N-30D 1 stform.htm SouthTrust Funds

SEMI-ANNUAL REPORT OCTOBER 31, 2001

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SouthTrust U.S. Treasury Money Market Fund

SouthTrust Income Fund

SouthTrust Bond Fund

SouthTrust Alabama Tax-Free Income Fund

SouthTrust Value Fund

SouthTrust Growth Fund

SOUTHTRUST FUNDS
PRESIDENT’S MESSAGE
 

 
Dear Investor:
 
          I am pleased to present the Semi-Annual Report of the SouthTrust Funds, for the six-month reporting period ended October 31, 2001. This report begins with an investment review of the economy and developments in the financial markets over the period. Next, you’ll find a complete list of investments and financial statements for SouthTrust U.S. Treasury Money Market Fund, SouthTrust Income Fund, SouthTrust Bond Fund, SouthTrust Alabama Tax-Free Income Fund, SouthTrust Value Fund and SouthTrust Growth Fund.
 
          The six-month reporting period was positive for bonds, as continued declines in interest rates caused the prices of existing bonds to rise. While stock investors experienced a painful period, short-term volatility is part of stock investing. Positive stock performance is best pursued over time—in years if not decades. Of course, if you’re a money market fund investor, your outlook is considerably shorter—your money is at work earning daily income and ready whenever you need it.
 
          The highlights for each fund over the six-month reporting period are as follows.
 
SouthTrust U.S. Treasury Money Market Fund
 
          This portfolio of U.S. Treasury money market securities paid a dividend stream totaling $0.02 per share in dividends over the six-month reporting period. The fund’s net assets totaled $1.2 billion at the end of the reporting period.*
 
SouthTrust Income Fund
 
          SouthTrust Income Fund, a diversified portfolio of income-producing investments, paid dividends totaling $0.26 per share, while the net asset value increased by $0.24. As a result, the fund produced a total return of 5.26%.** Net assets in the fund totaled $75.5 million at the end of the reporting period.
 
SouthTrust Bond Fund
 
          This fund’s diversified portfolio of high-quality corporate and government bonds paid income distributions totaling $0.28 per share, while the fund’s net asset value rose from $10.08 to $10.56. As a result, the fund produced a total return of 7.68%.** Total net assets in the fund reached $152.0 million at the end of the reporting period.

1

SOUTHTRUST FUNDS
PRESIDENT’S MESSAGE
(Continued)

 
SouthTrust Alabama Tax-Free Income Fund
 
          This fund is designed for tax-sensitive Alabama residents. It pursues double-tax-free income—income free from federal regular income tax and Alabama income tax by investing in high-quality securities issued by Alabama municipalities.† During the six-month reporting period, the fund paid income totaling $0.22 per share as the net asset value rose from $10.35 to $10.68. As a result, the fund produced a total return of 5.31%.** Total net assets in the fund reached $57.6 million at the end of the reporting period.
 
SouthTrust Value Fund
 
          The fund’s portfolio primarily consists of undervalued stocks with long-term growth potential issued by large, established, and well-managed companies that are leaders in their industries. During the six-month reporting period, the fund produced a total return of (12.71%)**, due to a decline in net asset value. The fund paid $0.03 per share in dividends. Net assets totaled $300.9 million at the end of the reporting period.
 
SouthTrust Growth Fund
 
          SouthTrust Growth Fund invests in stocks issued by large, established U.S. companies that have a record of growth in price and earnings—and have high potential to continue that growth. It complements SouthTrust Value Fund, which invests in value stocks issued by large, high-quality companies. Over the six-month reporting period, SouthTrust Growth Fund produced a total return of (13.71%), resulting from a decline in its net asset value.** Net assets in the fund totaled $74.6 million at the end of the reporting period.
 
          As always, we thank you for pursuing your financial goals through the professional management and diversification of the SouthTrust Funds. We look forward to keeping you up-to-date on your progress.
 

Sincerely,

/s/ Edward C. Gonzales

Edward C. Gonzales
President
December 15, 2001

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SOUTHTRUST FUNDS
PRESIDENT’S MESSAGE
(Concluded)

*
 
An investment in money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
**
 
Performance quoted is based upon net asset value and does not take into account the fund’s sales charge. Total return based on offering price (i.e., less any applicable sales charge) for the Income Fund, Bond Fund, Alabama Tax-Free Income Fund, Value Fund and Growth Fund, were 1.60%, 3.87%, 1.58% (16.62)% and (17.63)%, respectively. Past performance is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
†
 
Income may be subject to the federal alternative minimum tax.

3

SOUTHTRUST FUNDS
INVESTMENT REVIEW
 

 
Economic Perspective
 
          Six months ago, we questioned the ability of consumers to maintain their high level of confidence and spending given the weakening job market. With the consumer heavily in debt and on the tail end of an extended spending spree, we wondered whether they were capable of single handedly extending the longest economic expansion in history. Economists at that time were convinced the four rate cuts by the Federal Reserve (the “Fed”) would take hold in time for our economy to avoid the two down quarters in real Gross Domestic Product necessary to meet the unofficial definition of a recession. The focus was on the consumer, because businesses were already in recession with capital spending falling sharply since mid 2000. Government spending had been effectively frozen by a joint Congressional agreement not to spend the Social Security surplus.
 
          A technique of Wall Street economists is to take an optimistic position on economic prospects and hold to it no matter how absurd the forecast appears given what’s going on in the real economy. Then they wait for an event to unfold on which they can place blame for causing the recession. That allows them to completely reverse their forecast based on the unforeseen incident, but claim that the earlier forecast would otherwise have been right.
 
          The terrible tragedy of September 11 is now that event. However, in the real world the US economy was heading south long before that cowardly attack. Proof? When the Conference Board issued its preliminary Consumer Confidence Index for September, for which the survey was conducted between the 1st and 21st of September, or both before and after the attack, Lynn Franco, director of the Conference Board’s consumer-research center, said there was no significant difference between responses received before and after September 11. Consumer spending was in a nosedive before September 11. While September 11 resulted in the general acceptance that our economy, along with almost every major global economy, is in recession, it did diminish the focus on the consumer. However, with the consumer sector representing about two-thirds of our economy, it’s hard not to focus on it. While showing signs of being in the early stages of rebuilding their balance sheets, the consumer still looks far from healthy.
 
          Our view is that the U.S. economy was in recession prior to September 11, and the terrorist attack only served to make the slowdown worse and last longer. With the weakened outlook came the good news that when the recovery came it would most likely be a vigorous, V-shaped rebound. Our outlook was based on:
 
 
•
 
Pent-up demands building, both at the consumer and business levels.

4

SOUTHTRUST FUNDS
INVESTMENT REVIEW
(Continued)

 
 
•
 
Increased momentum for another tax cut, which will provide additional fiscal stimulation. Importantly, this prospective tax cut should provide direct help to our contracting economy. Skipping the political differences in the form of the relief, this money would get spent.
 
 
•
 
Fed easing monetary policy even more aggressively after the terrorist actions.
 
 
•
 
Fiscal spending for our military and rebuilding efforts, that will be the most aggressive since World War II.
 
 
•
 
Inventories have already mostly been liquidated, written down or written off as a result of the sharp decline in the industrial sector in the first half of the year. Now, companies find themselves vulnerable to just-in-time inventory policies, which should cause them to carry higher raw material stocks than previously. This will support a higher level of aggregate demand.
 
          While it is accepted we’re in recession, some are now questioning whether the recovery has already started. Spurred by new automobile sales, overall retail sales soared a record 7.1% in October. Early readings on consumer confidence have already shown signs of picking up in November. Given the still weakening job market, we believe October’s spending spree will prove only to take away from future spending and serve to extend the recession or cause a second dip. The length and depth of the recession will prove very important to investors and their prospective returns over the next year.
 
Fixed Income Review
 
          Clearly, bonds will most likely respond poorly to an early economic pickup or sharp recovery. Recessions are very bullish for bond investors. Bonds tend to try to anticipate future inflation. Inflation tends to continue to decline for over a year after the economy begins to recover. What’s unique in the current cycle is that inflationary pressures weren’t bad at the peak of the economic cycle, as is typically the case. Even in 1990, inflation, as measured by the Consumer Price Index, exceeded 6%. During this cycle, inflation never reached 4%, and, with the recession, talk of deflation has even become commonplace. Now, the bond market faces new uncertainties. If the recession is extended, bonds will remain strong performers for a while. If the recovery has already started, a more difficult time for bonds will most likely be upon us.

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SOUTHTRUST FUNDS
INVESTMENT REVIEW
(Continued)

 
          What’s most important to remember is the reason for investing in bonds. Bonds provide income. Even in the midst of the current bear market for stocks, attractive yields from dividends are very hard to find. But, perhaps the most important role bonds play is in balancing the volatility of stocks in a prudently diversified portfolio. If the volatility of stocks in recent years has accomplished anything, it has been to once again show the importance of bonds in balanced portfolios. As our baby boomer population is rapidly approaching the early stage of retirement, the notion of recent years that bonds are unimportant has been severely challenged.
 
          Bonds not only represent a prudent investment, but high quality tax-free municipal bonds look especially attractive relative to U.S. Treasury bonds. There is no question that bonds are approaching a far more challenging period than seen in recent years, but if the recession proves longer and worse than currently expected, it is far too early to be concerned. But, most important is to remember why one should own bonds in the first place.
 
Equity Review
 
          September 11 put in place exactly what investors needed to get the stage set for the next bull market. While before the terrorist attacks, any economic recovery looked like it would be muted at best, now the stage has been set for a V-shaped recovery. The attacks also rattled investor confidence enough to knock stocks down to relatively attractive valuations by the September 21 market lows. Now the question is, has the new bull market started and where do we go from here?
 
          Six months ago we said in our commentary:
 
 
“If we’re right about the economy and stock market, the next six months should be an excellent time to buy stocks. Fed easing should take hold before year-end with stocks heading higher before a significant rebound in the economy. It’s interesting that the normal seasonal market cycle is also consistent with our outlook. A study in Yale Hirsch’s Stock Traders Almanac 2001 shows that in the cumulative 51 year period from 1950 through 2000, $10,000 invested in S&P 500 for the six months of May through October provided a compounded gain in price to $11,574, while $10,000 invested from November through April returned $363,353. With stocks historically bottoming mid-way through a recession, we believe prospects for stock investors should be bright by the time our October 31, semi-annual report rolls around.”
 
          The more positive time frame for stocks has arrived and there is no question we’ve been in a bear market. Depending on the index used, the current bear market

6

SOUTHTRUST FUNDS
INVESTMENT REVIEW
(Continued)

has lasted well over a year and fallen at least in line with the historical averages. History has shown that bear markets create ideal buying opportunities, which is why we felt the last six months would represent an ideal time for buyers. We also know stocks rebound before the economy. On average, the S&P 500 has appreciated over 26% in the last three months of a recession.*
 
          We don’t advocate market timing. We believe it is important to let the market drive actions and not become overly concerned with forecasts, which have been proven to be inherently inaccurate. That said, if stocks did see their lows for the cycle on September 21, it is hard to get expectations too high. Unfortunately, we have entered an environment where the extended lofty returns of the last half of the 1990’s will probably not be seen again in our lifetimes. But, very attractive returns may still be possible for prudent stock investors with a focus on sound fundamental analysis and some form of valuation, concepts totally forgotten during the technology and telecom mania.
 
          Currently, any major setbacks in the war against terrorism or the economy could give stocks one more down leg, creating an exceptional buying opportunity. If we’ve seen the lows, being very selective and price disciplined should prove of utmost importance, because risks remain high. Investing in stocks is not as easy as many investors thought during the 1990’s. Unfortunately, the last year has proven that. As always, using a disciplined prudent approach in a consistent manner is a good strategy for investors.
 
SouthTrust U.S. Treasury Money Market Fund
 
          In the past six months ending October 2001, investors have become accustomed to lower yields, especially in money market securities. In response to continued economic weakness and the tragedies of September 11th, the Fed eased the overnight lending rate by 2 percentage points between May 2001 and October 2001 continuing the trend started at the beginning of the year. With the federal funds target rate close to historical lows, yields on the 3 and 6 month Treasury Bills declined by 1.88 and 1.96 percentage points, respectively, during the past six months. Similarly, yields on overnight repurchase agreements declined 1.84 percentage points over the same period.
 
          During the past six months the fund maintained an extended maturity structure to obtain higher yields in a falling rate environment. By increasing allocation to U.S. Treasuries, the fund lengthened the average maturity from 15 days to 44 days

7

SOUTHTRUST FUNDS
INVESTMENT REVIEW
(Continued)

helping to preserve higher yields over the period. While the Fed retains its bias towards economic weakness, the fund continues to emphasize longer dated Treasuries as opposed to overnight repurchase agreements. Despite anticipation of rate cuts at the next two Fed meetings, the fund remains cautious of pertinent economic news that could possibly indicate an earlier economic recovery and subsequently, a potential for higher yields.
 
SouthTrust Income Fund
 
          The events of September 11th delayed a recovery in the economy that was showing signs of improvement. The Fed lowered the federal funds target rates by 50 basis points immediately following the attack (followed by two more 50 basis point moves) furthering a stimulative monetary policy already in place. So far this year the Fed has cut federal funds target rates ten times for a total of 400 basis points (4%), which represents the fastest pace of easing since 1982. There were seven cuts before the attack and three cuts after September 11th. The last time the Fed was this aggressive was in 1990-91, when federal funds target rates fell from 9.75% to 3% for a total of 675 basis points (6.75%). At the current level of 2.00%, this is also the lowest level for federal funds target rates since 1962.
 
          During the six months reporting period ended October 31, 2001, yields on the 3-month, 2-year and 5-year U.S. Treasuries have declined 1.9, 1.9 and 1.4 percentage points, respectively, to 2.0%, 2.4% and 3.5%, respectively. Responding to the five interest rate cuts by the Fed during this period, the yield curve between 3-month and 30-year Treasuries returned to a normal upward sloping curve and steepened by 1.0 percentage points. In the six months ending October 31, 2001 the 2-year and 5-year Treasuries returned 5.6% and 8.0%, respectively, while 1-30 year corporate bonds under performed similar maturity U.S. Treasuries by 1.1 percentage points in response to weakening corporate profitability.
 
          Corporate bonds with maturities between one and five years experienced less spread widening than longer term bonds and outperformed similar maturity Treasuries. For the six months ending October 31, 2001, 1-5 year corporate bonds returned 6.6% while similar maturity U.S. Treasuries, Agencies and Mortgages returned 6.4%, 6.2% and 6.0%, respectively.
 
          The Fund maintained an over allocation to corporate debt throughout the six-month reporting period relative to its index (Merrill Lynch 1-5 Year Government/Corporate)** but did minimize this overweight during the last three months. During the period the Fund transformed its corporate allocation to emphasis

8

SOUTHTRUST FUNDS
INVESTMENT REVIEW
(Continued)

defensive issuers with quality earnings in diversified finance, food processing, Canadian provinces and utilities. The Fund maintained its overweight to strategic telecommunication issuers.
 
