SOUTHTRUST FUNDS, 497, 1999-06-29

SOUTHTRUST FUNDS
497, 1999-06-29

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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION

JUNE 29, 1999

PROSPECTUS

SouthTrust Funds

SOUTHTRUST VALUE FUND
SOUTHTRUST GROWTH FUND

SouthTrust Value Fund (formerly, SouthTrust Core Equity Fund) is a mutual fund
seeking to provide long- term capital appreciation, with income a secondary
consideration.

SouthTrust Growth Fund is a mutual fund seeking to provide capital appreciation.

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.

<TABLE>
<CAPTION>
CONTENTS
Fund Goals, Strategies, Performance and
<S> <C>
Investment Risks 1
What are the Funds' Fees and Expenses? 7
What is the Value Fund's Investment Approach? 8
What is the Growth Fund's Investment Approach? 9
What are the Principal Securities in Which the
Funds Invest? 9
What are the Main Risks of Investing in the Funds? 10
What do Shares Cost? 10
How are the Funds Sold? 11
How to Purchase Shares 12
How to Redeem and Exchange Shares 13
Account and Share Information 16
Who Manages the Funds? 17
Financial Information 18
</TABLE>

AUGUST , 1999

Fund Goals, Strategies, Performance and Investment Risks

SouthTrust Funds (Company) currently offer shares in six investment portfolios,
each with its own investment goal and strategies, described in separate
prospectuses. This prospectus pertains only to SouthTrust Value Fund (Value
Fund) and SouthTrust Growth Fund (Growth Fund). The purchase of shares of any
Fund should not be considered a complete investment program, but an important
segment of a well-diversified investment program. For information about other
funds offered by SouthTrust Funds, call 1-800-843-8618.

Following is a discussion of each Fund's goal, investment strategies, and
risks. In addition to the risks set forth below that are specific to an
investment in a particular Fund, there are risks common to all mutual funds. For
example, a Fund's share price may decline and you could lose money. Also, there
is no assurance that a Fund will achieve its investment objective. Finally, the
Funds bear the risk of Year 2000 readiness.

Also included on the following pages is performance information for the Funds
over a period of time.

SOUTHTRUST VALUE FUND

What is the Value Fund's Goal?
The Fund's goal is to provide long-term capital appreciation, with income a
secondary consideration.

What are the Fund's Main Investment Strategies?

The Fund's investment approach is focused on owning stocks of well-managed
companies with strong earnings growth that are trading at favorable valuation
levels and provide potential for long-term return. The Adviser first identifies
companies with long-term growth potential based upon the company's strengths,
industry position, strategic plans, and financial condition. After these
companies are identified, the Adviser seeks to uncover those companies selling
at attractive valuations. Investments are held for long-term growth and are
generally sold only when there is a fundamental change or the stock price
reaches its target potential. During normal market conditions, at least 65% of
the Fund's total assets will be invested in equity securities.

What are the Main Risks of Investing in the Fund?

The value of the stocks in the Fund's portfolio will go up and down. These
fluctuations could be a sustained trend or a drastic movement. The Fund's
portfolio will reflect changes in prices of individual portfolio stocks or
general changes in stock valuations. Consequently, the Fund's share price may
decline and you could lose money. Other risks of investing in the Fund include
sector risks and risks related to investing for value.

Risk/Return Bar Chart and Table

[Graph Appears Here]

The bar chart shows the variability of the Fund's total returns on a calendar
year-end basis.

The total returns displayed for the Fund in the bar chart do not reflect the
payment of any sales charges or recurring shareholder account fees. If these
charges or fees had been included, the returns shown would have been lower.

The Fund's total return from January 1, 1999 to March 31, 1999 was -0.32%.

Within the period shown in the chart, the Fund's highest quarterly return was
23.89% (quarter ended December 31, 1998). Its lowest quarterly return was -
16.95% (quarter ended September 30, 1998).

Average Annual Total Return Table

The following table represents the Fund's Average Annual Total Returns, reduced
to reflect applicable sales charges, for the calendar periods ending December
31, 1998.

The table shows the Fund's total returns averaged over a period of years
relative to the Standard & Poor's 500 (S&P 500) Index, a broad based market
index, for the calendar periods ended December 31, 1998. Total returns for the
index shown do not reflect sales charges, expenses or other fees that the SEC
requires to be reflected in the Fund's performance.

Indexes are unmanaged, and it is not possible to invest directly in an index.

Calendar Period 1 Year 5 Years Start of
Performance1

Fund 7.56% 17.77% 14.67%
S&P 500 28.58% 24.06% 20.41%

1 The Fund's start of performance date was May 8, 1992.

Past performance does not necessarily predict future performance. This
information provides you with historical performance information so that you can
analyze whether the Fund's investment risks are balanced by its potential
rewards.

SOUTHTRUST GROWTH FUND

What is the Growth Fund's Goal?

The Fund's goal is capital appreciation.

What are the Fund's Main Investment Strategies?

The Fund's investment approach focuses on owning stocks of well-known companies
which the Adviser believes offer the potential for long-term growth. These
companies will generally be "blue chip" companies, i.e., companies that are
nationally known, have a long record of profit growth and dividend payment, and
a reputation for quality management, products and services. These companies will
have market capitalizations over $10 billion, which is considered to be the
large capitalization sector of the market. Although the Fund seeks to buy stocks
when they are attractively valued, quality and growth are considered to be more
important than valuation.

What are the Main Risks of Investing in the Fund?

The value of the stocks in the Fund's portfolio will go up and down. These
fluctuations could be a sustained trend or a drastic movement. The Fund's
portfolio will reflect changes in prices of individual portfolio stocks or
general changes in stock valuations. Growth stocks in particular may experience
a larger decline on a forecast of lower earnings, a negative fundamental
development or an adverse market development. Consequently, the Fund's share
price may decline and you could lose money. Other risks of investing in the Fund
include sector risks and risks related to investing for growth.

Risk/Return Bar Chart and Table

[Graph Appears Here]

The bar chart shows the variability of the predecessor collective trust fund's
(CTF) total returns on a yearly basis. The total returns reflect projected Fund
expenses before waivers. The total returns displayed in the bar chart for the
CTF do not reflect the payment of any sales charges or recurring shareholder
account fees.

The CTF's total return from January 1, 1999 to March 31, 1999 was 3.20%.

Within the period shown in the Chart, the CTF's highest quarterly return was
24.9% (quarter ended December 31, 1998). Its lowest quarterly return was
(11.34%) (quarter ended September 30, 1990). Average Annual Total Return
Table* The following table represents the CTF's Annual Total Returns for
the calendar periods ending December 31, 1998 (reduced to reflect the sales
charges of the Fund). The table shows the CTF's total returns averaged over a
period of years relative to Standard & Poor's 500 (S&P 500), a broad-based
market index.

Total returns for the index shown do not reflect sales charges and other fees
the SEC requires to be reflected in the Fund's performance.

Indexes are unmanaged, and it is not possible to invest directly in an index.

Calendar Period 1 Year 5 Years 10 Years

Fund 23.99% 21.68% 16.68%
S&P 500 28.58% 24.06% 19.21%

1 The start of performance for the predecessor common trust fund was .

*The SouthTrust Growth Fund is the successor to a portfolio of a collective
trust fund managed by the Adviser. At the Fund's commencement of operations,
the assets from the collective trust fund were transferred to the Fund in
exchange for Fund shares. The quoted performance data includes the performance
of the collective trust fund for periods before the SouthTrust Growth Fund's
registration statement became effective on August , 1999, as adjusted to
reflect SouthTrust Growth Fund's expenses. The collective trust fund was not
registered under the Investment Company Act of 1940 ("1940 Act") and therefore
was not subject to certain investment restrictions that are imposed by the 1940
Act. If the collective trust fund had been registered under the 1940 Act, the
performance may have been adversely affected.

What are the Funds' Fees and Expenses?

SOUTHTRUST FUNDS

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Value Fund or the Growth Fund.

<TABLE>
<CAPTION>
Shareholder Fees Value Fund Growth Fund
Fees Paid Directly From Your Investment
<S> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 4.50% 4.50%
Redemption Fee (as a percentage of amount redeemed, if applicable)1 1.00% 1.00%

Annual Fund Operating Expenses (Before Waivers)2
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee 0.75% 0.75%
Distribution (12b-1) Fee3 None 0.25%
Shareholder Services Fee4 0.25% 0.25%
Other Expenses 0.16% 0.38%
Total Annual Fund Operating Expenses (before waivers)5 1.16% 1.63%
1Applies only to shares of the Value Fund and Growth Fund purchased at net asset value (investments in excess of $1,000,000) which
are redeemed within one year of purchase. See "How to Redeem and Exchange Shares."
2Although not contractually obligated to do so, the Adviser and shareholder
servicing agent waived certain amounts. These are shown below along with the
net expenses the Funds actually paid for the fiscal year ended April 30, 1999.
Total Waivers of Fund Expenses 0.22% 0.20% Total Annual Fund Operating Expenses
(after waivers) 0.97% 1.43% 3Growth Fund has no present intention of paying or
accruing the distribution (12b-1) fee during the year ending April 30, 2000.
4The shareholder servicing agent will voluntarily waive a portion of the
shareholder services fee equal to 0.20%. This waiver may be
terminated at any time.
5Total Annual Fund Operating Expenses for the Growth Fund are based on estimated expenses for the year ending April30,2000.
</TABLE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the Value
Fund and Growth Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Value Fund and Growth Fund
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Value Fund and Growth Fund operating expenses are before
waivers as shown in the table and remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years

Value Fund $563 $802 $1,060 $1,796
Growth Fund $608 $941 N/A N/A

What is the Value Fund's Investment Approach?

The Fund's investment approach focuses on owning stocks of well-managed
companies with strong earnings growth that are trading at valuation levels that
provide the potential for long-term growth. The approach combines sophisticated
quantitative screening to identify the companies with the most attractive
fundamental characteristics with disciplined fundamental analysis.

The initial step in the investment approach is to screen a broad universe of
companies to identify those with long-term growth potential. The emphasis is to
find stocks of companies with above-average long-term earnings growth. The
Adviser considers the attractiveness of the company's industry as well as the
core strengths (quality of management, financial position and competitive
posture) are considered. The Adviser carefully analyzes a company's industry
position, strategic plans and financial statements in an effort to understand
the variables driving its earnings growth.

Ideally, the Fund seeks well-managed companies that provide a unique,
value-added product or service and possess a competitive advantage, such as
being the low-cost producer or having a dominant market share. Typically,
companies should generate excess cash flows and maintain relatively under-
leveraged balance sheets. These characteristics support sustainable, superior
earnings growth, which is generally necessary to drive a stock's price
substantially higher over the long term. The earnings analysis focuses on:
superior long-term profits potential; the quarterly earnings trend; how reported
results compare with expectations; and whether earnings estimates are being
raised or lowered. In summary, the search is for excellent companies with
above-average to superior growth prospects.

After these companies are identified, they are screened for valuation. This is
the most important factor in selecting stocks for the Fund. The focus is to
uncover stocks of companies selling at attractive valuations based on: price-to-
earnings, price-to-sales, price-to-cash flow and price-to- earnings growth. The
Fund's strategy is to own stocks with above-average to superior growth,
identified when they are attractively priced. Research is used to project a
realistic fundamental price range for the stock over the next 12 months and
beyond. The projected price range is important because it is used in determining
the risk/reward relationship, which drives the investment decision. Only after
gaining an understanding of what price range is realistic for a stock is the
decision made on whether it is attractive for purchase in the Fund. While a
great deal of analysis and effort is placed into the purchase decision, the sell
decision is equally important. A stock may be sold if the reason for purchasing
it is no longer valid. A stock may also be eliminated when it hits our price
target or is no longer attractive relative to other stocks.

In summary, the investment approach for the Value Fund is a consistent,
disciplined search for solid companies with attractive earnings growth prospects
whose share prices are at levels that offer substantial upside potential and
limited downside risk. The investments are held for prospective long- term
appreciation and are sold only when either the fundamental situation changes or
the stock price reaches its target potential.

What is the Growth Fund's Investment Approach?

The Fund's investment approach is focused on owning stocks of large, well-known
companies which are believed to have the potential for superior long-term
growth. The Fund seeks companies with above average financial strength and
predictable stable earnings growth. In selecting stocks, the Adviser considers
sales trends, profit margins and the company's competitive position within its
industry. Investment in research and facilities, and new product development
often plays an important role in the investment decision. But, most important,
the Fund seeks to own stocks in companies with proven management and business
plans that greatly enhance their probability of success in the highly
competitive business environment. Most companies owned will be industry leaders
with low cost operations. A strong balance sheet with cash flow adequate to
support superior growth in a necessity. While we seek to buy the stocks when
they are at the low end of their relative valuation ranges, quality and growth
is generally considered more important than valuation in stocks held in the
portfolio.

In summary, management, financial strength, a low cost position, competitive
products, and the probability of predictable superior earnings growth guide our
stock selection.

What are the Principal Securities in Which the Funds Invest?

EQUITY SECURITIES

Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Funds cannot predict the income they will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business.

Common Stocks

Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings directly
influence the value of its common stock.

Depositary Receipts

Depositary receipts represent interest in underlying securities issued by a
foreign company. Depositary receipts are not traded in the same market as the
underlying security. The foreign securities underlying American Depositary
Receipts (ADRs) are traded in the United States. ADRs provide a way to buy
shares of foreign-based companies in the United States rather than in overseas
markets. ADRs are also traded in U.S. dollars, eliminating the need for foreign
exchange transactions. Depositary Receipts involve many of the same risks of
investing directly in foreign securities, including currency risks and risks of
foreign investing.

TEMPORARY DEFENSIVE INVESTMENTS

The Funds may temporarily depart from their principal investment strategies by
investing their assets in cash, cash items, and shorter-term, higher quality
debt securities and similar obligations. The Funds may do this to minimize
potential losses and maintain liquidity to meet shareholder redemptions during
adverse market conditions. This may cause a Fund to give up greater investment
returns to maintain the safety of principal, that is, the original amount
invested by shareholders. PORTFOLIO TURNOVER

The Funds actively trade their portfolio securities in an attempt to achieve
their investment objectives. Active trading will cause the Funds to have an
increased portfolio turnover rate, which is likely to generate shorter-term
gains (losses) for their shareholders, which are taxed at a higher rate than
longer-term gains (losses). Actively trading portfolio securities increases a
Fund's trading costs and may have an adverse impact on a Fund's performance.

What are the Main Risks of Investing in the Funds?

STOCK MARKET RISKS

. The value of equity securities in the Funds' portfolios will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. The Funds'
portfolios will reflect changes in prices of individual portfolio stocks or
general changes in stock valuations. Consequently, a Fund's share price may
decline and you could lose money.

. The Adviser attempts to manage market risk by limiting the amount the Funds
invest in each company's equity securities. However, diversification will not
protect a Fund against widespread or prolonged declines in the stock market.

SECTOR RISKS

. Companies with similar characteristics may be grouped together in broad
categories called sectors. Sector risk is the possibility that a certain sector
may underperform other sectors or the market as a whole. As the Adviser
allocates more of a Fund's portfolio holdings to a particular sector, the Fund's
performance will be more susceptible to any economic, business, or other
developments which generally affect that sector.

RISKS RELATED TO INVESTING FOR VALUE

. Due to their relatively low valuations, value stocks are typically less
volatile than growth stocks. For instance, the price of a value stock may
experience a smaller increase on a forecast of higher earnings, a positive
fundamental development, or positive market development. Further, value stocks
tend to have higher dividends than growth stocks. This means they depend less on
price changes for returns and may lag behind growth stocks in an up market.

RISKS RELATED TO INVESTING FOR GROWTH

. Due to their relatively high valuations, growth stocks are typically more
volatile than value stocks. For instance, the price of a growth stock may
experience a larger decline on an analyst's downward earnings estimate revision,
a negative fundamental development, or other adverse market development.
Further, growth stocks tend to have lower dividend yields than value stocks.
This means they depend more on price changes for returns and may be more
adversely affected in a down market compared to higher yielding stocks.

What Do Shares Cost?

You can purchase, redeem, or exchange shares any day the New York Stock Exchange
(NYSE) is open. When the Fund receives your transaction request in proper form,
it is processed at the next calculated net asset value (NAV) plus any applicable
front-end sales charge (public offering price). NAV is determined at the end of
regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open.
Payment must be received no later than 4:00 p.m. (Eastern time) by the third
business day following receipt of the order. If federal funds are not received
by such date, the order will be canceled and the institution placing the order
will be responsible for any loss to the Funds or their shareholders. Payment for
orders which are not received or accepted will be returned after prompt inquiry
to the sending institution.

The minimum initial investment in each Fund is $1,000. The minimum subsequent
investment is $50. Keep in mind that investment professionals may charge you
fees for their services in connection with your share transactions. SouthTrust
Bank or a broker/dealer that has entered into a sales agreement with the
Distributor (SouthTrust Funds Dealer) may set different minimums for their
customers. SALES CHARGE WHEN YOU PURCHASE <TABLE> <CAPTION> Purchase Amount
Sales Charge as a Sales Charge as a Dealer Allowance as a
Percentage of Percentage of Net Percentage of Offering
Public Offering Amount Invested Price
Price
<S> <C> <C> <C>
Less than $50,000 4.50% 4.71% 4.00%
$50,000 but less
than $100,000 4.00% 4.17% 3.50%
$100,000 but less
than $250,000 3.25% 3.36% 2.75%
$250,000 but less
than $500,000 2.75% 2.83% 2.25%
$500,000 but less
than $1,000,000 1.75% 1.78% 1.25%
$1,000,000 or more 0.00%* 0.00% 0.00%
</TABLE>

* A redemption fee of 1% may be imposed on certain redemptions made within one
year of purchase. See "How to Redeem and Exchange Shares."

The sales charge at purchase may be reduced or eliminated by: . purchasing
shares in greater quantities to reduce the applicable sales charge; . combining
concurrent purchases of shares by you, your spouse, and your children under age
21; . accumulating purchases (in calculating the sales charge on an additional
purchase, include the current value of previous share purchases still invested
in the Fund); or . signing a letter of intent to purchase a specific dollar
amount of shares within 13 months (call your SouthTrust Funds Dealer or the Fund
for more information).

The sales charge will be eliminated when you purchase shares:

. of $1 million or more;
. by reinvesting redemption proceeds within 30 days of redeeming shares;
. by exchanging shares of a Fund for other SouthTrust Funds or Class A Shares
in certain funds which are distributed by Federated Securities Corp. (Federated
Funds);

From time to time, the Distributor may offer special concessions to enable
investors to purchase shares of the Funds at net asset value. To qualify for a
net asset value purchase, you must pay for such purchases with proceeds from the
redemption of shares of a non-affiliated mutual fund on which a sales charge was
paid. A qualifying purchase of shares must occur within 30 days of the prior
redemption and must be evidenced by a confirmation of the redemption
transaction. Proceeds from the redemption of shares on which no sales charges or
commission were paid do not qualify for a purchase at net asset value.

If your investment qualifies for a reduction or elimination of the sales
charge, you, SouthTrust Funds Shareholder Services or your SouthTrust Funds
Dealer should notify the Funds' Distributor, Federated Securities Corp., at the
time of purchase. If the Distributor is not notified, you will receive the
reduced sales charge only on additional purchases, and not retroactively on
previous purchases.

How are the Funds Sold?

Federated Securities Corp., the Funds' Distributor, markets the shares described
in this prospectus to institutions and individuals.

When the Distributor receives sales charges, it may pay some or all of them to
investment professionals. The Distributor and its affiliates may pay out of
their assets other amounts (including items of material value) to investment
professionals for marketing and servicing shares. The Distributor is a
subsidiary of Federated Investors, Inc. (Federated).

RULE 12B-1 PLAN--GROWTH FUND

The Company has adopted a Rule 12b-1 Plan (Plan) on behalf of Growth Fund, which
allows it to pay marketing fees to the Distributor and investment professionals
for the sale, distribution and customer servicing of the Fund's shares. The
Company has no present intention to activate the Plan. Once the Fund begins
accruing the 12b-1 fee, Fund expenses will rise. If the Company were to activate
the Plan, it would be permitted to pay up to 0.25% of the average daily net
assets of the Fund as a distribution fee to the Distributor. Because these
shares could pay marketing fees on an ongoing basis, your investment cost may be
higher over time than other shares with different sales charges and marketing
fees.

How to Purchase Shares

You may purchase shares through SouthTrust Funds Shareholder Services, through
SouthTrust Securities, Inc., through your SouthTrust Funds Dealer, or through an
exchange from another SouthTrust Fund and certain Federated Funds. Texas
residents should purchase shares through Federated Securities Corp. at 1-800-
356-2805. The Funds reserve the right to reject any request to purchase or
exchange shares.

Trust customers of SouthTrust Bank should contact their account officer.

THROUGH SOUTHTRUST FUNDS SHAREHOLDER SERVICES

. Establish your account with the Fund by submitting a completed account
application; and . Send your payment to the Fund by Federal Reserve wire or
check.

You will become the owner of shares and your shares will be priced at the next
calculated NAV after the Fund receives your wire or your check. If your check
does not clear, your purchase will be canceled and you could be liable for any
losses or fees the Fund or its transfer agent incurs.

An institution may establish an account and place an order by calling
SouthTrust Funds Shareholder Services or a SouthTrust Funds Dealer and the
shares will be priced at the next calculated public offering price after the
Fund receives the order.

By Check

Complete an account application (for new accounts), make your check payable to
the Fund (existing shareholders should note their account number on the check),
and mail it to:
SouthTrust Funds Shareholder Services
P.O. Box 830804
Birmingham, AL 35283-0804

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund will
not accept third- party checks (checks originally payable to someone other than
the Fund). If your check does not clear, your purchase will be canceled and you
could be responsible for any losses or fees the Fund or its transfer agent
incurs.

By Wire

To purchase shares by Federal Reserve wire, contact SouthTrust Funds Shareholder
Services for wiring instructions. Wire orders will only be accepted on days on
which the Fund, SouthTrust, and the Federal Reserve wire are open.

By Telephone

Once an account has been established, you may purchase additional shares by
calling SouthTrust Funds Shareholder Services directly at 1-888-735-3441.

THROUGH A SOUTHTRUST FUNDS DEALER

. Establish an account with a SouthTrust Funds Dealer; and . Submit your
purchase order to your SouthTrust Funds Dealer before the end of trading on the
NYSE (normally 4:00 p.m. Eastern time). You will receive the next calculated NAV
if the SouthTrust Funds Dealer forwards the order to the Fund on the same day
and the Fund receives payment within three business days. You will become the
owner of shares and receive dividends when the Fund receives your payment.
SouthTrust Funds Dealers should send payments according to the instructions in
the sections "By Check" or "By Wire."

THROUGH AN EXCHANGE

You may purchase shares through an exchange from another SouthTrust Fund or
Class A Shares of one of the Federated Funds. The Federated Funds offered at net
asset value through exchange include: Federated International Income Fund,
Federated International Equity Fund; Federated Equity Income Fund, Inc.,
Federated High Income Bond Fund, Inc., Federated Municipal Securities Fund,
Inc., Federated Utility Fund, Inc., and Tax-Free Instruments Trust; You must
meet the minimum initial investment requirement for purchasing shares and both
accounts must have identical registrations.

You may telephone an exchange request by calling SouthTrust Funds Shareholder
Services or your SouthTrust Funds Dealer.

Trust customers should contact their account officer.

BY AUTOMATIC INVESTMENT PROGRAM (AIP)

Once you have opened an account, you may automatically purchase additional
shares in a minimum amount of $50 on a monthly basis by completing an AIP
application or by contacting SouthTrust Funds Shareholder Services or your
SouthTrust Funds Dealer. Once you have opened an account, you may purchase
additional shares through a depository institution that is an Automated Clearing
House (ACH) member. This purchase option can be established by completing the
appropriate sections of the AIP Application. How to Redeem and Exchange
Shares

You may redeem or exchange shares through SouthTrust Funds Shareholder Services
or your SouthTrust Funds Dealer.
Trust customers of SouthTrust Bank should contact their account officer.

THROUGH SOUTHTRUST FUNDS SHAREHOLDER SERVICES

By Telephone

You may redeem or exchange shares by calling SouthTrust Funds Shareholder
Services or your SouthTrust Funds Dealer once you have completed the appropriate
authorization form for telephone transactions.

If you call before the end of regular trading on the NYSE (normally 4:00 p.m.
Eastern time), you will receive a redemption amount based on that day's NAV.

By Mail

You may redeem or exchange shares by mailing your request to:

SouthTrust Funds Shareholder Services
P.O. Box 830804
Birmingham, AL 35283-0804

Your redemption request will be processed on the day the Fund receives your
written request in proper form. Dividends are paid up to and including the day
that a redemption request is processed.

All requests must include:

. Fund name, account number and account registration;
. amount to be redeemed or exchanged;
. signatures of all shareholders exactly as registered; and
. if exchanging, the Fund name, account number and account registration into
which you are exchanging.

Call SouthTrust Funds Shareholder Services or your SouthTrust Funds Dealer if
you need special instructions.

Signature Guarantees

Signatures must be guaranteed if:

. your redemption will be sent to an address other than the address of record;
. your redemption will be sent to an address of record that was changed within
the last 30 days;
. a redemption is payable to someone other than the shareholder(s) of record;
or
. if exchanging (transferring) into another fund with a different shareholder
registration.

A signature guarantee is designed to protect your account from fraud. Obtain a
signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A notary public cannot
provide a signature guarantee. Additional documentation may be required if the
redemption is requested by a corporation, partnership, trust, fiduciary,
executor or administrator.

