BANKSOUTH SELECT FUNDS, N-1A EL/A, 1994-01-07

BANKSOUTH SELECT FUNDS
N-1A EL/A, 1994-01-07

Previous: MUNICIPAL INVT TR FD INTERM TERM SER 224 DEFINED ASSET FDS, S-6EL24, 1994-01-07

Next: INTERCAPITAL INSURED CALIFORNIA MUNICIPAL SECURITIES, N-2/A, 1994-01-07

1933 Act File No. 33-50635
1940 Act File No. 811-7101

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
X

Pre-Effective Amendment No. 2 .
X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 2
X

BANKSOUTH SELECT FUNDS

(Exact name of Registrant as Specified in Charter)

Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)

(412) 288-1900
(Registrant's Telephone Number)

John W. McGonigle, Esq., Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering January 7, 1994.

Copies to:

Thomas J. Donnelly, Esquire Charles H. Morin, Esquire
Houston, Houston & Donnelly Dickstein, Shapiro & Morin
2510 Centre City Tower 2101 L Street, N.W.
650 Smithfield Street Washington, D.C. 20037
Pittsburgh, Pennsylvania 15222

Ralph F. MacDonald, III
Alston & Bird
One Atlantic Center
1201 W. Peachtree Road
Atlanta, Georgia 30309

Pursuant to the provisions of Rule 24f-2 of the Investment Company Act of
1940, Registrant hereby elects to register an indefinite number of shares.

Exhibit gistration Statement of BANKSOUTH SELECT FUNDS, which consists of
five portfolios, (1) BankSouth Select Georgia Tax-Free Income Fund; (2)
BankSouth Select Government Money Market Fund; (3) BankSouth Select Prime
Money Market Fund; (4) BankSouth Select Bond Fund; and (5) BankSouth Select
Equity Fund, is comprised of the following:

PART A. INFORMATION REQUIRED IN A PROSPECTUS.

Prospectus Heading
(Rule 404(c) Cross Reference)

Item 1. Cover Page (1-5) Cover Page
Item 2. Synopsis (1-5) Summary of Fund Expenses.
Item 3. Condensed Financial
Information (1-5) Performance Information.
Item 4. General Description of
Registrant (1-5) General Information; (1-5)
Investment Information; (1-5)
Investment Objective; (1-5)
Investment
Policies; (1,3) Investment Risks;
(4-5) Foreign Securities; (1-5)
Investment Limitations.
Item 5. Management of the Fund (1-5) BankSouth Select Funds
Information; (1-5) Management of the
Trust; (1-5) Administration of the
Trust; (1-5) Administrative
Services;
(2-5) Brokerage Transactions; (1-5)
Expenses of the Fund.
Item 6. Capital Stock and Other
Securities (1,4,5) Dividends and Distributions;
(2-3) Dividends; (1-5) Shareholder
Information; (1-5) Voting Rights;
(1-5) Massachusetts Partnership Law;
(1-5) Effect of Banking Laws; (1-5)
Tax Information; (1-5) Federal
Income
Tax; (2-5) State and Local Taxes;
(1)
State of Georgia Income and
Intangible
Taxes; (1) Other State and Local
Taxes.
Item 7. Purchase of Securities Being
Offered (1-5) Net Asset Value; (1-5)
Investing
in the Fund; (1-5) Share Purchases;
(1-5) Minimum Investment Required;
(1-5) What Shares Cost (1,4,5)
Reducing the Sales Charge; (1-5)
Systematic Investment Program; (1-5)
Distribution of Fund Shares; (1-5)
Exchanging Securities for Fund
Shares;
(1-5) Certificates and
Confirmations;
(1-5) Exchange Privilege.
Item 8. Redemption or Repurchase (1-5) Redeeming Shares; (1-5)
Redemption Before Purchase
Instruments
Clear; (1-5) Systematic Withdrawal
Program; (1-5) Accounts with Low
Balances.
Item 9. Pending Legal Proceedings None.

PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.

Item 10. Cover Page (1-5) Cover Page.
Item 11. Table of Contents (1-5) Table of Contents.

Item 12. General Information and
History (1-5) General Information About the
Fund.
Item 13. Investment Objectives and
Policies (1-5) Investment Objective and
Policies.
Item 14. Management of the Fund (1-5) BankSouth Select Funds
Management.
Item 15. Control Persons and Principal
Holders of Securities (1-5) Fund Ownership.
Item 16. Investment Advisory and Other
Services (1-5) Investment Advisory Services;
(1-5) Administrative Services.
Item 17. Brokerage Allocation (2-5) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not applicable.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered (1-5) Purchasing Shares; (1-5)
Determining Net Asset Value; (1-5)
Exchange Privilege; (1-5) Redeeming
Shares.
Item 20. Tax Status (1-5) Tax Status.
Item 21. Underwriters (1-5) Distribution Plan.
Item 22. Calculation of Performance
Data (1-5) Yield; (1,4,5) Total Return;
(2,3) Effective Yield; (1)
Tax-Equivalent Yield; (1-5)
Performance Comparisons.
Item 23. Financial Statements (To be filed by amendment.)

BANKSOUTH SELECT GEORGIA TAX-FREE
INCOME FUND
(A PORTFOLIO OF BANKSOUTH SELECT FUNDS)
PROSPECTUS

The shares of BankSouth Select Georgia Tax-Free Income Fund (the "Fund")
offered by this Prospectus represent interests in a non-diversified
portfolio of BankSouth Select Funds (the "Trust"), an open-end management
investment company (a mutual fund). The investment objective of the Fund
is to provide current income exempt from federal income tax and the
personal income taxes imposed by the state of Georgia. The Fund invests
primarily in securities issued by and on behalf of the State of Georgia
and its political subdivisions, authorities and agencies, and securities
issued by other states, territories, and possessions of the United States
which are exempt from federal income tax and the personal income taxes
imposed by the State of Georgia ("Georgia Municipal Securities").

This Prospectus contains the information you should read and know before
you invest in the Fund. Keep this prospectus for future reference.

The Fund has also filed a Statement of Additional Information dated
January 7, 1994, with the Securities and Exchange Commission. The
information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy of
the Statement of Additional Information free of charge, obtain other
information, or make inquiries about the Fund by writing to the Bank
South, N.A. (the "Bank") Mutual Funds Center or calling 1-800-282-6680
extension 4550.

SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE NOT
ISSUED, ENDORSED OR GUARANTEED BY, THE BANK OR ANY OF ITS AFFILIATES.
SUCH SHARES ARE NOT ISSUED, INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR
ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

THE BANK IS INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED BY
FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Prospectus dated January 7, 1994

BANKSOUTH SELECT FUNDS

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------

GENERAL INFORMATION 2
- ------------------------------------------------------

INVESTMENT INFORMATION 2
- ------------------------------------------------------

Investment Objective 2
Investment Policies 2
Acceptable Investments 2
Characteristics 3
Participation Interests 3
Variable Rate Municipal Securities 3
Municipal Leases 4
Restricted and Illiquid Securities 4
When-Issued and Delayed Delivery
Transactions 4
Investing in Securities of
Other Investment Companies 4
Temporary Investments 4

Portfolio Turnover 5

Georgia Municipal Securities 5
Investment Risks 5
Non-Diversification 6
Certain Borrowing and Investment Limitations 6

BANKSOUTH SELECT FUNDS INFORMATION 7
- ------------------------------------------------------

Management of the Trust 7
Board of Trustees 7
Investment Adviser 7
Advisory Fees 7
Adviser's Background 7
Portfolio Manager 7
Distribution of Fund Shares 8
Distribution Plan 8
Administrative Arrangements 8
Administration of the Trust 9
Administrative Services 9
Shareholder Services Plan 9
Custodian 9
Transfer Agent, Dividend Disbursing
Agent, and Portfolio Accounting
Services 9
Legal Counsel 9
Independent Auditors 9
Expenses of the Fund 10

NET ASSET VALUE 10
- ------------------------------------------------------

INVESTING IN THE FUND 10
- ------------------------------------------------------

Share Purchases 10
By Telephone 10
By Mail 10
Payment by Check 10
Payment by Wire 10
Minimum Investment Required 11
Systematic Investment Program 11
What Shares Cost 11
Purchases at Net Asset Value 11
Sales Charge Reallowance 11
Reducing the Sales Charge 12
Quantity Discounts and Accumulated
Purchases 12
Letter of Intent 12
Reinvestment Privilege 12
Concurrent Purchases 12
Certificates and Confirmations 13
Dividends and Distributions 13
Purchasing Fund Shares with Securities 13

EXCHANGE PRIVILEGE 13
- ------------------------------------------------------

BankSouth Select Funds 13
By Telephone 14

REDEEMING SHARES 15
- ------------------------------------------------------

By Telephone 15
By Mail 15
Signatures 16
Receiving Payment 16
Redemption Before Purchase
Instruments Clear 16
Systematic Withdrawal Program 16
Accounts with Low Balances 16

SHAREHOLDER INFORMATION 17
- ------------------------------------------------------

Voting Rights 17
Massachusetts Partnership Law 17

EFFECT OF BANKING LAWS 17
- ------------------------------------------------------

TAX INFORMATION 18
- ------------------------------------------------------

Federal Income Tax 18
State of Georgia Income and Intangibles Taxes 19
Other State and Local Taxes 19

PERFORMANCE INFORMATION 19
- ------------------------------------------------------

ADDRESSES Inside Back Cover
- ------------------------------------------------------

BANKSOUTH SELECT GEORGIA TAX-FREE INCOME FUND
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................................................... 2.50%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable)................................................. None
Redemption Fees (as a percentage of amount redeemed, if applicable)..................................... None
Exchange Fee............................................................................................ None

ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver)(1)........................................................................ 0.00%
12b-1 Fees(2)........................................................................................... 0.00%
Other Expenses (after waivers)(3)....................................................................... 0.57%
Total Fund Operating Expenses(4).................................................................... 0.57%
</TABLE>

- ---------
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver of a portion of the management fee by the investment
adviser. The investment adviser can terminate this voluntary waiver at any
time in its sole discretion. The maximum management fee is 0.75%.

(2) As of the date of this prospectus, the Fund is not paying or accruing 12b-1
fees. The Fund can pay up to 0.75% as a 12b-1 fee to the distributor.
Certain trust clients of the Bank or its affiliates, including ERISA plans,
will not be affected by the distribution plan because the distribution
plan will not be activated unless and until a second, "Trust," class of
shares of the Fund (which would not have a Rule 12b-1 plan) is created and
such trust clients' investments in the Fund are converted to such Trust
class.

(3) Total Other Expenses are estimated to be 1.16% absent the anticipated
voluntary waiver by the administrator and transfer agent.

(4) The Total Fund Operating Expenses are estimated to be 1.91% absent the
anticipated voluntary waivers by the adviser, administrator, and transfer
agent.

* Expenses are estimated based on average expenses expected to be incurred
during the fiscal year ending September 30, 1994. During the course of this
period, expenses may be more or less than the average amount shown.

THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "BANKSOUTH SELECT FUNDS INFORMATION" AND "INVESTING IN THE FUND."
WIRE TRANSFER REDEMPTIONS MAY BE SUBJECT TO AN ADDITIONAL FEE.

<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
<S> <C> <C>
You would pay the following expenses on a $1,000 investment assuming (1) 5% annual return and
(2) redemption at the end of each time period. As noted in the table above, the Fund charges no
redemption fees................................................................................ $31 $43
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING SEPTEMBER
30, 1994.

GENERAL INFORMATION
- --------------------------------------------------------------------------------

The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated September 22, 1993, as amended and restated dated December 20,
1993. The Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest representing interests in separate portfolios of
securities. This Prospectus relates only to the Trust's BankSouth Select Georgia
Tax-Free Income Fund. The Fund is designed as a convenient means of accumulating
an interest in a professionally managed, non-diversified portfolio investing
primarily in Georgia Municipal Securities. A minimum initial investment of
$1,000 is required and subsequent investments must be in amounts of at least
$100.

The Fund is not likely to be a suitable investment for non-Georgia taxpayers or
retirement plans since Georgia municipal securities are not likely to produce
competitive after-tax yields for such persons and entities when compared to
other investments. A minimum initial investment of $1,000 is required, and
subsequent investments must be in amounts of at least $100.

Fund shares are sold at net asset value plus a maximum sales charge of 2.50%,
and are redeemed at net asset value.

INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The Fund's investment objective is to provide current income exempt from federal
income tax and the personal income taxes imposed by the State of Georgia. The
investment objective cannot be changed without the approval of the Fund's
shareholders. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this Prospectus.

Interest income of the Fund that is exempt from the income taxes described above
retains its exempt status when distributed to the Fund's shareholders. However,
income distributed by the Fund may not necessarily be exempt from state or
municipal taxes in jurisdictions other than Georgia.

INVESTMENT POLICIES

The Fund pursues its investment objective by investing primarily in Georgia
Municipal Securities. As a matter of investment policy, which may not be changed
without shareholder approval, the Fund will invest its assets so that, under
normal circumstances, at least 80% of its annual interest income is exempt from
federal income tax (including alternative minimum tax). Unless indicated
otherwise, the other investment policies of the Fund may be changed by the Board
of Trustees without approval of shareholders. Shareholders will be notified
before any material change in these policies becomes effective.

ACCEPTABLE INVESTMENTS. Under normal circumstances, the Fund will invest at
least 65% of its total assets in Georgia Municipal Securities, which are
obligations issued by and on behalf of the State of Georgia, its political
subdivisions, authorities and agencies; debt obligations of any state,
territory, or possession of the United States, including the District of
Columbia, or any political subdivision of any of these; and participation
interests, as described below, in any of the above obligations, the interest
from which is, in the opinion of bond counsel for the issuers or in the opinion
of officers of the Fund and/or the investment adviser to the Fund, exempt from
both federal income tax and the personal income tax imposed by the State of
Georgia. While the Fund intends to invest primarily in securities issued by or
on behalf of the State of Georgia, its political subdivisions, authorities and
agencies, it will invest in other securities issued by states, territories, and
possessions of the United States which are exempt from federal income tax and
the personal income taxes imposed by the State of Georgia. The Fund will invest
in such securities in instances where, in the judgment of the Fund's investment
adviser, the supply and yield of such securities would be beneficial to the
Fund's investment performance.

CHARACTERISTICS. The Georgia Municipal Securities which the Fund buys are
investment-grade bonds rated, at the time of purchase, Aaa, Aa, A, or Baa
by Moody's Investors Service, Inc. ("Moody's"), or AAA, AA, A, or BBB by
Standard and Poor's Corporation ("S&P"), Fitch Investors Service, Inc.
("Fitch"), or Duff & Phelps Credit Rating Co. ("Duff & Phelps"). In certain
cases, the Fund's investment adviser may choose bonds which are unrated if
it determines that such bonds are of comparable quality or have similar
characteristics to investment-grade bonds. Bonds rated "BBB" by S&P, Fitch,
or Duff & Phelps or "Baa" by Moody's have speculative characteristics.
Changes in economic conditions or other circumstances are more likely to
lead to weakened capacity to make principal and interest payments than
higher rated bonds. Downgrades will be evaluated on a case-by-case basis by
the investment adviser. The adviser will determine whether or not the
security continues to be an acceptable investment. If not, the security
will be sold when deemed appropriate by its adviser given the costs of such
a sale, including potential losses. A description of the rating categories
is contained in the Appendix to the Statement of Additional Information. A
credit rating is not a recommendation to buy, sell or hold securities and
is subject to change and/or withdrawal by the rating agency.

PARTICIPATION INTERESTS. The Fund may purchase participation interests
from financial institutions such as commercial banks, savings and loan
associations, and insurance companies. These participation interests give
the Fund a fractional undivided interest in Georgia Municipal Securities.
The financial institutions from which the Fund purchases participation
interests frequently provide or secure irrevocable letters of credit or
guarantees to assure that the participation interests are of high quality.
The Trustees will determine that participation interests meet the
prescribed quality standards for the Fund.

VARIABLE RATE MUNICIPAL SECURITIES. Some of the Georgia Municipal
Securities which the Fund purchases may have variable interest rates.
Variable interest rates are ordinarily stated as a percentage of the prime
rate of a bank or a similar standard, such as the 91-day U.S. Treasury bill
rate or established by a remarketing agent as the minimum rate that it
judges would be necessary on the securities prior to the next remarketing
date, having due regard for the prevailing financial markets in order to
sell such securities in a secondary market transaction. Many variable rate
municipal securities are subject to payment of principal on demand by the
Fund in not more than seven days. All variable rate municipal securities
will be selected consistent with the Fund's quality standards. The Fund's
investment adviser has been instructed by the Trustees to monitor
the pricing, quality, and liquidity of the variable rate municipal
securities, including participation interests held by the Fund, on the
basis of published financial information and reports of the rating agencies
and other analytical services.

MUNICIPAL LEASES. Municipal leases are obligations issued by state and
local governments or authorities to finance the acquisition of equipment
and facilities and some may be considered to be illiquid. They may take the
form of a lease, an installment purchase contract, a conditional sales
contract, or a certificate of participation in any of the above.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies, but which
are subject to restriction on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, non-negotiable time
deposits, and repurchase agreements providing for settlement in more than seven
days after notice, to 15% of its net assets.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete the transaction may cause the Fund
to miss a price or yield considered to be advantageous.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund may invest in the securities of other investment companies, but will
not own more than 3% of the total outstanding voting stock of any investment
company, invest more than 5% of total assets in any one investment company, or
invest more than 10% of total assets in investment companies in the aggregate .
The Fund will invest in other investment companies primarily for the purpose of
investing short-term cash which has not yet been invested in other portfolio
instruments. It should be noted that investment companies incur certain
expenses, and therefore, any investment by the Fund in shares of another
investment company would be subject to certain duplicate expenses, particularly
transfer agent and custodian fees. The adviser will waive its investment
advisory fee on assets invested in securities of open-end investment companies.

TEMPORARY INVESTMENTS. From time to time, during periods of abnormal market
conditions, the Fund may invest in short-term tax-exempt or taxable temporary
investments. These temporary investments include: notes issued by or on behalf
of municipal or corporate issuers; obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities; other debt securities; commercial
paper; certificates of deposit of banks; securities of other investment
companies; and repurchase agreements (generally short-term arrangements in which
the Fund may buy securities subject to the seller's agreement to repurchase such
securities at a mutually agreed upon time and price such that the Fund earns
interest during the term of the agreement).

There are no rating requirements applicable to temporary investments. However,
the investment adviser will limit temporary investments to those within the
investment-grade categories described under "Acceptable
Investments--Characteristics" (if rated) or those which the investment adviser
judges to have similar characteristics as such investment-grade securities (if
unrated).

Although the Fund is permitted to make taxable, temporary investments, there is
no current intention of generating income subject to federal income tax or
personal income taxes imposed by the State of Georgia.

PORTFOLIO TURNOVER

Although the Fund does not intend to invest for the purpose of seeking
short-term profits, securities in the portfolio will be sold whenever the
Adviser believes it is appropriate to do so in light of the Fund's investment
objective, without regard to the length of time a particular security may have
been held. The Adviser does not anticipate that the Fund's annual portfolio
turnover rate will exceed 200% under normal market conditions. A high portfolio
turnover rate may lead to increased costs and may also result in higher taxes
paid by the Fund's shareholders.

GEORGIA MUNICIPAL SECURITIES

Georgia Municipal Securities are generally issued to finance public works, such
as airports, bridges, highways, housing, hospitals, mass transportation
projects, schools, streets, and water and sewer works. These are also issued to
repay outstanding obligations, to raise funds for general operating expenses,
and, under certain circumstances, to make loans for profit and non-profit public
and private entities.

The two principal classifications of municipal securities are "general
obligations" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and/or taxing power for the payment
of principal and interest. However, interest on and principal of revenue bonds
are payable only from the revenue generated by the facility financed by the bond
or other specified sources of revenue. Revenue bonds do not represent a pledge
of credit or create any debt of or charge against the general revenues of a
municipality or public authority.

A significant portion of revenue bonds issued by governmental units constitute
"private activity" bonds. Private activity bonds are issued by or on behalf of a
governmental unit, generally to finance the acquisition, construction and
equipping of facilities to be used, directly or indirectly, by private for-
profit and non-profit companies. These private activity bonds are generally
secured by a pledge of the revenues to be paid by such private companies under a
financing agreement (which usually takes the form of a lease, installment sale
or loan agreement) between a private company and a governmental unit, as well as
a security interest in the real and personal property acquired or constructed
with the proceeds of such bonds. Often the credit securing these types of
private activity bonds is enhanced through the issuance of a letter of credit or
guarantee by a credit-worthy financial institution. The credit ratings of these
so-called "credit enhanced" bond issues are based on the credit worthiness of
the financial institution issuing the credit enhancement and not the private
user of the facilities financed with the proceeds of such bonds or the
governmental unit issuing the bonds, which are not liable for the payment
thereof, other than through the assignment of revenues to be received by the
private user under the financing agreement.

INVESTMENT RISKS

Yields on Georgia Municipal Securities depend on a variety of factors,
including, but not limited to: the general conditions of the municipal bond
market; the size of the particular offering; the maturity of the obligations;
and the rating of the issue. Further, any adverse economic conditions or
developments affecting the State of Georgia or its municipalities, or companies
and financial institutions obligated under private activity bonds, could affect
the Fund's portfolio. The Fund's ability to achieve its investment objective
also depends on the continuing ability of the obligors of securities held by the
Fund to meet their obligations for the payment of interest and principal when
due. Investing in Georgia Municipal Securities which meet the Fund's quality
standards may not be possible if the State of Georgia and its municipalities do
not maintain their current credit ratings. In addition, certain Georgia
constitutional amendments, legislative measures, executive orders,
administrative regulations and voter initiatives could result in adverse
consequences affecting various Georgia Municipal Securities. A discussion of the
current economic risks associated with the purchase of Georgia Municipal
Securities is contained in the Statement of Additional Information.

NON-DIVERSIFICATION

The Fund is a non-diversified investment portfolio. As such, there is no limit
on the percentage of assets which can be invested in any single issuer. An
investment in the Fund, therefore, will entail greater risks and fluctuation in
market value of the Fund's portfolio than investments in a diversified portfolio
of securities. Any economic, political, or regulatory developments affecting the
value of the securities in the Fund's portfolio will have a greater effect on
the total value of the portfolio than would be the case if the portfolio were
diversified among more issuers. However, the Fund intends to comply with
Subchapter M of the Internal Revenue Code. This undertaking requires that at the
end of each quarter of the taxable year: (a) with regard to at least 50% of the
Fund's total assets, no more than 5% of its total assets are invested in the
securities of a single issuer and (b) no more than 25% of its total assets are
invested in the securities of a single issuer.

CERTAIN BORROWING AND INVESTMENT LIMITATIONS

The Fund will not:

borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an agreement to buy it back on a set
date) or pledge securities except, under certain circumstances, the Fund
may borrow up to 33 1/3% of the value of its total assets and secure such
borrowings with up to 15% of the value of those assets at the time of
borrowing.

The above limitation cannot be changed without shareholder approval. The
following limitation however, can be changed by the Trustees without shareholder
approval. Shareholders will be notified before any material change in this
limitation becomes effective.

invest more than 5% of its total assets in industrial development bonds
where the payment of principal and interest is the responsibility of
companies (including guarantors where applicable) with less than three
years of continuous operations, including the operation of any
predecessor.

BANKSOUTH SELECT FUNDS INFORMATION
- --------------------------------------------------------------------------------

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees (the "Board" or
"Trustees"). The Board is responsible for managing the Trust's business affairs
and for exercising all the Trust's powers except those reserved for the
shareholders. The Executive Committee of the Board handles various of the
Board's delegable responsibilities between meetings of the Board.

INVESTMENT ADVISER. Investment decisions for the Fund are made by the Bank as
the Fund's investment adviser (the "Adviser"), subject to direction by the
Board. The Adviser conducts investment research and supervision for the Fund and
is responsible for the purchase or sale of portfolio instruments, for which it
receives an annual fee from the Fund's assets. From time to time, to the extent
consistent with the investment objective, policies and restrictions of the Fund,
the Fund may invest in securities of issuers with which the Adviser has a
lending relationship. However, at this time, the Adviser has no intention to
invest in securities of issuers that have a lending relationship with the
investment Adviser or its affiliates.

ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to 0.75% of the Fund's average daily net assets. The fee paid by the
Fund, while higher than the advisory fee paid by certain other mutual
funds, is comparable to fees paid by many mutual funds with similar
objectives and policies. The Adviser has undertaken to reimburse the Fund,
up to the amount of the advisory fee, for operating expenses in excess of
limitations established by certain states. The Adviser may voluntarily
choose to waive a portion of its fee or reimburse other expenses of the
Fund, but reserves the right to terminate such waiver or reimbursement at
any time at its sole discretion.

ADVISER'S BACKGROUND. The Adviser, a national bank headquartered in
Atlanta, Georgia, is a wholly owned subsidiary of Bank South Corporation, a
Georgia corporation which is a registered bank holding company. The Adviser
serves consumers through its network of banking offices with a full range
of deposit and lending products, as well as investment services. The
principal executive offices of the Adviser are located at 55 Marietta
Street N.W., Atlanta, GA 30303.

The Adviser has managed discretionary assets for its consumers since 1931.
As of September 30, 1993 , the Adviser managed in excess of $1 billion of
discretionary assets. Prior to the date hereof, the Adviser has not served
as an investment adviser to mutual funds.

PORTFOLIO MANAGER. Mr. J.M. Johnston, Jr. is primarily responsible for the
day-to-day management of the Fund's portfolio. Mr. Johnston began at the
Adviser in September of 1992. Mr. Johnston directs the investment
management of the employee benefit plans, fixed income fund, and personal
trusts. He is also responsible for securities analysis for various
industries.

Mr. Johnston began his investment career in 1981. Prior to his affiliation
with the Bank, he spent six years with The Citizens & Southern National
Bank, Atlanta, Georgia as a portfolio manager.

Mr. Johnston holds a Bachelor of Science degree from the University of
Alabama and a Master of Business Administration in Finance from Georgia
State University. He is a member of the Atlanta Society of Financial
Analysts.

DISTRIBUTION OF FUND SHARES

Federated Securities Corp. (the "Distributor") is the principal distributor for
shares of the Fund. It is a Pennsylvania corporation organized on November 14,
1969, and is the principal distributor for a number of investment companies. The
Distributor is a subsidiary of Federated Investors.

DISTRIBUTION PLAN. Under a distribution plan (the "Plan") adopted in accordance
with Securities and Exchange Commission ("SEC") Rule 12b-1 under the Investment
Company Act of 1940, as amended, the Fund will pay an amount computed at an
annual rate of up to 0.75% of the average daily net asset value of the shares to
finance any activity which is principally intended to result in the sale of
shares subject to the Plan. Certain trust clients of the Bank, including ERISA
plans, will not be affected by the Plan because the Plan will not be activated
unless and until a second, "Trust" class of shares of the Fund (which would not
have a Rule 12b-1 plan) is created and such trust clients' investments in the
Fund are converted to such Trust class.

The Distributor may select other financial institutions (such as broker-dealers
or banks) to provide sales support services as agents for their clients or
customers who beneficially own shares. These financial institutions (including
the Bank) will receive fees from the Distributor based upon shares owned by
their clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by the Distributor.

The Fund's Plan is a compensation type plan. As such, the Fund pays the
Distributor the fee described above as opposed to reimbursing the Distributor
for actual expenses incurred. Therefore, the Fund does not pay for amounts
expended by the Distributor in excess of amounts received by it from the Fund,
which may include interest, carrying or other financing charges in connection
with excess amounts expended, or the Distributor's overhead expenses. However,
the Distributor may be able to recover such amounts or may earn a profit from
future payments made by the Fund under the Plan.

The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the capacities described above or should
Congress relax current restrictions on depository institutions, the Trustees
will consider appropriate changes in the services.

State securities laws on this issue may differ from the interpretations of
federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to certain states' securities laws.

ADMINISTRATIVE ARRANGEMENTS. The Distributor may also pay administrators a fee
based upon the average net asset value of shares of their customers invested in
the Trust for providing administrative services. This fee, if paid, will be
reimbursed by the Adviser and not the Trust.

ADMINISTRATION OF THE TRUST

ADMINISTRATIVE SERVICES. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides certain
administrative personnel and services necessary to operate the Fund. Such
services include certain legal and accounting services. Federated Administrative
Services provides these at the annual rates specified below:

<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
<C> <S>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>

The administrative fee received during any fiscal year shall be at least
$100,000 per Fund. Federated Administrative Services may voluntarily choose to
waive a portion of its fee.

SHAREHOLDER SERVICES PLAN. The Fund has adopted a Shareholder Services Plan
(the "Services Plan") with respect to the shares. Under the Services Plan,
financial institutions will enter into shareholder service agreements with the
Fund to provide administrative support services to their customers who from time
to time may be owners of record or beneficial owners of the shares. In return
for providing these support services, a financial institution may receive
payments from the Fund at a rate not exceeding 0.25% of the average daily net
assets of the shares benefically owned by the financial institution's customers
for whom it is holder of record or with whom it has a servicing relationship.
These administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities, and various
personnel including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding the
Fund; assisting clients in changing dividend options, account designations, and
addresses; and providing such other services as the Fund reasonably requests.
Certain trust clients of the Bank, including ERISA plans, will not be affected
by the Services Plan because the Services Plan will not be activated unless and
until a second, "Trust" class of shares of the Fund (which would not have a
Services Plan) is created and such trust clients' investments in the Fund are
converted to such Trust class.

CUSTODIAN. The Bank of New York, New York, New York is custodian for the
securities and cash of the Fund.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of Federated
Investors, is transfer agent (the "Transfer Agent") for the shares of and
dividend disbursing agent for the Fund. It also provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments.

LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania, and Dickstein, Shapiro & Morin, Washington, D.C.

INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young,
Pittsburgh, Pennsylvania.

EXPENSES OF THE FUND

The Fund pays all of its own expenses and its allocable share of the Trust's
expenses. The expenses borne by the Fund include, but are not limited to, the
cost of: organizing the Trust and continuing its existence; Trustees' fees;
investment advisory and administrative services; printing prospectuses and other
Fund documents for shareholders; registering the Trust, the Fund, and shares of
the Fund with federal and state securities authorities; taxes and commissions;
issuing, purchasing, repurchasing, and redeeming shares; fees for custodians,
transfer agents, dividend disbursing agents, shareholder servicing agents, and
registrars; printing, mailing, auditing, accounting, and legal expenses; reports
to shareholders and governmental agencies; meetings of Trustees and shareholders
and proxy solicitations therefor; insurance premiums; association membership
dues; and such nonrecurring and extraordinary items as may arise.

NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding.

INVESTING IN THE FUND
- --------------------------------------------------------------------------------

SHARE PURCHASES

Fund shares are sold on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. Shares of the Fund may be
purchased through the Bank. In connection with the sale of Fund shares, the
Distributor may from time to time offer certain items of nominal value to any
shareholder or investor. The Fund reserves the right to reject any purchase
request.

BY TELEPHONE. To place an order to purchase Fund shares, call the Bank South
Mutual Funds Center toll free at 1-800-282-6680 extension 4550. Texas residents
must purchase shares of the Fund through Bank South Securities Corporation at
404-521-7063. Your purchase order will be taken directly over the telephone. The
order must be placed by 4:00 p.m. (Eastern time) for shares to be purchased at
that day's price.

BY MAIL. Provide a letter of instruction to the Fund indicating your purchase
order, including the dollar amount of your order, your account title and/or
name, and your account number, and include a check made payable to the Fund.

PAYMENT BY CHECK. Mail to BankSouth Select Georgia Tax-Free Income Fund, c/o
Bank South Mutual Funds Center, MC 16, P.O. Box 4387, Atlanta, Georgia 30302.

PAYMENT BY WIRE. To purchase shares by Federal Wire, contact your account
officer for wiring instructions. Wire orders will only be accepted on days on
which the Fund, the Bank and the Federal Reserve Banks are open for business.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in the Fund by an investor is $1,000. Subsequent
investments must be in amounts of at least $100. The Fund may choose to waive
its minimum investment requirements from time to time and for accounts which
select the Systematic Investment Program.

SYSTEMATIC INVESTMENT PROGRAM

Once an account has been opened, shareholders may add to their investment on a
regular basis in minimum amounts of $100, unless waived. Under this program,
funds may be automatically withdrawn periodically from the shareholder's
checking or other transaction deposit account and invested in Fund shares at the
net asset value next determined after an order is received by the Bank, plus an
applicable sales charge. A shareholder may apply for participation in this
program through the Bank.

WHAT SHARES COST

Shares of the Fund are sold at their net asset value next determined after an
order is received plus a sales charge as follows:

<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS
A PERCENTAGE A PERCENTAGE
OF PUBLIC OF NET AMOUNT
AMOUNT OF TRANSACTION OFFERING PRICE INVESTED
<S> <C> <C>
Less than $100,000 2.50% 2.56%
$100,000 but less than $250,000 2.00% 2.04%
$250,000 but less than $500,000 1.50% 1.52%
$500,000 but less than $750,000 1.00% 1.01%
$750,000 but less than $1,000,000 0.50% 0.50%
$1,000,000 and more 0.00% 0.00%
</TABLE>

The net asset value is determined at 4:00 p.m. (Eastern time), Monday through
Friday, except on: (i) days on which changes (if any) in the value of the Fund's
portfolio securities do not materially affect its net asset value; (ii) days
during which no shares are tendered for redemption and no orders to purchase
shares are received; and (iii) the following holidays: New Year's Day, Martin
Luther King Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day.

PURCHASES AT NET ASSET VALUE. Shares of the Fund may be purchased at net asset
value, without a sales charge, by certain trust customers of the Bank and
employees of the Bank and its affiliates and their spouses and children under
21.

SALES CHARGE REALLOWANCE. The Bank and any authorized dealer or bank will
normally receive up to 85% of the applicable sales charge as a transaction fee
from its customers, and for sales and/or administrative services performed on
behalf of its customers in connection with the initiation of customer accounts
and purchases of Fund shares. Any portion of the sales charge which is not paid
to the Bank or a dealer or other bank will be retained by the Distributor.
However, the Distributor, in its sole discretion, may uniformly offer to permit
all dealers and other institutions selling shares of the Fund, to receive all or
a portion of the amount the Distributor normally retains as a sales charge. If
accepted by the dealer, such additional payments may be in the form of cash or
other promotional incentives, and will be predicated upon the amount of shares
of the Fund or other BankSouth Select Funds sold by the dealer or other
institutions.

REDUCING THE SALES CHARGE

The sales charge can be reduced on the purchase of shares of the Fund through:

quantity discounts and accumulated purchases;

signing a 13-month letter of intent;

using the reinvestment privilege; or

concurrent purchases.

QUANTITY DISCOUNTS AND ACCUMULATED PURCHASES. As shown in the table on the
previous page, larger purchases reduce the sales charge paid. The Fund will
combine purchases of shares made on the same day by the investor, his spouse,
and his children under age 21 when it calculates the sales charge.

If an additional purchase of shares is made, the Fund will consider the previous
purchases still invested in the Fund. For example, if a shareholder already owns
shares having a current value at the public offering price of $90,000 and
purchases $10,000 more at the current public offering price, the sales charge on
the additional purchase according to the schedule now in effect would be 2.00%,
not 2.50%.

To receive the sales charge reduction, the Bank must be notified by the
shareholder in writing at the time the purchase is made that shares are already
owned or that purchases are being combined. The Fund will reduce the sales
charge after it confirms the purchases.

LETTER OF INTENT. If a shareholder intends to purchase at least $100,000 of
shares in the Fund over the next 13 months, the sales charge may be reduced by
signing a letter of intent to that effect. This letter of intent includes a
provision for a sales charge adjustment depending on the amount actually
purchased within the 13-month period and a provision for the custodian to hold
up to 2.50% of the total amount intended to be purchased in escrow (in shares)
until such purchase is completed.

The amount held in escrow will be applied to the shareholder's account at the
end of the 13-month period unless the amount specified in the letter of intent
is not purchased. In this event, an appropriate number of escrowed shares may be
redeemed in order to realize the difference in the sales charge.

This letter of intent will not obligate the shareholder to purchase shares, but
if the shareholder does, each purchase during the period will be at the sales
charge applicable to the total amount intended to be purchased. This letter may
be dated as of a prior date to include any purchases made within the past 90
days.

REINVESTMENT PRIVILEGE. If shares in the Fund have been redeemed, the
shareholder has a one-time right, within 30 days, to reinvest the redemption
proceeds at the next-determined net asset value without any sales charge. The
Bank must be notified by the shareholder in writing or by the shareholder's
financial institution of the reinvestment in order to eliminate a sales charge.
If the shareholder redeems his shares in the Fund, there may be tax
consequences.

CONCURRENT PURCHASES. For purposes of qualifying for a sale charge reduction, a
shareholder has the privilege of combining concurrent purchases of two or more
funds in the Trust, the purchase price of which includes a sales charge. For
example, if a shareholder concurrently invested $30,000 in one of the other
funds in the Trust with a sales charge and $70,000 in this Fund, the sales
charge would be reduced.

To receive this sales charge reduction, the Distributor must be notified by the
shareholder in writing or by the Bank at the time the concurrent purchases are
made. The Fund will reduce the sales charge after it confirms the purchases. See
"What Shares Cost" and "Addresses".

CERTIFICATES AND CONFIRMATIONS

The Transfer Agent maintains a share account for each shareholder of record.
Share certificates are not issued, unless requested in writing from the Fund or
the Transfer Agent.

Detailed statements that include account balances, information on each purchase
or redemption, and a report of dividends are sent to each shareholder.

DIVIDENDS AND DISTRIBUTIONS

Dividends are declared daily and paid monthly to all shareholders invested in
the Fund on the record date.

Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months. Dividends and capital gains will be reinvested in additional
shares on payment dates at the ex-dividend date's net asset value without a
sales charge, unless a shareholder makes a written request for cash payments to
the Fund or the Bank.

PURCHASING FUND SHARES WITH SECURITIES

The Fund in its sole discretion, may sell Fund shares to investors that desire
to purchase Fund shares with certain securities or a combination of certain
securities and cash. The Fund reserves the right to determine the acceptability
of securities used to effect such purchases. On the day securities are accepted
by the Fund, they are valued based upon independent bid and in the same manner
as the Fund values its assets. Investors wishing to use securities to purchase
Fund shares should first contact the Bank. Any such transfer of securities is
treated as a sale of the securities and will result in the recognition of any
gain or loss for federal income tax purposes by the seller of such securities,
except to the extent the seller is an ERISA plan or similar entity not subject
to tax.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

BANKSOUTH SELECT FUNDS

All shareholders of the Fund are Shareholders of BankSouth Select Funds.
BankSouth Select Funds currently include the Fund, BankSouth Select Bond Fund,
BankSouth Select Equity Fund, BankSouth Select Prime Money Market Fund, and
BankSouth Select Government Money Market Fund. Shareholders have easy access to
each of the portfolios of BankSouth Select Funds through a telephone exchange
program. All BankSouth Select Funds are advised by the Bank and distributed by
the Distributor.

Shareholders may exchange shares of the Fund for shares of the other BankSouth
Select Funds. In addition, shares of the Fund may also be exchanged for certain
other funds designated by the Bank which are distributed by the Distributor, but
that are not advised by the Bank ("Federated Funds"). For further information on
the availability of Federated Funds for exchanges, please call the Bank South
Mutual Funds Center at 1-800-282-6680 extension 4550. Shares of funds with a
sales charge may be exchanged at net asset value for shares of other funds with
an equal sales charge or no sales charge. Shares of funds with a sales charge
may be exchanged for shares of funds with a higher sales charge at net asset
value, plus the additional sales charge. Shares of funds with no sales charge,
whether acquired by direct purchase, reinvestment of dividends on such shares,
or otherwise, may be exchanged for shares of funds with a sales charge at net
asset value, plus the applicable sales charge.

When an exchange is made from a fund with a sales charge to a fund with no sales
charge, the shares exchanged and additional shares which have been purchased by
reinvesting dividends or capital gains on such shares retain the character of
the exchanged shares for purposes of exercising further exchange privileges;
thus, an exchange of such shares for shares of a fund with a sales charge would
be at net asset value.

Shareholders who exercise this exchange privilege must exchange shares having a
net asset value of at least $1,000. Prior to any exchange, the shareholder must
receive a copy of the current prospectus of the fund into which an exchange is
to be effected.

The exchange privilege is available to shareholders residing in any state in
which the fund shares being acquired may legally be sold. Upon receipt of proper
instructions and all necessary supporting documents, shares submitted for
exchange will be redeemed at the next-determined net asset value for the
applicable fund. Written exchange instructions may require a signature
guarantee. Exercise of this privilege is treated as a sale for federal income
tax purposes and, depending on the circumstances, a short or long-term capital
gain or loss may be realized.

The Fund reserves the right to terminate the exchange privilege at any time on
60 days notice. Shareholders will be notified if this privilege is terminated. A
shareholder may obtain further information on the exchange privilege by calling
the Bank at 1-800-282-6680 extension 4550.

BY TELEPHONE. Instructions for exchanges between funds which are part of the
Trust may be given by telephone to the Bank South Mutual Funds Center at
1-800-282-6680 extension 4550, or to the Distributor. Shares may be exchanged by
telephone only between fund accounts having identical shareholder registrations.

Any shares held in certificate form cannot be exchanged by telephone but must be
forwarded to the Fund's Transfer Agent by the Bank and deposited to the
shareholder's mutual fund account before being exchanged. See "Addresses".

An authorization form permitting the Fund to accept telephone exchanges must
first be completed. It is recommended that investors request this privilege at
the time of their initial application. If not completed at the time of initial
application, authorization forms and information regarding this service are
available from the Bank. Telephone exchange instructions may be recorded. If
reasonable procedures are not followed by the Fund, it may be liable for losses
due to unauthorized or fraudulent telephone instructions.

Telephone exchange instructions must be received before 4:00 p.m. (Eastern time)
for shares to be exchanged the same day. The telephone exchange privilege may be
modified or terminated at any time.

Shareholders will be notified of such modification or termination. Shareholders
may have difficulty in making exchanges by telephone through the Bank during
times of drastic economic or market changes. If a shareholder cannot contact the
Bank by telephone, it is recommended that an exchange request be made in writing
and sent by overnight mail to BankSouth Select Funds, 55 Marietta Street, N.W.,
Atlanta, Georgia 30303.

REDEEMING SHARES
- --------------------------------------------------------------------------------

The Fund redeems shares at their net asset value next determined after the Bank
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Telephone or written requests for redemption
must be received in proper form and can be made through the Bank or directly to
the Fund.

BY TELEPHONE. A shareholder may redeem shares of the Fund by contacting his
account officer or by calling the Bank South Mutual Funds Center to request the
redemption. Call 1-800-282-6680 extension 4550. Shares will be redeemed at the
net asset value next determined after the Fund receives the redemption request
from the Bank. Redemption requests must be received by the Bank before 4:00 p.m.
(Eastern time) in order for shares to be redeemed at that day's net asset value
and the Bank will promptly submit such redemption requests and provide written
redemption instructions to the Fund. If, at any time, the Fund should determine
it necessary to terminate or modify this method of redemption, shareholders
would be promptly notified.

An authorization form permitting the Fund to accept telephonic redemption
requests must first be completed. It is recommended that investors request this
privilege at the time of their initial application. If not completed at the time
of initial application, authorization forms and information on this service are
available from the Bank. Telephone redemption instructions may be recorded. If
reasonable procedures are not followed by the Fund, it may be liable for losses
due to unauthorized or fraudulent telephone instructions.

A shareholder may have the redemption proceeds directly deposited by electronic
funds transfer or wired directly to a domestic commercial bank previously
designated by the shareholder. Wire redemption orders will only be accepted on
days on which the Fund, the Bank and the Federal Reserve Wire System are open
for business. Wire-transferred redemptions may be subject to an additional fee.

In the event of extraordinary economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should occur, it
is recommended that a redemption request be made in writing and be hand
delivered or sent by overnight mail to your account officer at the Bank.

BY MAIL. Shareholders may redeem shares by sending a written request to the
Bank. The written request should include the shareholder's name, the Fund name,
the account number, and the share or dollar amount requested. If share
certificates have been issued, they must be properly endorsed and should be sent
by registered or certified mail with the written request to the Bank.
Shareholders should call the Bank for assistance in redeeming shares by mail.

SIGNATURES. Shareholders requesting a redemption of $50,000 or more, a
redemption requesting payment to an address other than that on record with the
Fund, or other than to the shareholder of record must make written redemption
requests with signatures guaranteed by:

a trust company or commercial bank whose deposits are insured by the
FDIC's BIF;

a member firm of the New York, American, Boston, Midwest, or Pacific
Stock Exchange;

a savings bank or savings and loan association whose deposits are insured
by the FDIC's SAIF; or

any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934, as amended.

The Fund does not accept signatures guaranteed by a notary public.

The Fund and its Transfer Agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its Transfer Agent reserve the right
to amend these standards at any time without notice.

RECEIVING PAYMENT. Normally, a check for the proceeds is mailed to the
shareholder within one business day, but in no event more than seven calendar
days, after receipt of a proper written redemption request, provided that the
Transfer Agent has received payment for shares from the shareholder.

REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR

When shares are purchased by check or through an Automated Clearing House
("ACH"), the proceeds from the redemption of those shares are not available, and
the shares may not be exchanged, until the Bank is reasonably certain that the
check or clearing house funds have cleared, which could take up to 10 calendar
days.

SYSTEMATIC WITHDRAWAL PROGRAM

Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Fund shares
are redeemed to provide for periodic withdrawal payments in an amount directed
by the shareholder. Depending upon the amount of the withdrawal payments and the
amount of dividends paid with respect to Fund shares, redemptions may reduce,
and eventually deplete, the shareholder's investment in the Fund. For this
reason, payments under this program should not be considered as yield or income
on the shareholder's investment in the Fund. To be eligible to participate in
this program, a shareholder must have an account value of at least $10,000. A
shareholder may apply for participation in this program through the Bank.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if, due to
shareholder redemptions, the account balance falls below the required minimum of
$1,000.

Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

Each share of the Fund entitles shareholders to one vote in Trustee elections
and other matters submitted to shareholders of the Trust for vote. All shares of
each portfolio in the Trust have equal voting rights except that, in matters
affecting only a particular Fund, only shareholders of that Fund are entitled to
vote. As a Massachusetts business trust, the Trust is not required to hold
annual shareholder meetings. Shareholder approval will be sought only for
certain changes in the Trust's or the Fund's operation and for the election of
Trustees under certain circumstances.

Any Trustee may be removed by the Board of Trustees or by the shareholders at a
special meeting. A special meeting of the shareholders shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
Trust's outstanding shares.

MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust. To
protect shareholders, the Trust has filed legal documents with Massachusetts
that expressly disclaim the liability of shareholders of the Fund for such acts
or obligations of the Trust. These documents require notice of this disclaimer
to be given in each agreement, obligation, or instrument the Trust or its
Trustees enter into or sign on behalf of the Fund.

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

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

Banking laws and regulations presently prohibit a bank holding company
registered under the federal Bank Holding Company Act of 1956, as amended or any
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 or
distributing securities. However, such banking laws and regulations do not
prohibit such a holding company affiliate or banks generally from acting as
investment adviser, transfer agent, or custodian to such an investment company
or from acting as agent for their customers in purchasing securities. The Fund's
Adviser is subject to such banking laws and regulations.

The Bank believes, based on the advice of its counsel, that it may perform the
services for the Fund contemplated by its advisory agreement with the Trust
without violating the Glass-Steagall Act or other applicable banking laws or
regulations. Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their affiliates, as well as
further judicial or administrative decisions or interpretations of present or
future statutes and regulations, could prevent the Bank from continuing to
perform all or a part of the above services for its customers and/or the Fund.
If it were prohibited from engaging in these customer-related activities, the
Trustees would consider alternative advisers and means of continuing available
investment services. In such event, changes in the operation of the Fund may
occur, including possible termination of any automatic or other Fund share
investment and redemption services then being provided by the Bank. It is not
expected that existing shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

The Fund expects to pay no federal income tax because it intends to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.

Shareholders are not required to include any dividends received from the Fund
that represent net interest on tax-exempt municipal bonds in gross income for
federal income tax purposes. However, under the Tax Reform Act of 1986,
dividends representing net interest income earned on some municipal bonds are
included in calculating the federal individual alternative minimum tax or the
federal alternative minimum tax for corporations.

The alternative minimum tax, equal to up to 28% of alternative minimum taxable
income for individuals and 20% for corporations, applies when it exceeds the
regular tax for the taxable year. Alternative minimum taxable income is equal to
the regular taxable income for the taxpayer increased by certain "tax
preference" items not included in regular taxable income and reduced by only a
portion of the deductions allowed in the calculation of the regular income tax.

The Tax Reform Act of 1986 treats interest on certain "private activity" bonds
issued after August 7, 1986, as a tax-preference item for both individuals and
corporations. Unlike traditional government purpose municipal bonds, which
finance roads, schools, libraries, prisons, and other public facilities, private
activity bonds provide benefits to private parties. The Fund may purchase all
types of municipal bonds, including private activity bonds. Thus, while the Fund
has no present intention of purchasing any private activity bonds that would be
treated as tax preference items, should it purchase any such bonds, a portion of
the Fund's dividends may be treated as a tax-preference item.

In addition, in the case of a corporate shareholder, dividends of the Fund which
represent interest on municipal bonds will become subject to the 20% corporate
alternative minimum tax because the dividends are included in a corporation's
"adjusted current earnings." The corporate alternative minimum tax treats 75% of
the excess of a taxpayer's pre-tax "adjusted current earnings" over the
taxpayer's alternative minimum taxable income as a tax-preference item.
"Adjusted current earnings" are based upon the concept of a corporation's
"earnings and profits." Since "earnings and profits" generally includes the full
amount of any Fund dividend, and alternative minimum taxable income does not
include the portion of the Fund's dividend attributable to municipal bonds which
are not private activity bonds, the difference will be included in the
calculation of the corporation's alternative minimum tax.

Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.

These tax consequences apply whether dividends are received in cash or as
additional shares. Information on the tax status of dividends and distributions
is provided annually.

STATE OF GEORGIA INCOME AND INTANGIBLES TAXES

Under existing Georgia law, shareholders of the Fund will not be subject to
Georgia income taxes on distributions from the Fund to the extent that such
distributions represent either (1) "exempt-interest dividends" for federal
income tax purposes that are attributable to interest-bearing obligations issued
by or on behalf of the State of Georgia or its political subdivisions or (2)
dividends derived from interest on obligations of the United States or of any
other issuer whose obligations are exempt from state income taxes under federal
law. Distributions, if any, derived from capital gains or other sources
generally will be taxable for Georgia income tax purposes to shareholders of the
Fund who are subject to the Georgia income tax. The Fund, as a Massachusetts
business trust, is not expected to be required to pay the annual Georgia
intangible property tax on the securities it holds. It is, however, the current
practice of the Georgia Department of Revenue to subject trust interests similar
to the shares to the intangibles tax at a rate equal to 10 cents per $1,000 of
value if the owners of such interests reside or have their prinicipal business
location in Georgia. The Department of Revenue is currently considering whether
the taxable value of trust interests representing beneficial interests in
tax-exempt securities may be reduced to take into account the exempt nature of
such securities. Georgia law exempts the following securities from the
intangibles tax: (1) obligations of the United States (including United States
government agencies and corporations established by Acts of Congress), (2)
obligations of the State of Georgia (including its political subdivisions or
public institutions), and (3) industrial development revenue bonds issued
pursuant to the laws of Georgia.

OTHER STATE AND LOCAL TAXES

Dividends payable with respect to the shares of the Fund may or may not be
subject to state or local state income taxation in jurisdictions other than
Georgia under applicable state or local laws. Similarly, shares in the Fund may
or may not be subject to an intangible personal property tax in states other
than Georgia. Each purchaser of the shares of the Fund is urged to consult his
or her own tax adviser regarding the tax-exempt status of the Fund shares and
dividends in state or local jurisdictions other than the State of Georgia.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Fund may advertise its total return, yield and
tax-equivalent yield.

Total return represents the change, over a specified period of time, in the
value of an investment in the Fund after reinvesting all income and capital
gains distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.

The yield of the Fund is calculated each day by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by the Fund over a thirty-day period by the maximum offering price per share of
the Fund on the last day of the period. This number is then annualized using
semi-annual compounding. The tax-equivalent yield of the Fund is calculated
similarly to the yield, but is adjusted to reflect the taxable yield that the
Fund would have had to earn to equal the actual after tax yield, assuming a
specific tax rate. The yield and the tax-equivalent yield do not necessarily
reflect income actually earned by the Fund and, therefore, may not correlate to
the dividends or other distributions paid to shareholders.

From time to time, the Fund may advertise its performance using certain
reporting services and/or compare its performance to certain indices.

ADDRESSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
BankSouth Select Georgia Tax-Free Federated Investors Tower
Income Fund Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------

Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------

Investment Adviser
Bank South, N.A. MC 16
P.O. Box 4387
Atlanta, Georgia 30302
- ---------------------------------------------------------------------------------------------------------------------

Custodian
The Bank of New York 48 Wall Street
New York, New York 10286
- ---------------------------------------------------------------------------------------------------------------------

Transfer Agent, Dividend Disbursing Agent,
and Portfolio Accounting Services
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------

Legal Counsel
Houston, Houston & Donnelly 2510 Centre City Tower
Pittsburgh, Pennsylvania 15222
- ---------------------------------------------------------------------------------------------------------------------

Legal Counsel
Dickstein, Shapiro & Morin 2101 L Street, N.W.
Washington, D.C. 20037
- ---------------------------------------------------------------------------------------------------------------------

Independent Auditors
Ernst & Young One Oxford Centre
Pittsburgh, Pennsylvania 15219

- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

BANKSOUTH SELECT GEORGIA
TAX-FREE INCOME FUND
PROSPECTUS

A Non-Diversified Portfolio of
BankSouth Select Funds, an Open-End
Management Investment Company
(a Mutual Fund)

Prospectus dated January 7, 1994

Logo Bank South, N.A.
Investment Adviser
55 MARIETTA STREET, N.W.
ATLANTA, GA 30303

Logo FEDERATED SECURITIES CORP.

Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779

3100503A (1/94)

BANKSOUTH SELECT GEORGIA TAX-FREE INCOME FUND
(A PORTFOLIO OF BANKSOUTH SELECT FUNDS)
STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with the
prospectus of BankSouth Select Georgia Tax-Free Income Fund (the
"Fund") dated January 7, 1994. This Statement is not a prospectus
itself. To receive a copy of the prospectus, call the Bank South N.A.
(the "Bank") Mutual Funds Center at 1-800-282-6680 extension 4550.

SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE
NOT ISSUED, ENDORSED OR GUARANTEED BY THE BANK OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT ISSUED, INSURED, OR GUARANTEED BY THE
U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN
THE FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

THE BANK IS INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED BY
FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.

Statement dated January 7, 1994

FEDERATED SECURITIES CORP.
--------------------------------------------
Distributor
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------

INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------

Types of Investments 1
Types of Acceptable Investments 1
Participation Interests 1
Variable Rate Municipal Securities 1
Municipal Leases 1
When-Issued and Delayed
Delivery Transactions 2
Temporary Investments 2

Reverse Repurchase Agreements 2

Investment Limitations 3
Georgia Investment Risks 4

BANKSOUTH SELECT FUNDS MANAGEMENT 5
- ---------------------------------------------------------------

Officers and Trustees 5
The Funds 7
Fund Ownership 7
Trustee Liability 7

INVESTMENT ADVISORY SERVICES 7
- ---------------------------------------------------------------

Adviser to the Fund 7
Advisory Fees 7

ADMINISTRATIVE SERVICES 8
- ---------------------------------------------------------------

BROKERAGE TRANSACTIONS 8
- ---------------------------------------------------------------

PURCHASING SHARES 8
- ---------------------------------------------------------------

Administrative Arrangements 8
Distribution Plan 8
Purchasing Fund Shares with Securities 9

DETERMINING NET ASSET VALUE 9
- ---------------------------------------------------------------

Valuing Municipal Bonds 9

EXCHANGE PRIVILEGE 9
- ---------------------------------------------------------------

REDEEMING SHARES 9
- ---------------------------------------------------------------

Redemption in Kind 9

TAX STATUS 9
- ---------------------------------------------------------------

The Fund's Tax Status 9
Shareholders' Tax Status 10

TOTAL RETURN 10
- ---------------------------------------------------------------

YIELD 10
- ---------------------------------------------------------------

TAX EQUIVALENT YIELD 10
- ---------------------------------------------------------------

Tax-Equivalency Table 10

PERFORMANCE COMPARISONS 11
- ---------------------------------------------------------------

APPENDIX 13
- ---------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------

BankSouth Select Georgia Tax-Free Fund (the "Fund") is a portfolio in BankSouth
Select Funds (the "Trust"), which was established as a Massachusetts business
trust under a Declaration of Trust dated September 22, 1993, as amended and
restated dated December 20, 1993.

INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The Fund's investment objective is to provide current income exempt from federal
income tax and the personal income taxes imposed by the state of Georgia. The
investment objective cannot be changed without shareholder approval.

TYPES OF INVESTMENTS

The Fund invests primarily in a portfolio of municipal securities which are
exempt from federal income tax and the personal income taxes imposed by the
State of Georgia. The municipal securities in which the Fund invests include
those issued by or on behalf of the State of Georgia and its political
subdivisions, authorities and agencies and securities issued by other states,
territories, and possessions of the United States which are exempt from the
federal income tax and the personal income taxes imposed by the State of Georgia
("Georgia Municipal Securities").

CHARACTERISTICS

The Georgia Municipal Securities in which the Fund invests have the
characteristics set forth in the prospectus. If ratings made by Moody's
Investors Service, Inc. ("Moody's"), Standard and Poor's Corporation
("S&P"), Duff & Phelps Credit Rating Co. ("Duff & Phelps") or Fitch
Investors Service, Inc. ("Fitch"), change because of changes in those
organizations or in their rating systems, the Fund will try to use
comparable ratings as standards in accordance with the investment
policies described in the Fund's prospectus.

TYPES OF ACCEPTABLE INVESTMENTS

Examples of Georgia Municipal Securities include:

general obligation bonds;

governmental lease certificates of participation issued by governmental units
where payment is secured by installment payments for equipment, buildings, or
other facilities being leased by the state or municipality (Government lease
certificates purchased by the Fund will not contain nonappropriation clauses.);

municipal notes and tax-exempt commercial paper;

serial bonds;

tax anticipation notes sold to finance working capital needs of municipalities
in anticipation of receiving taxes;

bond anticipation notes sold in anticipation of the issuance of long-term bonds;

pre-refunded municipal bonds whose timely payment of interest and principal is
ensured by an escrow of U.S. government obligations; and

private activity and industrial development bonds issued to finance facilities
for use, directly and indirectly, by private for-profit and non-profit
companies.

PARTICIPATION INTERESTS

The financial institutions from which the Fund purchases participation interests
frequently provide or secure from another financial institution irrevocable
letters of credit or guarantees and give the Fund the right to demand payment of
the principal amounts of the participation interests plus accrued interest on
short notice (usually within seven days).

VARIABLE RATE MUNICIPAL SECURITIES

Variable interest rates generally reduce changes in the market value of
municipal securities from their original purchase prices. Accordingly, as
interest rates decrease or increase, the potential for capital appreciation or
depreciation is less for variable rate municipal securities than for fixed
income obligations. Many of the securities with variable interest rates
purchased by the Fund will be subject to repayment of principal (usually within
seven days) on the Fund's demand. The terms of these variable rate demand
instruments require payment of principal and accrued interest from the issuer of
the municipal obligations, the issuer of the participation interests, or a
guarantor of either issuer.

MUNICIPAL LEASES

The Fund may purchase securities in the form of participation interests which
represent undivided fractional interests in lease payments by a governmental or
non-profit entity. The lease payments and other rights under the lease provide
for and secure the payments on the certificates. Lease obligations may be
limited by municipal charter or the nature of the appropriation for the lease.
In particular, lease obligations may be subject to periodic appropriation. If
the entity does not appropriate funds for future lease payments, the entity
cannot be compelled to make such payments. Furthermore, a lease may provide
that the certificate trustee cannot accelerate lease obligations upon default.
The trustee would only be able to enforce lease payments as they became due. In
the event of a default or failure of appropriation, it is unlikely that the
trustee would be able to obtain an acceptable substitute source of payment.

In determining the liquidity of municipal lease obligations, the Fund's
investment adviser, under the authority delegated by the Trustees, will base its
determination on the following factors:

whether the lease can be terminated by the lessee;

the potential recovery, if any, from a sale of the leased property upon
termination of the lease;

the lessee's general credit strength (e.g., its debt, administrative, economic,
and financial characteristics and prospects);

the likelihood that the lessee will discontinue appropriating funding for the
leased property because the property is no longer deemed essential to its
operations (e.g., the potential for an "event of non-appropriation"); and

any credit enhancement or legal recourse provided upon an event of
non-appropriation or other termination of the lease.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective and
policies, not for investment leverage. These transactions are made to secure
what is considered to be an advantageous price and yield for the Fund.
Settlement dates may be a month or more after entering into these transactions,
and the market values of the securities purchased may vary from the purchase
prices.

The Fund will limit its obligations to purchase securities on a when-issued or
delayed delivery basis to no more than 20% of the value of its total assets at
any time.

TEMPORARY INVESTMENTS

The Fund may also invest in temporary investments during times of unusual market
conditions for defensive purposes.

REPURCHASE AGREEMENTS

Repurchase agreements are arrangements in which banks, securities
broker-dealers, and other financial institutions sell U.S. government and
agency securities to the Fund and agree at the time of sale to repurchase
them at a mutually agreed upon time and price including interest within
one year from the date of acquisition. As collateral for the obligation
of the seller to repurchase the securities from the Fund, the Fund or its
custodian will take possession of the securities subject to repurchase
agreements. To the extent that the original seller does not repurchase
the securities from the Fund, the Fund could receive less than the
repurchase price on any sale of such securities. In the event that such a
defaulting seller filed for bankruptcy or became insolvent, disposition
of such securities by the Fund might be delayed pending court action. The
Fund believes that under the regular procedures normally in effect for
custody of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of the
Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other financial
institutions, such as securities broker-dealers, which are found by the
Fund's investment adviser to be creditworthy pursuant to guidelines
established by the Trustees.

REVERSE REPURCHASE AGREEMENTS

The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash and pledging securities as collateral. In a
reverse repurchase agreement, the Fund transfers possession of a portfolio
instrument to another person, such as a financial institution or broker-dealer,
in return for a percentage of the instrument's market value in cash, and agrees
that on a stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration plus interest at an agreed
upon rate. The use of reverse repurchase agreements may enable the Fund to
avoid selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.

When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and are maintained until the transaction is settled.

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Fund will not sell any securities short or purchase any securities on
margin, but may obtain such short-term credits as may be necessary for
the clearance of purchases and sales of portfolio securities.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Fund will not issue senior securities except that the Fund may borrow
money and engage in reverse repurchase agreements in amounts up to
33 1/3% of the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure to facilitate management of the portfolio by enabling
the Fund to, for example, meet redemption requests when the liquidation
of portfolio securities is deemed to be inconvenient or disadvantageous.
The Fund will not purchase any securities while borrowings in excess of
5% of its total assets are outstanding.

PLEDGING ASSETS

The Fund will not mortgage, pledge, or hypothecate any assets, except to
secure permitted borrowings. In those cases, it may mortgage, pledge, or
hypothecate assets having a market value not exceeding 15% of the value
of the Fund's total assets at the time of the borrowing.

UNDERWRITING

The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.

INVESTING IN REAL ESTATE

The Fund will not invest in real estate, including limited partnership
interests, although it may invest in municipal bonds secured by real
estate or interests in real estate.

INVESTING IN COMMODITIES

The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.

LENDING CASH OR SECURITIES

The Fund will not lend any of its assets, except that it may acquire
publicly or non-publicly issued municipal bonds or temporary investments
or enter into repurchase agreements in accordance with its investment
objective, policies, and limitations or the Trust's Declaration of Trust.

CONCENTRATION OF INVESTMENTS

The Fund will not purchase securities if, as a result of such purchase,
25% or more of the value of its total assets would be invested in any one
industry or in private activity bonds or other securities, the interest
upon which is paid from revenues of similar types of projects. However,
the Fund may invest as temporary investments more than 25% of the value
of its assets in cash or cash items, securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities, or instruments
secured by these money market instruments, such as repurchase agreements.
(For purposes of this limitation, the Fund considers certificates of
deposits and demand and time deposits issued by a U.S. branch of a
domestic bank, savings and loan association or savings bank having
capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment to be "cash items.")

The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in, the following limitations becomes effective.

INVESTING IN RESTRICTED SECURITIES

The Fund will not invest more than 10% of the value of its total assets
in securities subject to restrictions on resale under the Securities Act
of 1933, except for certain restricted securities which meet the criteria
for liquidity as established by the Trustees.

INVESTING IN ILLIQUID SECURITIES

The Fund will not invest more than 15% of the value of its net assets in
securities, including repurchase agreements providing for settlement in
more than seven calendar days after notice, non-negotiable fixed time
deposits with maturities over seven days, and certain municipal leases
and restricted securities not determined by the Trustees to be liquid.

INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST

The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or the Fund's investment adviser
owning individually more than 0.50% of the issuer's securities together
own more than 5% of the issuer's securities.

INVESTING IN NEW ISSUERS

The Fund will not invest more than 5% of the value of its total assets in
private activity bonds where the principal and interest are the
responsibility of companies (including guarantors, where applicable) with
less than three years of continuous operations, including the operation
of any predecessor.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, will not invest more than 5% of its total assets in any one
investment company, or invest more than 10% of its total assets in
investment companies in the aggregate. However, these limitations are not
applicable if the securities are acquired in a merger, consolidation, or
acquisition of assets.

INVESTING IN MINERALS

The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although it may invest in
securities of issuers which invest in or sponsor such programs.

Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.

The Fund does not expect to borrow money or pledge securities in excess of 5% of
the value of its net assets in the coming fiscal year.

GEORGIA INVESTMENT RISKS

Georgia's economy is based on manufacturing (textiles, food products, paper
products, electronic equipment and aircraft), trade and a growing service
sector. Atlanta, with a service-oriented economy, is a trade, service and
transportation center for the Southeast region and is the focus of economic
growth in the State. In most other cities in Georgia, manufacturing
predominates. The State economy was only mildly affected by the early 1980's
recession and grew rapidly for most of the decade, with employment and personal
income growth in excess of comparable national rates. Despite continued
population growth, personal income per capita has steadily gained relative to
the nation. The economy began to slow in 1989, with less vigorous job growth
evident and relative per capita income position slipping.

Throughout the 1980's the State's expanding economy fostered strong income and
sales tax growth. This enabled the State to record fairly strong fiscal
operations from fiscal years 1984-1989. Financial operations have suffered since
fiscal year 1990, recording operating deficits in each of the fiscal years
1990-1992. Revenue projections were overly optimistic in fiscal year 1992 and
although the State reduced general fund expenditures, a minor operating deficit
was experienced.

The 1993 budget assumes a 6.9% increase in revenue from existing levels;
however, no surpluses or reserves from 1992 remain to carry over into fiscal
year 1993. If economic recovery is delayed or weakened, revenue shortfalls could
persist.

Except for the major building projects necessary for the 1996 Summer Olympics,
it appears unlikely that areas in and around metropolitan Atlanta will
experience the building construction rates of the mid to late 1980's.

BANKSOUTH SELECT FUNDS MANAGEMENT
- --------------------------------------------------------------------------------

OFFICERS AND TRUSTEES

Officers and Trustees are listed with their addresses, principal occupations,
and present positions, including any affiliation with Bank South, Federated
Investors, Federated Securities Corp., Federated Services Company, Federated
Administrative Services, and the Funds (as defined below).

<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>

John F. Donahue*\ Chairman and Chairman and Trustee, Federated Investors; Chairman and Trustee,
Federated Investors Tower Trustee Federated Advisers, Federated Management, and Federated Research;
Pittsburgh, PA Director AEtna Life and Casualty Company; Chief Executive Officer and
Director, Trustee, or Managing General Partner of the Funds; formerly,
Director, The Standard Fire Insurance Company. Mr. Donahue is the father
of J. Christopher Donahue, Vice President of the Trust.

John T. Conroy, Jr. Trustee President, Investment Properties Corporation; Senior Vice-President,
Wood/IPC Commercial John R. Wood and Associates, Inc., Realtors; President, Northgate
Department Village Development Corporation; General Partner or Trustee in private
John R. Wood and real estate ventures in Southwest Florida; Director, Trustee or Managing
Associates, Inc., Realtors General Partner of the Funds; formerly, President, Naples Property
3255 Tamiami Trail North Management, Inc.
Naples, FL

William J. Copeland Trustee Director and Member of the Executive Committee, Michael Baker, Inc.;
One PNC Plaza-23rd Floor Director, Trustee, or Managing General Partner of the Funds; formerly,
Pittsburgh, PA Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and
Director, Ryan Homes, Inc.

James E. Dowd Trustee Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
571 Hayward Mill Road Trustee, or Managing General Partner of the Funds; formerly, Director,
Concord, MA Blue Cross of Massachusetts, Inc.

Lawrence D. Ellis, M.D. Trustee Hematologist, Oncologist, and Internist, Presbyterian and Montefiore
3471 Fifth Avenue Hospitals; Clinical Professor of Medicine and Trustee, University of
Suite 1111 Pittsburgh; Director, Trustee, or Managing General Partner of the Funds.
Pittsburgh, PA

Edward L. Flaherty, Jr.\ Trustee Attorney-at-law; Partner, Meyer and Flaherty; Director, Eat'N Park
5916 Penn Mall Restaurants, Inc., and Statewide Settlement Agency, Inc.; Director,
Pittsburgh, PA Trustee, or Managing General Partner of the Funds; formerly, Counsel,
Horizon Financial, F.A., Western Region.

Edward C. Gonzales* President, Vice President, Treasurer, and Trustee, Federated Investors; Vice
Federated Investors Tower Treasurer President and Treasurer, Federated Advisers, Federated Management and
Pittsburgh, PA and Trustee Federated Research; Trustee, Federated Services Company; Executive Vice
President, Treasurer, and Director, Federated Securities Corp.;
Chairman, Treasurer, and Trustee, Federated Administrative Services;
Trustee or Director of some of the Funds; Vice President and Treasurer
of the Funds.

Peter E. Madden Trustee Consultant; State Representative, Commonwealth of Massachusetts;
225 Franklin Street Director, Trustee, or Managing General Partner of the Funds; formerly,
Boston, MA President, State Street Bank and Trust Company and State Street Boston
Corporation, and Trustee, Lahey Clinic Foundation, Inc.

Gregor F. Meyer Trustee Attorney-at-law; Partner, Meyer and Flaherty; Chairman, Meritcare, Inc.;
5916 Penn Mall Director Eat'N Park Restaurants, Inc.; Director, Trustee, or Managing
Pittsburgh, PA General Partner of the Funds; formerly, Vice Chairman, Horizon
Financial, F.A.

Wesley W. Posvar Trustee Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
1202 Cathedral of Endowment for International Peace and RAND Corporation, Online Computer
Learning Library Center, Inc., and U.S. Space Foundation; Chairman, Czecho Slovak
University of Pittsburgh Management Center; Director, Trustee, or Managing General Partner of the
Pittsburgh, PA Funds; President Emeritus, University of Pittsburgh; formerly, Chairman,
National Advisory Council for Environmental Policy and Technology.

Marjorie P. Smuts Trustee Public relations/marketing consultant; Director, Trustee, or Managing
4905 Bayard Street General Partner of the Funds.
Pittsburgh, PA

Charles L. Davis, Jr. Vice President Vice President, Federated Administrative Services; Vice President and
Federated Investors Tower and Assistant Assistant Treasurer of some of the Funds; formerly, Vice President and
Pittsburgh, PA Treasurer Director of Investor Relations, MNC Financial, Inc. and Vice President,
Product Management, MNC
Financial, Inc.

J. Christopher Donahue Vice President President and Trustee, Federated Investors; Trustee, Federated Advisers,
Federated Investors Tower Federated Management, and Federated Research; Trustee, Federated
Pittsburgh, PA Services Company; President and Director, Federated Administrative
Services; President or Vice President of the Funds; Director, Trustee,
or Managing General Partner of some of the Funds. Mr. Donahue is the son
of John F. Donahue, Chairman and Trustee of the Trust.

Richard B. Fisher Vice President Executive Vice President and Trustee, Federated Investors; Chairman and
Federated Investors Tower Director, Federated Securities Corp.; President or Vice President of the
Pittsburgh, PA Funds; Director or Trustee of some of the Funds.

John W. McGonigle Vice President and Vice President, Secretary, General Counsel, and Trustee, Federated
Federated Investors Tower Secretary Investors; Vice President, Secretary, and Trustee, Federated Advisers,
Pittsburgh, PA Federated Management, and Federated Research; Trustee, Federated
Services Company; Executive Vice President, Secretary, and Director,
Federated Administrative Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and Secretary of
the Funds.

John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive Vice
Federated Investors Tower President, Federated Securities Corp.; President and Trustee, Federated
Pittsburgh, PA Advisers, Federated Management, and Federated Research; Vice President
of the Funds; Director, Trustee, or Managing General Partner of some of
the Funds; formerly, Vice President, The Standard Fire Insurance Compa-
ny and President of its Federated Research Division.
</TABLE>

* This Trustee is deemed to be an "interested person" of the Trust as defined in
the Investment Company Act of 1940.

\ Members of the Board of Trustees' Executive Committee. The Executive Committee
handles the delegable responsibilities of the Board of Trustees between
meetings of the Board.

THE FUNDS

"The Funds" and "Funds" mean the following investment companies: A.T. Ohio
Tax-Free Money Fund; American Leaders Fund, Inc.; Annuity Management Series;
Automated Cash Management Trust; Automated Government Money Trust; The Boulevard
Funds; California Municipal Cash Trust; Cash Trust Series, Inc.; Cash Trust
Series II; DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
FT Series, Inc.; Federated ARMs Fund; Federated Exchange Fund, Ltd.; Federated
GNMA Trust; Federated Government Trust; Federated Growth Trust; Federated High
Yield Trust; Federated Income Securities Trust; Federated Income Trust;
Federated Index Trust; Federated Intermediate Government Trust; Federated Master
Trust; Federated Municipal Trust; Federated Short-Intermediate Government Trust;
Federated Short-Intermediate Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free Trust; Federated
U.S. Government Bond Fund; First Priority Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S. Government Securities,
Inc.; Government Income Securities, Inc.; High Yield Cash Trust; Insurance
Management Series; Intermediate Municipal Trust; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Equity Income Fund, Inc.; Liberty High Income
Bond Fund, Inc.; Liberty Municipal Securities Fund, Inc.; Liberty Term Trust,
Inc.-1999; Liberty U.S. Government Money Market Trust; Liberty Utility Fund,
Inc.; Liquid Cash Trust; Mark Twain Funds; Money Market Management; Money Market
Obligations; Money Market Trust; Municipal Securities Income Trust; New York
Municipal Cash Trust; 111 Corcoran Funds; The Planters Funds; Portage Funds;
RIMCO Monument Funds; The Shawmut Funds; Short-Term Municipal Trust; Signet
Select Funds; Star Funds; The Starburst Funds; The Starburst Funds II; Stock and
Bond Fund, Inc.; Sunburst Funds; Targeted Duration Trust; Tax-Free Instruments
Trust; Trademark Funds; Trust for Financial Institutions; Trust for Government
Cash Reserves; Trust for Short-Term U.S. Government Securities; and Trust for
U.S. Treasury Obligations.

FUND OWNERSHIP

Officers and Trustees own less than 1% of the Fund's outstanding shares.

