As Filed with the Securities and Exchange Commission on August 7, 1996
Registration No. 33- ,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. ____ / /
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. / /
(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.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8 (a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
<PAGE>
EXPLANATORY NOTE
This Registration Statement on Form N-1A (the "Registration Statement")
of Nations LifeGoal Funds, Inc. (the "Company") is being filed to register three
series: Nations Capital Accumulator Fund, Nations Conservative Growth Fund and
Nations Income and Managed Growth Fund (collectively, the "LifeGoal Funds").
Each of the LifeGoal Funds 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", pursuant to an exemptive order that permits such
investments (Investment Company Act of 1940, Release No. 22085) (July 22, 1996).
<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 Funds 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 Funds 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
Fund Investments; Additional
Information on Underlying Nations
Funds Investments
<PAGE>
Item 14. Management of the Fund Directors and Officers of the LifeGoal
Funds; 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
</TABLE>
<PAGE>
Prospectus
Primary A Shares
October , 1996
LIFEGOAL FUNDS
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
Investment Adviser: NationsBanc Advisors, Inc.
Investment Sub-Adviser: TradeStreet Investment Associates, Inc.
Distributor: Stephens Inc.
Nations Fund
<PAGE>
(Redherring appears on the left side of page. The language is as follows.)
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION
DATED SEPTEMBER 1, 1996
Prospectus
Primary A Shares
October , 1996
This Prospectus describes three diversified
investment portfolios, Nations Capital Accumulator
Fund, Nations Conservative Growth Fund, and Nations
Income and Managed Growth Fund (each a "LifeGoal
Fund" and, collectively, the "LifeGoal Funds"), of
Nations LifeGoal Funds, Inc. (the "Company"), an
open-end management investment company in the
Nations Fund Family. The LifeGoal Funds invest
substantially all of their assets in certain other
portfolios within the Nations Fund Family. These
underlying portfolios are referred to in this
Prospectus as "Nations Funds". This Prospectus
describes one class of shares of each LifeGoal Fund
-- Primary A Shares.
This Prospectus sets forth concisely the information
about each LifeGoal Fund 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 Funds 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 Funds,
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 Funds.
TradeStreet Investment Associates, Inc.
("TradeStreet") is investment sub-adviser to the
LifeGoal Funds. 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 FUNDS 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 FUNDS.
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 FUNDS:
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
For Fund 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 Funds
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 Funds Are Managed 14
Organization And History 16
About Your
Investment
How To Buy Shares 17
How To Redeem Shares 17
How To Exchange Shares 18
How The LifeGoal Funds Value Their Shares 18
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
Funds' 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 Funds or the
distributor. This Prospectus does not constitute an
offering by LifeGoal Funds or by the distributor in
any jurisdiction in which such offering may not
lawfully be made.
2
<PAGE>
About The LifeGoal Funds
Prospectus Summary
(Bullet) Type of Company: Open-end management investment company.
(Bullet) Investment Objectives and Policies:
(Bullet) Nations Capital Accumulator Fund's investment objective is to seek
capital appreciation through exposure to a variety of equity market
segments.
(Bullet) Nations Conservative Growth Fund's investment objective is
to seek total return through a balanced portfolio of equity
and fixed income securities.
(Bullet) Nations Income and Managed Growth Fund's investment
objective is to seek current income and modest
growth to protect against inflation and to preserve
purchasing power.
The LifeGoal Funds 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 Funds 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 Funds. NBAI also advises more than 43 Nations
Funds. TradeStreet Investment Associates, Inc. provides sub-advisory
services to the LifeGoal Funds and to more than 39 of the Nations
Funds.
(Bullet) Dividends and Distributions: Each LifeGoal Fund declares and pays
dividends from net investment income quarterly. Each LifeGoal Fund'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 Fund, there is no assurance that it will be
able to do so. Investments in a LifeGoal Fund are not insured against
loss of principal. Investments by a LifeGoal Fund 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
Fund 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 Fund's
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
Fund. The following tables summarize estimated shareholder transaction and
operating expenses as a percentage of average net assets for Primary A Shares of
each LifeGoal Fund. The Examples show the cumulative expenses attributable to a
hypothetical $1,000 investment in each LifeGoal Fund over specified periods.
LIFEGOAL FUNDS PRIMARY A SHARES
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
Nations Capital Nations
Accumulator Conservative
Fund Growth Fund
<S> <C> <C>
Sales Load Imposed on Purchases None None
Deferred Sales Load None None
</TABLE>
<TABLE>
<CAPTION>
Nations Income
and Managed
Growth Fund
<S> <C>
Sales Load Imposed on Purchases None
Deferred Sales Load None
</TABLE>
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
Nations Capital Nations
Accumulator Conservative
Fund Growth Fund
<S> <C> <C>
Management Fees .25% .25%
Other Expenses .0% .0%
Total Operating Expenses .25% .25%
</TABLE>
<TABLE>
<CAPTION>
Nations Income
and Managed
Growth Fund
<S> <C>
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 Fund, assuming indirect expenses (the LifeGoal Funds'
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>
Nations Capital Nations
Accumulator Conservative
Fund Growth Fund
<S> <C> <C>
1 Year $12 $11
3 Years $38 $34
</TABLE>
<TABLE>
<CAPTION>
Nations Income
and Managed
Growth Fund
<S> <C>
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 Fund 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 Funds' current fiscal year and the Example includes
indirect expenses for the underlying Nations Funds' most recent fiscal year (or
estimates thereof for new Funds). For more complete descriptions of the LifeGoal
Funds' operating expenses, see "How The LifeGoal Funds 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%
</TABLE>
<TABLE>
<CAPTION>
(before 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* .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%
* 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 Funds' 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 Fund is as follows:
<TABLE>
<CAPTION>
(after fee waivers
and/or expense
reimbursements)
<S> <C>
Nations Capital Accumulator Fund .86% to 1.01%
Nations Conservative Growth Fund .78% to .85%
Nations Income & Managed Growth Fund .56% to .73%
</TABLE>
<TABLE>
<CAPTION>
(before fee
waivers and/or
expense
reimbursements)
<S> <C>
Nations Capital Accumulator Fund .92% to 1.05%
Nations Conservative Growth Fund .87% to .92%
Nations Income & Managed Growth Fund .77% to .91%
</TABLE>
The indirect expense ratios fluctuate within these ranges depending upon how
assets are allocated among the Nations Funds. The LifeGoal Funds 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 classes in
the percentages shown below. Under extraordinary circumstances, a LifeGoal
Fund's investment in one or more Nations Funds might exceed these ranges. For
temporary defensive purposes, any LifeGoal Fund may invest up to 100% of its
assets in Nations Prime Fund.
5
<PAGE>
Objectives
(Bullet) Nations Capital Accumulator Fund -- Nations Capital Accumulator Fund's
investment objective is to seek capital appreciation through exposure
to a variety of equity market segments.
<TABLE>
<CAPTION>
Fund Class Range
<S> <C>
Large-Capitalization Domestic Equity Funds 35-75%
Small/Mid-Capitalization Domestic Equity Funds 20-30%
Core International Equity Funds 10-20%
Non-Core International Equity Funds 0-10%
</TABLE>
<TABLE>
<CAPTION>
Fund Class Funds
<S> <C>
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) Nations Conservative Growth Fund -- Nations Conservative Growth Fund's
investment objective is to seek total return through a balanced
portfolio of equity and fixed income securities.
<TABLE>
<CAPTION>
Fund Class 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%
</TABLE>
<TABLE>
<CAPTION>
Fund Class Funds
<S> <C>
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
</TABLE>
(Bullet)Nations Income and Managed Growth Fund -- Nations Income and Managed
Growth Fund's investment objective is to seek current income and modest
growth to protect against inflation and to preserve purchasing power.
<TABLE>
<CAPTION>
Fund Class Range
<S> <C>
Large-Capitalization Domestic Equity Funds 10-30%
Core International Equity Funds 0-10%
Short Duration Bond Funds 50-90%
Cash 0-20%
</TABLE>
<TABLE>
<CAPTION>
Fund Class Funds
<S> <C>
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
Cash Nations Prime Fund
</TABLE>
The LifeGoal Funds are intended primarily for long-term investors. The Funds 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 Funds 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 Fund'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 classes.
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 Fund are allocated among various asset and fund
classes. Each LifeGoal Fund has its own asset allocation strategy which gives it
a distinctive risk profile and offers different return potential. Investors
should select the LifeGoal Fund (or Funds) which best matches their investment
goals, risk tolerance and investment horizon.
In general, the greater the LifeGoal Fund'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 Funds 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 Fund, there is no assurance that it will be able to do so. No single
LifeGoal Fund should be considered, by itself, to provide a complete investment
program for any investor. The net asset value of the shares of a LifeGoal Fund
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 Funds for short-term
financial needs. The LifeGoal Funds 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 Fund'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 asset classes and Nations Funds within
a particular LifeGoal Fund's portfolio. Rebalancing is the process of bringing
such portfolio allocations back into alignment with the applicable weightings. A
LifeGoal Fund's investments are continuously monitored and are reallocated as
often as the Adviser deems appropriate. In addition, Fund allocations and
performance are reviewed at least quarterly for rebalancing at the discretion of
the Adviser.
Determining the asset allocation applicable to each LifeGoal Fund is a two step
process. The first step is determining the broad asset categories for each
LifeGoal Fund -- 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 Fund 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.
Although it is expected that the LifeGoal Funds 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 Funds. Among other things, the Adviser may substitute or
include other portfolios from the Nations Fund Family, including any introduced
subsequent to this Prospectus, as permissible investments for the LifeGoal
Funds.
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.
7
<PAGE>
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: An exemptive order issued by the SEC permits,
among other things, the LifeGoal Funds to purchase an unlimited amount of the
outstanding voting shares of each Nations Fund, and each of the Nations Funds to
sell more than 3% of its total outstanding voting stock to the LifeGoal Funds,
under certain conditions. Without this order, the Investment Company Act of
1940, as amended (the "1940 Act"), would prohibit the LifeGoal Funds from
investing in the Nations Funds. On the basis of this exemption, each of the
LifeGoal Funds 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 Funds invest do not
necessarily share the same investment objective as the investing LifeGoal Fund,
those Nations Funds will be selected by the Adviser based on the asset
allocation process described above.
Although each LifeGoal Fund intends to invest substantially all of its assets in
some or all of the underlying Nations Funds, each LifeGoal Fund 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
Fund will invest more than 5% of its assets in any of these direct investments.
Investment Limitations: Each LifeGoal Fund is subject to a number of investment
limitations, which are described in the SAI. Among other things, the LifeGoal
Funds' 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 Fund, unless
otherwise specified, may be changed without a vote of the LifeGoal Fund's
shareholders. If the investment objective, policies or limitations of a LifeGoal
Fund change, shareholders should consider whether the LifeGoal Fund remains an
appropriate investment in light of their current position and needs.
In order to register a LifeGoal Fund's shares for sale in certain states, a
LifeGoal Fund may make commitments more restrictive than the investment policies
and limitations described in this Prospectus and the SAI. Should a LifeGoal Fund
determine that any such commitment is no longer in the best interests of the
LifeGoal Fund, 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 Funds, thereby
allowing a LifeGoal Fund to participate in certain investment strategies
indirectly that are prohibited under the investment restrictions described in
the LifeGoal Funds' 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 Funds will purchase portfolio securities
for capital appreciation or investment income, or both, and not for short-term
trading profits. The LifeGoal Funds' portfolio turnover rates are not expected
to exceed [50%].
8
<PAGE>
Description of Underlying Nations Funds
-- Investment Objectives, Policies and Practices
Nations LifeGoal Funds seek to achieve their investment objectives by investing
in certain Nations Funds. 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 Funds in the Nations Funds. To receive a prospectus for any
underlying Nations Fund, which contains more complete information, please call
Nations Fund at (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 thorough 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 mostly 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
and, while they may have larger potential for gains, they also carry more risk
if unexpected company developments adversely affect stock prices.
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 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.
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 Funds or any of the Nations Funds.
9
<PAGE>
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.
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: 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.
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, 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
2 "Standard & Poor's 600" is a registered service mark of S&P, which does not
sponsor, and is not affiliated with, LifeGoal Funds or any of the Nations
Funds.
10
<PAGE>
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.
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 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
fifteen 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 instru-
11
<PAGE>
ments 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 periods. 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 Fund) 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 prospectuses and statements of additional
information of the particular Nations Fund, for more information about
investment practices and risks.
12
<PAGE>
How Performance Is Shown
From time to time the LifeGoal Funds may advertise the total return and yield on
a class of shares. In addition, the LifeGoal Funds 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 earnings and are not
intended to indicate future performance. The "total return" of a class of shares
of a LifeGoal Fund 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 Fund 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 Fund's or Nations Fund's
portfolio and operating expenses. Investment performance also often reflects the
risks associated with a LifeGoal Fund's or Nations Fund's investment objective
and policies. These factors should be considered when comparing a LifeGoal
Fund'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 Funds
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 Funds 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 Fund's
shares. Any fees charged by an institution directly to its customers' accounts
in connection with investments in the LifeGoal Funds 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 Funds' 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 Funds may invest. Because the LifeGoal Funds
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 Fund performance.
13
<PAGE>
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%
</TABLE>
<TABLE>
<CAPTION>
Inception
through
Fund Name (Date of Commencement of Operations) 6/30/96
<S> <C>
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%
</TABLE>
* This Fund had not commenced operations as of June 30, 1996.
** Date shown reflects commencement of operations of the predecessor fund.
How The LifeGoal Funds Are Managed
The business and affairs of Nations LifeGoal Funds, Inc., are managed under the
supervision and direction of its Board of Directors. The LifeGoal Funds' 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 Funds 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 Funds 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 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 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 Fund's investment policies, the Adviser is
responsible for allocating and reallocating each LifeGoal Fund's assets among
the Nations Funds in which it invests, and for rebalancing such portfolio
allocations. A LifeGoal Fund's investments are continuously monitored and are
reallocated as often as the Adviser deems appropriate. In addition, fund
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 Funds. Among other things, the Adviser
may substitute or include other portfolios from the Nations Fund Family,
including any introduced subsequent to
14
<PAGE>
this Prospectus, as permissible investments for the LifeGoal Funds.
Both the LifeGoal Funds 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 Fund. NBAI, in turn,
compensates TradeStreet for sub-advisory services at an annual rate of [0.10%]
of the average daily net assets of each LifeGoal Fund. NBAI also has agreed to
absorb all other expenses of the LifeGoal Funds (except 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 Fund. Once
commenced, waiver and reimbursement arrangements may be discontinued at any
time. LifeGoal Fund's shareholders indirectly pay their proportionate share of
the advisory fees and other expenses of any Nations Fund in which the LifeGoal
Funds 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 Fund assets to
underlying Nations Funds that pay higher fees or provide other benefits.
Andrew M. Silton has managed the LifeGoal Funds 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 Funds pursuant to an Administration
Agreement. Pursuant to the terms of the Administration Agreement, Stephens
provides various administrative and corporate secretarial services to the
LifeGoal Funds, 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 Funds. Stephens will not receive any fees from the
LifeGoal Funds 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 Funds. Under the Co-Administration Agreement, First Data provides
various administrative and accounting services to the LifeGoal Funds 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
Funds. 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 Fund,
which will be absorbed by NBAI.
Shares of the LifeGoal Funds are sold on a continuous basis by Stephens, as the
LifeGoal Funds' sponsor and distributor. The LifeGoal Funds have entered into
distribution agreements with Stephens which provide that Stephens has the
exclusive right to distribute shares of the LifeGoal Funds. Stephens may pay
service fees or
15
<PAGE>
commissions to Institutions that assist customers in purchasing Primary A Shares
of LifeGoal Funds.
First Data serves as the Transfer Agent for each of LifeGoal Fund's Primary A
Shares. NationsBank of Texas, N.A. ("NationsBank of Texas") serves as custodian
for the assets of each LifeGoal Fund. NationsBank of Texas, which also serves as
the sub-transfer agent for each LifeGoal Fund's Primary 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 Funds and Nations Funds levels. However, redundancies of fees and
expenses between the LifeGoal Funds and Nations Funds will be minimal, because
distinct services are being provided at each fund level. For example, the
LifeGoal Funds pay advisory fees to the Adviser for its services in allocating
LifeGoal Fund 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 Funds, has
agreed to absorb all expenses of the LifeGoal Funds, except brokerage fees and
commissions, extraordinary expenses and any applicable Rule 12b-1 fees,
shareholder servicing fees and/or shareholder administration fees. The LifeGoal
Funds' 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 Funds 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 Funds 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 Funds will not exceed the limits set forth in Article
III, Section 26, of the NASD Rules of Fair Practice when aggregated with sales
charges or service fees, if any, that the LifeGoal Funds pay relating to Nations
Funds shares.
The LifeGoal Funds' share of the Nations Funds' expenses may include expenses
that the LifeGoal Funds 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 Funds. Such transactions will be rare because
Nations Funds pursue a broad range of investment strategies, and therefore
invest in different types of securities.
Organization And History
The LifeGoal Funds are members of the Nations Fund Family, which consists of the
Company, Nations Fund Trust, Nations Fund, Inc., Nations Portfolios 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 funds, each of which includes several classes of shares.
This Prospectus relates to the Primary A Shares of the following three funds of
the Company: Nations Capital Accumulator Funds, Nations Conservative Growth
Fund, and Nations Income and Managed Growth Fund. To obtain additional
information regarding the LifeGoal Funds' 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 Fund and class have equal rights with respect to voting, except
that the holders of shares of a particular Fund or class will have the exclusive
right to vote on matters affecting only the rights of the holders of such Fund
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 Fund of the Company, less (b) the liabilities of the Company
attributable to the respective Fund or class or allocated among the Funds or
classes based on the respective liquidation value of each Fund or class.
16
<PAGE>
Shareholders of the Company do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all Funds 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 Funds. As sales of the LifeGoal Funds' 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 1940 Act or Maryland law.
About Your Investment
How To Buy Shares
Primary A Shares may be sold to financial institutions (including NationsBank
and its affiliated banks) acting on behalf of their fiduciary customers,
employee benefit plans, charitable foundations and endowments.
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").
There is a minimum initial investment of $500,000 for each record holder; there
is no minimum subsequent investment.
The Company reserves the right to reject any purchase order. The issuance of
Primary A Shares is recorded on the books of the LifeGoal Funds, 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 Funds 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 immediately
available funds in payment of the purchase price are received by the LifeGoal
Fund'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 Funds. No charge for wiring
redemption payments is imposed by the LifeGoal Funds, 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 Funds are normally
remitted in federal funds wired to the redeeming Institution or investor within
three Business Days following receipt of the order.
The LifeGoal Funds may redeem a shareholder's Primary A Shares if the balance in
such shareholder's account with the Fund 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
Insti-
17
<PAGE>
tution 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 Funds to the extent necessary to maintain the required minimum
balance in such Institution account. The LifeGoal Funds 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
Fund to acquire Primary A Shares of another Fund in the Nations Fund Family
(which includes both LifeGoal Funds 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 Fund 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 Funds 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 Funds upon such notice as may
be required by applicable regulatory agencies (presently sixty 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 portfolio of the Nations Funds describes its
investment objective and policies, and shareholders should obtain a copy and
examine it carefully before exchanging to a 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 ninety days after the shares are
purchased.
The LifeGoal Funds 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
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 Funds 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 Funds 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 Fund shares will be determined by reference
to the net asset value of the underlying Nations Fund.
18
<PAGE>
How Dividends And Distributions Are Made;
Tax Information
Dividends And Distributions
Each LifeGoal Fund declares and pays dividends from net investment income
quarterly. Each LifeGoal Fund's net realized capital gains (including net
short-term capital gains) are distributed at least annually.
Primary A Shares of LifeGoal Funds 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 Funds 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 Fund 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 Fund's Transfer Agent and will
become effective with respect to dividends paid after its receipt.
Tax Information
Each of the LifeGoal Funds 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 Fund of liability for federal
income tax to the extent all of its annual earnings are distributed in
accordance with the Code. Each LifeGoal Fund intends to distribute all of its
earnings each taxable year.
Any distributions by a LifeGoal Fund 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 Funds 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 Funds may be
eligible for the dividends-received deduction on the dividends paid by the
LifeGoal Funds to the extent that each LifeGoal Fund'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
Fund 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
Funds, if any, will be distributed at least annually to the LifeGoal Funds'
shareholders. The LifeGoal Funds 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
Funds' 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 Fund 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 Funds 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.
19
<PAGE>
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 Funds 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.
20
<PAGE>
Prospectus
Primary B Shares
October , 1996
LIFEGOAL FUNDS
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
Investment Adviser: NationsBanc Advisors, Inc.
Investment Sub-Adviser: TradeStreet Investment Associates, Inc.
Distributor: Stephens Inc.
Nations Fund
<PAGE>
(Redherring appears on left side of page. The language is as follows)
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION
DATED SEPTEMBER 1, 1996
Prospectus
Primary B Shares
October , 1996
This Prospectus describes three diversified
investment portfolios, Nations Capital Accumulator
Fund, Nations Conservative Growth Fund, and Nations
Income and Managed Growth Fund (each a "LifeGoal
Fund" and, collectively, the "LifeGoal Funds"), of
Nations LifeGoal Funds, Inc. (the "Company"), an
open-end management investment company in the
Nations Fund Family. The LifeGoal Funds invest
substantially all of their assets in certain other
portfolios within the Nations Fund Family. These
underlying portfolios are referred to in this
Prospectus as "Nations Funds". This Prospectus
describes one class of shares of each LifeGoal Fund
-- Primary B Shares.
This Prospectus sets forth concisely the information
about each LifeGoal Fund 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 Funds 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 Funds 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 Funds.
TradeStreet Investment Associates, Inc.
("TradeStreet") is investment sub-adviser to the
LifeGoal Funds. 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 FUNDS 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 FUNDS.
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 FUNDS:
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
For Fund 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 Funds
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 Funds Are Managed 14
Organization And History 16
About Your
Investment
How To Buy Shares 17
How To Redeem Shares 17
How To Exchange Shares 18
Shareholder Administration Arrangements 19
How The LifeGoal Funds Value Their Shares 19
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
Funds' 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 Funds or the
distributor. This Prospectus does not constitute an
offering by LifeGoal Funds or by the distributor in
any jurisdiction in which such offering may not
lawfully be made.
2
<PAGE>
About The LifeGoal Funds
Prospectus Summary
(Bullet) Type of Company: Open-end management investment company.
(Bullet) Investment Objectives and Policies:
(Bullet) Nations Capital Accumulator Fund's investment objective is to seek
capital appreciation through exposure to a variety of equity market
segments.
(Bullet) Nations Conservative Growth Fund's investment objective is
to seek total return through a balanced portfolio of equity
and fixed income securities.
(Bullet) Nations Income and Managed Growth Fund's investment
objective is to seek current income and modest
growth to protect against inflation and to preserve
purchasing power.
The LifeGoal Funds 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 Funds 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 Funds. NBAI also advises more than 43 Nations
Funds. TradeStreet Investment Associates, Inc. provides sub-advisory
services to the LifeGoal Funds and to more than 39 of the Nations
Funds.
(Bullet) Dividends and Distributions: Each LifeGoal Fund declares and pays
dividends from net investment income quarterly. Each LifeGoal Fund'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 Fund, there is no assurance that it will be
able to do so. Investments in a LifeGoal Fund are not insured against
loss of principal. Investments by a LifeGoal Fund 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
Fund 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 Fund's
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
Fund. The following tables summarize estimated shareholder transaction and
operating expenses as a percentage of average net assets for Primary B Shares of
each LifeGoal Fund. The Examples show the cumulative expenses attributable to a
hypothetical $1,000 investment in each LifeGoal Fund over specified periods.
LIFEGOAL FUNDS PRIMARY B SHARES
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
Nations Capital Nations
Accumulator Conservative
Fund Growth Fund
<S> <C> <C>
Sales Load Imposed on Purchases (1) None None
Deferred Sales Load None None
</TABLE>
<TABLE>
<CAPTION>
Nations Income
and Managed
Growth Fund
<S> <C>
Sales Load Imposed on Purchases (1) None
Deferred Sales Load None
</TABLE>
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Nations Capital Nations
Accumulator Conservative
Fund Growth Fund
<S> <C> <C>
Management Fees .25% .25%
Other Expenses .50% .50%
Total Operating Expenses .75% .75%
</TABLE>
<TABLE>
<CAPTION>
Nations Income
and Managed
Growth Fund
<S> <C>
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 Fund, assuming indirect expenses (the LifeGoal Funds'
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>
Nations Capital Nations
Accumulator Conservative
Fund Growth Fund
<S> <C> <C>
1 Year $17 $16
3 Years $53 $49
</TABLE>
<TABLE>
<CAPTION>
Nations Income
and Managed
Growth Fund
<S> <C>
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 Fund 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 Funds' current fiscal year and the Example includes
indirect expenses for the underlying Nations Funds' most recent fiscal year (or
estimates thereof for new funds). For more complete descriptions of the LifeGoal
Funds' operating expenses, see "How The LifeGoal Funds 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%
</TABLE>
<TABLE>
<CAPTION>
(before 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* .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%
* 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 Funds' 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 Fund is as follows:
<TABLE>
<CAPTION>
(after fee waivers
and/or expense
reimbursements)
<S> <C>
Nations Capital Accumulator Fund .86% to 1.01%
Nations Conservative Growth Fund .78% to .85%
Nations Income & Managed Growth Fund .56% to .73%
</TABLE>
<TABLE>
<CAPTION>
(before fee
waivers and/or
expense
reimbursements)
<S> <C>
Nations Capital Accumulator Fund .92% to 1.05%
Nations Conservative Growth Fund .87% to .92%
Nations Income & Managed Growth Fund .77% to .91%
</TABLE>
The indirect expense ratios fluctuate within these ranges depending upon how
assets are allocated among the Nations Funds. The LifeGoal Funds 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 classes in
the percentages shown below. Under extraordinary circumstances, a LifeGoal
Fund's investment in one or more Nations Funds might exceed these ranges. For
temporary defensive purposes, any LifeGoal Fund may invest up to 100% of its
assets in Nations Prime Fund.
5
<PAGE>
Objectives
(Bullet) Nations Capital Accumulator Fund -- Nations Capital Accumulator Fund's
investment objective is to seek capital appreciation through exposure
to a variety of equity market segments.
<TABLE>
<CAPTION>
Fund Class Range
<S> <C>
Large-Capitalization Domestic Equity Funds 35-75%
Small/Mid-Capitalization Domestic Equity Funds 20-30%
Core International Equity Funds 10-20%
Non-Core International Equity Funds 0-10%
</TABLE>
<TABLE>
<CAPTION>
Fund Class Funds
<S> <C>
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) Nations Conservative Growth Fund -- Nations Conservative Growth Fund's
investment objective is to seek total return through a balanced
portfolio of equity and fixed income securities.
<TABLE>
<CAPTION>
Fund Class 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%
</TABLE>
<TABLE>
<CAPTION>
Fund Class Funds
<C> <C>
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
</TABLE>
(Bullet)Nations Income and Managed Growth Fund -- Nations Income and Managed
Growth Fund's investment objective is to seek current income and modest
growth to protect against inflation and to preserve purchasing power.
<TABLE>
<CAPTION>
Fund Class Range
<S> <C>
Large-Capitalization Domestic Equity Funds 10-30%
Core International Equity Funds 0-10%
Short Duration Bond Funds 50-90%
Cash 0-20%
</TABLE>
<TABLE>
<CAPTION>
Fund Class Funds
<S> <C>
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
Cash Nations Prime Fund
</TABLE>
The LifeGoal Funds are intended primarily for long-term investors. The Funds 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 Funds 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 Fund'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 classes.
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 Fund are allocated among various asset and fund
classes. Each LifeGoal Fund has its own asset allocation strategy which gives it
a distinctive risk profile and offers different return potential. Investors
should select the LifeGoal Fund (or Funds) which best matches their investment
goals, risk tolerance and investment horizon.
In general, the greater the LifeGoal Fund'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 Funds 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 Fund, there is no assurance that a LifeGoal Fund will be able to do so.
No single LifeGoal Fund should be considered, by itself, to provide a complete
investment program for any investor. The net asset value of the shares of a
LifeGoal Fund 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 Funds for
short-term financial needs. LifeGoal Funds 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 Fund'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 asset classes and Nations Funds within
a particular LifeGoal Fund's portfolio. Rebalancing is the process of bringing
such portfolio allocations back into alignment with the applicable weightings. A
LifeGoal Fund's investments are continuously monitored and are reallocated as
often as the Adviser deems appropriate. In addition, Fund allocations and
performance are reviewed at least quarterly for rebalancing at the discretion of
the Adviser.
Determining the asset allocation applicable to each LifeGoal Fund is a two step
process. The first step is determining the broad asset categories for each
LifeGoal Fund -- 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 Fund 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.
Although it is expected that the LifeGoal Funds 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 Funds. Among other things, the Adviser may substitute or
include other portfolios from the Nations Fund Family, including any introduced
subsequent to this Prospectus, as permissible investments for the LifeGoal
Funds.
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.
7
<PAGE>
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: An exemptive order issued by the SEC permits,
among other things, the LifeGoal Funds to purchase an unlimited amount of the
outstanding voting shares of each Nations Fund, and each of the Nations Funds to
sell more than 3% of its total outstanding voting stock to the LifeGoal Funds,
under certain conditions. Without this order, the Investment Company Act of
1940, as amended (the "1940 Act"), would prohibit the LifeGoal Funds from
investing in the Nations Funds. On the basis of this exemption, each of the
LifeGoal Funds 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 Funds invest do not
necessarily share the same investment objective as the investing LifeGoal Fund,
those Nations Funds will be selected by the Adviser based on the asset
allocation process described above.
Although each LifeGoal Fund intends to invest substantially all of its assets in
some or all of the underlying Nations Funds, each LifeGoal Fund 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 Fund will invest more than 5% of its assets in
any of these direct investments.
Investment Limitations: Each LifeGoal Fund is subject to a number of investment
limitations, which are described in the SAI. Among other things, the LifeGoal
Funds' 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 Fund, unless
otherwise specified, may be changed without a vote of the LifeGoal Fund's
shareholders. If the investment objective, policies or limitations of a LifeGoal
Fund change, shareholders should consider whether the LifeGoal Fund remains an
appropriate investment in light of their current position and needs.
In order to register a LifeGoal Fund's shares for sale in certain states, a
LifeGoal Fund may make commitments more restrictive than the investment policies
and limitations described in this Prospectus and the SAI. Should a LifeGoal Fund
determine that any such commitment is no longer in the best interests of the
LifeGoal Fund, 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 Funds, thereby
allowing a LifeGoal Fund to participate in certain investment strategies
indirectly that are prohibited under the investment restrictions described in
the LifeGoal Funds' 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 Funds will purchase portfolio securities
for capital appreciation or investment income, or both, and not for short-term
trading profits. The LifeGoal Funds' portfolio turnover rates are not expected
to exceed [50%].
8
<PAGE>
Description of Underlying Nations Funds --
Investment Objectives, Policies and Practices
Nations LifeGoal Funds seek to achieve their investment objectives by investing
in certain Nations Funds. 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 Funds in the Nations Funds. To receive a prospectus for any
underlying Nations Fund, which contains more complete information, please call
Nations Fund at (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 thorough 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 mostly 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
and, while they may have larger potential for gains, they also carry more risk
if unexpected company developments adversely affect stock prices.
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 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 fashion as to produce returns
in excess of the market, as measured by the S&P 500 Index, on a comparable risk
basis.
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 Funds or any of the Nations Funds.
9
<PAGE>
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.
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: 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.
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 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
2 "Standard & Poor's 600" is a registered service mark of S&P, which does not
sponsor, and is not affiliated with, LifeGoal Funds or any of the Nations
Funds.
10
<PAGE>
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.
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 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
fifteen 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 instru-
11
<PAGE>
ments 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 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 Fund) 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
12
<PAGE>
can, under certain circumstances, significantly increase an investor's exposure
to market or other risks.
Please consult the SAI, and the prospectuses and statements of additional
information of the particular Nations Fund, for more information about
investment practices and risks.
How Performance Is Shown
From time to time the LifeGoal Funds may advertise the total return and yield on
a class of shares. In addition, the LifeGoal Funds 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 earnings and are not
intended to indicate future performance. The "total return" of a class of shares
of a LifeGoal Fund 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 Fund 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 Fund's or Nations Fund's
portfolio and operating expenses. Investment performance also often reflects the
risks associated with a LifeGoal Fund's or Nations Fund's investment objective
and policies. These factors should be considered when comparing a LifeGoal
Fund'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 Funds
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 Funds 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 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 Fund's
shares. Any fees charged by an institution directly to its customers' accounts
in connection with investments in the LifeGoal Funds 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 Funds' 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 Funds may invest. Because the LifeGoal Funds
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 Fund performance.
13
<PAGE>
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%
</TABLE>
<TABLE>
<CAPTION>
Inception
through
<S> <C>
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%
</TABLE>
* This Fund had not commenced operations as of June 30, 1996.
** Date shown reflects commencement of operations of the predecessor fund.
How The LifeGoal Funds Are Managed
The business and affairs of Nations LifeGoal Funds, Inc., are managed under the
supervision and direction of its Board of Directors. The LifeGoal Funds' 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 Funds 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 Funds 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 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 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 Fund's investment policies, the Adviser is
responsible for allocating and reallocating each LifeGoal Fund's assets among
the Nations Funds in which it invests, and for rebalancing such portfolio
allocations. A LifeGoal Fund's investments are continuously monitored and are
reallocated as often as the Adviser deems appropriate. In addition, fund
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 Funds. Among other things, the Adviser
may substitute or include other portfolios from the Nations Fund Family,
including any introduced subsequent to
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<PAGE>
this Prospectus, as permissible investments for the LifeGoal Funds.
Both the LifeGoal Funds 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 Fund. NBAI also has agreed to
absorb all other expenses of the LifeGoal Funds (except 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
[0.10%] of the average daily net assets of each LifeGoal Fund. 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 Fund. 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 Fund's
shareholders indirectly pay their proportionate share of the advisory fees and
other expenses of any Nations Fund in which the LifeGoal Funds 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 Fund assets to
underlying Nations Funds that pay higher fees or provide other benefits.
