<PAGE> 1
As filed with the Securities and Exchange Commission on
November 19, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO.
(Check appropriate box or boxes)
AMSOUTH FUNDS
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road
Columbus, OH 43219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
1-800-451-8382
(AREA CODE AND TELEPHONE NUMBER)
ALAN G. PRIEST, ESQUIRE
Ropes & Gray
One Franklin Square
1301 K Street, N.W., Suite 800 East
Washington, D.C. 20005
(NAME AND ADDRESS OF AGENT FOR SERVICE)
Approximate Date of Proposed Public Offering: As soon as practicable
after this Registration Statement becomes effective.
It is proposed that this filing will become effective on December 19,
1999 pursuant to Rule 488.
Title of securities being registered: Units of beneficial interest
An indefinite amount of the Registrant's securities has been registered
under the Securities Act of 1933 pursuant to Rule 24f-2 under The Investment
Company Act of 1940. In reliance upon such Rule, no filing fee is being paid at
this time.
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CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-14 ITEM CAPTION IN COMBINED PROSPECTUS/PROXY STATEMENT
- -------------- ----------------------------------------------
<S> <C>
1 Cross-Reference Sheet; Front Cover
2 Table of Contents
3 Synopsis and Principal Risks
4 Proposal (1) -- Approval of Agreement and
Plan of Reorganization; Introduction;
Proposal Regarding Approval or Disapproval
of Agreement and Plan of Reorganization;
Background and Reasons for the Proposed
Reorganization; Information about the
Reorganization
5 Front Cover -- Incorporated by reference to
specified documents; AmSouth Funds;
Financial Statements; Information filed with
the Securities and Exchange Commission;
Management Discussion of Fund Performance
6 Front Cover -- Incorporated by Reference to
Specified Documents; ISG Funds; Financial
Statements; Information filed with the
Securities and Exchange Commission
7 Introduction; Proposal Regarding Approval or
Disapproval of Agreement and Plan of
Reorganization; Information About the
Reorganization; Voting Information
Proposal (2) -- Approval of Investment
Advisory Agreement; Introduction; Proposal
Regarding Approval or Disapproval of
Investment Advisory Agreement
Proposal (3) -- Approval of Investment
Sub-Advisory Agreements; Introduction;
Proposal Regarding Approval or Disapproval
of Investment Sub- Advisory Agreements
8 Interest of Certain Persons in the
Transaction
9 Not Applicable
CAPTION IN COMBINED PROSPECTUS/PROXY STATEMENT
10, 11 Cover Page
12 Cover Page -- Incorporated by reference to
specified documents
13 Cover Page -- Incorporated by reference to
specified documents
14 Pro Forma Financial Statements
</TABLE>
Part C
The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
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IMPORTANT SHAREHOLDER INFORMATION
ISG FUNDS
The document you hold in your hands contains your Combined Prospectus/Proxy
Statement and proxy card. A proxy card is, in essence, a ballot. When you vote
your proxy, it tells us how to vote on your behalf on important issues relating
to your ISG Funds. If you simply sign the proxy without specifying a vote, your
shares will be voted in accordance with the recommendations of the Board of
Directors.
We urge you to spend a few minutes with the Combined Prospectus/Proxy Statement,
fill out your proxy card, and return it to us. By voting your proxy, and doing
so promptly, you help us avoid having to make additional mailings.
Please take a few moments to exercise your right to vote. Thank you.
The Combined Prospectus/Proxy Statement constitutes the Proxy Statement of the
ISG Funds for the meeting of their shareholders. It also constitutes the
Prospectus of AmSouth for 21 of its Funds which are to issue shares in
connection with the proposed reorganization of the ISG Funds with AmSouth Funds
described in the enclosed materials.
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ISG FUNDS
Columbus, OH 43219
December 22, 1999
To the Shareholders:
Enclosed you will find several documents being furnished to you in
connection with a special meeting of the shareholders of the ISG Funds to be
held on February 11, 2000 at the offices of BISYS Fund Services, 3435 Stelzer
Road, Columbus, OH 43219. We hope this material will receive your immediate
attention and that, if you cannot attend the meeting in person, you will vote
your proxy promptly.
As you may know, First American Corporation recently merged with
AmSouth Bancorporation on October 1, 1999. As a result, the new organization has
since taken steps to consolidate the mutual fund investment advisory activities
of both bank holding companies. Currently, First American National Bank, a
wholly-owned subsidiary of AmSouth Bancorporation, provides investment advisory
services to ISG Funds. AmSouth Bank, a wholly-owned subsidiary of AmSouth
Bancorporation, currently provides investment advisory services to AmSouth Funds
("AmSouth").
As the next step in the consolidation process, we are asking you to
consider and approve a proposed Agreement and Plan of Reorganization for your
ISG Fund. The Plan of Reorganization provides that each ISG Fund transfer all of
its assets to the corresponding AmSouth Fund, as listed in the chart below, in
return for Trust or Class A or Class B shares (collectively, "Shares") of such
AmSouth Fund and the assumption by such AmSouth Fund of all of the liabilities
of such ISG Fund. After the transfer, Shares of the corresponding AmSouth Fund
will be distributed to the ISG Fund's shareholders tax-free in liquidation of
such ISG Fund. As a result of these transactions, your ISG Fund shares, in
effect, would be exchanged at their net asset value and on a tax-free basis for
Shares of such AmSouth Fund. All ISG Fund shareholders will receive shares of
the AmSouth Class (Class A, Class B or Trust Class) that corresponds to the
class of ISG Fund shares ("ISG Shares") they hold. Each AmSouth Fund listed
below as a "New AmSouth Fund" recently has been organized for the purpose of
continuing the investment operations of the corresponding ISG Fund, and has no
assets or prior history of investment operations.
<TABLE>
<CAPTION>
ISG FUNDS NEW AMSOUTH FUNDS
--------- -----------------
<S> <C>
ISG International Equity Fund AmSouth International Equity Fund
ISG Mid-Cap Fund AmSouth Mid Cap Fund
ISG Capital Growth Fund AmSouth Capital Growth Fund
ISG Large-Cap Equity Fund AmSouth Large Cap Fund
ISG Limited Term U.S. Government Fund AmSouth Limited Term U.S. Government Fund
ISG Tennessee Tax-Exempt Fund AmSouth Tennessee Tax-Exempt Fund
ISG Limited Term Tennessee Tax-Exempt Fund AmSouth Limited Term Tennessee Tax-Exempt Fund
ISG Treasury Money Market Fund AmSouth Treasury Reserve Money Market Fund
ISG Aggressive Growth Portfolio AmSouth Strategic Portfolios: Aggressive Growth Portfolio
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
ISG Growth Portfolio AmSouth Strategic Portfolios: Growth Portfolio
ISG Growth & Income Portfolio AmSouth Strategic Portfolios: Growth and Income Portfolio
ISG Moderate Growth & Income Portfolio AmSouth Strategic Portfolios: Moderate Growth and Income Portfolio
ISG Current Income Portfolio AmSouth Strategic Portfolios: Current Income Portfolio
ISG FUNDS PRE-EXISTING AMSOUTH FUNDS
ISG Small-Cap Opportunity Fund AmSouth Small Cap Fund
ISG Equity Income Fund AmSouth Equity Income Fund
ISG Income Fund AmSouth Bond Fund
ISG Government Income Fund AmSouth Government Income Fund
ISG Limited Term Income Fund AmSouth Limited Term Bond Fund
ISG Municipal Income Fund AmSouth Municipal Bond Fund
ISG Prime Money Market Fund AmSouth Prime Money Market Fund
ISG Tax-Exempt Money Market Fund AmSouth Tax-Exempt Money Market Fund
</TABLE>
First American National Bank has advised the ISG Funds' Directors that
it believes that the above-described transactions regarding the ISG Funds and
the AmSouth Funds offer the shareholders of the ISG Funds an opportunity to
pursue similar investment objectives more effectively with potentially lower
expense ratios over time. The reorganization of each ISG Fund will be tax-free
and will not involve any sales loads, commissions or transaction charges.
We also are asking you to approve the current investment advisory
agreement with First American National Bank and, if you are a shareholder of ISG
International Equity Fund, ISG Small-Cap Opportunity Fund or ISG Mid-Cap Fund,
the current sub-investment advisory agreement between First American National
Bank and the respective sub-adviser to those ISG Funds. These agreements became
effective as of the date First American Corporation merged with AmSouth
Bancorporation--October 1, 1999--and will remain in effect, if approved by
shareholders, until the relevant ISG Fund's reorganization.
YOUR FUND'S DIRECTORS BELIEVE THAT THE PROPOSED COMBINATIONS OF THE ISG FUNDS
WITH THE AMSOUTH FUNDS AND APPROVAL OF THE INVESTMENT ADVISORY AND
SUB-INVESTMENT ADVISORY AGREEMENTS ARE IN THE BEST INTERESTS OF THE ISG FUNDS
AND THEIR SHAREHOLDERS AND RECOMMEND THAT YOU VOTE IN FAVOR OF SUCH PROPOSALS.
The Notice of Special Meeting of Shareholders, the accompanying
Combined Prospectus/Proxy Statement and proxy cards are enclosed. Please read
them carefully. If you are unable to attend the meeting in person, we urge you
to sign, date, and return the proxy card so that your shares may be voted in
accordance with your instructions.
SINCE THE MEETING IS LESS THAN EIGHT WEEKS AWAY, WE URGE YOU TO GIVE
THE ENCLOSED MATERIAL YOUR PROMPT ATTENTION SO AS TO AVOID THE EXPENSE OF
ADDITIONAL MAILINGS.
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Your vote is important to us. Thank you for taking the time to consider
this important proposal.
Sincerely yours,
[ ]
6
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ISG FUNDS
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of :
ISG International Equity Fund
ISG Small-Cap Opportunity Fund
ISG Mid-Cap Fund
ISG Capital Growth Fund
ISG Large-Cap Equity Fund
ISG Equity Income Fund
ISG Income Fund
ISG Government Income Fund
ISG Limited Term Income Fund
ISG Limited Term U.S. Government Fund
ISG Tennessee Tax-Exempt Fund
ISG Limited Term Tennessee Tax-Exempt Fund
ISG Municipal Income Fund
ISG Prime Money Market Fund
ISG Treasury Money Market Fund
ISG Tax-Exempt Money Market Fund
ISG Aggressive Growth Portfolio
ISG Growth Portfolio
ISG Growth & Income Portfolio
ISG Moderate Growth & Income Portfolio
ISG Current Income Portfolio
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of the
above-referenced funds (collectively, the "ISG Funds"), separate series of The
Infinity Mutual Funds, Inc. ("the Company"), will be held at BISYS Fund
Services, 3435 Stelzer Road, Columbus, OH on February 11, 2000 at TIME, Eastern
time, for the following purposes:
EACH ISG FUND WILL VOTE SEPARATELY ON PROPOSAL ONE
1. To consider and act upon an Agreement and Plan of
Reorganization ("Agreement") pursuant to which each ISG Fund
will transfer all of its assets to a corresponding AmSouth
Fund as listed below in exchange for Trust, Class A and Class
B shares (collectively, "Shares") of such AmSouth Fund and the
assumption by such AmSouth Fund of all of the liabilities of
such ISG Fund, followed by the dissolution and liquidation of
such ISG Fund, and the distribution of Shares of such AmSouth
Fund to the shareholders of such ISG Fund:
<TABLE>
<CAPTION>
<S> <C>
ISG International Equity Fund AmSouth International Equity Fund
ISG Small-Cap Opportunity Fund AmSouth Small Cap Fund
ISG Mid-Cap Fund AmSouth Mid Cap Fund
ISG Capital Growth Fund AmSouth Capital Growth Fund
ISG Large-Cap Equity Fund AmSouth Large Cap Fund
ISG Equity Income Fund AmSouth Equity Income Fund
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
ISG Income Fund AmSouth Bond Fund
ISG Government Income Fund AmSouth Government Income Fund
ISG Limited Term Income Fund AmSouth Limited Term Bond Fund
ISG Limited Term U.S. Government Fund AmSouth Limited Term U.S. Government Fund
ISG Tennessee Tax-Exempt Fund AmSouth Tennessee Tax-Exempt Fund
ISG Limited Term Tennessee Tax-Exempt Fund AmSouth Limited Term Tennessee Tax-Exempt Fund
ISG Municipal Income Fund AmSouth Municipal Bond Fund
ISG Prime Money Market Fund AmSouth Prime Money Market Fund
ISG Treasury Money Market Fund AmSouth Treasury Reserve Money Market Fund
ISG Tax-Exempt Money Market Fund AmSouth Tax-Exempt Money Market Fund
ISG Aggressive Growth Portfolio AmSouth Strategic Portfolios: Aggressive Growth Portfolio
ISG Growth Portfolio AmSouth Strategic Portfolios: Growth Portfolio
ISG Growth & Income Portfolio AmSouth Strategic Portfolios: Growth and Income Portfolio
ISG Moderate Growth & Income Portfolio AmSouth Strategic Portfolios: Moderate Growth and Income Portfolio
ISG Current Income Portfolio AmSouth Strategic Portfolios: Current Income Portfolio
</TABLE>
EACH ISG FUND WILL VOTE SEPARATELY ON PROPOSAL TWO
2. To consider and act upon a new Investment Advisory Agreement
between the Company, with respect to the ISG Funds, and First
American National Bank, the terms of which are identical in
all material respects to the prior investment advisory
agreement for the ISG Funds. The new Investment Advisory
Agreement was approved by the Board of Directors, effective as
of the date of the merger (the "Merger") of First American
Corporation, the former parent of the ISG Funds' investment
adviser, First American National Bank, with and into AmSouth
Bancorporation.
ISG INTERNATIONAL EQUITY FUND, ISG MID-CAP FUND AND
ISG SMALL-CAP OPPORTUNITY FUND ONLY
WILL EACH VOTE SEPARATELY ON PROPOSAL THREE
3. (a) To consider and act upon a new Sub-Investment
Advisory Agreement between Lazard Asset Management,
the present sub-adviser to the ISG International
Equity Fund, and First American National Bank, with
respect to the ISG International Equity Fund, the
terms of which are identical in all material respects
to the prior sub-advisory agreement for ISG
International Equity Fund;
(b) To consider and act upon a new Sub-Investment
Advisory Agreement between Bennett Lawrence
Management, LLC, the present sub-adviser to the ISG
Mid-Cap Fund, and First American National Bank, on
behalf of the ISG Mid-Cap Fund, the terms of which
are identical in all material respects to the prior
sub-advisory agreement for ISG Mid-Cap Fund; and
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(c) To consider and act upon a new Sub-Investment
Advisory Agreement between Womack Asset Management,
Inc., the present sub-adviser to the ISG Small-Cap
Opportunity Fund, and First American National Bank,
on behalf of the ISG Small-Cap Opportunity Fund, the
terms of which are identical in all material respects
to the prior sub-advisory agreement for the ISG
Small-Cap Opportunity Fund.
The new Sub-Investment Advisory Agreements were approved by the Board
of Directors, effective as of the date of the Merger.
4. To transact such other business as may properly come before
the Meeting or any adjournment or adjournments thereof.
The proposed transaction is described in the attached Combined
Prospectus/Proxy Statement. A copy of the Agreement is appended as Appendix A
thereto.
Pursuant to instructions of the Company's Board of Directors, the close
of business on December 2, 1999, has been designated as the record date for
determination of shareholders entitled to notice of, and to vote at, the
Meeting.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY THE
COMPANY'S BOARD OF DIRECTORS. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE
SPECIAL MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY
SUBMITTING TO THE COMPANY A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY
EXECUTED PROXY OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON.
By Order of the Directors
[ ]
[ ]
Columbus, OH
December 22, 1999
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PROSPECTUS/PROXY STATEMENT
December 22, 1999
AmSouth Funds ISG Funds
Columbus, OH 43219 Columbus, OH 43219
Tel. No. 1-800-451-8382 Tel. No. 1-800-852-0045
COMBINED PROSPECTUS/PROXY STATEMENT
This Combined Prospectus/Proxy Statement is furnished in connection
with the solicitation of proxies from the shareholders of the ISG Funds for use
at a Special Meeting of Shareholders of the ISG Funds for the purposes set forth
in the accompanying Notice of Special Meeting of Shareholders. Shareholders of
record at the close of business on December 2, 1999, are entitled to receive
notice of and to vote at the Meeting. It is proposed that each ISG Fund transfer
all of its assets and liabilities to the corresponding AmSouth Fund in exchange
for Trust Class, Class A and Class B shares (collectively "Shares"), followed by
the dissolution and liquidation of the respective ISG Fund and the distribution
of Shares to the shareholders of the ISG Fund (the "Transaction"). As a result
of the proposed Transaction, each ISG Shareholder will receive on a tax-free
basis, a number of full and fractional Shares of the corresponding AmSouth Fund
equal in value at the date of the exchange to the net asset value of the ISG
Shares transferred by each Shareholder to the corresponding AmSouth Fund. All
ISG shareholders will receive shares of the AmSouth Class (Class A, Class B or
Trust Class) that correspond to the class of ISG Shares that they hold.
It is proposed that each ISG Fund transfer all of its assets, subject
to liabilities, to a corresponding AmSouth Fund as indicated below. Each AmSouth
Fund listed below as a "New AmSouth Fund" recently has been organized for the
purpose of continuing the investment operations of the corresponding ISG Fund,
and has no assets or prior history of investment operations.
<TABLE>
<CAPTION>
ISG FUNDS NEW AMSOUTH FUNDS
<S> <C>
ISG International Equity Fund AmSouth International Equity Fund
ISG Mid-Cap Fund AmSouth Mid Cap Fund
ISG Capital Growth Fund AmSouth Capital Growth Fund
ISG Large-Cap Equity Fund AmSouth Large Cap Fund
ISG Limited Term U.S. Government Fund AmSouth Limited Term U.S. Government Fund
ISG Tennessee Tax-Exempt Fund AmSouth Tennessee Tax-Exempt Fund
ISG Limited Term Tennessee Tax-Exempt Fund AmSouth Limited Term Tennessee Tax-Exempt Fund
ISG Treasury Money Market Fund AmSouth Treasury Reserve Money Market Fund
ISG Aggressive Growth Portfolio AmSouth Strategic Portfolios: Aggressive Growth Portfolio
ISG Growth Portfolio AmSouth Strategic Portfolios: Growth Portfolio
ISG Growth & Income Portfolio AmSouth Strategic Portfolios: Growth and Income Portfolio
ISG Moderate Growth & Income Portfolio AmSouth Strategic Portfolios: Moderate Growth and Income Portfolio
ISG Current Income Portfolio AmSouth Strategic Portfolios: Current Income Portfolio
</TABLE>
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<TABLE>
<CAPTION>
ISG FUNDS PRE-EXISTING AMSOUTH FUNDS
<S> <C>
ISG Small-Cap Opportunity Fund AmSouth Small Cap Fund
ISG Equity Income Fund AmSouth Equity Income Fund
ISG Income Fund AmSouth Bond Fund
ISG Government Income Fund AmSouth Government Income Fund
ISG Limited Term Income Fund AmSouth Limited Term Bond Fund
ISG Municipal Income Fund AmSouth Municipal Bond Fund
ISG Prime Money Market Fund AmSouth Prime Money Market Fund
ISG Tax-Exempt Money Market Fund AmSouth Tax-Exempt Money Market Fund
</TABLE>
The Meeting also is being called to permit Shareholders of each ISG
Fund to consider and act upon a new Investment Advisory Agreement (the "New
Advisory Agreement") with First American National Bank. In addition,
shareholders of the ISG International Equity are asked to consider and act upon
a new Sub-Investment Advisory Agreement between First American National Bank and
Lazard Asset Management; shareholders of the ISG Mid-Cap are asked to consider
and act upon a new Sub-Investment Advisory Agreement between First American
National Bank and Bennett Lawrence Management, LLC; and shareholders of the ISG
Small-Cap Opportunity are asked to consider and act upon a new Sub-Investment
Advisory Agreement between First American National Bank and Womack Asset
Management, Inc. The new Sub-Investment Advisory Agreements are collectively
referred to as the "New Sub-Advisory Agreements," and each may individually be
referred to as a "New Sub-Advisory Agreement." Consideration of the New Advisory
Agreement and the New Sub-Advisory Agreements has been made necessary by the
merger (the "Merger") of First American Corporation, the parent of First
American National Bank prior to the Merger, with and into AmSouth
Bancorporation. The New Advisory Agreement and the New Sub-Advisory Agreements
took effect on the date that the Merger was consummated -- October 1, 1999 --
and will continue, if approved by Shareholders, until the relevant ISG Fund's
reorganization, referred to above.
If a proposal is approved by one or more ISG Funds, and disapproved by
the other ISG Funds, the Proposal will be implemented only for each ISG Fund
that approved the Proposal.
The AmSouth Funds are separate series of AmSouth Funds ("AmSouth"), an
open-end management investment company. The ISG Funds are separate series of The
Infinity Mutual Funds, Inc. ("the Company"), an open-end management investment
company.
This Combined Prospectus/Proxy Statement explains concisely what you
should know before investing in the AmSouth Funds. Please read it and keep it
for future reference. This Combined Prospectus/Proxy Statement is accompanied by
the prospectuses relating to the AmSouth Funds, dated December 1, 1999 and
December 14, 1999 (the "AmSouth Prospectuses"), which contain information about
the AmSouth Funds, as well as the current prospectuses relating to the ISG Funds
dated May 1, 1999 (the "ISG Prospectuses"), which contain information about the
ISG Funds, all of which are incorporated into this Combined Prospectus/Proxy
Statement by reference. The current Statements of Additional Information of the
AmSouth Funds, dated December 1, 1999 and December 14, 1999, and of the ISG
Funds, dated May 1, 1999, have been filed with the Securities and Exchange
Commission and are incorporated into this Combined Prospectus/Proxy Statement by
reference. The Statements of Additional Information may be obtained, without
charge, by writing to the relevant Fund, 3435 Stelzer Road, Columbus, Ohio 43219
or by calling 1-800-451-8382 for the AmSouth Funds or 1-800-852-0045 for the ISG
Funds. In addition, a Statement of Additional Information dated [_________,
1999] relating to the Transaction described in this Combined Prospectus/Proxy
Statement has been filed with the Securities and Exchange Commission and is also
incorporated into this Combined Prospectus/Proxy Statement by reference.
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Such Statement of Additional Information may be obtained, without charge, by
writing AmSouth Funds at the above-listed address or by calling 1-800-451-8382.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
SECURITIES DESCRIBED IN THIS COMBINED PROSPECTUS/PROXY STATEMENT OR DETERMINED
WHETHER THIS COMBINED PROSPECTUS/PROXY STATEMENT IS TRUTHFUL OR COMPLETE. ANYONE
WHO TELLS YOU OTHERWISE IS COMMITTING A CRIME.
AN INVESTMENT IN SHARES OF AN AMSOUTH FUND IS NOT A BANK DEPOSIT. IT IS NOT
GUARANTEED, ENDORSED OR INSURED BY ANY BANK, FINANCIAL INSTITUTION OR
GOVERNMENT ENTITY SUCH AS THE FDIC. YOU COULD LOSE MONEY, BUT YOU ALSO HAVE
THE POTENTIAL TO MAKE MONEY.
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[BACK COVER PAGE]
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS COMBINED PROSPECTUS/PROXY STATEMENT IN
CONNECTION WITH THE OFFERING MADE BY THIS COMBINED PROSPECTUS/PROXY STATEMENT
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE ISG FUNDS OR BY AMSOUTH. THIS COMBINED
PROSPECTUS/PROXY STATEMENT DOES NOT CONSTITUTE AN OFFERING BY AMSOUTH IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
13
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
PROPOSAL (1) APPROVAL OF AGREEMENT AND
PLAN OF REORGANIZATION ............................................................
FEE TABLES .........................................................................
SYNOPSIS ...........................................................................
PRINCIPAL RISKS ....................................................................
INTRODUCTION .......................................................................
PROPOSAL REGARDING APPROVAL OR DISAPPROVAL OF
AGREEMENT AND PLAN OF REORGANIZATION ..............................................
BACKGROUND AND REASONS FOR THE PROPOSED
REORGANIZATION .....................................................................
INFORMATION ABOUT THE REORGANIZATION ..............................................
APPROVAL OR DISAPPROVAL OF CERTAIN ADVISORY AGREEMENTS ............................
AMSOUTH FUNDS ......................................................................
ISG FUNDS ..........................................................................
FINANCIAL STATEMENTS ...............................................................
VOTING INFORMATION .................................................................
INFORMATION FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION ................................................................
FORM OF AGREEMENT AND PLAN OF REORGANIZATION ......................................
APPENDIX A ........................................................................
FEE TABLES -- APPENDIX B ...........................................................
AMSOUTH ANNUAL REPORT -- APPENDIX C ................................................
NEW ADVISORY AGREEMENT -- APPENDIX D ...............................................
NEW SUB-ADVISORY AGREEMENT
(ISG MID-CAP FUND) -- APPENDIX E ...................................................
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
NEW SUB-ADVISORY AGREEMENT
(ISG INTERNATIONAL EQUITY FUND)-- APPENDIX F .......................................
NEW SUB-ADVISORY AGREEMENT
(ISG SMALL-CAP OPPORTUNITY FUND)-- APPENDIX G ......................................
EXECUTIVE OFFICERS AND DIRECTORS
OF AMSOUTH BANK-- APPENDIX H .......................................................
</TABLE>
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PROPOSAL (1) -- APPROVAL OF AGREEMENT
AND PLAN OF REORGANIZATION
At a meeting held on November 18, 1999, all of the Directors of the
Company unanimously approved the Agreement providing for the transfer of all of
the assets of each ISG Fund to its corresponding AmSouth Fund in exchange for
Shares of beneficial interest of such AmSouth Fund and the assumption by such
AmSouth Fund of all of the liabilities of such ISG Fund.
Following the transfer, each ISG Fund will be dissolved and the Shares
received by the ISG Fund will be distributed to its shareholders in liquidation
of the ISG Fund. As a result of the proposed Transaction, shareholders of each
ISG Fund will receive, on a tax-free basis, a number of full and fractional
Shares equal in value at the date of the exchange to the net asset value of the
ISG Shares transferred by such Shareholder to the corresponding AmSouth Fund
attributable to the shareholder. All ISG Fund shareholders will receive shares
of the AmSouth Fund Class (Class A, Class B or Trust Class) that corresponds to
the class of ISG Shares that they hold.
For the reasons set forth below under "Background and Reasons for the
Proposed Reorganization," the Board of Directors of the Company and the Board of
Trustees of AmSouth, including those Board members who are not "interested
persons" of either the ISG Funds or the AmSouth Funds as defined in the
Investment Company Act of 1940 (the "1940 Act") (the "Independent Board
Members"), unanimously concluded that participation in the proposed Transaction
is in the best interests of the respective Funds and their existing shareholders
and that the economic interests of their respective existing shareholders will
not be diluted as a result of effecting the proposed Transaction.
In reaching this conclusion, each Board considered, among other things,
the qualifications and experience of AmSouth Bank (the "Advisor"); the projected
expense ratios of each AmSouth Fund compared to the corresponding ISG Fund, and
the potential economies of scale which could be realized over time by former ISG
Fund shareholders as each AmSouth Fund increases in size; the services to be
provided to AmSouth shareholders, including the availability of Funds with
objectives, policies and services similar to those of the ISG Funds; the
recommendation of the Advisor in favor of the Transaction; and the fact that the
Transaction will be free from Federal income taxes to the ISG Funds and the
AmSouth Funds and their shareholders.
FEE TABLES
Fee tables showing the current fees for the ISG Funds and AmSouth
Funds, as well as the pro forma fees after the reorganization, can be found in
Appendix B at the end of this Combined Prospectus/Proxy Statement. AmSouth Bank,
the investment adviser to the AmSouth Funds, has agreed that until October 1,
2001, it will maintain for each AmSouth Fund total fund operating expenses that
are less than or equal to those of its corresponding ISG Fund as of the date of
the Merger (October 1, 1999). Thereafter, total fund operating expenses for the
AmSouth Funds may be higher since, in many cases, the rate of investment
advisory fee payable will be higher than the rate currently payable by the
corresponding ISG Funds.
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SYNOPSIS OF PROSPECTUSES
Investment Objectives and Policies. Below is a brief comparison of the
investment objectives and policies of each ISG Fund and the corresponding
AmSouth Fund. The following discussion is qualified in its entirety by the
disclosure on such subjects contained in the AmSouth Prospectuses and the ISG
Prospectuses accompanying this Combined Prospectus/Proxy Statement. For a full
and detailed description of permitted investments, see the applicable AmSouth
and ISG Prospectuses.
The securities currently held by each ISG Fund are substantially
similar to those securities which the corresponding AmSouth Fund may hold.
Consequently, the proposed reorganizations of the ISG Funds should not result in
higher than normal portfolio turnover due to the corresponding AmSouth Fund's
disposal of investment securities.
EQUITY FUNDS (OR CAPITAL APPRECIATION FUNDS) -- These Funds seek capital
appreciation and invest primarily in equity securities, principally common
stocks and, to a limited extent, preferred stocks and convertible securities.
AmSouth International Equity Fund, AmSouth Mid Cap Fund, AmSouth Capital Growth
Fund and AmSouth Large Cap Equity Fund recently were organized for the purpose
of continuing the investment operations of the corresponding ISG Fund, and such
AmSouth Funds have no assets or prior history of investment operations.
ISG INTERNATIONAL EQUITY FUND AND AMSOUTH INTERNATIONAL EQUITY FUND
Fund Investment Objective/Goals As their investment objectives, both ISG
International Equity and AmSouth International Equity Funds seek to provide
investors with capital appreciation.
Principal Investment Strategies of the Funds As a New AmSouth Fund, the
principal investment strategies of AmSouth International Equity Fund are
identical to those of ISG International Equity Fund. Like ISG International
Equity Fund, AmSouth International Equity Fund will invest primarily in equity
securities of large non-U.S. companies (i.e., incorporated or organized outside
the United States). Lazard Asset Management, the Sub-Adviser of each Fund, looks
for established companies in economically developed countries that it believes
are undervalued based on their return on total capital or equity. The
Sub-Adviser attempts to identify undervalued securities through traditional
measures of value, including low price to earnings ratio, high yield,
unrecognized assets, potential for management change and the potential to
improve profitability.
As it currently does for ISG International Equity Fund, the Sub-Adviser
will focus on individual stock selection (a "bottom-up" approach) rather than on
forecasting stock market trends (a "top-down" approach). The percentage of the
Funds' assets invested in particular geographic sectors may shift from time to
time in accordance with the judgment of the Adviser and Sub-Adviser. Ordinarily,
the Fund will invest in at least three different foreign countries. Although the
Fund will invest primarily in the stocks of companies located in developed
foreign countries, it may invest up to 25% of its total assets in typically
large companies located, or doing significant business in emerging markets. In
addition, the Fund may have substantial investments in American and Global
Depositary Receipts.
ISG International Equity and AmSouth International Equity are
non-diversified Funds.
ISG SMALL-CAP OPPORTUNITY FUND AND AMSOUTH SMALL CAP FUND
Fund Investment Objective/Goals As their investment objectives, both ISG
Small-Cap Opportunity and AmSouth Small Cap seek to provide investors with
capital appreciation.
Principal Investment Strategies of the Funds ISG Small-Cap Opportunity invests
primarily in equity securities of U.S. companies with market capitalizations of
less than $1.5 billion. Womack Asset Management, the ISG Fund's Sub-Adviser,
seeks investment opportunities in smaller, well-managed U.S. companies whose
shares are undervalued relative to the companies' growth potential. The
Sub-Adviser employs a growth-oriented approach
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<PAGE> 18
which involves fundamental analysis of the company's published financial
statements with technical analysis (which relies on price and volume movements
of the company's stock) to discern potential and risk. The Sub-Adviser focuses
on individual stock selection (a "bottom-up" approach) rather than on
forecasting stock market trends (a "top-down" approach). The Sub-Adviser
considers, among other factors: projected earnings growth, relative price
strength and business fundamentals.
Similarly, AmSouth Small Cap Fund invests primarily in common stocks of
companies with market capitalizations at the time of purchase in the range of
companies in the Russell 2000(R) Growth Index (currently between $50 million and
$2 billion). Womack Asset Management however, is not be the Sub-Adviser for
AmSouth Small Cap Fund. Sawgrass Asset Management, Inc., the AmSouth Fund's
Sub-Adviser, seeks smaller companies with above-average growth potential. The
Sub-Adviser considers factors including positive changes in earnings estimates
for future growth, higher than market average profitability, a strategic
position in a specialized market, earnings growth consistently above market and
fundamental value.
ISG Small-Cap Opportunity and AmSouth Small Cap are diversified Funds.
ISG MID-CAP FUND AND AMSOUTH MID CAP FUND
Fund Investment Objective/Goals As their investment objectives, both ISG Mid-Cap
and AmSouth Mid Cap Funds seek to provide investors with capital appreciation.
Principal Investment Strategies of the Funds As a New AmSouth Fund, the
principal investment strategies of AmSouth Mid Cap Fund are substantially
similar to those of ISG Mid-Cap Fund. ISG Mid-Cap invests primarily in equity
securities of companies publicly traded on U.S. exchanges that have market
capitalizations of $500 million to $5 billion. Similarly, AmSouth Mid Cap will
invest primarily in equity securities of companies publicly traded on U.S.
exchanges that are either included in the Russell Mid-Cap Growth Index or have
market capitalizations within the range of such included companies (from
$________ to $_________ as of ____________, 1999). Bennett Lawrence Management,
the Sub-Adviser of each Fund, seeks to identify industries that are benefiting
from major demand trends or themes and are therefore growing at a much faster
rate than the overall economy. The Sub-Adviser then typically gathers
information on the companies that are benefiting from these trends or themes.
Generally, the Fund will not invest in a company unless the Sub-Adviser has met
with the company's top management. The Sub-Adviser also seeks to talk to
suppliers, purchasers, and competitors to reinforce its analysis and monitor
each Fund's holdings. The Sub-Adviser's experience has been that when mid-sized
companies are backed by major demand trends, they can create attractive gains
for investors.
ISG Mid-Cap and AmSouth Mid Cap are diversified Funds.
ISG CAPITAL GROWTH FUND AND AMSOUTH CAPITAL GROWTH FUND
Fund Investment Objective/Goals As their investment objectives, both ISG Capital
Growth and AmSouth Capital Growth Funds seek to provide investors with capital
growth.
Principal Investment Strategies of the Funds As a New AmSouth Fund, the
principal investment strategies of AmSouth Capital Growth Fund are identical to
those of ISG Capital Growth Fund. Like ISG Capital Growth Fund, AmSouth Capital
Growth Fund will invest primarily in equity securities of U.S. companies with
market capitalizations of at least $500 million that the Adviser believes offer
opportunities for capital appreciation and growth of earnings. The Adviser first
will identify industries that it believes will expand over the next few years or
longer. The Adviser then will use fundamental analyses of company financial
statements to find large U.S. companies within these industries that offer the
prospect of solid earnings growth. The Adviser also
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<PAGE> 19
may consider other factors in selecting investments for the Fund, including the
development of new or improved products or services, opportunities for greater
market share, more effective management or other signs that the company will
have greater than average earnings growth and capital appreciation.
ISG Capital Growth and AmSouth Capital Growth are non-diversified
Funds.
ISG LARGE-CAP EQUITY FUND AND AMSOUTH LARGE CAP FUND
Fund Investment Objective/Goals As their investment objectives, both ISG
Large-Cap Equity and AmSouth Large Cap Funds seek to provide investors with
long-term capital appreciation and, as a secondary objective, current income.
Principal Investment Strategies of the Funds As a New AmSouth Fund, the
principal investment strategies of AmSouth Large-Cap Equity Fund are identical
to those of ISG Large-Cap Equity Fund. Like ISG Large-Cap Equity Fund, AmSouth
Large Cap Fund will invest primarily in equity securities of large U.S.
companies with market capitalizations over $1 billion that the Adviser believes
have the potential to provide capital appreciation and growth of income. The
Adviser's strategy, as it currently is for ISG Large-Cap Equity Fund, will be to
select well-managed U.S. companies that have demonstrated sustained patterns of
profitability, strong balance sheets, and the potential to achieve predictable,
above-average earnings growth. The Adviser will seek to diversify the Fund's
portfolio within the various industries typically comprising, what the Adviser
believes to be, the classic growth segments of the U.S. economy: Technology,
Consumer Non-Durables, Health Care, Business Equipment and Services, Retail, and
Capital Goods.
ISG Large-Cap Equity and AmSouth Large Cap are diversified Funds.
ISG EQUITY INCOME FUND AND AMSOUTH EQUITY INCOME FUND
Fund Investment Objective/Goals As its investment objective, ISG Equity Income
seeks to provide investors with current income and capital appreciation.
Similarly, AmSouth Equity Income seeks above average income and capital
appreciation by investing primarily in a diversified portfolio of common stocks,
preferred stocks, and securities that are convertible into common stocks, such
as convertible bonds and convertible preferred stock.
Principal Investment Strategies of the Funds ISG Equity Income invests primarily
in dividend-paying equity securities of U.S. companies that the Adviser expects
to provide reasonable income and to have capital appreciation potential. The
Fund's Adviser's strategy is to identify financially stable, mature companies
that pay above-average dividends. The Adviser will select those companies that
it believes have the capacity to increase dividend payments in the future. The
Adviser takes into account factors, such as price-earnings ratios, cash flow and
the relationship of a company's asset value to the market price of its
securities. The Fund may invest in the securities of companies of any size
depending on the relative attractiveness of the company and the industry in
which it operates.
Similarly, the manager of AmSouth Equity Income seeks equity securities
which he believes represent investment value. In choosing individual securities,
the manager emphasizes those common stocks in each sector that have good value,
attractive yield, and dividend growth potential. The manager also will consider
higher valued companies that show the potential for growth. Factors affecting
selection include industry and company fundamentals, historical price
relationships, and/or underlying asset value. The Fund also utilizes convertible
securities because these securities typically offer higher yields and good
potential for capital appreciation as well as some downside protection.
ISG Equity Income is a non-diversified Fund while AmSouth Equity Income
is a diversified Fund.
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<PAGE> 20
FIXED INCOME FUNDS -- These Funds seek current income and invest primarily in
fixed income securities, such as U.S. Government securities, or corporate, bank
and commercial obligations. AmSouth Limited Term U.S. Government Fund recently
was organized for the purpose of continuing the investment operations of ISG
Limited Term U.S. Government Fund, and has no assets or prior history of
investment operations.
ISG INCOME FUND AND AMSOUTH BOND FUND
Fund Investment Objective/Goals As its investment objective, ISG Income seeks to
provide investors with current income without assuming undue risk. Similarly,
AmSouth Bond seeks current income consistent with the preservation of capital.
Principal Investment Strategies of the Funds ISG Income invests primarily in a
broad range of investment grade, U.S. dollar denominated fixed income securities
of U.S. issuers. These securities include corporate and government bonds,
debentures and notes, convertible debt obligations, money market instruments,
municipal obligations, mortgage-related securities and asset-backed securities.
Investment grade securities are those rated at the time of purchase in one of
the four highest rating categories by a nationally recognized statistical rating
organization (an "NRSRO"), or are determined by the Fund's Adviser to be of
comparable quality. In choosing fixed income securities for the Fund, the Fund's
Adviser follows a controlled duration strategy which limits the Fund's portfolio
duration to 50% to 150% of the duration of its benchmark--the Merrill Lynch
Corporate/Government Master Index. Duration is an indication of how sensitive a
bond or mutual fund portfolio may be to changes in interest rates. Typically,
the Fund will have an effective duration of between four and seven years. When
assessing a potential investment, the Adviser looks at a variety of factors,
including the company's credit history and financial strength, the long-term
economic trends of the industry or sector it belongs to, the company's
management and whether there is sufficient equity value in the company.
Similarly, AmSouth Bond invests in bonds and other fixed-income
securities, including primarily U.S. corporate bonds and debentures and notes or
bonds issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The Fund invests in debt securities only if they are high
grade (rated at time of purchase in one of the three highest rating categories
by an NRSRO, or are determined by the portfolio manager to be of comparable
quality). The Fund also invests in zero-coupon obligations which are securities
that do not provide current income but represent ownership of future interest
and principal payments on U.S. Treasury bonds. The Fund may purchase
fixed-income securities of any maturity and although there is no limit on the
Fund's average maturity, it is normally expected to be between five and ten
years. The Fund's manager uses a "top down" investment management approach
focusing on a security's maturity. The manager sets, and continually adjusts, a
target for the interest rate sensitivity of the Fund based upon expectations
about interest rates. The manager then selects individual securities whose
maturities fit this target and which the manager believes are the best relative
values.
ISG Income is a non-diversified Fund while AmSouth Bond is a
diversified Fund.
ISG GOVERNMENT INCOME FUND AND AMSOUTH GOVERNMENT INCOME FUND
Fund Investment Objective/Goals As its investment objective, ISG Government
Income seeks to provide investors with current income. Similarly, AmSouth
Government Income seeks current income consistent with the preservation of
capital.
Principal Investment Strategies of the Funds Both ISG Government Income and
AmSouth Government Income invest primarily in securities issued or guaranteed as
to payment of principal and interest by the U.S. Government, its agencies or
instrumentalities. ISG Government Income may enter into repurchase agreements,
and for additional yield, invest in high quality (AA/Aa) corporate bonds,
mortgage-related securities, asset-backed
20
<PAGE> 21
securities and bank obligations. ISG Government Income Fund also may purchase
securities of any maturity (the average maturity of the Fund's investments is
less than 10 years).
Investments of AmSouth Government Income are principally
mortgage-related securities, but may also include U.S. Treasury obligations. The
AmSouth Government Income Fund's manager uses a "top down" investment management
approach focusing on a security's maturity. The manager sets, and continually
adjusts, a target for the interest rate sensitivity of the Fund based upon
expectations about interest rates. The manager then selects individual
securities whose maturities fit this target and which the manger believes are
the best relative values.
ISG Government Income and AmSouth Government Income are diversified
Funds.
ISG LIMITED TERM INCOME FUND AND AMSOUTH LIMITED TERM BOND FUND
Fund Investment Objective/Goals As its investment objective, ISG Limited Term
Income seeks to provide investors with current income without assuming undue
risk. Similarly, AmSouth Limited Term Bond seeks current income consistent with
the preservation of capital.
Principal Investment Strategies of the Funds Each Fund invests primarily in a
broad range of U.S. dollar denominated fixed income securities of U.S. issuers.
These securities include corporate and government bonds, debentures and notes,
convertible debt obligations, money market instruments, municipal obligations,
mortgage-related securities and asset-backed securities. For ISG Limited Term
Income Fund, these securities must be considered investment grade (rated at the
time of purchase in one of the four highest rating categories by an NRSRO, or
are determined by the portfolio manager to be of comparable quality). In
choosing fixed income securities for ISG Limited Term Income, the Adviser
attempts to reduce interest rate risk by maintaining a portfolio duration
between one and four years and a dollar-weighted average portfolio life between
one and five years, depending on market conditions. Duration is an indication of
how sensitive a bond or mutual fund portfolio may be to changes in interest
rates. When assessing a potential investment, the Adviser looks at a variety of
factors, including the company's credit history and financial strength, the
long-term economic trends of the industry or sector it belongs to, the company's
management and whether there is sufficient equity value in the company.
Similarly, AmSouth Limited Term Bond invests primarily in short-term
fixed income securities with maturities of five years or less, principally
corporate bonds and securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities. The Fund invests in debt securities only if they
are high-grade (rated at the time or purchase in one of the three highest rating
categories by an NRSRO, or are determined by the portfolio manager to be of
comparable quality). The AmSouth Fund's manager uses a "top down" investment
management approach focusing on a security's maturity. The manager sets, and
continually adjusts, a target for the interest rate sensitivity of the Fund
based upon expectations about interest rates and other economic factors. The
manager then selects individual securities whose maturities fit this target and
which the manager believes are the best relative values.
ISG Limited Term Income is a non-diversified Fund while AmSouth Limited
Term Bond is a diversified Fund.
ISG LIMITED TERM U.S. GOVERNMENT FUND AND AMSOUTH LIMITED TERM U.S. GOVERNMENT
FUND
Fund Investment Objective/Goals As their investment objectives, both ISG Limited
Term U.S. Government and AmSouth Limited Term U.S. Government Funds seek to
provide investors with high current income without assuming undue risk.
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<PAGE> 22
Principal Investment Strategies of the Funds As a New AmSouth Fund, the
principal investment strategies of AmSouth Limited Term U.S. Government Fund are
identical to those of ISG Limited Term U.S. Government Fund. Like ISG Limited
Term U.S. Government Fund, AmSouth Limited Term U.S. Government Fund will invest
in securities issued or guaranteed as to payment of principal and interest by
the U.S. Government, its agencies or instrumentalities, and enter into
repurchase agreements in respect of such securities. The Fund's Adviser will
follow a controlled duration strategy which limits how much the Fund's portfolio
durations will differ from its benchmark--the Merrill Lynch 1-5 Year Government
Bond Index. Typically, the Fund will have a portfolio duration between one and
four years and a dollar weighted average portfolio life between one and five
years, depending on market conditions. Duration is an indication of how
sensitive a bond or mutual fund portfolio may be to changes in interest rates.
The market price of a bond with a duration of six years should increase or
decline twice as much as the market price of a bond with a three-year duration.
ISG Limited Term U.S. Government is a non-diversified Fund while
AmSouth Limited Term U.S. Government is a diversified Fund.
TAX-EXEMPT FIXED INCOME FUNDS -- These Funds seek tax-exempt income and invest
primarily in municipal obligations which are exempt from Federal and, in the
case of the Tennessee Funds, Tennessee income taxes. AmSouth Tennessee
Tax-Exempt Fund and AmSouth Limited Term Tennessee Tax-Exempt Fund recently were
organized for the purpose of continuing investment operations of ISG Tennessee
Tax-Exempt Fund and ISG Limited Term Tennessee Tax-Exempt Fund, respectively,
and such AmSouth Funds have no assets or prior history of investment operations.
ISG TENNESSEE TAX-EXEMPT FUND AND AMSOUTH TENNESSEE TAX-EXEMPT FUND
Fund Investment Objective/Goals As their investment objectives, both ISG
Tennessee Tax-Exempt and AmSouth Tennessee Tax-Exempt Funds seek to provide
investors with current income exempt from Federal and Tennessee income taxes
without assuming undue risk.
Principal Investment Strategies of the Funds As a New AmSouth Fund, the
principal investment strategies of AmSouth Tennessee Tax-Exempt Fund are
identical to those of ISG Tennessee Tax-Exempt Fund. Like ISG Tennessee
Tax-Exempt Fund, AmSouth Tennessee Tax-Exempt Fund will invest substantially all
of its assets in municipal obligations of the State of Tennessee, its political
subdivisions, authorities and corporations, that provide income exempt from
Federal and Tennessee personal income taxes. The average dollar-weighted credit
rating of the municipal obligations held by the Fund will be at least A-. To
further limit credit risk, the Fund will invest only in investment grade
municipal obligations or the unrated equivalent as determined by the Adviser.
The Advisers will evaluate municipal obligations based on credit quality,
financial outlook and yield potential. Although the Fund will concentrate its
assets in Tennessee municipal obligations, as is the case with ISG Tennessee
Tax-Exempt Fund, the Adviser will strive to diversify the portfolios across
sectors and issuers within Tennessee. The Fund may purchase securities of any
maturity. Generally, the average maturity of the Fund's investments will
continue to be primarily between six and ten years.
ISG Tennessee Tax-Exempt and AmSouth Tennessee Tax-Exempt are
non-diversified Funds.
ISG LIMITED TERM TENNESSEE TAX-EXEMPT FUND AND AMSOUTH LIMITED TERM TENNESSEE
TAX-EXEMPT FUND
Fund Investment Objective/Goals As their investment objectives, both ISG Limited
Term Tennessee Tax-Exempt and AmSouth Limited Term Tennessee Tax-Exempt Funds
seek to provide investors with current income exempt from Federal and Tennessee
income taxes without assuming undue risk.
Principal Investment Strategies of the Funds As a New AmSouth Fund, the
principal investment strategies of AmSouth Limited Term Tennessee Tax-Exempt
Fund are identical to those of ISG Limited Term Tennessee Tax-
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Exempt Fund. Like ISG Limited Term Tennessee Tax-Exempt Fund, AmSouth Limited
Term Tennessee Tax-Exempt Fund will invest substantially all of its assets in
municipal obligations of the State of Tennessee, its political subdivisions,
authorities and corporations, that provide income exempt from Federal and
Tennessee personal income taxes. The Fund's Adviser will attempt to reduce
interest rate risk by maintaining a portfolio duration of under five years and
an effective average portfolio maturity between three and five years, depending
on market conditions. Duration is an indication of how sensitive a bond or
mutual fund portfolio may be to changes in interest rates. The average
dollar-weighted credit rating of the municipal obligations held by the Funds
will be at least A-. To further limit credit risk, the Fund will invest only in
investment grade municipal obligations or the unrated equivalent as determined
by the Adviser. The Adviser will evaluate municipal obligations based on credit
quality, financial outlook and yield potential. Although the Fund will
concentrate its assets in Tennessee municipal obligations, as is the case with
ISG Limited Term Tennessee Tax-Exempt Fund, the Adviser will strive to diversify
the portfolio across sectors and issuers within Tennessee.
ISG Limited Term Tennessee Tax-Exempt and AmSouth Limited Term
Tennessee Tax-Exempt are non-diversified Funds.
ISG MUNICIPAL INCOME FUND AND AMSOUTH MUNICIPAL BOND FUND
Fund Investment Objective/Goals As its investment objective, ISG Municipal
Income seeks to provide investors with current income exempt from Federal income
tax. Similarly, AmSouth Municipal Bond seeks to produce as high a level of
current Federal tax-exempt income as is consistent with the preservation of
capital.
Principal Investment Strategies of the Funds ISG Municipal Income normally
invests substantially all of its assets in investment grade municipal
obligations, or the unrated equivalent as determined by the Adviser, that
provide income exempt from Federal income tax. The Adviser evaluates municipal
obligations based on credit quality, financial outlook and yield potential, and
seeks to diversify the Fund's investments across several different states,
sectors and issuers.
Similarly, AmSouth Municipal Bond invests primarily in municipal
securities that provide income that is exempt from Federal income tax and not
subject to the Federal alternative minimum tax for individuals. However, unlike
ISG Municipal Income, AmSouth Municipal Bond currently has a high concentrated
(approximately %) of its investments in municipal securities issued by the
State of Alabama and its political subdivisions. The Fund invests in debt
securities only if they are high-grade (rated at the time or purchase in one of
the three highest rating categories by an NRSRO, or are determined by the
portfolio manager to be of comparable quality). The Fund manager uses a "top
down" investment management approach focusing on a security's maturity. The
manager sets, and continually adjust, a target for the interest rate sensitivity
of the Fund based upon expectations about interest rates and other economic
factors. The manager then selects individual securities whose maturities fit
this target, have a certain level of credit quality, and which the manager
believes are the best relative values. Both ISG Municipal Income and AmSouth
Municipal Bond may purchase securities of any maturity. The average maturity of
the ISG Municipal Income is primarily between one and five and six and ten years
while that of AmSouth Municipal Bond is years.
ISG Municipal Income and AmSouth Municipal Bond are diversified Funds.
MONEY MARKET FUNDS -- These Funds seek current income and liquidity and invest
primarily in short-term securities. Each Fund seeks to maintain a stable price
of $1.00 per share. AmSouth Treasury Reserve Money Market Fund recently was
organized for the purpose of continuing the investment operations of ISG
Treasury Money Market Fund, and has no assets or prior history of investment
operations.
ISG PRIME MONEY MARKET FUND AND AMSOUTH PRIME MONEY MARKET FUND
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Fund Investment Objective/Goals As its investment objective, ISG Prime Money
Market seeks to provide investors with as high a level of current income as is
consistent with the preservation of capital and the maintenance of liquidity.
Similarly, as a money market fund, AmSouth Prime Money Market seeks current
income with liquidity and stability of principal.
Principal Investment Strategies of the Funds Both ISG Prime Money Market and
AmSouth Prime Money Market invest only in U.S. dollar-denominated,
"high-quality" short-term debt securities, including the following:
-obligations issued or guaranteed by the U.S. government, its agencies
or instrumentalities;
-certificates of deposit, time deposits, bankers' acceptances and other
short-term securities issued by domestic or foreign banks or their
subsidiaries or branches;
-domestic and foreign commercial paper and other short-term corporate
debt obligations, including those with floating or variable rates of
interest;
-obligations issued or guaranteed by one or more foreign governments or
their agencies or instrumentalities, including obligations of
supranational entities;
-asset-backed securities; and
-repurchase agreements collateralized by the types of securities listed
above.
ISG Prime Money Market buys and sells securities based on
considerations of safety of principal and liquidity, which means that the Fund
may not necessarily invest in securities paying the highest available yield at a
particular time. The Fund will attempt to increase its yield by trading to take
advantage of short-term market variations. The Adviser evaluates Fund
investments based on credit analysis and the interest rate outlook. The Fund
normally will invest at least 25% of its total assets in domestic or foreign
bank obligations.
The manager of AmSouth Prime Money Market first considers safety of
principal and the quality of an investment. The manager then focuses on
generating a high level of income. The manager generally evaluates investments
based on interest rate sensitivity selecting those securities whose maturities
fit the Fund's interest rate sensitivity target and which the manager believes
to be the best relative values. The Fund does not have a policy of investing
over 25% of its assets in the banking industry, or in any other industry. ISG
Prime Money Market and AmSouth Prime Money Market are diversified Funds.
ISG TREASURY MONEY MARKET FUND AND AMSOUTH TREASURY RESERVE MONEY MARKET FUND
Fund Investment Objective/Goals As their investment objectives, both ISG
Treasury Money Market and AmSouth Treasury Reserve Money Market Funds seek to
provide investors with as high a level of current income as is consistent with
the preservation of capital and the maintenance of liquidity.
Principal Investment Strategies of the Funds As a New AmSouth Fund, the
principal investment strategies of AmSouth Treasury Reserve Money Market Fund
are identical to those of ISG Treasury Money Market Fund. Like ISG Treasury
Money Market Fund, AmSouth Treasury Reserve Money Market Fund will invest
primarily in U.S. Treasury securities and repurchase agreements in respect
thereof. The Fund also may invest up to 35% of its assets in other securities
guaranteed as to payment of principal and interest by the U.S. Government and
repurchase agreements in respect thereof. Similarly, AmSouth Treasury Reserve
Money Market Fund will invest based on considerations of safety of principal and
liquidity, which means that the Fund may not necessarily invest in securities
paying the highest available yield at a particular time. The Fund will attempt
to increase its yield by trading to take advantage of short-term market
variations. The Fund's Adviser generally will evaluate investments based on
interest rate sensitivity.
Both ISG Treasury Money Market and AmSouth Treasury Reserve Money
Market are diversified Funds.
ISG TAX-EXEMPT MONEY MARKET FUND AND AMSOUTH TAX-EXEMPT MONEY MARKET FUND
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Fund Investment Objective/Goals As its investment objective, ISG Tax-Exempt
Money Market seeks as high a level of current interest income exempt from
Federal income tax as is consistent with the preservation of capital and the
maintenance of liquidity. Similarly, as a money market fund, AmSouth Tax-Exempt
Money Market seeks as high a level of current interest income exempt from
Federal income taxes as is consistent with the preservation of capital and
relative stability of principal.
Principal Investment Strategies of the Funds ISG Tax-Exempt Money Market
normally invests substantially all of its assets in short-term municipal
obligations that provide income exempt from Federal income tax. Municipal
obligations are debt obligations issued by states, territories and possessions
of the United States and their political subdivisions, agencies and
instrumentalities, and certain other entities.
Similarly, AmSouth Tax-Exempt Money Market invests primarily in
short-term municipal securities that provide income that is exempt from federal
income tax and not subject to the federal alternative minimum tax for
individuals. Municipal securities purchased by the Fund may include rated and
unrated variable and floating rate tax-exempt notes which may have a stated
maturity in excess of one year but which will be subject to a demand feature
permitting the Fund to demand payment within a year. The Fund may also invest up
to 10% of its total assets in the securities of money market mutual funds which
invest primarily in obligations exempt from Federal income tax. The Fund's
manager first considers safety of principal and the quality of an investment.
The manager then focuses on generating a high-level of income. The manager
generally evaluates investments based on interest rate sensitivity selecting
those securities whose maturities fit the Fund's interest rate sensitivity
target and which the manager believes to be the best relative values.
ISG Tax-Exempt Money Market and AmSouth Tax-Exempt Money Market are
diversified Funds.
STRATEGIC PORTFOLIOS -- These Funds are "fund of funds" which will invest
substantially all of their assets in Institutional Class shares of the ISG Funds
or, after the reorganizations, Trust shares of the AmSouth Funds ("Underlying
Funds") as described below. The Underlying Funds are described above and in the
relevant Fund Prospectus. AmSouth Strategic Portfolios: Aggressive Growth
Portfolio ("Aggressive Growth Portfolio"), AmSouth Strategic Portfolios: Growth
Portfolio ("Growth Portfolio"), AmSouth Strategic Portfolios: Growth and Income
Portfolio ("Growth and Income Portfolio"), AmSouth Strategic Portfolios:
Moderate Growth and Income Portfolio ("Moderate Growth and Income Portfolio")
and AmSouth Strategic Portfolios: Current Income Portfolio ("Current Income
Portfolio") recently were organized for the purpose of continuing the investment
operations of the corresponding ISG Fund, and such AmSouth Funds have no assets
or prior history of investment operations.
ISG AGGRESSIVE GROWTH PORTFOLIO AND AMSOUTH STRATEGIC PORTFOLIOS: AGGRESSIVE
GROWTH PORTFOLIO
Fund Investment Objective/Goals As their investment objectives, both ISG
Aggressive Growth and AmSouth Aggressive Growth Portfolios seek to provide
investors with capital growth.
Principal Investment Strategies of the Funds As a New AmSouth Fund, the
principal investment strategies of AmSouth Aggressive Growth Portfolio are
identical to those of ISG Aggressive Growth Portfolio. Like ISG Aggressive
Growth Portfolio, AmSouth Strategic Portfolios: Aggressive Growth Portfolio
("AmSouth Aggressive Growth Portfolio") will allocate its assets among the
Underlying Funds within predetermined strategy ranges, as set forth below. The
Fund's Adviser will make allocation decisions according to its outlook for the
economy, financial markets and relative market valuation of the Underlying
Funds. The Fund will invest up to 100% of their total assets in five Underlying
Funds which invest primarily in equity securities and up to 30% of their total
assets in one Underlying Fund which invests in money market instruments. ISG
Aggressive Growth Portfolio currently invests, and AmSouth Aggressive Growth
Portfolio, after the reorganization, will invest, in the following Underlying
Funds within the strategy ranges (expressed as a percentage of each Fund's total
assets) indicated below:
ISG Aggressive Growth
<TABLE>
<CAPTION>
Underlying Fund Strategy Ranges
<S> <C>
ISG Large-Cap Equity Fund 0-70%
</TABLE>
25
<PAGE> 26
<TABLE>
<CAPTION>
<S> <C>
ISG Capital Growth Fund 0-45%
ISG Mid-Cap Fund 0-30%
ISG Small-Cap Opportunity Fund 0-30%
ISG International Equity Fund 0-20%
ISG Prime Money Market Fund 0-30%
AmSouth Aggressive Growth
Underlying Fund Strategy Range
--------------- --------------
AmSouth Large Cap Fund 0-70%
AmSouth Capital Growth Fund 0-45%
AmSouth Mid Cap Fund 0-30%
AmSouth Small Cap Fund 0-30%
AmSouth International Equity Fund 0-20%
AmSouth Prime Money Market Fund 0-30%
</TABLE>
ISG Aggressive Growth is a non-diversified Fund while AmSouth Aggressive Growth
is a diversified Fund.
ISG GROWTH PORTFOLIO AND AMSOUTH STRATEGIC PORTFOLIOS: GROWTH PORTFOLIO
Fund Investment Objective/Goals As their investment objectives, both ISG Growth
and AmSouth Strategic Portfolios: Growth Portfolios ("AmSouth Growth Portfolio")
seek to provide investors with long-term capital growth.
Principal Investment Strategies of the Funds As a New AmSouth Fund, the
principal investment strategies of AmSouth Growth Portfolio are identical to
those of ISG Growth Portfolio. Like ISG Growth Portfolio, AmSouth Growth
Portfolio will allocate its assets among the Underlying Funds within
predetermined strategy ranges, as set forth below. The Fund's Adviser will make
allocation decisions according to its outlook for the economy, financial markets
and relative market valuation of the Underlying Funds. The Fund will invest up
to 100% of its total assets in six Underlying Funds which invest primarily in
equity securities, up to 25% of their total assets in one Underlying Fund which
invests primarily in fixed income securities and up to 20% of their total assets
in one Underlying Fund which invests in money market instruments. ISG Growth
Portfolio currently invest, and AmSouth Growth Portfolio, after the
reorganization, will invest, its assets in the following Underlying Funds within
the strategy ranges (expressed as a percentage of each Fund's total assets)
indicated below:
<TABLE>
<CAPTION>
ISG Growth
Underlying Fund Strategy Ranges
--------------- ---------------
<S> <C>
ISG Large-Cap Equity Fund 0-65%
ISG Capital Growth Fund 0-25%
ISG Equity Income Fund 0-25%
ISG Mid-Cap Fund 0-25%
ISG Small-Cap Opportunity Fund 0-25%
ISG International Equity Fund 0-15%
ISG Government Income Fund 0-25%
ISG Prime Money Market Fund 0-20%
AmSouth Growth
Underlying Fund Strategy Ranges
--------------- ---------------
AmSouth Large Cap Fund 0-65%
AmSouth Capital Growth Fund 0-25%
AmSouth Equity Income Fund 0-25%
AmSouth Mid Cap Fund 0-25%
AmSouth Small Cap Fund 0-25%
</TABLE>
26
<PAGE> 27
<TABLE>
<CAPTION>
<S> <C>
AmSouth International Equity Fund 0-15%
AmSouth Government Income Fund 0-25%
AmSouth Prime Money Market Fund 0-20%
</TABLE>
ISG Growth is a non-diversified Fund while AmSouth is a diversified Fund.
ISG GROWTH & INCOME PORTFOLIO AND AMSOUTH STRATEGIC PORTFOLIOS: GROWTH AND
INCOME PORTFOLIO
Fund Investment Objective/Goals As their investment objectives, both ISG Growth
& Income and AmSouth Strategic Portfolios: Growth and Income Portfolios
("AmSouth Growth and Income Portfolio") seek to provide investors with long-term
capital growth and a moderate level of current income.
Principal Investment Strategies of the Funds As a New AmSouth Fund, the
principal investment strategies of AmSouth Growth and Income Portfolio are
identical to those of ISG Growth & Income Portfolio. Like ISG Growth & Income
Portfolio, AmSouth Growth and Income Portfolio will allocate its assets among
the Underlying Funds within predetermined strategy ranges, as set forth below.
The Funds' Adviser will make allocation decisions according to its outlook for
the economy, financial markets and relative market valuation of the Underlying
Funds. The Fund will invest up to 100% of their s total assets in six Underlying
Funds which invest primarily in equity securities, up to 80% of their total
assets in two Underlying Funds which invest primarily in fixed income securities
and up to 20% of their total assets in one Underlying Fund which invests in
money market instruments. ISG Growth & Income Portfolio currently invests, and
AmSouth Growth and Income Portfolio, after the reorganization, will invest, its
assets in the following Underlying Funds within the strategy ranges (expressed
as a percentage of each Fund's total assets) indicated below:
<TABLE>
<CAPTION>
ISG Growth & Income
Underlying Fund Strategy Range
--------------- --------------
<S> <C>
ISG Large-Cap Equity Fund 0-60%
ISG Capital Growth Fund 0-25%
ISG Equity Income Fund 0-25%
ISG Mid-Cap Fund 0-20%
ISG Small-Cap Opportunities Fund 0-20%
ISG International Equity 0-15%
ISG Government Income Fund 0-60%
ISG Limited Term Income Fund 0-20%
ISG Prime Money Market Fund 0-20%
AmSouth Growth and Income
Underlying Funds Strategy Ranges
---------------- ---------------
AmSouth Large Cap Fund 0-60%
AmSouth Capital Growth Fund 0-25%
AmSouth Equity Income Fund 0-25%
AmSouth Mid Cap Fund 0-20%
AmSouth Small Cap Fund 0-20%
AmSouth International Equity Fund 0-15%
AmSouth Government Income Fund 0-60%
AmSouth Limited Term Bond Fund 0-20%
AmSouth Prime Money Market Fund 0-20%
</TABLE>
ISG Growth & Income is a non-diversified Fund while AmSouth Growth and Income is
a diversified Fund.
ISG MODERATE GROWTH & INCOME PORTFOLIO AND AMSOUTH STRATEGIC PORTFOLIOS:
MODERATE GROWTH AND INCOME PORTFOLIO
27
<PAGE> 28
Fund Investment Objective/Goals As their investment objectives, both ISG
Moderate Growth and Income and AmSouth Strategic Portfolios: Moderate Growth and
Income Portfolios ("AmSouth Moderate Growth and Income Portfolio") seek to
provide investors with current income and a moderate level of capital growth.
Principal Investment Strategies of the Funds As a New AmSouth Fund, the
principal investment strategies of AmSouth Moderate Growth and Income Portfolio
are identical to those of ISG Moderate Growth & Income Portfolio. Like ISG
Moderate Growth & Income Portfolio, AmSouth Moderate Growth and Income Portfolio
will allocate its assets among the Underlying Funds within predetermined
strategy ranges, as set forth below. The Fund's Adviser will make allocation
decisions according to its outlook for the economy, financial markets and
relative market valuation of the Underlying Funds. The Fund will invest up to
80% of their total assets in three Underlying Funds which invest primarily in
equity securities, up to 100% of their total assets in two Underlying Funds
which invest primarily in fixed income securities and up to 20% of their total
assets in one Underlying Fund which invests in money market instruments. ISG
Moderate Growth and Income Portfolio currently invests, and AmSouth Moderate
Growth and Income Portfolio, after the reorganization, will invest, its assets
in the following Underlying Funds within the strategy ranges (expressed as a
percentage of each Fund's total assets) indicated below:
<TABLE>
<CAPTION>
ISG Moderate Growth & Income
Underlying Fund Strategy Range
--------------- --------------
<S> <C>
ISG Government Income Fund 0-70%
ISG Limited Term Income Fund 0-45%
ISG Large-Cap Equity Fund 0-50%
ISG Capital Growth Fund 0-15%
ISG Equity Income Fund 0-15%
ISG Prime Money Market Fund 0-20%
AmSouth Moderate Growth and Income
Underlying Fund Strategy Range
--------------- --------------
AmSouth Government Income Fund 0-70%
AmSouth Limited Term Bond Fund 0-45%
AmSouth Large Cap Fund 0-50%
AmSouth Capital Growth Fund 0-15%
AmSouth Equity Income Fund 0-15%
AmSouth Prime Money Market Fund 0-20%
</TABLE>
ISG Moderate Growth & Income is a non-diversified Fund while AmSouth Moderate
Growth and Income is a diversified Fund.
ISG CURRENT INCOME PORTFOLIO AND AMSOUTH STRATEGIC PORTFOLIOS: CURRENT INCOME
PORTFOLIO
Fund Investment Objective/Goals As their investment objectives, both ISG Current
Income and AmSouth Strategic Portfolios: Current Income ("AmSouth Current
Income") seek to provide investors with current income.
Principal Investment Strategies of the Funds As a New AmSouth Fund, the
principal investment strategies of AmSouth Current Income are identical to those
of ISG Current Income. Like ISG Current Income, AmSouth Current Income will
allocate its assets among the Underlying Funds within predetermined strategy
ranges as set forth below. The Fund's Adviser will make allocation decisions
according to its outlook for the economy, financial markets and relative market
valuation of the Underlying Funds. The Fund will invest 75% to 100% of its total
assets in two Underlying Funds which invest primarily in fixed income securities
and up to 30% of its total assets in one Underlying Fund which invests in money
market instruments. ISG Current Income currently
28
<PAGE> 29
invests, and AmSouth Current Income, after the reorganization, will invest, its
assets in the following Underlying Funds within the strategy ranges (expressed
as a percentage of each Fund's total assets) indicated below:
<TABLE>
<CAPTION>
ISG Current Income
Underlying Fund Strategy Range
--------------- --------------
<S> <C>
ISG Limited Term Income Fund 40-60%
ISG Income Fund 35-55%
ISG Prime Money Market Fund 0-25%
AmSouth Current Income
Underlying Fund Strategy Range
--------------- --------------
AmSouth Limited Term Bond Fund 40-60%
AmSouth Bond Fund 35-55%
AmSouth Prime Money Market Fund 0-25%
</TABLE>
ISG Current Income is a non-diversified Fund while AmSouth Current Income is a
diversified Fund.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
Management discussion of fund performance for the pre-existing AmSouth
Funds -- AmSouth Government Income, AmSouth Limited Term Bond, AmSouth Equity
Income, AmSouth Municipal Bond, AmSouth Small Cap, AmSouth Bond, AmSouth
Tax-Exempt Money Market and AmSouth Prime Money Market is incorporated by
reference from the annual report of the AmSouth Funds, dated July 31, 1999, and
attached hereto as Appendix C.
No management discussion of fund performance is included for the New
AmSouth Funds -- AmSouth Current Income, AmSouth Moderate Growth and Income,
AmSouth Growth and Income, AmSouth Growth, AmSouth Aggressive Growth, AmSouth
Mid Cap, AmSouth Large Cap, AmSouth International Equity, AmSouth Capital
Growth, AmSouth Tennessee Tax-Exempt, AmSouth Limited Term Tennessee Tax-Exempt,
AmSouth Limited Term U.S. Government, and AmSouth Treasury Reserve Money Market
- -- which had not yet commenced operations.
Management discussion of fund performance for the ISG Funds is
incorporated by reference from the current prospectuses, annual report dated
December 31, 1998 and semi-annual report dated June 30, 1999 of ISG Funds, which
are available upon request without charge by calling 1-800-852-0045.
OPERATING PROCEDURES.
DISTRIBUTIONS. The dividends and distributions policies of each AmSouth
Fund and its corresponding ISG Fund (except for AmSouth Equity Income Fund and
ISG Equity Income Fund) are substantially similar. With respect to AmSouth
Equity Income Fund, distributions to shareholders are made quarterly; whereas
ISG Equity Income makes distributions to shareholders monthly.
For all Fixed Income Funds and Tax-Exempt Fixed Income Funds and ISG
Current Income Portfolio and its corresponding AmSouth Fund, dividends are
declared and paid monthly to all shareholders of record at the close of business
on the day of declaration. Distributions are made quarterly for all Equity Funds
(other than ISG International Equity and AmSouth International Equity Funds) and
ISG Aggressive Growth, ISG Growth, ISG Growth & Income, ISG Moderate Growth &
Income Portfolios and their corresponding AmSouth Funds. Distributions are made
annually for the ISG International Equity Fund and the AmSouth International
Equity Fund. Dividends on Money Market Funds are declared daily and generally
paid monthly although they are paid in cash not later than seven business days
after a shareholder's complete redemption of his or her shares.
29
<PAGE> 30
Net realized capital gains, if any, are distributed at least annually
to shareholders of record. All distributions will be automatically reinvested in
additional Fund Shares unless the shareholder requests to receive all
distributions in cash. Dividends and distributions, when received in shares, 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. Dividends paid in additional shares receive the same tax treatment
as dividends paid in cash.
The amount of dividends payable on Institutional Shares of the ISG
Funds and Trust Shares of the AmSouth Funds generally will be more than
dividends payable on Class A and Class B Shares of the ISG Funds and AmSouth
Funds because of the distribution expenses charged to Class A and Class B Shares
but not charged to Institutional or Trust Shares.
PURCHASE PROCEDURES. Because the distributor for both ISG and AmSouth
is BISYS Fund Services Limited Partnership (the "Distributor"), purchase
procedures are generally identical for the two Fund groups. Purchase orders for
Shares are executed at a per Share price equal to the net asset value next
determined after the purchase order is effective (plus any applicable sales
charge). No sales charges are imposed on Institutional shares of the ISG Funds
or Trust shares of AmSouth Funds. A maximum sales charge of 4.5% of the offering
price is imposed on Class A Shares of AmSouth International Equity, AmSouth Mid
Cap, AmSouth Capital Growth, AmSouth Large Cap, AmSouth Aggressive Growth,
AmSouth Growth, AmSouth Growth and Income, AmSouth Moderate Growth and Income,
AmSouth Equity Income and AmSouth Small Cap, and a maximum sales charge of 4.75%
of the offering price is imposed on Class A Shares of ISG International Equity,
ISG Mid-Cap, ISG Capital Growth, ISG Large-Cap Equity, ISG Aggressive Growth,
ISG Growth, ISG Growth & Income, ISG Moderate Growth & Income, ISG Equity Income
and ISG Small-Cap Opportunity. A maximum sales charge of 4.0% is imposed on
Class A Shares of AmSouth Limited Term U.S. Government, AmSouth Tennessee
Tax-Exempt, AmSouth Limited Term Tennessee Tax-Exempt, AmSouth Current Income,
AmSouth Bond, AmSouth Government Income, AmSouth Limited Term Bond and AmSouth
Municipal Bond, and a maximum sales charge of 3.0% is imposed on Class A Shares
of ISG Limited Term U.S. Government, ISG Tennessee Tax-Exempt, ISG Limited Term
Tennessee Tax-Exempt, ISG Current Income, ISG Income, ISG Government Income, ISG
Limited Term Income and ISG Municipal Income. However, no sales charge will be
imposed on the Shares of the AmSouth Funds distributed by AmSouth in the
Transaction. In addition, until October 1, 2001, each Shareholder who
participates in the Transaction will be able to purchase additional Class A
Shares of the relevant AmSouth Fund subject to the lower initial sales charge,
if any, applicable to the AmSouth Class A Shares or the corresponding ISG Fund
shares exchanged by the Shareholder. For a comparison of the schedules of the
initial sales charge imposed on shares of the applicable ISG Funds and their
corresponding AmSouth Funds, see the relevant Fund's Prospectus.
Shares of both the ISG Funds and the AmSouth Funds are sold on a
continuous basis by the Distributor, either by mail, by wire, through an
Automatic Investment Plan or through financial institutions. The ISG Funds have
a minimum investment requirement of $1,000 for Class A and for Class B, $250 for
Automatic Investment, $100 for Retirement, and $100,000 for Institutional Class,
while the AmSouth Funds have a minimum investment requirement of $1,000 for
Class A, Class B and Automatic Investment, and $250 for Retirement. The ISG
Funds have a subsequent minimum investment requirement of $100 for Class A and
for Class B, $50 for Retirement, and $25 for Automatic Investment whereas the
AmSouth Funds generally have no subsequent minimum investment requirement for
Class A and for Class B, and $50 for Automatic Investment and for Retirement.
Purchases and redemption of Shares of the ISG Funds and the AmSouth
Funds may be made on days on which both The New York Stock Exchange ("NYSE") and
the Federal Reserve wire system are open for business ("Business Days").
EXCHANGE PRIVILEGE. Shares will be exchanged at the next determined net
asset value. Shareholders of ISG Funds can exchange shares in one Fund for
shares of the same class of another ISG Fund, usually without
30
<PAGE> 31
paying additional sales charges. When exchanging from a Fund that has no sales
charge or a lower sales charge to a Fund with a higher sales charge, the
shareholder will pay the difference. No transaction fees are charged for
exchanges. Shareholders must meet the minimum investment requirements for the
Fund into which Shares are being exchanged, and the Shares being exchanged must
have a current value of at least $500. If Shares of the Fund are purchased by
check, those Shares cannot be exchanged until the check has cleared. This could
take 15 days or more. The Fund may reject an exchange request from a shareholder
who has made more than five exchanges between investment portfolios offered by
Fund management in a year, or more than three exchanges in a calendar quarter.
Although unlikely, the Funds may reject any exchanges or, upon 60-days' notice
to shareholders, change or terminate the exchange privilege.
Each AmSouth Fund's Shares may be exchanged for Shares of the class of
the various other Funds of AmSouth which the shareholder qualifies to purchase
directly so long as the shareholder maintains the applicable minimum account
balance in each Fund in which he or she owns Shares and satisfies the minimum
initial and subsequent purchase amounts of the Fund into which the Shares are
exchanged. AmSouth shareholders may exchange their Class A Shares for Trust
Shares of the same Fund if the shareholder becomes eligible to purchase Trust
Shares. No transaction fees are currently charged for exchanges. When exchanging
Trust Shares of a Fund for Class A Shares of a Fund, the shareholder will be
exempt from any applicable sales charge. For Class A Shares, when exchanging
from a Fund that has no sales charge or a lower sales charge to a Fund with a
higher sales charge, the shareholder will pay the difference. The Exchange
Privilege (including automatic exchanges) may be changed or eliminated at any
time upon 60-days' notice to shareholders.
Exchange privileges for shareholders in both the ISG Funds and the
AmSouth Funds are available only in states where the Shares of such Fund may be
legally sold. Exercise of the exchange privilege is generally treated as a sale
for Federal income tax purposes and, depending on the circumstances, a short or
long-term capital gain or loss may be realized by the exchanging shareholder.
Exchanges are made on the basis of the relative net asset values of the
shares exchanged plus any applicable sales charge. Neither ISG Funds nor AmSouth
Funds imposes a charge for processing exchanges of shares.
REDEMPTION PROCEDURES. Because the ISG Funds and the AmSouth Funds are
distributed by the same Distributor -- BISYS Fund Services Limited Partnership
- -- redemption procedures are generally identical for the two Fund groups. Both
ISG Funds and AmSouth redeem shares at their net asset value next determined
after receipt by the Distributor of the redemption request. Redemptions will be
made on any Business Day without charge, except that the AmSouth Funds presently
charge $7 for wiring redemption proceeds to a shareholder's designated account.
Shares may be redeemed by mail, by telephone or through a pre-arranged
systematic withdrawal plan.
Each of the ISG Funds and AmSouth Funds reserves the right to make
payment on redemptions in securities rather than cash. Each of the ISG Funds and
AmSouth reserve the right to redeem shares at net asset value if a shareholder's
account has a value of less than the minimum initial purchase amount. Before a
Fund exercises its right to redeem such shares, a shareholder is given notice
that the value of shares in his or her account is less than the minimum amount
and is allowed 60 days to make an additional investment in the Fund. The minimum
for an ISG Fund is $500 while the minimum for an AmSouth Fund is $50.
NET ASSET VALUE. The net asset value of shares of the non-money market
ISG Funds and the non- money market AmSouth Funds is determined daily as of 4:00
p.m., Eastern time on any Business Day.
The net asset value of shares of the ISG Money Market Funds (except the
ISG Tax-Exempt Money Market which is calculated as of 11:00 a.m. Eastern time)
is calculated as of 2:00 p.m., on each Business Day, based on the amortized cost
method. The net asset value of shares of the AmSouth money market funds (except
31
<PAGE> 32
the Tax-Exempt Money Market which is calculated at 12:00 p.m. and 4:00 p.m.
Eastern time) is calculated as of 1:00 p.m. and 4:00 p.m. Eastern time, on each
Business Day, based on the amortized cost method. The amortized cost method
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.
The net asset value per Share of the ISG Strategic Portfolios and the
AmSouth Strategic Portfolios will be established on the basis of current
valuations of their portfolio securities provided by Muller Data Corporation or
Kenny S&P Evaluation Services, whose procedures are monitored by the
Administrator, and which valuations are the fair market value of such
securities.
FEDERAL TAX CONSIDERATIONS. Consummation of each reorganization is
subject to the condition that the relevant ISG Fund and the corresponding
AmSouth Fund receive an opinion of Ropes & Gray, Counsel to AmSouth Funds, to
the effect that, based upon certain representations and assumptions and subject
to certain qualifications, the reorganization will not result in the recognition
of gain or loss for Federal income tax purposes to any of the ISG Funds, their
shareholders or the AmSouth Funds.
PRINCIPAL RISKS
The investment objective and policies of each ISG Fund and its
corresponding AmSouth Fund are substantially similar. However, in some
instances, an AmSouth Fund may invest in certain securities in which the
corresponding ISG Fund may not invest. In some cases, although both the AmSouth
Fund and the corresponding ISG Fund may invest in the same securities, they may
do so subject to varying limitations. Each Fund is actively managed and, thus,
is subject to the risk that the Fund's principal investment strategies might not
achieve the Fund's goal. This discussion is qualified in its entirety by the
disclosure set forth in the AmSouth and ISG Funds Prospectuses accompanying this
Combined Prospectus/Proxy Statement.
EQUITY FUNDS -- Stocks and other equity securities fluctuate in price, often
based on factors unrelated to the issuers' value, and such fluctuations can be
pronounced. The value of your investment in any of these Funds will fluctuate in
response to movements in the stock market and the activities of individual
portfolio companies. As a result, you could lose money by investing in an Equity
Fund, ISG or AmSouth, particularly if there is a sudden decline in share prices
of the Fund's holdings or an overall decline in the stock market.
With respect to each of ISG International Equity Fund and AmSouth
International Equity Fund, the Fund's performance will be influenced by
political, social and economic factors affecting companies in foreign countries.
The securities of foreign issuers fluctuate in price, often based on factors
unrelated to the issuers' value, and such fluctuations can be pronounced.
Foreign securities include special risks such as exposure to currency
fluctuations, a lack of adequate company information, political instability, and
differing auditing and legal standards. Emerging market countries in which these
Funds may invest have economic structures that are generally less diverse and
mature, and political systems that are less stable, than those of developed
countries. As a result, their markets are more volatile.
The ISG Small-Cap Opportunity Fund and AmSouth Small Cap Fund each
invest in small-cap companies which carry additional risks. Smaller companies
typically have more limited product lines, markets and financial resources, and
have less predictable earnings than larger companies and their securities trade
less frequently and in more limited volume than those of larger, more
established companies. As a result, small-cap stocks and thus their Funds'
shares may fluctuate significantly more in value than larger-cap stocks and
funds that focus on them.
The ISG Mid-Cap Fund and AmSouth Mid Cap Fund each invest in
mid-cap companies which carry additional risks. These companies typically have
less predictable earnings than larger companies and their
32
<PAGE> 33
securities trade less frequently and in more limited volume than those of
larger, more established companies. AS a result, mid-cap stocks and thus these
Funds' shares may fluctuate more in value than larger-cap stocks and funds that
focus on them.
Each of ISG International Equity Fund, AmSouth International Equity
Fund, ISG Capital Growth Fund, AmSouth Capital Growth Fund and ISG Equity Income
Fund is non-diversified and may invest a greater percentage of its assets in a
particular company compared with other funds. Accordingly, the Fund's portfolio
may be more sensitive to changes in the market value of a single company or
industry.
FIXED INCOME FUNDS -- These Funds' investments in fixed income
securities will be subject primarily to interest rate, credit and, for
mortgage-related and asset-backed securities, prepayment risk.
Prices of fixed income securities, including U.S. Government
securities, tend to move inversely with changes in interest rates. The most
immediate effect of a rise in rates is usually a drop in the prices of such
securities, and therefore in the Fund's share price as well. Interest rate risk
is usually greater for fixed income securities with longer maturities or
durations. To the extent the Fund maintains a comparatively long duration, its
share price will react more to interest rate movements. A security backed by the
U.S. Government is guaranteed only as to timely payment of interest and
principal when held to maturity. Neither the market value of such securities nor
the Fund's share price is guaranteed. As a result, the value of your investment
in a Fixed Income Fund, ISG or AmSouth, will fluctuate and you could lose money
by investing in the Fund.
A Fixed Income Fund's investments in corporate bonds also are subject
to credit risk, which is the risk that the issuer of the security will fail to
make timely payments of interest or principal, or otherwise honor its
obligations. Credit risk includes the possibility that any of the Funds'
investments will have its credit rating downgraded or will default.
Mortgage-related and asset-backed securities, which are derivative
instruments, are subject to both credit and prepayment risk, any may be more
volatile and less liquid than more traditional debt securities. If the borrowers
prepay some or all of the principal owed to the issuer much earlier than
expected, the Fund may have to replace the security by investing the proceeds in
a less attractive security which could reduce the Fund's share price or yield.
Each of ISG Income Fund, ISG Limited Term U.S. Government Fund and ISG
Limited Term Income Fund is non-diversified and may invest a greater percentage
of its assets in a particular issuer compared with other funds. Accordingly, the
Fund's portfolio may be more sensitive to changes in the market value of a
single issuer or industry.
TAX-EXEMPT FIXED INCOME FUNDS -- These Funds' investments in municipal
obligations will be subject primarily to interest rate and credit risk.
Prices of municipal obligations tend to move inversely with changes in
interest rates. The most immediate effect of a rise in rates is usually a drop
in the prices of such securities, and therefore in the Fund's share price as
well. Interest rate risk is usually greater for fixed income securities with
longer maturities or durations. If interest rates fall, it is possible that
issuers of callable bonds with high interest coupons will "call" (or prepay)
their bonds before their maturity date. If a call were exercised by the issuer
during a period of declining interest rates, the Fund is likely to replace such
called security with a lower yielding security. If that were to happen, it could
decrease the Fund's dividends. As a result, the value of your investment in a
Tax-Exempt Fixed Income Fund, ISG or AmSouth, will fluctuate and you could lose
money by investing in the Fund.
33
<PAGE> 34
These Funds' investments also are subject to credit risk, which is the
risk that the issuer of the security will fail to make timely payments of
interest or principal, or to otherwise honor its obligations. Credit risk
includes the possibility that any of the Fund's investments will have its credit
rating downgraded or will default.
Because of the Tennessee Funds' concentration in Tennessee municipal
obligations, these Funds will be vulnerable to any development in Tennessee's
economy that weakens or jeopardizes the ability of Tennessee municipal
obligation issuers to pay interest and principal. As a result, the value of a
Tennessee Fund's shares may fluctuate more widely than those of a fund investing
in municipal obligations from a number of different states.
Although each ISG Tax-Exempt Fixed Income Fund's objective is to
generate income exempt from Federal and, in the case of each Tennessee Fund,
Tennessee income taxes, interest from some of the Fund's holdings may be subject
tot he Federal alternative minimum tax.
Each of ISG Tennessee Tax-Exempt Fund, AmSouth Tennessee Tax-Exempt
Fund, ISG Limited Term Tennessee Tax-Exempt Fund and AmSouth Limited Term
Tennessee Tax-Exempt Fund is non-diversified and may invest a greater percentage
of its assets in a particular issuer compared with other funds. Accordingly, the
Fund's portfolio may be more sensitive to changes in the market value of a
single issuer or industry.
MONEY MARKET FUNDS -- Although each of these Funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose money by
investing in a Money Market Fund, ISG or AmSouth. An investment in the Funds is
not insured or guaranteed by the FDIC or any other government agency.
Each Money Market Fund is subject to the risk that changes in interest
rates will affect the yield or value of the Fund's investment. The investments
of the ISG Prime Money Market Fund, AmSouth Prime Money Market Fund, ISG
Tax-Exempt Money Market Fund and AmSouth Tax-Exempt Money Market Fund also are
subject to credit risk, which is the risk that the issuer or guarantor of a debt
security will be unable or unwilling to make timely interest or principal
payments, or to otherwise honor its obligations. Credit risk includes the
possibility that any of the Fund's investments will have its credit rating
downgraded or will default.
The ISG Prime Money Market Fund usually invests at least 25% of its
assets in domestic and/or U.S. dollar denominated foreign bank obligations.
Thus, it will have correspondingly greater exposure to the risks generally
associated with investments in the banking industry. Sustained increases in
interest rates, for example, can adversely affect the availability and cost of
capital funds for a bank's lending activities, and a deterioration in general
economic conditions could increase the bank's exposure to credit losses. In
addition, economic or regulatory developments in or related to the banking
industry, and competition within the banking industry as well as with other
types of financial institutions will affect the Fund's return. The Fund,
however, seeks to minimize its exposure to such risks by investing only in debt
securities which are determined to be of high quality.
STRATEGIC PORTFOLIOS -- These Funds' investments are concentrated in
the Underlying Fund, so the Fund's investment performance is directly related to
the performance of those Underlying Fund. Before investing in a Strategic
Portfolio, investors should assess the risks associated with the Underlying
Funds in which the Strategic Portfolio invests and the types of investments made
by such Underlying Funds. In addition, since each Strategic Portfolio must
allocate its investments among the Underlying Funds, the Strategic Portfolio
does not have the same flexibility to invest as a mutual fund without such
constraints. As a result, you could lose
34
<PAGE> 35
money by investing in a Strategic Portfolio, ISG or AmSouth, particularly if
there is a sudden decline in the share prices of the Underlying Fund's holdings.
With respect to those Strategic Portfolios investing in Underlying
Funds that invest primarily in equity securities, stocks and other equity
securities fluctuate in price, often based on factors unrelated to the issuers'
value, and such fluctuations can be pronounced.
With respect to those Strategic Portfolios investing in Underlying
Funds that invest primarily in fixed income securities, such securities are
subject to interest rate and credit risk. Interest rate risk is the potential
for a decline in bond prices due to rising interest rates. Credit risk is the
possibility that the issuer of a fixed-income security will fail to make timely
payments of interest or principal, or that the security will have its credit
rating downgraded.
Each ISG Strategic Portfolio is a non-diversified and may invest a
greater percentage of its assets in a particular issuer compared with other
funds. Accordingly, the Fund's portfolio may be more sensitive to changes in the
market value of a single issuer or industry.
* * * * *
There are also risks attached to particular types of investments made
by the ISG Funds and the AmSouth Funds. For a discussion of the risks associated
with a particular investment, see the Statement of Additional Information and
"Investment Objectives, Principal Investment Strategies and Related Risk" in any
AmSouth Prospectus or "Additional Strategies and Risks" in the relevant ISG
Prospectus accompanying this Combined Prospectus/Proxy Statement.
The above discussion is qualified in its entirety by the disclosure in
the ISG and AmSouth Prospectuses and Statements of Additional Information.
SPECIAL MEETING OF SHAREHOLDERS
Proxies will be solicited by and on behalf of the Company's Directors for use at
a Special Meeting of Shareholders of the ISG Funds. The Meeting is to be held on
February 11, 2000 at TIME, Eastern standard time, at the office of BISYS Fund
Services, 3435 Stelzer Road, Columbus, OH 43219. This Combined Prospectus/Proxy
Statement and the enclosed form of proxy are being mailed to shareholders on or
about December 22, 1999.
Any shareholder giving a proxy has the power to revoke it. The
shareholder revoking such proxy must either submit to ISG a subsequently dated
proxy, deliver to ISG a written notice of revocation, or otherwise give notice
of revocation in open meeting. All properly executed proxies received in time
for the meeting will be voted as specified in the proxy, or, if no specification
is made, FOR the proposals (set forth in items (1), (2) and (3) of the Notice of
Special Meeting) to implement the reorganization of the ISG Funds by the
transfer of all of their assets to the corresponding AmSouth Funds, in exchange
for AmSouth Class A, Class B and Trust Class shares of the corresponding AmSouth
Fund (collectively, "Shares") and the assumption by the corresponding AmSouth
Fund of all of the liabilities of the ISG Fund followed by the dissolution and
liquidation of each ISG Fund and the distribution of Shares to the shareholders
of the ISG Funds--all ISG shareholders will receive shares of the AmSouth Class
(Class A, Class B or Trust Class) that corresponds to the Class of ISG that they
hold; to consider and act upon a new Investment Advisory Agreement between ISG
and First American National Bank, the terms of which are identical in all
material respects to the prior investment advisory agreement for the ISG Funds.
The new Investment Advisory Agreement was approved by the Board of Directors,
effective as of the date of the merger (the "Merger") of First American
Corporation, the former parent of the ISG Funds' investment adviser, First
American National Bank, with and into AmSouth Bancorporation; to consider and
act upon a new Sub- Investment Advisory Agreement between Lazard Asset
Management, the present sub-adviser to the ISG International Equity Fund, and
First American National Bank, on behalf of the ISG International Equity Fund,
the
35
<PAGE> 36
terms of which are identical in all material respects to the prior sub-advisory
agreement for ISG International Equity Fund; to consider and act upon a new
Sub-Investment Advisory Agreement between Bennett Lawrence Management, LLC, the
present sub-adviser to the ISG Mid-Cap Fund, and First American National Bank,
on behalf of the ISG Mid-Cap Fund, the terms of which are identical in all
material respects to the prior sub-advisory agreement for ISG Mid-Cap Fund; and
to consider and act upon a new Sub-Investment Advisory Agreement between Womack
Asset Management, Inc., the present sub-adviser to the ISG Small-Cap Opportunity
Fund, and First American National Bank, on behalf of the ISG Small-Cap
Opportunity Fund, the terms of which are identical in all material respects to
the prior sub-advisory agreement for the ISG Small-Cap Opportunity Fund. The new
Sub-Investment Advisory Agreements were approved by the Board of Directors,
effective as of the date of the Merger.
As of November 11, 1999, there was outstanding the following amount of
shares of the Class A, Class B and Institutional Class of each ISG Fund:
<TABLE>
<CAPTION>
<S> <C> <C>
ISG Current Income 333.048 Class A shares
3,040.401 Class B shares
61,093.561 Institutional Class shares
ISG Treasury Money Market 130,764,303.955 Class A shares
302,250,711.305 Institutional Class shares
ISG Moderate Growth & Income 14,040.522 Class A shares
96,999.570 Class B shares
2,069,630.209 Institutional Class shares
ISG Growth & Income 53,691.046 Class A shares
153,899.411 Class B shares
8,030,059.491 Institutional Class shares
ISG Growth 13,124.886 Class A shares
74,339.283 Class B shares
864,084.113 Institutional Class shares
ISG Aggressive Growth 32,245.330 Class A shares
42,004.670 Class B shares
1,573,512.950 Institutional Class shares
ISG Mid-Cap 95,230.333 Class A shares
52,632.155 Class B shares
1,466,108.704 Institutional Class shares
ISG Large-Cap Equity 2,483,076.982 Class A shares
533,714.521 Class B shares
22,903,083.666 Institutional Class shares
ISG International Equity 69,281.663 Class A shares
9,108.945 Class B shares
2,933,547.885 Institutional Class shares
ISG Capital Growth 620,986.267 Class A shares
</TABLE>
36
<PAGE> 37
<TABLE>
<CAPTION>
<S> <C> <C>
456,976.325 Class B shares
14,603,598.082 Institutional Class shares
ISG Tennessee Tax-Exempt 324,769.191 Class A shares
136,142.748 Class B shares
8,165,969.910 Institutional Class shares
ISG Limited Term Tennessee 1,971,200.317 Class A shares
Tax-Exempt 71,287.838 Class B shares
N/A Institutional Class shares
ISG Limited Term U.S. Government 337,195.786 Class A shares
48,211.116 Class B shares
4,366,161.854 Institutional Class shares
ISG Government Income 241,517.789 Class A shares
61,709.971 Class B shares
36,996,047.920 Institutional Class shares
ISG Limited Term Income 693,038.122 Class A shares
72,190.341 Class B shares
9,734,234.622 Institutional Class shares
ISG Equity Income 628,193.117 Class A shares
774,966.627 Class B shares
8,286,154.411 Institutional Class shares
ISG Municipal Income 296,081.151 Class A shares
33,840.208 Class B shares
7,247,931.572 Institutional Class shares
ISG Small-Cap Opportunity 1,092,348.724 Class A shares
28,741.741 Class B shares
6,673,692.251 Institutional Class shares
ISG Tax-Exempt Money Market 10,402,505.630 Class A shares
107,598,528.370 Institutional Class shares
ISG Prime Money Market 492,117,600.391 Class A shares
575,615.020 Class B shares
239,720,486.684 Institutional Class shares
ISG Income 348,671.457 Class A shares
136,195.361 Class B shares
9,817,088.894 Institutional Class shares
</TABLE>
Only shareholders of record on the close of business on December 2, 1999, will
be entitled to notice of and to vote at the meeting. Each share is entitled to
one vote as of the close of business on December 2, 1999.
37
<PAGE> 38
ISG's Directors know of no matters other than those set forth herein to
be brought before the meeting. If, however, any other matters properly come
before the meeting, it is the Directors' intention that proxies will be voted on
such matters in accordance with the judgment of the persons named in the
enclosed form of proxy.
PROPOSAL REGARDING APPROVAL OR DISAPPROVAL OF
AGREEMENT AND PLAN OF REORGANIZATION
The shareholders of each ISG Fund are being asked to approve or
disapprove the Agreement and Plan of Reorganization by and between ISG Funds and
AmSouth dated as of [ DATE ] (the "Agreement"), a copy of which is attached to
this Combined Prospectus/Proxy Statement as Appendix A. The Agreement provides,
among other things, for the transfer of all of the assets of each ISG Fund to
the corresponding AmSouth Fund in exchange for the assumption by the
corresponding AmSouth Fund of all of the liabilities of the ISG Fund and for a
number of Shares calculated based on the value of the net assets of the ISG Fund
acquired by the AmSouth Fund and the net asset value per share of the AmSouth
Fund, all as more fully described below under "Information about the
Reorganization." After receipt of Shares each ISG Fund will dissolve,
distributing the Shares to its shareholders in complete liquidation, and each
ISG Fund will be terminated. Prior to the date of such transfer (the "Exchange
Date"), each ISG Fund will declare a distribution to their respective
shareholders which, together with all previous distributions, will have the
effect of distributing to their respective shareholders all of their investment
company taxable income (computed without regard to the deduction for dividends
paid) and net realized capital gains, if any, through the Exchange Date.
At a meeting held on November 18, 1999, the Company's Directors in
attendance voted unanimously to approve the Transaction and to recommend that
shareholders of each ISG Fund also approve the Transaction. Approval of each
reorganization of an ISG Fund requires the affirmative vote of a majority of all
votes attributable to the voting securities of that ISG Fund voting separately
as a Fund.
A shareholder of any ISG Fund objecting to the proposed Transaction is
not entitled under either Maryland law or the Company's Articles of
Incorporation or Bylaws to demand payment for and an appraisal of his or her
particular ISG Fund shares if the Transaction is consummated over his or her
objection. However, shares of the AmSouth Funds are redeemable for cash at their
net asset value on days on which the New York Stock Exchange is open for
business ("Business Days").
In the event that this proposal is not approved by the shareholders of
an ISG Fund, such ISG Fund will continue to be managed as a separate fund in
accordance with its current investment objectives and policies, and the
Company's Directors may consider alternatives in the best interests of
shareholders. However, the reorganization of the ISG Funds for which approval of
the Agreement is obtained will be consummated.
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
The primary reason for the Transaction is the recently completed Merger
of First American Corporation, the former parent company of First American
National Bank ("FANB") with AmSouth Bancorporation. The Transaction presents the
opportunity to combine the separate ISG Funds and AmSouth Funds into a single,
larger consolidated group. AmSouth Bank and FANB have recommended that each ISG
Fund be reorganized into the corresponding AmSouth Fund as described in this
Prospectus/Proxy Statement.
A meeting was held on November 18, 1999, for the Company's Directors,
and a meeting was held on November 23, 1999, for the AmSouth Trustees, at which
meetings the Directors and Trustees of the respective Funds, including the
Independent Board Members, unanimously determined that the reorganization would
be in the best interests of their respective registered investment companies and
existing Fund shareholders and that the economic interests of their respective
existing shareholders would not be diluted as a result of effecting the
reorganization. At these same meetings, the Directors and Trustees of the
respective Funds, including the Independent Board Members, unanimously approved
the proposed reorganization. The Company's Directors also unanimously
recommended that each ISG Fund's shareholders approve the reorganization.
38
<PAGE> 39
In electing to approve the Agreement and recommend it to shareholders
of the ISG Funds, the Company's Directors acted upon information provided to
them, indicating that the proposed transaction would be in the best interests of
ISG shareholders. In particular, the Directors determined that the proposed
transaction offered the following benefits:
- Participation in the Larger Fund Complex: The Directors were
informed that the proposed transaction would, if effected,
result in a mutual fund complex consisting of thirty-one
portfolios and total anticipated assets in excess of $7
billion. ISG Fund shareholders who would, as part of the
proposed transaction, become part of the AmSouth complex,
would be able to exchange their shares for shares of a
significantly larger number of funds than is currently the
case within the ISG Funds and would find compatibility of the
ISG and AmSouth Funds' investment objectives, policies and
shareholder services. In addition, the Directors received
information to the effect that a larger, more diverse complex
can appeal to a broader class of institutional and retail
investors, may be able to achieve economies of scale more
quickly or efficiently and may be able to reduce costs by
taking advantage of its relatively larger size.
- Continuity of Management: The Directors were provided with
information detailing the consolidation efforts involving
First American National Bank, the adviser to the ISG Funds
from its inception, and AmSouth Bank. It was represented to
the Directors that, in many instances the post-reorganization
portfolios of AmSouth would be managed on a day-to-day basis
by the same persons who had previously been responsible for
managing various ISG Fund portfolios.
- Tax-Free Nature of Transaction, Lack of Dilution: The
Directors were informed that the proposed transaction
involving ISG and AmSouth would be accomplished without the
imposition of Federal income taxes on any ISG Fund or its
shareholders. In addition, the Directors received
representations from AmSouth Bank to the effect that AmSouth
Bank would defray the ISG Fund's costs directly associated
with participation in the proposed transaction. Finally, the
Directors were informed that the interests of ISG Fund
shareholders would not be diluted as a result of the proposed
transaction, and that the ISG Fund shareholders would receive
shares of the corresponding AmSouth Fund equal in value to the
market value (or, where relevant, amortized cost value) of the
ISG Fund's assets.
- Performance of AmSouth; Fees and Expenses: The Board received
information relating to the performance of various AmSouth
Funds into which the interests of shareholders of the ISG
Funds would be merged. The Directors were given details on the
performance record for each pre-existing AmSouth Fund, both on
an absolute basis and in comparison to relevant benchmarks and
industry averages. The Directors also received information
about the fees and expenses charged or to be charged to
AmSouth shareholders, which information tended to show that,
after implementation of expense caps, ISG Fund shareholders
who become AmSouth shareholders as a result of the proposed
transaction would be subject to fees and expenses that were no
higher than the fee and expense level previously approved by
the ISG Board. The Directors received a commitment from
AmSouth Bank that fees and expenses of AmSouth Funds combining
with ISG Funds would not exceed the approved levels of fees
and expenses for the respective ISG Funds for a period of two
years following the proposed reorganization.
INFORMATION ABOUT THE REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION. The proposed Agreement provides
that each AmSouth Fund will acquire all of the assets of the corresponding ISG
Fund in exchange for the assumption by the AmSouth Fund of all of the
liabilities of the corresponding ISG Fund and for all Shares as of the Exchange
Date (defined in the Agreement to be March 13, 2000 or such other date as
mutually agreed upon by the Company and AmSouth).
39
<PAGE> 40
The following discussion of the Agreement is qualified in its entirety by
reference to the form of Agreement attached as Appendix A to this Combined
Prospectus/Proxy Statement.
As a result of the Transaction, each shareholder of the ISG Funds will
receive that number of full and fractional Shares equal in value at the Exchange
Date to the value of the portion of the net assets of the ISG Fund transferred
to the corresponding AmSouth Fund attributable to the shareholder (based on the
proportion of the outstanding shares of the ISG Fund owned by the shareholder as
of the Valuation Time). The portfolio securities of the ISG Funds will be valued
in accordance with the generally employed valuation procedures of the relevant
ISG Fund. Each reorganization is being accounted for as a tax-free business
combination. At separate meetings held on November 18, 1999, for ISG Directors
and November 23, 1999, for AmSouth Trustees, all of the Directors and Trustees
of each of ISG and AmSouth, including the Independent Board Members, unanimously
determined that the reorganization would be in the best interests of their
respective registered investment companies and existing shareholders and that
the economic interests of their respective existing shareholders would not be
diluted as a result of effecting the reorganization.
Immediately following the Exchange Date, each ISG Fund will distribute
pro rata to its respective shareholders of record as of the close of business on
the Exchange Date the full and fractional Shares received by it and such ISG
Fund will be liquidated and dissolved. Such distribution will be accomplished by
the establishment of accounts on the share records of the AmSouth Funds in the
name of such ISG Fund's shareholders, each account representing the respective
number of full and fractional Shares due such shareholder. All ISG Fund
shareholders will receive shares of the AmSouth Class (Class A, Class B or Trust
Class) that corresponds to the Class of ISG Fund shares that they hold.
The consummation of the reorganization is subject to the conditions set
forth in the Agreement. The Agreement may be terminated and the reorganization
abandoned at any time, before or after approval by the shareholders, prior to
the Exchange Date by mutual consent of the Company and AmSouth or, if any
condition set forth in the Agreement has not been fulfilled and has not been
waived by the party entitled to its benefits, by such party.
All fees and expenses, including accounting expenses, portfolio
transfer taxes (if any) or other similar expenses incurred directly in
connection with the consummation of the Transaction contemplated by the
Agreement will be borne by AmSouth Bank including the costs of proxy materials,
proxy solicitation, and legal expenses. Fees and expenses not incurred directly
in connection with the consummation of the Transaction will be borne by the
party incurring such fees and expenses. The Board of Trustees of AmSouth and the
Board of Directors of the Company have determined that the interests of the
existing shareholders of AmSouth and the ISG Funds will not be diluted as a
result of the Transaction. Full and fractional Shares will be issued to the ISG
Funds' shareholders in accordance with the procedure under the Agreement as
described above. Each AmSouth Share will be fully paid and nonassessable when
issued, will be transferable without restriction, and will have no preemptive or
conversion rights. AmSouth's Declaration of Trust permits AmSouth to divide its
shares of any series, without shareholder approval, into one or more classes of
shares having such preferences and special or relative rights and privileges as
the Trustees may determine. Shares of certain of the AmSouth Funds are currently
divided into three classes: Class A, Class B and Trust Shares. AmSouth Treasury
Reserve Money Market and AmSouth Tax-Exempt Money Market do not offer Class B
shares. Class A, Class B and Trust shares will be distributed as applicable by
AmSouth in connection with the Transaction. The Company's Articles of
Incorporation and Bylaws also permit multiple classes of shares, and shares of
certain of the ISG Funds are currently divided into three classes: Class A,
Class B and Institutional Class shares. ISG Treasury Money Market and ISG
Tax-Exempt Money Market Funds do not offer Class B shares.
Under Massachusetts law, AmSouth shareholders, could, under certain
circumstances, be held personally liable for the obligations of AmSouth.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of AmSouth. The Declaration of Trust provides for indemnification
out of AmSouth property for
40
<PAGE> 41
all loss and expense of any shareholder held personally liable for the
obligations of AmSouth. Thus, the risk of a shareholder incurring financial loss
on account of shareholder liability is limited to circumstances in which AmSouth
would be unable to meet its obligations. The likelihood of such circumstances is
remote.
FEDERAL INCOME TAX CONSEQUENCES. The Federal income tax consequences of
each reorganization will be as follows: (i) under Section 361 of the Code, no
gain or loss will be recognized by an ISG Fund upon the transfer of its assets
to the corresponding AmSouth Fund in exchange for AmSouth Fund Shares and the
assumption by the AmSouth Fund of the liabilities of the ISG Fund, or upon the
distribution of the AmSouth Fund Shares by the ISG Fund to its Shareholders in
liquidation; (ii) under Section 354 of the Code, no gain or loss will be
recognized by the ISG Fund shareholders upon the exchange of their shares of the
ISG Fund for the Shares; (iii) under Section 358 of the Code, the aggregate
basis of Shares an ISG shareholder receives in connection with the
reorganization will be the same as the aggregate basis of his or her ISG Fund
shares exchanged therefor; (iv) under Section 1223(1) of the Code, an ISG Fund's
shareholder's holding period for his or her Shares will be determined by
including the period for which he or she held the ISG Fund shares exchanged
therefor provided that he or she held the ISG shares as capital assets; (v) no
gain or loss will be recognized by an AmSouth Fund upon the receipt of the
assets of the corresponding ISG Fund in exchange for Shares and the assumption
by the AmSouth Fund of the liabilities of the ISG Fund, (vi) the basis in the
hands of an AmSouth Fund of the assets of the corresponding ISG Fund transferred
to the AmSouth Fund in the reorganization will be the same as the basis of such
assets in the hands of the ISG Fund immediately prior to the transfer; and (vii)
the holding period of the assets of an ISG Fund in the hands of the
corresponding AmSouth Fund will include the periods during which such assets
were held by the ISG Fund. As a condition to AmSouth and ISG Fund's obligations
to consummate the reorganization, ISG and AmSouth will receive an opinion from
Ropes & Gray, counsel to AmSouth, to the effect that, on the basis of the
existing provisions of the Code, current administrative rules, court decisions,
and certain representations by the AmSouth and ISG, for federal income tax
purposes the above stated tax consequences will be applicable to each
reorganization.
VOTING RIGHTS. Each shareholder of an AmSouth Fund and an ISG Fund is
entitled to one vote per share and a proportionate fractional vote for any
fractional share. Holders of Class A or Class B Shares of the AmSouth Funds will
vote separately as a fund or a class on matters relating solely to that fund or
class. On all other matters, they vote in the aggregate with shareholders of all
of the AmSouth Funds. When the former shareholders of each ISG Fund vote in the
aggregate as shareholders of each corresponding AmSouth Fund, the voting power
they will have will be less than the voting power they had when the ISG Funds
voted in the aggregate. For a more detailed discussion of AmSouth's voting
procedures, see the AmSouth Prospectuses "GENERAL INFORMATION -- Miscellaneous."
CAPITALIZATION. The following tables set forth as of September 30,
1999, (i) the capitalization of each ISG Fund, (ii) the capitalization of each
AmSouth Fund, and (iii) the pro forma capitalization of each AmSouth Fund as
adjusted giving effect to the proposed acquisition of assets at net asset value:
41
<PAGE> 42
CAPITALIZATION TABLES AS OF SEPTEMBER 30, 1999
ISG Current Income Portfolio and AmSouth Current Income Portfolio (unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 3,157 28,913 264,475 N/A N/A N/A 3,157 28,913 264,475
- ----------------------------------------------------------------------------------------------------------------------------
Shares 331 3,024 27,590 N/A N/A N/A 331 3,024 27,590
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 9.54 9.56 9.59 N/A N/A N/A 9.54 9.56 9.59
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
ISG Treasury Money Market Fund and AmSouth Treasury Reserve
Money Market Fund (unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- -------------------------------------------------------------------------------------------------------------
CLASS A INSTITUTIONAL CLASS A TRUST CLASS A TRUST
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Assets ($) 147,468,354 327,667,608 N/A N/A 147,468,354 327,667,608
- -------------------------------------------------------------------------------------------------------------
Shares 147,475,842 327,681,802 N/A N/A 147,475,842 327,681,802
- -------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 1.00 1.00 N/A N/A 1.00 1.00
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The adjusted balances are presented as if the Reorganization were effective
as of September 30, 1999 for information purposes only. The actual Effective
Time of the Reorganization is expected to be March 13, 2000 at which time the
results would be reflective of the actual composition of the shareholders'
equity at that date.
42
<PAGE> 43
CAPITALIZATION TABLES AS OF SEPTEMBER 30, 1999
ISG Moderate Growth & Income Portfolio and AmSouth Moderate
Growth and Income Portfolio (unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 134,231 883,919 7,068,796 N/A N/A N/A 134,231 883,919 7,068,796
- ----------------------------------------------------------------------------------------------------------------------------------
Shares 13,842 91,178 727,960 N/A N/A N/A 13,842 91,178 727,960
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 9.70 9.69 9.71 N/A N/A N/A 9.70 9.69 9.71
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ISG Growth & Income Portfolio and AmSouth Growth and Income Portfolio
(unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 529,923 1,566,791 42,168,011 N/A N/A N/A 529,923 1,566,791 42,168,011
- ----------------------------------------------------------------------------------------------------------------------------------
Shares 53,571 158,244 4,252,549 N/A N/A N/A 53,571 158,244 4,252,549
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 9.89 9.90 9.92 N/A N/A N/A 9.89 9.90 9.92
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The adjusted balances are presented as if the Reorganization were effective
as of September 30, 1999 for information purposes only. The actual Effective
Time of the Reorganization is expected to be March 13, 2000 at which time the
results would be reflective of the actual composition of the shareholders'
equity at that date.
43
<PAGE> 44
CAPITALIZATION TABLES AS OF SEPTEMBER 30, 1999
ISG Growth Portfolio and AmSouth Growth Portfolio (unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 130,735 715,281 5,575,213 N/A N/A N/A 130,735 715,281 5,575,213
- ----------------------------------------------------------------------------------------------------------------------------------
Shares 13,418 73,472 570,475 N/A N/A N/A 13,418 73,472 570,475
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 9.74 9.74 9.77 N/A N/A N/A 9.74 9.74 9.77
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ISG Aggressive Growth Portfolio and AmSouth Aggressive
Growth Portfolio (unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 318,933 298,867 11,249,486 N/A N/A N/A 318,933 298,867 11,249,486
- ----------------------------------------------------------------------------------------------------------------------------------
Shares 31,744 29,946 1,121,629 N/A N/A N/A 31,744 29,946 1,121,629
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 10.05 9.98 10.03 N/A N/A N/A 10.05 9.98 10.03
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The adjusted balances are presented as if the Reorganization were effective
as of September 30, 1999 for information purposes only. The actual Effective
Time of the Reorganization is expected to be March 13, 2000 at which time the
results would be reflective of the actual composition of the shareholders'
equity at that date.
44
<PAGE> 45
CAPITALIZATION TABLES AS OF SEPTEMBER 30, 1999
ISG Mid-Cap Fund and AmSouth Mid Cap Fund (unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 990,932 583,691 14,674,325 N/A N/A N/A 990,932 583,691 14,674,325
- ----------------------------------------------------------------------------------------------------------------------------------
Shares 86,316 50,956 1,276,810 N/A N/A N/A 86,316 50,956 1,276,810
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 11.48 11.45 11.49 N/A N/A N/A 11.48 11.45 11.49
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ISG Large-Cap Equity Fund and AmSouth Large Cap Fund (unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
ISG AMSOUTH PRO FORMA COMBINED (1)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 71,311,649 14,289,404 655,207,824 N/A N/A N/A 71,311,649 14,289,404 655,207,824
- ----------------------------------------------------------------------------------------------------------------------------------
Shares 2,505,610 505,257 23,026,809 N/A N/A N/A 2,505,610 505,257 23,026,809
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 28.46 28.28 28.45 N/A N/A N/A 28.46 28.28 28.45
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The adjusted balances are presented as if the Reorganization were effective
as of September 30, 1999 for information purposes only. The actual Effective
Time of the Reorganization is expected to be March 13, 2000 at which time the
results would be reflective of the actual composition of the shareholders'
equity at that date.
45
<PAGE> 46
CAPITALIZATION TABLES AS OF SEPTEMBER 30, 1999
ISG International Equity Fund and AmSouth International Equity Fund (unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
ISG AMSOUTH PRO FORMA COMBINED (1)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 681,422 76,374 34,651,938 N/A N/A N/A 681,422 76,374 34,657,938
- ----------------------------------------------------------------------------------------------------------------------------------
Shares 57,991 6,527 2,951,412 N/A N/A N/A 57,991 6,527 2,951,412
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 11.75 11.70 11.74 N/A N/A N/A 11.75 11.70 11.74
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ISG Capital Growth Fund and AmSouth Capital Growth Fund (unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 8,673,676 6,171,630 209,604,962 N/A N/A N/A 8,673,676 6,171,630 209,604,962
- -----------------------------------------------------------------------------------------------------------------------------------
Shares 605,222 441,275 14,713,283 N/A N/A N/A 605,222 441,275 14,713,283
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 14.33 13.99 14.25 N/A N/A N/A 14.33 13.99 14.25
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The adjusted balances are presented as if the Reorganization were effective
as of September 30, 1999 for information purposes only. The actual Effective
Time of the Reorganization is expected to be March 13, 2000 at which time the
results would be reflective of the actual composition of the shareholders'
equity at that date.
46
<PAGE> 47
CAPITALIZATION TABLES AS OF SEPTEMBER 30, 1999
ISG Tennessee Tax-Exempt Fund and AmSouth Tennessee Tax-Exempt Fund (unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 3,034,667 1,386,106 80,481,316 N/A N/A N/A 3,034,667 1,386,106 80,481,316
- ---------------------------------------------------------------------------------------------------------------------------------
Shares 312,343 142,370 8,284,294 N/A N/A N/A 312,343 142,370 8,284,294
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 9.72 9.74 9.71 N/A N/A N/A 9.72 9.74 9.71
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ISG Limited Term Tennessee Tax-Exempt Fund and AmSouth Limited
Term Tennessee Tax-Exempt Fund (unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 19,238,246 787,525 N/A N/A N/A N/A 19,238,246 787,525 N/A
- ------------------------------------------------------------------------------------------------------------------------------
Shares 1,957,905 80,158 N/A N/A N/A N/A 1,957,905 80,158 N/A
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 9.83 9.82 N/A N/A N/A N/A 9.83 9.82 N/A
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The adjusted balances are presented as if the Reorganization were effective
as of September 30, 1999 for information purposes only. The actual Effective
Time of the Reorganization is expected to be March 13, 2000 at which time the
results would be reflective of the actual composition of the shareholders'
equity at that date.
47
<PAGE> 48
CAPITALIZATION TABLES AS OF SEPTEMBER 30, 1999
ISG Limited Term U.S. Government Fund and AmSouth Limited Term
U.S. Government Fund (unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 3,207,783 484,877 43,994,681 N/A N/A N/A 3,207,783 484,877 43,994,681
- ----------------------------------------------------------------------------------------------------------------------------------
Shares 322,103 48,650 4,418,101 N/A N/A N/A 322,103 48,650 4,418,101
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 9.96 9.97 9.96 N/A N/A N/A 9.96 9.97 9.96
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ISG Government Income Fund and AmSouth Government Income Fund (unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 2,263,107 599,607 364,909,326 4,600,945 N/A 3,428,859 6,864,052 599,607 368,338,185
- ----------------------------------------------------------------------------------------------------------------------------------
Shares 231,424 61,504 37,351,764 477,828 N/A 356,003 712,778 62,264 38,249,033
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 9.78 9.75 9.77 9.63 N/A 9.63 9.63 9.63 9.63
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The adjusted balances are presented as if the Reorganization were effective
as of September 30, 1999 for information purposes only. The actual Effective
Time of the Reorganization is expected to be March 13, 2000 at which time the
results would be reflective of the actual composition of the shareholders'
equity at that date.
48
<PAGE> 49
CAPITALIZATION TABLES AS OF SEPTEMBER 30, 1999
ISG Limited Term Income Fund and AmSouth Limited Term Bond Fund (unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 6,766,653 698,989 9,356,262 2,903,115 2,027,331 107,105,408 9,669,768 2,726,320 116,461,670
- ---------------------------------------------------------------------------------------------------------------------------------
Shares 693,960 71,974 959,616 282,887 197,860 10,436,855 942,473 265,982 11,351,040
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per
Share ($) 9.75 9.71 9.75 10.26 10.25 10.26 10.26 10.25 10.26
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ISG Equity Income Fund and AmSouth Equity Income Fund (unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 5,808,153 7,302,260 77,415,127 19,856,727 7,485,633 10,941,793 25,664,880 14,847,893 88,356,920
- ---------------------------------------------------------------------------------------------------------------------------------
Shares 616,356 781,774 8,209,415 1,559,312 590,035 859,179 2,016,094 1,170,047 6,935,394
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per
Share ($) 9.42 9.34 9.43 12.73 12.69 12.74 12.73 12.69 12.74
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The adjusted balances are presented as if the Reorganization were effective
as of September 30, 1999 for information purposes only. The actual Effective
Time of the Reorganization is expected to be March 13, 2000 at which time the
results would be reflective of the actual composition of the shareholders'
equity at that date.
49
<PAGE> 50
CAPITALIZATION TABLES AS OF SEPTEMBER 30, 1999
ISG Municipal Income Fund and AmSouth Municipal Bond Fund (unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
ISG AMSOUTH PRO FORMA COMBINED (1)
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 3,064,056 342,822 75,796,243 2,855,942 65,853 322,939,140 5,919,998 408,675 398,735,383
- ---------------------------------------------------------------------------------------------------------------------------------
Shares 301,466 33,824 7,458,651 292,135 6,743 33,024,456 605,317 41,830 40,770,489
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 10.16 10.14 10.16 9.78 9.77 9.78 9.78 9.77 9.78
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ISG Small Cap Opportunity Fund and AmSouth Small Cap Fund (unaudited)
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 8,592,761 340,945 82,094,192 977,508 858,551 23,784,982 9,570,269 1,199,496 105,879,174
- ----------------------------------------------------------------------------------------------------------------------------------
Shares 697,283 27,925 6,679,370 114,344 101,594 2,768,509 1,119,330 141,952 12,325,864
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 12.32 12.21 12.29 8.55 8.45 8.59 8.55 8.45 8.59
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The adjusted balances are presented as if the Reorganization were effective
as of September 30, 1999 for information purposes only. The actual Effective
Time of the Reorganization is expected to be March 13, 2000 at which time the
results would be reflective of the actual composition of the shareholders'
equity at that date.
50
<PAGE> 51
CAPITALIZATION TABLES AS OF SEPTEMBER 30, 1999
ISG Tax-Exempt Money Market Fund and AmSouth Tax-Exempt Money Market Fund
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- ------------------------------------------------------------------------------------------------------------------------
CLASS A INSTITUTIONAL CLASS A TRUST CLASS A TRUST
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Assets ($) 10,860,885 94,548,102 24,707,467 68,733,102 35,568,352 163,281,204
- ------------------------------------------------------------------------------------------------------------------------
Shares 10,866,588 94,663,829 24,707,340 68,734,370 35,573,928 163,398,199
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value per Share ($) 1.00 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
ISG Prime Money Market Fund and AmSouth Prime Money Market Fund
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 443,019,384 347,030 211,833,097 154,031,214 468,095 559,375,905 597,050,598 815,125 771,209,002
- --------------------------------------------------------------------------------------------------------------------------------
Shares 443,055,722 347,070 211,899,694 154,036,885 468,095 559,391,132 597,092,607 815,165 771,290,826
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per
Share ($) 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The adjusted balances are presented as if the Reorganization were effective
as of September 30, 1999 for information purposes only. The actual Effective
Time of the Reorganization is expected to be March 13, 2000 at which time the
results would be reflective of the actual composition of the shareholders'
equity at that date.
51
<PAGE> 52
CAPITALIZATION TABLES AS OF SEPTEMBER 30, 1999
ISG Income Fund and AmSouth Bond Fund
<TABLE>
<CAPTION>
ISG AMSOUTH PRO FORMA COMBINED (1)
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B INSTITUTIONAL CLASS A CLASS B TRUST CLASS A CLASS B TRUST
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets ($) 3,392,384 1,309,865 93,694,072 7,359,492 2,377,261 383,905,716 10,751,876 3,687,126 477,599,788
- --------------------------------------------------------------------------------------------------------------------------------
Shares 348,245 134,549 9,621,662 694,888 224,974 36,244,789 1,015,286 348,829 45,099,130
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value per
Share ($) 9.74 9.74 9.74 10.59 10.57 10.59 10.59 10.57 10.59
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The adjusted balances are presented as if the Reorganization were effective
as of September 30, 1999 for information purposes only. The actual Effective
Time of the Reorganization is expected to be March 13, 2000 at which time the
results would be reflective of the actual composition of the shareholders'
equity at that date.
52
<PAGE> 53
Unaudited pro forma combined financial statements of each ISG Fund and each
AmSouth Fund as of and for the period ended July 31, 1999 are included in the
Statement of Additional Information. Because the Agreement provides that the
AmSouth Funds will be the surviving funds following the reorganization and
because the AmSouth Funds' investment objectives and policies will remain
unchanged, the pro forma combined financial statements reflect the transfer of
the assets and liabilities of each ISG Fund to the corresponding AmSouth Fund as
contemplated by the Agreement.
PROPOSALS TWO AND THREE
APPROVAL OR DISAPPROVAL OF
CERTAIN ADVISORY AGREEMENTS
INTRODUCTION
At the Meeting, Shareholders of each ISG Fund also will be
asked to approve or disapprove the New Advisory Agreement, which is being
submitted in connection with the Merger of First American Corporation, the
former parent corporation of First American National Bank ("FANB"), with and
into AmSouth Bancorporation on October 1, 1999, and the payment of advisory fees
to FANB during the interim period from the date of the Merger through the
earlier of the date of Shareholder approval or March 31, 2000. In addition, in
connection with the Merger, Shareholders of ISG Mid-Cap Fund, ISG International
Equity Fund, and ISG Small-Cap Opportunity Fund will be asked to ratify and
approve or disapprove the New Sub-Advisory Agreements between FANB and Bennett
Lawrence Management, LLC ("Bennett Lawrence"), Lazard Asset Management
("Lazard"), and Womack Asset Management, Inc. ("Womack"), respectively. As a
result of the Merger, the investment advisory agreement with FANB then in effect
(the "Former Advisory Agreement") automatically terminated in accordance with
its terms and as required by the 1940 Act. Similarly, the sub-investment
advisory agreement between FANB and Bennett Lawrence then in effect (the "Former
Bennett Lawrence Sub-Advisory Agreement"), the sub-investment advisory agreement
between FANB and Lazard then in effect (the "Former Lazard Sub-Advisory
Agreement"), and the sub-investment advisory agreement between FANB and Womack
then in effect (the "Former Womack Agreement") each automatically terminated as
a result of the Merger.
To assure the continued supervision of the investments of the
ISG Funds after the Merger, at a meeting held on September 22, 1999, the
Company's Board of Directors, including a majority of the Independent Board
Members, approved, subject to Shareholder approval, the New Advisory Agreement
and the New Sub-Advisory Agreements. Since the date of the Merger, FANB has
provided advisory services to the ISG Funds under the New Advisory Agreement
dated October 1, 1999, which provides for the same services at the same advisory
fee rate for the relevant ISG Fund as the Former Advisory Agreement. Bennett
Lawrence, Lazard, and Womack also have provided sub-advisory services since the
date of the Merger to ISG Mid-Cap Fund, ISG International Equity Fund, and ISG
Small-Cap Opportunity Fund, respectively, under the relevant New Sub-Advisory
Agreement dated October 1, 1999, which each provides for the same services at
the same sub-advisory fee rate as the relevant Former Sub-Advisory Agreement.
Under the 1940 Act, investment advisory agreements such as the
New Advisory Agreement and New Sub-Advisory Agreements must be approved by
shareholders. The ISG Funds, FANB, Bennett Lawrence, Lazard, and Womack have
received from the Securities and Exchange Commission an order of exemption (the
"Order") permitting the implementation, without shareholder approval, of the New
Advisory Agreement and New Sub-Advisory Agreements during the interim period
commencing on the date of the Merger until such time as the relevant ISG Fund's
shareholders vote on the approval of the New Advisory Agreement and New
Sub-Advisory Agreements, but in no event later than March 31, 2000 (the "Interim
Period"). As a condition to receiving the Order, the fees payable to FANB,
Bennett Lawrence, Lazard, and Womack under the respective new agreements during
the Interim Period are paid into an interest-bearing escrow account maintained
by an independent escrow agent. The escrow agent will release the amounts held
in the escrow account (including any interest earned) to
53
<PAGE> 54
FANB and Bennett Lawrence, Lazard, and Womack as the case may be, only upon
approval of the relevant new agreement by the shareholders of the relevant ISG
Fund. If the requisite shareholder approval is not received for an ISG Fund or
new agreement prior to the end of the Interim Period, the relevant amounts held
in the escrow account will be released to the appropriate ISG Fund.
The terms of the New Advisory Agreement and the New
Sub-Advisory Agreements with Bennett Lawrence, Lazard, and Womack are identical
in all material respects to the Former Advisory Agreement and Former Bennett
Lawrence Sub-Advisory Agreement, Former Lazard Sub-Advisory Agreement, and
Former Womack Agreement, respectively, except for the effective dates and escrow
provisions. In each case, the effective date is the date of the Merger--October
1, 1999.
Shareholders should consider the following factors in
determining whether it is fair to compensate the ISG Fund's adviser for their
continued services during the Interim Period and thus to ratify and approve the
New Advisory Agreement (and, in the case of shareholders of the ISG Mid-Cap
Fund, the ISG International Equity Fund, and the ISG Small-Cap Opportunity Fund,
whether to ratify and approve the respective New Sub-Advisory Agreement):
- the Board of Directors of ISG has unanimously approved the New
Advisory Agreement for all of the ISG Funds, and the New
Sub-Advisory Agreements for the affected ISG Funds;
- no change in any ISG Fund's investment objective or investment
policies and restrictions has taken or will take place during
the Interim Period;
- there has been and will be no change in the fees payable by an
ISG Fund to FANB for advisory services or the fees payable by
FANB to any sub-adviser during the Interim Period;
- investment personnel presently employed by FANB, who are
experienced in managing the ISG Funds, have managed and are
expected to continue to manage the ISG Funds' investment
programs under the New Advisory Agreement during the Interim
Period; and
- there has not been nor is there expected to be any change in
the personnel at the sub-advisers who manage the assets of the
ISG Mid-Cap Fund, the ISG International Equity Fund, and the
ISG Small-Cap Opportunity Fund during the Interim Period.
If the holders of a majority (as defined in the 1940 Act) of
the outstanding voting securities of an ISG Fund do not approve the New Advisory
Agreement or a New Sub-Advisory Agreement (if applicable), the Board of
Directors will consider what action to take in the best interests of the
shareholders of that ISG Fund.
PROPOSAL 2: APPROVAL OR DISAPPROVAL OF THE NEW ADVISORY AGREEMENT
Under the New Advisory Agreement, FANB continues to be responsible for providing
advisory services to the ISG Funds. A copy of the New Advisory Agreement is
attached as Appendix D to this Prospectus/Proxy Statement. As more fully
described below, the terms and conditions of the New Advisory Agreement are
identical in all material respects to the Former Advisory Agreement. The sole
differences between the Former Advisory Agreement and the New Advisory Agreement
are the effective date which, in the case of the New Advisory Agreement, is the
Merger Date, and the escrow provisions. THE NEW ADVISORY AGREEMENT DOES NOT
INCREASE THE RATE OF ADVISORY FEES PAYABLE BY ANY ISG FUND, AND DOES NOT CHANGE
THE TYPE OR EXTENT OF SERVICES PROVIDED TO THE ISG FUNDS BY FANB.
54
<PAGE> 55
INFORMATION ABOUT THE FORMER ADVISORY AGREEMENT
The Former Advisory Agreement was most recently approved by
the Company's Board of Directors, including a majority of the Independent Board
Members, with respect to each ISG Fund, on November 18, 1998. The Distributor,
as the initial shareholder of each ISG Fund, approved the Former Advisory
Agreement for each ISG Fund prior to the Fund's commencement of operations.
The Former Advisory Agreement provided that FANB provide
investment management services to the ISG Funds, subject to the supervision of
the Company's Board of Directors.
The table below sets forth: (i) the net assets for each ISG
Fund as of December 31, 1998; (ii) the rates of advisory fees, computed daily
and payable daily, to which FANB was entitled for the services provided and
expenses assessed pursuant to the Former Advisory Agreement; (iii) the effective
rates of each of the advisory fees (net of waivers) expressed as a percentage of
average net assets for the fiscal year ended December 31, 1998; and (iv)
advisory fees (net of waivers) paid by each ISG Fund for the fiscal year ended
December 31, 1998:
<TABLE>
ASSETS OF ISG FUND AND ADVISORY FEES PAID TO FANB
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Net Assets as of Annual Actual Advisory Fee
December 31, Advisory Fee Advisory Fee Paid (Net of
1998 ($) Rate (Based Rate Paid (Net Waivers)*
on Average of Waivers) ($)
Net Assets) (%) (%)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ISG International Equity Fund 28,125,923 1.00 .68 162,141
- -------------------------------------------------------------------------------------------------------------------------
ISG Small-Cap Opportunity Fund 107,453,528 .95 .95 874,343
- -------------------------------------------------------------------------------------------------------------------------
ISG Mid-Cap Fund n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------
ISG Capital Growth Fund 181,027,242 .65 .64 995,024
- -------------------------------------------------------------------------------------------------------------------------
ISG Large-Cap Equity Fund 844,333,854 .75 .75 4,767,781
- -------------------------------------------------------------------------------------------------------------------------
ISG Equity Income Fund 83,688,877 .65 .64 496,950
- -------------------------------------------------------------------------------------------------------------------------
ISG Income Fund 81,970,472 .50 .49 390,583
- -------------------------------------------------------------------------------------------------------------------------
ISG Government Income Fund 295,429,554 .60 .60 1,364,121
- -------------------------------------------------------------------------------------------------------------------------
ISG Limited Term Income Fund 93,509,941 .50 .50 457,120
- -------------------------------------------------------------------------------------------------------------------------
ISG Limited Term U.S. Government Fund 49,211,391 .50 .34 72,623
- -------------------------------------------------------------------------------------------------------------------------
ISG Tennessee Tax-Exempt Fund 96,002,354 .50 .49 491,735
- -------------------------------------------------------------------------------------------------------------------------
ISG Limited Term Tennessee Tax-Exempt Fund 20,171,315 .50 .39 87,062
- -------------------------------------------------------------------------------------------------------------------------
ISG Municipal Income Fund 56,558,693 .60 .30 136,582
- -------------------------------------------------------------------------------------------------------------------------
ISG Prime Money Market Fund 377,102,322 .25 .25 328,794
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
55
<PAGE> 56
<TABLE>
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
ISG Treasury Money Market Fund 477,454,108 .25 .25 480,809
- -------------------------------------------------------------------------------------------------------------------------
ISG Tax-Exempt Money Market Fund n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------
ISG Aggressive Growth Portfolio n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------
ISG Growth Portfolio n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------
ISG Growth & Income Portfolio n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------
ISG Moderate Growth & Income Portfolio n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------
ISG Current Income Portfolio n/a n/a n/a n/a
- -------------------------------------------------------------------------------------------------------------------------
TOTAL ISG FUNDS $2,792,039,574
==============
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*A fee waiver represents a percentage of daily net assets of the ISG Fund
calculated at an annualized rate. Fee waivers and reimbursements are voluntary
and may be modified or terminated by FANB at any time at its sole discretion.
For the fiscal year or periods ended December 31, 1998, the amounts paid by the
indicated Funds for brokerage commissions, gross spreads and concessions on
principal transactions, none of which was paid to the Distributor, were as
follows:
<TABLE>
<CAPTION>
Fund 1998
- ---- ----
<S> <C>
ISG Large-Cap Equity $76,036(1)
ISG Capital Growth $494,130
ISG Small-Cap Opportunity $318,620(1)
ISG Equity Income $314,269
ISG International Equity $68,007(1)
</TABLE>
- ----------------------
(1) For the period March 1, 1998 through December 31, 1998.
The ISG Income Fund, ISG Government Income Fund, ISG Limited Term
Income Fund, ISG Limited Term U.S. Government Fund, ISG Tennessee Tax-Exempt
Fund, ISG Limited Term Tennessee Tax-Exempt Fund, ISG Municipal Income Fund, ISG
Prime Money Market Fund and ISG Treasury Money Market Fund paid no brokerage
commissions and did not enter into any brokerage transactions during the fiscal
year ended December 31, 1999, however, engaged in transactions with dealers
acting as principal and the costs of such transactions involve dealer spreads
rather than brokerage commissions.
INFORMATION ABOUT THE NEW ADVISORY AGREEMENT
Under the New Advisory Agreement, FANB continues to manage the
ISG Funds' investments. Subject to the direction of the Company's Board of
Directors, FANB provides investment research and supervision of the investments
of each ISG Fund, and conducts a continuous program of investment evaluation and
of appropriate sale or other disposition and reinvestment of each ISG Fund's
assets. The New Advisory Agreement provides that FANB shall continue to
determine from time to time what securities or other instruments will be
purchased, retained or sold by ISG with respect to each ISG Fund. FANB, in its
supervision of the assets of each ISG Fund, is guided by each ISG Fund's
investment objective and policies, and the provisions and restrictions contained
in the Company's Articles of Incorporation and Bylaws and as set forth in the
ISG Funds' prospectuses and statements of additional information that are on
file with the Securities and Exchange Commission.
The New Advisory Agreement states that the Adviser shall pay
all expenses incurred by it in performing its services and duties as investment
adviser and shall pay all fees of each Sub-Adviser in connection with such
Sub-Adviser's duties in respect of the Company. All other expenses incurred in
the operation of the Company will be borne by the Company, except to the extent
specifically assumed by others. The expenses to be borne by the Company include,
without limitation, the following: organizational costs, taxes, interest,
brokerage fees and commissions, if any, fees of Directors who are not officers,
directors, employees or holders of 5% or more of the outstanding voting
securities of the Adviser, any Sub-Adviser or the Administrator, or any of their
affiliates, Commission fees, state Blue Sky qualification fees, advisory and
administration fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees, auditing
and legal
56
<PAGE> 57
expenses, costs of maintaining corporate existence, costs of independent pricing
services, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of calculating the net
asset value of the ISG Funds' shares, costs of shareholders' reports and
corporate meeting, costs of preparing and printing certain prospectuses and
statements of additional information, any extraordinary expenses.
NEW ADVISORY AGREEMENT. THE RATE OF ADVISORY FEES PAYABLE TO
FANB BY THE ISG FUNDS UNDER THE NEW ADVISORY AGREEMENT IS IDENTICAL TO THAT
PAYABLE TO FANB UNDER THE FORMER ADVISORY AGREEMENT. The rate of advisory fees
payable under the New Advisory Agreement by each ISG Fund is equal to the rate
for such Fund payable under the Former Advisory Agreement as listed above. From
time to time, FANB may waive its fee or reimburse an ISG Fund for certain of its
expenses in order to reduce the ISG Fund's expense ratio. As a result, the ISG
Fund's return and yield would be higher than it would be if the fees and such
expenses had been paid by the ISG Fund.
As in the Former Advisory Agreement, the New Advisory
Agreement provides that in the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties of FANB under the
New Advisory Agreement, FANB and its affiliates shall not be liable to ISG or to
any shareholder for any act or omission in the course of, or connected in any
way with, rendering services or for any losses that may be sustained in the
purchase, holding, or sale of any security.
If approved by shareholders of the ISG Funds at the Meeting,
the New Advisory Agreement will continue until December 31, 2000, unless
terminated, and may be continued from year to year thereafter by the Board of
Directors. The continuation of the New Advisory Agreement must be approved by a
majority vote of the Directors, including a majority of the Independent Board
Members, cast in person at a meeting called for that purpose. Under the New
Advisory Agreement, FANB has the right, in any year, to notify ISG in writing at
least 60 days before the New Advisory Agreement's anniversary date that it does
not desire a renewal of the New Advisory Agreement. The Directors, or a majority
of the outstanding voting shares of ISG, may terminate the New Advisory
Agreement at any time without penalty by giving FANB 60 days' written notice.
The New Advisory Agreement may not be assigned by FANB and will terminate
automatically in the event of its assignment. The New Advisory Agreement will
terminate automatically, with respect to the relevant ISG Fund, upon
consummation of the reorganization of such ISG Fund.
INFORMATION ABOUT FANB
FANB has served as the investment adviser to the ISG Funds
since February 15, 1994, the date the ISG Funds were established. FANB is an
investment adviser registered under the Investment Advisers Act of 1940, as
amended (the "Advisers Act"), providing investment management services to
individuals and institutional clients. FANB's address is 315 Deaderick Street,
Nashville, Tennessee 37237. FANB, a national banking association, is a
wholly-owned subsidiary of AmSouth Bancorporation. FANB and its affiliates
provide personal trust, estate, employee benefit trust, corporate trust and
custody services to over 7,000 accounts and investment advisory services. As of
June 30, 1999, FANB and its affiliates had approximately $11 billion under trust
and approximately $6 billion under management. AmSouth Bancorporation is a
registered bank holding company and a financial services company headquartered
in Birmingham, Alabama. Through its related banking subsidiaries, including
AmSouth Bank, AmSouth Bancorporation provides retail and commercial banking and
trust operation services. On DATE, AmSouth Bancorporation and its affiliates had
total assets of approximately $__________ under trust and approximately $
__________ under management. The principal executive officer and directors of
AmSouth Bank are listed in Appendix H.
DIRECTORS' CONSIDERATIONS
The New Advisory Agreement was unanimously approved on behalf of each
ISG Fund by the Company's Board of Directors, including the Independent Board
Members, at a meeting held on September 22, 1999. The
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Directors considered information relating to FANB, AmSouth Bancorporation,
AmSouth Bank and the consolidated entity that would result from the consummation
of the Merger, including information provided by AmSouth Bank concerning its
capabilities and expertise in serving as investment adviser to the ISG Funds.
The Directors reviewed the terms of the New Advisory Agreement and noted that
the New Advisory Agreement is identical to the Former Advisory Agreement, except
for its date and the escrow provisions.
Specifically, in connection with approval of the New Advisory
Agreement on behalf of each ISG Fund, the Board considered that the terms of the
Merger did not require or result in any changes in the ISG Funds' investment
objectives or policies, the investment management or operation of the ISG Funds,
the investment personnel managing the ISG Funds, or the shareholder services or
other business activities of the ISG Funds.
In approving the New Advisory Agreement, the Board noted
FANB's record of service to the ISG Funds and the expectation that the Merger
should not have any material adverse effect on the ISG Funds' ongoing operations
or on the extent or quality of services provided to the ISG Funds, or increase
the cost to the ISG Funds of such services.
Section 15(f) of the 1940 Act provides that in connection with
the sale of any interest in any investment adviser which results in the
"assignment" of an investment advisory agreement, an investment adviser of a
registered investment company, such as the ISG Funds, or an affiliated person of
such investment adviser, may receive any amount or benefit if (i) for a period
of three years after the sale, at least 75% of the members of the board of the
investment company are not interested persons of the investment adviser or the
predecessor adviser, and (ii) there is no "unfair burden" imposed on the
investment company as a result of such sale or any express or implied terms,
conditions or understanding applicable thereto. For this purpose, "unfair
burden" is defined to include any arrangement during the two-year period after
the transaction, whereby the investment adviser or its predecessor or successor
investment advisers, or any interested persons of any such adviser, receives or
is entitled to receive any compensation directly or indirectly (i) from any
person in connection with the purchase or sale of securities or other property
to, from or on behalf of the investment company other than bona fide ordinary
compensation as principal underwriter for such company, or (ii) from the
investment company or its security holders for other than bona fide investment
advisory or other services. This provision of the 1940 Act was enacted by
Congress in 1975 to make it clear that an investment adviser (or an affiliated
person of the adviser) can realize a profit on the sale of the adviser's
business subject to the two safeguards described above. The Board has requested
and received a written representation from FANB and assurances from AmSouth
Bancorporation that no "unfair burden" will be imposed on the ISG Funds as a
result of the Merger and the proposed transactions.
Based upon the considerations set forth above, the Directors
have determined that the New Advisory Agreement is in the best interest of each
ISG Fund and its shareholders. In addition, management expects that there will
be no diminution in the scope and quality of services provided to ISG as a
result of these transactions. In fact, as described above, the New Advisory
Agreement is identical in all material respects, except as to its date and the
escrow provisions, as the Former Advisory Agreement. The Board believes that the
ISG Funds will receive investment management services under the New Advisory
Agreement equivalent to those that they received under the Former Advisory
Agreement, and at the same fee and expense levels.
REQUIRED VOTE AND DIRECTORS' RECOMMENDATION
With respect to each ISG Fund, approval of this proposal
requires the affirmative vote of (a) 67% of the ISG Fund's voting securities
present at this Meeting, if the holders of more than 50% of the ISG Fund's
outstanding voting securities are present or represented by proxy, or (b) more
than 50% of the ISG Fund's outstanding voting securities, whichever is less.
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THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT BOARD MEMBERS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" APPROVAL OF THE NEW ADVISORY
AGREEMENT.
PROPOSAL 3: APPROVAL OR DISAPPROVAL OF THE NEW SUB-ADVISORY AGREEMENTS
A. NEW SUB-ADVISORY AGREEMENT BETWEEN FANB AND BENNETT LAWRENCE
MANAGEMENT (APPLIES ONLY TO ISG MID-CAP FUND)
As indicated above, consummation of the Merger caused a change
in ownership of FANB which, in turn, automatically terminated the Former Bennett
Lawrence Sub-Advisory Agreement. Thus, although the Merger had no effect on
Bennett Lawrence, the change in ownership of FANB requires approval by the
Shareholders of ISG Mid-Cap Fund of a new Sub-Advisory Agreement (the "New
Bennett Lawrence Sub-Advisory Agreement") between FANB, with respect to the ISG
Mid-Cap Fund, and Bennett Lawrence. A copy of the New Bennett Lawrence
Sub-Advisory Agreement is attached as Appendix E to this Prospectus/Proxy
Statement.
The terms of the New Bennett Lawrence Sub-Advisory Agreement
are identical in all material respects to the Former Bennett Lawrence
Sub-Advisory Agreement, except for the effective date, which, in the case of the
New Bennett Lawrence Sub-Advisory Agreement, is the Merger date, and the escrow
provisions.
The Former Bennett Lawrence Sub-Advisory Agreement was
approved by the Board of Directors, including a majority of the Independent
Board Members on August 12, 1998.
Pursuant to the terms of the Former Bennett Lawrence
Sub-Advisory Agreement and the New Bennett Lawrence Sub-Advisory Agreement,
subject to the direction of FANB, Bennett Lawrence makes all determinations with
respect to the ISG Mid-Cap Fund's investments other than cash and cash
equivalents, and takes such steps as may be necessary to implement such
determinations, including the placement of purchase and sale orders on behalf of
the ISG Mid-Cap Fund.
The Former Bennett Lawrence Sub-Advisory Agreement and the New
Bennett Lawrence Sub-Advisory Agreement provide that Bennett Lawrence will pay
the expenses incurred by it and its staff in connection with the performance of
its services under each Bennett Lawrence Sub-Advisory Agreement, including the
payment of salaries of all officers and employees who are employed by Bennett
Lawrence. Under the Former Bennett Lawrence Sub-Advisory Agreement and the New
Bennett Lawrence Sub-Advisory Agreement, FANB has agreed to pay Bennett Lawrence
an annual fee based on the average daily net assets of the Mid-Cap Fund as
follows: 0.75% of the average daily net assets on the first $25 million; 0.625%
of the average daily net assets on the next $50 million; 0.50% of the average
daily net assets on assets in excess of $75 million. Applying the foregoing
formula to the ISG Mid-Cap Fund's level of net assets on DATE, Bennett Lawrence
would be entitled to a sub-advisory fee from FANB equal to ____% of the ISG
Mid-Cap Fund's average daily net assets. THE FEE ARRANGEMENT BETWEEN FANB AND
BENNETT LAWRENCE MANAGEMENT IS IDENTICAL IN THE FORMER BENNETT LAWRENCE
SUB-ADVISORY AGREEMENT AND THE NEW BENNETT LAWRENCE SUB-ADVISORY AGREEMENT.
The New Bennett Lawrence Sub-Advisory Agreement provides that,
if approved by shareholders of the ISG Mid-Cap Fund, it will remain in effect
until December 31, 2000 and may continue in effect for successive one-year
periods thereafter, provided such continuance is specifically approved at least
annually by vote of a majority of Directors, including a majority of the
Independent Board Members, cast in person at a meeting called for the purpose of
voting on such approval. Bennett Lawrence has the right, in any year, to notify
FANB in writing, at least 60 days before the New Bennett Lawrence Sub-Advisory
Agreement's anniversary date, that it does not desire a renewal of the New
Bennett Lawrence Sub-Advisory Agreement. The New Bennett Lawrence Sub-Advisory
Agreement may be terminated by the Directors at any time without penalty, or by
a vote of a majority of
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the outstanding shares of the ISG Mid-Cap Fund on 60 days' written notice. The
New Bennett Lawrence Sub-Advisory Agreement will automatically terminate in the
event of its assignment (as such term is defined in the 1940 Act) or in the
event of the termination of ISG's then-effective advisory agreement with FANB.
If the Transaction is approved by shareholders, then Bennett Lawrence will serve
as Sub-Adviser to the AmSouth Mid Cap Fund.
If the New Bennett Lawrence Sub-Advisory Agreement and the New
Advisory Agreement are approved by shareholders of the ISG Mid-Cap Fund, the New
Bennett Lawrence Sub-Advisory Agreement will become effective as of October 1,
1999. If the New Advisory Agreement is approved but the New Bennett Lawrence
Sub-Advisory Agreement is not approved by the shareholders of the ISG Mid-Cap
Fund, FANB would be fully responsible for the Fund's investment activities. If
neither the New Advisory Agreement nor the New Bennett Lawrence Sub-Advisory
Agreement is approved by the shareholders of the ISG Mid-Cap Fund, the Board of
Directors will consider what actions should be taken.
DIRECTORS' CONSIDERATIONS
The New Bennett Lawrence Sub-Advisory Agreement was
unanimously approved on behalf of the ISG Mid-Cap Fund by the Company's Board of
Directors, including the Independent Board Members, at a meeting held on
September 22, 1999. The Directors considered information relating to Bennett
Lawrence, FANB, AmSouth Bancorporation, AmSouth Bank and the consolidated entity
that would result from the completion of the Merger. The Board considered
Bennett Lawrence Management's capabilities and expertise in serving as
sub-adviser to the ISG Mid-Cap Fund. The Directors reviewed the terms of the New
Bennett Lawrence Sub-Advisory Agreement, including the fact that the
sub-advisory services would continue to be performed at the same costs and by
the same personnel at Bennett Lawrence Management as they were under the Former
Bennett Lawrence Sub-Advisory Agreement.
