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AmSouth Funds Logo
3435 Stelzer Road
Columbus, OH 43219
1-800-451-8382
January 24, 2000
IMPORTANT NEWS ABOUT THE AMSOUTH REGIONAL EQUITY FUND
Dear AmSouth Regional Equity Shareholder:
The recent merger between AmSouth and First American National Bank is paving the
way for creation of one of the largest banking entities in the South. A highly
positive aspect of the merger will be the combining of the ISG Funds (First
American) into the AmSouth Funds family. This will occur during the first
quarter of 2000. The new fund family will consist of 29 funds with assets of
more than $7 billion.
HOW WILL THE MERGER AFFECT YOU?
In preparing for the planned mutual fund merger, a review of the current AmSouth
fund family was conducted to ensure the optimal mix of fund offerings. Among the
factors taken into consideration during the review were each fund's investment
objectives, performance and investment style. As a result, we are recommending
the combination of two funds: the AmSouth Regional Equity Fund (in which you
hold shares) and the AmSouth Value Fund (formerly known as the AmSouth Equity
Fund). As a shareholder, you are being asked to approve this combination.
THE INDEPENDENT BOARD OF TRUSTEES HAS UNANIMOUSLY APPROVED THE COMBINATION OF
THE AMSOUTH REGIONAL EQUITY FUND INTO THE AMSOUTH VALUE FUND, AND THE BOARD
STRONGLY ENCOURAGES YOUR APPROVAL.
There are several key benefits that can result from merging the two funds:
- - The new fund will retain the portfolio manager who has managed both the
Regional Equity Fund and the Value Fund since their inceptions. He has the
longest tenure of any of the AmSouth portfolio managers, and has guided
investment philosophy through all market cycles over the past 25 years.
- - There will be more investment latitude: the portfolio manager will be able to
select stocks without geographic limits or restrictions.
- - There will be greater opportunity to select stocks from industry or geographic
sectors that more often lead, rather than trail the market. Selecting
investments with ties only to the Southeast limits access to more active
sectors, such as technology companies, which are headquartered or conduct
business elsewhere in the country. Greater diversification may help limit
risk. The new fund will be able to invest in both a broader geographical area
as well as a wider range of securities as defined by market capitalization
size.
WHAT ARE SHAREHOLDERS BEING ASKED TO DO?
The enclosed proxy solicits your approval for the combination of the Regional
Equity Fund into the AmSouth Value Fund. Simply complete the form and return it
in the envelope provided (or vote by telephone or by the Internet). We look
forward to your affirmative response.
It is our intention to communicate additional information to you about the fund
merger as developments occur. Please know that we appreciate the continuing
opportunity to serve you.
Sincerely,
/s/ John F. Calvano
John F. Calvano
President
AmSouth Funds
<PAGE> 2
IMPORTANT SHAREHOLDER INFORMATION
AMSOUTH FUNDS
AMSOUTH REGIONAL EQUITY FUND
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, you tell us how to vote on your behalf on important issues relating
to the AmSouth Regional Equity Fund ("Regional Equity Fund"). If you simply sign
the proxy without specifying a vote, your shares will be voted in accordance
with the recommendations of the Board of Trustees.
We urge you to spend a few minutes with the Combined Prospectus/Proxy
Statement, fill out your proxy card, and return it to us (or vote by telephone
or the Internet). Voting your proxy, and doing so promptly, enables AmSouth
Funds to avoid conducting 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
AmSouth Funds for the meeting of shareholders of the Regional Equity Fund. It
also constitutes the Prospectus of the AmSouth Value Fund ("Value Fund") which
is to issue shares to be distributed to Regional Equity Fund shareholders in
connection with the proposed reorganization of the Regional Equity Fund with and
into the Value Fund. The Trustees of AmSouth Funds are recommending that
shareholders of the Regional Equity Fund approve a reorganization in which the
Regional Equity Fund will transfer all of its assets to the Value Fund in return
for Class A, Class B and Trust shares of the Value Fund. At the same time, the
Value Fund will assume all of the liabilities of the Regional Equity Fund. After
the transfer, shares of the Value Fund will be distributed to the Regional
Equity Fund's shareholders tax-free in liquidation of the Regional Equity Fund.
As a result of these transactions, your shares of the Regional Equity Fund will,
in effect, be exchanged at net asset value and on a tax-free basis for shares of
the Value Fund. Regional Equity Fund shareholders holding Class A, Class B or
Trust shares, will receive Class A, Class B or Trust shares, respectively, of
the Value Fund.
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AMSOUTH FUNDS
AMSOUTH REGIONAL EQUITY FUND
Columbus, OH 43219
January 24, 2000
To the Shareholders:
Enclosed you will find several documents being provided to you in
connection with a special meeting of the shareholders of the AmSouth Regional
Equity Fund ("Regional Equity Fund") to be held on February 22, 2000 at 10:00
a.m. 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.
The Trustees of AmSouth Funds are recommending that shareholders of the
Regional Equity Fund approve a reorganization in which the Regional Equity Fund
will transfer all of its assets to the AmSouth Value Fund ("Value Fund") in
return for Class A, Class B and Trust shares of the Value Fund. At the same
time, the Value Fund will assume all of the liabilities of the Regional Equity
Fund. After the transfer, shares of the Value Fund will be distributed to the
Regional Equity Fund's shareholders tax-free in liquidation of the Regional
Equity Fund. As a result of these transactions, your shares of the Regional
Equity Fund will, in effect, be exchanged at net asset value and on a tax-free
basis for shares of the Value Fund. Regional Equity Fund shareholders holding
Class A, Class B or Trust shares, will receive Class A, Class B or Trust shares,
respectively, of the Value Fund.
AmSouth Bank has advised the AmSouth Fund's Trustees that it believes that
the above-described transaction offers the shareholders of the Regional Equity
Fund the opportunity to pursue similar investment objectives more effectively
and with resulting economies of scale and potentially lower expense ratios over
time.
THE TRUSTEES BELIEVE THAT THE PROPOSED COMBINATION OF THE REGIONAL EQUITY
FUND WITH THE VALUE FUND IS IN THE BEST INTERESTS OF THE REGIONAL EQUITY FUND
AND ITS SHAREHOLDERS AND RECOMMEND THAT YOU VOTE IN FAVOR OF SUCH PROPOSAL.
The Notice of Special Meeting of Shareholders, the accompanying Combined
Prospectus/Proxy Statement, the Prospectus for the Regional Equity Fund and the
Value Fund, and the form of proxy 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 (or vote by telephone or the Internet) so that your shares
may be voted in accordance with your instructions.
SINCE THE MEETING IS LESS THAN FOUR WEEKS AWAY, WE URGE YOU TO GIVE THE
ENCLOSED MATERIAL YOUR PROMPT ATTENTION SO AS TO AVOID THE EXPENSE OF ADDITIONAL
MAILINGS.
Your vote is important to us. Thank you for taking the time to consider
this important proposal.
Sincerely yours,
/s/ John F. Calvano
John F. Calvano
President
AmSouth Funds
<PAGE> 4
AMSOUTH FUNDS
AMSOUTH REGIONAL EQUITY FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of the AmSouth Regional Equity Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of the
AmSouth Regional Equity Fund ("Regional Equity Fund"), separate series of
AmSouth Funds, will be held at BISYS Fund Services, Columbus, OH on February 22,
2000 at 10:00 a.m. Eastern time, for the following purposes:
1. To consider and act upon a Plan of Reorganization ("Plan") adopted by AmSouth
Funds providing for the transfer of all of the assets of the Regional Equity
Fund to the AmSouth Value Fund ("Value Fund") in exchange for Trust, Class A
and Class B shares (collectively, "Shares") of the Value Fund and the
assumption by the Value Fund of all of the liabilities of the Regional Equity
Fund, followed by the dissolution and liquidation of the Regional Equity
Fund, and the distribution of Shares of the Value Fund to the shareholders of
the Regional Equity Fund:
2. 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 Plan is appended as Appendix A
thereto.
Pursuant to instructions of the Board of Trustees of AmSouth Funds, the
close of business on January 14, 2000, 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 PROMPTLY VOTE BY TELEPHONE OR THE INTERNET OR
TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE THE ACCOMPANYING PROXY
CARD WHICH IS BEING SOLICITED BY AMSOUTH FUNDS' BOARD OF TRUSTEES. 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 AMSOUTH FUNDS A WRITTEN
NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE
SPECIAL MEETING AND VOTING IN PERSON.
By Order of the Trustees
/s/ Rodney L. Ruehle
Rodney L. Ruehle
Secretary
AmSouth Funds
Columbus, OH
January 24, 2000
<PAGE> 5
PROSPECTUS/PROXY STATEMENT
January 21, 2000
AMSOUTH FUNDS
3435 Stelzer Road
Columbus, OH 43219
Tel. No. 1-800-451-8382
COMBINED PROSPECTUS/PROXY STATEMENT
This Combined Prospectus/Proxy Statement is furnished in connection with
the solicitation of proxies from the holders of units of beneficial interest
("Shares") of AmSouth Regional Equity Fund ("Regional Equity Fund"), for use at
a Special Meeting of Shareholders to approve the reorganization of the Regional
Equity Fund. The reorganization contemplates the transfer of all the assets and
liabilities of the Regional Equity Fund to the AmSouth Value Fund ("Value Fund")
(collectively with the Regional Equity Fund, the "Funds") in exchange for shares
of the Value Fund, followed by the dissolution and liquidation of the Regional
Equity Fund, and the distribution of Value Fund shares to shareholders of the
Regional Equity Fund (the "Transaction"). As a result of the Transaction, each
shareholder of the Regional Equity Fund will receive, on a tax-free basis, a
number of full and fractional shares of the Value Fund equal at the date of the
exchange to the value of the net assets of the Regional Equity Fund transferred
to the Value Fund that are attributable to the shareholder. Regional Equity Fund
shareholders holding Class A, Class B, or Trust shares, will receive Class A,
Class B, or Trust shares, respectively, of the Value Fund.
Both the Regional Equity Fund and the Value Fund are portfolios ("series")
of AmSouth Funds, which is an open end management investment company consisting
of 29 separate funds.
This Combined Prospectus/Proxy Statement explains concisely what you should
know before investing in the Value Fund. Please read it carefully and keep it
for future reference.
This Combined Prospectus/Proxy Statement is accompanied by a prospectus for
the Value Fund and the Regional Equity Fund, dated December 1, 1999 (the
"AmSouth Prospectus"). The prospectus for the Value Fund and the Regional Equity
Fund is incorporated into this Combined Prospectus/Proxy Statement by reference.
The current Statement of Additional Information of AmSouth Funds, dated December
1, 1999, has been filed with the Securities and Exchange Commission and is
incorporated by reference. The Statement of Additional Information of AmSouth
Funds may be obtained, without charge, by writing AmSouth Funds, 3435 Stelzer
Road, Columbus, Ohio 43219 or by calling 1-800-451-8382. In addition, a
Statement of Additional Information dated January 21, 2000, 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. 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.
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE FUND SHARES OR DETERMINED WHETHER THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIME.
LIKE OTHER INVESTMENTS, YOU COULD LOSE MONEY ON YOUR INVESTMENT IN A FUND.
YOUR INVESTMENT IN A FUND IS NOT A DEPOSIT OR AN OBLIGATION OF AMSOUTH BANK, ITS
AFFILIATES, OR ANY BANK. IT IS NOT INSURED BY THE FDIC OR ANY GOVERNMENT AGENCY.
<PAGE> 6
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 AMSOUTH FUNDS. THIS COMBINED PROSPECTUS/PROXY
STATEMENT DOES NOT CONSTITUTE AN OFFERING BY AMSOUTH FUNDS IN ANY JURISDICTION
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROPOSAL (1) APPROVAL OF PLAN OF REORGANIZATION............. 1
FEE TABLES.................................................. 1
SYNOPSIS.................................................... 4
RISK FACTORS................................................ 12
INTRODUCTION................................................ 13
PROPOSAL REGARDING APPROVAL OR DISAPPROVAL OF PLAN OF
REORGANIZATION............................................ 13
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION...... 14
INFORMATION ABOUT THE REORGANIZATION........................ 15
AMSOUTH FUNDS............................................... 17
FINANCIAL STATEMENTS........................................ 19
VOTING INFORMATION.......................................... 19
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION................................................ 21
FORM OF PLAN OF REORGANIZATION -- APPENDIX A
</TABLE>
i
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PROPOSAL (1)
APPROVAL OF PLAN OF REORGANIZATION
At a meeting held on November 23, 1999, all of the Trustees of AmSouth
Funds unanimously approved a Plan of Reorganization pursuant to which the
Regional Equity Fund would be merged with and into the Value Fund on or about
March 13, 2000 (the "Exchange Date"). On the Exchange Date, the Regional Equity
Fund will transfer all of its assets and liabilities to the Value Fund in
exchange for shares of the Value Fund having an aggregate net asset value equal
to the aggregate value of the net assets acquired from the Regional Equity Fund.