SouthTrust Bond Fund
 
          Because of the events of September 11th, we believe an “uncertainty” premium will continue permeate the fixed income markets at least on some level.
 
          As described in the Income Fund discussion, the Fed has cut the fed fund target rate a total of ten times this year, and will most likely continue to reduce rates at their November and December meetings.
 
          Fiscal policy has been equally stimulative as politicians reversed what has been a restrictive fiscal package over the past eight years, by approving nearly $60 billion in fiscal initiatives designed to restore confidence to an economy battered by the September 11th attacks and teetering on recession. While the final details of the package have yet to be decided, we consider this to be an important variable going forward as a rise in long-term yields will serve to crimp any sort of economic recovery. As we wrote about in our last quarterly piece, we were of the opinion that the U.S. Treasury would try to find ways to keep long-term rates low. They did just that as they surprised the markets by announcing the discontinuation of the 30-year Treasury, causing a rally in long-term rates.
 
          Buoyed by an aggressive Fed, a stimulative fiscal program and a period of global uncertainty, interest rates fell and the yield curve steepened. For the six-month reporting period, 10-year Treasury rates fell to 4.26% from 5.33%, a decline of 107 basis points. A flight to quality arising from the September 11th attacks caused the yield curve—as measured by the spread between 2- and 30-year Treasury rates—to steepen 100 basis points to 248 basis points. Investment grade corporate bonds which ended the six-month period strongly with a 7.72% return experienced their worst one month decline in years as the month of September netted them a -0.33% return. Clearly, this was a volatile period for all asset classes.
 
          For the reporting period, the fund’s total return was 7.68%*** compared to 8.55% for our benchmark, the Lehman Government/Credit Index†. Going forward, it is our belief that monetary and fiscal policy will serve to bring growth back to trend, probably sometime next year. As such, we believe we have seen the low in yields for this cycle. However, segments of the economy remain weak, and until strength returns on a broader scale, we will remain at our benchmark duration target.
 

9

SOUTHTRUST FUNDS
INVESTMENT REVIEW
(Continued)

SouthTrust Alabama Tax-Free Income Fund
 
          Municipal bonds provided attractive returns during most of the past six months reporting period, but concerns surfaced when the terrorist attacks occurred on September 11. Vast issuance of new municipal bonds had been scheduled for that week. Combined with the terrorist actions, this caused investors to pause from potential purchases. However, when trading resumed yields in the tax-exempt market did not follow the rest of the bond market and tax-exempt bond prices declined over the uncertainty surrounding new supply coming to market. As tax-exempt yields rose modestly, taxable yields declined in a flight to quality creating an attractive opportunity for municipal buyers.
 
          Since then, insurance companies specializing in municipal debt insurance were re-evaluated by the rating agencies. Their exposure to the terrorist attacks was determined to pose no financial threat at this time, leaving their AAA ratings intact.
 
          Another concern has resulted from the fact tax-exempt bonds play a significant role in the investment strategy of most property/casualty companies. The unknown of total claims compensation for losses stemming from the events of September 11 has the potential to increase the supply of bonds for sale thereby depressing their prices. What these events have done is make the yields and potential returns from tax-exempt bonds look very attractive relative to taxable bonds. At the current time you can find AAA rated insured tax-exempt bonds that provide higher yields than long-maturity U.S. Treasury bonds, which is very unusual historically. It is our view that the unfortunate events of September 11 have created a buying opportunity for investors in the higher-tax brackets.
 
SouthTrust Value Fund
 
          Our relative performance has been good, but we believe opportunities for value investors still exist. The number one group where we see opportunity today is in the energy sector. The global recession has sharply reduced demand at the same time Russia has been able to increase their production. With OPEC and Non-OPEC countries fighting over quotas at a time when demand is sagging, oil and gas prices have been in a free fall. What we believe is most important is that U.S. production is falling, and finding new reserves has proven increasingly expensive and difficult. We remain dependent on Middle East reserves at a time when any number of events in our war against terrorism could easily disrupt supply. Investors are chasing cyclical stocks, looking for beneficiaries of an economic recovery, yet overlooking the cheapest group. Our portfolio should be well positioned for the

10

SOUTHTRUST FUNDS
INVESTMENT REVIEW
(Continued)

rebound, when it comes, with excellent natural gas companies like Anadarko Petroleum, El Paso, and Williams and a mix of oil, service, and drilling companies, each of which has its’ own attraction based on our analysis. One of our favorite groups prior to the terrorist attacks was the property and casualty insurers. Needless to say, September 11 gave us the opportunity to buy more. Showing the stock market’s willingness to look ahead, the stocks have since rebounded sharply, but we believe they remain very attractive for a long-term improvement in their business. Ironically our attraction to the group was that things were so bad, that they had to improve. Losses like those that resulted from the terrorist attacks actually end up improving pricing power and future profitability for the industry.
 
          Performance during the period was helped by a number of stocks. The biggest positive impact came from Harris Corp., which should prove a beneficiary of increased defense spending along with being a leader in a number of other exciting businesses. Harris has long had a strong top-secret business base from the government, is a leader in secured communications, has by far the dominant position in digital, high definition broadcasting, and is also a leader in wireless communication technology. One of the keys to Harris’ success has been its ability to expand on government funded technology and use it for commercial products. The future for Harris could be exceptional if any of its growth areas develops to full potential. Also boosting our returns was strong performance by Tricon Global Restaurants, whose Kentucky Fried Chicken, Pizza Hut, and Taco Bell restaurants are exceptionally well managed. International growth has been strong, while the stock had traded at the very low end of its historical valuation range. Opportunities for global expansion look excellent. Johnson & Johnson, a true bellwether health care company with superb management, also had an excellent six months.
 
          The biggest risk in being a value investor is that you always tend to be early. While our relative performance has been good, there is no question that we began to build our energy exposure too early. This proved especially true given what has happened since September 11, which has negatively impacted our performance this year. Holdings in telecom equipment were also premature. As was our confidence in management at CVS and Computer Sciences.
 
          While the tragic events of September 11 will probably serve to help our fund over the long-term, near-term it has had a negative impact. Excellent companies, such as United Technologies and Honeywell, moved down sharply in price despite the fact their aerospace segments may actually get increased government business, with the commercial aviation exposure being a short-term negative. The weakness

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SOUTHTRUST FUNDS
INVESTMENT REVIEW
(Continued)

did, however, give us a chance to add to our positions. Cendant, with its diversified travel related exposure, also gave up its’ early year gains. This well managed company with strong free cash flow may have been slowed, but the terrific potential for the stock in our view is unchanged.
 
          We are committed to a constant search for above-average companies that we can buy at attractive valuations. Our willingness to look for opportunities in all sectors of the market and do the fundamental analysis necessary should continue to provide plenty of opportunities for profit.
 
          Growth or Value? We think there is room for both styles in a prudently diversified portfolio, but obviously have a bias for value. Investor’s Business Daily on November 12, 2001, ran an interesting article by Claire Mencke, “Manager: Value Funds Have Legs” (pg 15). The article shows the tremendous outperformance value stocks have historically demonstrated coming out of recessions. The study showed value stocks outperformed the Standard & Poor’s 500 Index (the “S&P 500”)†† by 263% coming out of the 1973-74 recession, 272% coming out of the 1980-82 recessions, and 117% coming out of the mild 1990-91 recession. Our experience in investing during these last 30 years has found that recessions have historically created terrific opportunities for disciplined value investors, helping boost our optimism for the next several years. It may still be a little early for the market, but we strongly suggest not trying to invest for a repeat of last cycles excesses.*
 
SouthTrust Growth Fund
 
          For the six-month reporting period ended October 31, 2001, the SouthTrust Growth Fund returned (13.71)%*** at net asset value compared to a return of (14.60)% for the S&P 500††.
 
          Our approach to managing the fund centers around how we define growth companies. Growth companies produce sales gains at a premium to other companies. We believe they provide more consistent earnings patterns. We also believe they are more profitable and, as such, are able to fund future expansion. We seek financially strong companies with proven management and business plans to enhance superior growth prospects. Investors recognize these attributes and value them in the market.
 
          We have continued to see the landscape change within the equity market over the past six months with investors unwilling to continue to payup for speculative

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SOUTHTRUST FUNDS
INVESTMENT REVIEW
(Continued)

growth stocks priced for perfection. The ability to grow year after year has become more important than the potential to post triple-digit gains for a few quarters. This transformation has benefited on a relative basis our approach to growth stock investing. We believe that our focus on premier, industry leading companies with low cost operations and strong financials positions the fund ideally for the more fundamentally based stock market in existence at the present time.
 
          The fund has found opportunity in an variety of names over the past year. We established positions in health care companies Amgen and, more recently, Eli Lilly both of whom have performed admirably. We also established positions in Dell Computer and Southwest Airlines by taking advantage of price weakness in their sectors to solidify positions in these industry leaders.
*
 
Past market performance is no guarantee of future results.
**
 
The Merrill Lynch 1-5 Year Corporate/Government Index is a market capitalization weighted index including U.S. government and fixed-coupon domestic investment grade corporate bonds with at least $100 million par amount outstanding. Quality range is BBB3-AAA. Maturities for all bonds are more than one year and less than five years. Indexes are unmanaged and investments cannot be made in an index.
***
 
Performance quoted is based on net asset value, represents past performance, and is no guarantee of future results. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Total returns for the six-month reporting period, based on offering price (i.e., any applicable sales charge), for the SouthTrust Bond Fund, Value Fund and Growth Fund, were 3.87%, (16.62)%, and (17.63)%, respectively.
†
 
The Lehman Government/Credit Index is a market value weighted performance benchmark for government and corporate fixed-rate debt issues with maturities between one and ten years. Indexes are unmanaged and investments cannot be made in an index.
††
 
The S&P 500 is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Investments cannot be made in an index.

13

SOUTHTRUST U.S. TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited)

 
Principal Amount
     
Value
U.S. TREASURY OBLIGATIONS—45.5%
  
 
  
U.S. TREASURY BILLS—30.7%
  
$250,000,000 
(1)
  
1/3/2002
  
$    248,943,000
   50,000,000 
(1)
  
1/10/2002
  
49,680,139
50,000,000 
(1)
  
1/17/2002
  
49,649,757
20,000,000 
(1)
  
11/1/2001
  
20,000,000
     
 
  
TOTAL
  
368,272,896
     
 
  
U.S. TREASURY NOTES—14.8%
  
50,000,000
  
6.375%, 1/31/2002
  
50,527,407
75,000,000
  
6.625%, 4/30/2002
  
76,015,838
50,000,000
  
6.625%, 5/31/2002
  
50,737,576
     
 
  
TOTAL
  
177,280,821
     
TOTAL U.S. TREASURY OBLIGATIONS
  
545,553,717
     
REPURCHASE AGREEMENTS(2)—54.5%
  
50,000,000

  
Bear, Stearns and Co., 2.560%,
dated 10/31/2001, due 11/1/2001
  
50,000,000
50,000,000


  
Dresdner Securities (USA), Inc.,
2.520%, dated 10/31/2001, due
11/1/2001
  
50,000,000
253,513,000


  
Greenwich Capital Markets, Inc.,
2.550%, dated 10/31/2001, due
11/1/2001
  
253,513,000
50,000,000

  
Lehman Brothers, Inc., 2.550%,
dated 10/31/2001, due 11/1/2001
  
50,000,000
250,000,000

  
Warburg Securities, 2.550%, dated
10/31/2001, due 11/1/2001
  
250,000,000
     
TOTAL REPURCHASE AGREEMENTS
  
653,513,000
     
TOTAL INVESTMENTS
     (at amortized cost)(3)
  
$1,199,066,717
  
(1)
 
Yield at date of purchase.
(2)
 
The repurchase agreements are fully collateralized by U.S. Treasury obligations based on market prices at the date of the portfolio.
(3)
 
Also represents cost for federal tax purposes.
Note:
 
The categories of investments are shown as a percentage of net assets ($1,199,191,136) at October 31, 2001.
 

14

SOUTHTRUST INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited)
Principal
Amount
  
  
Value
CORPORATE BONDS—56.8%
  
 
  
CAPITAL GOODS—2.0%
  
$1,475,000

  
Tyco International Group, Company
Guarantee, 4.95%, 8/1/2003
  
$1,508,825
     
 
  
CHEMICALS—2.1%
  
1,000,000
  
Praxair, Inc., Note, 6.15%, 4/15/2003
  
1,032,970
550,000
  
Solutia, Inc., Note, 6.50%, 10/15/2002
  
555,378
     
 
  
TOTAL
  
1,588,348
     
 
  
COMMUNICATIONS—2.8%
  
1,000,000

  
Citizens Communications Co., Note, 8.50%,
5/15/2006
  
1,081,222
1,000,000
  
WorldCom, Inc., 6.50%, Note, 5/15/2004
  
1,038,359
     
 
  
TOTAL
  
2,119,581
     
 
  
CONSUMER CYCLICAL—2.4%
  
500,000
  
Masco Corp., Note, 6.00%, 5/3/2004
  
520,533
1,250,000
  
Target Corp., Note, 5.50%, 4/1/2007
  
1,294,295
     
 
  
TOTAL
  
1,814,828
     
 
  
CONSUMER NON-DURABLES—6.0%
  
1,800,000

  
Anheuser-Busch Cos., Inc., Note, 6.75%,
6/1/2005
  
1,863,322
1,000,000
 (1)
  
Kellogg Co., Note, 5.50%, 4/1/2003
  
1,027,365
900,000
  
Kraft Foods, Inc., Note, 4.625%, 11/1/2006
  
905,346
700,000
  
PepsiCo, Inc., Note, 4.50%, 9/15/2004
  
718,307
     
 
  
TOTAL
  
4,514,340
     
 
  
ENERGY—4.7%
  
1,000,000

  
Amoco Co., Company Guarantee, 6.25%,
10/15/2004
  
1,072,359
1,308,000
  
Chevron Corp., Deb., 8.11%, 12/1/2004
  
1,416,701
1,000,000
  
Conoco, Inc., Sr. Note, 5.90%, 4/15/2004
  
1,041,996
     
 
  
TOTAL
  
3,531,056
     
 
  
FINANCIAL SERVICES—19.4%
  
500,000
 (1)

  
AIG SunAmerica Global Financial, Note,
5.85%, 8/1/2008
  
522,378
450,000

  
BellSouth Capital Funding Corp., Deb., 6.04%,
11/15/2026
  
476,036

15

SOUTHTRUST INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Continued)
Principal
Amount
  
