As filed with the Securities and Exchange Commission
on July 31, 1998
Registration No. 333-09703; 811-07745
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Post-Effective Amendment No. 4 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 5 [X]
(Check appropriate box or boxes)
-----------------------
NATIONS LIFEGOAL FUNDS, INC.
(Exact Name of Registrant as specified in Charter)
One NationsBank Plaza
33rd Floor
Charlotte, North Carolina 28255
(Address of Principal Executive Offices, including Zip Code)
--------------------------
Registrant's Telephone Number, including Area Code: (800) 626-2275
c/o The Corporation Trust Company
32 South Street
Baltimore, Maryland 21202
(Name and Address of Agent for Service)
With copies to:
Robert M. Kurucza, Esq. Carl Frischling, Esq.
Marco E. Adelfio, Esq. Kramer, Levin, Naftalis & Frankel
Morrison & Foerster LLP 919 3rd Avenue
2000 Pennsylvania Ave., N.W. New York, New York 10022
Suite 5500
Washington, D.C. 20006
It is proposed that this filing will become effective (check appropriate box):
[X] Immediately upon filing pursuant [ ] on (date) pursuant
to Rule 485(b), or to Rule 485(b), or
[ ] 60 days after filing pursuant [ ] on (date) pursuant
to Rule 485(a), or to Rule 485(a).
[ ] 75 days after filing pursuant to [ ] on (date) pursuant to
paragraph (a)(2) paragraph (a)(2) of rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
EXPLANATORY NOTE
This Post-Effective Amendment No. 4 to the Registration Statement
of Nations LifeGoal Funds, Inc. (the "Company") is being filed in order
to update financial information and to make other non-material changes.
<PAGE>
NATIONS LIFEGOAL FUNDS, INC.
CROSS REFERENCE SHEET
N-1A ITEM NO. LOCATION
PART A PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary
Item 3. Condensed Financial Not Applicable
Information
Item 4. General Description of Objectives; How Objectives Are Pursued;
Registrant 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, Investor B and
Investor C Shares); Shareholder
Administration Arrangements (for
Primary B Shares)
Item 6. Capital Stock and Other How Dividends and Distributions Are
Securities 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 Introduction
History
Item 13. Investment Objectives Additional Information on the LifeGoal
and Policies Fund Investments; Additional
Information on Underlying Nations
Funds Investments
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 Miscellaneous
Principal Holders of
Securities
Item 16. Investment Advisory and Investment Advisory, Administration,
Other Services Custody, Transfer Agency, Shareholder
Servicing, Shareholder Administration and
Distribution Agreements; Counsel
Item 17. Brokerage Allocation and Not Applicable
Other Practices
Item 18. Capital Stock and Other Description of Shares
Securities
Item 19. Purchase, Redemption and Purchases and Redemptions, Net Asset
Pricing of Securities Being Value Determination
Offered
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 Additional Information on Performance
Data
Item 23. Financial Statements Independent Accountant and Reports
PART C PART C
Part C Information required to be included in
Part C is set forth under the appropriate
Item, so numbered, in Part C of this
Document
<PAGE>
Prospectus
Primary A Shares
August 1, 1998
LIFEGOAL PORTFOLIOS
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
(NATIONS FUNDS logo)
Investment Adviser: NationsBanc Advisors, Inc.
Investment Sub-Adviser: TradeStreet Investment Associates, Inc.
Distributor: Stephens Inc.
TR-96700-8/98
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Prospectus
Primary A Shares
August 1, 1998
This Prospectus describes three diversified investment portfolios, LIFEGOAL
GROWTH PORTFOLIO, LIFEGOAL BALANCED GROWTH PORTFOLIO, and LIFEGOAL INCOME AND LIFEGOAL PORTFOLIOS:
GROWTH PORTFOLIO (each a "LifeGoal Portfolio" and, collectively, the "LifeGoal LifeGoal Growth Portfolio
Portfolios"), of Nations LifeGoal Funds, Inc. (the "Company"), an open-end LifeGoal Balanced Growth Portfolio
management investment company in the Nations Funds Family. The LifeGoal LifeGoal Income and Growth Portfolio
Portfolios invest substantially all of their assets in certain other funds
within the Nations Funds Family. These underlying funds are referred to in this
Prospectus as "Nations Funds." This Prospectus describes one class of shares of
each LifeGoal Portfolio -- Primary A Shares.
This Prospectus sets forth concisely the information about each LifeGoal
Portfolio that a prospective purchaser of Primary A Shares should consider
before investing. Investors should read this Prospectus and retain it for
future reference. Additional information about the LifeGoal Portfolios is
contained in a separate Statement of Additional Information (the "SAI") that
has been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request without charge by writing or calling the Nations Funds
Family at its address or telephone number shown below. The SAI for the LifeGoal
Portfolios, dated August 1, 1998, is incorporated by reference in its entirety
into this Prospectus. The SEC maintains a Web site (http://www.sec.gov) that
contains the SAI, material incorporated by reference in this Prospectus and
other information regarding registrants that file electronically with the SEC.
NationsBanc Advisors, Inc. ("NBAI") is the investment adviser to each of the
LifeGoal Portfolios. TradeStreet Investment Associates, Inc. ("TradeStreet") is
the investment sub-adviser to the LifeGoal Portfolios. As used in this
Prospectus, the term "Adviser" refers to NBAI, TradeStreet, Gartmore Global
Partners, Brandes Investment Partners, L.P. and/or Marsico Capital Management,
LLC as the context may require, see "How The LifeGoal Portfolios Are Managed."
SHARES OF THE NATIONS FUNDS 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 For Portfolio information call:
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER 1-800-765-2668
GOVERNMENT AGENCY. AN INVESTMENT IN THE LIFEGOAL PORTFOLIOS INVOLVES CERTAIN
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
Nations Funds Family
NATIONSBANK AND CERTAIN OF ITS AFFILIATES PROVIDE SERVICES TO THE NATIONS FUNDS c/o Stephens Inc.
FAMILY, FOR WHICH THEY ARE COMPENSATED. STEPHENS INC., WHICH IS NOT AFFILIATED One NationsBank Plaza
WITH NATIONSBANK, IS THE SPONSOR AND ADMINISTRATOR AND SERVES AS THE 33rd Floor
DISTRIBUTOR FOR THE LIFEGOAL PORTFOLIOS. Charlotte, NC 28255
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND (NATIONS FUNDS logo)
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.
</TABLE>
TR-96700-8/98
<PAGE>
Table Of Contents
About The LifeGoal Portfolios
Prospectus Summary 3
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Expenses Summary 4
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Objectives 5
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How Objectives Are Pursued 6
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Description Of Underlying Nations Funds
-- Investment Objectives, Policies And Practices 8
-----------------------------------------------------
How Performance Is Shown 13
-----------------------------------------------------
How The LifeGoal Portfolios Are Managed 15
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Organization And History 17
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About Your Investment
How To Buy Shares 18
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How To Redeem Shares 19
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How To Exchange Shares 19
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How The LifeGoal Portfolios Value Their Shares 20
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How Dividends And Distributions Are Made;
Tax Information 20
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Financial Highlights 21
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS, OR IN THE LIFEGOAL PORTFOLIOS' SAI
INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE LIFEGOAL
PORTFOLIOS OR THE DISTRIBUTOR. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY LIFEGOAL PORTFOLIOS OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
2
<PAGE>
About The LifeGoal Portfolios
Prospectus Summary
o TYPE OF COMPANY: Open-end management investment company.
o INVESTMENT OBJECTIVES AND POLICIES:
o LifeGoal Growth Portfolio's investment objective is to seek capital
appreciation through exposure to a variety of equity market segments.
o LifeGoal Balanced Growth Portfolio's investment objective is to seek total
return through a balanced portfolio of equity and fixed income securities.
o LifeGoal Income and Growth Portfolio's investment objective is to seek
current income and modest growth to protect against inflation and to
preserve purchasing power.
The LifeGoal Portfolios are designed for long-term investors seeking the
benefits of asset allocation and diversification. Unlike traditional mutual
funds, which invest directly in individual securities, the LifeGoal Portfolios
pursue their investment objectives by allocating their assets among various
Nations Funds.
o INVESTMENT ADVISER: NationsBanc Advisors, Inc. serves as the investment
adviser to the LifeGoal Portfolios. NBAI provides investment management
services to more than 60 investment company portfolios in the Nations Funds
Family. TradeStreet Investment Associates, Inc., an affiliate of NBAI,
provides investment sub-advisory services to the LifeGoal Portfolios. For
more information about the investment adviser and investment sub-adviser to
the LifeGoal Portfolios, see "How The LifeGoal Portfolios Are Managed."
o DIVIDENDS AND DISTRIBUTIONS: Each LifeGoal Portfolio declares and pays
dividends from net investment income quarterly. Each LifeGoal Portfolio's
net realized capital gains, including net short-term capital gains, are
distributed at least annually.
o RISK FACTORS: Although NBAI, together with TradeStreet, seek to achieve the
investment objective of each LifeGoal Portfolio, there is no assurance that
they will be able to do so. Investments in a LifeGoal Portfolio are not
insured against loss of principal. Investments by a LifeGoal Portfolio in
shares of a Nations Fund that holds stocks are subject to stock market risk,
which is the risk that the value of the stocks held by Nations Funds may
decline over short or even extended periods. In addition, certain of the
Nations Funds may invest in securities of smaller and newer issuers.
Investments in such companies may present greater opportunities for capital
appreciation because of high potential earnings growth, but also present
greater risks than investments in more established companies with longer
operating histories and greater financial capacity. Investments by a
LifeGoal Portfolio in shares of a Nations Fund that holds debt securities
are subject to interest rate risk, which is the risk that the value of the
debt securities, including U.S. Government Obligations (as defined below)
held by Nations Funds may be adversely affected by changes in market
interest rates. The value of Nations Funds' investments in debt securities
will tend to decrease when interest rates rise and increase when interest
rates fall. In addition, debt securities which are not issued or guaranteed
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 may constitute derivative securities. Certain types of
derivative securities can, under particular circumstances, significantly
increase an investor's exposure to market and other risks. For a discussion
of these and other factors, see "How Objectives Are Pursued -- General
Characteristics and Risk Factors of the Major Asset Classes" and
"Description of Underlying Nations Funds -- Principal Risk Considerations."
o MINIMUM PURCHASE: $250,000 minimum initial investment per record holder. See
"How To Buy Shares."
3
<PAGE>
Expenses Summary
Expenses are one of several factors to consider when investing in a LifeGoal
Portfolio. The following tables summarize estimated shareholder transaction and
operating expenses as a percentage of average net assets for Primary A Shares
of each LifeGoal Portfolio. The Examples show the cumulative expenses
attributable to a hypothetical $1,000 investment in each LifeGoal Portfolio
over specified periods.
LIFEGOAL PORTFOLIOS PRIMARY A SHARES
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
LifeGoal LifeGoal
LifeGoal Balanced Income and
Growth Growth Growth
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
Sales Load Imposed on Purchases None None None
- --------------------------------------------------------------------------------
Deferred Sales Load None None None
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management Fees .25% .25% .25%
- --------------------------------------------------------------------------------
Other Expenses .00% .00% .00%
- --------------------------------------------------------------------------------
Total Operating Expenses .25% .25% .25%
</TABLE>
Examples: You would pay the following expenses on a $1,000 investment in
Primary A Shares of the indicated LifeGoal Portfolio, assuming indirect
expenses (the LifeGoal Portfolios' share of the expenses incurred by the
underlying Nations Funds) at the midpoint of the after waiver ranges shown
below, and further assuming: (1) a 5% annual return and (2) redemption at the
end of each time period.
<TABLE>
<CAPTION>
LifeGoal LifeGoal
LifeGoal Balanced Income and
Growth Growth Growth
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
1 Year $ 12 $ 11 $ 10
- -----------------------------------------------
3 Years $ 36 $ 34 $ 30
- -----------------------------------------------
5 years $ 63 $ 58 $ 52
- -----------------------------------------------
10 years $139 $129 $115
</TABLE>
The purpose of the foregoing tables is to assist an investor in understanding
the various shareholder transaction and operating expenses that an investor in
Primary A Shares of a LifeGoal Portfolio can expect. The figures in the above
tables show the basis on which payments will be made, except that Other
Expenses are estimated for the LifeGoal Portfolios' current fiscal year and the
Examples include indirect expenses for the underlying Nations Funds' most
recent fiscal year (or estimates thereof for new funds). For more complete
descriptions of the LifeGoal Portfolios' operating expenses, see "How The
LifeGoal Portfolios Are Managed."
THE FOREGOING SHOULD NOT BE CONSIDERED TO BE AN ACTUAL REPRESENTATION OF PAST
OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES AND RATES OF RETURN MAY BE
GREATER OR LESS THAN THOSE SHOWN.
4
<PAGE>
LifeGoal Portfolios' Indirect Expenses
Based on 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, 1998 and the expected percentage investment ranges in the underlying
Nations Funds, the range of the weighted average indirect expense ratio for
each LifeGoal Portfolio is as follows:
<TABLE>
<CAPTION>
(after fee waivers (before fee waivers
and/or expense and/or expense
reimbursements) reimbursements)
<S> <C> <C>
LifeGoal Growth Portfolio .56% to 1.22% .88% to 1.37%
- --------------------------------------------------------------------------------
LifeGoal Balanced Growth Portfolio .61% to 1.00% .87% to 1.15%
- --------------------------------------------------------------------------------
LifeGoal Income and Growth Portfolio .49% to .89% .74% to 1.10%
</TABLE>
The indirect expense ratios fluctuate within these ranges depending upon how
assets are allocated among the Nations Funds. The LifeGoal Portfolios will be
invested in the Primary A Shares of the underlying Nations Funds and, under
normal market conditions, will be allocated among the various fund categories
in the percentages shown below. Under extraordinary circumstances, a LifeGoal
Portfolio's investment in one or more Nations Funds might exceed these ranges.
For temporary defensive purposes, any LifeGoal Portfolio may invest up to 100%
of its assets in Nations Prime Fund, a money market fund.
Objectives
o LIFEGOAL GROWTH PORTFOLIO--LifeGoal Growth Portfolio's investment objective
is to seek capital appreciation through exposure to a variety of equity
market segments.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
- --------------------------------------------------------------------------------
<S> <C> <C>
Large-Capitalization Domestic Equity Funds 40-75% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marsico Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
- -----------------------------------------------------------------------------------------------
Small/Mid-Capitalization Domestic Equity Funds 15-35% Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Nations Small Company Growth Fund
- -----------------------------------------------------------------------------------------------
Core International Equity Funds 10-20% Nations International Equity Fund
Nations International Value Fund
- -----------------------------------------------------------------------------------------------
Non-Core International Equity Funds 0-10% Nations Emerging Markets Fund
Nations Pacific Growth Fund
</TABLE>
o LIFEGOAL BALANCED GROWTH PORTFOLIO -- LifeGoal Balanced Growth Portfolio's
investment objective is to seek total return through a balanced portfolio of
equity and fixed income securities.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
- --------------------------------------------------------------------------------
<S> <C> <C>
Large-Capitalization Domestic Equity Funds 20-40% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marsico Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
- -----------------------------------------------------------------------------------------------
Small/Mid-Capitalization Domestic Equity Funds 10-20% Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Nations Small Company Growth Fund
- -----------------------------------------------------------------------------------------------
Core International Equity Funds 5-15% Nations International Equity Fund
Nations International Value Fund
- -----------------------------------------------------------------------------------------------
Core Bond Funds 40-60% Nations Diversified Income Fund
Nations Strategic Fixed Income Fund
</TABLE>
5
<PAGE>
o LIFEGOAL INCOME AND GROWTH PORTFOLIO -- LifeGoal Income and Growth
Portfolio's investment objective is to seek current income and modest growth
to protect against inflation and to preserve purchasing power.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
- -----------------------------------------------------------------------------------
<S> <C> <C>
Large-Capitalization Domestic Equity Funds 10-30% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marciso Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
- --------------------------------------------------------------------------------------------------
Small/Mid-Capitalization Domestic Equity Funds 0-10% Nations Small Company Growth Fund
- --------------------------------------------------------------------------------------------------
Core International Equity Funds 0-10% Nations International Equity Fund
Nations International Value Fund
- --------------------------------------------------------------------------------------------------
Short Duration Bond Funds 50-90% Nations Short-Term Income Fund
Nations Short-Intermediate Government
Fund
- --------------------------------------------------------------------------------------------------
Money Market Funds 0-20% Nations Prime Fund
</TABLE>
The LifeGoal Portfolios are intended primarily for long-term investors. The
LifeGoal Portfolios are structured as "funds of funds" that allocate
substantially all of their assets to investments in Primary A Shares of various
Nations Funds. The performance of the LifeGoal Portfolios will, therefore,
correspond to the performance of the various underlying Nations Funds.
Additional information about the underlying Nations Funds, including their
investment objectives, investment policies and practices, is set forth below
under "Descriptions of Underlying Nations Funds -- Investment Objectives,
Policies and Practices." The Adviser allocates and reallocates each LifeGoal
Portfolio's assets among the underlying Nations Funds identified above, and
potentially other Nations Funds, based on the percentage ranges shown above for
the various fund categories. As discussed below under "The Asset Allocation
Process," a LifeGoal Portfolio's actual investment allocation may deviate from
the percentage ranges shown above, over the short or long term.
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 (i.e., international
stocks, domestic stocks, and bonds) in varying portions to gain exposure to the
different return/risk characteristics of each asset class. Asset classes and
market segments (large, mid and small capitalization stocks) tend to react in
different ways to changes in economic conditions. Therefore, an investment
approach that combines various market segments and asset classes may reduce
overall portfolio volatility.
The assets of each LifeGoal Portfolio are allocated among various asset classes
through their investment in different fund categories. Each LifeGoal Portfolio
has its own asset allocation strategy which gives it a distinctive risk profile
and offers different return potential. Investors should select the LifeGoal
Portfolio (or Portfolios) which best matches their investment goals, risk
tolerance and investment horizon.
In general, the greater the LifeGoal Portfolio's percentage allocation to
equity funds, the greater the potential return and risk of share price decline.
Because of equity funds' greater risks, investors in the LifeGoal Portfolios
that have a higher allocation to equity funds should have a longer investment
horizon. In general, the greater the LifeGoal Portfolio's percentage allocation
to bond funds, the greater the potential price stability; however, returns may
be lower.
Investment performance will vary based on many factors, including market
conditions and the composition of a LifeGoal Portfolio's portfolio. Investment
performance also often reflects the risks associated with a LifeGoal
Portfolio's investment objective and policies. These factors should be
considered when comparing a LifeGoal Portfolio's investment results to those of
other mutual funds and to market indexes.
Although the Adviser will seek to achieve the investment objective of each
LifeGoal Portfolio, there is no assurance that it will be able to do so. No
single LifeGoal Portfolio should be considered, by itself, to provide a
complete investment program for any investor. The net asset value of the shares
of a LifeGoal Portfolio fluctuates based on fluctuations in the values of the
underlying Nations Funds' shares, which, in turn, fluctuate based on market
conditions and other factors. Therefore, investors should not rely upon
LifeGoal Portfolios for short-term financial needs. The LifeGoal Portfolios are
not intended to provide a vehicle for participating in short-term swings in the
stock market, and their shares are not insured against loss of principal.
6
<PAGE>
The Asset Allocation Process
Subject to the general supervision of the Company's Board of Directors, the
Adviser is responsible for allocating and reallocating each LifeGoal
Portfolio's assets among the Nations Funds in which it invests, and for
rebalancing such portfolio allocations. In this context, allocation is the
process of setting or changing the weightings of the different fund categories
and Nations Funds within a particular LifeGoal Portfolio's portfolio. The
"weightings" of the different fund categories and Nations Funds within a
particular LifeGoal Fund's portfolio are the percentage targets that the
Adviser sets for investment in a particular fund category or Nations Fund. All
fund category weightings will be within the overall percentage ranges shown
above. Rebalancing is the process of bringing portfolio allocations back into
alignment with the applicable weightings. A LifeGoal Portfolio's investments
are continuously monitored and are reallocated as often as the Adviser deems
appropriate. In addition, portfolio allocations and performance are reviewed at
least monthly for rebalancing at the discretion of the Adviser.
Although the Adviser may rebalance each LifeGoal Portfolio's holdings
quarterly, it expects to rebalance less often. Thus, at any given time, it is
possible that the percentage of a particular LifeGoal Portfolio's assets
actually invested in a particular Nations Fund or fund category will not
correspond precisely with the applicable weightings. Also, depending on the
frequency of rebalancings, the extent of any such deviation could continue for
some time.
The Adviser has adopted certain policies designed to reduce the extent and
duration of such deviations. For example, if any fund category percentage
ranges are exceeded, the Adviser will allocate new investment dollars to the
other fund categories. Likewise, the Adviser will allocate new investment
dollars to fund categories whose minimum percentages have not been met.
Redemption requests, however, will generally be met by redeeming shares of
underlying Nations Funds according to the applicable weightings.
Determining the asset allocation applicable to each LifeGoal Portfolio is a two
step process. The first step is determining the broad asset classes for each
LifeGoal Portfolio -- large and small capitalization domestic stocks, foreign
stocks, bonds and money market securities. In making this determination, the
Adviser will consult the relevant historical data for the returns of each asset
class in various economic scenarios. Those returns will be reviewed in the
context of the Adviser's outlook for the economy and markets and adjusted for
reasonableness. The second step in the process is to determine the particular
Nations Funds in which each LifeGoal Portfolio will invest. The Adviser looks
at historic returns and valuations to determine which Nations Funds are most
appropriate. Determining how the individual Nations Funds may interact with one
another within a portfolio is a critical part of this second step.
Although it is expected that the LifeGoal Portfolios will invest in the Nations
Funds identified in "Description of Underlying Nations Funds," the Adviser has
the discretion to change the particular Nations Funds used as underlying
investments for the LifeGoal Portfolios. Among other things, the Adviser may
substitute or include other funds from the Nations Funds Family, including any
funds introduced subsequent to the date of this Prospectus, as permissible
investments for the LifeGoal Portfolios.
General Characteristics and Risk Factors of the Major Asset Classes
The underlying Nations Funds invest primarily in various stocks, bonds and
money market securities. This section provides a brief summary of the general
characteristics and overall risk factors associated with these asset classes.
Additional information is provided under "Description of Underlying Nations
Funds" below and in the prospectuses of the underlying Nations Funds.
Common stocks represent ownership in a company. Stock prices move with changes
in a company's current earnings and its prospects for the future, and with
overall stock market conditions. Stocks offer the potential for price
appreciation and rising dividends. While smaller companies usually reinvest
their earnings back into the company and therefore pay minimal, if any,
dividends, they offer the possibility of greater appreciation.
Historically, stocks have provided higher returns than bonds or money market
securities. Therefore, they have also provided the greatest protection against
inflation and the resulting erosion of purchasing power. However, the
additional return has been accompanied by additional volatility. Equity
investors should have a long-term investment horizon and be willing to accept
the inevitable periods of market declines.
Bonds are a contract. The issuer has an obligation to pay a specified rate of
interest (which may be fixed or variable) at specified times and to repay the
bond's principal value upon maturity. Bonds are subject to credit risk and to
interest rate risk. Credit risk refers to the possibility that a bond's price
may fall due to a credit downgrade or a principal or interest payment default.
Interest rate risk refers to a bond's price movement in response to changes in
market interest rates. As a general rule, when market interest rates rise, bond
prices fall. Typically, the longer the maturity of a bond, the greater the
potential price fluctuation.
Money market securities are short term debt obligations issued primarily by the
U.S. Government, government agencies or corporations. High quality money market
securities are very low risk investments; their low risk, however, is
accompanied by lower potential returns relative to other investments.
Investment Company Securities: Each of the LifeGoal Portfolios intends, as a
fundamental policy, to concentrate investments by investing 25% or more of its
total assets in the mutual fund industry.
