As Filed with the Securities and Exchange Commission on October 9, 1996
Registration No. 333-09703 ,811-07745
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1 /x/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1 /x/
(Check appropriate box or boxes.)
NATIONS LIFEGOAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
One NationsBank Plaza
33rd Floor
Charlotte, North Carolina 28255
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (800) 626-2275
The Corporation Trust Company
32 South Street
Baltimore, Maryland 21202
(Name and Address of Agent for Service)
COPIES TO:
Robert M. Kurucza, Esq. Carl Frischling, Esq.
Marco E. Adelfio, Esq. Kramer, Levin, Naftalis & Frankel
Morrison & Foerster LLP 919 Third Avenue
2000 Pennsylvania Avenue, N.W., Suite 5500 New York, New York 10022
Washington, D.C. 20006
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after the
effective date of this registration statement.
It is expected that the securities will be sold to the public as soon as
possible after the registration statement is effective.
The Registration hereby elects to register an indefinite number of shares of its
Common Stock, $.001 par value, under the Securities Act of 1933, pursuant to
Rule 24f-2(a) (1) under the Investment Company Act of 1940, as amended.
<PAGE>
EXPLANATORY NOTE
This Pre-Effective Amendment to the Registration Statement on Form N-1A
(the "Registration Statement") of Nations LifeGoal Funds, Inc. (the "Company")
is being filed to reflect new names for three series: LifeGoal Growth
Portfolio, LifeGoal Balanced Growth Portfolio and LifeGoal Income and Growth
Portfolio (collectively, the "LifeGoal Portfolios"), an audited statement of
assets and liabilities as of October 1, 1996, and certain non-material changes.
Each of the LifeGoal Portfolios will invest substantially all of its assets in
certain other portfolios within the Nations Fund Family (the "underlying Nations
Funds") as a "fund of funds".
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
PART A PART A
<S> <C> <C>
Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary
Item 3. Condensed Financial Information Not Applicable
Item 4. General Description of Registrant Objectives; How Objectives Are
Pursued; Description of Underlying
Nations Funds
Item 5. Management of the Fund How the LifeGoal Portfolio Are Managed;
Shareholder Servicing and Distribution
Plans (for Investor A and Investor C
Shares); Shareholder Administration
Arrangements (for Primary B Shares)
Item 6. Capital Stock and Other Securities How Dividends and Distributions Are
Made; Tax Information; Organization
and History
Item 7. Purchase of Securities Being Expenses Summary; How Performance
Offered Is Shown; How to Buy Shares; How The
LifeGoal Portfolio Value Their Shares
Item 8. Redemption or Repurchase How to Redeem Shares;
How to Exchange Shares
Item 9. Pending Legal Proceedings Not Applicable
PART B PART B
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History Introduction
Item 13. Investment Objectives and Policies Additional Information on the LifeGoal
Portfolio Investments; Additional
Information on Underlying Nations
Funds Investments
<PAGE>
Item 14. Management of the Fund Directors and Officers of the LifeGoal
Portfolio; Investment Advisory,
Administration, Custody, Transfer
Agency, Shareholder Servicing and
Distribution Agreements
Item 15. Control Persons and Principal Miscellaneous
Holders of Securities
Item 16. Investment Advisory and Other Investment Advisory, Administration,
Services Custody, Transfer Agency, Shareholder
Servicing, Shareholder Administration
and Distribution Agreements; Counsel
Item 17. Brokerage Allocation and Other Not Applicable
Practices
Item 18. Capital Stock and Other Securities Description of Shares
Item 19. Purchase, Redemption and Pricing Purchases and Redemptions, Net Asset
of Securities Being Offered Value Determination
Item 20. Tax Status Additional Information Concerning
Taxes
Item 21. Underwriters Distributor, Distribution Plans and
Shareholder Servicing Plans for Investor
Shares, Expenses
Item 22. Calculation of Performance Data Additional Information on Performance
Item 23. Financial Statements Independent Accountant and Reports
Report of Independent Accountant;
Statement of Assets and Liabilities
at October 1, 1996
</TABLE>
<PAGE>
Prospectus
Primary A Shares
October 15, 1996
LIFEGOAL PORTFOLIOS
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
NATIONS FUND
Investment Adviser: NationsBanc Advisors, Inc.
Investment Sub-Adviser: TradeStreet Investment Associates, Inc.
Distributor: Stephens Inc.
<PAGE>
Prospectus
Primary A Shares
October 15, 1996
This Prospectus describes three diversified
investment portfolios, LifeGoal Growth Portfolio,
LifeGoal Balanced Growth Portfolio, and LifeGoal
Income and Growth Portfolio (each a "LifeGoal
Portfolio" and, collectively, the "LifeGoal
Portfolios"), of Nations LifeGoal Funds, Inc. (the
"Company"), an open-end management investment
company in the Nations Fund Family. The LifeGoal
Portfolios invest substantially all of their assets
in certain other funds within the Nations Fund
Family. These underlying funds are referred to in
this Prospectus as "Nations Funds". This Prospectus
describes one class of shares of each LifeGoal
Portfolio -- Primary A Shares.
This Prospectus sets forth concisely the information
about each LifeGoal Portfolio that a prospective
purchaser of Primary A Shares should consider before
investing. Investors should read this Prospectus and
retain it for future reference. Additional
information about the LifeGoal Portfolios is
contained in a separate Statement of Additional
Information (the "SAI") that has been filed with the
Securities and Exchange Commission (the "SEC") and
is available upon request without charge by writing
or calling the Nations Fund Family at its address or
telephone number shown below. The SAI for the
LifeGoal Portfolios, dated the same date as this
Prospectus, is incorporated by reference in its
entirety into this Prospectus. NationsBanc Advisors,
Inc. ("NBAI") is the investment adviser to the
LifeGoal Portfolios. TradeStreet Investment
Associates, Inc. ("TradeStreet") is the investment
sub-adviser to the LifeGoal Portfolios. As used in
this Prospectus, the "Adviser" refers to NBAI and/or
TradeStreet as the context may require.
SHARES OF THE NATIONS FUND FAMILY ARE NOT DEPOSITS
OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, NATIONSBANK, N.A. ("NATIONSBANK") OR
ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT INSURED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR
ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE
LIFEGOAL PORTFOLIOS INVOLVES CERTAIN RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
NATIONSBANK AND CERTAIN OF ITS AFFILIATES PROVIDE
CERTAIN ADVISORY AND OTHER SERVICES TO THE NATIONS
FUND FAMILY, FOR WHICH THEY ARE COMPENSATED.
STEPHENS INC., WHICH IS NOT AFFILIATED WITH
NATIONSBANK, IS THE SPONSOR AND ADMINISTRATOR AND
SERVES AS THE DISTRIBUTOR FOR THE LIFEGOAL
PORTFOLIOS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
LIFEGOAL PORTFOLIOS:
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
For Portfolio information
call:
1-800-626-2275
Nations Fund Family
c/o Stephens Inc.
One NationsBank Plaza
33rd Floor
Charlotte, NC 28255
NATIONS FUND
<PAGE>
Table Of Contents
About The LifeGoal Portfolios
Prospectus Summary 3
Expenses Summary 4
Objectives 6
How Objectives Are Pursued 7
Description Of Underlying Nations Funds
-- Investment Objectives, Policies And Practices 9
How Performance Is Shown 13
How The LifeGoal Portfolios Are Managed 14
Organization And History 17
About Your
Investment
How To Buy Shares 17
How To Redeem Shares 18
How To Exchange Shares 18
How The LifeGoal Portfolios Value Their Shares 19
How Dividends And Distributions Are Made;
Tax Information 19
No person has been authorized to give any
information or to make any representations not
contained in this Prospectus, or in the LifeGoal
Portfolios' SAI incorporated herein by reference, in
connection with the offering made by this Prospectus
and, if given or made, such information or
representations must not be relied upon as having
been authorized by the LifeGoal Portfolios or the
distributor. This Prospectus does not constitute an
offering by LifeGoal Portfolios or by the
distributor in any jurisdiction in which such
offering may not lawfully be made.
2
<PAGE>
About The LifeGoal Portfolios
Prospectus Summary
(Bullet) Type of Company: Open-end management investment company.
(Bullet) Investment Objectives and Policies:
(Bullet) LifeGoal Growth Portfolio's investment objective is to seek capital
appreciation through exposure to a variety of equity market segments.
(Bullet) LifeGoal Balanced Growth Portfolio's investment objective is
to seek total return through a balanced portfolio of equity
and fixed income securities.
(Bullet) LifeGoal Income and Growth Portfolio's investment
objective is to seek current income and modest
growth to protect against inflation and to preserve
purchasing power.
The LifeGoal Portfolios are designed for long-term
investors seeking the benefits of asset allocation
and diversification. Unlike traditional mutual
funds, which invest directly in individual
securities, the LifeGoal Portfolios pursue their
investment objectives by allocating their assets
among various Nations Funds.
(Bullet) Investment Adviser: NationsBanc Advisors, Inc. serves as the investment
adviser to the LifeGoal Portfolios. NBAI also advises more than 43
other funds in the Nations Fund Family. TradeStreet Investment
Associates, Inc. provides sub-advisory services to the LifeGoal
Portfolios and to more than 39 other funds in the Nations Fund Family.
(Bullet) Dividends and Distributions: Each LifeGoal Portfolio declares and pays
dividends from net investment income quarterly. Each LifeGoal
Portfolio's net realized capital gains, including net short-term
capital gains, are distributed at least annually.
(Bullet) Risk Factors: Although the Adviser seeks to achieve the investment
objective of each LifeGoal Portfolio, there is no assurance that it
will be able to do so. Investments in a LifeGoal Portfolio are not
insured against loss of principal. Investments by a LifeGoal Portfolio
in shares of a Nations Fund that holds stocks are subject to stock
market risk, which is the risk that the value of the stocks held by
Nations Funds may decline over short or even extended periods.
Investments by a LifeGoal Portfolio in shares of a Nations Fund that
holds debt securities are subject to interest rate risk, which is the
risk that the value of the debt securities, including securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities
("U.S. Government Obligations"), held by Nations Funds may be adversely
affected by changes in market interest rates. The value of Nations
Funds' investments in debt securities will tend to decrease when
interest rates rise and increase when interest rates fall. In addition,
debt securities which are not backed by the U.S. Government are subject
to credit risk, which is the risk that the issuer may not be able to
pay principal and/or interest when due. Certain of the Nations Funds
may invest portions, and in some cases substantially all, of their
assets in foreign securities. Foreign securities present unique
investment risks, including risks associated with currency
fluctuations, markets that tend to be less developed and more volatile
than U.S. markets and markets that are characterized by less
governmental supervision and lower disclosure standards. Certain of
Nations Funds' investments constitute derivative securities. Certain
types of derivative securities can, under certain circumstances,
significantly increase an investor's exposure to market or other risks.
For a discussion of these and other factors, see "How Objectives Are
Pursued -- Principal Risk Considerations."
(Bullet) Minimum Purchase: $500,000 minimum initial investment per record
holder. See "How To Buy Shares."
3
<PAGE>
Expenses Summary
Expenses are one of several factors to consider when investing in a LifeGoal
Portfolio. The following tables summarize estimated shareholder transaction and
operating expenses as a percentage of average net assets for Primary A Shares of
each LifeGoal Portfolio. The Examples show the cumulative expenses attributable
to a hypothetical $1,000 investment in each LifeGoal Portfolio over specified
periods.
LIFEGOAL PORTFOLIOS PRIMARY A SHARES
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
LifeGoal
LifeGoal Growth Balanced Growth
Portfolio Portfolio
<S> <C> <C>
Sales Load Imposed on Purchases None None
Deferred Sales Load None None
<CAPTION>
LifeGoal Income
and Growth
Portfolio
Sales Load Imposed on Purchases None
Deferred Sales Load None
</TABLE>
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
LifeGoal
LifeGoal Growth Balanced Growth
Portfolio Portfolio
<S> <C> <C>
Management Fees .25% .25%
Other Expenses .0% .0%
Total Operating Expenses .25% .25%
<CAPTION>
LifeGoal Income
and Growth
Portfolio
Management Fees .25%
Other Expenses .0%
Total Operating Expenses .25%
</TABLE>
Examples:
You would pay the following expenses on a $1,000 investment in Primary A Shares
of the indicated LifeGoal Portfolio, assuming indirect expenses (the LifeGoal
Portfolios' share of the expenses incurred by the underlying Nations Funds) at
the midpoint of the after waiver ranges shown below, and further assuming: (1) a
5% annual return and (2) redemption at the end of each time period.
[CAPTION]
<TABLE>
<CAPTION>
LifeGoal
LifeGoal Growth Balanced Growth
Portfolio Portfolio
<S> <C> <C>
1 Year $12 $11
3 Years $38 $34
<CAPTION>
LifeGoal Income
and Growth
Portfolio
1 Year $9
3 Years $29
</TABLE>
The purpose of the foregoing tables is to assist an investor in understanding
the various shareholder transaction and operating expenses that an investor in
Primary A Shares of a LifeGoal Portfolio can expect. The figures in the above
tables show the basis on which payments will be made, except that Other Expenses
are estimated for the LifeGoal Portfolios' current fiscal year and the Examples
include indirect expenses for the underlying Nations Funds' most recent fiscal
year (or estimates thereof for new funds). For more complete descriptions of the
LifeGoal Portfolios' operating expenses, see "How The LifeGoal Portfolios Are
Managed."
THE FOREGOING SHOULD NOT BE CONSIDERED TO BE AN ACTUAL REPRESENTATION OF PAST OR
FUTURE PERFORMANCE. ACTUAL EXPENSES AND RATES OF RETURN MAY BE GREATER OR LESS
THAN THOSE SHOWN.
4
<PAGE>
Expense Ratios For The Underlying Nations Funds (Primary A Shares)
The following table provides the annualized expense ratios for Primary A Shares
of each of the selected underlying Nations Fund's investments for its fiscal
period ended March 31, 1996.
<TABLE>
<CAPTION>
(after fee waivers
and/or expense
reimbursements)
<S> <C>
Nations Disciplined Equity Fund 1.02%
Nations Capital Growth Fund .96%
Nations Value Fund .96%
Nations Equity Income Fund .90%
Nations Managed Index Fund* .50%
Nations Emerging Growth Fund .99%
Nations Managed SmallCap Index Fund* .50%
Nations International Equity Fund 1.17%
Nations Pacific Growth Fund 1.76%
Nations Emerging Markets Fund 2.13%
Nations Prime Fund .30%
Nations Strategic Fixed Income Fund .72%
Nations Diversified Income Fund .77%
Nations Short-Intermediate Government Fund .63%
Nations Short-Term Income Fund .55%
Nations Global Government Income Fund 1.32%
* Because this Nations Fund had not commenced operations as of March 31, 1996, the expense
ratios are based on estimates for its current fiscal year.
<CAPTION>
(before fee
waivers and/or
expense
reimbursements)
Nations Disciplined Equity Fund 1.02%
Nations Capital Growth Fund .96%
Nations Value Fund .96%
Nations Equity Income Fund .90%
Nations Managed Index Fund* .70%
Nations Emerging Growth Fund .99%
Nations Managed SmallCap Index Fund* .70%
Nations International Equity Fund 1.18%
Nations Pacific Growth Fund 1.76%
Nations Emerging Markets Fund 2.13%
Nations Prime Fund .37%
Nations Strategic Fixed Income Fund .83%
Nations Diversified Income Fund .87%
Nations Short-Intermediate Government Fund .86%
Nations Short-Term Income Fund .88%
Nations Global Government Income Fund 1.32%
* Because this Nations Fund had not commenced operations as of March 31, 1996, the expense
ratios are based on estimates for its current fiscal year.
</TABLE>
LifeGoal Portfolios' Indirect Expenses
Based on the foregoing figures and the expected percentage investment ranges in
the underlying Nations Funds, the range of the weighted average indirect expense
ratio for each LifeGoal Portfolio is as follows:
<TABLE>
<CAPTION>
(after fee waivers
and/or expense
reimbursements)
<S> <C>
LifeGoal Growth Portfolio .86% to 1.01%
LifeGoal Balanced Growth Portfolio .89% to .94%
LifeGoal Income and Growth Portfolio .56% to .73%
<CAPTION>
(before fee
waivers and/or
expense
reimbursements)
LifeGoal Growth Portfolio .92% to 1.05%
LifeGoal Balanced Growth Portfolio .97% to 1.04%
LifeGoal Income and Growth Portfolio .77% to .91%
</TABLE>
The indirect expense ratios fluctuate within these ranges depending upon how
assets are allocated among the Nations Funds. The LifeGoal Portfolios will be
invested in the Primary A Shares of the underlying Nations Funds and, under
normal market conditions, will be allocated among the various fund categories in
the percentages shown below. Under extraordinary circumstances, a LifeGoal
Portfolio's investment in one or more Nations Funds might exceed these ranges.
For temporary defensive purposes, any LifeGoal Portfolio may invest up to 100%
of its assets in Nations Prime Fund.
5
<PAGE>
Objectives
(Bullet) LifeGoal Growth Portfolio -- LifeGoal Growth Portfolio's investment
objective is to seek capital appreciation through exposure to a variety
of equity market segments.
<TABLE>
<CAPTION>
Fund Category Range
<S> <C>
Large-Capitalization Domestic Equity Funds 35-75%
Small/Mid-Capitalization Domestic Equity Funds 20-35%
Core International Equity Funds 10-20%
Non-Core International Equity Funds 0-10%
<CAPTION>
Fund Category Funds
Large-Capitalization Domestic Equity Funds Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Value Fund
Small/Mid-Capitalization Domestic Equity Funds Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Core International Equity Funds Nations International Equity Fund
Non-Core International Equity Funds Nations Emerging Markets Fund
Nations Pacific Growth Fund
</TABLE>
(Bullet) LifeGoal Balanced Growth Portfolio -- LifeGoal Balanced Growth
Portfolio's investment objective is to seek total return through a
balanced portfolio of equity and fixed income securities.
<TABLE>
<CAPTION>
Fund Category Range
<S> <C>
Large-Capitalization Domestic Equity Funds 15-35%
Small/Mid-Capitalization Domestic Equity Funds 10-20%
Core International Equity Funds 5-15%
Core Bond Funds 40-60%
<CAPTION>
Fund Category Funds
Large-Capitalization Domestic Equity Funds Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Value Fund
Small/Mid-Capitalization Domestic Equity Funds Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Core International Equity Funds Nations International Equity Fund
Core Bond Funds Nations Diversified Income Fund
Nations Strategic Fixed Income Fund
Nations Global Government Income Fund
</TABLE>
(Bullet)LifeGoal Income and Growth Portfolio -- LifeGoal Income and Growth
Portfolio's investment objective is to seek current income and modest
growth to protect against inflation and to preserve purchasing power.
<TABLE>
<CAPTION>
Fund Category Range
<S> <C>
Large-Capitalization Domestic Equity Funds 10-30%
Core International Equity Funds 0-10%
Short Duration Bond Funds 50-90%
Money Market Funds 0-20%
<CAPTION>
Fund Category Funds
Large-Capitalization Domestic Equity Funds Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Value Fund
Core International Equity Funds Nations International Equity Fund
Short Duration Bond Funds Nations Short-Term Income Fund
Nations Short-Intermediate Government
Fund
Money Market Funds Nations Prime Fund
</TABLE>
The LifeGoal Portfolios are intended primarily for long-term investors. The
Portfolios are structured as "funds of funds" that allocate substantially all of
their assets to investments in Primary A Shares of various Nations Funds. The
performance of the LifeGoal Portfolios will, therefore, correspond to the
performance of the various underlying Nations Funds. Additional information
about the underlying Nations Funds, including their investment objectives,
investment policies and practices, is set forth below under "Descriptions of
Underlying Nations Funds." The Adviser allocates and reallocates each LifeGoal
Portfolio's assets among the underlying Nations Funds identified above, and
potentially other Nations Funds, based on the percentage ranges shown above for
the various fund categories. As discussed below under "The Asset Allocation
Process," a LifeGoal Portfolio's actual investment allocation may deviate from
the percentage ranges shown above, over the short or long term.
6
<PAGE>
How Objectives Are Pursued
Benefits of Asset Allocation
For most investors, choosing the mix of asset classes is the most important
investment decision they can make. Asset allocation is the single greatest
determinant of an investor's return and risk. It is the process of developing a
diversified portfolio by mixing different asset classes in varying portions to
gain exposure to the different return/risk characteristics of each asset class.
Market segments (i.e., international stocks, domestic stocks, bonds) tend to
react in different ways to changes in economic conditions. Therefore, an
investment approach that combines various market segments and asset classes may
reduce overall portfolio volatility.
The assets of each LifeGoal Portfolio are allocated among various asset classes
through their investment in different fund categories. Each LifeGoal Portfolio
has its own asset allocation strategy which gives it a distinctive risk profile
and offers different return potential. Investors should select the LifeGoal
Portfolio (or Portfolios) which best matches their investment goals, risk
tolerance and investment horizon.
In general, the greater the LifeGoal Portfolio's allocation to equity funds, the
greater the potential return and risk of price decline. Because of equity funds'
greater risks, investors in the LifeGoal Portfolios that have a higher
allocation to equity funds should have a longer investment horizon.
Although the Adviser will seek to achieve the investment objective of each
LifeGoal Portfolio, there is no assurance that it will be able to do so. No
single LifeGoal Portfolio should be considered, by itself, to provide a complete
investment program for any investor. The net asset value of the shares of a
LifeGoal Portfolio fluctuates based on fluctuations in the values of the
underlying Nations Funds' shares, which, in turn, fluctuate based on market
conditions and other factors. Therefore, investors should not rely upon LifeGoal
Portfolios for short-term financial needs. The LifeGoal Portfolios are not
intended to provide a vehicle for participating in short-term swings in the
stock market, and their shares are not insured against loss of principal.
The Asset Allocation Process
Subject to the general supervision of the Company's Board of Directors, the
Adviser is responsible for allocating and reallocating each LifeGoal Portfolio's
assets among the Nations Funds in which it invests, and for rebalancing such
portfolio allocations. In this context, allocation is the process of setting or
changing the weightings of the different fund categories and Nations Funds
within a particular LifeGoal Portfolio's portfolio. The "weightings" of the
different fund categories and Nations Funds within a particular LifeGoal Fund's
portfolio are the percentage targets that the Adviser sets for investment in a
particular fund category or Nations Fund. All fund category weightings will be
within the overall percentage ranges shown above. Rebalancing is the process of
bringing portfolio allocations back into alignment with the applicable
weightings. A LifeGoal Portfolio's investments are continuously monitored and
are reallocated as often as the Adviser deems appropriate. In addition,
portfolio allocations and performance are reviewed at least quarterly for
rebalancing at the discretion of the Adviser.
Although the Adviser may rebalance each LifeGoal Portfolio's holdings quarterly,
it expects to rebalance less often. Thus, over time, it is likely that the
percentage of a particular LifeGoal Portfolio's assets actually invested in a
particular Nations Fund or fund category will not correspond precisely with the
applicable weightings. Also, depending on the frequency of rebalancings, the
percentage of a particular LifeGoal Portfolio's assets actually invested in a
particular fund category at any given time may deviate from the percentage
ranges shown above, and such deviation may continue for some time.
The Adviser has adopted certain policies designed to reduce the extent of such
deviations. For example, if any fund category percentage ranges are exceeded,
the Adviser will allocate new investment dollars to the other fund categories.
Likewise, the Adviser will allocate new investment dollars to fund categories
whose minimum percentages have not been met. Redemption requests, however, will
generally be met by redeeming shares of underlying Nations Funds according to
the applicable weightings.
Determining the asset allocation applicable to each LifeGoal Portfolio is a two
step process. The first step is determining the broad asset classes for each
LifeGoal Portfolio -- large and small capitalization domestic stocks, foreign
stocks, bonds and money market securities. In making this determination, the
Adviser will consult the relevant historical data for the returns of each asset
class in various economic scenarios. Those returns will be reviewed in the
context of the Adviser's outlook for the economy and markets and adjusted for
reasonableness. The second step in the process is to determine the particular
Nations Funds in which each LifeGoal Portfolio will invest. The Adviser looks at
historic returns and valuations to determine which Nations Funds are most
appropriate. Determining how the individual Nations Funds may interact with one
another within a portfolio is a critical part of this second step.
7
<PAGE>
Although it is expected that the LifeGoal Portfolios will invest in the Nations
Funds identified in "Description of Underlying Nations Funds," the Adviser has
the discretion to change the particular Nations Funds used as underlying
investments for the LifeGoal Portfolios. Among other things, the Adviser may
substitute or include other funds from the Nations Fund Family, including any
introduced subsequent to this Prospectus, as permissible investments for the
LifeGoal Portfolios.
General Characteristics and Risk Factors of the Major Asset Classes
The underlying Nations Funds invest in various stocks, bonds and money market
securities. This section provides a brief summary of the general characteristics
and overall risk factors associated with these asset classes. Additional
information is provided under "Description of Underlying Nations Funds" below
and in the prospectuses of the underlying Nations Funds.
Common stocks represent ownership in a company. Stock prices move with changes
in a company's current earnings and its prospects for the future, and with
overall stock market conditions. Stocks offer the potential for price
appreciation and rising dividends. While smaller companies usually reinvest
their earnings back into the company and therefore pay minimal, if any,
dividends, they offer the possibility of greater appreciation.
Historically, stocks have provided higher returns than bonds or money market
securities. Therefore, they have also provided the greatest protection against
inflation and the resulting erosion of purchasing power. However, the additional
return has been accompanied by additional volatility. Equity investors should
have a long-term investment horizon and be willing to accept the inevitable
periods of market declines.
Bonds are a contract. The issuer has an obligation to pay a specified rate of
interest (which may be fixed or variable) at specified times and to repay the
bond's principal value upon maturity. Bonds are subject to credit risk and to
interest rate risk. Credit risk refers to the possibility that a bond's price
may fall due to a credit downgrade or a principal or interest payment default.
Interest rate risk refers to a bond's price movement in response to changes in
market interest rates. As a general rule, when market interest rates rise, bond
prices fall. Typically, the longer the maturity of a bond, the greater the
potential price fluctuation.
Money market securities are short term debt obligations issued primarily by the
U.S. Government, government agencies or corporations. High quality money market
securities are very low risk investments; their low risk, however, is
accompanied by lower potential returns relative to other investments.
Investment Company Securities: Each of the LifeGoal Portfolios intends, as a
fundamental policy, to concentrate investments by investing 25% or more of its
total assets in the mutual fund industry.
Although some of the Nations Funds in which the LifeGoal Portfolios invest do
not necessarily share the same investment objective as the investing LifeGoal
Portfolio, those Nations Funds will be selected by the Adviser based on the
asset allocation process described above.
Although each LifeGoal Portfolio intends to invest substantially all of its
assets in some or all of the underlying Nations Funds, each LifeGoal Portfolio
reserves the right to invest in obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, and money market instruments
with respect to any assets not so invested in Nations Funds. It is not expected
that any LifeGoal Portfolio will invest more than 5% of its assets in any of
these direct investments.
Investment Limitations: Each LifeGoal Portfolio is subject to a number of
investment limitations, which are described in the SAI. Among other things, the
LifeGoal Portfolios' fundamental policies permit them to borrow money from banks
for temporary or emergency purposes, subject to percentage and other
limitations, and to enter into forward purchase commitments and issue multiple
classes of shares. The investment objective, policies and limitations of each
LifeGoal Portfolio, unless otherwise specified, may be changed without a vote of
the LifeGoal Portfolio's shareholders. If the investment objective, policies or
limitations of a LifeGoal Portfolio change, shareholders should consider whether
the LifeGoal Portfolio remains an appropriate investment in light of their
current position and needs.
In order to register a LifeGoal Portfolio's shares for sale in certain states, a
LifeGoal Portfolio may make commitments more restrictive than the investment
policies and limitations described in this Prospectus and the SAI. Should a
LifeGoal Portfolio determine that any such commitment is no longer in the best
interests of the LifeGoal Portfolio, it may consider terminating sales of its
shares in the states involved.
The Nations Funds also have adopted certain investment restrictions which may be
more or less restrictive than those applicable to the LifeGoal Portfolios,
thereby allowing a LifeGoal Portfolio to participate in certain investment
strategies indirectly that are prohibited under the investment restrictions
described in the
8
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LifeGoal Portfolios' SAI. The investment restrictions of the underlying Nations
Funds are set forth in their respective prospectuses and statements of
additional information.
Portfolio Turnover: Generally, LifeGoal Portfolios will purchase portfolio
securities for capital appreciation or investment income, or both, and not for
short-term trading profits. The LifeGoal Portfolios' portfolio turnover rates
are not expected to exceed 50%.
Description of Underlying Nations Funds
-- Investment Objectives, Policies and Practices
The LifeGoal Portfolios seek to achieve their investment objectives by investing
in certain Nations Funds (each, a "Fund"). The following section provides
summaries of the Nations Funds' investment objectives, policies and practices.
These summaries are intended to help investors understand some of the more
significant aspects of the underlying Nations Funds, but are not intended to be
comprehensive disclosures of all policies, practices and risks associated with
investments by the LifeGoal Portfolios in the Nations Funds. To receive a
prospectus for any underlying Nations Fund, which contains more complete
information, please call Nations Fund at 1-800 982-2271.
Equity Funds
Nations Capital Growth Fund: The Fund's investment objective is to seek growth
of capital by investing in companies that are believed to have superior earnings
growth potential. The Fund invests in larger capitalization, high-quality
companies which possess above average earnings growth potential. While the
Fund's investments will generally be made in companies which share some of the
following characteristics:
(Bullet) above-average earnings growth relative to the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index")1;
(Bullet) established operating histories, strong balance sheets and favorable
financial characteristics; and
(Bullet) above-average return on equity relative to the S&P 500 Index,
the Fund has a flexible charter which allows it to take advantage of other
opportunities. Under normal market conditions, the Fund invests at least 65% of
its total assets in common stocks. In addition to common stocks, the Fund may
also invest in preferred stocks, securities convertible into common stocks and
other types of securities having common stock characteristics such as rights and
warrants. The Fund may invest a portion of its assets in foreign securities.
Nations Disciplined Equity Fund: The Fund's investment objective is to seek
growth of capital by investing in companies that are expected to produce
significant increases in earnings per share. The Adviser believes that companies
experiencing positive earnings trends have the potential to generate significant
increases in share price. The Adviser identifies securities for inclusion in the
portfolio through a combination of quantitative and qualitative methods. Using a
computer modeling program, the portfolio manager identifies securities that have
experienced positive earnings trends. Fundamental research is used to support
the model's analysis. Under normal market conditions, the Fund invests at least
65% of its total assets in common stocks of domestic issuers. The Fund also may
invest in preferred stocks, securities convertible into common stock, warrants
and rights to purchase common stock, options, U.S. Government and corporate debt
securities and foreign securities.
Nations Emerging Growth Fund: The Fund's investment objective is to seek capital
appreciation by investing in emerging growth companies that are believed to have
superior long-term earnings growth prospects. The Fund invests primarily in
emerging growth companies with revenues between $50 million and $1.5 billion.
The Fund focuses on companies with above average earnings growth rates and
profit margins, yet the portfolio may also include positions in special
situation companies whose growth is expected to accelerate. In selecting
companies for investment, the Adviser considers overall growth prospects,
financial condition, competitive position, technology, research and development,
productivity, innovation and management strength among other factors. Under
normal market conditions, the Fund invests at least 65% of its total assets in
common stocks. The Fund also may invest in securities convertible into common
stocks and may invest a portion of its assets in foreign securities. The
volatility of emerging growth stocks is higher than that of larger companies so,
while they may have greater potential for gains, they also carry greater
downside risk.
Nations Equity Income Fund: The Fund's investment objective is to seek current
income and growth of capital by investing primarily in companies with above
average dividend yields. The investment program of the Fund is
1 "Standard & Poor's 500" is a registered service mark of Standard & Poor's
Corporation ("S&P"), which does not sponsor, and is not affiliated with,
LifeGoal Portfolios or any of the Nations Funds.
9
<PAGE>
based on several premises. First, dividends are normally a more stable and
predictable source of return than capital appreciation. Second, diversifying
equity holdings in a manner that includes every major economic sector
contributes to reduced volatility, without a commensurate reduction in expected
investment return. Finally, investing in dividend paying stocks in all the
economic sectors can provide greater income than the S&P 500 Index with less
volatility. Collectively, these traits may be combined in such a fashion as to
produce returns in excess of the market, as measured by the S&P 500 Index, on a
comparable risk basis.
Under normal circumstances, the Fund will invest at least 65% of its assets in
income-producing common stocks, including securities convertible into or
ultimately exchangeable for common stock (i.e., convertible bonds or convertible
preferred stock), whose prospects for dividend growth and capital appreciation
are considered favorable by the Adviser. The Fund also may invest its assets in
fixed-income securities (corporate and government bonds of various maturities),
preferred stocks and warrants and other debt securities, including up to 5% of
its assets in debt securities that are rated below investment grade (e.g. rated
"BB" by S&P) or if not rated, are of equivalent investment quality as determined
by the Adviser. The Fund may invest a portion of its assets in foreign
securities.
Nations Managed Index Fund: The Fund's investment objective is to seek, over the
long-term, to provide a total return which (gross of fees and expenses) exceeds
the total return of the S&P 500 Index. The Fund will invest in selected equity
securities that are included in the S&P 500 Index. The S&P 500 Index is a
capitalization weighted index consisting of 500 common stocks chosen for market
size, liquidity and industry group representation.
Unlike traditional index funds, the Fund has a "managed" aspect. The Adviser
believes that a managed equity index portfolio can provide investors with
positive incremental performance relative to the S&P 500 Index while minimizing
the downside risk of underperforming the index over time. The Adviser ranks the
attractiveness of each security in the S&P 500 Index according to a multifactor
valuation model. The Adviser then screens out the lower ranked stocks resulting
in a portfolio of 350 to 400 holdings that capture the investment
characteristics of the S&P 500 Index. Under normal conditions, the Adviser will
attempt to invest as much of the Fund's assets as is practical and, in any event
at least 65% of its total assets, in common stocks which are included in the S&P
500 Index. The Fund is expected, however, to maintain a position in high-quality
short-term debt securities and money market instruments to meet redemption
requests.
Nations Managed SmallCap Index Fund: The Fund's investment objective is to seek,
over the long-term, to provide total return which (gross of fees and expenses)
exceeds that of the Standard & Poor's SmallCap 600 Index (the "S&P 600 Index").2
The Fund will invest in selected equity securities that are included in the S&P
600 Index. The S&P 600 Index is a capitalization weighted index consisting of
600 domestic stocks which captures the economic and industry characteristics of
small stock performance.
Unlike traditional index funds, the Fund has a "managed" aspect. The Adviser
believes that a managed equity index portfolio can provide investors with
positive incremental performance relative to the S&P 600 Index while minimizing
the downside risk of underperforming the index over time. From the initial S&P
600 Index stock universe, the Adviser ranks the attractiveness of each security
according to a multifactor valuation model. The Adviser then screens out the
lower ranked stocks resulting in a portfolio of approximately 450 to 500
holdings that capture the investment characteristics of the S&P 600 Index. Under
normal conditions, substantially all of the Fund's assets, and, in any event at
least 65% of its total assets, will be invested in common stocks which are
included in the S&P 600 Index. The Fund is expected, however, to maintain a
position in high-quality short-term debt securities and money market instruments
to meet redemption requests.
Nations Value Fund: The Fund's investment objective is to seek growth of capital
by investing in companies believed to be undervalued. The Fund invests in high
quality, large capitalization stocks which are believed to be undervalued
relative to the overall stock market or other stocks within the same industry.
The principal factor considered by the Adviser in making this determination is
the ratio of a stock's price to earnings. The Adviser believes that companies
with lower price to earnings ratios are more likely to provide better
opportunities for capital appreciation. This "value" approach generally produces
a dividend yield greater than the market average. Through a combination of the
"value" approach and broad diversification among economic sectors and
industries, the Fund pursues above-average returns while seeking to avoid
above-average risk.
Under normal market conditions, at least 65% of the Fund's total assets are
invested in domestic stocks. The Fund may invest a portion of its assets in
foreign securities as well as U.S. Government Obligations and investment grade
debt securities of domestic companies.
International Funds
Nations Emerging Markets Fund: The Fund's investment objective is to seek
long-term capital growth
2 "Standard & Poor's 600" is a registered service mark of S&P.
10
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by investing primarily in equity securities of companies in emerging market
countries such as those in Latin America, Eastern Europe, the Pacific Basin, the
Far East, Africa and India. Under normal market conditions, the Fund will invest
at least 65% of its total assets in equity securities of companies in emerging
markets. The Fund also may invest in other types of instruments, including debt
securities. The Fund intends to invest in at least three different countries,
although it may, from time to time, invest all of its assets in a single
country. In such cases, events occurring in such country are more likely to
affect the Fund's investments.
Nations International Equity Fund: The Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of
non-United States companies in Europe, Australia, the Far East and other areas,
including developing countries. The Fund invests in both established and
developing markets around the world. While emphasizing established markets, the
Fund typically has some exposure to the more rapidly growing markets of the
Pacific Basin, Latin America and Eastern Europe.
Under normal market conditions, the Fund will invest at least 65% of its assets
in common stocks of non-United States companies and may invest up to 35% of its
assets in any other type of security, including convertible securities,
preferred stocks, and various debt securities. Under normal circumstances, the
Fund invests in at least three different countries. Under unusual circumstances,
however, the Fund may invest all of its assets in one or two countries. In such
cases, events occurring in those countries are more likely to affect the Fund's
investments.
Nations Pacific Growth Fund: The Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of
companies in the Pacific Basin and the Far East (excluding Japan). Under normal
market conditions, the Fund will invest at least 65% of its total assets in
securities of issuers that conduct their principal business activities in
countries of the Pacific Basin and Far East, except for Japan. The Fund intends
to invest in at least three different countries, although it may, from time to
time, invest all or a significant portion of its assets in a single country. In
such cases, events occurring in that country are more likely to affect the
Fund's investments. The Fund will focus on equity securities, but may also
invest in investment grade debt obligations.
Nations Global Government Income Fund: Nations Global Government Income Fund's
investment objective is to seek total return by investing primarily in high
quality debt securities issued by governments, banks and supranational entities
located throughout the world.
In seeking to achieve its investment objective, the Fund will invest under
normal market conditions at least 65% of its total assets in debt securities
issued or guaranteed by U.S. or foreign governments (including states, provinces
and municipalities) or their agencies, instrumentalities or subdivisions
("Government Securities"). Except for temporary defensive purposes, the Fund
will concentrate its investments in foreign Government Securities. Concentration
in this context means the investment of more than 25% of the Fund's total assets
in such securities. The Fund may invest in the debt securities of any type of
issuer, including corporations, banks and supranational entities.
The Fund, under normal market conditions, will invest in at least three
different countries. These countries may include the U.S., the countries of
Western Europe, Japan, Australia, New Zealand and Canada. If the Fund invests a
significant portion of its assets at any time in a single country, events
occurring in such country are more likely to affect the Fund's investments. The
Fund may invest in securities of issuers located in any region or country and
that are denominated in any currency. For defensive purposes, the Fund may
temporarily invest substantially all of its assets in U.S. financial markets or
in U.S. dollar-denominated instruments.
Supranational entities are international organizations jointly operated by
multiple sovereign governments including, for example, the World Bank, the
European Coal and Steel Community, the Asian Development Bank, the European
Investment Bank and the Inter-American Development Bank. Supranational entities
generally have no taxing authority and are dependent upon their members for the
funds necessary to pay principal and interest on their debt obligations.
Nations Global Government Income Fund's yield and share price will change based
on changes in domestic or foreign interest rates and in an issuer's
creditworthiness.
Bond Funds
Nations Diversified Income Fund: The Fund's investment objective is to seek
total return with an emphasis on current income by investing in a diversified
portfolio of fixed income securities. The Fund actively seeks opportunities
within various bond market sectors, balancing credit and interest rate risk.
Under normal market conditions, the Fund will invest at least 65% of the total
value of its assets in investment grade debt obligations, including fixed income
securities such as government, government agency and corporate bonds. Up to 35%
of the Fund's total assets may be invested in securities rated lower than
investment grade. Non-investment-grade debt securities are sometimes referred to
as "high yield bonds" or "junk bonds," and tend to have speculative
characteristics, generally involve more
11
<PAGE>
risk of principal and income than higher rated securities, and have yields and
market values that tend to fluctuate more than higher quality securities.Under
normal market conditions, it is expected that the average weighted maturity of
the Fund's portfolio will be greater than five years. Although the Fund invests
primarily in securities of U.S. issuers, the Fund may invest a portion of its
assets in foreign securities.
Nations Short-Intermediate Government Fund: The Fund's investment objective is
to seek high current income consistent with modest fluctuation of principal. The
Fund invests primarily in securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. The Fund invests substantially
all of its assets in U.S. Government Obligations and repurchase agreements
relating to such obligations. Under normal market conditions, it is expected
that the average weighted maturity of the Fund's portfolio will be three to five
years and the duration will not exceed five years.
Nations Short-Term Income Fund: The Fund's investment objective is to seek high
current income consistent with minimal fluctuation of principal. The Fund
invests in a broad range of investment grade debt obligations. Under normal
market conditions, it is expected that the average weighted maturity and the
duration of the Fund's portfolio will not exceed three years. The Fund may
invest a portion of its assets in foreign securities.
Nations Strategic Fixed Income Fund: The Fund's investment objective is to seek
total return by investing in investment grade fixed income securities. The Fund
invests in a broad range of investment grade debt securities. Under normal
market conditions, it is expected that the average weighted maturity of the
Fund's portfolio will be 10 years or less and under no circumstances exceed 15
years. Under normal market conditions, the Fund will invest at least 65% of the
total value of its assets in government, corporate and mortgage-backed
securities. Most obligations acquired by the Fund will be issued by companies or
governmental entities located within the United States. The Fund may invest a
portion of its assets in foreign securities.
Money Market Fund
Nations Prime Fund: The Fund's investment objective is to seek the maximization
of current income to the extent consistent with the preservation of capital and
the maintenance of liquidity. The Fund invests in a diversified portfolio of
high quality money market instruments with maturities of 397 days or less from
the date of purchase. Securities subject to repurchase agreements may bear
longer maturities. The Fund may invest in U.S. Treasury bills, notes and bonds
and other instruments issued directly by the U.S. Government. The Fund may also
invest in bank and commercial instruments that may be available in the money
markets, high quality short-term taxable obligations issued by state and local
governments, and repurchase agreements relating to U.S. Government Obligations.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the Fund can maintain a stable net
asset value of $1.00 per share.
General
Other Investment Practices: Each of the Nations Funds may invest in certain
specified derivative securities, including: interest rate swaps, caps and floors
for hedging purposes; exchange-traded options; over-the-counter options executed
with primary dealers, including long calls and puts and covered calls to enhance
return; and Commodity Futures Trading Commission-approved U.S. and foreign
exchange-traded financial futures and options thereon for market exposure and/or
risk-management. Certain Nations Funds may lend their portfolio securities to
qualified institutional investors, invest in restricted, private placement and
other illiquid securities and engage in reverse repurchase agreements and dollar
roll transactions. Certain securities that have variable or floating interest
rates or demand or put features may be deemed to have remaining maturities
shorter than their nominal maturities for purposes of determining the average
weighted maturity and duration of the Nations Funds. Certain Nations Funds also
may invest in instruments issued by trusts, partnerships or other issuers,
including pass-through certificates representing participations in, or debt
instruments backed by, the securities owned by such issuers.
In addition to the foregoing investment practices, some of the underlying
Nations Funds may invest in securities issued by other investment companies,
preferred stock, securities convertible into common stock and other types of
securities having common stock characteristics (such as rights and warrants),
guaranteed investment contracts, money market instruments, below-investment
grade debt ("junk bonds"), debt obligations of foreign issuers and stocks of
foreign corporations, obligations of domestic or foreign governments and their
political subdivisions, American Depository Receipts ("ADRs", also called
American Depository Shares), European Depository Receipts ("EDRs"), Global
Depository Receipts ("GDRs"), securities of foreign investment funds or trusts,
real estate investment trust securities, convertible debentures, mortgage-backed
securities, mortgage pass-through certificates, collateralized mortgage
obligations ("CMOs"), mortgage-backed bonds, other asset-backed securities and
obligations of foreign banks and foreign branches of U.S. banks.
Principal Risk Considerations: Investments by a Nations Fund in common stocks
and other equity securities are subject to stock market risks. The value of the
stocks that a Nations Fund holds, like the broader stock market, may decline
over short or even extended peri-
12
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ods. The value of a Nations Fund's investments in debt securities, including
U.S. Government Obligations, will tend to decrease when interest rates rise and
increase when interest rates fall. In general, longer-term debt instruments tend
to fluctuate in value more than shorter-term debt instruments in response to
interest rate movements. In addition, debt securities that are not backed by the
U.S. Government are subject to credit risk, which is the risk that the issuer
may not be able to pay principal and/or interest when due.
Investments by a Nations Fund in foreign securities present additional risks.
These risks include restrictions on foreign investment and repatriation of
capital; fluctuations in currency exchange rates; costs of converting foreign
currency into U.S. dollars and U.S. dollars into foreign currencies; greater
price volatility and less liquidity; settlement practices, including delays,
which may differ from those customary in United States markets; exposure to
political and economic risks, including the risk of nationalization,
expropriation of assets and war; possible imposition of foreign taxes and
exchange control and currency restrictions; lack of uniform accounting, auditing
and financial reporting standards; less governmental supervision of securities
markets, brokers and issuers of securities; less financial information available
to investors; and difficulty in enforcing legal rights outside the United
States. These risks often are heightened for investments in emerging or
developing countries.
Certain of the U.S. Government Obligations that may be purchased by a Nations
Fund (or, under certain circumstances, directly by a LifeGoal Portfolio) are not
backed by the U.S. Treasury. For example, some U.S. Government Obligations are
supported only by the credit of the issuer/guarantor or by the right of the
issuer/guarantor to borrow from the U.S. Government. In addition, the market
value of U.S. Government Obligations may fluctuate due to fluctuations in market
interest rates. Certain types of U.S. Government Obligations are subject to
fluctuations in maturity, yield or value due to their structure or contract
terms.
Certain of the underlying Nations Funds may invest in derivative securities
("derivatives"). A derivative is a financial instrument whose value is based, at
least partly, on the value of an underlying stock, stock index, future or other
security. Examples of such derivatives include futures contracts, options,
interest rate and currency swap transactions. Certain types of derivatives can,
under certain circumstances, significantly increase an investor's exposure to
market or other risks.
Please consult the SAI and the prospectus of the particular Nations Fund, for
more information about investment practices and risks.
How Performance Is Shown
From time to time the LifeGoal Portfolios may advertise the total return and
yield of a class of shares. In addition, the LifeGoal Portfolios may advertise
the total return and yield of the Primary A Shares of certain underlying Nations
Funds. Total return and yield figures are based on historical data and are not
intended to indicate future performance. The "total return" of a class of shares
of a LifeGoal Portfolio or Nations Fund may be calculated on an average annual
total return basis or an aggregate total return basis. Average annual total
return refers to the average annual compounded rates of return over one-, five-,
and ten-year periods or the life of a LifeGoal Portfolio or Nations Fund (as
stated in the advertisement) that would equate an initial amount invested at the
beginning of a stated period to the ending redeemable value of the investment,
assuming the reinvestment of all dividend and capital gains distributions.
Aggregate total return reflects the total percentage change in the value of the
investment over the measuring period again assuming the reinvestment of all
dividends and capital gain distributions. Total return may also be presented for
other periods.
"Yield" of a class of shares of a non-money market fund is calculated by
dividing the annualized net investment income per share during a recent 30-day
(or one month) period of the class by the maximum public offering price per
share on the last day of that period. "Yield" of a class of shares of a money
market fund, such as the Nations Prime Fund, is calculated by annualizing the
income generated by an investment in such class over a seven-day period, and
showing it as a percentage of that investment. "Effective yield" assumes
reinvestment of income.
Investment performance, which will vary, is based on many factors, including
market conditions, the composition of a LifeGoal Portfolio's or Nations Fund's
portfolio and operating expenses. Investment performance also often reflects the
risks associated with a LifeGoal Portfolio's or Nations Fund's investment
objective and policies. These factors should be considered when comparing a
LifeGoal Portfolio's or Nations Fund's investment results to those of other
mutual funds and other investment vehicles. Since net asset value and yields
fluctuate, yield data cannot necessarily be used to compare an investment in the
LifeGoal Portfolios or Nations Fund with bank deposits, savings accounts, and
similar investment alternatives which often provide an agreed-upon or guaranteed
fixed yield for a stated period of time.
In addition to Primary A Shares, the LifeGoal Portfolios offer Primary B,
Investor A and Investor C Shares. Each class of shares may bear different sales
charges, shareholder servicing fees and other expenses, which may cause the
performance of a class to differ from the performance of the other classes.
Performance quotations will be computed separately for each class of a LifeGoal
13
<PAGE>
Portfolio's shares. Any fees charged by an institution directly to its
customers' accounts in connection with investments in the LifeGoal Portfolios
will not be included in calculations of total return or yield. The Company's
annual report will contain additional performance information and will be
available upon request without charge from the LifeGoal Portfolios' distributor
or an investor's Institution, as defined below.
The following information shows the average annual returns of the underlying
Nations Funds in which the LifeGoal Portfolios may invest. Because the LifeGoal
Portfolios are relatively new, they have no performance data of their own. The
performance of the underlying Nations Funds is shown for illustrative purposes
only and is not intended to show LifeGoal Portfolio performance.
NATIONS FUNDS
AVERAGE ANNUAL RETURNS -- PRIMARY A SHARES (UNAUDITED)
<TABLE>
<CAPTION>
12 Months 3-Year Period 5-Year Period
Fund Name (Date of Commencement of Operations) Ended 6/30/96 Ended 6/30/96 Ended 6/30/96
<S> <C> <C> <C>
Nations Capital Growth Fund (9/30/92) 18.93% 13.92% N/A
Nations Disciplined Equity Fund (10/1/92)** 20.88%% 14.03% N/A
Nations Diversified Income Fund (10/30/92) 3.82% 6.17% N/A
Nations Emerging Growth Fund (12/4/92) 32.90% 20.08% N/A
Nations Emerging Markets Fund (6/30/95) 7.61% N/A N/A
Nations Equity Income Fund (4/11/91) 21.57% 13.77% 14.71%
Nations International Equity Fund (12/2/91) 19.07% 11.65% N/A
Nations Managed Index Fund* N/A N/A N/A
Nations Managed SmallCap Index Fund* N/A N/A N/A
Nations Pacific Growth Fund (6/30/95) 3.83% N/A N/A
Nations Short-Intermediate Government Fund (8/1/91) 3.62% 3.73% N/A
Nations Short-Term Income Fund (9/30/92) 5.50% 4.82% N/A
Nations Strategic Fixed Income Fund (10/30/92) 3.41% 4.46% N/A
Nations Value Fund (9/19/89) 23.47% 16.07% 14.84%
Nations Global Government Income Fund (6/30/95) N/A N/A N/A
<CAPTION>
Inception
through
Fund Name (Date of Commencement of Operations) 6/30/96
Nations Capital Growth Fund (9/30/92) 13.50%%
Nations Disciplined Equity Fund (10/1/92)** 24.00%
Nations Diversified Income Fund (10/30/92) 8.62%
Nations Emerging Growth Fund (12/4/92) 17.39%
Nations Emerging Markets Fund (6/30/95) 7.61%
Nations Equity Income Fund (4/11/91) 13.90%
Nations International Equity Fund (12/2/91) 8.39%
Nations Managed Index Fund* N/A
Nations Managed SmallCap Index Fund* N/A
Nations Pacific Growth Fund (6/30/95) 3.83%
Nations Short-Intermediate Government Fund (8/1/91) 6.46%
Nations Short-Term Income Fund (9/30/92) 5.02%
Nations Strategic Fixed Income Fund (10/30/92) 6.17%
Nations Value Fund (9/19/89) 13.52%
Nations Global Government Income Fund (6/30/95) 5.03%+
</TABLE>
* This Fund had not commenced operations as of June 30, 1996.
** Date shown reflects commencement of operations of the predecessor fund.
+ Total Return represents aggregate total return through 3/31/96 and does not
reflect the deduction of any applicable sales charges.
How The LifeGoal Portfolios Are Managed
The business and affairs of the Company are managed under thesupervision and
direction of its Board of Directors. The LifeGoalPortfolios' SAI contains the
names of and general background information concerning each Director of the
Company.
The Company and the Adviser have adopted codes of ethics which contain policies
on personal securities transactions by "access persons," including portfolio
managers and investment analysts. These policies substantially comply in all
material respects with the recommendations set forth in the May 9, 1994 Report
of the Advisory Group on Personal Investing of the Investment Company Institute.
Investment Adviser: NationsBanc Advisors, Inc. serves as investment adviser to
the LifeGoal Portfolios and the Nations Funds. NBAI is a wholly owned subsidiary
of NationsBank, which in turn is a wholly owned banking subsidiary of
NationsBank Corporation, a bank holding company organized as a North Carolina
corporation. NBAI has its principal offices at One NationsBank Plaza, Charlotte,
North Carolina 28255.
TradeStreet Investment Associates, Inc., with principal offices at One
NationsBank Plaza, Charlotte, North Carolina 28255, serves as investment
sub-adviser to the LifeGoal Portfolios and most of the Nations Funds.
TradeStreet is a wholly owned subsidiary of NationsBank. TradeStreet provides
investment management services to individuals, corporations and institutions.
Gartmore Global Partners, with principal offices at One NationsBank Plaza,
Charlotte, North Carolina, 28255, serves as the investment sub-adviser to three
of the underlying Nations Funds. Gartmore is a joint venture structured as a
general partnership between NB Partner Corp., a wholly owned subsidiary of
NationsBank, and Gartmore U.S. Limited, an indirect, wholly owned subsidiary of
Gartmore Investment Management plc, a UK company which is the holding company
for a leading UK
14
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based international fund management group of companies. National Westminster
Bank plc and affiliated entities own 100% of the equity of Gartmore Investment
Management plc.
Subject to the general supervision of the Company's Board of Directors, and in
accordance with each LifeGoal Portfolio's investment policies, the Adviser is
responsible for allocating and reallocating each LifeGoal Portfolio's assets
among the Nations Funds in which it invests, and for rebalancing such portfolio
allocations. A LifeGoal Portfolio's investments are continuously monitored and
are reallocated as often as the Adviser deems appropriate. In addition,
portfolio allocations and performance are reviewed quarterly for rebalancing at
the discretion of the Adviser.
The Adviser has the ability to change the particular Nations Funds used as
underlying investments for the LifeGoal Portfolios. Among other things, the
Adviser may substitute or include other funds from the Nations Fund Family,
including any introduced subsequent to this Prospectus, as permissible
investments for the LifeGoal Portfolios. In the event the Adviser seeks to
invest the assets of a LifeGoal Portfolio in a Nations Fund not identified in
this Prospectus, the Company will amend or supplement the Prospectus to include
all pertinent information.
Both the LifeGoal Portfolios and Nations Funds have investment advisory
arrangements with NBAI. NBAI is entitled to receive advisory fees at an annual
rate of 0.25% of the average daily net assets of each LifeGoal Portfolio. NBAI,
in turn, compensates TradeStreet for sub-advisory services at an annual rate of
0.05% of the average daily net assets of each LifeGoal Portfolio. NBAI also has
agreed to absorb all other expenses of the LifeGoal Portfolios (except taxes,
brokerage fees and commissions, extraordinary expenses, and any applicable Rule
12b-1 fees, shareholder servicing fees and/or shareholder administration fees).
NBAI also receives advisory fees at varying rates from the underlying Nations
Funds, and pays TradeStreet or Gartmore Global Partners sub-advisory fees for
their services to the underlying Nations Funds. From time to time, the Adviser
may waive or reimburse (either voluntarily or pursuant to applicable state
expense limitations) advisory fees and/or expenses payable by a LifeGoal
Portfolio. Once commenced, waiver and reimbursement arrangements may be
discontinued at any time. LifeGoal Portfolio's shareholders indirectly pay their
proportionate share of the advisory fees and other expenses of any Nations Fund
in which the LifeGoal Portfolios are invested.
NBAI, TradeStreet and certain of their affiliates provide advisory and other
services to Nations Funds for which they receive compensation. The level of
compensation received and services provided by them differs among the various
Nations Funds. These differences subject the Adviser to conflicts of interest,
in that the Adviser could increase its fee income or that of its affiliates, or
attain other direct or indirect benefits, by allocating LifeGoal Portfolio
assets to underlying Nations Funds that pay higher fees or provide other
benefits.
Andrew M. Silton has managed the LifeGoal Portfolios since their inception. Mr.
Silton has been President, Chief Investment Officer and Managing Director of
TradeStreet since 1995. Prior to assuming his position with TradeStreet, he was
Director of Investment Strategy and Product Development for the Investment
Management Group of NationsBank and head of the Equity Group. Mr. Silton has
worked in the investment community since 1979. His past experience includes
Senior Vice President, Director of Equity Strategy and Portfolio Management for
Shields Asset Management. Mr. Silton was also Senior Vice President and Director
of Research for First Albany Corporation, a regional brokerage firm. Prior to
joining NationsBank, he operated his own management consulting firm which
advised financial institutions and local government agencies. Mr. Silton
received a B.A. in History from the State University of New York at Binghamton,
a J.D. from the School of Law at the University of North Carolina at Chapel Hill
and a M.A. from the Public Policy Institute of Duke University.
Morrison & Foerster LLP, counsel to the Company and Nations Fund, and special
counsel to NBAI and certain of its affiliates, has advised the Company and
Nations Fund that NBAI and its affiliates may perform the services contemplated
by the various Investment Advisory Agreements and this Prospectus without
violation of the Glass-Steagall Act. Such counsel has pointed out, however, that
there are no controlling judicial or administrative interpretations or decisions
and that future judicial or administrative interpretations of, or decisions
relating to, present federal or state statutes, including the Glass-Steagall
Act, and regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future changes in such federal or state
statutes, regulations and judicial or administrative decisions or
interpretations, could prevent such entities from continuing to perform, in
whole or in part, such services. If any such entity were prohibited from
performing any of such services, it is expected that new agreements would be
proposed or entered into with another entity or entities qualified to perform
such services.
Other Service Providers: Stephens Inc. ("Stephens"), a registered broker/dealer
with principal offices at 111 Center Street, Little Rock, Arkansas 72201, serves
as the administrator of the LifeGoal Portfolios pursuant to an Administration
Agreement. Pursuant to the terms of the Administration Agreement, Stephens
provides various administrative and corporate secretarial services to the
LifeGoal Portfolios, including providing general oversight of other service
providers, office space, utilities and various legal and administrative services
in connec-
15
<PAGE>
tion with the satisfaction of various regulatory requirements applicable to the
LifeGoal Portfolios. Stephens will not receive any fees from the LifeGoal
Portfolios for these services.
First Data Investor Services Group, Inc. ("First Data"), a wholly owned
subsidiary of First Data Corporation, with principal offices at One Exchange
Place, Boston, Massachusetts 02109, serves as the co-administrator of the
LifeGoal Portfolios. Under the Co-Administration Agreement, First Data provides
various administrative and accounting services to the LifeGoal Portfolios
including performing the calculations necessary to determine net asset value per
share and dividends, preparing tax returns and financial statements and
maintaining the portfolio records and certain of the general accounting records
for the LifeGoal Portfolios. For the services rendered pursuant to the
Co-Administration Agreement, First Data is entitled to receive a fee of $10,000
per year per LifeGoal Portfolio, which will be absorbed by NBAI.
Shares of the LifeGoal Portfolios are sold on a continuous basis by Stephens, as
the LifeGoal Portfolios' sponsor and distributor. The LifeGoal Portfolios have
entered into distribution agreements with Stephens which provide that Stephens
has the exclusive right to distribute shares of the LifeGoal Portfolios.
Stephens may pay service fees or commissions to Institutions that assist
customers in purchasing Primary A Shares of LifeGoal Portfolios.
First Data serves as the Transfer Agent for each of LifeGoal Portfolio's Primary
A Shares. NationsBank of Texas, N.A. ("NationsBank of Texas") serves as
custodian for the assets of each LifeGoal Portfolio. NationsBank of Texas, which
also serves as the sub-transfer agent for each LifeGoal Portfolio's Primary A
Shares, is located at 1401 Elm Street, Dallas, Texas 75202, and is a wholly
owned subsidiary of NationsBank Corporation.
Stephens, First Data and NationsBank of Texas all provide services at the
underlying Nations Fund level and are compensated directly by such Nations Funds
for those services.
Price Waterhouse LLP serves as independent accountant to the Company. Its
address is 160 Federal Street, Boston, Massachusetts 02110.
Expenses: Certain administrative and other fees and expenses will be charged at
the LifeGoal Portfolios and Nations Funds levels. However, redundancies of fees
and expenses between the LifeGoal Portfolios and Nations Funds will be minimal,
because distinct services are being provided at each fund level. For example,
the LifeGoal Portfolios pay advisory fees to the Adviser for its services in
allocating LifeGoal Portfolio assets among the underlying Nations Funds. These
services are distinct from the services provided by the Adviser to the Nations
Funds in managing the Nations Funds' individual portfolio securities.
NBAI, under its investment advisory agreement with the LifeGoal Portfolios, has
agreed to absorb all expenses of the LifeGoal Portfolios, except taxes,
brokerage fees and commissions, extraordinary expenses and any applicable Rule
12b-1 fees, shareholder servicing fees and/or shareholder administration fees.
The LifeGoal Portfolios' expenses that will be absorbed by NBAI include, but are
not limited to: fees paid to service providers other than the Adviser; interest;
directors' fees; federal and state securities registration and qualification
fees; costs of preparing and printing prospectuses for regulatory purposes and
for distribution to existing shareholders; certain insurance premiums; outside
auditing and legal expenses; and costs of shareholder reports and shareholder
meetings.
The LifeGoal Portfolios do not pay any front-end sales loads or contingent
deferred sales charges in connection with the purchase or redemption of shares
of the Nations Funds. By investing in Primary A Shares of the Nations Funds, the
LifeGoal Portfolios also will not be subject to any asset-based sales charges or
service fees. The sales charges or service fees associated with purchase of
shares of the LifeGoal Portfolios will not exceed the limits set forth in Rule
2830 of the Conduct Rules of the NASD when aggregated with sales charges or
service fees, if any, that the LifeGoal Portfolios pay relating to Nations Funds
shares.
The LifeGoal Portfolios' share of the Nations Funds' expenses may include
expenses that the LifeGoal Portfolios would not have incurred if it had not been
structured as a "fund of funds." For example, if a portfolio manager of one
Nations Fund purchases the same securities that the portfolio manager of another
Nations Fund is selling, there may be transaction charges and commissions that
achieve little or no benefit for the LifeGoal Portfolios. Such transactions will
be rare because the Nations Funds pursue a broad range of investment strategies,
and therefore invest in different types of securities.
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<PAGE>
Organization And History
The LifeGoal Portfolios are members of the Nations Fund Family, which consists
of the Company, Nations Fund Trust, Nations Fund, Inc., Nations Fund Portfolios,
Inc. and Nations Institutional Reserves. The Nations Fund Family currently has
more than 43 distinct investment portfolios and total assets in excess of $18
billion.
Nations LifeGoal Funds, Inc.: The Company was incorporated in Maryland on July
3, 1996, but had no operations prior to the date of this Prospectus. The
Company's fiscal year end is March 31. As of the date of this Prospectus, the
authorized capital stock of Nations LifeGoal Funds, Inc. consists of
1,200,000,000 shares of common stock, par value of $.001 per share, which are
divided into series or portfolios, each of which includes several classes of
shares. This Prospectus relates to the Primary A Shares of the following three
portfolios of the Company: LifeGoal Growth Portfolio, LifeGoal Balanced Growth
Portfolio, and LifeGoal Income and Growth Portfolio. To obtain additional
information regarding the LifeGoal Portfolios' other classes of shares which may
be available to you, contact your Institution (as defined below) or Nations Fund
at 1-800-982-2271.
Shares of each Portfolio and class have equal rights with respect to voting,
except that the holders of shares of a particular Portfolio or class will have
the exclusive right to vote on matters affecting only the rights of the holders
of such Portfolio or class. In the event of dissolution or liquidation, holders
of each class will receive pro rata, subject to the rights of creditors, (a) the
proceeds of the sale of that portion of the assets allocated to that class held
in the respective Portfolio of the Company, less (b) the liabilities of the
Company attributable to the respective Portfolio or class or allocated among the
Portfolios or classes based on the respective liquidation value of each
Portfolio or class.
Shareholders of the Company do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all Portfolios voting
together for election of directors may elect all of the members of the Board of
Directors of the Company. Meetings of shareholders may be called upon the
request of 10% or more of the outstanding shares of the Company. There are no
preemptive rights applicable to any of the Company's shares. The Company's
shares, when issued, will be fully paid and non-assessable.
As of the date of this Prospectus, Stephens owned all of the outstanding shares
of the Company and, therefore, would be considered a controlling person of the
Company and each of the LifeGoal Portfolios. As sales of the LifeGoal
Portfolios' shares commence, it is expected that Stephens' percentage ownership
will be reduced. It is anticipated that the Company will not hold annual
shareholder meetings on a regular basis unless required by the Investment
Company Act of 1940, as amended, (the "1940 Act") or Maryland law.
About Your Investment
How To Buy Shares
There is a minimum initial investment of $500,000 for each recordholder; there
is no minimum subsequent investment.
Primary A Shares may be sold to NationsBank and its affiliates acting on behalf
of bona fide trust customers. Primary A Shares also may be sold to employee
benefit plans, charitable foundations, endowments and to other funds in the
Nations Fund Family.
Primary A Shares are sold at net asset value without the imposition of a sales
charge. Financial institutions ("Institutions") acting on behalf of their
customers ("Customers") may establish certain procedures for processing
Customers' purchase orders and may charge their Customers for services provided
to them in connection with their investments.
Purchases may be effected on days on which the New York Stock Exchange (the
"Exchange") is open for business (a "Business Day").
The Company reserves the right to reject any purchase order. The issuance of
Primary A Shares is recorded on the books of the LifeGoal Portfolios, and share
certificates are not issued. It is the responsibility of Institutions, when
applicable, to record beneficial ownership of Primary A Shares and to reflect
such ownership in the account statements provided to their Customers.
Purchase orders for Primary A Shares in the LifeGoal Portfolios that are
received by Stephens or by the Transfer Agent before the close of regular
trading hours on the Exchange (currently 4:00 p.m., Eastern time) on any
Business Day are priced according to the net asset value determined on that day
but are not executed until 4:00 p.m., Eastern time, on the Business Day on which
imme-
17
<PAGE>
diately available funds in payment of the purchase price are received by the
LifeGoal Portfolio's Custodian. Such payment must be received not later than
4:00 p.m., Eastern time, by the third Business Day following receipt of the
order. If funds are not received by such date, the order will not be accepted
and notice thereof will be given to the Institution or investor placing the
order. Payment for orders which are not received or accepted will be returned
after prompt inquiry to the sending Institution or investor.
Institutions are responsible for transmitting orders for purchases of Primary A
Shares by their Customers, and for delivering required funds, on a timely basis.
It is Stephens' responsibility to transmit orders it receives to the Company.
How To Redeem Shares
Institutions are responsible for transmitting redemption orders to Stephens or
to the Transfer Agent and for crediting their Customers' accounts with the
redemption proceeds on a timely basis. It is the responsibility of Stephens to
transmit orders it receives to the LifeGoal Portfolios. No charge for wiring
redemption payments is imposed by the LifeGoal Portfolios, although Institutions
may charge their Customer accounts for these or other services provided in
connection with the redemption of Primary A Shares and may establish additional
procedures. Information concerning any charges or procedures is available from
the Institutions. Redemption orders are effected at the net asset value per
share next determined after acceptance of the order by Stephens or by the
Transfer Agent.
Redemption proceeds for Primary A Shares of the LifeGoal Portfolios are normally
remitted in federal funds wired to the redeeming Institution or investor within
three Business Days following receipt of the order.
The LifeGoal Portfolios may redeem a shareholder's Primary A Shares if the
balance in such shareholder's account with the Portfolio drops below $250,000 as
a result of redemptions, and the shareholder does not increase the balance to at
least $250,000 on 60 days' written notice. If a Customer has agreed with a
particular Institution to maintain a minimum balance in his or her account at
the Institution, and the balance in such Institution account falls below that
minimum, the Customer may be obliged to redeem all or a part of his or her
Primary A Shares in the LifeGoal Portfolios to the extent necessary to maintain
the required minimum balance in such Institution account. The LifeGoal
Portfolios also may redeem shares involuntarily or make payment for redemption
in readily marketable securities or other property under certain circumstances
in accordance with the 1940 Act.
How To Exchange Shares
The exchange feature enables a shareholder of Primary A Shares of a LifeGoal
Portfolio to acquire Primary A Shares of another fund in the Nations Fund Family
(which includes both LifeGoal Portfolios and Nations Funds) when that
shareholder believes that a shift between funds is an appropriate investment
decision. An exchange of Primary A Shares of a LifeGoal Portfolio for Primary A
Shares of another Nations Fund is made on the basis of the next calculated net
asset value per share of each fund after the exchange order is received.
The LifeGoal Portfolios and each of the other funds of the Nations Fund Family
may limit the number of times this exchange feature may be exercised by a
shareholder within a specified period of time. Also, the exchange feature may be
terminated or revised at any time by the LifeGoal Portfolios upon such notice as
may be required by applicable regulatory agencies (presently 60 days for
termination or material revision), provided that the exchange feature may be
terminated or materially revised without notice under certain unusual
circumstances.