  
Value
$1,125,000

  
British Columbia, Province of, Note, 4.625%,
10/3/2006
  
$   1,146,831
1,000,000

  
Countrywide Home Loans, Inc., Note, 5.25%,
5/22/2003
  
1,026,547
1,000,000

  
Countrywide Home Loans, Inc., Note, 5.25%,
6/15/2004
  
1,032,574
500,000

  
Ford Motor Credit Co., Global Note, 6.875%,
2/1/2006
  
512,277
1,000,000

  
Ford Motor Credit Co., Sr. Note, 8.20%,
2/15/2002
  
1,013,855
1,000,000

  
General Electric Capital Corp., Note, Series
A, 6.80%, 11/1/2005
  
1,094,378
1,000,000

  
General Motors Acceptance Corp., Note,
6.625%, 10/1/2002
  
1,030,322
1,000,000

  
General Motors Acceptance Corp., Sr. Note,
6.625%, 1/10/2002
  
1,007,189
1,950,000

  
Household Finance Corp., Note, 7.00%,
8/1/2003
  
2,064,196
250,000
  
KeyBank, N.A., Sub. Note, 6.50%, 4/15/2008
  
258,334
873,000

  
Lehman Brothers Holdings, Inc., Note,
7.75%, 1/15/2005
  
949,295
100,000

  
Morgan Stanley, Dean Witter & Co., Note,
8.10%, 6/24/2002
  
103,528
1,000,000

  
NationsBank Corp., Sub. Note, 6.875%,
2/15/2005
  
1,087,939
1,000,000

  
Wells Fargo Co., Sub. Note, 7.125%,
8/15/2006
  
1,104,286
200,000

  
Wells Fargo Financial, Inc., Sr. Note, 6.125%,
8/1/2003
  
209,678
     
  
TOTAL
  
14,639,643
     
  
HEALTH CARE—1.0%
  
750,000

  
Bristol-Myers Squibb Co., Note, 4.75%,
10/1/2006
  
766,238
     
  
RETAIL TRADE—0.5%
  
350,000
  
Safeway, Inc., 6.05%, 11/15/2003
  
367,642
     
  
TECHNOLOGY—5.6%
  
1,000,000

  
Diageo Capital PLC, Company Guarantee,
6.625%, 6/24/2004
  
1,075,781

16

SOUTHTRUST INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Continued)
Principal
Amount
  
  
Value
$    200,000

  
Republic New York Corp., Deb., 7.875%,
12/12/2001
  
$      201,073
1,000,000

  
International Business Machines Corp., Deb.,
6.22%, 8/1/2027
  
1,070,034
750,000

  
Sun Microsystems, Inc., Sr. Note, 7.35%,
8/15/2004
  
795,891
1,000,000

  
United Technologies Corp., Unsecd. Note,
6.625%, 11/15/2004
  
1,080,245
     
 
  
TOTAL
  
4,223,024
     
 
  
TELECOMMUNICATIONS—1.8%
  
1,250,000

  
Verizon Global Funding, Note, 6.75%,
12/1/2005
  
1,345,600
     
 
  
UTILITIES—8.5%
  
1,000,000

  
Alabama Power Co., Sr. Note, 5.49%,
11/1/2005
  
1,024,712
1,500,000

  
Ameritech Capital Funding Corp., Company
Guarantee, 5.95%, 1/15/2038
  
1,564,701
200,000

  
BellSouth Telecommunications, Inc., Note,
6.375%, 6/15/2004
  
212,702
1,050,000

  
Enron Corp., Unsecd. Note, 6.625%,
11/15/2005
  
821,720
700,000
  
Sprint Capital Corp., Note, 6.00%, 1/15/2007
  
699,608
1,000,000

  
U.S. West Communications, Inc., Unsecd.
Note, 6.375%, 10/15/2002
  
1,028,169
1,055,000

  
West Penn Power Co., Medium Term Note,
5.66%, 9/23/2002
  
1,077,308
     
 
  
TOTAL
  
6,428,920
     
TOTAL CORPORATE BONDS
     (identified cost $41,609,698)
  
42,848,045
     

17

SOUTHTRUST INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Continued)
Principal
Amount
  
  
Value
GOVERNMENT AGENCIES—20.3%
  
  
FEDERAL HOME LOAN BANK—1.4%
  
$1,000,000
  
6.00%, 8/15/2002
  
$   1,030,516
     

  
FEDERAL HOME LOAN MORTGAGE
CORPORATION—4.4%
  
677,911
  
6.50%, 9/15/2021
  
686,242
630,725
  
6.50%, 1/15/2006
  
654,405
43,089
  
7.00%, 8/1/2003
  
44,174
780,027
  
7.50%, 2/1/2023
  
827,192
200,000
  
7.75%, 11/7/2001
  
200,186
914,773
  
7.95%, 3/15/2021
  
925,366
     
  
TOTAL
  
3,337,565
     

  
FEDERAL NATIONAL MORTGAGE
ASSOCIATION—10.6%
  
1,750,000
  
5.50%, 5/2/2006
  
1,863,316
1,500,000
  
6.00%, 12/15/2005
  
1,625,340
856,075
  
6.50%, 8/1/2013
  
893,314
626,670
  
6.85%, 6/25/2021
  
636,871
2,000,000
  
6.95%, 11/13/2006
  
2,003,202
1,000,000
  
7.05%, 2/12/2007
  
1,012,019
     
  
TOTAL
  
8,034,062
     

  
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION—3.9%
  
820,492
  
7.00%, 9/15/2008
  
871,224
1,199,901
  
7.00%, 2/15/2009
  
1,271,151
720,578
  
7.50%, 12/15/2022
  
766,004
     
  
TOTAL
  
2,908,379
     
TOTAL GOVERNMENT AGENCIES
     (identified cost $14,835,786)
  
15,310,522
     
U.S. TREASURY OBLIGATIONS—20.6%
  
  
U.S. TREASURY NOTES—20.6%
  
5,000,000
  
3.625%, 8/31/2003
  
5,112,505
1,000,000
  
3.875%, 7/31/2003
  
1,026,407
5,350,000
  
4.625%, 5/15/2006
  
5,599,112
3,500,000
  
5.875%, 11/15/2004
  
3,791,410
     

18

SOUTHTRUST INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Concluded)
Shares
  
  
Value
TOTAL U.S. TREASURY OBLIGATIONS
     (identified cost $15,010,190)
  
$15,529,434
     
MUTUAL FUND—2.1%
  
1,635,876

  
AIM Short-Term Investment Co. Prime
Portfolio (at net asset value)
  
1,635,876
     
TOTAL INVESTMENTS
     (identified cost $73,091,550)(2)
  
$75,323,877
     
(1)
 
Denotes a restricted security which is subject to restrictions on resale under federal laws. This security has been deemed liquid based upon criteria approved by the fund’s Board of Trustees. At October 31, 2001, this security amounted to $1,549,743 which represents 2.1% of net assets.
(2)
 
The cost of investments for federal tax purposes amounts to $73,291,233. The net unrealized appreciation of investments on a federal tax basis amounts to $2,032,644 which is comprised of $2,369,068 appreciation and $336,424 depreciation at October 31, 2001.
Note:
 
The categories of investments are shown as a percentage of net assets ($75,494,523) at October 31, 2001.

19

SOUTHTRUST BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited)
Principal
Amount
  
 
Value
CORPORATE BONDS—48.8%
 
  
BANKING—4.7%
 
$2,000,000
  
BB&T Corp., Sub. Note, 7.25%, 6/15/2007
 
$      2,194,266
2,000,000
  
Bank One Corp., Note, 6.00%, 8/1/2008
 
2,059,400
2,500,000

  
Bank of New York Co., Inc., Sub. Note,
8.50%, 12/15/2004
 
2,833,913
    
  
TOTAL
 
7,087,579
    
  
CHEMICALS—2.1%
 
2,000,000
  
Praxair, Inc., Note, 6.15%, 4/15/2003
 
2,065,940
1,150,000
  
Solutia, Inc., Note, 6.50%, 10/15/2002
 
1,161,246
    
  
TOTAL
 
3,227,186
    
  
COMMERCIAL SERVICES—1.4%
 
2,000,000
  
Equifax, Inc., Sr. Note, 6.50%, 6/15/2003
 
2,086,892
    
  
COMMUNICATIONS—4.2%
 
1,000,000

  
Citizens Communications, Note, 8.50%,
5/15/2006
 
1,081,222
2,000,000
  
MCI Worldcom, Inc., Bond, 8.25%, 5/15/2031
 
2,053,652
3,000,000

  
Verizon Global Funding Corp., Note, 6.75%,
12/1/2005
 
3,229,440
    
  
TOTAL
 
6,364,314
    
  
CONSUMER CYCLICAL—0.7%
 
1,000,000
  
Masco Corp., Unsecd. Note, 6.00%, 5/3/2004
 
1,041,065
    
  
CONSUMER STAPLES—4.5%
 
2,000,000

  
AOL Time Warner, Inc., Bond, 7.625%,
4/15/2031
 
2,104,734
1,000,000
  
Cendant Corp., Note, 6.875%, 8/15/2006
 
949,701
1,000,000
  
Kraft Foods, Inc., Note, 4.625%, 11/1/2006
 
1,005,940
1,250,000
  
PepsiCo, Inc., Note, 4.50%, 9/15/2004
 
1,282,691
1,500,000
  
Sara Lee Corp., Note, 6.25%, 9/15/2011
 
1,580,020
    
  
TOTAL
 
6,923,086
    
  
FINANCIAL SERVICES—13.4%
 
1,500,000

  
(1)AIG SunAmerica Global Financial, Note,
      5.85%, 8/1/2008
 
1,567,134
1,000,000

  
British Columbia, Province of, Note,
4.625%, 10/3/2006
 
1,019,405

20

SOUTHTRUST BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Continued)
Principal
Amount
  
  
Value
$4,800,000

  
Citigroup, Inc., Sub. Unsecd. Note, 5.75%,
5/10/2006
  
$      5,038,013
2,240,000

  
Countrywide Home Loans, Inc., Company
Guarantee, 6.25%, 4/15/2009
  
2,294,988
1,000,000

  
EOP Operating LP, Sr. Note, 7.00%,
7/15/2011
  
1,045,208
2,000,000

  
Ford Motor Credit Co., Note, 6.875%,
2/1/2006
  
2,049,106
2,000,000

  
General Electric Capital Corp., Note, 6.80%,
11/1/2005
  
2,188,756
1,500,000

  
Household Finance Corp., Note, 6.75%,
5/15/2011
  
1,569,080
1,300,000

  
Lehman Brothers Holdings, Inc., Note,
8.25%, 6/15/2007
  
1,471,445
2,000,000

  
Morgan Stanley, Dean Witter & Co., Unsub.,
6.75%, 4/15/2011
  
2,096,232
     
 
  
TOTAL
  
   20,339,367
     
 
  
TECHNOLOGY—10.8%
  
1,000,000

  
Bristol-Myers Squibb Co., Note, 4.75%,
10/1/2006
  
1,021,651
1,000,000

  
Computer Sciences Corp., 7.375%,
6/15/2011
  
1,075,195
4,000,000

  
Quebec, Province of, Deb., 7.50%,
9/15/2029
  
4,701,964
1,000,000
 (1)

  
Qwest Capital Funding, Note, 5.875%,
8/3/2004
  
1,020,578
4,000,000
 (1)

  
Qwest Capital Funding, Note, 7.25%,
2/15/2011
  
4,103,468
1,500,000

  
Sun Microsystems, Inc., Sr. Unsecd. Note,
7.35%, 8/15/2004
  
1,591,782
2,800,000

  
Tyco International Group, Company
Guarantee, 4.95%, 8/1/2003
  
2,864,210
     
 
  
TOTAL
  
16,378,848
     
 
  
UTILITIES—7.0%
  
2,000,000

  
Dominion Resources, Inc., Sr. Note, 7.625%,
7/15/2005
  
2,184,826
2,000,000
  
(1)Enron Corp., Note, 8.00%, 8/15/2005
  
1,408,746
3,000,000

  
(1)PSEG Energy Holdings, Sr. Note, 8.50%,
     6/15/2011
  
3,098,778

21

SOUTHTRUST BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Continued)
Principal
Amount
  
  
Value
$2,000,000

  
Progress Energy, Inc., Sr. Note, 5.85%,
10/30/2008
  
$      2,017,212
2,000,000

  
Sprint Capital Corp., Company Guarantee,
6.00%, 1/15/2007
  
1,998,880
     
 
  
TOTAL
  
10,708,442
     
TOTAL CORPORATE BONDS
     (identified cost $71,325,415)
  
   74,156,779
     
GOVERNMENT AGENCIES—17.0%
  
 
  
FEDERAL HOME LOAN BANK—4.9%
  
5,000,000
  
4.875%, 4/16/2004
  
5,218,165
2,000,000
  
7.03%, 7/14/2009
  
2,289,380
     
 
  
TOTAL
  
7,507,545
     
 

  
FEDERAL HOME LOAN MORTGAGE
CORPORATION—4.2%
  
4,500,000
  
7.00%, 7/15/2005
  
5,007,195
914,773
  
7.95%, 3/15/2021
  
925,366
357,564
  
9.50%, 2/15/2020
  
378,719
     
 
  
TOTAL
  
6,311,280
     
 

  
FEDERAL NATIONAL MORTGAGE
ASSOCIATION—5.5%
  
2,900,000
  
4.625%, 5/15/2003
  
2,997,025
5,000,000
  
5.75%, 2/15/2008
  
5,387,950
     
 
  
TOTAL
  
8,384,975
     
 

  
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION—2.4%
  
1,199,901
  
7.00%, 2/15/2009
  
1,271,151
1,295,305
  
8.00%, 12/20/2021
  
1,305,506
1,025,435
  
8.00%, 2/15/2030
  
1,086,303
     
 
  
TOTAL
  
3,662,960
     
TOTAL GOVERNMENT AGENCIES
     (identified cost $24,486,447)
  
25,866,760
     
U.S. TREASURY OBLIGATIONS—32.2%
  
 
  
U.S. TREASURY BONDS—21.4%
  
4,100,000
  
(2)6.125%, 11/15/2027
  
4,729,096

22

SOUTHTRUST BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Concluded)
Principal
Amount
or Shares
  
  
Value
$3,000,000
 (2)
  
6.25%, 8/15/2023
  
$     3,453,048
4,125,000
 (2)
  
7.25%, 5/15/2004
  
4,577,302
6,000,000
 (2)
  
7.50%, 11/15/2016
  
7,643,442
3,000,000
 (2)
  
7.875%, 2/15/2021
  
4,042,032
3,650,000
 (2)
  
8.00%, 11/15/2021
  
4,999,369
2,260,000
 (2)
  
8.125%, 8/15/2019
  
3,087,020
     
 
  
TOTAL
  
32,531,309
     
 
  
U.S. TREASURY NOTES—10.8%
  
3,300,000
 (2)
  
4.625%, 5/15/2006
  
3,453,658
2,600,000
  
5.00%, 8/15/2011
  
2,751,837
2,350,000
 (2)
  
5.375%, 6/30/2003
  
2,468,418
2,000,000
  
5.50%, 5/15/2009
  
2,183,204
1,000,000
 (2)
  
5.875%, 11/15/2005
  
1,094,883
1,000,000
  
6.50%, 5/15/2005
  
1,111,446
3,000,000
 (2)
  
6.875%, 5/15/2006
  
3,418,713
     
 
  
TOTAL
  
16,482,159
     
TOTAL U.S. TREASURY OBLIGATIONS
     (identified cost $45,345,847)
  
49,013,468
     
MUTUAL FUND—2.2%
  
3,375,010

  
AIM Short-Term Investment Co. Prime
Portfolio (at net asset value)
  
3,375,010
     
TOTAL INVESTMENTS
     (identified cost $144,532,719)(3)
  
$152,412,017
     
(1)
 
Denotes a restricted security which is subject to restrictions on resale under federal laws. These securities have been deemed liquid based upon criteria approved by the fund’s Board of Trustees. At October 31, 2001, these securities amounted to $11,198,704 which represents 7.4% of net assets.
(2)
 
Certain principal amounts on loan to broker.
(3)
 
The cost of investments for federal tax purposes amounts to $144,675,830. The net unrealized appreciation of investments on a federal tax basis amounts to $7,736,187 which is comprised of $8,458,101 appreciation and $721,914 depreciation at October 31, 2001.
Note:
 
The categories of investments are shown as a percentage of net assets ($152,028,256) at October 31, 2001.