The assets and liabilities of the Regional Equity Fund and the Value Fund will
be valued as of the close of trading on the New York Stock Exchange on the
business day next preceding the Exchange Date. Following the transfer, the
Regional Equity Fund will be dissolved and shares of the Value Fund received by
the Regional Equity Fund will be distributed to Regional Equity Fund
shareholders in liquidation of the Regional Equity Fund. As a result of the
proposed Transaction, shareholders of the Regional Equity 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 value of the net assets of the Regional Equity Fund
transferred to the Value Fund attributable to the shareholder (based on the
proportion of the outstanding shares of the Regional Equity Fund owned at the
time by the shareholder). All Regional Equity Fund shareholders will receive
shares of the AmSouth Class (Class A, Class B or Trust) that corresponds to the
class of Regional Equity Fund shares that they hold.
For the reasons set forth below under "Background and Reasons for the
Proposed Reorganization," the Board of Trustees of AmSouth Funds, including
Trustees of AmSouth Funds who are not "interested persons" of AmSouth Funds as
defined in the Investment Company Act of 1940 (the "1940 Act") (the "Independent
Trustees"), unanimously concluded that participation in the proposed Transaction
is in the best interests of the Regional Equity Fund, the Value Fund and their
respective existing shareholders. The Trustees have further concluded that the
economic interests of shareholders of the Funds will not be diluted as a result
of the proposed Transaction. In reaching this conclusion, the Trustees
considered, among other things, the similarity of the investment objectives of
the Regional Equity Fund and the Value Fund; the expense ratios of the Regional
Equity Fund compared to the Value Fund; the performance of the Value Fund as
compared to the Regional Equity Fund; the potential economies of scale which
could be realized as a result of the increase in size of the Value Fund; the
qualifications and experience of AmSouth Bank (the "Adviser"); the
recommendation of the Adviser in favor of the Transaction; and the fact that the
Transaction will be free of federal income taxes.
FEE TABLES
Fee tables showing the current fees for the Regional Equity Fund and the
Value Fund, as well as the pro forma fees, are as follows:
1
<PAGE> 8
<TABLE>
<CAPTION>
AMSOUTH REGIONAL
EQUITY FUND AMSOUTH VALUE FUND COMBINED FUND PRO FORMA
------------------------- ------------------------- -------------------------
CLASS A CLASS B TRUST CLASS A CLASS B TRUST CLASS A CLASS B TRUST
------- ------- ----- ------- ------- ----- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
(expenses paid by you
directly)(1)
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price).............. 4.50%(2) None None 4.50%(2) None None 4.50%(2) 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 5.00%(3) None None 5.00%(3) None None 5.00%(3) None
Redemption Fees(4)............. None None None None None None None None None
Exchange Fees.................. None None None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of average
daily net assets)
Advisory Fees.................... .80% .80% .80% .80% .80% .80% .80% .80% .80%
12b-1 Fees....................... None 1.00% None None 1.00% None None 1.00% None
Other Expenses................... .64% .39% .39% .56% .31% .31% .56% .31% .46%
Total Fund Operating Expenses.... 1.44%(5) 2.19%(5) 1.19%(5) 1.36%(6) 2.11%(6) 1.11%(6) 1.36%(7) 2.11%(7) 1.26%(7,8)
</TABLE>
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(1) AmSouth Bank or other financial institutions may charge their customer's
account fees for automatic investment and other cash management services
provided in connection with investment in the Funds.
(2) Lower sales charges are available depending upon the amount invested. For
investments of $1 million or more, a contingent deferred sales charge
("CDSC") is applicable to redemptions within one year of purchase. See
"Distribution Arrangements" in the Funds' Prospectus.
(3) The CDSC, charged if Class B Shares are sold within six years of purchase,
declines as follows: 5%, 4%, 3%, 3%, 2%, 1%, to 0% in the seventh year.
Approximately eight years after purchase, Class B Shares automatically
convert to Class A Shares.
(4) A wire transfer fee of $7.00 will be deducted from the amount of your
redemption if you request a wire transfer.
(5) Other expenses are restated 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 will be as follows: Class A, 1.40%; Class B, 2.15 %; Trust
Class, 1.15%. Any fee waiver or expense reimbursement arrangement is
voluntary and may be discontinued at any time.
(6) Other expenses are restated 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 will be as follows: Class A, 1.35%; Class B, 2.10%; Trust
Class, 1.10%. 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. Total
expenses after fee waivers and expense reimbursements will be as follows:
Class A, 1.35%; Class B, 2.10%; Trust Class, 1.25%. Any fee waiver or
expense reimbursement arrangement is voluntary and may be discontinued at
any time.
(8) This amount includes a shareholder servicing fee effective on March 13,
2000.
2
<PAGE> 9
AMSOUTH REGIONAL EQUITY FUND
AMSOUTH VALUE 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>
AmSouth Regional Equity Fund
Class A Shares........................................ $590 $885 $1,201 $2,097
Class B Shares........................................ $722 $985 $1,375 $2,334
Trust Shares.......................................... $121 $378 $ 654 $1,443
AmSouth Value Fund
Class A Shares........................................ $582 $861 $1,161 $2,011
Class B Shares........................................ $714 $961 $1,334 $2,250
Trust Shares.......................................... $113 $353 $ 612 $1,352
Combined Fund Pro Forma
Class A Shares........................................ $582 $861 $1,161 $2,011
Class B Shares........................................ $714 $961 $1,334 $2,250
Trust Shares.......................................... $128 $400 $ 692 $1,523
</TABLE>
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** Class B shares of the AmSouth Regional Equity Fund, the AmSouth Value 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>
AmSouth Regional Equity Fund
Class B Shares........................................ $222 $685 $1,175 $2,334
AmSouth Value Fund
Class B Shares........................................ $214 $661 $1,134 $2,250
Combined Fund Pro Forma
Class B Shares........................................ $214 $661 $1,134 $2,250
</TABLE>
- ---------------
** Class B shares of the AmSouth Regional Equity Fund, the AmSouth Value 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.
3
<PAGE> 10
SYNOPSIS OF PROSPECTUS
Investment Objectives and Policies Below is a brief comparison of the
investment objectives and policies of the Regional Equity Fund and the Value
Fund. The following discussion is qualified in its entirety by the disclosure on
such subjects contained in the AmSouth Prospectus accompanying this Combined
Prospectus/ Proxy Statement. For a full and detailed description of permitted
investments, see the applicable AmSouth Prospectus.
The securities currently held by the Funds are substantially similar.
Consequently, the proposed reorganization should not result in higher than
normal portfolio turnover.
Investment Objectives As their investment objectives, both the Regional
Equity Fund and the Value Fund seek capital growth by investing primarily in a
diversified portfolio of common stock and securities convertible into common
stock, such as convertible bonds and convertible preferred stock. The production
of current income is an incidental objective.
Investment Policies The Regional Equity Fund invests primarily in common
stocks of companies headquartered in the Southern Region of the United States,
which includes Alabama, Florida, Georgia, Louisiana, Mississippi, North
Carolina, South Carolina, Tennessee and Virginia, that the portfolio manager
believes to be undervalued. In managing the Fund's portfolio, the manager uses a
variety of economic projections, quantitative techniques, and earnings
projections in formulating individual stock purchase and sale decisions. The
portfolio manager will select investments that he believes have basic investment
value which eventually will be recognized by other investors.
Similarly, the Value Fund invests primarily in common stocks that the
portfolio manager believes to be undervalued. Like the Regional Equity Fund, in
managing the Fund's portfolio, the manager uses a variety of economic
projections, quantitative techniques, and earnings projections in formulating
individual stock purchase and sale decisions. The portfolio manager will select
investments that it believes have basic investment value which eventually will
be recognized by other investors, thus increasing their value to the Fund.
Additional Investment Policies The Regional Equity Fund will normally
invest at least 65% of its total assets in common stocks and securities
convertible into common stocks of companies headquartered in the Southern
Region. The Fund may also invest up to 35% of its total assets in common stocks
and securities convertible into common stock of companies headquartered outside
the Southern Region, preferred stocks, corporate bonds, notes, and warrants, and
short-term money market instruments.
As a temporary defensive measure, if deemed appropriate under the
circumstances, the Regional Equity Fund may increase its holdings in short-term
money market instruments to over 35% of its total assets.
The Regional Equity Fund may invest (or engage) in American Depository
Receipts, Bankers' Acceptances and Certificates of Deposit, Commercial Paper,
Common Stock, Convertible Securities, Derivatives, Foreign Securities,
Investment Company Securities, Money Market Instruments, Preferred Stocks,
Repurchase Agreements, Securities Lending, Warrants, When-Issued Securities and
Forward Commitments, and Zero-Coupon Debt Obligations.
The Value Fund will normally invest at least 80% of its total assets in
common stocks and securities convertible into common stocks, such as convertible
bonds and convertible preferred stocks. The Fund may also invest up to 20% of
the value of its total assets in preferred stocks, corporate bonds, notes, and
warrants, and short-term money market instruments.
As a temporary defensive measure, if deemed appropriate under the
circumstances, the Value Fund may increase its holding in short-term money
market instruments to over 20% of its total assets.
The Value Fund may invest (or engage) in American Depository Receipts,
Bankers' Acceptances, Commercial Paper, Common Stock, Convertible Securities,
Derivatives, Foreign Securities, Investment Company Securities, Money Market
Instruments, Preferred Stocks, Repurchase Agreements, Securities Lending,
Warrants, When-Issued Securities and Forward Commitments, and Zero-Coupon Debt
Obligations.
4
<PAGE> 11
Investment Restrictions
The following investment restrictions may be changed only by a vote of a
majority of the outstanding voting shares of the Fund.
The Regional Equity Fund and the Value Fund may not:
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;
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) 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;
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;
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;
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;
Purchase or sell commodities, commodity contracts (including futures
contracts with respect to each Fund), 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);
Invest in securities of other investment companies, except as such
securities may be acquired as part of a merger, consolidation, reorganization,
or acquisition of assets; provided, however, that each Fund may purchase
securities of a money market fund;
Invest in any issuer for purposes of exercising control or management;
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;
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;
Write or purchase put options.
5
<PAGE> 12
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.
The following investment restriction is non-fundamental and may be changed
by a vote of the majority of the Board of Trustees: No Fund will invest more
than 15% of its net assets in securities that are restricted as to resale, or
for which no readily available market exists, including repurchase agreements
providing for settlement more than seven days after notice.
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
The following information was provided by the Annual Report to Shareholders
of AmSouth Funds ("Annual Report") for the period ended July 31, 1999. When
reading the Annual Report, please note that Classic Shares are currently named
Class A Shares, Premier Shares are currently named Trust Shares, and the AmSouth
Equity Fund is currently named the AmSouth Value Fund. The Management Discussion
found in the Annual Report is as follows:
AMSOUTH REGIONAL EQUITY FUND(1)
Performance. 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(2) returned 20.76%.
The Fund's performance suffered during the first part of the period, due to
the narrowness of the market and the facts that the groups the Fund embraces,
and the geographic requirements of the Fund's investment objective, worked
against it. However, in the second calendar quarter of 1999, circumstances
changed dramatically. The Fund's 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.
Factors Affecting Performance. The Fund 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 the Fund manager's 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 the
Fund manager thought to be valid. A couple of the energy stocks in the portfolio
were strong performers, including Offshore Logistics, Inc. (2.43%), Mobile 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 the Fund to buy their
shares. Since it is difficult to get energy exposure in the region, the Fund has
continued to hold these names.(3)
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, the one 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.
Current Strategy and Outlook. One key advantage of a regional fund like
this is that shareholders can benefit from the Fund manager's acute and in-depth
knowledge about a relatively narrow segment of the market.
- ---------------
1 Regional funds may be subject to additional risk, since the companies they
invest in are located in one geographical location.
2 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.
3 The Fund's portfolio compositions is subject to change.
6
<PAGE> 13
The Fund manager is based in the Southeast and has established close and
reliable contracts throughout the region; the Fund manager bases 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. The
Fund manager believes 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%).