The current prospectus for each fund of the Nations Funds describes its
investment objective and policies, and shareholders should obtain a copy and
examine it carefully before exchanging to another fund. Exchanges are subject to
the minimum investment requirement and any other conditions imposed by each
fund. In the case of any shareholder holding a share certificate or
certificates, no exchanges may be made until all applicable share certificates
have been received by the Transfer Agent and deposited in the shareholder's
account. An exchange will be treated for federal income tax purposes the same as
a redemption of shares, on which the shareholder may realize a capital gain or
loss. However, the ability to deduct capital losses on an exchange may be
limited in situations where there is an exchange of shares within 90 days after
the shares are purchased.
The LifeGoal Portfolios reserve the right to reject any exchange request. Only
shares that may legally be sold in the state of the investor's residence may be
acquired in an exchange. Only shares of a class that is accepting investments
generally may be acquired in an exchange.
If you have telephone exchange privileges, during periods of significant
economic or market change, such telephone exchanges may be difficult to
complete. In such event, shares may be exchanged by mailing your request
18
<PAGE>
directly to the entity through which the original shares were purchased.
Investors should consult their Institution or Stephens for further information
regarding exchanges.
Primary A Shares may be exchanged by directing a request directly to the
Institution, if any, through which the original Primary A Shares were purchased
or, in other cases, to Stephens or the Transfer Agent. Investors should consult
their Institution, Stephens or the Transfer Agent for further information
regarding exchanges. Your exchange feature may be governed by your account
agreement with your Institution.
How The LifeGoal Portfolios Value Their Shares
The net asset value of a share of each class is calculated by dividing the total
value of its assets, less liabilities, by the number of shares in the class
outstanding. Shares of each of the LifeGoal Portfolios are valued as of the
close of regular trading on the Exchange (currently 4:00 p.m., Eastern time) on
each Business Day. Currently, the days on which the Exchange is closed (other
than weekends) are: New Year's Day, Presidents' Day, Good Friday, Memorial Day
(observed), Independence Day, Labor Day, Thanksgiving and Christmas.
The Nations Funds determine their net asset value per share on a daily basis.
The net asset value of the LifeGoal Portfolio shares will be determined by
reference to the net asset value of the underlying Nations Fund.
How Dividends And Distributions Are Made;
Tax Information
Dividends And Distributions
Each LifeGoal Portfolio declares and pays dividends from net investment income
quarterly. Each LifeGoal Portfolio's net realized capital gains (including net
short-term capital gains) are distributed at least annually.
Primary A Shares of LifeGoal Portfolios are eligible to receive dividends when
declared, provided, however, that the purchase order for such shares is received
at least one day prior to the dividend declaration and such shares continue to
be eligible for dividends through and including the day before the redemption
order is executed.
The net asset value of Primary A Shares in LifeGoal Portfolios will be reduced
by the amount of any dividend or distribution. Dividends are paid in the form of
additional Primary A Shares of the same LifeGoal Portfolio unless the Customer
or investor has elected no less than ten business days prior to the date of
distribution to receive payment in cash. Such election, or any revocation
thereof, must be made in writing to LifeGoal Portfolio's Transfer Agent and will
become effective with respect to dividends paid after its receipt.
Tax Information
Each of the LifeGoal Portfolios intends to qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"). In
general, such qualification relieves a LifeGoal Portfolio of liability for
federal income tax to the extent all of its annual earnings are distributed in
accordance with the Code. Each LifeGoal Portfolio intends to distribute all of
its earnings each taxable year.
Any distributions by a LifeGoal Portfolio of its net investment income
(including net foreign currency gains) and the excess, if any, of its net
short-term capital gain over its net long-term capital loss will be taxable as
ordinary income to shareholders who are not currently exempt from federal income
tax, whether such income is received in cash or reinvested in additional shares.
(Federal income tax for distributions to an Individual Retirement Account are
generally deferred under the Code.)
Corporate shareholders in the LifeGoal Portfolios may be entitled to the
dividends-received deduction for distributions from those funds investing in the
stock of domestic corporations to the extent of the total qualifying dividends
received by the distributing fund. Corporate shareholders of the Portfolios may
be eligible for the dividends-received deduction on the dividends paid by the
LifeGoal Portfolios to the extent that each LifeGoal Portfolio's income is
derived from dividends (which, if received directly, would qualify for such
deduction) received from domestic corporations. In order to qualify for the
dividends-received deduction, a corporate shareholder must hold the LifeGoal
Portfolio shares paying the dividends upon which the deduction is based for at
least 46 days.
Substantially all of the net realized long-term capital gains of the LifeGoal
Portfolios, if any, will be distributed at least annually to the LifeGoal
Portfolios' shareholders. The LifeGoal Portfolios will generally have no tax
liability with respect to such gains, and the distributions will be taxable to
such shareholders who are not
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<PAGE>
currently exempt from federal income tax as long-term capital gains, regardless
of how long the shareholders have held such LifeGoal Portfolios' shares and
whether such gains are received in cash or reinvested in additional shares.
Each year, shareholders will be notified as to the amount and federal tax status
of all dividends and capital gain distributions paid during the prior year. Such
dividends and distributions may also be subject to state and local taxes.
Dividends and capital gain distributions declared in October, November or
December of any year payable to shareholders of record on a specified date in
such months will be deemed to have been received by shareholders and paid by a
LifeGoal Portfolio on December 31 of such year in the event such dividends and
distributions are actually paid during January of the following year.
Federal law requires the Company to withhold 31% from any dividends (other than
exempt-interest dividends) and capital gain distributions paid by the Company
and/or redemptions (including exchange redemptions) to individual shareholders
unless the shareholder properly furnishes a certified, correct Taxpayer
Identification Number and certifies that withholding does not apply. Such
withholding is also required if the Internal Revenue Service notifies the
Company that the Taxpayer Identification Number provided by the shareholder is
incorrect or that the shareholder is otherwise subject to such withholding.
Amounts withheld are applied to the shareholder's federal tax liability, and a
refund may be obtained from the Internal Revenue Service if withholding results
in overpayment of tax. Federal law also requires the LifeGoal Portfolios to
withhold 30% or the applicable tax treaty rate from dividends paid to certain
nonresident alien, non-U.S. partnership and non-U.S. corporation shareholder
accounts.
The foregoing discussion is based on tax laws and regulations that were in
effect as of the date of this Prospectus and summarizes only some of the
important tax considerations generally affecting the LifeGoal Portfolios and
their shareholders. It is not intended as a substitute for careful tax planning.
Accordingly, potential investors should consult their tax advisors with specific
reference to their own tax situations. Further tax information is contained in
the SAI.
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<PAGE>
Prospectus
PRIMARY B SHARES
OCTOBER 15, 1996
LIFEGOAL PORTFOLIOS
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
NATIONS FUND
INVESTMENT ADVISER: NationsBanc Advisors, Inc.
INVESTMENT SUB-ADVISER: TradeStreet Investment Associates, Inc.
DISTRIBUTOR: Stephens Inc.
<PAGE>
Prospectus
PRIMARY B SHARES
OCTOBER 15, 1996
This Prospectus describes three diversified
investment portfolios, LIFEGOAL GROWTH PORTFOLIO,
LIFEGOAL BALANCED GROWTH PORTFOLIO, and LIFEGOAL
INCOME AND GROWTH PORTFOLIO (each a "LifeGoal
Portfolio" and, collectively, the "LifeGoal
Portfolios"), of Nations LifeGoal Funds, Inc. (the
"Company"), an open-end management investment
company in the Nations Fund Family. The LifeGoal
Portfolios invest substantially all of their assets
in certain other funds within the Nations Fund
Family. These underlying funds are referred to in
this Prospectus as "Nations Funds". This Prospectus
describes one class of shares of each LifeGoal
Portfolio -- Primary B Shares.
This Prospectus sets forth concisely the information
about each LifeGoal Portfolio that a prospective
purchaser of Primary B Shares should consider before
investing. Investors should read this Prospectus and
retain it for future reference. Additional
information about the LifeGoal Portfolios is
contained in a separate Statement of Additional
Information (the "SAI") that has been filed with the
Securities and Exchange Commission (the "SEC") and
is available upon request without charge by writing
or calling the LifeGoal Portfolios at its address or
telephone number shown below. The SAI for the
Nations Fund Family, dated the same date as this
Prospectus, is incorporated by reference in its
entirety into this Prospectus. NationsBanc Advisors,
Inc. ("NBAI") is the investment adviser to the
LifeGoal Portfolios. TradeStreet Investment
Associates, Inc. ("TradeStreet") is the investment
sub-adviser to the LifeGoal Portfolios. As used in
this Prospectus, the "Adviser" refers to NBAI and/or
TradeStreet as the context may require.
SHARES OF THE NATIONS FUND FAMILY ARE NOT DEPOSITS
OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, NATIONSBANK, N.A. ("NATIONSBANK") OR
ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT INSURED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR
ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE
LIFEGOAL PORTFOLIOS INVOLVES CERTAIN RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
NATIONSBANK AND CERTAIN OF ITS AFFILIATES PROVIDE
CERTAIN ADVISORY AND OTHER SERVICES TO THE NATIONS
FUND FAMILY FOR WHICH THEY ARE COMPENSATED. STEPHENS
INC., WHICH IS NOT AFFILIATED WITH NATIONSBANK, IS
THE SPONSOR AND ADMINISTRATOR AND SERVES AS THE
DISTRIBUTOR FOR THE LIFEGOAL PORTFOLIOS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
LIFEGOAL PORTFOLIOS:
<PAGE>
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
For Portfolio information
call:
1-800-621-2192
Nations Fund Family
c/o Stephens Inc.
One NationsBank Plaza
33rd Floor
Charlotte, NC 28255
NATIONS FUND
<PAGE>
Table Of Contents
About The LifeGoal Portfolios
Prospectus Summary 3
Expenses Summary 4
Objectives 6
How Objectives Are Pursued 7
Description Of Underlying Nations Funds
-- Investment Objectives, Policies And Practices 9
How Performance Is Shown 13
How The LifeGoal Portfolios Are Managed 14
Organization And History 17
About Your
Investment
How To Buy Shares 17
How To Redeem Shares 18
How To Exchange Shares 18
Shareholder Administration Arrangements 19
How The LifeGoal Portfolios Value Their Shares 20
How Dividends And Distributions Are Made;
Tax Information 20
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS, OR IN THE LIFEGOAL
PORTFOLIOS' SAI INCORPORATED HEREIN BY REFERENCE, IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE LIFEGOAL PORTFOLIOS OR THE
DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING BY LIFEGOAL PORTFOLIOS OR BY THE
DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
2
<PAGE>
About The LifeGoal Portfolios
Prospectus Summary
(Bullet) TYPE OF COMPANY: Open-end management investment company.
(Bullet) INVESTMENT OBJECTIVES AND POLICIES:
(Bullet) LifeGoal Growth Portfolio's investment objective is to seek capital
appreciation through exposure to a variety of equity market segments.
(Bullet) LifeGoal Balanced Growth Portfolio's investment objective is
to seek total return through a balanced portfolio of equity
and fixed income securities.
(Bullet) LifeGoal Income and Growth Portfolio's investment
objective is to seek current income and modest
growth to protect against inflation and to preserve
purchasing power.
The LifeGoal Portfolios are designed for long-term
investors seeking the benefits of asset allocation
and diversification. Unlike traditional mutual
funds, which invest directly in individual
securities, the LifeGoal Portfolios pursue their
investment objectives by allocating their assets
among various Nations Funds.
(Bullet) INVESTMENT ADVISER: NationsBanc Advisors, Inc. serves as the investment
adviser to the LifeGoal Portfolios. NBAI also advises more than 43
other funds in the Nations Fund Family. TradeStreet Investment
Associates, Inc. provides sub-advisory services to the LifeGoal
Portfolios and to more than 39 other funds in the Nations Fund Family.
(Bullet) DIVIDENDS AND DISTRIBUTIONS: Each LifeGoal Portfolio declares and pays
dividends from net investment income quarterly. Each LifeGoal
Portfolio's net realized capital gains, including net short-term
capital gains, are distributed at least annually.
(Bullet) RISK FACTORS: Although the Adviser seeks to achieve the investment
objective of each LifeGoal Portfolio, there is no assurance that it
will be able to do so. Investments in a LifeGoal Portfolio are not
insured against loss of principal. Investments by a LifeGoal Portfolio
in shares of a Nations Fund that holds stocks are subject to stock
market risk, which is the risk that the value of the stocks held by
Nations Funds may decline over short or even extended periods.
Investments by a LifeGoal Portfolio in shares of a Nations Fund that
holds debt securities are subject to interest rate risk, which is the
risk that the value of the debt securities, including securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities
("U.S. Government Obligations"), held by Nations Funds may be adversely
affected by changes in market interest rates. The value of Nations
Funds' investments in debt securities will tend to decrease when
interest rates rise and increase when interest rates fall. In addition,
debt securities which are not backed by the U.S. Government are subject
to credit risk, which is the risk that the issuer may not be able to
pay principal and/or interest when due. Certain of the Nations Funds
may invest portions, and in some cases substantially all, of their
assets in foreign securities. Foreign securities present unique
investment risks, including risks associated with currency
fluctuations, markets that tend to be less developed and more volatile
than U.S. markets that are characterized by less governmental
supervision and lower disclosure standards. Certain of Nations Funds'
investments constitute derivative securities. Certain types of
derivative securities can, under certain circumstances, significantly
increase an investor's exposure to market or other risks. For a
discussion of these and other factors, see "How Objectives Are
Pursued -- Principal Risk Considerations."
(Bullet) MINIMUM PURCHASE: $1,000 minimum initial investment per record holder.
See "How To Buy Shares."
3
<PAGE>
Expenses Summary
Expenses are one of several factors to consider when investing in a LifeGoal
Portfolio. The following tables summarize estimated shareholder transaction and
operating expenses as a percentage of average net assets for Primary B Shares of
each LifeGoal Portfolio. The Examples show the cumulative expenses attributable
to a hypothetical $1,000 investment in each LifeGoal Portfolio over specified
periods.
LIFEGOAL PORTFOLIO PRIMARY B SHARES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
LifeGoal
LifeGoal Growth Balanced Growth
Portfolio Portfolio
<S> <C> <C>
Sales Load Imposed on Purchases (1) None None
Deferred Sales Load None None
<CAPTION>
LifeGoal Income
and Growth
Portfolio
Sales Load Imposed on Purchases (1) None
Deferred Sales Load None
</TABLE>
ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
LifeGoal
LifeGoal Growth Balanced Growth
Portfolio Portfolio
<S> <C> <C>
Management Fees .25% .25%
Other Expenses .50% .50%
Total Operating Expenses .75% .75%
<CAPTION>
LifeGoal Income
and Growth
Portfolio
Management Fees .25%
Other Expenses .50%
Total Operating Expenses .75%
</TABLE>
(1) Primary B Shares are purchased at net asset value per share without the
imposition of a sales charge according to procedures established by the
Institution (as defined below). Institutions, however, may charge the
accounts of their customers for services provided in connection with the
purchase or redemption of shares.
EXAMPLES:
You would pay the following expenses on a $1,000 investment in Primary B Shares
of the indicated LifeGoal Portfolio, assuming indirect expenses (the LifeGoal
Portfolios' share of the expenses incurred by the underlying Nations Funds) at
the midpoint of the after waiver ranges shown below and further assuming: (1) a
5% annual return and (2) redemption at the end of each time period.
[CAPTION]
<TABLE>
<CAPTION>
LifeGoal
LifeGoal Growth Balanced Growth
Portfolio Portfolio
<S> <C> <C>
1 Year $17 $16
3 Years $53 $49
<CAPTION>
LifeGoal Income
and Growth
Portfolio
1 Year $14
3 Years $44
</TABLE>
The purpose of the foregoing tables is to assist an investor in understanding
the various shareholder transaction and operating expenses that an investor in
Primary B Shares of a LifeGoal Portfolio can expect. The figures in the above
tables show the basis on which payments will be made, except that Other Expenses
are estimated for the LifeGoal Portfolios' current fiscal year and the Examples
include indirect expenses for the underlying Nations Funds' most recent fiscal
year (or estimates thereof for new funds). For more complete descriptions of the
LifeGoal Portfolios' operating expenses, see "How The LifeGoal Portfolios Are
Managed."
THE FOREGOING SHOULD NOT BE CONSIDERED TO BE AN ACTUAL REPRESENTATION OF PAST OR
FUTURE PERFORMANCE. ACTUAL EXPENSES AND RATES OF RETURN MAY BE GREATER OR LESS
THAN THOSE SHOWN.
4
<PAGE>
EXPENSE RATIOS FOR UNDERLYING NATIONS FUNDS (PRIMARY A SHARES)
The following table provides the annualized expense ratios for Primary A Shares
of each of the selected underlying Nations Fund's investments for its fiscal
period ended March 31, 1996.
<TABLE>
<CAPTION>
(after fee waivers
and/or expense
reimbursements)
<S> <C>
Nations Disciplined Equity Fund 1.02%
Nations Capital Growth Fund .96%
Nations Value Fund .96%
Nations Equity Income Fund .90%
Nations Managed Index Fund* .50%
Nations Emerging Growth Fund .99%
Nations Managed SmallCap Index Fund* .50%
Nations International Equity Fund 1.17%
Nations Pacific Growth Fund 1.76%
Nations Emerging Markets Fund 2.13%
Nations Prime Fund .30%
Nations Strategic Fixed Income Fund .72%
Nations Diversified Income Fund .77%
Nations Short-Intermediate Government Fund .63%
Nations Short-Term Income Fund .55%
Nations Global Government Income Fund 1.32%
* Because this Nations Fund had not commenced operations as of March 31, 1996, the expense
ratios are based on estimates for its current fiscal year.
<CAPTION>
(before fee
waivers and/or
expense
reimbursements)
Nations Disciplined Equity Fund 1.02%
Nations Capital Growth Fund .96%
Nations Value Fund .96%
Nations Equity Income Fund .90%
Nations Managed Index Fund* .70%
Nations Emerging Growth Fund .99%
Nations Managed SmallCap Index Fund* .70%
Nations International Equity Fund 1.18%
Nations Pacific Growth Fund 1.76%
Nations Emerging Markets Fund 2.13%
Nations Prime Fund .37%
Nations Strategic Fixed Income Fund .83%
Nations Diversified Income Fund .87%
Nations Short-Intermediate Government Fund .86%
Nations Short-Term Income Fund .88%
Nations Global Government Income Fund 1.32%
* Because this Nations Fund had not commenced operations as of March 31, 1996, the expense
ratios are based on estimates for its current fiscal year.
</TABLE>
LIFEGOAL PORTFOLIOS' INDIRECT EXPENSES
Based on the foregoing figures and the expected percentage investment ranges in
the underlying Nations Funds, the range of the weighted average indirect expense
ratio for each LifeGoal Portfolio is as follows:
<TABLE>
<CAPTION>
(after fee waivers
and/or expense
reimbursements)
<S> <C>
LifeGoal Growth Portfolio .86% to 1.01%
LifeGoal Balanced Growth Portfolio .89% to .94%
LifeGoal Income and Growth Portfolio .56% to .73%
<CAPTION>
(before fee
waivers and/or
expense
reimbursements)
LifeGoal Growth Portfolio .92% to 1.05%
LifeGoal Balanced Growth Portfolio .97% to 1.04%
LifeGoal Income and Growth Portfolio .77% to .91%
</TABLE>
The indirect expense ratios fluctuate within these ranges depending upon how
assets are allocated among the Nations Funds. The LifeGoal Portfolios will be
invested in the Primary A Shares of the underlying Nations Funds and, under
normal market conditions, will be allocated among the various fund categories in
the percentages shown below. Under extraordinary circumstances, a LifeGoal
Portfolio's investment in one or more Nations Funds might exceed these ranges.
For temporary defensive purposes, any LifeGoal Portfolio may invest up to 100%
of its assets in Nations Prime Fund.
5
<PAGE>
Objectives
(Bullet) LIFEGOAL GROWTH PORTFOLIO -- LifeGoal Growth Portfolio's investment
objective is to seek capital appreciation through exposure to a variety
of equity market segments.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE
<S> <C>
Large-Capitalization Domestic Equity Funds 35-75%
Small/Mid-Capitalization Domestic Equity Funds 20-35%
Core International Equity Funds 10-20%
Non-Core International Equity Funds 0-10%
<CAPTION>
FUND CATEGORY FUNDS
Large-Capitalization Domestic Equity Funds Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Value Fund
Small/Mid-Capitalization Domestic Equity Funds Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Core International Equity Funds Nations International Equity Fund
Non-Core International Equity Funds Nations Emerging Markets Fund
Nations Pacific Growth Fund
</TABLE>
(Bullet) LIFEGOAL BALANCED GROWTH PORTFOLIO -- LifeGoal Balanced Growth
Portfolio's investment objective is to seek total return through a
balanced portfolio of equity and fixed income securities.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE
<S> <C>
Large-Capitalization Domestic Equity Funds 15-35%
Small/Mid-Capitalization Domestic Equity Funds 10-20%
Core International Equity Funds 5-15%
Core Bond Funds 40-60%
<CAPTION>
FUND CATEGORY FUNDS
Large-Capitalization Domestic Equity Funds Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Value Fund
Small/Mid-Capitalization Domestic Equity Funds Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Core International Equity Funds Nations International Equity Fund
Core Bond Funds Nations Diversified Income Fund
Nations Strategic Fixed Income Fund
Nations Global Government Income Fund
</TABLE>
(Bullet)LIFEGOAL INCOME AND GROWTH PORTFOLIO -- LifeGoal Income and Growth
Portfolio's investment objective is to seek current income and modest
growth to protect against inflation and to preserve purchasing power.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE
<S> <C>
Large-Capitalization Domestic Equity Funds 10-30%
Core International Equity Funds 0-10%
Short Duration Bond Funds 50-90%
Money Market Funds 0-20%
<CAPTION>
FUND CATEGORY FUNDS
Large-Capitalization Domestic Equity Funds Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Value Fund
Core International Equity Funds Nations International Equity Fund
Short Duration Bond Funds Nations Short-Term Income Fund
Nations Short-Intermediate Government
Fund
Money Market Funds Nations Prime Fund
</TABLE>
The LifeGoal Portfolios are intended primarily for long-term investors. The
Portfolios are structured as "funds of funds" that allocate substantially all of
their assets to investments in Primary A Shares of various Nations Funds. The
performance of the LifeGoal Portfolios will, therefore, correspond to the
performance of the various underlying Nations Funds. Additional information
about the underlying Nations Funds, including their investment objectives,
investment policies and practices, is set forth below under "Descriptions of
Underlying Nations Funds." The Adviser allocates and reallocates each LifeGoal
Portfolio's assets among the underlying Nations Funds identified above based on
the percentage ranges shown above, and potentially other Nations Funds, for the
various fund categories. As discussed below under "The Asset Allocation
Process," a LifeGoal Portfolio's actual investment allocation may deviate from
the percentage ranges shown above, over the short or long term.
6
<PAGE>
How Objectives Are Pursued
BENEFITS OF ASSET ALLOCATION
For most investors, choosing the mix of asset classes is the most important
investment decision they can make. Asset allocation is the single greatest
determinant of an investor's return and risk. It is the process of developing a
diversified portfolio by mixing different asset classes in varying portions to
gain exposure to the different return/risk characteristics of each asset class.
Market segments (i.e., international stocks, domestic stocks, bonds) tend to
react in different ways to changes in economic conditions. Therefore, an
investment approach that combines various market segments and asset classes may
reduce overall portfolio volatility.
The assets of each LifeGoal Portfolio are allocated among various asset classes
through their investment in different fund categories. Each LifeGoal Portfolio
has its own asset allocation strategy which gives it a distinctive risk profile
and offers different return potential. Investors should select the LifeGoal
Portfolio (or Portfolios) which best matches their investment goals, risk
tolerance and investment horizon.
In general, the greater the LifeGoal Portfolio's percentage allocation to equity
funds, the greater the potential return and risk of price decline. Because of
equity funds' greater risks, investors in the LifeGoal Portfolios that have a
higher allocation to equity funds should have a longer investment horizon.
Although the Adviser will seek to achieve the investment objective of each
LifeGoal Portfolio, there is no assurance that a LifeGoal Portfolio will be able
to do so. No single LifeGoal Portfolio should be considered, by itself, to
provide a complete investment program for any investor. The net asset value of
the shares of a LifeGoal Portfolio fluctuates based on fluctuations in the
values of the underlying Nations Funds' shares, which, in turn, fluctuate based
on market conditions and other factors. Therefore, investors should not rely
upon LifeGoal Portfolios for short-term financial needs. LifeGoal Portfolios are
not intended to provide a vehicle for participating in short-term swings in the
stock market, are not insured against loss of principal.
THE ASSET ALLOCATION PROCESS
Subject to the general supervision of the Company's Board of Directors, the
Adviser is responsible for allocating and reallocating each LifeGoal Portfolio's
assets among the Nations Funds in which it invests, and for rebalancing such
portfolio allocations. In this context, allocation is the process of setting or
changing the weightings of the different fund categories and Nations Funds
within a particular LifeGoal Portfolio's portfolio. The "weightings" of the
different fund categories and Nations Funds within a particular LifeGoal Fund's
portfolio are the percentage targets that the Adviser sets for investment in a
particular fund category or Nations Fund. All fund category weightings will be
within the overall percentage ranges shown above. Rebalancing is the process of
bringing portfolio allocations back into alignment with the applicable
weightings. A LifeGoal Portfolio's investments are continuously monitored and
are reallocated as often as the Adviser deems appropriate. In addition,
portfolio allocations and performance are reviewed at least quarterly for
rebalancing at the discretion of the Adviser.
Although the Adviser may rebalance each LifeGoal Portfolio's holdings quarterly,
it expects to rebalance less often. Thus, over time, it is likely that the
percentage of a particular LifeGoal Portfolio's assets actually invested in a
particular Nations Fund or fund category will not correspond precisely with the
applicable weightings. Also, depending on the frequency of rebalancings, the
percentage of a particular LifeGoal Portfolio's assets actually invested in a
particular fund category at any given time may deviate from the percentage
ranges shown above, and such deviation may continue for some time.
The Adviser has adopted certain policies designed to reduce the extent of such
deviations. For example, if any fund category percentage ranges are exceeded,
the Adviser will allocate new investment dollars to the other fund categories.
Likewise, the Adviser will allocate new investment dollars to fund categories
whose minimum percentages have not been met. Redemption requests, however, will
generally be met by redeeming shares of underlying Nations Funds according to
the applicable weightings.
Determining the asset allocation applicable to each LifeGoal Portfolio is a two
step process. The first step is determining the broad asset classes for each
LifeGoal Portfolio -- large and small capitalization domestic stocks, foreign
stocks, bonds and money market securities. In making this determination, the
Adviser will consult the relevant historical data for the returns of each asset
class in various economic scenarios. Those returns will be reviewed in the
context of the Adviser's outlook for the economy and markets and adjusted for
reasonableness. The second step in the process is to determine the particular
Nations Funds in which each LifeGoal Portfolio will invest. The Adviser looks at
historic returns and valuations to determine which Nations Funds are most
appropriate. Determining how the individual Nations Funds may interact with one
another within a portfolio is a critical part of this second step.
7
<PAGE>
Although it is expected that the LifeGoal Portfolios will invest in the Nations
Funds identified in "Description of Underlying Nations Funds," the Adviser has
the discretion to change the particular Nations Funds used as underlying
investments for the LifeGoal Portfolios. Among other things, the Adviser may
substitute or include other funds from the Nations Fund Family, including any
introduced subsequent to this Prospectus, as permissible investments for the
LifeGoal Portfolios.
GENERAL CHARACTERISTICS AND RISK FACTORS OF THE MAJOR ASSET CLASSES
The underlying Nations Funds invest in various stocks, bonds and money market
securities. This section provides a brief summary of the general characteristics
and overall risk factors associated with these asset classes. Additional
information is provided under "Description of Underlying Nations Funds" below
and in the prospectuses of the underlying Nations Funds.
Common stocks represent ownership in a company. Stock prices move with changes
in a company's current earnings and its prospects for the future, and with
overall stock market conditions. Stocks offer the potential for price
appreciation and rising dividends. While smaller companies usually reinvest
their earnings back into the company and therefore pay minimal, if any,
dividends, they offer the possibility of greater appreciation.
Historically, stocks have provided higher returns than bonds or money market
securities. Therefore, they have also provided the greatest protection against
inflation and the resulting erosion of purchasing power. However, the additional
return has been accompanied by additional volatility. Equity investors should
have a long-term investment horizon and be willing to accept the inevitable
periods of market declines.
Bonds are a contract. The issuer has an obligation to pay a specified rate of
interest (which may be fixed or variable) at specified times and to repay the
bond's principal value upon maturity. Bonds are subject to credit risk and to
interest rate risk. Credit risk refers to the possibility that a bond's price
may fall due to a credit downgrade or a principal or interest payment default.
Interest rate risk refers to a bond's price movement in response to changes in
market interest rates. As a general rule, when market interest rates rise, bond
prices fall. Typically, the longer the maturity of a bond, the greater the
potential price fluctuation.
Money market securities are short term debt obligations issued primarily by the
U.S. Government, government agencies or corporations. High quality money market
securities are very low risk investments; their low risk, however, is
accompanied by lower potential returns relative to other investments.
INVESTMENT COMPANY SECURITIES: Each of the LifeGoal Portfolios intends, as a
fundamental policy, to concentrate investments by investing 25% or more of its
total assets in the mutual fund industry.
Although some of the Nations Funds in which the LifeGoal Portfolios invest do
not necessarily share the same investment objective as the investing LifeGoal
Portfolio, those Nations Funds will be selected by the Adviser based on the
asset allocation process described above.
Although each LifeGoal Portfolio intends to invest substantially all of its
assets in some or all of the underlying Nations Funds, each LifeGoal Portfolio
reserves the right to invest in obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, repurchase agreements and money
market instruments with respect to any assets not so invested in Nations Funds.
It is not expected that any LifeGoal Portfolio will invest more than 5% of its
assets in any of these direct investments.
INVESTMENT LIMITATIONS: Each LifeGoal Portfolio is subject to a number of
investment limitations, which are described in the SAI. Among other things, the
LifeGoal Portfolios' fundamental policies permit them to borrow money from banks
for temporary or emergency purposes, subject to percentage and other
limitations, and to enter into forward purchase commitments and issue multiple
classes of shares. The investment objective, policies and limitations of each
LifeGoal Portfolio, unless otherwise specified, may be changed without a vote of
the LifeGoal Portfolio's shareholders. If the investment objective, policies or
limitations of a LifeGoal Portfolio change, shareholders should consider whether
the LifeGoal Portfolio remains an appropriate investment in light of their
current position and needs.
In order to register a LifeGoal Portfolio's shares for sale in certain states, a
LifeGoal Portfolio may make commitments more restrictive than the investment
policies and limitations described in this Prospectus and the SAI. Should a
LifeGoal Portfolio determine that any such commitment is no longer in the best
interests of the LifeGoal Portfolio, it may consider terminating sales of its
shares in the states involved.
The Nations Funds also have adopted certain investment restrictions which may be
more or less restrictive than those applicable to the LifeGoal Portfolios,
thereby allowing a LifeGoal Portfolio to participate in certain investment
strategies indirectly that are prohibited under the investment restrictions
described in the LifeGoal Portfolios' SAI. The investment restrictions of the
underlying Nations Funds are set forth in their respective prospectuses and
statements of additional information.
8
<PAGE>
PORTFOLIO TURNOVER: Generally, LifeGoal Portfolios will purchase portfolio
securities for capital appreciation or investment income, or both, and not for
short-term trading profits. The LifeGoal Portfolios' portfolio turnover rates
are not expected to exceed 50%.
Description of Underlying Nations Funds --
Investment Objectives, Policies and Practices
The LifeGoal Portfolios seek to achieve their investment objectives by investing
in certain Nations Funds (each, a "Fund"). The following section provides
summaries of the Nations Funds' investment objectives, policies and practices.
These summaries are intended to help investors understand some of the more
significant aspects of the underlying Nations Funds, but are not intended to be
comprehensive disclosures of all policies, practices and risks associated with
investments by the LifeGoal Portfolios in the Nations Funds. To receive a
prospectus for any underlying Nations Fund, which contains more complete
information, please call Nations Fund at 1-800 982-2271.
EQUITY FUNDS
NATIONS CAPITAL GROWTH FUND: The Fund's investment objective is to seek growth
of capital by investing in companies that are believed to have superior earnings
growth potential. The Fund invests in larger capitalization, high-quality
companies which possess above average earnings growth potential. While the
Fund's investments will generally be made in companies which share some of the
following characteristics:
(Bullet) above-average earnings growth relative to the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index")1;
(Bullet) established operating histories, strong balance sheets and favorable
financial characteristics; and
(Bullet) above-average return on equity relative to the S&P 500 Index,
the Fund has a flexible charter which allows it to take advantage of other
opportunities. Under normal market conditions, the Fund invests at least 65% of
its total assets in common stocks. In addition to common stocks, the Fund may
also invest in preferred stocks, securities convertible into common stocks and
other types of securities having common stock characteristics such as rights and
warrants. The Fund may invest a portion of its assets in foreign securities.
NATIONS DISCIPLINED EQUITY FUND: The Fund's investment objective is to seek
growth of capital by investing in companies that are expected to produce
significant increases in earnings per share. The Adviser believes that companies
experiencing positive earnings trends have the potential to generate significant
increases in share price. The Adviser identifies securities for inclusion in the
portfolio through a combination of quantitative and qualitative methods. Using a
computer modeling program, the portfolio manager identifies securities that have
experienced positive earnings trends. Fundamental research is used to support
the model's analysis. Under normal market conditions, the Fund invests at least
65% of its total assets in comon stocks of domestic issuers. The Fund also may
invest in preferred stocks, securities convertible into common stock, warrants
and rights to purchase common stock, options, U.S. Government and corporate debt
securities and foreign securities.
NATIONS EMERGING GROWTH FUND: The Fund's investment objective is to seek capital
appreciation by investing in emerging growth companies that are believed to have
superior long-term earnings growth prospects. The Fund primarily invests in
emerging growth companies with revenues between $50 million and $1.5 billion.
The Fund focuses on companies with above average earnings growth rates and
profit margins, yet the portfolio may also include positions in special
situation companies whose growth is expected to accelerate. In selecting
companies for investment, the Adviser considers overall growth prospects,
financial condition, competitive position, technology, research and development,
productivity, innovation and management strength among other factors. Under
normal market conditions, the Fund invests at least 65% of its total assets in
common stocks. The Fund also may invest in securities convertible into common
stocks and may invest a portion of its assets in foreign securities. The
volatility of emerging growth stocks is higher than that of larger companies so,
while they may have greater potential for gains, they also carry greater
downside risk.
NATIONS EQUITY INCOME FUND: The Fund's investment objective is to seek current
income and growth of capital by investing primarily in companies with above
average dividend yields. The investment program of the Fund is based on several
premises. First, dividends are normally a more stable and predictable source of
return than capital appreciation. Second, diversifying equity holdings in a
manner that includes every major economic sector con-
1 "Standard & Poor's 500" is a registered service mark of Standard & Poor's
Corporation ("S&P"), which does not sponsor, and is not affiliated with,
LifeGoal Portfolios or any of the Nations Funds.
9
<PAGE>
tributes to reduced volatility, without a commensurate reduction in expected
investment return. Finally, investing in dividend paying stocks in all the
economic sectors can provide greater income than the S&P 500 Index with less
volatility. Collectively, these traits may be combined in such fashion as to
produce returns in excess of the market, as measured by the S&P 500 Index, on a
comparable risk basis.
Under normal circumstances, the Fund will invest at least 65% of its assets in
income-producing common stocks, including securities convertible into or
ultimately exchangeable for common stock (i.e., convertible bonds or convertible
preferred stock), whose prospects for dividend growth and capital appreciation
are considered favorable by the Adviser. The Fund also may invest its assets in
fixed-income securities (corporate and government bonds of various maturities),
preferred stocks and warrants and other debt securities, including up to 5% of
its assets in debt securities that are rated below investment grade (e.g. rated
"BB" by S&P) or if not rated, are of equivalent investment quality as determined
by the Adviser. The Fund may invest a portion of its assets in foreign
securities.
NATIONS MANAGED INDEX FUND: The Fund's investment objective is to seek, over the
long-term, to provide a total return which (gross of fees and expenses) exceeds
the total return of the S&P 500 Index. The Fund will invest in selected equity
securities that are included in the S&P 500 Index. The S&P 500 Index is a
capitalization weighted index consisting of 500 common stocks chosen for market
size, liquidity and industry group representation.
Unlike traditional index funds, the Fund has a "managed" aspect. The Adviser
believes that a managed equity index portfolio can provide investors with
positive incremental performance relative to the S&P 500 Index while minimizing
the downside risk of underperforming the index over time. The Adviser ranks the
attractiveness of each security in the S&P 500 Index according to a multifactor
valuation model. The Adviser then screens out the lower ranked stocks resulting
in a portfolio of 350 to 400 holdings that capture the investment
characteristics of the S&P 500 Index. Under normal conditions, the Adviser will
attempt to invest as much of the Fund's assets as is practical and, in any event
at least 65% of its total assets, in common stocks which are included in the S&P
500 Index. The Fund is expected, however, to maintain a position in high-quality
short-term debt securities and money market instruments to meet redemption
requests.
NATIONS MANAGED SMALLCAP INDEX FUND: The Fund's investment objective is to seek,
over the long-term, to provide total return which (gross of fees and expenses)
exceeds that of the Standard & Poor's SmallCap 600 Index (the "S&P 600 Index").2
The Fund will invest in selected equity securities that are included in the S&P
600 Index. The S&P 600 Index is a capitalization weighted index consisting of
600 domestic stocks which captures the economic and industry characteristics of
small stock performance.
Unlike traditional index funds, the Fund has a "managed" aspect. The Adviser
believes that a managed equity index portfolio can provide investors with
positive incremental performance relative to the S&P 600 Index while minimizing
the downside risk of underperforming the index over time. From the initial S&P
600 Index stock universe, the Adviser ranks the attractiveness of each security
according to a multifactor valuation model. The Adviser then screens out the
lower ranked stocks resulting in a portfolio of approximately 450 to 500
holdings that capture the investment characteristics of the S&P 600 Index. Under
normal conditions, substantially all of the Fund's assets, and, in any event at
least 65% of its total assets, will be invested in common stocks which are
included in the S&P 600 Index. The Fund is expected, however, to maintain a
position in high-quality short-term debt securities and money market instruments
to meet redemption requests.
NATIONS VALUE FUND: The Fund's investment objective is to seek growth of capital
by investing in companies believed to be undervalued. The Fund invests in high
quality, large capitalization stocks which are believed to be undervalued
relative to the overall stock market or other stocks within the same industry.
The principal factor considered by the Adviser in making this determination is
the ratio of a stock's price to earnings. The Adviser believes that companies
with lower price to earnings ratios are more likely to provide better
opportunities for capital appreciation. This "value" approach generally produces
a dividend yield greater than the market average. Through a combination of the
"value" approach and broad diversification among economic sectors and
industries, the Fund pursues above-average returns while seeking to avoid
above-average risk.
Under normal market conditions, at least 65% of the Fund's total assets are
invested in domestic stocks. The Fund may invest a portion of its assets in
securities of foreign securities, as well as in U.S. Government Obligations and
investment grade debt securities of domestic companies.
INTERNATIONAL FUNDS
NATIONS EMERGING MARKETS FUND: The Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of
companies in emerging market countries such as those in Latin America, Eastern
Europe, the Pacific Basin, the Far
2 "Standard & Poor's 600" is a registered service mark of S&P.
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<PAGE>
East, Africa and India. Under normal market conditions, the Fund will invest at
least 65% of its total assets in equity securities of companies in emerging
markets. The Fund also may invest in other types of instruments, including debt
securities. The Fund intends to invest in at least three different countries,
although it may, from time to time, invest all of its assets in a single
country. In such cases, events occurring in such country are more likely to
affect the Fund's investments.
NATIONS INTERNATIONAL EQUITY FUND: The Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of
non-United States companies in Europe, Australia, the Far East and other areas,
including developing countries. The Fund invests in both established and
developing markets around the world. While emphasizing established markets, the
Fund typically has some exposure to the more rapidly growing markets of the
Pacific Basin, Latin America and Eastern Europe.
Under normal market conditions, the Fund will invest at least 65% of its assets
in common stocks of non-United States companies and may invest up to 35% of its
assets in any other type of security, including convertible securities,
preferred stocks, and various debt securities. Under normal circumstances, the
Fund invests in at least three different countries. Under unusual circumstances,
however, the Fund may invest all of its assets in one or two countries. In such
cases, events occurring in those countries are more likely to affect the Fund's
investments.
NATIONS PACIFIC GROWTH FUND: The Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of
companies in the Pacific Basin and the Far East (excluding Japan). Under normal
market conditions, the Fund will invest at least 65% of its total assets in
securities of issuers that conduct their principal business activities in
countries of the Pacific Basin and Far East, except for Japan. The Fund intends
to invest in at least three different countries, although it may, from time to
time, invest all or a significant portion of its assets in a single country. In
such cases, events occurring in that country are more likely to affect the
Fund's investments. The Fund will focus on equity securities, but may also
invest in investment grade debt obligations.
NATIONS GLOBAL GOVERNMENT INCOME FUND: Nations Global Government Income Fund's
investment objective is to seek total return by investing primarily in high
quality debt securities issued by governments, banks and supranational entities
located throughout the world.
In seeking to achieve its investment objective, the Fund will invest under
normal market conditions at least 65% of its total assets in debt securities
issued or guaranteed by U.S. or foreign governments (including states, provinces
and municipalities) or their agencies, instrumentalities or subdivisions
("Government Securities"). Except for temporary defensive purposes, the Fund
will concentrate its investments in foreign Government Securities. Concentration
in this context means the investment of more than 25% of the Fund's total assets
in such securities. The Fund may invest in the debt securities of any type of
issuer, including corporations, banks and supranational entities.
The Fund, under normal market conditions, will invest in at least three
different countries. These countries may include the U.S., the countries of
Western Europe, Japan, Australia, New Zealand and Canada. If the Fund invests a
significant portion of its assets at any time in a single country, events
occurring in such country are more likely to affect the Fund's investments. The
Fund may invest in securities of issuers located in any region or country and
that are denominated in any currency. For defensive purposes, the Fund may
temporarily invest substantially all of its assets in U.S. dollar-denominated
instruments.
Supranational entities are international organizations jointly operated by
multiple sovereign governments including, for example, the World Bank, the
European Coal and Steel Community, the Asian Development Bank, the European
Investment Bank and the Inter-American Development Bank. Supranational entities
generally have no taxing authority and are dependent upon their members for the
funds necessary to pay principal and interest on their debt obligations.
Nations Global Government Income Fund's yield and share price will change based
on changes in domestic or foreign interest rates and in an issuer's
creditworthiness.
BOND FUNDS
NATIONS DIVERSIFIED INCOME FUND: The Fund's investment objective is to seek
total return with an emphasis on current income by investing in a diversified
portfolio of fixed income securities. The Fund actively seeks opportunities
within various bond market sectors, balancing credit and interest rate risk.
Under normal market conditions, the Fund will invest at least 65% of the total
value of its assets in investment grade debt obligations, including fixed income
securities such as government, government agency and corporate bonds. Up to 35%
of the Fund's total assets may be invested in securities rated lower than
investment grade. Non-investment-grade debt securities are sometimes referred to
as "high yield bonds" or "junk bonds," and tend to have speculative
characteristics, generally involve more risk of principal and income than higher
rated securities, and have yields and market values that tend to fluctuate more
than higher quality securities. Under normal market conditions, it is expected
that the average weighted
11
<PAGE>
maturity of the Fund's portfolio will be greater than five years. Although the
Fund invests primarily in securities of U.S. issuers, the Fund may invest a
portion of its assets in foreign securities.
NATIONS SHORT-INTERMEDIATE GOVERNMENT FUND: The Fund's investment objective is
to seek high current income consistent with modest fluctuation of principal. The
Fund invests primarily in securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. The Fund invests substantially
all of its assets in U.S. Government Obligations and repurchase agreements
relating to such obligations. Under normal market conditions, it is expected
that the average weighted maturity of the Fund's portfolio will be three to five
years and the duration will not exceed five years.
NATIONS SHORT-TERM INCOME FUND: The Fund's investment objective is to seek high
current income consistent with minimal fluctuation of principal. The Fund
invests in a broad range of investment grade debt obligations. Under normal
market conditions, it is expected that the average weighted maturity and the
duration of the Fund's portfolio will not exceed three years. The Fund may
invest a portion of its assets in foreign securities.
NATIONS STRATEGIC FIXED INCOME FUND: The Fund's investment objective is to seek
total return by investing in investment grade fixed income securities. The Fund
invests in a broad range of investment grade debt securities. Under normal
market conditions, it is expected that the average weighted maturity of the
Fund's portfolio will be 10 years or less and under no circumstances exceed 15
years. Under normal market conditions, the Fund will invest at least 65% of the
total value of its assets in government, corporate and mortgage-backed
securities. Most obligations acquired by the Fund will be issued by companies or
governmental entities located within the United States. The Fund may invest a
portion of its assets in foreign securities.
MONEY MARKET FUND
NATIONS PRIME FUND: The Fund's investment objective is to seek the maximization
of current income to the extent consistent with the preservation of capital and
the maintenance of liquidity. The Fund invests in a diversified portfolio of
high quality money market instruments with maturities of 397 days or less from
the date of purchase. Securities subject to repurchase agreements may bear
longer maturities. The Fund may invest in U.S. Treasury bills, notes and bonds
and other instruments issued directly by the U.S. Government. The Fund may also
invest in bank and commercial instruments that may be available in the money
markets, high quality short-term taxable obligations issued by state and local
governments, and repurchase agreements relating to U.S. Government Obligations.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the Fund can maintain a stable net
asset value of $1.00 per share.
GENERAL
OTHER INVESTMENT PRACTICES: Each of the Nations Funds may invest in certain
specified derivative securities, including some or all of the following:
interest rate swaps, caps and floors for hedging purposes; exchange-traded
options; over-the-counter options executed with primary dealers, including long
calls and puts and covered calls to enhance return; and Commodity Futures
Trading Commission-approved U.S. and foreign exchange-traded financial futures
and options thereon for market exposure and/or risk-management. Certain Nations
Funds may lend their portfolio securities to qualified institutional investors,
invest in restricted, private placement and other illiquid securities and engage
in reverse repurchase agreements and dollar roll transactions. Certain
securities that have variable or floating interest rates or demand or put
features may be deemed to have remaining maturities shorter than their nominal
maturities for purposes of determining the average weighted maturity and
duration of the Nations Funds. Certain Nations Funds also may invest in
instruments issued by trusts, partnerships or other issuers, including
pass-through certificates representing participations in, or debt instruments
backed by, the securities owned by such issuers.
In addition to the foregoing investment practices, some of the underlying
Nations Funds may invest in securities issued by other investment companies,
preferred stock, securities convertible into common stock and other types of
securities having common stock characteristics (such as rights and warrants),
guaranteed investment contracts, money market instruments, below-investment
grade debt ("junk bonds"), debt obligations of foreign issuers and stocks of
foreign corporations, obligations of domestic or foreign governments and their
political subdivisions, American Depository Receipts ("ADRs", also called
American Depository Shares), European Depository Receipts ("EDRs"), Global
Depository Receipts ("GDRs"), securities of foreign investment funds or trusts,
real estate investment trust securities, convertible debentures, mortgage-backed
securities, mortgage pass-through certificates, collateralized mortgage
obligations ("CMOs"), mortgage-backed bonds, other asset-backed securities and
obligations of foreign banks and foreign branches of U.S. banks.
PRINCIPAL RISK CONSIDERATIONS: Investments by a Nations Fund in common stocks
and other equity securities are subject to stock market risks. The value of the
stocks that a Nations Fund holds, like the broader stock market, may decline
over short or even extended periods. The value of a Nations Fund's investments
in debt
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<PAGE>
securities, including U.S. Government Obligations, will tend to decrease when
interest rates rise and increase when interest rates fall. In general,
longer-term debt instruments tend to fluctuate in value more than shorter-term
debt instruments in response to interest rate movements. In addition, debt
securities that are not backed by the U.S. Government are subject to credit
risk, which is the risk that the issuer may not be able to pay principal and/or
interest when due.
Investments by a Nations Fund in foreign securities present additional risks.
These risks include restrictions on foreign investment and repatriation of
capital; fluctuations in currency exchange rates; costs of converting foreign
currency into U.S. dollars and U.S. dollars into foreign currencies; greater
price volatility and less liquidity; settlement practices, including delays,
which may differ from those customary in United States markets; exposure to
political and economic risks, including the risk of nationalization,
expropriation of assets and war; possible imposition of foreign taxes and
exchange control and currency restrictions; lack of uniform accounting, auditing
and financial reporting standards; less governmental supervision of securities
markets, brokers and issuers of securities; less financial information available
to investors; and difficulty in enforcing legal rights outside the United
States. These risks often are heightened for investments in emerging or
developing countries.
Certain of the U.S. Government Obligations that may be purchased by a Nations
Fund (or, under certain circumstances, directly by a LifeGoal Portfolio) are not
backed by the U.S. Treasury. For example, some U.S. Government Obligations are
supported only by the credit of the issuer/guarantor or by the right of the
issuer/guarantor to borrow from the U.S. Government. In addition, the market
value of U.S. Government Obligations may fluctuate due to fluctuations in market
interest rates. Certain types of U.S. Government Obligations are subject to
fluctuations in maturity, yield or value due to their structure or contract
terms.
Certain of the underlying Nations Funds may invest in derivative securities
("derivatives"). A derivative is a financial instrument whose value is based, at
least partly, on the value of an underlying stock, stock index, future or other
security. Examples of such derivatives include futures contracts, options,
interest rate and currency swap transactions. Certain types of derivatives can,
under certain circumstances, significantly increase an investor's exposure to
market or other risks.
Please consult the SAI and the prospectus of the particular Nations Fund, for
more information about investment practices and risks.
How Performance Is Shown
From time to time the LifeGoal Portfolios may advertise the total return and
yield of a class of shares. In addition, the LifeGoal Portfolios may advertise
the total return and yield of the Primary A Shares of certain underlying Nations
Funds. TOTAL RETURN AND YIELD FIGURES ARE BASED ON HISTORICAL DATA AND ARE NOT
INTENDED TO INDICATE FUTURE PERFORMANCE. The "total return" of a class of shares
of a LifeGoal Portfolio or Nations Fund may be calculated on an average annual
total return basis or an aggregate total return basis. Average annual total
return refers to the average annual compounded rates of return over one-, five-,
and ten-year periods or the life of a LifeGoal Portfolio or Nations Fund (as
stated in the advertisement) that would equate an initial amount invested at the
beginning of a stated period to the ending redeemable value of the investment,
assuming the reinvestment of all dividend and capital gains distributions.
Aggregate total return reflects the total percentage change in the value of the
investment over the measuring period again assuming the reinvestment of all
dividends and capital gain distributions. Total return may also be presented for
other periods.
"Yield" of a class of shares of a non-money market fund is calculated by
dividing the annualized net investment income per share during a recent 30-day
(or one month) period of the class by the maximum public offering price per
share on the last day of that period. "Yield" of a class of shares of a money
market fund, such as the Nations Prime Fund, is calculated by annualizing the
income generated by an investment in such class over a seven-day period, and
showing it as a percentage of that investment. "Effective yield" assumes
reinvestment of income.
Investment performance, which will vary, is based on many factors, including
market conditions, the composition of a LifeGoal Portfolio's or Nations Fund's
portfolio and operating expenses. Investment performance also often reflects the
risks associated with a LifeGoal Portfolio's or Nations Fund's investment
objective and policies. These factors should be considered when comparing a
LifeGoal Portfolio's or Nations Fund's investment results to those of other
mutual funds and other investment vehicles. Since net asset value and yields
fluctuate, yield data cannot necessarily be used to compare an investment in the
LifeGoal Portfolios or Nations Fund with bank deposits, savings accounts, and
similar investment alternatives which often provide an agreed-upon or guaranteed
fixed yield for a stated period of time.
In addition to Primary B Shares, the LifeGoal Portfolios offer Primary A,
Investor A and Investor C Shares. Each class of shares may bear different sales
charges, shareholder servicing fees, and other expenses, which may
13
<PAGE>
cause the performance of a class to differ from the performance of the other
classes. Performance quotations will be computed separately for each class of a
LifeGoal Portfolio's shares. Any fees charged by an institution directly to its
customers' accounts in connection with investments in the LifeGoal Portfolios
will not be included in calculations of total return or yield. The Company's
annual report will contain additional performance information and will be
available upon request without charge from the LifeGoal Portfolios' distributor
or an investor's Institution, as defined below.
The following information shows the average annual returns of the underlying
Nations Funds in which the LifeGoal Portfolios may invest. Because the LifeGoal
Portfolios are relatively new, they have no performance data of their own. The
performance of the underlying Nations Funds is shown for illustrative purposes
only and is not intended to show LifeGoal Portfolio performance.
NATIONS FUNDS
AVERAGE ANNUAL RETURNS -- PRIMARY A SHARES (UNAUDITED)
<TABLE>
<CAPTION>
12 Months 3-Year Period 5-Year Period
FUND NAME (DATE OF COMMENCEMENT OF OPERATIONS) Ended 6/30/96 Ended 6/30/96 Ended 6/30/96
<S> <C> <C> <C>
Nations Capital Growth Fund (9/30/92) 18.93% 13.92% N/A
Nations Disciplined Equity Fund (10/1/92)** 20.88% 14.03% N/A
Nations Diversified Income Fund (10/30/92) 3.82% 6.17% N/A
Nations Emerging Growth Fund (12/4/92) 32.90% 20.88% N/A
Nations Emerging Markets Fund (6/30/95) 7.61% N/A N/A
Nations Equity Income Fund (4/11/91) 21.57% 13.77% 14.71%
Nations International Equity Fund (12/2/91) 19.07% 11.65% N/A
Nations Managed Index Fund* N/A N/A N/A
Nations Managed SmallCap Index Fund* N/A N/A N/A
Nations Pacific Growth Fund (6/30/95) 3.83% N/A N/A
Nations Short-Intermediate Government Fund (8/1/91) 3.62% 3.73% N/A
Nations Short-Term Income Fund (9/30/92) 5.50% 4.82% N/A
Nations Strategic Fixed Income Fund (10/30/92) 3.41% 4.46% N/A
Nations Value Fund (9/19/89) 23.47% 16.07% 14.84%
Nations Global Government Income Fund (6/30/95) N/A N/A N/A
<CAPTION>
Inception
through
FUND NAME (DATE OF COMMENCEMENT OF OPERATIONS) 6/30/96
Nations Capital Growth Fund (9/30/92) 13.50%
Nations Disciplined Equity Fund (10/1/92)** 24.00%
Nations Diversified Income Fund (10/30/92) 8.62%
Nations Emerging Growth Fund (12/4/92) 17.39%
Nations Emerging Markets Fund (6/30/95) 7.61%
Nations Equity Income Fund (4/11/91) 13.90%
Nations International Equity Fund (12/2/91) 8.39%
Nations Managed Index Fund* N/A
Nations Managed SmallCap Index Fund* N/A
Nations Pacific Growth Fund (6/30/95) 3.83%
Nations Short-Intermediate Government Fund (8/1/91) 6.46%
Nations Short-Term Income Fund (9/30/92) 5.02%
Nations Strategic Fixed Income Fund (10/30/92) 6.17%
Nations Value Fund (9/19/89) 13.52%
Nations Global Government Income Fund (6/30/95) 5.03%+
</TABLE>
* This Fund had not commenced operations as of June 30, 1996.
** Date shown reflects commencement of operations of the predecessor fund.
+ Total Return represents aggregate total return through 3/31/96 and does not
reflect the deduction of any applicable sales charges.
How The LifeGoal Portfolios Are Managed
The business and affairs of the Company are managed under the supervision and
direction of its Board of Directors. The LifeGoal Portfolios' SAI contains the
names of and general background information concerning each Director of the
Company.
The Company and the Adviser have adopted codes of ethics which contain policies
on personal securities transactions by "access persons," including portfolio
managers and investment analysts. These policies substantially comply in all
material respects with the recommendations set forth in the May 9, 1994 Report
of the Advisory Group on Personal Investing of the Investment Company Institute.
INVESTMENT ADVISER: NationsBanc Advisors, Inc. serves as investment adviser to
the LifeGoal Portfolios and the Nations Funds. NBAI is a wholly owned subsidiary
of NationsBank, which in turn is a wholly owned banking subsidiary of
NationsBank Corporation, a bank holding company organized as a North Carolina
corporation. NBAI has its principal offices at One NationsBank Plaza, Charlotte,
North Carolina 28255.
TradeStreet Investment Associates, Inc., with principal offices at One
NationsBank Plaza, Charlotte, North Carolina 28255, serves as investment
sub-adviser to the LifeGoal Portfolios and most of the Nations Funds.
TradeStreet is a wholly owned subsidiary of NationsBank. TradeStreet provides
investment management services to individuals, corporations and institutions.
Gartmore Global Partners, with principal offices at One NationsBank Plaza,
Charlotte, North Carolina, 28255, serves as the investment sub-adviser to three
of the
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<PAGE>
underlying Nations Funds. Gartmore is a joint venture structured as a general
partnership between NB Partner Corp., a wholly owned subsidiary of NationsBank,
and Gartmore U.S. Limited, an indirect, wholly owned subsidiary of Gartmore
Investment Management plc, a UK company which is the holding company for a
leading UK based international fund management group of companies. National
Westminster Bank plc and affiliated entities own 100% of the equity of Gartmore
Investment Management plc.
Subject to the general supervision of the Company's Board of Directors, and in
accordance with each LifeGoal Portfolio's investment policies, the Adviser is
responsible for allocating and reallocating each LifeGoal Portfolio's assets
among the Nations Funds in which it invests, and for rebalancing such portfolio
allocations. A LifeGoal Portfolio's investments are continuously monitored and
are reallocated as often as the Adviser deems appropriate. In addition,
portfolio allocations and performance are reviewed quarterly for rebalancing at
the discretion of the Adviser.
The Adviser has the ability to change the particular Nations Funds used as
underlying investments for the LifeGoal Portfolios. Among other things, the
Adviser may substitute or include other funds from the Nations Fund Family,
including any introduced subsequent to this Prospectus, as permissible
investments for the LifeGoal Portfolios. In the event the Adviser seeks to
invest the assets of a LifeGoal Portfolio in a Nations Fund not identified in
this Prospectus, the Company will amend or supplement the Prospectus to include
all pertinent information.
Both the LifeGoal Portfolios and Nations Funds have investment advisory
arrangements with NBAI. NBAI is entitled to receive advisory fees at an annual
rate of 0.25% of the average daily net assets of each LifeGoal Portfolio. NBAI
also has agreed to absorb all other expenses of the LifeGoal Portfolios (except
taxes, brokerage fees and commissions, extraordinary expenses, and any
applicable Rule 12b-1 fees, shareholder servicing fees and/or shareholder
administration fees). NBAI, in turn, compensates TradeStreet for sub-advisory
services at an annual rate of 0.05% of the average daily net assets of each
LifeGoal Portfolio. NBAI also receives advisory fees at varying rates from the
underlying Nations Funds, and pays TradeStreet or Gartmore Global Partners sub-
advisory fees for their services to the underlying Nations Funds. From time to
time, the Adviser may waive or reimburse (either voluntarily or pursuant to
applicable state expense limitations) advisory fees and/or expenses payable by a
LifeGoal Portfolio. Once commenced, waiver and reimbursement arrangements may be
discontinued at any time. In addition, the Adviser may from time to time
compensate Institutions, as defined below, for providing certain services to
Customers. LifeGoal Portfolio's shareholders indirectly pay their proportionate
share of the advisory fees and other expenses of any Nations Fund in which the
LifeGoal Portfolios are invested.
NBAI, TradeStreet and certain of their affiliates provide advisory and other
services to Nations Funds for which they receive compensation. The level of
compensation received and services provided by them differs among the various
Nations Funds. These differences subject the Adviser to conflicts of interest,
in that the Adviser could increase its fee income or that of its affiliates, or
attain other direct or indirect benefits, by allocating LifeGoal Portfolio
assets to underlying Nations Funds that pay higher fees or provide other
benefits.
Andrew M. Silton has managed the LifeGoal Portfolios since their inception. Mr.
Silton has been President, Chief Investment Officer and Managing Director of
TradeStreet since 1995. Prior to assuming his position with TradeStreet, he was
Director of Investment Strategy and Product Development for the Investment
Management Group of NationsBank and head of the Equity Group. Mr. Silton has
worked in the investment community since 1979. His past experience includes
Senior Vice President, Director of Equity Strategy and Portfolio Management for
Shields Asset Management. Mr. Silton was also Senior Vice President and Director
of Research for First Albany Corporation, a regional brokerage firm. Prior to
joining NationsBank, he operated his own management consulting firm which
advised financial institutions and local government agencies. Mr. Silton
received a B.A. in History from the State University of New York at Binghamton,
a J.D. from the School of Law at the University of North Carolina at Chapel Hill
and a M.A. from the Public Policy Institute of Duke University.
Morrison & Foerster LLP, counsel to the Company and Nations Fund, and special
counsel to NBAI and certain of its affiliates, has advised the Company and
Nations Fund that NBAI and its affiliates may perform the services contemplated
by the various Investment Advisory Agreements and this Prospectus without
violation of the Glass-Steagall Act. Such counsel has pointed out, however, that
there are no controlling judicial or administrative interpretations or decisions
and that future judicial or administrative interpretations of, or decisions
relating to, present federal or state statutes, including the Glass-Steagall
Act, and regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future changes in such federal or state
statutes, regulations and judicial or administrative decisions or
interpretations, could prevent such entities from continuing to perform, in
whole or in part, such services. If any such entity were prohibited from
performing any of such services, it is expected that new agreements would be
proposed or entered into with another entity or entities qualified to perform
such services.
OTHER SERVICE PROVIDERS: Stephens Inc. ("Stephens"), a registered broker-dealer
with principal offices at 111
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<PAGE>
Center Street, Little Rock, Arkansas 72201, serves as the administrator of the
LifeGoal Portfolios pursuant to an Administration Agreement. Pursuant to the
terms of the Administration Agreement, Stephens provides various administrative
and corporate secretarial services to the LifeGoal Portfolios, including
providing general oversight of other service providers, office space, utilities
and various legal and administrative services in connection with the
satisfaction of various regulatory requirements applicable to the LifeGoal
Portfolios. Stephens will not receive any fees from the LifeGoal Portfolios for
these services.
First Data Investor Services Group, Inc. ("First Data"), a wholly owned
subsidiary of First Data Corporation, with principal offices at One Exchange
Place, Boston, Massachusetts 02109, serves as the co-administrator of the
LifeGoal Portfolios. Under the Co-Administration Agreement, First Data provides
various administrative and accounting services to the LifeGoal Portfolios
including performing the calculations necessary to determine net asset value per
share and dividends, preparing tax returns and financial statements and
maintaining the portfolio records and certain of the general accounting records
for the LifeGoal Portfolios. For the services rendered pursuant to the
Co-Administration Agreement, First Data is entitled to receive a fee of $10,000
per year per LifeGoal Portfolio, which will be absorbed by NBAI.
Shares of the LifeGoal Portfolios are sold on a continuous basis by Stephens, as
the LifeGoal Portfolios' sponsor and distributor. The LifeGoal Portfolios have
entered into distribution agreements with Stephens which provide that Stephens
has the exclusive right to distribute shares of the LifeGoal Portfolios.
Stephens may pay service fees or commissions to Institutions that assist
customers in purchasing Primary B Shares of LifeGoal Portfolios.
First Data serves as the Transfer Agent for each of LifeGoal Portfolio's Primary
B Shares. NationsBank of Texas, N.A. ("NationsBank of Texas") serves as
custodian for the assets of each LifeGoal Portfolio. NationsBank of Texas, which
also serves as the sub-transfer agent for each LifeGoal Portfolio's Primary B
Shares, is located at 1401 Elm Street, Dallas, Texas 75202, and is a wholly
owned subsidiary of NationsBank Corporation.
Stephens, First Data, and NationsBank of Texas all provide services at the
underlying Nations Fund level and are compensated directly by such Nations Funds
for those services.
Price Waterhouse LLP serves as independent accountant to the Company. Its
address is 160 Federal Street, Boston, Massachusetts 02110.
EXPENSES: Certain administrative and other fees and expenses will be charged at
the LifeGoal Portfolios and Nations Funds levels. However, redundancies of fees
and expenses between the LifeGoal Portfolios and Nations Funds will be minimal,
because distinct services are being provided at each fund level. For example,
the LifeGoal Portfolios pay advisory fees to the Adviser for its services in
allocating LifeGoal Portfolio assets among the underlying Nations Funds. These
services are distinct from the services provided by the Adviser to the Nations
Funds in managing the Nations Funds' individual portfolio securities.
NBAI, under its investment advisory agreement with the LifeGoal Portfolios, has
agreed to absorb all expenses of the LifeGoal Portfolios, except taxes,
brokerage fees and commissions, extraordinary expenses and any applicable Rule
12b-1 fees, shareholder servicing fees and/or shareholder administration fees.
The LifeGoal Portfolios' expenses that will be absorbed by NBAI include, but are
not limited to: fees paid to service providers other than the Adviser; interest;
directors' fees; federal and state securities registration and qualification
fees; costs of preparing and printing prospectuses for regulatory purposes and
for distribution to existing shareholders; certain insurance premiums; outside
auditing and legal expenses; and costs of shareholder reports and shareholder
meetings. Primary B Shares also bear certain class specific expenses, which are
described under "Shareholder Administration Arrangements," below.
The LifeGoal Portfolios do not pay any front-end sales loads or contingent
deferred sales charges in connection with the purchase or redemption of shares
of the Nations Funds. By investing in Primary A Shares of the Nations Funds, the
LifeGoal Portfolios also will not be subject to any asset-based sales charges or
service fees. The sales charges or service fees associated with purchase of
shares of the LifeGoal Portfolios will not exceed the limits set forth in Rule
2830 of the Conduct Rules of the NASD when aggregated with sales charges or
service fees, if any, that the LifeGoal Portfolios pay relating to Nations Funds
shares.
The LifeGoal Portfolios' share of the Nations Funds' expenses may include
expenses that the LifeGoal Portfolios would not have incurred if it had not been
structured as a "fund of funds." For example, if a portfolio manager of one
Nations Fund purchases the same securities that the portfolio manager of another
Nations Fund is selling, there may be transaction charges and commissions that
achieve little or no benefit for the LifeGoal Portfolios. Such transactions will
be rare because the Nations Funds pursue a broad range of investment strategies,
and therefore invest in different types of securities.
16
<PAGE>
Organization And History
The LifeGoal Portfolios are members of the Nations Fund Family, which consists
of the Company, Nations Fund Trust, Nations Fund, Inc., Nations Fund Portfolios,
Inc. and Nations Institutional Reserves. The Nations Fund Family currently has
more than 43 distinct investment portfolios and total assets in excess of $18
billion.
NATIONS LIFEGOAL FUNDS, INC.: The Company was incorporated in Maryland on July
3, 1996, but had no operations prior to the date of this Prospectus. The
Company's fiscal year end is March 31. As of the date of this Prospectus, the
authorized capital stock of Nations LifeGoal Funds, Inc. consists of
1,200,000,000 shares of common stock, par value of $.001 per share, which are
divided into series or portfolios, each of which includes several classes of
shares. This Prospectus relates to the Primary B Shares of the following three
portfolios of the Company: LifeGoal Growth Portfolio, LifeGoal Balanced Growth
Portfolio, and LifeGoal Income and Growth Portfolio. To obtain additional
information regarding the LifeGoal Portfolios' other classes of shares which may
be available to you, contact your Institution (as defined below) or Nations Fund
at 1-800-982-2271.
Shares of each Portfolio and class have equal rights with respect to voting,
except that the holders of shares of a particular Portfolio or class will have
the exclusive right to vote on matters affecting only the rights of the holders
of such Portfolio or class. In the event of dissolution or liquidation, holders
of each class will receive pro rata, subject to the rights of creditors, (a) the
proceeds of the sale of that portion of the assets allocated to that class held
in the respective Portfolio of the Company, less (b) the liabilities of the
Company attributable to the respective Portfolio or class or allocated among the
Portfolios or classes based on the respective liquidation value of each
Portfolio or class.
Shareholders of the Company do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all Portfolios voting
together for election of directors may elect all of the members of the Board of
Directors of the Company. Meetings of shareholders may be called upon the
request of 10% or more of the outstanding shares of the Company. There are no
preemptive rights applicable to any of the Company's shares. The Company's
shares, when issued, will be fully paid and non-assessable.
As of the date of this Prospectus, Stephens owned all of the outstanding shares
of the Company and, therefore, would be considered a controlling person of the
Company and each of the LifeGoal Portfolios. As sales of the LifeGoal
Portfolios' shares commence, it is expected that Stephens' percentage ownership
will be reduced. It is anticipated that the Company will not hold annual
shareholder meetings on a regular basis unless required by the Investment
Company Act of 1940, as amended (the "1940 Act") or Maryland law.