The section entitled "Directors' Considerations" under
Proposal 2 discusses additional factors considered by the Directors, as well as
matters such as "assignment" of an investment advisory Agreement and "unfair
burden" with respect to the realization of a profit by FANB or its parent as a
result of the Merger. These statements are also applicable to shareholders of
the ISG Mid-Cap Fund with respect to the ratification and approval or
disapproval of the New Bennett Lawrence Sub-Advisory Agreement. Shareholders
should therefore review this information prior to determining whether to ratify
and approve the New Bennett Lawrence Sub-Advisory Agreement.
REQUIRED VOTE AND DIRECTORS' RECOMMENDATION
With respect to ISG Mid-Cap Fund, approval of this proposal
requires the affirmative vote of (a) 67% of the ISG Mid-Cap Fund's voting
securities present at this meeting, if the holders of more than 50% of the ISG
Mid-Cap Fund's outstanding voting securities are present or represented by
proxy, or (b) more than 50% of the ISG Mid-Cap Fund's outstanding voting
securities, whichever is less.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT BOARD MEMBERS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" APPROVAL OF THE NEW BENNETT
LAWRENCE SUB-ADVISORY AGREEMENT.
B. NEW SUB-ADVISORY AGREEMENT BETWEEN FANB AND LAZARD (APPLIES
ONLY TO ISG INTERNATIONAL EQUITY FUND)
As indicated above, consummation of the Merger caused a change
in ownership of FANB which, in turn, automatically terminated the Former Lazard
Sub-Advisory Agreement. Thus, although the Merger had no effect on Lazard, the
change in ownership of FANB requires approval by the Shareholders of ISG
International Equity Fund of a new Sub-Investment Advisory Agreement (the "New
Lazard Sub-Advisory Agreement") between
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FANB, with respect to the ISG International Equity Fund, and Lazard. A copy of
the New Lazard Sub-Advisory Agreement is attached as Appendix F to this
Prospectus/Proxy Statement.
The terms of the New Lazard Sub-Advisory Agreement are
identical in all material respects to the Former Lazard Sub-Advisory Agreement,
except for the effective date, which, in the case of the New Lazard Sub-Advisory
Agreement, is the Merger date, and the escrow provisions.
The Former Lazard Sub-Advisory Agreement was approved by the
Board of Directors, including a majority of the Independent Board Members on May
14, 1998.
Under the terms of the Former Lazard Sub-Advisory Agreement
and the New Lazard Sub-Advisory Agreement, subject to the direction of FANB,
Lazard makes all determinations with respect to the ISG International Equity
Fund's investments and takes all steps as may be necessary to implement its
investment decisions, including the placement of purchase and sale orders on
behalf of the ISG International Equity Fund.
The Former Lazard Sub-Advisory Agreement and the New Lazard
Sub-Advisory Agreement provide that Lazard will pay the expenses incurred by it
and its staff in connection with the performance of its services under each
Lazard Sub-Advisory Agreement, including the payment of salaries of all officers
and employees who are employed by Lazard. FANB will pay Lazard an annual
sub-advisory fee equal to 0.50% of the average daily net assets of the ISG
International Equity Fund. The sub-advisory fee is calculated by FANB, is
accrued daily, and paid monthly, to Lazard. THE FEE ARRANGEMENT BETWEEN FANB AND
LAZARD IS IDENTICAL IN THE FORMER LAZARD SUB-ADVISORY AGREEMENT AND THE NEW
LAZARD SUB-ADVISORY AGREEMENT.
If approved by shareholders of the ISG International Equity
Fund at the Meeting, the New Lazard Sub-Advisory Agreement will remain in effect
until December 31, 2000, unless terminated, and may be continued from year to
year thereafter by the Board of Directors. The continuation of the New Lazard
Sub-Advisory Agreement must be approved by a majority vote of the Directors,
including a majority of the Independent Board Members, cast in person at a
meeting called for that purpose. Lazard has the right, in any year, to notify
FANB in writing at least 60 days before the New Lazard Sub-Advisory Agreement's
anniversary date, that it does not desire a renewal of the New Lazard
Sub-Advisory Agreement. The Directors, or a majority of the outstanding voting
shares of the ISG International Equity Fund, may terminate the New Lazard
Sub-Advisory Agreement at any time without penalty by giving Lazard 60 days'
written notice. The New Lazard Sub-Advisory Agreement will terminate
automatically in the event of any assignment (as defined in the 1940 Act) or in
the event of the termination of the Advisor Agreement with FANB. If the
Transaction is approved by shareholders, then Lazard will serve as Sub-Adviser
to the AmSouth International Equity Fund.
If the New Lazard Sub-Advisory Agreement and the New Advisory
Agreement are approved by shareholders of the ISG International Equity Fund, the
New Lazard Sub-Advisory Agreement will become effective as of October 1, 1999.
If the New Advisory Agreement is approved but the New Lazard Sub-Advisory
Agreement is not approved by the shareholders of the ISG International Equity
Fund, FANB would be fully responsible for the ISG International Equity Fund's
investment activities. If neither the New Advisory Agreement nor the New Lazard
Sub-Advisory Agreement is approved by the shareholders of the ISG International
Equity Fund, the Board of Directors will consider what actions should be taken.
DIRECTORS' CONSIDERATIONS
The Lazard New Sub-Advisory Agreement was unanimously approved
on behalf of the ISG International Equity Fund by the Company's Board of
Directors, including the Independent Board Members, at a meeting held on
September 22, 1999. The Directors considered information relating to Lazard,
FANB, AmSouth Bancorporation, AmSouth Bank and the consolidated entity that
would result from the completion of the Merger. The Board considered Lazard's
capabilities and expertise in serving as sub-adviser to the ISG International
Equity Fund. The Directors reviewed the terms of the New Lazard Sub-Advisory
Agreement, including the fact that the sub-advisory services would continue to
be performed at the same costs and by the same personnel at Lazard as they
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were under the Former Lazard Sub-Advisory Agreement. It was noted that Lazard
has served as the sub-adviser to the ISG International Equity Fund's predecessor
since its inception.
The section entitled "Directors' Considerations" under
Proposal 2 discusses additional factors considered by the Directors, as well as
matters such as "assignment" of an investment advisory Agreement and "unfair
burden" with respect to the realization of profit by FANB or its parent as a
result of the Merger. These statements are also applicable to shareholders of
the ISG International Equity Fund with respect to the ratification and approval
or disapproval of the New Lazard Sub-Advisory Agreement. Shareholders should
therefore review this information prior to determining whether to ratify and
approve the New Lazard Sub-Advisory Agreement.
REQUIRED VOTE AND DIRECTORS' RECOMMENDATION
With respect to ISG International Equity Fund, approval of
this proposal requires the affirmative vote of (a) 67% of the ISG International
Equity Fund's voting securities present at this meeting, if the holders of more
than 50% of the ISG International Equity Fund's outstanding voting securities
are present or represented by proxy, or (b) more than 50% of the ISG
International Equity Fund's outstanding voting securities, whichever is less.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT BOARD MEMBERS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" APPROVAL OF THE NEW LAZARD
SUB-ADVISORY AGREEMENT.
C. NEW SUB-ADVISORY AGREEMENT BETWEEN FANB AND WOMACK (APPLIES
ONLY TO ISG SMALL-CAP OPPORTUNITY FUND)
As indicated above, consummation of the Merger caused a change
in ownership of FANB which, in turn, automatically terminated the Former Womack
Sub-Advisory Agreement. Thus, although the Merger had no effect on Womack, the
change in ownership of FANB requires approval by the Shareholders of ISG
Small-Cap Opportunity Fund of a new Sub-Advisory Agreement (the "New Womack
Sub-Advisory Agreement") between FANB, with respect to the ISG Small-Cap
Opportunity Fund, and Womack. A copy of the New Womack Sub-Advisory Agreement is
attached as Appendix G to this Prospectus/Proxy Statement.
The terms of the New Womack Sub-Advisory Agreement are
identical in all material respects to the Former Womack Sub-Advisory Agreement,
except for the effective date, which, in the case of the New Womack Sub-Advisory
Agreement, is the Merger date, and the escrow provisions.
The Former Womack Sub-Advisory Agreement was approved by the
Board of Directors, including a majority of the Independent Board Members on May
14, 1998.
Pursuant to the terms of the Former Womack Sub-Advisory
Agreement and the New Womack Sub-Advisory Agreement, subject to the direction of
FANB, Womack makes all determinations with respect to the ISG Small-Cap
Opportunity Fund's investments, and takes such steps as may be necessary to
implement such determinations, including the placement of purchase and sale
orders on behalf of the ISG Small-Cap Opportunity Fund.
The Former Womack Sub-Advisory Agreement and the New Womack
Sub-Advisory Agreement provide that Womack will pay the expenses incurred by it
and its staff in connection with the performance of its services under each
Womack Sub-Advisory Agreement, including the payment of salaries of all officers
and employees who are employed by Womack. Under the Former Womack Sub-Advisory
Agreement and the New Womack Sub-Advisory Agreement, FANB will pay Womack a
monthly fee at the annual rate of .35% of the average daily net assets of the
Small-Cap Opportunity Fund. THE FEE ARRANGEMENT BETWEEN FANB AND WOMACK
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IS IDENTICAL IN THE FORMER WOMACK SUB-ADVISORY AGREEMENT AND THE NEW WOMACK
SUB-ADVISORY AGREEMENT.
The New Womack Sub-Advisory Agreement provides that, if
approved by shareholders of the ISG Small-Cap Opportunity Fund, it will remain
in effect until December 31, 2000 unless terminated, and will continue in effect
for successive one-year periods, provided such continuance is specifically
approved at least annually by vote of a majority of Directors, including a
majority of the Independent Board Members, cast in person at a meeting called
for the purpose of voting on such approval. Womack has the right, in any year,
to notify FANB in writing, at least 60 days before the New Womack Sub-Advisory
Agreement's anniversary date, that it does not desire a renewal of the New
Womack Sub-Advisory Agreement. The New Womack Sub-Advisory Agreement may be
terminated by the Directors at any time without penalty, or by a vote of a
majority of the outstanding shares of the ISG Small-Cap Opportunity Fund on 60
days' written notice. The New Womack Sub-Advisory Agreement will terminate
automatically in the event of its assignment (as such term is defined in the
1940 Act) or in the event of the termination of ISG's then-effective advisory
agreement with FANB. If the Transaction is approved by shareholders, then
Sawgrass Asset Management, Inc. will serve as Sub-Adviser to the AmSouth Small
Cap Fund, and Womack will no longer serve as Sub-Adviser to the AmSouth Small
Cap Fund.
If the New Womack Sub-Advisory Agreement and the New Advisory
Agreement are approved by shareholders of the ISG Small-Cap Opportunity Fund,
the New Womack Sub-Advisory Agreement will become effective as of October 1,
1999. If the New Advisory Agreement is approved but the New Womack Sub-Advisory
Agreement is not approved by the shareholders of the ISG Small-Cap Opportunity
Fund, FANB would be fully responsible for the Fund's investment activities. If
neither the New Advisory Agreement nor the New Womack Sub-Advisory Agreement is
approved by the shareholders of the ISG Small-Cap Opportunity Fund, the Board of
Directors will consider what actions should be taken.
DIRECTORS' CONSIDERATIONS
The New Womack Sub-Advisory Agreement was unanimously approved
on behalf of the ISG Small-Cap Opportunity Fund by the Company's Board of
Directors, including the Independent Board Members, at a meeting held on
September 22, 1999. The Directors considered information relating to Womack,
FANB, AmSouth Bancorporation, AmSouth Bank and the consolidated entity that
would result from the completion of the Merger. The Board considered Womack's
capabilities and expertise in serving as sub-adviser to the ISG Small-Cap
Opportunity Fund. The Directors reviewed the terms of the New Womack
Sub-Advisory Agreement, including the fact that the sub-advisory services would
continue to be performed at the same costs and by the same personnel at Womack
as they were under the Former Womack Sub-Advisory Agreement. It was also noted
that Womack has served as the sub-adviser to the ISG Small-Cap Opportunity
Fund's predecessor since March 1997, and that Mr. Womack has acted as the Fund's
portfolio manager since its inception.
The section entitled "Directors' Considerations" under
Proposal 2 discusses additional factors considered by the Directors, as well as
matters such as "assignment" of an investment advisory Agreement and "unfair
burden" with respect to the realization of a profit by FANB or its parent as a
result of the Merger. These statements are also applicable to shareholders of
the ISG Small-Cap Opportunity Fund with respect to the ratification and approval
or disapproval of the New Womack Sub-Advisory Agreement. Shareholders should
therefore review this information prior to determining whether to ratify and
approve the New Womack Sub-Advisory Agreement.
REQUIRED VOTE AND DIRECTORS' RECOMMENDATION
With respect to ISG Small-Cap Opportunity Fund, approval of
this proposal requires the affirmative vote of (a) 67% of the ISG Small-Cap
Opportunity Fund's voting securities present at this meeting, if the holders of
more than 50% of the ISG Small-Cap Opportunity Fund's outstanding voting
securities are present or represented by proxy, or (b) more than 50% of the ISG
Small-Cap Opportunity Fund's outstanding voting securities, whichever is less.
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THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT BOARD MEMBERS, RECOMMENDS THAT
THE SHAREHOLDERS VOTE "FOR" APPROVAL OF THE NEW WOMACK SUB-ADVISORY AGREEMENT.
INTEREST OF CERTAIN PERSONS IN THE TRANSACTION
AmSouth Bancorporation and its subsidiaries, AmSouth Bank and
FANB may be deemed to have an interest in the Agreement and Plan of
Reorganization and the Transaction because AmSouth Bank and First American
National Bank provide investment advisory services to the AmSouth Funds and the
ISG Funds, respectively, pursuant to separate advisory agreements with each Fund
group. AmSouth Bank and First American National Bank receive compensation from
the AmSouth Funds and the ISG Funds, respectively, for services they provide
pursuant to these agreements. The terms and provisions of these arrangements are
described in the AmSouth and ISG Prospectuses. In addition, AmSouth Bank also
serves as custodian and sub-administrator to the AmSouth Funds for which
services it receives a fee as described in the AmSouth Prospectuses. AmSouth
Bank may also act as a service provider pursuant to the Shareholder Services
Plan adopted by AmSouth for which services it would also receive a fee as
described in the AmSouth Prospectuses.
THE AMSOUTH FUNDS
GENERAL
For a general discussion of the AmSouth Funds, see the AmSouth
Prospectuses. For the convenience of ISG shareholders, certain cross-references
to those prospectuses are set forth below.
FINANCIAL INFORMATION
For information on per-share income and capital changes of an AmSouth
Fund, see "Financial Highlights" in the AmSouth Prospectus pertaining to such
Fund.
EXPENSES
For a discussion of an AmSouth Fund's expenses, see "Fee Table" in the
AmSouth Prospectus pertaining to such Fund.
INVESTMENT OBJECTIVES AND POLICIES
For a discussion of an AmSouth Fund's investment objective and
policies, see "Investment Objective" and "Investment Policies" in the AmSouth
Prospectus pertaining to such Fund.
TRUSTEES
Overall responsibility for management of AmSouth rests with its Board
of Trustees who are elected by the shareholders of AmSouth. There are currently
five Trustees, one of whom is considered to be an "interested person" of AmSouth
as defined in the 1940 Act. The Trustees, in turn, elect the officers of AmSouth
to supervise actively its day-to-day operations.
The Trustees of AmSouth, their addresses and principal occupations
during the past five years are set forth as follows:
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<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS AGE WITH AMSOUTH DURING PAST 5 YEARS
- ---------------- --- ---------------- -------------------
<S> <C> <C> <C>
J. David Huber* 53 Chairman From June 1987 to present, employee of
3435 Stelzer Road BISYS Fund Services Limited Partnership
Columbus, Ohio 43219
Dick D. Briggs, Jr., M.D. 65 Trustee From September 1989 to present,
459 DER Building Emeritus Professor and Eminent Scholar
1808 7th Avenue South Chair, Univ. of Alabama at Birmingham;
UAB Medical Center from October 1979 to present,
Birmingham, Alabama 35294 Physician, Univ. of Alabama Health
Services Foundation; from 1981 to
1995, Professor and Vice Chairman,
Dept. of Birmingham School of
Medicine; from 1988 to 1992,
President, CEO and Medical Director,
Univ. of Alabama Health Services
Foundation
Wendell D. Cleaver 64 Trustee From September 3, 1993 to present,
209 Lakewood Drive, West retired; from December 1988 to August
Mobile, Alabama 36608 1993, Executive Vice President, Chief
Operating Officer and Director, Mobile
Gas Service Corporation
Homer H. Turner, Jr. 71 Trustee From June 1991 to present, retired;
751 Cary Drive until June 1991, Vice President,
Auburn, Alabama 36830-2505 Birmingham Division, Alabama Power
Company
James H. Woodward, Jr. 59 Trustee From July 1989 to present, chancellor,
The University of North The University of North Carolina at
Carolina at Charlotte Charlotte; from April 1997 to present,
Charlotte, North Carolina 28223 Trustee, BISYS Variable Insurance
Funds; from 1996 to present, Trustee,
the Sessions Group; from August 1984
to July 1989, Senior Vice President,
University College, University of
Alabama at Birmingham
</TABLE>
* Mr. Huber is considered to be an "interested person" of AmSouth as defined in
the 1940 Act.
INVESTMENT ADVISER
For a discussion of AmSouth Bank and the services performed by it and
its fees with respect to an AmSouth Fund, see "The Adviser" in the AmSouth
Prospectus pertaining to such Fund. For a discussion of Lazard, which serves as
sub-adviser to AmSouth International Equity, Bennett Lawrence, which serves as
sub-adviser to AmSouth Mid Cap, Rockhaven Asset Management, LLC, which serves as
sub-adviser to AmSouth Equity Income, and Sawgrass Asset Management, LLC, which
serves as sub-adviser to AmSouth Small Cap, see "The Sub-Adviser" in the
applicable AmSouth Prospectuses.
65
<PAGE> 66
ADMINISTRATOR
For a discussion of ASO Services Company's activities as the AmSouth
Funds' administrator, the services performed by it and its fees with respect to
an AmSouth Fund, see "The Administrator" in the AmSouth Prospectus pertaining to
such Fund.
DISTRIBUTOR
For a discussion of the Distributor's activities, see "The Distributor"
in any AmSouth Prospectus.
SHARES
For a discussion of voting rights of the AmSouth Funds, see
"Miscellaneous" in any AmSouth Prospectus.
REDEMPTION OR REPURCHASE OF SHARES
For a discussion concerning redemption or repurchase of shares of the
AmSouth Funds, see "Redemption of Shares" in any AmSouth Prospectus.
DIVIDENDS AND DISTRIBUTIONS
For a discussion of the AmSouth Funds' policies with respect to
dividends and distributions of an AmSouth Fund, see "Dividends" in the AmSouth
Prospectus pertaining to such Fund.
EXCHANGE PRIVILEGES
For a discussion of an AmSouth shareholder's right to exchange
particular Class shares of an AmSouth Fund for other Class shares of the same
AmSouth Fund, or the same Class shares or other Class shares of another AmSouth
Fund, see "Exchange Privileges" in any AmSouth Prospectus.
LEGAL PROCEEDINGS
There are no pending material legal proceedings to which AmSouth is a
party.
SHAREHOLDER INQUIRIES
Shareholder inquiries relating to the AmSouth Funds may be addressed to
AmSouth's administrator by writing to ASO Services Company, 3435 Stelzer Road,
Columbus, Ohio 43219 or by calling 1-800-451-8382.
ISG FUNDS
GENERAL
For a general discussion of the ISG Funds, see the ISG Prospectuses.
For the convenience of ISG shareholders, certain cross-references to the ISG
Prospectuses are set forth below.
FINANCIAL INFORMATION
66
<PAGE> 67
For information on per share income and capital changes of an ISG Fund,
see "Financial Highlights" in the ISG Prospectus pertaining to such Fund.
EXPENSES
For a discussion of an ISG Fund's expenses, see "Description of the
Funds -- Objectives, Risk/Return and Expenses -- Fees and Expenses" in the ISG
Prospectus pertaining to such Fund.
INVESTMENT OBJECTIVES AND POLICIES
For a discussion of an ISG Fund's investment objective and policies,
see "Description of the Funds -- Objectives, Risk/Return and Expenses --
Investment Objective" and "Principal Investment Strategies" in the ISG
Prospectus.
DIRECTORS
Overall responsibility for management of the ISG Funds rests with the
Company's Board of Directors. There are currently five Directors, one of whom is
considered to be an "interested person" of the ISG Funds as defined in the 1940
Act. The Directors, in turn, elect the officers of the Company to supervise
actively its day-to-day operations.
The Directors of ISG Funds their addresses and principal occupations
during the past five years are set forth as follows:
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS AGE WITH AMSOUTH DURING PAST 5 YEARS
- ---------------- --- ---------------- -------------------
<S> <C> <C> <C>
William B. Blundin* 60 President and An employee of BISYS Fund Services,
90 Park Avenue Chairman of the Board Inc., general partner of the Distributor.
New York, New York 10016 of Directors Mr. Blundin also is an officer of other
investment companies administered by the
Administrator or its affiliates
Norma A. Coldwell 72 Director International Economist and Consultant;
3330 Southwestern Boulevard Executive Vice President of Coldwell
Dallas, Texas 75225 Financial Consultants; Trustee and
Treasurer of Meridian House International
(International Education and Cultural
Group); Member of the Board of Advisors
of Meridian International Center and
Emerging Capital markets, S.A.
(Montevideo, Uruguay): formerly, Chief
International Economist of Riggs National
Bank, Washington, D.C.
</TABLE>
67
<PAGE> 68
<TABLE>
<S> <C> <C> <C>
Richard H. Francis 66 Director Former Executive Vice President and Chief
40 Grosvenor Road Financial Officer of Pan American World
Short Hills, New Jersey 07078 Airways, Inc., March 1988 to October
1991; Senior Vice President and Chief
Financial Officer of American Standard
Inc., 1960 to March 1988. Mr. Francis is
a director of Allendale Mutual Insurance
and The Indonesia Fund, Inc.
William W. McInnees 48 Director Private investor. From July 1978 to
116 30th Avenue South February 1993, he was Vice-President--
Nashville, Tennessee 37212 Finance and Treasurer of Hospital Corp.
of America. He is also a director of Gulf
South Medical Supply and Diversified
Trust Co.
Robert A Robertson 71 Director Private investor. Since 1991, President
2 Hathaway Common Emeritus, and from 1968 to 1991, President
New Canaan, Connecticut 06840 of The Church Pension Group, NYC. From
1956 to 1966, Senior Vice President of
Colonial Bank & Trust Co. He is also a
director of Mariner Institutional Funds, Inc.,
Mariner Tax-Free Institutional Funds, Inc.,
UST Master Funds, UST Master Tax Exempt Funds,
H.B. and F.H. Bugher Foundation,
Morehouse-Barlow Co. Publishers, The
Canterbury Cathedral Trust in America, The
Living Church Foundation and Hoosac School.
</TABLE>
* Mr. Blundin is considered to be an "interested person" of ISG as defined in
the 1940 Act.
INVESTMENT ADVISER
For a discussion of First American National Bank, and the services
performed by it and its fees with respect to an ISG Fund, and of Womack, which
serves as sub-adviser to ISG Small-Cap Opportunity, Lazard, which serves as
sub-adviser to ISG International Equity and Bennett Lawrence, which serves as
sub-adviser to ISG Mid-Cap, see "Fund Management -- Investment Adviser" in the
applicable ISG Prospectus.
ADMINISTRATOR
For a discussion of BISYS Fund Services Ohio, Inc.'s activities as the
ISG Funds' administrator, the services performed by it and its fees with respect
to an ISG Fund, see "Fund Management -- Administrator and Distributor," in the
ISG Prospectus pertaining to such Fund.
DISTRIBUTOR
For a discussion of the Distributor's activities, see "Fund Mangement
- -- Administrator and Distributor" in any ISG Prospectus.
68
<PAGE> 69
SHARES
For a discussion of voting rights of the ISG Funds, see "Voting Rights"
in any ISG Statement of Additional Information.
REDEMPTION OR REPURCHASE OF SHARES
For a discussion concerning redemption or repurchase of shares of the
ISG Funds, see "Shareholder Information -- Selling Your Shares" in any ISG
Prospectus.
DIVIDENDS AND DISTRIBUTIONS
For a discussion of the ISG Funds' policies with respect to dividends
and distributions of an ISG Fund, see "Shareholder Information -- Dividends,
Distributions and Taxes" in the ISG Prospectus pertaining to such Fund.
EXCHANGE PRIVILEGES
For a discussion of an ISG shareholder's right to exchange particular
Class shares of an ISG Fund for particular Class shares of another ISG Fund, see
"Shareholder Information -- Exchanging Your Shares" in the ISG Prospectus.
LEGAL PROCEEDINGS
There are no pending material legal proceedings to which ISG is a
party.
SHAREHOLDER INQUIRIES
Shareholder inquiries relating to the ISG Funds may be addressed to
ISG's administrator by writing to BISYS Fund Services Ohio, Inc., 3435 Stelzer
Road, Columbus, Ohio 43219-3035 or by calling 1-800-852-0045.
FINANCIAL STATEMENTS
The financial statements and financial highlights for the ISG Funds
included in the ISG Prospectuses and the related statement of additional
information have been audited by KPMG LLP for the periods indicated in their
report thereon which is also included in the statements of additional
information. The financial statements and financial highlights audited by KPMG
LLP have been incorporated herein by reference in reliance on their report given
on their authority as experts in accounting and auditing. Unaudited financial
statements and financial highlights for the ISG Funds for the period ended
September 30, 1999 are filed herewith.
The financial statements and financial highlights for the AmSouth Funds
for each of the periods indicated therein included in the AmSouth Prospectuses
and related statement of additional information have been incorporated by
reference in this Combined Prospectus/Proxy Statement in reliance on the report
of PricewaterhouseCoopers LLP, independent auditors, given on the authority of
that Firm as experts in accounting and auditing.
VOTING INFORMATION
Proxies are being solicited from shareholders of each ISG Fund by the
Company's Directors for the Special Meeting of Shareholders to be held on
February 11, 2000, at the office of BISYS Fund Services, 3534
69
<PAGE> 70
Stelzer Road, Columbus, OH 43219 at TIME p.m., Eastern time, or at such later
time made necessary by adjournment. A proxy may be revoked at any time at or
before the meeting by submitting to ISG a subsequently dated proxy, delivering a
written notice of revocation to ISG at LOCATION. Unless revoked, all valid
proxies will be voted in accordance with the instructions thereon or, in the
absence of instructions, will be voted FOR approval of the Agreement and Plan of
Reorganization. The Transaction contemplated by the Agreement and Plan of
Reorganization will be consummated only if approved by the affirmative vote of a
majority of all votes attributable to the voting securities of each ISG Fund
voting separately as a Fund, as described above. In the event the shareholders
do not approve the reorganization, the Directors will consider possible
alternative arrangements in the best interests of the ISG Fund and shareholders.
Proxies are being solicited by mail. Shareholders of record of each ISG
Fund at the close of business on December 2, 1999 (the "Record Date"), will be
entitled to vote at the Special Meeting of Shareholders or any adjournment
thereof. The holders of one-third of votes attributable to the outstanding
voting shares of an ISG Fund represented in person or by proxy at the meeting
will constitute a quorum for such Fund for the meeting, and a majority of the
shares of an ISG Fund entitled to vote on the Transaction is necessary to
approve the Transaction. Shareholders are entitled to one vote per share and a
proportionate fractional vote for any fractional share.
Votes cast by proxy, telephone, Internet or in person at the meeting
will be counted by the inspector of election appointed by ISG. The inspector of
election will count the total number of votes cast "for" approval of the
proposal for purposes of determining whether sufficient affirmative votes have
been cast. The inspector of election will count shares represented by proxies
that reflect abstentions as shares that are present and entitled to vote on the
matter for purposes of determining the presence of a quorum; however, the
inspector of election will not count "broker non-votes" (i.e., shares held by
brokers or nominees as to which (i) instructions have not been received from the
beneficial owners or the persons entitled to vote and (ii) the broker or nominee
does not have the discretionary voting power on a particular matter) as shares
that are present and entitled to vote on the matter for purposes of determining
the presence of a quorum. For purposes of determining whether an issue has been
approved, abstentions have the effect of a negative vote on the proposal, and
broker non-votes are treated as "against" votes in those instances where
approval of an issue requires a certain percentage of all votes outstanding, but
are given no effect in those instances where approval of an issue requires a
certain percentage of the votes constituting the quorum for such issue.
As of DATE, the officers and Directors of ISG Funds as a group
beneficially owned less than 1% of the outstanding shares of Class A, Class B
and Institutional Class shares of any of the ISG Funds. As of DATE, 1999, to the
best of the knowledge of ISG Funds, the following shareholders owned
beneficially 5% or more of the indicated Fund and Class:
<TABLE>
<CAPTION>
Name and Address Percent of Ownership
- ---------------- --------------------
<S> <C>
ISG CAPITAL GROWTH FUND:
JC Bradford Company ____________% (Class A Shares)
F/B/O Robert Jernigan
330 Commerce Street
Nashville, TN 37201-1899
FTC & Company ____________% (Class A Shares)
Attn: Datalynx No. 106
P.O. Box 173736
Denver, CO 80217-3736
</TABLE>
70
<PAGE> 71
<TABLE>
<S> <C>
First American National Bank ____________% (Class A Shares)
Attn: ISG Investment Management and Trust ____________% (Institutional Class)
800 First American Center
Nashville, TN 37237
ISG EQUITY INCOME FUND:
First American National Bank ____________% (Class A Shares)
Attn: ISG Investment Management and Trust ____________% (Institutional Shares)
800 First American Center
Nashville, TN 37237
ISG LARGE-CAP EQUITY FUND:
First American National Bank ____________% (Institutional Shares)
Attn: ISG Investment Management and Trust
800 First American Center
Nashville, TN 37237
NFSC FEBO FAN-156833
Charles T. Duke ____________% (Class B Shares)
206 Bonnabrook Drive
Hermitage, TN 37076
NFSC FEBO FAN-158690
Patricia A. Estes ____________% (Class B Shares)
104 Bill Stewart Blvd.
Lavergne, TN 37086
NFSC FEBO FAN-159417
Albert Don Taylor ____________% (Class B Shares)
7492 Nolensville Road
Nolensville, TN 37135
ISG SMALL-CAP OPPORTUNITY FUND:
First American National Bank
Attn: ISG Investment Management and Trust ____________% (Institutional Shares)
800 First American Center
Nashville, TN 37237
NFSC FEBO FAE-004251
First American National Bank, Custodian ____________% (Class B Shares)
738 Tobylynn Drive
Nashville, TN 37211
NFSC FEBO FAE-110625
Rhonda K. Sheppard, Custodian ____________% (Class B Shares)
532 Emily Drive
Smyrna, TN 37167
NFSC FEBO FAE-110833
Rhonda K. Sheppard, Custodian ____________% (Class B Shares)
</TABLE>
71
<PAGE> 72
<TABLE>
<S> <C>
532 Emily Drive
Smyrna, TN 37167
NFSC FEBO FAE-110833
Janis G. Lopez ____________% (Class B Shares)
2723 Albany Court
Murfreesboro, TN 37219
Sanwa Bank of California
Wilshire Associates, Inc. ____________% (Class A Shares)
444 Market Street, 23rd Floor
San Francisco, CA 94111-5325
JC Bradford Company
RCIP Limited Partners 1 ____________% (Class A Shares)
330 Commerce Street
Nashville, TN 37201-1899
ISG INCOME FUND:
First American National Bank
Attn: ISG Investment Management and Trust ____________% (Class A Shares)
800 First American Center ____________% (Institutional Shares)
Nashville, TN 37237
NFSC FEBO FAN-107280
Mary M. McGavock ____________% (Class B Shares)
115 Woodmont Blvd., Apt. 220
Nashville, TN 37205
NFSC FEBO FAE-033243 ____________% (Class B Shares)
NFSC FEBO FAN-109630
Mildred V. Morgan ____________% (Class B Shares)
1449 Fosterville Loop
Bell Buckle, TN 37020
ISG LIMITED TERM U.S. GOVERNMENT FUND:
First American National Bank
Attn: ISG Investment Management and Trust ____________% (Institutional Shares)
800 First American Center
Nashville, TN 37237
Martha D. Waller
Martha Sue Waller ____________% (Class A Shares)
2615 Poplar Springs Drive
Meridian, MS 38305-4614
Anderson Support and Equipment Foundation, Inc.
1400 20th Avenue ____________% (Class A Shares)
Meridian, MS 38301-4103
</TABLE>
72
<PAGE> 73
<TABLE>
<S> <C>
National Financial Services Corp.
Raspberry Comm. Properties, L.P. ____________% (Class B Shares)
800 Spring Street S
Bethany, LA 71007-9532
NFSC FEBO FAN-107280
Mary M. McGarock ____________% (Class B Shares)
115 Woodmont Blvd. Apt. 220
Nashville, TN 37205
NFSC FEBO FAD-029864
Ruby Page Morton ____________% (Class B Shares)
521 Fairfax Avenue
Nashville, TN 37212
NFSC FEBO FAN-092312
Lois B. Hoge ____________% (Class B Shares)
20 Ridge Road
Westminster, MD 21157
NFSC FEBO FAN-103012
Mary L. Binkley ____________% (Class B Shares)
309 Chesterfield Circle
Madison, TN 37115
NFSC FEBO FAN-137383
Beatrice P. Rushing ____________% (Class B Shares)
430 Forrest Avenue
Jackson, TN 38301
NFSC FEBO FAP-068025
First American National Bank, Custodian ____________% (Class B Shares)
306 Dye Road
Bell Buckle, TN 37020
NFSC FEBO FAN-155306
Woodrow W. Billips ____________% (Class B Shares)
3701 Woodlawn Drive
Nashville, TN 37215
ISG LIMITED TERM TENNESSEE TAX-EXEMPT FUND:
First American National Bank
Attn: ISG Investment Management & Trust ____________% (Class A Shares)
800 First American Center
Nashville, TN 37237
NFSC FEBO FAN-000078
Rose S. Kennon ____________% (Class B Shares)
</TABLE>
73
<PAGE> 74
<TABLE>
<S> <C>
1603 Tyne Blvd.
Nashville, TN 37216
NFSC FEBO FAD-024937
Mary Ann Pangle ____________% (Class B Shares)
3916 Caylor Drive
Nashville, TN 37215
NFSC FEBO FAD-027499
Thomas I. Sutton ____________% (Class B Shares)
4616 Tara Drive
Nashville, TN 37215
NFSC FEBO FAN-059580
Floyd W. Rhew ____________% (Class B Shares)
5009 D. Camelot Drive
Columbia, TN 38401
NFSC FEBO FAN-090565
Mary Dye ____________% (Class B Shares)
1913 Truett Street
Nashville, TN 37206
Name and Address
NFSC FEBO FAN-109183
Louese H. Peace ____________% (Class B Shares)
7919 Lakeview Heights
Baxter, TN 39544
NFSC FEBO FAN-142115
Yvonne P. Benson ____________% (Class B Shares)
4409 Belmont Terrace #246
Nashville, TN 37215
ISG TENNESSEE TAX-EXEMPT FUND:
First American National Bank
Attn: ISG Investment Management & Trust ____________% (Class A Shares)
800 First American Center
Nashville, TN 37237
CoreLink Financial Inc.
P.O. Box 4054 ____________% (Class A Shares)
Concord, CA 94520
JC Bradford Company
BTC SUC TUA Jeanne A ____________% (Class A Shares)
330 Commerce Street
Nashville, TN 37201-1899
NFSC FEBO FAN-060623
James E. Richards, III ____________% (Class A Shares)
</TABLE>
74
<PAGE> 75
<TABLE>
<S> <C>
10 Castlewood Court
Nashville, TN 37215
NFSC FEBO FAN-071587
Janet Myers Trent ____________% (Class A Shares)
1400 Kenesaw Avenue, Apt. 12R
Knoxville, TN 37918
NFSC FEBO FAN-080438
Alan F. Cooper ____________% (Class A Shares)
3305 Honeywood Drive
Johnson City, TN 37604
NFSC FEBO FAN-048933
Vivian M. Jones ____________% (Class B Shares)
5400 Park Avenue Unit - 306
Memphis, TN 34119
NFSC FEBO FAN-128732
Emil Fay Penley ____________% (Class B Shares)
1920 Bowster Drive, Apt C-8
Kingport, TN 37660
NFSC FEBO FAN-068340
Frances T. Harris ____________% (Class B Shares)
8045 Sunrise Circle
Franklin, TN 37067
NFSC FEBO FAN-267880
Bobby L. Jones _____________% (Class B Shares)
9 Abbeywood Court
Nashville, TN 37215
NFSC FEBO FAN-230626
Emet R. Ray Sr. ____________% (Class B Shares)
Mary F. Ray
802 Davis Drive
Brentwood, TN 37027
NFSC FEBO FAN-162552
Brenda K. Brasher ____________% (Class B Shares)
8244 Spring Ride Drive
Nashville, TN 37221
ISG LIMITED TERM INCOME FUND:
CoreLink Financial Inc.
P.O. Box 4054 ____________% (Class A Shares)
Concord, CA 94520
</TABLE>
75
<PAGE> 76
<TABLE>
<S> <C>
FTC & Company
P.O. Box 173736 ____________% (Class A Shares)
Denver, CO 80217-3736
First American National Bank
Attn: ISG Investment Management and Trust ____________% (Institutional Shares)
800 First American Center
Nashville, TN 37237
NFSC FEBO FAN-107280
Mary M McGavook ____________% (Class B Shares)
115 Woodmont Blvd. Apt. 220
Nashville, TN 37206
NFSC FEBO FAN-092312
Lois B. Hoge ____________% (Class B Shares)
20 Ridge Road
Westminster, MD 21157
NFSC FEBO FAN-109630
Mildred V. Morgan ____________% (Class B Shares)
1448 Footerville Loop
Bell Buckle, TN 37020
NFSC FEBO FAN-121002
Faye Ellen Dunlap ____________% (Class B Shares)
4612 Singleton Station Road
Louisville, TN 37777
NFSC FEBO FAN-129216
Margaret H. Leeper ____________% (Class B Shares)
137 Piney Flats Road
Piney Flats, TN 37686
NFSC FEBO FAP-062073
First American National Bank, Custodian ____________% (Class B Shares)
202 Windsor Terr. Road
Nashville, TN 37221
NFSC FEBO FAP-074845
First American National Bank, Custodian ____________% (Class B Shares)
347 Dafoe Circle
Maryville, TN 37804
NFSC FEBO FAP-058025
First American National Bank, Custodian ____________% (Class B Shares)
306 Dye Road
Bell Buckle, TN 37020
</TABLE>
76
<PAGE> 77
<TABLE>
<S> <C>
First American National Bank
First American Center ____________% (Institutional Shares)
300 Union Street
Nashville, TN 37237
ISG PRIME MONEY MARKET FUND:
First American National Bank
Attn: ISG Investment Management & Trust ____________% (Class A Shares)
800 First American Center ___________% (Institutional Shares)
Nashville, TN 37237
National Financial Services Corp.
Exclusively for the Benefit of our Customers ____________% (Class A Shares)
200 Liberty Street
New York, New York 10281
NFSC FEBO FAD-034177
Sanh Huzl Huynh ____________% (Class B Shares)
4917 Franklin Road
Nashville, TN 37220
NFSC FEBO FAN-064009121002
William E. Brazell ____________% (Class B Shares)
127 W End
Dickson, TN 37055
NFSC FEBO FAN-104426
Norma I. Haden ____________% (Class B Shares)
272 Sailboat Drive
Nashville, TN 37217
NFSC FEBO FAP-0065617
First American National Bank, Custodian ____________% (Class B Shares)
272 Sailboat Drive
Nashville, TN 37217
NFSC FEBO FAN-102121
First American National Bank, Custodian ____________% (Class B Shares)
60 Henslee Drive
Dickson, TN 37055
NFSC FEBO FAN-156019
Glynda B. Pendergrass ____________% (Class B Shares)
204 Village Circle West
Dickson, TN 37055
NFSC FEBO FAD-044407
Scott A. Moore ____________% (Class B Shares)
</TABLE>
77
<PAGE> 78
<TABLE>
<S> <C>
753 Radiance Drive
Cordova, TN 38018
ISG TREASURY MONEY MARKET FUND:
First American National Bank
Attn: ISG Investment Management and Trust ____________% (Class A Shares)
800 First American Center ___________% (Institutional Shares)
Nashville, TN 37237
Hare & Co.
c/o The Bank of New York ____________% (Class A Shares)
Attn: Stif/Master Note
One Wall Street
New York, NY 10286
National Financial Services Corp.
Exclusively for the Benefit of our Customers ____________% (Class A Shares)
200 Liberty Street
New York, NY 10281
ISG GOVERNMENT INCOME FUND:
National Financial Services Corp.
Highland Plantation ____________% (Class A Shares)
Attn: James D. Bell
1248 Highland Plantation Road
Greenville, MS 36701-9252
NFSC FEBO OIC 800962
Hodding Carter Memorial YMCA ____________% (Class A Shares)
1688 Fairground Road
Greenville, MS 38703-7805
NFSC FEBO BH2 379948
William F. Ford ____________% (Class A Shares)
SH 2069
Shreveport, LA 71101-3666
NFSC FEBO BH2 190349
Johnny B. Mitchell ____________% (Class A Shares)
Mary Sue Mitchell
904 Meadowbrook Drive
West Monroe, LA 71291-5035
NFSC FEBO BH2 001392
Marie Gober ____________% (Class A Shares)
2326 Bienville Drive
Monroe, LA 71201-2945
NFSC FEBO FAD-045543
James R. Wesson ____________% (Class B Shares)
</TABLE>
78
<PAGE> 79
<TABLE>
<S> <C>
612 Spring House Court
Brentwood, TN 37027
First American National Bank
Attn: ISG Investment Management & Trust ___________% (Institutional Shares)
800 First American Center
Nashville, TN 37237
ISG MUNICIPAL INCOME FUND:
Pullen Estate LP
P.O. Box 5327 ____________% (Class A Shares)
Jackson, MS 39296-5372
NFSC FEBO OIC 3-5128
Blanche R. Young ____________% (Class A Shares)
334 Williamsburg Road
Columbia, MS 36701-1948
NFSC FEBO OIC 528730
Harvey C. Sanders ____________% (Class A Shares)
Alds Sanders
P.O. Box 4387
Jackson, MS 39296-4387
NFSC FEBO OIC 215384
James A. O'Neill, Jr. ____________% (Class A Shares)
Marie D. O'Neill
2302 St. Charles Avenue, 3A
New Orleans, LA 70130-5849
NFSC FEBO OIC 560251
Cheryl Jean Jones ____________% (Class A Shares)
Max & Martha Jordan Family Trust
1175 Jordan Lane
Raymond, MS 39154-8725
BISYS Fund Services, LP
3435 Stelzer Road ____________% (Class B Shares)
Columbus, Ohio 43219-8001
First American National Bank
Attn: ISG Investment Management & Trust ____________% (Institutional Shares)
800 First American Center
Nashville, TN 37237
ISG INTERNATIONAL EQUITY FUND:
Houvis & Co.
First American National Bank ____________% (Class A Shares)
RPO Legwell & Sons, Enterprises
300 Union Street, NA 0052
Nashville, TN 37237-0001
</TABLE>
79
<PAGE> 80
<TABLE>
<S> <C>
NFSC FEBO OIC 054372
John R. Nunnery ____________% (Class A Shares)
P.O. Box 1325
Meridian, MS 39302-1325
NFSC FEBO BH2 128899
David H. Nordyke ____________% (Class A Shares)
6113 River Road
Shreveport, LA 71105-4833
NFSC FEBO OIC 176060215384
Mark A. Barger ____________% (Class A Shares)
Lacy N. Langford
P.O. Box 296
Greenwood, MS 38936-0295
BISYS Fund Services, LP
3435 Stelzer Road ____________% (Class B Shares)
Columbus, Ohio 43219-9001
First American National Bank
Attn: ISG Investment Management & Trust ____________% (Institutional Shares)
800 First American Center
Nashville, TN 37237
ISG AGGRESSIVE GROWTH PORTFOLIO:
Lorrie D. Madden
James B. Madden ____________% ( Class A Shares)
1954 Hunstman CR
Franklin, TN 37064
BISYS Fund Services, LP
3435 Stelzer Road __________% (Institutional Shares)
Columbus, Ohio 43219-8001
ISG GROWTH PORTFOLIO:
BISYS Fund Services, LP
3435 Stelzer Road __________% (Institutional Shares)
Columbus, Ohio 43219-8001
ISG GROWTH & INCOME PORTFOLIO:
BISYS Fund Services, LP
3435 Stelzer Road __________% (Class A Shares)
Columbus, Ohio 43219-8001
BISYS Fund Services, LP
3435 Stelzer Road __________% (Institutional Shares)
Columbus, Ohio 43219-8001
ISG MODERATE GROWTH & INCOME PORTFOLIO:
BISYS Fund Services, LP
</TABLE>
80
<PAGE> 81
<TABLE>
<S> <C>
3435 Stelzer Road __________% (Class A Shares)
Columbus, Ohio 43219-8001
BISYS Fund Services, LP
3435 Stelzer Road __________% (Institutional Shares)
Columbus, Ohio 43219-8001
ISG CURRENT INCOME PORTFOLIO:
BISYS Fund Services, LP
3435 Stelzer Road __________% (Class A Shares)
Columbus, Ohio 43219-8001
BISYS Fund Services, LP
3435 Stelzer Road __________% (Institutional Shares)
Columbus, Ohio 43219-8001
ISG MID-CAP FUND:
</TABLE>
ISG TAX-EXEMPT MONEY MARKET FUND:
The votes of the shareholders of AmSouth are not being solicited, since
their approval or consent is not necessary for approval of the Agreement. As of
August DATE, the officers and Trustees of AmSouth as a group beneficially owned
less than 1% of the outstanding Class A, Class B and Institutional Class shares
of any of the AmSouth Funds. As of DATE, to the best of the knowledge of
AmSouth, the following shareholders owned beneficially 5% or more of the
indicated Fund and Class:
<TABLE>
<S> <C>
Name and Address Percent of Ownership
AMSOUTH PRIME MONEY MARKET FUND:
AmSouth
1901 Sixth Avenue-North __________% (Trust Shares)
Birmingham, Alabama 35203
National Financial Services Corporation
One World Financial Center __________% (Class A Shares)
200 Liberty Street
New York, New York 10281
National Financial Services Corporation
One World Financial Center __________% (Class B Shares)
200 Liberty Street
New York, New York 10281
</TABLE>
81
<PAGE> 82
<TABLE>
<S> <C>
AMSOUTH TAX-EXEMPT MONEY MARKET FUND:
AmSouth
1901 Sixth Avenue-North __________% (Trust Shares)
Birmingham, Alabama 35203
National Financial Services Corporation
One World Financial Center __________% (Class A Shares)
200 Liberty Street
New York, New York 10281
AMSOUTH BOND FUND:
AmSouth
1901 Sixth Avenue-North __________% (Trust Shares)
Birmingham, Alabama 35203
National Financial Services Corporation
One World Financial Center __________% (Class A Shares)
200 Liberty Street
New York, New York 10281
National Financial Services Corporation
One World Financial Center __________% (Class B Shares)
200 Liberty Street
New York, New York 10281
AMSOUTH LIMITED TERM BOND FUND:
AmSouth
1901 Sixth Avenue-North __________% (Trust Shares)
Birmingham, Alabama 35203
National Financial Services Corporation
One World Financial Center __________% (Class A Shares)
200 Liberty Street
New York, New York 10281
National Financial Services Corporation
One World Financial Center __________% (Class B Shares)
200 Liberty Street
New York, New York 10281
Morgan Keegan, Inc.
Robert P. Hall, IRA __________% (Class A Shares)
19493 Scenic Hwy. 98
Fairhope, AL 36532
AMSOUTH GOVERNMENT INCOME FUND:
</TABLE>
82
<PAGE> 83
<TABLE>
<S> <C>
AmSouth
1901 Sixth Avenue-North __________% (Trust Shares)
Birmingham, Alabama 35203
National Financial Services Corporation
One World Financial Center __________% (Class A Shares)
200 Liberty Street
New York, New York 10281
AMSOUTH MUNICIPAL BOND FUND:
AmSouth
1901 Sixth Avenue-North __________% (Trust Shares)
Birmingham, Alabama 35203
National Financial Services Corporation
One World Financial Center __________% (Class A Shares)
200 Liberty Street
New York, New York 10281
National Financial Services Corporation
One World Financial Center __________% (Class B Shares)
200 Liberty Street
New York, New York 10281
Sterne Agee Leach Inc.
Plaza Suite 100B __________%(Class A Shares)
813 Shades Creek Parkway
Birmingham, Alabama 35209
AMSOUTH EQUITY INCOME FUND:
AmSouth
1901 Sixth Avenue-North __________% (Trust Shares)
Birmingham, Alabama 35203
AMSOUTH SMALL CAP FUND:
AmSouth
1901 Sixth Avenue-North __________% (Trust Shares)
Birmingham, Alabama 35203
National Financial Services Corporation __________% (Class A Shares)
One World Financial Center
200 Liberty Street
New York, New York 10281
National Financial Services Corporation __________% (Class B Shares)
One World Financial Center
</TABLE>
83
<PAGE> 84
200 Liberty Street
New York, New York 10281
THE BOARD OF DIRECTORS OF ISG, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMEND APPROVAL OF THE PLAN AND THE ADVISORY AND SUB-
ADVISORY AGREEMENTS.
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
This Combined Prospectus/Proxy Statement and the related statement of
additional information do not contain all of the information set forth in the
registration statements and the exhibits relating thereto which AmSouth and ISG,
respectively, have filed with the Securities and Exchange Commission under the
Securities Act of 1933 and the 1940 Act to which reference is hereby made. The
SEC file numbers for the ISG Prospectuses and the related statement of
additional information which are incorporated by reference herein are
Registration No. 33-34080 and 811-06076. The SEC file numbers for the AmSouth
Prospectuses and related statement of additional information which are
incorporated by reference herein are Registration No. 33-21660 and 811-5551.
AmSouth and ISG are subject to the informational requirements of the
Securities Exchange Act of 1934 and in accordance therewith file reports and
other information with the SEC. Reports, proxy and information statements,
registration statements and other information filed by AmSouth and ISG can be
inspected and copied at the public reference facilities of the SEC at 450 Fifth
Street, N.W. Washington, D.C. 20549. Copies of such filings may also be
available at the following SEC regional offices: 90 Devonshire Street, Suite
700, Boston, MA 02109; 500 West Madison Street, Suite 1400, Chicago, IL
60611-2511; and 601 Walnut Street, Suite 1005E, Philadelphia, PA 19106. Copies
of such materials can also be obtained by mail from the Public Reference Branch,
Office of Consumer Affairs and Information Services, SEC, Washington, D.C. 20549
at prescribed rates.
84
<PAGE> 85
APPENDIX A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
<PAGE> 86
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as
of DATE, by and between AmSouth Funds ("AmSouth"), a Massachusetts business
trust, and The Infinity Mutual Funds, Inc. ("Infinity"), a Maryland corporation,
on behalf of the ISG Funds. The capitalized terms used herein shall have the
meaning ascribed to them in this Agreement.
PLAN OF REORGANIZATION
(a) Infinity will sell, assign, convey, transfer and deliver to
AmSouth, and AmSouth will acquire, on the Exchange Date, all of the properties
and assets existing at the Valuation Time in the following funds:
ISG Current Income Portfolio ("ISG Current Income")
ISG Treasury Money Market Fund ("ISG Treasury Money Market")
ISG Moderate Growth & Income Portfolio ("ISG Moderate Growth & Income")
ISG Growth & Income Portfolio ("ISG Growth & Income")
ISG Growth Portfolio ("ISG Growth")
ISG Aggressive Growth Portfolio ("ISG Aggressive Growth")
ISG Mid-Cap Fund ("ISG Mid-Cap")
ISG Large-Cap Equity Fund ("ISG Large-Cap Equity")
ISG International Equity Fund ("ISG International Equity")
ISG Capital Growth Fund ("ISG Capital Growth")
ISG Tennessee Tax-Exempt Fund ("ISG Tennessee Tax-Exempt")
ISG Limited Term Tennessee Tax-Exempt Fund ("ISG Limited Term Tennessee
Tax-Exempt")
ISG Limited Term U.S. Government Fund ("ISG Limited Term U.S. Government")
ISG Limited Term Income Fund ("ISG Limited Term Income")
ISG Equity Income Fund ("ISG Equity Income")
ISG Municipal Income Fund ("ISG Municipal Income")
ISG Small-Cap Opportunity Fund ("ISG Small-Cap Opportunity")
ISG Tax-Exempt Money Market Fund ("ISG Tax-Exempt Money Market")
ISG Prime Money Market Fund ("ISG Prime Money Market")
ISG Government Income Fund ("ISG Government Income")
ISG Income Fund ("ISG Income")
(such funds each are an "ISG Fund" and are collectively the "ISG Funds").
Such acquisition is to be made by the following funds:
AmSouth Strategic Portfolios: Current Income Portfolio ("AmSouth
Current Income")
AmSouth Treasury Reserve Money Market Fund ("AmSouth Treasury Reserve
Money
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<PAGE> 87
Market")
AmSouth Strategic Portfolios: Moderate Growth and Income Portfolio
("AmSouth Moderate Growth and Income")
AmSouth Strategic Portfolios: Growth and Income Portfolio ("AmSouth
Growth and Income")
AmSouth Strategic Portfolios: Growth Portfolio ("AmSouth Growth")
AmSouth Strategic Portfolios: Aggressive Growth Portfolio ("AmSouth
Aggressive Growth")
AmSouth Mid Cap Fund ("AmSouth Mid Cap")
AmSouth Large Cap Fund ("AmSouth Large Cap")
AmSouth International Equity Fund ("AmSouth International Equity")
AmSouth Capital Growth Fund ("AmSouth Capital Growth")
AmSouth Tennessee Tax-Exempt Fund ("AmSouth Tennessee Tax-Exempt")
AmSouth Limited Term Tennessee Tax-Exempt Fund ("AmSouth Limited Term
Tennessee Tax-Exempt")
AmSouth Limited Term U.S. Government Fund ("AmSouth Limited Term U.S.
Government")
AmSouth Government Income Fund ("AmSouth Government Income")
AmSouth Limited Term Bond Fund ("AmSouth Limited Term Bond")
AmSouth Equity Income Fund ("AmSouth Equity Income")
AmSouth Municipal Bond Fund ("AmSouth Municipal Bond")
AmSouth Small Cap Fund ("AmSouth Small Cap")
AmSouth Tax-Exempt Money Market Fund ("AmSouth Tax-Exempt Money
Market")
AmSouth Prime Money Market Fund ("AmSouth Prime Money Market")
AmSouth Bond Fund ("AmSouth Bond")
(such funds each are an "AmSouth Fund" and are collectively the
"AmSouth Funds").
For purposes of this Agreement the respective ISG Funds correspond to the
AmSouth Funds as follows:
ISG Current Income AmSouth Current Income
ISG Treasury Money Market AmSouth Treasury Reserve Money Market
ISG Moderate Growth & Income AmSouth Moderate Growth and Income
ISG Growth & Income AmSouth Growth and Income
ISG Growth AmSouth Growth
ISG Aggressive Growth AmSouth Aggressive Growth
ISG Mid-Cap AmSouth Mid Cap
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<PAGE> 88
ISG Large-Cap Equity AmSouth Large Cap
ISG International Equity AmSouth International Equity
ISG Capital Growth AmSouth Capital Growth
ISG Tennessee Tax-Exempt AmSouth Tennessee Tax-Exempt
ISG Limited Term Tennessee Tax-Exempt AmSouth Limited Term Tennessee Tax-
Exempt
ISG Limited Term U.S. Government AmSouth Limited Term U.S. Government
ISG Government Income AmSouth Government Income
ISG Limited Term Income AmSouth Limited Term Bond
ISG Equity Income AmSouth Equity Income
ISG Municipal Income AmSouth Municipal Bond
ISG Small-Cap Opportunity AmSouth Small Cap
ISG Tax-Exempt Money Market AmSouth Tax-Exempt Money Market
ISG Prime Money Market AmSouth Prime Money Market
ISG Income AmSouth Bond
In consideration therefor, each AmSouth Fund shall, on the Exchange Date, assume
all of the liabilities of the corresponding ISG Fund and transfer to the
corresponding ISG Fund a number of full and fractional AmSouth Class A, Class B,
or Trust shares of the corresponding AmSouth Fund (collectively, "Shares")
having an aggregate net asset value equal to the value of all of the assets of
each ISG Fund transferred to the corresponding AmSouth Fund on such date less
the value of all of the liabilities of each ISG Fund assumed by the
corresponding AmSouth Fund on that date. It is intended that each reorganization
described in this Agreement shall be a tax-free reorganization under the
Internal Revenue Code of 1986, as amended (the "Code").
(b) Upon consummation of the transactions described in paragraph (a) of
this Agreement, each ISG Fund in complete liquidation shall distribute to its
respective shareholders of record as of the Exchange Date the Shares received by
it, each shareholder being entitled to receive that number of Shares equal to
the proportion which the number of shares of common stock of the ISG Fund held
by such shareholder bears to the number of such shares of the ISG Fund
outstanding on such date. ISG Fund shareholders of record holding Institutional
Class shares will receive AmSouth Trust shares; ISG Fund shareholders of record
A-3
<PAGE> 89
holding Class B shares will receive AmSouth Class B shares; and ISG Fund
shareholders of record holding Class A shares will receive AmSouth Class A
shares.
AGREEMENT
AmSouth and Infinity represent, warrant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF INFINITY. Each of Infinity and
each ISG Fund represent and warrant to and agree with AmSouth and each AmSouth
Fund that:
(a) Infinity is a corporation duly established and validly existing
under the laws of the State of Maryland and has power to own all of its
properties and assets and to carry out its obligations under this Agreement.
Infinity and each ISG Fund is not required to qualify as a foreign association
in any jurisdiction. Infinity and each ISG Fund has all necessary federal, state
and local authorizations to carry on its business as now being conducted and to
fulfill the terms of this Agreement, except for shareholder approval and as
otherwise described in Section 1(l).
(b) Infinity is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company, and such
registration has not been revoked or rescinded and is in full force and effect.
Each ISG Fund has elected to qualify and has qualified as a regulated investment
company under Part I of Subchapter M of the Code, as of and since its first
taxable year, and qualifies and intends to continue to qualify as a regulated
investment company for its taxable year ending upon its liquidation. Each ISG
Fund has been a regulated investment company under such sections of the Code at
all times since its inception.
(c) The statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of portfolio investments
(indicating their market values) for each ISG Fund at and for the year ended
December 31, 1998, such statements and schedules having been audited by KPMG
LLP, independent accountants to Infinity, have been furnished to AmSouth. Such
statements of assets and liabilities and schedule fairly present the financial
position of each ISG Fund as of their respective dates and said statements of
operations and changes in net assets fairly reflect the results of operations
and changes in net assets for the periods covered thereby in conformity with
generally accepted accounting principles. The statements of assets and
liabilities, statements of operations, statements of changes in net assets and
schedules of investments (indicating their market values) for each ISG Fund for
the six-month period ended June 30, 1999, which are unaudited, have also been
furnished to AmSouth. Such statements of assets and liabilities and schedules
fairly present the financial position of the ISG Funds as of their respective
dates, and said statements of operations and changes in net assets fairly
reflect the results of its operations and changes in financial position for the
periods covered thereby in conformity with generally accepted accounting
principles.
(d) The prospectuses of the ISG Funds dated May 1, 1999 (the "ISG
Prospectuses") and the Statement of Additional Information for the ISG Funds
dated May 1, 1999 and on file
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<PAGE> 90
with the Securities and Exchange Commission, which have been previously
furnished to AmSouth, did not as of their dates and do not as of the date hereof
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of Infinity or any ISG Fund, overtly threatened
against Infinity or any ISG Fund which assert liability on the part of Infinity
or any ISG Fund.
(f) There are no material contracts outstanding to which Infinity, with
respect to the ISG Funds, or any ISG Fund is a party, other than as disclosed in
the ISG Prospectuses and the corresponding Statement of Additional Information
or in the Registration Statement and the Proxy Statement.
(g) Neither Infinity, with respect to the ISG Funds, nor any ISG Fund
has any known liabilities of a material nature, contingent or otherwise, other
than those shown as belonging to it on its statement of assets and liabilities
as of June 30, 1999, and those incurred in the ordinary course of Infinity's
business as an investment company since that date. Prior to the Exchange Date,
Infinity will advise AmSouth of all known material liabilities, contingent or
otherwise, incurred by it, with respect to the ISG Funds, and each ISG Fund
subsequent to June 30, 1999, whether or not incurred in the ordinary course of
business.
(h) As used in this Agreement, the term "Investments" shall mean each
ISG Fund's investments shown on the schedule of its portfolio investments as of
June 30, 1999, referred to in Section 1(c) hereof, as supplemented with such
changes as Infinity or each ISG Fund shall make after June 30, 1999, which
changes shall be disclosed to AmSouth, and changes resulting from stock
dividends, stock split-ups, mergers and similar corporate actions.
(i) Each ISG Fund has filed or will file all federal and state tax
returns which, to the knowledge of Infinity's officers, are required to be filed
by each ISG Fund and has paid or will pay all federal and state taxes shown to
be due on said returns or on any assessments received by each ISG Fund. To the
best of such officers' knowledge, all tax liabilities of each ISG Fund have been
adequately provided for on its books, and no tax deficiency or liability of any
ISG Fund has been asserted, and no question with respect thereto has been
raised, by the Internal Revenue Service or by any state or local tax authority
for taxes in excess of those already paid.
(j) As of both the Valuation Time and the Exchange Date and except for
shareholder approval and otherwise as described in Section 1(l), Infinity on
behalf of each ISG Fund will have full right, power and authority to sell,
assign, transfer and deliver the Investments and any other assets and
liabilities of each ISG Fund to be transferred to the corresponding AmSouth Fund
pursuant to this Agreement. At the Exchange Date, subject only to the delivery
of the Investments and any such other assets and liabilities as contemplated by
this
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<PAGE> 91
Agreement, AmSouth will, on behalf of each AmSouth Fund, acquire the Investments
and any such other assets subject to no encumbrances, liens or security
interests in favor of any third party creditor of Infinity or an ISG Fund and,
except as described in Section 1(k), without any restrictions upon the transfer
thereof.
(k) Except as to Investments otherwise disclosed as unregistered
securities pursuant to Section 1(h) hereof, no registration under the Securities
Act of 1933, as amended (the "1933 Act"), of any of the Investments would be
required if they were, as of the time of such transfer, the subject of a public
distribution by either of Infinity or AmSouth.
(l) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Infinity on behalf of
the ISG Funds or any ISG Fund of the transactions contemplated by this
Agreement, except such as may be required under the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), the 1940 Act, state
securities or blue sky laws (which term as used herein shall include the laws of
the District of Columbia and of Puerto Rico) or the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "H-S-R Act").
(m) The registration statement (the "Registration Statement") filed
with the Securities and Exchange Commission (the "Commission") by AmSouth on
Form N-14 relating to the Shares issuable hereunder, and the proxy statement of
Infinity included therein (the "Proxy Statement"), on the effective date of the
Registration Statement and insofar as they relate to Infinity and the ISG Funds,
(i) will comply in all material respects with the provisions of the 1933 Act,
the 1934 Act and the 1940 Act and the rules and regulations thereunder and (ii)
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which such statements were made,
not misleading; and at the time of the shareholders' meeting referred to in
Section 8(a) below and on the Exchange Date, the prospectus contained in the
Registration Statement of which the Proxy Statement is a part (the
"Prospectus"), as amended or supplemented by any amendments or supplements filed
with the Commission by AmSouth, insofar as it relates to Infinity and the ISG
Funds, will not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not misleading; provided, however, that none of the representations
and warranties in this subsection shall apply to statements in or omissions from
the Registration Statement, the Prospectus or the Proxy Statement, made in
reliance upon or in conformity with information furnished by AmSouth, or any
AmSouth Fund, for use in the Registration Statement, Prospectus, or Proxy
Statement.
(n) All of the issued and outstanding shares of common stock of each
ISG Fund have been offered for sale and sold in conformity with all applicable
federal and state securities laws.
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<PAGE> 92
2. REPRESENTATIONS AND WARRANTIES OF AMSOUTH. Each of AmSouth and each
AmSouth Fund jointly and severally represent and warrant to and agree with
Infinity and each ISG Fund that:
(a) AmSouth is a business trust duly established and validly existing
under the laws of The Commonwealth of Massachusetts and has power to carry on
its business as it is now being conducted and to carry out this Agreement.
AmSouth and each AmSouth Fund is not required to qualify as a foreign
association in any jurisdiction. AmSouth and each AmSouth Fund has all necessary
federal, state and local authorizations to own all of its properties and assets
and to carry on its business as now being conducted and to fulfill the terms of
this Agreement, except as set forth in Section 2(i).
(b) AmSouth is registered under the 1940 Act as an open-end management
investment company, and such registration has not been revoked or rescinded and
is in full force and effect. Each AmSouth Fund that has had active operations
prior to the Exchange Date, has elected to qualify and has qualified as a
regulated investment company under Part I of Subchapter M of the Code, as of and
since its first taxable year, and qualifies and intends to continue to qualify
as a regulated investment company for its taxable year ending upon its
liquidation. Each AmSouth Fund that has had actual operations prior to the
Exchange Date has been a regulated investment company under such sections of the
Code at all times since its inception. AmSouth Current Income, AmSouth Treasury
Reserve Money Market, AmSouth Moderate Growth and Income, AmSouth Growth and
Income, AmSouth Growth, AmSouth Aggressive Growth, AmSouth International Equity,
AmSouth Mid Cap, AmSouth Large Cap, AmSouth Capital Growth, AmSouth Tennessee
Tax-Exempt, AmSouth Limited Term Tennessee Tax-Exempt, and AmSouth Limited Term
U.S. Government, which have not had active operations prior to the Exchange
Date, intend to qualify as regulated investment companies under Part I of
Subchapter M of the Code.
(c) The statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of investments (indicating
their market values) for each AmSouth Fund for the year ended JULY 31, 1999,
such statements and schedules having been audited by PricewaterhouseCoopers LLP,
independent accountants to AmSouth, have been furnished to Infinity.
(d) The prospectuses of each AmSouth Fund dated December 1, 1999 and
December 14, 1999, (collectively, the "AmSouth Prospectuses"), and the
Statements of Additional Information for the AmSouth Funds, dated December 1,
1999 and December 14, 1999 and on file with the Securities and Exchange
Commission, which have been previously furnished to Infinity, did not as of
their dates and do not as of the date hereof contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to
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<PAGE> 93
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of AmSouth or any AmSouth Fund, overtly threatened
against AmSouth or any AmSouth Fund which assert liability on the part of
AmSouth or any AmSouth Fund.
(f) There are no material contracts outstanding to which AmSouth or any
AmSouth Fund is a party, other than as disclosed in the AmSouth Prospectuses and
the corresponding Statement of Additional Information or in the Registration
Statement.
(g) Neither AmSouth nor any AmSouth Fund has any known liabilities of a
material nature, contingent or otherwise, other than those shown on its
statement of assets and liabilities as of July 31, 1999, referred to above and
those incurred in the ordinary course of the business of AmSouth as an
investment company or any AmSouth Fund since such date. Prior to the Exchange
Date, AmSouth will advise Infinity of all known material liabilities, contingent
or otherwise, incurred by it and each AmSouth Fund subsequent to July 31, 1999,
whether or not incurred in the ordinary course of business.
(h) Each AmSouth Fund has filed or will file all federal and state tax
returns which, to the knowledge of AmSouth's officers, are required to be filed
by each AmSouth Fund and has paid or will pay all federal and state taxes shown
to be due on said returns or on any assessments received by each AmSouth Fund.
To the best of such officers' knowledge, all tax liabilities of each AmSouth
Fund have been adequately provided for on its books, and no tax deficiency or
liability of any AmSouth Fund has been asserted, and no question with respect
thereto has been raised, by the Internal Revenue Service or by any state or
local tax authority for taxes in excess of those already paid.
(i) No consent, approval, authorization or order of any governmental
authority is required for the consummation by AmSouth or any AmSouth Fund of the
transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, the 1934 Act, the 1940 Act, state securities or Blue Sky
laws or the H-S-R Act.
(j) As of both the Valuation Time and the Exchange Date and otherwise
as described in Section 2(i), AmSouth on behalf of each AmSouth Fund will have
full right, power and authority to purchase the Investments and any other assets
and assume the liabilities of each ISG Fund to be transferred to the
corresponding AmSouth Fund pursuant to this Agreement.
(k) The Registration Statement, the Prospectus and the Proxy Statement,
on the effective date of the Registration Statement and insofar as they relate
to AmSouth and the AmSouth Funds: (i) will comply in all material respects with
the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
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which they were made, not misleading; and at the time of the shareholders'
meeting referred to in Section 8(a) and at the Exchange Date, the Prospectus, as
amended or supplemented by any amendments or supplements filed with the
Commission by AmSouth or any AmSouth Fund, will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
none of the representations and warranties in this subsection shall apply to
statements in or omissions from the Registration Statement, the Prospectus or
the Proxy Statement made in reliance upon and in conformity with information
furnished by Infinity or any ISG Fund for use in the Registration Statement, the
Prospectus or the Proxy Statement.
(l) Shares to be issued to each ISG Fund have been duly authorized and,
when issued and delivered pursuant to this Agreement and the Prospectus, will be
legally and validly issued and will be fully paid and nonassessable by AmSouth
and no shareholder of AmSouth will have any preemptive right of subscription or
purchase in respect thereof.
(m) The issuance of Shares pursuant to this Agreement will be in
compliance with all applicable federal and state securities laws.
(n) Each of AmSouth Government Income Fund, AmSouth Limited Term Bond
Fund, AmSouth Equity Income Fund, AmSouth Municipal Bond Fund, AmSouth Small Cap
Fund, AmSouth Tax-Exempt Money Market Fund, AmSouth Prime Money Market Fund,
AmSouth Bond Fund, is qualified and will at all times through the Exchange Date
qualify for taxation as a "regulated investment company" under Sections 851 and
852 of the Code. AmSouth Current Income, AmSouth Treasury Reserve Money Market,
AmSouth Moderate Growth and Income, AmSouth Growth and Income, AmSouth Growth,
AmSouth Aggressive Growth, AmSouth International Equity, AmSouth Mid Cap,
AmSouth Large Cap, AmSouth Capital Growth, AmSouth Tennessee Tax-Exempt, AmSouth
Limited Term Tennessee Tax-Exempt, and AmSouth Limited Term U.S. Government,
upon filing of their first income tax returns at the completion of their first
taxable year will elect to be regulated investment companies and until such time
will take all steps necessary to ensure qualification as regulated investment
companies under Sections 851 and 852 of the Code.
(o) AmSouth through its administrator, transfer agent, custodian or
otherwise, will cooperate fully and in a timely manner with Infinity and each
ISG Fund in completing each of the actions required of it and its agents and
necessary for consummation of the transactions described in Sections 3 (a) and
(b) of this Agreement.
3. REORGANIZATION. (a) Subject to the requisite approval of the
shareholders of each ISG Fund and to the other terms and conditions contained
herein (including each ISG Fund's obligation to distribute to its respective
shareholders all of its investment company taxable income and net capital gain
as described in Section 9(k) hereof), Infinity and each ISG Fund agree to sell,
assign, convey, transfer and deliver to the corresponding AmSouth Fund, and each
AmSouth Fund agree to acquire from the corresponding ISG Fund, on the Exchange
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Date all of the Investments and all of the cash and other assets of each ISG
Fund in exchange for that number of Shares of the corresponding AmSouth Fund
provided for in Section 4 and the assumption by the corresponding AmSouth Fund
of all of the liabilities of the ISG Fund. Pursuant to this Agreement, such ISG
Fund will, as soon as practicable after the Exchange Date, distribute in
liquidation all of the Shares received by it to its shareholders in exchange for
their shares of common stock of such ISG Fund.
(b) Infinity, on behalf of each ISG Fund, will pay or cause to be paid
to the corresponding AmSouth Fund any interest and cash dividends received by it
on or after the Exchange Date with respect to the Investments transferred to the
AmSouth Funds hereunder. Infinity, on behalf of each ISG Fund, will transfer to
the corresponding AmSouth Fund any rights, stock dividends or other securities
received by Infinity or any ISG Fund after the Exchange Date as stock dividends
or other distributions on or with respect to the Investments transferred, which
rights, stock dividends and other securities shall be deemed included in the
assets transferred to each AmSouth Fund at the Exchange Date and shall not be
separately valued, in which case any such distribution that remains unpaid as of
the Exchange Date shall be included in the determination of the value of the
assets of the ISG Fund acquired by the corresponding AmSouth Fund.
4. EXCHANGE DATE; VALUATION TIME. On the Exchange Date, AmSouth will
deliver to Infinity a number of Shares having an aggregate net asset value equal
to the value of the assets of the corresponding ISG Fund acquired by each
AmSouth Fund, less the value of the liabilities of such ISG Fund assumed,
determined as hereafter provided in this Section 4.
(a) Subject to Section 4(d) hereof, the value of each ISG Fund's net
assets will be computed as of the Valuation Time using the valuation procedures
for the corresponding AmSouth Fund set forth in the AmSouth Prospectus and
Statement of Additional Information. In no event shall the same security held by
both Infinity and AmSouth be valued at different prices.
(b) Subject to Section 4(d) hereof, the net asset value of a share of
each AmSouth Fund will be determined to the nearest full cent as of the
Valuation Time, using the valuation procedures set forth in the AmSouth
Prospectus for the particular AmSouth Fund.
(c) Subject to Section 4(d), the Valuation Time shall be 4:00 p.m.
Eastern Standard time on MARCH 10, 2000 for all of the ISG Funds, or such
earlier or later days as may be mutually agreed upon in writing by the parties
hereto (the "Valuation Time").
(d) No formula will be used to adjust the net asset value of any ISG
Fund or AmSouth Fund to take into account differences in realized and unrealized
gains and losses.
(e) Each AmSouth Fund shall issue its Shares to the corresponding ISG
Fund on one share deposit receipt registered in the name of the corresponding
ISG Fund. Each ISG Fund
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shall distribute in liquidation the Shares received by it hereunder pro rata to
its shareholders by redelivering such share deposit receipt to AmSouth's
transfer agent which will as soon as practicable set up open accounts for each
ISG Fund shareholder in accordance with written instructions furnished by
Infinity.
(f) Each AmSouth Fund shall assume all liabilities of the corresponding
ISG Fund, whether accrued or contingent, in connection with the acquisition of
assets and subsequent dissolution of the corresponding ISG Fund or otherwise,
except that recourse for assumed liabilities relating to a particular ISG Fund
will be limited to the corresponding AmSouth Fund.
5. EXPENSES, FEES, ETC. (a) Subject to subsections 5(b) through 5(e),
all fees and expenses, including accounting expenses, portfolio transfer taxes
(if any) or other similar expenses incurred directly in connection with the
consummation by AmSouth and Infinity of the transactions contemplated by this
Agreement will be borne by AMSOUTH BANK, including the costs of proxy materials,
proxy solicitation, and legal expenses; provided, however, that such expenses
will in any event be paid by the party directly incurring such expenses if and
to the extent that the payment by the other party of such expenses would result
in the disqualification of any AmSouth Fund or any ISG Fund, as the case may be,
as a "regulated investment company" within the meaning of Section 851 of the
Code. Fees and expenses not incurred directly in connection with the
consummation of the Transaction will be borne by the party incurring such fees
and expenses.
(b) In the event the transactions contemplated by this Agreement are
not consummated by reason of Infinity being either unwilling or unable to go
forward (other than by reason of the nonfulfillment or failure of any condition
to Infinity's obligations referred to in Section 8(a) or Section 10), Infinity
shall pay directly all reasonable fees and expenses incurred by AmSouth in
connection with such transactions, including, without limitation, legal,
accounting and filing fees.
(c) In the event the transactions contemplated by this Agreement are
not consummated by reason of AmSouth being either unwilling or unable to go
forward (other than by reason of the nonfulfillment or failure of any condition
to AmSouth's obligations referred to in Section 8(a) or Section 9), AmSouth
shall pay directly all reasonable fees and expenses incurred by Infinity in
connection with such transactions, including without limitation legal,
accounting and filing fees.
(d) In the event the transactions contemplated by this Agreement are
not consummated for any reason other than (i) AmSouth or Infinity being either
unwilling or unable to go forward or (ii) the nonfulfillment or failure of any
condition to Infinity or AmSouth's obligations referred to in Section 8(a),
Section 9 or Section 10 of this Agreement, then each of Infinity and AmSouth
shall bear the expenses it has actually incurred in connection with such
transactions.
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(e) Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not consummated, no
party shall be liable to the other party for any damages resulting therefrom,
including without limitation consequential damages, except as specifically set
forth above.
6. PERMITTED ASSETS. AmSouth and Infinity agree to review the assets of
the ISG Funds to ensure that at any time prior to the Exchange Date the assets
of any ISG Fund do not include any assets that the corresponding AmSouth Fund is
not permitted, or reasonably believes to be unsuitable for it, to acquire,
including without limitation any security that, prior to its acquisition by any
ISG Fund, is unsuitable for the corresponding AmSouth Fund to acquire.
7. EXCHANGE DATE. Delivery of the assets of the ISG Funds to be
transferred, assumption of the liabilities of the ISG Funds to be assumed, and
the delivery of Shares to be issued shall be made on March 13, 2000 at 10:00
a.m. or at such other times and dates agreed to by Infinity and AmSouth, the
date and time upon which such delivery is to take place being referred to herein
as the "Exchange Date."
8. SPECIAL MEETING OF SHAREHOLDERS; DISSOLUTION. (a) Infinity agrees to
call a special meeting of the shareholders of each ISG Fund as soon as is
practicable after the effective date of the Registration Statement for the
purpose of considering the sale of all of the assets of each ISG Fund to and the
assumption of all of the liabilities of each ISG Fund by the corresponding
AmSouth Fund as herein provided, approving this Agreement, and authorizing the
liquidation and dissolution of each ISG Fund, and, except as set forth in
Section 13, it shall be a condition to the obligations of each of the parties
hereto that the holders of the shares of common stock of each ISG Fund shall
have approved this Agreement and the transactions contemplated herein in the
manner required by law and Infinity's Articles of Incorporation and Bylaws at
such a meeting on or before the Valuation Time.
(b) Infinity and each ISG Fund agree that the liquidation and
dissolution of each ISG Fund will be effected in the manner provided in
Infinity's Articles of Incorporation and Bylaws in accordance with applicable
law, that it will not make any distributions of any Shares to the shareholders
of a ISG Fund without first paying or adequately providing for the payment of
all of such ISG Fund's known debts, obligations and liabilities.
(c) Each of AmSouth and Infinity will cooperate with the other, and
each will furnish to the other the information relating to itself required by
the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations
thereunder to be set forth in the Registration Statement, including the
Prospectus and the Proxy Statement.
9. CONDITIONS TO AMSOUTH'S OBLIGATIONS. The obligations of AmSouth and
each AmSouth Fund hereunder shall be subject to the following conditions:
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(a) That this Agreement shall have been approved and the transactions
contemplated hereby, including the liquidation and dissolution of the ISG Funds,
shall have been approved by the shareholders of each ISG Fund in the manner
required by law.
(b) Infinity shall have furnished to AmSouth a statement of each ISG
Fund's assets and liabilities, with values determined as provided in Section 4
of this Agreement, together with a list of Investments with their respective tax
costs, all as of the Valuation Time, certified on Infinity's behalf by its
President (or any Vice President) and Treasurer, and a certificate of both such
officers, dated the Exchange Date, to the effect that as of the Valuation Time
and as of the Exchange Date there has been no material adverse change in the
financial position of any ISG Fund since June 30, 1999, other than changes in
the Investments since that date or changes in the market value of the
Investments, or changes due to net redemptions of shares of the ISG Funds,
dividends paid or losses from operations.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Infinity and each ISG Fund made in this
Agreement are true and correct in all material respects as if made at and as of
such dates, Infinity and each ISG Fund has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to each of such dates, and Infinity shall have furnished to AmSouth a
statement, dated the Exchange Date, signed by Infinity's President (or any Vice
President) and Treasurer certifying those facts as of such dates.
(d) Infinity shall have delivered to AmSouth a letter from KPMG LLP
dated the Exchange Date stating that such firm reviewed the federal and state
income tax returns of each ISG Fund for the year ended December 31, 1999 and
that, in the course of such review, nothing came to their attention which caused
them to believe that such returns did not properly reflect, in all material
respects, the federal and state income taxes of each ISG Fund for the periods
covered thereby, or that each ISG Fund would not qualify as a regulated
investment company for federal income tax purposes.
(e) There shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.
(f) AmSouth shall have received an opinion of Stroock & Stroock & Lavan
LLP, in form reasonably satisfactory to AmSouth and dated the Exchange Date, to
the effect that (i) Infinity is a corporation duly established and validly
existing under the laws of the State of Maryland, (ii) this Agreement has been
duly authorized, executed, and delivered by Infinity on behalf of the ISG Funds
and, assuming that the Registration Statement, the Prospectus and the Proxy
Statement comply with the 1933 Act, the 1934 Act and the 1940 Act and assuming
due authorization, execution and delivery of this Agreement by AmSouth, is a
valid and binding obligation of Infinity with respect to the ISG Funds, subject
to the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto,
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and such counsel shall not be required to express an opinion with respect to the
application of equitable principles in any proceeding, whether at law or in
equity, or with respect to the provisions of this Agreement intended to limit
liability for particular matters to an ISG Fund and its assets, (iii) Infinity
and each ISG Fund has power to sell, assign, convey, transfer and deliver the
Investments and other assets contemplated hereby and, upon consummation of the
transactions contemplated hereby in accordance with the terms of this Agreement,
Infinity and each ISG Fund will have duly sold, assigned, conveyed, transferred
and delivered such Investments and other assets to AmSouth, (iv) the execution
and delivery of this Agreement did not, and the consummation of the transactions
contemplated hereby will not, violate Infinity's Articles of Incorporation and
Bylaws or any provision of an agreement known to such counsel to which Infinity,
with respect to the ISG Funds, or any ISG Fund is a party or by which it is
bound, it being understood that with respect to investment restrictions as
contained in Infinity's Articles of Incorporation and Bylaws, such counsel may
rely upon a certificate of an officer of Infinity whose responsibility it is to
advise Infinity with respect to such matters, and (v) no consent, approval,
authorization or order of any court or governmental authority is required for
the consummation by Infinity or any ISG Fund of the transactions contemplated
hereby, except such as have been obtained under the 1933 Act, the 1934 Act and
the 1940 Act and such as may be required under state securities or blue sky laws
and the H-S-R Act, and it being understood that such opinion shall not be deemed
to apply to AmSouth's compliance obligations under the 1933 Act, 1934 Act, 1940
Act, state securities or blue sky laws and H-S-R Act.
(g) AmSouth shall have received an opinion of Ropes & Gray, counsel to
AmSouth addressed to AmSouth and each AmSouth Fund, and to Infinity and ISG
Funds in form reasonably satisfactory to AmSouth and dated the Exchange Date
(which opinion would be based upon certain factual representations and subject
to certain qualifications), to the effect that, on the basis of the existing
provisions of the Code, current administrative rules and court decisions, for
Federal income tax purposes: (i) no gain or loss will be recognized by any ISG
Fund or its Shareholders upon the transfer of the assets to the corresponding
AmSouth Fund in exchange for Shares and the assumption by such AmSouth Fund of
the liabilities of the ISG Fund or upon the distribution of Shares by the ISG
Fund to its shareholders in liquidation pursuant to this Agreement; (ii) the
basis of the Shares an Infinity Shareholder receives in connection with the
transaction will be the same as the basis of his or her ISG Fund shares
exchanged therefor; (iii) an Infinity shareholder's holding period with respect
to his or her Shares will be determined by including the period for which he or
she held the ISG Fund shares exchanged therefor, provided that he or she held
such ISG Fund shares as capital assets; (iv) no gain or loss will be recognized
by any AmSouth Fund upon the receipt of the assets of the corresponding ISG Fund
in exchange for Shares and the assumption by the AmSouth Fund of the liabilities
of the corresponding ISG Fund; (v) the basis in the hands of the AmSouth Fund of
the assets of the corresponding ISG Fund transferred to the AmSouth Fund will be
the same as the basis of the assets in the hands of the corresponding ISG Fund
immediately prior to the transfer; and (vi) each AmSouth Fund's holding periods
with respect to the assets of the corresponding ISG Fund will include the
periods for which such assets were held by the
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corresponding ISG Fund.
(h) Subject to the parties' compliance with Section 6 hereof, the
assets of each ISG Fund to be acquired by the corresponding AmSouth Fund will
include no assets which the corresponding AmSouth Fund, by reason of limitations
contained in its Declaration of Trust or of investment restrictions disclosed in
the AmSouth Prospectuses in effect on the Exchange Date, may not properly
acquire. AmSouth shall not change the AmSouth Declaration of Trust and the
AmSouth Prospectuses so as to restrict permitted investments for each AmSouth
Fund except as required by the Commission or any state regulatory authority.
(i) The Registration Statement shall have become effective under the
1933 Act and applicable Blue Sky provisions, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of AmSouth,
contemplated by the Commission and or any state regulatory authority.
(j) All proceedings taken by Infinity in connection with the
transactions contemplated by this Agreement and all documents incidental thereto
reasonably shall be satisfactory in form and substance to AmSouth.
(k) Prior to the Exchange Date, each ISG Fund (other than an ISG Fund
that will combine with a AmSouth Fund in a manner qualifying for treatment under
Section 368(a)(1)(F) of the Code) shall have declared a dividend or dividends
which, together with all previous such dividends, shall have the effect of
distributing to its shareholders all of its investment company taxable income
for its taxable year ended December 31, 1999 and the short taxable year
beginning January 1, 2000 and ending on the Exchange Date (computed without
regard to any deduction for dividends paid), and all of the ISG Fund's net
capital gain realized in its taxable year ended December 31, 1999 and the short
taxable year beginning on January 1, 2000 and ending on the Exchange Date (after
reduction for any capital loss carryover).
(l) Infinity shall have furnished to AmSouth a certificate, signed by
the President (or any Vice President) and the Treasurer of Infinity, as to the
tax cost to Infinity of the securities delivered to AmSouth pursuant to this
Agreement, together with any such other evidence as to such tax cost as AmSouth
may reasonably request.
(m) ISG Funds' custodian shall have delivered to AmSouth a certificate
identifying all of the assets of each ISG Fund held by such custodian as of the
Valuation Time.
(n) ISG Funds' transfer agent shall have provided to AmSouth's transfer
agent (i) the originals or true copies of all of the records of each ISG Fund in
the possession of such ISG transfer agent as of the Exchange Date, (ii) a record
specifying the number of shares of each ISG Fund outstanding as of the Valuation
Time and (iii) a record specifying the name and address of each holder of record
of any such shares of each ISG Fund and the number of shares
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held of record by each such shareholder as of the Valuation Time. ISG's transfer
agent shall also have provided AmSouth with a certificate confirming that the
acts specified in the preceding sentence have been taken and that the
information so supplied is complete and accurate to the best knowledge of the
transfer agent.
(o) All of the issued and outstanding shares of common stock of each
ISG Fund shall have been offered for sale and sold in conformity with all
applicable federal or state securities or blue sky laws and, to the extent that
any audit of the records of Infinity or any ISG Fund or its transfer agent by
AmSouth or its agents shall have revealed otherwise, either (i) Infinity and
each ISG Fund shall have taken all actions that in the reasonable opinion of
AmSouth are necessary to remedy any prior failure on the part of Infinity to
have offered for sale and sold such shares in conformity with such laws or (ii)
Infinity shall have furnished (or caused to be furnished) surety, or deposited
(or caused to be deposited) assets in escrow, for the benefit of AmSouth in
amounts sufficient and upon terms satisfactory, in the opinion of AmSouth or its
counsel, to indemnify AmSouth against any expense, loss, claim, damage or
liability whatsoever that may be asserted or threatened by reason of such
failure on the part of Infinity to have offered and sold such shares in
conformity with such laws.
(p) AmSouth shall have received from Ernst & Young LLP a letter
addressed to AmSouth dated as of the Exchange Date reasonably satisfactory in
form and substance to AmSouth and Infinity to the effect that, on the basis of
limited procedures agreed upon by AmSouth and Infinity and described in such
letter (but not an examination in accordance with generally accepted auditing
standards), as of the Valuation Time the value of the assets of each ISG Fund to
be exchanged for the Shares have been determined in accordance with the
valuation procedures for the corresponding AmSouth Fund as set forth in the
AmSouth Prospectus and Statement of Additional Information.
(q) Infinity shall have duly executed and delivered to AmSouth bills of
sale, assignments, certificates and other instruments of transfer ("Transfer
Documents") as AmSouth may deem necessary or desirable to transfer all of
Infinity's and each ISG Fund's entire right, title and interest in and to the
Investments and all other assets of each ISG Fund.
10. CONDITIONS TO INFINITY'S OBLIGATIONS. The obligations of Infinity
and each ISG Fund hereunder shall be subject to the following conditions:
(a) This Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of the ISG Funds,
shall have been approved by the shareholders of each ISG Fund in the manner
required by law.
(b) AmSouth shall have furnished to Infinity a statement of each
AmSouth Fund's net assets, together with a list of portfolio holdings with
values determined as provided in Section 4, all as of the Valuation Time,
certified on AmSouth's behalf by its President (or any Vice President) and
Treasurer (or any Assistant Treasurer), and a certificate of both such officers,
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dated the Exchange Date, to the effect that as of the Valuation Time and as of
the Exchange Date there has been no material adverse change in the financial
position of any AmSouth Fund since July 31, 1999, other than changes in its
portfolio securities since that date, changes in the market value of its
portfolio securities, changes due to net redemptions, dividends paid or losses
from operations.
(c) AmSouth shall have executed and delivered to Infinity an Assumption
of Liabilities dated as of the Exchange Date pursuant to which each AmSouth Fund
will assume all of the liabilities of the corresponding ISG Fund existing at the
Valuation Time in connection with the transactions contemplated by this
Agreement.
(d) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of AmSouth and each AmSouth Fund made in this
Agreement are true and correct in all material respects as if made at and as of
such dates, AmSouth and each AmSouth Fund has complied with all of the
agreements and satisfied all of the conditions on its part to be performed or
satisfied at or prior to each of such dates, and AmSouth shall have furnished to
Infinity a statement, dated the Exchange Date, signed by AmSouth's President (or
any Vice President) and Treasurer certifying those facts as of such dates.
(e) There shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.
(f) Infinity shall have received an opinion of Ropes & Gray, in form
reasonably satisfactory to Infinity and dated the Exchange Date, to the effect
that (i) AmSouth is a business trust and validly existing in conformity with the
laws of The Commonwealth of Massachusetts, and, to the knowledge of such
counsel, neither AmSouth nor any AmSouth Fund is required to qualify to do
business as a foreign association in any jurisdiction, (ii) the Shares to be
delivered to Infinity as provided for by this Agreement are duly authorized and
upon such delivery will be validly issued and will be fully paid and
nonassessable by AmSouth and no shareholder of AmSouth has any preemptive right
to subscription or purchase in respect thereof, (iii) this Agreement has been
duly authorized, executed and delivered by AmSouth and, assuming that the
Prospectus, the Registration Statement and the Proxy Statement comply with the
1933 Act, the 1934 Act and the 1940 Act and assuming due authorization,
execution and delivery of this Agreement by Infinity, is a valid and binding
obligation of AmSouth, (iv) the execution and delivery of this Agreement did
not, and the consummation of the transactions contemplated hereby will not,
violate AmSouth's Declaration of Trust, as amended, or Code of Regulations, or
any provision of any agreement known to such counsel to which AmSouth or any
AmSouth Fund is a party or by which it is bound, it being understood that with
respect to investment restrictions as contained in AmSouth's Declaration of
Trust, as amended, Code of Regulations or then-current prospectus or statement
of additional information of each AmSouth Fund, such counsel may rely upon a
certificate of an officer of AmSouth whose responsibility it is to advise
AmSouth with respect to such matters, (v) no consent, approval, authorization or
order of any court or governmental authority is required for the consummation by
AmSouth or
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any AmSouth Fund of the transactions contemplated herein, except such as have
been obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may
be required under state securities or blue sky laws and the H-S-R Act and it
being understood that such opinion shall not be deemed to apply to Infinity's
compliance obligations under the 1933 Act, 1934 Act, 1940 Act, state securities
or blue sky laws and the H-S-R Act; and (vi) the Registration Statement has
become effective under the 1933 Act, and to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act.
(g) Infinity shall have received an opinion of Ropes & Gray addressed
to Infinity and each ISG Fund in a form reasonably satisfactory to Infinity and
dated the Exchange Date (which opinion would be based upon certain factual
representations and subject to certain qualifications), with respect to the
matters specified in Section 9(g) of this Agreement.
(h) All proceedings taken by AmSouth in connection with the
transactions contemplated by this Agreement and all documents incidental thereto
reasonably shall be satisfactory in form and substance to Infinity.
(i) The Registration Statement shall have become effective under the
1933 Act and applicable Blue Sky provisions, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of AmSouth,
contemplated by the Commission or any state regulatory authority.
(j) At the Exchange Date, each of the ISG Funds will have sold such of
its assets, if any, if informed by AmSouth in writing that such sale is
necessary to assure that, after giving effect to the acquisition of the assets
pursuant to this Agreement, each of the AmSouth Funds designated as a
"diversified company" will remain a "diversified company" within the meaning of
Section 5(b)(1) of the 1940 Act and in compliance with such other mandatory
investment restrictions as are set forth in the AmSouth Prospectuses previously
furnished to Infinity.
(k) Infinity and ISG Funds receive an order from the Securities and
Exchange Commission exempting from the reorganization from the provisions of
Section 17(a) of the 1940 Act.
11. INDEMNIFICATION. (a) Infinity will indemnify and hold harmless
AmSouth, its trustees and its officers (for purposes of this subsection, the
"Indemnified Parties") against any and all expenses, losses, claims, damages and
liabilities at any time imposed upon or reasonably incurred by any one or more
of the Indemnified Parties in connection with, arising out of, or resulting from
any claim, action, suit or proceeding in which any one or more of the
Indemnified Parties may be involved or with which any one or more of the
Indemnified Parties may be threatened by reason of any untrue statement or
alleged untrue statement of a material fact relating to Infinity or any ISG Fund
contained in the Registration Statement, the Prospectus or the Proxy Statement
or any amendment or supplement to any of the foregoing, or arising out of or
based upon the omission or alleged omission to state in any of the foregoing a
material fact relating to Infinity or any ISG Fund required to be stated therein
or necessary to make the statements relating to Infinity or any ISG Fund therein
not misleading, including, without limitation, any amounts paid by any one or
more of the Indemnified Parties in a reasonable compromise or settlement of any
such claim, action, suit or proceeding, or threatened claim, action, suit or
proceeding made with the prior consent of Infinity. The Indemnified Parties will
notify Infinity in writing within ten days after the receipt by any one or more
of the Indemnified Parties of any notice of legal process or any suit brought
against or claim made against such Indemnified Party as to any matters covered
by this Section 11(a).
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Infinity shall be entitled to participate at its own expense in the defense of
any claim, action, suit or proceeding covered by this Section 11(a), or, if it
so elects, to assume at its expense by counsel satisfactory to the Indemnified
Parties the defense of any such claim, action, suit or proceeding, and if
Infinity elects to assume such defense, the Indemnified Parties shall be
entitled to participate in the defense of any such claim, action, suit or
proceeding at their expense. Infinity's and the ISG Funds' obligation under this
Section 11(a) to indemnify and hold harmless the Indemnified Parties shall
constitute a guarantee of payment so that the ISG Funds will pay in the first
instance any expenses, losses, claims, damages and liabilities required to be
paid by them under this Section 11(a) without the necessity of the Indemnified
Parties' first paying the same.
(b) AmSouth will indemnify and hold harmless Infinity, its directors
and its officers (for purposes of this subparagraph, the "Indemnified Parties")
against any and all expenses, losses, claims, damages and liabilities at any
time imposed upon or reasonably incurred by any one or more of the Indemnified
Parties in connection with, arising out of, or resulting from any claim, action,
suit or proceeding in which any one or more of the Indemnified Parties may be
involved or with which any one or more of the Indemnified Parties may be
threatened by reason of any untrue statement or alleged untrue statement of a
material fact relating to AmSouth or any AmSouth Fund contained in the
Registration Statement, the Prospectus or the Proxy Statement, or any amendment
or supplement to any of the foregoing, or arising out of or based upon the
omission or alleged omission to state in any of the foregoing a material fact
relating to AmSouth or any AmSouth Fund required to be stated therein or
necessary to make the statements relating to AmSouth or any AmSouth Fund therein
not misleading, including, without limitation, any amounts paid by any one or
more of the Indemnified Parties in a reasonable compromise or settlement of any
such claim, action, suit or proceeding, or threatened claim, action, suit or
proceeding made with the prior consent of AmSouth. The Indemnified Parties will
notify AmSouth in writing within ten days after the receipt by any one or more
of the Indemnified Parties of any notice of legal process or any suit brought
against or claim made against such Indemnified Party as to any matters covered
by this Section 11(b). AmSouth shall be entitled to participate at its own
expense in the defense of any claim, action, suit or proceeding covered by this
Section 11(b), or, if it so elects, to assume at its expense by counsel
satisfactory to the Indemnified Parties the defense of any such claim, action,
suit or proceeding, and, if AmSouth elects to assume such defense, the
Indemnified Parties shall be entitled to participate in the defense of any such
claim, action, suit or proceeding at their own expense. The AmSouth Funds'
obligation under this Section 11(b) to indemnify and hold harmless the
Indemnified Parties shall constitute a guarantee of payment so that the AmSouth
Funds will pay in the first instance any expenses, losses, claims, damages and
liabilities required to be paid by them under this Section 11(b) without the
necessity of the Indemnified Parties' first paying the same.
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12. NO BROKER, ETC. Each of AmSouth and Infinity represents that there
is no person who has dealt with it who by reason of such dealings is entitled to
any broker's or finder's or other similar fee or commission arising out of the
transactions contemplated by this Agreement.
13. TERMINATION. AmSouth and Infinity may, by mutual consent of their
respective trustees, terminate this Agreement, and AmSouth or Infinity, after
consultation with counsel and by consent of their respective trustees or an
officer authorized by such trustees, may waive any condition to their respective
obligations hereunder. If the transactions contemplated by this Agreement have
not been substantially completed by June 30, 2000, this Agreement shall
automatically terminate on that date unless a later date is agreed to by AmSouth
and Infinity.
Notwithstanding any other provision in this Agreement, in the event
shareholder approval of this Agreement and the transactions contemplated by this
Agreement is obtained with respect to only one or more ISG Funds but not all of
the ISG Funds, AmSouth and Infinity agree to consummate those transactions with
respect to those ISG Funds that have approved this Agreement and those
transactions.
14. COVENANTS, ETC. DEEMED MATERIAL. All covenants, agreements,
representations and warranties made under this Agreement and any certificates
delivered pursuant to this Agreement shall be deemed to have been material and
relied upon by each of the parties, notwithstanding any investigation made by
them or on their behalf.
15. SOLE AGREEMENT; AMENDMENTS. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the subject
matter hereof, constitutes the only understanding with respect to such subject
matter, may not be changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts.
16. AGREEMENT AND DECLARATION OF TRUST AmSouth Funds is a business
trust organized under Massachusetts law and under a Declaration of Trust, to
which reference is hereby made and a copy of which is on file at the office of
the Secretary 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 Funds" entered into in the name or on behalf thereof by
any of the Trustees, officers, employees or agents are made not individually,
but in such capacities, and are not binding upon any of the Trustees, officers,
employees, agents or shareholders of AmSouth personally, but bind only the
assets of AmSouth and all persons dealing with any series or funds of AmSouth,
such as the AmSouth Funds, must look solely to the assets of AmSouth belonging
to such series or funds for the enforcement of any claims against AmSouth.
A-20
<PAGE> 106
This Agreement may be executed in any number of counter-parts, each of
which, when executed and delivered, shall be deemed to be an original.
THE INFINITY MUTUAL FUNDS, INC.
On Behalf of its ISG Funds
By:___________________________
AMSOUTH FUNDS
By:____________________________
A-21
<PAGE> 107
APPENDIX B
COMPARATIVE FEE TABLES
<PAGE> 108
PART A
APPENDIX B
COMPARATIVE FEE TABLE FOR EACH PORTFOLIO
<TABLE>
<CAPTION>
ISG AmSouth
Current Income Current Income Combined
Portfolio Portfolio Fund Pro Forma
------------------------- ------------------------ ------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- ------- ------- ----- ------- ------- -----
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 3.00%(1) None None 4.00%(1) None None 4.00%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None(2) 5.00%(4) None None(2)5.00% None
Redemption Fees None None None 0%(5) 0%(5) 0%(5) 0%(5) 0%(5) 0%(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .20% .20% .20% .20% .20% .20% .20% .20% .20%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .54% .64% .54% .79% .79% .69% .79% .79% .69%
Total Fund Operating Expenses(6), (7) .99% 1.59% .74% .99% 1.74% .89% .99% 1.74% .89%
</TABLE>
(1) Sales charges may be reduced depending upon the amount invested, or in
certain circumstances, waived.
(2) Class A Shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, which is charged if Class B Shares are sold within six years of
purchase, declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. Approximately seven years after purchase, Class B Shares
automatically convert to Class A Shares.
(4) For former B Share investors of the ISG Funds, waivers are in place on the
CDSC charged if Class B Shares are sold within six years of purchase, which
will decline as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
For all other holders of B Shares, the CDSC declines over the same seven
year period as follows: 5%, 4%, 3%, 3%, 2%, 1%, 0%. Approximately eight
years after purchase, Class B Shares automatically convert to Class A
Shares.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses noted above do not reflect any fee
waivers or expense reimbursement arrangements in effect. For the period
from inception through October 31, 1999, significant fee waivers occurred
with respect to the ISG Current Income Portfolio. Any fee waiver or expense
reimbursement arrangement is voluntary and may be discontinued at any time.
(7) If you buy and hold Shares of a Strategic Portfolio, you will indirectly
bear your pro rata share of fees and expenses incurred by the Underlying
Funds in which the fund invests, so that the investment returns of the Fund
will be net of the expenses of the Fund with those of the Underlying Funds.
After combining the total estimated operating expenses of the Fund with
those of the Underlying Funds, the estimated average weighted expense
ratios for the ISG Funds are as follows: Class A, 2.09%; Class B, 2.69%,
Class I, 1.84%; and for the AmSouth Funds and fund pro formas are as
follows: Class A, 2.06%; Class B, 2.81%; Trust, 1.96%.
1
<PAGE> 109
ISG Current Income Portfolio
AmSouth Current Income Portfolio
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
ISG Current Income Portfolio
Class A Shares............................................... $506 $ 935
Class B Shares............................................... $672 $1,135
Class I Shares............................................... $187 $ 579
AmSouth Current Income Portfolio
Class A Shares............................................... $601 $1,020
Class B Shares............................................... $784 $1,171
Trust Shares................................................. $199 $ 615
Combined Fund Pro Forma
Class A Shares............................................... $601 $1,020
Class B Shares............................................... $784 $1,171
Trust Shares................................................. $199 $ 615
</TABLE>
- ---------------
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
ISG Current Income Portfolio
Class B Shares............................................... $272 $835
AmSouth Current Income Portfolio
Class B Shares............................................... $284 $871
Combined Fund Pro Forma
Class B Shares............................................... $284 $871
</TABLE>
2
<PAGE> 110
<TABLE>
<CAPTION>
ISG AmSouth
Treasury Money Market Treasury Reserve Money Combined
Fund Market Fund Fund Pro Forma
------------------------- ------------------------ -----------------------
Class A Class I Class A Trust Class A Trust
------- ------- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) None None None None None None
Sales Charge on Reinvested
Dividends None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None None None None None None
Redemption Fees None None None(1) None None(1) None
Exchange Fees None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .25% .25% .40% .40% .40% .40%
12b-1 Fees None None None None None None
Other Expenses .53% .43% .57% .47% .57% .47%
Total Fund Operating Expenses .78%(2) .68%(2) .97%(3) .87%(3) .97%(3) .87%(3)
Fee Waiver and/or Expense
Reimbursement n/a n/a n/a n/a (.23%) (.23%)
Net Expenses n/a n/a n/a n/a .72%(4) .62%(4)
</TABLE>
(1) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(2) Other expenses have been restated for Class I to reflect current fees. The
expenses noted above do not reflect any fee waivers or expense
reimbursement arrangements that are or were in effect. Total expenses after
fee waivers and expense reimbursements for each Class were: Class A, .60%,
Class I, .60%. Any fee waiver or expense reimbursement arrangement is
voluntary and may be discontinued at any time.
(3) Other expenses are based on estimated amounts for the current fiscal year.
The expenses do not reflect any fee waivers or expense reimbursement
arrangements.
(4) Total expenses after fee waivers and expense reimbursements through April
30, 2000 are as follows: Class A, .60%; and Trust Class, .60%, and
thereafter will be: Class A, .72%; and Trust Class, .62%.
3
<PAGE> 111
ISG Treasury Money Market Fund
AmSouth Treasury Reserve Money Market Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Treasury Money Market Fund
Class A Shares............................................... $80 $249 $433 $ 966
Class I Shares............................................... $69 $218 $379 $ 847
AmSouth Treasury Reserve Money Market Fund
Class A Shares............................................... $99 $309 $536 $1,190
Trust Shares................................................. $89 $278 $482 $1,073
Combined Fund Pro Forma
Class A Shares............................................... $99 $309 $536 $1,190
Trust Shares................................................. $89 $278 $482 $1,073
</TABLE>
4
<PAGE> 112
<TABLE>
<CAPTION>
ISG AmSouth
Moderate Growth & Moderate Growth and Combined
Income Portfolio Income Portfolio Fund Pro Forma
------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 4.75%(1) None None 4.50%(1) None None 4.50%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None(2) 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .20% .20% .20% .20% .20% .20% .20% .20% .20%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .54% .64% .54% .79% .79% .69% .79% .79% .69%
Total Fund Operating Expenses(6) (7) .99% 1.59% .74% .99% 1.74% .89% .99% 1.74% .89%
</TABLE>
(1) Sales charges may be reduced depending upon the amount invested, or in
certain circumstances, waived.
(2) Class A Shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, which is charged if Class B Shares are sold within six years of
purchase, declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. Approximately seven years after purchase, Class B Shares
automatically convert to Class A Shares.
(4) For former B Share investors of the ISG Funds, waivers are in place on the
CDSC, charged if Class B Shares are sold within six years of purchase,
which will decline as follows: 5%, 4%, 3%, 3%, 2%, 1%, 0%. Approximately
eight years after purchase, Class B Shares automatically convert to Class A
Shares.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses noted above do not reflect any fee
waivers or expense reimbursement arrangements that are or were in effect.
For the period from inception through October 31, 1999, significant fee
waivers occurred with respect to the ISG Moderate Growth & Income
Portfolio. Any fee waiver or expense reimbursement arrangement is voluntary
and may be discontinued at any time.
(7) If you buy and hold Shares of a Strategic Portfolio, you will indirectly
bear your pro rata share of fees and expenses incurred by the Underlying
Funds in which the fund invests, so that the investment returns of the Fund
will be net of the expenses of the Fund with those of the Underlying Funds.
After combining the total estimated operating expenses of the Fund with
those of the Underlying Funds, the estimated average weighted expense
ratios for the ISG Funds are as follows: Class A, 1.91%; Class B, 2.51%,
Class I, 1.66%; and for the AmSouth Funds and fund pro formas are as
follows: Class A, 2.20%; Class B, 2.95%; Trust, 2.10%.
5
<PAGE> 113
ISG Moderate Growth & Income Portfolio
AmSouth Moderate Growth and Income Portfolio
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
ISG Moderate Growth & Income Portfolio
Class A Shares............................................... $660 $1,047
Class B Shares............................................... $654 $1,082
Class I Shares............................................... $169 $ 523
AmSouth Moderate Growth and Income Portfolio
Class A Shares............................................... $663 $1,107
Class B Shares............................................... $798 $1,213
Trust Shares................................................. $213 $ 658
Combined Fund Pro Forma
Class A Shares............................................... $663 $1,107
Class B Shares............................................... $798 $1,213
Trust Shares................................................. $213 $ 658
</TABLE>
- ----------
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
ISG Moderate Growth & Income Portfolio
Class B Shares............................................... $254 $ 782
AmSouth Moderate Growth and Income Portfolio
Class B Shares............................................... $298 $ 913
Combined Fund Pro Forma
Class B Shares............................................... $298 $ 913
</TABLE>
6
<PAGE> 114
<TABLE>
<CAPTION>
ISG AmSouth
Growth & Income Growth and Income Combined
Portfolio Portfolio Fund Pro Forma
------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 4.75%(1) None None 4.50%(1) None None 4.50%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None(2) 5.00%(4) None None(2) 5.00%(4) None(2)
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .20% .20% .20% .20% .20% .20% .20% .20% .20%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .54% .64% .54% .79% .79% .69% .79% .79% .69%
Total Fund Operating Expenses(6), (7) .99% 1.59% .74% .99% 1.74% .89% .99% 1.74% .89%
</TABLE>
(1) Sales charges may be reduced depending upon the amount invested, or in
certain circumstances, waived.
(2) Class A Shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, which is charged if Class B Shares are sold within six years of
purchase, declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. Approximately seven years after purchase, Class B Shares
automatically convert to Class A Shares.
(4) For former B Share investors of the ISG Funds, waivers are in place on the
CDSC, charged if Class B Shares are sold within six years of purchase,
which will decline as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. For all other holders of B Shares, the CDSC declines over the same
seven year period as follows: 5%, 4%, 3%, 3%, 2%, 1%, 0%. Approximately
eight years after purchase, Class B Shares automatically convert to Class A
Shares.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses noted above do not reflect any fee
waivers or expense reimbursement arrangements that were or are in effect.
For the period from inception through October 31, 1999, significant fee
waivers occurred with respect to the ISG Growth & Income Portfolio.Any fee
waiver or expense reimbursement arrangement is voluntary and may be
discontinued at any time.
(7) If you buy and hold Shares of a Strategic Portfolio, you will indirectly
bear your pro rata share of fees and expenses incurred by the Underlying
Funds in which the fund invests, so that the investment returns of the Fund
will be net of the expenses of the Fund with those of the Underlying Funds.
After combining the total estimated operating expenses of the Fund with
those of the Underlying Funds, the estimated average weighted expense
ratios for the ISG Funds are as follows: Class A, 1.93%; Class B, 2.53%,
Class I, 1.68%; and for the AmSouth Funds and fund pro formas are as
follows: Class A, 2.34%; Class B, 3.09%; Trust, 2.24%.
7
<PAGE> 115
ISG Growth & Income Portfolio
AmSouth Growth and Income Portfolio
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
ISG Growth & Income Portfolio
Class A Shares............................................... $662 $1,052
Class B Shares............................................... $656 $1,088
Class I Shares............................................... $171 $ 530
AmSouth Growth and Income Portfolio
Class A Shares............................................... $676 $1,148
Class B Shares............................................... $812 $1,254
Trust Shares................................................. $227 $ 700
Combined Fund Pro Forma
Class A Shares............................................... $676 $1,148
Class B Shares............................................... $812 $1,254
Trust Shares................................................. $227 $ 700
</TABLE>
- ----------
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
ISG Growth & Income Portfolio
Class B Shares............................................... $256 $ 788
AmSouth Growth and Income Portfolio
Class B Shares............................................... $312 $ 954
Combined Fund Pro Forma
Class B Shares............................................... $312 $ 954
</TABLE>
8
<PAGE> 116
<TABLE>
<CAPTION>
ISG AmSouth
Growth Growth Combined
Portfolio Portfolio Fund Pro Forma
------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
-------- -------- ------- ------- ------- ----- -------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 4.75%(1) None None 4.50%(1) None None 4.50%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None(2) 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .20% .20% .20% .20% .20% .20% .20% .20% .20%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .54% .64% .54% .79% .79% .69% .79% .79% .69%
Total Fund Operating Expenses(6), (7) .99% 1.59% .74% .99% 1.74% .89% .99% 1.74% .89%
</TABLE>
(1) Sales charges may be reduced depending upon the amount invested, or in
certain circumstances, waived.
(2) Class A Shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, which is charged if Class B Shares are sold within six years of
purchase, declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. Approximately seven years after purchase, Class B Shares
automatically convert to Class A Shares.
(4) For former B Share investors of the ISG Funds, waivers are in place on the
CDSC, charged if Class B Shares are sold within six years of purchase,
which will decline as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. For all other holders of B Shares, the CDSC declines over the same
seven year period as follows: 5%, 4%, 3%, 3%, 2%, 1%, 0%. Approximately
eight years after purchase, Class B Shares automatically convert to Class A
Shares.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.For the period
from inception through October 31, 1999, significant fee waivers occurred
with respect to the ISG Current Income Portfolio.
(6) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses noted above do not reflect any fee
waivers or expense reimbursement arrangements in effect. For the period
from inception through October 31, 1999, significant fee waivers occurred
with respect to the ISG Growth Portfolio. Any fee waiver or expense
reimbursement arrangement is voluntary and may be discontinued at any time.
(7) If you buy and hold Shares of a Strategic Portfolio, you will indirectly
bear your pro rata share of fees and expenses incurred by the Underlying
Funds in which the fund invests, so that the investment returns of the Fund
will be net of the expenses of the Fund with those of the Underlying Funds.
After combining the total estimated operating expenses of the Fund with
those of the Underlying Funds, the estimated average weighted expense
ratios for the ISG Funds are as follows: Class A, 2.24%; Class B, 2.84%,
Class I, 1.99%; and for the AmSouth Funds and fund pro formas are as
follows: Class A, 2.38%; Class B, 3.13%; Trust, 2.28%.
9
<PAGE> 117
ISG Growth Portfolio
AmSouth Growth Portfolio
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
ISG Growth Portfolio
Class A Shares............................................... $691 $1,142
Class B Shares............................................... $687 $1,180
Class I Shares............................................... $202 $ 624
AmSouth Growth Portfolio
Class A Shares............................................... $680 $1,159
Class B Shares............................................... $816 $1,266
Trust Shares................................................. $231 $ 712
Combined Fund Pro Forma
Class A Shares............................................... $680 $1,159
Class B Shares............................................... $816 $1,266
Trust Shares................................................. $231 $ 712
</TABLE>
- ----------
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
ISG Growth Portfolio
Class B Shares............................................... $287 $ 880
AmSouth Growth Portfolio
Class B Shares............................................... $316 $ 966
Combined Fund Pro Forma
Class B Shares............................................... $316 $ 966
</TABLE>
10
<PAGE> 118
<TABLE>
<CAPTION>
ISG AmSouth
Aggressive Growth Aggressive Growth Combined
Portfolio Portfolio Fund Pro Forma
------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 4.75%(1) None None 4.50%(1) None None 4.50%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None(2) 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .20% .20% .20% .20% .20% .20% .20% .20% .20%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .54% .64% .54% .79% .79% .69% .79% .79% .69%
Total Fund Operating Expenses(6), (7) .99% 1.59% .74% .99% 1.74% .89% .99% 1.74% .89%
</TABLE>
(1) Sales charges may be reduced depending upon the amount invested, or in
certain circumstances, waived.
(2) Class A Shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, which is charged if Class B Shares are sold within six years of
purchase, declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. Approximately seven years after purchase, Class B Shares
automatically convert to Class A Shares.
(4) For former B Share investors of the ISG Funds, waivers are in place on the
CDSC, charged if Class B Shares are sold within six years of purchase,
which will decline as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. For all other holders of B Shares, the CDSC declines over the same
seven year period as follows: 5%, 4%, 3%, 3%, 2%, 1%, 0%. Approximately
eight years after purchase, Class B Shares automatically convert to Class A
Shares.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses noted above do not reflect any fee
waivers or expense reimbursement arrangements in effect. For the period
from inception through October 31, 1999, significant fee waivers occurred
with respect to the ISG Aggressive Growth Portfolio. Any fee waiver or
expense reimbursement arrangement is voluntary and may be discontinued at
any time.
(7) If you buy and hold Shares of a Strategic Portfolio, you will indirectly
bear your pro rata share of fees and expenses incurred by the Underlying
Funds in which the fund invests, so that the investment returns of the Fund
will be net of the expenses of the Fund with those of the Underlying Funds.
After combining the total estimated operating expenses of the Fund with
those of the Underlying Funds, the estimated average weighted expense
ratios for the ISG Funds are as follows: Class A, 2.38%; Class B, 2.98%,
Class I, 2.13%; and for the AmSouth Funds and fund pro formas are as
follows: Class A, 2.51%; Class B, 3.26%; Trust, 2.41%.
11
<PAGE> 119
ISG Aggressive Growth Portfolio
AmSouth Aggressive Growth Portfolio
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
ISG Aggressive Growth Portfolio
Class A Shares............................................... $705 $1,182
Class B Shares............................................... $701 $1,221
Class I Shares............................................... $216 $ 667
AmSouth Aggressive Growth Portfolio
Class A Shares............................................... $693 $1,196
Class B Shares............................................... $829 $1,304
Trust Shares................................................. $244 $ 751
Combined Fund Pro Forma
Class A Shares............................................... $693 $1,196
Class B Shares............................................... $829 $1,304
Trust Shares................................................. $244 $ 751
</TABLE>
- ----------
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
ISG Aggressive Growth Portfolio
Class B Shares............................................... $301 $ 921
AmSouth Aggressive Growth Portfolio
Class B Shares............................................... $329 $1,004
Combined Fund Pro Forma
Class B Shares............................................... $329 $1,004
</TABLE>
12
<PAGE> 120
<TABLE>
<CAPTION>
ISG AmSouth
Mid-Cap Mid Cap Combined
Fund Fund Fund Pro Forma
------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- -------- ------- ----- -------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 4.75%(1) None None 4.50%(1) None None 4.50%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None(2) 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses 1.75% 1.85% 1.75% 1.34% 1.34% 1.24% 1.34% 1.34% 1.24%
Total Fund Operating Expenses 3.00%(6) 3.60%(6) 2.75%(6) 2.34%(7) 3.09%(7) 2.24%(7) 2.34%(7) 3.09%(7) 2.24%(7)
</TABLE>
(1) Sales charges may be reduced depending upon the amount invested, or in
certain circumstances, waived.
(2) Class A Shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
Approximately seven years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) For former B Share investors of the ISG Funds, waivers are in place on the
CDSC, charged if Class B Shares are sold within six years of purchase,
which will decline as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. For all other holders of B Shares, the CDSC declines over the same
seven year period as follows: 5%, 4%, 3%, 3%, 2%, 1%, 0%. Approximately
eight years after purchase, Class B Shares automatically convert to Class A
Shares.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses noted above do not reflect any fee
waivers or expense reimbursement arrangements in effect. Any fee waiver or
expense reimbursement arrangement is voluntary and may be discontinued at
any time.
(7) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses noted above do not reflect any fee
waivers or expense reimbursement arrangements in effect.
13
<PAGE> 121
ISG Mid-Cap Fund
AmSouth Mid Cap Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
ISG Mid-Cap Fund
Class A Shares............................................... $764 $1,358
Class B Shares............................................... $763 $1,403
Class I Shares............................................... $278 $ 853
AmSouth Mid Cap Fund
Class A Shares............................................... $676 $1,148
Class B Shares............................................... $812 $1,254
Trust Shares................................................. $227 $ 700
Combined Fund Pro Forma
Class A Shares............................................... $676 $1,148
Class B Shares............................................... $812 $1,254
Trust Shares................................................. $227 $ 700
</TABLE>
- ----------
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
ISG Mid-Cap Fund
Class B Shares............................................... $363 $1,103
AmSouth Mid Cap Fund
Class B Shares............................................... $312 $ 954
Combined Fund Pro Forma
Class B Shares............................................... $312 $ 954
</TABLE>
14
<PAGE> 122
<TABLE>
<CAPTION>
ISG AmSouth
Large-Cap Equity Large Cap Combined
Fund Fund Fund Pro Forma
------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 4.75%(1) None None 4.50%(1) None None 4.50%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None(2) 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .75% .75% .75% .80% .80% .80% .80% .80% .80%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .35% .45% .35% .57% .57% . 47% .57% .57% .47%
Total Fund Operating Expenses 1.35%(6) 1.95%(6) 1.10%(6) 1.37%(7) 2.12%(7) 1.27%(7) 1.37%(7) 2.12%(7) 1.27%(7)
Fee Waiver and/or Expense
Reimbursement n/a n/a n/a n/a n/a n/a n/a (.10%) (.10%)
Net Expenses n/a n/a n/a n/a n/a n/a n/a 2.02%(8) 1.17%(8)
</TABLE>
(1) Sales charges may be reduced depending upon the amount invested, or in
certain circumstances, waived.
(2) Class A Shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
Approximately seven years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) For former B Share investors of the ISG Funds, waivers are in place on the
CDSC, charged if Class B Shares are sold within six years of purchase,
which will decline as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. For all other holders of B Shares, the CDSC declines over the same
seven year period as follows: 5%, 4%, 3%, 3%, 2%, 1%, 0%. Approximately
eight years after purchase, Class B Shares automatically convert to Class A
Shares.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements. Any fee waiver or expense reimbursement
arrangement is voluntary and may be discontinued at any time.
(7) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements.
(8) Total expenses after fee waivers and expense reimbursements for each Class
through April 30, 2000 will not exceed the following: Class A, 1.04%; and
Class I Class, 1.04% and thereafter will be: Class B, 2.02%; and
Institutional Class, 1.17%. Any fee waiver or expense reimbursement
arrangement is voluntary and may be discontinued at any time.
15
<PAGE> 123
ISG Large-Cap Equity Fund
AmSouth Large Cap Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Large-Cap Equity Fund
Class A Shares............................................... $606 $882 $1,179 $2,022
Class B Shares............................................... $598 $912 $1,292 $2,044
Class I Shares............................................... $112 $350 $ 606 $1,340
AmSouth Large Cap Fund
Class A Shares............................................... $583 $864 $1,166 $2,022
Class B Shares............................................... $715 $964 $1,339 $2,171
Trust Shares................................................. $129 $403 $ 697 $1,534
Combined Fund Pro Forma
Class A Shares............................................... $583 $864 $1,166 $2,022
Class B Shares............................................... $715 $964 $1,339 $2,171
Trust Shares................................................. $129 $403 $ 697 $1,534
</TABLE>
- ----------
** Class B shares of the ISG Large-Cap Equity Fund automatically convert to
Class A Shares approximately after seven (7) years. AmSouth Large Cap Fund
and the Combined Fund automatically convert to Class A Shares approximately
after eight (8) years. Therefore, the "10 Years" example above reflects
these conversions.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Large-Cap Equity Fund
Class B Shares............................................... $198 $612 $1,052 $2,044
AmSouth Large Cap Fund
Class B Shares............................................... $215 $664 $1,139 $2,171
Combined Fund Pro Forma
Class B Shares............................................... $215 $664 $1,139 $2,171
</TABLE>
- ----------
** Class B shares of the ISG Large-Cap Equity Fund automatically convert to
Class A Shares approximately after seven (7) years. AmSouth Large Cap
Equity Fund and the Combined Fund automatically convert to Class A Shares
approximately after eight (8) years. Therefore, the "10 Years" example
above reflects these conversions.
16
<PAGE> 124
<TABLE>
<CAPTION>
ISG AmSouth
International Equity International Equity Combined
Fund Fund Fund Pro Forma
------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 4.75%(1) None None 4.50%(1) None None 4.50%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None(2) 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees 1.00% 1.00% 1.00% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .88% .98% .88% 1.21% 1.21% 1.11% 1.21% 1.21% 1.11%
Total Fund Operating Expenses 2.13%(6) 2.73%(6) 1.88%(6) 2.46%(7) 3.21%(7) 2.36%(7) 2.46%(7) 3.21%(7) 2.36%(7)
Fee Waiver and/or Expense
Reimbursement n/a n/a n/a n/a n/a n/a (.15%) (.30%) (.30%)
Net Expenses n/a n/a n/a n/a n/a n/a 2.31%(8) 2.91%(8) 2.06%(8)
</TABLE>
(1) Sales charges may be reduced depending upon the amount invested, or in
certain circumstances, waived.
(2) Class A Shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
Approximately seven years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) For former B Share investors of the ISG Funds, waivers are in place on the
CDSC, charged if Class B Shares are sold within six years of purchase,
which will decline as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. For all other holders of B Shares, the CDSC declines over the same
seven year period as follows: 5%, 4%, 3%, 3%, 2%, 1%, 0%. Approximately
eight years after purchase, Class B Shares automatically convert to Class A
Shares.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements. Any fee waiver or expense reimbursement
arrangement is voluntary and may be discontinued at any time.
(7) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements.
(8) Total expenses after fee waivers and expense reimbursements for each Class
through April 30, 2000 will be as follows: Class A, 1.77%; Institutional
Class, 1.77% and thereafter will be: Class A, 2.31%; Class B, 2.91%; Class
I, 2.06%. Any fee waiver or expense reimbursement arrangement is voluntary
and may be discontinued at any time.
17
<PAGE> 125
ISG International Equity Fund
AmSouth International Equity Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG International Equity Fund
Class A Shares............................................... $681 $1,110 $1,565 $2,820
Class B Shares............................................... $676 $1,147 $1,645 $2,846
Class I Shares............................................... $191 $ 591 $1,016 $2,201
AmSouth International Equity Fund
Class A Shares............................................... $688 $1,182 $1,702 $3,120
Class B Shares............................................... $824 $1,289 $1,878 $3,260
Trust Shares................................................. $239 $ 736 $1,260 $2,696
Combined Fund Pro Forma
Class A Shares............................................... $688 $1,182 $1,702 $3,120
Class B Shares............................................... $824 $1,289 $1,878 $3,260
Trust Shares................................................. $239 $ 736 $1,260 $2,696
</TABLE>
- ----------
** Class B shares of the ISG International Equity Fund automatically convert
to Class A Shares approximately after seven (7) years. AmSouth
International Equity Fund and the Combined Fund automatically convert to
Class A Shares approximately after eight (8) years. Therefore, the "10
Years" example above reflects these conversions.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG International Equity Fund
Class B Shares............................................... $276 $847 $1,445 $2,846
AmSouth International Equity Fund
Class B Shares............................................... $324 $989 $1,678 $3,260
Combined Fund Pro Forma
Class B Shares............................................... $324 $989 $1,678 $3,260
</TABLE>
- ----------
** Class B shares of the ISG International Equity Fund automatically convert
to Class A Shares approximately after seven (7) years. AmSouth
International Equity Fund and the Combined Fund automatically convert to
Class A Shares approximately after eight (8) years. Therefore, the "10
Years" example above reflects these conversions.
18
<PAGE> 126
<TABLE>
<CAPTION>
ISG AmSouth
Capital Growth Capital Growth Combined
Fund Fund Fund Pro Forma
------------------------- ------------------------- -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 4.75%(1) None None 4.50%(1) None None 4.50%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None(2) 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .65% .65% .65% .80% .80% .80% .80% .80% .80%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .54% .64% .54% .61% .61% .51% .61% .61% .51%
Total Fund Operating Expenses 1.44%(6) 2.04%(6) 1.19%(6) 1.41%(7) 2.16%(7) 1.31%(7) 1.41%(7) 2.16%(7) 1.31%(7)
Fee Waiver and/or Expense
Reimbursement n/a n/a n/a n/a n/a n/a (.07%) (.20%) (.20%)
Net Expenses n/a n/a n/a n/a n/a n/a 1.36%(8) 1.96%(8) 1.11%(8)
</TABLE>
(1) Sales charges may be reduced depending upon the amount invested, or in
certain circumstances, waived.
(2) Class A Shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
Approximately seven years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) For former B Share investors of the ISG Funds, waivers are in place on the
CDSC, charged if Class B Shares are sold within six years of purchase,
which will decline as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. For all other holders of B Shares, the CDSC declines over the same
seven year period as follows: 5%, 4%, 3%, 3%, 2%, 1%, 0%. Approximately
eight years after purchase, Class B Shares automatically convert to Class A
Shares.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements. Any fee waiver or expense reimbursement
arrangement is voluntary and may be discontinued at any time.
(7) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements
(8) Total expenses after fee waivers and expense reimbursements will be as
follows: Class A, 1.36%; Class B, 1.96%; Trust Class, 1.11%. Any fee waiver
or expense reimbursement arrangement is voluntary and may be discontinued
at any time.
19
<PAGE> 127
ISG Capital Growth Fund
AmSouth Capital Growth Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Capital Growth Fund
Class A Shares............................................... $615 $909 $1,225 $2,117
Class B Shares............................................... $607 $940 $1,298 $2,140
Class I Shares............................................... $121 $378 $ 654 $1,443
AmSouth Capital Growth Fund
Class A Shares............................................... $587 $876 $1,186 $2,065
Class B Shares............................................... $719 $976 $1,359 $2,213
Trust Shares................................................. $133 $415 $ 718 $1,579
Combined Fund Pro Forma
Class A Shares............................................... $587 $876 $1,186 $2,065
Class B Shares............................................... $719 $976 $1,359 $2,213
Trust Shares................................................. $133 $415 $ 718 $1,579
</TABLE>
- --------
** Class B shares of the ISG Capital Growth Fund automatically convert to
Class A Shares approximately after seven (7) years. AmSouth Capital Growth
Fund and the Combined Fund automatically convert to Class A Shares
approximately after eight (8) years. Therefore, the "10 Years" example
above reflects these conversions.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Capital Growth Fund
Class B Shares............................................... $207 $640 $1,098 $2,140
AmSouth Capital Growth Fund
Class B Shares............................................... $219 $676 $1,159 $2,213
Combined Fund Pro Forma
Class B Shares............................................... $219 $676 $1,159 $2,213
</TABLE>
- ----------
** Class B shares of the ISG Capital Growth Fund automatically convert to
Class A Shares approximately after seven (7) years. AmSouth Growth
Opportunities Fund and the Combined Fund automatically convert to Class A
Shares approximately after eight (8) years. Therefore, the "10 Years"
example above reflects these conversions.
20
<PAGE> 128
<TABLE>
<CAPTION>
ISG AmSouth
Tennessee Tax-Exempt Tennessee Tax-Exempt Combined
Fund Fund Fund Pro Forma
------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 3.00%(1) None None 4.00%(1) None None 4.00%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None(2) 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .50% .50% .50% .65% .65% .65% .65% .65% .65%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .60% .70% .60% .67% .67% .57% .67% .67% .57%
Total Fund Operating Expenses 1.35%(6) 1.95%(6) 1.10%(6) 1.32%(7) 2.07%(7) 1.22%(7) 1.32%(7) 2.07%(7) 1.22%(7)
Fee Waiver and/or Expense
Reimbursement n/a n/a n/a n/a n/a n/a (.05%) (.20%) (.20%)
Net Expenses n/a n/a n/a n/a n/a n/a 1.27%(8) 1.87%(8) 1.02%(8)
</TABLE>
(1) Sales charges may be reduced depending upon the amount invested, or in
certain circumstances, waived.
(2) Class A Shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
Approximately seven years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) For former B Share investors of the ISG Funds, waivers are in place on the
CDSC, charged if Class B Shares are sold within six years of purchase,
which will decline as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. For all other holders of B Shares, the CDSC declines over the same
seven year period as follows: 5%, 4%, 3%, 3%, 2%, 1%, 0%. Approximately
eight years after purchase, Class B Shares automatically convert to Class A
Shares.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements. Any fee waiver or expense reimbursement
arrangement is voluntary and may be discontinued at any time.
(7) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements.
(8) Total expenses after fee waivers and expense reimbursements will be as
follows: Class A, 1.27%; Class B, 1.87%; Trust Class, 1.02%. Any fee waiver
or expense reimbursement arrangement is voluntary and may be discontinued
at any time.
21
<PAGE> 129
ISG Tennessee Tax-Exempt Fund
AmSouth Tennessee Tax-Exempt Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Tennessee Tax-Exempt Fund
Class A Shares............................................... $433 $715 $1,017 $1,875
Class B Shares............................................... $598 $912 $1,252 $2,044
Class I Shares............................................... $112 $350 $ 606 $1,340
AmSouth Tennessee Tax-Exempt Fund
Class A Shares............................................... $529 $802 $1,095 $1,927
Class B Shares............................................... $710 $949 $1,314 $2,118
Trust Shares................................................. $124 $387 $ 670 $1,477
Combined Fund Pro Forma
Class A Shares............................................... $529 $802 $1,095 $1,927
Class B Shares............................................... $710 $949 $1,314 $2,118
Trust Shares................................................. $124 $387 $ 670 $1,477
</TABLE>
- ----------
** Class B shares of the ISG Tennessee Tax-Exempt Fund automatically convert
to Class A Shares approximately after seven (7) years. AmSouth Tennessee
Tax-Exempt Fund and the Combined Fund automatically convert to Class A
Shares approximately after eight (8) years. Therefore, the "10 Years"
example above reflects these conversions.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Tennessee Tax-Exempt Fund
Class B Shares............................................... $198 $612 $1,052 $2044
AmSouth Tennessee Tax-Exempt Fund
Class B Shares............................................... $210 $649 $1,114 $2,118
Combined Fund Pro Forma
Class B Shares............................................... $210 $649 $1,114 $2,118
</TABLE>
- ----------
** Class B shares of the ISG Tennessee Tax-Exempt Fund automatically convert
to Class A Shares approximately after seven (7) years. AmSouth Tennessee
Tax-Exempt Fund and the Combined Fund automatically convert to Class A
Shares approximately after eight (8) years. Therefore, the "10 Years"
example above reflects these conversions.
22
<PAGE> 130
<TABLE>
<CAPTION>
ISG AmSouth
Limited Term Tennessee Limited Term Tennessee Combined
Tax-Exempt Fund Tax-Exempt Fund Fund Pro Forma
-------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 3.00%(1) None None 4.00%(1) None None 4.00%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None(2) 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .50% .50% .50% .65% .65% .65% .65% .65% .65%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .92% 1.02 .92% 1.00% 1.00% .90% 1.00% 1.00% .90%
Total Fund Operating Expenses 1.67%(6) 2.27%(6) 1.42%(6) 1.65%(7) 2.40%(7) 1.55%(7) 1.65%(7) 2.40%(7) 1.55%(7)
Fee Waiver and/or Expense
Reimbursement n/a n/a n/a n/a n/a n/a (.05%) (.20%) (.20%)
Net Expenses n/a n/a n/a n/a n/a n/a 1.60%(8) 2.20%(8) 1.35%(8)
</TABLE>
(1) Sales charges may be reduced depending upon the amount invested, or in
certain circumstances, waived.
(2) Class A Shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
Approximately seven years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) For former B Share investors of the ISG Funds, waivers are in place on the
CDSC, charged if Class B Shares are sold within six years of purchase,
which will decline as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. For all other holders of B Shares, the CDSC declines over the same
seven year period as follows: 5%, 4%, 3%, 3%, 2%, 1%, 0%. Approximately
eight years after purchase, Class B Shares automatically convert to Class A
Shares.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements. Any fee waiver or expense reimbursement
arrangement is voluntary and may be discontinued at any time.
(7) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements.
(8) Total expenses after fee waivers and expense reimbursements will be as
follows: Class A, 1.60%; Class B, 2.20%; Trust Class, 1.35%. Any fee waiver
or expense reimbursement arrangement is voluntary and may be discontinued
at any time.
23
<PAGE> 131
ISG Limited Term Tennessee Tax-Exempt Fund
AmSouth Limited Term Tennessee Tax-Exempt Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Limited Term Tennessee Tax-Exempt Fund
Class A Shares............................................... $465 $ 811 $1,180 $2,217
Class B Shares............................................... $630 $1,009 $1,415 $2,381
Class I Shares............................................... $145 $ 449 $ 776 $1,702
AmSouth Limited Term Tennessee Tax-Exempt Fund
Class A Shares............................................... $561 $ 900 $1,261 $2,276
Class B Shares............................................... $743 $1,048 $1,480 $2,463
Trust Shares................................................. $158 $ 490 $ 845 $1,845
Combined Fund Pro Forma
Class A Shares............................................... $561 $ 900 $1,261 $2,276
Class B Shares............................................... $743 $1,048 $1,480 $2,463
Trust Shares................................................. $158 $ 900 $1,261 $2,276
</TABLE>
- ----------
** Class B shares of the ISG Limited Term Tennessee Tax-Exempt Fund
automatically convert to Class A Shares approximately after seven (7)
years. AmSouth Limited Term Tennessee Tax-Exempt Fund and the Combined Fund
automatically convert to Class A Shares approximately after eight (8)
years. Therefore, the "10 Years" example above reflects these conversions.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Limited Term Tennessee Tax-Exempt Fund
Class B Shares............................................... $203 $ 709 $1,215 $2,381
AmSouth Limited Term Tennessee Tax-Exempt Fund
Class B Shares............................................... $243 $ 748 $1,280 $2,463
Combined Fund Pro Forma
Class B Shares............................................... $243 $ 748 $1,280 $2,463
</TABLE>
- ----------
** Class B shares of the ISG Limited Term Tennessee Tax-Exempt Fund
automatically convert to Class A Shares approximately after seven (7)
years. AmSouth Limited Term Tennessee Tax-Exempt Fund and the Combined Fund
automatically convert to Class A Shares approximately after eight (8)
years. Therefore, the "10 Years" example above reflects these conversions.
24
<PAGE> 132
<TABLE>
<CAPTION>
ISG AmSouth
Limited Term U.S. Limited Term U.S. Combined
Government Fund Government Fund Fund Pro Forma
------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 3.00%(1) None None 4.00%(1) None None 4.00%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None(2) 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .50% .50% .50% .65% .65% .65% .65% .65% .65%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .79% .75% .65% .76% .76% .66% .76% .76% .66%
Total Fund Operating Expenses 1.54%(6) 2.00%(6) 1.15%(6) 1.49%(7) 2.24%(7) 1.39%(7) 1.41%(7) 2.16%(7) 1.31%(7)
Fee Waiver and/or Expense
Reimbursement n/a n/a n/a n/a n/a n/a (.05%) (.20%) (.20%)
Net Expenses n/a n/a n/a n/a n/a n/a 1.36%(8) 1.96%(8) 1.11%(8)
</TABLE>
(1) Sales charges may be reduced depending upon the amount invested, or in
certain circumstances, waived.
(2) Class A Shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
Approximately seven years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) For former B Share investors of the ISG Funds, waivers are in place on the
CDSC, charged if Class B Shares are sold within six years of purchase,
which will decline as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. For all other holders of B Shares, the CDSC declines over the same
seven year period as follows: 5%, 4%, 3%, 3%, 2%, 1%, 0%. Approximately
eight years after purchase, Class B Shares automatically convert to Class A
Shares.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements. Any fee waiver or expense reimbursement
arrangement is voluntary and may be discontinued at any time.
(7) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements.
(8) Total expenses after fee waivers and expense reimbursements will be as
follows: Class A, 1.36%; Class B, 1.96%; Trust Class, 1.11%. Any fee waiver
or expense reimbursement arrangement is voluntary and may be discontinued
at any time.
25
<PAGE> 133
ISG Limited Term U.S. Government Fund
AmSouth Limited Term U.S. Government Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Limited Term U.S. Government Fund
Class A Shares............................................... $452 $ 772 $1,114 $2,079
Class B Shares............................................... $603 $ 927 $1,278 $2,152
Class I Shares............................................... $117 $ 365 $ 633 $1,398
AmSouth Limited Term U.S. Government Fund
Class A Shares............................................... $546 $ 852 $1,181 $2,108
Class B Shares............................................... $727 $1,000 $1,400 $2,297
Trust Shares................................................. $142 $ 440 $ 761 $1,669
Combined Fund Pro Forma
Class A Shares............................................... $538 $ 828 $1,140 $2,023
Class B Shares............................................... $719 $ 976 $1,359 $2,213
Trust Shares................................................. $133 $ 415 $ 718 $1,579
</TABLE>
- ----------
** Class B shares of the ISG Limited Term U.S. Government Fund automatically
convert to Class A Shares approximately after seven (7) years. AmSouth
Limited Term U.S. Government Fund and the Combined Fund automatically
convert to Class A Shares approximately after eight (8) years. Therefore,
the "10 Years" example above reflects these conversions.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Limited Term U.S. Government Fund
Class B Shares............................................... $203 $627 $1,078 $2,152
AmSouth Limited Term U.S. Government Fund
Class B Shares............................................... $227 $700 $1,200 $2,297
Combined Fund Pro Forma
Class B Shares............................................... $219 $676 $1,159 $2,213
</TABLE>
- ----------
** Class B shares of the ISG Limited Term U.S. Government Fund automatically
convert to Class A Shares approximately after seven (7) years. AmSouth
Limited Term U.S. Government Fund and the Combined Fund automatically
convert to Class A Shares approximately after eight (8) years. Therefore,
the "10 Years" example above reflects these conversions.
26
<PAGE> 134
<TABLE>
<CAPTION>
ISG AmSouth
Government Income Government Income Combined
Fund Fund Fund Pro Forma
------------------------- ------------------------- ------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
-------- ------- ------- ------- ------- ----- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 3.00%(1) None None 4.00%(1) None None 4.00%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .60% .60% .60% .65% .65% .65% .65% .65% .65%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .38% .48% .38% .69% .69% .59% .69% .69% .59%
Total Fund Operating Expenses 1.23%(6) 1.83%(6) .98%(6) 1.34%(7) 2.09%(7) 1.24%(7) 1.34%(7) 2.09%(7) 1.24%(7)(8)
Fee Waiver and/or
Expense Reimbursement n/a n/a n/a n/a n/a n/a (.06%) (.21%) (.21%)
Net Expenses n/a n/a n/a n/a n/a n/a 1.28%(8) 1.88%(8) 1.03%(8)
</TABLE>
(1) Sales changes may be reduced or, in certain circumstances, waived.
(2) Class A shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
Approximately seven years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) For former B share investors of ISG Funds, waivers are in place on the CDSC
as follows: 4%, 3%, 3%, 2%, 2%, 1%, 0%. For all other B shareholders, the
CDSC declines over the same seven-year period as follows: 5%, 4%, 3%, 3%,
2%, 1%, 0%.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses for Class B shares and Class I shares are based on estimated
amounts for the current fiscal year, and have been restated for Class A to
reflect current fees. The expenses do not reflect any fee waivers or
expense reimbursement arrangements. Any fee waiver or expense reimbursement
is voluntary and my be discontinued at any time.
(7) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements.
(8) Total expenses after fee waivers and expense reimbursements will be as
follows: Class A, 1.28%; Class B, 1.88%; Trust Class, 1.03%. Any fee waiver
or expense reimbursement arrangement is voluntary and may be discontinued
at any time.
27
<PAGE> 135
ISG Government Income Fund
AmSouth Government Income Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Government Income Fund
Class A Shares............................................... $422 $679 $ 955 $1,744
Class B Shares............................................... $586 $876 $1,190 $1,915
Class I Shares............................................... $100 $312 $ 542 $1,201
AmSouth Government Income Fund
Class A Shares............................................... $531 $808 $1,105 $1,948
Class B Shares............................................... $710 $949 $1,314 $2,126
Trust Shares................................................. $126 $393 $ 681 $1,500
Combined Fund Pro Forma
Class A Shares............................................... $531 $808 $1,105 $1,948
Class B Shares............................................... $710 $949 $1,314 $2,126
Trust Shares................................................. $126 $393 $ 681 $1,500
</TABLE>
- ----------
** Class B shares of the ISG Government Income Fund automatically convert to
Class A Shares approximately after seven (7) years. AmSouth Government
Income Fund and the Combined Fund automatically convert to Class A Shares
approximately after eight (8) years. Therefore, the "10 Years" example
above reflects these conversions.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Government Income Fund
Class B Shares............................................... $186 $576 $ 990 $1,915
AmSouth Government Income Fund
Class B Shares............................................... $210 $649 $1,114 $2,126
Combined Fund Pro Forma
Class B Shares............................................... $210 $649 $1,114 $2,126
</TABLE>
- ----------
** Class B shares of the ISG Government Income Fund automatically convert to
Class A Shares approximately after seven (7) years. AmSouth Government
Income Fund and the Combined Fund automatically convert to Class A Shares
approximately after eight (8) years. Therefore, the "10 Years" example
above reflects these conversions.
28
<PAGE> 136
<TABLE>
<CAPTION>
ISG AmSouth
Limited Term Income Limited Term Bond Combined
Fund Fund Fund Pro Forma
------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 3.00%(1) None None 4.00%(1) None None 4.00%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .50% .50% .50% .65% .65% .65% .65% .65% .65%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .60% .70% .60% .54% .54% .44% .54%. .54% .44%
Total Fund Operating Expenses 1.35%(6) 1.95%(6) 1.10%(6) 1.19%(7) 1.94%(7) 1.09%(7) 1.19%(7) 1.94%(7) 1.09%(7)
Fee Waiver and/or
Expense Reimbursement n/a n/a n/a n/a n/a n/a n/a (.11%) (.11%)
Net Expenses n/a n/a n/a n/a n/a n/a n/a 1.83%(8) .98%(8)
</TABLE>
(1) Sales changes may be reduced or, in certain circumstances, waived.
(2) Class A shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
Approximately seven years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) For former B share investors of ISG Funds, waivers are in place on the CDSC
as follows: 4%, 3%, 3%, 2%, 2%, 1%, 0%. For all other B shareholders, the
CDSC declines over the same seven-year period as follows: 5%, 4%, 3%, 3%,
2%, 1%, 0%.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses have been restated for Class A and Class I to reflect
current fees. The expenses do not reflect any fee waivers or expense
reimbursement arrangements. Any fee waiver or expense reimbursement
arrangement is voluntary and may discontinued at any time.
(7) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements.
(8) Total expenses after fee waivers and expense reimbursements will be as
follows: Class B, 1.83%; Trust Class, .98%. Any fee waiver or expense
reimbursement arrangement is voluntary and may be discontinued at any time.
29
<PAGE> 137
ISG Limited Term Income Fund
AmSouth Limited Term Bond Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Limited Term Income Fund
Class A Shares............................................... $433 $715 $1,017 $1,875
Class B Shares............................................... $598 $912 $1,252 $2,044
Class I Shares............................................... $112 $350 $ 606 $1,340
AmSouth Limited Term Bond Fund
Class A Shares............................................... $516 $763 $1,028 $1,785
Class B Shares............................................... $697 $909 $1,247 $1,979
Trust Shares................................................. $111 $347 $ 601 $1,329
Combined Fund Pro Forma
Class A Shares............................................... $516 $763 $1,028 $1,785
Class B Shares............................................... $697 $909 $1,247 $1,979
Trust Shares................................................. $111 $347 $ 601 $1,329
</TABLE>
- ----------
** Class B shares of the ISG Limited Term Income Fund automatically convert to
Class A Shares approximately after seven (7) years. AmSouth Limited
Term Bond Fund and the Combined Fund automatically convert to Class A
Shares approximately after eight (8) years. Therefore, the "10 Years"
example above reflects these conversions.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Limited Term Income Fund
Class B Shares............................................... $198 $612 $1,052 $2,044
AmSouth Limited Term Bond Fund
Class B Shares............................................... $197 $609 $1,047 $1,979
Combined Fund Pro Forma
Class B Shares............................................... $197 $609 $1,047 $1,979
</TABLE>
- ---------
** Class B shares of the ISG Limited Term Income Fund automatically convert to
Class A Shares approximately after seven (7) years. AmSouth Limited Term
Bond Fund and the Combined Fund automatically convert to Class A Shares
approximately after eight (8) years. Therefore, the "10 Years" example
above reflects these conversions.
30
<PAGE> 138
<TABLE>
<CAPTION>
ISG AmSouth
Equity Income Equity Income Combined
Fund Fund Fund Pro Forma
------------------------- ------------------------- --------------------------
Class A Class B Class I Class A Class B Class I Class A Class B Class I
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 4.75%(1) None None 4.50%(1) None None 4.50%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .65% .65% .65% .80% .80% .80% .80% .80% .80%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .70% .80% .70% .58% .58% .98% .58% .58% .48%
Total Fund Operating Expenses 1.60%(6) 2.20%(6) 1.35%(6) 1.38%(7) 2.13%(7) 1.28%(7) 1.38%(7) 2.13%(7) 1.28(7)
Fee Waiver and/or
Expense Reimbursement n/a n/a n/a n/a n/a n/a n/a (.07%) (.07%)
Net Expenses n/a n/a n/a n/a n/a n/a n/a 2.06%(8) 1.21%(8)
</TABLE>
(1) Sales changes may be reduced or, in certain circumstances, waived.
(2) Class A shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
Approximately seven years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) For former B share investors of ISG Funds, waivers are in place on the CDSC
as follows: 4%, 3%, 3%, 2%, 2%, 1%, 0%. For all other B shareholders, the
CDSC declines over the same seven-year period as follows: 5%, 4%, 3%, 3%,
2%, 1%, 0%.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses have been restated for Class A and Class I to reflect
current fees. The expenses noted above do not reflect any fee waivers or
expense reimbursement arrangements that are or were in effect. Any fee
waiver or expense reimbursement arrangement is voluntary and may be
discontinued at any time.
(7) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses noted above do not reflect any fee
waivers or expense reimbursement arrangements that are or were in effect.
(8) Total expenses after fee waivers and expense reimbursements will be as
follows: Class B, 2.06%; Trust Class, 1.21%. Any fee waiver or expense
reimbursement arrangement is voluntary and may be discontinued at any time.