Andrew M. Silton has managed the LifeGoal Funds 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 Funds pursuant to an Administration
Agreement. Pursuant to the terms of the Administration Agreement, Stephens
provides various administrative and corporate secretarial services to the
LifeGoal Funds, 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 Funds. Stephens will not receive any fees from the
LifeGoal Funds 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 Funds. Under the Co-Administration Agreement, First Data provides
various administrative and accounting services to the LifeGoal Funds 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
Funds. 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 Fund,
which will be absorbed by NBAI.
Shares of the LifeGoal Funds are sold on a continuous basis by Stephens, as the
LifeGoal Funds' sponsor and distributor. The LifeGoal Funds have entered into
distribution agreements with Stephens which provide that Stephens has the
exclusive right to distribute shares of
15
<PAGE>
the LifeGoal Funds. Stephens may pay service fees or commissions to Institutions
that assist customers in purchasing Primary B Shares of LifeGoal Funds.
First Data serves as the Transfer Agent for each of LifeGoal Fund's Primary B
Shares. NationsBank of Texas, N.A. ("NationsBank of Texas") serves as custodian
for the assets of each LifeGoal Fund. NationsBank of Texas, which also serves as
the sub-transfer agent for each LifeGoal Fund'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 Funds and Nations Funds levels. However, redundancies of fees and
expenses between the LifeGoal Funds and Nations Funds will be minimal, because
distinct services are being provided at each fund level. For example, the
LifeGoal Funds pay advisory fees to the Adviser for its services in allocating
LifeGoal Fund 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 Funds, has
agreed to absorb all expenses of the LifeGoal Funds, except brokerage fees and
commissions, extraordinary expenses and any applicable Rule 12b-1 fees,
shareholder servicing fees and/or shareholder administration fees. The LifeGoal
Funds' 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 Funds 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 Funds 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 Funds will not exceed the limits set forth in Article
III, Section 26, of the NASD Rules of Fair Practice when aggregated with sales
charges or service fees, if any, that the LifeGoal Funds pay relating to Nations
Funds shares.
The LifeGoal Funds' share of the Nations Funds' expenses may include expenses
that the LifeGoal Funds 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 Funds. Such transactions will be rare because
Nations Funds pursue a broad range of investment strategies, and therefore
invest in different types of securities.
Organization And History
The LifeGoal Funds are members of the Nations Fund Family, which consists of the
Company, Nations Fund Trust, Nations Fund, Inc., Nations Portfolios 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 funds, each of which includes several classes of shares.
This Prospectus relates to the Primary B Shares of the following three funds of
the Company: Nations Capital Accumulator Funds, Nations Conservative Growth
Fund, and Nations Income and Managed Growth Fund. To obtain additional
information regarding the LifeGoal Funds' 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 Fund and class have equal rights with respect to voting, except
that the holders of shares of a particular Fund or class will have the exclusive
right to vote on matters affecting only the rights of the holders of such Fund
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 Fund of the Company, less (b) the liabilities of
16
<PAGE>
the Company attributable to the respective Fund or class or allocated among the
Funds or classes based on the respective liquidation value of each Fund 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 Funds 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 Funds. As sales of the LifeGoal Funds' 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 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 Funds, and share
certificates are not issued.
Purchase orders for Primary B Shares in the LifeGoal Funds 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 immediately
available funds in payment of the purchase price are received by the LifeGoal
Fund'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
17
<PAGE>
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 Funds are normally
remitted in federal funds wired to the redeeming Institution within three
Business Days following receipt of the order.
The LifeGoal Funds may redeem a shareholder's Primary B Shares if the balance in
such shareholder's account with the Fund 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 Funds to the extent necessary to maintain the
required minimum balance in such Institution account. The LifeGoal Funds 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
Fund to acquire Primary B Shares of another Fund in the Nations Fund Family
(which includes both LifeGoal Funds 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 Fund 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 Funds 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 Funds upon such notice as may
be required by applicable regulatory agencies (presently sixty 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 portfolio of the Nations Funds describes its
investment objective and policies, and shareholders should obtain a copy and
examine it carefully before exchanging to a 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 ninety days after the shares are
purchased.
The LifeGoal Funds 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.
18
<PAGE>
Shareholder Administration Arrangements
The LifeGoal Funds 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 Article III, Section 26(b)(9) of the Rules of
Fair Practice of the NASD, exceed 0.25% of the average daily net asset value of
such Primary B Shares of a LifeGoal Fund. 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 Funds 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 Fund 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 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 Funds 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 Funds 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 Fund shares will be determined by reference
to the net asset value of the underlying Nations Fund.
19
<PAGE>
How Dividends And Distributions Are Made;
Tax Information
Dividends And Distributions
Each LifeGoal Fund declares and pays dividends from net investment income
quarterly. Each LifeGoal Fund's net realized capital gains (including net
short-term capital gains) are distributed at least annually.
Primary B Shares of LifeGoal Funds 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 Funds 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 Fund 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 Fund's Transfer Agent and will
become effective with respect to dividends paid after its receipt.
Tax Information
Each of the LifeGoal Funds 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 Fund of liability for federal
income tax to the extent all of its annual earnings are distributed in
accordance with the Code. Each LifeGoal Fund intends to distribute all of its
earnings each taxable year.
Any distributions by a LifeGoal Fund 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 Funds 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 Funds may be
eligible for the dividends-received deduction on the dividends paid by the
LifeGoal Funds to the extent that each LifeGoal Fund'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
Fund 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
Funds, if any, will be distributed at least annually to the LifeGoal Funds'
shareholders. The LifeGoal Funds 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
Funds' 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 Fund 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 Funds 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
20
<PAGE>
and summarizes only some of the important tax considerations generally affecting
the LifeGoal Funds 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 , 1996
LIFEGOAL FUNDS
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
Investment Adviser: NationsBanc Advisors, Inc.
Investment Sub-Adviser: TradeStreet Investment Associates, Inc.
Distributor: Stephens Inc.
Nations Fund
<PAGE>
(Redherring appears on the left side of page. The language is as follows.)
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION
DATED SEPTEMBER 1, 1996
Prospectus
Investor A Shares
October , 1996
This Prospectus describes three diversified
investment portfolios, Nations Capital Accumulator
Fund, Nations Conservative Growth Fund, and Nations
Income and Managed Growth Fund (each a "LifeGoal
Fund" and, collectively, the "LifeGoal Funds"), of
Nations LifeGoal Funds, Inc. (the "Company"), an
open-end management investment company in the
Nations Fund Family. The LifeGoal Funds invest
substantially all of their assets in certain other
portfolios within the Nations Fund Family. These
underlying portfolios are referred to in this
Prospectus as "Nations Funds". This Prospectus
describes one class of shares of each LifeGoal Fund
-- Investor A Shares.
This Prospectus sets forth concisely the information
about each LifeGoal Fund 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 Funds 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 Funds, 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 Funds. TradeStreet Investment Associates,
Inc. ("TradeStreet") is investment sub-adviser to
the LifeGoal Funds. 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 FUNDS 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 FUNDS.
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 FUNDS:
<PAGE>
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
For Fund 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 Funds
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 Funds Are Managed 14
Organization And History 16
About Your
Investment
How To Buy Shares 17
How To Redeem Shares 18
How To Exchange Shares 19
Shareholder Servicing and Distribution Plans 20
How The LifeGoal Funds 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
Funds' 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 Funds or the
distributor. This Prospectus does not constitute an
offering by LifeGoal Funds or by the distributor in
any jurisdiction in which such offering may not
lawfully be made.
2
<PAGE>
About The LifeGoal
Funds
Prospectus Summary
(Bullet) Type of Company: Open-end management investment company.
(Bullet) Investment Objectives and Policies:
(Bullet) Nations Capital Accumulator Fund's investment objective is to seek
capital appreciation through exposure to a variety of equity market
segments.
(Bullet) Nations Conservative Growth Fund's investment objective is
to seek total return through a balanced portfolio of equity
and fixed income securities.
(Bullet) Nations Income and Managed Growth Fund's investment
objective is to seek current income and modest
growth to protect against inflation and to preserve
purchasing power.
The LifeGoal Funds 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 Funds 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 Funds. NBAI also advises more than 43 Nations
Funds. TradeStreet Investment Associates, Inc. provides sub-advisory
services to the LifeGoal Funds and to more than 39 of the Nations
Funds.
(Bullet) Dividends and Distributions: Each LifeGoal Fund declares and pays
dividends from net investment income quarterly. Each LifeGoal Fund'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 Fund, there is no assurance that it will be
able to do so. Investments in a LifeGoal Fund are not insured against
loss of principal. Investments by a LifeGoal Fund 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
Fund 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 Fund's
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
Fund. The following tables summarize estimated shareholder transaction and
operating expenses for Investor A Shares of each LifeGoal Fund. The Examples
show the cumulative expenses attributable to a hypothetical $1,000 investment in
each LifeGoal Fund over specified periods.
LIFEGOAL FUNDS INVESTOR A SHARES
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
Nations Capital Nations
Accumulator Conservative
Fund Growth Fund
<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
</TABLE>
<TABLE>
<CAPTION>
Nations Income
and Managed
Growth Fund
<S> <C>
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 Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Nations Capital Nations
Accumulator Conservative
Fund Growth Fund
<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%
</TABLE>
<TABLE>
<CAPTION>
Nations Income
and Managed
Growth Fund
<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 Fund, assuming indirect expenses (the LifeGoal Funds'
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>
Nations Capital Nations
Accumulator Conservative
Fund Growth Fund
<S> <C> <C>
1 Year $15 $13
3 Years $45 $42
</TABLE>
<TABLE>
<CAPTION>
Nations Income
and Managed
Growth Fund
<S> <C>
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 Fund 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 Funds' current fiscal year and the Example includes
indirect expenses for the underlying Nations Funds' most recent fiscal year (or
estimates thereof for new funds). For more complete descriptions of the LifeGoal
Funds' operating expenses, see "How The LifeGoal Funds 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%
</TABLE>
<TABLE>
<CAPTION>
(before 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* .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%
* 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 Funds' 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 Fund is as follows:
<TABLE>
<CAPTION>
(after fee waivers
and/or expense
reimbursements)
<S> <C>
Nations Capital Accumulator Fund .86% to 1.01%
Nations Conservative Growth Fund .78% to .85%
Nations Income & Managed Growth Fund .56% to .73%
</TABLE>
<TABLE>
<CAPTION>
(before fee
waivers and/or
expense
reimbursements)
<S> <C>
Nations Capital Accumulator Fund .92% to 1.05%
Nations Conservative Growth Fund .87 to .92%
Nations Income & Managed Growth Fund .77% to .81%
</TABLE>
The indirect expense ratios fluctuate within these ranges depending upon how
assets are allocated among the Nations Funds. The LifeGoal Funds 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 classes in
the percentages shown below. Under extraordinary circumstances, a LifeGoal
Fund's investment in one or more Nations Funds might exceed these ranges. For
temporary defensive purposes, any LifeGoal Fund may invest up to 100% of its
assets in Nations Prime Fund.
5
<PAGE>
Objectives
(Bullet) Nations Capital Accumulator Fund -- Nations Capital Accumulator Fund's
investment objective is to seek capital appreciation through exposure
to a variety of equity market segments.
<TABLE>
<CAPTION>
Fund Class Range
<S> <C>
Large-Capitalization Domestic Equity Funds 35-75%
Small/Mid-Capitalization Domestic Equity Funds 20-30%
Core International Equity Funds 10-20%
Non-Core International Equity Funds 0-10%
</TABLE>
<TABLE>
<CAPTION>
Fund Class Funds
<S> <C>
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) Nations Conservative Growth Fund -- Nations Conservative Growth Fund's
investment objective is to seek total return through a balanced
portfolio of equity and fixed income securities.
<TABLE>
<CAPTION>
Fund Class 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%
</TABLE>
<TABLE>
<CAPTION>
Fund Class Funds
<S> <C>
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
</TABLE>
(Bullet)Nations Income and Managed Growth Fund -- Nations Income and Managed
Growth Fund's investment objective is to seek current income and modest
growth to protect against inflation and to preserve purchasing power.
<TABLE>
<CAPTION>
Fund Class Range
<S> <C>
Large-Capitalization Domestic Equity Funds 10-30%
Core International Equity Funds 0-10%
Short Duration Bond Funds 50-90%
Cash 0-20%
</TABLE>
<TABLE>
<CAPTION>
Fund Class Funds
<S> <C>
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
Cash Nations Prime Fund
</TABLE>
The LifeGoal Funds are intended primarily for long-term investors. The Funds 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 Funds 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 Fund'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 classes.
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 Fund are allocated among various asset and fund
classes. Each LifeGoal Fund has its own asset allocation strategy which gives it
a distinctive risk profile and offers different return potential. Investors
should select the LifeGoal Fund (or Funds) which best matches their investment
goals, risk tolerance and investment horizon.
In general, the greater the LifeGoal Fund'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 Funds 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 Fund, there is no assurance that a LifeGoal Fund will be able to do so.
No single LifeGoal Fund should be considered, by itself, to provide a complete
investment program for any investor. The net asset value of the shares of a
LifeGoal Fund 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 Funds for
short-term financial needs. The LifeGoal Funds 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 Fund'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 asset classes and Nations Funds within
a particular LifeGoal Fund's portfolio. Rebalancing is the process of bringing
such portfolio allocations back into alignment with the applicable weightings. A
LifeGoal Fund's investments are continuously monitored and are reallocated as
often as the Adviser deems appropriate. In addition, Fund allocations and
performance are reviewed at least quarterly for rebalancing at the discretion of
the Adviser.
Determining the asset allocation applicable to each LifeGoal Fund is a two step
process. The first step is determining the broad asset categories for each
LifeGoal Fund -- 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 Fund 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.
Although it is expected that the LifeGoal Funds 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 Funds. Among other things, the Adviser may substitute or
include other portfolios from the Nations Fund Family, including any introduced
subsequent to this Prospectus, as permissible investments for the LifeGoal
Funds.
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.
7
<PAGE>
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: An exemptive order issued by the SEC permits,
among other things, the LifeGoal Funds to purchase an unlimited amount of the
outstanding voting shares of each Nations Fund, and each of the Nations Funds to
sell more than 3% of its total outstanding voting stock to the LifeGoal Funds,
under certain conditions. Without this order, the Investment Company Act of
1940, as amended (the "1940 Act"), would prohibit the LifeGoal Funds from
investing in the Nations Funds. On the basis of this exemption, each of the
LifeGoal Funds 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 Funds invest do not
necessarily share the same investment objective as the investing LifeGoal Fund,
those Nations Funds will be selected by the Adviser based on the asset
allocation process described above.
Although each LifeGoal Fund intends to invest substantially all of its assets in
some or all of the underlying Nations Funds, each LifeGoal Fund 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 Fund will invest more than 5% of its assets in
any of these direct investments.
Investment Limitations: Each LifeGoal Fund is subject to a number of investment
limitations, which are described in the SAI. Among other things, the LifeGoal
Funds' 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 Fund, unless
otherwise specified, may be changed without a vote of the LifeGoal Fund's
shareholders. If the investment objective, policies or limitations of a LifeGoal
Fund change, shareholders should consider whether the LifeGoal Fund remains an
appropriate investment in light of their current position and needs.
In order to register a LifeGoal Fund's shares for sale in certain states, a
LifeGoal Fund may make commitments more restrictive than the investment policies
and limitations described in this Prospectus and the SAI. Should a LifeGoal Fund
determine that any such commitment is no longer in the best interests of the
LifeGoal Fund, 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 Funds, thereby
allowing a LifeGoal Fund to participate in certain investment strategies
indirectly that are prohibited under the investment restrictions described in
the LifeGoal Funds' 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 Funds will purchase portfolio securities
for capital appreciation or investment income, or both, and not for short-term
trading profits. The LifeGoal Funds' portfolio turnover rates are not expected
to exceed [50%].
8
<PAGE>
Description of Underlying Nations Funds --
Investment Objectives, Policies and Practices
Nations LifeGoal Funds seek to achieve their investment objectives by investing
in certain Nations Funds. 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 Funds in the Nations Funds. To receive a prospectus for any
underlying Nations Fund, which contains more complete information, please call
Nations Fund at (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 thorough 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 mostly 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
and, while they may have larger potential for gains, they also carry more risk
if unexpected company developments adversely affect stock prices.
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 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.
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 Funds or any of the Nations Funds.
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<PAGE>
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.
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: 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.
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 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
2 "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 Funds or any of the Nations Funds.
10
<PAGE>
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.
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 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
fifteen 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 instru-
11
<PAGE>
ments 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 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 Fund) 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.
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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 prospectuses and statements of additional
information of the particular Nations Fund, for more information about
investment practices and risks.
How Performance Is Shown
From time to time the LifeGoal Funds may advertise the total return and yield on
a class of shares. In addition, the LifeGoal Funds 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 earnings and are not
intended to indicate future performance. The "total return" of a class of shares
of a LifeGoal Fund 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 Fund 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 Fund's or Nations Fund's
portfolio and operating expenses. Investment performance also often reflects the
risks associated with a LifeGoal Fund's or Nations Fund's investment objective
and policies. These factors should be considered when comparing a LifeGoal
Fund'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 Funds
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 Funds 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 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 Fund's
shares. Any fees charged by an institution directly to its customers' accounts
in connection with investments in the LifeGoal Funds 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 Funds' 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 Funds may invest. Because the LifeGoal Funds
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 Fund performance.
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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%
</TABLE>
<TABLE>
<CAPTION>
Inception
through
Fund Name (Date of Commencement of Operations) 6/30/96
<S> <C>
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%
</TABLE>
* This Fund had not commenced operations as of June 30, 1996.
** Date shown reflects commencement of operations of the predecessor fund.
How The LifeGoal Funds Are Managed
The business and affairs of Nations LifeGoal Funds, Inc., are managed under the
supervision and direction of its Board of Directors. The LifeGoal Funds' 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 Funds 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 Funds 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 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 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 Fund's investment policies, the Adviser is
responsible for allocating and reallocating each LifeGoal Fund's assets among
the Nations Funds in which it invests, and for rebalancing such portfolio
allocations. A LifeGoal Fund's investments are continuously monitored and are
reallocated as often as the Adviser deems appropriate. In addition, fund
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 Funds. Among other things, the Adviser
may substitute or include other portfolios from the Nations Fund Family,
including any introduced subsequent to
14
<PAGE>
this Prospectus, as permissible investments for the LifeGoal Funds.
Both the LifeGoal Funds 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 Fund. NBAI also has agreed to
absorb all other expenses of the LifeGoal Funds (except 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
[0.10%] of the average daily net assets of each LifeGoal Fund. 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 Fund. 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 Fund's
shareholders indirectly pay their proportionate share of the advisory fees and
other expenses of any Nations Fund in which the LifeGoal Funds 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 Fund assets to
underlying Nations Funds that pay higher fees or provide other benefits.
Andrew M. Silton has managed the LifeGoal Funds 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 Funds pursuant to an Administration
Agreement. Pursuant to the terms of the Administration Agreement, Stephens
provides various administrative and corporate secretarial services to the
LifeGoal Funds, 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 Funds. Stephens will not receive any fees from the
LifeGoal Funds 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 Funds. Under the Co-Administration Agreement, First Data provides
various administrative and accounting services to the LifeGoal Funds 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
Funds. 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 Fund,
which will be absorbed by NBAI.
Shares of the LifeGoal Funds are sold on a continuous basis by Stephens, as the
LifeGoal Funds' sponsor and distributor. The LifeGoal Funds have entered into
distribution agreements with Stephens which provide that Stephens has the
exclusive right to distribute shares of
15
<PAGE>
the LifeGoal Funds. Stephens may pay service fees or commissions to selling
agents that assist customers in purchasing Investor A Shares of the LifeGoal
Funds. See "Shareholder Servicing and Distribution Plans."
First Data serves as the Transfer Agent for each of LifeGoal Fund's Investor A
Shares. NationsBank of Texas, N.A. ("NationsBank of Texas") serves as custodian
for the assets of each LifeGoal Fund.
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 Funds and Nations Funds levels. However, redundancies of fees and
expenses between the LifeGoal Funds and Nations Funds will be minimal, because
distinct services are being provided at each fund level. For example, the
LifeGoal Funds pay advisory fees to the Adviser for its services in allocating
LifeGoal Fund 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 Funds, has
agreed to absorb all expenses of the LifeGoal Funds, except brokerage fees and
commissions, extraordinary expenses and any applicable Rule 12b-1 fees,
shareholder servicing fees and/or shareholder administration fees. The LifeGoal
Funds' 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 Funds 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 Funds 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 Funds will not exceed the limits set forth in Article
III, Section 26, of the NASD Rules of Fair Practice when aggregated with sales
charges or service fees, if any, that the LifeGoal Funds pay relating to Nations
Funds shares.
The reimbursement arrangements described above do not, of course, cover the
indirect expenses incurred by LifeGoal Fund investors through their investments
in Nations Funds. The LifeGoal Funds' share of the Nations Funds' expenses may
include expenses that the LifeGoal Funds 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 Funds. Such transactions will be
rare because Nations Funds pursue a broad range of investment strategies, and
therefore invest in different types of securities.
Organization And History
The LifeGoal Funds are members of the Nations Fund Family, which consists of the
Company, Nations Fund Trust, Nations Fund, Inc., Nations Portfolios 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 funds, each of which includes several classes of shares.
This Prospectus relates to the Investor A Shares of the following three funds of
the Company: Nations Capital Accumulator Funds, Nations Conservative Growth
Fund, and Nations Income and Managed Growth Fund. To obtain additional
information regarding the LifeGoal Funds' 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 Fund and class have equal rights with respect to voting, except
that the holders of shares of a particular Fund or class will have the exclusive
right to vote on matters affecting only the rights of the holders of such Fund
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
16
<PAGE>
portion of the assets allocated to that class held in the respective Fund of the
Company, less (b) the liabilities of the Company attributable to the respective
Fund or class or allocated among the Funds or classes based on the respective
liquidation value of each Fund 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 Funds 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 Funds. As sales of the LifeGoal Funds' 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 1940 Act or Maryland law.
About Your Investment
How To Buy Shares
The LifeGoal Funds 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 Fund 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 Funds, 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.
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 Funds, 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 Fund: Investors may open a regular
(non-retirement) account directly with a LifeGoal Fund, 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 Fund, to:
LifeGoal Fund
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 Fund
c/o Boston Safe Deposit & Trust
ABA #011001234
DDA #154202
Account Name
Account Number
Fund Name
17
<PAGE>
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
Fund 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 Funds 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 Funds' 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 Funds' 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 Fund
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.
How To Redeem Shares
For shareholders who open and maintain an account directly with a LifeGoal Fund,
redemption orders should be communicated to such LifeGoal Fund 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 Fund. 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 Fund, 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 Funds involuntarily or make payment for
redemption in readily mar-
18
<PAGE>
ketable 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 Funds 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
Fund to acquire Investor A Shares of another Fund in the Nations Fund Family
(which includes both LifeGoal Funds 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 Fund 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 Fund, exchange
requests should be communicated to the LifeGoal Fund 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 Funds 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 Funds upon such notice as may
be required by applicable regulatory agencies (presently sixty days for
termination or material revision), absent unusual circumstances.
The current prospectus for each portfolio of the Nations Funds describes its
investment objective and policies, and shareholders should obtain a copy and
examine it carefully before exchanging to a 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 ninety 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 Funds' 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
19
<PAGE>
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 Funds' Shareholder Servicing and Distribution Plan (the "Investor A
Plan"), adopted pursuant to Rule 12b-1 under the 1940 Act, permits the LifeGoal
Funds 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 Funds, 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 Funds.
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 Funds 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 Funds 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.
In addition, Stephens has established a non-cash compensation program pursuant
to which broker/dealers or financial institutions that sell shares of the
LifeGoal Funds 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.
20
<PAGE>
How The LifeGoal Funds 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 Funds 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 Fund 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 Fund declares and pays dividends from net investment income
quarterly. Each LifeGoal Fund's net realized capital gains (including net
short-term capital gains) are distributed at least annually.
Investor A Shares of LifeGoal Funds 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 Funds 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 Funds 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 Fund. 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 Funds 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 Fund of liability for federal
income tax to the extent all of its annual earnings are distributed in
accordance with the Code. Each LifeGoal Fund intends to distribute all of its
earnings each taxable year.
Any distributions by a LifeGoal Fund 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 Funds 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 Funds may be
eligible for the dividends-received deduction on the dividends paid by the
LifeGoal Funds to the extent that each LifeGoal Fund'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
Fund 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
Funds, if any, will be distributed at least annually to the LifeGoal Funds'
shareholders. The LifeGoal Funds 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
Funds' shares and whether such gains are received in cash or reinvested in
additional shares.
21
<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 Fund 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 Funds 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 Funds 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 , 1996
LIFEGOAL FUNDS
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
Investment Adviser: NationsBanc Advisors, Inc.
Investment Sub-Adviser: TradeStreet Investment Associates, Inc.
Distributor: Stephens Inc.
Nations Fund
<PAGE>
(Redherring appears on the left side of page. The language is as follows.)
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION
DATED SEPTEMBER 1, 1996
Prospectus
Investor C Shares
October , 1996
This Prospectus describes three diversified
investment portfolios, Nations Capital Accumulator
Fund, Nations Conservative Growth Fund, and Nations
Income and Managed Growth Fund (each a "LifeGoal
Fund" and, collectively, the "LifeGoal Funds"), of
Nations LifeGoal Funds, Inc. (the "Company"), an
open-end management investment company in the
Nations Fund Family. The LifeGoal Funds invest
substantially all of their assets in certain other
portfolios within the Nations Fund Family. These
underlying portfolios are referred to in this
Prospectus as "Nations Funds". This Prospectus
describes one class of shares of each LifeGoal Fund
-- Investor C Shares.
This Prospectus sets forth concisely the information
about each LifeGoal Fund 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 Funds 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 Funds, 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 Funds. TradeStreet Investment Associates,
Inc. ("TradeStreet") is investment sub-adviser to
the LifeGoal Funds. 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 FUNDS 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 FUNDS.
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 FUNDS:
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
For Fund 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 Funds
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 Funds Are Managed 14
Organization And History 16
About Your
Investment
How To Buy Shares 17
How To Redeem Shares 18
How To Exchange Shares 19
Shareholder Servicing and Distribution Plans 20
How The LifeGoal Funds 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
Funds' 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 Funds or the
distributor. This Prospectus does not constitute an
offering by LifeGoal Funds or by the distributor in
any jurisdiction in which such offering may not
lawfully be made.
2
<PAGE>
About The LifeGoal Funds
Prospectus Summary
(Bullet) Type of Company: Open-end management investment company.
(Bullet) Investment Objectives and Policies:
(Bullet) Nations Capital Accumulator Fund's investment objective is to seek
capital appreciation through exposure to a variety of equity market
segments.
(Bullet) Nations Conservative Growth Fund's investment objective is
to seek total return through a balanced portfolio of equity
and fixed income securities.
(Bullet) Nations Income and Managed Growth Fund's investment
objective is to seek current income and modest
growth to protect against inflation and to preserve
purchasing power.
The LifeGoal Funds 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 Funds 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 Funds. NBAI also advises more than 43 Nations
Funds. TradeStreet Investment Associates, Inc. provides sub-advisory
services to the LifeGoal Funds and to more than 39 of the Nations
Funds.
(Bullet) Dividends and Distributions: Each LifeGoal Fund declares and pays
dividends from net investment income quarterly. Each LifeGoal Fund'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 Fund, there is no assurance that it will be
able to do so. Investments in a LifeGoal Fund are not insured against
loss of principal. Investments by a LifeGoal Fund 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
Fund 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 Fund's
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
Fund. The following tables summarize estimated shareholder transaction and
operating expenses as a percentage of net assets for Investor C Shares of each
LifeGoal Fund. The Examples show the cumulative expenses attributable to a
hypothetical $1,000 investment in each LifeGoal Fund over specified periods.
LIFEGOAL FUNDS INVESTOR C SHARES
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
Nations Capital Nations
Accumulator Conservative
Fund Growth Fund
<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%
</TABLE>
<TABLE>
<CAPTION>
Nations Income
and Managed
Growth Fund
<S> <C>
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 Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Nations Capital Nations
Accumulator Conservative
Fund Growth Fund
<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%
</TABLE>
<TABLE>
<CAPTION>
Nations Income
and Managed
Growth Fund
<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 Fund, assuming indirect expenses (the LifeGoal Funds'
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>
Nations Capital Nations
Accumulator Conservative
Fund Growth Fund
<S> <C> <C>
1 Year $22 $21
3 Years $53 $49
</TABLE>
<TABLE>
<CAPTION>
Nations Income
and Managed
Growth Fund
<S> <C>
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 Fund, assuming indirect expenses (the LifeGoal Funds'
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.
[CAPTION]
<TABLE>
<CAPTION>
Nations Capital Nations
Accumulator Conservative
Fund Growth Fund
<S> <C> <C>
1 Year $17 $16
3 Years $53 $49
</Table
</TABLE>
<TABLE>
<CAPTION>
Nations Income
and Managed
Growth Fund
<S> <C>
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 Fund 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 Funds' current fiscal year and the Example includes
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 Fund. For more complete descriptions of the LifeGoal
Funds' operating expenses, see "How The LifeGoal Funds Are Managed." For a more
complete description of the Rule 12b-1 and shareholder servicing fees payable by
the LifeGoal Funds, 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%
</TABLE>
<TABLE>
<CAPTION>
(before 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* .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%
* 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 Funds' 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 Fund is as follows:
<TABLE>
<CAPTION>
(after fee waivers
and/or expense
reimbursements)
<S> <C>
Nations Capital Accumulator Fund .86% to 1.01%
Nations Conservative Growth Fund .78% to .85%
Nations Income & Managed Growth Fund .56% to .73%
</TABLE>
<TABLE>
<CAPTION>
(before fee
waivers and/or
expense
reimbursements)
<S> <C>
Nations Capital Accumulator Fund .92% to 1.05%
Nations Conservative Growth Fund .87% to .92%
Nations Income & Managed Growth Fund .77% to .91%
</TABLE>
The indirect expense ratios fluctuate within these ranges depending upon how
assets are allocated among the Nations Funds. The LifeGoal Funds 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 classes in
the percentages shown below. Under extraordinary circumstances, a LifeGoal Funds
investment in one or more Nations Funds might exceed these ranges. For temporary
defensive purposes, any LifeGoal Fund may invest up to 100% of its assets in
Nations Prime Fund.
5
<PAGE>
Objectives
(Bullet) Nations Capital Accumulator Fund -- Nations Capital Accumulator Fund's
investment objective is to seek capital appreciation through exposure
to a variety of equity market segments.
<TABLE>
<CAPTION>
Fund Class Range
<S> <C>
Large-Capitalization Domestic Equity Funds 35-75%
Small/Mid-Capitalization Domestic Equity Funds 20-30%
Core International Equity Funds 10-20%
Non-Core International Equity Funds 0-10%
</TABLE>
<TABLE>
<CAPTION>
Fund Class Funds
<S> <C>
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) Nations Conservative Growth Fund -- Nations Conservative Growth Fund's
investment objective is to seek total return through a balanced
portfolio of equity and fixed income securities.
<TABLE>
<CAPTION>
Fund Class 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%
</TABLE>
<TABLE>
<CAPTION>
Fund Class Funds
<S> <C>
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
</TABLE>
(Bullet)Nations Income and Managed Growth Fund -- Nations Income and Managed
Growth Fund's investment objective is to seek current income and modest
growth to protect against inflation and to preserve purchasing power.
<TABLE>
<CAPTION>
Fund Class Range
<S> <C>
Large-Capitalization Domestic Equity Funds 10-30%
Core International Equity Funds 0-10%
Short Duration Bond Funds 50-90%
Cash 0-20%
</TABLE>
<TABLE>
<CAPTION>
Fund Class Funds
<S> <C>
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
Cash Nations Prime Fund
</TABLE>
The LifeGoal Funds are intended primarily for long-term investors. The Funds 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 Funds 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 Fund'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 classes.
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 Fund are allocated among various asset and fund
classes. Each LifeGoal Fund has its own asset allocation strategy which gives it
a distinctive risk profile and offers different return potential. Investors
should select the LifeGoal Fund (or Funds) which best matches their investment
goals, risk tolerance and investment horizon.
In general, the greater the LifeGoal Fund'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 Funds 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 Fund, there is no assurance that it will be able to do so. No single
LifeGoal Fund should be considered, by itself, to provide a complete investment
program for any investor. The net asset value of the shares of a LifeGoal Fund
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 Funds for short-term
financial needs. The LifeGoal Funds 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 Fund'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 asset classes and Nations Funds within
a particular LifeGoal Fund's portfolio. Rebalancing is the process of bringing
such portfolio allocations back into alignment with the applicable weightings. A
LifeGoal Fund's investments are continuously monitored and are reallocated as
often as the Adviser deems appropriate. In addition, Fund allocations and
performance are reviewed at least quarterly for rebalancing at the discretion of
the Adviser.
Determining the asset allocation applicable to each LifeGoal Fund is a two step
process. The first step is determining the broad asset categories for each
LifeGoal Fund -- 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 Fund 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.
Although it is expected that the LifeGoal Funds 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 Funds. Among other things, the Adviser may substitute or
include other portfolios from the Nations Fund Family, including any introduced
subsequent to this Prospectus, as permissible investments for the LifeGoal
Funds.
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.
7
<PAGE>
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: An exemptive order issued by the SEC permits,
among other things, the LifeGoal Funds to purchase an unlimited amount of the
outstanding voting shares of each Nations Fund, and each of the Nations Funds to
sell more than 3% of its total outstanding voting stock to the LifeGoal Funds,
under certain conditions. Without this order, the Investment Company Act of
1940, as amended (the "1940 Act"), would prohibit the LifeGoal Funds from
investing in the Nations Funds. On the basis of this exemption, each of the
LifeGoal Funds 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 Funds invest do not
necessarily share the same investment objective as the investing LifeGoal Fund,
those Nations Funds will be selected by the Adviser based on the asset
allocation process described above.