TRUSTEE LIABILITY

BankSouth Select Funds' Declaration of Trust provides that the Trustees are not
liable for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.

INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------

ADVISER TO THE FUND

The Fund's investment adviser is the Bank (the "Adviser"). The Adviser shall not
be liable to the Trust, the Fund, or any shareholder of the Fund 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 Trust.

ADVISORY FEES

For its advisory services, the Adviser receives an annual investment advisory
fee as described in the prospectus.

STATE EXPENSE LIMITATIONS

The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes and extraordinary expenses) exceed
2.50% per year of the first $30 million of average net assets, 2.00% per
year of the next $70 million of average net assets, and 1.50% per year of
the remaining average net assets, the Adviser will reimburse the Fund for
its expenses over the limitation.

If the Fund's monthly projected operating expenses exceed this expense
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.

This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.

ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------

Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for the fees set forth in the
prospectus. John A. Staley, IV, an officer of the Fund, holds approximately 15%
of the outstanding common stock and serves as a director of Commercial Data
Services, Inc., a company which provides computer processing services to
Federated Administrative Services.

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. In working with dealers, the Adviser will generally utilize 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 makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Trustees.

The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the Adviser
and 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.

The Adviser and its affiliates exercise reasonable business judgment in
selecting 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.

Research services provided by brokers may be used by the Adviser and other
accounts. To the extent that receipt of these services may supplant services for
which the Adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses.

PURCHASING SHARES
- --------------------------------------------------------------------------------

Shares are sold at their offering price on days on which the New York Stock
Exchange and Federal Reserve Wire System are open for business. The procedure
for purchasing shares of the Fund is explained in the prospectus under
"Investing in the Fund."

ADMINISTRATIVE ARRANGEMENTS

The administrative services include, but are not limited to, providing office
space, equipment, telephone facilities, and various personnel, including
clerical, supervisory, and computer, as is necessary or beneficial to establish
and maintain shareholders' accounts and records, process purchase and redemption
transactions, process automatic investments of client account cash balances,
answer routine client inquiries regarding the Fund, assist clients in changing
dividend options, account designations, and addresses, and providing such other
services as the Fund may reasonably request.

DISTRIBUTION PLAN

With respect to the Fund, the Trust has adopted a Plan pursuant to Rule 12b-1
which was promulgated by the Securities and Exchange Commission ("SEC") pursuant
to the Investment Company Act of 1940, as amended (the "Act"). The Plan provides
for payment of fees to the Distributor to finance any activity which is
principally intended to result in the sale of the Fund's shares subject to the
Plan. Such activities may include the advertising and marketing of shares of the
Fund; preparing, printing, and distributing prospectuses and sales literature to
prospective shareholders, brokers, or administrators; and implementing and
operating the Plan. Pursuant to the Plan, the Distributor may pay fees to
brokers and others for such services.

The Trustees expect that the adoption of the Plan will assist the Fund in
selling a sufficient number of shares so as to allow the Fund to achieve
economic viability. It is also anticipated that an increase in the size of the
Fund will facilitate more efficient portfolio management and thereby assist the
Fund in seeking to achieve its investment objective.

PURCHASING FUND SHARES WITH SECURITIES

The Fund in its sole discretion, may sell Fund shares to investors that desire
to purchase Fund shares with certain securities or a combination of certain
securities and cash. The Fund reserves the right to determine the acceptability
of securities used to effect such purchases. On the day securities are accepted
by the Fund, they are valued based upon independent bid and in the same manner
as the Fund values it assets. Investors wishing to use securities to purchase
Fund Shares should first contact the Bank. Any such transfer of securities is
treated as a sale of the securities and will result in the recognition of any
gain or loss for federal income tax purposes by the seller of such securities,
except to the extent the seller is an ERISA plan or similar entity not subject
to tax.

DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------

Net asset value generally changes each day. The days on which the net asset
value is calculated by the Fund are described in the prospectus.

VALUING MUNICIPAL BONDS

The Board of Trustees uses an independent pricing service to value municipal
bonds. The independent pricing service takes into consideration yield,
stability, risk, quality, coupon rate, maturity, type of issue, trading
characteristics, special circumstances of a security or trading market, and any
other factors or market data it considers relevant in determining valuations for
normal institutional size trading units of debt securities, and does not rely
exclusively on quoted prices.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

Shareholders of the Fund may exchange shares of the Fund for shares of other
funds advised by the Bank and certain other funds designated by the Bank and
distributed by the Distributor, subject to certain conditions. Exchange
procedures are explained in the Prospectus under "Exchange Privilege."

REDEEMING SHARES
- --------------------------------------------------------------------------------

The Fund redeems shares at the next computed net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
Prospectus under "Redeeming Shares."

REDEMPTION IN KIND

Although the Fund intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price in whole or in part by a
distribution of securities from the Fund's portfolio.

Redemption in kind will be made in conformity with applicable SEC rules, taking
such securities at the same value employed in determining net asset value and
selecting the securities in a manner the Trustees determine to be fair and
equitable.

The Trust has elected to be governed by SEC Rule 18f-1 under the Investment
Company Act of 1940 under which each fund is obligated to redeem shares for any
one shareholder in cash only up to the lesser of $250,000 or 1% of the Fund's
net asset value during any 90-day period.

TAX STATUS
- --------------------------------------------------------------------------------

THE FUND'S TAX STATUS

The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, the Fund must, among other
requirements:

derive at least 90% of its gross income from dividends, interest, and gains from
the sale of securities;

derive less than 30% of its gross income from the sale of securities held less
than three months;

invest in securities within certain statutory limits; and

distribute to its shareholders at least 90% of its net income earned during the
year.

SHAREHOLDERS' TAX STATUS

No portion of any income dividend paid by the Fund is eligible for the dividends
received deduction available to corporations.

CAPITAL GAINS

Capital gains or losses may be realized by the Fund on the sale of
portfolio securities and as a result of discounts from par value on
securities held to maturity. Sales would generally be made because of:

the availability of higher relative yields;

differentials in market values;

new investment opportunities;

changes in creditworthiness of an issuer; or

an attempt to preserve gains or limit losses.

Distribution of long-term capital gains are taxed as such, whether they
are taken in cash or reinvested, and regardless of the length of time the
shareholder has owned the shares.

TOTAL RETURN
- --------------------------------------------------------------------------------

The average annual total return for the Fund 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 maximum offering price 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 load,
adjusted over the period by any additional shares, assuming the monthly
reinvestment of all dividends and distributions.

YIELD
- --------------------------------------------------------------------------------

The yield for the Fund is calculated by dividing the net investment income per
share (as defined by the SEC) earned by the Fund over a 30 day period by the
maximum offering price per share of the Fund on the last day of the period. This
value is then annualized using semi-annual compounding. This means that the
amount of income generated during the 30 day period is assumed to be generated
each month over a twelve-month period and is reinvested every six months. The
yield does not necessarily reflect income actually earned by the Fund because of
certain adjustments required by the Securities and Exchange Commission and,
therefore, may not correlate to the dividends or other distributions paid to
shareholders.

To the extent that financial institutions and broker-dealers charge fees in
connection with services provided in conjunction with an investment in the Fund,
performance will be reduced for those shareholders paying those fees.

TAX-EQUIVALENT YIELD
- --------------------------------------------------------------------------------

The tax-equivalent yield is calculated similarly to the yield, but is adjusted
to reflect the taxable yield necessary to equal on an after tax basis, the
actual yield of the Fund, assuming that income from the Fund is 100% tax-exempt.

TAX-EQUIVALENCY TABLE

The Fund may also use a tax-equivalency table in advertising and sales
literature. The interest earned by the municipal bonds in the portfolio
generally remains free from federal regular income tax,* and is often free from
state and local taxes as well. As the table below indicates, a "tax-free"
investment is an attractive choice for investors, particularly in times of
narrow spreads between tax-free and taxable yields.

TAXABLE YIELD EQUIVALENT FOR 1994
STATE OF GEORGIA

<TABLE>
<S> <C> <C> <C> <C> <C>
TAX BRACKET: FEDERAL
15.00% 28.00% 31.00% 36.00% 39.60%
- ------------------------------------------------------------------------------------------------------------
COMBINED FEDERAL AND STATE
21.000% 34.000% 37.000% 42.000% 45.600%
- ------------------------------------------------------------------------------------------------------------
JOINT RETURN: $1-38,000 $38,001-91,850 $91,851-140,000 $140,001-250,000 OVER $250,000
- ------------------------------------------------------------------------------------------------------------
SINGLE RETURN: $1-22,750 $22,751-55,100 $55,101-115,000 $115,001-250,000 OVER $250,000
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
1.50% 1.90% 2.27% 2.38% 2.59% 2.76%
2.00 2.53 3.03 3.17 3.45 3.68
2.50 3.16 3.79 3.97 4.31 4.60
3.00 3.80 4.55 4.76 5.17 5.51
3.50 4.43 5.30 5.56 6.03 6.43
4.00 5.06 6.06 6.35 6.90 7.35
4.50 5.70 6.82 7.14 7.76 8.27
5.00 6.33 7.58 7.94 8.62 9.19
5.50 6.96 8.33 8.73 9.48 10.11
6.00 7.59 9.09 9.52 10.34 11.03
6.50 8.23 9.85 10.32 11.21 11.95
7.00 8.86 10.61 11.11 12.07 12.87
</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.

The chart above is for illustrative purposes only. It is not an indicator of
past or future performance of any class of shares.

* Some portion of each class's income may be subject to the federal alternative
minimum tax and state and local taxes.

PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------

The performance of the Fund depends upon such variables as:

portfolio quality;

average portfolio maturity;

type of instruments in which the portfolio is invested;

changes in interest rates and market value of portfolio securities;

changes in the Fund's expenses; and

various other factors.

The Fund's 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. From
time to time the Fund may advertise its performance using certain reporting
services and/or compare its performance to certain indices. These may include
the following:

LIPPER ANALYTICAL SERVICES, INC., ranks funds in various 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 offering price over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in a specific category in
advertising and sales literature.

MORNINGSTAR, INC. an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values 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.

Investors may use such indices or reporting services in addition to the
prospectus of the Fund to obtain a more complete view of the Fund's performance
before investing. Of course, when comparing the Fund's performance to any index,
factors such as composition of the index and prevailing market conditions should
be considered in assessing the significance of such comparisons. When comparing
funds using reporting services, or total return and yield, investors should take
into consideration any relevant difference in funds such as permitted portfolio
compositions and methods used to value portfolio securities and compute the
offering price.

Advertisements and other sales literature for the Fund may quote total returns
which are calculated on non-standardized base periods. These total returns
represent the historic change in the value of an investment in the Fund based on
the monthly reinvestment of dividends over a specific period of time. In
addition, advertisements and sales literature for the Fund may include charts
and other illustrations which depict the hypothetical growth of an investment in
a systematic investment plan.

Advertisements may quote performance information which does not reflect the
effect of the sales load.

APPENDIX
- --------------------------------------------------------------------------------

STANDARD AND POOR'S CORPORATION MUNICIPAL BOND 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.

MOODY'S INVESTORS SERVICE, INC., MUNICIPAL 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
edge." 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 some time 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.

FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS

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.

NR--NR indicates that Fitch does not rate the specific issue.
Plus (+) or Minus (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA or D categories.

DUFF & PHELPS CREDIT RATING CO. MUNICIPAL BOND RATINGS DEFINITIONS

AAA--Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA+, AA, AA- --High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.

A+, A, A- --Protection factors are average but adequate. However, risk factors
are more variable and greater in periods of economic stress.

BBB+, BBB, BBB- --Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.

A CREDIT RATING IS NOT A RECOMMENDATION TO BUY, SELL OR HOLD SECURITIES, AND IS
SUBJECT TO CHANGE AND/OR WITHDRAWAL BY THE RATING AGENCY.

3100503B (1/94)

BANKSOUTH SELECT GOVERNMENT
MONEY MARKET FUND
(A PORTFOLIO OF BANKSOUTH SELECT FUNDS)
PROSPECTUS

The shares of BankSouth Select Government Money Market Fund (the "Fund")
offered by this Prospectus represent interests in a portfolio of
BankSouth Select Funds (the "Trust"), an open-end management investment
company (a mutual fund). The investment objective of the Fund is to
achieve current income consistent with stability of principal and
liquidity. The Fund pursues this objective by investing in a portfolio of
short-term securities of the U.S. government and its agencies and
instrumentalities.

THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE; THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.

This Prospectus contains the information you should read and know before
you invest in the Fund. Keep this prospectus for future reference.

THE BANK IS THE INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED
BY FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.

Prospectus dated January 7, 1994.

BANKSOUTH SELECT FUNDS

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------

GENERAL INFORMATION 2
- ------------------------------------------------------

INVESTMENT INFORMATION 2
- ------------------------------------------------------

Investment Objectives 2
Investment Policies 2
Acceptable Investments 2
Repurchase Agreements 3
Lending of Portfolio Securities 3
When-Issued and Delayed
Delivery Transactions 3
Investing in Securities of
Other Investment Companies 3
Certain Borrowing and Investment
Limitations 4
Regulatory Compliance 4

BANK SOUTH SELECT FUNDS INFORMATION 4
- ------------------------------------------------------

Management of the Trust 4
Board of Trustees 4
Investment Adviser 4
Advisory Fees 5
Adviser's Background 5
Distribution of Shares 5
Distribution Plan 5
Administrative Arrangements 6
Administration of the Trust 6
Administrative Services 6
Shareholder Services Plan 6
Custodian 7
Transfer Agent, Dividend Disbursing
Agent, and Portfolio Accounting
Services 7
Legal Counsel 7
Independent Auditors 7
Expenses of the Fund 7

NET ASSET VALUE 7
- ------------------------------------------------------

INVESTING IN THE FUND 7
- ------------------------------------------------------

Share Purchases 7
By Telephone 8
By Mail 8
Payment by Check 8
Payment by Wire 8
Minimum Investment Required 8
Systematic Investment Program 8
What Shares Cost 8
Certificates and Confirmations 9
Dividends 9
Purchasing Fund Shares with Securities 9

EXCHANGE PRIVILEGE 9
- ------------------------------------------------------

BankSouth Select Funds 9
By Telephone 10

REDEEMING SHARES 11
- ------------------------------------------------------

By Telephone 11
By Mail 11
Signatures 11
Receiving Payment 12
Redemption Before Purchase
Instruments Clear 12
Systematic Withdrawal Program 12
Accounts with Low Balances 12

SHAREHOLDER INFORMATION 13
- ------------------------------------------------------

Voting Rights 13
Massachusetts Partnership Law 13

EFFECT OF BANKING LAWS 13
- ------------------------------------------------------

TAX INFORMATION 14
- ------------------------------------------------------

Federal Income Tax 14
State and Local Taxes 14

PERFORMANCE INFORMATION 14
- ------------------------------------------------------

STATEMENT OF ASSETS AND LIABILITIES 15
- ------------------------------------------------------

REPORT OF ERNST & YOUNG, INDEPENDENT
AUDITORS 16
- ------------------------------------------------------
ADDRESSES Inside Back Cover

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

BANKSOUTH SELECT GOVERNMENT MONEY MARKET FUND
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................................................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable)................................................. None
Redemption Fees (as a percentage of amount redeemed, if applicable)..................................... None
Exchange Fee............................................................................................ None

ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver)(1)........................................................................ 0.35%
12b-1 Fees(2)........................................................................................... 0.00%
Other Expenses (after waiver)(3)........................................................................ 0.15%
Total Fund Operating Expenses(4).................................................................... 0.50%
</TABLE>

(2) As of the date of this prospectus, the Fund is not paying or accruing 12b-1
fees. The Fund can pay up to 0.25% as a 12b-1 fee to the distributor.
Certain trust clients of the Bank or its affiliates, including ERISA plans,
will not be affected by the distribution plan because the distribution plan
will not be activated unless and until a second, "Trust," class of shares
of the Fund (which would not have a Rule 12b-1 plan) is created and such
trust clients' investments in the Fund are converted to such Trust class.

(3) Total Other Expenses are estimated to be 0.21% absent the anticipated
voluntary waiver by the transfer agent.

(4) The Total Fund Operating Expenses are estimated to be 0.71% absent the
anticipated voluntary waivers by the adviser and transfer agent.

GENERAL INFORMATION
- --------------------------------------------------------------------------------

The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated September 22, 1993, as amended and restated dated December 20,
1993. The Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest representing interests in separate portfolios of
securities. This prospectus relates only to the Trust's BankSouth Select
Government Money Market Fund. The Fund is designed as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio of
short-term U.S. government securities. A minimum initial investment of $1,000 is
required ($500 for Individual Retirement Accounts ("IRAs")), and subsequent
investments must be in amounts of at least $100. See "Investing in the Fund".

The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.

INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The Fund's investment objective is to achieve current income consistent with
stability of principal and liquidity. The investment objective cannot be changed
without the approval of the Fund's shareholders. While there is no assurance
that the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this Prospectus.

INVESTMENT POLICIES

The Fund pursues its investment objective by investing in a portfolio of
short-term U.S government securities maturing in 13 months or less from the date
of acquisition unless they are purchased under a repurchase agreement that
provides for repurchase by the seller within one year from the date of
acquisition. The Fund invests only in instruments denominated and payable in
U.S. dollars. The average maturity of U.S. government securities in the Fund's
portfolio, computed on a dollar-weighted basis, will be 90 days or less. Unless
indicated otherwise, the investment policies may be changed by the Board of
Trustees without the approval of shareholders. Shareholders will be notified
before any material changes in these policies become effective.

ACCEPTABLE INVESTMENTS. The U.S. government securities in which the Fund
invests are either issued or guaranteed by the U.S. government, its agencies, or
instrumentalities. These securities include, but are not limited to:

direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and

notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as Federal Farm Credit Banks, Federal Home Loan
Mortgage Corporation, Student Loan Marketing Association, Federal Home
Loan Banks, Government National Mortgage Association and Federal National
Mortgage Association.

Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, such as Government National Mortgage Association securities,
are backed by the full faith and credit of the U.S. Treasury. Other obligations
are not backed by the full faith and credit of the United States. The U.S.
government may provide financial support to such other agencies or
instrumentalities, but it is not obligated to do so. Such instrumentalities
generally are supported by:

the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;

the discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or

the credit of the agency or instrumentality.

REPURCHASE AGREEMENTS. The U.S. government and agency securities in which the
Fund invests may be purchased pursuant to repurchase agreements. Repurchase
agreements are arrangements in which banks, broker-dealers, and other financial
institutions sell U.S. government and agency securities to the Fund and agree at
the time of sale to repurchase them at a mutually agreed upon time and price
including interest. To the extent that the original seller does not repurchase
the securities from the Fund, the Fund could receive less than the repurchase
price on any sale of such securities.

LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term basis to securities
broker-dealers, banks, or other institutional borrowers of securities. The Fund
will limit the amount of portfolio securities it may lend to not more than 50%
of its total assets. The Fund will only enter into loan arrangements with
broker-dealers, banks, or other institutions which the investment adviser has
determined are creditworthy under guidelines established by the Trust's Board of
Trustees, where loaned securities are marked to market daily and where the Fund
receives collateral at least equal to the value of the securities loaned at all
times.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase short-term
U.S. government securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The seller's failure to
complete these transactions may cause the Fund to miss a price or yield
considered to be advantageous.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund may invest in the securities of other investment companies, but will
not own more than 3% of the total outstanding voting stock of any investment
company, invest more than 5% of total assets in any one investment company, or
invest more than 10% of total assets in investment companies in the aggregate.
The Fund will invest in other investment companies that are money market funds
having investment objectives and policies similar to its own and primarily for
the purpose of investing short-term cash which has not yet been invested in
other portfolio instruments. It should be noted that investment companies incur
certain expenses, and therefore, any investment by the Fund in shares of another
investment company would be subject to certain duplicate expenses, particularly
transfer agent and custodian fees. The adviser will waive its investment
advisory fee on assets invested in securities of open-end investment companies.

CERTAIN BORROWING AND INVESTMENT LIMITATIONS

The Fund will not:

The above limitation cannot be changed without shareholder approval. The
following limitation, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.

The Fund will not:

invest more than 10% of the value of its net assets in illiquid
securities, including repurchase agreements providing for settlement more
than seven days after notice.

REGULATORY COMPLIANCE

BANKSOUTH SELECT FUNDS INFORMATION
- --------------------------------------------------------------------------------

MANAGEMENT OF THE TRUST

INVESTMENT ADVISER. Investment decisions for the Fund are made by the Bank, as
the Fund's investment adviser (the "Adviser"), subject to direction by the
Board. The Adviser conducts investment research and supervision for the Fund and
is responsible for the purchase or sale of portfolio instruments, for which it
receives an annual fee from the Fund's assets. From time to time, to the extent
consistent with the investment objective, policies and restrictions of the Fund,
the Fund may invest in securities of issuers with which the Adviser has a
lending relationship. However, at this time, the Adviser has no intention to
invest in securities of issuers that have a lending relationship with the
investment Adviser or its affiliates.

ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to 0.50% of the Fund's average daily net assets. The Adviser has
undertaken to reimburse the Fund up to the
amount of the advisory fee, for operating expenses in excess of limitations
established by certain states. The Adviser also may voluntarily choose to
waive a portion of its fee or reimburse other expenses of the Fund, but
reserves the right to terminate such waiver or reimbursement at any time at
its sole discretion.

The Adviser has managed discretionary assets for its customers since 1931.
As of September 30, 1993 the Adviser managed in excess of $1 billion of
discretionary assets. Prior to the date hereof, the Adviser has not served
as an investment adviser to mutual funds.

DISTRIBUTION OF SHARES

DISTRIBUTION PLAN. Under a distribution plan (the "Plan") adopted in accordance
with Securities and Exchange Commission ("SEC") Rule 12b-1 under the Investment
Company Act of 1940, as amended, the Fund will pay an amount computed at an
annual rate of up to 0.25% of the average daily net asset value of the shares to
finance any activity which is principally intended to result in the sale of
shares subject to the Plan. Certain trust clients of the Bank, including ERISA
plans, will not be affected by the Plan because the Plan will not be activated
unless and until a second, "Trust" class of shares of the Fund (which would not
have a Rule 12b-1 plan) is created and such trust clients' investments in the
Fund are converted to such Trust class.

The Distributor may select other financial institutions (such as broker-dealers
or banks) to provide sales support services as agents for their clients or
customers who beneficially own shares. These financial institutions (including
the Bank) will receive fees from the Distributor based upon shares subject to
the Plan and owned by their clients or customers. The schedules of such fees and
the basis upon which such fees will be paid will be determined from time to time
by the Distributor.

The Fund's Plan is a compensation type plan. As such, the Fund pays the
Distributor the fee described above as opposed to reimbursing the Distributor
for actual expenses incurred. Therefore, the Fund does not pay for amounts
expended by the distributor in excess of amounts received by it from the Fund,
which may include interest, carrying or other financing charges in connection
with excess amounts expended, or the Distributor's overhead expenses. However,
the Distributor may be able to recover such amounts or may earn a profit from
future payments made by the Fund under the Plan.

ADMINSTRATION OF THE TRUST

The administrative fee received during any fiscal year shall be at least
$100,000 per portfolio. Federated Administrative Services may voluntarily choose
to waive a portion of its fee.

SHAREHOLDER SERVICES PLAN. The Fund has adopted a Shareholder Services Plan
(the "Services Plan") with respect to the shares. Under the Services Plan,
financial institutions will enter into shareholder service agreements with the
Fund to provide administrative support services to their customers who from time
to time may be owners of record or beneficial owners of the shares. In return
for providing these support services, a financial institution may receive
payments from the Fund at a rate not exceeding 0.25% of the average daily net
assets of the shares beneficially owned by the financial institution's customers
for whom it is holder of record or with whom it has a servicing relationship.
These administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities, and various
personnel including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding the
Fund; assisting clients in changing dividend options, account designations, and
addresses; and providing such other services as the Fund reasonably requests.
Certain trust clients of the Bank, including ERISA plans, will not be affected
by the Services Plan because the Services Plan will not be activated unless and
until a second, "Trust" class of shares of the Fund (which would not have a
Services Plan) is created and such trust clients' investments in the Fund are
converted to such Trust class.

CUSTODIAN. The Bank of New York, New York, New York is custodian for the
securities and cash of the Fund.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of Federated
Investors, is transfer agent (the "Transfer Agent") for the shares of, and
dividend disbursing agent for, the Fund. It also provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments.

LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania and Dickstein, Shapiro & Morin, Washington, DC.

INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young,
Pittsburgh, Pennsylvania.

EXPENSES OF THE FUND

NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund attempts to stabilize the net asset value of its shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net asset
value per share is determined by subtracting total liabilities from total assets
and dividing the remainder by the number of shares outstanding. The Fund, of
course, cannot guarantee that its net asset value will always remain at $1.00
per share.

INVESTING IN THE FUND
- --------------------------------------------------------------------------------

SHARE PURCHASES

BY TELEPHONE. To place an order to purchase Fund shares, call Bank South Mutual
Funds Center toll free at 1-800-282-6680 extension 4550. Texas residents must
purchase shares of the Fund through Bank South Securities Corporation at
404-521-7063. Your purchase order will be taken directly over the telephone. The
order must be place by 4:00 p.m. (Eastern time) for shares to be purchased at
that day's price.

PAYMENT BY CHECK. Mail to BankSouth Select Government Money Market Fund, c/o
Bank South Mutual Funds Center, MC 16, P.O. Box 4387, Atlanta, Georgia 30302.

Payment by federal funds must be received before 12:00 noon (Eastern time) on
the same day as the order to earn dividends for that day.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in the Fund by an investor is $1,000 ($500 for
IRAs). Subsequent investments must be in amounts of at least $100. The Fund may
choose to waive its minimum investment requirement from time to time and for
accounts which select the Systematic Investment Program.

SYSTEMATIC INVESTMENT PROGRAM

Once a Fund account has been opened, shareholders may add to their investment on
a regular basis in minimum amounts of $100, unless waived. Under this program,
funds may be withdrawn periodically from the shareholder's checking or other
transaction deposit account and invested in Fund shares at the net asset value
next determined after an order is received by the Bank. A shareholder may apply
for participation in this program through the Bank.

WHAT SHARES COST

Fund shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund.

The net asset value is determined at 12:00 noon (Eastern time) and 4:00 p.m.
(Eastern time), Monday through Friday, except on: (i) days on which changes (if
any) in the value of the Fund's portfolio securities do not materially affect
its net asset value; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; or (iii) on the
following holidays: New Year's Day, Martin Luther King Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans'
Day, Thanksgiving Day, and Christmas Day.

CERTIFICATES AND CONFIRMATIONS

The Transfer Agent for the Fund maintains a share account for each shareholder
of record. Share certificates are not issued, unless requested in writing from
the Fund or the Transfer Agent.

Monthly confirmations are sent to report transactions, such as all purchases and
redemptions, as well as dividends paid during the month.

DIVIDENDS

Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund, unless a
shareholder makes a written request for cash payments to the Bank or the Fund.
Shares purchased by wire before 12:00 (Eastern time) begin earning dividends
that day. Shares purchased by check begin earning dividends the day after the
check is converted into available federal funds.

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 will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.

PURCHASING FUND SHARES WITH SECURITIES

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

BANKSOUTH SELECT FUNDS

All shareholders of the Fund are shareholders of BankSouth Select Funds.
BankSouth Select Funds currently includes the Fund, BankSouth Select Bond Fund,
BankSouth Select Prime Money Market Fund, BankSouth Select Equity Fund, and
BankSouth Select Georgia Tax-Free Income Fund. Shareholders have easy access to
each of the portfolios of BankSouth Select Funds through a telephone exchange
program. All BankSouth Select Funds are advised by the Bank and distributed by
the Distributor.

BY TELEPHONE. Instructions for exchanges between funds which are part of the
Trust may be given by telephone to the Bank South Mutual Funds Center at
1-800-282-6680 extension 4550; or to the Distributor. Shares may be exchanged by
telephone only between fund accounts having identical shareholder registrations.

Any shares held in certificate form cannot be exchanged by telephone but must be
forwarded to the Transfer Agent by the Bank and deposited to the shareholder's
mutual fund account before being exchanged. (See "Addresses").

Telephone exchange instructions must be received before 4:00 p.m. (Eastern time)
for shares to be exchanged the same day. The telephone exchange privilege may be
modified or terminated at any time. Shareholders will be notified of such
modification or termination. Shareholders may have difficulty in making
exchanges by telephone through the Bank during times of drastic economic or
market changes. If a shareholder cannot contact the Bank by telephone, it is
recommended that an exchange request be made in writing and sent by overnight
mail to BankSouth Select Funds, 55 Marietta Street, N.W., Atlanta, Georgia
30303.

REDEEMING SHARES
- --------------------------------------------------------------------------------

BY TELEPHONE. A shareholder may redeem shares of the Fund by contacting his
account officer or by calling the Bank South Mutual Funds Center to request the
redemption. (Call 1-800-282-6680 extension 4550.) Shares will be redeemed at the
net asset value next determined after the Fund receives the redemption request
from the Bank. Redemption requests to the Bank must be received before 4:00 p.m.
(Eastern time) in order for shares to be redeemed at that day's net asset value,
and the Bank will promptly submit such redemption requests and provide proper
written redemption instructions to the Fund. If, at any time, the Fund should
determine it necessary to terminate or modify this method of redemption,
shareholders would be promptly notified.

a trust company or commercial bank whose deposits are insured by the
FDIC's BIF;

a member firm of the New York, American, Boston, Midwest, or Pacific
Stock Exchange;

a savings bank or savings and loan association whose deposits are insured
by the FDIC's SAIF; or

any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934, as amended.

The Fund does not accept signatures guaranteed by a notary public.

REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR

SYSTEMATIC WITHDRAWAL PROGRAM

ACCOUNTS WITH LOW BALANCES

Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of shareholders of the Fund for such acts or
obligations of the Trust. These documents require notice of this disclaimer to
be given in each agreement, obligation, or instrument the Trust or its Trustees
enter into or sign on behalf of the Fund.

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

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

Banking laws and regulations presently prohibit a bank holding company
registered under the federal Bank Holding Company Act of 1956, as amended or any
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 or
distributing securities in general. However, such banking laws and regulations
do not prohibit such a holding company affiliate or banks generally from acting
as investment adviser, transfer agent, or custodian to such an investment
company or from acting as agent for their customers in purchasing securities.
The Fund's Adviser, is subject to such banking laws and regulations.

The Bank believes, based on the advice of its counsel, that it may perform the
services for the Fund contemplated by its advisory agreement with the Fund
without violating the Glass-Steagall Act or other applicable banking laws or
regulations. Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their affiliates, as well as
further judicial or administrative decisions or interpretations of present or
future statutes and regulations, could prevent the Bank from continuing to
perform all or a part of the above services for its customers and/or the Fund.
If it were prohibited from engaging in these customer-related activities, the
Trustees would consider alternative investment advisers and means of continuing
available investment services. In such event, changes in the operation of the
Fund may occur, including possible termination of any automatic or other Fund
share investment and redemption services then being provided by the Bank. It is
not expected that shareholders would suffer any adverse financial consequences
as a result of any of these occurrences.

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares.

STATE AND LOCAL TAXES

Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Fund advertises its yield and effective yield.

Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment.

Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the Fund after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.

From time to time, the Fund may advertise its performance using certain
reporting services and/or compare its performance to certain indices.

BANKSOUTH SELECT GOVERNMENT MONEY MARKET FUND
(A PORTFOLIO OF BANKSOUTH SELECT FUNDS)
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 3, 1994

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

<TABLE>
<S> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------------
Cash $100,000
- -----------------------------------------------------------------------------------------------------

LIABILITIES: --
- ----------------------------------------------------------------------------------------------------- -----------
Net Assets for 100,000 shares of beneficial interest outstanding $100,000
- ----------------------------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share ($100,000 / 100,000 SHARES OF
BENEFICIAL INTEREST OUTSTANDING) $1.00
- ----------------------------------------------------------------------------------------------------- -----------
</TABLE>

NOTES:

(1) BankSouth Select Funds (the "Trust"), which includes BankSouth Select
Government Money Market Fund (the "Fund"), was established as a
Massachusetts business trust under a Declaration of Trust dated September
22, 1993, as amended and restated dated December 20, 1993. The Fund has had
no operations since that date other than those relating to organizational
matters, including the issuance on January 3, 1994, of 100,000 shares at
$1.00 per share to Federated Administrative Services, the Administrator to
the Fund. Expenses of organization incurred by the Fund, $41,500, were borne
initially by the Administrator. The Fund has agreed to reimburse the
Administrator for the organization expenses initially borne by the
Administrator during the five-year period following the date the Fund's
registration statement first became effective.

REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS

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

To the Board of Trustees and Shareholders of
BankSouth Select Funds:

We have audited the accompanying statement of assets and liabilities of
BankSouth Select Government Money Market Fund, as of January 3, 1994. This
statement of assets and liabilities is the responsibility of the Trust's
management. Our responsibility is to express an opinion on this statement of
assets and liabilities based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the statement of assets and liabilities presents fairly, in all
material respects, the net assets of the BankSouth Select Government Money
Market Fund as of January 3, 1994 in conformity with generally accepted
accounting principles.

ERNST & YOUNG

Pittsburgh, Pennsylvania
January 5, 1994

ADDRESSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
BankSouth Select Government Money Federated Investors Tower
Market Fund Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------

Investment Adviser
Bank South, N.A. MC 16
P.O. Box 4387
Atlanta, Georgia 30302
- ---------------------------------------------------------------------------------------------------------------------

Custodian
The Bank of New York 48 Wall Street
New York, New York 10286
- ---------------------------------------------------------------------------------------------------------------------

Independent Auditors
Ernst & Young One Oxford Centre
Pittsburgh, Pennsylvania 15219
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

BANKSOUTH SELECT
GOVERNMENT MONEY MARKET
FUND
PROSPECTUS

A Portfolio of BankSouth
Select Funds, an Open-End
Management Investment Company

(a Mutual Fund)

January 7, 1994

[LOGO]
Bank South, N.A.
Investment Adviser
55 Marietta Street, N.W.
Atlanta, GA 30303

[LOGO]
FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779

3093003A (1/94)

BANKSOUTH SELECT GOVERNMENT MONEY MARKET FUND
(A PORTFOLIO OF BANKSOUTH SELECT FUNDS)
STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with the
prospectus of BankSouth Select Government Money Market Fund (the
"Fund") dated January 7, 1994. This Statement is not a prospectus
itself. To receive a copy of the prospectus, write or call the Bank
South, N.A. (the "Bank") Mutual Funds Center at 1-800-282-6680
extension 4550.

SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE
NOT ISSUED, ENDORSED OR GUARANTEED BY THE BANK OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT ISSUED, INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT
IN THE FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.

THE BANK IS INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED
BY FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE
BANK.

Statement dated January 7, 1994

FEDERATED SECURITIES CORP.
--------------------------------------------
Distributor
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------

INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------

Types of Investments 1
When-Issued and Delayed Delivery
Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 1
Lending of Portfolio Securities 1
Investment Limitations 2

BANKSOUTH SELECT FUNDS MANAGEMENT 2
- ---------------------------------------------------------------

Officers and Trustees 2
The Funds 4
Fund Ownership 5
Trustee Liability 5

INVESTMENT ADVISORY SERVICES 5
- ---------------------------------------------------------------

Adviser to the Fund 5
Advisory Fees 5

ADMINISTRATIVE SERVICES 5
- ---------------------------------------------------------------

BROKERAGE TRANSACTIONS 5
- ---------------------------------------------------------------

PURCHASING SHARES 6
- ---------------------------------------------------------------

Administrative Arrangements 6
Distribution Plan 6
Purchasing Fund Shares with Securities 6

DETERMINING NET ASSET VALUE 7
- ---------------------------------------------------------------

Use of the Amortized Cost Method 7

EXCHANGE PRIVILEGE 7
- ---------------------------------------------------------------

Requirements for Exchange 7
Making an Exchange 8

REDEEMING SHARES 8
- ---------------------------------------------------------------

Redemption in Kind 8

TAX STATUS 8
- ---------------------------------------------------------------

The Fund's Tax Status 8
Shareholders' Tax Status 8

YIELD 8
- ---------------------------------------------------------------

EFFECTIVE YIELD 9
- ---------------------------------------------------------------

PERFORMANCE COMPARISONS 9
- ---------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------

BankSouth Select Government Money Market Fund (the "Fund") is a portfolio of
BankSouth Select Funds (the "Trust") which was established as a Massachusetts
business trust under a Declaration of Trust dated as of September 22, 1993, as
amended and restated dated December 20, 1993.

INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The Fund's investment objective is to achieve current income consistent with
stability of principal and liquidity. The investment objective cannot be changed
without approval of shareholders.

TYPES OF INVESTMENTS

The Fund invests in short-term U.S. government securities.

VARIABLE RATE U.S. GOVERNMENT SECURITIES

Some of the short-term U.S. government securities the Fund may purchase
carry variable interest rates. These securities have a rate of interest
subject to adjustment at least annually. This adjusted interest rate is
ordinarily tied to some objective standard, such as the 91-day U.S.
Treasury bill rate.

Variable interest rates will reduce the changes in the market value of
such securities from their original purchase prices. Accordingly, the
potential for capital appreciation or capital depreciation should not be
greater than the potential for capital appreciation or capital
depreciation of fixed interest rate U.S. government securities having
maturities equal to the interest rate adjustment dates of the variable
rate U.S. government securities.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

No fees or other expenses, other than normal transaction costs, are incurred.
However, liquid assets of the Fund sufficient to make payment for the securities
to be purchased are segregated at the trade date. These securities are marked to
market daily and are maintained until the transaction is settled. The Fund may
engage in these transactions to an extent that would cause the segregation of an
amount up to 20% of the total value of its assets at any time.

REPURCHASE AGREEMENTS

As collateral for the obligation of the seller to repurchase the securities from
the Fund, the Fund or its custodian will take possession of the securities
subject to repurchase agreements, and these securities will be marked to market
daily. In the event that such a defaulting seller filed for bankruptcy or became
insolvent, disposition of such securities by the Fund might be delayed pending
court action. The Fund believes that under the regular procedures normally in
effect for custody of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of the Fund
and allow retention or disposition of such securities. The Fund will only enter
into repurchase agreements with banks and other financial institutions, such as
broker-dealers, which are deemed by the Fund's Adviser to be creditworthy
pursuant to guidelines established by the Trustees.

REVERSE REPURCHASE AGREEMENTS

The Fund may enter into reverse repurchase agreements. These transactions are
similar to borrowing cash and pledging securities as collateral. In a reverse
repurchase agreement, the Fund transfers possession of a portfolio instrument to
another person, such as a financial institution or broker-dealer, in return for
a percentage of the instrument's market value in cash, and agrees that on a
stipulated date in the future the Fund will repurchase the portfolio instrument
by remitting the original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable the Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not ensure that
the Fund will be able to avoid selling portfolio instruments at a disadvantaged
time.

When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These assets are marked to market daily and
maintained until the transaction is settled.

LENDING OF PORTFOLIO SECURITIES

The collateral received when the Fund lends portfolio securities must be valued
daily and, should the market value of the loaned securities increase, the
borrower must furnish additional collateral to the Fund. During the time
portfolio securities are on loan, the borrower pays the Fund any dividends or
interest paid on such securities. Loans are subject to termination at the option
of the Fund or the borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower or placing
broker.

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for
clearance of transactions.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
33 1/3% of the value of its total assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by
enabling the Fund to meet redemption requests when the liquidation of
portfolio securities is deemed to be inconvenient or disadvantageous. The
Fund will not purchase any securities while borrowings in excess of 5% of
the value of its total assets are outstanding.

PLEDGING ASSETS

The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, it may pledge assets having
a value not exceeding the lesser of the dollar amounts borrowed or 15% of
the value of total assets at the time of the pledge.

LENDING CASH OR SECURITIES

The Fund will not lend any of its assets, except portfolio securities up
to 50% of the value of its total assets. This shall not prevent the Fund
from purchasing or holding bonds, debentures, notes, certificates of
indebtedness, or other debt securities, entering into repurchase
agreements, or engaging in other transactions where permitted by the
Fund's investment objective, policies, limitations, or its Declaration of
Trust.

The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Board of Trustees
without shareholder approval. Shareholders will be notified before any material
change in the following limitations becomes effective.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

INVESTING IN ILLIQUID SECURITIES

The Fund will not invest more than 10% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice, non-negotiable fixed
time deposits with maturities over seven calendar days, and certain
restricted securities not determined by the Trustees to be liquid.

The Fund does not expect to borrow money or pledge securities in excess of 5% of
the value of its net assets during its first fiscal year.

BANKSOUTH SELECT FUNDS MANAGEMENT
- --------------------------------------------------------------------------------

OFFICERS AND TRUSTEES

Officers and Trustees of the Trust are listed with their addresses, principal
occupations, and present positions. Except as listed below, none of the Trustees
or officers are affiliated with Bank South, N.A., Federated Investors, Federated
Securities Corp., Federated Services Company, Federated Administrative Services,
or the Funds (as defined below).

<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>

John F. Donahue*\ Chairman and Chairman and Trustee, Federated Investors; Chairman and Trustee,
Federated Investors Tower Trustee Federated Advisers, Federated Management, and Federated Research;
Pittsburgh, PA Director, AEtna Life and Casualty Company; Chief Executive Officer and
Director, Trustee, or Managing General Partner of the Funds; formerly,
Director, The Standard Fire Insurance Company.

John T. Conroy, Jr. Trustee President, Investment Properties Corporation; Senior Vice-President,
Wood/IPC Commercial John R. Wood and Associates, Inc., Realtors; President, Northgate
Department Village Development Corporation; General Partner or Trustee in private
John R. Wood and real estate ventures in Southwest Florida; Director, Trustee, or
Associates, Inc., Realtors Managing General Partner of the Funds; formerly, President, Naples
3255 Tamiami Trail North Property Management, Inc.
Naples, FL

William J. Copeland Trustee Director and Member of the Executive Committee, Michael Baker, Inc. (an
One PNC Plaza-23rd Floor engineering firm); Director, Trustee, or Managing General Partner of the
Pittsburgh, PA Funds; formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC
Bank Corp. and
Director, Ryan Homes, Inc.

Edward C. Gonzales* President, Vice President, Treasurer, and Trustee, Federated Investors; Vice
Federated Investors Tower Treasurer President and Treasurer, Federated Advisers, Federated Management, and
Pittsburgh, PA and Trustee Federated Research; Executive Vice President, Treasurer, and Director,
Federated Securities Corp.; Trustee, Federated Services Company;
Chairman, Treasurer, and Director, Federated Administrative Services;
Trustee or Director of some of the Funds; Vice President and Treasurer
of the Funds.

Gregor F. Meyer Trustee Attorney-at-law; Partner, Meyer and Flaherty; Chairman, Meritcare, Inc.;
5916 Penn Mall Director, Eat'N Park Restaurants, Inc.; Director, Trustee, or Managing
Pittsburgh, PA General Partner of the Funds; formerly, Vice Chairman, Horizon
Financial, F.A.

Marjorie P. Smuts Trustee Public relations/marketing consultant; Director, Trustee, or Managing
4905 Bayard Street General Partner of the Funds.
Pittsburgh, PA

Charles L. Davis, Jr. Vice President Vice President, Federated Administrative Services; Vice President and
Federated Investors Tower and Assistant Assistant Treasurer of some of the Funds; formerly, Vice President and
Pittsburgh, PA Treasurer Director of Investor Relations, MNC
Financial, Inc. and Vice President, Product Management, MNC Financial,
Inc.

* This Trustee is deemed to be an "interested person" of the Trust as defined in
the Investment Company Act of 1940.

\ Members of the Board's Executive Committee. The Executive Committee of the
Board of Trustees handles various of the delegable responsibilities of the
Board of Trustees between meetings of the Board.

THE FUNDS

FUND OWNERSHIP

Officers and Trustees own less than 1% of the Fund's outstanding shares.

TRUSTEE LIABILITY

The Trust's Declaration of Trust provides that the Trustees are not liable for
errors of judgment or mistakes of fact or law. However, they are not protected
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of their office.

INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------

ADVISER TO THE FUND

The Fund's investment adviser is Bank South, N.A. (the "Adviser"). The Adviser
shall not be liable to the Trust, the Fund, or any shareholder of the Fund 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 Trust.

ADVISORY FEES

For its advisory services, the Adviser receives an annual investment advisory
fee as described in the Prospectus.

STATE EXPENSE LIMITATIONS

The Fund has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2.50% per year of the first $30 million of average net assets,
2.00% per year of the next $70 million of average net assets, and 1.50%
per year of the remaining average net assets, the Adviser has agreed to
reimburse the Fund for its expenses over the limitation.

If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.

This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.

ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------

Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for the fees set forth in the
prospectus. John A. Staley, IV, an officer of the Trust, holds approximately 15%
of the outstanding common stock and serves as a director of Commercial Data
Services, Inc., a company which provides computer processing services to
Federated Administrative Services.

BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------

The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the Adviser
and 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.

The Adviser exercises reasonable business judgment in selecting brokers who
offer brokerage and research services to execute securities transactions. The
Adviser determines in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research services
provided.

Research services provided by brokers and dealers may be used by the Adviser in
advising the Fund and other accounts. To the extent that receipt of these
services may supplant services for which the Adviser might otherwise have paid,
it would tend to reduce its expenses.

PURCHASING SHARES
- --------------------------------------------------------------------------------

Shares are sold at their net asset value without a sales charge on days the New
York Stock Exchange and the Federal Reserve Wire System are open for business.
The procedure for purchasing shares of the Fund is explained in the prospectus
under "Investing in the Funds."

ADMINISTRATIVE ARRANGEMENTS

DISTRIBUTION PLAN

With respect to the Fund, the Trust has adopted a Plan pursuant to Rule 12b-1
which was promulgated by the Securities and Exchange Commission ("SEC") pursuant
to the Investment Company Act of 1940, as amended (the "Act"). The Plan provides
for payment of fees to the Distributor to finance any activity which is
principally intended to result in the sale of the Fund's shares subject to the
Plan. Such activities may include the advertising and marketing of shares;
preparing, printing, and distributing prospectuses and sales literature to
prospective shareholders, brokers, or administrators; and implementing and
operating the Plan. Pursuant to the Plan, the Distributor may pay fees to
brokers and others for such services.

The Trustees expect that the adoption of the Plan will result in the sale of
sufficient number of shares so as to allow the Fund to achieve economic
viability. It is also anticipated that an increase in the size of the Fund will
facilitate more efficient portfolio management and assist the Fund in seeking to
achieve its investment objective.

PURCHASING FUND SHARES WITH SECURITIES

The Fund in its sole discretion, may sell Fund shares to investors that desire
to purchase Fund shares with certain securities or a combination of certain
securities and cash. The Fund reserves the right to determine the acceptability
of securities used to effect such purchases. On the day securities are accepted
by the Fund, they are valued based upon independent bid and in the same manner
as the Fund values it assets. Investors wishing to use securities to purchase
Fund shares should first contact the Bank. Any such transfer of securities is
treated as a sale of the securities and will result in the recognition of any
gain or loss for federal income tax purposes by the seller of such securities,
except to the extent the seller is an ERISA plan or similar entity not subject
to tax.

TAX CONSEQUENCES

Exercise of this exchange privilege is currently treated as a sale for
federal income tax purposes. Depending upon the cost basis of the
securities exchanged for Fund shares, a gain or loss may be realized by
the investor.

DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund attempts to stabilize the value of a share at $1.00. The days on which
net asset value is calculated by the Fund are described in the prospectus.

USE OF THE AMORTIZED COST METHOD

The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization of
premium or accumulation of discount rather than at current market value.

The Fund's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions of SEC Rule 2a-7 under the
Act. Under this Rule, the Trustees must establish procedures reasonably designed
to stabilize the net asset value per share, as computed for purposes of
distribution and redemption, at $1.00 per share, taking into account current
market conditions and the Fund's investment objective.

Under such Rule, the Fund is permitted to purchase instruments which are subject
to demand features or standby commitments. As defined by this Rule, a demand
feature entitles the Fund to receive the principal amount of the instrument from
the issuer or a third party (1) on no more than 30 days' notice or (2) at
specified intervals not exceeding one year on no more than 30 days' notice. A
standby commitment entitles the Fund to achieve same day settlement and to
receive an exercise price equal to the amortized cost of the underlying
instrument plus accrued interest at the time of exercise.

MONITORING PROCEDURES

The Trustees' procedures include monitoring the relationship between the
amortized cost value per share and the net asset value per share based
upon available indications of market value. The Trustees will decide
what, if any, steps should be taken if there is a difference of more than
0.50% between the two values. The Trustees will take any steps they
consider appropriate (such as redemption in kind or shortening the
average portfolio maturity) to minimize any material dilution or other
unfair results arising from differences between the two methods of
determining net asset value.

INVESTMENT RESTRICTIONS

Rule 2a-7 requires that the Fund limit its investments to instruments
that, in the opinion of the Trustees, present minimal credit risks and
have received the requisite rating from one or more nationally recognized
statistical rating organizations. If the instruments are not rated, the
Trustees must determine that they are of comparable quality. The Rule
also requires the Fund to maintain a dollar-weighted average portfolio
maturity (not more than 90 days) appropriate to the objective of
maintaining a stable net asset value of $1.00 per share. In addition, no
instruments with a remaining maturity of more than 13 months days can be
purchased by the Fund.

Should the disposition of a portfolio security result in a
dollar-weighted average portfolio maturity of more than 90 days, the Fund
will invest its available cash to reduce the average maturity to 90 days
or less as soon as possible.

The Fund may attempt to increase yield by trading portfolio securities to take
advantage of short-term market variations. This policy may, from time to time,
result in high portfolio turnover. Under the amortized cost method of valuation,
neither the amount of daily income nor the net asset value is affected by any
unrealized appreciation or depreciation of the portfolio.

In periods of declining interest rates, the indicated daily yield on shares of
the Fund computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above may tend to be higher than a
similar computation made by using a method of valuation based upon market prices
and estimates.

In periods of rising interest rates, the indicated daily yield on shares of the
Fund computed the same way may tend to be lower than a similar computation made
by using a method of calculation based upon market prices and estimates.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

Shareholders of the Fund may exchange shares of the Fund for shares of other
Funds advised by the Bank and certain other funds designated by the Bank and
distributed by the Distributor, subject to certain conditions. Exchange
procedures are explained in the Prospectus under "Exchange Privilege".

REQUIREMENTS FOR EXCHANGE

Shareholders using the exchange privilege must exchange shares having a net
asset value of at least $1,000. Before the exchange, the shareholder must
receive a prospectus of the fund for which the exchange is being made.

This privilege is available to shareholders resident in any state in which
shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, shares submitted for exchange are redeemed and
the proceeds invested in shares of the other fund. Further information on the
exchange privilege and prospectuses may be obtained by calling the Bank at the
number on the cover of this Statement of Additional Information.

MAKING AN EXCHANGE

Instructions for exchanges may be given in writing. Written instructions may
require a signature guarantee.

REDEEMING SHARES
- --------------------------------------------------------------------------------

The Fund redeems shares at the next computed net asset value after the Bank
receives the redemption request. Redemption will be made on days on which the
Fund computes its net asset value. Redemption requests cannot be executed on
days on which the New York Stock Exchange is closed or on federal holidays
restricting wire transfers. Redemption procedures are explained in the
prospectus under "Redeeming Shares."

REDEMPTION IN KIND

Although the Fund intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price, in whole or in part, by a
distribution of securities from the Fund's portfolio. To satisfy registration
requirements in a particular state, redemption in kind will be made in readily
marketable securities to the extent that such securities are available. If such
a state's policy changes, the Fund reserves the right to redeem in kind by
delivering those securities it deems appropriate.

The Trust has elected to be governed by SEC Rule 18f-1 under the Act under which
the Fund is obligated to redeem shares for any one shareholder in cash only up
to the lesser of $250,000 or 1% of the Fund's net asset value during any 90-day
period.

TAX STATUS
- --------------------------------------------------------------------------------

THE FUND'S TAX STATUS

derive at least 90% of its gross income from dividends, interest, and gains from
the sale of securities;

derive less than 30% of its gross income from the sale of securities held less
than three months;

invest in securities within certain statutory limits; and

distribute to its shareholders at least 90% of its net income earned during the
year.

SHAREHOLDERS' TAX STATUS

Shareholders are subject to federal income tax on dividends received as cash or
additional shares. No portion of any income dividend paid by the Fund is
eligible for the dividends received deduction available to corporations. These
dividends and any short-term capital gains are taxable as ordinary income.

CAPITAL GAINS

Capital gains experienced by the Fund could result in an increase in
dividends. Capital losses could result in a decrease in dividends. If,
for some extraordinary reason, the Fund realizes net long-term capital
gains, it will distribute them at least once every 12 months.

YIELD
- --------------------------------------------------------------------------------

The Fund calculates its yield daily based upon the seven days ending on the day
of the calculation, called the "base period." This yield is computed by:

determining the net change in the value of a hypothetical account with a balance
of one share at the beginning of the base period, with the net change excluding
capital changes but including the value of any additional shares purchased with
dividends earned from the original one share and all dividends declared on the
original and any purchased shares;

dividing the net change in the account's value by the value of the account at
the beginning of the base period to determine the base period return; and

multiplying the base period return by (365/7).

To the extent that financial institutions and brokers/dealers charge fees in
connection with services and provided in conjunction with an investment in the
Fund, the performance will be reduced for those shareholders paying those fees.

EFFECTIVE YIELD
- --------------------------------------------------------------------------------

The Fund's effective yield is computed by compounding the unannualized base
period return by:

adding 1 to the base period return;

raising the sum of the 365/7th power; and

subtracting 1 from the result.

PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------

The Fund's performance depends upon such variables as:

portfolio quality;

average portfolio maturity;

type of instruments in which the portfolio is invested;

changes in interest rates on money market instruments;

changes in Fund expenses; and

the relative amount of Fund cash flow.

From time to time the Fund may advertise its performance using certain reporting
services and/or compare its performance to certain indices. These may include
the following:

LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all income dividends and capital gains distributions, if any.
From time to time, the Fund will quote its Lipper ranking in the "short-term
U.S. government funds" category in advertising and sales literature.

MONEY, a monthly magazine, regularly ranks money market funds in various
categories based on the latest available seven-day compound (effective) yield.
From time to time, the Fund will quote its Money ranking in advertising and
sales literature.

SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most representative
yields for selected securities, issued by the U.S. Treasury, maturing in 30
days.

When comparing funds using reporting services or total return and yield,
investors should take into consideration any relevant differences in funds, such
as permitted portfolio compositions and methods used to value portfolio
securities and compute offering price.

Advertisements and other sales literature for the Fund may refer to total
return. Total return is the historic change in the value of an investment in the
Fund based on the monthly reinvestment of dividends over a specified period of
time.

3093003B (1/94)

BANKSOUTH SELECT PRIME MONEY MARKET FUND
(A PORTFOLIO OF BANKSOUTH SELECT FUNDS)
PROSPECTUS

The shares of BankSouth Select Prime Money Market Fund (the "Fund")
offered by this Prospectus represent interests in a diversified portfolio
of BankSouth Select Funds (the "Trust"), an open-end management
investment company (a mutual fund). The investment objective of the Fund
is to achieve current income consistent with stability of principal and
liquidity. The Fund pursues this objective by investing in a portfolio of
high-quality money market instruments.

THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE; THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.

This Prospectus contains the information you should read and know before
you invest in the Fund. Keep this prospectus for future reference.

THE BANK IS THE INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED
BY FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.

Prospectus dated January 7, 1994

BANKSOUTH SELECT FUNDS

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------

GENERAL INFORMATION 2
- ------------------------------------------------------

INVESTMENT INFORMATION 2
- ------------------------------------------------------

Investment Objective 2
Investment Policies 2
Acceptable Investments 2
Variable Rate Demand Notes 3
Demand Features 3
Bank Instruments 3
Asset-Backed Securities 3
Short-Term Credit Facilities 4
Ratings 4
Repurchase Agreements 4
Lending of Portfolio Securities 4
Restricted and Illiquid Securities 4
Credit Enhancement 5
When-Issued And Delayed Delivery
Transactions 5
Investing in Securities of Other
Investment Companies 5
Investment Risks 5
Certain Borrowing and Investment Limitations 6
Regulatory Compliance 6

BANKSOUTH SELECT FUNDS INFORMATION 7
- ------------------------------------------------------

Management of the Trust 7
Board of Trustees 7
Investment Adviser 7
Advisory Fees 7
Adviser's Background 7
Distribution of Shares 7
Distribution Plan 7
Administrative Arrangements 8
Administration of the Trust 8
Administrative Services 8
Shareholder Services Plan 9
Custodian 9
Transfer Agent, Dividend Disbursing
Agent and Portfolio Accounting
Services 9
Legal Counsel 9
Independent Auditors 9
Expenses of the Fund 9

NET ASSET VALUE 10
- ------------------------------------------------------

INVESTING IN THE FUND 10
- ------------------------------------------------------

Share Purchases 10
By Telephone 10
By Mail 10
Payment by Check 10
Payment by Wire 10
Minimum Investment Required 10
Systematic Investment Program 10
What Shares Cost 11
Certificates and Confirmations 11
Dividends 11
Purchasing Fund Shares with Securities 11

EXCHANGE PRIVILEGE 12
- ------------------------------------------------------

BankSouth Select Funds 12
By Telephone 12

REDEEMING SHARES 13
- ------------------------------------------------------

By Telephone 13
By Mail 14
Signatures 14
Receiving Payment 14
Redemption Before Purchase
Instruments Clear 14
Systematic Withdrawal Program 14
Accounts with Low Balances 15

SHAREHOLDER INFORMATION 15
- ------------------------------------------------------

Voting Rights 15
Massachusetts Partnership Law 15

EFFECT OF BANKING LAWS 16
- ------------------------------------------------------

TAX INFORMATION 16
- ------------------------------------------------------

Federal Income Tax 16
State and Local Taxes 16

PERFORMANCE INFORMATION 17
- ------------------------------------------------------

ADDRESSES Inside Back Cover

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

BANKSOUTH SELECT PRIME MONEY MARKET FUND
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................................................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable)................................................. None
Redemption Fees (as a percentage of amount redeemed, if applicable)..................................... None
Exchange Fee............................................................................................ None

ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver)(1)........................................................................ 0.33%
12b-1 Fees(2)........................................................................................... 0.00%
Other Expenses (after waivers)(3)....................................................................... 0.17%
Total Fund Operating Expenses(4).................................................................... 0.50%
</TABLE>

(2) As of the date of this prospectus, the Fund is not paying or accruing 12b-1
fees. The Fund can pay up to 0.25% as a 12b-1 fee to the distributor.
Certain trust clients of the Bank or its affiliates, including ERISA plans,
will not be affected by the distribution plan because the distribution plan
will not be activated unless and until a second, "Trust," class of shares
of the Fund (which would not have a Rule 12b-1 plan) is created and such
clients' investments in the Fund are converted to such Trust class.

(3) Total Other Expenses are estimated to be 0.23% absent the anticipated
voluntary waiver by the administrator and transfer agent.

(4) The Total Fund Operating Expenses are estimated to be 0.73% absent the
anticipated voluntary waivers by the adviser, administrator, and transfer
agent.

GENERAL INFORMATION
- --------------------------------------------------------------------------------

The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated September 22, 1993, as amended and restated dated December 20,
1993. The Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest representing interests in separate portfolios of
securities. This prospectus relates only to the Trust's BankSouth Select Prime
Money Market Fund. The Fund is designed as a convenient means of accumulating an
interest in a professionally managed, diversified portfolio of high quality
money market instruments maturing in 13 months or less. A minimum initial
investment of $1,000 is required ($500 for Individual Retirement Accounts
("IRAs")), and subsequent investments must be in amounts of at least $100. See
"Investing in the Fund."

The Fund attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.

INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

The Fund pursues its investment objective by investing in a portfolio of high
quality money market instruments maturing in 13 months or less. The average
maturity of money market instruments in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less. Unless indicated otherwise, the
investment policies may be changed by the Board of Trustees without the approval
of Fund shareholders. Shareholders will be notified before any material changes
in these policies become effective.

ACCEPTABLE INVESTMENTS. The Fund invests in high quality money market
instruments that are either rated in the highest short-term rating category by
one or more nationally recognized statistical rating organizations ("Rating
Agencies") or are deemed by the Adviser to be of comparable quality to
securities having such ratings. Examples of these instruments include, but are
not limited to:

domestic issues of corporate debt obligations, including variable rate
demand notes;

commercial paper (including Canadian Commercial Paper ("CCP") and
Europaper);

certificates of deposit, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other depository
institutions ("Bank Instruments");

short-term credit facilities;

asset-backed securities, including commercial paper;

obligations issued or guaranteed as to payment of principal and interest
by the U.S. Government or one of its agencies or instrumentalities
("Government Securities"); and

other money market instruments.

The Fund invests only in instruments denominated and payable in U.S. dollars.

VARIABLE RATE DEMAND NOTES. Variable rate demand notes are generally long-term
debt instruments that have variable or floating interest rates and provide the
Fund with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. Such securities typically bear interest
at a rate that is intended to cause the securities to trade at par. The interest
rate may float or be adjusted at regular intervals (ranging from daily to
annually), and is normally based on an index or rate such as the prime rate,
LIBOR or another published rate or index. Most variable rate demand notes allow
the Fund to demand the repurchase of the security on not more than seven days
prior notice. Other notes only permit the Fund to tender the security at the
time of each interest rate adjustment or at other fixed intervals. The Fund
treats variable rate demand notes as maturing on the later of the next interest
adjustment date or the date on which the Fund may next tender the security for
repurchase. See "Demand Features."

DEMAND FEATURES. The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase such securities at their
principal amount (usually with accrued interest) within a fixed period (usually
seven days) following a demand by the Fund. A demand feature may be issued by
the issuer of the underlying securities, a dealer in the securities, or by
another third party, and may not be transferred separately from the underlying
security. The Fund uses these arrangements to provide the Fund with liquidity
and not to protect against changes in the market value of the underlying
securities. The bankruptcy, receivership, or default by the issuer of the demand
feature, or a default on the underlying security or other event that terminates
the demand feature before its exercise, will adversely affect the liquidity of
the underlying security. Demand features that are exercisable even after a
payment default on the underlying security may be treated as a form of credit
enhancement.

BANK INSTRUMENTS. The Fund only invests in Bank Instruments either (i) issued
by an institution having capital, surplus and undivided profits over $100
million (an "Eligible Bank") or (ii) that are insured by the FDIC's Bank
Insurance Fund ("BIF") or Savings Association Insurance Fund ("SAIF"). Bank
Instruments may include Eurodollar Certificates of Deposit ("ECDs"), Yankee
Certificates of Deposit ("Yankee CDs") and Eurodollar Time Deposits ("ETDs")
issued by Eligible Banks. The Fund will treat securities that are credit
enhanced by an Eligible Bank's irrevocable letter of credit or unconditional
guaranty as Bank Instruments.

ASSET-BACKED SECURITIES. Asset-backed securities are securities issued
generally by special purpose entities, such as trusts, limited partnerships and
corporations whose primary assets consist of a pool of loans, leases or accounts
receivable (collectively, "Receivables"). The securities may take the form of
debt and other interests in the special purpose entities. Each special purpose
entity will be treated as a separate issuer for diversification purposes.
Although the securities often have some form of credit or liquidity enhancement,
payments on the securities depend predominantly upon collections of the
underlying Receivables and not upon the creditworthiness of the originator or
seller of the Receivables.

SHORT-TERM CREDIT FACILITIES. The Fund may enter into, or acquire
participations in, short-term borrowing arrangements with corporations, often
consisting of either a short-term revolving credit facility or a master note
payable upon demand. Under these arrangements, the borrower may reborrow funds
during the term of the facility. The Fund treats any commitments to provide such
advances as a standby commitment to purchase the borrower's notes.

RATINGS. For purposes of the Fund, a Rating Agency's highest rating category is
determined without regard for sub-categories and gradations. For example,
securities rated A-1 or A-1+ by Standard & Poor's Corporation ("S&P"), Prime-1
by Moody's Investors Service, Inc. ("Moody's"), F-1 (+ or -) by Fitch Investors
Service, Inc. ("Fitch"), Duff-1 (+ or -) by Duff & Phelps Credit Rating Co.
("Duff & Phelps") are all considered rated in the highest short-term rating
category. The Fund will follow applicable Securities and Exchange Commission
("SEC") regulations in determining whether a security rated by more than one
Rating Agency can be treated as being in the highest short-term rating category;
currently, such securities must be rated by two Rating Agencies in their highest
rating categories. See "Regulatory Compliance." A credit rating is not a
recommendation to buy, sell or hold securities, and is subject to change and/or
withdrawal by the rating agency.

REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, securities broker-dealers, and other financial
institutions sell securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price with interest. To the
extent that the seller does not repurchase the securities from the Fund, the
Fund could receive less than the repurchase price on any sale of such
securities.

LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term basis to securities
broker-dealers, banks, or other institutional borrowers of securities. The Fund
will limit the amount of portfolio securities it may lend to not more than 50%
of its total assets. The Fund will only enter into loan arrangements with
broker-dealers, banks, or other institutions which the investment adviser has
determined are creditworthy under guidelines established by the Trust's Board of
Trustees, where loaned securities are marked to market daily and where the Fund
receives collateral equal to at least 100% of the value of the securities loaned
at all times.

RESTRICTED AND ILLIQUID SECURITIES. The Fund intends to invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restrictions on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Board of Trustees to be liquid, non-negotiable
time deposits, and repurchase agreements providing for settlement in more than
seven days after notice, to 10% of the Fund's net assets.

The Fund may invest in commercial paper (including asset-backed commercial
paper) issued in reliance on the exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "Securities Act"). Section
4(2) commercial paper is restricted as to disposition under the Securities Act,,
and is generally sold to institutional investors, such as the Fund, who agree
that they are purchasing the paper for investment purposes and not with a view
to public distribution. Any resale by the purchaser must be in a transaction
exempt from Securities Act registration. Section 4(2) commercial paper is
normally resold to other institutional investors like the Fund through or with
the assistance of the issuer or investment dealers who make a market in Section
4(2) commercial paper, thus providing liquidity. The Fund believes that Section
4(2) commercial paper and possibly certain other restricted securities which
meet the criteria for liquidity established by the Trustees of the Fund are
quite liquid. The Fund intends, therefore, to treat the restricted securities
which meet the criteria for liquidity established by the Trustees, including
Section 4(2) commercial paper, as determined by the Fund's investment adviser,
as liquid and not subject to the investment limitations applicable to illiquid
securities. In addition, because Section 4(2) commercial paper is liquid, the
Fund intends to not subject such paper to the limitation applicable to
restricted securities.

CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may be credit
enhanced by a guaranty, letter of credit, cash collateral accounts, or
insurance. The Fund typically evaluates the credit quality and ratings of credit
enhanced securities based upon the financial condition and ratings of the party
providing the credit enhancement (the "Credit Enhancer"), rather than the
issuer. Generally, the Fund will not treat credit enhanced securities as having
been issued by the Credit Enhancer for diversification purposes. However, under
certain circumstances, applicable regulations may require the Fund to treat the
securities as having been issued by both the issuer and the Credit Enhancer. Any
decline in the Rating Agency ratings of the Credit Enhancer, or any bankruptcy,
receivership, or default of the Credit Enhancer will adversely affect the
quality, value and marketability of the underlying security.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase portfolio
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Fund purchases securities with payment and delivery
scheduled for a future time. The seller's failure to complete these transactions
may cause the Fund to miss a price or yield considered to be advantageous.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
the securities of other investment companies, but will not own more than 3% of
the total outstanding voting stock of any investment company, invest more than
5% of its total assets in any one investment company, or invest more than 10% of
its total assets in investment companies in the aggregate. The Fund will only
invest in other investment companies that are money market funds having
investment objectives and policies similar to its own and primarily for the
purpose of investing short-term cash which has not yet been invested in other
portfolio instruments. It should be noted that investment companies incur
certain expenses and therefore, any investment by the Fund in shares of another
investment company would be subject to certain duplicate expenses, particularly
transfer agent and custodian fees. The Adviser will waive its advisory fee on
assets invested in securities of open-end investment companies.

INVESTMENT RISKS

ECDs, ETDs, Yankee CDs, CCPs and Europaper are subject to different risks than
domestic obligations of domestic banks or corporations. Examples of these risks
include international economic and political developments, foreign governmental
restrictions that may adversely affect the payment of principal or interest,
foreign withholding and taxes on interest income, difficulties in obtaining or
enforcing a judgment against the issuing entity, and the possible impact of
interruptions in the flow of international currency transactions. Risks may also
exist for ECDs, ETDs, and Yankee CDs because the banks issuing these
instruments, or their branches, are not necessarily subject to the same
regulatory requirements that apply to domestic banks, such as reserve
requirements, loan limitations, examinations, accounting, auditing,
recordkeeping, deposit insurance and the public availability of information.
These factors will be carefully considered by the Fund's adviser in selecting
investments for the Fund.

CERTAIN BORROWING AND INVESTMENT LIMITATIONS

The Fund will not:

with respect to 75% of the value of its total assets, invest more than 5%
of the value of its total assets in securities of any one issuer (other
than cash, cash items or securities issued or guaranteed by the U.S.
government, or its agencies or instrumentalities, and repurchase
agreements collateralized by such securities), or acquire more than 10%
of the outstanding voting securities of any one issuer; or

borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for a
percentage of its cash value with an agreement to buy it back on a set
date) or pledge securities except, under certain circumstances, the Fund
may borrow up to 33 1/3% of the value of its total assets and secure such
borrowings with up to 15% of the value of its total assets at the time of
borrowing.

The above limitations cannot be changed without shareholder approval. The Fund
intends also to limit its investment in restricted and illiquid securities to
10% of the Fund's net assets. See "Restricted and Illiquid Securities."

REGULATORY COMPLIANCE

The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
Prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended (the "ICA"). In particular,
the Fund will comply with the various requirements of SEC Rule 2a-7 under the
ICA which regulates money market mutual funds. For example, with limited
exceptions, Rule 2a-7 prohibits the investment of more than 5% of the Fund's
total assets in the securities of any one issuer, although the Fund's investment
limitation only requires such 5% diversification with respect to 75% of its
assets. The Fund will invest more than 5% of its assets in any one issuer only
under the circumstances permitted by Rule 2a-7. The Fund will also determine the
effective maturity of its investments, as well as its ability to consider a
security as having received the requisite short-term ratings by the Rating
Agencies, according to Rule 2a-7. The Fund may change these operational policies
to reflect changes in the laws and regulations without the approval of its
shareholders.

BANKSOUTH SELECT FUNDS INFORMATION
- --------------------------------------------------------------------------------

MANAGEMENT OF THE TRUST

ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to 0.50% of the Fund's average daily net assets. The Adviser has
undertaken to reimburse the Fund, up to the amount of the advisory fee, for
operating expenses in excess of limitations established by certain states.
The Adviser also may voluntarily choose to waive a portion of its fee or
reimburse other expenses of the Fund, but reserves the right to terminate
such waiver or reimbursement at any time at its sole discretion.

The Adviser has managed discretionary assets for its customers since 1931.
As of September 30, 1993, the Adviser managed in excess of $1 billion of
discretionary assets. Prior to the date hereof, the Bank has not served as
an investment adviser to mutual funds.

DISTRIBUTION OF SHARES

DISTRIBUTION PLAN. Under a distribution plan (the "Plan") adopted in accordance
with SEC Rule 12b-1 under the Investment Company Act of 1940, as amended, the
Fund will pay an amount computed at an annual rate of up to 0.25% of the average
daily net asset value of the shares to finance any activity which is principally
intended to result in the sale of shares subject to the Plan. Certain trust
clients of the Bank, including ERISA plans,will not be affected by the Plan
because the Plan will not be activated unless and until a second, "Trust" class
of shares of the Fund (which would not have a Rule 12b-1 plan) is created and
such trust clients' investments in the Fund are converted to such Trust class.

The Distributor may select other financial institutions (such as broker-dealers
or banks) to provide sales support services as agents for their clients or
customers who beneficially own shares.These financial institutions (including
the Bank) will receive fees from the Distributor based upon shares owned by
their clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by the Distributor.

ADMINISTRATIVE ARRANGEMENTS. The distributor may also pay administrators a fee
based upon the average net asset value of shares of their customers invested in
the Trust for providing administrative services. This fee, if paid, will be
reimbursed by the Adviser and not the Trust.

ADMINISTRATION OF THE TRUST

<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
<S> <C>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>

The administrative fee received during any fiscal year shall be at least
$100,000 per portfolio. Federated Administrative Services may choose voluntarily
to waive a portion of its fee.

SHAREHOLDER SERVICES PLAN. The Fund has adopted a Shareholder Services Plan
(the "Services Plan") with respect to the shares. Under the Services Plan,
financial institutions will enter into shareholder service agreements with the
Fund to provide administrative support services to their customers who from time
to time may be owners of record or beneficial owners of the shares. In return
for providing these support services, a financial institution may receive
payments from the Fund at a rate not exceeding 0.25% of the average daily net
assets of the shares benefically owned by the financial institution's customers
for whom it is holder of record or with whom it has a servicing relationship.
These administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities, and various
personnel including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding the
Fund; assisting clients in changing dividend options, account designations, and
addresses; and providing such other services as the Fund reasonably requests.
Certain trust clients of Bank South, including ERISA plans, will not be affected
by the Services Plan because the Services Plan will not be activated unless and
until a second, "Trust" class of shares of the Fund (which would not have a
Services Plan) is created and such trust clients' investments in the Fund are
converted to such Trust class.

CUSTODIAN. The Bank of New York, New York, New York is custodian for the
securities and cash of the Fund.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of Federated
Investors, is transfer agent (the "Transfer Agent") for the shares of, and
dividend disbursing agent for, the Fund. It also provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments.

LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania and Dickstein, Shapiro & Morin, Washington, DC.

INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young,
Pittsburgh, Pennsylvania.

EXPENSES OF THE FUND

The Fund pays all of its own expenses and its allocable share of the Trust's
expenses. The expenses borne by the Fund include, but are not limited to, the
cost of: organizing the Trust and continuing its existence; Trustees' fees;
investment advisory and administrative services; printing prospectuses and other
Fund documents for shareholders; registering the Trust, the Fund and shares of
the Fund with federal and state securities authorities; taxes and commissions;
issuing, purchasing, repurchasing, and redeeming shares; fees for custodians,
transfer agents, dividend disbursing agents, shareholder servicing agents, and
registrars; printing, mailing, auditing, accounting, and legal expenses; reports
to shareholders and governmental agencies; meetings of Trustees and shareholders
and proxy solicitations therefor; insurance premiums; association membership
dues; and such nonrecurring and extraordinary items as may arise.

NET ASSET VALUE
- --------------------------------------------------------------------------------

INVESTING IN THE FUND
- --------------------------------------------------------------------------------

SHARE PURCHASES

BY TELEPHONE. To place an order to purchase Fund shares, call Bank South Mutual
Funds Center toll free at 1-800-282-6680 extension 4550. Texas residents must
purchase shares of the Fund through Bank South Securities Corporation at
404-521-7063. Your purchase order will be taken directly over the telephone. The
order must be placed by 4:00 p.m. (Eastern time) for shares to be purchased at
that day's price.

PAYMENT BY CHECK. Mail to BankSouth Select Prime Money Market Fund, c/o Bank
South Mutual Funds Center, MC 16, P.O. Box 4387, Atlanta, Georgia 30302.

Payment by federal funds must be received before 12:00 noon (Eastern time) on
the same day as the order to earn dividends for that day.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in the Fund by an investor is $1,000 ($500 for
IRA accounts). Subsequent investments must be in amounts of at least $100. The
Fund may choose to waive its minimum investment requirement from time to time
and for accounts which select the Systematic Investment Program.