23

SOUTHTRUST ALABAMA TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited)
Principal
Amount
  
  
Credit
Rating(1)
  
Value
LONG-TERM MUNICIPALS—94.6%
         
  
ALABAMA—92.8%
         
$1,020,000




  
Alabama Building Renovation
Finance Authority, Refunding
Revenue Bonds, 5.25% (AMBAC
INS)/(Original Issue Yield: 4.85%),
9/1/2007
    
AAA
    
$1,113,238
475,000


  
Alabama Drinking Water Finance
Authority, Series A, Revenue Bond,
4.60% (AMBAC INS), 8/15/2009
    
AAA
    
497,334
960,000


  
Alabama Drinking Water Finance
Authority, Series A, Revenue Bond,
4.70% (AMBAC INS), 8/15/2011
    
AAA
    
1,000,310
500,000



  
Alabama Incentives Financial
Authority, Series A, 6.00% (AMBAC
INS)/(Original Issue Yield: 6.20%),
10/1/2029
    
AAA
    
550,105
500,000



  
Alabama Industrial Access Road and
Bridge Corp., Revenue Bond, 4.90%
(Original Issue Yield: 5.00%),
6/1/2005
    
A1
    
532,290
500,000



  
Alabama Private Colleges &
Universities Facilities Authority,
Series A, Revenue Bond, 4.90%
(FGIC INS), 7/1/2005
    
AAA
    
532,820
500,000


  
Alabama Public Health Care
Authority, 6.00% (MBIA INS),
10/1/2025
    
AAA
    
532,020
500,000



  
Alabama State Board Education,
Revenue Bond, 5.00% (Shelton State
Community College)/(MBIA INS),
10/1/2006
    
AAA
    
541,015
1,000,000


  
Alabama State IDA, Special Tax
Refunding Bonds, 5.00% (Original
Issue Yield: 5.05%), 11/1/2003
    
A2
    
1,051,600

24

SOUTHTRUST ALABAMA TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Continued)
Principal
Amount
  
  
Credit
Rating(1)
  
Value
$1,000,000



  
Alabama State Public School &
College Authority, Revenue Bonds,
4.75% (Original Issue Yield:
4.87%), 12/1/2003
    
Aa3
    
$      1,049,910
1,000,000



  
Alabama State Public School &
College Authority, Revenue Bonds,
4.75% (Original Issue Yield:
4.85%), 11/1/2006
    
Aa3
    
1,066,770
1,375,000


  
Alabama State Public School &
College Authority, Revenue Bonds,
5.00%, 11/1/2004
    
Aa3
    
1,468,486
1,400,000



  
Alabama State Public School &
College Authority, Revenue Bonds,
5.75% (Original Issue Yield:
5.90%), 8/1/2019
    
AA
    
1,508,990
1,000,000


  
Alabama State Public School &
College Authority, Series C,
5.75%, 7/1/2017
    
AA
    
1,090,800
1,000,000


  
Alabama State, Series A, 5.00%
(Original Issue Yield: 4.49%),
6/1/2012
    
AA
    
1,064,160
1,410,000


  
Alabama State, Series C, 5.25%
(Parks Systems Improvement
Corp.), 6/1/2009
    
AA
    
1,545,022
300,000


  
Alabama Water PCA, Series A,
Revenue Bonds, 4.75% (AMBAC
INS), 8/15/2010
    
AAA
    
314,061
1,000,000


  
Alabama Water PCA, Series A,
Revenue Bonds, 5.00% (AMBAC
INS), 8/15/2004
    
AAA
    
1,060,840
700,000



  
Alabama Water PCA, Series A,
Revenue Bonds, 5.00% (AMBAC
INS)/(Original Issue Yield:
5.60%), 8/15/2015
    
AAA
    
708,939

25

SOUTHTRUST ALABAMA TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Continued)
Principal
Amount
  
  
Credit
Rating(1)
  
Value
$1,000,000



  
Alabama Water PCA, Revenue
Refunding Bonds, 5.50%
(AMBAC INS)/(Original Issue
Yield: 5.15%), 8/15/2008
    
AAA
    
$      1,106,810
1,000,000


  
Alabama Water PCA, Revenue
Refunding Bonds, 4.75%
(AMBAC INS), 8/15/2005
    
AAA
    
1,062,390
500,000




  
Anniston, AL, Regional Medical
Center Board, Series A, Revenue
Bonds, 4.80% (AMBAC INS)/
(Original Issue Yield: 4.90%),
6/1/2010
    
AAA
    
526,175
500,000



  
Anniston, AL, Waterworks &
Sewer Board, 5.35% (AMBAC
INS)/(Original Issue Yield:
5.40%), 6/1/2014
    
AAA
    
532,360
500,000

  
Auburn, AL, GO Unlimited
Warrants, 4.75%, 12/1/2008
    
A+
    
532,365
500,000

  
Auburn, AL, GO Unlimited
Warrants, 4.80%, 12/1/2009
    
A+
    
530,420
1,000,000




  
Birmingham, AL, Baptist Medical
Center Special Care Facilities,
Revenue Refunding Bonds, 5.80%,
(MBIA INS)/(Original Issue Yield:
5.98%), 11/15/2016
    
AAA
    
1,072,490
500,000



  
Birmingham, AL, Waterworks &
Sewer Board, Series A, Revenue
Refunding Bonds, 5.20% (Original
Issue Yield: 5.30%), 1/1/2002
    
Aa3
    
502,495
750,000





  
Birmingham-Carraway, AL,
Special Care Facilities Financing
Authority, Refunding Revenue
Bonds, 5.875% (Connie Lee LOC)/
(Original Issue Yield: 6.00%),
8/15/2015
    
AAA
    
803,505
1,000,000



  
DCH Health Care Authority, AL,
Revenue Refunding Bonds, 4.50%
(MBIA INS)/(Original Issue Yield:
4.55%), 6/1/2007
    
AAA
    
1,037,370

26

SOUTHTRUST ALABAMA TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Continued)
Principal
Amount
  
  
Credit
Rating(1)
  
Value
$    500,000



  
East Central, AL, Refunding
Revenue Bonds, 5.35% (AMBAC
INS)/(Original Issue Yield:
5.414%), 9/1/2014
    
AAA
    
$          529,515
   1,150,000



  
Fort Payne, AL, GO Unlimited
Warrants School Improvements,
5.75% (FSA INS)/(Original Issue
Yield: 5.875%), 5/1/2026
    
AAA
    
      1,220,391
50,000



  
Hartselle, AL Medical Clinic
Board, Revenue Bonds, 6.25%
(Hospital Corporation America),
10/1/2002
    
NR
    
51,874
750,000




  
Huntsville, AL, Health Care
Authority, Revenue Refunding
Bonds, Series A, 5.00% (MBIA
INS)/(Original Issue Yield:
5.05%), 6/1/2009
    
AAA
    
800,078
1,000,000


  
Huntsville, AL, Water Systems,
Revenue Refunding Bonds,
4.625%, 11/1/2006
    
AA
    
1,067,130
1,000,000


  
Huntsville, AL, Series A, 5.00%
(Original Issue Yield: 5.20%),
2/1/2007
    
AA
    
1,056,010
1,000,000


  
Huntsville, AL, Series D, 5.25%
(Original Issue Yield: 4.30%),
11/1/2009
    
AA
    
1,095,750
340,000


  
Huntsville, AL, GO LT Warrants,
Series C, 5.875% (Original Issue
Yield: 6.35%), 11/1/2015
    
AA
    
356,759
250,000



  
Jefferson County, AL, Board of
Education, School Improvements,
5.35% (AMBAC INS)/(Original
Issue Yield: 5.35%), 2/15/2008
    
AAA
    
264,888
1,000,000


  
Jefferson County, AL, GO UT,
5.20% (FSA INS)/(Original Issue
Yield: 5.30%), 2/15/2012
    
AAA
    
1,075,200
500,000


  
Jefferson County, AL, GO Unlimited
Warrants, 5.25% (Original Issue
Yield: 5.45%), 4/1/2008
    
AA-
    
521,690

27

SOUTHTRUST ALABAMA TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Continued)
Principal
Amount
  
  
Credit
Rating(1)
  
Value
$2,000,000



  
Jefferson County, AL, Sewer,
Revenue Refunding Warrants,
Series D, 5.75% (Original Issue
Yield: 5.83%), 2/1/2027
    
AAA
    
$      2,118,720
1,000,000



  
Jefferson County, AL, Sewer,
Revenue Refunding Warrants,
5.50% (MBIA INS)/(Original Issue
Yield: 5.60%), 9/1/2005
    
AAA
    
1,067,710
500,000



  
Lauderdale County & Florence, AL
Health Care Authority, Series A,
6.00% (MBIA INS)/(Original Issue
Yield: 5.20%), 7/1/2013
    
AAA
    
559,280
500,000


  
Madison County, AL, Board of
Education, Refunding Bonds,
5.20% (FSA INS), 3/1/2015
    
AAA
    
528,205
500,000




  
Madison County, AL, Board of
Education, Refunding Bonds,
Series B, 4.625% (FSA INS)/
(Original Issue Yield: 4.65%),
3/1/2011
    
AAA
    
516,410
1,000,000



  
Madison, AL, GO Unlimited
Warrants, 6.00% (MBIA INS)/
(Original Issue Yield: 6.10%),
4/1/2023
    
AAA
    
1,090,240
1,000,000


  
Mobile County, AL Board of
School Commissioners, Series B,
5.00% (AMBAC INS), 3/1/2006
    
AAA
    
1,072,460
350,000



  
Mobile, AL, GO Unlimited
Warrants, 5.50% (AMBAC INS)/
(Original Issue Yield: 5.67%),
2/15/2014
    
AAA
    
383,222
470,000





  
Montgomery County, AL, Baptist
Medical Center Special Care
Facilities Finance Authority,
Revenue Bonds, Series C, 5.20%
(Original Issue Yield: 5.10%),
9/1/2009
    
AAA
    
508,004

28

SOUTHTRUST ALABAMA TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Continued)
Principal
Amount
  
  
Credit
Rating(1)
  
Value
$1,000,000






  
Montgomery, AL, Baptist Medical
Center Special Care Facilities
Finance Authority, Revenue
Refunding Bonds, Series A, 4.60%
(Baptist Medical Center, AL)/
(AMBAC INS)/(Original Issue
Yield: 4.70%), 5/1/2009
    
AAA
    
$      1,030,010
600,000





  
Montgomery, AL, Baptist Medical
Center Special Care Facilities
Finance Authority, Revenue
Refunding Bonds, Series A, 5.00%
(Baptist Medical Center, AL)/
(AMBAC INS), 5/1/2007
    
AAA
    
635,064
1,000,000






  
Montgomery, AL, Baptist Medical
Center Special Care Facilities
Finance Authority, Revenue
Refunding Bonds, Series A, 5.20%
(Baptist Medical Center, AL)/
(AMBAC INS)/(Original Issue
Yield: 5.30%), 5/1/2013
    
AAA
    
1,061,910
245,000



  
Montgomery, AL, Medical Clinic,
Revenue Bonds, 6.00% (AMBAC
INS)/(Original Issue Yield:
6.279%), 3/1/2026
    
AAA
    
260,401
500,000


  
Pelham, AL, GO Unlimited
Warrants, 4.60% (AMBAC INS),
11/1/2006
    
AAA
    
532,515
635,000



  
Pelham, AL, GO Unlimited
Warrants, 4.60% (AMBAC INS)/
(Original Issue Yield: 4.65%),
11/1/2008
    
AAA
    
671,913
700,000



  
Pelham, AL, GO Unlimited
Warrants, 4.60% (AMBAC INS)/
(Original Issue Yield: 4.70%),
11/1/2009
    
AAA
    
740,250
1,250,000



  
Shelby County, AL, Board of
Education, GO Limited Warrants,
Series A, 4.75% (AMBAC INS),
2/1/2009
    
AAA
    
1,330,162

29

SOUTHTRUST ALABAMA TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Continued)
Principal
Amount
  
  
Credit
Rating(1)
  
Value
$    500,000



  
The Board of Trustees of the
University of Alabama, Revenue
Bonds, Series A, 5.25% (AMBAC
INS), 6/1/2008
    
AAA
    
$      542,535
500,000




  
The Board of Trustees of the
University of Alabama, Revenue
Bonds, Series A, 5.25% (AMBAC
INS)/(Original Issue Yield: 5.25%),
6/1/2010
    
AAA
    
536,385
500,000




  
The Board of Trustees of the
University of Alabama, Revenue
Refunding Bonds, 4.60% (MBIA
INS)/(Original Issue Yield: 4.65%),
6/1/2008
    
AAA
    
526,925
1,000,000




  
The Board of Trustees of the
University of Alabama, Revenue
Refunding Bonds, Series C, 4.60%
(Original Issue Yield: 4.70%),
10/1/2004
    
AA-
    
1,051,010
500,000



  
The Board of Trustees of the
University of Alabama, Revenue
Refunding Bonds, 5.00% (Original
Issue Yield: 5.50%), 10/1/2014
    
AAA
    
508,775
500,000



  
Tuscaloosa County, AL, Board of
Education, Series A, 5.50%
(AMBAC INS)/(Original Issue
Yield: 5.60%), 2/1/2027
    
AAA
    
523,510
1,000,000



  
Tuscaloosa County, AL, GO
Unlimited Warrants, 5.55%
(Original Issue Yield: 5.70%),
1/1/2015
    