About Your Investment
How To Buy Shares
Primary B Shares may be purchased through banks, broker/dealers or other
financial institutions (including certain affiliates of NationsBank)
("Institutions") that have entered into a shareholder administration agreement
(an "Administration Agreement") with the Company and/or a selling agreement with
Stephens.
Primary B Shares are purchased at net asset value per share without the
imposition of a sales charge according to procedures established by the
Institution. Institutions, however, may charge the accounts of their customers
("Customers") for services provided in connection with the purchase of shares.
Purchases may be effected on days on which the New York Stock Exchange (the
"Exchange") is open for business (a "Business Day").
There is a minimum initial investment of $1,000 for each record holder; there is
no minimum subsequent investment.
Pursuant to the Administration Agreements, Institutions will provide various
shareholder services for their Customers that own Primary B Shares. From time to
time, the Company may voluntarily reduce the maximum fees payable for
shareholder services.
The Company reserves the right to reject any purchase order. The issuance of
Primary B Shares is recorded on the books of the LifeGoal Portfolios, and share
certificates are not issued.
Purchase orders for Primary B Shares in the LifeGoal Portfolios that are
received by Stephens or by the Transfer Agent before the close of regular
trading hours on the
17
<PAGE>
Exchange (currently 4:00 p.m., Eastern time) on any Business Day are priced
according to the net asset value determined on that day but are not executed
until 4:00 p.m., Eastern time, on the Business Day on which immediately
available funds in payment of the purchase price are received by the LifeGoal
Portfolio's Custodian. Such payment must be received not later than 4:00 p.m.,
Eastern time, by the third Business Day following receipt of the order. If funds
are not received by such date, the order will not be accepted and notice thereof
will be given to the Institution or investor placing the order. Payment for
orders which are not received or accepted will be returned after prompt inquiry
to the sending Institution.
Institutions are responsible for transmitting orders for purchases of Primary B
Shares by their Customers, and for delivering required funds, on a timely basis.
It is Stephens' responsibility to transmit orders it receives to the Company.
How To Redeem Shares
Customers may redeem all or part of their Primary B Shares in accordance with
instructions and limitations pertaining to their account at an Institution. It
is the responsibility of the Institutions to transmit redemption orders to
Stephens or to the Transfer Agent and to credit their Customers' accounts with
the redemption proceeds on a timely basis. It is the responsibility of Stephens
to transmit orders that it receives to the Company. No charge for wiring
redemption payments is imposed by the Company, although the Institutions may
charge their Customer accounts for these or other services provided in
connection with the redemption of Primary B Shares. Information concerning these
services and any charges are available from the Institutions. Redemption orders
are effected at the net asset value per share next determined after acceptance
of the order by Stephens or by the Transfer Agent.
Redemption proceeds for Primary B Shares of the LifeGoal Portfolios are normally
remitted in federal funds wired to the redeeming Institution within three
Business Days following receipt of the order.
The LifeGoal Portfolios may redeem a shareholder's Primary B Shares if the
balance in such shareholder's account with the Portfolio drops below $500 as a
result of redemptions, and the shareholder does not increase the balance to at
least $500 on 60 days' written notice. If a shareholder has agreed with a
particular Institution to maintain a minimum balance in his or her account at
the Institution, and the balance in such Institution account falls below that
minimum, the shareholder may be obliged to redeem all or a part of his or her
Primary B Shares in the LifeGoal Portfolios to the extent necessary to maintain
the required minimum balance in such Institution account. The LifeGoal
Portfolios also may redeem shares involuntarily or make payment for redemption
in readily marketable securities or other property under certain circumstances
in accordance with the 1940 Act.
How To Exchange Shares
The exchange feature enables a shareholder of Primary B Shares of a LifeGoal
Portfolio to acquire Primary B Shares of another fund in the Nations Fund Family
(which includes both LifeGoal Portfolios and Nations Funds) when that
shareholder believes that a shift between funds is an appropriate investment
decision. An exchange of Primary B Shares of a LifeGoal Portfolio for Primary B
Shares of another Nations Fund is made on the basis of the next calculated net
asset value per share of each fund after the exchange order is received.
The LifeGoal Portfolios and each of the other funds of the Nations Fund Family
may limit the number of times this exchange feature may be exercised by a
shareholder within a specified period of time. Also, the exchange feature may be
terminated or revised at any time by the LifeGoal Portfolios upon such notice as
may be required by applicable regulatory agencies (presently 60 days for
termination or material revision), provided that the exchange feature may be
terminated or materially revised without notice under certain unusual
circumstances.
The current prospectus for each fund of the Nations Funds describes its
investment objective and policies, and shareholders should obtain a copy and
examine it carefully before exchanging to another fund. Exchanges are subject to
the minimum investment requirement and any other conditions imposed by each
fund. In the case of any shareholder holding a share certificate or
certificates, no exchanges may be made until all applicable share certificates
have been received by the Transfer Agent and deposited in the shareholder's
account. An exchange will be treated for federal income tax purposes the same as
a redemption of shares, on which the shareholder may realize a capital gain or
loss. However, the ability to deduct capital losses on an exchange may be
limited in situations where there is an exchange of shares within 90 days after
the shares are purchased.
18
<PAGE>
The LifeGoal Portfolios reserve the right to reject any exchange request. Only
shares that may legally be sold in the state of the investor's residence may be
acquired in an exchange. Only shares of a class that is accepting investments
generally may be acquired in an exchange.
Provided your institution allows telephone exchanges, during periods of
significant economic or market change, such telephone exchanges may be difficult
to complete. In such event, shares may be exchanged by mailing your request
directly to the Institution through which the original shares were purchased.
Investors should consult their Institution or Stephens for further information
regarding exchanges.
Primary B Shares may be exchanged by directing a request directly to the
Institution, if any, through which the original Primary B Shares were purchased
or, in some cases, to Stephens or the Transfer Agent. Investors should consult
their Institution or Stephens for further information regarding exchanges. Your
exchange feature may be governed by your account agreement with your
Institution.
Shareholder Administration Arrangements
The LifeGoal Portfolios have adopted a Shareholder Administration Plan (the
"Administration Plan") pursuant to which Institutions provide shareholder
administration services to their Customers who from time to time beneficially
own Primary B Shares. Payments under the Administration Plan are calculated
daily and paid monthly at a rate or rates set from time to time by the Funds,
provided that the annual rate may not exceed 0.60% of the average daily net
asset value of the Primary B Shares beneficially owned by Customers with whom
the Institutions have a servicing relationship. Additionally, in no event may
the portion of the shareholder administration fee that constitutes a "service
fee," as that term is defined in Rule 2830 of the Conduct Rules of the NASD,
exceed 0.25% of the average daily net asset value of such Primary B Shares of a
LifeGoal Portfolio. Holders of Primary B Shares will bear all fees paid to
Institutions under the Administration Plan.
Such shareholder administration services supplement the services provided by
Stephens, First Data and the Transfer Agent to shareholders of record. The
shareholder administration services provided by Institutions may include: (i)
aggregating and processing purchase and redemption requests for Primary B Shares
from Customers and transmitting promptly net purchase and redemption orders to
Stephens or the Transfer Agent; (ii) providing Customers with a service that
invests the assets of their accounts in Primary B Shares pursuant to specific or
pre-authorized instructions; (iii) processing dividend and distribution payments
from the LifeGoal Portfolios on behalf of Customers; (iv) providing information
periodically to Customers showing their positions in Primary B Shares; (v)
arranging for bank wires; (vi) responding to Customers' inquiries concerning
their investment in Primary B Shares; (vii) providing sub-accounting with
respect to Primary B Shares beneficially owned by Customers or the information
necessary for sub-accounting; (viii) if required by law, forwarding shareholder
communications (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to Customers;
(ix) forwarding to Customers proxy statements and proxies containing any
proposals regarding the Administration Agreement; (x) employee benefit plan
recordkeeping, administration, custody and trustee services; (xi) general
shareholder liaison services; and (xii) providing such other similar services as
may be reasonably requested.
The Company may suspend or reduce payments under the Administration Plan at any
time, and payments are subject to the continuation of the Administration Plan
described above and the terms of the Administration Agreement between
Institutions and the Company. See the SAI for more details on the Administration
Plan.
The Administration Plan also provides that, to the extent any portion of the
fees payable under the Administration Plan is deemed to be for services
primarily intended to result in the sale of LifeGoal Portfolio shares, such fees
are deemed approved and may be paid under the Administration Plan. Accordingly,
the Administration Plan has been approved and will be operated pursuant to Rule
12b-1 under the 1940 Act.
The Company understands that Institutions may charge fees to their Customers who
are the owners of Primary B Shares in connection with their Customers' accounts.
These fees would be in addition to any amounts which may be received by an
Institution under its Administration Agreement with the Company. The
Administration Agreement requires an Institution to disclose to its Customers
any compensation payable to the Institution by the Company and any other
compensation payable by the Customers in connection with the investment of their
assets in Primary B Shares. Customers of Institutions should read this
Prospectus in light of the terms governing their accounts with their
Institutions.
Conflict of interest restrictions may apply to the receipt by Institutions of
compensation from the Company in connection with the investment of fiduciary
assets in
19
<PAGE>
Primary B Shares. Institutions, including banks regulated by the Comptroller of
the Currency, the Federal Reserve Board, or the Federal Deposit Insurance
Corporation, and investment advisers and other money managers subject to the
jurisdiction of the SEC, the Department of Labor, or state securities
commissions, are urged to consult their legal advisers before investing such
assets in Primary B Shares.
How The LifeGoal Portfolios Value Their Shares
The net asset value of a share of each class is calculated by dividing the total
value of its assets, less liabilities, by the number of shares in the class
outstanding. Shares of each of the LifeGoal Portfolios are valued as of the
close of regular trading on the Exchange (currently 4:00 p.m., Eastern time) on
each Business Day. Currently, the days on which the Exchange is closed (other
than weekends) are: New Year's Day, Presidents' Day, Good Friday, Memorial Day
(observed), Independence Day, Labor Day, Thanksgiving and Christmas.
The Nations Funds determine their net asset value per share on a daily basis.
The net asset value of the LifeGoal Portfolio shares will be determined by
reference to the net asset value of the underlying Nations Fund.
How Dividends And Distributions Are Made;
Tax Information
DIVIDENDS AND DISTRIBUTIONS
Each LifeGoal Portfolio declares and pays dividends from net investment income
quarterly. Each LifeGoal Portfolio's net realized capital gains (including net
short-term capital gains) are distributed at least annually.
Primary B Shares of LifeGoal Portfolios are eligible to receive dividends when
declared, provided, however, that the purchase order for such shares is received
at least one day prior to the dividend declaration and such shares continue to
be eligible for dividends through and including the day before the redemption
order is executed.
The net asset value of Primary B Shares in LifeGoal Portfolios will be reduced
by the amount of any dividend or distribution. Dividends are paid in the form of
additional Primary B Shares of the same LifeGoal Portfolio unless the Customer
or investor has elected no less than ten business days prior to the date of
distribution to receive payment in cash. Such election, or any revocation
thereof, must be made in writing to LifeGoal Portfolio's Transfer Agent and will
become effective with respect to dividends paid after its receipt.
TAX INFORMATION
Each of the LifeGoal Portfolios intends to qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"). In
general, such qualification relieves a LifeGoal Portfolio of liability for
federal income tax to the extent all of its annual earnings are distributed in
accordance with the Code. Each LifeGoal Portfolio intends to distribute all of
its earnings each taxable year.
Any distributions by a LifeGoal Portfolio of its net investment income
(including net foreign currency gains) and the excess, if any, of its net
short-term capital gain over its net long-term capital loss will be taxable as
ordinary income to shareholders who are not currently exempt from federal income
tax, whether such income is received in cash or reinvested in additional shares.
(Federal income tax for distributions to an Individual Retirement Account are
generally deferred under the Code.)
Corporate shareholders in the LifeGoal Portfolios may be entitled to the
dividends-received deduction for distributions from those funds investing in the
stock of domestic corporations to the extent of the total qualifying dividends
received by the distributing fund. Corporate shareholders of the Portfolio may
be eligible for the dividends-received deduction on the dividends paid by the
LifeGoal Portfolios to the extent that each LifeGoal Portfolio's income is
derived from dividends (which, if received directly, would qualify for such
deduction) received from domestic corporations. In order to qualify for the
dividends-received deduction, a corporate shareholder must hold the LifeGoal
Portfolio shares paying the dividends upon which the deduction is based for at
least 46 days.
Substantially all of the net realized long-term capital gains of the LifeGoal
Portfolios, if any, will be distributed at least annually to the LifeGoal
Portfolios' shareholders. The LifeGoal Portfolios will generally have no tax
liability with respect to such gains, and the distributions will be taxable to
such shareholders who are not currently exempt from federal income tax as
long-term capital gains, regardless of how long the shareholders have held such
LifeGoal Portfolios' shares and whether such gains are received in cash or
reinvested in additional shares.
20
<PAGE>
Each year, shareholders will be notified as to the amount and federal tax status
of all dividends and capital gain distributions paid during the prior year. Such
dividends and distributions may also be subject to state and local taxes.
Dividends and capital gain distributions declared in October, November or
December of any year payable to shareholders of record on a specified date in
such months will be deemed to have been received by shareholders and paid by a
LifeGoal Portfolio on December 31 of such year in the event such dividends and
distributions are actually paid during January of the following year.
Federal law requires the Company to withhold 31% from any dividends (other than
exempt-interest dividends) and capital gain distributions paid by the Company
and/or redemptions (including exchange redemptions) to individual shareholders
unless the shareholder properly furnishes a certified, correct Taxpayer
Identification Number and certifies that withholding does not apply. Such
withholding is also required if the Internal Revenue Service notifies the
Company that the Taxpayer Identification Number provided by the shareholder is
incorrect or that the shareholder is otherwise subject to such withholding.
Amounts withheld are applied to the shareholder's federal tax liability, and a
refund may be obtained from the Internal Revenue Service if withholding results
in overpayment of tax. Federal law also requires the LifeGoal Portfolios to
withhold 30% or the applicable tax treaty rate from dividends paid to certain
nonresident alien, non-U.S. partnership and non-U.S. corporation shareholder
accounts.
The foregoing discussion is based on tax laws and regulations that were in
effect as of the date of this Prospectus and summarizes only some of the
important tax considerations generally affecting the LifeGoal Portfolios and
their shareholders. It is not intended as a substitute for careful tax planning.
Accordingly, potential investors should consult their tax advisors with specific
reference to their own tax situations. Further tax information is contained in
the SAI.
21
<PAGE>
Prospectus
Investor A Shares
October 15, 1996
LIFEGOAL PORTFOLIOS
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
NATIONS FUND
Investment Adviser: NationsBanc Advisors, Inc.
Investment Sub-Adviser: TradeStreet Investment Associates, Inc.
Distributor: Stephens Inc.
<PAGE>
PROSPECTUS
Investor A Shares
October 15, 1996
This Prospectus describes three diversified investment portfolios, LifeGoal
Growth Portfolio, LifeGoal Balanced Growth Portfolio, and LifeGoal Income and
Growth Portfolio (each a "LifeGoal Portfolio" and, collectively, the "LifeGoal
Portfolios"), of Nations LifeGoal Funds, Inc. (the "Company"), an open-end
management investment company in the Nations Fund Family. The LifeGoal
Portfolios invest substantially all of their assets in certain other funds
within the Nations Fund Family. These underlying funds are referred to in this
Prospectus as "Nations Funds". This Prospectus describes one class of shares
of each LifeGoal Portfolio -- Investor A Shares.
This Prospectus sets forth concisely the information about each LifeGoal
Portfolio that a prospective purchaser of Investor A Shares should consider
before investing. Investors should read this Prospectus and retain it for
future reference. Additional information about the LifeGoal Portfolios is
contained in a separate Statement of Additional Information (the "SAI") that
has been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request without charge by writing or calling the Nations Fund
Family at its address or telephone number shown below. The SAI for the
LifeGoal Portfolios, dated the same date as this Prospectus, is incorporated
by reference in its entirety into this Prospectus. NationsBanc Advisors, Inc.
("NBAI") is the investment adviser to the LifeGoal Portfolios. TradeStreet
Investment Associates, Inc. ("TradeStreet") is the investment sub-adviser to
the LifeGoal Portfolios. As used in this Prospectus, the "Adviser" refers to
NBAI and/or TradeStreet as the context may require.
SHARES OF THE NATIONS FUND FAMILY ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR ISSUED, ENDORSED OR GUARANTEED BY, NATIONSBANK, N.A.
("NATIONSBANK") OR ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT INSURED BY THE
U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE LIFEGOAL
PORTFOLIOS INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
NATIONSBANK AND CERTAIN OF ITS AFFILIATES PROVIDE CERTAIN ADVISORY AND OTHER
SERVICES TO THE NATIONS FUND FAMILY, FOR WHICH THEY ARE COMPENSATED.
STEPHENS INC., WHICH IS NOT AFFILIATED WITH NATIONSBANK, IS THE SPONSOR AND
ADMINISTRATOR AND SERVES AS THE DISTRIBUTOR FOR THE LIFEGOAL PORTFOLIOS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
LIFEGOAL PORTFOLIOS:
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
For Portfolio information
call:
1-800-321-7854
Nations Fund Family
c/o Stephens Inc.
One NationsBank Plaza
33rd Floor
Charlotte, NC 28255
NATIONS FUND
<PAGE>
Table Of Contents
About The LifeGoal Portfolios
Prospectus Summary 3
Expenses Summary 4
Objectives 6
How Objectives Are Pursued 7
Description Of Underlying Nations Funds
-- Investment Objectives, Policies And Practices 9
How Performance Is Shown 13
How The LifeGoal Portfolios Are Managed 14
Organization And History 17
About Your
Investment
How To Buy Shares 17
How To Redeem Shares 19
How To Exchange Shares 19
Shareholder Servicing and Distribution Plans 20
How The LifeGoal Portfolios Value Their Shares 21
How Dividends And Distributions Are Made;
Tax Information 21
No person has been authorized to give any
information or to make any representations not
contained in this Prospectus, or in the LifeGoal
Portfolios' SAI incorporated herein by reference, in
connection with the offering made by this Prospectus
and, if given or made, such information or
representations must not be relied upon as having
been authorized by the LifeGoal Portfolios or the
distributor. This Prospectus does not constitute an
offering by LifeGoal Portfolios or by the
distributor in any jurisdiction in which such
offering may not lawfully be made.
2
<PAGE>
About The LifeGoal Portfolios
Prospectus Summary
(Bullet) Type of Company: Open-end management investment company.
(Bullet) Investment Objectives and Policies:
(Bullet) LifeGoal Growth Portfolio's investment objective is to seek capital
appreciation through exposure to a variety of equity market segments.
(Bullet) LifeGoal Balanced Growth Portfolio's investment objective is
to seek total return through a balanced portfolio of equity
and fixed income securities.
(Bullet) LifeGoal Income and Growth Portfolio's investment
objective is to seek current income and modest
growth to protect against inflation and to preserve
purchasing power.
The LifeGoal Portfolios are designed for long-term
investors seeking the benefits of asset allocation
and diversification. Unlike traditional mutual
funds, which invest directly in individual
securities, the LifeGoal Portfolios pursue their
investment objectives by allocating their assets
among various Nations Funds.
(Bullet) Investment Adviser: NationsBanc Advisors, Inc. serves as the investment
adviser to the LifeGoal Portfolios. NBAI also advises more than 43
other funds in the Nations Fund Family. TradeStreet Investment
Associates, Inc. provides sub-advisory services to the LifeGoal
Portfolios and to more than 39 other funds in the Nations Fund Family.
(Bullet) Dividends and Distributions: Each LifeGoal Portfolio declares and pays
dividends from net investment income quarterly. Each LifeGoal
Portfolio's net realized capital gains, including net short-term
capital gains, are distributed at least annually.
(Bullet) Risk Factors: Although the Adviser seeks to achieve the investment
objective of each LifeGoal Portfolio, there is no assurance that it
will be able to do so. Investments in a LifeGoal Portfolio are not
insured against loss of principal. Investments by a LifeGoal Portfolio
in shares of a Nations Fund that holds stocks are subject to stock
market risk, which is the risk that the value of the stocks held by
Nations Funds may decline over short or even extended periods.
Investments by a LifeGoal Portfolio in shares of a Nations Fund that
holds debt securities are subject to interest rate risk, which is the
risk that the value of the debt securities, including securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities
("U.S. Government Obligations"), held by Nations Funds may be adversely
affected by changes in market interest rates. The value of Nations
Funds' investments in debt securities will tend to decrease when
interest rates rise and increase when interest rates fall. In addition,
debt securities which are not backed by the U. S. Government are
subject to credit risk, which is the risk that the issuer may not be
able to pay principal and/or interest when due. Certain of the Nations
Funds may invest portions, and in some cases substantially all, of
their assets in foreign securities. Foreign securities present unique
investment risks, including risks associated with currency
fluctuations, markets that tend to be less developed and more volatile
than U.S. markets that are characterized by less governmental
supervision and lower disclosure standards. Certain of Nations Funds'
investments constitute derivative securities. Certain types of
derivative securities can, under certain circumstances, significantly
increase an investor's exposure to market or other risks. For a
discussion of these and other factors, see "How Objectives Are
Pursued -- Principal Risk Considerations."
(Bullet) Minimum Purchase: $1,000 minimum initial investment per record holder
except that the minimum initial investment is: $500 for Individual
Retirement Account ("IRA") investors; $250 for non-working spousal
IRAs; and $100 for investors participating on a monthly basis in the
Systematic Investment Plan. There is no minimum investment amount for
investments by certain 401(k) and employee pension plans or salary
reduction-Individual Retirement Accounts. The minimum subsequent
investment is $100, except for investments pursuant to the Systematic
Investment Plan. See "How To Buy Shares."
3
<PAGE>
Expenses Summary
Expenses are one of several factors to consider when investing in a LifeGoal
Portfolio. The following tables summarize estimated shareholder transaction and
operating expenses for Investor A Shares of each LifeGoal Portfolio. The
Examples show the cumulative expenses attributable to a hypothetical $1,000
investment in each LifeGoal Portfolio over specified periods.
LIFEGOAL PORTFOLIOS INVESTOR A SHARES
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
LifeGoal
LifeGoal Growth Balanced Growth
Portfolio Portfolio
<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) None None
Maximum Deferred Sales Load (as a percentage of the lower of the original purchase
price or redemption proceeds) None None
<CAPTION>
LifeGoal Income
and Growth
Portfolio
Maximum Sales Load Imposed on Purchases (as a percentage of offering price) None
Maximum Deferred Sales Load (as a percentage of the lower of the original purchase
price or redemption proceeds) None
</TABLE>
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
LifeGoal
LifeGoal Growth Balanced Growth
Portfolio Portfolio
<S> <C> <C>
Management Fees .25% .25%
Rule 12b-1 fees (including shareholder servicing fees) .25% .25%
Other Expenses .0% .0%
Total Operating Expenses .50% .50%
<CAPTION>
LifeGoal Income
and Growth
Portfolio
<S> <C>
Management Fees .25%
Rule 12b-1 fees (including shareholder servicing fees) .25%
Other Expenses .0%
Total Operating Expenses .50%
</TABLE>
Examples:
You would pay the following expenses on a $1,000 investment in Investor A Shares
of the indicated LifeGoal Portfolio, assuming indirect expenses (the LifeGoal
Portfolios' share of the expenses incurred by the underlying Nations Funds) at
the midpoint of the after waiver ranges shown below and further assuming: (1) a
5% annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
LifeGoal
LifeGoal Growth Balanced Growth
Portfolio Portfolio
<S> <C> <C>
1 Year $15 $13
3 Years $45 $42
<CAPTION>
LifeGoal Income
and Growth
Portfolio
1 Year $12
3 Years $36
</TABLE>
The purpose of the foregoing tables is to assist an investor in understanding
the various shareholder transaction and operating expenses that an investor in
Investor A Shares of a LifeGoal Portfolio can expect. The figures in the above
tables show the basis on which payments will be made, except that Other Expenses
are estimated for the LifeGoal Portfolios' current fiscal year and the Examples
include indirect expenses for the underlying Nations Funds' most recent fiscal
year (or estimates thereof for new funds). For more complete descriptions of the
LifeGoal Portfolios' operating expenses, see "How The LifeGoal Portfolios Are
Managed."
THE FOREGOING SHOULD NOT BE CONSIDERED TO BE AN ACTUAL REPRESENTATION OF PAST OR
FUTURE PERFORMANCE. ACTUAL EXPENSES AND RATES OF RETURN MAY BE GREATER OR LESS
THAN THOSE SHOWN.
4
<PAGE>
Expense Ratios For Underlying Nations Funds (Primary A Shares)
The following table provides the annualized expense ratios for Primary A Shares
of each of the selected underlying Nations Fund's investments for its fiscal
period ended March 31, 1996.
<TABLE>
<CAPTION>
(after fee waivers
and/or expense
reimbursements)
<S> <C>
Nations Disciplined Equity Fund 1.02%
Nations Capital Growth Fund .96%
Nations Value Fund .96%
Nations Equity Income Fund .90%
Nations Managed Index Fund* .50%
Nations Emerging Growth Fund .99%
Nations Managed SmallCap Index Fund* .50%
Nations International Equity Fund 1.17%
Nations Pacific Growth Fund 1.76%
Nations Emerging Markets Fund 2.13%
Nations Prime Fund .30%
Nations Strategic Fixed Income Fund .72%
Nations Diversified Income Fund .77%
Nations Short-Intermediate Government Fund .63%
Nations Short-Term Income Fund .55%
Nations Global Government Income Fund 1.32%
* Because this Nations Fund had not commenced operations as of March 31, 1996, the expense
ratios are based on estimates for its current fiscal year.
<CAPTION>
(before fee
waivers and/or
expense
reimbursements)
Nations Disciplined Equity Fund 1.02%
Nations Capital Growth Fund .96%
Nations Value Fund .96%
Nations Equity Income Fund .90%
Nations Managed Index Fund* .70%
Nations Emerging Growth Fund .99%
Nations Managed SmallCap Index Fund* .70%
Nations International Equity Fund 1.18%
Nations Pacific Growth Fund 1.76%
Nations Emerging Markets Fund 2.13%
Nations Prime Fund .37%
Nations Strategic Fixed Income Fund .83%
Nations Diversified Income Fund .87%
Nations Short-Intermediate Government Fund .86%
Nations Short-Term Income Fund .88%
Nations Global Government Income Fund 1.32%
* Because this Nations Fund had not commenced operations as of March 31, 1996, the expense
ratios are based on estimates for its current fiscal year.
</TABLE>
LifeGoal Portfolios' Indirect Expenses
Based on the foregoing figures and the expected percentage investment ranges in
the underlying Nations Funds, the range of the weighted average indirect expense
ratio for each LifeGoal Portfolio is as follows:
<TABLE>
<CAPTION>
(after fee waivers
and/or expense
reimbursements)
<S> <C>
LifeGoal Growth Portfolio .86% to 1.01%
LifeGoal Balanced Growth Portfolio .89% to .94%
LifeGoal Income and Growth Portfolio .56% to .73%
<CAPTION>
(before fee
waivers and/or
expense
reimbursements)
LifeGoal Growth Portfolio .92% to 1.05%
LifeGoal Balanced Growth Portfolio .97% to 1.04%
LifeGoal Income and Growth Portfolio .77% to .81%
</TABLE>
The indirect expense ratios fluctuate within these ranges depending upon how
assets are allocated among the Nations Funds. The LifeGoal Portfolios will be
invested in the Primary A Shares of the underlying Nations Funds and, under
normal market conditions, will be allocated among the various fund categories in
the percentages shown below. Under extraordinary circumstances, a LifeGoal
Portfolio's investment in one or more Nations Funds might exceed these ranges.
For temporary defensive purposes, any LifeGoal Portfolio may invest up to 100%
of its assets in Nations Prime Fund.
<PAGE>
5
<PAGE>
Objectives
(Bullet) LifeGoal Growth Portfolio -- LifeGoal Growth Portfolio's investment
objective is to seek capital appreciation through exposure to a variety
of equity market segments.
<TABLE>
<CAPTION>
Fund Category Range
<S> <C>
Large-Capitalization Domestic Equity Funds 35-75%
Small/Mid-Capitalization Domestic Equity Funds 20-35%
Core International Equity Funds 10-20%
Non-Core International Equity Funds 0-10%
<CAPTION>
Fund Category Funds
Large-Capitalization Domestic Equity Funds Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Value Fund
Small/Mid-Capitalization Domestic Equity Funds Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Core International Equity Funds Nations International Equity Fund
Non-Core International Equity Funds Nations Emerging Markets Fund
Nations Pacific Growth Fund
</TABLE>
(Bullet) LifeGoal Balanced Growth Portfolio -- LifeGoal Balanced Growth
Portfolio's investment objective is to seek total return through a
balanced portfolio of equity and fixed income securities.
<TABLE>
<CAPTION>
Fund Category Range
<S> <C>
Large-Capitalization Domestic Equity Funds 15-35%
Small/Mid-Capitalization Domestic Equity Funds 10-20%
Core International Equity Funds 5-15%
Core Bond Funds 40-60%
<CAPTION>
Fund Category Funds
Large-Capitalization Domestic Equity Funds Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Value Fund
Small/Mid-Capitalization Domestic Equity Funds Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Core International Equity Funds Nations International Equity Fund
Core Bond Funds Nations Diversified Income Fund
Nations Strategic Fixed Income Fund
Nations Global Government Income Fund
</TABLE>
(Bullet)LifeGoal Income and Growth Portfolio -- LifeGoal Income and Growth
Portfolio's investment objective is to seek current income and modest
growth to protect against inflation and to preserve purchasing power.
<TABLE>
<CAPTION>
Fund Category Range
<S> <C>
Large-Capitalization Domestic Equity Funds 10-30%
Core International Equity Funds 0-10%
Short Duration Bond Funds 50-90%
Money Market Funds 0-20%
<CAPTION>
Fund Category Funds
Large-Capitalization Domestic Equity Funds Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Value Fund
Core International Equity Funds Nations International Equity Fund
Short Duration Bond Funds Nations Short-Term Income Fund
Nations Short-Intermediate Government
Fund
Money Market Funds Nations Prime Fund
</TABLE>
The LifeGoal Portfolios are intended primarily for long-term investors. The
Portfolios are structured as "funds of funds" that allocate substantially all of
their assets to investments in Primary A Shares of various Nations Funds. The
performance of the LifeGoal Portfolios will, therefore, correspond to the
performance of the various underlying Nations Funds. Additional information
about the underlying Nations Funds, including their investment objectives,
investment policies and practices, is set forth below under "Descriptions of
Underlying Nations Funds." The Adviser allocates and reallocates each LifeGoal
Portfolio's assets among the underlying Nations Funds identified above, and
potentially other Nations Funds, based on the percentage ranges shown above for
the various fund categories. As discussed below under "The Asset Allocation
Process," a LifeGoal Portfolio's actual investment allocation may deviate from
the percentage ranges shown above, over the short or long term.
6
<PAGE>
How Objectives Are Pursued
Benefits of Asset Allocation
For most investors, choosing the mix of asset classes is the most important
investment decision they can make. Asset allocation is the single greatest
determinant of an investor's return and risk. It is the process of developing a
diversified portfolio by mixing different asset classes in varying portions to
gain exposure to the different return and risk characteristics of each asset
class. Market segments (i.e., international stocks, domestic stocks, bonds) tend
to react in different ways to changes in economic conditions. Therefore, an
investment approach that combines various market segments and asset classes may
reduce overall portfolio volatility.
The assets of each LifeGoal Portfolio are allocated among various asset classes
through their investment in different fund categories. Each LifeGoal Portfolio
has its own asset allocation strategy which gives it a distinctive risk profile
and offers different return potential. Investors should select the LifeGoal
Portfolio (or Portfolios) which best matches their investment goals, risk
tolerance and investment horizon.
In general, the greater the LifeGoal Portfolio's allocation to equity funds, the
greater the potential return and risk of price decline. Because of equity funds'
greater risks, investors in the LifeGoal Portfolios that have a higher
allocation to equity funds should have a longer investment horizon.
Although the Adviser will seek to achieve the investment objective of each
LifeGoal Portfolio, there is no assurance that a LifeGoal Portfolio will be able
to do so. No single LifeGoal Portfolio should be considered, by itself, to
provide a complete investment program for any investor. The net asset value of
the shares of a LifeGoal Portfolio fluctuates based on fluctuations in the
values of the underlying Nations Funds' shares, which, in turn, fluctuate based
on market conditions and other factors. Therefore, investors should not rely
upon LifeGoal Portfolios for short-term financial needs. The LifeGoal Portfolios
are not intended to provide a vehicle for participating in short-term swings in
the stock market, and their shares are not insured against loss of principal.
The Asset Allocation Process
Subject to the general supervision of the Company's Board of Directors, the
Adviser is responsible for allocating and reallocating each LifeGoal Portfolio's
assets among the Nations Funds in which it invests, and for rebalancing such
portfolio allocations. In this context, allocation is the process of setting or
changing the weightings of the different fund categories and Nations Funds
within a particular LifeGoal Portfolio's portfolio. The "weightings" of the
different fund categories and Nations Funds within a particular LifeGoal Fund's
portfolio are the percentage targets that the Adviser sets for investment in a
particular fund category or Nations Fund. All fund category weightings will be
within the overall percentage ranges shown above. Rebalancing is the process of
bringing portfolio allocations back into alignment with the applicable
weightings. A LifeGoal Portfolio's investments are continuously monitored and
are reallocated as often as the Adviser deems appropriate. In addition,
portfolio allocations and performance are reviewed at least quarterly for
rebalancing at the discretion of the Adviser.
Although the Adviser may rebalance each LifeGoal Portfolio's holdings quarterly,
it expects to rebalance less often. Thus, over time, it is likely that the
percentage of a particular LifeGoal Portfolio's assets actually invested in a
particular Nations Fund or fund category will not correspond precisely with the
applicable weightings. Also, depending on the frequency of rebalancings, the
percentage of a particular LifeGoal Portfolio's assets actually invested in a
particular fund category at any given time may deviate from the percentage
ranges shown above, and such deviation may continue for some time.
The Adviser has adopted certain policies designed to reduce the extent of such
deviations. For example, if any fund category percentage ranges are exceeded,
the Adviser will allocate new investment dollars to the other fund categories.
Likewise, the Adviser will allocate new investment dollars to fund categories
whose minimum percentages have not been met. Redemption requests, however, will
generally be met by redeeming shares of underlying Nations Funds according to
the applicable weightings.
Determining the asset allocation applicable to each LifeGoal Portfolio is a two
step process. The first step is determining the broad asset classes for each
LifeGoal Portfolio -- large and small capitalization domestic stocks, foreign
stocks, bonds and money market securities. In making this determination, the
Adviser will consult the relevant historical data for the returns of each asset
class in various economic scenarios. Those returns will be reviewed in the
context of the Adviser's outlook for the economy and markets and adjusted for
reasonableness. The second step in the process is to determine the particular
Nations Funds in which each LifeGoal Portfolio will invest. The Adviser looks at
historic returns and valuations to determine which Nations Funds are most
appropriate. Determining how the individual Nations Funds may interact with one
another within a portfolio is a critical part of this second step.
7
<PAGE>
Although it is expected that the LifeGoal Portfolios will invest in the Nations
Funds identified in "Description of Underlying Nations Funds," the Adviser has
the discretion to change the particular Nations Funds used as underlying
investments for the LifeGoal Portfolios. Among other things, the Adviser may
substitute or include other funds from the Nations Fund Family, including any
introduced subsequent to this Prospectus, as permissible investments for the
LifeGoal Portfolios.
General Characteristics and Risk Factors of the Major Asset Classes
The underlying Nations Funds invest in various stocks, bonds and money market
securities. This section provides a brief summary of the general characteristics
and overall risk factors associated with these asset classes. Additional
information is provided under "Description of Underlying Nations Funds" below
and in the prospectuses of the underlying Nations Funds.
Common stocks represent ownership in a company. Stock prices move with changes
in a company's current earnings and its prospects for the future, and with
overall stock market conditions. Stocks offer the potential for price
appreciation and rising dividends. While smaller companies usually reinvest
their earnings back into the company and therefore pay minimal, if any,
dividends, they offer the possibility of greater appreciation.
Historically, stocks have provided higher returns than bonds or money market
securities. Therefore, they have also provided the greatest protection against
inflation and the resulting erosion of purchasing power. However, the additional
return has been accompanied by additional volatility. Equity investors should
have a long-term investment horizon and be willing to accept the inevitable
periods of market declines.
Bonds are a contract. The issuer has an obligation to pay a specified rate of
interest (which may be fixed or variable) at specified times and to repay the
bond's principal value upon maturity. Bonds are subject to credit risk and to
interest rate risk. Credit risk refers to the possibility that a bond's price
may fall due to a credit downgrade or a principal or interest payment default.
Interest rate risk refers to a bond's price movement in response to changes in
market interest rates. As a general rule, when market interest rates rise, bond
prices fall. Typically, the longer the maturity of a bond, the greater the
potential price fluctuation.
Money market securities are short term debt obligations issued primarily by the
U.S. Government, government agencies or corporations. High quality money market
securities are very low risk investments; their low risk, however, is
accompanied by lower potential returns relative to other investments.
Investment Company Securities: Each of the LifeGoal Portfolios intends, as a
fundamental policy, to concentrate investments by investing 25% or more of its
total assets in the mutual fund industry.
Although some of the Nations Funds in which the LifeGoal Portfolios invest do
not necessarily share the same investment objective as the investing LifeGoal
Portfolio, those Nations Funds will be selected by the Adviser based on the
asset allocation process described above.
Although each LifeGoal Portfolio intends to invest substantially all of its
assets in some or all of the underlying Nations Funds, each LifeGoal Portfolio
reserves the right to invest in obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, repurchase agreements, and money
market instruments with respect to any assets not so invested in Nations Funds.
It is not expected that any LifeGoal Portfolio will invest more than 5% of its
assets in any of these direct investments.
Investment Limitations: Each LifeGoal Portfolio is subject to a number of
investment limitations, which are described in the SAI. Among other things, the
LifeGoal Portfolios' fundamental policies permit them to borrow money from banks
for temporary or emergency purposes, subject to percentage and other
limitations, and to enter into forward purchase commitments and issue multiple
classes of shares. The investment objective, policies and limitations of each
LifeGoal Portfolio, unless otherwise specified, may be changed without a vote of
the LifeGoal Portfolio's shareholders. If the investment objective, policies or
limitations of a LifeGoal Portfolio change, shareholders should consider whether
the LifeGoal Portfolio remains an appropriate investment in light of their
current position and needs.
In order to register a LifeGoal Portfolio's shares for sale in certain states, a
LifeGoal Portfolio may make commitments more restrictive than the investment
policies and limitations described in this Prospectus and the SAI. Should a
LifeGoal Portfolio determine that any such commitment is no longer in the best
interests of the LifeGoal Portfolio, it may consider terminating sales of its
shares in the states involved.
The Nations Funds also have adopted certain investment restrictions which may be
more or less restrictive than those applicable to the LifeGoal Portfolios,
thereby allowing a LifeGoal Portfolio to participate in certain investment
strategies indirectly that are prohibited under the investment restrictions
described in the LifeGoal Portfolios' SAI. The investment restrictions of the
underlying Nations Funds are set forth in their respective prospectuses and
statements of additional information.
8
<PAGE>
Portfolio Turnover: Generally, LifeGoal Portfolio will purchase portfolio
securities for capital appreciation or investment income, or both, and not for
short-term trading profits. The LifeGoal Portfolios' portfolio turnover rates
are not expected to exceed 50%.
<PAGE>
Description of Underlying Nations Funds --
Investment Objectives, Policies and Practices
The LifeGoal Portfolios seek to achieve their investment objectives by investing
in certain Nations Funds (each, a "Fund"). The following section provides
summaries of the Nations Funds' investment objectives, policies and practices.
These summaries are intended to help investors understand some of the more
significant aspects of the underlying Nations Funds, but are not intended to be
comprehensive disclosures of all policies, practices and risks associated with
investments by the LifeGoal Portfolios in the Nations Funds. To receive a
prospectus for any underlying Nations Fund, which contains more complete
information, please call Nations Fund at 1-800 982-2271.
Equity Funds
Nations Capital Growth Fund: The Fund's investment objective is to seek growth
of capital by investing in companies that are believed to have superior earnings
growth potential. The Fund invests in larger capitalization, high-quality
companies which possess above average earnings growth potential. While the
Fund's investments will generally be made in companies which share some of the
following characteristics:
(Bullet) above-average earnings growth relative to the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index")1;
(Bullet) established operating histories, strong balance sheets and favorable
financial characteristics; and
(Bullet) above-average return on equity relative to the S&P 500 Index,
the Fund has a flexible charter which allows it to take advantage of other
opportunities. Under normal market conditions, the Fund invests at least 65% of
its total assets in common stocks. In addition to common stocks, the Fund may
also invest in preferred stocks, securities convertible into common stocks and
other types of securities having common stock characteristics such as rights and
warrants. The Fund may invest a portion of its total assets in foreign
securities.
Nations Disciplined Equity Fund: The Fund's investment objective is to seek
growth of capital by investing in companies that are expected to produce
significant increases in earnings per share. The Adviser believes that companies
experiencing positive earnings trends have the potential to generate significant
increases in share price. The Adviser identifies securities for inclusion in the
portfolio through a combination of quantitative and qualitative methods. Using a
computer modeling program, the portfolio manager identifies securities that have
experienced positive earnings trends. Fundamental research is used to support
the model's analysis. Under normal market conditions, the Fund invests at least
65% of its total assets in common stocks of domestic issuers. The Fund also may
invest in preferred stocks, securities convertible into common stock, warrants
and rights to purchase common stock, options, U.S. Government and corporate debt
securities, and foreign securities.
Nations Emerging Growth Fund: The Fund's investment objective is to seek capital
appreciation by investing in emerging growth companies that are believed to have
superior long-term earnings growth prospects. The Fund invests primarily in
emerging growth companies with revenues between $50 million and $1.5 billion.
The Fund focuses on companies with above average earnings growth rates and
profit margins, yet the portfolio may also include positions in special
situation companies whose growth is expected to accelerate. In selecting
companies for investment, the Adviser considers overall growth prospects,
financial condition, competitive position, technology, research and development,
productivity, innovation and management strength among other factors. Under
normal market conditions, the Fund invests at least 65% of its total assets in
common stocks. The Fund also may invest in securities convertible into common
stocks and may invest a portion of its assets in foreign securities. The
volatility of emerging growth stocks is higher than that of larger companies so,
while they may have greater potential for gains, they also carry greater
downside risk.
Nations Equity Income Fund: The Fund's investment objective is to seek current
income and growth of capital by investing primarily in companies with above
average dividend yields. The investment program of the Fund is based on several
premises. First, dividends are normally a more stable and predictable source of
return than capital appreciation. Second, diversifying equity holdings in a
manner that includes every major economic sector con-
1 "Standard & Poor's 500" is a registered service mark of Standard & Poor's
Corporation ("S&P"), which does not sponsor, and is not affiliated with,
LifeGoal Portfolios or any of the Nations Funds.
9
<PAGE>
tributes to reduced volatility, without a commensurate reduction in expected
investment return. Finally, investing in dividend paying stocks in all the
economic sectors can provide greater income than the S&P 500 Index with less
volatility. Collectively, these traits may be combined in such a fashion as to
produce returns in excess of the market, as measured by the S&P 500 Index, on a
comparable risk basis.
Under normal circumstances, the Fund will invest at least 65% of its assets in
income-producing common stocks, including securities convertible into or
ultimately exchangeable for common stock (i.e., convertible bonds or convertible
preferred stock), whose prospects for dividend growth and capital appreciation
are considered favorable by the Adviser.
The Fund also may invest its assets in fixed-income securities (corporate and
government bonds of various maturities), preferred stocks and warrants and other
debt securities, including up to 5% of its assets in debt securities that are
rated below investment grade (e.g. rated "BB" by S&P) or if not rated, are of
equivalent investment quality as determined by the Adviser. The Fund may invest
a portion of its total assets in foreign securities.
Nations Managed Index Fund: The Fund's investment objective is to seek, over the
long-term, to provide a total return which (gross of fees and expenses) exceeds
the total return of the S&P 500 Index. The Fund will invest in selected equity
securities that are included in the S&P 500 Index. The S&P 500 Index is a
capitalization weighted index consisting of 500 common stocks chosen for market
size, liquidity and industry group representation.
Unlike traditional index funds, the Fund has a "managed" aspect. The Adviser
believes that a managed equity index portfolio can provide investors with
positive incremental performance relative to the S&P 500 Index while minimizing
the downside risk of underperforming the index over time. The Adviser ranks the
attractiveness of each security in the S&P 500 Index according to a multifactor
valuation model. The Adviser then screens out the lower ranked stocks resulting
in a portfolio of 350 to 400 holdings that capture the investment
characteristics of the S&P 500 Index. Under normal conditions, the Adviser will
attempt to invest as much of the Fund's assets as is practical and, in any event
at least 65% of its total assets, in common stocks which are included in the S&P
500 Index. The Fund is expected, however, to maintain a position in high-quality
short-term debt securities and money market instruments to meet redemption
requests.
Nations Managed SmallCap Index Fund: The Fund's investment objective is to seek,
over the long-term, to provide total return which (gross of fees and expenses)
exceeds that of the Standard & Poor's SmallCap 600 Index (the "S&P 600 Index").2
The Fund will invest in selected equity securities that are included in the S&P
600 Index. The S&P 600 Index is a capitalization weighted index consisting of
600 domestic stocks which captures the economic and industry characteristics of
small stock performance.
Unlike traditional index funds, the Fund has a "managed" aspect. The Adviser
believes that a managed equity index portfolio can provide investors with
positive incremental performance relative to the S&P 600 Index while minimizing
the downside risk of underperforming the index over time. From the initial S&P
600 Index stock universe, the Adviser ranks the attractiveness of each security
according to a multifactor valuation model. The Adviser then screens out the
lower ranked stocks resulting in a portfolio of approximately 450 to 500
holdings that capture the investment characteristics of the S&P 600 Index. Under
normal conditions, substantially all of the Fund's assets, and, in any event at
least 65% of its total assets, will be invested in common stocks which are
included in the S&P 600 Index. The Fund is expected, however, to maintain a
position in high-quality short-term debt securities and money market instruments
to meet redemption requests.
Nations Value Fund: The Fund's investment objective is to seek growth of capital
by investing in companies believed to be undervalued. The Fund invests in high
quality, large capitalization stocks which are believed to be undervalued
relative to the overall stock market or other stocks within the same industry.
The principal factor considered by the Adviser in making this determination is
the ratio of a stock's price to earnings. The Adviser believes that companies
with lower price to earnings ratios are more likely to provide better
opportunities for capital appreciation. This "value" approach generally produces
a dividend yield greater than the market average. Through a combination of the
"value" approach and broad diversification among economic sectors and
industries, the Fund pursues above-average returns while seeking to avoid
above-average risk.
Under normal market conditions, at least 65% of the Fund's total assets are
invested in domestic stocks. The Fund may invest a portion of its assets in
securities of foreign securities as well as U.S. Government Obligations and
investment grade debt securities of domestic companies.
International Funds
Nations Emerging Markets Fund: The Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of
companies in emerging market countries such as those in Latin America, Eastern
Europe, the Pacific Basin, the Far
2 "Standard & Poor's 600" is a registered service mark of S&P.
10
<PAGE>
East, Africa and India. Under normal market conditions, the Fund will invest
at least 65% of its total assets in equity securities of companies in emerging
markets. The Fund also may invest in other types of instruments, including
debt securities. The Fund intends to invest in at least three different
countries, although it may, from time to time, invest all of its assets in a
single country. In such cases, events occurring in such country are more
likely to affect the Fund's investments.
Nations International Equity Fund: The Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of
non-United States companies in Europe, Australia, the Far East and other areas,
including developing countries. The Fund invests in both established and
developing markets around the world. While emphasizing established markets, the
Fund typically has some exposure to the more rapidly growing markets of the
Pacific Basin, Latin America and Eastern Europe.
Under normal market conditions, the Fund will invest at least 65% of its assets
in common stocks of non-United States companies and may invest up to 35% of its
assets in any other type of security, including convertible securities,
preferred stocks, and various debt securities. Under normal circumstances, the
Fund invests in at least three different countries. Under unusual circumstances,
however, the Fund may invest all of its assets in one or two countries. In such
cases, events occurring in those countries are more likely to affect the Fund's
investments.
Nations Pacific Growth Fund: The Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of
companies in the Pacific Basin and the Far East (excluding Japan). Under normal
market conditions, the Fund will invest at least 65% of its total assets in
securities of issuers that conduct their principal business activities in
countries of the Pacific Basin and Far East, except for Japan. The Fund intends
to invest in at least three different countries, although it may, from time to
time, invest all or a significant portion of its assets in a single country. In
such cases, events occurring in that country are more likely to affect the
Fund's investments. The Fund will focus on equity securities, but may also
invest in investment grade debt obligations.
Nations Global Government Income Fund: Nations Global Government Income Fund's
investment objective is to seek total return by investing primarily in high
quality debt securities issued by governments, banks and supranational entities
located throughout the world.
In seeking to achieve its investment objective, the Fund will invest under
normal market conditions at least 65% of its total assets in debt securities
issued or guaranteed by U.S. or foreign governments (including states, provinces
and municipalities) or their agencies, instrumentalities or subdivisions
("Government Securities"). Except for temporary defensive purposes, the Fund
will concentrate its investments in foreign Government Securities. Concentration
in this context means the investment of more than 25% of the Fund's total assets
in such securities. The Fund may invest in the debt securities of any type of
issuer, including corporations, banks and supranational entities.
The Fund, under normal market conditions, will invest in at least three
different countries. These countries may include the U.S., the countries of
Western Europe, Japan, Australia, New Zealand and Canada. If the Fund invests a
significant portion of its assets at any time in a single country, events
occurring in such country are more likely to affect the Fund's investments. The
Fund may invest in securities of issuers located in any region or country and
that are denominated in any currency. For defensive purposes, the Fund may
temporarily invest substantially all of its assets in U.S. financial markets or
in U.S. dollar-denominated instruments.
Supranational entities are international organizations jointly operated by
multiple sovereign governments including, for example, the World Bank, the
European Coal and Steel Community, the Asian Development Bank, the European
Investment Bank and the Inter-American Development Bank. Supranational entities
generally have no taxing authority and are dependent upon their members for the
funds necessary to pay principal and interest on their debt obligations.
Nations Global Government Income Fund's yield and share price will change based
on changes in domestic or foreign interest rates and in an issuer's
creditworthiness.
Bond Funds
Nations Diversified Income Fund: The Fund's investment objective is to seek
total return with an emphasis on current income by investing in a diversified
portfolio of fixed income securities. The Fund actively seeks opportunities
within various bond market sectors, balancing credit and interest rate risk.
Under normal market conditions, the Fund will invest at least 65% of the total
value of its assets in investment grade debt obligations, including fixed income
securities such as government, government agency and corporate bonds. Up to 35%
of the Fund's total assets may be invested in securities rated lower than
investment grade. Non-investment-grade debt securities are sometimes referred to
as "high yield bonds" or "junk bonds," and tend to have speculative
characteristics, generally involve more risk of principal and income than higher
rated securities, and have yields and market values that tend to fluctuate more
than higher quality securities. Under normal market conditions, it is expected
that the average weighted
11
<PAGE>
maturity of the Fund's portfolio will be greater than
five years. Although the Fund invests primarily in securities of U.S. issuers,
the Fund may invest a portion of its assets in foreign securities.
Nations Short-Intermediate Government Fund: The Fund's investment objective is
to seek high current income consistent with modest fluctuation of principal. The
Fund invests primarily in securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. The Fund invests substantially
all of its assets in U.S. Government Obligations and repurchase agreements
relating to such obligations. Under normal market conditions, it is expected
that the average weighted maturity of the Fund's portfolio will be three to five
years and the duration will not exceed five years.
Nations Short-Term Income Fund: The Fund's investment objective is to seek high
current income consistent with minimal fluctuation of principal. The Fund
invests in a broad range of investment grade debt obligations. Under normal
market conditions, it is expected that the average weighted maturity and the
duration of the Fund's portfolio will not exceed three years. The Fund may
invest a portion of its assets in foreign securities.
Nations Strategic Fixed Income Fund: The Fund's investment objective is to seek
total return by investing in investment grade fixed income securities. The Fund
invests in a broad range of investment grade debt securities. Under normal
market conditions, it is expected that the average weighted maturity of the
Fund's portfolio will be 10 years or less and under no circumstances exceed 15
years. Under normal market conditions, the Fund will invest at least 65% of the
total value of its assets in government, corporate and mortgage-backed
securities. Most obligations acquired by the Fund will be issued by companies or
governmental entities located within the United States. The Fund may invest a
portion of its assets in foreign securities.
Money Market Fund
Nations Prime Fund: The Fund's investment objective is to seek the maximization
of current income to the extent consistent with the preservation of capital and
the maintenance of liquidity. The Fund invests in a diversified portfolio of
high quality money market instruments with maturities of 397 days or less from
the date of purchase. Securities subject to repurchase agreements may bear
longer maturities. The Fund may invest in U.S. Treasury bills, notes and bonds
and other instruments issued directly by the U.S. Government. The Fund may also
invest in bank and commercial instruments that may be available in the money
markets, high quality short-term taxable obligations issued by state and local
governments, and repurchase agreements relating to U.S. Government Obligations.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the Fund can maintain a stable net
asset value of $1.00 per share.
General
Other Investment Practices: Each of the Nations Funds may invest in certain
specified derivative securities, including some or all of the following:
interest rate swaps, caps and floors for hedging purposes; exchange-traded
options; over-the-counter options executed with primary dealers, including long
calls and puts and covered calls to enhance return; and Commodity Futures
Trading Commission-approved U.S. and foreign exchange-traded financial futures
and options thereon for market exposure and/or risk-management. Certain Nations
Funds may lend their portfolio securities to qualified institutional investors,
invest in restricted, private placement and other illiquid securities and engage
in reverse repurchase agreements and dollar roll transactions. Certain
securities that have variable or floating interest rates or demand or put
features may be deemed to have remaining maturities shorter than their nominal
maturities for purposes of determining the average weighted maturity and
duration of the Nations Funds. Certain Nations Funds also may invest in
instruments issued by trusts, partnerships or other issuers, including
pass-through certificates representing participations in, or debt instruments
backed by, the securities owned by such issuers.
In addition to the foregoing investment practices, some of the underlying
Nations Funds may invest in securities issued by other investment companies,
preferred stock, securities convertible into common stock and other types of
securities having common stock characteristics (such as rights and warrants),
guaranteed investment contracts, money market instruments, below-investment
grade debt ("junk bonds"), debt obligations of foreign issuers and stocks of
foreign corporations, obligations of domestic or foreign governments and their
political subdivisions, American Depository Receipts ("ADRs", also called
American Depository Shares), European Depository Receipts ("EDRs"), Global
Depository Receipts ("GDRs"), securities of foreign investment funds or trusts,
real estate investment trust securities, convertible debentures, mortgage-backed
securities, mortgage pass-through certificates, collateralized mortgage
obligations ("CMOs"), mortgage-backed bonds, other asset-backed securities and
obligations of foreign banks and foreign branches of U.S. banks.
Principal Risk Considerations: Investments by a Nations Fund in common stocks
and other equity securities are subject to stock market risks. The value of the
stocks that a Nations Fund holds, like the broader stock market, may decline
over short or even extended periods. The value of a Nations Fund's investments
in debt
12
<PAGE>
securities, including U.S. Government Obligations, will tend to decrease
when interest rates rise and increase when interest rates fall. In general,
longer-term debt instruments tend to fluctuate in value more than shorter-term
debt instruments in response to interest rate movements. In addition, debt
securities that are not backed by the U.S. Government are subject to credit
risk, which is the risk that the issuer may not be able to pay principal and/or
interest when due.
Investments by a Nations Fund in foreign securities present additional risks.
These risks include restrictions on foreign investment and repatriation of
capital; fluctuations in currency exchange rates; costs of converting foreign
currency into U.S. dollars and U.S. dollars into foreign currencies; greater
price volatility and less liquidity; settlement practices, including delays,
which may differ from those customary in United States markets; exposure to
political and economic risks, including the risk of nationalization,
expropriation of assets and war; possible imposition of foreign taxes and
exchange control and currency restrictions; lack of uniform accounting, auditing
and financial reporting standards; less governmental supervision of securities
markets, brokers and issuers of securities; less financial information available
to investors; and difficulty in enforcing legal rights outside the United
States. These risks often are heightened for investments in emerging or
developing countries.
Certain of the U.S. Government Obligations that may be purchased by a Nations
Fund (or, under certain circumstances, directly by a LifeGoal Portfolio) are not
backed by the U.S. Treasury. For example, some U.S. Government Obligations are
supported only by the credit of the issuer/guarantor or by
the right of the issuer/guarantor to borrow from the U.S. Government. In
addition, the market value of U.S. Government Obligations may fluctuate due to
fluctuations in market interest rates. Certain types of U.S. Government
Obligations are subject to fluctuations in maturity, yield or value due to their
structure or contract terms.
Certain of the underlying Nations Funds may invest in derivative securities
("derivatives"). A derivative is a financial instrument whose value is based, at
least partly, on the value of an underlying stock, stock index, future or other
security. Examples of such derivatives include futures contracts, options,
interest rate and currency swap transactions. Certain types of derivatives can,
under certain circumstances, significantly increase an investor's exposure to
market or other risks.
Please consult the SAI and the prospectus of the particular Nations Fund, for
more information about investment practices and risks.
How Performance Is Shown
From time to time the LifeGoal Portfolios may advertise the total return and
yield of a class of shares. In addition, the LifeGoal Portfolios may advertise
the total return and yield of the Primary A Shares of certain underlying Nations
Funds. Total return and yield figures are based on historical data and are not
intended to indicate future performance. The "total return" of a class of shares
of a LifeGoal Portfolio or Nations Fund may be calculated on an average annual
total return basis or an aggregate total return basis. Average annual total
return refers to the average annual compounded rates of return over one-, five-,
and ten-year periods or the life of a LifeGoal Portfolio or Nations Fund (as
stated in the advertisement) that would equate an initial amount invested at the
beginning of a stated period to the ending redeemable value of the investment,
assuming the reinvestment of all dividend and capital gains distributions.
Aggregate total return reflects the total percentage change in the value of the
investment over the measuring period again assuming the reinvestment of all
dividends and capital gain distributions. Total return may also be presented for
other periods.
"Yield" of a class of shares of a non-money market fund is calculated by
dividing the annualized net investment income per share during a recent 30-day
(or one month) period of the class by the maximum public offering price per
share on the last day of that period. "Yield" of a class of shares of a money
market fund, such as the Nations Prime Fund, is calculated by annualizing the
income generated by an investment in such class over a seven-day period, and
showing it as a percentage of that investment. "Effective yield" assumes
reinvestment of income.
Investment performance, which will vary, is based on many factors, including
market conditions, the composition of a LifeGoal Portfolio's or Nations Fund's
portfolio and operating expenses. Investment performance also often reflects the
risks associated with a LifeGoal Portfolio's or Nations Fund's investment
objective and policies. These factors should be considered when comparing a
LifeGoal Portfolio's or Nations Fund's investment results to those of other
mutual funds and other investment vehicles. Since net asset value and yields
fluctuate, yield data cannot necessarily be used to compare an investment in the
LifeGoal Portfolios or Nations Fund with bank deposits, savings accounts, and
similar investment alternatives which often provide an agreed-upon or guaranteed
fixed yield for a stated period of time.
In addition to Investor A Shares, the LifeGoal Portfolios offer Primary A,
Primary B and Investor C Shares. Each class of shares may bear different sales
charges, shareholder servicing fees and other expenses, which may
13
<PAGE>
cause the performance of a class to differ from the performance of the other
classes. Performance quotations will be computed separately for each class of
a LifeGoal Portfolio's shares. Any fees charged by an institution directly to
its customers' accounts in connection with investments in the LifeGoal
Portfolios will not be included in calculations of total return or yield. The
Company's annual report will contain additional performance information and
will be available upon request without charge from the LifeGoal Portfolios'
distributor or an investor's Institution, as defined below.
The following information shows the average annual returns of the underlying
Nations Funds in which the LifeGoal Portfolios may invest. Because the LifeGoal
Portfolios are relatively new, they have no performance data of their own. The
performance of the underlying Nations Funds is shown for illustrative purposes
only and is not intended to show LifeGoal Portfolio performance.
NATIONS FUNDS
AVERAGE ANNUAL RETURNS -- PRIMARY A SHARES (UNAUDITED)
<TABLE>
<CAPTION>
12 Months 3-Year Period 5-Year Period
Fund Name (Date of Commencement of Operations) Ended 6/30/96 Ended 6/30/96 Ended 6/30/96
<S> <C> <C> <C>
Nations Capital Growth Fund (9/30/92) 18.93% 13.92% N/A
Nations Disciplined Equity Fund (10/1/92)** 20.88% 14.03% N/A
Nations Diversified Income Fund (10/30/92) 3.82% 6.17% N/A
Nations Emerging Growth Fund (12/4/92) 32.90% 20.08% N/A
Nations Emerging Markets Fund (6/30/95) 7.61% N/A N/A
Nations Equity Income Fund (4/11/91) 21.57% 13.77% 14.71%
Nations International Equity Fund (12/2/91) 19.07% 11.65% N/A
Nations Managed Index Fund* N/A N/A N/A
Nations Managed SmallCap Index Fund* N/A N/A N/A
Nations Pacific Growth Fund (6/30/95) 3.83% N/A N/A
Nations Short-Intermediate Government Fund (8/1/91) 3.62% 3.73% N/A
Nations Short-Term Income Fund (9/30/92) 5.50% 4.82% N/A
Nations Strategic Fixed Income Fund (10/30/92) 3.41% 4.46% N/A
Nations Value Fund (9/19/89) 23.47% 16.07% 14.84%
Nations Global Government Income Fund (6/30/95) N/A N/A N/A
<CAPTION>
Inception
through
Fund Name (Date of Commencement of Operations) 6/30/96
Nations Capital Growth Fund (9/30/92) 13.50%
Nations Disciplined Equity Fund (10/1/92)** 24.00%
Nations Diversified Income Fund (10/30/92) 8.62%
Nations Emerging Growth Fund (12/4/92) 17.39%
Nations Emerging Markets Fund (6/30/95) 7.61%
Nations Equity Income Fund (4/11/91) 13.90%
Nations International Equity Fund (12/2/91) 8.39%
Nations Managed Index Fund* N/A
Nations Managed SmallCap Index Fund* N/A
Nations Pacific Growth Fund (6/30/95) 3.83%
Nations Short-Intermediate Government Fund (8/1/91) 6.46%
Nations Short-Term Income Fund (9/30/92) 5.02%
Nations Strategic Fixed Income Fund (10/30/92) 6.17%
Nations Value Fund (9/19/89) 13.52%
Nations Global Government Income Fund (6/30/95) 5.03%+
</TABLE>
* This Fund had not commenced operations as of June 30, 1996.
** Date shown reflects commencement of operations of the predecessor fund.
+ Total Return represents aggregate total return through 3/31/96 and does not
reflect the deduction of any applicable sales charges.
How The LifeGoal Portfolios Are Managed
The business and affairs of the Company are managed under the supervision and
direction of its Board of Directors. The LifeGoal Portfolios' SAI contains the
names of and general background information concerning each Director of the
Company.
The Company and the Adviser have adopted codes of ethics which contain policies
on personal securities transactions by "access persons," including portfolio
managers and investment analysts. These policies substantially comply in all
material respects with the recommendations set forth in the May 9, 1994 Report
of the Advisory Group on Personal Investing of the Investment Company Institute.
Investment Adviser: NationsBanc Advisors, Inc. serves as investment adviser to
the LifeGoal Portfolios and the Nations Funds. NBAI is a wholly owned subsidiary
of NationsBank, which in turn is a wholly owned banking subsidiary of
NationsBank Corporation, a bank holding company organized as a North Carolina
corporation. NBAI has its principal offices at One NationsBank Plaza, Charlotte,
North Carolina 28255.
TradeStreet Investment Associates, Inc., with principal offices at One
NationsBank Plaza, Charlotte, North Carolina 28255, serves as investment
sub-adviser to the LifeGoal Portfolios and most of the Nations Funds.
TradeStreet is a wholly owned subsidiary of NationsBank. TradeStreet provides
investment management services to individuals, corporations and institutions.
Gartmore Global Partners, with principal offices at One NationsBank Plaza,
Charlotte, North Carolina, 28255, serves as the investment sub-adviser to three
of the underlying Nations Funds. Gartmore is a joint venture
14
<PAGE>
structured as a general partnership between NB Partner Corp., a wholly owned
subsidiary of NationsBank, and Gartmore U.S. Limited, an indirect, wholly
owned subsidiary of Gartmore Investment Management plc, a UK company which is
the holding company for a leading UK based international fund management group
of companies. National Westminster Bank plc and affiliated entities own 100%
of the equity of Gartmore Investment Management plc.
Subject to the general supervision of the Company's Board of Directors, and in
accordance with each LifeGoal Portfolio's investment policies, the Adviser is
responsible for allocating and reallocating each LifeGoal Portfolio's assets
among the Nations Funds in which it invests, and for rebalancing such portfolio
allocations. A LifeGoal Portfolio's investments are continuously monitored and
are reallocated as often as the Adviser deems appropriate. In addition,
portfolio allocations and performance are reviewed quarterly for rebalancing at
the discretion of the Adviser.
The Adviser has the ability to change the particular Nations Funds used as
underlying investments for the LifeGoal Portfolios. Among other things, the
Adviser may substitute or include other funds from the Nations Fund Family,
including any introduced subsequent to this Prospectus, as permissible
investments for the LifeGoal Portfolios. In the event the Adviser seeks to
invest the assets of a LifeGoal Portfolio in a Nations Fund not identified in
this Prospectus, the Company will amend or supplement the Prospectus to
include all pertinent information.
Both the LifeGoal Portfolios and Nations Funds have investment advisory
arrangements with NBAI. NBAI is entitled to receive advisory fees at an annual
rate of 0.25% of the average daily net assets of each LifeGoal Portfolio. NBAI
also has agreed to absorb all other expenses of the LifeGoal Portfolios (except
taxes, brokerage fees and commissions, extraordinary expenses, and any
applicable Rule 12b-1 fees, shareholder servicing fees and/or shareholder
administration fees). NBAI, in turn, compensates TradeStreet for sub-advisory
services at an annual rate of 0.05% of the average daily net assets of each
LifeGoal Portfolio. NBAI also receives advisory fees at varying rates from the
underlying Nations Funds, and pays TradeStreet or Gartmore Global Partners sub-
advisory fees for their services to the underlying Nations Funds. From time to
time, the Adviser may waive or reimburse (either voluntarily or pursuant to
applicable state expense limitations) advisory fees and/or expenses payable by a
LifeGoal Portfolio. Once commenced, waiver and reimbursement arrangements may be
discontinued at any time. In addition, the Adviser may from time to time
compensate Agents, as defined below, for providing certain services to
Customers. LifeGoal Portfolio's shareholders indirectly pay their proportionate
share of the advisory fees and other expenses of any Nations Fund in which the
LifeGoal Portfolios are invested.
NBAI, TradeStreet and certain of their affiliates provide advisory and other
services to Nations Funds for which they receive compensation. The level of
compensation received and services provided by them differs among the various
Nations Funds. These differences subject the Adviser to conflicts of interest,
in that the Adviser could increase its fee income or that of its affiliates, or
attain other direct or indirect benefits, by allocating LifeGoal Portfolio
assets to underlying Nations Funds that pay higher fees or provide other
benefits.
Andrew M. Silton has managed the LifeGoal Portfolios since their inception. Mr.
Silton has been President, Chief Investment Officer and Managing Director of
TradeStreet since 1995. Prior to assuming his position with TradeStreet, he was
Director of Investment Strategy and Product Development for the Investment
Management Group of NationsBank and head of the Equity Group. Mr. Silton has
worked in the investment community since 1979. His past experience includes
Senior Vice President, Director of Equity Strategy and Portfolio Management for
Shields Asset Management. Mr. Silton was also Senior Vice President and Director
of Research for First Albany Corporation, a regional brokerage firm. Prior to
joining NationsBank, he operated his own management consulting firm which
advised financial institutions and local government agencies. Mr. Silton
received a B.A. in History from the State University of New York at Binghamton,
a J.D. from the School of Law at the University of North Carolina at Chapel Hill
and a M.A. from the Public Policy Institute of Duke University.
Morrison & Foerster LLP, counsel to the Company and Nations Fund, and special
counsel to NBAI and certain of its affiliates, has advised the Company and
Nations Fund that NBAI and its affiliates may perform the services contemplated
by the various Investment Advisory Agreements and this Prospectus without
violation of the Glass-Steagall Act. Such counsel has pointed out, however, that
there are no controlling judicial or administrative interpretations or decisions
and that future judicial or administrative interpretations of, or decisions
relating to, present federal or state statutes, including the Glass-Steagall
Act, and regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future changes in such federal or state
statutes, regulations and judicial or administrative decisions or
interpretations, could prevent such entities from continuing to perform, in
whole or in part, such services. If any such entity were prohibited from
performing any of such services, it is expected that new agreements would be
proposed or entered into with another entity or entities qualified to perform
such services.