Although each LifeGoal Fund intends to invest substantially all of its assets in
some or all of the underlying Nations Funds, each LifeGoal Fund 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 Fund will invest more than 5% of its assets in
any of these direct investments.
Investment Limitations: Each LifeGoal Fund is subject to a number of investment
limitations, which are described in the SAI. Among other things, the LifeGoal
Funds' 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 Fund, unless
otherwise specified, may be changed without a vote of the LifeGoal Fund's
shareholders. If the investment objective, policies or limitations of a LifeGoal
Fund change, shareholders should consider whether the LifeGoal Fund remains an
appropriate investment in light of their current position and needs.
In order to register a LifeGoal Fund's shares for sale in certain states, a
LifeGoal Fund may make commitments more restrictive than the investment policies
and limitations described in this Prospectus and the SAI. Should a LifeGoal Fund
determine that any such commitment is no longer in the best interests of the
LifeGoal Fund, 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 Funds, thereby
allowing a LifeGoal Fund to participate in certain investment strategies
indirectly that are prohibited under the investment restrictions described in
the LifeGoal Funds' 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 Funds will purchase portfolio securities
for capital appreciation or investment income, or both, and not for short-term
trading profits. The LifeGoal Funds' portfolio turnover rates are not expected
to exceed [50%].
8
<PAGE>
Description of Underlying Nations Funds
-- Investment Objectives, Policies and Practices
Nations LifeGoal Funds seek to achieve their investment objectives by investing
in certain Nations Funds. 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 Funds in the Nations Funds. To receive a prospectus for any
underlying Nations Fund, which contains more complete information, please call
Nations Fund at (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 thorough 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 mostly 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
and, while they may have larger potential for gains, they also carry more risk
if unexpected company developments adversely affect stock prices.
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 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.
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 Funds or any of the Nations Funds.
9
<PAGE>
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.
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: 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.
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, 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
2 "Standard & Poor's 600" is a registered service mark of S&P, which does not
sponsor, and is not affiliated with, Lifegoal Funds or any of the Nations
Funds.
10
<PAGE>
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.
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 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
fifteen 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 instru-
11
<PAGE>
ments 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 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 Fund) 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
12
<PAGE>
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 prospectuses and statements of additional
information of the particular Nations Fund for more information about investment
practices and risks.
How Performance Is Shown
From time to time the LifeGoal Funds may advertise the total return and yield on
a class of shares. In addition, the LifeGoal Funds 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 earnings and are not
intended to indicate future performance. The "total return" of a class of shares
of a LifeGoal Fund 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 Fund 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 Fund's or Nations Fund's
portfolio and operating expenses. Investment performance also often reflects the
risks associated with a LifeGoal Fund's or Nations Fund's investment objective
and policies. These factors should be considered when comparing a LifeGoal
Fund'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 Funds
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 Funds 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 will be computed separately for each class of a LifeGoal Fund's
shares. Any fees charged by an institution directly to its customers' accounts
in connection with investments in the LifeGoal Funds 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 Funds' 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 Funds may invest. Because the LifeGoal Funds
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 Fund performance.
13
<PAGE>
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%
</TABLE>
<TABLE>
<CAPTION>
Inception
through
Fund Name (Date of Commencement of Operations) 6/30/96
<S> <C>
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%
</TABLE>
* This Fund had not commenced operations as of June 30, 1996.
** Date shown reflects commencement of operations of the predecessor fund.
How The LifeGoal Funds Are Managed
The business and affairs of Nations LifeGoal Funds, Inc., are managed under the
supervision and direction of its Board of Directors. The LifeGoal Funds' 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 Funds 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 Funds 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 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 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 Fund's investment policies, the Adviser is
responsible for allocating and reallocating each LifeGoal Fund's assets among
the Nations Funds in which it invests, and for rebalancing such portfolio
allocations. A LifeGoal Fund's investments are continuously monitored and are
reallocated as often as the Adviser deems appropriate. In addition, fund
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 Funds. Among other things, the Adviser
may substitute or include other portfolios from the Nations Fund Family,
including any introduced subsequent to
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this Prospectus, as permissible investments for the LifeGoal Funds.
Both the LifeGoal Funds 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 Fund. NBAI also has agreed to
absorb all other expenses of the LifeGoal Funds (except 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
[0.10%] of the average daily net assets of each LifeGoal Fund. 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 Fund. 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 Fund's
shareholders will indirectly pay their proportionate share of the advisory fees
and other expenses of any Nations Fund in which the LifeGoal Funds 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 Fund assets to
underlying Nations Funds that pay higher fees or provide other benefits.
Andrew M. Silton has managed the LifeGoal Funds 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 Funds pursuant to an Administration
Agreement. Pursuant to the terms of the Administration Agreement, Stephens
provides various administrative and corporate secretarial services to the
LifeGoal Funds, 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 Funds. Stephens will not receive any fees from the
LifeGoal Funds 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 Funds. Under the Co-Administration Agreement, First Data provides
various administrative and accounting services to the LifeGoal Funds 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
Funds. 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 Fund,
which will be absorbed by NBAI.
Shares of the LifeGoal Funds are sold on a continuous basis by Stephens, as the
LifeGoal Funds' sponsor and distributor. The LifeGoal Funds have entered into
distribution agreements with Stephens which provide that Stephens has the
exclusive right to distribute shares of
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the LifeGoal Funds. Stephens may pay service fees or commissions to Institutions
that assist customers in purchasing Investor C Shares of LifeGoal Funds.
First Data serves as the Transfer Agent for each of LifeGoal Fund's Investor C
Shares. NationsBank of Texas, N.A. ("NationsBank of Texas") serves as custodian
for the assets of each LifeGoal Fund.
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 Funds and Nations Funds levels. However, redundancies of fees and
expenses between the LifeGoal Funds and Nations Funds will be minimal, because
distinct services are being provided at each fund level. For example, the
LifeGoal Funds pay advisory fees to the Adviser for its services in allocating
LifeGoal Fund 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 Funds, has
agreed to absorb all expenses of the LifeGoal Funds, except brokerage fees and
commissions, extraordinary expenses and any applicable Rule 12b-1 fees,
shareholder servicing fees and/or shareholder administration fees. The LifeGoal
Funds' 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 Funds 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 Funds 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 Funds will not exceed the limits set forth in Article
III, Section 26, of the NASD Rules of Fair Practice when aggregated with sales
charges or service fees, if any, that the LifeGoal Funds pay relating to Nations
Funds shares.
The LifeGoal Funds' share of the Nations Funds' expenses may include expenses
that the LifeGoal Funds 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 Funds. Such transactions will be rare because
Nations Funds pursue a broad range of investment strategies, and therefore
invest in different types of securities.
Organization And History
The LifeGoal Funds are members of the Nations Fund Family, which consists of the
Company, Nations Fund Trust, Nations Fund, Inc., Nations Portfolios 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 funds, each of which includes several classes of shares.
This Prospectus relates to the Investor C Shares of the following three funds of
the Company: Nations Capital Accumulator Funds, Nations Conservative Growth
Fund, and Nations Income and Managed Growth Fund. To obtain additional
information regarding the LifeGoal Funds' 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 Fund and class have equal rights with respect to voting, except
that the holders of shares of a particular Fund or class will have the exclusive
right to vote on matters affecting only the rights of the holders of such Fund
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 Fund of the Company, less (b) the liabilities of the Company
attributable to the respective Fund or class or allocated among the Funds or
classes based on the respective liquidation value of each Fund or class.
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Shareholders of the Company do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all Funds 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 Funds. As sales of the LifeGoal Funds' 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 1940 Act or Maryland law.
About Your Investment
How To Buy Shares
The LifeGoal Funds 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.
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 Funds, 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 Funds 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 Funds' 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.
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Systematic Investment Plan: Under the LifeGoal Funds' 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 Fund 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 Funds 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 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 Funds 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
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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 Funds' 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 Fund, a
shareholder may reinvest any portion of the proceeds of such redemption in
Investor C Shares of the same LifeGoal Fund. 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 Funds 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.
How To Exchange Shares
The exchange feature enables a shareholder of Investor C Shares of a LifeGoal
Fund to acquire Investor C Shares of another Fund in the Nations Fund Family
(which includes both LifeGoal Funds 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 Funds' 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.
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General: The LifeGoal Funds 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 Funds.
Pursuant to the Distribution Plan, the LifeGoal Funds may compensate or
reimburse Stephens for any activities or expenses primarily intended to result
in the sale of the LifeGoal Funds' 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 Funds' 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 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 Funds which permits the LifeGoal Funds 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 Funds, provided that the annual rate
may not exceed 0.25% of the average daily net asset value of the LifeGoal Funds'
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
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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 Funds 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 Funds 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 Funds 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.
How The LifeGoal Funds 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 Funds 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 Fund 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 Fund declares and pays dividends from net investment income
quarterly. Each LifeGoal Fund's net realized capital gains (including net
short-term capital gains) are distributed at least annually.
Investor C Shares of LifeGoal Funds 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 Funds 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 Fund. 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
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after a shareholder's complete redemption of his/her Investor C Shares.
Tax Information
Each of the LifeGoal Funds 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 Fund of liability for federal
income tax to the extent all of its annual earnings are distributed in
accordance with the Code. Each LifeGoal Fund intends to distribute all of its
earnings each taxable year.
Any distributions by a LifeGoal Fund 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 Funds 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 Funds
may be eligible for the dividends-received deduction on the dividends paid by
the LifeGoal Funds to the extent that each LifeGoal Fund'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
Fund 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
Funds, if any, will be distributed at least annually to the LifeGoal Funds'
shareholders. The LifeGoal Funds 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
Funds' 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 Fund 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 Funds 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 Lifelike Funds 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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NATIONS LIFEGOAL FUNDS, INC.
Statement of Additional Information
NATIONS CAPITAL ACCUMULATOR FUND
NATIONS CONSERVATIVE GROWTH FUND
NATIONS INCOME AND MANAGED GROWTH FUND
INVESTOR A AND C SHARES AND PRIMARY A AND B SHARES
OCTOBER __, 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 Fund" and collectively, the "LifeGoal Funds"). This SAI is not a
prospectus and should be read only in conjunction with the current prospectuses
for the aforementioned LifeGoal Funds related to the class or series of shares
in which one is interested, dated October __, 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 FUND 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 Funds......................... 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
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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 Nations Capital
Accumulator Fund (the "Capital Accumulator Fund"); Nations Conservative Growth
Fund (the "Conservative Growth Fund") and Nations Income and Managed Growth Fund
(the "Income and Managed Growth Fund") (each a "LifeGoal Fund" and collectively,
the "LifeGoal Funds"). 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 Funds. 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.
Pursuant to an Exemptive Order issued by the SEC (Investment Company
Act Release No. 22085 on July 22, 1996), each LifeGoal Fund 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 Fund will concentrate more than 25%
of its assets in the mutual fund industry. However, each of the underlying
mutual funds in which the LifeGoal Funds 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 Funds. Some of the
information required to be in this SAI is also included in the LifeGoal Funds'
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 Fund'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 Funds 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,
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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 Fund intends to invest substantially all of its
assets in underlying Nations Funds, each LifeGoal Fund reserves the right to
invest assets not so invested in government securities, repurchase
agreements and money market instruments.
FUNDAMENTAL INVESTMENT LIMITATIONS
Each LifeGoal Fund 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 Fund, of (i) at least 67% of the shares of the LifeGoal present at the
meeting, if the holders of more than 50% of the outstanding shares of the
LifeGoal are present in person or by represented proxy; or (ii) more than 50% of
the outstanding shares of the LifeGoal Fund, whichever is less.
The LifeGoal Funds may not:
1. Borrow money or issue senior securities as defined in the 1940 Act
except that (a) a Fund may borrow money from banks for temporary
or emergency purposes in amounts up to one-third of the value of
such Fund's total assets at the time of borrowing, provided that
borrowings in excess of 5% of the value of such Fund's total assets
will be repaid prior to the purchase of additional portfolio securities
by such Fund, (b) a Fund may enter into commitments to purchase
securities in accordance with the Fund's investment program, including
delayed delivery and when-issued securities, which commitments may be
considered the issuance of senior securities, and (c) a Fund 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 Fund 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 Fund'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 Fund 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 Fund 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 Fund 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 Funds will be diversified and each Fund 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 Fund's total assets would be invested in the
securities of such issuer, except that up to 25% of the value of the Fund's
total assets may be invested without regard to these limitations and with
respect to 75% of such Fund's assets, such Fund will not hold more than 10%
of the voting securities of any issuer.
8. Each LifeGoal Fund will concentrate its investments in the securities of
other investment companies.
In addition, certain non-fundamental investment restrictions are also
applicable to the LifeGoal Funds, including the following:
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1. No Fund 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 Fund 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 Fund's investment in
such classes of securities would exceed 5% of such Fund'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 Fund 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 Fund's
transactions in futures contracts and related options, and (c) a Fund
may obtain short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities.
4. No Fund will invest in warrants, valued at the lower of cost or market,
in excess of 5% of the value of such Fund's assets, and no more than 2%
of the value of the Fund'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 Fund in units or attached to
securities will be deemed to have no value).
5. No Fund of the Company will purchase securities of companies for the
purpose of exercising control.
6. No Fund 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 Fund 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 Fund'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 Fund of the Company will purchase oil, gas or mineral leases or other
interests (a Fund 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 Funds may invest have adopted their own investment
restrictions which may be more or less restrictive than those listed above,
thereby allowing a LifeGoal Fund to participate in certain investment strategies
indirectly that are prohibited under the fundamental and non-fundamental
investment restrictions listed above and in a LifeGoal Fund 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 Funds, 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 on Fixed Income Securities and Related
Indices. 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 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.
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, unless
the security subsequently appreciates in value.
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
23
<PAGE>
complete description of the manner in which Shares of the various classes of the
LifeGoal Funds may be purchased and redeemed.
The LifeGoal Funds 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 Funds 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 Fund of the Company not reasonably
practicable.
NET ASSET VALUE DETERMINATION
Shares of the common stock of each class of shares of each LifeGoal
Fund 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 Funds is
determined at the times and in the manner described in the Prospectuses.
Portfolio securities of a LifeGoal Fund 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 Fund 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
24
<PAGE>
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 Fund describe the exchange privileges available to holders of such
Investor Shares and Primary Shares, respectively.
DESCRIPTION OF SHARES
DIVIDENDS AND DISTRIBUTIONS
Each LifeGoal Fund 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 Fund may either retain or distribute to shareholders its net
capital gain for each taxable year. Each LifeGoal Fund 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 Fund prior to the
date on which the shareholder acquired his/her shares. Conversely, if a LifeGoal
Fund elects to retain its net capital gain, the LifeGoal Fund will be taxed
thereon (except to the extent of any available capital loss carryovers) at the
applicable corporate tax rate. If a Fund elects to retain its net capital gain,
it is expected that the LifeGoal Fund 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 Fund 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 Fund 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 Funds 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 Funds.
Net investment income for the LifeGoal Funds for dividend purposes
consists of (i) interest accrued and original issue discount earned on a
LifeGoal Fund's assets, (ii) less accrued expenses directly attributable to the
LifeGoal Fund and the general expenses of the Company prorated to a LifeGoal
Fund on the basis of its relative net assets, plus dividend or distribution
income on a
25
<PAGE>
LifeGoal Fund's assets.
ADDITIONAL INFORMATION CONCERNING TAXES
The following is only a summary of certain additional tax
considerations generally affecting the LifeGoal Funds 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 Fund 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 Fund expects to qualify as a regulated investment company
under Subchapter M of the Code. As a regulated investment company, each LifeGoal
Fund 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 Fund 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 Fund 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 Fund'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 Fund'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 Fund'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 Fund
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 Fund 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
26
<PAGE>
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 Fund
(other than to the extent of the LifeGoal Fund's tax-exempt income) to the
extent it does not meet certain minimum distribution requirements by the end of
each calendar year. Each LifeGoal Fund 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 Fund 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 Fund 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 Fund 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
Fund 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 Fund 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
27
<PAGE>
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 Fund 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 Fund 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 Funds.
DIRECTORS AND OFFICERS OF THE LIFEGOAL FUNDS
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
CSX Corporation Corporation (transportation and natural
One James Center resources); Director, National Mine
901 East Cary Street Service; Director, Lawyers Title
Richmond, VA 23219 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,
6215 Riverwood Drive, N.W. Chairman of the Board A. Max Walker, Inc.; Director and Chairman
Atlanta, GA 30328 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
Funds.
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 Fund, or (ii) was being purchased or sold by a LifeGoal Fund. 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 Funds will receive
compensation from the LifeGoal Funds 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 Funds invest are identical to the persons above-named under
the heading "Directors And Officers of the LifeGoal Funds".
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).
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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 Funds. This SAI relates to the following LifeGoal
Funds of the Company: Nations Capital Accumulator Fund, Nations Conservative
Growth Fund and Nations Income and Managed Growth Fund. Each LifeGoal Fund
offers the following separate classes of shares: Primary A Shares, Primary B
Shares, Investor A Shares and Investor C Shares. Shares of each LifeGoal Fund 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 Fund or a particular
class of shares of a LifeGoal Fund means, respectively, the vote of the lesser
of (i) 67% or more of the shares of the Company, LifeGoal Fund 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
Fund or class.
The Board of Directors may classify or reclassify any unissued shares
of the Company into shares of any class, classes or LifeGoal Fund 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 Fund 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.
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INVESTMENT ADVISORY ARRANGEMENTS OF THE LIFEGOAL FUNDS
NBAI serves as investment adviser to the LifeGoal Funds 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 July 10 , 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 Fund's net assets during the preceding
month]. NBAI also has agreed to absorb all other expenses of the LifeGoal Funds
(except 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 Funds invest. The
Investment Advisory Agreement shall become effective with respect to a LifeGoal
Fund 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 Fund (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 Fund 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 Fund)
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 Funds. 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 July
36
<PAGE>
10, 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 Fund. TradeStreet
will not receive fees for such services. TradeStreet is compensated for
providing sub-advisory services to most of the underlying Nations Funds in which
the LifeGoal Funds 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
Funds, 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 Funds.
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; and 0.70% of
Nations Pacific Growth Fund's average 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
39
<PAGE>
- -- 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
40
<PAGE>
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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<PAGE>
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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<PAGE>
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.
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 Funds.
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 Fund, 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 Funds,
(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 Funds, (ii) compute each Fund'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 Funds 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 Funds' 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 Funds.
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 Funds 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 Funds, 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 Fund 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 Fund, 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 Fund, 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 Fund 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 Funds 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 Funds (the "Investor C Plan"). Pursuant to the Investor C Plan, each
Fund 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 Fund. 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 Funds. 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 Funds 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 Funds
(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 Funds' 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
46
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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 a Fund. 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 Fund 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
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C Shares of each Fund, 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 Fund are pro-rated among all
classes of shares or LifeGoal Funds of the Company based upon the relative net
assets of each class or LifeGoal Fund. Expenses of the Company which are not
directly attributable to a specific class of shares but are directly
attributable to a specific Fund are prorated among all the classes of shares of
such Fund 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.
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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 Funds
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 Fund's Primary Shares.
NationsBank of Texas, N.A. serves as custodian (the "Custodian") for
the portfolio securities and cash of the LifeGoal Funds. The Custodian maintains
custody of the LifeGoal Funds' 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 Funds for payments of
dividends, distributions and redemptions, endorses and collects on behalf of the
LifeGoal Funds all checks, and receives all dividends and other distributions
made on securities owned by the LifeGoal Funds. The Custodian receives no
compensation from the LifeGoal Funds.
INDEPENDENT ACCOUNTANT AND REPORTS
At least semi-annually, the Company will furnish shareholders of the
LifeGoal Funds with a list of the investments held in the LifeGoal Funds and
financial statements for the LifeGoal Funds. 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 Funds' fiscal years ending on
and after March 31, 1997.
COUNSEL
Morrison & Foerster LLP serves as legal counsel to the Company. Its
address is 2000 Pennsylvania Avenue, N.W., Washington, D.C. 20006.
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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 Funds may be obtained by calling the Company at (800) 321-7854.
From time to time, the yield and total return of a LifeGoal Fund's
Investor Shares and Primary Shares may be quoted in advertisements, shareholder
reports, and other communications to shareholders. Each LifeGoal Fund 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
Funds 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
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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 Fund'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 Fund may differ from the
rate of distributions a LifeGoal Fund paid over the same period or the rate of
income reported in the LifeGoal Funds' 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 Fund. The LifeGoal Funds' 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
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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 Funds 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 [ ]
Fund) or a three-month (in the case of the [ ] Fund) period as a percentage of
the maximum offering price per share on the last day of such period.
The performance figures of the LifeGoal Funds 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 Funds with
those of other investment companies and investment vehicles.
The LifeGoal Funds 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 Fund 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 Fund.
MISCELLANEOUS
CERTAIN RECORD HOLDERS
As of October __, 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.
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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
strongest 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. 33- ; 811-07745
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Not Applicable
(b) Exhibits
Exhibit
Number Description
(1) Articles of Incorporation, dated July 3, 1996, filed herewith
(2) By-Laws, dated July 10, 1996, filed herewith
(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 Nations Capital Accumulator Fund, Nations
Conservative Growth Fund and Nations Income and Managed Growth Fund,
filed herewith
(6)(a) Form of Distribution Agreement between Stephens Inc. and Nations
LifeGoal Funds, Inc., filed herewith
(6)(b) Form of Sales Support Agreement, filed herewith
(6)(c) Form of Shareholder Servicing Agreement, filed herewith
(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., filed herewith
<PAGE>
(9)(a) Transfer Agency Agreement, to be filed by Amendment
(9)(b) Form of Amendment to Transfer Agency and Services Agreement, filed
herewith
(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, filed
herewith
(9)(f) Form of Administration Agreement between Stephens Inc. and Nations
LifeGoal Funds, Inc., filed herewith
(9)(g) Form of Co-Administration Agreement between First Data Investor
Services Group, Inc. and Nations LifeGoal Funds, Inc., filed herewith
(10) Opinion and Consent of Counsel, filed herewith
(11) Consent of Independent Accountants, to be filed by Amendment
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15)(a) Form of Shareholder Servicing and Distribution Plan, Investor A Shares,
filed herewith
(15)(b) Form of Shareholder Servicing Plan, Investor C Shares, filed herewith
(15)(c) Form of Distribution Plan, Investor C Shares, filed herewith
(15)(d) Form of Shareholder Administration Plan, Primary B Shares, filed
herewith
(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 __, 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 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 6th day of August, 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 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 August 6, 1996
- ---------------------------------------- Directors
(A. Max Walker) (Principal Executive Officer)
* Treasurer August 6, 1996
- ---------------------------------------- Vice President
(Richard H. Rose) (Principal Financial and
Accounting Officer)
* Director August 6, 1996
- ----------------------------------------
(Edmund L. Benson, III)
* Director August 6, 1996
- ----------------------------------------
(James Ermer)
* Director August 6, 1996
- ----------------------------------------
(William H. Grigg)
* Director August 6, 1996
- ----------------------------------------
(Thomas F. Keller)
<PAGE>
* Director August 6, 1996
- ----------------------------------------
(Carl E. Mundy, Jr.)
* Director August 6, 1996
- ----------------------------------------
(Charles B. Walker)
* Director August 6, 1996
- ----------------------------------------
(Thomas S. Word)
/s/ Richard H. Blank, Jr.
Richard H. Blank, Jr.
*Attorney-in-Fact
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
<S> <C>
EX99.B1 Articles of Incorporation
EX99.B2 Bylaws of Nations LifeGoal Funds, Inc.
EX99.B5(a) Form of Investment Advisory Agreement
EX99.B5(b) Form of Sub-Advisory Agreement
EX99.B6(a) Form of Distribution Agreement
EX99.B6(b) Form of Sales Support Agreement
EX99.B6(c) Form of Shareholder Servicing Agreement
EX99.B8 Form of Custody Agreement
EX99.B9(b) Form of Amendment to Transfer Agency and Services Agreement
EX99.B9(e) Form of Amendment to Sub-Transfer Agency and Services Agreement
EX99.B9(f) Form of Administration Agreement
EX99.B9(g) Form of Co-Administration Agreement
EX99.B10 Opinion of Counsel
EX99.B15(a) Form of Shareholder Servicing and Distribution Plan (Investor A Shares)
EX99.B15(b) Form of Shareholder Servicing Plan (Investor C Shares)
EX99.B15(c) Form of Distribution Plan (Investor C Shares)
EX99.B15(d) Form of Shareholder Administration Plan (Primary B Shares)
EX99.B18 Rule 18f-3 Multi-Class Plan
</TABLE>
<PAGE>
EX99.B1
ARTICLES OF INCORPORATION
OF
NATIONS LIFEGOAL FUNDS, INC.
I.
INCORPORATOR
The undersigned, Rita W. Morales, whose mailing address is 2000
Pennsylvania Avenue, N.W., Washington, D.C., 20006, being at least 18 years of
age, does hereby form a corporation under and by virtue of the General Laws of
the State of Maryland.
II.
NAME
The name of the corporation is Nations LifeGoal Funds, Inc. (the
"Corporation").
III.
PURPOSES AND POWERS
The purpose or purposes for which the Corporation is formed and
the business or objects to be transacted, carried on and promoted by it are:
(a) To conduct and carry on the business of an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act").
(b) To hold, invest and reinvest its assets in securities and
other investments including holding part or all of its assets in cash, including
foreign currencies.
(c) To issue and sell shares of its capital stock in such accounts
and on such terms and conditions and for such purposes and for such amount or
kind of consideration (including, without limitation, securities) now or
hereafter permitted by law.
(d) To redeem, purchase or otherwise acquire, hold, dispose of,
resell, transfer, reissue or cancel (all without the vote or consent of the
shareholders of the Corporation) shares of its capital stock, in any manner and
to the extent now or hereafter permitted by law and by these Articles of
Incorporation.
<PAGE>
(e) To do any and all such acts or things and to exercise any and
all such further powers or rights as may be necessary, incidental, relative,
conducive, appropriate or desirable for the accomplishment, carrying out or
attainment of the purposes stated in this Article.
The foregoing enumerated purposes and objects shall be in no way
limited or restricted by reference to, or inference from, the terms of any other
clause of this or any other Article of these Articles of Incorporation, and
shall each be regarded as independent; and they are intended to be and shall be
construed as powers as well as purposes and objects of the Corporation and shall
be in addition to, and not in limitation of, the general powers of corporations
under the laws of the State of Maryland.
IV.
PRINCIPAL OFFICE AND PLACE OF BUSINESS
The present address of the principal office of the Corporation in
the State of Maryland is c/o The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202.
V.
RESIDENT AGENT
The name and address of the Corporation's resident agent is The
Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland 21202. Said
resident agent is a Maryland corporation.
VI.
CAPITAL STOCK
(a) The total number of shares of capital stock which the
Corporation shall have the authority to issue is one billion two hundred million
(1,200,000,000) shares of the par value of $.001 per share. There shall
initially be three series of shares, designated as the "Nations Capital
Accumulator Fund," consisting of one hundred million (100,000,000) shares of
"Primary A" shares, one hundred million (100,000,000) shares of "Primary B"
shares, one hundred million (100,000,000) shares of "Investor A" shares, and one
hundred million (100,000,000) shares of "Investor C" shares; "Nations
Conservative Growth Fund," consisting of one hundred million (100,000,000)
shares of "Primary A" shares, one hundred million (100,000,000) shares of
"Primary B" shares, one hundred million (100,000,000) shares of "Investor A"
shares, and one hundred million (100,000,000) shares of "Investor C" shares; and
"Nations Income and Managed Growth Fund," consisting of one hundred million
(100,000,000) shares of "Primary A" shares, one hundred million (100,000,000)
shares of "Primary B" shares, one hundred million
-2-
<PAGE>
(100,000,000) shares of "Investor A" shares, and one hundred million
(100,000,000) shares of "Investor C" shares, (such series and any further series
of shares from time to time created by the Board of Directors being referred to
individually herein as a "series," and such classes, and any further classes
from time to time created by the Board of Directors being referred to
individually herein as a "class"). The Board of Directors of the Corporation is
hereby empowered to increase or decrease, from time to time, the total number of
shares of capital stock or the number of shares of capital stock of any series
or class that the Corporation shall have authority to issue without any action
by the shareholders.
(b) Any fractional share shall carry proportionately all the
rights of a whole share, excepting any right to receive a certificate evidencing
such fractional share, but including the right to vote and the right to receive
dividends.
(c) All persons who shall acquire stock in the Corporation shall
acquire the same subject to the provisions of these Articles of Incorporation
and the Bylaws of the Corporation.
(d) As used in these Articles of Incorporation, a "series" of
shares represents interests in the same assets, liabilities, income, earnings
and profits of the Corporation; each "class" of shares of a series represents
interests in the same underlying assets, liabilities, income, earnings and
profits, but may differ from other classes of such series with respect to fees
and expenses or such other matters as shall be established by the Board of
Directors. The Board of Directors shall have authority to classify and
reclassify any authorized but unissued shares of capital stock from time to time
by setting or changing in any one or more respects the preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of the capital stock.
Subject to the provisions of Section (e) of this Article VI and applicable law,
the power of the Board of Directors to classify or reclassify any of the shares
of capital stock shall include, without limitation, authority to classify or
reclassify any such stock into one or more series of capital stock and to divide
and classify shares of any series into one or more classes of such series, by
determining, fixing or altering one or more of the following:
1. The distinctive designation of such class or series and
the number of shares to constitute such class or series; provided
that, unless otherwise prohibited by the terms of such class or
series, the number of shares of any class or series may be
decreased by the Board of Directors in connection with any
classification or reclassification of unissued shares and the
number of shares of such class or series may be increased by the
Board of Directors in connection with any such classification or
reclassification, and any shares of any class or series which have
been redeemed, purchased or otherwise acquired by the Corporation
shall remain part of the authorized capital stock and be subject
to classification and reclassification as provided herein;
2. Whether or not and, if so, the rates, amounts and times
at which, and the conditions under which, dividends shall be
payable on shares of such class or series;
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3. Whether or not shares of such class or series shall have
voting rights in addition to any general voting rights provided by
law and these Articles of Incorporation of the Corporation and, if
so, the terms of such additional voting rights;
4. The rights of the holders of shares of such class or
series upon the liquidation, dissolution or winding up of the
affairs of, or upon a distribution of the assets of, the
Corporation.
(e) Shares of capital stock of the Corporation shall have the
following preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption:
1. Assets Belonging to a Series. All consideration received
by the Corporation for the issue or sale of stock of any series
of capital stock, together with all assets in which such
consideration is invested and reinvested, income, earnings,
profits and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation thereof, and any funds or
payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to the
series of shares of capital stock with respect to which such
assets, payments or funds were received by the Corporation for
all purposes, subject only to the rights of creditors, and shall
be so handled upon the books of account of the Corporation. Such
consideration, assets, income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange
or liquidation thereof, and any assets derived from any
reinvestment of such proceeds in whatever form, are herein
referred to as "assets belonging to" such series. Any assets,
income, earnings, profits, and proceeds thereof, funds or
payments which are not readily attributable to any particular
series shall be allocable among any one or more of the series in
such manner and on such basis as the Board of Directors, in its
sole discretion, shall deem fair and equitable.
2. Liabilities Belonging to a Series. The assets belonging
to any series of capital stock shall be charged with the
liabilities in respect of such series and shall also be charged
with such series' share of the general liabilities of the
Corporation determined as hereinafter provided. The determination
of the Board of Directors shall be conclusive as to the amount of
such liabilities, including the amount of accrued expenses and
reserves; as to any allocation of the same to a given series; and
as to whether the same are allocable to one or more series. The
liabilities so allocated to a series are herein referred to as
"liabilities belonging to" such series. Any liabilities which are
not readily attributable to any particular series shall be
allocable among any one or more of the series in such manner and
on such basis as the Board of Directors, in its sole discretion,
shall deem fair and equitable.
3. Dividends and Distributions. Shares of each series of
capital stock shall be entitled to such dividends and
distributions, in stock or in cash or both, as may be
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declared from time to time by the Board of Directors, acting in
its sole discretion, with respect to such series, provided,
however, that dividends and distributions on shares of a series
of capital stock shall be paid only out of the lawfully available
"assets belonging to" such series as such phrase is defined in
Section (e)(1) of this Article VI.
4. Liquidating Dividends and Distributions. In the event of
the liquidation or dissolution of the Corporation, shareholders
of each series of capital stock shall be entitled to receive, as
a series, out of the assets of the Corporation available for
distribution to shareholders, but other than general assets not
belonging to any particular series of capital stock, the assets
belonging to such series; and the assets so distributable to the
shareholders of any series of capital stock shall be distributed
among such shareholders in proportion to the number of shares of
such series held by them and recorded on the books of the
Corporation. In the event that there are any general assets not
belonging to any particular series of capital stock and available
for distribution, such distribution shall be made to the holders
of stock of all series of capital stock in proportion to the
asset value of the respective series of capital stock determined
as hereinafter provided.
5. Voting. Each shareholder of each series of capital stock
shall be entitled to one vote for each share of capital stock,
irrespective of the class, then standing in his name on the books
of the Corporation, and on any matter submitted to a vote of
shareholders, all shares of capital stock then issued and
outstanding and entitled to vote shall be voted in the aggregate
and not by series except that: (i) when expressly required by
law, shares of capital stock shall be voted by individual class
or series and (ii) only shares of capital stock of the respective
series or class or classes affected by a matter shall be entitled
to vote on such matter. At all meetings of the shareholders, the
holders of one-third of the shares of capital stock of the
Corporation entitled to vote at the meeting, present in person or
by proxy, shall constitute a quorum for the transaction of any
business, except as otherwise provided by statute or by these
Articles of Incorporation. In the absence of a quorum no business
may be transacted, except that the holders of a majority of the
shares of capital stock present in person or by proxy and
entitled to vote may adjourn the meeting from time to time,
without notice other than announcement at the meeting except as
otherwise required by these Articles of Incorporation or the
Bylaws, until the holders of the requisite amount of shares of
capital stock shall be present. At any such adjourned meeting at
which a quorum may be present any business may be transacted
which might have been transacted at the meeting as originally
called. The absence from any meeting, in person or by proxy, of
holders of the number of shares of capital stock of the
Corporation in excess of the quorum which may be required by the
laws of the State of Maryland, the 1940 Act, or other applicable
statute, these Articles of Incorporation or the Bylaws, for
action upon any given matter shall not prevent action at such
meeting upon any other matter or matters which may properly come
before the meeting, if there shall be present at the meeting, in
person or by proxy, holders of the
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<PAGE>
number of shares of capital stock of the Corporation required for
action in respect of such other matter or matters.