THROUGH A SOUTHTRUST FUNDS DEALER

Submit your redemption or exchange request to SouthTrust Funds Shareholder
Services or your SouthTrust Funds Dealer by the end of regular trading on the
NYSE (normally 4:00 p.m. Eastern time). The redemption amount you will receive
is based upon the next calculated NAV after the Fund receives the order.

PAYMENT METHODS FOR REDEMPTIONS

Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the Account Application Form. These payment options require a signature
guarantee if they were not established when the account was opened:

. an electronic transfer to your account at a financial institution that is an
ACH member; or
. wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.

Redemption in Kind

Although the Funds intend to pay share redemptions in cash, they reserve the
right to pay the redemption price in whole or in part by a distribution of a
Fund's portfolio securities.

LIMITATIONS ON REDEMPTION PROCEEDS

Redemption proceeds normally are wired or mailed the next business dayafter
receiving a request in proper form. Payment may be delayed up to seven days:

. to allow your purchase to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts a Fund's
ability to manage its assets.

You will not accrue interest or dividends on uncashed checks from the Fund if
those checks are undeliverable and returned to the Fund.

REDEMPTION FEE

In order to discourage short-term investments in the Funds, the Company charges
a redemption fee in connection with redemptions of shares held for less than one
year which were purchased at net asset value (for $1,000,000 or more). The
charge is 1% of either the lesser of the value of the shares redeemed (exclusive
of reinvested dividends and capital gain distributions) or the total cost of
such shares. In determining if a charge applies and the amount of the charge,
the first shares redeemed are those purchased with reinvested dividends and
capital gain distributions, followed by others held the longest. The redemption
fee is not assessed on

. exchanges (except if shares acquired by exchange were then redeemed within
twelve months of the initial purchase);
. redemptions made in connection with distributions from qualified retirement
plans, 403(b) plans or IRAs due to death, disability or attainment of age 591.2;
. redemptions resulting from the tax-free return of excess contributions to
IRAs or employee benefit plans; and
. redemptions through certain automatic withdrawals.

The 1% redemption fee is not a deferred sales charge but is rather a means to
offset the additional costs associated with short-term investments in the Funds.

EXCHANGE PRIVILEGES

Shareholders who have purchased shares of the Funds (including shares acquired
through a reinvestment of a dividend or distribution on such shares) may
exchange into one of the other SouthTrust Funds or one of the Class A Share
Federated Funds without paying an additional sales charge. However, this
privilege does not apply to exchanges into SouthTrust Value Fund or SouthTrust
Growth Fund until an investor has owned shares in one of the Funds for 90 days.
The 90-day holding period does not apply to exchanges in which shares were
obtained through a prior exchange of shares of SouthTrust Value Fund or
SouthTrust Growth Fund. When shares of SouthTrust U.S. Treasury Money Market
Fund are exchanged for shares of a load Fund or a Federated Fund, the applicable
sales charge (if any) will be assessed. However, shareholders exchanging shares
of SouthTrust U.S. Treasury Money Market Fund which were received in a previous
exchange involving shares on which a load was paid will not be required to pay
an additional sales charge upon notification of the reinvestment of the
equivalent investment into a load Fund.

To do this, you must:

. exchange shares having a net asset value of at least $1,000;
. ensure that the account registrations are identical;
. meet any minimum initial investment requirements; and
. receive a prospectus for the fund into which you wish to exchange.

The Funds may modify or terminate the exchange privilege at any time. The
Fund's management or Adviser may determine from the amount, frequency and
pattern of exchanges that a shareholder is engaged in excessive trading that is
detrimental to a Fund and other shareholders. If this occurs, the Fund may
terminate the availability of exchanges to that shareholder and may bar that
shareholder from purchasing other SouthTrust Funds.

An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction.

AUTOMATIC WITHDRAWAL PLAN (AWP)

You may automatically redeem shares if the value of your account equals $10,000
or more other than retirement accounts subject to required minimum
distributions. Shareholders who elect to establish an AWP may receive a monthly,
quarterly, semi-annual, or annual payment of a stated amount not less than $50.
Complete the appropriate section of the Account Application or contact
SouthTrust Funds Shareholder Services or your SouthTrust Funds Dealer. This
program may reduce, and eventually deplete, your account. Payments should not be
considered yield or income. Generally, it is not advisable to continue to
purchase shares subject to a sales charge while redeeming shares using this
program.

ADDITIONAL CONDITIONS

Telephone Transactions

The Funds will record your telephone instructions. If the Funds do not follow
reasonable procedures, they may be liable for losses due to unauthorized or
fraudulent telephone instructions.

Share Certificates

The Funds do not issue share certificates.

Account and Share Information

CONFIRMATIONS AND ACCOUNT STATEMENTS

You will receive confirmation of purchases, redemptions and exchanges (except
for automatic transactions). In addition, you will receive periodic statements
reporting all account activity, including automatic transactions, dividends and
capital gains paid.

DIVIDENDS AND CAPITAL GAINS

The Funds declare and pay any dividends monthly to shareholders. Dividends are
paid to all shareholders invested in the Funds on the record date. The record
date is the date on which a shareholder must officially own shares in order to
earn a dividend.

In addition, the Funds pay any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
shares without a sales charge, unless you elect cash payments.

If you purchase shares just before a Fund declares a dividend or capital gain
distribution, you will pay the full price for the shares and then receive a
portion of the price back in the form of a taxable distribution, whether or not
you reinvest the distribution in shares. Therefore, you should consider the tax
implications of purchasing shares shortly before a Fund declares a dividend or
capital gain. Contact SouthTrust Funds Shareholder Services or your SouthTrust
Funds Dealer for information concerning when dividends and capital gains will be
paid. ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, non-retirement
accounts may be closed if redemptions or exchanges cause the account balance to
fall below the minimum initial investment amount. Before an account is closed,
you will be notified and allowed 30 days to purchase additional shares to meet
the minimum.

TAX INFORMATION

The Funds send an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time a Fund holds
its assets.

Fund distributions are expected to be both dividends and capital gains.
Redemptions and exchanges are taxable sales. Please consult your tax adviser
regarding your federal, state, and local tax liability.

Who Manages the Funds?

The Board of Trustees governs the Funds. The Board selects and oversees the
Adviser, SouthTrust Bank, N.A. The Adviser manages the Funds' assets, including
the selection and management of portfolio securities.

The Adviser, a national banking association, serves as the investment adviser
for each of the Funds. The Adviser, headquartered in Birmingham, Alabama, is a
wholly-owned subsidiary of SouthTrust Corporation, a publicly-held bank holding
company. The Adviser and SouthTrust Corporation have their principal offices at
420 North 20th Street, Birmingham, Alabama 35203.

The Adviser's experience includes the management of various collective and
common investment funds and the provision of investment management services to
banks and thrift institutions, corporate and profit-sharing trusts, municipal
and state retirement funds, and individual investors. As of July 31, 1999, the
Adviser had approximately $ billion in assets under management. The Adviser has
served as investment adviser since the Company's inception on March 4, 1992.

The Adviser receives an investment advisory fee from each Fund, computed daily
and payable monthly, at an annual rate of 0.75%. The Adviser may voluntarily
waive a portion of its fee or reimburse the Funds for certain operating
expenses.

Investment decisions for Value Fund are made by investment teams with Jon F.
Goebel as the lead portfolio manager. Mr. Goebel has guided the Value Fund since
joining SouthTrust Bank, N.A. in June 1994. Mr. Goebel is the Chief Investment
Officer of SouthTrust Asset Management Company. He is a Chartered Financial
Analyst and has a master's degree from the University of Nebraska. Prior to
joining SouthTrust, Mr. Goebel served in a similar capacity for North Carolina
Trust Company.

Joseph C. Ford has been the portfolio manager for Growth Fund since inception,
August , 1999. Mr. Ford is Director of Portfolio Management for SouthTrust Asset
Management Company where he has been a member of the investment team since 1995.
Prior to joining SouthTrust Asset Management Company, Mr. Ford served as Senior
Vice President and Senior Portfolio Manager at SunBank Capital Management,
SunBank, Inc., in Orlando, Florida, from 1983 to 1995. From 1979 to 1983, he was
an Assistant Vice President and Trust Officer for Virginia National Bankshares,
Inc., Norfolk, Virginia. Mr. Ford has a bachelor of arts degree in Economics
from Belmont Abbey College.

YEAR 2000 READINESS

The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date-related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Funds, that rely on computers.

While it is impossible to determine in advance all of the risks to a Fund, a
Fund could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.

The Funds' service providers are making changes to their computer systems to
fix any Year 2000 problems. In addition, they are working to gather information
from third-party providers to determine their Year 2000 readiness.

Year 2000 problems would also increase the risks of a Fund's investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities a Fund
may purchase. The financial impact of these issues for the Funds is still being
determined. There can be no assurance that potential Year 2000 problems would
not have a material adverse effect on a Fund.

Financial Information

FINANCIAL HIGHLIGHTS

The Financial Highlights will help you understand the Funds' financial
performance for its past five fiscal years, or since inception, if the life of
the Fund is shorter. Some of the information is presented on a per share basis.
Total returns represent the rate an investor would have earned (or lost) on an
investment in a Fund, assuming reinvestment of any dividends and capital gains.

This information has been audited by Arthur Andersen LLP whose report, along
with the Fund's audited financial statements, is included in the Annual Report.

[LOGO]

SouthTrust Funds

SOUTHTRUST VALUE FUND
SOUTHTRUST GROWTH FUND

AUGUST , 1999

A Statement of Additional Information (SAI) dated August , 1999, is incorporated
by reference into this prospectus. Additional information about the Funds'
investments is contained in the Funds' Annual and Semi-Annual Reports to
shareholders as they become available. The Annual Report discusses market
conditions and investment strategies that significantly affected the Funds'
performance during the last fiscal year. To obtain the SAI, the Annual Report,
Semi-Annual Report and other information without charge, and make inquiries,
call SouthTrust Funds Shareholder Services at 1-888-735-3441 or your SouthTrust
Funds Dealer. You can obtain information about the Funds (including the
SAI) by visiting or writing the Public Reference Room of the Securities and
Exchange Commission in Washington, DC 20549-6009 or from the Commission's
Internet site at http://www.sec.gov. You can call 1-800-SEC-0330 for information
on the Public Reference Room's operations and copying charges.

Investment Company Act File No. 811-6580
Cusip 844734301
Cusip 844734509
G00859-03 (8/99)

[RECYCLED PAPER LOGO]

THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION

JUNE 29, 1999

STATEMENT OF ADDITIONAL INFORMATION

SOUTHTRUST VALUE FUND

SOUTHTRUST GROWTH FUND

Portfolios of SouthTrust Funds

This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for SouthTrust Value Fund (formerly, Core
Equity Fund) and SouthTrust Growth Fund dated August , 1999. This SAI
incorporates by reference the Funds' Annual Reports. Obtain the prospectus or
Annual Reports without charge by calling 1-800-843-8618.

August , 1999

CONTENTS
How are the Funds Organized? 1
Securities in Which the Funds Invest 1
What do Shares Cost? 11
How are the Funds Sold? 11
Exchanging Securities for Shares 12
Subaccounting Services 12
Redemption in Kind 12
Massachusetts Partnership Law 13
Banking Laws 13
Account and Share Information 13
Tax Information 14
Who Manages and Provides Services to the Funds? 15
How Do the Funds Measure Performance? 18
Financial Information 19
Addresses Back Cover
Cusip 844734301
Cusip 844734509
G00859-06(6/99)

<PAGE>

HOW ARE THE FUNDS ORGANIZED?

The SouthTrust Value Fund and SouthTrust Growth Fund are diversified portfolios
of SouthTrust Funds (Company). The Company is an open-end management investment
company that was established under the laws of the Commonwealth of Massachusetts
on March 4, 1992. The Company may offer separate series of shares representing
interests in separate portfolios of securities.. On June 30, 1998, the name of
the Company changed from "Vulcan Funds" to "SouthTrust Vulcan Funds." Effective
July 22, 1998, the name of the Company changed from "SouthTrust Vulcan Funds" to
"SouthTrust Funds." On August , 1999, SouthTrust Core Equity Fund changed its
name to SouthTrust Value Fund.

The Board of Trustees has established five diversified and one non-diversified
investment portfolios. This SAI relates to SouthTrust SouthTrust Value Fund and
SouthTrust Growth Fund. The Funds' investment adviser is SouthTrust Bank, N.A.

SECURITIES IN WHICH THE FUNDS INVEST

In pursuing their investment strategy, the Funds may invest in the following
securities for any purpose that is consistent with their respective investment
objective.
Following is a table that indicates which types of securities are a: P =
Principal investment of a Fund; or A = Acceptable (but not principal) investment
of a Fund;

Securities Value Growth
Fund Fund

- ----------------------------------------------------------------------------
Equity Securities P P
- ---------------------------------------------------
--------------------------
Common Stocks P P
- ----------------------------------------------------------------------------
Preferred Stocks A A
- ---------------------------------------------------
--------------------------
Warrants A A
- ----------------------------------------------------------------------------
Real Estate Investment Trusts A A
Fixed Income Securities A A
Treasury Securities A A
- ----------------------------------------------------------------------------
Agency Securities A A
- ----------------------------------------------------------------------------
Corporate Debt Securities A A
- ----------------------------------------------------------------------------
Commercial Paper A A
- ----------------------------------------------------------------------------
Demand Instruments A A
- ----------------------------------------------------------------------------
Zero Coupon Securities A A
- ----------------------------------------------------------------------------
Bank Instruments A A
- ----------------------------------------------------------------------------
Credit Enhancement A A
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Variable Rate Demand Notes A A
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Convertible Securities 1 A A
- ----------------------------------------------------------------------------
Foreign Securities A A
Depositary Receipts A A
- ----------------------------------------------------------------------------
Brady Bonds A A
Derivative Contracts A A
Futures Contracts A A
- ----------------------------------------------------------------------------
Options A A
- ----------------------------------------------------------------------------
Hybrid Instruments A A
1. The Value Fund may acquire convertible securities that are rated below
investment grade, the Company does not expect that investments in lower rated
convertible securities will exceed 5% of the value of the total assets.

Special Transactions A A
Repurchase Agreements A A
Reverse Repurchase Agreements A N
Delayed Delivery A A
To Be Announced Securities A A

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

Securities Lending 2 A A
Asset Coverage A A

Investing in Securities of Other Investment A A
Companies
- ----------------------------------------------------------------------------
Illiquids A A
- ----------------------------------------------------------------------------

2. Such loans will not exceed 20% of a Fund's total assets. Loans of portfolio
securities by a Fund will be collateralized by cash, letters of credit or U.S.
government securities which are maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities.

SECURITIES DESCRIPTIONS AND TECHNIQUES

Equity Securities
Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. A Fund cannot predict the income it will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business. The
following describes the types of equity securities in which the Funds invest.
Common Stocks
Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings
directly influence the value of its common stock. Preferred Stocks
Preferred stocks have the right to receive specified dividends or
distributions before the issuer makes payments on its common stock. Some
preferred stocks also participate in dividends and distributions paid on
common stock. Preferred stocks may also permit the issuer to redeem the
stock.

Real Estate Investment Trusts (REITs)
REITs are real estate investment trusts that lease, operate and finance
commercial real estate. REITs are exempt from federal corporate income tax
if they limit their operations and distribute most of their income. Such
tax requirements limit a REIT's ability to respond to changes in the
commercial real estate market.

Warrants

Warrants give a Fund the option to buy the issuer's equity securities at a
specified price (the exercise price) at a specified future date (the
expiration date). A Fund may buy the designated securities by paying the
exercise price before the expiration date. Warrants may become worthless if
the price of the stock does not rise above the exercise price by the
expiration date. This increases the market risks of warrants as compared to
the underlying security. Rights are the same as warrants, except companies
typically issue rights to existing stockholders.

Fixed Income Securities
Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities. A security's yield measures the
annual income earned on a security as a percentage of its price. A security's
yield will increase or decrease depending upon whether it costs less (a
discount) or more (a premium) than the principal amount. If the issuer may
redeem the security before its scheduled maturity, the price and yield on a
discount or premium security may change based upon the probability of an early
redemption. Securities with higher risks generally have higher yields.

The following describes the types of fixed income securities in which the Funds
invest.

Treasury Securities
Treasury securities are direct obligations of the federal government of the
United States. Investors regard treasury securities as having the lowest
credit risks. Agency Securities Agency securities are issued or guaranteed
by a federal agency or other government sponsored entity acting under
federal authority (a GSE). The United States supports some GSEs with its
full faith and credit. Other GSEs receive support through federal
subsidies, loans or other benefits. A few GSEs have no explicit financial
support, but are regarded as having implied support because the federal
government sponsors their activities. Investors regard agency securities as
having low credit risks, but not as low as treasury securities.

Corporate Debt Securities
Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types
of corporate debt securities. The Funds may also purchase interests in bank
loans to companies. The credit risks of corporate debt securities vary
widely among issuers. In addition, the credit risk of an issuer's debt
security may vary based on its priority for repayment. For example, higher
ranking (senior) debt securities have a higher priority than lower ranking
(subordinated) securities. This means that the issuer might not make
payments on subordinated securities while continuing to make payments on
senior securities. In addition, in the event of bankruptcy, holders of
senior securities may receive amounts otherwise payable to the holders of
subordinated securities. Some subordinated securities, such as trust
preferred and capital securities notes, also permit the issuer to defer
payments under certain circumstances. For example, insurance companies
issue securities known as surplus notes that permit the insurance company
to defer any payment that would reduce its capital below regulatory
requirements.

Commercial Paper
Commercial paper is an issuer's obligation with a maturity of less than
nine months. Companies typically issue commercial paper to pay for
current expenditures. Most issuers constantly reissue their commercial
paper and use the proceeds (or bank loans) to repay maturing paper. If
the issuer cannot continue to obtain liquidity in this fashion, its
commercial paper may default. The short maturity of commercial paper
reduces both the market and credit risks as compared to other debt
securities of the same issuer.

Demand Instruments
Demand instruments are corporate debt securities that the issuer must
repay upon demand. Other demand instruments require a third party, such
as a dealer or bank, to repurchase the security for its face value upon
demand. The Funds treat demand instruments as short-term securities,
even though their stated maturity may extend beyond one year.

Zero Coupon Securities

Zero coupon securities do not pay interest or principal until final
maturity unlike debt securities that provide periodic payments of interest
(referred to as a coupon payment). Investors buy zero coupon securities at
a price below the amount payable at maturity. The difference between the
purchase price and the amount paid at maturity represents interest on the
zero coupon security. Investors must wait until maturity to receive
interest and principal, which increases the interest rate and credit risks
of a zero coupon security. There are many forms of zero coupon securities.
Some are issued at a discount and are referred to as zero coupon or capital
appreciation bonds. Others are created from interest bearing bonds by
separating the right to receive the bond's coupon payments from the right
to receive the bond's principal due at maturity, a process known as coupon
stripping. Treasury STRIPs, IOs and POs are the most common forms of
stripped zero coupon securities. In addition, some securities give the
issuer the option to deliver additional securities in place of cash
interest payments, thereby increasing the amount payable at maturity. These
are referred to as pay-in-kind or PIK securities. Bank Instruments Bank
instruments are unsecured interest bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit
and banker's acceptances. Yankee instruments are denominated in U.S.
dollars and issued by U.S. branches of foreign banks. Eurodollar
instruments are denominated in U.S. dollars and issued by non-U.S. branches
of U.S. or foreign banks.

Credit Enhancement

The Funds may purchase securities backed by credit enhancement. Credit
enhancement consists of an arrangement in which a company agrees to pay
amounts due on a fixed income security if the issuer defaults. In some
cases the company providing credit enhancement makes all payments directly
to the security holders and receives reimbursement from the issuer.
Normally, the credit enhancer has greater financial resources and liquidity
than the issuer. For this reason, the Adviser usually evaluates the credit
risk of a fixed income security based solely upon its credit enhancement.

Common types of credit enhancement include guarantees, letters of credit,
bond insurance and surety bonds. Credit enhancement also includes
arrangements where securities or other liquid assets secure payment of a
fixed income security. If a default occurs, these assets may be sold and
the proceeds paid to security's holders. Either form of credit enhancement
reduces credit risks by providing another source of payment for a fixed
income security.
Variable Rate Demand Instruments
Variable rate demand instruments are securities that require the issuer or a
third party, such as a dealer or bank, to repurchase the security for its face
value upon demand. The securities also pay interest at a variable rate intended
to cause the securities to trade at their face value. The Funds treat demand
instruments as short-term securities, because their variable interest rate
adjusts in response to changes in market rates, even though their stated
maturity may extend beyond thirteen months. Convertible Securities Convertible
securities are fixed income securities that have the option to exchange for
equity securities at a specified conversion price. The option allows a Fund to
realize additional returns if the market price of the equity securities exceeds
the conversion price. For example, the Fund may hold fixed income securities
that are convertible into shares of common stock at a conversion price of $10
per share. If the market value of the shares of common stock reached $12, the
Fund could realize an additional $2 per share by converting its fixed income
securities.

Foreign Securities
Foreign securities are securities of issuers based outside the United States.
The Funds consider an issuer to be based outside the United States if: o it is
organized under the laws of, or has a principal office located in, another
country; o the principal trading market for its securities is in another
country; or o it (or its subsidiaries) derived in its most current fiscal year
at least 50% of its total assets, capitalization, gross
revenue or profit from goods produced, services performed, or sales made in
another country.

Foreign securities are primarily denominated in foreign currencies. Along with
the risks normally associated with domestic securities of the same type, foreign
securities are subject to currency risks and risks of foreign investing. Trading
in certain foreign markets is also subject to liquidity risks.

Depositary Receipts
Depositary receipts represent interests in underlying securities issued by
a foreign company. Depositary receipts are not traded in the same market as
the underlying security. The foreign securities underlying American
Depositary Receipts (ADRs) are traded in the United States. ADRs provide a
way to buy shares of foreign-based companies in the United States rather
than in overseas markets. ADRs are also traded in U.S. dollars, eliminating
the need for foreign exchange transactions. The foreign securities
underlying European Depositary Receipts (EDRs), Global Depositary Receipts
(GDRs), and International Depositary Receipts (IDRs), are traded globally
or outside the United States. Depositary receipts involve many of the same
risks of investing directly in foreign securities, including currency risks
and risks of foreign investing.

Brady Bonds
Brady Bonds are U.S. dollar denominated debt obligations that foreign
governments issue in exchange for commercial bank loans. The International
Monetary Fund (IMF) typically negotiates the exchange to cure or avoid a
default by restructuring the terms of the bank loans. The principal amount
of some Brady Bonds is collateralized by zero coupon U.S. Treasury
securities which have the same maturity as the Brady Bonds. However,
neither the U.S. government nor the IMF has guaranteed the repayment of any
Brady Bond.

Derivative Contracts
Derivative contracts are financial instruments that require payments based upon
changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures and options) require payments relating to a future trade involving
the underlying asset. Other derivative contracts require payments relating to
the income or returns from the underlying asset. The other party to a derivative
contract is referred to as a counterparty.

Many derivative contracts are traded on securities or commodities exchanges. In
this case, the exchange sets all the terms of the contract except for the price.
Investors make payments due under their contracts through the exchange. Most
exchanges require investors to maintain margin accounts through their brokers to
cover their potential obligations to the exchange. Parties to the contract make
(or collect) daily payments to the margin accounts to reflect losses (or gains)
in the value of their contracts. This protects investors against potential
defaults by the counterparty. Trading contracts on an exchange also allows
investors to close out their contracts by entering into offsetting contracts.

For example, a Fund could close out an open contract to buy an asset at a future
date by entering into an offsetting contract to sell the same asset on the same
date. If the offsetting sale price is more than the original purchase price, the
Fund realizes a gain; if it is less, the Fund realizes a loss. Exchanges may
limit the amount of open contracts permitted at any one time. Such limits may
prevent the Fund from closing out a position. If this happens, the Fund will be
required to keep the contract open (even if it is losing money on the contract),
and to make any payments required under the contract (even if it has to sell
portfolio securities at unfavorable prices to do so). Inability to close out a
contract could also harm the Fund by preventing it from disposing of or trading
any assets it has been using to secure its obligations under the contract.

A Fund may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between the Fund and the counterparty. OTC
contracts do not necessarily have standard terms, so they cannot be directly
offset with other OTC contracts. In addition, OTC contracts with more
specialized terms may be more difficult to price than exchange traded contracts.

Depending upon how a Fund uses derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease the Fund's exposure to market and
currency risks, and may also expose the Fund to liquidity and leverage risks.
OTC contracts also expose the Fund to credit risks in the event that a
counterparty defaults on the contract. The Funds may trade in the following
types of derivative contracts:
Futures Contracts
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of an underlying asset at a specified
price, date, and time. Entering into a contract to buy an underlying asset
is commonly referred to as buying a contract or holding a long position in
the asset. Entering into a contract to sell an underlying asset is commonly
referred to as selling a contract or holding a short position in the asset.
Futures contracts are considered to be commodity contracts.
Futures contracts traded OTC are frequently referred to as forward
contracts.
Options
Options are rights to buy or sell an underlying asset for a specified price
(the exercise price) during, or at the end of, a specified period. A call
option gives the holder (buyer) the right to buy the underlying asset from
the seller (writer) of the option. A put option gives the holder the right
to sell the underlying asset to the writer of the option. The writer of the
option receives a payment, or premium, from the buyer, which the writer
keeps regardless of whether the buyer uses (or exercises) the option. The
Funds may:
o Buy call options on financial futures contracts in anticipation of an increase
in the value of the underlying asset. o Buy put options on financial futures
contracts in anticipation of a decrease in the value of the underlying asset. o
Write call options on financial futures contracts to generate income from
premiums, and in anticipation of a decrease or
only limited increase in the value of the underlying asset. If a call
written by a Fund is exercised, the Fund foregoes any possible profit from
an increase in the market price of the underlying asset over the exercise
price plus the premium received.
o Write put options on financial futures contracts to generate income from
premiums, and in anticipation of an increase or only limited decrease in
the value of the underlying asset. In writing puts, there is a risk that a
Fund may be required to take delivery of the underlying asset when its
current market price is lower than the exercise price.
When a Fund writes options on futures contracts, it will be subject to
margin requirements similar to those applied to futures contracts.
A Fund may also buy or write options to close out existing options
positions.