SYSTEMATIC INVESTMENT PROGRAM

Once a Fund account has been opened, shareholders may add to their investment on
a regular basis in minimum amounts of $100, unless waived. Under this program,
funds may be automatically withdrawn periodically from the shareholder's
checking or other transaction deposit account and invested in Fund shares at the
net asset value next determined after an order is received by the Bank. A
shareholder may apply for participation in this program through the Bank.

WHAT SHARES COST

Fund shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund.

CERTIFICATES AND CONFIRMATIONS

The Transfer Agent for the Fund maintains a share account for each shareholder.
Share certificates are not issued unless requested in writing from the Fund or
the Transfer Agent.

Monthly confirmations are sent to report transactions such as purchases and
redemptions as well as dividends paid during the month.

DIVIDENDS

Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund, unless a
shareholder makes a written request for cash payments to the Bank, or the Fund.
Shares purchased by wire before 12:00 (Eastern time) begin earning dividends
that day. Shares purchased by check begin earning dividends the day after the
check is converted into available federal funds.

PURCHASING FUND SHARES WITH SECURITIES

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

BANKSOUTH SELECT FUNDS

All shareholders of the Fund are shareholders of BankSouth Select Funds.
BankSouth Select Funds currently include the Fund, BankSouth Select Bond Fund,
BankSouth Select Equity Fund, BankSouth Select Georgia Tax-Free Income Fund, and
BankSouth Select Government Money Market Fund. Shareholders have easy access to
each of the portfolios of BankSouth Select Funds through a telephone exchange
program. All BankSouth Select Funds are advised by the Bank and distributed by
the Distributor.

BY TELEPHONE. Instructions for exchanges between funds which are part of the
Trust may be given by telephone to the Bank South Mutual Funds Center at
1-800-282-6680 extension 4550; or to the Distributor. Shares may be exchanged by
telephone only between fund accounts having identical shareholder registrations.

REDEEMING SHARES
- --------------------------------------------------------------------------------

a trust company or commercial bank whose deposits are insured by the
FDIC's BIF;

a member firm of the New York, American, Boston, Midwest, or Pacific
Stock Exchange;

a savings bank or savings and loan association whose deposits are insured
by the FDIC's SAIF; or

any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934, as amended.

The Fund does not accept signatures guaranteed by a notary public.

REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR

SYSTEMATIC WITHDRAWAL PROGRAM

ACCOUNTS WITH LOW BALANCES

Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

Each share of the Fund entitles the shareholders to one vote in Trustee
elections and other matters submitted to shareholders of the Trust for vote. All
shares of each portfolio in the Trust have equal voting rights except that, in
matters affecting only a particular Fund, only shareholders of that Fund are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the election
of Trustees under certain circumstances.

MASSACHUSETTS PARTNERSHIP LAW

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

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

Banking laws and regulations presently prohibit a bank holding company
registered under the federal Bank Holding Company Act of 1956, as amended or any
affiliate thereof from sponsoring, organizing, controlling or distributing a
registered, open-end investment company continuously engaged in the issuance of
its shares, and prevent banks generally from underwriting or distributing
securities in general. However, such laws and regulations do not prohibit such a
holding company affiliate from acting as investment adviser, transfer agent, or
custodian to such an investment company or from acting as agent for their
customers in purchasing securities. The Fund's Adviser is subject to such
banking laws and regulations.

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

STATE AND LOCAL TAXES

Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Fund advertises its yield and effective yield.

Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized amount of dividends earned during the
period on an investment shown as a percentage of the investment. The effective
yield is calculated similarly to the yield, but when annualized, the income
earned by an investment is assumed to be reinvested daily. The effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.

From time to time, the Fund may advertise its performance using certain
reporting services and/or compare its performance to certain indices.

ADDRESSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
BankSouth Select Prime Federated Investors Tower
Money Market Fund Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------

Investment Adviser
Bank South, N.A. MC 16
P.O. Box 4387
Atlanta, Georgia 30302
- ---------------------------------------------------------------------------------------------------------------------

Custodian
The Bank of New York 48 Wall Street
New York, New York 10286
- ---------------------------------------------------------------------------------------------------------------------

BANKSOUTH SELECT PRIME
MONEY MARKET FUND
PROSPECTUS
A Diversified Portfolio of BankSouth
Select Funds, an Open-End
Management Investment Company
(a Mutual Fund)

January 7, 1994

(Logo)
Bank South, N.A.
Investment Adviser
55 Marietta Street, N.W.
Atlanta, GA 30303

(Logo) Federated Securities Corp.
Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779

3092207A (1/94)

BANKSOUTH SELECT PRIME MONEY MARKET FUND
(A PORTFOLIO OF BANKSOUTH SELECT FUNDS)
STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with the
prospectus of BankSouth Select Prime Money Market Fund (the "Fund")
dated January 7, 1994. This Statement is not a prospectus itself. To
receive a copy of the prospectus, write or call the Bank South, N.A.
(the "Bank") Mutual Funds Center at 1-800-282-6680 extension 4550.

SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE
NOT ISSUED, ENDORSED OR GUARANTEED BY THE BANK OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT ISSUED, INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN
THE FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

THE BANK IS INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED BY
FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.

Statement dated January 7, 1994

FEDERATED SECURITIES CORP.
--------------------------------------------
Distributor
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------

INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------

Types of Investments 1
U.S. Government Obligations 1
Bank Instruments 1
When-Issued and Delayed Delivery
Transactions 1
Reverse Repurchase Agreements 2
Investment Limitations 2

BANKSOUTH SELECT FUNDS MANAGEMENT 3
- ---------------------------------------------------------------

Officers and Trustees 3
The Funds 5
Fund Ownership 6
Trustee Liability 6

INVESTMENT ADVISORY SERVICES 6
- ---------------------------------------------------------------

Adviser to the Fund 6
Advisory Fees 6

ADMINISTRATIVE SERVICES 6
- ---------------------------------------------------------------

BROKERAGE TRANSACTIONS 6
- ---------------------------------------------------------------

PURCHASING SHARES 7
- ---------------------------------------------------------------

Administrative Arrangements 7
Distribution Plan 7
Purchasing Fund Shares with Securities 7

DETERMINING NET ASSET VALUE 7
- ---------------------------------------------------------------

Use of the Amortized Cost Method 8

EXCHANGE PRIVILEGE 8
- ---------------------------------------------------------------

Requirements for Exchange 8
Making an Exchange 9

REDEEMING SHARES 9
- ---------------------------------------------------------------

Redemption in Kind 9

TAX STATUS 9
- ---------------------------------------------------------------

The Fund's Tax Status 9
Shareholders' Tax Status 9

YIELD 9
- ---------------------------------------------------------------

EFFECTIVE YIELD 10
- ---------------------------------------------------------------

PERFORMANCE COMPARISONS 10
- ---------------------------------------------------------------

APPENDIX 11
- ---------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------

BankSouth Select Prime Money Market Fund (the "Fund") is a portfolio of
BankSouth Select Funds (the "Trust"), which was established as a Massachusetts
business trust under a Declaration of Trust dated as of September 22, 1993, as
amended and restated dated December 20, 1993.

INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The Fund's investment objective is to achieve current income consistent with
stability of principal and liquidity. The investment objective cannot be changed
without approval of shareholders.

TYPES OF INVESTMENTS

The Fund invests in money market instruments which mature in 13 months or less,
and which include, but are not limited to, commercial paper and variable amount
master demand notes, bank instruments, U.S. government obligations, and
repurchase agreements.

The instruments of banks that are members of the Federal Deposit Insurance
Corporation ("FDIC"), such as certificates of deposit, demand and time deposits,
and bankers' acceptances, are not necessarily guaranteed or insured by FDIC's
BIF or SAIF or any other governmental agency.

U.S. GOVERNMENT OBLIGATIONS

The types of U.S. government obligations in which the Fund may invest generally
include direct obligations of the U.S. Treasury (such as U.S. Treasury bills,
notes, and bonds) and obligations issued or guaranteed by U.S. government
agencies or instrumentalities. These securities are backed by:

the full faith and credit of the U.S. Treasury;

the issuer's right to borrow from the U.S. Treasury;

the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or

the credit of the agency or instrumentality issuing the obligations.

Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:

Federal Farm Credit Banks;

Federal Home Loan Banks;

Federal National Mortgage Association;

Student Loan Marketing Association; and

Federal Home Loan Mortgage Corporation.

BANK INSTRUMENTS

In addition to domestic bank obligations, such as certificates of deposit,
demand and time deposits, and bankers' acceptances, the Fund may invest in:

Eurodollar Certificates of Deposit issued by foreign branches of U.S. or foreign
banks;

Eurodollar Time Deposits, which are U.S. dollar-denominated deposits in foreign
branches of U.S. or foreign banks;

Canadian Time Deposits, which are U.S. dollar-denominated deposits issued by
branches of major Canadian banks located in the United States; and

Yankee Certificates of Deposit, which are U.S. dollar-denominated certificates
of deposit issued by U.S. branches of foreign banks and held in the United
States.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are made to secure what is considered to be an advantageous
price and yield for the Fund. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.

REVERSE REPURCHASE AGREEMENTS

The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash and pledging securities as collateral. In a
reverse repurchase agreement, the Fund transfers possession of a portfolio
instrument to another person, such as a financial institution or broker-dealer,
in return for a percentage of the instrument's market value in cash, and agrees
that on a stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration plus interest at an agreed
upon rate. The use of reverse repurchase agreements may enable the Fund to avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.

When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These assets are marked to market daily and
are maintained until the transaction has been settled.

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for
clearance of transactions.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by
enabling the Fund to meet redemption requests when the liquidation of
portfolio securities is deemed to be inconvenient or disadvantageous.

PLEDGING ASSETS

The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In these cases, it may pledge assets having
a market value not exceeding the lesser of the dollar amounts borrowed or
15% of the value of total assets at the time of the pledge.

CONCENTRATION OF INVESTMENTS

The Fund will not invest 25% or more of the value of its total assets in
any one industry. However, the Fund may invest more than 25% of the value
of its total assets in cash or cash items, (for purposes of this
limitation, the Fund considers certificates of deposit and demand and
time deposits issued by a U.S. branch of a domestic bank, savings and
loan association or savings bank having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of investment), securities
issued or guaranteed by the U.S. government, its agencies or
instrumentalities, or instruments secured by money market instruments,
such as repurchase agreements to be "cash items."

INVESTING IN COMMODITIES, COMMODITY CONTRACTS, OR COMMODITY FUTURES
CONTRACTS

The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.

INVESTING IN REAL ESTATE

The Fund will not purchase or sell real estate, although it may invest in
the securities of issuers whose business involves the purchase or sale of
real estate or in securities which are secured by real estate or interest
in real estate.

UNDERWRITING

The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 (the
"Securities Act") in connection with the sale of securities in accordance
with its investment objective, policies, and limitations.

LENDING CASH OR SECURITIES

The Fund will not lend any of its assets, except portfolio securities up
to 50% of the value of its total assets, and except that it may purchase
or hold money market instruments, including repurchase agreements and
variable amount demand master notes, in accordance with its investment
objective, policies, and limitations.

DIVERSIFICATION OF INVESTMENTS

With respect to 75% of the value of its assets, the Fund will not
purchase securities of any one issuer (other than cash, cash items or
securities issued or guaranteed by the government of the United States or
its agencies or instrumentalities and repurchase agreements collaterlized
by U.S. government securities) if as a result more than 5% of the value
of its total assets would be invested in the securities of that issuer
and will not acquire more than 10% of the outstanding voting securities
of any one issuer.

The above investment limitations cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the Trust's
Board of Trustees ("Trustees") without shareholder approval. Shareholders will
be notified before any material change in the following limitations become
effective.

INVESTING IN ILLIQUID SECURITIES

The Fund will not invest more than 10% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice, non-negotiable fixed
time deposits with maturities over seven days, and certain restricted
securities not determined by the Trustees to be liquid.

INVESTING IN NEW ISSUERS

The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.

INVESTING IN MINERALS

The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, although it may purchase
the securities of issuers which invest in or sponsor such programs.

INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST

The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or the Fund's investment adviser
owning individually more than .5 of 1% of the issuer's securities
together own more than 5% of the issuer's securities.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund has no present intent to borrow money or pledge securities, except as a
temporary, extraordinary, or emergency measure, in excess of 5% of the value of
its net assets in its first fiscal year.

BANKSOUTH SELECT FUNDS MANAGEMENT
- --------------------------------------------------------------------------------

OFFICERS AND TRUSTEES

Officers and Trustees of the Trust are listed with their addresses, principal
occupations, and present positions. Except as listed below, none of the Trustees
or officers are affiliated with the Bank, Federated Investors, Federated
Securities Corp., Federated Services Company, Federated Administrative Services,
or the Funds (as defined below).

<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>

John F. Donahue*\ Chairman and Chairman and Trustee, Federated Investors; Chairman and Trustee,
Federated Investors Tower Trustee Federated Advisers, Federated Management, and Federated Research;
Pittsburgh, PA Director, AEtna Life and Casualty Company; Chief Executive Officer and
Director, Trustee, or Managing General Partner of the Funds; formerly,
Director, The Standard Fire Insurance Company.

John T. Conroy, Jr. Trustee President, Investment Properties Corporation; Senior Vice-President,
Wood/IPC Commercial John R. Wood and Associates, Inc., Realtors; President, Northgate
Department Village Development Corporation; General Partner or Trustee in private
John R. Wood and real estate ventures in Southwest Florida; Director, Trustee, or
Associates, Inc., Realtors Managing General Partner of the Funds; formerly, President, Naples
3255 Tamiami Trail North Naples, Property Management, Inc.
FL

William J. Copeland Trustee Director and Member of the Executive Committee, Michael Baker, Inc. (an
One PNC Plaza-23rd Floor engineering firm); Director, Trustee, or Managing General Partner of
Pittsburgh, PA the Funds; formerly, Vice Chairman and Director, PNC Bank, N.A., and
PNC Bank Corp. and
Director, Ryan Homes, Inc.

Edward C. Gonzales* President, Vice President, Treasurer, and Trustee, Federated Investors; Vice
Federated Investors Tower Treasurer, and President and Treasurer, Federated Advisers, Federated Management, and
Pittsburgh, PA Trustee Federated Research; Executive Vice President, Treasurer, and Director,
Federated Securities Corp.; Trustee, Federated Services Company;
Chairman, Treasurer, and Director, Federated Administrative Services;
Trustee or Director of some of the Funds; Vice President and Treasurer
of the Funds.

Gregor F. Meyer Trustee Attorney-at-law; Partner, Meyer and Flaherty; Chairman, Meritcare,
5916 Penn Mall Inc.; Director, Trustee, or Managing General Partner of the Funds;
Pittsburgh, PA formerly, Vice Chairman, Horizon Financial, F.A.

Wesley W. Posvar Trustee Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
1202 Cathedral of Learning Endowment for International Peace and RAND Corporation, Online Computer
University of Pittsburgh Library Center, Inc., and U.S. Space Foundation; Chairman, Czecho
Pittsburgh, PA Slovak Management Center; Director, Trustee, or Managing General Part-
ner of the Funds; President Emeritus, University of Pittsburgh;
formerly, Chairman, National Advisory Council for Environmental Policy
and Technology.

Marjorie P. Smuts Trustee Public relations/marketing consultant; Director, Trustee, or Managing
4905 Bayard Street General Partner of the Funds.
Pittsburgh, PA

Richard B. Fisher Vice President Executive Vice President and Trustee, Federated Investors; President
Federated Investors Tower and Director, Federated Securities Corp.; President or Vice President
Pittsburgh, PA of the Funds; Director or Trustee of some of the Funds.

Charles L. Davis, Jr. Vice President Vice President, Federated Administrative Services; Vice President and
Federated Investors Tower and Assistant Assistant Treasurer of some of the Funds; formerly Vice President and
Pittsburgh, PA Treasurer Director of Investor Relations, MNC Financial, Inc. and Vice President,
Product Management, MNC Financial, Inc.

John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee, Federated
Federated Investors Tower and Secretary Investors; Vice President, Secretary, and Trustee, Federated Advisers,
Pittsburgh, PA Federated Management, and Federated Research; Trustee, Federated
Services Company; Executive Vice President, Secretary, and Director,
Federated Administrative Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and Secretary of
the Funds.

John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive Vice
Federated Investors Tower President, Federated Securities Corp.; President and Trustee, Federated
Pittsburgh, PA Advisers, Federated Management, and Federated Research; Vice President
of the Funds; Director, Trustee, or Managing General Partner of some of
the Funds; formerly, Vice President, The Standard Fire Insurance Com-
pany and President of its Federated Research Division.
</TABLE>

* This Trustee is deemed to be an "interested person" of the Trust as defined in
the Investment Company Act of 1940.

THE FUNDS

FUND OWNERSHIP

Officers and Trustees own less than 1% of the Fund's outstanding shares.

TRUSTEE LIABILITY

INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------

ADVISER TO THE FUND

The Fund's investment adviser is the Bank (the "Adviser"). The Adviser shall not
be liable to the Trust, the Fund, or any shareholder of the Fund 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 Trust.

ADVISORY FEES

For its advisory services, the Adviser receives an annual investment advisory
fee as described in the Prospectus.

STATE EXPENSE LIMITATIONS

This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.

ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------

Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for the fees set forth in the
prospectus. John A. Staley, IV, an officer of the Trust, holds approximately 15%
of the outstanding common stock and serves as a director of Commercial Data
Services, Inc., a company which provides computer processing services to
Federated Administrative Services.

BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------

The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the Adviser
and 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.

PURCHASING SHARES
- --------------------------------------------------------------------------------

ADMINISTRATIVE ARRANGEMENTS

DISTRIBUTION PLAN

With respect to the Fund, the Trust has adopted a Plan pursuant to Rule 12b-1
which was promulgated by the Securities and Exchange Commission ("SEC") pursuant
to the Investment Company Act of 1940, as amended (the "ICA"'). The Plan
provides for payment of fees to Federated Securities Corp. (the "Distributor")
to finance any activity which is principally intended to result in the sale of
the Fund's shares subject to the Plan. Such activities may include the
advertising and marketing of shares; preparing, printing, and distributing
prospectuses and sales literature to prospective shareholders, brokers, or
administrators; and implementing and operating the Plan. Pursuant to the Plan,
the Distributor may pay fees to brokers and others for such services.

PURCHASING FUND SHARES WITH SECURITIES

The Fund in its sole discretion, may sell Fund shares to investors that desire
to purchase Fund shares with certain securities or a combination of certain
securities and cash. The Fund reserves the right to determine the acceptability
of securities used to effect such purchases. On the day securities are accepted
by the Fund, they are valued based upon independent bid and in the same manner
as the Fund values it assets. Investors wishing to use securities to purchase
Fund shares should first contact the Bank. Any such transfer of securities is
treated as a sale of the securities and will result in the recognition of any
gain or loss for federal income tax purposes by the seller of such securities,
except to the extent the seller is an ERISA plan or similar entity not subject
to tax.

DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund attempts to stabilize the value of a share at $1.00. The days on which
net asset value is calculated by the Fund are described in the prospectus.

USE OF THE AMORTIZED COST METHOD

The Fund's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions of SEC Rule 2a-7 under the
ICA. Under this Rule, the Trustees must establish procedures reasonably designed
to stabilize the net asset value per share, as computed for purposes of
distribution and redemption, at $1.00 per share, taking into account current
market conditions and the Fund's investment objective.

Under such Rule, the Fund is permitted to purchase instruments which are subject
to demand features or standby commitments. As defined by Rule 2a-7, a demand
feature entitles the Fund to receive the principal amount of the instrument from
the issuer or a third party (1) on no more than 30 days' notice or (2) at
specified intervals not exceeding one year on no more than 30 days' notice. A
standby commitment entitles the Fund to achieve same day settlement and to
receive an exercise price equal to the amortized cost of the underlying
instrument plus accrued interest at the time of exercise.

MONITORING PROCEDURES

INVESTMENT RESTRICTIONS

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

REQUIREMENTS FOR EXCHANGE

This privilege is available to shareholders resident in any state in which the
fund shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, shares submitted for exchange are redeemed and
the proceeds invested in shares of the other fund. Further information on the
exchange privilege and prospectuses may be obtained by calling the Bank at the
number on the cover of this Statement of Additional Information.

MAKING AN EXCHANGE

Instructions for exchanges may be given in writing. Written instructions may
require a signature guarantee.

REDEEMING SHARES
- --------------------------------------------------------------------------------

The Fund redeems shares at the next computed net asset value after the Bank
receives the redemption request. Redemptions will be made on days on which the
Fund computes its net asset value. Redemption requests cannot be executed on
days on which the New York Stock Exchange is closed or on federal holidays
restricting wire transfers. Redemption procedures are explained in the
prospectus under "Redeeming Shares."

REDEMPTION IN KIND

The Trust has elected to be governed by SEC Rule 18f-1 under the ICA where the
Fund is obligated to redeem shares for any one shareholder in cash only up to
the lesser of $250,000 or 1% of the Fund's net asset value during any 90-day
period.

TAX STATUS
- --------------------------------------------------------------------------------

THE FUND'S TAX STATUS

derive at least 90% of its gross income from dividends, interest, and gains from
the sale of securities;

derive less than 30% of its gross income from the sale of securities held less
than three months;

invest in securities within certain statutory limits; and

distribute to its shareholders at least 90% of its net income earned during the
year.

SHAREHOLDERS' TAX STATUS

CAPITAL GAINS

YIELD
- --------------------------------------------------------------------------------

The Fund calculates its yield daily based upon the seven days ending on the day
of the calculation, called the "base period." This yield is computed by:

dividing the net change in the account's value by the value of the account at
the beginning of the base period to determine the base period return; and

multiplying the base period return by (365/7).

EFFECTIVE YIELD
- --------------------------------------------------------------------------------

The Fund's effective yield is computed by compounding the unannualized base
period return by:

adding 1 to the base period return;

raising the sum of the 365/7th power; and

subtracting 1 from the result.

PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------

The Fund's performance depends upon such variables as:

portfolio quality;

average portfolio maturity;

type of instruments in which the portfolio is invested;

changes in interest rates on money market instruments;

changes in Fund expenses; and

the relative amount of Fund cash flow.

From time to time the Fund may advertise its performance using certain reporting
services and/or compare its performance to certain indices. These may include
the following:

LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all income dividends and capital gains distributions, if any.
From time to time, the Fund will quote its Lipper ranking in the "money market
instrument funds" category in advertising and sales literature.

Investors may use such a reporting service in addition to the Fund's prospectus
to obtain a more complete view of the Fund's performance before investing. Of
course, when comparing Fund performance to any index and reporting service,
factors such as portfolio composition and prevailing market conditions should be
considered in assessing the significance of such comparisons.

APPENDIX
- --------------------------------------------------------------------------------

STANDARD & POOR'S CORPORATION CORPORATE BOND RATING DEFINITIONS

AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's
Corporation. 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 effect of changes in
circumstances and economic conditions than debt in higher rated categories.

MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATING DEFINITIONS

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.

STANDARD & POOR'S CORPORATION COMMERCIAL PAPER RATING DEFINITIONS

A-1--This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.

A-2--Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.

MOODY'S INVESTORS SERVICE, INC., COMMERCIAL PAPER RATING DEFINITIONS

P-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:
conservative capitalization structures with moderate reliance on debt and ample
asset protection; broad margins in earning coverage of fixed financial charges
and high internal cash generation; well-established access to a range of
financial markets and assured sources of alternate liquidity.

P-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.

FITCH INVESTORS SERVICE, INC., SHORT-TERM DEBT RATING DEFINITIONS

F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-1+.

F-2--Good Credit Quality. Issues carrying this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as the
F-1+ and F-1 categories.

DUFF & PHELPS' CREDIT RATING CO. SHORT-TERM DEBT RATING DEFINITIONS

DUFF 1+--Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations.

DUFF 1--Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.

DUFF 1---High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.

DUFF 2--Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.

A CREDIT RATING IS NOT A RECOMMENDATION TO BUY, SELL OR HOLD SECURITIES, AND IS
SUBJECT TO CHANGE AND/OR WITHDRAWAL BY THE RATING AGENCY.

3092207B (1/94)

BANKSOUTH SELECT BOND FUND
(A PORTFOLIO OF BANKSOUTH SELECT FUNDS)
PROSPECTUS

The shares of BankSouth Select Bond Fund (the "Fund") offered by this
Prospectus represent interests in a diversified portfolio of BankSouth
Select Funds (the "Trust"), an open-end management investment company (a
mutual fund). The investment objective of the Fund is to achieve current
income. The Fund pursues this objective by investing primarily in a
portfolio of long-term bonds and other fixed income securities.

This prospectus contains the information you should read and know before
you invest in the Fund. Keep this prospectus for future reference.

The Fund has also filed a Statement of Additional Information dated
January 7, 1994, with the Securities and Exchange Commission. The
information contained in the Statement of Additional Information is
incorporated by reference into this Prospectus. You may request a copy of
the Statement of Additional Information free of charge, obtain other
information, or make inquiries about the Fund by writing to the Bank
South, N.A. (the "Bank") Mutual Funds Center or calling 1-800-282-6680
extension 4550.

THE BANK IS THE INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED
BY FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.

Prospectus dated January 7, 1994

BANKSOUTH SELECT FUNDS

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------

GENERAL INFORMATION 2
- ------------------------------------------------------

INVESTMENT INFORMATION 2
- ------------------------------------------------------

Investment Objective 2
Investment Policies 2
Acceptable Investments 2
Government Securities 3
Mortgage-Backed Securities 4
ARMS 4
CMOs 5
Asset-Backed Securities 5

Options and Futures 5

Obligations of Foreign Issuers 6
Foreign Government Securities 6
Repurchase Agreements 6
Restricted and Illiquid Securities 6
When-Issued and Delayed Delivery
Transactions 6
Investing in Securities of
Other Investment Companies 6
Lending of Portfolio Securities 7
Average Portfolio Maturity 7
Temporary Investments 7
Foreign Securities Risks 7
Portfolio Turnover 7
Certain Borrowing and Investment Limitations 8

BANKSOUTH SELECT FUNDS INFORMATION 8
- ------------------------------------------------------

Management of the Trust 8
Board of Trustees 8
Investment Adviser 8
Advisory Fees 8
Adviser's Background 9
Portfolio Manager 9
Distribution of Fund Shares 9
Distribution Plan 9
Administrative Arrangements 10
Administration of the Trust 10
Administrative Services 10
Shareholder Services Plan 10
Custodian 11
Transfer Agent, Dividend Disbursing
Agent, and Portfolio Accounting
Services 11
Legal Counsel 11
Independent Auditors 11
Expenses of the Fund 11

NET ASSET VALUE 11
- ------------------------------------------------------

INVESTING IN THE FUND 11
- ------------------------------------------------------

Share Purchases 11
By Telephone 12
By Mail 12
Payment By Check 12
Payment By Wire 12
Minimum Investment Required 12
Systematic Investment Program 12
What Shares Cost 12
Purchases at Net Asset Value 13
Sales Charge Reallowance 13
Reducing the Sales Charge 13
Quantity Discounts and Accumulated
Purchases 13
Letter of Intent 13
Reinvestment Privilege 14
Concurrent Purchases 14
Certificates and Confirmations 14
Dividends and Distributions 14
Purchasing Fund Shares with Securities 14

EXCHANGE PRIVILEGE 15
- ------------------------------------------------------

BankSouth Select Funds 15
By Telephone 16

REDEEMING SHARES 16
- ------------------------------------------------------

By Telephone 16
By Mail 17
Signatures 17
Receiving Payment 17
Redemption Before Purchase
Instruments Clear 17
Systematic Withdrawal Program 18
Accounts with Low Balances 18

SHAREHOLDER INFORMATION 18
- ------------------------------------------------------

Voting Rights 18
Massachusetts Partnership Law 18

EFFECT OF BANKING LAWS 19
- ------------------------------------------------------

TAX INFORMATION 19
- ------------------------------------------------------

Federal Income Tax 19
State and Local Taxes 20

PERFORMANCE INFORMATION 20
- ------------------------------------------------------

ADDRESSES Inside Back Cover
- ------------------------------------------------------

BANKSOUTH SELECT BOND FUND
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee.......................................................................................... 0.75%
12b-1 Fees(1)........................................................................................... 0.00%
Other Expenses (after waiver)(2)........................................................................ ]0.27%
Total Fund Operating Expenses(3).................................................................... 1.02%
</TABLE>

- ---------
(1) As of the date of this prospectus, the Fund is not paying or accruing 12b-1
fees. The Fund can pay up to 0.75% as a 12b-1 fee to the distributor.
Certain trust clients of the Bank or its affiliates, including ERISA plans,
will not be affected by the distribution plan because the distribution plan
will not be activated unless and until a second, "Trust," class of shares
of the Fund (which would not have a Rule 12b-1 plan) is created and such
clients' investments in the Fund are converted to such Trust class.

(2) Total Other Expenses are estimated to be 0.28% absent the anticipated
voluntary waiver by the transfer agent.

(3) The Total Fund Operating Expenses are estimated to be 1.03% absent the
anticipated voluntary waiver by the transfer agent.

GENERAL INFORMATION
- --------------------------------------------------------------------------------

The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated September 22, 1993, as amended and restated dated December 20,
1993. The Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest representing interests in separate portfolios of
securities. This Prospectus relates only to the Trust's BankSouth Select Bond
Fund. The Fund is designed as a convenient means of accumulating an interest in
a professionally managed, diversified portfolio consisting primarily of
government, mortgage-backed, asset-backed and corporate securities, as well as
collateralized mortgage obligations ("CMOs") and adjustable rate mortgage
securities ("ARMS"). A minimum initial investment of $1,000 is required ($500
for Individual Retirement Accounts ("IRAs")) and subsequent investments must be
in amounts of at least $100. See "Investing in the Fund."

Fund shares are sold at net asset value plus a maximum sales charge of 2.50% and
redeemed at net asset value.

INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The Fund's investment objective is to achieve current income. The investment
objective cannot be changed without the approval of the Fund's shareholders.
While there is no assurance that the Fund will achieve its investment objective,
it endeavors to do so by following the investment policies described in this
prospectus.

INVESTMENT POLICIES

The Fund pursues its investment objective by investing primarily in a portfolio
of U.S. government, mortgage-backed, asset-backed and corporate bonds and other
securities as well as CMOs and ARMS. Under normal market conditions, the Fund
will invest at least 65% of its assets in bonds. The Fund intends to maintain a
dollar-weighted average portfolio maturity of 15 years or less. Unless indicated
otherwise, the investment policies may be changed by the Trustees without the
approval of Fund shareholders. Shareholders will be notified before any material
change in these policies becomes effective.

ACCEPTABLE INVESTMENTS. The securities in which the Fund may invest include,
but are not limited to:

domestic issues of corporate debt obligations, so long as such debt
obligations are rated by one or more nationally recognized statistical
rating organizations ("Rating Agencies") in one of the four highest
rating categories at the time of purchase (e.g., AAA, AA, A or BBB by
Standard & Poor's Corporation ("S&P"), Fitch Investors Service, Inc.
("Fitch"), or Duff & Phelps Credit Rating Co. ("Duff & Phelps") or Aaa,
Aa, A or Baa by Moody's Investors Service, Inc. ("Moody's")) or, if
unrated, determined by Bank South, N.A. (the "Adviser") to be of
comparable quality to securities having such ratings;

commercial paper (including asset-backed commercial paper) which matures
in 270 days or less so long as at least two ratings are high quality
ratings by Rating Agencies. Such ratings would include: A-1 or A-2 by
S&P, Prime-1 or Prime-2 by Moody's, F-1 or F-2 by Fitch, or Duff-1 or
Duff-2 by Duff & Phelps;

obligations issued or guaranteed as to payment of principal and interest
by the U.S. government, or its agencies or instrumentalities ("Government
Securities");

asset-backed securities in one of the two highest ratings categories by a
Rating Agency, or if unrated, of comparable quality in the judgment of
the Adviser;

U.S. dollar denominated debt obligations of foreign issuers;

repurchase agreements;

time and savings deposits (including certificates of deposit) in
commercial or savings banks whose accounts are insured by the Bank
Insurance Fund ("BIF") or the Savings Association Insurance Fund
("SAIF"), which are administered by the Federal Deposit Insurance
Corporation ("FDIC"), and certificates of deposit and other time deposits
issued by foreign branches of BIF-insured banks;

bankers' acceptances; and

securities of other investment companies.

Securities rated Baa or BBB, while of investment grade, have speculative
characteristics with respect to the issuer's capacity to pay interest and repay
principal. If an investment grade security loses its rating or has its rating
reduced after the Fund has purchased it, the Fund is not required to sell the
security from its portfolio; however, the Adviser will endeavor to dispose of
the security as soon as practicable thereafter, taking into account existing
market conditions and the cost of such sale, including potential losses. A
credit rating is not a recommendation to buy, sell or hold securities, and is
subject to change and/or withdrawal by the rating agency.

The Adviser attempts to manage the Fund's total performance, which includes both
changes in principal value of the Fund's portfolio and income earned, by
anticipating opportunities in the capital markets and risks of changes in market
interest rates. When the Adviser expects that market interest rates may decline,
which would cause prices of outstanding bonds to rise, it generally extends the
average maturity of the Fund's portfolio. When the Adviser expects that market
interest rates may rise, which would cause prices of outstanding bonds to
decline, it generally shortens the average maturity of the Fund's portfolio.
Further, the Adviser attempts to improve the Fund's total return by weighing the
relative value of alternative bond issues having similar maturities in selecting
portfolio securities. By actively managing the Fund's portfolio in this manner,
the Adviser seeks to provide capital appreciation during periods of falling
interest rates and protection against capital depreciation during periods of
rising rates.

GOVERNMENT SECURITIES. The types of Government Securities in which the Fund may
invest generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by U.S.
government agencies or instrumentalities. These securities are backed by:

the full faith and credit of the U.S. Treasury;

the issuer's right to borrow from the U.S. Treasury;

the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or

the credit of the agency or instrumentality issuing the obligations.

Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:

Federal Home Loan Banks;

Federal Home Loan Mortgage Corporation;

Federal Farm Credit Banks;

Student Loan Marketing Association; and

Federal National Mortgage Association.

MORTGAGE-BACKED SECURITIES. Some of the U.S. Government Securities in which the
Fund will invest can represent an undivided interest in a pool of residential
mortgages or may be collateralized by a pool of residential mortgages
("Mortgage-backed securities"). Mortgage-backed securities have yield and
maturity characteristics corresponding to the underlying mortgages.
Distributions to holders of mortgage-backed securities include both interest and
principal payments. Principal payments represent the amortization of the
principal of the underlying mortgages and any prepayments of principal due to
prepayment, refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective maturities of
mortgage-backed securities. Due to these features, mortgage-backed securities
are less effective as a means of "locking-in" attractive long-term interest
rates than fixed-income securities which pay only a stated amount of interest
until maturity, when the entire principal amount is returned. Prepayments, which
become more likely as mortgage interest rates decline, create a need to reinvest
distribution of principal at then-current lower rates. Since comparatively high
interest rates cannot be effectively "locked in", mortgage-backed securities may
have less potential for capital appreciation during periods of declining
interest rates than other non-callable fixed-income government securities of
comparable stated maturities. However, mortgage-backed securities may experience
less pronounced declines in value during periods of rising interest rates.
Mortgage-backed securities utilizing ARMS may fluctuate less in value and suffer
fewer prepayments than mortgage-backed securities utilizing fixed rate
mortgages.

ARMS. ARMS are mortgage-backed securities representing interests in adjustable
rather than fixed interest rate mortgages. The Fund invests in ARMS issued by
the Government National Mortgage Association ("GNMA"), the Federal National
Mortgage Association ("FNMA"), the Federal Home Loan Mortgage Corporation
("FHLMC"), and by non-government and private entities and are actively traded.
The underlying mortgages which collateralize ARMS issued by GNMA are fully
guaranteed by the Federal Housing Administration ("FHA") or Veterans
Administration ("VA"), while those collateralizing ARMS issued by FHLMC or FNMA
are typically conventional residential mortgages conforming to strict
underwriting size and maturity constraints.

CMOS. CMOs are debt obligations collateralized by mortgage loans or
mortgage-backed securities. Typically, CMOs are collateralized by GNMA, FNMA or
FHLMC certificates, but may be collateralized by whole loans or private
mortgage-backed securities.

The Fund will only invest in CMOs which are rated AAA by a Rating Agency, and
which may be: (a) collateralized by pools of mortgages in which each mortgage is
guaranteed as to payment of principal and interest by an agency or
instrumentality of the U.S. government; (b) collateralized by pools of mortgages
in which payment of principal and interest is guaranteed by the issuer and such
guarantee is collateralized by U.S. Government Securities; (c) securities in
which the proceeds of the issuance are invested in mortgage securities and the
payment of the principal and interest is supported by the credit of an agency or
instrumentality of the U.S. government; or (d) collateralized by pools of
mortgages or mortgage-backed securities not guaranteed by the U.S. government or
any government agency.

ASSET-BACKED SECURITIES. Asset-backed securities are obligations of trusts or
special purpose corporations that directly or indirectly represent a
participation in, or are secured by and payable from various types of assets. At
the present time, automobile and credit card receivables are among the most
common collateral supporting asset-backed securities. In general, the collateral
supporting asset-backed securities is of shorter maturity than mortgage loans
and is less likely to experience substantial prepayments. As with
mortgage-backed securities, asset-backed securities are often backed by a pool
of assets representing the obligations of a number of different parties and use
similar credit enhancement techniques.

Asset-backed securities present certain risks that are not presented by
mortgage-backed securities. Credit card receivables are generally unsecured and
the debtors are entitled to the protection of a number of state and federal
consumer credit laws, many of which give such debtors the right to set off
certain amounts owed on the credit cards, thereby reducing the balance due. Most
issuers of asset-backed securities backed by automobile receivables permit the
servicers of such receivables to retain possession of the underlying
obligations. If the servicer were to sell these obligations to another party,
there is a risk that the purchaser would acquire an interest superior to that of
the holders of the related asset-backed securities. In addition, because of the
large number of vehicles involved in a typical issuance and technical
requirements under state laws, the trustee for the holders of asset-backed
securities backed by automobile receivables may not have a recorded security
interest in all of the obligations backing such receivables. Therefore, there is
a possibility that recoveries on repossessed collateral may not, in some cases,
be available to support payments on these securities.

In general, issues of asset-backed securities are structured to include
additional collateral and/or additional credit support to protect against the
risk that a portion of the collateral supporting the asset-backed securities may
default and/or may suffer from these defects. In evaluating the strength of
particular issues of asset-backed securities, the Adviser considers any rating
given to such securities, the financial strength of the provider of credit
support, the type and extent of credit enhancement provided, as well as the
documentation and structure of the issue itself and the credit support.

OPTIONS AND FUTURES. The Fund may purchase and sell financial futures contracts
and purchase and sell options on financial futures contracts and on its
portfolio securities.

OBLIGATIONS OF FOREIGN ISSUERS. The Fund may invest in debt obligations of
foreign issuers including foreign governments, foreign governmental agencies, or
supranational institutions. In addition, the Fund may invest in high quality
debt securities issued by corporations subject to the credit limitations listed
above.

FOREIGN GOVERNMENT SECURITIES. The foreign government securities in which
the Fund may invest generally consist of obligations supported by national,
state or provincial governments or similar political subdivisions. Foreign
government securities also include debt obligations of supranational
entities, which include international organizations designed or supported
by governmental entities to promote economic reconstruction or development,
international banking institutions and related government agencies.
Examples include the International Bank for Reconstruction and Development
(the World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank.

Foreign government securities also include debt securities of
"quasi-governmental agencies". Debt securities of quasi-governmental
agencies are either debt securities issued by entities which are 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
and general taxing powers. Further, foreign government securities include
mortgage-related securities issued or guaranteed by national, state or
provincial government instrumentalities, including quasi-governmental
agencies.

REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which banks,
broker-dealers, and other financial institutions sell securities to the Fund and
agree at the time of sale to repurchase them at a mutually agreed upon time and
price including interest. To the extent that the seller does not repurchase the
securities from the Fund, the Fund could receive less than the repurchase price
on any sale of such securities. Repurchase agreements will be collateralized by
securities having a value equal at all times to at least 100% of the amount of
the securities subject to the repurchase agreement.

RESTRICTED AND ILLIQUID SECURITIES. The Fund intends to invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies, but which
are subject to restriction on resale under federal securities law. However, the
Fund will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, non-negotiable time
deposits, and repurchase agreements providing for settlement in more than seven
days after notice, to 15% of its net assets.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund may invest in the securities of other investment companies, but will
not own more than 3% of the total outstanding voting stock of any investment
company, invest more than 5% of total assets in any one investment company, or
invest more than 10% of total assets in investment companies in the aggregate.
The Fund will invest in other investment companies primarily for the purpose of
investing short-term cash which has not yet been invested in other portfolio
instruments. It should be noted that investment companies incure certain
expenses, and therefore, any investment by the Fund in shares of another
investment Company would be subject to certain duplicate expenses, particularly
transfer agent and custodian fees. The adviser will waive its investment
advisory fee on assets invested in securities of open-end investment companies.

LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, to
broker-dealers, banks, or other institutional borrowers of securities. The Fund
will limit the amount of portfolio securities it may lend to not more than 50%
of the value of its total assets at any time. The Fund will only enter into loan
arrangements with broker-dealers, banks, or other institutions which the Adviser
has determined are creditworthy under guidelines established by the Trustees,
and will receive collateral equal to at least 100% of the value of the
securities loaned at all times.

AVERAGE PORTFOLIO MATURITY. Although the Fund will not maintain a stable net
asset value, the Adviser will seek to limit, to the extent consistent with the
Fund's investment objective of current income, the magnitude of fluctuations in
the Fund's net asset value by limiting the dollar-weighted average maturity of
the Fund's portfolio to 15 years or less. Securities with shorter maturities
generally have less price movement than securities of comparable quality with
longer maturities. In periods of anticipated rising interest rates, a greater
portion of the Fund's assets may be invested in shorter term and variable rate
securities, the value of which are believed to be less sensitive to interest
rate changes.

TEMPORARY INVESTMENTS. From time to time for defensive purposes, the Fund may
invest temporarily in the securities described under "Acceptable Investments"
having short-term maturities.

FOREIGN SECURITIES RISKS. Investments in foreign securities, particularly those
of non-governmental issuers, may involve additional risks not ordinarily
associated with investments in domestic issuers. Specifically, such securities
may be affected by the strength of foreign currencies relative to the U.S.
Dollar, possible expropriation or nationalization, or by political, social,
diplomatic or economic developments and the difficulties of assessing economic
trends in foreign countries. Accounting procedures and government supervision
may be less stringent than those applicable to U.S. companies. Financial
information may be unavailable or less detailed, and interpretation of financial
information prepared under foreign accounting standards more difficult than is
the case of domestic issuers. Foreign securities and securities markets may be
less liquid or more volatile than U.S. securities markets and may offer less
protection to investors. It may also be more difficult to enforce contractual
obligations abroad than would be the case in the United States because of
differences in the legal systems. Foreign securities may be subject to foreign
taxes or tax withholding, which may reduce yield, and may be less marketable
than comparable U.S. securities. Transaction costs in foreign securities may be
higher. The Adviser will consider these and other factors before investing in
foreign securities and will not make such investments unless, in its opinion,
such investments will meet the Fund's standards and objectives.

PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the purpose
of seeking short-term profits, securities in its portfolio will be sold whenever
the Adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular security
may have been held. The Adviser does not anticipate that the Fund's annual
portfolio turnover rate will exceed 200% under normal market conditions. A high
portfolio turnover rate may lead to increased costs and may also result in
higher taxes paid by the Fund's shareholders.

CERTAIN BORROWING AND INVESTMENT LIMITATIONS

The Fund will not:

with respect to 75% of its total assets, invest more than 5% of the value
of its total assets in securities of any one issuer (other than cash,
cash items, or securities issued or guaranteed by the U.S. government and
its agencies or instrumentalities, and repurchase agreements
collateralized by such securities or acquire more than 10% of the
outstanding voting securities of any one issuer).

The above investment limitations cannot be changed without shareholder approval.

BANKSOUTH SELECT FUNDS INFORMATION
- --------------------------------------------------------------------------------

MANAGEMENT OF THE TRUST

Mr. Johnston began his investment career in 1981. Prior to his affiliation
with the Bank, he spent six years with The Citizens & Southern National
Bank, Atlanta, Georgia as a portfolio manager.

DISTRIBUTION OF FUND SHARES

The Distributor may select other financial institutions (such as broker-dealers
or banks) to provide sales support services as agents for their clients or
customers who beneficially own shares. These financial institutions (including
the Bank) will receive fees from the Distributor based upon shares subject to
the Plan and owned by their clients or customers. The schedules of such fees and
the basis upon which such fees will be paid will be determined from time to time
by the Distributor.

ADMINISTRATION OF THE TRUST

The administrative fee received during any fiscal year shall be at least
$100,000 per Fund. Federated Administrative Services may voluntarily choose to
waive a portion of its fee.

CUSTODIAN. The Bank of New York, New York, New York is custodian for the
securities and cash of the Fund.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of Federated
Investors, is transfer agent (the "Transfer Agent") for the shares of, and
dividend disbursing agent for, the Fund. It also provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments.

LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania, and Dickstein, Shapiro & Morin, Washington, D.C.

INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young,
Pittsburgh, Pennsylvania.

EXPENSES OF THE FUND

NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding.

INVESTING IN THE FUND
- --------------------------------------------------------------------------------

SHARE PURCHASES

Fund shares are sold on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. Fund shares may be purchased
through the Bank. In connection with the sale of shares of the Fund, the
distributor may from time to time offer certain items of nominal value to any
shareholder or investor. The Fund reserves the right to reject any purchase
request.

BY TELEPHONE. To place an order to purchase Fund shares, call the Bank South
Mutual Funds Center toll free at 1-800-282-6680 extension 4550. Texas residents
must purchase shares of the Fund through Bank South Securities Corporation at
404-521-7063. Your purchase order will be taken directly over the telephone. The
order must be place by 4:00 p.m. (Eastern time) for shares to be purchased at
that day's price.

PAYMENT BY CHECK. Mail to BankSouth Select Bond Fund, c/o Bank South Mutual
Funds Center, MC 16, P.O. Box 4387, Atlanta, Georgia 30302.

PAYMENT BY WIRE. To purchase shares by Federal Wire, contact your account
officer for wiring instructions. Wire orders will only be accepted on days on
which the Fund, the Bank, and the Federal Reserve Banks are open for business.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in the Fund by an investor is $1,000 ($500 for
IRAs). Subsequent investments must be in amounts of at least $100. The Fund may
choose to waive its minimum investment requirements from time to time and for
accounts which select the Systematic Investment Program.

SYSTEMATIC INVESTMENT PROGRAM

Once an account has been opened, shareholders may add to their investment on a
regular basis in a minimum amount of $100, unless waived. Under this program,
funds may be automatically withdrawn periodically from the shareholder's
checking or other transaction deposit account and invested in Fund shares at the
net asset value next determined after an order is received by the Bank, plus an
applicable sales charge. A shareholder may apply for participation in this
program through the Bank.

WHAT SHARES COST

Shares of the Fund are sold at their net asset value next determined after an
order is received plus a sales charge as follows:

SALES CHARGE REALLOWANCE. The Bank and any authorized dealer or bank will
normally receive up to 85% of the applicable sales charge as a transaction fee
from its customers, and for sales and/or administrative services performed on
behalf of its customers in connection with the initiation of customer accounts
and purchases of Fund shares. Any portion of the sales charge which is not paid
to the Bank or a dealer will be retained by the Distributor. However, the
Distributor, in its sole discretion, may uniformly offer to permit all dealers
and other institutions selling shares of the Fund, to receive all or a portion
of the amount the Distributor normally retains as a sales charge. If accepted by
the dealer, such additional payments may be in the form of cash or other
promotional incentives, and will be predicated upon the amount of shares of the
Fund or other BankSouth Select Funds sold by the dealer or other institution.

REDUCING THE SALES CHARGE

The sales charge can be reduced on the purchase of shares of the Fund through:

quantity discounts and accumulated purchases;

signing a 13-month letter of intent;

using the reinvestment privilege; or

concurrent purchases.

CONCURRENT PURCHASES. For purposes of qualifying for a sales charge reduction,
a shareholder has the privilege of combining concurrent purchases of two or more
funds in the Trust, the purchase price of which includes a sales charge. For
example, if a shareholder concurrently invested $30,000 in one of the other
funds in the Trust with a sales charge and $70,000 in this Fund, the sales
charge would be reduced.

CERTIFICATES AND CONFIRMATIONS

The Transfer Agent for the Fund maintains a share account for each shareholder
of record. Share certificates are not issued unless requested in writing from
the Fund or the Transfer Agent.

Detailed statements that include account balances, information on each purchase
or redemption, and a report of dividends are sent to each shareholder.

DIVIDENDS AND DISTRIBUTIONS

Dividends are declared daily and paid monthly to all shareholders invested in
the Fund on the record date.

Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months. Dividends and capital gains will be reinvested in additional
shares on payment dates at the ex-dividend date's net asset value without a
sales charge, unless a shareholder makes written request for cash payments to
the Fund or the Bank.

PURCHASING FUND SHARES WITH SECURITIES

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

BANKSOUTH SELECT FUNDS

All shareholders of the Fund are shareholders of BankSouth Select Funds.
BankSouth Select Funds currently include the Fund, BankSouth Select Equity Fund,
BankSouth Select Georgia Tax-Free Income Fund, BankSouth Select Prime Money
Market Fund, and BankSouth Select Government Money Market Fund. Shareholders
have easy access to each of the portfolios of BankSouth Select Funds through a
telephone exchange program. All BankSouth Select Funds are advised by the Bank
and distributed by the Distributor.

Shareholders may exchange shares of the Fund for shares of the other BankSouth
Select Funds in the Trust. In addition, shares of the Fund may also be exchanged
for certain other funds designated by the Bank which are distributed by the
Distributor, but are not advised by the Bank ("Federated Funds"). For further
information on the availability of Federated Funds for exchanges, please call
the Bank South Mutual Funds Center at 1-800-282-6680 extension 4550. Shares of
funds with a sales charge may be exchanged at net asset value for shares of
other funds with an equal sales charge or no sales charge. Shares of funds with
a sales charge may be exchanged for shares of funds with a higher sales charge
at net asset value, plus the additional sales charge. Shares of funds with no
sales charge, whether acquired by direct purchase, reinvestment of dividends on
such shares, or otherwise, may be exchanged for shares of funds with a sales
charge at net asset value, plus the applicable sales charge.

BY TELEPHONE. Instructions for exchanges between funds which are part of the
Trust may be given by telephone to the Bank South Mutual Funds Center at
1-800-282-6680 extension 4550; or to the Distributor. Shares may be exchanged by
telephone only between fund accounts having identical shareholder registrations.

REDEEMING SHARES
- --------------------------------------------------------------------------------

BY TELEPHONE. A shareholder may redeem shares of the Fund by contacting his
account officer or by calling the Bank South Mutual Funds Center to request the
redemption. (Call 1-800-282-6680 extension 4550.) Shares will be redeemed at the
net asset value next determined after the Fund receives the redemption request
from the Bank. Redemption requests to the Bank must be received before 4:00 p.m.
(Eastern time) in order for shares to be redeemed at that day's net asset value,
and the Bank will promptly submit such redemption requests and provide written
redemption instructions to the Fund. If, at any time, the Fund should determine
it necessary to terminate or modify this method of redemption, shareholders
would be promptly notified.

If not completed at the time of initial application, authorization forms and
information on this service are available from the Bank. Telephone redemption
instructions may be recorded. If reasonable procedures are not followed by the
Fund, it may be liable for losses due to unauthorized or fraudulent telephone
instructions.

a trust company or commercial bank whose deposits are insured by the
FDIC's BIF;

a member firm of the New York, American, Boston, Midwest, or Pacific
Stock Exchange;

a savings bank or savings and loan association whose deposits are insured
by the FDIC's SAIF; or

any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934, as amended.

The Fund does not accept signatures guaranteed by a notary public.

REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR

SYSTEMATIC WITHDRAWAL PROGRAM

ACCOUNTS WITH LOW BALANCES

Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

Any Trustee may be removed by the Board or by the shareholders at a special
meeting. A special meeting of the shareholders shall be called by the Trustees
upon the written request of shareholders owning at least 10% of the Trust's
outstanding shares.

MASSACHUSETTS PARTNERSHIP LAW

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

Banking laws and regulations presently prohibit a bank holding company
registered under the federal Bank Holding Company Act of 1956, as amended or any
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 or
distributing securities. However, such banking laws and regulations do not
prohibit such a holding company affiliate or bank generally from acting as
investment adviser, transfer agent, or custodian to such an investment company
or from acting as agent for their customers in purchasing securities. The Fund's
Adviser, the Bank, is subject to such banking laws and regulations.

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

STATE AND LOCAL TAXES

Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Fund may advertise its total return and yield.

The yield of the Fund is calculated each day by dividing the net investment
income per share (as defined by the SEC) earned by the Fund over a 30-day period
by the maximum offering price per share of the Fund on the last day of the
period. This number is then annualized using semi-annual compounding. The yield
does not necessarily reflect income actually earned by the Fund and, therefore,
may not correlate to the dividends or other distributions paid to shareholders.

From time to time, the Fund may advertise its performance using certain
reporting services and/or compare its performance to certain indices.

ADDRESSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
BankSouth Select Bond Fund Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------

Investment Adviser
Bank South, N.A. MC 16
P.O. Box 4387
Atlanta, Georgia 30302
- ---------------------------------------------------------------------------------------------------------------------

Custodian
The Bank of New York 48 Wall Street
New York, New York 10286
- ---------------------------------------------------------------------------------------------------------------------

BANKSOUTH SELECT BOND FUND
PROSPECTUS

A Diversified Portfolio of
BankSouth Select Funds, an Open-End
Management Investment Company
(a Mutual Fund)

January 7, 1994
[LOGO]
Bank South, N.A.
Investment Adviser
55 Marietta Street, N.W.

(Logo)
Federated Securities Corp.
Distributor
A subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779

3092205A (1/94)

BANKSOUTH SELECT BOND FUND
(A PORTFOLIO OF BANKSOUTH SELECT FUNDS)
STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with the
prospectus of BankSouth Select Bond Fund (the "Fund") dated January
7, 1994. This Statement is not a prospectus itself. To receive a
copy of the prospectus, call the Bank South, N.A. (the "Bank")
Mutual Funds Center at
1-800-282-6680 extension 4550.

THE BANK IS INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED
BY FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE
BANK.

Statement dated January 7, 1994

FEDERATED SECURITIES CORP.
--------------------------------------------
Distributor
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------

INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------

Types of Investments 1
Repurchase Agreements 1
Reverse Repurchase Agreements 1
When-Issued and Delayed Delivery
Transactions 1
Futures and Options Transactions 2
Financial Futures Contracts 2
Put Options on Financial Futures Contracts 2
Call Options on Financial Futures Contracts 2
"Margin" in Futures Transactions 3
Purchasing Put Options on Portfolio Securities 3
Writing Covered Call Options on
Portfolio Securities 3
Risks 3
Restricted and Illiquid Securities 3
Lending of Portfolio Securities 4
Weighted Average Portfolio Maturity 4
Portfolio Turnover 4
Investment Limitations 4

BANKSOUTH SELECT FUNDS MANAGEMENT 7
- ---------------------------------------------------------------

Officers and Trustees 7
The Funds 9
Fund Ownership 9
Trustee Liability 9

INVESTMENT ADVISORY SERVICES 9
- ---------------------------------------------------------------

Adviser to the Fund 9
Advisory Fees 9

ADMINISTRATIVE SERVICES 10
- ---------------------------------------------------------------

BROKERAGE TRANSACTIONS 10
- ---------------------------------------------------------------

PURCHASING SHARES 10
- ---------------------------------------------------------------

Administrative Arrangements 10
Distribution Plan 10
Puchasing Fund Shares with Securities 11

DETERMINING NET ASSET VALUE 11
- ---------------------------------------------------------------

Determining Market Value of Securities 11

EXCHANGE PRIVILEGE 11
- ---------------------------------------------------------------

REDEEMING SHARES 12
- ---------------------------------------------------------------

Redemption in Kind 12

TAX STATUS 12
- ---------------------------------------------------------------

The Fund's Tax Status 12
Shareholders' Tax Status 12

TOTAL RETURN 12
- ---------------------------------------------------------------

YIELD 12
- ---------------------------------------------------------------

PERFORMANCE COMPARISONS 13
- ---------------------------------------------------------------

APPENDIX 14
- ---------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------

BankSouth Select Bond Fund (the "Fund") is a portfolio in BankSouth Select Funds
(the "Trust"), which was established as a Massachusetts business trust under a
Declaration of Trust dated as of September 22, 1993, as amended and restated
dated December 20, 1993.

INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The Fund's investment objective is to achieve current income. The investment
objective cannot be changed without approval of shareholders.

TYPES OF INVESTMENTS

The Fund invests primarily in investment grade bonds and other fixed income
securities which include:

domestic issues of corporate debt obligations (rated Baa or better by Moody's
Investors Service, Inc., or BBB or better by Standard & Poor's Corporation,
Fitch Investors Service, Inc. or Duff & Phelps Credit Rating Co.);

obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities;

mortgage-backed securities, which represent an undivided interest in a pool of
residential or other mortgages or may be collateralized by a pool of residential
mortgages;

asset-backed securities, which are obligations of trusts or special purpose
corporations that directly or indirectly represent a participation in, or are
secured by and payable from various types of assets, principally loans, leases
and other receivables and may include asset-backed commercial paper; and

CMOs, which are issued by single-purpose stand-alone finance subsidiaries or
trusts, government agencies, investment banks, or companies related to the
construction industry.

REPURCHASE AGREEMENTS

As collateral for the obligation of the seller to repurchase the securities from
the Fund, the Fund requires its custodian to take possession of the securities
subject to repurchase agreements and these securities are marked to market
daily. To the extent that the original seller does not repurchase the securities
from the Fund, the Fund could receive less than the repurchase price on any sale
of such securities. In the event that a defaulting seller filed for bankruptcy
or became insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that, under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other financial
institutions, such as securities broker-dealers, which are deemed by the Fund's
adviser to be creditworthy pursuant to guidelines established by the Board of
Trustees ("Trustees").

REVERSE REPURCHASE AGREEMENTS

The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash and pledging securities as collateral. In a
reverse repurchase agreement, the Fund transfers possession of a portfolio
instrument to another person, such as a financial institution or broker-dealer,
in return for a percentage of the instrument's market value in cash, and agrees
that on a stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration, plus interest at an agreed
upon rate. The use of reverse repurchase agreements may enable the Fund to avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with its investment objective and policies, not
for investment leverage. In when-issued and delayed delivery transactions, the
Fund relies on the seller to complete the transaction. The seller's failure to
complete the transaction may cause the Fund to miss a price or yield considered
to be advantageous.

These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. No fees or other expense, other
than normal transaction costs, are incurred. However, liquid assets of the Fund
sufficient to make payment for the securities to be purchased are segregated on
the Fund's records at the trade date. These securities are marked to market
daily and are maintained until the transaction is settled.

As a matter of policy, the Fund does not intend to engage in when-issued and
delayed delivery transactions to an extent that would cause the segregation of
more than 20% of the total value of its assets at any time.

FUTURES AND OPTIONS TRANSACTIONS

As a means of reducing fluctuations in the net asset value of shares of the
Fund, the Fund may attempt to hedge all or a portion of its portfolio by buying
and selling financial futures contracts, buying put options on portfolio
securities and listed put options on futures contracts, and writing call options
on futures contracts. The Fund may also write covered call options on portfolio
securities to attempt to increase its current income. The Fund will maintain its
positions in securities, option rights, and segregated cash subject to puts and
calls until the options are exercised, closed, or have expired. An option
position on financial futures contracts may be closed out only on an exchange
which provides a secondary market for options of the same series.

FINANCIAL FUTURES CONTRACTS

A futures contract is a firm commitment by two parties: the seller who agrees to
make delivery of the specific type of security called for in the contract
("going short") and the buyer who agrees to take delivery of the security
("going long") at a certain time in the future.

In the fixed income securities market, price moves inversely to interest rates.
A rise in rates means a drop in price. Conversely, a drop in rates means a rise
in price. In order to hedge its holdings of fixed income securities against a
rise in market interest rates, the Fund could enter into contracts to deliver
securities at a predetermined price (i.e., "go short") to protect itself against
the possibility that the prices of its fixed income securities may decline
during the Fund's anticipated holding period. The Fund could "go long" (agree to
purchase securities in the future at a predetermined price) to hedge against a
decline in market interest rates.

PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS

The Fund may purchase exchange listed put options on financial futures
contracts. Unlike entering directly into a futures contract, which requires the
purchaser to buy a financial instrument on a set date at a specified price, the
purchase of a put option on a futures contract entitles (but does not obligate)
its purchaser to decide on or before a future date whether to assume a short
position at the specified price.

Generally, if the hedged portfolio securities decrease in value during the term
of an option, the related futures contracts will also decrease in value and the
option will increase in value. In such an event, the Fund will normally close
out its option by selling an identical option. If the hedge is successful, the
proceeds received by the Fund upon the sale of the second option will be large
enough to offset both the premium paid by the Fund for the original option plus
the decrease in value of the hedged securities.

Alternatively, the Fund may exercise its put option to close out the position.
To do so, it would simultaneously enter into a futures contract of the type
underlying the option (for a price less than the strike price of the option) and
exercise the option. The Fund would then deliver the futures contract in return
for payment of the strike price. If the Fund neither closes out nor exercises an
option, the option will expire on the date provided in the option contract, and
only the premium paid for the contract will be lost.

CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS

In addition to purchasing put options on futures, the Fund may write exchange
listed call options on futures contracts to hedge its portfolio. When the Fund
writes a call option on a futures contract, it is undertaking the obligation of
assuming a short futures position (selling a futures contract) at the fixed
strike price at any time during the life of the option if the option is
exercised. As market interest rates rise, causing the prices of futures to go
down, the Fund's obligation under a call option on a future (to sell a futures
contract) costs less to fulfill, causing the value of the Fund's call option
position to increase.

In other words, as the underlying futures price goes down below the strike
price, the buyer of the option has no reason to exercise the call, so that the
Fund keeps the premium received for the option. This premium can substantially
offset the drop in value of the Fund's fixed income or indexed portfolio which
is occurring as interest rates rise.

Prior to the expiration of a call written by the Fund, or exercise of it by the
buyer, the Fund may close out the option by buying an identical option. If the
hedge is successful, the cost of the second option will be less than the premium
received by the Fund for the initial option. The net premium income of the Fund
will then substantially offset the decrease in value of the hedged securities.

The Fund will not maintain open positions in futures contracts it has sold or
call options it has written on futures contracts if, in the aggregate, the value
of the open positions (marked to market) exceeds the current market value of its
securities portfolio plus or minus the unrealized gain or loss on those open
positions, adjusted for the correlation of volatility between the hedged
securities and the futures contracts. If this limitation is exceeded at any
time, the Fund will take prompt action to close out a sufficient number of open
contracts to bring its open futures and options positions within this
limitation.

"MARGIN" IN FUTURES TRANSACTIONS

Unlike the purchase or sale of a security, the Fund does not pay or receive
money upon the purchase or sale of a futures contract. Rather, the Fund is
required to deposit an amount of "initial margin" in cash or U.S. Treasury bills
with its custodian (or the broker, if legally permitted). The nature of initial
margin in futures transactions is different from that of margin in securities
transactions in that initial margin in futures transactions does not involve the
borrowing of funds by the Fund to finance the transactions. Initial margin is in
the nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied.

A futures contract held by the Fund is valued daily at the official settlement
price of the exchange on which it is traded. Each day the Fund pays or receives
cash, called "variation margin," equal to the daily change in value of the
futures contract. This process is known as "marking to market." Variation margin
does not represent a borrowing or loan by the Fund but is instead settlement
between the Fund and the broker of the amount one would owe the other if the
futures contract expired. In computing its daily net asset value, the Fund will
mark to market its open futures positions.

The Fund is also required to deposit and maintain margin when it writes call
options on futures contracts.

PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES

The Fund may purchase put options on portfolio securities to protect against
price movements in particular securities in its portfolio. A put option gives
the Fund, in return for a premium, the right to sell the underlying security to
the writer (seller) at a specified price during the term of the option.

WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES

The Fund may also write covered call options to generate income. As writer of a
call option, the Fund has the obligation upon exercise of the option during the
option period to deliver the underlying security upon payment of the exercise
price. The Fund may only sell call options either on securities held in its
portfolio or on securities which it has the right to obtain without payment of
further consideration (or has segregated cash in the amount of any additional
consideration).

RISKS

When the Fund uses financial futures and options on financial futures as hedging
devices, there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the securities
in the Fund's portfolio. This may cause the futures contract and any related
options to react differently than the portfolio securities to market changes. In
addition, the Fund's investment adviser could be incorrect in its expectations
about the direction or extent of market factors, such as interest rate
movements. In these events, the Fund may lose money on the futures contract or
option.

It is not certain that a secondary market for positions in futures contracts or
for options will exist at all times. Although the investment adviser will
consider liquidity before entering into options transactions, there is no
assurance that a liquid secondary market on an exchange or otherwise will exist
for any particular futures contract or option at any particular time. The Fund's
ability to establish and close out futures and options positions depends on this
secondary market.

RESTRICTED AND ILLIQUID SECURITIES

The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under a Securities and Exchange Commission ("SEC") Staff
position set forth in the adopting release for SEC Rule 144A ("Rule 144A") under
the Securities Act of 1933, as amended (the "1933 Act"). Rule 144A is a
nonexclusive safe-harbor for certain secondary market transactions that provides
an exemption from registration for resales of otherwise restricted securities to
qualified institutional buyers. Rule 144A was expected to further enhance the
liquidity of the secondary market for securities eligible for resale under Rule
144A. The Fund believes that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities to the Trustees. The
Trustees consider the following criteria in determining the liquidity of certain
restricted securities:

the frequency of trades and quotes for the security;

the number of dealers willing to purchase or sell the security and the
number of other potential buyers;

dealer undertakings to make a market in the security; and

the nature of the security and the nature of the marketplace trades.

LENDING OF PORTFOLIO SECURITIES

The Fund would not have the right to vote securities on loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment.

WEIGHTED AVERAGE PORTFOLIO MATURITY

The Fund will determine its dollar-weighted average portfolio maturity by
assigning a "weight" to each portfolio security based upon the pro rata market
value of such portfolio security in comparison to the market value of the entire
portfolio. The remaining maturity of each portfolio security is then multiplied
by its weight, and the results are added together to determine the weighted
average maturity of the portfolio. For purposes of calculating its
dollar-weighted average portfolio maturity, the Fund will treat variable and
floating rate instruments as having a remaining maturity commensurate with the
period remaining until the next scheduled adjustment to the instrument's
interest rate. The Fund limits its dollar-weighted average maturity to 15 years
or less.

PORTFOLIO TURNOVER

The Fund may trade or dispose of portfolio securities as considered necessary to
meet its investment objective. It is not anticipated that the portfolio trading
engaged in by the Fund, under normal market conditions, will result in its
annual rate of portfolio turnover exceeding 200%.

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Fund will not sell any securities short or purchase any securities on
margin, but may obtain such short-term credits as are necessary for the
clearance of purchases and sales of securities. The deposit or payment by
the Fund of initial or variation margin in connection with financial
futures contracts or related options transactions is not considered the
purchase of a security on margin.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amounts
borrowed, and except to the extent that the Fund may enter into futures
contracts. The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure to facilitate management of the
portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while
borrowings in excess of 5% of its total assets are outstanding.

PLEDGING ASSETS

The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permissible borrowings. In those cases, it may pledge assets
having a market value not exceeding the lesser of the dollar amounts
borrowed or 15% of the value of total assets at the time of the pledge.
For purposes of this limitation, the following are not deemed to be
pledges: margin deposits for the purchase and sale of financial futures
contracts and related options, and segregation or collateral arrangements
made in connection with options activities or the purchase of securities
on a when-issued basis.

DIVERSIFICATION OF INVESTMENTS

With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer (other
than cash, cash items or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by such securities) if, as a result,
more than 5% of the value of its total assets would be invested in the
securities of that issuer. (For purposes of this limitation, the Fund
considers certificates of deposit and demand and time deposits issued by
a U.S. branch of a domestic bank having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of investment to be "cash
items.") Also, the Fund will not acquire more than 10% of the outstanding
voting securities of any one issuer.

CONCENTRATION OF INVESTMENTS

The Fund will not purchase securities if, as a result of such purchase,
25% or more of the value of its total assets would be invested in any one
industry. However, the Fund may at times invest 25% or more of the value
of its total assets in securities issued or guaranteed by the U.S.
government and its agencies or instrumentalities.

INVESTING IN COMMODITIES

The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts except that the Fund may purchase put options
on portfolio securities and on financial futures contracts and related
options as a hedging strategy and not for speculative purposes. In
addition, the Fund reserves the right to hedge the portfolio by entering
into financial futures contracts and to sell calls on financial futures
contracts. The Fund will notify shareholders before such a change in its
operating policies is implemented.

UNDERWRITING

The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities which the Fund may purchase
pursuant to its investment objective, policies, and limitations.

INVESTING IN REAL ESTATE

The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in the securities of
companies whose business involves the purchase or sale of real estate or
in securities which are secured by real estate or which represent
interests in real estate.

LENDING CASH OR SECURITIES

The Fund will not lend any of its assets except portfolio securities up
to 50% of the value of its total assets. This shall not prevent the Fund
from purchasing or holding U.S. government obligations, money market
instruments, variable rate demand notes, bonds, debentures, notes,
certificates of indebtedness, or other debt securities, entering into
repurchase agreements, or engaging in other transactions where permitted
by the Fund's investment objective, policies, and limitations or the
Trust's Declaration of Trust.

Except as noted, the above investment limitations cannot be changed without
shareholder approval. The following limitations, however, may be changed by the
Trustees without shareholder approval. Except as noted, shareholders will be
notified before any material change in the following limitations becomes
effective.

INVESTING IN NEW ISSUERS

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

INVESTING IN RESTRICTED SECURITIES

INVESTING IN ILLIQUID SECURITIES

The Fund will not invest more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement more than seven days after notice, over-the-counter options,
and certain restricted securities not determined by the Trustees to be
liquid. See "Restricted and Illiquid Securities".

INVESTING IN MINERALS

The Fund will not invest in interests in oil, gas, or other mineral
exploration or development programs or leases, except it may purchase the
securities of issuers which invest in or sponsor such programs.

PURCHASING SECURITIES TO EXERCISE CONTROL

The Fund will not purchase securities of a company for the purpose of
exercising control or management.

INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST

The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or its investment adviser owning
individually more than 0.50% of the issuer's securities together own more
than 5% of the issuer's securities.

WRITING COVERED CALL OPTIONS

The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them
in deliverable form without further payment or after segregating cash in
the amount of any further payment.

INVESTING IN PUT OPTIONS

The Fund will not purchase put options on securities unless the
securities are held in the Fund's portfolio and not more than 5% of the
value of the Fund's net assets would be invested in premiums on open put
option positions.

The Fund has no present intention to borrow money in excess of 5% of the total
value of its net assets during its first fiscal year. The Fund has no present
intention of investing more than 5% of its net assets in foreign securities or
options and fixtures.

Each fund of the Trust has the ability to issue more than one class of shares.
The Fund does not consider the issuance of separate classes of shares to
constitute an issue of "senior securities" within the meaning of the investment
limitations set forth below.

To comply with registration requirements in certain states, the Fund (1) will
limit the aggregate value of the assets underlying covered call options or put
options written by the Fund to not more than 25% of its net assets, (2) will
limit the premiums paid for options purchased by the Fund to 20% of its net
assets, and (3) will limit the margin deposits on futures contracts entered into
by the Fund to 5% of its net assets. (If state requirements change, these
restrictions may be revised without shareholder notification.)

BANKSOUTH SELECT FUNDS MANAGEMENT
- --------------------------------------------------------------------------------

OFFICERS AND TRUSTEES

<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>

John T. Conroy, Jr. Trustee President, Investment Properties Corporation; Senior Vice-President,
Wood/IPC Commercial John R. Wood and Associates, Inc., Realtors; President, Northgate
Department Village Development Corporation; General Partner or Trustee in private
John R. Wood and real estate ventures in Southwest Florida; Director, Trustee or Managing
Associates, Inc., Realtors General Partner of the Funds; formerly President, Naples Property
3255 Tamiami Trail North Management, Inc.
Naples, FL

Marjorie P. Smuts Trustee Public relations/marketing consultant; Director, Trustee, or Managing
4905 Bayard Street General Partner of the Funds.
Pittsburgh, PA

Charles L. Davis, Jr. Vice President Vice President, Federated Administrative Services; Vice President and
Federated Investors Tower and Assistant Assistant Treasurer of some of the Funds; formerly Vice President and
Pittsburgh, PA Treasurer Director of Investor Relations, MNC Financial, Inc. and Vice President,
Product Management, MNC Financial, Inc.

* This Trustee is deemed to be an "interested person" of the Trust as defined in
the Investment Company Act of 1940.

THE FUNDS

FUND OWNERSHIP

Officers and Trustees own less than 1% of the Fund's outstanding shares.

TRUSTEE LIABILITY

INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------

ADVISER TO THE FUND

The Bank serves as the Fund's investment adviser (the "Adviser"). The Adviser
shall not be liable to the Trust, the Fund, or any shareholder of the Fund 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 Trust.

ADVISORY FEES

For its advisory services, the Adviser receives an annual investment advisory
fee as described in the Prospectus.

STATE EXPENSE LIMITATIONS

This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.

ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------

Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for the fees set forth in the
prospectus. John A. Staley, IV, an officer of the Trust, holds approximately 15%
of the outstanding common stock and serves as a director of Commercial Data
Services, Inc., a company which provides computer processing services to
Federated Administrative Services.

BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------

The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the Adviser
and 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.

PURCHASING SHARES
- --------------------------------------------------------------------------------

ADMINISTRATIVE ARRANGEMENTS

DISTRIBUTION PLAN

With respect to the Fund, the Trust has adopted a Plan pursuant to Rule 12b-1
which was promulgated by the SEC pursuant to the Investment Company Act of 1940,
as amended (the "Act"). The Plan provides for payment of fees to the Distributor
to finance any activity which is principally intended to result in the sale of
the Fund's shares subject to the Plan. Such activities may include the
advertising and marketing of shares of the Fund; preparing, printing, and
distributing prospectuses and sales literature to prospective shareholders,
brokers, or administrators; and implementing and operating the Plan. Pursuant to
the Plan, the Distributor may pay fees to brokers and others for such services.

PURCHASING FUND SHARES WITH SECURITIES

The Fund in its sole discretion, may sell Fund shares to investors that desire
to purchase Fund shares with certain securities or a combination of certain
securities and cash. The Fund reserves the right to determine the acceptability
of securities used to effect such purchases. On the day securities are accepted
by the Fund, they are valued based upon independent bid and in the same manner
as the Fund values it assets. Investors wishing to use securities to purchase
Fund shares should first contact the Bank. Any such transfer of securities is
treated as a sale of the securities and will result in the recognition of any
gain or loss for federal income tax purposes by the seller of such securities,
except to the extent the seller is an ERISA plan or similar entity not subject
to tax.

DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------

Net asset value generally changes each day. The days on which the net asset
value is calculated by the Fund are described in the prospectus.