31
<PAGE> 139
ISG Equity Income Fund
AmSouth Equity Income Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Equity Income Fund
Class A Shares............................................... $630 $956 $1,304 $2,285
Class B Shares............................................... $623 $988 $1,380 $2,309
Class I Shares............................................... $137 $428 $ 739 $1,624
AmSouth Equity Income Fund
Class A Shares............................................... $584 $867 $1,171 $2,033
Class B Shares............................................... $716 $967 $1,344 $2,182
Trust Shares................................................. $130 $406 $ 702 $1,545
Combined Fund Pro Forma
Class A Shares............................................... $584 $867 $1,171 $2,033
Class B Shares............................................... $716 $967 $1,344 $2,182
Trust Shares................................................. $130 $406 $ 702 $1,545
</TABLE>
- ----------
** Class B shares of the ISG Equity Income Fund automatically convert to Class
A Shares approximately after seven (7) years. AmSouth Equity Income Fund
and the Combined Fund automatically convert to Class A Shares approximately
after eight (8) years. Therefore, the "10 Years" example above reflects
these conversions.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Equity Income Fund
Class B Shares............................................... $223 $688 $1,180 $2,309
AmSouth Equity Income Fund
Class B Shares............................................... $216 $667 $1,114 $2,182
Combined Fund Pro Forma
Class B Shares............................................... $216 $667 $1,114 $2,182
</TABLE>
- ----------
** Class B shares of the ISG Equity Income Fund automatically convert to Class
A Shares approximately after seven (7) years. AmSouth Equity Income Fund
and the Combined Fund automatically convert to Class A Shares approximately
after eight (8) years. Therefore, the "10 Years" example above reflects
these conversions.
32
<PAGE> 140
<TABLE>
<CAPTION>
ISG AmSouth
Municipal Income Municipal Bond Combined
Fund Fund Fund Pro Forma
------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 3.00%(1) None None 4.00%(1) None None 4.00%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None 5.00%(4) None(2) None(4) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .60% .60% .60% .65% .65% .65% .65% .65% .65%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .56% .66% .56% .53% .53% .43% .53% .53% .43%
Total Fund Operating Expenses 1.41%(6) 2.01%(6) 1.16%(6) 1.18%(7) 1.93%(7) 1.08%(7) .18%(7) 1.93%(7) 1.08%(7)
</TABLE>
(1) Sales changes may be reduced or, in certain circumstances, waived.
(2) Class A shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
Approximately seven years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) For former B share investors of ISG Funds, waivers are in place on the CDSC
as follows: 4%, 3%, 3%, 2%, 2%, 1%, 0%. For all other B shareholders, the
CDSC declines over the same seven-year period as follows: 5%, 4%, 3%, 3%,
2%, 1%, 0%.
(5) A wire transfer fee of $7.00 will be deducted from the amount.
(6) Other expenses have been for Class B and Class I are based on estimated
amounts for the current fiscal year, and have been restated for Class A to
reflect current fees. The expenses do not reflect any fee waivers or
expense reimbursement arrangements. Any fee waiver or expense reimbursement
arrangement is voluntary and may be discontinued at any time.
(7) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements. Any fee waiver or expense reimbursement
arrangement is voluntary and may be discontinued at any time.
33
<PAGE> 141
ISG Municipal Income Fund
AmSouth Municipal Bond Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Municipal Income Fund
Class A Shares............................................... $439 $733 $1,048 $1,940
Class B Shares............................................... $604 $930 $1,283 $2,108
Class I Shares............................................... $118 $368 $ 638 $1,409
AmSouth Municipal Bond Fund
Class A Shares............................................... $515 $760 $1,023 $1,775
Class B Shares............................................... $696 $906 $1,242 $1,968
Trust Shares................................................. $110 $343 $ 595 $1,317
Combined Fund Pro Forma
Class A Shares............................................... $515 $760 $1,023 $1,775
Class B Shares............................................... $696 $906 $1,242 $1,968
Trust Shares................................................. $110 $343 $ 595 $1,317
</TABLE>
- ----------
** Class B shares of the ISG Municipal Income Fund automatically convert to
Class A Shares approximately after seven (7) years. AmSouth Municipal Bond
Fund and the Combined Fund automatically convert to Class A Shares
approximately after eight (8) years. Therefore, the "10 Years" example
above reflects these conversions.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Municipal Income Fund
Class B Shares............................................... $204 $630 $1,083 $2,108
AmSouth Municipal Bond Fund
Class B Shares............................................... $196 $606 $1,042 $1,968
Combined Fund Pro Forma
Class B Shares............................................... $196 $606 $1,042 $1,968
</TABLE>
- ----------
** Class B shares of the ISG Municipal Income Fund automatically convert to
Class A Shares approximately after seven (7) years. AmSouth Municipal Bond
Fund and the Combined Fund automatically convert to Class A Shares
approximately after eight (8) years. Therefore, the "10 Years" example
above reflects these conversions.
34
<PAGE> 142
<TABLE>
<CAPTION>
ISG AmSouth
Small-Cap Opportunity Small Cap Combined
Fund Fund Fund Pro Forma
------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- -------- ------- ----- -------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 4.75%(1) None None 4.50%(1) None None 4.50%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .95% .95% .95% 1.20% 1.20% 1.20% 1.20% 1.20% 1.20%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .55% .65% .55% .55% .55% .45% .55% .55% .45%
Total Fund Operating Expenses 1.75%(6) 2.35%(6) 1.50%(6) 1.75%(7) 2.50%(7) 1.65%(7) 1.75%(7) 2.50%(7) 1.65%(7)
Fee Waiver and/or
Expense Reimbursement n/a n/a n/a n/a n/a n/a n/a (.15%) (.15%)
Net Expenses n/a n/a n/a n/a n/a n/a n/a 2.35%(8) 1.50%(8)
</TABLE>
(1) Sales changes may be reduced or, in certain circumstances, waived.
(2) Class A shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
Approximately seven years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) For former B share investors of ISG Funds, waivers are in place on the CDSC
as follows: 4%, 3%, 3%, 2%, 2%, 1%, 0%. For all other B shareholders, the
CDSC declines over the same seven-year period as follows: 5%, 4%, 3%, 3%,
2%, 1%, 0%.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses for Class B and Class I are based on estimated amounts for
the current fiscal year, and have been restated for Class A to reflect
current fees. The expenses noted above do not reflect any fee waivers or
expense reimbursement arrangements that are or were in effect. Any fee
waiver or expense reimbursement arrangement is voluntary and may be
discontinued at any time.
(7) Other expenses for each Class are based on estimated amounts for the
current fiscal year. Total expenses after fee waivers and expense
reimbursements will be as follows: Class B, 2.35 %; Trust Class, 1.50%. Any
fee waiver or expense reimbursement arrangement is voluntary and may be
discontinued at any time.
35
<PAGE> 143
ISG Small-Cap Opportunity Fund
AmSouth Small Cap Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
ISG Small-Cap Opportunity Fund
<S> <C> <C> <C> <C>
Class A Shares............................................... $636 $ 974 $1,334 $2,347
Class B Shares............................................... $629 $1,006 $1,410 $2,371
Class I Shares............................................... $144 $ 446 $ 771 $1,691
AmSouth Small Cap Fund
Class A Shares............................................... $620 $ 976 $1,356 $2,420
Class B Shares............................................... $753 $1,079 $1,531 $2,565
Trust Shares................................................. $168 $ 520 $ 897 $1,955
Combined Fund Pro Forma
Class A Shares............................................... $620 $ 976 $1,356 $2,420
Class B Shares............................................... $753 $1,079 $1,531 $2,565
Trust Shares................................................. $168 $ 520 $ 897 $1,955
</TABLE>
- ----------
** Class B shares of the ISG Small-Cap Opportunity Fund automatically convert
to Class A Shares after seven (7) years. AmSouth Small Cap Fund and the
Combined Fund automatically convert to Class A Shares approximately after
eight (8) years. Therefore, the "10 Years" example above reflects these
conversions.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Small-Cap Opportunity Fund
Class B Shares............................................... $229 $706 $1,210 $2,371
AmSouth Small Cap Fund
Class B Shares............................................... $253 $779 $1,331 $2,565
Combined Fund Pro Forma
Class B Shares............................................... $253 $779 $1,331 $2,565
</TABLE>
- ----------
** Class B shares of the ISG Small-Cap Opportunity Fund automatically convert
to Class A Shares after seven (7) years. AmSouth Small Cap Fund and the
Combined Fund automatically convert to Class A Shares approximately after
eight (8) years. Therefore, the "10 Years" example above reflects these
conversions.
36
<PAGE> 144
<TABLE>
<CAPTION>
ISG AmSouth
Tax-Exempt Money Tax-Exempt Money Combined
Market Fund Market Fund Fund Pro Forma
------------------------- ------------------- -----------------------
Class A Class I Class A Trust Class A Trust
------- ------- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) None(1) None None None None(1) None
Sales Charge on Reinvested
Dividends None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) None None None None(2) None
Redemption Fees None None None(3) None(3) None(3) None(3)
Exchange Fees None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .35% .35% .40% .40% .40% .40%
12b-1 Fees None None None None None None
Other Expenses .57% .47% .53% .43% .53% .43%
Total Fund Operating Expenses .92%(4) .82%(4) .93%(4) .83%(4) .93%(5) .83%(5)
Fee Waiver and/or
Expense Reimbursement n/a n/a n/a n/a (.03%) (.03%)
Net Expenses n/a n/a n/a n/a .90%(6) .80%(6)
</TABLE>
(1) Sales changes may be reduced or, in certain circumstances, waived.
(2) Class A shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(4) Other expenses for each class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements. Any fee waiver or expense reimbursement
arrangement is voluntary and may be discontinued at any time.
(5) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses do not reflect any fee waivers or expense
reimbursement arrangements.
(6) Total expenses after fee waivers and expense reimbursements will be as
follows: Class A, .90%; Trust Class, .80%. Any fee waiver or expense
reimbursement arrangement is voluntary and may be discontinued at any time.
37
<PAGE> 145
ISG Tax-Exempt Money Market Fund
AmSouth Tax-Exempt Money Market Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
ISG Tax-Exempt Money Market Fund
Class A Shares............................................... $ 94 $293
Class I Shares............................................... $ 84 $262
AmSouth Tax-Exempt Money Market Fund
Class A Shares............................................... $ 95 $296
Trust Shares................................................. $ 85 $265
Combined Fund Pro Forma
Class A Shares............................................... $ 95 $296
Trust Shares................................................. $ 85 $265
</TABLE>
38
<PAGE> 146
<TABLE>
<CAPTION>
ISG AmSouth
Prime Money Market Prime Money Market Combined
Fund Fund Fund Pro Forma
------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) None(1) None None None None None None(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .25% .25% .25% .40% .40% .40% .40% .40% .40%
12b-1 Fees None .75% None None .75% None None .75% None
Other Expenses .57% .58% .48% .53% .53% .43% .53% .53% .43%
Total Fund Operating Expenses .82%(6) 1.58%(6) .73%(6) .93%(7) 1.68%(7) .83%(7) .93%(7)1.68%(7) .83%(7)
Fee Waiver and/or
Expense Reimbursement n/a n/a n/a n/a n/a n/a (.16%) (.16%) (.16%)
Net Expenses n/a n/a n/a n/a n/a n/a .77%(8)1.52%(8) .67%8
</TABLE>
(1) Sales changes may be reduced or, in certain circumstances, waived.
(2) Class A shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
Approximately seven years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) For former B share investors of ISG Funds, waivers are in place on the CDSC
as follows: 4%, 3%, 3%, 2%, 2%, 1%, 0%. For all other B shareholders, the
CDSC declines over the same seven-year period as follows: 5%, 4%, 3%, 3%,
2%, 1%, 0%.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other fees have been restated for Class I to reflect current fees. The
expenses noted above do not reflect any fee waivers or expense
reimbursement arrangements that are or were in effect. Any fee waiver or
expense reimbursement arrangement is voluntary and may be discontinued at
any time.
(7) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses noted above do not reflect any fee
waivers or expense reimbursement arrangements that are or were in effect.
(8) Total expenses after fee waivers and expense reimbursements will be as
follows: Class A, .77%; Class B, 1.52%; Trust Class, .67%. Any fee waiver
or expense reimbursement arrangement is voluntary and may be discontinued
at any time.
39
<PAGE> 147
ISG Prime Money Market Fund
AmSouth Prime Money Market Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Prime Money Market Fund
Class A Shares............................................... $ 84 $262 $ 455 $1,014
Class B Shares............................................... $561 $799 $1,060 $1,576
Class I Shares............................................... $ 75 $233 $ 406 $ 906
AmSouth Prime Money Market Fund
Class A Shares............................................... $ 95 $296 $ 515 $1,143
Class B Shares............................................... $671 $830 $1,113 $1,694
Trust Shares................................................. $ 85 $265 $ 460 $1,025
Combined Fund Pro Forma
Class A Shares............................................... $ 95 $296 $ 515 $1,143
Class B Shares............................................... $671 $830 $1,113 $1,694
Trust Shares................................................. $ 85 $265 $ 460 $1,025
</TABLE>
- ----------
** Class B shares of the ISG Prime Money Market Fund automatically convert to
Class A Shares after seven (7) years. AmSouth Prime Money Market Fund and
the Combined Fund automatically convert to Class A Shares approximately
after eight (8) years. Therefore, the "10 Years" example above reflects
these conversions.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Prime Money Market Fund
Class B Shares............................................... $161 $499 $860 $1,576
AmSouth Prime Money Market Fund
Class B Shares............................................... $171 $530 $ 913 $1,694
Combined Fund Pro Forma
Class B Shares............................................... $171 $530 $913 $1,694
</TABLE>
- ----------
** Class B shares of the ISG Prime Money Market Fund automatically convert to
Class A Shares after seven (7) years. AmSouth Prime Money Market Fund and
the Combined Fund automatically convert to Class A Shares approximately
after eight (8) years. Therefore, the "10 Years" example above reflects
these conversions.
40
<PAGE> 148
<TABLE>
<CAPTION>
ISG AmSouth
Income Bond Combined
Fund Fund Fund Pro Forma
------------------------- ------------------------ -------------------------
Class A Class B Class I Class A Class B Trust Class A Class B Trust
------- ------- ------- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases (as
a percentage of offering
price) 3.00%(1) None None 4.00%(1) None None 4.00%(1) None None
Sales Charge on Reinvested
Dividends None None None None None None None None None
Maximum Contingent
Deferred Sales Charge (as
a percentage of original
purchase price or
redemption proceeds, as
applicable) None(2) 4.00%(3) None None 5.00%(4) None None(2) 5.00%(4) None
Redemption Fees None None None None(5) None(5) None(5) None(5) None(5) None(5)
Exchange Fees None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees .50% .50% .50% .65% .65% .65% .65% .65% .65%
12b-1 Fees .25% .75% None None .75% None None .75% None
Other Expenses .63% .73% .63% .53% .53% .43% .53% .53% .43%
Total Fund Operating Expenses 1.38%(6) 1.98%(6) 1.13%(6) 1.18%(7) 1.93%(7) 1.08%(7) 1.18%(7) 1.93%(7) 1.08%(7)
Fee Waiver and/or
Expense Reimbursement n/a n/a n/a n/a n/a n/a n/a (.07%) (.07%)
Net Expenses n/a n/a n/a n/a n/a n/a n/a 1.86%(8) 1.01%(8)
</TABLE>
(1) Sales changes may be reduced or, in certain circumstances, waived.
(2) Class A shares bought as part of an investment of $1 million or more are
not subject to an initial sales charge, but may be charged a CDSC of 1.00%
if sold within one year of purchase.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh year.
Approximately seven years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) For former B share investors of ISG Funds, waivers are in place on the CDSC
as follows: 4%, 3%, 3%, 2%, 2%, 1%, 0%. For all other B shareholders, the
CDSC declines over the same seven-year period as follows: 5%, 4%, 3%, 3%,
2%, 1%, 0%.
(5) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(6) Other expenses have been restated for class A and Class I to reflect
current fees. The expenses noted above do not reflect any fee waivers or
expense reimbursement arrangements that are or were in effect. There was no
fee waiver or expense reimbursement for Class B. Any fee waiver or expense
reimbursement arrangement is voluntary and may be discontinued at any time.
(7) Other expenses for each Class are based on estimated amounts for the
current fiscal year. The expenses noted above do not reflect any fee
waivers or expense reimbursement arrangements that are or were in effect.
(8) Total expenses after fee waivers and expense reimbursements will be as
follows: Class B, 1.86%; Trust Class, 1.01%. Any fee waiver or expense
reimbursement arrangement is voluntary and may be discontinued at any time.
41
<PAGE> 149
ISG Income Fund
AmSouth Bond Fund
EXAMPLE: An investor would pay the following expenses on $10,000 investment,
assuming (1) 5% annual return, (2) no changes in the Fund's operating expenses,
and (3) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Income Fund
Class A Shares............................................... $436 $724 $1,033 $1,908
Class B Shares............................................... $601 $921 $1,268 $2,076
Class I Shares............................................... $115 $359 $ 622 $1,375
AmSouth Bond Fund
Class A Shares............................................... $515 $760 $1,023 $1,775
Class B Shares............................................... $696 $906 $1,242 $1,968
Trust Shares................................................. $110 $343 $ 595 $1,317
Combined Fund Pro Forma
Class A Shares............................................... $515 $760 $1,023 $1,775
Class B Shares............................................... $696 $906 $1,242 $1,968
Trust Shares................................................. $110 $343 $ 595 $1,317
</TABLE>
- ----------
** Class B shares of the ISG Income Fund automatically convert after seven (7)
years. AmSouth Bond Fund and the Combined Fund automatically convert to
Class A Shares approximately after eight (8) years. Therefore, the "10
Years" example above reflects these conversions.
Assuming no redemption of Class B shares at the end of the period, the
dollar amounts in the above example would be as follows:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
ISG Income Fund
Class B Shares............................................... $201 $621 $1,068 $2,076
AmSouth Bond Fund
Class B Shares............................................... $196 $606 $1,042 $1,968
Combined Fund Pro Forma
Class B Shares............................................... $196 $606 $1,042 $1,968
</TABLE>
- ----------
** Class B shares of the ISG Income Fund automatically convert after seven (7)
years. AmSouth Bond Fund and the Combined Fund automatically convert to
Class A Shares approximately after eight (8) years. Therefore, the "10
Years" example above reflects these conversions.
42
<PAGE> 150
AmSouth Mutual Funds
ANNUAL REPORT
July 31, 1999
AMSOUTH AmSouth
MUTUAL FUNDS AMSOUTH BANK
Investment Advisor
BISYS Fund Services, Distributor
[LOGO OF AMSOUTH MUTUAL FUNDS APPEARS HERE] [LOGO OF AMSOUTH BANK
APPEARS HERE]
Not FDIC Insured
<PAGE> 151
Table of Contents
Message From the Chairman and Investment Advisor
Page 1
Report of Independent Accountants
Page 33
Statements of Assets and Liabilities
Page 34
Statements of Operations
Page 38
Statements of Changes in Net Assets
Page 42
Schedules of Portfolio Investments
Page 48
Notes to Financial Statements
Page 94
Financial Highlights
Page 108
- --------------------------------------------------------------------------------
The AmSouth Mutual Funds, like all mutual funds, are NOT FDIC
INSURED nor insured by any other agency and
are not obligations or deposits of, or endorsed or
guaranteed by, AmSouth Bank or any of its
affiliates. Investment products involve investment
risk, including the possible loss of principal.
- --------------------------------------------------------------------------------
<PAGE> 152
Message From the Chairman and Investment Advisor
Dear Shareholders:
We are pleased to send you this annual report for the 12 months ended July 31,
1999, a period full of the soaring volatility that has become customary in
recent years.
It was also a time when two portfolios in our fund family achieved noteworthy
milestones. First, the AmSouth Bond Fund was recognized by The Wall Street
Journal as one of the top 15 funds in its sector--not just once, but for 11
consecutive months through July 1999.
Based on data provided by Lipper Analytical Services, the AmSouth Bond Fund was
a consistent leader in the A-Rated Bond Fund category (for trailing 12-month
performance). In the most recent period that ended July 31, the Fund's Classic
Shares ranked eighth out of more than 159 funds in its peer group./1/
What is truly remarkable about this accomplishment is that the AmSouth Bond Fund
was ranked highly as stated above during both the bull market, which bonds
enjoyed last autumn and into the winter, and the bear market that has depressed
the fixed-income sector in the last six months.
A second achievement that bears mention was that the AmSouth Equity Fund as of
July 31, had portfolio assets under management of $1.03 billion, a testament to
the Fund's long-term performance and service to shareholders.
These feats had a direct bearing on another of our portfolios, the AmSouth
Balanced Fund--which draws upon the AmSouth Equity Fund's style for the stock
portion of its portfolio and follows the AmSouth Bond Fund's lead for its
fixed-income allocation.
Stocks Finish On An Upswing
The summer of 1998 seems like it was a very long time ago, but it was the start
of our latest fiscal year, and it was a treacherous time to be an investor.
Waves of bad news swept through the markets: Asia was still a depressed region;
Russia defaulted on tens of billions of dollars of government debt; an
enormously leveraged hedge fund, Long-Term Capital Management, threatened to
collapse and take the world's credit stability down with it. The stock market
plummeted.
The Federal Reserve Board's (the Fed's) decision to lower short-term interest
rates not once, but three times in just four months, sparked one of the most
dramatic recoveries ever. Investors rode back into the market on a wave of
liquidity. As had been the case for much of the previous four years, large-cap
growth issues were the biggest winners, along with just about any stock that had
a "dot.com" at the end of its name.
-1-
<PAGE> 153
The bull market kept its momentum into early spring. On March 29, for the first
time ever, the Dow Jones Industrial Average/2/ closed above 10,000, a
near-mythical level. In relatively short order, the 11,000 mark was breached as
well. And as we write this letter in the middle of August, the Dow has recovered
again--this time, from a brief drop this summer--to stand within a few
percentage points of its all-time high.
The individual fund reports that follow will detail the stock market's gyrations
and rotations more fully. But suffice it to say that most equity investors who
stuck with their long-term strategy for the full 12 months, and remained
unshaken by bouts of volatility, are most likely pleased with their funds'
returns.
Where the Fed Led, Bonds Followed
Veteran investors in the fixed-income market know that bond prices are at the
mercy of interest rates; when rates decline, bond prices rise, and vice versa.
This fact was never more evident than during the last 12 months.
The first and last six months of the period were almost mirror images of one
another. Spurred by a flight to quality in the U.S. Treasury market, and then by
the Fed's rate cuts, fixed-income instruments of nearly every stripe rose
sharply through January. Then just as quickly, the tide turned against bonds.
The fear of a global financial disaster abated, making Treasuries less
attractive. Inflation remained mild, but in an almost-perverse display of
looking for trouble where little existed, many observers began to evoke the
specter of rising prices. The Fed did not raise rates immediately, not until
June 30, but just the notion of a rate hike was enough to push rates
significantly higher.
Funds For Every Investor's Needs
Both stocks and bonds sold off modestly in July, the last month of our fiscal
year (though municipal bonds bucked the trend by remaining mostly unchanged). So
where does that leave you, and us, as we begin a new 12-month period?
As we look ahead, we believe bonds are a bit more attractive than stocks, on a
relative basis. That does not mean we think the stock market is troubled, but
rather, that bonds offer a better return on a risk-adjusted basis. In the first
two weeks of August, interest rates have continued to be volatile; the yield on
the bellwether 30-year Treasury bond spiked up to 6.26%, then fell rapidly below
the critical 6% level. It is our feeling that, while interest rates could dance
around for the next few months, the Fed could very well raise rates a number of
times before the end of 1999 bonds should produce decent returns. Factor in
historically low inflation, and the fixed-income sector could prove to be
hospitable.
At the same time, we are not abandoning stocks. Any long-term investor with a
plan that includes an equity allocation should not bail out at the first, or
even
-2-
<PAGE> 154
second, sign of trouble. We remain encouraged by the growth potential of
stocks.
With the addition to our fund family of the AmSouth Select Equity Fund, the
AmSouth Enhanced Market Fund and the AmSouth Institutional Prime Obligations
Fund, we now offer shareholders an impressively diversified array of funds. This
full complement of portfolios, in our opinion, allowed many shareholders to do
well in the markets over the last year, and regardless of future shifts in the
market, this diversification can serve you well in the months and years ahead.
Sincerely,
/s/ J. DAVID HUBER
- ----------------------
J. David Huber
Chairman
AmSouth Mutual Funds
/s/ BRIAN B. SULLIVAN
- ----------------------
Brian B. Sullivan
Senior Investment Officer
AmSouth Bank
/1/ The AmSouth Bond Fund (Classic Shares) was ranked 8 out of 159 Corporate
A-Rated Debt Funds for the one-year period, 20 out of 130 funds for the
three-year period, 25 out of 90 funds for the five-year period, and 21 out
of 42 funds for the ten-year period, respectively. All rankings are as of
July 31, 1999. Lipper rankings are based on total return with dividends and
capital gains reinvested and do not reflect a sales charge.
/2/ The Dow Jones Industrial Average is a price-weighted average based on the
price-only performance of 30 blue-chip stocks (the average is computed by
adding the prices of the 30 stock's splits, stock dividends and
substitutions of stocks).
-3-
<PAGE> 155
[THIS PAGE INTENTIONALLY LEFT BLANK]
-4-
<PAGE> 156
The AmSouth Equity Income Fund
The AmSouth Equity Income Fund is subadvised by Rockhaven Asset Management, LLC
and is managed by Christopher Wiles, CFA. President and chief investment officer
of Rockhaven, Mr. Wiles has more than 15 years of investment management
experience. He holds an MBA and a bachelor's degree in finance.
Low Risk, High Income
For the 12 months ended July 31, 1999, the AmSouth Equity Income Fund produced a
total return of 14.17% (Classic Shares at NAV). In comparison, the S&P 500 Stock
Index rose 20.20%, and the Lipper Equity Income Fund Index/1/ gained 11.26%.
We provided our shareholders with solid market participation with below-average
risk and above-average income. As of July 31, 1999, the Fund's yield was 2.82%,
more than twice the S&P 500's yield of just 1.26%.
We Made Good Money With Convertibles
In many ways, this was one of the most phenomenal 12-month periods in stock
market history. Last summer, we thought we might be in the throes of a
potentially disastrous, deflationary environment throughout the world. There was
serious trouble in Asia and Russia, with Latin America also looking vulnerable.
Consequently, even though the U.S. economy was strong, the Federal Reserve acted
quickly--lowering short-term interest rates three times in the latter part of
1998--to stave off a global financial collapse.
In a deflationary environment, it is prudent to hold securities with the longest
duration you can get your hands on. Those long-duration securities were
large-cap growth stocks and, to some degree, Internet stocks. Then all of a
sudden in 1999, the world looked much more stable, and deflationary fears
subsided. Therefore, interest rates began to rise sharply. This turnaround
favored short-duration securities. With regard to stocks, this favored
deep-value stocks.
The Fund participated in the climb from the October 1998 lows to the March 1999
highs. With the abrupt change away from large-cap growth, we gave up some
ground--though not that much.
One significant change in the portfolio during the last 12 months was an
increase in our allocation to convertible securities. Due to an active
merger-and-acquisition environment, we found some very attractive convertible
opportunities. For instance, when Centocor, a biotech company, was acquired by
Johnson & Johnson (0.91% of the Fund's net assets), we found ourselves holding
JNJ convertible (1.42%), which yielded 3.7%. Another example was Level One
Communications, which was taken over by Intel (0.75%). By buying Level One
convertible, which became Intel convertible (0.91%), we were getting
significantly more income than was available through Intel common stock.*
As of July 31, 1999, the Fund's top five holdings were BCE, Inc. (3.04%),
Lincoln National Corp. (2.94%), Nextel STRYPES (2.92%), Skytel/Worldcom
Communications, Inc. (2.85%) and General Electric Co. (2.81%).*
A Blase Market For the Next Few Months
Going forward, we believe there will be many things happening in the next six
months. The main event remains the Year 2000 (Y2K) situation. One factor that
helped the U.S. economy grow robustly in the first seven months of 1999 was a
significant amount of Y2K-related buying of goods before the end of the year.
Many made their purchases early in 1999. Therefore, we expect the economy to
show some signs of slowing in the fourth quarter of 1999, and interest rates
could fall from their relatively high levels. We do not see the stock market
making much of a move either way for the next six months, but we think
conditions could be ripe for an increase in stock prices in the early part of
next year.
/1/ The Lipper Equity Income Fund Index is comprised of funds that seek
relatively high current income and growth of income through investing 60% or
more of their portfolios in equities.
* The Fund's portfolio composition is subject to change.
-5-
<PAGE> 157
The AmSouth Equity Income Fund
[THE AMSOUTH EQUITY INCOME FUND APPEARS HERE]
<TABLE>
<CAPTION>
AmSouth Equity AmSouth Equity AmSouth Equity S&P 500 Lipper Equity
Income Fund Income Fund Income Fund Stock Income Fund
Date (Classic Shares)* (Premier Shares) (B Shares)** Index Index
- ---- ----------------- ---------------- -------------- ------- -------------
<S> <C> <C> <C> <C> <C>
3/20/97 9,550 10,000 10,000 10,000 10,000
7/97 11,409 11,948 11,421 12,633 11,786
7/98 12,073 12,669 12,142 15,136 12,918
7/99 13,784 14,497 13,915 18,193 14,373
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------
Average Annual Total Return
- ---------------------------------------------
Since
1 Inception
As of July 31, 1999 Year (3/20/97)
- ---------------------------------------------
<S> <C> <C>
Classic* 9.03% 14.54%
- ---------------------------------------------
Premier 14.43% 17.01%
- ---------------------------------------------
B Shares** 8.34% 15.00%
- ---------------------------------------------
</TABLE>
* Reflects 4.50% sales charge
** Reflects applicable contingent deferred sales charge.
Effective September 2, 1997, the Fund's existing shares, which were previously
unclassified, were designated either Classic or Premier Shares. The performance
figures for Premier Shares for periods prior to such date represent the
performance of Classic Shares of the Fund.
Performance for the Class B Shares, which commenced operations on September 3,
1997, is based on the historical performance of the Classic Shares (without
sales charge) prior to that date. The performance of Classic Shares does not
reflect the higher 12b-1 fees or the contingent deferred sales charge (CDSC).
Had the CDSC and higher 12b-1 fees been incorporated, total return and
hypothetical growth figures would have been lower.
The performance of the AmSouth Equity Income Fund is measured against the S&P
500 Stock Index and the Lipper Equity Income Fund Index. The S&P 500 Stock Index
is an unmanaged index generally representative of the U.S. stock market as a
whole. The index does not reflect the deduction of fees associated with a mutual
fund, such as investment management and fund accounting fees. The Lipper Equity
Income Fund Index, an index that consists of managed funds, and the Fund's
performance do reflect the deduction of fees for these value-added services.
During the period shown, the Fund waived fees for various expenses. Had these
waivers not been in effect, performance quoted would have been lower.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
-6-
<PAGE> 158
The AmSouth Equity Fund
The AmSouth Equity Fund is managed by Pedro Verdu, CFA. Mr. Verdu has more than
26 years of investment experience as an analyst and portfolio manager. He holds
an MBA in finance and a bachelor's degree in economics.
We Benefited From a Return To Value
For the 12 months ended July 31, 1999, the AmSouth Equity Fund produced a total
return of 14.92% (Classic Shares at NAV). In comparison, the S&P 500 Stock Index
rose 20.20%, while the Lipper Capital Appreciation Fund Index/1/ gained 20.76%.
Looking at our fiscal year as a whole, we had two very good periods. First, the
Fund performed well during the sharp market decline in August 1998; then during
the second calendar quarter of 1999, again turning in strong numbers when the
market became much broader and began to reward our value style of investing.
In the month of April, we saw a sudden broadening of investor interest--some of
which had to do with the significant signs of improvement in many foreign
economies that had lagged earlier in the year. There was a rapid rotation in the
second calendar quarter of 1999 and in our Fund.
We continued to perform strongly during periods when the market was sloppy,
which is what a value-oriented fund is structured to do.
Energy and Shelter: Our Strong Suits
In particular, we benefited from our holdings in energy and a sector we call
"shelter," which includes forest products and paper. With regard to energy, many
analysts did not believe that the Organization of Petroleum Exporting Countries
(OPEC) members would abide by an agreement to limit production; OPEC has a long
history of not holding together. But what was different this time was that, due
to historically low oil prices, OPEC countries were feeling true economic pain.
For the first time in four or five years, there not only was a political reason
for holding true to an agreement, there also were compelling economic reasons.
OPEC simply needed higher oil prices.
Consequently, production among OPEC nations shrunk by a couple of million
barrels a day. In a commodities market, when you suddenly go from a slight
amount of surplus to a position where inventories are tight, you can have some
dramatic price reactions--which is what happened.
We believe a similar scenario will unfold in forest products over the next
couple of quarters. Some of our favorite paper holdings include Weyerhaeuser
Co. (2.29% of the Fund's net assets), Willamette Industries, Inc. (1.51%),
International Paper Co. (2.35%) and Champion International Corp. (0.25%).*
We are also fond of selected stocks in the consumer nondurables sector,
including American Greetings Corp. (2.08%), Crown Cork & Seal, Inc. (0.70%)
and Dole Food, Inc. (0.42%).*
We Anticipate a Rise In Certain Commodities
With overweightings in energy and shelter, the portfolio is structured to
benefit from a continuation of moderate economic growth in the United States and
abroad. Despite the run-up in oil stocks, for example, we do not believe we have
yet seen a top. Even though the price of energy has risen significantly, that
has only happened in the last quarter, and the bottom lines of many companies in
the sector have not yet fully reflected those price increases. We have seen a
significant tightening in refining capacity, and the oil squeeze could get even
tighter.
As of July 31, 1999, the Fund's top five holdings were Gannett Co., Inc.
(2.74%), Marsh & McLennan Co., Inc. (2.62%), Texaco (2.58%), Newell Rubbermaid
(2.57%) and Kerr McGee Corp. (2.52%).*
/1/ Lipper Capital Appreciation Fund Index is comprised of funds that seek
maximum capital appreciation, frequently by means of 100% or more portfolio
turnover, leveraging, purchasing unregistered securities, purchasing
options, etc. The funds in the index may take large cash positions.
* The Fund's portfolio composition is subject to change.
-7-
<PAGE> 159
The AmSouth Equity Fund
[THE AMSOUTH EQUITY FUND APPEARS HERE]
<TABLE>
<CAPTION>
AmSouth AmSouth
Equity Equity AmSouth
Fund Fund Equity S&P 500 Lipper Capital
(Classic (Premier Fund Stock Appreciation
Date Shares)* Shares) (B Shares) Index Index
- ------ --------- -------- ---------- ------- --------------
<S> <C> <C> <C> <C> <C>
7/89 9,550 10,000 10,000 10,000 10,000
7/90 9,707 10,165 10,165 10,647 10,317
7/91 10,530 11,026 11,026 12,007 11,602
7/92 11,891 12,451 12,451 13,539 12,843
7/93 13,533 14,170 14,170 14,713 14,762
7/94 14,603 15,291 15,291 15,477 15,323
7/95 17,415 18,236 18,235 19,509 19,541
7/96 19,344 20,257 20,256 22,739 21,192
7/97 27,536 28,838 28,834 34,590 28,192
7/98 30,935 32,430 32,195 41,282 31,934
7/99 35,547 37,433 36,711 49,623 38,562
</TABLE>
For performances purposes the above graph has not been adjusted for CDSC
charges.
<TABLE>
<CAPTION>
- ---------------------------------------------
Average Annual Total Return
- ---------------------------------------------
As of 1 5 10
July 31, 1999 Year Year Year
- ---------------------------------------------
<S> <C> <C> <C>
Classic* 9.74% 18.38% 13.53%
- ---------------------------------------------
Premier 15.43% 19.61% 14.11%
- ---------------------------------------------
B Shares** 9.03% 18.95% 13.89%
- ---------------------------------------------
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
Effective September 2, 1997, the Fund's existing shares, which were previously
unclassified, were designated either Classic or Premier Shares. The performance
figures for Premier Shares for periods prior to such date represent the
performance of Classic Shares of the Fund.
Performance for the Class B Shares, which commenced operations on September 3,
1997, is based on the historical performance of the Classic Shares (without
sales charge) prior to that date. The performance of Classic Shares does not
reflect the higher 12b-1 fees or the contingent deferred sales charge (CDSC).
Had the CDSC and higher 12b-1 fees been incorporated, total return and
hypothetical growth figures would have been lower.
The performance of the AmSouth Equity Fund is measured against the S&P 500 Stock
Index and the Lipper Capital Appreciation Funds Index. The S&P 500 Stock Index
is an unmanaged index generally representative of the U.S. stock market as a
whole. The index does not reflect the deduction of fees associated with a mutual
fund, such as investment management and fund accounting fees. The Lipper Capital
Appreciation Funds Index is an index that consists of managed funds. The Lipper
Capital Appreciation Funds Index and the Fund's performance do reflect the
deduction of fees for these value-added services. During the period shown, the
Fund waived fees for various expenses. Had these waivers not been in effect,
performance quoted would have been lower.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
-8-
<PAGE> 160
The AmSouth Enhanced Market Fund
The AmSouth Enhanced Market Fund is subadvised by OakBrook Investments, LLC
and managed by Neil Wright, Janna Sampson and Peter Jankovskis. Mr. Wright has
19 years of investment experience and received his Ph.D. in economics from the
Massachusetts Institute of Technology. Ms. Sampson has 18 years of investment
management experience and has a master's degree in economics from Georgia
State University. Mr. Jankovskis has seven years of investment management
experience and holds a Ph.D. in economics from the University of California at
Santa Barbara.
The Fund Outperformed the Market
The AmSouth Enhanced Market Fund commenced operations on September 1, 1998. For
the period ended July 31, 1999, which represents nearly 11 months of
performance, the Fund produced a total return of 39.93% (Classic Shares at NAV).
In comparison, the S&P 500 Index rose 35.29%.
The Federal Reserve Board's (the Fed) three interest-rate cuts in the last few
months of 1998 pumped liquidity into the market and caused a tremendous surge in
stock prices. However, the benefits of those rate cuts were not evenly
distributed. From November 1998 through January 1999, growth stocks outperformed
value stocks by roughly 20%.
What few people realize is that there was an even greater divergence between the
performance of volatile stocks and more stable stocks. Thanks to the Fed's
actions, these volatile stocks suddenly became very attractive. The difference
in returns between stocks in these two groups during the same November 1998
through January 1999 period was more than 40%, with volatile stocks doing
better.
We define a "volatile stock" as one whose stock price tends to change by a large
degree, up or down, from month to month. To be included in this group, a stock's
average percentage change in its price over the past three years must rank it
among the 100 most-volatile stocks in the S&P 500. A "stable stock" is one that
ranks among the 100 least-volatile, in terms of its average change in price.
The Enhanced Market Fund is carefully balanced to make sure its allocation
compares to the S&P 500's along the lines of capitalization, in value versus
growth and also in terms of stability versus volatility. Because of these strong
risk controls, our ability to beat the S&P 500 was not influenced very much by
the strong performance of volatile stocks or any other group. The risk controls
worked as designed, allowing the strategy's strength in stock selection to shine
through. The Fund did very well during the time when volatile stocks were in
favor. Since the end of January, the Fund has continued to do well relative to
its benchmark.
A Wide Range Of Successes
We found good stocks in a number of sectors. Our winners ranged from mega-cap
technology powerhouse IBM Corp. (1.99% of the Fund's net assets) to smaller-cap
issues such as King World Productions (0.04%) and Navistar International
(0.05%). The Fund also benefited from positions in oil refiner Atlantic
Richfield Co. (0.47%) and financial service provider American Express (0.64%).*
A Challenging Climate In the Months Ahead
It is our belief that over the next six months, the market could be pretty
choppy. The Fed will probably raise rates once more before the end of 1999.
Regardless of what the Fed chooses to do, if the yield on the 30-year Treasury
bond stays above 6.00%, that is going to put some pressure on both corporate
earnings and the valuations of the companies that led the last market rally.
As of July 31, 1999, the Fund's top five holdings were Microsoft Corp.
(3.85%), General Electric Co. (3.20%), Intel Corp. (2.20%), IBM Corp. (1.99%)
and Lucent Technologies, Inc. (1.82%).*
* The Fund's portfolio composition is subject to change.
-9-
<PAGE> 161
The AmSouth Enhanced Market Fund
[THE AMSOUTH ENHANCED MARKET FUND APPEARS HERE]
<TABLE>
<CAPTION>
AmSouth Enhanced AmSouth Enhanced AmSouth Enhanced
Market Fund Market Fund Market Fund S&P 500
Date (Classic Shares)* (Premier Shares) (B Shares)** Stock Index
- ---- ----------------- ----------------- ---------------- -----------
<S> <C> <C> <C> <C>
9/1/98 9,550 10,000 10,000 10,000
9/98 10,154 10,631 10,123 10,641
10/98 10,955 11,470 10,947 11,506
11/98 11,656 12,204 11,673 12,203
12/98 12,258 12,834 12,299 12,907
1/99 12,757 13,358 12,805 13,446
7/99 13,365 14,010 13,390 16,162
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------
Aggregate Total Return
- ----------------------------------
Since
As of Inception
July 31, 1999 (9/1/98)
- ----------------------------------
<S> <C>
Classic* 33.65%
- ----------------------------------
Premier 40.10%
- ----------------------------------
B Shares** 33.90%
- ----------------------------------
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
Premier Shares commenced operations on December 11, 1998. The performance
figures for Premier Shares for periods prior to such date represent the
performance for Classic Shares of the Fund.
Performance for the Class B Shares, which commenced operations on September 2,
1998, is based on the historical performance of the Classic Shares (without
sales charge) prior to that date. The performance of Classic Shares does not
reflect the higher 12b-1 fees or the contingent deferred sales charge (CDSC).
Had the CDSC and higher 12b-1 fees been incorporated, total return and
hypothetical growth figures would have been lower.
The performance of the AmSouth Enhanced Market Fund is measured against the S&P
500 Stock Index. The S&P 500 Stock Index is an unmanaged index generally
representative of the U.S. stock market as a whole. The index does not reflect
the deduction of fees associated with a mutual fund, such as investment
management and fund accounting fees. During the period shown, the Fund waived
fees for various expenses. Had these waivers not been in effect, performance
quoted would have been lower.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
-10-
<PAGE> 162
The AmSouth Capital Growth Fund
The AmSouth Capital Growth Fund is subadvised by Peachtree Asset Management and
managed by Dennis Johnson, CFA. President and Chief Investment Officer of
Peachtree Asset Management, Mr. Johnson has more than 18 years of investment
management experience. He holds a master of science degree in finance and a
bachelor's degree in economics.
Solid Performance In the Face Of Volatility
For the 12 months ended July 31, 1999, the Fund produced a total return of
21.76% (Classic Shares at NAV). In comparison, the S&P 500 Stock Index rose
20.20%.
The entire period was marked by bouts of volatility and windows of opportunity.
As long-term investors, we rode through the volatility and took advantage of
numerous opportunities--especially in such sectors as consumer cyclicals,
consumer staples, financial services, health care, technology and
telecommunications. We had either average or above-average exposure in all of
these sectors.
Returns Greater In Stocks, Not Cash
We were fully invested throughout the period, which was very important to our
performance. Stocks provided much greater returns than cash and cash-equivalent
instruments. By minimizing cash, we enabled our shareholders to fully
participate in the market's above-average performance.
The second factor that was helpful was being invested in sectors in the market
that performed very well, as noted above. Being overweighted in the right
sectors was a result of our disciplined investment process. A third positive
factor was judicious, individual security selection. We benefited from our
holdings in Apple Computer, Inc. (1.61% of the Fund's net assets), Microsoft
Corp. (3.64%), General Electric Co. (3.39%), Home Depot, Inc. (1.95%), Applied
Materials, Inc. (2.73%), Lucent Technologies, Inc. (2.37%), Scientific
Atlanta, Inc. (2.67%) and Tyco International (3.51%).*
What do each of these companies have in common? They all exhibit above-average
rates of earnings growth, dominant market positions and valuations that our
research indicates are not fully reflective of these strong earnings trends. We
have a well-defined approach to looking at the growth characteristics of
companies--scrutinizing their earnings potential and cash flow. Therefore,
regardless of the volatility that certain stocks may exhibit in the marketplace
(based on changes in investor perceptions about fundamentals), we can remain
firm in our convictions about individual issues.
We validate our analysis with fundamental and quantitative research, and until
we believe that a company's underlying numbers have changed for the worse, we do
not make changes in the portfolio. This approach allows us to not be scared off
by periodic volatility; we always know why we are in a stock and why we want to
stay with a stock, despite that volatility.
The Stock Market Is the Place To Be
We continue to be optimistic about stocks. We would not want to assume that
absolute returns, going forward, will be comparable to the returns we have
experienced over the last 12 months. Nonetheless, we believe equity returns will
be acceptable, and not far off historical norms. We believe sectors that offer
opportunities for above-average performance include technology, health care,
consumer cyclicals and energy. Energy is particularly appealing. We believe
there is a profit recovery under way in both crude oil and natural gas that is
not fully reflected in current valuations.
As of July 31, 1999, the Fund's top five holdings were Microsoft Corp.
(3.64%), Tyco International (3.51%), General Electric Co. (3.39%), Nextel
Communications, Inc. (3.11%) and Applied Materials, Inc. (2.73%).*
*The Fund's portfolio composition is subject to change.
-11-
<PAGE> 163
The AmSouth Capital Growth Fund
[THE AMSOUTH CAPITAL GROWTH FUND APPEARS HERE]
<TABLE>
<CAPTION>
AmSouth Capital AmSouth Capital AmSouth Capital
Growth Fund Growth Fund Growth Fund S&P 500
Date (Classic Shares)* (Premier Shares) (B Shares)** Stock Index
- ---- ----------------- ---------------- --------------- -----------
<S> <C> <C> <C> <C>
8/3/97 9,550 10,000 10,000 10,000
7/98 11,098 11,650 11,040 12,637
7/99 13,514 14,219 13,558 15,190
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------
Since
As of 1 Inception
July 31, 1999 Year (8/3/97)
- --------------------------------------------------------
<S> <C> <C>
Classic Shares* 16.26% 16.34%
- --------------------------------------------------------
Premier Shares 22.05% 19.36%
- --------------------------------------------------------
B Shares** 15.96% 16.54%
- --------------------------------------------------------
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
Effective September 2, 1997, the Fund's existing shares, which were previously
unclassified, were designated either Classic or Premier Shares. The performance
figures for Premier Shares for periods prior to such date represent the
performance of Classic Shares of the Fund.
Performance for the Class B Shares, which commenced operations on September 3,
1997, is based on the historical performance of the Classic Shares (without
sales charge) prior to that date. The performance of Classic Shares does not
reflect the higher 12b-1 fees or the contingent deferred sales charge (CDSC).
Had the CDSC and higher 12b-1 fees been incorporated, total return and
hypothetical growth figures would have been lower.
The performance of the AmSouth Capital Growth Fund is measured against the S&P
500 Stock Index. The S&P 500 Stock Index is an unmanaged index generally
representative of the U.S. stock market as a whole. The index does not reflect
the deduction of fees associated with a mutual fund, such as investment
management and fund accounting fees. During the period shown, the Fund waived
fees for various expenses. Had these waivers not been in effect, performance
quoted would have been lower.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
-12-
<PAGE> 164
The AmSouth Select Equity Fund
The AmSouth Select Equity Fund is subadvised by OakBrook Investments, LLC and
managed by Neil Wright, Janna Sampson and Peter Jankovskis. Mr. Wright has 19
years of investment experience and received his Ph.D. in economics from the
Massachusetts Institute of Technology. Ms. Sampson has 18 years of investment
management experience and has a master's degree in economics from Georgia
State University. Mr. Jankovskis has seven years of investment management
experience and holds a Ph.D. in economics from the University of California at
Santa Barbara.
A Marked Difference Between Volatility and Stability
The AmSouth Select Equity Fund commenced operations on September 1, 1998. For
the period ended, July 31, 1999, which represents nearly 11 months of
performance, the Fund produced a total return of 19.44% (Classic Shares at NAV).
In comparison, the S&P 500 Stock Index rose 35.29%.
The Federal Reserve Board's (the Fed's) three interest-rate cuts in the last few
months of 1998 pumped liquidity into the market and caused a tremendous surge in
stock prices. However, the benefits of those rate cuts were not distributed
evenly.
What few people realize is that there was an even greater divergence between the
performance of volatile stocks and more stable stocks. Thanks to the Fed's
actions, these volatile stocks suddenly became attractive. The difference in
returns between stocks in these two groups during the same November 1998 through
January 1999 period was more than 40%, with volatile stocks doing better than
stable ones.
We define a "volatile stock" as one whose stock price tends to change by a large
degree, up or down, from month to month. To be included in this group, a stock's
average percentage change in its price over the past three years must rank it
among the 100 most-volatile stocks in the S&P 500. A "stable stock" is one that
ranks among the 100 least-volatile in terms of its average change in price.
The AmSouth Select Equity Fund, by its nature, favors more stable stocks, and
this caused the portfolio to underperform its benchmark during the
November-January period. However, since the end of January and through the end
of June, "stability" was the place to be, and the Fund outperformed its
benchmark. Unfortunately, in July, one of the Fund's key holdings, Waste
Management (3.59% of the Fund's net assets), announced disappointing news, and
the subsequent drop in the stock's price dragged down the Fund's overall
performance.*
We Did Well With Food and Tax Preparation Names
The Fund did have some compelling success stories during the period. One issue
that did particularly well for us in the last few months was SYSCO Corp.
(4.86%), a distributor of food and paper products to restaurants. SYSCO is the
leader in its field, and three times larger than any of its competitors. Despite
its dominance and cost advantage, SYSCO's market share is only 12%
nationwide--which means the company has tremendous growth opportunities. Another
good story is H&R Block, Inc. (6.60%), an income tax-preparation company. The
peak tax period is past us, but trends are still good; and we are confident the
stock will continue to outperform. We are also fond of Hershey Foods Corp.
(3.87%), the leading North American manufacturer of quality chocolate, whose
stock was bruised earlier in the year, when the company reported disappointing
earnings.*
A Bumpy Ride Ahead
It is our belief that over the next six months, the market could be pretty
choppy. The Fed will probably raise rates once more before the end of 1999.
Regardless of what the Fed chooses to do, if the yield on the 30-year Treasury
bond stays above 6.00%, that will put pressure on both corporate earnings and
the valuations of the companies that led the last market rally. The Fund's
emphasis on more stable holdings should serve us well in such an environment.
As of July 31, 1999, the Fund's top five holdings were Hubbell, Inc. (10.71%),
Emerson Electric Co. (10.27%), Bristol-Myers Squibb Co. (8.20%), H&R Block,
Inc. (6.60%) and McDonald's Corp. (5.44%).*
* The Fund's portfolio composition is subject to change.
-13-
<PAGE> 165
The AmSouth Select Equity Fund
[THE AMSOUTH SELECT EQUITY FUND APPEARS HERE]
<TABLE>
<CAPTION>
AmSouth Select AmSouth Select AmSouth Select S&P 500
Equity Fund Equity Fund Equity Fund Stock
(Classic Shares)* (Premier Shares) (B Shares)** Index
----------------- ---------------- -------------- -------
<S> <C> <C> <C> <C>
9/1/98 9,550 10,000 10,000 10,000
9/98 10,032 10,504 10,000 10,641
10/98 10,885 11,396 10,890 11,506
11/98 11,168 11,693 11,170 12,203
12/98 11,519 12,051 11,526 12,907
1/99 11,405 11,940 11,395 13,446
7/99 11,408 11,962 11,359 16,162
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------
Aggregate Total Return
- ------------------------------------
Since
As of Inception
July 31, 1999 (9/1/98)
- ------------------------------------
<S> <C>
Classic* 14.08%
- ------------------------------------
Premier 19.62%
- ------------------------------------
B Shares** 13.59%
- ------------------------------------
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
Premier Shares commenced operations on December 3, 1998. The performance figures
for Premier Shares for periods prior to such date represent the performance for
Classic Shares of the Fund.
Performance for the Class B Shares, which commenced operations on September 2,
1998, is based on the historical performance of the Classic Shares (without
sales charge) prior to that date. The performance of Classic Shares does not
reflect the higher 12b-1 fees or the contingent deferred sales charge (CDSC).
Had the CDSC and higher 12b-1 fees been incorporated, total return and
hypothetical growth figures would have been lower.
The performance of the AmSouth Select Equity Fund is measured against the S&P
500 Stock Index. The S&P 500 Stock Index is an unmanaged index generally
representative of the U.S. stock market as a whole. The index does not reflect
the deduction of fees associated with a mutual fund, such as investment
management and fund accounting fees. During the period shown, the Fund waived
fees for various expenses. Had these waivers not been in effect, performance
quoted would have been lower.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
-14-
<PAGE> 166
The AmSouth Regional Equity Fund+
The AmSouth Regional Equity Fund is managed by Pedro Verdu, CFA. Mr. Verdu has
more than 26 years of investment experience as an analyst and portfolio
manager. He holds an MBA in finance and a bachelor's degree in economics.
A Rough Start, a Firm Recovery
For the 12 months ended July 31, 1999, the AmSouth Regional Equity Fund produced
a total return of -9.85% (Classic Shares at NAV). In comparison, the S&P 500
Index rose 20.20%, while the Lipper Capital Appreciation Fund Index/1/ returned
20.76%.
The Fund's performance suffered during the first part of the period, due to the
narrowness of the market and the fact that the groups we embrace, and the
geographic requirements of the Fund's investment objective, worked against us.
However, in the second calendar quarter of 1999, circumstances changed
dramatically. Our style of investing came back into favor, and the Fund
recovered much of the ground it had lost earlier. Throughout the period, the
Southeast remained a healthy economic region, with growth continuing at a pace
above the national average.
A Rare Venture Into Energy Proved Profitable
We had a number of stocks that did very well, especially during the Fund's
recovery period. Fort James Corp. (3.11% of the Fund's net assets), one of our
favorite paper companies, had a sharp price increase. Scientific Atlanta, Inc.
(1.77%) also came back very strongly; the stock had dropped early on, though
not for any reasons that we thought to be valid. A couple of the energy stocks
in the portfolio were strong performers, including Offshore Logistics, Inc.
(2.43%), Mobil Corp. (1.24%) and Schlumberger, Ltd. (1.47%). Although the
latter two would not ordinarily be identified as Southeast companies (we do
not include Texas), they each bought firms based in the Southeast--which
allowed us to buy their shares. Since it is difficult to get energy exposure
in the region, we have continued to hold these names.*
Any time you are in a geographic region that does not necessarily reflect the
overall balance of the nation as a whole and the broader stock market, a key
factor in determining your fund's relative performance is the performance of the
sectors that can be found in your region. For example, our portfolio has few
technology names. So, when the technology sector declines, as it did between
April and June, the Fund's relative performance is enhanced.
The Southeast Remains An Attractive Region
One key advantage of a regional fund such as ours is that shareholders can
benefit from the fund manager's acute and in-depth knowledge about a relatively
narrow segment of the market. We are based in the Southeast and have established
close and reliable contacts throughout the region; we base our investment
decisions on decades of experience in this region. While it is not possible to
predict exactly when a particular region will drift in or out of favor, the
Southeast has produced some remarkable and profitable growth in the past. We
believe the Fund remains positioned to take full advantage of such opportunities
when they present themselves.
As of July 31, 1999, the Fund's top five holdings were HEALTHSOUTH Corp.
(5.06%), Bank of America Corp. (3.23%), Fort James Corp. (3.11%), Health
Management Associates, Inc. (3.11%) and Modis Professional Services (3.08%).*
+ Regional funds may be subject to additional risk, since the companies they
invest in are located in one geographical location. Small capitalization funds
carry additional risk and volatility.
/1/ The Lipper Capital Appreciation Funds Index is comprised of funds that seek
maximum capital appreciation, frequently by means of 100% or more portfolio
turnover, leveraging, purchasing unregistered securities, purchasing
options, etc. The funds in the index may take large cash positions.
* The Fund's portfolio composition is subject to change.
-15-
<PAGE> 167
The AmSouth Regional Equity Fund+
[THE AMSOUTH REGIONAL EQUITY FUND APPEARS HERE]
<TABLE>
<CAPTION>
AmSouth AmSouth
Regional Regional AmSouth
Equity Fund Equity Fund Regional S&P 500 Lipper Capital
(Classic (Premier Equity Fund Stock Appreciation
Date Shares)* Shares) (B Shares) Index Index
- ---- ----------- ----------- ----------- ------- --------------
<S> <C> <C> <C> <C> <C>
7/89 9,550 10,000 10,000 10,000 10,000
7/90 10,449 10,940 10,940 10,647 10,317
7/91 11,757 12,311 12,311 12,007 11,602
7/92 14,186 14,853 14,853 13,539 12,843
7/93 16,388 17,160 17,160 14,713 14,782
7/94 17,188 17,998 17,998 15,477 15,323
7/95 19,783 20,713 20,713 19,509 19,541
7/96 22,376 23,427 23,427 22,739 21,192
7/97 31,107 32,568 32,568 34,590 28,192
7/98 31,012 32,527 32,261 41,282 31,934
7/99 27,958 29,411 28,859 49,823 38,562
</TABLE>
For performance purposes the above graph has not been adjusted for CDSC charges.
<TABLE>
<CAPTION>
- ---------------------------------------------
Average Annual Total Return
- ---------------------------------------------
As of 1 5 10
July 31, 1999 Year Year Year
- ---------------------------------------------
<S> <C> <C> <C>
Classic* -13.90% 9.20% 10.83%
- ---------------------------------------------
Premier -9.57% 10.32% 11.39%
- ---------------------------------------------
B Shares** -14.73% 9.63% 11.18%
- ---------------------------------------------
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
Effective September 2, 1997, the Fund's existing shares, which were previously
unclassified, were designated either Classic or Premier Shares. The performance
figures for Premier Shares for periods prior to such date represent the
performance of Classic Shares of the Fund.
Performance for the Class B Shares, which commenced operations on September 3,
1997, is based on the historical performance of the Classic Shares (without
sales charge) prior to that date. The performance of Classic Shares does not
reflect the higher 12b-1 fees or the contingent deferred sales charge (CDSC).
Had the CDSC and higher 12b-1 fees been incorporated, total return and
hypothetical growth figures would have been lower.
The performance of the AmSouth Regional Equity Fund is measured against the S&P
500 Stock Index and the Lipper Capital Appreciation Funds Index. The S&P 500
Stock Index is an unmanaged index generally representative of the U.S. stock
market as a whole. The index does not reflect the deduction of fees associated
with a mutual fund, such as investment management and fund accounting fees. The
Lipper Capital Appreciation Funds Index is an index that consists of managed
funds. The Capital Appreciation Funds Index and the Fund's performance do
reflect the deduction of fees for these value-added services. During the period
shown, the Fund waived fees for various expenses. Had these waivers not been in
effect, performance quoted would have been lower.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
-16-
<PAGE> 168
The AmSouth Small Cap Fund+
The AmSouth Small Cap Fund is subadvised by Sawgrass Asset Management, LLC and
is managed by Dean McQuiddy, CFA. A principal of Sawgrass, Mr. McQuiddy has more
than 16 years of investment management experience. He received his bachelor's
degree in finance from the University of Florida.
Tough Times In Small Caps
For the 12 months ended July 31, 1999, the Fund produced a total return of -
8.10% (Classic Shares at NAV). In comparison, the Russell 2000 Growth Index rose
14.51%.
Looking at the entire period from beginning to end, the equity markets dove up
and down like a roller coaster. The period began with stocks going into a
tailspin, hitting bottom in early October 1998. Then, buoyed by three successive
interest-rate cuts by the Federal Reserve Board, many sectors surged
higher--though the small-cap arena in which we operate did not fully participate
in the recovery. The rally continued into the beginning of April 1999, when
small caps experienced what we call a "capitulation bottom." We believe many
small-cap funds--not including this one, fortunately--were forced to sell a
portion of their holdings to raise cash for redemptions, a situation that drove
small-cap stock prices even lower.
Then, quite abruptly, investor bias shifted away from large-cap growth stocks
and toward cyclical sectors. As sentiment broadened, the Fund experienced a
solid rebound throughout April, May, June and July.
However for the period as a whole, the Fund underperformed its benchmark, the
Russell 2000 Growth Index. The primary reason was the huge impact
Internet-related stocks had on the index--many issues in the sector rose an
astonishing 400% to 500%, and the virtual absence of these stocks in our
portfolio had an impact on Fund performance. One of the disciplines we follow is
the requirement that all stocks we buy have current earnings. That is part of
our risk-control approach. However, the vast majority of Internet stocks do not
have current earnings.
Not only do these stocks not have earnings, but they lack many of the
characteristics we find attractive, including above-market sales, earnings
growth rates that are rising, and estimates of future earnings, or valuation
multiples that we consider to be reasonable.
We Scored With Fiber Optic Cable and Handbags
We have talked in the past about our stocks being very "cheap" relative to the
overall market--at the end of the period, the average holding in our portfolio
was selling for just 18 times this year's earnings, while the market as a whole
was selling for close to 30 times earnings--and our strategy produced a number
of spectacular winners. Dycom (2.19% of the Fund's net assets), a company that
lays the fiber optic cable that brings the Internet into people's homes, more
than doubled in price. Among retailers, we profited from our investment in
Fossil (2.80%)--a manufacturer of fashionable watches, belts and handbags--which
grew in sales and earnings very strongly, and was up 130% for the period. And
going forward, we are optimistic about one of our newer holdings, Forest Oil
(1.66%). The energy sector has done very well this year, and we feel Forest has
a marvelous position in the oil-and-gas exploration segment of the industry.*
Attractive Circumstances For Small Caps
Going forward, we believe we are set up for a very nice rally in smaller stocks.
They are selling at tremendous discounts to the overall market, really at
historical lows. Normally, these high-growth stocks are priced at a premium to
the market, not at a discount. The other essential element is that the market
has begun broadening out, and investors are finally paying attention to this
sector. We have endured a very long bear market for small-company shares, but it
appears that liquidity has returned.
As of July 31, 1999, the Fund's top five holdings were Commscope, Inc. (3.47%),
Antec Corp. (3.03%), Priority Healthcare (3.02%), American Freightways (2.93%)
and Copart, Inc. (2.92%).*
+ Small-capitalization funds typically carry additional risks since smaller
companies generally have a higher risk of failure. Historically, smaller
companies' stocks have experienced a greater degree of market volatility than
average.
* The Fund's portfolio composition is subject to change.
-17-
<PAGE> 169
The AmSouth Small Cap Fund+
[THE AMSOUTH SMALL CAP FUND APPEARS HERE]
<TABLE>
<CAPTION>
AmSouth Small AmSouth Small AmSouth Small
Cap Fund Cap Fund Cap Fund Russell 2000
Date (Classic Shares)* (Premier Shares) (B Shares)** Growth Index
- ------- ---------------- ---------------- -------------- ------------
<S> <C> <C> <C> <C>
3/2/98 9,550 10,000 10,000 10,000
7/98 8,756 9,152 8,655 8,639
7/99 8,047 8,441 7,978 9,893
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------
Since
As of 1 Inception
July 31, 1999 Year (3/2/98)
- --------------------------------------------------------
<S> <C> <C>
Classic Shares* -12.23% -14.27%
- --------------------------------------------------------
Premier Shares -7.76% -11.30%
- --------------------------------------------------------
B Shares** -13.34% -14.77%
- --------------------------------------------------------
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
Classic Shares commenced operations on March 3, 1998. The performance figures
for Classic Shares prior to such date represent the performance of Premier
Shares of the Fund.
The performance of the AmSouth Small Cap Fund is measured against the Russell
2000 Growth Index, an unmanaged index generally representative of domestically
traded common stocks of small to mid-sized companies. The index does not reflect
the deduction of fees associated with a mutual fund, such as investment
management and fund accounting fees. The Fund's performance does reflect the
deduction of fees for these value-added services. During the period shown, the
Fund waived fees for various expenses. Had these waivers not been in effect,
performance quoted would have been lower.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
-18-
<PAGE> 170
The AmSouth Balanced Fund
The AmSouth Balanced Fund is managed by Pedro Verdu, CFA. Mr. Verdu has more
than 26 years of investment experience as an analyst and portfolio manager. He
holds an MBA in finance and a bachelor's degree in economics.
Our "Balance" Provided Both Performance and Stability
For the 12 months ended July 31, 1999, the AmSouth Balanced Fund produced a
total return of 9.40% (Classic Shares at NAV). In comparison, the S&P 500 Stock
Index rose 20.20%, while the Lehman Brothers Government/Corporate Bond Index
gained 2.33%. For the same period, the Lipper Balanced Fund Index/1/
moved up 10.75%.
Stocks: Big Gain In Energy and "Shelter"
The equity portion of the portfolio did well during periods when market tends
were not well established--times when judicious stock picking was very
advantageous. During the second quarter of 1999, investor sentiment turned to
the type of value stocks we favor.
In particular, we benefited from our holdings in energy and a sector we call
"shelter," which includes forest products and paper. Concerning energy, many
analysts did not believe that OPEC members would abide by an agreement to limit
production; OPEC has a long history of not holding together. However, what was
different this time was that, due to historically low oil prices, OPEC countries
were feeling true economic pain. For the first time in four or five years, there
not only was a political reason for holding true to an agreement, there also
were compelling economic reasons. OPEC simply needed higher oil prices.
We believe a similar scenario will unfold in forest products over the next
couple of quarters, and we are positioned to take advantage of such a situation.
Bonds: We Actively Responded To Interest-Rate Moves
The fixed-income portion of the portfolio moved up strongly during the first six
months of the period, during which time interest rates fell sharply. However, in
January, it seemed to us that rates had fallen so far, so quickly, that a
further, significant drop appeared unlikely. Consequently we shortened the
portfolio's average maturity and duration considerably.
At the same time and even prior, spreads on corporate bonds had widened. We
decided to swap the interest-rate risk inherent in long-term Treasuries for the
credit risk of short-term corporate bonds--without diminishing our yield to
maturity. At the same yield, we were trading a greater risk for a smaller risk.
Therefore, when rates reversed direction and headed back up (driving bond prices
lower), our shareholders' capital was protected somewhat.
Since February, we have increased our average maturity and duration. What we
have seen in the last six months is that agency paper and mortgage-backed
securities have outperformed Treasuries. Our buying emphasis in recent months
has been on improving the quality of the portfolio and pushing our maturity and
duration out longer.
As of July 31, 1999, the fixed-income securities within the Fund maintained an
average credit quality of AAA, with an average maturity of 9.05 years.
Bonds Offer More Relative Value
As of July 31, 1999, the allocation of the portfolio indicated a slight bias
toward bonds. Having less than 50% of our assets in stocks is a little bearish
for us, but does not reflect that we feel particularly pessimistic toward
equities; we do not anticipate a bear market. Rather, when we examine the
risk/reward characteristics of both asset classes, we feel that bonds look a bit
more attractive on a relative basis.
As of July 31, 1999, the Fund's top five equity holdings were Washington
Mutual, Inc. (1.38% ), Engelhard Corp. (1.38%), Texaco, Inc. (1.34%),
Cabeltron Systems, Inc. (1.33%) and Kerr-McGee Corp. (1.24%).*
/1/ The Lipper Balanced Fund Index is comprised of funds whose primary objective
is to conserve principal by maintaining at all times a balanced portfolio of
both stocks and bonds. Typically, the stock/bond ratio is approximately
60%/40% but may vary.
* The Fund's portfolio composition is subject to change.
-19-
<PAGE> 171
The AmSouth Balanced Fund
[THE AMSOUTH BALANCED FUND APPEARS HERE]
<TABLE>
<CAPTION>
Lehman
AmSouth AmSouth AmSouth Brothers Lipper
Balanced Balanced Balanced S&P 500 Government/ Balanced
Fund (Classic Fund (Premier Fund (B Stock Corporate Fund
Date Shares)* Shares) Shares)** Index Bond Index Index
- ---- ------------- ------------- --------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
12/19/91 9,550 10,000 10,000 10,000 10,000 10,000
7/92 10,861 11,371 10,871 10,337 10,724 11,117
7/93 12,106 12,675 12,275 11,233 11,907 12,400
7/94 12,727 13,325 13,025 11,816 11,892 12,731
7/95 14,670 15,360 15,060 14,895 13,095 14,685
7/96 15,897 16,645 16,445 17,360 13,518 16,087
7/97 20,097 21,043 20,943 26,409 15,482 21,023
7/98 20,846 21,836 21,653 27,363 16,275 21,626
7/98 22,003 23,076 22,873 31,518 16,730 23,037
7/99 24,070 25,324 24,854 37,885 17,120 25,513
</TABLE>
For performance purposes the above graph has not been adjusted for CDSC charges.
<TABLE>
<CAPTION>
- --------------------------------------------------------
Average Annual Total Return
- --------------------------------------------------------
Since
As of 1 5 Inception
July 31, 1999 Year Year (12/19/91)
- --------------------------------------------------------
<S> <C> <C> <C>
Classic* 4.45% 12.55% 12.22%
- --------------------------------------------------------
Premier 9.74% 13.71% 12.97%
- --------------------------------------------------------
B Shares** 3.74% 13.04% 12.70%
- --------------------------------------------------------
</TABLE>
* Reflects 4.50% sales charge.
** Reflects applicable contingent deferred sales charge.
Effective September 2, 1997, the Fund's existing shares, which were previously
unclassified, were designated either Classic or Premier Shares. The performance
figures for Premier Shares for periods prior to such date represent the
performance of Classic Shares of the Fund.
Performance for the Class B Shares, which commenced operations on September 3,
1997, is based on the historical performance of the Classic Shares (without
sales charge) prior to that date. The performance of Classic Shares does not
reflect the higher 12b-1 fees or the contingent deferred sales charge (CDSC).
Had the CDSC and higher 12b-1 fees been incorporated, total return and
hypothetical growth figures would have been lower.
The performance of the AmSouth Balanced Fund is measured against the S&P 500
Stock Index, an unmanaged index generally representative of the U.S. stock
market as a whole; the Lehman Brothers Government/Corporate Bond Index, an
unmanaged broad-based index representative of the total return of long-term
government and corporate bonds; and the Lipper Balanced Fund Index. The S&P 500
Stock Index and the Lehman Brothers Government/Corporate Bond Index do not
reflect the deduction of fees associated with a mutual fund, such as investment
management and fund accounting fees. The Lipper Balanced Fund Index, a managed
index, and the Fund's performance do reflect the deduction of fees for these
value-added services. During the period shown, the Fund waived fees for various
expenses. Had these waivers not been in effect, performance quoted would have
been lower.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
-20-
<PAGE> 172
The AmSouth Limited Maturity Fund
The AmSouth Limited Maturity Fund is managed by John Boston, CFA. Mr. Boston,
Senior Vice President of AmSouth Bank, has more than 10 years of experience as
a fixed-income manager. He holds a bachelor's degree in economics.
Our Short Orientation Led To Outperformance
For the 12 months ended July 31, 1999, the AmSouth Limited Maturity Fund
produced a total return of 4.01% (Classic Shares at NAV). In comparison, the
Merrill Lynch 1-5-Year Government/Corporate Bond Index rose 2.33%, and the
Lipper Short-Term Investment Grade Debt Index/1/ gained 3.84%.
With volatility and credit concerns rampant in the bond market during much of
the period, our shorter maturity and emphasis on quality were the keys to our
relatively high returns and our significant outperformance relative to the
Lipper benchmark. Further, continued low inflation resulted in
inflation-adjusted returns that were generous by historical standards.
The defensive characteristics of our portfolio enabled the Fund to hold up
better than many longer-maturity funds during the last six months of the period,
when skyrocketing interest rates ate away at the value of many portfolios
(higher rates lead to lower bond prices).
Upside Gains, Downside Protection
As interest rates fell during the first six months of the period, the Fund
showed a profit. Concurrently, we allowed the portfolio's average maturity to
shorten. When rates turned around abruptly and began climbing higher, the Fund's
shorter-than-average maturity preserved shareholder value. At that point, we
felt it was prudent to begin allowing the portfolio's maturity to lengthen
again, in order to be prepared to take advantage of any future decline in rates.
As of July 31, 1999, approximately 80% of the portfolio's net assets was
invested in high-quality corporates, with the remainder invested in Treasuries
and agencies. Our allocation to corporate paper has fallen slightly over the
last six months, as we have been buying longer-term Treasuries in order to
extend the portfolio's maturity structure.*
As of July 31, 1999, the Fund's average maturity was 2.7 years, up from 2.5
years six months earlier (but still lower than 2.9 years a year ago). The
Fund's credit quality was AA.
We Are Positioned For Neutral-To-Lower Rates
We believe that interest rates have reached the upper end of their near-term
band and should remain level or begin to fall again. With that in mind, we have
extended the Fund's average maturity. At current levels, the Fund is providing
shareholders with productive yields. If rates do fall--and we think this is
probably six to 12 months down the road--we should realize capital gain profits
that will be passed along to our investors.
/1/ The Lipper Short-Term Investment Grade Debt Index is comprised of funds that
invest at least 65% of their assets in investment-grade debt issues (rated
in the top four grades) with dollar-weighted average maturities of one to
five years.
*The Fund's portfolio composition is subject to change.
-21-
<PAGE> 173
The AmSouth Limited Maturity Fund
[THE AMSOUTH LIMITED MATURITY FUND APPEARS HERE]
<TABLE>
<CAPTION>
AmSouth AmSouth
Limited Limited AmSouth Merrill Lynch
Maturity Maturity Limited 1-5 Year Lipper Short
Fund Fund Maturity Government/ Investment
(Classic (Premier Fund Corporate Grade Debt
Date Shares)* Shares) (B Shares) Bond Index Index
- ---- --------- -------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
7/31/89 9,800 10,000 10,000 10,000 10,000
7/90 10,252 10,879 10,679 10,765 10,618
7/91 11,178 11,644 11,644 11,857 11,590
7/92 12,459 12,978 12,978 13,330 13,165
7/93 13,296 13,850 13,850 14,279 14,258
7/94 13,398 13,957 13,957 14,533 14,306
7/95 14,422 15,024 15,024 15,697 15,351
7/96 15,102 15,732 15,732 16,548 16,130
7/97 16,197 16,872 16,872 17,877 17,377
7/98 17,159 17,892 17,785 19,029 18,401
7/99 17,847 18,631 18,501 19,906 19,030
</TABLE>
For performance purposes the above graph has not been adjusted for CDSC charges.
<TABLE>
<CAPTION>
- ------------------------------------------
Average Annual Total Return
- ------------------------------------------
As of 1 5 10
July 31, 1999 Year Year Year
- ------------------------------------------
<S> <C> <C> <C>
Classic* -0.11% 5.03% 5.97%
- ------------------------------------------
Premier 4.14% 5.95% 6.42%
- ------------------------------------------
B Shares** -1.42% 5.48% 6.35%
- ------------------------------------------
</TABLE>
* Reflects 4.00% sales charge.
** Reflects applicable contingent deferred sales charge.
Effective September 2, 1997, the Fund's existing shares, which were previously
unclassified, were designated either Classic or Premier Shares. The performance
figures for Premier Shares for periods prior to such date represent the
performance of Classic Shares of the Fund.
Performance for the Class B Shares, which commenced operations on January 21,
1999, is based on the historical performance of the Classic Shares (without
sales charge) prior to that date. The performance of Classic Shares does not
reflect the higher 12b-1 fees or the contingent deferred sales charge (CDSC).
Had the CDSC and higher 12b-1 fees been incorporated, total return and
hypothetical growth figures would have been lower.
The performance of the AmSouth Limited Maturity Fund is measured against the
Merrill Lynch 1-5-Year Government/Corporate Bond Index and the Lipper Short-Term
Investment Grade Debt Index. The Merrill Lynch 1-5-Year Government/Corporate
Bond Index is unmanaged and generally representative of the total return of
short-term government and corporate bonds. The index does not reflect the
deduction of fees associated with a mutual fund, such as investment management
and fund accounting fees. The Lipper Short-Term Investment Grade Debt Index, an
index of managed funds, and the Fund's performance do reflect the deduction of
fees for these value-added services. During the period shown, the Fund waived
fees for various expenses. Had these waivers not been in effect, performance
quoted would have been lower.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
-22-
<PAGE> 174
The AmSouth Government Income Fund
John Boston, CFA, manages the AmSouth Government Income Fund. Mr. Boston,
Senior Vice President of AmSouth Bank, has over 10 years of experience as a
fixed-income manager. He holds a bachelor's degree in economics.
We Favored GNMA Securities
For the 12 months ended July 31, 1999, the AmSouth Government Income Fund
produced a total return of 2.62% (Classic Shares at NAV). In comparison, the
Lehman Brothers Mortgage Index rose 2.78%, while the Lipper U.S. Mortgage Fund
Index/1/ gained 1.49%.
The Fund invests solely in debt instruments issued by the U.S. Treasury or
backed by an agency of the federal government. This allocation allows the Fund
to hold securities of superior quality, which can serve our shareholders well
both in times of economic turmoil and relative stability.
We generally favor mortgage-backed securities, principally Ginnie Maes (GNMAs)
because they offer significantly higher yields than Treasuries. Ginnie Maes are
the highest-quality bonds among mortgage-backed securities and are the only type
of mortgage security backed by the full faith and credit of the U.S.
Government.
Mortgage-Backed Securities Supported the Portfolio
Interest rates, the primary driver of bond prices (prices generally rise when
rates fall, and vice versa) made two large, contrary moves during the period.
First, rates declined sharply last autumn--pushed lower by concerns about the
global economy, a flight to quality in U.S. government issues, and the Fed's
decision to cut short-term rates three times. Then, during the last six months
of our reporting period, rates rapidly climbed higher, retracing most if not all
of their earlier levels.
During this difficult latter period, the mortgage-backed sector was the
best-performing area in the bond market. Our overweighting in this sector
benefited our shareholders.
Throughout this volatility, we saw little reason to make dramatic changes to our
portfolio. For example, on a year-to-year basis, our allocation to GNMAs changed
just one percentage point. The Fund's average maturity did rise a bit during the
period, but such an increase is to be expected in a portfolio that holds a
preponderance of mortgage securities--which normally extend in maturity as
interest rates rise.
As of July 31, 1999, the Fund's average maturity was 7.7 years, and its average
credit quality was AAA (government-quality portfolio). Approximately 67% of the
Fund was invested in GNMAs; 18% in noncallable, government agency debentures;
11% in U.S. Treasury securities and 4% in cash. This mix reflected only minor
shifts from the portfolio's allocation six months earlier.*
We Do Not Expect Rates To Rise
We were a little surprised at the speed at which interest rates rose during the
last six months; we had expected a less-volatile environment. The increase in
market-set rates (as opposed to rate increases mandated by the Fed) will
reinforce the prospects for the economic slowdown that we have been expecting.
We think long-term rates in the 6.15% to 6.25% levels are attractive, meaning we
do not believe they will go much higher and, in our opinion, they should be
lower a year from now.
/1/ The Lipper U.S. Mortgage Fund Index is comprised of funds that invest at
least 65% of their assets in mortgages/securities issued or guaranteed as to
principal and interest by the U.S. Government and certain federal agencies.
* The Fund's portfolio composition is subject to change.
-23-
<PAGE> 175
The AmSouth Government Income Fund
[THE AMSOUTH GOVERNMENT INCOME FUND APPEARS HERE]
<TABLE>
<CAPTION>
AmSouth Government AmSouth Government Lehman Brothers Lipper U.S.
Income Fund Income Fund Mortgage Mortgage
(Classic Shares)* (Premier Shares) Index Fund Index
------------------ ------------------ --------------- -----------
<S> <C> <C> <C> <C>
10/93 9,600 10,000 10,000 10,000
7/94 9,572 9,974 9,924 9,833
7/95 10,378 10,814 10,798 10,432
7/96 10,888 11,345 11,688 10,945
7/97 12,000 12,504 12,933 12,057
1/98 12,581 13,115 13,506 12,573
7/98 12,900 13,443 13,897 12,797
7/99 13,248 13,807 14,284 12,988
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------
Average Annual Total Return
- -----------------------------------------------
Since
As of 1 5 Inception
July 31, 1999 Year Year (10/1/93)
- -----------------------------------------------
<S> <C> <C> <C>
Classic* -1.47% 5.86% 4.94%
- -----------------------------------------------
Premier 2.72% 6.72% 5.69%
- -----------------------------------------------
</TABLE>
* Reflects 4.00% sales charge.
Effective September 2, 1997, the Fund's existing shares, which were previously
unclassified, were designated either Classic or Premier Shares. The performance
figures for Premier Shares for periods prior to such date represent the
performance of Classic Shares of the Fund.
The performance of the AmSouth Government Income Fund is measured against the
Lehman Brothers Mortgage Index and the Lipper U.S. Mortgage Fund Index. The
Lehman Brothers Mortgage Index is an unmanaged index generally representative of
the mortgage bond market as whole. The index does not reflect the deduction of
fees associated with a mutual fund, such as investment management and fund
accounting fees. The Lipper U.S. Mortgage Fund Index, an index of managed funds,
and the Fund's performance do reflect the deduction of fees for these
value-added services. During the period shown, the Fund waived fees for various
expenses. Had these waivers not been in effect, performance quoted would have
been lower.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
-24-
<PAGE> 176
The AmSouth Bond Fund
Brian Sullivan, CFA, manages the AmSouth Bond Fund. Mr. Sullivan, Senior Vice
President of AmSouth Bank, serves as Chairman of the Trust Investment Policy and
Strategy Group and is AmSouth Bank's Senior Investment Officer. He has 14 years
of fixed-income investment management experience and holds an MBA in finance and
a bachelor's degree in economics.
Above-Average Returns, Despite Extreme Volatility
For the 12 months ended July 31, 1999, the AmSouth Bond Fund produced a total
return of 2.58% (Classic Shares at NAV). In comparison, the Lehman Brothers
Government/Corporate Bond Index rose 2.33%, and the Lipper Corporate A-Rated
Debt Fund Index/1/ gained 0.73%.
We were proud of the Fund's performance, which produced a positive return in the
face of extraordinary interest-rate volatility. As with most fixed-income
portfolios, we profited when rates declined sharply last fall, and we struggled
when rates rose just as abruptly in the last six months of the period.
Apart from total return, the Fund's inflation-adjusted yield was enhanced by the
fact that inflation remained remarkably tame throughout the period.
Making the Right Calls
In January, it seemed to us that the optimism then prevalent in the bond market
was overdone. Rates had fallen so far, so quickly--many rates were near 20-year
lows--that a further, significant drop appeared unlikely. Consequently, we
shortened the portfolio's average maturity and duration considerably.
At the same time, and just prior, spreads on corporate bonds had widened. (A
"spread" is the additional yield offered by an agency or corporate bond over a
U.S. Treasury bond of like maturity.) We decided to swap the interest-rate risk
inherent in long-term Treasuries for the credit risk of short-term corporate
bonds--without diminishing our yield to maturity. At the same yield, we were,
effectively, trading a greater risk for a smaller risk. Therefore, when rates
reversed direction and headed back up (driving bond prices lower), our
shareholders' capital was protected to some degree.
Since February, we have increased our average maturity and duration. What we
have seen in the last six months is that agency paper and mortgage-backed
securities have outperformed Treasuries. Spreads have narrowed. Our buying
emphasis in recent months has been on improving the quality of the portfolio and
pushing our maturity and duration out longer.*
As of July 31, 1999, approximately 46.8% of the portfolio was invested in
corporate issues, 35.3% in securities issued by the U.S. Treasury, 12.8% in U.S.
government agency paper and the remainder in cash and cash equivalents. The
securities within the Fund maintained an average credit quality of AAA, with an
average maturity of 7.84 years.*
A Slower Economy Should Help the Fund
We believe the domestic economy will slow in the coming months. Quite honestly,
we have been surprised that the economy hasn't slowed much to this point--which
makes us even more convinced that the market could lose a little steam from here
on out. At this time, there is one dominant engine in the economy: the American
consumer. There is a chance that foreign economies will improve and help to
maintain our growth rate, but that scenario has not yet materialized and is,
therefore, just a hope. A less robust economy should be positive for the
fixed-income securities we hold.
/1/ The Lipper Corporate A-Rated Debt Fund Index is comprised of funds that
invest at least 65% of their assets in corporate debt issues rated "A" or
better, or in government issues.
* The Fund's portfolio composition is subject to change.
-25-
<PAGE> 177
The AmSouth Bond Fund
[THE AMSOUTH BOND FUND APPEARS HERE]
<TABLE>
<CAPTION>
AmSouth AmSouth AmSouth
Bond Fund Bond Fund Bond Fund
Date (B Shares) (Classic Shares)* (Premier Shares)
- ---- ---------- ----------------- -----------------
<S> <C> <C> <C>
7/89 10,000 9,600 10,000
7/90 10,553 10,131 10,553
7/91 11,393 10,938 11,393
7/92 13,258 12,728 13,258
7/93 14,559 13,979 14,559
7/94 14,591 14,011 14,591
7/95 16,000 15,363 16,000
7/96 16,699 16,035 16,699
7/97 18,447 17,714 18,448
7/98 19,682 19,034 19,840
7/99 19,995 19,524 20,374
</TABLE>
<TABLE>
<CAPTION>
Lehman Brothers Lipper Corporation
Govt./Corp. A-Rated Debt
Date Bond Index Fund Index
- ---- --------------- ------------------
<S> <C> <C>
7/89 10,000 10,000
7/90 10,623 10,515
7/91 11,712 11,556
7/92 13,543 13,468
7/93 15,037 15,004
7/94 15,019 14,815
7/95 16,539 16,302
7/96 17,417 17,138
7/97 19,296 19,106
7/98 20,853 20,501
7/99 21,338 20,652
</TABLE>
For performance purposes the above graph has not been adjusted for CDSC charges.
<TABLE>
<CAPTION>
- ----------------------------------------------
Average Annual Total Return
- ----------------------------------------------
As of 1 5 10
July 31, 1999 Year Year Year
- ----------------------------------------------
<S> <C> <C> <C>
Classic* -1.52% 6.00% 6.92%
- ----------------------------------------------
Premier 2.68% 6.90% 7.38%
- ----------------------------------------------
B Shares** -3.22% 6.19% 7.17%
- ----------------------------------------------
</TABLE>
* Reflects 4.00% sales charge.
** Reflects applicable contingent deferred sales charge.
Effective September 2, 1997, the Fund's existing shares, which were previously
unclassified, were designated either Classic or Premier Shares. The performance
figures for Premier Shares for periods prior to such date represent the
performance of Classic Shares of the Fund.
Performance for the Class B Shares, which commenced operations on September 3,
1997, is based on the historical performance of the Classic Shares (without
sales charge) prior to that date. The performance of Classic Shares does not
reflect the higher 12b-1 fees or the contingent deferred sales charge (CDSC).
Had the CDSC and higher 12b-1 fees been incorporated, total return and
hypothetical growth figures would have been lower.
The performance of the AmSouth Bond Fund is measured against the Lehman Brothers
Government/Corporate Bond Index, an unmanaged broad-based index representative
of the total return of long-term government and corporate bond, and the Lipper
Corporate A-Rated Debt Fund Index. The Lehman Brothers Government/Corporate Bond
Index does not reflect the deduction of fees associated with a mutual fund, such
as investment management and fund accounting fees. The Lipper Corporate A-Rated
Debt Fund Index, an index of managed funds, and the Fund's performance do
reflect the deduction of fees for these value-added services. During the period
shown, the Fund waived fees for various expenses. Had these waivers not been in
effect, performance quoted would have been lower.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
-26-
<PAGE> 178
The AmSouth Municipal Bond Fund+
Dorothy Thomas, who has 16 years of experience as an investment portfolio
manager for municipal bond accounts, personal trusts and endowments, manages the
AmSouth Municipal Bond Fund. Ms. Thomas, Senior Vice President of AmSouth Bank,
holds an MBA and a bachelor's degree in economics.
Suitable Performance In a Challenging Environment
For the 12 months ended July 31, 1999, the Fund produced a total return of 2.31%
(Classic Shares at NAV). In comparison, the Merrill Lynch 3-7-Year Municipal
Bond Index rose 3.83%, while the Lipper Intermediate Municipal Debt Index/1/
gained 2.44%.
Roughly speaking, the first half of the period was very positive for
fixed-income securities, including municipal bond funds, while the second half
was unusually difficult. The Fund's performance followed suit in both instances.
Preserving Total Returns
Last summer, investors began to become very concerned about economic conditions
in Asia and elsewhere. As a result, money flooded into the U.S. Treasury market.
This flight to quality caused U.S. interest rates to plummet and bond prices to
rise sharply (rates and prices move in opposite directions). At nearly the same
time, the Fed cut short-term rates three times, in part to ensure that there
would be plenty of liquidity in the financial markets. Together, these actions
kept interest rates very low through the end of 1998.
However, as the new year began, these trends started to reverse completely, and
interest rates climbed sharply--pushing bond prices markedly lower. Fortunately
for our shareholders, municipal bonds held their value more than comparable
Treasury or corporate debt. In the last six months of the period, 10-year
Treasury bond yields climbed 125 basis points (1.25%), while 10-year corporate
bond yields surged 140 basis points (1.40%)--both substantial moves. But 10-year
AA municipal bond yields rose just 60 basis points (0.60%), thereby preserving a
greater measure of total return.*
We Continued To Focus On Alabama Issues
Because so many of our investors are Alabama residents, we kept 55% to 60% of
the portfolio invested in municipal debt issued in this state (56.5% as of July
31, 1999). This strategy helped boost the tax-equivalent yield for Alabama
shareholders.*
The Alabama muni market did not produce an abundance of supply during the
period. In fact, issuance in the national municipal market is lower this year
than last year, especially in the last six months, with rising interest rates
making it more expensive for government entities to borrow money. Based on the
amount of quality debt available in Alabama, we have kept our allocation to
Alabama paper as high as we can. If additional, high-quality debt is put on the
market at a reasonable price, we will buy it.
As of July 31, 1999, the securities within the Fund maintained an average credit
quality of AA, with an average maturity of 5.96 years.
Economic Growth Could Slow, One Way Or Another
We are starting to see some signs of a possible economic slowdown in the United
States. If that comes about, it would be good for the bond market. And if the
economy does not slow down by itself, the Fed is likely to step in and raise
rates in order to make it decelerate. Rates have gone up in recent months, as we
noted, and in response, we have lengthened the portfolio's average maturity
modestly.
+ The Fund's income may be subject to the federal alternative minimum tax and to
certain state and local taxes.
/1/ The Lipper Intermediate Municipal Debt Fund Index is comprised of funds that
invest in municipal debt issues with dollar-weighted average maturities of
five to ten years.
* The Fund's portfolio composition is subject to change.
-27-
<PAGE> 179
The AmSouth Municipal Bond Fund+
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
AmSouth Merrill Lynch Lipper AmSouth
Municipal AmSouth 3-7-Year Intermediate Municipal
Bond Fund Municipal Municipal Municipal Bond Fund
Date (Classic Shares)* (B Shares)** Bond Index Debt Index (Premier Shares)
- ------ -------------- ---------- ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
7/1/97 9,500 10,000 10,000 10,000 10,000
7/98 10,199 10,624 10,480 10,460 10,643
7/99 10,434 10,525 10,881 10,715 10,889
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------
Average Annual Total Return
- -------------------------------------------------------
Since
As of 1 Inception
July 31, 1999 Year (7/1/97)
- -------------------------------------------------------
<S> <C> <C>
Classic* -1.77% 2.04%
- -------------------------------------------------------
Premier 2.30% 4.17%
- -------------------------------------------------------
B Shares** -3.02% 2.48%
- -------------------------------------------------------
</TABLE>
* Reflects 4.00% sales charge.
** Reflects applicable contingent deferred sales charge
Effective September 2, 1997, the Fund's existing shares, which were previously
unclassified, were designated either Classic or Premier Shares. The performance
figures for Premier Shares for periods prior to such date represent the
performance of Classic Shares of the Fund.
Performance for the Class B Shares, which commenced operations on February 3,
1999, is based on the historical performance of the Classic Shares (without
sales charge) prior to that date. The performance of Classic Shares does not
reflect the higher 12b-1 fees or the contingent deferred sales charge (CDSC).
Had the CDSC and higher 12b-1 fees been incorporated, total return and
hypothetical growth figures would have been lower.
The performance of the AmSouth Municipal Bond Fund is measured against the
Merrill Lynch 3-7-Year Municipal Bond Index, an unmanaged index that is
generally representative of municipal bonds with intermediate maturities. The
Fund's performance is also measured against the Lipper Intermediate Municipal
Debt Fund Index. The Merrill Lynch 3-7-Year Municipal Bond Index does not
reflect the deduction of fees associated with a mutual fund, such as investment
management and fund accounting fees. The Lipper Intermediate Municipal Debt Fund
Index, an index of managed funds, and the Fund's performance do reflect the
deduction of fees for these value-added services. During the period shown, the
Fund waived fees for various expenses. Had these waivers not been in effect,
performance quoted would have been lower.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
-28-
<PAGE> 180
The AmSouth Florida Tax-Free Fund+,++
Steve L. Cass, Assistant Vice President of AmSouth Bank, manages the AmSouth
Florida Tax-Free Fund. Mr. Cass has five years of experience as an investment
portfolio manager and holds a bachelor's degree in economics.
Relative Stability In a Swirl Of Volatility
For the 12 months ended July 31, 1999, the AmSouth Florida Tax-Free Fund
produced a total return of 2.06% (Classic Shares at NAV). In comparison, the
Merrill Lynch 3-7-Year Municipal Bond Index rose 3.83%.
Throughout the period, the Fund offered shareholders some measure of protection
from the excessive volatility present in both the stock market and the long-term
taxable bond market. Along with greater stability, we provided our investors
with current income that was exempt from federal income tax and Florida
intangible taxes--which is one of our primary objectives.
We Took Action To Enhance Returns
During the first months of the period, the Federal Reserve Board (the Fed)
lowered short-term interest rates three times. While this action had only a
moderate effect on the Fund--municipal bonds have less interest-rate sensitivity
than, say, U.S. Treasuries--the constructive environment certainly provided a
welcome boost to our performance. In the second half of the period, however,
interest rates abruptly changed direction and headed back higher, effectively
wiping out all of the gains that we and many other bond funds had accrued
earlier.
A factor that helped was a steady stream of new Florida bonds (at least during
the first half of the period), which further tempered volatility. Even when
supply became more scarce in the last few months of the period, the Fund
benefited from already holding a portfolio of bonds that were in increasingly
greater demand.
Because a majority of our shareholders are residents of Florida, we also took
steps to hold as high a proportion of in-state securities as possible; this
enables Florida residents to reduce their exposure to the state's intangible
tax. At the end of the period, 97.3% of the portfolio was invested in securities
issued in the state of Florida, with the remainder in cash and cash equivalents.
In addition, we were successful in keeping our turnover and trading costs at
modest levels. With a fixed-income fund such as ours, lower expenses can
translate into higher net returns for shareholders. It is our intent to find the
best bonds we can and hold them to maturity whenever possible.
Lower Rates Possible By the End Of the Year
Looking forward, we believe the Fed quite possibly will raise rates at least
once more in the near future. However, as we get closer to the end of 1999 and
the economy begins to slow, rates should come back down. We remain committed to
maintaining a high-quality portfolio, concentrating on general obligation bonds
along with securities issued by water and sewer entities. The market is not
paying a sufficient premium for taking on additional risk, so we are not
pursuing lower-quality issues.
As of July 31, 1999, the securities within the Fund maintained an average credit
quality of AA1, with an average maturity of 5.83 years.
+ The Fund's income may be subject to the federal alternative minimum tax and
to certain state and local taxes.
++ Regional funds may be subject to additional risk, since companies they invest
in are located in one geographical location.
-29-
<PAGE> 181
The AmSouth Florida Tax-Free Fund+,++
[THE AMSOUTH FLORIDA TAX-FREE FUND APPEARS HERE]
<TABLE>
<CAPTION>
AmSouth Florida AmSouth Florida Merrill Lynch AmSouth Florida
Tax Free Fund Tax Free Fund 3-7-Year Municipal Tax Free Fund
(Classic Shares)* (Premier Shares) Bond Index (B Shares)**
----------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
9/1/94 9,600 10,000 10,000 10,000
7/95 10,224 10,653 10,670 10,152
7/96 10,658 11,105 11,147 10,702
7/97 11,392 11,870 11,943 11,567
7/98 11,896 12,420 12,516 12,096
7/99 12,142 12,688 12,995 12,410
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------
Average Annual Total Return
- ---------------------------------------------------
Since
As of 1 Inception
July 31, 1999 Year (9/30/94)
- ---------------------------------------------------
<S> <C> <C>
Classic Shares* -2.06% 4.10%
- ---------------------------------------------------
Premier Shares 2.16% 5.05%
- ---------------------------------------------------
B Shares** -3.15% 4.57%
- ---------------------------------------------------
</TABLE>
* Reflects 4.00% sales charge.
** Reflects applicable contingent deferred sales charge.
Effective September 2, 1997, the Fund's existing shares, which were previously
unclassified, were designated either Classic or Premier Shares. The performance
figures for Premier Shares for periods prior to such date represent the
performance of Classic Shares of the Fund.
Performance for the Class B Shares, which commenced operations on February 3,
1999, is based on the historical performance of the Classic Shares (without
sales charge) prior to that date. The performance of Classic Shares does not
reflect the higher 12b-1 fees or the contingent deferred sales charge (CDSC).
Had the CDSC and higher 12b-1 fees been incorporated, total return and
hypothetical growth figures would have been lower.
The performance of the AmSouth Florida Tax-Free Fund is measured against the
Merrill Lynch 3-7-Year Municipal Bond Index, an unmanaged index generally
representative of intermediate-term municipal bonds. The index does not reflect
the deduction of fees associated with a mutual fund, such as investment
management and fund accounting fees. The Fund's performance does reflect the
deduction of fees for these value-added services. During the period shown, the
Fund waived fees for various expenses. Had these waivers not been in effect,
performance quoted would have been lower.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
-30-
<PAGE> 182
The AmSouth Money Market Funds
The AmSouth Money Market Funds are managed by John Boston, CFA, Senior Vice
President of AmSouth Bank. Mr. Boston has more than 10 years of experience as
a fixed-income manager. He holds a bachelor's degree in economics.
Interest Rates Fall, Then Rise Sharply
During the first six months of the period, the Fed lowered the fed funds
rate--the benchmark rate banks charge one another for overnight loans--three
times. Remarkably, rates then reversed direction and began a steady climb over
the last six months of the period. This was due to many factors, including the
perception that the Fed would begin raising rates again--in effect, "taking
back" the earlier rate cuts. By the time the Fed did take action, raising
short-term rates by 25 basis points (0.25%) on June 30, the market had already
pushed rates significantly higher on its own.
The yields we generate in the money market funds depend, largely, on Fed policy.
Consequently, our yields fell and rose in response to the Fed's actions.
Throughout the period, inflation remained at very low levels, providing
shareholders with "real returns" (total returns minus inflation) that were
attractive on a historical basis.
o As of July 31, 1999, the Prime Obligations Fund's average maturity was 66
days, compared to 54 days on January 31, 1999, and 63 days on July 31, 1998.*
o As of July 31, 1999, the U.S. Treasury Fund's average maturity was 47 days,
compared to 50 days on January 31, 1999, and 48 days on July 31, 1998.*
o As of July 31, 1999, the Tax-Exempt Fund's+ average maturity was 53 days,
compared to 54 days on January 31, 1999, and 81 days on July 31, 1998.*
o As of July 31, 1999, the Institutional Prime Obligations Fund's average
maturity was 48 days, compared to 23 days on January 31, 1999.*
Investments in the Prime Obligations, the U.S. Treasury, the Tax-Exempt and the
Institutional Prime Obligations Money Market Funds are neither insured nor
guaranteed by the Federal Deposit Insurance Corporation or any government
agency. Although the Funds seek to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Funds.
Although money market funds may produce higher returns than insured deposit
products, the net asset value may be sensitive to interest rate movement.
The total return set forth may reflect the waiver of a portion of a Fund's
advisory or administrative fees for certain periods since the inception date. In
such instances, and without waiver of fees, total return would have been lower.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than the original cost.
+ The Fund's income may be subject to the federal alternative minimum tax and to
certain state and local taxes.
* The composition of the Fund's holdings is subject to change.
-31-
<PAGE> 183
[THIS PAGE INTENTIONALLY LEFT BLANK]
-32-
<PAGE> 184
Report of Independent Accountants
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Trustees AmSouth Mutual
Funds
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, and the related statements of operations
and changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of AmSouth Equity Income Fund, AmSouth
Equity Fund, AmSouth Enhanced Market Fund, AmSouth Capital Growth Fund, AmSouth
Select Equity Fund, AmSouth Regional Equity Fund, AmSouth Small Cap Fund,
AmSouth Balanced Fund, AmSouth Limited Maturity Fund, AmSouth Government Income
Fund, AmSouth Bond Fund, AmSouth Municipal Bond Fund, AmSouth Florida Tax-Free
Fund, AmSouth U.S. Treasury Fund, AmSouth Prime Obligations Fund, AmSouth
Institutional Prime Obligations Fund and AmSouth Tax-Exempt Fund (separate
portfolios constituting AmSouth Mutual Funds, hereafter referred to as the
"Funds") at July 31, 1999, the results of each of their operations for the
period then ended, the changes in each of their net assets for the periods
presented, and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at July 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Columbus, Ohio
September 21, 1999
-33-
<PAGE> 185
AMSOUTH MUTUAL FUNDS
Statements of Assets and Liabilities
July 31, 1999
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Equity Enhanced Capital
Income Equity Market Growth
Fund Fund Fund Fund
------- ---------- -------- -------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (Cost $36,192,
$711,667, $31,089 and $34,335,
respectively)........................ $40,285 $1,043,170 $33,651 $38,274
Cash.................................. -- -- -- 1,708
Interest and dividends receivable..... 75 1,652 66 16
Receivable for capital shares issued.. 10 61 155 21
Receivable from brokers for
investments sold..................... 1,037 2,830 1,000 --
Prepaid expenses and other assets..... 5 45 6 4
------- ---------- ------- -------
Total Assets....................... 41,412 1,047,758 34,878 40,023
------- ---------- ------- -------
LIABILITIES:
Payable for capital shares redeemed... 19 334 37 1
Payable to brokers for investments
purchased............................ 1,007 3,110 -- 433
Net payable for variation margin on
futures contracts.................... -- -- 41 --
Accrued expenses and other payables:
Investment advisory fees............. 15 379 7 14
Administration fees.................. 1 23 -- --
Distribution fees.................... 12 27 8 10
Accounting fees...................... -- 3 2 --
Transfer agent fees.................. 2 28 2 1
Custodian fees....................... -- 12 -- --
Other................................ 3 48 11 6
------- ---------- ------- -------
Total Liabilities.................. 1,059 3,964 108 465
------- ---------- ------- -------
NET ASSETS:
Capital............................... 33,870 577,771 30,785 34,119
Undistibuted (distributions in excess
of) net investment income............ 6 478 2 --
Net unrealized appreciation
(depreciation) on investments and
futures.............................. 4,093 331,503 2,432 3,939
Undistributed net realized gains
(losses) from investment
transactions......................... 2,384 134,042 1,551 1,500
------- ---------- ------- -------
Net Assets......................... $40,353 $1,043,794 $34,770 $39,558
======= ========== ======= =======
Net Assets
Classic Shares....................... $21,526 $ 70,740 $14,365 $14,040
Premier Shares....................... 10,908 960,660 14,273 18,055
B Shares............................. 7,919 12,394 6,132 7,463
------- ---------- ------- -------
Total.............................. $40,353 $1,043,794 $34,770 $39,558
======= ========== ======= =======
Outstanding units of beneficial
interest (shares)
Classic Shares....................... 1,643 2,801 1,036 1,000
Premier Shares....................... 832 38,024 1,030 1,279
B Shares............................. 607 493 443 539
------- ---------- ------- -------
Total.............................. 3,082 41,318 2,509 2,818
======= ========== ======= =======
Net asset value
Classic Shares--redemption price per
share............................... $ 13.10 $ 25.25 $ 13.86 $ 14.04
======= ========== ======= =======
Premier Shares--offering and
redemption price per share.......... $ 13.10 $ 25.27 $ 13.86 $ 14.11
======= ========== ======= =======
B Shares*--offering price per share.. $ 13.05 $ 25.14 $ 13.82 $ 13.85
======= ========== ======= =======
Maximum Sales Charge (Classic Shares). 4.50% 4.50% 4.50% 4.50%
------- ---------- ------- -------
Maximum Offering Price (100%/(100%-
Maximum Sales Charge) of net asset
value adjusted to the nearest cent)
per share (Classic Shares)........... $ 13.72 $ 26.44 $ 14.51 $ 14.70
======= ========== ======= =======
</TABLE>
- --------
* Redemption price per share varies by length of time shares are held.
See notes to financial statements.
-34-
<PAGE> 186
AMSOUTH MUTUAL FUNDS
Statements of Assets and Liabilities
July 31, 1999
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Select Regional
Equity Equity Small Cap Balanced
Fund Fund Fund Fund
------- -------- --------- --------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (Cost $21,102,
$69,670, $21,396 and $314,068,
respectively)......................... $22,483 $82,223 $24,019 $369,272
Interest and dividends receivable...... 9 107 2 3,556
Receivable for capital shares issued... 18 -- 12 296
Receivable from brokers for investments
sold.................................. 117 -- 1,343 --
Prepaid expenses and other assets...... 5 9 6 16
------- ------- ------- --------
Total Assets........................ 22,632 82,339 25,382 373,140
------- ------- ------- --------
LIABILITIES:
Payable for capital shares redeemed.... -- 32 -- 266
Payable to brokers for investments
purchased............................. -- -- 1,584 310
Accrued expenses and other payables:
Investment advisory fees.............. 8 30 12 134
Administration fees................... -- 2 -- 8
Distribution fees..................... 4 6 1 18
Accounting fees....................... -- -- -- 2
Transfer agent fees................... 1 4 1 10
Custodian fees........................ -- 1 -- 4
Other................................. 8 3 5 18
------- ------- ------- --------
Total Liabilities................... 21 78 1,603 770
------- ------- ------- --------
NET ASSETS:
Capital................................ 20,644 52,949 23,927 275,601
Undistibuted (distributions in excess
of) net investment income............. -- 13 (1) 577
Net unrealized appreciation
(depreciation) on investments......... 1,381 12,553 2,623 55,204
Undistributed net realized gains
(losses) from investment transactions. 586 16,746 (2,770) 40,988
------- ------- ------- --------
Net Assets.......................... $22,611 $82,261 $23,779 $372,370
======= ======= ======= ========
Net Assets
Classic Shares......................... $10,258 $20,911 $ 1,073 $ 43,223
Premier Shares......................... 10,420 60,385 21,777 319,016
B Shares............................... 1,933 965 929 10,131
------- ------- ------- --------
Total............................... $22,611 $82,261 $23,779 $372,370
======= ======= ======= ========
Outstanding units of beneficial
interest (shares)
Classic Shares........................ 863 913 128 2,895
Premier Shares........................ 877 2,631 2,581 21,368
B Shares.............................. 163 43 112 680
------- ------- ------- --------
Total............................... 1,903 3,587 2,821 24,943
======= ======= ======= ========
Net asset value
Classic Shares--redemption price per
share................................ $ 11.88 $ 22.90 $ 8.40 $ 14.93
======= ======= ======= ========
Premier Shares--offering and
redemption price per share........... $ 11.89 $ 22.95 $ 8.44 $ 14.93
======= ======= ======= ========
B Shares*--offering price per share... $ 11.83 $ 22.68 $ 8.31 $ 14.90
======= ======= ======= ========
Maximum Sales Charge (Classic Shares).. 4.50% 4.50% 4.50% 4.50%
------- ------- ------- --------
Maximum Offering Price (100%/(100%-
Maximum Sales Charge) of net asset
value adjusted to the nearest cent)
per share (Classic Shares)............ $ 12.44 $ 23.98 $ 8.80 $ 15.63
======= ======= ======= ========
</TABLE>
- --------
* Redemption price per share varies by length of time shares are held.
See notes to financial statements.
-35-
<PAGE> 187
AMSOUTH MUTUAL FUNDS
Statements of Assets and Liabilities
July 31, 1999
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Limited Government Municipal Florida
Maturity Income Bond Bond Tax-Free
Fund Fund Fund Fund Fund
-------- ---------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (Cost
$112,420, $8,566, $385,361,
$321,757 and $75,561,
respectively)............... $111,905 $8,521 $383,287 $323,878 $75,486
Interest and dividends
receivable.................. 1,999 78 6,731 4,967 844
Receivable for capital shares
issued...................... -- 1 -- -- --
Prepaid expenses and other
assets...................... 5 1 15 13 4
-------- ------ -------- -------- -------
Total Assets.............. 113,909 8,601 390,033 328,858 76,334
-------- ------ -------- -------- -------
LIABILITIES:
Payable for capital shares
redeemed.................... 2 8 83 -- --
Payable to brokers for
investments purchased....... -- -- -- 4,754 --
Accrued expenses and other
payables:
Investment advisory fees.... 25 1 86 57 10
Administration fees......... 1 -- 5 4 1
Distribution fees........... 2 -- 3 -- 1
Accounting fees............. 1 1 2 2 1
Transfer agent fees......... 3 -- 9 8 2
Custodian fees.............. 1 -- 4 3 1
Other....................... 5 5 24 27 6
-------- ------ -------- -------- -------
Total Liabilities......... 40 15 216 4,855 22
-------- ------ -------- -------- -------
NET ASSETS:
Capital...................... 115,003 8,967 389,653 319,649 76,062
Undistibuted (distributions
in excess of) net investment
income...................... 483 -- 1,421 599 130
Net unrealized appreciation
(depreciation) on
investments................. (515) (45) (2,074) 2,121 (75)
Undistributed net realized
gains (losses) from
investment transactions..... (1,102) (336) 817 1,634 195
-------- ------ -------- -------- -------
Net Assets................ $113,869 $8,586 $389,817 $324,003 $76,312
======== ====== ======== ======== =======
Net Assets
Classic Shares.............. $ 2,716 $5,436 $ 7,070 $ 2,694 $12,195
Premier Shares.............. 109,554 3,150 380,226 321,293 63,548
B Shares.................... 1,599 -- 2,521 16 569
-------- ------ -------- -------- -------
Total..................... $113,869 $8,586 $389,817 $324,003 $76,312
======== ====== ======== ======== =======
Outstanding units of
beneficial interest (shares)
Classic Shares.............. 264 565 665 273 1,194
Premier Shares.............. 10,647 328 35,778 32,557 6,218
B Shares.................... 156 -- 238 2 56
-------- ------ -------- -------- -------
Total..................... 11,067 893 36,681 32,832 7,468
======== ====== ======== ======== =======
Net asset value
Classic Shares--redemption
price per share............ $ 10.29 $ 9.62 $ 10.63 $ 9.87 $ 10.22
======== ====== ======== ======== =======
Premier Shares--offering
and redemption price per
share...................... $ 10.29 $ 9.62 $ 10.63 $ 9.87 $ 10.22
======== ====== ======== ======== =======
B Shares*--offering price
per share.................. $ 10.27 $ -- $ 10.60 $ 9.87 $ 10.20
======== ====== ======== ======== =======
Maximum Sales Charge (Classic
Shares)..................... 4.00% 4.00% 4.00% 4.00% 4.00%
-------- ------ -------- -------- -------
Maximum Offering Price (100%/
(100%-Maximum Sales Charge)
of net asset value adjusted
to the nearest cent) per
share (Classic Shares)..... $ 10.72 $10.02 $ 11.07 $ 10.28 $ 10.65
======== ====== ======== ======== =======
</TABLE>
- --------
* Redemption price per share varies by length of time shares are held.
See notes to financial statements.
-36-
<PAGE> 188
AMSOUTH MUTUAL FUNDS
Statements of Assets and Liabilities
July 31, 1999
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
Institutional
U.S. Prime Prime Tax-
Treasury Obligations Obligations Exempt
Fund Fund Fund Fund
-------- ----------- ------------- -------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at amortized cost..... $200,790 $582,351 $ 79,299 $96,133
Repurchase agreements, at cost..... 113,208 92,189 30,200 --
-------- -------- -------- -------
Total investments............... 313,998 674,540 109,499 96,133
Interest and dividends receivable.. 2,446 1,515 9 817
Receivable from brokers for
investments sold.................. 10,000 -- -- --
Prepaid expenses and other assets.. 17 33 5 6
-------- -------- -------- -------
Total Assets.................... 326,461 676,088 109,513 96,956
-------- -------- -------- -------
LIABILITIES:
Dividends payable.................. 1,081 2,540 426 202
Accrued expenses and other
payables:
Investment advisory fees.......... 107 233 6 16
Administration fees............... 7 15 -- 2
Distribution fees................. -- 12 11 2
Accounting fees................... 1 2 1 1
Transfer agent fees............... 7 16 3 1
Custodian fees.................... 5 7 1 1
Other............................. 16 62 32 7
-------- -------- -------- -------
Total Liabilities............... 1,224 2,887 480 232
-------- -------- -------- -------
NET ASSETS:
Capital............................ 325,229 673,208 109,028 96,725
Undistributed (distributions in
excess of) net investment income.. 7 -- 5 --
Undistributed net realized gains
(losses) from investment
transactions...................... 1 (7) -- (1)
-------- -------- -------- -------
Net Assets...................... $325,237 $673,201 $109,033 $96,724
======== ======== ======== =======
Net Assets
Classic Shares (a)................ $ 4,390 $136,078 $ 69,458 $22,844
Premier Shares (b)................ 320,847 536,899 26,000 73,880
B Shares (c)...................... -- 224 13,575 --
-------- -------- -------- -------
Total........................... $325,237 $673,201 $109,033 $96,724
======== ======== ======== =======
Outstanding units of beneficial
interest (shares)
Classic Shares (a)................ 4,390 136,085 69,458 22,845
Premier Shares (b)................ 320,838 536,913 26,000 73,880
B Shares (c)...................... -- 224 13,575 --
-------- -------- -------- -------
Total........................... 325,228 673,222 109,033 96,725
======== ======== ======== =======
Net asset value--offering and
redemption price per share
Classic Shares (a)................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== =======
Premier Shares (b)................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== =======
B Shares (c)*..................... $ -- $ 1.00 $ 1.00 $ --
======== ======== ======== =======
</TABLE>
- --------
(a) Class I shares for the Institutional Prime Obligations Fund.
(b) Class II shares for the Institutional Prime Obligations Fund.
(c) Class III shares for the Institutional Prime Obligations Fund.
* Redemption price per share varies by length of time shares are held.
See notes to financial statements.
-37-
<PAGE> 189
AMSOUTH MUTUAL FUNDS
Statements of Operations
For the Year Ended July 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Equity Enhanced Capital
Income Equity Market Growth
Fund Fund Fund (a) Fund
------ -------- -------- -------
<S> <C> <C> <C> <C>
Investment Income:
Interest income............................. $ 274 $ 918 $ 33 $ --
Dividend income............................. 853 21,407 257 184
------ -------- ------ ------
Total Income.............................. 1,127 22,325 290 184
------ -------- ------ ------
Expenses:
Investment advisory fees.................... 325 8,292 78 207
Administration fees......................... 81 2,073 35 52
Shareholder servicing fees (Classic Shares). 59 179 27 28
12b-1 fees (B Shares)....................... 78 102 20 52
Accounting fees............................. 54 335 59 54
Transfer agent fees......................... 47 261 31 40
Custodian fees.............................. 2 63 1 1
Trustee fees and expenses................... 1 23 -- --
Other....................................... 29 229 20 31
------ -------- ------ ------
Total Expenses............................ 676 11,557 271 465
Expenses voluntarily reduced................ (68) (50) (107) (132)
------ -------- ------ ------
Net Expenses.............................. 608 11,507 164 333
------ -------- ------ ------
Net Investment Income (Loss)................ 519 10,818 126 (149)
------ -------- ------ ------
Realized/Unrealized Gains (Losses) From
Investments:
Net realized gains (losses) from investment
transactions............................... 2,385 136,676 1,583 1,650
Net change in unrealized appreciation
(depreciation) from investments............ 2,356 419 2,432 2,629
------ -------- ------ ------
Net realized/unrealized gains (losses) from
investments................................ 4,741 137,095 4,015 4,279
------ -------- ------ ------
Change in net assets resulting from
operations................................. $5,260 $147,913 $4,141 $4,130
====== ======== ====== ======
</TABLE>
- --------
(a) For the period from September 1, 1998 (commencement of operations) through
July 31, 1999.
See notes to financial statements.
-38-
<PAGE> 190
AMSOUTH MUTUAL FUNDS
Statements of Operations
For the Year Ended July 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Select Regional Small
Equity Equity Cap Balanced
Fund (a) Fund Fund Fund
-------- -------- ------- --------
<S> <C> <C> <C> <C>
Investment Income:
Interest income.......................... $ 2 $ -- $ 37 $ 10,620
Dividend income.......................... 255 1,877 24 4,660
------ -------- ------- --------
Total Income........................... 257 1,877 61 15,280
------ -------- ------- --------
Expenses:
Investment advisory fees................. 130 856 127 3,046
Administration fees...................... 33 214 21 762
Shareholder servicing fees (Classic
Shares)................................. 28 76 3 113
12b-1 fees (B Shares).................... 8 15 9 79
Accounting fees.......................... 45 55 54 145
Transfer agent fees...................... 30 64 33 115
Custodian fees........................... 1 7 1 23
Trustee fees and expenses................ -- 3 -- 8
Other.................................... 16 58 17 92
------ -------- ------- --------
Total Expenses......................... 291 1,348 265 4,383
Expenses voluntarily reduced or
reimbursed.............................. (106) (50) (105) (50)
------ -------- ------- --------
Net Expenses........................... 185 1,298 160 4,333
------ -------- ------- --------
Net Investment Income (Loss)............. 72 579 (99) 10,947
------ -------- ------- --------
Realized/Unrealized Gains (Losses) From
Investments:
Net realized gains (losses) from
investment transactions................. 612 16,745 (2,191) 43,490
Net change in unrealized appreciation
(depreciation) from investments......... 1,381 (30,363) 2,703 (19,188)
------ -------- ------- --------
Net realized/unrealized gains (losses)
from investments........................ 1,993 (13,618) 512 24,302
------ -------- ------- --------
Change in net assets resulting from
operations.............................. $2,065 $(13,039) $ 413 $ 35,249
====== ======== ======= ========
</TABLE>
- --------
(a) For the period from September 1, 1998 (commencement of operations) through
July 31, 1999.
See notes to financial statements.
-39-
<PAGE> 191
AMSOUTH MUTUAL FUNDS
Statements of Operations
For the Year Ended July 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Limited Government Municipal Florida
Maturity Income Bond Bond Tax-Free
Fund Fund Fund Fund Fund
-------- ---------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest income............... $ 7,037 $ 566 $ 22,088 $15,208 $ 3,208
Dividend income............... 95 11 292 193 49
------- ----- -------- ------- -------
Total Income................ 7,132 577 22,380 15,401 3,257
------- ----- -------- ------- -------
Expenses:
Investment advisory fees...... 735 62 2,319 2,121 461
Administration fees........... 226 19 714 653 142
Shareholder servicing fees
(Classic Shares)............. 8 17 18 6 25
12b-1 fees (B Shares)......... 4 -- 17 -- 1
Accounting fees............... 57 47 140 129 63
Transfer agent fees........... 48 23 99 90 38
Custodian fees................ 7 1 21 20 4
Trustee fees and expenses..... 3 -- 8 6 1
Other......................... 28 5 89 83 15
------- ----- -------- ------- -------
Total Expenses.............. 1,116 174 3,425 3,108 750
Expenses voluntarily reduced.. (305) (110) (881) (1,121) (390)
------- ----- -------- ------- -------
Net Expenses................ 811 64 2,544 1,987 360
------- ----- -------- ------- -------
Net Investment Income (Loss).. 6,321 513 19,836 13,414 2,897
------- ----- -------- ------- -------
Realized/Unrealized Gains
(Losses) From Investments:
Net realized gains (losses)
from investment transactions. 464 51 3,588 2,189 376
Net change in unrealized
appreciation (depreciation)
from investments............. (2,240) (283) (15,033) (7,994) (2,004)
------- ----- -------- ------- -------
Net realized/unrealized gains
(losses) from investments.... (1,776) (232) (11,445) (5,805) (1,628)
------- ----- -------- ------- -------
Change in net assets resulting
from operations.............. $ 4,545 $ 281 $ 8,391 $ 7,609 $ 1,269
======= ===== ======== ======= =======
</TABLE>
See notes to financial statements.
-40-
<PAGE> 192
AMSOUTH MUTUAL FUNDS
Statements of Operations
For the Year Ended July 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Institutional
U.S. Prime Prime Tax-
Treasury Obligations Obligations Exempt
Fund Fund Fund (a) Fund
-------- ----------- ------------- ------
<S> <C> <C> <C> <C>
Investment Income:
Interest income..................... $15,108 $35,908 $4,854 $2,906
Dividend income..................... -- -- 136 165
------- ------- ------ ------
Total Income...................... 15,108 35,908 4,990 3,071
------- ------- ------ ------
Expenses:
Investment advisory fees............ 1,262 2,765 198 383
Administration fees................. 631 1,383 99 192
Shareholder servicing fees (Classic
Shares)............................ 16 336 17 63
12b-1 fees (B Shares)............... -- 1 15 --
Accounting fees..................... 107 230 41 53
Transfer agent fees................. 90 171 39 39
Custodian fees...................... 21 41 6 6
Trustee fees and expenses........... 6 15 2 2
Registration and filing fees........ 6 31 24 6
Other............................... 76 138 38 16
------- ------- ------ ------
Total Expenses.................... 2,215 5,111 479 760
Expenses voluntarily reduced........ (40) (252) (225) (271)
------- ------- ------ ------
Net Expenses...................... 2,175 4,859 254 489
------- ------- ------ ------
Net Investment Income (Loss)........ 12,933 31,049 4,736 2,582
------- ------- ------ ------
Realized/Unrealized Gains (Losses)
From Investments:
Net realized gains (losses) from
investment transactions............ -- 2 -- 1
------- ------- ------ ------
Net realized/unrealized gains
(losses) from investments.......... -- 2 -- 1
------- ------- ------ ------
Change in net assets resulting from
operations......................... $12,933 $31,051 $4,736 $2,583
======= ======= ====== ======
</TABLE>
- --------
(a) For the period from September 15, 1998 (commencement of operations) through
July 31, 1999.
See notes to financial statements.
-41-
<PAGE> 193
AMSOUTH MUTUAL FUNDS
Statements of Changes in Net Assets
(Amounts in thousands)
<TABLE>
<CAPTION>
Equity Income Equity Enhanced Market Capital Growth
Fund Fund Fund Fund
------------------ ---------------------- --------------- ------------------
Year Year Year Year Period Year Period
Ended Ended Ended Ended Ended Ended Ended
July 31, July 31, July 31, July 31, July 31, July 31, July 31,
1999 1998 1999 1998 1999 (b) 1999 1998 (a)
-------- -------- ---------- ---------- --------------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
From Investment
Activities:
Operations:
Net investment income
(loss)................ $ 519 $ 670 $ 10,818 $ 12,002 $ 126 $ (149) $ (39)
Net realized gains
(losses) from
investment
transactions.......... 2,385 1,649 136,676 124,775 1,583 1,650 177
Net change in
unrealized
appreciation
(depreciation) from
investments and
futures............... 2,356 (405) 419 (21,447) 2,432 2,629 1,310
-------- ------- ---------- ---------- ------- ------- -------
Change in net assets
resulting from
operations............. 5,260 1,914 147,913 115,330 4,141 4,130 1,448
-------- ------- ---------- ---------- ------- ------- -------
Distributions to Classic
Shareholders:
From net investment
income................ (314) (500) (565) (1,668) (79) -- --
In excess of net
investment income..... -- (2) -- (1) -- -- --
From net realized gains
from investment
transactions.......... (525) (763) (7,000) (3,043) (30) (69) --
Distributions to Premier
Shareholders:
From net investment
income................ (144) (132)(c) (9,737) (10,624)(c) (41)(e) -- --
In excess of net
investment income..... -- -- (c) -- (13)(c) -- (e) -- --
From net realized gains
from investment
transactions.......... (184) (189)(c) (94,909) (47,629)(c) -- (e) (40) --
Distributions to Class B
Shareholders:
From net investment
income................ (56) (53)(d) (24) (18)(d) (4)(f) -- --
From net realized gains
from investment
transactions.......... (167) (67)(d) (935) (85)(d) (2)(f) (31) --
-------- ------- ---------- ---------- ------- ------- -------
Change in net assets
resulting from
shareholder
distributions......... (1,390) (1,706) (113,170) (63,081) (156) (140) --
-------- ------- ---------- ---------- ------- ------- -------
Capital Transactions:
Proceeds from shares
issued................ 9,218 25,509 199,148 190,614 40,225 27,139 15,506
Dividends reinvested... 1,155 1,376 25,287 15,125 140 100 --
Cost of shares
redeemed.............. (16,396) (6,860) (244,053) (204,304) (9,580) (7,692) (933)
-------- ------- ---------- ---------- ------- ------- -------
Change in net assets
from capital
transactions........... (6,023) 20,025 (19,618) 1,435 30,785 19,547 14,573
-------- ------- ---------- ---------- ------- ------- -------
Change in net assets.... (2,153) 20,233 15,125 53,684 34,770 23,537 16,021
Net Assets:
Beginning of period.... 42,506 22,273 1,028,669 974,985 -- 16,021 --
-------- ------- ---------- ---------- ------- ------- -------
End of period.......... $ 40,353 $42,506 $1,043,794 $1,028,669 $34,770 $39,558 $16,021
======== ======= ========== ========== ======= ======= =======
Share Transactions:
Issued................. 755 2,121 8,339 8,021 3,204 2,033 1,467
Reinvested............. 98 118 1,125 664 10 8 --
Redeemed............... (1,347) (563) (10,006) (8,575) (705) (603) (87)
-------- ------- ---------- ---------- ------- ------- -------
Change in shares........ (494) 1,676 (542) 110 2,509 1,438 1,380
======== ======= ========== ========== ======= ======= =======
</TABLE>
- --------
(a) For the period from August 3, 1997 (commencement of operations) through July
31, 1998.
(b) For the period from September 1, 1998 (commencement of operations) through
July 31, 1999.
(c) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(d) For the period from September 3, 1997 (commencement of operations) through
July 31, 1998.
(e) For the period from December 11, 1998 (commencement of operations) through
July 31, 1999.
(f) For the period from September 2, 1998 (commencement of operations) through
July 31, 1999.
See notes to financial statements.
-42-
<PAGE> 194
AMSOUTH MUTUAL FUNDS
Statements of Changes in Net Assets
(Amounts in thousands)
<TABLE>
<CAPTION>
Select Equity Regional Equity Small Cap Balanced
Fund Fund Fund Fund
------------- ------------------ ------------------ -------------------
Period Year Year Year Period Year Year
Ended Ended Ended Ended Ended Ended Ended
July 31, July 31, July 31, July 31, July 31, July 31, July 31,
1999 (b) 1999 1998 1999 1998 (a) 1999 1998
------------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
From Investment
Activities:
Operations:
Net investment income
(loss)................ $ 72 $ 579 $ 520 $ (99) $ (19) $ 10,947 $ 10,904
Net realized gains
(losses) from
investment
transactions.......... 612 16,745 8,874 (2,191) (579) 43,490 36,908
Net change in
unrealized
appreciation
(depreciation) from
investments........... 1,381 (30,363) (9,341) 2,703 (80) (19,188) (13,602)
------- -------- -------- ------- ------ -------- ---------
Change in net assets
resulting from
operations............. 2,065 (13,039) 53 413 (678) 35,249 34,210
------- -------- -------- ------- ------ -------- ---------
Distributions to Classic
Shareholders:
From net investment
income................ (49) (128) (133) -- -- (1,197) (2,131)
In excess of net
investment income..... -- -- (8) -- -- -- --
From net realized gains
from investment
transactions.......... (19) (2,101) (1,577) -- -- (3,540) (3,102)
Distributions to Premier
Shareholders:
From net investment
income................ (22)(f) (436) (390)(c) -- -- (c) (9,447) (8,628)(c)
In excess of net
investment income..... -- (f) -- (18)(c) -- -- (c) -- (1)(c)
Tax return of capital.. -- (f) -- -- (c) -- (1)(c) -- -- (c)
From net realized gains
from investment
transactions.......... (6)(f) (4,934) (3,440)(c) -- -- (c) (25,304) (19,894)(c)
Distributions to Class B
Shareholders:
From net investment
income................ (2)(g) (1) (1)(d) -- -- (153) (43)(e)
From net realized gains
from investment
transactions.......... -- (g) (110) (26)(d) -- -- (554) (71)(e)
------- -------- -------- ------- ------ -------- ---------
Change in net assets
resulting from
shareholder
distributions.......... (98) (7,710) (5,593) -- (1) (40,195) (33,870)
------- -------- -------- ------- ------ -------- ---------
Capital Transactions:
Proceeds from shares
issued................ 27,874 9,981 31,703 18,277 8,135 66,769 96,873
Dividends reinvested... 94 3,734 3,015 -- -- 24,021 22,522
Cost of shares
redeemed.............. (7,324) (50,312) (39,409) (2,226) (141) (95,223) (110,755)
------- -------- -------- ------- ------ -------- ---------
Change in net assets
from capital
transactions........... 20,644 (36,597) (4,691) 16,051 7,994 (4,433) 8,640
------- -------- -------- ------- ------ -------- ---------
Change in net assets.... 22,611 (57,346) (10,231) 16,464 7,315 (9,379) 8,980
Net Assets:
Beginning of period.... -- 139,607 149,838 7,315 -- 381,749 372,769
------- -------- -------- ------- ------ -------- ---------
End of period.......... $22,611 $ 82,261 $139,607 $23,779 $7,315 $372,370 $ 381,749
======= ======== ======== ======= ====== ======== =========
Share Transactions:
Issued................. 2,492 419 1,076 2,300 815 4,511 6,447
Reinvested............. 8 159 105 -- -- 1,666 1,540
Redeemed............... (597) (2,125) (1,354) (279) (15) (6,379) (7,345)
------- -------- -------- ------- ------ -------- ---------
Change in shares........ 1,903 (1,547) (173) 2,021 800 (202) 642
======= ======== ======== ======= ====== ======== =========
</TABLE>
- --------
(a) For the period from March 2, 1998 (commencement of operations) through July
31, 1998.
(b) For the period from September 1, 1998 (commencement of operations) through
July 31, 1999.
(c) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(d) For the period from September 3, 1997(commencement of operations) through
July 31, 1998.
(e) For the period from September 2, 1997(commencement of operations) through
July 31, 1998.
(f) For the period from December 3, 1998 (commencement of operations) through
July 31, 1999.
(g) For the period from September 2, 1998 (commencement of operations) through
July 31, 1999.
See notes to financial statements.
-43-
<PAGE> 195
AMSOUTH MUTUAL FUNDS
Statements of Changes in Net Assets
(Amounts in thousands)
<TABLE>
<CAPTION>
Limited Maturity Government Income
Fund Fund Bond Fund
--------------------- ------------------ ------------------
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
July 31, July 31, July 31, July 31, July 31, July 31,
1999 1998 1999 1998 1999 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
From Investment
Activities:
Operations:
Net investment income
(loss)................. $ 6,321 $ 6,785 $ 513 $ 632 $ 19,836 $ 18,122
Net realized gains
(losses) from
investment
transactions........... 464 847 51 145 3,588 3,531
Net change in unrealized
appreciation
(depreciation) from
investments............ (2,240) (738) (283) 2 (15,033) 1,192
-------- -------- ------- ------- -------- --------
Change in net assets
resulting from
operations.............. 4,545 6,894 281 779 8,391 22,845
-------- -------- ------- ------- -------- --------
Distributions to Classic
Shareholders:
From net investment
income................. (163) (794) (360) (513) (385) (1,784)
In excess of net
investment income...... -- -- -- (48) -- --
From net realized gains
from investment
transactions........... -- -- -- -- (87) (18)
Distributions to Premier
Shareholders:
From net investment
income................. (5,930) (6,023)(a) (141) (57)(a) (18,671) (16,698)(a)
In excess of net
investment income...... -- -- (a) -- (15)(a) -- -- (a)
From net realized gains
from investment
transactions........... -- -- (a) -- -- (a) (3,997) (788)(a)
Distributions to Class B
Shareholders:
From net investment
income................. (20)(c) -- -- -- (77) (9)(b)
From net realized gains
from investment
transactions........... -- (c) -- -- -- (18) -- (b)
-------- -------- ------- ------- -------- --------
Change in net assets
resulting from
shareholder
distributions........... (6,113) (6,817) (501) (633) (23,235) (19,297)
-------- -------- ------- ------- -------- --------
Capital Transactions:
Proceeds from shares
issued................. 31,324 20,184 2,636 3,053 122,886 99,873
Dividends reinvested.... 709 633 240 320 5,561 5,321
Cost of shares redeemed. (27,080) (49,085) (4,767) (4,444) (59,190) (85,219)
-------- -------- ------- ------- -------- --------
Change in net assets from
capital transactions.... 4,953 (28,268) (1,891) (1,071) 69,257 19,975
-------- -------- ------- ------- -------- --------
Change in net assets..... 3,385 (28,191) (2,111) (925) 54,413 23,523
Net Assets:
Beginning of period..... 110,484 138,675 10,697 11,622 335,404 311,881
-------- -------- ------- ------- -------- --------
End of period........... $113,869 $110,484 $ 8,586 $10,697 $389,817 $335,404
======== ======== ======= ======= ======== ========
Share Transactions:
Issued.................. 2,987 1,930 266 310 11,159 9,081
Reinvested.............. 68 61 24 33 500 485
Redeemed................ (2,579) (4,702) (481) (451) (5,321) (7,771)
-------- -------- ------- ------- -------- --------
Change in shares......... 476 (2,711) (191) (108) 6,338 1,795
======== ======== ======= ======= ======== ========
</TABLE>
- --------
(a) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(b) For the period from September 16, 1997 (commencement of operations) through
July 31, 1998.
(c) For the period from January 21, 1999 (commencement of operations) through
July 31, 1999.
See notes to financial statements.
-44-
<PAGE> 196
AMSOUTH MUTUAL FUNDS
Statements of Changes in Net Assets
(Amounts in thousands)
<TABLE>
<CAPTION>
Municipal Bond Florida Tax-Free
Fund Fund
------------------ ---------------------
Year Year Year Year
Ended Ended Ended Ended
July 31, July 31, July 31, July 31,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income (loss). $ 13,414 $ 14,134 $ 2,897 $ 2,435
Net realized gains (losses)
from investment
transactions................ 2,189 3,647 376 418
Net change in unrealized
appreciation (depreciation)
from investments............ (7,994) (3,346) (2,004) (353)
-------- -------- -------- --------
Change in net assets resulting
from operations.............. 7,609 14,435 1,269 2,500
-------- -------- -------- --------
Distributions to Classic
Shareholders:
From net investment income... (88) (1,218) (388) (413)
From net realized gains from
investment transactions..... (21) (5) (50) (25)
Distributions to Premier
Shareholders:
From net investment income... (12,760) (12,911)(a) (2,374) (2,016)(a)
In excess of net investment
income...................... -- (6)(a) -- (1)(a)
From net realized gains from
investment transactions..... (3,342) (816)(a) (333) (322)(a)
Distributions to Class B
Shareholders:
From net investment income... -- -- (4)(b) --
-------- -------- -------- --------
Change in net assets resulting
from shareholder
distributions................ (16,211) (14,956) (3,149) (2,777)
-------- -------- -------- --------
Capital Transactions:
Proceeds from shares issued.. 52,433 54,703 25,737 24,956
Dividends reinvested......... 265 100 458 218
Cost of shares redeemed...... (49,246) (63,062) (12,035) (14,553)
-------- -------- -------- --------
Change in net assets from
capital transactions......... 3,452 (8,259) 14,160 10,621
-------- -------- -------- --------
Change in net assets.......... (5,150) (8,780) 12,280 10,344
Net Assets:
Beginning of period.......... 329,153 337,933 64,032 53,688
-------- -------- -------- --------
End of period................ $324,003 $329,153 $ 76,312 $ 64,032
======== ======== ======== ========
Share Transactions:
Issued....................... 5,171 5,391 2,447 2,383
Reinvested................... 27 10 43 21
Redeemed..................... (4,836) (6,210) (1,146) (1,392)
-------- -------- -------- --------
Change in shares.............. 362 (809) 1,344 1,012
======== ======== ======== ========
</TABLE>
- --------
(a) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, were designated either Classic or Premier Shares.
For reporting purposes, past performance numbers (prior to September 2,
1997) are being reflected as Classic Shares.
(b) For the period from March 16, 1999 (commencement of operations) through July
31, 1999.
See notes to financial statements.
-45-
<PAGE> 197
AMSOUTH MUTUAL FUNDS
Statements of Changes in Net Assets
(Amounts in thousands)
<TABLE>
<CAPTION>
U.S. Treasury Fund Prime Obligations Fund
-------------------- ------------------------
Year Year Year Year
Ended Ended Ended Ended
July 31, July 31, July 31, July 31,
1999 1998 1999 1998
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income (loss). $ 12,933 $ 14,654 $ 31,049 $ 31,203
Net realized gains (losses)
from investment
transactions................ -- 7 2 --
--------- --------- ----------- -----------
Change in net assets resulting
from operations.............. 12,933 14,661 31,051 31,203
--------- --------- ----------- -----------
Distributions to Classic
Shareholders:
From net investment income... (259) (350) (5,916) (5,957)
Distributions to Premier
Shareholders:
From net investment income... (12,674) (14,304) (25,128) (25,246)
Distributions to Class B
Shareholders:
From net investment income... -- -- (5) --
--------- --------- ----------- -----------
Change in net assets resulting
from shareholder
distributions................ (12,933) (14,654) (31,049) (31,203)
--------- --------- ----------- -----------
Capital Transactions:
Proceeds from shares issued.. 767,190 969,887 1,839,819 1,553,766
Dividends reinvested......... 909 737 7,705 7,810
Cost of shares redeemed...... (802,987) (929,752) (1,771,260) (1,492,634)
--------- --------- ----------- -----------
Change in net assets from
capital transactions......... (34,888) 40,872 76,264 68,942
--------- --------- ----------- -----------
Change in net assets.......... (34,888) 40,879 76,266 68,942
Net Assets:
Beginning of period.......... 360,125 319,246 596,935 527,993
--------- --------- ----------- -----------
End of period................ $ 325,237 $ 360,125 $ 673,201 $ 596,935
========= ========= =========== ===========
Share Transactions:
Issued....................... 767,190 969,887 1,839,819 1,553,766
Reinvested................... 909 737 7,705 7,810
Redeemed..................... (802,987) (929,752) (1,771,260) (1,492,634)
--------- --------- ----------- -----------
Change in shares.............. (34,888) 40,872 76,264 68,942
========= ========= =========== ===========
</TABLE>
See notes to financial statements.
-46-
<PAGE> 198
AMSOUTH MUTUAL FUNDS
Statements of Changes in Net Assets
(Amounts in thousands)
<TABLE>
<CAPTION>
Institutional
Prime
Obligations
Fund Tax-Exempt Fund
------------- --------------------
Period Year Year
Ended Ended Ended
July 31, July 31, July 31,
1999 (a) 1999 1998
------------- --------- ---------
<S> <C> <C> <C>
From Investment Activities:
Operations:
Net investment income (loss)........... $ 4,736 $ 2,582 $ 2,696
Net realized gains (losses) from
investment transactions............... -- 1 --
--------- --------- ---------
Change in net assets resulting from
operations............................. 4,736 2,583 2,696
--------- --------- ---------
Distributions to Classic Shareholders
(b):
From net investment income............. (4,300) (660) (691)
Distributions to Premier Shareholders
(c):
From net investment income............. (306)(e) (1,922) (2,005)
Distributions to Class B Shareholders
(d):
From net investment income............. (130)(f) -- --
--------- --------- ---------
Change in net assets resulting from
shareholder distributions.............. (4,736) (2,582) (2,696)
--------- --------- ---------
Capital Transactions:
Proceeds from shares issued............ 468,518 236,615 225,711
Dividends reinvested................... -- 691 698
Cost of shares redeemed................ (359,485) (231,324) (219,023)
--------- --------- ---------
Change in net assets from capital
transactions........................... 109,033 5,982 7,386
--------- --------- ---------
Change in net assets.................... 109,033 5,983 7,386
Net Assets:
Beginning of period.................... -- 90,741 83,355
--------- --------- ---------
End of period.......................... $ 109,033 $ 96,724 $ 90,741
========= ========= =========
Share Transactions:
Issued................................. 468,518 236,615 225,711
Reinvested............................. -- 691 698
Redeemed............................... (359,485) (231,324) (219,023)
--------- --------- ---------
Change in shares........................ 109,033 5,982 7,386
========= ========= =========
</TABLE>
- --------
(a) For the period from September 15, 1998 (commencement of operations) through
July 31, 1999.
(b) Class I shares for the Institutional Prime Obligations Fund.
(c) Class II shares for the Institutional Prime Obligations Fund.
(d) Class III shares for the Institutional Prime Obligations Fund.
(e) For the period from February 19, 1999 (commencement of operations) through
July 31, 1999.
(f) For the period from February 22, 1999 (commencement of operations) through
July 31, 1999.
See notes to financial statements.
-47-
<PAGE> 199
AMSOUTH MUTUAL FUNDS
Equity Income Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ----------------------------------------------------------- -------
<S> <C> <C>
Common Stocks & Securities Convertible to
Common Stock (99.8%):
Basic Materials (3.2%):
8,600 E.I. du Pont de Nemours & Co. ............................. $ 620
10,600 Sealed Air Corp., CVT. PFD., 4/1/18........................ 652
-------
1,272
-------
Capital Goods/Diversified (6.5%):
9,700 Emerson Electric Co. ...................................... 579
10,400 General Electric Co. ...................................... 1,134
31,000 Ingersoll-Rand Co., 6.75%, CVT. PFD., 12/31/49............. 930
-------
2,643
-------
Consumer Cyclical (2.3%):
8,450 Ford Motor Co. ............................................ 411
8,500 Mattel, Inc. .............................................. 200
11,700 Tribune/The Learning Co., 6.25%, CVT. PFD., 8/1/01......... 304
-------
915
-------
Energy (6.7%):
9,300 Mobil Corp. ............................................... 951
16,000 Shell Transport & Trading Co. PLC (ADR).................... 773
23,200 Williams Cos., Inc. ....................................... 976
-------
2,700
-------
Finance (14.8%):
19,350 Citigroup Inc. ............................................ 862
8,700 Fannie Mae................................................. 600
6,775 J.P. Morgan & Co., Inc. ................................... 866
8,750 Jefferson Pilot/Bank America (ACES)........................ 980
44,400 Lincoln National Corp., 7.75%, CVT. PFD., 8/16/01.......... 1,188
10,000 Merrill Lynch & Co., Inc. ................................. 681
28,000 National Australia Bank, 7.88%, CVT. PFD., 12/31/49........ 791
-------
5,968
-------
Healthcare (11.2%):
12,900 American Home Products Corp. .............................. 658
770,000 Athena Neurosciences Inc., 4.75%, CVT. BD., 11/15/04....... 823
11,800 Bristol-Myers Squibb Co. .................................. 785
450,000 Centocor Inc./JNJ.......................................... 576
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ----------------------------------------------------------- -------
<S> <C> <C>
Common Stocks & Securities Convertible to
Common Stock, continued:
Healthcare, continued:
4,000 Johnson & Johnson.......................................... $ 369
16,700 Monsanto (ACES) 6.50%, CVT. PFD., 11/30/01................. 685
11,500 Pharmacia & Upjohn Inc. ................................... 619
-------
4,515
-------
Retailing (5.9%):
1,340,000 Costco Companies........................................... 1,185
13,800 Dollar General............................................. 365
11,000 Dollar General STRYPES Trust............................... 456
390,000 Rite Aid Corp. ............................................ 379
-------
2,385
-------
Services (5.6%):
19,900 McDonald's Corp. .......................................... 830
390,000 Omnicom Group.............................................. 888
20,300 The Walt Disney Co. ....................................... 561
-------
2,279
-------
Staples (7.6%):
8,000 Coca Cola Co. ............................................. 483
6,200 Estee Lauder............................................... 570
8,800 Hershey Foods Corp. ....................................... 510
17,400 McCormick & Co., Inc. ..................................... 575
13,500 Quaker Oats Co. ........................................... 919
-------
3,057
-------
Technology (24.1%):
32,700 Amdocs LTD., 6.75%, CVT. PFD., 9/11/02..................... 834
13,400 Corning Glass Works........................................ 938
180,000 EMC Corp., 3.25%, CVT. BD., 3/15/02........................ 976
6,400 IBM Corp. ................................................. 804
4,400 Intel Corp. ............................................... 304
290,000 Level One Communications/Intel............................. 674
9,300 Motorola, Inc. ............................................ 849
26,000 Nextel STRYPES Trust....................................... 1,179
12,600 Pitney Bowes, Inc. ........................................ 802
7,300 Texas Instruments, Inc. ................................... 1,050
10,800 United Technologies Corp. ................................. 720
11,900 Xerox Corp. ............................................... 580
-------
9,710
-------
</TABLE>
Continued
-48-
<PAGE> 200
AMSOUTH MUTUAL FUNDS
Equity Income Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ----------------------------------------------------------- -------
<S> <C> <C>
Common Stocks & Securities Convertible to
Common Stock, continued:
Transportation (0.9%):
7,400 Union Pacific Corp. ....................................... 381
-------
Utilities (10.5%):
12,200 Ameritech Corp. ........................................... $ 894
24,700 BCE, Inc. ................................................. 1,227
20,300 Nisource Inc. ............................................. 974
32,100 Skytel Communications Inc./WorldCom (b).................... 1,156
-------
4,251
-------
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ----------------------------------------------------------- -------
<C> <S> <C>
Investment Companies (0.5%):
208,614 AmSouth Prime Obligations Fund............................. 209
-------
Total Common Stocks & Securities Convertible to Common Stock 40,285
-------
Total (Cost $36,192) (a) $40,285
=======
</TABLE>
- --------
Percentages indicated are based on net assets of $40,353.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of $137. Cost
for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......... $4,918
Unrealized depreciation......... (962)
------
Net unrealized appreciation..... $3,956
======
</TABLE>
(b) Represents a restricted security, purchased under Rule 144A, which is exempt
from registration under the Security Act of 1933, as amended. These
securities have been deemed liquid under guidelines established by the Board
of Trustees.
ACES--Automatic Common Exchange Securities
ADR--American Depository Receipt
CVT. PFD.--Convertible Preferred
CVT. BD.--Convertible Bond
PLC--Public Limited Co.
STRYPES--Structured Yield Product Exchangeable for Stock
<TABLE>
<CAPTION>
Breakdown of Sectors
- --------------------
<S> <C>
Common Stocks...................... 58.3%
Convertible Preferred Stocks....... 27.5%
Convertible Bonds.................. 13.7%
Investment Companies............... 0.5%
------
Total............................. 100.0%
======
</TABLE>
See notes to financial statements.