Hybrid Instruments
Hybrid instruments combine elements of derivative contracts with those of
another security (typically a fixed income security). All or a portion of
the interest or principal payable on a hybrid security is determined by
reference to changes in the price of an underlying asset or by reference to
another benchmark (such as interest rates, currency exchange rates or
indices). Hybrid instruments also include convertible securities with
conversion terms related to an underlying asset or benchmark.

The risks of investing in hybrid instruments reflect a combination of the
risks of investing in securities, options, futures and currencies, and
depend upon the terms of the instrument. Thus, an investment in a hybrid
instrument may entail significant risks in addition to those associated
with traditional fixed income or convertible securities. Hybrid instruments
are also potentially more volatile and carry greater interest rate risks
than traditional instruments. Moreover, depending on the structure of the
particular hybrid, it may expose the Fund to leverage risks or carry
liquidity risks.

Special Transactions
Repurchase Agreements
Repurchase agreements are transactions in which a Fund buys a security from a
dealer or bank and agrees to sell the security back at a mutually agreed upon
time and price. The repurchase price exceeds the sale price, reflecting the
Fund's return on the transaction. This return is unrelated to the interest
rate on the underlying security. The Funds will enter into repurchase
agreements only with banks and other recognized financial institutions, such
as securities dealers, deemed creditworthy by the Adviser. The Funds'
custodian or subcustodian will take possession of the securities subject to
repurchase agreements. The Adviser or subcustodian will monitor the value of
the underlying security each day to ensure that the value of the security
always equals or exceeds the repurchase price. Repurchase agreements are
subject to credit risks. Reverse Repurchase Agreements Reverse repurchase
agreements are repurchase agreements in which a Fund is the seller (rather
than the buyer) of the securities, and agrees to repurchase them at an agreed
upon time and price. A reverse repurchase agreement may be viewed as a type
of borrowing by the Fund. Reverse repurchase agreements are subject to credit
risks. In addition, reverse repurchase agreements create leverage risks
because the Fund must repurchase the underlying security at a higher price,
regardless of the market value of the security at the time of repurchase.

Delayed Delivery Transactions

Delayed delivery transactions, including when issued transactions, are
arrangements in which a Fund buys securities for a set price, with payment
and delivery of the securities scheduled for a future time. During the period
between purchase and settlement, no payment is made by the Fund to the issuer
and no interest accrues to the Fund. The Fund records the transaction when it
agrees to buy the securities and reflects their value in determining the
price of its shares. Settlement dates may be a month or more after entering
into these transactions so that the market values of the securities bought
may vary from the purchase prices. Therefore, delayed delivery transactions
create interest rate risks for the Fund. Delayed delivery transactions also
involve credit risks in the event of a counterparty default.

To Be Announced (TBA) Securities
As with other when issued transactions, a seller agrees to issue a TBA
security at a future date. However, the seller does not specify the
particular securities to be delivered. Instead, a Fund agrees to accept
any security that meets specified terms. For example, the Fund and the
seller would agree upon the issuer, interest rate and terms of the
underlying securities. However, the seller would not identify the
specific underlying security until it issues the security.

Securities Lending

The Funds may lend portfolio securities to borrowers that the Adviser deems
creditworthy. In return, a Fund receives cash or liquid securities from the
borrower as collateral. The borrower must furnish additional collateral if
the market value of the loaned securities increases. Also, the borrower must
pay the Fund the equivalent of any dividends or interest received on the
loaned securities. A Fund will reinvest cash collateral in securities that
qualify as an acceptable investment for the Fund. However, the Fund must pay
interest to the borrower for the use of cash collateral. Loans are subject to
termination at the option of the Fund or the borrower. The Fund will not have
the right to vote on securities while they are on loan, but it will terminate
a loan in anticipation of any important vote. The Fund may pay administrative
and custodial fees in connection with a loan and may pay a negotiated portion
of the interest earned on the cash collateral to a securities lending agent
or broker. Securities lending activities are subject to interest rate risks
and credit risks.

Asset Coverage
In order to secure their obligations in connection with derivatives contracts
or special transactions, the Funds will either own the underlying assets,
enter into an offsetting transaction or set aside readily marketable
securities with a value that equals or exceeds a Fund's obligations. Unless a
Fund has other readily marketable assets to set aside, it cannot trade assets
used to secure such obligations entering into an offsetting derivative
contract or terminating a special transaction. This may cause a Fund to miss
favorable trading opportunities or to realize losses on derivative contracts
or special transactions.

Investing in Securities of Other Investment Companies
The Funds may invest their assets in securities of other investment companies,
including the securities of affiliated money market funds, as an efficient means
of carrying out their investment policies and managing their uninvested cash. It
should be noted that investment companies incur certain expenses, such as
management fees, and, therefore, any investment by a Fund in shares of other
investment companies may be subject to such duplicate expenses.

Illiquid Securities
The Funds may invest up to 15% of the total value of their net assets in
securities that are illiquid. An illiquid security is one which may not be sold
or disposed of in the ordinary course of business within seven days at
approximately the value at which the Fund has valued it on its books. Repurchase
agreements with maturities in excess of seven days will be considered by the
Funds to be illiquid.

INVESTMENT RISKS

Stock Market Risks
o The value of equity securities in a Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. A Fund's
portfolio will reflect changes in prices of individual portfolio stocks or
general changes in stock valuations. Consequently, a Fund's share price may
decline and you could lose money. The Adviser attempts to manage market risk
by limiting the amount a Fund invests in each company's equity securities.
However, diversification will not protect a Fund against widespread or
prolonged declines in the stock market.

Sector Risks
o Companies with similar characteristics may be grouped together in broad
categories called sectors. Sector risk is the possibility that a certain
sector may underperform other sectors or the market as a whole. As the
Adviser allocates more of a Fund's portfolio holdings to a particular
sector, the Fund's performance will be more susceptible to any economic,
business or other developments which generally affect that sector.

Risks Related To Investing For Growth
o Due to their relatively high valuations, growth stocks are typically more
volatile than value stocks. For instance, the price of a growth stock may
experience a larger decline on an analyst's downward earnings estimate
revision, a negative fundamental development, or other adverse market
development. Further, growth stocks tend to have lower dividend yields than
value stocks. This means they depend more on price changes for returns and
may be more adversely affected in a down market compared to higher yielding
stocks.

Risks Related to Investing for Value
o Due to their relatively low valuations, value stocks are typically less
volatile than growth stocks. For instance, the price of a value stock may
experience a smaller increase on a forecast of higher earnings, a positive
fundamental development, or positive market development. Further, value
stocks tend to have higher dividends than growth stocks. This means they
depend less on price changes for returns and may lag behind growth stocks
in an up market.

Currency Risks
o Exchange rates for currencies fluctuate daily. The combination of currency
risk and market risk tends to make securities traded in foreign markets
more volatile than securities traded exclusively in the United States.
o The Adviser attempts to manage currency risk by limiting the amount a Fund
invests in securities denominated in a particular currency. However,
diversification will not protect a Fund against a general increase in the
value of the U.S. dollar relative to other currencies.

Risks Of Foreign Investing
o Foreign securities pose additional risks because foreign economic or
political conditions may be less favorable than those of the United States.
Foreign financial markets may also have fewer investor protections.
Securities in foreign markets may also be subject to taxation policies that
reduce returns for U.S. investors.
o Due to these risk factors, foreign securities may be more volatile and less
liquid than similar securities traded in the United States.

Liquidity Risks
o Trading opportunities are more limited for equity securities that are not
widely held. This may make it more difficult to sell or buy a security at a
favorable price or time. Consequently, a Fund may have to accept a lower
price to sell a security, sell other securities to raise cash or give up an
investment opportunity, any of which could have a negative effect on a
Fund's performance. Infrequent trading of securities may also lead to an
increase in their price volatility.
o Liquidity risk also refers to the possibility that a Fund may not be able
to sell a security or close out a derivative contract when it wants to. If
this happens, the Fund will be required to continue to hold the security or
keep the position open, and the Fund could incur losses.
o OTC derivative contracts generally carry greater liquidity risk than
exchange-traded contracts.

Leverage Risks
o Leverage risk is created when an investment exposes a Fund to a level of
risk that exceeds the amount invested. Changes in the value of such an
investment magnify a Fund's risk of loss and potential for gain.
o Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity
of a fixed income security to changes in interest rates.

Interest Rate Risks
o Prices of fixed income securities rise and fall in response to changes in
the interest rate paid by similar securities. Generally, when interest
rates rise, prices of fixed income securities fall. However, market
factors, such as the demand for particular fixed income securities, may
cause the price of certain fixed income securities to fall while the prices
of other securities rise or remain unchanged.
o Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity
of a fixed income security to changes in interest rates.

Credit Risks
o Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, a
Fund will lose money.
o Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investors Services, Inc. These services
assign ratings to securities by assessing the likelihood of issuer default.
Lower credit ratings correspond to higher credit risk. If a security has
not received a rating, the Funds must rely entirely upon the Adviser's
credit assessment.
o Fixed income securities generally compensate for greater credit risk by
paying interest at a higher rate. The difference between the yield of a
security and the yield of a U.S. Treasury security with a comparable
maturity (the spread) measures the additional interest paid for risk.
Spreads may increase generally in response to adverse economic or market
conditions. A security's spread may also increase if the security's rating
is lowered, or the security is perceived to have an increased credit risk.
An increase in the spread will cause the price of the security to decline.
o Credit risk includes the possibility that a party to a transaction
involving a Fund will fail to meet its obligations. This could cause a Fund
to lose the benefit of the transaction or prevent a Fund from selling or
buying other securities to implement its investment strategy.

Risks Associated with Noninvestment Grade Securities
o Securities rated below investment grade, also known as junk bonds,
generally entail greater interest rate, credit and liquidity risks than
investment grade securities. For example, their prices are more volatile,
economic downturns and financial setbacks may affect their prices more
negatively, and their trading market may be more limited.

INVESTMENT LIMITATIONS

The following limitations pertain to each of the Funds. The Funds may not:

1. Purchase securities, except U.S. government securities, if more than 5% of
its total assets will be invested in the securities of any one issuer, except
that up to 25% of the Bond Fund's, Income Fund's, Value Fund's or Growth Fund's
total assets may be invested without regard to this 5% limitation.

2. Subject to the foregoing 25% exception, purchase more than 10% of the
outstanding voting securities of any issuer.

3. Invest 25% or more of its total assets in one or more issuers conducting
their principal business activities in the same industry.

4. Borrow money except for temporary purposes in amounts up to one-third of the
value of its total assets at the time of such borrowing. Whenever borrowings
exceed 5% of a Fund's total assets, the Fund will not make any additional
investments.

These investment limitations are applied at the time investment securities are
purchased.

5. Purchase or sell real estate, except that a Fund may purchase securities of
issuers which deal in real estate and may purchase securities which are secured
by interests in real estate.

6. Acquire any other investment company or investment company security except in
connection with a merger, consolidation, reorganization or acquisition of assets
or where otherwise permitted by the Investment company Act of 1940.

7. Act as an underwriter of securities, except to the extent that it may be
deemed an underwriter within the meaning of the Securities Act of 1933 on
disposition of securities acquired subject to legal or contractual restrictions
on resale.

8. Write or sell put options, call options, straddles, spreads, or any
combination thereof, except for transactions in options on securities,
securities indices, futures contracts, options on futures contracts and
transactions in securities on a when-issued or forward commitment basis, and
except that a non-money market fund may enter into forward foreign currency
contracts and options thereon in accordance with its investment objectives and
policies.

9. Purchase securities of companies for the purpose of exercising control.

10. Purchase securities on margin, make short sales of securities or maintain a
short position, except that (a) this investment limitation shall not apply to a
Fund's transactions in futures contracts and related options, a Fund's sale of
securities short against the box or a Fund's transactions in securities on a
when-issued or forward commitment basis, and (b) a Fund may obtain short-term
credit as may be necessary for the clearance of purchases and sales of portfolio
securities.

11. Purchase or sell commodity contracts, or invest in oil, gas or mineral
exploration or development programs, except that each Fund may, to the extent
appropriate to its investment policies, purchase publicly traded securities of
companies engaging in whole or in part in such activities, may enter into
futures contracts and related options, and may engage in transactions in
securities on a when-issued or forward commitment basis, and except that a
non-money market fund may enter into forward foreign currency contracts and
options thereon in accordance with its investment objectives and policies.

12. Make loans, except that each Fund may purchase and hold debt instruments
(whether such instruments are part of a public offering or privately
negotiated), may lend portfolio securities and enter into repurchase agreements
in accordance with its investment objective and policies.

13. Purchase securities of any one issuer other than securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities or
certificates of deposit for any such securities if more than 5% of the value of
the Fund's total assets, taken at current value, would be invested in the
securities of such issuer, or more than 10% of the issuer's outstanding voting
securities would be owned by the Fund or the Company, except that up to 25% of
the value of the Fund's total assets, taken at current value, may be invested
without regard to these limitations provided, however, that the Treasury Money
Fund may in no event invest more than 5% of its total assets in the securities
of any one issuer. For purposes of this limitation, a security is considered to
be issued by the entity (or entities) whose assets and revenues back the
security. A guarantee of a security is not deemed to be a security issued by the
guarantor when the value of all securities issued and guaranteed by the
guarantor, and owned by the Fund, does not exceed 10% of the value of the Fund's
total assets.

14. Borrow money or issue senior securities except that each Fund may borrow
from banks and enter into reverse repurchase agreements for temporary purposes
in amounts up to one-third 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 then in amounts not in excess of one-third of the
value of the Fund's total assets at the time of such borrowing. No Fund will
purchase securities while its aggregate borrowings including reverse repurchase
agreements and borrowing from banks in excess of 5% of its total assets are
outstanding. Securities held in escrow or separate accounts in connection with a
Fund's investment practices are not deemed to be pledged for purposes of this
limitation.

15. Purchase any securities which would cause 25% or more of the value of the
Fund's total assets at the time of purchase to be invested in the securities of
one or more issuers conducting their principal business activities in the same
industry and, in the case of the Treasury Money Fund, in securities the interest
upon which is paid from revenues of similar types of projects, provided that (a)
there is no limitation with respect to (i) instruments that are issued (as
defined in Investment Limitation No. 1 above) or guaranteed by the United
States, any state, territory or possession of the United States, the District of
Columbia or any of their authorities, agencies, instrumentalities or political
subdivisions and (ii) repurchase agreements secured by the instruments described
in clause (i); (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 the parents; and (c) utilities will be divided
according to their services (for example, gas, gas transmission, electric and
gas, electric and telephone will each be considered a separate industry).

If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
a Fund's investments will not constitute a violation of such limitation, except
that any borrowing by a Fund that exceeds the fundamental investment limitations
stated above must be reduced to meet such limitations within the period required
by the Investment Company Act of 1940 (currently three days). Otherwise, a Fund
may continue to hold a security even though it causes the Fund to exceed a
percentage limitation because of fluctuation in the value of the Fund's assets.

The above limitations cannot be changed unless authorized by the "vote of a
majority of the Funds' outstanding voting securities," as defined by the
Investment Company Act of 1940.

portfolio turnover
The Value Fund experienced higher turnover variations during the past two years.
The Value Fund's portfolio was restructured in response to the rising stock
market.

Determining Market Value of Securities
Market values of a Fund's portfolio securities are determined as follows:
o for equity securities, according to the last sale price in the market in
which they are primarily traded (either a national securities exchange or the
over-the-counter market), if available;
o in the absence of recorded sales for equity securities, according to the mean
between the last closing bid and asked prices; o for bonds and other fixed
income securities, at the last sale price on a national securities exchange, if
available,
otherwise, as determined by an independent pricing service;

o futures contracts and options are valued at their market values established
by the exchanges on which they are traded at the close of trading on such
exchanges. Options traded in the over-the- counter market are valued
according to the mean between the last bid and the last asked price for the
option as provided by an investment dealer or other financial institution
that deals in the option. The Board may determine in good faith that another
method of valuing such investments is necessary to appraise their fair market
value;

o for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as
determined in good faith by the Board; and
o for all other securities, at fair value as determined in good faith by
the Board.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider: institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.

WHAT DO SHARES COST?

The Funds' net asset value (NAV) per share fluctuates and is based on the market
value of all securities and other assets of each Fund.

Reducing or Eliminating the Front-End Sales Charge
You can reduce or eliminate the applicable front-end sales charge as follows:

Quantity Discounts
Larger purchases can reduce or eliminate the sales charge you pay. You can
combine purchases of shares made on the same day by you, your spouse, and your
children under age 21. In addition, purchases made at one time by a trustee or
fiduciary for a single trust estate or a single fiduciary account can be
combined.

Accumulated Purchases
If you make an additional purchase of shares, you can count previous share
purchases still invested in a Fund in calculating the applicable sales charge on
the additional purchase.

Concurrent Purchases
You can combine concurrent purchases of two or more SouthTrust Funds in
calculating the applicable sales charge.

Letter of Intent
You can sign a Letter of Intent committing to purchase a certain amount of
shares within a 13-month period to combine such purchases in calculating the
sales charge. The Funds' custodian will hold shares in escrow equal to the
maximum applicable sales charge. If you complete the Letter of Intent, the
custodian will release the shares in escrow to your account. If you do not
fulfill the Letter of Intent, the custodian will redeem the appropriate amount
from the shares held in escrow to pay the sales charges that were not applied to
your purchases.

Reinvestment Privilege
You may reinvest, within 30 days, your redemption proceeds at the next
determined NAV, without any sales charge.

Purchases by Affiliates of the Funds

The following individuals and their immediate family members may buy shares at
NAV without any sales charge because there are nominal sales efforts associated
with their purchases: o the current or retired Trustees, employees, and sales
representatives of the Funds, the Adviser, the Distributor and their

affiliates (and spouses and children of the foregoing);
o retired employees of SouthTrust Corporation and it's affiliates;
o investors for whom SouthTrust Corporation or one of it's affiliates acts in a
fiduciary, advisory, custodial, agency or similar capacity (this does not
include transactions executed by SouthTrust Securities, Inc., including, but
not limited to, self-directed Individual Retirement Accounts); and
o employees who purchase shares through a payroll deduction plan sponsored by
their employers.

HOW ARE THE FUNDS SOLD?

Under the Distributor's Contract with the Company, the Distributor (Federated
Securities Corp.), located at Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA 15222-3779, offers shares on a continuous, best-efforts basis.

Front-End Sales Charge Reallowances
The Distributor receives a front-end sales charge on certain share sales. The
Distributor generally pays up to 90% (and as much as 100%) of this charge to
investment professionals for sales and/or administrative services. Any payments
to investment professionals in excess of 90% of the front-end sales charge are
considered supplemental payments. The Distributor retains any portion not paid
to an investment professional.

Rule 12b-1 Plan - Growth Fund
As a compensation type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of bank, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professionals) to promote
sales of shares so that overall Fund assets are maintained or increased. This
helps the Fund achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and share redemptions. Also, the
Fund's service providers that receive asset- based fees also benefit from stable
or increasing Fund assets.

The Fund may compensate the Distributor more or less than its actual marketing
expenses. In no event will the Fund pay for any expenses of the Distributor that
exceed the maximum Rule 12b-1 Plan fee.

The maximum Rule 12b-1 Plan fee that can be paid in any one year may not be
sufficient to cover the marketing related expenses the Distributor has incurred.
Therefore, it may take the Distributor a number of years to recoup these
expenses.

Shareholder Services

The Funds may pay Federated Shareholder Services Company, a subsidiary of
Federated, for providing shareholder services and maintaining shareholder
accounts. Federated Shareholder Services Company may select others to perform
these services for their customers and pay them fees.

supplemental payments

Investment professionals receive such fees for providing distribution-related or
shareholder services such as sponsoring sales, providing sales literature,
conducting training seminars for employees, and engineering sales-related
computer software programs and systems. Also, investment professionals may be
paid cash or promotional incentives, such as reimbursement of certain expenses
relating to attendance at informational meetings about the Funds or other
special events at recreational-type facilities, or items of material value.
These payments will be based upon the amount of shares the investment
professional sells or may sell and/or upon the type and nature of sales or
marketing support furnished by the investment professional.

EXCHANGING SECURITIES FOR SHARES

You may contact the Distributor to request a purchase of shares in an exchange
for securities you own. The Funds reserve the right to determine whether to
accept your securities and the minimum market value to accept. The Funds will
value your securities in the same manner as they values their assets. This
exchange is treated as a sale of your securities for federal tax purposes.

SUBACCOUNTING SERVICES

Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.

REDEMPTION IN KIND

Although the Funds intend to pay share redemptions in cash, they reserve the
right, as described below, to pay the redemption price in whole or in part by a
distribution of a Fund's portfolio securities. Because the Funds have elected to
be governed by Rule 18f-1 under the Investment Company Act of 1940, the Funds
are obligated to pay share redemptions to any one shareholder in cash only up to
the lesser of $250,000 or 1% of the net assets represented by such shares during
any 90-day period. Any share redemption payment greater than this amount will
also be in cash unless a Fund's Board determines that payment should be in kind.
In such a case, the Fund will pay all or a portion of the remainder of the
redemption in portfolio securities, valued in the same way as the Funds
determine NAV. The portfolio securities will be selected in a manner that the
Fund's Board deems fair and equitable and, to the extent available, such
securities will be readily marketable. Redemption in kind is not as liquid as a
cash redemption. If redemption is made in kind, shareholders receiving the
portfolio securities and selling them before their maturity could receive less
than the redemption value of the securities and could incur certain transaction
costs.

MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Company. To protect its
shareholders, the Company has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Company.

In the unlikely event a shareholder is held personally liable for the Company's
obligations, the Company is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Company will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Company. Therefore, financial loss resulting from liability as
a shareholder will occur only if the Company itself cannot meet its obligations
to indemnify shareholders and to pay judgments against them.

BANKING LAWS

Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956, or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from underwriting securities, but such banking laws and regulations do not
prohibit such a holding company or affiliate or banks generally from acting as
investment adviser, administrator, transfer agent or custodian to such an
investment company, or from purchasing shares of such a company as agent for and
upon the order of customers. The Adviser and the custodian are subject to such
banking laws and regulations.

The Adviser and the custodian believe they may perform the services for the
Company contemplated by their respective agreements with the Company without
violation of applicable banking laws or regulations. It should be noted,
however, that there have been no cases deciding whether bank and nonbank
subsidiaries of a registered bank holding company may perform services
comparable to those that are to be performed by these companies, and future
changes in either federal or state statutes and regulations relating to
permissible activities of banks and their subsidiaries or affiliates, as well as
future judicial or administrative decisions or interpretations of current and
future statutes and regulations, could prevent these companies from continuing
to perform such service for the Company.

Should future legislative, judicial, or administrative action prohibit or
restrict the activities of such companies in connection with the provision of
services on behalf of the Company, the Company might be required to alter
materially or discontinue its arrangements with such companies and change its
method of operations. It is not anticipated, however, that any change in the
Company's method of operations would affect the net asset value per share of the
Fund or result in a financial loss to any customer.

ACCOUNT AND SHARE INFORMATION

Voting Rights
Each share of a Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of the Company have
equal voting rights, except that in matters affecting only a particular Fund,
only shares of that Fund are entitled to vote.

Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of shareholders will be called by the Trustees upon the
written request of shareholders who own at least 10% of the Company's
outstanding shares of all series entitled to vote.

As of May 7, 1999, the following shareholder, owned of record, beneficially, or
both, 5% or more of the outstanding shares of the Value Fund: Lynspen & Co.,
Birmingham, AL, owned approximately 20,246,621.80 shares (93.38%).

Shareholders owning 25% or more of outstanding shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.

TAX INFORMATION

Federal Income Tax
The Funds intend to meet requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies. If these requirements are not
met, a Fund will not receive special tax treatment and will pay federal income
tax.

The Funds will each be treated as a single, separate entity for federal income
tax purposes so that income earned and capital gains and losses realized by the
Company's other portfolios will be separate from those realized by a Fund.

FOREIGN INVESTMENTS

If a Fund purchases foreign securities, their investment income may be subject
to foreign withholding or other taxes that could reduce the return on these
securities. Tax treaties between the United States and foreign countries,
however, may reduce or eliminate the amount of foreign taxes to which the Fund
would be subject. The effective rate of foreign tax cannot be predicted since
the amount of a Fund's assets to be invested within various countries is
uncertain. However, the Funds intend to operate so as to qualify for
treaty-reduced tax rates when applicable.

Distributions from a Fund may be based on estimates of book income for the year.
Book income generally consists solely of the coupon income generated by the
portfolio, whereas tax-basis income includes gains or losses attributable to
currency fluctuation. Due to differences in the book and tax treatment of
fixed-income securities denominated in foreign currencies, it is difficult to
project currency effects on an interim basis. Therefore, to the extent that
currency fluctuations cannot be anticipated, a portion of distributions to
shareholders could later be designated as a return of capital, rather than
income, for income tax purposes, which may be of particular concern to simple
trusts.

If a Fund invests in the stock of certain foreign corporations, they may
constitute Passive Foreign Investment Companies (PFIC), and the Fund may be
subject to federal income taxes upon disposition of PFIC investments.

If more than 50% of the value of a Fund's assets at the end of the tax year is
represented by stock or securities of foreign corporations, the Fund intends to
qualify for certain Code stipulations that would allow shareholders to claim a
foreign tax credit or deduction on their U.S. income tax returns. The Code may
limit a shareholder's ability to claim a foreign tax credit. Shareholders who
elect to deduct their portion of a Fund's foreign taxes rather than take the
foreign tax credit must itemize deductions on their income tax returns.