Although some of the Nations Funds in which the LifeGoal Portfolios invest do
not necessarily share the same invest-
7
<PAGE>
ment objective as the investing LifeGoal Portfolio, those Nations Funds will be
selected by the Adviser based on the asset allocation process described above.
Although each LifeGoal Portfolio intends to invest substantially all of its
assets in some or all of the underlying Nations Funds, each LifeGoal Portfolio
reserves the right to invest in obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, repurchase agreements and money
market instruments with respect to any assets not so invested in Nations Funds.
It is not expected that any LifeGoal Portfolio will invest more than 5% of its
assets in any of these direct investments.
Investment Limitations: Each LifeGoal Portfolio is subject to a number of
investment limitations, which are described in the SAI. Among other things, the
LifeGoal Portfolios' fundamental policies permit them to borrow money from banks
for temporary or emergency purposes, subject to percentage and other
limitations, and to enter into forward purchase commitments and issue multiple
classes of shares. The investment objective, policies and limitations of each
LifeGoal Portfolio, unless otherwise speci fied, may be changed without a vote
of the LifeGoal Portfolio's shareholders. If the investment objective, policies
or limitations of a LifeGoal Portfolio change, shareholders should consider
whether the LifeGoal Portfolio remains an appropriate investment in light of
their current position and needs.
The Nations Funds also have adopted certain investment restrictions which may
be more or less restrictive than those applicable to the LifeGoal Portfolios,
thereby allowing a LifeGoal Portfolio to participate in certain investment
strategies indirectly that are prohibited under the investment restrictions
described in the LifeGoal Portfolios' SAI. The investment restrictions of the
underlying Nations Funds are set forth in their respective prospectuses and
statements of additional information.
Portfolio Turnover: Generally, LifeGoal Portfolios will purchase portfolio
securities for capital appreciation or investment income, or both, and not for
short-term trading profits. The LifeGoal Portfolios' portfolio turnover rates
are not expected to exceed 50% annually.
Description of Underlying Nations Funds --
Investment Objectives, Policies and Practices
The LifeGoal Portfolios seek to achieve their investment objectives by
investing in certain Nations Funds (each, a "Fund"). The following section
provides summaries of the Nations Funds' investment objectives, policies and
practices. These summaries are intended to help investors understand some of
the more significant aspects of the underlying Nations Funds, but are not
intended to be comprehensive disclosures of all policies, practices and risks
associated with investments by the LifeGoal Portfolios in the Nations Funds. To
receive a prospectus for any underlying Nations Fund, which contains more
complete information, please call Nations Funds at 1-800 765-2668.
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:
o above-average earnings growth relative to Standard & Poor's 500 Composite
Stock Price Index ("S&P 500 Index")(1);
o established operating histories, strong balance sheets and favorable
financial characteristics; and
- ------------------
(1) "Standard & Poor's" and "Standard & Poor's 500" are trademarks of The
McGraw-Hill Companies, Inc.
o 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. In selecting stocks for the Fund,
the Adviser utilizes quantitative analysis and optimization tools. This
approach seeks to identify companies with improving profit potential through
analysis of earnings forecasts issued by investment banks, broker/dealers and
other investment professionals. The Adviser believes that companies
experiencing such earnings trends have the potential to generate significant
increases in per share earnings. The Adviser also believes that companies with
increasing earnings should experience positive trends in their stock price.
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.
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Nations Emerging Growth Fund: The Fund's investment objective is to seek
capital appreciation by investing in emerging growth companies that are
believed to have superior long-term earnings growth prospects. The Fund invests
primarily in emerging growth companies with revenues between $50 million and
$1.5 billion and a debt ratio of less than 50% of capitalization. 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 managing the Fund, the
Adviser applies a disciplined process with rigorous fundamental analysis
providing the basis for stock selection. Its methodology combines fundamental,
valuation and momentum-based disciplines in portfolio construction. 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 greater than that of larger companies.
Accordingly, while they may have greater potential for gains, they also carry
greater downside risk.
Nations Equity Income Fund: The Fund's investment objective is to seek current
income and growth of capital by investing primarily in companies with
above-average dividend yields. The investment program of the Fund is based on
several premises. First, dividends are normally a more stable and predictable
source of return than capital appreciation. Second, diversifying equity
holdings in a manner that includes every major economic sector 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 provided by the stocks in the S&P 500
Index with less volatility. Collectively, these traits may be combined in such
a fashion as to produce returns in excess of the market, as measured by the S&P
500 Index, on a comparable risk basis.
Under normal circumstances, the Fund will invest at least 65% of its assets in
income-producing common stocks, including securities convertible into or
ultimately exchangeable for common stock (i.e., convertible bonds or
convertible preferred stock), whose prospects for dividend growth and capital
appreciation are considered favorable by the Adviser. The Fund also may invest
its assets in fixed-income securities (corporate and government bonds of
various maturities), preferred stocks and warrants and other debt securities,
including up to 5% of its assets in debt securities that are rated below
investment grade (e.g. rated "BB" by S&P) or if not rated, are of equivalent
investment quality as determined by the Adviser. The Fund may invest a portion
of its assets in foreign securities.
Nations Managed Index Fund: The Fund's investment objective is to seek, over the
long-term, to provide a total return that (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 market
capitalization weighted index consisting of 500 common stocks chosen for market
size, liquidity and industry group representation.
Unlike traditional index funds, the Fund has a "managed" overlay. 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 300 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 80% of its total assets in common stocks which are included in
the S&P 500 Index. The Fund is expected, however, to maintain a position in
high-quality short-term debt securities and money market instruments to meet
redemption requests.
Nations Managed SmallCap Index Fund: The Fund's investment objective is to
seek, over the long-term, to provide a total return that (gross of fees and
expenses) exceeds that of 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 market capitalization weighted
index consisting of 600 domestic stocks which captures the economic and
industry characteristics of small stock performance.
Unlike traditional index funds, the Fund has a "managed" overlay. 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 400 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 80% 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 Marsico Focused Equities Fund: The Fund's investment objective is to
seek long-term growth of capital. The Fund is a non-diversified fund that
pursues its objective by normally investing in a core position of 20-30 common
stocks. In choosing stocks, the Adviser attempts to identify individual
companies with earnings growth potential that may not be recognized by the
market at large. In seeking such opportunities, the Adviser looks for a
combination of four factors: change (products, markets and tech-
- -------------------
(2) "Standard & Poor's" and "Standard & Poor's SmallCap 600" are trade-
marks of The McGraw-Hill Companies, Inc.
9
<PAGE>
nologies that are in flux), franchise (brand franchises that can be leveraged),
global reach (companies that consider world markets rather than local markets)
and themes (companies that are moving with, not against, major social, economic
and cultural shifts). Once an opportunity is identified, it is subject to a
disciplined analytical process that takes into consideration such macroeconomic
factors as interest rates, inflation, the regulatory environment, the global
competitive landscape, and such microeconomic factors as company fundamentals,
market franchise and company management.
Under normal circumstances the Fund invests at least 65% of its assets in large
capitalization common stocks selected for their growth potential. The Fund also
may invest to a lesser degree, in other types of securities such as preferred
stocks, warrants, convertible securities and debt securities.
Nations Marsico Growth & Income Fund: The Fund's investment objective is to
seek long-term growth of capital with a limited emphasis on income. The Fund
will typically invest in large capitalization stocks. The Fund may invest in
any combination of common stocks, preferred stocks, warrants, convertible
securities and debt securities. In building the portfolio, the Adviser seeks to
identify individual companies with earnings growth potential not recognized by
the market at large. In seeking such opportunities, the Adviser looks for a
combination of four factors: change (products, markets and technologies that
are in flux), franchise (brand franchise that can be leveraged), global reach
(companies that consider world markets rather than local markets) and themes
(companies that are moving with, not against, major social, economic and
cultural shifts). Once an opportunity is identified, it is subject to a
disciplined analytical process that takes into consideration macroeconomic
factors such as interest rates, inflation, the regulatory environment, the
global competitive landscape, and company fundamentals, such as market
franchise and company management.
Under normal circumstances, the Fund invests up to 75% of its assets in equity
securities selected primarily for their growth potential and at least 25% of
its assets in securities with income potential. However, in adverse market
conditions, the Fund may reduce the growth component of its portfolio to 25% of
its total assets. Additionally, the Adviser may shift the Fund's assets between
the growth and income components based on relevant market, financial and
economic conditions.
Nations Small Company Growth Fund: The Fund's investment objective is to seek
long-term capital growth by investing capital primarily in equity securities.
In pursuing its investment objective, under normal circumstances, the Fund will
invest at least 65% of its total assets in equity securities of companies with
a market capitalization of $1 billion or less. The investment philosophy of
Nations Small Company Growth Fund is based on the premise that stock prices are
driven by earnings growth and that superior stock market returns occur when a
company experiences rapid and accelerating earnings growth due to improving
fundamentals.
In managing the Fund, the Adviser applies a disciplined process with rigorous
fundamental analysis providing the basis for stock selection. Its methodology
combines fundamental, valuation and momentum-based disciplines in portfolio
construction. Overall, the Fund's strategy is to own those investments offering
both attractive fundamental valuation and relatively good prospects for
earnings improvement. Typically, two types of companies are candidates for
purchase: (i) mature companies which may have fallen from a larger market value
due to business difficulties, but which now exhibit improving prospects; and
(ii) smaller or younger companies which are experiencing strong trends in
earnings growth, but remain reasonably valued and therefore offer premium
growth at a discount in comparison to other companies.
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 in securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, ("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 such cases, events occurring in such
country are more likely to affect the Fund's investments.
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<PAGE>
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 International Value Fund: The Fund's investment objective is to seek
long-term capital appreciation by investing primarily in equity securities of
foreign issuers including emerging market countries. The Fund pursues its
investment objective, under normal circumstances, by investing its assets in
the securities of issuers in at least three different foreign countries. The
Adviser is committed to the use of the Graham & Dodd-style value investing
approach as introduced in the classic book SECURITY ANALYSIS. Although the Fund
may invest in companies of various sizes it typically invests in established
companies. The Adviser's approach to selecting stocks for the Fund is value
driven and it seeks to purchase a diversified group of businesses at prices
that research indicates are below true long-term, or intrinsic, value. In so
doing the Adviser seeks to secure not only a possible margin of safety against
price declines, but also an attractive opportunity for profit over the business
cycle. In analyzing a company's long-term value, the Adviser uses sources of
information such as company reports, filings with the SEC, computer databases,
industry publications, brokerage firm research reports and interviews with
company management.
Under normal circumstances, the Fund intends to invest at least 65% of its
total assets in equity securities of non-U.S. issuers whose market
capitalizations exceed $1 billion at the time of purchase. Although the Fund
intends to invest primarily in equity securities listed on stock exchanges it
also may invest in equity securities traded over the counter and in private
placements. Typically, no more than 5% of total Fund assets will be invested in
any one equity security at the time of purchase. Countries in which the Fund
may invest include, but are not limited to, the nations of Western Europe,
North and South America, Australia, Africa and Asia. During temporary defensive
periods in response to unusual and adverse conditions, the Fund's assets may be
invested without limitation in short-term debt instruments and in securities of
U.S. issuers.
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 loss 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 U.S. Government Obligations. 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 of the
Fund will not exceed five years 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
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<PAGE>
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 will it exceed 15
years. Under normal market conditions, the Fund will invest at least 65% of the
total value of its assets in government, corporate and mortgage-related
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 have
longer maturities. The Fund may invest in U.S. Treasury bills, notes and bonds
and other instruments issued directly by the U.S. Government. The Fund may also
invest in bank and commercial instruments that may be available in the money
markets, high quality short-term taxable obligations issued by state and local
governments, and repurchase agreements relating to U.S. Government Obligations.
Although the Fund is permitted to invest a portion of its assets in second tier
securities (as defined below) in accordance with Rule 2a-7 under the Investment
Company Act of 1940, as amended (the "1940 Act"), the Fund invests only in
first tier securities (as defined below). 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. Each of the
Funds may lend their portfolio securities to qualified institutional investors,
engage in repurchase agreement transactions, and invest in restricted, private
placement and other illiquid securities. Certain Nations Funds may 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.
Under Rule 2a-7 of the 1940 Act, a Money Market Fund is limited to acquiring
obligations with a remaining maturity of 397 days or less, or obligations with
greater maturities, provided such obligations are subject to demand features or
resets which are less than 397 days, and to maintaining a dollar-weighted
average portfolio maturity of 90 days or less. Quality requirements generally
limit investments to U.S. dollar denominated instruments determined to present
minimal credit risks which, at the time of acquisition, are rated in the first
or second rating categories (known as "first tier" and "second tier"
securities, respectively) by the required number of nationally recognized
statistical rating organizations (each an "NRSRO") or, if unrated by any NRSRO,
are (i) comparable in priority and security to a class of short- term
securities of the same issuer that has the required rating, or (ii) determined
to be comparable in quality to securities having the required rating. The
diversification requirements provide generally that a Money Market Fund may not
at the time of acquisition invest more than 5% of its assets in securities of
any one issuer except that up to 25% of total assets may be invested in the
first tier securities of a single issuer for three business days. Securities
issued by the U.S. Government, its agencies, authorities or instrumentalities
are exempt from the quality requirements, other than minimal credit risk. In
the event that a Fund's investment restrictions or permissible investments are
more restrictive than the requirements of Rule 2a-7, the Fund's own
restrictions will govern.
Principal Risk Considerations: Investments by a Nations Fund in common stocks
and other equity securities are subject to stock market risk. 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
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<PAGE>
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 Funds may invest in securities of smaller and newer issuers.
Investments in such companies may present greater opportunities for capital
appreciation because of high potential earnings growth, but also present
greater risks than investments in more established companies with longer
operating histories and greater financial capacity.
Nations Marsico Focused Equities Fund, as a non-diversified fund, may invest in
fewer issuers than a diversified fund. Therefore, appreciation or depreciation
of an investment in a single issuer could have a greater impact on the Fund's
net asset value. The Fund reserves the right to become a diversified fund by
limiting the investments in which more than 5% of its total assets are
invested.
In addition, the Euro will become the single currency in at least 11 European
nations used in many financial transactions. Accordingly, the German mark,
French franc and other national currencies will no longer be used. Although the
impact of implementing the Euro is not possible to predict, the transition
could have an effect on the financial markets and economic environment in
Europe and other parts of the world. For example, investors may begin to view
those countries participating in the Economic Monetary Union as a single
combined entity and may alter their investment behavior accordingly. In
response to any such effect of the Euro implementation, the Adviser may need to
adapt its investment policies and strategy.
Certain of the U.S. Government Obligations that may be purchased by a Nations
Fund (or, under certain circumstances, directly by a LifeGoal Portfolio) are
not backed by the U.S. Treasury. For example, some U.S. Government Obligations
are supported only by the credit of the issuer/guarantor or by the right of the
issuer/guarantor to borrow from the U.S. Government. In addition, the market
value of U.S. Government Obligations may fluctuate due to fluctuations in
market interest rates. Certain types of U.S. Government Obligations are subject
to fluctuations in maturity, yield or value due to their structure or contract
terms.
Certain of the underlying Nations Funds may invest in derivative securities
("derivatives"). A derivative is a financial instrument whose value is based,
at least partly, on the value of an underlying stock, stock index, future or
other security. Examples of such derivatives include futures contracts,
options, interest rate and currency swap transactions. Certain types of
derivatives can, under certain circumstances, significantly increase an
investor's exposure to market or other risks.
Year 2000 Issue: Many computer programs employed throughout the world use two
digits to identify the year. Unless modified, these programs may not correctly
handle the change from "99" to "00"on January 1, 2000, and may not be able to
perform necessary functions. Any failure to adapt these programs in time could
hamper the LifeGoal Portfolios' operations. The LifeGoal Portfolios' principal
service providers have advised the LifeGoal Portfolios that they have been
actively working on implementing necessary changes to their systems, and that
they expect that their systems will be adapted in time, although there can be
no assurance of success. Because the Year 2000 issue affects virtually all
organizations, the companies or governmental entities in which the LifeGoal
Portfolios invest could be adversely impacted by the Year 2000 issue, although
the extent of such impact cannot be predicted. To the extent the impact on a
portfolio holding is negative, a LifeGoal Portfolio's return could be adversely
affected.
Please consult the SAI and the prospectus of the particular Nations Fund, for
more information about investment practices and risks.
How Performance Is Shown
From time to time the LifeGoal Portfolios may advertise the "total return" and
"yield" of a class of shares. In addition, the LifeGoal Portfolios may
advertise the "total return" and "yield" of the Primary A Shares of certain
underlying Nations Funds. TOTAL RETURN AND YIELD FIGURES ARE BASED ON
HISTORICAL DATA AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The "total
return" of a class of shares of a LifeGoal Portfolio or Nations Fund may be
calculated on an average annual total return basis or an aggregate total return
basis. Average annual total return refers to the average annual compounded
rates of return over one-, five-, and ten-year periods or the life of a
LifeGoal Portfolio or Nations Fund (as stated in the Funds' advertisement) that
would equate an initial amount invested at the beginning
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<PAGE>
of a stated period to the ending redeemable value of the investment, assuming
the reinvestment of all dividend and capital gains distributions. Aggregate
total return reflects the total percentage change in the value of the
investment over the measuring period again assuming the reinvestment of all
dividends and capital gain distributions. Total return may also be presented
for other periods.
"Yield" of a class of shares of a non-money market fund is calculated by
dividing the annualized net investment income per share during a recent 30-day
(or one month) period of the class by the maximum public offering price per
share on the last day of that period. "Yield" of a class of shares of a money
market fund, such as the Nations Prime Fund, is calculated by annualizing the
income generated by an investment in such class over a seven-day period, and
showing it as a percentage of that investment. "Effective yield" assumes
reinvestment of income.
Investment performance, which will vary, is based on many factors, including
market conditions, the composition of a LifeGoal Portfolio's or Nations Fund's
portfolio and operating expenses. Investment performance also often reflects
the risks associated with a LifeGoal Portfolio's or Nations Fund's investment
objective and policies. These factors should be considered when comparing a
LifeGoal Portfolio's or Nations Fund's investment results to those of other
mutual funds and other investment vehicles. Since net asset value and yields
fluctuate, yield data cannot necessarily be used to compare an investment in
the LifeGoal Portfolios or Nations Fund with bank deposits, savings accounts,
and similar investment alternatives which often provide an agreed-upon or
guaranteed fixed yield for a stated period of time.
In addition to Primary A Shares, the LifeGoal Portfolios offer Primary B,
Investor A, Investor 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 Portfolio's shares. Any fees charged by an institution
directly to its customers' accounts in connection with investments in the
LifeGoal Portfolios will not be included in calculations of total return or
yield. The Company's annual report will contain additional performance
information and will be available upon request without charge from the LifeGoal
Portfolios' distributor or an investor's institution, as defined below or by
calling Nations Funds at the toll-free number indicated on the cover of this
Prospectus.
The following information shows the average annual returns of the underlying
Nations Funds in which the LifeGoal Portfolios may invest. The performance of
the underlying Nations Funds is shown for illustrative purposes only and is not
intended to show LifeGoal Portfolio performance.
NATIONS FUNDS
AVERAGE ANNUAL RETURNS -- PRIMARY A SHARES (UNAUDITED)
<TABLE>
<CAPTION>
Inception
1-Year Period 3-Year Period 5-Year Period through
FUND NAME (DATE OF COMMENCEMENT OF OPERATIONS) Ended 3/31/98 Ended 3/31/98 Ended 3/31/98 3/31/98
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nations Capital Growth Fund (9/30/92) 53.89% 29.63% 19.35% 19.47%
- -------------------------------------------------------------------------------------------------------------------
Nations Disciplined Equity Fund (10/1/92) 48.65% 31.57% 21.56% 27.15%
- -------------------------------------------------------------------------------------------------------------------
Nations Diversified Income Fund (10/30/92) 11.07% 9.05% 7.63% 8.73%
- -------------------------------------------------------------------------------------------------------------------
Nations Emerging Growth Fund (12/4/92) 45.09% 25.18% 19.30% 17.92%
- -------------------------------------------------------------------------------------------------------------------
Nations Emerging Markets Fund (6/30/95) ( 6.39)% N/A N/A 2.97%
- -------------------------------------------------------------------------------------------------------------------
Nations Equity Income Fund (4/11/91) 37.21% 25.40% 17.82% 17.18%
- -------------------------------------------------------------------------------------------------------------------
Nations International Equity Fund (12/2/91) 16.06% 12.09% 10.68% 8.47%
- -------------------------------------------------------------------------------------------------------------------
Nations International Value Fund (12/27/95) 39.92% N/A N/A 22.91%
- -------------------------------------------------------------------------------------------------------------------
Nations Managed Index Fund (8/1/96) 47.54% N/A N/A 41.04%
- -------------------------------------------------------------------------------------------------------------------
Nations Managed SmallCap Index Fund (10/15/96) 47.71% N/A N/A 29.41%
- -------------------------------------------------------------------------------------------------------------------
Nations Marsico Focused Equities Fund (12/31/97) N/A N/A N/A 21.30%
- -------------------------------------------------------------------------------------------------------------------
Nations Marsico Growth & Income Fund (12/31/97) N/A N/A N/A 20.30%
- -------------------------------------------------------------------------------------------------------------------
Nations Pacific Growth Fund (6/30/95) (28.35)% N/A N/A (9.86)%
- -------------------------------------------------------------------------------------------------------------------
Nations Short-Intermediate Government Fund (8/1/91) 9.11% 6.71% 5.08% 6.66%
- -------------------------------------------------------------------------------------------------------------------
Nations Short-Term Income Fund (9/30/92) 6.89% 6.74% 5.45% 5.45%
- -------------------------------------------------------------------------------------------------------------------
Nations Small Company Growth Fund (12/12/95) 49.41% N/A N/A 25.39%
- -------------------------------------------------------------------------------------------------------------------
Nations Strategic Fixed Income Fund (10/30/92) 10.53% 7.90% 6.07% 6.80%
- -------------------------------------------------------------------------------------------------------------------
Nations Value Fund (9/19/89) 38.53% 28.85% 20.29% 16.64%
- -------------------------------------------------------------------------------------------------------------------
Nations Prime Fund (12/15/86) 5.61% 5.59% 4.96% 6.00%
</TABLE>
14
<PAGE>
How The LifeGoal Portfolios Are Managed
The business and affairs of the Company are managed under the supervision and
direction of its Board of Directors. The LifeGoal Portfolios' SAI contains the
names of and general background information concerning each Director of the
Company.
As described below, the LifeGoal Portfolios are advised by NBAI which is
responsible for the overall management and supervision of the investment
management of each LifeGoal Portfolio. The LifeGoal Portfolios are sub-advised
by TradeStreet, which as a general matter is responsible for the day-to-day
investment decisions for the LifeGoal Portfolios.
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.
NationsBank Corporation, the parent company of NationsBank, has signed an
agreement to merge with BankAmerica Corporation. The proposed merger is subject
to certain regulatory approvals and must be approved by shareholders of both
holding companies. The merger is expected to close in the second half of 1998.
NationsBank and NBAI have advised the LifeGoal Portfolios that the merger will
not reduce the level or quality of advisory and other services provided to the
LifeGoal Portfolios.
Investment Adviser: NationsBanc Advisors, Inc. serves as investment adviser to
the LifeGoal Portfolios and the Nations Funds. NBAI is a wholly owned
subsidiary of NationsBank, which in turn is a wholly owned banking subsidiary
of NationsBank Corporation, a bank holding company organized as a North
Carolina corporation. NBAI has its principal offices at One NationsBank Plaza,
Charlotte, North Carolina 28255.
TradeStreet Investment Associates, Inc., with principal offices at One
NationsBank Plaza, Charlotte, North Carolina 28255, serves as investment
sub-adviser to the LifeGoal Portfolios and most of the Nations Funds.