-49-
<PAGE> 201
AMSOUTH MUTUAL FUNDS
Equity Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- -------------------------------------------------------- ----------
<S> <C> <C>
Common Stocks (97.3%):
Apparel (0.5%):
600,000 Phillips-Van Heusen Corp. .............................. $ 5,100
----------
Automotive (1.6%):
336,000 Ford Motor Co. ......................................... 16,338
----------
Automotive Parts (1.4%):
392,000 Arvin Industries, Inc. ................................. 14,651
----------
Banking (5.2%):
190,000 Bank of America Corp. .................................. 12,611
60,000 Bank One Corp. ......................................... 3,274
285,000 First Union Corp. ...................................... 13,110
735,000 Washington Mutual, Inc. ................................ 25,220
----------
54,215
----------
Beverages (1.6%):
400,000 Diageo PLC ADR.......................................... 16,400
----------
Business Services (1.8%):
815,000 Reynolds & Reynolds Co., Class A........................ 19,153
----------
Chemicals-Speciality (2.7%):
1,025,000 Engelhard Corp. ........................................ 22,870
355,000 M.A. Hanna Co. ......................................... 5,680
----------
28,550
----------
Computer Hardware (2.1%):
177,000 IBM Corp. .............................................. 22,247
----------
Computers & Peripherals (1.5%):
1,285,000 Cabletron Systems, Inc. (b)............................. 15,500
----------
Consumer Goods (2.1%):
740,000 American Greetings Corp., Class A....................... 21,738
----------
Electrical & Electronic (1.1%):
230,000 Avnet, Inc. ............................................ 11,270
----------
Financial Services (2.0%):
660,000 Dun & Bradstreet Corp. ................................. 20,955
----------
Food Processing & Packaging (2.6%):
165,000 Dole Food, Inc. ........................................ 4,352
855,000 Sara Lee Corp. ......................................... 18,810
180,000 Universal Foods Corp. .................................. 3,926
----------
27,088
----------
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- -------------------------------------------------------- ----------
<S> <C> <C>
Common Stocks, continued:
Forest & Paper Products (6.4%):
50,000 Champion International Corp. ........................... $ 2,588
480,000 International Paper Co. ................................ 24,540
370,000 Weyerhauser Co. ........................................ 23,934
350,000 Willamette Industries, Inc. ............................ 15,750
----------
66,812
----------
Health Care (3.3%):
225,000 Aetna, Inc. ............................................ 18,450
260,000 United Healthcare Corp. ................................ 15,860
----------
34,310
----------
Household Products/Wares (2.6%):
620,000 Newell Rubbermaid, Inc. ................................ 26,815
----------
Insurance (5.1%):
25,000 Chubb Corp. ............................................ 1,495
360,000 Marsh & McLennan Cos., Inc. ............................ 27,360
790,000 St. Paul Cos., Inc. .................................... 24,589
----------
53,444
----------
Manufacturing (0.3%):
123,800 Kennametal, Inc. ....................................... 2,987
----------
Medical Supplies (3.5%):
540,000 C.R. Bard, Inc. ........................................ 26,257
365,000 DENTSPLY International, Inc. ........................... 9,878
----------
36,135
----------
Metals & Mining (0.2%):
120,000 Barrick Gold Corp. ..................................... 2,228
----------
Newspapers (3.8%):
230,000 Dow Jones & Co., Inc. .................................. 11,471
395,000 Gannett Co., Inc. ...................................... 28,539
----------
40,010
----------
Oil & Gas Exploration, Production, & Services (14.5%):
240,000 Atlantic Richfield Co. ................................. 21,615
325,000 Burlington Resources, Inc. ............................. 14,361
510,000 Kerr-McGee Corp. ....................................... 26,264
190,000 Noble Affiliates........................................ 5,558
750,000 Sunoco, Inc. ........................................... 22,875
432,000 Texaco, Inc. ........................................... 26,918
</TABLE>
Continued
-50-
<PAGE> 202
AMSOUTH MUTUAL FUNDS
Equity Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- -------------------------------------------------------- ----------
<S> <C> <C>
Common Stocks, continued:
Oil & Gas Exploration, Production, & Services, continued:
710,000 Ultramar Diamond Shamrock Corp. ........................ $ 16,774
610,000 USX-Marathon Group...................................... 18,529
----------
152,894
----------
Packaging (0.7%):
250,000 Crown Cork & Seal, Inc. ................................ 7,328
----------
Pharmaceuticals (5.4%):
170,000 American Home Products Corp. ........................... 8,670
335,000 Baxter International, Inc. ............................. 23,010
450,000 Pharmacia & Upjohn, Inc. ............................... 24,216
----------
55,896
----------
Pollution Control Services & Equipment (1.0%):
391,500 Waste Management, Inc. ................................. 10,008
----------
Railroads (1.6%):
350,000 CSX Corp. .............................................. 16,953
----------
Retail (10.3%):
440,000 CVS Corp. .............................................. 21,890
300,000 Dayton Hudson Corp. .................................... 19,406
540,000 Dillard's, Inc., Class A................................ 16,639
600,000 May Department Stores Co. .............................. 23,212
120,000 The Limited, Inc. ...................................... 5,483
500,000 Wal-Mart Stores, Inc. .................................. 21,125
----------
107,755
----------
Temporary Services (0.6%):
700,000 Olsten Corp. ........................................... 5,906
----------
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
---------- ------------------------------------------------------- ----------
<S> <C> <C>
Common Stocks, continued:
Transportation Leasing & Trucking (2.3%):
525,000 Ryder System, Inc. .................................... $ 12,370
243,000 US Freightways Corp. .................................. 11,998
----------
24,368
----------
Utilities--Electric & Gas (3.5%):
615,000 Constellation Energy Group............................. 18,027
40,000 New Century Energies, Inc. ............................ 1,388
650,000 Southern Co. .......................................... 17,184
----------
36,599
----------
Utilities--Telecommunications (6.0%):
435,000 AT&T Corp. ............................................ 22,593
363,216 BellAtlantic Corp. .................................... 23,155
358,000 BellSouth Corp. ....................................... 17,184
----------
62,932
----------
Total Common Stocks 1,016,585
----------
Commercial Paper--Domestic (1.0%):
Automotive--Finance (1.0%):
$ 10,000 General Motors Acceptance Corp., 5.11%, 8/5/99 ........ 10,000
----------
Total Commercial Paper--Domestic 10,000
----------
Investment Companies (1.6%):
16,400,161 AmSouth Prime Obligations Fund......................... 16,400
184,508 AmSouth U.S. Treasury Fund............................. 185
----------
Total Investment Companies 16,585
----------
Total (Cost $711,667) (a) $1,043,170
==========
</TABLE>
- --------
Percentages indicated are based on net assets of $1,043,794.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of $891. Cost
for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....... $353,248
Unrealized depreciation....... (22,636)
--------
Net unrealized appreciation... $330,612
========
</TABLE>
(b) Represents non-income producing securities.
ADR--American Depository Receipt
PLC--Public Limited Co.
See notes to financial statements.
-51-
<PAGE> 203
AMSOUTH MUTUAL FUNDS
Enhanced Market Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- --------
<C> <S> <C>
Common Stocks (91.1%):
Aerospace/Defense (1.8%):
2,600 Alliedsignal, Inc. .......................................... $ 169
3,400 Boeing Co. .................................................. 154
300 General Dynamics Corp. ...................................... 20
2,200 Lockheed Martin Corp. ....................................... 77
100 Northrop Grumman Corp. ...................................... 7
900 Raytheon Company, Class B.................................... 63
2,100 United Technologies Corp. ................................... 140
--------
630
--------
Agriculture (0.1%):
500 Pioneer Hi-Bred International Inc. .......................... 19
--------
Air Freight (0.2%):
1,700 FDX Corp. (b)................................................ 76
--------
Airlines (0.5%):
900 AMR Corp. (b)................................................ 58
800 Delta Air Lines, Inc. ....................................... 48
2,700 Southwest Airlines........................................... 50
400 US Airways Group, Inc. (b)................................... 14
--------
170
--------
Apparel (0.1%):
300 Fruit of the Loom Inc. (b)................................... 2
300 Liz Claiborne, Inc. ......................................... 12
200 Reebok International Ltd. (b)................................ 2
100 Russell Corp. ............................................... 2
700 V F Corp. ................................................... 28
--------
46
--------
Appliances (0.0%):
100 Maytag Corp. ................................................ 7
100 Whirlpool Corp. ............................................. 7
--------
14
--------
Automotive (1.4%):
5,500 Ford Motor Co. .............................................. 268
3,400 General Motors Corp. ........................................ 207
400 Navistar International (b)................................... 18
200 PACCAR, Inc. ................................................ 11
--------
504
--------
</TABLE>
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Automotive Parts (0.4%):
200 Cooper Tire & Rubber Co. .................................... $ 5
900 Dana Corp. .................................................. 38
1,737 Delphi Automotive Systems.................................... 31
300 Genuine Parts Co. ........................................... 9
300 Goodyear Tire & Rubber Co. .................................. 16
700 TRW, Inc. ................................................... 37
--------
136
--------
Banking (5.7%):
4,800 Bank of America Corp. ....................................... 319
1,700 Bank of Boston Corp. ........................................ 80
3,500 Bank of New York Co., Inc. .................................. 129
1,748 Bank One Corp. .............................................. 95
3,800 Chase Manhattan Corp. ....................................... 292
900 Comerica, Inc. .............................................. 50
1,100 First Union Corp. ........................................... 51
3,900 Firstar Corp. ............................................... 102
660 Huntington Bancshares, Inc. ................................. 20
1,000 J.P. Morgan & Co., Inc. ..................................... 128
3,200 MBNA Corp. .................................................. 91
2,900 Mellon Bank Corp. ........................................... 98
300 Mercantile Bancorp. ......................................... 16
3,600 National City Corp. ......................................... 107
800 PNC Financial Corp. ......................................... 42
600 Regions Financial Corp. ..................................... 21
600 Republic New York Corp. ..................................... 42
400 SouthTrust Corp. ............................................ 15
300 Summit Bancorp. ............................................. 11
900 SunTrust Banks, Inc. ........................................ 58
400 Synovus Financial Corp. ..................................... 7
600 Wachovia Corp. .............................................. 47
1,700 Washington Mutual, Inc. ..................................... 58
2,500 Wells Fargo Co. ............................................. 98
--------
1,977
--------
Beverages (2.0%):
200 Adolph Coors Co. Class B..................................... 11
1,300 Anheuser-Busch Co., Inc. .................................... 103
5,400 Coca-Cola Co. ............................................... 325
5,000 PepsiCo, Inc. ............................................... 196
1,100 Seagram Co. Ltd. ............................................ 56
--------
691
--------
</TABLE>
Continued
-52-
<PAGE> 204
AMSOUTH MUTUAL FUNDS
Enhanced Market Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Biotechnology (0.5%):
2,100 Amgen, Inc. (b).............................................. $ 162
50 Pe Corp. Celera Genomics (b)................................. 1
--------
163
--------
Broadcasting/Cable (0.2%):
2,100 Comcast Corp.--Special Class A............................... 81
--------
Brokerage Services (1.4%):
100 Bear Stearns Co., Inc. ...................................... 4
2,800 Charles Schwab Corp. ........................................ 123
500 Lehman Brothers Holdings, Inc. .............................. 27
1,300 Merrill Lynch & Co., Inc. ................................... 88
2,700 Morgan Stanley Dean Witter & Co. ............................ 244
--------
486
--------
Business Services (0.2%):
1,700 Automatic Data Processing, Inc. ............................. 68
--------
Chemicals (1.8%):
600 Air Products and Chemicals, Inc. ............................ 20
3,900 E.I. du Pont de Nemours & Co. ............................... 280
300 Great Lakes Chemical Corp. .................................. 13
400 Hercules, Inc. .............................................. 14
2,700 Monsanto Co. ................................................ 106
400 Nalco Chemical Co. .......................................... 21
1,000 PPG Industries, Inc. ........................................ 60
900 Praxair, Inc. ............................................... 42
384 Rohm & Haas Co. ............................................. 16
900 Sherwin Williams Co. ........................................ 24
200 Sigma Aldrich Corp. ......................................... 7
400 Union Carbide Corp. ......................................... 19
100 W.R.Grace and Co. (b)........................................ 2
--------
624
--------
Chemicals--Speciality (0.1%):
800 Engelhard Corp. ............................................. 18
--------
Commercial Services (0.4%):
4,220 Cendant Corp. (b)............................................ 84
300 Deluxe Corp. ................................................ 11
117 Gartner Group, Inc. (b)...................................... 3
900 Laidlaw, Inc. ............................................... 6
600 Paychex, Inc. ............................................... 17
1,300 Service Corp. International.................................. 21
--------
142
--------
</TABLE>
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Computer Hardware (4.4%):
400 Apple Computer, Inc. (b)..................................... $ 22
6,500 Compaq Computer Corp. ....................................... 156
100 Data General Corp. (b)....................................... 1
9,400 Dell Computer Corp. (b)...................................... 384
400 Gateway, Inc. (b)............................................ 30
5,500 IBM Corp. ................................................... 692
3,400 Sun Microsystems, Inc. (b)................................... 231
--------
1,516
--------
Computer Software (5.2%):
200 Adobe Systems, Inc. ......................................... 17
100 Autodesk, Inc. .............................................. 3
2,500 Computer Associates International, Inc. ..................... 115
600 Computer Sciences Corp. (b).................................. 39
1,000 Compuware Corp. (b).......................................... 28
15,600 Microsoft Corp. (b).......................................... 1,338
900 Novell, Inc. (b)............................................. 23
5,500 Oracle Corp. (b)............................................. 208
700 Parametric Technology Corp. (b).............................. 10
700 Peoplesoft, Inc. (b)......................................... 10
--------
1,791
--------
Computers & Peripherals (4.0%):
1,200 3Com Corp. (b)............................................... 29
500 Cabletron Systems, Inc. (b).................................. 6
700 Ceridian Corp. (b)........................................... 20
9,500 Cisco Systems, Inc. (b)...................................... 589
2,100 Electronic Data Systems Corp. ............................... 127
2,800 EMC Corp. (b)................................................ 170
3,700 Hewlett-Packard Co. ......................................... 387
1,100 Seagate Technology, Inc. (b)................................. 30
500 Silicon Graphics, Inc. (b)................................... 9
400 Unisys Corp. (b)............................................. 16
--------
1,383
--------
Consumer Goods (1.3%):
300 American Greetings Corp., Class A............................ 9
500 Brunswick Corp. ............................................. 14
4,100 Gillette Co. ................................................ 180
2,600 Procter & Gamble Co. ........................................ 234
--------
437
--------
</TABLE>
Continued
-53-
<PAGE> 205
AMSOUTH MUTUAL FUNDS
Enhanced Market Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Cosmetics/Personal Care (0.6%):
200 Alberto Culver Co. Class B................................... $ 5
700 Avon Products, Inc. ......................................... 32
100 International Flavors & Fragrances, Inc. .................... 5
2,500 Kimberly Clark Corp. ........................................ 152
--------
194
--------
Diversified Manufacturing (4.3%):
500 Cooper Industries............................................ 27
300 Crane Co. ................................................... 8
300 Eaton Corp. ................................................. 30
200 FMC Corp. (b)................................................ 14
10,200 General Electric Co. ........................................ 1,111
1,800 Minnesota Mining & Manufacturing Co. ........................ 158
200 Raychem Corp. ............................................... 8
900 Tenneco, Inc. ............................................... 21
400 Textron, Inc. ............................................... 33
972 Tyco International Ltd. ..................................... 95
--------
1,505
--------
Electric Utility (0.0%):
500 Niagara Mohawk Holdings Inc. (b)............................. 8
--------
Electrical & Electronic (0.0%):
400 Ameren Corp. ................................................ 16
--------
Electronic Components (0.3%):
700 LSI Logic Corp. (b).......................................... 35
100 Millipore Corp. ............................................. 4
700 Solectron Corp. (b).......................................... 46
200 Tektronix, Inc. ............................................. 6
--------
91
--------
Electronic Components/ Instruments (0.5%):
100 E G & G, Inc. ............................................... 3
2,200 Emerson Electric Co. ........................................ 131
300 Johnson Controls, Inc. ...................................... 21
100 Parker-Hannifin Corp. ....................................... 5
200 Pe Corp. Biosystems.......................................... 11
--------
171
--------
Engineering & Construction (0.0%):
400 Fluor Corp. ................................................. 16
100 Foster Wheeler Corp. ........................................ 1
--------
17
--------
</TABLE>
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Entertainment (0.2%):
600 Harrah's Entertainment, Inc. (b)............................. $ 13
2,600 The Walt Disney Co. ......................................... 72
--------
85
--------
Environmental Control (0.1%):
400 Browning-Ferris Industries, Inc. ............................ 18
--------
Financial Services (4.0%):
1,700 American Express Co. ........................................ 224
2,000 Associates First Capital..................................... 77
1,000 Capital One Financial Corp. ................................. 46
10,000 Citigroup, Inc. ............................................. 445
500 Countrywide Credit Industries, Inc. ......................... 19
300 Dun & Bradstreet Corp. ...................................... 10
3,300 Fannie Mae................................................... 227
2,400 Freddie Mac.................................................. 138
200 Golden West Financial Corp. ................................. 19
2,400 Household International, Inc. ............................... 103
750 Providian Financial.......................................... 68
300 SLM Holding Corp. ........................................... 14
--------
1,390
--------
Food Distributors & Wholesalers (0.3%):
945 Albertsons, Inc. ............................................ 47
2,400 Archer-Daniels-Midland Co. .................................. 34
100 Great Atlantic & Pacific Tea Co., Inc. ...................... 3
600 Kroger Co. (b)............................................... 16
--------
100
--------
Food Products, Processing & Packaging (1.4%):
1,600 Bestfoods.................................................... 78
1,200 Campbell Soup Co. ........................................... 53
900 General Mills, Inc. ......................................... 75
2,000 H.J. Heinz Co. .............................................. 94
300 Hershey Foods Corp. ......................................... 17
1,800 Nabisco Group................................................ 34
600 Quaker Oats Co. ............................................. 41
1,550 Unilever NV-W/I ADR.......................................... 108
--------
500
--------
Forest & Paper Products (0.6%):
100 Boise Cascade Corp. ......................................... 4
500 Champion International Corp. ................................ 26
1,200 Fort James Corp. ............................................ 44
</TABLE>
Continued
-54-
<PAGE> 206
AMSOUTH MUTUAL FUNDS
Enhanced Market Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Forest & Paper Products, continued:
500 Georgia Pacific Corp. ....................................... $ 22
45 International Paper Co. ..................................... 2
600 Louisiana Pacific Corp. ..................................... 13
600 Mead Corp. .................................................. 25
100 Potlatch Corp. .............................................. 4
600 Westvaco Corp. .............................................. 18
600 Weyerhauser Co. ............................................. 39
--------
197
--------
Gas Distribution (0.6%):
600 Coastal Corp. ............................................... 24
200 Columbia Energy Group........................................ 12
300 Consolidated Natural Gas..................................... 19
1,000 Enron Corp. ................................................. 84
100 Nicor, Inc. ................................................. 4
100 Oneok, Inc. ................................................. 3
700 Sempra Energy................................................ 16
300 Sonat, Inc. ................................................. 11
1,200 Williams Cos., Inc. ......................................... 50
--------
223
--------
Health Care (0.3%):
400 Aetna, Inc. ................................................. 32
400 HCR Manor Care (b)........................................... 8
2,200 HEALTHSOUTH Corp. (b)........................................ 27
900 Humana, Inc. (b)............................................. 10
600 Tenet Healthcare Corp. (b)................................... 11
--------
88
--------
Health Care Services (0.1%):
900 IMS Health, Inc. ............................................ 25
470 Mckesson HBOC, Inc. ......................................... 15
--------
40
--------
Home Builders (0.0%):
100 Centex Corp. ................................................ 4
100 Kaufman & Broad Home Corp. .................................. 2
100 Pulte Corp. ................................................. 2
--------
8
--------
Hotels & Lodging (0.3%):
2,400 Carnival Corp. .............................................. 111
500 Hilton Hotels Corp. ......................................... 7
--------
118
--------
</TABLE>
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Household Products/Wares (0.3%):
700 Clorox Corp. ................................................ $ 79
800 Fortune Brands, Inc. ........................................ 32
100 Jostens, Inc. ............................................... 2
72 Newell Rubbermaid, Inc. ..................................... 3
100 Tupperware Corp. ............................................ 2
--------
118
--------
Insurance (2.9%):
503 Aegon Nv..................................................... 38
3,800 Allstate Corp. .............................................. 135
3,700 American International Group, Inc. .......................... 430
300 Chubb Corp. ................................................. 18
1,200 Cigna Corp. ................................................. 106
400 Cincinnati Financial Corp. .................................. 15
1,300 Hartford Financial Services Group............................ 70
200 Jefferson Pilot Corp. ....................................... 15
300 Lincoln National Corp. ...................................... 15
600 Loews Corp. ................................................. 42
600 MBIA, Inc. .................................................. 34
400 MGIC Investment Corp. ....................................... 20
400 Safeco Corp. ................................................ 15
300 St. Paul Cos., Inc. ......................................... 9
1,165 Unumprovident Corp. ......................................... 60
--------
1,022
--------
Internet Software (1.1%):
3,900 America Online, Inc. (b)..................................... 371
--------
Machinery & Equipment (0.3%):
100 Briggs & Stratton Corp. ..................................... 6
900 Deere & Co. ................................................. 34
900 Ingersoll Rand Co. .......................................... 58
100 Milacron Inc. ............................................... 2
100 Snap-On, Inc. ............................................... 4
900 Thermo Electron (b).......................................... 15
--------
119
--------
Media (1.3%):
2,900 CBS Corp. (b)................................................ 127
400 King World Productions, Inc. (b)............................. 14
1,100 McGraw Hill Cos., Inc. ...................................... 56
500 MediaOne Group, Inc. (b)..................................... 36
100 Meredith Corp. .............................................. 4
</TABLE>
Continued
-55-
<PAGE> 207
AMSOUTH MUTUAL FUNDS
Enhanced Market Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Media, continued:
2,000 Time Warner, Inc. ........................................... $ 144
1,900 Viacom, Inc., Class B (b).................................... 80
--------
461
--------
Medical Supplies (0.9%):
300 Allergan, Inc. .............................................. 28
300 Bausch & Lomb, Inc. ......................................... 22
1,000 Becton Dickinson & Co. ...................................... 27
300 Biomet, Inc. ................................................ 11
1,600 Guidant Corp. ............................................... 94
400 Mallinckrodt, Inc. .......................................... 14
1,600 Medtronic, Inc. ............................................. 115
200 St Jude Medical, Inc. (b).................................... 7
--------
318
--------
Metals & Mining (0.6%):
600 Alcan Aluminum Ltd. ......................................... 18
1,900 Alcoa, Inc. ................................................. 113
100 Asarco, Inc. ................................................ 2
1,000 Barrick Gold Corp. .......................................... 19
300 Battle Mountain Gold Co. .................................... 1
300 Cyprus Amax Minerals Co. .................................... 4
500 Freeport-McMoRan Copper & Gold, Inc. ........................ 8
600 Homestake Mining............................................. 5
500 Inco Ltd. ................................................... 9
900 Newmont Mining Corp. ........................................ 17
500 Placer Dome, Inc. ........................................... 5
400 Reynolds Metals Co. ......................................... 22
--------
223
--------
Newspapers (0.4%):
200 Dow Jones & Co., Inc. ....................................... 10
1,600 Gannett Co., Inc. ........................................... 116
100 Knight-Ridder, Inc. ......................................... 5
500 New York Times Co. .......................................... 20
--------
151
--------
Office Equipment & Services (0.2%):
300 Avery Dennison Corp. ........................................ 18
400 Harris Corp. ................................................ 12
100 Moore Corp. Ltd. ............................................ 1
800 Pitney Bowes, Inc. .......................................... 51
--------
82
--------
</TABLE>
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Oil & Gas Exploration, Production, & Services (6.6%):
100 Amerada Hess Corp. .......................................... $ 6
100 Anadarko Petroleum........................................... 4
200 Apache Corp. ................................................ 8
400 Ashland, Inc. ............................................... 15
1,800 Atlantic Richfield Co. ...................................... 162
1,852 Baker Hughes, Inc. .......................................... 64
500 Burlington Resources, Inc. .................................. 22
1,800 Chevron Corp. ............................................... 164
7,300 Exxon Corp. ................................................. 580
1,200 Halliburton Co. ............................................. 55
200 Helmerich & Payne, Inc. ..................................... 5
510 Kerr-McGee Corp. ............................................ 26
3,500 Mobil Corp. ................................................. 358
500 Occidental Petroleum Corp. .................................. 10
1,400 Phillips Petroleum Co. ...................................... 72
200 Rowan Cos., Inc. (b)......................................... 4
6,000 Royal Dutch Petroleum Co. ................................... 367
2,400 Schlumberger Ltd. ........................................... 145
2,800 Texaco, Inc. ................................................ 174
500 Union Pacific Resources Group................................ 9
1,700 USX-Marathon Group........................................... 52
--------
2,302
--------
Packaging (0.1%):
300 Crown Cork & Seal, Inc. ..................................... 9
200 Sealed Air Corp. (b)......................................... 13
--------
22
--------
Pharmaceuticals (8.9%):
4,900 Abbott Laboratories.......................................... 210
4,200 American Home Products Corp. ................................ 214
1,400 Baxter International, Inc. .................................. 96
6,500 Bristol-Myers Squibb Co. .................................... 432
4,300 Eli Lilly & Co. ............................................. 282
3,800 Johnson & Johnson............................................ 350
7,600 Merck & Co., Inc. ........................................... 515
11,700 Pfizer, Inc. ................................................ 397
2,000 Pharmacia & Upjohn, Inc. .................................... 108
5,400 Schering-Plough Corp. ....................................... 265
2,800 Warner-Lambert Co. .......................................... 185
500 Watson Pharmaceuticals, Inc. (b)............................. 17
--------
3,071
--------
</TABLE>
Continued
-56-
<PAGE> 208
AMSOUTH MUTUAL FUNDS
Enhanced Market Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Photography & Imaging (0.3%):
1,300 Eastman Kodak Co. ........................................... $ 90
100 Polaroid Corp. .............................................. 2
--------
92
--------
Railroads (0.5%):
2,600 Burlington Northern Santa Fe................................. 84
600 CSX Corp. ................................................... 29
600 Kansas City Southern Industries.............................. 33
1,000 Norfolk Southern Corp. ...................................... 29
--------
175
--------
Restaurants (0.2%):
1,600 McDonald's Corp. ............................................ 67
400 Tricon Global Restaurants (b)................................ 16
--------
83
--------
Retail (4.4%):
800 Best Buy, Inc. (b)........................................... 60
1,000 Circuit City Stores, Inc. ................................... 47
2,300 CVS Corp. ................................................... 114
1,600 Dayton Hudson Corp. ......................................... 104
300 Dillard's, Inc., Class A..................................... 9
3,000 Gap, Inc. ................................................... 140
2,300 Home Depot, Inc. ............................................ 147
400 Ikon Office Solutions........................................ 5
900 Kohls Corp. (b).............................................. 68
100 Longs Drug Stores Corp. ..................................... 3
1,700 May Department Stores Co. ................................... 66
400 Nordstrom, Inc. ............................................. 13
100 Pep Boys Manny, Moe & Jack................................... 2
200 Rite Aid..................................................... 4
2,200 Staples, Inc. (b)............................................ 64
600 Supervalu, Inc. ............................................. 14
900 Tandy Corp. ................................................. 46
1,700 TJX Co., Inc. ............................................... 56
300 Toys 'R' Us, Inc. (b)........................................ 5
13,000 Wal-Mart Stores, Inc. ....................................... 549
--------
1,516
--------
Semiconductors (3.4%):
400 Advanced Micro Devices, Inc. (b)............................. 7
1,500 Applied Materials, Inc. (b).................................. 108
11,100 Intel Corp. ................................................. 765
200 KLA-Tencor Corp. (b)......................................... 14
</TABLE>
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Semiconductors, continued:
1,000 Micron Technology, Inc. (b).................................. $ 62
900 National Semiconductor Corp. (b)............................. 22
1,400 Texas Instruments, Inc. ..................................... 202
--------
1,180
--------
Steel (0.0%):
100 Bethlehem Steel Corp. (b).................................... 1
100 Nucor Corp. ................................................. 5
100 Timken Co. .................................................. 2
100 Worthington Industries, Inc. ................................ 1
--------
9
--------
Telecommunications--Equipment (3.4%):
900 General Instrument Corp. .................................... 41
9,750 Lucent Technologies, Inc. ................................... 634
2,200 Motorola, Inc. .............................................. 201
1,900 Nortel Networks Corp. ....................................... 168
400 Scientific-Atlanta, Inc. .................................... 15
1,800 Tellabs, Inc. (b)............................................ 111
--------
1,170
--------
Telecommunications--Wireless (0.4%):
200 Andrew Corp. (b)............................................. 4
1,250 Sprint Corp. PCS............................................. 76
200 Vodafone Airtouch PLC........................................ 42
--------
122
--------
Tobacco (0.9%):
7,800 Philip Morris Companies, Inc. ............................... 290
500 UST, Inc. ................................................... 16
--------
306
--------
Tobacco Holdings (0.0%):
533 RJ Reynolds.................................................. 15
--------
Toys/Games/Hobbies (0.1%):
550 Hasbro, Inc. ................................................ 14
300 Mattel, Inc. ................................................ 7
--------
21
--------
Transportation & Shipping (0.0%):
200 USX U.S. Steel Group......................................... 5
--------
Transportation Leasing & Trucking (0.0%):
200 Ryder System, Inc. .......................................... 5
--------
</TABLE>
Continued
-57-
<PAGE> 209
AMSOUTH MUTUAL FUNDS
Enhanced Market Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Utilities--Electric & Gas (1.6%):
500 American Electric Power Co. ................................. $ 18
400 Carolina Power & Light Co. .................................. 16
600 Central & South West Corp. .................................. 13
400 Cinergy Corp. ............................................... 12
300 CMS Energy Corp. ............................................ 11
700 Consolidated Edison, Inc. ................................... 30
400 Constellation Energy Group................................... 12
500 Dominion Resources, Inc. .................................... 22
400 DTE Energy Co. .............................................. 16
1,000 Duke Energy Corp. ........................................... 52
900 Edison International......................................... 23
700 Entergy Corp. ............................................... 21
600 Firstenergy Corp. ........................................... 17
500 FPL Group, Inc. ............................................. 27
300 GPU Inc. .................................................... 12
300 New Century Energies, Inc. .................................. 10
400 Northern States Power Co. ................................... 9
450 P.P. & L. Resources, Inc. ................................... 13
800 Pacificorp................................................... 15
600 Peco Energy Co. ............................................. 25
100 Peoples Energy Corp. ........................................ 4
1,100 PG&E Corp. .................................................. 35
600 Public Service Enterprise Group, Inc. ....................... 24
800 Reliant Energy, Inc. ........................................ 22
1,900 Southern Co. ................................................ 50
800 Texas Utilities Co. ......................................... 34
600 Unicom Corp. ................................................ 24
--------
567
--------
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ---------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Utilities--Telecommunications (7.0%):
3,600 Ameritech Corp. .......................................... $ 264
7,432 AT&T Corp. ............................................... 385
2,500 BellAtlantic Corp. ....................................... 159
7,400 BellSouth Corp. .......................................... 355
700 Centurytel, Inc. ......................................... 30
300 Frontier Corp. ........................................... 17
3,200 GTE Corp. ................................................ 236
4,300 MCI WorldCom, Inc. (b).................................... 355
5,500 SBC Communications, Inc. ................................. 315
2,500 Sprint Corp. ............................................. 129
2,600 U.S. West, Inc. .......................................... 149
--------
2,394
--------
Total Common Stocks 31,661
--------
Investment Companies (2.8%):
979,724 AmSouth Prime Obligations Fund............................ 980
5,326 AmSouth U.S. Treasury Fund................................ 5
--------
Total Investment Companies 985
--------
U.S. Treasury Notes (2.9%):
$ 1,000 6.38%, 1/15/00 (c)........................................ 1,005
--------
Total U.S. Treasury Notes 1,005
--------
Total (Cost $31,089) (a) $ 33,651
========
</TABLE>
- --------
Percentages indicated are based on net assets of $34,770.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of $21. Cost
for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....... $ 3,697
Unrealized depreciation....... (1,156)
-------
Net unrealized appreciation... $ 2,541
=======
</TABLE>
(b) Represents non-income producing securities.
(c) All or part of this security has been pledged as collateral as of July 31,
1999.
<TABLE>
<CAPTION>
Unrealized
# of Contracts Contract Value Expiration Date Gain/(Loss)
-------------- -------------- --------------- -----------
<S> <C> <C> <C> <C>
S&P 500 Stock Index.. 9 $2,997 9/17/99 (130)
</TABLE>
The aggregate market value of securities pledged to cover margin requirements
for open futures positions at July 31, 1999 was $169.
See notes to financial statements.
-58-
<PAGE> 210
AMSOUTH MUTUAL FUNDS
Capital Growth Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- -------
<C> <S> <C>
Common Stocks (96.8%):
Advertising (1.6%):
9,000 Omnicom Group, Inc. ......................................... $ 638
-------
Banking (4.4%):
12,300 Commerce Bancshares, Inc..................................... 497
15,000 SouthTrust Corp.............................................. 551
10,692 SunTrust Banks, Inc.......................................... 689
-------
1,737
-------
Beverages (1.6%):
8,100 Anheuser-Busch Co., Inc. .................................... 639
-------
Broadcasting/Cable (1.9%):
20,400 Cox Communications Inc., Class A (b)......................... 764
-------
Brokerage Services (4.3%):
17,000 Lehman Brothers Holdings, Inc................................ 914
8,800 Morgan Stanley Dean Witter & Co.............................. 793
-------
1,707
-------
Chemicals (1.4%):
14,500 Monsanto Co. ................................................ 567
-------
Computer Hardware (2.7%):
11,400 Apple Computer, Inc. (b)..................................... 635
6,400 Sun Microsystems, Inc. (b)................................... 434
-------
1,069
-------
Computer Software (5.7%):
30,000 Compuware Corp. (b).......................................... 833
16,800 Microsoft Corp. (b).......................................... 1,441
-------
2,274
-------
Diversified Manufacturing (7.0%):
12,300 General Electric Co.......................................... 1,341
14,200 Tyco International Ltd. ..................................... 1,387
-------
2,728
-------
Electronic Components (2.5%):
20,000 LSI Logic Corp. (b).......................................... 1,006
-------
Financial Services (1.7%):
7,450 Providian Financial.......................................... 678
-------
Food Products & Services (2.0%):
19,000 Nabisco Holdings Corp........................................ 791
-------
</TABLE>
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- -------
<C> <S> <C>
Common Stocks, continued:
Household Products/Wares (1.7%):
6,100 Clorox Corp.................................................. $ 683
-------
Insurance (1.6%):
14,000 AFLAC, Inc................................................... 649
-------
Internet Software (4.1%):
5,000 America Online, Inc. (b)..................................... 476
13,000 Earthlink Network, Inc. (b).................................. 628
16,000 Mindspring Enterprises, Inc. (b)............................. 537
-------
1,641
-------
Medical Supplies (1.3%):
7,100 Medtronic, Inc............................................... 512
-------
Newspapers (1.9%):
14,000 Knight-Ridder, Inc. ......................................... 751
-------
Oil & Gas Exploration, Production, & Services (6.9%):
12,000 Phillips Petroleum Co. ...................................... 616
11,400 Royal Dutch Petroleum Co..................................... 695
12,700 Texaco, Inc.................................................. 792
15,000 Unocal Corp. ................................................ 595
-------
2,698
-------
Pharmaceuticals (9.3%):
13,100 Bristol-Myers Squibb Co. .................................... 871
9,900 Eli Lilly & Co. ............................................. 650
12,000 Pharmacia & Upjohn, Inc. .................................... 646
17,000 Schering-Plough Corp......................................... 833
9,900 Warner-Lambert Co. .......................................... 653
-------
3,653
-------
Retail (12.9%):
18,000 Abercrombie & Fitch Co. (b).................................. 747
31,000 Bed Bath & Beyond, Inc. (b).................................. 1,053
14,000 Best Buy, Inc. (b)........................................... 1,045
15,750 Gap, Inc..................................................... 736
12,100 Home Depot, Inc.............................................. 772
17,000 Wal-Mart Stores, Inc......................................... 718
-------
5,071
-------
Semiconductors (5.3%):
15,000 Applied Materials, Inc. (b).................................. 1,079
15,000 KLA-Tencor Corp. (b)......................................... 1,016
-------
2,095
-------
</TABLE>
Continued
-59-
<PAGE> 211
AMSOUTH MUTUAL FUNDS
Capital Growth Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- -------
<C> <S> <C>
Common Stocks, continued:
Telecommunications--Equipment (7.5%):
14,400 Lucent Technologies, Inc..................................... $ 937
175,000 Paging Network, Inc. (b)..................................... 941
29,000 Scientific-Atlanta, Inc. .................................... 1,058
-------
2,936
-------
Telecommunications--Wireless (3.1%):
23,000 Nextel Communications, Inc. (b).............................. 1,232
-------
</TABLE>
- --------
Percentages indicated are based on net assets of $39,558.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of $8. Cost
for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................. $ 5,523
Unrealized depreciation............................................. (1,592)
-------
Net unrealized appreciation......................................... $ 3,931
=======
</TABLE>
(b) Represents non-income producing securities.
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- -------
<C> <S> <C>
Common Stocks, continued:
Utilities--Telecommunications (4.4%):
21,225 Centurytel, Inc.............................................. $ 907
16,400 Sprint Corp.................................................. 848
-------
1,755
-------
Total Common Stocks 38,274
-------
Total (Cost $34,335) (a) $38,274
=======
</TABLE>
See notes to financial statements.
-60-
<PAGE> 212
AMSOUTH MUTUAL FUNDS
Select Equity Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- -------
<C> <S> <C>
Common Stocks (97.9%):
Business Services (4.8%):
27,300 Automatic Data Processing, Inc............................... $ 1,094
-------
Commercial Services (0.4%):
3,906 Gartner Group, Inc. (b)...................................... 84
-------
Consumer Goods (4.2%):
32,600 American Greetings Corp., Class A............................ 958
-------
Electrical Equipment (10.7%):
58,700 Hubbell Harvey, Inc., Class B................................ 2,421
-------
Electronic Components/ Instruments (10.3%):
38,900 Emerson Electric Co.......................................... 2,322
-------
Financial Services (11.3%):
33,700 Dun & Bradstreet Corp........................................ 1,070
27,300 H & R Block, Inc............................................. 1,492
-------
2,562
-------
Food Distributors & Wholesalers (4.9%):
33,600 SYSCO Corp................................................... 1,098
-------
Food Processing & Packaging (6.6%):
36,900 Ralston Purina Co............................................ 1,105
15,600 Smuckers Co., Class A........................................ 377
-------
1,482
-------
Food Products, Processing & Packaging (3.9%):
15,100 Hershey Foods Corp........................................... 876
-------
Health Care Services (3.7%):
30,000 IMS Health, Inc.............................................. 836
-------
Machinery & Equipment (4.2%):
10,100 Briggs & Stratton Corp....................................... 608
10,000 Snap-On, Inc................................................. 350
-------
958
-------
</TABLE>
- --------
Percentages indicated are based on net assets of $22,611.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................. $ 2,628
Unrealized depreciation............................................. (1,247)
-------
Net unrealized appreciation......................................... $ 1,381
=======
</TABLE>
(b) Represents non-income producing securities.
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ------------------------------------------------------------- -------
<C> <S> <C>
Common Stocks, continued:
Media (1.8%):
12,833 Nielsen Media Research (b)................................... $ 417
-------
Newspapers (8.3%):
17,000 Gannett Co., Inc. ........................................... 1,227
8,000 Lee Enterprises.............................................. 244
700 Washington Post, Class B..................................... 396
-------
1,867
-------
Office Equipment & Services (4.7%):
16,800 Pitney Bowes, Inc............................................ 1,069
-------
Pharmaceuticals (8.2%):
27,900 Bristol-Myers Squibb Co. .................................... 1,855
-------
Pollution Control Services & Equipment (3.6%):
31,760 Waste Management, Inc........................................ 812
-------
Restaurants (5.4%):
29,500 McDonald's Corp.............................................. 1,230
-------
Tobacco (0.9%):
5,500 Philip Morris Companies, Inc................................. 205
-------
Total Common Stocks 22,146
-------
Investment Companies (1.5%):
337,441 AmSouth Prime Obligations Fund............................... 337
-------
Total Investment Companies 337
-------
Total (Cost $21,102) (a) $22,483
=======
</TABLE>
See notes to financial statements.
-61-
<PAGE> 213
AMSOUTH MUTUAL FUNDS
Regional Equity
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ----------------------------------------------------------- -------
<C> <S> <C>
Common Stocks (98.0%):
Apparel (2.1%):
90,000 Russell Corp............................................... $ 1,727
-------
Automotive Parts (5.6%):
100,000 Discount Auto Parts, Inc. (b).............................. 2,238
75,000 Genuine Parts Co. ......................................... 2,329
-------
4,567
-------
Banking (9.7%):
40,000 Bank of America Corp....................................... 2,654
30,000 First American Corp.-Tenn.................................. 1,260
50,000 First Union Corp. ......................................... 2,300
40,000 Union Planters Corp........................................ 1,773
-------
7,987
-------
Building Materials (3.0%):
275,000 Interface, Inc............................................. 2,458
-------
Commercial Services (5.5%):
60,000 Equifax, Inc............................................... 1,973
175,000 Modis Professional Services (b)............................ 2,537
-------
4,510
-------
Construction--Manufactured Homes (2.9%):
225,000 Clayton Homes, Inc......................................... 2,363
-------
Diversified Manufacturing (0.8%):
55,000 Walter Industries, Inc. (b)................................ 694
-------
Food Processing & Packaging (3.8%):
90,000 Flowers Industries, Inc.................................... 1,502
110,000 Lance, Inc................................................. 1,616
-------
3,118
-------
Forest & Paper Products (5.5%):
80,000 Caraustar Industries, Inc. ................................ 1,990
70,000 Fort James Corp. .......................................... 2,555
-------
4,545
-------
Furniture (3.7%):
230,000 Heilig-Myers Co............................................ 1,668
40,000 Winsloew Furniture, Inc. (b)............................... 1,345
-------
3,013
-------
Health Care (5.1%):
340,000 HEALTHSOUTH Corp. (b)...................................... 4,165
-------
</TABLE>
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ----------------------------------------------------------- -------
<C> <S> <C>
Common Stocks, continued:
Manufacturing (2.7%):
105,000 Wolverine Tube, Inc. (b)................................... $ 2,192
-------
Medical Services (6.5%):
125,000 Coventry Health Care, Inc. (b)............................. 1,383
310,000 Health Management Assoc., Inc., Class A (b)................ 2,557
170,000 MedPartners, Inc. (b)...................................... 1,423
-------
5,363
-------
Office Equipment & Services (1.8%):
50,000 Harris Corp................................................ 1,516
-------
Oil & Gas Exploration, Production, & Services (5.1%):
45,000 Burlington Resources, Inc.................................. 1,988
10,000 Mobil Corp................................................. 1,023
20,000 Schlumberger Ltd........................................... 1,211
-------
4,222
-------
Printing (1.5%):
60,000 John H. Harland Co......................................... 1,208
-------
Railroads (2.7%):
75,000 Norfolk Southern Corp...................................... 2,194
-------
Restaurants (2.4%):
130,000 CRBL Group, Inc............................................ 1,966
-------
Retail (7.6%):
285,000 Hancock Fabrics, Inc....................................... 1,443
85,000 Office Depot, Inc. (b)..................................... 1,594
60,000 Saks, Inc. (b)............................................. 1,380
275,000 Stein-Mart, Inc. (b)....................................... 1,829
-------
6,246
-------
Steel (2.9%):
50,000 Nucor Corp................................................. 2,425
-------
Telecommunications--Equipment (1.8%):
40,000 Scientific-Atlanta, Inc.................................... 1,460
-------
Transportation (5.2%):
165,000 Offshore Logistics, Inc. (b)............................... 2,001
70,000 Tidewater, Inc............................................. 2,314
-------
4,315
-------
Transportation Leasing & Trucking (2.6%):
90,000 Ryder System, Inc.......................................... 2,121
-------
</TABLE>
Continued
-62-
<PAGE> 214
AMSOUTH MUTUAL FUNDS
Regional Equity
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ----------------------------------------------------------- -------
<C> <S> <C>
Common Stocks, continued:
Utilities-Electric & Gas (4.9%):
50,000 Florida Progress Corp. .................................... $ 2,047
75,000 Southern Co................................................ 1,983
-------
4,030
-------
Utilities-Telecommunications (2.6%):
45,000 BellSouth Corp............................................. 2,160
-------
Total Common Stocks 80,565
-------
</TABLE>
- --------
Percentages indicated are based on net assets of $82,261.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................. $20,404
Unrealized depreciation............................................. (7,851)
-------
Net unrealized appreciation......................................... $12,553
=======
</TABLE>
(b) Represents non-income producing securities.
<TABLE>
<CAPTION>
Security Market
Shares Description Value
------ ----------------------------------------------------------- -------
<C> <S> <C>
Investment Companies (2.0%):
1,655,457 AmSouth Prime Obligations Fund............................. $ 1,655
2,829 AmSouth U.S. Treasury Fund................................. 3
-------
Total Investment Companies 1,658
-------
Total (Cost $69,670) (a) $82,223
=======
</TABLE>
See notes to financial statements.
-63-
<PAGE> 215
AMSOUTH MUTUAL FUNDS
Small Cap Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ----------------------------------------------------------- -------
<C> <S> <C>
Common Stocks (95.3%):
Airlines (0.6%):
22,900 Airtran Holdings, Inc. (b)................................. $ 147
-------
Automotive (5.6%):
28,900 Copart, Inc. (b)........................................... 694
24,150 Monaco Coach Corp. (b)..................................... 638
-------
1,332
-------
Commercial Services (3.1%):
23,100 Dollar Thrifty Automotive Group (b)........................ 497
7,500 Plexus Corp. (b)........................................... 240
-------
737
-------
Computer Software (7.1%):
3,500 Computer Network Tech Co. (b).............................. 51
12,900 Credence Systems Corp. (b)................................. 535
21,900 Handleman Co. (b).......................................... 245
10,800 Mercury Interactive Corp. (b).............................. 498
12,600 Pinnacle Systems, Inc (b).................................. 367
-------
1,696
-------
Computers & Peripherals (9.5%):
17,400 Cybex Computer Products Corp. (b).......................... 463
5,600 Kronos, Inc. (b)........................................... 271
8,000 Lam Research Corp. (b)..................................... 443
46,100 Sybase, Inc. (b)........................................... 473
11,600 Verity, Inc. (b)........................................... 575
-------
2,225
-------
Construction (4.5%):
10,900 Dycom Industries, Inc. (b)................................. 520
25,700 Insituform Technologies, Class A (b)....................... 559
-------
1,079
-------
Construction--Manufactured Homes (2.1%):
18,000 Ryland Group, Inc. ........................................ 502
-------
Diversified Manufacturing (3.3%):
20,550 Labor Ready, Inc. (b)...................................... 353
27,600 WMS Industries, Inc. (b)................................... 425
-------
778
-------
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ----------------------------------------------------------- -------
<C> <S> <C>
Common Stocks, continued:
Electrical & Electronic (6.6%):
8,900 Advanced Digital Info Corp. (b)............................ $ 378
18,400 Aeroflex, Inc. (b)......................................... 348
3,200 Cree Research, Inc. (b).................................... 198
12,000 DII Group, Inc. (b)........................................ 445
9,400 Mentor Graphics Corp. (b).................................. 95
1,400 Optical Coating Laboratory................................. 100
-------
1,564
-------
Entertainment (1.6%):
40,000 Aztar Corp. (b)............................................ 373
-------
Financial Services (4.8%):
18,100 Hambrecht & Quist Group (b)................................ 681
13,400 Legg Mason, Inc. .......................................... 469
-------
1,150
-------
Food Processing & Packaging (2.1%):
18,500 Foodmaker, Inc. (b)........................................ 506
-------
Forest & Paper Products (1.3%):
19,000 Longview Fibre Co. ........................................ 310
-------
Health Care (5.4%):
17,500 Cytyc Corp. (b)............................................ 431
19,000 Hooper Holmes, Inc. ....................................... 375
8,800 Infocure Corp. (b)......................................... 472
-------
1,278
-------
Household Products/Wares (2.8%):
12,700 Fossil, Inc. (b)........................................... 667
-------
Machinery--Construction (0.9%):
6,600 Astec Industries, Inc. (b)................................. 225
-------
Machinery--Diversified (0.4%):
1,600 Tecumseh Products, Inc. ................................... 103
-------
Media (1.8%):
11,550 Valassis Communications, Inc. (b).......................... 430
-------
Medical Services (2.4%):
13,100 Medquist, Inc. (b)......................................... 568
-------
Office Equipment & Services (1.0%):
7,000 Clarify, Inc. (b).......................................... 231
-------
</TABLE>
Continued
-64-
<PAGE> 216
AMSOUTH MUTUAL FUNDS
Small Cap Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ----------------------------------------------------------- -------
<C> <S> <C>
Common Stocks, continued:
Oil & Gas Exploration, Production, & Services (4.1%):
15,100 Basin Exploration, Inc. (b)................................ $ 317
26,500 Forest Oil Corp. (b)....................................... 394
8,700 Syncor International Corp. (b)............................. 258
-------
969
-------
Pharmaceuticals (6.7%):
11,000 Chirex, Inc. (b)........................................... 360
19,400 King Pharmaceuticals, Inc. (b)............................. 526
14,850 Priority Healthcare Corp. Class B (b)...................... 717
-------
1,603
-------
Retail (1.8%):
11,300 American Eagle Outfitters (b).............................. 436
-------
Technology (2.3%):
1,600 Cohu, Inc.................................................. 66
10,900 Integrated Device Tech, Inc. (b)........................... 142
23,500 International Rectifier Corp. (b).......................... 340
-------
548
-------
Telecommunications (2.0%):
31,700 InterVoice, Inc. (b)....................................... 479
-------
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ----------------------------------------------------------- -------
<C> <S> <C>
Common Stocks, continued:
Telecommunications--Equipment (7.4%):
6,700 American Xtal Technology, Inc. (b)......................... $ 206
17,200 ANTEC Corp. (b)............................................ 721
24,100 Commscope, Inc. (b)........................................ 825
-------
1,752
-------
Transportation Leasing & Trucking (4.1%):
29,000 American Freightways Corp. (b)............................. 696
5,600 US Freightways Corp. ...................................... 277
-------
973
-------
Total Common Stocks 22,661
-------
U.S. Treasury Bills (2.1%):
$ 500 9/16/99.................................................... 497
-------
Total U.S. Treasury Bills 497
-------
Investment Companies (3.6%):
861,416 AmSouth Prime Obligations Fund............................. 861
-------
Total Investment Companies 861
-------
Total (Cost $21,396) (a) $24,019
=======
</TABLE>
- --------
Percentages indicated are based on net assets of $23,779.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of $20. Cost
for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......... $3,149
Unrealized depreciation......... (546)
------
Net unrealized appreciation..... $2,603
======
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements.
-65-
<PAGE> 217
AMSOUTH MUTUAL FUNDS
Balanced Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- --------------------------------------------------------- --------
<C> <S> <C>
Common Stocks (48.1%):
Apparel (0.3%):
140,000 Phillips-Van Heusen Corp................................. $ 1,190
--------
Automotive (0.7%):
55,000 Ford Motor Co............................................ 2,674
--------
Automotive Parts (1.0%):
101,000 Arvin Industries, Inc.................................... 3,775
--------
Banking (3.1%):
50,000 Bank of America Corp..................................... 3,319
20,000 Bank One Corp............................................ 1,091
40,000 First Union Corp. ....................................... 1,840
150,000 Washington Mutual, Inc................................... 5,147
--------
11,397
--------
Beverages (0.8%):
70,000 Diageo PLC ADR........................................... 2,870
--------
Business Services (1.0%):
160,000 Reynolds & Reynolds Co., Class A......................... 3,760
--------
Chemicals-Speciality (1.8%):
230,000 Engelhard Corp........................................... 5,132
100,000 M.A. Hanna Co. .......................................... 1,600
--------
6,732
--------
Computer Hardware (0.5%):
15,000 IBM Corp. ............................................... 1,885
--------
Computers & Peripherals (1.3%):
410,000 Cabletron Systems, Inc. (b).............................. 4,946
--------
Consumer Goods (0.7%):
95,000 American Greetings Corp., Class A........................ 2,791
--------
Electrical & Electronic (0.4%):
32,000 Avnet, Inc............................................... 1,568
--------
Financial Services (0.9%):
110,000 Dun & Bradstreet Corp.................................... 3,493
--------
Food Processing & Packaging (1.3%):
20,000 Dole Food, Inc........................................... 528
140,000 Sara Lee Corp............................................ 3,079
56,000 Universal Foods Corp. ................................... 1,222
--------
4,829
--------
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- --------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Forest & Paper Products (3.2%):
15,000 Champion International Corp.............................. $ 776
75,000 International Paper Co................................... 3,834
50,000 Weyerhauser Co. ......................................... 3,234
90,000 Willamette Industries, Inc............................... 4,051
--------
11,895
--------
Health Care (1.4%):
40,000 Aetna, Inc. ............................................. 3,280
33,000 United Healthcare Corp................................... 2,013
--------
5,293
--------
Household Products/Wares (1.0%):
90,000 Newell Rubbermaid, Inc. ................................. 3,893
--------
Insurance (2.3%):
5,000 Chubb Corp. ............................................. 299
60,000 Marsh & McLennan Cos., Inc. ............................. 4,560
120,000 St. Paul Cos., Inc....................................... 3,735
--------
8,594
--------
Manufacturing (0.2%):
31,000 Kennametal, Inc. ........................................ 748
--------
Medical Supplies (1.7%):
85,000 C.R. Bard, Inc........................................... 4,133
80,000 DENTSPLY International, Inc.............................. 2,165
--------
6,298
--------
Metals & Mining (0.2%):
40,000 Barrick Gold Corp........................................ 743
--------
Newspapers (1.6%):
30,000 Dow Jones & Co., Inc..................................... 1,496
60,000 Gannett Co., Inc. ....................................... 4,335
--------
5,831
--------
Oil & Gas Exploration, Production, & Services (8.1%):
40,000 Atlantic Richfield Co.................................... 3,603
75,000 Burlington Resources, Inc................................ 3,314
90,000 Kerr-McGee Corp.......................................... 4,634
50,000 Noble Affiliates......................................... 1,463
115,000 Sunoco, Inc.............................................. 3,508
80,000 Texaco, Inc.............................................. 4,984
</TABLE>
Continued
-66-
<PAGE> 218
AMSOUTH MUTUAL FUNDS
Balanced Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- --------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Oil & Gas Exploration, Production, & Services, continued:
190,000 Ultramar Diamond Shamrock Corp........................... $ 4,488
130,000 USX-Marathon Group....................................... 3,949
--------
29,943
--------
Packaging (0.5%):
60,000 Crown Cork & Seal, Inc. ................................. 1,759
--------
Pharmaceuticals (2.7%):
40,000 American Home Products Corp. ............................ 2,040
60,000 Baxter International, Inc. .............................. 4,121
70,000 Pharmacia & Upjohn, Inc. ................................ 3,767
--------
9,928
--------
Pollution Control Services & Equipment (0.5%):
70,000 Waste Management, Inc. .................................. 1,789
--------
Railroads (0.8%):
60,000 CSX Corp................................................. 2,906
--------
Retail (4.1%):
70,000 CVS Corp................................................. 3,483
18,000 Dayton Hudson Corp. ..................................... 1,164
105,000 Dillard's, Inc., Class A................................. 3,235
105,000 May Department Stores Co. ............................... 4,061
30,000 The Limited, Inc. ....................................... 1,371
46,000 Wal-Mart Stores, Inc. ................................... 1,944
--------
15,258
--------
Temporary Services (0.2%):
100,000 Olsten Corp. ............................................ 844
--------
Transportation Leasing & Trucking (1.4%):
105,000 Ryder System, Inc. ...................................... 2,474
55,000 US Freightways Corp. .................................... 2,716
--------
5,190
--------
Utilities-Electric & Gas (2.0%):
130,000 Constellation Energy Group............................... 3,810
10,000 New Century Energies, Inc. .............................. 347
120,000 Southern Co. ............................................ 3,173
--------
7,330
--------
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- --------------------------------------------------------- --------
<C> <S> <C>
Common Stocks, continued:
Utilities-Telecommunications (2.4%):
35,000 AT&T Corp................................................ $ 1,818
70,000 BellAtlantic Corp. ...................................... 4,462
57,000 BellSouth Corp........................................... 2,736
--------
9,016
--------
Total Common Stocks 179,168
--------
Corporate Bonds (24.6%):
Appliances (0.1%):
$ 500 Whirlpool Corp., 9.50%, 6/15/00.......................... 514
--------
Automotive (0.2%):
700 General Motors Corp., 9.63%, 12/1/00..................... 729
--------
Automotive-Finance (2.0%):
2,500 Chrysler Financial Corp., 6.08%, 4/6/01.................. 2,494
2,000 General Motors Acceptance Corp., 6.00%, 2/1/02........... 1,970
3,000 Toyota Motor Credit Corp.,
5.50%, 9/17/01.......................................... 2,951
--------
7,415
--------
Banking (3.7%):
930 Bank of America Corp., 9.50%, 4/1/01..................... 975
1,000 Bankers Trust Co., 9.50%, 6/14/00........................ 1,028
2,500 Mellon Financial Co., 6.30%, 6/1/00...................... 2,507
4,185 NationsBank Corp., 5.38%, 4/15/00........................ 4,174
2,000 SunTrust Banks, Inc., 7.38%, 7/1/06...................... 2,040
1,565 Wachovia Corp., 5.40%, 2/20/01........................... 1,545
1,475 Wachovia Corp., 6.63%, 11/15/06.......................... 1,440
--------
13,709
--------
Brokerage Services (1.9%):
3,000 Bear Stearns & Co., Inc., 6.50%, 8/1/02.................. 2,970
2,000 Merrill Lynch & Co., Inc.,
6.00%, 3/1/01........................................... 1,990
2,000 Morgan Stanley Group, Inc.,
8.10%, 6/24/02.......................................... 2,070
--------
7,030
--------
Chemicals (0.8%):
3,000 Monsanto Co., 6.00%, 7/1/00.............................. 3,000
--------
</TABLE>
Continued
-67-
<PAGE> 219
AMSOUTH MUTUAL FUNDS
Balanced Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- --------------------------------------------------------- --------
<C> <S> <C>
Corporate Bonds, continued:
Consumer Goods (0.5%):
$ 2,000 Procter & Gamble Co., 5.25%, 9/15/03..................... $ 1,913
--------
Diversified Manufacturing (0.7%):
2,500 Avnet Inc., 6.45%, 8/15/03............................... 2,444
--------
Electronic Components/ Instruments (0.5%):
2,000 Honeywell, Inc., 6.75%, 3/15/02.......................... 2,018
--------
Farm Equipment (0.8%):
3,000 John Deere Capital Corp.,
5.85%, 1/15/01.......................................... 2,981
--------
Financial Services (1.6%):
4,000 Associates Corp. N. A., 6.75%, 7/15/01................... 4,020
1,000 Commercial Credit Co., 7.88%, 7/15/04.................... 1,041
1,000 Pitney Bowes Credit Corp.,
6.80%, 10/1/01.......................................... 1,013
--------
6,074
--------
Food Products & Services (0.3%):
1,000 H.J. Heinz Co., 6.75%, 10/15/99.......................... 1,003
--------
Forest & Paper Products (0.3%):
1,000 Mead Corp., 6.60%, 3/1/02................................ 994
--------
Industrial Goods & Services (2.2%):
500 Browning-Ferris Industries, Inc.,
6.10%, 1/15/03.......................................... 461
2,000 Caterpillar Financial Services,
6.02%, 4/15/02.......................................... 1,974
1,000 Dresser Industries, Inc., 6.25%, 6/1/00.................. 1,003
3,000 First Data Corp., 6.75%, 7/15/05......................... 2,988
2,000 Illinois Tool Works, 5.75%, 3/1/09....................... 1,855
--------
8,281
--------
Insurance (0.4%):
1,400 Capital Holding Corp., 9.20%, 4/17/01.................... 1,462
140 Chubb Corp., 8.75%, 11/15/99............................. 141
--------
1,603
--------
Newspapers (0.5%):
2,000 Gannett Co., Inc., 5.85%, 5/1/00......................... 2,000
--------
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- --------------------------------------------------------- --------
<C> <S> <C>
Corporate Bonds, continued:
Oil & Gas Exploration, Production, & Services (0.8%):
$ 1,550 BP America, Inc., 9.38%, 11/1/00......................... $ 1,612
1,500 Conoco Inc., 6.35%, 4/15/09.............................. 1,427
--------
3,039
--------
Pollution Control Services & Equipment (0.8%):
1,000 Waste Management, Inc.,
8.25%, 11/15/99......................................... 1,008
2,000 Waste Management, Inc.,
7.70%, 10/1/02.......................................... 2,050
--------
3,058
--------
Retail (2.4%):
2,000 J.C. Penney Co., Inc., 7.25%, 4/1/02..................... 2,018
2,000 Sears, Roebuck and Co., 6.00%, 3/20/03................... 1,950
3,000 Wal-Mart Stores, Inc., 5.85%, 6/1/00..................... 3,003
2,000 Wal-Mart Stores, Inc., 6.75%, 5/15/02.................... 2,024
--------
8,995
--------
Telecommunications--Equipment (0.5%):
1,730 Lucent Technologies, Inc.,
6.90%, 7/15/01.......................................... 1,752
--------
Tools (0.6%):
2,200 Stanley Works, 7.38%, 12/15/02........................... 2,258
--------
Utilities--Electric & Gas (2.1%):
3,450 Duke Power Co., 7.00%, 6/1/00 ........................... 3,475
1,275 Georgia Power Co., 6.13%, 9/1/99......................... 1,275
2,000 Oklahoma Gas & Electric Co.,
6.25%, 10/15/00......................................... 2,005
900 Pennsylvania Power & Light Co.,
6.00%, 6/1/00........................................... 899
--------
7,654
--------
Utilities--Telecommunications (0.9%):
1,000 AT&T Corp., 7.13%, 1/15/02............................... 1,016
2,200 BellSouth Telecommunications,
6.00%, 6/15/02.......................................... 2,173
--------
3,189
--------
Total Corporate Bonds 91,653
--------
</TABLE>
Continued
-68-
<PAGE> 220
AMSOUTH MUTUAL FUNDS
Balanced Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- --------------------------------------------------------- --------
<C> <S> <C>
Municipal Bonds (1.0%):
Illinois (1.0%):
$ 3,800 Chicago Public Building, 7.00%, 1/1/06................... $ 3,824
--------
Total Municipal Bonds 3,824
--------
U.S. Government Agencies (7.7%):
Fannie Mae (2.9%):
2,400 5.50%, 2/2/01............................................ 2,386
5,000 6.21%, 11/07/07.......................................... 4,877
4,000 5.25%, 1/15/09........................................... 3,593
--------
10,856
--------
Freddie Mac (2.4%):
7,000 5.83%, 2/9/06............................................ 6,727
2,000 7.10%, 4/10/07........................................... 2,058
--------
8,785
--------
Government National Mortgage Assoc. (2.4%):
9,626 6.50%, 11/20/28.......................................... 9,093
--------
Total U.S. Government Agencies 28,734
--------
</TABLE>
- --------
Percentages indicated are based on net assets of $372,370.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of $297. Cost
for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................. $62,726
Unrealized depreciation............................................. (7,819)
-------
Net unrealized appreciation......................................... $54,907
=======
</TABLE>
(b) Represents non-income producing securities.
ADR--American Depository Receipt
PLC--Public Limited Co.
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- --------------------------------------------------------- --------
<C> <S> <C>
U.S. Treasury Bonds (3.0%):
$ 10,000 7.25%, 8/15/22........................................... $ 11,075
--------
Total U.S. Treasury Bonds 11,075
--------
U.S. Treasury Securities (13.1%):
Bonds (12.6%):
9,600 5.88%, 11/15/05.......................................... 9,526
7,000 6.50%, 10/15/06.......................................... 7,160
6,000 7.50%, 11/15/16.......................................... 6,693
23,400 6.25%, 8/15/23........................................... 23,212
--------
46,591
--------
Notes (0.5%):
2,000 6.13%, 8/15/07........................................... 2,004
--------
Total U.S. Treasury Securities 48,595
--------
Investment Companies (1.7%):
6,220,560 AmSouth Prime Obligations Fund........................... 6,220
2,512 AmSouth U.S. Treasury Fund............................... 3
--------
Total Investment Companies 6,223
--------
Total (Cost $314,068) (a) $369,272
========
</TABLE>
See notes to financial statements.
-69-
<PAGE> 221
AMSOUTH MUTUAL FUNDS
Limited Maturity Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ---------------------------------------------------------- --------
<C> <S> <C>
Corporate Bonds (79.6%):
Automotive--Finance (9.3%):
$ 1,000 Chrysler Financial Corp., 6.08%, 4/6/01................... $ 998
4,000 Ford Motor Credit Co., 8.20%, 2/15/02..................... 4,149
3,500 General Motors Acceptance Corp., 6.75%, 2/7/02............ 3,509
2,000 Toyota Motor Credit Corp., 5.50%, 9/17/01................. 1,968
--------
10,624
--------
Banking (8.7%):
3,000 Bank One Corp., 6.25%, 9/1/00............................. 3,003
1,500 Firstar Bank, 6.25%, 12/1/02.............................. 1,487
2,000 NationsBank Corp., 5.38%, 4/15/00......................... 1,995
2,500 NationsBank Corp., 5.70%, 9/11/00......................... 2,488
900 Wachovia Bank, 6.30%, 3/15/01............................. 899
--------
9,872
--------
Brokerage Services (4.8%):
3,500 Bear Stearns & Co., Inc., 6.50%, 8/1/02................... 3,465
2,000 Dean Witter Discover & Co., 6.26%, 3/15/00................ 2,005
--------
5,470
--------
Building Products (1.7%):
2,000 Vulcan Materials Co., 5.75%, 4/1/04....................... 1,940
--------
Computers & Peripherals (0.9%):
1,000 IBM Corp., 5.95%, 6/2/03.................................. 981
--------
Consumer Goods (1.7%):
2,000 Procter & Gamble Co., 5.25%, 9/15/03...................... 1,913
--------
Electronic Components/ Instruments (0.8%):
850 Honeywell, Inc., 6.75%, 3/15/02........................... 857
--------
Farm Equipment (2.6%):
3,000 John Deere Capital Corp., 5.85%, 1/15/01.................. 2,981
--------
Financial Services (16.7%):
3,000 Ameritech Capital Funding, 6.13%, 10/15/01................ 2,988
4,200 Associates Corp. of North America, 6.63%, 5/15/01......... 4,210
500 Beneficial Corp., 7.32%, 11/17/99......................... 502
2,000 CIT Group Holdings, 6.38%, 10/1/02........................ 1,983
1,000 Citigroup, Inc., 6.13%, 6/15/00........................... 1,000
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ---------------------------------------------------------- --------
<C> <S> <C>
Corporate Bonds, continued:
Financial Services, continued:
$ 1,000 Commercial Credit Co., 8.26%, 11/1/01..................... $ 1,038
2,500 General Electric Capital Corp., 6.15%, 11/5/01............ 2,491
2,500 Household Finance Co., 8.95%, 9/15/99..................... 2,508
2,500 Household Netherlands, 6.20%, 12/1/03..................... 2,438
--------
19,158
--------
Food Products & Services (2.6%):
1,000 Campbell Soup Co., 6.15%, 12/1/02......................... 996
1,000 McDonald's Corp., 5.90%, 5/11/01.......................... 995
1,000 McDonald's Corp., 6.00%, 6/23/02.......................... 990
--------
2,981
--------
Forest & Paper Products (0.9%):
1,000 Mead Corp., 6.60%, 3/1/02................................. 994
--------
Health Care (1.7%):
2,000 McKesson Corp., 6.88%, 3/1/02............................. 1,985
--------
Industrial Goods & Services (5.3%):
2,000 Air Products & Chemicals, Inc., 8.35%, 1/15/02............ 2,083
1,000 Caterpillar Financial Services, 6.02%, 4/15/02............ 988
3,000 E. I. Dupont de Nemours & Co., 6.50%, 9/1/02.............. 3,007
--------
6,078
--------
Insurance (5.8%):
2,000 American General Finance, 5.75%, 11/01/03................. 1,923
1,500 AON Corp., 6.88%, 10/1/99................................. 1,502
1,000 St. Paul Cos., Inc., Series A, 6.17%, 1/15/01............. 996
2,200 USLife Corp., 6.38%, 6/15/00.............................. 2,199
--------
6,620
--------
Leasing (1.8%):
2,000 USL Capital Corp., 8.13%, 2/15/00......................... 2,024
--------
Office Equipment & Services (1.2%):
1,274 Xerox Corp., 8.13%, 4/15/02............................... 1,331
--------
Oil & Gas Exploration, Production, & Services (1.9%):
2,200 Amoco Co., 6.25%, 10/15/04................................ 2,178
--------
</TABLE>
Continued
-70-
<PAGE> 222
AMSOUTH MUTUAL FUNDS
Limited Maturity Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ---------------------------------------------------------- --------
<C> <S> <C>
Corporate Bonds, continued:
Retail (3.9%):
$ 1,000 Sears, Roebuck and Co., 6.00%, 3/20/03.................... $ 975
3,500 Wal-Mart Stores, Inc., 5.85%, 6/1/00...................... 3,504
--------
4,479
--------
Telecommunications (1.3%):
1,500 AT&T Corp., 5.63%, 3/15/04................................ 1,438
--------
Telecommunications--Equipment (0.9%):
1,000 Lucent Technologies, Inc.,
6.90%, 7/15/01........................................... 1,013
--------
Tools (0.9%):
500 Stanley Works, 7.38%, 12/15/02............................ 514
500 Stanley Works, 5.75%, 3/1/04.............................. 484
--------
998
--------
Utilities--Electric & Gas (2.5%):
1,250 Alabama Power Corp., 5.35%, 11/15/03...................... 1,194
600 Baltimore Gas & Electric Co., 5.50%, 7/15/00.............. 599
1,000 Florida Power Corp., 6.50%, 12/1/99....................... 1,003
--------
2,796
--------
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- --------------------------------------------------------- --------
<C> <S> <C>
Corporate Bonds, continued:
Utilities--Telecommunications (1.7%):
$ 2,000 BellSouth Telecommunications, 6.00%, 6/15/02............. $ 1,975
--------
Total Corporate Bonds 90,686
--------
U.S. Treasury Notes (16.7%):
18,000 7.25%, 5/15/04........................................... 18,971
--------
Total U.S. Treasury Notes 18,971
--------
Investment Companies (2.0%):
2,248,559 AmSouth Prime Obligations Fund........................... 2,248
339 AmSouth U.S. Treasury Fund............................... --*
--------
Total Investment Companies 2,248
--------
Total (Cost $112,420) (a) $111,905
========
</TABLE>
- --------
Percentages indicated are based on net assets of $113,869.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....... $ 592
Unrealized depreciation....... (1,107)
-------
Net unrealized depreciation... $ (515)
=======
</TABLE>
* Due to rounding, figure was below thousand dollar threshold.
See notes to financial statements.
-71-
<PAGE> 223
AMSOUTH MUTUAL FUNDS
Government Income Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ------------------------------------------------------------ ------
<C> <S> <C>
U.S. Government Agencies (84.3%):
Fannie Mae (18.3%):
$ 1,600 5.75%, 4/15/03.............................................. $1,568
------
Government National Mortgage Assoc. (66.0%):
1,360 7.00%, 12/15/26-2/20/29..................................... 1,324
2,207 7.50%, 6/15/24-12/15/25..................................... 2,209
306 8.00%, 7/15/26.............................................. 312
196 8.50%, 12/15/19-2/15/23..................................... 203
874 9.00%, 6/15/18-9/15/22...................................... 921
662 9.50%, 5/15/18-8/15/21...................................... 705
------
5,674
------
Total U.S. Government Agencies 7,242
------
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ------------------------------------------------------------ ------
<C> <S> <C>
U.S. Treasury Securities (10.4%):
Bonds (10.4%):
$ 800 7.50%, 11/15/16............................................. $ 892
------
Total U.S. Treasury Securities 892
------
Investment Companies (4.5%):
387,763 AmSouth U.S. Treasury Fund.................................. 387
------
Total Investment Companies 387
------
Total (Cost $8,566) (a) $8,521
======
</TABLE>
- --------
Percentages indicated are based on net assets of $8,586.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......... $ 103
Unrealized depreciation......... (148)
-----
Net unrealized depreciation..... $ (45)
=====
</TABLE>
See notes to financial statements.
-72-
<PAGE> 224
AMSOUTH MUTUAL FUNDS
Bond Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
---------- --------------------------------------------------------- --------
<C> <S> <C>
Corporate Bonds (46.8%):
Aerospace/Defense (0.8%):
$ 3,000 Boeing Corp., 6.88%, 11/1/06............................. $ 3,000
--------
Appliances (0.1%):
500 Whirlpool Corp., 9.50%, 6/15/00.......................... 514
--------
Automotive (0.2%):
908 General Motors Corp., 9.63%, 12/1/00..................... 945
--------
Automotive--Finance (2.1%):
3,485 Ford Motor Credit Co., 6.25%, 12/8/05.................... 3,341
2,000 General Motors Acceptance Corp., 6.15%, 4/7/07........... 1,898
3,000 Toyota Motor Credit Corp., 5.50%, 9/17/01................ 2,951
--------
8,190
--------
Banking (5.1%):
1,150 Bank of America Corp., 9.50%, 4/1/01..................... 1,206
3,157 Bank One Corp., 7.00%, 7/15/05........................... 3,157
4,000 Fifth Third Bank, 6.75%, 7/15/05......................... 3,965
3,856 J.P. Morgan & Co., 7.63%, 9/15/04........................ 3,952
4,306 NationsBank Corp., 5.38%, 4/15/00........................ 4,296
3,159 SunTrust Banks, Inc., 7.38%, 7/1/06...................... 3,222
--------
19,798
--------
Beverages (0.9%):
3,500 Coca-Cola Enterprises, Inc., 6.38%, 8/1/01............... 3,509
--------
Brokerage Services (2.2%):
2,910 Bear Stearns & Co. Inc., 6.63%, 10/1/04.................. 2,826
3,500 Dean Witter Discover & Co., 6.50%, 11/1/05............... 3,387
750 Merrill Lynch & Co., Inc., 8.25%, 11/15/99............... 756
1,450 Merrill Lynch & Co., Inc., 6.00%, 2/12/03................ 1,419
--------
8,388
--------
Building Products (0.5%):
2,000 Vulcan Materials, 6.00%, 4/1/09.......................... 1,858
--------
Electronic Components/Instruments (0.5%):
2,000 Honeywell, Inc., 7.00%, 3/15/07.......................... 1,998
--------
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
---------- --------------------------------------------------------- --------
<C> <S> <C>
Corporate Bonds, continued:
Entertainment (0.7%):
$ 3,000 Walt Disney Company, 5.13%, 12/15/03..................... $ 2,831
--------
Financial Services (5.7%):
2,000 American Express Credit Corp., 6.50%, 8/1/00............. 2,012
3,500 Ameritech Capital, 5.65%, 1/15/01........................ 3,477
2,000 Associates Corp., 5.75%, 10/15/03........................ 1,913
3,000 Associates Corp., 5.75%, 11/01/03........................ 2,869
3,091 Avco Financial Service Corp., 5.50%, 4/1/00.............. 3,086
3,000 Commercial Credit Co., 7.38%, 3/15/02.................... 3,060
3,000 Commercial Credit Co., 6.50%, 8/1/04..................... 2,951
1,000 Margaretten Financial Corp., 6.75%, 6/15/00.............. 1,006
2,000 Norwest Financial, Inc., 6.63%, 7/15/04.................. 1,970
--------
22,344
--------
Food Products & Services (0.7%):
2,750 Campbell Soup Co., 6.15%, 12/1/02........................ 2,740
--------
Forest & Paper Products (0.8%):
3,000 Mead Corp., 6.60%, 3/1/02................................ 2,981
--------
Industrial Goods & Services (4.4%):
3,000 Air Products & Chemicals, Inc., 8.35%, 1/15/02........... 3,124
2,655 Browning-Ferris Industries, Inc., 6.10%, 1/15/03......... 2,446
2,000 E. I. Dupont de Nemours & Co., 6.50%, 9/1/02............. 2,005
2,570 E. I. Dupont de Nemours & Co., 6.75%, 10/15/02........... 2,596
2,000 First Data Corp., 6.75%, 7/15/05......................... 1,993
1,500 Illinois Tool Works, Inc., 5.88%, 3/1/00................. 1,502
3,456 Rockwell International Corp., 6.63%, 6/1/05.............. 3,433
--------
17,099
--------
Insurance (1.8%):
1,000 AON Corp., 6.88%, 10/1/99................................ 1,001
1,600 Capital Holding Corp., 9.20%, 4/17/01.................... 1,670
330 Chubb Corp., 8.75%, 11/15/99............................. 333
</TABLE>
Continued
-73-
<PAGE> 225
AMSOUTH MUTUAL FUNDS
Bond Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
---------- -------------------------------------------------------- --------
<C> <S> <C>
Corporate Bonds, continued:
Insurance, continued:
$ 1,000 Chubb Corp., 6.15%, 8/15/05............................. $ 963
3,100 Hartford Life, Inc., 6.90%, 6/15/04..................... 3,088
--------
7,055
--------
Office Equipment & Services (0.6%):
2,200 Xerox Corp., 7.15%, 8/1/04.............................. 2,247
--------
Oil & Gas Exploration, Production, & Services (1.8%):
3,158 BP America, Inc., 9.38%, 11/1/00........................ 3,284
1,000 Conoco Inc., 6.35%, 4/15/09............................. 951
864 Exxon Capital Corp., 7.45%, 12/15/01.................... 886
2,000 Phillips Petroleum Co., 6.38%, 3/30/09.................. 1,895
--------
7,016
--------
Pharmaceuticals (0.8%):
3,000 Warner-Lambert Co., 5.75%, 1/15/03...................... 2,936
--------
Photography (0.9%):
3,100 Eastman Kodak, 9.38%, 3/15/03........................... 3,379
--------
Pollution Control Services & Equipment (1.1%):
2,449 Waste Management, Inc., 6.38%, 12/1/03.................. 2,412
2,000 Waste Management, Inc., 7.00%, 5/15/05.................. 1,985
--------
4,397
--------
Railroads (0.3%):
1,000 Union Pacific Corp., 7.00%, 6/15/00..................... 1,006
--------
Retail (2.5%):
2,000 JC Penny & Co., 6.13%, 11/15/03......................... 1,930
3,000 Nike, Inc., 6.38%, 12/1/03.............................. 2,959
4,000 Wal-Mart Stores, Inc., 5.85%, 6/1/00.................... 4,004
1,000 Wal-Mart Stores, Inc., 6.75%, 5/15/02................... 1,013
--------
9,906
--------
Tools (0.5%):
2,000 Stanley Works, 5.75%, 3/1/04............................ 1,938
--------
Utilities--Electric & Gas (6.2%):
3,100 Baltimore Gas & Electric, 7.50%, 1/15/07................ 3,216
2,000 Consolidated Edison Co. of New York, Inc., 6.63%,
2/1/02................................................. 2,013
3,500 National Rural Utilities, 5.00%, 10/1/02................ 3,346
3,100 National Rural Utilities, 6.38%, 10/15/04............... 3,030
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
---------- -------------------------------------------------------- --------
<C> <S> <C>
Corporate Bonds, continued:
Utilities--Electric & Gas, continued:
$ 2,750 Northern States Power Co., 7.88%, 10/1/01............... $ 2,839
2,250 Oklahoma Gas & Electric Co., 6.25%, 10/15/00............ 2,256
2,000 Tampa Electric Co., 6.13%, 5/1/03....................... 1,968
2,500 Virginia Electric & Power Co., 8.00%, 3/1/04............ 2,625
3,500 Wisconsin Electric Power, 6.63%, 11/15/06............... 3,425
--------
24,718
--------
Utilities--Telecommunications (5.6%):
2,000 BellAtlantic Corp., 6.25%, 2/15/04...................... 1,960
3,500 BellSouth Telecommunications, 6.50%, 6/15/05............ 3,439
2,009 Chesapeake & Potomac Telephone, 6.00%, 5/1/03........... 1,971
2,000 GTE California, Inc., 5.63%, 2/1/01..................... 1,983
2,295 GTE Northwest, Inc., Series A, 7.38%, 5/1/01............ 2,335
1,650 GTE Southwest, Inc., Series A, 5.82%, 12/1/99........... 1,650
500 Michigan Bell Telephone, 5.88%, 9/15/99................. 500
2,000 Southern New England Telecommunications Corp.,
6.50%, 2/15/02......................................... 2,003
2,000 Southwestern Bell Telephone, 6.63%, 4/1/05.............. 1,978
4,000 US West Communications Group, 6.63%, 9/15/05............ 3,854
--------
21,673
--------
Total Corporate Bonds 182,466
--------
U.S. Government Agencies (12.8%):
Fannie Mae (8.9%):
3,000 6.59%, 5/21/02.......................................... 3,036
7,500 7.05%, 11/12/02......................................... 7,706
17,600 5.13%, 2/13/04.......................................... 16,716
7,300 6.56% 11/26/07.......................................... 7,148
--------
34,606
--------
</TABLE>
Continued
-74-
<PAGE> 226
AMSOUTH MUTUAL FUNDS
Bond Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
---------- --------------------------------------------------------- --------
<C> <S> <C>
U.S. Government Agencies, continued:
Freddie Mac (0.7%):
$ 700 7.14%, 3/12/07........................................... $ 704
2,000 7.10%, 4/10/07........................................... 2,058
--------
2,762
--------
Government National Mortgage Assoc. (2.3%):
9,279 7.00%, 11/20/28.......................................... 9,014
--------
Tennessee Valley Authority (0.9%):
4,000 5.38%, 11/13/08.......................................... 3,632
--------
Total U.S. Government Agencies 50,014
--------
U.S. Treasury Securities (35.3%):
Bonds (30.1%):
8,000 5.75%, 8/15/03........................................... 7,958
15,000 5.88%, 11/15/05.......................................... 14,884
21,000 6.50%, 10/15/06.......................................... 21,480
17,833 3.38%, 1/15/07........................................... 17,070
17,000 7.50%, 11/15/16.......................................... 18,963
37,360 6.25%, 8/15/23........................................... 37,060
--------
117,415
--------
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
---------- -------------------------------------------------------- --------
<C> <S> <C>
U.S. Treasury Securities, continued:
Notes (4.4%):
$ 17,000 6.13%, 8/15/07.......................................... $ 17,037
--------
Strips (0.8%):
4,000 2/15/04................................................. 3,067
--------
Total U.S. Treasury Securities 137,519
--------
Investment Companies (3.4%):
13,287,510 AmSouth Prime Obligations Fund.......................... 13,288
7 AmSouth U.S. Treasury Fund.............................. --*
--------
Total Investment Companies 13,288
--------
Total (Cost $385,361) (a) $383,287
========
</TABLE>
- --------
Percentages indicated are based on net assets of $389,817.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....... $ 5,701
Unrealized depreciation....... (7,775)
-------
Net unrealized depreciation... $(2,074)
=======
</TABLE>
* Due to rounding, figure was below thousand dollar threshold.
See notes to financial statements.
-75-
<PAGE> 227
AMSOUTH MUTUAL FUNDS
Municipal Bond Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- -------------------------------------------------------- --------
<C> <S> <C>
Municipal Bonds (98.0%):
Alabama (56.5%):
$ 2,245 Alabama State Agriculture & Mechanical University
Revenue, 4.55%, 11/1/09, Callable 5/1/08 @ 102, MBIA .. $ 2,155
2,355 Alabama State Agriculture & Mechanical University
Revenue, 4.65%, 11/1/10, Callable 5/1/08 @ 102, MBIA .. 2,248
2,035 Alabama State Agriculture & Mechanical University
Revenue, 6.50%, 11/1/25, Callable 11/1/05 @ 102, MBIA . 2,287
3,060 Alabama State Corrections Institution, Series A, 4.90%,
4/1/03, MBIA .......................................... 3,118
1,520 Alabama State Industrial Access Road & Bridge Corp.,
Capital Improvements, Series A, 4.60%, 6/1/03 ......... 1,528
3,700 Alabama State Judicial Building Authority, Judicial
Facilties Project, 4.75%, 1/1/05, AMBAC ............... 3,739
3,880 Alabama State Judicial Building Authority, Judicial
Facilties Project, 4.85%, 1/1/06, AMBAC ............... 3,927
2,000 Alabama State Mental Health Finance Authority, Special
Tax, 4.88%, 5/1/03, MBIA .............................. 2,039
7,350 Alabama State Public School & College Authority, 4.75%,
12/1/03, Callable 6/1/03 @ 103 ........................ 7,474
3,390 Alabama State Public School & College Authority, 5.00%,
12/1/05, Callable 6/1/03 @ 103 ........................ 3,479
10,000 Alabama State Public School & College Authority Revenue,
Series A, 4.38%, 8/1/04 ............................... 9,981
5,000 Alabama State Public School & College Authority, Capital
Improvement, 4.75%, 11/1/06, Callable 11/1/05 @ 101 ... 5,039
1,760 Alabama State Water Pollution Control Authority,
Revolving Fund, Series B, 5.25%, 8/15/08, Callable
8/15/06 @ 100, AMBAC .................................. 1,805
1,350 Alabama State Water Pollution Control Authority,
Revolving Fund, Series B, 5.38%, 8/15/10, Callable
8/15/06 @ 100, AMBAC .................................. 1,379
2,495 Alabama State Water Pollution Control Authority,
Revolving Fund, Series B, 5.40%, 8/15/11, Callable
8/15/06 @ 100, AMBAC .................................. 2,552
5,000 Alabama State Water Pollution Control Authority,
Revolving Fund, Series B, 5.50%, 8/15/16, Callable
8/15/06 @ 100, AMBAC .................................. 5,046
3,500 Alabama State, Series A, GO, 4.60%, 10/1/05............. 3,517
1,000 Auburn University, University Revenues, General Fee,
5.25%, 6/1/06, Callable 6/1/03 @ 102, MBIA ............ 1,032
1,040 Birmingham Capital Improvement, Series B, GO, 4.80%,
10/1/08, Callable 4/1/07 @ 102 ........................ 1,039
1,375 Birmingham Waterworks & Sewer Board, Water & Sewer
Revenue, 5.90%, 1/1/03, Callable 1/1/02 @ 102 ......... 1,453
1,340 Birmingham, Capital Improvements, Series A, GO, 4.75%,
10/1/10, Callable 4/1/08 @ 102 ........................ 1,309
1,430 Birmingham, Capital Improvements, Series A, GO, 4.85%,
10/1/11, Callable 4/1/08 @ 102 ........................ 1,396
1,500 Birmingham, GO, 4.90%, 7/1/06........................... 1,525
1,300 Birmingham, Industrial Water Board, Industrial Water
Supply, 5.50%, 3/1/06, Pre-refunded 3/1/05 @ 100 ...... 1,362
3,465 Birmingham, Industrial Water Board, Industrial Water
Supply, 6.20%, 7/1/08, Pre-refunded 1/1/07 @ 100 ...... 3,663
1,100 Birmingham, Industrial Water Board, Industrial Water
Supply, ETM, 5.30%, 3/1/04, Callable 3/1/03 @ 102 ..... 1,139
1,000 Birmingham, Industrial Water Board, Industrial Water
Supply, ETM, 5.40%, 3/1/05, Callable 3/1/03 @ 102 ..... 1,042
1,045 Clark & Mobile County, Gas District, 5.60%, 12/1/17,
Callable 12/1/06 @ 102, MBIA .......................... 1,064
9,500 Daphne, Special Care Facilities Financing Authority,
Presbyterian Retirement Corp., 7.30%, 8/15/18, Pre-
refunded 8/15/01 @ 100 ................................ 10,071
720 Decatur, Warrants, Series E, Limited GO, 5.10%, 8/1/05,
Callable 8/1/02 @ 102 ................................. 738
760 Decatur, Warrants, Series E, Limited GO, 5.20%, 8/1/06,
Callable 8/1/02 @ 102 ................................. 779
750 Decatur, Warrants, Series E, Limited GO, 5.25%, 8/1/08,
Callable 8/1/02 @ 102 ................................. 763
780 Decatur, Warrants, Series E, Limited GO, 5.30%, 8/1/09,
Callable 8/1/02 @ 102 ................................. 792
2,845 Florence, Warrants, Series A, GO, 4.65%, 9/1/03, MBIA... 2,879
390 Florence, Warrants, Series A, GO, 4.35%, 12/1/07, FSA... 380
</TABLE>
Continued
-76-
<PAGE> 228
AMSOUTH MUTUAL FUNDS
Municipal Bond Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- -------------------------------------------------------- --------
<C> <S> <C>
Municipal Bonds, continued:
Alabama, continued:
$ 405 Florence, Warrants, Series A, GO, 4.40%, 12/1/08........ $ 392
425 Florence, Warrants, Series A, GO, 4.50%, 12/1/09........ 410
445 Florence, Warrants, Series A, GO, 4.60%, 12/1/10,
Callable 12/1/08 @ 102 ................................ 428
790 Florence, Warrants, Series B, GO, 4.35%, 12/1/07, FSA... 769
825 Florence, Warrants, Series B, GO, 4.40%, 12/1/08, FSA... 798
865 Florence, Warrants, Series B, GO, 4.50%, 12/1/09,
Callable 12/1/08 @ 102, FSA ........................... 834
900 Florence, Warrants, Series B, GO, 4.60%, 12/1/10,
Callable 12/1/08 @ 102, FSA ........................... 865
4,700 Gadsden, East Alabama Medical Clinic Board, Baptist
Hospital of Gadsden, Inc., Series A, 7.80%, 11/1/21,
Pre-refunded 11/1/01 @ 102 ............................ 5,150
5,450 Hoover, Warrants, GO, 4.50%, 3/1/13, Pre-refunded 3/1/03
@ 100 ................................................. 5,016
550 Huntsville Electric, 4.60%, 12/1/09, Callable 12/1/07 @
102.................................................... 534
660 Huntsville Electric, 4.70%, 12/1/10, Callable 12/1/07 @
102.................................................... 639
680 Huntsville Electric, 4.80%, 12/1/11, Callable 12/1/07 @
102.................................................... 656
3,120 Huntsville, Warrants, Series B, GO, 4.00%, 11/1/05...... 3,026
3,245 Huntsville, Warrants, Series B, GO, 4.00%, 11/1/06...... 3,108
3,380 Huntsville, Warrants, Series B, GO, 4.10%, 11/1/07...... 3,218
2,000 Huntsville, Water System, Warrants, 5.00%, 5/1/02,
AMBAC.................................................. 2,042
3,125 Huntsville, Water System, Warrants, 5.05%, 5/1/03,
Callable 5/1/02 @ 102, AMBAC .......................... 3,202
1,000 Jefferson County Board of Education, Capital Outlay,
5.40%, 2/15/10, Callable 2/15/03 @ 102, AMBAC ......... 1,053
4,000 Jefferson County, GO, 5.30%, 4/1/09, Pre-refunded 4/1/03
@ 102 ................................................. 4,070
2,400 Jefferson County, Sewer Revenue Warrants, 5.40%, 9/1/04,
Pre-refunded 3/1/03 @ 102.5, MBIA ..................... 2,539
5,000 Jefferson County, Warrants, GO, 5.00%, 4/1/04, Callable
4/1/03 @ 102 .......................................... 5,119
2,000 Mobile County Board of School Commissioners, Warrants,
Capital Outlay, 4.80%, 3/1/02, AMBAC .................. 2,030
1,350 Mobile County, Series A, GO, 5.00%, 2/1/04, Callable
2/1/03 @ 102 .......................................... 1,382
1,000 Mobile County, Warrants, Series A, Limited GO, 5.00%,
2/1/04, Callable 2/1/03 @ 102 ......................... 1,024
5,000 Mobile County, Warrants, Series A, Limited GO, 5.10%,
2/1/05, Callable 2/1/03 @ 102 ......................... 5,142
1,630 Mobile, Warrants, GO, 6.50%, 2/15/05, AMBAC............. 1,782
1,685 Mobile, Warrants, GO, 6.50%, 2/15/06, AMBAC............. 1,857
2,700 Mobile, Warrants, GO, 4.85%, 2/15/09, Callable 2/15/00 @
100 ................................................... 2,662
3,250 Mobile, Water & Sewer Commissioners, Water & Sewer
Revenue, 5.00%, 1/1/05, FGIC .......................... 3,327
1,500 Montgomery County, Warrants, GO, 5.00%, 11/1/04,
Callable 11/1/04 @ 102 ................................ 1,539
1,040 Montgomery, Warrants, Series A, GO, 5.00%, 5/1/05,
Callable 5/1/03 @ 102 ................................. 1,066
1,000 Montgomery, Warrants, Series A, GO, 5.00%, 5/1/06,
Callable 5/1/03 @ 102 ................................. 1,019
3,000 Montgomery, Waterworks & Sanitary Sewer Board, 5.50%,
9/1/08, Callable 9/1/06 @ 101, MBIA ................... 3,135
1,000 Montgomery, Waterworks & Sanitary Sewer Board, Series B,
5.70%, 9/1/02 ......................................... 1,041
2,500 Montgomery, Waterworks & Sanitary Sewer Board, Series B,
6.25%, 9/1/08, Callable 9/1/02 @ 102 .................. 2,667
3,565 Montgomery, Waterworks & Sanitary Sewer Board, Series B,
6.30%, 9/1/10, Callable 9/1/02 @ 102 .................. 3,808
1,005 Shelby County, Warrants, Board of Education, Capital
Outlay, 4.80%, 2/1/10, Callable 2/1/09 @ 101, AMBAC.... 986
1,990 Shelby County, Warrants, Series A, 5.60%, 8/1/02, AMBAC. 2,070
1,830 Shelby County, Warrants, Series A, 5.70%, 2/1/03, AMBAC. 1,912
335 Talladega County, Industrial Development Board, Cyprus 1
Project, 9.75%, 12/1/13 ............................... 336
</TABLE>
Continued
-77-
<PAGE> 229
AMSOUTH MUTUAL FUNDS
Municipal Bond Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- --------------------------------------------------------- --------
<C> <S> <C>
Municipal Bonds, continued:
Alabama, continued:
$ 740 Tuscaloosa County, Warrants, GO, 5.60%, 10/1/04.......... $ 780
1,200 University Alabama General Fee, 4.60%, 6/1/09, Callable
6/1/07 @ 102, MBIA ..................................... 1,171
1,300 University Alabama General Fee, 4.70%, 6/1/10, Callable
6/1/07 @ 102, MBIA ..................................... 1,265
1,500 University Alabama General Fee, 4.75%, 6/1/11, Callable
6/1/07 @ 102, MBIA ..................................... 1,450
2,185 University of South Alabama, University Revenues,
Tuition, 4.70%, 11/15/08, Callable 5/15/06 @ 102, AMBAC.. 2,163
--------
183,221
--------
California (1.5%):
4,765 San Mateo County, Transit District Sales Tax Revenue,
Series A, 5.25%, 6/1/16, Callable 6/1/09 @ 101, FSA .... 4,744
--------
Florida (5.7%):
1,150 Escambia County, Utilities Authority Revenue, Series D,
5.00%, 1/1/04, FGIC .................................... 1,179
2,000 Escambia County, Utilities Authority Revenue, Series D,
5.00%, 1/1/05, FGIC .................................... 2,051
6,500 Florida State Board of Education, Capital Outlay, Series
A, GO, 5.00%, 6/1/08 ................................... 6,606
8,070 Reedy Creek, Improvement District, Series 1, 5.50%,
10/1/08, Callable 10/1/07 @ 101, AMBAC ................. 8,510
--------
18,346
--------
Michigan (2.2%):
7,000 Municipal Bond Authority Revenue, 5.00%, 12/1/05......... 7,191
--------
Minnesota (0.7%):
2,175 Centennial Independent School District, No. 12, Series A,
GO, 5.60%, 2/1/07, MBIA ................................ 2,296
--------
Mississippi (0.6%):
2,000 Mississippi State, Capital Improvements, Series A, GO,
5.20%, 8/1/11, Callable 8/1/03 @ 100 ................... 2,007
--------
Missouri (2.4%):
7,535 Missouri State, Water Pollution, Series B, GO, 5.00%,
8/1/07, Callable 8/1/03 @ 102 .......................... 7,699
--------
New York (0.9%):
1,150 Hempstead Town, GO, 5.00%, 2/15/09, Callable 2/15/06 @
102 .................................................... 1,163
1,500 Municipal Assistance Corp. for New York City, GO, 6.00%,
7/1/05 ................................................. 1,615
--------
2,778
--------
North Carolina (2.3%):
355 Durham, Water & Sewer Revenue, 4.60%, 6/1/05............. 357
675 Durham, Water & Sewer Revenue, 4.60%, 6/1/06............. 676
555 Durham, Water & Sewer Revenue, 4.60%, 6/1/07............. 552
765 Durham, Water & Sewer Revenue, 4.60%, 6/1/08............. 754
5,000 North Carolina State, Series A, GO, 4.75%, 4/1/09,
Callable 4/1/08 @ 100.5 ................................ 4,988
--------
7,327
--------
</TABLE>
Continued
-78-
<PAGE> 230
AMSOUTH MUTUAL FUNDS
Municipal Bond Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- -------------------------------------------------------- --------
<C> <S> <C>
Municipal Bonds, continued:
Oregon (2.3%):
$ 2,365 Salem, GO, 4.45%, 12/1/10, Callable 6/1/09 @ 100, FSA... $ 2,247
5,285 Washington County, Criminal Justice Facilities, GO,
5.00%, 12/1/09, Callable 12/1/07 @ 100 ................ 5,331
--------
7,578
--------
South Carolina (2.9%):
5,525 Beaufort County, School District, GO, Series B, 4.10%,
2/1/09, Callable 2/1/07 @ 101, SCSDE .................. 5,151
4,325 Beaufort County, School District, GO, Series B, 4.90%,
3/1/09, Callable 3/1/05 @ 101 ......................... 4,325
--------
9,476
--------
Tennessee (3.3%):
2,000 Jackson, Improvements, 5.00%, 3/1/10, Pre-refunded
3/1/05 @102 ........................................... 1,997
3,000 Metropolitan Government, Nashville & Davidson County,
GO, 5.25%, 5/15/06 .................................... 3,118
5,495 Tennessee State, Series B, GO, 4.60%, 5/1/07, Callable
5/1/06 @ 100 .......................................... 5,487
--------
10,602
--------
Texas (6.7%):
3,000 Dallas County, Series A, GO, 5.25%, 8/15/09............. 3,080
4,000 Mesquite Independent School District, Series A, GO,
4.70%, 8/15/08, Callable 8/15/07 @ 100 ................ 3,967
5,000 Texas State, Series B, GO, 5.25%, 10/1/08, Callable
10/1/03 @ 100 ......................................... 5,082
3,575 University of Texas, 4.60%, 7/1/08, Callable 7/1/06 @
100.................................................... 3,534
5,455 University of Texas, Series B, 4.25%, 8/15/09, Callable
8/15/07 @ 100 ......................................... 5,143
1,000 Whitehouse Texas Independent School District, GO, 4.80%,
2/15/12, Callable 2/15/08 @ 100 ....................... 956
--------
21,762
--------
Utah (4.6%):
4,805 Davis County, School District, GO, 4.38%, 6/1/08, School
Board Guaranty ........................................ 4,662
3,810 Jordan School District, GO, 4.80%, 6/15/08, Callable
6/15/07 @ 100 ......................................... 3,817
6,000 Utah State, GO, Series F, 5.50%, 7/1/07................. 6,343
--------
14,822
--------
Virginia (3.3%):
2,000 Virginia College Building Authority, Series A, 5.00%,
9/1/12, Callable 9/1/07 @ 101.......................... 1,975
5,000 Virginia State, GO, 5.00%, 6/1/08, Callable 6/1/07 @
100,................................................... 5,110
3,500 Virginia State, Public School Authority, Series S,
5.25%, 8/1/09 ......................................... 3,613
--------
10,698
--------
Washington (2.1%):
6,500 Washington State, GO, 5.75%, 9/1/08..................... 6,930
--------
Total Municipal Bonds 317,477
--------
</TABLE>
Continued
-79-
<PAGE> 231
AMSOUTH MUTUAL FUNDS
Municipal Bond Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- --------------------------------------------------------- --------
<C> <S> <C>
Investment Companies (2.0%):
33,471 Federated Tax-Free Fund.................................. $ 33
6,367,832 Goldman Sachs Tax-Free Fund.............................. 6,368
--------
Total Investment Companies 6,401
--------
Total (Cost $321,757) (a) $323,878
========
</TABLE>
- --------
Percentages indicated are based on net assets of $324,003.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........ $5,063
Unrealized depreciation........ (2,942)
------
Net unrealized appreciation.... $2,121
======
</TABLE>
AMBAC--Insured by AMBAC Indemnity Corp.
ETM--Escrowed to Maturity
FGIC--Insured by Financial Guaranty Insurance Corp.
FSA--Insured by Financial Security Assurance.
GO--General Obligation
MBIA--Insured by Municipal Bond Insurance Assoc.
SCSDE--South Carolina School District Enhancement.
See notes to financial statements.
-80-
<PAGE> 232
AMSOUTH MUTUAL FUNDS
Florida Tax-Free Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ----------------------------------------------------------- -------
<C> <S> <C>
Florida Municipal Bonds (97.3%):
$ 545 Altamonte Springs, Health Facilities Authority, Hospital
Revenue, ETM, 5.60%, 10/1/10.............................. $ 578
1,000 Bay County, Florida Resource Recovery Revenue, 6.00%,
7/1/01, MBIA.............................................. 1,037
1,500 Broward County School District, GO, 5.60%, 2/15/07,
Callable 2/15/03 @ 102.................................... 1,567
2,000 Broward County School District, GO, 6.00%, 2/15/07,
Callable 2/15/02 @ 102.................................... 2,116
1,000 Dade County School District, 5.75%, 8/1/03, AMBAC.......... 1,054
1,000 Dade County School District, GO, 6.00%, 7/15/06............ 1,084
1,000 Dade County School District, GO, 5.00%, 2/15/14, Callable
2/15/07 @ 101, MBIA....................................... 979
1,000 Dade County, Aviation Authority, Series 1994 B, 6.25%,
10/1/04, AMBAC............................................ 1,087
1,115 Dade County, Public Services, Tax Revenue, 5.00%, 10/1/12,
Callable 10/1/09 @ 101, FSA............................... 1,105
1,000 Dade County, Water & Sewer System Revenue, 4.70%, 10/1/04,
FGIC...................................................... 1,016
1,000 Escambia County, Utility Authority, Utility System Revenue,
5.00%, 1/1/08, FGIC....................................... 1,015
755 Florida Housing Finance Agency, Homeowner Mortgages, Series
1995 A-1, 5.65%, 1/1/09, Callable 1/1/06 @ 102 ........... 776
1,000 Florida State Board of Education, GO, 5.00%, 6/1/10,
Callable 6/1/05 @ 101..................................... 1,002
515 Florida State Board of Education, GO, 7.25%, 6/1/23,
Callable 6/1/00 @ 102 .................................... 541
1,355 Florida State Board of Education, Lottery Revenue, Series
A, 5.00%, 7/1/09, Callable 7/1/08 @ 101, FGIC............. 1,369
1,000 Florida State Board of Education, Series A, GO, 4.80%,
1/1/09, Callable 1/1/07 @ 101............................. 995
1,000 Florida State Board of Education, Series A, GO, 5.00%,
1/1/15, Callable 1/1/08 @ 101............................. 975
2,000 Florida State Board of Education, Series B, GO, 5.38%,
6/1/08, Callable 6/1/07 @ 101............................. 2,086
1,000 Florida State Board of Education, Series B, GO, 5.00%,
6/1/08.................................................... 1,016
1,000 Florida State Board of Education, Series E, GO, 5.10%,
6/1/13, Callable 6/1/03 @ 101............................. 993
3,310 Florida State Department of Transportation, Right of Way,
Series B, GO, 5.50%, 7/1/08, Callable 7/1/07 @ 101........ 3,487
1,000 Florida State Division of Bond Finance, Department of
General Services, Preservation 2000,
Series A, 5.50%, 7/1/08, FSA.............................. 1,052
1,000 Florida State Division of Bond Finance, Department of
General Services, Preservation 2000,
Series A, 5.70%, 7/1/09, Callable 7/1/05 @ 101, AMBAC..... 1,048
1,000 Florida State Division of Bond Finance, Department of
General Services, Preservation 2000,
Series A, 5.00%, 7/1/12, Callable 7/1/07 @ 101, AMBAC..... 990
2,000 Florida State Division of Bond Finance, Department of
General Services, Series B, 5.50%, 7/1/05, AMBAC.......... 2,108
1,000 Florida State Division of Bond Finance, Department of
Natural Resources, Preservation 2000,
Series A, 5.40%, 7/1/07, Callable 7/1/03 @ 101, FSA....... 1,027
1,000 Florida State Division of Bond Finance, Department of
Natural Resources, Save Our Coast, 6.30%, 7/1/04,
Callable 7/1/01 @ 101, MBIA............................... 1,052
1,000 Florida State Turnpike Authority, Turnpike Revenue, Series
A, 5.50%, 7/1/11, Callable 7/1/05 @ 101, FGIC............. 1,027
1,000 Florida State Turnpike Authority, Turnpike Revenue, Series
A, 5.00%, 7/1/12, Callable 7/1/09 @ 101, FSA.............. 992
890 Florida State, GO, Senior Lien, Jacksonville
Transportation, 6.25%, 7/1/06............................. 978
1,000 Florida State, GO, Senior Lien, Jacksonville
Transportation, 5.00%, 7/1/11, Callable 7/1/09 @ 101, FSA. 996
1,000 Florida State, GO, Senior Lien, Jacksonville
Transportation, 5.25%, 7/1/15, Callable 7/1/07 @ 101...... 999
1,250 Ft. Lauderdale, Park Improvement Project, GO, 5.50%,
7/1/17, Callable 1/1/04 @ 101............................. 1,261
1,000 Hillsborough County, Capital Improvements, County Center
Project, Series B, 5.00%, 7/1/13, Callable 7/1/06 @ 102,
MBIA...................................................... 983
750 Hillsborough County, Environmental Land, GO, 6.00%,
7/1/03*, Callable 7/1/02 @ 102, AMBAC-TCRS................ 797
1,000 Hillsborough County, Solid Waste & Resource Recovery
Revenue, 5.30%, 10/1/03, MBIA............................. 1,040
</TABLE>
Continued
-81-
<PAGE> 233
AMSOUTH MUTUAL FUNDS
Florida Tax-Free Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares
or
Principal Security Market
Amount Description Value
--------- ---------------------------------------------------------- -------
<C> <S> <C>
Florida Municipal Bonds, continued:
$ 1,000 Homestead, Special Insurance Assessment Revenue, 4.90%,
9/1/00, MBIA............................................. $ 1,014
1,000 Jacksonville Electric Authority, St. John's River Issue 2,
Series 15, 4.75%, 10/1/07, Callable 4/1/06 @ 101......... 1,004
1,000 Jacksonville Electric Authority, St. John's River Issue 2,
Series 16, 5.00%, 10/1/10, Callable 10/1/03 @ 101........ 1,001
1,000 Jacksonville, District Water & Sewer Revenue, ETM, 5.20%,
10/1/02, MBIA............................................ 1,031
1,010 Jacksonville, Excise Tax Revenue, Series A, 5.50%,
10/1/05, FGIC............................................ 1,067
1,500 Kissimmee Utility Authority, Electric System Revenue,
4.50%, 10/1/05........................................... 1,505
500 Manatee County School Board, Certificates of
Participation, 7/1/09, Callable 7/1/06 @ 102, MBIA....... 543
1,000 Miami Beach, Water & Sewer Revenue, 5.38%, 9/1/08,
Callable 9/1/05 @ 102, FSA............................... 1,041
1,675 Okeechobee Utility Authority, Utility System Revenue,
5.25% 10/1/14, Callable 10/1/09 @ 101, FSA............... 1,680
1,000 Orange County, Sales Tax Revenue, 4.80%, 1/1/17, Callable
1/1/07 @ 101, FGIC....................................... 930
1,000 Orlando & Orange County Expressway Authority, Expressway
Revenue, Senior Lien, 4.80%, 7/1/01, AMBAC............... 1,015
1,500 Orlando Utilities Commission, Water & Electric Revenue,
Series B, 5.10%, 10/1/11, Callable 10/1/06 @ 100......... 1,504
1,500 Orlando, Wastewater System Revenue, Series B, 4.90%,
10/1/06, Callable 10/1/03 @ 102, AMBAC................... 1,527
1,000 Osceola County, Capital Improvements, 5.00%, 9/1/02, MBIA. 1,026
1,000 Palm Beach County, Criminal Justice Facilities, 5.38%,
6/1/10, FGIC............................................. 1,035
1,000 Pasco County, Water & Sewer Revenue, Series A, 5.50%,
10/1/03, Callable 10/1/02 @ 102, FGIC.................... 1,048
1,000 Port of Palm Beach, 6.25%, 9/1/08, Callable 9/1/02 @ 102,
MBIA..................................................... 1,072
1,000 Reedy Creek, Improvement District, Series A, GO, 5.60%,
6/1/10, Callable 6/1/05 @ 100, MBIA...................... 1,033
1,000 Reedy Creek, Improvement District, Series C, GO, 4.90%,
6/1/08, Callable 12/1/05 @ 101, AMBAC.................... 1,009
1,000 Seminole County, Local Option Gas Tax Revenue, 5.00%,
10/1/02, FGIC............................................ 1,026
1,000 St. Johns River Management District, Land Acquisition,
5.10%, 7/1/09, Callable 7/1/05 @ 100, FSA................ 1,012
1,000 St. Petersburg, Utility Tax Revenue, 5.85%, 6/1/02........ 1,043
1,000 Sunshine Skyway Revenue, 6.60%, 7/1/08 *, Callable 7/1/01
@ 101.................................................... 1,049
1,000 Tallahassee, Consolidated Utility System Revenue, 5.80%,
10/1/08, Callable 10/1/03 @ 102.......................... 1,071
1,000 Tampa Sports Authority, Local Option Sales Tax Revenue,
Stadium Project, 6.00%, 1/1/06, MBIA..................... 1,080
1,000 Tampa Water Utility Systems, Series B, 4.75%, 10/1/27,
Callable 10/1/08 @ 101, FGIC............................. 884
750 Tampa, Water & Sewer Revenue, 5.25%, 10/1/12, Callable
10/1/05 @ 102, FGIC...................................... 757
1,000 Tampa-Hillsborough County, Expressway, 5.00%, 7/1/10,
Callable 7/1/07 @ 101.................................... 1,003
1,000 Volusia County Sales Tax Revenue, 5.00%, 10/1/13, Callable
10/1/08 @ 101, MBIA...................................... 986
1,000 Volusia County School District, GO, 5.30%, 6/1/01, FSA.... 1,023
-------
Total Florida Municipal Bonds 74,247
-------
Investment Companies (1.6%):
6,693 AmSouth Tax-Exempt Fund................................... 7
1,232,054 Dreyfus Florida Money Market Fund......................... 1,232
-------
Total Investment Companies 1,239
-------
Total (Cost $75,561) (a) $75,486
=======
</TABLE>
Continued
-82-
<PAGE> 234
AMSOUTH MUTUAL FUNDS
Florida Tax-Free Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
- --------
Percentages indicated are based on net assets of $76,312.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....... $ 1,026
Unrealized depreciation....... (1,101)
-------
Net unrealized depreciation... $ (75)
=======
</TABLE>
* Put and demand features exist allowing the Fund to require the repurchase of
the instrument within variable time periods including daily, weekly, monthly,
or semiannually.
AMBAC--Insured by AMBAC Indemnity Corp.
ETM--Escrowed to Maturity
FGIC--Insured by Financial Guaranty Insurance Corp.
FSA--Insured by Financial Security Assurance
GO--General Obligation
MBIA--Insured by Municipal Bond Insurance Assoc.
TCRS--Transferrable Custodial Receipts
See notes to financial statements.
-83-
<PAGE> 235
AMSOUTH MUTUAL FUNDS
U.S. Treasury Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
--------- --------------------------------------------------------- ---------
<C> <S> <C>
U.S. Treasury Bills (35.4%):
$11,000 8/5/99................................................... $ 10,996
5,000 8/12/99.................................................. 4,993
10,000 8/19/99.................................................. 9,977
15,000 8/26/99.................................................. 14,955
10,000 9/2/99................................................... 9,960
10,000 9/16/99.................................................. 9,944
10,000 9/23/99.................................................. 9,932
5,000 10/7/99.................................................. 4,958
10,000 10/21/99................................................. 9,900
10,000 10/28/99................................................. 9,888
10,000 11/12/99................................................. 9,864
10,000 12/16/99................................................. 9,823
--------
Total U.S. Treasury Bills 115,190
--------
U.S. Treasury Notes (26.3%):
10,000 8.00%, 8/15/99........................................... 10,012
10,000 5.88%, 8/31/99........................................... 10,009
5,000 7.13%, 9/30/99........................................... 5,020
10,000 6.00%, 10/15/99.......................................... 10,027
10,000 7.50%, 10/31/99.......................................... 10,069
15,000 7.88%, 11/15/99.......................................... 15,133
10,000 7.75%, 11/30/99.......................................... 10,085
5,000 7.75%, 1/31/00........................................... 5,064
10,000 8.50%, 2/15/00........................................... 10,181
--------
Total U.S. Treasury Notes 85,600
--------
</TABLE>
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
--------- ------------------------------------------------------- ---------
<C> <S> <C>
Repurchase Agreements (34.8%):
$56,604 C.S. First Boston Corp., 5.03%, dated 7/30/99, due
8/2/99, proceeds at maturity of $56,604,
(Collateralized by $47,066 U.S. Treasury Bonds, 8.13%,
8/15/99--Market value $58,165) ....................... $ 56,604
56,604 Solomon Smith Barney, 5.03%, dated 7/30/99, due 8/2/99,
proceeds at maturity of $56,604, (Collateralized by
$57,736 Freddie Mac, 5.75%, 4/15/08 and Fannie Mae,
5.63%, 5/14/04--Market value $57,018) ................ 56,604
--------
Total Repurchase Agreements 113,208
--------
Total (Cost $313,998) (a) $313,998
========
</TABLE>
- --------
Percentages indicated are based on net assets of $325,237.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
See notes to financial statements.
-84-
<PAGE> 236
AMSOUTH MUTUAL FUNDS
Prime Obligations Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
--------- --------------------------------------------------------- ---------
<C> <S> <C>
Commercial Paper--Foreign (4.4%):
Banking (1.5%):
$10,000 Toronto Dominion Holdings, 5.01%, 12/7/99................ $ 9,822
--------
Financial Services (1.5%):
10,000 Island Finance Puerto Rico, 5.13%, 10/18/99.............. 9,889
--------
Food Products & Services (1.4%):
10,000 Canadian Wheat Board, 4.74%, 8/20/99..................... 9,975
--------
Total Commercial Paper--Foreign 29,686
--------
Certificates of Deposit (3.7%):
Banking (3.7%):
10,000 BankAmerica, 5.24%, 9/24/99.............................. 10,001
10,000 Canadian Imperial Bank of Commerce, 5.01%, 2/7/00........ 9,998
5,000 Harris Trust, 5.05%, 2/14/00............................. 4,999
--------
Total Certificates of Deposit 24,998
--------
Corporate Bonds (3.7%):
Brokerage Services (1.5%):
5,000 Bear Stearns & Co., Inc., 6.50%, 7/5/00.................. 5,037
5,000 Morgan Stanley Dean Witter, 5.89%, 3/20/00............... 5,022
--------
10,059
--------
Electric Utility (0.7%):
5,000 Alabama Power Co., 6.00%, 3/1/00......................... 5,022
--------
Financial Services (0.8%):
5,000 American General Finance Corp., 7.25%, 4/15/00........... 5,051
--------
Food Products & Services (0.7%):
5,000 Diagio PLC, 6.50%, 9/15/99............................... 5,005
--------
Total Corporate Bonds 25,137
--------
Floating Rate Funding Agreements (5.5%):
Insurance (5.5%):
12,000 General American Life Insurance Co., 5.31%*, 9/1/99**.... 12,000
12,500 Monumental Life Insurance Co., 5.33%*, 8/1/99**.......... 12,500
12,500 Monumental Life Insurance Co., 5.38%*, 8/1/99**.......... 12,500
--------
Total Floating Rate Funding Agreements 37,000
--------
</TABLE>
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
--------- --------------------------------------------------------- ---------
<C> <S> <C>
Commercial Paper--Domestic (69.2%):
Agriculture (3.0%):
$10,000 Cargill Inc., 4.77%, 8/2/99.............................. $ 9,999
10,000 Monsanto Co., 4.91%, 9/21/99............................. 9,930
--------
19,929
--------
Aircraft Leasing (3.0%):
10,000 International Lease Finance Corp., 4.80%, 8/5/99......... 9,995
10,000 International Lease Finance Corp., 4.74%, 8/13/99........ 9,984
--------
19,979
--------
Aluminum (3.0%):
10,000 Alcoa, 4.78%, 8/24/99.................................... 9,969
10,000 Alcoa, 4.84%, 8/31/99.................................... 9,960
--------
19,929
--------
Automotive (2.9%):
10,000 Daimler Chrysler, 4.85%, 9/20/99......................... 9,932
10,000 Daimler Chrysler, 5.14%, 10/6/99......................... 9,906
--------
19,838
--------
Automotive Credit (5.9%):
10,000 BMW US Capital, 5.17%, 12/10/99.......................... 9,812
10,000 Ford Motor Credit Co., 4.80%, 8/27/99.................... 9,965
10,000 Ford Motor Credit Co., 4.70%, 11/5/99.................... 9,875
10,000 General Motors Acceptance Corp., 5.28%, 1/25/00.......... 9,740
--------
39,392
--------
Banking (6.6%):
10,000 J.P. Morgan & Co., 4.80%, 10/8/99........................ 9,909
5,000 J.P. Morgan & Co., 4.80%, 10/15/99....................... 4,950
10,000 SunTrust Banks, 5.06%, 8/11/99........................... 9,987
10,000 SunTrust Banks, 5.06%, 8/25/99........................... 9,966
10,000 Wells Fargo & Co., 4.86%, 9/10/99........................ 9,946
--------
44,758
--------
Beverages (1.5%):
10,000 Coca Cola Co., 5.00%, 9/17/99............................ 9,935
--------
Brokerage Services (2.9%):
10,000 Goldman Sachs, 5.36%, 1/21/00............................ 9,742
10,000 Merrill Lynch, 5.13%, 9/16/99............................ 9,935
--------
19,677
--------
</TABLE>
Continued
-85-
<PAGE> 237
AMSOUTH MUTUAL FUNDS
Prime Obligations Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
--------- --------------------------------------------------------- ---------
<C> <S> <C>
Commercial Paper--Domestic, continued:
Consumer Goods (8.8%):
$10,000 Clorox Co., 4.88%, 9/8/99................................ $ 9,948
10,000 Clorox Co., 5.11%, 10/21/99.............................. 9,885
10,000 Hasbro Inc., 4.94%, 10/26/99............................. 9,882
10,000 Kimberly Clark, 5.05%, 8/19/99........................... 9,975
10,000 Procter & Gamble, 4.97%, 8/9/99.......................... 9,989
10,000 Proctor & Gamble, 5.10%, 9/29/99......................... 9,916
--------
59,595
--------
Electric Utility (3.7%):
10,000 Alabama Power Co., 5.08%, 8/24/99........................ 9,968
5,000 National Rural Utilities, 4.83%, 8/23/99................. 4,985
10,000 National Rural Utilities, 4.79%, 8/26/99................. 9,967
--------
24,920
--------
Farm Equipment (3.0%):
10,000 John Deere Capital Corp., 4.77%, 8/17/99................. 9,979
10,000 John Deere Capital Corp., 4.78%, 9/7/99.................. 9,951
--------
19,930
--------
Financial Services (8.7%):
10,000 American Express, 4.80%, 12/14/99........................ 9,820
10,000 American Express, 4.78%, 1/11/00......................... 9,784
10,000 American General Finance Corp., 5.14%, 10/28/99.......... 9,874
10,000 Associates First Capital, 5.30%, 4/3/00.................. 9,638
10,000 General Electric Capital Corp., 5.38%, 4/4/00............ 9,631
10,000 Transamerica Finance, 4.80%, 8/12/99..................... 9,985
--------
58,732
--------
Oil & Gas Exploration, Production, & Services (5.9%):
10,000 Chevron USA, 5.03%, 9/3/99............................... 9,954
10,000 Equilon Enterprises, 5.00%, 8/16/99...................... 9,979
</TABLE>
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
--------- -------------------------------------------------------- ---------
<C> <S> <C>
Commercial Paper--Domestic, continued:
Oil & Gas Exploration, Production, & Services, continued:
$10,000 Equilon Enterprises, 5.16%, 10/19/99.................... $ 9,887
10,000 Texaco Inc., 5.33%, 1/18/00............................. 9,748
--------
39,568
--------
Pharmaceuticals (1.5%):
10,000 Pfizer Inc., 5.05%, 9/2/99.............................. 9,955
--------
Technology (2.2%):
5,000 IBM Credit Corp., 4.67%, 8/6/99......................... 4,997
10,000 IBM Credit Corp., 4.80%, 9/13/99........................ 9,942
--------
14,939
--------
Telecommunications (4.4%):
10,000 BellSouth Telecommunications Inc., 5.11%, 9/28/99....... 9,918
10,000 Lucent Technologies, 4.98%, 1/27/00..................... 9,752
10,000 Lucent Technologies, 4.97%, 2/10/00..................... 9,734
--------
29,404
--------
Telecommunications--Wireless (2.2%):
5,109 Motorola, 5.05%, 8/4/99................................. 5,107
10,000 Motorola, 5.08%, 9/10/99................................ 9,943
--------
15,050
--------
Total Commercial Paper--Domestic 465,530
--------
Repurchase Agreements (13.7%):
92,189 Solomon Smith Barney, 5.13%, dated 7/30/99, due 8/2/99
at maturity of $92,189, (Collateralized by $94,034
Freddie Mac, 5.75%,4/15/08 and Fannie Mae, 5.63%,
5/14/04--Market value $92,864)......................... 92,189
--------
Total Repurchase Agreements 92,189
--------
Total (Cost $674,540) (a) $674,540
========
</TABLE>
- --------
Percentages indicated are based on net assets of $673,201.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
* Variable rate security. Rate presented represents rate in effect at July 31,
1999. Date presented reflects next rate change date.
** Put and demand features exist allowing the Fund to require the repurchase of
the instrument within variable time periods including daily, weekly, monthly,
quarterly, or semianually.
PLC--Public Limited Co.
See notes to financial statements.
-86-
<PAGE> 238
AMSOUTH MUTUAL FUNDS
Institutional Prime Obligations Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares or
Principal Security Amortized
Amount Description Cost
--------- --------------------------------------------------------- ---------
<C> <S> <C>
Commercial Paper--Domestic (72.7%):
Aircraft Leasing (3.6%):
$4,000 International Lease Finance Corp., 4.91%, 9/8/99......... $ 3,979
--------
Aluminum (3.6%):
4,000 Alcoa, Inc., 5.08%, 9/20/99.............................. 3,972
--------
Automotive (3.6%):
4,000 Daimler Chrysler, 5.13%, 11/19/99........................ 3,937
--------
Automotive-Finance (11.0%):
4,000 BMW US Capital, 5.15%, 11/5/99........................... 3,945
4,000 Ford Motor Credit, 4.80%, 8/3/99......................... 3,999
4,000 General Motors Acceptance Corp., 5.13%, 12/10/99......... 3,925
--------
11,869
--------
Banking (3.6%):
4,000 Wells Fargo & Co., 4.86%, 9/10/99........................ 3,978
--------
Beverages (3.6%):
4,000 Coca Cola Co., 5.09%, 10/19/99........................... 3,955
--------
Brokerage Services (3.6%):
4,000 Goldman Sachs, 5.16%, 10/28/99........................... 3,950
--------
Consumer Goods (3.6%):
4,000 Clorox Co., 5.14%, 10/29/99.............................. 3,949
--------
Electric Utility (3.6%):
4,000 National Rural Utilities, 5.10%, 10/5/99................. 3,963
--------
Farm Equipment (3.7%):
4,000 John Deere Capital Corp., 5.09%, 8/6/99.................. 3,997
--------
Financial Services (14.6%):
4,000 American Express Credit, 5.11%, 11/5/99.................. 3,945
4,000 American General Finance Corp, 5.16%, 11/9/99............ 3,943
4,000 Associates First Capital, 4.96%, 10/4/99................. 3,966
4,000 General Electric Capital Corp., 5.01%, 10/25/99.......... 3,953
--------
15,807
--------
</TABLE>
- --------
Percentages indicated are based on net assets of $109,033.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
<TABLE>
<CAPTION>
Shares or
Principal Security Amortized
Amount Description Cost
--------- -------------------------------------------------------- ---------
<C> <S> <C>
Commercial Paper--Domestic, continued:
Oil & Gas Exploration, Production, & Services (3.6%):
$4,000 Equilon Enterprises, 5.13%, 10/22/99.................... $ 3,953
--------
Pharmaceuticals (3.7%):
4,000 Pfizer, Inc., 5.05%, 9/3/99............................. 3,981
--------
Technology (3.6%):
4,000 IBM Credit Corp, 5.05%, 9/7/99.......................... 3,979
--------
Telecommunications (3.7%):
4,000 BellSouth Telecommunications Inc., 5.02%, 8/6/99........ 3,997
--------
Total Commercial Paper--Domestic 79,266
--------
Investment Companies (0.0%):
18,427 AmSouth Prime Obligations Fund.......................... 18
15,291 AmSouth U.S. Treasury Fund.............................. 15
--------
Total Investment Companies 33
--------
Repurchase Agreements (27.7%):
15,100 C.S. First Boston Corp., 5.13%, dated 7/30/99, due
8/2/99, proceeds at maturity of $15,100,
(Collateralized by $15,675 Freddie Mac Discount Note,
0.00%, 8/19/99--Market value $15,631).................. 15,100
15,100 Solomon Smith Barney, 5.13%, dated 7/30/99, due 8/2/99,
proceeds at maturity of $15,100, (Collateralized by
$15,402 Freddie Mac, 5.75%, 4/15/08 and Fannie Mae,
5.63%, 5/14/04--Market value $15,211).................. 15,100
--------
Total Repurchase Agreements 30,200
--------
Total (Cost $109,499) (a) $109,499
========
</TABLE>
See notes to financial statements.
-87-
<PAGE> 239
AMSOUTH MUTUAL FUNDS
Tax-Exempt Fund
Schedule of Portfolio Investments
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares or
Principal Security Amortized
Amount Description Cost
--------- -------------------------------------------------------- ---------
<C> <S> <C>
Tax Anticipation Notes (4.9%):
Florida (1.0%):
$1,000 Orange County School District, Tax Anticipation Notes,
3.10%, 9/15/99 ........................................ $ 1,000
-------
Pennsylvania (1.6%):
1,500 Philadelphia, Tax & Revenue, Anticipation Notes, 4.25%,
6/30/00 ............................................... 1,510
-------
Texas (2.3%):
2,200 Texas State Tax & Revenue Anticipation Notes, 4.50%,
8/31/99 ............................................... 2,203
-------
Total Tax Anticipation Notes 4,713
-------
Demand Notes (40.2%):
Alabama (13.1%):
1,500 Alabama Housing Finance Authority, Huntsville, Series B,
3.15%*, 8/4/99**, FNMA ................................ 1,500
2,000 Alabama State Housing Finance Authority, Multi Family
Housing Revenue, Rime VLG Hoover Project, Series A,
3.15%*, 8/4/99**, FNMA ................................ 2,000
1,000 Bon Air, Industrial Development Board, Avondale Mills,
3.15%*, 8/4/99**, LOC: Trust Co. Bank ................. 1,000
2,000 City of Birmingham, Series 1992A, GO, 3.20%*, 8/4/99**,
LOC: Regions Bank ..................................... 2,000
350 Columbia, Industrial Development Board, PCR, Alabama
Power Co. Project, Series D, 3.40%*, 8/2/99** ......... 350
1,000 Jacksonville, Industrial Development Board, Parker
Hannifin Corp., 3.15%*, 8/5/99** ...................... 1,000
2,000 Mobile, Industrial Development Board, PCR, Alabama Power
Co. Project, Series B, 3.20%*, 8/5/99** ............... 1,999
500 North Alabama, Environmental Improvement Authority, PCR,
Reynolds Metals Co., 3.40%*, 8/2/99**, LOC: Bank of
Nova Scotia ........................................... 500
1,000 Port City, Medical Clinic Board, Infirmary Health
Systems, Series B, 3.15%*, 8/5/99**, AMBAC ............ 1,000
1,365 Stevenson, Industrial Development Board, Environmental
Improvement Revenue, Mead Corp. Project, 3.35%*,
8/2/99**, LOC: Credit Suisse .......................... 1,365
-------
12,714
-------
California (2.6%):
2,500 Los Angeles, Regional Airports Improvements Corp., Los
Angeles International-LAX 2, 3.40%*, 8/2/99 **, LOC:
Societe Generale ...................................... 2,500
-------
Florida (3.3%):
1,500 Alachua County Health, 3.00%*, 8/4/99**, MBIA........... 1,500
1,680 Laurel Club, Certificates of Participation, Series 96A,
3.25%*, 8/4/99**, LOC: Swiss Bank Corp. ............... 1,680
-------
3,180
-------
Georgia (1.0%):
1,000 Cobb County, Post Mill Project, 3.15%*, 8/4/99**........ 1,000
-------
Michigan (2.6%):
2,500 Cornell Township Economic Development Corp., Environment
Improvement Revenue, 3.35%*, 8/2/99**, LOC: Swiss Bank. 2,500
-------
</TABLE>
Continued
-88-
<PAGE> 240
AMSOUTH MUTUAL FUNDS
Tax-Exempt Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares or
Principal Security Amortized
Amount Description Cost
--------- -------------------------------------------------------- ---------
<C> <S> <C>
Demand Notes, continued:
Minnesota (3.5%):
$1,000 Minneapolis, GO, Sewer Improvements, Series A, 3.05%*,
8/4/99**, LOC: Bayerische Vereinsbank ................. $ 1,000
2,400 Minneapolis, GO, Sewer Improvements, Series B, 3.05%*,
8/5/99** .............................................. 2,400
-------
3,400
-------
New York (2.6%):
900 New York, GO, 3.50%*, 8/2/99**, LOC: Morgan Guaranty
Trust.................................................. 900
1,600 New York, GO, Series D, 3.00%*, 8/4/99**, FGIC.......... 1,600
-------
2,500
-------
North Carolina (0.5%):
500 North Carolina Educational Facilities, 3.00%*, 8/5/99**,
LOC: Wachovia B&T ..................................... 500
-------
Pennsylvania (2.3%):
2,200 Schuylkill County, Industrial Development Authority,
Resource Recovery Revenue, Gilberton Power Project,
3.05%*, 8/4/99**, LOC: Mellon Bank .................... 2,200
-------
South Carolina (1.0%):
1,000 South Carolina State Jobs & Economic Development
Revenue, St. Francis Hospital, 3.40%*, 8/2/99**, LOC:
Chase Manhattan Bank .................................. 1,000
-------
Tennessee (1.9%):
1,300 Metropolitan Nashville Airport Authority, Special
Facilities Revenue, American Airlines Project, Series
A, 3.40%*, 8/2/99**, LOC: Union Bank of Switzerland ... 1,300
500 Sullivan County, Industrial Development Board, PCR,
Mead Corp. Project, 2.80%*, 8/2/99**, LOC:
Union Bank of Switzerland ............................. 500
-------
1,800
-------
Texas (3.1%):
1,000 Grapevine, Industrial Development Corp., American
Airlines A4, 3.40%*, 8/2/99**, LOC: Morgan Guaranty ... 1,000
2,000 North Central Texas Series C, 3.40%*, 8/2/99**.......... 2,000
-------
3,000
-------
Washington (0.6%):
600 Seattle Municipal Light & Power, 3.00%*, 8/4/99**....... 600
-------
Wyoming (2.1%):
2,000 Lincoln County PCR, Project D, 3.35%*, 8/2/99**......... 2,000
-------
Total Demand Notes 38,894
-------
</TABLE>
Continued
-89-
<PAGE> 241
AMSOUTH MUTUAL FUNDS
Tax-Exempt Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares or
Principal Security Amortized
Amount Description Cost
--------- -------------------------------------------------------- ---------
<C> <S> <C>
Tax Free Commercial Paper (11.6%):
Alabama (2.6%):
$1,500 Montgomery, 3.00%, 8/6/99............................... $ 1,500
1,000 Port City Medical Clinic Board, Mobile, 3.05%, 8/4/99... 1,000
-------
2,500
-------
Florida (4.8%):
1,000 Jacksonville, 3.25%, 10/22/99........................... 1,000
1,500 Jacksonville, PCR, 3.35%, 10/18/99...................... 1,500
1,200 Sarasota County, Public Hospital Revenue, 3.20%, 9/7/99. 1,200
1,000 St. Lucie County, PCR, 3.05%, 8/5/99.................... 1,000
-------
4,700
-------
Mississippi (2.1%):
1,000 Mississippi Hospital Equipment & Facilities Authority,
3.10%, 9/13/99 ........................................ 1,000
1,000 Mississippi Hospital Equipment Authority Revenue, 3.25%,
10/7/99 ............................................... 1,000
-------
2,000
-------
Nevada (1.1%):
1,000 Clark County, 5.70%, 6/1/00............................. 1,018
-------
Utah (1.0%):
1,000 Intermountain Power Agency, 3.20%, 10/13/99............. 1,000
-------
Total Tax Free Commercial Paper 11,218
-------
Municipal Bonds (36.6%):
Alabama (3.3%):
1,000 Alabama State College Authority, 5.00%, 8/1/99.......... 1,000
1,000 Alabama State, Municipal Electrics Authority Power Supply
Revenue, 6.10%, 9/1/99, LOC: MBIA ..................... 1,003
380 Alabama Water Pollution Control Authority, 5.00%,
8/15/99, LOC: AMBAC ................................... 380
600 University Birmingham Alabama Medical & Educational
Foundation Revenue, 7.00%, 12/1/19, Prerefunded 12/1/99
@ 102 ................................................. 620
250 University of Alabama Revenue, 4.15%, 10/1/99........... 250
-------
3,253
-------
California (1.6%):
1,500 Los Angeles County, Tax & Revenue, 4.00%, 6/30/00....... 1,509
-------
Colorado (1.0%):
1,000 El Paso County, School District, 0.00%, 12/1/99, LOC:
MBIA .................................................. 989
-------
Florida (1.3%):
250 Homestead, Special Insurance Assessment Revenue, 4.75%,
9/1/99, LOC: MBIA ..................................... 250
1,000 Tampa, Water & Sewer Revenue, 6.20%, 10/1/99, LOC: Bank
of America ............................................ 1,005
-------
1,255
-------
</TABLE>
Continued
-90-
<PAGE> 242
AMSOUTH MUTUAL FUNDS
Tax-Exempt Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares or
Principal Security Amortized
Amount Description Cost
--------- -------------------------------------------------------- ---------
<C> <S> <C>
Municipal Bonds, continued:
Georgia (3.5%):
$1,000 Clayton County, GO, 4.25%, 8/1/99....................... $ 1,000
1,500 Gwinnett County School District, 3.50%, 12/31/99........ 1,501
1,000 Muscogee County School District, 4.00%, 11/1/99......... 1,003
-------
3,504
-------
Hawaii (1.6%):
1,500 Hawaii State, 4.75%, 11/1/99, LOC: FGIC................. 1,505
-------
Illinois (3.0%):
1,075 Chicago Wastewater Transmission Revenue, 7.20%,
11/15/19, Prerefunded 11/15/99 @ 102, LOC:MBIA ........ 1,109
750 Cook County High School District, 6.50%, 12/1/99, LOC:
FSA.................................................... 758
1,000 Illinois Health Facilities Authority Revenue, 4.00%
8/15/99................................................ 1,000
-------
2,867
-------
Kentucky (1.0%):
1,000 Kentucky Asset/Liability Revenue, 4.25%, 6/28/00........ 1,008
-------
Louisianna (0.5%):
525 Louisiana State Gas & Fuels Tax Revenue, 3.35%,
11/15/99............................................... 525
-------
Maryland (1.0%):
1,000 Montgomery County, GO, 5.80%, 10/1/99................... 1,005
-------
Massachusetts (1.4%):
500 Boston Water & Sewer Common Revenue, 7.10%, 11/01/19,
Prerefunded 11/1/99 @ 102, LOC:
US Government Securities .............................. 516
300 Hingham, MA, 5.50%, 10/15/99............................ 301
500 Massachusetts State Convention Center Authority, 6.00%,
9/1/99 ................................................ 501
-------
1,318
-------
New Hampshire (2.1%):
2,000 New Hampshire State Capital Appreciation, College
Savings Bond Program, 0.00%, 8/1/99 ................... 2,000
-------
New York (0.5%):
450 New York City Transitional Finance Authority Revenue,
4.00%, 8/15/99 ........................................ 450
-------
North Carolina (0.3%):
250 Stokes County, 4.80%, 6/1/00, LOC: FGIC................. 252
-------
Ohio (2.2%):
1,500 Cuyahoga County, 6.70%, 10/1/10, Prerefunded 10/1/99 @
102, LOC: US Government Securities .................... 1,539
625 Ottawa County, 4.25%, 9/1/99, LOC: MBIA................. 625
-------
2,164
-------
</TABLE>
Continued
-91-
<PAGE> 243
AMSOUTH MUTUAL FUNDS
Tax-Exempt Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares or
Principal Security Amortized
Amount Description Cost
--------- -------------------------------------------------------- ---------
<C> <S> <C>
Municipal Bonds, continued:
Oklahoma (1.1%):
$1,100 Oklahoma City, 4.65%, 8/1/99............................ $ 1,100
-------
Pennsylvania (2.8%):
1,000 Lehigh County Purpose Authority Revenue, 8.75%, 11/1/14,
Prerefunded 11/1/99 @ 102,
LOC: US Treasury Obligation ........................... 1,034
1,000 Pennsylvania State Turnpike Commission Turnpike Revenue,
7.63%, 12/1/09, Prerefunded 12/1/99 @ 102 ............. 1,035
600 Philadelphia School District, 4.00%, 6/30/00, LOC:
Mellon Bank ........................................... 603
-------
2,672
-------
Rhode Island (1.0%):
1,000 Rhode Island State Construction Capital Development
Loan, Series A, 4.25% 9/1/99, LOC: FGIC ............... 1,001
-------
South Carolina (0.7%):
665 South Carolina State Capital Improvement, Series B,
5.60%, 3/1/00 ......................................... 673
-------
Tennessee (2.1%):
1,000 Metro Government Nashville & Davidson Tennessee, Public
Improvement, Series A, 4.60%, 11/15/99 ................ 1,004
1,000 Sullivan County, Health Education & Housing, 7.20%,
2/15/00, LOC: MBIA .................................... 1,040
-------
2,044
-------
Texas (1.6%):
500 Dallas Water Works & Sewer Revenue, 5.90%, 10/1/99...... 502
1,000 Irving Independent School District GO, 4.50%, 8/15/99... 1,001
-------
1,503
-------
Virginia (0.4%):
355 James City County, 6.40%, 12/15/99, LOC: FGIC........... 359
-------
Washington (1.0%):
500 King County, GO, 4.70% 10/1/99.......................... 501
435 Richland Electric Revenue, 5.30% 11/1/99................ 437
-------
938
-------
West Virginia (1.6%):
500 West Virginia State Hospital Finance Authority, 7.00%,
8/1/04, Prerefunded 8/1/99 @ 102, LOC: FSA ............ 510
1,000 West Virginia State, State Road, 3.50%, 6/1/00.......... 1,000
-------
1,510
-------
Total Municipal Bonds 35,404
=======
</TABLE>
Continued
-92-
<PAGE> 244
AMSOUTH MUTUAL FUNDS
Tax-Exempt Fund
Schedule of Portfolio Investments, Continued
July 31, 1999
(Amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares or
Principal Security Amortized
Amount Description Cost
--------- --------------------------------------------------------- ---------
<C> <S> <C>
Investment Companies (6.1%):
4,012,917 Federated Tax-Free Fund.................................. $ 4,013
1,890,596 Goldman Sachs Tax-Free Fund.............................. 1,891
-------
Total Investment Companies 5,904
-------
Total (Cost $96,133) (a) $96,133
=======
</TABLE>
- --------
Percentages indicated are based on net assets of $96,724.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate security. Rate presented represents rate in effect at July
31, 1999. Date presented reflects next rate change date.
** Put and demand features exist allowing the fund to require the repurchase
of the instrument within variable time periods including daily, weekly,
monthly, and semiannually.
AMBAC--Insured by AMBAC Indemnity Corp.
FGIC--Insured by Financial Guaranty Insurance Corp.
FNMA--Insured by Federal National Mortgage Assoc.
FSA--Insured by Financial Security Assoc.
GO--General Obligation
LOC--Letter of Credit
MBIA--Insured by Municipal Bond Insurance Assoc.
PCR--Pollution Control Revenue
See notes to financial statements.
-93-
<PAGE> 245
AMSOUTH MUTUAL FUNDS
Notes to Financial Statements
July 31, 1999
1. Organization:
AmSouth Mutual Funds (the "Trust") was organized on October 1, 1987, and is
registered under the Investment Company Act of 1940, as amended ("the 1940
Act"), as a diversified, open-end investment company established as a
Massachusetts business trust.
The Trust is authorized to issue an unlimited number of shares without par
value. The Trust currently offers shares of the AmSouth Equity Income Fund
("Equity Income"), the AmSouth Equity Fund ("Equity"), the AmSouth Enhanced
Market Fund ("Enhanced Market"), the AmSouth Capital Growth Fund ("Capital
Growth"), the AmSouth Select Equity Fund ("Select Equity"), the AmSouth
Regional Equity Fund ("Regional Equity"), the AmSouth Small Cap Fund ("Small
Cap"), the AmSouth Balanced Fund ("Balanced"), the AmSouth Limited Maturity
Fund ("Limited Maturity"), the AmSouth Government Income Fund ("Government
Income"), the AmSouth Bond Fund ("Bond"), the AmSouth Municipal Bond Fund
("Municipal Bond"), and the AmSouth Florida Tax-Free Fund ("Florida
Tax-Free") (collectively, "the variable net asset funds"), the AmSouth U.S.
Treasury Fund ("U.S. Treasury") the AmSouth Prime Obligations Fund ("Prime
Obligations"), the AmSouth Institutional Prime Obligations Fund ("Institutional
Prime Obligations") and the AmSouth Tax-Exempt Fund ("Tax-Exempt")
(collectively, "the money market funds") (collectively, "the Funds" and
individually "a Fund").
The Equity Income Fund seeks above average income and capital appreciation. The
Equity Fund seeks growth of capital. The Enhanced Market Fund seeks long-term
growth of capital. The Capital Growth Fund seeks long-term capital appreciation
and growth of income. The Select Equity Fund seeks long-term growth of capital.
The Regional Equity Fund seeks growth of capital. The Small Cap Fund seeks
capital appreciation. The Balanced Fund seeks to obtain long-term capital
growth and to produce a reasonable amount of current income. The Limited
Maturity Fund seeks current income, consistent with the preservation of
capital. The Government Income Fund, Bond Fund, Municipal Bond Fund and Florida
Tax-Free Fund seeks to produce as high a level of current interest income
exempt from federal income taxes and Florida intangible taxes (Florida Tax-Free
Fund only) as is consistent with the preservation of capital. The U.S. Treasury
Fund, Prime Obligations Fund and Institutional Prime Obligations Fund seek
current income with liquidity and stability of principal. The Tax-Exempt Fund
seeks to produce as high a level of current interest income exempt from federal
income taxes as is consistent with the preservation of capital and relative
stability of principal.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. These policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
Securities Valuation:
Investments of the money market funds are valued at either amortized cost, which
approximates market value, or at original cost which, combined with accrued
interest, approximates market value. Under the
Continued
-94-
<PAGE> 246
AMSOUTH MUTUAL FUNDS
Notes to Financial Statements, Continued
July 31, 1999
amortized cost method, discount or premium is amortized on a constant basis to
the maturity of the security.
Investments in common stocks, corporate bonds, municipal bonds, commercial paper
and U.S. Government securities of the variable net asset value funds are valued
on the basis of valuations provided by dealers or an independent pricing service
approved by the Board of Trustees. Investments in investment companies are
valued at their net asset values as reported by such companies. The differences
between cost and market values of such investments are reflected as unrealized
appreciation or depreciation.
Securities Transactions and Related Income:
Securities transactions are accounted for on the date the security is purchased
or sold (trade date). Interest income is recognized on the accrual basis and
includes, where applicable, the pro rata amortization of premium or discount.
Dividend income is recorded on the ex-dividend date. Realized gains or losses
from sales of securities are determined by comparing the identified cost of the
security lot sold with the net sales proceeds.
Financial Futures Contracts:
The Enhanced Market Fund and the Select Equity Fund may invest in financial
futures contracts for the purpose of hedging their existing portfolio
securities, or securities that they intend to purchase, against fluctuations in
fair value caused by changes in prevailing market interest rates. Upon entering
into a financial futures contract, a Fund is required to pledge to the broker an
amount of cash and/or other assets equal to a certain percentage of the contract
amount (initial margin deposit). Subsequent payments, known as "variation
margin," are made or received by a Fund each day, depending on the daily
fluctuations in the fair value of the underlying security. A Fund recognizes a
gain or loss equal to the daily variation margin. Should market conditions move
unexpectedly, the Fund may not achieve the anticipated benefits of the financial
futures contracts and may realize a loss. The use of futures transactions
involves the risk of imperfect correlation in movements in the price of futures
contracts, interest rates, and the underlying hedged assets.
Repurchase Agreements:
The Funds may acquire repurchase agreements from member banks of the Federal
Deposit Insurance Corporation and from registered broker/dealers which AmSouth
Bank ("AmSouth"), deems creditworthy under guidelines approved by the Board of
Trustees, subject to the seller's agreement to repurchase such securities at a
mutually agreed-upon date and price. The repurchase price generally equals the
price paid by the Funds plus interest negotiated on the basis of current
short-term rates, which may be more or less than the rate on the underlying
portfolio securities. The seller, under a repurchase agreement, is required to
maintain the value of collateral held pursuant to the agreement at not less than
the repurchase price (including accrued interest). Securities subject to
repurchase agreements are held by the Funds' custodian or another qualified
custodian or in the Federal Reserve/Treasury book-entry system.
Continued
-95-
<PAGE> 247
AMSOUTH MUTUAL FUNDS
Notes to Financial Statements, Continued
July 31, 1999
Dividends to Shareholders:
Dividends from net investment income are declared daily and paid monthly for the
money market funds. Dividends from net investment income are declared and paid
monthly for the variable net asset value funds. Distributable net realized
gains, if any, are declared and distributed at least annually.
The amounts of dividends from net investment income and of distributions from
net realized gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions to shareholders which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized gains. To the extent they exceed net
investment income and net realized gains for tax purposes, they are reported as
distributions of capital.
As of July 31,1999, the following reclassifications have been made to increase
(decrease) such amounts with offsetting adjustments made to capital (amounts in
thousands):
<TABLE>
<CAPTION>
Undistributed
Undistributed Net Realized
Net Investment Gains on
Income Investments
-------------- -------------
<S> <C> <C>
Capital Growth Fund............................. $149 $(149)
Select Equity Fund.............................. 1 (1)
Small Cap Fund.................................. 99 --
Balanced Fund................................... 87 (87)
Limited Maturity Fund........................... 212 (212)
Government Income Fund.......................... (15) 24
Bond Fund....................................... 445 (445)
Municipal Bond Fund............................. 33 (33)
Institutional Prime Obligations Fund............ 5 --
</TABLE>
Federal Income Taxes:
It is the policy of each Fund to continue to qualify as a regulated investment
company by complying with the provisions available to certain investment
companies, as defined in applicable sections of the Internal Revenue Code, and
to make distributions of net investment income and net realized capital gains
sufficient to relieve it from all, or substantially all, federal income taxes.
Other:
Expenses that are directly related to one of the Funds are charged directly to
that Fund. Other operating expenses for the Trust are prorated to the Funds on
the basis of relative net assets. Fees paid under a Fund's shareholder servicing
or distribution plans are borne by the specific class of shares to which they
apply.
Continued
-96-
<PAGE> 248
AMSOUTH MUTUAL FUNDS
Notes to Financial Statements, Continued
July 31, 1999
Unamortized Organizational Costs:
Costs incurred by the Equity Income, the Capital Growth and the Small Cap Funds
in connection with their organization and registration of shares have been
deferred and are amortized using the straight-line method over a period of two
years from the commencement of the public offering of shares of the Fund. As of
July 31, 1999 the Small Cap Fund had remaining unamortized costs of $3,744.
3. Purchases and Sales of Securities:
Purchases and sales of securities (excluding short-term securities) for the year
ended July 31, 1999 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
Purchases Sales
--------- -------
<S> <C> <C>
Equity Income Fund........................................ $53,416 $60,382
Equity Fund............................................... 174,713 268,994
Enhanced Market Fund (a).................................. 34,546 6,824
Capital Growth Fund....................................... 38,892 20,058
Select Equity Fund (a).................................... 21,993 1,777
Regional Equity Fund...................................... 15,892 49,539
Small Cap Fund............................................ 36,636 21,062
Balanced Fund............................................. 84,942 119,423
Limited Maturity Fund..................................... 46,173 42,786
Government Income Fund.................................... 2,491 4,521
Bond Fund................................................. 115,567 63,340
Municipal Bond Fund....................................... 72,451 65,956
Florida Tax Free Fund..................................... 24,830 23,460
</TABLE>
--------
(a) For the period from September 1, 1998 (commencement of operations) through
July 31, 1999.
4. Capital Share Transactions:
The Trust has issued three classes of Fund shares in each of the Equity Income
Fund, the Equity Fund, the Enhanced Market Fund, the Capital Growth Fund, the
Select Equity Fund, the Regional Equity Fund, the Small Cap Fund, the Balanced
Fund, the Limited Maturity Fund, the Bond Fund, the Municipal Bond Fund, the
Florida Tax Free Fund, and the Prime Obligations Fund: Classic Shares, Premier
Shares, and B Shares. The Trust has issued two classes of Fund shares in each of
the Government Income Fund, the U.S. Treasury Fund, and the Tax-Exempt Fund:
Classic Shares and Premier Shares. The Trust has issued three classes of fund
shares in the Institutional Prime Obligations Fund: Class I, Class II and Class
III. Each class of shares in a Fund has identical rights and privileges except
with respect to fees paid under shareholder servicing or distribution plans,
expenses allocable exclusively to each class of shares, voting rights on matters
affecting a single class of shares, and the exchange privilege of each class of
shares.