Other Service Providers: Stephens Inc. ("Stephens"), a registered broker-dealer
with principal offices at 111 Center Street, Little Rock, Arkansas 72201, serves
as
15
<PAGE>
the administrator of the LifeGoal Portfolios pursuant to an Administration
Agreement. Pursuant to the terms of the Administration Agreement, Stephens
provides various administrative and corporate secretarial services to the
LifeGoal Portfolios, including providing general oversight of other service
providers, office space, utilities and various legal and administrative services
in connection with the satisfaction of various regulatory requirements
applicable to the LifeGoal Portfolios. Stephens will not receive any fees from
the LifeGoal Portfolios for these services.
First Data Investor Services Group, Inc. ("First Data"), a wholly owned
subsidiary of First Data Corporation, with principal offices at One Exchange
Place, Boston, Massachusetts 02109, serves as the co-administrator of the
LifeGoal Portfolios. Under the Co-Administration Agreement, First Data provides
various administrative and accounting services to the LifeGoal Portfolios
including performing the calculations necessary to determine net asset value per
share and dividends, preparing tax returns and financial statements and
maintaining the portfolio records and certain of the general accounting records
for the LifeGoal Portfolios. For the services rendered pursuant to the
Co-Administration Agreement, First Data is entitled to receive a fee of $10,000
per year per LifeGoal Portfolio, which will be absorbed by NBAI.
Shares of the LifeGoal Portfolios are sold on a continuous basis by Stephens, as
the LifeGoal Portfolios' sponsor and distributor. The LifeGoal Portfolios have
entered into distribution agreements with Stephens which provide that Stephens
has the exclusive right to distribute shares of the LifeGoal Portfolios.
Stephens may pay service fees or commissions to selling agents that assist
customers in purchasing Investor A Shares of the LifeGoal Portfolios. See
"Shareholder Servicing and Distribution Plans."
First Data serves as the Transfer Agent for each of LifeGoal Portfolio's
Investor A Shares. NationsBank of Texas, N.A. ("NationsBank of Texas") serves as
custodian for the assets of each LifeGoal Portfolio.
Stephens, First Data and NationsBank of Texas all provide services at the
underlying Nations Fund level and are compensated directly by such Nations Funds
for those services.
Price Waterhouse LLP serves as independent accountant to the Company. Its
address is 160 Federal Street, Boston, Massachusetts 02110.
Expenses: Certain administrative and other fees and expenses will be charged at
the LifeGoal Portfolios and Nations Funds levels. However, redundancies of fees
and expenses between the LifeGoal Portfolios and Nations Funds will be minimal,
because distinct services are being provided at each fund level. For example,
the LifeGoal Portfolios pay advisory fees to the Adviser for its services in
allocating LifeGoal Portfolio assets among the underlying Nations Funds. These
services are distinct from the services provided by the Adviser to the Nations
Funds in managing the Nations Funds' individual portfolio securities.
NBAI, under its investment advisory agreement with the LifeGoal Portfolios, has
agreed to absorb all expenses of the LifeGoal Portfolios, except taxes,
brokerage fees and commissions, extraordinary expenses and any applicable Rule
12b-1 fees, shareholder servicing fees and/or shareholder administration fees.
The LifeGoal Portfolios' expenses that will be absorbed by NBAI include, but are
not limited to: fees paid to service providers other than the Adviser; interest;
directors' fees; federal and state securities registration and qualification
fees; costs of preparing and printing prospectuses for regulatory purposes and
for distribution to existing shareholders; certain insurance premiums; outside
auditing and legal expenses; and costs of shareholder reports and shareholder
meetings. Investor A Shares also bear certain class specific expenses, which are
described under "Shareholder Servicing and Distribution Plans," below.
The LifeGoal Portfolios do not pay any front-end sales loads or contingent
deferred sales charges in connection with the purchase or redemption of shares
of the Nations Funds. By investing in Primary A Shares of the Nations Funds, the
LifeGoal Portfolios also will not be subject to any asset-based sales charges or
service fees. The sales charges or service fees associated with purchase of
shares of the LifeGoal Portfolios will not exceed the limits set forth in Rule
2830 of the Conduct Rules of the NASD when aggregated with sales charges or
service fees, if any, that the LifeGoal Portfolios pay relating to Nations Funds
shares.
The reimbursement arrangements described above do not, of course, cover the
indirect expenses incurred by LifeGoal Portfolio investors through their
investments in Nations Funds. The LifeGoal Portfolios' share of the Nations
Funds' expenses may include expenses that the LifeGoal Portfolios would not have
incurred if it had not been structured as a "fund of funds." For example, if a
portfolio manager of one Nations Fund purchases the same securities that the
portfolio manager of another Nations Fund is selling, there may be transaction
charges and commissions that achieve little or no benefit for the LifeGoal
Portfolios. Such transactions will be rare because the Nations Funds pursue a
broad range of investment strategies, and therefore invest in different types of
securities.
16
<PAGE>
Organization And History
The LifeGoal Portfolios are members of the Nations Fund Family, which consists
of the Company, Nations Fund Trust, Nations Fund, Inc., Nations Fund Portfolios,
Inc. and Nations Institutional Reserves. The Nations Fund Family currently has
more than 43 distinct investment portfolios and total assets in excess of $18
billion.
Nations LifeGoal Funds, Inc.: The Company was incorporated in Maryland on July
3, 1996, but had no operations prior to the date of this Prospectus. The
Company's fiscal year end is March 31. As of the date of this Prospectus, the
authorized capital stock of Nations LifeGoal Funds, Inc. consists of
1,200,000,000 shares of common stock, par value of $.001 per share, which are
divided into series or portfolios, each of which includes several classes of
shares. This Prospectus relates to the Investor A Shares of the following three
portfolios of the Company: LifeGoal Growth Portfolio, LifeGoal Balanced Growth
Portfolio, and LifeGoal Income and Growth Portfolio. To obtain additional
information regarding the LifeGoal Portfolios' other classes of shares which may
be available to you, contact your Institution (as defined below) or Nations Fund
at 1-800-982-2271.
Shares of each Portfolio and class have equal rights with respect to voting,
except that the holders of shares of a particular Portfolio or class will have
the exclusive right to vote on matters affecting only the rights of the holders
of such Portfolio or class. In the event of dissolution or liquidation, holders
of each class will receive pro rata, subject to the rights of creditors, (a) the
proceeds of the sale of that portion of the assets allocated to that class held
in the respective Portfolio of the Company, less (b) the liabilities of the
Company attributable to the respective Portfolio or class or allocated among the
Portfolios or classes based on the respective liquidation value of each
Portfolio or class.
Shareholders of the Company do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all Portfolios voting
together for election of directors may elect all of the members of the Board of
Directors of the Company. Meetings of shareholders may be called upon the
request of 10% or more of the outstanding shares of the Company. There are no
preemptive rights applicable to any of the Company's shares. The Company's
shares, when issued, will be fully paid and non-assessable.
As of the date of this Prospectus, Stephens owned all of the outstanding shares
of the Company and, therefore, would be considered a controlling person of the
Company and each of the LifeGoal Portfolios. As sales of the LifeGoal
Portfolios' shares commence, it is expected that Stephens' percentage ownership
will be reduced. It is anticipated that the Company will not hold annual
shareholder meetings on a regular basis unless required by the Investment
Company Act of 1940, as amended (the "1940 Act") or Maryland law.
About Your Investment
How To Buy Shares
The LifeGoal Portfolios have established various procedures for purchasing
Investor A Shares in order to accommodate different investors. Purchase orders
for Investor A Shares may be placed directly with a LifeGoal Portfolio or
through banks, broker/dealers or other financial institutions (including certain
affiliates of NationsBank) that have entered into a shareholder servicing
agreement ("Servicing Agreement") with Nations Fund ("Servicing Agents") and/or
a sales support agreement ("Sales Support Agreement") with Stephens ("Selling
Agents"). Servicing Agents and Selling Agents are sometimes referred to
hereafter as "Agents."
There is a minimum initial investment of $1,000 in the LifeGoal Portfolios,
except that the minimum initial investment is:
(Bullet) $500 for IRA investors;
(Bullet) $250 for non-working spousal IRAs; and
(Bullet) $100 for investors participating on a monthly basis in the Systematic
Investment Plan described below.
There is no minimum investment amount for investments by 401(k) plans,
simplified employee pension plans ("SEPs"), salary reduction-simplified employee
pension plans ("SAR-SEPs") or salary reduction-Individual Retirement Accounts
("SAR-IRAs"). However, the assets of such plans must reach an asset value of
$1,000 ($500 for SEPs, SAR-SEPs and SAR-IRAs) within one year of the account
open date. If the assets of such plans do not reach the minimum asset size
within one year, the Company reserves the right to redeem the shares held by
such plans on 60 days' written notice. The minimum subsequent investment is
$100, except for invest-
17
<PAGE>
ments pursuant to the Systematic Investment Plan described below.
Investor A Shares are purchased at net asset value per share. Purchases may be
effected on days on which the New York Stock Exchange (the "Exchange") is open
for business (a "Business Day").
The Company reserves the right to reject any purchase order. The issuance of
Investor A Shares is recorded on the books of the LifeGoal Portfolios, and share
certificates are not issued unless expressly requested in writing. Certificates
are not issued for fractional shares.
Opening an Account Directly With a LifeGoal Portfolio: Investors may open a
regular (non-retirement) account directly with a LifeGoal Portfolio, either by
mail or by wire.
By Mail: Investors should complete a New Account Application and forward it,
along with a check made payable to the LifeGoal Portfolio, to:
LifeGoal Portfolio
P.O. Box 34602
Charlotte, NC 28254-4602
By Wire: Investors should call Investor Services at 1-800-982-2271 for an
account number and use the following wire instructions:
LifeGoal Portfolio
c/o Boston Safe Deposit & Trust
ABA #011001234
DDA #154202
Account Name
Account Number
Fund Name
Investors should complete a New Account Application and mail it to the address
above.
Retirement Accounts: For IRAs and other retirement accounts, investors should
call Investor Services at 1-800-982-2271.
Additional Purchases: Additional purchases may be made by mail or wire. To
purchase additional shares by mail, send a check made payable to the LifeGoal
Portfolio with a reinvestment slip to the address set forth
above. To purchase additional shares by wire, follow the wiring instructions set
forth above.
Effective Time of Purchases: Purchase orders for Investor A Shares of the
LifeGoal Portfolios which are received by Stephens or by the Transfer Agent
before the close of regular trading hours on the Exchange (currently 4:00 p.m.,
Eastern time) on any Business Day are priced according to the net asset value
determined on that day but are not executed until 4:00 p.m., Eastern time, on
the Business Day on which immediately available funds in payment of the purchase
price are received by the LifeGoal Portfolios' Custodian. Such payment must be
received no later than 4:00 p.m., Eastern time, by the third Business Day
following receipt of the order. If funds are not received by such date, the
order will not be accepted and notice thereof will be given to the Agent placing
the order. Payment for orders which are not received or accepted will be
returned after prompt inquiry to the sending Agent.
The Agents are responsible for transmitting orders for purchases of Investor A
Shares by their customers ("Customers"), and delivering required funds, on a
timely basis. Stephens is responsible for transmitting orders it receives to the
Company.
Systematic Investment Plan: Under the LifeGoal Portfolios' Systematic Investment
Plan ("SIP") a shareholder may automatically purchase Investor A Shares. On a
bi-monthly, monthly or quarterly basis, a shareholder may direct cash to be
transferred automatically from his/her checking or savings account at any bank
which is a member of the Automated Clearing House to his/her LifeGoal Portfolio
account. Transfers will occur on or about the 15th and/or 30th day of the
applicable month. The systematic investment amount may be in any amount from $25
to $100,000. For more information concerning the SIP, contact your Agent or
Investor Services.
Telephone Transactions: Investors may effect purchases, redemptions (up to
$50,000) and exchanges by telephone. See "How To Redeem Shares" and "How To
Exchange Shares" below. Shareholders should be aware that by using the telephone
transaction feature, such shareholders may be giving up a measure of security
that they may have if they were to authorize written requests only. A
shareholder may bear the risk of any resulting losses from a telephone
transaction. The Company will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, and if the Company and its
service providers fail to employ such measures, they may be liable for any
losses due to unauthorized or fraudulent instructions. The Company requires a
form of personal identification prior to acting upon instructions received by
telephone and provides written confirmation to shareholders of each telephone
share transaction. In addition, the Company reserves the right to record all
telephone conversations.
18
<PAGE>
How To Redeem Shares
For shareholders who open and maintain an account directly with a LifeGoal
Portfolio, redemption orders should be communicated to such LifeGoal Portfolio
by calling Investor Services at 1-800-982-2271 or in writing. (Shareholders must
have established telephone features on their account in order to effect
telephone transactions.) Redemption proceeds are normally sent by mail or wired
within three Business Days after receipt of the order by the LifeGoal Portfolio.
For shareholders who purchased their shares through an Agent, redemption orders
should be transmitted by telephone or in writing through the same Agent.
Redemption proceeds are normally wired to the redeeming Agent within three
Business Days after receipt of the order by Stephens or by the Transfer Agent.
Redemption orders are effected at the net asset value per share next determined
after receipt of the order by the LifeGoal Portfolio, Stephens, or the Transfer
Agent, as the case may be. The Agents are responsible for transmitting
redemption orders to Stephens or to the Transfer Agent and for crediting their
Customer's account with the redemption proceeds on a timely basis. Redemption
proceeds for shares purchased by check may not be remitted until at least 15
days after the date of purchase to ensure that the check has cleared; a
certified check, however, is deemed to be cleared immediately. No charge for
wiring redemption payments is imposed by the Company. There is no redemption
charge.
The Company may redeem a shareholder's Investor A Shares upon 60 days' written
notice if the balance in the shareholder's account drops below $500 as a result
of redemptions. Share balances also may be redeemed at the direction of an Agent
pursuant to arrangements between the Agent and its Customers. The Company also
may redeem shares of the LifeGoal Portfolios involuntarily or make payment for
redemption in readily marketable securities or other property under certain
circumstances in accordance with the 1940 Act.
Prior to effecting a redemption of Investor A Shares represented by
certificates, the Transfer Agent must have received such certificates at its
principal office. All such certificates must be endorsed by the redeeming
shareholder or accompanied by a signed stock power, in each instance with the
signature guaranteed by a commercial bank or a member of a major stock exchange,
unless other arrangements satisfactory to the Company have previously been made.
The Company may require any additional information reasonably necessary to
evidence that a redemption has been duly authorized.
Automatic Withdrawal Plan: An Automatic Withdrawal Plan ("AWP") may be
established by a new or existing shareholder of the LifeGoal Portfolios if the
value of the Investor A Shares in his/her accounts within the Nations Fund
Family (valued at the net asset value at the time of the establishment of the
AWP) equals $10,000 or more. Investor A Shares redeemed under the AWP will not
be subject to a CDSC, provided that the shares so redeemed do not exceed, on
an annual basis, 12% of the net asset value of the Investor A Shares in the
account. Otherwise, any applicable CDSC will be imposed on shares redeemed
under the AWP. Shareholders who elect to establish an AWP may receive a
monthly, quarterly or annual check or automatic transfer to a checking or
savings account in a stated amount of not less than $25 on or about the
10th or 25th day of the applicable month of withdrawal. Investor A Shares
will be redeemed (net of any applicable CDSC) as necessary to meet withdrawal
payments. Withdrawals will reduce principal and may eventually deplete the
shareholder's account. If a shareholder desires to establish an AWP after
opening an account, a signature guarantee will be required. An AWP may be
terminated by a shareholder on 30 days' written notice to his/her Agent or by
the Company at any time.
How To Exchange Shares
The exchange feature enables a shareholder of Investor A Shares of a LifeGoal
Portfolio to acquire Investor A Shares of another fund in the Nations Fund
Family (which includes both LifeGoal Portfolios and Nations Funds) when that
shareholder believes that a shift between funds is an appropriate investment
decision. A qualifying exchange of Investor A Shares of a LifeGoal Portfolio for
Investor A Shares of another Nations Fund is made on the basis of the next
calculated net asset value per share of each fund after the exchange order is
received.
For shareholders who maintain an account directly with a LifeGoal Portfolio,
exchange requests should be communicated to the LifeGoal Portfolio by calling
Investor Services at 1-800-982-2271 or in writing. For shareholders who
purchased their shares through an Agent, exchange requests should be
communicated to the Agent, who is responsible for transmitting the request to
Stephens or to the Transfer Agent.
The LifeGoal Portfolios and each of the other funds of the Nations Fund Family
may limit the number of times this exchange feature may be exercised by a
shareholder within a specified period of time. Also, the exchange fea-
19
<PAGE>
ture may be terminated or revised at any time by the LifeGoal Portfolios upon
such notice as may be required by applicable regulatory agencies (presently 60
days for termination or material revision), absent unusual circumstances.
The current prospectus for each fund of the Nations Funds describes its
investment objective and policies, and shareholders should obtain a copy and
examine it carefully before exchanging to another fund. Exchanges are subject to
the minimum investment requirement and any other conditions imposed by each
fund. In the case of any shareholder holding a share certificate or
certificates, no exchanges may be made until all applicable share certificates
have been received by the Transfer Agent and deposited in the shareholder's
account. An exchange will be treated for federal income tax purposes the same as
a redemption of shares, on which the shareholder may realize a capital gain or
loss. However, the ability to deduct capital losses on an exchange may be
limited in situations where there is an exchange of shares within 90 days after
the shares are purchased.
The Investor A Shares exchanged must have a current value of at least $1,000
(except for exchanges through the Automatic Exchange Feature, which is described
below). The Company reserves the right to reject any exchange request. Only
shares that may legally be sold in the state of the shareholder's residence may
be acquired in an exchange. Only shares of a class that is accepting investments
generally may be acquired in an exchange. During periods of significant economic
or market change, telephone exchanges may be difficult to complete. In such
event, shareholders should consider communicating their exchange requests by
mail.
Automatic Exchange Feature: Under the LifeGoal Portfolios' Automatic Exchange
Feature ("AEF") a shareholder may automatically exchange at least $25 on a
monthly or quarterly basis. A shareholder may direct proceeds to be exchanged
from one fund of Nations Fund to another as allowed by the applicable exchange
rules within the prospectus. Exchanges will occur on or about the 15th or 30th
day of the applicable month. The shareholder must have an existing position in
both funds in order to establish the AEF. This feature may be established by
directing a request to the Transfer Agent by telephone or in writing. For
additional information, a shareholder should contact his/her Selling Agent or
Investor Services.
Shareholder Servicing And Distribution Plans
The LifeGoal Portfolios' Shareholder Servicing and Distribution Plan (the
"Investor A Plan"), adopted pursuant to Rule 12b-1 under the 1940 Act, permits
the LifeGoal Portfolios to compensate (i) Servicing Agents and Selling Agents
for services provided to their Customers that own Investor A Shares and (ii)
Stephens for distribution-related expenses incurred in connection with Investor
A Shares. Aggregate payments under the Investor A Plan are calculated daily and
paid monthly at a rate or rates set from time to time by the LifeGoal
Portfolios, provided that the annual rate may not exceed 0.25% of the average
daily net asset value of the Investor A Shares of the LifeGoal Portfolios.
The fees payable to Servicing Agents under the Investor A Plan are used
primarily to compensate or reimburse Servicing Agents for shareholder services
provided, and related expenses incurred, by such Servicing Agents. The
shareholder services provided by Servicing Agents may include: (i) aggregating
and processing purchase and redemption requests for Investor A Shares from
Customers and transmitting net purchase and redemption orders to Stephens or the
Transfer Agent; (ii) providing Customers with a service that invests the assets
of their accounts in Investor A Shares pursuant to specific or preauthorized
instructions; (iii) processing dividend and distribution payments from the
LifeGoal Portfolios on behalf of Customers; (iv) providing information
periodically to Customers showing their positions in Investor A Shares; (v)
arranging for bank wires; and (vi) providing general shareholder liaison
services. The fees payable to Selling Agents are used primarily to compensate or
reimburse Selling Agents for providing sales support assistance in connection
with the sale of Investor A Shares to Customers, which may include forwarding
sales literature and advertising provided by the Company to Customers.
The fees under the Investor A Plan also may be used to reimburse Stephens for
distribution-related expenses actually incurred by Stephens, including, but not
limited to, expenses of organizing and conducting sales seminars, printing
prospectuses and statements of additional information (and supplements thereto)
and reports for other than existing shareholders, preparation and distribution
of advertising and sales literature and the costs of administering the Investor
A Plan.
Stephens may, from time to time, at its expense or as an expense for which it
may be reimbursed under the Investor A Plan, pay a bonus or other consideration
or incentive to Agents who sell a minimum dollar amount of shares of the
LifeGoal Portfolios during a specified period of time. Stephens also may, from
time to time, pay additional consideration to Agents not to exceed 1.00% of the
offering price per share on all sales of Investor A Shares as an expense of
Stephens or for which Stephens may be reimbursed under the Investor A Plan. Any
such additional consideration or incentive program may be terminated at any time
by Stephens.
20
<PAGE>
In addition, Stephens has established a non-cash compensation program pursuant
to which broker/dealers or financial institutions that sell shares of the
LifeGoal Portfolios may earn additional compensation in the form of trips to
sales seminars or vacation destinations, tickets to sporting events, theater or
other entertainment, opportunities to participate in golf or other outings and
gift certificates for meals or merchandise. This non-cash compensation program
may be amended or terminated at any time by Stephens.
The Company and Stephens may suspend or reduce payments under the Investor A
Plan at any time, and payments are subject to the continuation of the Investor A
Plan described above and the terms of the Servicing Agreements and Sales Support
Agreements. See the SAI for more details on the Investor A Plan.
The Company understands that Agents may charge fees to their Customers who are
the owners of Investor A Shares for various services provided in connection with
a Customer's account. These fees would be in addition to any amounts received by
a Selling Agent under its Sales Support Agreement with Stephens or by a
Servicing Agent under its Servicing Agreement with the Company. The Sales
Support Agreements and Servicing Agreements require Agents to disclose to their
Customers any compensation payable to the Agent by Stephens or the Company and
any other compensation payable by the Customers for various services provided in
connection with their accounts. Customers should read this Prospectus in light
of the terms governing their accounts with their Agents.
How The LifeGoal Portfolios Value Their Shares
The net asset value of a share of each class is calculated by dividing the total
value of its assets, less liabilities, by the number of shares in the class
outstanding. Shares of each of the LifeGoal Portfolios are valued as of the
close of regular trading on the Exchange (currently 4:00 p.m., Eastern time) on
each Business Day. Currently, the days on which the Exchange is closed (other
than weekends) are: New Year's Day, Presidents' Day, Good Friday, Memorial Day
(observed), Independence Day, Labor Day, Thanksgiving and Christmas.
The Nations Funds determine their net asset value per share on a daily basis.
The net asset value of the LifeGoal Portfolio shares will be determined by
reference to the net asset value of the underlying Nations Fund.
How Dividends And Distributions Are Made;
Tax Information
Dividends and Distributions
Each LifeGoal Portfolio declares and pays dividends from net investment income
quarterly. Each LifeGoal Portfolio's net realized capital gains (including net
short-term capital gains) are distributed at least annually.
Investor A Shares of LifeGoal Portfolios are eligible to receive dividends when
declared, provided, however, that the purchase order for such shares is received
at least one day prior to the dividend declaration and such shares continue to
be eligible for dividends through and including the day before the redemption
order is executed. Distributions paid by the LifeGoal Portfolios with respect to
one class of shares may be greater or less than those paid with respect to
another class of shares due to the different expenses of the different classes.
The net asset value of Investor A Shares in LifeGoal Portfolios will be reduced
by the amount of any dividend or distribution. Certain Agents may provide for
the reinvestment of dividends in the form of additional Investor A Shares of the
same class in the same LifeGoal Portfolio. Dividends and distributions are paid
in cash within five Business Days of the end of the quarter to which the
dividend relates. Dividends and distributions payable to a shareholder are paid
in cash within five Business Days after a shareholder's complete redemption of
his/her Investor A Shares.
Tax Information
Each of the LifeGoal Portfolios intends to qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"). In
general, such qualification relieves a LifeGoal Portfolio of liability for
federal income tax to the extent all of its annual earnings are distributed in
accordance with the Code. Each LifeGoal Portfolio intends to distribute all of
its earnings each taxable year.
Any distributions by a LifeGoal Portfolio of its net investment income
(including net foreign currency gains) and the excess, if any, of its net
short-term capital gain over its net long-term capital loss will be taxable as
ordinary income to shareholders who are not currently exempt from federal income
tax, whether such income is received in cash or reinvested in additional shares.
(Fed-
21
<PAGE>
eral income tax for distributions to an Individual Retirement Account are
generally deferred under the Code.)
Corporate shareholders in the LifeGoal Portfolios may be entitled to the
dividends-received deduction for distributions from those funds investing in the
stock of domestic corporations to the extent of the total qualifying dividends
received by the distributing fund. Corporate shareholders of the Portfolios may
be eligible for the dividends-received deduction on the dividends paid by the
LifeGoal Portfolios to the extent that each LifeGoal Portfolio's income is
derived from dividends (which, if received directly, would qualify for such
deduction) received from domestic corporations. In order to qualify for the
dividends-received deduction, a corporate shareholder must hold the LifeGoal
Portfolio shares paying the dividends upon which the deduction is based for at
least 46 days.
Substantially all of the net realized long-term capital gains of the LifeGoal
Portfolios, if any, will be distributed at least annually to the LifeGoal
Portfolios' shareholders. The LifeGoal Portfolios will generally have no tax
liability with respect to such gains, and the distributions will be taxable to
such shareholders who are not currently exempt from federal income tax as
long-term capital gains, regardless of how long the shareholders have held such
LifeGoal Portfolios' shares and whether such gains are received in cash or
reinvested in additional shares.
Each year, shareholders will be notified as to the amount and federal tax status
of all dividends and capital gain distributions paid during the prior year. Such
dividends and distributions may also be subject to state and local taxes.
Dividends and capital gain distributions declared in October, November or
December of any year payable to shareholders of record on a specified date in
such months will be deemed to have been received by shareholders and paid by a
LifeGoal Portfolio on December 31 of such year in the event such dividends and
distributions are actually paid during January of the following year.
Federal law requires the Company to withhold 31% from any dividends (other than
exempt-interest dividends) and capital gain distributions paid by the Company
and/or redemptions (including exchange redemptions) to individual shareholders
unless the shareholder properly furnishes a certified, correct Taxpayer
Identification Number and certifies that withholding does not apply. Such
withholding is also required if the Internal Revenue Service notifies the
Company that the Taxpayer Identification Number provided by the shareholder is
incorrect or that the shareholder is otherwise subject to such withholding.
Amounts withheld are applied to the shareholder's federal tax liability, and a
refund may be obtained from the Internal Revenue Service if withholding results
in overpayment of tax. Federal law also requires the LifeGoal Portfolios to
withhold 30% or the applicable tax treaty rate from dividends paid to certain
nonresident alien, non-U.S. partnership and non-U.S. corporation shareholder
accounts.
The foregoing discussion is based on tax laws and regulations that were in
effect as of the date of this Prospectus and summarizes only some of the
important tax considerations generally affecting the LifeGoal Portfolios and
their shareholders. It is not intended as a substitute for careful tax planning.
Accordingly, potential investors should consult their tax advisors with specific
reference to their own tax situations. Further tax information is contained in
the SAI.
22
<PAGE>
Prospectus
Investor C Shares
October 15, 1996
LIFEGOAL PORTFOLIOS
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
NATIONS FUND
Investment Adviser: NationsBanc Advisors, Inc.
Investment Sub-Adviser: TradeStreet Investment Associates, Inc.
Distributor: Stephens Inc.
<PAGE>
Prospectus
Investor C Shares
October 15, 1996
This Prospectus describes three diversified
investment portfolios, LifeGoal Growth Portfolio,
LifeGoal Balanced Growth Portfolio and LifeGoal
Income and Growth Portfolio (each a "LifeGoal
Portfolio" and, collectively, the "LifeGoal
Portfolios"), of Nations LifeGoal Funds, Inc. (the
"Company"), an open-end management investment
company in the Nations Fund Family. The LifeGoal
Portfolios invest substantially all of their assets
in certain other funds within the Nations Fund
Family. These underlying funds are referred to in
this Prospectus as "Nations Funds". This Prospectus
describes one class of shares of each LifeGoal
Portfolio -- Investor C Shares.
This Prospectus sets forth concisely the information
about each LifeGoal Portfolio that a prospective
purchaser of Investor C Shares should consider
before investing. Investors should read this
Prospectus and retain it for future reference.
Additional information about the LifeGoal Portfolios
is contained in a separate Statement of Additional
Information (the "SAI") that has been filed with the
Securities and Exchange Commission (the "SEC") and
is available upon request without charge by writing
or calling the Nations Fund Family at its address or
telephone number shown below. The SAI for the
LifeGoal Portfolios, dated the same date as this
Prospectus, is incorporated by reference in its
entirety into this Prospectus. NationsBanc Advisors,
Inc. ("NBAI") is the investment adviser to the
LifeGoal Portfolios. TradeStreet Investment
Associates, Inc. ("TradeStreet") is the investment
sub-adviser to the LifeGoal Portfolios. As used in
this Prospectus, the "Adviser" refers to NBAI and/or
TradeStreet as the context may require.
SHARES OF THE NATIONS FUND FAMILY ARE NOT DEPOSITS
OR OTHER OBLIGATIONS OF, OR ISSUED, ENDORSED OR
GUARANTEED BY, NATIONSBANK, N.A. ("NATIONSBANK") OR
ANY OF ITS AFFILIATES. SUCH SHARES ARE NOT INSURED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR
ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE
LIFEGOAL PORTFOLIOS INVOLVES CERTAIN RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
NATIONSBANK AND CERTAIN OF ITS AFFILIATES PROVIDE
CERTAIN ADVISORY AND OTHER SERVICES TO THE NATIONS
FUND FAMILY, FOR WHICH THEY ARE COMPENSATED.
STEPHENS INC., WHICH IS NOT AFFILIATED WITH
NATIONSBANK, IS THE SPONSOR AND ADMINISTRATOR AND
SERVES AS THE DISTRIBUTOR FOR THE LIFEGOAL
PORTFOLIOS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
LIFEGOAL PORTFOLIOS:
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
For Portfolio information
call:
1-800-321-7854
Nations Fund Family
c/o Stephens Inc.
One NationsBank Plaza
33rd Floor
Charlotte, NC 28255
NATIONS FUND
<PAGE>
Table Of Contents
About The LifeGoal Portfolios
Prospectus Summary 3
Expenses Summary 4
Objectives 6
How Objectives Are Pursued 7
Description Of Underlying Nations Funds
-- Investment Objectives, Policies And Practices 9
How Performance Is Shown 13
How The LifeGoal Portfolios Are Managed 14
Organization And History 17
About Your
Investment
How To Buy Shares 17
How To Redeem Shares 18
How To Exchange Shares 20
Shareholder Servicing and Distribution Plans 20
How The LifeGoal Portfolios Value Their Shares 22
How Dividends And Distributions Are Made;
Tax Information 22
No person has been authorized to give any
information or to make any representations not
contained in this Prospectus, or in the LifeGoal
Portfolios' SAI incorporated herein by reference, in
connection with the offering made by this Prospectus
and, if given or made, such information or
representations must not be relied upon as having
been authorized by the LifeGoal Portfolios or the
distributor. This Prospectus does not constitute an
offering by LifeGoal Portfolios or by the
distributor in any jurisdiction in which such
offering may not lawfully be made.
2
<PAGE>
About The LifeGoal Portfolios
Prospectus Summary
(Bullet) Type of Company: Open-end management investment company.
(Bullet) Investment Objectives and Policies:
(Bullet) LifeGoal Growth Portfolio's investment objective is to seek capital
appreciation through exposure to a variety of equity market segments.
(Bullet) LifeGoal Balanced Growth Portfolio's investment objective is
to seek total return through a balanced portfolio of equity
and fixed income securities.
(Bullet) LifeGoal Income and Growth Portfolio's investment
objective is to seek current income and modest
growth to protect against inflation and to preserve
purchasing power.
The LifeGoal Portfolios are designed for long-term
investors seeking the benefits of asset allocation
and diversification. Unlike traditional mutual
funds, which invest directly in individual
securities, the LifeGoal Portfolios pursue their
investment objectives by allocating their assets
among various Nations Funds.
(Bullet) Investment Adviser: NationsBanc Advisors, Inc. serves as the investment
adviser to the LifeGoal Portfolios. NBAI also advises more than 43
other funds in the Nations Fund Family. TradeStreet Investment
Associates, Inc. provides sub-advisory services to the LifeGoal
Portfolios and to more than 39 other funds in the Nations Fund Family.
(Bullet) Dividends and Distributions: Each LifeGoal Portfolio declares and pays
dividends from net investment income quarterly. Each LifeGoal
Portfolio's net realized capital gains, including net short-term
capital gains, are distributed at least annually.
(Bullet) Risk Factors: Although the Adviser seeks to achieve the investment
objective of each LifeGoal Portfolio, there is no assurance that it
will be able to do so. Investments in a LifeGoal Portfolio are not
insured against loss of principal. Investments by a LifeGoal Portfolio
in shares of a Nations Fund that holds stocks are subject to stock
market risk, which is the risk that the value of the stocks held by
Nations Funds may decline over short or even extended periods.
Investments by a LifeGoal Portfolio in shares of a Nations Fund that
holds debt securities are subject to interest rate risk, which is the
risk that the value of the debt securities, including securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities
("U.S. Government Obligations"), held by Nations Funds may be adversely
affected by changes in market interest rates. The value of Nations
Funds' investments in debt securities will tend to decrease when
interest rates rise and increase when interest rates fall. In addition,
debt securities which are not backed by the U.S. Government are subject
to credit risk, which is the risk that the issuer may not be able to
pay principal and/or interest when due. Certain of the Nations Funds
may invest portions, and in some cases substantially all, of their
assets in foreign securities. Foreign securities present unique
investment risks, including risks associated with currency
fluctuations, markets that tend to be less developed and more volatile
than U.S. markets and markets that are characterized by less
governmental supervision and lower disclosure standards. Certain of
Nations Funds' investments constitute derivative securities. Certain
types of derivative securities can, under certain circumstances,
significantly increase an investor's exposure to market or other risks.
For a discussion of these and other factors, see "How Objectives Are
Pursued -- Principal Risk Considerations."
(Bullet) Minimum Purchase: $1,000 minimum initial investment per record holder
except that the minimum initial investment is: $500 for Individual
Retirement Account ("IRA") investors; $250 for non-working spousal
IRAs; and $100 for investors participating on a monthly basis in the
Systematic Investment Plan. There is no minimum investment amount for
investments by certain 401(k) and employee pension plans or salary
reduction-Individual Retirement Accounts. Minimum subsequent investment
is $100, except for investments pursuant to the Systematic Investment
Plan. See "How To Buy Shares."
3
<PAGE>
Expenses Summary
Expenses are one of several factors to consider when investing in a LifeGoal
Portfolio. The following tables summarize estimated shareholder transaction and
operating expenses as a percentage of net assets for Investor C Shares of each
LifeGoal Portfolio. The Examples show the cumulative expenses attributable to a
hypothetical $1,000 investment in each LifeGoal Portfolio over specified
periods.
LIFEGOAL PORTFOLIOS INVESTOR C SHARES
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
LifeGoal
LifeGoal Growth Balanced Growth
Portfolio Portfolio
<S> <C> <C>
Sales Load Imposed on Purchases None None
Deferred Sales Load (as a percentage of the lower of the original purchase price or
redemption proceeds) (1) .50% .50%
<CAPTION>
LifeGoal Income
and Growth
Portfolio
Sales Load Imposed on Purchases None
Deferred Sales Load (as a percentage of the lower of the original purchase price or
redemption proceeds) (1) .50%
</TABLE>
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
LifeGoal
LifeGoal Growth Balanced Growth
Portfolio Portfolio
<S> <C> <C>
Management Fees .25% .25%
Rule 12b-1 Fees (After Fee Waivers) .25% .25%
Shareholder Servicing Fees .25% .25%
Other Expenses .0% .0%
Total Operating Expenses .75% .75%
<CAPTION>
LifeGoal Income
and Growth
Portfolio
<S> <C>
Management Fees .25%
Rule 12b-1 Fees (After Fee Waivers) .25%
Shareholder Servicing Fees .25%
Other Expenses .0%
Total Operating Expenses .75%
</TABLE>
(1) A Deferred Sales Charge, if any, is imposed only with respect to Investor C
Shares redeemed within one year of purchase.
Examples:
You would pay the following expenses on a $1,000 investment in Investor C Shares
of the indicated LifeGoal Portfolio, assuming indirect expenses (the LifeGoal
Portfolios' share of the expenses incurred by the underlying Nations Funds) at
the midpoint of the after waiver ranges shown below, and further assuming: (1) a
5% annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
LifeGoal
LifeGoal Growth Balanced Growth
Portfolio Portfolio
<S> <C> <C>
1 Year $22 $21
3 Years $53 $49
<CAPTION>
LifeGoal Income
and Growth
Portfolio
1 Year $19
3 Years $44
</TABLE>
You would pay the following expenses on a $1,000 investment in Investor C Shares
of the indicated LifeGoal Portfolio, assuming indirect expenses (the LifeGoal
Portfolios' share of the expenses incurred by the underlying Nations Funds) at
the midpoint of the after waiver ranges shown below and further assuming: a 5%
annual return but no redemption.
<TABLE>
<CAPTION>
LifeGoal
LifeGoal Growth Balanced Growth
Portfolio Portfolio
<S> <C> <C>
1 Year $17 $16
3 Years $53 $49
<CAPTION>
LifeGoal Income
and Growth
Portfolio
1 Year $14
3 Years $44
</TABLE>
4
<PAGE>
The purpose of the foregoing tables is to assist an investor in understanding
the various shareholder transaction and operating expenses that an investor in
Investor C Shares of a LifeGoal Portfolio can expect. The figures in the above
tables show the basis on which payments will be made, except that Other Expenses
are estimated for the LifeGoal Portfolios' current fiscal year and the Examples
include indirect expenses for the underlying Nations Funds' most recent fiscal
year (or estimates thereof for new funds). Absent fee waivers, "Rule 12b-1 Fees"
would be .75% for each LifeGoal Portfolio. For more complete descriptions of the
LifeGoal Portfolios' operating expenses, see "How The LifeGoal Portfolios Are
Managed." For a more complete description of the Rule 12b-1 and shareholder
servicing fees payable by the LifeGoal Portfolios, see "Shareholder Servicing
And Distribution Plans."
THE FOREGOING SHOULD NOT BE CONSIDERED TO BE AN ACTUAL REPRESENTATION OF PAST OR
FUTURE PERFORMANCE. ACTUAL EXPENSES AND RATES OF RETURN MAY BE GREATER OR LESS
THAN THOSE SHOWN.
Expense Ratios For Underlying Nations Funds (Primary A Shares)
The following table provides the annualized expense ratios for the Primary A
Shares of each of the selected underlying Nations Fund's investments for its
fiscal period ended March 31, 1996.
<TABLE>
<CAPTION>
(after fee waivers
and/or expense
reimbursements)
<S> <C>
Nations Disciplined Equity Fund 1.02%
Nations Capital Growth Fund .96%
Nations Value Fund .96%
Nations Equity Income Fund .90%
Nations Managed Index Fund* .50%
Nations Emerging Growth Fund .99%
Nations Managed SmallCap Index Fund* .50%
Nations International Equity Fund 1.17%
Nations Pacific Growth Fund 1.76%
Nations Emerging Markets Fund 2.13%
Nations Prime Fund .30%
Nations Strategic Fixed Income Fund .72%
Nations Diversified Income Fund .77%
Nations Short-Intermediate Government Fund .63%
Nations Short-Term Income Fund .55%
Nations Global Government Income Fund 1.32%
* Because this Nations Fund had not commenced operations as of March 31, 1996, the expense
ratios are based on estimates for its current fiscal year.
<CAPTION>
(before fee
waivers and/or
expense
reimbursements)
Nations Disciplined Equity Fund 1.02%
Nations Capital Growth Fund .96%
Nations Value Fund .96%
Nations Equity Income Fund .90%
Nations Managed Index Fund* .70%
Nations Emerging Growth Fund .99%
Nations Managed SmallCap Index Fund* .70%
Nations International Equity Fund 1.18%
Nations Pacific Growth Fund 1.78%
Nations Emerging Markets Fund 2.13%
Nations Prime Fund .37%
Nations Strategic Fixed Income Fund .83%
Nations Diversified Income Fund .87%
Nations Short-Intermediate Government Fund .86%
Nations Short-Term Income Fund .88%
Nations Global Government Income Fund 1.32%
* Because this Nations Fund had not commenced operations as of March 31, 1996, the expense
ratios are based on estimates for its current fiscal year.
</TABLE>
LifeGoal Portfolios' Indirect Expenses
Based on the foregoing figures and the expected percentage investment ranges in
the underlying Nations Funds, the range of the weighted average indirect expense
ratio for each LifeGoal Portfolio is as follows:
<TABLE>
<CAPTION>
(after fee waivers
and/or expense
reimbursements)
<S> <C>
LifeGoal Growth Portfolio .86% to 1.01%
LifeGoal Balanced Growth Portfolio .89% to .94%
LifeGoal Income and Growth Portfolio .56% to .73%
<CAPTION>
(before fee
waivers and/or
expense
reimbursements)
LifeGoal Growth Portfolio .92% to 1.05%
LifeGoal Balanced Growth Portfolio .97% to 1.04%
LifeGoal Income and Growth Portfolio .77% to .91%
</TABLE>
The indirect expense ratios fluctuate within these ranges depending upon how
assets are allocated among the Nations Funds. The LifeGoal Portfolios will be
invested in the Primary A Shares of the underlying Nations Funds and, under
normal market conditions, will be allocated among the various fund categories in
the percentages shown below. Under extraordinary circumstances, a LifeGoal
Portfolio's investment in one or more Nations Funds might exceed these ranges.
For temporary defensive purposes, any LifeGoal Portfolio may invest up to 100%
of its assets in Nations Prime Fund.
5
<PAGE>
Objectives
(Bullet) LifeGoal Growth Portfolio -- LifeGoal Growth Portfolio's investment
objective is to seek capital appreciation through exposure to a variety
of equity market segments.
<TABLE>
<CAPTION>
Fund Category Range
<S> <C>
Large-Capitalization Domestic Equity Funds 35-75%
Small/Mid-Capitalization Domestic Equity Funds 20-35%
Core International Equity Funds 10-20%
Non-Core International Equity Funds 0-10%
<CAPTION>
Fund Category Funds
Large-Capitalization Domestic Equity Funds Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Value Fund
Small/Mid-Capitalization Domestic Equity Funds Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Core International Equity Funds Nations International Equity Fund
Non-Core International Equity Funds Nations Emerging Markets Fund
Nations Pacific Growth Fund
</TABLE>
(Bullet) LifeGoal Balanced Growth Portfolio -- LifeGoal Balanced Growth
Portfolio's investment objective is to seek total return through a
balanced portfolio of equity and fixed income securities.
<TABLE>
<CAPTION>
Fund Category Range
<S> <C>
Large-Capitalization Domestic Equity Funds 15-35%
Small/Mid-Capitalization Domestic Equity Funds 10-20%
Core International Equity Funds 5-15%
Core Bond Funds 40-60%
<CAPTION>
Fund Category Funds
Large-Capitalization Domestic Equity Funds Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Value Fund
Small/Mid-Capitalization Domestic Equity Funds Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Core International Equity Funds Nations International Equity Fund
Core Bond Funds Nations Diversified Income Fund
Nations Strategic Fixed Income Fund
Nations Global Government Income Fund
</TABLE>
(Bullet)LifeGoal Income and Growth Portfolio -- LifeGoal Income and Growth
Portfolio's investment objective is to seek current income and modest
growth to protect against inflation and to preserve purchasing power.
<TABLE>
<CAPTION>
Fund Category Range
<S> <C>
Large-Capitalization Domestic Equity Funds 10-30%
Core International Equity Funds 0-10%
Short Duration Bond Funds 50-90%
Money Market Funds 0-20%
<CAPTION>
Fund Category Funds
Large-Capitalization Domestic Equity Funds Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Value Fund
Core International Equity Funds Nations International Equity Fund
Short Duration Bond Funds Nations Short-Term Income Fund
Nations Short-Intermediate Government
Fund
Money Market Funds Nations Prime Fund
</TABLE>
The LifeGoal Portfolios are intended primarily for long-term investors. The
Portfolios are structured as "funds of funds" that allocate substantially all of
their assets to investments in Primary A Shares of various Nations Funds. The
performance of the LifeGoal Portfolios will, therefore, correspond to the
performance of the various underlying Nations Funds. Additional information
about the underlying Nations Funds, including their investment objectives,
investment policies and practices, is set forth below under "Descriptions of
Underlying Nations Funds." The Adviser allocates and reallocates each LifeGoal
Portfolio's assets among the underlying Nations Funds identified above, and
potentially other Nations Funds, based on the percentage ranges shown above for
the various fund categories. As discussed below under "The Asset Allocation
Process," a LifeGoal Portfolio's actual investment allocation may deviate from
the percentage ranges shown above, over the short or long term.
6
<PAGE>
How Objectives Are Pursued
Benefits of Asset Allocation
For most investors, choosing the mix of asset classes is the most important
investment decision they can make. Asset allocation is the single greatest
determinant of an investor's return and risk. It is the process of developing a
diversified portfolio by mixing different asset classes in varying portions to
gain exposure to the different return/risk characteristics of each asset class.
Market segments (i.e. -- international stocks, domestic stocks, bonds) tend to
react in different ways to changes in economic conditions. Therefore, an
investment approach that combines various market segments and asset classes may
reduce overall portfolio volatility.
The assets of each LifeGoal Portfolio are allocated among various asset classes
through their investment in different fund categories. Each LifeGoal Portfolio
has its own asset allocation strategy which gives it a distinctive risk profile
and offers different return potential. Investors should select the LifeGoal
Portfolio (or Portfolios) which best matches their investment goals, risk
tolerance and investment horizon.
In general, the greater the LifeGoal Portfolio's allocation to equity funds, the
greater the potential return and risk of price decline. Because of equity funds'
greater risks, investors in the LifeGoal Portfolios that have a higher
allocation to equity funds should have a longer investment horizon.
Although the Adviser will seek to achieve the investment objective of each
LifeGoal Portfolio, there is no assurance that it will be able to do so. No
single LifeGoal Portfolio should be considered, by itself, to provide a complete
investment program for any investor. The net asset value of the shares of a
LifeGoal Portfolio fluctuates based on fluctuations in the values of the
underlying Nations Funds' shares, which, in turn, fluctuate based on market
conditions and other factors. Therefore, investors should not rely upon LifeGoal
Portfolios for short-term financial needs. The LifeGoal Portfolios are not
intended to provide a vehicle for participating in short-term swings in the
stock market and their shares are not insured against loss of principal.
The Asset Allocation Process
Subject to the general supervision of the Company's Board of Directors, the
Adviser is responsible for allocating and reallocating each LifeGoal Portfolio's
assets among the Nations Funds in which it invests, and for rebalancing such
portfolio allocations. In this context, allocation is the process of setting or
changing the weightings of the different fund categories and Nations Funds
within a particular LifeGoal Portfolio's portfolio. The "weightings" of the
different fund categories and Nations Funds within a particular LifeGoal Fund's
portfolio are the percentage targets that the Adviser sets for investment in a
particular fund category or Nations Fund. All fund category weightings will be
within the overall percentage ranges shown above. Rebalancing is the process of
bringing portfolio allocations back into alignment with the applicable
weightings. A LifeGoal Portfolio's investments are continuously monitored and
are reallocated as often as the Adviser deems appropriate. In addition,
portfolio allocations and performance are reviewed at least quarterly for
rebalancing at the discretion of the Adviser.
Although the Adviser may rebalance each LifeGoal Portfolio's holdings quarterly,
it expects to rebalance less often. Thus, over time, it is likely that the
percentage of a particular LifeGoal Portfolio's assets actually invested in a
particular Nations Fund or fund category will not correspond precisely with the
applicable weightings. Also, depending on the frequency of rebalancings, the
percentage of a particular LifeGoal Portfolio's assets actually invested in a
particular fund category at any given time may deviate from the percentage
ranges shown above, and such deviation may continue for some time.
The Adviser has adopted certain policies designed to reduce the extent of such
deviations. For example, if any fund category percentage ranges are exceeded,
the Adviser will allocate new investment dollars to the other fund categories.
Likewise, the Adviser will allocate new investment dollars to fund categories
whose minimum percentages have not been met. Redemption requests, however, will
generally be met by redeeming shares of underlying Nations Funds according to
the applicable weightings.
Determining the asset allocation applicable to each LifeGoal Portfolio is a two
step process. The first step is determining the broad asset classes for each
LifeGoal Portfolio -- large and small capitalization domestic stocks, foreign
stocks, bonds and money market securities. In making this determination, the
Adviser will consult the relevant historical data for the returns of each asset
class in various economic scenarios. Those returns will be reviewed in the
context of the Adviser's outlook for the economy and markets and adjusted for
reasonableness. The second step in the process is to determine the particular
Nations Funds in which each LifeGoal Portfolio will invest. The Adviser looks at
historic returns and valuations to determine which Nations Funds are most
appropriate. Determining how the individual Nations Funds may interact with one
another within a portfolio is a critical part of this second step.
7
<PAGE>
Although it is expected that the LifeGoal Portfolios will invest in the Nations
Funds identified in "Description of Underlying Nations Funds," the Adviser has
the discretion to change the particular Nations Funds used as underlying
investments for the LifeGoal Portfolios. Among other things, the Adviser may
substitute or include other funds from the Nations Fund Family, including any
introduced subsequent to this Prospectus, as permissible investments for the
LifeGoal Portfolios.
General Characteristics and Risk Factors of the Major Asset Classes
The underlying Nations Funds invest in various stocks, bonds and money market
securities. This section provides a brief summary of the general characteristics
and overall risk factors associated with these asset classes. Additional
information is provided under "Description of Underlying Nations Funds" below
and in the prospectuses of the underlying Nations Funds.
Common stocks represent ownership in a company. Stock prices move with changes
in a company's current earnings and its prospects for the future, and with
overall stock market conditions. Stocks offer the potential for price
appreciation and rising dividends. While smaller companies usually reinvest
their earnings back into the company and therefore pay minimal, if any,
dividends, they offer the possibility of greater appreciation.
Historically, stocks have provided higher returns than bonds or money market
securities. Therefore, they have also provided the greatest protection against
inflation and the resulting erosion of purchasing power. However, the additional
return has been accompanied by additional volatility. Equity investors should
have a long-term investment horizon and be willing to accept the inevitable
periods of market declines.
Bonds are a contract. The issuer has an obligation to pay a specified rate of
interest (which may be fixed or variable) at specified times and to repay the
bond's principal value upon maturity. Bonds are subject to credit risk and to
interest rate risk. Credit risk refers to the possibility that a bond's price
may fall due to a credit downgrade or a principal or interest payment default.
Interest rate risk refers to a bond's price movement in response to changes in
market interest rates. As a general rule, when market interest rates rise, bond
prices fall. Typically, the longer the maturity of a bond, the greater the
potential price fluctuation.
Money market securities are short term debt obligations issued primarily by the
U.S. Government, government agencies or corporations. High quality money market
securities are very low risk investments; their low risk, however, is
accompanied by lower potential returns relative to other investments.
Investment Company Securities: Each of the LifeGoal Portfolios intends, as a
fundamental policy, to concentrate investments by investing 25% or more of its
total assets in the mutual fund industry.
Although some of the Nations Funds in which the LifeGoal Portfolios invest do
not necessarily share the same investment objective as the investing LifeGoal
Portfolio, those Nations Funds will be selected by the Adviser based on the
asset allocation process described above.
Although each LifeGoal Portfolio intends to invest substantially all of its
assets in some or all of the underlying Nations Funds, each LifeGoal Portfolio
reserves the right to invest in obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, repurchase agreements, and money
market instruments with respect to any assets not so invested in Nations Funds.
It is not expected that any LifeGoal Portfolio will invest more than 5% of its
assets in any of these direct investments.
Investment Limitations: Each LifeGoal Portfolio is subject to a number of
investment limitations, which are described in the SAI. Among other things, the
LifeGoal Portfolios' fundamental policies permit them to borrow money from banks
for temporary or emergency purposes, subject to percentage and other
limitations, and to enter into forward purchase commitments and issue multiple
classes of shares. The investment objective, policies and limitations of each
LifeGoal Portfolio, unless otherwise specified, may be changed without a vote of
the LifeGoal Portfolio's shareholders. If the investment objective, policies or
limitations of a LifeGoal Portfolio change, shareholders should consider whether
the LifeGoal Portfolio remains an appropriate investment in light of their
current position and needs.
In order to register a LifeGoal Portfolio's shares for sale in certain states, a
LifeGoal Portfolio may make commitments more restrictive than the investment
policies and limitations described in this Prospectus and the SAI. Should a
LifeGoal Portfolio determine that any such commitment is no longer in the best
interests of the LifeGoal Portfolio, it may consider terminating sales of its
shares in the states involved.
The Nations Funds also have adopted certain investment restrictions which may be
more or less restrictive than those applicable to the LifeGoal Portfolios,
thereby allowing a LifeGoal Portfolio to participate in certain investment
strategies indirectly that are prohibited under the investment restrictions
described in the LifeGoal Portfolios' SAI. The investment restrictions of the
underlying Nations Funds are set forth in their respective prospectuses and
statements of additional information.
8
<PAGE>
Portfolio Turnover: Generally, LifeGoal Portfolios will purchase portfolio
securities for capital appreciation or investment income, or both, and not for
short-term trading profits. The LifeGoal Portfolios' portfolio turnover rates
are not expected to exceed 50%.
Description of Underlying Nations Funds
-- Investment Objectives, Policies and Practices
The LifeGoal Portfolios seek to achieve their investment objectives by investing
in certain Nations Funds (each, a "Fund"). The following section provides
summaries of the Nations Funds' investment objectives, policies and practices.
These summaries are intended to help investors understand some of the more
significant aspects of the underlying Nations Funds, but are not intended to be
comprehensive disclosures of all policies, practices and risks associated with
investments by the LifeGoal Portfolios in the Nations Funds. To receive a
prospectus for any underlying Nations Fund, which contains more complete
information, please call Nations Fund at 1-800-982-2271.
Equity Funds
Nations Capital Growth Fund: The Fund's investment objective is to seek growth
of capital by investing in companies that are believed to have superior earnings
growth potential. The Fund invests in larger capitalization, high-quality
companies which possess above average earnings growth potential. While the
Fund's investments will generally be made in companies which share some of the
following characteristics:
(Bullet) above-average earnings growth relative to the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index")1;
(Bullet) established operating histories, strong balance sheets and favorable
financial characteristics; and
(Bullet) above-average return on equity relative to the S&P 500 Index,
the Fund has a flexible charter which allows it to take advantage of other
opportunities. Under normal market conditions, the Fund invests at least 65% of
its total assets in common stocks. In addition to common stocks, the Fund may
also invest in preferred stocks, securities convertible into common stocks and
other types of securities having common stock characteristics such as rights and
warrants. The Fund may invest a portion of its assets in foreign securities.
Nations Disciplined Equity Fund: The Fund's investment objective is to seek
growth of capital by investing in companies that are expected to produce
significant increases in earnings per share. The Adviser believes that companies
experiencing positive earnings trends have the potential to generate significant
increases in share price. The Adviser identifies securities for inclusion in the
portfolio through a combination of quantitative and qualitative methods. Using a
computer modeling program, the portfolio manager identifies securities that have
experienced positive earnings trends. Fundamental research is used to support
the model's analysis. Under normal market conditions, the Fund invests at least
65% of its total assets in common stocks of domestic issuers. The Fund also may
invest in preferred stocks, securities convertible into common stock, warrants
and rights to purchase common stock, options, and U.S. Government and corporate
debt securities, and foreign securities.
Nations Emerging Growth Fund: The Fund's investment objective is to seek capital
appreciation by investing in emerging growth companies that are believed to have
superior long-term earnings growth prospects. The Fund invests primarily in
emerging growth companies with revenues between $50 million and $1.5 billion.
The Fund focuses on companies with above average earnings growth rates and
profit margins, yet the portfolio may also include positions in special
situation companies whose growth is expected to accelerate. In selecting
companies for investment, the Adviser considers overall growth prospects,
financial condition, competitive position, technology, research and development,
productivity, innovation and management strength among other factors. Under
normal market conditions, the Fund invests at least 65% of its total assets in
common stocks. The Fund also may invest in securities convertible into common
stocks and may invest a portion of its assets in foreign securities. The
volatility of emerging growth stocks is higher than that of larger companies so,
while they may have greater potential for gains, they also carry greater
downside risk.
Nations Equity Income Fund: The Fund's investment objective is to seek current
income and growth of capital by investing primarily in companies with above
average dividend yields. The investment program of the Fund is based on several
premises. First, dividends are normally a more stable and predictable source of
return than capital appreciation. Second, diversifying equity holdings in a
manner that includes every major economic sector con-
1 "Standard & Poor's 500" is a registered service marks of Standard & Poor's
Corporation ("S&P"), which does not sponsor, and is not affiliated with,
LifeGoal Portfolios or any of the Nations Funds.
9
<PAGE>
tributes to reduced volatility, without a commensurate reduction in expected
investment return. Finally, investing in dividend paying stocks in all the
economic sectors can provide greater income than the S&P 500 Index with less
volatility. Collectively, these traits may be combined in such a fashion as to
produce returns in excess of the market, as measured by the S&P 500 Index, on a
comparable risk basis.
Under normal circumstances, the Fund will invest at least 65% of its assets in
income-producing common stocks, including securities convertible into or
ultimately exchangeable for common stock (i.e., convertible bonds or convertible
preferred stock), whose prospects for dividend growth and capital appreciation
are considered favorable by the Adviser. The Fund also may invest its assets in
fixed-income securities (corporate and government bonds of various maturities),
preferred stocks and warrants and other debt securities, including up to 5% of
its assets in debt securities that are rated below investment grade (e.g. rated
"BB" by S&P) or if not rated, are of equivalent investment quality as determined
by the Adviser. The Fund may invest a portion of its assets in foreign
securities.
Nations Managed Index Fund: The Fund's investment objective is to seek, over the
long-term, to provide a total return which (gross of fees and expenses) exceeds
the total return of the S&P 500 Index. The Fund will invest in selected equity
securities that are included in the S&P 500 Index. The S&P 500 Index is a
capitalization weighted index consisting of 500 common stocks chosen for market
size, liquidity and industry group representation.
Unlike traditional index funds, the Fund has a "managed" aspect. The Adviser
believes that a managed equity index portfolio can provide investors with
positive incremental performance relative to the S&P 500 Index while minimizing
the downside risk of underperforming the index over time. The Adviser ranks the
attractiveness of each security in the S&P 500 Index according to a multifactor
valuation model. The Adviser then screens out the lower ranked stocks resulting
in a portfolio of 350 to 400 holdings that capture the investment
characteristics of the S&P 500 Index. Under normal conditions, the Adviser will
attempt to invest as much of the Fund's assets as is practical and, in any event
at least 65% of its total assets, in common stocks which are included in the S&P
500 Index. The Fund is expected, however, to maintain a position in high-quality
short-term debt securities and money market instruments to meet redemption
requests.
Nations Managed SmallCap Index Fund: The Fund's investment objective is to seek,
over the long-term, to provide total return which (gross of fees and expenses)
exceeds that of the Standard & Poor's SmallCap 600 Index (the "S&P 600 Index").2
The Fund will invest in selected equity securities that are included in the S&P
600 Index. The S&P 600 Index is a capitalization weighted index consisting of
600 domestic stocks which captures the economic and industry characteristics of
small stock performance.
Unlike traditional index funds, the Fund has a "managed" aspect. The Adviser
believes that a managed equity index portfolio can provide investors with
positive incremental performance relative to the S&P 600 Index while minimizing
the downside risk of underperforming the index over time. From the initial S&P
600 Index stock universe, the Adviser ranks the attractiveness of each security
according to a multifactor valuation model. The Adviser then screens out the
lower ranked stocks resulting in a portfolio of approximately 450 to 500
holdings that capture the investment characteristics of the S&P 600 Index. Under
normal conditions, substantially all of the Fund's assets, and, in any event at
least 65% of its total assets, will be invested in common stocks which are
included in the S&P 600 Index. The Fund is expected, however, to maintain a
position in high-quality short-term debt securities and money market instruments
to meet redemption requests.
Nations Value Fund: The Fund's investment objective is to seek growth of capital
by investing in companies believed to be undervalued. The Fund invests in high
quality, large capitalization stocks which are believed to be undervalued
relative to the overall stock market or other stocks within the same industry.
The principal factor considered by the Adviser in making this determination is
the ratio of a stock's price to earnings. The Adviser believes that companies
with lower price to earnings ratios are more likely to provide better
opportunities for capital appreciation. This "value" approach generally produces
a dividend yield greater than the market average. Through a combination of the
"value" approach and broad diversification among economic sectors and
industries, the Fund pursues above-average returns while seeking to avoid
above-average risk.
Under normal market conditions, at least 65% of the Fund's total assets are
invested in domestic stocks. The Fund may invest a portion of its assets in
foreign securities as well as U.S. Government Obligations and investment grade
debt securities of domestic companies.
International Funds
Nations Emerging Markets Fund: The Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of
companies in emerging market countries such as those in Latin America, Eastern
Europe, the Pacific Basin, the Far East, Africa and India. Under normal market
conditions,
2 "Standard & Poor's 600" is a registered service mark of S&P.
10
<PAGE>
the Fund will invest at least 65% of its total assets in equity securities of
companies in emerging markets. The Fund also may invest in other types of
instruments, including debt securities. The Fund intends to invest in at least
three different countries, although it may, from time to time, invest all of its
assets in a single country. In such cases, events occurring in such country are
more likely to affect the Fund's investments.
Nations International Equity Fund: The Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of
non-United States companies in Europe, Australia, the Far East and other areas,
including developing countries. The Fund invests in both established and
developing markets around the world. While emphasizing established markets, the
Fund typically has some exposure to the more rapidly growing markets of the
Pacific Basin, Latin America and Eastern Europe.
Under normal market conditions, the Fund will invest at least 65% of its assets
in common stocks of non-United States companies and may invest up to 35% of its
assets in any other type of security, including convertible securities,
preferred stocks, and various debt securities. Under normal circumstances, the
Fund invests in at least three different countries. Under unusual circumstances,
however, the Fund may invest all of its assets in one or two countries. In such
cases, events occuring in those countries are more likely to affect the Fund's
investments.
Nations Pacific Growth Fund: The Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of
companies in the Pacific Basin and the Far East (excluding Japan). Under normal
market conditions, the Fund will invest at least 65% of its total assets in
securities of issuers that conduct their principal business activities in
countries of the Pacific Basin and Far East, except for Japan. The Fund intends
to invest in at least three different countries, although it may, from time to
time, invest all or a significant portion of its assets in a single country. In
such cases, events occurring in that country are more likely to affect the
Fund's investments. The Fund will focus on equity securities, but may also
invest in investment grade debt obligations.
Nations Global Government Income Fund: Nations Global Government Income Fund's
investment objective is to seek total return by investing primarily in high
quality debt securities issued by governments, banks and supranational entities
located throughout the world.
In seeking to achieve its investment objective, the Fund will invest under
normal market conditions at least 65% of its total assets in debt securities
issued or guaranteed by U.S. or foreign governments (including states, provinces
and municipalities) or their agencies, instrumentalities or subdivisions
("Government Securities"). Except for temporary defensive purposes, the Fund
will concentrate its investments in foreign Government Securities. Concentration
in this context means the investment of more than 25% of the Fund's total assets
in such securities. The Fund may invest in the debt securities of any type of
issuer, including corporations, banks and supranational entities.
The Fund, under normal market conditions, will invest in at least three
different countries. These countries may include the U.S., the countries of
Western Europe, Japan, Australia, New Zealand and Canada. If the Fund invests a
significant portion of its assets at any time in a single country, events
occurring in such country are more likely to affect the Fund's investments. The
Fund may invest in securities of issuers located in any region or country and
that are denominated in any currency. For defensive purposes, the Fund may
temporarily invest substantially all of its assets in U.S. financial markets or
in U.S. dollar-denominated instruments.
Supranational entities are international organizations jointly operated by
multiple sovereign governments including, for example, the World Bank, the
European Coal and Steel Community, the Asian Development Bank, the European
Investment Bank and the Inter-American Development Bank. Supranational entities
generally have no taxing authority and are dependent upon their members for the
funds necessary to pay principal and interest on their debt obligations.
Nations Global Government Income Fund's yield and share price will change based
on changes in domestic or foreign interest rates and in an issuer's
creditworthiness.
Bond Funds
Nations Diversified Income Fund: The Fund's investment objective is to seek
total return with an emphasis on current income by investing in a diversified
portfolio of fixed income securities. The Fund actively seeks opportunities
within various bond market sectors, balancing credit and interest rate risk.
Under normal market conditions, the Fund will invest at least 65% of the total
value of its assets in investment grade debt obligations, including fixed income
securities such as government, government agency and corporate bonds. Up to 35%
of the Fund's total assets may be invested in securities rated lower than
investment grade. Non-investment-grade debt securities are sometimes referred to
as "high yield bonds" or "junk bonds," and tend to have speculative
characteristics, generally involve more risk of principal and income than higher
rated securities, and have yields and market values that tend to fluctuate more
than higher quality securities. Under normal market conditions, it is expected
that the average weighted maturity of the Fund's portfolio will be greater than
five
11
<PAGE>
years. Although the Fund invests primarily in securities of U.S. issuers, the
Fund may invest a portion of its assets in foreign securities.
Nations Short-Intermediate Government Fund: The Fund's investment objective is
to seek high current income consistent with modest fluctuation of principal. The
Fund invests primarily in securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. The Fund invests substantially
all of its assets in U.S. Government Obligations and repurchase agreements
relating to such obligations. Under normal market conditions, it is expected
that the average weighted maturity of the Fund's portfolio will be three to five
years and the duration will not exceed five years.
Nations Short-Term Income Fund: The Fund's investment objective is to seek high
current income consistent with minimal fluctuation of principal. The Fund
invests in a broad range of investment grade debt obligations. Under normal
market conditions, it is expected that the average weighted maturity and the
duration of the Fund's portfolio will not exceed three years. The Fund may
invest a portion of its assets in foreign securities.
Nations Strategic Fixed Income Fund: The Fund's investment objective is to seek
total return by investing in investment grade fixed income securities. The Fund
invests in a broad range of investment grade debt securities. Under normal
market conditions, it is expected that the average weighted maturity of the
Fund's portfolio will be 10 years or less and under no circumstances exceed 15
years. Under normal market conditions, the Fund will invest at least 65% of the
total value of its assets in government, corporate and mortgage-backed
securities. Most obligations acquired by the Fund will be issued by companies or
governmental entities located within the United States. The Fund may invest a
portion of its assets in foreign securities.
Money Market Fund
Nations Prime Fund: The Fund's investment objective is to seek the maximization
of current income to the extent consistent with the preservation of capital and
the maintenance of liquidity. The Fund invests in a diversified portfolio of
high quality money market instruments with maturities of 397 days or less from
the date of purchase. Securities subject to repurchase agreements may bear
longer maturities. The Fund may invest in U.S. Treasury bills, notes and bonds
and other instruments issued directly by the U.S. Government. The Fund may also
invest in bank and commercial instruments that may be available in the money
markets, high quality short-term taxable obligations issued by state and local
governments, and repurchase agreements relating to U.S. Government Obligations.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the Fund can maintain a stable net
asset value of $1.00 per share.
General
Other Investment Practices: Each of the Nations Funds may invest in certain
specified derivative securities, including some or all of the following:
interest rate swaps, caps and floors for hedging purposes; exchange-traded
options; over-the-counter options executed with primary dealers, including long
calls and puts and covered calls to enhance return; and Commodity Futures
Trading Commission-approved U.S. and foreign exchange-traded financial futures
and options thereon for market exposure and/or risk-management. Certain Nations
Funds may lend their portfolio securities to qualified institutional investors,
invest in restricted, private placement and other illiquid securities and engage
in reverse repurchase agreements and dollar roll transactions. Certain
securities that have variable or floating interest rates or demand or put
features may be deemed to have remaining maturities shorter than their nominal
maturities for purposes of determining the average weighted maturity and
duration of the Nations Funds. Certain Nations Funds also may invest in
instruments issued by trusts, partnerships or other issuers, including
pass-through certificates representing participations in, or debt instruments
backed by, the securities owned by such issuers.
In addition to the foregoing investment practices, some of the underlying
Nations Funds may invest in securities issued by other investment companies,
preferred stock, securities convertible into common stock and other types of
securities having common stock characteristics (such as rights and warrants),
guaranteed investment contracts, money market instruments, below-investment
grade debt ("junk bonds"), debt obligations of foreign issuers and stocks of
foreign corporations, obligations of domestic or foreign governments and their
political subdivisions, American Depository Receipts ("ADRs", also called
American Depository Shares), European Depository Receipts ("EDRs"), Global
Depository Receipts ("GDRs"), securities of foreign investment funds or trusts,
real estate investment trust securities, convertible debentures, mortgage-backed
securities, mortgage pass-through certificates, collateralized mortgage
obligations ("CMOs"), mortgage-backed bonds, other asset-backed securities and
obligations of foreign banks and foreign branches of U.S. banks.