TradeStreet is a wholly owned subsidiary of NationsBank. TradeStreet provides
investment management services to individuals, corporations and institutions.
Gartmore Global Partners ("Gartmore"), with principal offices at One
NationsBank Plaza, Charlotte, North Carolina, 28255, serves as the investment
sub-adviser to three of the underlying Nations Funds. Gartmore is a joint
venture structured as a general partnership between NB Partner Corp., a wholly
owned subsidiary of NationsBank, and Gartmore U.S. Limited, an indirect, wholly
owned subsidiary of Gartmore Investment Management plc, a UK company which is
the holding company for a leading UK based international fund management group
of companies. National Westminster Bank plc and affiliated entities own 100% of
the equity of Gartmore plc.
Brandes Investment Partners, L.P. ("Brandes"), with principal offices at 12750
High Bluff Drive, San Diego, California 92130, serves as investment sub-adviser
to one of the underlying Nations Funds -- Nations International Value Fund.
Marsico Capital Management, LLC ("Marsico Capital"), located at 1200 17th
Street, Suite 1300, Denver, Colorado 80202, serves as the investment
sub-adviser to two of the underlying Nations Funds -- Nations Marsico Focused
Equities Fund and Nations Marsico Growth & Income Fund. NationsBank has an
option to purchase up to 50% of Marsico Capital.
Subject to the general supervision of the Company's Board of Directors, and in
accordance with each LifeGoal Portfolio's investment policies, the Adviser is
responsible for allocating and reallocating each LifeGoal Portfolio's assets
among the Nations Funds in which it invests, and for rebalancing such portfolio
allocations. A LifeGoal Portfolio's investments are continuously monitored and
are reallocated as often as the Adviser deems appropriate. In addition,
portfolio allocations and performance are reviewed quarterly for rebalancing at
the discretion of the Adviser.
The Adviser has the ability to change the particular Nations Funds used as
underlying investments for the LifeGoal Portfolios. Among other things, the
Adviser may substitute or include other funds from the Nations Funds Family,
including any introduced subsequent to this Prospectus, as permissible
investments for the LifeGoal Portfolios. In the event the Adviser seeks to
invest the assets of a LifeGoal Portfolio in a Nations Fund not identified in
this Prospectus, the Company will amend or supplement the Prospectus to include
all pertinent information.
Both the LifeGoal Portfolios and Nations Funds have investment advisory
arrangements with NBAI. NBAI is entitled to receive advisory fees at an annual
rate of .25% of the average daily net assets of each LifeGoal Portfolio. NBAI,
in turn, compensates TradeStreet for investment sub-advisory services at an
annual rate of .05% of the average daily net assets of each LifeGoal Portfolio.
NBAI also has agreed to absorb all other expenses of the LifeGoal Portfolios
(except taxes, brokerage fees and commissions, extraordinary expenses, and any
applicable Rule 12b-1 fees, shareholder servicing fees and/or shareholder
administration fees). NBAI also receives advisory fees at varying rates from
the underlying Nations Funds, and pays TradeStreet, Gartmore, Brandes and
Marsico Capital sub-advisory fees for their services to the underlying Nations
Funds. From time to time, the Adviser may waive or reimburse (either
voluntarily or pursuant to applicable state expense limitations) advisory fees
and/or expenses payable by a LifeGoal Portfolio. Once commenced, waiver and
reimbursement arrangements may be discontinued at any time. LifeGoal
Portfolio's shareholders will indirectly pay their proportionate share of the
advisory fees and other expenses of any Nations Fund in which the LifeGoal
Portfolios are invested.
15
<PAGE>
For the fiscal year ended March 31, 1998, the LifeGoal Portfolios paid NBAI
advisory fees at the indicated rates of the following LifeGoal Portfolios'
average daily net assets: Nations LifeGoal Growth Portfolio -- .25%; Nations
LifeGoal Balanced Growth Portfolio -- .25%; and Nations LifeGoal Income and
Growth Portfolio -- .25%.
For the fiscal year ended March 31, 1998, NBAI paid TradeStreet sub-advisory
fees at the indicated rates of the following LifeGoal Portfolios' average daily
net assets: Nations LifeGoal Growth Portfolio -- .05%; Nations LifeGoal
Balanced Growth Portfolio -- .05%; and Nations LifeGoal Income and Growth
Portfolio -- .05%.
NBAI, TradeStreet and certain of their affiliates provide advisory and other
services to Nations Funds for which they receive compensation. The level of
compensation received and services provided by them differs among the various
Nations Funds. These differences subject the Adviser to conflicts of interest,
in that the Adviser could increase its fee income or that of its affiliates, or
attain other direct or indirect benefits, by allocating LifeGoal Portfolio
assets to underlying Nations Funds that pay higher fees or provide other
benefits.
The Co-Portfolio Managers for the LifeGoal Portfolios are E. Keith Wirtz and C.
Thomas Clapp.
Mr. Wirtz is Managing Director and Chief Investment Officer of TradeStreet and
has been responsible for the Firm's investment staff, strategy and policy since
December 1996. Prior to assuming his position with TradeStreet, from April 1992
through December 1996, he was Senior Vice President and Chief Investment
Officer of Bank of America's Investment Management Division. Mr. Wirtz has
worked in the investment community since 1981. His past experience includes
domestic and international portfolio management for both private and
institutional clients. Mr. Wirtz received his B.S. in Finance from Arizona
State University. He holds the Chartered Financial Analyst designation and is a
member of the Association for Investment Management and Research, as well as
the Los Angeles Analyst Society.
Mr. Clapp is Director of the Equity Management Group for TradeStreet. Prior to
assuming his position with TradeStreet in 1995, he was Senior Vice President
and Director of Research for the Investment Management Group at NationsBank.
Prior to joining NationsBank in 1992, Mr. Clapp was a Senior Portfolio Manager
with Royal Insurance Group. Mr. Clapp has worked in the investment community
since 1984. He received his B.A. in Economics from the University of North
Carolina at Chapel Hill and an M.B.A. from the University of South Carolina. 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.
Morrison & Foerster LLP, counsel to the Company and Nations Funds, and special
counsel to NationsBank and certain of its affiliates, has advised the Company
and Nations Funds that NationsBank and its affiliates may perform the services
contemplated by the various investment advisory agreements and this Prospectus
without violation of the Glass-Steagall Act. Such counsel has pointed out,
however, that there are no controlling judicial or administrative
interpretations or decisions and that future judicial or administrative
interpretations of, or decisions relating to, present federal or state
statutes, including the Glass-Steagall Act, and regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, as well
as future changes in such federal or state statutes, regulations and judicial
or administrative decisions or interpretations, could prevent such entities
from continuing to perform, in whole or in part, such services. If any such
entity were prohibited from performing any of such services, it is expected
that new agreements would be proposed or entered into with another entity or
entities qualified to perform such services.
Other Service Providers: Stephens Inc. ("Stephens"), a registered broker/dealer
with principal offices at 111 Center Street, Little Rock, Arkansas 72201,
serves as the administrator of the LifeGoal Portfolios pursuant to an
administration agreement. Pursuant to the terms of the administration
agreement, Stephens provides various administrative and corporate secretarial
services to the LifeGoal Portfolios, including providing general oversight of
other service providers, office space, utilities and various legal and
administrative services in connection with the satisfaction of various
regulatory requirements applicable to the LifeGoal Portfolios. Stephens will
not receive any fees from the LifeGoal Portfolios for these services.
First Data Investor Services Group, Inc. ("First Data"), a wholly owned
subsidiary of First Data Corporation, with principal offices at One Exchange
Place, Boston, Massachusetts 02109, serves as the co-administrator of the
LifeGoal Portfolios. Under the co-administration agreement, First Data provides
various administrative and accounting services to the LifeGoal Portfolios
including performing the calculations necessary to determine net asset value
per share and dividends, preparing tax returns and financial statements and
maintaining the portfolio records and certain of the general accounting records
for the LifeGoal Portfolios. For the services rendered pursuant to the
co-administration agreement, First Data is entitled to receive a fee of $10,000
per year per LifeGoal Portfolio, which will be absorbed by NBAI.
For the fiscal period ended March 31, 1998, the LifeGoal Portfolios paid First
Data the following amounts for administration services: Nations LifeGoal Growth
Portfolio -- $4,959; Nations LifeGoal Balanced Growth Portfolio -- $4,959; and
Nations LifeGoal Income and Growth Portfolio -- $4,959.
Shares of the LifeGoal Portfolios are sold on a continuous basis by Stephens,
as the LifeGoal Portfolios' sponsor and distributor. The LifeGoal Portfolios
have entered into distribution agreements with Stephens which provide that
Stephens has the exclusive right to distribute shares of the LifeGoal
Portfolios. Stephens may pay service fees or commissions to Institutions that
assist customers in purchasing Primary A Shares of LifeGoal Portfolios.
16
<PAGE>
In addition, the Adviser may pay out of its own assets amounts to Stephens or
other broker/dealers in connection with the provision of administrative and/or
distribution related services to shareholders.
In addition, Stephens has established a non-cash compensation program, pursuant
to which broker/dealers or financial institutions that sell shares of the
LifeGoal Portfolios may earn additional compensation in the form of trips to
sales seminars or vacation destinations, tickets to sporting events, theater or
other entertainment, opportunities to participate in golf or other outings and
gift certificates for meals or merchandise. This non-cash compensation program
may be amended or terminated at any time by Stephens.
First Data serves as the transfer agent (the "Transfer Agent") for each of
LifeGoal Portfolio's Primary A Shares. NationsBank serves as custodian for the
assets of each LifeGoal Portfolio. NationsBank also serves as the sub-transfer
agent for each LifeGoal Portfolio's Primary Shares.
Stephens, First Data and NationsBank all provide services at the underlying
Nations Funds' level and are compensated directly by such Nations Funds for
those services.
PricewaterhouseCoopers LLP serves as independent accountant to the Company.
Their address is 160 Federal Street, Boston, Massachusetts 02110.
Expenses: Certain administrative and other fees and expenses will be charged at
the LifeGoal Portfolios and Nations Funds levels. However, redundancies of fees
and expenses between the LifeGoal Portfolios and Nations Funds will be minimal,
because distinct services are being provided at each fund level. For example,
the LifeGoal Portfolios pay advisory fees to the Adviser for its services in
allocating LifeGoal Portfolio assets among the underlying Nations Funds. These
services are distinct from the services provided by the Adviser to the Nations
Funds in managing the Nations Funds' individual portfolio securities.
NBAI, under its investment advisory agreement with the LifeGoal Portfolios, has
agreed to absorb all expenses of the LifeGoal Portfolios, except taxes,
brokerage fees and commissions, extraordinary expenses and any applicable Rule
12b-1 fees, shareholder servicing fees and/or shareholder administration fees.
The LifeGoal Portfolios' expenses that will be absorbed by NBAI include, but
are not limited to: fees paid to service providers other than the Adviser;
interest; Directors' fees; federal and state securities registration and
qualification fees; costs of preparing and printing prospectuses for regulatory
purposes and for distribution to existing shareholders; certain insurance
premiums; outside auditing and legal expenses; and costs of shareholder reports
and shareholder meetings.
The LifeGoal Portfolios do not pay any front-end sales loads or contingent
deferred sales charges in connection with the purchase or redemption of shares
of the Nations Funds. By investing in Primary A Shares of the Nations Funds,
the LifeGoal Portfolios also will not be subject to any asset-based sales
charges or service fees. The sales charges or service fees associated with
purchase of shares of the LifeGoal Portfolios will not exceed the limits set
forth in Rule 2830 of the Conduct Rules of the NASD when aggregated with sales
charges or service fees, if any, that the LifeGoal Portfolios pay relating to
Nations Funds shares.
The LifeGoal Portfolios' share of the Nations Funds' expenses may include
expenses that the LifeGoal Portfolios would not have incurred if it had not
been structured as a "fund of funds." For example, if a portfolio manager of
one Nations Fund purchases the same securities that the portfolio manager of
another Nations Fund is selling, there may be transaction charges and
commissions that achieve little or no benefit for the LifeGoal Portfolios. Such
transactions will be rare because the Nations Funds pursue a broad range of
investment strategies, and therefore invest in different types of securities.
Organization And History
The LifeGoal Portfolios are members of the Nations Funds Family, which consists
of the Company, Nations Fund Trust, Nations Fund, Inc., Nations Fund
Portfolios, Inc., Nations Annuity Trust and Nations Institutional Reserves. The
Nations Funds Family currently has more than 60 distinct investment portfolios
and total assets in excess of $40 billion.
Nations LifeGoal Funds, Inc.: The Company was incorporated in Maryland on July
3, 1996, and commenced operations on October 2, 1996, and shares were offered
to the public on October 15, 1996. The Company's fiscal year end is March 31.
As of the date of this Prospectus, the authorized capital stock of Nations
LifeGoal Funds, Inc. consists of 1,200,000,000 shares of common stock, par
value of $.001 per share, which are divided into series or portfolios, each of
which includes several classes of shares. This Prospectus relates to the
Primary A Shares of the following three portfolios of the Company: LifeGoal
Growth Portfolio, LifeGoal Balanced Growth Portfolio, and LifeGoal Income and
Growth Portfolio. To obtain additional information regarding the LifeGoal
Portfolios' other classes of shares which may be available to you, contact your
Institution (as defined below) or Nations Funds at 1-800-765-2668.
Shares of each portfolio and class have equal rights with respect to voting,
except that the holders of shares of a particular portfolio or class will have
the exclusive right to vote on matters affecting only the rights of the holders
of such portfolio or class. In the event of dissolution or liquidation, holders
of each class will receive pro rata, subject to the rights of creditors, (a)
the proceeds of the sale of that portion of the assets allocated to that class
held in
17
<PAGE>
the respective portfolio of the Company, less (b) the liabilities of the
Company attributable to the respective portfolio or class or allocated among
the portfolios or classes based on the respective liquidation value of each
portfolio or class.
Shareholders of the Company do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all portfolios voting
together for election of directors may elect all of the members of the Board of
Directors of the Company. Meetings of shareholders may be called upon the
request of 10% or more of the outstanding shares of the Company. There are no
preemptive rights applicable to any of the Company's shares. The Company's
shares, when issued, will be fully paid and non-assessable.
As of August 1, 1998, NationsBank and its affiliates possessed or shared power
to dispose of or vote with respect to more than 25% of the outstanding shares
of the Company and therefore could be considered to be a controlling person of
the Company and each of the LifeGoal Portfolios for purposes of the 1940 Act.
For more detailed information concerning the percentage of each class or series
over which NationsBank and its affiliates possessed or shared power to dispose
or vote as of a certain date, see the SAI. 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
There is a minimum initial investment of $250,000 for each recordholder; there
is no minimum subsequent investment.
Primary A Shares of the Funds may be sold to financial institutions (including
NationsBank and its affiliated and correspondent banks) and fee-based planners
acting on behalf of their customers, employee benefit plans, charitable
foundations, endowments and to other funds in the Nations Funds Family.
The LifeGoal Portfolios reserve the right, in their discretion, to make Primary
A Shares available to other categories of investors, including those who become
eligible in connection with a merger or reorganization.
Primary A Shares are sold at net asset value without the imposition of a sales
charge. Financial institutions ("Institutions") acting on behalf of their
customers ("Customers") may establish certain procedures for processing
Customers' purchase orders and may charge their Customers for services provided
to them in connection with their investments.
Purchases may be effected on days on which the New York Stock Exchange (the
"Exchange") is open for business (a "Business Day").
The Company and Stephens reserve the right to reject any purchase order. The
issuance of Primary A Shares is recorded on the books of the LifeGoal
Portfolios, and share certificates are not issued. It is the responsibility of
institutions, when applicable, to record beneficial ownership of Primary A
Shares and to reflect such ownership in the account statements provided to
their customers.
Purchase orders for Primary A Shares in the LifeGoal Portfolios which are
received by Stephens, the Transfer Agent or their respective agents before the
close of regular trading 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. In the event that the Exchange closes early, purchase orders received
prior to closing will be priced as of the time the Exchange closes and purchase
orders received after the Exchange closes will be deemed received on the next
Business Day and priced according to the net asset value determined on the next
Business Day. Purchase orders 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 Portfolios' Custodian. Such payment must be
received no later than 4:00 p.m., Eastern time, by the third Business Day
following the receipt of the order, as determined above. 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. Primary A Shares are purchased at the net
asset value per share next determined after receipt of the order by Stephens,
the Transfer Agent or their respective agents.
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. Institutions should be aware that during periods of significant
economic or market change, telephone transactions may be difficult to complete.
18
<PAGE>
How To Redeem Shares
Redemption orders for Primary A Shares of the LifeGoal Portfolios which are
received by Stephens, the Transfer Agent or their respective agents before the
close of regular trading on the Exchange (currently 4:00 p.m., Eastern time) on
any Business Day are priced according to the net asset value next determined
after acceptance of the order. In the event that the Exchange closes early,
redemption orders received prior to closing will be priced as of the time the
Exchange closes and redemption orders received after the Exchange closes will
be determined received on the next Business Day and priced according to the net
asset value determined on the next Business Day. Redemption proceeds are
normally remitted in federal funds wired to the redeeming institution or
investor within three Business Days following receipt of the order.
Institutions are responsible for transmitting redemption orders to Stephens or
to the transfer agent and for crediting their customers' accounts with the
redemption proceeds on a timely basis. It is the responsibility of Stephens to
transmit orders it receives to the LifeGoal Portfolios. No charge for wiring
redemption payments is imposed by the LifeGoal Portfolios, although
institutions may charge their customer accounts for these or other services
provided in connection with the redemption of Primary A Shares and may
establish additional procedures. Information concerning any charges or
procedures is available from the Institutions. Redemption orders are effected
at the net asset value per share next determined after acceptance of the order
by Stephens, the Transfer Agent or their respective agents.
The LifeGoal Portfolios may redeem a shareholder's Primary A Shares if the
balance in such shareholder's account with the Portfolio drops below $500 as a
result of redemptions, and the shareholder does not increase the balance to at
least $500 on 60 days' written notice. If a customer has agreed with a
particular institution to maintain a minimum balance in his or her account at
the institution, and the balance in such institution account falls below that
minimum, the customer may be obliged to redeem all or a part of his or her
Primary A Shares in the LifeGoal Portfolios to the extent necessary to maintain
the required minimum balance in such institution account. The LifeGoal
Portfolios also may redeem shares involuntarily or make payment for redemption
in readily marketable securities or other property under certain circumstances
in accordance with the 1940 Act.
How To Exchange Shares
The exchange feature enables a shareholder of Primary A Shares of a LifeGoal
Portfolio to acquire Primary A Shares of another fund in the Nations Funds
Family (which includes both LifeGoal Portfolios and Nations Funds) when that
shareholder believes that a shift between funds is an appropriate investment
decision. An exchange of Primary A Shares of a LifeGoal Portfolio for Primary A
Shares of another Nations Fund is made on the basis of the next calculated net
asset value per share of each fund after the exchange order is received.
The LifeGoal Portfolios and each of the other funds of the Nations Funds Family
may limit the number of times this exchange feature may be exercised by a
shareholder within a specified period of time. Also, the exchange feature may
be terminated or revised at any time by the LifeGoal Portfolios upon such
notice as may be required by applicable regulatory agencies (presently 60 days
for termination or material revision), provided that the exchange feature may
be terminated or materially revised without notice under certain unusual
circumstances.
The current prospectus for each Fund describes its investment objective and
policies, and shareholders should obtain a copy and examine it carefully before
exchanging to another fund. Exchanges are subject to the minimum investment
requirement and any other conditions imposed by each fund. In the case of any
shareholder holding a share certificate or certificates, no exchanges may be
made until all applicable share certificates have been received by the Transfer
Agent and deposited in the shareholder's account. An exchange will be treated
for federal income tax purposes the same as a redemption of shares, on which
the shareholder may realize a capital gain or loss. However, the ability to
deduct capital losses on an exchange may be limited in situations where there
is an exchange of shares within 90 days after the shares are purchased.
The LifeGoal Portfolios reserve the right to reject any exchange request. Only
shares that may legally be sold in the state of the investor's residence may be
acquired in an exchange. Only shares of a class that is accepting investments
generally may be acquired in an exchange.
Provided your institution allows 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.
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How The LifeGoal Portfolios Value Their Shares
The net asset value of a share of each class is calculated by dividing the
total value of its assets, less liabilities, by the number of shares in the
class outstanding. Shares of the LifeGoal Portfolios are valued as of the close
of regular trading on the Exchange (currently 4:00 p.m., Eastern time) on each
Business Day. In the event that the Exchange closes early, shares of the
LifeGoal Portfolios will be priced as of the time the Exchange closes.
Currently, the days on which the Exchange is closed (other than weekends) are:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day (observed), Independence Day, Labor Day, Thanksgiving and
Christmas.
The Nations Funds determine their net asset value per share on a daily basis.
The net asset value of the LifeGoal Portfolio shares will be determined by
reference to the net asset value of the underlying Nations Fund.
How Dividends And Distributions Are Made; Tax Information
Dividends And Distributions
Each LifeGoal Portfolio declares and pays dividends from net investment income
quarterly. Each LifeGoal Portfolio's net realized capital gains (including net
short-term capital gains) are distributed at least annually. Distributions from
capital gains are made after aplying any available capital loss carryovers.
Distributions paid by the LifeGoal Portfolios with respect to one class of
shares may be greater or less than those paid with respect to another class of
shares due to the different expenses of the different classes.
Primary A Shares of LifeGoal Portfolios are eligible to receive dividends when
declared, provided, however, that the purchase order for such shares is
received at least one day prior to the dividend declaration and such shares
continue to be eligible for dividends through and including the day before the
redemption order is executed.
The net asset value of Primary A Shares in LifeGoal Portfolios will be reduced
by the amount of any dividend or distribution. Dividends are paid in the form
of additional Primary A Shares of the same LifeGoal Portfolio unless the
Customer or investor has elected no less than ten business days prior to the
date of distribution to receive payment in cash. Such election, or any
revocation thereof, must be made in writing to LifeGoal Portfolio's Transfer
Agent and will become effective with respect to dividends paid after its
receipt. Accordingly, dividends and distributions on newly purchased Primary A
Shares represent, in substance, a return of capital. However, such dividends
and distributions would nevertheless be taxable.
Tax Information
Each of the LifeGoal Portfolios intends to continue to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). In general, such qualification relieves a LifeGoal Portfolio of
liability for federal income tax to the extent all of its annual earnings are
distributed in accordance with the Code. Each LifeGoal Portfolio intends to
distribute substantially all of its earnings each taxable year.
Any distributions by a LifeGoal Portfolio of its net investment income
(including net foreign currency gains) and the excess, if any, of its net
short-term capital gain over its net long-term capital loss generally will be
taxable as ordinary income to shareholders whether such income is received in
cash or reinvested in additional shares.
Corporate shareholders in the LifeGoal Portfolios may be entitled to the
dividends-received deduction for distributions attributable to those underlying
funds investing in the stock of domestic corporations to the extent of the
total qualifying dividends received by the distributing fund.
Substantially all of the net realized long-term capital gains of the LifeGoal
Portfolios, if any, will be distributed at least annually to the LifeGoal
Portfolios' shareholders. The LifeGoal Portfolios will generally have no tax
liability with respect to such gains, and the distributions generally will be
taxable to shareholders as net capital gain, regardless of how long the
shareholders have held such LifeGoal Portfolios' shares and whether such gains
are received in cash or reinvested in additional shares. Noncorporate
shareholders may be taxed on such distributions at preferential rates.
Each year, shareholders will be notified as to the amount and federal tax
status of all dividends and capital gain distributions paid during the prior
year. Such dividends and distributions may also be subject to state and local
taxes.
Dividends and capital gain distributions declared in October, November or
December of any year payable to shareholders of record on a specified date in
such months will be deemed to have been received by shareholders and paid by a
LifeGoal Portfolio on December 31 of such year in the event such dividends and
distributions are actually paid during January of the following year.