7
<PAGE> 14
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
AMSOUTH REGIONAL AMSOUTH REGIONAL AMSOUTH REGIONAL
EQUITY FUND EQUITY FUND EQUITY FUND (B S&P 500 STOCK LIPPER CAPITAL
(CLASSIC SHARES) * (PREMIER SHARES) SHARES) INDEX APPRECIATION INDEX
------------------ ---------------- ---------------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
7/89 9550 10000 10000 10000 10000
7/90 10449 10940 10940 10647 10317
7/91 11757 12311 12311 12007 11602
7/92 14186 14853 14853 13539 12843
7/93 16388 17160 17160 14713 14782
7/94 17188 17998 17998 15477 15323
7/95 19783 20713 20713 19509 19541
7/96 22376 23427 23427 22739 21192
7/97 31107 32568 32568 34590 28192
7/98 31012 32527 32261 41282 31934
7/99 27958 29411 28859 49823 38562
</TABLE>
For performance purposes the above graph has not been adjusted for CDSC charges.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Average Annual Total Return
- ---------------------------------------------------------------------------------------
As of July 31, 1999 1 Year 5 Year 10 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.
8
<PAGE> 15
AMSOUTH VALUE FUND
Performance. 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(4) gained 20.76%.
Looking at the Fund's fiscal year as a whole, it 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 the Fund manager's value
style of investing.
In the month of April, the Fund 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 the Fund. The Fund
continued to perform strongly during periods when the market was sloppy, which
is what a value-oriented fund is structured to do.
Factors Affecting Performance. In particular, the Fund benefited from its
holdings in energy and a sector called "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.
The Fund manager believes a similar scenario will unfold in forest products
over the next couple of quarters. Some of the Fund manager's 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%).(5) The Fund manager is 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%).(5)
Current Strategy and Outlook. 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, the Fund manager does 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. The Fund manager has 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%).(5)
- ---------------
4 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.
5 The Fund's portfolio composition is subject to change.
9
<PAGE> 16
VALUE OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
AMSOUTH EQUITY AMSOUTH EQUITY
FUND (CLASSIC FUND (PREMIER AMSOUTH EQUITY S&P 500 STOCK LIPPER CAPITAL
SHARES) * SHARES) FUND (B SHARES) INDEX APPRECIATION INDEX
-------------- -------------- --------------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
7/89 9550 10000 10000 10000 10000
7/90 9707 10165 10165 10647 10317
7/91 10530 11026 11026 12007 11602
7/92 11891 12451 12451 13539 12843
7/93 13533 14170 14170 14713 14762
7/94 14603 15291 15291 15477 15323
7/95 17415 18236 18235 19509 19541
7/96 19344 20257 20256 22739 21192
7/97 27536 28838 28834 34590 28192
7/98 30935 32430 32195 41282 31934
7/99 35547 37433 36711 49623 38562
</TABLE>
For performance purposes the above graph has not been adjusted for CDSC charges.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Average Annual Total Return
- ---------------------------------------------------------------------------------------
As of July 31, 1999 1 Year 5 Year 10 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 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
WORK MORE OR LESS THAN THE ORIGINAL COST.
10
<PAGE> 17
OPERATING PROCEDURES
Distributions. Each Fund distributes any net investment income monthly and
any net realized capital gains at least once a year. Shareholders of each Fund
will automatically receive all income dividends and capital gains distributions
in additional full and fractional Shares of the same class at net asset value as
of the date of payment unless the Shareholder elects to receive such dividends
or distributions in cash. 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 Trust shares of the Funds generally will
be more than the amount of dividends payable on Class A and Class B Shares of
the Funds because of the distribution expenses charged to Class A and Class B
Shares but not charged to Trust shares.
Purchase Procedures. Because the distributor for AmSouth Funds is BISYS
Fund Services Limited Partnership (the "Distributor"), purchase procedures are
generally identical for the two Funds. Purchase orders for Shares are executed
at a per Share price equal to the asset value next determined after the purchase
order is effective (plus any applicable sales charge). No sales charges are
imposed on Trust shares and therefore no sales charges will be imposed on the
Trust Shares of the Value Fund distributed by AmSouth Funds in the Transaction.
A maximum sales charge of 4.5% of the offering price is imposed on Class A
shares of the Regional Equity Fund as well as the Value Fund. However, no sales
charge will be imposed on the Class A or Class B Shares of the Value Fund
distributed by AmSouth Funds in the Transaction.
Shares of each Fund are sold on a continuous basis by the Distributor,
either by mail, by wire, through an Automatic Investment Plan or through
financial institutions. The Funds have a minimum investment requirement of
$1,000 for Class A, Class B and Automatic Investment, and $250 for Retirement.
The Funds also have no subsequent minimum investment requirement for Class A and
for Class B, and a $50 minimum for Automatic Investment and for Retirement.
Purchases and redemption of Shares of each Fund 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").
Class A and Class B Shares of each Fund are subject to a shareholder
servicing fee of .25%. Trust Shares of each Fund are subject to a shareholder
servicing fee of .15% effective on March 13, 2000.
Exchange privilege. Each 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. An AmSouth Funds shareholder may exchange his or her 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 a 60-day notice to shareholders.
Exchange privileges for shareholders in each Fund are available only in any
state 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.
Exchanges are made on the basis of the relative net asset values of the
shares exchanged plus any applicable sales charge. Neither Fund imposes a charge
for processing exchanges of shares.
Redemption Procedures. Each Fund redeems shares at its net asset value next
determined after receipt by the Distributor of the redemption request.
Redemptions will be made on any Business Day without charge although there is
presently a $7 charge 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.
11
<PAGE> 18
Each Fund reserves the right to make payment on redemptions in securities
rather than cash. Each Fund reserves 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 the Funds is $50.
Net Asset Value. The net asset value of shares of the Funds is determined
daily as of 4:00 p.m., Eastern time on days the NYSE and the Federal Reserve
Bank of Atlanta are open. A shareholder's order for purchase, sale or exchange
of shares is priced at the next NAV calculated after the order is accepted by
the Fund less any applicable sales charge. This is what is known as the offering
price. The Funds' securities are generally valued at current market prices. If
market quotations are not available, prices will be based on fair value as
determined by the Funds' Trustees.
Federal Tax Considerations. Consummation of the Transaction is subject to
the condition that AmSouth Funds 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 Transaction will not
result in the recognition of gain or loss for Federal income tax purposes for
either of the Funds, or the shareholders or the Regional Equity Fund.
RISK FACTORS
The investment objectives and policies of the Regional Equity Fund and the
Value Fund are substantially similar except that the Regional Equity Fund
invests primarily in companies of the Southern Region (Alabama, Florida,
Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and
Virginia), while the Value Fund is not so restricted. In some cases, although
both Funds may invest in the same securities, they may do so subject to varying
limitations. This discussion is qualified in its entirety by the disclosure set
forth in the AmSouth Prospectus accompanying this Combined Prospectus/Proxy
Statement.
Investment in the Regional Equity Fund may be subject to the following
principal risks:
MARKET RISK: The possibility that the Fund's stock holdings will decline in
price because of a broad stock market decline. Markets generally move in cycles,
with periods of rising prices followed by periods of falling prices. The value
of your investment will tend to increase or decrease in response to these
movements.
GEOGRAPHIC CONCENTRATION RISK: By concentrating its investments in the
Southern Region, the Fund may be more vulnerable to unfavorable developments in
that region than funds that are more geographically diversified.
INVESTMENT STYLE RISK: The possibility that the market segment on which
this Fund focuses -- undervalued stocks of companies in the Southern
Region -- will underperform other kinds of investments or market averages.
The Fund may trade securities actively, which could increase its
transaction costs (thereby lowering its performance) and may increase the amount
of taxes that you pay. If the Fund invests in securities with additional risks,
its share price volatility accordingly could be greater and its performance
lower.
Investment in the Value Fund may be subject to the following principal
risks:
MARKET RISK: The possibility that the Fund's stock holdings will decline in
price because of a broad stock market decline. Markets generally move in cycles,
with periods of rising prices followed by periods of falling prices. The value
of your investment will tend to increase or decrease in response to these
movements.
INVESTMENT STYLE RISK: The possibility that the market segment on which
this Fund focuses -- undervalued stocks -- will underperform other kinds of
investments or market averages.
* * * * *
The above discussion is qualified in its entirety by the disclosure in the
AmSouth Prospectus and Statement of Additional Information.
12
<PAGE> 19
SPECIAL MEETING OF SHAREHOLDERS
Proxies will be solicited by and on behalf of the Trustees of the AmSouth
Funds for use at a Special Meeting of Shareholders of AmSouth Funds (the
"Meeting"). The Meeting is to be held on February 22, 2000, at 10:00 a.m.
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 January 24, 2000.
Any shareholder giving a proxy has the power to revoke it. The shareholder
revoking such proxy must either submit to AmSouth Funds a subsequently dated
proxy, deliver to AmSouth Funds 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 proposal (set forth in item (1) of the Notice
of Special Meeting to implement the reorganization of the Regional Equity Fund
by the transfer of all of its assets to the Value Fund, in exchange for AmSouth
Class A, Class B and Trust shares of the Value Fund (collectively, "Shares") and
the assumption by the Value Fund of all of the liabilities of the Regional
Equity Fund followed by the dissolution and liquidation of the Regional Equity
Fund and the distribution of Shares to the shareholders of the Regional Equity
Fund. All Regional Equity Fund shareholders will receive shares of the AmSouth
Class (Class A, Class B or Trust) that corresponds to the Class of the Regional
Equity Fund Shares that they hold.
As of January 14, 2000, there was outstanding the following amount of
shares of the Class A, Class B and Trust Class of the Regional Equity Fund:
<TABLE>
<S> <C> <C>
Regional Equity............................................. 772,801 Class A shares
34,113 Class B shares
2,384,850 Trust shares
</TABLE>
Only shareholders of record at the close of business on January 14, 2000,
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 January 14, 2000.
AmSouth Funds' Trustees 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 Trustees' 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 PLAN OF REORGANIZATION
The shareholders of the Regional Equity Fund are being asked to approve or
disapprove (1) the Plan of Reorganization by and between the Regional Equity
Fund and the Value Fund dated as of November 23, 1999, (the "Plan"), a copy of
which is attached to this Combined Prospectus/Proxy Statement as Appendix A. The
Plan provides, among other things, for the transfer of all of the assets of the
Regional Equity Fund to the Value Fund in exchange for the assumption by the
Value Fund of all of the liabilities of the Regional Equity Fund and for a
number of Shares calculated based on the value of the net assets of the Regional
Equity Fund acquired by the Value Fund and the net asset value per share of the
Value Fund, all as more fully described below under "Information about the
Reorganization." After receipt of Shares, the Regional Equity Fund will
dissolve, distributing the Shares to its shareholders in complete liquidation,
and the Regional Equity Fund will be terminated. Prior to the date of such
transfer (the "Exchange Date"), the Regional Equity Fund will declare a
distribution to its shareholders which, together with all previous
distributions, will have the effect of distributing to its shareholders all of
its 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 23, 1999, the Trustees of AmSouth Funds in
attendance voted unanimously to approve the Transaction and to recommend that
shareholders of the Regional Equity Fund also approve the Transaction. Approval
of reorganization of the Regional Equity Fund requires the affirmative vote of a
majority of all votes attributable to the voting securities of the Regional
Equity Fund voting separately as a fund, defined as
13
<PAGE> 20
the lesser of (a) sixty seven percent (67%) or more of the votes attributable to
all voting securities of the Regional Equity Fund present at such meeting, if
holders of more than 50% of the votes attributable to the outstanding voting
securities are present or represented by proxy, or (b) more than 50% of the
votes attributable to the outstanding voting securities of the Regional Equity
Fund.
A shareholder of the Regional Equity Fund objecting to the proposed
Transaction is not entitled under either Massachusetts law or AmSouth Funds'
Declaration of Trust to demand payment for and an appraisal of his or her
particular Regional Equity Fund shares if the Transaction is consummated over
his or her objection. However, shares of the Regional Equity Fund are redeemable
for cash at their net asset value on days on which both the New York Stock
Exchange and the Federal Reserve Bank of Atlanta are open for business
("Business Days").
In the event that this proposal is not approved by the shareholders of the
Regional Equity Fund, such Fund will continue to be managed as a separate fund
in accordance with its current investment objectives and policies, and the
AmSouth Funds Trustees may consider alternatives in the best interests of the
shareholders. However, if approval of the Plan is obtained, the reorganization
of the Regional Equity Fund will be consummated.