Principal Risk Considerations: Investments by a Nations Fund in common stocks
and other equity securities are subject to stock market risks. The value of the
stocks that a Nations Fund holds, like the broader stock market, may decline
over short or even extended periods. The value of a Nations Fund's investments
in debt securities, including U.S. Government Obligations, will
12
<PAGE>
tend to decrease when interest rates rise and increase when interest rates fall.
In general, longer-term debt instruments tend to fluctuate in value more than
shorter-term debt instruments in response to interest rate movements. In
addition, debt securities that are not backed by the U.S. Government are subject
to credit risk, which is the risk that the issuer may not be able to pay
principal and/or interest when due.
Investments by a Nations Fund in foreign securities present additional risks.
These risks include restrictions on foreign investment and repatriation of
capital; fluctuations in currency exchange rates; costs of converting foreign
currency into U.S. dollars and U.S. dollars into foreign currencies; greater
price volatility and less liquidity; settlement practices, including delays,
which may differ from those customary in United States markets; exposure to
political and economic risks, including the risk of nationalization,
expropriation of assets and war; possible imposition of foreign taxes and
exchange control and currency restrictions; lack of uniform accounting, auditing
and financial reporting standards; less governmental supervision of securities
markets, brokers and issuers of securities; less financial information available
to investors; and difficulty in enforcing legal rights outside the United
States. These risks often are heightened for investments in emerging or
developing countries.
Certain of the U.S. Government Obligations that may be purchased by a Nations
Fund (or, under certain circumstances, directly by a LifeGoal Portfolio) are not
backed by the U.S. Treasury. For example, some U.S. Government Obligations are
supported only by the credit of the issuer/guarantor or by the right of the
issuer/guarantor to borrow from the U.S. Government. In addition, the market
value of U.S. Government Obligations may fluctuate due to fluctuations in market
interest rates. Certain types of U.S. Government Obligations are subject to
fluctuations in maturity, yield or value due to their structure or contract
terms.
Certain of the underlying Nations Funds may invest in derivative securities
("derivatives"). A derivative is a financial instrument whose value is based, at
least partly, on the value of an underlying stock, stock index, future or other
security. Examples of such derivatives include futures contracts, options,
interest rate and currency swap transactions. Certain types of derivatives can,
under certain circumstances, significantly increase an investor's exposure to
market or other risks.
Please consult the SAI and the prospectus of the particular Nations Fund for
more information about investment practices and risks.
How Performance Is Shown
From time to time the LifeGoal Portfolios may advertise the total return and
yield of a class of shares. In addition, the LifeGoal Portfolios may advertise
the total return and yield of the Primary A Shares of certain underlying Nations
Funds. Total return and yield figures are based on historical data and are not
intended to indicate future performance. The "total return" of a class of shares
of a LifeGoal Portfolio or Nations Fund may be calculated on an average annual
total return basis or an aggregate total return basis. Average annual total
return refers to the average annual compounded rates of return over one-, five-,
and ten-year periods or the life of a LifeGoal Portfolio or Nations Fund (as
stated in the advertisement) that would equate an initial amount invested at the
beginning of a stated period to the ending redeemable value of the investment,
assuming the reinvestment of all dividend and capital gains distributions.
Aggregate total return reflects the total percentage change in the value of the
investment over the measuring period again assuming the reinvestment of all
dividends and capital gain distributions. Total return may also be presented for
other periods.
"Yield" of a class of shares of a non-money market fund is calculated by
dividing the annualized net investment income per share during a recent 30-day
(or one month) period of the class by the maximum public offering price per
share on the last day of that period. "Yield" of a class of shares of a money
market fund, such as the Nations Prime Fund, is calculated by annualizing the
income generated by an investment in such class over a seven-day period, and
showing it as a percentage of that investment. "Effective yield" assumes
reinvestment of income.
Investment performance, which will vary, is based on many factors, including
market conditions, the composition of a LifeGoal Portfolio's or Nations Fund's
portfolio and operating expenses. Investment performance also often reflects the
risks associated with a LifeGoal Portfolio's or Nations Fund's investment
objective and policies. These factors should be considered when comparing a
LifeGoal Portfolio's or Nations Fund's investment results to those of other
mutual funds and other investment vehicles. Since net asset value and yields
fluctuate, yield data cannot necessarily be used to compare an investment in the
LifeGoal Portfolios or Nations Fund with bank deposits, savings accounts, and
similar investment alternatives which often provide an agreed-upon or guaranteed
fixed yield for a stated period of time.
In addition to Investor C Shares, the LifeGoal Portfolios offer Primary A,
Primary B, and Investor A Shares. Each class of shares may bear different sales
charges, shareholder servicing fees and other expenses, which may cause the
performance of a class to differ from the performance of the other classes.
Performance quotations
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<PAGE>
will be computed separately for each class of a LifeGoal Portfolio's shares. Any
fees charged by an institution directly to its customers' accounts in connection
with investments in the LifeGoal Portfolios will not be included in calculations
of total return or yield. The Company's annual report will contain additional
performance information and will be available upon request without charge from
the LifeGoal Portfolios' distributor or an investor's Institution, as defined
below.
The following information shows the average annual returns of the underlying
Nations Funds in which the LifeGoal Portfolios may invest. Because the LifeGoal
Portfolios are relatively new, they have no performance data of their own. The
performance of the underlying Nations Funds is shown for illustrative purposes
only and is not intended to show LifeGoal Portfolio performance.
NATIONS FUNDS
AVERAGE ANNUAL RETURNS -- PRIMARY A SHARES (UNAUDITED)
<TABLE>
<CAPTION>
12 Months 3-Year Period 5-Year Period
Fund Name (Date of Commencement of Operations) Ended 6/30/96 Ended 6/30/96 Ended 6/30/96
<S> <C> <C> <C>
Nations Capital Growth Fund (9/30/92) 18.93% 13.92% N/A
Nations Disciplined Equity Fund (10/1/92)** 20.88% 14.03% N/A
Nations Diversified Income Fund (10/30/92) 3.82% 6.17% N/A
Nations Emerging Growth Fund (12/4/92) 32.90% 20.08% N/A
Nations Emerging Markets Fund (6/30/95) 7.61% N/A N/A
Nations Equity Income Fund (4/11/91) 21.57% 13.77% 14.71%
Nations International Equity Fund (12/2/91) 19.07% 11.65% N/A
Nations Managed Index Fund* N/A N/A N/A
Nations Managed SmallCap Index Fund* N/A N/A N/A
Nations Pacific Growth Fund (6/30/95) 3.83% N/A N/A
Nations Short-Intermediate Government Fund (8/1/91) 3.62% 3.73% N/A
Nations Short-Term Income Fund (9/30/92) 5.50% 4.82% N/A
Nations Strategic Fixed Income Fund (10/30/92) 3.41% 4.46% N/A
Nations Value Fund (9/19/89) 23.47% 16.07% 14.84%
Nations Global Government Income Fund (6/30/95) N/A N/A N/A
<CAPTION>
Inception
through
Fund Name (Date of Commencement of Operations) 6/30/96
Nations Capital Growth Fund (9/30/92) 13.50%
Nations Disciplined Equity Fund (10/1/92)** 24.00%
Nations Diversified Income Fund (10/30/92) 8.62%
Nations Emerging Growth Fund (12/4/92) 17.39%
Nations Emerging Markets Fund (6/30/95) 7.61%
Nations Equity Income Fund (4/11/91) 13.90%
Nations International Equity Fund (12/2/91) 8.39%
Nations Managed Index Fund* N/A
Nations Managed SmallCap Index Fund* N/A
Nations Pacific Growth Fund (6/30/95) 3.83%
Nations Short-Intermediate Government Fund (8/1/91) 6.46%
Nations Short-Term Income Fund (9/30/92) 5.02%
Nations Strategic Fixed Income Fund (10/30/92) 6.17%
Nations Value Fund (9/19/89) 13.52%
Nations Global Government Income Fund (6/30/95) 5.03%+
</TABLE>
* This Fund had not commenced operations as of June 30, 1996.
** Date shown reflects commencement of operations of the predecessor fund.
+ Total Return represents aggregate total return through 3/31/96 and does not
reflect the deduction of any applicable sales charges.
How The LifeGoal Portfolios Are Managed
The business and affairs of the Company are managed under the supervision and
direction of its Board of Directors. The LifeGoal Portfolios' SAI contains the
names of and general background information concerning each Director of the
Company.
The Company and the Adviser have adopted codes of ethics which contain policies
on personal securities transactions by "access persons," including portfolio
managers and investment analysts. These policies substantially comply in all
material respects with the recommendations set forth in the May 9, 1994 Report
of the Advisory Group on Personal Investing of the Investment Company Institute.
Investment Adviser: NationsBanc Advisors, Inc. serves as investment adviser to
the LifeGoal Portfolios and the Nations Funds. NBAI is a wholly owned subsidiary
of NationsBank, which in turn is a wholly owned banking subsidiary of
NationsBank Corporation, a bank holding company organized as a North Carolina
corporation. NBAI has its principal offices at One NationsBank Plaza, Charlotte,
North Carolina 28255.
TradeStreet Investment Associates, Inc., with principal offices at One
NationsBank Plaza, Charlotte, North Carolina 28255, serves as investment
sub-adviser to the LifeGoal Portfolios and the Nations Funds. TradeStreet is a
wholly owned subsidiary of NationsBank. TradeStreet provides investment
management services to individuals, corporations and institutions.
Gartmore Global Partners, with principal offices at One NationsBank Plaza,
Charlotte, North Carolina, 28255, serves as the investment sub-adviser to three
of the underlying Nations Funds. Gartmore is a joint venture structured as a
general partnership between NB Partner Corp., a wholly owned subsidiary of
NationsBank, and Gartmore U.S. Limited, an indirect, wholly owned subsidiary of
Gartmore Investment Management plc, a UK
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<PAGE>
company which is the holding company for a leading UK based international fund
management group of companies. National Westminster Bank plc and affiliated
entities own 100% of the equity of Gartmore Investment Management plc.
Subject to the general supervision of the Company's Board of Directors, and in
accordance with each LifeGoal Portfolio's investment policies, the Adviser is
responsible for allocating and reallocating each LifeGoal Portfolio's assets
among the Nations Funds in which it invests, and for rebalancing such portfolio
allocations. A LifeGoal Portfolio's investments are continuously monitored and
are reallocated as often as the Adviser deems appropriate. In addition,
portfolio allocations and performance are reviewed quarterly for rebalancing at
the discretion of the Adviser.
The Adviser has the ability to change the particular Nations Funds used as
underlying investments for the LifeGoal Portfolios. Among other things, the
Adviser may substitute or include other funds from the Nations Fund Family,
including any introduced subsequent to this Prospectus, as permissible
investments for the LifeGoal Portfolios. In the event the Adviser seeks to
invest the assets of a LifeGoal Portfolio in a Nations Fund not identified in
this Prospectus, the Company will amend or supplement the Prospectus to include
all pertinent information.
Both the LifeGoal Portfolios and Nations Funds have investment advisory
arrangements with NBAI. NBAI is entitled to receive advisory fees at an annual
rate of 0.25% of the average daily net assets of each LifeGoal Portfolio. NBAI
also has agreed to absorb all other expenses of the LifeGoal Portfolios (except
taxes, brokerage fees and commissions, extraordinary expenses, and any
applicable Rule 12b-1 fees, shareholder servicing fees and/or shareholder
administration fees). NBAI, in turn, compensates TradeStreet for sub-advisory
services at an annual rate of 0.05% of the average daily net assets of each
LifeGoal Portfolio. NBAI also receives advisory fees at varying rates from the
underlying Nations Funds, and pays TradeStreet or Gartmore Global Partners sub-
advisory fees for their services to the underlying Nations Funds. From time to
time, the Adviser may waive or reimburse (either voluntarily or pursuant to
applicable state expense limitations) advisory fees and/or expenses payable by a
LifeGoal Portfolio. Once commenced, waiver and reimbursement arrangements may be
discontinued at any time. In addition, the Adviser may from time to time
compensate Agents, as defined below, for providing certain services to
Customers. LifeGoal Portfolio's shareholders will indirectly pay their
proportionate share of the advisory fees and other expenses of any Nations Fund
in which the LifeGoal Portfolios are invested.
NBAI, TradeStreet and certain of their affiliates provide advisory and other
services to Nations Funds for which they receive compensation. The level of
compensation received and services provided by them differs among the various
Nations Funds. These differences subject the Adviser to conflicts of interest,
in that the Adviser could increase its fee income or that of its affiliates, or
attain other direct or indirect benefits, by allocating LifeGoal Portfolio
assets to underlying Nations Funds that pay higher fees or provide other
benefits.
Andrew M. Silton has managed the LifeGoal Portfolios since their inception. Mr.
Silton has been President, Chief Investment Officer and Managing Director of
TradeStreet since 1995. Prior to assuming his position with TradeStreet, he was
Director of Investment Strategy and Product Development for the Investment
Management Group of NationsBank and head of the Equity Group. Mr. Silton has
worked in the investment community since 1979. His past experience includes
Senior Vice President, Director of Equity Strategy and Portfolio Management for
Shields Asset Management. Mr. Silton was also Senior Vice President and Director
of Research for First Albany Corporation, a regional brokerage firm. Prior to
joining NationsBank, he operated his own management consulting firm which
advised financial institutions and local government agencies. Mr. Silton
received a B.A. in History from the State University of New York at Binghamton,
a J.D. from the School of Law at the University of North Carolina at Chapel Hill
and a M.A. from the Public Policy Institute of Duke University.
Morrison & Foerster LLP, counsel to the Company and Nations Fund, and special
counsel to NBAI and certain of its affiliates, has advised the Company and
Nations Fund that NBAI and its affiliates may perform the services contemplated
by the various Investment Advisory Agreements and this Prospectus without
violation of the Glass-Steagall Act. Such counsel has pointed out, however, that
there are no controlling judicial or administrative interpretations or decisions
and that future judicial or administrative interpretations of, or decisions
relating to, present federal or state statutes, including the Glass-Steagall
Act, and regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future changes in such federal or state
statutes, regulations and judicial or administrative decisions or
interpretations, could prevent such entities from continuing to perform, in
whole or in part, such services. If any such entity were prohibited from
performing any of such services, it is expected that new agreements would be
proposed or entered into with another entity or entities qualified to perform
such services.
Other Service Providers: Stephens Inc. ("Stephens"), a registered broker-dealer
with principal offices at 111 Center Street, Little Rock, Arkansas 72201, serves
as the administrator of the LifeGoal Portfolios pursuant to an Administration
Agreement. Pursuant to the terms of the Administration Agreement, Stephens
provides various administrative and corporate secretarial services to
15
<PAGE>
the LifeGoal Portfolios, including providing general oversight of other service
providers, office space, utilities and various legal and administrative services
in connection with the satisfaction of various regulatory requirements
applicable to the LifeGoal Portfolios. Stephens will not receive any fees from
the LifeGoal Portfolios for these services.
First Data Investor Services Group, Inc. ("First Data"), a wholly owned
subsidiary of First Data Corporation, with principal offices at One Exchange
Place, Boston, Massachusetts 02109, serves as the co-administrator of the
LifeGoal Portfolios. Under the Co-Administration Agreement, First Data provides
various administrative and accounting services to the LifeGoal Portfolios
including performing the calculations necessary to determine net asset value per
share and dividends, preparing tax returns and financial statements and
maintaining the portfolio records and certain of the general accounting records
for the LifeGoal Portfolios. For the services rendered pursuant to the
Co-Administration Agreement, First Data is entitled to receive a fee of $10,000
per year per LifeGoal Portfolio, which will be absorbed by NBAI.
Shares of the LifeGoal Portfolios are sold on a continuous basis by Stephens, as
the LifeGoal Portfolios' sponsor and distributor. The LifeGoal Portfolios have
entered into distribution agreements with Stephens which provide that Stephens
has the exclusive right to distribute shares of the LifeGoal Portfolios.
Stephens may pay service fees or commissions to Institutions that assist
customers in purchasing Investor C Shares of LifeGoal Portfolios.
First Data serves as the Transfer Agent for each of LifeGoal Portfolio's
Investor C Shares. NationsBank of Texas, N.A. ("NationsBank of Texas") serves as
custodian for the assets of each LifeGoal Portfolio.
Stephens, First Data, and NationsBank of Texas all provide services at the
underlying Nations Fund level and are compensated directly by such Nations Funds
for those services.
Price Waterhouse LLP serves as independent accountant to the Company. Its
address is 160 Federal Street, Boston, Massachusetts 02110.
Expenses: Certain administrative and other fees and expenses will be charged at
the LifeGoal Portfolios and Nations Funds levels. However, redundancies of fees
and expenses between the LifeGoal Portfolios and Nations Funds will be minimal,
because distinct services are being provided at each fund level. For example,
the LifeGoal Portfolios pay advisory fees to the Adviser for its services in
allocating LifeGoal Portfolio assets among the underlying Nations Funds. These
services are distinct from the services provided by the Adviser to the Nations
Funds in managing the Nations Funds' individual portfolio securities.
NBAI, under its investment advisory agreement with the LifeGoal Portfolios, has
agreed to absorb all expenses of the LifeGoal Portfolios, except taxes,
brokerage fees and commissions, extraordinary expenses and any applicable Rule
12b-1 fees, shareholder servicing fees and/or shareholder administration fees.
The LifeGoal Portfolios' expenses that will be absorbed by NBAI include, but are
not limited to: fees paid to service providers other than the Adviser; interest;
directors' fees; federal and state securities registration and qualification
fees; costs of preparing and printing prospectuses for regulatory purposes and
for distribution to existing shareholders; certain insurance premiums; outside
auditing and legal expenses; and costs of shareholder reports and shareholder
meetings. Investor C Shares also bear certain class specific expenses, which are
described under "Shareholder Servicing and Distribution Plans," below.
The LifeGoal Portfolios do not pay any front-end sales loads or contingent
deferred sales charges in connection with the purchase or redemption of shares
of the Nations Funds. By investing in Primary A Shares of the Nations Funds, the
LifeGoal Portfolios also will not be subject to any asset-based sales charges or
service fees. The sales charges or service fees associated with purchase of
shares of the LifeGoal Portfolios will not exceed the limits set forth in Rule
2830 of the Conduct Rules of the NASD when aggregated with sales charges or
service fees, if any, that the LifeGoal Portfolios pay relating to Nations Funds
shares.
The LifeGoal Portfolios' share of the Nations Funds' expenses may include
expenses that the LifeGoal Portfolios would not have incurred if it had not been
structured as a "fund of funds." For example, if a portfolio manager of one
Nations Fund purchases the same securities that the portfolio manager of another
Nations Fund is selling, there may be transaction charges and commissions that
achieve little or no benefit for the LifeGoal Portfolios. Such transactions will
be rare because the Nations Funds pursue a broad range of investment strategies,
and therefore invest in different types of securities.
16
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Organization And History
The LifeGoal Portfolios are members of the Nations Fund Family, which consists
of the Company, Nations Fund Trust, Nations Fund, Inc., Nations Fund Portfolios,
Inc. and Nations Institutional Reserves. The Nations Fund Family currently has
more than 43 distinct investment portfolios and total assets in excess of $18
billion.
Nations LifeGoal Funds, Inc.: The Company was incorporated in Maryland on July
3, 1996, but had no operations prior to the date of this Prospectus. The
Company's fiscal year end is March 31. As of the date of this Prospectus, the
authorized capital stock of Nations LifeGoal Funds, Inc. consists of
1,200,000,000 shares of common stock, par value of $.001 per share, which are
divided into series or portfolios, each of which includes several classes of
shares. This Prospectus relates to the Investor C Shares of the following three
portfolios of the Company: LifeGoal Growth Portfolio, LifeGoal Balanced Growth
Portfolio and LifeGoal Income and Growth Portfolio. To obtain additional
information regarding the LifeGoal Portfolios' other classes of shares which may
be available to you, contact your Agent, (as defined below) or Nations Fund at
1-800-982-2271.
Shares of each Portfolio and class have equal rights with respect to voting,
except that the holders of shares of a particular Portfolio or class will have
the exclusive right to vote on matters affecting only the rights of the holders
of such Portfolio or class. In the event of dissolution or liquidation, holders
of each class will receive pro rata, subject to the rights of creditors, (a) the
proceeds of the sale of that portion of the assets allocated to that class held
in the respective Portfolio of the Company, less (b) the liabilities of the
Company attributable to the respective Portfolio or class or allocated among the
Portfolios or classes based on the respective liquidation value of each
Portfolio or class.
Shareholders of the Company do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all Portfolios voting
together for election of directors may elect all of the members of the Board of
Directors of the Company. Meetings of shareholders may be called upon the
request of 10% or more of the outstanding shares of the Company. There are no
preemptive rights applicable to any of the Company's shares. The Company's
shares, when issued, will be fully paid and non-assessable.
As of the date of this Prospectus, Stephens owned all of the outstanding shares
of the Company and, therefore, would be considered a controlling person of the
Company and each of the LifeGoal Portfolios. As sales of the LifeGoal
Portfolios' shares commence, it is expected that Stephens' percentage ownership
will be reduced. It is anticipated that the Company will not hold annual
shareholder meetings on a regular basis unless required by the Investment
Company Act of 1940, as amended, (the "1940 Act") or Maryland law.
About Your Investment
How To Buy Shares
The LifeGoal Portfolios have established various procedures for purchasing
Investor C Shares in order to accommodate different investors. Purchase orders
for Investor C Shares may be placed through banks, broker/dealers or other
financial institutions (including certain affiliates of NationsBank) that have
entered into a shareholder servicing agreement ("Servicing Agreement") with
Nations Fund ("Servicing Agents") and/or a sales support agreement ("Sales
Support Agreement") with Stephens ("Selling Agents").
There is a minimum initial investment of $1,000, except that the minimum initial
investment is:
(Bullet) $500 for "IRA" investors;
(Bullet) $250 for non-working spousal IRAs; and
(Bullet) $100 for investors participating on a monthly basis in the Systematic
Investment Plan described below.
There is no minimum investment amount for investments by 401(k) plans,
simplified employee pension plans ("SEPs"), salary reduction-simplified employee
pension plans ("SAR-SEPs") or salary reduction-Individual Retirement Account
("SAR-IRAs"). However, the assets of such plans must reach an asset value of
$1,000 ($500 for SEPs, SAR-SEPs and SAR-IRAs) within one year of the account
open date. If the assets of such plans do not reach the minimum asset size
within one year, the Company reserves the right to redeem the shares held by
such plans on 60 days' written notice. The minimum subsequent investment is
$100, except for investments pursuant to the Systematic Investment Plan
described below.
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Investor C Shares are purchased at net asset value per share. Purchases may be
effected on days on which the New York Stock Exchange (the "Exchange") is open
for business (a "Business Day").
The Servicing Agents will provide various shareholder services for, and the
Selling Agents will provide sales support assistance to, their respective
customers ("Customers") who own Investor C Shares. Servicing Agents and Selling
Agents are sometimes referred to hereafter as "Agents." From time to time the
Agents, Stephens and Nations Fund may agree to voluntarily reduce the maximum
fees payable for sales support or shareholder services.
The Company reserves the right to reject any purchase order. The issuance of
Investor C Shares is recorded on the books of the LifeGoal Portfolios, and share
certificates are not issued unless expressly requested in writing. Certificates
are not issued for fractional shares.
Effective Time of Purchases: Purchase orders for Investor C Shares of the
LifeGoal Portfolios which are received by Stephens or by the Transfer Agent
before the close of regular trading hours on the Exchange (currently 4:00 p.m.,
Eastern time) on any Business Day are priced according to the net asset value
determined on that day but are not executed until 4:00 p.m., Eastern time, on
the Business Day on which immediately available funds in payment of the purchase
price are received by the LifeGoal Portfolios' Custodian. Such payment must be
received no later than 4:00 p.m., Eastern time, by the third Business Day
following receipt of the order. If funds are not received by such date, the
order will not be accepted and notice thereof will be given to the Agent placing
the order. Payment for orders which are not received or accepted will be
returned after prompt inquiry to the sending Agent.
The Agents are responsible for transmitting orders for purchases of Investor C
Shares by their Customers, and delivering required funds, on a timely basis.
Stephens is responsible for transmitting orders it receives to the Company.
Systematic Investment Plan: Under the LifeGoal Portfolios' Systematic Investment
Plan ("SIP") a shareholder may automatically purchase Investor C Shares. On a
bi-monthly, monthly or quarterly basis, a shareholder may direct cash to be
transferred automatically from his/her checking or savings account at any bank
to his/her LifeGoal Portfolio account. Transfers will occur on or about the 15th
and/or 30th day of the applicable month. The systematic investment amount may be
in any amount from $25 to $100,000. For more information concerning the SIP,
contact your Agent.
Telephone Transactions: Investors may effect purchases, redemptions (up to
$50,000) and exchanges by telephone. See "How To Redeem Shares" and "How To
Exchange Shares" below. If a shareholder desires to elect the telephone
transaction feature after opening an account, a signature guarantee will be
required. Shareholders should be aware that by using the telephone transaction
feature, such shareholders may be giving up a measure of security that they may
have if they were to authorize written requests only. A shareholder may bear the
risk of any resulting losses from a telephone transaction. The Company will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, and if the Company and its service providers fail to
employ such measures, they may be liable for any losses due to unauthorized or
fraudulent instructions. The Company requires a form of personal identification
prior to acting upon instructions received by telephone and provides written
confirmation to shareholders of each telephone share transaction. In addition,
the Company reserves the right to record all telephone conversations.
How To Redeem Shares
Redemption orders should be transmitted by telephone or in writing through the
same Agent that transmitted the original purchase order. Redemption orders are
effected at the net asset value per share next determined after receipt of the
order by Stephens or by the Transfer Agent, less any applicable CDSC. The Agents
are responsible for transmitting redemption orders to Stephens or to the
Transfer Agent and for crediting their Customers' accounts with the redemption
proceeds on a timely basis. No charge for wiring redemption payments is imposed
by the Company. Except for any CDSC which may be applicable upon redemption of
Investor C Shares, as described below, there is no redemption charge.
Redemption proceeds are normally wired to the redeeming Agent within three
Business Days after receipt of the order by Stephens or by the Transfer Agent.
However, redemption proceeds for shares purchased by check may not be remitted
until at least 15 days after the date of purchase to ensure that the check has
cleared; a certified check, however, is deemed to be cleared immediately.
The Company may redeem a shareholder's Investor C Shares upon 60 days' written
notice if the balance in the shareholder's account drops below $500 as a result
of redemptions. Share balances also may be redeemed at the direction of an Agent
pursuant to arrangements between the Agent and its Customers. The Company also
may redeem shares of the LifeGoal Portfolios invol-
18
<PAGE>
untarily or make payment for redemption in readily marketable securities or
other property under certain circumstances in accordance with the 1940 Act.
Prior to effecting a redemption of Investor C Shares represented by
certificates, the Transfer Agent must have received such certificates at its
principal office. All such certificates must be endorsed by the redeeming
shareholder or accompanied by a signed stock power, in each instance with the
signature guaranteed by a commercial bank or a member of a major stock exchange,
unless other arrangements satisfactory to the Company have previously been made.
The Company may require any additional information reasonably necessary to
evidence that a redemption has been duly authorized.
Contingent Deferred Sales Charge: Subject to certain waivers, Investor C Shares
of the LifeGoal Portfolios that are redeemed within one year of the date of
purchase may be subject to a CDSC equal to 0.50% of the lesser of the net asset
value or the purchase price of the shares being redeemed. No CDSC is imposed on
increases in net asset value above the initial purchase price, including shares
acquired by reinvestment of distributions.
Solely for purposes of determining the period of time that has elapsed from the
purchase of any Investor C Shares, all purchases are deemed to have been made on
the trade date of the transaction. In determining whether a CDSC is applicable
to a redemption, the calculation will be made in the manner that results in the
lowest possible charge being assessed. In this regard, it will be assumed that
the redemption is first of shares held for the longest period of time or shares
acquired pursuant to reinvestment of dividends or distributions. The charge will
not be applied to dollar amounts representing an increase in the net asset value
since the time of purchase.
The CDSC will be waived on redemptions of Investor C Shares (i) following the
death or disability (as defined in the Internal Revenue Code of 1986, as amended
(the "Code")) of a shareholder (including a registered joint owner), (ii) in
connection with the following retirement plan distributions: (a) by qualified
plans, (except in cases of plan level terminations); (b) distributions from an
IRA following attainment of age 59 1/2; (c) a tax-free return of an excess
contribution to an IRA, and (d) distributions from a qualified retirement plan
that are not subject to the 10% additional federal withdrawal tax pursuant to
Section 72(t)(2) of the Code, (iii) effected pursuant to the Company's right to
liquidate a shareholder's account, including instances where the aggregate net
asset value of the Investor C shares held in the account is less than the
minimum account size, (iv) in connection with the combination of the Company
with any other registered investment company by merger, acquisition of assets or
by any other transaction, and (v) effected pursuant to the Automatic Withdrawal
Plan discussed below, provided that such redemptions do not exceed, on an annual
basis, 12% of the net asset value of the Investor C Shares in the account.
Shareholders are responsible for providing evidence sufficient to establish that
they are eligible for any waiver of the CDSC. The Company may terminate any
waiver of the CDSC by providing notice in the LifeGoal Portfolios' Prospectus,
but any such termination would affect only shares purchased after such
termination.
Within 120 days after a redemption of Investor C Shares of a LifeGoal Portfolio,
a shareholder may reinvest any portion of the proceeds of such redemption in
Investor C Shares of the same LifeGoal Portfolio. The amount which may be so
reinvested is limited to an amount up to, but not exceeding, the redemption
proceeds (or to the nearest full share if fractional shares are not purchased).
A shareholder exercising this privilege would receive a pro rata credit for any
CDSC paid in connection with the prior redemption. A shareholder may not
exercise this privilege with the proceeds of a redemption of shares previously
purchased through the reinvestment privilege. In order to exercise this
privilege, a written order for the purchase of Investor C Shares must be
received by the Transfer Agent or by Stephens within 120 days after the
redemption.
Automatic Withdrawal Plan: An Automatic Withdrawal Plan ("AWP") may be
established by a new or existing shareholder of the LifeGoal Portfolios if the
value of the Investor C Shares in his/her accounts within the Nations Fund
Family (valued at the net asset value at the time of the establishment of the
AWP) equals $10,000 or more. Investor C Shares redeemed under the AWP will not
be subject to a CDSC, provided that the shares so redeemed do not exceed, on an
annual basis, 12% of the net asset value of the Investor C Shares in the
account. Otherwise, any applicable CDSC will be imposed on shares redeemed under
the AWP. Shareholders who elect to establish an AWP may receive a monthly,
quarterly or annual check or automatic transfer to a checking or savings account
in a stated amount of not less than $25 on or about the 10th or 25th day of the
applicable month of withdrawal. Investor C Shares will be redeemed (net of any
applicable CDSC) as necessary to meet withdrawal payments. Withdrawals will
reduce principal and may eventually deplete the shareholder's account. If a
shareholder desires to establish an AWP after opening an account, a signature
guarantee will be required. An AWP may be terminated by a shareholder on 30
days' written notice to his/her Agent or by the Company at any time.
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<PAGE>
How To Exchange Shares
The exchange feature enables a shareholder of Investor C Shares of a LifeGoal
Portfolio to acquire Investor C Shares of another fund in the Nations Fund
Family (which includes both LifeGoal Portfolios and Nations Funds) when that
shareholder believes that a shift between funds is an appropriate investment
decision. A qualifying exchange is based on the next calculated net asset value
per share of each fund after the exchange order is received.
No CDSC will be imposed in connection with an exchange of Investor C Shares that
meets the requirements discussed in this section.
If a shareholder acquired Investor C Shares of a Nations Fund non-money market
fund or Investor D Shares of a Nations Fund money market fund through an
exchange, the CDSC applicable to the original shares purchased will be applied
to any redemption of the acquired shares. Additionally, when an investor
exchanges Investor C Shares of a Nations Fund non-money market fund for shares
of the same class of another non-money market fund or Investor D Shares of any
money market fund of Nations Fund, the remaining period of time (if any) that
the CDSC is in effect will be computed from the time of the initial purchase of
the previously held Investor C Shares.
Automatic Exchange Feature: Under the LifeGoal Portfolios' Automatic Exchange
Feature ("AEF") a shareholder may automatically exchange at least $25 on a
monthly or quarterly basis. A shareholder may direct proceeds to be exchanged
from one Nations Fund to another as allowed by the applicable exchange rules
within the prospectus. Exchanges will occur on or about the 15th or 30th day of
the applicable month. The shareholder must have an existing position in both
funds in order to establish the AEF. This feature may be established by
directing a request to the Transfer Agent by telephone or in writing. For
additional information, an investor should contact his/her Selling Agent.
General: The LifeGoal Portfolios and each of the other funds of the Nations Fund
Family may limit the number of times this exchange feature may be exercised by a
shareholder within a specified period of time. Also, the exchange feature may be
terminated or revised at any time by the Company upon such notice as may be
required by applicable regulatory agencies (presently 60 days for termination or
material revision), absent unusual circumstances.
The current prospectus for each fund of Nations Fund describes its investment
objective and policies, and shareholders should obtain a copy and examine it
carefully before investing. Exchanges are subject to the minimum investment
requirement and any other conditions imposed by each fund. In the case of any
shareholder holding a share certificate or certificates, no exchanges may be
made until all applicable share certificates have been received by the Transfer
Agent and deposited in the shareholder's account. An exchange will be treated
for federal income tax purposes the same as a redemption of shares, on which the
shareholder may realize a capital gain or loss. However, the ability to deduct
capital losses on an exchange may be limited in situations where there is an
exchange of shares within 90 days after the shares are purchased.
The Investor C Shares exchanged must have a current value of at least $1,000
(except for exchange through the AEF). The Company reserves the right to reject
any exchange request. Only shares that may legally be sold in the state of the
investor's residence may be acquired in an exchange. Only shares of a class that
is accepting investments generally may be acquired in an exchange. An investor
may telephone an exchange request by calling his/her Agent which is responsible
for transmitting such request to Stephens or to the Transfer Agent.
During periods of significant economic or market change, telephone exchanges may
be difficult to complete. In such event, shares may be exchanged by mailing the
request directly to the Agent through which the original shares were purchased.
An investor should consult his/her Agent or Stephens for further information
regarding exchanges.
Shareholder Servicing And Distribution Plans
Pursuant to Rule 12b-1 under the 1940 Act, the Directors have approved a
Distribution Plan with respect to Investor C Shares of the LifeGoal Portfolios.
Pursuant to the Distribution Plan, the LifeGoal Portfolios may compensate or
reimburse Stephens for any activities or expenses primarily intended to result
in the sale of the LifeGoal Portfolios' Investor C Shares. Payments under the
Investor C Distribution Plan will be calculated daily and paid monthly at a rate
or rates set from time to time by the Directors, provided that the annual rate
may not exceed 0.75% of the average daily net asset value of the Portfolios'
Investor C Shares.
The fees payable under the Distribution Plan are used (i) to compensate Selling
Agents for providing sales support assistance relating to Investor C Shares,
(ii) to pay for
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promotional activities intended to result in the sale of Investor C Shares such
as the preparation, printing and distribution of prospectuses to other than
current shareholders, and (iii) to compensate Selling Agents for providing sales
support services with respect to their Customers who are, from time to time,
beneficial and record holders of Investor C Shares. Currently, substantially all
fees paid pursuant to the Distribution Plan are paid to compensate Selling
Agents for providing the services described in (i) and (iii) above, with any
remaining amounts being used by Stephens to partially defray other expenses
incurred by Stephens in distributing Investor C Shares. Fees received by
Stephens pursuant to the Distribution Plan will not be used to pay any interest
expenses, carrying charges or other financing costs (except to the extent
permitted by the SEC) and will not be used to pay any general and administrative
expenses of Stephens.
The Company and Stephens may suspend or reduce payments under the Distribution
Plan at any time, and payments are subject to the continuation of the
Distribution Plan described above and the terms of the Sales Support Agreement
between Selling Agents and Stephens. See the SAIs for more details on the
Distribution Plan.
The Directors also have approved a shareholder servicing plan ("Servicing Plan")
for the Portfolios which permits the LifeGoal Portfolios to compensate Servicing
Agents for services provided to their Customers that own Investor C Shares.
Payments under the Servicing Plan are calculated daily and paid monthly at a
rate or rates set from time to time by the LifeGoal Portfolios, provided that
the annual rate may not exceed 0.25% of the average daily net asset value of the
LifeGoal Portfolios' Investor C Shares.
The fees payable under the Servicing Plan are used primarily to compensate or
reimburse Servicing Agents for shareholder services provided, and related
expenses incurred, by such Servicing Agents. The shareholder services provided
by Servicing Agents may include: (i) aggregating and processing purchase and
redemption requests for Investor C Shares from Customers and transmitting net
purchase and redemption orders to Stephens or the Transfer Agent; (ii) providing
Customers with a service that invests the assets of their accounts in Investor C
Shares pursuant to specific or preauthorized instructions; (iii) processing
dividend and distribution payments from the LifeGoal Portfolios on behalf of
Customers; (iv) providing information periodically to Customers showing their
positions in Investor C Shares; (v) arranging for bank wires; and (vi) providing
general shareholder liaison services.
The Company may suspend or reduce payments under the Servicing Plan at any time,
and payments are subject to the continuation of the Servicing Plan described
above and the terms of the Servicing Agreements. See the SAI for more details on
the Servicing Plan.
The Company understands that Agents may charge fees to their Customers who are
the owners of Investor C Shares for various services provided in connection with
a Customer's account. These fees would be in addition to any amounts received by
a Selling Agent under its Sales Support Agreement with Stephens or by a
Servicing Agent under its Servicing Agreement with the Company. The Sales
Support Agreements and Servicing Agreements require Agents to disclose to their
Customers any compensation payable to the Agent by Stephens or the Company and
any other compensation payable by the Customers for various services provided in
connection with their accounts. Customers should read this Prospectus in light
of the terms governing their accounts with their Agents.
Stephens may, from time to time, at its expense or as an expense for which it
may be reimbursed under the Distribution Plan, pay a bonus or other
consideration or incentive to Agents who sell a minimum dollar amount of shares
of the LifeGoal Portfolios during a specified period of time. Stephens also may,
from time to time, pay additional consideration to Agents not to exceed 0.75% of
the offering price per share on all sales of Investor C Shares as an expense of
Stephens or for which Stephens may be reimbursed under the Distribution Plan or
upon receipt of a CDSC. Any such additional consideration or incentive program
may be terminated at any time by Stephens.
In addition, Stephens has established a non-cash compensation program, pursuant
to which broker/dealers or financial institutions that sell shares of the
LifeGoal Portfolios may earn additional compensation in the form of trips to
sales seminars or vacation destinations, tickets to sporting events, theater or
other entertainment, opportunities to participate in golf or other outings and
gift certificates for meals or merchandise. This non-cash compensation program
may be amended or terminated at any time by Stephens.
21
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How The LifeGoal Portfolios Value Their Shares
The net asset value of a share of each class is calculated by dividing the total
value of its assets, less liabilities, by the number of shares in the class
outstanding. Shares of each of the LifeGoal Portfolios are valued as of the
close of regular trading on the Exchange (currently 4:00 p.m., Eastern time) on
each Business Day. Currently, the days on which the Exchange is closed (other
than weekends) are: New Year's Day, Presidents' Day, Good Friday, Memorial Day
(observed), Independence Day, Labor Day, Thanksgiving and Christmas.
The Nations Funds determine their net asset value per share on a daily basis.
The net asset value of the LifeGoal Portfolio shares will be determined by
reference to the net asset value of the underlying Nations Fund.
How Dividends And Distributions Are Made;
Tax Information
Dividends and Distributions
Each LifeGoal Portfolio declares and pays dividends from net investment income
quarterly. Each LifeGoal Portfolio's net realized capital gains (including net
short-term capital gains) are distributed at least annually.
Investor C Shares of LifeGoal Portfolios are eligible to receive dividends when
declared, provided, however, that the purchase order for such shares is received
at least one day prior to the dividend declaration and such shares continue to
be eligible for dividends through and including the day before the redemption
order is executed.
The net asset value of Investor C Shares in LifeGoal Portfolios will be reduced
by the amount of any dividend or distribution. Certain Agents may provide for
the reinvestment of dividends in the form of additional Investor C Shares of the
same class in the same LifeGoal Portfolio. Dividends and distributions are paid
in cash within five Business Days of the end of the quarter to which the
dividend relates. Dividends and distributions payable to a shareholder are paid
in cash within five Business Days after a shareholder's complete redemption of
his/her Investor C Shares.
Tax Information
Each of the LifeGoal Portfolios intends to qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"). In
general, such qualification relieves a LifeGoal Portfolio of liability for
federal income tax to the extent all of its annual earnings are distributed in
accordance with the Code. Each LifeGoal Portfolio intends to distribute all of
its earnings each taxable year.
Any distributions by a LifeGoal Portfolio of its net investment income
(including net foreign currency gains) and the excess, if any, of its net
short-term capital gain over its net long-term capital loss will be taxable as
ordinary income to shareholders who are not currently exempt from federal income
tax, whether such income is received in cash or reinvested in additional shares.
(Federal income tax for distributions to an Individual Retirement Account are
generally deferred under the Code.)
Corporate shareholders in the LifeGoal Portfolios may be entitled to the
dividends-received deduction for distributions from those funds investing in the
stock of domestic corporations to the extent of the total qualifying dividends
received by the distributing fund. Corporate shareholders of the LifeGoal
Portfolios may be eligible for the dividends-received deduction on the dividends
paid by the LifeGoal Portfolios to the extent that each LifeGoal Portfolio's
income is derived from dividends (which, if received directly, would qualify for
such deduction) received from domestic corporations. In order to qualify for the
dividends-received deduction, a corporate shareholder must hold the LifeGoal
Portfolio shares paying the dividends upon which the deduction is based for at
least 46 days.
Substantially all of the net realized long-term capital gains of the LifeGoal
Portfolios, if any, will be distributed at least annually to the LifeGoal
Portfolios' shareholders. The LifeGoal Portfolios will generally have no tax
liability with respect to such gains, and the distributions will be taxable to
such shareholders who are not currently exempt from federal income tax as
long-term capital gains, regardless of how long the shareholders have held such
LifeGoal Portfolios' shares and whether such gains are received in cash or
reinvested in additional shares.
Each year, shareholders will be notified as to the amount and federal tax status
of all dividends and capital gain distributions paid during the prior year. Such
dividends and distributions may also be subject to state and local taxes.
Dividends and capital gain distributions declared in October, November or
December of any year payable to
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shareholders of record on a specified date in such months will be deemed to have
been received by shareholders and paid by a LifeGoal Portfolio on December 31 of
such year in the event such dividends and distributions are actually paid during
January of the following year.
Federal law requires the Company to withhold 31% from any dividends (other than
exempt-interest dividends) and capital gain distributions paid by the Company
and/or redemptions (including exchange redemptions) to individual shareholders
unless the shareholder properly furnishes a certified, correct Taxpayer
Identification Number and certifies that withholding does not apply. Such
withholding is also required if the Internal Revenue Service notifies the
Company that the Taxpayer Identification Number provided by the shareholder is
incorrect or that the shareholder is otherwise subject to such withholding.
Amounts withheld are applied to the shareholder's federal tax liability, and a
refund may be obtained from the Internal Revenue Service if withholding results
in overpayment of tax. Federal law also requires the LifeGoal Portfolios to
withhold 30% or the applicable tax treaty rate from dividends paid to certain
nonresident alien, non-U.S. partnership and non-U.S. corporation shareholder
accounts.
The foregoing discussion is based on tax laws and regulations that were in
effect as of the date of this Prospectus and summarizes only some of the
important tax considerations generally affecting the LifeGoal Portfolios and
their shareholders. It is not intended as a substitute for careful tax planning.
Accordingly, potential investors should consult their tax advisors with specific
reference to their own tax situations. Further tax information is contained in
the SAI.
23
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NATIONS LIFEGOAL FUNDS, INC.
Statement of Additional Information
LIFEGOAL GROWTH PORTFOLIO
LIFEGOAL BALANCE GROWTH PORTFOLIO
LIFEGOAL INCOME AND GROWTH PORTFOLIO
INVESTOR A AND C SHARES AND PRIMARY A AND B SHARES
OCTOBER 15, 1996
This Statement of Additional Information ("SAI") provides supplementary
information pertaining to shares representing interests in the above listed
three investment portfolios of Nations LifeGoal Funds, Inc. (individually, a
"LifeGoal Portfolio" and collectively, the "LifeGoal Portfolios"). This SAI is
not a prospectus and should be read only in conjunction with the current
prospectuses for the aforementioned LifeGoal Portfolios related to the class or
series of shares in which one is interested, dated October 15, 1996 (each a
"Prospectus"). All terms used in this SAI that are defined in the Prospectuses
will have the same meanings assigned in the Prospectuses. Copies of these
Prospectuses may be obtained by writing Nations Fund c/o Stephens Inc., One
NationsBank Plaza, 33rd Floor, Charlotte, North Carolina 28255, or by calling
Nations Fund at 1-800-982-2271.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INTRODUCTION............................................................................ 1
ADDITIONAL INFORMATION ON LIFEGOAL PORTFOLIO INVESTMENTS
General........................................................................ 1
Fundamental Investment Limitations............................................. 2
ADDITIONAL INFORMATION ON UNDERLYING NATIONS
FUNDS' INVESTMENTS...................................................................... 3
General........................................................................ 3
When-Issued Securities......................................................... 3
Foreign Currency Transactions ................................................. 4
Futures, Options and Other Derivative
Instruments ................................................................. 5
Risk Factors Associated with Futures and
Options Transactions......................................................... 13
Interest Rate Transactions .................................................... 16
Asset-Backed Securities ....................................................... 17
Special Situations............................................................. 20
Equity Swap Contracts.......................................................... 20
Lower Rated Debt Securities.................................................... 21
Repurchase Agreements.......................................................... 21
Reverse Repurchase Agreements ................................................. 21
Securities Lending ............................................................ 22
Short Sales.................................................................... 22
Guaranteed Investment Contracts................................................ 22
Illiquid Securities............................................................ 23
Commercial Instruments......................................................... 23
Real Estate Investment Trusts ................................................. 23
NET ASSET VALUE......................................................................... 23
Purchases and Redemptions...................................................... 23
Net Asset Value Determination.................................................. 24
Exchanges...................................................................... 24
DESCRIPTION OF SHARES................................................................... 25
Dividends and Distributions.................................................... 25
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Page
ADDITIONAL INFORMATION CONCERNING TAXES................................................. 26
Qualification as a Regulated Investment
Company........................................................................ 26
Excise Tax on Regulated Investment Companies................................... 27
Sale or Redemption of Shares................................................... 27
Foreign Shareholders........................................................... 27
Effect of Future Legislation; Local Tax
Considerations ............................................................. 28
DIRECTORS AND OFFICERS OF LIFEGOAL FUNDS................................................ 28
Directors, Trustees and Officers of Underlying Nations Funds................... 32
Nations Funds Retirement Plan.................................................. 33
Nations Funds Deferred Compensation Plan....................................... 33
Compensation Table............................................................. 34
INVESTMENT ADVISORY, ADMINISTRATION, CUSTODY,
TRANSFER AGENCY, SHAREHOLDER SERVICING, SHAREHOLDER
ADMINISTRATION AND DISTRIBUTION AGREEMENTS.............................................. 35
The Company and Its Common Stock............................................... 35
Investment Advisory Arrangements of the LifeGoal Portfolios.................... 36
Investment Advisory Arrangements of the Underlying Nations Funds............... 37
Administrator and Co-Administrator............................................. 43
Distributor.................................................................... 44
Distribution Plans and Shareholder Servicing
Arrangements for Investor Shares............................................. 44
Investor A Shares..................................................... 44
Investor C Shares..................................................... 45
Information Applicable to Investor A and
Investor C .................................................................. 47
Shareholder Administration Plan
(Primary B Shares)........................................................... 48
Expenses....................................................................... 48
Transfer Agents and Custodians................................................. 50
INDEPENDENT ACCOUNTANT AND REPORTS...................................................... 50
COUNSEL................................................................................. 50
Pending Legal Proceedings...................................................... 50
ADDITIONAL INFORMATION ON PERFORMANCE................................................... 51
Yield Calculations............................................................. 51
Total Return Calculations...................................................... 52
MISCELLANEOUS........................................................................... 53
Certain Record Holders......................................................... 53
Report of Independent Accountant.............................................. 54
Statement of assets and liabilities at October 1, 1996........................ 54
ii
<PAGE>
SCHEDULE A - Description of Ratings..................................................... A-1
</TABLE>
iii
INTRODUCTION
Nations LifeGoal Funds, Inc. (the "Company") is a diversified open-
end management investment company. The rules and regulations of the Securities
and Exchange Commission (the "SEC") require all mutual funds to furnish
prospective investors certain information concerning the activities of the
mutual fund being considered for investment. This information about the Company
is included in various Prospectuses. The Prospectuses relate to the shares of
LifeGoal Growth Portfolio, LifeGoal Balanced Growth Portfolio and LifeGoal
Income and Growth Portfolio (each a "LifeGoal Portfolio" and collectively, the
"LifeGoal Portfolios"). The Primary A and Primary B Shares are collectively
referred to herein as "Primary Shares" and the Investor A and Investor C
Shares are collectively referred to as "Investor Shares." NationsBanc
Advisors, Inc. ("NBAI") is the investment adviser to the LifeGoal Portfolios.
TradeStreet Investment Associates, Inc. ("TradeStreet") is investment
sub-adviser. As used herein the "Adviser" shall mean NBAI and/or TradeStreet
as the context may require.
Each LifeGoal Portfolio may (i) own more than 3% of the total
outstanding stock of a registered investment company which is a member
of the Nations Fund Family, (ii) invest more than 5% of its assets in
any one such investment company, and (iii) invest more than 10% of it
assets, collectively, in registered investment companies which are
members of the Nations Fund Family. Each LifeGoal Portfolio will
concentrate more than 25% of its assets in the mutual fund industry.
However, each of the underlying mutual funds in which the LifeGoal
Portfolios will invest will not concentrate 25% or more of its total
assets in any one industry.
This SAI is intended to furnish prospective investors with additional
information concerning the Company and the LifeGoal Portfolios.
Some of the information required to be in this SAI is also included in
the LifeGoal Portfolios current Prospectuses, and, in order to avoid
repetition, this SAI will reference sections of the Prospectuses.
Additionally, the Prospectuses and this SAI omit certain information
contained in "Part C" of the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from the
Prospectuses and this SAI, may be obtained from the SEC.
ADDITIONAL INFORMATION ON THE LIFEGOAL FUND INVESTMENTS
GENERAL
Information concerning each LifeGoal Portfolio's investment
objective is set forth in each of the Prospectuses under the headings
"Prospectus Summary" and "How Objectives Are Pursued". There can be no
assurance that the LifeGoal Funds will achieve their objectives. The
principal features of the LifeGoal Funds' investment programs and
the primary risks associated with those investment programs are
discussed in the Prospectuses under the heading "How Objectives Are
Pursued". The principal features and certain risks of the underlying
Nations Funds are discussed in the Prospectuses under the heading
"Description of Underlying Nations Funds."
Under extraordinary circumstances, the LifeGoal Portfolios
may invest 100% of their assets in Nations Prime Fund. Such
circumstances that would prompt a shift in the allocation of assets for
defensive purposes by the Adviser include concerns about a precipitous
decline in the net asset value of any of the underlying Nations
Funds or similar volatility in the Nasdaq National Market,
1
<PAGE>
New York Stock Exchange or American Stock Exchange. The designation of
circumstances as sufficiently extraordinary to permit this defensive investing
is within the Adviser's discretion.
Although each LifeGoal Portfolio intends to invest
substantially all of its assets in underlying Nations Funds, each
LifeGoal Portfolio reserves the right to invest assets not so invested
in government securities, repurchase agreements and money market
instruments.
FUNDAMENTAL INVESTMENT LIMITATIONS
Each LifeGoal Portfolio is subject to a number of investment
limitations. The following investment limitations are matters of
fundamental policy and may not be changed without the affirmative vote
of the holders of a majority of the LifeGoal Fund's outstanding shares.
Under the Investment Company Act of 1940, as amended ("1940
Act"), such approval requires the affirmative vote, at a meeting of
shareholders of a LifeGoal Portfolio, of (i) at least 67% of the shares
of the LifeGoal Portfolio present at the meeting, if the holders of
more than 50% of the outstanding shares of the LifeGoal Portfolio
are present in person or by represented proxy; or (ii) more than 50% of
the outstanding shares of the LifeGoal Portfolio, whichever is less.
The LifeGoal Portfolios may not:
1. Borrow money or issue senior securities as defined in the 1940 Act
except that (a) a Portfolio may borrow money from banks for temporary
or emergency purposes in amounts up to one-third of the value of such
Portfolio's total assets at the time of borrowing, provided that
borrowings in excess of 5% of the value of such Portfolio's total
assets will be repaid prior to the purchase of additional portfolio
securities by such Portfolio, (b) a Portfolio may enter into
commitments to purchase securities in accordance with the Portfolio's
investment program, including delayed delivery and when-issued
securities, which commitments may be considered the issuance of
senior securities, and (c) a Portfolio may issue multiple classes of
shares in accordance with SEC regulations or exemptions under the
1940 Act. The purchase or sale of futures contracts and related
options shall not be considered to involve the borrowing of money or
issuance of senior securities.
2. Purchase any securities on margin (except for such short-term credits
as are necessary for the clearance of purchases and sales of
portfolio securities) or sell any securities short (except against
the box.) For purposes of this restriction, the deposit or payment by
the Portfolio of initial or maintenance margin connection with
futures contracts and related options and options on securities is
not considered to be the purchase of a security on margin.
3. Underwrite securities issued by any other person, except to the
extent that the purchase of securities and the later disposition of
such securities in accordance with the Portfolio's investment program
may be deemed an underwriting. This restriction shall not limit a
Fund's ability to invest in securities issued by other registered
investment companies.
4. Invest in real estate or real estate limited partnership interests.
(Each Portfolio may, however, purchase and sell securities secured by
real estate or interests therein or issued by issuers which invest in
real estate or interests therein.) This restriction does not apply to
real estate limited partnerships listed on a national stock exchange
(e.g., the New York Stock Exchange).
5. Purchase or sell commodity contracts except that each Portfolio may,
to the extent appropriate under its investment policies, purchase
publicly traded securities of companies engaging in whole or in part
in such activities, may enter into futures contracts and related
options, may engage in transactions on a when-issued or forward
commitment basis, and may enter into forward currency contracts in
accordance with its investment policies.
6. Make loans, except that a Portfolio may purchase and hold debt
instruments (whether such instruments are part of a public offering
or privately placed), may enter into repurchase agreements and may
lend portfolio securities in accordance with its investment policies.
7. The LifeGoal Portfolios will be diversified and each Portfolio may
not purchase securities of any one issuer (other than securities
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or securities of other investment companies) if,
immediately after such purchase, more than 5% of the value of such
Portfolio's total assets would be invested in the securities of such
issuer, except that up to 25% of the value of the Portfolio's total
assets may be invested without regard to these limitations and with
respect to 75% of such Portfolio's assets, such Portfolio will not
hold more than 10% of the voting securities of any issuer.
8. Each LifeGoal Portfolio will concentrate its investments in the
securities of other investment companies.
In addition, certain non-fundamental investment restrictions are also
applicable to the LifeGoal Portfolio, including the following:
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1. No Portfolio of the Company will purchase or retain the
securities of any issuer if the officers, or directors of the
Company, its advisers, or managers owning beneficially more than
one half of one percent of the securities of each issuer
together own beneficially more than five percent of such
securities.
2. No Portfolio of the Company will purchase securities of
unseasoned issuers, including their predecessors, that have been
in operation for less than three years, if by reason thereof the
value of such Portfolio's investment in such classes of
securities would exceed 5% of such Portfolio's total assets. For
purposes of this limitation, issuers include predecessors,
sponsors, controlling persons, general partners, guarantors and
originators of underlying assets which have less than three
years of continuous operation or relevant business experience.
3. No Portfolio will purchase puts, calls, straddles, spreads and
any combination thereof if by reason thereof the value of its
aggregate investment in such classes of securities will exceed
5% of its total assets except that: (a) this restriction shall
not apply to standby commitments, (b) this restriction shall not
apply to a Portfolio's transactions in futures contracts and
related options, and (c) a Portfolio may obtain short-term
credit as may be necessary for the clearance of purchases and
sales of portfolio securities.
4. No Portfolio will invest in warrants, valued at the lower of
cost or market, in excess of 5% of the value of such Portfolio's
assets, and no more than 2% of the value of the Portfolio's net
assets may be invested in warrants that are not listed on
principal domestic or foreign exchanges (for purposes of this
undertaking, warrants acquired by a Portfolio in units or
attached to securities will be deemed to have no value).
5. No Portfolio of the Company will purchase securities of
companies for the purpose of exercising control.
6. No Portfolio of the Company will invest more than 15% of the
value of its net assets in illiquid securities, including
repurchase agreements with remaining maturities in excess of
seven days, time deposits with maturities in excess of seven
days, restricted securities, and other securities which are not
readily marketable. For purposes of this restriction, illiquid
securities shall not include securities which may be resold
under Rule 144A under the Securities Act of 1933 that the Board
of Directors, or its delegate, determines to be liquid, based
upon the trading markets for the specific security.
7. No Portfolio of the Company will mortgage, pledge or hypothecate
any assets except to secure permitted borrowings and then only
in an amount up to one-third of the value of the Portfolio's
total assets at the time of borrowing. For purposes of this
limitation, collateral arrangements with respect to the writing
of options, futures contracts, options on futures contracts, and
collateral arrangements with respect to initial and variation
margin are not considered to be a mortgage, pledge or
hypothecation of assets.
8. No Portfolio of the Company will purchase oil, gas or mineral
leases or other interests (a Portfolio may, however, purchase and
sell the securities of companies engaged in the exploration,
development, production, refining, transporting and marketing of
oil, gas or minerals).
Notwithstanding the foregoing restrictions, the underlying
mutual funds in which LifeGoal Portfolios may invest have adopted
their own investment restrictions which may be more or less
restrictive than those listed above, thereby allowing a LifeGoal
Portfolio to participate in certain investment strategies indirectly
that are prohibited under the fundamental and non-fundamental
investment restrictions listed above and in a LifeGoal Portfolio
Prospectus. The investment restrictions of these underlying mutual
funds are set forth in their respective statements of additional
information.
ADDITIONAL INFORMATION ON UNDERLYING NATIONS FUNDS'
INVESTMENTS
GENERAL
Information concerning the investment objective and policies
of each underlying Nations Fund is set forth in each of their
prospectuses under the headings "Objectives," "How Objectives Are
Pursued," and "Appendix A" and their respective SAIs. As is the case
with the LifeGoal Portfolios, there can be no assurance that the
underlying Nations Funds will achieve their objectives. The principal
features of the Nations Funds' investment programs and the primary
risks associated with those investment programs are discussed
in their prospectuses under the heading "How Objectives Are Pursued"
and "Appendix A."
WHEN-ISSUED SECURITIES
Certain Nations Funds may purchase securities on a "when-issued" basis,
that is, the date for delivery of the payment for the securities is not fixed at
the date of purchase, but is set after the securities are issued (normally
within 45 days after the date of the transaction). Each Nations Fund may also
purchase or sell securities on a delayed delivery basis. The payment obligation
and the interest rate that will be received on the when-issued securities are
fixed at the time the buyer enters into the commitment. Each Nations Fund will
only make commitments to purchase when-issued or delayed delivery securities
with the intention of actually acquiring such securities, but each Nations Fund
may sell these securities before the settlement date if it is deemed advisable.
If a Nations Fund purchases a when-issued security, the Nations Fund
will direct its custodian bank to segregate cash or high grade securities in an
amount equal to the when-issued commitment. Segregated securities will be valued
at market for the purpose of determining the adequacy of the segregated
securities in the account. If the market value of such segregated securities
declines, additional cash or securities will be segregated on a daily basis so
that the market value of the segregated securities will equal the amount of the
Nations Fund's when-issued commitments. To the extent Nations Funds securities
are segregated, they will not be available for
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new investment or to meet redemptions.
Securities purchased on a when-issued basis and the securities held in
the Nations Funds are subject to changes in market value based upon the public's
perception of the creditworthiness of the issuer and changes in the level of
interest rates (which will generally result in all of those securities changing
in value in the same way, i.e., experiencing appreciation when interest rates
fall). Therefore, if in order to achieve higher interest income a Nations Fund
remains substantially fully invested at the same time that it has purchased
securities on a when-issued basis, there is a possibility that the Nations Fund
will experience greater fluctuation in the market value of its assets.
Furthermore, when the time comes for a Nations Fund to meet its
obligations under when-issued commitments, the Nations Fund will do so by use of
its then available cash, by the sale of segregated securities, by the sale of
other securities or, although it would not normally expect to do so, by
directing the sale of the when-issued securities themselves (which may have a
market value greater or less than the Nations Fund's payment obligation
thereunder). The sale of securities to meet such obligations carries with it a
greater potential for the realization of net short-term capital gains, which are
not exempt from federal income tax. The value of when-issued securities on the
settlement date may be more or less than the purchase price.
In a delayed delivery transaction, certain Nations Funds rely on the
other party to complete the transaction. If the transaction is not completed,
the Nations Fund may miss a price or yield considered to be advantageous.
FOREIGN CURRENCY TRANSACTIONS
As described in their Prospectuses, certain Nations Funds may invest in
foreign currency transactions. Foreign securities involve currency risks. The
U.S. dollar value of a foreign security tends to decrease when the value of the
U.S. dollar rises against the foreign currency in which the security is
denominated, and tends to increase when the value of the U.S. dollar falls
against such currency. A Nations Fund may purchase or sell forward foreign
currency exchange contracts ("forward contracts") to attempt to minimize the
risk to the Nations Fund from adverse changes in the relationship between the
U.S. dollar and foreign currencies. A Nations Fund also may purchase and sell
foreign currency futures contracts and related options (see "Purchase and Sale
of Currency Futures Contracts and Related Options"). A forward contract is an
obligation to purchase or sell a specific currency for an agreed price at a
future date that is individually negotiated and privately traded by currency
traders and their customers.
Forward foreign currency exchange contracts establish an exchange rate
at a future date. These contracts are transferable in the interbank market
conducted directly between currency traders (usually large commercial banks) and
their customers. A forward foreign currency exchange contract generally has no
deposit requirement, and is traded at a net price without commission. A Nations
Fund will direct its custodian to segregate high grade liquid assets in an
amount at least equal to its obligations under each forward foreign currency
exchange contract. Neither spot transactions nor forward foreign currency
exchange contracts eliminate fluctuations in the prices of a Nations Fund's
portfolio securities or in foreign exchange rates, or prevent loss if the prices
of these securities should decline.
Certain Nations Funds may enter into a forward contract, for example,
when they enter
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into a contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of the security (a
"transaction hedge"). In addition, when the Adviser believes that a foreign
currency may suffer a substantial decline against the U.S. dollar, a Nations
Fund may enter into a forward sale contract to sell an amount of that foreign
currency approximating the value of some or all of a Nations Fund's securities
denominated in such foreign currency, or when the Adviser believes that the U.S.
dollar may suffer a substantial decline against the foreign currency, a Nations
Fund may enter into a forward purchase contract to buy that foreign currency for
a fixed dollar amount (a "position hedge").
A Nations Fund may, in the alternative, enter into a forward contract
to sell a different foreign currency for a fixed U.S. dollar amount where the
Adviser believes that the U.S. dollar value of the currency to be sold pursuant
to the forward contract will fall whenever there is a decline in the U.S. dollar
value of the currency in which the fund securities are denominated (a
"cross-hedge").
Foreign currency hedging transactions are an attempt to protect a
Nations Fund against changes in foreign currency exchange rates between the
trade and settlement dates of specific securities transactions or changes in
foreign currency exchange rates that would adversely affect a portfolio position
or an anticipated portfolio position. Although these transactions tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time they tend to limit any potential gain that might be realized
should the value of the hedged currency increase. The precise matching of the
forward contract amount and the value of the securities involved will not
generally be possible because the future value of these securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and date
it matures.
The Nations Funds' custodian will segregate cash, U.S. Government
securities or other high-quality debt securities having a value equal to the
aggregate amount of the Nations Fund's commitments under forward contracts
entered into with respect to position hedges and cross-hedges. If the value of
the segregated securities declines, additional cash or securities will be
segregated on a daily basis so that the value of the segregated securities will
equal the amount of the Nations Fund's commitments with respect to such
contracts. As an alternative to segregating all or part of such securities, the
Nations Fund may purchase a call option permitting the Nations Fund to purchase
the amount of foreign currency being hedged by a forward sale contract at a
price no higher than the forward contract price or the Nations Fund may purchase
a put option permitting the Nations Fund to sell the amount of foreign currency
subject to a forward purchase contract at a price as high or higher than the
forward contract price.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
Futures Contracts in General. A futures contract is an agreement
between two parties for the future delivery of fixed income securities or for
the payment or acceptance of a cash settlement in the case of futures contracts
on an index of fixed income or equity securities. A "sale" of a futures contract
means the contractual obligation to deliver the securities at a specified price
on a specified date, or to make the cash settlement called for by the contract.
Futures contracts have been designed by exchanges which have been designated
"contract markets" by the Commodity Futures Trading Commission ("CFTC") and must
be executed through a brokerage firm, known as a futures commission merchant,
which is a member of the relevant contract market. Futures contracts trade on
these markets, and the exchanges, through their clearing organizations,
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guarantee that the contracts will be performed as between the clearing members
of the exchange. Presently, futures contracts are based on such debt securities
as long-term U.S. Treasury Bonds, Treasury Notes, Government National Mortgage
Association ("GNMA") modified pass-through mortgage-backed securities,
three-month U.S. Treasury Bills, bank certificates of deposit, and on indices of
municipal, corporate and government bonds.
Certain Nations Funds may enter futures contracts, while futures
contracts based on securities do provide for the delivery and acceptance of
securities, such deliveries and acceptances are very seldom made. Generally, a
futures contract is terminated by entering into an offsetting transaction. A
Nations Fund will incur brokerage fees when it purchases and sells futures
contracts. At the time such a purchase or sale is made, a Nations Fund must
provide cash or money market securities as a deposit known as "margin." The
initial deposit required will vary, but may be as low as 2% or less of a
contract's face value. Daily thereafter, the futures contract is valued through
a process known as "marking to market," and a Nations Fund that engages in
futures transactions may receive or be required to pay "variation margin" as the
futures contract becomes more or less valuable. At the time of delivery of
securities pursuant to a futures contract based on securities, adjustments are
made to recognize differences in value arising from the delivery of securities
with a different interest rate than the specific security that provides the
standard for the contract. In some (but not many) cases, securities called for
by a futures contract may not have been issued when the contract was written.
Futures contracts on indices of securities are settled through the
making and acceptance of cash settlements based on changes in value of the
underlying rate or index between the time the contract is entered into and the
time it is liquidated.
Futures Contracts on Fixed Income Securities and Related Indices.
Certain Nations Funds may enter into transactions in futures contracts for the
purpose of hedging a relevant portion of their portfolios. A Nations Fund may
enter into transactions in futures contracts that are based on obligations
issued or guaranteed as to payment of principal and interest by the U.S.
Government, it agencies or instrumentalities ("U.S. Government Obligations"),
including any index of government obligations that may be available for trading.
Such transactions will be entered into where movements in the value of the
securities or index underlying a futures contract can be expected to correlate
closely with movements in the value of securities held in a Nations Fund. For
example, a Nations Fund may sell futures contracts in anticipation of a general
rise in the level of interest rates, which would result in a decline in the
value of its fixed income securities. If the expected rise in interest rates
occurs, the Nations Fund may realize gains on its futures position, which should
offset all or part of the decline in value of fixed income fund securities. A
Nations Fund could protect against such decline by selling fixed income
securities, but such a strategy would involve higher transaction costs than the
sale of futures contracts and, if interest rates again declined, the Nations
Fund would be unable to take advantage of the resulting market advance without
purchases of additional securities.
The purpose of the purchase or sale of a futures contract on government
securities and indices of government securities, in the case of certain Nations
Funds, which hold or intend to acquire long-term debt securities, is to protect
a Nations Fund from fluctuations in interest rates without actually buying or
selling long-term debt securities. For example, if long-term bonds are held by a
Nations Fund, and interest rates were expected to increase, the Nations Fund
might enter into futures contracts for the sale of debt securities. Such a sale
would have much the same effect as selling an equivalent value of the long-term
bonds held by the Nations Fund. If interest rates did
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increase, the value of the debt securities in the Nations Fund would decline,
but the value of the futures contracts to the Nations Fund would increase at
approximately the same rate thereby keeping the net asset value of the Nations
Fund from declining as much as it otherwise would have. When a Nations Fund is
not fully invested and a decline in interest rates is anticipated, which would
increase the cost of fixed income securities that the Nations Fund intends to
acquire, it may purchase futures contracts. In the event that the projected
decline in interest rates occurs, the increased cost of the securities acquired
by the Nations Fund should be offset, in whole or part, by gains on the futures
contracts by entering into offsetting transactions on the contract market on
which the initial purchase was effected. In a substantial majority of
transactions involving futures contracts on fixed income securities, a Nations
Fund will purchase the securities upon termination of the long futures
positions, but under unusual market conditions, a long futures position may be
terminated without a corresponding purchase of securities.