Federal law requires the Company to withhold 31% from any capital gain
distributions paid by the Company and/or redemptions (including exchanges and
redemptions in-kind) to individual shareholders unless the shareholder prop-
20
<PAGE>
erly furnishes a certified, correct Taxpayer Identification Number and
certifies that withholding does not apply. Such withholding is also required if
the Internal Revenue Service notifies the Company that the Taxpayer
Identification Number provided by the shareholder is incorrect or that the
shareholder is otherwise subject to such withholding. Amounts withheld are
applied to the shareholder's federal tax liability, and a refund may be
obtained from the Internal Revenue Service if withholding results in
overpayment of tax. Federal law also requires the LifeGoal Portfolios to
withhold tax on dividends paid to certain foreign shareholders.
The foregoing discussion is based on tax laws and regulations that were in
effect as of the date of this Prospectus and summarizes only some of the
important tax considerations generally affecting the LifeGoal Portfolios and
their shareholders. It is not intended as a substitute for careful tax
planning. Accordingly, potential investors should consult their tax advisors
with specific reference to their own tax situations and with respect to
foreign, state and local taxes. Further tax information is contained in the
SAI.
Financial Highlights
The following financial information has been derived from the audited financial
statements of the LifeGoal Portfolios. PricewaterhouseCoopers LLP is the
independent accountant to the LifeGoal Portfolios. The reports of
PricewaterhouseCoopers LLP for the most recent fiscal period of the LifeGoal
Portfolios accompany the financial statements for such period and are
incorporated by reference in the SAI, which is available upon request. For more
information see "Organization And History." Shareholders of the Portfolios will
receive unaudited semi-annual reports describing the Portfolios' investment
operations and annual financial statements audited by the LifeGoal Portfolios'
independent accountant.
FOR A PRIMARY A SHARE OUTSTANDING THOUGHOUT EACH PERIOD
LifeGoal Growth Portfolio
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
Primary A Shares 03/31/98 03/31/97*
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Operating performance:
Net asset value, beginning of year $ 10.15 $ 10.06
- ------------------------------------------------------------------------------------------
Net investment income/(loss) 0.08 (a) 0.12
- ------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 2.87 0.09
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from investment operations 2.95 0.21
- ------------------------------------------------------------------------------------------
Distributions:
Distributions from net investment income (0.01) (0.12)
- ------------------------------------------------------------------------------------------
Distributions in excess of net investment income (0.39) --
- ------------------------------------------------------------------------------------------
Distributions from net realized capital gains (0.21) --
- ------------------------------------------------------------------------------------------
Total distributions (0.61) (0.12)
- ------------------------------------------------------------------------------------------
Net asset value, end of year $ 12.49 $ 10.15
- ------------------------------------------------------------------------------------------
Total return++ 29.80% 2.10%
Ratios to average net assets/supplemental data:
- ------------------------------------------------------------------------------------------
Net assets, end of year (in 000's) $ 289 $ 929
- ------------------------------------------------------------------------------------------
Ratio of operating expenses to average net assets+++ 0.25% 0.25%+
- ------------------------------------------------------------------------------------------
Ratio of net investment income/(loss) to average net assets 0.65% 1.11%+
- ------------------------------------------------------------------------------------------
Portfolio turnover rate 69% 25%
</TABLE>
* LifeGoal Growth Portfolio Primary A Shares commenced investment operations
on October 2, 1996. Shares were offered to the public on October 15, 1996 at
$10.06 per share.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
Funds.
(a) Per share amounts have been calculated using the monthly average shares
method, which more appropriately represents the per share for the period.
21
<PAGE>
FOR A PRIMARY A SHARE OUTSTANDING THOUGHOUT EACH PERIOD
LifeGoal Balanced Growth Portfolio
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
Primary A Shares 03/31/98 03/31/97*
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating performance:
Net asset value, beginning of year $ 9.95 $ 10.05
- ----------------------------------------------------------------------------------------------------
Net investment income 0.33 (a) 0.19
- ----------------------------------------------------------------------------------------------------
Net realized and unrealized gain/(loss) on investments 1.74 (0.10)
- ----------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets resulting from investment operations 2.07 0.09
- ----------------------------------------------------------------------------------------------------
Distributions:
Distributions from net investment income (0.28) (0.19)
- ----------------------------------------------------------------------------------------------------
Distributions in excess of net investment income (0.32) --
- ----------------------------------------------------------------------------------------------------
Distributions from net realized capital gains (0.50) --
- ----------------------------------------------------------------------------------------------------
Total distributions (1.10) (0.19)
- ----------------------------------------------------------------------------------------------------
Net asset value, end of year $ 10.92 $ 9.95
- ----------------------------------------------------------------------------------------------------
Total return++ 21.74% 0.90%
- ----------------------------------------------------------------------------------------------------
Ratios to average net assets/supplemental data:
Net assets, end of year (in 000's) $ 103 $2,114
- ----------------------------------------------------------------------------------------------------
Ratio of operating expenses to average net assets+++ 0.25% 0.25%+
- ----------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2.87% 3.94%+
- ----------------------------------------------------------------------------------------------------
Portfolio turnover rate 94% 1%
</TABLE>
* LifeGoal Balanced Growth Portfolio's Primary A Shares commenced investment
operations on October 2, 1996. Shares were offered to the public on October
15, 1996 at $10.05 per share.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
Funds.
(a) Per share amounts have been calculated using the monthly average share
method, which more appropriately represents the per share data for the
period.
LifeGoal Income and Growth Portfolio
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
Primary A Shares 03/31/98 03/31/97*
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Operating performance:
Net asset value, beginning of year $ 9.97 $ 10.03
- ------------------------------------------------------------------------------------------
Net investment income 0.43 (a) 0.32
- ------------------------------------------------------------------------------------------
Net realized and unrealized gain/(loss) on investments 0.89 (0.06)
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from investment operations 1.32 0.26
- ------------------------------------------------------------------------------------------
Distributions:
Distributions from net investment income (0.40) (0.32)
- ------------------------------------------------------------------------------------------
Distributions in excess of net investment income (0.12) --
- ------------------------------------------------------------------------------------------
Distributions from net realized capital gains (0.07) --
- ------------------------------------------------------------------------------------------
Total distributions (0.59) (0.32)
- ------------------------------------------------------------------------------------------
Net asset value, end of year $ 10.70 $ 9.97
- ------------------------------------------------------------------------------------------
Total return++ 13.56% 2.59%
- ------------------------------------------------------------------------------------------
Ratios to average net assets/supplemental data:
Net assets, end of year (in 000's) $ 476 $ 223
- ------------------------------------------------------------------------------------------
Ratio of operating expenses to average net assets+++ 0.25% 0.25%+
- ------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 4.17% 6.34%+
- ------------------------------------------------------------------------------------------
Portfolio turnover rate 64% 2%
</TABLE>
* LifeGoal Income and Growth Portfolio's Primary A Shares commenced investment
operations on October 2, 1996. Shares were offered to the public on October
15, 1996 at $10.03 per share.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
Funds.
(a) Per share amounts have been calculated using the monthly average shares
method, which more appropriately represents the per share data for the
period.
22
<PAGE>
Prospectus
Primary B Shares
August 1, 1998
LIFEGOAL PORTFOLIOS
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
(NATIONS FUND LOGO)
Investment Adviser: NationsBanc Advisors, Inc.
Investment Sub-Adviser: TradeStreet Investment Associates, Inc.
Distributor: Stephens Inc.
TR-96702-8/98
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Prospectus
Primary B Shares
August 1, 1998 LIFEGOAL PORTFOLIOS:
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
This Prospectus describes three diversified investment portfolios, LIFEGOAL
GROWTH PORTFOLIO, LIFEGOAL BALANCED GROWTH PORTFOLIO, and LIFEGOAL INCOME AND
GROWTH PORTFOLIO (each a "LifeGoal Portfolio" and, collectively, the "LifeGoal
Portfolios"), of Nations LifeGoal Funds, Inc. (the "Company"), an open-end
management investment company in the Nations Funds Family. The LifeGoal
Portfolios invest substantially all of their assets in certain other funds
within the Nations Funds Family. These underlying funds are referred to in this
Prospectus as "Nations Funds." This Prospectus describes one class of shares of
each LifeGoal Portfolio -- Primary B Shares.
This Prospectus sets forth concisely the information about each LifeGoal
Portfolio that a prospective purchaser of Primary B Shares should consider
before investing. Investors should read this Prospectus and retain it for
future reference. Additional information about the LifeGoal Portfolios is
contained in a separate Statement of Additional Information (the "SAI") that
has been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request without charge by writing or calling the Nations Funds
Family at its address or telephone number shown below. The SAI for the LifeGoal
Portfolios, dated August 1, 1998, is incorporated by reference in its entirety
into this Prospectus. The SEC maintains a Web site (http://www.sec.gov) that
contains the SAI, material incorporated by reference in this Prospectus and
other information regarding registrants that file electronically with the SEC.
NationsBanc Advisors, Inc. ("NBAI") is the investment adviser to each of the
LifeGoal Portfolios. TradeStreet Investment Associates, Inc. ("TradeStreet") is
the investment sub-adviser to the LifeGoal Portfolios. As used in this
Prospectus, the term "Adviser" refers to NBAI, TradeStreet, Gartmore Global
Partners, Brandes Investment Partners, L.P. and/or Marsico Capital Management,
LLC as the context may require, see "How The LifeGoal Portfolios Are Managed."
SHARES OF THE NATIONS FUNDS FAMILY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR
ISSUED, ENDORSED OR GUARANTEED BY, NATIONSBANK, N.A. ("NATIONSBANK") OR ANY OF
ITS AFFILIATES. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. AN INVESTMENT IN THE LIFEGOAL PORTFOLIOS INVOLVES CERTAIN
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
NATIONSBANK AND CERTAIN OF ITS AFFILIATES PROVIDE SERVICES TO THE NATIONS FUNDS
FAMILY FOR WHICH THEY ARE COMPENSATED. STEPHENS INC., WHICH IS NOT AFFILIATED
WITH NATIONSBANK, IS THE SPONSOR AND ADMINISTRATOR AND SERVES AS THE
DISTRIBUTOR FOR THE LIFEGOAL PORTFOLIOS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND For Portfolio information call:
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES 1-800-621-2192
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS Nations Funds Family
A CRIMINAL OFFENSE. c/o Stephens Inc.
One NationsBank Plaza
33rd Floor
Charlotte, NC 28255
(NATIONS FUND LOGO)
</TABLE>
TR-96702-8/98
<PAGE>
Table Of Contents
Prospectus Summary 3
-----------------------------------------------------
About The
LifeGoal
Portfolios Expenses Summary 4
-----------------------------------------------------
Objectives 5
-----------------------------------------------------
How Objectives Are Pursued 6
-----------------------------------------------------
Description Of Underlying Nations Funds --
Investment Objectives, Policies And Practices 8
-----------------------------------------------------
How Performance Is Shown 13
-----------------------------------------------------
How The LifeGoal Portfolios Are Managed 15
-----------------------------------------------------
Organization And History 17
-----------------------------------------------------
How To Buy Shares 18
-----------------------------------------------------
About Your
Investment
How To Redeem Shares 19
-----------------------------------------------------
How To Exchange Shares 19
-----------------------------------------------------
Shareholder Administration Plan 20
-----------------------------------------------------
How The LifeGoal Portfolios Value Their Shares 21
-----------------------------------------------------
How Dividends And Distributions Are Made;
Tax Information 21
-----------------------------------------------------
Financial Highlights 22
-----------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE
LIFEGOAL PORTFOLIOS' SAI INCORPORATED HEREIN BY REFERENCE, IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE LIFEGOAL PORTFOLIOS
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING BY LIFEGOAL PORTFOLIOS OR BY THE DISTRIBUTOR IN ANY
JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
2
<PAGE>
About The LifeGoal Portfolios
Prospectus Summary
o TYPE OF COMPANY: Open-end management investment company.
o INVESTMENT OBJECTIVES AND POLICIES:
o LifeGoal Growth Portfolio's investment objective is to seek capital
appreciation through exposure to a variety of equity market segments.
o LifeGoal Balanced Growth Portfolio's investment objective is to seek total
return through a balanced portfolio of equity and fixed income securities.
o LifeGoal Income and Growth Portfolio's investment objective is to seek
current income and modest growth to protect against inflation and to
preserve purchasing power.
The LifeGoal Portfolios are designed for long-term investors seeking the
benefits of asset allocation and diversification. Unlike traditional mutual
funds, which invest directly in individual securities, the LifeGoal Portfolios
pursue their investment objectives by allocating their assets among various
Nations Funds.
o INVESTMENT ADVISER: NationsBanc Advisors, Inc. serves as the investment
adviser to the LifeGoal Portfolios. NBAI provides investment management
services to more than 60 investment company portfolios in the Nations Funds
Family. TradeStreet Investment Associates, Inc., an affiliate of NBAI,
provides investment sub-advisory services to the LifeGoal Portfolios.
o DIVIDENDS AND DISTRIBUTIONS: Each LifeGoal Portfolio declares and pays
dividends from net investment income quarterly. Each LifeGoal Portfolio's
net realized capital gains, including net short-term capital gains, are
distributed at least annually.
o RISK FACTORS: Although NBAI, together with TradeStreet, seek to achieve the
investment objective of each LifeGoal Portfolio, there is no assurance that
they will be able to do so. Investments in a LifeGoal Portfolio are not
insured against loss of principal. Investments by a LifeGoal Portfolio in
shares of a Nations Fund that holds stocks are subject to stock market risk,
which is the risk that the value of the stocks held by Nations Funds may
decline over short or even extended periods. In addition, certain of the
Nations Funds may invest in securities of smaller and newer issuers.
Investments in such companies may present greater opportunities for capital
appreciation because of high potential earnings growth, but also present
greater risks than investments in more established companies with longer
operating histories and greater financial capacity. Investments by a
LifeGoal Portfolio in shares of a Nations Fund that holds debt securities
are subject to interest rate risk, which is the risk that the value of the
debt securities, including U.S. Government Obligations, held by Nations
Funds may be adversely affected by changes in market interest rates. The
value of Nations Funds' investments in debt securities will tend to decrease
when interest rates rise and increase when interest rates fall. In addition,
debt securities which are not issued or guaranteed 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 may constitute derivative
securities. Certain types of derivative securities can, under particular
circumstances, significantly increase an investor's exposure to market and
other risks. For a discussion of these and other factors, see "How
Objectives Are Pursued -- General Characteristics and Risk Factors of the
Major Asset Classes" and "Description of Underlying Nations Funds --
Principal Risk Considerations."
o MINIMUM PURCHASE: $1,000 minimum initial investment per record holder. See
"How To Buy Shares."
3
<PAGE>
Expenses Summary
Expenses are one of several factors to consider when investing in a LifeGoal
Portfolio. The following tables summarize estimated shareholder transaction and
operating expenses as a percentage of average net assets for Primary B Shares
of each LifeGoal Portfolio. The Examples show the cumulative expenses
attributable to a hypothetical $1,000 investment in each LifeGoal Portfolio
over specified periods.
LIFEGOAL PORTFOLIO PRIMARY B SHARES
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
LifeGoal LifeGoal
LifeGoal Balanced Income and
Growth Growth Growth
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
Sales Load Imposed on Purchases None None None
Deferred Sales Load None None None
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management Fees .25% .25% .25%
Other Expenses (After Fee Waivers) .50% .50% .50%
Total Operating Expenses (After Fee Waivers) .75% .75% .75%
</TABLE>
Examples:You would pay the following expenses on a $1,000 investment in Primary
B Shares of the indicated LifeGoal Portfolio, assuming indirect expenses (the
LifeGoal Portfolios' share of the expenses incurred by the underlying Nations
Funds) at the midpoint of the after waiver ranges shown below and further
assuming: (1) a 5% annual return and (2) redemption at the end of each time
period.
<TABLE>
<CAPTION>
LifeGoal LifeGoal
LifeGoal Balanced Income and
Growth Growth Growth
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
1 Year $ 17 $ 16 $ 15
3 Years $ 52 $ 49 $ 46
5 Years $ 89 $ 85 $ 79
10 Years $194 $186 $172
</TABLE>
The purpose of the foregoing tables is to assist an investor in understanding
the various shareholder transaction and operating expenses that an investor in
Primary B Shares of a LifeGoal Portfolio can expect. The figures in the above
tables show the basis on which payments will be made, except that Other
Expenses are estimated for the LifeGoal Portfolios' current fiscal year and the
Examples include indirect expenses for the underlying Nations Funds' most
recent fiscal year (or estimates thereof for new funds). For more complete
descriptions of the LifeGoal Portfolios' operating expenses, see "How The
LifeGoal Portfolios Are Managed."
After fee waivers, "Other Expenses" and "Total Operating Expenses" for Primary
B Shares of each LifeGoal Portfolio would have been .60% and .85%,
respectively.
THE FOREGOING SHOULD NOT BE CONSIDERED TO BE AN ACTUAL REPRESENTATION OF PAST
OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES AND RATES OF RETURN MAY BE
GREATER OR LESS THAN THOSE SHOWN.
4
<PAGE>
LifeGoal Portfolios' Indirect Expenses
Based on 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, 1998 and the expected percentage investment ranges in the underlying
Nations Funds, the range of the weighted average indirect expense ratio for
each LifeGoal Portfolio is as follows:
<TABLE>
<CAPTION>
(after fee waivers (before fee waivers
and/or expense and/or expense
reimbursements) reimbursements)
<S> <C> <C>
LifeGoal Growth Portfolio .56% to 1.22% .88% to 1.37%
LifeGoal Balanced Growth Portfolio .61% to 1.00% .87% to 1.15%
LifeGoal Income and Growth Portfolio .49% to .89% .74% to 1.10%
</TABLE>
The indirect expense ratios fluctuate within these ranges depending upon how
assets are allocated among the Nations Funds. The LifeGoal Portfolios will be
invested in the Primary A Shares of the underlying Nations Funds and, under
normal market conditions, will be allocated among the various fund categories
in the percentages shown below. Under extraordinary circumstances, a LifeGoal
Portfolio's investment in one or more Nations Funds might exceed these ranges.
For temporary defensive purposes, any LifeGoal Portfolio may invest up to 100%
of its assets in Nations Prime Fund, a money market fund.
Objectives
o LIFEGOAL GROWTH PORTFOLIO -- LifeGoal Growth Portfolio's investment objective
is to seek capital appreciation through exposure to a variety of equity
market segments.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
<S> <C> <C>
Large-Capitalization
Domestic Equity Funds 40-75% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marsico Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
Small/Mid-Capitalization
Domestic Equity Funds 15-35% Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Nations Small Company Growth Fund
Core International Equity Funds 10-20% Nations International Equity Fund
Nations International Value Fund
Non-Core International Equity Funds 0-10% Nations Emerging Markets Fund
Nations Pacific Growth Fund
</TABLE>
o LIFEGOAL BALANCED GROWTH PORTFOLIO -- LifeGoal Balanced Growth Portfolio's
investment objective is to seek total return through a balanced portfolio of
equity and fixed income securities.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
<S> <C> <C>
Large-Capitalization Domestic
Equity Funds 20-40% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marsico Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
Small/Mid-Capitalization
Domestic Equity Funds 10-20% Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Nations Small Company Growth Fund
Core International Equity Funds 5-15% Nations International Equity Fund
Nations International Value Fund
Core Bond Funds 40-60 Nations Diversified Income Fund
Nations Strategic Fixed Income Fund
</TABLE>
5
<PAGE>
o LIFEGOAL INCOME AND GROWTH PORTFOLIO -- LifeGoal Income and Growth
Portfolio's investment objective is to seek current income and modest growth
to protect against inflation and to preserve purchasing power.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
<S> <C> <C>
Large-Capitalization Domestic
Equity Funds 10-30% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marsico Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
Small/Mid-Capitalization Domestic
Equity Funds 0-10% Nations Small Company Growth Fund
Core International Equity Funds 0-10% Nations International Equity Fund
Nations International Value Fund
Short Duration Bond Funds 50-90% Nations Short-Term Income Fund
Nations Short-Intermediate Government Fund
Money Market Funds 0-20% Nations Prime Fund
</TABLE>
The LifeGoal Portfolios are intended primarily for long-term investors. The
LifeGoal Portfolios are structured as "funds of funds" that allocate
substantially all of their assets to investments in Primary A Shares of various
Nations Funds. The performance of the LifeGoal Portfolios will, therefore,
correspond to the performance of the various underlying Nations Funds.
Additional information about the underlying Nations Funds, including their
investment objectives, investment policies and practices, is set forth below
under "Descriptions of Underlying Nations Funds -- Investment Objectives,
Policies and Practices." The Adviser allocates and reallocates each LifeGoal
Portfolio's assets among the underlying Nations Funds identified above and
potentially other Nations Funds, based on the percentage ranges shown above,for
the various fund categories. As discussed below under "The Asset Allocation
Process," a LifeGoal Portfolio's actual investment allocation may deviate from
the percentage ranges shown above, over the short or long term.
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 (i.e., international
stocks, domestic stocks, bonds) in varying portions to gain exposure to the
different return/risk characteristics of each asset class. Asset classes and
market segments (large, mid and small capitalization stocks) tend to react in
different ways to changes in economic conditions. Therefore, an investment
approach that combines various market segments and asset classes may reduce
overall portfolio volatility.
The assets of each LifeGoal Portfolio are allocated among various asset classes
through their investment in different fund categories. Each LifeGoal Portfolio
has its own asset allocation strategy which gives it a distinctive risk profile
and offers different return potential. Investors should select the LifeGoal
Portfolio (or Portfolios) which best matches their investment goals, risk
tolerance and investment horizon.
In general, the greater the LifeGoal Portfolio's percentage allocation to
equity funds, the greater the potential return and risk of share price decline.
Because of equity funds' greater risks, investors in the LifeGoal Portfolios
that have a higher allocation to equity funds should have a longer investment
horizon. In general, the greater the LifeGoal Portfolio's percentage allocation
to bond funds, the greater the potential price stability; however, returns may
be lower.
Investment performance will vary based on many factors, including market
conditions and the composition of a LifeGoal Portfolio's portfolio. Investment
performance also often reflects the risks associated with a LifeGoal
Portfolio's investment objective and policies. These factors should be
considered when comparing a LifeGoal Portfolio's investment results to those of
other mutual funds and to market indexes.
Although the Adviser will seek to achieve the investment objective of each
LifeGoal Portfolio, there is no assurance that it will be able to do so. No
single LifeGoal Portfolio should be considered, by itself, to provide a
complete investment program for any investor. The net asset value of the shares
of a LifeGoal Portfolio fluctuates based on fluctuations in the values of the
underlying Nations Funds' shares, which, in turn, fluctuate based on market
conditions and other factors. Therefore, investors should not rely upon
LifeGoal Portfolios for short-term financial needs. LifeGoal Portfolios are not
intended to provide a vehicle for participating in short-term swings in the
stock market, are not insured against loss of principal.
6
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The Asset Allocation Process
Subject to the general supervision of the Company's Board of Directors, the
Adviser is responsible for allocating and reallocating each LifeGoal
Portfolio's assets among the Nations Funds in which it invests, and for
rebalancing such portfolio allocations. In this context, allocation is the
process of setting or changing the weightings of the different fund categories
and Nations Funds within a particular LifeGoal Portfolio's portfolio. The
"weightings" of the different fund categories and Nations Funds within a
particular LifeGoal Fund's portfolio are the percentage targets that the
Adviser sets for investment in a particular fund category or Nations Fund. All
fund category weightings will be within the overall percentage ranges shown
above. Rebalancing is the process of bringing portfolio allocations back into
alignment with the applicable weightings. A LifeGoal Portfolio's investments
are continuously monitored and are reallocated as often as the Adviser deems
appropriate. In addition, portfolio allocations and performance are reviewed at
least monthly for rebalancing at the discretion of the Adviser.