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
A meeting was held on November 23, 1999, for the AmSouth Funds' Trustees,
at which meeting all of the Trustees, including the Independent Trustees,
unanimously determined that the reorganization would be in the best interests of
AmSouth Funds and existing shareholders of both the Regional Equity Fund and the
Value Fund. The Trustees also unanimously determined that the economic interests
of such shareholders would not be diluted as a result of effecting the
reorganization. At this same meeting, all of the Trustees, including the
Independent Trustees, unanimously approved the proposed reorganization. AmSouth
Funds' Trustees have unanimously recommended approval of the Plan.
In electing to approve the Plan and recommend it to shareholders of the
Regional Equity Fund, the Trustees acted upon information provided to them,
indicating that the proposed Transaction would operate in the best interests of
the Regional Equity Fund and Value Fund shareholders. In particular, the
Trustees determined that the proposed Transaction offered the following
benefits:
- Continuity of Management: Both the Regional Equity Fund and the Value
Fund are 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.
- Tax-Free Nature of Transaction; Lack of Dilution: The AmSouth Funds'
Trustees were informed that the proposed Transaction involving the
Regional Equity Fund and the Value Fund would be accomplished without
resulting in the imposition of federal income taxes on the Regional
Equity Fund or its shareholders or the Value Fund. Also, the AmSouth
Funds' Trustees were informed that the interests of the Regional Equity
Fund and the Value Fund shareholders would not be materially diluted as a
result of the proposed Transaction, and that the Regional Equity Fund
shareholders would receive, in the aggregate, shares of the Value Fund
equal in value to the market value of the assets of the Regional Equity
Fund.
- Performance of AmSouth Funds; Fees and Expenses: The Board received
information relating to the performance of the Value Fund into which the
interests of shareholders of the Regional Equity Fund would be merged.
This information was presented both on an absolute basis and in
comparison to relevant benchmarks and industry averages. The information
showed that the long-term performance of the Value Fund has been superior
to that of the Regional Equity Fund. The Trustees also received
information about the fees and expenses charged or to be charged to
AmSouth shareholders, which information tended to show that the Regional
Equity Fund shareholders who become Value Fund shareholders as a result
of the proposed Transaction would be subject to fees and expenses that
were equal to or lower than those they currently bear as shareholders of
the Regional Equity Fund. While this is presently the case, there was no
guarantee that this would remain the case in the future.
14
<PAGE> 21
- Total Return: The total return of the Value Fund compares favorably with
that of the Regional Equity Fund. For information regarding the total
return of each of the Funds, see "Financial Highlights" herein. Of
course, past performance does not predict future results.
- Assets: As of July 31, 1999, the Value Fund had total assets of
approximately $70,740,000 compared with approximately $20,911,000 in
total assets for the Regional Equity Fund. The merger is expected to
result in greater investment leverage and market presence for the Value
Fund. In addition, former Regional Equity Fund shareholders would benefit
from the resulting economies of scale attributable to the larger asset
size of the Value Fund.
INFORMATION ABOUT THE REORGANIZATION
Plan of Reorganization. The proposed Plan provides that the Value Fund will
acquire all of the assets of the Regional Equity Fund in exchange for the
assumption by Value Fund of all of the liabilities of the Regional Equity Fund
and for Shares all as of the Exchange Date (defined in the Plan to be March 13,
2000, or such other date as determined by the Trustees.) The following
discussion of the Plan is qualified in its entirety by the full text of the
Plan, which is attached as Appendix A to this Combined Prospectus/Proxy
Statement.
As a result of the Transaction, each shareholder of the Regional Equity
Fund 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 Regional
Equity Fund transferred to the Value Fund attributable to the shareholder (based
on the proportion of the outstanding shares of the Regional Equity Fund owned by
the shareholder as of the Valuation Time). The portfolio securities of the
Regional Equity Fund will be valued in accordance with the generally employed
valuation procedures of AmSouth Funds. The reorganization is being accounted for
as a tax-free business combination. At a meeting held on November 23, 1999, all
of the Trustees, including the Independent Trustees, unanimously determined that
the reorganization would be in the best interests of their registered investment
company and existing shareholders and that the economic interests of their
existing shareholders would not be diluted as a result of effecting the
reorganization.
Immediately following the Exchange Date, the Regional Equity Fund will
distribute pro rata to its shareholders of record as of the close of business on
the Exchange Date the full and fractional Shares received by it and the Regional
Equity Fund will be liquidated and dissolved. Such liquidation and distribution
will be accomplished by the establishment of accounts on the share records of
the Value Fund in the name of such Regional Equity Fund's shareholders, each
account representing the respective number of full and fractional Shares due
such shareholder. All Regional Equity shareholders will receive shares of the
AmSouth Class (Class A, Class B or Trust) that corresponds to the Class of the
Regional Equity Fund that they hold.
The consummation of the reorganization is subject to the conditions set
forth in the Plan. The Plan may be terminated and the reorganization abandoned
at any time, before or after approval by the shareholders, prior to the Exchange
Date by consent of AmSouth Funds or, if any condition set forth in the Plan 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 Plan will be allocated
ratably between the two Funds in proportion to their net assets as of the
Exchange Date except that (a) the costs of the proxy materials and proxy
solicitations will be borne by AmSouth Bank and (b) such fees and expenses will
be paid by the party directly incurring such expenses if and to the extent that
payment by the other party would result in the disqualification of the Value
Fund or the Regional Equity Fund, as the case may be, as a "regulated investment
company" within the meaning of Section 851 of the Code.
The Board of Trustees of AmSouth Funds have determined that the interests
of the existing shareholders of the Regional Equity Fund and the Value Fund will
not be diluted as a result of the Transaction. Full and fractional Shares will
be issued to the Regional Equity Fund's shareholders in accordance with the
procedure under the Plan as described above. Each Value Share will be fully paid
and nonassessable when issued, will be transferable without restriction, and
will have no preemptive or conversion rights. AmSouth Funds' Declaration of
Trust permits AmSouth Funds to divide its shares of any series, without
shareholder approval, into one or more classes
15
<PAGE> 22
of shares having such preferences and special or relative rights and privileges
as the Trustees may determine. Shares of the Regional Equity Fund and the Value
Fund are currently divided into three classes: Class A, Class B and Trust
Shares. Class A, Class B and Trust shares will be distributed as applicable by
AmSouth Funds in connection with the Transaction.
Under Massachusetts law, AmSouth Funds' shareholders, could, under certain
circumstances, be held personally liable for the obligations of AmSouth Funds.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of AmSouth Funds. The Declaration of Trust provides for
indemnification out of AmSouth Funds property for all loss and expense of any
shareholder held personally liable for the obligations of AmSouth Funds. Thus,
the risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which AmSouth Funds would be unable to
meet its obligations. The likelihood of such circumstances is remote.
Federal Income Tax Consequences. The federal income tax consequences of the
Transaction should be as follows: (i) under Section 361 of the Code, no gain or
loss will be recognized by the Regional Equity Fund as a result of the
reorganization; (ii) under Section 354 of the Code, no gain or loss will be
recognized by the shareholders of the Regional Equity Fund on the distribution
of Shares to them in exchange for their shares of the Regional Equity Fund;
(iii) under Section 358 of the Code, the basis of Shares that any Regional
Equity shareholder receives in place of his or her Regional Equity shares will
be the same, in the aggregate, as the basis of the Regional Equity shares
exchanged; (iv) under Section 1223(1) of the Code, a shareholder's holding
period for the Shares received pursuant to the Plan will be determined by
including the holding period for the Regional Equity shares exchanged for the
Shares provided that the shareholder held the Regional Equity shares as a
capital asset; (v) under Section 1032 of the Code, no gain or loss will be
recognized by the Value Fund by the receipt of the assets of the Regional Equity
Fund in exchange for Shares and the assumption by the Value Fund of the
liabilities of the Regional Equity Fund; (vi) under Section 362 of the Code, the
basis in the hands of the Value Fund of the assets of the Regional Equity Fund
transferred to the Value Fund in the reorganization will be, in the aggregate,
the same as the basis of such assets in the hands of the Regional Equity Fund
immediately prior to the transfer; and (vii) under Section 1223(2) of the Code,
the holding period of the assets of the Regional Equity Fund in the hands of the
Value Fund will include the periods during which such assets were held by the
Regional Equity Fund. As a condition to AmSouth Funds' obligations to consummate
the reorganization, AmSouth Funds will receive an opinion from Ropes & Gray,
counsel to AmSouth Funds, to the effect that, on the basis of the existing
provisions of the Code, current administrative rules, court decisions, and
certain representations by AmSouth Funds, for federal income tax purposes the
above stated tax consequences will be applicable to the Transaction.
Voting Rights. Each shareholder of the Regional Equity Fund is entitled to
one vote per share and a proportionate fractional vote for any fractional share.
The former shareholders of the Regional Equity Fund, as holders of Class A,
Class B or Trust Shares of the Value Fund, will vote separately as a fund or a
class on matters relating solely to that fund or class. On all other matters,
they will vote in the aggregate with shareholders of the Value Fund. As
shareholders of the considerably larger Value Fund following the Transaction,
the former shareholders of the Regional Equity Fund will possess less
proportional voting power when they vote separately as Value Fund shareholders,
or shareholders of the classes thereof, than they had when they voted separately
as shareholders of the smaller Regional Equity Fund. For a more detailed
discussion of AmSouth Funds' voting procedures, see the AmSouth Prospectus
"GENERAL INFORMATION -- Miscellaneous."
Capitalization. The following tables (UNAUDITED) set forth as of November
30, 1999 (i) the capitalization of the Regional Equity Fund, (ii) the
capitalization of the Value Fund, and (iii) the pro forma capitalization of the
Value Fund as adjusted giving effect to the proposed acquisition of assets at
net asset value:
<TABLE>
<CAPTION>
REGIONAL EQUITY FUND VALUE FUND
--------------------------------- -------------------------------------
CLASS A CLASS B TRUST CLASS A CLASS B TRUST
---------- ------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Assets ($)....... 12,645,226 530,423 41,514,404 64,821,099 11,191,691 869,803,975
Shares............... 655,569 27,786 2,147,767 2,714,342 470,940 36,408,070
Net Asset Value per
Share ($)........... 19.29 19.09 19.33 23.88 23.77 23.89
<CAPTION>
PRO FORMA COMBINED
-------------------------------------
CLASS A CLASS B TRUST
---------- ---------- -----------
<S> <C> <C> <C>
Net Assets ($)....... 77,466,325 11,722,114 911,318,379
Shares............... 3,243,983 493,147 38,146,437
Net Asset Value per
Share ($)........... 23.88 23.77 23.89
</TABLE>
16
<PAGE> 23
Unaudited pro forma combined financial statements of each AmSouth Fund as
of and for the period ended July 31, 1999 are included in the Statement of
Additional Information. Because the Plan provides that the Value Fund will be
the surviving fund following the reorganization and because the Value Fund's
investment objectives and policies will remain unchanged, the pro forma combined
financial statements reflect the transfer of the assets and liabilities of the
Regional Equity Fund to the Value Fund as contemplated by the Plan.
INTEREST OF CERTAIN PERSONS IN THE TRANSACTION
AmSouth Bank may be deemed to have an interest in the merger because it
provides investment advisory services to the AmSouth Funds pursuant to an
advisory agreement with AmSouth Funds. Future growth of assets of AmSouth Funds
can be expected to increase the total amount of fees payable to AmSouth Bank and
to reduce the amount of fees required to be waived to maintain total fees of the
Funds at agreed upon levels.
AMSOUTH FUNDS
GENERAL
For a general discussion of the AmSouth Funds, see the AmSouth Prospectus.
For the convenience of AmSouth Funds shareholders, certain cross-references to
the Prospectus 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 and Expenses
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 Objectives" and "Principal Investment Strategies" in the AmSouth
Prospectus pertaining to such Fund.
TRUSTEES
Overall responsibility for management of AmSouth Funds rests with its Board
of Trustees who are elected by the shareholders of AmSouth Funds. There are
currently five Trustees, one of whom is considered to be an "interested person"
of AmSouth Funds as defined in the Investment Company Act of 1940. The Trustees,
in turn, elect the officers of AmSouth Funds to supervise actively its
day-to-day operations.
