SouthTrust
FUNDS
TREASURY OBLIGATIONS
MONEY MARKET FUND
BOND FUND
INCOME FUND
CORE EQUITY FUND
ANNUAL REPORT
APRIL 30, 1999
PRESIDENT'S MESSAGE
- -------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Annual Report of the SouthTrust Funds for the fiscal
year reporting period ended April 30, 1999. This report begins with an
investment review of the economy and developments in the financial markets over
the reporting period. Next, you'll find a complete listing of investments and
financial statements for SouthTrust Treasury Obligations Money Market Fund,
SouthTrust Bond Fund, SouthTrust Income Fund, and SouthTrust Core Equity Fund.
The highlights for each fund over the 12-month fiscal year reporting period are
as follows:
SOUTHTRUST TREASURY OBLIGATIONS MONEY MARKET FUND
This portfolio of U.S. Treasury money market securities paid a dividend stream
totaling $0.05 per share during the fiscal year. Total net assets in the fund
reached $687.7 million at the end of the reporting period.*
SOUTHTRUST BOND FUND
This fund's diversified portfolio of high-quality corporate and government bonds
paid income distributions totaling $0.56 per share, which contributed to a total
return of 5.54% (1.82% if taking into account the fund's 3.50% maximum sales
charge).** The fund also paid capital gains distributions totaling $0.18 per
share. Total net assets in the fund reached $129.9 million at the end of the
reporting period.
SOUTHTRUST INCOME FUND
SouthTrust Income Fund, a diversified portfolio of income-producing investments,
paid dividends totaling $0.57 per share, which contributed to a total return of
5.58% (1.85% if taking into account the fund's 3.50% maximum sales charge).**
Total net assets in the fund reached $52.4 million at the end of the reporting
period.
SOUTHTRUST CORE EQUITY FUND
The fund's portfolio primarily consists of stocks with long-term growth
potential issued by large, established, and well-managed companies that are
leaders in their industries. During the reporting period, the fund produced a
total return of 5.17% (0.43% if taking into account the fund's 4.50% maximum
sales charge).** Contributing to the total return were $0.08 per share in
dividends and $1.58 per share in capital gains. Total net assets in the fund
reached $388.7 million at the end of the reporting period.
Thank you for pursuing your financial goals through the professional management
and diversification of the SouthTrust Funds. We look forward to keeping you
up-to-date on your progress.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
June 15, 1999
* An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Although money market funds seek to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
** Performance quoted reflects past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
INVESTMENT REVIEW
- -------------------------------------------------------------------------------
A year ago we started our investment review with, "It just keeps getting
better!" This year we can probably say, "It doesn't get any better than this!"
The surprising economic strength continues. In 1998 the economy grew at 3.9%
while the consensus forecast at the start of the year was for 2.3% growth. At
the beginning of 1999, the consensus growth forecast was for 2.4%, now estimates
are rapidly closing in on 4% growth. Meanwhile, inflation has consistently
surprised on the downside until April's reports, which may signal a bottoming in
price gains. Nevertheless, the year-over-year rate of inflation remains subdued
by historical standards. Given the ideal economic environment, the strength in
stocks is not surprising.
ECONOMIC PERSPECTIVE
The current economic expansion should likely end up being the longest in
history. First quarter 1999 GDP growth of 4.5%, far exceeded economists'
expectations. Even the negative pressure of a skyrocketing trade deficit could
not hold growth back. Evidence that Asia is on the mend and Latin America will
avoid the worst have investors convinced that a global recovery is under way.
Most individuals now believe that the Federal Reserve Board (the "Fed") has
learned the secret of controlling the economy and that recessions are now
reserved for the history books. Fed Chairman Greenspan is held in near godlike
status by some investors. The rapid growth in money supply, until recently,
would have scared economists, but during the past year it went almost unnoticed.
The fact that consumers are spending more than they earn, resulting in a
negative savings rate, might normally raise more than a few eyebrows. But, in
the current environment, it is viewed as perfectly normal, with criticism
reserved for the government statistic which doesn't count capital gains as
income but does reflect dollars used to pay taxes.
While strong late-cycle growth normally causes cost-push and demand-pull pricing
pressures, inflation has now declined in seven of the last eight years. Given
the strength in the job market, with March unemployment having hit a
generational low of 4.2% and April only moving up slightly to 4.3%, labor cost
pressures should be expected. But, recent numbers show wage pressures to
actually be declining! Oil prices have been on a tear, soaring from around $10 a
barrel at year end to recent levels around $17 a barrel, but there has been only
moderate follow-through to date in the inflation numbers. Even when the
inflation statistics fully reflect the higher energy costs, the focus will
probably shift to core inflation, which doesn't consider food and energy. While
inflation almost has to pick up during 1999, investor concerns appear to exceed
visible inflationary pressures, at least as of this time.
Fed actions, or lack thereof, may likely prove to be the most important economic
event of 1999. The surprising economic strength and strong stock market have
many investors convinced that the Fed will tighten interest rates before the end
of the year. The futures market now reflects the probability of at least one Fed
tightening this year. Our current forecast is that the Fed remains on hold,
until there is evidence that the balance between growth and inflation that
presently exists is in jeopardy. Heavy debt loads coupled with the wealth
impact, where consumer spending is more reliant on the stock market than ever
before, will likely result in the economy slowing on its own. The current torrid
pace of economic growth, fueled by an optimistic consumer and business spending
in preparation for the year 2000, looks to be self- correcting. Only a
surprisingly strong global economic recovery would be likely to change our
outlook.
FIXED INCOME MARKET REVIEW
Bonds have reflected the full brunt of investor concerns about the surprising
economic strength and change in Fed status to having a bias towards tightening.
The 30-year U.S. Treasury Bond hit a record low yield of 4.7%
last October and by the end of April 1999 was very close to 5.7% and heading
higher. Over the past year, the yield on the long Treasury bond has had two
moves, first from over 6% last April to the 4.7% in October and now back towards
6%. The question is whether the long bull market for U.S. bonds that began in
1982 is over. Many top fixed-income managers have already proclaimed that the
game has changed!
As long as we believe the economy will slow on its own without the Fed
tightening, it's hard to get too worried about bonds. With long Treasury yields
moving towards 6%, we believe the current market adequately reflects the risks
of a Fed tightening and growing inflationary pressures. We believe bonds will
most likely move in lock step with the stock market. During periods when
investors become worried about stocks, it's logical to expect money to flow into
bonds and yields to fall. Bonds possess a relatively attractive real yield of 4%
over inflation and provide a nice balance to any potential speculative excesses
in the stock market. A significant correction in the stock market could cause a
sharp rally in bond prices. Bonds' function of reducing the risk of stocks in a
balanced portfolio makes as much sense now, if not more, than it has
historically.
Our family of funds includes fixed-income offerings designed to meet a variety
of needs. The investment objective of the SOUTHTRUST BOND FUND is to provide a
level of total return consistent with a portfolio of high-quality debt
securities. The weighted-average maturity of the fund's holdings will generally
be between 5 to 10 years, but may be longer when bonds are considered to be
particularly attractive. The fund's average maturity is adjusted based upon
anticipated market conditions. Currently, the targeted duration of the fund is
near its benchmark as interest rates move higher. Our strategy was to extend the
portfolio's duration when we anticipated the economy slowing. Purchases focused
on high-quality securities including mortgage-backed securities and federal
agencies.
Meanwhile, the SOUTHTRUST INCOME FUND invests in short and intermediate maturity
bonds and notes with an investment objective of providing current income. The
fund pursues this objective while attempting to minimize principal volatility.
The fund invests in a portfolio of high-quality debt securities with a
weighted-average maturity of 1.5 to 5 years. The Fund is closely mirroring its
benchmark duration. During the reporting period, fund purchases tended to
emphasize mortgage-backed securities, federal agencies and high-quality
corporates, while focusing on maximizing income.
For those desiring income and safety without price volatility, the objective of
the SOUTHTRUST TREASURY OBLIGATIONS MONEY MARKET FUND is to provide as high a
level of current interest income as is consistent with maintaining liquidity and
stability of principal. The fund invests solely in direct obligations of the
U.S. Treasury, consisting of Treasury bills and notes and repurchase agreements
collateralized by direct Treasury obligations. All securities acquired have
remaining maturities of thirteen months or less, and the dollar-weighted average
portfolio maturity of the fund will not exceed 90 days. The yield of the fund is
affected by changes in short-term interest rates. Fund investments focus on
limiting volatility from the effects of the approaching new millennium.