Although the Adviser may rebalance each LifeGoal Portfolio's holdings
quarterly, it expects to rebalance less often. Thus, at any given time, it is
possible that the percentage of a particular LifeGoal Portfolio's assets
actually invested in a particular Nations Fund or fund category will not
correspond precisely with the applicable weightings. Also, depending on the
frequency of rebalancings, the extent of any such deviation could continue for
some time.
The Adviser has adopted certain policies designed to reduce the extent and
duration of such deviations. For example, if any fund category percentage
ranges are exceeded, the Adviser will allocate new investment dollars to the
other fund categories. Likewise, the Adviser will allocate new investment
dollars to fund categories whose minimum percentages have not been met.
Redemption requests, however, will generally be met by redeeming shares of
underlying Nations Funds according to the applicable weightings.
Determining the asset allocation applicable to each LifeGoal Portfolio is a two
step process. The first step is determining the broad asset classes for each
LifeGoal Portfolio -- large and small capitalization domestic stocks, foreign
stocks, bonds and money market securities. In making this determination, the
Adviser will consult the relevant historical data for the returns of each asset
class in various economic scenarios. Those returns will be reviewed in the
context of the Adviser's outlook for the economy and markets and adjusted for
reasonableness. The second step in the process is to determine the particular
Nations Funds in which each LifeGoal Portfolio will invest. The Adviser looks
at historic returns and valuations to determine which Nations Funds are most
appropriate. Determining how the individual Nations Funds may interact with one
another within a portfolio is a critical part of this second step.
Although it is expected that the LifeGoal Portfolios will invest in the Nations
Funds identified in "Description of Underlying Nations Funds," the Adviser has
the discretion to change the particular Nations Funds used as underlying
investments for the LifeGoal Portfolios. Among other things, the Adviser may
substitute or include other funds from the Nations Funds Family, including any
funds introduced subsequent to the date of this Prospectus, as permissible
investments for the LifeGoal Portfolios.
General Characteristics and Risk Factors of the Major Asset Classes
The underlying Nations Funds invest primarily in various stocks, bonds and
money market securities. This section provides a brief summary of the general
characteristics and overall risk factors associated with these asset classes.
Additional information is provided under "Description of Underlying Nations
Funds" below and in the prospectuses of the underlying Nations Funds.
Common stocks represent ownership in a company. Stock prices move with changes
in a company's current earnings and its prospects for the future, and with
overall stock market conditions. Stocks offer the potential for price
appreciation and rising dividends. While smaller companies usually reinvest
their earnings back into the company and therefore pay minimal, if any,
dividends, they offer the possibility of greater appreciation.
Historically, stocks have provided higher returns than bonds or money market
securities. Therefore, they have also provided the greatest protection against
inflation and the resulting erosion of purchasing power. However, the
additional return has been accompanied by additional volatility. Equity
investors should have a long-term investment horizon and be willing to accept
the inevitable periods of market declines.
Bonds are a contract. The issuer has an obligation to pay a specified rate of
interest (which may be fixed or variable) at specified times and to repay the
bond's principal value upon maturity. Bonds are subject to credit risk and to
interest rate risk. Credit risk refers to the possibility that a bond's price
may fall due to a credit downgrade or a principal or interest payment default.
Interest rate risk refers to a bond's price movement in response to changes in
market interest rates. As a general rule, when market interest rates rise, bond
prices fall. Typically, the longer the maturity of a bond, the greater the
potential price fluctuation.
Money market securities are short term debt obligations issued primarily by the
U.S. Government, government agencies or corporations. High quality money market
securities are very low risk investments; their low risk, however, is
accompanied by lower potential returns relative to other investments.
Investment Company Securities: Each of the LifeGoal Portfolios intends, as a
fundamental policy, to concentrate investments by investing 25% or more of its
total assets in the mutual fund industry.
Although some of the Nations Funds in which the LifeGoal Portfolios invest do
not necessarily share the same invest-
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ment objective as the investing LifeGoal Portfolio, those Nations Funds will be
selected by the Adviser based on the asset allocation process described above.
Although each LifeGoal Portfolio intends to invest substantially all of its
assets in some or all of the underlying Nations Funds, each LifeGoal Portfolio
reserves the right to invest in obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, repurchase agreements and money
market instruments with respect to any assets not so invested in Nations Funds.
It is not expected that any LifeGoal Portfolio will invest more than 5% of its
assets in any of these direct investments.
Investment Limitations: Each LifeGoal Portfolio is subject to a number of
investment limitations, which are described in the SAI. Among other things, the
LifeGoal Portfolios' fundamental policies permit them to borrow money from banks
for temporary or emergency purposes, subject to percentage and other
limitations, and to enter into forward purchase commitments and issue multiple
classes of shares. The investment objective, policies and limitations of each
LifeGoal Portfolio, unless otherwise speci fied, may be changed without a vote
of the LifeGoal Portfolio's shareholders. If the investment objective, policies
or limitations of a LifeGoal Portfolio change, shareholders should consider
whether the LifeGoal Portfolio remains an appropriate investment in light of
their current position and needs.
The Nations Funds also have adopted certain investment restrictions which may
be more or less restrictive than those applicable to the LifeGoal Portfolios,
thereby allowing a LifeGoal Portfolio to participate in certain investment
strategies indirectly that are prohibited under the investment restrictions
described in the LifeGoal Portfolios' SAI. The investment restrictions of the
underlying Nations Funds are set forth in their respective prospectuses and
statements of additional information.
Portfolio Turnover: Generally, LifeGoal Portfolios will purchase portfolio
securities for capital appreciation or investment income, or both, and not for
short-term trading profits. The LifeGoal Portfolios' portfolio turnover rates
are not expected to exceed 50% annually.
Description of Underlying Nations Funds -- Investment Objectives,
Policies and Practices
The LifeGoal Portfolios seek to achieve their investment objectives by
investing in certain Nations Funds (each, a "Fund"). The following section
provides summaries of the Nations Funds' investment objectives, policies and
practices. These summaries are intended to help investors understand some of
the more significant aspects of the underlying Nations Funds, but are not
intended to be comprehensive disclosures of all policies, practices and risks
associated with investments by the LifeGoal Portfolios in the Nations Funds. To
receive a prospectus for any underlying Nations Fund, which contains more
complete information, please call Nations Funds at 1-800 621-2192.
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:
o above-average earnings growth relative to Standard & Poor's 500 Composite
Stock Price Index ("S&P 500 Index")1;
o established operating histories, strong balance sheets and favorable
financial characteristics; and
o 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. In selecting stocks for the Fund,
the Adviser utilizes quantitative analysis and optimization tools. This
approach seeks to identify companies with improving profit potential through
analysis of earnings forecasts issued by investment banks, broker/dealers and
other investment professionals. The Adviser believes that companies
experiencing such earnings trends have the potential to generate significant
increases in per share earnings. The Adviser also believes that companies with
increasing earnings should experience positive trends in their stock price.
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.
- ------------------
1 "Standard & Poor's" and "Standard & Poor's 500" are trademarks of The
McGraw-Hill Companies, Inc.
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Nations Emerging Growth Fund: The Fund's investment objective is to seek
capital appreciation by investing in emerging growth companies that are
believed to have superior long-term earnings growth prospects. The Fund
primarily invests in emerging growth companies with revenues between $50
million and $1.5 billion and a debt ratio of less than 50% of capitalization.
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 managing the
Fund, the Adviser applies a disciplined process with rigorous fundamental
analysis providing the basis for stock selection. Its methodology combines
fundamental, valuation and momentum-based disciplines in portfolio
construction. 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 greater than
that of larger companies. Accordingly, while they may have greater potential
for gains, they also carry greater downside risk.
Nations Equity Income Fund: The Fund's investment objective is to seek current
income and growth of capital by investing primarily in companies with
above-average dividend yields. The investment program of the Fund is based on
several premises. First, dividends are normally a more stable and predictable
source of return than capital appreciation. Second, diversifying equity
holdings in a manner that includes every major economic sector 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 provided by the stocks in the S&P 500
Index with less volatility. Collectively, these traits may be combined in such
fashion as to produce returns in excess of the market, as measured by the S&P
500 Index, on a comparable risk basis.
Under normal circumstances, the Fund will invest at least 65% of its assets in
income-producing common stocks, including securities convertible into or
ultimately exchangeable for common stock (i.e., convertible bonds or
convertible preferred stock), whose prospects for dividend growth and capital
appreciation are considered favorable by the Adviser. The Fund also may invest
its assets in fixed-income securities (corporate and government bonds of
various maturities), preferred stocks and warrants and other debt securities,
including up to 5% of its assets in debt securities that are rated below
investment grade (e.g. rated "BB" by S&P) or if not rated, are of equivalent
investment quality as determined by the Adviser. The Fund may invest a portion
of its assets in foreign securities.
Nations Managed Index Fund: The Fund's investment objective is to seek, over the
long-term, to provide a total return that (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 market
capitalization weighted index consisting of 500 common stocks chosen for market
size, liquidity and industry group representation.
Unlike traditional index funds, the Fund has a "managed" overlay. 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 300 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 80% of its total assets in common stocks which are included in
the S&P 500 Index. The Fund is expected, however, to maintain a position in
high-quality short-term debt securities and money market instruments to meet
redemption requests.
Nations Managed SmallCap Index Fund: The Fund's investment objective is to
seek, over the long-term, to provide a total return that (gross of fees and
expenses) exceeds that of 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 market capitalization weighted
index consisting of 600 domestic stocks which captures the economic and
industry characteristics of small stock performance.
Unlike traditional index funds, the Fund has a "managed" overlay. 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 400 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 80% 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 Marsico Focused Equities Fund: The Fund's investment objective is to
seek long-term growth of capital. The Fund is a non-diversified fund that
pursues its objective by normally investing in a core position of 20-30 common
stocks. In choosing stocks, the Adviser attempts to identify individual
companies with earnings growth potential that may not be recognized by the
market at large. In seeking such opportunities, the Adviser looks for a
combination of four factors: change (products, markets and tech-
- ------------------
2 "Standar & Poor's" and "Standard & Poor's SmallCap 600" are trade-
marks of The McGraw-Hill Companies, Inc.
9
<PAGE>
nologies that are in flux), franchise (brand franchises that can be leveraged),
global reach (companies that consider world markets rather than local markets)
and themes (companies that are moving with, not against, major social, economic
and cultural shifts). Once an opportunity is identified, it is subject to a
disciplined analytical process that takes into consideration such macroeconomic
factors as interest rates, inflation, the regulatory environment, the global
competitive landscape, and such microeconomic factors as company fundamentals,
market franchise and company management.
Under normal circumstances the Fund invests at least 65% of its assets in large
capitalization common stocks selected for their growth potential. The Fund also
may invest to a lesser degree, in other types of securities such as preferred
stocks, warrants, convertible securities and debt securities.
Nations Marsico Growth & Income Fund: The Fund's investment objective is to
seek long-term growth of capital with a limited emphasis on income. The Fund
will typically invest in large capitalization stocks. The Fund may invest in
any combination of common stocks, preferred stocks, warrants, convertible
securities and debt securities. In building the portfolio, the Adviser seeks to
indentify individual companies with earnings growth potential not recognized by
the market at large. In seeking such opportunities, the Adviser looks for a
combination of four factors: change (products, markets and technologies that
are in flux), franchise (brand franchise that can be leveraged), global reach
(companies that consider world markets rather than local markets) and themes
(companies that are moving with, not against, major social, economic and
cultural shifts). Once an opportunity is identified, it is subject to a
disciplined analytical process that takes into consideration macroeconomic
factors such as interest rates, inflation, the regulatory environment, the
global competitive landscape, and company fundamentals, such as market
franchise and company management.
Under normal circumstances, the Fund invests up to 75% of its assets in equity
securities selected primarily for their growth potential and at least 25% of
its assets in securities with income potential. However, in adverse market
conditions, the Fund may reduce the growth component of its portfolio to 25% of
its total assets. Additionally, the Adviser may shift the Fund's assets between
the growth and income components based on relevant market, financial and
economic conditions.
Nations Small Company Growth Fund: The Fund's investment objective is to seek
long-term capital growth by investing capital primarily in equity securities.
In pursuing its investment objective, under normal circumstances, the Fund will
invest at least 65% of its total assets in equity securities of companies with
a market capitalization of $1 billion or less. The investment philosophy of
Nations Small Company Growth Fund is based on the premise that stock prices are
driven by earnings growth and that superior stock market returns occur when a
company experiences rapid and accelerating earnings growth due to improving
fundamentals.
In managing the Fund, the Adviser applies a disciplined process with rigorous
fundamental analysis providing the basis for stock selection. Its methodology
combines fundamental, valuation and momentum-based disciplines in portfolio
construction. Overall, the Fund's strategy is to own those investments offering
both attractive fundamental valuation and relatively good prospects for
earnings improvement. Typically, two types of companies are candidates for
purchase: (i) mature companies which may have fallen from a larger market value
due to business difficulties, but which now exhibit improving prospects; and
(ii) smaller or younger companies which are experiencing strong trends in
earnings growth, but remain reasonably valued and therefore offer premium
growth at a discount in comparison to other companies.
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 in securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("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 such cases, events occurring in such
country are more likely to affect the Fund's investments.
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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 International Value Fund: The Fund's investment objective is to seek
long-term capital appreciation by investing primarily in equity securities of
foreign issuers, including emerging markets countries. The Fund pursues its
investment objective, under normal circumstances, by investing its assets in
the securities of issuers in at least three different foreign countries.
Although the Fund may invest in companies of various sizes it typically invests
in established companies. The Adviser is committed to the use of the Graham &
Dodd-Style value investing approach as introduced in the classic book Security
Analysis. The Adviser's approach to selecting stocks for the Fund is value
driven and it seeks to purchase a diversified group of businesses at prices
that research indicates are below true long-term, or intrinsic, value. In so
doing the Adviser seeks to secure not only a possible margin of safety against
price declines, but also an attractive opportunity for profit over the business
cycle. In analyzing a company's long-term value, the Adviser uses sources of
information such as company reports, filings with the SEC, computer databases,
industry publications, brokerage firm research reports and interviews with
company management.
Under normal circumstances, the Fund intends to invest at least 65% of its
total assets in equity securities of non-U.S. issuers whose market
capitalizations exceed $1 billion at the time of purchase. Although the Fund
intends to invest primarily in equity securities listed on stock exchanges it
also may invest in equity securities traded over the counter and in private
placements. Typically, no more than 5% of total Fund assets will be invested in
any one equity security at the time of purchase. Countries in which the Fund
may invest include, but are not limited to, the nations of Western Europe,
North and South America, Australia, Africa and Asia. During temporary defensive
periods in response to unusual and adverse conditions, the Fund's assets may be
invested without limitation in short-term debt instruments and in securities of
U.S. issuers.
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 loss 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 U.S. Government Obligations. 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 of the
Fund will not exceed five years 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
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<PAGE>
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 will
it exceed 15 years. Under normal market conditions, the Fund will invest at
least 65% of the total value of its assets in government, corporate and
mortgage-related 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 have
longer maturities. The Fund may invest in U.S. Treasury bills, notes and bonds
and other instruments issued directly by the U.S. Government. The Fund may also
invest in bank and commercial instruments that may be available in the money
markets, high quality short-term taxable obligations issued by state and local
governments, and repurchase agreements relating to U.S. Government Obligations.
Although the Fund is permitted to invest a portion of its assets in second tier
securities (as defined below) in accordance with Rule 2a-7 under the Investment
Company Act of 1940 as amended (the "1940 Act"), the Fund invests only in first
tier securities (as defined below). 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. Each of the
Funds may lend their portfolio securities to qualified institutional investors,
engage in repurchase agreement transactions, and invest in restricted, private
placement and other illiquid securities. Certain Nations Funds may 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.
Under Rule 2a-7 of the 1940 Act, a Money Market Fund is limited to acquiring
obligations with a remaining maturity of 397 days or less, or obligations with
greater maturities, provided such obligations are subject to demand features or
resets which are less than 397 days, and to maintaining a dollar-weighted
average portfolio maturity of 90 days or less. Quality requirements generally
limit investments to U.S. dollar denominated instruments determined to present
minimal credit risks which, at the time of acquisition, are rated in the first
or second rating categories (known as "first tier" and "second tier"
securities, respectively) by the required number of nationally recognized
statistical rating organization (each an "NRSRO") or, if unrated by any NRSRO,
are (i) comparable in priority and security to a class of short- term
securities of the same issuer that has the required rating, or (ii) determined
to be comparable in quality to securities having the required rating. The
diversification requirements provide generally that a Money Market Fund may not
at the time of acquisition invest more than 5% of its assets in securities of
any one issuer except that up to 25% of total assets may be invested in the
first tier securities of a single issuer for three business days. Securities
issued by the U.S. Government, its agencies, authorities or instrumentalities
are exempt from the quality requirements, other than minimal credit risk. In
the event that a Fund's investment restrictions or permissible investments are
more restrictive than the requirements of Rule 2a-7, the Fund's own
restrictions will govern.
Principal Risk Considerations: Investments by a Nations Fund in common stocks
and other equity securities are subject to stock market risk. 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 secu-
12
<PAGE>
rities 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 Funds may invest in securities of smaller and newer issuers.
Investments in such companies may present greater opportunities for capital
appreciation because of high potential earnings growth, but also present
greater risks than investments in more established companies with longer
operating histories and greater financial capacity.
Nations Marsico Focused Equities Fund, as a non-diversified fund, may invest in
fewer issuers than a diversified fund. Therefore, appreciation or depreciation
of an investment in a single issuer could have a greater impact on the Fund's
net asset value. The Fund reserves the right to become a diversified fund by
limiting the investments in which more than 5% of its total assets are
invested.
In addition, the Euro will become the single currency in at least 11 European
nations used in many financial transactions. Accordingly, the German mark,
French franc and other national currencies will no longer be used. Although the
impact of implementing the Euro is not possible to predict, the transition
could have an effect on the financial markets and economic environment in
Europe and other parts of the world. For example, investors may begin to view
those countries participating in the Economic Monetary Union as a single
combined entity and may alter their investment behavior accordingly. In
response to any such effect of the Euro implementation, the Adviser may need to
adapt its investment policies and strategy.
Certain of the U.S. Government Obligations that may be purchased by a Nations
Fund (or, under certain circumstances, directly by a LifeGoal Portfolio) are
not backed by the U.S. Treasury. For example, some U.S. Government Obligations
are supported only by the credit of the issuer/guarantor or by the right of the
issuer/guarantor to borrow from the U.S. Government. In addition, the market
value of U.S. Government Obligations may fluctuate due to fluctuations in
market interest rates. Certain types of U.S. Government Obligations are subject
to fluctuations in maturity, yield or value due to their structure or contract
terms.
Certain of the underlying Nations Funds may invest in derivative securities
("derivatives"). A derivative is a financial instrument whose value is based,
at least partly, on the value of an underlying stock, stock index, future or
other security. Examples of such derivatives include futures contracts,
options, interest rate and currency swap transactions. Certain types of
derivatives can, under certain circumstances, significantly increase an
investor's exposure to market or other risks.
Year 2000 Issue: Many computer programs employed throughout the world use two
digits to identify the year. Unless modified, these programs may not correctly
handle the change from "99" to "00" on January 1, 2000, and may not be able to
perform necessary functions. Any failure to adapt these programs in time could
hamper the LifeGoal Portfolios' operations. The LifeGoal Portfolios' principal
service providers have advised the LifeGoal Portfolios that they have been
actively working on implementing necessary changes to their systems, and that
they expect that their systems will be adapted in time, although there can be
no assurance of success. Because the Year 2000 issue affects virtually all
organizations, the companies or governmental entities in which the LifeGoal
Portfolios invest also could be adversely impacted by the Year 2000 issue,
although the extent of such impact cannot be predicted. To the extent the
impact on a portfolio holding is negative, a LifeGoal Portfolio's return could
be adversely affected.
Please consult the SAI and the prospectus of the particular Nations Fund, for
more information about investment practices and risks.
How Performance Is Shown
From time to time the LifeGoal Portfolios may advertise the total return and
yield of a class of shares. In addition, the LifeGoal Portfolios may advertise
the "total return" and "yield" of the Primary A Shares of certain underlying
Nations Funds. TOTAL RETURN AND YIELD FIGURES ARE BASED ON HISTORICAL DATA AND
ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The "total return" of a class
of shares of a LifeGoal Portfolio or Nations Fund may be calculated on an
average annual total return basis or an aggregate total return basis. Average
annual total return refers to the average annual compounded rates of return
over one-, five-, and ten-year periods or the life of a LifeGoal Portfolio or
Nations Fund (as stated in the Funds' 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
13
<PAGE>
capital gains distributions. Aggregate total return reflects the total
percentage change in the value of the investment over the measuring period
again assuming the reinvestment of all dividends and capital gain
distributions. Total return may also be presented for other periods.
"Yield" of a class of shares of a non-money market fund is calculated by
dividing the annualized net investment income per share during a recent 30-day
(or one month) period of the class by the maximum public offering price per
share on the last day of that period. "Yield" of a class of shares of a money
market fund, such as the Nations Prime Fund, is calculated by annualizing the
income generated by an investment in such class over a seven-day period, and
showing it as a percentage of that investment. "Effective yield" assumes
reinvestment of income.
Investment performance, which will vary, is based on many factors, including
market conditions, the composition of a LifeGoal Portfolio's or Nations Fund's
portfolio and operating expenses. Investment performance also often reflects
the risks associated with a LifeGoal Portfolio's or Nations Fund's investment
objective and policies. These factors should be considered when comparing a
LifeGoal Portfolio's or Nations Fund's investment results to those of other
mutual funds and other investment vehicles. Since net asset value and yields
fluctuate, yield data cannot necessarily be used to compare an investment in
the LifeGoal Portfolios or Nations Fund with bank deposits, savings accounts,
and similar investment alternatives which often provide an agreed-upon or
guaranteed fixed yield for a stated period of time.
In addition to Primary B Shares, the LifeGoal Portfolios offer Primary A,
Investor A, Investor 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 Portfolio's shares. Any fees charged by an institution
directly to its customers' accounts in connection with investments in the
LifeGoal Portfolios will not be included in calculations of total return or
yield. The Company's annual report will contain additional performance
information and will be available upon request without charge from the LifeGoal
Portfolios' distributor or an investor's Institution, as defined below or by
calling Nations Funds at the toll free numbers indicated on the cover of this
Prospectus.
The following information shows the average annual returns of the underlying
Nations Funds in which the LifeGoal Portfolios may invest. The performance of
the underlying Nations Funds is shown for illustrative purposes only and is not
intended to show LifeGoal Portfolio performance.