DETERMINING MARKET VALUE OF SECURITIES

Market values of the Fund's portfolio securities, other than options, are
determined as follows:

as provided by an independent pricing service;

for short-term obligations, according to the mean between the bid and asked
prices, as furnished by an independent pricing service; or

at fair value as determined in good faith by the Trustees.

Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices.

Pricing services may consider:

yield;

quality;

coupon rate;

maturity;

type of issue;

trading characteristics; and

other market data.

The Fund will value futures contracts, options, put options on futures and
financial futures at their market values established by the exchanges at the
close of option trading on such exchanges unless the Trustees determine in good
faith that another method of valuing option positions is necessary to appraise
their fair value.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

REDEEMING SHARES
- --------------------------------------------------------------------------------

The Fund redeems shares at the next computed net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
Prospectus under "Redeeming Shares."

REDEMPTION IN KIND

The Trust has elected to be governed by SEC Rule 18f-1 under the Act under which
each fund is obligated to redeem shares for any one shareholder in cash only up
to the lesser of $250,000 or 1% of the Fund's net asset value during any 90-day
period.

TAX STATUS
- --------------------------------------------------------------------------------

THE FUND'S TAX STATUS

derive at least 90% of its gross income from dividends, interest, and gains from
the sale of securities;

derive less than 30% of its gross income from the sale of securities held less
than three months;

invest in securities within certain statutory limits; and

distribute to its shareholders at least 90% of its net income earned during the
year.

SHAREHOLDERS' TAX STATUS

Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional shares. No portion of any income dividend paid by
the Fund is eligible for the dividends received deduction available to
corporations. These dividends, and any short-term capital gains, are taxable as
ordinary income.

CAPITAL GAINS

Long-term capital gains distributed to shareholders will be treated as
long-term capital gains regardless of how long shareholders have held
Fund shares.

TOTAL RETURN
- --------------------------------------------------------------------------------

YIELD
- --------------------------------------------------------------------------------

The yield for the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a 30-day period by the maximum offering price per share of the Fund on the
last day of the period. This value 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 twelve-month
period and is reinvested every six months. The yield does not necessarily
reflect income actually earned by the Fund 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 that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the Fund,
performance will be reduced for those shareholders paying those fees.

PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------

The performance of the Fund depends upon such variables as:

portfolio quality;

average portfolio maturity;

type of instruments in which the portfolio is invested;

changes in interest rates and market value of portfolio securities;

changes in the Fund's expenses; and

various other factors.

LIPPER ANALYTICAL SERVICES, INC., ranks funds in various 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 offering price over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in the "U.S. government
funds" category in advertising and sales literature.

SHEARSON LEHMAN GOVERNMENT/CORPORATE (Total) index is comprised of approximately
5,000 issues which include: non-convertible bonds publicly issued by the U.S.
government or its agencies; corporate bonds guaranteed by the U.S. government
and quasi-federal corporations; and publicly issued, fixed-rate,
non-convertible domestic bonds of companies in industry, public utilities, and
finance. The average maturity of these bonds approximates nine years. Tracked
by Shearson Lehman Hutton, Inc., the index calculates total returns for
one-month, three-month, twelve-month, and ten-year periods, and year-to-date.

SALOMON BROTHERS AAA-AA CORPORATE INDEX calculates total returns of
approximately 775 issues which include long-term high grade domestic corporate
taxable bonds, rated AAA-AA with maturities of twelve years or more and
companies in industry, public utilities, and finance.

MERRILL LYNCH CORPORATE & GOVERNMENT MASTER INDEX is an unmanaged index
comprised of approximately 4,821 issues which include corporate debt obligations
rated BBB or better and publicly issued, non-convertible domestic debt of the
U.S. government or any agency thereof. These quality parameters are based on
composites of ratings assigned by Standard and Poor's Corp. and Moody's
Investors Service. Only bonds with a minimum maturity of one year are included.

MERRILL LYNCH CORPORATE MASTER INDEX is an unmanaged index comprised of
approximately 4,356 corporate debt obligations rated BBB or better. These
quality parameters are based on composites of ratings assigned by Standard and
Poor's Corp. and Moody's Investors Service. Only bonds with a minimum maturity
of one year are included.

SALOMON BROTHERS BROAD INVESTMENT-GRADE ("BIG") BOND INDEX is designed to
provide the investment-grade bond manager with an all-inclusive universe of
institutionally traded U.S. Treasury, agency, mortgage and corporate securities
which can be used as a benchmark. The BIG Index is market
capitalization-weighted and includes all fixed rate bonds with a maturity of
one year or longer and a minimum of $50-million amount outstanding at entry
($200 million for mortgage coupons) and remain in the index until their amount
falls below $25 million.

When comparing funds using reporting services or total return and yield,
investors should take into consideration any relevant differences in funds such
as permitted portfolio compositions and methods used to value portfolio
securities and compute offering price.

Advertisements and other sales literature for the Fund may quote total returns
which are calculated on non-standardized base periods. These total returns also
represent the historic change in the value of an investment in the Fund based on
monthly reinvestment of dividends over a specified period of time.

APPENDIX
- --------------------------------------------------------------------------------

STANDARD AND POOR'S CORPORATION CORPORATE BOND RATINGS

AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's
Corporation. 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.

NR--NR indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.

PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

MOODY'S INVESTORS SERVICE, INC., CORPORATE BOND RATINGS

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.

NR--Not rated by Moody's.

Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATINGS

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+.

NR--NR indicates that Fitch does not rate the specific issue.

PLUS (+) OR MINUS (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the AAA category.

DUFF & PHELPS CREDIT RATING CO. LONG-TERM DEBT RATINGS

AAA--Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA--High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.

A--Protection factors are average but adequate. However, risk factors are more
variable and greater in periods of economic stress.

BBB--Below average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic cycles.

COMMERCIAL PAPER RATINGS
STANDARD AND POOR'S CORPORATION

A-2--Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.

MOODY'S INVESTORS SERVICE, INC.

P-1--Issuers rated PRIME-1 (for 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:
conservative capitalization structures with moderate reliance on debt and ample
asset protection; broad margins in earning coverage of fixed financial charges
and high internal cash generation; and well-established access to a range of
financial markets and assured sources of alternative liquidity.

P-2--Issuers rated PRIME-2 (for 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.

FITCH INVESTORS SERVICE, INC.

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.

DUFF & PHELPS CREDIT RATING CO.

DUFF 1--Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.

DUFF 1---High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.

GOOD GRADE

A CREDIT RATING IS NOT A RECOMMENDATION TO BUY, SELL OR HOLD SECURITIES, AND IS
SUBJECT TO CHANGE AND/OR WITHDRAWAL BY THE RATING AGENCY.

3092205B (1/94)

BANKSOUTH SELECT EQUITY FUND
(A PORTFOLIO OF BANKSOUTH SELECT FUNDS)
PROSPECTUS

The shares of BankSouth Select Equity Fund (the "Fund") offered by this
Prospectus represent interests in a diversified portfolio of BankSouth
Select Funds (the "Trust"), an open-end management investment company (a
mutual fund). The investment objective of the Fund is to achieve
long-term growth of capital and income. The Fund pursues this objective
by investing primarily in a portfolio of common stocks of United States
issuers.

This Prospectus contains the information you should read and know before
you invest in the Fund. Keep this Prospectus for future reference.

SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE NOT
ISSUED, ENDORSED OR GUARANTEED BY, BANK SOUTH, N.A. OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT ISSUED, INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE FUND
INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

THE BANK IS THE INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED
BY FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.

Prospectus dated January 7, 1994

BANKSOUTH SELECT FUNDS

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------

GENERAL INFORMATION 2
- ------------------------------------------------------

INVESTMENT INFORMATION 2
- ------------------------------------------------------

Investment Objective 2
Investment Policies 2
Acceptable Investments 2
Common Stocks 2
Other Corporate Securities 2
U.S. Government Securities 3
Options and Futures 3
Foreign Securities 3
Repurchase Agreements 3
When-Issued and Delayed Delivery
Transactions 3
Investing in Securities of
Other Investment Companies 3
Lending of Portfolio Securities 4
Temporary Investments 4
Restricted and Illiquid Securities 4
Certain Borrowing and Investment Limitations 4

BANKSOUTH SELECT FUNDS INFORMATION 5
- ------------------------------------------------------

Management of the Trust 5
Board of Trustees 5
Investment Adviser 5
Advisory Fees 5
Adviser's Background 5
Portfolio Manager 5
Distribution of Fund Shares 6
Distribution Plan 6
Administrative Arrangements 6
Administration of the Trust 7
Administrative Services 7
Shareholder Services Plan 7
Custodian 7
Transfer Agent, Dividend Disbursing
Agent, and Portfolio Accounting
Services 7
Legal Counsel 7
Independent Auditors 8
Expenses of the Fund 8
Brokerage Transactions 8

NET ASSET VALUE 8
- ------------------------------------------------------

INVESTING IN THE FUND 8
- ------------------------------------------------------

Share Purchases 8
By Telephone 8
By Mail 9
Payment by Check 9
Payment by Wire 9
Minimum Investment Required 9
Systematic Investment Program 9
What Shares Cost 9
Purchases at Net Asset Value 10
Sales Charge Reallowance 10
Reducing the Sales Charge 10
Quantity Discounts and Accumulated
Purchases 10
Letter of Intent 10
Reinvestment Privilege 11
Concurrent Purchases 11
Certificates and Confirmations 11
Dividends and Distributions 11
Purchasing Fund Shares with Securities 11

EXCHANGE PRIVILEGE 12
- ------------------------------------------------------

BankSouth Select Funds 12
By Telephone 12

REDEEMING SHARES 13
- ------------------------------------------------------

By Telephone 13
By Mail 14
Signatures 14
Receiving Payment 14
Redemption Before Purchase Instruments
Clear 14
Systematic Withdrawal Program 14
Accounts with Low Balances 15

SHAREHOLDER INFORMATION 15
- ------------------------------------------------------

Voting Rights 15
Massachusetts Partnership Law 15

EFFECT OF BANKING LAWS 16
- ------------------------------------------------------

TAX INFORMATION 16
- ------------------------------------------------------

Federal Income Tax 16
State and Local Taxes 16

PERFORMANCE INFORMATION 17
- ------------------------------------------------------

ADDRESSES Inside Back Cover
- ------------------------------------------------------

BANKSOUTH SELECT EQUITY FUND
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................................................... 3.75%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)................................................................... None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds as applicable).................................................. None
Redemption Fees (as a percentage of amount redeemed, if applicable)..................................... None
Exchange Fee............................................................................................ None

ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee.......................................................................................... 0.75%
12b-1 Fees(1)........................................................................................... 0.00%
Other Expenses (after waiver)(2)........................................................................ 0.25%
Total Fund Operating Expenses(3).................................................................... 1.00%
</TABLE>

(1) As of the date of this Prospectus, the Fund is not paying or accruing 12b-1
fees. The Fund can pay up to 0.75% as a 12b-1 fee to the distributor.
Certain trust clients of the Bank or its affiliates, including ERISA plans,
will not be affected by the distribution plan because the distribution plan
will not be activated unless and until a second, "Trust," class of shares
of the Fund (which would not have a Rule 12b-1 plan) is created and such
trust clients' investments in the Fund are converted to such Trust class.

(2) Total Other Expenses are estimated to be 0.27% absent the anticipated
voluntary waiver by the transfer agent.

(3) The Total Fund Operating Expenses are estimated to be 1.02% absent the
anticipated voluntary waiver by the transfer agent.

GENERAL INFORMATION
- --------------------------------------------------------------------------------

The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated September 22, 1993, as amended and restated dated December 20,
1993. The Declaration of Trust permits the Trust to offer separate series of
shares of beneficial interest representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
This Prospectus relates only to the Trust's BankSouth Select Equity Fund. The
Fund is designed as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio consisting primarily of common
stocks of United States issuers. A minimum initial investment of $1,000 is
required ($500 for Individual Retirement Accounts ("IRAs")), and subsequent
investments must be in amounts of at least $100. See "Investing in the Fund".

Fund shares are sold at net asset value plus a maximum sales charge of 3.75% and
redeemed at net asset value.

INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The Fund's investment objective is to achieve long-term growth of capital and
income. The investment objective cannot be changed without the approval of the
Fund's shareholders. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this prospectus.

INVESTMENT POLICIES

The Fund pursues its investment objective by investing in the securities of high
quality companies. Emphasis is placed on stocks where the market price of the
stock appears low when compared to present earnings. The Fund's investment
approach is based on the conviction that, over the long term, the economy will
continue to expand and develop and that this economic growth will be reflected
in the growth of the revenues and earnings of publicly-held corporations. Unless
indicated otherwise, the investment policies of the Fund may be changed by the
Trustees without the approval of shareholders. Shareholders will be notified
before any material change in these policies becomes effective.

ACCEPTABLE INVESTMENTS. The securities in which the Fund invests include, but
are not limited to:

COMMON STOCKS. The Fund invests primarily in common stocks of companies
selected by the Fund's investment adviser on the basis of traditional research
techniques, including assessment of earnings and dividend growth prospects of
the companies. Ordinarily, these companies will be in the top 30% of their
industries with regard to revenues. However, other factors such as product
position, market share, potential earnings growth, or asset values will be
considered by the investment adviser and may outweigh revenues. At least 65% of
the Fund's portfolio will be invested in common stocks, unless it is in a
defensive position.

OTHER CORPORATE SECURITIES. The Fund may invest in preferred stocks,
convertible securities, notes rated A or better by Moody's Investors Service,
Inc., Standard & Poor's Corporation, Duff & Phelps Credit Rating Co. or Fitch
Investors Service, Inc., or securities deemed by the investment adviser to be of
comparable quality to securities having such ratings, and warrants of these
companies. Corporate fixed income securities are subject to market and credit
risks. If any note invested in by the Fund loses its rating or has its rating
reduced after the Fund has purchased it, the Fund is not required to sell or
otherwise dispose of the security, but may consider doing so.

U.S. GOVERNMENT SECURITIES. The Fund may invest in U.S. government securities
and obligations of U.S. government agencies and instrumentalities.

OPTIONS AND FUTURES. The Fund may purchase and sell financial futures contracts
and purchase and sell options on financial futures contracts and on its
portfolio securities.

FOREIGN SECURITIES. The Fund may invest in foreign securities which are traded
publicly in the United States. Investments in foreign securities, particularly
those of non-governmental issuers, involve considerations which are not
ordinarily associated with investments in domestic issuers. These considerations
include the possibility of expropriation or nationalization, exchange rate
fluctuations, foreign taxation and withholding, the unavailability of financial
information or the difficulty of interpreting financial information prepared
under foreign accounting standards, less liquidity and more volatility in
foreign securities markets, the impact of political, social, or diplomatic
developments, and the difficulty of assessing economic trends in foreign
countries. It may also be more difficult to enforce contractual obligations
abroad than would be the case in the United States because of differences in the
legal systems. Transaction costs in foreign securities may be higher. The Fund's
investment adviser will consider these and other factors before investing in
foreign securities and will not make such investments unless, in its opinion,
such investments will meet the Fund's standards and objectives.

REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which banks,
broker-dealers and other financial institutions sell securities to the Fund and
agree at the time of sale to repurchase them at a mutually agreed upon time and
price including interest. To the extent that the seller does not repurchase the
securities from the Fund, the Fund could receive less than the repurchase price
on any sale of such securities. Repurchase agreements will be collateralized by
securities having a value equal at all times to at least 100% of the amount of
the securities subject to the repurchase agreement.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund may invest in the securities of other investment companies, but will
not own more than 3% of the total outstanding voting stock of any investment
company, invest more than 5% of total assets in any one investment company, or
invest more than 10% of total assets in investment companies in the aggregate.
The Fund will invest in other investment companies primarily for the purpose of
investing short-term cash which has not yet been invested in other portfolio
instruments. It should be noted that investment companies incur certain
expenses, and therefore, any investment by the Fund in Shares of another
investment company would be subject to certain duplicate expenses, particularly
transfer agent and custodian fees. The adviser will waive its investment
advisory fee on assets invested in securities of open-end investment companies.

LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, to
broker-dealers, banks, or other institutional borrowers of securities. The Fund
will limit the amount of portfolio securities it may lend to not more than 50%
of its total assets at any time. The Fund will only enter into loan arrangements
with broker-dealers, banks, or other institutions which the adviser has
determined are creditworthy under guidelines established by the Board of
Trustees, and will receive collateral equal to at least 100% of the value of the
securities loaned at all times.

TEMPORARY INVESTMENTS. For defensive purposes only, the Fund may also invest
temporarily in cash and money market instruments during times of unusual market
conditions. These investments include the following:

prime commercial paper, including master demand notes;

instruments of domestic and U.S. dollar denominated foreign banks and
savings and loans (such as certificates of deposit, demand and time
deposits, savings shares, and bankers' acceptances);

securities issued and/or guaranteed as to payment of principal and
interest by the U.S. government, its agencies, or instrumentalities;

repurchase agreements;

securities of other investment companies; and

other short-term money market instruments.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restriction on resale under federal securities law. However, the Fund
will limit investments in illiquid securities, including certain restricted
securities not determined by the Trustees to be liquid, non-negotiable time
deposits, and repurchase agreements providing for settlement in more than seven
days after notice to 15% of its net assets.

CERTAIN BORROWING AND INVESTMENT LIMITATIONS

The Fund will not:

engage in short sales; or

with respect to 75% of its total assets, invest more than 5% in
securities of any one issuer other than cash, cash items, or securities
issued and/or guaranteed by the U.S. government, its agencies or
instrumentalities, and repurchase agreements collateralized by such
securities, or acquire more than 10% of the outstanding voting securities
of any one issuer.

The above investment limitations cannot be changed without Fund shareholder
approval.

BANKSOUTH SELECT FUNDS INFORMATION
- --------------------------------------------------------------------------------

MANAGEMENT OF THE TRUST

The Adviser has managed discretionary assets for its customers since 1931.
As of September 30, 1993 the Adviser managed in excess of $1 billion of
discretionary assets. Prior to the date hereof, the Bank has not served as
an investment adviser to mutual funds.

PORTFOLIO MANAGER. Mr. W. Shelton Prince is primarily responsible for the
day-to-day management of the Fund's portfolio. Mr. Prince joined the
Adviser in March of 1968, and was promoted to Vice President in November
1979, and Senior Investment Manager in February 1993. He is responsible for
the management of large personal trusts, foundations, and employee benefit
accounts as well as the Adviser's equity and common trust funds for both
institutional and personal trusts. He serves on the Adviser's Portfolio
Strategy and Trust Fiduciary Committees.

Mr. Prince's educational background includes a Bachelor of Science degree
from North Georgia College and a Master of Business Administration in both
Finance and Management from Georgia State University. He is a member of the
Atlanta Society of Financial Analysts.

DISTRIBUTION OF FUND SHARES

The Distributor may select other financial institutions (such as broker-dealers
or banks) to provide sales support services as agents for their clients or
customers who beneficially own shares. These financial institutions (including
the Bank ) will receive fees from the Distributor based upon shares subject to
the Plan and owned by their clients or customers. The schedules of such fees and
the basis upon which such fees will be paid will be determined from time to time
by the Distributor.

ADMINISTRATION OF THE TRUST

The administrative fee received during any fiscal year shall be at least
$100,000 per Fund. Federated Administrative Services may voluntarily choose to
waive a portion of its fee.

SHAREHOLDER SERVICES PLAN. The Fund has adopted a Shareholder Services Plan
(the "Services Plan") with respect to the shares. Under the Services Plan,
financial institutions will enter into shareholder service agreements with the
Fund to provide administrative support services to their customers who from time
to time may be owners of record or beneficial owners of the shares. In return
for providing these support services, a financial institution may recieve
payments from the Fund at a rate not exceeding 0.25% of the average daily net
assets of the shares beneficially owned by the financial institution's customers
for whom it is holder of record or with whom it has a servicing relationship.
These administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities, and various
personnel including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding the
Fund; assisting clients in changing dividend options, account designations, and
addresses; and providing such other services as the Fund reasonably requests.
Certain trust clients of the Bank, including ERISA plans, will not be affected
by the Services Plan because the Services Plan will not be activated unless and
until a second, "Trust" class of shares of the Fund (which would not have a
Services Plan) is created and such trust clients' investments in the Fund are
converted to such Trust class.

CUSTODIAN. The Bank of New York, New York, New York is custodian for the
securities and cash of the Fund.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING SERVICES.
Federated Services Company, Pittsburgh, Pennsylvania, a subsidiary of Federated
Investors, is transfer agent for the shares of, and dividend disbursing agent
for the Fund. It also provides certain accounting and recordkeeping services
with respect to the Fund's portfolio investments.

LEGAL COUNSEL. Legal counsel is provided by Houston, Houston & Donnelly,
Pittsburgh, Pennsylvania, and Dickstein, Shapiro & Morin, Washington, D.C.

INDEPENDENT AUDITORS. The independent auditors for the Fund are Ernst & Young,
Pittsburgh, Pennsylvania.

EXPENSES OF THE FUND

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. In working with dealers, the Adviser will generally utilize those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. 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 Fund. The Adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Fund's Board.

NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund's net asset value per share fluctuates. It is determined by dividing
the sum of the market value of all securities and other assets, less
liabilities, by the number of shares outstanding.

INVESTING IN THE FUND
- --------------------------------------------------------------------------------

SHARE PURCHASES

Fund shares are sold on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. Fund shares may be purchased
through the Bank. In connection with the sale of shares of the Fund, the
Distributor may from time to time offer certain items of nominal value to any
shareholder or investor. The Fund reserves the right to reject any purchase
request.

BY TELEPHONE. To place an order to purchase Fund shares, call Bank South Mutual
Funds Center toll free at 1-800-282-6680 extension 4550. Texas residents must
purchase shares of the Fund through Bank South Securities Corporation at
404-521-7063. Your purchase order will be taken directly over the telephone. The
order must be placed by 4:00 p.m. (Eastern time) for shares to be purchased at
that day's price.

PAYMENT BY CHECK. Mail to BankSouth Select Equity Fund, c/o Bank South Mutual
Fund Center, MC 16, P.O. Box 4387, Atlanta, Georgia 30302.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in the Fund by an investor is $1,000 ($500 for
IRAs). Subsequent investments must be in amounts of at least $100. The Fund may
choose to waive its minimum investment from time to time and for accounts which
select the Systematic Investment Program.

SYSTEMATIC INVESTMENT PROGRAM

WHAT SHARES COST

Shares of the Fund are sold at their net asset value next determined after an
order is received plus a sales charge as follows:

<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS
A PERCENTAGE A PERCENTAGE
OF PUBLIC OF NET AMOUNT
AMOUNT OF TRANSACTION OFFERING PRICE INVESTED
<S> <C> <C>
Less than $100,000 3.75% 3.90%
$100,000 but less than $250,000 3.25% 3.38%
$250,000 but less than $500,000 2.75% 2.83%
$500,000 but less than $750,000 2.25% 2.30%
$750,000 but less than $1,000,000 1.00% 1.01%
$1,000,000 but less than $2,000,000 0.50% 0.50%
$2,000,000 or more 0.00% 0.00%
</TABLE>

SALES CHARGE REALLOWANCE. The Bank and any authorized dealer or bank will
normally receive up to 85% of the applicable sales charge as a transaction fee
from its customers and for sales and/or administrative services performed on
behalf of its customers in connection with the initiation of customer accounts
and purchases of Fund shares. Any portion of the sales charge which is not paid
to the Bank or a dealer will be retained by the Distributor. However, the
Distributor, in its sole discretion, may uniformly offer to permit all dealers
and other institutions selling shares of the Fund, to receive all or a portion
of the amount the Distributor normally retains as a sales charge. If accepted by
the dealer, such additional payments may be in the form of cash or other
promotional incentives, and will be predicated upon the amount of shares of the
Fund or other BankSouth Select Funds sold by the dealer or other institution.

REDUCING THE SALES CHARGE

The sales charge can be reduced on the purchase of shares of the Fund through:

quantity discounts and accumulated purchases;

signing a 13-month letter of intent;

using the reinvestment privilege; or

concurrent purchases.

LETTER OF INTENT. If a shareholder intends to purchase at least $100,000 of
shares in the Fund over the next 13 months, the sales charge may be reduced by
signing a letter of intent to that effect. This letter of intent includes a
provision for a sales charge adjustment depending on the amount actually
purchased within the 13-month period and a provision for the Custodian to hold
up to 3.75% of the total amount intended to be purchased in escrow (in shares)
until such purchase is completed.

To receive this sales charge reduction, the Distributor must be notified by the
shareholder in writing or by the Bank at the time the concurrent purchases are
made. The Fund will reduce the sales charge after if confirms the purchases. See
"What Shares Cost" and "Addresses".

CERTIFICATES AND CONFIRMATIONS

The Transfer Agent for the Fund maintains a share account for each shareholder
of record. Share certificates are not issued unless requested in writing from
the Fund or the Transfer Agent.

Detailed statements that include account balances, information on each purchase
or redemption, and a report of dividends are sent to each shareholder.

DIVIDENDS AND DISTRIBUTIONS

Dividends are declared and paid quarterly to all shareholders invested in the
Fund on the record date.

Capital gains realized by the Fund, if any, will be distributed at least once
every 12 months. Dividends and capital gains will be reinvested in additional
shares on payment dates at the ex-dividend date's net asset value without a
sales charge, unless a shareholder makes written request for cash payments to
the Fund or the Bank.

PURCHASING FUND SHARES FOR SECURITIES

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

BANKSOUTH SELECT FUNDS

All shareholders of the Fund are shareholders of BankSouth Select Funds.
BankSouth Select Funds currently include the Fund, BankSouth Select Bond Fund,
BankSouth Select Georgia Tax-Free Income Fund, BankSouth Select Prime Money
Market Fund, and BankSouth Select Government Money Market Fund. Shareholders
have easy access to each of the portfolios of BankSouth Select Funds through a
telephone exchange program. All BankSouth Select Funds are advised by the Bank
and distributed by the Distributor.

Shareholders may exchange shares of the Fund for shares of the other BankSouth
Select Funds. In addition, shares of the Fund may also be exchanged for certain
other funds designated by the Bank which are distributed by the Distributor but
are not advised by the Bank ("Federated Funds"). For further information on the
availability of Federated Funds for exchanges, please call the Bank South Mutual
Funds Center at 1-800-282-6680 extension 4550. Shares of funds with a sales
charge may be exchanged at net asset value for shares of other funds with an
equal sales charge or no sales charge. Shares of funds with a sales charge may
be exchanged for shares of funds with a higher sales charge at net asset value,
plus the additional sales charge. Shares of funds with no sales charge, whether
acquired by direct purchase, reinvestment of dividends on such shares, or
otherwise, may be exchanged for shares of funds with a sales charge at net asset
value, plus the applicable sales charge.

BY TELEPHONE. Instructions for exchanges between funds which are part of the
Trust may be given by telephone to the Bank South Mutual Funds Center at
1-800-282-6680 extension 4550 or to the Distributor. Shares may be exchanged by
telephone only between fund accounts having identical shareholder registrations.

Telephone exchange instructions must be received before 4:00 p.m. (Eastern time)
for shares to be exchanged the same day. The telephone exchange privilege may be
modified or terminated at any time. Shareholders will be notified of such
modification or termination. Shareholders may have difficulty in making
exchanges by telephone through the Bank, during times of drastic economic or
market changes. If a shareholder cannot contact the Bank, by telephone, it is
recommended that an exchange request be made in writing and sent by overnight
mail to BankSouth Select Funds, 55 Marietta Street, N.W., Atlanta, Georgia
30303.

REDEEMING SHARES
- --------------------------------------------------------------------------------

BY TELEPHONE. A shareholder may redeem shares of the Fund by contacting his
account officer or by calling the Bank South Mutual Funds Center to request the
redemption. Call 1-800-282-6680 extension 4550). Shares will be redeemed at the
net asset value next determined after the Fund receives the redemption request
from the Bank. Redemption requests to the Bank must be received before 4:00 p.m.
(Eastern time) in order for shares to be redeemed at that day's net asset value,
and the Bank will promptly submit such redemption requests and provide written
redemption instructions to the Fund. If, at any time, the Fund should determine
it necessary to terminate or modify this method of redemption, shareholders
would be promptly notified.

a trust company or commercial bank whose deposits are insured by the
FDIC's BIF;

a member firm of the New York, American, Boston, Midwest, or Pacific
Stock Exchange;

a savings bank or savings and loan association whose deposits are insured
by the FDIC's SAIF; or

any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934, as amended.

The Fund does not accept signatures guaranteed by a notary public.

REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR

SYSTEMATIC WITHDRAWAL PROGRAM

Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, Fund shares
are redeemed to provide for periodic withdrawal payments in an amount directed
by the shareholder. Depending upon the amount of the withdrawal payments and
the amount of dividends paid with respect to Fund shares, redemptions may
reduce, and eventually deplete, the shareholder's investment in the Fund. For
this reason, payments under this program should not be considered as yield or
income on the shareholder's investment in the Fund. To be eligible to
participate in this program, a shareholder must have an account value of at
least $10,000. A shareholder may apply for participation in this program
through the Bank.

ACCOUNTS WITH LOW BALANCES

Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

MASSACHUSETTS PARTNERSHIP LAW

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

The Bank believes, based on the advice of its counsel, that it may perform the
services for the Fund contemplated by its advisory agreement with the Trust
without violating of the Glass-Steagall Act or other applicable banking laws or
regulations. Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their affiliates, as well as
further judicial or administrative decisions or interpretations of present or
future statutes and regulations, could prevent the Bank from continuing to
perform all or a part of the above services for its customers and/or the Fund.
If it were prohibited from engaging in these customer-related activities, the
Trustees would consider alternative advisers and means of continuing available
investment services. In such event, changes in the operation of the Fund may
occur, including possible termination of any automatic or other Fund share
investment and redemption services then being provided by the Bank. It is not
expected that existing shareholders would suffer any adverse financial
consequences (if another adviser with equivalent abilities to the Bank is found)
as a result of any of these occurrences.

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

STATE AND LOCAL TAXES

Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Fund may advertise its total return and yield.

From time to time, the Fund may advertise its performance using certain
reporting services and/or compare its performance to certain indices.

ADDRESSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
BankSouth Select Equity Fund Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
- ---------------------------------------------------------------------------------------------------------------------

Investment Adviser
Bank South, N.A. MC 16
P.O. Box 4387
Atlanta, Georgia 30302
- ---------------------------------------------------------------------------------------------------------------------

Custodian
The Bank of New York 48 Wall Street
New York, New York 10286
- ---------------------------------------------------------------------------------------------------------------------

BANKSOUTH SELECT
EQUITY FUND
PROSPECTUS
A Diversified Portfolio of
BankSouth Select Funds, an Open-End
Management Investment Company
(a Mutual Fund)

Prospectus dated January 7, 1994

BANK SOUTH, N.A.
(Logo)
Investment Adviser
55 Marietta Street, N.W.
Atlanta, GA 30303

FEDERATED SECURITIES CORP.
(LOGO)
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779

3092102A (1/94)

BANKSOUTH SELECT EQUITY FUND
(A PORTFOLIO OF BANKSOUTH SELECT FUNDS)
STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with the
prospectus of BankSouth Select Equity Fund (the "Fund") dated January
7, 1994. This Statement is not a prospectus itself. To receive a copy
of the prospectus, call the Bank South, N.A. (the "Bank") Mutual Funds
Center at 1-800-282-6680 extension 4550.

SHARES OF THE FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, AND ARE
NOT ISSUED, ENDORSED OR GUARANTEED BY THE BANK OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT ISSUED, INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN
THE FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.

THE BANK IS INVESTMENT ADVISER TO THE FUND. THE FUND IS DISTRIBUTED BY
FEDERATED SECURITIES CORP., WHICH IS NOT AFFILIATED WITH THE BANK.

Statement dated January 7, 1994

FEDERATED SECURITIES CORP.
--------------------------------------------
Distributor
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------

INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------

Types of Investments 1
Other Permitted Investments 1
Futures and Options Transactions 1
Temporary Investments 3
When-Issued and Delayed Delivery
Transactions 4
Restricted and Illiquid Securities 4
Repurchase Agreements 4
Reverse Repurchase Agreements 4
Lending of Portfolio Securities 5
Portfolio Turnover 5
Investment Limitations 5

BANKSOUTH SELECT FUNDS MANAGEMENT 7
- ---------------------------------------------------------------

Officers and Trustees 7
The Funds 10
Fund Ownership 10
Trustee Liability 10

INVESTMENT ADVISORY SERVICES 10
- ---------------------------------------------------------------

Adviser to the Fund 10
Advisory Fees 10

ADMINISTRATIVE SERVICES 11
- ---------------------------------------------------------------

BROKERAGE TRANSACTIONS 11
- ---------------------------------------------------------------

PURCHASING SHARES 11
- ---------------------------------------------------------------

Administrative Arrangements 11

Distribution Plan 11
Purchasing Fund Shares with Securities 12

DETERMINING NET ASSET VALUE 12
- ---------------------------------------------------------------

Determining Market Value of Securities 12

EXCHANGE PRIVILEGE 12
- ---------------------------------------------------------------

REDEEMING SHARES 12
- ---------------------------------------------------------------

Redemption in Kind 12

TAX STATUS 13
- ---------------------------------------------------------------

The Fund's Tax Status 13
Shareholders' Tax Status 13

TOTAL RETURN 13
- ---------------------------------------------------------------

YIELD 13
- ---------------------------------------------------------------

PERFORMANCE COMPARISONS 13
- ---------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------

BankSouth Select Equity Fund (the "Fund") is a portfolio in Bank South Select
Funds (the "Trust"), which was established as a Massachusetts business trust
under a Declaration of Trust dated as of September 22, 1993, as amended and
restated dated December 20, 1993.

INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The Fund's investment objective is to achieve long-term growth of capital and
income. The investment objective cannot be changed without shareholder approval.

TYPES OF INVESTMENTS

The Fund invests principally in common stocks of United States issuers. Although
the Fund may invest in other securities and in money market instruments, it is
the Fund's policy under normal market conditions to invest at least 65% of its
portfolio in equity securities.

OTHER PERMITTED INVESTMENTS

CONVERTIBLE SECURITIES

Convertible securities are fixed income securities which may be exchanged
or converted into a predetermined number of shares of the issuer's
underlying common stock at the option of the holder during a specified
time period. Convertible securities may take the form of convertible
preferred stock or units consisting of "usable" bonds and warrants or a
combination of the features of several of these securities. The
investment characteristics of each convertible security vary widely,
which allows convertible securities to be employed for different
investment objectives.

The Fund will exchange or convert the convertible securities held in its
portfolio into shares of the underlying common stock in instances in
which, in the investment adviser's opinion, the investment
characteristics of the underlying common shares will assist the Fund in
achieving its investment objectives. Otherwise, the Fund may hold or
trade convertible securities. In selecting convertible securities for the
Fund, the Fund's adviser evaluates the investment characteristics of the
convertible security as a fixed income instrument, and the investment
potential of the underlying equity security for capital appreciation. In
evaluating these matters with respect to a particular convertible
security, the Fund's adviser considers numerous factors, including the
economic and political outlook, the value of the security relative to
other investment alternatives, trends in the determinants of the issuer's
profits, and the issuer's management capability and practices.

WARRANTS

Warrants are basically options to purchase common stock at a specific
price (usually at a premium above the market value of the underlying
common stock at the time of the issuance of the warrant) valid for a
specific period of time. Warrants may have a life ranging from less than
a year to twenty years or may be perpetual. However, most warrants have
expiration dates after which they are worthless. In addition, if the
market price of the common stock does not exceed the warrant's exercise
price during the life of the warrant, the warrant will expire as
worthless. Warrants have no voting rights, pay no dividends, and have no
rights with respect to the assets of the corporation issuing them. The
percentage increase or decrease in the market price of the warrant may
tend to be greater than the percentage increase or decrease in the market
price of the underlying common stock.

FUTURES AND OPTIONS TRANSACTIONS

FINANCIAL FUTURES CONTRACTS

A futures contract is a firm commitment by two parties: the seller who
agrees to make delivery of the specific type of security called for in
the contract ("going short") and the buyer who agrees to take delivery of
the security ("going long") at a certain time in the future.

Financial futures contracts may call for the delivery of shares of common
stocks represented in a particular index.

In addition, the Fund reserves the right to hedge the portfolio by
entering into financial futures contracts. The Fund will notify
shareholders before such a change in its operating policies is
implemented.

PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS

The Fund may purchase exchange listed put options on financial futures
contracts. Unlike entering directly into a futures contract, which
requires the purchaser to buy a financial instrument on a set date at a
specified price, the purchase of a put option on a futures contract
entitles (but does not obligate) its purchaser to decide on or before a
future date whether to assume a short position at the specified price.

Generally, if the hedged portfolio securities decrease in value during
the term of an option, the related futures contracts will also decrease
in value and the option will increase in value. In such an event, the
Fund will normally close out its option by selling an identical option.
If the hedge is successful, the proceeds received by the Fund upon the
sale of the second option will be large enough to offset both the premium
paid by the Fund for the original option plus the decrease in value of
the hedged securities.

Alternatively, the Fund may exercise its put option to close out the
position. To do so, it would simultaneously enter into a futures contract
of the type underlying the option (for a price less than the strike price
of the option) and exercise the option. The Fund would then deliver the
futures contract in return for payment of the strike price. If the Fund
neither closes out nor exercises an option, the option will expire on the
date provided in the option contract, and only the premium paid for the
contract will be lost.

CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS

In addition to purchasing put options on futures, the Fund may write
exchange listed call options on futures contracts to hedge its portfolio.
When the Fund writes a call option on a futures contract, it is
undertaking the obligation of assuming a short futures position (selling
a futures contract) at the fixed strike price at any time during the life
of the option if the option is exercised. As stock prices fall, causing
the prices of futures to go down, the Funds' obligation under a call
option on a future (to sell a futures contract) costs less to fulfill,
causing the value of the Fund's call option position to increase.

In other words, as the underlying futures price goes down below the
strike price, the buyer of the option has no reason to exercise the call,
so that the Fund keeps the premium received for the option. This premium
can substantially offset the drop in value of the Fund's fixed income or
indexed portfolio which is occurring as interest rates rise.

Prior to the expiration of a call written by the Fund, or exercise of it
by the buyer, the Fund may close out the option by buying an identical
option. If the hedge is successful, the cost of the second option will be
less than the premium received by the Fund for the initial option. The
net premium income of the Fund will then substantially offset the
decrease in value of the hedged securities.

The Fund will not maintain open positions in futures contracts it has
sold or call options it has written on futures contracts if, in the
aggregate, the value of the open positions (marked to market) exceeds the
current market value of its securities portfolio plus or minus the
unrealized gain or loss on those open positions, adjusted for the
correlation of volatility between the hedged securities and the futures
contracts. If this limitation is exceeded at any time, the Fund will take
prompt action to close out a sufficient number of open contracts to bring
its open futures and options positions within this limitation.

"MARGIN" IN FUTURES TRANSACTIONS

Unlike the purchase or sale of a security, the Fund does not pay or
receive money upon the purchase or sale of a futures contract. Rather,
the Fund is required to deposit an amount of "initial margin" in cash or
U.S. Treasury bills with its custodian (or the broker, if legally
permitted). The nature of initial margin in futures transactions is
different from that of margin in securities transactions in that initial
margin in futures transactions does not involve the borrowing of funds by
the Fund to finance the transactions. Initial margin is in the nature of
a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract, assuming
all contractual obligations have been satisfied.

A futures contract held by the Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the Fund
pays or receives cash, called "variation margin," equal to the daily
change in value of the futures contract. This process in known as
"marking to market." Variation margin does not represent a borrowing or
loan by the Fund but is instead settlement between the Fund and the
broker of the amount one would owe the other if the futures contract
expired. In computing its daily net asset value, the Fund will mark to
market its open futures positions.

The Fund is also required to deposit and maintain margin when it writes
call options on futures contracts.

PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES

The Fund may purchase put options on portfolio securities to protect
against price movements in particular securities in its portfolio. A put
option gives the Fund, in return for a premium, the right to sell the
underlying security to the writer (seller) at a specified price during
the term of the option.

WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES

The Fund may also write covered call options to generate income. As
writer of a call option, the Fund has the obligation upon exercise of the
option during the option period to deliver the underlying security upon
payment of the exercise price. The Fund may only sell call options either
on securities held in its portfolio or on securities which it has the
right to obtain without payment of further consideration (or has
segregated cash in the amount of any additional consideration).

RISKS

When the Fund uses financial futures and options on financial futures as
hedging devices, there is a risk that the prices of the securities
subject to the futures contracts may not correlate perfectly with the
prices of the securities in the Fund's portfolio. This may cause the
futures contract and any related options to react differently than the
portfolio securities to market changes. In addition, the Fund's
investment adviser could be incorrect in its expectations about the
direction or extent of market factors such as stock price movements. In
these events, the Fund may lose money on the futures contract or option.

It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the investment
adviser will consider liquidity before entering into options
transactions, there is no assurance that a liquid secondary market on an
exchange or otherwise will exist for any particular futures contract or
option at any particular time. The Fund's ability to establish and close
out futures and options positions depends on this secondary market.

TEMPORARY INVESTMENTS

MONEY MARKET INSTRUMENTS

For defensive purposes only, the Fund may invest temporarily in cash and
money market instruments during times of unusual market conditions:

prime commercial paper (rated A-1 by Standard & Poor's Corporation, P-1
by Moody's Investors Service, Inc., F-1 by Fitch Investors Service, or
Duff-1 by Duff & Phelps Credit Rating Co.) and Europaper (rated A-1,
P-1, F-1 or Duff-1 or above). In the case where commercial paper or
Europaper has received different ratings from different rating services,
such commercial paper or Europaper is an acceptable temporary investment
so long as at least one rating is one of the preceding high quality
ratings and provided the Fund's investment adviser has determined that
such investment presents minimal credit risks;

instruments of domestic and foreign banks and savings and loans if they
have capital, surplus, and undivided profits of over $100,000,000
("Eligible Institutions"), or if the principal amount of the instrument
is insured by the Bank Insurance Fund ("BIF") administered by the
Federal Deposit Insurance Corporation ("FDIC") or the Savings
Association Insurance Fund ("SAIF") administered by the FDIC. Such Fund
investments may include Eurodollar Certificates of Deposit ("ECDs"),
Eurodollar Time Deposits ("ETDs"), and Canadian Time Deposits issued by
Eligible Institutions;

obligations of the U.S. government or its agencies or instrumentalities;

repurchase agreements; and

other short-term instruments which are not rated but are determined by
the investment adviser to be of comparable quality to the other
temporary obligations in which the Fund may invest.

U.S. GOVERNMENT OBLIGATIONS

The types of U.S. government obligations in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are
backed by:

the full faith and credit of the U.S. Treasury;

the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;

the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or

the credit of the agency or instrumentality issuing the obligations.

Examples of agencies and instrumentalities which are permissible
investments which may not always receive financial support from the U.S.
government are:

Federal Farm Credit Banks;

Federal Home Loan Banks;

Federal National Mortgage Association;

Student Loan Marketing Association; and

Federal Home Loan Mortgage Corporation.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are arrangements in which the Fund purchases and sells
securities with payment and delivery scheduled for a future time. The Fund
engages in when-issued and delayed delivery transactions only for the purpose of
acquiring portfolio securities consistent with the its investment objective and
policies, not for investment leverage. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction. The
seller's failure to complete the transaction may cause the Fund to miss a price
or yield considered to be advantageous.

These transactions are made to secure what is considered to be an advantageous
price or yield for the Fund. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the Fund
sufficient to make payment for the securities to be purchased are segregated on
the Fund's records at the trade date. These securities are marked to market
daily and maintained until the transaction is settled.

RESTRICTED SECURITIES

The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under a Securities and Exchange Commission ("SEC") Staff
position set forth in the adopting release for Rule 144A under the Securities
Act of 1933. Rule 144A is a nonexclusive safe-harbor for certain secondary
market transactions involving securities subject to restrictions on resale under
federal securities laws. Rule 144A provides an exemption from registration for
resales of otherwise restricted securities to qualified institutional buyers.
Rule 144A was expected to further enhance the liquidity of the secondary market
for securities eligible for resale under Rule 144A. The Fund believes that the
Staff of the SEC has left the question of determining the liquidity of all
restricted securities to the Trustees. The Trustees consider the following
criteria in determining the liquidity of certain restricted securities:

the frequency of trades and quotes for the security;

the number of dealers willing to purchase or sell the security and the number of
other potential buyers;

dealer undertakings to make a market in the security; and

the nature of the security and the nature of the marketplace trades.

REPURCHASE AGREEMENTS

As collateral for the obligations of the seller to repurchase the securities
from the Fund, the Fund or its custodian will take possession of the securities
subject to repurchase agreements and these securities are marked to market
daily. To the extent that the original seller does not repurchase the securities
from the Fund, the Fund could receive less than the repurchase price on any sale
of such securities. In the event that a defaulting seller filed for bankruptcy
or became insolvent, disposition of securities by the Fund might be delayed
pending court action. The Fund believes that, under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other financial
institutions, such as securities broker-dealers, which are deemed by the Fund's
adviser to be creditworthy pursuant to guidelines established by the Board of
Trustees ("Trustees").

REVERSE REPURCHASE AGREEMENTS

The Fund may also enter into reverse repurchase agreements. These transactions
are similar to borrowing cash and pledging securities as collateral. In a
reverse repurchase agreement, the Fund transfers possession of a portfolio
instrument to another person, such as a financial institution or broker-dealer,
in return for a percentage of the instrument's market value in cash, and agrees
that on a stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration, plus interest at an agreed
upon rate. The use of reverse repurchase agreements may enable the Fund to
avoid selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.

LENDING OF PORTFOLIO SECURITIES

The Fund would not have the right to vote securities on loan, but would
terminate the loan and regain the right to vote if that were considered
important with respect to the investment.

PORTFOLIO TURNOVER

The Fund may trade or dispose of portfolio securities as considered necessary to
meet its investment objective. It is anticipated that, under stable market
conditions, the portfolio trading engaged in by the Fund will not result in its
annual rate of portfolio turnover exceeding 100%.

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Fund will not sell any securities short or purchase any securities on
margin, but may obtain such short-term credits as are necessary for
clearance of purchase and sale of securities. The deposit or payment by
the Fund of initial or variation margin in connection with financial
futures contracts or related options transactions is not considered the
purchase of a security on margin.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Fund will not issue senior securities except that the Fund may borrow
money and engage in reverse repurchase agreements in amounts up to
33 1/3% of the value of its total assets, including the amounts borrowed
except to the extent that the Fund may enter into futures contracts. The
Fund will not borrow money or engage in reverse repurchase agreements for
investment leverage, but rather as a temporary, extraordinary, or
emergency measure to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. The Fund will
not purchase any securities while borrowings in excess of 5% of its total
assets are outstanding.

PLEDGING ASSETS

The Fund will not mortgage, pledge, or hypothecate any assets, except to
secure permissible borrowings. In those cases, it may pledge assets
having a market value not exceeding the lesser of the dollar amounts
borrowed or 15% of the value of the Fund's total assets at the time of
the pledge. For purposes of this limitation, the following are not deemed
to be pledges: margin deposits for the purchase and sale of financial
futures contracts and related options; and segregation or collateral
arrangements made in connection with options activities or the purchase
of securities on a when-issued basis.

DIVERSIFICATION OF INVESTMENTS

With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer (other
than cash, cash items or securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities and
repurchase agreements collateralized by such securities) if as a result
more than 5% of the value of its total assets would be invested in the
securities of that issuer and will not acquire more than 10% of the
outstanding voting securities of any one issuer. (For purposes of this
limitation, the Fund considers certificates of deposit and demand and
time deposits issued by a U.S. branch of a domestic bank having capital,
surplus, and undivided profits in excess of $100,000,000 at the time of
investment to be "cash items".)

CONCENTRATION OF INVESTMENTS

The Fund will not invest 25% or more of its total assets in securities of
issuers having their principal business activities in the same industry.

INVESTING IN COMMODITIES

The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts except that the Fund may purchase and sell
financial futures contracts and related options.

UNDERWRITING

The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of restricted or other securities which the Fund
may purchase pursuant to its investment objective, policies and
limitations.

INVESTING IN REAL ESTATE

LENDING CASH OR SECURITIES

INVESTING IN NEW ISSUERS

INVESTING IN FOREIGN SECURITIES

The Fund will not invest more than 5% of its total assets in securities
of foreign issuers.

INVESTING IN RESTRICTED SECURITIES

The Fund will not purchase restricted securities if immediately
thereafter more than 10% of the total assets of the Fund, taken at market
value, would be invested in such securities, except for securities which
meet the criteria for liquidity as established by the Trustees. To comply
with certain state restrictions, the Fund will limit these transactions
to 5% of its total assets. (If state restrictions change, this latter
restriction may be revised without shareholder approval or notification.)

INVESTING IN MINERALS

The Fund will not invest in interests in oil, gas, or other mineral
exploration or development programs or leases, other than debentures or
equity stock interests.

PURCHASING SECURITIES TO EXERCISE CONTROL

The Fund will not purchase securities of a company for the purpose of
exercising control or management.

INVESTING IN WARRANTS

The Fund will not invest more than 5% of its assets in warrants,
including those acquired in units or attached to other securities. To
comply with certain state restrictions, the Fund will limit its
investment in such warrants not listed on New York or American stock
exchanges to 2% of its total assets. (If state restrictions change, this
latter restriction may be revised without notice to shareholders.) For
purposes of this investment restriction, warrants will be valued at the
lower of cost or market, except that warrants acquired by the Fund in
units with or attached to securities may be deemed to be without value.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, invest no more than 5% of the total assets in any investment
company, or invest more than 10% of its total assets in investment
companies in the aggregate. However, these limitations are not applicable
if the securities are acquired in a merger, consolidation, or acquisition
of assets.

INVESTING IN ILLIQUID SECURITIES

The Fund will not invest more than 15% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement more than seven calendar days after notice, over-the-counter
options, and restricted securities not determined by the Trustees to be
liquid.

INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST

The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Fund or the Adviser own individually more
than 0.5% of the issuer's securities or in the aggregate own more than 5%
of such issuer's securities.

ARBITRAGE TRANSACTIONS

To comply with certain state restrictions, the Fund will not enter into
transactions for the purpose of engaging in arbitrage. If state
requirements change, this restriction may be revised without shareholder
notification.

WRITING COVERED CALL OPTIONS

INVESTING IN PUT OPTIONS

The Fund will not purchase put options on securities, other than put
options on stock indices, unless the securities are held in the Fund's
portfolio and not more than 5% of the value of the Fund's net assets
would be invested in premiums on open put option positions.

The Fund has no present intention to borrow money in excess of 5% of the total
value of its net assets during the first fiscal year.

BANKSOUTH SELECT FUNDS MANAGEMENT
- --------------------------------------------------------------------------------

OFFICERS AND TRUSTEES

Officers and Trustees are listed with their addresses, principal occupations,
and present positions, including any affiliation with Bank South, Federated
Investors, Federated Securities Corp., Federated Services Company, and Federated
Administrative Services, and the Funds (as defined below).

<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>

John F. Donahue*\ Chairman and Chairman and Trustee, Federated Investors; Chairman and Trustee,
Federated Investors Tower Trustee Federated Advisers, Federated Management, and Federated Research;
Pittsburgh, PA Director AEtna Life and Casualty Company; Chief Executive Officer and
Director, Trustee, or Managing General Partner of the Funds; formerly,
Director, The Standard Fire Insurance Company. Mr. Donahue is the
father of J. Christopher Donahue, Vice President of the Trust.

John T. Conroy, Jr. Trustee President, Investment Properties Corporation; Senior Vice-President,
Wood/IPC Commercial John R. Wood and Associates, Inc., Realtors; President, Northgate
Department Village Development Corporation; General Partner or Trustee in private
John R. Wood and real estate ventures in Southwest Florida; Director, Trustee or
Associates, Inc., Realtors Managing General Partner of the Funds; formerly, President, Naples
3255 Tamiami Trail North Property Management, Inc.
Naples, FL

William J. Copeland Trustee Director and Member of the Executive Committee, Michael Baker, Inc. (an
One PNC Plaza-23rd Floor engineering firm); Director, Trustee, or Manag-
Pittsburgh, PA ing General Partner of the Funds; formerly, Vice Chairman and Director,
PNC Bank, N.A. and PNC Bank Corp. and Director, Ryan Homes, Inc.

Edward L. Flaherty, Jr.\ Trustee Attorney-at-law; Partner, Meyer and Flaherty; Director, Eat 'N Park
5916 Penn Mall Restaurants, Inc, and Statewide Settlement Agency, Inc.; Director,
Pittsburgh, PA Trustee, or Managing General Partner of the Funds; formerly, Counsel,
Horizon Financial, F.A., Western Region.

Edward C. Gonzales* President, Vice President, Treasurer, and Trustee, Federated Investors; Vice
Federated Investors Tower Treasurer and President and Treasurer, Federated Trustee Advisers, Federated
Pittsburgh, PA Trustee Management and Federated Research; Trustee, Federated Services Company;
Executive Vice President, Treasurer, and Director, Federated Securities
Corp.; Chairman, Treasurer, and Trustee, Federated Administrative
Services; Trustee of some of the Funds; Vice President and Treasurer of
the Funds.

Peter E. Madden Trustee Consultant; State Representative, Commonwealth of Massachusetts;
225 Franklin Street Director, Trustee, or Managing General Partner of the Funds; formerly,
Boston, MA President, State Street Bank & Trust Company and State Street Boston
Corporation and Trustee, Lahey Clinic Foundation, Inc.

Wesley W. Posvar Trustee Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
1202 Cathedral of Endowment for International Peace and RAND Corporation, Online Computer
Learning Library Center, Inc., and U.S. Space Foundation; Chairman, Czecho
University of Pittsburgh Slovak Management Center; Director, Trustee, or Managing General Part-
Pittsburgh, PA ner of the Funds; President Emeritus, University of Pittsburgh;
formerly, Chairman, National Advisory Council for Environmental Policy
& Technology.

Marjorie P. Smuts Trustee Public relations/marketing consultant; Director, Trustee, or Managing
4905 Bayard Street General Partner of the Funds.
Pittsburgh, PA

J. Christopher Donahue Vice President President and Trustee, Federated Investors; Trustee, Federated
Federated Investors Tower Advisers, Federated Management, and Federated Research; Trustee,
Pittsburgh, PA Federated Services Company; President and Director, Federated
Administrative Services; President or Vice President of the Funds;
Director, Trustee or Managing General Partner of some of the Funds. Mr.
Donahue is the son of John F. Donahue, Chairman and Trustee of the
Trust.

Charles L. Davis, Jr. Vice President Vice President, Federated Administrative Services; Vice President and
Federated Investors Tower and Assistant Assistant Treasurer of some of the Funds; formerly Vice President and
Pittsburgh, PA Treasurer Director of Investor Relations, MNC Financial, Inc. and Vice President,
Product Management, MNC Financial, Inc.

Richard B. Fisher Vice President Executive Vice President and Trustee, Federated Investors; Chairman and
Federated Investors Tower Director, Federated Securities Corp.; President or Vice President of
Pittsburgh, PA the Funds; Director or Trustee of some of the Funds.

John W. McGonigle Vice President Vice President, Secretary, General Counsel, and Trustee, and Secretary
Federated Investors Tower Federated Investors; Vice President, Secretary and Trustee, Federated
Pittsburgh, PA Advisers, Federated Management, and Federated Research; Trustee,
Federated Services Company; Executive Vice President, Secretary, and
Director, Federated Administrative Services; Executive Vice President
and Director, Federated Securities Corp.; Vice President and Secretary
of the Funds.

John A. Staley, IV Vice President Vice President and Trustee, Federated Investors; Executive Vice
Federated Investors Tower President, Federated Securities Corp.; President and Trustee, Federated
Pittsburgh, PA Advisers, Federated Management, and Federated Research; Vice President
of the Funds; Director, Trustee, or Managing General Partner of some of
the Funds; formerly, Vice President, The Standard Fire Insurance Com-
pany and President of its Federated Research Division.
</TABLE>

* This Trustee is deemed to be an "interested person" of the Trust as defined in
the Investment Company Act of 1940.

THE FUNDS

FUND OWNERSHIP

Officers and Trustees own less than 1% of the Fund's outstanding Shares.

TRUSTEE LIABILITY

INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------

ADVISER TO THE FUND

The Fund's investment adviser is Bank South, N.A., (the "Adviser"). The Adviser
shall not be liable to the Trust, the Fund, or any shareholder of the Fund 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 Trust.

ADVISORY FEES

For its advisory services, the Adviser receives an annual investment advisory
fee as described in the Prospectus.

STATE EXPENSE LIMITATIONS

This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.

ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------

BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------

The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the Adviser
and 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.

PURCHASING SHARES
- --------------------------------------------------------------------------------

Shares are sold at their net asset value without a sales charge on days the New
York Stock Exchange and Federal Reserve Wire System are open for business. The
procedure for purchasing shares of the Fund is explained in the prospectus under
"Investing in the Fund."

ADMINISTRATIVE ARRANGEMENTS

DISTRIBUTION PLAN

PURCHASING FUND SHARES WITH SECURITIES

The Fund in its sole discretion, may sell Fund shares to investors that desire
to purchase Fund shares with certain securities or a combination of certain
securities and cash. The Fund reserves the right to determine the acceptability
of securities used to effect such purchases. On the day securities are accepted
by the Fund, they are valued based upon independent bid and in the same manner
as the Fund values it assets. Investors wishing to use securities to purchase
Fund Shares should first contact the Bank. Any such transfer of securities is
treated as a sale of the securities and will result in the recognition of any
gain or loss for federal income tax purposes by the seller of such securities,
except to the extent the seller is an ERISA plan or similar entity not subject
to tax.

DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------

Net asset value generally changes each day. The days on which the net asset
value is calculated by the Fund are described in the prospectus.

DETERMINING MARKET VALUE OF SECURITIES

The market values of the Fund's portfolio securities, other than options, are
determined as follows:

for equity securities, according to the last sale price on a national securities
exchange, if available;

in the absence of recorded sales for listed equity securities, according to the
mean between the last closing bid and asked prices;

for unlisted equity securities, the latest bid prices;

for bonds and other fixed income securities, as determined by an independent
pricing service;

for short-term obligations, according to the mean between the bid and asked
prices, as furnished by an independent pricing service; or

for all other securities, at fair value as determined in good faith by the
Trustees.

The Fund will value futures contracts, options, put options on futures and
financial futures at their market values established by the exchanges at the
close of option trading on such exchanges unless the Trustees determines in good
faith that another method of valuing option positions is necessary to appraise
their fair value.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

Shareholders of the Fund may exchange shares of the Fund for shares of other
funds advised by the Bank and certain other Funds designated by the Bank and
distributed by the Distributor, subject to certain conditions. Exchange
procedures are explained in the prospectus under "Exchange Privilege."

REDEEMING SHARES
- --------------------------------------------------------------------------------

The Fund redeems shares at the next determined net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
Prospectus under "Redeeming Shares."

REDEMPTION IN KIND

TAX STATUS
- --------------------------------------------------------------------------------

THE FUND'S TAX STATUS

derive at least 90% of its gross income from dividends, interest, and gains from
the sale of securities;

derive less than 30% of its gross income from the sale of securities held less
than three months;

invest in securities within certain statutory limits; and

distribute to its shareholders at least 90% of its net income earned during the
year.

SHAREHOLDERS' TAX STATUS

CAPITAL GAINS

Long-term capital gains distributed to shareholders will be treated as
long-term capital gains regardless of how long shareholders have held
Fund shares.

TOTAL RETURN
- --------------------------------------------------------------------------------

The average annual total return for the Fund 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 maximum offering price 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 load,
adjusted over the period by any additional shares, assuming the quarterly
reinvestment of all dividends and distributions.

YIELD
- --------------------------------------------------------------------------------

The yield for the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the maximum offering price per share of the Fund on
the last day of the period. This value 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 twelve-month
period and is reinvested every six months. The yield does not necessarily
reflect income actually earned by the Fund because of certain adjustments
required by the Securities and Exchange Commission and therefore, may not
correlate to the dividends or other distributions paid to shareholders.

PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------

The performance of the Fund depends upon such variables as:

portfolio quality;

average portfolio maturity;

type of instruments in which the portfolio is invested;

changes in interest rates and market value of portfolio securities;

changes in the Fund's expenses; and

various other factors.

STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a composite
index of common stocks in industry, transportation, financial and public utility
companies. In addition, the Standard & Poor's index assumes reinvestment of all
dividends paid by stocks listed on the index. Taxes due on any of these
distributions are not included, nor are brokerage or other fees calculated in
the Standard & Poor's figures.

DOW JONES INDUSTRIAL AVERAGE ("DJIA") represents share prices of selected large
capitalization, well-established blue-chip industrial corporations as well as
public utility and transportation companies. The DJIA indicates daily changes
in the average price of stocks in any of its categories. It also reports total
sales for each group of industries.

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 specific period of time. From
time to time, the Fund will quote its Lipper ranking in the "growth and income
funds" category in advertising and sales literature.

Investors may use such indices or reporting services in addition to the Fund's
prospectus to obtain a more complete view of the Fund's performance before
investing. Of course, when comparing performance of the Fund to any index,
conditions such as composition of the index and prevailing market conditions
should be considered in assessing the significance of such comparisons. When
comparing funds using reporting services, or total return and yield, investors
should take into consideration any relevant differences in funds such as
permitted portfolio compositions and methods used to value portfolio securities
and compute offering price.

Advertisements and other sales literature for the Fund may quote total returns
which are calculated on non-standardized base periods. These total returns also
represent the historic change in the value of an investment in the Fund based on
quarterly reinvestment of dividends over a specified period of time.

3092102B (1/94)

PART C. OTHER INFORMATION.

Item 24. Financial Statements and Exhibits:

(a) Financial Statements (to be filed by amendment)
(b) Exhibits:
(1) (i) Conformed Copy of Declaration of Trust of the
Registrant (1.);
(ii) Conformed Copy of Amended and Restated
Declaration of Trust of the Registrant;+
(2) Copy of By-Laws of the Registrant;+
(3) Not applicable;
(4) Copy of Specimen Certificates for Shares of Beneficial
Interest of the Registrant;+
(i) BankSouth Select Georgia Tax-Free Income Fund;+
(ii) BankSouth Select Government Money Market Fund;+
(iii) BankSouth Select Prime Money Market Fund;+
(iv) BankSouth Select Bond Fund;+
(v) BankSouth Select Equity Fund;+
(5) Conformed Copy of Investment Advisory Contract of the
Registrant;+
(6) (i) Conformed Copy of Distributor's Contract of the
Registrant;+
(ii) Conformed Copy of Administrative Services
Agreement;+
(7) Not applicable;
(8) Conformed Copy of Custodian Agreement of the
Registrant;+
(9) (i) Conformed Copy of Agreement for Fund Accounting,
Shareholder Recordkeeping and Custody Services
Procurment Agreement of the Registrant;+
(ii) Conformed Copy of Shareholder Services Plan
of the Registrant;+
(10) Conformed Copy of Opinion and Consent of Counsel as
to legality of shares being registered;+
(11) (i) Conformed Copy of Consent of Independent
Public Accountants;+
(ii) Conformed Copy of Opinion and Consent of Special
Counsel (to be filed by amendment;+
(12) Not applicable;
(13) Conformed Copy of Initial Capital Understanding;+
(14) Not applicable;
(15) (i) Conformed Copy of Distribution Plan;+
(ii) Copy of Form of 12b-1 Agreement;+
(16) Schedule for Computation of Fund Performance Data;
(to be filed by amendment)
(17) Power of Attorney (1.);

Item 25. Persons Controlled by or Under Common Control with Registrant

None

1. Response is incorporated by reference to Registrant's Initial
Registration
Statement on Form N-1A filed October 15, 1993. (File Nos. 33-50635).
Item 26. Number of Holders of Securities:

Number of Record Holders
Title of Class as of January 7, 1994

Shares of
beneficial interest
(no par value)

BankSouth Select Georgia Tax-Free Income Fund 0

BankSouth Select Government Money Market Fund 0

BankSouth Select Prime Money Market Fund 0

BankSouth Select Bond Fund 0

BankSouth Select Equity Fund 0

Item 27. Indemnification:

Indemnification is provided to Officers and Trustees of the
Registrant
pursuant to (Section 4 of Article XI of Registrant's
Declaration of
Trust. The Investment Advisory Contract between the Registrant
and
Bank South National Association ("Adviser") provides that, in the
absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties under the
Investment
Advisory Contract on the part of Adviser, Adviser shall not be
liable
to the Registrant or to any shareholder for any act or omission
in the
course of or connected in any way with rendering services or
for any
losses that may be sustained in the purchase, holding, or sale
of any
security. Registrant's Trustees and Officers are covered by an
Investment Trust Errors and Omissions Policy.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Trustees, Officers, and
controlling persons of the Registrant by the Registrant
pursuant to
the Declaration of Trust or otherwise, the Registrant is aware
that in
the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Act and,
therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by
the Registrant of expenses incurred or paid by Trustees,
Officers, or
controlling persons of the Registrant in connection with the
successful defense of any act, suit, or proceeding) is asserted by
such Trustees, Officers, or controlling persons in connection
with the
shares being registered, the Registrant will, unless in the
opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in
the Act and will be governed by the final adjudication of such
issues.

Insofar as indemnification for liabilities may be permitted
pursuant
to Section 17 of the Investment Company Act of 1940 for Trustees,
Officers, and controlling persons of the Registrant by the
Registrant
pursuant to the Declaration of Trust or otherwise, the
Registrant is
aware of the position of the Securities and Exchange Commission
as set
forth in Investment Company Act Release No. IC-11330.
Therefore, the
Registrant undertakes that in addition to complying with the
applicable provisions of the Declaration of Trust or otherwise,
in the
absence of a final decision on the merits by a court or other body
before which the proceeding was brought, that an indemnification
payment will not be made unless in the absence of such a
decision, a
reasonable determination based upon factual review has been made
(i) by a majority vote of a quorum of non-party Trustees who
are not
interested persons of the Registrant or (ii) by independent legal
counsel in a written opinion that the indemnitee was not liable
for an
act of willful misfeasance, bad faith, gross negligence, or
reckless
disregard of duties. The Registrant further undertakes that
advancement of expenses incurred in the defense of a proceeding
(upon
undertaking for repayment unless it is ultimately determined that
indemnification is appropriate) against an Officer, Trustee, or
controlling person of the Registrant will not be made absent the
fulfillment of at least one of the following conditions: (i) the
indemnitee provides security for his undertaking; (ii) the
Registrant
is insured against losses arising by reason of any lawful
advances; or
(iii) a majority of a quorum of disinterested non-party
Trustees or
independent legal counsel in a written opinion makes a factual
determination that there is reason to believe the indemnitee
will be
entitled to indemnification.

Item 28. Business and Other Connections of Investment Adviser:

(a) Bank South National Association (the "Bank") is
headquartered in
Atlanta Georgia and is a wholly owned subsidiary of Bank South
Corporation, a Georgia corporation which is a registered bank
holding company. The Bank serves consumers through its
network
of banking offices with a full range of deposit and lending
products, as well as investment services. The principal
executive offices of the Adviser are located at 55 Marietta
Street N.W., Atlanta, GA 30303. The Bank has managed
discretionary assets for its consumers since 1931. As of
December 17, 1993, the Bank managed in excess of $1 billion of
discretionary assets. Prior to the date hereof, the Bank
has not
served as an investment adviser to mutual funds.

The principal executive offices and directors of the Trust's
Investment Adviser are set forth in the following tables.
Unless
otherwise noted, the position listed under Other Substantial
Business, Profession, Vocation or Employment is with the Bank.

(1) (2) (3)
Other Substantial
Position with Business Profession,
Name the Adviser Vocation or Employment

Bernard W. Abrams Director Chairman of the Board and
Chief Executive Officer of
Abrams Industries, Inc., a
holding company for
subsidiaries doing business
in general contracting, real
estate development and
manufacturing of store
fixtures.
(1) (2) (3)
Other Substantial
Position with Business Profession,
Name the Adviser Vocation or Employment

Ray C. Anderson Director Chairman and Chief Executive
Officer of Interface, Inc., a
manufacturer of carpet,
textiles and chemicals.

Kenneth W. Cannestra Director President of Lockheed
Aeronautical Systems Co.

John S. Carr Director President of John S. Carr and
Associates, Inc., a real
estate development company.

Patrick L. Flinn Director and
Chief Executive
Officer

Ralph E. Hutchens, Jr. Senior Executive
Vice President
and Chief
Financial Officer

Sidney E. Jennette, Jr. Director Management consultant.

Lynn H. Johnston Director Chairman of Life Insurance
Company of Georgia.

William M. McClatchey, M.D. Director President of Piedmont
Internal Medicine Associates,
P.A. and is a doctor of
internal medicine and
rheumatology

John E. McKinley, III Director and
Senior Executive
Vice President,
Credit Policy
and Corporate
Banking

Julia W. Morgan Director President and Chief Executive
Officer of Ed Morgan &
Associates, an insurance
company.

Barry Phillips Director Partner of Kilpatrick & Cody,
attorneys.

Ben. G. Porter Director Chairman of Piedmont
Communications Corporation.

John W. Robinson, Jr. Director President of Southern
Waistbands, Inc.

(1) (2) (3)
Other Substantial
Position with Business Profession,
Name the Adviser Vocation or Employment

Lee M. Sessions, Jr. Senior Executive
Vice President,
Consumer
Investment
and Trust
Banking

Felker W. Ward, Jr. Director President of Ward &
Associates, investment
bankers.

Virgil R. Williams Director President of Equipment
Technology, Inc., President
of International Banking
Technologies, Inc. and the
President and Publisher of
Georgia Trend.

Item 29. Principal Underwriters:

(a) Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the following
open-end investment companies: A.T. Ohio Tax-Free Money Fund;
American Leaders Fund, Inc.; Annuity Management Series; Automated
Cash Management Trust; Automated Government Money Trust;
BayFunds;
The Biltmore Funds; The Biltmore Municipal Funds; The Boulevard
Funds; California Municipal Cash Trust; Cambridge Series Trust; Cash
Trust Series, Inc.; Cash Trust Series II; DG Investor Series; Edward
D. Jones & Co. Daily Passport Cash Trust; FT Series, Inc.; Federated
ARMs Fund; Federated Exchange Fund, Ltd.; Federated GNMA Trust;
Federated Government Trust; Federated Growth Trust; Federated High
Yield Trust; Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated Intermediate Government
Trust; Federated Master Trust; Federated Municipal Trust; Federated
Short-Intermediate Government Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free Trust;
Federated U.S. Government Bond Fund; Financial Reserves Fund; First
Priority Funds; First Union Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.; Fortress
Municipal Income Fund, Inc.; Fortress Utility Fund, Inc.; Fountain
Square Funds; Fund for U.S. Government Securities, Inc.; Government
Income Securities, Inc.; High Yield Cash Trust; Independence One
Mutual Funds; Insurance Management Series; Intermediate Municipal
Trust; Investment Series Funds, Inc.; Investment Series Trust;
Liberty Equity Income Fund, Inc.; Liberty High Income Bond Fund,
Inc.; Liberty Municipal Securities Fund, Inc.; Liberty U.S.
Government Money Market Trust; Liberty Utility Fund, Inc.; Liquid
Cash Trust; Mark Twain Funds; Marshall Funds, Inc.; Money Market
Management, Inc.; Money Market Obligations Trust; Money Market
Trust; The Monitor Funds; Municipal Securities Income Trust; New
York Municipal Cash Trust; 111 Corcoran Funds; The Planters Funds;
Portage Funds; RIMCO Monument Funds; The Shawmut Funds; Short-Term
Municipal Trust; Signet Select Funds; SouthTrust Vulcan Funds; Star
Funds; The Starburst Funds; The Starburst Funds II; Stock and Bond
Fund, Inc.; Sunburst Funds; Targeted Duration Trust; Tax-Free
Instruments Trust; Tower Mutual Funds; Trademark Funds; Trust for
Financial Institutions; Trust for Government Cash Reserves; Trust
for Short-Term U.S. Government Securities; Trust for U.S. Treasury
Obligations; Vision Fiduciary Funds, Inc.; and Vision Group of
Funds, Inc.

Federated Securities Corp. also acts as principal underwriter for
the following closed-end investment company: Liberty Term Trust,
Inc.- 1999.
(b)

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant

Richard B. Fisher Director, Chaiman, Cheif Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.

Edward C. Gonzales Director, Executive Vice Trustee, President,
Federated Investors Tower President, and Treasurer, and Treasurer
Pittsburgh, PA 15222-3779 Federated Securities
Corp.

John W. McGonigle Director, Executive Vice Vice President and
Federated Investors Tower President, and Assistant Secretary
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.

John A. Staley, IV Executive Vice President Vice President
Federated Investors Tower and Assistant Secretary,
Pittsburgh, PA 15222-3779 Federated Securities Corp.

John B. Fisher President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James F. Getz President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.

James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James R. Ball Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark W. Bloss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant

Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Theodore Fadool, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Bryant R. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Christopher T. Fives Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James M. Heaton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

R. Jeffery Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Keith Nixon Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant

Solon A. Person, IV Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Timothy C. Pillion Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Brian L. Sullivan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas E. Territ Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp
Pittsburgh, PA 15222-3779

R. Edmond Connell, Jr. Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

H. Joseph Kennedy Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Sharon M. Morgan Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

S. Elliott Cohan Secretary, Federated --
Federated Investors Tower Securities Corp.
Pittsburgh, PA 15222-3779

Item 30. Location of Accounts and Records:

All accounts and records required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and Rules 31a-1 through 31a-3
promulgated thereunder are maintained at one of the following locations:

Registrant Federated Investors Tower
Federated Services Company Pittsburgh, PA
Federated Administrative Services 15222-3779

Bank of New York
("Custodian") New York, New York

Bank South National Association
("Adviser") MC 82
P.O. Box 5092
Atlanta, Georgia 30302

Item 31. Management Services: Not applicable.

Item 32. Undertakings:

Registrant hereby undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to six
months from the effective date of Registrant's 1933 Act Registration
Statement.

Registrant undertakes to hold a meeting of shareholders of BankSouth
Select Funds within sixteen months from its effective date to provide,
where appropriate, for election of Trustees, approval of the
investment advisory contract, ratification of the selection of
independent public accountants, and approval of the 12b-1 plan.

Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.

Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, BANKSOUTH SELECT FUNDS, has
duly caused this Pre-Effective Amendment No. 2 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of Pittsburgh and Commonwealth of Pennsylvania, on the 7th day of
January, 1994.