<PAGE>

WHO MANAGES AND PROVIDES SERVICES TO THE FUNDS?

BOARD OF TRUSTEES

The Board is responsible for managing the Company's business affairs and for
exercising all the Company's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birth date, present position(s) held with the Company,
principal occupations for the past five years and positions held prior to the
past five years, and the total compensation received as a Trustee from the
Company for its most recent fiscal year. The Company is comprised of six funds.

As of May 7, 1999, the Company's Board and Officers as a group owned less than
1% of the Funds' outstanding shares.

An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940.

<PAGE>

Name

Birth Date Aggregate
Address Principal Occupations Compensation
Position With Company for Past Five Years From Company
William O. Vann* Chairman and Chief Executive Officer, Young & Vann $7750.
Birth Date: January 28, 1942 Supply Co. (since 1987); Partner, B&B Investments;
Box 757 Trustee and Past Chairman, The Childrens' Hospital of

Birmingham, AL Alabama.
CHAIRMAN AND TRUSTEE

Charles G. Brown, III resident, Tubular Products Company (since 1985); $7000.
Birth Date: November 27, 1953 Managing Partner, Red Hollow Partnership.
P.O. Box 170100
Birmingham, AL
TRUSTEE

Russell W. Chambliss President (since 1989), Executive Vice President $7750.
Birth Date: December 26, 1951 (1988), and Vice President of Sales and Marketing
Mason Corporation (1984-1988), Mason Corporation.
P.O. Box 59226
Birmingham, AL
TRUSTEE

Thomas M. Grady* Partner of the law firm of Williams, Boger, Grady, $6750.
Birth Date: July 25, 1941 Davis and Tuttle, P.A.; Chairman of the Board of
P.O. Box 2 Pfeiffer University; Member of Cannon Foundation.
Kannapolis, NC
TRUSTEE

Billy L. Harbert, Jr.* President and Chief Operating Officer of Bill Harbert $6250.
Birth Date: May 23, 1965 Construction, Inc. (BHIC) and Vice President of BHIC
Bill Harbert International (until 1998); Director, Harbert International
Construction, Inc. Establishment; Director, Harbert International
P.O. Box 531390 Establishment, S.C.; Director, Bilhar International
Birmingham, AL Establishment; Member/Shareholder, Bonaventure
TRUSTEE Capital, LLC; Member/Shareholder, Bonaventure
Partners, LLC; Board Member/Shareholder, Founders
Trust Company, Inc.; and Member/Shareholder, Treble
Range Partners, LLC.

Edward C. Gonzales Trustee or Director of some of the funds in the $0
Birth Date: October 22, 1930 Federated Complex; President, Executive Vice
Federated Investors Tower President and Treasurer of some of the funds in the
Pittsburgh, PA Federated Fund Complex; Vice Chairman, Federated
PRESIDENT AND TREASURER Investors, Inc.; Vice President, Federated Investment
Management Company and Federated Investment
Counseling, Federated Global Investment
Management Corp., and Passport Research,
Ltd.; Executive Vice President and Director,
Federated Securities Corp.; Trustee,
Federated Shareholder Services Company.

Peter J. Germain Senior Vice President and Director, Mutual Fund $0
Birth Date: September 2, 1959 Services Division, Federated Services Company.
Federated Investors Tower Formerly Senior Corporate Counsel, Federated
Pittsburgh, PA Investors, Inc.
VICE PRESIDENT

Beth Broderick Assistant Vice President, Federated Services Company $0

Birth Date: August 2, 1965 (1997 to present); Client Services Officer, Federated
Federated Investors Tower Services Company (1992-1997).
Pittsburgh, PA
VICE PRESIDENT AND TREASURER

C. Todd Gibson Associate Corporate Counsel, Federated Investors, $0
Birth Date: May 17, 1967 Inc.; Assistant Vice President, Federated
Federated Investors Tower Administrative Services.
Pittsburgh, PA
SECRETARY
</TABLE>

INVESTMENT ADVISER
The Adviser, SouthTrust Bank, N.A. conducts investment research and makes
investment decisions for the Funds.

The Adviser is not be liable to the Company or any Fund shareholder for any
losses that may be sustained in the purchase, holding, or sale of any security
or for anything done or omitted by it, except acts or omissions involving
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties imposed upon it by its contract with the Company.

Brokerage Transactions
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. The Adviser will generally use those who are recognized dealers in
specific portfolio instruments, except when a better price and execution of the
order can be obtained elsewhere. The Adviser may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling shares of the Funds
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Company's Board.

Research Services
Research services may include advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry studies;
receipt of quotations for portfolio evaluations; and similar services. Research
services may be used by the Adviser in advising other accounts. To the extent
that receipt of these services may replace services for which the Adviser or its
affiliates might otherwise have paid, it would tend to reduce their expenses.
The Adviser and its affiliates exercise reasonable business judgment in
selecting those brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.

Investment decisions for the Funds are made independently from those of other
accounts managed by the Adviser. When a Fund and one or more of those accounts
invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Fund and the account(s) in a
manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit a Fund, it is possible
that this procedure could adversely impact the price paid or received and/or the
position obtained or disposed of by a Fund.

Administrator
Federated Services Company, a subsidiary of Federated, provides administrative
personnel and services (including certain legal and financial reporting
services) necessary to operate the Funds. Federated Services Company also
provides certain accounting and recordkeeping services with respect to a Fund's
portfolio investments for a fee based on Fund assets, plus out-of-pocket
expenses.

Custodian
SouthTrust Bank, N.A. is custodian for the securities and cash of the Funds.

Transfer Agent And Dividend Disbursing Agent
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Funds pay the transfer agent a fee based on the size, type, and
number of accounts and transactions made by shareholders.

Independent Auditors
Arthur Andersen LLP are the independent auditors for the Funds.

FEES PAID BY THE Value FUND FOR SERVICES

For the Year ended April 30 1999 1998 1997

- -------------------------------------------------------------------------------
Advisory Fee Earned $2,779,844 $2,550,383 $1,750,919
- -------------------------------------------------------------------------------
Advisory Fee Reduction $0 $10,794 $70,037
- -------------------------------------------------------------------------------
Brokerage Commissions $616,769 $658,372 $292,801
- -------------------------------------------------------------------------------
Administrative Fee $396,862 $384,783 $284,437
- -------------------------------------------------------------------------------
Administrative Fee Reduction $0 $0
- -------------------------------------------------------------------------------

HOW DO THE FUNDS MEASURE PERFORMANCE?

The Funds may advertise share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.

Share performance reflects the effect of non-recurring charges, such as maximum
sales charges, which, if excluded, would increase the total return and yield.
The performance of shares depends upon such variables as portfolio quality;
average portfolio maturity; type and value of portfolio securities; changes in
interest rates; changes or differences in a Fund's expenses; and various other
factors.

Share performance fluctuates on a daily basis largely because net earnings and
offering price per share fluctuate daily. Both net earnings and offering price
per share are factors in the computation of yield and total return.

Average Annual Total Returns and Yield of The Value Fund
Value Fund

Total returns given for the one-year, five-year and start of performance periods
ended April 30, 1999.

Yield given for the seven-day period ended April 30, 1999.

7-Day Period 1 Year 5 years Start of Performance
Total Return N/A 5.17% 21.37% 15.62%
Yield 0.85% N/A N/A N/A

Total Return
Total return represents the change (expressed as a percentage) in the value of
shares over a specific period of time, and includes the investment of income and
capital gains distributions.

The average annual total return for shares is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period by
the NAV per share at the end of the period. The number of shares owned at the
end of the period is based on the number of shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, adjusted over the
period by any additional shares, assuming the annual reinvestment of all
dividends and distributions.

When shares of a Fund are in existence for less than a year, the Fund may
advertise cumulative total return for that specific period of time, rather than
annualizing the total return.

Yield
The yield of shares is calculated by dividing: (i) the net investment income per
share earned by the shares over a thirty-day period; by (ii) the maximum
offering price per share on the last day of the period. This number is then
annualized using semi- annual compounding. This means that the amount of income
generated during the thirty-day period is assumed to be generated each month
over a 12-month period and is reinvested every six months. The yield does not
necessarily reflect income actually earned by shares because of certain
adjustments required by the SEC and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.

To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in shares,
the share performance is lower for shareholders paying those fees.

Performance Comparisons
Advertising and sales literature may include:
o references to ratings, rankings, and financial publications and/or performance
comparisons of shares to certain indices; o charts, graphs, and illustrations
using a Fund's returns, or returns in general, that demonstrate investment
concepts such
as tax-deferred compounding, dollar-cost averaging and systematic
investment;
o discussions of economic, financial, and political developments and their
impact on the securities market, including the portfolio manager's views on
how such developments could impact the Funds; and
o information about the mutual fund industry from sources such as the Investment
Company Institute. A Fund may compare its performance, or performance for the
types of securities in which it invests, to a variety of other investments,
including federally insured bank products such as bank savings accounts,
certificates of deposit, and Treasury bills. A Fund may quote information from
reliable sources regarding individual countries and regions, world stock
exchanges, and economic and demographic statistics. You may use financial
publications and/or indices to obtain a more complete view of share performance.
When comparing performance, you should consider all relevant factors such as the
composition of the index used, prevailing market conditions, portfolio
compositions of other funds, and methods used to value portfolio securities and
compute offering price. The financial publications and/or indices which a Fund
uses in advertising may include:

Dow Jones Industrial Average (DJIA)
Represents share prices of selected blue-chip industrial corporations. The DJIA
indicates daily changes in the average price of stock of these corporations.
Because it represents the top corporations of America, the DJIA index is a
leading economic indicator for the stock market as a whole.

Financial Publications
The Wall Street Journal, Business Week, Changing Times, Financial World, Forbes,
Fortune, and Money magazines, among others-provide performance statistics over
specified time periods.

Lipper Analytical Services, Inc.
Ranks funds in various fund categories by making comparative calculations using
total return. Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any change in net
asset value over a specified period of time.

Moody's Investors Services, Inc., Fitch IBCA, Inc. and Standard & Poor's
Various publications.

Morningstar, Inc.
An independent rating service, is the publisher of the bi-weekly Mutual Fund
Values, which rates more than 1,000 NASDAQ- listed mutual funds of all types,
according to their risk-adjusted returns. The maximum rating is five stars, and
ratings are effective for two weeks.

Standard & Poor's Daily Stock Price Index of 500 Common Stocks (S&P 500)
Composite index of common stocks in industry, transportation, and financial and
public utility companies can be used to compare to the total returns of funds
whose portfolios are invested primarily in common stocks. In addition, the S & P
500 assumes reinvestments of all dividends paid by stocks listed on its index.
Taxes due on any of these distributions are not included, nor are brokerage or
other fees calculated in the S & P figures. S&P 500 Barra Growth Index is
constructed by sorting the S&P 500 based on their price/book ratios, with the
high price/ book companies making up the index.

FINANCIAL INFORMATION

The Financial Statements for the Value Fund for the fiscal year ended April 30,
1999 are incorporated herein by reference to the Annual Report to Shareholders
of SouthTrust Value Fund dated April 30, 1999.

<PAGE>

ADDRESSES

Southtrust Value Fund
southtrust Growth Fund

Portfolios of SouthTrust Funds

5800 Corporate Drive
Pittsburgh, PA 15237-7010

Distributor
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue,
Pittsburgh, PA 15222-3779

Investment Adviser
SouthTrust Bank, N.A.
420 North 20th Street
Birmingham, AL 35203

Custodian
SouthTrust Bank, N.A.
420 North 20th Street
Birmingham, AL 35203

Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600

Independent Auditors
Arthur Andersen LLP
225 Franklin Street
Boston, MA 02110-2812

JUNE 29, 1999

PROSPECTUS

SouthTrust Funds

SOUTHTRUST BOND FUND
SOUTHTRUST INCOME FUND
SOUTHTRUST ALABAMA TAX-FREE INCOME FUND

SouthTrust Bond Fund is a mutual fund seeking to provide a level of total return
consistent with a portfolio of high-quality debt securities.

SouthTrust Income Fund is a mutual fund seeking to provide current income. As a
secondary, non-fundamental objective, the Fund will attempt to minimize
principal volatility. SouthTrust Alabama Tax-Free Income Fund is a mutual
fund seeking to provide income exempt from federal income tax and the income tax
imposed by the State of Alabama.

<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Fund Goals, Strategies, Performance and Investment Risks 1
What are the Funds' Fees and Expenses? 8
What are the Principal Securities in Which the Funds Invest? 9
What are the Main Risks of Investing in the Funds? 12
What do Shares Cost? 14
How are the Funds Sold? 15
How to Purchase Shares 15
How to Redeem and Exchange Shares 17
Account and Share Information 19
Who Manages the Funds? 20
Financial Information 21
</TABLE>

AUGUST , 1999

Fund Goals, Strategies, Performance and Investment Risks

SouthTrust Funds (Company) currently offer shares in six investment portfolios,
each with its own investment goal and strategies, described in separate
prospectuses. This prospectus pertains only to SouthTrust Bond Fund (Bond Fund),
SouthTrust Income Fund (Income Fund), and SouthTrust Alabama Tax-Free Income
Fund (Alabama Tax-Free Income Fund). The purchase of shares of any Fund should
not be considered a complete investment program, but an important segment of a
well-diversified investment program. For information about other funds offered
by SouthTrust Funds, call 1-800-843-8618.
Following is a discussion of each Fund's goal, investment strategies, and
risks. In addition to the risks set forth below that are specific to an
investment in a particular Fund, there are risks common to all mutual funds. For
example, a Fund's share price may decline and you could lose money. Also, there
is no assurance that a Fund will achieve its investment objective. Finally, all
of the Funds bear the risk of Year 2000 readiness.

Also included on the following pages is performance information for each Fund
over a period of time.

SOUTHTRUST BOND FUND

What is the Bond Fund's Goal?
The Fund's goal is to provide a level of total return consistent with a
portfolio of high-quality debt securities.

What are the Fund's Main Investment Strategies?

The Fund seeks to achieve its goal by investing in high quality, investment
grade corporate debt obligations and U.S. government securities, including
obligations issued or guaranteed by agencies or instrumentalities of the U.S.
government. The Adviser selects securities based upon their quality,
marketability, and maturity. Investment decisions are based upon the Adviser's
assessment of the overall economy, the Treasury yield curve, and interest rate
spreads. First, the Fund's targeted duration is determined based upon
macroeconomic factors. Then, the Adviser's analysis of the yield curve
determines which maturities (intermediate to long term) offer the most
attractive potential returns. The Adviser then considers spreads between various
sectors (such as U.S. Treasuries, agency securities, and corporate bonds) to
select the quality and types of bonds that offer the most attractive investment
opportunity. It is expected that the Fund's average maturity will generally
range up to 15 years. During normal market conditions, at least 65% of the
Fund's total assets will be invested in investment grade bonds.

What are the Main Risks of Investing in the Fund?

[Graph Appears Here]

The bar chart shows the variability of the Fund's total returns on a calendar
year-end basis.

The total returns displayed for the Fund do not reflect the payment of any sales
charges or recurring shareholder account fees. If these charges or fees had been
included, the returns shown would have been lower.

The Fund's total return from January 1, 1999 to March 31, 1999 was -1.94%.

Within the period shown in the chart, the Fund's highest quarterly return was
5.77% (quarter ended September 30, 1998). Its lowest quarterly return was -3.39%
(quarter ended March 31, 1994).

Average Annual Total Return

The following table represents the Fund's Average Annual Total Returns, reduced
to reflect applicable sales charges, for the calendar periods ending December
31, 1998.

The table shows the Fund's total returns averaged over a period of years
relative to the Lehman Brothers Intermediate Government/Corporate Index
(LBIG/C), a broad based market index. Total returns for the index shown do not
reflect sales charges, expenses or other fees that the SEC requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index.

Calendar Period Fund LBIG/C

1 Year 5.42% 8.44%
5 Years 5.60% 6.60%
Start of Performance1 6.94% 7.35%

1 The Fund's start of performance date was May 8, 1992.

SOUTHTRUST INCOME FUND

What is the Income Fund's Goal?

The Fund's goal is to provide current income. The Fund will attempt to minimize
principal volatility as a secondary, non-fundamental goal.

What are the Fund's Main Investment Strategies?

The Fund seeks to achieve its goal by investing in a diversified portfolio
comprised primarily of income-producing securities. The Adviser selects the
Fund's investment-grade securities based upon their quality, marketability, and
maturity. Investment decisions are based upon the Adviser's assessment of the
overall economy, the Treasury yield curve, and interest rate spreads. First, the
Fund's targeted duration is determined based upon macroeconomic factors. Then,
the Adviser's analysis of the yield curve determines which maturities (short to
intermediate term) offer the most attractive potential returns. The Adviser then
considers spreads between various sectors (such as U.S. Treasuries, agency
securities, and corporate bonds) to select the quality and types of bonds that
offer the most attractive investment opportunity. It is expected that the Fund's
average maturity will generally range up to five years. During normal market
conditions, at least 65% of the Fund's total assets will be invested in
income-producing securities. What are the Main Risks of Investing in the
Fund?

[Graph Appears Here]

The bar chart shows the variability of the Fund's total returns on a calendar
year-end basis.

The Fund's total return from January 1, 1999 to March 31, 1999 was 0.25%.

Within the period shown in the chart, the Fund's highest quarterly return was
3.73% (quarter ended September 30, 1998). Its lowest quarterly return was 0.05%
(quarter ended December 31, 1998).

Average Annual Total Return

The following table represents the Fund's Average Annual Total Returns, reduced
to reflect applicable sales charges, for the calendar periods ending December
31, 1998.

The table shows the Fund's total returns averaged over a period of years
relative to the Merrill Lynch Corporate/Government 1-5 Year Index (MLC/G 1-5), a
broad based market index. Total returns for the index shown do not reflect sales
charges, expenses or other fees that the SEC requires to be reflected in the
Fund's performance. Indexes are unmanaged, and it is not possible to invest
directly in an index.

Calendar Period Fund MLC/G 1-5

1 Year 3.22% 7.68%
Start of Performance1 4.29% 6.57%

1 The Fund's start of performance date was January 10, 1996.

SOUTHTRUST ALABAMA TAX-FREE INCOME FUND

What is the Alabama Tax-Free Income Fund's Goal?
The Fund's goal is to provide current income exempt from federal income tax and
the income tax imposed by the State of Alabama.

What are the Fund's Main Investment Strategies?

The Fund seeks to achieve its goal by investing at least 80% of its total assets
in tax-exempt fixed income securities so that the Fund's annual interest income
is exempt from federal income tax and Alabama state income tax. The Adviser
selects investments after assessing factors such as trends in interest rates,
creditworthiness, the supply of appropriate municipal bonds, and portfolio
diversification. In order to reduce interest rate risks but still produce
competitive return, the Fund will maintain a weighted average maturity of four
to eight years.

At least 65% of the Fund's total assets will be invested in obligations issued
by or on behalf of the State of Alabama, its political subdivisions, or
agencies. Some of the interest from the Fund's investments may be subject to the
federal alternative minimum tax for individuals and corporations.

What are the Main Risks of Investing in the Fund?

The prices of fixed-rate debt securities change in the opposite direction of
interest rates. As a result, if interest rates increase, the value of the Fund's
portfolio securities (and therefore the value of your Fund shares) could go
down. Other factors that may affect the Fund's returns include bond defaults or
increase in the risk of defaults, or early redemptions of portfolio securities.
Since the Fund is non-diversified and invests primarily in issuers from a single
state, the Fund may be subject to additional risks compared to funds that are
fully diversified and/or invest in multiple states. Alabama's economy is
dependent on certain industries, such as manufacturing and natural resource-
based industries (e.g., textiles, coal mining, and timber)--any downturn in
these and other industries may adversely impact the economy of Alabama.

The shares offered by this prospectus are not deposits or obligations of any
bank, are not endorsed or guaranteed by any bank, and are not insured or
guaranteed by the Federal Deposit Insurance Corporation, or any other government
agency.
Since the Alabama Tax-Free Fund was effective on ________, 1999 and does not
have a performance record for a full calendar year, the Fund is not permitted by
the Securities and Exchange Commission to show performance in a bar chart or
table. What are the Fund's Fees and Expenses?

SOUTHTRUST FUNDS

FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Bond Fund, Income Fund or Alabama Tax-Free Fund.

<TABLE>
<CAPTION>
Shareholder Fees Bond Income Alabama Tax-
Fund Fund Free Fund
Fees Paid Directly From Your Investment
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 3.50% 3.50% 3.50%
Redemption Fee (as a percentage of amount redeemed, if applicable)1 1.00% 1.00% 1.00%

Annual Fund Operating Expenses (Before Waivers)2
Expenses That are Deducted From Fund Assets (as percentage of average net assets)
Management Fee3 0.60% 0.60% 0.60%
Distribution (12b-1) Fee4 None 0.25% 0.25%
Shareholder Services Fee5 0.25% 0.25% 0.25%
Other Expenses6 0.25% 0.56% 0.42%
Total Annual Fund Operating Expenses7 1.10% 1.66% 1.52%

1Applies only to shares of the Bond Fund, Income Fund and the Alabama Tax-Free
Fund purchased at net asset value (investments in excess of $1,000,000) which
are redeemed within one year of purchase. See "How to Redeem and
ExchangeShares".

2Although not contractually obligated to do so, the Adviser, Shareholder
Servicing Agent and administrator waived certain amounts. These are shown below
along with the net expenses the Fund actually paid for the fiscal year ended
April 30, 1999.

Total Waivers of Fund Expenses 0.23% 0.91% 0.20%
Total Actual Annual Fund Operating Expenses (after waivers) 0.87% 0.78% 1.32%7

3The Adviser voluntarily waived a portion of the management fee. The Adviser can
terminate this voluntary waiver at any time. The management fees paid by the
Bond Fund and Income Fund (after the voluntary waivers) were 0.59% and 0.30%
respectively for the year ended April 30, 1999.

4The Income Fund did not pay or accrue the distribution (12b-1) fee during the
year ended April 30, 1999. Income Fund and Alabama Tax-Free Fund have no
present intention of paying or accruing the distribution (12b-1) fee during the
year ending April 30, 2000.

5The shareholder servicing agent will voluntarily waive a portion of the
shareholder services fee equal to 0.20%. This waiver may be terminated at any
time.

6The administrator voluntarily waived a portion of the administrative fee of the
Income Fund. The administrator can terminate this voluntary waiver at any time.
Total other expenses paid by the Income Fund (after the voluntary waiver) was
0.45% for the year ended April 30, 1999.

7Total Annual Fund Operating Expenses for the Alabama Tax-Free Fund are based on
estimated expenses for the year ending April 30, 2000.
</TABLE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the Bond
Fund, Income Fund and Alabama Tax-Free Fund with the cost of investing in other
mutual funds.

The Example assumes that you invest $10,000 in the Bond Fund, Income Fund and
Alabama Tax-Free Fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Bond Fund, Income Fund and
Alabama Tax-Free Fund operating expenses are before waivers as shown in the
table and remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years

Bond Fund $458 $687 $ 935 $1,643
Income Fund $513 $855 $1,221 $2,247
Alabama Tax-Free Fund $499 $813 N/A N/A

What are the Principal Securities in Which the Funds Invest?

FIXED INCOME SECURITIES

Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities.

A security's yield measures the annual income earned on a security as a
percentage of its price. A security's yield will increase or decrease depending
upon whether it costs less (a discount) or more (a premium) than the principal
amount. If the issuer may redeem the security before its scheduled maturity, the
price and yield on a discount or premium security may change based upon the
probability of an early redemption. Securities with higher risks generally have
higher yields.

The following describes the types of fixed income securities in which the Funds
invest.

Treasury Securities

Treasury securities in which Bond Fund and Income Fund invest are direct
obligations of the federal government of the United States. Treasury securities
are generally regarded as having the lowest credit risks.

Agency Securities

Agency securities in which Bond Fund and Income Fund invest are issued or
guaranteed by a federal agency or other government sponsored entity acting under
federal authority (a GSE). The United States supports some GSEs with its full
faith and credit. Other GSEs receive support through federal subsidies, loans or
other benefits. A few GSEs have no explicit financial support, but are regarded
as having implied support because the federal government sponsors their
activities. Agency securities are generally regarded as having low credit risks,
but not as low as treasury securities.

The Funds treat mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does not
reduce the interest rate and prepayment risks of these mortgage backed
securities.

Corporate Debt Securities

Corporate debt securities in which Bond Fund and Income Fund invest are fixed
income securities issued by businesses. Notes, bonds, debentures and commercial
paper are the most prevalent types of corporate debt securities. The Funds may
also purchase interests in bank loans to companies. The credit risks of
corporate debt securities vary widely among issuers.

In addition, the credit risk of an issuer's debt security may vary based on
its priority for repayment. For example, higher ranking (senior) debt securities
have a higher priority than lower ranking (subordinated) securities. This means
that the issuer might not make payments on subordinated securities while
continuing to make payments on senior securities. In addition, in the event of
bankruptcy, holders of senior securities may receive amounts otherwise payable
to the holders of subordinated securities. Some subordinated securities, such as
trust preferred and capital securities notes, also permit the issuer to defer
payments under certain circumstances. For example, insurance companies issue
securities known as surplus notes that permit the insurance company to defer any
payment that would reduce its capital below regulatory requirements.

Mortgage Backed Securities

Mortgage backed securities in which Bond Fund and Income Fund invest represent
interests in pools of mortgages. The mortgages that comprise a pool normally
have similar interest rates, maturities and other terms. Mortgages may have
fixed or adjustable interest rates. Interests in pools of adjustable rate
mortgages are known as ARMs.