AA-
    
1,084,330
1,000,000



  
Tuscaloosa County, AL, GO
Unlimited Warrants, 5.75%
(Original Issue Yield: 5.90%),
1/1/2019
    
AA-
    
1,075,020
500,000



  
Wilsonville, AL, IDB, Alabama
Power Company (Gaston Plant),
5.50% (MBIA INS)/(Original Issue
Yield: 5.499%), 1/1/2024
    
AAA
    
500,150
            
  
TOTAL
         
53,429,491
            

30

SOUTHTRUST ALABAMA TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Concluded)
Principal
Amount
or Shares
  
  
Credit
Rating(1)
  
Value
  
PUERTO RICO—1.8%
         
$500,000


  
Puerto Rico, Electric Power Authority,
Revenue Bonds, Series DD, 5.00%
(FSA INS), 7/1/2009
    
AAA
    
$      549,965
500,000



  
Puerto Rico, Public Building
Authority, Revenue Bonds, Series B,
5.125% (MBIA INS)/(Original Issue
Yield: 5.40%), 7/1/2017
    
AAA
    
520,350
            
  
TOTAL
         
1,070,315
            
TOTAL LONG-TERM MUNICIPALS
     (identified cost $51,922,603)
         
54,499,806
            
MUTUAL FUND—3.7%
         
2,136,288

  
Federated Alabama Municipal Cash
Trust Fund (at net asset value)
         
2,136,288
            
TOTAL INVESTMENTS
     (identified cost $54,058,891)(2)
         
$56,636,094
            
(1)
 
Please refer to "Investment Ratings" in the Statement of Additional Information for an explanation of the credit ratings. Investment Ratings are unaudited.
(2)
 
The cost of investments for federal tax purposes amounts to $54,058,891. The net unrealized appreciation of investments on a federal tax basis amounts to $2,577,203 which is comprised of $2,601,624 appreciation and $24,421 depreciation at October 31, 2001.
Note:
 
The categories of investments are shown as a percentage of net assets ($57,586,226) at October 31, 2001.
The following acronyms are used throughout this portfolio:
AMBAC—American Municipal Bond Assurance Corporation
FGIC—Financial Guaranty Insurance Company
FSA—Financial Security Assurance
GO—General Obligation
IDA—Industrial Development Authority
IDB—Industrial Development Bond
INS—Insured
LOC—Letter of Credit
LT—Limited Tax
MBIA—Municipal Bond Investors Assurance
PCA—Pollution Control Authority

31

SOUTHTRUST VALUE FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited)
Shares
  
  
Value
COMMON STOCKS—93.5%
  
 
  
CAPITAL GOODS—5.7%
  
154,062
  
Honeywell International, Inc.
  
$            4,552,532
135,000
  
Tyco International Ltd.
  
6,633,900
110,000
  
United Technologies Corp.
  
5,927,900
     
 
  
TOTAL
  
17,114,332
     
 
  
CONSUMER CYCLICAL—10.9%
  
375,000
 (1)
  
Cendant Corp.
  
4,860,000
425,000
  
Circuit City Stores, Inc.
  
5,831,000
130,000
 (1)
  
Jones Apparel Group, Inc.
  
3,588,000
200,000
  
Lowe’s Cos., Inc.
  
6,820,000
200,000
  
Masco Corp.
  
3,966,000
350,000
  
Penney (J.C.) Co., Inc.
  
7,602,000
     
 
  
TOTAL
  
32,667,000
     
 
  
CONSUMER STAPLES—6.0%
  
150,000
  
CVS Corp.
  
3,585,000
195,000
  
McDonald’s Corp.
  
5,083,650
25,400
  
Ralston Purina Co.
  
832,866
170,000
 (1)
  
Tricon Global Restaurants, Inc.
  
8,600,300
     
 
  
TOTAL
  
18,101,816
     
 
  
ENERGY—9.4%
  
110,000
  
Anadarko Petroleum Corp.
  
6,275,500
70,000
  
ChevronTexaco Corp.
  
6,198,500
180,000
  
Conoco, Inc., Class B
  
4,626,000
100,000
  
Halliburton Co.
  
2,469,000
125,000
  
Transocean Offshore, Inc.
  
3,768,750
180,000
  
USX-Marathon Group
  
4,966,200
     
 
  
TOTAL
  
28,303,950
     
 
  
FINANCE—18.1%
  
185,000
  
Ace, Ltd.
  
6,521,250
110,000
  
Ambac Financial Group, Inc.
  
5,280,000
150,000
  
FleetBoston Financial Corp.
  
4,929,000
150,000
  
J.P. Morgan Chase & Co.
  
5,304,000
160,000
  
John Hancock Financial Services, Inc.
  
5,452,800
130,000
  
PartnerRe Ltd.
  
6,045,000
225,000
  
U.S. Bancorp
  
4,000,500
     

32

SOUTHTRUST VALUE FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Continued)
Shares
  
  
Value
150,000
  
Wachovia Corp.
  
$            4,290,000
187,500
  
Washington Mutual, Inc.
  
5,660,625
80,000
  
XL Capital Ltd., Class A
  
6,948,800
     
 
  
TOTAL
  
54,431,975
     
 
  
HEALTH CARE—12.9%
  
120,000
  
Abbott Laboratories
  
6,357,600
115,000
  
Baxter International, Inc.
  
5,562,550
95,000
  
Bristol-Myers Squibb Co.
  
5,077,750
100,000
  
Johnson & Johnson
  
5,791,000
135,000
  
Pfizer, Inc.
  
5,656,500
125,000
  
Pharmacia Corp.
  
5,065,000
140,000
  
Schering-Plough Corp.
  
5,205,200
     
 
  
TOTAL
  
38,715,600
     
 
  
TECHNOLOGY—18.1%
  
90,000
 (1)
  
Computer Sciences Corp.
  
3,231,900
147,336
 (1)
  
eFunds Corp.
  
2,283,708
100,000
  
First Data Corp.
  
6,757,000
245,000
  
Harris Corp.
  
8,398,600
60,000
  
International Business Machines Corp.
  
6,484,200
270,000
  
Motorola, Inc.
  
4,419,900
200,000
 (1)
  
Sungard Data Systems, Inc.
  
5,040,000
170,000
 (1)
  
Symantec Corp.
  
9,348,300
375,000
 (1)
  
Tellabs, Inc.
  
5,118,750
385,000
 (1)
  
Unisys Corp.
  
3,438,050
     
 
  
TOTAL
  
54,520,408
     
 
  
TELECOMMUNICATIONS—8.2%
  
200,000
  
AT&T Corp.
  
3,050,000
160,000
  
Sprint Corp.—Fon Group
  
3,200,000
45,000
  
Telephone and Data System, Inc.
  
3,955,500
168,360
  
Verizon Communications
  
8,386,012
210,000
  
Williams Companies
  
6,062,700
     
 
  
TOTAL
  
24,654,212
     
 
  
UTILITIES—4.2%
  
160,000
  
El Paso Corp.
  
7,849,600
275,000
 (1)
  
NRG Energy, Inc.
  
4,859,250
     
 
  
TOTAL
  
12,708,850
     
     

33

SOUTHTRUST VALUE FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Concluded)
Shares
  
  
Value
TOTAL COMMON STOCKS
     (identified cost $226,099,376)
  
$281,218,143
     
MUTUAL FUND—4.0%
  
12,194,985

  
AIM Short-Term Investment Co. Prime
Portfolio (at net asset value)
  
12,194,985
     
REPURCHASE AGREEMENT—1.7%
  
5,000,000


  
Morgan Stanley and Co., Inc., 2.48%, dated
10/31/2001, due 11/1/2001 (at net asset
value)
  
5,000,000
     
TOTAL INVESTMENTS
     (identified cost $243,294,361)(2)
  
$298,413,128
     
(1)
 
Non-income producing security.
(2)
 
The cost of investments for federal tax purposes amounts to $243,294,361. The net unrealized appreciation of investments on a federal tax basis amounts to $55,118,767 which is comprised of $61,115,087 appreciation and $5,996,320 depreciation at October 31, 2001.
Note:
 
The categories of investments are shown as a percentage of net assets ($300,877,406) at October 31, 2001.

34

SOUTHTRUST GROWTH FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited)
Shares
     
Value
COMMON STOCKS—99.5%
  
 
  
CAPITAL GOODS—8.9%
  
   80,000
  
General Electric Co.
  
$   2,912,800
15,000
  
Minnesota Mining & Manufacturing Co.
  
1,565,700
44,000
  
Tyco International Ltd.
  
2,162,160
     
 
  
TOTAL
  
6,640,660
     
 
  
CONSUMER CYCLICAL—13.7%
  
26,500
 (1)
  
Best Buy Co., Inc.
  
1,454,850
41,000
  
Costco Wholesale Corp.
  
1,551,030
30,000
  
Disney (Walt) Co.
  
557,700
70,000
  
Home Depot, Inc.
  
2,676,100
19,000
 (1)
  
Staples, Inc.
  
277,020
36,000
  
Target Corp.
  
1,121,400
50,000
  
Wal-Mart Stores, Inc.
  
2,570,000
     
 
  
TOTAL
  
10,208,100
     
 
  
CONSUMER STAPLES—12.2%
  
45,000
 (1)
  
AOL Time Warner, Inc.
  
1,404,450
34,000
  
Anheuser-Busch Cos., Inc.
  
1,416,440
28,000
  
Coca-Cola Co.
  
1,340,640
19,500
  
Colgate-Palmolive Co.
  
1,121,640
21,000
  
CVS Corp.
  
501,900
16,000
  
McDonald's Corp.
  
417,120
25,000
  
PepsiCo, Inc.
  
1,217,750
52,500
  
Walgreen Co.
  
1,699,950
     
 
  
TOTAL
  
9,119,890
     
 
  
ENERGY—1.9%
  
29,000
  
Schlumberger Ltd.
  
1,404,180
     
 
  
FINANCE—16.8%
  
27,500
  
Aflac, Inc.
  
672,650
33,000
  
American International Group, Inc.
  
2,593,800
35,000
  
Bank of New York Co., Inc.
  
1,190,350
18,000
  
Chubb Corp.
  
1,229,400
45,000
  
Citigroup, Inc.
  
2,048,400
22,500
  
Freddie Mac
  
1,525,950
27,500
  
Federal National Mortgage Association
  
2,226,400
23,500
  
J.P. Morgan Chase & Co.
  
830,960

35

SOUTHTRUST GROWTH FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Continued)
Shares
     
Value
47,500
  
Providian Financial Corp.
  
$      184,775
     
 
  
TOTAL
  
12,502,685
     
 
  
HEALTH CARE—18.6%
  
22,500
 (1)
  
Amgen, Inc.
  
1,278,450
50,000
  
Bristol-Myers Squibb Co.
  
2,672,500
42,000
  
Johnson & Johnson
  
2,432,220
11,000
  
Lilly (Eli) & Co.
  
841,500
45,000
  
Medtronic, Inc.
  
1,813,500
17,500
  
Merck & Co., Inc.
  
1,116,675
85,000
  
Pfizer, Inc.
  
3,561,500
4,000
  
Schering-Plough Corp.
  
148,720
     
 
  
TOTAL
  
13,865,065
     
 
  
TECHNOLOGY—20.3%
  
75,000
 (1)
  
Cisco Systems, Inc.
  
1,269,000
67,500
 (1)
  
Dell Computer Corp.
  
1,618,650
80,000
  
Intel Corp.
  
1,953,600
28,000
  
International Business Machines Corp.
  
3,025,960
65,000
 (1)
  
Microsoft Corp.
  
3,779,750
75,000
  
Nokia Oyj, ADR
  
1,538,250
100,000
 (1)
  
Sun Microsystems, Inc.
  
1,015,000
33,000
  
Texas Instruments, Inc.
  
923,670
     
 
  
TOTAL
  
15,123,880
     
 
  
TELECOM SERVICES—6.5%
  
35,000
  
Alltel Corp.
  
1,999,900
35,000
  
Verizon Communications
  
1,743,350
85,000
 (1)
  
Worldcom, Inc.
  
1,143,250
     
 
  
TOTAL
  
4,886,500
     
 
  
TRANSPORTATION—0.6%
  
31,000
  
Southwest Airlines Co.
  
492,900
     
TOTAL COMMON STOCKS
    (identified cost $64,076,527)
  
74,243,860
     
MUTUAL FUND—0.5%
  
355,595

  
AIM Short-Term Investment Co. Prime
Portfolio (at net asset value)
  
355,595
     

36

SOUTHTRUST GROWTH FUND
PORTFOLIO OF INVESTMENTS
October 31, 2001 (Unaudited) (Concluded)
Shares
  
  
Value
 
TOTAL INVESTMENTS
(identified cost $64,432,122)(2)
  
$74,599,455
         
(1)
 
Non-income producing security.
(2)
 
The cost of investments for federal tax purposes amounts to $64,432,122. The net unrealized appreciation of investments on a federal tax basis amounts to $10,167,333 which is comprised of $19,126,607 appreciation and $8,959,274 depreciation at October 31, 2001.
Note:
 
The categories of investments are shown as a percentage of net assets ($74,596,830) at October 31, 2001.
 
The following acronym is used throughout this portfolio:
ADR—American Depositary Receipt

37

SOUTHTRUST FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 2001 (Unaudited)
  
U.S. Treasury
Money
Market Fund
  
Income
Fund
  
Bond
Fund
Assets:
     
 
  
 
    Investments in repurchase agreements
  
$    653,513,000
  
$              —
  
$                —
    Investments in securities
  
545,553,717
  
75,323,877
  
152,412,017
  
  
  
       Total investments in securities, at value
  
1,199,066,717
  
75,323,877
  
152,412,017
    Short-term investments held as collateral for
        securities lending
  
—
  
—
  
37,392,375
    Cash
  
510
  
81,552
  
—
    Receivable for investments sold
  
—
  
2,703,976
  
—
    Receivable for shares sold
  
—
  
150
  
—
    Income receivable
  
2,285,222
  
1,151,765
  
2,605,783
    Deferred compensation
  
23,309
  
1,595
  
3,145
  
  
  
       Total assets
  
1,201,375,758
  
79,262,915
  
192,413,320
  
  
  
Liabilities:
     
 
  
 
    Payable for investments purchased
  
—
  
3,762,350
  
2,988,780
    Payable for shares redeemed
  
—
  
100
  
162
    Payable to collateral to broker
  
—
  
—
  
37,392,375
    Income distribution payable
  
2,126,932
  
—
  
—
    Accrued expenses
  
34,381
  
4,347
  
602
    Payable for deferred compensation
  
23,309
  
1,595
  
3,145
  
  
  
       Total liabilities
  
2,184,622
  
3,768,392
  
40,385,064
  
  
  
Net Assets Consist of:
     
 
  
 
    Paid in capital
  
1,199,191,136
  
75,400,866
  
145,486,929
    Net unrealized appreciation of investments
  
—
  
2,232,327
  
7,879,298
    Accumulated net realized gain (loss) on
        investments
  
—
  
(1,734,052
)
  
(1,097,533
)
    Undistributed net investment income
  
—
  
(404,618
)
  
(240,438
)
  
  
  
       Total Net Assets
  
$1,199,191,136
  
$75,494,523
  
$152,028,256
  
  
  
Shares Outstanding
  
1,199,191,136
  
7,578,420
  
14,391,044
  
  
  
Net Asset Value Per Share:
     
 
  
 
    (Net Assets/Shares Outstanding)
  
$                 1.00
  
$           9.96
  
$           10.56
  
  
  
Offering Price Per Share(1)
  
$                    —
  
$          10.32
(2)
  
$            10.94
(2)
  
  
  
Redemption Proceeds Per Share(1)
  
$                    —
  
$            9.86
(4)
  
$            10.45
(4)
  
  
  
Investments, at identified cost
  
—
  
73,291,233
  
144,675,830
  
  
  
Investments, at cost reflecting generally accepted
    accounting principles
  
—
  
73,091,550
  
144,532,719
  
  
  
(1)
 
See “What Do Shares Cost?” in the Prospectus.
(2)
 
Computation of offering price: 100/96.5 of net asset value.
(3)
 
Computation of offering price: 100/95.5 of net asset value.
(4)
 
Computation of redemption proceeds: 99/100 of net asset value.