EQUITY REVIEW
While last year's April-to-October correction was worse than during the 1987
bear market for the average stock, it ended quietly. The rally that started last
October has moved stock prices consistently higher with nothing more than
periodic slowdowns. The S&P 500 Index ("S&P 500")* has advanced from the mid-
900 level last October to the mid-1300 level this April. The six-month gain of
over 40% is something rarely seen in the past, except at
* The S&P 500 Index is an unmanaged capitalization-weighted index of 500 stocks
designed to measure performance of the broad domestic economy through changes
in the aggregate market value of 500 stock's representing all major
industries. Investments cannot be made in an index.
the start of a new bull market. While this bull market is unprecedented in its
durability, internally the market has undergone some very important changes. In
last year's fourth quarter move, a broad list of stocks showed strength. But by
year-end, the nifty twenty mega-cap growth stocks that led the way for most of
1998 had resumed command. In the first quarter of 1999, new annual lows
dramatically exceeded new highs on a daily basis, yet the large cap indexes hit
record high after record high. By March, the mega-cap growth leaders looked more
expensive relative to the rest of the market than the "nifty fifty" did in the
early 1970's. With most stocks actually down in price during the first calendar
quarter of 1999, the S&P 500 returned 5.0%, the entire gain coming from just 18
stocks! Two stocks, America Online and Microsoft, represented over 37% of the
S&P 500's total return!
By April of this year, we were seeing any number of reasons for caution.
Unparalleled speculation in internet stocks, extremely narrow market leadership,
and investors appearing to ignore any fundamental valuation to buy the mega-cap
growth leaders, were just several of the many warning signs. As a general rule,
old bull markets need a bear market or at least a significant correction before
leadership changes. In April of this year something very unusual appeared to
have happened. The growth stock leaders started to undergo meaningful
corrections while basic industry stocks surged. Along with the basic industry
stocks, a broad list of value and even mid-cap stocks started to perform
significantly better than the S&P 500. If this move proves sustainable, the vast
majority of stocks that fared so poorly during last year's correction and whose
valuations look dirt cheap relative to the mega- cap growth stock leaders could
keep this bull market going for some time. The strength currently being
experienced by the broad market is by far the healthiest alternative for stock
investors we can envision, and at least for now it looks to be sustainable.
Your SOUTHTRUST CORE EQUITY FUND has had a very difficult year. Our style of
buying stocks in industry-leading companies with earnings growth prospects well
in excess of the average, but only when they are selling at valuations well
below that of the average stock, led us to be out of favor. The fact that we
stuck by our historically successful disciplines did not help performance. Many
mutual fund managers appear to have given in to the relentless success of
momentum investing and gave up on their past disciplines! Many managers now
readily acknowledge that they index up to 80% of their portfolios in order to
stay close to their target of the S&P 500. We believe this pursuit of short-term
performance may prove extremely risky and the S&P 500 target may not prove as
attractive over the next several years as most investors think.
Recent action in the stock market and the April performance of the SOUTHTRUST
CORE EQUITY FUND gives us reason to believe that rational minds are beginning to
prevail. Our commitment remains to buying above-average companies, with strong
earnings growth, when their stocks are selling at attractive valuations. As we
have said before, historically, companies with these characteristics have
performed very well in the equity market, and we have no doubt they will again.
It is only logical to expect last year's growth stock leaders to be able to
generate short periods of strength. But, last year's record outperformance by
growth managers over value managers and the resulting significant valuation
extremes for the mega-cap leaders and internet stocks are not sustainable! We
believe the stage has been set for value managers and fundamentally attractively
valued stocks to lead the market. Numerous academic studies support the
long-term advantage of value stocks over growth stocks. Many of the arguments
currently being used to justify the lofty valuations of growth stocks are the
same ones provided in the early 1970's for the "nifty fifty." The holdings in
our SOUTHTRUST CORE EQUITY FUND have a significant valuation advantage, are
fundamentally strong companies and possess excellent growth prospects, all
factors which give us reason to be optimistic on our value style in 1999. Thank
you for your continued vote of confidence.
SOUTHTRUST BOND FUND
- -------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN SOUTHTRUST BOND FUND
The graph below illustrates the hypothetical investment of $10,000 in the
SouthTrust Bond Fund (the "Fund") from May 8, 1992 (start of performance) to
April 30, 1999, compared to the Lehman Brothers Intermediate
Government/Corporate Index ("LBIG/C") and the
Lehman Brothers Government/Corporate Index ("LBG/C").+
[Graphic Representation Omitted. Please see Appendix A1.]
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* Represents a hypothetical investment of $10,000 in the Fund after deducting
the former maximum sales charge of 4.00% ($10,000 investment minus $400 sales
charge = $9,600). The Fund's performance assumes the reinvestment of all
dividends and distributions. The LBIG/C and the LBG/C have been adjusted to
reflect reinvestment of dividends on securities in the indexes.
+ The LBIG/C and the LBG/C are not adjusted to reflect sales charges, expenses,
or other fees that the SEC requires to be reflected in the Fund's
performance. The indexes are unmanaged. The Fund has elected to change its
benchmark index from the LBIG/C to the LBG/C. The LBG/C is more
representative of the securities in which the Fund invests.
++ Total return quoted reflects all applicable sales charges. The total returns
and graph above are based on the original sales charge of 4.00%. On March 1,
1996, the sales charge on the SouthTrust Bond Fund changed to 3.50%.
SOUTHTRUST INCOME FUND
- -------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN SOUTHTRUST INCOME FUND
Thegraph below illustrates the hypothetical investment of $10,000 in the
SouthTrust Income Fund (the "Fund") from January 10, 1996 (start of
performance) to April 30, 1999, compared to the
Merrill Lynch Corporate/Government 1-5 Year Index ("MLC/G 1-5").+
[Graphic Representation Omitted. Please see Appendix A2.]
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 3.50% ($10,000 investment minus $350 sales
charge = $9,650). The Fund's performance assumes the reinvestment of all
dividends and distributions. The MLC/G 1-5 has been adjusted to reflect
reinvestment of dividends on securities in the index.
+ The MLC/G 1-5 is not adjusted to reflect sales charges, expenses, or other
fees that the SEC requires to be reflected in the Fund's performance. This
index is unmanaged.
++ Total return quoted reflects all applicable sales charges.
SOUTHTRUST CORE EQUITY FUND
- -------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN SOUTHTRUST CORE EQUITY FUND
Thegraph below illustrates the hypothetical investment of $10,000 in the
SouthTrust Core Equity Fund (the "Fund") from May 8, 1992 (start of
performance) to April 30, 1999, compared to the Standard & Poor's 500 Index
("S&P 500").+
[Graphic Representation Omitted. Please see Appendix A3.]
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.50% ($10,000 investment minus $450 sales
charge = $9,550). The Fund's performance assumes the reinvestment of all
dividends and distributions. The S&P 500 has been adjusted to reflect re-
investment of dividends on securities in the index.
+ The S&P 500 is not adjusted to reflect sales charges, expenses, or other
fees that the SEC requires to be reflected in the Fund's performance. This
index is unmanaged.
++ Total return quoted reflects all applicable sales charges. The total returns
and graph above are based on the original sales charge of 4.50%. On March 1,
1996, the sales charge for SouthTrust Core Equity Fund changed to 3.50%.
Effective July 1, 1996, the sales charge for SouthTrust Core Equity was
changed back to 4.50%.
SOUTHTRUST TREASURY OBLIGATIONS MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------ ------------------------------------------------ ------------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS--7.2%
-------------------------------------------------------------
U.S. TREASURY BILLS--7.2%
------------------------------------------------
$ 25,000,000 (c)4.520%, 5/27/1999 $ 24,921,007
------------------------------------------------
25,000,000 (c)4.550%, 6/3/1999 24,904,094
------------------------------------------------ ------------
TOTAL U.S. TREASURY OBLIGATIONS 49,825,101
------------------------------------------------ ------------
(A) REPURCHASE AGREEMENTS--93.1%
-------------------------------------------------------------
66,000,000 Donaldson, Lufkin and Jenrette Securities Corp.,
4.800%, dated 4/29/1999, due 5/3/1999 66,000,000
------------------------------------------------
188,839,000 Greenwich Capital Markets, Inc., 4.880%, dated
4/30/1999, due 5/3/1999 188,839,000
------------------------------------------------
65,000,000 Lehman Brothers, Inc., 4.810%, dated 4/29/1999,
due 5/3/1999 65,000,000
------------------------------------------------
160,000,000 State Street Corp., 4.770%, dated 4/29/1999, due
5/3/1999 160,000,000
------------------------------------------------
160,000,000 Warburg Securities, 4.810%, dated 4/29/1999, due
5/3/1999 160,000,000
------------------------------------------------ ------------
TOTAL REPURCHASE AGREEMENTS 639,839,000
------------------------------------------------ ------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $689,664,101
------------------------------------------------ ------------
</TABLE>
(a) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) Also represents cost for federal tax purposes.