BANKSOUTH SELECT FUNDS

BY: /s/C. Grant Anderson

C. Grant Anderson, Assistant Secretary

Attorney in Fact for John F. Donahue

January 7, 1994

Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:

NAME TITLE DATE

By: /s/C. Grant Anderson
C. Grant Anderson Attorney In Fact January 7, 1994
ASSISTANT SECRETARY For the Persons
Listed Below

NAME TITLE

John F. Donahue* Chairman and Trustee
(Chief Executive Officer)

Glen R. Johnson* President

Edward C. Gonzales* Vice President, Treasurer
(Principal Financial and
Accounting Officer) and Trustee

John T. Conroy, Jr.* Trustee

William J. Copeland* Trustee

James E. Dowd* Trustee

Lawrence D. Ellis, M.D.* Trustee

Edward L. Flaherty, Jr.* Trustee

Peter E. Madden* Trustee

Gregor F. Meyer* Trustee

Wesley W. Posvar* Trustee

Marjorie P. Smuts* Trustee

* By Power of Attorney

Exhibit 1(ii) Under Form N-1A
Exhibit 3(a) Under Item 601/ Reg SK

BANKSOUTH SELECT FUNDS

Amended and Restated
Declaration of Trust

TABLE OF CONTENTS

Page

ARTICLE I. NAMES AND DEFINITIONS ............................. 1

Section 1. Name .......................................... 1
Section 2. Definitions ................................... 1

ARTICLE II. PURPOSE OF TRUST .................................. 2

ARTICLE III. BENEFICIAL_INTEREST................................ 2

Section 1. Shares of Beneficial Interest ................. 2
Section 2. Ownership of Shares ........................... 2
Section 3. Investment in the Trust ....................... 2
Section 4. No Pre-emptive Rights ......................... 3
Section 5. Establishment and Designation of Series
or Class ................................... 3

ARTICLE IV. THE TRUSTEES ...................................... 4

Section 1. Management of the Trust ....................... 4
Section 2. Term of Office of Trustees .................... 4
Section 3. Termination of Service and Appointment
of Trustees ................................ 5
Section 4. Number of Trustees ............................ 5
Section 5. Effect of Death, Resignation, etc. of a
Trustee .................................... 5
Section 6. Ownership of Assets ........................... 5

ARTICLE V. POWERS OF THE TRUSTEES ............................ 6

Section 1. Powers ........................................ 6
Section 2. Principal Transactions ........................ 8
Section 3. Trustees and Officers as Shareholders.......... 8
Section 4. Parties to Contract ........................... 8

-i-
Page

ARTICLE VI. TRUSTEES' EXPENSES AND COMPENSATION ............... 8

Section 1. Trustee Reimbursement ........................ 8
Section 2. Trustee Compensation ......................... 9

ARTICLE VII. INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,
PRINCIPAL UNDERWRITER AND
TRANSFER AGENT ......................... 9

Section 1. Investment Adviser ........................... 9
Section 2. Administrative Services ...................... 9
Section 3. Principal Underwriter ........................ 10
Section 4. Transfer Agent ............................... 10

ARTICLE VIII. SHAREHOLDERS' VOTING POWERS AND MEETINGS .......... 10

Section 1. Voting Powers ................................ 10
Section 2. Meetings ..................................... 10
Section 3. Quorum and Required Vote ..................... 11
Section 4. Additional Provisions ........................ 11

ARTICLE IX. CUSTODIAN ......................................... 11

ARTICLE X. DISTRIBUTIONS AND REDEMPTIONS ..................... 11

Section 1. Distributions ................................ 11
Section 2. Redemptions and Repurchases .................. 12
Section 3. Net Asset Value of Shares .................... 12
Section 4. Suspension of the Right of Redemption......... 13
Section 5. Trust's Right to Redeem Shares ............... 13

ARTICLE XI. LIMITATION OF LIABILITY AND INDEMNIFICATION ....... 13

Section 1. Limitation of Personal Liability and
Indemnification of Shareholders ............ 13
Section 2. Limitation of Personal Liability of
Trustees, Officers, Employees or
Agents of the Trust ........................ 13
Section 3. Express Exculpatory Clauses and
Instruments ................................ 14

-ii-
Page

ARTICLE XII. MISCELLANEOUS...................................... 14

Section 1. Trust is not a Partnership ................... 14
Section 2. Trustee Action Binding, Expert Advice,
No Bond or Surety .......................... 14
Section 3. Establishment of Record Dates ................ 14
Section 4. Termination of Trust ......................... 15
Section 5. Offices of the Trust, Filing of Copies,
Headings, Counterparts ..................... 15
Section 6. Applicable Law ............................... 16
Section 7. Amendments -- General ........................ 16
Section 8. Amendments -- Series and Classes.............. 16
Section 9. Use of Name .................................. 17

-iii-

AMENDED AND RESTATED
DECLARATION OF TRUST
BankSouth Select Funds

Dated December 20, 1993

THIS AMENDED AND RESTATED DECLARATION OF TRUST made December 20, 1993, by
John F. Donahue, William J. Copeland, James E. Dowd, Lawrence D. Ellis, M.D.,
Edward L. Flaherty, Jr., Edward C. Gonzales, Marjorie P. Smuts, Gregor F.
Meyer, Wesley W. Posvar, Peter E. Madden, John T. Conroy, Jr.

WHEREAS, the Trustees desire to establish a trust fund for the investment
and reinvestment of funds contributed thereto;

NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed under this
Declaration of Trust IN TRUST as herein set forth below.

ARTICLE I

NAMES AND DEFINITIONS

Section 1. Name.

This Trust shall be known as BankSouth Select Funds.

Section 2. Definitions.

Wherever used herein, unless otherwise required by the context or
specifically provided:

(a) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "Majority Shareholder Vote" (the 67% or 50% requirement
of Section 2(a)(42) of the 1940 Act, whichever may be applicable) and
"Principal Underwriter" shall have the meanings given them in the 1940 Act, as
amended from time to time;

(b) The "Trust" refers to BankSouth Select Funds.

(c) "Class" refers to a class of Shares established and designated
under or in accordance with the provisions of Article III;

(d) "Series" refers to a series of Shares established and designated
under or in accordance with the provisions of Article III;

(e) "Series Company" refers to the form of a registered open-end
investment company described in Section 18(f)(2) of the 1940 Act or in any
successor statutory provision;

(f) "Shareholder" means a record owner of Shares of any Series or
Class;

(g) The "Trustees" refer to the individual Trustees in their
capacity as Trustees hereunder of the Trust and their successor or successors
for the time being in office as such Trustees;

(h) "Shares" means the equal proportionate units of interest into
which the beneficial interest in the Trust shall be divided from time to time,
or if more than one Series or Class of Shares is authorized by the
Trustees, the equal proportionate units into which each Series or Class of
Shares shall be divided from time to time and includes fractions of Shares as
well as whole Shares; and

(i) The "1940 Act" refers to the Investment Company Act of 1940, and
the Rules and Regulations thereunder, (including any exemptions granted
thereunder) as amended from time to time.

ARTICLE II
PURPOSE OF TRUST

The purpose of this Trust is to provide investors a continuous source of
managed investments by investing primarily in securities including, without
limit, equities, debt instruments, futures, commodities, commodity contracts
and derivatives (including, without limit, options, interest rate swaps, and
other interest rate protective instruments and any combination thereof).
ARTICLE III
BENEFICIAL INTEREST

Section 1. Shares of Beneficial Interest.

The beneficial interest in the Trust shall at all times be divided
into transferable Shares, without par value. Subject to the provisions of
Section 5 of this Article III, each Share shall have voting rights as provided
in Article VIII hereof, and holders of the Shares of any Series shall be
entitled to receive dividends, when and as declared with respect thereto in
the manner provided in Article X, Section 1 hereof. The Shares of any Series
may be issued in two or more Classes, as the Trustees may authorize pursuant
to Article XII, Section 8 hereof. Unless the Trustees have authorized the
issuance of Shares of a Series in two or more Classes, each Share of a Series
shall represent an equal proportionate interest in the assets and liabilities
of the Series with each other Share of the same Series, none having priority
or preference over another. If the Trustees have authorized the issuance of
Shares of a Series in two or more Classes, then the Classes may have such
variations as to dividend, redemption, and voting rights, net asset values,
expenses borne by the Classes, and other matters as the Trustees have
authorized provided that each Share of a Class shall represent an equal
proportionate interest in the assets and liabilities of the Class with each
other Share of the same Class, none having priority or preference over
another. The number of Shares authorized shall be unlimited. The Trustees
may from time to time divide or combine the Shares of any Series or Class into
a greater or lesser number without thereby changing the proportionate
beneficial interests in the Series or Class.

Section 2. Ownership of Shares.

The ownership of Shares shall be evidenced by book-entry or physical
certificates and recorded in the books of the Trust or a transfer agent which
books shall be maintained separately for the Shares of each Series or Class.
The Trustees may make such rules as they consider appropriate for the transfer
of Shares and similar matters. The record books of the Trust or any transfer
agent, as the case may be, shall be conclusive as to who are the Shareholders
of each Series or Class and as to the number of Shares of each Series or
Class held from time to time by each.

Section 3. Investment in the Trust.

The Trustees shall accept investments in the Trust from such persons
and on such terms as they may from time to time authorize. After the date of
the initial contribution of capital (which shall occur prior to the initial
public offering of Shares), the number of Shares to represent the initial
contribution shall be considered as outstanding and the amount received by the
Trustees on account of the contribution shall be treated as an asset of the
Trust to be allocated among any Series or Classes in the manner described in
Section 5(a) of this Article. Subsequent to such initial contribution of
capital, Shares (including Shares which may have been redeemed or repurchased
by the Trust) may be issued or sold at a price which will net the relevant
Series or Class, as the case may be, before paying any taxes in connection
with such issue or sale, not less than the net asset value (as defined in
Article X, Section 3) thereof; provided, however, that the Trustees may in
their discretion impose a sales charge upon investments in the Trust.

Section 4. No Pre-emptive Rights.

Shareholders shall have no pre-emptive or other right to subscribe to
any additional Shares or other securities issued by the Trust.

Section 5. Establishment and Designation of Series or Class.

Without limiting the authority of the Trustees set forth in Article
XII, Section 8, inter alia, to establish and designate any additional series
or class or to modify the rights and preferences of any existing Series or
Class, the initial series shall be, and are established and designated as,
BankSouth Select Equity Fund, BankSouth Select Bond Fund, BankSouth Select
Government Money Market Fund, BankSouth Select Georgia Tax-Free Income Fund,
and BankSouth Select Prime Money Market Fund.

Shares of any Series or Class established in this Section 5 shall
have the following relative rights and preferences:

(a) Assets belonging to Series or Class. All consideration
received by the Trust for the issue or sale of Shares of a particular
Series or Class, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof
from whatever source derived, including, without limitation, any proceeds
derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to that Series or
Class for all purposes, subject only to the rights of creditors, and shall
be so recorded upon the books of account of the Trust. Such consideration,
assets, income, earnings, profits and proceeds thereof, from whatever
source derived, including, without limitation, any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the same
may be, are herein referred to as "assets belonging to" that Series or
Class. In the event that there are any assets, income, earnings, profits
and proceeds thereof, funds or payments which are not readily identifiable
as belonging to any particular Series or Class (collectively "General
Assets"), the Trustees shall allocate such General Assets to, between or
among any one or more of the Series or Classes established and designated
from time to time in such manner and on such basis as they, in their sole
discretion, deem fair and equitable, and any General Assets so allocated to
a particular Series or Class shall belong to that Series or Class. Each
such allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series or Classes for all purposes.

(b) Liabilities Belonging to Series or Class. The assets
belonging to each particular Series or Class shall be charged with the
liabilities of the Trust in respect to that Series or Class and all
expenses, costs, charges and reserves attributable to that Series or Class,
and any general liabilities of the Trust which are not readily identifiable
as belonging to any particular Series or Class shall be allocated and
charged by the Trustees to and among any one or more of the Series or
Classes established and designated from time to time in such manner and on
such basis as the Trustees in their sole discretion deem fair and
equitable. The liabilities, expenses, costs, charges and reserves so
charged to a Series or Class are herein referred to as "liabilities
belonging to" that Series or Class. Each allocation of liabilities
belonging to a Series or class by the Trustees shall be conclusive and
binding upon the Shareholders of all Series or Classes for all purposes.

(c) Dividends, Distributions, Redemptions, Repurchases
and_Indemnification. Notwithstanding any other provisions of this
Declaration, including, without limitation, Article X, no dividend or
distribution (including, without limitation, any distribution paid upon
termination of the Trust or of any Series or Class) with respect to, nor
any redemption or repurchase of the Shares of any Series or Class shall be
effected by the Trust other than from the assets belonging to such Series
or Class, nor except as specifically provided in Section 1 of Article XI
hereof, shall any Shareholder of any particular Series or Class otherwise
have any right or claim against the assets belonging to any other Series or
Class except to the extent that such Shareholder has such a right or claim
hereunder as a Shareholder of such other Series or Class.

(d) Voting. Notwithstanding any of the other provisions of
this Declaration, including, without limitation, Section 1 of Article VIII,
only Shareholders of a particular Series or Class shall be entitled to vote
on any matters affecting such Series or Class. Except with respect to
matters as to which any particular Series or Class is affected, all of the
Shares of each Series or Class shall, on matters as to which such Series or
Class is entitled to vote, vote with other Series or Classes so entitled as
a single class. Notwithstanding the foregoing, with respect to matters
which would otherwise be voted on by two or more Series or Classes as a
single class, the Trustees may, in their sole discretion, submit such
matters to the Shareholders of any or all such Series or Classes,
separately.

(e) Fraction. Any fractional Share of a Series or Class shall
carry proportionately all the rights and obligations of a whole Share of
that Series or Class, including rights with respect to voting, receipt of
dividends and distributions, redemption of Shares and termination of the
Trust or of any Series or Class.

(f) Exchange Privilege. The Trustees shall have the authority
to provide that the holders of Shares of any Series or Class shall have the
right to exchange said Shares for Shares of one or more other Series or
Classes in accordance with such requirements and procedures as may be
established by the Trustees.

(g) Combination of Series or Classes. The Trustees shall have
the authority, without the approval of the Shareholders of any Series or
Class, unless otherwise required by applicable law, to combine the assets
and liabilities belonging to a single Series or Class with the assets and
liabilities of one or more other Series or Classes.

(h) Elimination of Series or Classes. At any time that there
are no Shares outstanding of any particular Series or Class previously
established and designated, the Trustees may amend this Declaration of
Trust to abolish that Series or Class and to rescind the establishment and
designation thereof.

ARTICLE IV
THE TRUSTEES

Section 1. Management of the Trust.

The business and affairs of the Trust shall be managed by the
Trustees, and they shall have all powers necessary and desirable to carry out
that responsibility. The Trustees who shall serve until the election of
Trustees at the Meeting of Shareholders subsequent to the initial public
offering of Shares shall be John F. Donahue, William J. Copeland, James E.
Dowd, Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr., Edward C. Gonzales,
Marjorie P. Smuts, Gregor F. Meyer, Wesley W. Posvar, Peter E. Madden, John T.
Conroy, Jr.

Section 2. Term of Office of Trustees.

The Trustees shall hold office during the lifetime of this Trust, and
until its termination as hereinafter provided; except (a) that any Trustee may
resign his office at any time by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such
removal shall become effective; (c) that any Trustee who requests in writing
to be retired or who has become mentally or physically incapacitated may be
retired by written instrument signed by a majority of the other Trustees,
specifying the date of his retirement; and (d) a Trustee may be removed at any
special meeting of Shareholders of the Trust by a vote of two-thirds of the
outstanding Shares.

Section 3. Termination of Service and Appointment of Trustees.

In case of the death, resignation, retirement, removal or mental or
physical incapacity of any of the Trustees, or in case a vacancy shall, by
reason of an increase in number, or for any other reason, exist, the remaining
Trustees shall fill such vacancy by appointing such other person as they in
their discretion shall see fit. Such appointment shall be effected by the
signing of a written instrument by a majority of the Trustees in office. An
appointment of a Trustee may be made by the Trustees then in office in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee so appointed shall have accepted this Trust, the trust estate shall
vest in the new Trustee or Trustees, together with the continuing Trustees,
without any further act or conveyance, and he shall be deemed a Trustee
hereunder. Any appointment authorized by this Section 4 is subject to the
provisions of Section 16(a) of the 1940 Act.

Section 4. Number of Trustees.

The number of Trustees, not less than three (3) nor more than twenty
(20) serving hereunder at any time, shall be determined by the Trustees
themselves.

Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled or while any Trustee is physically or mentally
incapacitated, the other Trustees shall have all the powers hereunder and the
certificate signed by a majority of the other Trustees of such vacancy,
absence or incapacity, shall be conclusive, provided, however, that no vacancy
which reduces the number of Trustees below three (3) shall remain unfilled for
a period longer than six calendar months.

Section 5. Effect of Death, Resignation, etc. of a Trustee.

The death, resignation, retirement, removal, or mental or physical
incapacity of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust.

Section 6. Ownership of Assets.

The assets belonging to each Series or Class shall be held separate
and apart from any assets now or hereafter held in any capacity other than as
Trustee hereunder by the Trustees or any successor Trustee. All of the assets
belonging to each Series or Class or owned by the Trust shall at all times be
considered as vested in the Trustees. No Shareholder shall be deemed to have
a severable ownership interest in any individual asset belonging to any Series
or Class or owned by the Trust or any right of partition or possession
thereof, but each Shareholder shall have a proportionate undivided beneficial
interest in a Series or Class.

ARTICLE V
POWERS OF THE TRUSTEES

Section 1. Powers.

The Trustees in all instances shall act as principals, and are and
shall be free from the control of the Shareholders. The Trustees shall have
full power and authority to do any and all acts and to make and execute any
and all contracts and instruments that they may consider necessary or
appropriate in connection with the management of the Trust or a Series or
Class. The Trustees shall not be bound or limited by present or future laws
or customs in regard to trust investments, but shall have full authority and
power to make any and all investments which they, in their uncontrolled
discretion, shall deem proper to accomplish the purpose of this Trust.
Without limiting the foregoing, the Trustees shall have the following specific
powers and authority, subject to any applicable limitation in this Declaration
of Trust or in the By-Laws of the Trust:

(a) To buy, and invest funds in their hands in securities
including, but not limited to, common stocks, preferred stocks, bonds,
debentures, warrants and rights to purchase securities, options,
certificates of beneficial interest, money market instruments, notes or
other evidences of indebtedness issued by any corporation, trust or
association, domestic or foreign, or issued or guaranteed by the United
States of America or any agency or instrumentality thereof or any entity
sponsored by the United States, by the government of any foreign country,
by any State of the United States, or by any political subdivision or
agency or instrumentality of any State or foreign country, or in
"when-issued" or "delayed-delivery" contracts for any such securities, or
in any repurchase agreement or reverse repurchase agreement, or in debt
instruments, futures, commodities, commodity contracts and derivatives,
including without limit options, interest rate swaps and other interest
rate protective instruments, or any combination thereof, or to retain
assets belonging to each and every Series or Class in cash, and from time
to time to change the investments of the assets belonging to each Series or
Class;

(b) To adopt By-Laws of the Trust not inconsistent with the
Declaration of Trust providing for the conduct of the business of the Trust
and to amend and repeal them to the extent that they do not reserve that
right to the Shareholders;

(c) To elect and remove such officers of the Trust and appoint
and terminate such agents of the Trust as they consider appropriate;

(d) To appoint or otherwise engage a bank or trust company as
custodian of any assets belonging to any Series or Class subject to any
conditions set forth in this Declaration of Trust or in the By-Laws;

(e) To appoint or otherwise engage transfer agents, dividend
disbursing agents, Shareholder servicing agents, investment advisers,
sub-investment advisers, principal underwriters, administrative service
agents, and such other agents as the Trustees may from time to time appoint
or otherwise engage;

(f) To provide for the distribution of any Shares of any Series
or Class either through a principal underwriter in the manner hereinafter
provided for or by the Trust itself, or both;

(g) To set record dates in the manner hereinafter provided for;

(h) To delegate such authority as they consider desirable to a
committee or committees composed of Trustees, including without limitation,
an Executive Committee, or to any officers of the Trust and to any agent,
custodian or underwriter;

(i) To sell or exchange any or all of the assets belonging to
one or more Series or Classes, subject to the provisions of Article XII,
Section 4(b) hereof;

(j) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property; and to
execute and deliver powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such power
and discretion with relation to securities or property as the Trustees
shall deem proper;

(k) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;

(l) To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form; or
either in its own name or in the name of a custodian or a nominee or
nominees, subject in either case to proper safeguards according to the
usual practice of Massachusetts trust companies or investment companies;

(m) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern, any
security of which belongs to any Series or Class; to consent to any
contract, lease, mortgage, purchase, or sale of property by such
corporation or concern, and to pay calls or subscriptions with respect to
any security which belongs to any Series or Class;

(n) To engage in and to prosecute, compromise, abandon, or
adjust, by arbitration, or otherwise, any actions, suits, proceedings,
disputes, claims, demands, and things relating to the Trust, and out of the
assets belonging to any Series or Class to pay, or to satisfy, any debts,
claims or expenses incurred in connection therewith, including those of
litigation, upon any evidence that the Trustees may deem sufficient (such
powers shall include without limitation any actions, suits, proceedings,
disputes, claims, demands and things relating to the Trust wherein any of
the Trustees may be named individually and the subject matter of which
arises by reason of business for or on behalf of the Trust);

(o) To make distributions of income and of capital gains to
Shareholders;

(p) To borrow money;

(q) From time to time to issue and sell the Shares of any
Series or Class either for cash or for property whenever and in such
amounts as the Trustees may deem desirable, but subject to the limitation
set forth in Section 3 of Article III.

(r) To purchase insurance of any kind, including, without
limitation, insurance on behalf of any person who is or was a Trustee,
Officer, employee or agent of the Trust, or is or was serving at the
request of the Trust as a Trustee, Director, Officer, agent or employee of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity or arising out of his status as such.

(s) To sell, exchange, lend, pledge, mortgage, hypothecate,
lease, or write options with respect to or otherwise deal in any property
rights relating to any or all of the assets belonging to any Series or
Class.

The Trustees shall have all of the powers set forth in this Section 1 with
respect to all assets and liabilities of each Series and Class.

Section 2. Principal Transactions.

The Trustees shall not cause the Trust on behalf of any Series or
Class to buy any securities (other than Shares) from or sell any securities
(other than Shares) to, or lend any assets belonging to any Series or Class to
any Trustee or officer or employee of the Trust or any firm of which any such
Trustee or officer is a member acting as principal unless permitted by the
1940 Act, but the Trust may employ any such other party or any such person or
firm or company in which any such person is an interested person in any
capacity not prohibited by the 1940 Act.

Section 3. Trustees and Officers as Shareholders.

Any Trustee, officer or other agent of the Trust or any Series or
Class may acquire, own and dispose of Shares of any Series or Class to the
same extent as if he were not a Trustee, officer or agent; and the Trustees
may issue and sell or cause to be issued or sold Shares of any Series or Class
to and buy such Shares from any such person or any firm or company in which he
is an interested person subject only to the general limitations herein
contained as to the sale and purchase of such Shares; and all subject to any
restrictions which may be contained in the By-Laws.

Section 4. Parties to Contract.

The Trustees may enter into any contract of the character described
in Article VII or in Article IX hereof or any other capacity not prohibited by
the 1940 Act with any corporation, firm, trust or association, although one or
more of the shareholders, Trustees, officers, employees or agents of the Trust
or any Series or Class or their affiliates may be an officer, director,
trustee, shareholder or interested person of such other party to the contract,
and no such contract shall be invalidated or rendered voidable by reason of
the existence of any such relationship, nor shall any person holding such
relationship be liable merely by reason of such relationship for any loss or
expense to the Trust or any Series or Class under or by reason of said
contract or accountable for any profit realized directly or indirectly
therefrom, in the absence of actual fraud. The same person (including a firm,
corporation, trust or association) may be the other party to contracts entered
into pursuant to Article VII or Article IX or any other
capacity not prohibited by the 1940 Act, and any individual may be
financially interested or otherwise an interested person of persons who are
parties to any or all of the contracts mentioned in this Section 4.

ARTICLE VI
TRUSTEES' EXPENSES AND COMPENSATION

Section 1. Trustee Reimbursement.

The Trustees shall be reimbursed from the assets belonging to each
particular Series or Class for all of such Trustees' expenses as such expenses
are allocated to and among any one or more of the Series or Classes pursuant
to Article III, Section 5(b), including, without limitation, expenses of
organizing the Trust or any Series or Class and continuing its or their
existence; fees and expenses of Trustees and Officers of the Trust; fees for
investment advisory services, administrative services and principal
underwriting services provided for in Article VII, Sections 1, 2 and 3; fees
and expenses of preparing and printing Registration Statements under the
Securities Act of 1933 and the 1940 Act and any amendments thereto; expenses
of registering and qualifying the Trust and any Series or Class and the Shares
of any Series or Class under federal and state laws and regulations; expenses
of preparing, printing and distributing prospectuses, statements of additional
information, and any amendments thereto sent to shareholders, underwriters,
broker-dealers and to investors who may be considering the purchase of Shares;
interest expenses, taxes, fees and commissions of every kind; expenses of
issue (including cost of share certificates), purchases, repurchases and
redemptions of Shares, including expenses attributable to a program of
periodic issue; charges and expenses of custodians, transfer agents, dividend
disbursing agents, Shareholder servicing agents and registrars; printing and
mailing costs; auditing, accounting and legal expenses; reports to
Shareholders and governmental officers and commissions; expenses of meetings
of Shareholders and proxy solicitations therefor; insurance expenses;
association membership dues and nonrecurring items as may arise, including all
losses and liabilities by them incurred in administering the Trust and any
Series or Class, including expenses incurred in connection with litigation,
proceedings and claims and the obligations of the Trust under Article XI
hereof and the By-Laws to indemnify its Trustees, Officers, employees,
Shareholders and agents, and any contract obligation to indemnify principal
underwriters under Section 3 of Article VII and/or any person selling Shares
pursuant to a dealer or similar arrangement; and for the payment of such
expenses, disbursements, losses and liabilities, the Trustees shall have a
lien on the assets belonging to each Series or Class prior to any rights or
interests of the Shareholders of any Series or Class. This section shall not
preclude the Trust from directly paying any of the aforementioned fees and
expenses.

Section 2. Trustee Compensation.

The Trustees shall be entitled to compensation from the Trust from
the assets belonging to any Series or Class for their respective services as
Trustees, to be determined from time to time by vote of the Trustees, and the
Trustees shall also determine the compensation of all Officers, consultants
and agents whom they may elect or appoint. The Trust may pay out of the
assets belonging to any Series or Class any Trustee or any corporation, firm,
trust or other entity of which a Trustee is an interested person for services
rendered in any capacity not prohibited by the 1940 Act, and such payments
shall not be deemed compensation for services as a Trustee under the first
sentence of this Section 2 of Article VI.

ARTICLE VII
INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,
PRINCIPAL UNDERWRITER AND TRANSFER_AGENT

Section 1. Investment Adviser.

Subject to a Majority Shareholder Vote by the relevant Series or
Class, the Trustees may in their discretion from time to time enter into an
investment advisory contract whereby the other party to such contract shall
undertake to furnish the Trustees investment advisory services for such Series
or Class upon such terms and conditions and for such compensation as the
Trustees may in their discretion determine. Subject to a Majority Shareholder
Vote by the relevant Series or Class, the investment adviser may enter into a
sub-investment advisory contract to receive investment advice and/or
statistical and factual information from the sub-investment adviser for such
Series or Class upon such terms and conditions and for such compensation as
the Trustees, in their discretion, may agree. Notwithstanding any provisions
of this Declaration of Trust, the Trustees may authorize the investment
adviser or sub-investment adviser or any person furnishing administrative
personnel and services as set forth in Article VII, Section 2 (subject to such
general or specific instructions as the Trustees may from time to time adopt)
to effect purchases, sales or exchanges of portfolio securities belonging to a
Series or Class on behalf of the Trustees or may authorize any officer or
Trustee to effect such purchases, sales, or exchanges pursuant to
recommendations of the investment adviser (and all without further action by
the Trustees). Any such purchases, sales and exchanges shall be deemed to
have been authorized by the Trustees. The Trustees may also authorize the
investment adviser to determine what firms shall be employed to effect
transactions in securities for the account of a Series or Class and to
determine what firms shall participate in any such transactions or shall share
in commissions or fees charged in connection with such transactions.

Section 2. Administrative Services.

The Trustees may in their discretion from time to time contract for
administrative personnel and services whereby the other party shall agree to
provide the Trustees administrative personnel and services to operate the
Trust or a Series or Class on a daily basis, on such terms and conditions as
the Trustees may in their discretion determine. Such services may be provided
by one or more entities.

Section 3. Principal Underwriter.

The Trustees may in their discretion from time to time enter into an
exclusive or nonexclusive contract or contracts providing for the sale of the
Shares of a Series or Class to net such Series or Class not less than the
amount provided in Article III, Section 3 hereof, whereby a Series or Class
may either agree to sell the Shares to the other party to the contract or
appoint such other party its sales agent for such Shares. In either case, the
contract shall be on such terms and conditions (including indemnification of
principal underwriters or sales agents or persons that may sell Shares
pursuant to dealer or similar arrangements allowable under applicable law and
regulation) as the Trustees may in their discretion determine not inconsistent
with the provisions of this Article VII; and such contract may also provide
for the repurchase or sale of Shares of a Series or Class by such other party
as principal or as agent of the Trust and may provide that the other party may
maintain a market for shares of a Series or Class.

Section 4. Transfer Agent.

The Trustees may in their discretion from time to time enter into
transfer agency and shareholder services contracts whereby the other party
shall undertake to furnish a transfer agency and shareholder services. The
contracts shall be on such terms and conditions as the Trustees may in their
discretion determine not inconsistent with the provisions of this Declaration
of Trust or of the By-Laws. Such services may be provided by one or more
entities.

ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS

Section 1. Voting Powers.

Subject to the provisions set forth in Article III, Section 5(d), the
Shareholders shall have the power to vote, (i) for the election of Trustees;
(ii) for the removal of Trustees as provided in Article IV, Section 2(d);
(iii) with respect to any investment adviser or sub-investment adviser as
provided in Article VII, Section 1; (iv) with respect to the amendment of this
Declaration of Trust as provided in Article XII, Section 7; (v) to the same
extent as the shareholders of a Massachusetts business corporation as to
whether or not a court action, proceeding or claim should be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders; and (vi) with respect to such additional matters relating to the
Trust as may be required by law, by this Declaration of Trust, or the By-Laws
of the Trust or any regulation of the Trust or the Securities and Exchange
Commission or any State, or as the Trustees may consider desirable. Each
whole Share shall be entitled to one vote as to any matter on which it is
entitled to vote, and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. Until
Shares of a Series or Class are issued, the Trustees may exercise all rights
of Shareholders of such Series or Class with respect to matters affecting such
Series or Class, and may take any action with respect to the Trust or such
Series or Class required or permitted by law, this Declaration of Trust or any
By-Laws of the Trust to be taken by Shareholders.

Section 2. Meetings.

A Shareholders meeting shall be held as specified in Section 2 of
Article IV at the principal office of the Trust or such other place as the
Trustees may designate. Special meetings of the Shareholders may be called by
the Trustees or the Chief Executive Officer of the Trust and shall be called
by the Trustees upon the written request of Shareholders owning at least
one-tenth of the outstanding Shares of all Series and Classes entitled to vote
upon matters submitted to Shareholders generally. Shareholders shall be
entitled to at least fifteen days' notice of any meeting.

Section 3. Quorum and Required Vote.

Except as otherwise provided by law, to constitute a quorum for the
transaction of any business at any meeting of Shareholders there must be
present, in person or by proxy, holders of more than fifty percent of the
total number of outstanding Shares of all Series and Classes entitled to vote
at such meeting. When any one or more Series or Classes is entitled to vote
as a single Series or Class, more than fifty percent of the shares of each
such Series or Class entitled to vote shall constitute a quorum at a
Shareholder's meeting of that Series or Class. If a quorum shall not be
present for the purpose of any vote that may properly come before the meeting,
the Shares present in person or by proxy and entitled to vote at such meeting
on such matter may, by plurality vote, adjourn the meeting from time to time
to such place and time without further notice than by announcement to be given
at the meeting until a quorum entitled to vote on such matter shall be
present, whereupon any such matter may be voted upon at the meeting as though
held when originally convened. Subject to any applicable requirement of law
or of this Declaration of Trust or the By-Laws, a plurality of the votes cast
shall elect a Trustee, and all other matters shall be decided by a majority of
the votes cast and entitled to vote thereon.

Section 4. Additional Provisions.

The By-Laws may include further provisions for Shareholders' votes
and meetings and related matters.

ARTICLE IX
CUSTODIAN

The Trustees may, in their discretion, from time to time enter into
contracts providing for custodial and accounting services to the Trust or any
Series or Class. The contracts shall be on the terms and conditions as the
Trustees may in their discretion determine not inconsistent with the
provisions of this Declaration of Trust or of the By-Laws. Such services may
be provided by one or more entities, including one or more sub-custodians.

ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS

Section 1. Distributions.

(a) The Trustees may from time to time declare and pay
dividends to the Shareholders of any Series or Class, and the amount of
such dividends and the payment of them shall be wholly in the discretion of
the Trustees. Such dividends may be accrued and automatically reinvested
in additional Shares (or fractions thereof) of the relevant Series or Class
or paid in cash or additional Shares of such Series or Class, all upon such
terms and conditions as the Trustees may prescribe.

(b) The Trustees may distribute in respect of any fiscal year
as dividends and as capital gains distributions, respectively, amounts
sufficient to enable any Series or Class to qualify as a regulated
investment company to avoid any liability for federal income taxes in
respect of that year.

c) The decision of the Trustees as to what constitutes income
and what constitutes principal shall be final, and except as specifically
provided herein the decision of the Trustees as to what expenses and
charges of any Series or Class shall be charged against principal and what
against the income shall be final. Any income not distributed in any year
may be permitted to accumulate and as long as not distributed may be
invested from time to time in the same manner as the principal funds of any
Series or Class.

(d) All dividends and distributions on Shares of a particular
Series or Class shall be distributed pro rata to the holders of that Series
or Class in proportion to the number of Shares of that Series or Class held
by such holders and recorded on the books of the Trust or its transfer
agent at the date and time of record established for that payment.

Section 2. Redemptions and Repurchases.

(a) In case any Shareholder of record of any Series or Class at
any time desires to dispose of Shares of such Series or Class recorded in
his name, he may deposit a written request (or such other form of request
as the Trustees may from time to time authorize) requesting that the Trust
purchase his Shares, together with such other instruments or authorizations
to effect the transfer as the Trustees may from time to time require, at
the office of the Transfer Agent, and the Trust shall purchase his Shares
out of assets belonging to such Series or Class. The purchase price shall
be the net asset value of his shares reduced by any redemption charge as
the Trustees from time to time may determine.

Payment for such Shares shall be made by the Trust to the Shareholder
of record within that time period required under the 1940 Act after the
request (and, if required, such other instruments or authorizations of
transfer) is deposited, subject to the right of the Trustees to postpone
the date of payment pursuant to Section 4 of this Article X. If the
redemption is postponed beyond the date on which it would normally occur by
reason of a declaration by the Trustees suspending the right of redemption
pursuant to Section 4 of this Article X, the right of the Shareholder to
have his Shares purchased by the Trust shall be similarly suspended, and he
may withdraw his request (or such other instruments or authorizations of
transfer) from deposit if he so elects; or, if he does not so elect, the
purchase price shall be the net asset value of his Shares determined next
after termination of such suspension (reduced by any redemption charge),
and payment therefor shall be made within the time period required under
the 1940 Act.

(b) The Trust may purchase Shares of a Series or Class by
agreement with the owner thereof at a purchase price not exceeding the net
asset value per Share (reduced by any redemption charge) determined (1)
next after the purchase or contract of purchase is made or (2) at some
later time.

(c) The Trust may pay the purchase price (reduced by any
redemption charge) in whole or in part by a distribution in kind of
securities from the portfolio of the relevant Series or Class, taking such
securities at the same value employed in determining net asset value, and
selecting the securities in such manner as the Trustees may deem fair and
equitable.

Section 3. Net Asset Value of Shares.

The net asset value of each Share of a Series or Class outstanding
shall be determined at such time or times as may be determined by or on behalf
of the Trustees. The power and duty to determine net asset value may be
delegated by the Trustees from time to time to one or more of the Trustees or
Officers of the Trust, to the other party to any contract entered into
pursuant to Section 1 or 2 of Article VII or to the custodian or to a transfer
agent or other person designated by the Trustees.

The net asset value of each Share of a Series or Class as of any
particular time shall be the quotient (adjusted to the nearer cent) obtained
by dividing the value, as of such time, of the net assets belonging to such
Series or Class (i.e., the value of the assets belonging to such Series or
Class less the liabilities belonging to such Series or Class exclusive of
capital and surplus) by the total number of Shares outstanding of the Series
or Class at such time in accordance with the requirements of the 1940 Act and
applicable provisions of the By-Laws of the Trust in conformity with generally
accepted accounting practices and principles.

The Trustees may declare a suspension of the determination of net
asset value for the whole or any part of any period in accordance with the
1940 Act.

Section 4. Suspension of the Right of Redemption.

The Trustees may declare a suspension of the right of redemption or
postpone the date of payment for the whole or any part of any period in
accordance with the 1940 Act.

Section 5. Trust's Right to Redeem Shares.

The Trust shall have the right to cause the redemption of Shares of
any Series or Class in any Shareholder's account for their then current net
asset value and promptly make payment to the shareholder (which payment may be
reduced by any applicable redemption charge), if at any time the total
investment in the account does not have a minimum dollar value determined from
time to time by the Trustees in their sole discretion.

ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION

Section 1. Limitation of Personal Liability and Indemnification of
Shareholders.

The Trustees, officers, employees or agents of the Trust shall have
no power to bind any Shareholder of any Series or Class personally or to call
upon such Shareholder for the payment of any sum of money or assessment
whatsoever, other than such as the Shareholder may at any time agree to pay by
way of subscription to any Shares or otherwise.

No Shareholder or former Shareholder of any Series or Class shall be
liable solely by reason of his being or having been a Shareholder for any
debt, claim, action, demand, suit, proceeding, judgment, decree, liability or
obligation of any kind, against, or with respect to the Trust or any Series or
Class arising out of any action taken or omitted for or on behalf of the Trust
or such Series or Class, and the Trust or such Series or Class shall be solely
liable therefor and resort shall be had solely to the property of the relevant
Series or Class of the Trust for the payment or performance thereof.

Each Shareholder or former Shareholder of any Series or Class (or
their heirs, executors, administrators or other legal representatives or, in
case of a corporate entity, its corporate or general successor) shall be
entitled to be indemnified and reimbursed by the Trust to the full extent of
such liability and the costs of any litigation or other proceedings in which
such liability shall have been determined, including, without limitation, the
fees and disbursements of counsel if, contrary to the provisions hereof, such
Shareholder or former Shareholder of such Series or Class shall be held to be
personally liable. Such indemnification and reimbursement shall come
exclusively from the assets of the relevant Series or Class.

The Trust shall, upon request by a Shareholder or former Shareholder,
assume the defense of any claim made against any Shareholder for any act or
obligation of the Trust or any Series or Class and satisfy any judgment
thereon.

Section 2. Limitation of Personal Liability of Trustees,
Officers, Employees or Agents of the Trust.

No Trustee, officer, employee or agent of the Trust shall have the
power to bind any other Trustee, officer, employee or agent of the Trust
personally. The Trustees, officers, employees or agents of the Trust
incurring any debts, liabilities or obligations, or in taking or omitting any
other actions for or in connection with the Trust are, and each shall be
deemed to be, acting as Trustee, officer, employee or agent of the Trust and
not in his own individual capacity.

Trustees and officers of the Trust shall be liable for their willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee or officer, as the case may
be, and for nothing else.

Section 3. Express Exculpatory Clauses and Instruments.

The Trustees shall use every reasonable means to assure that all
persons having dealings with the Trust or any Series or Class shall be
informed that the property of the Shareholders and the Trustees, officers,
employees and agents of the Trust or any Series or Class shall not be subject
to claims against or obligations of the Trust or any other Series or Class to
any extent whatsoever. The Trustees shall cause to be inserted in any written
agreement, undertaking or obligation made or issued on behalf of the Trust or
any Series or Class (including certificates for Shares of any Series or Class)
an appropriate reference to the provisions of this Declaration, providing that
neither the Shareholders, the Trustees, the officers, the employees nor any
agent of the Trust or any Series or Class shall be liable thereunder, and that
the other parties to such instrument shall look solely to the assets belonging
to the relevant Series or Class for the payment of any claim thereunder or for
the performance thereof; but the omission of such provisions from any such
instrument shall not render any Shareholder, Trustee, officer, employee or
agent liable, nor shall the Trustee, or any officer, agent or employee of the
Trust or any Series or Class be liable to anyone for such omission. If,
notwithstanding this provision, any Shareholder, Trustee, officer, employee or
agent shall be held liable to any other person by reason of the omission of
such provision from any such agreement, undertaking or obligation, the
Shareholder, Trustee, officer, employee or agent shall be indemnified and
reimbursed by the Trust.

ARTICLE XII
MISCELLANEOUS

Section 1. Trust is not a Partnership.

It is hereby expressly declared that a trust and not a partnership is
created hereby.

Section 2. Trustee Action Binding, Expert Advice, No Bond or Surety.

The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. Subject to the
provisions of Article XI, the Trustees shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of counsel
or other experts with respect to the meaning and operation of this Declaration
of Trust, and subject to the provisions of Article XI, shall be under no
liability for any act or omission in accordance with such advice or for
failing to follow such advice. The Trustees shall not be required to give any
bond as such, nor any surety if a bond is required.

Section 3. Establishment of Record Dates.

The Trustees may close the Share transfer books of the Trust
maintained with respect to any Series or Class for a period not exceeding
sixty (60) days preceding the date of any meeting of Shareholders of the Trust
or any Series or Class, or the date for the payment of any dividend or the
making of any distribution to Shareholders, or the date for the allotment of
rights, or the date when any change or conversion or exchange of Shares of any
Series or Class shall go into effect; or in lieu of closing the Share transfer
books as aforesaid, the Trustees may fix in advance a date, not exceeding
sixty (60) days preceding the date of any meeting of Shareholders of the Trust
or any Series or Class, or the date for the payment of any dividend or the
making of any distribution to Shareholders of any Series or Class, or the date
for the allotment of rights, or the date when any change or conversion or
exchange of Shares of any Series or Class shall go into effect, or the last
day on which the consent or dissent of Shareholders of any Series or Class may
be effectively expressed for any purpose, as a record date for the
determination of the Shareholders entitled to notice of, and, to vote at, any
such meeting and any adjournment thereof, or entitled to receive payment of
any such dividend or distribution, or to any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or exchange of
shares, or to exercise the right to give such consent or dissent, and in such
case such Shareholders and only such Shareholders as shall be Shareholders of
record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting, or to receive payment of such dividend or distribution, or
to receive such allotment or rights, or to exercise such rights, as the case
may be, notwithstanding, after such date fixed aforesaid, any transfer of any
Shares on the books of the Trust maintained with respect to any Series or
Class. Nothing in the foregoing sentence shall be construed as precluding the
Trustees from setting different record dates for different Series or Classes.

Section 4. Termination of Trust.

(a) This Trust shall continue without limitation of time but
subject to the provisions of paragraphs (b), (c) and (d) of this Section 4.

(b) The Trustees may, by majority action, with the approval of
the holders of more than fifty percent of the outstanding Shares of each
Series or Class entitled to vote and voting separately by Series or Class,
sell and convey the assets of the Trust or any Series or Class to another
trust or corporation. Upon making provision for the payment of all
liabilities, by assumption or otherwise, the Trustees shall distribute the
remaining proceeds belonging to each Series or Class ratably among the
holders of the Shares of that Series or Class then outstanding.

(c) Subject to a Majority Shareholder Vote by such Series or
Class, the Trustees may at any time sell and convert into money all the
assets of the Trust or any Series or Class. Upon making provision for the
payment of all outstanding obligations, taxes and other liabilities,
accrued or contingent, belonging to each Series or Class, the Trustees
shall distribute the remaining assets belonging to each Series or Class
ratably among the holders of the outstanding Shares of that Series or
Class.

(d) Upon completion of the distribution of the remaining
proceeds of the remaining assets as provided in paragraphs (b) and (c), the
Trust or the applicable Series or Class shall terminate and the Trustees
shall be discharged of any and all further liabilities and duties hereunder
or with respect thereto and the right, title and interest of all parties
shall be canceled and discharged.

Section 5. Offices of the Trust, Filing of Copies,
Headings, Counterparts.

The Trust shall maintain a usual place of business in Massachusetts,
which, initially, shall be c/o Donnelly, Conroy & Gelhaar, 176 Federal Street,
Boston, Massachusetts 02110, and shall continue to maintain an office at such
address unless changed by the Trustees to another location in Massachusetts.
The Trust may maintain other offices as the Trustees may from time to time
determine. The original or a copy of this instrument and of each declaration
of trust supplemental hereto shall be kept at the office of the Trust where it
may be inspected by any Shareholder. A copy of this instrument and of each
supplemental declaration of trust shall be filed by the Trustees with the
Massachusetts Secretary of State and the Boston City Clerk, as well as any
other governmental office where such filing may from time to time be required.
Headings are placed herein for convenience of reference only and in case of
any conflict, the text of this instrument, rather than the headings shall
control. This instrument may be executed in any number of counterparts each
of which shall be deemed an original.

Section 6. Applicable Law.

The Trust set forth in this instrument is created under and is to be
governed by and construed and administered according to the laws of The
Commonwealth of Massachusetts. The Trust shall be of the type commonly called
a Massachusetts business trust, and without limiting the provisions hereof,
the Trust may exercise all powers which are ordinarily exercised by such a
trust.

Section 7. Amendments -- General.

Prior to the initial issuance of Shares pursuant to Section 3 of
Article III, a majority of the Trustees then in office may amend or otherwise
supplement this instrument by making a Declaration of Trust supplemental
hereto, which thereafter shall form a part hereof. Subsequent to such initial
issuance of Shares, amendments or supplements to this instrument may be
authorized by a majority of the Trustees then in office and by the holders of
a majority of the Shares of all Series and classes then outstanding and
entitled to vote thereon (except that any amendments or supplements changing
the name of the Trust or pursuant to Section 8 hereunder may be made without
shareholder approval), or by any larger vote which may be required by
applicable law or this Declaration of Trust in any particular case, which
amendment or supplement thereafter shall form a part hereof. Any such
amendment or supplement (which may be in the form of a complete restatement)
may be evidenced by either (i) a supplemental Declaration of Trust signed by
at least a majority of the Trustees then in office or (ii) by a certificate of
the President and Secretary of the Trust setting forth such amendment or
supplement and certifying that such amendment or supplement has been duly
authorized by the Trustees, and if required, by the shareholders. Copies of
the supplemental Declaration of Trust or the certificate of the President and
Secretary, as the case may be, shall be filed as specified in Section 5 of
this Article XII.

Section 8. Amendments -- Series.

The establishment and designation of any series or class of Shares in
addition to those established and designated in Section 5 of Article III
hereof shall be effective upon the execution by a majority of the then serving
Trustees of an amendment to this Declaration of Trust, taking the form of a
complete restatement or otherwise, setting forth such establishment and
designation and the relative rights and preferences of any such Series or
Class, or as otherwise provided in such instrument.

Without limiting the generality of the foregoing, the Declaration of
the Trust may be amended to:

(a) create one or more Series or Classes of Shares (in addition
to any Series or Classes already existing or otherwise) with such rights and
preferences and such eligibility requirements for investment therein as the
Trustees shall determine and reclassify any or all outstanding Shares as
Shares of particular Series or Classes in accordance with such eligibility
requirements;

(b) combine two or more Series or Classes of Shares into a
single Series or Class on such terms and conditions as the Trustees shall
determine;

(c) change or eliminate any eligibility requirements for
investment in Shares of any Series or Class, including without limitation the
power to provide for the issue of Shares of any Series or Class in connection
with any merger or consolidation of the Trust with another trust or company or
any acquisition by the Trust of part or all of the assets of another trust or
company;

(d) change the designation of any Series or Class of Shares;

(e) change the method of allocating dividends among the various
Series and Classes of Shares;

(f) allocate any specific assets or liabilities of the Trust or
any specific items of income or expense of the Trust to one or more Series and
Classes of Shares;

(g) specifically allocate assets to any or all Series or
Classes of Shares or create one or more additional Series or Classes of Shares
which are preferred over all other Series or Classes of Shares in respect of
assets specifically allocated thereto or any dividends paid by the Trust with
respect to any net income, however determined, earned from the investment and
reinvestment of any assets so allocated or otherwise and provide for any
special voting or other rights with respect to such Series or Classes.

Section 9. Use of Name.

The Trust acknowledges that Bank South, N.A. has reserved the right
to grant the non-exclusive use of the name "BankSouth Select Funds" or any
derivative thereof and all other marks developed for and/or used in connection
with the Trust and/or any Series or Class to any other investment company,
investment company portfolio, investment adviser, distributor, or other
business enterprise, and to withdraw from the Trust or one or more Series or
Classes any right to the use of the name "BankSouth Select Funds". The name
"BankSouth Select Funds" and all such other marks shall belong solely to Bank
South, N.A., and any other such marks. The use of the name "BankSouth Select
Funds" and such marks shall be governed by a separate licensing agreement.

IN WITNESS WHEREOF, the undersigned have executed this instrument the day
and year first above written.

/S/ John F. Donahue /s/ Edward
C. Gonzales
John F. Donahue Edward C.
Gonzales

/s/ William J. Copeland /s/ Marjorie
P. Smuts
William J. Copeland Marjorie P. Smuts

/s/ James E. Dowd /s/ Gregor
F. Meyer
James E. Dowd Gregor F. Meyer

/s/ Lawrence D. Ellis, M.D. /s/ Wesley
W. Posvar
Lawrence D. Ellis, M.D. Wesley W. Posvar

/s/ Edward L. Flaherty, Jr. /s/ Peter E.
Madden
Edward L. Flaherty, Jr. Peter E. Madden

/s/ John T. Conroy, Jr.
John T. Conroy, Jr.

COMMONWEALTH OF PENNSYLVANIA )
: ss:
COUNTY OF ALLEGHENY )

I hereby certify that on December 20, 1993 before me, the subscriber, a
Notary Public of the Commonwealth of Pennsylvania, in for the County of
Allegheny, personally appeared JOHN F. DONAHUE, WILLIAM J. COPELAND, JAMES E.
DOWD, LAWRENCE D. ELLIS, M.D., EDWARD L. FLAHERTY, JR., EDWARD C. GONZALES,
MARJORIE P. SMUTS, GREGOR F. MEYER, J. WESLEY W. POSVAR, PETER E. MADDEN,
JOHN T. CONROY, JR. who acknowledged the foregoing Declaration of Trust to be
their act.

Witness my hand and notarial seal the day and year above written.

/s/ Erin J. Ratesic

Notary Public

Exhibit 2 Under Form N-1A
Exhibit 3(b) Under Item 601/Reg. SK

BANKSOUTH SELECT FUNDS

BY-LAWS

TABLE OF CONTENTS

Page

ARTICLE I: OFFICERS AND THEIR ELECTION................................1

Section 1 Officers .............................................1
Section 2 Election of Officers .................................1
Section 3 Resignations and Removals and Vacancies ..............1

ARTICLE II: POWERS AND DUTIES OF TRUSTEES AND OFFICERS.................1

Section 1 Trustees .............................................1
Section 2 Chairman of the Trustees ("Chairman") ................1
Section 3 President ............................................1
Section 4 Vice President .......................................2
Section 5 Secretary ............................................2
Section 6 Treasurer ............................................2
Section 7 Assistant Vice President .............................2
Section 8 Assistant Secretaries and Assistant
Treasurers .........................................2
Section 9 Salaries .............................................2

ARTICLE III: POWERS AND DUTIES OF THE EXECUTIVE
AND OTHER COMMITTEES ....................................3

Section 1 Executive and Other Committees .......................3
Section 2 Vacancies in Executive Committee .....................3
Section 3 Executive Committee to Report to Trustees ............3
Section 4 Procedure of Executive Committee .....................3
Section 5 Powers of Executive Committee ........................3
Section 6 Compensation .........................................3
Section 7 Informal Action by Executive Committee or
Other Committee ....................................3

ARTICLE IV: SHAREHOLDERS' MEETINGS....................................4

Section 1 Special Meetings .....................................4
Section 2 Notices ..............................................4
Section 3 Place of Meeting .....................................4
Section 4 Action by Consent ....................................4
Section 5 Proxies ..............................................4

-i-
Page

ARTICLE V: TRUSTEES' MEETINGS........................................4

Section 1 Number and Qualifications of Trustees ..............4
Section 2 Special Meetings ...................................5
Section 3 Regular Meetings ...................................5
Section 4 Quorum and Vote ....................................5
Section 5 Notices ............................................5
Section 6 Place of Meeting ...................................5
Section 7 Telephonic Meeting .................................5
Section 8 Special Action .....................................5
Section 9 Action by Consent ..................................6
Section 10 Compensation of Trustees ...........................6

ARTICLE VI: SHARES...................................................6

Section 1 Certificates .........................................6
Section 2 Transfer of Shares ...................................6
Section 3 Equitable Interest Not Recognized ....................6
Section 4 Lost, Destroyed or Mutilated Certificates ............6
Section 5 Transfer Agent and Registrar: Regulations ............7

ARTICLE VII: INSPECTION OF BOOKS......................................7

ARTICLE VIII: AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC...........7

Section 1 Agreements, Etc ......................................7
Section 2 Checks, Drafts, Etc ..................................7
Section 3 Endorsements, Assignments and Transfer of
Securities .........................................7
Section 4 Evidence of Authority ................................8

ARTICLE IX: INDEMNIFICATION OF TRUSTEES AND OFFICERS

Section 1 General ..............................................8
Section 2 No Indemnification ...................................8
Section 3 Conditions for Indemnification .......................8
Section 4 Advancement of Expenses ..............................8
Section 5 Non-Exclusivity ......................................9

-ii-
Page

ARTICLE X: SEAL.......................................................9

ARTICLE XI: FISCAL YEAR...............................................9

ARTICLE XII: AMENDMENTS.............................................. 9

ARTICLE XIII: WAIVERS OF NOTICE.......................................9

ARTICLE XIV: REPORT TO SHAREHOLDERS.................................. 9

ARTICLE XV: BOOKS AND RECORDS........................................10

ARTICLE XVI: TERMS...................................................10

-iii-

BankSouth Select Funds

BY-LAWS

ARTICLE I

OFFICERS AND THEIR ELECTION

Section 1. Officers. The officers of the Trust shall be a Chairman of
the
Board of Trustees, a President, one or more Vice Presidents, a Treasurer, a
Secretary and such other officers as the Trustees may from time to time
elect. It
shall not be necessary for any Trustee or other officer to be a holder of
shares in
any Series or Class of the Trust.

Section 2. Election of Officers. The President, Vice President(s),
Treasurer
and Secretary shall be chosen annually by the Trustees. The Chairman of the
Trustees shall be chosen annually by and from the Trustees.

Two or more offices may be held by a single person except the offices of
President and Secretary. The officers shall hold office until their
successors are
chosen and qualified.

Section 3. Resignations and Removals and Vacancies. Any officer of
the Trust
may resign by filing a written resignation with the Chairman of the Trustees
or with
the Trustees or with the Secretary, which shall take effect on being so
filed or at
such time as may be therein specified. The Trustees may remove any officer,
with or
without cause, by a majority vote of all of the Trustees.
The Trustees may fill any
vacancy created in any office whether by resignation, removal or otherwise.

ARTICLE II

POWERS AND DUTIES OF TRUSTEES AND OFFICERS

Section 1. Trustees. The business and affairs of the Trust shall be
managed
by the Board of Trustees (the "Trustees"), and they shall have all powers
necessary
and desirable to carry out that responsibility.

Section 2. Chairman of the Trustees ("Chairman"). The Chairman shall
be the
chief executive officer of the Trust. He shall have general supervision
over the
business of the Trust and policies of the Trust. He shall employ and define
the
duties of all employees of the Trust, shall have power to discharge any such
employees, shall exercise general supervision over the affairs of the Trust and
shall perform such other duties as may be assigned to him from time to time
by the
Trustees. He shall preside at the meetings of shareholders and of the
Trustees.
The Chairman shall appoint a Trustee or officer to preside at such meetings in
his absence.

Section 3. President. The President, in the absence of the Chairman,
shall perform all duties and may exercise any of the powers of the Chairman
subject to the
control of the other Trustees. He shall counsel and
advise the Chairman on matters of major importance and shall perform such other
duties as may be assigned to him from time to time by the Trustees, the Chairman
or the Executive Committee.

Section 4. Vice President. The Vice President (or if more than one, the
senior Vice President) in the absence of the President shall perform all duties
and may exercise any of the powers of the President
Trustees. Each Vice President shall perform such other duties as may be
assigned to him from time to time by the Trustees, the Chairman or the
Executive Committee.
Each Vice President shall be authorized to sign documents on behalf of the
Trust.

Section 5. Secretary. The Secretary shall be the chief legal officer
of the
Trust responsible for providing legal guidance to the Trust.
The Secretary shall
keep or cause to be kept in books provided for that purpose the Minutes of the
Meetings of Shareholders and of the Trustees; shall see that all Notices are
duly
given in accordance with the provisions of these By-Laws and as required by
law;
shall be custodian of the records and of the Seal of the Trust and see that
the Seal
is affixed to all documents, the execution of which on behalf of the Trust
under its
Seal is duly authorized; shall keep directly or through a transfer agent a
register
of the post office address of each shareholder of each Series or Class of
the Trust,
and make all proper changes in such register, retaining and filing his
authority for
such entries; shall see that the books, reports, statements, certificates
and all
other documents and records required by law are properly kept and filed; and in
general shall perform all duties incident to the Office of Secretary
and such other
duties as may from time to time be assigned to him by the Trustees, Chairman
or the
Executive Committee.

Section 6. Treasurer. The Treasurer shall be the principal financial and
accounting officer of the Trust responsible for the preparation and
maintenance of
the financial books and records of the Trust. He shall deliver all funds and
securities belonging to any Series or Class to such custodian or
sub-custodian as
may be employed by the Trust for any Series or Class. The Treasurer shall
perform
such duties additional to the foregoing as the Trustees, Chairman or the
Executive
Committee may from time to time designate.

Section 7. Assistant Vice President. The Assistant Vice President or
Vice
Presidents of the Trust shall have such authority and perform such duties as
may be
assigned to them by the Trustees, the Executive Committee or the Chairman.

Section 8. Assistant Secretaries and Assistant Treasurers. The Assistant
Secretary or Secretaries and the Assistant Treasurer or Treasurers shall
perform the
duties of the Secretary and of the Treasurer, respectively, in the absence of
those
Officers and shall have such further powers and perform such other duties as
may be
assigned to them respectively by the Trustees or the Executive Committee or the
Chairman.

Section 9. Salaries. The salaries of the Officers shall be fixed from
time to
time by the Trustees. No officer shall be prevented from receiving such salary
by
reason of the fact that he is also a Trustee.

ARTICLE III

POWERS AND DUTIES OF THE
EXECUTIVE AND OTHER COMMITTEES

Section 1. Executive and Other Committees. The Trustees may elect from
their
own number an Executive Committee to consist of not less than two members. The
Executive Committee shall be elected by a resolution passed by a vote of at
least a
majority of the Trustees then in office. The Trustees may also elect from their
own
number other committees from time to time, the number composing such committees
and
the powers conferred upon the same to be determined by vote of the Trustees.
<TABLE>
<S> <C>
Section 2. Vacancies in Executive Committee. Vacancies occurring in the
Executive Committee from any cause shall be filled by the Trustees by a resolution
passed by the vote of at least a majority of the Trustees then in office.

Section 3. Executive Committee to Report to Trustees. All action by the
Executive Committee shall be reported to the Trustees at their meeting next
succeeding such action.

Section 4. Procedure of Executive Committee. The Executive Committee shall
fix its own rules of procedure not inconsistent with these By-Laws or with any
directions of the Trustees. It shall meet at such times and places and upon such
notice as shall be provided by such rules or by resolution of the Trustees. The
presence of a majority shall constitute a quorum for the transaction of business,
and in every case an affirmative vote of a majority of all the members of the
Committee present shall be necessary for the taking of any action.

Section 5. Powers of Executive Committee. During the intervals between the
Meetings of the Trustees, the Executive Committee, except as limited by these
By-Laws or by specific directions of the Trustees, shall possess and may exercise
all the powers of the Trustees in the management and direction of the business and
conduct of the affairs of the Trust in such manner as the Executive Committee shall
deem to be in the best interests of the Trust, and shall have power to authorize the
Seal of the Trust to be affixed to all instruments and documents requiring same.
Notwithstanding the foregoing, the Executive Committee shall not have the power to
elect Trustees, increase or decrease the number of Trustees, elect or remove any
Officer, declare dividends, issue shares or recommend to shareholders any action
requiring shareholder approval.

Section 6. Compensation. The members of any duly appointed committee shall
receive such compensation and/or fees as from time to time may be fixed by the
Trustees.

Section 7. Certain Actions by Executive Committee or Other Committee. Any
action required or permitted to be taken at any meeting of the Executive Committee
or any other duly appointed Committee may be taken without a meeting if a consent in
writing setting forth such action is signed by all members of such committee and
such consent is filed with the records of the Trust. Any meeting of the Executive
and other Committees may be held by conference telephone call or other communication
device where all members of such Committee may hear and communicate with each other.

ARTICLE IV

SHAREHOLDERS' MEETINGS

Section 1. Special Meetings. A special meeting of the shareholders of the
Trust or of a particular Series or Class shall be called by the Secretary whenever
ordered by the Trustees, the Chairman or requested in writing by the holder or
holders of at least one-tenth of the outstanding shares of the Trust or of the
relevant Series or Class, entitled to vote on matters submitted to shareholders
generally. If the Secretary, when so ordered or requested, refuses or neglects for
more than two days to call such special meeting, the Trustees, Chairman or the
shareholders so requesting may, in the name of the Secretary, call the meeting by
giving notice thereof in the manner required when notice is given by the Secretary.

Section 2. Notices. Except as above provided, notices of any special meeting
of the shareholders of the Trust or a particular Series or Class, shall be given by
the Secretary by delivering or mailing, postage prepaid, to each shareholder
entitled to vote at said meeting, a written or printed notification of such meeting,
at least fifteen days before the meeting, to such address as may be registered with
the Trust by the shareholder.

Section 3. Place of Meeting. Meetings of the shareholders of the Trust or a
particular Series or Class, shall be held at the principal place of business of the
Trust in Pittsburgh, Pennsylvania, or at such place within or without The
Commonwealth of Massachusetts as fixed from time to time by resolution of the
Trustees.

Section 4. Action by Consent. Any action required or permitted to be taken at
any meeting of shareholders may be taken without a meeting, if a consent in writing,
setting forth such action, is signed by all the shareholders entitled to vote on the
subject matter thereof, and such consent is filed with the records of the Trust.

Section 5. Proxies. Any shareholder entitled to vote at any meeting of
shareholders may vote either in person or by proxy. Every proxy shall be in writing
subscribed by the shareholder or his duly authorized attorney and dated, but need
not be sealed, witnessed or acknowledged. All proxies shall be filed with and
verified by the Secretary or an Assistant Secretary of the Trust or, the person
acting as Secretary of the Meeting.

ARTICLE V

TRUSTEES' MEETINGS

Section 1. Number and Qualifications of Trustees. The number of Trustees
shall be as fixed from time to time by a majority of the Trustees but shall be no
less than three nor more than twenty. The Trustees may from time to time increase
or decrease the number of Trustees to such number as they deem expedient, not to be
less than three nor more than twenty, however, and fill the vacancies so created.
The term of office of a Trustee shall not be affected by any decrease in the number
of Trustees made by the Trustees pursuant to the foregoing authorization.

Section 2. Special Meetings. Special meetings of the Trustees shall be called
by the Secretary at the written request of the Chairman or any Trustee, and if the
Secretary when so requested refuses or fails for more than twenty-four hours to call
such meeting, the Chairman or such Trustee may in the name of the Secretary call
such meeting by giving due notice in the manner required when notice is given by the
Secretary.

Section 3. Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that any Trustee who is absent when such
determination is made shall be given notice of the determination.

Section 4. Quorum and Vote. A majority of the Trustees shall constitute a
quorum for the transaction of business. The act of a majority of the Trustees
present at any meeting at which a quorum is present shall be the act of the Trustees
unless a greater proportion is required by the Declaration of Trust or these By-Laws
or applicable law. In the absence of a quorum, a majority of the Trustees present
may adjourn the meeting from time to time until a quorum shall be present. Notice
of any adjourned meeting need not be given.

Section 5. Notices. It shall be sufficient notice of a special meeting to
send notice by mail to a Trustee at least forty-eight hours or by telegram, telex or
telecopy or other electronic fascimile transmission method at least twenty-four
hours before the meeting addressed to the Trustee at his usual or last known
business or residence address or to give notice to such Trustee in person or by
telephone at least twenty-four hours before the meeting. Notice of a meeting need
not be given to any Trustee if a written waiver of notice, executed by such Trustee
before the meeting, is filed with the records of the meeting, or to any Trustee who
attends the meeting without protesting the lack of notice to such Trustee prior
thereto or at its commencement. Subject to compliance with Section 15(c) of the
1940 Act, notice or waiver of notice need not specify the purpose of any special
meeting.

Section 6. Place of Meeting. Meetings of the Trustees shall be held at the
principal place of business of the Trust in Pittsburgh, Pennsylvania, or at such
place within or without The Commonwealth of Massachusetts as fixed from time to time
by resolution of the Trustees, or as the person or persons requesting said meeting
to be called may designate, but any meeting may adjourn to any other place.

Section 7. Telephonic Meeting. Subject to compliance with Sections 15(c) and
32(a) of the 1940 Act, if it is impractical for the Trustees to meet in person, the
Trustees may meet by means of a telephone conference circuit to which all Trustees
are connected or of which all Trustees shall have waived notice, which meeting shall
be deemed to have been held at a place designated by the Trustees at the meeting.

Section 8. Special Action. When all the Trustees shall be present at any
meeting, however called, or whenever held, or shall assent to the holding of the
meeting without notice, or after the meeting shall sign a written assent thereto on
the record of such meeting, the acts of such meeting shall be valid as if such
meeting had been regularly held.

Section 9. Action by Consent. Any action by the Trustees may be taken without
a meeting if a written consent thereto is signed by all the Trustees and filed with
the records of the Trustees' meetings. Such consent shall be treated as a vote of
the Trustees for all purposes.

Section 10. Compensation of Trustees. The Trustees may receive a stated
salary for their services as Trustees, and by resolution of Trustees a fixed fee and
expenses of attendance may be allowed for attendance at each Meeting. Nothing
herein contained shall be construed to preclude any Trustee from serving the Trust
in any other capacity, as an officer, agent or otherwise, and receiving compensation
therefor.

ARTICLE VI

Section 1. Certificates. All certificates for shares shall be signed by the
Chairman, President or any Vice President and by the Treasurer or Secretary or any
Assistant Treasurer or Assistant Secretary and sealed with the seal of the Trust.
The signatures may be either manual or facsimile signatures and the seal may be
either facsimile or any other form of seal. Certificates for shares for which the
Trust has appointed an independent Transfer Agent and Registrar shall not be valid
unless countersigned by such Transfer Agent and registered by such Registrar. In
case any officer who has signed any certificate ceases to be an officer of the Trust
before the certificate is issued, the certificate may nevertheless be issued by the
Trust with the same effect as if the officer had not ceased to be such officer as of
the date of its issuance. Share certificates of each Series or Class shall be in
such form not inconsistent with law or the Declaration of Trust or these By-Laws as
may be determined by the Trustees.

Section 2. Transfer of Shares. The shares of each Series and Class of the
Trust shall be transferable, so as to affect the rights of the Trust or any Series
or Class, only by transfer recorded on the books of the Trust or its transfer agent,
in person or by attorney.

Section 3. Equitable Interest Not Recognized. The Trust shall be entitled to
treat the holder of record of any share or shares of a Series or Class as the
absolute owner thereof and shall not be bound to recognize any equitable or other
claim or interest in such share or shares of a Series or Class on the part of any
other person (except as may be otherwise expressly provided by law.)

Section 4. Lost, Destroyed or Mutilated Certificates. In case any certificate
for shares is lost, mutilated or destroyed, the Trustees may issue a new certificate
in place thereof upon indemnity to the relevant Series or Class against loss and
upon such other terms and conditions as the Trustees may deem advisable.

Section 5. Transfer Agent and Registrar: Regulations. The Trustees shall have
power and authority to make all such rules and regulations as they may deem
expedient concerning the issuance, transfer and registration of Shares and may
appoint a Transfer Agent and/or Registrar of Shares of each Series or Class, and may
require all such share certificates to bear the signature of such Transfer Agent
and/or of such Registrar.

ARTICLE VII

INSPECTION OF BOOKS

The Trustees shall from time to time determine whether and to what extent, and
at what times and places, and under what conditions and regulations the accounts and
books of the Trust maintained on behalf of each Series and Class or any of them
shall be open to the inspection of the shareholders of any Series or Class; and no
shareholder shall have any right of inspecting any account or book or document of
the Trust except that, to the extent such account or book or document relates to the
Series or Class in which he is a Shareholder or the Trust generally, such
Shareholder shall have such right of inspection as conferred by laws or authorized
by the Trustees or by resolution of the Shareholders of the relevant Series or
Class.

ARTICLE VIII

AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC.

Section 1. Agreements, Etc. The Trustees or the Executive Committee may
authorize any Officer or Agent of the Trust to enter into any Agreement or execute
and deliver any instrument in the name of the Trust on behalf of any Series or
Class, and such authority may be general or confined to specific instances; and,
unless so authorized by the Trustees or by the Executive Committee or by these
By-Laws, no Officer, Agent or Employee shall have any power or authority to bind the
Trust by any Agreement or engagement or to pledge its credit or to render it liable
pecuniarily for any purpose or for any amount.

Section 2. Checks, Drafts, Etc. All checks, drafts, or orders for the payment
of money, notes and other evidences of indebtedness shall be signed by such
Officers, Employees, or Agents, as shall from time to time be designated by the
Trustees or the Executive Committee, or as may be specified in or pursuant to the
agreement between the Trust on behalf of any Series or Class and the custodian
appointed, pursuant to the provisions of the Declaration of Trust.

Section 3. Endorsements, Assignments and Transfer of Securities. All
endorsements, assignments, stock powers, other instruments of transfer or directions
for the transfer of portfolio securities, whether or not registered in nominee form,
or belonging to any Series or Class shall be made by such Officers, Employees, or
Agents as may be authorized by the Trustees or the Executive Committee.

Section 4. Evidence of Authority. Anyone dealing with the Trust shall be
fully justified in relying on a copy of a resolution of the Trustees or of any
committee thereof empowered to act in the premises which is certified as true by the
Secretary or an Assistant Secretary under the seal of the Trust.

ARTICLE IX

INDEMNIFICATION OF TRUSTEES AND OFFICERS

Section 1. General. Every person who is or has been a Trustee or officer of
the Trust and persons who serve at the Trust's request as director, officer,
trustee, partner or fiduciary of another corporation, partnership, joint venture,
trust or other enterprise shall be indemnified by the Trust (or the appropriate
Series or Class, where such Trustee or officer is acting on behalf of or with
respect to a single Series or Class) to the fullest extent permitted by law against
liability and all expenses, including amounts incurred in satisfaction of judgments,
settlements, compromises, fines, penalties, and counsel fees reasonably incurred or
paid by him in connection with any debt, claim, action, demand, suit or proceeding
of any kind, whether civil or criminal, in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee or officer of the Trust or
his serving or having served as a director, officer, trustee, partner or fiduciary
of another corporation, partnership, joint venture, trust or other enterprise at the
request of the Trust; provided that the Trust shall indemnify any such person
seeking indemnification in connection with a proceeding initiated by such person
only if such proceeding was authorized by the Board of Trustees.

Section 2. No Indemnification. No indemnification shall be provided hereunder
to a Trustee or officer against any liability to the Trust or any Series or Class or
the Shareholders of any Series or Class by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of his
office.

Section 3. Conditions for Indemnification. Except as provided in Section 4
hereof, in the absence of a final decision on the merits by a court or other body
before which such proceeding was brought, an indemnification payment will not be
made, unless a reasonable determination based upon a factual review has been made by
a majority vote of a quorum of non-party Trustees who are not interested persons of
the Trust, or by independent legal counsel in a written opinion that the indemnitee
was not liable for an act of willful misfeasance, bad faith, gross negligence, or
reckless disregard of duties.

Section 4. Advancement of Expenses. The Trust shall pay the expenses incurred
in the defense of a proceeding in advance of its final disposition (upon undertaking
for repayment unless it is ultimately determined that indemnification is
appropriate) if at least one of the following conditions is fulfilled: (i) the
indemnitee provides security for his undertaking, (ii) the Trust or any relevant
Series or Class is insured against any loss arising by reason of any lawful advance
or (iii) a majority of a quorum of disinterested non-party trustees or independent
legal counsel in a written opinion makes a factual determination that there is
reason to believe the indemnitee will be entitled to indemnification.

Section 5. Non-Exclusivity. Nothing contained in this Article shall affect
any rights to indemnification to which Trustees, officers or any other persons may
be entitled by contract or otherwise under law, nor the power of the Trust to
purchase and maintain insurance on their behalf.

ARTICLE X

SEAL

The seal of the Trust shall consist of a flat-faced die with the word
"Massachusetts", together with the name of the Trust and the year of its
organization cut or engraved thereon but, unless otherwise required by the Trustees,
the seal shall not be necessary to be placed on, and its absence shall not impair
the validity of, any document, instrument or other paper executed and delivered by
or on behalf of the Trust.

ARTICLE XI

FISCAL YEAR

The fiscal year of the Trust and each Series or Class shall be as designated
from time to time by the Trustees.

ARTICLE XII

AMENDMENTS

These By-Laws may be amended by a majority vote of all of the Trustees.

ARTICLE XIII

WAIVERS OF NOTICE

Whenever any notice whatever is required to be given under the provisions of
any statute of The Commonwealth of Massachusetts, or under the provisons of the
Declaration of Trust or these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. A notice shall be deemed to have been
given if telegraphed, cabled, faxed or sent by wireless when it has been delivered
to a representative of any telegraph, cable, facsimile or wireless company with
instructions that it be telegraphed, cabled, facsimile, or sent by wireless. Any
notice shall be deemed to be given if mailed at the time when the same shall be
deposited in the mail.

ARTICLE XIV

REPORT TO SHAREHOLDERS

The Trustees shall at least semi-annually submit to the shareholders of each
Series or Class a written financial report of the transactions of that Series or
Class including financial statements which shall at least annually be certified by
independent public accountants.

ARTICLE XV

BOOKS AND RECORDS

The books and records of the Trust and any Series or Class, including the stock
ledger or ledgers, may be kept in or outside The Commonwealth of Massachusetts at
such office or agency of the Trust as may from time to time be determined by the
Trustees.

ARTICLE XVI

TERMS

Terms defined in the Declaration of Trust and not otherwise defined herein are
used herein with the meanings set forth or referred to in the Declaration of Trust.

</TABLE>

Exhibit 4(i) Under Form N1-A

Exhibit 4 Under Item 601/Reg. SK

BANKSOUTH SELECT FUNDS
BANKSOUTH SELECT GEORGIA TAX-FREE INCOME FUND
Number Shares
_____ _____

PORTFOLIO
Organized under the laws of the Commonwealth of Massachusetts

Account No. Alpha Code See Reverse Side For
Certain Definitions

THIS IS TO CERTIFY THAT is
the owner of

CUSIP 066518 50 7

Fully Paid and Non-Assessable Shares of Beneficial Interest of the BANKSOUTH
SELECT GEORGIA TAX-FREE INCOME FUND PORTFOLIO OF BANKSOUTH SELECT FUNDS
hereafter called the "Trust," transferable on the books of the Trust by the
owner in person or by duly authorized attorney upon surrender of this
certificate properly endorsed.

The shares represented hereby are issued and shall be held subject to
the provisions of the Declaration of Trust and By-Laws of the Trust and all
amendments thereto, all of which the holder by acceptance hereof assents.

This Certificate is not valid unless countersigned by the Transfer
Agent.

IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its seal.

Dated: BankSouth Select Funds
Corporate Seal
1993
Massachusetts

/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman

Countersigned:Federated Services
Company (Pittsburgh)
Transfer Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations;
TEN COM - as tenants in common UNIF GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties (Cust) (Minors)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.............................
in common (State)

Additional abbreviations may also be used though not in the above list.