38

SOUTHTRUST FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 2001 (Unaudited) (Concluded)
  
Alabama
Tax-Free
Income
Fund
  
Value
Fund
  
Growth
Fund
Assets:
            
    Investments in repurchase agreements
  
$              —
    
$    5,000,000
    
$              —
 
    Investments in securities
  
56,636,094
    
293,413,128
    
74,599,455
 
  
  
  
       Total investments in securities, at value
  
56,636,094
    
298,413,128
    
74,599,455
 
    Receivable for investments sold
  
—
    
6,133,210
    
149,235
 
    Receivable for shares sold
  
96,995
    
50
    
74
 
    Income receivable
  
861,849
    
289,082
    
50,468
 
    Prepaid expenses
  
15,055
    
—
    
28,802
 
    Deferred compensation
  
1,312
    
7,918
    
2,123
 
  
  
  
       Total assets
  
57,611,305
    
304,843,388
    
74,830,157
 
  
  
  
Liabilities:
            
    Payable for investments purchased
  
—
    
3,946,750
    
215,690
 
    Payable for shares redeemed
  
8,777
    
505
    
1,553
 
    Accrued expenses
  
14,990
    
10,809
    
13,962
 
    Payable for deferred compensation
  
1,312
    
7,918
    
2,122
 
  
  
  
       Total liabilities
  
25,079
    
    3,965,982
    
233,327
 
  
  
  
Net Assets Consist of:
  
 
  
 
  
 
    Paid in capital
  
54,687,688
  
247,075,315
  
67,135,406
    Net unrealized appreciation of investments
  
2,577,203
  
55,118,767
  
10,167,333
    Accumulated net realized gain (loss) on
        investments
  
239,559
  
(1,342,147
)
  
(2,625,442
)
    Undistributed net investment income/
        Accumulated net operating loss
  
81,776
  
25,471
  
(80,467
)
  
  
  
       Total Net Assets
  
$57,586,226
  
$300,877,406
  
$74,596,830
  
  
  
Shares Outstanding
  
5,393,354
  
20,277,649
  
10,299,526
  
  
  
Net Asset Value Per Share:
  
 
  
 
  
 
    (Net Assets/Shares Outstanding)
  
$         10.68
  
$           14.84
  
$           7.24
  
  
  
Offering Price Per Share(1)
  
$          11.07
(2)
  
$            15.54
(3)
  
$            7.58
(3)
  
  
  
Redemption Proceeds Per Share(1)
  
$          10.57
(4)
  
$            14.69
(4)
  
$            7.17
(4)
  
  
  
Investments, at identified cost
  
54,058,891
  
243,294,361
  
64,432,122
  
  
  
Investments, at tax cost
  
54,058,891
  
243,294,361
  
64,432,122
  
  
  
(1)
 
See “What Do Shares Cost?” in the Prospectus.
(2)
 
Computation of offering price: 100/96.5 of net asset value.
(3)
 
Computation of offering price: 100/95.5 of net asset value.
(4)
 
Computation of redemption proceeds: 99/100 of net asset value.

39

SOUTHTRUST FUNDS
STATEMENTS OF OPERATIONS
October 31, 2001 (Unaudited)
  
U.S. Treasury
Money Market
Fund
  
Income
Fund
  
Bond
Fund
Investment Income:
    
 
    
 
  
 
    Interest
    
$20,871,075
    
$2,064,127
  
$   4,357,968
    
    
  
Expenses:
    
 
    
 
  
 
    Investment adviser fee
    
2,901,888
    
219,737
  
435,617
    Administrative personnel and services fee
    
554,021
    
50,410
  
69,328
    Custodian fees
    
41,622
    
3,662
  
7,260
    Transfer and dividend disbursing agent fees and
        expenses
    
17,519
    
17,756
  
19,460
    Directors’/Trustees’ fees
    
9,816
    
1,160
  
1,980
    Auditing fees
    
6,479
    
7,088
  
7,249
    Legal fees
    
5,615
    
7,515
  
5,613
    Portfolio accounting fees
    
63,354
    
24,758
  
23,415
    Shareholder services fee
    
1,450,944
    
91,556
  
181,507
    Share registration costs
    
24,342
    
8,705
  
7,155
    Printing and postage
    
13,646
    
7,486
  
10,769
    Insurance premiums
    
1,646
    
433
  
496
    Deferred compensation expense
    
9,507
    
574
  
1,182
    Miscellaneous
    
8,111
    
5,701
  
3,856
    
    
  
    Total expenses
    
5,108,510
    
446,541
  
774,887
    
    
  
Waivers—  
    
 
    
 
  
 
    Waiver of investment adviser fee
    
(1,102,717
)
    
(109,868
)
  
—
    Waiver of administrative personnel and services fee
    
—
    
(15,439
)
  
—
    Waiver of shareholder services fee
    
(1,160,755
)
    
(73,245
)
  
(145,205
)
    
    
  
    Total waivers
    
(2,263,472
)
    
(198,552
)
  
(145,205
)
    
    
  
       Net expenses
    
2,845,038
    
247,989
  
629,682
    
    
  
           Net investment income
    
18,026,037
    
1,816,138
  
3,728,286
    
    
  
Realized and Unrealized Gain on Investments:
    
 
    
 
  
 
    Net realized gain on investments
    
—
    
765,348
  
1,857,233
    Change in unrealized appreciation of investments
    
—
    
1,203,701
  
5,164,328
    
    
  
       Net realized and unrealized gain on investments
    
—
    
1,969,049
  
7,021,561
    
    
  
           Change in net assets resulting from operations
    
$18,026,037
    
$3,785,187
  
$10,749,847
    
    
  

40

SOUTHTRUST FUNDS
STATEMENTS OF OPERATIONS
October 31, 2001 (Unaudited) (Concluded)
    
Alabama
Tax-Free Income
Fund
  
Value
Fund
  
Growth
Fund
Investment Income:
      
 
    
 
  
 
    Dividends
      
$           —  
    
$   2,072,170
  
$      363,377
    Interest
      
1,259,590
    
215,204
  
7,500
      
    
  
    Total income
      
1,259,590
    
2,287,374
  
370,877
      
    
  
Expenses:
      
 
    
 
  
 
    Investment adviser fee
      
163,727
    
1,242,766
  
308,374
    Administrative personnel and services fee
      
26,057
    
158,186
  
39,255
    Custodian fees
      
2,729
    
16,570
  
4,112
    Transfer and dividend disbursing agent fees and
        expenses
      
16,358
    
18,009
  
19,152
    Directors’/Trustees’ fees
      
590
    
4,014
  
795
    Auditing fees
      
5,291
    
6,191
  
5,022
    Legal fees
      
6,116
    
8,422
  
6,276
    Portfolio accounting fees
      
27,092
    
39,321
  
20,861
    Shareholder services fee
      
68,220
    
414,256
  
102,792
    Share registration costs
      
7,940
    
10,873
  
7,437
    Printing and postage
      
6,536
    
13,923
  
13,955
    Insurance premiums
      
377
    
854
  
315
    Deferred compensation expense
      
460
    
2,829
  
763
    Miscellaneous
      
4,257
    
6,388
  
3,148
      
    
  
    Total expenses
      
335,750
    
1,942,602
  
532,257
      
    
  
Waivers—  
      
 
    
 
  
 
    Waiver of investment adviser fee
      
(109,152
)
    
—
  
—
    Waiver of administrative personnel and
        services fee
      
—
    
—
  
—
    Waiver of shareholder services fee
      
(54,575
)
    
(331,404
)
  
(82,233
)
      
    
  
    Total waivers
      
(163,727
)
    
(331,404
)
  
(82,233
)
      
    
  
       Net expenses
      
172,023
    
1,611,198
  
450,024
      
    
  
           Net investment income (loss)
      
1,087,567
    
676,176
  
(79,147
)
      
    
  
Realized and Unrealized Gain (Loss) on
    Investments:
      
 
    
 
  
 
    Net realized gain (loss) on investments
      
347,537
    
(7,651,422
)
  
(1,540,098
)
    Change in unrealized appreciation of
        investments
      
1,328,640
    
(37,086,525
)
  
(10,068,112
)
      
    
  
       Net realized and unrealized gain (loss) on
           investments
      
1,676,177
    
(44,737,947
)
  
(11,608,210
)
      
    
  
           Change in net assets resulting from
               operations
      
$2,763,744
    
$(44,061,771
)
  
$(11,687,357
)
      
    
  

41

SOUTHTRUST FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
 
U.S. Treasury
Money Market Fund
 
Income
Fund
 
Six-Months
Ended
(Unaudited)
October 31,
2001
 
Year Ended
April 30,
2001
 
Six-Months
Ended
(Unaudited)
October 31,
2001
 
Year Ended
April 30,
2001
Increase (Decrease) in Net Assets
 
 
 
 
 
 
Operations—
 
 
 
 
 
 
 
 
    Net investment income
 
$      18,026,037
 
$      53,714,283
 
$   1,816,138
 
$   3,836,618
    Net realized gain (loss) on
        investments
 
—
 
—
 
765,348
 
(354,489
)
    Net change in unrealized
        appreciation (depreciation) of
        investment
 
—
 
—
 
1,203,701
 
2,376,599
 
 
 
 
    Change in net assets resulting
        from operations
 
18,026,037
 
53,714,283
 
3,785,187
 
5,858,728
 
 
 
 
Distributions to Shareholders—
 
 
 
 
 
 
 
 
    Distributions from net investment
        income
 
(18,026,037
)
 
(53,714,283
)
 
(1,958,098
)
 
(3,833,941
)
 
 
 
 
Share Transactions—
 
 
 
 
 
 
 
 
    Proceeds from sale of shares
 
1,245,055,557
 
1,958,777,972
 
11,925,929
 
15,950,047
    Net asset value of shares issued to
        shareholders in payment of
        distributions declared
 
7,000,231
 
19,667,365
 
374,139
 
679,576
    Cost of shares redeemed
 
(1,194,351,361
)
 
(1,689,741,589
)
 
(8,360,698
)
 
(13,188,648
)
 
 
 
 
    Change in net assets resulting
        from share transactions
 
57,704,427
 
288,703,748
 
3,939,370
 
3,440,975
 
 
 
 
    Change in net assets
 
57,704,427
 
288,703,748
 
5,766,459
 
5,465,762
Net Assets:
 
 
 
 
 
 
 
 
    Beginning of period
 
1,141,486,709
 
852,782,961
 
69,728,064
 
64,262,302
 
 
 
 
    End of period
 
$ 1,199,191,136
 
$ 1,141,486,709
 
$   5,494,523
 
$ 69,728,064
 
 
 
 
    Undistributed net investment
        income/distributions in excess
        of net investment income
        included in net assets at end of
        period
 
$                     —
 
$                    —
 
$      (404,618
)
 
$        34,188
 
 
 
 
    Net gain (loss) as computed for
        federal tax purposes
 
$                    —
 
$                    —
 
$      765,348
 
$      (591,780
)
 
 
 
 

42

SOUTHTRUST FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
(Continued)
  
Bond Fund
  
Alabama
Tax-Free
Income Fund
  
Six-Months
Ended
(Unaudited)
October 31,
2001
  
Year Ended
April 30,
2001
  
Six-Months
Ended
(Unaudited)
October 31,
2001
  
Year Ended
April 30,
2001
Increase (Decrease) in Net Assets
  
 
  
 
  
 
  
 
Operations—
  
 
  
 
  
 
  
 
    Net investment income
  
$    3,728,286
  
$    7,443,873
  
$   1,087,567
  
$   2,253,886
    Net realized gain on investments
  
1,857,233
  
790,847
  
347,537
  
106,550
    Net change in unrealized
        appreciation (depreciation) of
        investment
  
5,164,328
  
4,575,140
  
1,328,640
  
2,462,151
  
  
  
  
    Change in net assets resulting from
        operations
  
10,749,847
  
12,809,860
  
2,763,744
  
4,822,587
  
  
  
  
Distributions to Shareholders—
  
 
  
 
  
 
  
 
    Distributions from net investment
        income
  
(3,966,320
)
  
(7,449,022
)
  
(1,108,367
)
  
(2,213,092
)
  
  
  
  
Share Transactions—
  
 
  
 
  
 
  
 
    Proceeds from sale of shares
  
12,551,457
  
39,862,578
  
7,041,870
  
9,760,629
    Net asset value of shares issued to
        shareholders in payment of
        distributions declared
  
2,758,963
  
5,382,348
  
164,481
  
242,496
    Cost of shares redeemed
  
(10,614,405
)
  
(23,438,344
)
  
(3,821,465
)
  
(12,832,459
)
  
  
  
  
    Change in net assets resulting from
        share transactions
  
4,696,015
  
21,806,582
  
3,384,886
  
(2,829,334
)
  
  
  
  
Change in net assets
  
11,479,542
  
27,167,420
  
5,040,263
  
(219,839
)
Net Assets:
  
 
  
 
  
 
  
 
Beginning of period
  
140,548,714
  
113,381,294
  
52,545,963
  
52,765,802
  
  
  
  
End of period
  
$152,028,256
  
$140,548,714
  
$ 57,586,226
  
$ 52,545,963
  
  
  
  
Undistributed net investment income/
    distributions in excess of net
    investment income included in net
    assets at end of period
  
$      (240,438
)
  
$       111,353
  
$        81,776
  
$      102,576
  
  
  