(c) Yield at date of purchase.
Note: The categories of investments are shown as a percentage of net assets
($687,683,442) as of April 30, 1999.
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- --------------------------------------------------- ------------
<C> <S> <C>
CORPORATE BONDS--32.5%
--------------------------------------------------------------
BANKING--3.7%
---------------------------------------------------
$2,000,000 BB&T Corp., Sub. Note, 7.25%, 6/15/2007 $ 2,090,194
---------------------------------------------------
2,500,000 Bank of New York Co., Inc., Sub. Note, 8.50%,
12/15/2004 2,771,298
--------------------------------------------------- ------------
Total 4,861,492
--------------------------------------------------- ------------
CHEMICALS--3.1%
---------------------------------------------------
2,000,000 Praxair, Inc., Note, 6.15%, 4/15/2003 1,984,786
---------------------------------------------------
2,000,000 Solutia, Inc., Note, 6.50%, 10/15/2002 2,003,790
--------------------------------------------------- ------------
Total 3,988,576
--------------------------------------------------- ------------
COMMERCIAL SERVICES--1.6%
---------------------------------------------------
2,000,000 Equifax, Inc., Sr. Note, 6.50%, 6/15/2003 2,037,590
--------------------------------------------------- ------------
CONSUMER NON-DURABLES--2.0%
---------------------------------------------------
1,000,000 Philip Morris Cos., Inc., Unsecd. Note, 7.125%,
12/1/1999 1,008,591
---------------------------------------------------
1,500,000 Philip Morris Cos., Inc., Unsecd. Note, 7.125%,
10/1/2004 1,557,861
--------------------------------------------------- ------------
Total 2,566,452
--------------------------------------------------- ------------
CONSUMER SERVICES--2.3%
---------------------------------------------------
3,000,000 Service Corp. International, Note, 6.30%, 3/15/2003 2,948,097
--------------------------------------------------- ------------
FINANCIAL SERVICES--3.5%
---------------------------------------------------
2,500,000 Ford Motor Credit Corp., Unsecd. Note, 7.75%,
10/1/1999 2,524,755
---------------------------------------------------
2,000,000 National Rural Utilities Cooperative Finance Corp.,
Sr. Note, 6.75%, 9/1/2001 2,045,162
--------------------------------------------------- ------------
Total 4,569,917
--------------------------------------------------- ------------
PROCESS INDUSTRIES--4.1%
---------------------------------------------------
5,000,000 Archer-Daniels-Midland Co., Deb., 7.125%, 3/1/2013 5,331,315
--------------------------------------------------- ------------
TRANSPORTATION--2.3%
---------------------------------------------------
2,000,000 CSX Transportation, Inc., Equip. Trust, 6.47%,
6/15/2011 1,994,344
---------------------------------------------------
1,000,000 Norfolk Southern Corp., Equip. Trust, Series C,
7.75%, 8/15/2006 1,081,321
--------------------------------------------------- ------------
Total 3,075,665
--------------------------------------------------- ------------
</TABLE>
SOUTHTRUST BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- --------------------------------------------------- ------------
<C> <S> <C>
CORPORATE BONDS--CONTINUED
--------------------------------------------------------------
UTILITIES--9.9%
---------------------------------------------------
$5,000,000 BellSouth Telecommunications, Inc., Deb., 7.00%,
10/1/2025 $ 5,162,750
---------------------------------------------------
2,000,000 GTE North, Inc., Deb., 5.65%, 11/15/2008 1,926,718
---------------------------------------------------
755,000 New Jersey Bell Telephone Co., Deb., 7.375%,
6/1/2012 765,960
---------------------------------------------------
5,000,000 Pacific Bell, Note, 6.125%, 2/15/2008 5,025,320
--------------------------------------------------- ------------
Total 12,880,748
--------------------------------------------------- ------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $46,577,497) 42,259,852
--------------------------------------------------- ------------
GOVERNMENT AGENCIES--25.9%
--------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--3.4%
---------------------------------------------------
3,500,000 6.52%, 1/2/2002 3,596,379
---------------------------------------------------
772,017 9.50%, 2/15/2020 813,889
--------------------------------------------------- ------------
Total 4,410,268
--------------------------------------------------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--22.5%
---------------------------------------------------
5,000,000 5.375%, 3/15/2002 4,998,515
---------------------------------------------------
5,000,000 5.75%, 4/15/2003 5,029,770
---------------------------------------------------
5,000,000 6.00%, 5/15/2008 5,047,560
---------------------------------------------------
5,000,000 6.65%, Medium Term Note, 11/14/2007 5,063,065
---------------------------------------------------
2,000,000 6.65%, Unsecd. Note, 11/7/2007 2,003,706
---------------------------------------------------
5,000,000 8.00%, 7/25/2005 5,099,250
---------------------------------------------------
2,000,000 8.50%, 2/1/2005 2,047,616
--------------------------------------------------- ------------
Total 29,289,482
--------------------------------------------------- ------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST
$34,193,113) 33,699,750
--------------------------------------------------- ------------
U.S. TREASURY OBLIGATIONS--35.6%
--------------------------------------------------------------
U.S. TREASURY BONDS--16.6%
---------------------------------------------------
5,500,000 5.50%, 8/15/2028 5,231,875
---------------------------------------------------
2,000,000 6.125%, 11/15/2027 2,065,626
---------------------------------------------------
1,125,000 7.25%, 5/15/2004 1,221,328
---------------------------------------------------
</TABLE>
SOUTHTRUST BOND FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
---------- --------------------------------------------------- ------------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS--CONTINUED
--------------------------------------------------------------
U.S. TREASURY BONDS--CONTINUED
---------------------------------------------------
$5,000,000 7.25%, 8/15/2022 $ 5,818,750
---------------------------------------------------
4,000,000 7.50%, 11/15/2016 4,685,000
---------------------------------------------------
1,000,000 7.875%, 2/15/2021 1,234,063
---------------------------------------------------
1,000,000 8.00%, 11/15/2021 1,253,750
--------------------------------------------------- ------------
Total 21,510,392
--------------------------------------------------- ------------
U.S. TREASURY NOTES--19.0%
---------------------------------------------------
5,000,000 5.50%, 1/31/2003 5,042,190
---------------------------------------------------
2,000,000 6.25%, 10/31/2001 2,052,500
---------------------------------------------------
2,000,000 6.25%, 2/15/2003 2,068,126
---------------------------------------------------
2,000,000 6.375%, 3/31/2001 2,047,500
---------------------------------------------------
2,000,000 6.375%, 9/30/2001 2,056,250
---------------------------------------------------
3,000,000 6.50%, 5/15/2005 3,176,250
---------------------------------------------------
1,500,000 6.50%, 8/15/2005 1,590,000
---------------------------------------------------
3,000,000 6.625%, 5/15/2007 3,231,564
---------------------------------------------------
1,000,000 7.25%, 8/15/2004 1,088,125
---------------------------------------------------
1,125,000 7.50%, 2/15/2005 1,244,180
---------------------------------------------------
1,000,000 8.00%, 5/15/2001 1,055,625
--------------------------------------------------- ------------
Total 24,652,310
--------------------------------------------------- ------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST
$44,545,625) 46,162,702
--------------------------------------------------- ------------
MUTUAL FUND--3.9%
--------------------------------------------------------------
5,066,720 AIM Short-Term Investment Co. Prime Portfolio (AT
NET ASSET VALUE) 5,066,720
--------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $125,316,235)(A) $127,189,024
--------------------------------------------------- ------------
</TABLE>
(a) The cost of investments for investments for federal tax purposes amounts to
$125,316,235. The net unrealized appreciation of investments on a federal
tax basis amounts to $1,872,789 which is comprised of $3,412,455
appreciation and $1,539,666 depreciation as of April 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($129,895,574) as of April 30, 1999.