Similarly, when it is expected that interest rates may decline, futures
contracts on fixed income securities and indices of government securities may be
purchased for the purpose of hedging against anticipated purchases of long-term
bonds at higher prices. Since the fluctuations in the value of such futures
contracts should be similar to that of long-term bonds, a Nations Fund could
take advantage of the anticipated rise in the value of long-term bonds without
actually buying them until the market had stabilized. At that time, the futures
contracts could be liquidated and the Nations Fund's cash reserves could then be
used to buy long-term bonds in the cash market. Similar results could be
accomplished by selling bonds with long maturities and investing in bonds with
short maturities when interest rates are expected to increase. However, since
the futures market is more liquid than the cash market, the use of these futures
contracts as an investment technique allows a Nations Fund to act in
anticipation of such an interest rate decline without having to sell its
portfolio securities. To the extent a Nations Fund enters into futures contracts
for this purpose, the segregated assets maintained by a Nations Fund will
consist of cash, cash equivalents or high quality debt securities of the Nations
Fund in an amount equal to the difference between the fluctuating market value
of such futures contracts and the aggregate value of the initial deposit and
variation margin payments made by the Nations Fund with respect to such futures
contracts.
Stock Index Futures Contracts. Certain Nations Funds may sell stock
index futures contracts in order to offset a decrease in market value of its
securities that might otherwise result from a market decline. A Nations Fund may
do so either to hedge the value of its portfolio as a whole, or to protect
against declines, occurring prior to sales of securities, in the value of
securities to be sold. Conversely, a Nations Fund may purchase stock index
futures contracts in order to protect against anticipated increases in the cost
of securities to be acquired.
In addition, a Nations Fund may utilize stock index futures contracts
in anticipation of changes in the composition of its portfolio. For example, in
the event that a Nations Fund expects to narrow the range of industry groups
represented in its portfolio, it may, prior to making purchases of the actual
securities, establish a long futures position based on a more restricted index,
such as an index comprised of securities of a particular industry group. As such
securities are acquired, a Nations Fund's futures positions would be closed out.
A Nations Fund may also sell futures contracts in connection with this strategy,
in order to protect against the possibility that the value of the securities to
be sold as part of the restructuring of its portfolio will decline prior to the
time of sale.
Options on Futures Contracts. Certain Nations Funds may purchase
options on futures
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contracts. An option on a futures contract gives the purchaser (the "holder")
the right, but not the obligation, to enter into a "long" position in the
underlying futures contract (i.e., a purchase of such futures contract) in the
case of an option to purchase (a "call" option), or a "short" position in the
underlying futures contract (i.e., a sale of such futures contract) in the case
of an option to sell (a "put" option), at a fixed price (the "strike price") up
to a stated expiration date. The holder pays a non-refundable purchase price for
the option, known as the "premium." The maximum amount of risk the purchase of
the option assumes is equal to the premium plus related transaction costs,
although this entire amount may be lost. Upon exercise of the option by the
holder, the exchange clearing corporation establishes a corresponding long
position in the case of a put option. In the event that an option is exercised,
the parties will be subject to all the risks associated with the trading of
futures contracts, such as payment of variation margin deposits. In addition,
the writer of an option on a futures contract, unlike the holder, is subject to
initial and variation margin requirements on the option position.
Options on Futures Contracts. Certain Nations Funds may purchase put
options on futures contracts in which the Nations Funds are permitted to
invest for the purpose of hedging a relevant portion of their portfolios
against an anticipated decline in the values of portfolio securities resulting
from increases in interest rates, and may purchase call options on such futures
contracts as a hedge against an interest rate decline when they are not fully
invested. A Nations Fund would write options on these futures contracts
primarily for the purpose of terminating existing positions.
Options on Stock Index Futures Contracts, Options on Stock Indices and
Options on Equity Securities. Certain Nations Funds may purchase put options on
stock index futures contracts, stock indices or equity securities for the
purpose of hedging the relevant portion of its portfolio securities against an
anticipated market-wide decline or against declines in the values of individual
portfolio securities, and it may purchase call options on such futures contracts
as a hedge against a market advance when it is not fully invested. A Nations
Fund would write options on such futures contracts primarily for the purpose of
termination of existing positions. In general, options on stock indices will be
employed in lieu of options on stock index futures contracts only where they
present an opportunity to hedge at lower cost. With respect to options on equity
securities, a Nations Fund may, under certain circumstances, purchase a
combination of call options on such securities and U.S. Treasury bills. The
Adviser believes that such a combination may more closely parallel movements in
the value of the security underlying the call option than would the option
itself.
Further, while a Nations Fund generally would not write options on
individual portfolio securities, it may do so under limited circumstances known
as "targeted sales" and "targeted buys," which involve the writing of call or
put options in an attempt to purchase or sell portfolio securities at specific
desired prices. A Nations Fund would receive a fee, or a "premium," for the
writing of the option. For example, where the Nations Fund seeks to sell
portfolio securities at a "targeted" price, it may write a call option at that
price. In the event that the market rises above the exercise price, it would
receive its "targeted" price, upon the exercise of the option, as well as the
premium income. Also, where it seeks to buy portfolio securities at a "targeted"
price, it may write a put option at that price for which it will receive the
premium income. In the event that the market declines below the exercise price,
a Nations Fund would pay its "targeted" price upon the exercise of the option.
In the event that the market does not move in the direction or to the extent
anticipated, however, the targeted sale or buy might not be successful and a
Nations Fund could sustain a loss on the transaction that may not be offset by
the premium received. In addition, a
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Nations Fund may be required to forego the benefit of an intervening increase or
decline in value of the underlying security.
Options and Futures Strategies. The Adviser may seek to increase the
current return of certain Nations Funds by writing covered call or put options.
In addition, through the writing and purchase of options and the purchase and
sale of U.S. and certain foreign stock index futures contracts, interest rate
futures contracts, foreign currency futures contracts and related options on
such futures contracts, the Adviser may at times seek to hedge against a decline
in the value of securities included in the Nations Fund or an increase in the
price of securities that it plans to purchase for the Nations Fund. Expenses and
losses incurred as a result of such hedging strategies will reduce the Nations
Fund's current return. A Nations Fund's investment in foreign stock index
futures contracts and foreign interest rate futures contracts, and related
options on such futures contracts, are limited to only those contracts and
related options that have been approved by the CFTC for investment by U.S.
Investors. Additionally, with respect to a Nations Fund's investment in foreign
options, unless such options are specifically authorized for investment by order
of the CFTC or meet the definition of "trade option" as set forth in CFTC rule
32.4, a Nations Fund will not make these investments.
The ability of a Nations Fund to engage in the options and futures
strategies described below will depend on the availability of liquid markets in
such instruments. Markets in options and futures with respect to stock indices,
foreign government securities and foreign currencies are relatively new and
still developing. It is impossible to predict the amount of trading interest
that may exist in various types of options or futures. Therefore, no assurance
can be given that a Nations Fund will be able to utilize these instruments
effectively for the purposes stated below. Furthermore, a Nations Fund's ability
to engage in options and futures transactions may be limited by tax
considerations. Although a Nations Fund will only engage in options and futures
transactions for limited purposes, these activities will involve certain risks
which are described below under "Risk Factors Associated with Futures and
Options Transactions." A Nations Fund will not engage in options and futures
transactions for leveraging purposes.
Writing Covered Options on Securities. Certain Nations Funds may write
covered call options and covered put options on optionable securities of the
types in which it is permitted to invest from time to time as the Adviser
determines is appropriate in seeking to attain its objective. Call options
written by a Nations Fund give the holder the right to buy the underlying
securities from a Nations Fund at a stated exercise price; put options give the
holder the right to sell the underlying security to the Nations Fund at a stated
price.
A Nations Fund may write only covered options, which means that, so
long as the Nations Fund is obligated as the writer of a call option, it will
own the underlying securities subject to the option (or comparable securities
satisfying the cover requirements of securities exchanges). In the case of put
options, a Nations Fund will maintain in a separate account cash or short-term
U.S. Government securities with a value equal to or greater than the exercise
price of the underlying securities. A Nations Fund may also write combinations
of covered puts and calls on the same underlying security or index or futures
contract.
A Nations Fund will receive a premium from writing a put or call
option, which increases the Nations Fund's return in the event the option
expires unexercised or is closed out at a profit. The amount of the premium will
reflect, among other things, the relationship of the market price of the
underlying security to the exercise price of the option, the term of the option
and the volatility
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of the market price of the underlying security. By writing a call option, a
Nations Fund limits its opportunity to profit from any increase in the market
value of the underlying security above the exercise price of the option. By
writing a put option, the Nations Fund assumes the risk that it may be required
to purchase the underlying security for an exercise price higher than its then
current market value, resulting in a potential capital loss if the purchase
price exceeds the market value plus the amount of the premium received.
A Nations Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option written. A Nations Fund will
realize a profit or loss from such transaction if the cost of such transaction
is less or more than the premium received from the writing of the option. In the
case of a put option, any loss so incurred may be partially or entirely offset
by the premium received from a simultaneous or subsequent sale of a different
put option. Because increases in the market price of a call option will
generally reflect increases in the market price of the underlying security, any
loss resulting from the repurchase of a call option is likely to be offset in
whole or in part by unrealized appreciation of the underlying security owned by
a Nations Fund.
Purchasing Put and Call Options on Securities. Certain Nations Funds
may purchase put options to protect its portfolio holdings in an underlying
security against a decline in market value. Such hedge protection is provided
during the life of the put option since a Nations Fund, as holder of the put
option, is able to sell the underlying security at the put exercise price
regardless of any decline in the underlying security's market price. In order
for a put option to be profitable, the market price of the underlying security
must decline sufficiently below the exercise price to cover the premium and
transaction costs. By using put options in this manner, a Nations Fund will
reduce any profit it might otherwise have realized in its underlying security by
the premium paid for the put option and by transaction costs.
Certain Nations Funds may also purchase call options to hedge against
an increase in prices of securities that it wants ultimately to buy. Such hedge
protection is provided during the life of the call option since the Nations
Fund, as holder of the call option, is able to buy the underlying security at
the exercise price regardless of any increase in the underlying security's
market price. In order for a call option to be profitable, the market price of
the underlying security must rise sufficiently above the exercise price to cover
the premium and transaction costs. By using call options in this manner, a
Nations Fund will reduce any profit it might have realized had it bought the
underlying security at the time it purchased the call option by the premium paid
for the call option and by transaction costs.
Purchase and Sale of Options and Futures on Stock Indices. Certain
Nations Funds may purchase and sell options on non-U.S. stock indices and stock
index futures as a hedge against movements in the equity markets.
Options on stock indices are similar to options on specific securities
except that, rather than the right to take or make delivery of the specific
security at a specific price, an option on a stock index gives the holder the
right to receive, upon exercise of the option, an amount of cash if the closing
level of that stock index is greater than, in the case of a call, or less than,
in the case of a put, the exercise price of the option. This amount of cash is
equal to such difference between the closing price of the index and the exercise
price of the option expressed in dollars multiplied by a specified multiple. The
writer of the option is obligated, in return for the premium received, to make
delivery of this amount. Unlike options on specific securities, all settlements
of options on
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stock indices are in cash and gain or loss depends on general movements in the
stocks included in the index rather than price movements in particular stocks. A
stock index futures contract is an agreement in which one party agrees to
deliver to the other an amount of cash equal to a specific amount multiplied by
the difference between the value of a specific stock index at the close of the
last trading day of the contract and the price at which the agreement is made.
No physical delivery of securities is made.
If the Adviser expects general stock market prices to rise, a Nations
Fund might purchase a call option on a stock index or a futures contract on that
index as a hedge against an increase in prices of particular equity securities
it wants ultimately to buy. If in fact the stock index does rise, the price of
the particular equity securities intended to be purchased may also increase, but
that increase would be offset in part by the increase in the value of a Nations
Fund's index option or futures contract resulting from the increase in the
index. If, on the other hand, the Adviser expects general stock market prices to
decline, a Nations Fund might purchase a put option or sell a futures contract
on the index. If that index does in fact decline, the value of some or all of
the equity securities in a Nations Fund may also be expected to decline, but
that decrease would be offset in part by the increase in the value of the
Nations Fund's position in such put option or futures contract.
Purchase and Sale of Interest Rate Futures. Certain Nations Funds may
purchase and sell interest rate futures contracts on foreign government
securities for the purpose of hedging fixed income and interest sensitive
securities against the adverse effects of anticipated movements in interest
rates.
A Nations Fund may sell interest rate futures contracts in anticipation
of an increase in the general level of interest rates. Generally, as interest
rates rise, the market value of the fixed income securities held by a Nations
Fund will fall, thus reducing the net asset value of the Nations Fund. This
interest rate risk can be reduced without employing futures as a hedge by
selling long-term fixed income securities and either reinvesting the proceeds in
securities with shorter maturities or by holding assets in cash. This strategy,
however, entails increased transaction costs to a Nations Fund in the form of
dealer spreads and brokerage commissions.
The sale of interest rate futures contracts provides an alternative
means of hedging against rising interest rates. As rates increase, the value of
a Nations Fund's short position in the futures contracts will also tend to
increase, thus offsetting all or a portion of the depreciation in the market
value of a Nations Fund's investments that are being hedged. While a Nations
Fund will incur commission expenses in selling and closing out futures positions
(which is done by taking an opposite position which operates to terminate the
position in the futures contract), commissions on futures transactions are lower
than transaction costs incurred in the purchase and sale of portfolio
securities.
Options on Stock Index Futures Contracts and Interest Rate Futures
Contracts. Certain Nations Funds may purchase and write call and put options on
non-U.S. stock index and interest rate futures contracts. A Nations Fund may use
such options on futures contracts in connection with its hedging strategies in
lieu of purchasing and writing options directly on the underlying securities or
stock indices or purchasing and selling the underlying futures. For example, a
Nations Fund may purchase put options or write call options on stock index
futures, or interest rate futures, rather than selling futures contracts, in
anticipation of a decline in general stock market prices or rise in interest
rates, respectively, or purchase call options or write put options on stock
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index or interest rate futures, rather than purchasing such futures, to hedge
against possible increases in the price of equity securities or debt securities,
respectively, which the Nations Fund intends to purchase.
Purchase and Sale of Currency Futures Contracts and Related Options. In
order to hedge its portfolio and to protect it against possible variations in
foreign exchange rates pending the settlement of securities transactions,
certain Nations Funds may buy or sell currency futures contracts and related
options. If a fall in exchange rates for a particular currency is anticipated, a
Nations Fund may sell a currency futures contract or a call option thereon or
purchase a put option on such futures contract as a hedge. If it is anticipated
that exchange rates will rise, a Nations Fund may purchase a currency futures
contract or a call option thereon or sell (write) a put option to protect
against an increase in the price of securities denominated in a particular
currency a Nations Fund intends to purchase. These futures contracts and related
options thereon will be used only as a hedge against anticipated currency rate
changes, and all options on currency futures written by a Nations Fund will be
covered.
A currency futures contract sale creates an obligation by a Nations
Fund, as seller, to deliver the amount of currency called for in the contract at
a specified futures time for a special price. A currency futures contract
purchase creates an obligation by a Nations Fund, as purchaser, to take delivery
of an amount of currency at a specified future time at a specified price.
Although the terms of currency futures contracts specify actual delivery or
receipt, in most instances the contracts are closed out before the settlement
date without the making or taking of delivery of the currency. Closing out of a
currency futures contract is effected by entering into an offsetting purchase or
sale transaction. Unlike a currency futures contract, which requires the parties
to buy and sell currency on a set date, an option on a currency futures contract
entitles its holder to decide on or before a future date whether to enter into
such a contract. If the holder decides not to enter into the contract, the
premium paid for the option is fixed at the point of sale.
The Nations Funds will write (sell) only covered put and call options
on currency futures. This means that a Nations Fund will provide for its
obligations upon exercise of the option by segregating sufficient cash or
short-term obligations or by holding an offsetting position in the option or
underlying currency future, or a combination of the foregoing. A Nations Fund
will, so long as it is obligated as the writer or a call option on currency
futures, own on a contract-for-contract basis an equal long position in currency
futures with the same delivery date or a call option on stock index futures with
the difference, if any, between the market value of the call written and the
market value of the call or long currency futures purchased maintained by a
Nations Fund in cash, Treasury bills, or other high-grade short-term obligations
in a segregated account with its custodian. If at the close of business on any
day the market value of the call purchased by a Nations Fund falls below 100% of
the market value of the call written by the Nations Fund, a Nations Fund will so
segregate an amount of cash, Treasury bills or other high grade short-term
obligations equal in value to the difference. Alternatively, a Nations Fund may
cover the call option through segregating with the custodian an amount of the
particular foreign currency equal to the amount of foreign currency per futures
contract option times the number of options written by a Nations Fund. In the
case of put options on currency futures written by the Nations Fund, the Nations
Fund will hold the aggregate exercise price in cash, Treasury bills, or other
high grade short-term
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obligations in a segregated account with its custodian, or own put options on
currency futures or short currency futures, with the difference, if any, between
the market value of the puts written and the market value of the puts purchased
or the currency futures sold maintained by a Nations Fund in cash, Treasury
bills or other high grade short-term obligations in a segregated account with
its custodian. If at the close of business on any day the market value of the
put options purchased or the currency futures by a Nations Fund falls below 100%
of the market value of the put options written by a Nations Fund, the Nations
Fund will so segregate an amount of cash, Treasury bills or other high grade
short-term obligations equal in value to the difference.
If other methods of providing appropriate cover are developed, a
Nations Fund reserves the right to employ them to the extent consistent with
applicable regulatory and exchange requirements. In connection with transactions
in stock index options, stock index futures, interest rate futures, foreign
currency futures and related options on such futures, a Nations Fund will be
required to deposit as "initial margin" an amount of cash or short-term
government securities equal to from 5% to 8% of the contract amount. Thereafter,
subsequent payments (referred to as "variation margin") are made to and from the
broker to reflect changes in the value of the futures contract.
Limitations on Purchase of Options. The staff of the SEC has taken the
position that purchased over-the-counter options and assets used to cover
written over-the-counter options are illiquid and, therefore, together with
other illiquid securities, cannot exceed 15% of a Nations Fund's assets. The
Adviser intends to limit certain Nations Funds' writing of over-the-counter
options in accordance with the following procedure. Each Nations Fund intends to
write over-the-counter options only with primary U.S. Government securities
dealers recognized by the Federal Reserve Bank of New York. Also, the contracts
which a Nations Fund has in place with such primary dealers will provide that
the Nations Fund has the absolute right to repurchase an option it writes at any
time at a price which represents the fair market value, as determined in good
faith through negotiation between the parties, but which in no event will exceed
a price determined pursuant to a formula in the contract. Although the specific
formula may vary between contracts with different primary dealers, the formula
will generally be based on a multiple of the premium received by a Nations Fund
for writing the option, plus the amount, if any, of the option's intrinsic value
(i.e., the amount that the option is in-the-money). The formula also may include
a factor to account for the difference between the price of the security and the
strike price of the option if the option is written out-of-the-money. A Nations
Fund will treat all or a part of the formula price as illiquid for purposes of
the 15% test imposed by the SEC staff.
RISK FACTORS ASSOCIATED WITH FUTURES AND OPTIONS TRANSACTIONS
The effective use of options and futures strategies depends on, among
other things, a Nations Fund's ability to terminate options and futures
positions at times when its the Adviser deems it desirable to do so. Although
certain Nations Funds will not enter into an option or futures position unless
the Adviser believes that a liquid secondary market exists for such option or
future, there is no assurance that a Nations Fund will be able to effect closing
transactions at any particular time or at an acceptable price or that the
secondary market will exist. A Nations Fund generally expects that its options
and futures transactions will be conducted on recognized U.S. and foreign
securities and commodity exchanges. In certain instances, however, a Nations
Fund may purchase and sell options in the over-the-counter market. A Nations
Fund's ability to terminate option positions established in the over-the-counter
market may be more limited than in the case of exchange-traded options and may
also involve the risk that securities dealers participating in such transactions
would fail to meet their obligations to the Nations Fund.
Options and futures markets can be highly volatile and transactions of
this type carry a
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high risk of loss. Moreover, a relatively small adverse market movement with
respect to these types of transactions may result not only in loss of the
original investment but also in unquantifiable further loss exceeding any margin
deposited.
The use of options and futures involves the risk of imperfect
correlation between movements in options and futures prices and movements in the
price of securities which are the subject of the hedge. Such correlation,
particularly with respect to options on stock indices and stock index futures,
is imperfect, and such risk increases as the composition of a Nations Fund
diverges from the composition of the relevant index. The successful use of these
strategies also depends on the ability of the Adviser to correctly forecast
interest rate movements, currency rate movements and general stock market price
movements.
In addition to certain risk factors described above, the following sets
forth certain information regarding the potential risks associated with certain
Nations Funds' futures and options transactions.
Risk of Imperfect Correlation. A Nations Fund's ability effectively to
hedge all or a portion of its portfolio through transactions in futures, options
on futures or options on stock indices depends on the degree to which movements
in the value of the securities or index underlying such hedging instrument
correlate with movements in the value of the relevant portion of the Nations
Fund's securities. If the values of the securities being hedged do not move in
the same amount or direction as the underlying security or index, the hedging
strategy for a Nations Fund might not be successful and the Nations Fund could
sustain losses on its hedging transactions which would not be offset by gains on
its portfolio. It is also possible that there may be a negative correlation
between the security or index underlying a futures or option contract and the
portfolio securities being hedged, which could result in losses both on the
hedging transaction and the Nations Fund securities. In such instances, a
Nations Fund's overall return could be less than if the hedging transactions had
not been undertaken. Stock index futures or options based on a narrower index of
securities may present greater risk than options or futures based on a broad
market index, as a narrower index is more susceptible to rapid and extreme
fluctuations resulting from changes in the value of a small number of
securities. A Nations Fund would, however, effect transactions in such futures
or options only for hedging purposes.
The trading of futures and options on indices involves the additional
risk of imperfect correlation between movements in the futures or option price
and the value of the underlying index. The anticipated spread between the prices
may be distorted due to differences in the nature of the markets, such as
differences in margin requirements, the liquidity of such markets and the
participation of speculators in the futures and options market. The purchase of
an option on a futures contract also involves the risk that changes in the value
of underlying futures contract will not be fully reflected in the value of the
option purchased. The risk of imperfect correlation, however, generally tends to
diminish as the maturity date of the futures contract or termination date of the
option approaches. The risk incurred in purchasing an option on a futures
contract is limited to the amount of the premium plus related transaction costs,
although it may be necessary under certain circumstances to exercise the option
and enter into the underlying futures contract in order to realize a profit.
Under certain extreme market conditions, it is possible that a Nations Fund will
not be able to establish hedging positions, or that any hedging strategy adopted
will be insufficient to completely protect the Nations Fund.
Certain Nations Funds will purchase or sell futures contracts or
options only if, in the
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Adviser's judgment, there is expected to be a sufficient degree of correlation
between movements in the value of such instruments and changes in the value of
the relevant portion of the Nations Fund's portfolio for the hedge to be
effective. However, there can be no assurance that the Adviser's judgment will
be accurate.
Potential Lack of a Liquid Secondary Market. The ordinary spreads
between prices in the cash and futures markets, due to differences in the
natures of those markets, are subject to distortions. First, all participants in
the futures market are subject to initial deposit and variation margin
requirements. This could require a Nations Fund to post additional cash or cash
equivalents as the value of the position fluctuates. Further, rather than
meeting additional variation margin requirements, investors may close futures
contracts through offsetting transactions which could distort the normal
relationship between the cash and futures markets. Second, the liquidity of the
futures or options market may be lacking. Prior to exercise or expiration, a
futures or option position may be terminated only by entering into a closing
purchase or sale transaction, which requires a secondary market on the exchange
on which the position was originally established. While certain Nations Funds
will establish a futures or option position only if there appears to be a liquid
secondary market therefor, there can be no assurance that such a market will
exist for any particular futures or option contract at any specific time. In
such event, it may not be possible to close out a position held by a Nations
Fund, which could require the Nations Fund to purchase or sell the instrument
underlying the position, make or receive a cash settlement, or meet ongoing
variation margin requirements. The inability to close out futures or option
positions also could have an adverse impact on a Nations Fund's ability
effectively to hedge its securities, or the relevant portion thereof.
The liquidity of a secondary market in a futures contract or an option
on a futures contract may be adversely affected by "daily price fluctuation
limits" established by the exchanges, which limit the amount of fluctuation in
the price of a contract during a single trading day and prohibit trading beyond
such limits once they have been reached. The trading of futures and options
contracts also is subject to the risk of trading halts, suspensions, exchange or
clearing house equipment failures, government intervention, insolvency of the
brokerage firm or clearing house or other disruptions of normal trading
activity, which could at times make it difficult or impossible to liquidate
existing positions or to recover excess variation margin payments.
Risk of Predicting Interest Rate Movements. Investments in futures
contracts on fixed income securities and related indices involve the risk that
if the Adviser's investment judgment concerning the general direction of
interest rates is incorrect, a Nations Fund's overall performance may be poorer
than if it had not entered into any such contract. For example, if a Nations
Fund has been hedged against the possibility of an increase in interest rates
which would adversely affect the price of bonds held in its portfolio and
interest rates decrease instead, the Nations Fund will lose part or all of the
benefit of the increased value of its bonds which have been hedged because it
will have offsetting losses in its futures positions. In addition, in such
situations, if a Nations Fund has insufficient cash, it may have to sell bonds
from its portfolio to meet daily variation margin requirements, possibly at a
time when it may be disadvantageous to do so. Such sale of bonds may be, but
will not necessarily be, at increased prices which reflect the rising market.
Trading and Position Limits. Each contract market on which futures and
option contracts are traded has established a number of limitations governing
the maximum number of positions which may be held by a trader, whether acting
alone or in concert with others. The Adviser does not believe that these trading
and position limits will have an adverse impact on the hedging
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strategies regarding the Nations Funds' investments.
Regulations on the Use of Futures and Options Contracts. Regulations of
the CFTC require that the Nations Funds enter into transactions in futures
contracts and options thereon for hedging purposes only, in order to assure that
they are not deemed to be a "commodity pool" under such regulations. In
particular, CFTC regulations require that all short futures positions be entered
into for the purpose of hedging the value of investment securities held by a
Nations Fund, and that all long futures positions either constitute bona fide
hedging transactions, as defined in such regulations, or have a total value not
in excess of an amount determined by reference to certain cash and securities
positions maintained for the Nations Fund, and accrued profits on such
positions. In addition, a Nations Fund may not purchase or sell such instruments
if, immediately thereafter, the sum of the amount of initial margin deposits on
its existing futures positions and premiums paid for options on futures
contracts would exceed 5% of the market value of the Nations Fund's total
assets.
When a Nations Fund purchases a futures contract, an amount of cash or
cash equivalents or high quality debt securities will be segregated with the
Nations Fund's custodian so that the amount so segregated, plus the initial
deposit and variation margin held in the account of its broker, will at all
times equal the value of the futures contract, thereby insuring that the use of
such futures is unleveraged.
The Nations Funds' ability to engage in the hedging transactions
described herein may be limited by the current federal income tax requirement
that a Nations Fund derive less than 30% of its gross income from the sale or
other disposition of stock or securities held for less than three months. The
Nations Funds may also further limit their ability to engage in such
transactions in response to the policies and concerns of various federal and
state regulatory agencies. Such policies may be changed by vote of the Board of
Directors.
INTEREST RATE TRANSACTIONS
Among the strategic transactions into which certain Nations Funds may
enter are interest rate swaps and the purchase or sale of related caps and
floors. The Nations Funds expect to enter into these transactions primarily to
preserve a return or spread on a particular investment or portion of its
portfolio, to protect against currency fluctuations, as a duration management
technique or to protect against any increase in the price of securities the
Nations Fund anticipates purchasing at a later date. Each Nations Fund intends
to use these transactions as hedges and not as speculative investments and will
not sell interest rate caps or floors where it does not own securities or other
instruments providing the income stream the Nations Fund may be obligated to
pay. Interest rate swaps involve the exchange by a Nations Fund with another
party of their respective commitments to pay or receive interest, e.g., an
exchange of floating rate payments for fixed rate payments with respect to a
notional amount of principal. A currency swap is an agreement to exchange cash
flows on a notional amount of two or more currencies based on the relative value
differential among them and an index swap is an agreement to swap cash flows on
a notional amount based on changes in the values of the reference indices. The
purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling such floor to the extent that a
specified index falls below a predetermined interest rate or amount.
A Nations Fund will usually enter into swaps on a net basis, i.e., the
two payment streams are netted out in a cash settlement on the payment date or
dates specified in the instrument, with the
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Nations Fund receiving or paying, as the case may be, only the net amount of the
two payments. Inasmuch as these swaps, caps and floors are entered into for good
faith hedging purposes, the Adviser and the Nations Funds believe such
obligations do not constitute senior securities under the 1940 Act and,
accordingly, will not treat them as being subject to its borrowing restrictions.
A Nations Fund will not enter into any swap, cap and floor transaction unless,
at the time of entering into such transaction, the unsecured long-term debt of
the counterparty, combined with any credit enhancements, is rated at least "A"
by Standard & Poor's Corporation or Moody's Investors Service, Inc. or has an
equivalent rating from a nationally recognized statistical rating organization
("NRSRO") or is determined to be of equivalent credit quality by the Adviser. If
there is a default by the counterparty, the Nations Fund may have contractual
remedies pursuant to the agreements related to the transaction. The swap market
has grown substantially in recent years with a large number of banks and
investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid. Caps and floors are more recent innovations for which
standardized documentation has not yet been fully developed and, accordingly,
they are less liquid than swaps.
With respect to swaps, a Nations Fund will accrue the net amount of the
excess, if any, of its obligations over its entitlements with respect to each
swap on a daily basis and will segregate an amount of cash or liquid high grade
securities having a value equal to the accrued excess. Caps and floors require
segregation of assets with a value equal to the Nations Fund's net obligation,
if any.
ASSET-BACKED SECURITIES
In General. Certain Nations Funds may invest in asset-backed
securities. Asset-backed securities arise through the grouping by governmental,
government-related, and private organizations of loans, receivables, or other
assets originated by various lenders. Asset-backed securities consist of both
mortgage- and non-mortgage-backed securities. Interests in pools of these assets
may differ from other forms of debt securities, which normally provide for
periodic payment of interest in fixed amounts with principal paid at
maturity or specified call dates. Conversely, asset-backed securities
provide periodic payments which may consist of both interest and principal
payments.
The life of an asset-backed security varies depending upon rate of the
prepayment of the underlying debt instruments. The rate of such prepayments will
be a function of current market interest rates, and other economic and
demographic factors. For example, falling interest rates generally result in
an increase in the rate of prepayments of mortgage loans while rising interest
rates generally decrease the rate of prepayments. An acceleration in prepayments
in response to sharply falling interest rates will shorten the security's
average maturity and limit the potential appreciation in the security's value
relative to a conventional debt security. Consequently, asset-backed
securities may not be as effective in locking in high, long-term yields.
Conversely, in periods of sharply rising rates, prepayments are
generally slow, increasing the security's average life and its potential for
price depreciation.
Mortgage-Backed Securities. Mortgage-backed securities represent an
ownership interest in a pool of mortgage loans.
Mortgage pass-through securities may represent participation interests
in pools of residential mortgage loans originated by U.S. governmental or
private lenders and guaranteed, to
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the extent provided in such securities, by the U.S. Government or one of its
agencies, authorities or instrumentalities. Such securities, which are ownership
interests in the underlying mortgage loans, differ from conventional debt
securities, which provide for periodic payment of interest in fixed amounts
(usually semi-annually) and principal payments at maturity or on specified call
dates. Mortgage pass-through securities provide for monthly payments that are a
"pass-through" of the monthly interest and principal payments (including any
prepayments) made by the individual borrowers on the pooled mortgage loans, net
of any fees paid to the guarantor of such securities and the servicer of the
underlying mortgage loans.
The guaranteed mortgage pass-through securities in which a Nations Fund
may invest may include those issued or guaranteed by GNMA, the Federal National
Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation
("FHLMC"). Such Certificates are mortgage-backed securities which represent a
partial ownership interest in a pool of mortgage loans issued by lenders such as
mortgage bankers, commercial banks and savings and loan associations. Such
mortgage loans may have fixed or adjustable rates of interest.
The average life of a mortgage-backed security is likely to be
substantially less than the original maturity of the mortgage pools underlying
the securities. Prepayments of principal by mortgagors and mortgage foreclosures
will usually result in the return of the greater part of principal invested far
in advance of the maturity of the mortgages in the pool.
The yield which will be earned on mortgage-backed securities may vary
from their coupon rates for the following reasons: (i) Certificates may be
issued at a premium or discount, rather than at par; (ii) Certificates may trade
in the secondary market at a premium or discount after issuance; (iii) interest
is earned and compounded monthly which has the effect of raising the effective
yield earned on the Certificates; and (iv) the actual yield of each Certificate
is affected by the prepayment of mortgages included in the mortgage pool
underlying the Certificates and the rate at which principal so prepaid is
reinvested. In addition, prepayment of mortgages included in the mortgage pool
underlying a GNMA Certificate purchased at a premium may result in a loss to the
Nations Fund.
Mortgage-backed securities issued by private issuers, whether or not
such obligations are subject to guarantees by the private issuer, may entail
greater risk than obligations directly or indirectly guaranteed by the U.S.
Government.
Collateralized mortgage obligations or "CMOs" are debt obligations
collateralized by mortgage loans or mortgage pass-through securities (collateral
collectively hereinafter referred to as "Mortgage Assets"). Multi-class
pass-through securities are interests in a trust composed of Mortgage Assets and
all references herein to CMOs will include multi-class pass-through securities.
Payments of principal of and interest on the Mortgage Assets, and any
reinvestment income thereon, provide the Nations Funds to pay debt service on
the CMOs or make scheduled distribution on the multi-class pass-through
securities.
Moreover, principal prepayments on the Mortgage Assets may cause the
CMOs to be retired substantially earlier than their stated maturities or final
distribution dates, resulting in a loss of all or part of the premium if any has
been paid. Interest is paid or accrues on all classes of the CMOs on a monthly,
quarterly or semiannual basis.
The principal and interest payments on the Mortgage Assets may be
allocated among the
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various classes of CMOs in several ways. Typically, payments of principal,
including any prepayments, on the underlying mortgages are applied to the
classes in the order of their respective stated maturities or final distribution
dates, so that no payment of principal is made on CMOs of a class until all CMOs
of other classes having earlier stated maturities or final distribution dates
have been paid in full.
Stripped mortgage-backed securities ("SMBS") are derivative multi-class
mortgage securities. A Fund will only invest in SMBS that are obligation backed
by the full faith and credit of the U.S. Government. SMBS are usually structured
with two classes that receive different proportions of the interest and
principal distributions from a pool of Mortgage Assets. A Fund will only invest
SMBS whose Mortgage Assets are U.S. Government obligations.
A common type of SMBS will be structured so that one class receives
some of the interest and most of the principal from the Mortgage Assets, while
the other class receives most of the interest and the remainder of the
principal. If the underlying mortgage assets experience greater than anticipated
prepayments of principal, a Nations Fund may fail to fully recoup its initial
investment in these securities. The market value of any class which consists
primarily or entirely of principal payments generally is unusually volatile in
response to changes in interest rates.
The average life of mortgage-backed securities varies with the
maturities of the underlying mortgage instruments. The average life is likely to
be substantially less than the original maturity of the mortgage pools
underlying the securities as the result of mortgage prepayments, mortgage
refinancing, or foreclosures. The rate of mortgage prepayments, and hence the
average life of the certificates, will be a function of the level of interest
rates, general economic conditions, the location and age of the mortgage and
other social and demographic conditions. Such prepayments are passed through to
the registered holder with the regular monthly payments of principal and
interest and have the effect of reducing future payments. Estimated average life
will be determined by the Adviser and used for the purpose of determining the
average weighted maturity and duration of the Nations Funds.
Non-Mortgage Asset-Backed Securities. Non-mortgage asset-backed
securities include interests in pools of receivables, such as motor vehicle
installment purchase obligations and credit card receivables. Such securities
are generally issued as pass-through certificates, which represent undivided
fractional ownership interests in the underlying pools of assets. Such
securities also may be debt instruments, which are also known as collateralized
obligations and are generally issued as the debt of a special purpose entity
organized solely for the purpose of owning such assets and issuing such debt.
Such securities also may include instruments issued by certain trusts,
partnerships or other special purpose issuers, including pass-through
certificates representing participations in, or debt instruments backed by,
the securities and other assets owned by such issuers.
Non-mortgage-backed securities are not issued or guaranteed by the U.S.
Government or its agencies or instrumentalities; however, the payment of
principal and interest on such obligations may be guaranteed up to certain
amounts and for a certain time period by a letter of credit issued by a
financial institution (such as a bank or insurance company) unaffiliated with
the issuers of such securities.
The purchase of non-mortgage-backed securities raises considerations
peculiar to the
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financing of the instruments underlying such securities. For example, most
organizations that issue asset-backed securities relating to motor vehicle
installment purchase obligations perfect their interests in their respective
obligations only by filing a financing statement and by having the servicer of
the obligations, which is usually the originator, take custody thereof. In such
circumstances, if the servicer were to sell the same obligations to another
party, in violation of its duty not to do so, there is a risk that such party
could acquire an interest in the obligations superior to that of the holders of
the asset-backed securities. Also, although most such obligations grant a
security interest in the motor vehicle being financed, in most states the
security interest in a motor vehicle must be noted on the certificate of title
to perfect such security interest against competing claims of other parties. Due
to the larger number of vehicles involved, however, the certificate of title to
each vehicle financed, pursuant to the obligations underlying the asset-backed
securities, usually is not amended to reflect the assignment of the seller's
security interest for the benefit of the holders of the asset-backed securities.
Therefore, there is the possibility that recoveries on repossessed collateral
may not, in some cases, be available to support payments on those securities. In
addition, various state and Federal laws give the motor vehicle owner the right
to assert against the holder of the owner's obligation certain defenses such
owner would have against the seller of the motor vehicle. The assertion of such
defenses could reduce payments on the related asset-backed securities. Insofar
as credit card receivables are concerned, credit card holders are entitled to
the protection of a number of state and federal consumer credit laws, many of
which give such holders the right to set off certain amounts against balances
owed on the credit card, thereby reducing the amounts paid on such receivables.
In addition, unlike most other Asset-backed Securities, credit card receivables
are unsecured obligations of the card holder.
The development of non-mortgage-backed securities is at an early stage
compared to mortgage-backed securities. While the market for Asset-backed
Securities is becoming increasingly liquid the market for mortgage-backed
securities issued by certain private organizations and non-mortgage-backed
securities is not as well developed. As stated above, the Adviser, as adviser
to each Fund, intends to limit its purchases of mortgage-backed securities
issued by certain private organizations and non-mortgage-backed securities
to securities that are readily marketable at the time of purchase.
SPECIAL SITUATIONS
Certain Nations Funds may invest in "special situations." A special
situation arises when, in the opinion of the Adviser, the securities of a
particular company will, within a reasonably estimable period of time, be
accorded market recognition at an appreciated value solely by reason of a
development applicable to that company, and regardless of general business
conditions or movements of the market as a whole. Developments creating special
situations might include, among others: liquidations, reorganizations,
recapitalizations, mergers, material litigation, technical breakthroughs and new
management or management policies. Although large and well known companies may
be involved, special situations more often involve comparatively small or
unseasoned companies. Investments in unseasoned companies and special situations
often involve much greater risk than is inherent in ordinary investment
securities.
EQUITY SWAP CONTRACTS
Certain Nations Funds may invest in Equity Swap contracts. The
counterparty to an Equity Swap Contract will typically be a bank, investment
banking firm or broker/dealer. For example, the counterparty will generally
agree to pay a Nations Fund the amount, if any, by which the notional amount of
the Equity Swap Contract would have increased in value had it been invested in
the stocks comprising the S&P 500 Index in proportion to the composition of the
Index, plus the dividends that would have been received on those stocks. A
Nations Fund will agree to pay to the counterparty a floating rate of interest
(typically the London Inter Bank Offered Rate) on the notional amount of the
Equity Swap Contract plus the amount, if any, by which that notional amount
would have decreased in value had it been invested in such stocks. Therefore,
the return to a Nations Fund on any Equity Swap Contract should be the gain or
loss on the notional amount plus dividends on the stocks comprising the S&P 500
Index less the interest paid by the Nations Fund on the notional amount. A
Nations Fund will only enter into Equity Swap Contracts
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on a net basis, i.e., the two parties' obligations are netted out, with the
Nations Fund paying or receiving, as the case may be, only the net amount of any
payments. Payments under the Equity Swap Contracts may be made at the conclusion
of the contract or periodically during its term.
If there is a default by the counterparty to an Equity Swap Contract, a
Nations Fund will be limited to contractual remedies pursuant to the agreements
related to the transaction. There is no assurance that Equity Swap Contract
counterparties will be able to meet their obligations pursuant to Equity Swap
Contracts or that, in the event of default, a Nations Fund will succeed in
pursuing contractual remedies. A Nations Fund thus assumes the risk that it may
be delayed in or prevented from obtaining payments owed to it pursuant to Equity
Swap Contracts. A Nations Fund will closely monitor the credit of Equity Swap
Contract counterparties in order to minimize this risk.
Each Nations Fund may from time to time enter into the opposite side of
Equity Swap Contracts (i.e., where a Nations Fund is obligated to pay the
increase (net of interest) or receive the decrease (plus interest) on the
contract to reduce the amount of the Nations Fund's equity market exposure
consistent with the Nations Fund's objective. These positions are sometimes
referred to as Reverse Equity Swap Contracts.
Equity Swap Contracts will not be used to leverage a Nations Fund. A
Nations Fund will not enter into any Equity Swap Contract or Reverse Equity Swap
Contract unless, at the time of entering into such transaction, the unsecured
senior debt of the counterparty is rated at least A by Moody's or S&P. Since the
SEC considers Equity Swap Contracts and Reverse Equity Swap Contracts to be
illiquid securities, a Nations Fund will not invest in Equity Swap Contracts or
Reverse Equity Swap Contracts if the total value of such investments together
with that of all other illiquid securities which a Nations Fund owns would
exceed a specified percentage of the Nations Fund's total assets.
The Adviser does not believe that a Nations Fund's obligations under
Equity Swap Contracts or Reverse Equity Swap Contracts are senior securities
and, accordingly, the Nations Fund will not treat them as being subject to its
borrowing restrictions. However, the net amount of the excess, if any, of a
Nations Fund's obligations over its respective entitlements with respect to each
Equity Swap Contract and each Reverse Equity Swap Contract will be accrued on a
daily basis and an amount of cash, U.S. Government securities or other liquid
high quality debt securities having an aggregate market value at least equal to
the accrued excess will be maintained in a segregated account by the Nations
Fund's custodian.
LOWER RATED DEBT SECURITIES
The yields on lower rated debt and comparable unrated fixed-income securities
generally are higher than the yields available on higher-rated securities.
However, investments in lower rated debt and comparable unrated securities
generally involve greater volatility of price and risk of loss of income and
principal, including the probability of default by or bankruptcy of the
issuers of such securities. Lower rated debt and comparable unrated securities
(a) will likely have some quality and protective characteristics that, in the
judgment of the rating organization, are outweighed by large uncertainties or
major risk exposures to adverse conditions and (b) are predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation. Accordingly, it is
possible that these types of factors could, in certain instances, reduce the
value of securities held in a Nation Fund's portfolio, with a commensurate
effect on the value of the Nation Fund's shares.
The market prices of lower rated securities may fluctuate more than higher
rated securities and may decline significantly in periods of general economic
difficulty which may follow periods of rising interest rates. During an
economic downturn or a prolonged period of rising interest rates, the ability
of issuers of lower quality debt to service their payment obligations, meet
projected goals, or obtain additional financing may be impaired.
Since the risk of default is higher for lower rated securities, the Adviser
will try to minimize the risks inherent in investing in lower rated debt
securities by engaging in credit analysis, diversification, and attention to
current developments and trends affecting interest rates and economic
conditions. The Adviser will attempt to identify those issuers of
high-yielding securities whose financial condition is adequate to meet future
obligations, have improved, or are expected to improve in the future.
Unrated securities are not necessarily of lower quality than rated
securities, but they may not be attractive to as many buyers. Each Nations
Fund's policies regarding lower rated debt securities is not fundamental and
may not be changed at any time without shareholder approval.
While the market values of lower rated debt and comparable unrated securities
tend to react less to fluctuations in interest rate levels than the market
values of higher-rated securities, the market values of certain lower rated
debt and comparable unrated securities also tend to be more sensitive to
individual corporate developments and changes in economic conditions than
higher-rated securities. In addition, lower rated debt securities and
comparable unrated securities generally present a higher degree of credit
risk. Issuers of lower rated debt and comparable unrated securities often are
highly leveraged and may not have more traditional methods of financing
available to them so that their ability to service their debt obligations
during an economic downturn or during sustained periods of rising interest
rates may be impaired. The risk of loss due to default by such issuers is
significantly greater because lower rated debt and comparable unrated
securities generally are unsecured and frequently are subordinated to the prior
payment of senior indebtedness. A Nations Fund may incur additional expenses to
the extent that it is required to seek recovery upon a default in the payment
of principal or interest on its portfolio holdings. The existence of limited
markets for lower rated debt and comparable unrated securities may diminish a
Nations Fund's ability to (a) obtain accurate market quotations for purposes
of valuing such securities and calculating its net asset value and (b) sell
the securities at fair value either to meet redemption requests or to respond
to changes in the economy or in financial markets.
Fixed-income securities, including lower rated debt securities and
comparable unrated securities, frequently have call or buy-back features that
permit their issuers to call or repurchase the securities from their holders,
such as a Nations Fund. If an issuer exercises these rights during periods of
declining interest rates, a Nations Fund may have to replace the security with
a lower yielding security, thus resulting in a decreased return to a Nations
Fund.
The market for certain lower rated debt and comparable unrated securities is
relatively new and has not weathered a major economic recession. The effect
that such a recession might have on such securities is not known. Any
such recession, however, could disrupt severely the market for such securities
and adversely affect the value of such securities. Any such economic downturn
also could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon.
REPURCHASE AGREEMENTS
A repurchase agreement involves the purchase of a security by a Nations Fund
and a simultaneous agreement (generally with a bank or broker/dealer) to
repurchase that security from the Nations Fund at a specified price and date
or upon demand. This technique offers a method of earning income on
uninvested cash. A risk associated with repurchase agreements is the failure
of the seller to repurchase the securities as agreed, which may cause a
Nations Fund to suffer a loss if the market value of such securities declines
before they can be liquidated on the open market. Repurchase agreements with a
duration of more than seven days are considered illiquid securities and are
subject to the applicable limit. A Nations Fund may enter into joint
repurchase agreements jointly with other investment portfolios of Nations
Fund. The LifeGoal Funds may engage in repurchase agreement transactions
directly.
REVERSE REPURCHASE AGREEMENTS
Certain Nations Funds may enter reverse repurchase agreements. At the
time a Nations Fund enters into a reverse repurchase agreement, it may establish
a segregated account with its custodian bank in which it will maintain cash,
U.S. Government Securities or other liquid high grade debt obligations equal in
value to its obligations in respect of reverse repurchase agreements. Reverse
repurchase agreements involve the risk that the market value of the securities
the Nations Funds are obligated to repurchase under the agreement may decline
below the repurchase price. In the event the buyer of securities under a reverse
repurchase agreement files for bankruptcy or becomes insolvent, the Nations
Funds' use of proceeds of the agreement may be restricted pending a
determination by the other party, or its trustee or receiver, whether to enforce
the Nations Funds' obligation to repurchase the securities. Reverse repurchase
agreements are speculative techniques
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involving leverage, and are subject to asset coverage requirements if the
Nations Funds do not establish and maintain a segregated account (as described
above). In addition, some or all of the proceeds received by a Nations Fund from
the sale of a portfolio instrument may be applied to the purchase of a
repurchase agreement. To the extent the proceeds are used in this fashion and a
common broker/dealer is the counterparty on both the reverse repurchase
agreement and the repurchase agreement, the arrangement might be recharacterized
as a swap transaction. Under the requirements of the 1940 Act, the Nations Funds
are required to maintain an asset coverage (including the proceeds of the
borrowings) of at least 300% of all borrowings. Depending on market conditions,
the Nations Funds' asset coverage and other factors at the time of a reverse
repurchase, the Nations Funds may not establish a segregated account when the
Adviser believes it is not in the best interests of the Nations Funds to do so.
In this case, such reverse repurchase agreements will be considered borrowings
subject to the asset coverage described above.
SECURITIES LENDING
To increase return on portfolio securities, certain of the Nations
Funds may lend their portfolio securities to broker/dealers and other
institutional investors pursuant to agreements requiring that the loans be
continuously secured by collateral equal at all times in value to at least the
market value of the securities loaned. Collateral for such loans may include
cash, securities of the U.S. Government, its agencies or instrumentalities, an
irrevocable letter of credit issued by (i) a U.S. bank that has total assets
exceeding $1 billion and that is a member of the Federal Deposit Insurance
Corporation, or (ii) a foreign bank that is one of the 75 largest foreign
commercial banks in terms of total assets, or any combination thereof. Such
loans will not be made if, as a result, the aggregate of all outstanding loans
of the Nations Fund involved exceeds 30% of the value of its total assets. There
may be risks of delay in receiving additional collateral or in recovering the
securities loaned or even a loss of rights in the collateral should the borrower
of the securities fail financially. However, loans are made only to borrowers
deemed by the Adviser to be of good standing and when, in its judgment, the
income to be earned from the loan justifies the attendant risks. A Nations Fund
that is engaged in lending its portfolio securities has the right to call each
loan, and obtain the return of securities identical to the transferred
securities upon such termination of the loan, upon notice of not more than five
business days.
SHORT SALES
Certain Nations Funds may from time to time enter into short sales
transactions. A Nations Fund will not make short sales of securities nor
maintain a short position unless at all times when a short position is open,
such Nations Fund owns an equal amount of such securities or securities
convertible into or exchangeable, without payment of any further consideration,
for securities of the same issue as, and equal in amount to, the securities sold
short. This is a technique known as selling short "against the box." Such short
sales will be used by a Nations Fund for the purpose of deferring recognition of
gain or loss for federal income tax purposes.
GUARANTEED INVESTMENT CONTRACTS
Guaranteed investment contracts, investment contracts or funding
agreements (each referred to as a "GIC") are investment instruments issued by
highly rated insurance companies. Pursuant to such contracts, a Nations
Fund makes cash contributions to a deposit fund of the insurance company's
general or separate accounts. The insurance company then credits interest to
the Nations Fund at a guaranteed rate. The insurance company may assess
periodic charges against a GIC for expense and service costs allocable to it,
and the charges will be deducted from the value
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of the deposit fund. The purchase price paid for a GIC generally becomes
part of the general assets of the issuer, and the contract is paid from the
general assets of the issuer.
Certain Nations Funds will only purchase GlCs from issuers which, at
the time of purchase, meet quality and credit standards established by the
Adviser. Generally, GlCs are not assignable or transferable without the
permission of the issuing insurance companies, and an active secondary market in
GlCs does not currently exist. Also, a Nations Fund may not receive the
principal amount of a GIC from the insurance company on seven days' notice or
less, at which point the GIC may be considered to be an illiquid investment.
ILLIQUID SECURITIES
Certain Nations Funds may invest a portion of their net assets in
securities that are considered illiquid because of the absence of a readily
available market or due to legal or contractual restrictions. Certain restricted
securities that are not registered for sale to the general public but that can
be resold to institutional investors may not be considered illiquid, provided
that a dealer or institutional trading market exists.
COMMERCIAL INSTRUMENTS
Commercial Instruments consist of short-term U.S. dollar-denominated
obligations issued by domestic corporations or issued in the U.S. by foreign
corporations and foreign commercial banks. Investments by certain Nations Funds
in commercial paper will consist of issues rated in a manner consistent with
such Nations Fund's investment policies and objective. In addition, the Nations
Funds may acquire unrated commercial paper and corporate bonds that are
determined by the Adviser at the time of purchase to be of comparable quality to
rated instruments that may be acquired by the Nations Funds as previously
described.
REAL ESTATE INVESTMENT TRUSTS
A real estate investment trust ("REIT") is a managed portfolio of real
estate investments which may include office buildings, apartment complexes,
hotels and shopping malls. An Equity REIT holds equity positions in real estate,
and it seeks to provide its shareholders with income from the leasing of its
properties, and with capital gains from any sales of properties. A Mortgage REIT
specializes in lending money to developers of properties, and passes any
interest income it may earn to its shareholders. Certain Nations Funds may
invest in REITs.
REITs may be affected by changes in the value of the underlying
property owned or financed by the REIT, while Mortgage REITs also may be
affected by the quality of credit extended. Both Equity and Mortgage REITs are
dependent upon management skill and may not be diversified. REITs also may be
subject to heavy cash flow dependency, defaults by borrowers, self-liquidation,
and the possibility of failing to qualify for tax-free pass-through of income
under the Internal Revenue Code of 1986, as amended (the "Code").
NET ASSET VALUE
PURCHASES AND REDEMPTIONS
See "How To Buy Shares" and "How To Redeem Shares" in the Prospectuses
for a
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complete description of the manner in which Shares of the various classes of the
LifeGoal Portfolios may be purchased and redeemed.
The LifeGoal Portfolios are available for a variety of
retirement plans, including IRAs, that allow investors to shelter some
of their income from taxes. Investors should contact the LifeGoal
Portfolios or their Selling Agents for details concerning retirement plans.
The right of redemption may be suspended or the date of
payment postponed when (a) trading on the New York Stock Exchange is
restricted, as determined by applicable rules and regulations of
the SEC, (b) the New York Stock Exchange is closed for other than
customary weekend and holiday closings, (c) the SEC has by order
permitted such suspension, or (d) an emergency as determined by
the SEC exists making disposal of portfolio securities or the
valuation of the net assets of a LifeGoal Portfolio of the Company
not reasonably practicable.
NET ASSET VALUE DETERMINATION
Shares of the common stock of each class of shares of each
LifeGoal Portfolio that are offered by the Prospectuses are sold at
their respective net asset value next determined after the receipt of
the purchase order. Shareholders may at any time redeem all or a
portion of their shares at net asset value next determined following
receipt of a redemption order, less any contingent deferred sales charge
applicable to Investor C Shares.
The net asset value per share of each of the LifeGoal
Portfolios is determined at the times and in the manner described in
the Prospectuses.
Portfolio securities of a LifeGoal Portfolio for which market
quotations are not readily available, if any, are valued at fair value
as determined in good faith by or under the supervision of the
Company's officers in a manner specifically authorized by the Board
of Directors of the Company. Short-term obligations having 60 days or
less to maturity are valued at amortized cost, which approximates
market value.
Generally, trading in U.S. Government securities and money
market instruments is substantially completed each day at various
times prior to the close of the New York Stock Exchange. The values of
such securities, if any, used in computing the net asset value of the
shares of a Portfolio are determined as of such times. Occasionally,
events affecting the value of such securities may occur between the
times at which they are determined and the close of the New York Stock
Exchange, which will not be reflected in the computation of net asset
value. If during such periods events occur which materially affect the
value of such securities, the securities will be valued at their
fair market value as determined in good faith by the directors.
EXCHANGES
By use of the exchange privilege, the holder of Investor Shares and/or
Primary Shares authorizes the transfer agent or the shareholder's financial
institution to rely on telephonic instructions from any person representing
himself to be the investor and reasonably believed to be genuine. The transfer
agent's or a financial institution's records of such instructions are binding.
Exchanges are taxable transactions for federal income tax purposes; therefore, a
shareholder will realize a capital gain or loss depending on whether the
Investor Shares and/or Primary Shares
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being exchanged have a value which is more or less than their adjusted cost
basis.
The Company may limit the number of times the exchange privilege may be
exercised by a shareholder within a specified period of time. Also, the exchange
privilege may be terminated or revised at any time by the Company upon such
notice as may be required by applicable regulatory agencies (presently sixty
days for termination or material revision), provided that the exchange privilege
may be terminated or materially revised without notice under certain unusual
circumstances.
The Prospectuses for the Investor Shares and Primary Shares
of each LifeGoal Portfolio describe the exchange privileges
available to holders of such Investor Shares and Primary Shares,
respectively.
DESCRIPTION OF SHARES
DIVIDENDS AND DISTRIBUTIONS
Each LifeGoal Portfolio anticipates distributing
substantially all of its investment company taxable income for each
taxable year. Such distributions will be taxable to shareholders as
ordinary income and treated as dividends for federal income tax
purposes.
A LifeGoal Portfolio may either retain or distribute to
shareholders its net capital gain for each taxable year. Each LifeGoal
Portfolio currently intends to distribute any such amounts. If net
capital gain is distributed and designated as a capital gain dividend,
it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his/her Shares
or whether such gain was recognized by the LifeGoal Portfolio prior
to the date on which the shareholder acquired his/her shares.
Conversely, if a LifeGoal Portfolio elects to retain its net capital
gain, the LifeGoal Portfolio will be taxed thereon (except to the
extent of any available capital loss carryovers) at the applicable
corporate tax rate. If a Portfolio elects to retain its net capital
gain, it is expected that the LifeGoal Portfolio also will elect to
have shareholders treated as if each received a distribution of his or
her pro rata share of such gain, with the result that each shareholder
will be required to report his or her pro rata share of such gain on
his or her tax return as long-term capital gain, will receive a
refundable tax credit for his or her share of tax paid by the LifeGoal
Portfolio on the gain and will increase the basis for his or her Shares
by an amount equal to the deemed distribution less the tax credit.
Dividends and distributions from net investment income,
for each LifeGoal Portfolio are declared and paid quarterly, and
capital gains distributions are declared and paid annually. The
Investor A, Investor C and Primary B Shares of the LifeGoal Portfolios
accrue additional expense, not borne by the Primary A Shares, as a
result of the applicable Rule 12b-1 Plan, Shareholder Servicing Plan
and/or Shareholder Administration Plan. Consequently, a
separate calculation is made to arrive at the net asset value per share
and dividends of each class of shares of the LifeGoal Portfolios.
Net investment income for the LifeGoal Portfolios for
dividend purposes consists of (i) interest accrued and original
issue discount earned on a LifeGoal Portfolio's assets, (ii) less
accrued expenses directly attributable to the LifeGoal Portfolio and
the general expenses of the Company prorated to a LifeGoal Portfolio
on the basis of its relative net assets, plus dividend or
distribution income on a
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LifeGoal Portfolio's assets.
ADDITIONAL INFORMATION CONCERNING TAXES
The following is only a summary of certain
additional tax considerations generally affecting the LifeGoal
Portfolios and their shareholders that are not described in the
Prospectuses. No attempt is made to present a detailed explanation of
the tax treatment of each Portfolio or its shareholders, and the discussion
here and in the Prospectuses is not intended as a substitute for
careful tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
Each LifeGoal Portfolio expects to qualify as a regulated
investment company under Subchapter M of the Code. As a regulated
investment company, each LifeGoal Portfolio is not subject to federal
income tax on the portion of its net investment income (i.e., taxable
interest, dividends and other taxable ordinary income, net of expenses)
and capital gain net income (i.e., the excess of capital gains over
capital losses) that it distributes to shareholders, provided
that it distributes at least 90% of its investment company taxable
income (i.e., net investment income and the excess of net
short-term capital gain over net long-term capital loss) and at
least 90% of its tax-exempt income (net of expenses allocable
thereto) for the taxable year (the "Distribution Requirement"),
and satisfies certain other requirements of the Code that are
described below. Distributions by a LifeGoal Portfolio made during the
taxable year or, under specified circumstances, within twelve months
after the close of the taxable year, will be considered distributions
of income and gains of the taxable year and can therefore satisfy the
Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must (i) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (ii) derive less
than 30% of its gross income from gains from the sale or other disposition of
stock, securities or options thereon held for less than three months.
In addition to satisfying the requirements described
above, each LifeGoal Portfolio must satisfy an asset diversification
test in order to qualify as a regulated investment company. Under this
test, (i) at least 50% of the market value of each LifeGoal Portfolio's
assets is represented by cash, U.S. Government obligations, the
securities of other regulated investment companies, and other
securities limited in respect of any one issuer to an amount not greater
than 5% of the LifeGoal Portfolio's total assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than
25% of the value of the LifeGoal Portfolio's total assets is invested
in the securities of any one issuer (other than U.S. Government of
other issuers, or obligations or the securities of other regulated
investment companies), or of two or more issuers which the
LifeGoal Portfolio controls and which are determined to be engaged in
the same or similar trades or businesses or related trades or
businesses.
If for any taxable year a LifeGoal Portfolio does not qualify as a
regulated investment company, all of its taxable income (including its net
capital gain) will be subject to tax at regular
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corporate rates without any deduction for distributions to shareholders, and
such distributions will be taxable as ordinary dividends to the extent of such
Fund's current and accumulated earnings and profits.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A nondeductible 4% excise tax will be imposed on each
LifeGoal Portfolio
(other than to the extent of the LifeGoal Portfolio's tax-exempt
income) to the
extent it does not meet certain minimum distribution requirements
by the end of
each calendar year. Each LifeGoal Portfolio will either
actually or be deemed to
distribute substantially all of its net investment income and net capital
gains by the end of each calendar year and, thus, expects not to be subject
to the excise tax.
SALE OR REDEMPTION OF SHARES
A shareholder will recognize gain or loss on the sale or redemption of
shares of a LifeGoal Portfolio in an amount equal to the difference between
the proceeds of the sale or redemption and the shareholder's adjusted tax
basis in the shares sold or redeemed. All or a portion of any loss so
recognized may be disallowed if the shareholder purchases other shares of the
LifeGoal Portfolio within 30 days before or after the sale or redemption. In
general, any gain or loss arising from (or treated as arising from) the sale
or redemption of shares of a LifeGoal Portfolio will in most cases be
considered capital in nature and will be long-term capital gain or loss if the
shares were held for longer than one year.
The Company may make payment for redemptions in readily marketable
securities or other property if it is appropriate to do so in light of the
Company's responsibilities under the 1940 Act. Such payments in-kind shall also
result in recognized gain or loss, and most likely be capital in nature, to a
redeeming shareholder on the difference between the fair market value of the
securities received and the shareholder's adjusted tax basis in the LifeGoal
Portfolio shares sold or redeemed.
TAX RATES
As of the printing of this SAI, the maximum individual tax rate
applicable to ordinary income is 39.6% (marginal rates may be higher for some
individuals due to phase out of exemptions and elimination of deductions); the
maximum individual tax rate applicable to net capital gains is 28%; and the
maximum corporate tax rate applicable to ordinary income and net capital gains
is 35% (however, to eliminate the benefit of lower marginal corporate income tax
rates, corporations which have taxable income in excess of $100,000 for a
taxable year will be required to pay an additional amount of income tax of up to
$11,750 and corporations which have taxable income in excess of $15,000,000 for
a taxable year will be required to pay an additional amount of tax of up to
$100,000).
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder"), depends on whether the income from
a LifeGoal Portfolio is "effectively connected" with a U.S. trade or business
carried on by such shareholder. If the income from a LifeGoal Fund is not
effectively connected with a U.S. trade or business carried on by a foreign
shareholder, ordinary
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income dividends will be subject to U.S. withholding tax at the rate of 30% (or
lower applicable treaty rate) upon the gross amount of the dividend.
If the income from a LifeGoal Portfolio is effectively connected with a
U.S. trade or business carried on by a foreign shareholder, then ordinary
income dividends, capital gain dividends and any gains realized upon the sale of
shares of the LifeGoal Portfolio will be subject to U.S. Federal income tax at
the rates applicable to U.S. citizens, U.S. residents, or domestic corporations.
In the case of foreign non-corporate shareholders, a LifeGoal Fund may
be required to withhold U.S. federal income tax at a rate of 31% on
distributions that are otherwise exempt from withholding tax (or taxable at a
reduced treaty rate) unless such shareholders furnish the Fund with proper
notification of their foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisors with
respect to the particular tax consequences to them of an investment in a
LifeGoal Fund, including the applicability of foreign taxes.
TAXATION OF NATIONS FUNDS
Each Nations Fund similarly intends to qualify as a regulated
investment company under Subchapter M of the Code. Accordingly, each Nations
Fund must also meet the requirements set forth above for regulated investment
companies see "Additional Information Concerning Taxes -- Qualification as a
Regulated Investment Company"). In any year that a Nations Fund qualifies as a
regulated investment company and timely distributes all of its taxable and
tax-exempt income, the Nations Fund generally will not pay any federal income
tax or excise tax. Failure of a Nations Fund to qualify could cause a LifeGoal
Fund investing therein to fail to qualify as a regulated investment company.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the regulations issued thereunder as in
effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation for ordinary income dividends,
exempt-interest dividends and capital gain dividends from regulated investment
companies often differ from the rules for U.S. federal income taxation described
above. Distributions of net investment income may be taxable to shareholders as
dividend income under state or local law even though a substantial portion of
such distributions may be derived from interest on U.S. Government Obligations,
which, if realized directly, would be exempt from such taxes. Shareholders are
urged to consult their tax advisors as to the consequences of these and other
state and local tax rules affecting investment in the LifeGoal Portfolios.
DIRECTORS AND OFFICERS OF THE LIFEGOAL PORTOLIOS
The directors and executive officers of the Company and their principal
occupations
28
<PAGE>
during the last five years are set forth below. The address of each, unless
otherwise indicated, is 111 Center Street, Little Rock, Arkansas 72201. Those
Directors who are "interested persons" of the Company (as defined in the 1940
Act) are indicated by an asterisk (*).
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
DURING PAST 5 YEARS
POSITION WITH AND CURRENT
NAME, ADDRESS, AND AGE THE COMPANY DIRECTORSHIPS
<S> <C> <C>
Edmund L. Benson, III, 59 Director Director, President and Treasurer, Saunders
Saunders & Benson, Inc. & Benson, Inc. (Insurance); Trustee,
728 East Main Street Nations Institutional Reserves and Nations
Suite 400 Fund Trust; Director, Nations Fund, Inc.
Richmond, VA 23219 and Nations Fund Portfolios, Inc.
James Ermer, 53 Director Senior Vice President- Finance, CSX
13705 Hickory Nut Point Corporation (transportation and natural
Midlothian, VA 23112 resources); Director, National Mine
Service; Director, Lawyers Title
Corporation; Trustee, Nations Institutional
Reserves and Nations Fund Trust; Director,
Nations Fund, Inc. and Nations Fund
Portfolios, Inc.
William H. Grigg, 63 Director Since April 1994, Chairman and Chief
Duke Power Co. Executive Officer; November 1991 to April
422 South Church Street 1994, Vice Chairman, Duke Power Co.; from
PB04G April 1988 to November 1991, Executive Vice
Charlotte, NC 28242-0001 President Customer Group, Duke Power Co.;
Director, Hatteras Income Securities, Inc.,
Nations Government Income Term Trust 2003,
Inc., Nations Government Income Term Trust 2004,
Inc., Nations Balanced Target Maturity Fund,
Inc., Nations Fund, Inc. and Nations Fund
Portfolios, Inc.; Trustee, Nations Institutional
Reserves and Nations Fund Trust.
Thomas F. Keller, 64 Director R.J. Reynolds Industries Professor of
Fuqua School of Business Business Administration and Dean, Fuqua
Duke University School of Business, Duke University;
Durham, NC 27706 Director, LADD Furniture, Inc.; Director,
Wendy's International Mentor Growth
Fund, and Cambridge
29
<PAGE>
Trust; Director, Hatteras Income
Securities, Inc., Nations
Government Income Term Trust 2003,
Inc., Nations Government Income
Term Trust 2004, Inc., Nations
Balanced Target Maturity Fund,
Inc., Nations Fund, Inc. and
Nations Fund Portfolios, Inc.;
Trustee, Nations Institutional
Reserves and Nations Fund
Trust.
Carl E. Mundy, Jr., 60 Director Commandant, United States Marine Corps,
9308 Ludgate Drive from July 1991 to July 1995; Commanding
Alexandria, VA 23309 General, Marine Forces Atlantic, from June
1990 to June 1991; Director, Nations Fund,
Inc. and Nations Fund Portfolios, Inc.;
Trustee, Nations Institutional Reserves and
Nations Fund Trust.
A. Max Walker, 74* President, Director and Financial consultant; Formerly, President,
4580 Windsor Gate Court Chairman of the Board A. Max Walker, Inc.; Director and Chairman
Atlanta, GA 30342 of the Board, Hatteras Income Securities,
Inc., Nations Government Income
Term Trust 2003, Inc., Nations
Government Income Term Trust 2004,
Inc., Nations Balanced Target
Maturity Fund, Inc., Nations
Fund, Inc. and Nations Fund
Portfolios, Inc.;President and
Chairman of the Board of
Trustees, Nations Institutional
Reserves and Nations Fund
Trust.
Charles B. Walker, 57 Director Since 1989, Director, Executive Vice
Ethyl Corporation President, Chief Financial Officer and
P.O . Box 2189 Treasurer, Ethyl Corporation (chemicals,
330 South Fourth Street plastics, and aluminum manufacturing);
Richmond, VA 23217 since 1994, Vice Chairman, Ethyl
Corporation and Vice Chairman, Chief
Financial Officer and Treasurer, Albemarle
Corporation, Director, Nations Fund, Inc.
and Nations Fund Portfolios, Inc.; Trustee,
Nations Institutional Reserves and Nations
Fund Trust.
Thomas S. Word, Jr., 57* Director Partner, McGuire Woods Battle & Boothe
McGuire, Woods, Battle (law); Director, Vaughan Bassett
30
<PAGE>
& Boothe Furniture Company, Director VB Williams Furniture
One James Center Company, Inc.; Director, Nations Fund, Inc.