  
Net gain (loss) as computed for
    federal tax purposes
  
$    1,857,233
  
$   (1,748,936
)
  
$      347,537
  
$       (18,217
)
  
  
  
  

43

SOUTHTRUST FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
(Concluded)
 
Value Fund
 
Growth Fund
 
Six-Months
Ended
(Unaudited)
October 31,
2001
 
Year Ended
April 30,
2001
 
Six-Months
Ended
(Unaudited)
October 31,
2001
 
Year Ended
April 30,
2001
Increase (Decrease) in Net Assets
 
 
 
 
 
 
 
 
Operations—
 
 
 
 
 
 
 
 
    Net investment income (loss)
 
$       676,176
 
$    1,725,664
 
$       (79,147
)
 
$       (88,667
)
    Net realized gain (loss) on
        investments
 
(7,651,422
)
 
13,804,049
 
(1,540,098
)
 
(1,085,344
)
    Net change in unrealized appreciation
        (depreciation) of investment
 
(37,086,525
)
 
21,363,631
 
(10,068,112
)
 
(10,798,679
)
 
 
 
 
    Change in net assets resulting from
        operations
 
(44,061,771
)
 
36,893,344
 
(11,687,357
)
 
(11,972,690
)
 
 
 
 
Distributions to Shareholders—
 
 
 
 
 
 
 
 
    Distributions from net investment
        income
 
(690,376
)
 
(1,812,958
)
 
—
 
—
    Distributions from net realized gain on
        investments transactions
 
—
 
(32,543,239
)
 
—
 
(6,565,609
)
 
 
 
 
    Change in net assets from distributions
        to shareholders
 
(690,376
)
 
(34,356,197
)
 
—
 
(6,565,609
)
 
 
 
 
Share Transactions—
 
 
 
 
 
 
 
 
    Proceeds from sale of shares
 
23,545,405
 
52,674,107
 
6,869,578
 
25,868,540
    Net asset value of shares issued to
        shareholders in payment of
        distributions declared
 
601,352
 
31,297,188
 
—
 
6,534,430
    Cost of shares redeemed
 
(24,173,284
)
 
(70,271,560
)
 
(11,121,460
)
 
(9,695,986
)
 
 
 
 
    Change in net assets resulting from
        share transactions
 
(26,527
)
 
13,699,735
 
(4,251,882
)
 
22,706,984
 
 
 
 
    Change in net assets
 
(44,778,674
)
 
16,236,882
 
(15,939,239
)
 
4,168,685
Net Assets:
 
 
 
 
 
 
 
 
    Beginning of period
 
345,656,080
 
329,419,198
 
90,536,069
 
86,367,384
 
 
 
 
    End of period
 
$300,877,406
 
$345,656,080
 
$   4,596,830
 
$ 90,536,069
 
 
 
 
    Undistributed net investment income
        (Accumulated net investment loss)
        included in net assets at end of
        period
 
$         25,471
 
$         39,671
 
$       (80,467
)
 
$          (1,320
)
 
 
 
 
    Net gain (loss) as computed for federal
        tax purposes
 
$    (7,651,422
)
 
$  13,719,064
 
$  (1,540,098
)
 
$   (1,082,264
)
 
 
 
 

44
 
 
 
[THIS PAGE INTENTIONALLY LEFT BLANK]
 
 
 
 

45

SOUTHTRUST FUNDS
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
Year
Ended
April 30,
  
Net asset
value,
beginning
of period
    
Net
investment
income (loss)
    
Net realized
and unrealized
gain (loss) on
investments
  
Total from
investment
operations
    
Distributions
from net
investment
income
    
Distributions
from net
realized
gain on
investments
U.S. Treasury Money Market Fund
      
 
        
 
        
 
 
    1997
    
$   1.00
        
0.05
        
—
      
0.05
        
(0.05
)
        
—
 
    1998
    
$   1.00
        
0.05
        
—
      
0.05
        
(0.05
)
        
—
 
    1999
    
$   1.00
        
0.05
        
—
      
0.05
        
(0.05
)
        
—
 
    2000
    
$   1.00
        
0.05
        
—
      
0.05
        
(0.05
)
        
—
 
    2001
    
$   1.00
        
0.06
        
—
      
0.06
        
(0.06
)
        
—
 
    2001(3)
    
$   1.00
        
0.02
        
—
      
0.02
        
(0.02
)
        
—
 
Income Fund
      
 
        
 
        
 
 
    1997
    
$   9.77
        
0.56
        
(0.09
)
      
0.47
        
(0.56
)
        
—
 
    1998
    
$   9.68
        
0.58
        
0.13
      
0.71
        
(0.58
)
        
—
 
    1999
    
$   9.81
        
0.57
        
(0.03
)
      
0.54
        
(0.57
)
        
—
 
    2000
    
$   9.78
        
0.58
        
(0.37
)
      
0.21
        
(0.58
)
        
—
 
    2001
    
$   9.41
        
0.57
        
0.31
      
0.88
        
(0.57
)
        
—
 
    2001(3)
    
$   9.72
        
0.25
(7)
        
0.25
(7)
      
0.50
        
(0.26
)
        
—
 
Bond Fund
      
 
        
 
        
 
 
    1997
    
$10.01
        
0.61
        
(0.03
)
      
0.58
        
(0.64
)
        
—
 
    1998
    
$   9.95
        
0.60
        
0.45
      
1.05
        
(0.60
)
        
—
 
    1999
    
$10.40
        
0.55
        
0.03
      
0.58
        
(0.56
)
        
(0.18
)
 
    2000
    
$10.24
        
0.58
        
(0.57
)
      
0.01
        
(0.58
)
        
—
 
    2001
    
$   9.67
        
0.57
        
0.42
      
0.99
        
(0.58
)
        
—
 
    2001(3)
    
$10.08
        
0.27
(7)
        
0.49
(7)
      
0.76
        
(0.28
)
        
—
 
Alabama Tax Free Income Fund
      
 
        
 
        
 
 
    2000(5)
    
$10.00
        
0.29
        
(0.14
)
      
0.15
        
(0.28
)
        
—
 
    2001
    
$   9.87
        
0.43
        
0.47
      
0.90
        
(0.42
)
        
—
 
    2001(3)
    
$10.35
        
0.22
        
0.33
      
0.55
        
(0.22
)
        
—
 
Value Fund
      
 
        
 
        
 
 
    1997
    
$14.40
        
0.20
        
2.59
      
2.79
        
(0.21
)
        
(1.17
)
 
    1998
    
$15.81
        
0.15
        
5.26
      
5.41
        
(0.15
)
        
(2.02
)
 
    1999
    
$19.05
        
0.08
        
0.43
      
0.51
        
(0.08
)
        
(1.58
)
 
    2000
    
$17.90
        
0.06
        
0.63
      
0.69
        
(0.06
)
        
(1.56
)
 
    2001
    
$16.97
        
0.09
        
1.75
      
1.84
        
(0.09
)
        
(1.68
)
 
    2001(3)
    
$17.04
        
0.03
        
(2.20
)
      
(2.17
)
        
(0.03
)
        
—  
 
Growth Fund
      
 
        
 
        
 
 
    2000(5)
    
$10.00
        
—  
        
0.65
      
0.65
        
—
        
(0.25
)
 
    2001
    
$10.40
        
(0.00
)(6)
        
(1.30
)
      
(1.30
)
        
—
        
(0.71
)
 
    2001(3)
    
$   8.39
        
(0.01
)
        
(1.14
)
      
(1.15
)
        
—
        
—
 

46

SOUTHTRUST FUNDS
FINANCIAL HIGHLIGHTS
(For a share outsanding throughout each period)
Total
distributions
 
Net
asset
value,
end of
period
 
Total
return(1)
  
Ratios to average net assets
 
Net
assets,
end of
period
(000 omitted)
  
Portfolio
turnover
rate
      
Expenses
  
Net
investment
income (loss)
  
Expense
waivers/
reimburse-
ments(2)
    
                                     
 
(0.05
)
   
$   1.00
 
4.88
%
  
0.51
%
    
4.78
%
      
0.20
%
     
$    524,462
      
—
 
 
(0.05
)
   
$   1.00
 
5.14
%
  
0.48
%
    
5.03
%
      
0.19
%
     
$    631,869
      
—
 
 
(0.05
)
   
$   1.00
 
4.77
%
  
0.45
%
    
4.65
%
      
0.19
%
     
$    687,683
      
—
 
 
(0.05
)
   
$   1.00
 
4.91
%
  
0.49
%
    
4.82
%
      
0.40
%
     
$    852,783
      
—
 
 
(0.06
)
   
$   1.00
 
5.68
%
  
0.50
%
    
5.50
%
      
0.39
%
     
$1,141,487
      
—
 
 
(0.02
)
   
$   1.00
 
1.57
%
  
0.49
%(4)
    
3.11
%(4)
      
0.39
%(4)
     
$1,199,191
      
—
 
                                     
 
(0.56
)
   
$   9.68
 
4.90
%
  
0.92
%
    
5.59
%
      
0.32
%
     
$      38,598
      
112
%
 
 
(0.58
)
   
$   9.81
 
7.46
%
  
0.75
%
    
5.86
%
      
0.44
%
     
$      39,969
      
112
%
 
 
(0.57
)
   
$   9.78
 
5.58
%
  
0.75
%
    
5.76
%
      
0.41
%
     
$      52,446
      
48
%
 
 
(0.58
)
   
$   9.41
 
2.25
%
  
0.64
%
    
6.13
%
      
0.57
%
     
$      64,262
      
85
%
 
 
(0.57
)
   
$   9.72
 
9.58
%
  
0.70
%
    
5.91
%
      
0.56
%
     
$      69,728
      
55
%
 
 
(0.26
)
   
$   9.96
 
5.26
%
  
0.68
%(4)
    
4.96
%(4)(7)
      
0.54
%(4)
     
$      75,495
      
51
%
 
                                     
 
(0.64
)
   
$   9.95
 
5.98
%
  
0.86
%
    
6.18
%
      
0.05
%
     
$      91,185
      
63
%
 
 
(0.60
)
   
$10.40
 
10.80
%
  
0.84
%
    
5.88
%
      
0.01
%
     
$    114,650
      
107
%
 
 
(0.74
)
   
$10.24
 
5.54
%
  
0.84
%
    
5.26
%
      
—  
     
$    129,897
      
119
%
 
 
(0.58
)
   
$   9.67
 
0.15
%
  
0.84
%
    
5.88
%
      
0.22
%
     
$    113,381
      
76
%
 
 
(0.58
)
   
$10.08
 
10.47
%
  
0.89
%
    
5.80
%
      
0.20
%
     
$    140,549
      
80
%
 
 
(0.28
)
   
$10.56
 
7.68
%
  
0.87
%(4)
    
5.14
%(4)(7)
      
0.20
%(4)
     
$    152,028
      
78
%
 
                                     
 
(0.28
)
   
$   9.87
 
1.47
%
  
0.65
%(4)
    
4.17
%(4)
      
0.60
%(4)
     
$      52,766
      
33
%
 
 
(0.42
)
   
$10.35
 
9.27
%
  
0.63
%
    
4.19
%
      
0.60
%
     
$      52,546
      
14
%
 
 
(0.22
)
   
$10.68
 
5.31
%
  
0.63
%(4)
    
3.99
%(4)
      
0.60
%(4)
     
$      57,586
      
15
%
 
                                     
 
(1.38
)
   
$15.81
 
19.99
%
  
0.94
%
    
1.33
%
      
0.03
%
     
$    272,665
      
27
%
 
 
(2.17
)
   
$19.05
 
36.39
%
  
0.94
%
    
0.77
%
      
—
     
$    412,857
      
75
%
 
 
(1.66
)
   
$17.90
 
5.17
%
  
0.91
%
    
0.48
%
      
—
     
$    388,731
      
45
%
 
 
(1.62
)
   
$16.97
 
4.26
%
  
0.94
%
    
0.37
%
      
0.22
%
     
$    329,419
      
45
%
 
 
(1.77
)
   
$17.04
 
12.12
%
  
0.98
%
    
0.53
%
      
0.20
%
     
$    345,656
      
54
%
 
 
(0.03
)
   
$14.84
 
(12.71
)%
  
0.97
%(4)
    
0.41
%(4)
      
0.20
%(4)
     
$    300,877
      
23
%
 
                                     
 
(0.25
)
   
$10.40
 
6.54
%
  
1.15
%(4)
    
(0.01
)%(4)
      
0.20
%(4)
     
$      86,367
      
28
%
 
 
(0.71
)
   
$   8.39
 
(12.68
)%
  
1.08
%
    
(0.10
)%
      
0.20
%
     
$      90,536
      
19
%
 
 
—
   
$   7.24
 
(13.71
)%
  
1.09
%(4)
    
(0.20
)%(4)
      
0.20
%(4)
     
$      74,597
      
14
%
 

47

SOUTHTRUST FUNDS
FINANCIAL HIGHLIGHTS

(1)
 
Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable.
(2)
 
This voluntary expense decrease is reflected in both the expense and the net investment income (loss) ratios.
(3)
 
For the six-months ended October 31, 2001 (unaudited).
(4)
 
Computed on an annualized basis.
(5)
 
Reflects operations for the period from August 20, 1999 (date of initial public investment) to April 30, 2000.
(6)
 
Per share amount does not equal (0.01).
(7)
 
As required, effective May 1, 2001, the Company adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies. The Income and Bond Fund began amortizing long-term market premiums and discounts on debt securities.
 
 
The effect of this change for the six months ended October 31, 2001 resulted in the following adjustments:
 
width="3%">             
Net investment
income per share
    
Net realized
and unrealized
gain/loss per share
    
Ratio of net investment
income to average net assets
 
 
Income Fund
        
(0.01
)
        
0.01
           
(0.35
)%
      
 
Bond Fund
      
(0.01
)
      
0.01
        
(0.33
)%
 
 
 
Per share, ratios and supplemental data for the periods prior to October 31, 2001 have not been restated to reflect this change in presentation.
 
 
See Notes which are an integral part of the Financial Statements

48

SOUTHTRUST FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
October 31, 2001 (Unaudited) (Continued)

 
(1)   Organization
 
SouthTrust Funds (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. The Company consists of six portfolios (individually referred to as the “Fund”, or collectively as the “Funds”) which are presented herein:
 
Portfolio Name
 
Diversification
 
Investment Objective
U.S. Treasury
Money Market
Fund (“U.S.
Treasury”)

 
  Diversified





 
  To provide as high a
  level of current income
  as is consistent with
  maintaining liquidity
  and stability of
  principal.
Income Fund
(“Income”)
 
  Diversified

 
  To provide current
  income.
Bond Fund
(“Bond”)

 
  Diversified




 
  To provide a level of
  total return consistent
  with a portfolio of
  high-quality debt
  securities.
Alabama Tax Free
Income Fund
(“Alabama Tax-
Free Income”)


 
  Non-
  diversified




 
  To provide current
  income exempt from
  federal income tax and
  the income tax
  imposed by the State of
  Alabama.
Value Fund
(“Value”)

 
  Diversified




 
  To provide long-term
  capital appreciation,
  with income a
  secondary
  consideration.
Growth Fund
(“Growth”)
 
  Diversified

 
  To provide capital
  appreciation.
 