Mortgage backed securities come in a variety of forms, including
collateralized mortgage obligations (CMOs). Many have extremely complicated
terms. The simplest form of mortgage backed securities are pass-through
certificates. An issuer of pass-through certificates gathers monthly payments
from an underlying pool of mortgages. Then, the issuer deducts its fees and
expenses and passes the balance of the payments onto the certificate holders
once a month. Holders of pass-through certificates receive a pro rata share of
all payments and pre-payments from the underlying mortgages. As a result, the
holders assume all the prepayment risks of the underlying mortgages.

Asset Backed Securities

Asset backed securities in which Bond Fund and Income Fund invest are payable
from pools of obligations other than mortgages such as auto loans or credit card
receivables. Most asset backed securities involve consumer or commercial debts
with maturities of less than ten years. However, almost any type of fixed income
assets (including other fixed income securities) may be used to create an asset
backed security. Asset backed securities may take the form of commercial paper,
notes, or pass through certificates. Asset backed securities have prepayment
risks. Like CMOs, asset backed securities may be structured like Floaters,
Inverse Floaters, IOs and POs.

Zero Coupon Securities

Zero coupon securities in which Bond Fund and Income Fund invest do not pay
interest or principal until final maturity unlike debt securities that provide
periodic payments of interest (referred to as a coupon payment). Investors buy
zero coupon securities at a price below the amount payable at maturity. The
difference between the purchase price and the amount paid at maturity represents
interest on the zero coupon security. Investors must wait until maturity to
receive interest and principal, which increases the interest rate and credit
risks of a zero coupon security.

TAX EXEMPT SECURITIES

Tax exempt securities in which Alabama Tax- Free Income Fund invests are fixed
income securities that pay interest that is not subject to federal income taxes
or Alabama state income taxes. Typically, states, counties, cities and other
political subdivisions and authorities issue tax exempt securities. The market
categorizes tax exempt securities by their source of repayment.

General Obligation Bonds

General obligation bonds are supported by the issuer's power to impose property
or other taxes. The issuer must impose and collect taxes sufficient to pay
principal and interest on the bonds. However, the issuer's authority to impose
additional taxes may be limited by its charter or state law.

Special Revenue Bonds

Special revenue bonds are payable solely from specific revenues received by the
issuer such as specific taxes, assessments, tolls, or fees. Bondholders may not
collect from the municipality's general taxes or revenues. For example, a
municipality may issue bonds to build a toll road, and pledge the tolls to repay
the bonds. Therefore, a shortfall in the tolls could result in a default on the
bonds.

Private Activity Bonds

Private activity bonds are special revenue bonds used to finance private
entities. For example, a municipality may issue bonds to finance a new factory
to improve its local economy. The municipality would lend the proceeds from its
bonds to the company using the factory, and the company would agree to make loan
payments sufficient to repay the bonds. The bonds would be payable solely from
the company's loan payments, not from any other revenues of the municipality.
Therefore, any default on the loan normally would result in a default on the
bonds.

The interest on many types of private activity bonds is subject to the federal
alternative minimum tax (AMT). The Fund may invest in bonds subject to AMT.

Tax Increment Financing Bonds

Tax increment financing (TIF) bonds are payable from increases in taxes or other
revenues attributable to projects financed by the bonds. For example, a
municipality may issue TIF bonds to redevelop a commercial area. The TIF bonds
would be payable solely from any increase in sales taxes collected from
merchants in the area. The bonds could default if merchants' sales, and related
tax collections, failed to increase as anticipated.

Municipal Notes

Municipal notes are short-term tax exempt securities. Many municipalities issue
such notes to fund their current operations before collecting taxes or other
municipal revenues. Municipalities may also issue notes to fund capital projects
prior to issuing long-term bonds. The issuers typically repay the notes at the
end of their fiscal year, either with taxes, other revenues or proceeds from
newly issued notes or bonds.

TEMPORARY DEFENSIVE INVESTMENTS

The Funds may temporarily depart from their principal investment strategies by
investing their assets in cash, cash items, and shorter-term, higher-quality
debt securities and similar obligations. A Fund may do this to minimize
potential losses and maintain liquidity to meet shareholder redemptions during
adverse market conditions. This may cause a Fund to give up greater investment
returns to maintain the safety of principal, that is, the original amount
invested by shareholders.

INVESTMENT RATINGS FOR INVESTMENT GRADE SECURITIES

The Adviser will determine whether a security is investment grade based upon the
credit ratings given by an NRSRO. For example, Standard and Poor's, a rating
service, assigns ratings to investment grade securities (AAA, AA, A, and BBB)
based on their assessment of the likelihood of the issuer's inability to pay
interest or principal (default) when due on each security. The Funds will
purchase only those securities that are rated within the four highest rating
categories or, if unrated, are determined by the Adviser to be of comparable
quality, which may include securities having speculative characteristics. The
Funds may purchase securities rated within the lowest category of investment
grade (i.e., Baa by Moody's Investors Services, Inc. or BBB by Standard and
Poor's). Lower credit ratings correspond to higher credit risk. If a security
has not received a rating, the Fund must rely entirely upon the Adviser's credit
assessment that the security is comparable to investment grade.

PORTFOLIO TURNOVER

The Funds actively trade their portfolio securities in an attempt to achieve
their individual investment objective. Active trading will cause a Fund to have
an increased portfolio turnover rate, which is likely to generate shorter-term
gains (losses) for its shareholders, which are taxed at a higher rate than
longer-term gains (losses). Actively trading portfolio securities increases the
Funds' trading costs and may have an adverse impact on a Fund's performance.

What are the Main Risks of Investing in the Funds?

INTEREST RATE RISKS

. Prices of fixed income securities rise and fall in response to changes in the
interest rate paid by similar securities. Generally, when interest rates
rise, prices of fixed income securities fall. However, market factors, such
as the demand for particular fixed income securities, may cause the price of
certain fixed income securities to fall while the prices of other securities
rise or remain unchanged.

. Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of
a fixed income security to changes in interest rates.

CREDIT RISKS

. Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the
Fund will lose money.

. Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investors Services, Inc. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not
received a rating, a Fund must rely entirely upon the Adviser's credit
assessment.

. Fixed income securities generally compensate for greater credit risk by
paying interest at a higher rate. The difference between the yield of a
security and the yield of a U.S. Treasury security with a comparable maturity
(the spread) measures the additional interest paid for risk. Spreads may
increase generally in response to adverse economic or market conditions. A
security's spread may also increase if the security's rating is lowered, or
the security is perceived to have an increased credit risk. An increase in
the spread will cause the price of the security to decline.

. Credit risk includes the possibility that a party to a transaction involving
a Fund will fail to meet its obligations. This could cause a Fund to lose the
benefit of the transaction or prevent a Fund from selling or buying other
securities to implement its investment strategy.

CALL RISKS

. Call risk is the possibility that an issuer may redeem a fixed income
security before maturity (a call) at a price below its current market price.
An increase in the likelihood of a call may reduce the security's price.

. If a fixed income security is called, the Fund may have to reinvest the
proceeds in other fixed income securities with lower interest rates, higher
credit risks, or other less favorable characteristics.

PREPAYMENT RISKS

. Generally, homeowners have the option to prepay their mortgages at any time
without penalty. Homeowners frequently refinance high interest rate mortgages
when mortgage rates fall. This results in the prepayment of mortgage backed
securities with higher interest rates. Conversely, prepayments due to
refinancings decrease when mortgage rates increase. This extends the life of
mortgage backed securities with lower interest rates. Other economic factors
can also lead to increases or decreases in prepayments. Increases in
prepayments of high interest rate mortgage backed securities, or decreases in
prepayments of lower interest rate mortgage backed securities, may reduce
their yield and price. These factors, particularly the relationship between
interest rates and mortgage prepayments makes the price of mortgage backed
securities more volatile than many other types of fixed income securities
with comparable credit risks.

. Mortgage backed securities generally compensate for greater prepayment risk
by paying a higher yield. The difference between the yield of a mortgage
backed security and the yield of a U.S. Treasury security with a comparable
maturity (the spread) measures the additional interest paid for risk. Spreads
may increase generally in response to adverse economic or market conditions.
A security's spread may also increase if the security is perceived to have an
increased prepayment risk or perceived to have less market demand. An
increase in the spread will cause the price of the security to decline.

. The Fund may have to reinvest the proceeds of mortgage prepayments in other
fixed income securities with lower interest rates, higher prepayment risks,
or other less favorable characteristics.

MUNICIPAL SECURITIES RISKS

. Local political and economic factors may adversely affect the value and
liquidity of municipal securities held by Alabama Tax-Free Income Fund. The
value of municipal securities can be affected more by supply and demand
factors or the creditworthiness of the issuer than market interest rates.
Repayment of municipal securities depends on the ability of the issuer or
project backing such securities to generate taxes or revenues. Because the
Fund invests primarily in Alabama, it may be adversely affected by the
factors or events particular to the state.

ISSUER DIVERSIFICATION

. The Alabama Tax-Free Income Fund is not diversified. Compared to diversified
funds, it may invest a higher percentage of its assets among fewer issuers of
portfolio securities. This increases the Fund's risk by magnifying the impact
(positively or negatively) that any one issuer has on the Fund's share price
and performance.

TAX RISKS

. In order to be tax-exempt, municipal securities must meet certain legal
requirements. Failure to meet such requirements may cause the interest
received and distributed by the Alabama Tax- Free Income Fund to shareholders
to be taxable.

. Changes or proposed changes in federal tax laws may cause the prices of
municipal securities to fall.

What Do Shares Cost?

You can purchase, redeem, or exchange shares any day the New York Stock Exchange
(NYSE) is open. When the Fund receives your transaction request in proper form,
it is processed at the next calculated net asset value (NAV) plus any applicable
front-end sales charge (public offering price). NAV is determined at the end of
regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open.
Payment must be received by the Funds' custodian no later than 4:00 p.m.
(Eastern time) by the third business day following receipt of the order. If
federal funds are not received by such date, the order will be canceled and the
institution placing the order will be responsible for any loss to the Funds or
their shareholders. Payment for orders which are not received or accepted will
be returned after prompt inquiry to the sending institution.

SALES CHARGE WHEN YOU PURCHASE
<TABLE>
<CAPTION>
Purchase Amount Sales Charge as a Sales Charge as Dealer Allowance
Percentage of a Percentage of as a Percentage
Public Offering Net Amount of Offering Price
Price Invested
<S> <C> <C> <C>
Less than $100,000 3.50% 3.63% 3.00%
$100,000 but less
than $250,000 3.00% 3.09% 2.50%
$250,000 but less
than $500,000 2.50% 2.56% 2.00%
$500,000 but less
than $1 million 2.00% 2.04% 1.50%
$1 million or
greater 0.00%* 0.00% 0.00%
</TABLE>

* A redemption fee of 1% may be imposed on certain redemptions made within one
year of purchase. See "How to Redeem and Exchange Shares."

The sales charge at purchase may be reduced or eliminated by:

. purchasing shares in greater quantities to reduce applicable sales charges;
. combining concurrent purchases of shares by you, your spouse, and your
children under age 21;
. ccumulating purchases (in calculating the sales charge on an additional
purchase, include the current alue of previous share purchases still invested
in the Fund); or
. signing a letter of intent to purchase a specific dollar amount of shares
within 13 months (call your SouthTrust Funds Dealer or the Fund for more
information).

The sales charge will be eliminated when you purchase shares:

. of $1 million or more;
. by reinvesting redemption proceeds within 30 days of redeeming shares; and
. by exchanging shares of a Fund for other SouthTrust Funds or Class A Shares
in certain funds which are distributed by Federated Securities Corp.
(Federated Funds).
. From time to time, the Distributor may offer special concessions to enable
investors to purchase shares of the Funds at net asset value. To qualify for
a net asset value purchase, you must pay for such purchases with proceeds
from the redemption of shares of a non-affiliated mutual fund on which a
sales charge was paid. A qualifying purchase of shares must occur within 30
days of the prior redemption and must be evidenced by a confirmation of the
redemption transaction. Proceeds from the redemption of shares on which no
sales charges or commission were paid do not qualify for a purchase at net
asset value.

How are the Funds Sold?

Federated Securities Corp., the Fund's Distributor, markets the shares described
in this prospectus to institutions and individuals. The Alabama Tax-Free Income
Fund may not be a suitable investment for retirement plans or for non-Alabama
taxpayers because it invests in Alabama municipal securities.

RULE 12B-1 PLAN

The Company has adopted a Rule 12b-1 Plan (Plan) on behalf of Income Fund and
Alabama Tax-Free Income Fund, which allows it to pay marketing fees to the
Distributor and investment professionals for the sale, distribution and customer
servicing of the Funds' shares. The Company has no present intention to activate
the Plan. Once the Funds begin accruing the 12b-1 fee, Fund expenses will rise.
If the Company were to activate the Plan, it would be permitted to pay up to
0.25% of the average daily net assets of each Fund as a distribution fee to the
Distributor. Because these shares could pay marketing fees on an ongoing basis,
your investment cost may be higher over time than other shares with different
sales charges and marketing fees.

How to Purchase Shares

You may purchase shares through SouthTrust Funds Shareholder Services, through
SouthTrust Securities, Inc., or through a SouthTrust Funds Dealer, or through an
exchange from another SouthTrust Fund and certain Federated Funds. Texas
residents should purchase shares through Federated Securities Corp. at 1-800-
356-2805. The Funds reserve the right to reject any request to purchase or
exchange shares.
Trust customers of SouthTrust Bank should contact their account officer.

THROUGH SOUTHTRUST FUNDS SHAREHOLDER SERVICES

. Establish your account with the Fund by submitting a completed account
application; and

. Send your payment to the Fund by Federal Reserve wire or check.

By Check
Complete an account application (for new accounts), make your check payable to
the Fund (existing shareholders should note their account number on the check),
and mail it to: SouthTrust Funds Shareholder Services P.O. Box 830804
Birmingham, AL 35283-0804 Payment should be made in U.S. dollars and drawn
on a U.S. bank. The Fund will not accept third- party checks (checks originally
payable to someone other than the Fund). If your check does not clear, your
purchase will be canceled and you could be responsible for any losses or fees
the Fund or its transfer agent incurs.

By Wire
To purchase shares by Federal Reserve wire, contact SouthTrust Funds Shareholder
Services for wiring instructions. Wire orders will only be accepted on days on
which the Fund, SouthTrust, and the Federal Reserve wire are open.

By Telephone
Once an account has been established, you may purchase additional shares by
calling SouthTrust Funds Shareholder Services directly at 1-888-735-3441.

THROUGH A SOUTHTRUST FUNDS DEALER

. Establish an account with a SouthTrust Funds Dealer; and

. Submit your purchase order to your SouthTrust Funds Dealer before the end of
trading on the NYSE (normally 4:00 p.m. Eastern time). You will receive the
next calculated NAV if the SouthTrust Funds Dealer forwards the order to the
Fund on the same day and the Fund receives payment within three business
days. You will become the owner of shares and receive dividends when the Fund
receives your payment. SouthTrust Funds Dealers should send payments
according to the instructions in the sections "By Check" or "By Wire."

THROUGH AN EXCHANGE

You may telephone an exchange request by calling SouthTrust Shareholder
Services or your SouthTrust Funds Dealer.

Trust customers of SouthTrust Bank should contact their account officer.

BY AUTOMATIC INVESTMENT PROGRAM (AIP)

How to Redeem and Exchange Shares

You may redeem or exchange shares through SouthTrust Funds Shareholder Services
or your SouthTrust Funds Dealer. Trust customers of SouthTrust Bank should
contact their account officer.

THROUGH SOUTHTRUST FUNDS SHAREHOLDER SERVICES

By Telephone

If you call before the end of regular trading on the NYSE (normally 4:00 p.m.
Eastern time), you will receive a redemption amount based on that day's NAV.

The Funds reserve the right to wire redemption proceeds within five business
days after receiving the redemption order if, in the judgment of the Adviser, an
earlier payment could adversely impact a Fund. See "Payment Methods for
Redemptions". By Mail You may redeem or exchange shares by mailing your
request to: SouthTrust Funds Shareholder Services P.O. Box 830804
Birmingham, AL 35283-0804 Your redemption will be processed after the Fund
receives your written request in proper form. All requests must include:

Call SouthTrust Funds Shareholder Services or your SouthTrust Funds Dealer if
you need special instructions.

Signature Guarantees Signatures must be guaranteed if:

THROUGH A SOUTHTRUST FUNDS DEALER

PAYMENT METHODS FOR REDEMPTIONS

. an electronic transfer to your account at a financial institution that is an
ACH member; or
. wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.

Redemption in Kind

Although the Funds intend to pay share redemptions in cash, they reserve the
right to pay the redemption price in whole or in part by a distribution of a
Fund's portfolio securities.

LIMITATIONS ON REDEMPTION PROCEEDS

Redemption proceeds normally are wired or mailed the next business day after
receiving a request in proper form. Payment may be delayed up to seven days:

. to allow your purchase to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts a Fund's
ability to manage its assets.

You will not accrue interest or dividends on uncashed checks from the Fund if
those checks are undeliverable and returned to the Fund.

REDEMPTION FEE

The redemption fee is not assessed on:

. exchanges (except if shares acquired by exchange were then redeemed within
twelve months of the initial purchase);
. redemptions made in connection with distributions from qualified retirement
plans, 403(b) plans or IRAs due to death, disability or attainment of age
591.2;
. redemptions resulting from the tax-free return of excess contributions to
IRAs or employee benefit plans; and
. redemptions through certain automatic withdrawals.

The 1% redemption fee is not a deferred sales charge but is rather a means to
offset the additional costs associated with short-term investments in the Funds.

EXCHANGE PRIVILEGES

Shareholders who have purchased shares of the Funds (including shares acquired
through a reinvestment of a dividend or distribution on such shares) may
exchange into one of the other SouthTrust Funds or one of the Federated Funds
without paying an additional sales charge. However, this privilege does not
apply to exchanges into SouthTrust Value Fund or SouthTrust Growth Fund until an
investor has owned shares in one of the Funds for 90 days. The 90-day holding
period does not apply to exchanges in which shares were obtained through a prior
exchange of shares of SouthTrust Value Fund or SouthTrust Growth Fund. When
shares of SouthTrust U.S. Treasury Money Market Fund are exchanged for shares of
a load Fund or a Federated Fund, the applicable sales charge (if any) will be
assessed. However, shareholders exchanging shares of SouthTrust U.S. Treasury
Money Market Fund which were received in a previous exchange involving shares on
which a load was paid will not be required to pay an additional sales charge
upon notification of the reinvestment of the equivalent investment into a load
Fund.

To exchange, you must:

An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction.

AUTOMATIC WITHDRAWAL PLAN (AWP)

You may automatically redeem shares if the value of your account equals $10,000
or more (other than retirement accounts subject to required minimum
distributions). Shareholders who elect to establish an AWP may receive a
monthly, quarterly, semi-annual, or annual payment of a stated amount not less
than $50. Complete the appropriate section of the Account Application or contact
SouthTrust Funds Shareholder Services or your SouthTrust Funds Dealer. This
program may reduce, and eventually deplete, your account. Payments should not be
considered yield or income. Generally, it is not advisable to continue to
purchase shares subject to a sales charge while redeeming shares using this
program.

ADDITIONAL CONDITIONS

Telephone Transactions

The Funds will record your telephone instructions. If the Funds do not follow
reasonable procedures, they may be liable for losses due to unauthorized or
fraudulent telephone instructions.

Share Certificates

The Funds do not issue share certificates.

Account and Share Information

CONFIRMATIONS AND ACCOUNT STATEMENTS

DIVIDENDS AND CAPITAL GAINS

ACCOUNTS WITH LOW BALANCES

TAX INFORMATION

Fund distributions are expected to be primarily dividends. Redemptions and
exchanges are taxable sales. Please consult your tax adviser regarding your
federal, state, and local tax liability.

It is anticipated that Alabama Tax-Free Income Fund distributions will be
primarily dividends that are exempt from federal income tax, although a portion
of the Fund's dividends may not be exempt. Dividends may be subject to state and
local taxes, although the Alabama Tax-Free Income Fund's dividends will be
exempt from Alabama state personal income tax to the extent they are derived
from interest on obligations exempt from Alabama personal income taxes. Capital
gains and non-exempt dividends are taxable whether paid in cash or reinvested in
the Fund.

Who Manages the Fund?

The Adviser receives an investment advisory fee from each Fund, computed daily
and payable monthly, at an annual rate of 0.60%. The Adviser may voluntarily
waive a portion of its fee or reimburse the Funds for certain operating
expenses.

Investment decisions for Bond Fund and Income Fund are made by investment
teams with David J. Howell as the lead portfolio manager. Mr. Howell has lead
the Bond and Income Fund's management since their inceptions in May 1992 and
January 1996, respectively. Mr. Howell is a Senior Fixed-Income Portfolio
Manager for SouthTrust Asset Management Company where he has been a member of
the investment team since 1987. Mr. Howell has a bachelor's degree from the
University of North Alabama.

Charles P. Matthews has been the portfolio manager for Alabama Tax-Free Income
Fund since inception, August , 1999. Mr. Matthews is a Vice President and
Senior Portfolio Manager for SouthTrust Asset Management Company, Inc. where he
has been a member of the investment team since 1997. Prior to joining SouthTrust
Asset Management Company, Inc., Mr. Matthews served as Assistant Vice President
and Portfolio Manager at Bay- Banks Investment Management in Boston,
Massachusetts from 1992 to 1997. Mr. Matthews has a bachelor of arts degree from
Clark University and an MBA in Finance from Suffolk University

YEAR 2000 READINESS

The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date- related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Funds, that rely on computers.

Financial Information

FINANCIAL HIGHLIGHTS

The Financial Highlights will help you understand the Bond Fund's and Income
Fund's financial performance for its past five fiscal years, or since inception,
if the life of the Fund is shorter. Some of the information is presented on a
per share basis. Total returns represent the rate an investor would have earned
(or lost) on an investment in a Fund, assuming reinvestment of any dividends and
capital gains. As this is the Alabama Tax-Free Income Fund's first fiscal year,
financial information is not yet available.

This information has been audited by Arthur Andersen LLP whose report, along
with the Fund's audited financial statements, is included in the Annual Report.

[LOGO]

SouthTrust Funds

SOUTHTRUST BOND FUND
SOUTHTRUST INCOME FUND

SOUTHTRUST ALABAMA TAX-FREE INCOME FUND

AUGUST , 1999

A Statement of Additional Information (SAI) dated August , 1999, is incorporated
by reference into this prospectus. Additional information about the Funds'
investments is contained in the Funds' Annual and Semi-Annual Reports to
shareholders as they become available. The Annual Report discusses market
conditions and investment strategies that significantly affected the Funds'
performance during the last fiscal year. To obtain the SAI, the Annual Report,
Semi-Annual Report and other information without charge, and make inquiries,
call SouthTrust Funds Shareholder Services at 1-888-735-3441 or your SouthTrust
Funds Dealer. You can obtain information about the Fund (including the SAI)
by visiting or writing the Public Reference Room of the Securities and Exchange
Commission in Washington, DC 20549-6009 or from the Commission's Internet site
at http://www.sec.gov. You can call 1-800-SEC-0330 for information on the Public
Reference Room's operations and copying charges.

Investment Company Act File No. 811-6580
Cusip 844734202
Cusip 844734400
Cusip 844734608
G00859-04 (8/99)

[RECYCLED PAPER LOGO]

SUBJECT TO COMPLETION

JUNE 29, 1999

STATEMENT OF ADDITIONAL INFORMATION

SOUTHTRUST BOND FUND

SOUTHTRUST INCOME FUND

SOUTHTRUST ALABAMA TAX-FREE INCOME FUND

Portfolios of SouthTrust Funds

This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for SouthTrust Bond Fund, SouthTrust
Income Fund, and SouthTrust Alabama Tax Free Income Fund dated August , 1999.
This SAI incorporates by reference the Funds' Annual Reports. Obtain the
prospectus or Annual Reports without charge by calling 1-800-843-8618.

August , 1999

CONTENTS

How are the Funds Organized? 1
Securities in Which the Funds Invest 1
What do Shares Cost? 15
How are the Funds Sold? 16
Exchanging Securities for Shares 17
Subaccounting Services 17
Redemption in Kind 17
Massachusetts Partnership Law 17
Banking Laws 18
Account and Share Information 18
Tax Information 18
Who Manages and Provides Services to the Funds? 20
How Do the Funds Measure Performance? 23
Financial Information 25
Investment Ratings 26
Addresses Back Cover

Cusip 844734202
Cusip 844734400
Cusip 844734608
G00859-07(6/99)

<PAGE>

HOW ARE THE FUNDS ORGANIZED?

The SouthTrust Bond Fund and SouthTrust Income Fund are diversified portfolios
of SouthTrust Funds (Company) The Alabama Tax-Free Income Fund is a
non-diversified portfolio of the Company. The Company is an open-end management
investment company that was established under the laws of the Commonwealth of
Massachusetts on March 4, 1992. The Company may offer separate series of shares
representing interests in separate portfolios of securities.. On June 30, 1998,
the name of the Company changed from "Vulcan Funds" to "SouthTrust Vulcan
Funds." Effective July 22, 1998, the name of the Company changed from
"SouthTrust Vulcan Funds" to "SouthTrust Funds."

The Board of Trustees has established five diversified and one non-diversified
investment portfolios. This SAI relates to SouthTrust SouthTrust Bond Fund,
SouthTrust Income Fund, and SouthTrust Alabama Tax-Free Income Fund. The Funds'
investment adviser is SouthTrust Bank, N.A.

SECURITIES IN WHICH THE FUNDS INVEST

In pursuing their investment strategy, the Funds may invest in the following
securities for any purpose that is consistent with their respective investment
objective.
Following is a table that indicates which types of securities are a: P =
Principal investment of the Funds; A = Acceptable (but not principal) investment
of the Funds; or N = Not an acceptable investment of the Funds.