17
<PAGE> 24
The Trustees of AmSouth Funds, their addresses and principal occupations
during the past five years are set forth as follows:
<TABLE>
<CAPTION>
POSITION(S)
HELD WITH
AMSOUTH PRINCIPAL OCCUPATION
NAME AND ADDRESS AGE FUNDS DURING PAST 5 YEARS
- ----------------------------------- --- ------------ -----------------------------------
<S> <C> <C> <C>
J. David Huber* 53 Chairman From June, 1987 to present,
3435 Stelzer Road employee of BISYS Fund Services
Columbus, Ohio 43219 Limited Partnership
Dick D. Briggs, Jr., M.D. 65 Trustee From September 1989 to present,
459 DER Building Emeritus Professor and Eminent
1808 7th Avenue South Scholar Chair, Univ. of Alabama at
UAB Medical Center Birmingham; from October 1979 to
Birmingham, Alabama 35294 present, 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
Mobile, Alabama 36608 August, 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 1996 to present, Trustee, the
The University of North Sessions Group; from July 1989 to
Carolina at Charlotte present, chancellor, The University
Charlotte, North Carolina 28223 of North Carolina at Charlotte;
from April 1997 to present,
Trustee, BISYS Variable Insurance
Funds; from August 1984 to July
1989, Senior Vice President,
University College, University of
Alabama at Birmingham
</TABLE>
- ---------------
* Mr. Huber is considered to be an "interested person" of AmSouth Funds as
defined in the 1940 Act.
INVESTMENT ADVISOR
For a discussion of AmSouth Bank and the services performed by it and its
fees with respect to an AmSouth Fund, see "The Advisor" in the AmSouth
Prospectus pertaining to such Fund.
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.
18
<PAGE> 25
DISTRIBUTOR
For a discussion of BISYS Fund Services Limited Partnership's activities as
distributor, see "The Distributor" in any AmSouth Funds Prospectus.
SHARES
For a discussion of voting rights of the AmSouth Funds, see "Miscellaneous"
in any AmSouth Funds 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 Funds 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 Funds
Prospectus pertaining to such Fund.
EXCHANGE PRIVILEGES
For a discussion of an AmSouth Funds 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 Funds Prospectus.
LEGAL PROCEEDINGS
There are no pending material legal proceedings to which AmSouth Funds is a
party.
SHAREHOLDER INQUIRIES
Shareholder inquiries relating to the AmSouth Funds may be addressed to
AmSouth Funds' administrator by writing to ASO Services Company, 3435 Stelzer
Road, Columbus, Ohio 43219 or by calling 1-800-451-8382.
FINANCIAL STATEMENTS
The financial statements and financial highlights for AmSouth Funds for
each of the periods indicated therein included in the AmSouth Prospectus 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 the Regional Equity Fund
by the Trustees of AmSouth Funds for the Special Meeting of Shareholders to be
held on February 22, 2000, at the office of BISYS Fund Services, 3534 Stelzer
Road, Columbus, OH 43219 at 10:00 a.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 AmSouth Funds a subsequently dated proxy, delivering a
written notice of revocation to AmSouth Funds at 3534 Stelzer Road, Columbus, OH
43219 or as otherwise described in the "Introduction" above. 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 Plan of
Reorganization. The Transaction contemplated by the 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 the Regional Equity Fund voting
as a Fund, as described above. In the event the shareholders do not
19
<PAGE> 26
approve the reorganization, the Trustees of AmSouth Funds will consider possible
alternative arrangements in the best interests of AmSouth Funds and its
shareholders.
Proxies are being solicited by mail. Shareholders of record of each AmSouth
Fund at the close of business on January 14, 2000, (the "Record Date"), will be
entitled to vote at the Special Meeting of Shareholders or any adjournment
thereof. The holders of a majority of votes attributable to the outstanding
voting shares of an AmSouth 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 AmSouth Fund voted 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, the Internet or in person at the meeting
will be counted by the inspector of election appointed by AmSouth Funds. 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 January 14, 2000, the officers and Trustees of AmSouth Funds as a
group beneficially owned less than 1% of the outstanding shares of Class A,
Class B and Trust shares of any of the AmSouth Funds. The information in the
following table shows, to the best of the knowledge of AmSouth Funds, the
shareholders who owned of record or beneficially 5% or more of the indicated
Fund and Class. The table also shows, as far as practicable, the percentage of
record and beneficial ownership of these same shareholders upon consummation of
the Transaction calculated on the basis of holdings as of the January 14, 2000
record date. Those shareholders who beneficially own 25% or more of the
outstanding shares of a Fund may be deemed to be controlling persons of that
Fund under the 1940 Act.
<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
PERCENT OF PERCENT OF PERCENT OF
BENEFICIAL RECORD BENEFICIAL
OWNERSHIP OWNERSHIP OWNERSHIP
PERCENT OF RECORD OWNERSHIP AS OF UPON UPON
NAME AND ADDRESS AS OF 1/14/2000 1/14/2000 CONSUMMATION CONSUMMATION
- ----------------------------------- ------------------------------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
AMSOUTH VALUE FUND
National Bank of Commerce.......... 9.07% (Class A Shares) 9.07% 7.81% 7.81%
Maynard Cooper
P.O. Box 10686
Birmingham, AL 35202-0686
Kenneburt & Company................ 91.70% (Trust Shares) 64.31% 87.72% 61.69%
P.O. Box 11426 Cstdy Unit
Birmingham, AL 35202-1426
AMSOUTH REGIONAL EQUITY FUND
NFSC FEBO 010-824917............... 8.97% (Class A Shares) 8.97% 1.34% 1.34%
SunTrust Bank TTEE Russell Corp.
P.O. Box 4655 Mail Code 210
Atlanta, GA 30303
NFSC FEBO 010-821845............... 5.35%(Class B Shares) 5.35% 0.22% 0.22%
NFSC FMTC IRA Rollover
2899 Vinewood Place
Green Cove Springs, FL 32043
</TABLE>
20
<PAGE> 27
<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
PERCENT OF PERCENT OF PERCENT OF
BENEFICIAL RECORD BENEFICIAL
OWNERSHIP OWNERSHIP OWNERSHIP
PERCENT OF RECORD OWNERSHIP AS OF UPON UPON
NAME AND ADDRESS AS OF 1/14/2000 1/14/2000 CONSUMMATION CONSUMMATION
- ----------------------------------- ------------------------------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
NFSC FEBO 010-421847............... 5.08%(Class B Shares) 5.08% 0.20% 0.20%
AmSouth Bank IRA Cust
169 Saddle Club Rd.
Jacksonville,AL 36265
NFSC FEBO 010-592498............... 14.49%(Class B Shares) 14.49% 0.58% 0.58%
Mr. Douglas B. Cooper
4402 Greenbrier Dear Rd.
Anniston, AL 36207
Kenneburt & Company................ 98.48%(Trust Shares) 36.41% 4.03% 1.50%
P.O. Box 11426 Cstdy Unit
Birmingham, AL 35202-1426
</TABLE>
THE BOARD OF TRUSTEES OF AMSOUTH FUNDS, INCLUDING THE INDEPENDENT TRUSTEES,
UNANIMOUSLY RECOMMEND APPROVAL OF THE PLAN.
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 Funds
has 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 AmSouth Funds Prospectus and the related Statement of Additional
Information which are incorporated by reference herein are Registration No.
33-21660 and 811-5551.
AmSouth Funds is 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 Funds 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.
21
<PAGE> 28
APPENDIX A
FORM OF PLAN OF REORGANIZATION
AMSOUTH FUNDS
AMSOUTH REGIONAL EQUITY FUND AND
AMSOUTH VALUE FUND
This Plan of Reorganization having been approved by the Board of Trustees
of AmSouth Funds is made as of November 23, 1999, by AmSouth Funds (the "Plan").
The capitalized terms used herein shall have the meaning ascribed to them in
this Plan.
OVERVIEW OF PLAN OF REORGANIZATION
(1) The AmSouth Regional Equity Fund (the "Regional Equity Fund") will
sell, assign, convey, transfer and deliver to the AmSouth Value Fund (the "Value
Fund") on the Exchange Date all of the properties and assets existing at the
Valuation Time in the Regional Equity Fund. In consideration therefor, the Value
Fund shall, on the Exchange Date, assume all of the liabilities of the Regional
Equity Fund for a number of full and fractional shares of the Value Fund having
an aggregate net asset value equal to the value of the assets of the Regional
Equity Fund transferred to the Value Fund on such date less the value of the
liabilities of the Regional Equity Fund assumed by the Value Fund on that date.
It is intended that the reorganization described in this Plan shall be a
tax-free reorganization under the Internal Revenue Code of 1986, as amended (the
"Code").
(2) Upon consummation of the transactions described in paragraph (1) of
this Plan, the Regional Equity Fund shall distribute in complete liquidation to
its shareholders of record as of the Exchange Date the shares of the Value Fund
received by it, each shareholder being entitled to receive the number of such
shares of the Value Fund equal to the proportion which the number of shares of
beneficial interest of the Regional Equity Fund held by such shareholder bears
to the number of such shares of the Regional Equity Fund outstanding on such
date.
FACTUAL BASIS OF THE PLAN
1. (a) AmSouth Funds is a business trust duly established and validly
existing under the laws of the Commonwealth of Massachusetts and has power to
own all of its properties and assets and to carry out the transactions involved
under this Plan. Each of AmSouth Funds, the Regional Equity Fund and the Value
Fund has all necessary federal, state and local authorizations to carry on its
business as now being conducted and to carry out this Plan.
(b) AmSouth Funds 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. The Regional Equity Fund and the Value Fund have
elected to qualify and have qualified as regulated investment companies
under Part I of Subchapter M of the Code as of and since their first
taxable year and the Regional Equity Fund and the Value Fund qualify and
intend to continue to qualify as regulated investment companies for the
taxable year ending upon their liquidation. The Regional Equity Fund and
the Value Fund have been regulated investment companies under such Sections
of the Code at all times since their inception.
(c) The statement of assets and liabilities, statement of operations,
and statements of changes in net assets financial highlights and schedule
of investments (indicating their market values) for the Regional Equity
Fund and the Value Fund for the year ended July 31, 1999, such statements
and schedules having been audited by PricewaterhouseCoopers LLP,
independent accountants to AmSouth Funds, fairly present the financial
position of the Regional Equity Fund and the Value Fund as of such date and
said statements of operations and changes in net assets and financial
highlights fairly reflect the results of operations, changes in net assets
and financial highlights for the periods covered thereby in conformity with
generally accepted accounting principles.
A-1
<PAGE> 29
(d) The prospectus of each of the Regional Equity Fund and the Value
Fund dated December 1, 1999, as filed with the Securities and Exchange
Commission (the "Commission") (the "Prospectus") and the Statement of
Additional Information for AmSouth Funds, dated December 1, 1999, as filed
with the Commission, did not as of such date, and will not as of the
Exchange Date 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 not misleading.
(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of AmSouth Funds, the Regional Equity Fund, or
the Value Fund, threatened against AmSouth Funds, the Regional Equity Fund
or the Value Fund which assert liability on the part of AmSouth Funds, the
Regional Equity Fund or the Value Fund.
(f) The Regional Equity Fund has no 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 July 31, 1999, referred to
in Section 1(c) hereof and those incurred in the ordinary course of AmSouth
Funds's business as an investment company since that date.
(g) As used in this Plan, the term "Investments" shall mean the
Regional Equity Fund's investments shown on the schedule of its portfolio
investments as of July 31, 1999, referred to in Section 1(c) hereof as
supplemented with such changes as AmSouth Funds or the Regional Equity Fund
shall make after that date.
(h) AmSouth Funds and each of the Regional Equity Fund and the Value
Fund have filed or will file all federal and state tax returns which, to
the knowledge of AmSouth Funds's officers, are required to be filed by
AmSouth Funds and each of the Regional Equity Fund and the federal and
state taxes shown to be due on said returns or on any Value Fund and have
paid or will pay all assessments received by AmSouth Funds or each of the
Regional Equity Fund and the Value Fund. All tax liabilities of AmSouth
Funds and each of the Regional Equity Fund and the Value Fund have been
adequately provided for on its books, and no tax deficiency or liability of
AmSouth Funds or either of the Regional Equity Fund and the Value 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) At both the Valuation Time and the Exchange Date and except for
shareholder approval, AmSouth Funds and the Regional Equity Fund will have
full right, power and authority to sell, assign, transfer and deliver the
Investments and any other assets and liabilities transferred by it pursuant
to this Plan. At the Exchange Date, subject only to the delivery of the
shares, Investments and any such other assets and liabilities as
contemplated by this Plan, the Value Fund will acquire the Investments and
any such other assets subject to no encumbrances, liens or security
interests whatsoever and without any restrictions upon the transfer
thereof.