6. Redemption. To the extent the Corporation has funds or
other property legally available therefor, each holder of shares
of capital stock of the Corporation shall be entitled to require
the Corporation to redeem all or any part of the shares standing
in the name of such holder on the books of the Corporation, at
the redemption price of such shares as in effect from time to
time as may be determined by the Board of Directors of the
Corporation in accordance with the provisions hereof, subject to
the right of the Board of Directors of the Corporation to suspend
the right of redemption of shares of capital stock of the
Corporation or postpone the date of payment of such redemption
price in accordance with provisions of applicable law. Without
limiting the generality of the foregoing, the Corporation shall,
to the extent permitted by applicable law, have the right at any
time to redeem the shares owned by any holder of capital stock of
the Corporation if the value of such shares in the account of
such holder is less than the minimum initial investment amount
applicable to that account as set forth in the Corporation's
current registration statement under the 1940 Act, and subject to
such further terms and conditions as the Board of Directors of
the Corporation may from time to time adopt. The redemption price
of shares of capital stock of the Corporation shall, except as
otherwise provided in this Section (e)(6), be the net asset value
thereof as determined by, or pursuant to methods approved by, the
Board of Directors of the Corporation from time to time in
accordance with the provisions of applicable law, less such
redemption fee or other charge, if any, as may be specified in
the Corporation's current registration statement under the 1940
Act for that class or series. Payment of the redemption price
shall be made in cash by the Corporation at such time and in such
manner as may be determined from time to time by the Board of
Directors of the Corporation unless, in the opinion of the Board
of Directors, which shall be conclusive, conditions exist which
make payment wholly in cash unwise or undesirable; in such event
the Corporation may make payment wholly or partly by securities
or other property included in the assets belonging or allocable
to the series of the shares redemption of which is being sought,
the value of which shall be determined as provided herein.
7. Conversion. Shares of a series or class of capital stock
of the Corporation shall be convertible into shares of another
series or class of capital stock of the Corporation upon such
terms and at such time as may be determined from time to time by
the Board of Directors of the Corporation and described in the
Corporation's then current registration statement under the 1940
Act for that series or class.
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VII.
DIRECTORS
The number of Directors of the Corporation shall initially be
eight (8), which number may, from time to time be, increased or decreased
pursuant to the Bylaws of the Corporation, but shall never be less than the
minimum number permitted by the General Laws of the State of Maryland as now or
hereafter in force. The names of the Directors who will serve until the first
shareholders meeting or until their successors are elected and qualified are as
follows:
A. Max Walker
Edmund L. Benson, III
James Ermer
William H. Grigg
Thomas F. Keller
Carl E. Mundy, Jr.
Charles B. Walker
Thomas S. Word, Jr.
VIII.
PROVISIONS FOR DEFINING, LIMITING AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF THE
DIRECTORS AND SHAREHOLDERS
The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
Directors and shareholders:
(a) No holder of any stock or any other securities of the
Corporation, whether now or hereafter authorized, shall have any preemptive
right to subscribe for or purchase any stock or any other securities of the
Corporation other than such, if any, as the Board of Directors, in its sole
discretion, may determine and at such price or prices and upon such other terms
as the Board of Directors, in its sole discretion, may fix; and any stock or
other securities which the Board of Directors may determine to offer for
subscription may, as the Board of Directors in its sole discretion shall
determine, be offered to the holders of any class, series or type of stock or
other securities at the time outstanding to the exclusion of the holders of any
or all other classes, series or types of stock or other securities at the time
outstanding.
(b) The Board of Directors of the Corporation shall have power
from time to time and in its sole discretion to determine, in accordance with
sound accounting practice, what constitutes annual or other net income, profits,
earnings, surplus or net assets; to fix and vary from time to time the amount to
be reserved as working capital, or determine that retained earnings or surplus
shall remain in the hands of the Corporation; to set apart out of any funds of
the Corporation such reserve or reserves in such amount or amounts and for such
proper purpose
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<PAGE>
or purposes as it shall determine and to abolish any such reserve or any part
thereof; to distribute and pay distributions or dividends in stock, cash or
other securities or property, out of surplus or any other funds or amounts
legally available therefor, at such times and to the shareholders of record on
such dates as it may from to time determine; and to determine whether and to
what extent and at what times and places and under what conditions and
regulations the books, accounts and documents of the Corporation, or any of
them, shall be open to the inspection of shareholders, except as otherwise
provided by statute or by the Bylaws, and, except as so provided, no shareholder
shall have any right to inspect any book, account or document of the Corporation
unless authorized so to do by resolution of the Board of Directors.
(c) The Board of Directors of the Corporation may establish in its
absolute discretion the basis or method for determining the value of the assets
belonging to any series, and the net asset value of each share of capital stock
of each series and class for purposes of sales, redemptions, repurchases of
shares or otherwise.
(d) Any Director or officer, individually, or any firm of which
any Director or officer may be a member, or any corporation, trust or
association of which any Director or officer may be an officer or Director or in
which any Director or officer may be directly or indirectly interested as the
holder of any amount of its capital stock or otherwise, may be a party to, or
may be financially or otherwise interested in, any contract or transaction of
the Corporation; and any such Director or officer of the Corporation may be
counted in determining the existence of a quorum at the meeting of the Board of
Directors of the Corporation or a committee thereof which shall authorize any
such contract or transaction, and may vote thereat to authorize any such
contract or transaction, and such transaction or contract shall not as a result
be void or voidable provided either
(i) the fact of the common directorship or interest is disclosed
or known to: (a) the Board of Directors or the committee and the Board
or committee authorizes, approves, or ratifies the contract or
transaction by the affirmative vote of a majority of disinterested
Directors, even if the disinterested Directors constitute less than a
quorum; or (b) the shareholders entitled to vote, and the contract or
transaction is authorized, approved, or ratified by a majority of the
votes cast by the shareholders entitled to vote other than the votes of
shares owned of record or beneficially by the interested Director or
corporation, firm, or other entity; or
(ii) the contract or transaction is fair and reasonable to the
Corporation.
In furtherance and not in limitation of the foregoing, the Board
of Directors of the Corporation is expressly authorized to contract for
management services of any nature, with respect to the conduct of the business
of the Corporation with any entity, person or company, incorporated or
unincorporated, on such terms as the Board of Directors may deem desirable. Any
such contract may provide for the rendition of management services of any nature
with respect to the conduct of the business of the Corporation, and for the
management or direction of the business and activities of the Corporation to
such extent as the Board of Directors may determine, whether or not the contract
involves delegation of functions usually or customarily
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<PAGE>
performed by the Board of Directors or officers of the Corporation or of a
corporation organized under the laws of Maryland. The Board of Directors is
further expressly authorized to contract with any person or company on such
terms as the Board of Directors may deem desirable for the distribution of
shares of the Corporation and to contract for other services, including, without
limitation, services as custodian of the Corporation's assets and as transfer
agent for the Corporation's shares, with any entity(ies), person(s) or
company(ies), incorporated or unincorporated, on such terms as the Directors may
deem desirable. Any entity, person or company which enters into one or more of
such contracts may also perform similar or identical services for other
investment companies and other persons and entities without restriction by
reason of the relationship with the Corporation unless the contract expressly
provides otherwise.
(e) Any contract, transaction, or act of the Corporation or of the
Board of Directors which shall be ratified by a majority of a quorum of the
shareholders having voting powers at any annual meeting, or at any special
meeting called for such purpose, shall so far as permitted by law be as valid
and as binding as though ratified by every shareholder of the Corporation.
(f) Unless the Bylaws otherwise provide, any officer or employee
of the Corporation (other than a Director) may be removed at any time with or
without cause by the Board of Directors or by any committee or superior officer
upon whom such power of removal may be conferred by the Bylaws or by authority
of the Board of Directors.
(g) Notwithstanding any provision of law requiring the
authorization of any action by a greater proportion than a majority of the total
number of shares of any series or class, or of all classes or series of capital
stock, or by the total number of such shares, such action shall be valid and
effective if authorized by the affirmative vote of the holders of a majority of
the total number of shares outstanding and entitled to vote thereon.
(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.
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(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.
(j) In addition to the powers and authority hereinbefore,
hereinafter or by statute expressly conferred upon them, the Board of Directors
may exercise all such powers and do all such acts and things as may be exercised
or done by the Corporation, subject, nevertheless, to the express provisions of
the laws of Maryland, of these Articles of Incorporation and of the Bylaws of
the Corporation.
(k) The Corporation reserves the right from time to time to make
any amendments of its Articles of Incorporation which may now or hereafter be
authorized by law, including any amendments changing the terms or contract
rights, as expressly set forth in its Articles of Incorporation, of any of its
outstanding stock by classification, reclassification or otherwise but no such
amendment which changes such terms or contract rights of any of its outstanding
stock shall be valid unless such amendment shall have been authorized by not
less than a majority of the aggregate number of the votes entitled to be cast
thereon, by a vote at a meeting or in writing with or without a meeting.
(l) The Corporation shall not be required to hold an annual
meeting of shareholders in any year in which the laws of Maryland do not require
that such a meeting be held.
The enumeration and definition of particular powers of the Board
of Directors included in the foregoing shall in no way be limited or restricted
by reference to or inference from the terms of any other clause of this or any
other Article of these Articles of Incorporation of the Corporation, or
construed as or deemed by inference or otherwise in any manner to exclude or
limit any powers conferred upon the Board of Directors under the General Laws of
the State of Maryland now or hereafter in force.
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IX.
DURATION OF THE CORPORATION
The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation
acknowledging the same to be my act, on July 3, 1996.
/s/ Rita W. Morales
---------------------------------------
Rita W. Morales
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EX99.B2
BYLAWS
I N D E X
<TABLE>
<CAPTION>
Section and Title Page
Article I. SHAREHOLDERS
<S> <C> <C>
1.1 Annual Meetings ............................................. ...................1
1.2 Special Meetings ........................................... ....................1
1.3 Place of Meetings ......................................... .....................1
1.4 Notice of Meetings ....................................... ......................1
1.5 Quorum................................................... .......................2
1.6 Votes Required ..................................................................2
1.7 Proxies..........................................................................2
1.8 List of Shareholders ............................................................3
1.9 Voting...........................................................................3
1.10 Action by Shareholders Other than at a
Meeting..........................................................................3
Article II. BOARD OF DIRECTORS
2.1 Powers...........................................................................4
2.2 Number of Directors .............................................................4
2.3 Election of Directors ...........................................................4
2.4 Regular Meetings ................................................................4
2.5 Special Meetings ................................................................4
2.6 Notice of Meetings ..............................................................5
2.7 Quorum...........................................................................5
2.8 Vacancies........................................................................5
2.9 Compensation and Expenses .......................................................6
2.10 Action by Directors Other than at a Meeting .....................................6
2.11 Audit Committee .................................................................6
2.12 Nominating Committee of Directors ...............................................7
2.13 Other Committees ................................................................7
2.14 Holding of Meetings by Conference Telephone Call ................................7
2.15 Qualification of Directors ......................................................7
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Article III. OFFICERS
3.1 Executive Officers .............................................................8
3.2 Chairman and Vice Chairman of the Board.........................................8
3.3 President ......................................................................8
3.4 Vice Presidents ................................................................8
3.5 Chief Operating Officer ........................................................9
3.6 Secretary and Assistant Secretaries ............................................9
3.7 Treasurer and Assistant Treasurers .............................................9
3.8 Subordinate Officers ..........................................................10
3.9 Removal 10
Article IV. STOCK
4.1 Certificates ..................................................................10
4.2 Transfers .....................................................................11
4.3 Stock Ledgers .................................................................11
4.4 Record Dates ..................................................................11
Article V. GENERAL PROVISIONS
5.1 Dividends .....................................................................11
5.2 Checks 12
5.3 Fiscal Year ...................................................................12
5.4 Custodian .....................................................................12
5.5 Seal ......................................................................12
5.6 Representation of Shares ......................................................12
5.7 Prohibited Transactions .......................................................12
5.8 Bonds ......................................................................13
5.9 Annual Statement of Affairs ...................................................13
Article VI. AMENDMENT OF BYLAWS
</TABLE>
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<PAGE>
BYLAWS
OF
NATIONS LIFEGOAL FUNDS, INC.
<PAGE>
BYLAWS
OF
NATIONS LIFEGOAL FUNDS, INC.
(the "Corporation")
ARTICLE I
SHAREHOLDERS
Section 1.1 Annual Meetings. The Corporation is not required to
hold an annual meeting of shareholders in any year in which the election of
directors is not required to be acted upon by shareholders under the Investment
Company Act of 1940, as amended (the "1940 Act"). If such action is required to
be acted upon under the 1940 Act, then such meeting (or the first such meeting
in any year) shall be designated as the annual meeting of shareholders for that
year. Except as the Articles of Incorporation or statute provides otherwise, any
business may be considered at an annual meeting without the purpose of the
meeting having been specified in the notice. Failure to hold an annual meeting
does not invalidate the Corporation's existence or affect any otherwise valid
corporate acts.
Section 1.2 Special Meetings. At any time in the interval between
annual meetings, special meetings of the shareholders may be called by the
Chairman of the Board, if any, the President in the absence of the Chairman, the
Chief Operating Officer in the absence of the Chairman and the President, or by
a majority of the Board or by shareholders entitled to cast 10% in number of
votes by vote at a meeting or in writing with or without a meeting.
Section 1.3 Place of Meetings. Meetings of the shareholders for
the election of Directors shall be held at such place either within or without
the State of Maryland or elsewhere in the United States as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting. Meetings of shareholders for any other purpose may be held at such time
and place, within the State of Maryland or elsewhere in the United States, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
Section 1.4 Notice of Meetings. Not less than ten days nor more
than ninety days before the date of every shareholders' meeting, the Secretary
shall give to each shareholder entitled to vote at such meeting, written or
printed notice stating the time and place of the meeting and, if the meeting is
a special meeting or notice of the purpose is required by statute, the purpose
or purposes for which the meeting is called, either by mail or by presenting it
to the shareholder personally or by leaving it at the shareholder's residence or
usual place of business. If mailed, such notice shall be deemed to be given when
deposited in the United States mail addressed to the shareholder at his address
as it appears on the records of the Corporation, with postage thereon prepaid.
Notwithstanding the foregoing provision, a waiver of notice in writing, signed
by the person or persons entitled to such notice and filed with the records of
the meeting, whether before or after the holding thereof, or actual attendance
at the meeting in person or by proxy, shall be
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deemed equivalent to the giving of such notice to such persons. Any meeting of
shareholders, annual or special, may adjourn from time to time to reconvene at
the same or some other place, and no notice need be given of any such adjourned
meeting other than by announcement at the meeting.
Section 1.5 Quorum. At any meeting of shareholders the presence in
person or by proxy of shareholders entitled to cast one-third of the votes
thereat shall constitute a quorum; but this Section shall not affect any
requirement under statute or under the Articles for the vote necessary for the
adoption of any measure. In the absence of a quorum the shareholders present in
person or by proxy, by majority vote and without notice, may adjourn the meeting
from time to time until a quorum shall attend. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted which might have
been transacted at the meeting as originally called.
Section 1.6 Votes Required. A majority of the votes cast at a
meeting of shareholders, duly called and at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may properly come
before the meeting, unless more than a majority of votes cast is required by
statute or by the Articles and except that a plurality of all the votes cast at
a meeting at which a quorum is present is sufficient to elect a Director. Each
outstanding share of stock shall be entitled to one vote on each matter
submitted to a vote at a meeting of shareholders and fractional shares shall be
entitled to corresponding fractions of one vote on such matters.
Section 1.7 Proxies. A shareholder may vote the shares owned of
record by him either in person or by proxy executed in writing by the
shareholder or by the shareholder's duly authorized attorney-in-fact. No proxy
shall be valid after eleven months from its date, unless otherwise provided in
the proxy. Every proxy shall be in writing, subscribed by the shareholder or the
shareholder's duly authorized attorney, and dated, but need not be sealed,
witnessed or acknowledged.
Section 1.8 List of Shareholders. At each meeting of shareholders,
a full, true and complete list in alphabetical order of all shareholders
entitled to vote at such meeting, certifying the number and class or series of
shares held by each, shall be made available by the Secretary.
Section 1.9 Voting. In all elections for Directors every
shareholder shall have the right to vote, in person or by proxy, the shares
owned of record by the shareholder, for as many persons as there are Directors
to be elected and for whose election the shareholder has a right to vote. At all
meetings of shareholders, unless the voting is conducted by inspectors, the
proxies and ballots shall be received, and all questions regarding the
qualification of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided by the chairman of the meeting. If demanded
by shareholders, present in person or by proxy, entitled to cast 10% in number
of votes, or if ordered by the chairman, the vote upon any election or question
shall be taken by ballot. Upon like demand or order, the voting shall be
conducted by two inspectors in which event the proxies and ballots shall be
received, and all questions regarding the qualification of voters and the
validity of proxies and the acceptance or rejection of votes shall be decided,
by
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<PAGE>
such inspectors. Unless so demanded or ordered, no vote need be by ballot,
and voting need not be conducted by inspectors. Inspectors may be elected by the
shareholders at their annual meeting, to serve until the close of the next
annual meeting and their election may be held at the same time as the election
of Directors. In case of a failure to elect inspectors, or in case an inspector
shall fail to attend, or refuse or be unable to serve, the shareholders at any
meeting may choose an inspector or inspectors to act at such meeting, and in
default of such election the chairman of the meeting may appoint an inspector or
inspectors.
Section 1.10 Action by Shareholders Other than at a Meeting. Any
action required or permitted to be taken at any meeting of shareholders may be
taken without a meeting, if a consent in writing, setting forth such action, is
signed by all the shareholders entitled to vote on the subject matter thereof
and any other shareholders entitled to notice of a meeting of shareholders (but
not to vote thereat) have waived in writing any rights which they may have to
dissent from such action, and such consent and waiver are filed with the records
of the Corporation.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Powers. The Board may exercise all the powers of the
Corporation, except such as are by statute or the charter or these Bylaws
conferred upon or reserved to the shareholders. The Board shall keep full and
fair accounts of its transactions.
Section 2.2 Number of Directors. The number of Directors shall be
such number as shall be fixed from time to time by vote of a majority of the
Directors; provided, however, that the number of Directors shall in no event
exceed fifteen nor be reduced to fewer than two. The tenure of office of a
Director shall not be affected by any decrease in the number of Directors made
by the Board.
Section 2.3 Election of Directors. Until the first annual meeting
of shareholders and until successors or additional Directors are duly elected
and qualify, the Board shall consist of the persons named as such in the
charter. At the first annual meeting of shareholders and at each annual meeting
thereafter, the shareholders shall elect Directors to hold office until the next
succeeding annual meeting and until their successors are elected and qualify. At
any meeting of shareholders, duly called and at which a quorum is present, the
shareholders may, by the affirmative vote of the holders of a majority of the
votes entitled to be case thereon, remove any Director or Directors from office
and may elect a successor or successors to fill any resulting vacancies for the
unexpired terms of removed Directors.
Section 2.4 Regular Meetings. After each meeting of shareholders
at which a Board of Directors shall have been elected, the Board so elected
shall meet for the purpose of organization and the transaction of other
business. No notice of such first meeting shall be necessary if held immediately
after the adjournment, and at the site, of such meeting of
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shareholders. Other regular meetings of the Board shall be held without notice
on such dates and at such places within or without the State of Maryland as may
be designated from time to time by the Board.
Section 2.5 Special Meetings. Special meetings of the Board may be
called at any time by the Chairman of the Board, the President, the Chief
Operating Officer, or the Secretary of the Corporation, or by a majority of the
Board by vote at a meeting, or in writing with or without a meeting. Such
special meetings shall be held at such place or places within or without the
State of Maryland as may be designated from time to time by the Board. In the
absence of such designation such meetings shall be held at such places as may be
designated in the Notice of Meeting.
Section 2.6 Notice of Meetings. Except as provided in Section 2.4,
notice of the place, day, and hour of all meetings shall be given to each
Director two days (or more) before the meeting, by delivering the same
personally, or by sending the same by telegraph or telefacsimile, or by leaving
the same at the Director's residence or usual place of business, or, in the
alternative, by mailing such notice three days (or more) before the meeting,
postage prepaid, and addressed to the Director at the Director's last known
business or residence post office address, according to the records of the
Corporation. Unless required by these Bylaws or by resolution of the Board, no
notice of any meeting of the Board need state the business to be transacted
thereat. No notice of any meeting of the Board need be given to any Director who
attends or, to any Director who in writing executed and filed with the records
of the meeting either before or after the holding thereof, waives such notice.
Any meeting of the Board, regular or special, may adjourn from time to time to
reconvene at the same or some other place, and no notice need be given of any
such adjourned meeting other than by announcement at the adjourned meeting.
Section 2.7 Quorum. At all meetings of the Board, one-third of the
Directors (but in no event fewer than two Directors) shall constitute a quorum
for the transaction of business. Except in cases in which it is by statute, by
the charter or by these Bylaws otherwise provided, the vote of a majority of
such quorum at a duly constituted meeting shall be sufficient to elect and pass
any measure. In the absence of a quorum, the Directors present by majority vote
and without notice other than by announcement at the meeting may adjourn the
meeting from time to time until a quorum shall attend. At any such adjourned
meeting at which a quorum shall be present, any business may be transacted which
might have been transacted at the meeting as originally noticed.
Section 2.8 Vacancies. Any vacancy occurring in the Board of
Directors for any cause other than by reason of an increase in the number of
Directors may be filled by a majority of the remaining members of the Board of
Directors, although such majority is less than a quorum. Any vacancy occurring
by reason of an increase in the number of Directors may be filled by action of a
majority of the entire Board of Directors; provided, in either case, that
immediately after filling such vacancy at least two-thirds of the Directors then
holding office shall have been elected to such office by the shareholders at an
annual or special meeting thereof. If at any time after the first annual meeting
of shareholders of the Corporation a majority of the Directors in office shall
consist of Directors elected by the Board of Directors, a meeting of the
shareholders shall be
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called forthwith for the purpose of electing the entire Board of Directors, and
the terms of office of the Directors then in office shall terminate upon the
election and qualification of such Board of Directors. A Director elected by the
Board of Directors or the shareholders to fill a vacancy shall be elected to
hold office until the next annual meeting of shareholders and until his
successor is elected and qualifies.
Section 2.9 Compensation and Expenses. Directors may, pursuant to
resolution of the Board, be paid fees for their services, which fees may
include, but are not limited to, an annual fee or retainer and/or a fixed fee
for attendance at meetings. In addition, Directors may be reimbursed for
expenses incurred in connection with their attendance at meetings or otherwise
in performing their duties as Directors. Members of committees may be allowed
like compensation and reimbursement. Nothing herein contained shall preclude any
Director from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 2.10 Action by Directors Other than at a Meeting. Any
action required or permitted to be taken at any meeting of the Board, or of any
committee thereof, may be taken without a meeting, if a written consent to such
action is signed by all members of the Board or of such committee, as the case
may be, and such written consent is filed with the minutes of proceedings of the
Board or committee.
Section 2.11 Audit Committee. The Board of Directors may by the
affirmative vote of a majority of the entire Board appoint from its members an
Audit Committee composed of two or more Directors who are not "interested
persons" (as defined in the 1940 Act) of the Corporation, as the Board may from
time to time determine. The Audit Committee shall (a) recommend independent
public accountants for selection by the Board, (b) review the scope of audit,
accounting and financial internal controls and the quality and adequacy of the
Corporation's accounting staff with the independent public accountants and such
other persons as may be deemed appropriate, (c) review with the accounting staff
and the independent public accountants the compliance of transactions of the
Corporation with any service provider with the financial terms of applicable
agreements, (d) review reports of the independent public accountants and comment
to the Board when warranted, (e) report to the Board at least once each year and
at such other times as the committee deems desirable, and (f) be directly
available to the independent public accountants and responsible officers of the
Corporation for consultation on audit, accounting and related financial matters.
Section 2.12 Nominating Committee of Directors. The Board of
Directors may by the affirmative vote of a majority of the entire Board appoint
from its members a Director Nominating Committee composed of two or more
Directors. The Director Nominating Committee shall recommend to the Board a
slate of persons to be nominated for election as Directors by the stockholders
at each annual meeting of stockholders and a person to be elected to fill any
vacancy occurring for any reason in the Board. Notwithstanding anything in this
Section 2.12 to the contrary, so long as the Corporation has in effect one or
more plans pursuant to Rule 12b-1 under the 1940 Act, the selection and
nomination of those Directors who are not "interested persons" (as defined in
the 1940 Act) shall be committed to the discretion of such disinterested
Directors.
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Section 2.13 Other Committees. The Board of Directors may appoint
from among its members other committees composed of two or more of its Directors
which shall have such powers as may be delegated or authorized by the resolution
appointing them.
Section 2.14 Holding of Meetings by Conference Telephone Call. At
any regular or special meeting of the Board or any committee thereof, members
thereof may participate in such meeting by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in a meeting pursuant to this
section shall constitute presence in person at such meeting, unless the 1940 Act
specifically requires the Directors to act "in person," in which case such term
shall be construed consistent with Securities and Exchange Commission or staff
releases or interpretations.
Section 2.15 Qualification of Directors. No person shall be
qualified to stand for election or appointment as a Director if such person has
already reached the age of 70. Each Director shall retire from service on the
Board of Directors no later than the end of the calendar year in which such
Director reaches age 70, provided that any Director who is an initial Director
and who had reached the age of 70 prior to being appointed as such may continue
to serve as a Director of the Company until the end of the calendar year in
which such Director reaches age 75 and may continue to serve for successive
annual periods thereafter upon the vote of a majority of the other Directors.
ARTICLE III
OFFICERS
Section 3.1 Executive Officers. The Board of Directors may choose
a Chairman of the Board and a Vice Chairman of the Board from among the
Directors, and shall choose a President, a Secretary and a Treasurer who need
not be Directors. The Board of Directors may choose a Chief Operating Officer,
an Executive Vice President, one or more Senior Vice Presidents, one or more
Vice Presidents, one or more Assistant Secretaries, one or more Assistant
Treasurers, and such other officers or assistant officers, none of whom need be
a Director. Any two or more of the above-mentioned offices, except those of
President and a Secretary, may be held by the same person, but no officer shall
execute, acknowledge or verify any instrument in more than one capacity if such
instrument be required by law, by the charter, by the Bylaws or by resolution of
the Board of Directors to be executed by any two or more officers. Each such
officer shall hold office until his successor shall have been duly chosen and
qualified, or until he shall have resigned or shall have been removed. Any
vacancy in any of the above offices may be filled for the unexpired portion of
the term of the Board of Directors at any regular or special meeting.
Section 3.2 Chairman and Vice Chairman of the Board. The Chairman
of the Board, if one be elected, shall preside at all meetings of the Board of
Directors and of the shareholders at which he is present. He shall have and may
exercise such powers as are, from
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time to time, assigned to him by the Board of Directors. The Vice Chairman of
the Board, if one be elected, shall, when present and in the absence of the
Chairman of the Board, preside at all meetings of the shareholders and
Directors, and he shall perform such other duties as may from time to time be
assigned to him by the Board of Directors or as may be required by law.
Section 3.3 President. In the absence of the Chairman or Vice
Chairman of the Board, the President shall preside at all meetings of the
shareholders and of the Board at which the President is present; shall be the
chief executive officer; and in general, shall perform all duties incident to
the office of a president of a Maryland corporation, and such other duties, as
from time to time, may be assigned to him by the Board.
Section 3.4 Vice Presidents. The Vice President or Vice
Presidents, including any Executive or Senior Vice President(s), at the request
of the President or in the President's absence or during the President's
inability or refusal to act, shall perform the duties and exercise the functions
of the President, and when so acting shall have the powers of the President. If
there be more than one Vice President, the Board may determine which one or more
of the Vice Presidents shall perform any of such duties or exercise any of such
functions, or if such determination is not made by the Board, the President may
make such determination. The Vice President or Vice Presidents shall have such
other powers and perform such other duties as may be assigned by the Board, the
Chairman of the Board, or the President.
Section 3.5 Chief Operating Officer. The Chief Operating Officer
shall have the authority and duties that generally pertain to such office,
including, but not limited to, those delegated by the Chairman or the President.
Section 3.6 Secretary and Assistant Secretaries. The Secretary
shall keep the minutes of the meetings of the shareholders, of the Board and of
any committees, in books provided for the purpose; shall see that all notices
are duly given in accordance with the provisions of these Bylaws or as required
by law; be custodian of the records of the Corporation; see that the corporate
seal is affixed to all documents the execution of which, on behalf of the
Corporation, under its seal, is duly authorized, and when so affixed may attest
the same; and in general perform all duties incident to the office of a
secretary of a Maryland corporation, and such other duties as, from time to
time, may be assigned to him by the Board, the Chairman of the Board, or the
President.
The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the order determined by the Board, the President or the
Chairman of the Board, shall, in the absence of the Secretary or in the event of
the Secretary's inability or refusal to act, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such other
powers as the Board may from time to time prescribe.
Section 3.7 Treasurer and Assistant Treasurers. The Treasurer
shall have charge of and be responsible for all funds, securities, receipts and
disbursements of the Corporation, and shall deposit, or cause to be deposited in
the name of the Corporation, all moneys or other
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valuable effects in such banks, trust companies or other depositories as shall,
from time to time, be selected by the Board in accordance with Section 5.4 of
these Bylaws; render to the Chief Operating Officer, President, the Chairman of
the Board and to the Board, whenever requested, an account of the financial
condition of the Corporation; and in general, perform all the duties incident
to the office of a treasurer of a corporation, such other duties as may be
assigned to him by the Board, the President, the Chief Operating Officer or the
Chairman of the Board.
The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board, the President, the
Chief Operating Officer or the Chairman of the Board shall, in the absence of
the Treasurer or in the event of the Treasurer's inability or refusal to act,
perform the duties and exercise the powers of the Treasurer and shall perform
other duties and have such other powers as the Board may from time to time
prescribe.
Section 3.8 Subordinate Officers. The Board may from time to time
appoint such subordinate officers as it may deem desirable. Each such officer
shall hold office for such period and perform such duties as the Board, the
President, the Chief Operating Officer or the Chairman of the Board may
prescribe. The Board may, from time to time, authorize any committee or officer
to appoint and remove subordinate officers and prescribe the duties thereof.
Section 3.9 Removal. Any officer or agent of the Corporation may
be removed by the Board whenever, in its judgment, the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contractual rights, if any, of the person so removed.
ARTICLE IV
STOCK
Section 4.1 Certificates. In accordance with Section 2-210 of the
Maryland General Corporation Law, shareholders will not be entitled to a
certificate or certificates which represent the number of shares of stock owned
by him or her in the Corporation, unless a majority of the Board of Directors
otherwise provides by resolution. At the time of issuance of shares of stock,
the Corporation shall send, or cause to be sent, to the shareholder a written
statement of the information otherwise required on stock certificates.
Section 4.2 Transfers. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem necessary or
expedient concerning the issue, transfer and registration of shares of stock;
and may appoint transfer agents and registrars thereof. The duties of transfer
agent and registrar, if any, may be combined.
Section 4.3 Stock Ledgers. A stock ledger, containing the names
and addresses of the shareholders of the Corporation and the number of shares of
each class held by them, respectively, shall be kept by the Transfer Agent of
the Corporation. The stock ledger may be in
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written form or in any other form which can be converted within a reasonable
time into written form for visual inspection.
Section 4.4 Record Dates. The Board is hereby empowered to fix, in
advance, a date as the record date for the purpose of determining shareholders
entitled to notice of, or to vote at, any meeting of shareholders, or
shareholders entitled to receive payment of any dividend, capital gains
distribution or the allotment of any rights, or in order to make a determination
of shareholders for any other proper purpose. Such date in any case shall be not
more than ninety days, and in case of a meeting of shareholders, not less than
ten days, prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken.
ARTICLE V
GENERAL PROVISIONS
Section 5.1 Dividends. Dividends or distribution upon the capital
stock of the Corporation, subject to provisions of the charter, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends or distributions may be paid only in cash or in shares of the
capital stock, subject to the provisions of the Articles of Incorporation.
Before payment of any dividend or distribution there may be set
aside out of any funds of the Corporation available for dividends or
distributions such sum or sums as the Directors from time to time, in their
absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends or distributions or for maintaining
any property of the Corporation, or for such other purpose as the Directors
shall think conducive to the interest of the Corporation, and the Directors may
modify or abolish any such reserve in the manner in which it was created.
Section 5.2 Checks. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other person
or persons as the Board may from time to time designate.
Section 5.3 Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 5.4 Custodian. All securities and cash of the Corporation
shall be placed in the custody of a bank or trust company ("Custodian") having
(according to its last published report) not less than $2,000,000 aggregate
capital, surplus and undivided profits, provided such a Custodian can be found
ready and willing to act (or maintained in such other manner as is consistent
with Section 17(f) of the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder). The Corporation shall enter into a written
contract with the Custodian regarding the powers, duties and compensation of the
Custodian with respect to the cash and securities of the Corporation held by the
Board of Directors of the Corporation. The
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Corporation shall upon the resignation or inability to serve of the Custodian
use its best efforts to obtain a successor custodian; require that the cash and
securities owned by the Corporation be delivered directly to the successor
custodian; and in the event that no successor custodian can be found, submit to
the shareholders, before permitting delivery of the cash and securities owned
by the Corporation to other than a successor custodian, the question whether or
not the Corporation shall be liquidated or shall function without a custodian.
Section 5.5 Seal. The Board of Directors may provide a suitable
seal, bearing the name of the Corporation, which shall be in the custody of the
Secretary. The Board of Directors may authorize one or more duplicate seals and
provide for the custody thereof.
Section 5.6 Representation of Shares. Any officer of the
Corporation is authorized to vote, represent and exercise for the Corporation
any and all rights incident to any shares of any corporation or other business
enterprise owned by the Corporation.