          The assets of each portfolio are segregated and a shareholder’s interest is limited to the portfolio in which shares are held.

49

SOUTHTRUST FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
October 31, 2001 (Unaudited) (Continued)

 
(2)   Significant Accounting Policies
 
The following is a summary of significant accounting policies consistently followed by the Company in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles.
 
          Investment Valuation—Municipal bonds are valued by an independent pricing service, taking into consideration yield, liquidity, risk, credit quality, coupon, maturity, type of issue and any other factors or market data the pricing service deems relevant. U.S. government securities are generally valued at the mean between the over-the-counter bid and asked prices as furnished by an independent pricing service. Listed corporate bonds (other fixed income and asset-backed securities) and unlisted securities and private placement securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Listed equity securities are valued at the last sale price reported on a national securities exchange. For U.S. Treasury, the use of the amortized cost method to value its portfolio securities is in accordance with Rule 2a-7 under the Act. For fluctuating net asset value Funds within the Company, short-term securities are valued at the prices provided by an independent pricing service. However, short-term securities purchased with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair market value. Investments in other open-end regulated investment companies are valued at net asset value. Securities for which no quotations are readily available are valued at fair value as determined in good faith using methods approved by the Board of Trustees (the “Trustees”).
 
          Repurchase Agreements—It is the policy of the Company to require the custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System, or to have segregated within the custodian bank’s vault, all securities held as collateral under repurchase agreement transactions. Additionally, procedures have been established by the Company to monitor, on a daily basis, the market value of each repurchase agreement’s collateral to ensure that the value of collateral at least equals the repurchase price to be paid under the repurchase agreement.
 
          The Company will only enter into repurchase agreements with banks and other recognized financial institutions, such as broker/dealers, which are deemed by the Company’s adviser to be creditworthy pursuant to the

50

SOUTHTRUST FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
October 31, 2001 (Unaudited) (Continued)

guidelines and/or standards reviewed or established by the Trustees. Risks may arise from the potential inability of counterparties to honor the terms of the repurchase agreement. Accordingly, the Company could receive less than the repurchase price on the sale of collateral securities.            
 
          Investment Income, Expenses and Distributions—Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized/accreted as required by the Internal Revenue Code, as amended (the “Code”) and for financial reporting purposes (see Changes in Accounting Principle note). Dividend income and distributions to shareholders are recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at fair value.
 
          Change in Accounting Principle—As required, effective May 1, 2001, the Company adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies. The Income Fund and Bond Fund began amortizing long-term market premiums and discounts. Prior to May 1, 2001, the Income Fund and Bond Fund did not amortize long-term market premiums and discounts. The cumulative effect of this accounting change had no impact on total net assets of these Funds, but resulted in the following adjustments based on securities held by the funds on October 31, 2001:
 
    
Undistributed
(distribution in excess of)
Net Investment Income
    
Accumulated net
realized gain (loss)
on Investments
    
Unrealized
Appreciation/
Depreciation
Income Fund
      
$(296,846
)
        
$105,263
        
$191,583
 
Bond Fund
      
(113,757
)
        
1,259
        
112,498
 
 
          The effect of this change for the six months ended October 31, 2001 was as follows:
 
    
Undistributed
(distribution in excess of)
Net Investment Income
    
Accumulated net
realized gain (loss)
on Investments
    
Unrealized
Appreciation/
Depreciation
Income Fund
      
$(129,564
)
        
$121,464
        
$   8,100
 
Bond Fund
      
(241,087
)
        
210,474
        
30,613
 
 
          The statement of changes in net assets and financial highlights for prior periods have not been restated to reflect this change in presentation. For the Funds of the Company not indicated above, the adoption of the guide did not have any effect on their financial statements.
 

51

SOUTHTRUST FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
October 31, 2001 (Unaudited) (Continued)

          Federal Taxes—It is the Company’s policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of its income. Accordingly, no provision for federal tax is necessary.
 
          At April 30, 2001, the following Funds had capital loss carryforwards for federal tax purposes, which will reduce each Fund’s taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve each Fund of any liability for federal tax. Pursuant to the Code, such capital loss carryforwards will expire as follows:
 
  
Expiration Year
  
Total Capital Loss
Carryforwards
Fund
  
2005
  
2006
  
2008
  
2009
  
Income
  
$1,448,015
  
$73,422
  
$    280,958
  
$    591,780
    
$2,394,175
 
Bond
  
—
  
—
  
1,071,571
  
1,748,936
    
2,820,507
 
Alabama
     Tax-Free
     Income
  
—
  
—
  
89,761
  
18,217
    
107,978
 
Growth
  
—
  
—
  
—
  
1,082,264
    
1,082,264
 
 
          When-Issued and Delayed Delivery Transactions—The Company may engage in when-issued or delayed delivery transactions. The Company records when-issued securities on the trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.
 
          Use of Estimates—The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated.
 
          Securities Lending—Under guidelines adopted by the Trustees, each Fund may lend portfolio securities to brokers/dealers and other financial organizations in order to generate additional income. Loans of portfolio securities by a Fund will be collateralized by cash, letters of credit or U.S.

52

SOUTHTRUST FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
October 31, 2001 (Unaudited) (Continued)

government securities which are maintained at an amount equal to at least 100% of the current market value of the loaned securities.
 
          Collateral is either held as cash or reinvested in short-term securities including overnight repurchase agreements, commercial paper, master notes, floating rate corporate notes (with at least quarterly reset rates) and money market funds. The Fund returns a portion of the interest on any cash received as collateral and continues to receive interest or dividends on securities loaned. Included in interest income is $13,733 for Bond Fund attributable to income earned on securities lending transactions.
 
          Loans will be made to firms deemed by the Company’s adviser to be of good financial standing and will not be made unless, in the judgement of the Company’s adviser, the consideration to be earned from such loans would justify the risk. The risks associated with lending portfolio securities consist of possible decline in value of collateral, possible delays receiving additional collateral or in the recovery of the loaned securities or expenses from enforcing the Fund’s rights should the borrower of the securities fail financially.
 
          As of October 31, 2001, the value of securities loaned, the payable on collateral due to broker and the value of reinvested cash collateral securities were as follows:
 
Fund
  
Market Value
of Securities
Loaned
  
Payable on
Collateral Due
to Broker
  
Market Value
of Reinvested
Collateral
Securities
Bond
  
$36,491,285
  
$37,392,375
  
$37,392,375
 
Cash collateral is held in a segregated account.
 
          Restricted Securities—Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale, at the issuer’s expense either upon demand by the Fund or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund’s restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined by the Fund’s pricing committee.

53

SOUTHTRUST FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
October 31, 2001 (Unaudited) (Continued)

 
          Other—Investment transactions are accounted for on a trade date basis.
 
(3)   Shares of Beneficial Interest
 
The Master Trust Agreement permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (par value of $0.001). Transactions in shares were as follows:
 
 
U.S. Treasury
  
Income
 
Six Months
Ended
October 31,
2001
 
Year Ended
April 30,
2001
  
Six Months
Ended
October 31,
2001
 
Year
Ended
April 30,
2001
Shares sold
 
1,245,055,557
 
1,958,777,972
    
1,213,507
   
1,659,756
Shares issued to shareholders in payment
    of distributions declared
 
7,000,231
 
19,667,365
    
38,107
   
71,146
Shares redeemed
 
(1,194,351,361
)
 
(1,689,741,589
)
    
(850,143
)
   
(1,380,960
)
 
 
    
   
Net change resulting from share
    transactions
 
57,704,427
 
288,703,748
    
401,471
   
349,942
 
 
    
   
 
  
Bond
  
Alabama Tax-Free
Income
  
Six Months
Ended
October 31,
2001
 
Year
Ended
April 30,
2001
  
Six Months
Ended
October 31,
2001
 
Year
Ended
April 30,
2001
Shares sold
    
1,220,867
   
4,031,826
    
665,732
   
956,927
Shares issued to shareholders in payment of
    distributions declared
    
269,683
   
543,120
    
15,626
   
23,642
Shares redeemed
    
(1,036,683
)
   
(2,367,079
)
    
(364,073
)
   
(1,250,956
)
    
   
    
   
Net change resulting from share transactions
    
453,867
   
2,207,867
    
317,285
   
(270,387
)
    
   
    
   
 
  
Value
 
Growth
  
Six Months
Ended
October 31,
2001
 
Year
Ended
April 30,
2001
 
Six Months
Ended
October 31,
2001
 
Year
Ended
April 30,
2001
Shares sold
    
1,445,457
   
3,248,648
   
861,724
   
2,765,879
Shares issued to shareholders in payment of
    distributions declared
    
40,802
   
2,008,391
   
—
   
763,368
Shares redeemed
    
(1,489,017
)
   
(4,383,406
)
   
(1,356,575
)
   
(1,037,822
)
    
   
   
   
Net change resulting from share transactions
    
(2,758
)
   
873,633
   
(494,851
)
   
2,491,425
    
   
   
   

54

SOUTHTRUST FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
October 31, 2001 (Unaudited) (Continued)

 
(4)   Investment Adviser Fee and Other Transactions with Affiliates
 
          Investment Adviser Fee—SouthTrust Investment Advisors, the Company’s investment adviser (the “Adviser”), receives for its services an annual investment adviser fee based on a percentage of each Fund’s average daily net assets as shown below. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.
 
Fund
  
Annual
Rate
U.S. Treasury
  
0.50
%
  
Income
  
0.60
%
  
Bond
  
0.60
%
  
Alabama Tax-Free Income
  
0.60
%
  
Value
  
0.75
%
  
Growth
  
0.75
%
  
 
          Administrative Fee—Federated Services Company (“FServ”) provides the Company with certain administrative personnel and services. The fee is based on a scale that ranges from 0.15% to 0.075% of the average aggregate net assets of the Company for the period. FServ may voluntarily choose to waive a portion of its fee. FServ can modify or terminate this voluntary waiver at any time at its sole discretion.
 
          Distribution Services Fee—The Company has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act on behalf of Income, Alabama Tax-Free Income and Growth. Under the terms of the Plan, the Funds will compensate Federated Securities Corp., (“FSC”) the principal distributor, from the net assets of the Funds to finance activities intended to result in the sale of the Fund’s shares. The Plan provides that the Funds may incur distribution expenses according to the following schedule annually, to compensate FSC.
 
Fund
    
Percentage of
the Average
Daily Net Assets
of Fund
Income
      
0.25
 %
        
Alabama Tax-Free Income
      
0.25
 %
        
Growth
      
0.25
 %
        
 

55

SOUTHTRUST FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
October 31, 2001 (Unaudited) (Continued)

          During the six months ended October 31, 2001, none of the above mentioned Funds incurred a distribution services fee.
 
          Shareholder Services Fee—Under the terms of a Shareholder Services Agreement with the Adviser, the Funds will pay the Adviser up to 0.25% of average daily net assets of the Funds for the period. The fee paid to the Adviser is used to finance certain services for shareholders and to maintain shareholder accounts. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion.
 
          Transfer and Dividend Disbursing Agent Fees and Expenses—FServ through its subsidiary Federated Shareholder Services Company (“FSSC”), serves as transfer and dividend disbursing agent for the Company. The fee paid to FSSC is based on the size, type, and number of accounts and transactions made by shareholders.
 
          Portfolio Accounting Fees—FServ also maintains the Company’s accounting records for which it receives a fee. The fee is based on the level of each Fund’s average net assets for the period, plus out-of-pocket expenses.
 
          Deferred Compensation Plan—The Company’s independent Trustees may participate in a deferred compensation plan. Under the deferred compensation plan, Trustees may elect to defer 50% or 100% of the compensation they earn as Trustees. Amounts deferred will be invested in Shares of one or more eligible Funds as defined under the Plan.
 
          General—Certain of the Officers of the Company are Officers and Directors or Trustees of the above companies.

56

SOUTHTRUST FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
October 31, 2001 (Unaudited) (Continued)

 
(5)   Investment Transactions
 
Purchases and sales of investments, excluding long-term U.S. government securities, short-term securities (and in-kind contributions), for the six-months ended October 31, 2001, were as follows:
 
Fund
  
Purchases
  
Sales
Income
  
$16,642,038
  
$14,557,966
     
Bond
  
51,643,014
  
45,698,490
     
Alabama Tax-Free Income
  
10,137,341
  
8,073,323
     
Value
  
72,013,518
  
78,712,556
     
Growth
  
11,388,501
  
15,347,295
     
 
Purchases and sales of long-term U.S. government securities for the period ended October 31, 2001, were as follows:
 
Fund
  
Purchases
  
Sales
Income
  
$23,626,945
  
$21,204,262
     
Bond
  
62,674,556
  
63,726,770
     
 
(6)   Concentration of Credit Risk
 
Since Alabama Tax-Free Income invests a substantial portion of its assets in issuers located in one state, it will be more susceptible to factors adversely affecting issuers of that state than would be a comparable tax-exempt mutual fund that invests nationally. In order to reduce the credit risk associated with such factors, at October 31, 2001, 56.6% of the securities in the portfolio of investments are backed by letters of credit or bond insurance of various financial institutions and financial guaranty assurance agencies. The percentage of investments insured by or supported (backed) by a letter of credit from any one institution or agency did not exceed 32.8% of total investments.

57
 
TRUSTEES
 
 
Charles G. Brown III
 
Russell W. Chambliss
 
Thomas M. Grady
 
Lawrence W. Greer
 
Billy L. Harbert, Jr.
 
William O. Vann
 
George Jones
   
   
 
OFFICERS
 
 
Charles G. Brown, III
 
    Chairman
 
Edward C. Gonzales
 
    President
 
Beth S. Broderick
 
    Vice President and Treasurer
 
Peter J. Germain
 
    Vice President
 
John D. Johnson
 
    Secretary
 
Victor R. Siclari
 
    Assistant Secretary

This report is authorized for distribution to prospective investors only when preceded or accompanied by the Company’s prospectuses, which contain facts concerning the Funds’ objectives and policies, management fees, expenses and other information.

58

 

 

 

 

 

 

 

 

 

 

 

 

No Bank Guarantee
Not FDIC Insured
May Lose Value

 

 

 

 

 

No Bank Guarantee
Not FDIC Insured
May Lose Value

 

Cusip 844734103
Cusip 844734400
Cusip 844734202
Cusip 844734608
Cusip 844734301
Cusip 844734509
3110408 (12/01)

Investment Adviser: SouthTrust Investment Advisors
Distributor: Federated Securities Corp.