(j) At both the Valuation Time and the Exchange Date, AmSouth Funds
and the Value Fund will have full right, power and authority to purchase
the Investments and any other assets and assume the liabilities of the
Regional Equity Fund to be transferred to it pursuant to this Plan.
(k) The Regional Equity Fund and the Value Fund are 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.
(l) At the Exchange Date, the Regional Equity Fund will have sold such
of its assets, if any, as necessary to assure that, after giving effect to
the acquisition of its assets pursuant to this Plan, the Value Fund 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 its Prospectus and Statement of Additional
Information.
SPECIFICS OF PLAN
2. Reorganization. (a) Subject to the requisite approval of the
shareholders of the Regional Equity Fund and to the other terms and conditions
contained herein (including the Regional Equity Fund's distribution to its
A-2
<PAGE> 30
shareholders of all of its investment company taxable income and net capital
gain (as described in Section 7(l)), the Regional Equity Fund will sell, assign,
convey, transfer and deliver to the Value Fund and the Value Fund will acquire
from the Regional Equity Fund, on the Exchange Date all of the Investments and
all of the cash and other assets of the Regional Equity Fund in exchange for
that number of shares of beneficial interest of the Value Fund provided for in
Section 3 and the assumption by the Value Fund of all of the liabilities of the
Regional Equity Fund. Pursuant to this Plan, the Regional Equity Fund will, as
soon as practicable after the Exchange Date, distribute in liquidation all of
the Value Fund's shares received by it to its shareholders in exchange for their
shares of beneficial interest of the Regional Equity Fund.
(b) AmSouth Funds, on behalf of the Regional Equity Fund, will pay or
cause to be paid to the Value Fund any interest and cash dividends received
by it on or after the Exchange Date with respect to the Investments
transferred to the Value Fund hereunder. AmSouth Funds, on behalf of the
Regional Equity Fund, will transfer to the Value Fund any rights, stock
dividends or other securities received by the Regional Equity 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 the
Value 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 Regional Equity Fund acquired by the Value Fund.
3. Exchange Date; Valuation Time. On the Exchange Date, the Value Fund will
deliver to the Regional Equity Fund a number of shares of the Value Fund having
an aggregate net asset value equal to the value of the assets of the Regional
Equity Fund acquired by the Value Fund, less the value of the liabilities of the
Regional Equity Fund assumed, determined as hereafter provided in this Section.
(a) The valuation time shall be 4:00 p.m. (Eastern Time) March 10,
2000, or such earlier or later day as may be established by the proper
officers of AmSouth Funds (the "Valuation Time").
(b) The net asset value of shares of the Value Fund to be delivered to
the Regional Equity Fund, the value of the assets of the Regional Equity
Fund, and the value of the liabilities of the Regional Equity Fund to be
assumed by the Value Fund in each case shall be computed as of the
Valuation Time pursuant to the valuation procedures customarily used by
AmSouth Funds.
(c) No formula will be used to adjust the net asset value of the
Regional Equity Fund or the Value Fund to take into account differences in
realized and unrealized gains and losses.
(d) AmSouth Funds, on behalf of the Value Fund, shall issue its shares
to the Regional Equity Fund on one share deposit receipt registered in the
name of the Regional Equity Fund. The Regional Equity Fund shall distribute
in liquidation shares of the Value Fund received by it hereunder pro rata
to its shareholders by redelivering such share deposit receipt to AmSouth
Funds's transfer agent, which will as soon as practicable set up open
accounts for each shareholder of the Regional Equity Fund in accordance
with written instructions furnished by AmSouth Funds.
(e) The Value Fund shall assume all liabilities of the Regional Equity
Fund, whether accrued or contingent, in connection with the acquisition of
assets and subsequent dissolution of the Regional Equity Fund or otherwise,
except that recourse for assumed liabilities relating to the Regional
Equity Fund will be limited to the Value Fund.
4. Expenses and Fees. (a) All fees and expenses incurred by the Regional
Equity Fund and/or the Value Fund as a direct result of the transactions
contemplated by this Plan, will be allocated ratably between the two Funds in
proportion to their net assets as of the Exchange Date except that (a) the costs
of proxy materials and proxy solicitations will be borne by AmSouth Bank and (b)
such fees and expenses will be paid by the party directly incurring such
expenses if and to the extent that payment by the other party would result in
the disqualification of the Value Fund or the Regional Equity, as the case may
be, as a "regulated investment company" within the meaning of Section 851 of the
Code.
A-3
<PAGE> 31
(b) Notwithstanding any other provisions of this Plan, if for any
reason the transaction contemplated by this Plan is not consummated, no
entity shall be liable to the other entity for any damages resulting
therefrom, including, without limitation, consequential damages.
5. Exchange Date. Delivery of the assets of the Regional Equity Fund to be
transferred, assumption of the liabilities of the Regional Equity Fund to be
assumed, and the delivery of the Value Fund shares to be issued shall be made at
the offices of AmSouth Funds, 3435 Stelzer Road, Columbus, Ohio 43219, at 10:00
a.m. Eastern standard time on the next full business day following the Valuation
Time, or at such other time and date established by the proper officers of
AmSouth Funds, the date and time upon which such delivery is to take place being
referred to herein as the "Exchange Date."
6. Special Meeting of Shareholders: Dissolution.(a) The Regional Equity
Fund will call a special meeting of its shareholders as soon as is practicable
after the effective date of the registration statement filed with the Commission
by AmSouth Funds on Form N-14 relating to the shares of the Value Fund issuable
hereunder (the "Registration Statement"), and the proxy statement of the
Regional Equity Fund included therein (the "Proxy Statement") for the purpose of
considering the sale of all of the assets of the Regional Equity Fund to and the
assumption of all of the liabilities of the Regional Equity Fund by the Value
Fund as herein provided, adopting this Plan, and authorizing the liquidation and
dissolution of the Regional Equity Fund, and it shall be a condition to the
obligations of each of the parties hereto that the holders of the shares of
beneficial interest of the Regional Equity Fund shall have approved this Plan
and the transactions contemplated herein in the manner required by law and
AmSouth Funds's Declaration of Trust at such a meeting on or before the
Valuation Time.
(b) The Regional Equity Fund will liquidate and dissolve in the manner
provided in AmSouth Funds's Declaration of Trust and in accordance with
applicable law, provided that the Regional Equity Fund will not make any
distributions of shares of the Value Fund to its shareholders without first
paying or adequately providing for the payment of all of its debts,
obligations and liabilities.
7. Conditions to Be Met Regarding the Transaction. The intention of AmSouth
Funds to consummate the transactions described herein are subject to the
following conditions:
(a) This Plan shall have been adopted and the transactions
contemplated hereby, including the liquidation and dissolution of the
Regional Equity Fund, shall have been approved by the shareholders of the
Regional Equity Fund in the manner required by law.
(b) The officers of AmSouth Funds shall cause the preparation of a
statement of the assets and liabilities of the Regional Equity Fund, with
values determined as provided in Section 3, together with a list of
Investments with their respective tax costs, all as of the Valuation Time,
certified on AmSouth Funds's behalf by its President (or any Vice
President) and Treasurer, and a certificate of both such officers, dated
the Exchange Date, that there has been no material adverse change in the
financial position of the Regional Equity Fund since July 31, 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 Regional Equity Fund, dividends paid or losses from operations.
(c) The officers of AmSouth Funds shall cause the preparation of a
statement of the Value Fund's net assets, together with a list of portfolio
holdings with values determined as provided in Section 3 hereof, all as of
the Valuation Time certified on AmSouth Funds's behalf by its President (or
any Vice President) and Treasurer.
(d) The President (or any Vice President) and Treasurer of AmSouth
Funds shall certify that as of the Valuation Time and as of the Exchange
Date all the elements in Section 1 of this Plan are true and correct in all
material respects as if made at and as of such dates and that each of the
Regional Equity Fund and the Value Fund has complied with and satisfied all
the conditions on its part under the Plan to be performed or satisfied at
or prior to such dates.
(e) AmSouth Funds shall have received a letter from Ernst & Young
dated the Exchange Date stating that such firm reviewed (i) the federal and
state income tax returns of the Regional Equity Fund related to the year
ended July 31, 1999, and (ii) to the extent returns have not been prepared
or filed, all available
A-4
<PAGE> 32
information of the Regional Equity Fund for the period from July 31, 1999,
to the Exchange Date, and that, in the course of such review, nothing came
to their attention which caused them to believe that such returns and/or
available information did not properly reflect, in all material respects,
the federal and state income taxes of the Regional Equity Fund for the
periods covered thereby, or that the Regional Equity Fund would not qualify
as a regulated investment company for federal income tax purposes.
(f) There shall not be any material litigation pending with respect to
the matters contemplated by this Plan.
(g) AmSouth Funds shall have received an opinion of Ropes & Gray dated
the Exchange Date to the effect that: (i) AmSouth Funds is a business trust
duly established and validly existing under the laws of the Commonwealth of
Massachusetts, and neither AmSouth Funds, the Regional Equity Fund, nor the
Value Fund is, to the knowledge of such counsel, required to qualify to do
business as a foreign association in any jurisdiction; (ii) AmSouth Funds
and the Regional Equity Fund have 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 Plan, AmSouth Funds and the Regional Equity Fund will have
duly sold, assigned, conveyed, transferred and delivered such Investments
and other assets to the Value Fund; (iii) the adoption of this Plan did
not, and the consummation of the transactions contemplated hereby will not,
violate AmSouth Funds's Declaration of Trust or Code of Regulations, as
amended, or any provision of any agreement known to such counsel to which
AmSouth Funds is a party or by which it is bound; (iv) no consent,
approval, authorization or order of any court or governmental authority is
required for the consummation by AmSouth Funds of the transactions
contemplated hereby, except such as have been obtained under the Securities
Act of 1933 (the "1933 Act"), the Securities Exchange Act of 1934 ("the
1934 Act") and the 1940 Act; (v) this Plan has been duly authorized,
executed and delivered by AmSouth Funds and is a valid and binding
obligation of AmSouth Funds; and (vi) the shares of the Value Fund to be
delivered to the Regional Equity Fund as provided for by this Plan are duly
authorized and upon such delivery will be validly issued and will be fully
paid and nonassessable by AmSouth Funds and no shareholder of AmSouth Funds
has any preemptive right to subscription or purchase in respect thereof.
(h) AmSouth Funds shall have received an opinion of Ropes & Gray
addressed to AmSouth Funds and dated the Exchange Date to the effect that
for Federal income tax purposes: (i) no gain or loss will be recognized by
the Regional Equity Fund upon the transfer of the assets and Investments to
the Value Fund in exchange for shares of the Value Fund and the assumption
by the Value Fund of the liabilities of the Regional Equity Fund or upon
the distribution of shares of the Value Fund by the Regional Equity Fund to
its shareholders in liquidation; (ii) no gain or loss will be recognized by
the shareholders of the Regional Equity Fund upon the exchange of their
shares for the shares of the Value Fund; (iii) the basis of the shares of
the Value Fund shares a shareholder of the Regional Equity Fund receives in
connection with the exchange will be the same as the basis of his or her
Regional Equity Fund shares exchanged therefor; (iv) a Regional Equity Fund
shareholder's holding period for his or her Value Fund shares will be
determined by including the period for which he or she held the shares of
the Regional Equity Fund exchanged therefor, provided that he or she held
such shares of the Regional Equity Fund as capital assets; (v) no gain or
loss will be recognized by the Value Fund upon the receipt of the assets
transferred to the Value Fund pursuant to this Plan in exchange for the
shares of the Value Fund and the assumption by the Value Fund of the
liabilities of the Regional Equity Fund; (vi) the basis in the hands of the
Value Fund of the assets of the Regional Equity Fund will be the same as
the basis of the assets in the hands of the Regional Equity Fund
immediately prior to the transfer; and (vii) the Value Fund's holding
periods of the assets of the Regional Equity Fund will include the period
for which such assets were held by the Regional Equity Fund.
(i) The assets of the Regional Equity Fund to be acquired by the Value
Fund will include no assets which the Value Fund, by reason of limitations
contained in its Declaration of Trust or of investment restrictions
disclosed in its Prospectus in effect on the Exchange Date, may not
properly acquire.
A-5
<PAGE> 33
(j) The Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been
instituted or to the knowledge of AmSouth Funds, contemplated by the
Commission.
(k) AmSouth Funds shall have received from the Commission such order
or orders as Ropes & Gray deems reasonably necessary or desirable under the
1933 Act, the 1934 Act, the 1940 Act in connection with the transactions
contemplated hereby, and that all such orders shall be in full force and
effect.