For value received__________ hereby sell, assign, and transfer unto

Please insert social security or other
identifying number of assignee

______________________________________

_____________________________________________________________________________

(Please print or typewrite name and address, including zip code, of
assignee)

_____________________________________________________________________________

______________________________________________________________________
shares

of beneficial interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint
__________________________________________
_____________________________________________________________________________

to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.

Dated______________________
NOTICE:______________________________
The signature to this assignment must
correspond with the name as written upon
the face of the certificate in every
particular, without alteration or
enlargement or any change whatever.

All persons dealing with BankSouth Select Funds, a Massachusetts business
trust, must look solely to the Trust property for the enforcement of any
claim against the Trust, as the Trustees, officers, agents or shareholders
of the Trust assume no personal liability whatsoever for obligations entered
into on behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE

Page One

A. The Certificate is outlined by an blue one-half inch border.

B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.

C. The cusip number in the middle right-hand area of the page is boxed.

D. The Massachusetts corporate seal appears in the bottom middle of the
page.

Page Two

The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.

Exhibit 4(ii) Under Form N1-A

Exhibit 4 Under Item 601/Reg. SK

BANKSOUTH SELECT FUNDS
BANKSOUTH SELECT GOVERNMENT MONEY MARKET FUND
Number Shares
_____ _____

PORTFOLIO
Organized under the laws of the Commonwealth of Massachusetts

Account No. Alpha Code See Reverse Side For
Certain Definitions

THIS IS TO CERTIFY THAT is
the owner of

CUSIP 066518 30 9

Fully Paid and Non-Assessable Shares of Beneficial Interest of the BANKSOUTH
SELECT GOVERNMENT MONEY MARKET FUND PORTFOLIO OF BANKSOUTH SELECT FUNDS
hereafter called the "Trust," transferable on the books of the Trust by the
owner in person or by duly authorized attorney upon surrender of this
certificate properly endorsed.

This Certificate is not valid unless countersigned by the Transfer
Agent.

IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its seal.

Dated: BankSouth Select Funds
Corporate Seal
1993
Massachusetts

/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman

Additional abbreviations may also be used though not in the above list.

For value received__________ hereby sell, assign, and transfer unto

Please insert social security or other
identifying number of assignee

______________________________________

_____________________________________________________________________________

(Please print or typewrite name and address, including zip code, of
assignee)

_____________________________________________________________________________

______________________________________________________________________
shares

to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.

Page One

A. The Certificate is outlined by an blue one-half inch border.

B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.

C. The cusip number in the middle right-hand area of the page is boxed.

D. The Massachusetts corporate seal appears in the bottom middle of the
page.

Page Two

The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.

Exhibit 4(iii) Under Form N1-A

Exhibit 4 Under Item 601/Reg. SK

BANKSOUTH SELECT FUNDS
BANKSOUTH SELECT PRIME MONEY MARKET FUND
Number Shares
_____ _____

PORTFOLIO
Organized under the laws of the Commonwealth of Massachusetts

Account No. Alpha Code See Reverse Side For
Certain Definitions

THIS IS TO CERTIFY THAT is
the owner of

CUSIP 066518 40 8

Fully Paid and Non-Assessable Shares of Beneficial Interest of the BANKSOUTH
SELECT PRIME MONEY MARKET FUND PORTFOLIO OF BANKSOUTH SELECT FUNDS hereafter
called the "Trust," transferable on the books of the Trust by the owner in
person or by duly authorized attorney upon surrender of this certificate
properly endorsed.

This Certificate is not valid unless countersigned by the Transfer
Agent.

IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its seal.

Dated: BankSouth Select Funds
Corporate Seal
1993
Massachusetts

/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman

Additional abbreviations may also be used though not in the above list.

For value received__________ hereby sell, assign, and transfer unto

Please insert social security or other
identifying number of assignee

______________________________________

_____________________________________________________________________________

(Please print or typewrite name and address, including zip code, of
assignee)

_____________________________________________________________________________

______________________________________________________________________
shares

to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.

Page One

A. The Certificate is outlined by an blue one-half inch border.

B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.

C. The cusip number in the middle right-hand area of the page is boxed.

D. The Massachusetts corporate seal appears in the bottom middle of the
page.

Page Two

The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.

Exhibit 4(iv) Under Form N1-A

Exhibit 4 Under Item 601/Reg. SK

BANKSOUTH SELECT FUNDS
BANKSOUTH SELECT BOND FUND
Number Shares
_____ _____

PORTFOLIO
Organized under the laws of the Commonwealth of Massachusetts

Account No. Alpha Code See Reverse Side For
Certain Definitions

THIS IS TO CERTIFY THAT is
the owner of

CUSIP 066518 20 0

Fully Paid and Non-Assessable Shares of Beneficial Interest of the BANKSOUTH
SELECT BOND FUND PORTFOLIO OF BANKSOUTH SELECT FUNDS hereafter called the
"Trust," transferable on the books of the Trust by the owner in person or by
duly authorized attorney upon surrender of this certificate properly
endorsed.

This Certificate is not valid unless countersigned by the Transfer
Agent.

IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its seal.

Dated: BANKSOUTH SELECT FUNDS
Trust Seal
1993
Massachusetts

/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman

Additional abbreviations may also be used though not in the above list.

For value received__________ hereby sell, assign, and transfer unto

Please insert social security or other
identifying number of assignee

______________________________________

_____________________________________________________________________________

(Please print or typewrite name and address, including zip code, of
assignee)

_____________________________________________________________________________

______________________________________________________________________
shares

to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.

Page One

A. The Certificate is outlined by an blue one-half inch border.

B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.

C. The cusip number in the middle right-hand area of the page is boxed.

D. The Massachusetts corporate seal appears in the bottom middle of the
page.

Page Two

The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.

Exhibit 4(v) Under Form N1-A

Exhibit 4 Under Item 601/Reg. SK

BANKSOUTH SELECT FUNDS
BANKSOUTH SELECT EQUITY FUND
Number Shares
_____ _____

PORTFOLIO
Organized under the laws of the Commonwealth of Massachusetts

Account No. Alpha Code See Reverse Side For
Certain Definitions

THIS IS TO CERTIFY THAT is
the owner of

CUSIP 066518 10 1

Fully Paid and Non-Assessable Shares of Beneficial Interest of the BANKSOUTH
SELECT EQUITY FUND PORTFOLIO OF BANKSOUTH SELECT FUNDS hereafter called the
"Trust," transferable on the books of the Trust by the owner in person or by
duly authorized attorney upon surrender of this certificate properly
endorsed.

This Certificate is not valid unless countersigned by the Transfer
Agent.

IN WITNESS WHEREOF, the Trust has caused this Certificate to be signed
in its name by its proper officers and to be sealed with its seal.

Dated: BANKSOUTH SELECT FUNDS
Trust Seal
1993
Massachusetts

/s/ Edward C. Gonzales /s/ John F. Donahue
Treasurer Chairman

Additional abbreviations may also be used though not in the above list.

For value received__________ hereby sell, assign, and transfer unto

Please insert social security or other
identifying number of assignee

______________________________________

_____________________________________________________________________________

(Please print or typewrite name and address, including zip code, of
assignee)

_____________________________________________________________________________

______________________________________________________________________
shares

to transfer the said shares on the books of the within named Trust with full
power of substitution in the premises.

Page One

A. The Certificate is outlined by an blue one-half inch border.

B. The number in the upper left-hand corner and the number of shares in
the upper right-hand corner are outlined by octagonal boxes.

C. The cusip number in the middle right-hand area of the page is boxed.

D. The Massachusetts corporate seal appears in the bottom middle of the
page.

Page Two

The social security or other identifying number of the assignee
appears in a box in the top-third upper-left area of the page.

Exhibit 5 under Form N-1A
Exhibit 10 under Item 601/Reg. SK

BankSouth Select Funds

INVESTMENT ADVISORY CONTRACT

This Contract is made this 1st day of December 1993, between Bank
South, N.A., a national banking association having its principal place of
business in Atlanta, Georgia (the "Adviser"), and BankSouth Select Funds, a
Massachusetts business trust having its principal place of business in
Pittsburgh, Pennsylvania (the "Trust").

WHEREAS the Trust is an open-end management investment company as that
term is defined in the Investment Company Act of 1940 and is registered
as such with the Securities and Exchange Commission; and

WHEREAS Adviser is engaged in the business of rendering investment
advisory and management services.

NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:

1. The Trust hereby appoints Adviser as Investment Adviser for each
of the portfolios ("Funds") of the Trust which executes an exhibit to this
Contract, and Adviser accepts the appointments. Subject to the direction of
the Trustees of the Trust, Adviser shall provide investment research and
supervision of the investments of the Funds and conduct a continuous program
of investment evaluation and of appropriate sale or other disposition and
reinvestment of each Fund's assets.

2. Adviser, in its supervision of the investments of each of the
Funds will be guided by each of the Fund's investment objective and policies
and the provisions and restrictions contained in the Declaration of Trust
and By-Laws of the Trust and as set forth in the Registration Statements and
exhibits as may be on file with the Securities and Exchange Commission.
Adviser will place or cause to be placed orders for the purchase and sale of
such investments and instruments on behalf of each Fund and give
corresponding instructions to the Fund's custodian.

3. Each Fund shall pay or cause to be paid all of its own expenses
and its allocable share of Trust expenses, including, without limitation,
the expenses of organizing the Trust and continuing its existence; fees and
expenses of Trustees and officers of the Trust; fees for investment advisory
services and administrative personnel and services; fees and expenses of
preparing and printing its Registration Statements under the Securities Act
of 1933 and the Investment Company Act of 1940 and any amendments thereto;
expenses of registering and qualifying the Trust, the Funds, and shares
("Shares") of the Funds under federal and state laws and regulations;
expenses of preparing, printing, and distributing prospectuses (and any
amendments thereto) to shareholders; interest expense, taxes, fees, and
commissions of every kind; expenses of issue (including cost of Share
certificates), purchase, repurchase, and redemption of Shares, including
expenses attributable to a program of periodic issue; charges and expenses
of custodians, transfer agents, dividend disbursing agents, shareholder
servicing agents, and registrars; printing and mailing costs, auditing,
accounting, and legal expenses; reports to shareholders and governmental
officers and commissions; expenses of meetings of Trustees and shareholders
and proxy solicitations therefor; insurance expenses; association membership
dues and such nonrecurring items as may arise, including all losses and
liabilities incurred in administering the Trust and the Funds. Each Fund
will also pay its allocable share of such extraordinary expenses as may
arise including expenses incurred in connection with litigation,
proceedings, and claims and the legal obligations of the Trust to indemnify
its officers and Trustees and agents with respect thereto.

4. Each of the Funds shall pay to Adviser, for all services rendered
to each Fund by Adviser hereunder, the fees set forth in the exhibits
attached hereto.

5. The net asset value of each Fund's Shares as used herein will be
calculated to the nearest 1/10th of one cent.

6. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of
one or more of the Funds) to the extent that any Fund's expenses exceed such
lower expense limitation as the Adviser may, by notice to the Fund,
voluntarily declare to be effective.

7. This Contract shall begin for each Fund as of the date of
execution of the applicable exhibit and shall continue in effect with
respect to each Fund presently set forth on an exhibit (and any subsequent
Funds added pursuant to an exhibit during the initial term of this Contract)
for two years from the date of this Contract set forth above and thereafter
for successive periods of one year, subject to the provisions for
termination and all of the other terms and conditions hereof if: (a) such
continuation shall be specifically approved at least annually by the vote of
a majority of the Trustees of the Trust, including a majority of the
Trustees who are not parties to this Contract or interested persons of any
such party (other than as Trustees of the Trust), cast in person at a
meeting called for that purpose; and (b) Adviser shall not have notified a
Fund in writing at least sixty (60) days prior to the anniversary date of
this Contract in any year thereafter that it does not desire such
continuation with respect to that Fund. If a Fund is added after the first
approval by the Trustees as described above, this Contract will be effective
as to that Fund upon execution of the applicable exhibit and will continue
in effect until the next annual approval of this Contract by the Trustees
and thereafter for successive periods of one year, subject to approval as
described above.

8. Notwithstanding any provision in this Contract, it may be
terminated at any time with respect to any Fund, without the payment of any
penalty, by the Trustees of the Trust or by a vote of the shareholders of
that Fund on sixty (60) days' written notice to Adviser.

9. This Contract may not be assigned by Adviser and shall
automatically terminate in the event of any assignment. Adviser may employ
or contract with such other person, persons, corporation, or corporations at
its own cost and expense as it shall determine in order to assist it in
carrying out this Contract.

10. In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties under this
Contract on the part of Adviser, Adviser shall not be liable to the Trust or
to any of the Funds or to any shareholder for any act or omission in the
course of or connected in any way with rendering services or for any losses
that may be sustained in the purchase, holding, or sale of any security.

11. This Contract may be amended at any time by agreement of the
parties provided that the amendment shall be approved both by the vote of a
majority of the Trustees of the Trust, including a majority of the Trustees
who are not parties to this Contract or interested persons of any such party
to this Contract (other than as Trustees of the Trust) cast in person at a
meeting called for that purpose, and on behalf of a Fund by a majority of
the outstanding voting securities of such Fund.

12. The Adviser acknowledges that all sales literature for investment
companies (such as the Trust) are subject to strict regulatory oversight.
The Adviser agrees to submit any proposed sales literature for the Trust (or
any Fund) or for itself or its affiliates which mentions the Trust (or any
Fund) to the Trust's distributor for review and filing with the appropriate
regulatory authorities prior to the public release of any such sales
literature, provided, however, that nothing herein shall be construed so as
to create any obligation or duty on the part of the Adviser to produce sales
literature for the Trust (or any Fund). The Trust agrees to cause its
distributor to promptly review all such sales literature to ensure
compliance with relevant requirements, to promptly advise Adviser of any
deficiencies contained in such sales literature, to promptly file complying
sales literature with the relevant authorities, and to cause such sales
literature to be distributed to prospective investors in the Trust.

13. Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees
that the obligations pursuant to this Contract of a particular Fund and of
the Trust with respect to that particular Fund be limited solely to the
assets of that particular Fund, and Adviser shall not seek satisfaction of
any such obligation from any other Fund, the shareholders of any Fund, the
Trustees, officers, employees or agents of the Trust, or any of them.

14. This Contract shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.

15. This Contract will become binding on the parties hereto upon their
execution of the attached exhibits to this Contract.

16. The parties hereto acknowledge that Bank South, N.A. has reserved
the right to grant the non-exclusive use of the name "BankSouth Select
Funds" or any derivative thereof to any other investment company, investment
company portfolio, investment adviser, distributor or other business
enterprise, and to withdraw from the Trust and one or more of the Funds the
use of the name "BankSouth Select Funds." The name "BankSouth Select Funds"
will continue to be used by the Trust and each Fund so long as such use is
mutually agreeable to Bank South, N.A. and the Trust.

EXHIBIT A
to the
Investment Advisory Contract

BankSouth Select Government Money Market Fund
BankSouth Select Prime Money Market Fund

For all services rendered by Adviser hereunder, the above-named Funds of
the Trust shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment
advisory fee equal to .50 of 1% of the average daily net assets of the
Funds.

The portion of the fee based upon the average daily net assets of the
Funds shall be accrued daily at the rate of 1/365th of .50 of 1% applied to
the daily net assets of the Funds.

The advisory fee so accrued shall be paid to Adviser daily.

Witness the due execution hereof this 1st day of December, 1993.

Attest: Bank South, N.A.

/s/ Gregory N. Studdard By: /s/ Betty Cowell

Secretary Vice President

Attest: BankSouth Select Funds

/s/ C. Grant Anderson By:/s/ Charles L. Davis, Jr.

Assistant Secretary Vice President
EXHIBIT B
to the
Investment Advisory Contract

BankSouth Select Equity Fund
BankSouth Select Bond Fund
BankSouth Select Georgia Tax-Free Income Fund

For all services rendered by Adviser hereunder, the above-named Funds of
the Trust shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment
advisory fee equal to .75 of 1% of the average daily net assets of the
Funds.

The portion of the fee based upon the average daily net assets of the
Funds shall be accrued daily at the rate of 1/365th of .75 of 1% applied to
the daily net assets of the Funds.

The advisory fee so accrued shall be paid to Adviser daily.

Witness the due execution hereof this 1st day of December, 1993.

Attest: Bank South, N.A.

/s/ Gregory N. Studdard
By /s/ Betty Cowell Secretary
Vice President

Attest: BankSouth Select Funds

/s/ C. Grant Anderson By:/s/ Charles L. Davis, Jr.
Assistant Secretary Vice President

Exhibit 6(i) under Form N-1A
Exhibit 10 under Item 601/Reg. SK

BankSouth Select Funds

DISTRIBUTOR'S CONTRACT

AGREEMENT made this 1st day of December, 1993, by and between BANKSOUTH
SELECT FUNDS (the "Trust"), a Massachusetts business trust, and FEDERATED
SECURITIES CORP. ("FSC"), a Pennsylvania corporation.

In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:

1. (a) The Trust hereby appoints FSC as its agent to sell and
distribute shares of the Trust which may be offered in one or more series
(the "Funds") consisting of one or more classes (the "Classes") of shares
(the "Shares"), as described and set forth on one or more exhibits to this
Agreement, at the current public offering price thereof as described and set
forth in the current Prospectuses of the Trust. FSC hereby accepts such
appointment and agrees to provide such other services for the Trust, if any,
and accept such compensation from the Trust, if any, as set forth in the
applicable exhibit to this Agreement.

(b) FSC agrees to use appropriate efforts to solicit or to
facilitate the solicitation of orders for the sale of Shares. As part of
such efforts, FSC will undertake, or facilitate others in their undertaking,
such advertising and promotion as it believes reasonable in connection with
such solicitation.

(c) FSC will transmit promptly any orders received by it for the
purchase or redemption of shares to the Trust's transfer agent.

(d) FSC shall give appropriate and prompt notice to the custodian of
the Trust of any Shares of the Fund and the prices thereof which are ordered
through FSC.

2. The sale of any Shares may be suspended without prior notice
whenever in the judgment of the Trust such action is permitted by the 1940
Act and warranted by unusual market, economic or political conditions, or by
abnormal circumstances of any kind.

3. Neither FSC nor any other person is authorized by the Trust to give
any information or to make any representation relative to any Shares other
than those contained in the Registration Statement, Prospectuses, or
Statements of Additional Information ("SAIs") filed with the Securities and
Exchange Commission, as the same may be amended from time to time, or in any
supplemental information to said Prospectuses or SAIs approved by the Trust.
FSC agrees that any other information or representations other than those
specified above which it or any dealer or other person who purchases Shares
through FSC may make in connection with the offer or sale of Shares, shall
be made entirely without liability on the part of the Trust. No person or
dealer, other than FSC, is authorized to act as agent for the Trust for any
purpose. FSC agrees that in offering or selling Shares as agent of the
Trust, it will, in all respects, duly conform to all applicable state and
federal laws and the rules and regulations of the National Association of
Securities Dealers, Inc., including its Rules of Fair Practice. FSC will
submit to the Trust copies of all sales literature before using the same and
will not use such sales literature if disapproved by the Trust.

4. This Agreement is effective with respect to each Class as of the
date of execution of the applicable exhibit and shall continue in effect
with respect to each Class presently set forth on an exhibit and any
subsequent Classes added pursuant to an exhibit during the initial term of
this Agreement for one year from the date set forth above, and thereafter
for successive periods of one year if such continuance is approved at least
annually by the Trustees of the Trust including a majority of the members of
the Board of Trustees of the Trust who are not interested persons of the
Trust and have no direct or indirect financial interest in the operation of
any Distribution Plan relating to the Trust or in any related documents to
such Plan ("Disinterested Trustees") cast in person at a meeting called for
that purpose or by the vote of a majority of the outstanding voting
securities of each Fund as to which this Agreement is to continue. If a
Class is added after the first annual approval by the Trustees as described
above, this Agreement will be effective as to that Class upon execution of
the applicable exhibit and will continue in effect until the next annual
approval of this Agreement by the Trustees and thereafter for successive
periods of one year, subject to approval as described above.

5. This Agreement may be terminated with regard to a particular Fund or
Class at any time, without the payment of any penalty, by the vote of a
majority of the Disinterested Trustees or by a majority of the outstanding
voting securities of the particular Fund or Class on not more than sixty
(60) days' written notice to any other party to this Agreement. This
Agreement may be terminated with regard to a particular Fund or Class by FSC
on sixty (60) days' written notice to the Trust.

6. This Agreement may not be assigned by FSC and shall automatically
terminate in the event of an assignment by FSC as defined in the Investment
Company Act of 1940, as amended (the "1940 Act") provided, however, that FSC
may employ such other person, persons, corporation or corporations as it
shall determine in order to assist it in carrying out its duties under this
Agreement but, in such case, FSC shall remain responsible to the Trust for
its duties and obligations hereunder.

7. FSC shall not be liable to the Trust for anything done or omitted by
it, except acts or omissions involving willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties and obligations imposed by
this Agreement.

8. This Agreement may be amended at any time by mutual agreement in
writing of all the parties hereto, provided that such amendment is approved
by the Trustees of the Trust including a majority of the Disinterested
Trustees of the Trust cast in person at a meeting called for that purpose.

9. This Agreement shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.

10. (a) Subject to the conditions set forth below, the Trust agrees to
indemnify, defend and hold harmless FSC, its officers and directors and each
person, if any, who controls FSC within the meaning of Section 15 of the
Securities Act of 1933, as amended (the "1933 Act") and Section 20 of the
Securities Act of 1934, as amended, (the "1934 Act"), (for purposes of this
subsection 10(a), all such persons are referred to as "FSC Covered Persons")
against any and all claims, demands, losses, liabilities, damages and
expenses whatsoever (including but not limited to any and all legal and
other expenses whatsoever reasonably incurred in investigating, preparing or
defending against any litigation or proceeding, commenced or threatened, or
any claim or demand whatsoever) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectuses or SAIs (as from time to time
amended and supplemented) or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission was
made in reliance upon and in conformity with written information furnished
to the Trust about FSC by or on behalf of FSC expressly for use in the
Registration Statement, any Prospectuses and SAIs or any amendment or
supplement thereof.

If any claim, demand, action or proceeding is brought against FSC or any
FSC Covered Person with respect to which indemnity may be sought against the
Trust pursuant to the foregoing paragraph, FSC shall promptly notify the
Trust in writing of the institution of such claim, demand, action or
proceeding and the Trust shall assume the defense of such claim, demand,
action, or proceeding including the employment of counsel selected by the
Trust and reasonably acceptable to FSC, and the payment of expenses,
including, without limitation, reasonable fees and charges of counsel. FSC,
and/or any related FSC Covered Person shall have the right to employ
separate counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of FSC or such FSC Covered Person unless the
employment of such counsel shall have been authorized in writing by the
Trust in connection with the defense of such action or the Trust shall not
have employed counsel to have charge of the defense of such action, in any
of which events such fees and expenses shall be borne by the Trust.
Anything in this paragraph to the contrary notwithstanding, the Trust shall
not be liable for any compromise or settlement of any such claim, demand,
action or proceeding effected without its prior written consent. The Trust
agrees promptly to notify FSC of the commencement of any claim, demand,
action or proceeding against the Trust or any of its officers or Trustees or
controlling persons in connection with the issue and sale of Shares or in
connection with the Registration Statement, Prospectuses, or SAI's.

(b) FSC agrees to indemnify and hold harmless the Trust, its
Trustees and officers and each other person, if any, who controls the Trust
within the meaning of Section 15 of the 1933 Act (for purposes of this
subsection 10(b), all such persons are collectively referred to as the
"Trust Covered Persons"), against any and all claims, demands, losses,
liabilities, damages, and expenses (including, but not limited to any and
all legal and other expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation or proceeding,
commenced or the referred, or any claim or demand whatsoever), but only with
respect to statements or omissions, if any, made in the Registration
Statement or any Prospectus, SAI, or any amendment or supplement thereof in
reliance upon, and in conformity with, information furnished to the Trust
about FSC by or on behalf of FSC expressly for use in the Registration
Statement or any Prospectus, SAI, or any amendment or supplement thereof.

(c) If any claim, demand, action or proceeding is brought against
the Trust or Trust Covered Person with respect to which indemnity may be
sought against FSC pursuant to the foregoing paragraph,the Trust or such
Trust Covered Person shall promptly notify FSC in writing of the institution
of such claim, demand, action or proceeding and FSC shall assume the defense
of such claim, demand action or proceeding, including the employment of
counsel selected by FSC and reasonably acceptable to the Trust Covered
Person, and the payment of expenses, including, without limitation,
reasonable fees and charges of counsel. The Trust or Trust Covered Person
shall have the right to employ separate counsel in such any case but the
fees and expenses of such counsel shall be at the expense of the Trust or
such Trust Covered Person unless the employment of such counsel shall have
been authorized in writing by FSC in connection with the defense of such
action or FSC shall not have employed counsel to have charge of the defense
of such action, in any of which events such fees and expenses shall be borne
by FSC. Anything in this paragraph to the contrary notwithstanding, FSC
shall not be liable for any compromise or settlement of any such claim,
demand, action or proceeding effected without its prior written consent.
FSC agrees promptly to notify the Trust of the commencement of any claim,
demand, action or proceeding against FSC or any of its officers, directors,
employees, agents or controlling persons in connection with the issuance and
sale of shares or in connection with the Registration Statement,
Prospectuses, or SAI's.

(d) Nothing herein contained shall be deemed to protect any person
against liability to the Trust or its shareholders to which such person
would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of the duties of such person or by
reason of the reckless disregard by such person of the obligations and
duties of such person under this Agreement (collectively, "Disabling
Conduct").

(e) Insofar as indemnification for liabilities may be permitted
pursuant to Section 17 of the Investment Company Act of 1940 for FSC and FSC
Controlling Persons by the Trust pursuant to this Agreement, the parties are
aware of the position of the Securities and Exchange Commission as set forth
in the Investment Company Act Release No. IC-11330. Therefore, in addition
to complying with the applicable provisions of this Agreement, in the
absence of a final decision on the merits by a court or other body before
which the proceeding was brought, an indemnification payment will not be
made in the absence of such a decision,unless a reasonable determination
based upon factual review has been made (i) by a majority vote of a quorum
of non-party Disinterested Trustees, or (ii) by independent legal counsel in
a written opinion that the indemnitee had not engaged in any Disabling
Conduct. The Trust further undertakes that advancement of expenses incurred
in the defense of a proceeding (upon undertaking for repayment unless it is
ultimately determined that indemnification is appropriate) against FSC or
FSC Controlling Person will not be made absent the fulfillment of at least
one of the following conditions: (i) the indemnitee provides security for
his undertaking; (ii) the Trust is insured against losses arising by reason
of any lawful advances; or (iii) a majority of a quorum of non-party
Disinterested Trustees or independent legal counsel in a written opinion
makes a factual determination that there is reason to believe the indemnitee
ultimately will be entitled to indemnification.

11. FSC is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees
that the obligations assumed by the Trust pursuant to this agreement shall
be limited in any case to the Trust and its assets and FSC shall not seek
satisfaction of any such obligation from the shareholders of the Trust, the
Trustees, officers, employees or agents of the Trust, or any of them.

12. FSC agrees on behalf of itself and its affiliates and employees to
treat confidentially and as proprietary information of the Trust all records
and other information relative to prior, present, or potential Shareholders
of the Trust, and not to use such records and information for any purpose
other than performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the Trust which
approval shall not be unreasonably withheld any may not be withheld where
FSC may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust. Provided, however, that FSC
shall not be bound by this provision with regard to information (i) which it
receives from another source not subject to confidential treatment; or (ii)
which otherwise becomes part of the public domain through no action of FSC
or the Fund or any affiliate of either of them.

13. The Fund and FSC each represents, warrants, and covenants to the
other that it has all requisite authority to enter into, execute, deliver
and perform its obligations under this Agreement and that this Agreement is
a legal, valid and binding obligation enforceable in accordance with its
terms.

14. If at any time the Shares of any Fund are offered in two or more
Classes, FSC agrees to adopt appropriate compliance standards as to when a
class of shares may be sold to particular investors.

15. This Agreement will be executed by and become binding on the
parties hereto upon the execution of the attached exhibits to the Agreement.

16. The terms "vote of a majority of the outstanding voting
securities", "interested person," "assignment" and "specifically approved at
least annually" shall have the respective meanings specified in, and shall
be construed in a manner consistent with the 1940 Act, subject to such
exemptions that may be granted by the Securities and Exchange Commission
thereunder, provided, however, that the "assignment" shall include (without
limitation) any sale, transfer or conversion of a controlling interest of
any class of voting stock of FSC or of any entity which holds a controlling
interest of any stock of FSC and other such entity.

17. FSC is responsible for its own conduct and the employment and
conduct with respect to its duties and obligations hereunder of its
employees, officers, and agents.

Exhibit A
to the
Distributor's Contract

BankSouth Select Funds

BankSouth Select Bond Fund
BankSouth Select Equity Fund
BankSouth Select Georgia Tax-Free Income Fund
BankSouth Select Government Money Market Fund
BankSouth Select Prime Money Market Fund

The following provisions are hereby incorporated and made part of the
Distributor's Contract dated the 1st day of December, 1993, between
BankSouth Select Funds and Federated Securities Corp. with respect to
Classes of the Funds set forth above.

1. The Trust hereby appoints FSC to engage in activities principally
intended to result in the sale of the above-listed Classes ("Shares").
Pursuant to this appointment, FSC is authorized to select a group of
Broker/Dealers or Financial Institutions ("Institutions") to sell Shares at
the current offering price thereof as described and set forth in the
respective prospectuses of the Trust, and to render sales-related services
to the Trust and its shareholders.

2. During the term of this Agreement, the Trust will pay FSC for
services pursuant to this Agreement, a monthly fee computed at the annual
rate of .25% of the average aggregate net asset value of the Shares of
BankSouth Select Government Money Market Fund and BankSouth Select Prime
Money Market Fund held during the month and a monthly fee computed at the
annual rate of .75% of the average aggregate net asset value of the Shares
of BankSouth Select Bond Fund, BankSouth Select Equity Fund, and BankSouth
Select Georgia Tax-Free Income Fund held during the month; provided,
however, that no fee will accrue with respect to a Fund until that Fund's
prospectus is amended to indicate that the Fund's Rule 12b-1 Plan has been
activated. For the month in which this Agreement becomes effective or
terminates, there shall be an appropriate proration of any fee payable on
the basis of the number of days that the Agreement is in effect during the
month.

3. FSC may from time-to-time and for such periods as it deems
appropriate reduce its compensation to the extent any Class's expenses
exceed such lower expense limitation as FSC may, by notice to the Trust,
voluntarily declare to be effective.

4. FSC will enter into separate written agreements consistent herewith
with various firms to provide certain of the services set forth in Paragraph
1 herein. FSC, in its sole discretion, may pay Institutions a periodic fee
in respect of Shares owned from time to time by their clients or customers.
The schedules of such fees and the basis upon which such fees will be paid
shall be determined from time to time by FSC in its sole discretion.

5. FSC will prepare reports to the Board of Trustees of the Trust on a
quarterly basis showing amounts expended hereunder including amounts paid to
Institutions and the purpose for such payments.

In consideration of the mutual covenants set forth in the Distributor's
Contract dated December 1, 1993, between BankSouth Select Funds and
Federated Securities Corp., BankSouth Select Funds executes and delivers
this Exhibit on behalf of the Funds, and with respect to the separate
Classes of Shares thereof, first set forth in this Exhibit.

WITNESS the due execution hereof on behalf of the undersigned by their
respective officers thereunto duly authorized whereupon this exhibit and the
Contract to which it is attached will become binding agreements.

ATTEST: BANKSOUTH SELECT FUNDS

/s/ C. Grant Anderson By: /s/ Charles L. Davis, Jr.
Assistant Secretary Vice-President

(SEAL)

ATTEST: FEDERATED SECURITIES CORP.

/s/ S. Elliott Cohan By: /s/ Edward C. Gonzales
Secretary Executive Vice-President
(SEAL)

Exhibit 6(ii) under Form N-1A
Exhibit 1 under Item 601/Reg. SK

BankSouth Select Funds

ADMINISTRATIVE SERVICES AGREEMENT

This Administrative Services Agreement is made as of this
1st day of December, 1993, between BankSouth Select Funds,
a Massachusetts business trust (herein called the "Fund"),
and Federated Administrative Services, a Delaware business
trust (herein called "FAS").

WHEREAS, the Fund is a Massachusetts business trust,
consisting of one or more portfolios, which operates as an
open-end management investment company and will so register
under the Investment Company Act of 1940, as amended (the
"1940 Act"); and

WHEREAS, the Fund desires to retain FAS as its
Administrator to provide it with Administrative Services
(as herein defined), and FAS is willing to render such
services;

NOW, THEREFORE, in consideration of the premises and
mutual covenants set forth herein, the parties hereto agree
as follows:

1. Appointment of Administrator. The Fund hereby
appoints FAS as Administrator of the Fund on the terms and
conditions set forth in this Agreement; and FAS hereby
accepts such appointment and agrees to perform the services
and duties set forth in Section 2 of this Agreement in
consideration of the compensation provided for in Section 4
hereof.

2. Services and Duties. As Administrator, and subject
to the supervision and control of the Fund's Board of
Trustees or Directors and the terms and conditions hereof,
FAS will provide facilities, equipment, and personnel to
carry out the following administrative services for
operation of the business and affairs of the Fund and each
of its portfolios:

(a) prepare, file, and maintain the Fund's governing
documents and any amendments thereto, including the
Declaration of Trust (which has already been
prepared and filed), the By-laws and minutes of
meetings of Trustees and shareholders;

(b) prepare and file with the Securities and Exchange
Commission and the appropriate state securities and
blue sky authorities the registration statements
for the Fund and the Fund's shares and all
amendments thereto, reports to regulatory
authorities and shareholders, prospectuses,
statements of additional information, proxy
statements, and such other documents all as may be
necessary to enable the Fund to make a continuous
offering of its shares;

(c) prepare, negotiate, and administer contracts on
behalf of the Fund with, among others, the Fund's
investment adviser, distributor, custodian, and
transfer agent;

(d) supervise the Fund's custodian in the maintenance
of the Fund's general ledger and in the preparation
of the Fund's financial statements, including
oversight of expense accruals and payments, of the
determination of the net asset value of the Fund
and of the declaration and payment of dividends and
other distributions to shareholders, all in
conformance with the Fund's prospectuses and
applicable law.

(e) calculate performance data of the Fund for
dissemination to information services covering the
investment company industry;

(f) prepare and file the Fund's tax returns;

(g) examine and review the operations of the Fund's
custodian and transfer agent;

(h) coordinate the layout and printing of publicly
disseminated prospectuses and reports;

(i) perform internal audit examinations in accordance
with a charter to be adopted by FAS and the Fund;

(j) assist with the design, development, and operation
of the Fund;

(k) provide individuals reasonably acceptable to the
Fund's Board of Trustees for nomination,
appointment, or election as officers of the Fund,
who will be responsible for the management of
certain of the Fund's affairs as determined by the
Fund's Board of Trustees; and

(l) consult with the Fund and its Board of Trustees on
matters concerning the Fund and its affairs.

(m) cause the Trust to maintain sufficient shares of
the Fund registered and available for sale;

(n) monitor the Trust's status as a regulated
investment company under Internal Revenue Code of
1940;

(o) cause the Fund to comply with the laws of the
Fund's jurisdiction of organization.

(p) provide one or more persons, during normal business
hours, to respond to telephone inquiries with
respect to the Fund; and

(q) perform administrative and managerial oversight of
the custodian and transfer agent.

The foregoing, along with any additional services that FAS
shall agree in writing to perform for the Fund hereunder,
shall hereafter be referred to as "Administrative
Services." Administrative Services shall not include any
duties, functions, or services to be performed for the Fund
by the Fund's investment adviser, distributor, custodian,
or transfer agent pursuant to their respective agreements
with the Fund.

3. Expenses. FAS shall be responsible for expenses
incurred in providing office space, equipment, and
personnel as may be necessary or convenient to provide the
Administrative Services to the Fund, including the
compensation of FAS employees who serve as Trustees or
officers of the Fund. The Fund shall be responsible for
all other expenses incurred by FAS on behalf of and for the
benefit of the Fund, including without limitation postage
and courier expenses, printing expenses, travel expenses,
registration fees, filing fees, fees of outside counsel and
independent auditors, insurance premiums, fees payable to
Trustees who are not FAS employees, and trade association
dues.FAS will not cause the Fund to incur any expense that
would require the Fund or any class to adopt a plan under
Rule 12b-1 under the 1940 Act.

4. Compensation. For the Administrative Services
provided, the Fund hereby agrees to pay and FAS hereby
agrees to accept as full compensation for its services
rendered hereunder an administrative fee at an annual rate
per portfolio of the Fund's shares, payable daily, as
specified below:

Maximum Administrative Average Daily Net Assets
Fee of the Fund

.15% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of
$750 million

However, in no event shall the administrative fee received
during any year of this Agreement be less than, or be paid
at a rate less than would aggregate, $100,000, per
portfolio having a single class of shares, plus $25,000 per
each additional class of shares related to such portfolio.

5. Responsibility of Administrator.

(a) FAS shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the
Fund in connection with the matters to which this
Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or
from reckless disregard by it of its obligations
and duties under this Agreement. FAS shall be
entitled to rely on and may act upon advice of
counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such
advice. Any person, even though also an officer,
trustee, partner, employee or agent of FAS, who may
be or become an officer, Trustee ,employee or agent
of the Fund, shall be deemed, when rendering
services to the Fund or acting on any business of
the Fund (other than services or business in
connection with the duties of FAS hereunder) to be
rendering such services to or acting solely for the
Fund and not as an officer, trustee, partner,
employee or agent or one under the control or
direction of FAS even though paid by FAS.

(b) FAS shall be kept indemnified by the Fund and be
without liability for any action taken or any thing
done by it in performing the Administrative
Services in accordance with the above standards.
In order that the indemnification provisions
contained in this Section 5 shall apply, however,
it is understood that if in any case the Fund may
be asked to indemnify or save FAS harmless, the
Fund shall be fully and promptly advised of all
pertinent facts concerning the situation in
question, and it is further understood that FAS
will use all reasonable care to identify and notify
the Fund promptly concerning any situation which
presents or appears likely to present the
probability of such a claim for indemnification
against the Fund. The Fund shall have the option
to defend FAS against any claim which may be the
subject of this indemnification. In the event that
the Fund so elects, it will so notify FAS and
thereupon the Fund shall take over complete defense
of the claim, and FAS shall in such situation
initiate no further legal or other expenses for
which it shall seek indemnification under this
Section. FAS shall in no case confess any claim or
make any compromise or settlement in any case in
which the Fund will be asked to indemnify FAS
except with the Fund's prior written consent.

(c) The Fund shall be kept indemnified by FAS and shall
be without liability for any action taken or thing
done by FAS in performing the administrative
services in contravention of the above standards.
The Fund will use all reasonable care to notify FAS
promptly concerning any situation which presents or
appears likely to present the possibility of a
claim for indemnification against FAS. FAS may
defend the Fund against any claim which may be the
subject of this indemnification. In the event that
FAS so elects, it will notify the Fund and
thereupon FAS will take over complete defense of
the claim and the Fund shall in such situation
initiate no further legal or other expenses for
which it shall seek indemnification under this
Section. The Fund shall in no case confess any
claim or make any compromise or settlement in any
case in which the FAS will be asked to indemnify
the Fund except with FAS' prior written consent.

6. Duration and Termination.

(a) The initial term of this Agreement shall commence
on the date hereof, and shall extend for a period
of five years (the "Initial Term") from the later
of (i) the date hereof or (ii) the first day of the
year as of which the minimum administrative fee of
$100,000 per portfolio having a single class of
shares, plus, if applicable, $25,000 per each
additional class of shares for each portfolio
having more than one class of shares, is paid.

(b) In the event one or more new portfolios or classes
of shares is added to the Fund subsequent to the
second anniversary following the later of the two
dates specified in clauses (i) and (ii) of
paragraph (a) immediately above, in each case this
Agreement shall be extended such that it shall
expire on the third anniversary of the effective
date of the registration statement or
post-effective amendment to a registration
statement adding the new portfolio or class of
shares.

(c) Upon the expiration of the Initial Term or any
subsequent term, this Agreement shall be
automatically renewed for an additional term of one
year, unless notice of termination has been
delivered by either party to the other not less
than 120 days before the expiration of such term.

7. Amendment. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against
which an enforcement of the change, waiver, discharge or
termination is sought.

8. Limitations of Liability of Trustees or Officers,
Employees, Agents and Shareholders of the Fund. FAS is
expressly put on notice of the limitation of liability as
set forth in the Fund's Declaration of Trust and agrees
that the obligations assumed by the Fund pursuant to this
Agreement shall be limited in any case to the Fund and its
assets and that FAS shall not seek satisfaction of any such
obligations from the shareholders of the Fund, the
Trustees, Officers, Employees or Agents of the Fund, or any
of them.

9. Limitations of Liability of Trustees and
Shareholders of FAS. The execution and delivery of this
Agreement have been authorized by the Trustees of FAS and
signed by an authorized officer of FAS, acting as such, and
neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any
liability on any of them personally, and the obligations of
this Agreement are not binding upon any of the Trustees or
shareholders of FAS, but bind only the trust property of
FAS as provided in the Declaration of Trust of FAS.

10.
Notices. Notices of any kind to be given hereunder shall
be in writing (including facsimile communication) and shall
be duly given if delivered to the Fund and to its
investment adviser at the following address:Bank South,
N.A., 55 Marietta Street, Atlanta, Georgia 30303.
Attention: Director of Mutual Funds
and if delivered to FAS at Federated Investors Tower,
Pittsburgh, PA 15222-3779, Attention: President.

11. Confidentiality. FAS agrees on behalf of itself
and its affiliates and employees to treat confidentially
and as proprietary information of the Trust all records and
other information relative to prior, present, or potential
Shareholders of the Trust, and not to use such records and
information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior
notification to and approval in writing by the Trust and
may not be withheld where FAS may be exposed to civil or
criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted
authorities, or when so requested by the Trust. Provided,
however, that FAS shall not be bound by this provision with
regard to information (i) which it receives from another
source not subject to confidential treatment; or (ii) which
otherwise becomes part of the public domain through no
action of FAS or the Fund or any affiliate of either of
them.

12. Miscellaneous. The captions in this Agreement are
included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of
this Agreement shall be held or made invalid by a court or
regulatory agency decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
Subject to the provisions of Section 5, hereof, this
Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective
successors and shall be governed by Pennsylvania law;
provided, however, that nothing herein shall be construed
in a manner inconsistent with the Investment Company Act of
1940 or any rule or regulation promulgated by the
Securities and Exchange Commission thereunder.

13. Counterparts. This Agreement may be executed by
different parties on separate counterparts, each of which,
when so executed and delivered, shall be an original, and
all such counterparts shall together constitute one and the
same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their respective officers
thereunto duly authorized as of the day and year first
above written.

BANKSOUTH SELECT FUNDS

By:/s/ Charles L. Davis, Jr.
Name:Charles L. Davis, Jr.
Title:Vice-President

Attest:/s/ C. Grant Anderson
Assistant Secretary

FEDERATED ADMINISTRATIVE SERVICES

By: /s/ Edward C. Gonzales
Name:Edward C. Gonzales
Title:Chairman

Attest: /s/ S. Elliott Cohan
Assistant Secretary

Exhibit 8 under Form N-1A
Exhibit 10 under Item 601/Reg. SK

FORM OF
CUSTODY AGREEMENT
BETWEEN
BANKSOUTH SELECT FUNDS
AND
THE BANK OF NEW YORK

Agreement made as of this sixth day of January, 1994,
between BANKSOUTH SELECT FUNDS, a Massachusetts business
trust organized and existing under the laws of the
Commonwealth of Massachusetts, having its principal office
and place of business at Federated Investors Tower,
Pittsburgh Pennsylvania 1522-3779 (hereinafter called the
"Fund"), and THE BANK OF NEW YORK, a New York corporation
authorized to do a banking business, having its principal
office and place of business at 48 Wall Street, New York,
New York 10286 (hereinafter called the "Custodian").

W I T N E S S E T H :

That for and in consideration of the mutual promises
hereinafter set forth, the Fund and the Custodian agree as
follows:

ARTICLE I.

DEFINITIONS

Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have
the following meanings:

1. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and
federal agency securities, its successor or successors and
its nominee or nominees.

2. "Call Option" shall mean an over the counter or exchange
traded option with respect to Securities other than Stock
Index Options, Futures Contracts, and Futures Contract
Options entitling the holder, upon timely exercise and
payment of the exercise price, as specified therein, to
purchase from the writer thereof the specified underlying
Securities.

3. "Clearing Member" shall mean a registered broker-dealer
which is a clearing member under the rules of O.C.C. and a
member of a national securities exchange qualified to act as
a custodian for an investment company, or any broker-dealer
reasonably believed by the Custodian to be such a clearing
member.

4. "Collateral Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this
Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain
Securities and/or other assets of the Fund specifically
allocated to such Series shall be deposited and withdrawn
from time to time in accordance with Proper Instructions
received by the Custodian in connection with such
transactions as the Fund may from time to time determine.

5. "Covered Call Option" shall mean an exchange traded
option entitling the holder, upon timely exercise and
payment of the exercise price, as specified therein, to
purchase from the writer thereof the specified underlying
Securities (excluding Futures Contracts) which are owned by
the writer thereof and subject to appropriate restrictions.

6. "Depository" shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities
and Exchange Commission, its successor or successors and its
nominee or nominees. The term "Depository" shall further
mean and include any other person authorized to act as a
depository under the Investment Company Act of 1940, its
successor or successors and its nominee or nominees,
specifically identified in a certified copy of a resolution
of the Fund's Board of Directors specifically approving
deposits therein by the Custodian and those book-entry
systems approved pursuant to Rule 17f-4 under the Investment
Company Act of 1940, by the Fund's Board of Directors.

7. "Derivative" shall mean puts, calls, straddles, futures,
forwards, interest rate swaps, caps, collars, ceilings and
floors and other interest rate protection instruments and
any related options, and currency swaps.

8. "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities including,
without limitation, U.S. Treasury Bills, U.S. Treasury
Notes, U.S. Treasury Bonds, domestic bank certificates of
deposit, and Eurodollar certificates of deposit, during a
specified month at an agreed upon price.

9. "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contracts.

10. "Futures Contract Option" shall mean an option with
respect to a Futures Contract.

11. "Margin Account" shall mean a segregated account in the
name of a broker, dealer, futures commission merchant, or a
Clearing Member, or in the name of the Fund for the benefit
of a broker, dealer, futures commission merchant, or
Clearing Member, or otherwise, in accordance with an
agreement between the Fund, the Custodian and a broker,
dealer, futures commission merchant or a Clearing Member (a
"Margin Account Agreement"), separate and distinct from the
custody account, in which certain Securities and/or money of
the Fund shall be deposited and withdrawn from time to time
in connection with such transactions as the Fund may from
time to time determine. Securities held in the Book-Entry
System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the
Custodian's effecting an appropriate entry in its books and
records.

12. "Money Market Security" shall be deemed to include,
without limitation, certain Reverse Repurchase Agreements,
debt obligations issued or guaranteed as to interest and
principal by the government of the United States or agencies
or instrumentalities thereof, any tax, bond or revenue
anticipation note issued by any state or municipal
government or public authority, commercial paper,
certificates of deposit and bankers' acceptances, repurchase
agreements with respect to the same and bank time deposits,
and such other instruments and agreements where the purchase
and sale of such securities and instruments normally
requires settlement in federal funds on the same day as such
purchase or sale.

13. "O.C.C." shall mean the Options Clearing Corporation, a
clearing agency registered under Section 17A of the
Securities Exchange Act of 1934, its successor or
successors, and its nominee or nominees.

14. "Officers" shall be deemed to include the President, any
Vice President, the Secretary, the Treasurer, the
Controller, any Assistant Secretary, any Assistant
Treasurer, and any other person or persons, whether or not
any such other person is an officer of the Fund, duly
authorized by the Board of Directors of the Fund to execute
any Proper Instruction, instruction, notice or other
instrument on behalf of the Fund and listed in the
Authorized and Proper Instructions annexed hereto as
Appendix A or such other Proper Instruction as may be
received by the Custodian from time to time.

15. "Option" shall mean a Call Option, Covered Call Option,
Stock Index Option and/or a Put Option.

16. "Proper Instruction" shall mean any oral or written
notice, instruction, or other instrument, authorized or
required by this Agreement to be given to the Custodian
which is actually received by the Custodian and, authorized
on behalf of the Fund by the kind and number of Officers
designated in the Fund's Authorized and Proper Instructions,
and the term Proper Instruction shall also include
instructions by the Fund to the Custodian communicated by a
Terminal Link.

17. "Put Option" shall mean an exchange traded option with
respect to Securities other than Stock Index Options,
Futures Contracts, and Futures Contract Options entitling
the holder, upon timely exercise and tender of the specified
underlying Securities, to sell such Securities to the writer
thereof for the exercise price.

18. "Reverse Repurchase Agreement" shall mean an agreement
pursuant to which the Fund sells Securities and agrees to
repurchase such Securities at a described or specified date
and price.

19. "Security" shall be deemed to include, without
limitation, Money Market Securities, Derivatives, Call
Options, Put Options, Stock Index Options, Stock Index
Futures Contracts, Stock Index Futures Contract Options,
Financial Futures Contracts, Financial Futures Contract
Options, Reverse Repurchase Agreements, common stocks and
other securities having characteristics similar to common
stocks, preferred stocks, debt obligations issued by state
or municipal governments and by public authorities,
(including, without limitation, general obligation bonds,
revenue bonds, industrial bonds and industrial development
bonds), asset-backed securities and obligations, bonds,
debentures, notes, mortgages or other obligations, and any
combination of any of the foregoing to create "synthetic"
securities or otherwise and any certificates, receipts,
warrants or other instruments representing rights to
receive, purchase, sell or subscribe for the same, or
evidencing or representing any other rights or interest
therein, or any property or assets.

20. "Series" shall mean the various portfolios, if any, of
the Fund as described from time to time in the current and
effective prospectus for the Fund.

21. "Shares" shall mean the shares of capital stock of the
Fund, each of which is, in the case of a Fund having Series,
allocated to a particular Series.

22. "Stock Index Futures Contract" shall mean a bilateral
agreement pursuant to which the parties agree to take or
make delivery of an amount of cash equal to a specified
dollar amount times the difference between the value of a
particular stock index at the close of the last business day
of the contract and the price at which the futures contract
is originally struck.

23. "Stock Index Option" shall mean an exchange traded
option entitling the holder, upon timely exercise, to
receive an amount of cash determined by reference to the
difference between the exercise price and the value of the
index on the date of exercise.

24. "Terminal Link" shall mean an electronic data
transmission link between the Fund and the Custodian
requiring in connection with each use of the Terminal Link
by or on behalf of the Fund use of an authorization code
provided by the Custodian and at least two access codes
established by the Fund.

ARTICLE II.

APPOINTMENT OF CUSTODIAN

1. The Fund hereby constitutes and appoints the Custodian as
custodian of the Securities and moneys at any time owned by
the Fund during the period of this Agreement.

2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as
hereinafter set forth.

ARTICLE III.

CUSTODY OF CASH AND SECURITIES

1. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, the Fund will deliver or cause
to be delivered to the Custodian all Securities and all
moneys owned by it, at any time during the period of this
Agreement, and shall specify with respect to such Securities
and money the Series to which the same are specifically
allocated. The Custodian shall segregate, keep and maintain
the assets of each Series separate and apart from the other
Series and from the Custodian's own assets and assets it
holds for others, regardless of capacity, and shall maintain
books and records adequate to reflect the ownership of
Securities and moneys held hereunder. The Custodian will not
be responsible for any Securities and moneys not actually
received by it. The Custodian will be entitled to reverse
any credits made to the Fund's cash balance on the Fund's
behalf where such credits have been previously made and
moneys are not finally collected. The Fund shall deliver to
the Custodian a certified resolution of the Board of
Directors of the Fund, substantially in the form of Exhibit
A hereto, approving, authorizing and instructing the
Custodian on a continuous and on-going basis to deposit in
the Book-Entry System all Securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated and to utilize the Book-Entry System
to the extent possible in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities and deliveries and returns of Securities
collateral. Prior to a deposit of Securities specifically
allocated to a Series in the Depository, the Fund shall
deliver to the Custodian a certified resolution of the Board
of Directors of the Fund, substantially in the form of
Exhibit B hereto, approving, authorizing and instructing the
Custodian on a continuous and ongoing basis until instructed
to the contrary by a Proper Instruction actually received by
the Custodian to deposit in the Depository all Securities
specifically allocated to such Series eligible for deposit
therein, and to utilize the Depository to the extent
possible with respect to such Securities in connection with
its performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns
of Securities collateral. Securities and moneys deposited in
either the Book-Entry System or the Depository will be
represented in accounts which include only assets held by
the Custodian for customers, including, but not limited to,
accounts in which the Custodian acts in a fiduciary or
representative capacity and will be specifically allocated
on the Custodian's books to the separate account for the
applicable Series. Recognizing that only a confirmation and
not an actual security is received when dealing with Options
and Derivatives, prior to the Custodian's accepting,
utilizing and acting with respect to Clearing Member
confirmations for Options and Derivatives and transactions
in Options and Derivatives for a Series as provided in this
Agreement, the Custodian shall have received a Proper
Instruction, substantially in the form of Exhibit C hereto,
approving, authorizing and instructing the Custodian on a
continuous and on-going basis, until instructed to the
contrary by a Proper Instruction actually received by the
Custodian, to accept, utilize and act in accordance with
such confirmations as provided in this Agreement with
respect to such Series.

2. The Custodian shall establish and maintain separate
accounts, in the name of each Series, and shall credit to
the separate account for each Series all moneys received by
it for the account of the Fund with respect to such Series.
Money credited to a separate account for a Series shall be
disbursed by the Custodian only:

(a) As hereinafter provided;

(b) Pursuant to Proper Instructions setting forth the name
and address of the person to whom the payment is to be made,
the Series account from which payment is to be made and the
purpose for which payment is to be made; or

(c) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian attributable to
such Series upon invoice and instruction to pay.

3. Promptly after the close of business on each day, the
Custodian shall furnish the Fund with confirmations and a
summary, on a per Series basis, of all transfers to or from
the account of the Fund for a Series during said day, either
hereunder or with any co-custodian or sub-custodian
appointed in accordance with this Agreement. Where
Securities are transferred to the account of the Fund for a
Series, the Custodian shall also by book-entry or otherwise
identify as belonging to such Series a quantity of
Securities in a fungible bulk of Securities registered in
the name of the Custodian (or its nominee) as Custodian for
the Fund or shown on the Custodian's account on the books of
the Book-Entry System or the Depository. At least monthly
and from time to time, the Custodian shall furnish the Fund
with a detailed statement, on a per Series basis, of the
Securities and moneys held by the Custodian for the Fund.

4. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, all Securities held by the
Custodian hereunder, which are issued or issuable only in
bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian in that
form; all other Securities held hereunder may be registered
in the name of the Fund or its nominee, in the name of any
duly appointed registered nominee of the Custodian, as
Custodian for the Fund, as the Custodian may from time to
time determine, or in the name of the Book-Entry System or
the Depository or their successor or successors, or their
nominee or nominees. The Fund agrees to furnish to the
Custodian appropriate instruments to enable the Custodian to
hold or deliver in proper form for transfer, or to register
in the name of its registered nominee or in the name of the
Book-Entry System or the Depository any Securities which it
may hold hereunder and which may from time to time be
registered in the name of the Fund or its nominee. The
Custodian shall hold all such Securities specifically
allocated to a Series which are not held in the Book-Entry
System or in the Depository in a separate account in the
name of such Series physically segregated at all times from
those of any other person or persons.

5. Except as otherwise provided in this Agreement and unless
otherwise instructed to the contrary by a Proper
Instruction, the Custodian by itself, or through the use of
the Book-Entry System or the Depository with respect to
Securities held hereunder and therein deposited, shall with
respect to all Securities held for the Fund hereunder in
accordance with preceding paragraph 4:

(a) Collect all income due or payable;

(b) Present for payment and collect the amount payable upon
such Securities which are called, but only if either (i) the
Custodian receives a written notice of such call, or (ii)
notice of such call appears in one or more of the
publications listed in Appendix B annexed hereto, which may
be amended at any time by the Custodian without the prior
notification or consent of the Fund, although the Custodian
will give the Fund notice as soon as practical;

(d) Surrender Securities in temporary form for definitive
Securities;

(e) Execute, as custodian, any necessary declarations or
certificates of ownership under the Federal Income Tax Laws
or the laws or regulations of any other taxing authority now
or hereafter in effect; and

(f) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for
the account of a Series, all rights and similar securities
issued with respect to any Securities held by the Custodian
for such Series hereunder.

6. Upon receipt of a Proper Instruction and not otherwise,
the Custodian, directly or through the use of the Book-Entry
System or the Depository, shall:

(a) Execute and deliver to such persons as may be designated
in such Proper Instruction proxies, consents,
authorizations, and any other instruments whereby the
authority of the Fund as owner of any Securities held by the
Custodian hereunder for the Series specified in such Proper
Instruction may be exercised;

(b) Deliver any Securities held by the Custodian hereunder
for the Series specified in such Proper Instruction in
exchange for other Securities or cash issued or paid in
connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of
any corporation, or the exercise of any conversion privilege
and receive and hold hereunder specifically allocated to
such Series any cash or other Securities received in
exchange;

(c) Deliver any Securities held by the Custodian hereunder
for the Series specified in such Proper Instruction to any
protective committee, reorganization committee or other
person in connection with the reorganization, refinancing,
merger, consolidation, recapitalization or sale of assets of
any corporation, and receive and hold hereunder specifically
allocated to such Series such certificates of deposit,
interim receipts or other instruments or documents as may be
issued to it to evidence such delivery;

(d) Make such transfers or exchanges of the assets of the
Series specified in such Proper Instruction, and take such
other steps as shall be stated in such Proper Instruction to
be for the purpose of effectuating any duly authorized plan
of liquidation, reorganization, merger, consolidation or
recapitalization of the Fund; and

(e) Present for payment and collect the amount payable upon
Securities not described in preceding paragraph 5(b) of this
Article which may be called as specified in the Proper
Instruction.

7. Notwithstanding any provision elsewhere contained herein,
the Custodian shall not be required to obtain possession of
any instrument or certificate representing any Derivative,
Futures Contract, any Option, or any Futures Contract Option
until after it shall have determined, or shall have received
a Proper Instruction from the Fund stating, that any such
instruments or certificates are available. The Fund shall
deliver to the Custodian such a Proper Instruction no later
than the business day preceding the availability of any such
instrument or certificate. Prior to such availability, the
Custodian shall comply with Section 17(f) of the Investment
Company Act of 1940, as amended, in connection with the
purchase, sale, settlement, closing out or writing of
Derivatives, Futures Contracts, Options, or Futures Contract
Options by making payments or deliveries specified in Proper
Instructions received by the Custodian in connection with
any such purchase, sale, writing, settlement or closing out
upon its receipt from a broker, dealer, or futures
commission merchant of a statement or confirmation
reasonably believed by the Custodian to be in the form
customarily used by brokers, dealers, or future commission
merchants with respect to such Derivatives, Futures
Contracts, Options, or Futures Contract Options, as the case
may be, confirming that such Security is held by such
broker, dealer or futures commission merchant, in book-entry
form or otherwise, in the name of the Custodian (or any
nominee of the Custodian) as custodian for the Fund,
provided, however, that notwithstanding the foregoing,
payments to or deliveries from the Margin Account, and
payments with respect to Securities to which a Margin
Account relates, shall be made in accordance with the terms
and conditions of the Margin Account Agreement. Whenever any
such instruments or certificates are available, the
Custodian shall, notwithstanding any provision in this
Agreement to the contrary, make payment for any Derivative,
Futures Contract, Option, or Futures Contract Option for
which such instruments or such certificates are available
only against the delivery to the Custodian of such
instrument or such certificate, and deliver any Derivative,
Futures Contract, Option or Futures Contract Option for
which such instruments or such certificates are available
only against receipt by the Custodian of payment therefor.
Any such instrument or certificate delivered to the
Custodian shall be held by the Custodian hereunder in
accordance with, and subject to, the provisions of this
Agreement.

ARTICLE IV.

PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS

1. Promptly after each purchase of Securities by the Fund,
other than a purchase of an Option, a Futures Contract, or a
Futures Contract Option, the Fund shall deliver to the
Custodian (a) the Series to which such Securities are to be
specifically allocated; (b) the name of the issuer and the
title of the Securities; (c) the number of shares or the
principal amount purchased and accrued interest, if any; (d)
the date of purchase and settlement; (e) the purchase price
per unit; (f) the total amount payable upon such purchase;
(g) the name of the person from whom or the broker through
whom the purchase was made, and the name of the clearing
broker, if any; and (h) the name of the broker to whom
payment is to be made. The Custodian shall, upon receipt of
Securities purchased by or for the Fund, pay to the broker
specified in the Proper Instruction out of the moneys held
for the account of such Series the total amount payable upon
such purchase, provided that the same conforms to the total
amount payable as set forth in such Proper Instruction.

2. Promptly after each sale of Securities by the Fund, other
than a sale of any Option, Futures Contract, Futures
Contract Option, or any Reverse Repurchase Agreement, the
Fund shall deliver to the Custodian (a) the Series to which
such Securities were specifically allocated; (b) the name of
the issuer and the title of the Security; (c) the number of
shares or principal amount sold, and accrued interest, if
any; (d) the date of sale; (e) the sale price per unit; (f)
the total amount payable to the Fund upon such sale; (g) the
name of the broker through whom or the person to whom the
sale was made, and the name of the clearing broker, if any;
and (h) the name of the broker to whom the Securities are to
be delivered. The Custodian shall deliver the Securities
specifically allocated to such Series to the broker
specified in the Proper Instruction against payment of the
total amount payable to the Fund upon such sale, provided
that the same conforms to the total amount payable as set
forth in such Proper Instruction.

ARTICLE V.

OPTIONS

1. Promptly after the purchase of any Option by the Fund,
the Fund shall deliver to the Custodian a Proper Instruction
specifying with respect to each Option purchased: (a) the
Series to which such Option is specifically allocated; (b)
the type of Option (put or call); (c) the name of the issuer
and the title and number of shares subject to such Option
or, in the case of a Stock Index Option, the stock index to
which such Option relates and the number of Stock Index
Options purchased; (d) the expiration date; (e) the exercise
price; (f) the dates of purchase and settlement; (g) the
total amount payable by the Fund in connection with such
purchase; (h) the name of the Clearing Member through whom
such Option was purchased; and (i) the name of the broker to
whom payment is to be made. The Custodian shall pay, upon
receipt of a Clearing Member's statement confirming the
purchase of such Option held by such Clearing Member for the
account of the Custodian (or any duly appointed and
registered nominee of the Custodian) as custodian for the
Fund, out of moneys held for the account of the Series to
which such Option is to be specifically allocated, the total
amount payable upon such purchase to the Clearing Member
through whom the purchase was made, provided that the same
conforms to the total amount payable as set forth in such
Proper Instruction.

2. Promptly after the sale of any Option purchased by the
Fund pursuant to paragraph 1 hereof, the Fund shall deliver
to the Custodian a Proper Instruction specifying with
respect to each such sale: (a) the Series to which such
Option was specifically allocated; (b) the type of Option
(put or call); (c) the name of the issuer and the title and
number of shares subject to such Option or, in the case of a
Stock Index Option, the stock index to which such Option
relates and the number of Stock Index Options sold; (d) the
date of sale; (e) the sale price; (f) the date of
settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the Clearing Member through
whom the sale was made. The Custodian shall consent to the
delivery of the Option sold by the Clearing Member which
previously supplied the confirmation described in preceding
paragraph 1 of this Article with respect to such Option
against payment to the Custodian of the total amount payable
to the Fund, provided that the same conforms to the total
amount payable as set forth in such Proper Instruction.

3. Promptly after the exercise by the Fund of any Call
Option purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall deliver to the Custodian a Proper Instruction
specifying with respect to such Call Option: (a) the Series
to which such Call Option was specifically allocated; (b)
the name of the is- sure and the title and number of shares
subject to the Call Option; (c) the expiration date; (d) the
date of exercise and settlement; (e) the exercise price per
share; (f) the total amount to be paid by the Fund upon such
exercise; and (g) the name of the Clearing Member through
whom such Call Option was exercised. The Custodian shall,
upon receipt of the Securities underlying the Call Option
which was exercised, pay out of the moneys held for the
account of the Series to which such Call Option was
specifically allocated the total amount payable to the
Clearing Member through whom the Call Option was exercised,
provided that the same conforms to the total amount payable
as set forth in such Proper Instruction.

4. Promptly after the exercise by the Fund of any Put Option
purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall deliver to the Custodian a Proper Instruction
specifying with respect to such Put Option: (a) the Series
to which such Put Option was specifically allocated; (b) the
name of the issuer and the title and number of shares
subject to the Put Option; (c) the expiration date; (d) the
date of exercise and settlement; (e) the exercise price per
share; (f) the total amount to be paid to the Fund upon such
exercise; and (g) the name of the Clearing Member through
whom such Put Option was exercised. The Custodian shall,
upon receipt of the amount payable upon the exercise of the
Put Option, deliver or direct the Depository to deliver the
Securities specifically allocated to such Series, provided
the same conforms to the amount payable to the Fund as set
forth in such Proper Instruction.

5. Promptly after the exercise by the Fund of any Stock
Index Option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver to the Custodian a Proper
Instruction specifying with respect to such Stock Index
Option: (a) the Series to which such Stock Index Option was
specifically allocated; (b) the type of Stock Index Option
(put or call); (c) the number of Options being exercised;
(d) the stock index to which such Option relates; (e) the
expiration date; (f) the exercise price; (g) the total
amount to be received by the Fund in connection with such
exercise; and (h) the Clearing Member from whom such payment
is to be received. The Custodian shall remove such Stock
Index Option from the Fund's listing of assets and credit
the Fund's cash account timely upon receipt of such amount
by the Custodian.

6. Whenever the Fund writes a Covered Call Option, the Fund
shall promptly deliver to the Custodian a Proper Instruction
specifying with respect to such Covered Call Option: (a) the
Series for which such Covered Call Option was written; (b)
the name of the issuer and the title and number of shares
for which the Covered Call Option was written and which
underlie the same; (c) the expiration date; (d) the exercise
price; (e) the premium to be received by the Fund; (f) the
date such Covered Call Option was written; and (g) the name
of the Clearing Member through whom the premium is to be
received. The Custodian shall deliver or cause to be
delivered, in exchange for receipt of the premium specified
in the Proper Instruction with respect to such Covered Call
Option, such receipts as are required in accordance with the
customs prevailing among Clearing Members dealing in Covered
Call Options and shall impose, or direct the Depository to
impose, upon the underlying Securities specified in the
Proper Instruction specifically allocated to such Series
such restrictions as may be required by such receipts.
Notwithstanding the foregoing, the Custodian has the right,
upon prior written notification to the Fund and in order to
maintain compliance with OCC Rules limiting the amount of
receipts a bank can issue in relation to its capital, at any
time to refuse to issue any receipts for Securities in the
possession of the Custodian and not deposited with the
Depository underlying a Covered Call Option.

7. Whenever a Covered Call Option written by the Fund and
described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian
a Proper Instruction instructing the Custodian to deliver,
or to direct the Depository to deliver, the Securities
subject to such Covered Call Option and specifying: (a) the
Series for which such Covered Call Option was written; (b)
the name of the issuer and the title and number of shares
subject to the Covered Call Option; (c) the Clearing Member
to whom the underlying Securities are to be delivered; and
(d) the total amount payable to the Fund upon such delivery.
Upon the return and/or cancellation of any receipts
delivered pursuant to paragraph 6 of this Article, the
Custodian shall deliver, or direct the Depository to
deliver, the underlying Securities as specified in the
Proper Instruction against payment of the amount to be
received as set forth in such Proper Instruction.

8. Whenever the Fund writes a Put Option, the Fund shall
promptly deliver to the Custodian a Proper Instruction
specifying with respect to such Put Option: (a) the Series
for which such Put Option was written; (b) the name of the
issuer and the title and number of shares for which the Put
Option is written and which underlie the same; (c) the
expiration date; (d) the exercise price; (e) the premium to
be received by the Fund; (f) the date such Put Option is
written; (g) the name of the Clearing Member through whom
the premium is to be received and to whom a Put Option
guarantee letter is to be delivered; (h) the amount of cash,
and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the
Senior Security Account for such Series; and (I) the amount
of cash and/or the amount and kind of Securities
specifically allocated to such Series to be deposited into
the Collateral Account for such Series. The Custodian shall,
after making the deposits into the Collateral Account
specified in the Proper Instruction, issue a Put Option
guarantee letter substantially in the form utilized by the
Custodian on the date hereof, and deliver the same to the
Clearing Member specified in the Proper Instruction against
receipt of the premium specified in said Proper Instruction.
Notwithstanding the foregoing, the Custodian shall be under
no obligation to issue any Put Option guarantee letter or
similar document if it is unable to make any of the
representations contained therein.

9. Whenever a Put Option written by the Fund and described
in the preceding paragraph is exercised, the Fund shall
promptly deliver to the Custodian a Proper Instruction
specifying: (a) the Series to which such Put Option was
written; (b) the name of the issuer and title and number of
shares subject to the Put Option; (c) the Clearing Member
from whom the underlying Securities are to be received; (d)
the total amount payable by the Fund upon such delivery; (e)
the amount of cash and/or the amount and kind of Securities
specifically allocated to such Series to be withdrawn from
the Collateral Account for such Series and (f) the amount of
cash and/or the amount and kind of Securities, specifically
allocated to such Series, if any, to be withdrawn from the
Senior Security Account. Upon the return and/or cancellation
of any Put Option guarantee letter or similar document
issued by the Custodian in connection with such Put Option,
the Custodian shall pay out of the moneys held for the
account of the Series to which such Put Option was
specifically allocated the total amount payable to the
Clearing Member specified in the Proper Instruction as set
forth in such Proper Instruction against delivery of such
Securities, and shall make the withdrawals specified in such
Proper Instruction.

10. Whenever the Fund writes a Stock Index Option, the Fund
shall promptly deliver to the Custodian a Proper Instruction
specifying with respect to such Stock Index Option: (a) the
Series for which such Stock Index Option was written; (b)
whether such Stock Index Option is a put or a call; (c) the
number of options written; (d) the stock index to which such
Option relates; (e) the expiration date; (f) the exercise
price; (g) the Clearing Member through whom such Option was
written; (h) the premium to be received by the Fund; (i) the
amount of cash and/or the amount and kind of Securities, if
any, specifically allocated to such Series to be deposited
in the Collateral Account for such Series; and (j) the
amount of cash and/or the amount and kind of Securities, if
any, specifically allocated to such Series to be deposited
in a Margin Account, and the name in which such account is
to be or has been established. The Custodian shall, upon
receipt of the premium specified in the Proper Instruction,
make the deposits, if any, into the Collateral Account
specified in the Proper Instruction, and either (1) deliver
such receipts, if any, which the Custodian has specifically
agreed to issue, which are in accordance with the customs
prevailing among Clearing Members in Stock Index Options and
make the deposits into the Collateral Account specified in
the Proper Instruction, or (2) make the deposits into the
Margin Account specified in the Proper Instruction.

11. Whenever a Stock Index Option written by the Fund and
described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian
a Proper Instruction specifying with respect to such Stock
Index Option: (a) the Series for which such Stock Index
Option was written; (b) such information as may be necessary
to identify the Stock Index Option being exercised; (c) the
Clearing Member through whom such Stock Index Option is
being exercised; (d) the total amount payable upon such
exercise, and whether such amount is to be paid by or to the
Fund; (e) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Margin Account;
and (f) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Collateral
Account for such Series. Upon the return and/or
cancellation of the receipt, if any, delivered pursuant to
the preceding paragraph of this Article, the Custodian shall
pay out of the moneys held for the account of the Series to
which such Stock Index Option was specifically allocated to
the Clearing Member specified in the Proper Instruction the
total amount payable, if any, as specified therein.

12. Whenever the Fund purchases any Option identical to a
previously written Option described in paragraphs, 6, 8 or
10 of this Article in a transaction expressly designated by
the Fund's adviser as a "Closing Purchase Transaction" in
order to liquidate its position as a writer of an Option,
the Fund shall promptly deliver to the Custodian a Proper
Instruction specifying with respect to the Option being
purchased: (a) that the transaction is a Closing Purchase
Transaction; (b) the Series for which the Option was
written; (c) the name of the issuer and the title and number
of shares subject to the Option, or, in the case of a Stock
Index Option, the stock index to which such Option relates
and the number of Options held; (d) the exercise price; (e)
the premium to be paid by the Fund; (f) the expiration date;
(g) the type of Option (put or call); (h) the date of such
purchase; (i) the name of the Clearing Member to whom the
premium is to be paid; and (j) the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from
the Collateral Account, or a specified Margin Account, for
such Series. Upon the Custodian's payment of the premium and
the return and/or cancellation of any receipt issued
pursuant to paragraphs 6, 8 or 10 of this Article with
respect to the Option being liquidated through the Closing
Purchase Transaction, the Custodian shall remove, or direct
the Depository to remove, the previously imposed
restrictions on the Securities underlying the Call Option.

13. Upon the expiration, exercise or consummation of a
Closing Purchase Transaction with respect to any Option
purchased or written by the Fund and described in this
Article, the Custodian shall delete such Option from the
statements delivered to the Fund pursuant to paragraph 3
Article III herein, and upon the return and/or cancellation
of any receipts issued by the Custodian, shall make such
withdrawals from the Collateral Account, and the Margin
Account as may be specified in a Proper Instruction received
in connection with such expiration, exercise, or
consummation.

ARTICLE VI.

FUTURES CONTRACTS

1. Whenever the Fund shall enter into a Futures Contract,
the Fund shall deliver to the Custodian a Proper Instruction
specifying with respect to such Futures Contract, (or with
respect to any number of identical Futures Contract(s)): (a)
the Series for which the Futures Contract is being entered;
(b) the category of Futures Contract (the name of the
underlying stock index or financial instrument); (c) the
number of identical Futures Contracts entered into; (d) the
delivery or settlement date of the Futures Contract(s); (e)
the date the Futures Contract(s) was (were) entered into and
the maturity date; (f) whether the Fund is buying (going
long) or selling (going short) on such Futures Contract(s);
(g) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Collateral
Account for such Series; (h) the name of the broker, dealer,
or futures commission merchant through whom the Futures
Contract was entered into; and (i) the amount of fee or
commission, if any, to be paid and the name of the broker,
dealer, or futures commission merchant to whom such amount
is to be paid. The Custodian shall make the deposits, if
any, to the Margin Account in accordance with the terms and
conditions of the Margin Account Agreement. The Custodian
shall make payment out of the moneys specifically allocated
to such Series of the fee or commission, if any, specified
in the Proper Instruction and deposit in the Collateral
Account for such Series the amount of cash and/or the amount
and kind of Securities specified in said Proper Instruction.

2. (a) Any variation margin payment or similar payment
required to be made by the Fund to a broker, dealer, or
futures commission merchant with respect to an outstanding
Futures Contract, shall be made by the Custodian in
accordance with the terms and conditions of the Margin
Account Agreement.

(b) Any variation margin payment or similar payment from a
broker, dealer, or futures commission merchant to the Fund
with respect to an outstanding Futures Contract, shall be
received and dealt with by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.