Alabama Tax Free
Securities Bond Fund Income Fund Income Fund
- ----------------------------------------------------------------------------------------------
Equity Securities N A N
- ----------------------------------------------------------------------------------------------
Common Stocks N A N
- ----------------------------------------------------------------------------------------------
Preferred Stocks A A N
- ----------------------------------------------------------------------------------------------
Warrants N A N
- ----------------------------------------------------------------------------------------------
Fixed Income Securities P P A
- ----------------------------------------------------------------------------------------------
Treasury Securities P P A
- ----------------------------------------------------------------------------------------------
Agency Securities P P N
- ----------------------------------------------------------------------------------------------

Corporate Debt Obligations 1 P P N

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

Commercial Paper A A N

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

Demand Instruments A A N
Taxable Municipal Bonds A A N
Mortgage-Backed Securities 3 P P N
Collateralized Mortgage Obligations (CMOs) P P N

Sequential CMOs P P N
PACs, TACs and Companion Classes P P N
IOs and POs A A N
Floaters and Inverse Floaters A A N
Z Classes and Residual Classes A A N

Asset Backed Securities P P N
Zero Coupon Securities A A N
Credit Enhancement A A A

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

Bank Instruments A A A

- ----------------------------------------------------------------------------------------------
Convertible Securities2 A A N
Tax Exempt Securities N N P
General Obligation Bonds N N P
Special Revenue Bonds N N P
Private Activity Bonds N N A
Tax Increment Financing Bonds N N A
- ----------------------------------------------------------------------------------------------

Municipal Notes N N A
Variable Rate Demand Instruments A A A
Foreign Securities A A N
Depositary Receipts A A N
Foreign Government Securities A A N
Derivative Contracts A A A
Special Transactions A A A
Repurchase Agreements A A A
Reverse Repurchase Agreements A A N
Delayed Delivery Transactions A A N
To Be Announced Securities A A N

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

Securities Lending 4 A A A
Asset Coverage A A A

- ----------------------------------------------------------------------------------------------
Investing in Securities of Other Investment A A A
Companies
- ----------------------------------------------------------------------------------------------

Illiquid Securities A A A

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

</TABLE>

1. The Bond Fund and Income Fund may invest in corporate debt obligations
which are rated, at the time of purchase, investment grade by an NRSRO, or,
if unrated, are of comparable quality a determined by the Adviser. If a
security's rating is reduced below the required minimum after a Fund has
purchased it, the Fund is not required to sell the security, but may
consider doing so.
2. The Bond Fund and Income Fund will invest in convertible securities which
are rated, at the time of purchase, investment grade by an NRSRO, or if
unrated, of comparable quality as determined by the Adviser.
3. The Bond Fund and Income Fund will invest in mortgage backed securities
which are rated, at the time of purchase, investment grade by an NRSRO, or
if unrated, of comparable quality as determined by the Adviser.
4. Such loans will not exceed 20% of a Fund's total assets. Loans of portfolio
securities by a Fund will be collateralized by cash, letters of credit or
U.S. government securities which are maintained at all times in an amount
equal to at least 100% of the current market value of the loaned
securities.

SECURITIES DESCRIPTIONS AND TECHNIQUES

Equity Securities
Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. A Fund cannot predict the income it will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business. The
following describes the types of equity securities in which the Income Fund
invests. The Bond Fund may invest in preferred stocks.
Common Stocks
Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings
directly influence the value of its common stock. Preferred Stocks
Preferred stocks have the right to receive specified dividends or
distributions before the issuer makes payments on its common stock. Some
preferred stocks also participate in dividends and distributions paid on
common stock. Preferred stocks may also permit the issuer to redeem the
stock.

<PAGE>

Warrants
Warrants give the Fund the option to buy the issuer's equity securities at
a specified price (the exercise price) at a specified future date (the
expiration date). The Fund may buy the designated securities by paying the
exercise price before the expiration date. Warrants may become worthless if
the price of the stock does not rise above the exercise price by the
expiration date. This increases the market risks of warrants as compared to
the underlying security. Rights are the same as warrants, except companies
typically issue rights to existing stockholders.

The following describes the types of fixed income securities in which the
Funds invest.

Treasury Securities
Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the
lowest credit risks.

Agency Securities
Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The
United States supports some GSEs with its full faith and credit. Other GSEs
receive support through federal subsidies, loans or other benefits. A few
GSEs have no explicit financial support, but are regarded as having implied
support because the federal government sponsors their activities. Agency
securities are generally regarded as having low credit risks, but not as
low as treasury securities.

The Funds treat mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does
not reduce the interest rate and prepayment risks of these mortgage backed
securities.

In addition, the credit risk of an issuer's debt security may vary based on
its priority for repayment. For example, higher ranking (senior) debt
securities have a higher priority than lower ranking (subordinated)
securities. This means that the issuer might not make payments on
subordinated securities while continuing to make payments on senior
securities. In addition, in the event of bankruptcy, holders of senior
securities may receive amounts otherwise payable to the holders of
subordinated securities. Some subordinated securities, such as trust
preferred and capital securities notes, also permit the issuer to defer
payments under certain circumstances. For example, insurance companies
issue securities known as surplus notes that permit the insurance company
to defer any payment that would reduce its capital below regulatory
requirements.

Taxable Municipal Securities
Municipal securities are issued by states, counties, cities and other
political subdivisions and authorities. Although many municipal securities
are exempt from federal income tax, the Funds may invest in taxable
municipal securities.

Mortgage Backed Securities
Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates,
maturities and other terms. Mortgages may have fixed or adjustable interest
rates. Interests in pools of adjustable rate mortgages are known as ARMs.

Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer
deducts its fees and expenses and passes the balance of the payments onto
the certificate holders once a month. Holders of pass-through certificates
receive a pro rata share of all payments and pre-payments from the
underlying mortgages. As a result, the holders assume all the prepayment
risks of the underlying mortgages.

Collateralized Mortgage Obligations (CMOs)
CMOs, including interests in real estate mortgage investment conduits
(REMICs), allocate payments and prepayments from an underlying pass-through
certificate among holders of different classes of mortgage backed
securities. This creates different prepayment and interest rate risks for
each CMO class.

The degree of increased or decreased prepayment risks depends upon the
structure of the CMOs. However, the actual returns on any type of mortgage
backed security depend upon the performance of the underlying pool of
mortgages, which no one can predict and will vary among pools.

Sequential CMOs
In a sequential pay CMO, one class of CMOs receives all principal
payments and prepayments. The next class of CMOs receives all
principal payments after the first class is paid off. This process
repeats for each sequential class of CMO. As a result, each class
of sequential pay CMOs reduces the prepayment risks of subsequent
classes.

PACs, TACs and Companion Classes
More sophisticated CMOs include planned amortization classes
(PACs) and targeted amortization classes (TACs). PACs and TACs are
issued with companion classes. PACs and TACs receive principal
payments and prepayments at a specified rate. The companion
classes receive principal payments and prepayments in excess of
the specified rate. In addition, PACs will receive the companion
classes' share of principal payments, if necessary, to cover a
shortfall in the prepayment rate. This helps PACs and TACs to
control prepayment risks by increasing the risks to their
companion classes.

IOs and POs
CMOs may allocate interest payments to one class (Interest Only or
IOs) and principal payments to another class (Principal Only or
POs). POs increase in value when prepayment rates increase. In
contrast, IOs decrease in value when prepayments increase, because
the underlying mortgages generate less interest payments. However,
IOs tend to increase in value when interest rates rise (and
prepayments decrease), making IOs a useful hedge against interest
rate risks.

Floaters and Inverse Floaters
Another variant allocates interest payments between two classes of
CMOs. One class (Floaters) receives a share of interest payments
based upon a market index such as LIBOR. The other class (Inverse
Floaters) receives any remaining interest payments from the
underlying mortgages. Floater classes receive more interest (and
Inverse Floater classes receive correspondingly less interest) as
interest rates rise. This shifts prepayment and interest rate
risks from the Floater to the Inverse Floater class, reducing the
price volatility of the Floater class and increasing the price
volatility of the Inverse Floater class.

Z Classes and Residual Classes
CMOs must allocate all payments received from the underlying
mortgages to some class. To capture any unallocated payments, CMOs
generally have an accrual (Z) class. Z classes do not receive any
payments from the underlying mortgages until all other CMO classes
have been paid off. Once this happens, holders of Z class CMOs
receive all payments and prepayments. Similarly, REMICs have
residual interests that receive any mortgage payments not
allocated to another REMIC class. The degree of increased or
decreased prepayment risks depends upon the structure of the CMOs.
However, the actual returns on any type of mortgage backed
security depend upon the performance of the underlying pool of
mortgages, which no one can predict and will vary among pools.

Asset Backed Securities
Asset backed securities are payable from pools of obligations other than
mortgages. Most asset backed securities involve consumer or commercial
debts with maturities of less than ten years. However, almost any type of
fixed income assets (including other fixed income securities) may be used
to create an asset backed security. Asset backed securities may take the
form of commercial paper, notes, or pass through certificates. Asset backed
securities have prepayment risks. Like CMOs, asset backed securities may be
structured like Floaters, Inverse Floaters, IOs and POs.

Zero Coupon Securities
There are many forms of zero coupon securities. Some are issued at a
discount and are referred to as zero coupon or capital appreciation bonds.
Others are created from interest bearing bonds by separating the right to
receive the bond's coupon payments from the right to receive the bond's
principal due at maturity, a process known as coupon stripping. Treasury
STRIPs, IOs and POs are the most common forms of stripped zero coupon
securities. In addition, some securities give the issuer the option to
deliver additional securities in place of cash interest payments, thereby
increasing the amount payable at maturity. These are referred to as
pay-in-kind or PIK securities.

Bank Instruments

Bank instruments are unsecured interest bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit
and banker's acceptances. Yankee instruments are denominated in U.S.
dollars and issued by U.S. branches of foreign banks. Eurodollar
instruments are denominated in U.S. dollars and issued by non-U.S. branches
of U.S. or foreign banks.

Credit Enhancement
All of the Funds may purchase securities backed by credit enhancement.
Credit enhancement consists of an arrangement in which a company agrees to
pay amounts due on a fixed income security if the issuer defaults. In some
cases the company providing credit enhancement makes all payments directly
to the security holders and receives reimbursement from the issuer.
Normally, the credit enhancer has greater financial resources and liquidity
than the issuer. For this reason, the Adviser usually evaluates the credit
risk of a fixed income security based solely upon its credit enhancement.

Convertible Securities
Convertible securities are fixed income securities that the Bond Fund and Income
Fund have the option to exchange for equity securities at a specified conversion
price. The option allows a Fund to realize additional returns if the market
price of the equity securities exceeds the conversion price. For example, a Fund
may hold fixed income securities that are convertible into shares of common
stock at a conversion price of $10 per share. If the market value of the shares
of common stock reached $12, the Fund could realize an additional $2 per share
by converting its fixed income securities.

Convertible securities have lower yields than comparable fixed income
securities. In addition, at the time a convertible security is issued the
conversion price exceeds the market value of the underlying equity securities.
Thus, convertible securities may provide lower returns than non-convertible
fixed income securities or equity securities depending upon changes in the price
of the underlying equity securities. However, convertible securities permit a
Fund to realize some of the potential appreciation of the underlying equity
securities with less risk of losing its initial investment.

The Funds treat convertible securities as both fixed income and equity
securities for purposes of their investment policies and limitations, because of
their unique characteristics.

Tax Exempt Securities
Tax exempt securities are fixed income securities that pay interest that is not
subject to regular federal income taxes. Typically, states, counties, cities and
other political subdivisions and authorities issue tax exempt securities. The
market categorizes tax exempt securities by their source of repayment.

General Obligation Bonds
General obligation bonds are supported by the issuer's power to exact
property or other taxes. The issuer must impose and collect taxes
sufficient to pay principal and interest on the bonds. However, the
issuer's authority to impose additional taxes may be limited by its charter
or state law.

Special Revenue Bonds
Special revenue bonds are payable solely from specific revenues received by
the issuer such as specific taxes, assessments, tolls, or fees. Bondholders
may not collect from the municipality's general taxes or revenues. For
example, a municipality may issue bonds to build a toll road, and pledge
the tolls to repay the bonds. Therefore, a shortfall in the tolls normally
would result in a default on the bonds.

Private Activity Bonds
Private activity bonds are special revenue bonds used to finance
private entities. For example, a municipality may issue bonds to
finance a new factory to improve its local economy. The municipality
would lend the proceeds from its bonds to the company using the
factory, and the company would agree to make loan payments sufficient
to repay the bonds. The bonds would be payable solely from the
company's loan payments, not from any other revenues of the
municipality. Therefore, any default on the loan normally would result
in a default on the bonds.

The interest on many types of private activity bonds is subject to the
federal alternative minimum tax (AMT). The Alabama Tax-Free Fund may
invest in bonds subject to AMT.

Tax Increment Financing Bonds
Tax increment financing (TIF) bonds are payable from increases in taxes or
other revenues attributable to projects financed by the bonds. For example,
a municipality may issue TIF bonds to redevelop a commercial area. The TIF
bonds would be payable solely from any increase in sales taxes collected
from merchants in the area. The bonds could default if merchants' sales,
and related tax collections, failed to increase as anticipated.

Municipal Notes
Municipal notes are short-term tax exempt securities. Many municipalities
issue such notes to fund their current operations before collecting taxes
or other municipal revenues. Municipalities may also issue notes to fund
capital projects prior to issuing long-term bonds. The issuers typically
repay the notes at the end of their fiscal year, either with taxes, other
revenues or proceeds from newly issued notes or bonds.

Municipal Bond Insurance
The Alabama Tax-Free Fund may purchase municipal securities covered by
insurance which guarantees the timely payment of principal at maturity and
interest on such securities ("Policy" or "Policies"). These insured
municipal securities are either (1) covered by an insurance policy
applicable to a particular security, whether obtained by the issuer of the
security or by a third party ("Issuer-Obtained Insurance") or (2) insured
under master insurance policies issued by municipal bond insurers, which
may by purchased by the Fund. The premiums for the Policies may be paid by
the Fund and the yield on the Fund's portfolio may be reduced thereby.

The Fund may require or obtain municipal bond insurance when purchasing
municipal securities which would not otherwise meet the Fund's quality
standards. The Fund may also require or obtain municipal bond insurance
when purchasing or holding specific municipal securities, when, in the
opinion of the Fund's Adviser, such insurance would benefit the Fund (for
example, through improvement of portfolio quality or increased liquidity of
certain securities). The Fund's Adviser anticipates that between [ INSERT
PERCENTAGE ]% and [ INSERT PERCENTAGE ]% of the Fund's net assets will be
invested in municipal securities which are insured.

Issuer-Obtained Insurance policies are non-cancelable and continue in force
as long as the municipal securities are outstanding and their respective
insurers remain in business. If a municipal security is covered by
Issuer-Obtained Insurance, then such security need not be insured by the
Policies purchased by the Fund.

The Fund may purchase two types of Policies issued by municipal bond
insurers. One type of Policy covers certain municipal securities only
during the period in which they are in the Fund's portfolio. In the event
that a municipal security covered by such a Policy is sold from the Fund,
the insurer of the relevant Policy will be liable for those payments of
interest and principal which are due and owing at the time of the sale.

The other type of Policy covers municipal securities not only while they
remain in the Fund's portfolio but also until their final maturity even if
they are sold out of the Fund's portfolio, so that the coverage may benefit
all subsequent holders of those municipal securities. The Fund will obtain
insurance which covers municipal securities until final maturity even after
they are sold out of the Fund's portfolio only if, in the judgment of the
Fund's Adviser, the Fund would receive net proceeds from the sale of those
securities, after deducting the cost of such permanent insurance and
related fees, significantly in excess of the proceeds it would receive if
such municipal securities were sold without insurance. Payments received
from municipal bond issuers may not be tax-exempt income to shareholders of
the Fund.

The Fund may purchase Policies from MBIA Corp. (MBIA), AMBAC Indemnity
Corporation (AMBAC), Financial Guaranty Insurance Company (FGIC), or any
other municipal bond insurer which is rated AAA by Standard & Poor's (S&P)
or Aaa by Moody's Investors Services, Inc. (Moody's). Each Policy
guarantees the payment of principal and interest on those municipal
securities it insures. The Policies will have the same general
characteristics and features. A municipal security will be eligible for
coverage if it meets certain requirements set forth in the Policy. In the
event interest or principal on an insured municipal security is not paid
when due, the insurer covering the security will be obligated under its
Policy to make such payment not later than 30 days after it has been
notified by the Fund that such non-payment has occurred. MBIA, AMBAC, and
FGIC will not have the right to withdraw coverage on securities insured by
their Policies so long as such securities remain in the Fund's portfolio,
nor may MBIA, AMBAC, or FGIC cancel their Policies for any reason except
failure to pay premiums when due.

MBIA, AMBAC, and FGIC will reserve the right at any time upon 90 days'
written notice to the Fund to refuse to insure any additional municipal
securities purchased by the Fund after the effective date of such notice.
The Fund reserves the right to terminate any of the Policies if it
determines that the benefits to the Fund of having its portfolio insured
under such Policy are not justified by the expense involved.

Additionally, the Fund reserves the right to enter into contracts with
insurance carriers other than MBIA, AMBAC, or FGIC if such carriers are
rated AAA by S&P or Aaa by Moody's.

Variable Rate Demand Instruments

Variable rate demand instruments are securities that require the issuer or a
third party, such as a dealer or bank, to repurchase the security for its face
value upon demand. The securities also pay interest at a variable rate intended
to cause the securities to trade at their face value. The Funds treat demand
instruments as short-term securities, because their variable interest rate
adjusts in response to changes in market rates, even though their stated
maturity may extend beyond thirteen months. Foreign Securities Foreign
securities are securities of issuers based outside the United States. The Funds
consider an issuer to be based outside the United States if: o it is organized
under the laws of, or has a principal office located in, another country; o the
principal trading market for its securities is in another country; or o it (or
its subsidiaries) derived in its most current fiscal year at least 50% of its
total assets, capitalization, gross
revenue or profit from goods produced, services performed, or sales made in
another country.

Foreign Government Securities
Foreign government securities generally consist of fixed income securities
supported by national, state or provincial governments or similar political
subdivisions. Foreign government securities also include debt obligations
of supranational entities, such as international organizations designed or
supported by governmental entities to promote economic reconstruction or
development, international banking institutions and related government
agencies. Examples of these include, but are not limited to, the
International Bank for Reconstruction and Development (the World Bank), the
Asian Development Bank, the European Investment Bank and the Inter-American
Development Bank.

Foreign government securities also include fixed income securities of
quasi-governmental agencies that are either issued by entities owned by a
national, state or equivalent government or are obligations of a political
unit that are not backed by the national government's full faith and
credit. Further, foreign government securities include mortgage-related
securities issued or guaranteed by national, state or provincial
governmental instrumentalities, including quasi-governmental agencies.

For example, a Fund could close out an open contract to buy an asset at a future
date by entering into an offsetting contract to sell the same asset on the same
date. If the offsetting sale price is more than the original purchase price, the
Fund realizes a gain; if it is less, the Fund realizes a loss. Exchanges may
limit the amount of open contracts permitted at any one time. Such limits may
prevent a Fund from closing out a position. If this happens, the Fund will be
required to keep the contract open (even if it is losing money on the contract),
and to make any payments required under the contract (even if it has to sell
portfolio securities at unfavorable prices to do so). Inability to close out a
contract could also harm a Fund by preventing it from disposing of or trading
any assets it has been using to secure its obligations under the contract.

A Fund may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between a Fund and the counterparty. OTC
contracts do not necessarily have standard terms, so they cannot be directly
offset with other OTC contracts. In addition, OTC contracts with more
specialized terms may be more difficult to price than exchange traded contracts.

The Funds' custodian or subcustodian will take possession of the securities
subject to repurchase agreements. The Adviser or subcustodian will monitor
the value of the underlying security each day to ensure that the value of
the security always equals or exceeds the repurchase price.

Repurchase agreements are subject to credit risks.

<PAGE>

Reverse Repurchase Agreements

Reverse repurchase agreements are repurchase agreements in which a Fund is
the seller (rather than the buyer) of the securities, and agrees to
repurchase them at an agreed upon time and price. A reverse repurchase
agreement may be viewed as a type of borrowing by the Fund. Reverse
repurchase agreements are subject to credit risks. In addition, reverse
repurchase agreements create leverage risks because the Fund must repurchase
the underlying security at a higher price, regardless of the market value of
the security at the time of repurchase.

Delayed Delivery Transactions
Delayed delivery transactions, including when issued transactions, are
arrangements in which a Fund buys securities for a set price, with payment
and delivery of the securities scheduled for a future time. During the
period between purchase and settlement, no payment is made by the Fund to
the issuer and no interest accrues to the Fund. The Fund records the
transaction when it agrees to buy the securities and reflects their value in
determining the price of its shares. Settlement dates may be a month or more
after entering into these transactions so that the market values of the
securities bought may vary from the purchase prices. Therefore, delayed
delivery transactions create interest rate risks for the Fund. Delayed
delivery transactions also involve credit risks in the event of a
counterparty default.

To Be Announced (TBA) Securities

As with other when issued transactions, a seller agrees to issue a TBA
security at a future date. However, the seller does not specify the
particular securities to be delivered. Instead, a Fund agrees to accept any
security that meets specified terms. For example, in a TBA mortgage backed
transaction, the Fund and the seller would agree upon the issuer, interest
rate and terms of the underlying mortgages. However, the seller would not
identify the specific underlying mortgages until it issues the security. TBA
mortgage backed securities increase interest rate risks because the
underlying mortgages may be less favorable than anticipated by the Fund.

Securities Lending

A Fund will reinvest cash collateral in securities that qualify as an
acceptable investment for the Fund. However, the Fund must pay interest to
the borrower for the use of cash collateral.

Loans are subject to termination at the option of the Fund or the borrower.
The Fund will not have the right to vote on securities while they are on
loan, but it will terminate a loan in anticipation of any important vote.
The Fund may pay administrative and custodial fees in connection with a loan
and may pay a negotiated portion of the interest earned on the cash
collateral to a securities lending agent or broker.

Securities lending activities are subject to interest rate risks and credit
risks.

Asset Coverage
In order to secure its obligations in connection with derivatives contracts
or special transactions, the Funds will either own the underlying assets,
enter into an offsetting transaction or set aside readily marketable
securities with a value that equals or exceeds a Fund's obligations. Unless
a Fund has other readily marketable assets to set aside, it cannot trade
assets used to secure such obligations entering into an offsetting
derivative contract or terminating a special transaction. This may cause a
Fund to miss favorable trading opportunities or to realize losses on
derivative contracts or special transactions.

Temporary Defensive Investments
The Funds may temporarily depart from their principal investment strategies by
investing their assets in U.S. government obligations, notes, zero coupon
securities (in the case of the Bond Fund and Income Fund), and repurchase
agreements collateralized by U.S. government obligations. In the case of Alabama
Tax-Free Fund, temporary defensive investments may include taxable securities.
The Funds may do this to minimize potential losses and maintain liquidity to
meet shareholder redemptions during adverse market conditions. This may cause a
Fund to give up greater investment returns to maintain the safety of principal,
that is, the original amount invested by shareholders.

INVESTMENT RISKS

Interest Rate Risks
o Prices of fixed income securities rise and fall in response to interest
rate changes for similar securities. Generally, when interest rates rise,
prices of fixed income securities fall.
o Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity
of a fixed income security to changes in interest rates.

Credit Risks
o Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, a
Fund will lose money.
o Many fixed income securities receive credit ratings from services such as
S&P and Moody's. These services assign ratings to securities by assessing
the likelihood of issuer default. Lower credit ratings correspond to higher
credit risk. If a security has not received a rating, the Funds must rely
entirely upon the Adviser's credit assessment.
o Fixed income securities generally compensate for greater credit risk by
paying interest at a higher rate. The difference between the yield of a
security and the yield of a U.S. Treasury security with a comparable
maturity (the spread) measures the additional interest paid for risk.
Spreads may increase generally in response to adverse economic or market
conditions. A security's spread may also increase if the security's rating
is lowered, or the security is perceived to have an increased credit risk.
An increase in the spread will cause the price of the security to decline.
o Credit risk includes the possibility that a party to a transaction
involving a Fund will fail to meet its obligations. This could cause a Fund
to lose the benefit of the transaction or prevent a Fund from selling or
buying other securities to implement its investment strategy.

Prepayment Risks
o Generally, homeowners have the option to prepay their mortgages at any time
without penalty. Homeowners frequently refinance high interest rate
mortgages when mortgage rates fall. This results in the prepayment of
mortgage backed securities with higher interest rates. Conversely,
prepayments due to refinancings decrease when mortgage rates increase. This
extends the life of mortgage backed securities with lower interest rates.
As a result, increases in prepayments of high interest rate mortgage backed
securities, or decreases in prepayments of lower interest rate mortgage
backed securities, may reduce their yield and price. This relationship
between interest rates and mortgage prepayments makes the price of mortgage
backed securities more volatile than most other types of fixed income
securities with comparable credit risks.

Call Risks
o Call risk is the possibility that an issuer may redeem a fixed income
security before maturity (a call) at a price below its current market
price. An increase in the likelihood of a call may reduce the security's
price.
o If a fixed income security is called, a Fund may have to reinvest the
proceeds in other fixed income securities with lower interest rates, higher
credit risks, or other less favorable characteristics.

Stock Market Risks
o The value of equity securities in Income Fund's portfolio will rise and
fall. These fluctuations could be a sustained trend or a drastic movement.
The Fund's portfolio will reflect changes in prices of individual portfolio
stocks or general changes in stock valuations. Consequently, the Fund's
share price may decline and you could lose money. The Adviser attempts to
manage market risk by limiting the amount the Fund invests in each
company's equity securities. However, diversification will not protect the
Fund against widespread or prolonged declines in the stock market.