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST INCOME FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ---------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS--42.5%
---------------------------------------------------------------
BANKING--2.0%
----------------------------------------------------
$1,000,000 NationsBank Corp., Sub. Note, 6.875%, 2/15/2005 $ 1,032,343
---------------------------------------------------- -----------
CHEMICALS--3.8%
----------------------------------------------------
1,000,000 Praxair, Inc., Note, 6.15%, 4/15/2003 992,393
----------------------------------------------------
1,000,000 Solutia, Inc., Note, 6.50%, 10/15/2002 1,001,895
---------------------------------------------------- -----------
Total 1,994,288
---------------------------------------------------- -----------
CONSUMER NON-DURABLES--3.0%
----------------------------------------------------
1,000,000 Philip Morris Cos., Inc., Note, 7.625%, 5/15/2002 1,043,190
----------------------------------------------------
500,000 Procter & Gamble Co., Deb., 8.70%, 8/1/2001 534,314
---------------------------------------------------- -----------
Total 1,577,504
---------------------------------------------------- -----------
CONSUMER SERVICES--3.8%
----------------------------------------------------
1,000,000 Service Corp. International, Note, 6.30%, 3/15/2003 982,699
----------------------------------------------------
1,000,000 Service Corp. International, Note, 6.375%, 10/1/2000 999,682
---------------------------------------------------- -----------
Total 1,982,381
---------------------------------------------------- -----------
ENERGY--5.6%
----------------------------------------------------
1,000,000 Amoco Corp., Company Guarantee, 6.25%, 10/15/2004 1,021,264
----------------------------------------------------
1,802,133 Chevron Corp., Deb., 8.11%, 12/1/2004 1,919,164
---------------------------------------------------- -----------
Total 2,940,428
---------------------------------------------------- -----------
ENTERTAINMENT--1.8%
----------------------------------------------------
1,000,000 Disney (Walt) Co., Bond, 5.125%, 12/15/2003 974,954
---------------------------------------------------- -----------
FINANCIAL SERVICES--13.3%
----------------------------------------------------
1,000,000 Ford Motor Credit Corp., Note, 6.375%, 10/6/2000 1,012,559
----------------------------------------------------
1,000,000 Ford Motor Credit Corp., Unsecd. Note, 8.20%,
2/15/2002 1,061,153
----------------------------------------------------
1,000,000 General Motors Acceptance Corp., Note, 6.625%,
10/1/2002 1,019,983
----------------------------------------------------
1,000,000 General Motors Acceptance Corp., Sr. Note, 6.625%,
1/10/2002 1,019,467
----------------------------------------------------
1,000,000 IBM Credit Corp., Note, 6.80%, 5/22/2001 1,000,550
----------------------------------------------------
</TABLE>
SOUTHTRUST INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ----------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS--CONTINUED
----------------------------------------------------------------
FINANCIAL SERVICES--CONTINUED
-----------------------------------------------------
$1,000,000 Merrill Lynch & Co., Inc., Note, 8.375%, 2/9/2000 $ 1,021,038
-----------------------------------------------------
850,000 Sears Roebuck Acceptance Corp., Note, Series MTN2,
6.86%, 8/6/2001 866,412
----------------------------------------------------- -----------
Total 7,001,162
----------------------------------------------------- -----------
MANUFACTURING--1.9%
-----------------------------------------------------
1,000,000 Sony Corp., Bond, 6.125%, 3/4/2003 1,009,900
----------------------------------------------------- -----------
RETAIL--1.0%
-----------------------------------------------------
500,000 Dillard Department Stores, Inc., Note, 7.375%,
6/15/1999 500,877
----------------------------------------------------- -----------
UTILITIES--6.3%
-----------------------------------------------------
1,000,000 SBC Communications, Inc., Deb., 6.50%, 7/1/2003 996,657
-----------------------------------------------------
1,000,000 U.S. West Communications, Inc., Unsecd. Note, 6.375%,
10/15/2002 1,021,627
-----------------------------------------------------
1,275,000 Washington Gas Light Co., 1st Mtg. Bond, 8.75%,
7/1/2019 1,280,563
----------------------------------------------------- -----------
Total 3,298,847
----------------------------------------------------- -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $22,239,140) 22,312,684
----------------------------------------------------- -----------
GOVERNMENT AGENCIES--26.3%
----------------------------------------------------------------
FEDERAL HOME LOAN BANK--3.9%
-----------------------------------------------------
2,000,000 7.00%, 11/13/2007 2,019,908
----------------------------------------------------- -----------
FEDERAL HOME LOAN MORTGAGE CORPORATION--4.1%
-----------------------------------------------------
928,429 6.50%, 1/15/2006 939,005
-----------------------------------------------------
1,000,000 6.50%, 9/15/2021 1,002,180
-----------------------------------------------------
190,903 7.00%, 8/1/2003 193,476
----------------------------------------------------- -----------
Total 2,134,661
----------------------------------------------------- -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--18.3%
-----------------------------------------------------
1,207,405 6.50%, 8/1/2013 1,220,167
-----------------------------------------------------
1,775,000 6.59%, 5/16/2002 1,827,895
-----------------------------------------------------
1,000,000 6.60%, 5/1/2008 996,583
-----------------------------------------------------
1,000,000 6.65%, 11/7/2007 1,001,853
-----------------------------------------------------
</TABLE>
SOUTHTRUST INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
---------- ----------------------------------------------------- -----------
<C> <S> <C>
GOVERNMENT AGENCIES--CONTINUED
----------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--CONTINUED
-----------------------------------------------------
$1,000,000 6.65%, 11/14/2007 $ 1,012,613
-----------------------------------------------------
1,000,000 6.97%, 10/30/2007 1,003,912
-----------------------------------------------------
1,000,000 7.05%, 2/12/2007 1,027,990
-----------------------------------------------------
1,500,000 8.00%, 7/25/2005 1,529,775
----------------------------------------------------- -----------
Total 9,620,788
----------------------------------------------------- -----------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST
$13,906,905) 13,775,357
----------------------------------------------------- -----------
U.S. TREASURY OBLIGATIONS--23.1%
----------------------------------------------------------------
U.S. TREASURY BOND--2.1%
-----------------------------------------------------
1,000,000 7.25%, 5/15/2004 1,085,625
----------------------------------------------------- -----------
U.S. TREASURY NOTES--21.0%
-----------------------------------------------------
1,250,000 6.25%, 8/31/2000 1,269,922
-----------------------------------------------------
1,000,000 6.375%, 1/15/2000 1,010,313
-----------------------------------------------------
1,000,000 6.375%, 3/31/2001 1,023,750
-----------------------------------------------------
1,000,000 6.50%, 8/31/2001 1,030,000
-----------------------------------------------------
1,500,000 6.875%, 3/31/2000 1,526,719
-----------------------------------------------------
1,000,000 7.125%, 2/29/2000 1,018,125
-----------------------------------------------------
1,000,000 7.50%, 10/31/1999 1,013,125
-----------------------------------------------------
1,000,000 7.50%, 11/15/2001 1,055,625
-----------------------------------------------------
1,000,000 7.75%, 2/15/2001 1,045,625
-----------------------------------------------------
1,000,000 8.00%, 8/15/1999 1,009,688
----------------------------------------------------- -----------
Total 11,002,892
----------------------------------------------------- -----------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST
$11,996,211) 12,088,517
----------------------------------------------------- -----------
MUTUAL FUND--3.5%
----------------------------------------------------------------
1,852,604 AIM Short-Term Investment Co. Prime Portfolio (AT NET
ASSET VALUE) 1,852,604
----------------------------------------------------- -----------
</TABLE>
SOUTHTRUST INCOME FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -------------------------------------------------- -----------
<C> <S> <C>
COMMERCIAL PAPER--2.9%
-------------------------------------------------------------
$1,500,000 General Electric Capital Corp., 4.76%, 5/6/99
(AMORTIZED COST $1,500,000) $ 1,500,000
-------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $51,494,860)(A) $51,529,162
-------------------------------------------------- -----------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $51,494,860. The
net unrealized appreciation of investments on a federal tax basis amounts to
$34,302 which is comprised of $377,511 appreciation and $343,209
depreciation as of April 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($52,445,506) as of April 30, 1999.