3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or
settlement is made on such Futures Contract, the Fund shall
deliver to the Custodian a Proper Instruction specifying:
(a) the Futures Contract and the Series to which the same
relates; (b) with respect to a Stock Index Futures Contract,
the total cash settlement amount to be paid or received, and
with respect to a Financial Futures Contract, the Securities
and/or amount of cash to be delivered or received; (c) the
broker, dealer, or futures commission merchant to or from
whom payment or delivery is to be made or received; and (d)
the amount of cash and/or Securities to be withdrawn from
the Collateral Account for such Series. The Custodian shall
make the payment or delivery specified in the Proper
Instruction, and delete such Futures Contract from the
statements delivered to the Fund pursuant to paragraph 3 of
Article III herein.

4. Whenever the Fund shall enter into a Futures Contract to
offset a Futures Contract held by the Custodian hereunder,
the Fund shall deliver to the Custodian a Proper Instruction
specifying: (a) the items of information required in a
Proper Instruction described in paragraph 1 of this Article,
and (b) the Futures Contract being offset. The Custodian
shall make payment out of the money specifically allocated
to such Series of the fee or commission, if any, specified
in the Proper Instruction and delete the Futures Contract
being offset from the statements delivered to the Fund
pursuant to paragraph 3 of Article III herein, and make such
withdrawals from the Senior Security Account for such Series
as may be specified in such Proper Instruction. The
withdrawals, if any, to be made from the Margin Account
shall be made by the Custodian in accordance with the terms
and conditions of the Margin Account Agreement.

ARTICLE VII.

FUTURES CONTRACT OPTIONS

1. Promptly after the purchase of any Futures Contract
Option by the Fund, the Fund shall promptly deliver to the
Custodian a Proper Instruction specifying with respect to
such Futures Contract Option: (a) the Series to which such
Option is specifically allocated; (b) the type of Futures
Contract Option (put or call); (c) the type of Futures
Contract and such other information as may be necessary to
identify the Futures Contract underlying the Futures
Contract Option purchased; (d) the expiration date; (e) the
exercise price; (f) the dates of purchase and settlement;
(g) the amount of premium to be paid by the Fund upon such
purchase; (h) the name of the broker or futures commission
merchant through whom such option was purchased; and (i) the
name of the broker, or futures commission merchant, to whom
payment is to be made. The Custodian shall pay out of the
moneys specifically allocated to such Series, the total
amount to be paid upon such purchase to the broker or
futures commissions merchant through whom the purchase was
made, provided that the same conforms to the amount set
forth in such Proper Instruction.

2. Promptly after the sale of any Futures Contract Option
purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall promptly deliver to the Custodian a Proper
Instruction specifying with respect to each such sale: (a)
Series to which such Futures Contract Option was
specifically allocated; (b) the type of Future Contract
Option (put or call); (c) the type of Futures Contract and
such other information as may be necessary to identify the
Futures Contract underlying the Futures Contract Option; (d)
the date of sale; (e) the sale price; (f) the date of
settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the broker of futures
commission merchant through whom the sale was made. The
Custodian shall consent to the cancellation of the Futures
Contract Option being closed against payment to the
Custodian of the total amount payable to the Fund, provided
the same conforms to the total amount payable as set forth
in such Proper Instruction.

3. Whenever a Futures Contract Option purchased by the Fund
pursuant to paragraph 1 is exercised by the Fund, the Fund
shall promptly deliver to the Custodian a Proper Instruction
specifying: (a) the Series to which such Futures Contract
Option was specifically allocated; (b) the particular
Futures Contract Option (put or call) being exercised; (c)
the type of Futures Contract underlying the Futures Contract
Option; (d) the date of exercise; (e) the name of the broker
or futures commission merchant through whom the Futures
Contract Option is exercised; (f) the net total amount, if
any, payable by the Fund; (g) the amount, if any, to be
received by the Fund; and (h) the amount of cash and/or the
amount and kind of Securities to be deposited in the
Collateral Account for such Series. The Custodian shall
make, out of the moneys and Securities specifically
allocated to such Series, the payments, if any, and the
deposits, if any, into the Collateral Accounts specified in
the Proper Instruction. The deposits, if any, to be made to
the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin
Account Agreement.

4. Whenever the Fund writes a Futures Contract Option, the
Fund shall promptly deliver to the Custodian a Proper
Instruction specifying with respect to such Futures Contract
Option: (a) the Series for which such Futures Contract
Option was written; (b) the type of Futures Contract Option
(put or call); (c) the type of Futures Contract and such
other information as may be necessary to identify the
Futures Contract underlying the Futures Contract Option; (d)
the expiration date; (e) the exercise price; (f) the premium
to be received by the Fund; (g) the name of the broker or
futures commission merchant through whom the premium is to
be received; and (h) the amount of cash and/or the amount
and kind of Securities, if any, to be deposited in the
Collateral Account for such Series. The Custodian shall,
upon receipt of the premium specified in the Proper
Instruction, make out of the moneys and Securities
specifically allocated to such Series the deposits into the
Collateral Account, if any, as specified in the Proper
Instruction. The deposits, if any, to be made to the Margin
Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.

5. Whenever a Futures Contract Option written by the Fund
which is a call is exercised, the Fund shall promptly
deliver to the Custodian a Proper Instruction specifying:
(a) the Series to which such Futures Contract Option was
specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type of Futures Contract
underlying the Futures Contract Option; (d) the name of the
broker or futures commission merchant through whom such
Futures Contract Option was exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f)
the net total amount, if any, payable by the Fund upon such
exercise; and (g) the amount of cash and/or the amount and
kind of Securities to be deposited in the Collateral Account
for such Series. The Custodian shall, upon its receipt of
the net total amount payable to the Fund, if any, specified
in such Proper Instruction make the payments, if any, and
the deposits, if any, into the Senior Security Account as
specified in the Proper Instruction. The deposits, if any,
to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the
Margin Account Agreement.

6. Whenever a Futures Contract Option which is written by
the Fund and which is a put is exercised, the Fund shall
promptly deliver to the Custodian a Proper Instruction
specifying: (a) the Series to which such Option was
specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type of Futures Contract
underlying such Futures Contract Option; (d) the name of the
broker or futures commission merchant through whom such
Futures Contract Option is exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f)
the net total amount, if any, payable by the Fund upon such
exercise; and (g) the amount and kind of Securities and/or
cash to be withdrawn from or deposited in, the Collateral
Account for such Series, if any. The Custodian shall, upon
its receipt of the net total amount payable to the Fund, if
any, specified in the Proper Instruction, make out of the
moneys and Securities specifically allocated to such Series,
the payments, if any, and the deposits, if any, into the
Senior Security Account as specified in the Proper
Instruction. The deposits to and/or withdrawals from the
Margin Account, if any, shall be made by the Custodian in
accordance with the terms and conditions of the Margin
Account Agreement.

7. Whenever the Fund purchases any Futures Contract Option
identical to a previously written Futures Contract Option
described in this Article in order to liquidate its position
as a writer of such Futures Contract Option, the Fund shall
promptly deliver to the Custodian a Proper Instruction
specifying with respect to the Futures Contract Option being
purchased: (a) the Series to which such Option is
specifically allocated; (b) that the transaction is a
closing transaction; (c) the type of Future Contract and
such other information as may be necessary to identify the
Futures Contract underlying the Futures Option Contract; (d)
the exercise price; (e) the premium to be paid by the Fund;
(f) the expiration date; (g) the name of the broker or
futures commission merchant to whom the premium is to be
paid; and (h) the amount of cash and/or the amount and kind
of Securities, if any, to be withdrawn from the Collateral
Account for such Series. The Custodian shall effect the
withdrawals from the Collateral Account specified in the
Proper Instruction. The withdrawals, if any, to be made from
the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin
Account Agreement.

8. Upon the expiration, exercise, or consummation of a
closing transaction with respect to, any Futures Contract
Option written or purchased by the Fund and described in
this Article, the Custodian shall (a) delete such Futures
Contract Option from the statements delivered to the Fund
pursuant to paragraph 3 of Article III herein and, (b) make
such withdrawals from and/or in the case of an exercise such
deposits into the Collateral Account as may be specified in
a Proper Instruction. The deposits to and/or withdrawals
from the Margin Account, if any, shall be made by the
Custodian in accordance with the terms and conditions of the
Margin Account Agreement.

9. Futures Contracts acquired by the Fund through the
exercise of a Futures Contract Option described in this
Article shall be subject to Article VI hereof.

ARTICLE VIII.

SHORT SALES

1. Promptly after any short sales by any Series of the Fund,
the Fund shall promptly deliver to the Custodian a Proper
Instruction specifying: (a) the Series for which such short
sale was made; (b) the name of the issuer and the title of
the Security; (c) the number of shares or principal amount
sold, and accrued interest or dividends, if any; (d) the
dates of the sale and settlement; (e) the sale price per
unit; (f) the total amount credited to the Fund upon such
sale, if any, (g) the amount of cash and/or the amount and
kind of Securities, if any, which are to be deposited in a
Margin Account and the name in which such Margin Account has
been or is to be established; (h) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited
in a Collateral Account, and (i) the name of the broker
through whom such short sale was made. The Custodian shall
upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to the Fund
upon such sale, if any, as specified in the Proper
Instruction is held by such broker for the account of the
Custodian (or any nominee of the Custodian) as custodian of
the Fund, issue a receipt or make the deposits into the
Margin Account and the Collateral Account specified in the
Proper Instruction.

2. In connection with the closing-out of any short sale, the
Fund shall promptly deliver to the Custodian a Proper
Instruction specifying with respect to each such closing
out: (a) the Series for which such transaction is being
made; (b) the name of the issuer and the title of the
Security; (c) the number of shares or the principal amount,
and accrued interest or dividends, if any, required to
effect such closing-out to be delivered to the broker; (d)
the dates of closing-out and settlement; (e) the purchase
price per unit; (f) the net total amount payable to the Fund
upon such closing-out; (g) the net total amount payable to
the broker upon such closing-out; (h) the amount of cash and
the amount and kind of Securities to be withdrawn, if any,
from the Margin Account; (i) the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from
the Collateral Account; and (j) the name of the broker
through whom the Fund is effecting such closing-out. The
Custodian shall, upon receipt of the net total amount
payable to the Fund upon such closing-out, and the return
and/ or cancellation of the receipts, if any, issued by the
Custodian with respect to the short sale being closed-out,
pay out of the moneys held for the account of the Fund to
the broker the net total amount payable to the broker, and
make the withdrawals from the Margin Account and the
Collateral Account, as the same are specified in the Proper
Instruction.

ARTICLE IX.

REVERSE REPURCHASE AGREEMENTS

1. Promptly after the Fund enters a Reverse Repurchase
Agreement with respect to Securities held by the Custodian
hereunder, the Fund shall deliver to the Custodian a Proper
Instruction, or in the event such Reverse Repurchase
Agreement is a Money Market Security, a Proper Instruction
specifying: (a) the Series for which the Reverse Repurchase
Agreement is entered; (b) the total amount payable to the
Fund in connection with such Reverse Repurchase Agreement
and specifically allocated to such Series; (c) the names of
the counterparty and of the broker or dealer through or with
whom the Reverse Repurchase Agreement is entered; (d) the
amount and kind of Securities to be delivered by the Fund to
such broker or dealer; (e) the date of such Reverse
Repurchase Agreement; and (f) the amount of cash and/or the
amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in a Senior
Security Account for such Series in connection with such
Reverse Repurchase Agreement. The Custodian shall, upon
receipt of the total amount payable to the Fund specified in
the Proper Instruction, make the delivery to the broker or
dealer, and the deposits, if any, to the Collateral Account,
specified in such Proper Instruction.

2. Upon the termination of a Reverse Repurchase Agreement
described in preceding paragraph 1 of this Article, the Fund
shall promptly deliver a Proper Instruction or, in the event
such Reverse Repurchase Agreement is a Money Market
Security, a Proper Instruction to the Custodian specifying:
(a) the Reverse Repurchase Agreement being terminated and
the Series for which same was entered; (b) the total amount
payable by the Fund in connection with such termination; (c)
the amount and kind of Securities to be received by the Fund
and specifically allocated to such Series in connection with
such termination; (d) the date of termination; (e) the names
of the counterparty and of the broker or dealer with or
through whom the Reverse Repurchase Agreement is to be
terminated; and (f) the amount of cash and/or the amount and
kind of Securities to be withdrawn from the Collateral
Account for such Series. The Custodian shall, upon receipt
of the amount and kind of Securities to be received by the
Fund specified in the Proper Instruction, make the payment
to the broker or dealer, and the withdrawals, if any, from
the Collateral Account, specified in such Proper
Instruction.

ARTICLE X.

LOAN OF PORTFOLIO SECURITIES OF THE FUND

1. Promptly after each loan of portfolio Securities
specifically allocated to a Series held by the Custodian
hereunder, the Fund shall deliver or cause to be delivered
to the Custodian a Proper Instruction specifying with
respect to each such loan: (a) the Series to which the
loaned Securities are specifically allocated; (b) the name
of the issuer and the title of the Securities, (c) the
number of shares or the principal amount loaned, (d) the
date of loan and delivery, (e) the total amount to be
delivered to the Custodian against the loan of the
Securities, including the amount of cash collateral and the
premium, if any, separately identified, and (f) the name of
the broker, dealer, or financial institution to which the
loan was made. The Custodian shall deliver the Securities
thus designated to the broker, dealer or financial
institution to which the loan was made upon receipt of the
total amount designated as to be delivered against the loan
of Securities. The Custodian may accept payment in
connection with a delivery otherwise than through the
Book-Entry System or Depository only in the form of a
certified or bank cashier's check payable to the order of
the Fund or the Custodian drawn on New York Clearing House
funds and may deliver Securities in accordance with the
customs prevailing among dealers in securities.

2. Promptly after each termination of the loan of Securities
by the Fund, the Fund shall deliver or cause to be delivered
to the Custodian a Proper Instruction specifying with
respect to each such loan termination and return of
Securities: (a) the Series to which the loaned Securities
are specifically allocated; (b) the name of the issuer and
the title of the Securities to be returned, (c) the number
of shares or the principal amount to be returned, (d) the
date of termination, (e) the total amount to be delivered by
the Custodian (including the cash collateral for such
Securities minus any offsetting credits as described in said
Proper Instruction), and (f) the name of the broker, dealer,
or financial institution from which the Securities will be
returned. The Custodian shall receive all Securities
returned from the broker, dealer, or financial institution
to which such Securities were loaned and upon receipt
thereof shall pay, out of the moneys held for the account of
the Fund, the total amount payable upon such return of
Securities as set forth in the Proper Instruction.

ARTICLE XI.

CONCERNING MARGIN ACCOUNTS, AND COLLATERAL ACCOUNTS

1. The Custodian shall make deliveries or payments from a
Margin Account to the broker, dealer, futures commission
merchant or Clearing Member in whose name, or for whose
benefit, the account was established as specified in the
Margin Account Agreement.

2. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any
Margin Account shall be dealt with in accordance with the
terms and conditions of the related Margin Account
Agreement.

3. The Custodian shall have a continuing lien and security
interest in and to any property at any time held by the
Custodian in any Collateral Account described herein. In
accordance with applicable law, including limitations under
the 1940 Act and the Fund's Prospectus, the Custodian may
enforce its lien and realize on any such property whenever
the Custodian has made payment or delivery pursuant to any
Put Option guarantee letter or similar document or any
receipt issued hereunder by the Custodian. In the event the
Custodian should realize on any such property net proceeds
which are less than the Custodian's obligations under any
Put Option guarantee letter or similar document or any
receipt, such deficiency shall be a debt owed the Custodian
by the Fund within the scope of Article XIV herein.

4 On each business day the Custodian shall furnish the Fund
with a statement with respect to each Margin Account in
which money or Securities are held specifying as of the
close of business on the previous business day: (a) the name
of the Margin Account; (b) the amount and kind of Securities
held therein; and (c) the amount of money held therein. The
Custodian shall make available upon request to any broker,
dealer, or futures commission merchant specified in the name
of a Margin Account a copy of the statement furnished the
Fund with respect to such Margin Account.

5. Promptly after the close of business on each business day
in which cash and/or Securities are maintained in a
Collateral Account for any Series, the Custodian shall
furnish the Fund with a statement with respect to such
Collateral Account specifying the amount of cash and/or the
amount and kind of Securities held therein. No later than
the close of business next succeeding the delivery to the
Fund of such statement, the Fund shall furnish to the
Custodian a Proper Instruction or Written Instructions
specifying the then market value of the Securities described
in such statement. In the event such then market value is
indicated to be less than the Custodian's obligation with
respect to any outstanding Put Option guarantee letter or
similar document, the Fund shall promptly specify in a
Proper Instruction the additional cash and/or Securities to
be deposited in such Collateral Account to eliminate such
deficiency.

ARTICLE XII.

PAYMENT OF DIVIDENDS OR DISTRIBUTIONS

1. The Fund shall furnish to the Custodian a copy of the
resolution of the Board of Directors of the Fund, certified
by the Secretary or any Assistant Secretary, either (i)
setting forth with respect to the Series specified therein
the date of the declaration of a dividend or distribution,
the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the
amount payable per Share of such Series to the shareholders
of record as of that date and the total amount payable to
the Dividend Agent and any sub-dividend agent or co-dividend
agent of the Fund on the payment date, or (ii) authorizing
with respect to the Series specified therein the declaration
of dividends and distributions on a daily basis and
authorizing the Custodian to rely on a Proper Instruction
setting forth the date of the declaration of such dividend
or distribution, the date of payment thereof, the record
date as of which shareholders entitled to payment shall be
determined, the amount payable per Share of such Series to
the shareholders of record as of that date and the total
amount payable to the Dividend Agent on the payment date.

2. Upon the payment date specified in such resolution,
Proper Instruction, as the case may be, the Custodian
shall pay out of the moneys held for the account of each
Series the total amount payable to the Dividend Agent and
any sub-dividend agent or co-dividend agent of the Fund with
respect to such Series.

ARTICLE XIII.

SALE AND REDEMPTION OF SHARES

1. Whenever the Fund shall sell any Shares, it shall deliver
to the Custodian a Proper Instruction duly specifying the
amount of money to be received by the Custodian for the sale
of such Shares and specifically allocated to the separate
account in the name of such Series.

2. Upon receipt of such money from the Transfer Agent, the
Custodian shall credit such money to the separate account in
the name of the Series for which such money was received.

3. Upon issuance of any Shares of any Series described in
the foregoing provisions of this Article, the Custodian
shall pay, out of the money held for the account of such
Series, all original issue or other taxes required to be
paid by the Fund in connection with such issuance upon the
receipt of a Proper Instruction specifying the amount to be
paid.

4. Except as provided hereinafter, whenever the Fund desires
the Custodian to make payment out of the money held by the
Custodian hereunder in connection with a redemption of any
Shares, it shall furnish to the Custodian a Proper
Instruction specifying:

(a) The number and Series of Shares redeemed; and

(b) The amount to be paid for such Shares.

5. Upon receipt from the Transfer Agent of an advice setting
forth the Series and number of Shares received by the
Transfer Agent for redemption and that such Shares are in
good form for redemption, the Custodian shall make payment
to the Transfer Agent or to another account of the Fund at
the Custodian out of the moneys held in the separate account
in the name of the Series the total amount specified in the
Proper Instruction issued pursuant to the foregoing
paragraph 4 of this Article.

6. Notwithstanding the above provisions regarding the
redemption of any Shares, whenever any Shares are redeemed
pursuant to any check redemption privilege which may from
time to time be offered by the Fund, the Custodian, unless
otherwise instructed by a Proper Instruction, shall, upon
receipt of an advice from the Fund or its agent setting
forth that the redemption is in good form for redemption in
accordance with the check redemption procedure, honor the
check presented as part of such check redemption privilege
out of the moneys held in the separate account of the Series
of the Shares being redeemed.

ARTICLE XIV.

OVERDRAFTS OR INDEBTEDNESS

1. If the Custodian, should in its sole discretion advance
funds on behalf of any Series which results in an overdraft
because the moneys held by the Custodian in the separate
account for such Series shall be insufficient to pay the
total amount payable upon a purchase of Securities
specifically allocated to such Series, as set forth in a
Proper Instruction, or which results in an overdraft in the
separate account of such Series for some other reason, or if
the Fund is for any other reason indebted to the Custodian
with respect to a Series (except a borrowing for investment
or for temporary or emergency purposes using Securities as
collateral pursuant to a separate agreement and subject to
the provisions of paragraph 2 of this Article), such
overdraft or indebtedness shall be deemed to be a loan made
by the Custodian to the Fund for such Series payable on
demand and shall bear interest from the date incurred at a
rate per annum (based on a 360-day year for the actual
number of days involved) equal to one-half percent over
Custodian's prime commercial lending rate, or alternatively,
such other rate, if any, as the Custodian and the Fund may
agree to from time to time. In addition, the Fund hereby
agrees that the Custodian shall have a continuing lien and
security interest in and to up to 5% of the net assets
specifically allocated to such Series, at any time held by
it for the benefit of such Series or in which the Fund may
have an interest which is then in the Custodian's possession
or control or in possession or control of any third party
acting in the Custodian's behalf. The Fund authorizes the
Custodian, in its sole discretion, at any time to charge any
such overdraft or indebtedness together with interest due
thereon against any balance of account standing to such
Series' credit on the Custodian's books. In addition, the
Fund hereby agrees that on each Business Day on which either
it intends to enter a Reverse Repurchase Agreement and/or
otherwise borrow from a third party, or which next succeeds
a Business Day on which at the close of business the Fund
had outstanding a Reverse Repurchase Agreement or such a
borrowing, it shall attempt prior to 9 a.m., New York City
time, or as soon as practicable, advise the Custodian, in
writing, of each such borrowing, shall specify the Series to
which the same relates, and shall not incur any indebtedness
not so specified other than from the Custodian.

2. The Fund will cause to be delivered to the Custodian by
any bank (including, if the borrowing is pursuant to a
separate agreement, the Custodian) from which it borrows
money for investment or for temporary or emergency purposes
using Securities held by the Custodian hereunder as
collateral for such borrowings, a notice or undertaking in
the form currently employed by any such bank setting forth
the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall
promptly deliver to the Custodian a Proper Instruction
specifying with respect to each such borrowing: (a) the
Series to which such borrowing relates; (b) the name of the
bank, (c) the amount and terms of the borrowing, which may
be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Fund, or other loan
agreement, (d) the time and date, if known, on which the
loan is to be entered into, (e) the date on which the loan
becomes due and payable, (f) the total amount payable to the
Fund on the borrowing date, (g) the market value of
Securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the number
of shares or the principal amount of any particular
Securities, and (h) a statement specifying whether such loan
is for investment purposes or for temporary or emergency
purposes and that such loan is in conformance with the
Investment Company Act of 1940 and the Fund's prospectus.
The Custodian shall deliver on the borrowing date specified
in a Proper Instruction the specified collateral and the
executed promissory note, if any, against delivery by the
lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable
as set forth in the Proper Instruction. The Custodian may,
at the option of the lending bank, keep such collateral in
its possession, but such collateral shall be subject to all
rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall
deliver such Securities as additional collateral as may be
specified in a Proper Instruction to collateralize further
any transaction described in this paragraph. The Fund shall
cause all Securities released from collateral status to be
returned directly to the Custodian, and the Custodian shall
receive from time to time such return of collateral as may
be tendered to it. In the event that the Fund fails to
specify in a Proper Instruction the Series, the name of the
issuer, the title and number of shares or the principal
amount of any particular Securities to be delivered as
collateral by the Custodian, the Custodian shall not be
under any obligation to deliver any Securities.

ARTICLE XV.

TERMINAL LINK

1. At no time and under no circumstances shall the Fund be
obligated to have or utilize the Terminal Link, and the
provisions of this Article shall apply if, but only if, the
Fund in its sole and absolute discretion elects to utilize
the Terminal Link to transmit Proper Instructions to the
Custodian.

2. The Terminal Link shall be utilized by the Fund only for
the purpose of the Fund providing Proper Instructions to the
Custodian with respect to transactions involving Securities
or for the transfer of money to be applied to the payment of
dividends, distributions or redemptions of Fund Shares, and
shall be utilized by the Custodian only for the purpose of
providing notices to the Fund. Such use shall commence only
after the Fund shall have delivered to the Custodian a
Proper Instruction substantially in the form of Exhibit D
and shall have established access codes. Each use of the
Terminal Link by the Fund shall constitute a representation
and warranty that the Terminal Link is being used only for
the purposes permitted hereby, that at least two Officers
have each utilized an access code, that such safekeeping
procedures have been established by the Fund, and that such
use does not contravene the Investment Company Act of 1940,
as amended, or the rules or regulations thereunder.

3. The Fund shall obtain and maintain at its own cost and
expense all equipment and services, including, but not
limited to communications services, necessary for it to
utilize the Terminal Link, and the Custodian shall not be
responsible for the reliability or availability of any such
equipment or services.

4. The Fund acknowledges that any data bases made available
as part of, or through the Terminal Link and any proprietary
data, software, processes, information and documentation
(other than any such which are or become part of the public
domain or are legally required to be made available to the
public) (collectively, the "Information"), are the exclusive
and confidential property of the Custodian. The Fund shall,
and shall cause others to which it discloses the
Information, to keep the Information confidential by using
the same care and discretion it uses with respect to its own
confidential property and trade secrets, and shall neither
make nor permit any disclosure without the express prior
written consent of the Custodian.

5. Upon termination of this Agreement for any reason, the
Fund shall return to the Custodian any and all copies of the
Information which are in the Fund's possession or under its
control, or which the Fund distributed to third parties. The
provisions of this Article shall not affect the copyright
status of any of the Information which may be copyrighted
and shall apply to all Information whether or not
copyrighted.

6. The Custodian reserves the right to modify the Terminal
Link from time to time without notice to the Fund except
that the Custodian shall give the Fund notice not less than
75 days in advance of any modification which would
materially adversely affect the Fund's operation, and the
Fund agrees that the Fund shall not modify or attempt to
modify the Terminal Link without the Custodian's prior
written consent. The Fund acknowledges that any software or
procedures provided the Fund as part of the Terminal Link
are the property of the Custodian and, accordingly, the Fund
agrees that any modifications to the Terminal Link, whether
by the Fund, or by the Custodian and whether with or without
the Custodian's consent, shall become the property of the
Custodian.

7. Neither the Custodian nor any manufacturers and suppliers
it utilizes or the Fund utilizes in connection with the
Terminal Link makes any warranties or representations,
express or implied, in fact or in law, including but not
limited to warranties of merchantability and fitness for a
particular purpose.

8. The Fund will cause its Officers and employees to treat
the authorization codes and the access codes applicable to
Terminal Link with extreme care, and irrevocably authorizes
the Custodian to act in accordance with and rely on Proper
Instructions received by it through the Terminal Link. The
Fund acknowledges that it is its responsibility to assure
that only its Officers use the Terminal Link on its behalf,
and that a Custodian shall not be responsible nor liable for
use of the Terminal Link on the Fund's behalf by persons
other than such persons or Officers, or by only a single
Officer, nor for any alteration, omission, or failure to
promptly forward.

9(a). Except as otherwise specifically provided in Section
9(b) of this Article, the Custodian shall have no liability
for any losses, damages, injuries, claims, costs or expenses
arising out of or in connection with any failure,
malfunction or other problem relating to the Terminal Link
except for money damages suffered as the direct result of
the negligence of the Custodian in an amount not exceeding
for any incident $100,000 provided, however, that the
Custodian shall have no liability under this Section 9 if
the Fund fails to comply with the provisions of Section 11.

9(b). The Custodian shall be liable for any loss or damage
arising out of its own negligence or willful misconduct in
executing or failing to execute in accordance with a duly
acknowledged Proper Instruction received through Terminal
Link.

10. Without limiting the generality of the foregoing, in no
event shall the Custodian or any manufacturer or supplier of
its computer equipment, software or services relating to the
Terminal Link be responsible for any special, indirect,
incidental or consequential damages which the Fund may incur
or experience by reason of its use of the Terminal Link even
if the Custodian or any manufacturer or supplier has been
advised of the possibility of such damages, nor with respect
to the use of the Terminal Link shall the Custodian or any
such manufacturer or supplier be liable for acts of God, or
with respect to the following to the extent beyond such
person's reasonable control: machine or computer breakdown
or malfunction, interruption or malfunction of communication
facilities, labor difficulties or any other similar or
dissimilar cause.

11. The Fund shall notify the Custodian of any errors,
omissions or interruptions in, or delay or unavailability
of, the Terminal Link as promptly as practicable, and in any
event within 24 hours after the earliest of (i) discovery
thereof, (ii) the Business Day on which discovery should
have occurred as a result of the need to use such Terminal
Link, and where, through the exercise of reasonable care
such omission, interruption, delay or unavailability, such
problem would have been discovered, and (iii) in the case of
any error, the date of actual receipt of the earliest notice
which reflects such error, it being agreed that discovery
and receipt of notice may only occur on a business day. The
Custodian shall promptly advise the Fund whenever the
Custodian learns of any errors, omissions or interruption
in, or delay or unavailability of, the Terminal Link.

12. The Custodian shall verify to the Fund, by use of the
Terminal Link, receipt of each Proper Instruction the
Custodian receives through the Terminal Link. If the
Custodian cannot, for some reason, verify through Terminal
Link, then it will verify by facsimile. In the absence of
such verification the Custodian shall not be liable for any
failure to act in accordance with such Certificate and the
Fund may not claim that such Certificate was received by the
Custodian. Such verification, which may occur after the
Custodian has acted upon such Proper Instruction, shall be
accomplished on the same day on which such Proper
Instruction is received.

ARTICLE XVI.

RESERVED

ARTICLE XVII.

CONCERNING THE CUSTODIAN

1. The Custodian shall be held to a standard of reasonable
care in carrying out the provisions of this Agreement.
Except as hereinafter provided, or as provided in Article
XVI, neither the Custodian nor its nominee shall be liable
for any loss or damage, including counsel fees, resulting
from its action or omission to act or otherwise, either
hereunder or under any Margin Account Agreement, except for
any such loss or damage arising out of its own negligence or
willful misconduct. In no event shall the Custodian be
liable to the Fund or any third party for special, indirect
or consequential damages or lost profits or loss of
business, arising under or in connection with this
Agreement, even if previously informed of the possibility of
such damages and regardless of the form of action, unless
such loss resulted from the Custodian's willful misconduct.
Negligence includes the failure of the Custodian to comply
with any law or regulation applicable to the Custodian. The
Custodian may, with respect to questions of law arising
hereunder or under any Margin Account Agreement, apply for
and obtain the advice and opinion of counsel to the Fund or
of its own counsel, and the Fund shall pay the reasonable
expenses thereof, and the Custodian shall be fully protected
with respect to anything done or omitted by it in good faith
in conformity with such advice or opinion. The Custodian
shall be liable to the Fund for any loss or damage resulting
from the use of the Book-Entry System or any Depository
arising by reason of any negligence or willful misconduct on
the part of the Custodian or any of its employees or agents.

2. Without limiting the generality of the foregoing, the
Custodian shall be under no obligation to inquire into, and
shall not be liable for:

(a) The validity of the issue of any Securities purchased,
sold, or written by or for the Fund, the legality of the
purchase, sale or writing thereof, or the propriety of the
amount paid or received therefor;

(b) The legality of the sale or redemption of any Shares, or
the propriety of the amount to be received or paid therefor;

(d) The legality of any borrowing by the Fund using
Securities as collateral;

(e) The legality of any loan of portfolio Securities, nor
shall the Custodian be under any duty or obligation to
determine that any cash collateral delivered to it by a
broker, dealer, or financial institution or held by it at
any time as a result of such loan of portfolio Securities of
the Fund is adequate collateral for the Fund against any
loss it might sustain as a result of such loan. The
Custodian specifically, but not by way of limitation, shall
not be under any duty or obligation periodically to check or
notify the Fund that the amount of such cash collateral held
by it for the Fund is sufficient collateral for the Fund,
but such duty or obligation shall be the sole responsibility
of the Fund. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer or
financial institution to which portfolio Securities of the
Fund are lent pursuant to Article XIV of this Agreement
makes payment to it of any dividends or interest which are
payable to or for the account of the Fund during the period
of such loan or at the termination of such loan, provided,
however, that the Custodian shall promptly notify the Fund
in the event that such dividends or interest are not paid
and received when due and to fully cooperate (at the Fund's
expense) with the Fund in obtaining any such dividends
and/or interest; or

(f) The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Senior Security
Account or Collateral Account in connection with
transactions by the Fund. In addition, the Custodian shall
be under no duty or obligation to see that any broker,
dealer, futures commission merchant or Clearing Member makes
payment to the Fund of any variation margin payment or
similar payment which the Fund may be entitled to receive
from such broker, dealer, futures commission merchant or
Clearing Member, to see that any payment received by the
Custodian from any broker, dealer, futures commission
merchant or Clearing Member is the amount the Fund is
entitled to receive, or to notify the Fund of the
Custodian's receipt or non-receipt of any such payment.

3. The Custodian shall not be liable for, or considered to
be the Custodian of, any money, whether or not represented
by any check, draft, or other instrument for the payment of
money, received by it on behalf of the Fund until the
Custodian actually receives and collects such money directly
or by the final crediting of the account representing the
Fund's interest at the Book-Entry System or the Depository.

4. The Custodian shall have no responsibility and shall not
be liable for ascertaining or acting upon any calls,
conversions, exchange offers, tenders, interest rate changes
or similar matters relating to Securities held in the
Depository, unless the Custodian shall have actually
received timely notice thereof from. In no event shall the
Custodian have any responsibility or liability for the
failure of the Depository to collect, or for the late
collection or late crediting by the Depository or any other
payor or issuer of any amount payable upon Securities
deposited in the Depository which may mature or be redeemed,
retired, called or otherwise become payable. However, upon
receipt of a Proper Instruction from the Fund of an overdue
amount on Securities held in the Depository the Custodian
shall make a claim against the Depository on behalf of the
Fund, except that the Custodian shall not be under any
obligation to appear in, prosecute or defend any action suit
or proceeding in respect to any Securities held by the
Depository which in its opinion may involve it in expense or
liability, unless indemnity satisfactory to it against all
expense and liability be furnished as often as may be
required.

5. The Custodian shall not be under any duty or obligation
to take action to effect collection of any amount due to the
Fund from the Transfer Agent of the Fund nor to take any
action to effect payment or distribution by the Transfer
Agent of the Fund of any amount paid by the Custodian to the
Transfer Agent of the Fund in accordance with this
Agreement.

6. The Custodian shall not be under any duty or obligation
to take action to effect collection of any amount, if the
Securities upon which such amount is payable are in default,
or if payment is refused after due demand or presentation,
unless and until (i) it shall be directed to take such
action by a Proper Instruction and (ii) it shall be assured
to its satisfaction of reimbursement of its costs and
expenses in connection with any such action.

7. The Custodian may appoint one or more banking
institutions as Depository or Depositories, as Sub-Custodian
or Sub-Custodians, or as Co-Custodian or Co-Custodians, of
Securities and moneys at any time owned by the Fund, upon
such terms and conditions as may be approved in a Proper
Instruction or contained in an agreement executed by the
Custodian, the Fund and the appointed institution.

8. The Custodian shall not be under any duty or obligation
(a) to ascertain whether any Securities at any time
delivered to, or held by it or by any Foreign Sub-Custodian,
for the account of the Fund and specifically allocated to a
Series are such as properly may be held by the Fund or such
Series under the provisions of its then current prospectus,
or (b) to ascertain whether any transactions by the Fund,
whether or not involving the Custodian, are such
transactions as may properly be engaged in by the Fund.

9. The Custodian shall be entitled to receive and the Fund
agrees to pay to the Custodian all reasonable out-of-pocket
expenses and such compensation as may be agreed upon from
time to time between the Custodian and the Fund. The
Custodian may charge such compensation and any such
reasonable expenses with respect to a Series incurred by the
Custodian in the performance of its duties pursuant to such
agreement against any money specifically allocated to such
Series. Unless and until the Fund instructs the Custodian by
a Proper Instruction to apportion any loss, damage,
liability or expense among the Series in a specified manner,
the Custodian shall also be entitled to invoice a Series
such Series' pro rata share (based on such Series net asset
value at the time of the charge to the aggregate net asset
value of all Series at that time) of the amount of any loss,
damage, liability or expense, including reasonable fees of
counsel not of salaried employees of the Custodian, for
which it shall be entitled to reimbursement under the
provisions of this Agreement.

10. The Custodian shall be entitled to rely upon any Proper
Instruction, notice or other instrument in writing received
by the Custodian and reasonably believed by the Custodian to
be a Proper Instruction. The Custodian shall be entitled to
rely upon any Proper Instruction orally given and actually
received by the Custodian hereinabove provided for, provided
such instructions reasonably appear to have been received
from an Officer. The Fund agrees to confirm to the Custodian
such a Proper Instruction by facsimile or otherwise, by the
close of business of the same day that such Instructions are
given to the Custodian. The Fund agrees that the fact that
such confirming instructions are not received by the
Custodian shall in no way affect the validity of the
transactions or enforceability of the transactions hereby
authorized by the Fund. The Fund agrees that the Custodian
shall incur no liability to the Fund in acting upon Proper
Instructions orally given to the Custodian hereunder
concerning such transactions provided such instructions
reasonably appear to have been received from an Officer.

11. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian
and reasonably believed by the Custodian to be given in
accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the
foregoing, the Custodian shall be under no duty to inquire
into, and shall not be liable for, the accuracy of any
statements or representations contained in any such
instrument or other notice including, without limitation,
any specification of any amount to be paid to a broker,
dealer, futures commission merchant or Clearing Member.

12. The books and records pertaining to the Fund which are
in the possession of the Custodian shall be the property of
the Fund. Such books and records shall be prepared and
maintained as required by the 1940 Act, as amended, and
other applicable securities laws and rules and regulations.
The Fund, or the Fund's authorized representatives, shall
have access to such books and records during the Custodian's
normal business hours. Upon the reasonable request of the
Fund, copies of any such books and records shall be provided
by the Custodian to the Fund or the Fund's authorized
representative, and the Fund shall reimburse the Custodian
its reasonable expenses of providing such copies. Upon
reasonable request of the Fund, the Custodian shall provide
in hard copy or on micro-film computer disc or other
electronic means, whichever the Custodian elects, any
records included in any such delivery which are maintained
by the Custodian on a computer disc, or are similarly
maintained, and the Fund shall reimburse the Custodian for
its reasonable expenses of providing such hard copy or
micro-film.

13. The Custodian shall provide the Fund with any report
obtained by the Custodian on the system of internal
accounting control of the Book-Entry System, the Depository
or O.C.C., including any report of such entities the
Custodian receives from any banking regulator, and with such
reports on its own systems of internal accounting control as
the Fund may reasonably request from time to time.

14. The Fund agrees to indemnify the Custodian against and
save the Custodian harmless from all liability, claims,
losses and demands whatsoever, including reasonable
attorneys' fees, howsoever arising or incurred because of or
in connection with this Agreement, including the Custodian's
payment or non-payment of checks pursuant to paragraph 6 of
Article XIII as part of any check redemption privilege
program of the Fund, except for any such liability, claim,
loss and demand arising out of the Custodian's own or its
agents negligence or willful misconduct or breach of the
terms of this Agreement.

15. Subject to the foregoing provisions of this Agreement,
including, without limitation, those contained in Article
XVI, the Custodian may deliver and receive Securities, and
receipts with respect to such Securities, and arrange for
payments to be made and received by the Custodian in
accordance with the rules of any Depository or Book-Entry
System or OCC and with respect to physicals not delivered to
one of the foregoing, in accordance with the customs and
practices prevailing among brokers and dealers in such
securities on the date of execution of this Agreement, or in
accordance with such lesser customs, if any, as may be
approved by the Fund in Proper Instructions. The Custodian
will immediately inform the Fund and await a specific Proper
Instruction and/or a resolution of the Executive Committee
of the Board of Directors before permitting the release of
securities or cash which is not against delivery of the
counteritem. The Fund assumes all responsibility and
liability for all credit risks involved in connection with
the Custodian's delivery of Securities pursuant to such
Proper Instructions or Executive Committee Resolution of the
Fund, which responsibility and liability shall continue
until final payment in full has been received by the
Custodian.

16. The Custodian shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are
specifically set forth in this Agreement, and no covenant or
obligation shall be implied in this Agreement against the
Custodian.

ARTICLE XVIII.

TERMINATION

1. Either of the parties hereto may terminate this Agreement
by giving to the other party a notice in writing specifying
the date of such termination, which shall be not less than
ninety (90) days after the date of giving of such notice. In
the event such notice is given by the Fund, it shall be
accompanied by a copy of a resolution of the Board of
Directors of the Fund, certified by the Secretary or any
Assistant Secretary, electing to terminate this Agreement
and designating a successor custodian or custodians, each of
which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits.
In the event such notice is given by the Custodian, the Fund
shall, on or before the termination date, deliver to the
Custodian a copy of a resolution of the Board of Directors
of the Fund, certified by the Secretary or any Assistant
Secretary, designating a successor custodian or custodians.
In the absence of such designation by the Fund, the
Custodian may designate a successor custodian which shall be
a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. Upon the
date set forth in such notice this Agreement shall
terminate, and the Custodian shall upon receipt of a notice
of acceptance by the successor custodian on that date
deliver directly to the successor custodian all Securities
and moneys then owned by the Fund and held by it as
Custodian, after deducting all fees, reasonable expenses and
other amounts for the payment or reimbursement of which it
shall then be entitled.

2. If a successor custodian is not designated by the Fund or
the Custodian in accordance with the preceding paragraph,
the Fund shall upon the date specified in the notice of
termination of this Agreement and upon the delivery by the
Custodian of all Securities (other than Securities held in
the Book-Entry System which cannot be delivered to the Fund)
and moneys then owned by the Fund be deemed to be its own
custodian and the Custodian shall thereby be relieved of all
duties and responsibilities pursuant to this Agreement,
other than the duty with respect to Securities held in the
Book Entry System which cannot be delivered to the Fund to
hold such Securities hereunder in accordance with this
Agreement.

ARTICLE XIX.

MISCELLANEOUS

1. Annexed hereto as Appendix A are the Authorized and
Proper Instructions signed by present Officers of the Fund
under its corporate seal, setting forth the names and the
signatures of the present Officers of the Fund. The Fund
agrees to furnish to the Custodian a new Authorized and
Proper Instructions in similar form in the event any such
present Officer ceases to be an Officer of the Fund, or in
the event that other or additional Officers are elected or
appointed. Until such new Authorized and Proper Instructions
shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon the
signatures of the Officers as set forth in the last
delivered Authorized and Proper Instructions.

2. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian,
shall be sufficiently given if addressed to the Custodian
and mailed, sent by reliable overnight delivery service or
delivered to it at its offices at 90 Washington Street, New
York, New York 10286, or sent by facsimile to (212)_________
or at such other place as the Custodian may from time to
time designate in writing.

3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Fund shall be
sufficiently given if addressed to the Fund and mailed, sent
by reliable overnight delivery service or delivered to it at
its office at the address for the Fund first above written,
or at such other place or facsimile number as the Fund may
from time to time designate in writing.

4. This Agreement may not be amended except by a written
agreement executed by both parties with the same formality
as this Agreement and approved by a resolution of the Board
of Directors of the Fund. However, in connection with the
operation of the Agreement, the Custodian and the Fund may
from time to time agree in writing on such provisions
interpretive of or in addition to the provisions of this
Agreement as may in their joint opinion be consistent with
the general tenor of this Agreement, which provisions will
not be deemed to be amendments.

5. This Agreement shall extend to and shall be binding upon
the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of the
Custodian, or by the Custodian without the written consent
of the Fund, authorized or approved by a resolution of the
Fund's Board of Directors.

6. This Agreement shall be construed in accordance with the
laws of the State of New York without giving effect to
conflict of laws principles thereof. Each party hereby
consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any
dispute arising hereunder and hereby waives its right to
trial by jury.

7. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an
original, but such counterparts shall, together, constitute
only one and the same instrument.

8. A copy of the Declaration of Trust of the Fund is on file
with the Secretary of the Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on
behalf of the Board of Trustees of the Fund as Trustee and
not individually and that the obligations of this instrument
are not binding upon any of the Trustees or shareholders
individually but are binding only upon the assets and
property of the Fund; provided, however, that the
Declaration of the Fund provides that the assets of a
particular Series of the Fund shall under no circumstances
be charged with liabilities attributable to any other Series
of the Fund and that all persons extending credit to, or
contracting with or having any claim against a particular
Series of the Fund shall look only to the assets of that
particular Series for payment of such credit, contract or
claim. The Custodian acknowledges that it has read and
understands the exculpation and limitation of liability
provisions of the Trust, Article XI, Section 3.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective corporate
Officers, thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and
year first above written.

Attest:

BANKSOUTH SELECT FUNDS

_________________________ By: __________________________
Typed Name:
Title:_________________________

Attest THE BANK OF NEW YORK

__________________________ By: ___________________________
Typed Name:
Title:__________________________

APPENDIX A

Custodian Contract
Authorization and Proper Instructions

I. Pursuant to Sections III, 3; XI, 5, 6; XVII, 12; XIV,
1; XVII, 1, 2, 3, 4, 5, 6, 14; and XVIII, 1, 6 of the
Custodian Contract (the "Contract") between BankSouth Select
Funds (the "Fund") and The Bank of New York (the
"Custodian"), this shall constitute the authorization of the
persons named herein to issue Proper Instructions on behalf
of the Fund, in the form and on the basis set forth in the
Authorizations and Proper Instructions. The meaning of all
terms used herein shall be the same as the meaning of those
respective terms in the Custodian Contract.

II. Oral instructions shall be authorized only as specified
herein and shall be subject to any security measures as
shall hereafter be directed by each Fund in writing.

III. The following Fund officers, J. Christopher Donahue,
Edward C. Gonzales or John W. McGonigle, shall be authorized
to sign Proper Instructions issued under Sections II, 1;
III, 1 and Section III, 5(e) of the Contract, and to perform
all functions set forth hereafter.

IV. Standing instructions, which shall be in writing, shall
be authorized only as specified herein and shall continue
until such instructions are revoked directly or by the
transmittal of new instructions by the Fund.

-- Standing instructions may be issued with respect
to the following sections of the Contract by
persons as designated in the subsequent sections
of this API:

A. Sections V, 7; III, 5(b)(c), 6(e); III,
6(b)(c)(d); V, 9, 11; VI, 3, 4; VIII, 2; XI, 1,
2; III, 5(d); X, 1; VIII, 1; VI, 1; VII, 3, 4,
5, 6, 8; and XI, 1, 2 of Section 2.2 of the
contract

B. Sections III, 2(b); XIII, 5; III, 2(c); VI, 1;
XII, 2; VIII, 2; V, 8, 10, 11; VII, 4, 5, 8;
VIII, 1, 2; XI, 1, 2; and XIV, 2 of Section 2.8
of the contract.

V. Proper instructions issued:
A. With regard to Section 2.2 of the Contract:
Delivery of Securities, Sections IV, 2; V, 2, 4;
IX, 1; IV, 2; V, 2.4; V, 7; III, 5(b)(c), 6(e);
V, 7; XVII, 15; III, 6(b)(c)(d); V, 9, 11; VI,
3, 4; VIII, 2; XI, 1, 2; III, 5(d); V, 8, 10;
XI, 1, 2; VI, 1; VII, 3, 4, 5, 6, 8; XI, 1, 2.

B. With regard to Section 2.8 of the Contract:
Payment of Fund Moneys, Sections IV, 1; V, 1, 3,
9; VI, 1, 2, 4; VII, 1, 3, 6, 8; IX, 1; XI, 1,
2; V, 9; and VI, 3.

C. With regard to Section
of the Contract: Joint Repurchase Agreements.

D. With regard to Sections XIV, 1 and XVII, 1, 2,
3, 4, 5, 6, 14 of the Contract: Responsibility
of Custodian

A. Designations of Fund securities subject to a
security interest of the Custodian made
pursuant to this Section of the Contract;

B. These designations shall be standing.

Proper Instructions issued under the above Sections of the
Contract as described in this Article V shall be given
orally, electronically, by telefacsimile or in writing by
any one of the persons designated in Attachment A under
Section (4. Trading, Trading Support Staff or Research).

Confirmation of the above Oral or Fax Proper Instructions
shall be given in writing by any two of the persons
designated in Attachment A under Sections (2. Corporate
Records) or (4. Trading, Trading Support Staff or
Research).

VI. Sections XI and VIII, 1 of Section 2.2 of the Contract:
Proper Instructions issued under the above subsections of
the Contract as described in this Article VI shall be signed
by J. Kenneth Alderman, Vice President.

VII. Section III, 2, 4 of the Contract (Segregated Account):

Proper Instructions issued under the above subsections of
the Contract as described in this Article VII shall be
signed by any one of the persons designated in Attachment A
under Section (4. Trading, Trading Support Staff or
Research).

VIII. Sections XII, 2; VIII, 2; V, 8, 10, 11; VII, 4, 5,
8; VIII, 1, 2; XI, 1, 2; and XIV, 2 of Section 2.8 of the
Contract:

Proper Instructions issued under the above subsections of
the
Contract as described in this Article VIII shall be signed
by any
one of the persons designated in Attachment A under Section
(3. Finance).

IX. Sections III, 2(c); and IV, 1 of Section 2.8 of the
Contract:

Proper Instructions issued under the above Subsection of the
Contract as described in this Article IX shall be signed by
any one of the persons designated in Attachment A under
Sections
(1. Product Administration Names) or (3. Finance Names).

ATTACHMENT A to the
Authorization & Proper Instructions
to the Custodian Contract
for BANKSOUTH SELECT FUNDS

Section 1
Product Administration
(authorized to sign for operating expenses)

James J. Dolan
R. Jeffrey Niss
Robert J. Wagner

Section 2
Corporate Records
(authorized to co-sign confirmations

Larry Kreger
Christine A. Nettrour

Section 3
Finance
(authorized to perform accounting entries, etc.)

Barbara A. Moritz
Theresa Dewar
Lisa J. Ling
Kathleen M. Friday
Anna Germ
Sharon W. Huckestein
Darci Langan
Deborah M. Molini
David M. Taylor
Richard J. Thomas
C. Christine Thomson

Section 4
Trading, Trading Support, and Research Personnel
(authorized to give oral and telefacsimile instructions and
to co-sign written instructions)

Vice President
Equity Trader
Fixed Income Trader
Trust Investment Group Administration
Trust Investment Group Manager
Mutual Fund Administration
Mutual Fund Sales Manager

APPENDIX B

I, , a Vice President with THE BANK OF NEW YORK do hereby
designate the following publications:

The Bond Buyer Depository Trust Company Notices Financial
Daily Card Service JJ Kenney Municipal Bond Service London
Financial Times New York Times Standard & Poor's Called Bond
Record Wall Street Journal

EXHIBIT A

CERTIFICATION

The undersigned, , hereby certifies that he or she is the
duly elected and acting of ***, a
corporation (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Directors
of the Fund at a meeting duly held on , 1993, at which a
quorum was at all times present and that such resolution has
not been modified or rescinded and is in full force and
effect as of the date hereof.

RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 1993, (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis
to deposit in the Book-Entry System, as defined in the
Custody Agreement, all securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Book-Entry System
to the extent possible in connection with its performance
thereunder, including, without limitation, in connection
with settlements of purchases and sales of securities, loans
of securities, and deliveries and returns of securities
collateral.

IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of *** as of the day of , 1993.

[SEAL]

EXHIBIT B

CERTIFICATION

The undersigned, , hereby certifies that he or she is the
duly elected and acting of ***, a corporation (the "Fund"),
and further certifies that the following resolution was
adopted by the Board of Directors of the Fund at a meeting
duly held on ______, 1993, at which a quorum was at all
times present and that such resolution has not been modified
or rescinded and is in full force and effect as of the date
hereof.

RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 1993, (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis
until such time as it receives a Proper Instruction, as
defined in the Custody Agreement, to the contrary to deposit
in the Depository, as defined in the Custody Agreement, all
securities eligible for deposit therein, regardless of the
Series to which the same are specifically allocated, and to
utilize the Depository to the extent possible in connection
with its performance thereunder, including, without
limitation, in connection with settlements of purchases and
sales of securities, loans of securities, and deliveries and
returns of securities collateral.

IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of *** as of the day of _______________________, 1993.

[SEAL]

EXHIBIT B-1

CERTIFICATION

The undersigned, , hereby certifies that he or she is the
duly elected and acting
of ***, a corporation (the "Fund"), and further certifies
that the following resolution was adopted by the Board of
Trustees of the Fund at a meeting duly held on , 1993, at
which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in full
force and effect as of the date hereof.

RESOLVED, that The Bank of New York, as Custodian pursuant
to a Custody Agreement between The Bank of New York and the
Fund dated as of , 1993, (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis
until such time as it receives a Proper Instruction, as
defined in the Custody Agreement, to the contrary to deposit
in the Participants Trust Company as Depository, as defined
in the Custody Agreement, all securities eligible for
deposit therein, regardless of the Series to which the same
are specifically allocated, and to utilize the Participants
Trust Company to the extent possible in connection with its
performance thereunder, including, without limitation, in
connection with settlements of purchases and sales of
securities, loans of securities, and deliveries and returns
of securities collateral.

IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of ***, as of the day of , 1993.

[SEAL]

EXHIBIT C

PROPER INSTRUCTION

The Bank of New York, as Custodian pursuant to a Custody
Agreement between The Bank of New York and the Fund dated as
of , 1993, (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis until such time
as it receives a Proper Instruction, as defined in the
Custody Agreement, to the contrary, to accept, utilize and
act with respect to Clearing Member confirmations for
Derivatives and Options and transactions in Derivatives and
Options, regardless of the Series to which the same are
specifically allocated, as such terms are defined in the
Custody Agreement, as provided in the Custody Agreement.

IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of *** as of the day of , 1993.

(SIGNED by Officer as defined in the Custody Agreement and
the Authorization and Proper Instructions)

EXHIBIT D

The undersigned, , hereby certifies that he or she is the
duly elected and acting
of ***, a corporation (the "Fund"), further certifies that
the following resolutions were adopted by the Board of
Directors of the Fund at a meeting duly held on , 1993, at
which a quorum was at all times present and that such
resolutions have not been modified or rescinded and are in
full force and effect as of the date hereof.

RESOLVED, that The Bank of New York, as Custodian pursuant
to the Custody Agreement between The Bank of New York and
the Fund dated as of , 1993 (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis
to act in accordance with, and to rely on Proper
Instructions (as defined in the Custody Agreement) given by
the Fund to the Custodian by a Terminal Link (as defined in
the Custody Agreement).

RESOLVED, that the Fund shall establish access codes and
grant use of such access codes only to Officers of the Fund
as defined in the Custody Agreement, shall establish
internal safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes,
shall limit its use of the Terminal Link to those purposes
permitted by the Custody Agreement, shall require at least
two such Officers to utilize their respective access codes
in connection with each such Proper Instruction, and shall
use the Terminal Link only in a manner that does not
contravene the Investment Company Act of 1940, as amended,
or the rules and regulations thereunder.

RESOLVED, that Officers of the Fund shall, following the
establishment of such access codes and such internal
safekeeping procedures, advise the Custodian that the same
have been established by delivering a Proper Instruction, as
defined in the Custody Agreement, and the Custodian shall be
entitled to rely upon such advice.

IN WITNESS WHEREOF, I hereunto set my hand and the seal of
***, as of the day of , 1993.

[SEAL]

Exhibit 9(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. SK

AGREEMENT
for
FUND ACCOUNTING,
SHAREHOLDER RECORDKEEPING,
and
CUSTODY SERVICES PROCUREMENT

AGREEMENT made as of the 1st day of December, 1993, by and
between those investment companies listed on Exhibit 1 as may be
amended from time to time, having their principal office and
place of business at Federated Investors Tower, Pittsburgh, PA
15222-3779 (the "Trust"), on behalf of the portfolios
(individually referred to herein as a "Fund" and collectively as
"Funds") of the Trust, and FEDERATED SERVICES COMPANY, a Delaware
business trust, having its principal office and place of business
at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(the "Company").

WHEREAS, the Trust is registered as an open-end management
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), with authorized and issued shares of
capital stock or beneficial interest ("Shares"); and

WHEREAS, the Trust wishes to retain the Company to provide
certain pricing, accounting and recordkeeping services for each
of the Funds, including any classes of shares issued by any Fund
("Classes"), and the Company is willing to furnish such services;
and

WHEREAS, the Trust desires to appoint the Company as its
transfer agent, dividend disbursing agent, and agent in
connection with certain other activities, and the Company desires
to accept such appointment; and

WHEREAS, the Trust desires to appoint the Company as its
agent to select, negotiate and subcontract for custodian services
from an approved list of qualified banks and the Company desires
to accept such appointment; and

WHEREAS, from time to time the Trust may desire and may
instruct the Company to subcontract for the performance of
certain of its duties and responsibilities hereunder to State
Street Bank and Trust Company or another agent (the "Agent"); and

WHEREAS, the words Trust and Fund may be used interchangeably
for those investment companies consisting of only one portfolio;

NOW THEREFORE, in consideration of the premises and mutual
covenants herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:

SECTION ONE: Fund Accounting.

Article 1. Appointment.

The Trust hereby appoints the Company to provide certain
pricing and accounting services to the Funds, and/or the Classes,
for the period and on the terms set forth in this Agreement. The
Company accepts such appointment and agrees to furnish the
services herein set forth in return for the compensation as
provided in Article 3 of this Section.

Article 2. The Company and Duties.

Subject to the supervision and control of the Trust's Board
of Trustees or Directors ("Board"), the Company will assist the
Trust with regard to fund accounting for the Trust, and/or the
Funds, and/or the Classes, and in connection therewith undertakes
to perform the following specific services;

A. Value the assets of the Funds and determine the net
asset value per share of each Fund and/or Class, at the time and
in the manner from time to time determined by the Board and as
set forth in the Prospectus and Statement of Additional
Information ("Prospectus") of each Fund;

B. Calculate the net income of each of the Funds, if any;

C. Calculate capital gains or losses of each of the Funds
resulting from sale or disposition of assets, if any;

D. Maintain the general ledger and other accounts, books
and financial records of the Trust, including for each Fund,
and/or Class, as required under Section 31(a) of the 1940 Act and
the Rules thereunder in connection with the services provided by
the Company;

E. Preserve for the periods prescribed by Rule 31a-2 under
the 1940 Act the records to be maintained by Rule 31a-1 under the
1940 Act in connection with the services provided by the Company.
The Company further agrees that all such records it maintains for
the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust such records upon the Trust's
request;

F. At the request of the Trust, prepare various reports or
other financial documents required by federal, state and other
applicable laws and regulations; and

G. Such other similar services as may be reasonably
requested by the Trust.

Article 3. Compensation and Allocation of Expenses.

A. The Funds will compensate the Company for its services
rendered pursuant to Section One of this Agreement in accordance
with the fees set forth on Fee Schedules A ("A1, A2, A3 etc..."),
annexed hereto and incorporated herein, as may be added or
amended from time to time. Such fees do not include
out-of-pocket disbursements of the Company for which the Funds
shall reimburse the Company upon receipt of a separate invoice.
Out-of-pocket disbursements shall include, but shall not be
limited to, the items specified in Schedules B ("B1, B2, B3,
etc..."), annexed hereto and incorporated herein, as may be added
or amended from time to time. Schedules B may be modified by the
Company upon not less than thirty days' prior written notice to
the Trust.

B. The Fund and/or the Class, and not the Company, shall
bear the cost of: custodial expenses; membership dues in the
Investment Company Institute or any similar organization;
transfer agency expenses; investment advisory expenses; costs of
printing and mailing stock certificates, Prospectuses, reports
and notices; administrative expenses; interest on borrowed money;
brokerage commissions; taxes and fees payable to federal, state
and other governmental agencies; fees of Trustees or Directors of
the Trust; independent auditors expenses; Federated
Administrative Services and/or Federated Administrative Services,
Inc. legal and audit department expenses billed to Federated
Services Company for work performed related to the Trust, the
Funds, or the Classes; law firm expenses; or other expenses not
specified in this Article 3 which may be properly payable by the
Funds and/or classes.

C. The Company will send an invoice to each of the Funds as
soon as practicable after the end of each month. Each invoice
will provide detailed information about the compensation and
out-of-pocket expenses in accordance with Schedules A and
Schedules B. The Funds and or the Classes will pay to the
Company the amount of such invoice within 30 days of receipt of
the invoices.

D. Any compensation agreed to hereunder may be adjusted
from time to time by attaching to Schedules A revised Schedules
dated and signed by a duly authorized officer of the Trust and/or
the Funds and a duly authorized officer of the Company.

E. The fee for the period from the effective date of this
Agreement with respect to a Fund or a Class to the end of the
initial month shall be prorated according to the proportion that
such period bears to the full month period. Upon any termination
of this Agreement before the end of any month, the fee for such
period shall be prorated according to the proportion which such
period bears to the full month period. For purposes of
determining fees payable to the Company, the value of the Fund's
net assets shall be computed at the time and in the manner
specified in the Fund's Prospectus.

F. The Company, in its sole discretion, may from time to
time subcontract to, employ or associate with itself such person
or persons as the Company may believe to be particularly suited
to assist it in performing services under this Section One. Such
person or persons may be third-party service providers, or they
may be officers and employees who are employed by both the
Company and the Funds. The compensation of such person or
persons shall be paid by the Company and no obligation shall be
incurred on behalf of the Trust, the Funds, or the Classes in
such respect.

SECTION TWO: Shareholder Recordkeeping.

Article 4. Terms of Appointment.

Subject to the terms and conditions set forth in this
Agreement, the Trust hereby appoints the Company to act as, and
the Company agrees to act as, transfer agent and dividend
disbursing agent for each Fund's Shares, and agent in connection
with any accumulation, open-account or similar plans provided to
the shareholders of any Fund ("Shareholder(s)"), including
without limitation any periodic investment plan or periodic
withdrawal program.

As used throughout this Agreement, a "Proper Instruction"
means a writing signed or initialed by one or more person or
persons as the Board shall have from time to time authorized.
Each such writing shall set forth the specific transaction or
type of transaction involved. Oral instructions will be deemed
to be Proper Instructions if (a) the Company reasonably believes
them to have been given by a person previously authorized in
Proper Instructions to give such instructions with respect to the
transaction involved, and (b) the Trust, or the Fund, and the
Company promptly cause such oral instructions to be confirmed in
writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices
provided that the Trust, or the Fund, and the Company are
satisfied that such procedures afford adequate safeguards for the
Fund's assets. Proper Instructions may only be amended in
writing.

Article 5. Duties of the Company.

The Company shall perform the following services in
accordance with Proper Instructions as may be provided from time
to time by the Trust as to any Fund:

A. Purchases

(1) The Company shall receive orders and payment for the
purchase of shares and promptly deliver payment and
appropriate documentation therefore to the custodian
of the relevant Fund, (the "Custodian"). The
Company shall notify the Fund and the Custodian on a
daily basis of the total amount of orders and
payments so delivered.

(2) Pursuant to purchase orders and in accordance with
the Fund's current Prospectus, the Company shall
compute and issue the appropriate number of Shares of
each Fund and/or Class and hold such Shares in the
appropriate Shareholder accounts.

(3) For certificated Funds and/or Classes, if a
Shareholder or its agent requests a certificate, the
Company, as Transfer Agent, shall countersign and
mail by first class mail, a certificate to the
Shareholder at its address as set forth on the
transfer books of the Funds, and/or Classes, subject
to any Proper Instructions regarding the delivery of
certificates.

(4) In the event that any check or other order for the
purchase of Shares of the Fund and/or Class is
returned unpaid for any reason, the Company shall
debit the Share account of the Shareholder by the
number of Shares that had been credited to its
account upon receipt of the check or other order,
promptly mail a debit advice to the Shareholder, and
notify the Fund and/or Class of its action. In the
event that the amount paid for such Shares exceeds
proceeds of the redemption of such Shares plus the
amount of any dividends paid with respect to such
Shares, the Fund and/the Class or its distributor
will reimburse the Company on the amount of such
excess.

B. Distribution

(1) Upon notification by the Funds of the declaration of
any distribution to Shareholders, the Company shall
act as Dividend Disbursing Agent for the Funds in
accordance with the provisions of its governing
document and the then-current Prospectus of the Fund.
The Company shall prepare and mail or credit income,
capital gain, or any other payments to Shareholders.
As the Dividend Disbursing Agent, the Company shall,
on or before the payment date of any such
distribution, notify the Custodian of the estimated
amount required to pay any portion of said
distribution which is payable in cash and request the
Custodian to make available sufficient funds for the
cash amount to be paid out. The Company shall
reconcile the amounts so requested and the amounts
actually received with the Custodian on a daily
basis. If a Shareholder is entitled to receive
additional Shares by virtue of any such distribution
or dividend, appropriate credits shall be made to the
Shareholder's account, for certificated Funds and/or
Classes, delivered where requested; and

(2) The Company shall maintain records of account for
each Fund and Class and advise the Trust, each Fund
and Class and its Shareholders as to the foregoing.

C. Redemptions and Transfers

(1) The Company shall receive redemption requests and
redemption directions and, if such redemption
requests comply with the procedures as may be
described in the Fund Prospectus or set forth in
Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company
shall notify the Funds on a daily basis of the total
amount of redemption requests processed and monies
paid to the Company by the Custodian for redemptions.

(2) At the appropriate time upon receiving redemption
proceeds from the Custodian with respect to any
redemption, the Company shall pay or cause to be paid
the redemption proceeds in the manner instructed by
the redeeming Shareholders, pursuant to procedures
described in the then-current Prospectus of the Fund.

(3) If any certificate returned for redemption or other
request for redemption does not comply with the
procedures for redemption approved by the Fund, the
Company shall promptly notify the Shareholder of such
fact, together with the reason therefor, and shall
effect such redemption at the price applicable to the
date and time of receipt of documents complying with
said procedures.

(4) The Company shall effect transfers of Shares by the
registered owners thereof.

(5) The Company shall identify and process abandoned
accounts and uncashed checks for state escheat
requirements on an annual basis and report such
actions to the Fund.

D. Recordkeeping

(1) The Company shall record the issuance of Shares of
each Fund, and/or Class, and maintain pursuant to
applicable rules of the Securities and Exchange
Commission ("SEC") a record of the total number of
Shares of the Fund and/or Class which are authorized,
based upon data provided to it by the Fund, and
issued and outstanding. The Company shall also
provide the Fund on a regular basis or upon
reasonable request with the total number of Shares
which are authorized and issued and outstanding, but
shall have no obligation when recording the issuance
of Shares, except as otherwise set forth herein, to
monitor the issuance of such Shares or to take
cognizance of any laws relating to the issue or sale
of such Shares, which functions shall be the sole
responsibility of the Funds.

(2) The Company shall establish and maintain records
pursuant to applicable rules of the SEC relating to
the services to be performed hereunder in the form
and manner as agreed to by the Trust or the Fund to
include a record for each Shareholder's account of
the following:

(a) Name, address and tax identification number (and
whether such number has been certified);

(b) Number of Shares held;

(d) Any stop or restraining order placed against the
account;

(e) Information with respect to withholding in the
case of a foreign account or an account for which
withholding is required by the Internal Revenue
Code;

(f) Any dividend reinvestment order, plan
application, dividend address and correspondence
relating to the current maintenance of the
account;

(g) Certificate numbers and denominations for any
Shareholder holding certificates;

(h) Any information required in order for the Company
to perform the calculations contemplated or
required by this Agreement.

(3) The Company shall preserve any such records required
to be maintained pursuant to the rules of the SEC for
the periods prescribed in said rules as specifically
noted below. Such record retention shall be at the
expense of the Company, and such records may be
inspected by the Fund at reasonable times. The
Company may, at its option at any time, and shall
forthwith upon the Fund's demand, turn over to the
Fund and cease to retain in the Company's files,
records and documents created and maintained by the
Company pursuant to this Agreement, which are no
longer needed by the Company in performance of its
services or for its protection. If not so turned
over to the Fund, such records and documents will be
retained by the Company for six years from the year
of creation, during the first two of which such
documents will be in readily accessible form. At the
end of the six year period, such records and
documents will either be turned over to the Fund or
destroyed in accordance with Proper Instructions.

E. Confirmations/Reports

(1) The Company shall furnish to the Fund periodically
the following information:

(a) A copy of the transaction register;

(b) Dividend and reinvestment blotters;

(c) The total number of Shares issued and outstanding
in each state for "blue sky" purposes as
determined according to Proper Instructions
delivered from time to time by the Fund to the
Company;

(d) Shareholder lists and statistical information;

(e) Payments to third parties relating to
distribution agreements, allocations of sales
loads, redemption fees, or other transaction- or
sales-related payments;

(f) Such other information as may be agreed upon from
time to time.

(2) The Company shall prepare in the appropriate form,
file with the Internal Revenue Service and
appropriate state agencies, and, if required, mail to
Shareholders, such notices for reporting dividends
and distributions paid as are required to be so filed
and mailed and shall withhold such sums as are
required to be withheld under applicable federal and
state income tax laws, rules and regulations.

(3) In addition to and not in lieu of the services set
forth above, the Company shall:

(a) Perform all of the customary services of a
transfer agent, dividend disbursing agent and, as
relevant, agent in connection with accumulation,
open-account or similar plans (including without
limitation any periodic investment plan or
periodic withdrawal program), including but not
limited to: maintaining all Shareholder
accounts, mailing Shareholder reports and
Prospectuses to current Shareholders, withholding
taxes on accounts subject to back-up or other
withholding (including non-resident alien
accounts), preparing and filing reports on U.S.
Treasury Department Form 1099 and other
appropriate forms required with respect to
dividends and distributions by federal
authorities for all Shareholders, preparing and
mailing confirmation forms and statements of
account to Shareholders for all purchases and
redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing
and mailing activity statements for Shareholders,
and providing Shareholder account information;
and

(b) provide a system which will enable the Fund to
monitor the total number of Shares of each Fund
and/or Class sold in each state ("blue sky
reporting"). The Fund shall by Proper
Instructions (i) identify to the Company those
transactions and assets to be treated as exempt
from the blue sky reporting for each state and
(ii) verify the classification of transactions
for each state on the system prior to activation
and thereafter monitor the daily activity for
each state. The responsibility of the Company
for each Fund's and/or Class's state blue sky
registration status is limited solely to the
recording of the initial classification of
transactions or accounts with regard to blue sky
compliance and the reporting of such transactions
and accounts to the Fund as provided above.

F. Other Duties

(1) The Company shall answer correspondence from
Shareholders relating to their Share accounts and
such other correspondence as may from time to time be
addressed to the Company;

(2) The Company shall prepare Shareholder meeting lists,
mail proxy cards and other material supplied to it by
the Fund in connection with Shareholder Meetings of
each Fund; receive, examine and tabulate returned
proxies, and certify the vote of the Shareholders;

(3) The Company shall establish and maintain facilities
and procedures for safekeeping of stock certificates,
check forms and facsimile signature imprinting
devices, if any; and for the preparation or use, and
for keeping account of, such certificates, forms and
devices.

Article 6. Duties of the Trust.

A. Compliance

The Trust or Fund assume full responsibility for the
preparation, contents and distribution of their own
and/or their classes' Prospectus and for complying with
all applicable requirements of the Securities Act of
1933, as amended (the "1933 Act"), the 1940 Act and any
laws, rules and regulations of government authorities
having jurisdiction.

B. Share Certificates

The Trust shall supply the Company with a sufficient
supply of blank Share certificates and from time to time
shall renew such supply upon request of the Company.
Such blank Share certificates shall be properly signed,
manually or by facsimile, if authorized by the Trust and
shall bear the seal of the Trust or facsimile thereof;
and notwithstanding the death, resignation or removal of
any officer of the Trust authorized to sign certificates,
the Company may continue to countersign certificates
which bear the manual or facsimile signature of such
officer until otherwise directed by the Trust.

C. Distributions

The Fund shall promptly inform the Company of the
declaration of any dividend or distribution on account of
any Fund's shares.

Article 7. Compensation and Expenses.

A. Annual Fee

For performance by the Company pursuant to Section Two of
this Agreement, the Trust and/or the Fund agree to pay
the Company an annual maintenance fee for each
Shareholder account as set out in Schedules C ("C1, C2,
C3 etc..."), attached hereto, as may be added or amended
from time to time. Such fees may be changed from time to
time subject to written agreement between the Trust and
the Company. Pursuant to information in the Fund
Prospectus or other information or instructions from the
Fund, the Company may sub-divide any Fund into Classes or
other sub-components for recordkeeping purposes. The
Company will charge the Fund the fees set forth on
Schedule C for each such Class or sub-component the same
as if each were a Fund.

B. Reimbursements

In addition to the fee paid under Article 7A above, the
Trust and/or Fund agree to reimburse the Company for
out-of-pocket expenses or advances incurred by the
Company for the items set out in Schedules D ("D1, D2, D3
etc..."), attached hereto, as may be added or amended
from time to time. In addition, any other expenses
incurred by the Company at the request or with the
consent of the Trust and/or the Fund, will be reimbursed
by the appropriate Fund.

C. Payment

The Company shall send an invoice with respect to fees
and reimbursable expenses to the Trust or each of the
Funds as soon as practicable at the end of each month.
Each invoice will provide detailed information about the
Compensation and out-of-pocket expenses in accordance
with Schedules C and Schedules D. The Trust or the Funds
will pay to the Company the amount of such invoice within
30 days following the receipt of the invoices.

Article 8. Assignment of Shareholder Recordkeeping.

Except as provided below, no right or obligation under
this Section Two may be assigned by either party without
the written consent of the other party.

(1) This Agreement shall inure to the benefit of and be
binding upon the parties and their respective
permitted successors and assigns.

(2) The Company may without further consent on the part
of the Trust subcontract for the performance hereof
with (A) State Street Bank and its subsidiary, Boston
Financial Data Services, Inc., a Massachusetts Trust
("BFDS"), which is duly registered as a transfer
agent pursuant to Section 17A(c)(1) of the Securities
Exchange Act of 1934, as amended, or any succeeding
statute ("Section 17A(c)(1)"), or (B) a BFDS
subsidiary duly registered as a transfer agent
pursuant to Section 17A(c)(1), or (C) a BFDS
affiliate, or (D) such other provider of services
duly registered as a transfer agent under Section
17A(c)(1) as Company shall select; provided, however,
that the Company shall be as fully responsible to the
Trust for the acts and omissions of any subcontractor
as it is for its own acts and omissions; or

(3) The Company shall upon instruction from the Trust
subcontract for the performance hereof with an Agent
selected by the Trust, other than BFDS or a provider
of services selected by Company, as described in (2)
above; provided, however, that the Company shall in
no way be responsible to the Trust for the acts and
omissions of the Agent.

SECTION THREE: Custody Services Procurement

Article 9. Appointment.

The Trust hereby appoints Company as its agent to evaluate
and obtain custody services from a financial institution that (i)
meets the criteria established in Section 17(f) of the 1940 Act
and (ii) has been approved by the Board as eligible for selection
by the Company as a custodian (the "Eligible Custodian"). The
Company accepts such appointment.

Article 10. The Company and Its Duties.

Subject to the review, supervision and control of the Board,
the Company shall:

(1) evaluate the nature and the quality of the custodial
services provided by the Eligible Custodian;

(2) employ the Eligible Custodian to serve on behalf of the
Trust as Custodian of the Trust's assets substantially on
the terms set forth as the form of agreement in Exhibit 2;

(3) negotiate and enter into agreements with the Custodians
for the benefit of the Trust, with the Trust as a party to
each such agreement. The Company shall not be a party to
any agreement with any such Custodian;

(4) establish procedures to monitor the nature and the quality
of the services provided by the Custodians;

(5) continuously monitor the nature and the quality of
services provided by the Custodians; and

(6) periodically provide to the Trust (i) written reports on
the activities and services of the Custodians; (ii) the
nature and amount of disbursement made on account of the
Trust with respect to each custodial agreement; and (iii)
such other information as the Board shall reasonably
request to enable it to fulfill its duties and obligations
under Sections 17(f) and 36(b) of the 1940 Act and other
duties and obligations thereof.