NATIONS FUNDS
AVERAGE ANNUAL RETURNS -- PRIMARY A SHARES (UNAUDITED)
<TABLE>
<CAPTION>
Inception
1-Year Period 3-Year Period 5-Year Period through
FUND NAME (DATE OF COMMENCEMENT OF OPERATIONS) Ended 3/31/98 Ended 3/31/98 Ended 3/31/98 3/31/98
<S> <C> <C> <C> <C>
Nations Capital Growth Fund (9/30/92) 53.89% 29.63% 19.35% 19.47%
Nations Disciplined Equity Fund (10/1/92) 48.65% 31.57% 21.56% 27.15%
Nations Diversified Income Fund (10/30/92) 11.07% 9.05% 7.63% 8.73%
Nations Emerging Growth Fund (12/4/92) 45.09% 25.18% 19.30% 17.92%
Nations Emerging Markets Fund (6/30/95) (6.39)% N/A N/A 2.97%
Nations Equity Income Fund (4/11/91) 37.21% 25.40% 17.82% 17.18%
Nations International Equity Fund (12/2/91) 16.06% 12.09% 10.68% 8.47%
Nations International Value Fund (12/27/95) 39.92% N/A N/A 22.91%
Nations Managed Index Fund (8/1/96) 47.54% N/A N/A 41.04%
Nations Managed SmallCap Index Fund (10/15/96) 47.71% N/A N/A 29.41%
Nations Marsico Focused Equities Fund (12/31/97) N/A N/A N/A 21.30%
Nations Marsico Growth & Income Fund (12/31/97) N/A N/A N/A 20.30%
Nations Pacific Growth Fund (6/30/95) (28.35)% N/A N/A (9.86)%
Nations Short-Intermediate Government Fund (8/1/91) 9.11% 6.71% 5.08% 6.66%
Nations Short-Term Income Fund (9/30/92) 6.89% 6.74% 5.45% 5.45%
Nations Small Company Growth Fund (12/12/95) 49.41% N/A N/A 25.39%
Nations Strategic Fixed Income Fund (10/30/92) 10.53% 7.90% 6.07% 6.80%
Nations Value Fund (9/19/89) 38.53% 28.85% 20.29% 16.64%
Nations Prime Fund (12/15/86) 5.61% 5.59% 4.96% 6.00%
</TABLE>
14
<PAGE>
How The LifeGoal Portfolios Are Managed
The business and affairs of the Company are managed under the supervision and
direction of its Board of Directors. The LifeGoal Portfolios' SAI contains the
names of and general background information concerning each Director of the
Company.
As described below, the LifeGoal Portfolios are advised by NBAI which is
responsible for the overall management and supervision of the investment
management of each LifeGoal Portfolio. The LifeGoal Portfolios also are
sub-advised by TradeStreet, which as a general matter is responsible for the
day-to-day investment decisions for the LifeGoal Portfolios.
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.
NationsBank Corporation, the parent company of NationsBank, has signed an
agreement to merge with BankAmerica Corporation. The proposed merger is subject
to certain regulatory approvals and must be approved by shareholders of both
holding companies. The merger is expected to close in the second half of 1998.
NationsBank and NBAI have advised the Portfolios that the merger will not
reduce the level or quality of advisory and other services provided to the
Portfolios.
Investment Adviser: NationsBanc Advisors, Inc. serves as investment adviser to
the LifeGoal Portfolios and the Nations Funds. NBAI is a wholly owned
subsidiary of NationsBank, which in turn is a wholly owned banking subsidiary
of NationsBank Corporation, a bank holding company organized as a North
Carolina corporation. NBAI has its principal offices at One NationsBank Plaza,
Charlotte, North Carolina 28255.
TradeStreet Investment Associates, Inc., with principal offices at One
NationsBank Plaza, Charlotte, North Carolina 28255, serves as investment
sub-adviser to the LifeGoal Portfolios and most of the Nations Funds.
TradeStreet is a wholly owned subsidiary of NationsBank. TradeStreet provides
investment management services to individuals, corporations and institutions.
Gartmore Global Partners ("Gartmore"), with principal offices at One
NationsBank Plaza, Charlotte, North Carolina, 28255, serves as the investment
sub-adviser to three of the underlying Nations Funds. Gartmore is a joint
venture structured as a general partnership between NB Partner Corp., a wholly
owned subsidiary of NationsBank, and Gartmore U.S. Limited, an indirect, wholly
owned subsidiary of Gartmore Investment Management plc, a UK company which is
the holding company for a leading UK based international fund management group
of companies. National Westminster Bank plc and affiliated entities own 100% of
the equity of Gartmore Investment Management plc.
Brandes Investment Partners, L.P. ("Brandes"), with principal offices at 12750
High Bluff Drive, San Diego, California 92130, serves as investment sub-adviser
to one of the underlying Nations Funds -- Nations International Value Fund.
Marsico Capital Management, LLC ("Marsico Capital"), located at 1200 17th
Street, Suite 1300, Denver, Colorado 80202, serves as the investment
sub-adviser to two of the underlying Nations Funds -- Nations Marsico Focused
Equities Fund and Nations Marsico Growth & Income Fund. NationsBank has an
option to purchase up to 50% of Marsico Capital.
Subject to the general supervision of the Company's Board of Directors, and in
accordance with each LifeGoal Portfolio's investment policies, the Adviser is
responsible for allocating and reallocating each LifeGoal Portfolio's assets
among the Nations Funds in which it invests, and for rebalancing such portfolio
allocations. A LifeGoal Portfolio's investments are continuously monitored and
are reallocated as often as the Adviser deems appropriate. In addition,
portfolio allocations and performance are reviewed quarterly for rebalancing at
the discretion of the Adviser.
The Adviser has the ability to change the particular Nations Funds used as
underlying investments for the LifeGoal Portfolios. Among other things, the
Adviser may substitute or include other funds from the Nations Funds Family,
including any introduced subsequent to this Prospectus, as permissible
investments for the LifeGoal Portfolios. In the event the Adviser seeks to
invest the assets of a LifeGoal Portfolio in a Nations Fund not identified in
this Prospectus, the Company will amend or supplement the Prospectus to include
all pertinent information.
Both the LifeGoal Portfolios and Nations Funds have investment advisory
arrangements with NBAI. NBAI is entitled to receive advisory fees at an annual
rate of .25% of the average daily net assets of each LifeGoal Portfolio. NBAI
also has agreed to absorb all other expenses of the LifeGoal Portfolios (except
taxes, brokerage fees and commissions, extraordinary expenses, and any
applicable Rule 12b-1 fees, shareholder servicing fees and/or shareholder
administration fees). NBAI, in turn, compensates TradeStreet for investment
sub-advisory services at an annual rate of .05% of the average daily net assets
of each LifeGoal Portfolio. NBAI also receives advisory fees at varying rates
from the underlying Nations Funds, and pays TradeStreet, Gartmore, Brandes and
Marsico Capital 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 Port-
15
<PAGE>
folio. 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 Portfolios' shareholders will indirectly pay their
proportionate share of the advisory fees and other expenses of any Nations Fund
in which the LifeGoal Portfolios are invested.
For the fiscal year ended March 31, 1998, the LifeGoal Portfolios paid NBAI
advisory fees at the indicated rates of the following LifeGoal Portfolios'
average daily net assets: Nations LifeGoal Growth Portfolio -- .25%; Nations
LifeGoal Balanced Growth Portfolio -- .25%; and Nations LifeGoal Income and
Growth Portfolio -- .25%.
For the fiscal year ended March 31, 1998, NBAI paid TradeStreet sub-advisory
fees at the indicated rates of the following LifeGoal Portfolios' average daily
net assets: Nations LifeGoal Growth Portfolio -- .05%; Nations LifeGoal
Balanced Growth Portfolio -- .05%; and Nations LifeGoal Income and Growth
Portfolio -- .05%.
NBAI, TradeStreet and certain of their affiliates provide advisory and other
services to Nations Funds for which they receive compensation. The level of
compensation received and services provided by them differs among the various
Nations Funds. These differences subject the Adviser to conflicts of interest,
in that the Adviser could increase its fee income or that of its affiliates, or
attain other direct or indirect benefits, by allocating LifeGoal Portfolio
assets to underlying Nations Funds that pay higher fees or provide other
benefits.
The Co-Portfolio Managers for the LifeGoal Portfolios are E. Keith Wirtz and C.
Thomas Clapp.
Mr. Wirtz is Managing Director and Chief Investment Officer of TradeStreet and
has been responsible for the Firm's investment staff, strategy and policy since
December 1996. Prior to assuming his position with TradeStreet, from April 1992
through December 1996, he was Senior Vice President and Chief Investment
Officer of Bank of America's Investment Management Division. Mr. Wirtz has
worked in the investment community since 1981. His past experience includes
domestic and international portfolio management for both private and
institutional clients. Mr. Wirtz received his B.S. in Finance from Arizona
State University. He holds the Chartered Financial Analyst designation and is a
member of the Association for Investment Management and Research, as well as
the Los Angeles Analyst Society.
Mr. Clapp is Director of the Equity Management Group for TradeStreet. Prior to
assuming his position with TradeStreet in 1995, he was Senior Vice President
and Director of Research for the Investment Management Group at NationsBank.
Prior to joining NationsBank in 1992, Mr. Clapp was a Senior Portfolio Manager
with Royal Insurance Group. Mr. Clapp has worked in the investment community
since 1984. He received his B.A. in Economics from the University of North
Carolina at Chapel Hill and an M.B.A. from the University of South Carolina. 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.
Morrison & Foerster LLP, counsel to the Company and Nations Funds, and special
counsel to NationsBank and certain of its affiliates, has advised the Company
and Nations Funds that NationsBank and its affiliates may perform the services
contemplated by the various investment advisory agreements and this Prospectus
without violation of the Glass-Steagall Act. Such counsel has pointed out,
however, that there are no controlling judicial or administrative
interpretations or decisions and that future judicial or administrative
interpretations of, or decisions relating to, present federal or state
statutes, including the Glass-Steagall Act, and regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, as well
as future changes in such federal or state statutes, regulations and judicial
or administrative decisions or interpretations, could prevent such entities
from continuing to perform, in whole or in part, such services. If any such
entity were prohibited from performing any of such services, it is expected
that new agreements would be proposed or entered into with another entity or
entities qualified to perform such services.
Other Service Providers:Stephens Inc. ("Stephens"), a registered broker-dealer
with principal offices at 111 Center Street, Little Rock, Arkansas 72201,
serves as the administrator of the LifeGoal Portfolios pursuant to an
administration agreement. Pursuant to the terms of the administration
agreement, Stephens provides various administrative and corporate secretarial
services to the LifeGoal Portfolios, including providing general oversight of
other service providers, office space, utilities and various legal and
administrative services in connection with the satisfaction of various
regulatory requirements applicable to the LifeGoal Portfolios. Stephens will
not receive any fees from the LifeGoal Portfolios for these services.
First Data Investor Services Group, Inc. ("First Data"), a wholly owned
subsidiary of First Data Corporation, with principal offices at One Exchange
Place, Boston, Massachusetts 02109, serves as the co-administrator of the
LifeGoal Portfolios. Under the co-administration agreement, First Data provides
various administrative and accounting services to the LifeGoal Portfolios
including performing the calculations necessary to determine net asset value
per share and dividends, preparing tax returns and financial statements and
maintaining the portfolio records and certain of the general accounting records
for the LifeGoal Portfolios. For the services rendered pursuant to the
co-administration agreement, First Data is entitled to receive a fee of $10,000
per year per LifeGoal Portfolio, which will be absorbed by NBAI.
For the fiscal period ended March 31, 1998, the LifeGoal Portfolios paid First
Data the following amounts for administration services: Nations LifeGoal Growth
Portfolio --
16
<PAGE>
$4,959; Nations LifeGoal Balanced Growth Portfolio -- $4,959; and Nations
LifeGoal Income and Growth Portfolio -- $4,959.
Shares of the LifeGoal Portfolios are sold on a continuous basis by Stephens,
as the LifeGoal Portfolios' sponsor and distributor. The LifeGoal Portfolios
have entered into distribution agreements with Stephens which provide that
Stephens has the exclusive right to distribute shares of the LifeGoal
Portfolios. Stephens may pay service fees or commissions to Institutions that
assist customers in purchasing Primary B Shares of LifeGoal Portfolios.
First Data serves as the transfer agent (the "Transfer Agent") for each of
LifeGoal Portfolio's Primary B Shares. NationsBank serves as custodian for the
assets of each LifeGoal Portfolio. NationsBank also serves as the sub-transfer
agent for each LifeGoal Portfolio's Primary B Shares.
Stephens, First Data, and NationsBank all provide services at the underlying
Nations Funds level and are compensated directly by such Nations Funds for
those services.
PricewaterhouseCoopers LLP serves as independent accountant to the Company.
Their address is 160 Federal Street, Boston, Massachusetts 02110.
Expenses: Certain administrative and other fees and expenses will be charged at
the LifeGoal Portfolios and Nations Funds levels. However, redundancies of fees
and expenses between the LifeGoal Portfolios and Nations Funds will be minimal,
because distinct services are being provided at each fund level. For example,
the LifeGoal Portfolios pay advisory fees to the Adviser for its services in
allocating LifeGoal Portfolio assets among the underlying Nations Funds. These
services are distinct from the services provided by the Adviser to the Nations
Funds in managing the Nations Funds' individual portfolio securities.
NBAI, under its investment advisory agreement with the LifeGoal Portfolios, has
agreed to absorb all expenses of the LifeGoal Portfolios, except taxes,
brokerage fees and commissions, extraordinary expenses and any applicable Rule
12b-1 fees, shareholder servicing fees and/or shareholder administration fees.
The LifeGoal Portfolios' expenses that will be absorbed by NBAI include, but
are not limited to: fees paid to service providers other than the Adviser;
interest; Directors' fees; federal and state securities registration and
qualification fees; costs of preparing and printing prospectuses for regulatory
purposes and for distribution to existing shareholders; certain insurance
premiums; outside auditing and legal expenses; and costs of shareholder reports
and shareholder meetings. Primary B Shares also bear certain class specific
expenses, which are described under "Shareholder Administration Arrangements,"
below.
The LifeGoal Portfolios do not pay any front-end sales loads or contingent
deferred sales charges in connection with the purchase or redemption of shares
of the Nations Funds. By investing in Primary A Shares of the Nations Funds,
the LifeGoal Portfolios also will not be subject to any asset-based sales
charges or service fees. The sales charges or service fees associated with
purchase of shares of the LifeGoal Portfolios will not exceed the limits set
forth in Rule 2830 of the Conduct Rules of the NASD when aggregated with sales
charges or service fees, if any, that the LifeGoal Portfolios pay relating to
Nations Funds shares.
The LifeGoal Portfolios' share of the Nations Funds' expenses may include
expenses that the LifeGoal Portfolios would not have incurred if it had not
been structured as a "fund of funds." For example, if a portfolio manager of
one Nations Fund purchases the same securities that the portfolio manager of
another Nations Fund is selling, there may be transaction charges and
commissions that achieve little or no benefit for the LifeGoal Portfolios. Such
transactions will be rare because the Nations Funds pursue a broad range of
investment strategies, and therefore invest in different types of securities.
Organization And History
The LifeGoal Portfolios are members of the Nations Funds Family, which consists
of the Company, Nations Fund Trust, Nations Fund, Inc., Nations Fund
Portfolios, Inc., Nations Annuity Trust and Nations Institutional Reserves. The
Nations Funds Family currently has more than 60 distinct investment portfolios
and total assets in excess of $40 billion.
Nations LifeGoal Funds, Inc.: The Company was incorporated in Maryland on July
3, 1996 and commenced operations on October 2, 1996, and shares were offered to
the public on October 15, 1996. The Company's fiscal year end is March 31. As
of the date of this Prospectus, the authorized capital stock of Nations
LifeGoal Funds, Inc. consists of 1,200,000,000 shares of common stock, par
value of $.001 per share, which are divided into series or portfolios, each of
which includes several classes of shares. This Prospectus relates to the
Primary B Shares of the following three portfolios of the Company: LifeGoal
Growth Portfolio, LifeGoal Balanced Growth Portfolio, and LifeGoal Income and
Growth Portfolio. To obtain additional information regarding the LifeGoal
Portfolios' other classes of shares which may be available to you, contact your
Institution (as defined below) or Nations Funds at 1-800-621-2192.
Shares of each portfolio and class have equal rights with respect to voting,
except that the holders of shares of a particular Portfolio or class will have
the exclusive right to vote on matters affecting only the rights of the holders
of such portfolio or class. In the event of dissolution or liquidation, holders
of each class will receive pro rata, subject to the rights of creditors, (a)
the proceeds of the sale of that portion of the assets allocated to that class
held in
17
<PAGE>
the respective portfolio of the Company, less (b) the liabilities of the
Company attributable to the respective portfolio or class or allocated among
the Portfolios or classes based on the respective liquidation value of each
portfolio or class.
Shareholders of the Company do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all portfolios voting
together for election of directors may elect all of the members of the Board of
Directors of the Company. Meetings of shareholders may be called upon the
request of 10% or more of the outstanding shares of the Company. There are no
preemptive rights applicable to any of the Company's shares. The Company's
shares, when issued, will be fully paid and non-assessable.
As of August 1, 1998, NationsBank and its affiliates possessed or shared power
to dispose of or vote with respect to more than 25% of the outstanding shares
of the Company and therefore could be considered to be a controlling person of
the Company and each of the LifeGoal Portfolios for purposes of the 1940 Act.
For more detailed information concerning the percentage of each class or series
over which NationsBank and its affiliates possessed or shared power to dispose
or vote as of a certain date, see the SAI. 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.
The LifeGoal Portfolios reserve the right, in their discretion, to make Primary
B Shares available to other categories of investors, including those who become
eligible in connection with a merger or reorganization.
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 and Stephens reserves the right to reject any purchase order. The
issuance of Primary B Shares is recorded on the books of the LifeGoal
Portfolios, and share certificates are not issued. It is the responsibility of
Institutions to record beneficial ownership of Primary B Shares and to reflect
such ownership in the account statements provided to their Customers.
Purchase orders for Primary B Shares in the LifeGoal Portfolios which are
received by Stephens, the Transfer Agent or their respective agents before the
close of regular trading 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. In the event that the Exchange closes early, purchase orders received
prior to closing will be priced as of the time the Exchange closes and purchase
orders received after the Exchange closes will be deemed received on the next
Business Day and priced according to the net asset value determined on the next
Business Day. Purchase orders 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 Portfolios' Custodian. Such payment must be
received no later than 4:00 p.m., Eastern time, by the third Business Day
following the receipt of the order, as determined above. 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. Primary B Shares are purchased at the net asset value per
share next determined after receipt of the order by Stephens, the Transfer
Agent or their respective agents.
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. Institutions should be aware that during periods of significant
economic or market change, telephone transactions may be difficult to complete.
18
<PAGE>
How To Redeem Shares
Redemption orders for Primary B Shares of the LifeGoal Portfolios which are
received by Stephens, the Transfer Agent or their respective agents before the
close of regular trading on the Exchange (currently 4:00 p.m., Eastern time) on
any Business Day are priced according to the net asset value next determined
after acceptance of the order. In the event that the Exchange closes early,
redemption orders received prior to closing will be priced as of the time the
Exchange closes and redemption orders received after the Exchange closes will
be deemed received on the next Business Day and priced according to the net
asset value determined on the next Business Day. Redemption proceeds are
normally remitted in federal funds wired to the redeeming Institution within
three Business Days following receipt of the order. Customers may redeem all or
part of their Primary B Shares in accordance with instructions and limitations
pertaining to their account at an institution. It is the responsibility of the
institutions to transmit redemption orders to Stephens or to the transfer agent
and to credit their customers' accounts with the redemption proceeds on a
timely basis. It is the responsibility of Stephens to transmit orders that it
receives to the Company. No charge for wiring redemption payments is imposed by
the Company, although the institutions may charge their customer accounts for
these or other services provided in connection with the redemption of Primary B
Shares. Information concerning these services and any charges are available
from the institutions. Redemption orders are effected at the net asset value
per share next determined after acceptance of the order by Stephens, the
Transfer Agent or their respective agents.
The LifeGoal Portfolios may redeem a shareholder's Primary B Shares if the
balance in such shareholder's account with the Portfolio drops below $500 as a
result of redemptions, and the shareholder does not increase the balance to at
least $500 on 60 days' written notice. If a shareholder has agreed with a
particular institution to maintain a minimum balance in his or her account at
the institution, and the balance in such institution account falls below that
minimum, the shareholder may be obliged to redeem all or a part of his or her
Primary B Shares in the LifeGoal Portfolios to the extent necessary to maintain
the required minimum balance in such institution account. The LifeGoal
Portfolios also may redeem shares involuntarily or make payment for redemption
in readily marketable securities or other property under certain circumstances
in accordance with the 1940 Act.
How To Exchange Shares
The exchange feature enables a shareholder of Primary B Shares of a LifeGoal
Portfolio to acquire Primary B Shares of another fund in the Nations Funds
Family (which includes both LifeGoal Portfolios and Nations Funds) when that
shareholder believes that a shift between funds is an appropriate investment
decision. An exchange of Primary B Shares of a LifeGoal Portfolio for Primary B
Shares of another Nations Fund is made on the basis of the next calculated net
asset value per share of each fund after the exchange order is received.
The LifeGoal Portfolios and each of the other funds of the Nations Funds Family
may limit the number of times this exchange feature may be exercised by a
shareholder within a specified period of time. Also, the exchange feature may
be terminated or revised at any time by the LifeGoal Portfolios upon such
notice as may be required by applicable regulatory agencies (presently 60 days
for termination or material revision), provided that the exchange feature may
be terminated or materially revised without notice under certain unusual
circumstances.
The current prospectus for each Fund describes its investment objective and
policies, and shareholders should obtain a copy and examine it carefully before
exchanging to another fund. Exchanges are subject to the minimum investment
requirement and any other conditions imposed by each fund. In the case of any
shareholder holding a share certificate or certificates, no exchanges may be
made until all applicable share certificates have been received by the Transfer
Agent and deposited in the shareholder's account. An exchange will be treated
for federal income tax purposes the same as a redemption of shares, on which
the shareholder may realize a capital gain or loss. However, the ability to
deduct capital losses on an exchange may be limited in situations where there
is an exchange of shares within 90 days after the shares are purchased.
The LifeGoal Portfolios reserve the right to reject any exchange request. Only
shares that may legally be sold in the state of the investor's residence may be
acquired in an exchange. Only shares of a class that is accepting investments
generally may be acquired in an exchange.
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.
19
<PAGE>
Shareholder Administration Plan
The LifeGoal Portfolios have adopted a Shareholder Administration Plan (the
"Administration Plan") pursuant to which institutions provide shareholder
administration services to their Customers who from time to time beneficially
own Primary B Shares. Payments under the Administration Plan are calculated
daily and paid monthly at a rate or rates set from time to time by the Funds,
provided that the annual rate may not exceed 0.60% of the average daily net
asset value of the Primary B Shares beneficially owned by customers with whom
the Institutions have a servicing relationship. Additionally, in no event may
the portion of the shareholder administration fee that constitutes a "service
fee," as that term is defined in Rule 2830 of the Conduct Rules of the NASD,
exceed 0.25% of the average daily net asset value of such Primary B Shares of a
LifeGoal Portfolio. Holders of Primary B Shares will bear all fees paid to
Institutions under the Administration Plan.
Such shareholder administration services supplement the services provided by
Stephens, First Data and the transfer agent to shareholders of record. The
shareholder administration services provided by Institutions may include: (i)
aggregating and processing purchase and redemption requests for Primary B
Shares from Customers and transmitting promptly net purchase and redemption
orders to Stephens or the Transfer Agent; (ii) providing customers with a
service that invests the assets of their accounts in Primary B Shares pursuant
to specific or pre-authorized instructions; (iii) processing dividend and
distribution payments from the LifeGoal Portfolios on behalf of Customers; (iv)
providing information periodically to Customers showing their positions in
Primary B Shares; (v) arranging for bank wires; (vi) responding to Customers'
inquiries concerning their investment in Primary B Shares; (vii) providing
sub-accounting with respect to Primary B Shares beneficially owned by Customers
or the information necessary for sub-accounting; (viii) if required by law,
forwarding shareholder communications (such as proxies, shareholder reports,
annual and semi-annual financial statements and dividend, distribution and tax
notices) to Customers; (ix) forwarding to Customers proxy statements and
proxies containing any proposals regarding the Administration Agreement; (x)
employee benefit plan recordkeeping, administration, custody and trustee
services; (xi) general shareholder liaison services; and (xii) providing such
other similar services as may be reasonably requested.
The Company may suspend or reduce payments under the Administration Plan at any
time, and payments are subject to the continuation of the Administration Plan
described above and the terms of the Administration Agreement between
Institutions and the Company. See the SAI for more details on the
Administration Plan.