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST CORE EQUITY FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS--94.5%
------------------------------------------------
BASIC MATERIALS--1.6%
------------------------------------
185,000 Lafarge Corp. $ 6,255,312
------------------------------------ ------------
CAPITAL GOODS--12.9%
------------------------------------
170,000 Allied-Signal, Inc. 9,987,500
------------------------------------
87,500 Honeywell, Inc. 8,290,625
------------------------------------
220,000 Ingersoll-Rand Co. 15,221,250
------------------------------------
70,300 (a)Jacobs Engineering Group, Inc. 2,772,456
------------------------------------
51,000 United Technologies Corp. 7,388,625
------------------------------------
265,100 (a)Wolverine Tube, Inc. 6,693,775
------------------------------------ ------------
Total 50,354,231
------------------------------------ ------------
CONSUMER CYCLICAL--13.6%
------------------------------------
315,000 Deluxe Corp. 10,906,875
------------------------------------
140,000 (a)Federated Department Stores, Inc. 6,536,250
------------------------------------
225,000 (a)Jones Apparel Group, Inc. 7,425,000
------------------------------------
205,000 Masco Corp. 6,021,875
------------------------------------
146,200 (a)Meadowcraft, Inc. 1,032,538
------------------------------------
465,000 (a)Office Depot, Inc. 10,230,000
------------------------------------
150,000 (a)School Specialty, Inc. 2,831,250
------------------------------------
250,000 Sherwin-Williams Co. 7,781,250
------------------------------------ ------------
Total 52,765,038
------------------------------------ ------------
CONSUMER STAPLES--8.1%
------------------------------------
279,300 Dial Corp. 9,496,200
------------------------------------
200,000 PepsiCo, Inc. 7,387,500
------------------------------------
210,000 Philip Morris Cos., Inc. 7,363,125
------------------------------------
335,000 Sara Lee Corp. 7,453,750
------------------------------------ ------------
Total 31,700,575
------------------------------------ ------------
</TABLE>
SOUTHTRUST CORE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
-------------------------------------------------
ENERGY--8.7%
-------------------------------------
240,000 Coastal Corp. $ 9,180,000
-------------------------------------
185,000 Halliburton Co. 7,885,625
-------------------------------------
200,000 Transocean Offshore, Inc. 5,937,500
-------------------------------------
350,000 USX Marathon 10,937,500
------------------------------------- ------------
Total 33,940,625
------------------------------------- ------------
FINANCE--13.2%
-------------------------------------
167,400 Ace, Ltd. 5,063,850
-------------------------------------
65,000 American International Group, Inc. 7,633,437
-------------------------------------
97,000 Bank of America Corp. 6,984,000
-------------------------------------
165,000 Bank of New York Co., Inc. 6,600,000
-------------------------------------
110,000 Chase Manhattan Corp. 9,102,500
-------------------------------------
119,000 Federal National Mortgage Association 8,441,562
-------------------------------------
102,500 SunTrust Banks, Inc. 7,328,750
------------------------------------- ------------
Total 51,154,099
------------------------------------- ------------
HEALTHCARE--11.1%
-------------------------------------
92,000 American Home Products Corp. 5,612,000
-------------------------------------
168,000 Bristol-Myers Squibb Co. 10,678,500
-------------------------------------
600,000 (a)HEALTHSOUTH, Corp. 8,062,500
-------------------------------------
90,000 Johnson & Johnson 8,775,000
-------------------------------------
72,000 Merck & Co., Inc. 5,058,000
-------------------------------------
206,400 (a)Tenet Healthcare Corp. 4,876,200
------------------------------------- ------------
Total 43,062,200
------------------------------------- ------------
MISCELLANEOUS--1.4%
-------------------------------------
470,000 (a)Modis Professional Services, Inc. 5,434,375
------------------------------------- ------------
TECHNOLOGY--18.5%
-------------------------------------
300,000 Compaq Computer Corp. 6,693,750
-------------------------------------
80,000 (a)Computer Sciences Corp. 4,765,000
-------------------------------------
225,000 Diebold, Inc. 5,414,063
-------------------------------------
</TABLE>
SOUTHTRUST CORE EQUITY FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
VALUE VALUE
----------- --------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
---------------------------------------------------------------
TECHNOLOGY--CONTINUED
---------------------------------------------------
50,000 Electronic Data Systems Corp. $ 2,687,500
---------------------------------------------------
145,000 First Data Corp. 6,153,437
---------------------------------------------------
225,000 Harris Corp. 7,776,563
---------------------------------------------------
64,000 Hewlett-Packard Co. 5,048,000
---------------------------------------------------
96,000 Intel Corp. 5,874,000
---------------------------------------------------
60,000 International Business Machines Corp. 12,551,250
---------------------------------------------------
166,000 (a)Sun Microsystems, Inc. 9,928,875
---------------------------------------------------
250,000 (a)Symantec Corp. 4,968,750
--------------------------------------------------- ------------
Total 71,861,188
--------------------------------------------------- ------------
TELECOMMUNICATION SERVICES--5.4%
---------------------------------------------------
95,000 Bell Atlantic Corp. 5,474,375
---------------------------------------------------
138,000 GTE Corp. 9,237,375
---------------------------------------------------
59,800 Sprint Corp. 6,133,238
--------------------------------------------------- ------------
Total 20,844,988
--------------------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $263,781,060) 367,372,631
--------------------------------------------------- ------------
MUTUAL FUNDS--2.3%
---------------------------------------------------------------
9,144,931 AIM Short-Term Investment Co. Prime Portfolio (AT
NET ASSET VALUE) 9,144,931
--------------------------------------------------- ------------
REPURCHASE AGREEMENTS--3.9%
---------------------------------------------------------------
$ 5,000,000 Morgan Stanley Group, Inc., 4.68%, dated 4/27/1999,
due 5/4/1999 5,000,000
---------------------------------------------------
10,000,000 Morgan Stanley Group, Inc., 4.75%, dated 4/29/1999, due 5/4/1999
10,000,000
--------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST) 15,000,000
--------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $287,925,991)(B) $391,517,562
--------------------------------------------------- ------------
</TABLE>
(a)Non-income producing security.
(b) The cost of investments for federal tax purposes amounts to $287,925,991.
The net unrealized appreciation of investments on a federal tax basis
amounts to $103,591,571 which is comprised of $115,590,079 appreciation and
$11,998,508 depreciation at April 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($388,731,283) at April 30, 1999.
The following acronym is used throughout this portfolio
ADR--American Depositary Receipt
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST FUNDS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY
OBLIGATIONS
MONEY BOND INCOME CORE EQUITY
MARKET FUND FUND FUND FUND
- ------------------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
- ------------------------
Investments in
repurchase agreements $639,839,000 $ -- $ -- $ 15,000,000
- ------------------------
Investments in
securities 49,825,101 127,189,024 51,529,162 376,517,562
- ------------------------ ------------ ------------ ----------- ------------
Total investments in
securities, at value $689,664,101 $127,189,024 $51,529,162 $391,517,562
- ------------------------ ------------ ------------ ----------- ------------
Cash 16 66,016 -- --
- ------------------------
Income receivable 171,636 2,043,760 864,067 237,664
- ------------------------
Receivable for
investments sold -- -- -- 3,915,279
- ------------------------
Receivable for shares
sold -- 821,539 160,151 80,276
- ------------------------
Deferred organizational
costs -- -- 5,764 --
- ------------------------ ------------ ------------ ----------- ------------
Total assets 689,835,753 130,120,339 52,559,144 395,750,781
- ------------------------ ------------ ------------ ----------- ------------
LIABILITIES:
- ------------------------
Payable for investments
purchased -- -- -- 6,099,092
- ------------------------
Payable for shares
redeemed -- 121,620 4,727 827,074
- ------------------------
Payable to Bank -- -- 58,813 41,600
- ------------------------
Income distribution
payable 2,092,545 -- -- --
- ------------------------
Accrued expenses 59,766 103,145 50,098 51,732
- ------------------------ ------------ ------------ ----------- ------------
Total liabilities 2,152,311 224,765 113,638 7,019,498
- ------------------------ ------------ ------------ ----------- ------------
NET ASSETS CONSIST OF:
- ------------------------
Paid in capital 687,683,442 128,272,471 53,896,376 273,036,266
- ------------------------
Net unrealized
appreciation of
investments -- 1,872,789 34,302 103,591,571
- ------------------------
Accumulated net realized
gain (loss) on
investments -- (332,346) (1,521,437) 12,026,938
- ------------------------
Undistributed net
investment income -- 82,660 36,265 76,508
- ------------------------ ------------ ------------ ----------- ------------
Total Net Assets $687,683,442 $129,895,574 $52,445,506 $388,731,283
- ------------------------ ------------ ------------ ----------- ------------
Shares Outstanding 687,683,442 12,688,887 5,359,923 21,722,280
- ------------------------ ------------ ------------ ----------- ------------
NET ASSET VALUE PER
SHARE:
(Net Assets / Shares
Outstanding) $ 1.00 $ 10.24 $ 9.78 $ 17.90
- ------------------------ ------------ ------------ ----------- ------------
Offering Price Per
Share(a) -- $ 10.61(b) $ 10.13(b) $ 18.74(c)
- ------------------------ ------------ ------------ ----------- ------------
Redemption Proceeds Per
Share(a) -- $ 10.14(d) $ 9.68(d) $ 17.72(d)
- ------------------------ ------------ ------------ ----------- ------------
Investments, at
identified cost -- 125,316,235 51,494,860 287,925,991
- ------------------------ ------------ ------------ ----------- ------------
Investments, at tax cost -- 125,316,235 51,494,860 287,925,991
- ------------------------ ------------ ------------ ----------- ------------
</TABLE>
(a)See "How to Purchase, Exchange and Redeem Shares" in the prospectus.