Section 5.7 Prohibited Transactions. No officer or Director of the
Corporation or of its investment adviser shall deal for or on behalf of the
Corporation with himself, as principal or agent, or with any corporation or
partnership in which he has a financial interest. This prohibition shall not
prevent: (a) officers or Directors of the Corporation from having a financial
interest in the Corporation, its principal underwriter or its investment
adviser; (b) the purchase of securities for the portfolio of the Corporation or
the sale of securities owned by the Corporation through a securities dealer, one
or more of whose partners, officers or Directors is an officer or Director of
the Corporation, provided such transactions are handled in the capacity of
broker only and provided commissions charged do not exceed customary brokerage
charges for such service; or (c) the employment of legal counsel, registrar,
transfer agent, dividend disbursing agent, or custodian having a partner,
officer or Director who is an officer or Director of the Corporation, provided
only customary fees are charged for services rendered to or for the benefit of
the Corporation.
Section 5.8 Bonds. The Board of Directors may require any officer,
agent or employee of the Corporation to give a bond to the Corporation,
conditioned upon the faithful discharge of his duties, with one or more sureties
and in such amount as may be satisfactory to the Board of Directors. The Board
of Directors shall, in any event, require the Corporation to provide and
maintain a bond issued by a reputable fidelity insurance company, against
larceny and embezzlement, covering each officer and employee of the Corporation
who may singly, or jointly with others, have access to securities or funds of
the Corporation, either directly or through authority to draw upon such funds,
or to direct generally the disposition of such securities, such bond or bonds to
be in such reasonable amount as a majority of the Board of Directors who are not
such officers or employees of the Corporation shall determine with due
consideration to the value of the aggregate assets of the Corporation to which
any such officer or employee may have access, or in any amount or upon such
terms as the Securities and Exchange Commission may prescribe by order, rule or
regulations.
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Section 5.9 Annual Statement of Affairs. The President or the
Controller shall prepare annually a full and correct statement of the affairs of
the Corporation, to include a balance sheet and a financial statement of
operations for the preceding fiscal year. The statement of affairs shall be
placed on file at the Corporation's principal office within 120 days after the
end of the fiscal year.
ARTICLE VI
AMENDMENT OF BY-LAWS
These Bylaws of the Corporation may be altered, amended, added to
or repealed by majority vote of the shareholders or by majority vote of the
entire Board.
Dated: July 10, 1996
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EX99.B5(A)
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
<PAGE>
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 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
<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.
<PAGE>
7. COMPENSATION. In return for providing the advisory services
contemplated by this Agreement, the Adviser is entitled to receive a fee from
each Fund at the annual rate of 0.20% of the average daily value of each Fund's
net assets.
8. EXPENSES OF THE FUNDS. All of the ordinary business expenses
incurred 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.
These expenses borne by the Funds include, but are not limited to, brokerage
commissions, taxes, 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:
<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.
<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.
<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
<PAGE>
SCHEDULE I
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
<PAGE>
EX99.B5(B)
FORM OF
SUB-ADVISORY AGREEMENT
NATIONS LIFEGOAL FUNDS, INC.
THIS AGREEMENT is made as of this ___ day of July, 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
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<PAGE>
Directors, and the Sub-Adviser hereby accepts such appointment, all subject to
the terms and conditions contained herein.
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:
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<PAGE>
(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 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
-3-
<PAGE>
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 Company indicating the brokers to whom such
allocations have been made and the basis therefor.
6. COMPENSATION. In return for providing the sub-advisory
services contemplated by this Agreement, the Sub-Adviser is entitled to
receive a fee from the Sub-Adviser at the annual rate of [0.10%] of the
average daily value of each Fund's net assets. The Sub-Adviser agrees that
it shall have no claim against the Company or the Funds with respect to
compensation under this Agreement.
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. These expenses borne by the Funds include but are not limited to
brokerage commissions, taxes, 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,
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 copies of prospectuses and statements of additional information
distributed to the Funds' shareholders.
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.
-4-
<PAGE>
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 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
-5-
<PAGE>
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.
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.
-6-
<PAGE>
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
-7-
<PAGE>
EX99.B6(a)
FORM OF
DISTRIBUTION AGREEMENT
NATIONS LIFEGOAL FUNDS, INC.
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Gentlemen:
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, Nations LifeGoal Funds, Inc. (the
"Company"), a Maryland corporation, has agreed that Stephens Inc. (the
"Distributor") shall be, for the period of this Agreement, the exclusive
distributor of the shares of common stock in all classes of shares ("Shares") of
the investment portfolios of the Company listed on Schedule I (individually, a
"Fund" and collectively the "Funds"). Absent written notification to the
contrary by either the Company or the Distributor, each new investment portfolio
established in the future shall automatically become a "Fund" for all purposes
hereunder and shares of each new class established in the future shall
automatically become "Shares" for all purposes hereunder as if set forth on
Schedule I.
1. Services as Distributor.
1.1 The Distributor will act as agent for the distribution of
Shares in accordance with the instructions of the Company's Board of Directors
and the Company's registration statement and prospectus then in effect under the
Securities Act of 1933, as amended (the "1933 Act"), and will transmit promptly
any orders received by it for the purchase or redemption of Shares to the
Company or its transfer agent.
1.2 The Distributor agrees to use appropriate efforts to solicit
orders for the sale of Shares and will undertake such advertising and promotion
as it believes appropriate in connection with such solicitation. The Company
understands that the Distributor is and may in the future be the distributor of
shares of other investment company portfolios ("Portfolios") including
Portfolios having investment objectives similar to those of the Funds. The
Company further understands that existing and future investors in the Funds may
invest in shares of such other Portfolios. The Company agrees that the
Distributor's duties to such Portfolios shall not be deemed in conflict with its
duties to the Company under this paragraph 1.2.
1.3 The Distributor shall, at its own expense, finance such
activities as it deems reasonable and which are primarily intended to result in
the sale of Shares, including, but not limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing and mailing of
prospectuses to other than current shareholders, and the printing and mailing of
sales literature. The Distributor shall be responsible for reviewing and
providing advice and counsel on
1
<PAGE>
all sales literature (e.g., advertisements, brochures and shareholder
communications) with respect to each of the Funds. In addition, the Distributor
will provide one or more persons, during normal business hours, to respond to
telephone questions with respect to the Funds.
1.4 All activities by the Distributor and its agents and employees
as distributor of Shares shall comply with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations made or
adopted pursuant to the Investment Company Act of 1940, as amended ("1940 Act")
by the Securities and Exchange Commission (the "SEC") or any securities
association registered under the Securities Exchange Act of 1934.
1.5 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by other circumstances of any kind,
the Company's officers may decline to accept any orders for, or make any sales
of Shares until such time as those officers deem it advisable to accept such
orders and to make such sales.
1.6 The Company agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the registration or
qualification of Shares for sale in such states as the Distributor may designate
to the Company and the Company may approve, and the Company shall pay all fees
and other expenses incurred in connection with such registration or
qualification.
1.7 The Company shall furnish from time to time, for use in
connection with the sale of Shares, such information with respect to the Funds
and Shares as the Distributor may reasonably request; and the Company warrants
that the statements contained in any such information shall fairly show or
represent what they purport to show or represent. The Company shall also furnish
the Distributor upon request with: (a) audited annual and unaudited semi-annual
statements of the Company's books and accounts with respect to each Fund, and,
(b) from time to time such additional information regarding the Funds' financial
condition as the Distributor may reasonably request.
1.8 The Distributor may be reimbursed for all or a portion of the
expenses described above to the extent permitted by a distribution plan adopted
by the Company on behalf of a Fund pursuant to Rule 12b-1 under the 1940 Act. No
provision of this Agreement shall be deemed to prohibit any payments by a Fund
to the Distributor or by a Fund or the Distributor to investment dealers, banks
or other financial institutions through whom shares of the Fund are sold where
such payments are made under a distribution plan adopted by the Company on
behalf of such Fund pursuant to Rule 12b-1 under the 1940 Act. In addition, the
Distributor shall be entitled to retain any front-end sales charge imposed upon
the sale of the shares (and reallow a portion thereof) as specified in the
Fund's Registration Statement and the Company shall pay to the Distributor the
proceeds from any contingent deferred sales charge imposed on the redemption of
the shares as specified in the Fund's Registration Statement.
1.9 The Distributor will execute and deliver agreements with
broker/dealers, financial institutions and other industry professionals based on
the forms attached hereto or based on the additional forms of agreement approved
from time to time by the Company's Board of
2
<PAGE>
Directors with respect to the various classes of shares of the Funds, including
but not limited to forms of sales support agreements approved in connection with
a distribution approved in accordance with Rule 12b-1 under the 1940 Act.
2. Representations; Indemnification.
2.1 The Company represents to the Distributor that all
registration statements and prospectuses filed by the Company with the SEC under
the 1933 Act, with respect to Shares have been prepared in conformity with the
requirements of the 1933 Act and rules and regulations of the SEC thereunder. As
used in this Agreement, the terms "registration statement" and "prospectus"
shall mean any registration statement and then current prospectus (together with
any related then current statement of additional information) filed with the SEC
with respect to Shares, and any amendments and supplements thereto which at any
time shall have been filed therewith. The Company represents and warrants to the
Distributor that any registration statement and prospectus, when such
registration statement becomes effective, will contain all statements required
to be stated therein in conformity with the 1933 Act and the rules and
regulations of the SEC; that all statements of fact contained in any such
registration statement and prospectus will be true and correct when such
registration statement and prospectus become effective; and that neither any
registration statement nor any prospectus when any registration statement
becomes effective will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of Shares. The Company may, but
shall not be obligated to, propose from time to time such amendment or
amendments to any registration statement and such supplement or supplements to
any prospectus which in light of future developments, may, in the opinion of the
Company's counsel, be necessary or advisable. The Company shall promptly notify
the Distributor of any advice given to it by the Company's counsel regarding the
necessity or advisability so to amend or supplement such registration statement
or prospectus. If the Company shall not propose such amendment or amendments
and/or supplement or supplements within fifteen days after receipt by the
Company of a written request from the Distributor to do so, the Distributor may,
at its option, terminate this Agreement. The Company shall not file any
amendment to any registration statement or supplement to any prospectus without
giving the Distributor reasonable notice thereof in advance; provided, however,
that nothing contained in this Agreement shall in any way limit the Company's
right to file at any time such amendments to any registration statement and/or
supplements to any prospectus, of whatever character, as the Company may deem
advisable, such right being in all respects absolute and unconditional.
2.2 The Company authorizes the Distributor and dealers to use any
prospectus in the form furnished from time to time in connection with the sale
of Shares and represented by the Company as being the then current form of
prospectus. The Company agrees to indemnify, defend and hold the Distributor,
its several officers and directors, and any person who controls the Distributor
within the meaning of Section 15 of the 1933 Act free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Distributor, its
officers and directors, or any such controlling person, may incur under the 1933
Act or under common law or otherwise, arising out of or based upon any
3
<PAGE>
untrue statement, or alleged untrue statement, of a material fact contained in
any registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
any registration statement or prospectus or necessary to make any statement in
such documents not misleading; provided, however, that the Company's agreement
to indemnify the Distributor, its officers or directors, and any such
controlling person shall not be deemed to cover any claims, demands, liabilities
or expenses arising out of any untrue statement or alleged untrue statement or
omission or alleged omission made in any registration statement or prospectus or
in any financial or other statements in reliance upon and in conformity with any
information furnished to the Company by the Distributor or any affiliate thereof
and used in the preparation thereof; and further provided that the Company's
agreement to indemnify the Distributor and the Company's representations and
warranties herein set forth shall not be deemed to cover any liability to the
Company or its shareholders to which the Distributor would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of the Distributor's reckless disregard
of its obligations and duties under this Agreement. The Company's agreement to
indemnify the Distributor, its officers and directors, and any such controlling
person, as aforesaid, is expressly conditioned upon the Company's being notified
of any action brought against the Distributor, its officers or directors, or any
such controlling person, such notification to be given by letter or by telegram
addressed to the Company at its principal office and sent to the Company by the
person against whom such action is brought, within a reasonable period of time
after the summons or other first legal process shall have been served. The
failure to so notify the Company of any such action shall not relieve the
Company from any liability which the Company may have to the person against whom
such action is brought by reason of any such untrue, or allegedly untrue,
statement or omission, or alleged omission, otherwise than on account of the
Company's indemnity agreement contained in this paragraph 2.2. The Company will
be entitled to assume the defense of any suit brought to enforce any such claim,
demand or liability, but, in such case, such defense shall be conducted by
counsel of good standing chosen by the Company and approved by the Distributor,
which approval shall not unreasonably be withheld. In the event the Company
elects to assume the defense of any such suit and retain counsel of good
standing approved by the Distributor, the defendant or defendants in such suit
shall bear the fees and expenses of any additional counsel retained by any of
them; but in case the Company does not elect to assume the defense of any such
suit, or in case the Distributor reasonably does not approve of counsel chosen
by the Company, the Company will reimburse the Distributor, its officers and
directors, or the controlling person or persons named as defendant or defendants
in such suit, for the fees and expenses of any counsel retained by the
Distributor or them. The Company's indemnification agreement contained in this
paragraph 2.2 and the Company's representations and warranties in this Agreement
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Distributor, its officers and
directors, or any controlling person, and shall survive the delivery of any
Shares. This agreement of indemnity will inure exclusively to the Distributor's
benefit, to the benefit of its several officers and directors, and their
respective estates, and to the benefit of the controlling persons and their
successors. The Company agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against the Company or any of its
officers or directors in connection with the issue and sale of any Shares.
4
<PAGE>
2.3 The Distributor agrees to indemnify, defend and hold the
Company, its several officers and directors, and any person who controls the
Company within the meaning of Section 15 of the 1933 Act free and harmless from
and against any and all claims, demands, liabilities and expenses (including the
costs of investigation or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Company, its officers
or directors or any such controlling person, may incur under the 1933 Act or
under common law or otherwise, but only to the extent that such liability or
expense incurred by the Company, its officers or directors, or such controlling
person resulting from such claims or demands, shall arise out of or be based
upon any untrue, or alleged untrue, statement of a material fact contained in
information furnished by the Distributor or any affiliate thereof to the Company
or its counsel and used in the Company's registration statement or corresponding
statements made in the prospectus, or shall arise out of or be based upon any
omission, or alleged omission, to state a material fact in connection with such
information furnished by the Distributor or any affiliate thereof to the Company
or its counsel required to be stated in such answers or necessary to make such
information not misleading. The Distributor's agreement to indemnify the
Company, its officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Distributor's being notified of any
action brought against the Company, its officers or directors, or any such
controlling person, such notification to be given by letter or telegram
addressed to the Distributor at its principal office in Little Rock, Arkansas
and sent to the Distributor by the person against whom such action is brought,
within a reasonable period of time after the summons or other first legal
process shall have been served. The Distributor shall have the right to control
the defense of such action, with counsel of its own choosing, satisfactory to
the Company, if such action is based solely upon such alleged misstatement or
omission on the Distributor's part or any affiliate thereof, and in any other
event the Company, its officers or directors or such controlling person shall
each have the right to participate in the defense or preparation of the defense
of any such action. The failure so to notify the Distributor of any such action
shall not relieve the Distributor or any affiliate thereof from any liability
which the Distributor or any affiliate thereof may have to the Company, its
officers or directors, or to such controlling person by reason of any such
untrue or alleged untrue statement, or omission or alleged omission, otherwise
than on account of the Distributor's indemnity agreement contained in this
paragraph 2.3.
2.4 No Shares shall be offered by either the Distributor or the
Company under any of the provisions of this Agreement and no orders for the
purchase or sale of Shares hereunder shall be accepted by the Company if and so
long as the effectiveness of the registration statement then in effect or any
necessary amendments thereto shall be suspended under any of the provisions of
the 1933 Act, or if and so long as a current prospectus, as required by Section
10(b) of the 1933 Act is not on file with the SEC; provided, however, that
nothing contained in this paragraph 2.4 shall in any way restrict or have any
application to or bearing upon the Company's obligation to repurchase Shares
from any shareholder in accordance with the provisions of the Company's
prospectus or Articles of Incorporation.
2.5 The Company agrees to advise the Distributor as soon as
reasonably practical:
5
<PAGE>
(a) of any request by the SEC for amendments to the
registration statement or prospectus then in effect;
(b) of the issuance by the SEC of any stop order suspending
the effectiveness of the registration statement or prospectus then in effect or
of the initiation of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration statement or prospectus
then in effect or which requires the making of a change in such registration
statement or prospectus in order to make the statements therein not misleading;
(d) of all actions of the SEC with respect to any amendment
to any registration statement or prospectus which may from time to time be filed
with the SEC; and
(e) if a current prospectus is not on file with the SEC.
For purposes of this section, informal requests by or acts of the
Staff of the SEC shall not be deemed actions of or requests by the SEC.
3. Confidentiality.
The Distributor agrees on behalf of itself and its employees to
treat confidentially and as proprietary information of the Company all records
and other information relative to the Funds and/or the Company and its prior,
present or potential shareholders, and not to use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by the
Company, which approval shall not be unreasonably withheld and may not be
withheld where the Distributor may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Company.
4. Limitations of Liability.
Except as provided in paragraph 2.3, the Distributor shall not be
liable for any error of judgment or mistake or law or for any loss suffered by
the Company or any Fund in connection with matters to which this agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard of its obligations and duties under this agreement.
5. Term.
This agreement shall become effective on the date of its execution
and, unless sooner terminated as provided herein, shall continue thereafter with
respect to each Fund for successive annual periods, provided such continuance is
specifically approved at least annually by (i) the Company's Board of Directors
or (ii) by a vote of a majority (as defined in the 1940 Act) of the
6
<PAGE>
outstanding voting securities of the Fund, provided that in either event the
continuance is also approved by the majority of the Company's Directors who are
not parties to this agreement or interested persons (as defined in the 1940 Act)
of any such party, by vote cast in person at a meeting called for the purpose of
voting on such approval. This agreement is not assignable and is terminable with
respect to a Fund, without penalty, on not less than sixty days' notice, by the
Company's Board of Directors, by vote of a majority (as defined in the 1940 Act)
of the outstanding voting securities of such Fund, or by the Distributor. This
agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act).
6. Miscellaneous.
6.1 No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which an enforcement of the change, waiver, discharge or
termination is sought.
6.2 This agreement shall be governed by the laws of the
State of Arkansas.
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place indicated below,
whereupon it shall become a binding agreement between us.
Yours very truly,
NATIONS LIFEGOAL FUNDS, INC.
By: ________________________________
Name:
Title:
Accepted:
STEPHENS INC.
By: _________________________
Name: R. Greg Feltus
Title: Senior Vice President
Dated as of __________, 1996
7
<PAGE>
SCHEDULE I
1. Nations Capital Accumulator Fund
2. Nations Conservative Growth Fund
3. Nations Income and Managed Growth Fund
8
<PAGE>
EX99.B6(B)
NATIONS LIFEGOAL FUNDS, INC.
FORM OF
SALES SUPPORT AGREEMENT
__________ SHARES
Ladies and Gentlemen:
We wish to enter into this Sales Support Agreement ("Agreement") with you
concerning the provision of sales support assistance relating to ___________
Shares of the _______________ portfolios (collectively, the "Funds") of Nations
LifeGoal Funds, Inc. (the "Company"), of which we are the principal underwriter
as defined in the Investment Company Act of 1940 (the "1940 Act") and the
exclusive agent for the continuous distribution of said shares (the "Shares").
The terms and conditions of this Agreement are as follows:
Section 1. You agree to provide reasonable sales support assistance in
connection with the sale of Shares to your customers ("Customers"), which
assistance may include forwarding sales literature and advertising provided by
the Company or by us to Customers and providing such other sales support
assistance as may be requested by us from time to time. All services rendered
hereunder by you shall be performed in a professional, competent and timely
manner.
Section 2. We recognize that you may be subject to the provisions of the
Glass-Steagall Act and other laws governing, among other things, the conduct of
activities by federally chartered and supervised banks and other banking
organizations. As such, you may be restricted in the activities you may
undertake and for which you may be paid. You will perform only those activities
which are consistent with statutes and regulations applicable to you. You will
act solely as agent for, upon the order of, and for the account of your
Customers.
Section 3. You will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space, equipment and
facilities currently used in your business, or any personnel employed by you) as
may be reasonably necessary or beneficial in order to provide the sales support
services contemplated hereby.
Section 4. Neither you nor any of your officers, employees or agents are
authorized to make any representations concerning us, the Company or the Shares
except those contained in the Company's applicable then current prospectuses and
statements of additional information, as amended or supplemented from time to
time, copies of which will be supplied by us to you, or in such supplemental
literature or advertising as may be authorized by us or the Company in writing.
Section 5. For all purposes of this Agreement you will be deemed to be an
independent contractor, and will have no authority to act as agent for us or the
Company in any matter or in any respect, except as provided herein. By your
written acceptance of this Agreement, you agree
1
<PAGE>
to and do release, indemnify and hold us and the Company harmless from and
against any and all direct or indirect liabilities or losses resulting from
requests, directions, actions or inactions of or by you or your officers,
employees or agents regarding your responsibilities hereunder or the purchase,
redemption, transfer or registration of Shares (or orders relating to the same)
by or on behalf of Customers. You and your employees will, upon request, be
available during normal business hours to consult with us or the Company or our
respective designees concerning the performance of your responsibilities under
this Agreement.
Section 6. In consideration of the services and facilities provided by you
hereunder, we will pay to you, and you will accept as full payment therefor, a
fee as described in the applicable then current prospectuses. The fees payable
under this Section 6 shall be used primarily for sales support services
provided, and related expenses incurred, by you. By your acceptance of this
Agreement, you agree to and do waive such portion of any fee payable to you
hereunder to the extent necessary to assure that such fee and other expenses
required to be accrued hereunder with respect to the Shares owned by or on
behalf of Customers on any day does not exceed the income to be accrued by the
Company to such shares on that day. The fee rate payable to you may be
prospectively increased or decreased by us or by the Company, in our or its sole
discretion, at any time upon notice to you. Further, we or the Company may, in
our or its discretion and without notice, suspend or withdraw the sale of Shares
of any or all Funds, including the sale of Shares for the account of any
Customer or Customers.
Section 7. You agree to provide to us and the Company, at least quarterly,
a written report of amounts expended by you in connection with the provision of
sales support services hereunder and the purposes for which such expenditures
were made. In addition, you will furnish us or the Company or our respective
designees with such information as we or they may reasonably request (including,
without limitation, periodic certifications confirming the provision to
Customers of the services described herein), and will otherwise cooperate with
us and the Company and our respective designees (including, without limitation,
any auditors or legal counsel designated by us or the Company), in connection
with the preparation of reports to the Company's Board of Directors concerning
this Agreement and the monies paid or payable by us pursuant hereto, as well as
any other reports or filings that may be required by law.
Section 8. We may enter into other similar Agreements with any other
person or persons without your consent.
Section 9. By your written acceptance of this Agreement, you represent,
warrant and agree that the compensation payable to you hereunder, together with
any other compensation you receive in connection with the investment of your
Customers' assets in Shares of the Funds, will be disclosed by you to your
Customers to the extent required by applicable laws or regulations, will be
authorized by your Customers and will not be excessive or unreasonable under the
laws and instruments governing your relationships with Customers. By your
written acceptance of this Agreement, you represent and warrant that: (i) in the
event an issue pertaining to this Agreement or the Shares' Distribution Plan
related hereto is submitted for shareholder approval, and you have the authority
to do so, you will vote any Shares held for your own account in the same
proportion as the vote of the Shares held for your Customers' benefit; and (ii)
you will not engage
<PAGE>
in activities pursuant to this Agreement which constitute acting as a broker or
dealer under state law unless you have obtained any licenses required by such
law. In addition, you understand that this Agreement has been entered into
pursuant to Rule 12b-1 under the 1940 Act, and is subject to the provisions of
said Rule, as well as any other applicable rules or regulations promulgated by
the Securities and Exchange Commission.
Section 10. You agree to conform to compliance standards adopted by the
Company or its distributor as to when a class of shares in a Fund may be
appropriately sold to particular investors.
Section 11. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by us or our designee and continues
in effect until terminated. This Agreement is terminable with respect to any
Fund's Shares, without penalty, at any time by the Company (which termination
may be by a vote of a majority of the disinterested Directors of the Company or
by vote of the holders of a majority of the outstanding Shares of such Fund) or
by us or you upon notice to the other party hereto.
Section 12. All notices and other communications to either you or us will
be duly given if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address or number stated herein
(with a conforming copy by mail), or to such other address as either party shall
so provide in writing to the other.
Section 13. This Agreement will be construed in accordance with the laws
of The State of Arkansas without giving effect to principles of conflict of
laws, and is nonassignable by the parties hereto.
If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to us, at the following address: 111 Center Street, Little Rock, Arkansas 72201;
Fax No. (501) 377-2331; Attention: Mr. Richard H. Blank, Jr.
Very truly yours,
STEPHENS INC.
Date: __________________ By:____________________________
Name:
Title:
<PAGE>
Accepted and Agreed to:
Selling Agent
-------------------------------------------
(Firm Name)
-------------------------------------------
(Address)
-------------------------------------------
(City) (State) (County)
Fax No.____________________________________
Attention:_________________________________
Date: __________________ By:________________________________________
Name:______________________________________
Title:_____________________________________
<PAGE>
EX99.B6(C)
APPENDIX A
NATIONS LIFEGOAL FUNDS, INC.
FORM OF
SHAREHOLDER SERVICING AGREEMENT
_______________ SHARES
Ladies and Gentlemen:
We wish to enter into this Shareholder Servicing Agreement ("Agreement")
with you concerning the provision of administrative support services to your
clients ("Customers") who may from time to time beneficially own ______________
Shares in one or more of the portfolios (the "Funds") of Nations LifeGoal Funds,
Inc. (the "Company").
The terms and conditions of this Agreement are as follows:
Section 1. You agree to provide the following administrative support
services to your Customers who may from time to time beneficially own
______________ Shares:1 (i) aggregating and processing purchase and redemption
requests for ______________ Shares from Customers and transmitting promptly net
purchase and redemption orders to our distributor or transfer agent; (ii)
providing Customers with a service that invests the assets of their accounts in
______________ 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 ______________ Shares; (v) arranging for bank wires; (vi)
responding to Customers' inquiries concerning their investment in ______________
Shares; (vii) providing subaccounting with respect to ______________ Shares
beneficially owned by Customers or the information to us necessary for
subaccounting; (viii) if required by law, forwarding shareholder communications
from us (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 this Agreement; (x) general shareholder liaison services; and (xi)
providing such other similar services as we may reasonably request to the extent
you are permitted to do so under applicable statutes, rules or regulations. All
services rendered hereunder by you shall be performed in a professional,
competent and timely manner.
Section 2. You will perform only those activities which are consistent
with statutes and regulations applicable to you. You will act solely as agent
or, upon the order of, and for the account of, your Customers.
- --------
1 Services may be modified or omitted in the particular case and
items relettered or renumbered.
<PAGE>
Section 3. You will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space, equipment and
facilities currently used in your business, or any personnel employed by you) as
may be reasonably necessary or beneficial in order to provide the administrative
support services contemplated hereby.
Section 4. Neither you nor any of your officers, employees or agents are
authorized to make any representations concerning us or the ______________
Shares except those contained in our then current prospectuses and statements of
additional information, as amended or supplemented from time to time, copies of
which will be supplied by us to you, or in such supplemental literature or
advertising as may be authorized by the Distributor or us in writing.
Section 5. For all purposes of this Agreement you will be deemed to be an
independent contractor, and will have no authority to act as agent for us in any
matter or in any respect, except as provided herein. By your written acceptance
of this Agreement, you agree to and do release, indemnify and hold us harmless
from and against any and all direct or indirect liabilities or losses resulting
from requests, directions, actions or inactions of or by you or your officers,
employees or agents regarding your responsibilities hereunder or the purchase,
redemption, transfer or registration of ______________ Shares (or orders
relating to the same) by or on behalf of Customers. You and your employees will,
upon request, be available during normal business hours to consult with us or
our designees concerning the performance of your responsibilities under this
Agreement.
Section 6. In consideration of the services and facilities provided by you
hereunder, we will pay to you, and you will accept as full payments therefor, a
fee as described in the applicable then current prospectuses. The fee rate
payable to you may be prospectively increased or decreased by us, in our sole
discretion, at any time upon notice to you. Further, we may, in our discretion
and without notice, suspend or withdraw the sale of ______________ Shares of any
and all Funds, including the sale of ______________ Shares to you for the
account of any Customer or Customers. Compensation payable under this Agreement
is subject to, among other things, the National Association of Securities
Dealers, Inc. ("NASD") Rules of Fair Practice governing receipt by NASD members
of service fees from registered investment companies (the "NASD Service Fee
Rule"). Such compensation shall only be paid if permissible under the NASD
Service Fee Rule and shall not be payable for services that are deemed to be
distribution-related services.
Section 7. You agree to provide to us at least quarterly, a written report
of the amounts expended by you in connection with the provision of
administrative support services hereunder and the purposes for which such
expenditures were made. In addition, you will furnish us or our designees with
such information as we or they may reasonably request (including, without
limitation, periodic certifications confirming the provision to Customers of the
services described herein), and will otherwise cooperate with us and our
designees (including, without limitation, any auditors or legal counsel
designated by us), in connection with the preparation of reports to our Board of
Directors concerning this Agreement and the monies paid or payable by us
pursuant hereto, as well as any other reports or filings that may be required by
law.
2
<PAGE>
Section 8. We may enter into other similar Agreements with any other
person or persons without your consent.
Section 9. By your written acceptance of this Agreement, you represent,
warrant and agree that: (i) in no event will any of the services provided by you
hereunder be primarily intended to result in the sale of any shares issued by
us; (ii) the compensation payable to you hereunder, together with any other
compensation you receive in connection with the investment of your Customers'
assets in ______________ Shares of the Funds, will be disclosed by you to your
Customers to the extent required by applicable laws or regulations, will be
authorized by your Customers and will not result in an excessive or unreasonable
fee to you and (iii) in the event an issue pertaining to this Agreement is
submitted for shareholder approval, and you have the authority from your
Customer to do so, you will vote any ______________ Shares held for your own
account in the same proportion as the vote of the ______________ Shares held for
your Customers' benefit.
Section 10. You agree to conform to compliance standards adopted by the
Company or its distributor as to when a class of shares in a Fund may be
appropriately sold to particular investors.
Section 11. This Agreement will become effective on the date a fully
executed copy of this Agreement is received by us or our designee and continues
in effect until terminated. This Agreement is terminable with respect to any
series of ______________ Shares, without penalty, at any time by us (which
termination may be by a vote of a majority of the disinterested Directors of the
Company) or by you upon written notice to the other party hereto.
Section 12. All notices and other communications to either you or us will
be duly given if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address or number stated herein
(with a confirming copy by mail), or to such other address as either party shall
so provide in writing to the other.
Section 13. This Agreement will be construed in accordance with the
internal laws of the State of Maryland without giving effect to principles of
conflict of laws, and is nonassignable by the parties hereto.
If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to us, at the following address: 111 Center Street, Little Rock, Arkansas 72201;
Fax No. (501) 377-2331; Attention: Mr. Richard H. Blank, Jr.
Very truly yours,
NATIONS LIFEGOAL FUNDS, INC.
3
<PAGE>
Date: ___________________ By: ______________________
Name: ______________________
Title: _______________________
Accepted and Agreed to:
Servicing Agent
------------------------------
(Firm Name)
------------------------------
(Address)
------------------------------
(City) (State)
Fax # ________________________
Attention: ___________________
Date: ____________________ By: __________________________
Name: ________________________
Title: _________________________
4
<PAGE>
FORM OF CUSTODY AGREEMENT
THIS AGREEMENT is made this __ day of _____, 1996 by and between
Nations LifeGoal Funds, Inc. (the "Company") on behalf of its portfolios listed
on Schedule I, as such Schedule may be amended from time to time (individually a
"Fund" and collectively the "Funds") and NationsBank of Texas, N.A., a national
banking association (the "Custodian").
W I T N E S S E T H
WHEREAS, the Company is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Company desires to retain the Custodian to serve as the
Company's custodian and the Custodian is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints the Custodian to act
as custodian of its portfolio securities, cash and other property on the terms
set forth in this Agreement. The Custodian accepts such appointment and agrees
to furnish the services herein set forth in return for the compensation as
provided in Paragraph 24 of this Agreement. The Custodian agrees to comply with
all relevant provisions of the 1940 Act and applicable rules and regulations
thereunder. The Company may from time to time issue separate series, classes or
classify and reclassify shares of any such series or class. The Custodian shall
identify to each such series or class Property, as hereinafter defined,
belonging to such series or class and in such reports, confirmations and notices
and to the Company called for under this Agreement shall identify the series or
class to which such report, confirmation or notice pertains.
2. Delivery of Documents. The Company has furnished the
Custodian with copies properly certified or authenticated of each of
the following:
<PAGE>
(a) Resolutions of the Company's Board of Directors
authorizing the appointment of the Custodian as Custodian of the
portfolio securities, cash and other property of the Company and
approving this Agreement;
(b) Schedule A identifying and containing the
signatures of the Company's officers and/or other persons authorized to
issue Oral Instructions and to sign Written Instructions, as
hereinafter defined, on behalf of the Company;
(c) Schedule B setting forth the names and
signatures of the present officers of the Company;
(d) The Company's Articles of Incorporation filed
with the State of Maryland and all amendments thereto (such as
currently in effect and as they shall from time to time be amended, are
herein called the "Charter");
(e) The Company's By-Laws and all amendments
thereto (such By-Laws, as currently in effect and as they shall from
time to time be amended, are herein called the "By-Laws");
(f) Resolutions of the Company's Board of Directors
appointing the investment advisers and sub-adviser of the Company and
resolutions of the Company's Board of Directors and the Company's
shareholders approving (i) the Investment Advisory Agreement (the
"Investment Advisory Agreement") dated _________, 1996 between the
Company and NationsBanc Advisors, N.A. ("NBAI") on behalf of the Funds;
TradeStreet Investment Associates, Inc. ("TradeStreet") on behalf of
the Funds (as used herein the Adviser shall mean NBAI and/or
TradeStreet as the context may require);
(g) The Investment Advisory Agreement;
(h) The Sub-Advisory Agreement;
(i) The Distribution Agreement dated _________,
1996 between the Company and Stephens Inc. ("Stephens");
(j) The Administration Agreement dated ________,
1996 between the Company on behalf of the Funds and Stephens;
2
<PAGE>
(k) The Co-Administration Agreement dated
___________, 1996 between the Company and First Data Investor Services
Group, Inc.