The Administration Plan also provides that, to the extent any portion of the
fees payable under the Administration Plan is deemed to be for services
primarily intended to result in the sale of LifeGoal Portfolio shares, such
fees are deemed approved and may be paid under the Administration Plan.
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.
The Adviser may also pay out of its own assets amounts to Stephens or other
broker/dealers in connection with the provision of administrative and/or
distribution related services to shareholders.
In addition, Stephens has also established a non-cash compensation program,
pursuant to which broker/dealers or financial institutions that sell shares of
the LifeGoal Portfolios may earn additional compensation in the form of trips
to sales seminars or vacation destinations, tickets to sporting events, theater
or other entertainment, opportunities to participate in golf or other outings
and gift certificates for meals or merchandise. This non-cash compensation
program may be amended or terminated at any time by Stephens.
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.
20
<PAGE>
How The LifeGoal Portfolios Value Their Shares
The net asset value of a share of each class is calculated by dividing the
total value of its assets, less liabilities, by the number of shares in the
class outstanding. Shares of the LifeGoal Portfolios are valued as of the close
of regular trading on the Exchange (currently 4:00 p.m., Eastern time) on each
Business Day. In the event that the Exchange closes early, shares of the
LifeGoal Portfolios will be priced as of the time the Exchange closes.
Currently, the days on which the Exchange is closed (other than weekends) are:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day (observed), Independence Day, Labor Day, Thanksgiving and
Christmas.
The Nations Funds determine their net asset value per share on a daily basis.
The net asset value of the LifeGoal Portfolio shares will be determined by
reference to the net asset value of the underlying Nations Fund.
How Dividends And Distributions Are Made; Tax Information
Dividends And Distributions
Each LifeGoal Portfolio declares and pays dividends from net investment income
quarterly. Each LifeGoal Portfolio's net realized capital gains (including net
short-term capital gains) are distributed at least annually. Distributions from
capital gains are made after applying any available capital loss carryovers.
Distributions paid by the LifeGoal Portfolios with respect to one class of
shares may be greater or less than those paid with respect to another class of
shares due to the different expenses of the different classes.
Primary B Shares of LifeGoal Portfolios are eligible to receive dividends when
declared, provided, however, that the purchase order for such shares is
received at least one day prior to the dividend declaration and such shares
continue to be eligible for dividends through and including the day before the
redemption order is executed.
The net asset value of Primary B Shares in LifeGoal Portfolios will be reduced
by the amount of any dividend or distribution. Dividends are paid in the form
of additional Primary B Shares of the same LifeGoal Portfolio unless the
Customer or investor has elected no less than ten business days prior to the
date of distribution to receive payment in cash. Such election, or any
revocation thereof, must be made in writing to LifeGoal Portfolio's Transfer
Agent and will become effective with respect to dividends paid after its
receipt. Accordingly, dividends and distributions on newly purchased Primary B
Shares represent, in substance, a return of capital. However, such dividends
and distributions would nevertheless be taxable.
Tax Information
Each of the LifeGoal Portfolios intends to continue to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). In general, such qualification relieves a LifeGoal Portfolio of
liability for federal income tax to the extent all of its annual earnings are
distributed in accordance with the Code. Each LifeGoal Portfolio intends to
distribute substantially all of its earnings each taxable year.
Any distributions by a LifeGoal Portfolio of its net investment income
(including net foreign currency gains) and the excess, if any, of its net
short-term capital gain over its net long-term capital loss generally will be
taxable as ordinary income to shareholders whether such income is received in
cash or reinvested in additional shares. (Federal income tax for distributions
to an Individual Retirement Account are generally deferred under the Code.)
Corporate shareholders in the LifeGoal Portfolios may be entitled to the
dividends-received deduction for distributions attributable to those underlying
funds investing in the stock of domestic corporations to the extent of the
total qualifying dividends received by the distributing fund.
Substantially all of the net realized long-term capital gains of the LifeGoal
Portfolios, if any, will be distributed at least annually to the LifeGoal
Portfolios' shareholders. The LifeGoal Portfolios will generally have no tax
liability with respect to such gains, and the distributions generally will be
taxable to shareholders as capital gains, regardless of how long the
shareholders have held such LifeGoal Portfolios' shares and whether such gains
are received in cash or reinvested in additional shares. Noncorporate
shareholders may be taxed on such distributions at preferential rates.
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
21
<PAGE>
by a LifeGoal Portfolio on December 31 of such year in the event such dividends
and distributions are actually paid during January of the following year.
Federal law requires the Company to withhold 31% from any distributions paid by
the Company and/or redemptions (including exchanges and redemptions in-kind) to
individual shareholders unless the shareholder properly furnishes a certified,
correct Taxpayer Identification Number and certifies that withholding does not
apply. Such withholding is also required if the Internal Revenue Service
notifies the Company that the Taxpayer Identification Number provided by the
shareholder is incorrect or that the shareholder is otherwise subject to such
withholding. Amounts withheld are applied to the shareholder's federal tax
liability, and a refund may be obtained from the Internal Revenue Service if
withholding results in overpayment of tax. Federal law also requires the
LifeGoal Portfolios to withhold tax on dividends paid to certain foreign
shareholders.
The foregoing discussion is based on tax laws and regulations that were in
effect as of the date of this Prospectus and summarizes only some of the
important tax considerations generally affecting the LifeGoal Portfolios and
their shareholders. It is not intended as a substitute for careful tax
planning. Accordingly, potential investors should consult their tax advisors
with specific reference to their own tax situations and with respect to
foreign, state and local taxes. Further tax information is contained in the
SAI.
Financial Highlights
The following financial information has been derived from the audited financial
statements of the LifeGoal Portfolios. PricewaterhouseCoopers LLP is the
independent accountant to the LifeGoal Portfolios. The reports of
PricewaterhouseCoopers LLP for the most recent fiscal period of the LifeGoal
Portfolios accompany the financial statements for such period and are
incorporated by reference in the SAI, which is available upon request. For more
information see "Organization And History." Shareholders of the Portfolios will
receive unaudited semi-annual reports describing the Portfolios' investment
operations and annual financial statements audited by the LifeGoal Portfolios'
independent accountant.
FOR A PRIMARY B SHARE OUTSTANDING THROUGHOUT THE PERIOD
LifeGoal Growth Portfolio
<TABLE>
<CAPTION>
PERIOD
ENDED
Primary B Shares 03/31/98*
<S> <C>
Operating performance:
Net asset value, beginning of period $ 12.25
Net investment income/(loss) 0.01 (a)
Net realized and unrealized gain on investments 0.70
Net increase in net assets resulting from investment operations 0.71
Distributions:
Distributions from net investment income (0.01)
Distributions in excess of net investment income (0.25)
Distributions from net realized capital gains (0.21)
Total distributions (0.47)
Net asset value, end of period $ 12.49
Total return++ 6.24%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 6
Ratio of operating expenses to average net assets+++ 0.75%+
Ratio of net investment income to average net assets 0.15%+
Portfolio turnover rate 69%
</TABLE>
* LifeGoal Growth Portfolio Primary B Shares commenced investment
operations on September 19, 1997.
+ Annualized.
++ Total return represents aggregate total return for the period indicated
anddoes not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
Funds.
(a) Per share amounts have been calculated using the monthly average share
method, which more appropriately represents the per share for the period.
22
<PAGE>
FOR A PRIMARY B SHARE OUTSTANDING THROUGHOUT THE PERIOD
LifeGoal Balanced Growth Portfolio
<TABLE>
<CAPTION>
PERIOD
ENDED
Primary B Shares 03/31/98*
<S> <C>
Operating performance:
Net asset value, beginning of period $ 10.95
Net investment income (0.16)(a)
Net realized and unrealized gain/(loss) on investments 0.77
Net increase/(decrease) in net assets resulting from investment operations 0.93
Distributions:
Distributions from net investment income (0.20)
Distributions in excess of net investment income (0.24)
Distributions from net realized capital gains (0.50)
Total distributions (0.94)
Net asset value, end of period $ 10.94
Total return++ 9.24%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 26
Ratio of operating expenses to average net assets+++ 0.75%+
Ratio of net investment income to average net assets 2.37%+
Portfolio turnover rate 94%
</TABLE>
* LifeGoal Balanced Growth Portfolio Primary B Shares commenced investment
operations on August 4, 1997.
+ Annualized.
++ Total return represents aggregate total return for the period indicated
and does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
Funds.
(a) Per share amounts have been calculated using the monthly average shares
method, which more appropriately represents the per share data for the
period.
23
Prospectus
Investor A Shares
August 1, 1998
This Prospectus describes three diversified investment portfolios, LIFEGOAL
GROWTH PORTFOLIO, LIFEGOAL BALANCED GROWTH PORTFOLIO, and LIFEGOAL INCOME AND
GROWTH PORTFOLIO (each a "LifeGoal Portfolio" and, collectively, the "LifeGoal
Portfolios"), of Nations LifeGoal Funds, Inc. (the "Company"), an open-end
management investment company in the Nations Funds Family. The LifeGoal
Portfolios invest substantially all of their assets in certain other funds
within the Nations Funds Family. These underlying funds are referred to in this
Prospectus as "Nations Funds." This Prospectus describes one class of shares of
each LifeGoal Portfolio -- Investor A Shares.
This Prospectus sets forth concisely the information about each LifeGoal
Portfolio that a prospective purchaser of Investor A Shares should consider
before investing. Investors should read this Prospectus and retain it for
future reference. Additional information about the LifeGoal Portfolios is
contained in a separate Statement of Additional Information (the "SAI") that
has been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request without charge by writing or calling the Nations Funds
Family at its address or telephone number shown below. The SAI for the LifeGoal
Portfolios, dated August 1, 1998, is incorporated by reference in its entirety
into this Prospectus. The SEC maintains a Web site (http://www.sec.gov) that
contains the SAI, material incorporated by reference in this Prospectus and
other information regarding registrants that file electronically with the SEC.
NationsBanc Advisors, Inc. ("NBAI") is the investment adviser to each of the
LifeGoal Portfolios. TradeStreet Investment Associates, Inc. ("TradeStreet") is
the investment sub-adviser to the LifeGoal Portfolios. As used in this
Prospectus, the term "Adviser" refers to NBAI, TradeStreet/Gartmore Global
Partners, Brandes Investment Partners, L.P. and/or Marisco Capital Management,
LLC as the context may require, see "How The LifeGoal Portfolios Are Managed."
SHARES OF THE NATIONS FUNDS FAMILY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR
ISSUED, ENDORSED OR GUARANTEED BY, NATIONSBANK, N.A. ("NATIONSBANK") OR ANY OF
ITS AFFILIATES. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. AN INVESTMENT IN THE LIFEGOAL PORTFOLIOS INVOLVES CERTAIN
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
NATIONSBANK AND CERTAIN OF ITS AFFILIATES PROVIDE SERVICES TO THE NATIONS FUNDS
FAMILY, FOR WHICH THEY ARE COMPENSATED. STEPHENS INC., WHICH IS NOT AFFILIATED
WITH NATIONSBANK, IS THE SPONSOR AND ADMINISTRATOR AND SERVES AS THE
DISTRIBUTOR FOR THE LIFEGOAL PORTFOLIOS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
LIFEGOAL PORTFOLIOS:
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
For Portfolio
information call:
1-800-321-7854
Nations Funds
c/o Stephens Inc.
One NationsBank Plaza
33rd Floor
Charlotte, NC 28255
[Nations Funds Logo]
NF-96701-8/98
<PAGE>
Table Of Contents
About The LifeGoal Portfilios
Prospectus Summary 3
-----------------------------------------------------
Expenses Summary 4
-----------------------------------------------------
Objectives 6
-----------------------------------------------------
How Objectives Are Pursued 7
-----------------------------------------------------
Description Of Underlying Nations Funds
-- Investment Objectives, Policies And Practices 10
-----------------------------------------------------
How Performance Is Shown 17
-----------------------------------------------------
How The LifeGoal Portfolios Are Managed 19
-----------------------------------------------------
Organization And History 23
-----------------------------------------------------
How To Buy Shares 24
-----------------------------------------------------
About Your Investment
How To Redeem Shares 26
-----------------------------------------------------
How To Exchange Shares 27
-----------------------------------------------------
Shareholder Servicing and Distribution Plans 28
-----------------------------------------------------
How The LifeGoal Portfolios Value Their Shares 29
-----------------------------------------------------
How Dividends And Distributions Are Made;
Tax Information 30
-----------------------------------------------------
Financial Highlights 31
-----------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS, OR IN THE LIFEGOAL PORTFOLIOS' SAI
INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE LIFEGOAL
PORTFOLIOS OR THE DISTRIBUTOR. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY LIFEGOAL PORTFOLIOS OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
2
<PAGE>
About The LifeGoal Portfolios
Prospectus Summary
o TYPE OF COMPANY: Open-end management investment company.
o INVESTMENT OBJECTIVES AND POLICIES:
o LifeGoal Growth Portfolio's investment objective is to seek capital
appreciation through exposure to a variety of equity market segments.
o LifeGoal Balanced Growth Portfolio's investment objective is to seek total
return through a balanced portfolio of equity and fixed income securities.
o LifeGoal Income and Growth Portfolio's investment objective is to seek
current income and modest growth to protect against inflation and to preserve
purchasing power.
The LifeGoal Portfolios are designed for long-term investors seeking the
benefits of asset allocation and diversification. Unlike traditional mutual
funds, which invest directly in individual securities, the LifeGoal
Portfolios pursue their investment objectives by allocating their assets
among various Nations Funds.
o INVESTMENT ADVISER: NationsBanc Advisors, Inc. serves as the investment
adviser to the LifeGoal Portfolios. NBAI provides investment management
services to more than 60 other funds in the Nations Funds Family. TradeStreet
Investment Associates, Inc., an affiliate of NBAI, provides investment
sub-advisory services to the LifeGoal Portfolios. For more information about
the investment adviser and investment sub-adviser to the LifeGoal Portfolios,
see "How The LifeGoal Portfolios Are Managed".
o DIVIDENDS AND DISTRIBUTIONS: Each LifeGoal Portfolio declares and pays
dividends from net investment income quarterly. Each LifeGoal Portfolio's net
realized capital gains, including net short-term capital gains, are
distributed at least annually.
o RISK FACTORS: Although NBAI, together with TradeStreet, seek to achieve the
investment objective of each LifeGoal Portfolio, there is no assurance that
they will be able to do so. Investments in a LifeGoal Portfolio are not
insured against loss of principal. Investments by a LifeGoal Portfolio in
shares of a Nations Fund that holds stocks are subject to stock market risk,
which is the risk that the value of the stocks held by Nations Funds may
decline over short or even extended periods. In addition, certain of the
Nations Funds may invest in securities of smaller and newer issuers.
Investments in such companies may present greater opportunities for capital
appreciation because of high potential earnings growth, but also present
greater risks than investments in more established companies with longer
operating histories and greater financial capacity. Investments by a LifeGoal
Portfolio in shares of a Nations Fund that holds debt securities are subject
to interest rate risk, which is the risk that the value of the debt
securities, including U.S. Government Obligations (as defined below), held by
Nations Funds may be adversely affected by changes in market interest rates.
The value of Nations Funds' investments in debt securities will tend to
decrease when interest rates rise and increase when interest rates fall. In
addition, debt securities which are not issued or guaranteed 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
3
<PAGE>
more volatile than U.S. markets and markets that are characterized by less
governmental supervision and lower disclosure standards. Certain of Nations
Funds' investments may constitute derivative securities. Certain types of
derivative securities can, under particular circumstances, significantly
increase an investor's exposure to market and other risks. For a discussion
of these and other factors, see "How Objectives Are Pursued -- General
Characteristics and Risk Factors of the Major Asset Classes" and
"Description of Underlying Nations Funds -- Principal Risk Considerations."
o 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 or accounts established
with certain fee-based investment advisers or financial planners, including
wrap fee accounts and other managed agency/asset allocation accounts; 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. The minimum subsequent
investment is $100, except for investments pursuant to the Systematic
Investment Plan. See "How To Buy Shares."
Expenses Summary
Expenses are one of several factors to consider when investing in a LifeGoal
Portfolio. The following tables summarize estimated shareholder transaction and
operating expenses as a percentage of net assets for Investor A Shares of each
LifeGoal Portfolio. The Examples show the cumulative expenses attributable to a
hypothetical $1,000 investment in each LifeGoal Portfolio over specified
periods.
LIFEGOAL PORTFOLIOS INVESTOR A SHARES
<TABLE>
<CAPTION>
LifeGoal LifeGoal
LifeGoal Balanced Income and
Growth Growth Growth
Shareholder Transaction Expenses Portfolio Portfolio Portfolio
<S> <C> <C> <C>
Sales Load Imposed on Purchases None None None
Deferred Sales Load None None None
Redemption Fees Payable to the LifeGoal Portfolios1 1.00% 1.00% 1.00%
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management Fees .25% .25% .25%
Rule 12b-1 fees (including shareholder servicing fees) .25% .25% .25%
Other Expenses (After Expense Reimbursements) .00% .00% .00%
Total Operating Expenses (After Expense Reimbursements) .50% .50% .50%
</TABLE>
1 There is a 1% redemption fee retained by the LifeGoal Portfolio or Portfolios
which is imposed only on certain redemptions by Substantial Investors (as
defined below) of Investor A Shares held less than 18 months. See "How To
Redeem Shares -- Redemption Fee."
4
<PAGE>
Examples: You would pay the following expenses on a $1,000 investment in
Investor A Shares of the indicated LifeGoal Portfolio, assuming indirect
expenses (the LifeGoal Portfolios' share of the expenses incurred by the
underlying Nations Funds) at the midpoint of the after waiver ranges shown
below and further assuming: (1) a 5% annual return and (2) redemption at the
end of each time period.
<TABLE>
<CAPTION>
LifeGoal LifeGoal
LifeGoal Balanced Income and
Growth Growth Growth
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
1 Year $ 14 $ 13 $ 12
3 Years $ 44 $ 42 $ 38
5 Years $ 76 $ 72 $ 65
10 Years $167 $158 $144
</TABLE>
The purpose of the foregoing tables is to assist an investor in understanding
the various shareholder transaction and operating expenses that an investor in
Investor A Shares of a LifeGoal Portfolio can expect. The figures in the above
tables show the basis on which payments will be made, except that Other
Expenses are estimated for the LifeGoal Portfolios' current fiscal year and the
Examples include indirect expenses for the underlying Nations Funds' most
recent fiscal year (or estimates thereof for new funds). For more complete
descriptions of the LifeGoal Portfolios' operating expenses, see "How The
LifeGoal Portfolios Are Managed." For a more complete description of the Rule
12b-1 and shareholder servicing fees payable by the LifeGoal Portfolios, see
"Shareholder Servicing and Distribution Plans."
THE FOREGOING SHOULD NOT BE CONSIDERED TO BE AN ACTUAL REPRESENTATION OF PAST
OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES AND RATES OF RETURN MAY BE
GREATER OR LESS THAN THOSE SHOWN.
LifeGoal Portfolios' Indirect Expenses
Based on 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, 1998 and the expected percentage investment ranges in the underlying
Nations Funds, the range of the weighted average indirect expense ratio for
each LifeGoal Portfolio is as follows:
<TABLE>
<CAPTION>
(before fee
(after fee waivers waivers and/or
and/or expense expense
reimbursements) reimbursements)
<S> <C> <C>
LifeGoal Growth Portfolio .56% to 1.22% .88% to 1.37%
LifeGoal Balanced Growth Portfolio .61% to 1.00% .87% to 1.15%
LifeGoal Income and Growth Portfolio .49% to .89% .74% to 1.10%
</TABLE>
The indirect expense ratios fluctuate within these ranges depending upon how
assets are allocated among the Nations Funds. The LifeGoal Portfolios will be
invested in the Primary A Shares of the underlying Nations Funds and, under
normal market conditions, will be allocated among the various fund categories
in the percentages shown below. Under extraordinary circumstances, a LifeGoal
Portfolio's investment in one or more Nations Funds might exceed these ranges.
For temporary defensive purposes, any LifeGoal Portfolio may invest up to 100%
of its assets in Nations Prime Fund, a money market fund.
5
<PAGE>
Objectives
o LIFEGOAL GROWTH PORTFOLIO -- LifeGoal Growth Portfolio's investment objective
is to seek capital appreciation through exposure to a variety of equity market
segments.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
<S> <C> <C>
Large-Capitalization Domestic Equity Funds 40-75% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marsico Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
Small/Mid-Capitalization Domestic Equity Funds 15-35% Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Nations Small Company Growth Fund
Core International Equity Funds 10-20% Nations International Equity Fund
Nations International Value Fund
Non-Core International Equity Funds 0-10% Nations Emerging Markets Fund
Nations Pacific Growth Fund
</TABLE>
o LIFEGOAL BALANCED GROWTH PORTFOLIO -- LifeGoal Balanced Growth Portfolio's
investment objective is to seek total return through a balanced portfolio of
equity and fixed income securities.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
<S> <C> <C>
Large-Capitalization Domestic Equity Funds 20-40% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marsico Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
Small/Mid-Capitalization Domestic Equity Funds 10-20% Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Nations Small Company Growth Fund
Core International Equity Funds 5-15% Nations International Equity Fund
Nations International Value Fund
Core Bond Funds 40-60% Nations Diversified Income Fund
Nations Strategic Fixed Income Fund
</TABLE>
6
<PAGE>
o LIFEGOAL INCOME AND GROWTH PORTFOLIO -- LifeGoal Income and Growth Portfolio's
investment objective is to seek current income and modest growth to protect
against inflation and to preserve purchasing power.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
<S> <C> <C>
Large-Capitalization Domestic Equity Funds 10-30% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marsico Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
Small/Mid-Capitalization Domestic Equity Funds 0-10% Nations Small Company Growth Fund
Core International Equity Funds 0-10% Nations International Equity Fund
Nations International Value Fund
Short Duration Bond Funds 50-90% Nations Short-Term Income Fund
Nations Short-Intermediate Government
Fund
Money Market Funds 0-20% Nations Prime Fund
</TABLE>
The LifeGoal Portfolios are intended primarily for long-term investors. The
LifeGoal Portfolios are structured as "funds of funds" that allocate
substantially all of their assets to investments in Primary A Shares of various
Nations Funds. The performance of the LifeGoal Portfolios will, therefore,
correspond to the performance of the various underlying Nations Funds.
Additional information about the underlying Nations Funds, including their
investment objectives, investment policies and practices, is set forth below
under "Descriptions of Under-lying Nations Funds -- Investment Objectives,
Policies and Practices." The Adviser allocates and reallocates each LifeGoal
Portfolio's assets among the underlying Nations Funds identified above, and
potentially other Nations Funds, based on the percentage ranges shown above for
the various fund categories. As discussed below under "The Asset Allocation
Process," a LifeGoal Portfolio's actual investment allocation may deviate from
the percentage ranges shown above, over the short or long term.
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 (I.E., international
stocks, domestic stocks and bonds) in varying portions to gain exposure to the
different return and risk characteristics of each asset class. Asset classes
and market segments (large, mid and small capitalization stocks) tend to react
in different ways to changes in economic conditions. Therefore, an investment
approach that combines various market segments and asset classes may reduce
overall portfolio volatility.
The assets of each LifeGoal Portfolio are allocated among various asset classes
through their investment in different fund categories. Each LifeGoal Portfolio
has its own asset allocation strategy which gives it a distinctive risk profile
and offers different return potential. Investors should select the LifeGoal
Portfolio (or Portfolios) which best matches their investment goals, risk
tolerance and investment horizon.
In general, the greater the LifeGoal Portfolio's percentage allocation to
equity funds, the greater the
7
<PAGE>
potential return and risk of share price decline. Because of equity funds'
greater risks, investors in the LifeGoal Portfolios that have a higher
allocation to equity funds should have a longer investment horizon. In general,
the greater the LifeGoal Portfolio's percentage allocation to bond funds, the
greater the potential price stability; however, returns may be lower.