(l) Prior to the Exchange Date, the Regional Equity Fund 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 years ending on or
after July 31, 1999, and on or prior to the Exchange Date (computed without
regard to any deduction for dividends paid), and all of its net capital
gain realized in each of its taxable years ending on or after July 31, 1999
and on or prior to the Exchange Date (after reduction for any capital loss
carryover).
(m) The custodian of AmSouth Funds shall have delivered to AmSouth
Funds a certificate identifying all of the assets of the Regional Equity
Fund held by such custodian as of the Valuation Time.
(n) The transfer agent of AmSouth Funds shall have provided to AmSouth
Funds (i) a certificate setting forth the number of shares of the Regional
Equity Fund outstanding as of the Valuation Time and (ii) the name and
address of each holder of record of any such shares of the Regional Equity
Fund and the number and class of shares held of record by each such
shareholder.
(o) AmSouth Funds, on behalf of the Value Fund, shall have executed
and delivered an Assumption of Liabilities dated as of the Exchange Date
pursuant to which the Value Fund will assume all of the liabilities of the
Regional Equity Fund existing at the Valuation Time in connection with the
transactions contemplated by this Plan.
(p) AmSouth Funds, on behalf of the Regional Equity Fund, shall have
executed and delivered an instrument of transfer ("Transfer Document") and
any other certificates or documents AmSouth Funds may deem necessary or
desirable to transfer the Regional Equity Fund's entire right, title and
interest in and to the Investments and all other assets of the Regional
Equity Fund.
8. No Broker. There is no person who has dealt with AmSouth Funds, the
Regional Equity Fund or the Value Fund 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 Plan.
9. Termination. AmSouth Funds may, by consent of its Trustees, terminate
this Plan, and AmSouth Funds, after consultation with counsel, may modify this
Plan in any manner deemed necessary or desirable.
10. Rule 145. Pursuant to Rule 145 under the 1933 Act, AmSouth Funds will,
in connection with the issuance of any shares of the Value Fund to any person
who at the time of the transaction contemplated hereby is deemed to be an
affiliate of a party to the transaction pursuant to Rule 145(c), cause to be
affixed upon the certificates issued to such person (if any) a legend as
follows:
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO AMSOUTH FUNDS OR
ITS PRINCIPAL UNDERWRITER UNLESS (i) A REGISTRATION STATEMENT WITH RESPECT
THERETO IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (ii) IN
THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO AMSOUTH FUNDS SUCH
REGISTRATION IS NOT REQUIRED.
and, further, AmSouth Funds will issue stop transfer instructions to AmSouth
Funds's transfer agent with respect to such shares.
11. Declaration of Trust. Copies of the Declaration of Trust of AmSouth
Funds and any amendments thereto so filed are on file with the Secretary of
State of Massachusetts, and notice is hereby given that this instrument is
executed on behalf of the trustees of AmSouth Funds, as trustees and not
individually, and that the
A-6
<PAGE> 34
obligations of this instrument are not binding upon any of the trustees,
officers or shareholders of AmSouth Funds individually but are binding only upon
the assets and property of AmSouth Funds.
The names "AmSouth Funds" and "Trustees of AmSouth Funds" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust filed on October 1, 1987, as amended, 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,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, Shareholders or representatives of the
Trust personally, but bind only the assets of the Trust, and all persons dealing
with any series of Shares of the Trust must look solely to the assets of the
Trust belonging to such series for the enforcement of any claims against the
Trust.
AMSOUTH FUNDS
By:
--------------------------------------
A-7
<PAGE> 35
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 the Regional Equity Fund dated
January 21, 2000, relating to the transfer of assets and liabilities from the
AmSouth Regional Equity Fund to the AmSouth Value Fund.
The Statement of Additional Information for the AmSouth Funds dated
December 1, 1999, has been filed with the Securities and Exchange Commission and
is 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 that Prospectus. A copy of the Prospectus may
be obtained, without charge, by writing AmSouth Funds, 3435 Stelzer Road,
Columbus, OH 43219 or by calling 1-800-451-8382.
Audited financial statements for the AmSouth Regional Equity Fund and
the AmSouth Value Fund for the period ended July 31, 1999, are contained in the
AmSouth Annual Report, which is incorporated herein by reference.
The date of this Statement of Additional Information is January 21,
2000.
<PAGE> 36
TABLE OF CONTENTS
-----------------
Financial Statements of the
combined Funds on a pro-forma
basis for the year ended
July 31, 1999 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . B-3
-2-
<PAGE> 37
<TABLE>
AMSOUTH VALUE FUND
AMSOUTH REGIONAL EQUITY FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES(1)
7/31/99
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
AMSOUTH AMSOUTH
VALUE REGIONAL EQUITY ADJUSTMENTS COMBINED
---------- --------------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Investment securities at value (Cost $711,667
and $69,670, respectively) $1,043,170 $82,223 $ -- $1,125,393
Interest and dividends receivable 1,652 107 -- 1,759
Receivable for capital shares issued 61 -- -- 61
Receivable from brokers for investments sold 2,830 -- -- 2,830
Other assets 45 9 -- 54
---------- ------- ------ ----------
TOTAL ASSETS 1,047,758 82,339 -- 1,130,097
---------- ------- ------ ----------
LIABILITIES:
Payable for capital shares redeemed 334 32 -- 366
Payable to brokers for investments purchased 3,110 -- -- 3,110
Accrued expenses and other payables:
Advisory fees 379 30 -- 409
Administration fees 23 2 -- 25
Distribution fees 27 6 -- 33
Accounting fees 3 -- 3
Transfer agent fees 28 4 -- 32
Custodian fees 12 1 -- 13
Other 48 3 -- 51
---------- ------- ------ ----------
TOTAL LIABILITIES 3,964 78 -- 4,042
---------- ------- ------ ----------
NET ASSETS:
Class A Shares $ 70,740 $20,911 $ -- $ 91,651
Class B Shares 12,394 965 -- 13,359
Trust Shares 960,660 60,385 -- 1,021,045
---------- ------- ------ ----------
$1,043,794 $82,261 $ -- $1,126,055
========== ======= ====== ==========
CAPITAL SHARES OUTSTANDING
Class A Shares 2,801 913 (85)(a) 3,629
Class B Shares 493 43 (5)(a) 531
Institutional Shares 38,024 2,631 (241)(a) 40,414
---------- ------- ------ ----------
41,318 3,587 (331)(a) 44,574
========== ======= ====== ==========
NET ASSET VALUE
Class A Shares - redemption price per share $ 25.25 $ 22.90 $ 25.25
========== ======= ==========
Class A Shares - maximum sales charge 4.50% 4.50% 4.50%
---------- ------- ----------
Class A Shares - POP $ 26.44 $ 23.98 $ 26.44
========== ======= ==========
Class B Shares - offering price per share(2) $ 25.14 $ 22.68 $ 25.14
========== ======= ==========
Trust Shares - offering and redemption
price per share $ 25.27 $ 22.95 $ 25.27
========== ======= ==========
COMPOSITION OF NET ASSETS
Capital $ 577,771 $52,949 $ -- $ 630,720
Undistributed (distributions in excess of) 478 13 -- 491
net investment income
Undistributed net realized gains (losses) 134,042 16,746 -- 150,788
from investment transactions
Net unrealized appreciation (depreciation) of investments 331,503 12,553 -- 344,056
---------- ------- ------ ----------
NET ASSETS, JULY 31, 1999 $1,043,794 $82,261 $ -- $1,126,055
========== ======= ====== ==========
</TABLE>
(1) Details about the proposed merger are contained in the Prospectus, and this
Statement of Additional Information should be read in conjunction with that
Prospectus.
(2) Redemption price per share varies by length of time shares are held.
(a) Adjustment to convert AmSouth Regional Equity Shares Outstanding to AmSouth
Value Shares Outstanding based on Value's NAV's.
<PAGE> 38
<TABLE>
AMSOUTH VALUE FUND
AMSOUTH REGIONAL EQUITY FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
7/31/99
(AMOUNTS IN THOUSANDS)
<CAPTION>
AMSOUTH AMSOUTH
VALUE REGIONAL EQUITY ADJUSTMENTS(a) COMBINED
--------- --------------- -------------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest Income $ 918 $ -- $ -- $ 918
Dividend Income 21,407 1,877 -- $ 23,284
-------- -------- ----- --------
22,325 1,877 -- 24,202
-------- -------- ----- --------
EXPENSES:
Advisory fees 8,292 856 9,148
Administration fees 2,073 214 2,287
Shareholder servicing fees (Class A Shares) 179 76 255
12b-1 fees (Class B Shares) 102 15 117
Accounting fees 335 55 390
Transfer agent fees 261 64 325
Custodian fees 63 7 70
Trustee fees and expenses 23 3 26
Other expenses 229 58 287
-------- -------- ----- --------
TOTAL EXPENSES: 11,557 1,348 -- 12,905
Less Waivers:
Accounting fees (20) (20) -- (40)
Transfer agent fees (30) (30) -- (60)
-------- -------- ----- --------
NET EXPENSES: 11,507 1,298 -- 12,805
-------- -------- ----- --------
NET INVESTMENT INCOME 10,818 579 -- 11,397
-------- -------- ----- --------
REALIZED/UNREALIZED GAINS (LOSSES) FROM
INVESTMENTS
Net realized gains (losses) from investment transaction 136,676 16,745 -- 153,421
Net change in unrealized appreciation (depreciation)
from investments 419 (30,363) -- (29,944)
-------- -------- ----- --------
Net realized/unrealized gains (losses) from investments 137,095 (13,618) -- 123,477
-------- -------- ----- --------
CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS: $147,913 $(13,039) $ -- $134,874
======== ======== ===== ========
</TABLE>
(a) AmSouth Value Fund and AmSouth Regional Equity Fund have the same expense
structures. Therefore, no adjustments to expenses have been made.