(l) The Company's Notification of Registration
filed pursuant to Section 8(a) of the 1940 Act, as filed with the
Securities and Exchange Commission (the "SEC");
(m) The Company's current Registration Statement on
Form N-1A under the 1940 Act and the Securities Act of 1933, as amended
("the 1933 Act") as filed with the SEC, relating to shares of
beneficial interest of the Company, without par value (the "Shares");
(n) The current prospectuses and statements of
additional information of each of the Funds, including all amendments
and supplements thereto (the "Prospectuses").
The Company will furnish the Custodian from time to time with copies of
all amendments of or supplements to the foregoing, if any. The Company will also
furnish the Custodian with a copy of the opinion of counsel for the Company with
respect to the validity of the Shares and the status of such Shares under the
1933 Act filed with the SEC, and any other applicable federal law or regulation;
and
(o) Before any Fund of the Company engages in any
transactions regulated by the Commodity Futures Trading Commission
("CFTC"), a copy of either (i) a filed notice of eligibility to claim
the exclusion from the definition of "commodity pool operator"
contained in Section 2(a)(1)(A) of the Commodity Exchange Act ("CEA")
that is provided in Rule 4.5 under the CEA, together with all
supplements as are required by the CFTC, or (ii) a letter which has
been granted to the Company by the CFTC which states that the Company
will not be treated as a "pool" as defined in Section 4.10(d) of the
CFTC's General Regulations, or (iii) a letter which has been granted to
the Company by the CFTC which states that the CFTC will not take any
enforcement action if the Company does not register as a "commodity
pool operator."
The Company will furnish the Custodian from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
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3. Definitions.
(a) "Authorized Person". As used in this Agreement,
the term "Authorized Person" means any of the Company's officers, and
any other person, whether or not any such person is an officer or
employee of the Company, duly authorized by the Board of Directors of
the Company to give Oral and Written Instructions on behalf of the
Company and listed on Schedule A, which may be amended from time to
time.
(b) "Book-Entry System". As used in this Agreement,
the term "Book-Entry System" means the Federal Reserve/Treasury
book-entry system for United States and federal agency securities, its
successor or successors and its nominee or nominees and any book-entry
system maintained by a clearing agency registered with the SEC under
Section 17A of the Securities Exchange Act of 1934 (the "1934 Act").
(c) "Oral Instructions". As used in this Agreement,
the term "Oral Instructions" means oral instructions actually received
by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person. The Company
agrees to deliver to the Custodian, at the time and in the manner
specified in Paragraph 9 of this Agreement Written Instructions
confirming Oral Instructions.
(d) "Officer's Certificate". The term "Officer's
Certificate" as used in this Agreement means instructions delivered by
hand, mail, tested telegram, cable, telex, facsimile sending device,
and received by the Custodians signed by two officers of the Company
listed on Schedule B.
(e) "Property". The term "Property", as used in
this Agreement, means:
(i) any and all securities and other property
of the Company which the Company may from time to time deposit, or
cause to be deposited, with the Custodian or which the Custodian may,
from time to time, hold for the Company;
(ii) all income in respect of any other such
securities or other property;
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<PAGE>
(iii) all proceeds of the sales of any of such
securities or other property; and
(iv) all proceeds of the sale of securities
issued by the Company, which are received by the Custodian from time to
time from or on behalf of the Company.
(f) "Securities Depository". As used in this
Agreement, the term "Securities Depository" shall mean The Depository
Trust Company, a clearing agency registered with the SEC or its
successor or successors and its nominee or nominees; and shall also
mean any other registered clearing agency, its successor or successors
specifically identified in a certified copy of a resolution of the
Company's Board of Directors approving deposits by the Custodian
therein.
(g) "Written Instructions". As used in this
Agreement, "Written Instructions" means instructions delivered by hand,
mail, tested telegram, cable, telex, facsimile sending device, and
received by the Custodian, signed by two Authorized Persons.
4. Delivery and Registration of the Property. The Company will
deliver or cause to be delivered to the Custodian all securities and all monies
owned by it, including cash received for the issuance of its Shares, at any time
during the period of this Agreement, except for securities and monies to be
delivered to any sub-custodian appointed pursuant to Paragraph 7 hereof. The
Custodian will not be responsible for such securities and such monies until
actually received by it. All securities delivered to the Custodian or to any
such sub-custodian (other than in bearer form) shall be registered in the name
of the Company or in the name of a nominee of the fund or in the name of the
Custodian or any nominee of the Custodian (with or without indication of
fiduciary status) or in the name of any sub-custodian or any nominee of such
sub-custodian appointed pursuant to Paragraph 7 hereof or shall be properly
endorsed and in form for transfer satisfactory to the Custodian.
5. Voting Rights. With respect to all securities, however
registered, it is understood that the voting and other rights and powers shall
be exercised by the Company. The Custodian's only duty shall be to mail to the
Company any documents received, including proxy statements
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<PAGE>
and offering circulars, with any proxies for securities registered in a nominee
name executed by such nominee. Where warrants, options, tenders or other
securities have fixed expiration dates, the Company understands that in order
for the Custodian to act, the Custodian must receive the Company's instructions
at its offices in New York, addressed as the Custodian may from time to time
request, by no later than noon (New York City time) at least one business day
prior to the last scheduled date to act with respect thereto (or such earlier
date or time as the Custodian may reasonably notify the Company). Absent the
Custodian's timely receipt of such instructions, such instructions will expire
without liability to the Custodian. Corporate reports need not be forwarded to
the Company.
6. Receipt and Disbursement of Money.
(a) the Custodian shall open and maintain a custody
account for each Fund of the Company, subject only to draft or order by
the Custodian acting pursuant to the terms of this Agreement, and shall
hold in such account, subject to the provisions hereof, all cash
received by it from or for the Company. The Custodian shall make
payments of cash to, or for the account of, each Fund of the Company
from such cash only (i) for the purchase of securities for the Company
as provided in paragraph 14 hereof; (ii) upon receipt of an Officer's
Certificate for the payment of dividends or other distributions of
shares, or for the payment of interest, taxes, administration,
distribution or advisory fees or expenses which are to be borne by the
Company under the terms of this Agreement, and, with respect to each
Fund, and Investment Advisory Agreement, Sub-Advisory Agreement,
Administration Agreement or Distribution Agreement; (iii) upon receipt
of Written Instructions for payments in connection with the conversion,
exchange or surrender of securities owned or subscribed to by the
Company and held by or to be delivered to the Custodian; (iv) to a
sub-custodian pursuant to Paragraph 7 hereof; or (v) for the redemption
of Fund Shares; or (vi) upon receipt of an Officer's Certificate for
other corporate purposes. No payment pursuant to (i) above shall be
made unless the Custodian
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<PAGE>
has received a copy of the broker's or dealer's confirmation or the
payee's invoice as appropriate.
(b) The Custodian is hereby authorized to endorse
and collect all checks, drafts or other orders for the payment of money
received as custodian for the Company.
(c) In the event that a payment required to be made
under this Agreement exceeds the cash available in the account of a
Fund, the Custodian, in its discretion, may advance to the Fund an
amount equal to that excess and such advance will be deemed a loan from
Custodian to the Fund, payable on demand, bearing interest at such fair
market rate as may be agreed upon from time to time by the parties
hereto. Custodian may not unreasonably decline to advance funds. In
exercising its discretion under this Paragraph 6(c), Custodian
recognizes the interest of a Fund in avoiding failed trades and in
meeting redemption requests on a same-day basis, and will inform the
Fund immediately whenever Custodian anticipates that it may, in the
future, be necessary to exercise its discretion to decline an advance
of funds. In any event, where practicable, Custodian will give a Fund
at least three business days' notice before declining to advance funds.
In this regard, the parties agree to cooperate in good faith to
minimize the need for advances under this Paragraph 6(c).
7. Receipt of Securities.
(a) Except as provided by Paragraph 8 hereof, the
Custodian shall hold and physically segregate in a separate account
with respect to each Fund, identifiable from those of any other person,
all securities and non-cash property received by it for the Company.
All such securities and non-cash property are to be held or disposed of
by the Custodian for each Fund of the Company pursuant to the terms of
this Agreement. In the absence of Written Instructions accompanied by a
certified resolution authorizing the specific transaction by the
Company's Board of Directors, the Custodian shall have no power or
authority to withdraw, deliver, assign, hypothecate, pledge or
otherwise dispose of any such securities and investments, except in
accordance with the express terms
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<PAGE>
provided for in this Agreement. In no case may any director, officer,
employee or agent of the Company withdraw any securities except as
provided in this Agreement and pursuant to a duly adopted resolution of
the Board of Directors. In connection with its duties under this
Paragraph 7, the Custodian may, at its own expense, enter into
sub-custodian Agreements with other banks or trust companies for the
receipt of certain securities and cash to be held by the Custodian for
the account of a Fund of the Company pursuant to this Agreement;
provided that each such bank or trust company has an aggregate capital,
surplus and undivided profits, as shown by its last published report,
of not less than one million dollars ($1,000,000) for a Custodian
subsidiary or affiliate, or of not less than twenty million dollars
($20,000,000) for a sub-custodian that is not a Custodian subsidiary or
affiliate and that in either case such bank or trust company agrees
with the Custodian to comply with all relevant provisions of the 1940
Act and applicable rules and regulations thereunder. The Custodian will
provide the Company with a copy of each sub-custodian agreement it
executes relating to the Company. The Custodian will be liable for acts
or omissions of any such sub-custodian, under the standards of care
provided for herein, of any bank or trust company that it chooses
pursuant to this Paragraph 7.
(b) Promptly after the close of business on each
day the Custodian shall furnish the Company with confirmations and a
summary of all transfers to or from the account of each Fund of the
Company during said day. Where securities are transferred to the
account of any Fund of the Company established at a Securities
Depository or the Book-Entry System pursuant to Paragraph 8 herein, the
Custodian shall also by book-entry or otherwise, identify as belonging
to such Fund the quantity of securities in a fungible bulk of
securities registered in the name of the Custodian (or its nominee) or
shown in the Custodian's account on the books of a Securities
Depository or the Book-Entry System. At least monthly and from time to
time, the Custodian shall furnish the Company with a detailed statement
of the Property held for each Fund under this Agreement.
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<PAGE>
8. Use of Securities Depository or the Book-Entry System. The
Company shall deliver to the Custodian a certified resolution of the Board of
Directors of the Company approving, authorizing and instructing the Custodian on
a continuous and ongoing basis until instructed to the contrary by Oral or
Written Instructions actually received by the Custodian (i) to deposit in a
Securities Depository or the Book-Entry System all securities of the Company
eligible for deposit therein and (ii) to utilize a Securities Depository or the
Book-Entry System to the extent possible in connection with the performance of
its duties hereunder, including without limitation settlements of purchases and
sales of securities by the Company, and deliveries and returns of securities
loaned, subject to repurchase agreements or used as collateral in connection
with borrowings. Without limiting the generality of such use, it is agreed that
the following provisions shall apply thereto:
(a) Securities and any cash of the Company
deposited in a Securities Depository or the Book-Entry System will at
all times be segregated from any assets and cash controlled by the
Custodian in other than a fiduciary or custodian capacity. The
Custodian and its sub-custodians, if any, will pay out money only upon
receipt of securities and will deliver securities only upon receipt of
money, unless the Company has given the Custodian Written Instructions
to the contrary.
(b) All books and records maintained by the
Custodian that relate to the Company participation in a Securities
Depository or the Book-Entry System will at all times during the
Custodian's regular business hours be open to the inspection of the
Company's duly authorized employees or agents and the Company's
independent auditors in accordance with applicable regulations, and the
Company will be furnished with all information in respect of the
services rendered to it as it may require.
(c) The Custodian will provide the Company with
copies of any report obtained by the Custodian on the system of
internal accounting control of the Securities Depository or Book-Entry
System promptly after receipt of such a report by the
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<PAGE>
Custodian. The Custodian will also provide the Company with such
reports on its own system of internal control as the Company may
reasonably request from time to time.
9. Instructions Consistent With the Charter, etc..
Unless otherwise provided in this Agreement, the Custodian shall act
only upon Oral and Written Instructions. The Custodian may assume that
any Oral or Written Instructions received hereunder are not in any way
inconsistent with any provision of the Charter or By-Laws or any vote
or resolution of the Company's Board of Directors, or any committee
thereof. The Custodian shall be entitled to rely upon any Oral or
Written Instructions actually received by the Custodian pursuant to
this Agreement. The Company agrees to forward to the Custodian Written
Instructions confirming Oral Instructions in such manner that the
Written Instructions are received by the Custodian at the close of
business of the same day that such Oral Instructions are given to the
Custodian. The Company agrees that the fact that such confirming
Written Instructions are not received by the Custodian shall in no way
affect the validity of any of the transactions authorized by the
Company by giving Oral Instructions. The Company agrees that the
Custodian shall incur no liability in acting upon Oral Instructions
given to the Custodian hereunder concerning such transactions, provided
that such instructions reasonably appear to have been received from an
Authorized Person, unless any liability to the Company results from the
negligence or willful misconduct of the Custodian. In accordance with
instructions from the Company, as required by accepted industry
practice or as the Custodian may elect in effecting the execution of
the Company instructions, advances of cash or other Property made by
the Custodian, arising from the purchase, sale, redemption, transfer or
other disposition of Property of the Company, or in connection with the
disbursement of funds to any party, or in payment of fees, expenses,
claims or liabilities owed to the Custodian by the Company, or to any
other party which has secured judgment in a court of law against the
Company which creates an overdraft in the accounts or overdelivery of
Property shall be deemed a loan by the Custodian to the Company,
payable on demand, bearing interest at such rate customarily charged by
the Custodian for similar loans.
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<PAGE>
10. Transactions Not Requiring Instructions. The Custodian is
authorized to take the following action without Written Instructions:
(a) Collection of Income and Other Payments. The
Custodian shall:
(i) collect and receive for the account of any
Fund of the Company, all income and other payments and distributions,
including (without limitation) stock dividends, rights, warrants and
similar items, included or to be included in the Property of any Fund
of the Company, and promptly advise the Company of such receipt and
shall credit such income, as collected, to such Fund of the Company.
From time to time, the Custodian may elect, but shall not be so
obligated, to credit the account with interest, dividends or principal
payments on payable or contractual settlement date, in anticipation of
receiving same from a payor, central depository, broker or other agent
employed by the Company or the Custodian. Any such crediting and
posting shall be at the Company's sole risk, and the Custodian shall be
authorized to reverse any such advance posting in the event that it
does not receive good funds from any such payor, central depository,
broker or agent.
(ii) with respect to securities of foreign
issue, effect collection of dividends, interest and other income, and
to notify the Company of any call for redemption, offer of exchange,
right of subscription, reorganization, or other proceedings affecting
such securities, or any default in payments due thereon. It is
understood, however, that the Custodian shall be under no
responsibility for any failure or delay in effecting such collections
or giving such notice with respect to domestic securities regardless of
whether or not the relevant information is published in any financial
service available to it unless such failure or delay is due to its
negligence; however, this sentence shall not be construed as creating
any such responsibility with respect to securities of non-foreign
issue, other than such responsibility of the Custodian. Collections of
income in foreign currency are, to
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<PAGE>
the extent possible, to be converted into United States dollars unless
otherwise instructed in writing, and in effecting such conversion the
Custodian may use such methods or agencies as it may see fit, including
the facilities of its own foreign division at customary rates. All risk
and expenses incident to such collection and conversion is for the
account of the Company and the Custodian shall have no responsibility
for fluctuations in exchange rates affecting any such conversion.
(iii) endorse and deposit for collection in the
name of the Company and each of its Funds, checks, drafts, or other
orders for the payment of money on the same day as received;
(iv) receive and hold for the account of each
of the Company's all securities received by the Company as a result of
a stock dividend, share or reorganization, recapitalization,
readjustment or other rearrangement or distribution of rights or
similar securities issued with respect to any portfolio securities of
the Company held by the Custodian hereunder;
(v) present for payment and collect the amount
payable upon all securities which may mature or be called, redeemed or
retired, or otherwise become payable on the date such securities become
payable;
(vi) take any action which may be necessary and
proper in connection with the collection and receipt of such income and
other payments and the endorsement for collection of checks, drafts and
other negotiable instructions;
(vii) with respect to domestic securities, to
exchange securities in temporary form for securities in definitive
form, to effect an exchange of the shares where the par value of stock
is changed, and to surrender securities at maturity or when advised of
earlier call for redemption, against payment therefor, in accordance
with accepted industry practice. When fractional shares of stock of a
declaring corporation are received as a stock distribution, the
Custodian is authorized to sell the fraction received and credit the
Company account. Unless
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<PAGE>
specifically instructed to the contrary in writing, the Custodian is
authorized to exchange securities in bearer form for securities in
registered form. If any Property registered in the name of a nominee of
the Custodian is called for partial redemption by the issuer of such
Property, the Custodian is authorized to allot the called portion to
the respective beneficial holders of the Property in such manner deemed
to be fair and equitable by the Custodian in its sole discretion.
(b) Miscellaneous Transactions. The Custodian is
authorized to deliver or cause to be delivered Property against payment
or other consideration or written receipt therefor in the following
cases:
(i) for examination by a broker selling for the
account of the Company in accordance with street delivery custom;
(ii) for the exchange for interim receipts or
temporary securities for definitive securities;
(iii) for transfer of securities into the name
of the Company or the Custodian or a nominee of either, or for exchange
or securities for a different number of bonds, certificates, or other
evidence, representing the same aggregate face amount or number of
units bearing the same interest rate, maturity date and call
provisions, if any; provided that, in any such case, the new securities
are to be delivered to the Custodian.
11. Transactions Requiring Instructions. Upon receipt of Oral
or Written Instructions and not otherwise, the Custodian, directly or
through the use of a Securities Depository or the Book-Entry System,
shall:
(a) Execute and deliver to such persons as may be
designated in such Oral or Written Instructions, proxies, consents,
authorizations, and any other instruments whereby the authority of the
Company as owner of any securities may be exercised;
(b) Deliver any securities held for any Fund of the
Company against receipt of other securities or cash issued or paid in
connection with the liquidation, reorganization,
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<PAGE>
refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any securities held for any Fund of the
Company to any protective committee, reorganization committee or other
person in connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any corporation,
against receipt of such certificates or deposit, interim receipts or
other instruments or documents as may be issued to it to evidence such
delivery;
(d) Make such transfers or exchanges of the assets
of any Fund of the Company and take such other steps as shall be stated
in said instructions to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger, consolidation
or recapitalization of the Company;
(e) Release securities belonging to any Fund of the
Company to any bank or trust company for the purpose of pledge or
hypothecation to secure any loan incurred by the Company; provided,
however, that securities shall be released only upon payment to the
Custodian of the monies borrowed, except that in cases where additional
collateral is required to secure a borrowing already made, subject to
proper prior authorization, further securities may be released for that
purpose; and pay such loan upon redelivery to it of the securities
pledged or hypothecated therefor and upon surrender of the note or
notes evidencing the loan;
(f) Deliver any securities held for the Company
upon the exercise of a covered call option written by the Company on
such securities;
(g) Release and deliver securities owned by the
Company in connection with any repurchase agreement entered into on
behalf of any Fund of the Company, but only on receipt of payment
therefor; and pay out monies of the Company in connection with such
repurchase agreements, but only upon the delivery of the securities;
(h) Otherwise transfer, exchange or deliver
securities in accordance with Oral or Written Instructions.
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12. Segregated Accounts.
(a) The Custodian shall, upon receipt of Written or
Oral Instructions, establish and maintain a segregated account or
accounts, on its records, for and on behalf of any Fund of the Company,
into which account or accounts may be transferred cash and/or
securities, including securities in the Book-Entry System (i) for the
purposes of compliance by the Company with the procedures required by a
securities or option exchange, providing such complies with the
Investment Company Act and Release No. 10666 or any subsequent release
or releases of the Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered investment companies
and (ii) for other proper corporate purposes, but only, in the case of
clause (ii), upon receipt of Written Instructions.
13. Dividend and Distributions.
(a) The Company shall furnish the Custodian with
appropriate evidence of action by the Company's Board of Directors
declaring and authorizing the payment of any dividends and
distributions. Upon receipt by the Custodian of an Officer's
Certificate with respect to dividends and distributions declared by the
Company's Board of Directors and payable to shareholders of any Fund
who are entitled to receive cash for fractional shares and those who
have elected in the proper manner to receive their distributions on
dividends in cash, and in conformance with procedures mutually agreed
upon by the Custodian, The Company and the Company's Administrator or
transfer agent, the Custodian shall pay to the Fund's transfer agent,
as agent for the shareholders, an amount equal to the amount indicated
in said Officer's Certificate as payable by the fund to such
shareholders for distribution in cash by the transfer agent to such
shareholders. In lieu of paying the Company's transfer agent cash
dividends and distributions, the Custodian may arrange for the direct
payment of cash dividends and distributions to shareholders by the
Custodian in accordance with such procedures and controls as are
mutually agreed upon
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<PAGE>
from time to time by and among the Company, the Custodian and the
Company's Administrator and Transfer Agent.
In accordance with the Prospectuses, the Internal Revenue Code of 1986,
as amended, and regulations promulgated thereunder, and with such procedures and
controls as are mutually agreed upon from time to time by and among the Company,
the Custodian, the Company's Administrator and Transfer Agent, the Custodian
shall arrange for the establishment of Individual Retirement Accounts ("IRAs")
as custodian accounts for such shareholders holding shares through IRA accounts.
(b) The Custodian may enter into separate custodial
agreements with various futures commission merchants ("FCMs") that the
Company uses (each an "FCM Agreement"), pursuant to which the Company's
margin deposits in any transactions involving futures contracts and
options on futures contracts will be held by the Custodian in accounts
(each an "FCM Account") subject to the disposition by the FCM involved
in such contracts in accordance with the customer contract between FCM
and the Company ("FCM Contract"), SEC rules governing such segregated
accounts, CFTC rules and the rules of the applicable commodities
exchange. Such FCM Agreements shall only be entered into upon receipt
of Written Instructions from the Company which stated that (i) an FCM
Contract has been entered into; and (ii) the Company is in compliance
with all the rules and regulations of the CFTC. Transfers of initial
margin shall be made into FCM Account only upon Written Instructions;
transfers of premium and variation margin may be made into an FCM
Account pursuant to Oral Instructions. Transfers of funds from an FCM
Account to the FCM for which the Custodian holds such an account may
only occur upon certification by the FCM to the Custodian that pursuant
to the FCM Agreement and the FCM Contract, all conditions precedent to
its right to give the Custodian such instruction have been satisfied.
14. Purchase of Securities. Promptly after each purchase of
securities by the Adviser on behalf of any Fund, the Company shall deliver to
the Custodian Oral or Written Instructions
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<PAGE>
specifying with respect to each such purchase: (a) the name
of the issuer and the title of the securities, (b) the number of shares of the
principal amount purchased and accrued interest, if any, (c) the dates of
purchase and settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase, (f) the name of the person, from whom, or the broker
through whom, the purchase was made and (g) the Fund for which the purchase was
made. The Custodian shall, upon receipt of securities purchased by or for the
Company, pay out of the monies held for the account of such Fund, the total
amount payable to the person, from whom, or the broker through whom, the
purchase was made, provided that the same conforms to the total amount payable
as set forth in such Oral or Written Instructions.
15. Notation. With respect to each deposit or withdrawal of
securities or when ordering the deposit or withdrawal of securities from
safekeeping, the Custodian shall sign a notation in respect of each such
deposit, withdrawal or order that shall show: (a) the date and time of the
deposit, withdrawal or order; (b) the title and amount of the securities or
other investments deposited, withdrawn or ordered to be withdrawn, and the
identification thereof by certificate numbers or otherwise; (c) the manner of
acquisition of the securities or similar investments deposited or the purpose
for which they have been withdrawn, or ordered to be withdrawn; and (d) if
withdrawn and delivered to another person, the name of such person. The time of
any deposit, withdrawal or order means the time of the formal recording of such
transactions on the books of the Custodian at the Custodian's close of business.
Such notation shall be transmitted promptly to an officer or director of the
Company designated by the Board of Directors who shall not otherwise be
authorized to have access to the Company's securities. Such notation shall be on
serially numbered forms and shall be preserved for at least one year.
16. Sales of Securities. Promptly after each sale of securities
by the Adviser, the Company shall deliver to the Custodian Oral or Written
Instructions, specifying with respect to each such sale: (a) the name of the
issuer and the title of the security, (b) the number of the shares or principal
amount sold, and accrued interest, if any, (c) the dates of sale, (d) the sale
price per unit, (e) the total amount payable to the Company upon such sale, (f)
the name of the
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<PAGE>
broker, through whom, or the person to whom, the sale was made and (g) the Fund
for which the sale was made. The Custodian shall deliver the securities upon
receipt of the total amount payable to the Company upon such sale, provided that
the same conforms to the total amount payable as set forth in such Oral and
Written Instructions. Subject to the foregoing, the Custodian may accept payment
in such form as shall be satisfactory to it, and may deliver securities and
arrange for payment in accordance with the customs prevailing among dealers in
securities.
17. Records. The books and records pertaining to the Company
which are in the possession of the Custodian shall be the property of the
Company. Such books and records shall be prepared and maintained as required by
the 1940 Act, as amended, and other applicable securities laws and rules and
regulations. The SEC, the Company, or the Company's authorized representatives,
shall have access to such books and records at all times during the Custodian's
normal business hours, and such books and records shall be surrendered to the
Company promptly upon request. Upon reasonable request of the Company, copies of
any such books and records shall be provided by the Custodian to the Company or
the Company's authorized representative at the Company's expense.
18. Reports.
(a) The Custodian shall furnish the Company the
following reports:
(i) such periodic and special reports as the
Company may reasonably request;
(ii) a monthly statement summarizing all
transactions and entries for the account of each Fund of the Company;
(iii) a monthly report of portfolio securities
belonging to each fund of the Company showing the adjusted average cost
of each issue and the market value at the end of such month;
(iv) a monthly report of the cash account of
each Fund of the Company showing disbursements;
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<PAGE>
(v) the reports to be furnished to the Company
pursuant to Rule 17f-4 under the 1940 Act; and
(vi) such other information as may be agreed
upon from time to time between the Company and the Custodian.
(b) The Custodian shall transmit promptly to the
Company any proxy statement, proxy materials, notice of a call or
conversation or similar communications received by it as Custodian of
the Property.
19. Cooperation with Accountants. The Custodian shall cooperate
with the Company's independent certified public accountant and shall take all
reasonable action in the performance of its obligations under this Agreement and
those under Rule 17f-2 under the 1940 Act ("Rule 17f-2") to the extent such Rule
is applicable, to assure that the necessary information is made available to
such accountant for the expression of its unqualified opinion with respect to,
including without limitation, the three audits required each year, the
certificates with respect to such annual audits and the opinion included in the
Company's semi-annual report on Form N-SAR, and will require each sub-custodian
appointed pursuant to paragraph 7 hereof to grant such access to the information
to the fund's independent certified public accountant. The Custodian shall
require any sub-custodian it appoints with respect to the Company to comply with
the provisions of this Paragraph 19.
20. Confidentiality. The Custodian agrees on behalf of itself
and its employees to treat confidentially and as the proprietary information of
the Company, all record and other information relative to the Company and its
prior, present or potential shareholders and relative to the managers and its
prior, present or potential customers, and not to use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Company, which approval shall not be unreasonably withheld and may not be
withheld where the Custodian may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Company.
19
<PAGE>
21. Equipment Failures. In the event of equipment failures
beyond the Custodian's control, the Custodian shall, at no additional expense to
the Company, take reasonable steps to minimize service interruptions but shall
not have liability with respect thereto. The Custodian shall enter into and
shall maintain in effect with appropriate parties one or more agreements making
reasonable provision for back up emergency use of electronic data processing
equipment to the extent appropriate equipment is available.
22. Right to Receive Advice.
(a) Advice of Fund. If the Custodian shall be in
doubt as to any action to be taken or omitted by it, it may request,
and shall receive, from the Company clarification or advice, including
Oral or Written Instructions.
(b) Advice of Counsel. If the Custodian shall be in
doubt as to any question of law involved in any action to be taken or
omitted by the Custodian, it may request advice at its own cost from
counsel of its own choosing (who may be counsel for the Company or the
Custodian, at the option of the Custodian).
(c) Conflicting Advice. In case of conflict between
directions, advice or Oral or Written Instructions received by the
Custodian pursuant to subparagraph (a) of this paragraph and advice
received by the Custodian pursuant to subparagraph (b) of this
paragraph, the Custodian shall be entitled to rely on and follow the
advice received pursuant to the latter provision alone.
(d) Protection of The Custodian. The Custodian
shall be protected in any action or inaction which it takes or omits to
take in reliance on any directions, advice or Oral or Written
Instructions received pursuant to subparagraphs (a) or (b) of this
section which the Custodian, after receipt of any such directions,
advice or Oral or Written Instructions, in good faith believes to be
consistent with such directions, advice or Oral or Written
Instructions, as the case may be. Nothing in this paragraph shall be
construed as imposing upon the Custodian any obligation (i) to seek
such directions, advice or Oral or Written Instructions, or (ii) to act
in accordance with such directions, advice or Oral or
20
<PAGE>
Written Instructions when received, unless, under the terms or another
provision of this Agreement, the same is a condition to the Custodian's
properly taking or omitting to take such action. Nothing in this
subparagraph shall excuse the Custodian when an action or omission on
the part of the Custodian constitutes willful misfeasance, bad faith,
negligence or reckless disregard by the Custodian of its duties under
this Agreement.
23. Compliance with Governmental Rules and Regulations. The
Custodian undertakes to comply with all applicable requirements of the 1933 Act,
the 1934 Act, the 1940 Act and any laws, rules and regulations of governmental
authorities having jurisdiction with respect to the duties and obligations to be
performed by the Custodian hereunder. The Custodian acknowledges that the
Company is subject to Rule 17f-2 and will undertake to assist the Company in
complying with its obligations thereunder.
24. Compensation. As compensation for the services rendered by
the Custodian during the term of this Agreement, the Company will pay to the
Custodian, in addition to reimbursement of its out-of-pocket expenses, monthly
fees as outlined in Schedule C, or as otherwise agreed upon from time to time in
writing by the Custodian and the Company.
25. Indemnification. The Company, as sole owner of the
Property, agrees to indemnify and hold harmless the Custodian and its nominees
from all taxes, charges, expenses, assessments, claims, and liabilities
(including, without limitation, liabilities arising under the 1933 Act, the Act
of 1934, the 1940 Act, the CEA, and any state and foreign securities and blue
sky laws, all as or to be amended from time to time) and expenses, including
(without limitation) attorney's fees and disbursements, arising directly or
indirectly (a) from the fact that securities included in the Property are
registered in the name of any such nominee or (b) without limiting the
generality of the foregoing clause (a) from any action or thing which the
Custodian takes or does or omits to take or do (i) at the request or at the
direction of or in reliance on the advice of the Company, or (ii) upon Oral or
Written Instructions, provided, that neither the Custodian nor any of its
nominees or sub-custodians shall be indemnified against any liability to any
Fund of the Company or to its shareholders (or any expenses incident to such
liability) arising out of (x) the
21
<PAGE>
Custodian's or such nominee's or sub-custodian's own willful misfeasance, bad
faith, negligence or reckless disregard of its duties under this Agreement or
any agreement between the Custodian and any nominee or sub-custodian or (y) the
Custodian's own negligent failure to perform its duties under this Agreement. In
the event of any advance of cash for any purpose made by the Custodian resulting
from Oral or Written Instructions of the Company, or in the event that the
Custodian or its nominee or sub-custodian shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in connection with the
performance of this Agreement, except such as may arise from its or its
nominee's or sub-custodian's own negligent action, negligent failure to act,
willful misconduct, or reckless disregard, the Company shall promptly reimburse
the Custodian for such advance of cash or such taxes, charges, expenses,
assessment claims or liabilities. Notwithstanding anything to the contrary, any
one Fund shall not provide indemnification to the Custodian for any loss or
liability resulting from actions with respect to any other Fund.
26. Responsibility of The Custodian. The Custodian shall be
under no duty to take any action on behalf of the Company except as specifically
set forth herein or as may be specifically agreed to by the Custodian in
writing. In the performance of its duties hereunder, the Custodian shall be
obligated to exercise care and diligence and to act in good faith and to use its
best efforts within reasonable limits to ensure the accuracy of all services
performed under this Agreement. The Custodian shall be responsible for its own
negligent failure or that of any sub-custodian it shall appoint to perform its
duties under this Agreement but to the extent that duties, obligations and
responsibilities are not expressly set forth in this Agreement, the Custodian
shall not be liable for any act or omission which does not constitute willful
misfeasance, bad faith, or negligence on the part of the Custodian or reckless
disregard of such duties, obligations and responsibilities. Without limiting the
generality of the foregoing or of any other provision of this Agreement, the
Custodian in connection with its duties under this Agreement shall not be under
any duty or obligation to inquire into and shall not be liable for or in respect
of (a) the validity or invalidity or authority or lack thereof of any advice,
direction, notice or other instrument which conforms to
22
<PAGE>
the applicable requirements of this Agreement, if any, and which the Custodian
believes to be genuine, (b) the validity of the issue of any securities
purchased or sold by the Company, the legality of the purchase or sale thereof
or the propriety of the amount paid or received therefor, (c) the legality of
the issue or sale of any Shares, or the sufficiency of the amount to be received
therefor, (d) delays or errors or loss of data occurring by reason of
circumstances beyond the Custodian's control, including acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdown (except as provided in Paragraph 21), flood or catastrophe, acts of
God, insurrection, war, riots, or failure of the mail, transportation,
communication or power supply.