(b)Computation of offering price: 100 / 96.5 of net asset value.
(c)Computation of offering price: 100 / 95.5 of net asset value.
(d)Computation of redemption proceeds: 99 / 100 of net asset value.
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST FUNDS
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY
OBLIGATIONS
MONEY MARKET BOND INCOME CORE EQUITY
FUND FUND FUND FUND
- -------------------------- ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------
Dividends $ -- $ -- $ -- $ 4,703,668
- --------------------------
Interest 32,191,164 7,584,751 2,966,111 426,995
- -------------------------- ----------- ----------- ---------- -----------
Total income 32,191,164 7,584,751 2,966,111 5,130,663
- -------------------------- ----------- ----------- ---------- -----------
EXPENSES:
- --------------------------
Investment advisory fee 3,148,280 746,243 273,245 2,779,844
- --------------------------
Administrative personnel
and services fee 673,714 133,295 99,999 396,862
- --------------------------
Custodian fees 40,686 12,095 4,293 36,093
- --------------------------
Transfer and dividend
disbursing agent fees and
expenses 40,281 31,578 34,676 23,033
- --------------------------
Directors'/Trustees' fees 12,960 4,959 461 7,470
- --------------------------
Auditing fees 10,674 8,612 13,049 7,413
- --------------------------
Legal fees 7,043 6,156 6,321 3,763
- --------------------------
Portfolio accounting fees 94,921 58,647 56,981 66,730
- --------------------------
Share registration costs 34,392 18,572 22,211 25,662
- --------------------------
Printing and postage 8,000 5,432 3,623 11,395
- --------------------------
Insurance premiums 4,056 1,244 1,134 4,500
- --------------------------
Miscellaneous 8,741 14,473 13,520 6,670
- -------------------------- ----------- ----------- ---------- -----------
Total expenses 4,083,748 1,041,311 529,513 3,369,435
- -------------------------- ----------- ----------- ---------- -----------
Waivers--
- --------------------------
Waiver of investment
advisory fee (1,196,347) -- (136,623) --
- --------------------------
Waiver of administrative
personnel and services fee -- -- (51,209) --
- -------------------------- ----------- ----------- ---------- -----------
Total waivers (1,196,347) -- (187,832) --
- -------------------------- ----------- ----------- ---------- -----------
Net expenses 2,887,401 1,041,311 341,681 3,369,435
- -------------------------- ----------- ----------- ---------- -----------
Net investment income 29,303,763 6,543,440 2,624,430 1,761,228
- -------------------------- ----------- ----------- ---------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
- --------------------------
Net realized gain on
investments -- 1,552,929 113,077 12,149,054
- --------------------------
Change in unrealized
appreciation
(depreciation) of
investments -- (1,619,125) (386,729) 258,129
- -------------------------- ----------- ----------- ---------- -----------
Net realized and
unrealized gain (loss)
on investments -- (66,196) (273,652) 12,407,183
- -------------------------- ----------- ----------- ---------- -----------
Change in net assets
resulting from
operations $29,303,763 $ 6,477,244 $2,350,778 $14,168,411
- -------------------------- ----------- ----------- ---------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY OBLIGATIONS BOND
MONEY MARKET FUND FUND
-------------------------------- --------------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
-------------------------------- --------------------------
1999 1998 1999 1998
- --------------------------- --------------- --------------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
- ---------------------------
OPERATIONS--
- ---------------------------
Net investment income $ 29,303,763 $ 25,246,533 $ 6,543,440 $ 5,939,397
- ---------------------------
Net realized gain on
investments -- -- 1,552,929 1,212,542
- ---------------------------
Net change in unrealized
appreciation (depreciation)
of investments -- -- (1,619,125) 2,922,962
- --------------------------- --------------- --------------- ------------ ------------
Change in net assets
resulting from
operations 29,303,763 25,246,533 6,477,244 10,074,901
- --------------------------- --------------- --------------- ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS--
- ---------------------------
Distributions from net
investment income (29,303,763) (25,246,533) (6,596,944) (5,914,468)
- ---------------------------
Distributions from net
realized gain on investment
transactions -- -- (2,103,163) --
- --------------------------- --------------- --------------- ------------ ------------
Change in net assets from
distributions to
shareholders (29,303,763) (25,246,533) (8,700,107) (5,914,468)
- --------------------------- --------------- --------------- ------------ ------------
SHARE TRANSACTIONS--
- ---------------------------
Proceeds from sale of
shares 2,420,255,869 1,160,628,263 37,707,215 32,780,331
- ---------------------------
Net asset value of shares
issued to shareholders
in payment of distributions
declared 2,316,665 1,286,356 36,387 27,482
- ---------------------------
Cost of shares redeemed (2,366,757,874) (1,054,507,906) (20,275,478) (13,502,506)
- --------------------------- --------------- --------------- ------------ ------------
Change in net assets
resulting from share
transactions 55,814,660 107,406,713 17,468,124 19,305,307
- --------------------------- --------------- --------------- ------------ ------------
Change in net assets 55,814,660 107,406,713 15,245,261 23,465,740
- ---------------------------
NET ASSETS:
- ---------------------------
Beginning of period 631,868,782 524,462,069 114,650,313 91,184,573
- --------------------------- --------------- --------------- ------------ ------------
End of period $ 687,683,442 $ 631,868,782 $129,895,574 $114,650,313
- --------------------------- --------------- --------------- ------------ ------------
Undistributed net
investment income included
in net assets at the end of
the period $ -- $ -- $ 82,523 $ 136,027
- --------------------------- --------------- --------------- ------------ ------------
Net gain as computed for
federal tax purposes -- -- $ 1,866,223 --
- --------------------------- --------------- --------------- ------------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME CORE EQUITY
FUND FUND
------------------------- --------------------------
YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30,
------------------------- --------------------------
1999 1998 1999 1998
- --------------------------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
- ---------------------------
OPERATIONS--
- ---------------------------
Net investment income $ 2,624,430 $ 2,279,841 $ 1,761,228 $ 2,622,092
- ---------------------------
Net realized gain on
investments 113,077 151,620 12,149,054 58,160,304
- ---------------------------
Net change in unrealized
appreciation (depreciation)
of investments (386,729) 369,670 258,129 42,808,715
- --------------------------- ------------ ----------- ------------ ------------
Change in net assets
resulting from
operations 2,350,778 2,801,131 14,168,411 103,591,111
- --------------------------- ------------ ----------- ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS--
- ---------------------------
Distributions from net
investment income (2,625,125) (2,286,964) (1,741,817) (2,656,592)
- ---------------------------
Distributions from net
realized gain on investment
transactions -- -- (34,486,631) (37,488,088)
- --------------------------- ------------ ----------- ------------ ------------
Change in net assets from
distributions to
shareholders (2,625,125) (2,286,964) (36,228,448) (40,144,680)
- --------------------------- ------------ ----------- ------------ ------------
SHARE TRANSACTIONS--
- ---------------------------
Proceeds from sale of
shares 27,055,242 8,595,541 45,298,138 85,834,433
- ---------------------------
Net asset value of shares
issued to shareholders
in payment of distributions
declared 1,107 -- 31,652,987 35,274,684
- ---------------------------
Cost of shares redeemed (14,305,452) (7,738,354) (79,016,339) (44,363,740)
- --------------------------- ------------ ----------- ------------ ------------