Transactions in capital shares for the Funds for the year ended July 31, 1999
and July 31,1998, respectively, were as follows (amounts in thousands):
Continued
-97-
<PAGE> 249
AMSOUTH MUTUAL FUNDS
Notes to Financial Statements, Continued
July 31, 1999
<TABLE>
<CAPTION>
Equity Enhanced Capital
Income Equity Market Growth
Fund Fund Fund Fund
----------------- -------------------- -------- ----------------
Year Year Year Year Period Year Period
Ended Ended Ended Ended Ended Ended Ended
July 31, July 31, July 31, July 31, July 31, July 31, July 31,
1999 1998 1999 1998 1999 (b) 1999 1998 (a)
-------- ------- --------- --------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Classic Shares:
Proceeds from shares
issued................ $ 1,858 $12,824 $ 57,426 $ 35,457 $19,464 $ 7,168 $11,600
Dividends reinvested... 790 1,113 6,662 3,628 103 65 --
Cost of shares
redeemed.............. (10,017) (5,099) (68,598) (25,227) (8,488) (4,647) (695)
-------- ------- --------- --------- ------- ------- -------
Change in net assets
from Classic Share
transactions.......... $ (7,369) $ 8,838 $ (4,510) $ 13,858 $11,079 $ 2,586 $10,905
======== ======= ========= ========= ======= ======= =======
Premier Shares:
Proceeds from shares
issued................ $ 6,156 $ 4,442 (c) $ 136,777 $ 147,122 (c) $14,504 (e) $16,038 $ 457 (c)
Dividends reinvested... 135 155 (c) 17,681 11,396 (c) 32 (e) 4 -- (c)
Cost of shares
redeemed.............. (4,389) (1,253)(c) (173,589) (178,749)(c) (749)(e) (2,206) (25)(c)
-------- ------- --------- --------- ------- ------- -------
Change in net assets
from Premier Share
transactions.......... $ 1,902 $ 3,344 $ (19,131) $ (20,231) $13,787 $13,836 $ 432
======== ======= ========= ========= ======= ======= =======
Class B Shares:
Proceeds from shares
issued................ $ 1,204 $ 8,243 (d) $ 4,945 $ 8,035 (d) $ 6,257 (f) $ 3,933 $ 3,449 (d)
Dividends reinvested... 230 108 (d) 944 101 (d) 5 (f) 31 -- (d)
Cost of shares
redeemed.............. (1,990) (508)(d) (1,866) (328)(d) (343)(f) (839) (213)(d)
-------- ------- --------- --------- ------- ------- -------
Change in net assets
from Class B Share
transactions.......... $ (556) $ 7,843 $ 4,023 $ 7,808 $ 5,919 $ 3,125 $ 3,236
======== ======= ========= ========= ======= ======= =======
SHARE TRANSACTIONS:
Classic Shares:
Issued................. 153 1,071 2,355 1,497 1,655 538 1,106
Reinvested............. 67 96 296 159 8 5 --
Redeemed............... (821) (418) (2,824) (1,075) (627) (380) (66)
-------- ------- --------- --------- ------- ------- -------
Change in Classic
Shares................ (601) 749 (173) 581 1,036 163 1,040
======== ======= ========= ========= ======= ======= =======
Premier Shares:
Issued................. 501 366 (c) 5,779 6,192 (c) 1,081 (e) 1,196 41 (c)
Reinvested............. 11 13 (c) 787 501 (c) 2 (e) -- -- (c)
Redeemed............... (360) (104)(c) (7,105) (7,487)(c) (53)(e) (159) (2)(c)
-------- ------- --------- --------- ------- ------- -------
Change in Premier
Shares................ 152 275 (539) (794) 1,030 1,037 39
======== ======= ========= ========= ======= ======= =======
Class B Shares:
Issued................. 101 684 (d) 205 332 (d) 468 (f) 299 320 (d)
Reinvested............. 20 9 (d) 42 4 (d) -- (f) 3 -- (d)
Redeemed............... (166) (41)(d) (77) (13)(d) (25)(f) (64) (19)(d)
-------- ------- --------- --------- ------- ------- -------
Change in Class B
Shares................ (45) 652 170 323 443 238 301
======== ======= ========= ========= ======= ======= =======
</TABLE>
- --------
(a) For the period from August 3, 1997 (commencement of operations) through July
31, 1998.
(b) For the period from September 1, 1998 (commencement of operations) through
July 31, 1999.
(c) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(d) For the period from September 3, 1997 (commencement of operations) through
July 31, 1998.
(e) For the period from December 11, 1998 (commencement of operations) through
July 31, 1999.
(f) For the period from September 2, 1998 (commencement of operations) through
July 31, 1999.
Continued
-98-
<PAGE> 250
AMSOUTH MUTUAL FUNDS
Notes to Financial Statements, Continued
July 31, 1999
<TABLE>
<CAPTION>
Select Equity Regional Equity Small Cap Balanced
Fund Fund Fund Fund
------------- ------------------ ------------------ ------------------
Period Year Year Year Period Year Year
Ended Ended Ended Ended Ended Ended Ended
July 31, July 31, July 31, July 31, July 31, July 31, July 31,
1999 (b) 1999 1998 1999 1998 (a) 1999 1998
------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Classic Shares:
Proceeds from shares
issued................ $14,740 $ 795 $ 6,724 $ 657 $1,559 (e) $ 3,921 $ 8,568
Dividends reinvested... 67 2,115 1,663 -- -- (e) 4,523 5,169
Cost of shares
redeemed.............. (6,553) (18,502) (11,554) (835) (47)(e) (11,411) (21,937)
------- -------- -------- ------- ------ -------- --------
Change in net assets
from Classic Share
transactions.......... $ 8,254 $(15,592) $ (3,167) $ (178) $1,512 $ (2,967) $ (8,200)
======= ======== ======== ======= ====== ======== ========
Premier Shares:
Proceeds from shares
issued................ $11,128 (g) $ 9,008 $ 22,574 (c) $17,146 $5,609 $ 57,092 $ 82,900 (c)
Dividends reinvested... 25 (g) 1,509 1,325 (c) -- -- 18,818 17,248 (c)
Cost of shares
redeemed.............. (708)(g) (30,812) (27,608)(c) (1,058) (72) (82,279) (88,638)(c)
------- -------- -------- ------- ------ -------- --------
Change in net assets
from Premier Share
transactions.......... $10,445 $(20,295) $ (3,709) $16,088 $5,537 $ (6,369) $ 11,510
======= ======== ======== ======= ====== ======== ========
Class B Shares:
Proceeds from shares
issued................ $ 2,006 (h) $ 178 $ 2,405 (d) $ 474 $ 967 $ 5,756 $ 5,405 (f)
Dividends reinvested... 2 (h) 110 27 (d) -- -- 680 105 (f)
Cost of shares
redeemed.............. (63)(h) (998) (247)(d) (333) (22) (1,533) (180)(f)
------- -------- -------- ------- ------ -------- --------
Change in net assets
from Class B Share
transactions.......... $ 1,945 $ (710) $ 2,185 $ 141 $ 945 $ 4,903 $ 5,330
======= ======== ======== ======= ====== ======== ========
SHARE TRANSACTIONS:
Classic Shares:
Issued................. 1,391 33 231 81 155 (e) 261 567
Reinvested............. 6 90 58 -- -- (e) 314 351
Redeemed............... (534) (781) (397) (103) (5)(e) (763) (1,453)
------- -------- -------- ------- ------ -------- --------
Change in Classic
Shares................ 863 (658) (108) (22) 150 (188) (535)
======= ======== ======== ======= ====== ======== ========
Premier Shares:
Issued................. 933 (g) 379 764 (c) 2,159 562 3,865 5,525 (c)
Reinvested............. 2 (g) 64 46 (c) -- -- 1,305 1,182 (c)
Redeemed............... (58)(g) (1,301) (949)(c) (132) (8) (5,514) (5,880)(c)
------- -------- -------- ------- ------ -------- --------
Change in Premier
Shares................ 877 (858) (139) 2,027 554 (344) 827
======= ======== ======== ======= ====== ======== ========
Class B Shares:
Issued................. 168 (h) 7 81 (d) 60 98 385 355 (f)
Reinvested............. -- (h) 5 1 (d) -- -- 47 7 (f)
Redeemed............... (5)(h) (43) (8)(d) (44) (2) (102) (12)(f)
------- -------- -------- ------- ------ -------- --------
Change in Class B
Shares................ 163 (31) 74 16 96 330 350
======= ======== ======== ======= ====== ======== ========
</TABLE>
- --------
(a) For the period from March 2, 1998 (commencement of operations) through July
31, 1998.
(b) For the period from September 1, 1998 (commencement of operations) through
July 31, 1999.
(c) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(d) For the period from September 3, 1997 (commencement of operations) through
July 31, 1998.
(e) For the period from March 3, 1998 (commencement of operations) through July
31, 1998.
(f) For the period from September 2, 1997 (commencement of operations) through
July 31, 1998.
(g) For the period from December 3, 1998 (commencement of operations) through
July 31, 1999.
(h) For the period from September 2, 1998 (commencement of operations) through
July 31, 1999.
Continued
-99-
<PAGE> 251
AMSOUTH MUTUAL FUNDS
Notes to Financial Statements, Continued
July 31, 1999
<TABLE>
<CAPTION>
Limited Maturity Government Income Bond
Fund Fund Fund
--------------------- ------------------ ------------------
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
July 31, July 31, July 31, July 31, July 31, July 31,
1999 1998 1999 1998 1999 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Classic Shares:
Proceeds from shares
issued................ $ 2,211 $ 3,654 $ 1,349 $ 916 $ 3,224 $ 9,635
Dividends reinvested... 159 224 240 320 406 1,185
Cost of shares
redeemed.............. (3,166) (10,734) (4,187) (4,434) (3,293) (19,183)
-------- -------- ------- ------- -------- --------
Change in net assets
from Classic Share
transactions.......... $ (796) $ (6,856) $(2,598) $(3,198) $ 337 $ (8,363)
======== ======== ======= ======= ======== ========
Premier Shares:
Proceeds from shares
issued................ $ 27,407 $ 16,530 (a) $ 1,287 $ 2,137 (a) $116,935 $ 89,740 (a)
Dividends reinvested... 534 409 (a) -- -- (a) 5,091 4,132 (a)
Cost of shares
redeemed.............. (23,812) (38,351)(a) (580) (10)(a) (55,310) (65,976)(a)
-------- -------- ------- ------- -------- --------
Change in net assets
from Premier Share
transactions.......... $ 4,129 $(21,412) $ 707 $ 2,127 $ 66,716 $ 27,896
======== ======== ======= ======= ======== ========
Class B Shares:
Proceeds from shares
issued................ $ 1,706 (c) $ -- $ -- $ -- $ 2,727 $ 498 (b)
Dividends reinvested... 16 (c) -- -- -- 64 4 (b)
Cost of shares
redeemed.............. (102)(c) -- -- -- (587) (60)(b)
-------- -------- ------- ------- -------- --------
Change in net assets
from Class B Share
transactions.......... $ 1,620 $ -- $ -- $ -- $ 2,204 $ 442
======== ======== ======= ======= ======== ========
SHARE TRANSACTIONS:
Classic Shares:
Issued................. 211 350 135 93 289 889
Reinvested............. 15 22 24 33 36 109
Redeemed............... (300) (1,033) (423) (450) (296) (1,781)
-------- -------- ------- ------- -------- --------
Change in Classic
Shares................ (74) (661) (264) (324) 29 (783)
======== ======== ======= ======= ======== ========
Premier Shares:
Issued................. 2,612 1,580 (a) 131 217 (a) 10,625 8,147 (a)
Reinvested............. 51 39 (a) -- -- (a) 458 376 (a)
Redeemed............... (2,269) (3,669)(a) (58) (1)(a) (4,972) (5,985)(a)
-------- -------- ------- ------- -------- --------
Change in Premier
Shares................ 394 (2,050) 73 216 6,111 2,538
======== ======== ======= ======= ======== ========
Class B Shares:
Issued................. 164 (c) -- -- -- 245 45 (b)
Reinvested............. 2 (c) -- -- -- 6 -- (b)
Redeemed............... (10)(c) -- -- -- (53) (5)(b)
-------- -------- ------- ------- -------- --------
Change in Class B
Shares................ 156 -- -- -- 198 40
======== ======== ======= ======= ======== ========
</TABLE>
- --------
(a) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(b) For the period from September 16, 1997 (commencement of operations) through
July 31, 1998.
(c) For the period from January 21, 1999 (commencement of operations) through
July 31, 1999.
Continued
-100-
<PAGE> 252
AMSOUTH MUTUAL FUNDS
Notes to Financial Statements, Continued
July 31, 1999
<TABLE>
<CAPTION>
Municipal Bond Fund Florida Tax-Free Fund
------------------------- --------------------------
Year Year Year Year
Ended Ended Ended Ended
July 31, July 31, July 31, July 31,
1999 1998 1999 1998
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Classic Shares:
Proceeds from shares
issued................ $ 1,032 $ 9,434 $ 6,120 $ 6,245
Dividends reinvested... 76 52 425 218
Cost of shares
redeemed.............. (1,049) (5,477) (2,685) (5,154)
--------- ---------- ---------- ----------
Change in net assets
from Classic Share
transactions.......... $ 59 $ 4,009 $ 3,860 $ 1,309
========= ========== ========== ==========
Premier Shares:
Proceeds from shares
issued................ $ 51,374 $ 45,269 (a) $ 19,040 $ 18,711 (a)
Dividends reinvested... 189 48 (a) 32 -- (a)
Cost of shares
redeemed.............. (48,186) (57,585)(a) (9,350) (9,399)(a)
--------- ---------- ---------- ----------
Change in net assets
from Premier Share
transactions.......... $ 3,377 $ (12,268) $ 9,722 $ 9,312
========= ========== ========== ==========
Class B Shares:
Proceeds from shares
issued................ $ 27 (c) $ -- $ 577 (b) $ --
Dividends reinvested... -- (c) -- 1 (b) --
Cost of shares
redeemed.............. (11)(c) -- -- (b) --
--------- ---------- ---------- ----------
Change in net assets
from Class B Share
transactions.......... $ 16 $ -- $ 578 $ --
========= ========== ========== ==========
SHARE TRANSACTIONS:
Classic Shares:
Issued................. 102 934 580 596
Reinvested............. 8 5 40 21
Redeemed............... (103) (542) (255) (493)
--------- ---------- ---------- ----------
Change in Classic
Shares................ 7 397 365 124
========= ========== ========== ==========
Premier Shares:
Issued................. 5,066 4,457 (a) 1,811 1,787 (a)
Reinvested............. 19 5 (a) 3 -- (a)
Redeemed............... (4,732) (5,668)(a) (891) (899)(a)
--------- ---------- ---------- ----------
Change in Premier
Shares................ 353 (1,206) 923 888
========= ========== ========== ==========
Class B Shares:
Issued................. 3 (c) -- 56 (b) --
Reinvested............. -- (c) -- -- (b) --
Redeemed............... (1)(c) -- -- (b) --
--------- ---------- ---------- ----------
Change in Class B
Shares................ 2 -- 56 --
========= ========== ========== ==========
</TABLE>
- --------
(a) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(b) For the period from March 16, 1999 (commencement of operations) through July
31, 1999.
(c) For the period from February 3, 1999 (commencement of operations) through
July 31, 1999.
Continued
-101-
<PAGE> 253
AMSOUTH MUTUAL FUNDS
Notes to Financial Statements, Continued
July 31, 1999
<TABLE>
<CAPTION>
U.S. Treasury Fund Prime Obligations Fund
-------------------- ------------------------
Year Year Year Year
Ended Ended Ended Ended
July 31, July 31, July 31, July 31,
1999 1998 1999 1998
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
Classic Shares:
Proceeds from shares
issued.................... $ 13,408 $ 13,952 $ 282,648 $ 214,118
Dividends reinvested....... 270 354 5,884 5,951
Cost of shares redeemed.... (17,357) (16,122) (269,414) (214,135)
--------- --------- ----------- -----------
Change in net assets from
Classic Share
transactions.............. $ (3,679) $ (1,816) $ 19,118 $ 5,934
========= ========= =========== ===========
Premier Shares:
Proceeds from shares
issued.................... $ 753,782 $ 955,935 $ 1,556,708 $ 1,339,647
Dividends reinvested....... 639 383 1,817 1,859
Cost of shares redeemed.... (785,630) (913,630) (1,501,602) (1,278,499)
--------- --------- ----------- -----------
Change in net assets from
Premier Share
transactions.............. $ (31,209) $ 42,688 $ 56,923 $ 63,007
========= ========= =========== ===========
Class B Shares:
Proceeds from shares
issued.................... $ -- $ -- $ 463 $ 1 (a)
Dividends reinvested....... -- -- 4 -- (a)
Cost of shares redeemed.... -- -- (244) -- (a)
--------- --------- ----------- -----------
Change in net assets from
Class B Share
transactions.............. $ -- $ -- $ 223 $ 1
========= ========= =========== ===========
SHARE TRANSACTIONS:
Classic Shares:
Issued..................... 13,408 13,952 282,648 214,118
Reinvested................. 270 354 5,884 5,951
Redeemed................... (17,357) (16,122) (269,414) (214,135)
--------- --------- ----------- -----------
Change in Classic Shares... (3,679) (1,816) 19,118 5,934
========= ========= =========== ===========
Premier Shares:
Issued..................... 753,782 955,935 1,556,708 1,339,647
Reinvested................. 639 383 1,817 1,859
Redeemed................... (785,630) (913,630) (1,501,602) (1,278,499)
--------- --------- ----------- -----------
Change in Premier Shares... (31,209) 42,688 56,923 63,007
========= ========= =========== ===========
Class B Shares:
Issued..................... -- -- 463 1 (a)
Reinvested................. -- -- 4 -- (a)
Redeemed................... -- -- (244) -- (a)
--------- --------- ----------- -----------
Change in Class B Shares... -- -- 223 1
========= ========= =========== ===========
</TABLE>
- --------
(a) For the period from June 15, 1998 (commencement of operations) through July
31, 1998.
Continued
-102-
<PAGE> 254
AMSOUTH MUTUAL FUNDS
Notes to Financial Statements, Continued
July 31, 1999
<TABLE>
<CAPTION>
Institutional Prime
Obligations Fund Tax-Exempt Fund
------------------- ---------------------
Period Year Year
Ended Ended Ended
July 31, July 31, July 31,
1999 (a) 1999 1998
------------------- -------- --------
<S> <C> <C> <C>
CAPITAL TRANSACTIONS:
Classic Shares (b):
Proceeds from shares issued........... $ 387,727 $ 55,604 $ 56,588
Dividends reinvested.................. -- 686 691
Cost of shares redeemed............... $(318,269) (62,103) (56,548)
--------- --------- ---------
Change in net assets from Classic
Share transactions................... $ 69,458 $ (5,813) $ 731
========= ========= =========
Premier Shares (c):
Proceeds from shares issued........... $ 56,608 (e) $ 181,011 $ 169,123
Dividends reinvested.................. -- (e) 5 7
Cost of shares redeemed............... (30,608)(e) (169,221) (162,475)
--------- --------- ---------
Change in net assets from Premier
Share transactions................... $ 26,000 $ 11,795 $ 6,655
========= ========= =========
Class B Shares (d):
Proceeds from shares issued........... $ 24,183 (f) $ -- $ --
Dividends reinvested.................. -- (f) -- --
Cost of shares redeemed............... (10,608)(f) -- --
--------- --------- ---------
Change in net assets from Class B
Share transactions................... $ 13,575 $ -- $ --
========= ========= =========
SHARE TRANSACTIONS:
Classic Shares (b):
Issued................................ 387,727 55,604 56,588
Reinvested............................ -- 686 691
Redeemed.............................. (318,269) (62,103) (56,548)
--------- --------- ---------
Change in Classic Shares.............. 69,458 (5,813) 731
========= ========= =========
Premier Shares (c):
Issued................................ 56,608 (e) 181,011 169,123
Reinvested............................ -- (e) 5 7
Redeemed.............................. (30,608)(e) (169,221) (162,475)
--------- --------- ---------
Change in Premier Shares.............. 26,000 11,795 6,655
========= ========= =========
Class B Shares (d):
Issued................................ 24,183 (f) -- --
Reinvested............................ -- (f) -- --
Redeemed.............................. (10,608)(f) -- --
--------- --------- ---------
Change in Class B Shares.............. 13,575 -- --
========= ========= =========
</TABLE>
- --------
(a) For the period from September 15, 1998 (commencement of operations) through
July 31, 1999.
(b) Class I shares for the Institutional Prime Obligations Fund.
(c) Class II shares for the Institutional Prime Obligations Fund.
(d) Class III shares for the Institutional Prime Obligations Fund.
(e) For the period from February 19, 1999 (commencement of operations) through
July 31, 1999.
(f) For the period from February 22, 1999 (commencement of operations) through
July 31, 1999.
Continued
-103-
<PAGE> 255
AMSOUTH MUTUAL FUNDS
Notes to Financial Statements, Continued
July 31, 1999
5. Related Party Transactions:
Investment advisory services are provided to each of the Funds by AmSouth. Under
the terms of the investment advisory agreement, AmSouth is entitled to receive
fees based on a percentage of the average daily net assets of each of the Funds.
On 8/9/99 AmSouth purchased a Guaranteed Life Insurance Contract issued by
General American Life Insurance Co. at par, plus accrued interest, from the
Prime Obligation Fund. AmSouth also serves as Custodian for the Trust. Pursuant
to the Custodian Agreement with the Trust, AmSouth receives compensation from
each Fund for such services in an amount equal to an asset-based fee plus fixed
fees charged for certain portfolio transactions and out-of-pocket expenses.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS"), an
Ohio Limited Partnership, BISYS Fund Services Ohio, Inc. ("BISYS Ohio"), and
BISYS Fund Services, Inc. ("BISYS Inc.") are subsidiaries of the BISYS Group,
Inc.
ASO Services Company ("Administrator"), a wholly owned subsidiary of the BISYS
Group, Inc., serves the Funds as administrator. Under the terms of the
administration agreement, The Administrator's fees are computed as 0.20% of the
average daily net assets of each of the Funds. AmSouth and BISYS, with whom
certain officers and trustees of the Trust are affiliated, serve as the Funds'
sub-administrator. Such officers and trustees are paid no fees directly by the
Funds for serving as officers and trustees of 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 0.10% of each Fund's daily
average net assets.
Pursuant to its agreement with the Administrator, BISYS, as sub-administrator,
is entitled to compensation as mutually agreed upon from time to time by it and
the Administrator. BISYS also serves as the Funds' distributor and is entitled
to receive commissions on sales of shares of the variable net asset value funds.
For the period ended July 31, 1999, BISYS received $1,668,740 from commissions
earned on sales of shares of the Funds' variable net asset value funds of which
the $1,664,928 was reallowed to AmSouth Investment Services, a related
investment dealer of the Funds' shares and other dealers of the Funds' shares.
BISYS receives no fees from the Funds for providing distribution services to the
Funds.
BISYS Ohio serves the Funds as Transfer Agent. Under the terms of the Transfer
Agent Agreement, BISYS Ohio receives a fee based on a percentage of each funds
average daily net assets, plus out of pocket charges.
BISYS Inc. serves the Funds as Mutual Fund Accountant. Under the terms of the
Fund Accounting Agreement, BISYS Inc. receives a fee based on a percentage of
average daily net assets, plus out of pocket charges.
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 and reimburses BISYS for its cost
of providing these services, subject to a maximum rate of 0.25% of the average
daily net assets of the Classic Shares of each of the Funds.
Continued
-104-
<PAGE> 256
AMSOUTH MUTUAL FUNDS
Notes to Financial Statements, Continued
July 31, 1999
Class B Shares, Class II Shares and Class III shares of the Trust are subject to
a Distribution and Shareholder Servicing Plan (the "Distribution Plan")
permitting payment of compensation to a participating organization as payment
for its services or expenses in connection with distribution assistance of the
Funds' Class B Shares, Class II Shares and Class III Shares to the participating
organizations customers. Each Fund has entered into a specific arrangement with
BISYS for the provision of such services and pays BISYS for its cost of
providing such services, subject to a maximum rate of 1.00% of the average daily
net assets of the Class B Shares of each of the Funds (0.25% for Class II Shares
and 0.50% for Class III Shares), which includes a Shareholder Servicing Fee of
0.25% of the average daily net assets of the Class B Shares of each Fund.
Fees may be voluntarily reduced to assist the Funds in maintaining competitive
expense ratios. Information regarding these transactions is as follows for the
year ended July 31, 1999 (amounts in thousands):
<TABLE>
<CAPTION>
Investment Advisory Fees
---------------------------
Annual Fee as Administration Shareholder Fund Transfer Other
a Percentage of Fees Fees Servicing Fees Accounting Fees Agent Fees Expenses
Average Daily Voluntarily Voluntarily Voluntarily Voluntarily Voluntarily Voluntarily
Net Assets Reduced Reduced Reduced Reduced Reduced Reimbursed
--------------- ----------- -------------- -------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity Income Fund..... 0.80% $-- $-- $-- $38 $30 $--
Equity Fund............ 0.80% -- -- -- 20 30 --
Enhanced Market
Fund (a).............. 0.45% -- 35 9 38 25 --
Capital Growth Fund.... 0.80% -- 52 -- 50 30 --
Select Equity Fund (a). 0.80% -- 33 10 38 25 --
Regional Equity Fund... 0.80% -- -- -- 20 30 --
Small Cap Fund......... 1.20% -- 21 -- 50 30 4
Balanced Fund.......... 0.80% -- -- -- 20 30 --
Limited Maturity Fund.. 0.65% 170 90 5 15 25 --
Government Income Fund. 0.65% 33 10 10 37 20 --
Bond Fund.............. 0.65% 535 285 11 20 30 --
Municipal Bond Fund.... 0.65% 816 261 4 15 25 --
Florida Tax-Free Fund.. 0.65% 248 71 15 32 24 --
U.S. Treasury Fund..... 0.40% -- -- 10 10 20 --
Prime Obligations Fund. 0.40% -- -- 202 20 30 --
Institutional Prime
Obl. Fund (b)......... 0.20% 129 69 -- 9 18 --
Tax-Exempt Fund........ 0.40% 192 -- 38 21 20 --
</TABLE>
- --------
(a) For the period from September 1, 1998 (commencement of operations) through
July 31, 1999.
(b) For the period from September 15, 1998 (commencement of
operations) through July 31, 1999.
Continued
-105-
<PAGE> 257
AMSOUTH MUTUAL FUNDS
Notes to Financial Statements, Continued
July 31, 1999
6. Eligible Distributions: (Unaudited)
The AmSouth Mutual Funds designate the following eligible distributions for the
dividends received deductions for corporations for the year ended July 31, 1999:
<TABLE>
<CAPTION>
Percentage
----------
<S> <C>
Equity Income Fund................................................ 62.37%
Equity Fund....................................................... 100.00%
Enhanced Market Fund.............................................. 13.18%
Capital Growth Fund............................................... 40.40%
Select Equity Fund................................................ 36.03%
Regional Equity Fund.............................................. 100.00%
Balanced Fund..................................................... 31.97%
</TABLE>
7. Exempt-Interest Income Designations (Unaudited):
The AmSouth Mutual Funds designate the following exempt-interest dividends for
the taxable year ended July 31, 1999 (amounts in thousands):
<TABLE>
<CAPTION>
Tax-Exempt
Distribution
------------
<S> <C>
Municipal Bond Fund............................................. $13,985
Florida Tax-Free Fund........................................... 3,001
Tax-Exempt Fund................................................. 2,613
</TABLE>
8. Federal Income Tax Information (Unaudited):
The accompanying table details distributions from long-term capital gains for
the following funds for the year ended July 31, 1999 (amounts in thousands):
<TABLE>
<CAPTION>
20% Capital
Gains
-----------
<S> <C>
Equity Income Fund............................................... $ 607
Equity Fund...................................................... 97,302
Enhanced Market Fund............................................. 5
Regional Equity Fund............................................. 7,145
Balanced Fund.................................................... 28,585
Bond Fund........................................................ 3,908
Municipal Bond Fund.............................................. 3,301
Florida Tax-Free Fund............................................ 366
</TABLE>
Continued
-106-
<PAGE> 258
AMSOUTH MUTUAL FUNDS
Notes to Financial Statements, Continued
July 31, 1999
At July 31, 1999, the following Funds have capital loss carryforwards which are
available to offset future capital gains, if any (amounts in thousands):
<TABLE>
<CAPTION>
Amount Expires
------ -------
<S> <C> <C>
Small Cap Fund................................................ $1,924 2007
Limited Maturity Fund......................................... 65 2002
730 2003
4 2004
304 2005
Government Income Fund........................................ 209 2004
127 2005
Prime Obligations Fund........................................ 6 2000
Tax-Exempt Fund............................................... 2 2006
</TABLE>
Under current tax law, capital losses realized after October 31, within the
Fund's fiscal year may be deferred and treated as occurring on the first day of
the following fiscal year. The following deferred losses will be treated as
arising on the first day of the next fiscal year (amounts in thousands):
<TABLE>
<S> <C>
Small Cap Fund.......................................................... $827
</TABLE>
-107-
<PAGE> 259
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Equity Income Fund
------------------------------------------------------------------------------------
Year Ended Year Ended March 20, 1997 to
July 31, 1999 July 31, 1998 July 31, 1997 (g)
-------------------------- -------------------------------------- -----------------
Classic Premier B Shares Classic (a) Premier (a) B Shares (b)
------- ------- -------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................ $ 11.89 $ 11.89 $11.86 $ 11.72 $11.35 $11.60 $ 10.00
------- ------- ------ ------- ------ ------ -------
Investment Activities
Net investment income
(loss).................. 0.17 0.19 0.07 0.24 0.25 0.15 0.07
Net realized and
unrealized gains
(losses) from
investments............. 1.46 1.47 1.47 0.59 0.95 0.68 1.71
------- ------- ------ ------- ------ ------ -------
Total from investment
activities.............. 1.63 1.66 1.54 0.83 1.20 0.83 1.78
------- ------- ------ ------- ------ ------ -------
Distributions
Net investment income.... (0.16) (0.19) (0.09) (0.25) (0.25) (0.16) (0.06)
Net realized gains from
investment transactions. (0.26) (0.26) (0.26) (0.41) (0.41) (0.41) --
------- ------- ------ ------- ------ ------ -------
Total Distributions...... (0.42) (0.45) (0.35) (0.66) (0.66) (0.57) (0.06)
------- ------- ------ ------- ------ ------ -------
Net Asset Value, End of
Period................... $ 13.10 $ 13.10 $13.05 $ 11.89 $11.89 $11.86 $ 11.72
======= ======= ====== ======= ====== ====== =======
Total Return (excludes
sales charge).............. 14.17% 14.43% 13.34% 7.29% 7.54%(c) 7.26%(d) 17.81%(d)
Ratios/Supplemental Data:
Net Assets at end of
period (000)............ $21,526 $10,908 $7,919 $26,686 $8,087 $7,733 $22,273
Ratio of expenses to
average net assets...... 1.41% 1.16% 2.16% 1.42% 1.19%(e) 2.19%(e) 1.30%(e)
Ratio of net investment
income to average net
assets.................. 1.37% 1.59% 0.61% 2.03% 2.34%(e) 1.29%(e) 2.13%(e)
Ratio of expenses to
average net assets*..... 1.58% 1.33% 2.33% 1.57% 1.35%(e) 2.35%(e) 1.51%(e)
Portfolio turnover (f).... 133.74% 133.74% 133.74% 83.26% 83.26% 83.26% 27.38%
</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, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(b) For the period from September 3, 1997 (commencements of operations) through
July 31, 1998,
(c) Represents total return based on the activity of Classic Shares for the
period from August 1, 1997 to September 1, 1997 and the activity of Premier
Shares for the period from September 2, 1997 to July 31, 1998. Total return
for the Premier Shares for the period from September 2, 1997 (commencement
of operations) through July 31, 1998 was 10.82%.
(d) Not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
(g) Period from commencement of operations.
See notes to financial statements.
-108-
<PAGE> 260
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Equity Fund
--------------------------------------------------------------------
Year Ended Year Ended
July 31, 1999 July 31, 1998
--------------------------- ---------------------------------------
Classic Premier B Shares Classic (a) Premier (a) B Shares (b)
------- -------- -------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 24.60 $ 24.57 $ 24.55 $ 23.35 $ 22.51 $23.15
------- -------- ------- ------- -------- ------
Investment Activities
Net investment income
(loss)................ 0.20 0.26 0.02 0.21 0.28 0.09
Net realized and
unrealized gains
(losses) from
investments........... 3.11 3.16 3.10 2.54 3.31 2.68
------- -------- ------- ------- -------- ------
Total from Investment
Activities............ 3.31 3.42 3.12 2.75 3.59 2.77
------- -------- ------- ------- -------- ------
Distributions
Net investment income.. (0.19) (0.25) (0.06) (0.25) (0.28) (0.12)
Net realized gains from
investment
transactions.......... (2.47) (2.47) (2.47) (1.25) (1.25) (1.25)
------- -------- ------- ------- -------- ------
Total Distributions.... (2.66) (2.72) (2.53) (1.50) (1.53) (1.37)
------- -------- ------- ------- -------- ------
Net Asset Value, End of
Period................. $ 25.25 $ 25.27 $ 25.14 $ 24.60 $ 24.57 $24.55
======= ======== ======= ======= ======== ======
Total Return (excludes
sales charge).......... 14.92% 15.43% 14.03% 12.34% 12.46%(c) 12.49%(d)
Ratios/Supplemental
Data:
Net Assets at end of
period (000).......... $70,740 $960,660 $12,394 $73,165 $947,575 $7,929
Ratio of expenses to
average net assets.... 1.33% 1.08% 2.08% 1.19% 1.09%(e) 2.11%(e)
Ratio of net investment
income to average net
assets................ 0.82% 1.07% 0.05% 0.89% 1.26%(e) 0.26%(e)
Ratio of expenses to
average net assets*... 1.34% 1.09% 2.09% 1.19% 1.10%(e) 2.11%(e)
Portfolio turnover (f).. 17.65% 17.65% 17.65% 16.95% 16.95% 16.95%
</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, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(b) For the period from September 3, 1997 (commencement of operations) through
July 31, 1998.
(c) Represents total return based on the activity of Classic Shares for the
period from August 1, 1997 to September 1, 1997 and the activity of Premier
Shares for the period from September 2, 1997 to July 31, 1998. Total return
for the Premier Shares for the period from September 2, 1997 (commencement
of operations) through July 31, 1998 was 16.52%.
(d) Not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
See notes to financial statements.
-109-
<PAGE> 261
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Equity Fund
----------------------------
Year Ended July 31,
----------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period......... $ 17.62 $ 16.75 $ 14.82
-------- -------- --------
Investment Activities
Net investment income (loss)................ 0.30 0.33 0.33
Net realized and unrealized gains (losses)
from investments........................... 6.77 1.48 2.39
-------- -------- --------
Total from Investment Activities............ 7.07 1.81 2.72
-------- -------- --------
Distributions
Net investment income....................... (0.30) (0.33) (0.32)
Net realized gains from investment
transactions............................... (1.04) (0.61) (0.47)
-------- -------- --------
Total Distributions......................... (1.34) (0.94) (0.79)
-------- -------- --------
Net Asset Value, End of Period............... $ 23.35 $ 17.62 $ 16.75
======== ======== ========
Total Return (excludes sales charge)......... 42.35% 11.09% 19.27%
Ratios/Supplemental Data:
Net Assets at end of period (000)........... $974,985 $374,622 $275,757
Ratio of expenses to average net assets..... 1.06% 1.02% 1.03%
Ratio of net investment income to average
net assets................................. 1.52% 1.86% 2.17%
Ratio of expenses to average net assets*.... 1.10% 1.11% 1.11%
Portfolio turnover........................... 24.47% 19.11% 19.46%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
-110-
<PAGE> 262
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Enhanced Market
--------------------------------------
September 1, 1998
to July 31,
1999 (a)
--------------------------------------
Classic Premier (b) B Shares (c)
------- ----------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.. $ 10.00 $ 12.18 $10.30
------- ------- ------
Investment Activities
Net investment income (loss)......... 0.09 0.07 0.03
Net realized and unrealized gains
(losses) from investments........... 3.89 1.71 3.55
------- ------- ------
Total from Investment Activities..... 3.98 1.78 3.58
------- ------- ------
Distributions
Net investment income................ (0.09) (0.07) (0.03)
Net realized gains from investment
transactions........................ (0.03) (0.03) (0.03)
------- ------- ------
Total Distributions.................. (0.12) (0.10) (0.06)
------- ------- ------
Net Asset Value, End of Period........ $ 13.86 $ 13.86 $13.82
======= ======= ======
Total Return (excludes sales charge).. 39.93%(d) 14.71%(d) 34.85%(d)
Ratios/Supplemental Data:
Net Assets at end of period (000).... $14,365 $14,273 $6,132
Ratio of expenses to average net
assets.............................. 0.88%(e) 0.74%(e) 1.73%(e)
Ratio of net investment income to
average net assets.................. 0.79%(e) 0.90%(e) (0.12)%(e)
Ratio of expenses to average net
assets*............................. 1.52%(e) 1.29%(e) 2.28%(e)
Portfolio turnover (f)................ 36.03% 36.03% 36.03%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) For the period from December 11, 1998 (commencement of operations) through
July 31, 1999.
(c) For the period from September 2, 1998 (commencement of operations) through
July 31, 1999.
(d) Not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
See notes to financial statements.
-111-
<PAGE> 263
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Capital Growth Fund
-----------------------------------------------------------------------
Year Ended August 3, 1997
July 31, to July 31,
1999 1998 (g)
---------------------------- -----------------------------------------
Classic Premier B Shares Classic (a) Premier (a) B Shares (b)
------- ------- -------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 11.62 $ 11.65 $11.54 $10.00 $ 9.55 $ 9.82
------- ------- ------ ------ ------ ------
Investment Activities
Net investment income
(loss)................ (0.06) (0.02) (0.12) (0.03) -- (0.06)
Net realized and
unrealized gains
(losses) from
investments........... 2.57 2.57 2.52 1.65 2.10 1.78
------- ------- ------ ------ ------ ------
Total from Investment
Activities............ 2.51 2.55 2.40 1.62 2.10 1.72
------- ------- ------ ------ ------ ------
Distributions
Net investment income.. -- -- -- -- -- --
Net realized gains from
investment
transactions.......... (0.09) (0.09) (0.09) -- -- --
------- ------- ------ ------ ------ ------
Total Distributions.... (0.09) (0.09) (0.09) -- -- --
------- ------- ------ ------ ------ ------
Net Asset Value, End of
Period................. $ 14.04 $ 14.11 $13.85 $11.62 $11.65 $11.54
======= ======= ====== ====== ====== ======
Total Return (excludes
sales charge).......... 21.76% 22.05% 20.96% 16.20%(d) 16.50%(c) 17.52%(d)
Ratios/Supplemental
Data:
Net Assets at end of
period (000).......... $14,040 $18,055 $7,463 $9,720 $2,824 $3,477
Ratio of expenses to
average net assets.... 1.23% 0.96% 1.97% 1.40%(e) 0.99%(e) 2.05%(e)
Ratio of net investment
income to average net
assets................ (0.50)% (0.28)% (1.26)% (0.42)%(e) 0.00%(e) (1.10)%(e)
Ratio of expenses to
average net assets*... 1.74% 1.47% 2.48% 2.37%(e) 2.05%(e) 3.11%(e)
Portfolio turnover (f).. 79.30% 79.30% 79.30% 77.26% 77.26% 77.26%
</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, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(b) For the period from September 3, 1997 (commencement of operations) through
July 31, 1998.
(c) Represents total return based on the activity of Classic Shares for the
period from August 4, 1997 to September 1, 1997 and the activity of Premier
Shares for the period from September 2, 1997 to July 31, 1998. Total return
for the Premier Shares for the period from September 2, 1997 (commencement
of operations) through July 31, 1998 was 21.99%.
(d) Not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
(g) Period from commencement of operations.
See notes to financial statements.
-112-
<PAGE> 264
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Select Equity
--------------------------------------
September 1, 1998
to July 31,
1999 (a)
--------------------------------------
Classic Premier (b) B Shares (c)
------- ----------- ------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.. $ 10.00 $ 11.52 $ 9.98
------- ------- ------
Investment Activities
Net investment income (loss)......... 0.04 0.04 0.02
Net realized and unrealized gains
(losses) from investments........... 1.91 0.38 1.86
------- ------- ------
Total from Investment Activities..... 1.95 0.42 1.88
------- ------- ------
Distributions
Net investment income................ (0.05) (0.03) (0.01)
In excess of net investment income... (0.01) (0.01) (0.01)
Net realized gains from investment
transactions........................ (0.01) (0.01) (0.01)
------- ------- ------
Total Distributions.................. (0.07) (0.05) (0.03)
------- ------- ------
Net Asset Value, End of Period....... $ 11.88 $ 11.89 $11.83
======= ======= ======
Total Return (excludes sales charge).. 19.44%(d) 3.63%(d) 18.83%(d)
Ratios/Supplemental Data:
Net Assets at end of period (000).... $10,258 $10,420 $1,933
Ratio of expenses to average net
assets.............................. 1.13%(e) 0.99%(e) 1.99%(e)
Ratio of net investment income to
average net assets.................. 0.43%(e) 0.65%(e) (0.49)%(e)
Ratio of expenses to average net
assets*............................. 1.81%(e) 1.58%(e) 2.58%(e)
Portfolio turnover (f)................ 9.72% 9.72% 9.72%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) For the period from December 3, 1998 (commencement of operations) through
July 31, 1999.
(c) For the period from September 2, 1998 (commencement of operations) through
July 31, 1999.
(d) Not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
See notes to financial statements.
-113-
<PAGE> 265
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Regional Equity Fund
---------------------------------------------------------------------
Year Ended Year Ended
July 31, July 31,
1999 1998
---------------------------- ---------------------------------------
Classic Premier B Shares Classic (a) Premier (a) B Shares (b)
------- ------- -------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 27.18 $ 27.20 $27.05 $ 28.23 $ 27.95 $28.49
------- ------- ------ ------- ------- ------
Investment Activities
Net investment income
(loss)................ 0.09 0.15 (0.09) 0.05 0.13 (0.05)
Net realized and
unrealized gains
(losses) from
investments........... (2.74) (2.73) (2.73) (0.08) 0.17 (0.42)
------- ------- ------ ------- ------- ------
Total from Investment
Activities............ (2.65) (2.58) (2.82) (0.03) 0.30 (0.47)
------- ------- ------ ------- ------- ------
Distributions
Net investment income.. (0.10) (0.14) (0.02) (0.07) (0.10) (0.03)
In excess of net
investment income..... -- -- -- (0.01) (0.01) -
Net realized gains from
investment
transactions.......... (1.53) (1.53) (1.53) (0.94) (0.94) (0.94)
------- ------- ------ ------- ------- ------
Total Distributions.... (1.63) (1.67) (1.55) (1.02) (1.05) (0.97)
------- ------- ------ ------- ------- ------
Net Asset Value, End of
Period................. $ 22.90 $ 22.95 $22.68 $ 27.18 $ 27.20 $27.05
======= ======= ====== ======= ======= ======
Total Return (excludes
sales charge).......... (9.85)% (9.57)% (10.54)% (0.31)% (0.12)%(c) (1.86)%(d)
Ratios/Supplemental
Data:
Net Assets at end of
period (000).......... $20,911 $60,385 $ 965 $42,700 $94,909 $1,998
Ratio of expenses to
average net assets.... 1.38% 1.13% 2.13% 1.30% 1.12%(e) 2.14%(e)
Ratio of net investment
income to average net
assets................ 0.37% 0.63% (0.37)% 0.14% 0.45%(e) (0.65)%(e)
Ratio of expenses to
average net assets*... 1.42% 1.17% 2.17% 1.32% 1.13%(e) 2.15%(e)
Portfolio turnover (f).. 15.60% 15.60% 15.60% 8.17% 8.17% 8.17%
</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, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(b) For the period from September 3, 1997 (commencement of operations) to July
31, 1998.
(c) Represents total return based on the activity of Classic Shares for the
period from August 1, 1997 to September 1, 1997 and the activity of Premier
Shares for the period from September 2, 1997 to July 31, 1998. Total return
for the Premier Shares for the period from September 2, 1997 (commencement
of operations) through July 31, 1998 was 0.87%.
(d) Not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
See notes to financial statements.
-114-
<PAGE> 266
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Regional Equity Fund
--------------------------
Year Ended
July 31,
--------------------------
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period............... $ 20.95 $ 18.94 $ 16.68
-------- ------- -------
Investment Activities
Net investment income (loss)...................... 0.24 0.26 0.23
Net realized and unrealized gains (losses) from
investments...................................... 7.77 2.20 2.26
-------- ------- -------
Total from Investment Activities.................. 8.01 2.46 2.49
-------- ------- -------
Distributions
Net investment income............................. (0.24) (0.26) (0.23)
Net realized gains from investment transactions... (0.49) (0.19) --
-------- ------- -------
Total Distributions............................... (0.73) (0.45) (0.23)
-------- ------- -------
Net Asset Value, End of Period..................... $ 28.23 $ 20.95 $ 18.94
======== ======= =======
Total Return (excludes sales charge)............... 39.02% 13.10% 15.10%
Ratios/Supplemental Data:
Net Assets at end of period (000)................. $149,838 $93,584 $68,501
Ratio of expenses to average net assets........... 1.06% 1.05% 1.07%
Ratio of net investment income to average net
assets........................................... 0.99% 1.30% 1.35%
Ratio of expenses to average net assets*.......... 1.10% 1.13% 1.15%
Portfolio turnover................................. 10.30% 8.22% 14.25%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
-115-
<PAGE> 267
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Small Cap Fund
-------------------------------------------------------------------
Year Ended March 2, 1998
July 31, to July 31,
1999 1998 (a)
---------------------------- ------------------------------------
Classic Premier B Shares Classic (b) Premier B Shares
------- ------- -------- ----------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 9.14 $ 9.15 $ 9.11 $ 9.97 $10.00 $10.00
------- ------- ------- ------ ------ ------
Investment Activities
Net investment income
(loss)................ (0.10) (0.03) (0.14) (0.03) (0.02) (0.04)
Net realized and
unrealized gains
(losses) from
investments........... (0.64) (0.68) (0.66) (0.80) (0.83) (0.85)
------- ------- ------- ------ ------ ------
Total from Investment
Activities............ (0.74) (0.71) (0.80) (0.83) (0.85) (0.89)
------- ------- ------- ------ ------ ------
Net Asset Value, End of
Period................. $ 8.40 $ 8.44 $ 8.31 $ 9.14 $ 9.15 $ 9.11
======= ======= ======= ====== ====== ======
Total Return (excludes
sales charge).......... (8.10)% (7.76)% (8.78)% (8.31)%(c) (8.48)%(c) (8.90)%(c)
Ratios/Supplemental
Data:
Net Assets at end of
period (000).......... $ 1,073 $21,777 $ 929 $1,372 $5,072 $ 871
Ratio of expenses to
average net assets.... 1.66% 1.39% 2.41% 1.78%(d) 1.50 %(d) 2.54%(d)
Ratio of net investment
income to average net
assets................ (1.07)% (0.82)% (1.83)% (0.92)%(d) (0.52)%(d) (1.69)%(d)
Ratio of expenses to
average net assets*... 2.68% 2.38% 3.42% 4.23%(d) 3.94%(d) 4.98%(d)
Portfolio turnover (e).. 208.13% 208.13% 208.13% 70.64% 70.64% 70.64%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) For the period from March 3, 1998 (commencement of operations) through July
31, 1998.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
See notes to financial statements.
-116-
<PAGE> 268
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Balanced Fund
--------------------------------------------------------------------
Year Ended Year Ended
July 31, July 31,
1999 1998
--------------------------- ---------------------------------------
Classic Premier B Shares Classic (a) Premier (a) B Shares (b)
------- -------- -------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 15.19 $ 15.18 $ 15.16 $ 15.21 $ 14.77 $14.99
------- -------- ------- ------- -------- ------
Investment Activities
Net investment income
(loss)................ 0.41 0.44 0.29 0.38 0.41 0.28
Net realized and
unrealized gains
(losses) from
investments............ 0.93 0.95 0.95 0.98 1.38 1.15
------- -------- ------- ------- -------- ------
Total from Investment
Activities............ 1.34 1.39 1.24 1.36 1.79 1.43
------- -------- ------- ------- -------- ------
Distributions
Net investment income.. (0.40) (0.44) (0.30) (0.41) (0.41) (0.29)
Net realized gains from
investment
transactions.......... (1.20) (1.20) (1.20) (0.97) (0.97) (0.97)
------- -------- ------- ------- -------- ------
Total Distributions.... (1.60) (1.64) (1.50) (1.38) (1.38) (1.26)
------- -------- ------- ------- -------- ------
Net Asset Value, End of
Period................. $ 14.93 $ 14.93 $ 14.90 $ 15.19 $ 15.18 $15.16
======= ======== ======= ======= ======== ======
Total Return (excludes
sales charge).......... 9.40% 9.74% 8.66% 9.54% 9.73%(c) 10.07%(d)
Ratios/Supplemental
Data:
Net Assets at end of
period (000)........... $43,223 $319,016 $10,131 $46,814 $329,626 $5,309
Ratio of expenses to
average net assets..... 1.34% 1.09% 2.09% 1.24% 1.10%(e) 2.12%(e)
Ratio of net investment
income to average net
assets................. 2.67% 2.93% 1.93% 2.77% 2.95%(e) 1.83%(e)
Ratio of expenses to
average net assets*.... 1.35% 1.10% 2.10% 1.24% 1.10%(e) 2.12%(e)
Portfolio turnover (f).. 23.24% 23.24% 23.24% 25.40% 25.40% 25.40%
</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, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(b) For the period from September 2, 1997 (commencement of operations) through
July 31, 1998.
(c) Represents total return based on the activity of Classic Shares for the
period from August 1, 1997 to September 1, 1997 and the activity of Premier
Shares for the period from September 2, 1997 to July 31, 1998. Total return
for the Premier Shares for the period from September 2, 1997 (commencement
of operations) through July 31, 1998 was 12.70%.
(d) Not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
See notes to financial statements.
-117-
<PAGE> 269
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Balanced Fund
----------------------------
Year Ended July 31,
----------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period......... $ 13.03 $ 12.76 $ 11.81
-------- -------- --------
Investment Activities
Net investment income (loss)................ 0.48 0.47 0.47
Net realized and unrealized gains (losses)
from investments........................... 2.78 0.58 1.24
-------- -------- --------
Total from Investment Activities............ 3.26 1.05 1.71
-------- -------- --------
Distributions
Net investment income....................... (0.50) (0.47) (0.46)
Net realized gains from investment
transactions............................... (0.58) (0.31) (0.30)
-------- -------- --------
Total Distributions......................... (1.08) (0.78) (0.76)
-------- -------- --------
Net Asset Value, End of Period............... $ 15.21 $ 13.03 $ 12.76
======== ======== ========
Total Return (excludes sales charge)......... 26.42% 8.37% 15.27%
Ratios/Supplemental Data:
Net Assets at end of period (000)........... $372,769 $338,425 $295,509
Ratio of expenses to average net assets..... 1.05% 0.98% 0.94%
Ratio of net investment income to average
net assets................................. 3.49% 3.61% 3.91%
Ratio of expenses to average net assets*.... 1.10% 1.11% 1.12%
Portfolio turnover........................... 25.00% 20.47% 16.97%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
-118-
<PAGE> 270
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Limited Maturity Fund
---------------------------------------------------------
Year Ended Year Ended
July 31, July 31,
1999 1998
------------------------------- -----------------------
Classic Premier B Shares (d) Classic (a) Premier (a)
------- -------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $10.43 $ 10.43 $10.58 $10.42 $ 10.34
------ -------- ------ ------ --------
Investment Activities
Net investment income
(loss)................ 0.57 0.59 0.27 0.85 0.55
Net realized and
unrealized gains
(losses) from
investments........... (0.15) (0.16) (0.30) (0.25) 0.10
------ -------- ------ ------ --------
Total from Investment
Activities............ 0.42 0.43 (0.03) 0.60 0.65
------ -------- ------ ------ --------
Distributions
Net investment income.. (0.56) (0.57) (0.28) (0.59) (0.56)
------ -------- ------ ------ --------
Total Distributions.... (0.56) (0.57) (0.28) (0.59) (0.56)
------ -------- ------ ------ --------
Net Asset Value, End of
Period................. $10.29 $ 10.29 $10.27 $10.43 $ 10.43
====== ======== ====== ====== ========
Total Return (excludes
sales charge).......... 4.01% 4.14% (0.33)%(c) 5.94% 6.04%(b)
Ratios/Supplemental
Data:
Net Assets at end of
period (000).......... $2,716 $109,554 $1,599 $3,531 $106,953
Ratio of expenses to
average net assets.... 0.81% 0.71% 1.69%(e) 0.74% 0.73%(e)
Ratio of net investment
income to average net
assets................ 5.49% 5.60% 4.61%(e) 5.65% 5.70%(e)
Ratio of expenses to
average net assets*... 1.23% 0.98% 1.96%(e) 0.96% 0.98%(e)
Portfolio turnover (f).. 39.15% 39.15% 39.15% 39.31% 39.31%
</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, were designated either Classic Shares or Premier
Shares.
(b) Represents total return based on activity of Classic Shares for the period
from August 1, 1997 to September 1, 1997 and the activity of Premier Shares
for the period from September 2, 1997 to July 31, 1998. Total return for the
Premier Shares for the period from September 2, 1997 (commencement of
operations) through July 31, 1998 was 6.37%.
(c) Not annualized.
(d) For the period from January 21, 1999 (commencement of operations) through
July 31, 1999.
(e) Annualized
(f) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
See notes to financial statements.
-119-
<PAGE> 271
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Limited Maturity Fund
--------------------------
Year Ended July 31,
--------------------------
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period............... $ 10.31 $ 10.41 $ 10.23
-------- ------- -------
Investment Activities
Net investment income (loss)...................... 0.58 0.58 0.58
Net realized and unrealized gains (losses) from
investments...................................... 0.14 (0.10) 0.17
-------- ------- -------
Total from Investment Activities.................. 0.72 0.48 0.75
-------- ------- -------
Distributions
Net investment income............................. (0.61) (0.57) (0.57)
Net realized gains from investment transactions... -- (0.01) --
-------- ------- -------
Total Distributions............................... (0.61) (0.58) (0.57)
-------- ------- -------
Net Asset Value, End of Period..................... $ 10.42 $ 10.31 $ 10.41
======== ======= =======
Total Return (excludes sales charge)............... 7.25% 4.74% 7.65%
Ratios/Supplemental Data:
Net Assets at end of period (000)................. $138,675 $46,005 $59,798
Ratio of expenses to average net assets........... 0.77% 0.76% 0.80%
Ratio of net investment income to average net
assets........................................... 5.65% 5.48% 5.69%
Ratio of expenses to average net assets*.......... 1.02% 0.99% 1.03%
Portfolio turnover................................. 64.89% 29.56% 38.11%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
-120-
<PAGE> 272
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Government Income Fund
-----------------------------------------
Year Ended Year Ended
July 31, July 31,
1999 1998
---------------- -----------------------
Classic Premier Classic (a) Premier (a)
------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period.............................. $ 9.88 $ 9.87 $ 9.75 $ 9.66
------ ------ ------ ------
Investment Activities
Net investment income (loss)........ 0.54 0.54 0.63 0.59
Net realized and unrealized gains
(losses) from investments.......... (0.28) (0.26) 0.09 0.17
------ ------ ------ ------
Total from Investment Activities.... 0.26 0.28 0.72 0.76
------ ------ ------ ------
Distributions
Net investment income............... (0.52) (0.53) (0.53) (0.49)
In excess of net investment income.. -- -- (0.06) (0.06)
------ ------ ------ ------
Total Distributions................. (0.52) (0.53) (0.59) (0.55)
------ ------ ------ ------
Net Asset Value, End of Period....... $ 9.62 $ 9.62 $ 9.88 $ 9.87
====== ====== ====== ======
Total Return (excludes sales charge). 2.62% 2.72% 7.58% 7.58%(b)
Ratios/Supplemental Data:
Net Assets at end of period (000)... $5,436 $3,150 $8,176 $2,521
Ratio of expenses to average net
assets............................. 0.70% 0.60% 0.71% 0.63%(c)
Ratio of net investment income to
average net assets................. 5.35% 5.44% 5.95% 5.72%(c)
Ratio of expenses to average net
assets*............................ 1.90% 1.65% 1.77% 1.80%(c)
Portfolio turnover (d)............... 26.85% 26.85% 34.89% 34.89%
</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, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(b) Represents total return based on the activity of Classic Shares for the
period from August 1, 1997 to September 1, 1997 and the activity of Premier
Shares for the period from September 2, 1997 to July 31, 1998. Total return
for the Premier Shares for the period from September 2, 1997 (commencement
of operations) through July 31, 1998 was 8.04%.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
See notes to financial statements.
-121-
<PAGE> 273
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Government Income Fund
-------------------------
Year Ended July 31,
-------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period............ $ 9.40 $ 9.54 $ 9.48
------- ------- -------
Investment Activities
Net investment income (loss)................... 0.58 0.66 0.68
Net realized and unrealized gains (losses) from
investments................................... 0.35 (0.20) 0.08
------- ------- -------
Total from Investment Activities............... 0.93 0.46 0.76
------- ------- -------
Distributions
Net investment income.......................... (0.58) (0.59) (0.70)
Tax return of capital.......................... -- (0.01) --
------- ------- -------
Total Distributions............................ (0.58) (0.60) (0.70)
------- ------- -------
Net Asset Value, End of Period.................. $ 9.75 $ 9.40 $ 9.54
======= ======= =======
Total Return (excludes sales charge)............ 10.21% 4.91% 8.43%
Ratios/Supplemental Data:
Net Assets at end of period (000).............. $11,622 $15,752 $16,679
Ratio of expenses to average net assets........ 0.69% 0.65% 0.58%
Ratio of net investment income to average net
assets........................................ 5.98% 6.81% 7.18%
Ratio of expenses to average net assets*....... 1.29% 1.10% 1.19%
Portfolio turnover.............................. 2.96% 78.31% 27.32%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
-122-
<PAGE> 274
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Bond Fund
-------------------------------------------------------------------
Year Ended Year Ended
July 31, July 31,
1999 1998
--------------------------- ---------------------------------------
Classic Premier B Shares Classic (a) Premier (a) B Shares (b)
------- -------- -------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period ... $11.05 $ 11.05 $11.04 $10.92 $ 10.72 $10.88
------ -------- ------ ------ -------- ------
Investment Activities
Net investment income
(loss)................ 0.61 0.61 0.50 1.41 0.57 0.46
Net realized and
unrealized gains
(losses) from
investments........... (0.32) (0.30) (0.31) (0.62) 0.38 0.24
------ -------- ------ ------ -------- ------
Total from Investment
Activities............ 0.29 0.31 0.19 0.79 0.95 0.70
------ -------- ------ ------ -------- ------
Distributions
Net investment income.. (0.58) (0.60) (0.50) (0.63) (0.59) (0.51)
Net realized gains from
investment
transactions.......... (0.13) (0.13) (0.13) (0.03) (0.03) (0.03)
------ -------- ------ ------ -------- ------
Total Distributions.... (0.71) (0.73) (0.63) (0.66) (0.62) (0.54)
------ -------- ------ ------ -------- ------
Net Asset Value, End of
Period................ $10.63 $ 10.63 $10.60 $11.05 $ 11.05 $11.04
====== ======== ====== ====== ======== ======
Total Return (excludes
sales charge).......... 2.58% 2.68% 1.58% 7.45% 7.54%(c) 6.58%(d)
Ratios/Supplemental
Data:
Net Assets at end of
period (000).......... $7,070 $380,226 $2,521 $7,032 $327,930 $ 442
Ratio of expenses to
average net assets.... 0.81% 0.71% 1.71% 0.73% 0.73%(e) 1.74%(e)
Ratio of net investment
income to average net
assets................ 5.46% 5.57% 4.63% 5.78% 5.72%(e) 4.75%(e)
Ratio of expenses to
average net assets*... 1.20% 0.95% 1.95% 0.95% 0.97%(e) 1.99%(e)
Portfolio turnover (f).. 18.26% 18.26% 18.26% 40.41% 40.41% 40.41%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(b) For the period from September 16, 1997 (commencement of operations) through
July 31, 1998.
(c) Represents total return based on the activity of Classic Shares for the
period from August 1, 1997 to September 1, 1997 and the activity of Premier
Shares for the period from September 2, 1997 to July 31, 1998. Total return
for the Premier Shares for the period from September 2, 1997 (commencement
of operations) through July 31, 1998 was 9.03%.
(d) Not annualized.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
See notes to financial statements.
-123-
<PAGE> 275
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Bond Fund
---------------------------
Year Ended July 31,
---------------------------
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 10.54 $ 10.83 $ 10.59
-------- -------- -------
Investment Activities
Net investment income (loss)..................... 0.65 0.65 0.69
Net realized and unrealized gains (losses) from
investments..................................... 0.42 (0.18) 0.28
-------- -------- -------
Total from Investment Activities................. 1.07 0.47 0.97
-------- -------- -------
Distributions
Net investment income............................ (0.69) (0.65) (0.69)
Net realized gains from investment transactions.. -- (0.11) (0.04)
-------- -------- -------
Total Distributions.............................. (0.69) (0.76) (0.73)
-------- -------- -------
Net Asset Value, End of Period.................... $ 10.92 $ 10.54 $ 10.83
======== ======== =======
Total Return (excludes sales charge).............. 10.48% 4.40% 9.70%
Ratios/Supplemental Data:
Net Assets at end of period (000)................ $311,881 $132,737 $94,671
Ratio of expenses to average net assets.......... 0.75% 0.75% 0.75%
Ratio of net investment income to average net
assets.......................................... 6.10% 6.12% 6.63%
Ratio of expenses to average net assets*......... 0.98% 0.98% 0.98%
Portfolio turnover................................ 34.62% 9.60% 17.70%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
-124-
<PAGE> 276
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Municipal Bond Fund
-------------------------------------------------------------------------
Year Ended Year Ended July 1, 1997
July 31, July 31, July 31,
1999 1998 1997 (a)
------------------------------ ----------------------- ------------
Classic Premier Class B (g) Classic (b) Premier (b)
------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $10.13 $ 10.14 $10.28 $10.15 $ 10.04 $ 10.00
------ -------- ------ ------ -------- --------
Investment Activities
Net investment income
(loss)................ 0.41 0.42 0.14 0.86 0.39 0.04
Net realized and
unrealized gains
(losses) from
investments........... (0.17) (0.18) (0.41) (0.43) 0.14 0.15
------ -------- ------ ------ -------- --------
Total from Investment
Activities............ 0.24 0.24 (0.27) 0.43 0.53 0.19
------ -------- ------ ------ -------- --------
Distributions
Net investment income.. (0.39) (0.40) (0.14) (0.42) (0.40) (0.04)
Net realized gains from
investment
transactions.......... (0.11) (0.11) -- (0.03) (0.03) --
------ -------- ------ ------ -------- --------
Total Distributions.... (0.50) (0.51) (0.14) (0.45) (0.43) (0.04)
------ -------- ------ ------ -------- --------
Net Asset Value, End of
Period................. $ 9.87 $ 9.87 $ 9.87 $10.13 $ 10.14 $ 10.15
====== ======== ====== ====== ======== ========
Total Return (excludes
sales charge).......... 2.31% 2.30% (2.60)%(c) 4.30% 4.49%(d) 1.86%(c)
Ratios/Supplemental
Data:
Net Assets at end of
period (000).......... $2,694 $321,293 $ 16 $2,689 $326,464 $337,933
Ratio of expenses to
average net assets.... 0.71% 0.61% 1.60%(e) 0.62% 0.64%(e) 0.71%(e)
Ratio of net investment
income to average net
assets................ 4.01% 4.11% 3.17%(e) 4.26% 4.23%(e) 4.31%(e)
Ratio of expenses to
average net assets*... 1.20% 0.95% 1.87%(e) 0.92% 0.97%(e) 1.04%(e)
Portfolio turnover (f).. 20.74% 20.74% 20.74% 28.75% 28.75% 1.59%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(c) Not annualized.
(d) Represents total return based on the activity of Classic Shares for the
period from August 1, 1997 to September 1, 1997 and the activity of Premier
Shares for the period from September 2, 1997 to July 31, 1998. Total return
for the Municipal Bond Fund Premier Shares for the period from September 2,
1997 (commencement of operations) through July 31, 1998 was 5.27%.
(e) Annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
(g) For the period from February 3, 1999 (commencement of operations) through
July 31, 1999.
See notes to financial statements.
-125-
<PAGE> 277
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Florida Tax-Free Fund
----------------------------------------------------------------------------------------------
Year Ended
Year Ended Year Ended July 31, September 30, 1994
July 31, July 31, --------------- to July 31,
1999 1998 1997 1996 1995 (f)
----------------------------- ----------------------- ------ ------- ------------------
Classic Premier Class B (g) Classic (a) Premier (a)
------- ------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 10.45 $ 10.46 $10.52 $10.50 $ 10.39 10.30 $ 10.32 $ 10.00
------- ------- ------ ------ ------- ------ ------- -------
Investment Activities
Net investment income
(loss)................ 0.41 0.43 0.12 0.45 0.41 0.45 0.45 0.34
Net realized and
unrealized gains
(losses) from
investments........... (0.18) (0.20) (0.30) 0.01 0.14 0.24 (0.01) 0.30
------- ------- ------ ------ ------- ------ ------- -------
Total from Investment
Activities............ 0.23 0.23 (0.18) 0.46 0.55 0.69 0.44 0.64
------- ------- ------ ------ ------- ------ ------- -------
Distributions
Net investment income.. (0.40) (0.41) (0.14) (0.44) (0.41) (0.48) (0.45) (0.32)
Net realized gains from
investment
transactions.......... (0.06) (0.06) -- (0.07) (0.07) (0.01) (0.01) --
------- ------- ------ ------ ------- ------ ------- -------
Total Distributions.... (0.46) (0.47) (0.14) (0.51) (0.48) (0.49) (0.46) (0.32)
------- ------- ------ ------ ------- ------ ------- -------
Net Asset Value, End of
Period................. $ 10.22 $ 10.22 $10.20 $10.45 $ 10.46 $10.50 $ 10.30 $ 10.32
======= ======= ====== ====== ======= ====== ======= =======
Total Return (excludes
sales charge).......... 2.06% 2.16% (1.77)%(c) 4.46% 4.66%(b) 6.89% 4.24% 6.53%(c)
Ratios/Supplemental
Data:
Net Assets at end of
period (000).......... $12,195 $63,548 $ 569 $8,883 $55,369 53,688 $48,869 $48,333
Ratio of expenses to
average net assets.... 0.59% 0.49% 1.49%(d) 0.55% 0.49%(d) 0.57% 0.59% 0.70%(d)
Ratio of net investment
income to average net
assets................ 4.00% 4.10% 3.06%(d) 4.24% 4.30%(d) 4.36% 4.33% 4.16%(d)
Ratio of expenses to
average net assets*... 1.26% 1.01% 2.00%(d) 1.06% 1.04%(d) 1.06% 1.04% 1.01%(d)
Portfolio turnover (e).. 34.33% 34.33% 34.33% 29.55% 29.55% 24.05% 12.21% 2.33%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Effective September 2, 1997, the Fund's existing shares, which were
previously unclassified, were designated either Classic Shares or Premier
Shares. For reporting purposes, past performance numbers (prior to September
2, 1997) are being reflected as Classic Shares.
(b) Represents total return based on the activity of Classic Shares for the
period from August 1, 1997 to September 1, 1997 and the activity of Premier
Shares for the period from September 2, 1997 to July 31, 1998. Total return
for the Florida Tax-Free Fund Premier Shares for the period from September
2, 1997 (commencement of operations) through July 31, 1998 was 5.40%.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
(f) Period from commencement of operations.
(g) For the period from March 16, 1999 (commencement of operations) through July
31, 1999.
See notes to financial statements.
-126-
<PAGE> 278
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
U.S. Treasury Fund
-------------------------------------------------------
Year Ended July 31,
-------------------------------------------------------
1999 1998 1997
----------------- ----------------- -----------------
Classic Premier Classic Premier Classic Premier
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 1.000 $ 1.000 $1.000 $ 1.000 $1.000 $ 1.000
------- -------- ------ -------- ------ --------
Investment Activities
Net investment income.. 0.040 0.041 0.046 0.047 0.045 0.046
------- -------- ------ -------- ------ --------
Distributions
Net investment income.. (0.040) (0.041) (0.046) (0.047) (0.045) (0.046)
------- -------- ------ -------- ------ --------
Net Asset Value, End of
Period................. $ 1.000 $ 1.000 $1.000 $ 1.000 $1.000 $ 1.000
======= ======== ====== ======== ====== ========
Total Return............ 4.06% 4.16% 4.67% 4.77% 4.60% 4.70%
Ratios/Supplemental
Data:
Net Assets at end of
period (000).......... $ 4,390 $320,847 $8,070 $352,055 $9,885 $309,361
Ratio of expenses to
average net assets.... 0.79% 0.69% 0.80% 0.70% 0.79% 0.69%
Ratio of net investment
income to average net
assets................ 4.03% 4.10% 4.57% 4.67% 4.50% 4.60%
Ratio of expenses to
average net assets*... 0.95% 0.70% 0.95% 0.70% 0.94% (a)
</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) There were no waivers during the period.
See notes to financial statements.
-127-
<PAGE> 279
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
U.S. Treasury Fund
----------------------------------
Year Ended July 31,
----------------------------------
1996 1995
------------------------- --------
Classic (a) Premier (a)
----------- -----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period....... $ 1.000 $ 1.000 $ 1.000
------- -------- --------
Investment Activities
Net investment income..................... 0.015 0.048 0.048
------- -------- --------
Distributions
Net investment income..................... (0.015) (0.048) (0.048)
------- -------- --------
Net Asset Value, End of Period............. $ 1.000 $ 1.000 $ 1.000
======= ======== ========
Total Return............................... 4.90%(b) 4.93% 4.90%
Ratios/Supplemental Data:
Net Assets at end of period (000)......... $12,263 $368,162 $322,939
Ratio of expenses to average net assets... 0.82%(c) 0.71% 0.70%
Ratio of net investment income to average
net assets............................... 4.44%(c) 4.82% 4.81%
Ratio of expenses to average net assets*.. 0.97%(c) (d) (d)
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Effective April 1, 1996, the Fund's existing shares, which were previously
unclassified, were designated as Premier Shares, and the Fund commenced
offering Classic Shares.
(b) Represents total return for the Premier Shares for the period from August 1,
1995 to March 31, 1996 plus the total return for the Classic Shares for the
period from April 1, 1996 to July 31, 1996. Total return for the Classic
Shares for the period April 1, 1996 (commencement of operations) to July 31,
1996 was 1.49%.
(c) Annualized.
(d) There were no waivers during the period.
See notes to financial statements.
-128-
<PAGE> 280
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Prime Obligations Fund
--------------------------------------------------------------
Year Ended
July 31,
--------------------------------------------------------------
1999 1998
---------------------------- --------------------------------
Classic Premier B Shares Classic Premier B Shares (a)
-------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- ------- -------- -------- -------
Investment Activities
Net investment income.. 0.044 0.045 0.035 0.049 0.050 0.005
-------- -------- ------- -------- -------- -------
Distributions
Net investment income.. (0.044) (0.045) (0.035) (0.049) (0.050) (0.005)
-------- -------- ------- -------- -------- -------
Net Asset Value, End of
Period................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======= ======== ======== =======
Total Return............ 4.48% 4.59% 3.55% 4.99% 5.09% 0.49%(b)
Ratios/Supplemental
Data:
Net Assets at end of
period (000).......... $136,078 $536,899 $ 224 $116,960 $479,974 $ 1
Ratio of expenses to
average net assets.... 0.78% 0.68% 1.69% 0.79% 0.69% 1.85%(c)
Ratio of net investment
income to average net
assets................ 4.40% 4.51% 3.39% 4.88% 4.98% 3.83%(c)
Ratio of expenses to
average net assets*... 0.94% 0.69% 1.70% 0.95% 0.70% 1.88%(c)
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) For the period from June 15, 1998 (commencement of operations) through July
31, 1998.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
-129-
<PAGE> 281
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Prime Obligations Fund
-----------------------------------------------------------
Year Ended July 31,
-----------------------------------------------------------
1997 1996 1995
------------------ -------------------------- --------
Classic Premier Classic (a) Premier (a)
-------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- --------
Investment Activities
Net investment income.. 0.048 0.049 0.016 0.050 0.050
-------- -------- -------- -------- --------
Distributions
Net investment income.. (0.048) (0.049) (0.016) (0.050) (0.050)
-------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ========
Total Return............ 4.90% 5.00% 5.07%(b) 5.10% 5.14%
Ratios/Supplemental
Data:
Net Assets at end of
period (000).......... $111,027 $416,966 $125,075 $478,542 $617,673
Ratio of expenses to
average net assets.... 0.78% 0.68% 0.81%(c) 0.71% 0.69%
Ratio of net investment
income to average net
assets................ 4.79% 4.89% 4.61%(c) 5.00% 5.04%
Ratio of expenses to
average net assets*... 0.93% (d) 0.96%(c) (d) (d)
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Effective April 1, 1996, the Fund's existing shares, which were previously
unclassified, were designated as Premier Shares, and the Fund commenced
offering Classic Shares.
(b) Represents total return for the Premier Shares for the period from August 1,
1995 to March 31, 1996 plus the total return for the Classic Shares for the
period from April 1, 1996 to July 31, 1996. Total return for the Classic
Shares for the period April 1, 1996 (commencement of operations) to July 31,
1996 was 1.55%.
(c) Annualized.
(d) There were no waivers during the period.
See notes to financial statements.
-130-
<PAGE> 282
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Institutional Prime
Obligations Fund
----------------------------------------
September 15, 1998 to July 31,
1999(a)
----------------------------------------
Class I Class II (b) Class III (c)
------- ------------ -------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.. $ 1.000 $ 1.000 $ 1.000
------- ------- -------
Investment Activities
Net investment income................ 0.042 0.020 0.018
------- ------- -------
Distributions
Net investment income................ (0.042) (0.020) (0.018)
------- ------- -------
Net Asset Value, End of Period........ $ 1.000 $ 1.000 $ 1.000
======= ======= =======
Total Return.......................... 4.31%(d) 1.96%(d) 1.84%(d)
Ratios/Supplemental Data:
Net Assets at end of period (000).... $69,458 $26,000 $13,575
Ratio of expenses to average net
assets.............................. 0.22%(e) 0.49%(e) 0.74%(e)
Ratio of net investment income to
average net assets.................. 4.82%(e) 4.45%(e) 4.22%(e)
Ratio of expenses to average net
assets*............................. 0.45%(e) 0.72%(e) 0.97%(e)
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) For the period from February 19, 1999 (commencement of operations) through
July 31, 1999.
(c) For the period from February 22, 1999 (commencement of operations) through
July 31, 1999.
(d) Not annualized
(e) Annualized.
See notes to financial statements.
-131-
<PAGE> 283
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Tax-Exempt Fund
----------------------------------------------------
Year Ended July 31,
----------------------------------------------------
1999 1998 1997
---------------- ---------------- ----------------
Classic Premier Classic Premier Classic Premier
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- ------- -------
Investment Activities
Net investment income... 0.026 0.027 0.030 0.031 0.030 0.031
------- ------- ------- ------- ------- -------
Distributions
Net investment income... (0.026) (0.027) (0.030) (0.031) (0.030) (0.031)
------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period.................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= ======= =======
Total Return............. 2.66% 2.76% 3.03% 3.13% 3.04% 3.15%
Ratios/Supplemental Data:
Net Assets at end of
period (000)........... $22,844 $73,880 $28,657 $62,084 $27,926 $55,429
Ratio of expenses to
average net assets..... 0.59% 0.49% 0.60% 0.50% 0.62% 0.52%
Ratio of net investment
income to average net
assets................. 2.64% 2.71% 2.97% 3.07% 3.00% 3.10%
Ratio of expenses to
average net assets*.... 0.98% 0.73% 0.98% 0.73% 0.97% 0.72%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
-132-
<PAGE> 284
AMSOUTH MUTUAL FUNDS
Financial Highlights
<TABLE>
<CAPTION>
Tax-Exempt Fund
---------------------------------
Year Ended July 31,
---------------------------------
1996 1995
------------------------- -------
Classic (a) Premier (a)
----------- -----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 1.000 $ 1.000 $ 1.000
------- ------- -------
Investment Activities
Net investment income.................. 0.010 0.031 0.032
------- ------- -------
Distributions
Net investment income.................. (0.010) (0.031) (0.032)
------- ------- -------
Net Asset Value, End of Period.......... $ 1.000 $ 1.000 $ 1.000
======= ======= =======
Total Return............................ 3.12%(b) 3.15% 3.22%
Ratios/Supplemental Data:
Net Assets at end of period (000)...... $17,116 $43,611 $57,640
Ratio of expenses to average net
assets................................ 0.68%(c) 0.54% 0.54%
Ratio of net investment income to
average net assets.................... 2.82%(c) 3.11% 3.15%
Ratio of expenses to average net
assets*............................... 1.03%(c) 0.74% 0.74%
</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 April 1, 1996, the Fund's existing shares, which were previously
unclassified, were designated as Premier Shares, and the Fund commenced
offering Classic Shares.
(b) Represents total return for the Premier Shares for the period from August 1,
1995 to March 31, 1996 plus the total return for the Classic Shares for the
period from April 1, 1996 to July 31, 1996. Total return for the Classic
Shares for the period April 1, 1996 (commencement of operations) through
July 31, 1996 was 0.95%.
(c) Annualized.
See notes to financial statements.
-133-
<PAGE> 285
INVESTMENT ADVISOR [LOGO OF AMSOUTH MUTUAL
AmSouth FUNDS APPEARS HERE]
[LOGO OF AMSOUTH APPEARS HERE]
AmSouth Bank ANNUAL REPORT
1901 Sixth Avenue North July 31, 1999
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 Salomon Smith Barney
Fund Management, LLC
One Peachtree Center
Atlanta, GA 30308
(Small Cap Fund Only)
Sawgrass Asset Management, LLC
4337 Pablo Oaks Court
Jacksonville, FL 32224
(Select Equity and Enhanced Market Funds)
OakBrook Investments, LLC
701 Warrenville Road, Suite 135
Lisle, IL 60532
DISTRIBUTOR
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
LEGAL COUNSEL
Ropes & Gray
One Franklin Square
1301 K Street, N.W.
Suite 800 East
Washington, DC 20005
TRANSFER AGENT
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, OH 43219
AUDITORS
Pricewaterhouse Coopers LLP AmSouth
100 East Broad Street AMSOUTH BANK
Columbus, OH 43219 Investment Advisor
[LOGO OF AMSOUTH BANK
APPEARS HERE]
<PAGE> 286
APPENDIX D
FORM OF NEW ADVISORY AGREEMENT
<PAGE> 287
FORM OF
INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement made as of October 1, 1999, between THE
INFINITY MUTUAL FUNDS, INC., a Maryland corporation having its principal office
and place of business at 3435 Stelzer Road, Columbus, Ohio 43219-3035 (herein
called the "Fund"), and FIRST AMERICAN NATIONAL BANK, a national banking
association having its principal office and place of business at First American
Center, 315 Deaderick Street, Nashville, Tennessee 37238-0035 (herein called the
"Adviser").
WHEREAS, the Fund is an open-end, management investment company,
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Fund intends to employ BISYS Fund Services Ohio, Inc. (the
"Administrator") to act as the Fund's administrator; and
WHEREAS, the Fund desires to retain the Adviser to provide investment
advisory services and other services to the Fund's portfolios set forth on
Schedule 1 attached hereto, as such may be revised from time to time (each, a
"Series"; the provisions herein shall apply severally to each Series), and the
Adviser is willing to furnish such services upon the terms and conditions herein
set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
------------
(a) The Fund hereby appoints the Adviser to act as investment
adviser to each Series for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
(b) In the event that the Fund establishes one or more
portfolios, other than those set forth on Schedule 1 hereto, and with respect to
which the Fund desires the Adviser to act as investment adviser hereunder, the
Fund shall notify the Adviser in writing. If the Adviser is willing to render
such services under this Agreement it shall notify the Fund in writing whereupon
such portfolio shall become a Series hereunder and shall be subject to the
provisions of this Agreement to the same extent as the Series currently named in
Schedule 1, except to the extent that said provisions (including those relating
to the
<PAGE> 288
compensation payable to the Adviser) are modified with respect to such Series in
writing by the Fund and the Adviser.
2. Delivery of Documents.
----------------------
The Fund has furnished the Adviser with copies properly certified or
authenticated of each of the following:
(a) The Fund's Articles of Incorporation and any amendments
and supplements thereto (as presently in effect and as from time to
time amended or supplemented, herein called the "Charter");
(b) The Fund's By-laws and any amendments thereto;
(c) Resolutions of the Fund's Board of Directors authorizing
the appointment of the Adviser and approving this Agreement;
(d) The Fund's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), and under the 1940
Act most recently filed with the Securities and Exchange Commission
(the "Commission");
(e) The Fund's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Commission; and
(f) The Fund's current Prospectuses and Statements of
Additional Information of the Series (as presently in effect and as
from time to time amended and supplemented, herein called individually
the "Prospectus" and collectively the "Prospectuses").
The Fund promptly will furnish the Adviser with copies of all amendments of or
supplements to the foregoing, if any.
3. Services of Adviser.
--------------------
Subject to the supervision of the Fund's Board of Directors,
the Adviser will provide a continuous investment program for each Series,
including investment research and day-to-day management with respect to
such Series' assets. The Adviser will determine from time to time what
securities and other investments will be purchased, retained or sold by
the Series. The Adviser will provide the services rendered by it under
this Agreement in accordance with the investment criteria and policies
established from time to time for a Series by the Fund, such Series'
investment objective, policies and restrictions as stated in its
Prospectus and resolutions of the Fund's Board of Directors. The Fund
wishes to be informed of
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<PAGE> 289
important developments materially affecting a Series' portfolio and the Adviser
agrees to furnish to the Fund from time to time such information as the Adviser
may believe appropriate for this purpose. The Adviser shall be permitted to
employ one or more sub-investment advisers (each a "Sub-Adviser") to provide the
day-to-day management of the investments of the Series.
4. Other Covenants.
----------------
The Adviser agrees that it will:
(a) comply with all applicable rules and regulations of the
Securities and Exchange Commission in performing its duties as
investment adviser for the Series and, in addition, will conduct its
activities under this Agreement in accordance with other applicable
federal and state law;
(b) review and analyze on a periodic basis each Series'
portfolio holdings and transactions;
(c) provide, or cause to be provided, to the Board of
Directors of the Fund such reports, statistical data and economic
information as may be reasonably requested in connection with the
Adviser's services hereunder;
(d) 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;
(e) place orders pursuant to its investment determinations for
the Series either directly with the issuer or with any broker or
dealer. In executing portfolio transactions and selecting brokers or
dealers, the Adviser will use its best efforts to seek on behalf of the
Series the best overall terms available. In assessing the best overall
terms available for any transaction, the Adviser shall consider all
factors that it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of
the commission, if any, both for the specific transaction and on a
continuing basis. In evaluating the best overall terms available, and
in selecting the broker-dealer to execute a particular transaction, the
Adviser also may consider the brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of
1934) provided to the Series and other accounts over which the Adviser
or an affiliate of the Adviser exercises investment discretion. The
Adviser is authorized, subject to the prior approval of the Fund's
Board of Directors, to pay to a
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<PAGE> 290
broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for any of the Series
which is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if, but only if, the
Adviser determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided
by such broker or dealer as viewed in terms of that particular
transaction or in terms of the overall responsibilities of the Adviser
to the Series. In addition, the Adviser is authorized to take into
account the sale of the Fund's Shares in allocating purchase and sale
orders for portfolio securities to brokers or dealers (including
brokers and dealers that are affiliated with the Adviser or the Fund's
principal underwriter), provided the Adviser believes that the quality
of the execution and the commission are comparable to what they would
be with other qualified firms. In no instance, however, will portfolio
securities be purchased from or sold to the Adviser, the Fund's
principal underwriter or any affiliated person of either the Fund, the
Adviser, or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Securities and
Exchange Commission and other applicable federal and state laws and
regulations;
(f) maintain historical tax lots for each portfolio security
held by the Series;
(g) transmit trades to the Fund's custodian for proper
settlement; and
(h) prepare a quarterly broker security transaction summary
and monthly security transaction listing for each Series.
5. Services Not Exclusive.
-----------------------
The services furnished by the Adviser hereunder are deemed not
to be exclusive, and the Adviser shall be free to furnish similar services
to others so long as its services under this Agreement are not impaired
thereby. To the extent that the purchase or sale of securities or other
investments of the same issuer may be deemed by the Adviser to be suitable
for two or more Series, investment companies or accounts managed by the
Adviser, the available securities or investments will be allocated in a
manner believed by the Adviser to be equitable to each of them. It is
recognized and acknowledged by the Fund that in some cases this procedure
may adversely affect the price paid or received by a Series or the size of
the position obtained for or disposed of by a Series.
-4-
<PAGE> 291
6. Books and Records.
------------------
In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Adviser hereby agrees that all records which it maintains for the
Series are the property of the Fund and further agrees to surrender promptly to
the Fund any of such records upon the Fund's request. The Adviser further agrees
to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the
records required to be maintained by Rule 31a-1 under the 1940 Act.
7. Expenses.
---------
Except as otherwise stated in this section 7, the Adviser
shall pay all expenses incurred by it in performing its services and duties as
investment adviser and shall pay all fees of each Sub-Adviser in connection with
such Sub-Adviser's duties in respect of the Fund. All other expenses incurred in
the operation of the Fund will be borne by the Fund, except to the extent
specifically assumed by others. The expenses to be borne by the Fund include,
without limitation, the following: organizational costs, taxes, interest,
brokerage fees and commissions, if any, fees of Directors who are not officers,
directors, employees or holders of 5% or more of the outstanding voting
securities of the Adviser, any Sub-Adviser or the Administrator, or any of their
affiliates, Commission fees, state Blue Sky qualification fees, advisory and
administration fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees, auditing
and legal expenses, costs of maintaining corporate existence, costs of
independent pricing services, costs attributable to investor services
(including, without limitation, telephone and personnel expenses), costs of
calculating the net asset value of the Series' shares, costs of shareholders'
reports and corporate meetings, costs of preparing and printing certain
prospectuses and statements of additional information, and any extraordinary
expenses.
8. Compensation.
-------------
In consideration of services rendered pursuant to this
Agreement, the Fund will pay the Adviser on the first business day of each
month, subject to the terms and conditions set forth on Exhibit A attached
hereto, the fee at the annual rate set forth opposite the Series' name on
Schedule 1 attached hereto, based upon the value of the Series' average daily
net assets for the previous month. Such fee as is attributable to a Series shall
be a separate charge to such Series and shall be the several (and not joint or
joint and several) obligation of the
-5-
<PAGE> 292
Series. Fees hereunder shall be payable with respect to a Series commencing on
the date of the initial public sale of such Series' shares. The Adviser agrees
to accept such fee from the Fund as full compensation for the services provided
and expenses assumed by it pursuant to this Agreement, and acknowledges that it
shall not be entitled to any further compensation from the Fund in respect of
the same.
Net asset value shall be computed on such days and at such time or times
as described in the Prospectus. Upon the commencement or any termination of this
Agreement after the first day or before the end of any month, as the case may
be, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and, in the case
of any termination, shall be payable upon the date of termination of this
Agreement.
For the purpose of determining fees payable to the Adviser, the value of
each Series' net assets shall be computed in the manner specified in the Charter
for the computation of the value of the Series' net assets.
Notwithstanding anything to the contrary herein, if in any fiscal year
the aggregate expenses of a Series, exclusive of taxes, brokerage, interest on
borrowings and (with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including investment advisory and
administration fees, exceed the expense limitation of any such state having
jurisdiction over such Series, the Fund may deduct from the fees to be paid
hereunder, or the Adviser will bear, to the extent required by state law, that
portion of such excess which bears the same relation to the total of such excess
as the Adviser's fee hereunder bears to the total fee otherwise payable for the
fiscal year by the Series pursuant to this Agreement and the Fund's
Administration Agreement. Such deduction or payment, if any, will be estimated
daily, and reconciled and effected or paid, as the case may be, on a monthly
basis.
9. Limitation of Liability.
------------------------
The Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except that the Adviser shall be liable to the Fund for
any loss resulting from willful misfeasance, bad faith or gross negligence on
its part in the performance of the Adviser's duties or from its reckless
disregard of its obligations and duties under this Agreement. Any person, even
though also an officer, director, partner, employee or agent of the Adviser, who
may be or become an officer, Director, employee or agent of the Fund, shall be
-6-
<PAGE> 293
deemed, when rendering services to the Fund or to a Series, or acting on any
business of the Fund or of a Series (other than services or business in
connection with the Adviser's duties as investment adviser hereunder) to be
rendering such services to or acting solely for the Fund or such Series and not
as an officer, director, partner, employee or agent or one under the control or
direction of the Adviser even though paid by the Adviser.
10. Term.
-----
As to each Series, this Agreement shall continue until the
date set forth opposite such Series' name on Schedule 1 attached hereto (the
"Reapproval Date"), and thereafter shall continue automatically for successive
annual periods ending on the day of each year set forth opposite the Series'
name on Schedule 1 attached hereto (the "Reapproval Day"), provided such
continuance is specifically approved as to a Series at least annually by (a) the
Fund's Board of Directors or (b) vote of a majority (as defined in the 1940 Act)
of such Series' outstanding voting securities, provided that in either event its
continuance also is approved by a majority of the Fund's Directors who are not
"interested persons" (as defined in the 1940 Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. As to each Series, this Agreement may be terminated without
penalty, on 60 days' written notice to the Adviser (which notice may be waived
in writing by the Adviser), by the Fund's Board of Directors or by vote of the
holders of a majority of such Series' shares or may be terminated without
penalty, upon not less than 90 days' written notice to the Fund (which notice
may be waived in writing by the Fund), by the Adviser. This Agreement also will
terminate automatically, as to the relevant Series, in the event of its
assignment (as defined in the 1940 Act).
11. Use of Name.
------------
The parties hereto agree that (i) in the event of the
termination of this Agreement, the Adviser shall have the right to require the
Fund, within 30 days of such termination, to delete from the Series and its name
the word "ISG" and (ii) the Adviser or any affiliate of the Adviser shall have
the right to grant to other investment companies that it may sponsor or advise
the use of the word "ISG" in the name of such investment company.
-7-
<PAGE> 294
12. Miscellaneous.
--------------
(a) Amendments. No provision of this Agreement may be changed,
waived, discharged or terminated, except by an instrument in writing
signed by the party against whom an enforcement of the change, waiver,
discharge or termination is sought.
(b) Construction. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or
effect. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby. Subject to the
provisions of Section 10 hereof, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by New York law; provided,
however, that nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or regulation of the
Commission thereunder.
(c) Notice. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Fund shall
be effective upon actual receipt by the Fund, or on the fourth day
after the postmark if such notice or other instrument is mailed via
first class postage prepaid, at its office at the address first above
written, or at such other place as the Fund may from time to time
designate in writing. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Adviser
shall be effective upon actual receipt by the Adviser, or on the fourth
day after the postmark if such notice or other instrument is mailed via
first class postage prepaid, at its office at the address first above
written, or at such other place as the Adviser may from time to time
designate in writing.
-8-
<PAGE> 295
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below as of the day and
year first above written.
THE INFINITY MUTUAL FUNDS, INC.
By:___________________________
Attest:____________________
FIRST AMERICAN NATIONAL BANK
By:__________________________
Attest:_______________________
-9-
<PAGE> 296
<TABLE>
<CAPTION>
SCHEDULE 1
Annual Fee as
a Percentage of
Average Daily Reapproval Reapproval
Name of Series Net Assets Date Day
- -------------- ---------- ---------- ----------
<S> <C> <C> <C>
ISG Aggressive
Growth Portfolio .20 of 1% December 31, 1999 December 31
ISG Capital
Growth Fund .65 of 1% December 31, 1999 December 31
ISG Income Fund .50 of 1% December 31, 1999 December 31
ISG Current Income
Portfolio .20 of 1% December 31, 1999 December 31
ISG Equity Income Fund .65 of 1% December 31, 1999 December 31
ISG Equity Value Fund .75 of 1% December 31, 1999 December 31
ISG Government
Income Fund .60 of 1% December 31, 1999 December 31
ISG Government
Money Market Fund .25 of 1% December 31, 1999 December 31
ISG Growth
Portfolio .20 of 1% December 31, 1999 December 31
ISG Growth &
Income Portfolio .20 of 1% December 31, 1999 December 31
ISG International
Equity Fund* 1.00% December 31, 1999 December 31
ISG Large-Cap
Equity Fund .75 of 1% December 31, 1999 December 31
ISG Limited
Term Income
Fund .50 of 1% December 31, 1999 December 31
</TABLE>
* The Adviser has retained Lazard Asset Management as the Series' sub-investment
adviser.
-10-
<PAGE> 297
<TABLE>
<S> <C> <C> <C>
ISG Limited Term
Tennessee Tax-
Exempt Fund .50 of 1% December 31, 1999 December 31
ISG Limited Term
U.S. Government
Fund .50 of 1% December 31, 1999 December 31
ISG Mid-Cap Fund** 1.00% December 31, 1999 December 31
ISG Moderate
Growth & Income
Portfolio .20 of 1% December 31, 1999 December 31
ISG Municipal
Income Fund .60 of 1% December 31, 1999 December 31
ISG Prime Money
Market Fund .25 of 1% December 31, 1999 December 31
ISG Small-Cap
Opportunity Fund*** .95 of 1% December 31, 1999 December 31
ISG Tax-Exempt
Money Market Fund .35 of 1% December 31, 1999 December 31
ISG Tennessee
Tax-Exempt Fund .50 of 1% December 31, 1999 December 31
ISG Treasury Money
Market Fund .25 of 1% December 31, 1999 December 31
</TABLE>
** The Adviser has retained Bennett Lawrence Management, LLC as the Series'
sub-investment adviser.
*** The Adviser has retained Womack Asset Management, Inc. as the Series'
sub-investment adviser.
-11-
<PAGE> 298
Exhibit A
As to each Series, during the period from and including October 1, 1999 (the
"Escrow Beginning Date") until the date of approval by shareholders of the
Series in conformity with the provisions of the 1940 Act, including but not
limited to Section 15(c) thereof (the "Escrow Termination Date"), any and all
sub-advisory fees (the "Sub-Advisory Fees") payable under this Agreement shall
be paid in accordance with this Exhibit A. From and including the Escrow
Beginning Date to, but not including, the Escrow Termination Date, any and all
Sub-Advisory Fees payable under this Agreement shall be paid into an interest
bearing escrow account (the "Escrow Account") maintained by an unaffiliated
financial institution (the "Escrow Agent"). Pursuant to a letter agreement with
the Escrow Agent, the Sub-Advisory Fees (including interest earned on such
Sub-Advisory Fees) payable under this Agreement will be paid to the Sub-Adviser
only if shareholders of the Series approve the Agreement. Further pursuant to
the letter agreement, on the Escrow Termination Date the Sub-Advisory Fees paid
hereunder will be released by the Escrow Agent from the Escrow Account to the
Sub-Adviser, only upon receipt by the Escrow Agent of a certificate from
officers of the Fund stating that this Agreement, with respect to the Series,
has received the requisite shareholder vote. As to each Series, in the event
that the requisite shareholder vote is not obtained and the Escrow Termination
Date does not therefore occur, the officers of the Fund shall execute and
deliver to the Escrow Agent, no later than March 31, 2000, a certificate stating
that the requisite shareholder vote with respect to the Series has not been
obtained and that the Sub-Advisory Fees (and interest) in the Escrow Account
should be paid over to the Series. As to each Series, the provisions of this
Exhibit A shall terminate and be of no further force and effect, and may be
removed from this Agreement, upon (i) the Escrow Termination Date, or (ii) March
31, 2000.
-12-
<PAGE> 299
APPENDIX E
FORM OF NEW SUB-ADVISORY AGREEMENT (ISG MID-CAP FUND)
<PAGE> 300
FORM OF
SUB-INVESTMENT ADVISORY AGREEMENT
Sub-Investment Advisory Agreement made as of the 1st day of
October, l999, between FIRST AMERICAN NATIONAL BANK, a national banking
association having its principal office and place of business at First
American Center, 315 Deaderick Street, Nashville, Tennessee 37238-0035
(herein called the "Adviser"), and BENNETT LAWRENCE MANAGEMENT, LLC,
having its principal office and place of business at 757 Third Avenue,
New York, New York 10017(herein called the "Sub-Adviser").
WHEREAS, The Infinity Mutual Funds, Inc. (herein called the
"Fund") is an open-end, management investment company, registered under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund employs the Adviser to provide advisory
services pursuant to an Investment Advisory Agreement dated October 1,
1999 between the Fund and the Adviser (the "Investment Advisory
Agreement") with respect to the Fund's portfolio or portfolios set forth
on Schedule 1 attached hereto, as such may be revised from time to time
(the "Series"; if there are more than one Series to which this Agreement
applies, the provisions herein shall apply severally to each such
Series); and
WHEREAS, the Fund intends to employ BISYS Fund Services Ohio,
Inc. (the "Administrator") to act as the Fund's administrator; and
WHEREAS, the Adviser, in its capacity as investment adviser
to the Series, desires to retain the Sub-Adviser to provide the
day-to-day management of the Series' investments, the Fund consents to
the Adviser retaining the Sub-Adviser to provide such services, and the
Sub-Adviser is willing to perform such services upon the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. Appointment.
------------
The Adviser hereby retains the Sub-Adviser to act as
sub-investment adviser to the Series for the period and on the terms set
forth in this Agreement. The Sub-Adviser
<PAGE> 301
accepts such appointment and agrees to furnish the services herein set forth for
the compensation herein provided.
2. Services of Sub-Adviser.
------------------------
Subject to the oversight and supervision of the Adviser, the
Sub-Adviser will provide a continuous investment program for the Series,
including investment research and day-to-day management with respect to
such Series' assets. The Sub-Adviser will provide the services rendered
by it under this Agreement in accordance with the investment criteria and
policies established from time to time for the Series by the Adviser, the
Series' investment objective, policies and restrictions as stated in the
Fund's Prospectus and Statement of Additional Information for the Series,
as from time to time in effect, and resolutions of the Fund's Board of
Directors. The Fund and the Adviser wish to be informed of important
developments materially affecting the Series' portfolio and the
Sub-Adviser agrees to furnish to the Fund and the Adviser from time to
time such information as may be appropriate for this purpose.
3. Other Covenants.
----------------
The Sub-Adviser agrees that it will:
(a) comply with all applicable rules and regulations of the
Securities and Exchange Commission in performance of its duties as
sub-investment adviser for the Series and, in addition, will conduct its
activities under this Agreement in accordance with other applicable
federal and state law;
(b) provide, or cause to be provided, to the Board of
Directors of the Fund such reports, statistical data and economic
information as may be reasonably requested in connection with the
Sub-Adviser's services hereunder;
(c) 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;
(d) place orders pursuant to its investment determinations
for the Series either directly with the issuer or with any broker or
dealer. In executing portfolio transactions and selecting brokers or
dealers, the Sub-Adviser will use its best efforts to seek on behalf of
the Series the best overall terms available. In assessing the best
overall terms available for any transaction, the Sub-Adviser shall
consider all factors that it deems relevant,
-2-
<PAGE> 302
including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any,
both for the specific transaction and on a continuing basis. In
evaluating the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the Sub-Adviser may
also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to the Series and other accounts over which the Sub-Adviser or
an affiliate of the Sub-Adviser exercises investment discretion. The
Sub-Adviser is authorized, subject to the prior approval of the Adviser
and the Fund's Board of Directors, to pay to a broker or dealer who
provides such brokerage and research services a commission for
executing a portfolio transaction for any of the Series which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the Sub-Adviser
determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided
by such broker or dealer as viewed in terms of that particular
transaction or in terms of the overall responsibilities of the
Sub-Adviser to the Series. In addition, the Sub-Adviser is authorized
to take into account the sale of the Fund's shares in allocating
purchase and sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the Adviser,
Sub-Adviser or the Fund's principal underwriter), provided that the
Sub-Adviser believes that the quality of the execution and the
commission are comparable to what they would be with other qualified
firms. In no instance, however, will portfolio securities be purchased
from or sold to the Adviser, Sub-Adviser, the Fund's principal
underwriter or any affiliated person of any of the Fund, the Adviser,
Sub-Adviser, or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Securities and
Exchange Commission and other applicable federal and state laws and
regulations;
(e) maintain historical tax lots for each portfolio security
held by the Series;
(f) transmit trades to the Fund's custodian for proper
settlement; and
(g) prepare a quarterly broker security transaction summary
and monthly security transaction listing for each Series.
-3-
<PAGE> 303
4. Services Not Exclusive.
-----------------------
The services furnished by the Sub-Adviser hereunder are
deemed not to be exclusive, and the Sub-Adviser shall be free to furnish
similar services to others so long as its services under this Agreement
are not impaired thereby. To the extent that the purchase or sale of
securities or other investments of the same issuer may be deemed by the
Sub-Adviser to be suitable for two or more Series, investment companies
or accounts managed by the Sub-Adviser, the available securities or
investments will be allocated in a manner believed by the Sub-Adviser to
be equitable to each of them. It is recognized and acknowledged by the
Adviser that in some cases this procedure may adversely affect the price
paid or received by the Series or the size of the position obtained for
or disposed of by Series.
5. Books and Records.
------------------
In compliance with the requirements of Rule 3la-3 under the
1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Series are the property of the Fund and further agrees
to surrender promptly to the Fund any of such records upon the request of
the Fund of the Adviser. The Sub-Adviser further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained by Rule 31a-1 under the 1940 Act.
6. Expenses.
---------
Except as otherwise stated in this Section 6, the Sub-Adviser
shall pay all expenses incurred by it in performing its services and
duties as sub-investment adviser. The Adviser hereby agrees that all
other expenses to be incurred in the operation of the Fund shall not be
borne by the Sub-Adviser. The Adviser and the Fund have agreed that such
other expenses will be borne by the Fund, except to the extent
specifically assumed by others. The expenses to be borne by the Fund
include, without limitation, the following: organizational costs, taxes,
interest, brokerage fees and commissions, if any, fees of Directors who
are not officers, directors, employees or holders of 5% or more of the
outstanding voting securities of the Adviser, Sub-Adviser or the
Administrator, or any of their affiliates, Securities and Exchange
Commission fees, state Blue Sky qualification fees, advisory and
administration fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance
-4-
<PAGE> 304
premiums, industry association fees, auditing and legal expenses, costs
of maintaining corporate existence, costs of independent pricing
services, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of calculating the
net asset value of the Series' shares, costs of shareholders' reports
and corporate meetings, costs of preparing and printing certain
prospectuses and statements of additional information, and any
extraordinary expenses.
7. Compensation.
-------------
In consideration of services rendered pursuant to this
Agreement, the Adviser will pay the Sub-Adviser on the first business day
of each month, subject to the terms and conditions set forth on Exhibit A
attached hereto, the fee at the annual rate set forth opposite the
Series' name on Schedule l attached hereto, based on the value of such
Series' average daily net assets for the previous month. The Sub-Adviser
agrees to accept such fee from the Adviser as full compensation for the
services provided and expenses assumed by it pursuant to this Agreement,
and acknowledges that it shall not be entitled to any further
compensation from any other person in respect of the same.
Net asset value shall be computed on such days and at such
time or times as described in the Fund's current Prospectus for the
Series. The fee for the period from the date of the commencement of the
initial public sale of the Series' shares to the end of the month during
which such sale shall have been commenced shall be pro-rated according to
the proportion which such period bears to the full monthly period, and
upon any termination of this Agreement before the end of any month, the
fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall
be payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to the
Sub-Adviser, the value of the Series' net assets shall be computed in the
manner specified in the Fund's Charter for the computation of the value
of the Series' net assets.
8. Limitation of Liability.
------------------------
The Sub-Adviser shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund or the Adviser in
connection with the matters to which this Agreement relates, except that
the Sub-Adviser shall be liable to the Fund for any loss resulting from
-5-
<PAGE> 305
willful misfeasance, bad faith or gross negligence on its part in the
performance of the Sub-Adviser's duties or from its reckless disregard of
its obligations and duties under this Agreement. Any person, even though
also an officer, director, partner, employee or agent of the Sub-Adviser,
who may be or become an officer, Director, employee or agent of the Fund,
shall be deemed, when rendering services to the Fund or to the Series, or
acting on any business of the Fund or of the Series (other than services
or business in connection with the Sub-Adviser's duties as sub-investment
adviser hereunder) to be rendering such services to or acting solely for
the Fund or the Series and not as an officer, director, partner, employee
or agent or one under the control or direction of the Sub-Adviser even
though paid by the Sub-Adviser.
9. Term.
-----
As to each Series, this Agreement shall continue until the
date set forth opposite such Series' name on Schedule 1 attached hereto
(the "Reapproval Date"), and thereafter shall continue automatically for
successive annual periods ending on the day of each year set forth
opposite the Series' name on Schedule 1 attached hereto (the "Reapproval
Day"), provided such continuance is specifically approved as to a Series
at least annually by (a) the Fund's Board of Directors or (b) vote of a
majority (as defined in the 1940 Act) of such Series' outstanding voting
securities, provided that in either event its continuance also is
approved by a majority of the Fund's Directors who are not "interested
persons" (as defined in the 1940 Act) of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. As to each Series, this Agreement may be terminated without
penalty (i) by the Fund's Board of Directors or by vote of the holders of
a majority of such Series' shares, upon written notice to the
Sub-Adviser, (ii) by the Adviser (but only upon the approval of the
Fund's Board of Directors) upon 60 days' written notice to the
Sub-Adviser (which notice may be waived in writing by the Sub-Adviser),
or (iii) by the Sub-Adviser upon not less than 90 days' written notice to
the Fund and the Adviser (which notice may be waived in writing by the
Fund and the Adviser). This Agreement also will terminate automatically,
as to the relevant Series, in the event of its assignment (as defined in
the 1940 Act). In addition, notwithstanding anything herein to the
contrary, if the Investment Advisory Agreement is terminated for any
reason (whether by the Fund, by the Adviser or by operation of law), this
Agreement shall
-6-
<PAGE> 306
terminate with respect to the Series upon the effective date of such termination
of the Investment Advisory Agreement.
10. Miscellaneous.
--------------
(a) Amendments. No provision of this Agreement may
be changed, waived, discharged or terminated, except by an
instrument in writing signed by the party or parties against
whom an enforcement of the change, waiver, discharge or
termination is sought.
(b) Construction. The captions in this Agreement are
included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of
this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. Subject to the
provisions of Section 10 hereof, this Agreement shall be
binding upon and shall inure to the benefit of the parties
hereto and their respective successors and shall be governed
by New York law; provided, however, that nothing herein
shall be construed in a manner inconsistent with the 1940
Act or any rule or regulation of the Securities and Exchange
Commission thereunder.
(c) Notice. Any notice or other instrument in
writing, authorized or required by this Agreement to be
given to the Fund shall be effective upon actual receipt by
the Fund, or on the fourth day after the postmark if such
notice or other instrument is mailed via first class postage
prepaid, at its office at 3435 Stelzer Road, Columbus, Ohio
43219-3035, Attention: Compliance Officer, or at such other
place as the Fund may from time to time designate in
writing. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Adviser or Sub-Adviser, as the case may be, shall be
effective upon actual receipt by the Adviser or Sub-Adviser,
as the case may be, or on the fourth day after the postmark
if such notice or other instrument is mailed via first class
postage prepaid, at its office at the address first above
written, or at such other place as the Adviser or
Sub-Adviser, as the case may be, may from time to time
designate in writing.
-7-
<PAGE> 307
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below as of the day and
year first above written.
FIRST AMERICAN NATIONAL BANK
By:
--------------------------------
Attest:
--------------------------------
BENNETT LAWRENCE MANAGEMENT, LLC
By:
--------------------------------
Attest:
--------------------------------
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<PAGE> 308
SCHEDULE 1
Annual Fee As
a Percentage
of Average
Name of Series Daily Net Assets Reapproval Date Reapproval Day
- -------------- ---------------- --------------- --------------
ISG Mid-Cap Fund * December 31, 1999 December 31
* .75% on the first $25 million of average aggregate daily net assets; .625% on
the next $50 million of such assets; and .50% on assets in excess of $75
million.
-9-
<PAGE> 309
EXHIBIT A
As to each Series, during the period from and including October 1, 1999
(the "Escrow Beginning Date") until the date of approval by shareholders of the
Series in conformity with the provisions of the 1940 Act, including but not
limited to Section 15(c) thereof (the "Escrow Termination Date"), any and all
sub-advisory fees (the "Sub-Advisory Fees") payable under this Agreement shall
be paid in accordance with this Exhibit A. From and including the Escrow
Beginning Date to, but not including, the Escrow Termination Date, any and all
Sub-Advisory Fees payable under this Agreement shall be paid into an interest
bearing escrow account (the "Escrow Account") maintained by an unaffiliated
financial institution (the "Escrow Agent"). Pursuant to a letter agreement with
the Escrow Agent, the Sub-Advisory Fees (including interest earned on such
Sub-Advisory Fees) payable under this Agreement will be paid to the Sub-Adviser
only if shareholders of the Series approve the Agreement. Further pursuant to
the letter agreement, on the Escrow Termination Date the Sub-Advisory Fees paid
hereunder will be released by the Escrow Agent from the Escrow Account to the
Sub-Adviser, only upon receipt by the Escrow Agent of a certificate from
officers of the Fund stating that this Agreement, with respect to the Series,
has received the requisite shareholder vote. As to each Series, in the event
that the requisite shareholder vote is not obtained and the Escrow Termination
Date does not therefore occur, the officers of the Fund shall execute and
deliver to the Escrow Agent, no later than March 31, 2000, a certificate stating
that the requisite shareholder vote with respect to the Series has not been
obtained and that the Sub-Advisory Fees (and interest) in the Escrow Account
should be paid over to the Series. As to each Series, the provisions of this
Exhibit A shall terminate and be of no further force and effect, and may be
removed from this Agreement, upon (i) the Escrow Termination Date, or (ii) March
31, 2000.
-10-
<PAGE> 310
APPENDIX F
FORM OF NEW SUB-ADVISORY AGREEMENT (ISG INTERNATIONAL EQUITY FUND)
<PAGE> 311
FORM OF
SUB-INVESTMENT ADVISORY AGREEMENT
Sub-Investment Advisory Agreement made as of the 1st day of October,
l999, between FIRST AMERICAN NATIONAL BANK, a national banking association
having its principal office and place of business at First American Center, 315
Deaderick Street, Nashville, Tennessee 37238-0035 (herein called the "Adviser"),
and LAZARD ASSET MANAGEMENT, having its principal office and place of business
at 30 Rockefeller Plaza, New York, New York 10020 (herein called the
"Sub-Adviser").
WHEREAS, The Infinity Mutual Funds, Inc. (herein called the "Fund") is
an open-end, management investment company, registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund employs the Adviser to provide advisory services
pursuant to an Investment Advisory Agreement dated October 1, 1999 between the
Fund and the Adviser (the "Investment Advisory Agreement") with respect to the
Fund's portfolio or portfolios set forth on Schedule 1 attached hereto, as such
may be revised from time to time (the "Series"; if there are more than one
Series to which this Agreement applies, the provisions herein shall apply
severally to each such Series); and
WHEREAS, the Fund intends to employ BISYS Fund Services Ohio, Inc. (the
"Administrator") to act as the Fund's administrator; and
WHEREAS, the Adviser, in its capacity as investment adviser to the
Series, desires to retain the Sub-Adviser to provide the day-to-day management
of the Series' investments, the Fund consents to the Adviser retaining the
Sub-Adviser to provide such services, and the Sub-Adviser is willing to perform
such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
The Adviser hereby retains the Sub-Adviser to act as sub-investment
adviser to the Series for the period and
<PAGE> 312
on the terms set forth in this Agreement. The Sub-Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
2. Services of Sub-Adviser.
Subject to the oversight and supervision of the Adviser, the
Sub-Adviser will provide a continuous investment program for the Series,
including investment research and day-to-day management with respect to such
Series' assets. The Sub-Adviser will provide the services rendered by it under
this Agreement in accordance with the investment criteria and policies
established from time to time for the Series by the Adviser, the Series'
investment objective, policies and restrictions as stated in the Fund's
Prospectus and Statement of Additional Information for the Series, as from time
to time in effect, and resolutions of the Fund's Board of Directors. The Fund
and the Adviser wish to be informed of important developments materially
affecting the Series' portfolio and the Sub-Adviser agrees to furnish to the
Fund and the Adviser from time to time such information as may be appropriate
for this purpose.
3. Other Covenants.
The Sub-Adviser agrees that it will:
(a) comply with all applicable rules and regulations of the
Securities and Exchange Commission in performance of its duties as
sub-investment adviser for the Series and, in addition, will conduct its
activities under this Agreement in accordance with other applicable federal and
state law;
(b) provide, or cause to be provided, to the Board of
Directors of the Fund such reports, statistical data and economic information as
may be reasonably requested in connection with the Sub-Adviser's services
hereunder;
(c) 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;
(d) place orders pursuant to its investment determinations for
the Series either directly with the issuer or with any broker or dealer. In
executing portfolio transactions and selecting brokers or dealers, the
Sub-Adviser will use its best efforts to seek on behalf of the Series the best
overall terms available. In assessing the best overall terms available for any
transaction, the Sub-
-2-
<PAGE> 313
Adviser shall consider all factors that it deems relevant, including the breadth
of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific transaction and
on a continuing basis. In evaluating the best overall terms available, and in
selecting the broker-dealer to execute a particular transaction, the Sub-Adviser
may also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Series and other accounts over which the Sub-Adviser or an affiliate of the
Sub-Adviser exercises investment discretion. The Sub-Adviser is authorized,
subject to the prior approval of the Adviser and the Fund's Board of Directors,
to pay to a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for any of the Series which is
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the Sub-Adviser
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer
as viewed in terms of that particular transaction or in terms of the overall
responsibilities of the Sub-Adviser to the Series. In addition, the Sub-Adviser
is authorized to take into account the sale of the Fund's shares in allocating
purchase and sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the Adviser, Sub-Adviser
or the Fund's principal underwriter), provided that the Sub-Adviser believes
that the quality of the execution and the commission are comparable to what they
would be with other qualified firms. In no instance, however, will portfolio
securities be purchased from or sold to the Adviser, Sub-Adviser, the Fund's
principal underwriter or any affiliated person of any of the Fund, the Adviser,
Sub-Adviser, or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Securities and Exchange
Commission and other applicable federal and state laws and regulations;
(e) maintain historical tax lots for each portfolio security
held by the Series;
(f) transmit trades to the Fund's custodian for proper
settlement; and
(g) prepare a quarterly broker security transaction summary
and monthly security transaction listing for each Series.
-3-
<PAGE> 314
4. Services Not Exclusive.
The services furnished by the Sub-Adviser hereunder are deemed not to
be exclusive, and the Sub-Adviser shall be free to furnish similar services to
others so long as its services under this Agreement are not impaired thereby. To
the extent that the purchase or sale of securities or other investments of the
same issuer may be deemed by the Sub-Adviser to be suitable for two or more
Series, investment companies or accounts managed by the Sub-Adviser, the
available securities or investments will be allocated in a manner believed by
the Sub-Adviser to be equitable to each of them. It is recognized and
acknowledged by the Adviser that in some cases this procedure may adversely
affect the price paid or received by the Series or the size of the position
obtained for or disposed of by Series.
5. Books and Records.
In compliance with the requirements of Rule 3la-3 under the 1940 Act,
the Sub-Adviser hereby agrees that all records which it maintains for the Series
are the property of the Fund and further agrees to surrender promptly to the
Fund any of such records upon the request of the Fund or the Adviser. The
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
6. Expenses.
Except as otherwise stated in this Section 6, the Sub-Adviser shall pay
all expenses incurred by it in performing its services and duties as
sub-investment adviser. The Adviser hereby agrees that all other expenses to be
incurred in the operation of the Fund shall not be borne by the Sub-Adviser. The
Adviser and the Fund have agreed that such other expenses will be borne by the
Fund, except to the extent specifically assumed by others. The expenses to be
borne by the Fund include, without limitation, the following: organizational
costs, taxes, interest, brokerage fees and commissions, if any, fees of
Directors who are not officers, directors, employees or holders of 5% or more of
the outstanding voting securities of the Adviser, Sub-Adviser or the
Administrator, or any of their affiliates, Securities and Exchange Commission
fees, state Blue Sky qualification fees, advisory and administration fees,
charges of custodians, transfer and
-4-
<PAGE> 315
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, auditing and legal expenses, costs of maintaining corporate
existence, costs of independent pricing services, costs attributable to investor
services (including, without limitation, telephone and personnel expenses),
costs of calculating the net asset value of the Series' shares, costs of
shareholders' reports and corporate meetings, costs of preparing and printing
certain prospectuses and statements of additional information, and any
extraordinary expenses.
7. Compensation.
In consideration of services rendered pursuant to this Agreement, the
Adviser will pay the Sub-Adviser on the first business day of each month,
subject to the terms and conditions set forth on Exhibit A attached hereto, the
fee at the annual rate set forth opposite the Series' name on Schedule l
attached hereto, based on the value of such Series' average daily net assets for
the previous month. The Sub-Adviser agrees to accept such fee from the Adviser
as full compensation for the services provided and expenses assumed by it
pursuant to this Agreement, and acknowledges that it shall not be entitled to
any further compensation from any other person in respect of the same.
Net asset value shall be computed on such days and at such time or
times as described in the Fund's current Prospectus for the Series. The fee for
the period from the date of the commencement of the initial public sale of the
Series' shares to the end of the month during which such sale shall have been
commenced shall be pro-rated according to the proportion which such period bears
to the full monthly period, and upon any termination of this Agreement before
the end of any month, the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the full monthly period
and shall be payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to the Sub-Adviser, the
value of the Series' net assets shall be computed in the manner specified in the
Fund's Charter for the computation of the value of the Series' net assets.
8. Limitation of Liability.
The Sub-Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund or the Adviser in connection
with the matters to which this Agreement relates, except that the Sub-Adviser
-5-
<PAGE> 316
shall be liable to the Fund for any loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of the Sub-Adviser's
duties or from its reckless disregard of its obligations and duties under this
Agreement. Any person, even though also an officer, director, partner, employee
or agent of the Sub-Adviser, who may be or become an officer, Director, employee
or agent of the Fund, shall be deemed, when rendering services to the Fund or to
the Series, or acting on any business of the Fund or of the Series (other than
services or business in connection with the Sub-Adviser's duties as
sub-investment adviser hereunder) to be rendering such services to or acting
solely for the Fund or the Series and not as an officer, director, partner,
employee or agent or one under the control or direction of the Sub-Adviser even
though paid by the Sub-Adviser.
9. Term.
As to each Series, this Agreement shall continue until the date set
forth opposite such Series' name on Schedule 1 attached hereto (the "Reapproval
Date"), and thereafter shall continue automatically for successive annual
periods ending on the day of each year set forth opposite the Series' name on
Schedule 1 attached hereto (the "Reapproval Day"), provided such continuance is
specifically approved as to a Series at least annually by (a) the Fund's Board
of Directors or (b) vote of a majority (as defined in the 1940 Act) of such
Series' outstanding voting securities, provided that in either event its
continuance also is approved by a majority of the Fund's Directors who are not
"interested persons" (as defined in the 1940 Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. As to each Series, this Agreement may be terminated without
penalty (i) by the Fund's Board of Directors or by vote of the holders of a
majority of such Series' shares, upon written notice to the Sub-Adviser, (ii) by
the Adviser (but only upon the approval of the Fund's Board of Directors) upon
60 days' written notice to the Sub-Adviser (which notice may be waived in
writing by the Sub-Adviser), or (iii) by the Sub-Adviser upon not less than 90
days' written notice to the Fund and the Adviser (which notice may be waived in
writing by the Fund and the Adviser). This Agreement also will terminate
automatically, as to the relevant Series, in the event of its assignment (as
defined in the 1940 Act). In addition, notwithstanding anything herein to the
contrary, if the Investment Advisory Agreement is terminated for any reason
(whether by the Fund, by the Adviser or by operation of law), this Agreement
shall
-6-
<PAGE> 317
terminate with respect to the Series upon the effective date of such termination
of the Investment Advisory Agreement.
10. Miscellaneous.
(a) Amendments. No provision of this Agreement may be changed,
waived, discharged or terminated, except by an instrument in writing signed by
the party or parties against whom an enforcement of the change, waiver,
discharge or termination is sought.
(b) Construction. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. Subject to the provisions of Section 10 hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by New York law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the 1940 Act or any rule or regulation of the Securities and Exchange Commission
thereunder.
(c) Notice. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Fund shall be
effective upon actual receipt by the Fund, or on the fourth day after the
postmark if such notice or other instrument is mailed via first class postage
prepaid, at its office at 3435 Stelzer Road, Columbus, Ohio 43219-3035,
Attention: Compliance Officer, or at such other place as the Fund may from time
to time designate in writing. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Adviser or
Sub-Adviser, as the case may be, shall be effective upon actual receipt by the
Adviser or Sub-Adviser, as the case may be, or on the fourth day after the
postmark if such notice or other instrument is mailed via first class postage
prepaid, at its office at the address first above written, or at such other
place as the Adviser or Sub-Adviser, as the case may be, may from time to time
designate in writing.
-7-
<PAGE> 318
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
FIRST AMERICAN NATIONAL BANK
By:
--------------------------------
Attest:
---------------------------
LAZARD ASSET MANAGEMENT
By:
--------------------------------
Attest:
---------------------------
-8-
<PAGE> 319
SCHEDULE 1
<TABLE>
<CAPTION>
Annual Fee As a
Percentage of Average
Name of Series Daily Net Assets Reapproval Date Reapproval Day
- -------------- ---------------- --------------- --------------
<S> <C> <C> <C>
ISG International .50 of 1% December 31, 1999 December 31
Equity Fund
</TABLE>
<PAGE> 320
EXHIBIT A
As to each Series, during the period from and including October 1, 1999
(the "Escrow Beginning Date") until the date of approval by shareholders of the
Series in conformity with the provisions of the 1940 Act, including but not
limited to Section 15(c) thereof (the "Escrow Termination Date"), any and all
sub-advisory fees (the "Sub-Advisory Fees") payable under this Agreement shall
be paid in accordance with this Exhibit A. From and including the Escrow
Beginning Date to, but not including, the Escrow Termination Date, any and all
Sub-Advisory Fees payable under this Agreement shall be paid into an interest
bearing escrow account (the "Escrow Account") maintained by an unaffiliated
financial institution (the "Escrow Agent"). Pursuant to a letter agreement with
the Escrow Agent, the Sub-Advisory Fees (including interest earned on such
Sub-Advisory Fees) payable under this Agreement will be paid to the Sub-Adviser
only if shareholders of the Series approve the Agreement. Further pursuant to
the letter agreement, on the Escrow Termination Date the Sub-Advisory Fees paid
hereunder will be released by the Escrow Agent from the Escrow Account to the
Sub-Adviser, only upon receipt by the Escrow Agent of a certificate from
officers of the Fund stating that this Agreement, with respect to the Series,
has received the requisite shareholder vote. As to each Series, in the event
that the requisite shareholder vote is not obtained and the Escrow Termination
Date does not therefore occur, the officers of the Fund shall execute and
deliver to the Escrow Agent, no later than March 31, 2000, a certificate stating
that the requisite shareholder vote with respect to the Series has not been
obtained and that the Sub-Advisory Fees (and interest) in the Escrow Account
should be paid over to the Series. As to each Series, the provisions of this
Exhibit A shall terminate and be of no further force and effect, and may be
removed from this Agreement, upon (i) the Escrow Termination Date, or (ii) March
31, 2000.
-10-
<PAGE> 321
APPENDIX G
FORM OF NEW SUB-ADVISORY AGREEMENT (ISG SMALL-CAP OPPORTUNITY FUND)
<PAGE> 322
FORM OF
SUB-INVESTMENT ADVISORY AGREEMENT
Sub-Investment Advisory Agreement made as of the 1st day of October,
l999, between FIRST AMERICAN NATIONAL BANK, a national banking association
having its principal office and place of business at First American Center, 315
Deaderick Street, Nashville, Tennessee 37238-0035 (herein called the "Adviser"),
and WOMACK ASSET MANAGEMENT, INC., having its principal office and place of
business at 1667 Lelia Drive, Suite 101, Jackson, Mississippi 39216 (herein
called the "Sub-Adviser").
WHEREAS, The Infinity Mutual Funds, Inc. (herein called the "Fund") is
an open-end, management investment company, registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund employs the Adviser to provide advisory services
pursuant to an Investment Advisory Agreement dated October 1, 1999 between the
Fund and the Adviser (the "Investment Advisory Agreement") with respect to the
Fund's portfolio or portfolios set forth on Schedule 1 attached hereto, as such
may be revised from time to time (the "Series"; if there are more than one
Series to which this Agreement applies, the provisions herein shall apply
severally to each such Series); and
WHEREAS, the Fund intends to employ BISYS Fund Services Ohio, Inc. (the
"Administrator") to act as the Fund's administrator; and
WHEREAS, the Adviser, in its capacity as investment adviser to the
Series, desires to retain the Sub-Adviser to provide the day-to-day management
of the Series' investments, the Fund consents to the Adviser retaining the
Sub-Adviser to provide such services, and the Sub-Adviser is willing to perform
such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
The Adviser hereby retains the Sub-Adviser to act as sub-investment
adviser to the Series for the period and on the terms set forth in this
Agreement. The Sub-Adviser
<PAGE> 323
accepts such appointment and agrees to furnish the services herein set forth for
the compensation herein provided.
2. Services of Sub-Adviser.
Subject to the oversight and supervision of the Adviser, the
Sub-Adviser will provide a continuous investment program for the Series,
including investment research and day-to-day management with respect to such
Series' assets, other than cash and cash equivalents. The Sub-Adviser will
provide the services rendered by it under this Agreement in accordance with the
investment criteria and policies established from time to time for the Series by
the Adviser, the Series' investment objective, policies and restrictions as
stated in the Fund's Prospectus and Statement of Additional Information for the
Series, as from time to time in effect, and resolutions of the Fund's Board of
Directors. The Fund and the Adviser wish to be informed of important
developments materially affecting the Series' portfolio and the Sub-Adviser
agrees to furnish to the Fund and the Adviser from time to time such information
as may be appropriate for this purpose.
3. Other Covenants.
The Sub-Adviser agrees that it will:
(a) comply with all applicable rules and regulations of the
Securities and Exchange Commission in performance of its duties as
sub-investment adviser for the Series and, in addition, will conduct its
activities under this Agreement in accordance with other applicable federal and
state law;
(b) provide, or cause to be provided, to the Board of
Directors of the Fund such reports, statistical data and economic information as
may be reasonably requested in connection with the Sub-Adviser's services
hereunder;
(c) 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;
(d) place orders pursuant to its investment determinations for
the Series either directly with the issuer or with any broker or dealer. In
executing portfolio transactions and selecting brokers or dealers, the
Sub-Adviser will use its best efforts to seek on behalf of the Series the best
overall terms available. In assessing the best overall terms available for any
transaction, the Sub-
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<PAGE> 324
Adviser shall consider all factors that it deems relevant, including the breadth
of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific transaction and
on a continuing basis. In evaluating the best overall terms available, and in
selecting the broker-dealer to execute a particular transaction, the Sub-Adviser
may also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Series and other accounts over which the Sub-Adviser or an affiliate of the
Sub-Adviser exercises investment discretion. The Sub-Adviser is authorized,
subject to the prior approval of the Adviser and the Fund's Board of Directors,
to pay to a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for any of the Series which is
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the Sub-Adviser
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer
as viewed in terms of that particular transaction or in terms of the overall
responsibilities of the Sub-Adviser to the Series. In addition, the Sub-Adviser
is authorized to take into account the sale of the Fund's shares in allocating
purchase and sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the Adviser, Sub-Adviser
or the Fund's principal underwriter), provided that the Sub-Adviser believes
that the quality of the execution and the commission are comparable to what they
would be with other qualified firms. In no instance, however, will portfolio
securities be purchased from or sold to the Adviser, Sub-Adviser, the Fund's
principal underwriter or any affiliated person of any of the Fund, the Adviser,
Sub-Adviser, or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Securities and Exchange
Commission and other applicable federal and state laws and regulations;
(e) maintain historical tax lots for each portfolio security
held by the Series;
(f) transmit trades to the Fund's custodian for proper
settlement; and
(g) prepare a quarterly broker security transaction summary
and monthly security transaction listing for each Series.
-3-
<PAGE> 325
4. Services Not Exclusive.
The services furnished by the Sub-Adviser hereunder are deemed not to
be exclusive, and the Sub-Adviser shall be free to furnish similar services to
others so long as its services under this Agreement are not impaired thereby. To
the extent that the purchase or sale of securities or other investments of the
same issuer may be deemed by the Sub-Adviser to be suitable for two or more
Series, investment companies or accounts managed by the Sub-Adviser, the
available securities or investments will be allocated in a manner believed by
the Sub-Adviser to be equitable to each of them. It is recognized and
acknowledged by the Adviser that in some cases this procedure may adversely
affect the price paid or received by the Series or the size of the position
obtained for or disposed of by Series.
5. Books and Records.
In compliance with the requirements of Rule 3la-3 under the 1940 Act,
the Sub-Adviser hereby agrees that all records which it maintains for the Series
are the property of the Fund and further agrees to surrender promptly to the
Fund any of such records upon the request of the Fund of the Adviser. The
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
6. Expenses.
Except as otherwise stated in this Section 6, the Sub-Adviser shall pay
all expenses incurred by it in performing its services and duties as
sub-investment adviser. The Adviser hereby agrees that all other expenses to be
incurred in the operation of the Fund shall not be borne by the Sub-Adviser. The
Adviser and the Fund have agreed that such other expenses will be borne by the
Fund, except to the extent specifically assumed by others. The expenses to be
borne by the Fund include, without limitation, the following: organizational
costs, taxes, interest, brokerage fees and commissions, if any, fees of
Directors who are not officers, directors, employees or holders of 5% or more of
the outstanding voting securities of the Adviser, Sub-Adviser or the
Administrator, or any of their affiliates, Securities and Exchange Commission
fees, state Blue Sky qualification fees, advisory and administration fees,
charges of custodians, transfer and
-4-
<PAGE> 326
dividend disbursing agents' fees, certain insurance premiums, industry
association fees, auditing and legal expenses, costs of maintaining corporate
existence, costs of independent pricing services, costs attributable to investor
services (including, without limitation, telephone and personnel expenses),
costs of calculating the net asset value of the Series' shares, costs of
shareholders' reports and corporate meetings, costs of preparing and printing
certain prospectuses and statements of additional information, and any
extraordinary expenses.
7. Compensation.
In consideration of services rendered pursuant to this Agreement, the
Adviser will pay the Sub-Adviser on the first business day of each month,
subject to the terms and conditions set forth on Exhibit A attached hereto, the
fee at the annual rate set forth opposite the Series' name on Schedule l
attached hereto, based on the value of such Series' average daily net assets for
the previous month. The Sub-Adviser agrees to accept such fee from the Adviser
as full compensation for the services provided and expenses assumed by it
pursuant to this Agreement, and acknowledges that it shall not be entitled to
any further compensation from any other person in respect of the same.
Net asset value shall be computed on such days and at such time or
times as described in the Fund's current Prospectus for the Series. The fee for
the period from the date of the commencement of the initial public sale of the
Series' shares to the end of the month during which such sale shall have been
commenced shall be pro-rated according to the proportion which such period bears
to the full monthly period, and upon any termination of this Agreement before
the end of any month, the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the full monthly period
and shall be payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to the Sub-Adviser, the
value of the Series' net assets shall be computed in the manner specified in the
Fund's Charter for the computation of the value of the Series' net assets.
8. Limitation of Liability.
The Sub-Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund or the Adviser in connection
with the matters to which this Agreement relates, except that the Sub-Adviser
-5-
<PAGE> 327
shall be liable to the Fund for any loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of the Sub-Adviser's
duties or from its reckless disregard of its obligations and duties under this
Agreement. Any person, even though also an officer, director, partner, employee
or agent of the Sub-Adviser, who may be or become an officer, Director, employee
or agent of the Fund, shall be deemed, when rendering services to the Fund or to
the Series, or acting on any business of the Fund or of the Series (other than
services or business in connection with the Sub-Adviser's duties as
sub-investment adviser hereunder) to be rendering such services to or acting
solely for the Fund or the Series and not as an officer, director, partner,
employee or agent or one under the control or direction of the Sub-Adviser even
though paid by the Sub-Adviser.
9. Term.
As to each Series, this Agreement shall continue until the date set
forth opposite such Series' name on Schedule 1 attached hereto (the "Reapproval
Date"), and thereafter shall continue automatically for successive annual
periods ending on the day of each year set forth opposite the Series' name on
Schedule 1 attached hereto (the "Reapproval Day"), provided such continuance is
specifically approved as to a Series at least annually by (a) the Fund's Board
of Directors or (b) vote of a majority (as defined in the 1940 Act) of such
Series' outstanding voting securities, provided that in either event its
continuance also is approved by a majority of the Fund's Directors who are not
"interested persons" (as defined in the 1940 Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. As to each Series, this Agreement may be terminated without
penalty (i) by the Fund's Board of Directors or by vote of the holders of a
majority of such Series' shares, upon written notice to the Sub-Adviser, (ii) by
the Adviser (but only upon the approval of the Fund's Board of Directors) upon
60 days' written notice to the Sub-Adviser (which notice may be waived in
writing by the Sub-Adviser), or (iii) by the Sub-Adviser upon not less than 90
days' written notice to the Fund and the Adviser (which notice may be waived in
writing by the Fund and the Adviser). This Agreement also will terminate
automatically, as to the relevant Series, in the event of its assignment (as
defined in the 1940 Act). In addition, notwithstanding anything herein to the
contrary, if the Investment Advisory Agreement is terminated for any reason
(whether by the Fund, by the Adviser or by operation of law), this Agreement
shall
-6-
<PAGE> 328
terminate with respect to the Series upon the effective date of such termination
of the Investment Advisory Agreement.
10. Miscellaneous.
(a) Amendments. No provision of this Agreement may be changed,
waived, discharged or terminated, except by an instrument in writing signed by
the party or parties against whom an enforcement of the change, waiver,
discharge or termination is sought.
(b) Construction. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. Subject to the provisions of Section 10 hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and shall be governed by New York law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the 1940 Act or any rule or regulation of the Securities and Exchange Commission
thereunder.
(c) Notice. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Fund shall be
effective upon actual receipt by the Fund, or on the fourth day after the
postmark if such notice or other instrument is mailed via first class postage
prepaid, at its office at 3435 Stelzer Road, Columbus, Ohio 43219-3035,
Attention: Compliance Officer, or at such other place as the Fund may from time
to time designate in writing. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Adviser or
Sub-Adviser, as the case may be, shall be effective upon actual receipt by the
Adviser or Sub-Adviser, as the case may be, or on the fourth day after the
postmark if such notice or other instrument is mailed via first class postage
prepaid, at its office at the address first above written, or at such other
place as the Adviser or Sub-Adviser, as the case may be, may from time to time
designate in writing.
-7-
<PAGE> 329
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
FIRST AMERICAN NATIONAL BANK
By:
--------------------------------
Attest:
-------------------------------
WOMACK ASSET MANAGEMENT, INC.
By:
--------------------------------
Attest:
-------------------------------
-8-
<PAGE> 330
SCHEDULE 1
<TABLE>
<CAPTION>
Annual Fee As a
Percentage of Average
Name of Series Daily Net Assets Reapproval Date Reapproval Day
- -------------- ---------------- --------------- --------------
<S> <C> <C> <C>
ISG Small-Cap Opportunity .35 of 1% December 31, 1999 December 31
Fund
</TABLE>
-9-
<PAGE> 331
EXHIBIT A
As to each Series, during the period from and including October 1, 1999
(the "Escrow Beginning Date") until the date of approval by shareholders of the
Series in conformity with the provisions of the 1940 Act, including but not
limited to Section 15(c) thereof (the "Escrow Termination Date"), any and all
sub-advisory fees (the "Sub-Advisory Fees") payable under this Agreement shall
be paid in accordance with this Exhibit A. From and including the Escrow
Beginning Date to, but not including, the Escrow Termination Date, any and all
Sub-Advisory Fees payable under this Agreement shall be paid into an interest
bearing escrow account (the "Escrow Account") maintained by an unaffiliated
financial institution (the "Escrow Agent"). Pursuant to a letter agreement with
the Escrow Agent, the Sub-Advisory Fees (including interest earned on such
Sub-Advisory Fees) payable under this Agreement will be paid to the Sub-Adviser
only if shareholders of the Series approve the Agreement. Further pursuant to
the letter agreement, on the Escrow Termination Date the Sub-Advisory Fees paid
hereunder will be released by the Escrow Agent from the Escrow Account to the
Sub-Adviser, only upon receipt by the Escrow Agent of a certificate from
officers of the Fund stating that this Agreement, with respect to the Series,
has received the requisite shareholder vote. As to each Series, in the event
that the requisite shareholder vote is not obtained and the Escrow Termination
Date does not therefore occur, the officers of the Fund shall execute and
deliver to the Escrow Agent, no later than March 31, 2000, a certificate stating
that the requisite shareholder vote with respect to the Series has not been
obtained and that the Sub-Advisory Fees (and interest) in the Escrow Account
should be paid over to the Series. As to each Series, the provisions of this
Exhibit A shall terminate and be of no further force and effect, and may be
removed from this Agreement, upon (i) the Escrow Termination Date, or (ii) March
31, 2000.
-10-
<PAGE> 332
APPENDIX H
EXECUTIVE OFFICERS AND DIRECTORS OF AMSOUTH BANK
<PAGE> 333
APPENDIX H
The principal executive officer and directors of AmSouth Bank are listed in the
table below. Certain executive officers and directors of AmSouth Bank also hold
or have held various positions with bank and non-bank affiliates of AmSouth
Bank, including AmSouth Bancorporation.
<TABLE>
<CAPTION>
Name and Position with Other business, profession,
AmSouth Bank AmSouth Bank vocation, or employment
- ------------ ------------------------------------
<S> <C>
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
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
</TABLE>
H-1
<PAGE> 334
<TABLE>
<S> <C>
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
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 Senior Executive Vice President
Senior Executive Vice President
E.W. Stephenson, Jr. None
Senior Executive Vice President
</TABLE>
H-2
<PAGE> 335
<TABLE>
<S> <C>
Alfred W. Swan, Jr. None
Senior Executive Vice President
Stephen A. Yoder None
Executive Vice President
and General Counsel
</TABLE>
H-3
<PAGE> 336
ISG CURRENT INCOME PORTFOLIO
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY
MUTUAL FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Current Income Portfolio on February 11, 2000
at TIME a.m., Eastern time, and at any adjournments thereof, all of the shares
of the Fund which the undersigned would be entitled to vote if personally
present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets
of ISG Current Income Portfolio ("ISG Current Income") to AmSouth
Strategic Portfolios: Current Income Portfolio ("AmSouth Current
Income") in exchange for Shares of AmSouth Current Income and the
assumption by AmSouth Current Income of all of the liabilities of ISG
Current Income, followed by the dissolution and liquidation of ISG
Current Income and the distribution of Shares of AmSouth Current Income
to the shareholders of ISG Current Income.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all
material respects to the prior investment advisory agreement for the
ISG Current Income Portfolio.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting
or any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
<PAGE> 337
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please give the full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 338
ISG TREASURY MONEY MARKET FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY
MUTUAL FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Treasury Money Market Fund on February 11,
2000 at TIME a.m., Eastern time, and at any adjournments thereof, all of the
shares of the Fund which the undersigned would be entitled to vote if personally
present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Treasury Money Market Fund ("ISG Treasury Money Market") to AmSouth
Treasury Reserve Money Market Fund ("AmSouth Treasury Reserve Money
Market") in exchange for Shares of AmSouth Treasury Reserve Money Market
and the assumption by AmSouth Treasury Reserve Money Market of all of the
liabilities of ISG Treasury Money Market, followed by the dissolution and
liquidation of ISG Treasury Money Market and the distribution of Shares of
AmSouth Treasury Reserve Money Market to the shareholders of ISG Treasury
Money Market.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Treasury
Money Market Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
<PAGE> 339
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please give the full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 340
ISG MODERATE GROWTH & INCOME PORTFOLIO
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Moderate Growth & Income Portfolio on
February 11, 2000 at TIME a.m., Eastern time, and at any adjournments thereof,
all of the shares of the Fund which the undersigned would be entitled to vote if
personally present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Moderate Growth & Income Portfolio ("ISG Moderate Growth & Income") to
AmSouth Strategic Portfolios: Moderate Growth and Income Portfolio
("AmSouth Moderate Growth and Income") in exchange for Shares of AmSouth
Moderate Growth and Income and the assumption by AmSouth Moderate Growth
and Income of all of the liabilities of ISG Moderate Growth & Income,
followed by the dissolution and liquidation of ISG Moderate Growth &
Income and the distribution of Shares of AmSouth Moderate Growth and
Income to the shareholders of ISG Moderate Growth & Income.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Moderate
Growth & Income Portfolio.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
<PAGE> 341
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please give the full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 342
ISG GROWTH & INCOME PORTFOLIO
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each
of them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Growth & Income Portfolio on February 11,
2000 at TIME a.m., Eastern time, and at any adjournments thereof, all of the
shares of the Fund which the undersigned would be entitled to vote if personally
present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Growth & Income Portfolio ("ISG Growth & Income") to AmSouth Strategic
Portfolios: Growth and Income Portfolio ("AmSouth Growth and Income") in
exchange for Shares of AmSouth Growth and Income and the assumption by
AmSouth Growth and Income of all of the liabilities of ISG Growth &
Income, followed by the dissolution and liquidation of ISG Growth & Income
and the distribution of Shares of AmSouth Growth and Income to the
shareholders of ISG Growth & Income.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Growth &
Income Portfolio.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please
<PAGE> 343
give the full title as such. If a corporation, please sign in full corporate
name and indicate the signer's office. If a partner, please sign in the
partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 344
ISG GROWTH PORTFOLIO
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Growth Portfolio on February 11, 2000 at TIME
a.m., Eastern time, and at any adjournments thereof, all of the shares of the
Fund which the undersigned would be entitled to vote if personally present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Growth Portfolio ("ISG Growth") to AmSouth Strategic Portfolios:
Growth Portfolio ("AmSouth Growth") in exchange for Shares of AmSouth
Growth and the assumption by AmSouth Growth of all of the liabilities of
ISG Growth, followed by the dissolution and liquidation of ISG Growth and
the distribution of Shares of AmSouth Growth to the shareholders of ISG
Growth.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Growth
Portfolio.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please give the full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
<PAGE> 345
office. If a partner, please sign in the partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 346
ISG AGGRESSIVE GROWTH PORTFOLIO
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Aggressive Growth Portfolio on February 11,
2000 at TIME a.m., Eastern time, and at any adjournments thereof, all of the
shares of the Fund which the undersigned would be entitled to vote if personally
present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Aggressive Growth Portfolio ("ISG Aggressive Growth") to AmSouth
Strategic Portfolios: Aggressive Growth Portfolio ("AmSouth Aggressive
Growth") in exchange for Shares of AmSouth Aggressive Growth and the
assumption by AmSouth Aggressive Growth of all of the liabilities of ISG
Aggressive Growth, followed by the dissolution and liquidation of ISG
Aggressive Growth and the distribution of Shares of AmSouth Aggressive
Growth to the shareholders of ISG Aggressive Growth.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Aggressive
Growth Portfolio.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please
<PAGE> 347
give the full title as such. If a corporation, please sign in full corporate
name and indicate the signer's office. If a partner, please sign in the
partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 348
ISG MID-CAP FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Mid-Cap Fund on February 11, 2000 at TIME
a.m., Eastern time, and at any adjournments thereof, all of the shares of the
Fund which the undersigned would be entitled to vote if personally present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Mid-Cap Fund ("ISG Mid-Cap") to AmSouth Mid Cap Fund ("AmSouth Mid
Cap") in exchange for Shares of AmSouth Mid Cap and the assumption by
AmSouth Mid Cap of all of the liabilities of ISG Mid-Cap, followed by the
dissolution and liquidation of ISG Mid-Cap and the distribution of Shares
of AmSouth Mid Cap to the shareholders of ISG Mid-Cap.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Mid-Cap
Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3b. Approval of a new Sub-Investment Advisory Agreement between Bennett
Lawrence Management, LLC, the present sub-adviser to the ISG Mid-Cap Fund,
and First American National Bank, with respect to the ISG Mid-Cap Fund,
the terms of which are identical in all material respects to the prior
sub-advisory agreement for ISG Mid-Cap Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 349
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) (3)(b) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) (3)(b) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please give the full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 350
ISG LARGE-CAP EQUITY FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Large-Cap Equity Fund on February 11, 2000 at
TIME a.m., Eastern time, and at any adjournments thereof, all of the shares of
the Fund which the undersigned would be entitled to vote if personally present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Large-Cap Equity Fund ("ISG Large-Cap Equity") to AmSouth Large Cap
Fund ("AmSouth Large Cap") in exchange for Shares of AmSouth Large Cap and
the assumption by AmSouth Large Cap of all of the liabilities of ISG
Large-Cap Equity, followed by the dissolution and liquidation of ISG
Large-Cap Equity and the distribution of Shares of AmSouth Large Cap to
the shareholders of ISG Large-Cap Equity.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Large-Cap
Equity Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please
<PAGE> 351
give the full title as such. If a corporation, please sign in full corporate
name and indicate the signer's office. If a partner, please sign in the
partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 352
ISG INTERNATIONAL EQUITY FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG International Equity Fund on February 11,
2000 at TIME a.m., Eastern time, and at any adjournments thereof, all of the
shares of the Fund which the undersigned would be entitled to vote if personally
present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG International Equity Fund ("ISG International Equity") to AmSouth
International Equity Fund ("AmSouth International Equity") in exchange for
Shares of AmSouth International Equity and the assumption by AmSouth
International Equity of all of the liabilities of ISG International
Equity, followed by the dissolution and liquidation of ISG International
Equity and the distribution of Shares of AmSouth International Equity to
the shareholders of ISG International Equity.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG
International Equity Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3a. Approval of a new Sub-Investment Advisory Agreement between Lazard Asset
Management, the present sub-adviser to the ISG International Equity Fund,
and First American National Bank, with respect to the ISG International
Equity Fund, the terms of which are identical in all material respects to
the prior sub-advisory agreement for ISG International Equity Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 353
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2), (3)(a) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2), (3)(a) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please give the full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 354
ISG CAPITAL GROWTH FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Capital Growth Fund on February 11, 2000 at
TIME a.m., Eastern time, and at any adjournments thereof, all of the shares of
the Fund which the undersigned would be entitled to vote if personally present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Capital Growth Fund ("ISG Capital Growth") to AmSouth Capital Growth
Fund ("AmSouth Capital Growth") in exchange for Shares of AmSouth Capital
Growth and the assumption by AmSouth Capital Growth of all of the
liabilities of ISG Capital Growth, followed by the dissolution and
liquidation of ISG Capital Growth and the distribution of Shares of
AmSouth Capital Growth to the shareholders of ISG Capital Growth.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Capital
Growth Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please
<PAGE> 355
give the full title as such. If a corporation, please sign in full corporate
name and indicate the signer's office. If a partner, please sign in the
partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 356
ISG TENNESSEE TAX-EXEMPT FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Tennessee Tax-Exempt Fund on February 11,
2000 at TIME a.m., Eastern time, and at any adjournments thereof, all of the
shares of the Fund which the undersigned would be entitled to vote if personally
present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Tennessee Tax-Exempt Fund ("ISG Tennessee Tax-Exempt") to AmSouth
Tennessee Tax-Exempt Fund ("AmSouth Tennessee Tax- Exempt") in exchange
for Shares of AmSouth Tennessee Tax-Exempt and the assumption by AmSouth
Tennessee Tax-Exempt of all of the liabilities of ISG Tennessee
Tax-Exempt, followed by the dissolution and liquidation of ISG Tennessee
Tax-Exempt and the distribution of Shares of AmSouth Tennessee Tax-Exempt
to the shareholders of ISG Tennessee Tax-Exempt.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Tennessee
Tax-Exempt Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please
<PAGE> 357
give the full title as such. If a corporation, please sign in full corporate
name and indicate the signer's office. If a partner, please sign in the
partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 358
ISG LIMITED TERM TENNESSEE TAX-EXEMPT FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Limited Term Tennessee Tax-Exempt Fund on
February 11, 2000 at TIME a.m., Eastern time, and at any adjournments thereof,
all of the shares of the Fund which the undersigned would be entitled to vote if
personally present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Limited Term Tennessee Tax-Exempt Fund ("ISG Limited Term Tennessee
Tax-Exempt") to AmSouth Limited Term Tennessee Tax-Exempt Fund ("AmSouth
Limited Term Tennessee Tax-Exempt") in exchange for Shares of AmSouth
Limited Term Tennessee Tax-Exempt and the assumption by AmSouth Limited
Term Tennessee Tax-Exempt of all of the liabilities of ISG Limited Term
Tennessee Tax-Exempt, followed by the dissolution and liquidation of ISG
Limited Term Tennessee Tax-Exempt and the distribution of Shares of AmSouth
Limited Term Tennessee Tax-Exempt to the shareholders of ISG Limited Term
Tennessee Tax-Exempt.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Limited
Term Tennessee Tax-Exempt Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
<PAGE> 359
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please give the full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 360
ISG LIMITED TERM U.S. GOVERNMENT FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Limited Term U.S. Government Fund on February
11, 2000 at TIME a.m., Eastern time, and at any adjournments thereof, all of the
shares of the Fund which the undersigned would be entitled to vote if personally
present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Limited Term U.S. Government Fund ("ISG Limited Term U.S. Government")
to AmSouth Limited Term U.S. Government Fund ("AmSouth Limited Term U.S.