Article 11. Fees and Expenses.

A. Annual Fee

For the performance by the Company pursuant to Section Three of
this Agreement, the Trust and/or the Fund agree to pay the Company
an annual fee as set forth in Schedule E, attached hereto.

B. Payment

The Company shall send an invoice with respect to fees
and reimbursable expenses to each of the Trust/or Fund as
soon as practicable at the end of each month. Each
invoice will provide detailed information about the
Compensation and out-of-pocket expenses in occurrence
with Schedule E. The Trust and/or Fund will pay to the
Company the amount of such invoice within 30 days
following the receipt of the invoice.

Article 12. Representations.

The Company represents and warrants that it has obtained
all required approvals from all government or regulatory
authorities necessary to enter into this arrangement and to
provide the services contemplated in Section Three of this
Agreement.

SECTION FOUR: General Provisions.

Article 13. Documents.

A. In connection with the appointment of the Company under
this Agreement, the Trust shall file with the Company
the following documents:

(1) A copy of the Charter and By-Laws of the Trust and
all amendments thereto;

(2) A copy of the resolution of the Board of the Trust
authorizing this Agreement;

(3) Specimens of all forms of outstanding Share
certificates of the Trust or the Funds in the forms
approved by the Board of the Trust with a certificate
of the Secretary of the Trust as to such approval;

(4) All account application forms and other documents
relating to Shareholders accounts; and

(5) A copy of the current Prospectus for each Fund.

B. The Fund will also furnish from time to time the
following documents:

(1) Each resolution of the Board of the Trust authorizing
the original issuance of each Fund's, and/or Class's
Shares;

(2) Each Registration Statement filed with the SEC and
amendments thereof and orders relating thereto in
effect with respect to the sale of Shares of any
Fund, and/or Class;

(3) A certified copy of each amendment to the governing
document and the By-Laws of the Trust;

(4) Certified copies of each vote of the Board
authorizing officers to give Proper Instructions to
the Custodian and agents for fund accountant, custody
services procurement, and shareholder recordkeeping
or transfer agency services;

(5) Specimens of all new Share certificates representing
Shares of any Fund, accompanied by Board resolutions
approving such forms;

(6) Such other certificates, documents or opinions which
the Company may, in its discretion, deem necessary or
appropriate in the proper performance of its duties;
and

(7) Revisions to the Prospectus of each Fund.

Article 14. Representations and Warranties.

A. Representations and Warranties of the Company

The Company represents and warrants to the Trust that:

(1) It is a business trust duly organized and existing
and in good standing under the laws of the State of
Delaware.

(2) It is duly qualified to carry on its business in the
State of Delaware.

(3) It is empowered under applicable laws and by its
charter and by-laws to enter into and perform this
Agreement.

(4) All requisite corporate proceedings have been taken
to authorize it to enter into and perform its
obligations under this Agreement.

(5) It has and will continue to have access to the
necessary facilities, equipment and personnel to
perform its duties and obligations under this
Agreement.

(6) It is in compliance with federal securities law
requirements and in good standing as a transfer
agent.

B. Representations and Warranties of the Trust

The Trust represents and warrants to the Company that:

(1) It is an investment company duly organized and
existing and in good standing under the laws of its
state of organization;

(2) It is empowered under applicable laws and by its
Charter and By-Laws to enter into and perform its
obligations under this Agreement;

(3) All corporate proceedings required by said Charter
and By-Laws have been taken to authorize it to enter
into and perform its obligations under this
Agreement;

(4) The Trust is an open-end investment company
registered under the 1940 Act; and

(5) A registration statement under the 1933 Act will be
effective, and appropriate state securities law
filings have been made and will continue to be made,
with respect to all Shares of each Fund being offered
for sale.

Article 15. Indemnification.

A. Indemnification by Trust

The Company shall not be responsible for and the Trust
or Fund shall indemnify and hold the Company, including
its officers, directors, shareholders and their agents
employees and affiliates, harmless against any and all
losses, damages, costs, charges, counsel fees, payments,
expenses and liabilities arising out of or attributable
to:

(1) The acts or omissions of any Custodian,

(2) The Trust's or Fund's refusal or failure to comply
with the terms of this Agreement, or which arise out
of the Trust's or The Fund's lack of good faith,
negligence or willful misconduct or which arise out
of the breach of any representation or warranty of
the Trust or Fund hereunder or otherwise.

(3) The reliance on or use by the Company or its agents
or subcontractors of information, records and
documents in proper form which

(a) are received by the Company or its agents or
subcontractors and furnished to it by or on
behalf of the Fund, its Shareholders or investors
regarding the purchase, redemption or transfer of
Shares and Shareholder account information; or

(b) have been prepared and/or maintained by the Fund
or its affiliates or any other person or firm on
behalf of the Trust.

(4) The reliance on, or the carrying out by the Company
or its agents or subcontractors of Proper
Instructions of the Trust or the Fund.

(5) The offer or sale of Shares in violation of any
requirement under the federal securities laws or
regulations or the securities laws or regulations of
any state that such Shares be registered in such
state or in violation of any stop order or other
determination or ruling by any federal agency or any
state with respect to the offer or sale of such
Shares in such state.

Provided, however, that the Company shall not be
protected by this Article 15.A. from liability for any
act or omission resulting from the Company's willful
misfeasance, bad faith, gross negligence or reckless
disregard of its duties.

B. Indemnification by the Company

The Company shall indemnify and hold the Trust or each
Fund harmless from and against any and all losses,
damages, costs, charges, counsel fees, payments, expenses
and liabilities arising out of or attributable to any
action or failure or omission to act by the Company as a
result of the Company's willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties.

C. Reliance

At any time the Company may apply to any officer of the
Trust or Fund for instructions, and may consult with
legal counsel with respect to any matter arising in
connection with the services to be performed by the
Company under this Agreement, and the Company and its
agents or subcontractors shall not be liable and shall be
indemnified by the Trust or the appropriate Fund for any
action reasonably taken or omitted by it in reliance upon
such instructions or upon the opinion of such counsel
provided such action is not in violation of applicable
federal or state laws or regulations. The Company, its
agents and subcontractors shall be protected and
indemnified in recognizing stock certificates which are
reasonably believed to bear the proper manual or
facsimile signatures of the officers of the Trust or the
Fund, and the proper countersignature of any former
transfer agent or registrar, or of a co-transfer agent or
co-registrar.

D. Notification

In order that the indemnification provisions contained in
this Article 15 shall apply, upon the assertion of a
claim for which either party may be required to indemnify
the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and
shall keep the other party advised with respect to all
developments concerning such claim. The party who may be
required to indemnify shall have the option to
participate with the party seeking indemnification in the
defense of such claim. The party seeking indemnification
shall in no case confess any claim or make any compromise
in any case in which the other party may be required to
indemnify it except with the other party's prior written
consent.

Article 16. Termination of Agreement.

This Agreement may be terminated by either party upon one
hundred twenty (120) days written notice to the other. Should
the Trust exercise its rights to terminate, all out-of-pocket
expenses associated with the movement of records and materials
will be borne by the Trust or the appropriate Fund.
Additionally, the Company reserves the right to charge for any
other reasonable expenses associated with such termination. The
provisions of Article 15 shall survive the termination of this
Agreement.

Article 17. Amendment.

This Agreement may be amended or modified by a written
agreement executed by both parties.

Article 18. Interpretive and Additional Provisions.

In connection with the operation of this Agreement, the
Company and the Trust may from time to time agree on such
provisions interpretive of or in addition to the provisions of
this Agreement as may in their joint opinion be consistent with
the general tenor of this Agreement. Any such interpretive or
additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the
Charter. No interpretive or additional provisions made as
provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.

Article 19. Governing Law.

This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the
Commonwealth of Massachusetts

Article 20. Notices.

Except as otherwise specifically provided herein, Notices and
other writings delivered or mailed postage prepaid to the Trust
at Federated Investors Tower, Pittsburgh, Pennsylvania,
15222-3779, or to the Company at Federated Investors Tower,
Pittsburgh, Pennsylvania, 15222-3779, or to such other address as
the Trust or the Company may hereafter specify, shall be deemed
to have been properly delivered or given hereunder to the
respective address.

Article 21. Counterparts.

This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.

Article 22. Limitations of Liability of Trustees and
Shareholders of the Trust.

The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an
authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding
upon any of the Trustees or Shareholders of the Trust, but bind
only the appropriate property of the Fund, or Class, as provided
in the Declaration of Trust.

Article 23. Limitations of Liability of Trustees and
Shareholders of the Company.

The execution and delivery of this Agreement have been
authorized by the Trustees of the Company and signed by an
authorized officer of the Company, acting as such, and neither
such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding
upon any of the Trustees or Shareholders of the Company, but bind
only the property of the Company as provided in the Declaration
of Trust.

Article 24. Assignment.

This Agreement and the rights and duties hereunder shall not
be assignable with respect to the Trust or the Funds by either of
the parties hereto except by the specific written consent of the
other party.

Article 25. Merger of Agreement.

This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to
the subject hereof whether oral or written.

Article 26. Successor Agent.

If a successor agent for the Trust shall be appointed by the
Trust, the Company shall upon termination of this Agreement
deliver to such successor agent at the office of the Company all
properties of the Trust held by it hereunder. If no such
successor agent shall be appointed, the Company shall at its
office upon receipt of Proper Instructions deliver such
properties in accordance with such instructions.

In the event that no written order designating a successor
agent or Proper Instructions shall have been delivered to the
Company on or before the date when such termination shall become
effective, then the Company shall have the right to deliver to a
bank or trust company, which is a "bank" as defined in the 1940
Act, of its own selection, having an aggregate capital, surplus,
and undivided profits, as shown by its last published report, of
not less than $2,000,000, all properties held by the Company
under this Agreement. Thereafter, such bank or trust company
shall be the successor of the Company under this Agreement.

Article 27. Force Majeure.

The Company shall have no liability for cessation of services
hereunder or any damages resulting therefrom to the Fund as a
result of work stoppage, power or other mechanical failure,
natural disaster, governmental action, communication disruption
or other impossibility of performance.

Article 28. Assignment; Successors.

This Agreement shall not be assigned by either party without
the prior written consent of the other party, except that either
party may assign to a successor all of or a substantial portion
of its business, or to a party controlling, controlled by, or
under common control with such party. Nothing in this Article 28
shall prevent the Company from delegating its responsibilities to
another entity to the extent provided herein.

Article 29. Severability.

In the event any provision of this Agreement is held illegal,
void or unenforceable, the balance shall remain in effect.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their names and on their behalf under
their seals by and through their duly authorized officers, as of
the day and year first above written.

ATTEST:

INVESTMENT COMPANIES (listed on
Exhibit 1)

/s/ John W. McGonigle By: /s/ John F. Donahue
John W. McGonigle John F. Donahue
Secretary Chairman

ATTEST: FEDERATED SERVICES COMPANY

/s/ Jeannette Fisher-Garber By: /s/ James J. Dolan
Jeannette Fisher-Garber James J. Dolan
Secretary President

Schedule A

Fund Accounting
Fee Schedule

I. Portfolio Record Keeping/Fund Accounting Services

Maintain investment ledgers, provide selected portfolio
transactions, position and income reports. Maintain general
ledger and capital stock accounts. Prepare daily trial balance.
Provide selected general ledger reports. Calculate net asset
value daily. Securities yield or market value quotations will be
provided to State Street by the fund or via State Street Bank
automated pricing services.

ANNUAL FEES

ASSET

First $250 Million 2.0 Basis Points
Next $250 Million 1.5 Basis Points
Next $250 Million 1.0 Basis Point
Excess .5 Basis Point

Minimum fee per year $39,000
Additional class of shares per year $12,000

II. Special Services

Fees for activities of a non-recurring nature such as fund
consolidation or reorganization, extraordinary security shipments
and the preparation of special reports will be subject to
negotiation.

III. Term of the Contract

The parties agree that this fee schedule shall become effective
June 1, 1993 and will remain in effect until it is revised as a
result of negotiations initiated by either party.
Schedule A1

Fund Accounting
Fee Schedule

Annual

First $100 Million 3.0 Basis Points
$100 Million - $300 Million 2.0 Basis Points
$300 Million - $500 Million 1.0 Basis Points
Over $500 Million 0.5 Basis Points

Fund Minimum $39,000

Additional Class of Shares $12,000

(Plus pricing charges and other out-of-pocket expenses)

Schedule B

Out-of-Pocket Expenses
Fund Accounting

Out-of-pocket expenses include, but are not limited to,
the following:

- Postage (including overnight courier service)
- Statement Stock
- Envelopes
- Telephones
- Telecommunication Charges (including FAX)
- Travel
- Duplicating
- Forms
- Supplies
- Microfiche
- Computer Access Charges
- Client Specific System Enhancements
- Access to the Shareholder Recordkeeping System
- Security Pricing Services
- Variable Rate Change Notification Services
- Paydown Factor Notification Services

Schedule C

Fees and Expenses
Shareholder Recordkeeping

I. Transfer Agency Services

Base Fee * (Annual fee per fund, class or other subdivision) $24,000

Account Fee* (Annual account charge)
(includes system access and funds control and reconcilement)
Daily dividend fund $16.00
Monthly dividend fund $10.00
Quarterly dividend fund $10.00
Contingent Deferred Sales Charge (Additionally) $5.00
(monthly and quarterly funds only)
Closed Accounts* $1.20
(annual)
Termination Fee (One time charge) $20,000

II. Shareholder Services

Other Account Fees* (Services or features not covered above)
Account Activity Processing $3.50
(includes account establishment, transaction and
maintenance processing)
Account Servicing $4.50
(includes shareholder servicing and correspondence)

* All fees are annualized and will be prorated on a
monthly basis for billing purposes. Out-of-pocket
expenses are not covered by these fees.

Schedule C1
Federated Investors
_ Federated Funds _

I. Annual Maintenance Charge

The annual maintenance charge includes the processing of all transactions and
correspondence. The fee is billable on a monthly basis at the rate of 1/12 of
the annual fee. A charge is made for an account in the month that an account
opens or closes.

Basic Annual per Account Fee
The individual per account charges will be billed as follows:
Money Market Fund/Daily Accrual $16.65
Money Market Fund/Sweep Account $10.00
Fluctuating NAV/Daily Accrual
_ Non FundServe $16.65
_ Non Networked FundServe $14.65
CDSC/Declared Dividend
_ Non FundServe $13.75
_ Non Networked FundServe $11.75
_ Networking Levels 1, 2, and 4 $11.75
_ Networking Level 3 $9.00
Declared Dividend
_ Non FundServe $8.75
_ Non Networked FundServe $6.75
_ Networked FundServe Levels 1, 2, 3, and 4 $6.75

Taxpayer Identification Processing (TIN)
The charge for TIN solicitation includes maintenance and certification and
complies
to all known government regulations regarding TIN processing.
Maintenance $.25 per item
Certification $.10 per item

I. Annual Maintenance Charge (con't.)

Closed Account Fee $.10 per account
per month
(No fee assessed for $0 balance open accounts)

Minimum Charges
The monthly maintenance charge for each fund will be the actual
account fees or $1000, whichever is greater.
All funds will be subject to the minimum monthly fee of $1,000 except that
the
minimum will be waived for the initial six months or until the fund's
net assets
exceed $50,000,000, whichever occurs first.
The "clone" funds will be subject to a monthly minimum fee of $600.

II. Out-of-Pocket Expenses

Out-of-pocket expenses include but are not limited to: postage, forms,
telephone, microfilm, microfiche, and expenses incurred at the specific
direction of the fund. Postage for mass mailings is due seven days in advance
of the mailing date.

III. Payment

Payment is due thirty days after the date of the invoice.

Schedule C2
Federated Investors
_ Bank Proprietary Funds _

I. Annual Maintenance Charge

I. Annual Maintenance Charge (con't.)

Closed Account Fee $.10 per account
per month
(No fee assessed for $0 balance open accounts)

Minimum Charges
The monthly maintenance charge for each fund will be the actual
account fees or
$2000, whichever is greater.

II. Out-of-Pocket Expenses

III. Payment

Payment is due thirty days after the date of the invoice.

SCHEDULE D

Out-of-Pocket Expenses Schedule

- Postage (including overnight courier service)
- Statement Stock
- Envelopes
- Telecommunication Charges (including FAX)
- Travel
- Duplicating
- Forms
- Supplies
- Microfiche
- Computer Access Charges
- Client Specific Enhancements
- Disaster Recovery
SCHEDULE E

Fee Schedule

I. Custody Services

Maintain Custody of fund assets. Settle portfolio purchases and
sales. Report buy and sell fails. Determine and collect
portfolio income. Make cash disbursements and report cash
transactions. Monitor corporate actions.

ANNUAL FEES

ASSET

First $500 Million 1.0 Basis Point
Excess .5 Basis Point

Minimum fee per year $15,000
Wire Fees $2.70 per wire
Settlements:
Each DTC Commercial Paper $9.00
Each DTC Transaction $9.00
Each Federal Reserve Book Entry Transaction (Repo) $4.50
Each Repo with Banks Other than State Street Bank $7.50
Each Physical Transaction (NY/Boston, Private Placement) $21.75
Each Option Written/Exercised/Expired $18.75
Each Stock Load Transaction $12.00
Each Book Entry Muni (Sub-custody) Transaction $15.00
Index Fund/ETD Cost + 15%

II. Out-Of-Pocket Expenses

Telephone
Postage & Insurance
Armored carrier costs
Legal fees
Supplies related to fund records
Processing validation certificates
Forms, envelopes, Xerox copies, supplies, etc.

III. Special Services

Fees for activities of a non-recurring nature such as fund
consolidation or reorganization, extraordinary security shipments
and the preparation of special reports will be subject to
negotiation.

IV. Coupon Clipping

Monitoring for calls and processing for each monthly issue held

Monthly Charge $5.00

V. Balance Credit

A balance credit equal to 75% of the average balance in the
custodian account for the monthly billed times the 30-day T-Bill
Rate on the last Monday of the month billed will be applied
against Section I through IV above.

VI. Term of the Contract

The parties agree that this fee schedule shall become effective
June 1, 1993 and will remain in effect until it is revised as a
result of negotiations initiated by either party.

Exhibit 2

CUSTODIAN CONTRACT
Between
(Investment Company),
and
STATE STREET BANK AND TRUST COMPANY/
OTHER CUSTODIAN BANK
and
Federated Services Company

Exhibit 2

CUSTODIAN CONTRACT
Between
(Investment Company),
and
STATE STREET BANK AND TRUST COMPANY/
OTHER CUSTODIAN BANK

TABLE OF CONTENTS

Page
1. Employment of Custodian and Property to be Held by It 1
2. Duties of the Custodian With Respect to Property
of the Funds Held by the Custodian 2
2.1 Holding Securities 2
2.2 Delivery of Securities 2
2.3 Registration of Securities 5
2.4 Bank Accounts 6
2.5 Payments for Shares 6
2.6 Availability of Federal Funds 6
2.7 Collection of Income 7
2.8 Payment of Fund Moneys 8
2.9 Liability for Payment in Advance of
Receipt of Securities Purchased. 9
2.10 Payments for Repurchases or Redemptions
of Shares of a Fund 9
2.11 Appointment of Agents 10
2.12 Deposit of Fund Assets in Securities System 10
2.13 Segregated Account 12
2.14 Joint Repurchase Agreements 12
2.15 Ownership Certificates for Tax Purposes 13
2.16 Proxies 13
2.17 Communications Relating to Fund Portfolio Securities 13
2.18 Proper Instructions 14
2.19 Actions Permitted Without Express Authority 14
2.20 Evidence of Authority 15

WHEN FSCO IS FA&SR OR TA AND CUSTODIAN IS NOT SSBT, USE:
2.21 Notice to Trust by Custodian Regarding Cash Movement 15

WHEN SSBT IS TA OR CUSTODIAN, USE:
2.21 Reserved 15

FOR FUND ACCOUNTING AND SAFEKEEPING (WHEN SSBT IS CUSTODIAN OR
TA, USE:
3. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income 16
FOR SAFEKEEPING ONLY (WHEN FSCO IS FA&SR AND SSBT IS NOT
CUSTODIAN, USE:
3. Duties of Custodian with Respect to the Books of Account
and Regulatory Reporting 16

4. Records 16
5. Opinion of Funds' Independent Public Accountants/Auditors 17
6. Reports to Trust by Independent Public Accountants/Auditors 17
7. Compensation of Custodian 18
8. Responsibility of Custodian 18
9. Effective Period, Termination and Amendment 20
10. Successor Custodian 21
11. Interpretive and Additional Provisions 22
12. Massachusetts/Maryland (if using SSBT, use Mass., if not
use state of incorporation of the Trust/Corp.) Law to Apply 22
13. Notices 22
14. Counterparts 23

IF MASSACHUSETTS BUSINESS TRUST, USE:
15. Limitations of Liability 23

CUSTODIAN CONTRACT

This Contract between
, (the "Trust"), a Massachusetts business
trust/Maryland corporation, on behalf of the portfolios
(hereinafter collectively called the "Funds" and individually
referred to as a "Fund") of the Trust, organized and existing
under the laws of the State of Maryland/Commonwealth of
Massachusetts, having its principal place of business at
Federated Investors Tower, Pittsburgh, Pennsylvania,
15222-3779, and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, having its principal place of
business at 225 Franklin Street, Boston, Massachusetts, 02110,
hereinafter called the "Custodian",

WITNESSETH: That in consideration of the mutual covenants
and agreements hereinafter contained, the parties hereto agree
as follows:

1. Employment of Custodian and Property to be Held by It

The Trust hereby employs the Custodian as the custodian of
the assets of each of the Funds of the Trust. Except as
otherwise expressly provided herein, the securities and other
assets of each of the Funds shall be segregated from the assets
of each of the other Funds and from all other persons and
entities. The Trust will deliver to the Custodian all
securities and cash owned by the Funds and all payments of
income, payments of principal or capital distributions received
by them with respect to all securities owned by the Funds from
time to time, and the cash consideration received by them for
shares ("Shares") of beneficial interest/capital stock of the
Funds as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of the
Funds held or received by the Funds and not delivered to the
Custodian.

Upon receipt of "Proper Instructions" (within the meaning
of Section 2.18), the Custodian shall from time to time employ
one or more sub-custodians upon the terms specified in the
Proper Instructions, provided that the Custodian shall have no
more or less responsibility or liability to the Trust or any of
the Funds on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to
the Custodian.

2. Duties of the Custodian With Respect to Property of the
Funds Held by the Custodian

2.1 Holding Securities. The Custodian shall hold and
physically segregate for the account of each Fund all
non-cash property, including all securities owned by each
Fund, other than securities which are maintained pursuant
to Section 2.12 in a clearing agency which acts as a
securities depository or in a book-entry system authorized
by the U.S. Department of the Treasury, collectively
referred to herein as "Securities System", or securities
which are subject to a joint repurchase agreement with
affiliated funds pursuant to Section 2.14. The Custodian
shall maintain records of all receipts, deliveries and
locations of such securities, together with a current
inventory thereof, and shall conduct periodic physical
inspections of certificates representing stocks, bonds and
other securities held by it under this Contract in such
manner as the Custodian shall determine from time to time
to be advisable in order to verify the accuracy of such
inventory. With respect to securities held by any agent
appointed pursuant to Section 2.11 hereof, and with respect
to securities held by any sub-custodian appointed pursuant
to Section 1 hereof, the Custodian may rely upon
certificates from such agent as to the holdings of such
agent and from such sub-custodian as to the holdings of
such sub-custodian, it being understood that such reliance
in no way relieves the Custodian of its responsibilities
under this Contract. The Custodian will promptly report to
the Trust the results of such inspections, indicating any
shortages or discrepancies uncovered thereby, and take
appropriate action to remedy any such shortages or
discrepancies.

2.2 Delivery of Securities. The Custodian shall release and
deliver securities owned by a Fund held by the Custodian or
in a Securities System account of the Custodian only upon
receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, and
only in the following cases:

(1) Upon sale of such securities for the account of a Fund
and receipt of payment therefor;

(2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered
into by the Trust;

(3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section
2.12 hereof;

(4) To the depository agent in connection with tender or
other similar offers for portfolio securities of a
Fund, in accordance with the provisions of Section 2.17
hereof;

(5) To the issuer thereof or its agent when such securities
are called, redeemed, retired or otherwise become
payable; provided that, in any such case, the cash or
other consideration is to be delivered to the
Custodian;

(6) To the issuer thereof, or its agent, for transfer into
the name of a Fund or into the name of any nominee or
nominees of the Custodian or into the name or nominee
name of any agent appointed pursuant to Section 2.11 or
into the name or nominee name of any sub-custodian
appointed pursuant to Section 1; or for exchange for a
different number of bonds, certificates or other
evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the
new securities are to be delivered to the Custodian;

(7) Upon the sale of such securities for the account of a
Fund, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street
delivery custom"; provided that in any such case, the
Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities
prior to receiving payment for such securities except
as may arise from the Custodian's own failure to act in
accordance with the standard of reasonable care or any
higher standard of care imposed upon the Custodian by
any applicable law or regulation if such above-stated
standard of reasonable care were not part of this
Contract;

(8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization
or readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the
new securities and cash, if any, are to be delivered to
the Custodian;

(9) In the case of warrants, rights or similar securities,
the surrender thereof in the exercise of such warrants,
rights or similar securities or the surrender of
interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;

(10) For delivery in connection with any loans of
portfolio securities of a Fund, but only against
receipt of adequate collateral in the form of (a) cash,
in an amount specified by the Trust, (b) certificated
securities of a description specified by the Trust,
registered in the name of the Fund or in the name of a
nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer, or (c)
securities of a description specified by the Trust,
transferred through a Securities System in accordance
with Section 2.12 hereof;

(11) For delivery as security in connection with any
borrowings requiring a pledge of assets by a Fund, but
only against receipt of amounts borrowed, except that
in cases where additional collateral is required to
secure a borrowing already made, further securities may
be released for the purpose;

(12) For delivery in accordance with the provisions of
any agreement among the Trust or a Fund, the Custodian
and a broker-dealer registered under the Securities
Exchange Act of 1934, as amended, (the "Exchange Act")
and a member of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any
similar organization or organizations, regarding escrow
or other arrangements in connection with transactions
for a Fund;

(13) For delivery in accordance with the provisions of
any agreement among the Trust or a Fund, the Custodian,
and a Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission
and/or any Contract Market, or any similar organization
or organizations, regarding account deposits in
connection with transaction for a Fund;

(14) Upon receipt of instructions from the transfer
agent ("Transfer Agent") for a Fund, for delivery to
such Transfer Agent or to the holders of shares in
connection with distributions in kind, in satisfaction
of requests by holders of Shares for repurchase or
redemption; and

(15) For any other proper corporate purpose, but only
upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Executive
Committee of the Trust on behalf of a Fund signed by an
officer of the Trust and certified by its Secretary or
an Assistant Secretary, specifying the securities to be
delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be
made.

2.3 Registration of Securities. Securities held by the
Custodian (other than bearer securities) shall be
registered in the name of a particular Fund or in the name
of any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to
the Fund, unless the Trust has authorized in writing the
appointment of a nominee to be used in common with other
registered investment companies affiliated with the Fund,
or in the name or nominee name of any agent appointed
pursuant to Section 2.11 or in the name or nominee name of
any sub-custodian appointed pursuant to Section 1. All
securities accepted by the Custodian on behalf of a Fund
under the terms of this Contract shall be in "street name"
or other good delivery form.

2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the name of each Fund,
subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in
such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of each
Fund, other than cash maintained in a joint repurchase
account with other affiliated funds pursuant to Section
2.14 of this Contract or by a particular Fund in a bank
account established and used in accordance with Rule 17f-3
under the Investment Company Act of 1940, as amended, (the
"1940 Act"). Funds held by the Custodian for a Fund may be
deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the
1940 Act and that each such bank or trust company and the
funds to be deposited with each such bank or trust company
shall be approved by vote of a majority of the Board of
Trustees/Directors ("Board") of the Trust. Such funds
shall be deposited by the Custodian in its capacity as
Custodian for the Fund and shall be withdrawable by the
Custodian only in that capacity. If requested by the
Trust, the Custodian shall furnish the Trust, not later
than twenty (20) days after the last business day of each
month, an internal reconciliation of the closing balance as
of that day in all accounts described in this section to
the balance shown on the daily cash report for that day
rendered to the Trust.

2.5 Payments for Shares. The Custodian shall make such
arrangements with the Transfer Agent of each Fund, as will
enable the Custodian to receive the cash consideration due
to each Fund and will deposit into each Fund's account such
payments as are received from the Transfer Agent. The
Custodian will provide timely notification to the Trust and
the Transfer Agent of any receipt by it of payments for
Shares of the respective Fund.

2.6 Availability of Federal Funds. Upon mutual agreement
between the Trust and the Custodian, the Custodian shall
make federal funds available to the Funds as of specified
times agreed upon from time to time by the Trust and the
Custodian in the amount of checks, clearing house funds,
and other non-federal funds received in payment for Shares
of the Funds which are deposited into the Funds' accounts.

2.7 Collection of Income.

(1) The Custodian shall collect on a timely basis all
income and other payments with respect to registered
securities held hereunder to which each Fund shall be
entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely
basis all income and other payments with respect to
bearer securities if, on the date of payment by the
issuer, such securities are held by the Custodian or
its agent thereof and shall credit such income, as
collected, to each Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian
shall detach and present for payment all coupons and
other income items requiring presentation as and when
they become due and shall collect interest when due on
securities held hereunder. The collection of income
due the Funds on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the
responsibility of the Trust. The Custodian will have
no duty or responsibility in connection therewith,
other than to provide the Trust with such information
or data as may be necessary to assist the Trust in
arranging for the timely delivery to the Custodian of
the income to which each Fund is properly entitled.

WHEN SSBT IS TA OR CUSTODIAN, USE:

(2) The Custodian shall promptly notify the Trust whenever
income due on securities is not collected in due course
and will provide the Trust with monthly reports of the
status of past due income unless the parties otherwise
agree.

WHEN FSCO IS FA&SR OR TA AND SSBT IS NOT CUSTODIAN, USE:

(2) The Trust shall promptly notify the Custodian whenever
income due on securities is not collected in due course
and will provide the Custodian with monthly reports of
the status of past due income. The Trust will furnish
the Custodian with a weekly report of accrued/past due
income for the Fund. Once an item is identified as
past due and the Trust has furnished the necessary
claim documentation to the Custodian, the Custodian
will then initiate a claim on behalf of the Trust. The
Custodian will furnish the Trust with a status report
monthly unless the parties otherwise agree.

2.8 Payment of Fund Moneys. Upon receipt of Proper
Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay
out moneys of each Fund in the following cases only:

(1) Upon the purchase of securities, futures contracts or
options on futures contracts for the account of a Fund
but only (a) against the delivery of such securities,
or evidence of title to futures contracts, to the
Custodian (or any bank, banking firm or trust company
doing business in the United States or abroad which is
qualified under the 1940 Act to act as a custodian and
has been designated by the Custodian as its agent for
this purpose) registered in the name of the Fund or in
the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer, (b)
in the case of a purchase effected through a Securities
System, in accordance with the conditions set forth in
Section 2.12 hereof or (c) in the case of repurchase
agreements entered into between the Trust and any other
party, (i) against delivery of the securities either in
certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with
such securities or (ii) against delivery of the receipt
evidencing purchase for the account of the Fund of
securities owned by the Custodian along with written
evidence of the agreement by the Custodian to
repurchase such securities from the Fund;

(2) In connection with conversion, exchange or surrender of
securities owned by a Fund as set forth in Section 2.2
hereof;

(3) For the redemption or repurchase of Shares of a Fund
issued by the Trust as set forth in Section 2.10
hereof;

(4) For the payment of any expense or liability incurred by
a Fund, including but not limited to the following
payments for the account of the Fund: interest; taxes;
management, accounting, transfer agent and legal fees;
and operating expenses of the Fund, whether or not such
expenses are to be in whole or part capitalized or
treated as deferred expenses;

(5) For the payment of any dividends on Shares of a Fund
declared pursuant to the governing documents of the
Trust;

(6) For payment of the amount of dividends received in
respect of securities sold short;

(7) For any other proper purpose, but only upon receipt of,
in addition to Proper Instructions, a certified copy of
a resolution of the Executive Committee of the Trust on
behalf of a Fund signed by an officer of the Trust and
certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth
the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to
be made.

2.9 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for
purchase of securities for the account of a Fund is made by
the Custodian in advance of receipt of the securities
purchased, in the absence of specific written instructions
from the Trust to so pay in advance, the Custodian shall be
absolutely liable to the Fund for such securities to the
same extent as if the securities had been received by the
Custodian.

2.10 Payments for Repurchases or Redemptions of Shares of a
Fund. From such funds as may be available for the purpose
of repurchasing or redeeming Shares of a Fund, but subject
to the limitations of the Declaration of Trust/Articles of
Incorporation and any applicable votes of the Board of the
Trust pursuant thereto, the Custodian shall, upon receipt
of instructions from the Transfer Agent, make funds
available for payment to holders of shares of such Fund who
have delivered to the Transfer Agent a request for
redemption or repurchase of their shares including without
limitation through bank drafts, automated clearinghouse
facilities, or by other means. In connection with the
redemption or repurchase of Shares of the Funds, the
Custodian is authorized upon receipt of instructions from
the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders.

2.11 Appointment of Agents. The Custodian may at any time
or times in its discretion appoint (and may at any time
remove) any other bank or trust company which is itself
qualified under the 1940 Act and any applicable state law
or regulation, to act as a custodian, as its agent to carry
out such of the provisions of this Section 2 as the
Custodian may from time to time direct; provided, however,
that the appointment of any agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder.

2.12 Deposit of Fund Assets in Securities System. The
Custodian may deposit and/or maintain securities owned by
the Funds in a clearing agency registered with the
Securities and Exchange Commission ("SEC") under Section
17A of the Exchange Act, which acts as a securities
depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal
agencies, collectively referred to herein as "Securities
System" in accordance with applicable Federal Reserve Board
and SEC rules and regulations, if any, and subject to the
following provisions:

(1) The Custodian may keep securities of each Fund in a
Securities System provided that such securities are
represented in an account ("Account") of the Custodian
in the Securities System which shall not include any
assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;

(2) The records of the Custodian with respect to securities
of the Funds which are maintained in a Securities
System shall identify by book-entry those securities
belonging to each Fund;

(3) The Custodian shall pay for securities purchased for
the account of each Fund upon (i) receipt of advice
from the Securities System that such securities have
been transferred to the Account, and (ii) the making of
an entry on the records of the Custodian to reflect
such payment and transfer for the account of the Fund.
The Custodian shall transfer securities sold for the
account of a Fund upon (i) receipt of advice from the
Securities System that payment for such securities has
been transferred to the Account, and (ii) the making of
an entry on the records of the Custodian to reflect
such transfer and payment for the account of the Fund.
Copies of all advices from the Securities System of
transfers of securities for the account of a Fund shall
identify the Fund, be maintained for the Fund by the
Custodian and be provided to the Trust at its request.
Upon request, the Custodian shall furnish the Trust
confirmation of each transfer to or from the account of
a Fund in the form of a written advice or notice and
shall furnish to the Trust copies of daily transaction
sheets reflecting each day's transactions in the
Securities System for the account of a Fund.

(4) The Custodian shall provide the Trust with any report
obtained by the Custodian on the Securities System's
accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Securities System;

(5) The Custodian shall have received the initial
certificate, required by Section 9 hereof;

(6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the
Trust for any loss or damage to a Fund resulting from
use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian
or any of its agents or of any of its or their
employees or from failure of the Custodian or any such
agent to enforce effectively such rights as it may have
against the Securities System; at the election of the
Trust, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim
against the Securities System or any other person which
the Custodian may have as a consequence of any such
loss or damage if and to the extent that a Fund has not
been made whole for any such loss or damage.

(7) The authorization contained in this Section 2.12 shall
not relieve the Custodian from using reasonable care
and diligence in making use of any Securities System.

2.13 Segregated Account. The Custodian shall upon receipt
of Proper Instructions establish and maintain a segregated
account or accounts for and on behalf of each Fund, into
which account or accounts may be transferred cash and/or
securities, including securities maintained in an account
by the Custodian pursuant to Section 2.12 hereof, (i) in
accordance with the provisions of any agreement among the
Trust, the Custodian and a broker-dealer registered under
the Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions for a
Fund, (ii) for purpose of segregating cash or government
securities in connection with options purchased, sold or
written for a Fund or commodity futures contracts or
options thereon purchased or sold for a Fund, (iii) for the
purpose of compliance by the Trust or a Fund with the
procedures required by any release or releases of the SEC
relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper
corporate purposes, but only, in the case of clause (iv),
upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board or of the
Executive Committee signed by an officer of the Trust and
certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate
purposes.

2.14 Joint Repurchase Agreements. Upon the receipt of
Proper Instructions, the Custodian shall deposit and/or
maintain any assets of a Fund and any affiliated funds
which are subject to joint repurchase transactions in an
account established solely for such transactions for the
Fund and its affiliated funds. For purposes of this
Section 2.14, "affiliated funds" shall include all
investment companies and their portfolios for which
subsidiaries or affiliates of Federated Investors serve as
investment advisers, distributors or administrators in
accordance with applicable exemptive orders from the SEC.
The requirements of segregation set forth in Section 2.1
shall be deemed to be waived with respect to such assets.

2.15 Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
respect to securities of a Fund held by it and in
connection with transfers of securities.

2.16 Proxies. The Custodian shall, with respect to the
securities held hereunder, cause to be promptly executed by
the registered holder of such securities, if the securities
are registered otherwise than in the name of a Fund or a
nominee of a Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall
promptly deliver to the Trust such proxies, all proxy
soliciting materials and all notices relating to such
securities.

2.17 Communications Relating to Fund Portfolio Securities.
The Custodian shall transmit promptly to the Trust (if FSCO
is the TA or FA&SR and SSBT is not the Custodian add: and
the investment adviser of the Trust) all written
information (including, without limitation, pendency of
calls and maturities of securities and expirations of
rights in connection therewith and notices of exercise of
call and put options written by the Fund and the maturity
of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the securities
being held for the Fund. With respect to tender or
exchange offers, the Custodian shall transmit promptly to
the Trust (if FSCO is the TA or FA&SR and SSBT is not the
Custodian add: and the investment adviser of the Trust) all
written information received by the Custodian from issuers
of the securities whose tender or exchange is sought and
from the party (or his agents) making the tender or
exchange offer. If the Trust (if FSCO is the TA or FA&SR
and SSBT is not the Custodian add: or the investment
adviser of the Trust) desires to take action with respect
to any tender offer, exchange offer or any other similar
transaction, the Trust shall notify the Custodian in
writing at least three business days prior to the date on
which the Custodian is to take such action. However, the
Custodian shall nevertheless exercise its best efforts to
take such action in the event that notification is received
three business days or less prior to the date on which
action is required. (when FSCO is TA or FA&SR and SSBT is
not Custodian) add: For securities which are not held in
nominee name, the Custodian will act as a secondary source
of information and will not be responsible for providing
corporate action notification to the Trust.

2.18 Proper Instructions. Proper Instructions as used
throughout this Section 2 means a writing signed or
initialed by one or more person or persons as the Board
shall have from time to time authorized. Each such writing
shall set forth the specific transaction or type of
transaction involved. Oral instructions will be deemed to
be Proper Instructions if (a) the Custodian reasonably
believes them to have been given by a person previously
authorized in Proper Instructions to give such instructions
with respect to the transaction involved, and (b) the Trust
promptly causes such oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or
an Assistant Secretary as to the authorization by the Board
of the Trust accompanied by a detailed description of
procedures approved by the Board, Proper Instructions may
include communications effected directly between
electro-mechanical or electronic devices provided that the
Board and the Custodian are satisfied that such procedures
afford adequate safeguards for a Fund's assets.

2.19 Actions Permitted Without Express Authority. The
Custodian may in its discretion, without express authority
from the Trust:

(1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to
its duties under this Contract, provided that all such
payments shall be accounted for to the Trust in such
form that it may be allocated to the affected Fund;

(2) surrender securities in temporary form for securities
in definitive form;

(3) endorse for collection, in the name of a Fund, checks,
drafts and other negotiable instruments; and

(4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the
securities and property of each Fund except as
otherwise directed by the Trust.

2.20 Evidence of Authority. The Custodian shall be
protected in acting upon any instructions, notice, request,
consent, certificate or other instrument or paper
reasonably believed by it to be genuine and to have been
properly executed on behalf of a Fund. The Custodian may
receive and accept a certified copy of a vote of the Board
of the Trust as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of
any determination of or any action by the Board pursuant to
the Declaration of Trust/Articles of Incorporation as
described in such vote, and such vote may be considered as
in full force and effect until receipt by the Custodian of
written notice to the contrary.

WHEN FSCO IS THE FA&SR OR TA AND SSBT IS NOT THE CUSTODIAN,
USE:

2.21 Notice to Trust by Custodian Regarding Cash Movement.
The Custodian will provide timely notification to the Trust
of any receipt of cash, income or payments to the Trust and
the release of cash or payment by the Trust.

WHEN SSBT IS THE CUSTODIAN, FA&SR OR TA, USE:
2.21 Reserved.
FOR SAFEKEEPING ONLY (WHEN FSCO IS FA&SR AND SSBT IS NOT
CUSTODIAN, USE:

3. Duties of Custodian With Respect to the Books of Account
and Regulatory Reporting.

The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board of
the Trust to keep the books of account of each Fund and
appointed to report on behalf of each Fund to the Board, the
SEC and other regulatory bodies.

FOR FUND ACCOUNTING AND SAFEKEEPING (WHEN A TA), USE:

3. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income.

The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board of
the Trust to keep the books of account of each Fund and/or
compute the net asset value per share of the outstanding Shares
of each Fund or, if directed in writing to do so by the Trust,
shall itself keep such books of account and/or compute such net
asset value per share. If so directed, the Custodian shall
also calculate daily the net income of a Fund as described in
the Fund's currently effective prospectus and Statement of
Additional Information ("Prospectus") and shall advise the
Trust and the Transfer Agent daily of the total amounts of such
net income and, if instructed in writing by an officer of the
Trust to do so, shall advise the Transfer Agent periodically of
the division of such net income among its various components.
The calculations of the net asset value per share and the daily
income of a Fund shall be made at the time or times described
from time to time in the Fund's currently effective Prospectus.

4. Records.

The Custodian shall create and maintain all records
relating to its activities and obligations under this Contract
in such manner as will meet the obligations of the Trust and
the Funds under the 1940 Act, with particular attention to
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder, and
specifically including identified cost records used for tax
purposes. All such records shall be the property of the Trust
and shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers,
employees or agents of the Trust and employees and agents of
the SEC. In the event of termination of this Contract, the
Custodian will deliver all such records to the Trust, to a
successor Custodian, or to such other person as the Trust may
direct. The Custodian shall supply daily to the Trust a
tabulation of securities owned by a Fund and held by the
Custodian and shall, when requested to do so by the Trust and
for such compensation as shall be agreed upon between the Trust
and the Custodian, include certificate numbers in such
tabulations. (when FSCO is TA or FA&SR and SSBT is not the
Custodian, add the next sentence:) In addition, the Custodian
shall electronically transmit daily to the Trust information
pertaining to security trading and other investment activity
and all other cash activity of a Fund.

5. Opinion of Funds' Independent Public Accountants/Auditors.

The Custodian shall take all reasonable action, as the
Trust may from time to time request, to obtain from year to
year favorable opinions from each Fund's independent public
accountants/auditors with respect to its activities hereunder
in connection with the preparation of the Fund's registration
statement, periodic reports, or any other reports to the SEC
and with respect to any other requirements of such Commission.

6. Reports to Trust by Independent Public
Accountants/Auditors.

The Custodian shall provide the Trust, at such times as the
Trust may reasonably require, with reports by independent
public accountants/auditors for each Fund on the accounting
system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on
futures contracts, including securities deposited and/or
maintained in a Securities System, relating to the services
provided by the Custodian for the Fund under this Contract;
such reports shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Trust, to provide
reasonable assurance that any material inadequacies would be
disclosed by such examination and, if there are no such
inadequacies, the reports shall so state.

7. Compensation of Custodian.

The Custodian shall be entitled to reasonable compensation
for its services and expenses as Custodian, as agreed upon from
time to time between the Trust and the Custodian.

8. Responsibility of Custodian.

The Custodian shall be held to a standard of reasonable
care in carrying out the provisions of this Contract; provided,
however, that the Custodian shall be held to any higher
standard of care which would be imposed upon the Custodian by
any applicable law or regulation if such above stated standard
of reasonable care was not part of this Contract. The
Custodian shall be entitled to rely on and may act upon advice
of counsel (who may be counsel for the Trust) on all matters,
and shall be without liability for any action reasonably taken
or omitted pursuant to such advice, provided that such action
is not in violation of applicable federal or state laws or
regulations, and is in good faith and without negligence.
(Delete "Subject to the ... in Section 15 hereof" for Maryland
Corporations) Subject to the limitations set forth in Section
15 hereof, the Custodian shall be kept indemnified by the Trust
but only from the assets of the Fund involved in the issue at
hand and be without liability for any action taken or thing
done by it in carrying out the terms and provisions of this
Contract in accordance with the above standards.

In order that the indemnification provisions contained in
this Section 8 shall apply, however, it is understood that if
in any case the Trust may be asked to indemnify or save the
Custodian harmless, the Trust shall be fully and promptly
advised of all pertinent facts concerning the situation in
question, and it is further understood that the Custodian will
use all reasonable care to identify and notify the Trust
promptly concerning any situation which presents or appears
likely to present the probability of such a claim for
indemnification. The Trust shall have the option to defend the
Custodian against any claim which may be the subject of this
indemnification, and in the event that the Trust so elects it
will so notify the Custodian and thereupon the Trust shall take
over complete defense of the claim, and the Custodian shall in
such situation initiate no further legal or other expenses for
which it shall seek indemnification under this Section. The
Custodian shall in no case confess any claim or make any
compromise in any case in which the Trust will be asked to
indemnify the Custodian except with the Trust's prior written
consent.

Notwithstanding the foregoing, the responsibility of the
Custodian with respect to redemptions effected by check shall
be in accordance with a separate Agreement entered into between
the Custodian and the Trust.

If the Trust requires the Custodian to take any action with
respect to securities, which action involves the payment of
money or which action may, in the reasonable opinion of the
Custodian, result in the Custodian or its nominee assigned to a
Fund being liable for the payment of money or incurring
liability of some other form, the Custodian may request the
Trust, as a prerequisite to requiring the Custodian to take
such action, to provide indemnity to the Custodian in an amount
and form satisfactory to the Custodian.

(Delete "Subject to the ... in Section 15 hereof" for
Maryland Corporations) Subject to the limitations set forth in
Section 15 hereof, the Trust agrees to indemnify and hold
harmless the Custodian and its nominee from and against all
taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) (referred to herein as authorized
charges) incurred or assessed against it or its nominee in
connection with the performance of this Contract, except such
as may arise from it or its nominee's own failure to act in
accordance with the standard of reasonable care or any higher
standard of care which would be imposed upon the Custodian by
any applicable law or regulation if such above-stated standard
of reasonable care were not part of this Contract. To secure
any authorized charges and any advances of cash or securities
made by the Custodian to or for the benefit of a Fund for any
purpose which results in the Fund incurring an overdraft at the
end of any business day or for extraordinary or emergency
purposes during any business day, the Trust hereby grants to
the Custodian a security interest in and pledges to the
Custodian securities held for the Fund by the Custodian, in an
amount not to exceed 10 percent of the Fund's gross assets, the
specific securities to be designated in writing from time to
time by the Trust or the Fund's investment adviser. Should the
Trust fail to make such designation, or should it instruct the
Custodian to make advances exceeding the percentage amount set
forth above and should the Custodian do so, the Trust hereby
agrees that the Custodian shall have a security interest in all
securities or other property purchased for a Fund with the
advances by the Custodian, which securities or property shall
be deemed to be pledged to the Custodian, and the written
instructions of the Trust instructing their purchase shall be
considered the requisite description and designation of the
property so pledged for purposes of the requirements of the
Uniform Commercial Code. Should the Trust fail to cause a Fund
to repay promptly any authorized charges or advances of cash or
securities, subject to the provision of the second paragraph of
this Section 8 regarding indemnification, the Custodian shall
be entitled to use available cash and to dispose of pledged
securities and property as is necessary to repay any such
advances.

9. Effective Period, Termination and Amendment.

This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either
party by an instrument in writing delivered or mailed, postage
prepaid to the other party, such termination to take effect not
sooner than sixty (60) days after the date of such delivery or
mailing; provided, however that the Custodian shall not act
under Section 2.12 hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary
that the Board of the Trust has approved the initial use of a
particular Securities System as required in each case by Rule
17f-4 under the 1940 Act; provided further, however, that the
Trust shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations,
or any provision of the Declaration of Trust/Articles of
Incorporation, and further provided, that the Trust may at any
time by action of its Board (i) substitute another bank or
trust company for the Custodian by giving notice as described
above to the Custodian, or (ii) immediately terminate this
Contract in the event of the appointment of a conservator or
receiver for the Custodian by the appropriate banking
regulatory agency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of
competent jurisdiction.

Upon termination of the Contract, the Trust shall pay to
the Custodian such compensation as may be due as of the date of
such termination and shall likewise reimburse the Custodian for
its costs, expenses and disbursements.

10. Successor Custodian.

If a successor custodian shall be appointed by the Board of
the Trust, the Custodian shall, upon termination, deliver to
such successor custodian at the office of the Custodian, duly
endorsed and in the form for transfer, all securities then held
by it hereunder for each Fund and shall transfer to separate
accounts of the successor custodian all of each Fund's
securities held in a Securities System.

If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified
copy of a vote of the Board of the Trust, deliver at the office
of the Custodian and transfer such securities, funds and other
properties in accordance with such vote.

In the event that no written order designating a successor
custodian or certified copy of a vote of the Board shall have
been delivered to the Custodian on or before the date when such
termination shall become effective, then the Custodian shall
have the right to deliver to a bank or trust company, which is
a "bank" as defined in the 1940 Act, (delete "doing business
... Massachusetts" unless SSBT is the Custodian) doing business
in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by
its last published report, of not less than $100,000,000, all
securities, funds and other properties held by the Custodian
and all instruments held by the Custodian relative thereto and
all other property held by it under this Contract for each Fund
and to transfer to separate accounts of such successor
custodian all of each Fund's securities held in any Securities
System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.

In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to
failure of the Trust to procure the certified copy of the vote
referred to or of the Board to appoint a successor custodian,
the Custodian shall be entitled to fair compensation for its
services during such period as the Custodian retains possession
of such securities, funds and other properties and the
provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force and
effect.

11. Interpretive and Additional Provisions.

In connection with the operation of this Contract, the
Custodian and the Trust may from time to time agree on such
provisions interpretive of or in addition to the provisions of
this Contract as may in their joint opinion be consistent with
the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the
Declaration of Trust/Articles of Incorporation. No
interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this
Contract.

12. Massachusetts/Maryland Law to Apply.

This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The
Commonwealth of Massachusetts/State of Maryland.

13. Notices.

Except as otherwise specifically provided herein, Notices
and other writings delivered or mailed postage prepaid to the
Trust at Federated Investors Tower, Pittsburgh, Pennsylvania,
15222-3779, or to the Custodian at address for SSBT only: 225
Franklin Street, Boston, Massachusetts, 02110, or to such other
address as the Trust or the Custodian may hereafter specify,
shall be deemed to have been properly delivered or given
hereunder to the respective address.

14. Counterparts.

This Contract may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.

15. Limitations of Liability.

The Custodian is expressly put on notice of the limitation
of liability as set forth in Article XI of the Declaration of
Trust and agrees that the obligations and liabilities assumed
by the Trust and any Fund pursuant to this Contract, including,
without limitation, any obligation or liability to indemnify
the Custodian pursuant to Section 8 hereof, shall be limited in
any case to the relevant Fund and its assets and that the
Custodian shall not seek satisfaction of any such obligation
from the shareholders of the relevant Fund, from any other Fund
or its shareholders or from the Trustees, Officers, employees
or agents of the Trust, or any of them. In addition, in
connection with the discharge and satisfaction of any claim
made by the Custodian against the Trust, for whatever reasons,
involving more than one Fund, the Trust shall have the
exclusive right to determine the appropriate allocations of
liability for any such claim between or among the Funds.

IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed
as of the day of , 19
.

ATTEST: INVESTMENT COMPANIES

_____________________ By __________________________
Typed Name; Typed Name:
Secretary Title:

ATTEST: STATE STREET BANK AND TRUST
COMPANY OR OTHER CUSTODIAN

_________________________ By _________________________
(Assistant) Secretary Typed Name:
Typed Name: Title:

Exhibit 9(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. SK

BANKSOUTH SELECT FUNDS

Shareholder Services Plan

This Shareholder Services Plan ("Plan") is adopted as of this 1st day of
December 1993, by the Board of Trustees of BankSouth Select Funds (the
"Trust"), a Massachusetts business trust, with respect to certain classes
("Classes") of shares ("Shares") of the portfolios of the Trust set forth in
exhibits hereto.

1. This Plan is adopted to allow the Trust to make payments as
contemplated herein to obtain certain personal services ("Services") for
Trust shareholders ("Shareholders") and/or the maintenance of Shareholder
accounts.

2. This Plan is designed to compensate broker-dealers and other
participating financial institutions and other persons ("Providers") for
providing services to the Trust and its Shareholders. The Plan will be
administered by Federated Administrative Services ("FAS"). In compensation
for the services provided pursuant to this Plan, Providers will be paid a
monthly fee in respect of the Classes set forth on the applicable exhibit,
computed at the annual rate not to exceed 0.25% of the average aggregate net
asset value of the shares of such Classes of the Trust held during the month.

3. All services to be rendered and any payments to be made by the
Trust to any Provider hereunder will be made pursuant to the "Shareholder
Services Agreement" entered into by FAS on behalf of the Trust and the
Provider.

4. The Trust has the right (i) to select, in its sole discretion, the
Providers to participate in the Plan and (ii) to terminate without cause and
in its sole discretion any Shareholder Services Agreement.

5. Quarterly in each year that this Plan remains in effect, FAS shall
prepare and furnish to the Board of Trustees of the Trust, and the Board of
Trustees shall review, a written report of the amounts expended under the
Plan.

6. This Plan shall become effective with respect to each Class
(i) after approval by majority votes of: (a) the Trust's Board of Trustees;
and (b) the Disinterested Trustees of the Trust, cast in person at a meeting
called for the purpose of voting on the Plan; and (ii) upon execution of an
exhibit adopting this Plan.

7. This Plan shall remain in effect with respect to each Class
presently set forth on an exhibit hereto and any subsequent Classes added
pursuant to an exhibit hereto during the initial year of the Plan for the
period of one year from the date set forth above and may be continued
thereafter if this Plan is approved with respect to each Class at least
annually by a majority of the Trust's Board of Trustees and a majority of the
Disinterested Trustees, cast in person at a meeting called for the purpose of
voting on such Plan. If this Plan is adopted with respect to a Class after
the first annual approval by the Trustees as described above, this Plan will
be effective as to that Class upon execution of the applicable exhibit
pursuant to the provisions of paragraph 6(ii) above and will continue in
effect until the next annual approval of this Plan by the Trustees and
thereafter for successive periods of one year subject to approval as
described above.

8. All material amendments to this Plan must be approved by a vote of
the Board of Trustees of the Trust and of the Disinterested Trustees, cast in
person at a meeting called for the purpose of voting on it.

9. This Plan may be terminated with respect to a particular Class at
any time by: (a) a majority vote of the Disinterested Trustees; or (b) a vote
of a majority of the outstanding voting securities of the Trust as defined in
Section 2(a)(42) of the Investment Company Act of 1940, as amended.

10. While this Plan shall be in effect, the selection and nomination of
Disinterested Trustees of the Trust shall be committed to the discretion of
the Disinterested Trustees then in office.

11. All agreements with any person relating to the implementation of
this Plan shall be in writing and any agreement related to this Plan shall be
subject to termination, without penalty, pursuant to the provisions of
Paragraph 9 herein.

12. This Plan shall be construed in accordance with and governed by the
laws of the Commonwealth of Pennsylvania.

Witness the due execution hereof this 1st day of December, 1993.

BankSouth Select Funds

By:/s/ Charles L. Davis, Jr.

Vice-President

EXHIBIT A
to Shareholder Services Plan of
BankSouth Select Funds (the "Trust")

Classes covered by this Plan :

As of January 7, 1994

BankSouth Select Equity Fund
BankSouth Select Bond Fund
BankSouth Select Georgia Tax-Free Income Fund
BankSouth Select Government Money Market Fund
BankSouth Select Prime Money Market Fund

Exhibit 10 under Form N-1A
Exhibit 5 under Item 601/Reg. SK

HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
2510 CENTRE CITY TOWER
WILLIAM McC. HOUSTON PITTSBURGH, PA. 15222
FRED CHALMERS HOUSTON, JR. __________
THOMAS J. DONNELLY
JOHN F. MECK (412) 471-5828 FRED CHALMERS HOUSTON
FAX (412) 471-0736 (1914 - 1971)

MARIO SANTILLI, JR.
THEODORE M. HAMMER

January 6, 1994

The Trustees of
BankSouth Select Funds
Federated Investors Tower
Pittsburgh, PA 15222-3779

Gentlemen:

BankSouth Select Funds ("Trust") proposes to offer and sell
five separate series of Shares of Beneficial Interest
representing interests in separate portfolios of securities known
as BankSouth Select Georgia Tax-Free Income Fund, BankSouth
Select Government Money Market Fund, BankSouth Select Prime Money
Market Fund, BankSouth Select Bond Fund and BankSouth Select
Equity Fund (all such shares of beneficial interest being herein
referred to as "Shares") in the manner and on the terms set forth
in its Registration Statement filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
(File No. 33-50635.)

As counsel we have participated in the organization of the
Trust, its registration under the Investment Company Act of 1940
and the preparation and filing of its Registration Statement
under the Securities Act of 1933. We have examined and are
familiar with the provisions of the written Declaration of Trust
dated September 22, 1993 ("Declaration of Trust"), the Bylaws of
the Trust and such other documents and records deemed relevant.
We have also reviewed questions of law and consulted with counsel
thereon as deemed necessary or appropriate by us for the purposes
of this opinion.

Based upon the foregoing, it is our opinion that:

1. The Trust is duly organized and validly existing
pursuant to the Declaration of Trust.

2. The Shares which are currently being registered by the
Registration Statement referred to above may be legally and
validly issued from time to time in accordance with the
Declaration of Trust upon receipt of consideration sufficient to
comply with the provisions of Article III, Section 3, of the
Declaration of Trust and subject to compliance with the
Securities Act of 1933, as amended, the Investment Company Act of
1940, as amended, and applicable state laws regulating the sale
of securities. Such Shares, when so issued, will be fully paid
and non-assessable.

We consent to your filing this opinion as an exhibit to the
Registration Statement referred to above and to any application
or registration statement filed under the securities laws of any
of the States of the United States. We further consent to the
reference to our firm under the caption Legal Counsel in the
prospectus filed as a part of such Registration Statement,
applications and registration statements.

Very truly yours,

Houston, Houston & Donnelly

By: /s/Thomas J. Donnelly
Thomas J. Donnelly

TJD:heh

Exhibit 11(ii) under Form N-1A
Exhibit 8 under Item 601/Reg. SK

ALSTON & BIRD

One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424

404-881-7000
Faxc 404-881-7777 Telex 54-2996

Michael T. Petrik Direct Dial (404) 881-7479

December 17, 1993

Board of Trustees
BankSouth Select Georgia Tax-Free
Income Fund
c/o Federated Investors
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Ladies and Gentlemen:

We have acted as special Georgia tax counsel to BankSouth Select Georgia
Tax-Free Income Fund (the "Fund") in connection with the preparation of the
Preliminary Prospectus dated December 17, 1993, to be filed with the
Securities and Exchange Commission as a part of Pre-effective Amendment No. 1
to the Registration Statement for the Fund. You have requested that we,
acting in such capacity, render an opinion to you on certain State of Georgia
("Georgia") tax matters relating to the shares of the Fund to be offered to
the public.

In rendering the opinions expressed herein, we have examined such
documents as we have deemed appropriate, including the Preliminary Prospectus
and the Statement of Additional Information. In our examination of documents,
we have assumed, with your consent, that all documents submitted to us as
photocopies faithfully reproduce the originals thereof, that such originals
are authentic, that all such documents have been or will be duly executed to
the extent required, and that all statements set forth in such documents are
true, accurate and complete.

Under Georgia law, the amount of a taxpayer's income that is subject to
Georgia income tax generally is determined with reference to federal income
tax law. Accordingly, in expressing our views on the Georgia income tax
treatment of shareholders of the Fund, we have relied upon the statements
provided by you and contained in the Preliminary Prospectus and the Statement
of Additional Information with respect to the federal tax treatment of the
Fund and its shareholders.

700 Thirteenth Street, N.W., Suite 350 3575 Koger Boulevard, Suite 200
Washington, D.C. 2005-3960 Duluth, Georgia 30136-4958
Based upon the foregoing, it is our opinion that:

Under existing Georgia law, shareholders of the Fund will not be subject
to Georgia income taxes on distributions from the Fund to the extent that such
distributions represent either (1) "exempt--interest dividends" for federal
income tax purposes that are attributable to interest-bearing obligations
issued by or on behalf of the State of Georgia or its political subdivisions
or (2) dividends derived from interest on obligations of the United States or
of any other issuer whose obligations are exempt from state income taxes under
federal law. Distributions, if any, derived from capital gains or other
sources generally will be taxable for Georgia income tax purposes to
shareholders of the Fund who are subject to the Georgia income tax. It is the
current practice of the Georgia Department of Revenue to subject trust
interests similar to the Shares to the Georgia intangibles property tax at a
rate equal to $.10 per $1,000 of value if the owners of such interests reside
or have their principal business location in Georgia. We understand that the
Department of Revenue is currently considering whether the taxable value of
trust interests representing beneficial interests in tax-exempt securities may
be reduced to take into account the exempt nature of such securities. Lastly,
we have reviewed the statements regarding Georgia law under the heading "State
of Georgia Income and Intangibles Taxes" in the Preliminary Prospectus, and
are of the opinion that these are correct in all material respects as of the
date hereof.

The opinions expressed herein are based upon existing statutory,
regulatory, and judicial authority, any of which may change at any time with
retroactive effect. In addition, our opinions are based solely on the
documents we have examined, the additional information that we have obtained,
and the representations that have been made to us (including, in particular,
the statements contained in the Preliminary Prospectus and Statement of
Additional Information with respect to the federal income tax treatment of the
Fund and its shareholders). Our opinions cannot be relied upon if any of the
facts contained in such documents or in such additional information is, or
later becomes, inaccurate or if any of the representations made to us is, or
later becomes, inaccurate, and we make no undertaking and have no obligation
to update such opinions. Our opinions are limited to the tax matters
specifically covered thereby, and we have not been asked to address, nor have
we addressed, any other tax consequences relating to the Fund or its
shareholders, and no opinion is implied or may be inferred beyond those
expressly stated above.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement of which the Preliminary Prospectus is a part.

Very truly yours,

ALSTON & BIRD

By:/s/ Michael T. Petrik
A Partner

MTP:pw

[AD933470.113]

Exhibit 13 under Form N-1A
Exhibit 99 under Item 601/Reg. SK

FEDERATED ADMINISTRATIVE SERVICES
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
(412) 288-1900

January 7, 1994

BankSouth Select Funds
Federated Investors Tower
Pittsburgh, PA 15222-3779

Gentlemen:

Federated Administrative Services agrees to purchase S100,000
shares of BankSouth Select Government Money Market Fund (a portfolio of
BankSouth Select Funds) at the cost of $1.00 each. These shares are
purchased for investment purposes and Federated Administrative Services
has no present intention of redeeming these shares.

Very truly yours,

/s/Byron F. Bowman
Vice President

Exhibit 15(i) under Form N-1A
Exhibit 1 under Item 601/Reg. SK

BankSouth Select Funds
PLAN

THIS PLAN ("Plan") is adopted as of this 1st day of December, 1993, by
the Board of Trustees of BankSouth Select Funds (the "Trust"), a
Massachusetts business trust with respect to certain classes of shares
("Classes") of the portfolios of the Trust (the "Funds") set forth in
exhibits hereto.

1. This Plan is adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended ("Act"), so as to allow the Trust to make
payments as contemplated herein, in conjunction with the distribution of
Classes of the Funds ("Shares").

2. This Plan is designed to finance activities of Federated Securities
Corporation ("FSC") principally intended to result in the sale of Shares to
include: (a) compensating broker/dealers and other financial institutions
("Institutions") that sell Shares; (b) paying for the costs incurred in
conjunction with advertising and marketing of Shares, including expenses of
preparing, printing and distributing prospectuses, statements of additional
information, and sales literature to prospective shareholders and
Institutions; and (c) other costs incurred in the implementation and
operation of the Plan. In compensation for services provided pursuant to
this Plan, FSC will be paid a fee in respect of the respective Classes set
forth on each exhibit.

3. Any payment to FSC in accordance with this Plan will be made
pursuant to the "Distributor's Contract" entered into by the Trust and FSC.
Any payments made by FSC to Institutions with funds received as compensation
under this Plan will be made pursuant to the "Rule 12b-1 Agreement" entered
into by FSC and the Institutions.

4. FSC has the right (i) to select, in its sole discretion, the
Institutions to participate in the Plan and (ii) to terminate without cause
and in its sole discretion any Rule 12b-1 Agreement.

5. Quarterly in each year that this Plan remains in effect, FSC shall
prepare and furnish to the Board of Trustees of the Trust, and the Board of
Trustees shall review, a written report of the amounts expended under the
Plan and the purpose for which such expenditures were made.

6. This Plan shall become effective with respect to each Class
(i) after approval by majority votes of: (a) the Trust's Board of Trustees;
(b) the Disinterested Trustees of the Trust, cast in person at a meeting
called for the purpose of voting on the Plan; and (c) the outstanding voting
securities of the particular Class, as defined in Section 2(a)(42) of the Act
and (ii) upon execution of an exhibit adopting this Plan with respect to such
Class.

7. This Plan shall remain in effect with respect to each Class
presently set forth on an exhibit and any subsequent Classes added pursuant
to an exhibit during the initial year of this Plan for the period of one year
from the date set forth above and may be continued thereafter if this Plan is
approved with respect to each Class at least annually by a majority of the
Trust's Board of Trustees and a majority of the Disinterested Trustees, cast
in person at a meeting called for the purpose of voting on such Plan. If
this Plan is adopted with respect to a Class after the first annual approval
by the Trustees as described above, this Plan will be effective as to that
Class upon execution of the applicable exhibit pursuant to the provisions of
paragraph 6(ii) above and will continue in effect until the next annual
approval of this Plan by the Trustees and thereafter for successive periods
of one year subject to approval as described above.

9. This Plan may not be amended in order to increase materially the
costs which the Classes may bear for distribution pursuant to the Plan
without being approved by a majority vote of the outstanding voting
securities of the Classes as defined in Section 2(a)(42) of the Act.

10. This Plan may be terminated at any time without penalty with
respect to a particular Class at any time by: (a) a majority vote of the
Disinterested Trustees; or (b) a vote of a majority of the outstanding voting
securities of the particular Class as defined in Section 2(a)(42) of the Act;
or (c) by FSC on 60 days written notice to the Trust.

11. While this Plan shall be in effect, the selection and nomination of
Disinterested Trustees of the Trust shall be committed to the discretion of
the Disinterested Trustees then in office.

12. All agreements with any person relating to the implementation of
this Plan shall be in writing and any agreement related to this Plan shall be
subject to termination, without penalty, pursuant to the provisions of
Paragraph 10 herein.

13. The term "Disinterested Trustee" shall mean any Trustee of the Fund
who is not an "interested person" of the Fund (as defined in the Act) and who
has no direct or indirect financial interest in the Plan or in any agreement
related to the Plan.

14. This Plan shall be construed in accordance with and governed by the
laws of the Commonwealth of Pennsylvania.

EXHIBIT A
to the
Plan

BankSouth Select Funds

BankSouth Select Bond Fund
BankSouth Select Equity Fund
BankSouth Select Georgia Tax-Free Income Fund
BankSouth Select Government Money Market Fund
BankSouth Select Prime Money Market Fund

This Plan is adopted by BankSouth Select Funds with respect to the Class
of Shares of the portfolios of the Trust set forth above.

In compensation for the services provided pursuant to this Plan, FSC
will be paid a monthly fee computed at the annual rate of 0.25% of the
average aggregate net asset value of the Shares of BankSouth Select
Government Money Market Fund and BankSouth Select Prime Money Market Fund
held during the month and 0.75 of 1% of the average aggregate net asset value
of the Shares of BankSouth Select Bond Fund, BankSouth Select Equity Fund,
and BankSouth Select Georgia Tax-Free Income held during the month.

Witness the due execution hereof this 1st day of December, 1993.

BankSouth Select Funds

By:/s/ Charles L. Davis, Jr.

Name:Charles L. Davis, Jr.

Title:Vice President

Exhibit 15(ii) under Form N-1A
Exhibit 1 under Item 601/Reg. SK

FORM OF
RULE 12b-1 AGREEMENT

This Agreement is made between the Broker/Dealer or Financial Institution
executing this Agreement ("Institution") and Federated Securities Corp.
("FSC") for the mutual funds (referred to individually as the "Fund" and
collectively as the "Funds") for which FSC serves as Distributor of shares of
beneficial interest or capital stock ("Shares") and which have adopted a Rule
12b-1 Plan ("Plan") and approved this form of agreement pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the "1940 Act"). In
consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:

1. FSC hereby appoints Institution to render or cause to be rendered
sales-related services to the Funds and their shareholders.

2. The services to be provided under Paragraph 1 may include, but are not
limited to, the following:

(a) maintaining and distributing current copies of prospectuses and
shareholder reports;

(b) advertising the availability of its services and products;

(c) providing assistance and review in designing materials to send to
customers and potential customers and developing methods of making
such materials accessible to customers and potential customers;

(d) responding to customers' and potential customers' questions about
the Funds; and

(e) providing training and supervision of its personnel.

The services listed above are illustrative. The Institution is not required
to perform each service and may at any time perform either more or fewer
services than described above.

3. During the term of this Agreement, FSC will pay the Institution fees
for each Fund as set forth in a written schedule delivered to the Institution
pursuant to this Agreement. FSC's fee schedule for the Institution may be
changed by FSC sending a new fee schedule to Institution pursuant to Paragraph
12 of this Agreement. For the payment period in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of the fee on
the basis of the number of days that the Rule 12b-1 Agreement is in effect
during the quarter.

4. The Institution will not perform or provide any duties which would
cause it to be a fiduciary under Section 4975 of the Internal Revenue Code, as
amended. For purposes of that Section, the Institution understands that any
person who exercises any discretionary authority or discretionary control with
respect to any individual retirement account or its assets, or who renders
investment advice for a fee, or has any authority or responsibility to do so,
or has any discretionary authority or discretionary responsibility in the
administration of such an account, is a fiduciary.

5. The Institution understands that the Department of Labor views ERISA's
fiduciary and self-dealing and conflict of interest rules as prohibiting
fiduciaries of discretionary ERISA assets from receiving administrative
service fees or other compensation from funds in which the fiduciary's
discretionary ERISA assets are invested. To date, the Department of Labor has
not issued any exemptive order or advisory opinion that would exempt
fiduciaries from this interpretation. Without specific authorization from the
Department of Labor, fiduciaries should carefully avoid investing
discretionary assets in any fund pursuant to an arrangement where the
fiduciary is to be compensated by the fund for such investment.

6. With respect to each Fund, this Agreement shall continue in effect for
one year from the date of its execution, and thereafter for successive periods
of one year if the form of this Agreement is approved at least annually by the
Directors or Trustees of the Fund, including a majority of the members of the
Board of Directors or Trustees of the Fund who are not interested persons of
the Fund and have no direct or indirect financial interest in the operation of
the Fund's Plan or in any related documents to the Plan ("Disinterested
Directors or Trustees") cast in person at a meeting called for that purpose.

7. Notwithstanding paragraph 6, this Agreement may be terminated as
follows:

(a) at any time, without the payment of any penalty, by the vote of a
majority of the Disinterested Directors or Trustees of the Fund or by
a vote of a majority of the outstanding voting securities of the Fund
as defined in the 1940 Act on not more than sixty (60) days' written
notice to the parties to this Agreement;

(b) automatically in the event of the Agreement's assignment as
defined in the 1940 Act or upon the termination of the or
"Distributor's Contract" between the Fund and FSC; and

(c) by either party to the Agreement without cause by giving the
other party at least sixty (60) days' written notice of its intention
to terminate.

8. The termination of this Agreement with respect to any one Fund will
not cause the Agreement's termination with respect to any other Fund. Upon
termination, the Fund shall continue to pay the Institution for any services
rendered prior to such termination.

9. The Institution agrees to use its reasonable efforts to obtain any
taxpayer identification number certification from its customers required under
Section 3406 of the Internal Revenue Code of 1986, as amended. And any
applicable Treasury regulations, and to provide FSC or its designee with
timely written notice of any failure to obtain such taxpayer identification
number certification in order to enable the implementation of any required
backup withholding.

10. This Agreement supersedes any prior service agreements with respect
to the subject matter hereof between the parties for the Funds.

12. This Agreement including the schedules and exhibits hereto, may be
amended by FSC from time to time by the following procedure. FSC will mail a
copy of the amendment to the Institution's address, as shown below. If the
Institution does not object to the amendment within thirty (30) days after its
receipt, the amendment will become part of the Agreement. The Institution's
objection must be in writing and be received by FSC within such thirty days.

13. This Agreement shall be construed in accordance with the Laws of the
Commonwealth of Pennsylvania.

[Institution]

Address

City State Zip Code

Dated:_______________________ By:______________________________
Name:

Title:

FEDERATED SECURITIES CORP.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

By:_________________________________
Richard B. Fisher, President
BankSouth Select Funds

EXHIBIT A to 12b-1 Agreement with
Federated Securities Corp. ("FSC")

Portfolios

FSC will pay Institution fees for the following Funds (the "Funds")
effective as of the dates set forth below:

Name Date

[effective dates]
BankSouth Select Bond Fund
BankSouth Select Equity Fund
BankSouth Select Georgia Tax-Free Income Fund
BankSouth Select Government Money Market Fund
BankSouth Select Prime Money Market Fund

Fees

1. During the term of this Agreement, FSC will pay the Institution
within __ days after the end of each calendar quarter a fee in respect of each
Fund. This fee will be computed at the annual rate of 0.25% of the average
net asset value of shares of BankSouth Select Government Money Market Fund and
BankSouth Select Prime Money Market Fund and at the annual rate of 0.75% of
the average net asset value of shares of BankSouth Select Bond Fund, BankSouth
Select Equity Fund, and BankSouth Select Georgia Tax-Free Income Fund held
during the quarter in accounts for which the Institution provides services
under this Agreement.

2. For the quarterly period in which the Agreement becomes effective
or terminates, there shall be an appropriate proration of any fee payable on
the basis of the number of days that the Agreement is in effect during the
quarter.

Exhibit 11(i) under N-1A

Exhibit 23 under Item 601/Reg SK

CONSENT OF ERNST & YOUNG, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Independent
Auditors" and to the use of our report dated January 5, 1994 on the
statement of assets and liabilities in Pre-Effective Amendment Number 2 to
the Registration Statement (Form N-1A Number 33-50635) and the related
Prospectus of BankSouth Select Government Money Market Fund (a Portfolio of
Banksouth Select Funds.

By: ERNST & YOUNG

January 6, 1994