Tax Risks
o In order to be tax-exempt, municipal securities must meet certain legal
requirements. Failure to meet such requirements may cause the interest
received and distributed by the Alabama Tax-Free Fund to shareholders to be
taxable.
o Changes or proposed changes in federal tax laws may cause the prices of
municipal securities to fall.

Currency Risks
o Exchange rates for currencies fluctuate daily. The combination of currency
risk and interest rate risk tends to make securities traded in foreign
markets more volatile than securities traded exclusively in the U.S.
o The Adviser attempts to manage currency risk by limiting the amount a Fund
invests in securities denominated in a particular currency. However,
diversification will not protect a Fund against a general increase in the
value of the U.S. dollar relative to other currencies.

Risks of Foreign Investing
o Foreign securities pose additional risks because foreign economic or
political conditions may be less favorable than those of the United States.
Securities in foreign markets may also be subject to taxation policies that
reduce returns for U.S.
investors.
o Foreign companies may not provide information (including financial
statements) as frequently or to as great an extent as companies in the
United States. Foreign companies may also receive less coverage than United
States companies by market analysts and the financial press. In addition,
foreign countries may lack uniform accounting, auditing and financial
reporting standards or regulatory requirements comparable to those
applicable to U.S. companies. These factors may prevent the Funds and their
Adviser from obtaining information concerning foreign companies that is as
frequent, extensive and reliable as the information available concerning
companies in the United States.
o Foreign countries may have restrictions on foreign ownership of securities
or may impose exchange controls, capital flow restrictions or repatriation
restrictions which could adversely affect the liquidity of the Funds'
investments.

<PAGE>

Risks of Investing in Alabama

The economy of Alabama historically has relied on manufacturing and natural
resource-based industries which included textiles, apparel, food processing,
coal mining and timber. Throughout the 1990's, many of these industries have
faced intense competition from overseas and have been forced to downsize or
dramatically alter the way they do business in response to these threats. As a
result, the Alabama economy has undergone much diversification and transition in
the past decade. Since the 1991 recession, the State's proactive business
development policies have yielded big results with growth in high technology,
health care, banking and business services, particularly in the Birmingham,
Huntsville, and Mobile metropolitan areas. Once heavily reliant on the steel
industry, the Greater Birmingham area has much experience in transformation, and
has exhibited its resiliency by attracting several major companies to the region
in recent years. This has fueled a dramatic suburban expansion that has greatly
benefited the real estate development and construction trades.

The outlook for the future is that modest economic growth will continue with
growth in some industries more than offsetting downsizing in the textile and
apparel sectors. Particularly noteworthy is growth associated with automobile
manufacturing as Mercedes-Benz (a subsidiary of Daimler-Chrysler) has operated
an assembly plant in Vance, Alabama since 1998 and Honda has recently announced
that it will build a plant in Lincoln, Alabama which will come online in 2001 to
meet increased demand for sport-utility vehicles. This should allow solid
employment growth to continue with unemployment expected to keep pace with the
national average as it has substantially closed the gap. These trends indicate
stable to modestly improving demographic and credit fundamentals for issuers of
municipal debt within the State.

The State has been characterized by conservative financial management and fiscal
practices as is evidenced by its fairly low general obligation debt burden and
its ability to consistently maintain a AA credit rating from both S&P and
Moody's. The state constitution does not allow for deficit spending so should a
revenue shortfall occur, the governor is required to cutback spending across the
board. This has not occurred since 1993 and is not expected in the current year.
Governor Don Siegelman's proposal to establish a state lottery would provide an
additional revenue source and would be viewed as a positive development from a
credit analysis standpoint. This proposal is currently pending in the state
legislature. A diversifying economic base coupled with sound fiscal management
leaves Alabama well-positioned for consistent growth looking ahead.

INVESTMENT LIMITATIONS

The following limitations pertain to each of the Funds. A Fund may not:

2. Subject to the foregoing 25% exception, purchase more than 10% of the
outstanding voting securities of any issuer.

3. Invest 25% or more of its total assets in one or more issuers conducting
their principal business activities in the same industry.

These investment limitations are applied at the time investment securities are
purchased.

5. Purchase or sell real estate, except that a Fund may purchase securities of
issuers which deal in real estate and may purchase securities which are secured
by interests in real estate.

9. Purchase securities of companies for the purpose of exercising control.

If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
a Fund's investments will not constitute a violation of such limitation, except
that any borrowing by a Fund that exceeds the fundamental investment limitations
stated above must be reduced to meet such limitations within the period required
by the .Investment Company Act of 1940 (currently three days). Otherwise, a Fund
may continue to hold a security even though it causes the Fund to exceed a
percentage limitation because of fluctuation in the value of the Fund's assets.

The above limitations cannot be changed unless authorized by the "vote of a
majority of the Funds' outstanding voting securities," as defined by the
Investment Company Act of 1940.

portfolio turnover

The Bond Fund experienced higher turnover variation during the past two years.
The Bond Fund's portfolio was restructured as a result of the Adviser's
expectation of the general direction of interest rates.

Determining Market Value of Securities
Market values of a Fund's portfolio securities are determined as follows:
o for equity securities, according to the last sale price in the market in
which they are primarily traded (either a national securities exchange or
the over-the-counter market), if available;
o in the absence of recorded sales for equity securities, according to the mean
between the last closing bid and asked prices; o for bonds and other fixed
income securities, at the last sale price on a national securities exchange, if
available,
otherwise, as determined by an independent pricing service;

o futures contracts and options are valued at market values established by
the exchanges on which they are traded at the close of trading on such
exchanges. Options traded in the over-the- counter market are valued
according to the mean between the last bid and the last asked price for the
option as provided by an investment dealer or other financial institution
that deals in the option. The Board may determine in good faith that
another method of valuing such investments is necessary to appraise their
fair market value;

o for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, except that
short-term obligations with remaining maturities of less than 60 days at
the time of purchase may be valued at amortized cost or at fair market
value as determined in good faith by the Board; and
o for all other securities, at fair value as determined in good faith by
the Board.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider: institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.

WHAT DO SHARES COST?

The Funds' net asset value (NAV) per share fluctuates and is based on the market
value of all securities and other assets of each Fund.

Reducing or Eliminating the Front-End Sales Charge
You can reduce or eliminate the applicable front-end sales charge as follows:

Concurrent Purchases
You can combine concurrent purchases of two or more SouthTrust Funds in
calculating the applicable sales charge.

Reinvestment Privilege
You may reinvest, within 30 days, your redemption proceeds at the next
determined NAV, without any sales charge.

Purchases by Affiliates of the Funds
The following individuals and their immediate family members may buy shares at
NAV without any sales charge because there are nominal sales efforts associated
with their purchases: o the current or retiredTrustees, employees, and sales
representatives of the Funds, the Adviser, the Distributor and their
affiliates and the immediate family members of these individuals;
o retired employees of SouthTrust Corporation and it's affiliates;
o investors for whom SouthTrust Corporation or one of it's affiliates acts in
a fiduciary, advisory, custodial, agency or similar capacity (this does not
include transactions executed by SouthTrust Securities, Inc., including,
but not limited to, self-directed Individual Retirement Accounts); and
o employees who purchase shares through a payroll deduction plan sponsored by
their employers.

HOW ARE THE FUNDS SOLD?

Rule 12b-1 Plan - Income fund and Alabama Tax Free Income Fund
As a compensation type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of bank, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professionals) to promote
sales of shares so that overall Fund assets are maintained or increased. This
helps the Funds achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and share redemptions. Also, the
Funds' service providers that receive asset- based fees also benefit from stable
or increasing Fund assets. The Funds may compensate the Distributor more or less
than its actual marketing expenses. In no event will the Funds pay for any
expenses of the Distributor that exceed the maximum Rule 12b-1 Plan fee. The
maximum Rule 12b-1 Plan fee that can be paid in any one year may not be
sufficient to cover the marketing related expenses the Distributor has incurred.
Therefore, it may take the Distributor a number of years to recoup these
expenses.

Shareholder Services

supplemental payments

Investment professionals may be paid fees out of the assets of the Distributor
and/or Federated Shareholder Services Company (but not out of Fund assets). The
Distributor and/or Federated Shareholder Services Company may be reimbursed by
the Adviser or its affiliates. Investment professionals receive such fees for
providing distribution-related or shareholder services such as sponsoring sales,
providing sales literature, conducting training seminars for employees, and
engineering sales-related computer software programs and systems. Also,
investment professionals may be paid cash or promotional incentives, such as
reimbursement of certain expenses relating to attendance at informational
meetings about the Funds or other special events at recreational-type
facilities, or items of material value. These payments will be based upon the
amount of shares the investment professional sells or may sell and/or upon the
type and nature of sales or marketing support furnished by the investment
professional.

EXCHANGING SECURITIES FOR SHARES

SUBACCOUNTING SERVICES

Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services that may be related to the ownership of shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.

REDEMPTION IN KIND

Because the Funds have elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, the Funds are obligated to pay share redemptions to any one
shareholder in cash only up to the lesser of $250,000 or 1% of the net assets
represented by such shares during any 90-day period.

Any share redemption payment greater than this amount will also be in cash
unless a Fund's Board determines that payment should be in kind. In such a case,
the Fund will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Funds determine NAV. The
portfolio securities will be selected in a manner that the Fund's Board deems
fair and equitable and, to the extent available, such securities will be readily
marketable.

Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
and could incur certain transaction costs.

MASSACHUSETTS PARTNERSHIP LAW

BANKING LAWS

ACCOUNT AND SHARE INFORMATION

As of May 7, 1999, the following shareholder, owned of record, beneficially, or
both, 5% or more of the outstanding shares of the Bond Fund: Lynspen & Co.,
Birmingham, AL, owned approximately 11,633,945.55 shares (91.11%).

As of May 7, 1999, the following shareholder, owned of record, beneficially, or
both, 5% or more of the outstanding shares of the Income Fund: Lynspen & Co.,
Birmingham, AL, owned approximately 4,933,416.38 shares (91.45%).

Shareholders owning 25% or more of outstanding shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.

TAX INFORMATION

FOREIGN INVESTMENTS

<PAGE>

WHO MANAGES AND PROVIDES SERVICES TO THE FUNDS?

BOARD OF TRUSTEES

As of May 7, 1999, the Company's Board and Officers as a group owned less than
1% of the Funds' outstanding shares.

An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940.

<PAGE>

Name

Birmingham, AL Alabama.
CHAIRMAN AND TRUSTEE

Charles G. Brown, III President, Tubular Products Company (since 1985); $7000.
Birth Date: November 27, 1953 Managing Partner, Red Hollow Partnership.
P.O. Box 170100
Birmingham, AL
TRUSTEE

Russell W. Chambliss President (since 1989), Executive Vice President $7750.
Birth Date: December 26, 1951 (1988), and Vice President of Sales and Marketing

Mason Corporation (1984-1988), Mason Corporation.
P.O. Box 59226
Birmingham, AL
TRUSTEE

Beth Broderick Assistant Vice President, Federated Services Company $0
Birth Date: August 2, 1965 (1997 to present); Client Services Officer, Federated
Federated Investors Tower Services Company (1992-1997).
Pittsburgh, PA
VICE PRESIDENT AND TREASURER

C. Todd Gibson Associate Corporate Counsel, Federated Investors, $0

Birth Date: May 17, 1967 Inc.; Assistant Vice President, Federated
Federated Investors Tower Administrative Services.
Pittsburgh, PA
SECRETARY
</TABLE>

INVESTMENT ADVISER
The Adviser, SouthTrust Bank, N.A. conducts investment research and makes
investment decisions for the Funds.

ADMINISTRATOR
Federated Services Company, a subsidiary of Federated, provides administrative
personnel and services (including certain legal and financial reporting
services) necessary to operate the Fund. Federated Services Company provides
these at the following annual rate of the average aggregate daily net assets as
specified below:

Maximum Administrative Fee Average Aggregate Daily Net Assets of
the Federated Funds
0.150 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least $50,000
for Bond Fund, $100,000 for Income Fund, and , $ ,000 for Alabama Tax-Free
Income Fund. Federated Services Company may voluntarily waive a portion of its
fee and may reimburse the Fund for expenses.

Federated Services Company also provides certain accounting and recordkeeping
services with respect to the Fund's portfolio investments for a fee based on
Fund assets, plus out-of-pocket expenses.

Custodian
SouthTrust Bank, N.A. is custodian for the securities and cash of the Funds.

Independent Auditors
Arthur Andersen LLP are the independent auditors for the Funds.

<PAGE>

FEES PAID BY THE FUNDS FOR SERVICES
Bond Fund

For the Year ended April 30 1999 1998 1997

- ----------------------------------------------------------------------------------------------------
Advisory Fee Earned $746,243 $604,746 $528,799
- ----------------------------------------------------------------------------------------------------
Advisory Fee Reduction $0 $5,747 $44,067
- ----------------------------------------------------------------------------------------------------
Brokerage Commissions $0 $0 $0
- ----------------------------------------------------------------------------------------------------
Administrative Fee $133,295 $114,117 $107,564
- ----------------------------------------------------------------------------------------------------
Administrative Fee Reduction $0 $0 $0
- ----------------------------------------------------------------------------------------------------
Income Fund
For the Year ended April 30 1998 1997
- ----------------------------------------------------------------------------------------------------
Advisory Fee Earned $273,245 $233,648 $248,407
- ----------------------------------------------------------------------------------------------------
Advisory Fee Reduction $136,623 $116,824 $113,723
- ----------------------------------------------------------------------------------------------------
Brokerage Commissions $0 $0 $0
- ----------------------------------------------------------------------------------------------------
Administrative Fee $99,799 $99,999 $100,160
- ----------------------------------------------------------------------------------------------------
Administrative Fee Reduction $51,209 $55,841 $21,981
- ----------------------------------------------------------------------------------------------------
</TABLE>

Alabama Tax-Free Income Fund has not completed a full fiscal year and,
therefore, has no fees to report as of the date of this Statement.

HOW DO THE FUNDS MEASURE PERFORMANCE?

Share performance reflects the effect of non-recurring charges, such as maximum
sales charges, which, if excluded, would increase the total return and yield.
The performance of shares depends upon such variables as: portfolio quality;
average portfolio maturity; type and value of portfolio securities; changes in
interest rates; changes or differences in a Fund's expenses; and various other
factors.

Average Annual Total Returns and Yields

Bond Fund total returns given for the one-year, five-year, and start of
performance periods ended April 30, 1999.

Bond Fund yield given for the seven-day period ended April 30, 1999.

7-Day Period 1 Year 5 Years Start of Performance

Total Return N/A 5.54% 6.88% 6.85%
Yield 6.03% N/A N/A N/A

Income Fund total returns given for the one-, and start of performance periods
ended April 30, 1999.

Income Fund yield given for the seven-day period ended April 30, 1999.

7-Day Period 1 Year Start of Performance
Total Return N/A 5.58% 5.11%
Yield 5.55% N/A N/A

Alabama Tax-Free Income Fund has not completed a full fiscal year and,
therefore, has no performance to report as of the date of this Statement.

When shares of a Fund are in existence for less than a year, the Fund may
advertise cumulative total return for that specific period of time, rather than
annualizing the total return.

TAX EQUIVALENCY TABLE
Set forth below is a sample of a tax-equivalency table that may be used in
advertising and sales literature. This table is for illustrative purposes only
and is not representative of future performance of the Alabama Tax-Free Income
Fund. The interest earned by the municipal securities owned by the Fund
generally remains free from federal regular income tax and is often free from
state and local taxes as well. However, some of the Fund's income may be subject
to the federal alternative minimum tax and state and/or local taxes.

Taxable Yield Equivalent for 1999 - STATE OF ALABAMA

Combined Federal and State
Income Tax Bracket: 20.00% 33.00% 36.00% 41.00% 44.60%
- ----------------------------------------------------------------------------------------------------------------------
Joint Return $1-43,050 $43,051-104,050 $104,051-158,550 $158,551-283,150 Over 283,150
- ----------------------------------------------------------------------------------------------------------------------
Single Return $1-25,750 $25,751-62,450 $62,451-130,250 $130,251-283,150 Over 283,150
- ----------------------------------------------------------------------------------------------------------------------
Tax Exempt Yield: Taxable Yield Equivalent:
2.50% 3.13% 3.73% 3.91% 4.24% 4.51%
3.00% 3.75% 4.48% 4.69% 5.08% 5.42%
3.50% 4.38% 5.22% 5.47% 5.93% 6.32%
4.00% 5.00% 5.97% 6.25% 6.78% 7.22%
4.50% 5.63% 6.72% 7.03% 7.63% 8.12%
5.00% 6.25% 7.46% 7.81% 8.47% 9.03%
5.50% 6.88% 8.21% 8.59% 9.32% 9.93%
6.00% 7.50% 8.96% 9.38% 10.17% 10.83%
6.50% 8.13% 9.70% 10.16% 11.02% 11.73%
7.00% 8.75% 10.45% 10.94% 11.86% 12.64%
</TABLE>

Note: The maximum marginal tax rate for each bracket was used in calculating the
taxable yield equivalent. Furthermore, additional state and local taxes paid on
comparable taxable investments were not used to increase federal deductions.

<PAGE>

In reports or other communications to shareholders or in advertising material,
the Funds may compare its performance with that of other mutual funds as listed
in the rankings prepared by Lipper Analytical Services, Inc., CDA Technologies,
Inc., or similar independent services, which monitor the performance of mutual
funds or with other appropriate indices of investment securities. In addition,
certain indices may be used to illustrate historic performance of select asset
classes. These may include, among others, the Lehman Brothers Index of Baa-rated
Corporate Bonds, the T-Bill Index, and the "Stocks, Bonds and Inflation Index"
published annually by Ibbotson Associates. The performance information may also
include evaluations of the Funds published by ranking services and financial
publications that are nationally recognized, such as Business Week, Forbes,
Fortune, Institutional Investor, Money and The Wall Street Journal.

A Fund may compare its performance, or performance for the types of securities
in which it invests, to a variety of other investments, including federally
insured bank products such as bank savings accounts, certificates of deposit,
and Treasury bills.

A Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics. You may use financial publications and/or indices to obtain a more
complete view of share performance. When comparing performance, you should
consider all relevant factors such as the composition of the index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price.

FINANCIAL INFORMATION

The Financial Statements for the Funds for the fiscal year ended April 30, 1999
are incorporated herein by reference to the Annual Report to Shareholders of
SouthTrust Bond Fund and SouthTrust Income Fund dated April 30, 1999.

<PAGE>

INVESTMENT RATINGS

Standard and Poor's Long-Term Debt Rating Definitions
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong. AA--Debt rated
AA has a very strong capacity to pay interest and repay principal and differs
from the higher rated issues only in small degree. A--Debt rated A has a strong
capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories. BBB--Debt rated BBB is regarded
as having an adequate capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories. BB--Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating. B--Debt rated B has a greater
vulnerability to default but currently has the capacity to meet interest
payments and principal repayments. Adverse business, financial, or economic
conditions will likely impair capacity or willingness to pay interest and repay
principal. The B rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied BB or BB- rating. CCC--Debt rated CCC
has a currently identifiable vulnerability to default, and is dependent upon
favorable business, financial, and economic conditions to meet timely payment of
interest and repayment of principal. In the event of adverse business,
financial, or economic conditions, it is not likely to have the capacity to pay
interest and repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or B-
rating. CC--The rating CC typically is applied to debt subordinated to senior
debt that is assigned an actual or implied CCC debt rating. C--The rating C
typically is applied to debt subordinated to senior debt which is assigned an
actual or implied CCC- debt rating. The C rating may be used to cover a
situation where a bankruptcy petition has been filed, but debt service payments
are continued.

Moody's Investors Service, Inc. Long-Term Bond Rating Definitions
AAA--Bonds which are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as gilt
edged. Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues. AA--Bonds which are rated AA are
judged to be of high quality by all standards. Together with the AAA group, they
comprise what are generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large as in AAA
securities or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks appear
somewhat larger than in AAA securities. A--Bonds which are rated A possess many
favorable investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future. BAA--Bonds which are rated BAA are considered
as medium grade obligations, (i.e., they are neither highly protected nor poorly
secured). Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well. BA--Bonds which are BA are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class. B--Bonds which are rated B
generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small. CAA--Bonds which are rated CAA are of
poor standing. Such issues may be in default or there may be present elements of
danger with respect to principal or interest. CA--Bonds which are rated CA
represent obligations which are speculative in a high degree. Such issues are
often in default or have other marked shortcomings. C--Bonds which are rated C
are the lowest rated class of bonds, and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.

Fitch IBCA, Inc. Long-Term Debt Rating Definitions
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short- term debt of these issuers is generally rated F-1+. A--Bonds considered
to be investment grade and of high credit quality. The obligor's ability to pay
interest and repay principal is considered to be strong, but may be more
vulnerable to adverse changes in economic conditions and circumstances than
bonds with higher ratings. BBB--Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings. BB--Bonds are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements. B--Bonds
are considered highly speculative. While bonds in this class are currently
meeting debt service requirements, the probability of continued timely payment
of principal and interest reflects the obligor's limited margin of safety and
the need for reasonable business and economic activity throughout the life of
the issue. CCC--Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment. CC--Bonds are minimally
protected. Default in payment of interest and/or principal seems probable over
time. C--Bonds are in imminent default in payment of interest or principal.

Moody's Investors Services, Inc. Commercial Paper Ratings
Prime-1--Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
o Leading market positions in well established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance on debt and ample
asset protection. o Broad margins in earning coverage of fixed financial charges
and high internal cash generation. o Well established access to a range of
financial markets and assured sources of alternate liquidity. Prime-2--Issuers
rated Prime-2 (or related supporting institutions) have a strong capacity for
repayment of short-term promissory obligations. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

Standard and Poor's Commercial Paper Ratings
A-1--This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation. A-2--Capacity for
timely payment on issues with this designation is satisfactory. However, the
relative degree of safety is not as high as for issues designated A-1.

Fitch IBCA, Inc. Commercial Paper Rating Definitions
FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment. FITCH-2--(Very Good
Grade) Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than the strongest issues.

<PAGE>

ADDRESSES

Southtrust Bond fund
southtrust Income fund
SouthTrust Alabama Tax Free Income Fund

Portfolios of SouthTrust Funds

5800 Corporate Drive
Pittsburgh, PA 15237-7010

Distributor
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue,
Pittsburgh, PA 15222-3779

Investment Adviser

SouthTrust Bank, N.A.
420 North 20th Street
Birmingham, AL 35203

Custodian

SouthTrust Bank, N.A.
420 North 20th Street
Birmingham, AL 35203

Transfer Agent and Dividend Disbursing Agent

Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600

Independent Auditors

Arthur Andersen LLP
225 Franklin Street
Boston, MA 02110-2812

JUNE 29, 1999

PROSPECTUS

SouthTrust Funds

SOUTHTRUST U.S. TREASURY MONEY MARKET FUND

SouthTrust U.S. Treasury Money Market Fund is a mutual fund seeking to provide
as high a level of current interest income as is consistent with maintaining
liquidity and stability of principal.

<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Fund Goals, Strategies, Performance and Investment Risks 1
What are the Fund's Fees and Expenses? 3
What are the Principal Securities in Which the Fund Invests? 4
What are the Main Risks of Investing in the Fund? 4
What do Shares Cost? 4
How is the Fund Sold? 5
How to Purchase Shares 5
How to Redeem and Exchange Shares 6
Account and Share Information 9
Who Manages the Fund? 9
Financial Information 10

</TABLE>

AUGUST , 1999

Fund Goals, Strategies, Performance and Investment Risks

SouthTrust Funds (Company) currently offer shares in six investment portfolios,
each with its own investment goal and strategies, described in separate
prospectuses. This prospectus pertains only to SouthTrust U.S. Treasury Money
Market Fund (Treasury Money Fund). The purchase of shares of any Fund should not
be considered a complete investment program, but an important segment of a well-
diversified investment program. For information about other funds offered by
SouthTrust Funds, call 1-800-843-8618.

WHAT IS THE TREASURY MONEY FUND'S GOAL?

The Fund's goal is to provide as high a level of current income as is consistent
with maintaining liquidity and stability of principal.

WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?

The Fund pursues its goal by investing solely in short-term direct obligations
of the U.S. Treasury or in repurchase agreements collateralized by such
obligations. The strategy undertaken to accomplish the Fund's goal requires
maintaining a portfolio with a weighted average maturity of 60 days or less. The
relatively short average portfolio maturity provides necessary cash flow to meet
redemption needs. Fund liquidity needs and interest rate trends weigh heavily on
the Adviser's maturity and sector decisions.
A "barbell" or "ladder" strategy is used with a blend of Treasuries and
repurchase agreements. In using a barbell structure, the Fund combines
investments in longer maturity Treasury bills with overnight repurchase
agreements. This structure offers a competitive yield when Treasuries and
repurchase agreements offer relative value. In using a ladder structure, the
Fund invests in each maturity range of the Treasury bill yield curve. The Fund
attempts to maximize its yield through ongoing relative value analysis. Changing
economic and market events drive the Fund's strategy and are continuously
monitored.

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?

Although the Fund seeks to maintain a stable net asset value of $1.00 per share,
it is possible to lose money by investing in the Fund. Although the Fund invests
in U.S. Treasury securities that are backed by the full faith and credit of the
United States, Fund shares themselves are not guaranteed or supported by the
U.S. government. In addition, the Fund bears the risk of Year 2000 readiness.

The shares offered by this prospectus are not deposits or obligations of any
bank, are not endorsed or guaranteed by any bank and are not insured or
guaranteed by the U.S. government, the Federal Deposit Insurance Corporation,
the Federal Reserve Board, or any other government agency.