Government") in exchange for Shares of AmSouth Limited Term U.S. Government
and the assumption by AmSouth Limited Term U.S. Government of all of the
liabilities of ISG Limited Term U.S. Government, followed by the
dissolution and liquidation of ISG Limited Term U.S. Government and the
distribution of Shares of AmSouth Limited Term U.S. Government to the
shareholders of ISG Limited Term U.S. Government.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Limited
Term U.S. Government Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When
<PAGE> 361
signing as executor, administrator, attorney, trustee or guardian, or as
custodian for a minor, please give the full title as such. If a corporation,
please sign in full corporate name and indicate the signer's office. If a
partner, please sign in the partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 362
ISG GOVERNMENT INCOME FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Government Income Fund on February 11, 2000
at TIME a.m., Eastern time, and at any adjournments thereof, all of the shares
of the Fund which the undersigned would be entitled to vote if personally
present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Government Income Fund ("ISG Government Income") to AmSouth Government
Income Fund ("AmSouth Government Income") in exchange for Shares of
AmSouth Government Income and the assumption by AmSouth Government Income
of all of the liabilities of ISG Government Income, followed by the
dissolution and liquidation of ISG Government Income and the distribution
of Shares of AmSouth Government Income to the shareholders of ISG
Government Income.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Government
Income Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please
<PAGE> 363
give the full title as such. If a corporation, please sign in full corporate
name and indicate the signer's office. If a partner, please sign in the
partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 364
ISG LIMITED TERM INCOME FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Limited Term Income Fund on February 11, 2000
at TIME a.m., Eastern time, and at any adjournments thereof, all of the shares
of the Fund which the undersigned would be entitled to vote if personally
present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Limited Term Income Fund ("ISG Limited Term Income") to AmSouth
Limited Term Bond Fund ("AmSouth Limited Term Bond") in exchange for
Shares of AmSouth Limited Term Bond and the assumption by AmSouth Limited
Term Bond of all of the liabilities of ISG Limited Term Income, followed
by the dissolution and liquidation of ISG Limited Term Income and the
distribution of Shares of AmSouth Limited Term Bond to the shareholders of
ISG Limited Term Income.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Limited
Term Income Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please
<PAGE> 365
give the full title as such. If a corporation, please sign in full corporate
name and indicate the signer's office. If a partner, please sign in the
partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 366
ISG EQUITY INCOME FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Equity Income Fund on February 11, 2000 at
TIME a.m., Eastern time, and at any adjournments thereof, all of the shares of
the Fund which the undersigned would be entitled to vote if personally present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Equity Income Fund ("ISG Equity Income") to AmSouth Equity Income Fund
("AmSouth Equity Income") in exchange for Shares of AmSouth Equity Income
and the assumption by AmSouth Equity Income of all of the liabilities of
ISG Equity Income, followed by the dissolution and liquidation of ISG
Equity Income and the distribution of Shares of AmSouth Equity Income to
the shareholders of ISG Equity Income.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Equity
Income Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please give the full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
<PAGE> 367
office. If a partner, please sign in the partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 368
ISG MUNICIPAL INCOME FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Municipal Income Fund on February 11, 2000 at
TIME a.m., Eastern time, and at any adjournments thereof, all of the shares of
the Fund which the undersigned would be entitled to vote if personally present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Municipal Income Fund ("ISG Municipal Income") to AmSouth Municipal
Bond Fund ("AmSouth Municipal Bond") in exchange for Shares of AmSouth
Municipal Bond and the assumption by AmSouth Municipal Bond of all of the
liabilities of ISG Municipal Income, followed by the dissolution and
liquidation of ISG Municipal Income and the distribution of Shares of
AmSouth Municipal Bond to the shareholders of ISG Municipal Income.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Municipal
Income Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please
<PAGE> 369
give the full title as such. If a corporation, please sign in full corporate
name and indicate the signer's office. If a partner, please sign in the
partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 370
ISG SMALL-CAP OPPORTUNITY FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Small-Cap Opportunity Fund on February 11,
2000 at TIME a.m., Eastern time, and at any adjournments thereof, all of the
shares of the Fund which the undersigned would be entitled to vote if personally
present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Small-Cap Opportunity Fund ("ISG Small Cap Opportunity") to AmSouth
Small Cap Fund ("AmSouth Small Cap") in exchange for Shares of AmSouth
Small Cap and the assumption by AmSouth Small Cap of all of the
liabilities of ISG Small-Cap Opportunity, followed by the dissolution and
liquidation of ISG Small-Cap Opportunity and the distribution of Shares of
AmSouth Small Cap to the shareholders of ISG Small-Cap Opportunity.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Small-Cap
Opportunity Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3c. Approval of a new Sub-Investment Advisory Agreement between Womack Asset
Management, Inc., the present sub-adviser to the ISG Small-Cap Opportunity
Fund, and First American National Bank, with respect to the ISG Small-Cap
Opportunity Fund, the terms of which are identical in all material
respects to the prior sub-advisory agreement for the ISG Small-Cap
Opportunity Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 371
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2), (3)(C) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2), (3)(C) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please give the full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, please sign in the partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 372
ISG TAX-EXEMPT MONEY MARKET FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Tax-Exempt Money Market Fund on February 11,
2000 at TIME a.m., Eastern time, and at any adjournments thereof, all of the
shares of the Fund which the undersigned would be entitled to vote if personally
present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Tax-Exempt Money Market Fund ("ISG Tax-Exempt Money Market") to
AmSouth Tax-Exempt Money Market Fund ("AmSouth Tax-Exempt Money Market")
in exchange for Shares of AmSouth Tax-Exempt Money Market and the
assumption by AmSouth Tax-Exempt Money Market of all of the liabilities of
ISG Tax-Exempt Money Market, followed by the dissolution and liquidation
of ISG Tax-Exempt Money Market and the distribution of Shares of AmSouth
Tax-Exempt Money Market to the shareholders of ISG Tax-Exempt Money
Market.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Tax-Exempt
Money Market Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please
<PAGE> 373
give the full title as such. If a corporation, please sign in full corporate
name and indicate the signer's office. If a partner, please sign in the
partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 374
ISG PRIME MONEY MARKET FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Prime Money Market Fund on February 11, 2000
at TIME a.m., Eastern time, and at any adjournments thereof, all of the shares
of the Fund which the undersigned would be entitled to vote if personally
present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Prime Money Market Fund ("ISG Prime Money Market") to AmSouth Prime
Money Market Fund ("AmSouth Prime Money Market") in exchange for Shares of
AmSouth Prime Money Market and the assumption by AmSouth Prime Money
Market of all of the liabilities of ISG Prime Money Market, followed by
the dissolution and liquidation of ISG Prime Money Market and the
distribution of Shares of AmSouth Prime Money Market to the shareholders
of ISG Prime Money Market.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Prime
Money Market Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please
<PAGE> 375
give the full title as such. If a corporation, please sign in full corporate
name and indicate the signer's office. If a partner, please sign in the
partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 376
ISG INCOME FUND
PROXY FOR A SPECIAL MEETING OF
SHAREHOLDERS, FEBRUARY 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS OF THE INFINITY MUTUAL
FUNDS, INC. ON BEHALF OF ISG FUNDS ("ISG FUNDS").
The undersigned hereby appoints Rodney Ruehle and Jeffrey C. Cusick, and each of
them with full power of substitution as proxy of the undersigned, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of the ISG Income Fund on February 11, 2000 at TIME
a.m., Eastern time, and at any adjournments thereof, all of the shares of the
Fund which the undersigned would be entitled to vote if personally present.
1. Approval of the Agreement and Plan of Reorganization by and between ISG
Funds and AmSouth Funds providing for the transfer of all of the assets of
ISG Income Fund ("ISG Income") to AmSouth Bond Fund ("AmSouth Bond") in
exchange for Shares of AmSouth Bond and the assumption by AmSouth Bond of
all of the liabilities of ISG Income, followed by the dissolution and
liquidation of ISG Income and the distribution of Shares of AmSouth Bond
to the shareholders of ISG Income.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of a new Investment Advisory Agreement between ISG and First
American National Bank, the terms of which are identical in all material
respects to the prior investment advisory agreement for the ISG Income
Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS (1), (2) AND (4) AND TO AUTHORIZE THE PROXIES, IN THEIR
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS (1), (2) AND (4).
NOTE: Please sign exactly as the name appears on this card. EACH joint owner
should sign. When signing as executor, administrator, attorney, trustee or
guardian, or as custodian for a minor, please give the full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
<PAGE> 377
office. If a partner, please sign in the partnership name.
Please be sure to sign and date this Proxy.
________________________________________
Signature of Shareholder(s)
________________________________________
Signature of Shareholder(s)
Dated:______________, 2000
PLEASE EXECUTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
OR
Vote On-Line
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Go to Web Site www.proxyvote.com
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have your Proxy Card* at hand.
2. Call the toll-free number found on your Proxy Card.
3. Enter the 12-digit Control Number found on your Proxy Card.
4. Cast your vote using the easy-to-follow instructions.
*DO NOT MAIL THE PROXY CARD IF VOTING BY INTERNET OR TELEPHONE.
<PAGE> 378
AMSOUTH FUNDS
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information contains information which may
be of interest to investors but which is not included in the Combined
Prospectus/Proxy Statement (the "Prospectus") of AmSouth Funds dated [_________,
1999] relating to the transfer of assets from the ISG Funds to the corresponding
AmSouth Funds as follows:
<TABLE>
<CAPTION>
<S> <C>
ISG Current Income Portfolio AmSouth Strategic Portfolios: Current Income Portfolio
ISG Treasury Money Market Fund AmSouth Treasury Reserve Money Market Fund
ISG Moderate Growth & Income Portfolio AmSouth Strategic Portfolios: Moderate Growth and Income Portfolio
ISG Growth & Income Portfolio AmSouth Strategic Portfolios: Growth and Income Portfolio
ISG Growth Portfolio AmSouth Strategic Portfolios: Growth Portfolio
ISG Aggressive Growth Portfolio AmSouth Strategic Portfolios: Aggressive Growth Portfolio
ISG Mid-Cap Fund AmSouth Mid Cap Fund
ISG Large-Cap Equity Fund AmSouth Large Cap Fund
ISG International Equity Fund AmSouth International Equity Fund
ISG Capital Growth Fund AmSouth Capital Growth Fund
ISG Tennessee Tax-Exempt Fund AmSouth Tennessee Tax-Exempt Fund
ISG Limited Term Tennessee Tax-Exempt Fund AmSouth Limited Term Tennessee Tax-Exempt Fund
ISG Limited Term U.S. Government Fund AmSouth Limited Term U.S. Government Fund
ISG Government Income Fund AmSouth Government Income Fund
ISG Limited Term Income Fund AmSouth Limited Term Bond Fund
ISG Equity Income Fund AmSouth Equity Income Fund
ISG Municipal Income Fund AmSouth Municipal Bond Fund
ISG Small-Cap Opportunity Fund AmSouth Small Cap Fund
</TABLE>
B-1
<PAGE> 379
<TABLE>
<CAPTION>
<S> <C>
ISG Tax-Exempt Money Market Fund AmSouth Tax-Exempt Money Market Fund
ISG Prime Money Market Fund AmSouth Prime Money Market Fund
ISG Income Fund AmSouth Bond Fund
</TABLE>
The Statement of Additional Information for the ISG Funds dated May 1, 1999, and
the Statements of Additional Information for the AmSouth Funds dated December 1,
1999 and December 14, 1999 have been filed with the Securities and Exchange
Commission and are incorporated herein by reference. This Statement of
Additional Information is not a prospectus and is authorized for distribution
only when it accompanies or follows delivery of the Prospectus. This Statement
of Additional Information should be read in conjunction with the Prospectus. A
copy of the [_____________, 1999] Prospectus may be obtained, without charge, by
writing ASO Services Company, 3435 Stelzer Road, Columbus, OH 43219 or by
calling 1-800-852-0045.
The date of this Statement of Additional Information is [________,
1999].
B-2
<PAGE> 380
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Other Investment Policies and Techniques ........................... B-4
Other Risks ........................................................ B-49
Financial Statements of the
combined Funds on a pro-forma
basis for the year ended
July 31, 1999 ...................................................... B-55
</TABLE>
B-3
<PAGE> 381
OTHER INVESTMENT POLICIES AND TECHNIQUES
Regarding ISG Funds and AmSouth International Equity Fund, AmSouth Mid Cap Fund,
AmSouth Capital Growth Fund, AmSouth Large Cap Fund, AmSouth Limited Term U.S.
Government Fund, AmSouth Tennessee Tax-Exempt Fund, AmSouth Limited Term
Tennessee Tax-Exempt Fund, AmSouth Treasury Reserve Money Market Fund
Lending Portfolio Securities. (All ISG Funds and AmSouth Funds) From time to
time, each Fund may lend securities from its investment portfolio to brokers,
dealers and other financial institutions needing to borrow securities to
complete certain transactions. Such loans may not exceed 33-1/3% of the value of
the relevant Fund's total assets. In connection with such loans, each Fund will
receive collateral consisting of cash or U.S. Government securities which will
be maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. Each Fund can increase its income through
the investment of such collateral. Each Fund continues to be entitled to
payments in amounts equal to the dividends, interest and other distributions
payable on the loaned security and receives interest on the amount of the loan.
Such loans will be terminable at any time upon specified notice. A Fund might
experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with such Fund. From time to
time, a Fund may return to the borrower or a third party which is unaffiliated
with the Fund, and which is acting as a "placing broker," a part of the interest
earned from the investment of collateral received for securities loaned.
The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned: (1)
the Fund must receive at least 100% cash collateral from the borrower; (2) the
borrower must increase such collateral whenever the market value of the
securities rises above the level of such collateral; (3) the Fund must be able
to terminate the loan at any time; (4) the Fund must receive reasonable interest
on the loan, as well as any dividends, interest or other distributions payable
on the loaned securities, and any increase in market value; (5) the Fund may pay
only reasonable custodian fees in connection with the loan; and (6) while voting
rights on the loaned securities may pass to the borrower, the Trust's Board of
Directors must terminate the loan and regain the right to vote the securities if
a material event adversely affecting the investment occurs.
Options Transactions. (ISG Large-Cap Equity, ISG Capital Growth, ISG
Small Cap Opportunity, ISG Mid-Cap, ISG Equity Income, ISG Government Income and
ISG International Equity and AmSouth Large Cap, AmSouth Capital Growth, AmSouth
Mid Cap and AmSouth International Equity Funds) Each of these Funds may purchase
call and put options in respect of specific securities in which the Fund may
invest and write covered call and put option contracts. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell, the
underlying security at the exercise price at any time during the option period.
Conversely, a put option gives the purchaser of the option the right to sell,
and obligates the writer to buy, the underlying
B-4
<PAGE> 382
security at the exercise price at any time during the option period. A covered
call option sold by the Fund, which is a call option with respect to which the
Fund owns the underlying security, exposes the Fund during the term of the
option to possible loss of opportunity to realize appreciation in the market
price of the underlying security or to possible continued holding of a security
which might otherwise have been sold to protect against depreciation in the
market price of the security. A covered put option sold by the Fund exposes the
Fund during the term of the option to a decline in price of the underlying
security. A put option sold by the Fund is covered when, among other things,
permissible liquid assets are placed in a segregated account to fulfill the
obligation undertaken.
The principal reason for the Fund writing covered call options is to
realize, through the receipt of premiums, a greater return than would be
realized on its portfolio securities alone. In return for a premium, the writer
of a covered call option forfeits the right to any appreciation in the value of
the underlying security above the strike price for the life of the option (or
until a closing purchase transaction can be effected). Nevertheless, the call
writer retains the risk of a decline in the price of the underlying security.
Similarly, the principal reason for writing covered put options is to realize
income in the form of premiums. The writer of a covered put option accepts the
risk of a decline in the price of the underlying security. The size of the
premiums that the Fund may receive may be adversely affected as new or existing
institutions, including other investment companies, engage in or increase their
option-writing activities.
Options written ordinarily will have expiration dates between one and
nine months from the date written. The exercise price of the options may be
below, equal to or above the market values of the underlying securities at the
time the options are written. In the case of call options, these exercise prices
are referred to as "in-the-money," "at-the-money" and "out-of-the-money,"
respectively. The Fund may write (a) in-the-money call options when the Adviser
expects that the price of the underlying security will remain stable or decline
moderately during the option period, (b) at-the-money call options when the
Adviser expects that the price of the underlying security will remain stable or
advance moderately during the option period and (c) out-of-the-money call
options when the Adviser expects that the premiums received from writing the
call option plus the appreciation in market price of the underlying security up
to the exercise price will be greater than the appreciation in the price of the
underlying security alone. In these circumstances, if the market price of the
underlying security declines and the security is sold at this lower price, the
amount of any realized loss will be offset wholly or in part by the premium
received. Out-of-the-money, at-the-money and in-the-money put options (the
reverse of call options as to the relation of exercise price to market price)
may be utilized in the same market environments that such call options are used
in equivalent transactions.
So long as the Fund's obligation as the writer of an option continues,
it may be assigned an exercise notice by the broker-dealer through which the
option was sold, requiring it to deliver, in the case of a call, or take
delivery of, in the case of a put, the underlying security against payment of
the exercise price. This obligation terminates when the option
B-5
<PAGE> 383
expires or the Fund effects a closing purchase transaction. The Fund can no
longer effect a closing purchase transaction with respect to an option once it
has been assigned an exercise notice.
While it may choose to do otherwise, the Fund generally will purchase
or write only those options for which the Adviser believes there is an active
secondary market so as to facilitate closing transactions. There is no assurance
that sufficient trading interest to create a liquid secondary market on a
securities exchange will exist for any particular option or at any particular
time, and for some options no such secondary market may exist. A liquid
secondary market in an option may cease to exist for a variety of reasons. In
the past, for example, higher than anticipated trading activity or order flow,
or other unforeseen events, at times have rendered certain clearing facilities
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that otherwise may interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible to
effect closing transactions in particular options. If, as a covered call option
writer, the Fund is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise or it
otherwise covers its position.
The Fund intends to treat options in respect of specific securities
that are not traded on a national securities exchange and the securities
underlying covered call options written by the Fund as illiquid securities.
Stock Index Options. (ISG Large-Cap Equity, ISG Capital Growth, ISG
Small Cap Opportunity, ISG Mid-Cap, ISG Equity Income and ISG International
Equity, AmSouth Large Cap, AmSouth Capital Growth, AmSouth Mid Cap and AmSouth
International Equity Funds) Each of these Funds may purchase and write put and
call options on stock indexes listed on national securities exchanges or traded
in the over-the-counter market to the extent of 15% of the value of its net
assets. A stock index fluctuates with changes in the market values of the stocks
included in the index. Options on stock indexes are similar to options on stock
except that (a) the expiration cycles of stock index options are monthly, while
those of stock options are currently quarterly, and (b) the delivery
requirements are different. Instead of giving the right to take or make delivery
of a stock at a specified price, an option on a stock index gives the holder the
right to receive a cash "exercise settlement amount" equal to (i) the amount, if
any, by which the fixed exercise price of the option exceeds (in the case of a
put) or is less than (in the case of a call) the closing value of the underlying
index on the date of exercise, multiplied by (ii) a fixed "index multiplier."
Receipt of this cash amount will depend upon the closing level of the stock
index upon which the option is based being greater than, in the case of a call,
or less than, in the case of a put, the exercise price of the option. The amount
of cash received will be equal to such difference between the closing price of
the index and the exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
B-6
<PAGE> 384
premium received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a closing
transaction on an exchange or it may let the option expire unexercised.
The effectiveness of the Fund's purchasing or writing stock index
options will depend upon the extent to which price movements in its portfolio
correlate with price movements of the stock index selected. Because the value of
an index option depends upon movements in the level of the index rather than the
price of a particular stock, whether the Fund will realize a gain or loss from
the purchase or writing of options on an index depends upon movements in the
level of stock prices in the stock market generally or, in the case of certain
indexes, in an industry or market segment, rather than movements in the price of
a particular stock. Accordingly, successful use by the Fund of options on stock
indexes will be subject to the Adviser's ability to predict correctly movements
in the direction of the stock market generally or of a particular industry. This
requires different skills and techniques than predicting changes in the price of
individual stocks.
When the Fund writes an option on a stock index, it will place in a
segregated account permissible liquid assets in an amount at least equal to the
market value of the underlying stock index and will maintain the account while
the option is open or will otherwise cover the transaction.
Futures Contracts and Options on Futures Contracts. (ISG Large-Cap
Equity, ISG Capital Growth, ISG Small-Cap Opportunity, ISG Mid-Cap, ISG Equity
Income, ISG International Equity, ISG Tennessee Tax-Exempt and ISG Limited Term
Tennessee Tax-Exempt and AmSouth Large Cap, AmSouth Capital Growth, AmSouth Mid
Cap, AmSouth International Equity, AmSouth Tennessee Tax-Exempt and AmSouth
Limited Term Tennessee Tax-Exempt Funds) None of these Funds will be a commodity
pool. However, as a substitute for a comparable market position in the
underlying securities or for hedging purposes, each of these Funds may engage in
futures and options on futures transactions, as described below.
The commodities transactions of each of these Funds must constitute
bona fide hedging or other permissible transactions pursuant to regulations
promulgated by the Commodity Futures Trading Commission. In addition, none of
these Funds may engage in such transactions if the sum of the amount of initial
margin deposits and premiums paid for unexpired commodity options, other than
for bona fide hedging transactions, would exceed 5% of the liquidation value of
the Fund's total assets, after taking into account unrealized profits and
unrealized losses on such contracts it has entered into; provided, however, that
in the case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in calculating the 5%. Pursuant to
regulations and/or published positions of the Securities and Exchange
Commission, each of these Funds may be required to segregate permissible liquid
assets in connection with its commodities transactions in an amount at least
equal to the value of the underlying commodity.
B-7
<PAGE> 385
Initially, when purchasing or selling futures contracts, a Fund will be
required to deposit with the Trust's custodian in the broker's name an amount of
cash or cash equivalents up to approximately 10% of the contract amount. This
amount is subject to change by the exchange or board of trade on which the
contract is traded and members of such exchange or board of trade may impose
their own higher requirements. This amount is known as "initial margin" and is
in the nature of a performance bond or good faith deposit on the contract which
is returned to the Fund upon termination of the futures position, assuming all
contractual obligations have been satisfied. Subsequent payments, known as
"variation margin," to and from the broker will be made daily as the price of
the index or securities underlying the futures contract fluctuates, making the
long and short positions in the futures contract more or less valuable, a
process known as "marking-to-market." At any time prior to the expiration of a
futures contract, the Fund may elect to close the position by taking an opposite
position, at the then prevailing price, which will operate to terminate its
existing position in the contract.
Although each of these Funds intends to purchase or sell futures
contracts only if there is an active market for such contracts, no assurance can
be given that a liquid market will exist for any particular contract at any
particular time. Many futures exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices during a single trading day.
Once the daily limit has been reached in a particular contract, no trades may be
made that day at a price beyond that limit or trading may be suspended for
specified periods during the trading day. Futures contract prices could move to
the limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and potentially
subjecting the relevant Fund to substantial losses. If it is not possible, or
the Fund determines not, to close a futures position in anticipation of adverse
price movements, it will be required to make daily cash payments of variation
margin. In such circumstances, an increase in the value of the portion of the
portfolio being hedged, if any, may offset partially or completely losses on the
futures contract. However, no assurance can be given that the price of the
securities being hedged will correlate with the price movements in a futures
contract and thus provide an offset to losses on the futures contract.
To the extent a Fund is engaging in a futures transaction as a hedging
device, because of the risk of an imperfect correlation between securities in a
portfolio that are the subject of a hedging transaction and the futures contract
used as a hedging device, it is possible that the hedge will not be fully
effective if, for example, losses on the portfolio securities exceed gains on
the futures contract or losses on the futures contract exceed gains on the
portfolio securities. For futures contracts based on indexes, the risk of
imperfect correlation increases as the composition of a Fund's investments
varies from the composition of the index. In an effort to compensate for the
imperfect correlation of movements in the price of the securities being hedged
and movements in the price of futures contracts, the Fund may buy or sell
futures contracts in a greater or lesser dollar amount than the dollar amount of
the securities being hedged if the historical volatility of the futures contract
has been less or greater than that of the securities. Such "over hedging" or
"under hedging" may adversely affect the
B-8
<PAGE> 386
Fund's net investment results if market movements are not as anticipated when
the hedge is established.
Successful use of futures by a Fund also is subject to the Adviser's
ability to predict correctly movements in the direction of the market or
interest rates. For example, if a Fund has hedged against the possibility of a
decline in the market adversely affecting the value of securities held in its
portfolio and prices increase instead, such Fund will lose part or all of the
benefit of the increased value of securities which it has hedged because it will
have offsetting losses in its futures positions. Furthermore, if in such
circumstances the Fund has insufficient cash, it may have to sell securities to
meet daily variation margin requirements. The Fund may have to sell such
securities at a time when it may be disadvantageous to do so.
An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume an offsetting futures
position (a short position if the option is a call and a long position if the
option is a put). Upon exercise of the option, the assumption of offsetting
futures positions by the writer and holder of the option will be accompanied by
delivery of the accumulated cash balance in the writer's futures margin account
which represents the amount by which the market price of the futures contract,
at exercise, exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract.
Call options sold by a Fund with respect to futures contracts will be
covered by, among other things, entering into a long position in the same
contract at a price no higher than the strike price of the call option, or by
ownership of the instruments underlying, or instruments the prices of which are
expected to move relatively consistently with, the instruments underlying the
futures contract. Put options sold by a Fund with respect to futures contracts
will be covered in the same manner as put options on specific securities as
described above.
Upon exercise of an option, the writer of the option delivers to the
holder of the option the futures position and the accumulated balance in the
writer's futures margin account, which represents the amount by which the market
price of the futures contract exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option on the futures contract.
The potential loss related to the purchase of options on futures contracts is
limited to the premium paid for the option (plus transaction costs). Because the
value of the option is fixed at the time of sale, there are no daily cash
payments to reflect changes in the value of the underlying contract; however,
the value of the option does change daily and that change would be reflected in
the net asset value of the Fund.
Stock Index Futures and Options on Stock Index Futures. (ISG Large-Cap
Equity, ISG Capital Growth, ISG Small-Cap Opportunity, ISG Mid-Cap, ISG Equity
Income and ISG
B-9
<PAGE> 387
International Equity Funds and AmSouth Large Cap, AmSouth Capital Growth,
AmSouth Mid Cap and AmSouth International Equity Funds) Each of these Funds may
purchase and sell stock index futures contracts and options on stock index
futures contracts to the extent of 15% of the value of its net assets.
A stock index future obligates the seller to deliver (and the purchaser
to take) an amount of cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the close of the last
trading day of the contract and the price at which the agreement is made. No
physical delivery of the underlying stocks in the index is made. With respect to
stock indexes that are permitted investments, each of these Funds intends to
purchase and sell futures contracts on the stock index for which it can obtain
the best price with consideration also given to liquidity.
Each of these Funds may use index futures as a substitute for a
comparable market position in the underlying securities.
Interest Rate Futures Contracts and Options on Interest Rate Futures
Contracts. (ISG and AmSouth Tennessee Tax-Exempt and AmSouth Limited Term
Tennessee Tax-Exempt Funds) Each of these Funds may invest in interest rate
futures contracts and options on interest rate futures contracts as a substitute
for a comparable market position and to hedge against adverse movements in
interest rates to the extent of 15% of the value of its net assets.
To the extent the Fund has invested in interest rate futures contracts
or options on interest rate futures contracts as a substitute for a comparable
market position, the Fund will be subject to the same investment risks had it
purchased the securities underlying the contract.
Each of these Funds may purchase call options on interest rate futures
contracts to hedge against a decline in interest rates and may purchase put
options on interest rate futures contracts to hedge its portfolio securities
against the risk of rising interest rates. The Fund may sell call options on
interest rate futures contracts to partially hedge against declining prices of
portfolio securities. The Fund may sell put options on interest rate futures
contracts to hedge against increasing prices of the securities which are
deliverable upon exercise of the futures contracts.
Each of these Funds also may sell options on interest rate futures
contracts as part of closing purchase transactions to terminate its options
positions. No assurance can be given that such closing transactions can be
effected or the degree of correlation between price movements in the options on
interest rate futures and price movements in the Fund's investment securities
which are the subject of the hedge.
Future Developments. Each Fund may take advantage of opportunities in
the area of options and futures contracts and options on futures contracts and
any other derivative investments which are not presently contemplated for use by
such Fund or which are not
B-10
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currently available but which may be developed, to the extent such opportunities
are both consistent with its investment objective and legally permissible for
the Fund. Before entering into such transactions or making any such investment,
the Fund will provide appropriate disclosure in its Prospectus or this Statement
of Additional Information.
Foreign Currency Transactions. (ISG and AmSouth International Equity
Fund) Foreign currency transactions may be entered into for a variety of
purposes, including: to fix in U.S. dollars, between trade and settlement date,
the value of a security the Fund has agreed to buy or sell; to hedge the U.S.
dollar value of securities the Fund already owns, particularly if it expects a
decrease in the value of the currency in which the foreign security is
denominated; or to gain exposure to the foreign currency in an attempt to
realize gains.
Foreign currency transactions may involve, for example, the Fund's
purchase of foreign currencies for U.S. dollars or the maintenance of short
positions in foreign currencies, which would involve the Fund agreeing to
exchange an amount of a currency it did not currently own for another currency
at a future date in anticipation of a decline in the value of the currency sold
relative to the currency the Fund contracted to receive in the exchange. The
Fund's success in these transactions will depend principally on the ability of
the Fund's Sub-Adviser to predict accurately the future exchange rates between
foreign currencies and the U.S. dollar.
Short-Selling. (ISG International Equity Fund and, to a limited extent,
ISG Capital Growth, ISG Equity Income, ISG Income, ISG Limited Term Income, ISG
Limited Term U.S. Government, ISG Tennessee Tax-Exempt and ISG Limited Term
Tennessee Tax-Exempt Funds and AmSouth International Equity Fund and, to a
limited extent, AmSouth Capital Growth, AmSouth Limited Term U.S. Government,
AmSouth Tennessee Tax-Exempt and AmSouth Limited Term Tennessee Tax-Exempt
Funds) In these transactions the Fund sells a security it does not own in
anticipation of a decline in the market value of the security. To complete the
transaction, the Fund must borrow the security to make delivery to the buyer.
The Fund is obligated to replace the security borrowed by purchasing it
subsequently at the market price at the time of replacement. The price at such
time may be more or less than the price at which the security was sold by the
Fund, which would result in a loss or gain, respectively. Securities will not be
sold short if, after effect is given to any such short sale, the total market
value of all securities sold short would exceed 25% of the value of the Fund's
net assets. Each of these Funds, other than the International Equity Fund, will
limit its short sales to those that are "against the box," a transaction in
which the Fund enters into a short sale of a security which it owns. The
proceeds of the short sale will be held by a broker until the settlement date at
which time the Fund delivers the security to close the short position. The Fund
receives the net proceeds from the short sale. At no time will any of these
Funds have more than 15% of the value of its net assets in deposits on short
sales against the box.
Borrowing Money. (All ISG Funds and AmSouth Capital Appreciation Funds,
AmSouth Income Funds and AmSouth Money Market Funds) As a fundamental policy,
each
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Fund is permitted to borrow money in an amount up to 33-1/3% of the value of its
total assets. However, each Fund currently intends to borrow money only for
temporary or emergency (not leveraging) purposes, in an amount up to 33-1/3% of
the value of its total assets (including the amount borrowed) valued at the
lesser of cost or market, less liabilities (not including the amount borrowed)
at the time the borrowing is made. While borrowings exceed 5% of a Fund's total
assets, such Fund will not make any investments. In addition, each Money Market
Fund may borrow for investment purposes on a secured basis through entering into
reverse repurchase agreements as described below.
Reverse Repurchase Agreements. (ISG Prime Money Market, ISG Treasury
Money Market Funds and AmSouth Treasury Reserve Money Market Fund) These Funds
may enter into reverse repurchase agreements with banks, brokers or dealers.
Reverse repurchase agreements involve the transfer by the Fund of an underlying
debt instrument in return for cash proceeds based on a percentage of the value
of the security. The Fund retains the right to receive interest and principal
payments on the security. The Fund will use the proceeds of reverse repurchase
agreements only to make investments which generally either mature or have a
demand feature to resell to the issuer at a date simultaneous with or prior to
the expiration of the reverse repurchase agreement. At an agreed upon future
date, the Fund repurchases the security at principal plus accrued interest. In
certain types of agreements, there is no agreed upon repurchase date and
interest payments are calculated daily, often based on the prevailing overnight
repurchase rate. As a result of these transactions, the Fund may be exposed to
greater potential fluctuations in the value of its assets and its net asset
value per share. Interest costs on the money borrowed may exceed the return
received on the securities purchased. The Trust's Directors have considered the
risks to each of these Funds and their shareholders which may result from the
entry into reverse repurchase agreements and have determined that the entry into
such agreements is consistent with such Fund's investment objective and
management policies. The Fund will maintain in a segregated account permissible
liquid assets equal to the aggregate amount of its reverse repurchase
obligations, plus accrued interest, in certain cases, in accordance with
releases promulgated by the Securities and Exchange Commission.
AmSouth Equity Income Fund, AmSouth Small Cap Fund, AmSouth Bond Fund, AmSouth
Government Income Fund, AmSouth Limited Term Bond Fund, AmSouth Municipal Bond
Fund, AmSouth Prime Money Market Fund, AmSouth Tax Exempt Money Market 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 adviser to the Trust ("Adviser") to present minimal credit risks
under guidelines adopted by the Trust's Trustees.
With regard to the AmSouth Prime Money Market 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 nationally recognized statistical
ratings organizations ("NRSROs"); or (ii) do not
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possess a rating, (i.e., are unrated) but are determined by the Adviser 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 AmSouth Tax Exempt
Money Market 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 Adviser 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 Adviser 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 AmSouth Prime Money Market Fund and the
AmSouth Tax Exempt Money Market 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 Adviser 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 Adviser. 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 Money Market Fund will not invest more than 5% of its total
assets in the securities of any one issuer, except that the Fund may invest up
to 25% of its total assets in the securities of a single issuer for a period of
up to three business days. If a percentage limitation is satisfied at the time
of purchase, a later increase in such percentage resulting from a change in the
Fund's net asset value or a subsequent change in a security's qualification as
an Eligible Security will not constitute a violation of the limitation. In
addition, there is no limit on the percentage of the Fund's assets that may be
invested in obligations issued or guaranteed by the U.S. government, its
agencies, and instrumentalities and repurchase agreements fully collateralized
by such obligations.
Under the guidelines adopted by the Trust's Trustees and in accordance
with Rule 2a- 7 under the Investment Company Act of 1940 (the "1940 Act"), the
Adviser 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.
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The Appendix to this Statement of Additional Information identifies
each NRSRO that may be utilized by the Adviser 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 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. The Prime Money Market Fund will
not invest in excess of 10% of its net assets in time deposits, including ETDs
and CTDs but not including certificates of deposit, with maturities in excess of
seven days which are subject to penalties upon early withdrawal.
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 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 Tax Exempt Fund and the Municipal Bond Fund 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.
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
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securities are regarded as predominantly speculative. The market value of high
yield securities may fluctuate more than the market value of higher rated
securities, since high yield securities tend to reflect short-term corporate and
market developments to a greater extent than higher rated securities, which
fluctuate primarily in response to the general level of interest rates, assuming
that there has been no change in the fundamental interest rates, assuming that
there has been no change in the fundamental quality of such securities. The
market prices of fixed income securities generally fall when interest rates
rise. Conversely, the market prices of fixed-income securities generally rise
when interest rates fall.
Additional risks of high yield securities include limited liquidity and
secondary market support. As a result, the prices of high yield securities may
decline rapidly in the event that a significant number of holders decide to
sell. Changes in expectations regarding an individual issuer, an industry or
high yield securities generally could reduce market liquidity for such
securities and make their sale by the AmSouth Equity Income Fund more difficult,
at least in the absence of price concessions. Reduced liquidity also could
adversely affect the AmSouth 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.
Insurance Company Funding Agreements. The AmSouth Bond Fund, the
AmSouth Limited Term Bond Fund and the AmSouth Prime Money Market Fund may
invest in funding agreements ("Funding Agreements"), also known as guaranteed
investment contracts, issued by insurance companies. Pursuant to such
agreements, the AmSouth Bond Fund, AmSouth Limited Term Bond Fund and the
AmSouth Prime Money Market Fund invest an amount of cash with an insurance
company and the insurance company credits such investment on a monthly basis
with guaranteed interest which is based on an index. The Funding Agreements
provide that this guaranteed interest will not be less than a certain minimum
rate. The AmSouth Bond Fund, the AmSouth Limited Term Bond Fund and the AmSouth
Prime Money Market Fund will only purchase a Funding Agreement (i) when the
Adviser has determined, under guidelines established by the Board of Trustees,
that the Funding Agreement presents minimal credit risks to the Fund and is of
comparable quality to instruments that are rated high quality by a nationally
recognized statistical rating organization that is not an affiliated person, as
defined in the 1940 Act, of the issuer, on any insurer, guarantor, provider of
credit support for the instrument and (ii) if it may receive all principal of
and accrued interest on a Funding Agreement at any time upon thirty days'
written notice. Because the AmSouth Bond Fund, the AmSouth Limited Term Bond
Fund and the AmSouth Prime Money Market Fund may not receive the principal
amount of a Funding Agreement from the insurance company on seven days' notice
or less, the Funding Agreement is considered an illiquid investment, and,
together with other instruments in such Fund which are not readily marketable,
will not exceed 15% of such Fund's net assets in the case of the AmSouth Bond
Fund and
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AmSouth Limited Term Bond Fund, and 10% of such Funds net assets in the case of
the AmSouth Prime Money Market Fund. In determining average weighted portfolio
maturity, a Funding Agreement will be deemed to have a maturity equal to 30
days, representing the period of time remaining until the principal amount can
be recovered through demand.
Variable Amount Master Demand Notes. Variable amount master demand
notes, in which the AmSouth Prime Money Market Fund, the AmSouth Equity Income
Fund, the AmSouth Small Cap Fund, the AmSouth Bond Fund and the AmSouth Limited
Term Bond Fund 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 Adviser or
Sub-Adviser 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.
Variable and Floating Rate Notes. The AmSouth Tax Exempt Money Market
Fund, the AmSouth Bond Fund, the AmSouth Limited Term Bond Fund and the AmSouth
Municipal Bond Fund 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 Adviser 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 Adviser will
consider the earning power, cash flow and other liquidity ratios of the issuers
of such notes (such issuers include financial,
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merchandising, bank holding and other companies) and will continuously monitor
their financial condition. Although there may be no active secondary market with
respect to a particular variable or floating rate note purchased by a Fund, the
Fund may resell the note at any time to a third party. The absence of an active
secondary market, however, could make it difficult for the Fund to dispose of a
variable or floating rate note in the event the issuer of the note defaulted on
its payment obligations and the Fund could, as a result or for other reasons,
suffer a loss to the extent of the default. Variable or floating rate notes may
be secured by bank letters of credit or drafts.
For purposes of the AmSouth Tax Exempt Money Market Fund, the AmSouth
Bond Fund, the AmSouth Limited Term Bond Fund and the AmSouth Municipal Bond
Fund, the maturities of the variable and floating rate notes will be determined
in accordance with Rule 2a-7 under the 1940 Act.
Zero Coupon Obligations. The AmSouth Bond Fund, AmSouth Limited Term
Bond Fund and AmSouth Tax Exempt Money Market Fund may acquire zero-coupon
obligations evidencing ownership of future interest and principal payments on
U.S. Treasury bonds. Such zero-coupon obligations pay no current interest and
are typically sold at prices greatly discounted from par value, with par value
to be paid to the holder at maturity. The return on a zero-coupon obligation,
when held to maturity, equals the difference between the par value and the
original purchase price. Zero-coupon obligations have greater price volatility
than coupon obligations and such obligations will be purchased when the yield
spread, in light of the obligation's duration, is considered advantageous. The
AmSouth Bond Fund will only purchase zero-coupon obligations if, at the time of
purchase, such investments do not exceed 15% of the value of the Bond Fund's
total assets, and the AmSouth Limited Term Bond Fund will only purchase
zero-coupon obligations if, at the time of purchase, such investments do not
exceed 25% of the value of the AmSouth Limited Term Bond Fund's total assets.
An increase in interest rates will generally reduce the value of the
investments in the Income Funds and a decline in interest rates will generally
increase the value of those investments. Depending upon prevailing market
conditions, the Adviser may purchase debt securities at a discount from face
value, which produces a yield greater than the coupon rate. Conversely, if debt
securities are purchased at a premium over face value, the yield will be lower
than the coupon rate. In making investment decisions, the Adviser will consider
many factors other than current yield, including the preservation of capital,
maturity, and yield to maturity.
Foreign Investment. All of the Funds, except the AmSouth Municipal Bond
Fund, 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
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U.S. bank or a foreign bank, Canadian Time Deposits ("CTD's") which are U.S.
dollar denominated certificates of deposit issued by Canadian offices of major
Canadian Banks, and American Depository Receipts ("ADRs") which are foreign
shares of a company held by a U.S. bank which issues a receipt evidencing
ownership. Investments in securities issued by foreign branches of U.S. banks,
foreign banks, or other foreign issuers, including ADRs and securities purchased
on foreign securities exchanges, may subject the Funds to investment risks that
differ in some respects from those related to investment in obligations of U.S.
domestic issuers or in U.S. securities markets. Such risks include future
adverse political and economic developments, possible seizure, currency
blockage, nationalization or expropriation of foreign investments, less
stringent disclosure requirements, the possible establishment of exchange
controls or taxation at the source, and the adoption of other foreign
governmental restrictions. Additional risks include currency exchange risks,
less publicly available information, the risk that companies may not be subject
to the accounting, auditing and financial reporting standards and requirements
of U.S. companies, the risk that foreign securities markets may have less volume
and therefore many securities traded in these markets may be less liquid and
their prices more volatile than U.S. securities, and the risk that custodian and
brokerage costs may be higher. Foreign issuers of securities or obligations are
often subject to accounting treatment and engage in business practices different
from those respecting domestic issuers of similar securities or obligations.
Foreign branches of U.S. banks and foreign banks may be subject to less
stringent reserve requirements than those applicable to domestic branches of
U.S. banks. A Fund will acquire such securities only when the Adviser or Sub-
Adviser 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 Adviser or Sub-Adviser
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 Adviser or Sub-Adviser
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
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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 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 AmSouth Prime Money Market Fund,
the AmSouth Tax Exempt Money Market Fund, the AmSouth Bond Fund, the AmSouth
Government Income Fund, the AmSouth Limited Term Bond Fund or other liquid,
high-grade debt securities, in the case of the AmSouth Equity Income Fund and
the AmSouth Small Cap Fund. 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. Each of the Funds may invest 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. The Funds also may invest in
other obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities. Such other obligations may include those such as GNMA and the
Export-Import Bank of the United States, which are supported by the full faith
and credit of the U.S. government; others, such as those of FNMA, 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, such as those of the Federal Farm
Credit Banks or FHLMC, 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 Adviser or
Sub-Adviser believes that the credit risk with respect thereto is minimal.
The principal governmental (i.e., backed by the full faith and credit of the
U.S. government) guarantor of mortgage-related securities is GNMA. GNMA is a
wholly-owned U.S.
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government corporation within the Department of Housing and Urban Development.
GNMA is authorized to guarantee, with the full faith and credit of the U.S.
government, the timely payment of principal and interest on securities issued by
institutions approved by GNMA (such as savings and loan institutions, commercial
banks and mortgage bankers) and backed by pools of FHA-insured or VA-guaranteed
mortgages.
Government-related (i.e., not backed by the full faith and credit of
the U.S. government) guarantors include FNMA and FHLMC. FNMA and FHLMC are
government-sponsored corporations owned entirely by private stockholders.
Pass-through securities issued by FNMA and FHLMC are guaranteed as to timely
payment of principal and interest by FNMA and FHLMC but are not backed by the
full faith and credit of the U.S.
government.
When-Issued Securities. As discussed in the Prospectuses, each Fund
except the AmSouth Prime Money Market 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. Securities purchased on a "when-issued" basis are
recorded as an asset and are subject to changes in value based upon changes in
the general level of interest rates. The AmSouth Equity Income Fund and the
AmSouth Small Cap Fund expect 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 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 Adviser or
Sub-Adviser 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.
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Asset-Backed Securities. The Bond Fund, the Limited Term Bond Fund and
the Prime Money Market Fund may invest in securities backed by automobile
receivables and credit-card receivables and other securities backed by other
types of receivables.
Offerings of Certificates for Automobile Receivables ("CARS") are
structured either as flow-through grantor trusts or as pay-through notes. CARS
structured as flow-through instruments represent ownership interests in a fixed
pool of receivables. CARS structured as pay-through notes are debt instruments
supported by the cash flows from the underlying assets. CARS may also be
structured as securities with fixed payment schedules which are generally issued
in multiple-classes. Cash-flow from the underlying receivables is directed first
to paying interest and then to retiring principal via paying down the two
respective classes of notes sequentially. Cash-flows on fixed-payment CARS are
certain, while cash-flows on other types of CARS issues depends on the
prepayment rate of the underlying automobile loans. Prepayments of automobile
loans are triggered mainly by automobile sales and trade-ins. Many people buy
new cars every two or three years, leading to rising prepayment rates as a pool
becomes more seasoned.
Certificates for Amortizing Revolving Debt ("CARDS") represent
participation in a fixed pool of credit card accounts. CARDS pay "interest only"
for a specified period, typically 18 months. The CARD'S principal balance
remains constant during this period, while any cardholder repayments or new
borrowings flow to the issuer's participation. Once the principal amortization
phase begins, the balance declines with paydowns on the underlying portfolio.
CARDS have monthly payment schedules, weighted-average lives of 18-24 months and
stated final maturities ranging from 3 to 5 years. Cash flows on CARDS are
certain during the interest-only period. After this initial interest-only
period, the cash flow will depend on how fast cardholders repay their
borrowings. Historically, monthly cardholder repayment rates have been
relatively fast. As a consequence, CARDS amortize rapidly after the end of the
interest-only period. During this amortization period, the principal payments on
CARDS depend specifically on the method for allocating cardholder repayments to
investors. In many cases, the investor's participation is based on the ratio of
the CARDS' balance to the total credit card portfolio balance. This ratio can be
adjusted monthly or can be based on the balances at the beginning of the
amortization period. In some issues, investors are allocated most of the
repayments, regardless of the CARDS' balance. This method results in especially
fast amortization.
Credit support for asset-backed securities may be based on the
underlying assets or provided by a third party. Credit enhancement techniques
include letters of credit, insurance bonds, limited guarantees (which are
generally provided by the issuer), senior-subordinated structures and over
collateralization. The Bond Fund and the Limited Term Bond Fund will only
purchase an asset-backed security if it is rated at the time of purchase in one
of the three highest rating categories by an NRSRO or, if unrated, found by the
Adviser under guidelines established by the Trust's Board of Trustees to be of
comparable quality.
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Mortgage-Related Securities. Mortgage-related securities have mortgage
obligations backing such securities, including among others, conventional thirty
year fixed rate mortgage obligations, graduated payment mortgage obligations,
fifteen year mortgage obligations, and adjustable rate mortgage obligations. All
of these mortgage obligations can be used to create pass-through securities. A
pass-through security is created when mortgage obligations are pooled together
and undivided interests in the pool or pools are sold. The cash flow from the
mortgage obligations is passed through to the holders of the securities in the
form of periodic payments of interest, principal and prepayments (net of a
service fee). Prepayments occur when the holder of an individual mortgage
obligation prepays the remaining principal before the mortgage obligation's
scheduled maturity date. As a result of the pass-through of prepayments of
principal on the underlying securities, mortgage-backed securities are often
subject to more rapid prepayment of principal than their stated maturity would
indicate. Because the prepayment characteristics of the underlying mortgage
obligations vary, it is not possible to predict accurately the realized yield or
average life of a particular issue of pass-through certificates. Prepayment
rates are important because of their effect on the yield and price of the
securities. Accelerated prepayments have an adverse impact on yields for
pass-throughs purchased at a premium (i.e., a price in excess of principal
amount) and may involve additional risk of loss of principal because the premium
may not have been fully amortized at the time the obligation is repaid. The
opposite is true for pass-throughs purchased at a discount. The Government
Income Fund may purchase mortgage-related securities at a premium or at a
discount.
Mortgage-Related Securities Issued By Nongovernmental Entities. The
AmSouth Government Income Fund may invest in mortgage-related securities issued
by nongovernmental entities. Commercial banks, savings and loan institutions,
private mortgage insurance companies, mortgage bankers and other secondary
market issues also create pass-through pools of conventional residential
mortgage loans. Such issuers may also be the originators of the underlying
mortgage loans as well as the guarantors of the mortgage-related securities.
Pools created by such nongovernmental issuers generally offer a higher rate of
interest than government and government-related pools because there are not
direct or indirect government guarantees of payments in the former pools.
However, timely payment of interest and principal of these pools is supported by
various forms of insurance or guarantees, including individual loan, title, pool
and hazard insurance. The insurance and guarantees are issued by government
entities, private insurers and the mortgage poolers. Such insurance and
guarantees and the creditworthiness of the issuers thereof will be considered in
determining whether a mortgage-related security meets the AmSouth Government
Income Fund's investment quality standards. There can be no assurance that the
private insurers can meet their obligations under the policies. The Government
Income Fund may buy mortgage-related securities without insurance or guarantees
if through an examination of the loan experience and practices of the poolers
the Adviser determines that the securities meet the Government Income Fund's
quality standards. Although the market for such securities is becoming
increasingly liquid, securities issued by certain private organizations may not
be readily marketable. The Government Income Fund will not purchase
mortgage-related securities or
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any other assets which in the Adviser's opinion are illiquid, if as a result,
more than 15% of the value of the Government Income Fund's net assets will be
illiquid.
Collateralized Mortgage Obligations. Mortgage-related securities in
which the AmSouth Government Income Fund may invest may also include
collateralized mortgage obligations ("CMOs"). CMOs are debt obligations issued
generally by finance subsidiaries or trusts that are secured by mortgage-backed
certificates, including, in many cases, certificates issued by
government-related guarantors, including GNMA, FNMA and FHLMC, together with
certain funds and other collateral. Although payment of the principal of and
interest on the mortgage-backed certificates pledged to secure the CMOs may be
guaranteed by GNMA, FNMA or FHLMC, the CMOs represent obligations solely of the
issuer and are not insured or guaranteed by GNMA, FHLMC, FNMA or any other
governmental agency, or by any other person or entity. The issuers of the CMOs
typically have no significant assets other than those pledged as collateral for
the obligations. The staff of the Securities and Exchange Commission has
determined that certain issuers of CMOs are investment companies for purposes of
the 1940 Act.
CMOs may include Stripped Mortgage Securities. Such securities are
derivative multiclass mortgage securities issued by agencies or
instrumentalities of the U.S. government, or by private originators of, or
investors in, mortgage loans, including savings and loan associations, mortgage
banks, commercial banks, investment banks and special purpose subsidiaries of
the foregoing. Stripped Mortgage Securities are usually structured with two
classes that receive different proportions of the interest and principal
distributions on a pool of mortgage assets. A common type of Stripped Mortgage
Security will have one class receiving all of the interest from the mortgage
assets (the interest-only or "IO" class), while the other class will receive all
of the principal (the principal-only or "PO" class). The yield to maturity on an
IO class is extremely sensitive to the rate of principal payments (including
prepayments) on the related underlying mortgage assets, and a rapid rate of
principal payments may have a material adverse effect on the securities' yield
to maturity. If the underlying mortgage assets experience greater than
anticipated prepayments of principal, the Fund may fail to fully recoup its
initial investment in these securities even if the security is rated AAA or Aaa.
The Stripped Mortgage Securities held by the Fund will be considered
liquid securities only under guidelines established by the Trust's Board of
Trustees, and the Fund will not purchase a Stripped Mortgage Security that is
illiquid if, as a result thereof, more than 15% of the value of the Fund's net
assets would be invested in such securities and other illiquid securities.
In reliance on a recent staff interpretation, the Government Income
Fund's investment in certain qualifying CMOs, including CMOs that have elected
to be treated as Real Estate Mortgage Investment Conduits (REMICs), are not
subject to the 1940 Act's limitation on acquiring interests in other investment
companies. In order to be able to rely on the staff's interpretation, the CMOs
and REMICs must be unmanaged, fixed-asset issuers, that
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(a) invest primarily in mortgaged-backed securities, (b) do not issue redeemable
securities, (c) operate under general exemptive orders exempting them from all
provisions of the 1940 Act, and (d) are not registered or regulated under the
1940 Act as investment companies. To the extent that the Government Income Fund
selects CMOs or REMICs that do not meet the above requirements, the Government
Income Fund's investment in such securities will be subject to the limitations
on its investment in investment company securities. See "Investment Company
Securities" in this Statement of Additional Information.
The AmSouth Government Income Fund expects that governmental,
government-related or private entities may create mortgage loan pools offering
pass-through investments in addition to those described above. The mortgages
underlying these securities may be alternative mortgage instruments, that is,
mortgage instruments whose principal or interest payments may vary or whose
terms to maturity may be different from customary long-term fixed rate
mortgages. As new types of mortgage-related securities are developed and offered
to investors, the Adviser will, consistent with the Government Income Fund's
investment objective, policies and quality standards, consider making
investments in such new types of securities.
Convertible Securities. The AmSouth Equity Income Fund and the AmSouth
Small Cap Fund 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. The Funds 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. If a convertible security falls below these minimum ratings after a
Fund has purchased it, a Fund is not required to drop the convertible bond from
its portfolio, but will consider appropriate action. The investment
characteristics of each convertible security vary widely, which allows
convertible securities to be employed for different investment objectives.
Securities which are rated "BB" or lower by Standard & Poor's or "Ba"
or lower by Moody's either have speculative characteristics or are speculative
with respect to capacity to pay interest and repay principal in accordance with
the terms of the obligations. A description of the rating categories is
contained in the Appendix to the Statement of Additional Information. There is
no lower limit with respect to rating categories for convertible securities in
which the Equity Income Fund may invest.
Corporate debt obligations that are not determined to be
investment-grade are high-yield, high-risk bonds, typically subject to greater
market fluctuations and greater risk of loss of income and principal due to an
issuer's default. To a greater extent than investment-grade securities, lower
rated securities tend to reflect short-term corporate, economic and market
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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 AmSouth Equity Income Fund's investment objective may be more
dependent on the Sub-Adviser'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-Adviser attempts to reduce the risks described above through
diversification of the portfolio and by credit analysis of each issuer as well
as by monitoring broad economic trends and corporate and legislative
developments.
Convertible bonds and convertible preferred stocks are fixed-income
securities that generally retain the investment characteristics of fixed-income
securities until they have been converted but also react to movements in the
underlying equity securities. The holder is entitled to receive the fixed-income
of a bond or the dividend preference of a preferred stock until the holder
elects to exercise the conversion privilege. Usable bonds are corporate bonds
that can be used in whole or in part, customarily at full face value, in lieu of
cash to purchase the issuer's common stock. When owned as part of a unit along
with warrants, which are options to buy the common stock, they function as
convertible bonds, except that the warrants generally will expire before the
bond's maturity. Convertible securities are senior to equity securities, and,
therefore, have a claim to assets of the corporation prior to the holders of
common stock in the case of liquidation. However, convertible securities are
generally subordinated to similar non-convertible securities of the same
company. The interest income and dividends from convertible bonds and preferred
stocks provide a stable stream of income with generally higher yields than
common stocks, but lower than non-convertible securities of similar quality.
The AmSouth Equity Income Fund and the AmSouth Small Cap Fund 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 Adviser
or Sub-Adviser, the investment characteristics of the underlying common shares
will assist a Fund in achieving its investment objectives. Otherwise, a Fund
will hold or trade the convertible securities. In selecting convertible
securities for a Fund, the Adviser or Sub-Adviser evaluates the investment
characteristics of the convertible security as a fixed-income instrument, and
the investment potential of the underlying equity security for capital
appreciation. In evaluating these matters with respect to a particular
convertible security, the Adviser or Sub-Adviser considers numerous factors,
including the economic and political outlook, the value of the
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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.
Calls. The AmSouth Equity Income Fund, the AmSouth Small Cap Fund, the
AmSouth Bond Fund, the AmSouth Limited Term Bond Fund and the AmSouth 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 of any price decline of the
security involved in the option. Covered call options will generally be written
on securities which, in the Adviser's or Sub-Adviser'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
AmSouth Bond Fund, the AmSouth Limited Term Bond Fund and the AmSouth 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 AmSouth Equity Income Fund,
the AmSouth Small Cap Fund, the AmSouth Bond Fund, the AmSouth Limited Term Bond
Fund and the AmSouth 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 AmSouth Equity Income Fund, the AmSouth
Small Cap Fund, the AmSouth Bond Fund, the AmSouth Limited Term Bond Fund and
the AmSouth 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
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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 AmSouth Equity
Income Fund, the AmSouth Small Cap Fund, the AmSouth Bond Fund, the AmSouth
Limited Term Bond Fund and the AmSouth Government Income Fund will consider a
security covered by a call to be "pledged" as that term is used in its policy
which limits the pledging or mortgaging of its assets.
The premium received is the market value of an option. The premium a
Fund will receive from writing a call option will reflect, among other things,
the current market price of the underlying security, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying security, and the length of the option period. Once the decision to
write a call option has been made, the Adviser or Sub-Adviser, 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 AmSouth Equity Income Fund, the AmSouth
Small Cap Fund, the AmSouth Bond Fund, the AmSouth Limited Term Bond Fund and
the AmSouth 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
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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 AmSouth Tax-Exempt Money Market Fund and the AmSouth
Municipal Bond Fund may acquire "puts" with respect to Municipal Securities held
in their portfolios, and the Bond Fund and the AmSouth Limited Term Bond Fund
may acquire "puts" with respect to debt securities held in their portfolios and
the Select Equity 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
AmSouth Tax Exempt Money Market Fund, the AmSouth Municipal Bond Fund, the
AmSouth Bond Fund, the AmSouth Limited Term Bond 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.
The AmSouth Limited Term Bond Fund will acquire puts solely to shorten
the maturity of the underlying debt security.
The AmSouth Tax-Exempt Money Market Fund, the AmSouth Municipal Bond
Fund, the AmSouth Limited Term Bond 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).
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The AmSouth Tax Exempt Money Market Fund, the AmSouth Municipal Bond
Fund, the AmSouth Limited Term Bond intend to enter into puts only with dealers,
banks, and broker-dealers which, in the Adviser's opinion, present minimal
credit risks.
Futures Contracts and Related Options. The AmSouth Small Cap Fund may
invest in futures contracts and options thereon (interest rate futures contracts
or index futures contracts, as applicable) 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.
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.
Positions in futures contracts may be closed out only on an exchange
which provides a secondary market for such futures. However, there can be no
assurance that a liquid secondary market will exist for any particular futures
contract at any specific time. Thus, it may not be possible to close a futures
position. In the event of adverse price movements, the 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.
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.
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
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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 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
or impossible to liquidate existing positions or to recover excess variation
margin payments.
Investment Company Securities. The AmSouth Equity Income Fund, the
AmSouth Small Cap Fund, the AmSouth Bond Fund, the AmSouth Government Income
Fund, the AmSouth Limited Term Bond Fund and the AmSouth Municipal Bond Fund may
invest up to 5% of the value of its total assets in the securities of any one
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money market mutual fund including Shares of the AmSouth Prime Money Market
Fund, the AmSouth Treasury Reserve Fund (the "AmSouth Money Market Funds"), the
AmSouth Money Market and AmSouth Tax Exempt Money Market Fund may invest in the
securities of other money market funds that have similar policies and objectives
provided that no more than 10% of a 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 Funds in the
AmSouth Money Market Funds or the AmSouth Institutional Money Market Funds, the
Adviser and the Administrator will reduce that portion of their usual service
fees from each Fund by an amount equal to their service fees from the AmSouth
Money Market Funds or the AmSouth Institutional Money Market Funds that are
attributable to those Fund investments. The Adviser and the Administrator will
promptly forward such fees to the Funds. Each Fund will incur additional
expenses due to the duplication of expenses as a result of investing in
securities of other unaffiliated money market mutual funds.
Securities Lending. In order to generate additional income, each 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 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 Fund will receive 100% collateral in the form of cash or other
liquid securities. This collateral will be valued daily by the Adviser or
Sub-Adviser and should the market value of the loaned securities increase, the
borrower will furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination by the Funds
or the borrower at any time. While the Funds do not have the right to vote
securities on loan, the Funds intend to terminate the loan and regain the right
to vote if that is considered important with respect to the investment. The
Funds will only enter into loan arrangements with broker-dealers, banks or other
institutions which the Adviser or Sub-Adviser has determined are creditworthy
under guidelines established by the Trust's Board of Trustees.
Short-Term Trading. The AmSouth Equity Income Fund, the AmSouth Small
Cap Fund and the AmSouth Government Income 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 Fund in order to take advantage of what the Adviser or Sub-Adviser
believes are changes in market, industry or individual company conditions or
outlook. Any such trading would increase the turnover rate of a Fund and its
transaction costs.
Municipal Securities. Under normal market conditions, the AmSouth Tax
Exempt Fund and the AmSouth Municipal Bond Fund will be primarily invested in
bonds (and in the case of the AmSouth Tax-Exempt Money Market
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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 AmSouth Tax-Exempt Money
Market Fund will invest at least 80% of its total assets, the Municipal Bond
Fund will invest at least 80% of its net assets 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. Interest on
private activity bonds (and industrial development bonds) is fully tax-exempt
only if the bonds fall within certain defined categories of qualified private
activity bonds and meet the requirements specified in those respective
categories. Regardless of whether they qualify for tax-exempt status, private
activity bonds may subject both individual and corporate investors to tax
liability under the alternative minimum tax. However, private activity bonds
will only be considered Municipal Securities if they do not have this effect
regarding individuals.
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 Money Market Fund,
the Municipal Bond Fund the two principal classifications of Municipal
Securities consist of "general obligation" and "revenue" issues. A Fund
permitted to invest in Municipal Securities may also acquire "moral obligation"
issues, which are normally issued by special purpose authorities. If the issuer
of moral obligation bonds is unable to meet its debt service obligations from
current revenues, it may draw on a reserve fund, the restoration of which is a
moral commitment but not a legal obligation of the state or municipality that
created the issuer. There are, of
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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.
Municipal Securities purchased by the AmSouth Tax-Exempt Money Market
Fund may include rated and unrated variable and floating rate tax-exempt notes,
which may have a stated maturity in excess of one year but which will, in such
event, be subject to a demand feature that will permit the AmSouth Tax Exempt
Money Market Fund to demand payment of the principal of the note either (i) at
any time upon not more than thirty days' notice or (ii) at specified intervals
not exceeding one year and upon no more than thirty days' notice. There may be
no active secondary market with respect to a particular variable or floating
rate note. Nevertheless, the periodic readjustments of their interest rates tend
to assure that their value to the AmSouth Tax Exempt Fund will approximate their
par value.
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.
Opinions relating to the validity of Eligible Municipal Securities and
to the exemption of interest thereon from federal income tax are rendered by
bond counsel to the respective issuers at the time of issuance. Neither the
Municipal Bond Fund nor the Adviser will review the proceedings relating to the
issuance of Eligible Municipal Securities or the basis for such opinions.
Although the AmSouth Tax-Exempt Fund and AmSouth Municipal Bond Fund do
not presently intend to do so on a regular basis, each may invest more than 25%
of its total assets in Municipal Securities that are related in such a way that
an economic, business, or political development
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or change affecting one such security would likewise affect the other Municipal
Securities. An example of such securities are obligations the repayment of which
is dependent upon similar types of projects. Such investments would be made only
if deemed necessary or appropriate by the Adviser. To the extent that the Fund's
assets are concentrated in Municipal Securities that are so related, the Fund
will be subject to the peculiar risks presented by such securities, such as
negative developments in a particular industry, to a greater extent than it
would be if the Fund's assets were not so concentrated.
The AmSouth Municipal Bond Fund may acquire "puts" with respect to
Eligible Municipal Securities held in their portfolios. Under a put, the Funds
would have the right to sell a specified Eligible Municipal Security within a
specified period of time at a specified price to a third party. A put would be
sold, transferred, or assigned only with the underlying Eligible Municipal
Security. The Funds will acquire puts solely to facilitate portfolio liquidity,
shorten the maturity of the underlying Eligible Municipal Securities, or permit
the investment of the Funds' at a more favorable rate of return. The Funds
expect that they will generally acquire puts only where the puts are available
without the payment of any direct or indirect consideration. However, if
necessary or advisable, the Funds may pay for a put separately in cash. The
aggregate price of a security subject to a put may be higher than the price
which otherwise would be paid for the security without such an option, thereby
increasing the security's cost and reducing its yield.
Tax-Free Funds. The AmSouth Municipal Bond Fund may also invest in
master demand notes in order to satisfy short-term needs or, if warranted, as
part of its temporary defensive investment strategy. Such notes are demand
obligations that permit the investment of fluctuating amounts at varying market
rates of interest pursuant to arrangements between the issuer and a U.S.
commercial bank acting as agent for the payees of such notes. Master demand
notes are callable on demand by the Funds, but are not marketable to third
parties. Master demand notes are direct lending arrangements between the Fund
and the issuer of such notes. The Adviser will review the quality of master
demand notes at least quarterly, and will consider the earning power, cash flow
and debt-to-equity ratios indicating the borrower's ability to pay principal
together with accrued interest on demand. While master demand notes are not
typically rated by credit rating agencies, issuers of such notes must satisfy
the same criteria for the Funds set forth above for commercial paper.
The AmSouth Municipal Bond Fund may acquire rated and unrated variable
and floating rate notes. Variable and floating rate notes are frequently not
rated by credit rating agencies; however, unrated variable and floating rate
notes purchased by the Funds will be determined by the Adviser under guidelines
established by the Board of Trustees to be of comparable quality at the time of
purchase to rated instruments eligible for purchase under the Funds' investment
policies. There may be no active secondary market with respect to a particular
variable or floating rate note. Nevertheless, the periodic readjustments of
their interest rates tend to assure that their value to the Funds will
approximate their par value.
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The AmSouth Municipal Bond Fund may acquire zero coupon obligations.
Such zero-coupon obligations pay no current interest and are typically sold at
prices greatly discounted from par value, with par value to be paid to the
holder at maturity. The return on a zero-coupon obligation, when held to
maturity, equals the difference between the par value and the original purchase
price. Zero-coupon obligations have greater price volatility than coupon
obligations and such obligations will be purchased when the yield spread, in
light of the obligation's duration, is considered advantageous. The Fund will
only purchase zero-coupon obligations if, at the time of purchase, such
investments does not exceed 25% of the Municipal Bond Fund's total assets.
An increase in interest rates will generally reduce the value of the
investments in the Municipal Bond Fund and a decline in interest rates will
generally increase the value of those investments. Depending upon prevailing
market conditions, the Adviser may purchase debt securities at a discount from
face value, which produces a yield greater than the coupon rate. Conversely, if
debt securities are purchased at a premium over face value, the yield will be
lower than the coupon rate. In making investment decisions, the Adviser will
consider many factors besides current yield, including the preservation of
capital, maturity, and yield to maturity.
The AmSouth Municipal Bond Fund -- Concentration in Alabama Issuers.
The AmSouth Municipal Bond Fund may invest 25% or more of its total assets in
bonds, notes and warrants generally issued by or on behalf of the State of
Alabama and its political subdivisions, the interest on which, in the opinion of
the issuer's bond counsel at the time of issuance, is exempt form both federal
income tax and Alabama personal income tax and is not treated as a preference
item for purposes of the federal alternative minimum tax for individuals
("Alabama Municipal Securities"). Because of the relatively small number of
issuers of Alabama Municipal Securities, the Fund is more likely to invest a
higher percentage of its assets in the securities of a single issuer. This
concentration involves an increased risk of loss if the issuer is unable to make
interest or principal payments or if the market value of such securities were to
decline. Concentration of this nature may cause greater fluctuation in the net
asset value of the Fund's Shares.
General Economic Characteristics of Alabama. Alabama ranks twenty-third
in the nation in total population, with over four million residents in 1998. Its
economy has historically been based primarily on agriculture, textiles, mineral
extraction and iron and steel production, although the state has diversified
into health care related industries and other service-oriented sectors. Overall
job growth rate was 0.2% in 1998. Alabama's per capita income in 1998 was
$21,442, 81.2% of U.S. per capita income. Currently Alabama's general
obligations are rated Aa3 by Moody's and AA by Standard and Poor's.
Balanced Budget and Pro-Ration Procedures. Section 213 of the
Constitution of Alabama, as amended, requires that annual financial operations
of Alabama must be on a balanced budget. The Constitution also prohibits the
state from incurring general obligation debt unless authorized by an amendment
to the Constitution. Amendments to the Constitution have generally been adopted
through a procedure that requires each amendment
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to be proposed by a favorable vote of three-fifths of all the members of each
house of the Legislature and thereafter approved by a majority of the voters of
the state voting in a statewide election.
Alabama has statutory budget provisions which create a proration
procedure in the event that estimated budget resources in a fiscal year are
insufficient to pay in full all appropriations for such fiscal year. The Alabama
state budget is composed of two funds the General Fund and the Education Fund.
Proration of either Fund is possible in any fiscal year, and proration may have
a material adverse effect on entities dependent on state funding, including
certain issuers of Alabama Municipal Securities held in the Alabama Fund.
Court decisions have indicated that certain state expenses necessary
for essential functions of government are not subject to proration under
applicable law. The Supreme Court of Alabama has held that the debt prohibition
contained in the constitutional amendment does not apply to obligations incurred
for current operating expenses payable during the current fiscal year, debts
incurred by separate public corporations, or state debt incurred to repel
invasion or suppress insurrection. The state may also make temporary loans not
exceeding $300,000 to cover deficits in the state treasury. Limited obligation
debt may be authorized by the legislature without amendment to the Constitution.
The state has followed the practice of financing certain capital improvement
programs - principally for highways, education and improvements to the State
Docks - through the issuance of limited obligation bonds payable solely out of
certain taxes and other revenues specifically pledged for their payment and not
from the general revenues of the state.
General Obligation Warrants. Municipalities and counties in
Alabama traditionally have issued general obligation warrants to finance various
public improvements. Alabama statutes authorizing the issuance of such
interest-bearing warrants do not require an election prior to issuance. On the
other hand, the Constitution of Alabama (Section 222) provides that general
obligation bonds may not be issued without an election.
The Supreme Court of Alabama validated certain general obligation
warrants issued by the City of Hoover, reaffirming that such obligations did not
require an election under Section 222 of the Constitution of Alabama. In so
holding, the Court found that warrants are not "bonds" within the meaning of
Section 222. According to the Court, warrants are not negotiable instruments and
transferees of warrants cannot be holders in due course. Therefore, a transferee
of warrants is subject to all defenses that the issuer of such warrants may have
against the transferor.
County boards of education may borrow money by issuing interest-bearing
warrants payable solely out of such board's allocated or apportioned share of
specified tax. The county board's apportioned share of such tax may be
diminished upon the establishment of a city school system, which could
jeopardize the payment of the county board's warrants.
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Limited Taxing Authority. Political subdivisions of the state
have limited taxing authority. Ad valorem taxes may be levied only as authorized
by the Alabama Constitution. In order to increase the rate at which any ad
valorem tax is levied above the limit otherwise provided in the Constitution,
the proposed increase must be proposed by the governing body of the taxing
authority after a public hearing, approved by an act of the Alabama Legislature
and approved at an election within the taxing authority's jurisdiction. In
addition, the Alabama Constitution limits the total amount of state, county,
municipal and other ad valorem taxes that may be imposed on any class of
property in any one tax year. This limitation is expressed in terms of a
specified percentage of the market value of such property.
Specific authorizing legislation is required for the levy of taxes by
local governments. In addition, the rate at which such taxes are levied may be
limited to the authorizing legislation or judicial precedent. For example, the
Alabama Supreme Court has held that sales and use taxes, which usually comprise
a significant portion of the revenues for local governments, may not be levied
at rates that are confiscatory or unreasonable. The total sales tax (state and
local) in some jurisdictions is 9%. State and local governments in Alabama are
more dependent on general and special sales taxes than are state and local
governments in many states. Because sales taxes are less stable sources of
revenue than are property taxes, state and local governments in Alabama may be
subject to shortfalls in revenue due to economic cycles.
Priority for Essential Governmental Functions. Numerous
decisions of the Alabama Supreme Court hold that a governmental unit may first
use its taxes and other revenues to pay the expenses of providing necessary
governmental services before paying debt service on its bonds, warrants or other
indebtedness.
Challenge to Education Funding. On January 10, 1997, the
Alabama Supreme Court affirmed a lower court ruling which held that an
unconstitutional disparity exists among Alabama's public school districts
because, among other things, of an inequitable distribution of tax funds among
the school districts. In order to comply with the ruling, the Alabama
Legislature continues to restructure the public educational system in Alabama,
subject to review by the state courts. Any reallocation of funds between school
districts arising out of this restructuring could impair the ability of certain
districts to service debt.
INVESTMENT RESTRICTIONS. As noted above, each ISG Fund's investment
objective and policies are similar, although not always identical, to those of
the corresponding AmSouth Fund. In addition, for the most part, the types of
instruments and securities in which they may invest are similar. Likewise, the
fundamental investment restrictions adopted by each ISG Fund and the
corresponding AmSouth Fund, which may be changed only with shareholder approval,
are also similar. However, as summarized below, there are some differences
between these investment restrictions. The following discussion is qualified by
the disclosure on such subjects contained in the AmSouth Prospectuses and the
ISG Prospectuses accompanying and incorporated by reference into this Combined
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Prospectus/Proxy Statement, as well as by the disclosure on such subjects
contained in the Statements of Additional Information of AmSouth and ISG which
are incorporated by reference into this Combined Prospectus/Proxy Statement.
ISG Funds
Each Fund's investment objective is a fundamental policy, which cannot
be changed without approval by the holders of a majority (as defined in the 1940
Act) of the Fund's outstanding voting shares. In addition, each Fund has adopted
investment restrictions numbered 1 through 7 as fundamental policies, and only
the Funds so indicated have adopted investment restrictions numbered 8 through
13 as additional fundamental policies. These restrictions cannot be changed, as
to a Fund, without approval by the holders of a majority (as defined in the 1940
Act) of such Fund's outstanding voting securities. Each Fund, except as
otherwise indicated, has adopted investment restrictions numbered 14 through 19
as non-fundamental policies which may be changed by vote of a majority of ISG's
Directors at any time. No fund may:
1. Invest in commodities, except that each Fund may purchase and sell
options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.
2. Purchase, hold or deal in real estate, or oil, gas or other mineral
leases or exploration or development programs, but each Fund may purchase and
sell securities that are secured by real estate or issued by companies that
invest or deal in real estate.
3. Borrow money , except that each fund may borrow up to 33-1/3% of the
value of its total assets. For purposes of this investment restriction, a Fund's
entry into options, forward contracts, futures contracts, including those
relating to indexes, and options on futures contracts or indexes shall not
constitute borrowing.
4. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, each Fund may
lend its portfolio securities in an amount not to exceed 33-1/3% of the value of
its total assets. Any loans of portfolio securities will be made according to
guidelines established by the Securities and Exchange Commission and ISG's Board
of Directors.
5. Act as an underwriter of securities of other issuers, except to the
extent the Fund may be deemed an underwriter under the 1933 Act by virtue of
disposing of portfolio securities, and except that the Municipal Income Fund,
Tennessee Tax-Exempt Fund, Limited Term Tennessee Tax-Exempt, Tax-Exempt Money
Market Fund, Limited Term Income Fund and Income Fund each may bid separately or
as part of a group for the purchase of Municipal Obligations directly from an
issuer for its own portfolio to take advantage of the lower purchase price
available.
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6. Issue any senior security (as such term is defined in Section 18(f)
of the 1940 Act). A Fund's permitted borrowings and transactions in futures and
options, to the extent permitted under the 1940 Act, are not considered senior
securities for purposes of this investment restriction.
7. Purchase securities on margin, but each Fund may make margin
deposits in connection with transactions in options, forward contracts, futures
contracts, including those relating to indexes, and options on futures contracts
or indexes.
The following investment restrictions numbered 8 and 9 are fundamental
policies which apply only the Prime Money Market Fund. The Prime Money Market
Fund may not:
8. Invest more than 5% of its assets in the obligations of any one
issuer, except that up to 25% of the value of the Prime Money Market Fund's
total assets may be invested without regard to any such limitation, provided
that not more than 10% of its assets may be invested in securities issued or
guaranteed by any single guarantor of obligations held by the Prime Money Market
Fund.
9. Invest less than 25% of its total assets in securities issued by
banks or invest more than 25% of its assets in the securities of issuers in any
other industry, provided that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. Notwithstanding the foregoing, for temporary defensive
purposes the Prime Money Market Fund may invest less than 25% of its assets in
bank obligations.
The following investment restriction number 10 is a fundamental policy
which applies to each Fund, except the Strategic Portfolios and Prime Money
Market Fund. None of these Funds may:
10. Invest more than 25% of its assets in the securities of issuers in
any single industry, provided that, in the case of the Municipal Income Fund,
Tennessee Tax-Exempt Fund, Limited Term Tennessee Tax-Exempt Fund and Tax-Exempt
Money Market Fund, there shall be no such limitation on the purchase of
tax-exempt municipal obligations and, in the case of each Fund, there shall be
no limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
The following investment restrictions numbered 11 and 12 are
fundamental policies which apply only to the Large-Cap Equity Fund, Small-Cap
Opportunity Fund, Mid-Cap Fund, Municipal Income Fund and Government Income
Fund. None of these Funds may:
11. With respect to 75% of its total assets, invest more than 5% of its
assets in the obligations of any single issuer. This investment restriction does
not apply to the purchase of U.S. Government securities.
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12. Hold more than 10% of the outstanding voting securities of any
single issuer. This investment restriction applies only with respect to 75% of
the Fund's total assets.
The following investment restriction number 13 is a fundamental policy
which applies only to the Strategic Portfolios. None of the Strategic Portfolios
may:
13. Invest less than 25% of the value of its total assets in securities
issued by investment companies or invest more than 25% of the value of its total
assets in the securities of issuers in any other industry, provided that there
shall be no limitation on the purchase of obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities.
As non-fundamental policies, no fund may:
14. Invest in the securities of a company for the purpose of exercising
management or control, but each Fund will vote (as provided in ISG's charter)
the securities it owns as a shareholder in accordance with its views.
15. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with respect
to options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.
16. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if, in
the aggregate, more than 15% (10% in the case of the Capital Growth, Equity
Income, Income, Limited Term Income, Limited Term U.S. Government, Tennessee
Tax-Exempt, Limited Term Tennessee Tax-Exempt and Money market Funds) of the
value of the Fund's net assets would be so invested.
17. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.
The following investment restrictions numbered 18 and 19 are
noon-fundamental policies which apply to each Fund, except the Strategic
Portfolios, Large-Cap Equity Fund, Small-Cap Opportunity Fund, Mid-Cap Fund,
International Equity Fund, Municipal Income Fund, Government Income Fund, Prime
Money Market fund, Government Money market fund, Treasury Money market Fund and
Tax-Exempt Money Market Fund. None of these Funds may:
18. Purchase, sell or write puts, calls or combinations thereof, except
as may be described in the Funds' Prospectus and Statement of Additional
Information.
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19. Purchase securities of any company having less than three years'
continuous operations (including operations of any predecessors) is such
purchase would cause the value of the Fund's investments in all such companies
to exceed 5% of the value of its total assets.
For purposes of Investment Restriction No. 10, industrial development
bonds, where the payment of principal and interest is the ultimate
responsibility of companies within the same industry, are grouped together as an
"industry."
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will not
constitute a violation of such restriction.
AmSouth Funds
AmSouth International Equity Fund, AmSouth Mid-Cap Equity Fund, AmSouth Growth
Opportunities Fund, AmSouth Large-Cap Fund, AmSouth Limited Term U.S. Government
Fund, AmSouth Tennessee Tax-Exempt Fund, AmSouth Limited Term Tennessee
Tax-Exempt Fund, AmSouth Treasury Reserve Money Market Fund, AmSouth Aggressive
Growth Portfolio, AmSouth Growth Portfolio, AmSouth Growth and Income Portfolio,
AmSouth Moderate Growth and Income Portfolio, AmSouth Current Income Portfolio
Each Fund's investment objective is a fundamental policy, which cannot
be changed without approval by the holders of a majority (as defined in the 1940
Act) of the Fund's outstanding voting shares. In addition, each Fund has adopted
investment restrictions numbered 1 through 5 as fundamental policies, and only
the Funds so indicated have adopted investment restrictions numbered 6 through 9
as additional fundamental policies. These restrictions cannot be changed, as to
a Fund, without approval by the holders of a majority (as defined in the 1940
Act) of such Fund's outstanding voting securities. Each Fund, except as
otherwise indicated, has adopted investment restrictions numbered 10 through 13
as non-fundamental policies which may be changed by vote of a majority of the
Trust's Trustees at any time.
AmSouth International Equity Fund, AmSouth Mid Cap Fund, AmSouth Capital Growth
Fund, AmSouth Large Cap Fund, AmSouth Limited Term U.S. Government Fund, AmSouth
Tennessee Tax-Exempt Fund, AmSouth Limited Term Tennessee Tax-Exempt Fund,
AmSouth Treasury Reserve Money Market Fund, AmSouth Aggressive Growth Portfolio,
AmSouth Growth Portfolio, AmSouth Growth and Income Portfolio, AmSouth Moderate
Growth and Income Portfolio, AmSouth Current Income Portfolio
No Fund may:
1. Purchase or sell commodities, commodity contracts (including futures
contracts with respect to each Fund other than the International Equity, Mid Cap
Capital Growth, Large Cap, Limited Term U.S. Government, Tennessee Tax-Exempt,
and
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Limited Term Tennessee Tax-Exempt 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 Treasury Reserve Money
Market 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
Mid Cap Equity, Capital Growth, and Large Cap Funds).
2. Borrow money or issue senior securities, except that each Fund may
borrow from banks or enter into reverse repurchase agreements for temporary
emergency purposes in amounts up to 33 1/3% of the value of its total assets at
the time of such borrowing, or mortgage, pledge, or hypothecate any assets,
except in connection with any such borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 33 1/3% of the value of such Fund's
total assets at the time of its borrowing. A Fund will not purchase securities
while borrowings (including reverse repurchase agreements) in excess of 5% of
its total assets are outstanding.
3. Make loans, except that each Fund may purchase or hold debt
instruments in accordance with its investment objective and policies, may lend
Fund securities in accordance with its investment objective and policies, and
may enter into repurchase agreements.
4. 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.
5. Issue any senior security (as such term is defined in Section 18(f)
of the 1940 Act). A Fund's permitted borrowings and transactions in futures and
options, to the extent permitted under the 1940 Act, are not considered senior
securities for purposes of this investment restriction.
The following investment restriction numbered 6 is a fundamental policy
which applies only to the Treasury Reserve Money Market Fund. The Treasury
Reserve Money Market Fund may not:
6. Invest in securities other than those issued or guaranteed by the
U.S. Government or its agencies or instrumentalities or repurchase agreements
related thereto.
The following investment restriction numbered 7 is a fundamental policy
which applies to each of the Tennessee Tax-Exempt and Tennessee Limited Term
Tax-Exempt Funds. Neither of these Funds may:
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7. Purchase any securities which would cause 25% or more of the Fund's
total assets at the time of purchase to be invested in the securities of one or
more issuers conducting their principal business activities in the same
industry; provided that this limitation shall not apply to Municipal Securities;
and provided, further, that for the purpose of this limitation only, private
activity bonds that are backed only by the assets and revenues of a
non-governmental user shall not be deemed to be Municipal Securities.
The following investment restriction numbered 8 is fundamental for the
Treasury Reserve Money Market, International Equity Fund, Mid Cap Fund, Capital
Growth Fund, Large Cap Fund, Limited Term U.S. Government Fund, Aggressive
Growth Portfolio, Growth Portfolio, Growth and Income Portfolio, Moderate Growth
and Income Portfolio, and Current Income Portfolio. None of these Funds may:
8. Purchase any securities which would cause more than 25% of the value
of such Fund's total assets at the time of purchase to be invested in securities
of one or more issuers conducting their principal business activities in the
same industry, provided that (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities, and repurchase agreements secured by obligations of the U.S.
government or its agencies or instrumentalities; (b) for the Aggressive Growth
Portfolio, Growth Portfolio, Growth & Income Portfolio, Moderate Growth & Income
Portfolio, and Current Income Portfolio, there is no limitation with respect to
registered investment companies; (c) wholly-owned finance companies will be
considered to be in the industries of their parents if their activities are
primarily related to financing the activities of their parents; and (d)
utilities will be divided according to their services. For example, gas, gas
transmission, electric and gas, electric, and telephone will each be considered
a separate industry.
The following investment restriction numbered 9 is fundamental for the
Mid Cap Fund, Large Cap Fund, Limited Term U.S. Government Fund, Treasury
Reserve Money Market Fund, Aggressive Growth Portfolio, Growth Portfolio, Growth
and Income Portfolio, Moderate Growth and Income Portfolio, and Current Income
Portfolio. No such fund may:
9. 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 Fund's total
assets would be invested in such issuer, or such Fund would hold more than 10%
of any class of securities of the issuer or more than 10% of the outstanding
voting securities of the issuer, except that up to 25% of the value of each
Fund's total assets may be invested without regard to such limitations. There is
no limit to the percentage of assets that may be invested in U.S. Treasury
bills, notes, or other obligations issued or guaranteed by the U.S. government
or its agencies or instrumentalities or securities of other investment
companies.
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AmSouth International Equity Fund, AmSouth Mid Cap Fund, AmSouth Capital Growth
Fund, AmSouth Large Cap Fund, AmSouth Limited Term U.S. Government Fund, AmSouth
Tennessee Tax-Exempt Fund, AmSouth Limited Term Tennessee Tax-Exempt Fund,
AmSouth Treasury Reserve Money Market Fund, AmSouth Aggressive Growth Portfolio,
AmSouth Growth Portfolio, AmSouth Growth and Income Portfolio, AmSouth Moderate
Growth and Income Portfolio, AmSouth Current Income Portfolio
None of the Funds may:
10. Invest in the securities of a company for the purpose of exercising
management or control.
11. Enter into repurchase agreements providing for settlement in more
than seven days after notice or purchase securities which are illiquid, if, in
the aggregate, more than 15% of the value of the Fund's net assets would be so
invested.
12. Purchase securities of other investment companies, except to the
extent permitted under the 1940 Act.
None of the International Equity, Capital Growth, Tennessee Tax-Exempt,
and Limited Term Tennessee Tax-Exempt Funds will:
13. Purchase securities of any one issuer, other than obligations
issued or guaranteed by the U.S. government or its agencies or instrumentalities
if, immediately after such purchase, more than 5% of the value of its total
assets would be invested in such issuer (except that up to 50% of the value of
the Fund's total assets may be invested without regard to such 5% limitation).
For purposes of this limitation, a security is considered to be issued by the
government entity (or entities) whose assets and revenues back the security;
with respect to a private activity bond that is backed only by the assets and
revenues of a non-government user, a security is considered to be issued by such
non-governmental user.
AmSouth Prime Obligations Fund, AmSouth Tax Exempt Fund, AmSouth Municipal Bond
Fund, AmSouth Limited Maturity Fund, AmSouth Government Income Fund, AmSouth
Bond Fund, AmSouth Small Cap Fund, AmSouth Equity Income Fund:
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 "ADDITIONAL INFORMATION - Miscellaneous" in the
Statement of Additional Information).
The Prime Money Market Fund may not:
1. Purchase securities of any one issuer, other than obligations issued
or guaranteed by the U.S. government or its agencies or instrumentalities if,
immediately after such
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purchase, more than 5% of the value of the Prime Money Market Fund's total
assets would be invested in such issuer, except that 25% or less of the value of
the Prime Money Market Fund's total assets may be invested without regard to
such 5% limitation. There is no limit to the percentage of assets that may be
invested in U.S. Treasury bills, notes, or other obligations issued or
guaranteed by the U.S. government or its agencies or instrumentalities.
2. Purchase any securities which would cause more than 25% of the value
of the Prime Money Market Fund's total assets at the time of purchase to be
invested in securities of one or more issuers conducting their principal
business activities in the same industry, provided that (a) there is no
limitation with respect to obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities, bank certificates of deposit or
bankers' acceptances issued by a domestic bank or by a U.S. branch of a foreign
bank provided that such U.S. branch is subject to the same regulation as U.S.
banks, and repurchase agreements secured by bank instruments or obligations of
the U.S. government or its agencies or instrumentalities; (b) wholly owned
finance companies will be considered to be in the industries of their parents if
their activities are primarily related to financing the activities of their
parents; and (c) utilities will be divided according to their services. For
example, gas, gas transmission, electric and gas, electric, and telephone will
each be considered a separate industry.
The Tax Exempt Money Market Fund may not:
1. Purchase securities of any one issuer, other than obligations issued
or guaranteed by the U.S. government or its agencies or instrumentalities if,
immediately after such purchase, more than 5% of the value of its total assets
would be invested in such issuer (except that up to 25% of the value of the Tax
Exempt Money Market Fund's total assets may be invested without regard to such
5% limitation). For purposes of this limitation, a security is considered to be
issued by the government entity (or entities) whose assets and revenues back the
security; with respect to a private activity bond that is backed only by the
assets and revenues of a non-government user, a security is considered to be
issued by such non-governmental user.
2. Purchase any securities which would cause 25% or more of the Tax
Exempt Money Market Fund's total assets at the time of purchase to be invested
in the securities of one or more issuers conducting their principal business
activities in the same industry; provided that this limitation shall not apply
to Municipal Securities; and provided, further, that for the purpose of this
limitation only, private activity bonds that are backed only by the assets and
revenues of a non-governmental user shall not be deemed to be Municipal
Securities.
3. Acquire a put if, immediately after such acquisition, over 5% of the
total amortized cost value of the Tax Exempt Money Market Fund's assets would be
subject to puts from the same institution (except that (i) up to 25% of the
value of the Tax Exempt Money Market Fund's total assets may be subject to puts
without regard to such 5% limitation and (ii) the 5% limitation is inapplicable
to puts that, by their terms, would be readily exercisable in the event of a
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default in payment of principal or interest on the underlying securities). For
the purpose of this investment restriction and investment restriction No. 4
below, a put will be considered to be from the party to whom the Tax Exempt Fund
will look for payment of the exercise price.
4. Acquire a put that, by its terms would be readily exercisable in the
event of a default in payment of principal and interest on the underlying
security or securities if, immediately after that acquisition, the amortized
cost value of the security or securities underlying that put, when aggregated
with the amortized cost value of any other securities issued or guaranteed by
the issuer of the put, would exceed 10% of the total amortized cost value of the
Tax Exempt Fund's assets.
The Bond Fund, the Limited Term Bond Fund, the Government Income Fund,
the Municipal Bond Fund, the Equity Income Fund and the Small Cap Fund may not:
1. Purchase securities of any one issuer, other than obligations issued
or guaranteed by the U.S. government or its agencies or instrumentalities, if,
immediately after such purchase, more than 5% of the value of such Fund's total
assets would be invested in such issuer, or such Fund would hold more than 10%
of any class of securities of the issuer or more than 10% of the outstanding
voting securities of the issuer, except that up to 25% of the value of each
Fund's total assets may be invested without regard to such limitations. There is
no limit to the percentage of assets that may be invested in U.S. Treasury
bills, notes, or other obligations issued or guaranteed by the U.S. government
or its agencies or instrumentalities.
The Bond Fund, the Government Income Fund, the Limited Term Bond Fund,
the Municipal Bond Fund, the Equity Income Fund and the Small Cap Fund may not:
1. Purchase any securities which would cause more than 25% of the value
of such Income Fund's, Equity Income Fund's or Small Cap Fund's total assets at
the time of purchase to be invested in securities of one or more issuers
conducting their principal business activities in the same industry, provided
that (a) there is no limitation with respect to obligations issued or guaranteed
by the U.S. government or its agencies or instrumentalities, and repurchase
agreements secured by obligations of the U.S. government or its agencies or
instrumentalities; (b) for the Bond Fund, the Limited Term Bond Fund and the
Municipal Bond Fund there is no limitation with respect to Municipal Securities,
which, for purposes of this limitation only, do not include private activity
bonds that are backed only by the assets and revenues of a non-governmental
user; (c) wholly-owned finance companies will be considered to be in the
industries of their parents if their activities are primarily related to
financing the activities of their parents; and (d) utilities will be divided
according to their services. For example, gas, gas transmission, electric and
gas, electric, and telephone will each be considered a separate industry.
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The Municipal Bond Fund may not:
1. Write or sell puts, calls, straddles, spreads, or combinations
thereof except that the Funds may acquire puts with respect to Eligible
Municipal Securities and sell those puts in conjunction with a sale of those
Eligible Municipal Securities.
The Prime Money Market Fund, the Tax Exempt Fund, the Bond Fund, the
Government Income Fund, the Limited Term Bond Fund, the Municipal Bond Fund, the
Equity Income Fund, and the Small Cap Fund may not:
1. Borrow money or issue senior securities, except that each Fund may
borrow from banks or enter into reverse repurchase agreements for temporary
emergency purposes in amounts up to 10% of the value of its total assets at the
time of such borrowing; or mortgage, pledge, or hypothecate any assets, except
in connection with any such borrowing and in amounts not in excess of the lesser
of the dollar amounts borrowed or 10% of the value of such Fund's total assets
at the time of its borrowing. A Fund will not purchase securities while
borrowings (including reverse repurchase agreements) in excess of 5% of its
total assets are outstanding.
2. Make loans, except that each Fund may purchase or hold debt
instruments in accordance with its investment objective and policies, may lend
Fund securities in accordance with its investment objective and policies, and
may enter into repurchase agreements.
None of the AmSouth Prime Money Market Fund, AmSouth Tax Exempt Money
Market Fund, AmSouth Municipal Bond Fund, AmSouth Limited Term Fund, AmSouth
Government Income Fund, AmSouth Bond Fund, AmSouth Small Cap Fund, AmSouth
Equity Income Fund 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 Fund, which may
purchase futures contracts), oil, gas or mineral exploration or development
programs, or real estate (although investments by all of the Funds 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 Small Cap Fund and the Equity
Income 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;
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provided, however, that the Equity Income Fund, the Small Cap Fund and the
Income Funds may purchase securities of a money market fund, including
securities of both the Prime Money Market Fund and the AmSouth Treasury Reserve
Fund (and in the case of the Tax-Free Funds, securities of the Tax Exempt Money
Market Fund) and the Tax Exempt Money Market Fund and the Prime Money Market
Fund may purchase securities of a money market fund which invests primarily in
high quality short-term obligations exempt from federal income tax, if, with
respect to each such Fund, immediately after such purchase, the acquiring Fund,
does not own in the aggregate (i) more than 3% of the acquired company's
outstanding voting securities, (ii) securities issued by the acquired company
having an aggregate value in excess of 5% of the value of the total assets of
the acquiring Fund, or (iii) securities issued by the acquired company and all
other investment companies (other than Treasury stock of the acquiring Fund)
having an aggregate value in excess of 10% of the value of the acquiring Fund's
total assets;
4. Invest in any issuer for purposes of exercising control or
management;
5. Purchase or retain securities of any issuer if the officers or
Trustees of the Trust or the officers or directors of its investment adviser
owning beneficially more than one-half of 1% of the securities of such issuer
together own beneficially more than 5% of such securities; and
6. Invest more than 10% of total assets in the securities of issuers
which together with any predecessors have a record of less than three years of
continuous operation.
The Prime Money Market Fund may not buy common stocks or voting
securities, or state, municipal, or private activity bonds. The Prime Money
Market Fund, the Tax Exempt Money Market Fund and the Municipal Bond Fund may
not write or purchase call options. None of the Funds may write put options. The
Prime Money Market Fund and the Equity Income Fund may not purchase put options.
The Tax Exempt Money Market Fund and the Municipal Bond Fund 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: The AmSouth Prime
Money Market Fund, AmSouth Tax Exempt Money Market Fund, AmSouth Municipal Bond
Fund, AmSouth Limited Term Bond Fund, AmSouth Government Income Fund, AmSouth
Bond Fund, AmSouth Small Cap Fund,
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AmSouth Equity Income Fund will not 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.
ADDITIONAL INVESTMENT RISKS
Both the ISG and AmSouth money market funds intend to comply with Rule
2a-7 under the 1940 Act. Shares of each Fund are priced pursuant to the
amortized cost method whereby each Fund seeks to maintain its net asset value
per share at $1.00. There can be, however, no assurance that a stable net asset
value of $1.00 per share will be maintained.
Investments by both the ISG Funds and the AmSouth Funds in obligations
of certain agencies and instrumentalities of the U.S. Government may not be
guaranteed by the full faith and credit of the U.S. Treasury, and there can be
no assurance 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.
As in the case of mortgage-related securities, loan participations and
certain asset-backed securities are subject to prepayments and there can be no
assurance that an ISG Fund or an AmSouth Fund will be able to reinvest the
proceeds of any prepayment at the same interest rate or on the same terms as the
original investment.
With regard to loan participations, although an ISG or AmSouth Fund's
ability to receive payments of principal and interest in connection with a
particular loan is primarily dependent on the financial condition of the
underlying borrower, the lending institution or bank may provide assistance in
collecting interest and principal from the borrower and in enforcing its rights
against the borrower in the event of a default. In selecting loan participations
on behalf of an ISG or AmSouth Fund, the Advisor evaluates the creditworthiness
of both the borrower and the loan originator and will treat both as an "issuer"
of the loan participation for purposes of the Fund's investment policies and
restrictions.
Certain risks are inherent in both ISG and AmSouth Tennessee Tax-Exempt
and ISG and AmSouth Limited Term Tennessee Tax-Exempt's concentrated investment
in Tennessee Municipal Securities, which may make an investment in such Funds
riskier than an investment in other types of funds. The Constitution of the
State of Tennessee requires a balanced budget. In 1978, the voters of the State
of Tennessee approved an amendment to the State Constitution requiring that (1)
the total expenditures of the State for any fiscal year may not exceed the
State's revenues and reserves, including the proceeds of debt obligations issued
to finance capital expenditures and (2) in no year may the rate of growth of
appropriations from State tax revenues exceed the estimated rate of growth of
the State's economy. In the past the Governor and the General Assembly have had
to restrict expenditures to comply with the State Constitution.
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Tennessee's fiscal year 1997-98 budget completed a six year plan for
funding of improvements in the Basic Education Program for public schools and of
teacher salary equalization, funded certain crime legislation aimed at juvenile
crime, and expanded TennCare enrollment to all children without access to health
insurance. The reduction in retirement contributions sufficient to fund
contingency appropriations for a compound cost-of-living retirement adjustment,
a 3.6% retirement adjustment, and a 1.5% salary increase for state employees,
teachers and higher education was confirmed effective January 1, 1998. The
General Assembly approved $60.8 million in general obligation bonds (excluding
highway bonds), of which $24.8 million was for higher education projects, to
fund part of the $93.1 million capital projects program.
A budget transfer of $43 million from the Tennessee Housing Development
Agency dedicated tax revenues, reserves and other funds was made as of June 30,
1998, to the State's General Fund. Such transfer did not impact the ratings on
the Agency's outstanding debt.
The Governor's $15.4 billion budget for fiscal year 1998-99 was amended
and approved April 29, 1998. The budget includes a 1,049 reduction in then
existing staff positions and an increase of 406 positions necessary for
recommended improvements. The base budget includes a $57.1 million reduction in
expenditures from General Fund taxes ($66.2 million from all tax sources). The
improvement budget of $370 million from General Fund taxes includes $66.3
million for the Basic Education Program for public schools; $20.3 million for
higher education operating budgets; $67.8 million for TennCare; $21 million for
new prison beds and operating requirements; and a 2% salary increase effective
January 1, 1999. The Governor recommended and the General Assembly passed $265.5
million in general obligation bonds (excluding highway bonds), of which $196.2
million is for higher education projects, to fund part of the $322.7 million
capital projects program.
On February 8, 1999, the Funding Board reported to the Governor and the
Chairmen of the Finance, Ways & Means Committees of the Tennessee General
Assembly its revised consensus revenue estimates for fiscal year 1998-99 and the
first estimates for fiscal year 1999-2000, which became the basis for the fiscal
year 1998-99 revised estimates and the estimates for fiscal year 1999-2000. The
growth estimates for fiscal year 1998-99 for the General Fund taxes range from
2.25% to 2.75% and for all tax collections range from 2.5% to 3.0%. The budget
document for fiscal year 1999-2000 estimates growth of 2.43% in 1998-99 which is
$69.8 million less than the budgeted estimate. The shortfall is offset by fiscal
year 1997-98's surplus and available reserves in the current year.
Revenue collections for the six months of August 1998 through January
1999 increased by 3.36% over the same period last year. General Fund collections
are $2.6 billion which is $20.2 million less than budgeted. The undercollection
was in the franchise and excise taxes.
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The estimated financial effects of the Governor's proposed "Tax Relief
& Fairness Act of 1999", which repeals the sales tax on grocery food and
replaces the franchise and excise taxes with the "fair business tax" -a 2.5% tax
on business compensation and profits (with a $50,000 exemption on each), are
included in the 1999-2000 budget. The budget contemplates a net revenue increase
from the 1999 Tax Bill of $406 million in General Fund revenue consisting of
$40.6 million to the Reserve for Revenue Fluctuations and $365.4 million to fund
the 1999-2000 budget.
The $16.568 billion budget recommended for fiscal year 1999-2000
includes no growth in positions. The base budget includes $42.3 million to fund
supplemental appropriations. The improvement budget of $416 million from general
fund taxes includes $68.9 million for the Basic Education Program for public
schools; $25.6 million for higher education operating budgets; $142.3 million
for TennCare; $13.6 million for new prison beds and local jail beds; $20 million
for state employee compensation issues; and $26 million for a 1.7% salary
increase effective January 1, 2000 for state employees, teachers and higher
education employees. The Governor recommended $166.5 million in general
obligation bonds (excluding highway bonds), of which $75.9 million is for higher
education projects, to fund part of the $246.9 million capital projects program.
Investment in ISG Capital Growth, AmSouth Growth Opportunities, ISG
Equity Income and AmSouth Equity Income entails certain risks. These Funds are
permitted to invest, to a limited extent, in securities rated as low as Ba by
Moody's or BB by S&P, Fitch or Duff. Such securities, though higher yielding,
are characterized by risk. Although ratings may be useful in evaluating the
safety of interest and principal payments, they do not evaluate the market value
risk of these securities. The Fund will rely on the Adviser's judgment, analysis
and experience in evaluating the creditworthiness of an issuer.
Investors should be aware that the market values of many of these
securities tend to be more sensitive to economic conditions than are higher
rated securities and will fluctuate over time. These securities are considered
by S&P, Moody's, Fitch and Duff generally to be predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligation and generally will involve more credit risk than
securities in the higher rating categories.
Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities of such
issuers generally is greater than is the case with the higher rated securities.
For example, during an economic downturn or a sustained period of rising
interest rates, highly leveraged issuers of these securities may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations also may be affected adversely by
specific corporate developments, forecasts, or the unavailability of additional
financing. The risk of loss because of default by the issuer is significantly
greater for the holders of these securities because such securities generally
are unsecured and often are subordinated to other creditors of the issuer.
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Because there is no established retail secondary market for many of
these securities, the Funds anticipate that such securities could be sold only
to a limited number of dealers or institutional investors. To the extent a
secondary trading market for these securities does exist, it generally is not as
liquid as the secondary market for higher rated securities. The lack of a liquid
secondary market may have an adverse impact on market price and yield and the
Funds' ability to dispose of particular issues when necessary to meet its
liquidity needs or in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer. The lack of a liquid
secondary market for certain securities also may make it more difficult for the
Fund to obtain accurate market quotations for purposes of valuing its securities
and calculating its net asset value. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the values and
liquidity of these securities. In such cases, judgment may play a greater role
in valuation because less reliable, objective data may be available.
These securities may be particularly susceptible to economic downturns.
It is likely that an economic recession could disrupt severely the market for
such securities and may have an adverse impact on the value of such securities.
In addition, it is likely that any such economic downturn could adversely affect
the ability of the issuers of such securities to repay principal and pay
interest thereon and increase the incidence of default for such securities.
ISG Capital Growth, AmSouth Capital Growth, ISG Equity Income and
AmSouth Equity Income may acquire these securities during an initial offering.
Such securities may involve special risks because they are new issues. The Funds
do not have any arrangement with any persons concerning the acquisition of such
securities, and the Adviser will review carefully the credit and other
characteristics pertinent to such new issues.
The credit risk factors pertaining to lower rated securities also apply
to lower rated zero coupon securities. Such zero coupon securities carry an
additional risk in that, unlike securities which pay interest throughout the
period to maturity, the Funds will realize no cash until the cash payment date
unless a portion of such securities are sold and, if the issuer defaults, the
Funds may obtain no return at all on its investment.
Regarding ISG Capital Growth, AmSouth Capital Growth, ISG Limited Term
U.S. Government, AmSouth Limited Term U.S. Government, ISG Equity Income,
AmSouth Equity Income, ISG Limited Term Income, AmSouth Limited Term Bond, ISG
Income, AmSouth Bond, ISG Government Income and AmSouth Government Income,
mortgage-related securities in which these Funds may invest are complex
derivative instruments, subject to both credit and prepayment risk, and may be
more volatile and less liquid than more traditional debt securities. Some
mortgage-related securities have structures that make their reactions to
interest rate changes and other factors difficult to predict, making their value
highly volatile. No assurance can be given as to the liquidity of the market for
certain mortgage-backed securities, such as collateralized mortgage obligations
and stripped mortgage-backed securities. Determination as to the liquidity of
interest-only and principal-only fixed mortgage-backed securities issued by the
U.S. Government or its
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agencies and instrumentalities will be made in accordance with guidelines
established by the Trust's Board of Directors. In accordance with such
guidelines, the Adviser will monitor investments in such securities with
particular regard to trading activity, availability of reliable price
information and other relevant information. The Fund intends to treat other
stripped mortgage-backed securities as illiquid securities.
Mortgage-related securities are subject to credit risks associated with
the performance of the underlying mortgage properties. Adverse changes in
economic conditions and circumstances are more likely to have an adverse impact
on mortgage-related securities secured by loans on certain types of commercial
properties than on those secured by loans on residential properties. In
addition, these securities are subject to prepayment risk, although commercial
mortgages typically have shorter maturities than residential mortgages and
prepayment protection features. In certain instances, the credit risk associated
with mortgage-related securities can be reduced by third party guarantees or
other forms of credit support. Improved credit risk does not reduce prepayment
risk which is unrelated to the rating assigned to the mortgage-related security.
Prepayment risk can lead to fluctuations in value of the mortgage-related
security which may be pronounced. If a mortgage-related security is purchased at
a premium, all or part of the premium may be lost if there is a decline in the
market value of the security, whether resulting from changes in interest rates
or prepayments in the underlying mortgage collateral. Certain mortgage-related
securities that may be purchased by the Funds, such as inverse floating rate
collateralized mortgage obligations, have coupons that move inversely to a
multiple of a specific index which may result in a form of leverage. As with
other interest-bearing securities, the prices of certain mortgage-related
securities are inversely affected by changes in interest rates. However, though
the value of a mortgage-related security may decline when interest rates rise,
the converse is not necessarily true, since in periods of declining interest
rates the mortgages underlying the security are more likely to be prepaid. For
this and other reasons, a mortgage-related security's stated maturity may be
shortened by unscheduled prepayments on the underlying mortgages, and,
therefore, it is not possible to predict accurately the security's return to the
Funds. Moreover, with respect to certain stripped mortgage-backed securities, if
the underlying mortgage securities experience greater than anticipated
prepayments of principal, the Funds may fail to fully recoup its initial
investment in these securities even if the securities are rated in the highest
rating category. During periods of rapidly rising interest rates, prepayments of
mortgage-related securities may occur at slower than expected rates. Slower
prepayments effectively may lengthen a mortgage-related security's expected
maturity which generally would cause the value of such security to fluctuate
more widely in response to changes in interest rates. Were the prepayments on
the Fund's mortgage-related securities to decrease significantly, the Funds'
effective duration, and thus sensitivity to interest rate fluctuations, would
increase.
Regarding all ISG and AmSouth Funds except the Strategic Portfolios,
investment decisions for each Fund are made independently from those of the
other investment companies, investment advisory accounts, custodial accounts,
individual trust accounts and commingled funds that may be advised by the
Adviser or, if applicable, sub-investment
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adviser. However, if such other investment companies or managed accounts desire
to invest in, or dispose of, the same securities as the Fund, available
investments or opportunities for sales will be allocated equitably to each of
them. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by a Fund or the price paid or received by
a Fund.
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AMSOUTH FUNDS
ISG FUNDS
Note to Pro Forma Financial Statements
(Unaudited)
-------
1. BASIS OF COMBINATION:
---------------------
The unaudited Pro Forma Combining Statements of Assets and Liabilities,
Statements of Operations, and Schedules of Portfolio Investments reflect the
accounts of eight investment portfolios offered by the AmSouth Funds (the
"AmSouth Funds"): AmSouth Prime Money Market Fund, the AmSouth Tax-Exempt Money
Market Fund, the AmSouth Limited Term Bond Fund, the AmSouth Government Income
Fund, the AmSouth Bond Fund, the AmSouth Municipal Bond Fund, the AmSouth Equity
Income Fund and the AmSouth Small Cap Fund (the "AmSouth Funds") and eight
investment portfolios offered by the Infinity Mutual Funds, Inc., ISG Funds: the
ISG Prime Money Market Fund, the ISG Tax-Exempt Money Market Fund, the ISG
Limited Term Income Fund, the ISG Government Income Fund, the ISG Income Fund,
the ISG Municipal Income Fund, the ISG Equity Income Fund, and the ISG Small-Cap
Opportunity Fund (the "ISG Funds"), (collectively, the "Funds" and individually
a "Fund") as if the proposed reorganization occurred as of and for the year
ended July 31, 1999. These statements have been derived from books and records
utilized in calculating daily net asset value at July 31, 1999.
The Reorganization Agreement provides that on the Closing Date of the
Reorganization, all of the assets and liabilities will be transferred as follows
such that at and after the Reorganization, the assets and liabilities of the
applicable ISG Funds will become the assets and liabilities of the corresponding
AmSouth Fund (see table below):
<TABLE>
<S> <C>
ISG Prime Money Market Fund AmSouth Prime Money Market Fund
ISG Tax-Exempt Money Market Fund AmSouth Tax-Exempt Money Market Fund
ISG Limited Term Income Fund AmSouth Limited Term Bond Fund
ISG Government Income Fund AmSouth Government Income Fund
ISG Income Fund AmSouth Bond Fund
ISG Municipal Income Fund AmSouth Municipal Bond Fund
ISG Equity Income Fund AmSouth Equity Income Fund
ISG Small-Cap Opportunity AmSouth Small Cap Fund
</TABLE>
In exchange for the transfer of assets and liabilities, the Company
will issue to the ISG Funds full and fractional shares of the corresponding
AmSouth Funds, and the ISG Funds will make a liquidating distribution of such
shares to its shareholders. The number of shares of the AmSouth Funds so issued
will be equal in value to the full and fractional shares of the ISG Funds that
are outstanding immediately prior to the Reorganization. At and after the
Reorganization, all debts, liabilities and obligations of ISG Funds will attach
to the AmSouth Funds and may thereafter be enforced against the AmSouth Funds to
the same extent as if the AmSouth Funds had incurred them. The pro forma
statements give effect to the proposed transfer described above.
Under the purchase method of accounting for business combinations under
generally
(CONTINUED)
B-55
<PAGE> 433
AMSOUTH FUNDS
ISG FUNDS
Note to Pro Forma Financial Statements
(Unaudited)
-------
accepted accounting principles, the basis on the part of the AmSouth
Funds, of the assets of the ISG Funds will be the fair market value of such
assets on the Closing Date of the Reorganization. The AmSouth Funds will
recognize no gain or loss for federal tax purposes on its issuance of shares in
the Reorganization, and the basis to the AmSouth Funds of the assets of the ISG
Funds received pursuant to the Reorganization will equal the fair market value
of the consideration furnished, and costs incurred, by the AmSouth Funds in the
Reorganization -- i.e., the sum of the liabilities assumed, the fair market
value of the AmSouth Funds shares issued, and such costs. For accounting
purposes, the AmSouth Funds are the surviving portfolios of this Reorganization,
except for the ISG Equity Income Fund and the AmSouth Equity Income Fund, where
the ISG Fund will be the accounting survivor. The pro forma statements reflect
the combined results of operations of the ISG Funds and the AmSouth Funds.
However, should such Reorganization be effected, the statements of operations of
the AmSouth Funds will not be restated for pre-combination period results of the
corresponding ISG Funds.
The Pro Forma Combining Statements of Assets and Liabilities,
Statements of Operations, and Schedules of Portfolio Investments should be read
in conjunction with the historical financial statements of the Funds
incorporated by reference in the Statement of Additional Information.
The AmSouth Funds and the ISG Funds are each separate portfolios of the
AmSouth Mutual Funds and The Infinity Mutual Funds, Inc, respectively, which are
registered as open-end management companies under the Investment Company Act of
1940. The investment objectives of each fund are listed below.
AmSouth Prime Money Market Funds seeks current income with liquidity
and stability of principal.
ISG Prime Money Market Fund seeks to provide investors with as high a
level of current income as is consistent with the preservation of
capital and the maintenance of liquidity.
AmSouth Tax-Exempt Money Market Fund seeks to produce as high a level
of current interest income exempt from Federal income taxes as is
consistent with the preservation of capital and relative stability of
principal.
ISG Tax-Exempt Money Market Fund seeks to provide investors with as
high a level of current income exempt from Federal income tax as is
consistent with the preservation of capital and the maintenance of
liquidity.
AmSouth Limited Term Bond Fund seeks current income, consistent with
the preservation of capital.
ISG Limited Term Income Fund seeks to provide investors with current
income without
(CONTINUED)
B-56
<PAGE> 434
AMSOUTH FUNDS
ISG FUNDS
Note to Pro Forma Financial Statements
(Unaudited)
-------
assuming undue risk.
AmSouth Government Income Fund seeks current income consistent with the
preservation of capital.
ISG Government Income Fund seeks to provide investors with current
income.
AmSouth Bond Fund seeks current income consistent with the
preservation of capital
ISG Income Fund seeks to provide investor with current income without
assuming undue risk.
AmSouth Municipal Bond Fund seeks to provide as high a level of current
interest income exempt from Federal income taxes as is consistent with
the preservation of capital.
ISG Municipal Income Fund seeks to provide investors with dividend
income exempt from Federal income tax.
AmSouth Equity Income Fund seeks above average income and capital
appreciation.
ISG Equity Income Fund seeks to provide investor with current income
and capital appreciation.
AmSouth Small Cap Fund seeks capital appreciation.
ISG Small-Cap Opportunity Fund seeks to provide investors with capital
appreciation.
EXPENSES
--------
AmSouth Bank serves as the AmSouth Funds' investment advisor and
custodian. Rockhaven Asset Management, LLC, serves as sub-investment advisor to
the AmSouth Equity Income Fund. Sawgrass Assets Management, LLC serves as
sub-investment advisor to the AmSouth Small Cap Fund. ASO Services Company
("ASO") serves as the administrator and mutual fund accountant for the AmSouth
Funds. AmSouth and BISYS Fund Services Limited Partnership d/b/a BISYS Fund
Services (BISYS) serve as sub-administrators to the AmSouth Funds. BISYS Fund
Services Ohio ("BISYS Ohio") serves as the transfer and dividend disbursing
agent for the AmSouth Funds. ASO, BISYS and BISYS Ohio are subsidiaries of The
BISYS Group, Inc.
ISG Funds:
- ----------
(CONTINUED)
B-57
<PAGE> 435
AMSOUTH FUNDS
ISG FUNDS
Note to Pro Forma Financial Statements
(Unaudited)
-------
The ISG Funds issue three classes of shares, Institutional Shares,
Class A Shares and Class B Shares (except for the Tax-Exempt Money Market Fund
which does not offer Class B Shares), which have rights and privileges analogous
to those of the AmSouth Funds' Trust Shares, Class A Shares and Class B Shares,
respectively.
Under the terms of the investment advisory agreement between the ISG
Funds and First American National Bank ("FANB"), FANB is entitled to receive
fees computed at an annual rate based on each Fund's average daily net assets
(see table below). Such fees are accrued daily and paid monthly. For the period
from August 1, 1998 to December 13, 1999, ParkSouth Corporation (ParkSouth) was
the investment advisor to the DG Prime Money Market Fund (now the ISG Money
Market Fund), the DG Municipal Income Fund (now the ISG Municipal Income Fund)
and the DG Opportunity Fund (now the ISG Small-Cap Opportunity Fund). ParkSouth
received a fee for its services at an annual rate of 0.50%, 0.60% and 0.95% of
each respective Fund's daily average net assets. Womack Asset Management, Inc.
serves as the sub-investment advisor to the ISG Small-Cap Opportunity Fund and
receives a fee from FANB paid at the annual rate of 0.35% of the Fund's average
daily net assets. For the year ended July 31, 1999, total investment advisory
fees incurred by the ISG Funds were as follows:
<TABLE>
<CAPTION>
Percentage Fee Total Fees Fees Waived
-------------- ---------- -----------
<S> <C> <C> <C>
Prime Money Market* 0.25%
Tax-Exempt Money Market 0.35%
Limited Term Income 0.50%
Government Income 0.60%
Income 0.50%
Municipal Income* 0.60%
Equity Income 0.65%
Small-Cap Opportunity* 0.95%
</TABLE>
* Amounts include fees incurred by the funds payable to ParkSouth for the period
of August 1, 1998 to December 13, 1998.
AmSouth Funds:
- --------------
The AmSouth Funds offer three classes of shares: Trust Shares, Class A
Shares and B Shares (except for the Tax-Exempt Money Market Fund and Government
Income Fund which do not offer B Shares; effective with the Closing Date of the
Reorganization, the Government Income Fund will offer B Shares. For pro forma
purposes, the Combining Pro Forma Statement of Assets and Liabilities and
Statement of Operations include B Share operations for the period presented for
the Government Income Fund). Each class of shares has identical rights and
privileges except with respect to fees paid under shareholder servicing or
distribution plans, expenses allocable exclusively to each class of shares,
voting rights on matters affecting a single class of shares, and the exchange
(CONTINUED)
B-58
<PAGE> 436
AMSOUTH FUNDS
ISG FUNDS
Note to Pro Forma Financial Statements
(Unaudited)
-------
privilege of each class of shares. Class A Shares are subject to an initial
sales charge upon purchase. Class B Shares are subject to a contingent deferred
sales change (CDSC) upon redemption.
Under the terms of the investment advisory agreement, AmSouth Bank is
entitled to receive fees computed at the annual rate based on each Fund's
average daily net assets (see table below). Rockhaven Asset Management, LLC,
serves as sub-investment advisor to the AmSouth Equity Income Fund and receives
an annual fee from AmSouth Bank of 0.48% of the average daily net assets of the
Fund. Sawgrass Assets Management, LLC serves as sub-investment advisor to the
AmSouth Small Cap Fund and receives an annual fee from AmSouth Bank of 0.84% of
the average daily net assets of the Fund. Such fees are accrued daily and paid
monthly. For the year ended July 31, 1999, total investment advisory fees
incurred by the AmSouth Funds were as follows:
<TABLE>
<CAPTION>
Percentage Fee Total Fees Fees Waived
-------------- ---------- -----------
<S> <C> <C> <C>
Prime Money Market 0.40% $2,765 -
Tax-Exempt Money Market 0.40% 383 $192
Limited Term Bond 0.65% 735 170
Government Income 0.65% 62 33
Bond 0.65% 2,319 535
Municipal Bond 0.65% 2,121 816
Equity Income 0.80% 325 -
Small Cap 1.20% 127 -
</TABLE>
Under the terms of the administration agreement, ASO's fees are
computed at the annual rate of 0.20% of each Fund's daily average net assets.
For the year ended July 31, 1999, the administration fees incurred by the
AmSouth Funds were as follows:
<TABLE>
<CAPTION>
Total Fees Fees Waived
---------- -----------
<S> <C> <C>
Prime Money Market $1,383 -
Tax-Exempt Money Market 192 -
Limited Term Bond 226 $90
Government Income 19 10
Bond 714 285
Municipal Bond 653 261
Equity Income 81 -
Small Cap 21 21
</TABLE>
(CONTINUED)
B-59
<PAGE> 437
AMSOUTH FUNDS
ISG FUNDS
Note to Pro Forma Financial Statements
(Unaudited)
-------
PRO FORMA ADJUSTMENTS AND PRO FORMA COMBINED COLUMNS
----------------------------------------------------
The pro forma adjustments and pro forma combined columns of the
Statements of Operations reflect the adjustments necessary to show expenses at
the rates which would have been in effect if the ISG Funds were included in the
AmSouth Funds for the year ended July 31, 1999. Investment advisory,
administration, 12b-1, shareholder service, accounting and custodian fees in the
pro forma combined column are calculated at the rates in effect for the AmSouth
Funds based upon the combined net assets of the corresponding ISG Funds and the
AmSouth Funds. Certain pro forma adjustments were made to estimate the benefit
of combining operations of separate funds into one survivor fund.
The pro forma Schedules of Portfolio Investments give effect to the
proposed transfer of such assets as if the Reorganization had occurred at July
31, 1999.
2. PORTFOLIO VALUATION, SECURITIES TRANSACTIONS AND RELATED INCOME:
----------------------------------------------------------------
Investments of the Prime Money Market and Tax-Exempt Money Market Funds
are valued at either amortized cost, which approximates market value, or at
original cost which, combined with accrued interest, approximates market value.
Under the amortized cost method, discount or premium is amortized on a constant
basis to the maturity of the security.
Investments in common stocks, corporate bonds, municipal bonds,
commercial paper and U.S. Government securities of the remaining Funds are
valued on the basis of valuations provided by dealers or an independent pricing
service approved by the Board of Trustees. Investments in investment companies
are valued at their net asset values as reported by such companies. The
differences between cost and market values of such investments are reflected as
unrealized appreciation or depreciation.
Security transactions are recorded on trade date. Realized gains and
losses from sales of investments are calculated on the identified cost basis.
Interest income, including accretion of discount and amortization of premium on
investments, is accrued daily. Dividend income is recorded on the ex-dividend
date.
3. CAPITAL SHARES:
---------------
The pro forma net asset values per share assume the issuance of shares
of the AmSouth Funds, which would have occurred at July 31, 1999 in connection
with the proposed reorganization. The pro forma number of shares outstanding
consists of the following:
(CONTINUED)
B-60
<PAGE> 438
AMSOUTH FUNDS
ISG FUNDS
Note to Pro Forma Financial Statements
(Unaudited)
-------
<TABLE>
<CAPTION>
- ----------------------------------------- -------------------- ------------------------ -----------------------
Shares Additional Shares
Outstanding at Assumed in the Pro Forma Shares
July 31, 1999 Reorganization at July 31, 1999
(000's) (000's) (000's)
- ----------------------------------------- -------------------- ------------------------ -----------------------
<S> <C> <C> <C>
Prime Money Market 673,222
- ----------------------------------------- -------------------- ------------------------ -----------------------
Tax-Exempt Money Market 96,725
- ----------------------------------------- -------------------- ------------------------ -----------------------
Limited Term Bond 11,067
- ----------------------------------------- -------------------- ------------------------ -----------------------
Government Income 893
- ----------------------------------------- -------------------- ------------------------ -----------------------
Bond 36,681
- ----------------------------------------- -------------------- ------------------------ -----------------------
Municipal Income 32,832
- ----------------------------------------- -------------------- ------------------------ -----------------------
Equity Income 3,082
- ----------------------------------------- -------------------- ------------------------ -----------------------
Small Cap 2,821
- ----------------------------------------- -------------------- ------------------------ -----------------------
</TABLE>
(CONTINUED)
B-61
<PAGE> 439
AMSOUTH SMALL CAP FUND
ISG SMALL-CAP OPPORTUNITY FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
07/31/99
(UNAUDITED)
<TABLE>
<CAPTION>
ISG PRO FORMA
AMSOUTH SMALL-CAP PRO FORMA COMBINED
SMALL CAP OPPORTUNITY ADJUSTMENTS (NOTE 1)
------------ ------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities, at value
(cost $21,396 and $91,042, respectively) $ 24,019 $ 102,507 $ -- $ 126,526
Interest and dividends receivable 2 12 -- 14
Receivable for capital shares sold 12 -- -- 12
Receivable from investment adviser -- 22 -- 22
Receivable from brokers for investments sold 1,343 421 -- 1,764
Other assets 6 25 -- 31
---------- ---------- ---------- ----------
TOTAL ASSETS 25,382 102,987 -- 128,369
---------- ---------- ---------- ----------
LIABILITIES:
Payable for capital shares redeemed -- 1 -- 1
Payable to brokers for investments purchased 1,584 394 -- 1,978
Accrued expenses:
Advisory fees 12 88 -- 100
Administration fees -- 2 -- 2
Distribution fees 1 14 -- 15
Accounting fees -- 1 -- 1
Transfer agent fees 1 4 -- 5
Custodian fees -- 4 -- 4
Other 5 15 -- 20
---------- ---------- ---------- ----------
TOTAL LIABILITIES 1,603 523 -- 2,126
---------- ---------- ---------- ----------
NET ASSETS
Class A Shares 1,073 9,649 -- 10,722
Class B Shares 929 311 -- 1,240
Institutional Shares 21,777 92,504 -- 114,281
========== ========== ========== ==========
$ 23,779 $ 102,464 $ -- $ 126,243
========== ========== ========== ==========
CAPITAL SHARES OUTSTANDING
Class A Shares 128 723 426 (a) 1,277
Class B Shares 112 23 14 (a) 149
Institutional Shares 2,581 6,932 4,028 (a) 13,541
========== ========== ========== ==========
2,821 7,678 4,468 (a) 14,967
========== ========== ========== ==========
NET ASSET VALUE
Class A Shares - redemption price per share $ 8.40 $ 13.36 $ 8.40
---------- ---------- ==========
Class A Shares - maximum sales charge 4.50% 4.75% 4.50%
---------- ---------- ==========
Class A Shares - POP $ 8.80 $ 14.03 $ 8.80
========== ========== ==========
Class B Shares - offering price per share* $ 8.31 $ 13.28 $ 8.31
========== ========== ==========
Institutional Shares - offering and redemption
price per share $ 8.44 $ 13.35 $ 8.44
========== ========== ==========
COMPOSITION OF NET ASSETS
Capital $ 23,927 $ 96,999 $ -- $ 120,926
Undistributed (distributions in excess of) (1) (1,225) -- (1,226)
net investment income
Undistributed net realized gains/(loss) (2,770) (4,775) -- (7,545)
from investment transactions
Net unrealized appreciation of investments 2,623 11,465 -- 14,088
---------- ---------- ---------- ----------
NET ASSETS, JULY 31, 1999 $ 23,779 $ 102,464 $ -- $ 126,243
========== ========== ========== ==========
</TABLE>
* Redemption price per share varies by length of time shares are held.
(a) Adjustment to convert ISG Shares Outstanding to AmSouth Shares Outstanding
based on AmSouth's NAV's.
B-62
<PAGE> 440
AMSOUTH SMALL CAP FUND
ISG SMALL-CAP OPPORTUNITY FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
07/31/99
(UNAUDITED)
<TABLE>
<CAPTION>
ISG PRO FORMA
AMSOUTH SMALL-CAP PRO FORMA COMBINED
SMALL CAP OPPORTUNITY ADJUSTMENTS (NOTE 1)
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $ 37 $ 584 $ -- $ 621
Dividend Income 24 144 -- 168
Income from securities lending -- 7 (7)(m) --
-------- -------- -------- --------
61 735 (7) 789
-------- -------- -------- --------
EXPENSES:
Advisory fees 127 948 250 (a) 1,325
Administration fees 21 131 69 (b) 221
Shareholder servicing fees (Class A Shares) 3 65 43 (c) 111
Shareholder servicing fees (Class B Shares) -- -- 2 (d) 2
Shareholder servicing fees (Institutional Shares) -- 85 13 (e) 98
12b-1 fees (Class A Shares) -- 19 (19)(f) --
12b-1 fees (Class B Shares) 9 1 (3)(g) 7
Accounting fees 54 34 (65)(h) 23
Transfer agent fees 33 78 (49)(i) 62
Custodian fees 1 10 19 (j) 30
Trustee fees and expenses -- 1 -- 1
Other expenses 17 87 (29)(k) 75
-------- -------- -------- --------
TOTAL EXPENSES: 265 1,459 232 1,956
Less Waivers
Advisory fees -- -- -- --
Administration fees (21) -- 21 (b) --
12b-1 fees (Class A Shares) -- (19) 19 (f) --
Accounting Fees (50) -- 50 (h) --
Transfer agent fees (30) -- 30 (i) --
Reimbursements (4) (79) 83 (l) --
-------- -------- -------- --------
NET EXPENSES: 160 1,361 435 1,956
-------- -------- -------- --------
NET INVESTMENT INCOME (LOSS) (99) (626) (442) (1,167)
-------- -------- -------- --------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
Investments:
Net realized gains (losses) from investment transactions (2,191) (3,660) -- (5,851)
Net change in unrealized appreciation (depreciation)
from investments 2,703 -- -- 2,703
-------- -------- -------- --------
Net realized/unrealized gains (losses) from investments 512 (3,660) -- (3,148)
Change in net assets resulting from
======== ======== ======== ========
Operations: $ 413 $ (4,286) $ (442) $ (4,315)
======== ======== ======== ========
</TABLE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(a) Adjustment to reflect the AmSouth contractual fee structure for
Advisory fees (1.20% of net assets).
(b) Adjustment to reflect the AmSouth contractual fee structure for
Administration fees (0.20% of net assets).
(c) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder Servicing fees (0.25% of Class A net assets).
(d) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder Servicing fees (0.25% of Class B net assets).
(e) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder Servicing fees (0.15% of Institutional net assets).
(f) Adjustment to reflect the AmSouth contractual fee structure for
12b-1 fees (0.00% of Class A net assets).
(g) Adjustment to reflect the AmSouth contractual fee structure for
12b-1 fees (0.75% of Class B net assets).
(h) Adjustment to reflect the AmSouth contractual fee structure for
Accounting fees ($10,000 a year per additional class + OOP).
(i) Adjustment to reflect the AmSouth contractual fee structure for
Transfer agent fees (0.015% of net assets + $10,000 a year per
class + OOP).
(j) Adjustment to reflect the AmSouth contractual fee structure for
Custodian fees (0.0275% of net assets).
(k) Reduction reflects expected savings when the two funds merge.
(l) Adjustment to reflect the AmSouth contractual fee structure.
(m) Adjustment to reflect no securities lending income since there is
not a securities lending program set up on the AmSouth Funds.
B-63
<PAGE> 441
AMSOUTH SMALL CAP FUND
ISG SMALL-CAP OPPORTUNITY FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
07/31/99
(UNAUDITED)
<TABLE>
<CAPTION>
AMSOUTH ISG SMALL-CAP PRO FORMA
SMALL CAP OPPORTUNITY COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
--------------------- ----------------------------- --------------------- -----------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (91.4%):
Airlines (0.1%):
22,900 22,900 Airtran Holdings, Inc. (b)
APPAREL (2.2%):
83,000 83,000 Jones Apparel Group, Inc. (b)
AUTOMOTIVE (1.1%):
28,900 28,900 Copart, Inc. (b)
24,150 24,150 Monaco Coach Corp. (b)
BUSINESS SERVICES (2.9%):
93,700 93,700 Comforce Corp. (b)
95,000 95,000 MasTec, Inc. (b)
COMMERCIAL SERVICES (0.6%):
23,100 23,100 Dollar Thrifty Automotive Group (b)
7,500 7,500 Plexus Corp. (b)
COMPUTER HARDWARE (1.0%):
94,000 94,000 Data General Corp. (b)
COMPUTER SOFTWARE (2.9%):
3,500 3,500 Computer Network Tech Co. (b)
12,900 12,900 Credence Systems Corp. (b)
21,900 21,900 Handleman Co. (b)
10,800 10,800 Mercury Interactive Corp. (b)
12,600 12,600 Pinnacle Systems, Inc (b)
69,000 69,000 THQ, Inc. (b)
COMPUTERS & PERIPHERALS (3.6%):
17,400 17,400 Cybex Computer Products Corp. (b)
171,800 171,800 Datastream Systems, Inc.
5,600 5,600 Kronos, Inc. (b)
8,000 8,000 Lam Research Corp. (b)
46,100 46,100 Sybase, Inc. (b)
11,600 11,600 Verity, Inc. (b)
CONSTRUCTION (0.9%):
10,900 10,900 Dycom Industries, Inc. (b)
25,700 25,700 Insituform Technologies, Class A (b)
</TABLE>
<TABLE>
<CAPTION>
ISG
AMSOUTH AMSOUTH SMALL-CAP PRO FORMA
SMALL CAP SMALL CAP OPPORTUNITY COMBINED
PRINCIPAL MARKET MARKET MARKET
AMOUNT/SHARES VALUE VALUE VALUE
--------------------- -------------------- --------------------- -------------------
<S> <C> <C> <C>
COMMON STOCKS (91.4%):
Airlines (0.1%):
22,900 $ 147 $ - $ 147
-------------------- --------------------- -------------------
APPAREL (2.2%):
- 2,729 2,729
-------------------- --------------------- -------------------
AUTOMOTIVE (1.1%):
28,900 694 694
24,150 638 638
-------------------- --------------------- -------------------
1,332 - 1,332
-------------------- --------------------- -------------------
BUSINESS SERVICES (2.9%):
228 228
3,385 3,385
-------------------- --------------------- -------------------
- 3,613 3,613
-------------------- --------------------- -------------------
COMMERCIAL SERVICES (0.6%):
23,100 497 497
7,500 240 240
-------------------- --------------------- -------------------
737 - 737
-------------------- --------------------- -------------------
COMPUTER HARDWARE (1.0%):
- 1,310 1,310
-------------------- --------------------- -------------------
COMPUTER SOFTWARE (2.9%):
3,500 51 51
12,900 535 535
21,900 245 245
10,800 498 498
12,600 367 367
1,936 1,936
-------------------- --------------------- -------------------
1,696 1,936 3,632
-------------------- --------------------- -------------------
COMPUTERS & PERIPHERALS (3.6%):
17,400 463 463
2,308 2,308
5,600 271 271
8,000 443 443
46,100 473 473
11,600 574 574
-------------------- --------------------- -------------------
2,224 2,308 4,532
-------------------- --------------------- -------------------
CONSTRUCTION (0.9%):
10,900 520 520
25,700 559 559
-------------------- --------------------- -------------------
1,079 - 1,079
-------------------- --------------------- -------------------
</TABLE>
B-64
<PAGE> 442
<TABLE>
<S> <C> <C> <C>
CONSTRUCTION-MANUFACTURED HOMES (2.1%):
207,000 207,000 Clayton Homes, Inc.
18,000 18,000 Ryland Group, Inc.
DIVERSIFIED MANUFACTURING (0.6%):
20,550 20,550 Labor Ready, Inc. (b)
27,600 27,600 WMS Industries, Inc. (b)
ELECTRICAL & ELECTRONIC (1.2%):
8,900 8,900 Advanced Digital Info Corp. (b)
18,400 18,400 Aeroflex, Inc. (b)
3,200 3,200 Cree Research, Inc. (b)
12,000 12,000 DII Group, Inc. (b)
9,400 9,400 Mentor Graphics Corp. (b)
1,400 1,400 Optical Coating Laboratory
ENTERTAINMENT (0.3%):
40,000 40,000 Aztar Corp. (b)
FINANCIAL SERVICES (5.4%):
18,100 18,100 Hambrecht & Quist Group (b)
13,400 13,400 Legg Mason, Inc.
137,000 137,000 Morgan Keegan, Inc.
95,200 95,200 T. Rowe Price Associates
FOOD PROCESSING & PACKAGING (2.9%):
18,500 18,500 Foodmaker, Inc. (b)
125,000 125,000 Hain Food Group, Inc. (b)
FOREST & PAPER PRODUCTS (0.2%):
19,000 19,000 Longview Fibre Co.
HEALTH CARE (3.9%):
17,500 17,500 Cytyc Corp. (b)
19,000 19,000 Hooper Holmes, Inc.
8,800 4,000 12,800 Infocure Corp. (b)
114,500 114,500 Neotherapeutics, Inc. (b)
225,000 225,000 PSS World Medical, Inc. (b)
HOUSEHOLD PRODUCTS/WARES (0.5%):
12,700 12,700 Fossil, Inc. (b)
MACHINERY & EQUIPMENT (1.0%):
134,000 134,000 AGCO Corp.
MACHINERY-CONSTRUCTION (3.3%):
6,600 6,600 Astec Industries, Inc. (b)
129,700 129,700 Terex Corp. (b)
MACHINERY-DIVERSIFIED (0.1%):
1,600 1,600 Tecumseh Products, Inc.
MEDIA (0.3%):
11,550 11,550 Valassis Communications, Inc. (b)
</TABLE>
<TABLE>
<S> <C> <C> <C>
CONSTRUCTION-MANUFACTURED HOMES (2.1%):
2,173 2,173
18,000 502 502
------------------- --------------------- -------------------
502 2,173 2,675
------------------- --------------------- -------------------
DIVERSIFIED MANUFACTURING (0.6%):
20,550 353 353
27,600 425 425
------------------- --------------------- -------------------
778 - 778
------------------- --------------------- -------------------
ELECTRICAL & ELECTRONIC (1.2%):
8,900 378 378
18,400 348 348
3,200 198 198
12,000 445 445
9,400 95 95
1,400 100 100
------------------- --------------------- -------------------
1,564 - 1,564
------------------- --------------------- -------------------
ENTERTAINMENT (0.3%):
40,000 373 - 373
------------------- --------------------- -------------------
FINANCIAL SERVICES (5.4%):
18,100 681 681
13,400 469 469
2,380 2,380
3,332 3,332
------------------- --------------------- -------------------
1,150 5,712 6,862
------------------- --------------------- -------------------
FOOD PROCESSING & PACKAGING (2.9%):
18,500 506 506
3,149 3,149
------------------- --------------------- -------------------
506 3,149 3,655
------------------- --------------------- -------------------
FOREST & PAPER PRODUCTS (0.2%):
19,000 310 - 310
------------------- --------------------- -------------------
HEALTH CARE (3.9%):
17,500 431 431
19,000 375 375
8,800 472 214 686
1,159 1,159
2,321 2,321
------------------- --------------------- -------------------
1,278 3,694 4,972
------------------- --------------------- -------------------
HOUSEHOLD PRODUCTS/WARES (0.5%):
12,700 667 - 667
------------------- --------------------- -------------------
MACHINERY & EQUIPMENT (1.0%):
- 1,256 1,256
------------------- --------------------- -------------------
MACHINERY-CONSTRUCTION (3.3%):
6,600 225 225
3,891 3,891
------------------- --------------------- -------------------
225 3,891 4,116
------------------- --------------------- -------------------
MACHINERY-DIVERSIFIED (0.1%):
1,600 103 - 103
------------------- --------------------- -------------------
MEDIA (0.3%):
11,550 430 - 430
------------------- --------------------- -------------------
</TABLE>
B-65
<PAGE> 443
<TABLE>
<S> <C> <C> <C>
MEDICAL EQUIPMENT & SUPPLIES (0.9%):
110,000 110,000 ATS Medical, Inc. (b)
MEDICAL SERVICES (4.3%):
295,000 295,000 MedPartners, Inc. (b)
13,100 13,100 Medquist, Inc. (b)
115,000 115,000 Res-Care, Inc. (b)
OFFICE EQUIPMENT & SERVICES (0.2%):
7,000 7,000 Clarify, Inc. (b)
OIL & GAS EXPLORATION, PRODUCTION, & SERVICES (8.1%):
15,100 15,100 Basin Exploration, Inc. (b)
26,500 133,000 159,500 Forest Oil Corp. (b)
148,000 148,000 Gulf Island Fabrication, Inc. (b)
200,000 200,000 Ocean Energy, Inc. (b)
80,000 80,000 Santa Fe Snyder Corp. (b)
40,000 40,000 Stone Energy Corp. (b)
8,700 8,700 Syncor International Corp. (b)
175,000 175,000 TransCoastal Marine Services, Inc. (b)
OILFIELD EQUIPMENT & SERVICES (2.0%):
92,000 92,000 McDermott International, Inc.
PHARMACEUTICALS (1.3%):
11,000 11,000 Chirex, Inc. (b)
19,400 19,400 King Pharmaceuticals, Inc. (b)
14,850 14,850 Priority Healthcare Corp. Class B (b)
RESTAURANTS (9.3%):
120,000 120,000 CEC Entertainment, Inc. (b)
150,000 150,000 CRBL Group, Inc.
70,500 70,500 RARE Hospitality International, Inc. (b)
70,000 70,000 Ruby Tuesday, Inc.
82,000 82,000 Sonic Corp. (b)
RETAIL (15.2%):
49,000 49,000 Action Performance Cos., Inc. (b)
11,300 11,300 American Eagle Outfitters (b)
250,000 250,000 Goody's Family Clothing, Inc. (b)
155,000 155,000 Horizon Pharmacies, Inc. (b)
100,000 100,000 J. Jill Group, Inc. (b)
67,000 67,000 JAKKS Pacific, Inc. (b)
110,000 110,000 Micro Warehouse, Inc.
245,000 245,000 OfficeMax, Inc. (b)
115,000 115,000 Rainbow Rentals, Inc. (b)
360,000 360,000 Stein-Mart, Inc. (b)
145,000 145,000 Trans World Entertainment Corp. (b)
TECHNOLOGY (2.1%):
1,600 1,600 Cohu, Inc.
72,500 72,500 Insight Enterprises, Inc. (b)
10,900 10,900 Integrated Device Tech, Inc. (b)
23,500 23,500 International Rectifier Corp. (b)
</TABLE>
<TABLE>
<S> <C> <C> <C>
MEDICAL EQUIPMENT & SUPPLIES (0.9%):
- 1,079 1,079
-------------------- --------------------- -------------------
MEDICAL SERVICES (4.3%):
2,471 2,471
13,100 568 568
2,415 2,415
-------------------- --------------------- -------------------
568 4,886 5,454
-------------------- --------------------- -------------------
OFFICE EQUIPMENT & SERVICES (0.2%):
7,000 231 - 231
-------------------- --------------------- -------------------
OIL & GAS EXPLORATION, PRODUCTION, & SERVICES (8.1%):
15,100 317 317
26,500 394 1,978 2,372
1,776 1,776
2,212 2,212
740 740
1,808 1,808
8,700 258 258
793 793
-------------------- --------------------- -------------------
969 9,307 10,276
-------------------- --------------------- -------------------
OILFIELD EQUIPMENT & SERVICES (2.0%):
- 2,593 2,593
-------------------- --------------------- -------------------
PHARMACEUTICALS (1.3%):
11,000 360 360
19,400 526 526
14,850 717 717
-------------------- --------------------- -------------------
1,603 - 1,603
-------------------- --------------------- -------------------
RESTAURANTS (9.3%):
3,781 3,781
2,269 2,269
1,573 1,573
1,470 1,470
2,634 2,634
-------------------- --------------------- -------------------
- 11,727 11,727
-------------------- --------------------- -------------------
RETAIL (15.2%):
1,697 1,697
11,300 436 436
2,625 2,625
823 823
1,975 1,975
2,048 2,048
1,554 1,554
2,650 2,650
1,208 1,208
2,396 2,396
1,803 1,803
-------------------- --------------------- -------------------
436 18,779 19,215
-------------------- --------------------- -------------------
TECHNOLOGY (2.1%):
1,600 66 66
2,102 2,102
10,900 142 142
23,500 341 341
-------------------- --------------------- -------------------
549 2,102 2,651
-------------------- --------------------- -------------------
</TABLE>
B-66
<PAGE> 444
<TABLE>
<S> <C> <C> <C>
TELECOMMUNICATIONS (5.4%):
55,000 55,000 International Telecommunication Data
Systems, Inc.
31,700 31,700 InterVoice, Inc. (b)
100,000 100,000 ITC DeltaCom, Inc. (b)
200,000 200,000 World Access, Inc. (b)
TELECOMMUNICATIONS-EQUIPMENT (4.7%):
6,700 6,700 American Xtal Technology, Inc. (b)
17,200 17,200 ANTEC Corp. (b)
24,100 24,100 Commscope, Inc. (b)
310,000 310,000 Paging Network, Inc. (b)
68,000 68,000 Scientific-Atlanta, Inc.
TRANSPORTATION LEASING & TRUCKING (0.8%):
29,000 29,000 American Freightways Corp. (b)
5,600 5,600 US Freightways Corp.
U.S. TREASURY BILLS (0.4%):
$ 500 $ 500 9/16/1999
TOTAL U.S. TREASURY BILLS
INVESTMENT COMPANIES (0.7%):
861,416 861,416 AMSOUTH PRIME OBLIGATIONS FUND
64 64 BANK OF NEW YORK CASH RESERVE MONEY MARKET
FUND
TOTAL INVESTMENT COMPANIES
REPURCHASE AGREEMENTS (7.7%):
$ 9,774 $ 9,774 CANTOR FITZGERALD
</TABLE>
<TABLE>
<S> <C> <C> <C>
TELECOMMUNICATIONS (5.4%):
516 516
31,700 479 479
2,638 2,638
3,187 3,187
---------- ---------- ---------
479 6,341 6,820
---------- ---------- ---------
TELECOMMUNICATIONS-EQUIPMENT (4.7%):
6,700 206 206
17,200 721 721
24,100 825 825
1,666 1,666
2,482 2,482
---------- ---------- ---------
1,752 4,148 5,900
---------- ---------- ---------
TRANSPORTATION LEASING & TRUCKING (0.8%):
29,000 696 696
5,600 277 277
---------- ---------- ---------
973 - 973
---------- ---------- ---------
TOTAL COMMON STOCKS $ 22,661 $ 92,733 $ 115,394
---------- ---------- ---------
U.S. TREASURY BILLS (0.4%):
$ 500 497 497
---------- ---------- ---------
TOTAL U.S. TREASURY BILLS $ 497 $ - $ 497
---------- ---------- ---------
INVESTMENT COMPANIES (0.7%):
861,416 861 861
* *
---------- ---------- ---------
$ $ 861 $ - $ 861
---------- ---------- ---------
REPURCHASE AGREEMENTS (7.7%):
9,774 9,774
---------- ---------- ---------
TOTAL REPURCHASE $ - $ 9,774 $ 9,774
AGREEMENTS ---------- ---------- ---------
---------- ---------- ---------
TOTAL (COST
$112,438) (a) $ 24,019 $ 102,507 $ 26,526
---------- ---------- ---------
</TABLE>
____________
Percentages indicated are based on net assets of $126,243.
* Amount is less than one thousand dollars.
(a) Represents cost for financial reporting purposes and differs
from cost basis for federal income tax purposes by the amount
of losses recognized for financial reporting purposes in
excess of federal income tax reporting of $20. Cost for
federal income tax purposes differs from value by net
unrealized appreciation of securities as follows:
Unrealized appreciation 20,655
Unrealized depreciation (6,587)
------
Net unrealized appreciation 14,068
======
(b) Represents non-income producing securities.
B-67
<PAGE> 445
AMSOUTH EQUITY INCOME FUND
ISG EQUITY INCOME FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
7/31/99
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
AMSOUTH ISG PRO FORMA COMBINED
EQUITY INCOME EQUITY INCOME ADJUSTMENTS (NOTE 1)
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities at value (Cost $36,192
and $86,653, respectively) $ 40,285 $ 91,498 $ -- $ 131,783
Interest and dividends receivable 75 145 -- 220
Receivable for capital shares issued 10 42 -- 52
Receivable from brokers for investments sold 1,037 1,718 -- 2,755
Other assets 5 29 -- 34
--------- --------- --------- ---------
TOTAL ASSETS 41,412 93,432 -- 134,844
--------- --------- --------- ---------
LIABILITIES:
Dividends payable -- 70 -- 70
Payable for capital shares redeemed 19 18 -- 37
Payable to brokers for investments purchased 1,007 548 -- 1,555
Accrued expenses and other payables:
Advisory fees 15 53 -- 68
Administration fees 1 2 -- 3
Distribution fees 12 15 -- 27
Transfer agent fees 2 -- -- 2
Custodian fees -- 3 -- 3
Other 3 28 -- 31
--------- --------- --------- ---------
TOTAL LIABILITIES 1,059 737 -- 1,796
--------- --------- --------- ---------
NET ASSETS:
Class A Shares 21,526 5,821 -- 27,347
Class B Shares 7,919 7,715 -- 15,634
Institutional Shares 10,908 79,159 -- 90,067
========= ========= ========= =========
$ 40,353 $ 92,695 $ -- $ 133,048
========= ========= ========= =========
CAPITAL SHARES OUTSTANDING
Class A Shares 1,643 559 (115)(a) 2,087
Class B Shares 607 742 (151)(a) 1,198
Institutional Shares 832 7,600 (1,557)(a) 6,875
--------- --------- --------- ---------
3,082 8,901 (1,823)(a) 10,160
========= ========= ========= =========
NET ASSET VALUE
Class A Shares - redemption price per share $ 13.10 $ 10.41 $ 13.10
========= ========= =========
Class A Shares - maximum sales charge 4.50% 4.75% 4.50%
--------- --------- ---------
Class A Shares - POP $ 13.72 $ 10.93 $ 13.72
========= ========= =========
Class B Shares - offering price per share* $ 13.05 $ 10.40 $ 13.05
========= ========= =========
Institutional Shares - offering and redemption
price per share $ 13.10 $ 10.42 $ 13.10
========= ========= =========
COMPOSITION OF NET ASSETS
Capital 33,870 77,165 -- 111,035
Undistributed (distributions in excess of) 6 (6) -- --
net investment income
Undistributed net realized gains (losses) 2,384 10,691 -- 13,075
from investment transactions
Net unrealized appreciation (depreciation) of investments 4,093 4,845 -- 8,938
--------- --------- --------- ---------
NET ASSETS, JULY 31, 1999 $ 40,353 $ 92,695 $ -- $ 133,048
========= ========= ========= =========
</TABLE>
* Redemption price per share varies by length of time shares are held.
(a) Adjustment to convert ISG Shares Outstanding to AmSouth Shares Outstanding
based on AmSouth's NAV's.