27. Collection. All collections of monies or other property in
respect, or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by the Custodian) shall be at the sole risk of the Company.
In any case in which the Custodian does not receive any payment due the Company
within a reasonable time after the Custodian has made proper demands for the
same, it shall so notify the Company in writing, including copies of all demand
letters, any written responses thereto, and memoranda of all oral responses
thereto, and to telephonic demands, and await instructions from the Company. The
Custodian shall not be obliged to take legal action for collection unless and
until reasonably indemnified to its satisfaction. The Custodian shall also
notify the Company as soon as reasonably practicable whenever income due on
securities is not collected in due course.
28. Duration and Termination. This Agreement shall be effective
as of the date hereof and shall continue until termination by the Company or by
the Custodian on 60 days written notice provided that this Agreement shall
terminate at the end of two years from the date hereof unless the Agreement is
approved on an annual basis thereafter by the Board of Directors of the Company,
including a majority of the Directors who are not "interested persons" under the
1940 Act. Upon any termination of this Agreement, pending appointment of a
successor to the Custodian or a vote of the shareholders of the Company to
dissolve or to function without a custodian of its cash, securities or other
property, the Custodian shall not deliver cash, securities
23
<PAGE>
or other property of the Company to the Company, but may deliver them to a bank
or trust company of its own selection, having aggregate capital, surplus and
undivided profits, as shown by its last published report of not less than twenty
million dollars ($20,000,000) as a custodian for the Company to be held under
terms similar to those of this Agreement, provided, however, that the Custodian
shall not be required to make any such delivery or payment until full payment
shall have been made by the Company of all liabilities constituting a charge on,
or against, the properties then held by the Custodian, or on or against the
Custodian, and until full payment shall have been made to the Custodian of all
of its fee, compensation, costs and expenses, subject to the provisions of
Paragraph 21 of this Agreement.
29. Notices. All notices and other communications (collectively
referred to as "Notice" or "Notices" in this paragraph) hereunder shall be in
writing or by confirm in telegram, cable, telex, or facsimile sending device.
Notices shall be addressed (a) if the Custodian, at the Custodian's address, 901
Main Street, Dallas, Texas 75283-2222, Attention: ______; (b) if to the Company,
at the address of Nations LifeGoal Funds, Inc., 111 Center Street, Little Rock,
Arkansas 72201, Attention: Richard H. Blank, Jr., Secretary; or (c) if to
neither of the foregoing, at such other address as shall have been notified to
the sender of any such Notice or other communication. Notice shall be deemed to
have been given when actually received by the other party. All postage, cable,
telegram, telex and facsimile sending device charges arising from the sending of
a Notice hereunder shall be paid by the sender.
30. Further Actions. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate the
purposes hereof.
31. Amendments. This Agreement or any party hereof may be
changed or waived only by an instrument in writing signed by the party against
which enforcement of such change or waiver is sought.
32. Miscellaneous. This Agreement embodies the entire Agreement
and understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to the subject matter hereof. The
captions in this Agreement are included for convenience of reference
24
<PAGE>
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. This Agreement shall be deemed to be a
contract made in New York and governed by New York law. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their offices designated below as of the day and year first above
written.
NATIONS LIFEGOAL FUNDS, INC.
By: ____________________________ ATTEST: _____________________
Name: _____________________ Secretary
Title: _____________________
NATIONSBANK OF TEXAS, N.A. ATTEST: _____________________
Title:_______________
By: _____________________________
Name: ______________________
Title: ______________________
25
<PAGE>
SCHEDULE A
AUTHORIZED PERSONS FOR
ORAL AND WRITTEN INSTRUCTIONS
MARY PRIMM
MARTHA SHERMAN
MELINDA CROSBY
SANDY DUCK
JAMES JONES
26
<PAGE>
SCHEDULE B
OFFICERS OF THE COMPANY
A. Max Walker President and Chief Executive Officer
Richard H. Rose Treasurer
Joseph C. Viselli Assistant Treasurer
Richard H. Blank, Jr. Secretary
Michael W. Nolte Assistant Secretary
Louise P. Newcomb Assistant Secretary
James E. Banks, Jr. Assistant Secretary
27
<PAGE>
SCHEDULE C
FEE SCHEDULE
Each Fund of The Company shall pay the Custodian the following annual fees:
1. 1.25% of 1.00% of the average daily net assets of each Fund;
2. $10.00 per Repurchase Collateral movement; and
3. $15.00 per Purchase, Sale and Maturity transaction
This fee will be paid monthly, based upon the average daily net assets of each
Fund.
28
<PAGE>
SCHEDULE I
The Custody Agreement between the Company and the Custodian applies to
the following funds of the Company:
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
29
EX99.B9(b)
FORM OF
AMENDMENT TO TRANSFER AGENCY
AND SERVICES AGREEMENT
This Amendment, dated as of July __, 1996, is made to the Transfer
Agency and Services Agreement dated as of June 1, 1995, as amended (the
"Agreement"), by and among NATIONS FUND, INC., NATIONS FUND TRUST, THE CAPITOL
MUTUAL FUNDS, d/b/a NATIONS INSTITUTIONAL RESERVES, NATIONS FUND PORTFOLIOS,
INC., and each other party which may become a party thereto pursuant to the
terms of the Agreement (individually, a "Fund," and collectively, the "Funds")
and FIRST DATA INVESTOR SERVICES GROUP, INC., formerly known as THE SHAREHOLDER
SERVICES GROUP, INC. (the "Transfer Agent").
RECITALS
WHEREAS, the Transfer Agent serves as transfer agent, dividend
disbursing agent and agent in connection with certain other services for the
Funds pursuant to the Agreement; and
WHEREAS, Section 17.1 of the Agreement provides that, subsequent to
the date of the Agreement, a registered investment company (a "New Fund") for
which NationsBank, N.A., or any of its affiliates acts as investment adviser may
become a party to the Agreement upon execution of a written adoption agreement
(an "Adoption Agreement") by such New Fund pursuant to which such New Fund
agrees to be bound by the terms of the Agreement; and
WHEREAS, the Board of Directors of Nations LifeGoal Funds, Inc.
("Nations LifeGoal") has approved the selection of the Transfer Agent to serve
as the transfer and dividend disbursing agent for all classes of shares of the
portfolios of Nations LifeGoal; and
WHEREAS, Nations LifeGoal is advised by NationsBanc Advisors, Inc.
and sub-advised by TradeStreet Investment Associates, Inc., each an affiliate of
NationsBank, N.A.; and
WHEREAS, Nations LifeGoal has executed an Adoption Agreement dated
as of _____, 1996:
AGREEMENT
NOW THEREFORE, in consideration of the promises and mutual
covenants herein contained, the Funds and the Transfer Agent agree that the
Agreement shall be amended as follows:
1. The Funds hereby authorize the addition of Nations Lifegoal as a party to
the Agreement effective upon the execution of the Adoption Agreement, and
Nations LifeGoal is deemed a Fund for all purposes of the Agreement upon such
execution of the Adoption Agreement and shall have all the rights, obligations
and duties of a Fund under the Agreement.
<PAGE>
2. References to "Schedule F" in the first full paragraph under "WITNESSETH"
on page 1 of the Agreement and to "Schedule A" in Section 17.1 are hereby
deleted in their entirety and replaced by references to "Schedule G".
3. Schedule G, attached hereto, is hereby attached to the Agreement as
Schedule G and is deemed a part of the Agreement.
4. The terms and provisions of this Amendment shall be deemed a part
of the Agreement for all purposes. To the extent that any provisions of this
Amendment modify or are otherwise inconsistent with any provisions of the
Agreement, the provisions of this Amendment shall control. In all other
respects, the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their duly authorized officers, as of the day and year first
above written.
FIRST DATA INVESTOR SERVICES GROUP,
INC., formerly, THE SHAREHOLDER
SERVICES GROUP, INC.
By: ____________________________________________
Name: ____________________________________
Title: ___________________________________
NATIONS FUND, INC.
By: ____________________________________________
Name: ____________________________________
Title: ___________________________________
NATIONS FUND TRUST
By: ____________________________________________
Name: ____________________________________
Title: ___________________________________
2
<PAGE>
CAPITOL MUTUAL FUNDS, d/b/a NATIONS
INSTITUTIONAL RESERVES
By: ____________________________________________
Name: ____________________________________
Title: ___________________________________
NATIONS FUND PORTFOLIOS, INC.
By: ____________________________________________
Name: ____________________________________
Title: ___________________________________
3
<PAGE>
SCHEDULE G
I) NATIONS FUND TRUST
o Nations Government Money Market Fund
o Nations Tax Exempt Fund
o Nations Value Fund
o Nations Capital Growth Fund
o Nations Emerging Growth Fund
o Nations Disciplined Equity Fund
o Nations Equity Index Fund
o Nations Balanced Assets Fund
o Nations Managed Index Fund
o Nations Managed SmallCap Index Fund
o Nations Short-Intermediate Government Fund
o Nations Short-Term Income Fund
o Nations Diversified Income Fund
o Nations Strategic Fixed Income Fund
o Nations Municipal Income Fund
o Nations Short-Term Municipal Income Fund
o Nations Intermediate Municipal Bond Fund
o Nations Florida Intermediate Municipal Bond Fund
o Nations Florida Municipal Bond Fund
o Nations Georgia Intermediate Municipal Bond Fund
o Nations Georgia Municipal Bond Fund
o Nations Maryland Intermediate Municipal Bond Fund
o Nations Maryland Municipal Bond Fund
o Nations North Carolina Intermediate Municipal Bond Fund
o Nations North Carolina Municipal Bond Fund
o Nations South Carolina Intermediate Municipal Bond Fund
o Nations South Carolina Municipal Bond Fund
o Nations Tennessee Intermediate Municipal Bond Fund
o Nations Tennessee Municipal Bond Fund
o Nations Texas Intermediate Municipal Bond Fund
o Nations Texas Municipal Bond Fund
o Nations Virginia Intermediate Municipal Bond Fund
o Nations Virginia Municipal Bond Fund
II) NATIONS FUND, INC.
o Nations Prime Fund
o Nations Treasury Fund
o Nations Equity Income Fund
o Nations International Equity Fund
o Nations Government Securities Fund
4
<PAGE>
III) NATIONS PORTFOLIOS, INC.
o Nations Emerging Markets Fund
o Nations Pacific Growth Fund
o Nations Global Government Income Fund
IV) THE CAPITOL MUTUAL FUNDS, d/b/a NATIONS INSTITUTIONAL RESERVES
o Nations Cash Reserves
o Nations Treasury Reserves
o Nations Government Reserves
o Nations Tax Free Reserves
V) NATIONS LIFEGOAL FUNDS, INC.
o Nations Capital Accumulator Fund
o Nations Conservative Growth Fund
o Nations Income and Managed Growth Fund
5
<PAGE>
EX99.B9(e)
FORM OF AMENDMENT TO SUB-TRANSFER AGENCY
AND SERVICES AGREEMENT
This Amendment, dated as of July __, 1996, is made to the
Sub-Transfer Agency and Services Agreement dated as of June 1, 1995, as amended
(the "Agreement"), between FIRST DATA INVESTOR SERVICES GROUP, INC., formerly
known as THE SHAREHOLDER SERVICES GROUP, INC. (the "Transfer Agent") and
NATIONSBANK OF TEXAS, N.A. ("NATIONSBANK")
RECITALS
WHEREAS, the Transfer Agent serves as transfer agent, dividend
disbursing agent and agent in connection with certain other services for certain
registered investment companies pursuant to a Transfer Agency and Services
Agreement dated as of June 1, 1995, as amended (the "Transfer Agency
Agreement"); and
WHEREAS, Article 15 of the Agreement provides that the Agreement
may be amended or modified by a written instrument executed by both parties
thereto; and
WHEREAS, the Transfer Agent was appointed as transfer agent to
Nations LifeGoal Funds, Inc. ("Nations LifeGoal"), a registered investment
company, pursuant to an Amendment to the Transfer Agency Agreement dated as of
__________, 1996; and
WHEREAS, both parties to the Agreement wish to amend the Agreement
to reflect the appointment of the Transfer Agent as transfer agent for Nations
LifeGoals:
AGREEMENT
NOW THEREFORE, in consideration of the promises and mutual
covenants herein contained, the Transfer Agent and NationsBank agree that the
Agreement shall be amended as follows:
1. Schedule A of the Agreement is hereby deleted in its entirety
and replaced by Schedule A, attached hereto.
2. The terms and provisions of this Amendment shall be deemed a
part of the Agreement for all purposes. To the extent that any provisions of
this Amendment modify or are otherwise inconsistent with any provisions of the
Agreement, the provisions of this Amendment shall control. In all other
respects, the Agreement shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their duly authorized officers, as of the day and year first
above written.
FIRST DATA INVESTOR SERVICES GROUP,
INC., formerly, THE SHAREHOLDER
SERVICES GROUP, INC.
By: ________________________________
Name: ____________________________
Title: ___________________________
NATIONSBANK OF TEXAS, N.A.
By: ________________________________
Name: ____________________________
Title: ___________________________
2
<PAGE>
SCHEDULE A
I) NATIONS FUND TRUST
o Nations Government Money Market Fund
o Nations Tax Exempt Fund
o Nations Value Fund
o Nations Capital Growth Fund
o Nations Emerging Growth Fund
o Nations Disciplined Equity Fund
o Nations Equity Index Fund
o Nations Balanced Assets Fund
o Nations Managed Index Fund
o Nations Managed SmallCap Index Fund
o Nations Short-Intermediate Government Fund
o Nations Short-Term Income Fund
o Nations Diversified Income Fund
o Nations Strategic Fixed Income Fund
o Nations Municipal Income Fund
o Nations Short-Term Municipal Income Fund
o Nations Intermediate Municipal Bond Fund
o Nations Florida Intermediate Municipal Bond Fund
o Nations Florida Municipal Bond Fund
o Nations Georgia Intermediate Municipal Bond Fund
o Nations Georgia Municipal Bond Fund
o Nations Maryland Intermediate Municipal Bond Fund
o Nations Maryland Municipal Bond Fund
o Nations North Carolina Intermediate Municipal Bond Fund
o Nations North Carolina Municipal Bond Fund
o Nations South Carolina Intermediate Municipal Bond Fund
o Nations South Carolina Municipal Bond Fund
o Nations Tennessee Intermediate Municipal Bond Fund
o Nations Tennessee Municipal Bond Fund
o Nations Texas Intermediate Municipal Bond Fund
o Nations Texas Municipal Bond Fund
o Nations Virginia Intermediate Municipal Bond Fund
o Nations Virginia Municipal Bond Fund
II) NATIONS FUND, INC.
o Nations Prime Fund
o Nations Treasury Fund
o Nations Equity Income Fund
o Nations International Equity Fund
o Nations Government Securities Fund
3
<PAGE>
III) NATIONS PORTFOLIOS, INC.
o Nations Emerging Markets Fund
o Nations Pacific Growth Fund
o Nations Global Government Income Fund
IV) THE CAPITOL MUTUAL FUNDS, D/B/A NATIONS INSTITUTIONAL RESERVES
o Nations Cash Reserves
o Nations Treasury Reserves
o Nations Government Reserves
o Nations Tax Free Reserves
V) NATIONS LIFEGOAL FUNDS, INC.
o Nations Capital Accumulator Fund
o Nations Conservative Growth Fund
o Nations Income and Managed Growth Fund
4
<PAGE>
EX99.B9(f)
FORM OF
ADMINISTRATION AGREEMENT
This ADMINISTRATION AGREEMENT (the "Agreement") is made as of
___________, 1996 by and between STEPHENS INC. ("Stephens") and NATIONS LIFEGOAL
FUNDS, INC. a Maryland corporation (the "Company").
WHEREAS, the Company is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, the Company desires to retain Stephens to render certain
administrative services for the investment portfolios of the Company listed on
Schedule I, as such Schedule may be amended from time to time, (individually, a
"Fund" and collectively, the "Funds"), and Stephens is willing to render such
services; and
WHEREAS, the Company is retaining, pursuant to a separate
Co-Administration Agreement, First Data Investor Services, Inc. ("First Data")
to perform certain other administrative services.
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints Stephens to act as
Administrator of the Funds and Stephens hereby accepts such appointment and
agrees to render such services and duties set forth in Paragraph 3, for the
compensation and on the terms herein provided. Absent written notification to
the contrary by either the Company or Stephens, each new investment portfolio
established in the future by the Company shall automatically become a "Fund" for
all purposes hereunder as if listed on Schedule I.
2. Delivery of Documents. The Company has furnished Stephens with
copies properly certified or authenticated of each of the following:
(a) The Company's Registration Statement on Form N-1A
(the "Registration Statement") under the Securities Act of 1933, as amended, and
under the 1940 Act (File Nos. ___________ and ________), as filed with the
Securities and Exchange Commission (the "SEC") on July __, 1996 relating to the
Funds' shares (the "Shares");
(b) The Funds' most recent Prospectus(es); and
(c) The Funds' most recent Statement(s) of Additional
Information.
1
<PAGE>
The Company will furnish Stephens from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing. Furthermore, the Company will provide Stephens with any other
documents that Stephens may reasonably request and will notify Stephens as soon
as possible of any matter materially affecting Stephens' performance of its
services under this Agreement.
3. Duties as Administrator. Subject to the supervision and
direction of the Board of Directors of the Company, Stephens, as Administrator,
will assist in supervising various aspects of the Company's administrative
operations and undertakes to perform the following specific services from and
after the effective date of this Agreement:
(a) Maintaining office facilities (which may be in the
offices of Stephens or a corporate affiliate);
(b) Furnishing statistical and research data, data
processing services, clerical services, and internal executive and
administrative services and stationery and office supplies in connection with
the foregoing;
(c) Furnishing corporate secretarial services, including
coordinating the preparation and distribution of materials for Board of
Directors' meetings;
(d) Providing the services of certain persons who may be
appointed as officers of the Company by the Company's Board of Directors;
(e) Coordinating the provision of legal advice and counsel
to the Company with respect to regulatory matters, including monitoring
regulatory and legislative developments which may affect the Company and
assisting in the strategic response to such developments, counseling and
assisting the Company in routine regulatory examinations or investigations of
the Company, and working closely with outside counsel to the Company in
connection with any litigation in which the Company is involved;
(f) Coordinating the preparation of reports to the
Company's shareholders of record and the SEC including, but not necessarily
limited to, Annual Reports and Semi-Annual Reports to Shareholders and on Form
N-SAR and Notices pursuant to Rule 24f-2 under the 1940 Act;
(g) Coordinating with the Company and its Distributor
regarding the jurisdictions in which the Shares of the Company shall be
registered or qualified for sale and, in connection therewith, being responsible
for the registration or qualification and the maintenance of such registration
or qualification of Shares for sale under the securities laws of any state.
Payment of share registration fees and any fees for qualifying or continuing the
qualification of the Company or any Fund as a dealer or broker shall be made or
reimbursed by the Company or that Fund, respectively;
2
<PAGE>
(h) Preparing and filing on a timely basis various reports,
registration statements and post-effective amendments thereto and other
documents required by federal, state and other applicable laws and regulations
other than those filed or required to be filed by the Adviser, First Data,
Transfer Agent or Custodian;
(i) Preparing and filing on a timely basis the Company's
Rule 24f-2 Notice;
(j) Monitoring the development and implementation of
compliance procedures for the Company which will include, among other matters,
monitoring each Fund's status as a regulated investment company under
Sub-Chapter M of the Internal Revenue Code of 1986, as amended, and compliance
by each Fund with its investment objective, policies, restrictions, tax matters
and applicable laws and regulations; and
(k) Generally assisting in all aspects of the Company's
operations.
In performing all services under this Agreement, Stephens shall
(a) act in conformity with the Company's Articles of Incorporation and Bylaws;
the 1940 Act, the Investment Advisers Act of 1940 and other applicable laws, as
the same may be amended from time to time; and the Company's Registration
Statement, as such Registration Statement may be amended from time to time, (b)
consult and coordinate with legal counsel for the Company, as necessary and
appropriate, and (c) advise and report to the Company and its legal counsel, as
necessary or appropriate, with respect to any compliance or other matters that
come to its attention.
In connection with its duties under this Paragraph 3, Stephens
may, at its own expense, enter into sub-administration agreements with other
service providers, provided that each such service provider agrees with Stephens
to comply with all relevant provisions of the 1940 Act and applicable rules and
regulations thereunder. Stephens will provide the Company with a copy of each
sub-administration agreement it executes relating to the Company. Stephens will
be liable for acts or omissions of any such sub-administrators under the
standards of care provided herein under Paragraph 5.
In addition to the services specifically identified above,
Stephens shall coordinate the provision of services to the Company by First
Data, the Transfer Agent and the Custodian.
4. Compensation. Stephens shall bear all expenses in connection
with the performance of its services under this Agreement, except those
enumerated in Paragraph 4(b) below.
(a) Stephens will from time to time employ or associate
with itself such person or persons as Stephens may believe to be particularly
suited to assist it in performing services under this Agreement. Such person or
persons may be officers and employees who are employed by both Stephens and the
Company. The compensation of such person or persons shall be paid by Stephens
and no obligation shall be incurred on behalf of the Company in such respect.
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(b) Stephens shall not be required to pay any of the
following expenses incurred by the Company: investment advisory expenses, costs
of printing and mailing stock certificates, prospectuses, reports and notices;
interest on borrowed money; brokerage fees and commissions; taxes and fees
payable to federal, state and other governmental agencies; fees of Directors of
the Company who are not affiliated with Stephens; outside auditing expenses;
outside legal expenses; fees of any other service provider to the Company (other
than a sub-administrator engaged pursuant to Paragraph 3, and except for
transmitting the fees payable to First Data pursuant to Paragraph 3(d)); or
other expenses not specified in this Section 4 which may be properly payable by
the Company and which are approved by the Company's President or Treasurer.
(c) For the services to be rendered, the facilities to be
furnished and the payments to be made by Stephens, as provided for in this
Agreement, Stephens shall be compensated by the Company in accordance with the
terms set forth in the Fee Letter Agreement dated as of _________, 1996, as
amended on ____, 1996, between the Company, Nations Fund Trust, Nations Fund,
Inc., Stephens and First Data, as the same may be amended from time to time (the
"Fee Letter Agreement") provided, however, that any amendments to the Fee Letter
Agreement shall be presented for approval or ratification by the Directors at
the next regularly scheduled Board meeting.
(d) Stephens shall be authorized to receive, as agent for
First Data, the fees payable by the Company to First Data pursuant to the Fee
Letter Agreement for services provided by First Data under its Co-Administration
Agreement, and shall promptly forward such fees to First Data, provided that it
shall only be required to forward amounts actually received from the Company and
shall have no other duty to pay the same.
5. Limitation of Liabilities; Indemnification.
(a) Stephens shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Company in connection with the
performance of its obligations and duties under this Agreement, except a loss
resulting from Stephens' willful misfeasance, bad faith or gross negligence in
the performance of such obligations and duties, or by reason of its reckless
disregard thereof. Any person, even though also an officer, Directors, partner,
employee or agent of Stephens, shall be deemed, when rendering services to the
Company or acting on any business of the Company (other than services or
business in connection with Stephens' duties as Administrator hereunder), to be
acting solely for the Company and not as an officer, Director, partner, employee
or agent or one under the control or discretion of Stephens even though paid by
it.
(b) The Company, on behalf of each Fund, will indemnify Stephens
against and hold it harmless from any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses)
resulting from any claim, demand, action or suit relating to the particular Fund
and not resulting from the willful misfeasance, bad faith or gross negligence of
Stephens in the performance of such obligations and duties or by reason of its
reckless disregard thereof. Stephens will not confess any claim or settle or
make any compromise in any instance in
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<PAGE>
which the Company will be asked to provide indemnification, except with the
Company's prior written consent. Any amounts payable by the Company under this
Section 5(b) shall be satisfied only against the assets of the Fund involved in
the claim, demand, action or suit and not against the assets of any other
investment portfolio of the Company.
6. Termination of Agreement.
(a) This Agreement shall become effective as of ______, 1996 and
shall remain in full force and effect unless terminated pursuant to the
provisions of subsection (b) of this Section 6.
(b) This Agreement may be terminated at any time without payment
of any penalty, upon 60 days' written notice, by vote of the holders of a
majority of the Board of Directors of the Company or by Stephens. Stephens will
cooperate with and assist the Company, its agents and any successor
administrator or administrators in the substitution/conversion process.
(c) Section 8 shall survive this Agreement's termination.
7. Amendments. No provision of this Agreement may be changed, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, discharge or termination is sought.
8. Confidentiality. All books, records, information and data pertaining to
the business of the Company, its prior, present or potential shareholders and
the Adviser's customers that are exchanged or received pursuant to the
performance of Stephens' duties under this Agreement shall remain confidential
and shall not be disclosed to any other person, except as specifically
authorized by the Company or as may be required by law, and shall not be used
for any purpose other than performance of its responsibilities and duties
hereunder.
9. Service to Other Companies or Accounts.
The Company acknowledges that Stephens now acts, will continue to
act and may act in the future as investment adviser to fiduciary and other
managed accounts, and as investment adviser, sub-investment adviser and/or
administrator to other investment companies or series of investment companies,
and the Company has no objection to Stephens' so acting. The Company further
acknowledges that the persons employed by Stephens to assist in the performance
of Stephens' duties under this Agreement may not devote their full time to such
service and nothing contained in this Agreement shall be deemed to limit or
restrict the right of Stephens or any affiliate of Stephens to engage in and
devote time and attention to other businesses or to render services of whatever
kind or nature.
10. Miscellaneous
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Company or Stephens shall be
sufficiently given if addressed to that party
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<PAGE>
and received by it at its office set forth below or at such other place as it
may from time to time designate in writing.
To the Company:
Nations LifeGoal Funds, Inc.
111 Center Street
Little Rock, Arkansas 72201
Attention: Secretary
To Stephens:
Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
Attention: R. Greg Feltus
(b) This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable without the written consent of the
other party.
(c) This Agreement shall be construed in accordance with the laws
of the State of Arkansas.
(d) This Agreement may be executed in any number of counterparts
each of which shall be deemed to be an original and which collectively shall be
deemed to constitute only one instrument.
(e) The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(f) This Agreement and the Fee Letter Agreement constitute the
entire agreement between the parties hereto with respect to the matters
described herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be duly executed and delivered by their duly authorized officers as of the
date first written above.
6
<PAGE>
STEPHENS INC.
By: ________________________________
Name: ___________________
Title: _____________________
NATIONS LIFEGOAL FUNDS, INC.
By: ________________________________
Name: __________________
Title: ____________________
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SCHEDULE I
1. Nations Capital Accumulator Fund
2. Nations Conservative Growth Fund
3. Nations Income and Managed Growth Fund
Dated: _____________, 1996
8
<PAGE>
EX99.B9(g)
FORM OF
CO-ADMINISTRATION AGREEMENT
THIS CO-ADMINISTRATION AGREEMENT (the "Agreement") is made as of
________, 1996 by and between FIRST DATA INVESTOR SERVICES GROUP, INC., a
Massachusetts corporation ("First Data"), and NATIONS LIFEGOAL FUNDS, INC., a
Maryland corporation (the "Company").
WHEREAS, the Company is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Company desires to retain First Data to render certain
fund accounting and related administrative services for the Company's investment
portfolios listed on Schedule I (individually, a "Fund" and collectively, the
"Funds") to provide administrative services, and First Data is willing to render
such services; and
WHEREAS, the Company is retaining pursuant to a separate Administration
Agreement, Stephens Inc. ("Stephens") to provide certain other administration
services.
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual
convenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints First Data to act as
Co-Administrator of the Funds, and First Data hereby accepts such appointment
and agrees to render such services and duties set forth in Paragraph 3, for the
compensation and on the terms herein provided. Absent written notification to
the contrary by either the Company or First Data, each new investment portfolio
established in the future by the Company shall automatically become a "Fund" for
all purposes hereunder as if listed on Schedule I.
2. Delivery of Documents. The Company has furnished First Data
with copies properly certified or authenticated of each of the following:
(a) The Company Registration Statement on Form N-1A (the
"Registration Statement") under the Securities Act of 1933, as amended, and
under the 1940 Act (File Nos. __________ and _________), as filed with the
Securities and Exchange Commission (the "SEC") on July __, 1996 relating to the
Funds' units or shares (the "Shares");
(b) The Funds' most recent Prospectus(es); and
(c) The Funds' most recent Statement(s) of Additional
Information.
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The Company will furnish First Data from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing. Furthermore, the Company will provide First Data with any other
documents that First Data may reasonably request and will notify First Data as
soon as possible of any matter materially affecting First Data's performance of
its services under this Agreement.
3. Duties as Co-Administrator. Subject to the supervision and direction
of the Board of Directors of the Company, First Data, as Co-Administrator, will
assist in supervising various aspects of the Company's administrative operations
and undertakes to perform the following specific services, from and after the
effective date of this Agreement:
(a) Providing accounting and bookkeeping services (including
the maintenance for the periods prescribed by Rule 31a-2 under the 1940 Act of
such accounts, books and records of the Company as may be required by Section 31
(a) of the 1940 Act and the rules thereunder). First Data further agrees that
all such records which it maintains for the Company are the property of the
Company and further agrees to surrender promptly to the Company any of such
records upon the Company's request;
(b) Providing the services of certain persons who may be
appointed as Treasurer or Assistant Treasurer of the Company by the Company's
Board of Directors;
(c) Valuing each Fund's assets and calculating the net asset
value and the net income of the shares of each Fund in accordance with the
Company's current Prospectus(es) and resolutions of the Company's Board of
Directors, provided, that in performing such services, First Data shall obtain
security market quotes from independent pricing services, or if such quotes are
unavailable, obtain such prices from the Adviser;
(d) Accumulating information for reports to the Company's
shareholders of record and the SEC including, but not necessarily limited to,
Annual Reports and Semi-Annual Reports to Shareholders and on Form N-SAR and
Notices pursuant to Rule 24f-2 under the 1940 Act;
(e) Preparing and filing on a timely basis the Company's
tax returns and other tax filings;
(f) On the basis of information provided by the Company's
investment adviser to First Data, performing monthly compliance testing with
regard to the items specified on Annex A, attached hereto and incorporated
herein;
(g) Preparing and furnishing the Company with monthly broker
security transactions summaries and monthly security transaction listings and
(at the Company's request) with performance information (including yield and
total return information) calculated in accordance with applicable U.S.
securities laws and reporting to external databases such information as may
reasonably be requested: and
2
<PAGE>
(h) Assisting the Company and its agents in their accumulation
and preparation of materials for Board of Directors meetings and for regulatory
examinations and inspections of the Company, however only to the extent such
materials relate to the services being performed for the Company by First Data.
In performing all services under this Agreement, First Data shall (a)
act in conformity with the Company's Articles of Incorporation and By-Laws; the
1940 Act, the Investment Advisers Act of 1940 and other applicable laws, as the
same may be amended from time to time; and the Company's Registration Statement,
as such Registration Statement may be amended from time to time, (b) consult and
coordinate with legal counsel for the Company, as necessary and appropriate, and
(c) advise and report to the Company and its legal counsel, as necessary or
appropriate, with respect to any compliance or other matters that come to its
attention.
In connection with its duties under this Paragraph 3, First Data may,
at its own expense, enter into sub co-administration agreements with other
service providers, provided that each such service provider agrees with First
Data to comply with all relevant provisions of the 1940 Act and applicable rules
and regulations thereunder. First Data will provide the Company with a copy of
each sub co-administration agreement it executes relating to the Company. First
Data will be liable for acts or omissions of any such sub co-administrators
under the standards of care provided herein under Paragraph 5.
In performing its services under this Agreement, First Data shall
cooperate and coordinate with Stephens as necessary and appropriate and shall
provide such information as is reasonably necessary or appropriate for Stephens
to perform its responsibilities to the Company.
4. Compensation. First Data shall bear all expenses in
connection with the performance of its services under this Agreement, except
those enumerated in 4(b) below.
(a) First Data will from time to time employ or associate with
itself such person or persons as First Data may believe to be particularly
suited to assist it in performing services under this Agreement. Such person or
persons may be officers and employees who are employed by both First Data and
the Company. The compensation of such person or persons shall be paid by First
Data and no obligation shall be incurred on behalf of the Company in such
respect.
(b) First Data shall not be required to pay any of the
following expenses incurred by the Company: investment advisory expenses; costs
of printing and mailing stock certificates, prospectuses, reports and notices;
interest on borrowed money; brokerage fees and commissions; taxes and fees
payable to Federal, state and other governmental agencies; fees of Directors of
the Company who are not affiliated with First Data; outside auditing expenses;
outside legal expenses; fees of independent pricing services utilized by First
Data to value each Fund's assets; or other expenses not specified in this
Section 4 which may be properly payable by the Company and which are approved by
the Company's President or Treasurer.
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<PAGE>
(c) For the services to be rendered, and expenses assumed by
(i) First Data under this Agreement and its Agreement with Nations Fund, Inc.,
and (ii) Stephens under the Administration Agreements with the Company and with
Nations Fund, Inc., the Company will pay to Stephens, for its services and as
agent for First Data, a monthly fee in accordance with the terms set forth in
the Fee Letter Agreement dated as of __________, 1996 among Nations Fund Trust,
Nations Fund, Inc., First Data and Stephens as the same may be amended from time
to time (the "Fee Letter Agreement") provided, however, that any amendments to
the Fee Letter Agreement shall be presented for approval or ratification by the
Directors at the next regularity scheduled Board meeting.
(d) The Company will compensate First Data for its services
rendered pursuant to this Agreement in accordance with the fees set forth above.
Such fees do not include out-of-pocket disbursements by First Data for services
that are not specifically identified in Paragraph 3 above. Such out-of-pocket
disbursements may include, but are not limited to, costs associated with postage
(including overnight services), telephone, telecommunications (including
facsimiles), duplicating, pricing services and forms of supplies. First Data
shall not be obligated to incur any out-of-pocket disbursements for services
that are not specifically identified in Paragraph 3 above, unless reasonably
satisfactory arrangements for the payment of such expenses are agreed to by the
Company and First Data, prior to such expenses being incurred.