Richmond, VA 23219 and Nations Fund Portfolios, Inc.; Trustee,
Nations Institutional Reserves and Nations
Fund Trust.
Richard H. Blank, Jr., 39 Secretary Since 1994, Vice President of Mutual Fund
Stephens Inc. Services, Stephens Inc. 1990 to 1994,
Manager Mutual Fund Services, Stephens Inc.
1983 to 1990, Associate in Corporate
Finance Department, Stephens Inc.;
Secretary, Nations Institutional Reserves,
Nations Fund Trust, Nations Fund, Inc. and
Nations Fund Portfolios, Inc.
Michael W. Nolte, 35 Assistant Secretary Associate, Financial Services
Stephens Inc. Group of Stephens Inc.
Louise P. Newcomb, 43 Assistant Secretary Corporate Syndicate
Stephens Inc. Associate, Stephens Inc.
James E. Banks, 40 Assistant Secretary Since 1993, Attorney,
Stephens Inc. Stephens Inc.; Associate
Corporate Counsel,
Federated Investors; from
1991 to 1993, Staff Attorney,
Securities and Exchange
Commission from 1988 to 1991
Richard H. Rose, 41 Treasurer Since 1994, Vice President, Division
First Data Investor Services Manager, First Data Investor Services
Group, Inc. Group, Inc., since 1988, Senior Vice
One Exchange Place President, The Boston Company Advisors,
Boston, MA 02109 Inc.; Treasurer, Nations Institutional
Reserves, Nations Fund Trust, Nations Fund,
Inc. and Nations Fund Portfolios, Inc.
Joseph C. Viselli, 32 Assistant Treasurer Since 1994, Director, First Data Investor
First Data Investor Services Group, Inc., since 1992, Assistant
Services Group, Inc. Vice President, The Boston Company
One Exchange Place Advisors, Inc., since 1989, Senior
Boston, MA 02109 Accountant, Price Waterhouse LLP
31
<PAGE>
Susan Manter, 42 Assistant Treasurer Since 1996, Vice President, First Data
First Data Investor Services Investor Services Group, Inc., since 1994,
Group Inc. Vice President, Scudder Stevens and Clark,
One Exchange Place Inc., previously Senior Manager, Coopers &
Boston, MA 02109 Lybrand LLP
</TABLE>
Mr. Rose serves as Treasurer to certain other investment companies for
which First Data Investor Services Group, Inc. or its affiliates serve as
sponsor, distributor, administrator and/or investment adviser. Mr. Blank serves
as Secretary and Treasurer, Chief Operating Officer to other investment
companies for which Stephens Inc. serves as administrator.
Each Director of the Company is also a Director of Nations Fund, Inc.
and Nations Fund Portfolios, Inc. and a Trustee of Nations Fund Trust and
Nations Institutional Reserves, each a registered investment company that is
part of the Nations Fund Family. Richard H. Blank, Jr., Richard H. Rose, Joseph
C. Viselli, Susan Manter, Michael W. Nolte, Louise P. Newcomb and James E.
Banks, Jr. are also officers of Nations Fund, Inc., Nations Fund Trust, Nations
Fund Portfolios, Inc. and Nations Institutional Reserves.
As of the date of this SAI, the directors and officers of the Company
as a group owned less than 1% of the outstanding shares of each of the LifeGoal
Portfolios.
The Company has adopted a Code of Ethics which, among other things,
prohibits each access person of the Company from purchasing or selling
securities when such person knows or should have known that, at the time of the
transaction, the security (i) was being considered for purchase or sale by a
LifeGoal Portfolio, or (ii) was being purchased or sold by a LifeGoal
Portfolio. For purposes of the Code of Ethics, an access person means (i) a
Director or officer of the Company, (ii) any employee of the Company (or any
company in a control relationship with the Company) who, in the course of
his/her regular duties, obtains information about, or makes recommendations
with respect to, the purchase or sale of securities by the Company, and (iii)
any natural person in a control relationship with the Company who obtains
information concerning recommendations made to the Company regarding the
purchase or sale of securities. Portfolio managers and other persons who
assist in the investment process are subject to additional restrictions,
including a requirement that they disgorge to the Company any profits realized
on short-term trading (i.e., the purchase/sale or sale/purchase of securities
within any 60-day period). The above restrictions do not apply to purchases
or sales of certain types of securities, including mutual fund shares, money
market instruments and certain U.S. Government securities. To facilitate
enforcement, the Code of Ethics generally requires that the Company's
access persons, other than its "disinterested" Directors, submit reports to
the Company's designated compliance person regarding transactions involving
securities which are eligible for purchase by a Fund.
The Directors and officers of the LifeGoal Portfolios will
receive compensation from the LifeGoal Portfolios as follows: an annual
retainer of $1,000 ($3,000 for the Chairman of the Board), plus $500 per
portfolio, and meeting fees of $1,000 for in-person meetings and $500 for
telephone meetings. The Compensation Table below sets forth their
aggregate compensation in such capacity.
DIRECTORS, TRUSTEES AND OFFICERS OF UNDERLYING NATIONS FUNDS
32
<PAGE>
The directors, trustees and officers of the underlying Nations Funds in
which the LifeGoal Portfolios invest are identical to the persons above-named
under the heading "Directors And Officers of the LifeGoal Portfolios".
NATIONS FUNDS RETIREMENT PLAN
Under the terms of the Nations Funds Retirement Plan for Eligible
Directors (the "Retirement Plan"), each director may be entitled to certain
benefits upon retirement from the Board of Directors. Pursuant to the Retirement
Plan, the normal retirement date is the date on which the eligible director has
attained age 65 and has completed at least five years of continuous service with
one or more of the open-end investment companies (the "Funds") advised
by the Adviser. If a director retires before reaching age 65, no benefits are
payable. Each eligible director is entitled to receive an annual benefit from
the Funds commencing on the first day of the calendar quarter coincident with or
next following his date of retirement equal to 5% of the aggregate director's
fees payable by the Funds during the calendar year in which the director's
retirement occurs multiplied by the number of years of service (not in excess of
ten years of service) completed with respect to any of the Funds. Such benefit
is payable to each eligible director in quarterly installments for a period of
no more than five years. If an eligible director dies after attaining age 65,
the director's surviving spouse (if any) will be entitled to receive 50% of the
benefits that would have been paid (or would have continued to have been paid)
to the director if he had not died. The Retirement Plan is unfunded. The
benefits owed to each director are unsecured and subject to the general
creditors of the Funds. Because no directors are currently eligible to receive
payments under the Plan, no fees are disclosed below.
NATIONS FUNDS DEFERRED COMPENSATION PLAN
Under the terms of the Nations Funds Deferred Compensation Plan for
Eligible Directors (the "Deferred Compensation Plan"), each director may elect,
on an annual basis, to defer all or any portion of the annual board fees
(including the annual retainer and all attendance fees) payable to the director
for that calendar year. An application was submitted to and approved by the SEC
to permit deferring directors to elect to tie the rate of return on fees
deferred pursuant to the Deferred Compensation Plan to one or more of certain
investment portfolios of certain Funds. Distributions from the deferring
directors' deferral accounts will be paid in cash, in generally equal quarterly
installments over a period of five years beginning on the date the deferring
director's retirement benefits commence under the Retirement Plan. The Board of
Directors, in its sole discretion, may accelerate or extend such payments after
a director's termination of service. If a deferring director dies prior to the
commencement of the distribution of amounts in his deferral account, the balance
of the deferral account will be distributed to his designated beneficiary in a
lump sum as soon as practicable after the director's death. If a deferring
director dies after the commencement of such distribution, but prior to the
complete distribution of his deferral account, the balance of the amounts
credited to his deferral account will be distributed to his designated
beneficiary over the remaining period during which such amounts were
distributable to the director. Amounts payable under the Deferred Compensation
Plan are not funded or secured in any way and deferring directors have the
status of unsecured creditors of the Funds from which they are deferring
compensation.
33
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
ESTIMATED TOTAL COMPENSATION
AGGREGATE PENSION OR RETIREMENT ANNUAL BENEFITS FROM REGISTRANT AND
NAME OF PERSON COMPENSATION BENEFITS ACCRUED AS UPON FUND COMPLEX PAID
POSITION (1) FROM REGISTRANT (2) PART OF FUND EXPENSES RETIREMENT TO DIRECTORS (3)(4)
- ---------------- ------------------- --------------------- --------------- ---------------------
<S> <C> <C> <C> <C>
Edmund L. Benson, III $8500 [$19,488] [$21,000] [$57,619]
Director
James Ermer $8500 [$19,488] [$21,000] [$52,750]
Director
William H. Grigg $8500 [$19,488] [$21,000] [$74,897]
Director
Thomas F. Keller $8500 [$19,488] [$21,000] [$77,097]
Director
A. Max Walker $8500 [$19,488] [$25,000] [$83,750]
Chairman of the Board
Charles B. Walker $8500 [$19,488] [$21,000] [$52,250]
Director
Thomas S. Word $6500 [$19,488] [$21,000] [$60,079]
Director
Carl E. Mundy, Jr., $8500 [$0] [$21,000] [$25,875]
Director
</TABLE>
(1) All Directors receive reimbursements for expenses related to their
attendance at meetings of the Board of Directors. Officers of the Company
receive no direct remuneration in such capacity from the Company.
(2) For current fiscal year and includes estimated future payments. Each
Director receives (i) an annual retainer of $1,000 ($3,000 for the Chairman
of the Board) plus $500 for each Fund, plus (ii) a fee of $1,000 for
attendance at each "in-person" meeting of the Board of Directors (or
committee thereof) and $500 for attendance at each other meeting of the
Board of Directors (or Committee thereof).
(3) Messrs. Grigg, Keller and A.M. Walker receive compensation from nine
investment companies, that are deemed to be part of the Nations Fund "fund
complex," as that term is defined under Item 22(a)(1)(v) of Schedule 14A of
the Securities Exchange Act of 1934, as amended. Messrs. Benson, Ermer, C.
Walker, Mundy and Word receive compensation from five investment companies
deemed to be part of the Nations Fund complex.
(4) Total compensation amounts include deferred compensation (including
interest) payable to or accrued for the following Directors: Edmund L.
Benson, III ($28,994.19); William H. Grigg ($54,397.01); Thomas F. Keller
($58,096.19); and Thomas S. Word ($58,078.37).
34
<PAGE>
INVESTMENT ADVISORY, ADMINISTRATION, CUSTODY,
TRANSFER AGENCY, SHAREHOLDER SERVICING AND
DISTRIBUTION AGREEMENTS
THE COMPANY AND ITS COMMON STOCK
The Company is a diversified open-end management investment company
organized as a corporation under the laws of the State of Maryland on July 3,
1996. The Company offers shares of common stock which represent interests in one
of three separate LifeGoal Portfolios. This SAI relates to the following
LifeGoal Portfolios of the Company: LifeGoal Growth Portfolio, LifeGoal
Balanced Growth Portfolio and LifeGoal Income and Growth Portfolio. Each
LifeGoal Portfolio offers the following separate classes of shares: Primary
A Shares, Primary B Shares, Investor A Shares and Investor C Shares. Shares of
each LifeGoal Portfolio of the Company are redeemable at the net
asset value (less,
in the case of Investor C Shares, any applicable contingent deferred sales
charge ("CDSC")) thereof at the option of the holders thereof or in certain
circumstances at the option of the Company. For information concerning the
methods of redemption and the rights of share ownership, consult the
Prospectuses under the captions "How To Buy Shares," "How To Redeem Shares"
and "Organization And History."
As used in this SAI and in the Prospectuses, the term "majority of the
outstanding shares" of the Company, a particular LifeGoal Portfolio or a
particular class of shares of a LifeGoal Portfolio means, respectively, the
vote of the lesser of (i) 67% or more of the shares of the Company, LifeGoal
Portfolio or class (as appropriate) present at a meeting of shareholders, if
the holders of more than 50% of the outstanding shares entitled to vote, are
present or represented by proxy, or (ii) more than 50% of the outstanding shares
of the Company, LifeGoal Portfolio or class.
The Board of Directors may classify or reclassify any unissued shares
of the Company into shares of any class, classes or LifeGoal Portfolio in
addition to those already authorized by setting or changing in any one or
more respects, from time to time, prior to the issuance of such shares,
the preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption, of such shares and, pursuant to such classification or
reclassification to increase or decrease the number of authorized shares of
any LifeGoal Portfolio or class. Any such classification or reclassification
will comply with the provisions of the 1940 Act. Fractional shares shall have
the same rights as full shares to the extent of their proportionate interest.
35
<PAGE>
INVESTMENT ADVISORY ARRANGEMENTS OF THE LIFEGOAL PORTFOLIOS
NBAI serves as investment adviser to the LifeGoal Portfolios pursuant
to an Investment Advisory Agreement. NBAI is a wholly owned subsidiary of
NationsBank, N.A. ("NationsBank"), which in turn is a wholly owned banking
subsidiary of NationsBank Corporation, a bank holding company organized as a
North Carolina corporation. NBAI has its principal offices at One NationsBank
Plaza, Charlotte, North Carolina 28255.
NBAI also serves as investment adviser to Nations Fund, Inc.,
Nations Fund Portfolios, Inc., Nations Fund Trust and Nations Institutional
Reserves, each a registered investment company that is part of the Nations Fund
Family. In addition, NBAI serves as the investment adviser to Hatteras Income
Securities, Inc., Nations Government Income Term Trust 2003, Inc., Nations
Government Income Term Trust 2004, Inc. and Nations Balanced Target Maturity
Fund, Inc., each a closed-end diversified management investment company traded
on the New York Stock Exchange.
The Investment Advisory Agreement was approved by the Company's Board
of Directors at the October 11, 1996 Meeting of the Board of Directors and by
the initial shareholder. It provides that NBAI may delegate its duties to a
sub-adviser. The Investment Advisory Agreement provides that in the absence of
willful misfeasance, bad faith, negligence or reckless disregard of obligations
or duties thereunder on the part of NBAI, or any of its officers,
directors, employees or agents, NBAI shall not be subject to liability to the
Company or to any shareholder of the Company for any act or omission in the
course of, or connected with, rendering services thereunder or for any losses
that may be sustained in the purchase, holding or sale of any security. NBAI
will receive fees for providing advisory services at the annual rate of .25% of
the average daily value of each Portfolio's net assets during the preceding
month. NBAI also has agreed to absorb all other expenses of the LifeGoal
Portfolios (except taxes, brokerage fees and commissions, extraordinary
expenses, and any applicable Rule 12b-1 fees, shareholder servicing fees and/or
shareholder administration fees). NBAI also is compensated for providing
advisory services to the underlying Nations Funds in which the LifeGoal
Portfolios invest. The Investment Advisory Agreement shall become effective with
respect to a LifeGoal Portfolio if and when approved by the Directors of the
Company, and if so approved, shall thereafter continue from year to year,
provided that such continuation of the Agreement is specifically approved at
least annually by (a) (i) the Company's Board of Directors or (ii) the vote of
"a majority of the outstanding voting securities" of a LifeGoal Portfolio (as
defined in Section 2(a)(42) of the 1940 Act), and (b) the affirmative vote of a
majority of the Company's Directors who are not parties to such Agreement or
"interested persons" (as defined in the 1940 Act) of a party to such Agreement
(other than as Directors of the Company), by votes cast in person at a meeting
specifically called for such purpose. The Investment Advisory Agreement will
terminate automatically in the event of its assignment, and is terminable with
respect to a LifeGoal Portfolio at any time without penalty by the Company (by
vote of the Board of Directors or by vote of a majority of the outstanding
voting securities of a LifeGoal Portfolio) or by NBAI on 60 days' written
notice.
TradeStreet Investment Associates, Inc. ("TradeStreet") with principal
offices at One NationsBank Plaza, Charlotte, North Carolina serves as investment
sub-adviser to the LifeGoal Portfolios. TradeStreet is a wholly owned
subsidiary of NationsBank. TradeStreet provides investment management services
to individuals, corporations and institutions.
The Sub-Advisory Agreement was approved by the Company's Board of
Directors on October 11,
36
<PAGE>
1996 and by the initial shareholder. It provides that TradeStreet, subject
to the supervision of NBAI and the Board of Directors of the Company, will be
primarily responsible for managing the assets of each LifeGoal
Portfolio. TradeStreet
will receive fees for providing such services at the annual rate of .05% of the
average daily value of each Portfolio's net assets during the preceding month.
TradeStreet is also compensated for providing sub-advisory services to most
of the underlying Nations Funds in which the LifeGoal Portfolio invest. The
Sub-Advisory Agreement will continue in effect for an initial term of two
years from its effective date and continues in effect from year to year
thereafter only if such continuance is specifically approved at least
annually by the Company's Board of Directors and the affirmative vote of a
majority of the directors who are not parties to the Sub-Advisory Agreement
or "interested persons" of any such party by votes cast in person at a
meeting called for such purpose. The respective LifeGoal Portfolios, NBAI or
TradeStreet may terminate the Sub-Advisory Agreement, on 60 days'
written notice without penalty. The Advisory Agreement terminates
automatically in the event of its "assignment," as defined in the 1940 Act.
Each Adviser has adopted a code of ethics which contain policies on
personal securities transactions by "access persons," including portfolio
managers and investment analysts. These codes comply in all material respects
with the recommendations set forth in the May 9, 1994 Report of the Advisory
Group on Personal Investing of the Investment Company Institute.
INVESTMENT ADVISORY ARRANGEMENTS OF THE UNDERLYING NATIONS FUNDS
Effective January 1, 1996, NBAI, began serving as investment
adviser to the underlying Nations Funds. Prior to January 1, 1996,
NationsBank, through its Investment Management Division, served as investment
adviser to the underlying Nations Funds. NationsBank is a wholly owned
subsidiary of NationsBank Corporation, a bank holding company organized as a
North Carolina corporation. NationsBank and NationsBank Corporation are located
at One NationsBank Plaza, Charlotte, North Carolina 28255. NationsBank is
successor to NationsBank of North Carolina, N.A., which was merged with and into
NationsBank of South Carolina, N.A. effective January 3, 1995.
Since 1874, NationsBank and its predecessors have been managing money
for foundations, universities, corporations, institutions and individuals.
Today, NationsBank and its affiliates manage over $50 billion, including over
$18 billion in Nations Fund assets. It is a company dedicated to a goal of
providing responsible investment management and superior service. NationsBank is
recognized for its sound investment approaches, which place it among the
nation's foremost financial institutions. NationsBank and its affiliated
organizations make available a wide range of financial services to its over 6
million customers through over 1700 banking and investment centers.
NationsBank restructured its Investment Management Group as of
January 1, 1996 by reorganizing the division into two separate, wholly
owned advisory subsidiaries, NBAI and TradeStreet. The restructuring resulted
in the transfer of the Group's investment management and advisory
functions to NBAI and TradeStreet. The investment professionals who formerly
37
<PAGE>
performed investment company management functions as employees of NationsBank
continue to perform such services as employees of NBAI and TradeStreet. The
restructuring did not change the scope and nature of investment advisory
services provided to the LifeGoal Portfolios.
Gartmore Global Partners, with principal offices at One NationsBank
Plaza, Charlotte, North Carolina 28255, serves as investment sub-adviser to
Nations Fund Portfolios, Inc. and the International Equity Fund of Nations Fund,
Inc., pursuant to a sub-advisory agreement. Gartmore Global Partners is a
joint venture structured as a Delaware general partnership between NB Partner
Corp., a wholly owned subsidiary of NationsBank, and Gartmore U.S. Limited, an
indirect wholly owned subsidiary of Gartmore Investment Management plc
("Gartmore plc"), a U.K. company, which is the holding company for a leading
UK-based international fund management group of companies. National
Westminster Bank plc and affiliated entities (collectively, "NatWest") own 100%
of the equity of Gartmore plc.
Pursuant to the terms of certain advisory and sub-advisory agreements,
NBAI and Gartmore Global Partners, subject at all times to the control of the
applicable Boards of Directors and in conformance with the stated policies of
the applicable Nations Fund, select and manage the investments of the Nations
Funds. NBAI obtains and evaluates economic, statistical and financial
information to formulate and implement investment policies for the Nations
Funds. The sub-advisory agreement of these Funds provides that Gartmore Global
Partners shall not be liable to the Company or to its shareholders for any act
or omission by NBAI or Gartmore Global Partners or for any loss sustained by the
Company or by its shareholders except in the case of NBAI's or Gartmore
Global Partners' willful misfeasance, bad faith, gross negligence or reckless
disregard of duty on the part of NBAI or Gartmore Global Partners, as the case
may be.
TradeStreet serves as investment sub-adviser to all of the Funds
except those for which Gartmore Global Partners serves as investment
sub-adviser. The terms and provisions of the sub-advisory agreements are
substantially similar, except with respect to fee levels, to the terms and
provisions of the Sub-Advisory Agreement with the Company.
For the services provided and expenses assumed pursuant to various
Investment Advisory Agreements, NBAI is entitled to receive advisory fees,
computed daily and paid monthly, at the annual rates of: 0.25% of the first $250
million of the average daily net assets of Nations Prime Fund, plus 0.20% of the
average daily net assets of such Fund in excess of $250 million; 0.60% of the
average daily net assets of each of the Nations Short-Intermediate Government
Fund, Nations Short-Term Income Fund, Nations Diversified Income Fund and
Nations Strategic Fixed Income Fund; 0.75% of the average daily net assets of
each of Nations Value Fund, Nations Capital Growth Fund, Nations Emerging Growth
Fund and Nations Disciplined Equity Fund; 0.75% of the first $100 million of the
Nations Equity Income Fund's average daily net assets, plus 0.70% of the Fund's
average daily net assets in excess of $100 million and up to $250 million, plus
0.60% of the Fund's average daily net assets in excess of $250 million; 0.90% of
the average daily net assets of Nations International Equity Fund; 1.10% of the
average daily net assets of Nations Emerging Markets Fund; and 0.90% of the
average daily net assets of Nations Pacific Growth Fund.
For the services provided and expenses assumed pursuant to sub-advisory
agreements, TradeStreet is entitled to receive from NBAI sub-advisory fees
computed daily and paid monthly, at the annual rates of 0.055% of Nations Prime
Fund's average daily net assets; 0.20% of Nations Equity Income Fund's average
daily net assets; 0.25% of Nations Value Fund's Nations Capital Growth Fund's,
38
<PAGE>
Nations Emerging Growth Fund's and Nations Disciplined Equity Fund's average
daily net assets; 0.15% of Nations Short-Intermediate Government Fund's, Nations
Short-Term Income Fund's, Nations Diversified Income Fund's, and Nations
Strategic Fixed Income Fund's average daily net assets.
For services provided and expenses assumed pursuant to a sub-advisory
agreement, Gartmore Global Partners is entitled to receive from NBAI
sub-advisory fees, compute daily and paid monthly at the annual rates of 0.70%
of Nations International Equity Fund's average daily net assets; 0.70% of
Nations Pacific Growth Fund's average daily net assets and 0.54% of Nations
Global Government Income Fund's daily net assets. From time to time,
NationsBank (and/or TradeStreet and/or Gartmore Global Partners) may waive or
reimburse (either voluntarily or pursuant to applicable state limitations)
advisory fees or expenses payable by a Fund.
For the fiscal period from December 1, 1995 to December 31, 1995, after
waivers, Nations Fund Trust paid NationsBank under a prior Investment Advisory
Agreement advisory fees at the indicated rates of the following Nations Funds'
average daily net assets: Nations Value Fund -- 0.75%; Nations Capital Growth
Fund -- 0.75%; Nations Emerging Growth Fund -- 0.75%; Nations Disciplined Equity
Fund -- 0.75%; Nations Short-Intermediate Government Fund -- 0.37%; Nations
Short-Term Income Fund -- 0.27%; Nations Diversified Income Fund -- 0.50%; and
Nations Strategic Fixed Income Fund -- 0.50%
For the fiscal period from June 1, 1995 to December 31, 1995, after
waivers, Nations Fund, Inc. paid NationsBank under a prior Investment Advisory
Agreement advisory fees at the indicated rates of the following Funds' average
daily net assets: Nations Prime Fund -- 0.18%; Nations Equity Income Fund --
0.67% and Nations International Equity Fund -- 0.22%.
For the fiscal period from June 30, 1995 to December 31, 1995, after
waivers, Nations Portfolios paid NationsBank under a prior to Investment
Advisory Agreement advisory fees at the indicted rates of the following Funds'
average daily net assets: Nations Emerging Markets Fund -- 0.25% and Nations
Pacific Growth Fund -- 0.20%.
For the fiscal period from January 1, 1996 to March 31, 1996, after
waivers, Nations Fund Trust paid NBAI under the current Investment Advisory
Agreement advisory fees at the indicates rates of the following Funds' average
daily net assets: Nations Value Fund -- 0.75%; Nations Capital Growth Fund --
0.75%; Nations Emerging Growth Fund -- 0.75%; Nations Disciplined Equity Fund --
0.75%; Nations Short-Intermediate Government Fund -- 0.37%; Nations Short-Term
Income Fund -- 0.27%; Nations Diversified Income Fund -- 0.50%; and Nations
Strategic Fixed Income Fund -- 0.50%.
For the fiscal period from January 1, 1996 to March 31, 1996, after
waivers, Nations Fund, Inc. paid NBAI under the current Investment Advisory
Agreement advisory fees at the indicated rates of the following Funds' average
daily net assets: Nations Prime Fund -- 0.18%; Nations Equity Income Fund --
0.67% and Nations International Equity Fund -- 0.22%.
For the fiscal period from January 1, 1996 to March 31, 1996, after
waivers, Nations Portfolios paid NBAI under the current Investment Advisory
Agreement advisory fees at the indicated rates of the following Funds' average
daily net assets: Nations Emerging Markets Fund
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- -- 0.25% and Nations Pacific Growth Fund -- 0.20%.
For the fiscal period from January 1, 1996 to March 31, 1996, after
waivers, NBAI paid TradeStreet under the current Sub-Advisory Agreement
sub-advisory fees at the indicated rates of the following Funds' average daily
net assets: Nations Value Fund -- 0.25%; Nations Capital Growth Fund -- 0.25%;
Nations Emerging Growth Fund -- 0.25%; Nations Short-Intermediate Government
Fund -- 0.15%; Nations Diversified Income Fund -- 0.15%; Nations Strategic Fixed
Income Fund -- 0.15%; Nations Prime Fund -- 0.055%; and Nations Equity Income
Fund -- .20%.
For the fiscal period from June 1, 1995 to March 31, 1996, after
waivers, NBAI or its predecessor NationsBank paid Gartmore Global Partners or
its predecessor sub-advisory fees at the rate of 0.67% of the average daily net
assets of Nations International Equity Fund.
For the fiscal period from January 1, 1996 to March 31, 1996, after
waivers, NBAI paid Gartmore Global Partners or its predecessors sub-advisory
fees at the indicated rates of the following Funds average daily net assets:
Nations Emerging Markets Fund -- 0.85% and Nations Pacific Growth Fund -- 0.70%.
Martha L. Sherman is a Senior Product Manager, Money Market Management
for TradeStreet and is Senior Portfolio Manager for Nations Prime Fund. She has
been Portfolio Manager for Nations Prime Fund since 1988. Prior to assuming
her position with TradeStreet, she was Vice President and Senior Portfolio
Manager for the Investment Management Group at NationsBank. Ms. Sherman has
worked in the investment community since 1981. Her past experience includes
investment research for William Lowry & Associates. Ms. Sherman received a B.S.
in Business Administration from the University of Texas at Dallas.
Sharon M. Herrmann, CFA, is a Director of Equity Management for
TradeStreet and Senior Portfolio Manager for Nations Value Fund. Ms. Herrmann
has been Portfolio Manager for Nations Value Fund since 1989. Prior to assuming
her position with TradeStreet, she was Senior Vice President and Portfolio
Manager for the Investment Management Group at NationsBank. Ms. Herrmann has
worked for the Investment Management Group at NationsBank since 1981 where her
responsibilities included fund management and institutional portfolio
management. She attended Virginia Wesleyan College. Ms. Herrmann holds the
Chartered Financial Analyst designation and is a member of the Association for
Investment Management and Research as well as the North Carolina Society of
Financial Analysts, Inc.
Eric S. Williams, CFA, is a Senior Product Manager, Equity Management
for TradeStreet and Senior Portfolio Manager for Nations Equity Income Fund. Mr
Williams has been Portfolio Manager for Nations Equity Income Fund since 1991.
Prior to assuming his position with TradeStreet, he was Senior Vice President
and Senior Portfolio Manager for the Investment Management Group at
NationsBank. He has worked in the investment community since 1980. His past
experience includes fund analysis and portfolio management for National Bank
of Detroit. Mr. Williams received a B.S. in Accounting from East Carolina
University, Summa Cum Laude and an M.B.A. from Indiana University. He holds
the Chartered Financial Analyst designation, is on the Advisory Board of
Indiana University's Investment Management Academy, and is a member of the
Association for Investment Management and Research as well as the North
Carolina Society of Financial Analysts, Inc.
Stephen Watson has been Principal Portfolio Manager for Nations
International Equity Fund and has been the Portfolio Manager since February,
1995. He joined the Gartmore Group as a Global Fund Manager in 1993
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and currently holds the position of Head of the International and Global Team.
Previously, Mr. Watson was a director and global fund manager with James Capel
Fund Managers, London, as well as Client Services Manager for international
clients. From 1980 to 1987 he was associated with Capel-Cure Myers in their
Portfolio Management Division. He began his career in 1976 when he joined
the investment division at Samuel Montagu. Mr. Watson is currently a member
of the Securities Institute.
Philip Ehrmann is Principal Portfolio Manager for Nations Emerging
Markets Fund and is the head of the Gartmore Emerging Markets Team. He has been
Portfolio Manager for the Fund since 1995. Prior to joining Gartmore in 1995,
Mr. Ehrmann was the Director of Emerging Markets for Invesco in London. He
began his career in 1981 as an institutional stockbroker with Rowe & Pitmann
Inc. and also spent a brief period with Prudential Bache Securities as an
institutional salesman before joining Invesco in 1984. Mr. Ehrmann graduated
from the London School of Economics with a degree in Economics, Industry and
Trade.
Seok Teoh is Principal Portfolio Manager of the Nations Pacific Growth
Fund and has been the Portfolio Manager since the Fund's inception. She has
been associated with Gartmore since 1990 as the London based manager on its
Far East Team. Previously, Ms. Teoh managed Far East equities for Rothschild
Asset Management in Tokyo and in Singapore. She was also responsible for
Singaporean and Malaysian equity sales at Overseas Union Bank in Singapore. Ms.
Teoh, who is a native of Singapore, is fluent in Mandarin and Cantonese and
received an Economics degree from the University of Durham.
Philip J. Sanders, CFA, is a Senior Product Manager, Equity Management
for TradeStreet and Senior Portfolio Manager for Nations Capital Growth Fund.
Mr. Sanders has been Portfolio Manager for Nations Capital Growth Fund since
1995. Prior to assuming his position with TradeStreet, he was Senior Vice
President and Senior Portfolio Manager for the Investment Management Group at
NationsBank. Mr. Sanders has worked in the financial investment community
since 1981. His past experience includes portfolio management, equity
research and financial analysis for the Investment Management Group at
NationsBank and Duke Power Company. Mr. Sanders received a B.A. in Economics
from the University of Michigan and an M.B.A. from the University of North
Carolina at Charlotte. He holds the Chartered Financial Analyst designation and
is a member of the Association for Investment Management and Research as well
as the North Carolina Society of Financial Analysts, Inc.
Edward E. (Jack) Smiley, Jr., CFA, is a Senior Product Manager, Equity
Management for TradeStreet and Senior Portfolio Manager for Nations Emerging
Growth Fund. Mr. Smiley has been Portfolio Manager for Nations Emerging Growth
Fund since 1992. Prior to assuming his position with TradeStreet, he was Senior
Vice President and Senior Portfolio Manager for the Investment Management
Group at NationsBank. He has worked in the investment community since 1968.
His past experience includes management consulting and portfolio
management for Interfirst Investment Management, Merrill Lynch and Dean
Witter. Mr. Smiley received a B.B.A. in Management from Southern Methodist
University. He holds the Chartered Financial Analyst designation and is
a member of the Association for Investment Management and Research as well as
the Dallas Association of Investment Analysts.
Jeffery C. Moser, CFA, is a Senior Product Manager, Equity Management
for TradeStreet
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and Senior Portfolio Manager for Nations Disciplined Equity Fund. Mr. Moser has
been Portfolio Manager for Nations Disciplined Equity Fund since 1995.
Prior to assuming his position with TradeStreet, he was Senior Vice President
and Senior Portfolio Manager for the Investment Management Group at
NationsBank. Mr. Moser has worked for the Investment Management Group at
NationsBank since 1983 where his responsibilities included institutional
portfolio management and equity analysis. Mr. Moser graduated Phi Beta Kappa
with a B.S. in Mathematics from Wake Forest University. He holds the Chartered
Financial Analyst designation and is a member of the Association for
Investment Management and Research as well as the North Carolina Society of
Financial Analysts, Inc.
Greg W. Golden is a Structured Products Manager, Equity Management for
TradeStreet and is Portfolio Manager for Nations Equity Index Fund. He
has been Portfolio Manager for Nations Equity Index Fund since 1993. Prior
to assuming his position with TradeStreet, he was Vice President and
Structured Products Manager for the Investment Management Group at
NationsBank. He has worked in the investment community since 1990. His past
experience includes portfolio management, derivatives management and
quantitative analysis for the Investment Management Group at NationsBank
and Sovran Bank of Tennessee. Mr. Golden received a B.B.A. in Finance
from Belmont University. He is a Chartered Financial Analyst candidate
and a member of the Association for Investment Management and Research as
well as the North Carolina Society of Financial Analysts, Inc.
Gregory H. Cobb is a Senior Product Manager, Fixed Income Management
for TradeStreet and Senior Portfolio Manager for Nations Strategic Fixed Income
Fund. Mr. Cobb has been Portfolio Manager for Nations Strategic Fixed Income
Fund since 1995. Prior to assuming his position with TradeStreet, he was Vice
President and Senior Portfolio Manager for the Investment Management Group at
NationsBank. Mr. Cobb has worked in the investment community since 1987.
His past experience includes portfolio management of intermediate duration
and insurance products for Trust Company Bank and Barnett Bank Trust Company
Inc. Mr. Cobb received a B.A. in Economics from the University of North
Carolina at Chapel Hill.
Mark S. Ahnrud, CFA, is a Director of Fixed Income Management for
TradeStreet and the Senior Portfolio Manager for Nations Diversified Income
Fund. Mr. Ahnrud has been the Portfolio Manager for the Nations Diversified
Income Fund since 1992. Prior to assuming his position with TradeStreet, he
was Senior Vice President and Senior Portfolio Manager for the Investment
Management Group at NationsBank. Mr. Ahnrud has worked for the Investment
Management Group at NationsBank since 1985 where his responsibilities
initially included institutional investment management sales and later involved
high yield credit analysis. Mr. Ahnrud received a dual B.S. in Finance and
Investments from Babson College and an M.B.A. from Duke University, Fuqua
School of Business. He holds the Chartered Financial Analyst designation
and is a member of the Association for Investment Management and Research as
well as the North Carolina Society of Financial Analysts, Inc.
John S. Swaim is a Senior Product Manager, Fixed Income Management for
TradeStreet and Senior Portfolio Manager for Nations Short-Intermediate
Government Fund. Mr. Swaim has been Portfolio Manager for the Fund since 1995.
Prior to assuming his position with TradeStreet, he was Vice President and
Senior Portfolio Manager for the Investment Management Group at NationsBank.
Mr. Swaim has worked in the investment community since 1986. His past
experience includes derivative products manager for the NationsBank Texas
Corporate Investment Division portfolio. Mr. Swaim received a B.S. from
University of North Texas and an M.B.A. from University of Texas at Arlington.
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David M. Hetherington, CFA, is Managing Director of Fixed Income
Management for TradeStreet. Mr. Hetherington is responsible for overseeing all
fixed income product management and is Senior Portfolio Manager for Nations
Short-Term Income Fund. Mr. Hetherington has been Portfolio Manager for Nations
Short-Term Income Fund since 1995. Previously he was Senior Vice President and
Director of Fixed Income for the Investment Management Group at NationsBank. Mr.
Hetherington has worked in the investment community since 1975. His past
experience includes working as a portfolio manager, a trust investment officer
and a securities analyst for First Citizens Bank and Deposit Guarantee as well
as working as an Economist for the U.S. Department of Labor in the Bureau of
Labor Statistics. Mr. Hetherington received a B.A. in Economics from Duke
University. He holds the Chartered Financial Analyst designation and is a member
of the Association for Investment Management and Research.
Mark Rimmer is the principal portfolio manager of the Nations Global
Government Income Fund and has been an International Fixed Income Manager with
the Gartmore Group since 1990. He joined Gulf International Bank in 1986 on the
trading desk, and subsequently joined their Investment Management Group in 1988,
managing multi-currency funds for institutional clients in the Gulf region.
Prior to that he was associated with Sumitomo Finance International as a senior
trader. Mr. Rimmer graduated from Cambridge University in 1984 with an honors
degree in Economics. Mr. Rimmer also is a member of the Institute of Investment
Management and Research.
ADMINISTRATOR AND CO-ADMINISTRATOR
The Company has retained Stephens Inc. ("Administrator") as the
administrator and First Data Investors Services Group, Inc. (the
"Co-Administrator") as the co-administrator of the LifeGoal Portfolios.
The Administrator and Co-Administrator serve under an administration
agreement ("Administration Agreement") and co-administration agreement
("Co-Administration Agreement"), respectively, each of which was approved by the
Board of Directors on July 10, 1996. The Administrator receives, as compensation
for its services rendered under the Administration Agreement and as agent for
the Co-Administrator for the services it provides under the Co-Administration
Agreement, an administrative fee of $10,000 per year per LifeGoal Portfolio,
which will be absorbed by NBAI.
Pursuant to the Administration Agreement, the Administrator has agreed
to, among other things, (i) maintain office facilities for the LifeGoal
Portfolios, (ii) furnish statistical and research data, data processing,
clerical, and internal executive and administrative services to the Company,
(iii) furnish corporate secretarial services to the Company, including
coordinating the preparation and distribution of materials for Board of
Directors meetings, (iv) coordinate the provision of legal advice to the
Company with respect to regulatory matters, (v) coordinate the preparation
of reports to the Company's shareholders and the SEC, including annual and
semi-annual reports, (vi) coordinate the provision of services to the Company
by the Co-Administrator, the Transfer Agents and the Custodians, and (vii)
generally assist in all aspects of the Company's operations. Additionally,
the Administrator is authorized to receive, as agent for the
Co-Administrator, the fees payable to the Co-Administrator by the
Company for its services rendered under the Co-Administration
Agreement. The Administrator bears all expenses incurred in connection with
the performance of its services.
Pursuant to the Co-Administration Agreement, the Co-Administrator has
agreed to, among other things, (i) provide accounting and bookkeeping services
for the LifeGoal Portfolios, (ii) compute each Portfolio's net asset
value and net
income, (iii) accumulate information required for the Company's reports to
shareholders and the SEC, (iv) prepare and file the Company's Federal and state
tax returns, (v) perform monthly compliance testing for the Company, and
(vi) prepare and furnish the Company monthly broker security transaction
summaries and transaction listings and performance information. The
Co-Administrator bears all expenses incurred in connection with the performance
of its services.
The Administration Agreement and the Co-Administration Agreement may be
terminated
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by a vote of a majority of the Board of Directors, or by the Administrator or
Co-Administrator, respectively, on 60 days' written notice without penalty. The
Administration Agreement and Co-Administration Agreement are not assignable
without the written consent of the non-assigning party. Furthermore, the
Administration Agreement and the Co-Administration Agreement provide that the
Administrator and Co-Administrator, respectively, shall not be liable to the
LifeGoal Portfolios or to their shareholders except in the case of the
Administrator's or Co-Administrator's respective willful misfeasance, bad faith,
gross negligence or reckless disregard of duty.
As discussed under the caption "Expenses," the Administrator and
Co-Administrator will be required to reduce their fee from the Company, in
direct proportion to the fees payable to the Administrator and Co-Administrator
by the Company, if the expenses of the Company exceed the applicable expense
limitation of any state in which the LifeGoal Portfolios' shares are
registered or qualified for sale.
DISTRIBUTOR
Stephens Inc. (the "Distributor") serves as the principal underwriter
and distributor of the shares of the LifeGoal Portfolios.
At a meeting held on July 10, 1996, the Board of Directors selected
Stephens Inc. as Distributor, and approved a distribution agreement
("Distribution Agreement") with the Distributor. Pursuant to the Distribution
Agreement, the Distributor, as agent, sells shares of the LifeGoal Portfolios
on a continuous basis and transmits purchase and redemption orders that its
receives to the Company or the Transfer Agent (as defined under the caption
"Transfer Agents and Custodian"). Additionally, the Distributor has agreed
to use appropriate efforts to solicit orders for the sale of shares and to
undertake such advertising and promotion as it believes appropriate in
connection with such solicitation. Pursuant to the Distribution Agreement, the
Distributor, at its own expense, finances those activities which are
primarily intended to result in the sale of shares of the LifeGoal Portfolios,
including, but not limited to, advertising, compensation of underwriters,
dealers and sales personnel, the printing of prospectuses to other than existing
shareholders, and the printing and mailing of sales literature. The
Distributor, however, may be reimbursed for all or a portion of such expenses to
the extent permitted by a distribution plan adopted by the Company pursuant to
Rule 12b-1 under the 1940 Act.
The Distribution Agreement will continue year to year as long as such
continuance is approved at least annually by (i) the Board of Directors or a
vote of the majority (as defined in the 1940 Act) of the outstanding voting
securities of a Portfolio and (ii) a majority of the directors who are not
parties to the Distribution Agreement or "interested persons" of any such
party by a vote cast in person at a meeting called for such purpose. The
Distribution Agreement is not assignable and is terminable with respect to a
Portfolio, without penalty, on 60 days' notice by the Board of Directors, the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of such Portfolio, or by the Distributor.
DISTRIBUTION PLANS AND SHAREHOLDER SERVICING ARRANGEMENTS FOR INVESTOR SHARES
Investor A Shares
The Company has adopted a Shareholder Servicing and Distribution Plan
(the "Investor A Plan") pursuant to Rule 12b-1 under the 1940 Act with respect
to each Fund's Investor A Shares.
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The Investor A Plan provides that each Portfolio may pay the Distributor or
banks, broker/dealers or other financial institutions that offer shares of the
Fund and that have entered into a Sales Support Agreement with the Distributor
("Selling Agents") or a Shareholder Servicing Agreement with the Company
("Servicing Agents"), up to 0.25% (on an annualized basis) of the average
daily net asset value of such Fund.
Payments under the Investor A Plan may be made to the Distributor for
reimbursements of distribution-related expenses actually incurred by the
Distributor, including, but not limited to, expenses of organizing and
conducting sales seminars, printing of prospectuses and statements of additional
information (and supplements thereto) and reports for other than existing
shareholders, preparation and distribution of advertising material and sales
literature and costs of administering the Investor A Plan, or to Servicing
Agents that have entered into a Shareholder Servicing Agreement with the Company
for providing shareholder support services to their customers ("Customers")
which hold of record or beneficially Investor A Shares of a Fund. Such
shareholder support services provided by Servicing Agents to holders of Investor
A Shares of the LifeGoal Portfolios may include (i) aggregating and
processing purchase and redemption requests for Investor A Shares from their
Customers and transmitting promptly net purchase and redemption orders to
the Company's distributor or transfer agent; (ii) providing their Customers
with a service that invests the assets of their accounts in Investor A
Shares pursuant to specific or pre-authorized instructions; (iii)
processing dividend and distribution payments from the Company on behalf
of their Customers; (iv) providing information periodically to their Customers
showing their positions in Investor A Shares; (v) arranging for bank wires;
(vi) responding to their Customers' inquiries concerning their investment
in Investor A Shares; (vii) providing subaccounting with respect to Investor A
Shares beneficially owned by their Customers or the information necessary
for subaccounting; (viii) if required by law, forwarding shareholder
communications from the Company (such as proxies, shareholder reports, annual
and semi-annual financial statements and dividend, distribution and tax
notices) to their Customers; (ix) forwarding to their Customers proxy
statements and proxies containing any proposals regarding the Shareholder
Servicing Agreement; (x) providing general shareholder liaison services; and
(xi) providing such other similar services as the Company may reasonably
request to the extent the Selling Agent is permitted to do so under applicable
statutes, rules or regulations.
Expenses incurred by the Distributor pursuant to the Investor A Plan in
any given year may exceed the sum of the fees received under the Investor A
Plan. Any such excess may be recovered by the Distributor in future years so
long as the Investor A Plan is in effect. If the Investor A Plan were terminated
or not continued, a Fund would not be contractually obligated to pay the
Distributor for any expenses not previously reimbursed by the Fund.
Investor C Shares
The Directors of the Company have approved a Distribution Plan in
accordance with Rule 12b-1 under the 1940 Act for the Investor C Shares of the
LifeGoal Portfolios (the "Investor C Plan"). Pursuant to the Investor C Plan,
each Portfolio may pay the Distributor for certain expenses that are
incurred in connection with the distribution of shares. Payments under the
Investor C Plan will be calculated daily and paid monthly at a rate set from
time to time by the Board of Directors provided that the annual rate may not
exceed 0.75% of the average daily net asset value of Investor C Shares of a
Portfolio. Payments to the Distributor pursuant to the Investor C Plan will
be used (i) to compensate Selling Agents for providing sales support
assistance relating to Investor C Shares, (ii) for promotional activities
intended to result in the sale of Investor C Shares such as to pay for the
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preparation, printing and distribution of prospectuses to other than current
shareholders, and (iii) to compensate Selling Agents for providing sales support
services with respect to their Customers who are, from time to time, beneficial
and record holders of Investor C Shares. Currently, substantially all fees paid
pursuant to the Investor C Plan are paid to compensate Selling Agents for
providing the services described in (i) and (iii) above, with any remaining
amounts being used by the Distributor to partially defray other expenses
incurred by the Distributor in distributing Investor C Shares. Fees received by
the Distributor pursuant to the Investor C Plan will not be used to pay any
interest expenses, carrying charges or other financing costs (except to the
extent permitted by the SEC) and will not be used to pay any general and
administrative expenses of the Distributor.
Pursuant to the Investor C Plan, the Distributor may enter into Sales
Support Agreements with Selling Agents for providing sales support services to
their Customers who are the record or beneficial owners of Investor C Shares of
the LifeGoal Portfolios. Such Selling Agents will be compensated at the annual
rate of up to 0.75% of the average daily net asset value of the Investor C
Shares of the LifeGoal Portfolios held of record or beneficially by such
Customers. The sales support services provided by Selling Agents may include
providing distribution assistance and promotional activities intended to
result in the sales of shares such as paying for the preparation, printing and
distribution of prospectuses to other than current shareholders.
Fees paid pursuant to the Investor C Plan are accrued daily and paid
monthly, and are charged as expenses of the relevant shares of a Fund as
accrued. Expenses incurred by the Distributor pursuant to the Investor C Plan in
any given year may exceed the sum of the fees received under the Investor C Plan
and payments received pursuant to contingent deferred sales charges. Any such
excess may be recovered by the Distributor in future years so long as the
Investor C Plan is in effect. If the Investor C Plan were terminated or not
continued, a Fund would not be contractually obligated to pay the Distributor
for any expenses not previously reimbursed by the Fund or recovered through
contingent deferred sales charges.
In addition, the Directors have approved a Shareholder Servicing Plan
("Servicing Plan") with respect to the Investor C Shares of the LifeGoal
Portfolios (the "Investor C Servicing Plan"). Pursuant to the Investor C
Servicing Plan, each Fund may pay banks, broker/dealers or other financial
institutions that have entered into a Shareholder Servicing Agreement
with Nations Fund ("Servicing Agents") for certain expenses that are
incurred by the Servicing Agents in connection with shareholder support
services that are provided by the Servicing Agents. Payments under the
Investor C Servicing Plan will be calculated daily and paid monthly at a
rate set from time to time by the Board of Directors, provided that the annual
rate may not exceed 0.25% of the average daily net asset value of the LifeGoal
Portfolios' Investor C Shares. The shareholder services provided by the
Servicing Agents may include (i) aggregating and processing purchase and
redemption requests for such Investor C Shares from Customers and
transmitting promptly net purchase and redemption orders to the Company's
distributor or transfer agent; (ii) providing Customers with a service that
invests the assets of their accounts in such Investor C Shares pursuant to
specific or pre-authorized instructions; (iii) processing dividend and
distribution payments from the Company on behalf of Customers; (iv) providing
information periodically to Customers showing their positions in such Investor C
Shares; (v) arranging for bank wires; (vi) responding to Customers' inquiries
concerning their investment in such Investor C Shares; (vii) providing
subaccounting with respect to such Investor C Shares beneficially owned by
Customers or providing the information necessary for subaccounting; (viii) if
required by law, forwarding shareholder communications from the Company (such as
proxies, shareholder reports, annual and semi-annual financial
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statements and dividend, distribution and tax notices) to Customers; (ix)
forwarding to Customers proxy statements and proxies containing any proposals
regarding the Shareholder Servicing Agreement; (x) providing general shareholder
liaison services; and (xi) providing such other similar services as the Company
may reasonably request to the extent the Servicing Agent is permitted to do so
under applicable statutes, rules or regulations.
Information Applicable to Investor A and Investor C Shares
The Investor A Plan, the Investor C Plan and the Investor C Servicing
Plan, (each a "Plan" and collectively the "Plans") may only be used for the
purposes specified above and as stated in each such Plan. Compensation payable
to Selling Agents or Servicing Agents for shareholder support services under the
Plans is subject to, among other things, the National Association of Securities
Dealers, Inc.'s ("NASD") Rules of Fair Practice governing receipt by NASD
members of shareholder servicing plan fees from registered investment companies
(the "NASD Servicing Plan Rule"), which became effective on July 7, 1993. Such
compensation shall only be paid for services determined to be permissible under
the NASD Servicing Plan Rule.
Each Plan requires the officers of the Company or the Distributor to
provide the Board of Directors at least quarterly with a written report of the
amounts expended pursuant to the Plan and the purposes for which such
expenditures were made. The Board of Directors reviews these reports in
connection with their decisions with respect to the Plans.
As required by Rule 12b-1 under the 1940 Act, each Plan was approved by
the Board of Directors, including a majority of the directors who are not
"interested persons" (as defined in the 1940 Act) of the Company and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan ("Qualified Directors") on July 10, 1996. The
Plans continue in effect as long as such continuance is specifically approved at
least annually by the Board of Directors, including a majority of the Qualified
Directors.
In approving the Plans in accordance with the requirements of Rule
12b-1, the directors considered various factors and determined that there is a
reasonable likelihood that each Plan will benefit the respective Investor A or
Investor C Shares and the holders of such shares. The Plans have been
approved by the initial shareholders.
Each Plan may be terminated with respect to its shares by vote of a
majority of the Qualified Directors or by vote of a majority of holders of its
outstanding voting securities. Any change in a Plan that would increase
materially the distribution expenses paid by the Investor A or Investor C Shares
requires shareholder approval; otherwise, each Plan may be amended by the
directors, including a majority of the Qualified Directors, by vote cast in
person at a meeting called for the purpose of voting upon such amendment. The
Investor C Servicing Plan may be terminated by a vote of a majority of the
Qualified Directors. As long as a Plan is in effect, the selection or nomination
of the Qualified Directors is committed to the discretion of the Qualified
Directors.
Conflict of interest restrictions may apply to the receipt by Selling,
and/or Servicing Agents of compensation from Nations Fund in connection with the
investment of fiduciary assets in Investor Shares. Selling and/or Servicing
Agents, including banks regulated by the Comptroller of the Currency, the
Federal Reserve Board, or the Federal Deposit Insurance Corporation, and
investment advisers and other money maneuvers subject to the jurisdiction of the
SEC, the Department of Labor, or state securities commissions, are urged to
consult their legal advisers
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before investing such assets in Investor Shares.
SHAREHOLDER ADMINISTRATION PLAN (PRIMARY B SHARES)
As stated in the Prospectus describing the Primary B Shares, the Company
has a separate Shareholder Administration Plan (the "Administration Plan") with
respect to such shares. Pursuant to the Administration Plan, the Company may
enter into agreements ("Administration Agreements") with broker/dealers, banks
and other financial institutions that are dealers of record or holders of record
or which have a servicing relationship with the beneficial owners of Primary B
Shares ("Servicing Agents"). The Administration Plan provides that pursuant to
the Administration Agreements, Servicing Agents shall provide the shareholder
support services as set forth therein to their Customers who may from time to
time own of record or beneficially Primary B Shares in consideration for the
payment of up to 0.60% (on an annualized basis) of the net asset value of such
shares. Such services may include: (i) aggregating and processing purchase,
exchange and redemption requests for Primary B Shares from Customers and
transmitting promptly net purchase and redemption orders with the Distributor or
the transfer agents; (ii) providing Customers with a service that invests the
assets of their accounts in Primary B Shares pursuant to specific or
pre-authorized instructions; (iii) processing dividend and distribution payments
from the Company on behalf of Customers; (iv) providing information periodically
to Customers showing their positions in Primary B Shares; (v) arranging for bank
wires; (vi) responding to Customer inquiries concerning their investment in
Primary B Shares; (vii) providing sub-accounting with respect to Primary B
Shares beneficially owned by Customers or the information necessary for
sub-accounting; (viii) if required by law, forwarding shareholder communications
(such as proxies, shareholder reports annual and semi-annual financial
statements and dividend, distribution and tax notices) to Customers; (ix)
forwarding to Customers proxy statements and proxies containing any proposals
regarding an Administration Agreement; (x) employee benefit plan recordkeeping,
administration, custody and trustee services; (xi) general shareholder liaison
services; and (xii) providing such other similar services as may reasonably be
requested to the extent permitted under applicable statutes, rules, or
regulations.
The Administration Plan also provides that in no event may the portion of
the shareholder administration fee that constitutes a "service fee," as the term
is defined in the NASD Servicing Plan Rule, exceed 0.25% of the average daily
net asset value of the Primary B Shares of a Portfolio. In addition, to the
extent any portion of the fees payable under the Plan is deemed to be
for services primarily intended to result in the sale of Portfolio Primary B
Shares, such fees are deemed approved and may be paid under the Administration
Plan. Accordingly, the Administration Plan has been approved and will be
operated pursuant to Rule 12b-1 under the 1940 Act. Such Plan shall continue
in effect as long as the Board of Directors, including a majority of the
Qualified Directors, specifically approves the Plan at least annually.
EXPENSES
The Administrator and/or Co-Administrator furnishes, without additional
cost to the Company, the services of the Treasurer and Secretary of the Company
and such other personnel (other than the personnel of the Adviser or
Sub-Adviser) as are required for the proper conduct of the Company's affairs.
The Distributor bears the incremental expenses of printing and distributing
prospectuses used by the Distributor or furnished by the Distributor to
investors in connection with the public offering of the Company's Shares and the
costs of any other promotional or sales literature, except that to the extent
permitted under the Plans relating to the Investor A and Investor
48
<PAGE>
C Shares of each Portfolio, sales-related expenses incurred by the Distributor
may be reimbursed by the Company.
The Company pays, or causes to be paid, all other expenses of the
Company, including without limitation: the fees of the Adviser, the Sub-Adviser,
the Administrator and Co-Administrator; the charges and expenses of any
registrar, any custodian or depository appointed by the Company for the
safekeeping of its cash, fund securities and other property, and any stock
transfer, dividend or accounting agent or agents appointed by the Company;
brokerage commissions chargeable to the Company in connection with fund
securities transactions to which the Company is a party; all taxes, including
securities issuance and transfer taxes; corporate fees payable by the Company to
Federal, state or other governmental agencies; all costs and expenses in
connection with the registration and maintenance of registration of the Company
and its shares with the SEC and various states and other jurisdictions
(including filing fees, legal fees and disbursements of counsel); the costs and
expenses of typesetting prospectuses and statements of additional information of
the Company (including supplements thereto) and periodic reports and of printing
and distributing such prospectuses and statements of additional information
(including supplements thereto) to the Company's shareholders; all expenses of
shareholders' and directors' meetings and of preparing, printing and mailing
proxy statements and reports to shareholders; fees and travel expenses of
directors or director members of any advisory board or committee; all expenses
incident to the payment of any dividend or distribution, whether in shares or
cash; charges and expenses of any outside service used for pricing of the
Company's shares; fees and expenses of legal counsel and of independent auditors
in connection with any matter relative to the Company; membership dues of
industry associations; interest payable on Company borrowings; postage and
long-distance telephone charges; insurance premiums on property or personnel
(including officers and directors) of the Company which inure to its benefit;
extraordinary expenses (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification related thereto); and
all other charges and costs of the Company's operation unless otherwise
explicitly assumed by the Adviser (and/or the Sub-Adviser), the Administrator or
Co-Administrator.
Expenses of the Company which are not directly attributable to the
operations of any class of shares or LifeGoal Portfolio are pro-rated among all
classes of shares or LifeGoal Portfolios of the Company based upon the
relative net assets of each class or LifeGoal Portfolio. Expenses of the
Company which are not directly attributable to a specific class of
shares but are directly attributable to a specific Portfolio are prorated
among all the classes of shares of such Portfolio based upon the relative net
assets of each such class of shares. Expenses of the Company which are directly
attributable to a class of shares are charged against the income available for
distribution as dividends to such class of shares.
49
<PAGE>
TRANSFER AGENTS AND CUSTODIANS
First Data Investors Services Group, Inc., a wholly owned subsidiary of
First Data Corporation, is located at One Exchange Place, 53 State Street,
Boston, Massachusetts 02109, and serves as transfer agent (the "Transfer Agent")
for the Company's Primary Shares and Investor Shares. Under a transfer agency
agreement, the Transfer Agent maintains shareholder account records for the
Company, handles certain communications between shareholders and the Company,
distributes dividends and distributions payable by the Company to shareholders
and produces statements with respect to account activity for the Company and its
shareholders for these services. The Transfer Agent is entitled to receive fees
from Nations LifeGoal under a "cost plus" formula as set forth in a schedule to
the Transfer Agency Agreement. This formula would (i) reimburse First Data for
its costs incurred in providing transfer agency and shareholder services under
such Agreement, and (ii) provide a specific profit margin to First Data which
declines over the term of such Agreement. It is proposed that these fees, in
turn, be reimbursed by the underlying Nations Funds in which the LifeGoal
Portfolios invest pursuant to a separate agreement between Nations
LifeGoal and the underlying Nations Funds. To the extent that such fees are not
reimbursed by the underlying Nations Funds, NBAI will be obligated to
reimburse the remainder of such fees. NationsBank of Texas, N.A. serves as
sub-transfer agent for each LifeGoal Portfolio's Primary Shares.
NationsBank of Texas, N.A. serves as custodian (the "Custodian") for
the portfolio securities and cash of the LifeGoal Portfolios. The Custodian
maintains custody of the LifeGoal Portfolios' securities cash and other
property, delivers securities against payment upon sale and pays for
securities against delivery upon purchase, makes payments on behalf of the
LifeGoal Portfolios for payments of dividends, distributions and redemptions,
endorses and collects on behalf of the LifeGoal Portfolios all checks, and
receives all dividends and other distributions made on securities owned by
the LifeGoal Portfolios. The Custodian receives no compensation from the
LifeGoal Portfolios.
INDEPENDENT ACCOUNTANT AND REPORTS
At least semi-annually, the Company will furnish
shareholders of the LifeGoal Portfolios with a list of the
investments held in the LifeGoal Portfolios
and financial statements for the LifeGoal Portfolios. The annual financial
statements will be audited by the Company's independent accountant. The Board
of Directors has selected Price Waterhouse LLP, 160 Federal Street, Boston,
Massachusetts 02110 as the Company's independent accountant to audit the
Company's books and review the Company's tax returns for the LifeGoal
Portfolios' fiscal years ending on and after March 31, 1997.
The statement of assets and liabilities of the LifeGoal Portfolios
at October 1, 1996, included herein, has been so included in reliance upon
the report of the Independent Accountants, Price Waterhouse LLP, given on the
authority of said firm as experts in auditing and accounting.
COUNSEL
Morrison & Foerster LLP serves as legal counsel to the Company. Its
address is 2000 Pennsylvania Avenue, N.W., Washington, D.C. 20006.
50
<PAGE>
PENDING LEGAL PROCEEDINGS
A purported class action lawsuit against, among others, Nations
Short-Intermediate Government Fund was filed by Lawrence Bergelt on May 21,
1996. The complaint was amended and consolidated on July 11, 1996 in the
United States District Court for the Middle District of Florida, Tampa
Division by Mr. Bergelt and others in an action against the Nations Government
Securities Fund, NationsBank Corporation and certain of its affiliates, Dean
Witter Distributors and certain of its affiliates, and Stephens Inc. (Case No.
94-995-Civ.-T-23E). As relevant to Nations Short-Intermediate Government Fund,
plaintiffs allege that, among other things, defendants violated the
Securities Exchange Act of 1934 and various state securities fraud statutes by
employing a scheme to defraud plaintiffs into purchasing shares of the fund and
making untrue statements of material fact and omitting to state material facts
in connection with sales of shares of the fund. Plaintiffs further allege
that, among other things, defendants concealed the risks associated with the
fund by blurring the distinctions between banks and non-bank subsidiaries and
by obscuring the differences between traditional, federally insured bank
products and uninsured, non-depository products.
ADDITIONAL INFORMATION ON PERFORMANCE
Yield information and other performance information for the Company's
LifeGoal Portfolios may be obtained by calling the Company at (800) 321-7854.
From time to time, the yield and total return of a LifeGoal
Portfolio's Investor Shares and Primary Shares may be quoted in advertisements,
shareholder reports, and other communications to shareholders. Each LifeGoal
Portfolio of the Company also may quote information obtained from the
Investment Company Institute in its advertising materials and sales
literature. Performance information is available by calling 1-800-321-7854
with respect to Investor Shares and 1-800-621-2192 with respect to Primary
Shares.
YIELD CALCULATIONS
The yield of the Primary Shares and Investor Shares of the LifeGoal
Portfolios is a measure of the net investment income per share (as defined)
earned over a 30-day period expressed as a percentage of the maximum offering
price of a share of such classes at the end of the period. Yield figures are
determined by dividing the net investment income per share earned during the
specified 30-day period by the maximum offering price per share on the last
day of the period, according to the following formula:
Yield = 2[(a-b + 1)6 1]
cd
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = average daily number of shares outstanding during
the period that were entitled to receive dividends
51
<PAGE>
d = maximum offering price per share on the last day of
the period
For purposes of yield quotation, income is calculated in accordance
with standardized methods applicable to all stock and bond mutual funds. In
general, interest income is reduced with respect to bonds trading at a premium
over their par value by subtracting a portion of the premium from income on a
daily basis, and is increased with respect to bonds trading at a discount by
adding a portion of the discount to daily income. Capital gains and losses are
excluded from the calculation.
Income calculated for the purposes of calculating a LifeGoal
Portfolio's yield differs from income as determined for other accounting
purposes. Because of the different accounting methods used, and because of the
compounding assumed in yield calculations, the yield quoted for a
LifeGoal Portfolio
may differ from the rate of distributions a LifeGoal Portfolio paid over the
same period or the rate of income reported in the LifeGoal Portfolios' financial
statements.
TOTAL RETURN CALCULATIONS
Total return measures both the net investment income generated by, and
the effect of any realized or unrealized appreciation or depreciation of the
underlying investments in a Portfolio. The LifeGoal Portfolios' average
annual and cumulative total return figures are computed in accordance with the
standardized methods prescribed by the SEC.
Average annual total return figures are computed by determining the
average annual compounded rates of return over the periods indicated in the
advertisement, sales literature or shareholders' report that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of
such period
This calculation (i) assumes all dividends and distributions are reinvested at
net asset value on the appropriate reinvestment dates as described in the
Prospectuses, and (ii) deducts (a) the maximum sales charge from the
hypothetical initial $1,000 investment, and (b) all recurring fees, such as
advisory and administrative fees, charged as expenses to all shareholder
accounts.
Cumulative total return is computed by finding the cumulative
compounded rate of return over the period indicated in the advertisement that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:
CTR = (ERV-P) 100
P
52
<PAGE>
Where: CTR = Cumulative total return
ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of
such period
P = initial payment of $ 1,000.
This calculation (i) assumes all dividends and distributions are reinvested at
net asset value on the appropriate reinvestment dates as described in the
Prospectuses, and (ii) deducts (a) the maximum sales charge from the
hypothetical initial $1,000 investment, and (b) all recurring fees, such as
advisory and administrative fees, charged as expenses to all shareholder
accounts.
The Primary Shares and Investor Shares of the LifeGoal Portfolios may
also quote their distribution rates, which express the historical amount of
income dividends paid to their shareholders during a one-month (in the case
of [ ] Portfolio) or a three-month (in the case of the [ ] Portfolio) period
as a percentage of the maximum offering price per share on the last day of such
period.
The performance figures of the LifeGoal Portfolios as described above
will vary from time to time depending upon market and economic conditions,
the composition of their portfolios and operating expenses. These factors
should be considered when comparing the performance figures of the LifeGoal
Portfolios with those of other investment companies and investment vehicles.
The LifeGoal Portfolios may compare the performance and yield of a
class or series of shares to those of other mutual funds with similar
investment objectives and to other relevant indices or to rankings prepared by
independent services or other financial or industry publications that
monitor the performance of mutual funds. For example, the performance and
yield of a class of shares in a LifeGoal Portfolio may be compared to data
prepared by Lipper Analytical Services, Inc. Performance and yield data as
reported in national financial publications such as Money Magazine, Forbes,
Barron's, The Wall Street Journal, and The New York Times, or in publications
of a local or regional nature, also may be used in comparing the performance
of a class of shares in a LifeGoal Portfolio.
MISCELLANEOUS
CERTAIN RECORD HOLDERS
As of October 1, 1996, Stephens Inc. owned of record 100% of the
outstanding shares of the Company and may be deemed a controlling person of the
Company under the 1940 Act.
53
[Price Waterhouse LLP Letterhead)
Report of Independent Accountants
To the Shareholder and Board
of Directors of Nations LifeGoal Funds, Inc.
In our opinion, the accompanying statements of assets and liabilities present
fairly, in all materials respects, the financial position of LifeGoal Growth
Portfolio, LifeGoal Balanced Growth Portfolio and LifeGoal Income and Growth
Portfolio (constituting Nations LifeGoal Funds, Inc., hereafter referred to
as the "Company") at October 1, 1996, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
October 2, 1996
<PAGE>
NATIONS LIFEGOAL FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
October 1, 1996
<TABLE>
<CAPTION>
Balanced Income and
Growth Growth Growth
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
ASSETS:
Cash................................................ $40,000 $30,000 $30,000
Deferred organizational expenses (Note 1)........... 61,254 61,254 61,254
Offering costs (Note 1)............................. 45,000 45,000 45,000
------ ------ ------
Total Assets .................................. 146,254 136,254 136,254
LIABILITIES:
Accrued organizational expenses (Note 1)..... 61,254 61,254 61,254
Accrued offering costs (Note 1).................... 45,000 45,000 45,000
------ ------ ------
Total Liabilities ................................ 106,254 106,254 106,254
------- ------- -------
NET ASSETS:
Primary A Shares.................................. $40,000 $30,000 $30,000
======= ======= =======
SHARES OF BENEFICIAL INTEREST OUTSTANDING:
Primary A Shares................................. 4,000 3,000 3,000
PRIMARY A SHARES:
Net asset value, offering and redemption price per
share of beneficial interest
outstanding............................................ $10.00 $ 10.00 $ 10.00
===== ========== ==========
</TABLE>
<PAGE>
NOTES TO STATEMENTS OF ASSETS AND LIABILITIES
1. Nations LifeGoal Funds, Inc. (the "Company") was organized as a Maryland
Corporation on July 3, 1996 and is registered under the Investment Company Act
of 1940, as amended, as an open-end management investment company. The Company
was established in order to offer a range of asset allocation strategies to
accommodate different investment philosophies and goals. The Company offers
three Portfolios: LifeGoal Growth Portfolio, LifeGoal Balanced Growth Portfolio
and LifeGoal Income and Growth Portfolio (individually, a "LifeGoal Portfolio",
collectively the "LifeGoal Portfolios"). The LifeGoal Portfolios currently offer
four classes of shares: Primary A Shares, Primary B Shares, Investor A Shares
and Investor C Shares. Shareholders of LifeGoal Portfolios have equal voting
rights on matters affecting all shareholders of the LifeGoal Portfolios equally.
Each class of shares of a LifeGoal Portfolio has exclusive voting rights on
matters that relate solely to its class, and separate voting rights on matters
in which the interests of one class of shares differ from the interests of any
other class. In addition to its own expenses, each LifeGoal Portfolio will
indirectly bear their pro-rata share of fees and expenses incurred by the
underlying funds they invest in. Pursuant to an exemptive order the LifeGoal
Portfolios will begin investing, within certain percentage ranges, substantially
all of their assets in the Primary A Shares of certain other funds in the
Nations Fund Family. The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
Company has had no operations other than organizational matters and the issuance
and sale of Primary A Shares of each of the LifeGoal Portfolios to Stephens Inc.
("Stephens"), the Company's administrator.