B-68
<PAGE> 446
AMSOUTH EQUITY INCOME FUND
ISG EQUITY INCOME FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
7/31/99
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ISG PRO FORMA
AMSOUTH SMALL-CAP PRO FORMA COMBINED
EQUITY INCOME EQUITY INCOME ADJUSTMENTS (NOTE 1)
------------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest Income $ 274 $ 19 $ -- $ 293
Dividend Income 853 2,009 -- 95
Income from securities lending -- 69 (69) --
-------- -------- -------- --------
1,127 2,097 (69) 388
-------- -------- -------- --------
EXPENSES:
Advisory fees 325 549 127 (a) 1,001
Administration fees 81 127 42 (b) 250
Shareholder servicing fees (Class A Shares) 59 4 6 (c) 69
Shareholder servicing fees (Class B Shares) -- 12 20 (d) 32
Shareholder servicing fees (Institutional Shares) -- 68 59 (e) 127
12b-1 fees (Class A Shares) -- 10 (10) (f) --
12b-1 fees (Class B Shares) 78 37 (20) (g) 95
Accounting fees 54 45 (74) (h) 25
Transfer agent fees 47 85 (71) (i) 61
Custodian fees 2 34 (2) (j) 34
Trustee fees and expenses 1 4 (1) (k) 4
Other expenses 29 88 (56) (k) 61
-------- -------- -------- --------
TOTAL EXPENSES: 676 1,063 20 1,759
Less Waivers:
Accounting fees (38) -- 38 (l) --
Transfer agent fees (30) -- 30 (l) --
-------- -------- -------- --------
NET EXPENSES: 608 1,063 88 1,759
-------- -------- -------- --------
NET INVESTMENT INCOME 519 1,034 (157) (1,371)
-------- -------- -------- --------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS
Net realized gains (losses) from investment transaction 2,385 10,112 12,497
Net change in unrealized appreciation (depreciation)
from investments 2,356 (1,328) 1,028
-------- -------- -------- --------
Net realized/unrealized gains (losses) from investments 4,741 8,784 -- 13,525
CHANGE IN NET ASSETS RESULTING FROM
-------- -------- -------- --------
OPERATIONS: $ 5,260 $ 9,818 $ (157) $ 12,154
======== ======== ======== ========
</TABLE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(a) Adjustment to reflect the AmSouth contractual fee structure for
Advisory fees (0.80% of net assets).
(b) Adjustment to reflect the AmSouth contractual fee structure for
Administration fees (0.20% of net assets).
(c) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder servicing fees (0.25% of Class A net assets).
(d) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder servicing fees (0.25% of Class B net assets).
(e) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder servicing fees (0.25% of Institutional net assets).
(f) Adjustment to reflect the AmSouth contractual fee structure for 12b-1
fees (0.00% of Class A net assets).
(g) Adjustment to reflect the AmSouth contractual fee structure for 12b-1
fees (0.75% of Class B net assets).
(h) Adjustment to reflect the AmSouth contractual fee structure for
Accounting fees ($10,000 a year per additional class + OOP).
(i) Adjustment to reflect the AmSouth contractual fee structure for
Transfer agent fees (0.015% of net assets + $10,000 a year per class +
OOP).
(j) Adjustment to reflect the AmSouth contractual fee structure for
Custodian fees (0.0275% of net assets).
(k) Reduction reflects expected savings when the two funds merge.
(l) Adjustment to reflect the AmSouth contractual fee structure.
B-69
<PAGE> 447
AMSOUTH EQUITY INCOME FUND
ISG EQUITY INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
7/31/99
(AMOUNTS IN THOUSANDS, EXCEPT SHARES)
(UNAUDITED)
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
EQUITY INCOME EQUITY INCOME COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
SHARES SHARES SHARES DESCRIPTION
------------------------------------------ --------------------- ---------------- -------------------------------------
<S> <C> <C>
COMMON STOCKS & SECURITIES CONVERTIBLE TO COMMON STOCK (91.4%):
BANKING (4.3%):
25,500 25,500 Bank of America Corp.
19,000 19,000 First Tennessee National Corp.
19,000 19,000 KeyCorp
16,000 16,000 Wachovia Corp.
37,100 37,100 Wells Fargo Co.
BASIC MATERIALS (1.7%):
8,600 13,500 22,100 E.I. du Pont de Nemours & Co.
10,600 10,600 Sealed Air Corp., CVT. PFD., 4/1/18
CAPITAL GOODS/DIVERSIFIED (3.7%):
9,700 16,900 26,600 Emerson Electric Co.
10,400 12,500 22,900 General Electric Co.
31,000 31,000 Ingersoll-Rand Co., 6.75%, CVT. PFD.,
12/31/49
CHEMICALS (0.9%):
10,000 10,000 Air Products & Chemicals, Inc.
34,000 34,000 Sherwin-Williams Co.
CONSUMER CYCLICAL (3.1%):
17,000 17,000 Colgate Palmolive Co.
8,450 16,000 24,450 Ford Motor Co.
8,500 8,500 Mattel, Inc.
17,500 17,500 Minnesota Mining & Manufacturing
11,700 11,700 Tribune/The Learning Co., 6.25%, CVT.
PFD., 8/1/01
ENERGY (6.4%):
13,000 13,000 Enron Corp.
16,400 16,400 Exxon Corp.
22,500 22,500 Halliburton Co.
9,300 12,500 21,800 Mobil Corp.
16,000 16,000 Shell Transport & Trading Co. PLC
(ADR)
18,100 18,100 Texaco, Inc.
23,200 23,200 Williams Cos., Inc.
FINANCE (7.4%):
6,700 6,700 American Express Co.
19,350 25,750 45,100 Citigroup Inc.
8,700 27,900 36,600 Fannie Mae
6,775 6,775 J.P. Morgan & Co., Inc.
8,750 8,750 Jefferson Pilot/Bank America (ACES)
44,400 44,400 Lincoln National Corp., 7.75%, CVT.
PFD., 8/16/01
10,000 10,000 Merrill Lynch & Co., Inc.
28,000 28,000 National Australia Bank, 7.88%, CVT.
PFD., 12/31/49
</TABLE>
<TABLE>
<CAPTION>
AMSOUTH AMSOUTH ISG PRO FORMA
EQUITY INCOME EQUITY INCOME EQUITY INCOME COMBINED
PRINCIPAL MARKET MARKET MARKET
SHARES VALUE VALUE VALUE
------------------------------------------ ------------------- ----------------------- -------------------
<S> <C> <C> <C>
COMMON STOCKS & SECURITIES CONVERTIBLE TO COMMON STOCK (91.4%):
BANKING (4.3%):
$ 1,692 $ 1,692
696 696
599 599
1,249 1,249
1,447 1,447
------------------- ----------------------- -------------------
- 5,683 5,683
------------------- ----------------------- -------------------
BASIC MATERIALS (1.7%):
8,600 $ 620 972 1,592
10,600 652 652
------------------- ----------------------- -------------------
1,272 972 2,244
------------------- ----------------------- -------------------
CAPITAL GOODS/DIVERSIFIED (3.7%):
9,700 579 1,009 1,588
10,400 1,134 1,362 2,496
31,000 930 930
------------------- ----------------------- -------------------
2,643 2,371 5,014
------------------- ----------------------- -------------------
CHEMICALS (0.9%):
334 334
918 918
------------------- ----------------------- -------------------
- 1,252 1,252
------------------- ----------------------- -------------------
CONSUMER CYCLICAL (3.1%):
839 839
8,450 411 778 1,189
8,500 200 200
1,539 1,539
11,700 304 304
------------------- ----------------------- -------------------
915 3,156 4,071
------------------- ----------------------- -------------------
ENERGY (6.4%):
1,107 1,107
1,302 1,302
1,038 1,038
9,300 951 1,278 2,229
16,000 773 773
1,128 1,128
23,200 976 976
------------------- ----------------------- -------------------
2,700 5,853 8,553
------------------- ----------------------- -------------------
FINANCE (7.4%):
883 883
19,350 862 1,148 2,010
8,700 600 1,925 2,525
6,775 866 866
8,750 980 980
44,400 1,188 1,188
10,000 681 681
28,000 791 791
------------------- ----------------------- -------------------
5,968 3,956 9,924
------------------- ----------------------- -------------------
</TABLE>
B-70
<PAGE> 448
<TABLE>
<S> <C> <C> <C> <C>
HEALTHCARE (8.6%):
34,000 34,000 Abbott Laboratories
12,900 12,900 American Home Products Corp.
770,000 770,000 Athena Neurosciences Inc., 4.75%, CVT. BD., 11/15/04
11,800 16,800 28,600 Bristol-Myers Squibb Co.
450,000 450,000 Centocor Inc.\ JNJ
12,500 12,500 Hillenbrand Industries, Inc.
4,000 4,000 Johnson & Johnson
23,500 23,500 Merck & Co., Inc.
16,700 16,700 Monsanto (ACES) 6.50%, CVT. PFD., 11/30/01
11,500 11,500 Pharmacia & Upjohn Inc.
22,000 22,000 Schering Plough Corp.
17,500 17,500 Warner Lambert Co.
INSURANCE (2.5%):
22,500 22,500 Allstate Corp.
35,000 35,000 Conseco, Inc.
32,000 32,000 Torchmark Corp.
16,000 16,000 Washington Mutual Inc.
REAL ESTATE (2.4%):
21,000 21,000 Equity Residential Property
28,000 28,000 Post Properties
31,000 31,000 Spieker Properties
RETAILING (4.9%):
1,340,000 1,340,000 Costco Companies
29,000 29,000 CVS Corp.
9,500 9,500 Dayton Hudson Corp.
13,800 13,800 Dollar General
11,000 31,500 42,500 Dollar General STRYPES Trust
390,000 390,000 Rite Aid Corp.
18,000 18,000 Wal Mart Stores, Inc.
SERVICES (5.2%):
13,000 13,000 Gannett Co., Inc.
19,900 33,500 53,400 McDonald's Corp.
26,500 26,500 McGraw Hill Cos., Inc.
390,000 390,000 Omnicom Group
26,000 26,000 SYSCO Corp.
20,300 20,300 The Walt Disney Co.
STAPLES (8.8%):
19,500 19,500 Bestfoods
5,000 5,000 Campbell Soup Co.
8,000 8,000 Coca Cola Co.
6,200 6,200 Estee Lauder
36,000 36,000 H.J. Heinz Co.
8,800 8,800 Hershey Foods Corp.
17,400 17,400 McCormick & Co., Inc.
52,000 52,000 Pepsi Bottling Group, Inc.
10,000 10,000 PepsiCo, Inc.
48,200 48,200 Philip Morris Cos., Inc.
13,000 13,000 Procter & Gamble Co.
13,500 13,500 Quaker Oats Co.
18,000 18,000 Unilever
TECHNOLOGY (14.2%):
32,700 32,700 Amdocs LTD., 6.75%, CVT.PFD., 9/11/02
57,200 57,200 Automatic Data Processing, Inc.
13,400 13,400 Corning Glass Works
12,000 12,000 Electronic Data Systems Corp.
180,000 50,000 230,000 EMC Corp., 3.25%, CVT. BD., 3/15/02
9,500 9,500 Hewlett-Packard Co.
6,400 8,000 14,400 IBM. Corp.
</TABLE>
<TABLE>
<S> <C> <C> <C>
HEALTHCARE (8.6%):
1,460 1,460
658 658
823 823
785 1,116 1,901
576 576
562 562
369 369
1,590 1,590
685 685
619 619
1,078 1,078
1,155 1,155
------------------- ----------------------- -------------------
4,515 6,961 11,476
------------------- ----------------------- -------------------
INSURANCE (2.5%):
799 799
1,008 1,008
1,052 1,052
549 549
------------------- ----------------------- -------------------
- 3,408 3,408
------------------- ----------------------- -------------------
REAL ESTATE (2.4%):
868 868
1,120 1,120
1,185 1,185
------------------- ----------------------- -------------------
- 3,173 3,173
------------------- ----------------------- -------------------
RETAILING (4.9%):
1,185 1,185
1,442 1,442
615 615
365 365
456 1,304 1,760
379 379
761 761
------------------- ----------------------- -------------------
2,385 4,122 6,507
------------------- ----------------------- -------------------
SERVICES (5.2%):
939 939
830 1,396 2,226
1,348 1,348
888 888
850 850
561 561
------------------- ----------------------- -------------------
2,279 4,533 6,812
------------------- ----------------------- -------------------
STAPLES (8.8%):
951 951
220 220
483 483
570 570
1,697 1,697
510 510
575 575
1,229 1,229
391 391
1,794 1,794
1,177 1,177
919 919
1,258 1,258
------------------- ----------------------- -------------------
3,057 8,717 11,774
------------------- ----------------------- -------------------
TECHNOLOGY (14.2%):
834 834
2,291 2,291
938 938
724 724
976 271 1,247
995 995
804 1,006 1,810
</TABLE>
B-71
<PAGE> 449
<TABLE>
<S> <C> <C> <C> <C>
4,400 4,400 Intel Corp.
290,000 290,000 Level One Communications\ Intel
9,300 9,300 Motorola, Inc.
26,000 26,000 Nextel STRYPES Trust
12,600 27,500 40,100 Pitney Bowes, Inc.
13,000 13,000 Raytheon Co., Class B
7,300 7,300 Texas Instruments, Inc.
10,800 18,100 28,900 United Technologies Corp.
11,900 11,900 Xerox Corp.
TRANSPORTATION (1.5%):
32,500 32,500 CSX Corp.
7,400 7,400 Union Pacific Corp. (b)
UTILITIES (15.8%):
43,750 43,750 A T & T Corp.
12,200 12,200 Ameritech Corp.
24,700 24,700 BCE, Inc.
35,500 35,500 Duke Energy Corp.
27,000 27,000 GTE Corp.
6,000 6,000 Honeywell, Inc.
20,300 20,300 Nisource Inc., 7.75%, CVT. PFD., 2/19/03
32,500 32,500 Nisource, Inc.
18,300 18,300 Royal Dutch Petroleum Co. ADR
33,000 33,000 SBC Communications, Inc.
53,280 53,280 Sierra Pacific Resources
32,100 32,100 Skytel Communications Inc./WorldCom (b)
25,500 25,500 Sonat, Inc.
12,400 12,400 Sprint Corp.
6,500 6,500 Telefonos De Mexico, Sponsored ADR
25,500 25,500 Texas Utilities Co., 9.25%, PRIDES
45,000 45,000 Washington Gas & Light Co.
INVESTMENT COMPANIES (8.2%):
4,439,481 4,439,481 AIM Liquid Assets
2,741,037 2,741,037 AIM Stic Prime
208,614 208,614 AmSouth Prime Obligations Fund
1,077,202 1,077,202 Bank of New York Deposit Account
12,000 12,000 S & P 500 Depositary Receipt
</TABLE>
<TABLE>
<S> <C> <C> <C>
304 304
674 674
849 849
1,179 1,179
802 1,748 2,550
914 914
1,050 1,050
720 1,207 1,927
580 580
------------------- ----------------------- -------------------
9,710 9,156 18,866
------------------- ----------------------- -------------------
TRANSPORTATION (1.5%):
1,574 1,574
381 381
------------------- ----------------------- -------------------
381 1,574 1,955
------------------- ----------------------- -------------------
UTILITIES (15.8%):
2,278 2,278
894 894
1,227 1,227
1,879 1,879
1,991 1,991
719 719
974 974
843 843
1,116 1,116
1,887 1,887
1,385 1,385
1,156 1,156
897 897
641 641
491 491
1,379 1,379
1,254 1,254
------------------- ----------------------- -------------------
4,251 16,760 21,011
------------------- ----------------------- -------------------
------------------- ----------------------- -------------------
TOTAL COMMON STOCKS & SECURITIES $ 40,076 $ 81,647 $ 127,723
CONVERTIBLE TO COMMON STOCK ------------------- ----------------------- -------------------
INVESTMENT COMPANIES (8.2%):
4,439 4,439
2,741 2,741
209 209
1,077 1,077
1,594 1,594
------------------- ----------------------- -------------------
TOTAL INVESTMENT COMPANIES $ 209 $ 9,851 $ 10,060
------------------- ----------------------- -------------------
------------------- ----------------------- -------------------
TOTAL (COST $122,845) (a) $ 40,285 $ 91,498 $ 131,783
------------------- ----------------------- -------------------
</TABLE>
------------------------------------------
Percentages indicated are based on net assets of $133,048.
(a) Represents cost for financial reporting purposes and
differs from cost basis for federal income tax purposes by the
amount of losses recognized for financial reporting in excess
of federal income tax reporting of $137. Cost for federal
income tax purposes differs from value by net unrealized
appreciation of securities as follows:
Unrealized appreciation 12,470
Unrealized depreciation (3,669)
-------
Net unrealized appreciation 8,801
=======
(b) Represents a restricted security, purchased under Rule
144A, which is exempt from registration un the Security Act of
1933, as amended. These securities have been deemed liquid
under guidelines established by the Board of Trustees.
ACES - Automatic Common Exchange Securities
ADR - American Depository Receipt
CVT. PFD. - Convertible Preferred
CVT. BD. - Convertible Bond
PLC - Public Limited Co.
STRYPES - Structured Yield Product Exchangeable for Stock
Breakdown of Sectors
--------------------
Common Stocks - 58.3%
Convertible Preferred Stocks - 27.5%
Convertible Bonds - 13.7%
Investment Companies - 0.5%
B-72
<PAGE> 450
AMSOUTH BOND FUND
ISG INCOME FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
7/31/99
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
AMSOUTH ISG PRO FORMA COMBINED
BOND INCOME ADJUSTMENTS (NOTE 1)
------------ --------------- ---------------- -----------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities, at value
(cost $385,361 and $100,292, respectively) $ 383,287 $ 97,519 $ -- $ 480,806
Interest and dividends receivable 6,731 1,431 -- 8,162
Other assets 15 22 -- 37
--------- --------- --------- ---------
TOTAL ASSETS 390,033 98,972 -- 489,005
--------- --------- --------- ---------
LIABILITIES:
Cash overdraft -- 2 -- 2
Distributions Payable -- 439 -- 439
Payable for capital shares redeemed 83 -- -- 83
Accrued expenses and other payables:
Advisory fees 86 41 -- 127
Administration fees 5 2 -- 7
Distribution fees 3 14 -- 17
Accounting fees 2 2 -- 4
Transfer agent fees 9 3 -- 12
Custodian fees 4 7 -- 11
Other 24 21 -- 45
--------- --------- --------- ---------
TOTAL LIABILITIES 216 531 -- 747
--------- --------- --------- ---------
NET ASSETS:
Class A Shares 7,070 3,593 -- 10,663
Class B Shares 2,521 1,348 -- 3,869
Institutional Shares 380,226 93,500 -- 473,726
--------- --------- --------- ---------
$ 389,817 $ 98,441 $ -- $ 488,258
========= ========= ========= =========
CAPITAL SHARES OUTSTANDING
Class A Shares 665 368 (30)(a) 1,003
Class B Shares 238 138 (11)(a) 365
Institutional Shares 35,778 9,583 (787)(a) 44,574
--------- --------- --------- ---------
36,681 10,089 (828)(a) 45,942
========= ========= ========= =========
NET ASSET VALUE
Class A Shares - redemption price per share $ 10.63 $ 9.76 $ 10.63
========= ========= =========
Class A Shares - maximum sales charge 4.00% 3.00% 4.00%
--------- --------- ---------
Class A Shares - POP $ 11.07 $ 10.06 $ 11.07
========= ========= =========
Class B Shares - offering price per share* $ 10.60 $ 9.75 $ 10.60
========= ========= =========
Institutional Shares - offering and redemption
price per share $ 10.63 $ 9.76 $ 10.63
========= ========= =========
COMPOSITION OF NET ASSETS
Capital $ 389,653 $ 101,315 $ -- $ 490,968
Undistributed (distributions in excess of)
net investment income 1,421 (33) -- 1,388
Undistributed net realized gains (losses)
from investment transactions 817 (68) -- 749
Net unrealized appreciation (depreciation) of
investments (2,074) (2,773) -- (4,847)
--------- --------- --------- ---------
NET ASSETS, JULY 31, 1999 $ 389,817 $ 98,441 $ -- $ 488,258
========= ========= ========= =========
</TABLE>
* Redemption price per share varies by length of time shares are held.
(a) Adjustment to convert ISG Shares Outstanding to AmSouth Shares Outstanding
based on AmSouth's NAV's.
B-73
<PAGE> 451
AMSOUTH BOND FUND
ISG INCOME FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
7/31/99
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
AMSOUTH ISG PRO FORMA COMBINED
BOND INCOME ADJUSTMENTS (NOTE 1)
---------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $ 22,088 $ 5,234 $ -- $ 27,322
Dividend Income 292 191 -- 483
Income from securities lending -- 2 (2)(l) --
-------- -------- -------- --------
22,380 5,427 (2) 27,805
-------- -------- -------- --------
EXPENSES:
Advisory fees 2,319 427 129 (a) 2,875
Administration fees 714 128 43 (b) 885
Shareholder servicing fees (Class A Shares) 18 3 5 (c) 26
Shareholder servicing fees (Class B Shares) -- 3 4 (d) 7
Shareholder servicing fees (Institutional Shares) -- 73 571 (e) 644
12b-1 fees (Class A Shares) -- 7 (7)(f) --
12b-1 fees (Class B Shares) 17 10 (5)(g) 22
Accounting fees 140 49 (159)(h) 30
Transfer agent fees 99 60 (58)(i) 101
Custodian fees 21 26 75 (j) 122
Trustee fees and expenses 8 4 (4)(k) 8
Other expenses 89 82 (77)(k) 94
-------- -------- -------- --------
TOTAL EXPENSES: 3,425 872 517 4,814
Less Waivers
Advisory fees (535) -- 535 (a) --
Administration fees (285) -- 285 (b) --
Shareholder servicing fees (Class A Shares) (11) -- 11 (c) --
Accounting fees (20) -- 20 (h) --
Transfer agent fees (30) -- 30 (i) --
-------- -------- -------- --------
NET EXPENSES: 2,544 872 1,398 4,814
-------- -------- -------- --------
NET INVESTMENT INCOME (LOSS) 19,836 4,555 (1,400) 22,991
-------- -------- -------- --------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS
Net realized gains (losses) from investment transaction 3,588 12 -- 3,600
Net change in unrealized appreciation (depreciation)
from investments (15,033) (3,881) -- (18,914)
-------- -------- -------- --------
Net realized/unrealized gains (losses) from investments (11,445) (3,869) -- (15,314)
CHANGE IN NET ASSETS RESULTING FROM
-------- -------- -------- --------
OPERATIONS: $ 8,391 $ 686 $ (1,400) $ 7,677
======== ======== ======== ========
</TABLE>
Notes to Pro Forma Financial Statements
(a) Adjustment to reflect the AmSouth contractual fee structure for
Advisory fees (0.80% of net assets).
(b) Adjustment to reflect the AmSouth contractual fee structure for
Administration fees (0.20% of net assets).
(c) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder servicing fees (0.25% of Class A net assets).
(d) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder servicing fees (0.25% of Class B net assets).
(e) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder servicing fees (0.25% of Institutional net assets).
(f) Adjustment to reflect the AmSouth contractual fee structure for 12b-1
fees (0.00% of Class A net assets).
(g) Adjustment to reflect the AmSouth contractual fee structure for 12b-1
fees (0.75% of Class B net assets).
(h) Adjustment to reflect the AmSouth contractual fee structure for
Accounting fees ($10,000 a year per additional class + OOP).
(i) Adjustment to reflect the AmSouth contractual fee structure for
Transfer agent fees (0.015% of net assets + $10,000 a year per class +
OOP).
(j) Adjustment to reflect the AmSouth contractual fee structure for
Custodian fees (0.0275% of net assets).
(k) Reduction reflects expected savings when the two funds merge.
(l) Adjustment to reflect no securities lending income since there is not
a securities lending program set up on the AmSouth Funds.
B-74
<PAGE> 452
AMSOUTH BOND FUND
ISG INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
7/31/99
(AMOUNTS IN THOUSANDS, EXCEPT SHARES)
(UNAUDITED)
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
BOND INCOME COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
----------------------- --------------------- ------------------- -----------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS (52.6%):
AEROSPACE/DEFENSE (0.6%):
$ 3,000 $ 3,000 Boeing Corp., 6.88%, 11/1/06
Appliances (0.1%):
500 500 Whirlpool Corp., 9.50%, 6/15/00
Automotive (0.2%):
908 908 General Motors Corp., 9.63%, 12/1/00
Automotive-Finance (2.0%):
3,485 3,485 Ford Motor Credit Co., 6.25%, 12/8/05
$ 1,500 1,500 General Motors Acceptance Corp., 5.80%, 4/9/01
2,000 2,000 General Motors Acceptance Corp., 6.15%, 4/7/07
3,000 3,000 Toyota Motor Credit Corp., 5.50%, 9/17/01
BANKING (6.3%):
1,750 1,750 ABN AMRO Bank, 6.63%, 10/31/01
2,000 2,000 AmSouth Bancorp., 6.13%, 3/1/09
1,150 1,150 Bank of America Corp., 9.50%, 4/1/01
3,157 3,157 Bank One Corp., 7.00%, 7/15/05
1,000 1,000 Bank One, Texas, 6.25%, 2/15/08
4,000 4,000 Fifth Third Bank, 6.75%, 7/15/05
1,700 1,700 First Union Corp., 6.18%, 2/15/36
3,856 3,856 J.P. Morgan & Co., 7.63%, 9/15/04
1,500 1,500 National City Corp., 6.88%, 5/15/19
4,306 4,306 NationsBank Corp., 5.38%, 4/15/00
1,100 1,100 NationsBank Corp., 7.75%, 8/15/15
3,159 3,159 SunTrust Banks, Inc., 7.38%, 7/1/06
2,100 2,100 Wachovia Corp., 6.61%, 10/1/25
BEVERAGES (1.2%):
2,250 2,250 Anheuser-Busch, 7.13%, 7/1/17
3,500 3,500 Coca-Cola Enterprises, Inc., 6.38%, 8/1/01
BROKERAGE SERVICES (1.7%):
2,910 2,910 Bear Stearns & Co., Inc., 6.63%, 10/1/04
3,500 3,500 Dean Witter Discover & Co., 6.50%, 11/1/05
750 750 Merrill Lynch & Co., Inc., 8.25%, 11/15/99
1,450 1,450 Merrill Lynch & Co., Inc., 6.00%, 2/12/03
</TABLE>
<TABLE>
<CAPTION>
AMSOUTH AMSOUTH ISG PRO FORMA
BOND BOND INCOME COMBINED
PRINCIPAL MARKET MARKET MARKET
AMOUNT/SHARES VALUE VALUE VALUE
----------------------- ------------------------- --------------------------------- ----------------------
<S> <C> <C> <C>
CORPORATE BONDS (52.6%):
AEROSPACE/DEFENSE (0.6%):
$ 3,000 $ 3,000 $ - $ 3,000
------------------------- --------------------------------- ----------------------
APPLIANCES (0.1%):
500 514 - 514
------------------------- --------------------------------- ----------------------
AUTOMOTIVE (0.2%):
908 945 - 945
------------------------- --------------------------------- ----------------------
AUTOMOTIVE-FINANCE (2.0%):
3,485 3,341 3,341
1,485 1,485
2,000 1,898 1,898
3,000 2,951 2,951
------------------------- --------------------------------- ----------------------
8,190 1,485 9,675
------------------------- --------------------------------- ----------------------
BANKING (6.3%):
1,757 1,757
1,843 1,843
1,150 1,206 1,206
3,157 3,157 3,157
943 943
4,000 3,965 3,965
1,628 1,628
3,856 3,952 3,952
1,391 1,391
4,306 4,296 4,296
1,132 1,132
3,159 3,222 3,222
2,062 2,062
------------------------- --------------------------------- ----------------------
19,798 10,756 30,554
------------------------- --------------------------------- ----------------------
BEVERAGES (1.2%):
2,205 2,205
3,500 3,509 3,509
------------------------- --------------------------------- ----------------------
3,509 2,205 5,714
------------------------- --------------------------------- ----------------------
BROKERAGE SERVICES (1.7%):
2,910 2,826 2,826
3,500 3,387 3,387
750 756 756
1,450 1,419 1,419
------------------------- --------------------------------- ----------------------
8,388 - 8,388
------------------------- --------------------------------- ----------------------
</TABLE>
B-75
<PAGE> 453
<TABLE>
<S> <C> <C> <C>
BUILDING PRODUCTS (0.4%):
2,000 2,000 Vulcan Materials, 6.00%, 4/1/09
CHEMICALS (0.3%):
1,500 1,500 Eastman Chemical, 6.38%, 1/15/04
ELECTRONIC COMPONENTS/ INSTRUMENTS (0.9%):
2,000 2,000 Honeywell, Inc., 7.00%, 3/15/07
2,500 2,500 Motorola, Inc., 6.50%, 11/15/28
ENTERTAINMENT (0.6%):
3,000 3,000 Walt Disney Company, 5.13%, 12/15/03
FINANCIAL SERVICES (6.0%):
2,000 2,000 American Express Credit Corp., 6.50%, 8/1/00
3,500 3,500 Ameritech Capital, 5.65%, 1/15/01
800 800 Associates Corp., 7.32%, 1/13/03
2,000 2,000 Associates Corp., 5.75%, 10/15/03
3,000 3,000 Associates Corp., 5.75%, 11/01/03
3,091 3,091 Avco Financial Service Corp., 5.50%, 4/1/00
3,000 3,000 Commercial Credit Co., 7.38%, 3/15/02
3,000 3,000 Commercial Credit Co., 6.50%, 8/1/04
2,400 2,400 Countrywide Home Loan, 6.84%, 10/22/04
2,000 2,000 Ford Motor Credit, 7.35%, 11/7/11
1,500 1,500 General Electric, 7.50%, 8/21/35
1,000 1,000 Margaretten Financial Corp., 6.75%, 6/15/00
2,000 2,000 Norwest Financial, Inc., 6.63%, 7/15/04
FOOD PRODUCTS & SERVICES (1.3%):
2,500 2,500 Best Foods, 6.63%, 4/15/28
2,750 2,750 Campbell Soup Co., 6.15%, 12/1/02
1,250 1,250 Sara Lee Corp., 6.15%, 6/19/08
FOREST & PAPER PRODUCTS (0.8%):
1,000 1,000 International Paper Co., 6.88%, 7/10/00
3,000 3,000 Mead Corp., 6.60%, 3/1/02
INDUSTRIAL GOODS & SERVICES (4.8%):
3,000 3,000 Air Products & Chemicals, Inc., 8.35%, 1/15/02
2,500 2,500 Albertson's, Inc., 6.52%, 4/10/28, MTN
2,655 2,655 Browning-Ferris Industries, Inc., 6.10%, 1/15/03
2,000 2,000 E. I. Dupont de Nemours & Co., 6.50%, 9/1/02
2,570 2,570 E. I. Dupont de Nemours & Co., 6.75%, 10/15/02
2,000 2,000 First Data Corp., 6.75%, 7/15/05
2,000 2,000 H.J. Heinz Co., 6.38%, 7/15/28
1,500 1,500 Illinois Tool Works, Inc., 5.88%, 3/1/00
1,000 1,000 Lockheed Martin Corp., 7.875%, 3/15/23
1,500 1,500 Reliance Electric Co., 6.80%, 4/15/03
3,456 3,456 Rockwell International Corp., 6.63%, 6/1/05
INSURANCE (2.1%):
1,000 1,000 AON Corp., 6.88%, 10/1/99
1,600 1,600 Capital Holding Corp., 9.20%, 4/17/01
330 330 Chubb Corp., 8.75%, 11/15/99
1,000 1,000 Chubb Corp., 6.15%, 8/15/05
3,100 3,100 Hartford Life, Inc., 6.90%, 6/15/04
2,000 2,000 Travelers Property Casualty, 6.75%, 4/15/01
1,250 1,250 USLife Corp., 6.38%, 6/15/00
</TABLE>
<TABLE>
<S> <C> <C> <C>
BUILDING PRODUCTS (0.4%):
2,000 1,858 - 1,858
---------------------- ------------------------- ----------------------
CHEMICALS (0.3%):
- 1,466 1,466
---------------------- ------------------------- ----------------------
ELECTRONIC COMPONENTS/ INSTRUMENTS (0.9%):
2,000 1,998 1,998
2,206 2,206
---------------------- ------------------------- ----------------------
1,998 2,206 4,204
---------------------- ------------------------- ----------------------
ENTERTAINMENT (0.6%):
3,000 2,831 - 2,831
---------------------- ------------------------- ----------------------
FINANCIAL SERVICES (6.0%):
2,000 2,012 2,012
3,500 3,477 3,477
813 813
2,000 1,913 1,913
3,000 2,869 2,869
3,091 3,086 3,086
3,000 3,060 3,060
3,000 2,951 2,951
2,382 2,382
1,990 1,990
1,560
1,000 1,006 2,566
2,000 1,970 1,970
---------------------- ------------------------- ----------------------
22,344 6,745 29,089
---------------------- ------------------------- ----------------------
FOOD PRODUCTS & SERVICES (1.3%):
2,266 2,266
2,750 2,740 2,740
1,194 1,194
---------------------- ------------------------- ----------------------
2,740 3,460 6,200
---------------------- ------------------------- ----------------------
FOREST & PAPER PRODUCTS (0.8%):
1,004 1,004
3,000 2,981 2,981
---------------------- ------------------------- ----------------------
2,981 1,004 3,985
---------------------- ------------------------- ----------------------
INDUSTRIAL GOODS & SERVICES (4.8%):
3,000 3,124 3,124
2,194 2,194
2,655 2,446 2,446
2,000 2,005 2,005
2,570 2,596 2,596
2,000 1,993 1,993
1,813 1,813
1,500 1,502 1,502
981 981
1,513 1,513
3,456 3,433 3,433
---------------------- ------------------------- ----------------------
17,099 6,501 23,600
---------------------- ------------------------- ----------------------
INSURANCE (2.1%):
1,000 1,001 1,001
1,600 1,670 1,670
330 333 333
1,000 963 963
3,100 3,088 3,088
2,008 2,008
1,250 1,250
---------------------- ------------------------- ----------------------
7,055 3,258 10,313
---------------------- ------------------------- ----------------------
</TABLE>
B-76
<PAGE> 454
<TABLE>
<S> <C> <C>
OFFICE EQUIPMENT & SERVICES (0.5%):
2,200 2,200 Xerox Corp., 7.15%, 8/1/04
OIL & GAS EXPLORATION, PRODUCTION, & SERVICES (1.4%):
3,158 3,158 BP America, Inc., 9.38%, 11/1/00
1,000 1,000 Conoco Inc., 6.35%, 4/15/09
864 864 Exxon Capital Corp., 7.45%, 12/15/01
2,000 2,000 Phillips Petroleum Co., 6.38%, 3/30/09
PHARMACEUTICALS (0.6%):
3,000 3,000 Warner-Lambert Co., 5.75%, 1/15/03
PHOTOGRAPHY (0.7%):
3,100 3,100 Eastman Kodak, 9.38%, 3/15/03
POLLUTION CONTROL SERVICES & EQUIPMENT (0.9%):
2,449 2,449 Waste Management, Inc., 6.38%, 12/1/03
2,000 2,000 Waste Management, Inc., 7.00%, 5/15/05
RAILROADS (0.2%):
1,000 1,000 Union Pacific Corp., 7.00%, 6/15/00
RETAIL (3.2%):
2,000 2,000 Autozone, 6.50%, 7/15/08
1,500 1,500 Dayton Hudson Co., 6.80%, 10/1/01
1,500 1,500 JCPenney & Co., 6.50%, 6/15/02
2,000 2,000 JCPenney & Co., 6.13%, 11/15/03
1,000 1,000 May Department Stores Co., 7.15%, 8/15/04
3,000 3,000 Nike, Inc., 6.38%, 12/1/03
4,000 4,000 Wal-Mart Stores, Inc., 5.85%, 6/1/00
1,000 1,000 Wal-Mart Stores, Inc., 6.75%, 5/15/02
TELECOMMUNICATIONS (0.8%):
2,000 2,000 IBM Corp., 6.50%, 1/15/28
1,000 1,000 IBM Corp., 6.25%, 2/24/00
1,250 1,250 Worldcom, Inc., 6.13%, 8/15/01
TOOLS (0.4%):
2,000 2,000 Stanley Works, 5.75%, 3/1/04
UTILITIES-ELECTRIC & GAS (9.5%):
3,100 3,100 Baltimore Gas & Electric, 7.50%, 1/15/07
1,500 1,500 Cincinnati Gas & Electric, 6.45%, 2/15/04
2,000 2,000 Consolidated Edison Co. of New York, Inc.,
6.63%, 2/1/02
1,600 1,600 Consolidated Natural Gas, 6.80%, 12/15/27
1,500 1,500 Florida Power Corp., 6.54%, 7/1/02
1,725 1,725 Houston Light & Power, 6.10%, 3/1/00
1,600 1,600 National Rural Utilities, 6.49%, 7/10/02
3,500 3,500 National Rural Utilities, 5.00%, 10/1/02
3,100 3,100 National Rural Utilities, 6.38%, 10/15/04
2,750 2,750 Northern States Power Co., 7.88%, 10/1/01
2,250 2,250 Oklahoma Gas & Electric Co., 6.25%, 10/15/00
2,500 2,500 Potomac Electric Power, 6.00%, 4/1/04
2,400 2,400 Public Service Electric & Gas, 6.25%, 1/1/07
1,500 1,500 Puget Sound Power & Light, 6.61%, 2/9/00
2,500 2,500 SCANA Corp., Series B, 6.25%, 7/8/03, MTN
2,050 2,050 Smith Enron, 5.97%, 12/15/06
2,000 2,000 Tampa Electric Co., 6.13%, 5/1/03
1,750 1,750 Virginia Electric & Power Co., 6.63%, 4/1/03
2,500 2,500 Virginia Electric & Power Co., 8.00%, 3/1/04
1,500 1,500 Washington Gas Light, 6.85%, 3/9/28
3,500 3,500 Wisconsin Electric Power, 6.63%, 11/15/06
</TABLE>
<TABLE>
<S> <C> <C> <C>
OFFICE EQUIPMENT & SERVICES (0.5%):
2,200 2,247 - 2,247
------------------- ------------------ --------------------
OIL & GAS EXPLORATION, PRODUCTION, & SERVICES (1.4%):
3,158 3,284 3,284
1,000 951 951
864 886 886
2,000 1,895 1,895
------------------- ------------------ --------------------
7,016 - 7,016
------------------- ------------------ --------------------
PHARMACEUTICALS (0.6%):
3,000 2,936 - 2,936
------------------- ------------------ --------------------
PHOTOGRAPHY (0.7%):
3,100 3,379 - 3,379
------------------- ------------------ --------------------
POLLUTION CONTROL SERVICES & EQUIPMENT (0.9%):
2,449 2,412 2,412
2,000 1,985 1,985
------------------- ------------------ --------------------
4,397 - 4,397
------------------- ------------------ --------------------
RAILROADS (0.2%):
1,000 1,006 - 1,006
------------------- ------------------ --------------------
RETAIL (3.2%):
1,885 1,885
1,515 1,515
1,487 1,487
2,000 1,930 1,930
1,015 1,015
3,000 2,959 2,959
4,000 4,004 4,004
1,000 1,013 1,013
------------------- ------------------ --------------------
9,906 5,902 15,808
------------------- ------------------ --------------------
TELECOMMUNICATIONS (0.8%):
1,830 1,830
1,000 1,000
1,241 1,241
------------------- ------------------ --------------------
- 4,071 4,071
------------------- ------------------ --------------------
TOOLS (0.4%):
2,000 1,938 - 1,938
------------------- ------------------ --------------------
UTILITIES-ELECTRIC & GAS (9.5%):
3,100 3,216 3,216
1,491 1,491
2,000 2,013 2,013
1,454 1,454
1,500 1,500
1,725 1,725
1,602 1,602
3,500 3,346 3,346
3,100 3,030 3,030
2,750 2,839 2,839
2,250 2,256 2,256
2,433 2,433
2,301 2,301
1,506 1,506
2,455 2,455
2,019 2,019
2,000 1,968 1,968
1,750 1,750
2,500 2,625 2,625
1,395 1,395
3,500 3,425 3,425
------------------- ------------------ --------------------
24,718 21,631 46,349
------------------- ------------------ --------------------
</TABLE>
B-77
<PAGE> 455
<TABLE>
<S> <C> <C> <C>
UTILITIES-TELECOMMUNICATIONS (5.1%):
1,500 1,500 AT&T Corp., 6.50%, 3/15/29
2,000 2,000 BellAtlantic Corp., 6.25%, 2/15/04
3,500 3,500 BellSouth Telecommunications, 6.50%, 6/15/05
475 475 BellSouth Telecommunications, 8.25%, 7/1/32
2,009 2,009 Chesapeake & Potomac Telephone, 6.00%,
5/1/03
2,000 2,000 GTE California, Inc., 5.63%, 2/1/01
1,450 1,450 GTE Corp., 7.90%, 2/1/27
2,295 2,295 GTE Northwest, Inc., Series A, 7.38%, 5/1/01
1,650 1,650 GTE Southwest, Inc., Series A, 5.82%,
12/1/99
500 500 Michigan Bell Telephone, 5.88%, 9/15/99
2,000 2,000 Southern New England Telecommunications
Corp., 6.50%, 2/15/02
2,000 2,000 Southwestern Bell Telephone, 6.63%, 4/1/05
4,000 4,000 US West Communications Group, 6.63%, 9/15/05
MUNICIPAL BONDS (0.2%):
GEORGIA (0.2%):
800 800 Atlanta Downtown Development Lease Revenue
Bond, 6.88%, 2/1/21
U.S. GOVERNMENT AGENCIES (12.2%):
FANNIE MAE (7.3%):
1,000 1,000 6.35%, 11/23/01
3,000 3,000 6.59%, 5/21/02
7,500 7,500 7.05%, 11/12/02
17,600 17,600 5.13%, 2/13/04
7,300 7,300 6.56% 11/26/07
FREDDIE MAC (0.6%):
700 700 7.14%, 3/12/07
2,000 2,000 7.10%, 4/10/07
GOVERNMENT NATIONAL MORTGAGE ASSOC. (3.6%):
364 364 8.00%, 5/15/10
762 762 6.50%, 8/15/11
584 584 7.50%, 8/15/11
1,023 1,023 7.00%, 9/15/11
9,279 9,279 7.00%, 11/20/28
1,449 1,449 6.50%, 1/15/29
1,988 1,988 6.50%, 3/15/29
2,886 2,886 6.50%, 4/20/29
TENNESSEE VALLEY AUTHORITY (0.7%):
4,000 4,000 5.38%, 11/13/08
U.S. TREASURY SECURITIES (28.6%):
U.S. TREASURY BILLS (0.2%):
950 950 4.47%, 8/5/99
BONDS (24.3%):
8,000 8,000 5.75%, 8/15/03
15,000 15,000 5.88%, 11/15/05
21,000 21,000 6.50%, 10/15/06
17,833 17,833 3.38%, 1/15/07
17,000 17,000 7.50%, 11/15/16
1,000 1,000 8.13%, 8/15/21
37,360 37,360 6.25%, 8/15/23
</TABLE>
<TABLE>
<S> <C> <C> <C>
UTILITIES-TELECOMMUNICATIONS (5.1%):
1,344 1,344
2,000 1,960 1,960
3,500 3,439 3,439
484 484
2,009 1,971 1,971
2,000 1,983 1,983
1,461 1,461
2,295 2,335 2,335
1,650 1,650 1,650
500 500 500
2,000 2,003 2,003
2,000 1,978 1,978
4,000 3,854 3,854
------------------------- ------------------------ ----------------------
21,673 3,289 24,962
------------------------- ------------------------ ----------------------
TOTAL CORPORATE BONDS $ 182,466 $ 73,979 $ 256,445
------------------------- ------------------------ ----------------------
MUNICIPAL BONDS (0.2%):
GEORGIA (0.2%):
- 752 752
------------------------- ------------------------ ----------------------
TOTAL MUNICIPAL BONDS $ - $ 752 $ 752
------------------------- ------------------------ ----------------------
U.S. GOVERNMENT AGENCIES (12.2%):
FANNIE MAE (7.3%):
1,000 1,000
3,000 3,036 3,036
7,500 7,706 7,706
17,600 16,716 16,716
7,300 7,148 7,148
------------------------- ------------------------ ----------------------
34,606 1,000 35,606
------------------------- ------------------------ ----------------------
FREDDIE MAC (0.6%):
700 704 704
2,000 2,058 2,058
------------------------- ------------------------ ----------------------
2,762 - 2,762
------------------------- ------------------------ ----------------------
GOVERNMENT NATIONAL MORTGAGE ASSOC. (3.6%)
378 378
745 745
596 596
1,022 1,022
9,279 9,014 9,013
1,376 1,376
1,888 1,888
2,727 2,728
------------------------- ------------------------ ----------------------
9,014 8,732 17,746
------------------------- ------------------------ ----------------------
TENNESSEE VALLEY AUTHORITY (0.7%):
4,000 3,632 - 3,632
------------------------- ------------------------ ----------------------
TOTAL U.S. GOVERNMENT AGENCIES $ 50,014 $ 9,732 $ 59,746
------------------------- ------------------------ ----------------------
U.S. TREASURY SECURITIES (28.6%):
U.S. TREASURY BILLS (0.2%):
- 949 949
------------------------- ------------------------ ----------------------
Bonds (24.3%):
8,000 7,958 7,958
15,000 14,884 14,884
21,000 21,480 21,480
17,833 17,070 17,070
17,000 18,963 18,963
1,206 1,206
37,360 37,060 37,060
------------------------- ------------------------ ----------------------
117,415 1,206 118,621
------------------------- ------------------------ ----------------------
</TABLE>
B-78
<PAGE> 456
<TABLE>
<S> <C> <C> <C>
Notes (3.5%):
17,000 17,000 6.13%, 8/15/07
Strips (0.6%):
4,000 4,000 2/15/04
Commercial Paper (0.4%):
Financial Services (0.4%):
2,000,000 2,000,000 General Electric Capital Corp., 4.99%, 7/6/99
Investment Companies (4.5%):
4,611,751 4,611,751 Aim Liquid Assets Money Market Fund
4,291,754 4,291,754 AIM Prime Money Market Fund
13,287,510 13,287,510 AmSouth Prime Obligations Fund
7 7 AmSouth U.S. Treasury Fund
1,000 1,000 Bank of New York Cash Reserve Money Market Fund
</TABLE>
<TABLE>
<S> <C> <C> <C>
Notes (3.5%):
17,000 17,037 - 17,037
------------------------- --------------------------------- ----------------------
Strips (0.6%):
4,000 3,067 - 3,067
------------------------- --------------------------------- ----------------------
TOTAL U.S. TREASURY SECURITIES $ 137,519 $ 2,155 $ 139,674
------------------------- --------------------------------- ----------------------
Commercial Paper (0.4%):
Financial Services (0.4%):
- 1,997 1,997
------------------------- --------------------------------- ----------------------
TOTAL COMMERCIAL PAPER $ - $ 1,997 $ 1,997
------------------------- --------------------------------- ----------------------
Investment Companies (4.5%):
4,612 4,612
4,291 4,291
13,287,510 13,288 13,288
7 * *
1 1
------------------------- --------------------------------- ----------------------
TOTAL INVESTMENT
COMPANIES $ 13,288 $ 8,904 $ 22,192
------------------------- --------------------------------- ----------------------
------------------------- --------------------------------- ----------------------
TOTAL (COST $485,653) (a) $ 383,287 $ 97,519 $ 480,806
------------------------- --------------------------------- ----------------------
</TABLE>
Percentages indicated are based on net assets of $488,258.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized depreciation of securities as follows:
Unrealized appreciation $ 5,802
Unrealized depreciation (10,649)
-------------------
Net unrealized depreciation $ (4,847)
===================
* Amount is less than one thousand dollars.
MTN - Medium Term Note
B-79
<PAGE> 457
AMSOUTH GOVERNMENT INCOME FUND
ISG GOVERNMENT INCOME FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
07/31/99
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
GOVERNMENT GOVERNMENT PRO FORMA COMBINED
INCOME INCOME ADJUSTMENTS (NOTE 1)
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities, at value
(Cost $8,566 and $351,112, respectively) $ 8,521 $348,749 $ -- $357,270
Interest and dividends receivable 78 6,406 -- 6,484
Receivable for capital shares issued 1 1 -- 2
Receivable from investment adviser -- 32 32
Other assets 1 26 -- 27
-------- -------- -------- --------
TOTAL ASSETS 8,601 355,214 -- 363,815
-------- -------- -------- --------
LIABILITIES:
Dividends Payable -- 1,513 -- 1,513
Payable for capital shares redeemed 8 5 -- 13
Accrued expenses and other payables:
Investment advisory fees 1 180 -- 181
Administration fees -- 6 -- 6
Distribution fees -- 46 -- 46
Accounting fees 1 2 -- 3
Transfer agent fees -- 3 -- 3
Custodian fees -- 12 -- 12
Other 5 43 -- 48
-------- -------- -------- --------
TOTAL LIABILITIES 15 1,810 -- 1,825
-------- -------- -------- --------
NET ASSETS:
Class A Shares 5,436 1,973 -- 7,409
Class B Shares -- 606 -- 606
Institutional Shares 3,150 350,825 -- 353,975
======== ======== ======== ========
$ 8,586 $353,404 $ -- $361,990
======== ======== ======== ========
CAPITAL SHARES OUTSTANDING
Class A Shares 565 201 4 (a) 770
Class B Shares -- 62 1 (a) 63
Institutional Shares 328 35,777 691 (a) 36,796
======== ======== ======== ========
893 36,040 696 (a) 37,566
======== ======== ======== ========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
Class A Shares - redemption price per share $ 9.62 $ 9.82 $ 9.62
-------- -------- --------
Class A Shares - maximum sales charge 4.50% 4.75% 4.50%
-------- -------- ========
Class A Shares - POP $ 10.02 $ 10.31 $ 10.07
======== ======== ========
Class B Shares - offering price per share* $ -- $ 9.79 $ 9.62
======== ======== ========
Institutional Shares - offering and redemption
price per share $ 9.62 $ 9.81 $ 9.62
======== ======== ========
COMPOSITION OF NET ASSETS
Capital 8,967 357,534 -- 366,501
Undistributed (distributions in excess of)
net investment income -- 242 -- 242
Undistributed net realized gains/(loss)
from investment transactions (336) (2,009) -- (2,345)
Net unrealized appreciation (depreciation) of investments (45) (2,363) -- (2,408)
-------- -------- -------- --------
NET ASSETS, JULY 31, 1999 $ 8,586 $353,404 $ -- $361,990
======== ======== ======== ========
</TABLE>
* Redemption price per share varies by length of time shares are held
(a) Adjustment to convert ISG Shares Outstanding to AmSouth Shares Outstanding
based on AmSouth's NAV's.
B-80
<PAGE> 458
AMSOUTH GOVERNMENT INCOME FUND
ISG GOVERNMENT INCOME FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
07/31/99
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
GOVERNMENT GOVERNMENT PRO FORMA COMBINED
INCOME INCOME ADJUSTMENTS (NOTE 1)
------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $ 566 $ 18,290 $ -- $ 18,856
Dividend Income 11 640 -- 651
Income from securities lending -- 35 (35)(m) --
-------- -------- -------- --------
577 18,965 (35) 19,507
-------- -------- -------- --------
EXPENSES:
Advisory fees 62 1,878 158 (a) 2,098
Administration fees 19 414 213 (b) 646
Shareholder servicing fees (Class A Shares) 17 154 105 (c) 276
Shareholder servicing fees (Class B Shares) -- -- 0 (d) 0
Shareholder servicing fees (Institutional Shares) -- 313 5 (e) 318
12b-1 fees (Class A Shares) -- 4 (4)(f) --
12b-1 fees (Class B Shares) -- 1 0 (g) 1
Accounting fees 47 38 (55)(h) 30
Transfer agent fees 23 50 7 (i) 80
Custodian fees 1 50 38 (j) 89
Trustee fees and expenses -- 5 -- 5
Other expenses 5 123 (49)(k) 79
-------- -------- -------- --------
TOTAL EXPENSES: 174 3,030 418 3,622
Less Waivers
Advisory fees (33) -- 33 (a) --
Administration fees (10) -- 10 (b) --
Shareholder servicing fees (Class A Shares) (10) -- 10 (c) --
12b-1 fees (Class A Shares) -- (4) 4 (f) --
Accounting Fees (37) -- 37 (h) --
Transfer agent fees (20) -- 20 (i) --
Reimbursements -- (177) 177 (l) --
-------- -------- -------- --------
NET EXPENSES: 64 2,849 709 3,622
-------- -------- -------- --------
NET INVESTMENT INCOME (LOSS) 513 16,116 (744) 15,885
-------- -------- -------- --------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment transactions 51 (24) -- 27
Net change in unrealized appreciation (depreciation)
from investments (283) -- -- (283)
-------- -------- -------- --------
Net realized/unrealized gains (losses) from investments (232) (24) -- (256)
CHANGE IN NET ASSETS RESULTING FROM
-------- -------- -------- --------
OPERATIONS: $ 281 $ 16,092 $ (744) $ 15,629
======== ======== ======== ========
</TABLE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(a) Adjustment to reflect the AmSouth contractual fee structure for
Advisory fees (0.65% of net assets).
(b) Adjustment to reflect the AmSouth contractual fee structure for
Administration fees (0.20% of net assets).
(c) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder Servicing fees (0.25% of Class A net assets).
(d) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder Servicing fees (0.25% of Class B net assets).
(e) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder Servicing fees (0.15% of Institutional net assets).
(f) Adjustment to reflect the AmSouth contractual fee structure for
12b-1 fees (0.00% of Class A net assets).
(g) Adjustment to reflect the AmSouth contractual fee structure for
12b-1 fees (0.75% of Class B net assets).
(h) Adjustment to reflect the AmSouth contractual fee structure for
Accounting fees ($10,000 a year per additional class + OOP).
(i) Adjustment to reflect the AmSouth contractual fee structure for
Transfer agent fees (0.015% of net assets + $10,000 a year per
class + OOP).
(j) Adjustment to reflect the AmSouth contractual fee structure for
Custodian fees (0.0275% of net assets).
(k) Reduction reflects expected savings when the two funds merge.
(l) Adjustment to reflect the AmSouth contractual fee structure.
(m) Adjustment to reflect no securities lending income since there is
not a securities lending program set up on the AmSouth Funds.
B-81
<PAGE> 459
AMSOUTH GOVERNMENT INCOME FUND
ISG GOVERNMENT INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
7/31/99
(AMOUNTS IN THOUSANDS, EXCEPT SHARES)
(UNAUDITED)
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
GOVERNMENT GOVERNMENT COMBINED
INCOME INCOME PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
--------------------------- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE BONDS (12.9%):
AIRCRAFT LEASING (0.7%):
2,500 2,500 International Lease Finance Corp., 6.00%,
6/15/03
AUTOMOTIVE-FINANCE (1.6%):
3,000 3,000 Ford Motor Credit Co., 5.75%, 2/23/04
2,000 2,000 General Motors, 6.25%, 5/1/05
1,000 1,000 General Motors Acceptance Corp., 5.75%,
11/10/03
BANKING (0.3%):
1,000 1,000 NationsBank Corp., 5.38%, 4/15/00
BEVERAGES (0.7%):
2,000 2,000 Anheuser Busch Cos., 5.75%, 1/15/11,
Callable 1/15/06 @ 100
889 889 Anheuser Busch Cos., 6.90%, 10/1/02,
Callable 10/1/99 @ 100
BROKERAGE SERVICES (0.7%):
2,500 2,500 Merrill Lynch & Co., 6.00%, 7/15/05
DIVERSIFIED MANUFACTURING (1.6%):
1,400 1,400 American Home Products, 7.70%, 2/15/00
3,000 3,000 Kellogg Co., 4.875%, 10/15/05
1,000 1,000 Pharmacia & Upjohn Inc., 5.88%, 4/15/00
437 437 Texas Instruments, 9.25%, 6/15/03
ENTERTAINMENT (0.8%):
3,000 3,000 Walt Disney Co., 5.62%, 12/1/08, Callable
12/1/05 @ 100
FINANCIAL SERVICES (0.5%):
2,000 2,000 Associates Corp., 5.75%, 11/01/03
FOOD PRODUCTS & SERVICES (0.9%):
2,500 2,500 Campbell Soup Co., 4.75%, 10/1/03
1,000 1,000 H.J. Heinz Co., 6.75%, 10/15/99
INDUSTRIAL GOODS & SERVICES (0.4%):
889 889 E.I. Du Pont de Nemours & Co., 6.75%,
10/15/02
437 437 E.I. Du Pont de Nemours & Co., 9.15%,
4/15/00
INSURANCE (1.1%):
2,250 2,250 Chubb Corp., 6.15%, 8/15/05
2,000 2,000 General Electric Capital Corp., 5.92%,
4/3/01
OIL & GAS EXPLORATION, PRODUCTION, & SERVICES (1.0%):
3,500 3,500 Atlantic Richfield, 5.55%, 4/15/03
TELECOMMUNICATIONS (0.5%):
2,000 2,000 GTE, Inc., 6.13%, 6/15/07
</TABLE>
<TABLE>
<CAPTION>
AMSOUTH ISG
AMSOUTH GOVERNMENT GOVERNMENT PRO FORMA
GOVERNMENT INCOME INCOME COMBINED
INCOME MARKET MARKET MARKET
AMOUNT/SHARES VALUE VALUE VALUE
--------------------------- --------------------- ------------------------ --------------------
<S> <C> <C> <C>
CORPORATE BONDS (12.9%):
AIRCRAFT LEASING (0.7%):
- $ 2,444 $ 2,444
-------------------- ------------------------ --------------------
AUTOMOTIVE-FINANCE (1.6%):
2,865 2,865
1,940 1,940
956 956
-------------------- ------------------------ --------------------
- 5,761 5,761
-------------------- ------------------------ --------------------
BANKING (0.3%):
- 998 998
-------------------- ------------------------ --------------------
BEVERAGES (0.7%):
1,800 1,800
896 896
-------------------- ------------------------ --------------------
- 2,696 2,696
-------------------- ------------------------ --------------------
BROKERAGE SERVICES (0.7%):
- 2,391 2,391
-------------------- ------------------------ --------------------
DIVERSIFIED MANUFACTURING (1.6%):
1,416 1,416
2,752 2,752
1,000 1,000
481 481
-------------------- ------------------------ --------------------
- 5,649 5,649
-------------------- ------------------------ --------------------
ENTERTAINMENT (0.8%):
- 2,760 2,760
-------------------- ------------------------ --------------------
FINANCIAL SERVICES (0.5%):
- 1,918 1,918
-------------------- ------------------------ --------------------
FOOD PRODUCTS & SERVICES (0.9%):
2,356 2,356
1,003 1,003
-------------------- ------------------------ --------------------
- 3,359 3,359
-------------------- ------------------------ --------------------
INDUSTRIAL GOODS & SERVICES (0.4%):
899 899
447 447
-------------------- ------------------------ --------------------
- 1,346 1,346
-------------------- ------------------------ --------------------
INSURANCE (1.1%):
2,171 2,171
1,990 1,990
-------------------- ------------------------ --------------------
- 4,161 4,161
-------------------- ------------------------ --------------------
OIL & GAS EXPLORATION, PRODUCTION, & SERVICES (1.0%):
- 3,404 3,404
-------------------- ------------------------ --------------------
TELECOMMUNICATIONS (0.5%):
- 1,900 1,900
-------------------- ------------------------ --------------------
</TABLE>
B-82
<PAGE> 460
AMSOUTH GOVERNMENT INCOME FUND
ISG GOVERNMENT INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
7/31/93
(AMOUNTS IN THOUSANDS, EXCEPT SHARES)
(UNAUDITED)
<TABLE>
<S> <C> <C> <C>
AMSOUTH ISG PRO FORMA
GOVERNMENT GOVERNMENT COMBINED
INCOME INCOME PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
--------------------------- ---------------------------------------------------------------------------------------------
UTILITIES-ELECTRIC & GAS (2.1%):
3,000 3,000 Emerson Electric, 5.85%, 3/15/09
3,500 3,500 National Rural Utilities, 5.75%, 12/1/08
1,000 1,000 Pacific Gas & Electric, 6.25%, 3/1/04
1,000 1,000 Southern California Edison, 5.63%, 10/1/02
U.S. Government Agencies (36.0%):
FANNIE MAE (8.6%):
15,000 15,000 5.28%*, 9/15/99
1,600 1,600 5.75%, 4/15/03
7,000 7,000 6.00%, 5/15/08
5,000 5,000 6.46%, 5/9/05, Callable 5/9/01 @ 100
1,000 1,000 6.82%, 12/13/06
2,000 2,000 6.94%, 9/5/07, Callable 9/5/02 @ 100
FEDERAL FARM CREDIT BANK (8.5%):
15,000 15,000 5.07%, 12/15/03
7,000 7,000 5.70%, 9/3/08
10,000 10,000 6.20%, 7/1/02
FEDERAL HOME LOAN BANK (5.9%):
5,000 5,000 5.26%, 2/18/04
3,000 3,000 5.35%, 12/1/03
10,000 10,000 5.80%, 9/2/08
2,000 2,000 6.275%, 8/13/01, Callable 8/13/99 @ 100
2,250 2,250 6.34%, 6/29/04
FREDDIE MAC (9.1%):
5,000 5,000 5.00%, 1/15/04
10,000 10,000 5.75%, 3/15/09
10,000 10,000 6.75%, 5/4/09, Callable 8/4/99 @ 100
5,000 5,000 7.00%, 3/23/09, Callable 6/23/99 @ 100
4,000 4,000 7.40%, 6/9/14, Callable 6/9/00 @ 100
GOVERNMENT NATIONAL MORTGAGE ASSOC. (1.6%):
1360 1360 7.00%, 12/15/26-2/20/29
2207 2207 7.50%, 6/15/24-12/15/25
306 306 8.00%, 7/15/26
196 196 8.50%, 12/15/19-2/15/23
874 874 9.00%, 6/15/18-9/15/22
662 662 9.50%, 5/15/18-8/15/21
PRIVATE EXPORT FUNDING (1.9%):
2,000 2,000 Series B, 6.49%, 7/15/07
2,000 2,000 Series C, 6.31%, 9/30/04
3,000 3,000 Series D, 5.87%, 7/31/08
</TABLE>
<TABLE>
AMSOUTH ISG
AMSOUTH GOVERNMENT GOVERNMENT PRO FORMA
GOVERNMENT INCOME INCOME COMBINED
INCOME MARKET MARKET MARKET
AMOUNT/SHARES VALUE VALUE VALUE
--------------------------- --------------------- ------------------------ --------------------
<S> <C> <C> <C>
UTILITIES-ELECTRIC & GAS (2.1%):
2,800 2,800
3,215 3,215
985 985
978 978
------------------------ -------------------------- --------------------
- 7,978 7,978
------------------------ -------------------------- --------------------
TOTAL CORPORATE BONDS $ - $ 46,765 $ 46,765
------------------------ -------------------------- --------------------
U.S. Government Agencies (36.0%):
FANNIE MAE (8.6%):
14,908 14,908
1,600 1,568 1,568
6,673 6,673
4,952 4,952
1,001 1,001
1,989 1,989
------------------------ -------------------------- --------------------
1,568 29,523 31,091
------------------------ -------------------------- --------------------
FEDERAL FARM CREDIT BANK (8.5%):
14,298 14,298
6,574 6,574
9,993 9,993
------------------------ -------------------------- --------------------
- 30,865 30,865
------------------------ -------------------------- --------------------
FEDERAL HOME LOAN BANK (5.9%):
4,785 4,785
2,879 2,879
9,401 9,401
2,000 2,000
2,244 2,244
------------------------ -------------------------- --------------------
- 21,309 21,309
------------------------ -------------------------- --------------------
FREDDIE MAC (9.1%):
4,729 4,729
9,312 9,312
9,999 9,999
5,000 5,000
3,943 3,943
------------------------ -------------------------- --------------------
- 32,983 32,983
------------------------ -------------------------- --------------------
GOVERNMENT NATIONAL MORTGAGE ASSOC. (1.6%):
1360 1,324 1,324
2207 2,208 2,208
306 312 312
196 203 203
874 921 921
662 705 705
------------------------ -------------------------- --------------------
5,673 - 5,673
------------------------ -------------------------- --------------------
PRIVATE EXPORT FUNDING (1.9%):
2,013 2,013
2,008 2,008
2,894 2,894
------------------------ -------------------------- --------------------
- 6,915 6,915
------------------------ -------------------------- --------------------
</TABLE>
B-83
<PAGE> 461
AMSOUTH LIMITED TERM BOND FUND
ISG LIMITED TERM INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
7/31/99
(AMOUNTS IN THOUSANDS, EXCEPT SHARES)
(UNAUDITED)
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
Limited Term Bond Limited Term COMBINED
Principal Income Principal Principal
Amount/Shares Amount/Shares Amount/Shares Description
- ------------------------------- ------------------- --------------- ---------------------------------------------------
<S> <C> <C> <C>
AUTOMOTIVE-FINANCE (7.1%):
1,000 1,000 Chrysler Financial Corp., 6.08%, 4/6/01
4,000 4,000 Ford Motor Credit Co., 8.20%, 2/15/02
2,500 2,500 Ford Motor Credit Co., 6.50%, 2/28/02
2,000 2,000 General Motors Acceptance Corp., 5.80%, 4/9/01
3,500 3,500 General Motors Acceptance Corp., 6.75%, 2/7/02
2,000 2,000 Toyota Motor Credit Corp., 5.50%, 9/17/01
BANKING (7.5%):
2,500 2,500 ABN AMRO Bank, 6.63%, 10/31/01
3,000 3,000 Bank One Corp., 6.25%, 9/1/00
1,500 1,500 Bankers Trust, 6.75%, 10/3/01
1,500 1,500 Firstar Bank, 6.25%, 12/1/02
2,000 2,000 NationsBank Corp., 5.38%, 4/15/00
2,500 2,500 NationsBank Corp., 5.70%, 9/11/00
2,000 2,000 Nationsbank Corp., 7.00%, 9/15/01
900 900 Wachovia Bank, 6.30%, 3/15/01
BEVERAGES (0.6%):
1,250 1,250 Anheuser-Busch, 7.13%, 7/1/17
BROKERAGE SERVICES (3.4%):
3,500 3,500 Bear Stearns & Co., Inc., 6.50%, 8/1/02
2,000 2,000 Dean Witter Discover & Co., 6.26%, 3/15/00
1,750 1,750 Merrill Lynch & Co., 6.00%, 1/15/01
BUILDING PRODUCTS (0.9%):
2,000 2,000 Vulcan Materials Co., 5.75%, 4/1/04
CHEMICALS (0.7%):
1,500 1,500 Eastman Chemical, 6.38%, 1/15/04
COMPUTERS & PERIPHERALS (0.9%):
1,000 1,000 IBM Corp., 6.04%, 8/7/00
1,000 1,000 IBM Corp., 5.95%, 6/2/03
CONSUMER GOODS (0.9%):
2,000 2,000 Procter & Gamble Co., 5.25%, 9/15/03
ELECTRONIC COMPONENTS/
INSTRUMENTS (0.4%):
850 850 Honeywell, Inc., 6.75%, 3/15/02
ENTERTAINMENT (0.7%):
1,500 1,500 Walt Disney Co., 6.375%, 3/30/01
FARM EQUIPMENT (2.3%):
3,000 3,000 John Deere Capital Corp., 5.85%, 1/15/01
2,000 2,000 John Deere Capital Corp., 5.90%, 4/8/03
FINANCIAL SERVICES (9.7%):
3,000 3,000 Ameritech Capital Funding, 6.13%, 10/15/01
1,500 1,500 Associates Corp., 7.68%, 3/3/00
4,200 4,200 Associates Corp. of North America, 6.63%, 5/15/01
500 500 Beneficial Corp., 7.32%, 11/17/99
2,000 2,000 CIT Group Holdings, 6.38%, 10/1/02
1,000 1,000 Citigroup, Inc., 6.13%, 6/15/00
1,000 1,000 Commercial Credit Co., 8.26%, 11/1/01
</TABLE>
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
LIMITED TERM BOND LIMITED TERM COMBINED
MARKET INCOME MARKET MARKET
Description Value Value Value
--------------------------------------------------- -----------------------------------------------------
<S> <C> <C> <C>
Chrysler Financial Corp., 6.08%, 4/6/01 $ 998 $ - $ 998
Ford Motor Credit Co., 8.20%, 2/15/02 4,149 4,149
Ford Motor Credit Co., 6.50%, 2/28/02 2,497 2,497
General Motors Acceptance Corp., 5.80%, 4/9/01 1,980 1,980
General Motors Acceptance Corp., 6.75%, 2/7/02 3,509 3,509
Toyota Motor Credit Corp., 5.50%, 9/17/01 1,968 1,968
------------- ------------ -------------
10,624 4,477 15,101
------------- ------------ -------------
ABN AMRO Bank, 6.63%, 10/31/01 2,509 2,509
Bank One Corp., 6.25%, 9/1/00 3,003 3,003
Bankers Trust, 6.75%, 10/3/01 1,508 1,508
Firstar Bank, 6.25%, 12/1/02 1,487 1,487
NationsBank Corp., 5.38%, 4/15/00 1,995 1,995
NationsBank Corp., 5.70%, 9/11/00 2,488 2,488
Nationsbank Corp., 7.00%, 9/15/01 2,025 2,025
Wachovia Bank, 6.30%, 3/15/01 899 899
------------- ------------ -------------
9,872 6,042 15,914
------------- ------------ -------------
Anheuser-Busch, 7.13%, 7/1/17 - 1,225 1,225
------------- ------------ -------------
Bear Stearns & Co., Inc., 6.50%, 8/1/02 3,465 3,465
Dean Witter Discover & Co., 6.26%, 3/15/00 2,005 2,005
Merrill Lynch & Co., 6.00%, 1/15/01 1,746 1,746
------------- ------------ -------------
5,470 1,746 7,216
------------- ------------ -------------
Vulcan Materials Co., 5.75%, 4/1/04 1,940 - 1,940
------------- ------------ -------------
Eastman Chemical, 6.38%, 1/15/04 - 1,466 1,466
------------- ------------ -------------
IBM Corp., 6.04%, 8/7/00 1,002 1,002
IBM Corp., 5.95%, 6/2/03 981 981
------------- ------------ -------------
------------- ------------
981 1,002 1,983
------------- ------------ -------------
Procter & Gamble Co., 5.25%, 9/15/03 1,913 - 1,913
------------- ------------ -------------
Honeywell, Inc., 6.75%, 3/15/02 857 - 857
------------- ------------ -------------
Walt Disney Co., 6.375%, 3/30/01 - 1,508 1,508
------------- ------------ -------------
John Deere Capital Corp., 5.85%, 1/15/01 2,981 2,981
John Deere Capital Corp., 5.90%, 4/8/03 1,948 1,948
------------- ------------ -------------
-------------
2,981 1,948 4,929
------------- ------------ -------------
Ameritech Capital Funding, 6.13%, 10/15/01 2,988 2,988
Associates Corp., 7.68%, 3/3/00 1,519 1,519
Associates Corp. of North America, 6.63%, 5/15/01 4,210 4,210
Beneficial Corp., 7.32%, 11/17/99 502 502
CIT Group Holdings, 6.38%, 10/1/02 1,983 1,983
Citigroup, Inc., 6.13%, 6/15/00 1,000 1,000
Commercial Credit Co., 8.26%, 11/1/01 1,038 1,038
</TABLE>
B-84
<PAGE> 462
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
Limited Term Bond Limited Term COMBINED
Principal Income Principal Principal
Amount/Shares Amount/Shares Amount/Shares Description
- ------------------------------- ------------------- --------------- ---------------------------------------------------
<S> <C> <C> <C>
2,500 2,500 General Electric Capital Corp., 6.15%, 11/5/01
2,500 2,500 Household Finance Co., 8.95%, 9/15/99
2,500 2,500 Household Netherlands, 6.20%, 12/1/03
FOOD PRODUCTS & SERVICES (1.4%):
1,000 1,000 Campbell Soup Co., 6.15%, 12/1/02
1,000 1,000 McDonald's Corp., 5.90%, 5/11/01
1,000 1,000 McDonald's Corp., 6.00%, 6/23/02
FOREST & PAPER PRODUCTS (1.4%):
2,000 2,000 International Paper Co., 6.88%, 7/10/00
1,000 1,000 Mead Corp., 6.60%, 3/1/02
HEALTH CARE (0.9%):
2,000 2,000 McKesson Corp., 6.88%, 3/1/02
INDUSTRIAL GOODS & SERVICES (6.2%):
2,000 2,000 Air Products & Chemicals, Inc., 8.35%, 1/15/02
1,500 1,500 Archer Daniels, 6.25%, 5/15/03
1,000 1,000 Caterpillar Financial Services, 6.02%, 4/15/02
3,000 3,000 E. I. Dupont de Nemours & Co., 6.50%, 9/1/02
3,000 3,000 Imperial Oil Ltd., 8.75%, 10/15/19
2,500 2,500 Martin Marietta, 6.50%, 4/15/03
INSURANCE (4.1%):
2,000 2,000 American General Finance, 5.75%, 11/01/03
1,500 1,500 AON Corp., 6.88%, 10/1/99
1,000 1,000 St. Paul Cos., Inc., Series A, 6.17%, 1/15/01
2,000 2,000 Travelers Property Casualty, 6.75%, 4/15/01
2,200 2,200 USLife Corp., 6.38%, 6/15/00
LEASING (1.0%):
2,000 2,000 USL Capital Corp., 8.13%, 2/15/00
OFFICE EQUIPMENT & SERVICES (0.6%):
1,274 1,274 Xerox Corp., 8.13%, 4/15/02
OIL & GAS EXPLORATION, PRODUCTION,
& SERVICES (1.0%):
2,200 2,200 Amoco Co., 6.25%, 10/15/04
RETAIL (5.5%):
2,500 2,500 Dayton Hudson Co., 6.40%, 2/15/03
2,000 2,000 J.C. Penney Co., Inc., 7.25%, 4/1/02
1,000 1,000 Sears, Roebuck and Co., 6.00%, 3/20/03
3,500 3,500 Wal-Mart Stores, Inc., 5.85%, 6/1/00
2,500 2,500 Wal-Mart Stores, Inc., 5.85%, 6/1/00
TELECOMMUNICATIONS (2.6%):
1,500 1,500 AT&T Corp., 5.63%, 3/15/04
1,036 1,036 IBM Corp., 6.25%, 2/24/00
1,500 1,500 MCI Communication Corp., 7.13%, 1/20/00
1,500 1,500 Worldcom, Inc., 6.13%, 8/15/01
TELECOMMUNICATIONS-EQUIPMENT (0.5%):
1,000 1,000 Lucent Technologies, Inc., 6.90%, 7/15/01
TOOLS (0.5%):
500 500 Stanley Works, 7.38%, 12/15/02
500 500 Stanley Works, 5.75%, 3/1/04
UTILITIES-ELECTRIC & GAS (12.1%):
1,250 2,000 3,250 Alabama Power Corp., 5.35%, 11/15/03
2,500 2,500 Baltimore Gas & Electric Co., 6.50%, 2/15/03
600 600 Baltimore Gas & Electric Co., 5.50%, 7/15/00
2,000 2,000 Central Power & Light, 6.00%, 4/1/00
1,300 1,300 Cincinnati Gas & Electric, 6.45%, 2/15/04
1,000 1,000 ENSERCH, 7.00%, 8/15/99
1,000 1,000 Florida Power Corp., 6.50%, 12/1/99
2,000 2,000 Florida Power Corp., 6.54%, 7/1/02
2,500 2,500 Midamerican Energy, 6.50%, 12/15/01
2,000 2,000 National Rural Utilities, 6.49%, 7/10/02
</TABLE>
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
LIMITED TERM BOND LIMITED TERM COMBINED
MARKET INCOME MARKET MARKET
Description Value Value Value
- --------------------------------------------------- -----------------------------------------------------
<S> <C> <C> <C>
General Electric Capital Corp., 6.15%, 11/5/01 2,491 2,491
Household Finance Co., 8.95%, 9/15/99 2,508 2,508
Household Netherlands, 6.20%, 12/1/03 2,438 2,438
------------- ------------ -------------
19,158 1,519 20,677
------------- ------------ -------------
Campbell Soup Co., 6.15%, 12/1/02 996 996
McDonald's Corp., 5.90%, 5/11/01 995 995
McDonald's Corp., 6.00%, 6/23/02 990 990
------------- ------------ -------------
2,981 - 2,981
------------- ------------ -------------
International Paper Co., 6.88%, 7/10/00 2,007 2,007
Mead Corp., 6.60%, 3/1/02 994 994
------------- ------------
------------- ------------ -------------
994 2,007 3,001
------------- ------------ -------------
McKesson Corp., 6.88%, 3/1/02 1,985 - 1,985
------------- ------------ -------------
Air Products & Chemicals, Inc., 8.35%, 1/15/02 2,083 2,083
Archer Daniels, 6.25%, 5/15/03 1,489 1,489
Caterpillar Financial Services, 6.02%, 4/15/02 988 988
E. I. Dupont de Nemours & Co., 6.50%, 9/1/02 3,007 3,007
Imperial Oil Ltd., 8.75%, 10/15/19 3,127 3,127
Martin Marietta, 6.50%, 4/15/03 2,487 2,487
------------- ------------ -------------
6,078 7,103 13,181
------------- ------------ -------------
American General Finance, 5.75%, 11/01/03 1,923 1,923
AON Corp., 6.88%, 10/1/99 1,502 1,502
St. Paul Cos., Inc., Series A, 6.17%, 1/15/01 996 996
Travelers Property Casualty, 6.75%, 4/15/01 2,007 2,007
USLife Corp., 6.38%, 6/15/00 2,199 2,199
------------- ------------ -------------
6,620 2,007 8,627
------------- ------------ -------------
USL Capital Corp., 8.13%, 2/15/00 2,024 - 2,024
------------- ------------ -------------
Xerox Corp., 8.13%, 4/15/02 1,331 - 1,331
------------- ------------ -------------
Amoco Co., 6.25%, 10/15/04 2,178 - 2,178
------------- ------------ -------------
Dayton Hudson Co., 6.40%, 2/15/03 2,497 2,497
J.C. Penney Co., Inc., 7.25%, 4/1/02 2,020 2,020
Sears, Roebuck and Co., 6.00%, 3/20/03 975 975
Wal-Mart Stores, Inc., 5.85%, 6/1/00 3,504 3,504
Wal-Mart Stores, Inc., 5.85%, 6/1/00 2,503 2,503
------------- ------------ -------------
4,479 7,020 11,499
------------- ------------ -------------
AT&T Corp., 5.63%, 3/15/04 1,438 1,438
IBM Corp., 6.25%, 2/24/00 1,036 1,036
MCI Communication Corp., 7.13%, 1/20/00 1,510 1,510
Worldcom, Inc., 6.13%, 8/15/01 1,489 1,489
------------- ------------ -------------
1,438 4,035 5,473
------------- ------------ -------------
Lucent Technologies, Inc., 6.90%, 7/15/01 1,013 - 1,013
------------- ------------ -------------
Stanley Works, 7.38%, 12/15/02 514 514
Stanley Works, 5.75%, 3/1/04 484 484
------------- ------------ -------------
998 - 998
------------- ------------ -------------
Alabama Power Corp., 5.35%, 11/15/03 1,194 1,918 3,112
Baltimore Gas & Electric Co., 6.50%, 2/15/03 2,493 2,493
Baltimore Gas & Electric Co., 5.50%, 7/15/00 599 599
Central Power & Light, 6.00%, 4/1/00 2,000 2,000
Cincinnati Gas & Electric, 6.45%, 2/15/04 1,292 1,292
ENSERCH, 7.00%, 8/15/99 1,001 1,001
Florida Power Corp., 6.50%, 12/1/99 1,003 1,003
Florida Power Corp., 6.54%, 7/1/02 2,000 2,000
Midamerican Energy, 6.50%, 12/15/01 2,493 2,493
National Rural Utilities, 6.49%, 7/10/02 2,003 2,003
</TABLE>
B-85
<PAGE> 463
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
Limited Term Bond Limited Term COMBINED
Principal Income Principal Principal
Amount/Shares Amount/Shares Amount/Shares Description
- ------------------------------- ------------------- --------------- ---------------------------------------------------
<S> <C> <C> <C>
2,500 2,500 Potomac Electric Power, 6.00%, 4/1/04
2,000 2,000 Puget Sound Power & Light, 6.61%, 2/9/00
2,000 2,000 SCANA Corp., Series B, 6.25%, 7/8/03
1,321 1,321 Smith Enron, 5.97%, 12/15/06
UTILITIES-TELECOMMUNICATIONS
(0.9%):
2,000 2,000 BellSouth Telecommunications, 6.00%, 6/15/02
FANNIE MAE (0.7%):
1,500 1,500 6.35%, 11/23/01
FREDDIE MAC (0.9%):
2,000 2,000 6.75%, 4/1/08
GOVERNMENT NATIONAL MORTGAGE
ASSOC. (9.2%):
450 450 8.00%, 12/15/07
823 823 8.00%, 8/15/08
521 521 7.50%, 4/15/09
373 373 7.50%, 4/15/09
467 467 7.50%, 6/15/09
492 492 8.50%, 9/15/09
921 921 8.00%, 11/15/09
373 373 8.50%, 12/15/09
451 451 8.50%, 12/15/09
855 855 8.00%, 4/15/10
1,119 1,119 8.00%, 4/15/10
1,199 1,199 7.50%, 8/15/11
1,928 1,928 6.00%, 1/15/14
1,930 1,930 6.00%, 1/15/14
1,932 1,932 6.50%, 1/15/29
1,942 1,942 6.50%, 1/20/29
1,988 1,988 6.50%, 3/15/29
1,990 1,990 6.50%, 4/20/29
1,500 1,500 7.75%, 1/31/00
1,000 1,000 6.25%, 6/30/02
18,000 18,000 7.25%, 5/15/04
3,835,297 3,835,297 AIM Liquid Assets Money Market Fund
2,024,579 2,024,579 AIM Prime Money Market Fund
2,248,559 2,248,559 AmSouth Prime Obligations Fund
339 339 AmSouth U.S. Treasury Fund
1,000 1,000 Bank of New York Cash Reserve Money Market Fund
Unrealized appreciation $ 929
Unrealized depreciation (2,354)
--------
Net unrealized depreciation $ (1,425)
========
</TABLE>
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
LIMITED TERM BOND LIMITED TERM COMBINED
MARKET INCOME MARKET MARKET
Description Value Value Value
- --------------------------------------------------- -----------------------------------------------------
<S> <C> <C> <C>
Potomac Electric Power, 6.00%, 4/1/04 2,432 2,432
Puget Sound Power & Light, 6.61%, 2/9/00 2,007 2,007
SCANA Corp., Series B, 6.25%, 7/8/03 1,965 1,965
Smith Enron, 5.97%, 12/15/06 1,301 1,301
------------- ------------ -------------
2,796 22,905 25,701
------------- ------------ -------------
BellSouth Telecommunications, 6.00%, 6/15/02 1,975 - 1,975
------------- ------------ -------------
TOTAL CORPORATE BONDS $ 90,686 $ 66,010 $ 156,696
--------- ------------ -------------
6.35%, 11/23/01 - 1,501 1,501
--------- ------------ -------------
6.75%, 4/1/08 - 2,000 2,000
--------- ------------ -------------
8.00%, 12/15/07 466 466
8.00%, 8/15/08 854 854
7.50%, 4/15/09 531 531
7.50%, 4/15/09 380 380
7.50%, 6/15/09 477 477
8.50%, 9/15/09 514 514
8.00%, 11/15/09 955 955
8.50%, 12/15/09 389 389
8.50%, 12/15/09 471 471
8.00%, 4/15/10 886 886
8.00%, 4/15/10 1,160 1,160
7.50%, 8/15/11 1,223 1,223
6.00%, 1/15/14 1,846 1,846
6.00%, 1/15/14 1,849 1,849
6.50%, 1/15/29 1,835 1,835
6.50%, 1/20/29 1,836 1,836
6.50%, 3/15/29 1,889 1,889
6.50%, 4/20/29 1,882 1,882
--------- ------------ -------------
- 19,443 19,443
--------- ------------ -------------
TOTAL U.S. GOVERNMENT AGENCIES $ - $ 22,944 $ 22,944
--------- ------------ -------------
7.75%, 1/31/00 1,519 1,519
6.25%, 6/30/02 1,013 1,013
7.25%, 5/15/04 18,971 18,971
--------- ------------ -------------
TOTAL U.S. TREASURY NOTES $ 18,971 $ 2,532 $ 21,503
--------- ------------ -------------
AIM Liquid Assets Money Market Fund 3,835 3,835
AIM Prime Money Market Fund 2,025 2,025
AmSouth Prime Obligations Fund 2,248 2,248
AmSouth U.S. Treasury Fund - -
Bank of New York Cash Reserve Money Market Fund 1 1
--------- ------------ -------------
TOTAL INVESTMENT COMPANIES $ 2,248 $ 5,861 $ 8,109
--------- ------------ -------------
TOTAL (COST $210,677) (A) $ 111,905 $ 97,347 $ 209,252
--------- ------------ -------------
</TABLE>
B-86
<PAGE> 464
AmSouth Limited Term Bond Fund
ISG Limited Term Income Fund ISG
Pro Forma Combining Statement of Operations ANA # Days
7/31/99 A 7,358,647
(Amounts in thousands) B 602,460
(Unaudited) I 88,566,034
<TABLE>
<CAPTION>
ISG Pro Forma
AmSouth Limited Term Pro Forma Combined
Limited Term Bond Income Adjustments (Note 1)
----------------- ---------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $ 7,037 $ 5,884 $ - $12,921
Dividend Income 95 191 - 95
Income from securities lending - 8 (8)(m) -
--------- ------------ ---------- ------------
7,132 6,083 (8) 13,207
--------- ------------ ---------- ------------
EXPENSES:
Advisory fees 735 483 144 (a) 1,362
Administration fees 226 145 48 (b) 419
Shareholder servicing fees (Class A Shares) 8 6 12 (c) 26
Shareholder servicing fees (Class B Shares) - 2 1 (d) 3
Shareholder servicing fees (Institutional Shares) - 80 217 (e) 297
12b-1 fees (Class A Shares) - 18 (18) (f) -
12b-1 fees (Class B Shares) 4 5 (1) (g) 8
Accounting fees 57 49 (73) (h) 33
Transfer agent fees 48 57 (42) (i) 63
Custodian fees 7 25 26 (j) 58
Trustee fees and expenses 3 5 (3) (k) 5
Other expenses 28 93 (58) (k) 63
--------- ------------ ---------- ------------
Total Expenses: 1,116 968 253 2,337
Less Waivers:
Advisory fees (170) - 170 (a) -
Administration fees (90) - 90 (b) -
Shareholder servicing fees (Class A Shares) (5) - 5 (c) -
Accounting fees (15) - 15 (h) -
Transfer agent fees (25) - 25 (i) -
--------- ------------ ---------- ------------
Net Expenses: 811 968 558 2,337
--------- ------------ ---------- ------------
Net Investment Income 6,321 5,115 (566) 10,870
--------- ------------ ---------- ------------
Realized/Unrealized Gains (Losses) from
Investments
Net realized gains (losses) from investment transaction 464 130 - 594
Net change in unrealized appreciation (depreciation)
from investments (2,240) (1,948) - (4,188)
--------- ------------ ---------- ------------
Net realized/unrealized gains (losses) from investments (1,776) (1,818) - (3,594)
Change in net assets resulting from
========= ============ ========== ============
Operations: $ 4,545 $ 3,297 $ (566) $ 7,276
</TABLE>
Notes to Pro Forma Financial Statements
(a) Adjustment to reflect the AmSouth contractual fee structure for
Advisory fees (0.65% of net assets).
(b) Adjustment to reflect the AmSouth contractual fee structure for
Administration fees (0.20% of net assets).
(c) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder servicing fees (0.25% of Class A net assets)
(d) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder servicing fees (0.25% of Class B net assets)
(e) Adjustment to reflect the AmSouth contractual fee structure for
Shareholder servicing fees (0.25% of Institutional net assets).
(f) Adjustment to reflect the AmSouth contractual fee structure for 12b-1
fees (0.00% of Class A net assets).
(g) Adjustment to reflect the AmSouth contractual fee structure for 12b-1
fees (0.75% of Class B net assets).
(h) Adjustment to reflect the AmSouth contractual fee structure for
Accounting fees ($10,000 a year per additional class + OOP).
(i) Adjustment to reflect the AmSouth contractual fee structure for
Transfer agent fees (0.015% of net assets + $10,000 a year per class +
OOP).
(j) Adjustment to reflect the AmSouth contractual fee structure for
Custodian fees (0.0275% of net assets).
(k) Reduction reflects expected savings when the two funds merge.
(l) Adjustment to reflect the AmSouth contractual fee structure.
(m) Adjustment to reflect no securities lending income since there is not
a securities lending program set up on the AmSouth Funds.
B-87
<PAGE> 465
AMSOUTH LIMITED TERM BOND FUND
ISG Limited Term Income Fund
Pro Forma Combining Statement of Assets and Liabilities
7/31/99
(Amounts in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
ISG PRO FORMA
AmSouth Limited Term Pro Forma Combined
Limited Term Bond Income Adjustments (Note 1)
----------------- ------------- ------------ -------------
ASSETS:
Investment in securities, at value
<S> <C> <C> <C> <C>
(cost $112,420 and $98,257, respectively) $ 111,905 $ 97,347 $ - $ 209,252
Interest and dividends receivable 1,999 1,384 - 3,383
Other assets 5 22 - 27
--------------- ------------- ------------ -------------
TOTAL ASSETS 113,909 98,753 - 212,662
--------------- ------------- ------------ -------------
LIABILITIES:
Dividends payable - 444 - 444
Payable for capital shares redeemed 2 - - 2
Accrued expenses and other payables: -
Advisory fees 25 42 - 67
Administration fees 1 2 - 3
Distribution fees 2 15 - 17
Accounting fees 1 2 - 3
Transfer agent fees 3 3 - 6
Custodian fees 1 7 - 8
Other 5 22 - 27
--------------- ------------- ------------ -------------
TOTAL LIABILITIES 40 537 - 577
--------------- ------------- ------------ -------------
NET ASSETS:
Class A Shares 2,716 6,850 - 9,566
Class B Shares 1,599 696 - 2,295
Institutional Shares 109,554 90,670 - 200,224
--------------- ------------- ------------ -------------
$ 113,869 $ 98,216 $ - $212,085
=============== ============= ============ =============
CAPITAL SHARES OUTSTANDING
Class A Shares 264 702 (36)(a) 930
Class B Shares 156 71 (3)(a) 224
Institutional Shares 10,647 9,287 (476)(a) 19,458
--------------- ------------- ------------ -------------
11,067 10,060 (515)(a) 20,612
=============== ============= ============ =============
Net Asset Value
Class A Shares - redemption price per share $ 10.29 $ 9.76 $ 10.29
=============== ============= =============
Class A Shares - maximum sales charge 4.00% 3.00% 4.00%
--------------- ------------- -------------
Class A Shares - POP $ 10.72 $ 10.06 $ 10.72
=============== ============= =============
Class B Shares - offering price per share* $ 10.27 $ 9.75 $ 10.27
=============== ============= =============
Institutional Shares - offering and redemption
price per share $ 10.29 $ 9.76 $ 10.29
=============== ============= =============
COMPOSITION OF NET ASSETS
Capital $ 115,003 $ 99,310 $ - $ 214,313
Undistributed (distributions in excess of)
net investment income 483 (1) - 482
Undistributed net realized gains (losses)
from investment transactions (1,102) (183) - (1,285)
Net unrealized appreciation (depreciation) of
investments (515) (910) - (1,425)
--------------- ------------- ------------ -------------
NET ASSETS, JULY 31, 1999 $ 113,869 $ 98,216 $ - $212,085
=============== ============= ============ =============
</TABLE>
* Redemption price per share varies by length of time shares are held.
(a) Adjustment to convert ISG Shares Outstanding to AmSouth Shares Outstanding
based on AmSouth's NAV's.
B-88
<PAGE> 466
<TABLE>
<CAPTION>
AMSOUTH MUNICIPAL BOND FUND
ISG MUNICIPAL INCOME FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
07/31/99
(UNAUDITED)
AMSOUTH ISG PRO FORMA
MUNICIPAL MUNICIPAL PRO FORMA COMBINED
BOND INCOME ADJUSTMENTS (NOTE 1)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities, at value
(cost $321,757 and $66,213, respectively) $323,878 $ 64,489 $ -- $388,367
Interest and dividends receivable 4,967 916 -- 5,883
Other assets 13 18 -- 31
-------- -------- -------- --------
TOTAL ASSETS 328,858 65,423 -- 394,281
-------- -------- -------- --------
LIABILITIES:
Cash overdraft -- 26 -- 26
Payable for capital shares redeemed -- 226 -- 226
Payable to brokers for investments purchased 4,754 991 -- 5,745
Accrued expenses:
Advisory fees 57 17 -- 74
Administration fees 4 1 -- 5
Distribution fees -- 8 -- 8
Accounting fees 2 1 -- 3
Transfer agent fees 8 4 -- 12
Custodian fees 3 2 -- 5
Other 27 15 -- 42
-------- -------- -------- --------
TOTAL LIABILITIES 4,855 1,291 -- 6,146
-------- -------- -------- --------
NET ASSETS
Class A Shares 2,694 3,270 -- 5,964
Class B Shares 16 347 -- 363
Institutional Shares 321,293 60,515 -- 381,808
-------- -------- -------- --------
$324,003 $ 64,132 $ -- $388,135
======== ======== ======== ========
CAPITAL SHARES OUTSTANDING
Class A Shares 273 312 19 (a) 604
Class B Shares 2 33 2 (a) 37
Institutional Shares 32,557 5,782 349 (a) 38,688
-------- -------- -------- --------
32,832 6,127 370 (a) 39,329
======== ======== ======== ========
NET ASSET VALUE
Class A Shares - redemption price per share $ 9.87 $ 10.47 $ 9.87
-------- -------- ========
Class A Shares - maximum sales charge 4.00% 3.00% 4.00%
======== ======== ========
Class A Shares - POP $ 10.28 $ 10.79 $ 10.28
======== ======== ========
Class B Shares - offering price per share* $ 9.87 $ 10.44 $ 9.87
======== ======== ========
Institutional Shares - offering and redemption
price per share $ 9.87 $ 10.47 $ 9.87
======== ======== ========
COMPOSITION OF NET ASSETS
Capital $319,649 $ 63,867 $ -- $383,516
Undistributed (distributions in excess of)
net investment income 599 (148) -- 451
Undistributed net realized gains/(loss)
from investment transactions 1,634 2,137 -- 3,771
Net unrealized appreciation (depreciation) of
investments 2,121 (1,724) -- 397
-------- -------- -------- --------
NET ASSETS, JULY 31, 1999 $324,003 $ 64,132 $ -- $388,135
======== ======== ======== ========
<FN>
* Redemption price per share varies by length of time shares are held.
(a) Adjustment to convert ISG Shares Outstanding to AmSouth Shares Outstanding
based on AmSouth's NAV's.
</TABLE>
B-89
<PAGE> 467
<TABLE>
<CAPTION>
AMSOUTH MUNICIPAL BOND FUND
ISG MUNICIPAL INCOME FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
07/31/99
(UNAUDITED)
AMSOUTH ISG PRO FORMA
MUNICIPAL MUNICIPAL PRO FORMA COMBINED
BOND INCOME ADJUSTMENTS (NOTE 1)
-------- -------- --------- --------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C>
Interest Income $ 15,208 $ 2,787 $ -- $ 17,995
Dividend Income 193 26 -- 219
-------- -------- --------- --------
15,401 2,813 -- 18,214
-------- -------- --------- --------
EXPENSES:
Advisory fees 2,121 356 29 (a) 2,506
Administration fees 653 95 23 (b) 771
Shareholder servicing fees (Class A Shares) 6 33 23 (c) 62
Shareholder servicing fees (Class B Shares) -- -- 0 (d) 0
Shareholder servicing fees (Institutional Shares) -- 55 486 (e) 541
12b-1 fees (Class A Shares) -- 4 (4) (f) --
12b-1 fees (Class B Shares) -- 1 0 (g) 1
Accounting fees 129 49 (146) (h) 32
Transfer agent fees 90 38 (30) (i) 98
Custodian fees 20 13 73 (j) 106
Trustee fees and expenses 6 2 (2) (k) 6
Other expenses 83 69 (62) (k) 90
-------- -------- --------- --------
TOTAL EXPENSES: 3,108 715 391 4,214
Less Waivers
Advisory fees (816) (178) 994 (a) --
Administration fees (261) -- 261 (b) --
Shareholder servicing fees (Class A Shares) (4) -- 4 (c) --
12b-1 fees (Class A Shares) -- (4) 4 (f) --
Accounting Fees (15) -- 15 (h) --
Transfer agent fees (25) -- 25 (i) --
Reimbursements -- (1) 1 (l) --
-------- -------- --------- --------
NET EXPENSES: 1,987 532 1,695 4,214
-------- -------- --------- --------
NET INVESTMENT INCOME (LOSS) 13,414 2,281 (1,695) 14,000
-------- -------- --------- --------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment transactions 2,189 2,081 -- 4,270
Net change in unrealized appreciation (depreciation)
from investments (7,994) -- -- (7,994)
-------- -------- --------- --------
Net realized/unrealized gains (losses) from investments (5,805) 2,081 -- (3,724)
CHANGE IN NET ASSETS RESULTING FROM
-------- -------- --------- --------
OPERATIONS: $ 7,609 $ 4,362 $ (1,695) $ 10,276
======== ======== ========= ========
<FN>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(a) Adjustment to reflect the AmSouth contractual fee structure for Advisory fees (0.65% of net assets).
(b) Adjustment to reflect the AmSouth contractual fee structure for Administration fees (0.20% of net assets).
(c) Adjustment to reflect the AmSouth contractual fee structure for Shareholder Servicing fees (0.25% of Class A
net assets).
(d) Adjustment to reflect the AmSouth contractual fee structure for Shareholder Servicing fees (0.25% of Class B
net assets).
(e) Adjustment to reflect the AmSouth contractual fee structure for Shareholder Servicing fees (0.15% of Institutional
net assets).
(f) Adjustment to reflect the AmSouth contractual fee structure for 12b-1 fees (0.00% of Class A net assets).
(g) Adjustment to reflect the AmSouth contractual fee structure for 12b-1 fees (0.75% of Class B net assets).
(h) Adjustment to reflect the AmSouth contractual fee structure for Accounting fees ($10,000 a year per additional
class + OOP).
(i) Adjustment to reflect the AmSouth contractual fee structure for Transfer agent fees (0.015% of net assets + $10,000 a
year per class + OOP).
(j) Adjustment to reflect the AmSouth contractual fee structure for Custodian fees (0.0275% of net assets).
(k) Reduction reflects expected savings when the two funds merge.
(l) Adjustment to reflect the AmSouth contractual fee structure.
</TABLE>
B-90
<PAGE> 468
<TABLE>
<CAPTION>
AMSOUTH MUNICIPAL BOND FUND
ISG MUNICIPAL INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
07/31/99
(UNAUDITED)
AMSOUTH ISG
MUNICIPAL MUNICIPAL PRO FORMA
BOND INCOME COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
------------------ ------------- --------------- -----------------------------------------------------------------
MUNICIPAL BONDS (97.7%):
ALABAMA (47.4%):
<S> <C> <C> <C>
$ 2,245 $ 2,245 Alabama State Agriculture & Mechanical University
Revenue, 4.55%, 11/1/09, Callable 5/1/08 @ 102, MBIA
2,355 2,355 Alabama State Agriculture & Mechanical University
Revenue, 4.65%, 11/1/10, Callable 5/1/08 @ 102, MBIA
2,035 2,035 Alabama State Agriculture & Mechanical University
Revenue, 6.50%, 11/1/25, Callable 11/1/05 @ 102, MBIA
3,060 3,060 Alabama State Corrections Institution, Series A, 4.90%,
4/1/03, MBIA
1,520 1,520 Alabama State Industrial Access Road & Bridge Corp.,
Capital Improvements, Series A, 4.60%, 6/1/03
3,700 3,700 Alabama State Judicial Building Authority, Judicial Facilities
Project, 4.75%, 1/1/05, AMBAC
3,880 3,880 Alabama State Judicial Building Authority, Judicial Facilities
Project, 4.85%, 1/1/06, AMBAC
2,000 2,000 Alabama State Mental Health Finance Authority, Special
Tax, 4.88%, 5/1/03, MBIA
7,350 7,350 Alabama State Public School & College Authority, 4.75%,
12/1/03, Callable 6/1/03 @ 103
3,390 3,390 Alabama State Public School & College Authority, 5.00%,
12/1/05, Callable 6/1/03 @ 103
10,000 10,000 Alabama State Public School & College Authority Revenue,
Series A, 4.38%, 8/1/04
5,000 5,000 Alabama State Public School & College Authority, Capital
Improvement, 4.75%, 11/1/06, Callable 11/1/05 @ 101
1,760 1,760 Alabama State Water Pollution Control Authority, Revolving
Fund, Series B, 5.25%, 8/15/08, Callable 8/15/06 @ 100,
AMBAC
1,350 1,350 Alabama State Water Pollution Control Authority, Revolving
Fund, Series B, 5.38%, 8/15/10, Callable 8/15/06 @ 100,
AMBAC
2,495 2,495 Alabama State Water Pollution Control Authority, Revolving
Fund, Series B, 5.40%, 8/15/11, Callable 8/15/06 @ 100,
AMBAC
5,000 5,000 Alabama State Water Pollution Control Authority, Revolving
Fund, Series B, 5.50%, 8/15/16, Callable 8/15/06 @ 100,
AMBAC
3,500 3,500 Alabama State, Series A, GO, 4.60%, 10/1/05
1,000 1,000 Auburn University, University Revenues, General Fee, 5.25%,
6/1/06, Callable 6/1/03 @ 102, MBIA
1,040 1,040 Birmingham Capital Improvement, Series B, GO, 4.80%,
10/1/08, Callable 4/1/07 @ 102
1,375 1,375 Birmingham Waterworks & Sewer Board, Water & Sewer
Revenue, 5.90%, 1/1/03, Callable 1/1/02 @ 102
<CAPTION>
AMSOUTH MUNICIPAL BOND FUND
ISG MUNICIPAL INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
07/31/99
(UNAUDITED)
AMSOUTH ISG PRO FORMA
MUNICIPAL BOND MUNICIPAL INCOME COMBINED
MARKET MARKET MARKET
DESCRIPTION VALUE VALUE VALUE
------------------------------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Alabama State Agriculture & Mechanical University $ 2,155 $ 2,155
Revenue, 4.55%, 11/1/09, Callable 5/1/08 @ 102, MBIA
Alabama State Agriculture & Mechanical University 2,248 2,248
Revenue, 4.65%, 11/1/10, Callable 5/1/08 @ 102, MBIA
Alabama State Agriculture & Mechanical University 2,287 2,287
Revenue, 6.50%, 11/1/25, Callable 11/1/05 @ 102, MBIA
Alabama State Corrections Institution, Series A, 4.90%, 3,118 3,118
4/1/03, MBIA
Alabama State Industrial Access Road & Bridge Corp., 1,528 1,528
Capital Improvements, Series A, 4.60%, 6/1/03
Alabama State Judicial Building Authority, Judicial Facilities 3,739 3,739
Project, 4.75%, 1/1/05, AMBAC
Alabama State Judicial Building Authority, Judicial Facilities 3,927 3,927
Project, 4.85%, 1/1/06, AMBAC
Alabama State Mental Health Finance Authority, Special 2,039 2,039
Tax, 4.88%, 5/1/03, MBIA
Alabama State Public School & College Authority, 4.75%, 7,474 7,474
12/1/03, Callable 6/1/03 @ 103
Alabama State Public School & College Authority, 5.00%, 3,479 3,479
12/1/05, Callable 6/1/03 @ 103
Alabama State Public School & College Authority Revenue, 9,981 9,981
Series A, 4.38%, 8/1/04
Alabama State Public School & College Authority, Capital 5,039 5,039
Improvement, 4.75%, 11/1/06, Callable 11/1/05 @ 101
Alabama State Water Pollution Control Authority, Revolving 1,805 1,805
Fund, Series B, 5.25%, 8/15/08, Callable 8/15/06 @ 100,
AMBAC
Alabama State Water Pollution Control Authority, Revolving 1,379 1,379
Fund, Series B, 5.38%, 8/15/10, Callable 8/15/06 @ 100,
AMBAC
Alabama State Water Pollution Control Authority, Revolving 2,552 2,552
Fund, Series B, 5.40%, 8/15/11, Callable 8/15/06 @ 100,
AMBAC
Alabama State Water Pollution Control Authority, Revolving 5,046 5,046
Fund, Series B, 5.50%, 8/15/16, Callable 8/15/06 @ 100,
AMBAC
Alabama State, Series A, GO, 4.60%, 10/1/05 3,517 3,517
Auburn University, University Revenues, General Fee, 5.25%, 1,032 1,032
6/1/06, Callable 6/1/03 @ 102, MBIA
Birmingham Capital Improvement, Series B, GO, 4.80%, 1,039 1,039
10/1/08, Callable 4/1/07 @ 102
Birmingham Waterworks & Sewer Board, Water & Sewer 1,453 1,453
Revenue, 5.90%, 1/1/03, Callable 1/1/02 @ 102
</TABLE>
B-91
<PAGE> 469
<TABLE>
<CAPTION>
AMSOUTH MUNICIPAL BOND FUND
ISG MUNICIPAL INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
07/31/99
(UNAUDITED)
AMSOUTH ISG
MUNICIPAL MUNICIPAL PRO FORMA
BOND INCOME COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
------------------ ------------- -------------- ----------------------------------------------------------------
1,340 1,340 Birmingham, Capital Improvements, Series A, GO, 4.75%,
10/1/10, Callable 4/1/08 @ 102
1,430 1,430 Birmingham, Capital Improvements, Series A, GO, 4.85%,
10/1/11, Callable 4/1/08 @ 102
1,500 1,500 Birmingham, GO, 4.90%, 7/1/06
1,300 1,300 Birmingham, Industrial Water Board, Industrial Water
Supply, 5.50%, 3/1/06, Pre-refunded 3/1/05 @ 100
3,465 3,465 Birmingham, Industrial Water Board, Industrial Water
Supply, 6.20%, 7/1/08, Pre-refunded 1/1/07 @ 100
1,100 1,100 Birmingham, Industrial Water Board, Industrial Water
Supply, ETM, 5.30%, 3/1/04, Callable 3/1/03 @ 102
1,000 1,000 Birmingham, Industrial Water Board, Industrial Water
Supply, ETM, 5.40%, 3/1/05, Callable 3/1/03 @ 102
1,045 1,045 Clark & Mobile County, Gas District, 5.60%, 12/1/17, Callable
12/1/06 @ 102, MBIA
9,500 9,500 Daphne, Special Care Facilities Financing Authority,
Presbyterian Retirement Corp., 7.30%, 8/15/18, Pre-refunded
8/15/01 @ 100
720 720 Decatur, Warrants, Series E, Limited GO, 5.10%, 8/1/05,
Callable 8/1/02 @ 102
760 760 Decatur, Warrants, Series E, Limited GO, 5.20%, 8/1/06,
Callable 8/1/02 @ 102
750 750 Decatur, Warrants, Series E, Limited GO, 5.25%, 8/1/08,
Callable 8/1/02 @ 102
780 780 Decatur, Warrants, Series E, Limited GO, 5.30%, 8/1/09,
Callable 8/1/02 @ 102
2,845 2,845 Florence, Warrants, Series A, GO, 4.65%, 9/1/03, MBIA
390 390 Florence, Warrants, Series A, GO, 4.35%, 12/1/07, FSA
405 405 Florence, Warrants, Series A, GO, 4.40%, 12/1/08
425 425 Florence, Warrants, Series A, GO, 4.50%, 12/1/09
445 445 Florence, Warrants, Series A, GO, 4.60%, 12/1/10, Callable
12/1/08 @ 102
790 790 Florence, Warrants, Series B, GO, 4.35%, 12/1/07, FSA
825 825 Florence, Warrants, Series B, GO, 4.40%, 12/1/08, FSA
865 865 Florence, Warrants, Series B, GO, 4.50%, 12/1/09, Callable
12/1/08 @ 102, FSA
900 900 Florence, Warrants, Series B, GO, 4.60%, 12/1/10, Callable
12/1/08 @ 102, FSA
4,700 4,700 Gadsden, East Alabama Medical Clinic Board, Baptist
Hospital of Gadsden, Inc., Series A, 7.80%, 11/1/21,
Pre-refunded 11/1/01 @ 102
5,450 5,450 Hoover, Warrants, GO, 4.50%, 3/1/13, Pre-refunded 3/1/03 @ 100
550 550 Huntsville Electric, 4.60%, 12/1/09, Callable 12/1/07 @ 102
660 660 Huntsville Electric, 4.70%, 12/1/10, Callable 12/1/07 @ 102
680 680 Huntsville Electric, 4.80%, 12/1/11, Callable 12/1/07 @ 102
3,120 3,120 Huntsville, Warrants, Series B, GO, 4.00%, 11/1/05
3,245 3,245 Huntsville, Warrants, Series B, GO, 4.00%, 11/1/06
3,380 3,380 Huntsville, Warrants, Series B, GO, 4.10%, 11/1/07
2,000 2,000 Huntsville, Water System, Warrants, 5.00%, 5/1/02, AMBAC
<CAPTION>
AMSOUTH MUNICIPAL BOND FUND
ISG MUNICIPAL INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
07/31/99
(UNAUDITED)
AMSOUTH ISG PRO FORMA
MUNICIPAL BOND MUNICIPAL INCOME COMBINED
MARKET MARKET MARKET
DESCRIPTION VALUE VALUE VALUE
- -------------------------------------------------------------------- --------------------- ------------------ --------------
<S> <C> <C> <C>
Birmingham, Capital Improvements, Series A, GO, 4.75%, 1,309 1,309
10/1/10, Callable 4/1/08 @ 102
Birmingham, Capital Improvements, Series A, GO, 4.85%, 1,396 1,396
10/1/11, Callable 4/1/08 @ 102
Birmingham, GO, 4.90%, 7/1/06 1,525 1,525
Birmingham, Industrial Water Board, Industrial Water 1,362 1,362
Supply, 5.50%, 3/1/06, Pre-refunded 3/1/05 @ 100
Birmingham, Industrial Water Board, Industrial Water 3,663 3,663
Supply, 6.20%, 7/1/08, Pre-refunded 1/1/07 @ 100
Birmingham, Industrial Water Board, Industrial Water 1,139 1,139
Supply, ETM, 5.30%, 3/1/04, Callable 3/1/03 @ 102
Birmingham, Industrial Water Board, Industrial Water 1,042 1,042
Supply, ETM, 5.40%, 3/1/05, Callable 3/1/03 @ 102
Clark & Mobile County, Gas District, 5.60%, 12/1/17, Callable 1,064 1,064
12/1/06 @ 102, MBIA
Daphne, Special Care Facilities Financing Authority, 10,071 10,071
Presbyterian Retirement Corp., 7.30%, 8/15/18, Pre-refunded
8/15/01 @ 100
Decatur, Warrants, Series E, Limited GO, 5.10%, 8/1/05, 738 738
Callable 8/1/02 @ 102
Decatur, Warrants, Series E, Limited GO, 5.20%, 8/1/06, 779 779
Callable 8/1/02 @ 102
Decatur, Warrants, Series E, Limited GO, 5.25%, 8/1/08, 763 763
Callable 8/1/02 @ 102
Decatur, Warrants, Series E, Limited GO, 5.30%, 8/1/09, 792 792
Callable 8/1/02 @ 102
Florence, Warrants, Series A, GO, 4.65%, 9/1/03, MBIA 2,879 2,879
Florence, Warrants, Series A, GO, 4.35%, 12/1/07, FSA 380 380
Florence, Warrants, Series A, GO, 4.40%, 12/1/08 392 392
Florence, Warrants, Series A, GO, 4.50%, 12/1/09 410 410
Florence, Warrants, Series A, GO, 4.60%, 12/1/10, Callable 428 428
12/1/08 @ 102
Florence, Warrants, Series B, GO, 4.35%, 12/1/07, FSA 769 769
Florence, Warrants, Series B, GO, 4.40%, 12/1/08, FSA 798 798
Florence, Warrants, Series B, GO, 4.50%, 12/1/09, Callable 834 834
12/1/08 @ 102, FSA
Florence, Warrants, Series B, GO, 4.60%, 12/1/10, Callable 865 865
12/1/08 @ 102, FSA
Gadsden, East Alabama Medical Clinic Board, Baptist 5,150 5,150
Hospital of Gadsden, Inc., Series A, 7.80%, 11/1/21,
Pre-refunded 11/1/01 @ 102
Hoover, Warrants, GO, 4.50%, 3/1/13, Pre-refunded 3/1/03 @ 100 5,016 5,016
Huntsville Electric, 4.60%, 12/1/09, Callable 12/1/07 @ 102 534 534
Huntsville Electric, 4.70%, 12/1/10, Callable 12/1/07 @ 102 639 639
Huntsville Electric, 4.80%, 12/1/11, Callable 12/1/07 @ 102 656 656
Huntsville, Warrants, Series B, GO, 4.00%, 11/1/05 3,026 3,026
Huntsville, Warrants, Series B, GO, 4.00%, 11/1/06 3,108 3,108
Huntsville, Warrants, Series B, GO, 4.10%, 11/1/07 3,218 3,218
Huntsville, Water System, Warrants, 5.00%, 5/1/02, AMBAC 2,042 2,042
</TABLE>
B-92
<PAGE> 470
<TABLE>
<CAPTION>
AMSOUTH MUNICIPAL BOND FUND
ISG MUNICIPAL INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
07/31/99
(UNAUDITED)
AMSOUTH ISG
MUNICIPAL MUNICIPAL PRO FORMA
BOND INCOME COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
------------------ ---------------- ---------------- ---------------------------------------------------------------
3,125 3,125 Huntsville, Water System, Warrants, 5.05%, 5/1/03, Callable
5/1/02 @ 102, AMBAC
1,000 1,000 Jefferson County Board of Education, Capital Outlay, 5.40%,
2/15/10, Callable 2/15/03 @ 102, AMBAC
4,000 4,000 Jefferson County, GO, 5.30%, 4/1/09, Pre-refunded 4/1/03 @ 102
2,400 2,400 Jefferson County, Sewer Revenue Warrants, 5.40%, 9/1/04,
Pre-refunded 3/1/03 @ 102.5, MBIA
5,000 5,000 Jefferson County, Warrants, GO, 5.00%, 4/1/04, Callable
4/1/03 @ 102
1,000 1,000 Jefferson Sewer, 6.00%, 9/1/13, Callable 9/1/02 @ 102
2,000 2,000 Mobile County Board of School Commissioners, Warrants,
Capital Outlay, 4.80%, 3/1/02, AMBAC
1,350 1,350 Mobile County, Series A, GO, 5.00%, 2/1/04, Callable 2/1/03
@ 102
1,000 1,000 Mobile County, Warrants, Series A, Limited GO, 5.00%,
2/1/04, Callable 2/1/03 @ 102
5,000 5,000 Mobile County, Warrants, Series A, Limited GO, 5.10%,
2/1/05, Callable 2/1/03 @ 102
1,630 1,630 Mobile, Warrants, GO, 6.50%, 2/15/05, AMBAC
1,685 1,685 Mobile, Warrants, GO, 6.50%, 2/15/06, AMBAC
2,700 2,700 Mobile, Warrants, GO, 4.85%, 2/15/09, Callable 2/15/00 @ 100
3,250 3,250 Mobile, Water & Sewer Commissioners, Water & Sewer
Revenue, 5.00%, 1/1/05, FGIC
1,500 1,500 Montgomery County, Warrants, GO, 5.00%, 11/1/04, Callable
11/1/04 @ 102
1,040 1,040 Montgomery, Warrants, Series A, GO, 5.00%, 5/1/05,
Callable 5/1/03 @ 102
1,000 1,000 Montgomery, Warrants, Series A, GO, 5.00%, 5/1/06,
Callable 5/1/03 @ 102
3,000 3,000 Montgomery, Waterworks & Sanitary Sewer Board, 5.50%,
9/1/08, Callable 9/1/06 @ 101, MBIA
1,000 1,000 Montgomery, Waterworks & Sanitary Sewer Board, Series B,
5.70%, 9/1/02
2,500 2,500 Montgomery, Waterworks & Sanitary Sewer Board, Series B,
6.25%, 9/1/08, Callable 9/1/02 @ 102
3,565 3,565 Montgomery, Waterworks & Sanitary Sewer Board, Series B,
6.30%, 9/1/10, Callable 9/1/02 @ 102
1,005 1,005 Shelby County, Warrants, Board of Education, Capital
Outlay, 4.80%, 2/1/10, Callable 2/1/09 @ 101, AMBAC
1,990 1,990 Shelby County, Warrants, Series A, 5.60%, 8/1/02, AMBAC
1,830 1,830 Shelby County, Warrants, Series A, 5.70%, 2/1/03, AMBAC
335 335 Talladega County, Industrial Development Board, Cyprus 1
Project, 9.75%, 12/1/13
740 740 Tuscaloosa County, Warrants, GO, 5.60%, 10/1/04
1,200 1,200 University Alabama General Fee, 4.60%, 6/1/09, Callable
6/1/07 @ 102, MBIA
1,300 1,300 University Alabama General Fee, 4.70%, 6/1/10, Callable
6/1/07 @ 102, MBIA
1,500 1,500 University Alabama General Fee, 4.75%, 6/1/11, Callable
6/1/07 @ 102, MBIA
2,185 2,185 University of South Alabama, University Revenues, Tuition,
4.70%, 11/15/08, Callable 5/15/06 @ 102, AMBAC
<CAPTION>
AMSOUTH MUNICIPAL BOND FUND
ISG MUNICIPAL INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
07/31/99
(UNAUDITED)
AMSOUTH ISG PRO FORMA
MUNICIPAL BOND MUNICIPAL INCOME COMBINED
MARKET MARKET MARKET
DESCRIPTION VALUE VALUE VALUE
------------------------------------------------------------------- ----------------- ---------------- --------------
<S> <C> <C> <C>
Huntsville, Water System, Warrants, 5.05%, 5/1/03, Callable 3,202 3,202
5/1/02 @ 102, AMBAC
Jefferson County Board of Education, Capital Outlay, 5.40%, 1,053 1,053
2/15/10, Callable 2/15/03 @ 102, AMBAC
Jefferson County, GO, 5.30%, 4/1/09, Pre-refunded 4/1/03 @ 102 4,070 4,070
Jefferson County, Sewer Revenue Warrants, 5.40%, 9/1/04, 2,539 2,539
Pre-refunded 3/1/03 @ 102.5, MBIA
Jefferson County, Warrants, GO, 5.00%, 4/1/04, Callable 5,119 5,119
4/1/03 @ 102
Jefferson Sewer, 6.00%, 9/1/13, Callable 9/1/02 @ 102 1,069 1,069
Mobile County Board of School Commissioners, Warrants, 2,030 2,030
Capital Outlay, 4.80%, 3/1/02, AMBAC
Mobile County, Series A, GO, 5.00%, 2/1/04, Callable 2/1/03 1,382 1,382
@ 102
Mobile County, Warrants, Series A, Limited GO, 5.00%, 1,024 1,024
2/1/04, Callable 2/1/03 @ 102
Mobile County, Warrants, Series A, Limited GO, 5.10%, 5,142 5,142
2/1/05, Callable 2/1/03 @ 102
Mobile, Warrants, GO, 6.50%, 2/15/05, AMBAC 1,782 1,782
Mobile, Warrants, GO, 6.50%, 2/15/06, AMBAC 1,857 1,857
Mobile, Warrants, GO, 4.85%, 2/15/09, Callable 2/15/00 @ 100 2,662 2,662
Mobile, Water & Sewer Commissioners, Water & Sewer 3,327 3,327
Revenue, 5.00%, 1/1/05, FGIC
Montgomery County, Warrants, GO, 5.00%, 11/1/04, Callable 1,539 1,539
11/1/04 @ 102
Montgomery, Warrants, Series A, GO, 5.00%, 5/1/05, 1,066 1,066
Callable 5/1/03 @ 102
Montgomery, Warrants, Series A, GO, 5.00%, 5/1/06, 1,019 1,019
Callable 5/1/03 @ 102
Montgomery, Waterworks & Sanitary Sewer Board, 5.50%, 3,135 3,135
9/1/08, Callable 9/1/06 @ 101, MBIA
Montgomery, Waterworks & Sanitary Sewer Board, Series B, 1,041 1,041
5.70%, 9/1/02
Montgomery, Waterworks & Sanitary Sewer Board, Series B, 2,667 2,667
6.25%, 9/1/08, Callable 9/1/02 @ 102
Montgomery, Waterworks & Sanitary Sewer Board, Series B, 3,808 3,808
6.30%, 9/1/10, Callable 9/1/02 @ 102
Shelby County, Warrants, Board of Education, Capital 986 986
Outlay, 4.80%, 2/1/10, Callable 2/1/09 @ 101, AMBAC
Shelby County, Warrants, Series A, 5.60%, 8/1/02, AMBAC 2,070 2,070
Shelby County, Warrants, Series A, 5.70%, 2/1/03, AMBAC 1,912 1,912
Talladega County, Industrial Development Board, Cyprus 1 336 336
Project, 9.75%, 12/1/13
Tuscaloosa County, Warrants, GO, 5.60%, 10/1/04 780 780
University Alabama General Fee, 4.60%, 6/1/09, Callable 1,171 1,171
6/1/07 @ 102, MBIA
University Alabama General Fee, 4.70%, 6/1/10, Callable 1,265 1,265
6/1/07 @ 102, MBIA
University Alabama General Fee, 4.75%, 6/1/11, Callable 1,450 1,450
6/1/07 @ 102, MBIA
University of South Alabama, University Revenues, Tuition, 2,163 2,163
4.70%, 11/15/08, Callable 5/15/06 @ 102, AMBAC
----------------- ---------------- --------------
183,221 1,069 184,290
----------------- ---------------- --------------
</TABLE>
B-93
<PAGE> 471
<TABLE>
<CAPTION>
AMSOUTH MUNICIPAL BOND FUND
ISG MUNICIPAL INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
07/31/99
(UNAUDITED)
AMSOUTH ISG
MUNICIPAL MUNICIPAL PRO FORMA
BOND INCOME COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
----------------- ---------------- ---------------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
ARKANSAS (0.2%):
1,400 1,400 Arkansas State Capital Appreciation, College Savings,
Series C, GO, 0.00%, 6/1/11
CALIFORNIA (2.4%):
1,285 1,285 California State, 7.00%, 10/1/09, GO
2,655 2,655 Los Angeles County Metro Transit Authority Sales Tax
Revenues, Series A, 6.00%, 7/1/09
4,765 4,765 San Mateo County, Transit District Sales Tax Revenue,
Series A, 5.25%, 6/1/16, Callable 6/1/09 @ 101, FSA
FLORIDA (5.6%):
1,760 1,760 Dade County, Series DD, 7.70%, 10/1/08, AMBAC
1,000 1,000 Dade County, Series DD, 7.70%, 10/1/12, AMBAC
1,150 1,150 Escambia County, Utilities Authority Revenue, Series D,
5.00%, 1/1/04, FGIC
2,000 2,000 Escambia County, Utilities Authority Revenue, Series D,
5.00%, 1/1/05, FGIC
6,500 6,500 Florida State Board of Education, Capital Outlay, Series A,
GO, 5.00%, 6/1/08
8,070 8,070 Reedy Creek, Improvement District, Series 1, 5.50%, 10/1/08,
Callable 10/1/07 @ 101, AMBAC
GEORGIA (2.1%):
1,000 1,000 Georgia Municipal Gas Authority, 4.50%, 9/1/06, Gas
Revenue Gas Portfolio Ii PJ - Series B
2,350 2,350 Georgia State, Series A, GO, 6.25%, 4/1/08
2,500 2,500 Georgia State, Series B, 7.20%, 3/1/06
1,500 1,500 Savannah Hospital Authority Revenue, St. Josephs Hospital
Project, 6.20%, 7/1/23, Callable 7/1/03 @ 102
HAWAII (0.3%):
270 270 Honolulu City & County Prerefunded, Series B, 5.50%,
10/1/11, GO
730 730 Honolulu City & County Unrefunded Balance, Series B,
5.50%, 10/1/11, GO
ILLINOIS (1.6%):
1,830 1,830 Chicago Metropolitan Water Reclamation District, Greater
Chicago Capital Improvements, 6.90%, 1/1/07
2,830 2,830 Illinois Educational Facilities Authority Revenue, Loyola
University, Series A, 6.10%, 7/1/15, Pre-Refunded 7/1/03 @
102
3,000 3,000 Will County Forest Preservation District,, Series B, 0.00%,
12/1/18, GO, FGIC
KENTUCKY (0.5%):
2,000 2,000 Carrollton & Henderson, 5.00%, 1/1/09, Public Energy
Authority Gas Revenue
MICHIGAN (2.5%):
1,000 1,000 Battle Creek Downtown Development Authority, 7.30%,
5/1/10, Prerefunded 5/1/07 @ 102
7,000 7,000 Municipal Bond Authority Revenue, 5.00%, 12/1/05
1,500 1,500 Rochester Community School District, 5.00%, 5/1/19, GO,
MBIA, Q-SBLF
<CAPTION>
AMSOUTH MUNICIPAL BOND FUND
ISG MUNICIPAL INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
07/31/99
(UNAUDITED)
AMSOUTH ISG PRO FORMA
MUNICIPAL BOND MUNICIPAL INCOME COMBINED
MARKET MARKET MARKET
DESCRIPTION VALUE VALUE VALUE
- ------------------------------------------------------------------------------------ -------------------- ----------------
<S> <C> <C> <C>
Arkansas State Capital Appreciation, College Savings, - 774 774
Series C, GO, 0.00%, 6/1/11
-------------------- -------------------- ----------------
California State, 7.00%, 10/1/09, GO 1,513 1,513
Los Angeles County Metro Transit Authority Sales Tax 2,907 2,907
Revenues, Series A, 6.00%, 7/1/09
San Mateo County, Transit District Sales Tax Revenue, 4,744 4,744
Series A, 5.25%, 6/1/16, Callable 6/1/09 @ 101, FSA
-------------------- -------------------- ----------------
4,744 4,420 9,164
-------------------- -------------------- ----------------
Dade County, Series DD, 7.70%, 10/1/08, AMBAC 2,125 2,125
Dade County, Series DD, 7.70%, 10/1/12, AMBAC 1,256 1,256
Escambia County, Utilities Authority Revenue, Series D, 1,179 1,179
5.00%, 1/1/04, FGIC
Escambia County, Utilities Authority Revenue, Series D, 2,051 2,051
5.00%, 1/1/05, FGIC
Florida State Board of Education, Capital Outlay, Series A, 6,606 6,606
GO, 5.00%, 6/1/08
Reedy Creek, Improvement District, Series 1, 5.50%, 10/1/08, 8,510 8,510
Callable 10/1/07 @ 101, AMBAC
-------------------- -------------------- ----------------
18,346 3,381 21,727
-------------------- -------------------- ----------------
Georgia Municipal Gas Authority, 4.50%, 9/1/06, Gas 993 993
Revenue Gas Portfolio Ii PJ - Series B
Georgia State, Series A, GO, 6.25%, 4/1/08 2,606 2,606
Georgia State, Series B, 7.20%, 3/1/06 2,865 2,865
Savannah Hospital Authority Revenue, St. Josephs Hospital 1,624 1,624
Project, 6.20%, 7/1/23, Callable 7/1/03 @ 102
-------------------- -------------------- ----------------
- 8,088 8,088
-------------------- -------------------- ----------------
Honolulu City & County Prerefunded, Series B, 5.50%, 283 283
10/1/11, GO
Honolulu City & County Unrefunded Balance, Series B, 754 754
5.50%, 10/1/11, GO
-------------------- -------------------- ----------------
- 1,037 1,037
-------------------- -------------------- ----------------
Chicago Metropolitan Water Reclamation District, Greater 2,070 2,070
Chicago Capital Improvements, 6.90%, 1/1/07
Illinois Educational Facilities Authority Revenue, Loyola 3,051 3,051
University, Series A, 6.10%, 7/1/15, Pre-Refunded 7/1/03 @
102
Will County Forest Preservation District,, Series B, 0.00%, 1,024 1,024
12/1/18, GO, FGIC
-------------------- -------------------- ----------------
- 6,145 6,145
-------------------- -------------------- ----------------
Carrollton & Henderson, 5.00%, 1/1/09, Public Energy - 2,018 2,018
-------------------- -------------------- ----------------
Authority Gas Revenue
Battle Creek Downtown Development Authority, 7.30%, 1,136 1,136
5/1/10, Prerefunded 5/1/07 @ 102
Municipal Bond Authority Revenue, 5.00%, 12/1/05 7,191 7,191
Rochester Community School District, 5.00%, 5/1/19, GO, 1,438 1,438
MBIA, Q-SBLF
-------------------- -------------------- ----------------
7,191 2,574 9,765
-------------------- -------------------- ----------------
</TABLE>
B-94
<PAGE> 472
<TABLE>
<CAPTION>
AMSOUTH MUNICIPAL BOND FUND
ISG MUNICIPAL INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
07/31/99
(UNAUDITED)
AMSOUTH ISG
MUNICIPAL MUNICIPAL PRO FORMA
BOND INCOME COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
------------------ -------------- --------------- -----------------------------------------------------------
<S> <C> <C> <C> <C>
MINNESOTA (0.6%):
2,175 2,175 Centennial Independent School District, No. 12, Series A,
GO, 5.60%, 2/1/07, MBIA
MISSISSIPPI (1.2%):
1,000 1,000 Hinds County Refunding Bonds, 5.50%, 3/1/08, GO, MBIA
1,430 1,430 Jackson Mississippi Water & Sewer Revenue, 5.13%,
9/1/14, Callable @ 100 9/1/09
2,000 2,000 Mississippi State, Capital Improvements, Series A, GO,
5.20%, 8/1/11, Callable 8/1/03 @ 100
MISSOURI (2.0%):
7,535 7,535 Missouri State, Water Pollution, Series B, GO, 5.00%,
8/1/07, Callable 8/1/03 @ 102
NEW JERSEY (0.4%):
1,605 1,605 New Jersey Health Care, Cathedral Health Services, 5.50%,
2/1/11, MBIA
NEW YORK (1.8%):
1,150 1,150 Hempstead Town, GO, 5.00%, 2/15/09, Callable 2/15/06 @
102
1,500 1,500 Municipal Assistance Corp. for New York City, GO, 6.00%,
7/1/05
1,225 1,225 New York State Dorm Authority, New York University, Series
A, 5.75%, 7/1/13, MBIA
2,500 2,500 New York State Environmental Facilities Corp., Pollution
Control Revenue, Series E, 6.00%, 6/15/12
NORTH CAROLINA (1.9%):
355 355 Durham, Water & Sewer Revenue, 4.60%, 6/1/05
675 675 Durham, Water & Sewer Revenue, 4.60%, 6/1/06
555 555 Durham, Water & Sewer Revenue, 4.60%, 6/1/07
765 765 Durham, Water & Sewer Revenue, 4.60%, 6/1/08
5,000 5,000 North Carolina State, Series A, GO, 4.75%, 4/1/09, Callable
4/1/08 @ 100.5
OKLAHOMA (0.4%):
1,530 1,530 Moore Oklahoma Refunding, 5.75%, 4/1/12, GO, MBIA
OREGON (2.0%):
2,365 2,365 Salem, GO, 4.45%, 12/1/10, Callable 6/1/09 @ 100, FSA
5,285 5,285 Washington County, Criminal Justice Facilities, GO, 5.00%,
12/1/09, Callable 12/1/07 @ 100
PENNSYLVANIA (1.3%):
1,500 1,500 Bethlehem Area School District, 6.00%, 3/1/16, Prerefunded
3/1/06 @100, MBIA
3,075 3,075 Pennsylvania Convention Center Authority Revenue, Series
A, 6.70%, 9/1/16, FGIC
RHODE ISLAND (0.3%):
1,000 1,000 Rhode Island Port Authority & Economic Development Corp.,
Shepard Building Project, Series B, 6.75%, 6/1/25,
Prerefunded 6/1/04 @ 102, AMBAC
SOUTH CAROLINA (2.4%):
5,525 5,525 Beaufort County School District, Series B, GO, 4.10%,
2/1/09, Callable 2/1/07 @ 101, SCSDE
4,325 4,325 Beaufort County School District, Series B, GO, 4.90%,
3/1/09, Callable 3/1/05 @ 101
<CAPTION>
AMSOUTH ISG PRO FORMA
MUNICIPAL BOND MUNICIPAL INCOME COMBINED
MARKET MARKET MARKET
DESCRIPTION VALUE VALUE VALUE
---------------------------------------------------------------------------------------- ------------------ --------------
Centennial Independent School District, No. 12, Series A, 2,296 - 2,296
------------------ ------------------ --------------
GO, 5.60%, 2/1/07, MBIA
Hinds County Refunding Bonds, 5.50%, 3/1/08, GO, MBIA 1,048 1,048
Jackson Mississippi Water & Sewer Revenue, 5.13%, 1,412 1,412
9/1/14, Callable @ 100 9/1/09
Mississippi State, Capital Improvements, Series A, GO, 2,007 2,007
5.20%, 8/1/11, Callable 8/1/03 @ 100
------------------ ------------------ --------------
2,007 2,460 4,467
------------------ ------------------ --------------
Missouri State, Water Pollution, Series B, GO, 5.00%, 7,699 - 7,699
------------------ ------------------ --------------
8/1/07, Callable 8/1/03 @ 102
New Jersey Health Care, Cathedral Health Services, 5.50%, - 1,663 1,663
------------------ ------------------ --------------
2/1/11, MBIA
Hempstead Town, GO, 5.00%, 2/15/09, Callable 2/15/06 @ 1,163 1,163
102
Municipal Assistance Corp. for New York City, GO, 6.00%, 1,615 1,615
7/1/05
New York State Dorm Authority, New York University, Series 1,306 1,306
A, 5.75%, 7/1/13, MBIA
New York State Environmental Facilities Corp., Pollution 2,731 2,731
Control Revenue, Series E, 6.00%, 6/15/12
------------------ ------------------ --------------
2,778 4,037 6,815
------------------ ------------------ --------------
Durham, Water & Sewer Revenue, 4.60%, 6/1/05 357 357
Durham, Water & Sewer Revenue, 4.60%, 6/1/06 676 676
Durham, Water & Sewer Revenue, 4.60%, 6/1/07 552 552
Durham, Water & Sewer Revenue, 4.60%, 6/1/08 754 754
North Carolina State, Series A, GO, 4.75%, 4/1/09, Callable 4,988 4,988
4/1/08 @ 100.5
------------------ ------------------ --------------
7,327 - 7,327
------------------ ------------------ --------------
Moore Oklahoma Refunding, 5.75%, 4/1/12, GO, MBIA - 1,635 1,635
------------------ ------------------ --------------
Salem, GO, 4.45%, 12/1/10, Callable 6/1/09 @ 100, FSA 2,247 2,247
Washington County, Criminal Justice Facilities, GO, 5.00%, 5,331 5,331
12/1/09, Callable 12/1/07 @ 100
------------------ ------------------ --------------
7,578 - 7,578
------------------ ------------------ --------------
Bethlehem Area School District, 6.00%, 3/1/16, Prerefunded 1,618 1,618
3/1/06 @100, MBIA
Pennsylvania Convention Center Authority Revenue, Series 3,540 3,540
A, 6.70%, 9/1/16, FGIC
------------------ ------------------ --------------
- 5,158 5,158
------------------ ------------------ --------------
- 1,115 1,115
------------------ ------------------ --------------
Rhode Island Port Authority & Economic Development Corp.,
Shepard Building Project, Series B, 6.75%, 6/1/25, Prerefunded
6/1/04 @ 102, AMBAC
Beaufort County School District, Series B, GO, 4.10%, 5,151 5,151
2/1/09, Callable 2/1/07 @ 101, SCSDE
Beaufort County School District, Series B, GO, 4.90%, 4,325 4,325
3/1/09, Callable 3/1/05 @ 101
------------------ ------------------ --------------
9,476 - 9,476
------------------ ------------------ --------------
</TABLE>
B-95
<PAGE> 473
<TABLE>
<CAPTION>
AMSOUTH MUNICIPAL BOND FUND
ISG MUNICIPAL INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
07/31/99
(UNAUDITED)
AMSOUTH ISG
MUNICIPAL MUNICIPAL PRO FORMA
BOND INCOME COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
------------------ ------------ --------------- -------------------------------------------------------------
TENNESSEE (4.3%):
2,000 2,000 Jackson, Improvements, 5.00%, 3/1/10, Pre-refunded 3/1/05
@102
2,500 2,500 Metropolitan Government Nashville & Davidson, 5.50%,
5/15/08, County, Tn Electric Revenue Refunded, Series B
1,000 1,000 Metropolitan Government Nashville & Davidson, Industrial
Development Board Revenue, 7.50%, 11/15/10, Prerefunded
5/15/10 @ 100
3,000 3,000 Metropolitan Government, Nashville & Davidson County, GO,
5.25%, 5/15/06
1,000 1,000 Metropolitan Nashville & Davidson County, Industrial
Development Board Revenue, Multi-family Housing, Arbor,
Series C, 7.50%, 11/15/12, Callable 5/15/12 @ 100
1,000 1,000 Montgomery County, GO, 5.25%, 5/1/08, FSA
5,495 5,495 Tennessee State, Series B, GO, 4.60%, 5/1/07, Callable
5/1/06 @ 100
TEXAS (7.0%):
1,000 1,000 Austin Utility Systems Revenue Combined, Series A, 9.50%,
5/15/15, Prerefunded 5/15/00 @ 100
3,000 3,000 Dallas County, Series A, GO, 5.25%, 8/15/09
1,000 1,000 Harris County Housing Financial Corp., Multi-Family Housing
Revenue, Breton Mill Partners, 7.00%, 3/1/07, Prerefunded
2/15/07 @ 100
1,000 1,000 Lubbock Health Facilities Development Hospital Revenue,
Methodist Hospital, Series B, 6.75%, 12/1/10
4,000 4,000 Mesquite Independent School District, Series A, GO, 4.70%,
8/15/08, Callable 8/15/07 @ 100
1,600 1,600 North Central Health Facilities Development Corp., Baylor
Health Care System, 6.25%, 5/15/10
1,000 1,000 Richardson Independent School District, Series C, 4.75%,
2/15/22, Callable 2/15/08 @ 100
5,000 5,000 Texas State, Series B, GO, 5.25%, 10/1/08, Callable 10/1/03
@ 100
3,575 3,575 University of Texas, 4.60%, 7/1/08, Callable 7/1/06 @ 100
5,455 5,455 University of Texas, Series B, 4.25%, 8/15/09, Callable
8/15/07 @ 100
1,000 1,000 Whitehouse Texas Independent School District, GO, 4.80%,
2/15/12, Callable 2/15/08 @ 100
UTAH (3.8%):
4,805 4,805 Davis County, School District, GO, 4.38%, 6/1/08, School
Board Guaranty
3,810 3,810 Jordan School District, GO, 4.80%, 6/15/08, Callable 6/15/07
@ 100
6,000 6,000 Utah State, GO, Series F, 5.50%, 7/1/07
VIRGINIA (2.8%):
2,000 2,000 Virginia College Building Authority, Series A, 5.00%, 9/1/12,
Callable 9/1/07 @ 101
5,000 5,000 Virginia State, GO, 5.00%, 6/1/08, Callable 6/1/07 @ 100
3,500 3,500 Virginia State, Public School Authority, Series S, 5.25%,
8/1/09
WASHINGTON (2.2%):
1,675 1,675 Seattle, Series A GO, 5.50%, 3/1/09
6,500 6,500 Washington State, GO, 5.75%, 9/1/08
<CAPTION>
AMSOUTH ISG PRO FORMA
MUNICIPAL BOND MUNICIPAL INCOME COMBINED
MARKET MARKET MARKET
DESCRIPTION VALUE VALUE VALUE
------------------------------------------------------------------------------------------ ----------------- ---------------
<S> <C> <C> <C>
Jackson, Improvements, 5.00%, 3/1/10, Pre-refunded 3/1/05 1,997 1,997
@102
Metropolitan Government Nashville & Davidson, 5.50%, 2,625 2,625
5/15/08, County, Tn Electric Revenue Refunded, Series B
Metropolitan Government Nashville & Davidson, Industrial 1,211 1,211
Development Board Revenue, 7.50%, 11/15/10, Prerefunded
5/15/10 @ 100
Metropolitan Government, Nashville & Davidson County, GO, 3,118 3,118
5.25%, 5/15/06
Metropolitan Nashville & Davidson County, Industrial 1,229 1,229
Development Board Revenue, Multi-family Housing, Arbor,
Series C, 7.50%, 11/15/12, Callable 5/15/12 @ 100
Montgomery County, GO, 5.25%, 5/1/08, FSA 1,035 1,035
Tennessee State, Series B, GO, 4.60%, 5/1/07, Callable 5,487 5,487
5/1/06 @ 100
----------------- ----------------- ---------------
10,602 6,100 16,702
----------------- ----------------- ---------------
Austin Utility Systems Revenue Combined, Series A, 9.50%, 1,045 1,045
5/15/15, Prerefunded 5/15/00 @ 100
Dallas County, Series A, GO, 5.25%, 8/15/09 3,080 3,080
Harris County Housing Financial Corp., Multi-Family Housing 1,145 1,145
Revenue, Breton Mill Partners, 7.00%, 3/1/07, Prerefunded
2/15/07 @ 100
Lubbock Health Facilities Development Hospital Revenue, 1,151 1,151
Methodist Hospital, Series B, 6.75%, 12/1/10
Mesquite Independent School District, Series A, GO, 4.70%, 3,967 3,967
8/15/08, Callable 8/15/07 @ 100
North Central Health Facilities Development Corp., Baylor 1,734 1,734
Health Care System, 6.25%, 5/15/10
Richardson Independent School District, Series C, 4.75%, 894 894
2/15/22, Callable 2/15/08 @ 100
Texas State, Series B, GO, 5.25%, 10/1/08, Callable 10/1/03 5,082 5,082
@ 100
University of Texas, 4.60%, 7/1/08, Callable 7/1/06 @ 100 3,534 3,534
University of Texas, Series B, 4.25%, 8/15/09, Callable 5,143 5,143
8/15/07 @ 100
Whitehouse Texas Independent School District, GO, 4.80%, 956 956
2/15/12, Callable 2/15/08 @ 100
----------------- ----------------- ---------------
21,762 5,969 27,731
----------------- ----------------- ---------------
Davis County, School District, GO, 4.38%, 6/1/08, School 4,662 4,662
Board Guaranty
Jordan School District, GO, 4.80%, 6/15/08, Callable 6/15/07 3,817 3,817
@ 100
Utah State, GO, Series F, 5.50%, 7/1/07 6,343 6,343
----------------- ----------------- ---------------
14,822 - 14,822
----------------- ----------------- ---------------
Virginia College Building Authority, Series A, 5.00%, 9/1/12, 1,975 1,975
Callable 9/1/07 @ 101
Virginia State, GO, 5.00%, 6/1/08, Callable 6/1/07 @ 100 5,110 5,110
Virginia State, Public School Authority, Series S, 5.25%, 3,613 3,613
8/1/09
----------------- ----------------- ---------------
10,698 - 10,698
----------------- ----------------- ---------------
Seattle, Series A GO, 5.50%, 3/1/09 1,750 1,750
Washington State, GO, 5.75%, 9/1/08 6,930 6,930
----------------- ----------------- ---------------
6,930 1,750 8,680
----------------- ----------------- ---------------
</TABLE>
B-96
<PAGE> 474
<TABLE>
<CAPTION>
AMSOUTH MUNICIPAL BOND FUND
ISG MUNICIPAL INCOME FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
07/31/99
(UNAUDITED)
AMSOUTH ISG
MUNICIPAL MUNICIPAL PRO FORMA
BOND INCOME COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
------------------ ---------------- ---------------------- -----------------------------------------------------------
<S> <C> <C> <C>
WISCONSIN (0.7%):
2,420 2,420 Wisconsin State Health & Educational Facilities Authority
Revenue, Wheaton Franciscan Services, Inc., 6.10%,
8/15/09, MBIA
INVESTMENT COMPANIES (2.3%):
2,375,454 2,375,454 Aim Tax Free Money Market
67,559 67,559 Dreyfus Tax Free Money Market
33,471 33,471 Federated Tax-Free Fund
6,367,832 6,367,832 Goldman Sachs Tax-Free Fund
<CAPTION>
AMSOUTH ISG PRO FORMA
MUNICIPAL BOND MUNICIPAL INCOME COMBINED
MARKET MARKET MARKET
DESCRIPTION VALUE VALUE VALUE
--------------------------------------------------------------------------------------- ---------------- --------------
<S> <C> <C> <C>
Wisconsin State Health & Educational - 2,653 2,653
Facilities Authority Revenue, Wheaton ---------------- ---------------- --------------
Franciscan Services, Inc., 6.10%,
8/15/09, MBIA
---------------- ---------------- --------------
TOTAL MUNICIPAL BONDS $317,477 $ 62,046 $379,523
---------------- ---------------- --------------
Aim Tax Free Money Market 2,375 2,375
Dreyfus Tax Free Money Market 68 68
Federated Tax-Free Fund 33 33
Goldman Sachs Tax-Free Fund 6,368 6,368
---------------- ---------------- --------------
TOTAL INVESTMENT COMPANIES $ 6,401 $ 2,443 $ 8,844
---------------- ---------------- --------------
---------------- ---------------- --------------
TOTAL (COST $387,970) (a) $323,878 $ 64,489 $388,367
---------------- ---------------- --------------
<FN>
------------
PERCENTAGES INDICATED ARE BASED ON NET ASSETS OF $388,135
(a) Represents cost for federal income
tax and financial reporting purposes
and differs from value by net unrealized
appreciation of securities as follows:
Unrealized appreciation 5,258
Unrealized depreciation (4,861)
----------------
Net unrealized appreciation 397
================
AMBAC - Insured by AMBAC Indemnity Corp.
ETM - Escrowed to Maturity
FGIC - Insured by Financial Guaranty Insurance Corp.
FSA - Insured by Financial Security Assurance
GO - General Obligation
MBIA - Insured by Municipal Bond Insurance Assoc.
SCSDE - South Carolina School District Enhancement
Q-SBLF - Qualified School Bond Loan Fund
</TABLE>
B-97
<PAGE> 475
<TABLE>
<CAPTION>
AMSOUTH PRIME MONEY MARKET FUND
ISG PRIME MONEY MARKET FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
7/31/99
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
AMSOUTH ISG PRO FORMA
PRIME PRIME PRO FORMA COMBINED
MONEY MARKET MONEY MARKET ADJUSTMENTS (NOTE 1)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities, at amortized cost $ 582,351 $ 574,097 $ -- $ 1,156,448
Repurchase agreements 92,189 30,778 -- 122,967
------------ ------------ ------------ ------------
Total Investments 674,540 604,875 -- 1,279,415
Interest and dividends receivable 1,515 1,356 -- 2,871
Receivable for capital shares issued -- 423 -- 423
Receivable from investment advisor -- 21 -- 21
Other assets 33 65 -- 98
============ ============ ============ ============
TOTAL ASSETS 676,088 606,740 -- 1,282,828
============ ============ ============ ============
LIABILITIES:
Distributions payable 2,540 1,912 -- 4,452
Accrued expenses and other payables:
Advisory fees 233 108 -- 341
Administration fees 15 7 -- 22
Distribution fees 12 96 -- 108
Accounting fees 2 -- -- 2
Transfer agent fees 16 -- -- 16
Custodian fees 7 16 -- 23
Other 62 47 -- 109
------------ ------------ ------------ ------------
TOTAL LIABILITIES 2,887 2,186 -- 5,073
============ ============ ============ ============
NET ASSETS:
Class A Shares 136,078 466,274 -- 602,352
Class B Shares 224 196 -- 420
Institutional Shares 536,899 138,084 -- 674,983
------------ ------------ ------------ ------------
$ 673,201 $ 604,554 -- $ 1,277,755
============ ============ ============ ============
CAPITAL SHARES OUTSTANDING
Class A Shares 136,085 466,314 -- 602,399
Class B Shares 224 196 -- 420
Institutional Shares 536,913 138,101 -- 675,014
------------ ------------ ------------ ------------
$ 673,222 $ 604,611 -- $ 1,277,833
============ ============ ============ ============
Net Asset Value - offering price and
redemption price per share
Class A Shares $ 1.00 $ 1.00 $ 1.00
============ ============ ============
Class B Shares* $ 1.00 $ 1.00 $ 1.00
============ ============ ============
Institutional Shares $ 1.00 $ 1.00 $ 1.00
============ ============ ============
COMPOSITION OF NET ASSETS
Capital 673,208 604,611 -- 1,277,819
Undistributed net realized gains (losses)
from investments (7) (57) -- (64)
------------ ------------ ------------ ------------
NET ASSETS, JULY 31, 1999 $ 673,201 $ 604,554 -- $ 1,277,755
============ ============ ============ ============
* Redemption price per share varies by length of time shares are held.