Change in net assets
resulting from share
transactions 12,750,897 857,187 (2,065,214) 76,745,377
- --------------------------- ------------ ----------- ------------ ------------
Change in net assets 12,476,550 1,371,354 (24,125,251) 140,191,808
- ---------------------------
NET ASSETS:
- ---------------------------
Beginning of period 39,968,956 38,597,602 412,856,534 272,664,726
- --------------------------- ------------ ----------- ------------ ------------
End of period $ 52,445,506 $39,968,956 $388,731,283 $412,856,534
- --------------------------- ------------ ----------- ------------ ------------
Undistributed net
investment income included
in net assets at the end of
the period $ 36,265 $ 36,960 $ 76,905 $ 57,494
- --------------------------- ------------ ----------- ------------ ------------
Net gain as computed for
federal tax purposes -- -- $ 12,144,199 --
- --------------------------- ------------ ----------- ------------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
[This Page Intentionally Left Blank]
SOUTHTRUST FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
NET
REALIZED
AND DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS FROM NET
VALUE, NET GAIN (LOSS) TOTAL FROM FROM NET REALIZED
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT GAIN ON TOTAL
YEAR ENDED APRIL 30, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INVESTMENTS DISTRIBUTIONS
- -------------------- --------- ---------- ----------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
TREASURY OBLIGATIONS
MONEY MARKET FUND
1995 $ 1.00 0.05 -- 0.05 (0.05) -- (0.05)
1996 $ 1.00 0.05 -- 0.05 (0.05) -- (0.05)
1997 $ 1.00 0.05 -- 0.05 (0.05) -- (0.05)
1998 $ 1.00 0.05 -- 0.05 (0.05) -- (0.05)
1999 $ 1.00 0.05 -- 0.05 (0.05) -- (0.05)
BOND FUND
1995 $10.04 0.61 (0.09) 0.52 (0.61) -- (0.61)
1996 $ 9.95 0.59 0.03 0.62 (0.56) -- (0.56)
1997 $10.01 0.61 (0.03) 0.58 (0.64) -- (0.64)
1998 $ 9.95 0.60 0.45 1.05 (0.60) -- (0.60)
1999 $10.40 0.55 0.02 0.57 (0.56) (0.18) (0.74)
INCOME FUND
1996(c) $10.00 0.16 (0.25) (0.09) (0.14) -- (0.14)
1997 $ 9.77 0.56 (0.09) 0.47 (0.56) -- (0.56)
1998 $ 9.68 0.58 0.13 0.71 (0.58) -- (0.58)
1999 $ 9.81 0.57 (0.03) 0.54 (0.57) -- (0.57)
CORE EQUITY FUND
1995 $10.08 0.20 1.43 1.63 (0.20) -- (0.20)
1996 $11.51 0.23 3.33 3.56 (0.23) (0.44) (0.67)
1997 $14.40 0.20 2.59 2.79 (0.21) (1.17) (1.38)
1998 $15.81 0.15 5.26 5.41 (0.15) (2.02) (2.17)
1999 $19.05 0.08 0.43 0.51 (0.08) (1.58) (1.66)
</TABLE>
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
(c) Reflects operations for the period from January 10, 1996 (date of initial
public investment) to April 30, 1996.
(d) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
--------------------------------------------------------
NET ASSET NET NET ASSETS,
VALUE, NET INVESTMENT END OF PORTFOLIO
END OF TOTAL INVESTMENT EXPENSES INCOME PERIOD TURNOVER
PERIOD RETURN(A) EXPENSES(B) INCOME(B) (AFTER WAIVERS) (AFTER WAIVERS) (000 OMITTED) RATE
- --------- --------- ----------- ---------- --------------- --------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1.00 4.62% 0.73% 4.26% 0.43% 4.56% $314,200 --
$ 1.00 5.26% 0.70% 4.89% 0.48% 5.11% $445,729 --
$ 1.00 4.88% 0.71% 4.58% 0.51% 4.78% $524,462 --
$ 1.00 5.14% 0.67% 4.84% 0.48% 5.03% $631,869 --
$ 1.00 4.77% 0.64% 4.46% 0.45% 4.65% $687,683 --
$ 9.95 5.41% 1.03% 6.01% 0.75% 6.29% $ 76,409 48%
$10.01 6.78% 0.95% 6.20% 0.87% 6.28% $ 83,257 28%
$ 9.95 5.98% 0.91% 6.13% 0.86% 6.18% $ 91,185 63%
$10.40 10.80% 0.85% 5.87% 0.84% 5.88% $114,650 107%
$10.24 5.54% 0.84% 5.26% 0.84% 5.26% $129,897 119%
$ 9.77 (0.93%) 0.90%(d) 5.25%(d) 0.85%(d) 5.30%(d) $ 78,147 61%
$ 9.68 4.90% 1.24% 5.27% 0.92% 5.59% $ 38,598 112%
$ 9.81 7.46% 1.19% 5.42% 0.75% 5.86% $ 39,969 112%
$ 9.78 5.58% 1.16% 5.35% 0.75% 5.76% $ 52,446 48%
$11.51 16.36% 1.13% 1.56% 0.74% 1.95% $138,281 57%
$14.40 31.51% 0.98% 1.64% 0.87% 1.75% $204,421 39%
$15.81 19.99% 0.97% 1.30% 0.94% 1.33% $272,665 27%
$19.05 36.39% 0.94% 0.77% 0.94% 0.77% $412,857 75%
$17.90 5.17% 0.91% 0.48% 0.91% 0.48% $388,731 45%
</TABLE>
SOUTHTRUST FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- -------------------------------------------------------------------------------
(1) ORGANIZATION
SouthTrust Funds (the "Company"), (formerly, SouthTrust Vulcan Funds) is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
an open-end management investment company. The Company consists of four
diversified portfolios (individually referred to as the "Fund," or collectively
as the "Funds") which are presented herein:
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
<S> <C>
Treasury Obligations
Money Market Fund To provide as high a level of current interest ("Treasury
Obligations") income as is consistent with maintaining liquidity
and stability of principal.
- --------------------------------------------------------------------------------
Bond Fund ("Bond") To provide a level of total return
consistent with a portfolio of high-quality debt
securities.
- --------------------------------------------------------------------------------
Income Fund ("Income") To provide current income.
- --------------------------------------------------------------------------------
Core Equity Fund ("Core To provide long-term capital appreciation, Equity")
with income a secondary consideration.
</TABLE>
The assets of each portfolio are segregated and a shareholder's interest is
limited to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Company in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--U.S. government securities are generally valued at the
mean between the over-the-counter bid and asked prices as furnished by an
independent pricing service. Listed corporate bonds, (other fixed income and
asset-backed securities), and unlisted securities and private placement
securities are generally valued at the mean of the latest bid and asked price
as furnished by an independent pricing service. Listed equity securities are
valued at the last sale price reported on a national securities exchange. For
Treasury Obligations, the use of the amortized cost method to value its
portfolio securities is in accordance with rule 2a-7 under the Act. For the
other Funds within the Company, short-term securities are valued at the prices
provided by an independent pricing service. However, short-term securities
purchased with remaining maturities of sixty days or less may be valued at
amortized cost, which approximates fair market value. Investments in other
open-end regulated investment companies are valued at net asset value.
REPURCHASE AGREEMENTS--It is the policy of the Company to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System, or to have segregated within the custodian bank's
vault, all securities held as collateral under repurchase agreement
transactions. Additionally, procedures have been established by the Company to
monitor, on a daily basis, the market value of each repurchase agreement's
collateral to ensure that the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
The Company will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Company's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Company could receive less
than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
short-term capital gains. The following reclassifications have been made to
the financial statements.
<TABLE>
<CAPTION>
INCREASE (DECREASE)
--------------------------------------------------------------------------
ACCUMULATED NET UNDISTRIBUTED NET
FUND NAME PAID-IN CAPITAL REALIZED GAIN INVESTMENT INCOME (LOSS)
---------------- --------------- --------------- ------------------------
<S> <C> <C> <C>
Bond Fund $(6,895) $6,758 $ 137
----------------
Core Equity Fund (1) 398 (397)
----------------
</TABLE>
Net investment income, net realized gains/losses and net assets were not
affected by this reclassification.
FEDERAL TAXES--It is the Company's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
At April 30, 1999, the Company, for federal tax purposes, had capital loss
carryforwards, as noted below, which will reduce the Company's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions to
shareholders which would otherwise be necessary to relieve the Company of any
liability for federal tax.