5. Limitation of Liability: Indemnification.
(a) First Data shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Company in connection with the
performance of its obligations and duties under this Agreement, except a loss
resulting from First Data's willful misfeasance, bad faith or gross negligence
in the performance of such obligations and duties, or by reason of its reckless
disregard thereof. Any person, even though also an officer, Director, partner,
employee or agent of First Data, shall be deemed, when rendering services to the
Company or acting on any business of the Company (other than services or
business in connection with First Data' duties as Co-Administrator hereunder),
to be acting solely for the Company and not as an officer, Director, partner,
employee or agent or one under the control or discretion of First Data even
though paid by it.
(b) The Company, on behalf of each Fund, will indemnify First
Data against and hold it harmless from any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses)
resulting from any claim, demand, action or suit relating to the particular Fund
and not resulting from the willful misfeasance, bad faith or gross negligence of
First Data in the performance of such obligations and duties or by reason of its
reckless disregard thereof. First Data will not confess any claim or settle or
make any compromise in any instance in which the Company will be asked to
provide indemnification, except with the Company's prior written consent. Any
amounts payable by the Company under this Section 5(b) shall be satisfied only
against the assets of the Fund involved in the claim, demand, action or suit and
not against the assets of any other investment portfolio of the Company.
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<PAGE>
6. Termination of Agreement.
(a) This Agreement shall become effective ________, 1996 and
shall remain in full force and effect unless terminated pursuant to the
Provisions of subsection (b) of this Section 6.
(b) This Agreement may be terminated at any time without
payment of any penalty, upon 60 days' written notice, by vote of the holders of
a majority of the Board of Directors of the Company or by First Data. First Data
will cooperate with and assist the Company, its agents and any successor
administrator or administrators in the substitution/conversion process.
(c) Section 8 shall survive this Agreement's termination.
7. Amendments. No provision of this Agreement may be changed,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, discharge or termination is
sought.
8. Confidentiality. All books, records, information and data pertaining
to the business of the Company, its prior, present or potential shareholders and
the Adviser's customers that are exchanged or received pursuant to the
performance of First Data'a duties under this Agreement shall remain
confidential and shall not be disclosed to any other person, except as
specifically authorized by the Company or as may be required by law, and shall
not be used for any purpose other than performance of its responsibilities and
duties hereunder.
9. Service to Other Companies or Accounts. The Company acknowledges
that First Data now acts, will continue to act and may act in the future as
investment adviser to fiduciary and other managed accounts, and as investment
adviser, sub-investment adviser and/or administrator to other investment
companies or series of investment companies, and the Company has no objection to
First Data's so acting. The Company further acknowledges that the persons
employed by First Data to assist in the performance of First Data' duties under
this Agreement may not devote their full time to such service and nothing
contained in this Agreement shall be deemed to limit or restrict the right of
First Data or any affiliate of First Data to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
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<PAGE>
10. Miscellaneous.
(a) Any notice or other instrument authorized or required by
this Agreement to be given in writing to the Company or First Data shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing
To the Company:
Nations LifeGoal Funds, Inc.
111 Center Street
Little Rock, Arkansas 72201
Attention: Secretary
To First Data:
First Data Investor Services Group, Inc.
One Exchange Place, 025-004B
Boston, MA 02109
Attention: ___________________
(b) This Agreement shall extend to and shall be binding upon
the parties hereto and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable without the written consent
of the other party.
(c) This Agreement shall be construed in accordance with
the laws of the State of Maryland.
(d) This Agreement may be executed in any number of
counterparts each of which shall be deemed to be an original and which
collectively shall be deemed to constitute only one instrument.
(e) The captions of this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(f) This Agreement and the Fee Letter Agreement constitute the
entire agreement between the parties hereto with respect to the matters
described herein.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed and delivered by their duly authorized officers as of the date,
first written above.
FIRST DATA INVESTOR SERVICES GROUP, INC.
By:______________________________________
Name:
Title: President
NATIONS LIFEGOAL FUNDS, INC.
By:______________________________________
Name: A. Max Walker
Title: President and Chairman of the Board
7
<PAGE>
ANNEX A
First Data shall perform the following compliance tests on a monthly
basis (based only on information received from the Company's investment adviser,
the accuracy of which will not be independently verified by First Data):
1. The following tests derived from Sub-Chapter M of the
Internal Revenue Code of 1986, as amended: :
(a) 90% gross income test;
(b) 30% short-three test; and
(c) asset diversification test.
2. The following tests derived from the Investment Company Act
of 1940, as amended:
(a) Asset diversification tests for both money market
funds and non-money market funds.
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SCHEDULE I
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
9
<PAGE>
EX99.B10
[Morrison & Foerster LLP Letterhead]
August 6, 1996
Nations LifeGoal Funds, Inc.
Re: Registration Statement on Form N-1A for Nations LifeGoal
Funds, Inc.
Gentlemen:
We refer to the Registration Statement on Form N-1A (the
"Registration Statement") of Nations LifeGoal Funds, Inc., a Maryland
corporation (the "Company"), relating to the registration of an indefinite
number of shares of common stock of three new portfolios proposed to be offered
by the Company, namely Nations Capital Accumulator Fund, Nations Conservative
Growth Fund and Nations Income and Managed Growth Fund (collectively, the
"Shares").
We have been requested by the Company to furnish this opinion as
Exhibit 10 to the Registration Statement.
We have examined documents relating to the organization of the
Company and the authorization and issuance of shares of the Funds. We have also
made such inquiries of the Company and examined such questions of law as we have
deemed necessary for the purpose of rendering the opinion set forth herein. We
have assumed the genuineness of all signatures and the authenticity of all items
submitted to us as originals and the conformity with originals of all items
submitted to us as copies.
Based upon and subject to the foregoing, we are of the opinion
that:
The issuance and sale of the Shares have been duly and validly
authorized by all appropriate corporate action, and assuming delivery of the
Shares by sale or in accord with the company's dividend reinvestment plan in
accordance with the Company's then-current Registration Statement under the
Securities Act of 1933, the Shares will be validly issued, fully paid and
nonassessable.
We consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
In addition, we consent to the use of our name and to the
reference to our firm under the heading "Counsel" in the Prospectus, which is
included as part of the Registration Statement.
Very truly yours,
/s/ Morrison & Foerster LLP
MORRISON & FOERSTER LLP
<PAGE>
EX99.B15(A)
NATIONS LIFEGOAL FUNDS, INC.
FORM OF SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
INVESTOR A SHARES
This Investor A Shareholder Servicing and Distribution Plan (the
"Plan") has been adopted by the Board of Directors of Nations LifeGoal Funds,
Inc. (the "Company") in conformance with Rule 12b-1 under the Investment Company
Act of 1940 (the "1940 Act").
Section 1. Payments for Services. Under the terms of this Plan,
the Company may act as a distributor of the Shares of which a Fund is the
issuer, pursuant to Rule 12b-1 under the 1940 Act. The Company may incur as a
distributor of the Investor A Shares ("Shares) of each Fund listed on Exhibit A
(the "Funds") expenses of up to twenty-five one-hundredths of one percent
(0.25%) per annum of the average daily net assets of the Company attributable to
the Shares of the Funds.
Section 2. Expenses Covered by the Plan. Amounts set forth in
Section 1 may be expended when and if authorized in advance by the Company's
Board of Directors. Such amounts may be used to finance any activity which is
primarily intended to result in the sale of the Shares, 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, supplemental payments to the
Company's distributor (the "Distributor") and the cost of administering this
Plan, as well as the shareholder servicing activities described below. All
amounts expended pursuant to this Plan shall be paid:
(i) 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 this Plan, or
(ii) to certain broker/dealers and other financial institutions
("Agents") who offer shares to their customers and who have entered into (A)
Shareholder Servicing Agreements substantially in the form of Exhibit C, and
(B) Sales Support Agreements substantially in the form of Exhibit B, for
providing the services contemplated thereunder.
The shareholder servicing activities for which compensation may be
received under this Plan may include, among other things: (i) aggregating and
processing purchase and redemption requests and transmitting promptly net
purchase and redemption orders to the Distributor or transfer agent; (ii)
providing customers with a service that invests the assets of their accounts in
Shares pursuant to specific or pre-authorized instructions; (iii) processing
dividend and distribution payments; (iv) providing information periodically to
customers showing their
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positions in Shares; (v) arranging for bank wires; (vi) responding to customers'
inquiries concerning their investment in Shares; (vii) providing subaccounting
with respect to Shares beneficially owned by customers or the information to the
Company necessary for subaccounting; (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 Shareholder Servicing Agreement; (x) general
shareholder liaison services; and (xi) providing such other similar services as
the Company may reasonably request to the extent such firms are permitted to do
so under applicable statutes, rules or regulations.
Section 3. Limitations on Payments. No additional payments are to
be made by the Company on behalf of the Funds with respect to the Shares under
this Plan, provided that the Funds shall not be precluded from making the
payments such Fund is otherwise obligated to make (i) to its investment adviser
or sub-investment adviser pursuant to an Investment Advisory Agreement or a
Sub-Advisory Agreement, (ii) to its custodian pursuant to a Custody Agreement,
(iii) to its transfer agent, pursuant to a Transfer Agency and Registrar
Agreement, (iv) to its administrator, pursuant to an Administration Agreement,
(v) to its co-administrator pursuant to a Co-Administration Agreement, (vi) to
Agents pursuant to Shareholder Servicing Agreements and (vii) for the expenses
otherwise incurred by a Fund and the Company on behalf of the Shares in the
normal conduct of such Fund's business pursuant to such Investment Advisory
Agreement, Sub-Advisory Agreement, Custody Agreement, Transfer Agency and
Registrar Agreement, Administration Agreement, Co-Administration Agreement and
the Shareholder Servicing Agreements. However, to the extent any payments by the
Company on behalf of a Fund to Agents; by its investment adviser, sub-investment
adviser, custodian, transfer agent, administrator, co-administrator, Agents or
any affiliate thereof, to any party, pursuant to any agreement; or, generally,
by the Company on behalf of a Fund to any party, are deemed to be payments for
the financing of any activity primarily intended to result in the sale of the
Shares within the context of Rule 12b-1 under the 1940 Act, then such payments
shall be deemed to be approved pursuant to this Plan as set forth herein.
Section 4. Reports of Distributor. The officers of the Company
shall report quarterly in writing to the Board of Directors on the amounts and
purpose of payments for any of the activities in Section 2 and shall furnish the
Board of Directors with such other information as the Board may reasonably
request in connection with such payments in order to enable the Board to make an
informed determination on the nature and value of such expenditures.
Section 5. Approval of Plan. This Plan shall continue in effect
for a period of more than one year from the date written below only so long as
such continuance is specifically approved at least annually by the Company's
Board of Directors, including the Directors who are not interested persons of
the Company and have no direct or indirect financial interest in the operation
of this Plan or in any Agreements related to this Plan ("Disinterested
Directors"), by vote cast in person at a meeting called for the purpose of
voting on this Plan.
Section 6. Termination. This Plan may be terminated at any time by
vote of a majority of the Disinterested Directors or with respect to a
particular Fund by vote of a majority
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of the outstanding voting securities of the Shares of such Fund, on not more
than sixty (60) days' written notice to any other party to the Plan.
Section 7. Amendments. This Plan may be amended at any time by the
Board of Directors provided that (a) any amendments to increase materially the
costs which a Fund's Investor A Shares may bear for distribution pursuant to
this Plan shall be effective only upon approval by a vote of a majority of the
outstanding Investor A Shares of such Fund, and (b) any material amendments of
the terms of this Plan shall become effective only upon approval as provided in
Section 6 hereof.
Section 8. Selection/Nomination of Directors. So long as this Plan
is in effect, the selection and nomination of the Company's Disinterested
Directors shall be committed to the discretion of such Disinterested Directors.
Section 9. Governing Law. This Plan shall be subject to the laws
of The State of Maryland and shall be interpreted and construed to further
promote the operation of the Company as an open-end management investment
company. As used herein the terms "open-end management investment company,"
"assignment," "principal underwriter," "interested person," and "majority of the
outstanding voting securities" shall have the meanings set forth in the
Securities Act of 1933, as amended or the 1940 Act, and the rules and
regulations thereunder.
Section 10. Scope of Liability. Nothing herein shall be deemed to
protect the parties to any Agreement entered into pursuant to this Plan against
any liability to the Company or its shareholders to which they would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of their duties hereunder, or by reason of their reckless
disregard of their obligations and duties hereunder.
Section 11. Records. The Company will preserve copies of this
Plan, Agreements and any written reports regarding this Plan presented to the
Board of Directors for a period of not less than six years.
Adopted on behalf of Nations LifeGoal on July ___, 1996.
3
<PAGE>
EXHIBIT A
NATIONS LIFEGOAL FUNDS, INC.
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
4
EX99.B15(B)
NATIONS LIFEGOAL FUNDS, INC.
FORM OF
SHAREHOLDER SERVICING PLAN ("PLAN")
INVESTOR C SHARES
Section 1. Each of the proper officers of Nations LifeGoal Funds,
Inc. (the "Company") is authorized to execute and deliver, in the name and on
behalf of the Company, written agreements based substantially on the form
attached hereto as Appendix A or any other form that is (a) duly approved by the
Company's Board of Directors or (b) approved and entered into by the Officers of
the Company with advice of counsel, and ratified by the Company's Board of
Directors ("Agreements") with broker/dealers, banks and other financial
institutions that are dealers of record or holders of record or which have a
servicing relationship ("Servicing Agents") with the beneficial owners of
Investor C Shares ("Shares") of the Funds of the Company, as listed on Schedule
1 hereto (the "Funds"), provided that any material modifications of services
listed in the Agreement shall be presented for approval or ratification by the
Directors at the next regularly scheduled Board Meeting. Pursuant to such
Agreements, Servicing Agents shall provide shareholder support services as set
forth therein to their clients who beneficially own Shares of the Funds in
consideration of a fee, computed monthly in the manner set forth in the
applicable Fund's then current prospectus, at an annual rate of up to 0.25% of
the average daily net asset value of the Shares beneficially owned by or
attributable to such clients. Affiliates of the Company's distributor,
administrator, co-administrator and adviser are eligible to become Servicing
Agents and to receive fees under this Plan. All expenses incurred by a Fund in
connection with the Agreements and the implementation of this Plan shall be
borne entirely by the holders of the Shares of the particular Fund involved. If
more than one Fund is involved and these expenses are not directly attributable
to Shares of a particular Fund, then the expenses may be allocated between or
among the Shares of the Funds in a fair and equitable manner.
Section 2. The Company's administrator and/or co-administrator
shall monitor the arrangements pertaining to the Company's Agreements with
Servicing Agents. The Company's administrator and co-administrator shall not,
however, be obligated by this Plan to recommend, and the Company shall not be
obligated to execute, any Agreement with any qualifying Servicing Agents.
Section 3. So long as this Plan is in effect, the Company's
distributor shall provide to the Company's Board of Directors, and the Directors
shall review, at least quarterly, a written report of the amounts expended
pursuant to this Plan and the purposes for which such expenditures were made.
Section 4. This Plan may be amended at any time with respect to
any Fund by the Company's Board of Directors, provided that any material
amendment of the terms of this Plan (including a material increase of the fee
payable hereunder) shall become effective only upon the approvals set forth in
Section 4.
1
<PAGE>
Section 5. This Plan is terminable at any time with respect to any
Fund by vote of a majority of the Disinterested Directors.
Section 6. While this Plan is in effect, the selection and
nomination of the Disinterested Directors shall be committed to the discretion
of such Disinterested Directors.
Section 7. The Company will preserve copies of this Plan,
Agreements, and any written reports regarding this Plan presented to the Board
of Directors for a period of not less than six years.
Adopted on behalf of Nations LifeGoal on July ___, 1996.
2
<PAGE>
SCHEDULE 1
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
<PAGE> 3
<PAGE>
<PAGE>
EX99.B15(C)
NATIONS LIFEGOAL FUNDS, INC.
FORM OF DISTRIBUTION PLAN
INVESTOR C SHARES
This Portfolios Distribution Plan (this "Plan") has been adopted by the
Board of Directors of Nations LifeGoal Funds, Inc. (the "Company") in
conformance with Rule 12b-1 under the Investment Company Act of 1940 (the "1940
Act").
Section 1. Payments for Distribution-Related Services. The Company may pay
its Distributor for certain expenses that are incurred in connection with the
support and distribution of Investor C Shares ("Shares") of the Company's funds,
as listed in Exhibit A (collectively, the "Funds"). Payments by the Company
under the Plan will be calculated daily and paid monthly at a rate or rates set
from time to time by the Company's Board of Directors, provided that no rate set
by the Board for any Fund may exceed the annual rate of 0.50% of the average
daily net asset value of Shares of the Funds. For purposes of determining the
payments payable under this Plan, the net asset value of the outstanding Shares
of the respective Funds shall be computed in the manner specified in the
Company's then current prospectuses and statement of additional information as
amended or supplemented from time to time for such Shares.
Section 2. Expenses Covered by Plan. Payments to the Distributor under
Section 1 of this Plan will be used by the Distributor (i) to compensate banks,
broker/dealers or other financial institutions that have entered into Sales
Support Agreements with the Distributor ("Selling Agents") for providing
distribution assistance relating to Shares, (ii) for promotional activities
intended to result in the sale of Shares such as by paying for the preparation,
printing and distribution of prospectuses for other than current Shareholders,
and (iii) to compensate Selling Agents for providing distribution services with
regard to their Customers who are, from time to time, beneficial, and record
owners of Shares.
Section 3. Distribution and Sales Support Agreements. Any officer of the
Company is authorized to execute and deliver, in the name and on behalf of the
Company, a written agreement with the Distributor in a form duly approved from
time to time by the Company's Board of Directors. Such agreement shall authorize
the Distributor to enter into written Sales Support Agreements, in substantially
the form attached hereto as Exhibit B ("Agreements"), with Selling Agents.
As used herein, promotional activities include, but are not limited to,
advertising via radio, television, newspapers, magazines and otherwise;
preparing, printing and mailing sales materials, brochures and prospectuses
(except for prospectuses used for regulatory purposes or for distribution to
existing shareholders).
1
<PAGE>
Section 4. Limitations on Payments. Payment made by a particular Fund
under Section 1 must be for distribution or sales support services rendered for
or on behalf of such Fund. However, joint distribution or sales support
financing with respect to the Funds (which financing may also involve other
investment portfolios or companies that are affiliated persons of such a person,
or affiliated persons of the Distributor) shall be permitted in accordance with
applicable regulations of the Securities and Exchange Commission ("SEC") as in
effect from time to time.
Upon proper authorization by the Company's Directors in accordance with
Rule 12b-1 under the Act, expenses covered by this Plan may also include other
expenses the Distributor (or any other person) may incur in connection with the
distribution of the Company's Shares including, without limitation, expenditures
for telephone facilities and in-house telemarketing, or in connection with
shareholder servicing. Distribution service fees will not be used to pay any
interest expenses, carrying charges or other financing costs (except to the
extent permitted by the SEC). Distribution service fees will not be used to pay
any general or administrative expenses of the Distributor.
Except for the payments specified in Section 1, no additional payments are
to be made by the Company under this Plan, provided that nothing herein shall be
deemed to preclude the payments such Funds are otherwise obligated to make to
(i) their investment adviser or sub-investment adviser, pursuant to an
Investment Advisory Agreement or Sub-Advisory Agreement (ii) their custodian,
pursuant to a Custody Agreement, (iii) their transfer agent, pursuant to a
Transfer Agency and Registrar Agreement, (iv) their administrator, pursuant to
an Administration Agreement, (v) their co-administrator, pursuant to a
Co-Administration Agreement, (vi) Servicing Agents, pursuant to Shareholder
Servicing Agreements and (vii) for the expenses otherwise incurred by a Fund and
the Company on behalf of the Shares in the normal conduct of such Fund's
business pursuant to such Investment Advisory Agreement, Sub-Advisory Agreement,
Custody Agreement, Transfer Agency and Registrar Agreement, Administration
Agreement, Co-Administration Agreement and Shareholder Servicing Agreements. To
the extent any such payments by the Company on behalf of a Fund to its
investment adviser, sub-investment adviser, custodian, transfer agent,
administrator or co-administrator or Servicing Agents; by or its investment
adviser, sub-investment adviser, custodian, transfer agent, administrator or
co-administrator or Servicing Agents, or any affiliate thereof, to any party
pursuant to any agreement; or, generally, by the Company on behalf of a Fund to
any party, are deemed to be payments for the financing of any activity primarily
intended to result in the sale of the Shares within the context of Rule 12b-1
under the 1940 Act, then such payments shall be deemed to have been approved
pursuant to this Plan without regard to Section 1.
With respect to Shares, actual distribution expenses incurred by the
Distributor (or sales support expenses incurred by the Selling Agents) in a
given year may exceed the sum of the fees received by the Distributor pursuant
to this Plan and payments received by the Distributor pursuant to contingent
deferred sales charges. Any such excess may be recovered by the Distributor, and
retained by it or paid over to the Selling Agents, as applicable, in future
years as long as this Plan is in effect. If this Plan is terminated or not
continued, the Company shall not be obligated to pay the Distributor (or Selling
Agents) for any expenses not previously reimbursed by the Company or recovered
through contingent deferred sales charges.
2
<PAGE>
Notwithstanding anything herein to the contrary, no Fund shall be
obligated to make any payments under this Plan that exceed the maximum amounts
payable under Article III, Section 26 of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc.
Section 5. Reports of Distributor. So long as this Plan is in effect, the
Distributor shall provide to the Company's Officers and Board of Directors, and
the Directors shall review, at least quarterly, a written report of the amounts
expended by it pursuant to the Distribution Agreement, or by Selling Agents
pursuant to Sales Support Agreements, and the purposes for which such
expenditures were made.
Section 6. Approval of Plan. The Plan will become effective immediately,
as to any Fund's Shares, upon its approval by (a) a majority of the outstanding
Shares of such Fund, and (b) a majority of 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 this Plan or in any agreements entered into in connection
with this Plan, pursuant to a vote cast in person at a meeting called for the
purpose of voting on the approval of this Plan.
Section 7. Continuance of Plan. The Plan shall continue in effect for so
long as its continuance is specifically approved at least annually by the
Company's Board of Directors in the manner described in Section 6.
Section 8. Amendments. The Plan may be amended at any time by the Board of
Directors provided that (a) any amendment to increase materially the costs which
a Fund's Shares may bear for distribution pursuant to this Plan shall be
effective only upon approval by a vote of a majority of the outstanding Shares
of such Fund, and (b) any material amendments of the terms of this Plan shall
become effective only upon approval as provided in Section 6 hereof.
Section 9. Termination. The Plan is terminable, as to a Fund's Shares,
without penalty at any time by (a) a vote of 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 this Plan or
in any agreements entered into in connection with this Plan, or (b) a vote of a
majority of the outstanding Shares of such Fund.
Section 10. Selection/Nomination of Directors. While this Plan is in
effect, the selection and nomination of those Directors who are not "interested
persons" (as defined in the 1940 Act) of the Company shall be committed to the
discretion of such non-interested Directors.
Section 11. Records. The Company will preserve copies of this Plan,
Agreements, and any written reports regarding this Plan presented to the Board
of Directors for a period of not less than six years.
3
<PAGE>
Section 12. Miscellaneous. The captions in this Plan are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
4
<PAGE>
EXHIBIT A
NATIONS LIFEGOAL FUNDS, INC.
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
5
<PAGE>
EX99.B15(d)
NATIONS LIFEGOAL FUNDS, INC.
FORM OF SHAREHOLDER ADMINISTRATION
PLAN ("PLAN") FOR PRIMARY B SHARES
Section 1. Each of the proper officers of Nations LifeGoal Funds, Inc.
(the "Company") is authorized to execute and deliver, in the name and on behalf
of the Company, written agreements based substantially on the form attached
hereto as Appendix A or any other form that is (a) duly approved by the
Company's Board of Directors or (b) approved and entered into by the officers of
the Company with advice of Counsel, and ratified by the Company's Board of
Directors ("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") in certain of the Company's Funds (as listed on Exhibit I)
offering such shares provided that any material modifications of services listed
in the Agreement shall be presented for approval or ratification by the
Directors at the next regularly scheduled Board Meeting. Pursuant to such
Agreements, Servicing Agents shall provide shareholder support services as set
forth therein to their clients who beneficially own Primary B Shares of the
Funds in consideration of a fee, computed monthly in the manner set forth in the
applicable Fund's then current prospectus, at an annual rate of up to 0.60% of
the average daily net asset value of the Primary B Shares beneficially owned by
or attributable to such clients, provided that in no event may the portion of
such fee that constitutes a "service fee," as that term is defined in Article
III, Section 26(b)(9) of the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., exceed 0.60% of the average daily net asset value
of such Primary B Shares of a Fund. Affiliates of the Company's distributor,
administrator, co-administrator and adviser are eligible to become Servicing
Agents and to receive fees under this Plan. All expenses incurred by a Fund in
connection with the Agreements and the implementation of this Plan shall be
borne entirely by the holders of the Primary B Shares of the particular Fund
involved. If more than one Fund is involved and these expenses are not directly
attributable to Primary B Shares of a particular Fund, then the expenses may be
allocated between or among the Primary B Shares of the Funds in a fair and
equitable manner.
Section 2. The Company's administrator and/or co-administrator shall
monitor the arrangements pertaining to the Company's Agreements with Servicing
Agents. The Company's administrator and co-administrator shall not, however, be
obligated by this Plan to recommend, and the Company shall not be obligated to
execute, any Agreement with any qualifying Servicing Agents.
Section 3. So long as this Plan is in effect, the Company's distributor
shall provide to the Company's Board of Directors, and the Directors shall
review, at least quarterly, a written report of the amounts expended pursuant to
this Plan and the purposes for which such expenditures were made.
<PAGE>
Section 4. This Plan may be amended at any time with respect to any Fund
by the Company's Board of Directors, provided that any material amendment of the
terms of this Plan (including a material increase of the fee payable hereunder)
shall become effective only upon the approvals set forth in Section 4.
Section 5. This Plan is terminable at any time with respect to any Fund
by vote of a majority of the Disinterested Directors.
Section 6. While this Plan is in effect, the selection and nomination of
the Disinterested Directors shall be committed to the discretion of such
Disinterested Directors.
Section 7. To the extent that any portion of the fees payable under the
Agreements is deemed to be for services primarily intended to result in the sale
of Fund shares, such fees are deemed approved and may be paid pursuant to the
Plan and in accordance with Rule 12b-1 under the Act, provided that the
Agreements, to the extent they are deemed to relate to services primarily
intended to result in the sale of Fund shares, are approved and otherwise
treated in all respects as agreements related to the Plan.
Section 8. The Company will preserve copies of this Plan, Agreements,
and any written reports regarding this Plan presented to the Board of Directors
for a period of not less than six years.
Adopted on behalf of Nations LifeGoal on July ___, 1996.
2
EXHIBIT I
NATIONS LIFEGOAL FUNDS, INC.
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
3
APPENDIX A
FORM OF SHAREHOLDER ADMINISTRATION AGREEMENT
NATION LIFEGOAL FUNDS, INC.
PRIMARY B SHARES
Ladies and Gentlemen:
We wish to enter into this Shareholder Administration Agreement
("Agreement") with you concerning the provision of administrative support
services to your clients ("Customers") who may from time to time beneficially
own Primary B Shares in one or more of the portfolios (collectively, the
"Funds") listed on Schedule I, as such Schedule may be amended from time to
time, of Nations LifeGoal Funds, Inc. (the "Company"), an open-end management
investment company in the Nations Fund Family of Funds ("Nations Fund"). The
Primary B Shares of the Funds listed on Schedule I are collectively referred to
herein as "Shares." The terms and conditions of this Agreement are as follows:
1. Provision of Shareholder Services.
(a) You agree to provide the following administrative support
services to your Customers who may from time to time beneficially own Shares:
(i) aggregating and processing purchase and redemption requests for Shares from
Customers and transmitting promptly net purchase and redemption orders to our
distributor or transfer agent; (ii) providing Customers with a service that
invests the assets of their accounts in Shares pursuant to specific or
pre-authorized instructions; (iii) processing dividend and distribution payments
from Nations Fund on behalf of Customers; (iv) providing information
periodically to Customers showing their positions in Shares; (v) arranging for
bank wires; (vi) responding to Customers' inquiries concerning their investment
in Shares; (vii) providing sub-accounting with respect to Shares beneficially
owned by Customers or the information to us necessary for sub-accounting; (viii)
if required by law, forwarding shareholder communications from us (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 this
Agreement; (x) employee benefit plan recordkeeping, administration, custody and
trustee services; (xi) general shareholder liaison services; and (xii) providing
such other similar services as we may reasonably request to the extent you are
permitted to do so under applicable statutes, rules or regulations.
(b) All services rendered hereunder by you shall be
performed in a professional, competent and timely manner.
____________________________
1 Services may be modified or omitted in the particular case and items
relettered or renumbered.
4
<PAGE>
(c) You will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space, equipment and
facilities currently used in your business, or any personnel employed by you) as
may be reasonably necessary or beneficial in order to provide the administrative
support services contemplated hereby. You and your employees will, upon request,
be available during normal business hours to consult with us or our designees
concerning the performance of your responsibilities under this Agreement.
(d) By your written acceptance of this Agreement, you represent,
warrant and agree that in no event will any of the services provided by you
hereunder be primarily intended to result in the sale of any shares issued by
us.
2. Adherence to Applicable Law.
You will perform only those activities which are consistent with
statutes and regulations applicable to you. You will act solely as agent or,
upon the order of, and for the account of, your Customers.
3. Representations Regarding Nations Fund and Shares.
Neither you nor any of your officers, employees or agents are authorized
to make any representations concerning us or the Shares except those contained
in our then current prospectuses and statements of additional information, as
amended or supplemented from time to time, copies of which will be supplied by
us to you, or in such supplemental literature or advertising as may be
authorized by our distributor or us in writing.
4. Status of Servicing Agent.
(a) For all purposes of this Agreement you will be deemed to be
an independent contractor, and will have no authority to act as agent for us in
any matter or in any respect, except as expressly provided herein.
(b) We may, in our discretion and without notice, suspend or
withdraw the sale of Shares of any and all Funds, including the sale of Shares
to you for the account of any Customer or Customers.
5. Indemnification.
By your written acceptance of this Agreement, you agree to and do
release, indemnify and hold us harmless from and against any and all direct or
indirect liabilities or losses resulting from requests, directions, actions or
inactions of or by you or your officers, employees or agents regarding your
responsibilities hereunder or the purchase, redemption, transfer or registration
of Shares (or orders relating to the same) by or on behalf of Customers.
6. Compensation.
5
<PAGE>
(a) In consideration of the services and facilities provided by
you hereunder, we will pay to you, and you will accept as full payment therefor,
a fee as described in the applicable then current prospectuses for the Shares.
The fee rate payable to you may be prospectively increased or decreased by us,
in our sole discretion, at any time upon notice to you.
(b) Compensation payable under this Agreement is subject to,
among other things, the National Association of Securities Dealers, Inc.
("NASD") Rules of Fair Practice governing receipt by NASD members of service
fees from registered investment companies. In this regard, in no event may the
portion of any fee payable hereunder that constitutes a "service fee," as that
term is defined in Article III, Section 26(b)(9) of the NASD's Rules of Fair
Practice, exceed 0.25% of the average daily net asset value of the Shares of a
Fund.
7. Reports.
You agree to provide to us at least quarterly, a written report of the
amounts expended by you in connection with the provision of administrative
support services hereunder and the purposes for which such expenditures were
made. In addition, you will furnish us or our designees with such information as
we or they may reasonably request (including, without limitation, periodic
certifications confirming the provision to Customers of the services described
herein), and will otherwise cooperate with us and our designees (including,
without limitation, any auditors or legal counsel designated by us), in
connection with the preparation of reports to our Board of Directors concerning
this Agreement and the monies paid or payable by us pursuant hereto, as well as
any other reports or filings that may be required by law.
8. Agreement Not Exclusive.
We may enter into other similar Agreements with any other person or
persons without your consent.
9. Disclosure of Compensation.
You agree that the compensation payable to you hereunder, together with
any other compensation you receive in connection with the investment of your
Customers' assets in Shares of the Funds, will be disclosed by you to your
Customers to the extent required by applicable laws or regulations, will be
authorized by your Customers and will not result in an excessive or unreasonable
fee to you.
10. Voting of Shares.
You agree that in the event an issue pertaining to this Agreement is
submitted for shareholder approval, and you have the authority from your
Customers to do so, you will vote any Shares held for your own account in the
same proportion as the vote of the Shares held for your Customers' benefit.
6
<PAGE>
11. Compliance Standards.
You agree to conform to compliance standards adopted by Nations Fund or
its distributor as to when a class of shares in a Fund may be appropriately sold
to particular investors.
12. Effective Date and Termination.
(a) This Agreement will become effective on the date a fully
executed copy of this Agreement is received by us or our designee and continues
in effect until terminated.
(b) This Agreement is terminable with respect to any series of
Shares, without penalty, at any time by us (which termination may be by a vote
of a majority of the disinterested Directors of the Company) or by you upon
written notice to the other party hereto.
13. Communications.
All notices and other communications to either you or us will be duly
given if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address or number stated herein
(with a confirming copy by mail), or to such other address as either party shall
so provide in writing to the other.
14. Governing Law.
This Agreement will be construed in accordance with the internal laws of
the State of Maryland without giving effect to principles of conflict of laws,
and is nonassignable by the parties hereto.
If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to us, at the following address: 111 Center Street, Little Rock, AR; Fax No.
(501) 377-2331; Attention: Mr. Richard H. Blank, Jr.
Very truly yours,
NATIONS LIFEGOAL FUNDS, INC.
Date: ____________________ By: ____________________
Name: __________________
Title: _________________
7
<PAGE>
SCHEDULE I
Nations Capital Accumulator Fund
Nations Conservative Growth Fund
Nations Income and Managed Growth Fund
8
EX99.B18
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. _________ and _________). 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: Nations Capital Accumulator Fund, Nations Conservative Growth Fund
and Nations Income and Managed Growth Fund (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;
1
<PAGE>
(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 Article III, Section 26(b)(9) of
the Rules of Fair Practice 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
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Nations Short-Term Municipal Income Fund
until one year after purchase.
(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 10, 1996
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