Costs incurred by the LifeGoal Portfolios in connection with their organization
will be deferred and amortized on a straight line basis over the period of
benefit not to exceed sixty months. Initial offering costs will be deferred and
amortized over the twelve month period from the date upon which each LifeGoal
Portfolio commences its investment operations. If any of the initial shares are
redeemed during the amortization period by any holder thereof, the redemption
proceeds will be reduced by a pro rata portion of the then unamortized
organization costs.
Expenses: General expenses of the Company are allocated to the relevant LifeGoal
Portfolios based upon relative net assets. Operating expenses directly
attributable to a LifeGoal Portfolio or class of shares are charged to that
LifeGoal Portfolio's or class' operations. Expenses of each LifeGoal Portfolio
not directly attributable to the operations of any class of shares are prorated
among the classes based on the relative average net assets of each class of
shares.
<PAGE>
2. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
The Company has entered into an Investment Advisory Agreement with NationsBanc
Advisors, Inc. ("NBAI"), a wholly-owned subsidiary of NationsBank. For its
investment advisory services to the LifeGoal Portfolios, NBAI is entitled to
receive an advisory fee calculated at an annual rate of 0.25% of the value of
the average daily net assets of each LifeGoal Portfolio. LifeGoal Portfolios pay
advisory fee
TradeStreet Investment Associates, Inc. ("TradeStreet") , a wholly owned
subsidiary of NationsBank serves as investment sub-adviser to the LifeGoal
Portfolios. For its investment sub-advisory services to the LifeGoal Portfolios,
NBAI compensates TradeStreet at an annual rate of .05% of the value of the
average daily net assets of each LifeGoal Portfolio.
NBAI has agreed to absorb all other expenses of the LifeGoal Portfolios (except
brokerage fees and commissions, extraordinary expenses, and any applicable Rule
12b-1 fees, shareholder servicing fees and/or shareholder administration fees).
From time to time, NBAI may waive advisory fees and/or reimburse expenses
payable by a LifeGoal Portfolio.
Stephens serves as the Administrator of the Company pursuant to an
Administration Agreement. Stephens will not receive any fees from LifeGoal
Portfolios for these services. First Data Investor Services Group, Inc. ("First
Data"), a wholly-owned subsidiary of First Data Corporation, serves as the
Co-administrator of the LifeGoal Portfolios pursuant to a Co-Administration
Agreement. First Data is entitled to receive an annual fee of $10,000 per
LifeGoal Portfolio.
3. SHAREHOLDER SERVICING AND DISTRIBUTION PLANS.
Each LifeGoal Portfolio has adopted shareholder administration plans
("Administration Plan") for Primary B Shares of each LifeGoal Portfolio,
shareholder servicing and distribution plans ("Investor A Plan") pursuant to
Rule 12b-1 under the 1940 Act for Investor A Shares of each LifeGoal Portfolio,
a shareholder servicing plan ("Servicing Plan") for Investor C Shares of each
LifeGoal Portfolio and a distribution plan ("Distribution Plan") pursuant to
Rule 12b-1 under the 1940 Act for Investor C Shares of each LifeGoal Portfolio.
The Administration Plan permits the LifeGoal Portfolios to compensate
Institutions for shareholder administration services provided to their customers
that own Primary B Shares. The Investor A Plan permits the LifeGoal Portfolios
to compensate (i) Servicing Agents and Selling Agents that have entered into a
servicing agreement with the LifeGoal Portfolios for services provided to their
customers that own Investor A Shares and (ii) Stephens for distribution-related
expenses incurred in connection with Investor A Shares. The Servicing Plan
permits the LifeGoal Portfolios to compensate Servicing
<PAGE>
Agents for services provided to their customers that own Investor C Shares. The
Distribution Plan permits the LifeGoal Portfolios to compensate or reimburse
Stephens for any activities or expenses primarily intended to result in the sale
of the LifeGoal Portfolios' Investor C Shares. Payments under the plans are
accrued daily and paid monthly at a rate set from time to time by the LifeGoal
Portfolios, provided that the annual rate may not exceed the following rates:
the Administration Plan may not exceed 0.60% of the average daily net asset
value of Primary B Shares, the Investor A Plan may not exceed 0.25% of the
average daily net asset value of Investor A Shares, the Servicing Plan may not
exceed 0.25% of the average daily net asset value of Investor C Shares and the
Distribution Plan may not exceed 0.75% of the average daily net asset value of
Investor C Shares. Fees paid pursuant to the plans are charged as expenses of
Primary B Shares, Investor A Shares and Investor C Shares, respectively, of each
LifeGoal Portfolio as accrued.
SCHEDULE A
DESCRIPTION OF RATINGS
The following summarizes the highest six ratings used by Standard &
Poor's Corporation ("S&P") for corporate and municipal bonds. The first four
ratings denote investment grade securities.
AAA - This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay interest
and repay principal.
AA - Debt rated AA is considered to have a very strong
capacity to pay interest and repay principal and differs from AAA
issues only in a small degree.
A - Debt rated A has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher-rated categories.
BBB - Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in
this category than for those in higher-rated categories.
BB, B - Bonds rated BB and B are regarded, on balance
as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation.
BB represents the lowest degree of speculation and B a higher
degree of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposure to adverse conditions.
To provide more detailed indications of credit quality, the
AA, A and
BBB ratings may be modified by the addition of a plus or
minus sign to show relative standing within these major rating categories.
The following summarizes the highest six ratings used by Moody's
Investors Service, Inc. ("Moody's") for corporate and municipal
bonds. The first four denote investment grade securities.
Aaa - Bonds that are rated Aaa are judged to be of
the best quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and principal
is secure. While the various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa - Bonds that are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude
A-1
<PAGE>
or there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A - Bonds that are rated A possess many favorable
investment attributes and are to be considered upper medium grade
obligations. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa - Bonds that are rated Baa are considered medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and
thereby not as well safeguarded during both good times and bad times
over the future. Uncertainty of position characterizes bonds in this
class.
B - Bond which are rated B generally lack characteristics of
the desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long period
of time may be small.
Moody's applies numerical modifiers (1, 2 and 3) with respect to
corporate bonds rated Aa through B. The modifier 1 indicates that the
bond being
rated ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the
bond ranks
in the lower end of its generic rating category. With regard to municipal
bonds,
those bonds in the Aa, A and Baa groups which Moody's believes possess the
s
trongest investment attributes are designated by the symbols Aa1, A1 or
Baa1, respectively.
The following summarizes the highest four ratings used by Duff &
Phelps
Credit Rating Co. ("D&P") for bonds, each of which denotes that the
securities
are investment grade.
AAA - Bonds that are rated AAA are of the highest credit
quality. The risk factors are considered to be negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA - Bonds that are rated AA are of high credit quality.
Protection factors are strong. Risk is modest but may vary slightly
from time to time because of economic conditions.
A - Bonds that are rated A have protection factors which are
average but adequate. However, risk factors are more variable and
greater in periods of economic stress.
BBB - Bonds that are rated BBB have below average protection
factors but still are considered sufficient for prudent investment.
Considerable variability in risk exists during economic cycles.
A-2
<PAGE>
To provide more detailed indications of credit quality,
the AA, A and BBB ratings may modified by the addition of a plus
or minus sign to show
relative standing within these major categories.
The following summarizes the highest four ratings used by
Fitch
Investors Service, Inc. ("Fitch") for bonds, each of which denotes
that the
securities are investment grade:
AAA - Bonds considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability
to pay interest and repay principal, which is unlikely to be affected
by reasonably foreseeable events.
AA - Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated
AAA. Because bonds rated in the AAA and AA categories are not
significantly vulnerable to foreseeable future developments, short-term
debt of these issuers is generally rated F-1+.
A - Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes
in economic conditions and circumstances than bonds with higher
ratings.
BBB - Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in
economic conditions and circumstances, however, are more likely to have
adverse impact on these bonds, and therefore impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
To provide more detailed indications of credit quality, the AA, A and
BBB ratings may be modified by the addition of a plus or minus sign to show
relative standing within these major rating categories.
The following summarizes the two highest ratings used by Moody's for
short-term municipal notes and variable-rate demand obligations:
MIG-1/VMIG-1 -- Obligations bearing these designations are of
the best quality, enjoying strong protection from established cash
flows, superior liquidity support or demonstrated broad-based access to
the market for refinancing.
MIG-2/VMIG-2 -- Obligations bearing these designations are of
high quality, with ample margins of protection although not so large as
in the preceding group.
The following summarizes the two highest ratings used by S&P for
short-term municipal notes:
SP-1 -- Very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety
characteristics are given a "plus" (+) designation.
A-3
<PAGE>
SP-2 -- Satisfactory capacity to pay principal and interest.
The three highest rating categories of D&P for short-term debt, each of
which denotes that the securities are investment grade, are D-1, D-2, and D-3.
D&P employs three designations, D-1+, D-1 and D-1-, within the highest rating
category. D-1+ indicates highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to alternative
sources of LifeGoal Funds, is judged to be "outstanding, and safety is just
below risk-free U.S. Treasury short-term obligations." D-1 indicates very high
certainty of timely payment. Liquidity factors are excellent and supported by
good fundamental protection factors. Risk factors are considered to be minor.
D-1 indicates high certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
D-2 indicates good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small. D-3 indicates satisfactory liquidity and other protection factors which
qualify the issue as investment grade. Risk factors are larger and subject to
more variation. Nevertheless, timely payment is expected.
The following summarizes the three highest rating categories used by
Fitch for short-term obligations, each of which denotes that the securities are
investment grade:
F-1+ securities possess exceptionally strong credit quality.
Issues assigned this rating are regarded as having the strongest degree
of assurance for timely payment.
F-1 securities possess very strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
F-2 securities possess good credit quality. Issues carrying
this rating have a satisfactory degree of assurance for timely payment,
but the margin of safety is not as great as for issues assigned the
F-1+ and F-1 ratings.
Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of senior short-term
promissory obligations. Issuers rated Prime-2 (or related supporting
institutions) are considered to have a strong capacity for repayment of senior
short-term promissory obligations. This will normally be evidenced by many of
the characteristics of issuers rated Prime-1, but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
For commercial paper, D&P uses the short-term debt ratings described
above.
For commercial paper, Fitch uses the short-term debt ratings described
above.
Thomson BankWatch, Inc. ("BankWatch") ratings are based upon a
qualitative and quantitative analysis of all segments of the organization
including, where applicable, holding
A-4
<PAGE>
company and operating subsidiaries. BankWatch ratings do not constitute a
recommendation to buy or sell securities of any of these companies. Further,
BankWatch does not suggest specific investment criteria for individual clients.
BankWatch long-term ratings apply to specific issues of long-term debt
and preferred stock. The long-term ratings specifically assess the likelihood of
untimely payment of principal or interest over the term to maturity of the rated
instrument. The following are the four investment grade ratings used by
BankWatch for long-term debt:
AAA - The highest category; indicates ability to repay
principal and interest on a timely basis is extremely high.
AA - The second highest category; indicates a very strong
ability to repay principal and interest on a timely basis with limited
incremental risk versus issues rated in the highest category.
A - The third highest category; indicates the ability to repay
principal and interest is strong. Issues rated "A" could be more
vulnerable to adverse developments (both internal and external) than
obligations with higher ratings.
BBB - The lowest investment grade category; indicates an
acceptable capacity to repay principal and interest. Issues rated "BBB"
are, however, more vulnerable to adverse developments (both internal
and external) than obligations with higher ratings.
The BankWatch short-term ratings apply to commercial paper, other
senior short-term obligations and deposit obligations of the entities to which
the rating has been assigned. The BankWatch short-term ratings specifically
assess the likelihood of an untimely payment of principal or interest.
TBW-1 The highest category; indicates a very high likelihood that
principal and interest will be paid on a timely basis.
TBW-2 The second highest category; while the degree of safety
regarding timely repayment of principal and interest is
strong, the relative degree of safety is not as high as for
issues rated "TBW-1".
TBW-3 The lowest investment grade category; indicates that while
more susceptible to adverse developments (both internal and
external) than obligations with higher ratings, capacity to
service principal and interest in a timely fashion is
considered adequate.
TBW-4 The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.
The following summarizes the four highest long-term debt ratings used by IBCA
Limited and its affiliate, IBCA Inc. (collectively, "IBCA"):
AAA - Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and
interest is substantial such that adverse
A-5
<PAGE>
changes in business, economic or financial conditions are unlikely to
increase investment risk significantly.
AA - Obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and
interest is substantial. Adverse changes in business, economic or
financial conditions may increase investment risk albeit not very
significantly.
A - Obligations for which there is a low expectation of
investment risk. Capacity for timely repayment of principal and
interest is strong, although adverse changes in business, economic or
financial conditions may lead to increased investment risk.
BBB - Obligations for which there is currently a low
expectation of investment risk. Capacity for timely repayment of
principal and interest is adequate, although adverse changes in
business, economic or financial conditions are more likely to lead to
increased investment risk than for obligations in other categories.
A plus or minus sign may be appended to a rating below AAA to
denote relative status within major rating categories.
The following summarizes the three highest short-term debt ratings used by IBCA:
A-1+ Where issues possess a particularly strong credit
feature.
A-1 Obligations supported by the highest capacity for timely
repayment.
A-2 Obligations supported by a good capacity for timely repayment.
A-6
<PAGE>
NATIONS LIFEGOAL FUNDS, INC.
FILE NOS. 333-09703 ; 811-07745
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) (1) Report of Independent Accountants of October 1, 1996 is incorporated
by reference to Item 23 of the Statement of Additional Information
(a) (2) Statement of assets and liabilities at October 1, 1996, is incorporated
by reference to Item 23 of the Statement of Additional Information
(b) Exhibits
Exhibit
Number Description
(1) Articles of Incorporation, dated July 3, 1996 is incorporated
by reference to the Registration Statement on Form N1-A filed on
August 7, 1996
(1) (b) Form of Articles of Amendment, filed herewith
(2) By-Laws, dated July 10, 1996 is incorporated by reference to the
Registration Statement on Form N1-A filed on August 7, 1996
(3) Not Applicable
(4) None
(5)(a) Form of Investment Advisory Agreement between Nations LifeGoal Funds,
Inc. and NationsBanc Advisors, Inc., filed herewith
(5)(b) Form of Sub-Advisory Agreement with NationsBanc Advisors, Inc.,
TradeStreet Investment Associates, Inc. and Nations LifeGoal Funds,
Inc. on behalf of LifeGoal Growth Portfolios, LifeGoal Balanced
Growth Portfolio and LifeGoal Income and Growth Portfolio, filed
herewith
(6)(a) Form of Distribution Agreement between Stephens Inc. and Nations
LifeGoal Funds, Inc. is incorporated by reference to the Registration
Statement on Form N1-A filed on August 7, 1996
(6)(b) Form of Sales Support Agreement is incorporated by reference to the
Registration Statement on Form N1-A filed on August 7, 1996
(6)(c) Form of Shareholder Servicing Agreement is incorporated by reference
to the Registration Statement on Form N1-A filed on August 7, 1996
(7) Deferred Compensation Plan, to be filed by Amendment.
(8) Form of Custody Agreement between Nations LifeGoal Funds, Inc. and
NationsBank of Texas, N.A. is incorporated by reference to the
Registration Statement on Form N1-A filed on August 7, 1996
<PAGE>
(9)(a) Transfer Agency Agreement, to be filed by Amendment
(9)(b) Form of Amendment to Transfer Agency and Services Agreement
is incorporated by Reference to the Registration Statement
on Form N1-A filed on August 7, 1996
(9)(c) Supplement to Transfer Agency and Services Agreement, to be filed by
Amendment
(9)(d) Sub-Transfer Agency and Services Agreement, to be filed by Amendment
(9)(e) Form of Amendment to Sub-Transfer Agency and Services Agreement
is incorporated by reference to the Registration Statement on
Form N1-A filed on August 7, 1996
(9)(f) Form of Administration Agreement between Stephens Inc. and Nations
LifeGoal Funds, Inc. is incorporated by reference to the
Registration Statement on Form N1-A filed on August 7, 1996
(9)(g) Form of Co-Administration Agreement between First Data Investor
Services Group, Inc. and Nations LifeGoal Funds, Inc. is incorporated
by reference to the Registration Statement on Form N1-A filed on August
7, 1996
(10) Opinion and Consent of Counsel is incorporated by reference to the
Registration Statement on Form N1-A filed on August 7, 1996
(11) Consent of Independent Accountants, filed herewith
(12) Not Applicable
(13) Investment Letter, filed herewith
(14) Not Applicable
(15)(a) Form of Shareholder Servicing and Distribution Plan, Investor A Shares
is incorporated by reference to the Registration Statement on Form
N1-A filed on August 7, 1996
(15)(b) Form of Shareholder Servicing Plan, Investor C Shares is incorporated
by reference to the Registration Statement on Form N1-A filed on August
7, 1996
(15)(c) Form of Distribution Plan, Investor C Shares is incorporated by
reference to the Registration Statement on Form N1-A filed on August
7, 1996
(15)(d) Form of Shareholder Administration Plan, Primary B Shares
is incorporated by reference to the Registration Statement on Form
N1-A filed on August 7, 1996
(16) Schedule for Computation of Performance Data, to be filed by Amendment
(27) Not Applicable
(18) Rule 18f-3 Multi-Class Plan, filed herewith
<PAGE>
Item 25. Persons Controlled or Under Common Control with Registrant.
No person is controlled by or under common control with
Registrant.
Item 26. Number of Holders of Securities.
As of October 1, 1996, Stephens Inc. held all securities of the
Registrant.
Item 27. Indemnification.
The following paragraphs of Article VIII of the Registrant's
Articles of Incorporation provide:
(h) The Corporation shall indemnify (1) its Directors and
officers, whether serving the Corporation or at its request any other entity, to
the full extent required or permitted by the General Laws of the State of
Maryland now or hereafter in force, including the advance of expenses under the
procedures and to the full extent permitted by law, and (2) its other employees
and agents to such extent as shall be authorized by the Board of Directors or
the Corporation's Bylaws and be permitted by law. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such Bylaws,
resolutions or contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. No amendment of these
Articles of Incorporation of the Corporation shall limit or eliminate the right
to indemnification provided hereunder with respect to acts or omissions
occurring prior to such amendment or repeal. Nothing contained herein shall be
construed to authorize the Corporation to indemnify any Director or officer of
the Corporation against any liability to the Corporation or to any holders of
securities of the Corporation to which he is subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. Any indemnification by the Corporation
shall be consistent with the requirements of law, including the 1940 Act.
(i) To the fullest extent permitted by Maryland statutory and
decisional law and the 1940 Act, as amended or interpreted, no Director or
officer of the Corporation shall be personally liable to the Corporation or its
stockholders for money damages; provided, however, that nothing herein shall be
construed to protect any Director or officer of the Corporation against any
liability to which such Director or officer would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office. No amendment, modification or
repeal of this Article VIII shall adversely affect any right or protection of a
Director or officer that exists at the time of such amendment, modification or
repeal.
<PAGE>
Under the terms of Maryland Corporation Law and the Registrant's
Charter and ByLaws, incorporated by reference as Exhibits (1) and (2) hereto,
provides for the indemnification of Registrant's directors and employees.
Indemnification of Registrant's principal underwriter, custodian, and transfer
agent is provided for respectively, in the Registrant's: Administration
Agreement with Stephens Inc.; Co-Administration Agreement with First Data
Investor Services Group, Inc.; Distribution Agreement with Stephens Inc.;
Custody Agreement with NationsBank of Texas, N.A.; and Transfer Agency Agreement
with First Data Investor Services Group, Inc.
Item 28. Business and Other Connections of Investment Adviser.
(a) To the knowledge of Registrant, none of the directors or officers
of NBAI, the adviser to the Registrant's portfolios, or TradeStreet, the
sub-investment adviser, except as set forth in the Forms ADV referenced below,
is or has been, at any time during the past two calendar years, engaged in any
other business, profession, vocation or employment of a substantial nature.
Certain directors and officers also hold various positions with, and engage in
business for, the company that owns all the outstanding stock (other than
directors' qualifying shares) of NBAI or TradeStreet, respectively, or other
subsidiaries of NationsBank Corporation.
(b) NBAI performs investment advisory services for the Registrant and
certain other customers. NBAI is a wholly owned subsidiary of NationsBank, N.A.
("NationsBank"), which in turn is a wholly owned banking subsidiary of
NationsBank Corporation. Information with respect to each director and officer
of the investment adviser is incorporated by reference to Form ADV filed by NBAI
with the Securities and Exchange Commission pursuant to the Investment Advisers
Act of 1940 (file no. 801-49874).
(c) TradeStreet performs sub-investment advisory services for the
Registrant and certain other customers. TradeStreet is a wholly owned subsidiary
of NationsBank, which in turn is a wholly owned banking subsidiary of
NationsBank Corporation. Information with respect to each director and officer
of the sub-investment adviser is incorporated by reference to Form ADV filed by
TradeStreet with the Securities and Exchange Commission pursuant to the
Investment Advisers Act of 1940 (file no. 801-50372).
Item 29. Principal Underwriters.
(a) Stephens Inc. is the distributor and principal underwriter for Nations
LifeGoal Funds, Inc. Stephens Inc. does not presently act as investment adviser
for any other registered investment companies, but does act as principal
underwriter for Nations Fund, Inc., Nations Fund Trust, Nations Fund Portfolios
Inc., Nations Institutional Reserves, the Overland Express Funds, Inc.,
MasterWorks Funds Inc., Stagecoach Funds, Inc. and Stagecoach Trust and is the
exclusive placement agent for Master Investment Trust, Managed Series Investment
Trust, Life & Annuity Trust and Master Investment Portfolio,
<PAGE>
all of which are registered open-end management investment companies, and has
acted as principal underwriter for the Liberty Term Trust, Inc., Nations
Government Income Term Trust 2003, Inc., Nations Government Income Term Trust
2004, Inc. and the Nations Balanced Target Maturity Fund, Inc., closed-end
management investment companies.
(b) Information with respect to each director and officer of the principal
underwriter is incorporated by reference to Form ADV filed by Stephens Inc. with
the Securities and Exchange Commission pursuant to the Investment Advisers Act
of 1940 (file no.
501-15510).
(c) Not applicable.
Item 30. Location of Accounts and Records.
(1) NBAI, One NationsBank Plaza, Charlotte, North Carolina 28255 (records
relating to its function as Investment Adviser).
(2) TradeStreet, One NationsBank Plaza, Charlotte, North Carolina 28255
(records relating to its function as Sub-Adviser).
(3) Stephens Inc., 111 Center Street, Little Rock, Arkansas 72201 (records
relating to its function as Distributor and as Administrator).
(4) First Data Investors Services Group, Inc., One Exchange Place, Boston,
Massachusetts 02109 (records relating to its function as
Co-Administrator and Transfer Agent).
(5) NationsBank of Texas, N.A. 1401 Elm Street, Dallas, Texas 75202
(records relating to its function as Sub-Transfer Agent and Custodian).
Item 31. Management Services
Not Applicable.
Item 32. Undertakings.
(a) Registrant undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to six months from
the effective date of this Registration Statement.
(b) Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions set forth above in response to Item
27, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in such Act and is, therefore,
<PAGE>
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of its most current annual report to shareholders, upon
request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Pre-Effective
Amendment No. 1 to its Registration Statement to be signed on its behalf by
the undersigned, thereto duly authorized, in the City of Little Rock, and
State of Arkansas on the 8th day of October, 1996.
Nations LifeGoal Funds, Inc.
By *
A. Max Walker
President and Chairman of the Board
of Trustees
By /s/ Richard H. Blank, Jr.
Richard H. Blank, Jr.
*Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this Pre-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
* President and Chairman of the Board of October 8, 1996
- ---------------------------------------- Directors
(A. Max Walker) (Principal Executive Officer)
* Treasurer October 8, 1996
- ---------------------------------------- Vice President
(Richard H. Rose) (Principal Financial and
Accounting Officer)
* Director October 8, 1996
- ----------------------------------------
(Edmund L. Benson, III)
* Director October 8, 1996
- ----------------------------------------
(James Ermer)
* Director October 8, 1996
- ----------------------------------------
(William H. Grigg)
* Director October 8, 1996
- ----------------------------------------
(Thomas F. Keller)
<PAGE>
* Director October 8, 1996
- ----------------------------------------
(Carl E. Mundy, Jr.)
* Director October 8, 1996
- ----------------------------------------
(Charles B. Walker)
* Director October 8, 1996
- ----------------------------------------
(Thomas S. Word)
/s/ Richard H. Blank, Jr.
Richard H. Blank, Jr.
*Attorney-in-Fact
</TABLE>
<PAGE>
<PAGE>
POWER OF ATTORNEY
Edmund L. Benson, III, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Robert M. Kurucza, Marco E. Adelfio,
Steven G. Cravath and Richard H. Blank, Jr., each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations LifeGoal Funds, Inc. (the "Company"), to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended ("Acts"), and any rules, regulations or requirements of
the Securities and Exchange Commission in respect thereof, in connection with
the filing and effectiveness of any and all amendments to the Company's
Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as a director
of the Company any and all such amendments filed with the Securities and
Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, individually or collectively, shall do or cause to be
done by virtue thereof.
Dated: July 11, 1996
_/s/ Edmund L. Benson, III____________
Edmund L. Benson, III
<PAGE>
POWER OF ATTORNEY
James Ermer, whose signature appears below, does hereby constitute
and appoint R. Gregory Feltus, Robert M. Kurucza, Marco E. Adelfio, Steven G.
Cravath and Richard H. Blank, Jr., each individually, his true and lawful
attorneys and agents, with power of substitution or resubstitution, to do any
and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations LifeGoal Funds, Inc. (the "Company"), to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended ("Acts"), and any rules, regulations or requirements of
the Securities and Exchange Commission in respect thereof, in connection with
the filing and effectiveness of any and all amendments to the Company's
Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as a director
of the Company any and all such amendments filed with the Securities and
Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, individually or collectively, shall do or cause to be
done by virtue thereof.
Dated: July 11, 1996
__ /s/ James Ermer________________
James Ermer
<PAGE>
POWER OF ATTORNEY
William H. Grigg, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Robert M. Kurucza, Marco E. Adelfio,
Steven G. Cravath and Richard H. Blank, Jr., each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations LifeGoal Funds, Inc. (the "Company"), to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended ("Acts"), and any rules, regulations or requirements of
the Securities and Exchange Commission in respect thereof, in connection with
the filing and effectiveness of any and all amendments to the Company's
Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as a director
of the Company any and all such amendments filed with the Securities and
Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, individually or collectively, shall do or cause to be
done by virtue thereof.
Dated: July 11, 1996
_/s/ William H. Grigg_____
William H. Grigg
<PAGE>
POWER OF ATTORNEY
Thomas F. Keller, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Robert M. Kurucza, Marco E. Adelfio,
Steven G. Cravath and Richard H. Blank, Jr., each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations LifeGoal Funds, Inc. (the "Company"), to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended ("Acts"), and any rules, regulations or requirements of
the Securities and Exchange Commission in respect thereof, in connection with
the filing and effectiveness of any and all amendments to the Company's
Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as a director
of the Company any and all such amendments filed with the Securities and
Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, individually or collectively, shall do or cause to be
done by virtue thereof.
Dated: July 11, 1996
_/s/ Thomas F. Keller______________
Thomas F. Keller
<PAGE>
POWER OF ATTORNEY
A. Max Walker, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Robert M. Kurucza, Marco E. Adelfio,
Steven G. Cravath and Richard H. Blank, Jr., each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations LifeGoal Funds, Inc. (the "Company"), to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended ("Acts"), and any rules, regulations or requirements of
the Securities and Exchange Commission in respect thereof, in connection with
the filing and effectiveness of any and all amendments to the Company's
Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as a director
and officer of the Company any and all such amendments filed with the Securities
and Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, individually or collectively, shall do or cause to be
done by virtue thereof.
Dated: July 11, 1996
_ /s/ A. Max Walker_____________
A. Max Walker
<PAGE>
POWER OF ATTORNEY
Charles B. Walker, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Robert M. Kurucza, Marco E. Adelfio,
Steven G. Cravath and Richard H. Blank, Jr., each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations LifeGoal Funds, Inc. (the "Company"), to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended ("Acts"), and any rules, regulations or requirements of
the Securities and Exchange Commission in respect thereof, in connection with
the filing and effectiveness of any and all amendments to the Company's
Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as a director
of the Company any and all such amendments filed with the Securities and
Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, individually or collectively, shall do or cause to be
done by virtue thereof.
Dated: July 11, 1996
_/s/ Charles B. Walker________________
Charles B. Walker
<PAGE>
POWER OF ATTORNEY
Thomas S. Word, Jr., whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Robert M. Kurucza, Marco E. Adelfio,
Steven G. Cravath and Richard H. Blank, Jr., each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations LifeGoal Funds, Inc. (the "Company"), to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended ("Acts"), and any rules, regulations or requirements of
the Securities and Exchange Commission in respect thereof, in connection with
the filing and effectiveness of any and all amendments to the Company's
Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as a director
of the Company any and all such amendments filed with the Securities and
Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, individually or collectively, shall do or cause to be
done by virtue thereof.
Dated: July 11, 1996
_/s/ Thomas S.Word. Jr.________
Thomas S. Word, Jr.
<PAGE>
POWER OF ATTORNEY
Richard H. Rose, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Robert M. Kurucza, Marco E. Adelfio,
Steven G. Cravath and Richard H. Blank, Jr., each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations LifeGoal Funds, Inc. (the "Company"), to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended ("Acts"), and any rules, regulations or requirements of
the Securities and Exchange Commission in respect thereof, in connection with
the filing and effectiveness of any and all amendments to the Company's
Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as an officer
of the Company any and all such amendments filed with the Securities and
Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, individually or collectively, shall do or cause to be
done by virtue thereof.
Dated: July 11, 1996
_/s/ Richard H. Rose, Jr.____________
Richard H. Rose, Jr.
<PAGE>
POWER OF ATTORNEY
Carl E. Mundy, Jr., whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Robert M. Kurucza, Marco E. Adelfio,
Steven G. Cravath and Richard H. Blank, Jr., each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations LifeGoal Funds, Inc. (the "Company"), to
comply with the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended ("Acts"), and any rules, regulations or requirements of
the Securities and Exchange Commission in respect thereof, in connection with
the filing and effectiveness of any and all amendments to the Company's
Registration Statement on Form N-1A pursuant to said Acts, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign in the name and on behalf of the undersigned as an officer
of the Company any and all such amendments filed with the Securities and
Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, individually or collectively, shall do or cause to be
done by virtue thereof.
Dated: July 11, 1996
/s/ Carl E. Mundy, Jr._______
Carl E. Mundy, Jr.
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
<S> <C>
EX99.B1(b) Form of Articles of Amendment
EX99.B5(a) Form of Investment Advisory Agreement
EX99.B5(b) Form of Sub-Advisory Agreement
EX99.B11 Consent of Independent Accountants
EX99.B13 Investment Letter
EX99.B18 Rule 18f-3 Multi-Class Plan
</TABLE>
<PAGE>
NATIONS LIFEGOAL FUNDS, INC.
FORM OF
ARTICLES OF AMENDMENT
RENAMING EXISTING SERIES OF CAPITAL STOCK
OF THE CORPORATION
Nations LifeGoal Funds, Inc., a Maryland corporation having its
principal office in Maryland at The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202 (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The Corporation is registered as an open-end management
investment company under the Investment Company Act of 1940.
SECOND: Pursuant to authority expressly vested in the Board of
Directors by the Articles of Incorporation of the Corporation (the "Charter")
and Section VI(d)(1) and Section VIII(k) thereto, and in accordance with
Sections 2-605 and 2-607 of the Corporations and Associations Article of the
Annotated Code of Maryland (the "Code"), and pursuant to resolutions duly
adopted on October 11-12, 1996, the Board of Directors of the Corporation has
taken the following actions, which are expressly limited to changes permitted by
Section 2-605(a)(4) of the Code to be made without action by the stockholders:
(1) renamed four hundred million (400,000,000) shares of the
Corporation's authorized, classified and designated shares, with a
par value of $.001 per share, currently classified and named as
shares of the "Nations Capital Accumulator Fund", as shares of the
"LifeGoal Growth Portfolio";
(2) renamed four hundred million (400,000,000) shares of the
Corporation's authorized, classified and designated shares, with a
par value of $.001 per share, currently classified and named as
shares of the "Nations Conservative Growth Fund", as shares of the
"LifeGoal Balanced Growth Portfolio";
(3) renamed four hundred million (400,000,000) shares of the
Corporation's authorized, classified and designated shares, with a
par value of $.001 per share, currently classified and named as
shares of the "Nations Income and Managed Growth Fund", as shares
of the "LifeGoal Income and Growth Portfolio";
<PAGE>
THIRD: The shares classified and renamed in Article SECOND hereto
shall have the same preferences, conversions and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption as each previously authorized and classified Series and
Class of the Corporation.
FOURTH: In connection with Article SECOND hereto, the Corporation
provides the following information:
Prior to the renaming, the number of shares of each Series and
Class of the Corporation was as follows:
Series Number of Shares
Nations Capital Accumulator Fund
Primary A 100,000,000
Primary B 100,000,000
Investor A 100,000,000
Investor C 100,000,000
Nations Conservative Growth Fund
Primary A 100,000,000
Primary B 100,000,000
Investor A 100,000,000
Investor C 100,000,000
Nations Income and Managed Growth Fund
Primary A 100,000,000
Primary B 100,000,000
Investor A 100,000,000
Investor C 100,000,000
Unclassified 0
------------
TOTAL 1,200,000,000
FIFTH: After the renaming, the number of shares of each Series and
Class of the Corporation was as follows:
Series Number of Shares
LifeGoal Growth Portfolio
Primary A 100,000,000
Primary B 100,000,000
Investor A 100,000,000
Investor C 100,000,000
2
<PAGE>
Series Number of Shares
LifeGoal Balanced Growth Portfolio
Primary A 100,000,000
Primary B 100,000,000
Investor A 100,000,000
Investor C 100,000,000
LifeGoal Income and Growth Portfolio
Primary A 100,000,000
Primary B 100,000,000
Investor A 100,000,000
Investor C 100,000,000
Unclassified 0
------------
TOTAL 1,200,000,000
SIXTH: The total number of shares the Corporation is authorized to
issue remains at one billion, two hundred million (1,200,000,000) shares and the
aggregate par value of all shares having a par value remains at one million two
hundred thousand dollars ($1,200,000).
SEVENTH: The Board of Directors has duly authorized the filing of
these Articles of Amendment.
IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its President and witnessed by its Secretary as
of the ___ day of October 1996.
WITNESS: NATIONS LIFEGOAL FUNDS, INC.
___________________________________________ By: ____________________________
Richard H. Blank, Jr. A. Max Walker
Secretary President
3
<PAGE>
THE UNDERSIGNED, President of Nations LifeGoal Funds, Inc., who
executed on behalf of the Corporation the Articles of Amendment of which this
Certificate is made a part, hereby acknowledges in the name and on behalf of
said Corporation the foregoing Articles of Amendment to be the corporate act of
said Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury, and that the Board of
Directors of the Corporation has duly authorized the filing of these Articles of
Amendment.
---------------------------------
A. Max Walker
President
4
<PAGE>
FORM OF
INVESTMENT ADVISORY AGREEMENT
NATIONS LIFEGOAL FUNDS, INC.
THIS AGREEMENT is made as of this __ day of October, 1996, by and
between NATIONS LIFEGOAL FUNDS, INC., a Maryland corporation (the "Company"),
and NATIONSBANC ADVISORS, INC., a North Carolina corporation (the "Adviser"), on
behalf of those portfolios of the Company now or hereafter identified on
Schedule I hereto (each a "Fund" and, collectively, the "Funds").
RECITALS
WHEREAS, the Company is registered with the Securities and
Exchange Commission (the "Commission") under the Investment Company Act of 1940,
as amended (the "1940 Act") as an open-end, series management investment
company; and
WHEREAS, the Adviser is registered with the Commission under the
Investment Advisers Act of 1940, as amended (the "Advisers Act") as an
investment adviser; and
WHEREAS, the Company and the Adviser desire to enter into an
agreement to provide for investment advisory services to the Company upon the
terms and conditions hereinafter set forth; and
WHEREAS, the Company and the Adviser contemplate that certain
duties of the Adviser under this Agreement will be delegated to one or more
sub-investment adviser(s) (the "Sub-Adviser(s)") pursuant to separate
sub-advisory agreement(s) (the "Sub-Advisory Agreement(s)");
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. ADVISORY SERVICES. The Adviser shall act as investment adviser
for the Funds and shall, in such capacity, manage and supervise the investment
and reinvestment of the cash, securities or other properties comprising the
Funds' assets, subject at all times to the policies and control of the Company's
Board of Directors. The Adviser shall give the Funds the benefit of its best
judgment, efforts and facilities in rendering its services as investment
adviser.
2. INVESTMENT ANALYSIS AND IMPLEMENTATION. In carrying out its
obligations under paragraph 1 hereof, the Adviser shall:
(a) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial
data, domestic, foreign or otherwise, whether affecting the
economy generally or the Funds specifically, and
1
<PAGE>
whether concerning the individual issuers whose securities are
included in the Funds or the activities in which such issuers
engage, or with respect to securities which the Adviser considers
desirable for inclusion in the Funds;
(b) invest and reinvest, on an ongoing basis, assets
held in the Funds in strict accordance with the investment
policies of the Funds as set forth in the registration statement
of the Company with respect to the Funds, as the same may be
amended from time to time;
(c) select brokers and dealers to execute portfolio
transactions for the Funds and select the markets on or in which
the transactions will be executed;
(d) vote, either in person or by general or limited
proxy, or refrain from voting, any securities held in the Funds
for any purposes; exercise or sell any subscription or conversion
rights; consent to and join in or oppose any voting trusts,
reorganizations, consolidations, mergers, foreclosures and
liquidations and in connection therewith, deposit securities, and
accept and hold other property received therefor;
(e) determine on an ongoing basis the overall
investment strategy with respect to the Funds, and ensure on an
ongoing basis adherence to such strategy;
(f) use the same skill and care in providing
services to the Funds as it uses in providing services to
fiduciary accounts for which it has investment responsibilities;
(g) furnish the Company's Board of Directors with
such periodic and special reports as the Board of Directors may
request; and
(h) take, on behalf of the Funds, all actions which
appear necessary to carry into effect such purchase and sale
programs and supervisory functions set forth in this Paragraph 2.
3. DELEGATION OF RESPONSIBILITIES. Subject to the approval of the
Company's Board of Directors and, if required, the shareholders of the Funds,
the Adviser may, pursuant to the Sub-Advisory Agreement(s), delegate to the
Sub-Adviser(s) those of its duties hereunder identified in the Sub-Advisory
Agreement(s), provided that the Adviser shall continue to supervise and monitor
the performance of the duties delegated to the Sub-Adviser(s) and any such
delegation shall not relieve the Adviser of its duties and obligations under
this Agreement. The Adviser shall be solely responsible for providing
compensation, if any, to the Sub-Adviser(s) for services rendered under the
Sub-Advisory Agreement(s).
4. CONTROL BY BOARD OF DIRECTORS. Any investment activities
undertaken by the Adviser pursuant to this Agreement, as well as any other
activities undertaken by the Adviser on
2
<PAGE>
behalf of the Funds, shall at all times be subject to any directives of the
Company's Board of Directors.
5. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out its
obligations under this Agreement, the Adviser shall at all times conform to:
(a) all applicable provisions of the 1940 Act, the
Advisers Act and any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of
the Company, as the same may be amended from time to time, under
the Securities Act of 1933 and the 1940 Act;
(c) the provisions of the Articles of Incorporation
of the Company, as the same may be amended from time to time;
(d) the provisions of the By-laws of the Company, as
the same may be amended from time to time; and
(e) any other applicable provisions of state or
federal law.
6. BROKER-DEALER RELATIONSHIPS. The Adviser is responsible for the
purchase and sale of securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The Adviser's primary consideration
in effecting a security transaction will be to obtain the best price and
execution. In selecting a broker-dealer to execute each particular transaction
for a Fund, the Adviser will take the following into consideration: the best net
price available, the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the Fund on a continuing
basis. Accordingly, the price to the Fund in any transaction may be less
favorable than that available from another broker-dealer if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies as the Company's Board of Directors may from
time to time determine, the Adviser shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise solely by
reason of having caused a Fund to pay a broker or dealer that provides brokerage
and research services to the Adviser an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if the
Adviser determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
overall responsibilities of the Adviser with respect to the Fund and to other
clients of the Adviser. The Adviser is further authorized to allocate the orders
placed by it on behalf of the Funds to brokers and dealers who also provide
research or statistical material, or other services to the Funds or to the
Adviser. Such allocation shall be in such amounts and proportions as the Adviser
shall determine and the Adviser will report on said allocations regularly to the
Board of Directors of the Company indicating the brokers to whom such
allocations have been made and the basis therefor.
3
<PAGE>
7. COMPENSATION. Each Fund shall pay the Adviser, as compensation
for services rendered and expenses assumed hereunder, fees, payable monthly, at
the annual rate of 0.25% of the average daily net assets of the Fund. Each
Fund's obligations hereunder are several, and not joint, and no Fund shall be
responsible for the payment of any fees of any other Fund.
8. EXPENSES OF THE FUNDS. The Adviser hereby agrees to bear any
and all fees and expenses of the Funds (other than the management fee payable
under this Agreement), except taxes, brokerage fees and commissions,
extraordinary expenses, and any applicable Rule 12b-1 fees, shareholder
servicing fees and/or shareholder administration fees. The expenses borne by the
Adviser include, but are not limited to, legal, auditing, or governmental fees,
the cost of preparing share certificates, custodian, transfer agent and
shareholder service agent costs, expenses of issue, sale, redemption and
repurchase of shares, expenses of registering and qualifying shares for sale,
expenses relating to directors and shareholder meetings, the cost of preparing
and distributing reports and notices to shareholders, the fees and other
expenses incurred by the Funds in connection with membership in investment
company organizations and the cost of printing prospectuses and statements of
additional information distributed to the Funds' shareholders.
9. NON-EXCLUSIVITY. The services of the Adviser to the Funds are
not to be deemed to be exclusive, and the Adviser shall be free to render
investment advisory and administrative or other services to others (including
other investment companies) and to engage in other activities. It is understood
and agreed that officers or directors of the Adviser may serve as officers and
directors of the Company, and that officers or directors of the Company may
serve as officers or directors of the Adviser, to the extent that such services
may be permitted by law, and that the officers and directors of the Adviser are
not prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
10. RECORDS. The Adviser shall, with respect to orders the Adviser
places for the purchase and sale of portfolio securities of the Funds, maintain
or arrange for the maintenance of the documents and records required pursuant to
Rule 31a-1 under the 1940 Act as well as such records as the Funds'
administrator reasonably requests to be maintained, including, but not limited
to, trade tickets and confirmations for portfolio trades. All such records shall
be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1. All such records will be the property of the Funds and
will be available for inspection and use by the Funds. The Adviser will promptly
notify the Funds' administrator if it experiences any difficulty in maintaining
the records in an accurate and complete manner.
11. TERM AND APPROVAL. This Agreement shall become effective with
respect to a Fund when approved in accordance with the requirements of the 1940
Act, and shall thereafter continue from year to year, provided that the
continuation of the Agreement is specifically approved at least annually:
4
<PAGE>
(a) (i) by the Company's Board of Directors or (ii) by the
vote of "a majority of the outstanding voting securities" of the
Fund (as defined in Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Company's
Directors who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of a party to this Agreement
(other than as Directors of the Company), by votes cast in person
at a meeting specifically called for such purpose.
12. TERMINATION. This Agreement may be terminated with respect to a
Fund at any time, without the payment of any penalty, by vote of the Company's
Board of Directors or by vote of a majority of a Fund's outstanding voting
securities, or by the Adviser, on sixty (60) days' written notice to the other
party. The notice provided for herein may be waived by the party entitled to
receipt thereof. This Agreement shall automatically terminate in the event of
its assignment, the term "assignment" for purposes of this paragraph having the
meaning defined in Section 2(a)(4) of the 1940 Act.
13. LIABILITY OF ADVISER. In the absence of willful misfeasance, bad
faith, negligence or reckless disregard of obligations or duties hereunder on
the part of the Adviser or any of its officers, directors, employees or agents,
the Adviser shall not be subject to liability to the Company or to any
shareholder of the Company for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
14. INDEMNIFICATION. In the absence of willful misfeasance, bad
faith, negligence or reckless disregard of duties hereunder on the part of the
Adviser or any of its officers, directors, employees or agents, the Company
hereby agrees to indemnify and hold harmless the Adviser against all claims,
actions, suits or proceedings at law or in equity whether brought by a private
party or a governmental department, commission, board, bureau, agency or
instrumentality of any kind, arising from the advertising, solicitation, sale,
purchase or pledge of securities, whether of the Funds or other securities,
undertaken by the Funds, their officers, directors, employees or affiliates,
resulting from any violations of the securities laws, rules, regulations,
statutes and codes, whether federal or of any state, by the Funds, their
officers, directors, employees or affiliates. Federal and state securities laws
impose liabilities under certain circumstances on persons who act in good faith,
and nothing herein shall constitute a waiver or limitation of any rights which a
Fund may have and which may not be waived under any applicable federal and state
securities laws.
15. NOTICES. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Company
shall be c/o Stephens Inc., 111 Center Street, Suite 300, Little Rock, Arkansas
72201 and that of the Adviser shall be One NationsBank Plaza, Charlotte, North
Carolina 28255.
5
<PAGE>
16. QUESTIONS OF INTERPRETATION. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act or the Advisers Act shall be
resolved by reference to such terms or provision of the 1940 Act or the Advisers
Act and to interpretations thereof, if any, by the United States Courts or in
the absence of any controlling decision of any such court, by rules, regulations
or orders of the Commission issued pursuant to the 1940 Act or the Advisers Act.
In addition, where the effect of a requirement of the 1940 Act or the Advisers
Act reflected in any provision of this Agreement is revised by rule, regulation
or order of the Commission, such provision shall be deemed to incorporate the
effect of such rule, regulation or order.
17. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. No amendment of this
Agreement affecting a Fund shall be effective until approved by vote of a
majority of the outstanding voting securities of such Fund. However, this shall
not prevent the Adviser from reducing, limiting or waiving its fee.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to
be executed in duplicate by their respective officers on the day and year first
written above.
NATIONS LIFEGOAL FUNDS, INC.
on behalf of the Funds
By: __________________________
A. Max Walker
President and Chairman of the
Board of Directors
NATIONSBANC ADVISORS, INC.
By: __________________________
Mark H. Williamson
President and Director
7
<PAGE>
SCHEDULE I
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
8
<PAGE>
FORM OF
SUB-ADVISORY AGREEMENT
NATIONS LIFEGOAL FUNDS, INC.
THIS AGREEMENT is made as of this ___ day of October, 1996, by and
among NATIONSBANC ADVISORS, INC., a North Carolina corporation (the "Adviser"),
TRADESTREET INVESTMENT ASSOCIATES, INC., a Maryland corporation (the
"Sub-Adviser"), and NATIONS LIFEGOAL FUNDS, INC., a Maryland corporation (the
"Company"), on behalf of those portfolios of the Company now or hereafter
identified on Schedule I hereto (each a "Fund" and collectively, the "Funds").
RECITALS
WHEREAS, the Company is registered with the Securities and
Exchange Commission (the "Commission") under the Investment Company Act of 1940,
as amended (the "1940 Act") as an open-end, series management investment
company; and
WHEREAS, the Adviser is registered with the Commission under the
Investment Advisers Act of 1940, as amended (the "Advisers Act") and engages in
the business of acting as an investment adviser; and
WHEREAS, the Sub-Adviser also is registered with the Commission
under the Advisers Act as an investment adviser; and
WHEREAS, the Adviser and the Company have entered into an
Investment Advisory Agreement of even date herewith (the "Investment Advisory
Agreement"), pursuant to which the Adviser shall act as investment adviser with
respect to the Funds; and
WHEREAS, pursuant to such Investment Advisory Agreement, the
Adviser, with the approval of the Company, wishes to retain the Sub-Adviser for
purposes of rendering advisory services to the Adviser and the Company in
connection with the Funds upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. APPOINTMENT OF SUB-ADVISER. The Adviser hereby appoints, and
the Company hereby approves, the Sub-Adviser to render investment research and
advisory services to the Adviser and the Company with respect to the Funds,
under the supervision of the Adviser and subject to the policies and control of
the Company's Board of Directors, and the Sub-Adviser hereby accepts such
appointment, all subject to the terms and conditions contained herein.
-1-
2. INVESTMENT SERVICES. The specific duties of the Adviser
delegated to the Sub-Adviser shall be the following:
(a) obtaining and evaluating pertinent information
about significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether affecting
the economy generally or the Funds specifically, and whether
concerning the individual issuers whose securities are included in
the Funds or the activities in which such issuers engage, or with
respect to securities which the Adviser or Sub-Adviser considers
desirable for inclusion in the Funds;
(b) investing and reinvesting, on an ongoing basis,
assets held in the Funds in strict accordance with the investment
policies of the Funds as set forth in the registration statement
of the Company with respect to the Funds, as the same may be
amended from time to time;
(c) in accordance with policies and procedures
established by the Board of Directors of the Company and the
Adviser, selecting brokers and dealers to execute portfolio
transactions for the Funds and selecting the markets on or in
which the transactions will be executed;
(d) voting, either in person or by general or
limited proxy, or refraining from voting, any securities held in
the Funds for any purposes; exercising or selling any subscription
or conversion rights; consenting to and joining in or opposing any
voting trusts, reorganizations, consolidations, mergers,
foreclosures and liquidations and in connection therewith,
depositing securities, and accepting other property received
therefor; and
(e) performing other acts necessary or appropriate
in connection with the proper management of the Funds, consistent
with its obligations hereunder, and as may be directed by the
Adviser and/or the Company's Board of Directors.
3. CONTROL BY BOARD OF DIRECTORS. As is the case with respect to
the Adviser under the Investment Advisory Agreement, any investment activities
undertaken by the Sub-Adviser pursuant to this Agreement, as well as any other
activities undertaken by the Sub-Adviser with respect to the Funds, shall at all
times be subject to any directives of the Board of Directors of the Company.
4. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out
its obligations under this Agreement, the Sub-Adviser shall at all times
conform to:
(a) all applicable provisions of the 1940 Act, the
Advisers Act and any rules and regulations adopted thereunder;
-2-
<PAGE>
(b) the provisions of the registration statement of
the Company applicable to the Funds, as the same may be amended
from time to time, under the Securities Act of 1933 and the 1940
Act;
(c) the provisions of the Articles of Incorporation
of the Company, as the same may be amended from time to time;
(d) the provisions of the By-Laws of the Company, as
the same may be amended from time to time;
(e) any other applicable provisions of state or
federal law.
In addition, any code of ethics adopted by the Sub-Adviser
pursuant to Rule 17j-1 under the 1940 Act shall include policies, prohibitions
and procedures which substantially conform to the recommendations regarding
personal investing approved by the Board of Governors of the Investment Company
Institute on June 30, 1994, as such recommendations may be amended from time to
time.
5. BROKER-DEALER RELATIONSHIPS. The Sub-Adviser is responsible for
the purchase and sale of securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The Sub-Adviser's primary
consideration in effecting a security transaction will be to obtain the best
price and execution. In selecting a broker-dealer to execute each particular
transaction for a Fund, the Sub-Adviser will take the following into
consideration: the best net price available, the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the Fund on a continuing basis. Accordingly, the price to the
Fund in any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Adviser or
the Company's Board of Directors may from time to time determine, the
Sub-Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of having caused a
Fund to pay a broker or dealer that provides brokerage and research services to
the Sub-Adviser an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Sub-Adviser determines in
good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the overall
responsibilities of the Sub-Adviser with respect to the Fund and to other
clients of the Sub-Adviser. The Sub-Adviser is further authorized to allocate
the orders placed by it on behalf of the Funds to brokers and dealers who also
provide research or statistical material, or other services to the Funds or to
the Sub-Adviser. Such allocation shall be in such amounts and proportions as the
Sub-Adviser shall determine, and the Sub-Adviser will report on said allocations
regularly to the Adviser and to the Board of Directors of the
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Company indicating the brokers to whom such allocations have been made and the
basis therefor.
6. COMPENSATION. The Adviser shall pay the Sub-Adviser, as
compensation for services rendered hereunder, fees, payable monthly, at the
annual rate of 0.05% of the average daily net assets of each Fund. It is
understood that the Adviser shall be responsible for the Sub-Adviser's fee for
its services hereunder, and the Sub-Adviser agrees that it shall have no claim
against the Company or the Fund with respect to compensation under this
Agreement. The Sub-Adviser's fees shall be pro-rated for portions of months in
which sub-advisory services are provided.
The average daily net asset value of the Funds shall be determined
in the manner set forth in the Articles of Incorporation and registration
statement of the Company, as amended from time to time.
7. EXPENSES OF THE FUNDS. All of the ordinary business expenses
incurred by the Company in the operations of the Funds and the offering of their
shares shall be borne by the Funds unless specifically provided otherwise in
this Agreement or in the Investment Advisory Agreement.
8. NON-EXCLUSIVITY. The services of the Sub-Adviser to the Adviser
and the Company with respect to the Fund are not to be deemed to be exclusive,
and the Sub-Adviser shall be free to render investment advisory and
administrative or other services to others (including other investment
companies) and to engage in other activities. It is understood and agreed that
the officers and directors of the Sub-Adviser are not prohibited from engaging
in any other business activity or from rendering services to any other person,
or from serving as partners, officers, directors or trustees of any other firm
or trust, including other investment advisory companies.
9. RECORDS. The Sub-Adviser shall, with respect to the orders the
Sub-Adviser places for the purchases and sales of portfolio securities of the
Funds, maintain or arrange for the maintenance of the documents and records
required pursuant to Rule 31a-1 under the 1940 Act as well as such records as
the Funds' administrator reasonably requests to be maintained, including, but
not limited to, trade tickets and confirmations for portfolio trades. All such
records shall be maintained in a form acceptable to the Funds and in compliance
with the provisions of Rule 31a-1. All such records will be the property of the
Funds and will be available for inspection and use by the Adviser or the Funds
upon request. The Sub-Adviser will promptly notify the Adviser and the Fund's
administrator if it experiences any difficulty in maintaining the records in an
accurate and complete manner.
10. TERM AND APPROVAL. This Agreement shall become effective with
respect to each Fund when approved in accordance with the requirements of the
1940 Act, and shall thereafter continue in force and effect for one year, and
may be continued from
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year to year with respect to each Fund thereafter, provided that the
continuation of the Agreement is specifically approved at least annually:
(a) (i) by the Company's Board of Directors or (ii) by the
vote of "a majority of the outstanding voting securities" of the
Fund (as defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the Directors
of the Company who are not parties to this Agreement or
"interested persons" (as defined in the 1940 Act) of a party to
this Agreement (other than as Directors of the Company), by votes
cast in person at a meeting specifically called for such purpose.
11. TERMINATION. This Agreement may be terminated at any time with
respect to a Fund, without the payment of any penalty, by vote of the Company's
Board of Directors or by vote of a majority of the Fund's outstanding voting
securities, or by the Adviser or by the Sub-Adviser, on sixty (60) days' written
notice to the other parties to this Agreement. Any party entitled to notice may
waive the notice provided for herein. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment" for purposes of
this paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act.
12. LIABILITY OF SUB-ADVISER. In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of obligations or
duties hereunder on the part of the Sub-Adviser or any of its officers,
directors, employees or agents, the Sub-Adviser shall not be subject to
liability to the Adviser or to the Company for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security.
13. INDEMNIFICATION. In the absence of willful misfeasance, bad
faith, negligence or reckless disregard of duties hereunder on the part of the
Sub-Adviser, or any officers, directors, employees or agents thereof, the
Company hereby agrees to indemnify and hold harmless the Sub-Adviser against all
claims, actions, suits or proceedings at law or in equity whether brought by a
private party or a governmental department, commission, board, bureau, agency or
instrumentality of any kind, arising from the advertising, solicitation, sale,
purchase or pledge of securities, whether of the Funds or other securities,
undertaken by the Funds, their officers, directors, employees, agents or
affiliates, resulting from any violations of the securities laws, rules,
regulations, statutes and codes, whether federal or of any state, by the Funds,
their officers, directors, employees or affiliates. Federal and state securities
laws impose liabilities under certain circumstances on persons who act in good
faith, and nothing herein shall constitute a waiver or limitation of any rights
which a Fund may have and which may not be waived under any applicable federal
and state securities laws.
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<PAGE>
14. NOTICES. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to such address as may be
designated for the receipt of such notice, with a copy to the Company. Until
further notice, it is agreed that the address of the Company shall be 111 Center
Street, Little Rock, Arkansas 72201; that of the Sub-Adviser shall be One
NationsBank Plaza, Charlotte, North Carolina 28255; and that of the Adviser
shall be One NationsBank Plaza, Charlotte, North Carolina 28255.
15. QUESTIONS OF INTERPRETATION. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act or the Advisers Act shall be
resolved by reference to such term or provision of the 1940 Act or the Advisers
Act and to interpretations thereof, if any, by the United States courts or in
the absence of any controlling decision of any such court, by rules, regulations
or orders of the Commission issued pursuant to the 1940 Act or the Advisers Act.
In addition, where the effect of a requirement of the 1940 Act or the Advisers
Act reflected in any provision of this Agreement is revised by rule, regulation
or order of the Commission, such provision shall be deemed to incorporate the
effect of such rule, regulation or order.
16. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. No amendment of this
Agreement affecting a Fund shall be effective until approved by vote of a
majority of the outstanding voting securities of such Fund. However, this shall
not prevent the Sub-Adviser from reducing, limiting or waiving its fee.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in triplicate by their respective officers on the day and year
first written above.
NATIONS LIFEGOAL FUNDS, INC.,
on behalf of the Funds
By:
A. Max Walker
President and Chairman of the
Board of Directors
NATIONSBANC ADVISORS, INC.
By:
Mark H. Williamson
President and Director
TRADESTREET INVESTMENT
ASSOCIATES, INC.
By:
Andrew M. Silton
President and Director
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SCHEDULE I
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
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<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Pre-Effective Amendment No. 1 under the Securities Act
of 1933 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated October 2, 1996, relating to the financial
statements of Nations LifeGoal Funds, Inc., which are also included in the
Statement of Additional Information constituting part of this Registration
Statement. We also consent to the references to us under the heading "Other
Service Providers" in the Prospectuses and under the heading "Independent
Accountant and Reports" in the Statement of Additional Information.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
October 9, 1996
October 1, 1996
Nations LifeGoal Funds, Inc.
111 Center Street
Little Rock, Arkansas 72201
Gentlemen:
With respect to our purchase from you of $100,000 in shares of common
stock in Nations LifeGoal Funds, Inc. (the "Company"), consisting of $40,000 in
Primary A shares of the LifeGoal Growth Portfolio, $30,000 in Primary A shares
of the LifeGoal Balanced Growth Portfolio and $30,000 in Primary A shares of the
LifeGoal Income and Growth Portfolio Fund, we hereby advise you that we are
purchasing such shares with no intention to dispose of such shares either
through resale to others or redemption by the Company.
Very truly yours,
STEPHENS INC.
By: /s/ Richard H. Blank, Jr.
Name: Richard H. Blank, Jr.
Title: Vice President
NATIONS LIFEGOAL FUNDS, INC.
RULE 18F-3 MULTI-CLASS PLAN
I. INTRODUCTION.
Pursuant to Rule 18f-3 under the Investment Company Act of 1940,
as amended (the "1940 Act"), the following sets forth the method for allocating
fees and expenses among each class of shares in the investment portfolios of
Nations LifeGoal Funds, Inc. (the "Company"). In addition, this Rule 18f-3
Multi-Class Plan (the "Plan") sets forth the maximum initial sales loads,
contingent deferred sales charges, Rule 12b-1 distribution fees, shareholder
servicing fees, conversion features, exchange privileges and other shareholder
services applicable to a particular class of shares of the portfolios. The Plan
also identifies expenses that may be allocated to a particular class of shares
to the extent that they are actually incurred in a different amount by the class
or relate to a different kind or degree of services provided to the class.
The Company is an open-end series investment company registered
under the 1940 Act, the shares of which are registered on Form N-1A under the
Securities Act of 1933 (Registration Nos. 333-09703 and 811-07745). The Company
elects to offer multiple classes of shares in its investment portfolios pursuant
to the provisions of Rule 18f-3 and this Plan.
The Company currently consists of the following three separate investment
portfolios: LifeGoal Growth Portfolio, LifeGoal Balanced Growth Portfolio and
LifeGoal Income and Growth Portfolio (each, a "Fund", and collectively, the
"Funds"). The Funds are authorized to issue the following classes of shares
representing interests in the Funds:
Primary A Shares, Primary B Shares, Investor A Shares and Investor C Shares;
II.ALLOCATION OF EXPENSES.
A. Pursuant to Rule 18f-3 under the 1940 Act, the Company shall
allocate to each class of shares in a Fund (i) any fees and expenses incurred by
the Company in connection with the distribution of such class of shares under a
distribution plan adopted for such class of shares pursuant to Rule 12b-1, and
(ii) any fees and expenses incurred by the Company under a shareholder servicing
plan in connection with the provision of shareholder services to the holders of
such class of shares.
B. In addition, pursuant to Rule 18f-3, the Company may allocate
the following fees and expenses, if any, to a particular class of shares in a
single Fund:
(i) transfer agent fees identified by the transfer agent as
being attributable to such class of shares;
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(ii) printing and postage expenses related to preparing and
distributing materials such as shareholder reports,
prospectuses, reports, and proxies to current shareholders
of such class of shares or to regulatory agencies with
respect to such class of shares;
(iii) blue sky registration or qualification fees incurred by
such class of shares;
(iv) Securities and Exchange Commission registration fees
incurred by such class of shares;
(v) the expense of administrative personnel and services
(including, but not limited to, those of a portfolio
accountant, custodian or dividend paying agent charged with
calculating net asset values or determining or paying
dividends) as required to support the shareholders of such
class of shares;
(vi) litigation or other legal expenses relating solely to such
class of shares;
(vii) fees of the Company's Directors incurred as result of
issues relating to such class of shares;
(viii) independent accountants' fees relating solely to such class
of shares; and
(ix) any other fees and expenses, not including advisory or
custodial fees or other expenses related to the management
of the Fund's assets, relating to (as defined below) such
class of shares.
C. For all purposes under this Plan, fees and expenses "relating
to" a class of shares are those fees and expenses that are actually incurred in
a different amount by the class or that relate to a different kind or degree of
services provided to the class. The proper officers of the Company shall have
the authority to determine whether any or all of the fees and expenses described
in Section B of this Part II should be allocated to a particular class of
shares. The Board of Directors will monitor any such allocations to ensure that
they comply with the requirements of the Plan.
D. Income, realized and unrealized capital gains and losses, and
any expenses of a Fund not allocated to a particular class of any such Fund
pursuant to this Plan shall be allocated to each class of the Fund on the basis
of the relative net assets (settled shares), as defined in Rule 18f-3, of that
class in relation to the net assets of the Fund.
E. In certain cases, NationsBanc Advisors, Inc., TradeStreet
Investment Associates, Inc., Stephens Inc., First Data Investor Services Group,
Inc., (formerly The Shareholder Services Group, Inc.), or another service
provider for a Fund may waive or reimburse all or a portion of the expenses of a
specific class of shares of the Fund. The Board of Directors will monitor any
such waivers or reimbursements to ensure that they do not provide a means for
cross-subsidization between classes.
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III.CLASS ARRANGEMENTS.
The following summarizes the maximum front-end sales charges,
contingent deferred sales charges, Rule 12b-1 distribution fees, shareholder
servicing fees, conversion features, exchange privileges and other shareholder
services applicable to each class of shares of the Company. Additional details
regarding such fees and services are set forth in the Funds' current
Prospectus(es) and Statement(s) of Additional Information.
A.PRIMARY A SHARES.
1.Maximum Initial Sales Load: None
2. Contingent Deferred Sales Charge: None
3. Maximum Rule 12b-1 Distribution Fees: None
4. Maximum Shareholder Servicing Fees: None
6. Exchange Privileges:
(a) Primary A Shares of a Fund may be exchanged
for Primary A Shares of any other fund of
the Nations Fund Family.
(b) From time to time, the Board of Directors of
the Company may modify, or ratify
modifications to, the exchange privileges of
Primary A Shares of a Fund without amending
this Plan, provided that such exchange
privileges, as modified, are described in
the then-current prospectus for such shares
of such Fund.
7. Other Shareholder Services: None
B. PRIMARY B SHARES -- ALL FUNDS.
1. Maximum Initial Sales Load: None
2. Contingent Deferred Sales Charge: None
3. Maximum Rule 12b-1 Distribution Fees: None
4. Maximum Shareholder Servicing/Administration Fees:
(a) Pursuant to a Shareholder Administration
Plan, each Fund may pay shareholder
administration fees of up to 0.60% of the
average daily
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net assets of such shares,
provided that in no event may the portion of
such fee that constitutes a "service fee,"
as that term is defined in Rule 2830 of the
Conduct Rules of the National Association of
Securities Dealers, Inc., exceed 0.25% of
the average daily net asset value of such
Primary B Shares of a Fund.
5. Conversion Features/Exchange Privileges: Primary B
Shares of a Fund shall have such conversion
features and exchange privileges, if any, as are
determined by or ratified by the Board of Directors
of the Company and described in the then-current
prospectus for such shares of such Fund.
6. Exchange Privileges:
(a) Primary B Shares of a Fund may be exchanged
for Primary B Shares of any other fund of
Nations Fund Family.
(b) From time to time, the Board of Directors of
the Company may modify, or ratify
modifications to, the exchange privileges of
Primary B Shares of a Fund without amending
this Plan, provided that such exchange
privileges, as modified, are described in
the then-current prospectus for such shares
of such Fund.
7. Other Shareholder Services: None
C. INVESTOR A SHARES -- ALL FUNDS.
1. Maximum Initial Sales Load: None
2. Contingent Deferred Sales Charge (as a percentage of
the lower of the original purchase price or
redemption proceeds): None
3. Maximum Rule 12b-1 Distribution/Shareholder
Servicing Fees: Pursuant to a Shareholder Servicing
and Distribution Plan adopted under Rule 12b-1,
Investor A Shares of each Fund may pay a combined
distribution and shareholder servicing fee of up to
0.25% of the average daily net assets of such
shares.
4. Conversion Features: Investor A Shares of a Fund
shall have such conversion features, if any, as are
determined by or ratified by the Board of Directors
of the Company and described in the then-current
prospectus for such shares of such Fund.
5. Exchange Privileges:
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(a) Investor A Shares of each Fund may be
exchanged for Investor A Shares of any other
Nations Fund Non-Money Market Fund or any
Nations Fund Money Market Fund.
(b) From time to time, the Board of Directors of
the Company may modify, or ratify
modifications to, the exchange privileges of
Investor A Shares of a Fund without amending
this Plan, provided that such exchange
privileges, as modified, are described in
the then-current prospectus for such shares
of such Fund.
6. Other Shareholder Services. The Company offers a
Systematic Investment Plan and Automatic Withdrawal
Plan to holders of Investor A Shares of the Funds.
D. INVESTOR C SHARES -- ALL FUNDS.
1. Maximum Initial Sales Load: None
2. Contingent Deferred Sales Charge (as a percentage of
the lower of the purchase price or redemption
proceeds): 0.50% of the average daily net assets of
such shares.
3. Maximum Rule 12b-1 Distribution Fees: Pursuant to a
Distribution Plan adopted under Rule 12b-1, Investor
C Shares of each Fund may pay distribution fees of
up to 0.75% of the average daily net assets of such
shares.
4. Maximum Shareholder Servicing Fees: Pursuant to a
Shareholder Servicing Plan, the Investor C Shares of
each Fund may pay shareholder servicing fees of up
to 0.25% of the average daily net assets of such
shares.
5. Conversion Features: Investor C Shares of a Fund
shall have such conversion features, if any, as
are determined by or ratified by the Board of
Directors of the Company and described in the
then-current prospectus for such shares of such
Fund.
6. Exchange Privileges:
(a) Investor C Shares of a Fund may be exchanged
for Investor C Shares of any other Nations
Fund Non-Money Market Fund, except for
Investor C Shares of Nations Short-Term
Income Fund or Nations Short-Term Municipal
Income Fund until one year after purchase.
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(b) In addition, Investor C Shares of a Fund may
be exchanged for Investor D Shares of any
Nations Fund Money Market Fund.
(c) From time to time, the Board of Directors of
the Company may modify, or ratify
modifications to, the exchange privileges of
Investor C Shares of a Fund without amending
this Plan, provided that such exchange
privileges, as modified, are described in
the then-current prospectus for such shares
of such Fund.
7. Other Shareholder Services. The Company offers a
Systematic Investment Plan and Automatic Withdrawal
Plan to holders of Investor C Shares of the Funds.
IV. BOARD REVIEW.
The Board of Directors of the Company shall review this Plan as
frequently as it deems necessary. Prior to any material amendment(s) to this
Plan with respect to a Fund's shares, the Company's Board of Directors,
including a majority of the Directors who are not interested persons of the
Company, shall find that the Plan, as proposed to be amended (including any
proposed amendments to the method of allocating class and/or fund expenses), is
in the best interests of each class of shares of the Fund individually and the
Fund as a whole. In considering whether to approve any proposed amendment(s) to
the Plan, the Directors of the Company shall request and evaluate such
information as they consider reasonably necessary to evaluate the proposed
amendment(s) to the Plan.
Adopted: July 11, 1996
Amended: October __, 1996
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