Pursuant to the Code, such capital loss carryforward will expire as follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR
------------------ TOTAL TAX LOSS
FUND 2005 2006 CARRYFORWARD
----------- ---------- ------- --------------
<S> <C> <C> <C>
Income Fund $1,448,015 $73,422 $1,521,437
-----------
</TABLE>
Net realized capital losses on Bond Fund of $332,346 attributable to security
transactions incurred after October 31, 1998, are treated as arising on the
first day of the Funds' next taxable year (May 1, 1999).
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Company may engage in
when-issued or delayed delivery transactions. The Company records when- issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin earning interest on the settlement date.
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ
from those estimated.
SECURITIES LENDING--Under guidelines adopted by the Board of Trustees, each
Fund may lend portfolio securities to brokers/dealers and other financial
organizations in order to generate additional income. Loans of portfolio
securities by a Fund will be collateralized by cash, letters of credit or U.S.
government securities which are maintained at 100% of the current market value
of the loaned securities.
Loans will be made to firms deemed by the Company's adviser to be of good
financial standing and will not be made unless, in the judgment of the
Company's adviser, the consideration to be earned from such loans would
justify the risk. The risks associated with lending portfolio securities
consist of possible decline in value of collateral, possible delays receiving
additional collateral or in the recovery of the loaned securities or expenses
from enforcing the Funds' rights should the borrower of the securities fail
financially. At April 30, 1999 there were no outstanding security lending
transactions.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Master Trust Agreement permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (par value of $0.001).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
------------------------------------------------------
TREASURY OBLIGATIONS BOND
------------------------------ ----------------------
1999 1998 1999 1998
- ---------------------- -------------- -------------- ---------- ----------
<S> <C> <C> <C> <C>
Shares sold 2,420,255,869 1,160,628,263 3,571,054 3,180,087
- ----------------------
Shares issued to
shareholders in
payment
of distributions
declared 2,316,665 1,286,356 3,452 2,667
- ----------------------
Shares redeemed (2,366,757,874) (1,054,507,906) (1,913,583) (1,320,806)
- ---------------------- -------------- -------------- ---------- ----------
Net change resulting
from share
transactions 55,814,660 107,406,713 1,660,923 1,861,948
- ---------------------- -------------- -------------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
--------------------------------------------
INCOME CORE EQUITY
-------------------- ----------------------
1999 1998 1999 1998
- --------------------------------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Shares sold 2,733,455 876,213 2,677,341 4,743,525
- ---------------------------------
Shares issued to shareholders in
payment of distributions declared 112 -- 2,265,450 2,137,883
- ---------------------------------
Shares redeemed (1,445,930) (789,401) (4,895,145) (2,451,001)
- --------------------------------- ---------- -------- ---------- ----------
Net change resulting from share
transactions 1,287,637 86,812 47,646 4,430,407
- --------------------------------- ---------- -------- ---------- ----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--SouthTrust Bank, N.A., the Company's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
based on a percentage of each Fund's average daily net assets as shown below.
The Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
<TABLE>
<CAPTION>
ANNUAL
FUND RATE
- -------------------- ------
<S> <C>
TREASURY OBLIGATIONS 0.50%
- --------------------
BOND 0.60%
- --------------------
INCOME 0.60%
- --------------------
CORE EQUITY 0.75%
- --------------------
</TABLE>
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the
Company with certain administrative personnel and services. The fee is based on
the level of average aggregate net assets of the Company for the period. FAS may
voluntarily choose to waive a portion of its fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the
Company. The fee paid to FSSC is based on the size, type, and number of accounts
and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Company's accounting records
for which it receives a fee. The fee is based on the level of each Fund's
average net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers of the Company are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
year ended April 30, 1999, were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ----------- ------------ ------------
<S> <C> <C>
BOND $157,251,065 $142,476,820
- ----------- ------------ ------------
INCOME 31,258,619 21,237,230
- ----------- ------------ ------------
CORE EQUITY 163,427,766 212,323,871
- ----------- ------------ ------------
</TABLE>
(6) YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Funds could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Funds.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- -------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
SOUTHTRUST FUNDS
We have audited the accompanying statements of assets and liabilities of
SouthTrust Treasury Obligations Money Market Fund, SouthTrust Bond Fund,
SouthTrust Income Fund and SouthTrust Core Equity Fund (investment portfolios of
SouthTrust Funds, a Massachusetts business trust), including the schedules of
portfolios investments, as of April 30, 1999, and the related statements of
operations for the year then ended, and the statements of changes in net assets
and the financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1999, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
SouthTrust Treasury Obligations Money Market Fund, SouthTrust Bond Fund,
SouthTrust Income Fund and SouthTrust Core Equity Fund (investment portfolios of
SouthTrust Funds) as of April 30, 1999, the results of their operations for the
year then ended, and the changes in their net assets and their financial
highlights for the periods presented, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
June 15, 1999
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
Charles G. Brown, III William O. Vann
Russell W. Chambliss Chairman
Thomas M. Grady Edward C. Gonzales
Billy L. Harbert, Jr. President and Treasurer
William O. Vann Beth S. Broderick
Vice President and Assistant Treasurer
C. Christine Thomson
Vice President and Assistant Treasurer
Peter J. Germain
Secretary
C. Todd Gibson
Assistant Secretary
MUTUAL FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS, ARE NOT 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. INVESTMENT IN MUTUAL FUNDS INVOLVES INVESTMENT RISK,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Company's prospectus, which contains facts
concerning the Funds' objectives and policies, management fees, expenses and
other information.
Federated Securities Corp., Distributor
Investment Adviser:
[LOGO SouthTrust Cusip 844734202
Bank Cusip 844734301
N.A.] Cusip 844734103
Cusip 844734400
G00859-01 (6/99)
SOUTHTRUST FUNDS
APPENDIX
SOUTHTRUST BOND FUND
A1. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The SouthTrust
Bond Fund (the "Fund") is represented by a solid line. The Lehman Brothers
Intermediate Government/Corporate Index (LBIG/C) is represented by a dotted
line, and the Lehman Brothers Government/Corporate Index (LBG/C) is represented
by a dashed line. The line graph is a visual representation of a comparison of
change in value of a $10,000 hypothetical investment in the Fund, the LBIG/C,
and the LBG/C. The "x" axis reflects computation periods from 5/8/92 to 4/30/99.
The "y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in the Fund as compared to the
LBIG/C, and the LBG/C. The right margin reflects the ending value of the
hypothetical investment in the Fund as compared to the LBIG/C and the LBG/C. The
ending values were $15,242, $16,074, and $16,989, respectively. The legend in
the top quadrant of the graphic presentation indicates the Fund's Average Annual
Total Returns for the one-year, five-year, and start of performance (5/8/92) to
4/30/99. The total returns were 1.82%, 6.13%, and 6.31%, respectively.
SOUTHTRUST INCOME FUND
A2. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The SouthTrust
Income Fund (the "Fund") is represented by a solid line. The Merrill Lynch
Corporate/Government Index (MLC/G 1-5) is represented by a dashed line. The line
graph is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Fund, and the MLC/G 1-5. The "x" axis reflects
computation periods from 1/19/96 to 4/30/99. The "y" axis reflects the cost of
the investment. The right margin reflects the ending value of the hypothetical
investment in the Fund as compared to the MLC/G 1-5. The right margin reflects
the ending value of the hypothetical investment in the Fund as compared to the
MLC/G 1-5. The ending values were $11,378, and $12,140, respectively. The legend
in the top quadrant of the graphic presentation indicates the Fund's Average
Annual Total Returns for the one-year, and start of performance (1/10/96) to
4/30/99. The total returns were 1.85%, and 3.99%, respectively.
SOUTHTRUST CORE EQUITY FUND
A3. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The SouthTrust
Core Equity Fund (the "Fund") is represented by a solid line. The Standard &
Poor's 500 Index (S&P 500) is represented by a dashed line. The line graph is a
visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Fund, and the S&P 500. The "x" axis reflects
computation periods from 5/8/92 to 4/30/99. The "y" axis reflects the cost of
the investment. The right margin reflects the ending value of the hypothetical
investment in the Fund as compared to the S&P 500. The right margin reflects the
ending value of the hypothetical investment in the Fund as compared to the S&P
500. The ending values were $26,308, and $37,957, respectively. The legend in
the top quadrant of the graphic presentation indicates the Fund's Average Annual
Total Returns for the one-year, five year, and start of performance (5/8/92) to
4/30/99. The total returns were 0.43%, 20.27% and 14.86%, respectively.