<PAGE> 39
<TABLE>
AMSOUTH VALUE FUND
AMSOUTH REGIONAL EQUITY FUND
PRO FORMA COMBINING SCHEDULE OF PORTFOLIO INVESTMENTS
7/31/99
(AMOUNTS IN THOUSANDS, EXCEPT SHARES)
<CAPTION>
AMSOUTH
AMSOUTH AMSOUTH PRO FORMA AMSOUTH REGIONAL
VALUE FUND REGIONAL EQUITY COMBINED VALUE FUND EQUITY COMBINED
PRINCIPAL PRINCIPAL PRINCIPAL MARKET MARKET MARKET
AMOUNT/SHARES AMOUNT/SHARES AMOUNT/SHARES DESCRIPTION VALUE VALUE VALUE
-------------------------- --------------- ------------- ------------------------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS (97.5%):
Apparel (0.6%):
600,000 600,000 600,000 Phillips-Van Heusen Corp. $ 5,100 $ -- $ 5,100
90,000 90,000 90,000 Russell Corp. -- 1,727 1,727
-------- ------ ----------
5,100 1,727 6,827
-------- ------ ----------
Automotive (1.5%):
336,000 336,000 336,000 Ford Motor Co. 16,338 -- 16,338
-------- ------ ----------
Automotive Parts (1.7%):
392,000 392,000 392,000 Arvin Industries, Inc. 14,651 -- 14,651
100,000 100,000 100,000 Discount Auto Parts,
Inc. (b) -- 2,238 2,238
75,000 75,000 75,000 Genuine Parts Co. -- 2,329 2,329
-------- ------ ----------
14,651 4,567 19,218
-------- ------ ----------
Banking (5.5%):
190000 40,000 230,000 230,000 Bank of America Corp. 12,611 2,654 15,265
60,000 60,000 60,000 Bank One Corp. 3,274 -- 3,274
30,000 30,000 30,000 First American Corp.-Tenn -- 1,260 1,260
285,000 50,000 335,000 335,000 First Union Corp. 13,110 2,300 15,410
40,000 40,000 40,000 Union Planters Corp. -- 1,773 1,773
735,000 735,000 735,000 Washington Mutual, Inc. 25,220 -- 25,220
-------- ------ ----------
54,215 7,987 62,202
-------- ------ ----------
Beverages (1.5%):
400,000 400,000 400,000 Diageo PLC ADR 16,400 -- 16,400
-------- ------ ----------
Building Materials (0.2%):
275,000 275,000 275,000 Interface, Inc. -- 2,458 2,458
-------- ------ ----------
Business Services (1.7):
815,000 815,000 815,000 Reynolds & Reynolds Co.,
Class A 19,153 -- 19,153
-------- ------ ----------
Chemicals-Speciality (2.5%):
1,025,000 1,025,000 1,025,000 Engelhard Corp. 22,870 -- 22,870
355,000 355,000 355,000 M.A. Hanna Co. 5,680 -- 5,680
-------- ------ ----------
28,550 -- 28,550
-------- ------ ----------
Commercial Services (0.4%):
60,000 60,000 60,000 Equifax, Inc. -- 1,973 1,973
175,000 175,000 175,000 Modis Professional
Services (b) -- 2,537 2,537
-------- ------ ----------
-- 4,510 4,510
-------- ------ ----------
Computer Hardware (2.0%):
177,000 177,000 177,000 IBM Corp. 22,247 -- 22,247
-------- ------ ----------
Computers & Peripherals (1.4%):
1,285,000 1,285,000 1,285,000 Cabletron Systems,
Inc. (b) 15,500 -- 15,500
-------- ------ ----------
Construction-Manufactured Homes (0.2%):
225,000 225,000 225,000 Clayton Homes, Inc. -- 2,363 2,363
-------- ------ ----------
Consumer Goods (1.9%):
740,000 740,000 740,000 American Greetings
Corp., Class A 21,738 -- 21,738
-------- ------ ----------
Diversified Manufacturing (0.1%):
55,000 55,000 55,000 Walter Industries,
Inc. (b) -- 694 694
-------- ------ ----------
Electrical & Electronic (1.0%):
230,000 230,000 230,000 Avnet, Inc. 11,270 -- 11,270
-------- ------ ----------
Financial Services (1.9%):
660,000 660,000 660,000 Dun & Bradstreet Corp. 20,955 -- 20,955
-------- ------ ----------
</TABLE>
<PAGE> 40
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Food Processing & Packaging (2.7%):
165,000 165,000 165,000 Dole Food, Inc. 4,352 -- 4,352
90,000 90,000 90,000 Flowers Industries, Inc. -- 1,502 1,502
110,000 110,000 110,000 Lance, Inc. -- 1,616 1,616
855,000 855,000 855,000 Sara Lee Corp. 18,810 -- 18,810
180,000 180,000 180,000 Universal Foods Corp. 3,926 -- 3,926
-------- ------ ----------
27,088 3,118 30,206
-------- ------ ----------
Forest & Paper Products (6.3%):
80,000 80,000 80,000 Caraustar Industries,
Inc. -- 1,990 1,990
50,000 50,000 50,000 Champion International
Corp. 2,588 -- 2,588
70,000 70,000 70,000 Fort James Corp. -- 2,555 2,555
480,000 480,000 480,000 International Paper Co. 24,540 -- 24,540
370,000 370,000 370,000 Weyerhauser Co. 23,934 -- 23,934
350,000 350,000 350,000 Willamette Industries,
Inc. 15,750 -- 15,750
-------- ------ ----------
66,812 4,545 71,357
-------- ------ ----------
Furniture (0.3%):
230,000 230,000 230,000 Heilig-Myers Co. -- 1,668 1,668
40,000 40,000 40,000 Winsloew Furniture,
Inc. (b) -- 1,345 1,345
-------- ------ ----------
-- 3,013 3,013
-------- ------ ----------
Health Care (3.4%):
225,000 225,000 225,000 Aetna, Inc. 18,450 -- 18,450
340,000 340,000 340,000 HEALTHSOUTH Corp. (b) -- 4,165 4,165
260,000 260,000 260,000 United Healthcare Corp. 15,860 -- 15,860
-------- ------ ----------
34,310 4,165 38,475
-------- ------ ----------
Household Products/Wares (2.4%):
620,000 620,000 620,000 Newell Rubbermaid, Inc. 26,815 -- 26,815
-------- ------ ----------
Insurance (4.7%):
25,000 25,000 25,000 Chubb Corp. 1,495 -- 1,495
360,000 360,000 360,000 Marsh & McLennan Cos.,
Inc. 27,360 -- 27,360
790,000 790,000 790,000 St. Paul Cos., Inc. 24,589 -- 24,589
-------- ------ ----------
53,444 -- 53,444
-------- ------ ----------
Manufacturing (0.5%):
123,800 123,800 123,800 Kennametal, Inc. 2,987 -- 2,987
105,000 105,000 105,000 Wolverine Tube, Inc. (b) -- 2,192 2,192
-------- ------- -----------
2,987 2,192 5,179
-------- ------ ----------
Medical Services (0.5%):
125,000 125,000 125,000 Coventry Health Care,
Inc. (b) -- 1,383 1,383
310,000 310,000 310,000 Health Management Assoc.,
Inc., Class A (b) -- 2,557 2,557
170,000 170,000 170,000 MedPartners, Inc. (b) -- 1,423 1,423
-------- ------ ----------
-- 5,363 5,363
-------- ------ ----------
Medical Supplies (3.2%):
540,000 540,000 540,000 C.R. Bard, Inc. 26,257 -- 26,257
365,000 365,000 365,000 DENTSPLY International,
Inc. 9,878 -- 9,878
-------- ------ ----------
36,135 -- 36,135
-------- ------ ----------
Metals & Mining (0.2%):
120,000 120,000 120,000 Barrick Gold Corp. 2,228 -- 2,228
-------- ------ ----------
Newspapers (3.6%):
230,000 230,000 230,000 Dow Jones & Co., Inc. 11,471 -- 11,471
395,000 395,000 395,000 Gannett Co., Inc. 28,539 -- 28,539
-------- ------ ----------
40,010 -- 40,010
-------- ------ ----------
Office Equipment & Services (0.1%):
50,000 50,000 50,000 Harris Corp. -- 1,516 1,516
-------- ------ ----------
</TABLE>
<PAGE> 41
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Oil & Gas Exploration, Production, & Services (13.9%):
240,000 240,000 240,000 Atlantic Richfield Co. 21,615 -- 21,615
325,000 45,000 370,000 370,000 Burlington Resources, Inc. 14,361 1,988 16,349
510,000 510,000 510,000 Kerr-McGee Corp. 26,264 -- 26,264
10,000 10,000 10,000 Mobil Corp. -- 1,023 1,023
190,000 190,000 190,000 Noble Affiliates 5,558 -- 5,558
20,000 20,000 20,000 Schlumberger Ltd. -- 1,211 1,211
750,000 750,000 750,000 Sunoco, Inc. 22,875 -- 22,875
432,000 432,000 432,000 Texaco, Inc. 26,918 -- 26,918
710,000 710,000 710,000 Ultramar Diamond
Shamrock Corp. 16,774 -- 16,774
610,000 610,000 610,000 USX-Marathon Group 18,529 -- 18,529
-------- ------ ----------
152,894 4,222 157,116
-------- ------ ----------
Packaging (0.7%):
250,000 250,000 250,000 Crown Cork & Seal, Inc. 7,328 -- 7,328
-------- ------ ----------
Pharmaceuticals (5.0%):
170,000 170,000 170,000 American Home Products
Corp. 8,670 -- 8,670
335,000 335,000 335,000 Baxter International,
Inc. 23,010 -- 23,010
450,000 450,000 450,000 Pharmacia & Upjohn, Inc. 24,216 -- 24,216
-------- ------ ----------
55,896 -- 55,896
-------- ------ ----------
Pollution Control Services & Equipment (0.9%):
391,500 391,500 391,500 Waste Management, Inc. 10,008 -- 10,008
-------- ------ ----------
Printing (0.1%):
60,000 60,000 60,000 John H. Harland Co. -- 1,208 1,208
-------- ------ ----------
Railroads (1.7%):
350,000 350,000 350,000 CSX Corp. 16,953 -- 16,953
75,000 75,000 75,000 Norfolk Southern Corp. -- 2,194 2,194
-------- ------ ----------
16,953 2,194 19,147
-------- ------ ----------
Restaurants (0.2%):
130,000 130,000 130,000 CRBL Group, Inc. -- 1,966 1,966
-------- ------ ----------
Retail (10.0%):
440,000 440,000 440,000 CVS Corp. 21,890 -- 21,890
300,000 300,000 300,000 Dayton Hudson Corp. 19,406 -- 19,406
540,000 540,000 540,000 Dillard's, Inc., Class A 16,639 -- 16,639
285,000 285,000 285,000 Hancock Fabrics, Inc. -- 1,443 1,443
600,000 600,000 600,000 May Department
Stores Co. 23,212 -- 23,212
85,000 85,000 85,000 Office Depot, Inc. (b) -- 1,594 1,594
60,000 60,000 60,000 Saks, Inc. (b) -- 1,380 1,380
275,000 275,000 275,000 Stein-Mart, Inc. (b) -- 1,829 1,829
120,000 120,000 120,000 The Limited, Inc. 5,483 -- 5,483
500,000 500,000 500,000 Wal-Mart Stores, Inc. 21,125 -- 21,125
-------- ------ ----------
107,755 6,246 114,001
-------- ------ ----------
Steel (0.2%):
50,000 50,000 50,000 Nucor Corp. -- 2,425 2,425
------- ------ ----------
Telecommunications-Equipment (0.1%):
40,000 40,000 40,000 Scientific-Atlanta, Inc. -- 1,460 1,460
------- ------ ----------
Temporary Services (0.5%):
700,000 700,000 700,000 Olsten Corp. 5,906 -- 5,906
------- ------ ----------
Transportation (0.4%):
165,000 165,000 165,000 Offshore Logistics,
Inc. (b) -- 2,001 2,001
70,000 70,000 70,000 Tidewater, Inc. -- 2,314 2,314
------- ------ ----------
-- 4,315 4,315
------- ------ ----------
</TABLE>
<PAGE> 42
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Transportation Leasing & Trucking (2.4%):
525,000 90,000 615,000 615,000 Ryder System, Inc. 12,370 2,121 14,491
243,000 243,000 243,000 US Freightways Corp. 11,998 -- 11,998
-------- ------ ----------
24,368 2,121 26,489
-------- ------ ----------
Utilities-Electric & Gas (3.6%):
615,000 615,000 615,000 Constellation Energy
Group 18,027 -- 18,027
50,000 50,000 50,000 Florida Progress Corp. -- 2,047 2,047
40,000 40,000 40,000 New Century Energies,
Inc. 1,388 -- 1,388
650,000 75,000 725,000 725,000 Southern Co. 17,184 1,983 19,167
-------- ------ ----------
36,599 4,030 40,629
-------- ------ ----------
Utilities-Telecommunications (5.8%):
435,000 435,000 435,000 AT&T Corp. 22,593 -- 22,593
363,216 363,216 363,216 BellAtlantic Corp. 23,155 -- 23,155
358,000 45,000 403,000 403,000 BellSouth Corp. 17,184 2,160 19,344
-------- ------ ----------
62,932 2,160 65,092
-------- ------ ----------
TOTAL COMMON STOCKS $1,097,150
----------
COMMERCIAL PAPER-DOMESTIC (0.9%):
Automotive-Finance (0.9%):
10,000 0 10,000 10,000,000 General Motors Acceptance
Corp. 10,000 -- 10,000
-------- ------ ----------
TOTAL COMMERCIAL PAPER-
DOMESTIC $ 10,000
----------
INVESTMENT COMPANIES (1.6%):
16,400,161 1,655,457 18,055,618 18,055,617 AmSouth Prime Obligations
Fund 16,400 1,655 18,055
184,508 2,829 187,337 187,337 AmSouth U.S. Treasury Fund 185 3 188
-------- ------ ----------
16,585 1,658 18,243
-------- ------ ----------
TOTAL INVESTMENT COMPANIES $ 18,243
----------
TOTAL (COST $781,337) (a) $1,125,393
==========
</TABLE>
- ------------
Percentages indicated are based on net assets of $1,126,055.
(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:
Unrealized appreciation $373,652
Unrealized depreciation (30,487)
--------
Net unrealized appreciation 343,165
=======
(b) Represents non-income producing securities.
ADR - American Depository Receipt
PLC - Public Limited Co.
<PAGE> 1
<TABLE>
<S> <C>
Two Quick and Easy Ways AMSOUTH
To Vote Your Proxy Instantly FUNDS
</TABLE>
As a valued AmSouth Regional Equity Fund shareholder, your proxy vote is
important to us. That's why we've made it faster and easier to vote your proxy
at your convenience, 24 hours a day. After reviewing the enclosed Proxy
Statement, which outlines important issues affecting your fund, select one of
the following quick and easy methods to register your vote -- accurately and
immediately.
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.