Risk/Return Bar Chart and Table

[Graph Appears Here]

Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's total returns on a
calendar year-end basis.

The Fund shares are not sold subject to a sales charge (load). The total returns
shown above are based upon the net asset value.

The Fund's total return from January 1, 1999 to March 31, 1999 was 1.07%.
Within the period shown in the chart, the Fund's highest quarterly return was
1.38% (quarter ended June 30, 1995). Its lowest quarterly return was 0.68%
(quarter ended June 30, 1993).

Average Annual Total Return

The following table represents the Fund's Average Annual Total Returns for the
calendar periods ending December 31, 1998.

Calendar Period Fund

1 Year 5.00%
5 Year 4.84%
Start of Performance1 4.35%

1 The Fund's start of performance date was May 8, 1992.

The Fund's 7-Day Net Yield as of December 31, 1998 was 4.43%. Investors may call
the Fund to acquire the current 7-Day Net Yield by calling 1-800-843-8618.

What are the Fund's Fees and Expenses?

TREASURY MONEY FUND

FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
shares of Treasury Money Fund.

<TABLE>
<CAPTION>
Shareholder Fees
Fees Paid Directly From Your Investment None

Annual Fund Operating Expenses (Before Waivers)1
Expenses That are Deducted From Fund Assets (as percentage of average net assets)
<S> <C>
Management Fee2 0.50%
Distribution (12b-1) Fee None
Shareholder Services Fee3 0.25%
Other Expenses 0.14%
Total Annual Fund Operating Expenses 0.89%
1Although not contractually obligated to do so, the Adviser and shareholder servicing agent waived certain amounts. These are
shown below along with the net expenses the Fund actually paid for the fiscal
year ended April 30, 1999.
Total Waiver of Fund Expenses 0.41%
Total Annual Fund Operating Expenses (after waiver) 0.48%
2The Adviser voluntarily waived a portion of the management fee. The Adviser can terminate this voluntary waiver at any time. The
management fee paid by the Treasury Money Fund (after the voluntary waiver) was 0.31% for the year ended April 30, 1999.
3The shareholder servicing agent will voluntarily waive a portion of the shareholder services fee equal to 0.20%. This waiver may
be terminated at any time.
</TABLE>

EXAMPLE
This Example is intended to help you compare the cost of investing in the
Treasury Money Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Treasury Money Fund for the
time periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Treasury Money Fund operating expenses are before waivers as shown
in the table and remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years

Treasury Money Fund $91 $284 $493 $1,096

What are the Principal Securities in Which the Fund Invests?

U.S. TREASURY SECURITIES

U.S. Treasury securities are direct obligations of the federal government of the
United States. U.S. Treasury securities generally pay interest, dividends or
distributions at a specified rate. The rate may be fixed or adjusted
periodically. The U.S. Treasury must also repay the principal amount of the
security, normally within a specified time.

The Fund may also purchase participation interests in trusts that are issued
directly by the U.S. Treasury and are related to direct U.S. Treasury
obligations such as Treasury Investors Growth Receipts (TIGRs) and Certificates
of Accrual on Treasury Securities (CATs).

REPURCHASE AGREEMENTS

Repurchase agreements are transactions in which the Fund buys a security from a
dealer or bank and agrees to sell the security back at a mutually agreed upon
time and price. The repurchase price exceeds the sale price, reflecting the
Fund's return for the transaction. This return is unrelated to the interest rate
on the underlying security. The Fund will enter into repurchase agreements only
with banks and other recognized financial institutions, such as securities
dealers deemed creditworthy by the Adviser.

The Fund's custodian or subcustodian will take possession of the securities
subject to repurchase agreements. The Adviser or subcustodian will monitor the
value of the underlying securities each day to ensure that the value of the
security always equals or exceeds the repurchase price.

Repurchase agreements are subject to credit risks.

What are the Main Risks of Investing in the Fund?

Although there are many factors which may affect an investment in the Fund, the
principal risks of investing in the Fund are described below.

INTEREST RATE RISK

Prices of fixed income securities rise and fall in response to changes in the
interest rate paid by similar securities. Generally, when interest rates rise,
prices of fixed income securities fall. However, market factors, such as the
demand for particular fixed income securities, may cause the price of certain
fixed income securities to fall while the prices of other securities rise or
remain unchanged.

Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of a
fixed income security to changes in interest rates.

CREDIT RISK

Credit risk includes the possibility that a party to a transaction involving the
Fund will fail to meet its obligations. This could cause the Fund to lose the
benefit of the transaction or prevent the Fund from selling or buying other
securities to implement its investment strategy.

What Do Shares Cost?

Shares of the Treasury Money Fund are sold without a sales charge or a
redemption fee. You can purchase, redeem, or exchange shares any day the New
York Stock Exchange (NYSE) is open. Purchase orders received before 12:00 noon
(Eastern time) will be executed at 12:00 noon (Eastern time); but if federal
funds for such orders are not received by 4:00 p.m. (Eastern time), the order
will be canceled with notice to the investor. Orders received after 12:00 noon
(Eastern time) will be executed on the next business day.

The Fund attempts to stabilize the net asset value (NAV) of its shares at
$1.00 per share by valuing the portfolio securities using the amortized cost
method. The Fund cannot guarantee that its NAV will always remain at $1.00 per
share. NAV is determined twice, at 12:00 noon (Eastern time) and at the end of
regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open.

The minimum initial investment in the Fund is $1,000. The minimum subsequent
investment is $50. Keep in mind that investment professionals may charge you
fees for their services in connection with your share transactions. With respect
to investments made in the Fund through a sweep program, initial minimum
investments may be modified under the relevant account agreement. SouthTrust
Bank or a broker/dealer that has entered into a sales agreement with the
Distributor (a SouthTrust Funds Dealer)may set different minimums for their
customers. How is the Fund Sold?

Federated Securities Corp., the Fund's Distributor, markets the shares described
in this prospectus to institutions and individuals.

The Distributor and its affiliates may pay out of their assets other amounts
(including items of material value) to investment professionals (such as
brokers) for marketing and servicing shares. The Distributor is a subsidiary of
Federated Investors, Inc. (Federated). How to Purchase Shares You may
purchase shares through SouthTrust Funds Shareholder Services, through
SouthTrust Securities, Inc., a SouthTrust Funds Dealer, or through an exchange
from another SouthTrust Fund and certain Federated Funds. Texas residents should
purchase shares through Federated Securities Corp. at 1-800-356-2805. The Fund
reserves the right to reject any request to purchase or exchange shares.
Trust customers of SouthTrust Bank should contact their account officer.

THROUGH SOUTHTRUST FUNDS SHAREHOLDER SERVICES

. Establish your account with the Fund by submitting a completed account
application; and
. Send your payment to the Fund by Federal Reserve wire or check.

You will become the owner of shares after the Fund receives your wire or your
check. If your check does not clear, your purchase will be canceled and you
could be liable for any losses or fees the Fund or its transfer agent incurs.

An institution may establish an account and place an order by calling
SouthTrust Funds Shareholder Services or a SouthTrust Funds Dealer and will
become a shareholder after the Fund receives the order.

By Check

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund will
not accept third-party checks (checks originally payable to someone other than
the Fund). Orders by mail are considered received when payment by check is
converted into federal funds (normally the business day after the check is
received) and shares begin earning dividends the next day.

By Wire

By Telephone

Once an account has been established, you may purchase additional shares by
calling SouthTrust Funds Shareholder Services directly at 1-888-735-3441.

THROUGH A SOUTHTRUST FUNDS DEALER

. Establish an account with the SouthTrust Funds Dealer; and
. Submit your purchase order to the SouthTrust Funds Dealer before 12:00 noon
(Eastern time). You will receive that day's dividends if the SouthTrust Funds
Dealer forwards the order to the Fund and the Fund receives payment by 4:00
p.m. (Eastern time). You will become the owner of shares and receive
dividends when the Fund receives your payment. SouthTrust Funds Dealers
should send payments according to the instructions in the sections "By Check"
or "By Wire."

THROUGH AN EXCHANGE

You may purchase shares through an exchange from another SouthTrust Fund.

You must meet the minimum initial investment requirement for purchasing shares
and both accounts must have identical registrations.

You may telephone an exchange request by calling SouthTrust Funds Shareholder
Services or your SouthTrust Funds Dealer.

Trust customers of SouthTrust Bank should contact their account officer.

You may exchange shares of the Fund for Class A Shares in certain funds which
are distributed by Federated Securities Corp. (Federated Funds). The Federated
Funds offered for exchange with the Company are: Federated International Income
Fund, Federated International Equity Fund; Federated Equity Income Fund, Inc.,
Federated High Income Bond Fund, Inc., Federated Municipal Securities Fund,
Inc., Federated Utility Fund, Inc., and Tax-Free Instruments Trust.

BY AUTOMATIC INVESTMENT PROGRAM (AIP)

How to Redeem and Exchange Shares

You may redeem or exchange shares through SouthTrust Funds Shareholder Services
or your SouthTrust Funds Dealer.

Trust customers of SouthTrust Bank should contact their account officer.

THROUGH SOUTHTRUST FUNDS SHAREHOLDER SERVICES

BY TELEPHONE

If you call before 12:00 noon (Eastern time), your redemption will be wired to
you the same day. You will not receive that day's dividend.

If you call after 12:00 noon (Eastern time), your redemption will be wired to
you the following business day. You will receive that day's dividend.

The Fund reserves the right to wire redemption proceeds within five business
days after receiving the redemption order if, in the judgment of the Adviser, an
earlier payment could adversely impact the Fund. See "Payment Methods for
Redemptions."

By Mail

You may redeem shares by mailing your request to:

SouthTrust Funds Shareholder Services
P.O. Box 830804
Birmingham, AL 35283-0804

Your redemption request will be processed on the day the Fund receives your
written request in proper form. Dividends are paid up to and including the day
that a redemption request is processed.

All requests must include:

Call SouthTrust Funds Shareholder Services or your SouthTrust Funds Dealer if
you need special instructions.

Signature Guarantees

Signatures must be guaranteed if:

THROUGH A SOUTHTRUST FUNDS DEALER

Submit your redemption or exchange request by the end of regular trading on the
NYSE (normally 4:00 p.m. Eastern time). SouthTrust Funds Dealers are responsible
for promptly submitting redemption requests and providing proper written
redemption instructions as outlined below. If your redemption order is received
before 12:00 noon (Eastern time), payment in federal funds is normally wired the
same day. Payment for redemption requests received after 12:00 noon (Eastern
time) but before 4:00 p.m. (Eastern time) will be wired the next business day.

PAYMENT METHODS FOR REDEMPTIONS

. an electronic transfer to your account at a financial institution that is an
ACH member; or
. wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.

Redemption in Kind

Although the Fund intends to pay share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of the
Fund's portfolio securities.

LIMITATIONS ON REDEMPTION PROCEEDS

Redemption proceeds normally are wired or mailed the next business day after
receiving a request in proper form. Payment may be delayed up to seven days:

. to allow your purchase to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.

You will not accrue interest or dividends on uncashed checks from the Fund if
those checks are undeliverable and returned to the Fund.

EXCHANGE PRIVILEGES

Shareholders who have purchased shares of the Fund (including shares acquired
through a reinvestment of a dividend or distribution on such shares) may
exchange those shares for shares of one of the other SouthTrust Funds or Class A
Shares of certain Federated Funds. When shares of the Fund are exchanged for
shares of a load Fund or a Federated Fund, a sales charge, if applicable and not
previously paid, will be assessed. However, this privilege does not apply to
exchanges into SouthTrust Value Fund or SouthTrust Growth Fund until an investor
has owned shares in the one of the Funds for 90 days. The 90-day holding period
does not apply to exchanges in which the investor obtained Fund shares through a
prior exchange of shares of SouthTrust Value Fund or SouthTrust Growth Fund.
When shares of Treasury Money Fund are exchanged for shares of a load Fund or a
Federated Fund, the applicable sales charge (if any) will be assessed. However,
shareholders exchanging shares of Treasury Money Fund which were received in a
previous exchange involving shares on which a load was paid will not be required
to pay an additional sales charge upon notification of the reinvestment of the
equivalent investment into a load Fund.

To exchange, you must:

The Fund may modify or terminate the exchange privilege at any time. The Fund's
management or Adviser may determine from the amount, frequency and pattern of
exchanges that a shareholder is engaged in excessive trading that is detrimental
to the Fund and other shareholders. If this occurs, the Fund may terminate the
availability of exchanges to that shareholder and may bar that shareholder from
purchasing other SouthTrust Funds.

An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction.

AUTOMATIC WITHDRAWAL PLAN (AWP)

ADDITIONAL CONDITIONS

Telephone Transactions

The Fund will record your telephone instructions. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

Share Certificates

The Fund does not issue share certificates.

Account and Share Information

ACCOUNT ACTIVITY

You will receive periodic statements reporting all account activity, including
automatic transactions, dividends and capital gains paid.

DIVIDENDS AND CAPITAL GAINS

The Fund declares daily and pays any dividends monthly to shareholders. If you
purchase shares by wire, you begin earning dividends on the day your wire is
received if your purchase order is received by 12:00 noon (Eastern time). If you
purchase shares by check, you begin earning dividends on the business day after
the Fund receives your check. In either case, you earn dividends through the day
your redemption request is received.
The Fund does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Fund pays any capital gains at least annually. Your dividends and
capital gains distributions will be automatically invested in additional shares,
unless you elect cash payments.

ACCOUNTS WITH LOW BALANCES

TAX INFORMATION

The Fund sends an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Although the Fund is
structured to provide income exempt from state and local taxes, dividends may be
subject to state and local taxes in some states. Fund distributions of dividends
and capital gains are taxable to you whether paid in cash or reinvested in the
Fund. Non-exempt dividends and capital gains are taxable whether paid in cash or
reinvested in the Fund. Redemptions and exchanges are taxable sales. Please
consult your tax adviser regarding your federal, state, and local tax liability.

Who Manages the Fund?

The Board of Trustees governs the Fund. The Board selects and oversees the
Adviser, SouthTrust Bank, N.A. The Adviser manages the Fund's assets, including
the selection and management of portfolio securities.

The Adviser, a national banking association, serves as the investment adviser
for the Fund. The Adviser, headquartered in Birmingham, Alabama, is a
wholly-owned subsidiary of SouthTrust Corporation, a publicly-held bank holding
company. The Adviser and SouthTrust Corporation have their principal offices at
420 North 20th Street, Birmingham, Alabama 35203.

The Adviser is entitled to receive an investment advisory fee from the Fund,
computed daily and payable monthly, at an annual rate of 0.50%. The Adviser may
voluntarily waive a portion of its fee or reimburse the Fund for certain
operating expenses.

YEAR 2000 READINESS

The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date- related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Fund, that rely on computers.

While it is impossible to determine in advance all of the risks to the Fund,
the Fund could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.

The Fund's service providers are making changes to their computer systems to
fix any Year 2000 problems. In addition, they are working to gather information
from third-party providers to determine their Year 2000 readiness.

Year 2000 problems would also increase the risks of the Fund's investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities the Fund
may purchase. The financial impact of these issues for the Fund is still being
determined. There can be no assurance that potential Year 2000 problems would
not have a material adverse effect on the Fund.

Financial Information

FINANCIAL HIGHLIGHTS

The Financial Highlights will help you understand the Treasury Money Fund's
financial performance for its past five fiscal years. Some of the information is
presented on a per share basis. Total returns represent the rate an investor
would have earned (or lost) on an investment in the Fund, assuming reinvestment
of any dividends and capital gains.

This information has been audited by Arthur Andersen LLP whose report, along
with the Fund's audited financial statements, is included in the Annual Report.

[LOGO]

SouthTrust U.S. Treasury Money Market Fund

A Portfolio of SouthTrust Funds

AUGUST , 1999

A Statement of Additional Information (SAI) dated August , 1999, is incorporated
by reference into this prospectus. Additional information about the Fund's
investments is contained in the Fund's Annual and Semi-Annual Reports to
shareholders as they become available. The Annual Report discusses market
conditions and investment strategies that significantly affected the Fund's
performance during the last fiscal year. To obtain the SAI, the Annual Report,
Semi-Annual Report and other information without charge, and make inquiries,
call SouthTrust Funds Shareholder Services at 1-888-735-3441 or your SouthTrust
Funds Dealer. You can obtain information about the Fund (including the SAI)
by visiting or writing the Public Reference Room of the Securities and Exchange
Commission in Washington, DC 20549-6009 or from the Commission's Internet site
at http://www.sec.gov. You can call 1-800-SEC-0330 for information on the Public
Reference Room's operations and copying charges.

Investment Company Act File No. 811-6580
Cusip 844734103
G00859-02 (8/99)

[RECYCLED PAPER LOGO]

Risk/Return Bar Chart and Table Appendix
The graphic presentation displayed here consists of a bar chart representing the
annual total returns of SouthTrust Value Fund as of the calendar year-end for
each of six years.

The `y' axis reflects the "% Total Return" beginning with "-5%" and increasing
in increments of 5% up to 40%

The `x' axis represents calculation periods from the earliest calendar year end
of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features six distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund for each calendar year is stated directly
at the top of each respective bar, for the calendar years1993 through 1998, The
percentages noted are: 2.86%/1993, -1.71%/1994, 36.54%/1995. 23.17%/1996,
27.45%/1997, and 12.61%/1998.

The bar chart shows the variability of the Fund's total returns on a calendar
year-end basis.

The Fund's total return from January 1, 1999 to March 31, 1999 was -0.32%.

Within the period shown in the Chart, the Fund's highest quarterly return was
23.89% (quarter ended December 31, 1998). Its lowest quarterly return was
- -16.95% (quarter ended September 30, 1998).

Average Annual Total Return Table
The following table represents the Fund's Average Annual Total Returns, reduced
to reflect applicable sales charges, for the calendar periods ending December
31, 1998.

The table shows the Fund's total returns averaged over a period of years
relative to Standard and Poor's 500 Composite Index (S&P500), a broad-based
market index, for the calendar periods ended December 31, 1998. Total returns
for the index shown do not reflect sales charges, expenses or other fees that
the SEC requires to be reflected in the Fund's performance. Indexes are
unmanaged, and it is not possible to invest directly in an index.

Calendar Period Value Fund S&P 500 Index
1 Year % 28.61%
5 Years % 24.07%
Start of Performance1 % 0.00%

1 The Fund's start of performance date was May 8, 1992.
Past performance does not necessarily predict future performance. This
information provides you with historical performance so that you can analyze
whether the Fund's investment risks are balanced by its potential rewards.

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of SouthTrust Growth Fund1 as of the calendar year-end for
each of six years.

The `y' axis reflects the "% Total Return" beginning with "-5%" and increasing
in increments of 5% up to 40%

The `x' axis represents calculation periods for the last ten calendar years of
the Fund beginning with the earliest year through the calendar year ended
December 31, 1998. The light gray shaded chart features ten distinct vertical
bars, each shaded in charcoal, and each visually representing by height the
total return percentages for the calendar year stated directly at its base. The
calculated total return percentage for the Fund for each calendar year is stated
directly at the top of each respective bar, for the calendar years1989 through
1998, The percentages noted are: 29.58%/1989, 0.91%/1990, 30.29%/1991,
3.93%/1992. 1.80%/1993, -2.30%/1994, 36.25%/1995. 24.29%/1996, 27.23%/1997, and
29.84%/1998.

The bar chart shows the variability of the Predecessor Collective Trust Fund's
total returns on a calendar year-end basis.

The total returns displayed for the Predecessor Collective Trust Fund do not
reflect the payment of any sales charges or recurring shareholder account fees.
If these charges or fees had been included, the returns shown would have been
lower.]

The Predecessor Collective Trust Fund's total return from January 1, 1999 to
March 31, 1999 was 3.20 %.

Within the period shown in the Chart, the Predecessor Collective Trust Fund's
highest quarterly return was 24.9 % (quarter ended December 311998). Its lowest
quarterly return was -11.34% (quarter ended September 30, 1990).

Average Annual Total Return Table
The following table represents the Predecessor Collective Trust Fund's Average
Annual Total Returns, reduced to reflect applicable sales charges, for the
calendar periods ending December 31, 1998.

The table shows the Predecessor Collective Trust Fund's total returns averaged
over a period of years relative to Standard and Poor's 500 Composite Index
(S&P500), a broad-based market index, for the calendar periods ended December
31, 1998. Total returns for the index shown do not reflect sales charges,
expenses or other fees that the SEC requires to be reflected in the Fund's
performance.
Indexes are unmanaged, and it is not possible to invest directly in an index.

Calendar Period Growth Fund S&P 500 Index
1 Year 23.99% 28.61%
5 Years 21.68% 24.07%
10 Years 16.68% 19.19%

Past performance does not necessarily predict future performance. This
information provides you with historical performance so that you can analyze
whether the Fund's investment risks are balanced by its potential rewards.

1 The Growth Fund is the successor to the portfolio of a collective trust fund
managed by the Adviser. At the Fund's commencement of operations, the assets
from the collective trust fund were transferred to the Fund in exchange for Fund
shares. The Fund's average annual total return since inception ( ) is xx.xx%
through December 31, 1998. The quoted performance data includes the performance
of the collective trust fund for periods before Growth Fund's registration
statement became effective on July , 1999, as adjusted to reflect the Growth
Fund's expenses. The collective trust fund was not registered under the
Investment Company Act of 1940 ("1940 Act") and therefore was not subject to
certain investment restrictions that are imposed by the 1940 Act. If the
collective trust fund had been registered under the 1940 Act, the performance
may have been adversely affected. The graphic presentation displayed here
consists of a bar chart representing the annual total returns of SouthTrust Bond
Fund as of the calendar year-end for each of six years.

The `y' axis reflects the "% Total Return" beginning with "-5%" and increasing
in increments of 5% up to 20%

The `x' axis represents calculation periods from the earliest calendar year end
of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features six distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund for each calendar year is stated directly
at the top of each respective bar, for the calendar years1993 through 1998, The
percentages noted are: 10.42%/1993, -4.62%/1994, 15.95%/1995. 2.89%/1996,
9.51%/1997, and 9.26%/1998.

The bar chart shows the variability of the Fund's total returns on a calendar
year-end basis.

The Fund's total return from January 1, 1999 to March 31, 1999 was -1.94%.

Within the period shown in the Chart, the Fund's highest quarterly return was
5.77% (quarter ended September 30, 1998). Its lowest quarterly return was -3.39%
(quarter ended March 31, 1994).

The table shows the Fund's total returns averaged over a period of years
relative to Lehman Brothers Intermediate Government/Corporate Index (LBIG/C), a
broad-based market index, for the calendar periods ended December 31, 1998.
Total returns for the index shown do not reflect sales charges, expenses or
other fees that the SEC requires to be reflected in the Fund's performance.
Indexes are unmanaged, and it is not possible to invest directly in an index.

Calendar Period Bond Fund LBIG/C Index
1 Year 5.42% 0.00%
5 Years 5.60% 0.00%
Start of Performance1 6.94% 0.00%

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of SouthTrust Income Fund as of the calendar year-end for
each of six years.

The `y' axis reflects the "% Total Return" beginning with "6.60%" and increasing
in increments of 5% up to 7%

The `x' axis represents calculation periods from the earliest calendar year end
of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features two distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund for each calendar year is stated directly
at the top of each respective bar, for the calendar years1997 and 1998, The
percentages noted are: 6.76%/1997, and 7.00%/1998.

The bar chart shows the variability of the Fund's total returns on a calendar
year-end basis.

The Fund's total return from January 1, 1999 to March 31, 1999 was 0.25%.

Within the period shown in the Chart, the Fund's highest quarterly return was
3.73% (quarter ended September 30, 1998). Its lowest quarterly return was 0.05%
(quarter ended December 31, 1994).

The table shows the Fund's total returns averaged over a period of years
relative to Merrill Lynch Government 1-5 Index (MLC/G 1-5), a broad-based market
index, for the calendar periods ended December 31, 1998. Total returns for the
index shown do not reflect sales charges, expenses or other fees that the SEC
requires to be reflected in the Fund's performance. Indexes are unmanaged, and
it is not possible to invest directly in an index.

Calendar Period Income Fund MLC/G Index
1 Year 53.22% 0.00%
Start of Performance1 4.29% 0.00%

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of SouthTrust U.S. Treasury Money Market Fund as of the
calendar year-end for each of six years.

The `y' axis reflects the "% Total Return" beginning with "%" and increasing in
increments of 1% up to 6%

The `x' axis represents calculation periods from the earliest calendar year end
of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features six distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund for each calendar year is stated directly
at the top of each respective bar, for the calendar years1993 through 1998, The
percentages noted are: 2.78%/1993, 3.77%/1994, 5.48%/1995. 4.87%/1996,
5.07%/1997, and 5.00%/1998.

Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's total returns on a
calendar year-end basis.

The Fund shares are not sold subject to a sales charge (load). The total returns
shown are based on the net asset value.

The Fund's total return from January 1, 1999 to March 31, 1999 was 1.07%.

Within the period shown in the Chart, the Fund's highest quarterly return was
1.38% (quarter ended June 30, 1995). Its lowest quarterly return was 0.68%
(quarter ended June 30, 1993). The Fund's 7-Day Net Yield as of December 31,
1998 was 4.43%.

The table shows the Fund's total returns for the calendar periods ending
December 31, 1998.

U.S. Treasury
Money Market
Calendar Period Fund
1 Year 5.00%
5 Years 4.84%
Start of Performance1 4.35%

1 The Fund's start of performance date was May 8, 1992.
The Fund's 7-Day Net Yield as of December 31, 1998 was 4.43%. Investors may
call the Fund to acquire the 7-Day Net Yield by calling
1-800-834-8618.