</TABLE>
B-98
<PAGE> 476
AMSOUTH PRIME MONEY MARKET FUND
ISG PRIME MONEY MARKET FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
7/31/99
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
PRIME PRIME MONEY PRO FORMA COMBINED
MONEY MARKET MARKET ADJUSTMENTS (NOTE 1)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $ 35,908 $ 16,703 $ -- $ 52,611
------------ ------------ ------------ ------------
35,908 16,703 -- 52,611
------------ ------------ ------------ ------------
EXPENSES:
Advisory fees 2,765 820 492 (a) 4,077
Administration fees 1,383 328 328 (b) 2,039
Shareholder servicing fees (Class A Shares) 336 583 1 (c) 920
Shareholder servicing fees (Class B Shares) -- 1 - (d) 1
Shareholder servicing fees (Institutional Shares) -- 98 879 (e) 977
12b-1 fees (B Shares) 1 2 - (f) 3
Accounting fees 230 46 (248)(g) 28
Transfer agent fees 171 53 (39)(h) 185
Custodian fees 41 74 165 (i) 280
Trustee fees and expenses 15 10 (10)(j) 15
Registration and filing fees 31 70 (24)(k) 77
Other expenses 138 143 (131)(k) 150
------------ ------------ ------------ ------------
TOTAL EXPENSES: 5,111 2,228 1,413 8,752
Less Waivers
Advisory fees -- -- -- --
Administration fees -- -- -- --
12b-1 fees (Class A Shares) -- -- -- --
Shareholder servicing fees (Class A Shares) (202) -- 202 (c) --
Accounting fees (20) -- 20 (g) --
Transfer agent fees (30) -- 30 (h) --
Reimbursement -- (74) 74 (l) --
------------ ------------ ------------ ------------
NET EXPENSES: 4,859 2,154 1,739 8,752
------------ ------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) 31,049 14,549 (1,739) 43,859
------------ ------------ ------------ ------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains (losses) from investment
transactions 2 (53) -- (51)
------------ ------------ ------------ ------------
Net realized/unrealized gains (losses) from investments 2 (53) -- (51)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS: $ 31,051 $ 14,496 $ (1,739) $ 43,808
============ ============ ============ ============
</TABLE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(a) Adjustment to reflect the AmSouth contractual fee structure for Advisory
fees (0.40% of net assets).
(b) Adjustment to reflect the AmSouth contractual fee structure for
Administration fees (0.20% of net assets).
(c) Adjustment to reflect the AmSouth contractual fee structure for Shareholder
Servicing fees (0.25% of Class A net assets).
(d) Adjustment to reflect the AmSouth contractual fee structure for Shareholder
Servicing fees (0.25% of Class B net assets).
(e) Adjustment to reflect the AmSouth contractual fee structure for Shareholder
Servicing fees (0.15% of Institutional net assets).
(f) Adjustment to reflect the AmSouth contractual fee structure for 12b-1 fees
(0.75% of Class B net assets).
(g) Adjustment to reflect the AmSouth contractual fee structure for Accounting
fees ($10,000 a year per additional class + OOP).
(h) Adjustment to reflect the AmSouth contractual fee structure for Transfer
agent fees (0.015% of net assets + $10,000 a year per class + OOP).
(i) Adjustment to reflect the AmSouth contractual fee structure for Custodian
fees (0.0275% of net assets).
(j) Adjustment to reflect the AmSouth contractual fee structure.
(k) Reduction reflects expected savings when the two funds merge.
(l) Adjustment to reflect the AmSouth contractual fee structure.
B-99
<PAGE> 477
AMSOUTH PRIME MONEY MARKET FUND
ISG PRIME MONEY MARKET FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
7/31/99
(AMOUNTS IN THOUSANDS, EXCEPT SHARES)
(UNAUDITED)
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
PRIME MONEY MARKET PRIME COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
- -------------------- ------------- ------------- ----------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER-FOREIGN (b) (10.1%):
BANKING (8.5%):
20,000 20,000 Bank Austria, 5.08%, 10/01/99
19,000 19,000 Banque Generale du Luxembourg, S.A., 5.01%, 8/13/99
22,000 22,000 Bayer Hypo Vereinsbank, 5.05%, 09/24/99
19,000 19,000 Bayerische Landesbank NY, 4.98%, 9/13/99
20,000 20,000 Rabobank Nederland NV, 5.10%, 9/28/99
10,000 10,000 Toronto Dominion Holdings, 5.01%, 12/7/99
FINANCIAL SERVICES (0.8%):
10,000 10,000 Island Finance Puerto Rico, 5.13%, 10/18/99
FOOD PRODUCTS & SERVICES (0.8%):
10,000 10,000 Canadian Wheat Board, 4.74%, 8/20/99
TOTAL COMMERCIAL PAPER-FOREIGN
CERTIFICATES OF DEPOSIT (2.0%):
BANKING (2.0%):
10,000 10,000 BankAmerica, 5.24%, 9/24/99
10,000 10,000 Canadian Imperial Bank of Commerce, 5.01%, 2/7/00
5,000 5,000 Harris Trust, 5.05%, 2/14/00
TOTAL CERTIFICATES OF DEPOSIT
CORPORATE BONDS (2.0%):
BROKERAGE SERVICES (0.8%):
5,000 5,000 Bear Stearns & Co., Inc., 6.50%, 7/5/00
5,000 5,000 Morgan Stanley Dean Witter, 5.89%, 3/20/00
ELECTRIC UTILITY (0.4%):
5,000 5,000 Alabama Power Co., 6.00%, 3/1/00
FINANCIAL SERVICES (0.4%):
5,000 5,000 American General Finance Corp., 7.25%, 4/15/00
FOOD PRODUCTS & SERVICES (0.4%):
5,000 5,000 Diagio PLC, 6.50%, 9/15/99
TOTAL CORPORATE BONDS
FLOATING RATE FUNDING AGREEMENTS (2.9%):
INSURANCE (2.9%):
12,000 12,000 General American Life Insurance Co., 5.31%*, 9/1/99**
12,500 12,500 Monumental Life Insurance Co., 5.40%*, 9/1/99**
12,500 12,500 Monumental Life Insurance Co., 5.45%*, 9/1/99**
TOTAL FLOATING RATE FUNDING AGREEMENTS
</TABLE>
<TABLE>
<CAPTION>
AMSOUTH
PRIME ISG PRO FORMA
OBLIGATIONS PRIME COMBINED
AMORTIZED AMORTIZED AMORTIZED
DESCRIPTION COST COST COST
- ----------------------------------------------------------------------- ----------- ----------
<S> <C> <C> <C>
Bank Austria, 5.08%, 10/01/99 $ 19,828 $ 19,828
Banque Generale du Luxembourg, S.A., 5.01%, 8/13/99 18,968 18,968
Bayer Hypo Vereinsbank, 5.05%, 09/24/99 21,833 21,833
Bayerische Landesbank NY, 4.98%, 9/13/99 18,887 18,887
Rabobank Nederland NV, 5.10%, 9/28/99 19,836 19,836
Toronto Dominion Holdings, 5.01%, 12/7/99 $ 9,822 9,822
---------- ---------- ----------
9,822 99,352 109,174
---------- ---------- ----------
Island Finance Puerto Rico, 5.13%, 10/18/99 9,889 -- 9,889
---------- ---------- ----------
Canadian Wheat Board, 4.74%, 8/20/99 9,975 9,975
---------- ---------- ----------
TOTAL COMMERCIAL PAPER-FOREIGN $ 29,686 $ 99,352 $ 129,038
---------- ---------- ----------
BankAmerica, 5.24%, 9/24/99 10,001 10,001
Canadian Imperial Bank of Commerce, 5.01%, 2/7/00 9,998 9,998
Harris Trust, 5.05%, 2/14/00 4,999 4,999
---------- ---------- ----------
TOTAL CERTIFICATES OF DEPOSIT $ 24,998 $ -- $ 24,998
---------- ---------- ----------
Bear Stearns & Co., Inc., 6.50%, 7/5/00 5,037 5,037
Morgan Stanley Dean Witter, 5.89%, 3/20/00 5,022 5,022
---------- ---------- ----------
10,059 -- 10,059
---------- ---------- ----------
Alabama Power Co., 6.00%, 3/1/00 5,022 -- 5,022
---------- ---------- ----------
American General Finance Corp., 7.25%, 4/15/00 5,051 -- 5,051
---------- ---------- ----------
Diagio PLC, 6.50%, 9/15/99 5,005 5,005
---------- ---------- ----------
TOTAL CORPORATE BONDS $ 25,137 $ -- $ 25,137
---------- ---------- ----------
General American Life Insurance Co., 5.31%*, 9/1/99** 12,000 12,000
Monumental Life Insurance Co., 5.40%*, 9/1/99** 12,500 12,500
Monumental Life Insurance Co., 5.45%*, 9/1/99** 12,500 12,500
---------- ---------- ----------
37,000 -- 37,000
---------- ---------- ----------
TOTAL FLOATING RATE FUNDING AGREEMENTS $ 37,000 $ -- $ 37,000
---------- ---------- ----------
</TABLE>
B-100
<PAGE> 478
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
PRIME MONEY MARKET PRIME COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES
--------------------------- ------------------------- -------------------
<S> <C> <C>
U.S. GOVERNMENT AGENCIES (5.2%):
FANNIE MAE (2.8%):
15,000 15,000
15,000 15,000
6,500 6,500
FEDERAL FARM CREDIT BANK (1.2%):
15,000 15,000
STUDENT LOAN MARKETING ASSOC. (1.2%):
15,000 15,000
COMMERCIAL PAPER-DOMESTIC (b) (68.3%):
AGRICULTURE (1.6%):
10,000 10,000
10,000 10,000
AIRCRAFT LEASING (3.1%):
10,000 10,000
10,000 10,000
20,000 20,000
ALUMINUM (1.6%):
10,000 10,000
10,000 10,000
AUTOMOTIVE (1.6%):
10,000 10,000
10,000 10,000
AUTOMOTIVE CREDIT (5.8%):
10,000 10,000
18,000 18,000
10,000 10,000
10,000 10,000
17,000 17,000
10,000 10,000
BANKING (7.2%):
10,000 10,000
10,000 10,000
5,000 5,000
18,000 18,000
10,000 10,000
10,000 10,000
10,000 10,000
19,000 19,000
BEVERAGES (2.2%):
10,000 10,000
19,000 19,000
</TABLE>
<TABLE>
<CAPTION>
AMSOUTH
OBLIGATIONS ISG PRO FORMA
PRIME PRIME COMBINED
AMORTIZED AMORTIZED AMORTIZED
DESCRIPTION COST COST COST
- -------------------------------------------------------------------------------- -------------- ---------------
<S> <C> <C> <C>
5.00%, 2/24/00 15,000 15,000
5.10%, 3/8/00, Callable 6/8/99 @ 100 15,000 15,000
5.07%, 4/19/00 6,500 6,500
------------ -------------- ---------------
- 36,500 36,500
------------ -------------- ---------------
Federal Farm Credit Bank, 5.26%, 3/17/00 - 15,000 15,000
------------ -------------- ---------------
Student Loan Marketing Assoc., 5.16%, 3/8/00, Callable
6/8/99 @ 100 - 15,000 15,000
------------ -------------- ---------------
TOTAL U.S. GOVERNMENT AGENCIES $ - $ 66,500 $ 66,500
------------ -------------- ---------------
Cargill Inc., 4.77%, 8/2/99 9,999 9,999
Monsanto Co., 4.91%, 9/21/99 9,930 9,930
------------ -------------- ---------------
19,929 - 19,929
------------ -------------- ---------------
International Lease Finance Corp., 4.80%, 8/5/99 9,995 9,995
International Lease Finance Corp., 4.74%, 8/13/99 9,984 9,984
International Lease Finance Corp., 5.06%, 9/21/99 19,857 19,857
------------ -------------- ---------------
19,979 19,857 39,836
------------ -------------- ---------------
Alcoa, 4.78%, 8/24/99 9,969 9,969
Alcoa, 4.84%, 8/31/99 9,960 9,960
------------ -------------- ---------------
19,929 - 19,929
------------ -------------- ---------------
Daimler Chrysler, 4.85%, 9/20/99 9,932 9,932
Daimler Chrysler, 5.14%, 10/6/99 9,906 9,906
------------ -------------- ---------------
19,838 - 19,838
------------ -------------- ---------------
BMW US Capital, 5.17%, 12/10/99 9,812 9,812
Ford Motor Credit, 5.16%, 10/21/99 17,791 17,791
Ford Motor Credit Co., 4.80%, 8/27/99 9,965 9,965
Ford Motor Credit Co., 4.70%, 11/5/99 9,875 9,875
General Motors Accept Corp., 5.15%, 10/5/99 16,842 16,842
General Motors Acceptance Corp., 5.28%, 1/25/00 9,740 9,740
------------ -------------- ---------------
39,392 34,633 74,025
------------ -------------- ---------------
Banca Credit Financial Corp., 4.80%, 8/9/99 9,989 9,989
J.P. Morgan & Co., 4.80%, 10/8/99 9,909 9,909
J.P. Morgan & Co., 4.80%, 10/15/99 4,950 4,950
Lloyds Bank PLC, 4.94%, 8/23/99 17,946 17,946
SunTrust Banks, 5.06%, 8/11/99 9,986 9,986
SunTrust Banks, 5.06%, 8/25/99 9,966 9,966
Wells Fargo & Co., 4.86%, 9/10/99 9,946 9,946
Wells Fargo Co., 5.01%, 8/20/99 18,950 18,950
------------ -------------- ---------------
44,757 46,885 91,642
------------ -------------- ---------------
Coca Cola Co., 5.00%, 9/17/99 9,935 9,935
Coca Cola Co., 5.10%, 10/7/99 18,819 18,819
------------ -------------- ---------------
9,935 18,819 28,754
------------ -------------- ---------------
</TABLE>
B-101
<PAGE> 479
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
PRIME MONEY MARKET PRIME COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES
--------------------------- ----------------- -------------
<S> <C> <C>
BROKERAGE SERVICES (1.5%):
10,000 10,000
10,000 10,000
CONSUMER GOODS (6.1%):
10,000 10,000
10,000 10,000
10,000 10,000
10,000 10,000
10,000 10,000
19,000 19,000
10,000 10,000
ELECTRIC UTILITY (3.6%):
10,000 10,000
5,000 5,000
10,000 10,000
22,000 22,000
FARM EQUIPMENT (3.1%):
20,000 20,000
10,000 10,000
10,000 10,000
FINANCIAL SERVICES (16.3%):
18,000 18,000
19,000 19,000
10,000 10,000
10,000 10,000
18,000 18,000
10,000 10,000
18,000 18,000
10,000 10,000
19,000 19,000
19,000 19,000
10,000 10,000
19,000 19,000
10,000 10,000
9,000 9,000
12,654 12,654
INDUSTRIALS (1.4%):
18,000 18,000
OIL & GAS EXPLORATION, PRODUCTION, & SERVICES (4.5%):
10,000 10,000
10,000 10,000
10,000 10,000
18,000 18,000
10,000 10,000
PHARMACEUTICALS (2.3%):
19,000 19,000
10,000 10,000
</TABLE>
<TABLE>
<CAPTION>
AMSOUTH
PRIME ISG PRO FORMA
OBLIGATIONS PRIME COMBINED
AMORTIZED AMORTIZED AMORTIZED
DESCRIPTION COST COST COST
- --------------------------------------------------------------------------- -------------- -----------
<S> <C> <C> <C>
Goldman Sachs, 5.36%, 1/21/00 9,742 9,742
Merrill Lynch, 5.13%, 9/16/99 9,935 9,935
---------------- -------------- -----------
19,677 - 19,677
---------------- -------------- -----------
Clorox Co., 4.88%, 9/8/99 9,948 9,948
Clorox Co., 5.11%, 10/21/99 9,885 9,885
Hasbro Inc., 4.94%, 10/26/99 9,882 9,882
Kimberly Clark, 5.05%, 8/19/99 9,975 9,975
Procter & Gamble, 4.97%, 8/9/99 9,989 9,989
Proctor & Gamble, 4.88%, 8/2/99 18,998 18,998
Proctor & Gamble, 5.10%, 9/29/99 9,916 9,916
---------------- -------------- -----------
59,595 18,998 78,593
---------------- -------------- -----------
Alabama Power Co., 5.08%, 8/24/99 9,968 9,968
National Rural Utilities, 4.83%, 8/23/99 4,985 4,985
National Rural Utilities, 4.79%, 8/26/99 9,967 9,967
National Rural Utilities, 5.15%, 10/27/99 21,726 21,726
---------------- -------------- -----------
24,920 21,726 46,646
---------------- -------------- -----------
John Deere & Co., 5.07%, 9/1/99 19,912 19,912
John Deere Capital Corp., 4.77%, 8/17/99 9,979 9,979
John Deere Capital Corp., 4.78%, 9/7/99 9,951 9,951
---------------- -------------- -----------
19,930 19,912 39,842
---------------- -------------- -----------
Abbey National North America, 5.01%, 9/15/99 17,887 17,887
American Express, 4.94%, 8/25/99 18,937 18,937
American Express, 4.80%, 12/14/99 9,820 9,820
American Express, 4.78%, 1/11/00 9,784 9,784
American General, 5.09%, 9/9/99 17,901 17,901
American General Finance Corp., 5.14%, 10/28/99 9,874 9,874
Associates Corp., 5.10%, 9/7/99 17,906 17,906
Associates First Capital, 5.30%, 4/3/00 9,638 9,638
Commercial Credit Co., 5.06%, 8/30/99 18,923 18,923
General Electric, 4.93%, 8/16/99 18,961 18,961
General Electric Capital Corp., 5.38%, 4/4/00 9,631 9,631
Household Financial, 4.90%, 8/11/99 18,973 18,973
Transamerica Finance, 4.80%, 8/12/99 9,985 9,985
USAA Capital Corp., 5.13%, 10/18/99 8,900 8,900
USAA Capital Corp., 5.15%, 10/19/99 12,511 12,511
---------------- -------------- -----------
58,732 150,899 209,631
---------------- -------------- -----------
Emerson Electric, 5.08%, 8/5/99 17,990 17,990
---------------- -------------- -----------
Chevron USA, 5.03%, 9/3/99 9,954 9,954
Equilon Enterprises, 5.00%, 8/16/99 9,979 9,979
Equilon Enterprises, 5.16%, 10/19/99 9,887 9,887
Shell Oil Co., 5.05%, 9/3/99 17,917 17,917
Texaco Inc., 5.33%, 1/18/00 9,748 9,748
---------------- -------------- -----------
39,568 17,917 57,485
---------------- -------------- -----------
Glaxo Wellcome PLC, 5.06%, 9/17/99 18,875 18,875
Pfizer Inc., 5.05%, 9/2/99 9,955 9,955
---------------- -------------- -----------
9,955 18,875 28,830
---------------- -------------- -----------
</TABLE>
B-102
<PAGE> 480
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
PRIME MONEY MARKET PRIME COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES
--------------------------- ------------------------- -------------------
<S> <C> <C>
TECHNOLOGY (2.9%):
5,000 5,000
10,000 10,000
22,000 22,000
TELECOMMUNICATIONS (2.3%):
10,000 10,000
10,000 10,000
10,000 10,000
TELECOMMUNICATIONS-WIRELESS (1.2%):
5,109 5,109
10,000 10,000
INVESTMENT COMPANIES (0.0%):
568 568
REPURCHASE AGREEMENTS (9.6%):
30,778 30,778
92,189 92,189
</TABLE>
<TABLE>
<CAPTION>
AMSOUTH
PRIME ISG PRO FORMA
OBLIGATIONS PRIME COMBINED
AMORTIZED AMORTIZED AMORTIZED
DESCRIPTION COST COST COST
- --------------------------------------------------------------------------------------------- ------------- ------------
<S> <C> <C> <C>
IBM Credit Corp., 4.67%, 8/6/99 4,997 4,997
IBM Credit Corp., 4.80%, 9/13/99 9,943 9,943
IBM Credit Corp., 5.12%, 10/25/99 21,733 21,733
---------------- -------------- ------------
14,940 21,733 36,673
---------------- -------------- ------------
BellSouth Telecommunications Inc., 5.11%, 9/28/99 9,918 9,918
Lucent Technologies, 4.98%, 1/27/00 9,752 9,752
Lucent Technologies, 4.97%, 2/10/00 9,734 9,734
---------------- -------------- ------------
29,404 - 29,404
---------------- -------------- ------------
Motorola, 5.05%, 8/4/99 5,107 5,107
Motorola, 5.08%, 9/10/99 9,943 9,943
---------------- -------------- ------------
15,050 - 15,050
---------------- -------------- ------------
TOTAL COMMERCIAL PAPER-DOMESTIC $ 465,530 $ 408,244 $ 873,774
---------------- -------------- ------------
Bank Of New York Cash Reserve 1 1
---------------- -------------- ------------
TOTAL INVESTMENT COMPANIES $ - $ 1 $ 1
---------------- -------------- ------------
Cantor Fizgerald, 5.08%, 8/02/99 30,778 30,778
Solomon Smith Barney, 5.13%, 7/30/99 92,189 92,189
---------------- -------------- ------------
TOTAL REPURCHASE AGREEMENTS $ 92,189 $ 30,778 $ 122,967
---------------- -------------- ------------
---------------- -------------- ------------
TOTAL (COST $1,279,415) (a) $ 674,540 $ 604,875 $ 1,279,415
---------------- -------------- ------------
</TABLE>
---------------------------
Percentages are based on net assets of $1,277,755.
(a) Cost and value for federal income tax and financial reporting
purposes are the same.
(b) Yield effective at purchase.
* Variable rate security. Rate presented represents the rate in
effect at July 31, 1999. Date presented reflects next rate change
date
** Put and demand features exist allowing the Fund to require the
repurchase of the instrument within variable time periods
including daily, weekly, monthly, quarterly, or semiannually.
PLC - Public Limited Co.
B-103
<PAGE> 481
AMSOUTH TAX-EXEMPT MONEY MARKET FUND
ISG TAX-EXEMPT MONEY MARKET FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
7/31/99
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
AMSOUTH ISG PRO FORMA
TAX-EXEMPT TAX-EXEMPT PRO FORMA COMBINED
MONEY MARKET MONEY MARKET ADJUSTMENTS (NOTE 1)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $ 2,906 $ 792 $ -- $ 3,698
Dividend Income 165 38 -- 203
------------ ------------ ------------ ------------
3,071 830 -- 3,901
------------ ------------ ------------ ------------
EXPENSES:
Advisory fees 383 88 13 (a) 484
Administration fees 192 25 25 (b) 242
Shareholder servicing fees (Class A Shares) 63 2 (1)(c) 64
Shareholder servicing fees (Institutional Shares) -- 37 106 (d) 143
Accounting fees 53 4 (27)(e) 30
Transfer agent fees 39 7 22 (f) 68
Custodian fees 6 9 18 (g) 33
Trustee fees and expenses 2 -- -- 2
Registration and filing fees 6 14 (5)(h) 15
Other expenses 16 16 (11)(h) 21
------------ ------------ ------------ ------------
TOTAL EXPENSES: 760 202 141 1,103
Less Waivers
Advisory fees (192) -- 192 (a) --
Administration fees -- -- -- --
Shareholder servicing fees (Class A Shares) (38) -- 38 (c) --
12b-1 fees (Class A Shares) -- -- -- --
Accounting fees (21) -- 21 (e) --
Transfer agent fees (20) -- 20 (i) --
Reimbursements -- -- -- --
------------ ------------ ------------ ------------
NET EXPENSES: 489 202 412 1,103
------------ ------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) 2,582 628 (412) 2,798
------------ ------------ ------------ ------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains (losses) from investment transactions 1 (40) -- (39)
------------ ------------ ------------ ------------
Net realized/unrealized gains (losses) from investments 1 (40) -- (39)
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS: $ 2,583 $ 588 $ (412) $ 2,759
============ ============ ============ ============
</TABLE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(a) Adjustment to reflect the AmSouth contractual fee structure for Advisory
fees (0.40% of net assets).
(b) Adjustment to reflect the AmSouth contractual fee structure for
Administration fees (0.20% of net assets).
(c) Adjustment to reflect the AmSouth contractual fee structure for Shareholder
Servicing fees (0.25% of Class A net assets).
(d) Adjustment to reflect the AmSouth contractual fee structure for Shareholder
Servicing fees (0.15% of Institutional net assets).
(e) Adjustment to reflect the AmSouth contractual fee structure for Accounting
fees ($10,000 a year per additional class + OOP).
(f) Adjustment to reflect the AmSouth contractual fee structure for Transfer
agent fees (0.015% of net assets + $10,000 a year per class + OOP).
(g) Adjustment to reflect the AmSouth contractual fee structure for Custodian
fees (0.0275% of net assets).
(h) Reduction reflects expected savings when the two funds merge.
(i) Adjustment to reflect the AmSouth contractual fee structure.
B-104
<PAGE> 482
<TABLE>
<CAPTION>
AMSOUTH TAX-EXEMPT MONEY MARKET FUND
ISG TAX-EXEMPT MONEY MARKET FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
7/31/99
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
AMSOUTH ISG PRO FORMA
TAX-EXEMPT TAX-EXEMPT PRO FORMA COMBINED
MONEY MARKET MONEY MARKET ADJUSTMENTS (NOTE 1)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities, at amortized cost $ 96,133 $ 110,571 $ -- $ 206,704
Interest and dividends receivable 817 735 -- 1,552
Other assets 6 2 -- 8
------------ ------------ ------------ ------------
TOTAL ASSETS 96,956 111,308 -- 208,264
------------ ------------ ------------ ------------
LIABILITIES:
Distributions payable 202 212 -- 414
Securities purchased payable -- 2,904 -- 2,904
Accrued expenses and other payables:
Investment advisory fees 16 31 -- 47
Administration fees 2 1 -- 3
Distribution fees 2 13 -- 15
Accounting fees 1 -- -- 1
Transfer agent fees 1 7 -- 8
Custodian fees 1 6 -- 7
Other 7 29 -- 36
------------ ------------ ------------ ------------
TOTAL LIABILITIES 232 3,203 -- 3,435
------------ ------------ ------------ ------------
NET ASSETS:
Class A Shares 22,844 10,046 -- 32,890
Institutional Shares 73,880 98,059 -- 171,939
------------ ------------ ------------ ------------
$ 96,724 $ 108,105 $ -- $ 204,829
============ ============ ============ ============
CAPITAL SHARES OUTSTANDING
Class A Shares 22,845 10,047 -- 32,892
Institutional Shares 73,880 98,099 -- 171,979
------------ ------------ ------------ ------------
96,725 108,146 -- 204,871
============ ============ ============ ============
NET ASSET VALUE - OFFERING AND
REDEMPTION PRICE PER SHARE
Class A Shares $ 1.00 $ 1.00 -- $ 1.00
------------ ------------ ------------
Institutional Shares $ 1.00 $ 1.00 -- $ 1.00
------------ ------------ ------------
COMPOSITION OF NET ASSETS
Capital $ 96,725 $ 108,146 $ -- $ 204,871
Undistributed (distributions in excess of)
net investment income -- (41) -- (41)
Undistributed net realized gains (losses)
from investment transactions (1) -- -- (1)
------------ ------------ ------------ ------------
NET ASSETS, JULY 31, 1999 $ 96,724 $ 108,105 $ -- $ 204,829
============ ============ ============ ============
</TABLE>
B-105
<PAGE> 483
AMSOUTH TAX-EXEMPT MONEY MARKET FUND
ISG TAX-EXEMPT MONEY MARKET FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
7/31/99
(AMOUNTS IN THOUSANDS, EXCEPT SHARES)
(UNAUDITED)
<TABLE>
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
--------------------- ------------------ -----------------------------------------------------------------------------
<S> <C> <C> <C>
TAX ANTICIPATION NOTES (4.7%):
FLORIDA (0.5%):
$ 1,000 $ 1,000 Orange County School District Tax Anticipation Notes,
3.10%, 9/15/99
PENNSYLVANIA (0.7%):
1,500 1,500 Philadelphia Tax & Revenue Anticipation Notes, 4.25%,
6/30/00
TEXAS (3.5%):
2,200 5,000 7,200 Texas State Tax & Revenue Anticipation Notes, 4.50%,
8/31/99
DEMAND NOTES (19.0%):
ALABAMA (6.2%):
1,500 1,500 Alabama Housing Finance Authority, Huntsville, Series B,
3.15%*, 8/4/99**, FNMA
2,000 2,000 Alabama State Housing Finance Authority, Multi Family
Housing Revenue, Rime VLG Hoover Project, Series A,
3.15%*,8/4/99**, FNMA
1,000 1,000 Bon Air, Industrial Development Board, Avondale Mills,
3.15%*, 8/4/99**
2,000 2,000 City of Birmingham, Series 1992A, GO, 3.20%*, 8/4/99**
350 350 Columbia, Industrial Development Board, PCR, Alabama
Power Co. Project , Series D, 3.40%*, 8/2/99**
1,000 1,000 Jacksonville, Industrial Development Board, Parker Hannifin
Corp., 3.15%*, 8/5/99**
2,000 2,000 Mobile, Industrial Development Board, PCR, Alabama Power
Co. Project, Series B, 3.20%*, 8/5/99**
500 500 North Alabama, Environmental Improvement Authority, PCR,
Reynolds Metals Co., 3.40%*, 8/2/99**
1,000 1,000 Port City Medical Clinic Board, Infirmary Health Systems,
Series B, 3.15%*, 8/5/99**, AMBAC
1,365 1,365 Stevenson, Industrial Development Board, Environmental
Improvement Revenue, Mead Corp. Project, 3.35%*, 8/2/99**
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
AMORTIZED AMORTIZED AMORTIZED
DESCRIPTION COST COST COST
------------------------------------------------------------------------------------ ---------------- --------------------
<S> <C> <C> <C>
Orange County School District Tax Anticipation Notes, $ 1,000 - $ 1,000
3.10%, 9/15/99 ------------------- ---------------- ----------------
Philadelphia Tax & Revenue Anticipation Notes, 4.25%, 1,510 - 1,510
6/30/00 ------------------- ---------------- ----------------
Texas State Tax & Revenue Anticipation Notes, 4.50%, 2,203 5,005 7,208
8/31/99 ------------------- ---------------- ----------------
TOTAL TAX ANTICIPATION NOTES $ 4,713 $ 5,005 $ 9,718
------------------- ---------------- ----------------
Alabama Housing Finance Authority, Huntsville, Series B, 1,500 1,500
3.15%*, 8/4/99**, FNMA
Alabama State Housing Finance Authority, Multi Family 2,000 2,000
Housing Revenue, Rime VLG Hoover Project, Series A,
3.15%*,8/4/99**, FNMA
Bon Air, Industrial Development Board, Avondale Mills, 1,000 1,000
3.15%*, 8/4/99**
City of Birmingham, Series 1992A, GO, 3.20%*, 8/4/99** 2,000 2,000
Columbia, Industrial Development Board, PCR, Alabama 350 350
Power Co. Project , Series D, 3.40%*, 8/2/99**
Jacksonville, Industrial Development Board, Parker Hannifin 1,000 1,000
Corp., 3.15%*, 8/5/99**
Mobile, Industrial Development Board, PCR, Alabama Power 1,999 1,999
Co. Project, Series B, 3.20%*, 8/5/99**
North Alabama, Environmental Improvement Authority, PCR, 500 500
Reynolds Metals Co., 3.40%*, 8/2/99**
Port City Medical Clinic Board, Infirmary Health Systems, 1,000 1,000
Series B, 3.15%*, 8/5/99**, AMBAC
Stevenson, Industrial Development Board, Environmental 1,365 1,365
Improvement Revenue, Mead Corp. Project, 3.35%*, 8/2/99**
------------------- --------------------- -----------------
12,714 12.714
------------------- --------------------- -----------------
</TABLE>
B-106
<PAGE> 484
<TABLE>
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
--------------------- ---------------- ------------------- ---------------------------------------------------------
<S> <C> <C> <C>
CALIFORNIA (1.2%):
2,500 2,500 Los Angeles, Regional Airports Improvements Corp., Los
Angeles International-LAX 2, 3.40%*, 8/2/99 **
FLORIDA (1.5%):
1,500 1,500 Alachua County Florida Health, 3.00%*, 8/4/99**, MBIA
1,680 1,680 Laurel Club, Certificates of Participation, Series 96A,
3.25%*, 8/4/99**
GEORGIA (0.5%):
1,000 1,000 Cobb County, Post Mill Project, 3.15%*, 8/4/99**
MICHIGAN (1.2%):
2,500 2,500 Cornell Township Economic Development Corporation,
Environment Improvement Revenue, 3.35%*, 8/2/99**
MINNESOTA (1.7%):
1,000 1,000 Minneapolis, GO, Sewer Improvements, Series A, 3.05%*,
8/4/99**
2,400 2,400 Minneapolis, GO, Sewer Improvements, Series B, 3.05%*,
8/5/99**
NEW YORK (1.2%):
900 900 New York, GO, 3.50%*, 8/2/99**, LOC: Morgan Guaranty Trust
1,600 1,600 New York, GO, Series D, 3.00%*, 8/4/99**, FGIC
NORTH CAROLINA (0.2%):
500 500 North Carolina Educational Facilities, 3.00%*, 8/5/99**
PENNSYLVANIA (1.1%):
2,200 2,200 Schuylkill County, Industrial Development Authority,
Resource Recovery Revenue, Gilberton Power Project,
3.05%*, 8/4/99**
SOUTH CAROLINA (0.5%):
1,000 1,000 South Carolina State Jobs & Economic Development
Revenue, St. Francis Hospital, 3.40%*, 8/2/99**
TENNESSEE (0.9%):
1,300 1,300 Metropolitan Nashville Airport Authority, Special Facilitie
Revenue, American Airlines Project, Series A, 3.40%*,
8/2/99**
500 500 Sullivan County, Industrial Development Board , PCR, Mead
Corp. Project, 2.80%*, 8/2/99**
TEXAS (1.5%):
1,000 1,000 Grapevine, Industrial Development Corp., American Airlines
A4, 3.40%*, 8/2/99**
2,000 2,000 North Central Texas Series C, 3.40%*, 8/2/99**
WASHINGTON (0.3%):
600 600 Seattle Municipal Light & Power, 3.00%*, 8/4/99**
WYOMING (1.0%):
2,000 2,000 Lincoln County PCR, Project D, 3.35%*, 8/2/99**
TOTAL DEMAND NOTES
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
AMORTIZED AMORTIZED AMORTIZED
DESCRIPTION COST COST COST
-------------------------------------------------------------------------------------- --------------------- ------------------
<S> <C> <C> <C>
Los Angeles, Regional Airports Improvements Corp., Los 2,500 - 2,500
Angeles International-LAX 2, 3.40%*, 8/2/99 ** ------------------- ---------------- -----------------
Alachua County Florida Health, 3.00%*, 8/4/99**, MBIA 1,500 1,500
Laurel Club, Certificates of Participation, Series 96A, 1,680 1,680
3.25%*, 8/4/99**
------------------- ---------------- -----------------
3,180 - 3,180
------------------- ---------------- -----------------
Cobb County, Post Mill Project, 3.15%*, 8/4/99** 1,000 - 1,000
------------------- ---------------- -----------------
Cornell Township Economic Development Corporation, 2,500 - 2,500
------------------- ---------------- -----------------
Environment Improvement Revenue, 3.35%*, 8/2/99**
Minneapolis, GO, Sewer Improvements, Series A, 3.05%*, 1,000 1,000
8/4/99**
Minneapolis, GO, Sewer Improvements, Series B, 3.05%*, 2,400 2,400
8/5/99**
------------------- ---------------- -----------------
3,400 - 3,400
------------------- ---------------- -----------------
New York, GO, 3.50%*, 8/2/99**, LOC: Morgan Guaranty Trust 900 900
New York, GO, Series D, 3.00%*, 8/4/99**, FGIC 1,600 1,600
------------------- ---------------- -----------------
2,500 - 2,500
------------------- ---------------- -----------------
North Carolina Educational Facilities, 3.00%*, 8/5/99** 500 - 500
------------------- ---------------- -----------------
Schuylkill County, Industrial Development Authority, 2,200 - 2,200
Resource Recovery Revenue, Gilberton Power Project, ------------------- ---------------- -----------------
3.05%*, 8/4/99**
South Carolina State Jobs & Economic Development 1,000 - 1,000
Revenue, St. Francis Hospital, 3.40%*, 8/2/99** ------------------- ---------------- -----------------
Metropolitan Nashville Airport Authority, Special Facilities 1,300 1,300
Revenue, American Airlines Project, Series A, 3.40%*,
8/2/99**
Sullivan County, Industrial Development Board , PCR, Mead 500 500
Corp. Project, 2.80%*, 8/2/99**
------------------- ---------------- -----------------
1,800 - 1,800
------------------- ---------------- -----------------
Grapevine, Industrial Development Corp., American Airlines 1,000 1,000
A4, 3.40%*, 8/2/99**
North Central Texas Series C, 3.40%*, 8/2/99** 2,000 - 2,000
------------------- ---------------- -----------------
3,000 - 3,000
------------------- ---------------- -----------------
Seattle Municipal Light & Power, 3.00%*, 8/4/99** 600 - 600
------------------- ---------------- -----------------
Lincoln County PCR, Project D, 3.35%*, 8/2/99** 2,000 - 2,000
------------------ ---------------- -----------------
TOTAL DEMAND NOTES $ 38,894 - $ 38,894
------------------- ---------------- -----------------
</TABLE>
B-107
<PAGE> 485
<TABLE>
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
--------------------- --------------------- --------------- ---------------------------------------------------------
<S> <C> <C> <C>
TAX FREE COMMERCIAL PAPER (5.5%):
ALABAMA (1.2%):
1,500 1,500 Montgomery, 3.00%, 8/6/99
1,000 1,000 Port City Medical Clinic Board, Mobile, 3.05%, 8/4/99
FLORIDA (2.3%):
1,000 1,000 Jacksonville, 3.25%, 10/22/99
1,500 1,500 Jacksonville, PCR, 3.35%, 10/18/99
1,200 1,200 Sarasota County, Public Hospital Revenue, 3.20%,9/7/99
1,000 1,000 St. Lucie County, PCR, 3.05%, 8/5/99
MISSISSIPPI (1.0%):
1,000 1,000 Mississippi Hospital Equiment & Facilities Authority, 3.10%
5/15/27
1,000 1,000 Mississippi Hospital Equipment Authority Revenue, 3.25%,
10/7/99
NEVADA (0.5%):
1,000 1,000 Clark County, 5.70%, 6/1/00
UTAH (0.5%):
1,000 1,000 Intermountain Power Agency, 3.20%, 10/13/99
TOTAL TAX FREE COMMERCIAL PAPER
MUNICIPAL BONDS (66.4%):
ALABAMA (1.6%):
1,000 1,000 Alabama State College Authority, 5.00%, 8/1/99
1,000 1,000 Alabama State, Municipal Electric Authority Power Supply
Revenue, 6.10%, 9/1/99
380 380 Alabama Water Pollution Control Authority, 5.00%, 8/15/99
600 600 University Birmingham Alabama Medical & Educational
Foundation Revenue, 7.00%, 12/1/19, Prerefunded 12/1/99
@ 102
250 250 University of Alabama Revenue, 4.15%, 10/1/99
ARIZONA (0.5%):
1,000 1,000 Salt River Agriculture Improvement, Series B, Salt River
Project, 4.45%, 1/1/00
CALIFORNIA (0.7%):
1,500 1,500 Los Angeles County, Tax & Revenue, 4.00%, 6/30/00
COLORADO (0.5%):
1,000 1,000 El Paso County School District, 0.00%, 12/1/99, LOC: MBIA
CONNECTICUT (2.4%):
5,000 5,000 Connecticut State Health & Educational Facilities Authority
Series T-1, Yale University, 3.60%*, 7/1/29
DIST OF COLUMBIA (0.0%):
25 25 District Of Columbia, 1998 Series A, 6.75%, 6/1/08,
Prerefunded 6/1/00 @ 102, MBIA, GO
30 30 District Of Columbia, Series B, 7.40%, 6/1/05, Prerefunded
6/1/00 @ 102, FSA, GO
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
AMORTIZED AMORTIZED AMORTIZED
DESCRIPTION COST COST COST
- ------------------------------------------------------------------------------------- --------------------- -------------------
<S> <C> <C> <C>
Montgomery, 3.00%, 8/6/99 1,500 1,500
Port City Medical Clinic Board, Mobile, 3.05%, 8/4/99 1,000 1,000
------------------- --------------------- -----------------
2,500 - 2,500
------------------- --------------------- -----------------
Jacksonville, 3.25%, 10/22/99 1,000 1,000
Jacksonville, PCR, 3.35%, 10/18/99 1,500 1,500
Sarasota County, Public Hospital Revenue, 3.20%,9/7/99 1,200 1,200
St. Lucie County, PCR, 3.05%, 8/5/99 1,000 1,000
------------------- --------------------- -----------------
4,700 - 4,700
------------------- --------------------- -----------------
Mississippi Hospital Equiment & Facilities Authority, 3.10%, 1,000 1,000
5/15/27
Mississippi Hospital Equipment Authority Revenue, 3.25%, 1,000 1,000
10/7/99
------------------- --------------------- -----------------
2,000 - 2,000
------------------- --------------------- -----------------
Clark County, 5.70%, 6/1/00 1,018 - 1,018
------------------- --------------------- -----------------
Intermountain Power Agency, 3.20%, 10/13/99 1,000 - 1,000
------------------- --------------------- -----------------
TOTAL TAX FREE COMMERCIAL PAPER $ 11,218 - $ 11,218
------------------- --------------------- -----------------
Alabama State College Authority, 5.00%, 8/1/99 1,000 1,000
Alabama State, Municipal Electric Authority Power Supply 1,003 1,003
Revenue, 6.10%, 9/1/99
Alabama Water Pollution Control Authority, 5.00%, 8/15/99 380 380
University Birmingham Alabama Medical & Educational 620 620
Foundation Revenue, 7.00%, 12/1/19, Prerefunded 12/1/99
@ 102
University of Alabama Revenue, 4.15%, 10/1/99 250 250
------------------- --------------------- -----------------
3,253 - 3,253
------------------- --------------------- -----------------
Salt River Agriculture Improvement, Series B, Salt River - 1,004 1,004
Project, 4.45%, 1/1/00 ------------------- --------------------- -----------------
Los Angeles County, Tax & Revenue, 4.00%, 6/30/00 1,509 - 1,509
------------------- --------------------- -----------------
El Paso County School District, 0.00%, 12/1/99, LOC: MBIA 989 - 989
------------------- --------------------- -----------------
Connecticut State Health & Educational Facilities Authority, - 5,000 5,000
Series T-1, Yale University, 3.60%*, 7/1/29 ---------------- --------------------- -----------------
District Of Columbia, 1998 Series A, 6.75%, 6/1/08, 26 26
Prerefunded 6/1/00 @ 102, MBIA, GO
District Of Columbia, Series B, 7.40%, 6/1/05, Prerefunded 31 31
6/1/00 @ 102, FSA, GO
------------------- --------------------- -----------------
- 57 57
------------------- --------------------- -----------------
</TABLE>
B-108
<PAGE> 486
<TABLE>
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
--------------------- -------------------- ---------------- -----------------------------------------------------------
<S> <C> <C> <C>
FLORIDA (0.7%):
250 250 Homestead, Special Insurance Assessment Revenue,
4.75%, 9/1/99, LOC: MBIA
30 30 Martin County, 6.50%, 2/1/10, Prerefunded 2/1/00 @ 102,
AMBAC, GO
40 40 Orlando & Orange County Expressway Revenue, Jr. Lien,
6.50%, 7/1/20, Prerefunded 7/1/00 @ 102, FGIC
30 30 Pinellas County Health Facilities Authority, Morton Plant
Health System Project, 4.50%, 11/15/99, MBIA
1,000 1,000 Tampa, Water & Sewer Revenue, 6.20%, 10/1/99, LOC: Bank
of America
GEORGIA (3.7%):
50 50 Albany Sewer Systems, 5.35%, 7/1/00, FGIC
30 30 Atlanta Airport Extension & Improvement, 7.00%, 1/1/00
1,000 1,000 Clayton County, GO, 4.25%, 8/1/99
1,000 1,000 Douglas County Water & Sewer Authority, 6.70%, 6/1/05,
Prerefunded 6/1/00 @ 102, MBIA
2,900 2,900 Georgia Municipal Gas Authority Gas Revenue, Series A
4.25%, 11/1/99
1,500 1,500 Gwinnett County School District, 3.50, 12/31/99
30 30 Jackson County School District, 4.90%, 7/1/00, MBIA
1,000 1,000 Muscogee County School District, 4.00%, 11/1/99
HAWAII (1.4%):
1,300 1,300 Hawaii County, Series A, 4.80%, 5/1/00, FGIC, GO
1,500 1,500 Hawaii State, 4.75%, 11/1/99, LOC: FGIC
ILLINOIS (8.9%):
1,075 1,075 Chicago Wastewater Transmission Revenue, 7.20%,
11/15/19, Prerefunded 11/15/99 @ 102, LOC:MBIA
3,000 3,000 Chicago, O'Hare International Airport,, Series A, General
Airport Second Lien, 3.40%*, 1/1/18
750 750 Cook County High School District, 6.50%, 12/1/99, LOC: FSA
50 50 Du Page County Forest Preservation, 4.00%, 10/1/99
4,895 4,895 Elmhurst Revenue Bond, Joint Common Accreditation,
3.65%*, 7/1/18
5,000 5,000 Illinois Developmental Finance Authority, Series C, Provena
Health, 3.45%*, 5/1/28
1,000 1,000 Illinois Health Facilities Authority Revenue, 4.00% 8/15/99
90 90 Illinois Health Facilities Authority Revenue, 7.00%, 1/1/19
Prerefunded 1/1/00 @ 102, MBIA
1,190 1,190 Kane County Public Building Revenue Bond, 4.20%, 12/1/99
1,000 1,000 Peoria Public Building & School Facilities, 6.50%, 12/1/05,
Prerefunded 12/1/99 @ 100, AMBAC
INDIANA (0.1%):
235 235 Hamilton Southeastern, School Building Corp., 4.25%,
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
AMORTIZED AMORTIZED AMORTIZED
DESCRIPTION COST COST COST
------------------------------------------------------------------------------- --------------------- --------------------
<S> <C> <C> <C>
Homestead, Special Insurance Assessment Revenue, 250 250
4.75%, 9/1/99, LOC: MBIA
Martin County, 6.50%, 2/1/10, Prerefunded 2/1/00 @ 102, 31 31
AMBAC, GO
Orlando & Orange County Expressway Revenue, Jr. Lien, 42 42
6.50%, 7/1/20, Prerefunded 7/1/00 @ 102, FGIC
Pinellas County Health Facilities Authority, Morton Plant 30 30
Health System Project, 4.50%, 11/15/99, MBIA
Tampa, Water & Sewer Revenue, 6.20%, 10/1/99, LOC: Bank 1,005 1,005
of America
------------------- --------------------- --------------------
1,255 103 1,358
------------------- --------------------- --------------------
Albany Sewer Systems, 5.35%, 7/1/00, FGIC 51 51
Atlanta Airport Extension & Improvement, 7.00%, 1/1/00 30 30
Clayton County, GO, 4.25%, 8/1/99 1,000 1,000
Douglas County Water & Sewer Authority, 6.70%, 6/1/05, 1,048 1,048
Prerefunded 6/1/00 @ 102, MBIA
Georgia Municipal Gas Authority Gas Revenue, Series A 2,904 2,904
4.25%, 11/1/99
Gwinnett County School District, 3.50, 12/31/99 1,501 1,501
Jackson County School District, 4.90%, 7/1/00, MBIA 30 30
Muscogee County School District, 4.00%, 11/1/99 1,003 1,003
------------------- --------------------- --------------------
3,504 4,063 7,567
------------------- --------------------- --------------------
Hawaii County, Series A, 4.80%, 5/1/00, FGIC, GO 1,316 1,316
Hawaii State, 4.75%, 11/1/99, LOC: FGIC 1,505 1,505
------------------- --------------------- --------------------
1,505 1,316 2,821
------------------- --------------------- --------------------
Chicago Wastewater Transmission Revenue, 7.20%, 1,109 1,109
11/15/19, Prerefunded 11/15/99 @ 102, LOC:MBIA
Chicago, O'Hare International Airport,, Series A, General 3,000 3,000
Airport Second Lien, 3.40%*, 1/1/18
Cook County High School District, 6.50%, 12/1/99, LOC: FSA 758 758
Du Page County Forest Preservation, 4.00%, 10/1/99 50 50
Elmhurst Revenue Bond, Joint Common Accreditation, 4,895 4,895
3.65%*, 7/1/18
Illinois Developmental Finance Authority, Series C, Provena 5,000 5,000
Health, 3.45%*, 5/1/28
Illinois Health Facilities Authority Revenue, 4.00% 8/15/99 1,000 1,000
Illinois Health Facilities Authority Revenue, 7.00%, 1/1/19, 93 93
Prerefunded 1/1/00 @ 102, MBIA
Kane County Public Building Revenue Bond, 4.20%, 12/1/99 1,194 1,194
Peoria Public Building & School Facilities, 6.50%, 12/1/05, 1,011 1,011
Prerefunded 12/1/99 @ 100, AMBAC
------------------- --------------------- --------------------
2,867 15,243 18,110
------------------- --------------------- --------------------
Hamilton Southeastern, School Building Corp., 4.25%, - 236 236
</TABLE>
B-109
<PAGE> 487
<TABLE>
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
--------------------- -------------------- --------------------- -----------------------------------------------------
<S> <C> <C> <C>
IOWA (2.4%):
5,000 5,000 Iowa Finance Authority Revenue, Series B, Wheaton
Franciscan, 3.30%*, 8/15/24, MBIA
KANSAS (0.0%):
100 100 Shawnee County, Series A, 7.00%, 9/1/99, GO
KENTUCKY (0.5%):
1,000 1,000 Kentucky Asset/Liability Revenue, 4.25%, 6/28/00
LOUISIANA (0.3%):
525 525 Louisiana State Gas & Fuels Tax Revenue, 3.35%, 11/15/99
MARYLAND (0.5%):
1,000 1,000 Montgomery County, GO, 5.80%, 10/1/99
50 50 Prince Georges County, Series A, Construction Public
Improvement, 4.90%, 9/1/99, MBIA, GO
MASSACHUSETTS (4.3%):
500 500 Boston Water & Sewer Common Revenue, 7.10%, 11/01/19,
Prerefunded 11/1/99 @ 102, LOC: US Government Securities
2,278 2,278 Dedham, 3.75%, 10/8/99
5,300 5,300 Greenfield, 3.50%, 1/14/00
300 300 Hingham, 5.50, 10/15/99
500 500 Massachusetts State Convention Center Authority, 6.00%,
9/1/99
MICHIGAN (0.1%):
125 125 Macomb County Transportation Funding Notes, 6.50%,
25 25 Marquette Electric Utility Revenue, 4.80%, 7/1/00, AMBAC
MISSISSIPPI (0.1%):
250 250 Mississippi Higher Education, Series B, 6.00%, 1/1/00
NEBRASKA (0.6%):
250 250 American Public Energy Agency, Series A, Nebraska Gas
Supply, 3.35%, 6/1/00, AMBAC
990 990 Nebraska Public Power Revenue, 4.50%, 1/1/00
NEVADA (0.0%):
25 25 Washoe County, Reno Sparks Convention/Visitor, 7.10%,
7/1/07, Prerefunded 7/1/00 @ 102, AMBAC
NEW HAMPSHIRE (5.1%):
130 130 Hudson School District, Lot C, 7.25%, 12/15/99
2,000 2,000 Nashua, 3.50%, 12/10/99
2,000 2,000 New Hampshire State Capital Appreciation, College
Savings Bond Program, 0.00%, 8/1/99
2,150 2,150 Salem, 3.75%, 12/16/99, GO
4,200 4,200 Strafford, 3.60%, 12/31/99, GO
NEW YORK (4.1%):
2,500 2,500 Arlington Central School District, 3.88%, 11/9/99, GO
450 450 New York City Transitional Finance Authority Revenue,
4.00%, 8/15/99
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
AMORTIZED AMORTIZED AMORTIZED
DESCRIPTION COST COST COST
-------------------------------------------------------------------------------- --------------------- --------------------
<S> <C> <C> <C>
Iowa Finance Authority Revenue, Series B, Wheaton - 5,000 5,000
Franciscan, 3.30%*, 8/15/24, MBIA ------------------- --------------------- --------------------
Shawnee County, Series A, 7.00%, 9/1/99, GO - 100 100
------------------- --------------------- --------------------
Kentucky Asset/Liability Revenue, 4.25%, 6/28/00 1,008 - 1,008
------------------- --------------------- --------------------
Louisiana State Gas & Fuels Tax Revenue, 3.35%, 11/15/99 525 - 525
------------------- --------------------- --------------------
Montgomery County, GO, 5.80%, 10/1/99 1,005 1,005
Prince Georges County, Series A, Construction Public 50 50
Improvement, 4.90%, 9/1/99, MBIA, GO
------------------- --------------------- --------------------
1,005 50 1,055
------------------- --------------------- --------------------
Boston Water & Sewer Common Revenue, 7.10%, 11/01/19, 516 516
Prerefunded 11/1/99 @ 102, LOC: US Government Securities
Dedham, 3.75%, 10/8/99 2,280 2,280
Greenfield, 3.50%, 1/14/00 5,305 5,305
Hingham, 5.50, 10/15/99 301 301
Massachusetts State Convention Center Authority, 6.00%, 501 501
9/1/99
------------------- --------------------- --------------------
1,318 7,585 8,903
------------------- --------------------- --------------------
Macomb County Transportation Funding Notes, 6.50%, 125 125
Marquette Electric Utility Revenue, 4.80%, 7/1/00, AMBAC 25 25
------------------- --------------------- --------------------
- 150 150
------------------- --------------------- --------------------
Mississippi Higher Education, Series B, 6.00%, 1/1/00 - 253 253
------------------- --------------------- --------------------
American Public Energy Agency, Series A, Nebraska Gas 249 249
Supply, 3.35%, 6/1/00, AMBAC
Nebraska Public Power Revenue, 4.50%, 1/1/00 994 994
------------------- --------------------- --------------------
- 1,243 1,243
------------------- --------------------- --------------------
Washoe County, Reno Sparks Convention/Visitor, 7.10%, - 26 26
7/1/07, Prerefunded 7/1/00 @ 102, AMBAC ------------------- --------------------- --------------------
Hudson School District, Lot C, 7.25%, 12/15/99 131 131
Nashua, 3.50%, 12/10/99 2,001 2,001
New Hampshire State Capital Appreciation, College 2,000 2,000
Savings Bond Program, 0.00%, 8/1/99
Salem, 3.75%, 12/16/99, GO 2,152 2,152
Strafford, 3.60%, 12/31/99, GO 4,203 4,203
------------------- --------------------- --------------------
2,000 8,487 10,487
------------------- --------------------- --------------------
Arlington Central School District, 3.88%, 11/9/99, GO 2,503 2,503
New York City Transitional Finance Authority Revenue, 450 450
4.00%, 8/15/99
</TABLE>
B-110
<PAGE> 488
<TABLE>
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
--------------------- --------------------- --------------- -----------------------------------------------------------
<S> <C> <C> <C>
4.00%, 8/15/99
20 20 New York City, Series B, 7.50%, 10/1/11, Prerefunded
10/1/99 @ 101.50, GO
250 250 New York State Dorm Authority, Series B, 4.80%, 5/15/00
5,000 5,000 New York, Series F-3, 3.30%*, 2/15/13, GO
100 100 Suffock County, Series B, 4.50%, 10/15/99, AMBAC
NORTH CAROLINA (0.2%):
155 155 Clinton, 4.00%, 6/1/00, GO
250 250 Stokes County, 4.80%, 6/1/00, LOC: FGIC
OHIO (3.6%):
1,000 1,000 Columbus Sewer Revenue, 5.70%, 6/1/00
1,500 1,500 Cuyahoga County, 6.70%, 10/1/10, Prerefunded 10/1/99 @
102, LOC: US Government Securities
3,425 3,425 Dayton Water System Revenue, 3.50%,12/1/99
700 700 Ohio Air Quality Development Authority Revenue, Mead
Corp., 3.80%*, 10/1/01
625 625 Ottawa County, 4.25%, 9/1/99, LOC: MBIA
OKLAHOMA (2.0%):
750 750 Broken Arrow, 7.00%, 7/1/00, GO
610 610 Cleveland County Independent School District, 7.40%,
4/1/00, GO
1,100 1,100 Oklahoma City, 4.65%, 8/1/99
1,555 1,555 Oklahoma County Independent School District #12, Series
B, 4.50-6.20%, 7/1/00, GO
PENNSYLVANIA (4.8%):
5,000 5,000 Allegheny County Hospital Development Authority, St.
Francis Medical Center, 3.65%*, 11/1/27
50 50 Derry Township School District, 6.20%, 9/1/13. Prerefunded
3/1/00 @ 100, AMBAC
1,000 1,000 Lehigh County Purpose Authority Revenue, 8.75%, 11/1/14,
Prerefunded 11/1/99 @ 102, LOC: US Treasury Obligation
25 25 Mahheim Township School District, 4.50%, 6/1/00, FGIC, GO
1,000 1,000 Pennsylvania State Turnpike Commission Turnpike
Revenue, 7.63%, 12/1/09, Prerefunded 12/1/99 @ 102
2,000 2,000 Pennsylvania Housing Finance Agency, Rental Housing,
5.40%, 1/1/00, FNMA COLL
25 25 Perkiomen Valley School District, 4.35%, 3/1/00, AMBAC,
600 600 Philadelphia, School District, 4.00%, 6/30/00, LOC: Mellon
Bank
25 25 Westmorland County Municipal Authority Revenue, 7.25%,
7/1/15, Prerefunded 7/1/00 @ 100, MBIA
RHODE ISLAND (0.5%):
1,000 1,000 Rhode Island State Construction Capital Development Loan,
Series A, 4.25% 9/1/99, LOC: FGIC
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
AMORTIZED AMORTIZED AMORTIZED
DESCRIPTION COST COST COST
- ------------------------------------------------------------------------------- --------------------- -----------------------
<S> <C> <C> <C>
4.00%, 8/15/99
New York City, Series B, 7.50%, 10/1/11, Prerefunded 20 20
10/1/99 @ 101.50, GO
New York State Dorm Authority, Series B, 4.80%, 5/15/00 253 253
New York, Series F-3, 3.30%*, 2/15/13, GO 5,001 5,001
Suffock County, Series B, 4.50%, 10/15/99, AMBAC 100 100
--------------- --------------------- --------------------
450 7,877 8,327
--------------- --------------------- --------------------
Clinton, 4.00%, 6/1/00, GO 155 155
Stokes County, 4.80%, 6/1/00, LOC: FGIC 252 252
--------------- --------------------- --------------------
252 155 407
--------------- --------------------- --------------------
Columbus Sewer Revenue, 5.70%, 6/1/00 1,020 1,020
Cuyahoga County, 6.70%, 10/1/10, Prerefunded 10/1/99 @ 1,539 1,539
102, LOC: US Government Securities
Dayton Water System Revenue, 3.50%,12/1/99 3,427 3,427
Ohio Air Quality Development Authority Revenue, Mead 700 700
Corp., 3.80%*, 10/1/01
Ottawa County, 4.25%, 9/1/99, LOC: MBIA 625 625
--------------- --------------------- --------------------
2,164 5,147 7,311
--------------- --------------------- --------------------
Broken Arrow, 7.00%, 7/1/00, GO 772 772
Cleveland County Independent School District, 7.40%, 625 625
4/1/00, GO
Oklahoma City, 4.65%, 8/1/99 1,100 1,100
Oklahoma County Independent School District #12, Series 1,583 1,583
B, 4.50-6.20%, 7/1/00, GO
--------------- --------------------- --------------------
1,100 2,980 4,080
--------------- --------------------- --------------------
Allegheny County Hospital Development Authority, St. 4,999 4,999
Francis Medical Center, 3.65%*, 11/1/27
Derry Township School District, 6.20%, 9/1/13. Prerefunded 51 51
3/1/00 @ 100, AMBAC
Lehigh County Purpose Authority Revenue, 8.75%, 11/1/14, 1,034 1,034
Prerefunded 11/1/99 @ 102, LOC: US Treasury Obligation
Mahheim Township School District, 4.50%, 6/1/00, FGIC, GO 25 25
Pennsylvania State Turnpike Commission Turnpike 1,035 1,035
Revenue, 7.63%, 12/1/09, Prerefunded 12/1/99 @ 102
Pennsylvania Housing Finance Agency, Rental Housing, 2,017 2,017
5.40%, 1/1/00, FNMA COLL
Perkiomen Valley School District, 4.35%, 3/1/00, AMBAC, 25 25
Philadelphia, School District, 4.00%, 6/30/00, LOC: Mellon 603 603
Bank
Westmorland County Municipal Authority Revenue, 7.25%, 26 26
7/1/15, Prerefunded 7/1/00 @ 100, MBIA
--------------- --------------------- --------------------
2,672 7,143 9,815
--------------- --------------------- --------------------
Rhode Island State Construction Capital Development Loan, 1,001 - 1,001
Series A, 4.25% 9/1/99, LOC: FGIC --------------- --------------------- --------------------
</TABLE>
B-111
<PAGE> 489
<TABLE>
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
--------------------- --------------------- ---------------- ----------------------------------------------------------
<S> <C> <C> <C>
SOUTH CAROLINA (0.3%):
20 20 Oconee County School District, 5.50%, 1/1/00, MBIA
665 665 South Carolina State Capital Improvement, Series B, 5.60%,
3/1/00
TENNESSEE (7.1%):
2,245 2,245 Knox County Health & Hospital Facilities, Baptist Health
System, 5.00%, 4/15/00, AMBAC
25 25 Knox County Hospital Facilities Revenue, Series A, Mercy
Health System, 7.60%, 9/1/19, Prerefunded 9/1/99 @ 102,
AMBAC
25 25 Knox County Hospital Facilities Revenue, Series C, Fort
Sanders Alliance Obligation, 7.00, 1/1/08, Prerefunded
1/1/00 @ 102, MBIA
1,000 1,000 Metro Government Nashville & Davidson Public
Improvement, Series A, 4.60%, 11/15/99
40 40 Metropolitan Government Nashville & Davidson, County,
Series C, Airport Revenue 5.90%, 7/1/00, FGIC
30 30 Metropolitan Government Nashville & Davidson, County,
4.63%, 5/15/00
5,000 5,000 Metropolitan Government, Nashville & Davidson County,
Country Music Hall of Fame, 3.65%*, 6/1/22
40 40 Rhea County, 5.25%, 3/1/00, AMBAC, GO
5,000 5,000 Sevier County Public Building Authority, Local Public
Improvement, 4.00%*, 6/1/25
1,000 1,000 Sullivan County, Health Education & Housing, 7.20%,
2/15/00, LOC: MBIA
TEXAS (1.7%):
500 500 Dallas Water Works & Sewer Revenue, 5.90%, 10/1/99
80 80 Houston Water & Sewer System Revenue, Series C, Jr. Lien,
5.90%, 12/1/99, MBIA-IBC
435 435 Hurst Bedford Independent School District, 6.60%, 8/15/05,
Prerefunded 8/15/99 @ 102
1,000 1,000 Irving Independent School District GO, 4.50%, 8/15/99
300 300 Lone Star Texas Airport Improvement Authority, Series A-5,
Multiple Mode, 3.85%*, 12/1/14
400 400 Lone Star Texas Airport Improvement Authority, Series B-1,
Multiple Mode, 3.85%*, 12/1/14
25 25 San Antonio Certificates of Obligation, 6.80%, 8/1/06,
Prerefunded 8/1/99 @ 100, GO
100 100 San Antonio Certificates of Obligation, 7.75%, 8/1/99, GO
700 700 Texas State Public Finance Authority, Series D, 6.60%,
10/1/03 Prerefunded 10/1/99 @ 100
VIRGINIA (0.7%):
1,000 1,000 Arlington Count, 5.50%, 6/1/00, GO
355 355 James City County, 6.40%, 12/15/99, LOC: FGIC
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT P RO FORMA
MMF MMF COMBINED
AMORTIZED AMORTIZED AMORTIZED
DESCRIPTION COST COST COST
- ----------------------------------------------------------- --------------------- ---------------- -----------------
<S> <C> <C> <C>
Oconee County School District, 5.50%, 1/1/00, MBIA 20 20
South Carolina State Capital Improvement, Series B, 5.60%, 673 673
3/1/00
--------------- --------------------- ----------------
673 20 693
--------------- --------------------- ----------------
Knox County Health & Hospital Facilities, Baptist Health 2,270 2,270
System, 5.00%, 4/15/00, AMBAC
Knox County Hospital Facilities Revenue, Series A, Mercy 26 26
Health System, 7.60%, 9/1/19, Prerefunded 9/1/99 @ 102,
AMBAC
Knox County Hospital Facilities Revenue, Series C, Fort 26 26
Sanders Alliance Obligation, 7.00, 1/1/08, Prerefunded
1/1/00 @ 102, MBIA
Metro Government Nashville & Davidson Public 1,004 1,004
Improvement, Series A, 4.60%, 11/15/99
Metropolitan Government Nashville & Davidson, County, 41 41
Series C, Airport Revenue 5.90%, 7/1/00, FGIC
Metropolitan Government Nashville & Davidson, County, 30 30
4.63%, 5/15/00
Metropolitan Government, Nashville & Davidson County, 5,000 5,000
Country Music Hall of Fame, 3.65%*, 6/1/22
Rhea County, 5.25%, 3/1/00, AMBAC, GO 40 40
Sevier County Public Building Authority, Local Public 5,000 5,000
Improvement, 4.00%*, 6/1/25
Sullivan County, Health Education & Housing, 7.20%, 1,040 1,040
2/15/00, LOC: MBIA
--------------- --------------------- ----------------
2,044 12,433 14,477
--------------- --------------------- ----------------
Dallas Water Works & Sewer Revenue, 5.90%, 10/1/99 502 502
Houston Water & Sewer System Revenue, Series C, Jr. Lien, 80 80
5.90%, 12/1/99, MBIA-IBC
Hurst Bedford Independent School District, 6.60%, 8/15/05, 444 444
Prerefunded 8/15/99 @ 102
Irving Independent School District GO, 4.50%, 8/15/99 1,001 1,001
Lone Star Texas Airport Improvement Authority, Series A-5, 300 300
Multiple Mode, 3.85%*, 12/1/14
Lone Star Texas Airport Improvement Authority, Series B-1, 400 400
Multiple Mode, 3.85%*, 12/1/14
San Antonio Certificates of Obligation, 6.80%, 8/1/06, 25 25
Prerefunded 8/1/99 @ 100, GO
San Antonio Certificates of Obligation, 7.75%, 8/1/99, GO 100 100
Texas State Public Finance Authority, Series D, 6.60%, 704 704
10/1/03 Prerefunded 10/1/99 @ 100
--------------- --------------------- ----------------
1,503 2,053 3,556
--------------- --------------------- ----------------
Arlington Count, 5.50%, 6/1/00, GO 1,019 1,019
James City County, 6.40%, 12/15/99, LOC: FGIC 359 359
--------------- --------------------- ----------------
359 1,019 1,378
--------------- --------------------- ----------------
</TABLE>
B-112
<PAGE> 490
<TABLE>
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION
--------------------- --------------------- --------------------- ------------------------------------------------------
<S> <C> <C> <C>
WASHINGTON (5.1%):
500 500 King County, GO, 4.70% 10/1/99
435 435 Richland Electric Revenue, 5.30% 11/1/99
1,000 1,000 Snohomish County Public Utility, 6.40%, 1/1/00
100 100 Snohomish Water & Sewer, 4.45%, 11/1/99, FSA
1,750 1,750 Spokane Revenue Anticipation Note, 3.50%, 1/31/00
500 500 Tacoma Electric System Revenue, 7.30%, 1/1/00
1,000 1,000 Washington State Public Power Supply, Series B, Project 3
7.25%, 7/1/15, Prerefunded 1/1/00 @ 102
30 30 Washington State Public Power Supply, Series B, 7.50%,
7/1/18, Prerefunded 7/1/00 @ 102
50 50 Washington State Public Water Supply, 5.10%, 7/1/00
5,000 5,000 Washington State, Series VR 96B, 3.40%*, 6/1/20, GO
WEST VIRGINIA (0.7%):
500 500 West Virginia State Hospital Finance Authority, 7.00%,
8/1/04, Prerefunded 8/1/99 @ 102, LOC: FSA
1,000 1,000 West Virginia State, State Road, 3.50%, 6/1/00
WISCONSIN (0.8%):
100 100 Madison Waterworks Management, 6.80%, 1/1/00
30 30 Wisconsin State Health & Educational Facilities Authority
Revenue, Series B, SSM Healthcare Projects, 7.00%, 6/1/20
Prerefunded 6/1/00 @ 102, MBIA
1,500 1,500 Wisconsin State Transportation Revenue, 4.10%, 7/1/00
WYOMING (0.3%):
600 600 Lincoln County PCR, Series C, Exxon Co. Project, 3.80%*,
11/1/14
TOTAL MUNICIPAL BONDS
INVESTMENT COMPANIES (5.3%):
5,093,044 5,093,044 Aim Tax Free Money Market
100 100 Bank Of New York Cash Reserve Money Market Fund
1,000 1,000 Dreyfus Tax Free Money Market
4,012,917 4,012,917 Federated Tax-Free Fund
1,890,596 1,890,596 Goldman Sachs Tax-Free Fund
TOTAL INVESTMENT COMPANIES
TOTAL (COST $206,704) (a)
<CAPTION>
AMSOUTH ISG
TAX-EXEMPT TAX-EXEMPT PRO FORMA
MMF MMF COMBINED
AMORTIZED AMORTIZED AMORTIZED
DESCRIPTION COST COST COST
- --------------------------------------------------------------------------------- --------------------- --------------------
<S> <C> <C> <C>
King County, GO, 4.70% 10/1/99 501 501
Richland Electric Revenue, 5.30% 11/1/99 437 437
Snohomish County Public Utility, 6.40%, 1/1/00 1,012 1,012
Snohomish Water & Sewer, 4.45%, 11/1/99, FSA 100 100
Spokane Revenue Anticipation Note, 3.50%, 1/31/00 1,750 1,750
Tacoma Electric System Revenue, 7.30%, 1/1/00 508 508
Washington State Public Power Supply, Series B, Project 3 1,035 1,035
7.25%, 7/1/15, Prerefunded 1/1/00 @ 102
Washington State Public Power Supply, Series B, 7.50%, 32 32
7/1/18, Prerefunded 7/1/00 @ 102
Washington State Public Water Supply, 5.10%, 7/1/00 50 50
Washington State, Series VR 96B, 3.40%*, 6/1/20, GO 5,001 5,001
------------------- --------------------- --------------------
938 9,488 10,426
------------------- --------------------- --------------------
West Virginia State Hospital Finance Authority, 7.00%, 510 510
8/1/04, Prerefunded 8/1/99 @ 102, LOC: FSA
West Virginia State, State Road, 3.50%, 6/1/00 1,000 1,000
------------------- --------------------- --------------------
1,510 - 1,510
------------------- --------------------- --------------------
Madison Waterworks Management, 6.80%, 1/1/00 101 101
Wisconsin State Health & Educational Facilities Authority 31 31
Revenue, Series B, SSM Healthcare Projects, 7.00%, 6/1/20
Prerefunded 6/1/00 @ 102, MBIA
Wisconsin State Transportation Revenue, 4.10%, 7/1/00 1,509 1,509
------------------- --------------------- --------------------
- 1,641 1,641
------------------- --------------------- --------------------
Lincoln County PCR, Series C, Exxon Co. Project, 3.80%*, - 600 600
11/1/14 ------------------- --------------------- --------------------
------------------- --------------------- --------------------
TOTAL MUNICIPAL BONDS $ 35,404 $ 100,472 $135,876
------------------- --------------------- --------------------
Aim Tax Free Money Market 5,093 5,093
Bank Of New York Cash Reserve Money Market Fund *** ***
Dreyfus Tax Free Money Market 1 1
Federated Tax-Free Fund 4,013 4,013
Goldman Sachs Tax-Free Fund 1,891 1,891
------------------- --------------------- --------------------
TOTAL INVESTMENT COMPANIES $ 5,904 $ 5,094 $ 10,998
------------------- --------------------- --------------------
------------------- --------------------- --------------------
TOTAL (COST $206,704) (a) $ 96,133 $ 110,571 $206,704
------------------- --------------------- --------------------
- -----------------------
PERCENTAGES INDICATED ARE BASED ON NET ASSETS OF $204,829.
(a) Cost for federal income tax and financial reporting purposes are the
same.
* Variable rate security. Rate presented represents rate in effect at
July 31, 1999. Date presented reflects next rate change date.
** Put and demand features exist allowing the fund to require the
repurchase of the instrument within variable time periods including
daily, weekly, monthly, and semiannually.
*** Amount is less than one thousand dollars.
AMBAC - Insured by AMBAC Indemnity Corp.
FGIC - Insured by Financial Guaranty Insurance Corp.
FNMA - Insured by Federal National Mortgage Assoc.
FSA - Insured by Financial Security Assoc.
GO - General Obligation
LOC - Letter of Credit
MBIA - Insured by Municipal Bond Insurance Assoc.
PCR - Pollution Control Revenue
</TABLE>
B-113
<PAGE> 491
AMSOUTH FUNDS
REGISTRATION STATEMENT ON FORM N-14
PART C. OTHER INFORMATION
Item 15. Indemnification
The information required by this item is incorporated by reference to
Item 25 of Post-Effective Amendment No. 30 (filed October 1, 1999) to
Registrant's Registration Statement on Form N-1A (File No. 33-21660) under the
Securities Act of 1933 and the Investment Company Act of 1940 (File No.
811-5551).
<TABLE>
<CAPTION>
Item 16. Exhibits
- -------- --------
<S> <C>
(1) (a) Amended Declaration of Trust, dated as of June 25, 1993 and filed on
August 19, 1993, is incorporated by reference to Post-Effective
Amendment No. 11 to Registrant's Registration Statement on Form
N-1A.
(2) (a) Bylaws -- incorporated by reference to
Registrant's Registration Statement on Form N-1A.
(2) (b) Amendment No. 1 to Bylaws incorporated by reference to Post-Effective
Amendment No. 3 to Registrant's Registration Statement on Form N-1A.
(3) Not applicable.
(4) Form of Agreement and Plan of Reorganization is filed herewith.
(5) (a) Rights of Shareholders
</TABLE>
The following portions of Registrant's Declaration of Trust
incorporated as Exhibit (a) hereto, define the rights of
shareholders:
ARTICLE III
No Preemptive Rights
Section 4. Shareholders shall have no preemptive or other
right to subscribe to any additional Shares or other
securities issued by the Trust.
C-1
<PAGE> 492
Status of Shares and Limitation of Personal Liability
Section 5. Shares shall be deemed to be personal property
giving only the rights provided in this instrument. Every
Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof
and to have become a party hereto. The death of a Shareholder
during the continuance of the Trust shall not operate to
terminate the same nor entitle the representative of any
deceased Shareholder to an accounting or to take any action in
court or elsewhere against the Trust or the Trustees, but only
to the rights of said decedent under this Trust. Ownership of
Shares shall not entitle the Shareholder to any title in or to
the whole or any part of the Trust property or right to call
for a partition or division of the same or for an accounting,
nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind
personally any Shareholder, nor except as specifically
provided herein to call upon any Shareholder for the payment
of any sum of money or assessment whatsoever other than such
as the Shareholder may at any time personally agree to pay.
ARTICLE IV
The Trustees
Election
Section 1. There shall initially be one Trustee who shall be
Stephen G. Mintos. The number of Trustees shall be as provided
in the Bylaws or as fixed from to time by the Trustees. The
shareholders may elect Trustees at any meeting of Shareholders
called by the Trustees for that purpose. Each Trustee shall
serve during the continued lifetime of the Trust until he
dies, resigns or is removed, or, if sooner, until the next
meeting of Shareholders called for the purpose of electing
Trustees and the election and qualification of his successor.
Any Trustee may resign at any time by written instrument
signed by him and delivered to any officer of the Trust, to
each other Trustee or to a meeting of the Trustees. Such
resignation shall be effective upon receipt unless specified
to be effective at some other time. Except to the extent
expressly provided in a written agreement with the Trust, no
Trustee resigning and no Trustee removed shall have any right
to any compensation for any period following his resignation
or removal, or any right to damages on account of such
removal.
Advisory, Management and Distribution
Section 6. The Trustees may, at any time and from time to
time, contract for exclusive or nonexclusive advisory and/or:
management services with any
C-2
<PAGE> 493
corporation, trust, association or other organization (the
"Manager"), every such contract to comply with such
requirements and restrictions as may be set forth in the
Bylaws; and any such contract may provide for one or more
Sub-advisers who shall perform all or part of the obligations
of the Manager under such Contract and may contain such other
terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine, including, without
limitation, authority to determine from time to time what
investments shall be purchased, held, sold or exchanged and
what portion, if any, of the assets of the Trust shall be held
uninvested and to make changes in the Trust's investments. The
Trustees may also, at any time and from time to time, contract
with the Manager or any other corporation, trust, association
or other organization, appointing it exclusive or nonexclusive
distributor or principal underwriter for the Shares, every
such contract to comply with such requirements and
restrictions as may be set forth in the Bylaws; and any such
contract may contain such other terms interpretive of or in
addition to said requirements and restrictions as the Trustees
may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee,
employee, manager, adviser, principal underwriter or
distributor or agent of or for any corporation, trust,
association, or other organization, or of or for any parent or
affiliate of any organization, with which an advisory or
management contract, or principal underwriter's or
distributor's contract, or transfer, shareholder servicing or
other agency contract may have been or may hereafter be made,
or that any such organization, or any parent or affiliate
thereof, is a Shareholder or has an interest in the Trust, or
that
(ii) any corporation, trust, association or other organization
with which an advisory or management contract or principal
underwriter's or distributor's contract, or transfer,
shareholder servicing or other agency contract may have been
or may hereafter be made also has an advisory or management
contract, or principal underwriter's or distributor's
contract, or transfer, Shareholder servicing or other agency
contract with one or more other corporations, trusts,
associations, or other organizations, or has other business or
interests shall not affect the validity of any such contract
or disqualify any Shareholder, Trustee or officer of the Trust
from voting upon or executing the same or create any liability
or accountability to the Trust or its Shareholders.
ARTICLE V
Shareholders' Voting Powers and Meetings
C-3
<PAGE> 494
Shareholders shall have such power to vote as is provided for
in, and may hold meetings and take actions pursuant to the
provisions of the Bylaws.
ARTICLE VIII
Indemnification
Shareholders
Section 4. In case any Shareholder or former Shareholder shall
be held to be personally liable solely by reason of his or her
being or having been a Shareholder and not because of his or
her acts or omissions or for some other reason, the
Shareholder or former Shareholder (or his or her heirs,
executors, administrators or other legal representatives or in
the case of a corporation or other entity, its corporate or
other general successor) shall be entitled to be held harmless
from and indemnified against all loss and expense, arising
from such liability, but only out of the assets, of the
particular series of Shares of which he or she is or was a
Shareholder.
ARTICLE IX
Miscellaneous
Trustees, Shareholders, etc. Not Personally Liable; Notice
Section 1. All persons extending credit to, contracting with
or having any claim against the Trust or a particular series
of Shares shall look only to the assets of the Trust or the
assets of that particular series of Shares for payment under
such credit, contract or claim; and neither the Shareholders
nor the Trustees, nor any of the Trust's officers, employees
or agents, whether past, present or future, shall be
personally liable therefor. Nothing in this Declaration of
Trust shall protect any Trustee against any liability to which
such Trustee would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of
Trustee.
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officer
or officers shall give notice that this Declaration of Trust
is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite that the same was executed or
made by or on behalf of the Trust or by them as Trustee or
Trustees or as officers or officer and not individually and
that the obligations of such instrument are not binding upon
any of them or the Shareholders individually but are binding
only upon the assets and property of the Trust, and may
contain such further recital as he or she or they may deem
appropriate, but the omission thereof shall not operate to
bind any Trustee or Trustees or officer or officers or
Shareholder or Shareholders individually.
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Duration and Termination of Trust
Section 4. Unless terminated as provided herein, the Trust
shall continue without limitation of time. The Trust may be
terminated at any time by the vote of Shareholders holding at
least a majority of the Shares of each series entitled to vote
or by the Trustees by written notice to the Shareholders. Any
series of Shares may be terminated at any time by vote of
Shareholders holding at least a majority of the Shares of such
series entitled to vote or by the Trustees by written notice
to the Shareholders of such series.
Upon termination of the Trust or of any one or more series of
Shares, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or
anticipated, of the Trust or of the particular series as may
be determined by the Trustees, the Trust shall, in accordance
with such procedures as the Trustees consider appropriate,
reduce the remaining assets to distributable form in cash or
shares or other securities, or any combination thereof, and
distribute the proceeds to the Shareholders of the series
involved, ratably according to the number of Shares of such
series held by the several Shareholders of such series on the
date of termination.
Amendments
Section 7. This Declaration of Trust may be amended at any
time by an instrument in writing signed by a majority of the
then Trustees when authorized to do so by vote of Shareholders
holding a majority of the Shares of each series entitled to
vote, except that an amendment which shall affect the holders
of one or more series of Shares but not the holders of all
outstanding series shall be authorized by vote of the
Shareholders holding a majority of the Shares entitled to vote
of each series affected and no vote of Shareholders of a
series not affected shall be required. Amendments having the
purpose of changing the name of the Trust, of establishing,
changing, or eliminating the par value of the shares or of
supplying any omission, curing any ambiguity or curing,
correcting or supplementing any defective or inconsistent
provision contained herein shall not require authorization by
Shareholder vote.
The following portions of Registrant's Bylaws incorporated as
Exhibit (b) hereto, define the rights of Shareholders:
ARTICLE 11
Shareholders' Voting Powers and Meetings
11.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Article
IV, Section 1 of the Declaration of
C-5
<PAGE> 496
Trust, provided, however, that no meeting of Shareholders is
required to be called for the purpose of electing Trustees
unless and until such time as less than a majority of the
Trustees have been elected by the Shareholders, (ii) with
respect to any Manager or Sub-Adviser as provided in Article
IV, Section 6 of the Declaration of Trust to the extent
required by the 1940 Act, (iii) with respect to any
termination of this Trust to the extent and as provided in
Article IX, Section 4 of the Declaration of Trust, (iv) with
respect to any amendment of the Declaration of Trust to the
extent and as provided in Article IX, Section 7 of the
Declaration of Trust, (v) to the same extent as the
stockholders of a Massachusetts business corporation as to
whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class
action on behalf of the Trust or the Shareholders, and (vi)
with respect to such additional matters relating to the Trust
as may be required by law, the Declaration of Trust , these
Bylaws or any registration of the Trust with the Commission
(or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled
to vote and each fractional Share shall be entitled to a
proportionate fractional vote. The Shareholders of any
particular series shall not be entitled to vote on any matters
as to which such series is not affected. Except with respect
to matters as to which the Trustees have determined that only
the interests of one or more particular series are affected or
as required by law, all of the Shares of each series shall, on
matters as to which it is entitled to vote, vote with other
series so entitled as a single class. Notwithstanding the
foregoing, with respect to matters which would otherwise be
voted on by two or more series as a single class, the Trustees
may, in their sole discretion, submit such matters to the
Shareholders of any or all such series, separately. There
shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or
prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy
purporting to be executed by or on behalf of a Shareholder
shall be deemed valid unless challenged at or prior to its
exercise and the burden of proving invalidity shall rest on
the challenger. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action
required by law, the Declaration of Trust or these Bylaws to
be taken by shareholders.
11.2 Voting and Meetings. Meetings of the Shareholders may be
called by the Trustees for the purpose of electing Trustees as
provided in Article IV, Section 1 of the Declaration of Trust
and for such other purposes as may be prescribed by law, by
the Declaration of Trust or by these Bylaws. Meetings of the
Shareholders may also be called by the Trustees from time to
time for the purpose of taking action upon any other matter
deemed by the Trustees to be necessary or desirable. A meeting
of Shareholders may be held at any place designated by the
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<PAGE> 497
Trustees. Written notice of any meeting of Shareholders shall
be given or caused to be given by the Trustees by mailing such
notice at least seven days before such meeting, postage
prepaid, stating the time and place of the meeting, to each
Shareholder at the Shareholder's address as it appears on the
records of the Trust. Whenever notice of a meeting is required
to be given to a Shareholder under the Declaration of Trust or
these Bylaws, a written waiver thereof, executed before or
after the meeting by such Shareholder or his attorney
thereunto authorized and filed with the records of the
meeting, shall be deemed equivalent to such notice.
11.3 Quorum and Required Vote. A majority of Shares entitled
to vote shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law
or of the Declaration of Trust or these Bylaws permits or
requires that holders of any series shall vote as a series,
then a majority of the aggregate number of Shares of that
series entitled to vote shall be necessary to constitute a
quorum for the transaction of business by that series. Any
lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held, within a reasonable
time after the date set for the original meeting, without the
necessity of further notice. Except when a larger vote is
required by any provision of law or the Declaration of Trust
or these Bylaws, a majority of the Shares voted shall decide
any questions and a plurality shall elect a Trustee, provided
that where any provision of law or of the Declaration of Trust
or these Bylaws permits or requires that the holders of any
series shall vote as a series, then a majority of the Shares
of that series voted on the matter (or a plurality with
respect to the election of a Trustee) shall decide that matter
insofar as that series is concerned.
11.4 Action by Written Consent. Any action taken by
Shareholders may be taken without a meeting if a majority of
Shareholders entitled to vote on the matter (or such larger
proportion thereof as shall be required by any express
provision of law or the Declaration of Trust or these Bylaws)
consent to the action in writing and such written consents are
filed with the records of the meetings of Shareholders. Such
consent shall be treated for all purposes as a vote taken at a
meeting of Shareholders.
11.5 Record Dates. For the purposes of determining the
shareholders who are entitled to vote or act at any meeting or
any adjournment thereof, or who are entitled to receive
payment of any dividend or of any other distribution, the
Trustees may from time to time fix a time, which shall be not
more than 90 days before the date of any meeting of
shareholders or the date for the payment of any dividend or of
any other distributions, as the record date for determining
the shareholders having the right to notice of and to vote at
such meeting and any adjournment thereof or the right to
receive such dividend or distribution, and in such case only
shareholders of record on such record date shall have such
right
C-7
<PAGE> 498
notwithstanding any transfer of shares on the books of the
Trust after the record date; or without fixing such record
date the Trustees may for any of such purposes close the
register or transfer books for all of any part of such period.
(6) (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).
(6) (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).
(6) (c) Form of Amended Schedule A dated September 15,
1998 to the Investment Advisory Agreement dated as of
August 1, 1988 between the Registrant and AmSouth
Bank, N.A. is incorporated by reference to Exhibit
5(c) of Post-Effective Amendment No. 28 to the
Registrant's Registration Statement filed on
September 24, 1998 on Form N-1A (File
No. 33-21660).
(6) (d) Form of Amended Schedule A to the Investment
Advisory Agreement between the Registrant and AmSouth
Bank, N.A. -- incorporated by reference to
Post-Effective Amendment No. 30 filed on October 1,
1999 to the Registrant's Registration Statement on
Form N-1A (File No. 33- 21660).
(6) (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).
(6) (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).
(6) (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
C-8
<PAGE> 499
No. 23 to the Registrant's Registration Statement
filed on July 3, 1997 on Form N-1A (File No.
33-21660).
(6) (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).
(6) (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
22, 1998 on Form N-1A (File No. 33-21660).
(6) (j) Investment Sub-Advisory Agreement dated September
1, 1998 between AmSouth Bank and OakBrook
Investments, LLC is incorporated by reference to
Exhibit 5(i) of Post-Effective Amendment No. 28 to
the Registrant's Registration Statement filed on
September 24, 1998 on Form N-1A (File No. 33-21660).
(6) (k) Form of the Investment Sub-Advisory Agreement
between AmSouth Bank and Lazard Asset Management --
incorporated by reference to Post-Effective Amendment
No. 30 filed on October 1, 1999 to the Registrant's
Registration Statement on Form N-1A (File No. 33-
21660).
(6) (l) Form of the Investment Sub-Advisory Agreement
between AmSouth Bank and Bennett Lawrence Management
-- incorporated by reference to Post-Effective
Amendment No. 30 filed on October 1, 1999 to the
Registrant's Registration Statement on Form N-1A
(File No. 33- 21660).
(7) (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).
(7) (b) Form of Amended Schedules A, B, C and D dated
September 15, 1998 to the Distribution Agreement
between the Registrant and BISYS Fund Services
Limited Partnership are incorporated by reference to
Exhibit 6(b) of Post-Effective Amendment No. 28 to
the Registrant's
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<PAGE> 500
Registration Statement filed on September 24, 1998 on
Form N-1A (File No. 33-21660).
(7) (c) Form of Amended Schedules A, B, C and D to the
Distribution Agreement between the Registrant and
BISYS Fund Services Limited Partnership --
incorporated by reference to Post-Effective Amendment
No. 30 filed on October 1, 1999 to the Registrant's
Registration Statement on Form N-1A (File No.
33-21660).
(7) (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).
(7) (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).
(7) (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).
(8) Not applicable.
(9) (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) Form of Amended Schedule A dated September 15, 1998
to the Custodian Agreement between the Registrant and
AmSouth Bank is incorporated by reference to Exhibit
8(b) of Post-Effective Amendment No. 28 to the
Registrant's Registration Statement filed on
September 24, 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 --
incorporated by reference to Post-Effective Amendment
No. 30 filed on October 1, 1999 to the Registrant's
Registration Statement on Form N-1A (File No.
33-21660).
C-10
<PAGE> 501
(10) (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).
(10) (b) Form of Amended Schedule A dated September 15,
1998 to the Management and Administration Agreement
between the Registrant and ASO Services Company is
incorporated by reference to Exhibit 9(b) of
Post-Effective Amendment No. 28 to the Registrant's
Registration Statement filed on September 24, 1998 on
Form N-1A (File No. 33-21660).
(10) (c) Form of Amended Schedule A to the Management and
Administration Agreement between the Registrant and
ASO Services Company -- incorporated by reference to
Post-Effective Amendment No. 30 filed on October 1,
1999 to the Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(10) (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).
(10) (e) Form of Amended Schedules A and B dated September
15, 1998 to the Sub-Administration Agreement between
ASO Services Company and AmSouth Bank are
incorporated by reference to Exhibit 9(d) of
Post-Effective Amendment No. 28 to the Registrant's
Registration Statement filed on September 24, 1998 on
Form N-1A (File No. 33-21660).
(10) (f) Form of Amended Schedules A and B to the
Sub-Administration Agreement between ASO Services
Company and AmSouth Bank --incorporated by reference
to Post-Effective Amendment No. 30 filed on October
1, 1999 to the Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(10) (g) 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).
(10) (h) Form of Amended Schedules A and B dated September
15, 1998 to the Sub-Administration Agreement between
ASO Services Company and BISYS Fund Services Limited
Partnership are incorporated by reference
C-11
<PAGE> 502
to Exhibit 9(f) of Post-Effective Amendment No. 28 to
the Registrant's Registration Statement on filed on
September 24, 1998 Form N-1A (File No. 33-21660).
(10) (i) Form of Amended Schedules A and B to the
Sub-Administration Agreement between ASO Services
Company and BISYS Fund Services Limited Partnership
-- incorporated by reference to Post-Effective
Amendment No. 30 filed on October 1, 1999 to the
Registrant's Registration Statement on Form N-1A
(File No. 33-21660).
(10) (j) 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).
(10) (k) Form of Amended Schedule A dated September 15,
1998 to the Transfer Agency and Shareholder Services
Agreement between the Registrant and BISYS Fund
Services Ohio, Inc. is incorporated by reference to
Exhibit 9(h) of Post-Effective Amendment No. 28 to
the Registrant's Registration Statement filed on
September 24, 1998 on Form N-1A (File No. 33-21660).
(10) (l) Form of Amended Schedule A to the Transfer Agency
and Shareholder Services Agreement between the
Registrant and BISYS Fund Services Ohio, Inc.--
incorporated by reference to Post-Effective Amendment
No. 30 to the Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(10) (m) Amended Schedule D dated September 15, 1998 to
the Transfer Agency Agreement between the Registrant
and BISYS Fund Services Ohio, Inc. -- incorporated by
reference to Post-Effective Amendment No. 30 filed on
October 1, 1999 to the Registrant's Registration
Statement on Form N-1A (File No. 33-21660).
(10) (n) Fund Accounting Agreement dated as of April 1,
1996 between the Registrant and BISYS Fund Services,
Inc. is incorporated by reference to Post-Effective
Amendment No. 19 to the Registrant's Registration
Statement on Form N-1A (File No. 33-21660).
(10) (o) Shareholder Servicing Plan for AmSouth Funds adopted
by the Board of Trustees on December 6, 1995 is
incorporated by reference to
C-12
<PAGE> 503
Exhibit 18(b) to Post-Effective Amendment No. 18 to
the Registrant's Registration Statement on Form N-1A
(File No. 33-21660).
(10) (p) 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).
(10) (q) Amended Schedule I dated September 15, 1998 to
the Shareholder Servicing Plan is incorporated by
reference to Exhibit 18(e) of Post-Effective
Amendment No. 28 to the Registrant's Registration
Statement filed on September 24, 1998 on Form N-1A
(File No. 33-21660).
(10) (r) Form of Amended Schedule I to the Shareholder
Servicing Plan -- incorporated by reference to
Post-Effective Amendment No. 30 filed on October 1,
1999 to the Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(10) (s) 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).
(11) Opinion of Ropes & Gray -- incorporated by reference
to Post-Effective Amendment No. 30 filed on October
1, 1999 to the Registrant's Registration Statement on
Form N-1A (File No. 33-21660).
(12) Not Applicable.
(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).
(13) (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).
(13) (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).
C-13
<PAGE> 504
(13) (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).
(13) (e) 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).
(13) (f) Form of Amended Schedule A dated September 15,
1998 to the Distribution and Shareholder Services
Plan is incorporated by reference to Exhibit 18(h) to
Post-Effective Amendment No. 27 to the Registrant's
Registration Statement filed on June 17, 1998 on Form
N-1A (File No. 33-21660).
(13) (g) Form of Amended Schedule A to the Distribution and
Shareholder Services Plan -- incorporated by
reference to Post- Effective Amendment No. 30 filed
on October 1, 1999 to the Registrant's Registration
Statement on Form N-1A (File No. 33-21660).
(13) (h) Multiple Class Plan for AmSouth 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).
(13) (i) Amended Schedule I dated September 15, 1998 to
the Multiple Class Plan is incorporated by reference
to Exhibit 18(b) to Post-Effective Amendment No. 28
to the Registrant's Registration Statement filed on
September 24, 1998 on Form N-1A (File No. 33-21660).
(13) (j) Form of Amended Schedule I to the Multiple Class
Plan -- incorporated by reference to Post-Effective
Amendment No. 30 filed on October 1, 1999 to the
Registrant's Registration Statement on Form N-1A
(File No. 33-21660).
(14) (a) Consent of KPMG LLP is filed herewith.
(14) (b) Consent of PricewaterhouseCoopers LLP is filed
herewith.
C-14
<PAGE> 505
(14) (c) Consent of Ropes & Gray -- incorporated by
reference to Post-Effective Amendment No. 30 filed on
October 1, 1999 to the Registrant's Registration
Statement on Form N-1 A (File No. 33-21660).
(15) Not applicable.
(16) Executed Powers of Attorney -- incorporated by
reference to Post- Effective Amendment No. 30 filed
on October 1, 1999 to the Registrant's Registration
Statement on Form N-1 A (File No. 33-21660).
Item 17. Undertakings
(1) The registrant agrees that prior to any public
reoffering of the securities registered through the
use of a prospectus which is a part of this
registration statement by any person or party who is
deemed to be an underwriter within the meaning of
Rule 145(c) of the Securities Act, the reoffering
prospectus will contain the information called for by
the applicable registration form for reofferings by
persons who may be deemed underwriters, in addition
to the information called for by the other items of
the applicable form.
(2) The registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a
part of an amendment to the registration statement
and will not be used until the amendment is
effective, and that, in determining any liability
under the 1933 Act, each post-effective amendment
shall be deemed to be a new registration statement
for the securities offered therein, and the offering
of the securities at that time shall be deemed to be
the initial bona fide offering of them.
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<PAGE> 506
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has been
signed on behalf of the Registrant in the City of Washington, District of
Columbia, on the nineteenth day of November, 1999.
AmSouth Funds
Registrant
_____________________
*J. David Huber
Chairman
As required by the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
* Chairman November 19, 1999
----------------------------------------
J. David Huber
* Treasurer November 19, 1999
----------------------------------------
Charles L. Booth
* Trustee November 19, 1999
----------------------------------------
James H. Woodward, Jr.
* Trustee November 19, 1999
----------------------------------------
Homer H. Turner, Jr.
* Trustee November 19, 1999
----------------------------------------
Wendell D. Cleaver
* Trustee November 19, 1999
----------------------------------------
Dick D. Briggs, Jr.
* By November 19, 1999
----------------------------------------
Alan G. Priest,
Attorney-in-fact, pursuant to Powers of Attorney filed herewith
</TABLE>
C-16
<PAGE> 507
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has been
signed on behalf of the Registrant in the City of Washington, District of
Columbia, on the nineteenth day of November, 1999.
AmSouth Funds
Registrant
/s/ J. David Huber
-------------------
*J. David Huber
Chairman
As required by the Securities Act of 1933, this registration statement has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
*/s/ J. David Huber Chairman November 19, 1999
-------------------------------
J. David Huber
*/s/ Charles L. Booth Treasurer November 19, 1999
-------------------------------
Charles L. Booth
*/s/ James H. Woodward, Jr. Trustee November 19, 1999
-------------------------------
James H. Woodward, Jr.
*/s/ Homer H. Turner, Jr. Trustee November 19, 1999
-------------------------------
Homer H. Turner, Jr.
*/s/ Wendell D. Cleaver Trustee November 19, 1999
-------------------------------
Wendell D. Cleaver
*/s/ Dick D. Briggs, Jr. Trustee November 19, 1999
-------------------------------
Dick D. Briggs, Jr.
* By: /s/ Alan G. Priest November 19, 1999
-------------------------------
Alan G. Priest,
Attorney-in-fact, pursuant to Powers of Attorney filed herewith
</TABLE>
C-17
<PAGE> 508
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
(4) Form of Agreement and Plan of Reorganization.
(14) (a) Consent of KPMG LLP.
(14) (b) Consent of PricewaterhouseCoopers LLP.
</TABLE>
<PAGE> 1
EXHIBIT (4)
Form of Agreement and Plan of Reorganization
<PAGE> 2
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as
of DATE, by and between AmSouth Funds ("AmSouth"), a Massachusetts business
trust, and The Infinity Mutual Funds, Inc. ("Infinity"), a Maryland corporation,
on behalf of the ISG Funds. The capitalized terms used herein shall have the
meaning ascribed to them in this Agreement.
PLAN OF REORGANIZATION
(a) Infinity will sell, assign, convey, transfer and deliver to
AmSouth, and AmSouth will acquire, on the Exchange Date, all of the properties
and assets existing at the Valuation Time in the following funds:
ISG Current Income Portfolio ("ISG Current Income")
ISG Treasury Money Market Fund ("ISG Treasury Money Market")
ISG Moderate Growth & Income Portfolio ("ISG Moderate Growth & Income")
ISG Growth & Income Portfolio ("ISG Growth & Income")
ISG Growth Portfolio ("ISG Growth")
ISG Aggressive Growth Portfolio ("ISG Aggressive Growth")
ISG Mid-Cap Fund ("ISG Mid-Cap")
ISG Large-Cap Equity Fund ("ISG Large-Cap Equity")
ISG International Equity Fund ("ISG International Equity")
ISG Capital Growth Fund ("ISG Capital Growth")
ISG Tennessee Tax-Exempt Fund ("ISG Tennessee Tax-Exempt")
ISG Limited Term Tennessee Tax-Exempt Fund ("ISG Limited Term Tennessee
Tax-Exempt")
ISG Limited Term U.S. Government Fund ("ISG Limited Term U.S. Government")
ISG Limited Term Income Fund ("ISG Limited Term Income")
ISG Equity Income Fund ("ISG Equity Income")
ISG Municipal Income Fund ("ISG Municipal Income")
ISG Small-Cap Opportunity Fund ("ISG Small-Cap Opportunity")
ISG Tax-Exempt Money Market Fund ("ISG Tax-Exempt Money Market")
ISG Prime Money Market Fund ("ISG Prime Money Market")
ISG Government Income Fund ("ISG Government Income")
ISG Income Fund ("ISG Income")
(such funds each are an "ISG Fund" and are collectively the "ISG Funds").
Such acquisition is to be made by the following funds:
AmSouth Strategic Portfolios: Current Income Portfolio ("AmSouth
Current Income")
AmSouth Treasury Reserve Money Market Fund ("AmSouth Treasury Reserve
Money
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Market")
AmSouth Strategic Portfolios: Moderate Growth and Income Portfolio
("AmSouth Moderate Growth and Income")
AmSouth Strategic Portfolios: Growth and Income Portfolio ("AmSouth
Growth and Income")
AmSouth Strategic Portfolios: Growth Portfolio ("AmSouth Growth")
AmSouth Strategic Portfolios: Aggressive Growth Portfolio ("AmSouth
Aggressive Growth")
AmSouth Mid Cap Fund ("AmSouth Mid Cap")
AmSouth Large Cap Fund ("AmSouth Large Cap")
AmSouth International Equity Fund ("AmSouth International Equity")
AmSouth Capital Growth Fund ("AmSouth Capital Growth")
AmSouth Tennessee Tax-Exempt Fund ("AmSouth Tennessee Tax-Exempt")
AmSouth Limited Term Tennessee Tax-Exempt Fund ("AmSouth Limited Term
Tennessee Tax-Exempt")
AmSouth Limited Term U.S. Government Fund ("AmSouth Limited Term U.S.
Government")
AmSouth Government Income Fund ("AmSouth Government Income")
AmSouth Limited Term Bond Fund ("AmSouth Limited Term Bond")
AmSouth Equity Income Fund ("AmSouth Equity Income")
AmSouth Municipal Bond Fund ("AmSouth Municipal Bond")
AmSouth Small Cap Fund ("AmSouth Small Cap")
AmSouth Tax-Exempt Money Market Fund ("AmSouth Tax-Exempt Money
Market")
AmSouth Prime Money Market Fund ("AmSouth Prime Money Market")
AmSouth Bond Fund ("AmSouth Bond")
(such funds each are an "AmSouth Fund" and are collectively the
"AmSouth Funds").
For purposes of this Agreement the respective ISG Funds correspond to the
AmSouth Funds as follows:
ISG Current Income AmSouth Current Income
ISG Treasury Money Market AmSouth Treasury Reserve Money Market
ISG Moderate Growth & Income AmSouth Moderate Growth and Income
ISG Growth & Income AmSouth Growth and Income
ISG Growth AmSouth Growth
ISG Aggressive Growth AmSouth Aggressive Growth
ISG Mid-Cap AmSouth Mid Cap
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ISG Large-Cap Equity AmSouth Large Cap
ISG International Equity AmSouth International Equity
ISG Capital Growth AmSouth Capital Growth
ISG Tennessee Tax-Exempt AmSouth Tennessee Tax-Exempt
ISG Limited Term Tennessee Tax-Exempt AmSouth Limited Term Tennessee Tax-
Exempt
ISG Limited Term U.S. Government AmSouth Limited Term U.S. Government
ISG Government Income AmSouth Government Income
ISG Limited Term Income AmSouth Limited Term Bond
ISG Equity Income AmSouth Equity Income
ISG Municipal Income AmSouth Municipal Bond
ISG Small-Cap Opportunity AmSouth Small Cap
ISG Tax-Exempt Money Market AmSouth Tax-Exempt Money Market
ISG Prime Money Market AmSouth Prime Money Market
ISG Income AmSouth Bond
In consideration therefor, each AmSouth Fund shall, on the Exchange Date, assume
all of the liabilities of the corresponding ISG Fund and transfer to the
corresponding ISG Fund a number of full and fractional AmSouth Class A, Class B,
or Trust shares of the corresponding AmSouth Fund (collectively, "Shares")
having an aggregate net asset value equal to the value of all of the assets of
each ISG Fund transferred to the corresponding AmSouth Fund on such date less
the value of all of the liabilities of each ISG Fund assumed by the
corresponding AmSouth Fund on that date. It is intended that each reorganization
described in this Agreement shall be a tax-free reorganization under the
Internal Revenue Code of 1986, as amended (the "Code").
(b) Upon consummation of the transactions described in paragraph (a) of
this Agreement, each ISG Fund in complete liquidation shall distribute to its
respective shareholders of record as of the Exchange Date the Shares received by
it, each shareholder being entitled to receive that number of Shares equal to
the proportion which the number of shares of common stock of the ISG Fund held
by such shareholder bears to the number of such shares of the ISG Fund
outstanding on such date. ISG Fund shareholders of record holding Institutional
Class shares will receive AmSouth Trust shares; ISG Fund shareholders of record
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holding Class B shares will receive AmSouth Class B shares; and ISG Fund
shareholders of record holding Class A shares will receive AmSouth Class A
shares.
AGREEMENT
AmSouth and Infinity represent, warrant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF INFINITY. Each of Infinity and
each ISG Fund represent and warrant to and agree with AmSouth and each AmSouth
Fund that:
(a) Infinity is a corporation duly established and validly existing
under the laws of the State of Maryland and has power to own all of its
properties and assets and to carry out its obligations under this Agreement.
Infinity and each ISG Fund is not required to qualify as a foreign association
in any jurisdiction. Infinity and each ISG Fund has all necessary federal, state
and local authorizations to carry on its business as now being conducted and to
fulfill the terms of this Agreement, except for shareholder approval and as
otherwise described in Section 1(l).
(b) Infinity is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company, and such
registration has not been revoked or rescinded and is in full force and effect.
Each ISG Fund has elected to qualify and has qualified as a regulated investment
company under Part I of Subchapter M of the Code, as of and since its first
taxable year, and qualifies and intends to continue to qualify as a regulated
investment company for its taxable year ending upon its liquidation. Each ISG
Fund has been a regulated investment company under such sections of the Code at
all times since its inception.
(c) The statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of portfolio investments
(indicating their market values) for each ISG Fund at and for the year ended
December 31, 1998, such statements and schedules having been audited by KPMG
LLP, independent accountants to Infinity, have been furnished to AmSouth. Such
statements of assets and liabilities and schedule fairly present the financial
position of each ISG Fund as of their respective dates and said statements of
operations and changes in net assets fairly reflect the results of operations
and changes in net assets for the periods covered thereby in conformity with
generally accepted accounting principles. The statements of assets and
liabilities, statements of operations, statements of changes in net assets and
schedules of investments (indicating their market values) for each ISG Fund for
the six-month period ended June 30, 1999, which are unaudited, have also been
furnished to AmSouth. Such statements of assets and liabilities and schedules
fairly present the financial position of the ISG Funds as of their respective
dates, and said statements of operations and changes in net assets fairly
reflect the results of its operations and changes in financial position for the
periods covered thereby in conformity with generally accepted accounting
principles.
(d) The prospectuses of the ISG Funds dated May 1, 1999 (the "ISG
Prospectuses") and the Statement of Additional Information for the ISG Funds
dated May 1, 1999 and on file
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with the Securities and Exchange Commission, which have been previously
furnished to AmSouth, did not as of their dates and do not as of the date hereof
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of Infinity or any ISG Fund, overtly threatened
against Infinity or any ISG Fund which assert liability on the part of Infinity
or any ISG Fund.
(f) There are no material contracts outstanding to which Infinity, with
respect to the ISG Funds, or any ISG Fund is a party, other than as disclosed in
the ISG Prospectuses and the corresponding Statement of Additional Information
or in the Registration Statement and the Proxy Statement.
(g) Neither Infinity, with respect to the ISG Funds, nor any ISG Fund
has any known liabilities of a material nature, contingent or otherwise, other
than those shown as belonging to it on its statement of assets and liabilities
as of June 30, 1999, and those incurred in the ordinary course of Infinity's
business as an investment company since that date. Prior to the Exchange Date,
Infinity will advise AmSouth of all known material liabilities, contingent or
otherwise, incurred by it, with respect to the ISG Funds, and each ISG Fund
subsequent to June 30, 1999, whether or not incurred in the ordinary course of
business.
(h) As used in this Agreement, the term "Investments" shall mean each
ISG Fund's investments shown on the schedule of its portfolio investments as of
June 30, 1999, referred to in Section 1(c) hereof, as supplemented with such
changes as Infinity or each ISG Fund shall make after June 30, 1999, which
changes shall be disclosed to AmSouth, and changes resulting from stock
dividends, stock split-ups, mergers and similar corporate actions.
(i) Each ISG Fund has filed or will file all federal and state tax
returns which, to the knowledge of Infinity's officers, are required to be filed
by each ISG Fund and has paid or will pay all federal and state taxes shown to
be due on said returns or on any assessments received by each ISG Fund. To the
best of such officers' knowledge, all tax liabilities of each ISG Fund have been
adequately provided for on its books, and no tax deficiency or liability of any
ISG Fund has been asserted, and no question with respect thereto has been
raised, by the Internal Revenue Service or by any state or local tax authority
for taxes in excess of those already paid.
(j) As of both the Valuation Time and the Exchange Date and except for
shareholder approval and otherwise as described in Section 1(l), Infinity on
behalf of each ISG Fund will have full right, power and authority to sell,
assign, transfer and deliver the Investments and any other assets and
liabilities of each ISG Fund to be transferred to the corresponding AmSouth Fund
pursuant to this Agreement. At the Exchange Date, subject only to the delivery
of the Investments and any such other assets and liabilities as contemplated by
this
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Agreement, AmSouth will, on behalf of each AmSouth Fund, acquire the Investments
and any such other assets subject to no encumbrances, liens or security
interests in favor of any third party creditor of Infinity or an ISG Fund and,
except as described in Section 1(k), without any restrictions upon the transfer
thereof.
(k) Except as to Investments otherwise disclosed as unregistered
securities pursuant to Section 1(h) hereof, no registration under the Securities
Act of 1933, as amended (the "1933 Act"), of any of the Investments would be
required if they were, as of the time of such transfer, the subject of a public
distribution by either of Infinity or AmSouth.
(l) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Infinity on behalf of
the ISG Funds or any ISG Fund of the transactions contemplated by this
Agreement, except such as may be required under the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), the 1940 Act, state
securities or blue sky laws (which term as used herein shall include the laws of
the District of Columbia and of Puerto Rico) or the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "H-S-R Act").
(m) The registration statement (the "Registration Statement") filed
with the Securities and Exchange Commission (the "Commission") by AmSouth on
Form N-14 relating to the Shares issuable hereunder, and the proxy statement of
Infinity included therein (the "Proxy Statement"), on the effective date of the
Registration Statement and insofar as they relate to Infinity and the ISG Funds,
(i) will comply in all material respects with the provisions of the 1933 Act,
the 1934 Act and the 1940 Act and the rules and regulations thereunder and (ii)
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which such statements were made,
not misleading; and at the time of the shareholders' meeting referred to in
Section 8(a) below and on the Exchange Date, the prospectus contained in the
Registration Statement of which the Proxy Statement is a part (the
"Prospectus"), as amended or supplemented by any amendments or supplements filed
with the Commission by AmSouth, insofar as it relates to Infinity and the ISG
Funds, will not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not misleading; provided, however, that none of the representations
and warranties in this subsection shall apply to statements in or omissions from
the Registration Statement, the Prospectus or the Proxy Statement, made in
reliance upon or in conformity with information furnished by AmSouth, or any
AmSouth Fund, for use in the Registration Statement, Prospectus, or Proxy
Statement.
(n) All of the issued and outstanding shares of common stock of each
ISG Fund have been offered for sale and sold in conformity with all applicable
federal and state securities laws.
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<PAGE> 8
2. REPRESENTATIONS AND WARRANTIES OF AMSOUTH. Each of AmSouth and each
AmSouth Fund jointly and severally represent and warrant to and agree with
Infinity and each ISG Fund that:
(a) AmSouth is a business trust duly established and validly existing
under the laws of The Commonwealth of Massachusetts and has power to carry on
its business as it is now being conducted and to carry out this Agreement.
AmSouth and each AmSouth Fund is not required to qualify as a foreign
association in any jurisdiction. AmSouth and each AmSouth Fund has all necessary
federal, state and local authorizations to own all of its properties and assets
and to carry on its business as now being conducted and to fulfill the terms of
this Agreement, except as set forth in Section 2(i).
(b) AmSouth is registered under the 1940 Act as an open-end management
investment company, and such registration has not been revoked or rescinded and
is in full force and effect. Each AmSouth Fund that has had active operations
prior to the Exchange Date, has elected to qualify and has qualified as a
regulated investment company under Part I of Subchapter M of the Code, as of and
since its first taxable year, and qualifies and intends to continue to qualify
as a regulated investment company for its taxable year ending upon its
liquidation. Each AmSouth Fund that has had actual operations prior to the
Exchange Date has been a regulated investment company under such sections of the
Code at all times since its inception. AmSouth Current Income, AmSouth Treasury
Reserve Money Market, AmSouth Moderate Growth and Income, AmSouth Growth and
Income, AmSouth Growth, AmSouth Aggressive Growth, AmSouth International Equity,
AmSouth Mid Cap, AmSouth Large Cap, AmSouth Capital Growth, AmSouth Tennessee
Tax-Exempt, AmSouth Limited Term Tennessee Tax-Exempt, and AmSouth Limited Term
U.S. Government, which have not had active operations prior to the Exchange
Date, intend to qualify as regulated investment companies under Part I of
Subchapter M of the Code.
(c) The statements of assets and liabilities, statements of operations,
statements of changes in net assets and schedules of investments (indicating
their market values) for each AmSouth Fund for the year ended JULY 31, 1999,
such statements and schedules having been audited by PricewaterhouseCoopers LLP,
independent accountants to AmSouth, have been furnished to Infinity.
(d) The prospectuses of each AmSouth Fund dated December 1, 1999 and
December 14, 1999, (collectively, the "AmSouth Prospectuses"), and the
Statements of Additional Information for the AmSouth Funds, dated December 1,
1999 and December 14, 1999 and on file with the Securities and Exchange
Commission, which have been previously furnished to Infinity, did not as of
their dates and do not as of the date hereof contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to
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<PAGE> 9
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of AmSouth or any AmSouth Fund, overtly threatened
against AmSouth or any AmSouth Fund which assert liability on the part of
AmSouth or any AmSouth Fund.
(f) There are no material contracts outstanding to which AmSouth or any
AmSouth Fund is a party, other than as disclosed in the AmSouth Prospectuses and
the corresponding Statement of Additional Information or in the Registration
Statement.
(g) Neither AmSouth nor any AmSouth Fund has any known liabilities of a
material nature, contingent or otherwise, other than those shown on its
statement of assets and liabilities as of July 31, 1999, referred to above and
those incurred in the ordinary course of the business of AmSouth as an
investment company or any AmSouth Fund since such date. Prior to the Exchange
Date, AmSouth will advise Infinity of all known material liabilities, contingent
or otherwise, incurred by it and each AmSouth Fund subsequent to July 31, 1999,
whether or not incurred in the ordinary course of business.
(h) Each AmSouth Fund has filed or will file all federal and state tax
returns which, to the knowledge of AmSouth's officers, are required to be filed
by each AmSouth Fund and has paid or will pay all federal and state taxes shown
to be due on said returns or on any assessments received by each AmSouth Fund.
To the best of such officers' knowledge, all tax liabilities of each AmSouth
Fund have been adequately provided for on its books, and no tax deficiency or
liability of any AmSouth Fund has been asserted, and no question with respect
thereto has been raised, by the Internal Revenue Service or by any state or
local tax authority for taxes in excess of those already paid.
(i) No consent, approval, authorization or order of any governmental
authority is required for the consummation by AmSouth or any AmSouth Fund of the
transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, the 1934 Act, the 1940 Act, state securities or Blue Sky
laws or the H-S-R Act.
(j) As of both the Valuation Time and the Exchange Date and otherwise
as described in Section 2(i), AmSouth on behalf of each AmSouth Fund will have
full right, power and authority to purchase the Investments and any other assets
and assume the liabilities of each ISG Fund to be transferred to the
corresponding AmSouth Fund pursuant to this Agreement.
(k) The Registration Statement, the Prospectus and the Proxy Statement,
on the effective date of the Registration Statement and insofar as they relate
to AmSouth and the AmSouth Funds: (i) will comply in all material respects with
the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
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<PAGE> 10
which they were made, not misleading; and at the time of the shareholders'
meeting referred to in Section 8(a) and at the Exchange Date, the Prospectus, as
amended or supplemented by any amendments or supplements filed with the
Commission by AmSouth or any AmSouth Fund, will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
none of the representations and warranties in this subsection shall apply to
statements in or omissions from the Registration Statement, the Prospectus or
the Proxy Statement made in reliance upon and in conformity with information
furnished by Infinity or any ISG Fund for use in the Registration Statement, the
Prospectus or the Proxy Statement.
(l) Shares to be issued to each ISG Fund have been duly authorized and,
when issued and delivered pursuant to this Agreement and the Prospectus, will be
legally and validly issued and will be fully paid and nonassessable by AmSouth
and no shareholder of AmSouth will have any preemptive right of subscription or
purchase in respect thereof.
(m) The issuance of Shares pursuant to this Agreement will be in
compliance with all applicable federal and state securities laws.
(n) Each of AmSouth Government Income Fund, AmSouth Limited Term Bond
Fund, AmSouth Equity Income Fund, AmSouth Municipal Bond Fund, AmSouth Small Cap
Fund, AmSouth Tax-Exempt Money Market Fund, AmSouth Prime Money Market Fund,
AmSouth Bond Fund, is qualified and will at all times through the Exchange Date
qualify for taxation as a "regulated investment company" under Sections 851 and
852 of the Code. AmSouth Current Income, AmSouth Treasury Reserve Money Market,
AmSouth Moderate Growth and Income, AmSouth Growth and Income, AmSouth Growth,
AmSouth Aggressive Growth, AmSouth International Equity, AmSouth Mid Cap,
AmSouth Large Cap, AmSouth Capital Growth, AmSouth Tennessee Tax-Exempt, AmSouth
Limited Term Tennessee Tax-Exempt, and AmSouth Limited Term U.S. Government,
upon filing of their first income tax returns at the completion of their first
taxable year will elect to be regulated investment companies and until such time
will take all steps necessary to ensure qualification as regulated investment
companies under Sections 851 and 852 of the Code.
(o) AmSouth through its administrator, transfer agent, custodian or
otherwise, will cooperate fully and in a timely manner with Infinity and each
ISG Fund in completing each of the actions required of it and its agents and
necessary for consummation of the transactions described in Sections 3 (a) and
(b) of this Agreement.
3. REORGANIZATION. (a) Subject to the requisite approval of the
shareholders of each ISG Fund and to the other terms and conditions contained
herein (including each ISG Fund's obligation to distribute to its respective
shareholders all of its investment company taxable income and net capital gain
as described in Section 9(k) hereof), Infinity and each ISG Fund agree to sell,
assign, convey, transfer and deliver to the corresponding AmSouth Fund, and each
AmSouth Fund agree to acquire from the corresponding ISG Fund, on the Exchange
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<PAGE> 11
Date all of the Investments and all of the cash and other assets of each ISG
Fund in exchange for that number of Shares of the corresponding AmSouth Fund
provided for in Section 4 and the assumption by the corresponding AmSouth Fund
of all of the liabilities of the ISG Fund. Pursuant to this Agreement, such ISG
Fund will, as soon as practicable after the Exchange Date, distribute in
liquidation all of the Shares received by it to its shareholders in exchange for
their shares of common stock of such ISG Fund.
(b) Infinity, on behalf of each ISG Fund, will pay or cause to be paid
to the corresponding AmSouth Fund any interest and cash dividends received by it
on or after the Exchange Date with respect to the Investments transferred to the
AmSouth Funds hereunder. Infinity, on behalf of each ISG Fund, will transfer to
the corresponding AmSouth Fund any rights, stock dividends or other securities
received by Infinity or any ISG Fund after the Exchange Date as stock dividends
or other distributions on or with respect to the Investments transferred, which
rights, stock dividends and other securities shall be deemed included in the
assets transferred to each AmSouth Fund at the Exchange Date and shall not be
separately valued, in which case any such distribution that remains unpaid as of
the Exchange Date shall be included in the determination of the value of the
assets of the ISG Fund acquired by the corresponding AmSouth Fund.
4. EXCHANGE DATE; VALUATION TIME. On the Exchange Date, AmSouth will
deliver to Infinity a number of Shares having an aggregate net asset value equal
to the value of the assets of the corresponding ISG Fund acquired by each
AmSouth Fund, less the value of the liabilities of such ISG Fund assumed,
determined as hereafter provided in this Section 4.
(a) Subject to Section 4(d) hereof, the value of each ISG Fund's net
assets will be computed as of the Valuation Time using the valuation procedures
for the corresponding AmSouth Fund set forth in the AmSouth Prospectus and
Statement of Additional Information. In no event shall the same security held by
both Infinity and AmSouth be valued at different prices.
(b) Subject to Section 4(d) hereof, the net asset value of a share of
each AmSouth Fund will be determined to the nearest full cent as of the
Valuation Time, using the valuation procedures set forth in the AmSouth
Prospectus for the particular AmSouth Fund.
(c) Subject to Section 4(d), the Valuation Time shall be 4:00 p.m.
Eastern Standard time on MARCH 10, 2000 for all of the ISG Funds, or such
earlier or later days as may be mutually agreed upon in writing by the parties
hereto (the "Valuation Time").
(d) No formula will be used to adjust the net asset value of any ISG
Fund or AmSouth Fund to take into account differences in realized and unrealized
gains and losses.
(e) Each AmSouth Fund shall issue its Shares to the corresponding ISG
Fund on one share deposit receipt registered in the name of the corresponding
ISG Fund. Each ISG Fund
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shall distribute in liquidation the Shares received by it hereunder pro rata to
its shareholders by redelivering such share deposit receipt to AmSouth's
transfer agent which will as soon as practicable set up open accounts for each
ISG Fund shareholder in accordance with written instructions furnished by
Infinity.
(f) Each AmSouth Fund shall assume all liabilities of the corresponding
ISG Fund, whether accrued or contingent, in connection with the acquisition of
assets and subsequent dissolution of the corresponding ISG Fund or otherwise,
except that recourse for assumed liabilities relating to a particular ISG Fund
will be limited to the corresponding AmSouth Fund.
5. EXPENSES, FEES, ETC. (a) Subject to subsections 5(b) through 5(e),
all fees and expenses, including accounting expenses, portfolio transfer taxes
(if any) or other similar expenses incurred directly in connection with the
consummation by AmSouth and Infinity of the transactions contemplated by this
Agreement will be borne by AMSOUTH BANK, including the costs of proxy materials,
proxy solicitation, and legal expenses; provided, however, that such expenses
will in any event be paid by the party directly incurring such expenses if and
to the extent that the payment by the other party of such expenses would result
in the disqualification of any AmSouth Fund or any ISG Fund, as the case may be,
as a "regulated investment company" within the meaning of Section 851 of the
Code. Fees and expenses not incurred directly in connection with the
consummation of the Transaction will be borne by the party incurring such fees
and expenses.
(b) In the event the transactions contemplated by this Agreement are
not consummated by reason of Infinity being either unwilling or unable to go
forward (other than by reason of the nonfulfillment or failure of any condition
to Infinity's obligations referred to in Section 8(a) or Section 10), Infinity
shall pay directly all reasonable fees and expenses incurred by AmSouth in
connection with such transactions, including, without limitation, legal,
accounting and filing fees.
(c) In the event the transactions contemplated by this Agreement are
not consummated by reason of AmSouth being either unwilling or unable to go
forward (other than by reason of the nonfulfillment or failure of any condition
to AmSouth's obligations referred to in Section 8(a) or Section 9), AmSouth
shall pay directly all reasonable fees and expenses incurred by Infinity in
connection with such transactions, including without limitation legal,
accounting and filing fees.
(d) In the event the transactions contemplated by this Agreement are
not consummated for any reason other than (i) AmSouth or Infinity being either
unwilling or unable to go forward or (ii) the nonfulfillment or failure of any
condition to Infinity or AmSouth's obligations referred to in Section 8(a),
Section 9 or Section 10 of this Agreement, then each of Infinity and AmSouth
shall bear the expenses it has actually incurred in connection with such
transactions.
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(e) Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not consummated, no
party shall be liable to the other party for any damages resulting therefrom,
including without limitation consequential damages, except as specifically set
forth above.
6. PERMITTED ASSETS. AmSouth and Infinity agree to review the assets of
the ISG Funds to ensure that at any time prior to the Exchange Date the assets
of any ISG Fund do not include any assets that the corresponding AmSouth Fund is
not permitted, or reasonably believes to be unsuitable for it, to acquire,
including without limitation any security that, prior to its acquisition by any
ISG Fund, is unsuitable for the corresponding AmSouth Fund to acquire.
7. EXCHANGE DATE. Delivery of the assets of the ISG Funds to be
transferred, assumption of the liabilities of the ISG Funds to be assumed, and
the delivery of Shares to be issued shall be made on March 13, 2000 at 10:00
a.m. or at such other times and dates agreed to by Infinity and AmSouth, the
date and time upon which such delivery is to take place being referred to herein
as the "Exchange Date."
8. SPECIAL MEETING OF SHAREHOLDERS; DISSOLUTION. (a) Infinity agrees to
call a special meeting of the shareholders of each ISG Fund as soon as is
practicable after the effective date of the Registration Statement for the
purpose of considering the sale of all of the assets of each ISG Fund to and the
assumption of all of the liabilities of each ISG Fund by the corresponding
AmSouth Fund as herein provided, approving this Agreement, and authorizing the
liquidation and dissolution of each ISG Fund, and, except as set forth in
Section 13, it shall be a condition to the obligations of each of the parties
hereto that the holders of the shares of common stock of each ISG Fund shall
have approved this Agreement and the transactions contemplated herein in the
manner required by law and Infinity's Articles of Incorporation and Bylaws at
such a meeting on or before the Valuation Time.
(b) Infinity and each ISG Fund agree that the liquidation and
dissolution of each ISG Fund will be effected in the manner provided in
Infinity's Articles of Incorporation and Bylaws in accordance with applicable
law, that it will not make any distributions of any Shares to the shareholders
of a ISG Fund without first paying or adequately providing for the payment of
all of such ISG Fund's known debts, obligations and liabilities.
(c) Each of AmSouth and Infinity will cooperate with the other, and
each will furnish to the other the information relating to itself required by
the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations
thereunder to be set forth in the Registration Statement, including the
Prospectus and the Proxy Statement.
9. CONDITIONS TO AMSOUTH'S OBLIGATIONS. The obligations of AmSouth and
each AmSouth Fund hereunder shall be subject to the following conditions:
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(a) That this Agreement shall have been approved and the transactions
contemplated hereby, including the liquidation and dissolution of the ISG Funds,
shall have been approved by the shareholders of each ISG Fund in the manner
required by law.
(b) Infinity shall have furnished to AmSouth a statement of each ISG
Fund's assets and liabilities, with values determined as provided in Section 4
of this Agreement, together with a list of Investments with their respective tax
costs, all as of the Valuation Time, certified on Infinity's behalf by its
President (or any Vice President) and Treasurer, and a certificate of both such
officers, dated the Exchange Date, to the effect that as of the Valuation Time
and as of the Exchange Date there has been no material adverse change in the
financial position of any ISG Fund since June 30, 1999, other than changes in
the Investments since that date or changes in the market value of the
Investments, or changes due to net redemptions of shares of the ISG Funds,
dividends paid or losses from operations.
(c) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of Infinity and each ISG Fund made in this
Agreement are true and correct in all material respects as if made at and as of
such dates, Infinity and each ISG Fund has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to each of such dates, and Infinity shall have furnished to AmSouth a
statement, dated the Exchange Date, signed by Infinity's President (or any Vice
President) and Treasurer certifying those facts as of such dates.
(d) Infinity shall have delivered to AmSouth a letter from KPMG LLP
dated the Exchange Date stating that such firm reviewed the federal and state
income tax returns of each ISG Fund for the year ended December 31, 1999 and
that, in the course of such review, nothing came to their attention which caused
them to believe that such returns did not properly reflect, in all material
respects, the federal and state income taxes of each ISG Fund for the periods
covered thereby, or that each ISG Fund would not qualify as a regulated
investment company for federal income tax purposes.
(e) There shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.
(f) AmSouth shall have received an opinion of Stroock & Stroock & Lavan
LLP, in form reasonably satisfactory to AmSouth and dated the Exchange Date, to
the effect that (i) Infinity is a corporation duly established and validly
existing under the laws of the State of Maryland, (ii) this Agreement has been
duly authorized, executed, and delivered by Infinity on behalf of the ISG Funds
and, assuming that the Registration Statement, the Prospectus and the Proxy
Statement comply with the 1933 Act, the 1934 Act and the 1940 Act and assuming
due authorization, execution and delivery of this Agreement by AmSouth, is a
valid and binding obligation of Infinity with respect to the ISG Funds, subject
to the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto,
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<PAGE> 15
and such counsel shall not be required to express an opinion with respect to the
application of equitable principles in any proceeding, whether at law or in
equity, or with respect to the provisions of this Agreement intended to limit
liability for particular matters to an ISG Fund and its assets, (iii) Infinity
and each ISG Fund has power to sell, assign, convey, transfer and deliver the
Investments and other assets contemplated hereby and, upon consummation of the
transactions contemplated hereby in accordance with the terms of this Agreement,
Infinity and each ISG Fund will have duly sold, assigned, conveyed, transferred
and delivered such Investments and other assets to AmSouth, (iv) the execution
and delivery of this Agreement did not, and the consummation of the transactions
contemplated hereby will not, violate Infinity's Articles of Incorporation and
Bylaws or any provision of an agreement known to such counsel to which Infinity,
with respect to the ISG Funds, or any ISG Fund is a party or by which it is
bound, it being understood that with respect to investment restrictions as
contained in Infinity's Articles of Incorporation and Bylaws, such counsel may
rely upon a certificate of an officer of Infinity whose responsibility it is to
advise Infinity with respect to such matters, and (v) no consent, approval,
authorization or order of any court or governmental authority is required for
the consummation by Infinity or any ISG Fund of the transactions contemplated
hereby, except such as have been obtained under the 1933 Act, the 1934 Act and
the 1940 Act and such as may be required under state securities or blue sky laws
and the H-S-R Act, and it being understood that such opinion shall not be deemed
to apply to AmSouth's compliance obligations under the 1933 Act, 1934 Act, 1940
Act, state securities or blue sky laws and H-S-R Act.
(g) AmSouth shall have received an opinion of Ropes & Gray, counsel to
AmSouth addressed to AmSouth and each AmSouth Fund, and to Infinity and ISG
Funds in form reasonably satisfactory to AmSouth and dated the Exchange Date
(which opinion would be based upon certain factual representations and subject
to certain qualifications), to the effect that, on the basis of the existing
provisions of the Code, current administrative rules and court decisions, for
Federal income tax purposes: (i) no gain or loss will be recognized by any ISG
Fund or its Shareholders upon the transfer of the assets to the corresponding
AmSouth Fund in exchange for Shares and the assumption by such AmSouth Fund of
the liabilities of the ISG Fund or upon the distribution of Shares by the ISG
Fund to its shareholders in liquidation pursuant to this Agreement; (ii) the
basis of the Shares an Infinity Shareholder receives in connection with the
transaction will be the same as the basis of his or her ISG Fund shares
exchanged therefor; (iii) an Infinity shareholder's holding period with respect
to his or her Shares will be determined by including the period for which he or
she held the ISG Fund shares exchanged therefor, provided that he or she held
such ISG Fund shares as capital assets; (iv) no gain or loss will be recognized
by any AmSouth Fund upon the receipt of the assets of the corresponding ISG Fund
in exchange for Shares and the assumption by the AmSouth Fund of the liabilities
of the corresponding ISG Fund; (v) the basis in the hands of the AmSouth Fund of
the assets of the corresponding ISG Fund transferred to the AmSouth Fund will be
the same as the basis of the assets in the hands of the corresponding ISG Fund
immediately prior to the transfer; and (vi) each AmSouth Fund's holding periods
with respect to the assets of the corresponding ISG Fund will include the
periods for which such assets were held by the
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<PAGE> 16
corresponding ISG Fund.
(h) Subject to the parties' compliance with Section 6 hereof, the
assets of each ISG Fund to be acquired by the corresponding AmSouth Fund will
include no assets which the corresponding AmSouth Fund, by reason of limitations
contained in its Declaration of Trust or of investment restrictions disclosed in
the AmSouth Prospectuses in effect on the Exchange Date, may not properly
acquire. AmSouth shall not change the AmSouth Declaration of Trust and the
AmSouth Prospectuses so as to restrict permitted investments for each AmSouth
Fund except as required by the Commission or any state regulatory authority.
(i) The Registration Statement shall have become effective under the
1933 Act and applicable Blue Sky provisions, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of AmSouth,
contemplated by the Commission and or any state regulatory authority.
(j) All proceedings taken by Infinity in connection with the
transactions contemplated by this Agreement and all documents incidental thereto
reasonably shall be satisfactory in form and substance to AmSouth.
(k) Prior to the Exchange Date, each ISG Fund (other than an ISG Fund
that will combine with a AmSouth Fund in a manner qualifying for treatment under
Section 368(a)(1)(F) of the Code) shall have declared a dividend or dividends
which, together with all previous such dividends, shall have the effect of
distributing to its shareholders all of its investment company taxable income
for its taxable year ended December 31, 1999 and the short taxable year
beginning January 1, 2000 and ending on the Exchange Date (computed without
regard to any deduction for dividends paid), and all of the ISG Fund's net
capital gain realized in its taxable year ended December 31, 1999 and the short
taxable year beginning on January 1, 2000 and ending on the Exchange Date (after
reduction for any capital loss carryover).
(l) Infinity shall have furnished to AmSouth a certificate, signed by
the President (or any Vice President) and the Treasurer of Infinity, as to the
tax cost to Infinity of the securities delivered to AmSouth pursuant to this
Agreement, together with any such other evidence as to such tax cost as AmSouth
may reasonably request.
(m) ISG Funds' custodian shall have delivered to AmSouth a certificate
identifying all of the assets of each ISG Fund held by such custodian as of the
Valuation Time.
(n) ISG Funds' transfer agent shall have provided to AmSouth's transfer
agent (i) the originals or true copies of all of the records of each ISG Fund in
the possession of such ISG transfer agent as of the Exchange Date, (ii) a record
specifying the number of shares of each ISG Fund outstanding as of the Valuation
Time and (iii) a record specifying the name and address of each holder of record
of any such shares of each ISG Fund and the number of shares
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<PAGE> 17
held of record by each such shareholder as of the Valuation Time. ISG's transfer
agent shall also have provided AmSouth with a certificate confirming that the
acts specified in the preceding sentence have been taken and that the
information so supplied is complete and accurate to the best knowledge of the
transfer agent.
(o) All of the issued and outstanding shares of common stock of each
ISG Fund shall have been offered for sale and sold in conformity with all
applicable federal or state securities or blue sky laws and, to the extent that
any audit of the records of Infinity or any ISG Fund or its transfer agent by
AmSouth or its agents shall have revealed otherwise, either (i) Infinity and
each ISG Fund shall have taken all actions that in the reasonable opinion of
AmSouth are necessary to remedy any prior failure on the part of Infinity to
have offered for sale and sold such shares in conformity with such laws or (ii)
Infinity shall have furnished (or caused to be furnished) surety, or deposited
(or caused to be deposited) assets in escrow, for the benefit of AmSouth in
amounts sufficient and upon terms satisfactory, in the opinion of AmSouth or its
counsel, to indemnify AmSouth against any expense, loss, claim, damage or
liability whatsoever that may be asserted or threatened by reason of such
failure on the part of Infinity to have offered and sold such shares in
conformity with such laws.
(p) AmSouth shall have received from Ernst & Young LLP a letter
addressed to AmSouth dated as of the Exchange Date reasonably satisfactory in
form and substance to AmSouth and Infinity to the effect that, on the basis of
limited procedures agreed upon by AmSouth and Infinity and described in such
letter (but not an examination in accordance with generally accepted auditing
standards), as of the Valuation Time the value of the assets of each ISG Fund to
be exchanged for the Shares have been determined in accordance with the
valuation procedures for the corresponding AmSouth Fund as set forth in the
AmSouth Prospectus and Statement of Additional Information.
(q) Infinity shall have duly executed and delivered to AmSouth bills of
sale, assignments, certificates and other instruments of transfer ("Transfer
Documents") as AmSouth may deem necessary or desirable to transfer all of
Infinity's and each ISG Fund's entire right, title and interest in and to the
Investments and all other assets of each ISG Fund.
10. CONDITIONS TO INFINITY'S OBLIGATIONS. The obligations of Infinity
and each ISG Fund hereunder shall be subject to the following conditions:
(a) This Agreement shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of the ISG Funds,
shall have been approved by the shareholders of each ISG Fund in the manner
required by law.
(b) AmSouth shall have furnished to Infinity a statement of each
AmSouth Fund's net assets, together with a list of portfolio holdings with
values determined as provided in Section 4, all as of the Valuation Time,
certified on AmSouth's behalf by its President (or any Vice President) and
Treasurer (or any Assistant Treasurer), and a certificate of both such officers,
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<PAGE> 18
dated the Exchange Date, to the effect that as of the Valuation Time and as of
the Exchange Date there has been no material adverse change in the financial
position of any AmSouth Fund since July 31, 1999, other than changes in its
portfolio securities since that date, changes in the market value of its
portfolio securities, changes due to net redemptions, dividends paid or losses
from operations.
(c) AmSouth shall have executed and delivered to Infinity an Assumption
of Liabilities dated as of the Exchange Date pursuant to which each AmSouth Fund
will assume all of the liabilities of the corresponding ISG Fund existing at the
Valuation Time in connection with the transactions contemplated by this
Agreement.
(d) As of the Valuation Time and as of the Exchange Date, all
representations and warranties of AmSouth and each AmSouth Fund made in this
Agreement are true and correct in all material respects as if made at and as of
such dates, AmSouth and each AmSouth Fund has complied with all of the
agreements and satisfied all of the conditions on its part to be performed or
satisfied at or prior to each of such dates, and AmSouth shall have furnished to
Infinity a statement, dated the Exchange Date, signed by AmSouth's President (or
any Vice President) and Treasurer certifying those facts as of such dates.
(e) There shall not be any material litigation pending with respect to
the matters contemplated by this Agreement.
(f) Infinity shall have received an opinion of Ropes & Gray, in form
reasonably satisfactory to Infinity and dated the Exchange Date, to the effect
that (i) AmSouth is a business trust and validly existing in conformity with the
laws of The Commonwealth of Massachusetts, and, to the knowledge of such
counsel, neither AmSouth nor any AmSouth Fund is required to qualify to do
business as a foreign association in any jurisdiction, (ii) the Shares to be
delivered to Infinity as provided for by this Agreement are duly authorized and
upon such delivery will be validly issued and will be fully paid and
nonassessable by AmSouth and no shareholder of AmSouth has any preemptive right
to subscription or purchase in respect thereof, (iii) this Agreement has been
duly authorized, executed and delivered by AmSouth and, assuming that the
Prospectus, the Registration Statement and the Proxy Statement comply with the
1933 Act, the 1934 Act and the 1940 Act and assuming due authorization,
execution and delivery of this Agreement by Infinity, is a valid and binding
obligation of AmSouth, (iv) the execution and delivery of this Agreement did
not, and the consummation of the transactions contemplated hereby will not,
violate AmSouth's Declaration of Trust, as amended, or Code of Regulations, or
any provision of any agreement known to such counsel to which AmSouth or any
AmSouth Fund is a party or by which it is bound, it being understood that with
respect to investment restrictions as contained in AmSouth's Declaration of
Trust, as amended, Code of Regulations or then-current prospectus or statement
of additional information of each AmSouth Fund, such counsel may rely upon a
certificate of an officer of AmSouth whose responsibility it is to advise
AmSouth with respect to such matters, (v) no consent, approval, authorization or
order of any court or governmental authority is required for the consummation by
AmSouth or
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<PAGE> 19
any AmSouth Fund of the transactions contemplated herein, except such as have
been obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may
be required under state securities or blue sky laws and the H-S-R Act and it
being understood that such opinion shall not be deemed to apply to Infinity's
compliance obligations under the 1933 Act, 1934 Act, 1940 Act, state securities
or blue sky laws and the H-S-R Act; and (vi) the Registration Statement has
become effective under the 1933 Act, and to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act.
(g) Infinity shall have received an opinion of Ropes & Gray addressed
to Infinity and each ISG Fund in a form reasonably satisfactory to Infinity and
dated the Exchange Date (which opinion would be based upon certain factual
representations and subject to certain qualifications), with respect to the
matters specified in Section 9(g) of this Agreement.
(h) All proceedings taken by AmSouth in connection with the
transactions contemplated by this Agreement and all documents incidental thereto
reasonably shall be satisfactory in form and substance to Infinity.
(i) The Registration Statement shall have become effective under the
1933 Act and applicable Blue Sky provisions, and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of AmSouth,
contemplated by the Commission or any state regulatory authority.
(j) At the Exchange Date, each of the ISG Funds will have sold such of
its assets, if any, if informed by AmSouth in writing that such sale is
necessary to assure that, after giving effect to the acquisition of the assets
pursuant to this Agreement, each of the AmSouth Funds designated as a
"diversified company" will remain a "diversified company" within the meaning of
Section 5(b)(1) of the 1940 Act and in compliance with such other mandatory
investment restrictions as are set forth in the AmSouth Prospectuses previously
furnished to Infinity.
(k) Infinity and ISG Funds receive an order from the Securities and
Exchange Commission exempting from the reorganization from the provisions of
Section 17(a) of the 1940 Act.
11. INDEMNIFICATION. (a) Infinity will indemnify and hold harmless
AmSouth, its trustees and its officers (for purposes of this subsection, the
"Indemnified Parties") against any and all expenses, losses, claims, damages and
liabilities at any time imposed upon or reasonably incurred by any one or more
of the Indemnified Parties in connection with, arising out of, or resulting from
any claim, action, suit or proceeding in which any one or more of the
Indemnified Parties may be involved or with which any one or more of the
Indemnified Parties may be threatened by reason of any untrue statement or
alleged untrue statement of a material fact relating to Infinity or any ISG Fund
contained in the Registration Statement, the Prospectus or the Proxy Statement
or any amendment or supplement to any of the foregoing, or arising out of or
based upon the omission or alleged omission to state in any of the foregoing a
material fact relating to Infinity or any ISG Fund required to be stated therein
or necessary to make the statements relating to Infinity or any ISG Fund therein
not misleading, including, without limitation, any amounts paid by any one or
more of the Indemnified Parties in a reasonable compromise or settlement of any
such claim, action, suit or proceeding, or threatened claim, action, suit or
proceeding made with the prior consent of Infinity. The Indemnified Parties will
notify Infinity in writing within ten days after the receipt by any one or more
of the Indemnified Parties of any notice of legal process or any suit brought
against or claim made against such Indemnified Party as to any matters covered
by this Section 11(a).
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<PAGE> 20
Infinity shall be entitled to participate at its own expense in the defense of
any claim, action, suit or proceeding covered by this Section 11(a), or, if it
so elects, to assume at its expense by counsel satisfactory to the Indemnified
Parties the defense of any such claim, action, suit or proceeding, and if
Infinity elects to assume such defense, the Indemnified Parties shall be
entitled to participate in the defense of any such claim, action, suit or
proceeding at their expense. Infinity's and the ISG Funds' obligation under this
Section 11(a) to indemnify and hold harmless the Indemnified Parties shall
constitute a guarantee of payment so that the ISG Funds will pay in the first
instance any expenses, losses, claims, damages and liabilities required to be
paid by them under this Section 11(a) without the necessity of the Indemnified
Parties' first paying the same.
(b) AmSouth will indemnify and hold harmless Infinity, its directors
and its officers (for purposes of this subparagraph, the "Indemnified Parties")
against any and all expenses, losses, claims, damages and liabilities at any
time imposed upon or reasonably incurred by any one or more of the Indemnified
Parties in connection with, arising out of, or resulting from any claim, action,
suit or proceeding in which any one or more of the Indemnified Parties may be
involved or with which any one or more of the Indemnified Parties may be
threatened by reason of any untrue statement or alleged untrue statement of a
material fact relating to AmSouth or any AmSouth Fund contained in the
Registration Statement, the Prospectus or the Proxy Statement, or any amendment
or supplement to any of the foregoing, or arising out of or based upon the
omission or alleged omission to state in any of the foregoing a material fact
relating to AmSouth or any AmSouth Fund required to be stated therein or
necessary to make the statements relating to AmSouth or any AmSouth Fund therein
not misleading, including, without limitation, any amounts paid by any one or
more of the Indemnified Parties in a reasonable compromise or settlement of any
such claim, action, suit or proceeding, or threatened claim, action, suit or
proceeding made with the prior consent of AmSouth. The Indemnified Parties will
notify AmSouth in writing within ten days after the receipt by any one or more
of the Indemnified Parties of any notice of legal process or any suit brought
against or claim made against such Indemnified Party as to any matters covered
by this Section 11(b). AmSouth shall be entitled to participate at its own
expense in the defense of any claim, action, suit or proceeding covered by this
Section 11(b), or, if it so elects, to assume at its expense by counsel
satisfactory to the Indemnified Parties the defense of any such claim, action,
suit or proceeding, and, if AmSouth elects to assume such defense, the
Indemnified Parties shall be entitled to participate in the defense of any such
claim, action, suit or proceeding at their own expense. The AmSouth Funds'
obligation under this Section 11(b) to indemnify and hold harmless the
Indemnified Parties shall constitute a guarantee of payment so that the AmSouth
Funds will pay in the first instance any expenses, losses, claims, damages and
liabilities required to be paid by them under this Section 11(b) without the
necessity of the Indemnified Parties' first paying the same.
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<PAGE> 21
12. NO BROKER, ETC. Each of AmSouth and Infinity represents that there
is no person who has dealt with it who by reason of such dealings is entitled to
any broker's or finder's or other similar fee or commission arising out of the
transactions contemplated by this Agreement.
13. TERMINATION. AmSouth and Infinity may, by mutual consent of their
respective trustees, terminate this Agreement, and AmSouth or Infinity, after
consultation with counsel and by consent of their respective trustees or an
officer authorized by such trustees, may waive any condition to their respective
obligations hereunder. If the transactions contemplated by this Agreement have
not been substantially completed by June 30, 2000, this Agreement shall
automatically terminate on that date unless a later date is agreed to by AmSouth
and Infinity.
Notwithstanding any other provision in this Agreement, in the event
shareholder approval of this Agreement and the transactions contemplated by this
Agreement is obtained with respect to only one or more ISG Funds but not all of
the ISG Funds, AmSouth and Infinity agree to consummate those transactions with
respect to those ISG Funds that have approved this Agreement and those
transactions.
14. COVENANTS, ETC. DEEMED MATERIAL. All covenants, agreements,
representations and warranties made under this Agreement and any certificates
delivered pursuant to this Agreement shall be deemed to have been material and
relied upon by each of the parties, notwithstanding any investigation made by
them or on their behalf.
15. SOLE AGREEMENT; AMENDMENTS. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the subject
matter hereof, constitutes the only understanding with respect to such subject
matter, may not be changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts.
16. AGREEMENT AND DECLARATION OF TRUST AmSouth Funds is a business
trust organized under Massachusetts law and under a Declaration of Trust, to
which reference is hereby made and a copy of which is on file at the office of
the Secretary 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 Funds" entered into in the name or on behalf thereof by
any of the Trustees, officers, employees or agents are made not individually,
but in such capacities, and are not binding upon any of the Trustees, officers,
employees, agents or shareholders of AmSouth personally, but bind only the
assets of AmSouth and all persons dealing with any series or funds of AmSouth,
such as the AmSouth Funds, must look solely to the assets of AmSouth belonging
to such series or funds for the enforcement of any claims against AmSouth.
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<PAGE> 22
This Agreement may be executed in any number of counter-parts, each of
which, when executed and delivered, shall be deemed to be an original.
THE INFINITY MUTUAL FUNDS, INC.
On Behalf of its ISG Funds
By:___________________________
AMSOUTH FUNDS
By:____________________________
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<PAGE> 1
EXHIBIT (14)(a)
Consent of KPMG LLP
<PAGE> 2
FORM OF
INDEPENDENT AUDITOR'S CONSENT
The Board of Directors of
Infinity Mutual Funds, Inc.
We consent to use in this combined Prospectus/Proxy Statement under the
Securities Act of 1933, pertaining to the proposed combination of AmSouth Funds
and ISG Funds, of our report dated February 19, 1999 relating to Infinity Mutual
Funds, Inc., including ISG Treasury Money Market Fund, ISG Large-Cap Equity
Fund, ISG International Equity Fund, ISG Capital Growth Fund, ISG Tennessee
Tax-Exempt Fund, ISG Limited Term Tennessee Tax-Exempt Fund, ISG Limited Term
U.S. Government Fund, ISG Limited Term Income Fund, ISG Equity Income Fund, ISG
Small-Cap Opportunity Fund, ISG Prime Money Market Fund, ISG Government Income
Fund, ISG, Municipal Income Fund, and ISG Income Fund, incorporated by reference
in such Registration Statement and to the reference to us under the headings
"Financial Statements" and "Auditors" in such Registration Statement.
KPMG LLP
Columbus, Ohio
____________, 1999
<PAGE> 1
EXHIBIT (14)(b)
Consent of PricewaterhouseCoopers LLP
<PAGE> 2
FORM OF
INDEPENDENT AUDITOR'S CONSENT
We consent to the reference to our firm in this Combined Prospectus/Proxy
Statement filed on Form N-14 under the Securities Act of 1933, pertaining to the
proposed combination of AmSouth Funds and ISG Funds.
PricewaterhouseCoopers LLP
Columbus, Ohio
November 19, 1999