Investment performance will vary based on many factors, including market
conditions and the composition of a LifeGoal Portfolio's portfolio. Investment
performance also often reflects the risks associated with a LifeGoal
Portfolio's investment objective and policies. These factors should be
considered when comparing a LifeGoal Portfolio's investment results to those of
other mutual funds and to market indexes.
Although the Adviser will seek to achieve the investment objective of each
LifeGoal Portfolio, there is no assurance that it will be able to do so. No
single LifeGoal Portfolio should be considered, by itself, to provide a
complete investment program for any investor. The net asset value of the shares
of a LifeGoal Portfolio fluctuates based on fluctuations in the values of the
underlying Nations Funds' shares, which, in turn, fluctuate based on market
conditions and other factors. Therefore, investors should not rely upon
LifeGoal Portfolios for short-term financial needs. The LifeGoal Portfolios are
not intended to provide a vehicle for participating in short-term swings in the
stock market, and their shares are not insured against loss of principal.
The Asset Allocation Process
Subject to the general supervision of the Company's Board of Directors, the
Adviser is responsible for allocating and reallocating each LifeGoal
Portfolio's assets among the Nations Funds in which it invests, and for
rebalancing such portfolio allocations. In this context, allocation is the
process of setting or changing the weightings of the different fund categories
and Nations Funds within a particular LifeGoal Portfolio's portfolio. The
"weightings" of the different fund categories and Nations Funds within a
particular LifeGoal Fund's portfolio are the percentage targets that the
Adviser sets for investment in a particular fund category or Nations Fund. All
fund category weightings will be within the overall percentage ranges shown
above. Rebalancing is the process of bringing portfolio allocations back into
alignment with the applicable weightings. A LifeGoal Portfolio's investments
are continuously monitored and are reallocated as often as the Adviser deems
appropriate. In addition, portfolio allocations and performance are reviewed at
least monthly for rebalancing at the discretion of the Adviser.
Although the Adviser may rebalance each LifeGoal Portfolio's holdings
quarterly, it expects to rebalance less often. Thus, at any time, it is
possible that the percentage of a particular LifeGoal Portfolio's assets
actually invested in a particular Nations Fund or fund category will not
correspond precisely with the applicable weightings. Also, depending on the
frequency of rebalancings, the extent of any such deviation could continue for
some time.
The Adviser has adopted certain policies designed to reduce the extent and
duration of such deviations. For example, if any fund category percentage
ranges are exceeded, the Adviser will allocate new investment dollars to the
other fund categories. Likewise, the Adviser will allocate new investment
dollars to fund categories whose minimum percentages have not been met.
Redemption requests, however, will generally be met by redeeming shares of
underlying Nations Funds according to the applicable weightings.
Determining the asset allocation applicable to each LifeGoal Portfolio is a two
step process. The first step is determining the broad asset classes for each
LifeGoal Portfolio -- large and small capitalization domestic stocks, foreign
stocks, bonds and money market securities. In making this determination, the
Adviser will consult the relevant historical data for the returns of each asset
class in various economic scenarios. Those returns will be reviewed in the
context of the Adviser's outlook for the economy and markets and adjusted for
reasonableness. The second step in the process is to determine the particular
Nations Funds in which each LifeGoal Portfolio will invest. The Adviser looks
at historic returns and valuations to determine which Nations Funds are most
appropriate. Determining how the individual Nations Funds may interact with one
another within a portfolio is a critical part of this second step.
8
<PAGE>
Although it is expected that the LifeGoal Portfolios will invest in the Nations
Funds identified in "Description of Underlying Nations Funds," the Adviser has
the discretion to change the particular Nations Funds used as underlying
investments for the LifeGoal Portfolios. Among other things, the Adviser may
substitute or include other funds from the Nations Funds Family, including any
funds introduced subsequent to the date of this Prospectus, as permissible
investments for the LifeGoal Portfolios.
General Characteristics and Risk Factors of the Major Asset Classes
The underlying Nations Funds invest primarily in various stocks, bonds and
money market securities. This section provides a brief summary of the general
characteristics and overall risk factors associated with these asset classes.
Additional information is provided under "Description of Underlying Nations
Funds" below and in the prospectuses of the underlying Nations Funds.
Common stocks represent ownership in a company. Stock prices move with changes
in a company's current earnings and its prospects for the future, and with
overall stock market conditions. Stocks offer the potential for price
appreciation and rising dividends. While smaller companies usually reinvest
their earnings back into the company and therefore pay minimal, if any,
dividends, they offer the possibility of greater appreciation.
Historically, stocks have provided higher returns than bonds or money market
securities. Therefore, they have also provided the greatest protection against
inflation and the resulting erosion of purchasing power. However, the
additional return has been accompanied by additional volatility. Equity
investors should have a long-term investment horizon and be willing to accept
the inevitable periods of market declines.
Bonds are a contract. The issuer has an obligation to pay a specified rate of
interest (which may be fixed or variable) at specified times and to repay the
bond's principal value upon maturity. Bonds are subject to credit risk and to
interest rate risk. Credit risk refers to the possibility that a bond's price
may fall due to a credit downgrade or a principal or interest payment default.
Interest rate risk refers to a bond's price movement in response to changes in
market interest rates. As a general rule, when market interest rates rise, bond
prices fall. Typically, the longer the maturity of a bond, the greater the
potential price fluctuation.
Money market securities are short-term debt obligations issued primarily by the
U.S. Government, government agencies or corporations. High quality money market
securities are very low risk investments; their low risk, however, is
accompanied by lower potential returns relative to other investments.
Investment Company Securities: Each of the LifeGoal Portfolios intends, as a
fundamental policy, to concentrate investments by investing 25% or more of its
total assets in the mutual fund industry.
Although some of the Nations Funds in which the LifeGoal Portfolios invest do
not necessarily share the same investment objective as the investing LifeGoal
Portfolio, those Nations Funds will be selected by the Adviser based on the
asset allocation process described above.
Although each LifeGoal Portfolio intends to invest substantially all of its
assets in some or all of the underlying Nations Funds, each LifeGoal Portfolio
reserves the right to invest in obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, repurchase agreements, and
money market instruments with respect to any assets not so invested in Nations
Funds. It is not expected that any LifeGoal Portfolio will invest more than 5%
of its assets in any of these direct investments.
Investment Limitations: Each LifeGoal Portfolio is subject to a number of
investment limitations, which are described in the SAI. Among other things, the
LifeGoal Portfolios' fundamental policies permit them to borrow money from
banks for temporary or emergency purposes, subject to percentage and other
limitations, and to enter into forward purchase commitments and issue multiple
classes of shares. The investment objective, policies and limitations of each
LifeGoal Portfolio, unless otherwise specified, may be changed without a vote
of the LifeGoal Portfolio's shareholders. If the investment objective, policies
or limitations of a LifeGoal Portfolio change, shareholders should consider
whether the LifeGoal Portfolio remains
9
<PAGE>
an appropriate investment in light of their current position and needs.
The Nations Funds also have adopted certain investment restrictions which may be
more or less restrictive than those applicable to the LifeGoal Portfolios,
thereby allowing a LifeGoal Portfolio to participate in certain investment
strategies indirectly that are prohibited under the investment restrictions
described in the LifeGoal Portfolios' SAI. The investment restrictions of the
underlying Nations Funds are set forth in their respective prospectuses and
statements of additional information.
Portfolio Turnover: Generally, LifeGoal Portfolio will purchase portfolio
securities for capital appreciation or investment income, or both, and not for
short-term trading profits. The LifeGoal Portfolios' portfolio turnover rates
are not expected to exceed 50% annually.
Description of Underlying Nations Funds --
Investment Objectives, Policies and Practices
The LifeGoal Portfolios seek to achieve their investment objectives by
investing in certain Nations Funds (each, a "Fund"). The following section
provides summaries of the Nations Funds' investment objectives, policies and
practices. These summaries are intended to help investors understand some of
the more significant aspects of the underlying Nations Funds, but are not
intended to be comprehensive disclosures of all policies, practices and risks
associated with investments by the LifeGoal Portfolios in the Nations Funds. To
receive a prospectus for any underlying Nations Fund, which contains more
complete information, please call Nations Funds at 1-800 321-7854.
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:
o above-average earnings growth relative to Standard & Poor's 500 Composite
Stock Price Index ("S&P 500 Index")(1);
o established operating histories, strong balance sheets and favorable financial
characteristics; and
o 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. In selecting stocks for the Fund,
the Adviser utilizes quantitative analysis and optimization tools. This
approach seeks to identify companies with improving profit potential through
analysis of earnings forecasts issued by investment banks, broker/dealers and
other investment professionals. The Adviser believes that companies
experiencing such earnings trends have the potential to generate significant
increases in per share earnings. The Adviser also believes that companies with
increasing earnings should experience positive trends in their stock price.
Under normal market conditions, the Fund
- ---------------------
(1) "Standard & Poor's" and "Standard & Poor's 500" are trademarks of The
McGraw-Hill Companies, Inc.
10
<PAGE>
invests at least 65% of its total assets in common stocks of domestic issuers.
The Fund also may invest in preferred stocks, securities convertible into
common stock, warrants and rights to purchase common stock, options, U.S.
Government and corporate debt securities, and foreign securities.
Nations Emerging Growth Fund: The Fund's investment objective is to seek
capital appreciation by investing in emerging growth companies that are
believed to have superior long-term earnings growth prospects. The Fund invests
primarily in emerging growth companies with revenues between $50 million and
$1.5 billion and a debt ratio of less than 50% of capitalization. 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 managing the Fund, the
Adviser applies a disciplined process with rigorous fundamental analysis
providing the basis for stock selection. Its methodology combines fundamental,
valuation and momentum-based disciplines in portfolio construction. 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 greater than that of larger companies.
Accordingly, while they may have greater potential for gains, they also carry
greater downside risk.
Nations Equity Income Fund: The Fund's investment objective is to seek current
income and growth of capital by investing primarily in companies with
above-average dividend yields. The investment program of the Fund is based on
several premises. First, dividends are normally a more stable and predictable
source of return than capital appreciation. Second, diversifying equity
holdings in a manner that includes every major economic sector 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 provided by the stocks in the S&P 500
Index with less volatility. Collectively, these traits may be combined in such
a fashion as to produce returns in excess of the market, as measured by the S&P
500 Index, on a comparable risk basis.
Under normal circumstances, the Fund will invest at least 65% of its assets in
income-producing common stocks, including securities convertible into or
ultimately exchangeable for common stock (i.e., convertible bonds or
convertible preferred stock), whose prospects for dividend growth and capital
appreciation are considered favorable by the Adviser. The Fund also may invest
its assets in fixed-income securities (corporate and government bonds of
various maturities), preferred stocks and warrants and other debt securities,
including up to 5% of its assets in debt securities that are rated below
investment grade (e.g. rated "BB" by S&P) or if not rated, are of equivalent
investment quality as determined by the Adviser. The Fund may invest a portion
of its total assets in foreign securities.
Nations Managed Index Fund: The Fund's investment objective is to seek, over
the long-term, to provide a total return that (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 market capitalization weighted index consisting of 500 common stocks chosen
for market size, liquidity and industry group representation.
Unlike traditional index funds, the Fund has a "managed" overlay. 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 300 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 80% of its total assets, in common stocks which are included in
the S&P 500 Index. The Fund is expected, however, to maintain a position in
high-quality short-term debt securities and money market instruments to meet
redemption requests.
Nations Managed SmallCap Index Fund: The Fund's investment objective is to
seek, over the long-term, to provide a total return that (gross of
11
<PAGE>
fees and expenses) exceeds that of 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 market capitalization
weighted index consisting of 600 domestic stocks which captures the economic
and industry characteristics of small stock performance.
Unlike traditional index funds, the Fund has a "managed" overlay. 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 400 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 80% 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 Marsico Focused Equities Fund: The Fund's investment objective is to
seek long-term growth of capital. The Fund is a non-diversified fund that
pursues its objective by normally investing in a core position of 20-30 common
stocks. In choosing stocks, the Adviser attempts to identify individual
companies with earnings growth potential that may not be recognized by the
market at large. In seeking such opportunities, the Adviser looks for a
combination of four factors: change (products, markets and technologies that are
in flux), franchise (brand franchises that can be leveraged), global reach
(companies that consider world markets rather than local markets) and themes
(companies that are moving with, not against, major social, economic and
cultural shifts). Once an opportunity is identified, it is subject to a
disciplined analytical process that takes into consideration such macroeconomic
factors as interest rates, inflation, the regulatory environment, the global
competitive landscape, and such microeconomic factors as company fundamentals,
market franchise and company management.
Under normal circumstances the Fund invests at least 65% of its assets in large
capitalization common stocks selected for their growth potential. The Fund also
may invest to a lesser degree, in other types of securities such as preferred
stocks, warrants, convertible securities and debt securities.
Nations Marsico Growth & Income Fund:
The Fund's investment objective is to seek long-term growth of capital with a
limited emphasis on income. The Fund will typically invest in large
capitalization stocks. The Fund may invest in any combination of common stock,
preferred stocks, warrants, convertible securities and debt securities. In
building the portfolio, the Adviser seeks to identify individual companies with
earnings growth potential net recognized by the market at large. In seeking
such opportunities, the Adviser looks for a combination of four factors: change
(products, markets and technologies that are in flux), franchise (brand
franchise that can be leveraged), global reach (companies that consider world
markets rather than local markets) and themes (companies that are moving with,
not against, major social, economic and cultural shifts). Once an opportunity
is identified, it is subject to a disciplined analytical process that takes
into consideration macroeconomic factors such as interest rates, inflation, the
regulatory environment, the global competitive landscape, and company
fundamentals, such as market franchise and company management.
Under normal circumstances, the Fund invests up to 75% of its assets in equity
securities selected primarily for their growth potential and at least 25% of
its assets in securities with income potential. However, in adverse market
conditions, the Fund may reduce the growth component of its portfolio to 25% of
its total assets. Additionally, the Adviser may shift the Fund's assets between
the growth and income components based on relevant market, financial and
economic conditions.
Nations Small Company Growth Fund:
The Fund's investment objective is to seek long-term capital growth by
investing capital primarily in equity securities. In pursuing its invest-
- ---------------------
(2) "Standard & Poor's" and "Standard & Poor's SmallCap 600" are trademarks of
The McGraw-Hill Companies, Inc.
12
<PAGE>
ment objective, under normal circumstances, the Fund will invest at least 65%
of its total assets in equity securities of companies with a market
capitalization of $1 billion or less. The investment philosophy of Nations
Small Company Growth Fund is based on the premise that stock prices are driven
by earnings growth and that superior stock market returns occur when a company
experiences rapid and accelerating earnings growth due to improving
fundamentals.
In managing the Fund, the Adviser applies a disciplined process with rigorous
fundamental analysis providing the basis for stock selection. Its methodology
combines fundamental, valuation and momentum-based disciplines in portfolio
construction. Overall, the Fund's strategy is to own those investments offering
both attractive fundamental valuation and relatively good prospects for
earnings improvement. Typically, two types of companies are candidates for
purchase: (i) mature companies which may have fallen from a larger market value
due to business difficulties, but which now exhibit improving prospects; and
(ii) smaller or younger companies which are experiencing strong trends in
earnings growth, but remain reasonably valued and therefore offer premium
growth at a discount in comparison to other companies.
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 securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("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 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 International Value Fund: The Fund's investment objective is to seek
long-term capital appreciation by investing primarily in equity secu-
13
<PAGE>
rities of foreign issuers, including emerging markets countries. The Fund
pursues its investment objective, under normal circumstances, by investing its
assets in the securities of issuers in at least three different foreign
countries. Although the Fund may invest in companies of various sizes it
typically invests in established companies. The Adviser is committed to the use
of the Graham & Dodd- style value investing approach as introduced in the
classic book SECURITY ANALYSIS. The Adviser's approach to selecting stocks for
the Fund is value driven and it seeks to purchase a diversified group of
businesses at prices that research indicates are below true long-term, or
intrinsic, value. In so doing the Adviser seeks to secure not only a possible
margin of safety against price declines, but also an attractive opportunity for
profit over the business cycle. In analyzing a company's long-term value, the
Adviser uses sources of information such as company reports, filings with the
SEC, computer databases, industry publications, brokerage firm research reports
and interviews with company management.
Under normal circumstances, the Fund intends to invest at least 65% of its
total assets in equity securities of non-U.S. issuers whose market
capitalizations exceed $1 billion at the time of purchase. Although the Fund
intends to invest primarily in equity securities listed on stock exchanges it
also may invest in equity securities traded over the counter and in private
placements. Typically, no more than 5% of total Fund assets will be invested in
any one equity security at the time of purchase. Countries in which the Fund
may invest include, but are not limited to, the nations of Western Europe,
North and South America, Australia, Africa and Asia. During temporary defensive
periods in response to unusual and adverse conditions, the Fund's assets may be
invested without limitation in short-term debt instruments and in securities of
U.S. issuers.
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 loss 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 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 con-
14
<PAGE>
ditions, it is expected that the average weighted maturity of the Fund will not
exceed five years 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 will it
exceed 15 years. Under normal market conditions, the Fund will invest at least
65% of the total value of its assets in government, corporate and
mortgage-related 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 remaining maturities of 397 days or
less from the date of purchase. Securities subject to repurchase agreements may
have longer maturities. The Fund may invest in U.S. Treasury bills, notes and
bonds and other instruments issued directly by the U.S. Government. The Fund
may also invest in bank and commercial instruments that may be available in the
money markets, high quality short-term taxable obligations issued by state and
local governments, and repurchase agreements relating to U.S. Government
Obligations. Although the Fund is permitted to invest a portion of its assets
in second tier securities (as defined below) in accordance with Rule 2a-7 under
the Investment Company Act of 1940, as amended (the "1940 Act"), the Fund
invests only in first tier securities (as defined below). 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. Each of the
Funds may lend their portfolio securities to qualified institutional investors,
engage in repurchase agreement, transactions, and invest in restricted, private
placement and other illiquid securities. Certain Nations Funds may 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-
15
<PAGE>
backed securities and obligations of foreign banks and foreign branches of U.S.
banks.
Under Rule 2a-7 of the 1940 Act, a Money Market Fund is limited to acquiring
obligations with a remaining maturity of 397 days or less, or obligations with
greater maturities, provided such obligations are subject to demand features or
resets which are less than 397 days, and to maintaining a dollar-weighted
average portfolio maturity of 90 days or less. Quality requirements generally
limit investments to U.S. dollar denominated instruments determined to present
minimal credit risks which, at the time of acquisition, are rated in the first
or second rating categories (known as "first tier" and "second tier"
securities, respectively) by the required number of nationally recognized
statistical rating organizations (each an "NRSRO") or, if unrated by any NRSRO,
are (i) comparable in priority and security to a class of short-term
securities of the same issuer that has the required rating, or (ii) determined
to be comparable in quality to securities having the required rating. The
diversification requirements provide generally that a Money Market Fund may not
at the time of acquisition invest more than 5% of its assets in securities of
any one issuer except that up to 25% of total assets may be invested in the
first tier securities of a single issuer for three business days. Securities
issued by the U.S. Government, its agencies, authorities or instrumentalities
are exempt from the quality requirements, other than minimal credit risk. In
the event that a Fund's investment restrictions or permissible investments are
more restrictive than the requirements of Rule 2a-7, the Fund's own
restrictions will govern.
Principal Risk Considerations: Investments by a Nations Fund in common stocks
and other equity securities are subject to stock market risk. 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 Funds may invest in securities of smaller and newer issuers.
Investments in such companies may present greater opportunities for capital
appreciation because of high potential earnings growth, but also present
greater risks than investments in more established companies with longer
operating histories and greater financial capacity.
Nations Marsico Focused Equities Fund, as a non-diversified fund, may invest in
fewer issuers than a diversified fund. Therefore, appreciation or depreciation
of an investment in a single issuer could have a greater impact on the Fund's
net asset value. The Fund reserves the right to become a diversified fund by
limiting the investments in which more than 5% of its total assets are
invested.
In addition, the Euro will become the single currency in at least 11 European
nations used in many financial transactions. Accordingly, the German mark,
French franc and other national currencies will no longer be used. Although the
impact of implementing the Euro is not possible to predict, the transition
could have an effect on the financial markets and economic environment in
Europe and other
16
<PAGE>
parts of the world. For example, investors may begin to view those countries
participating in the Economic Monetary Union as a single combined entity and
may alter their investment behavior accordingly. In response to any such effect
of the Euro implementation, the Adviser may need to adapt its investment
policies and strategy.
Certain of the U.S. Government Obligations that may be purchased by a Nations
Fund (or, under certain circumstances, directly by a LifeGoal Portfolio) are
not backed by the U.S. Treasury. For example, some U.S. Government Obligations
are supported only by the credit of the issuer/guarantor or by the right of the
issuer/guarantor to borrow from the U.S. Government. In addition, the market
value of U.S. Government Obligations may fluctuate due to fluctuations in
market interest rates. Certain types of U.S. Government Obligations are subject
to fluctuations in maturity, yield or value due to their structure or contract
terms.
Certain of the underlying Nations Funds may invest in derivative securities
("derivatives"). A derivative is a financial instrument whose value is based,
at least partly, on the value of an underlying stock, stock index, future or
other security. Examples of such derivatives include futures contracts,
options, interest rate and currency swap transactions. Certain types of
derivatives can, under certain circumstances, significantly increase an
investor's exposure to market or other risks.
Year 2000 Issue: Many computer programs employed throughout the world use two
digits to identify the year. Unless modified, these programs may not correctly
handle the change from "99" to "00" on January 1, 2000, and may not be able to
perform necessary functions. Any failure to adapt these programs in time could
hamper the LifeGoal Portfolios' operations. The LifeGoal Portfolios' principal
service providers have advised the Funds that they have been actively working
on implementing necessary changes to their systems, and that they expect that
their systems will be adapted in time, although there can be no assurance of
success. Because the Year 2000 issue affects virtually all organizations, the
companies or governmental entities in which the LifeGoal Portfolios invest
could be adversely impacted by the Year 2000 issue, although the extent of such
impact cannot be predicted. To the extent the impact on a portfolio holding is
negative, the LifeGoal Portfolio's return could be adversely affected.
Please consult the SAI and the prospectus of the particular Nations Fund, for
more information about investment practices and risks.
How Performance Is Shown
From time to time, the LifeGoal Portfolios may advertise the "total return" and
"yield" of a class of shares. In addition, the LifeGoal Portfolios may
advertise the total return and yield of the Primary A Shares of certain
underlying Nations Funds. TOTAL RETURN AND YIELD FIGURES ARE BASED ON
HISTORICAL DATA AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The "total
return" of a class of shares of a LifeGoal Portfolio or Nations Fund may be
calculated on an average annual total return basis or an aggregate total return
basis. Average annual total return refers to the average annual compounded
rates of return over one-, five-, and ten-year periods or the life of a
LifeGoal Portfolio or Nations Fund (as stated in a LifeGoal Portfolio's
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 dividends and capital gain 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
17
<PAGE>
investment. "Effective yield" assumes reinvestment of income.
Investment performance, which will vary, is based on many factors, including
market conditions, the composition of a LifeGoal Portfolio's or Nations Fund's
portfolio and operating expenses. Investment performance also often reflects
the risks associated with a LifeGoal Portfolio's or Nations Fund's investment
objective and policies. These factors should be considered when comparing a
LifeGoal Portfolio's or Nations Fund's investment results to those of other
mutual funds and other investment vehicles. Since net asset value and yields
fluctuate, yield data cannot necessarily be used to compare an investment in
the LifeGoal Portfolios or Nations Funds with bank deposits, savings accounts,
and similar investment alternatives which often provide an agreed-upon or
guaranteed fixed yield for a stated period of time.
In addition to Investor A Shares, the LifeGoal Portfolios offer Primary A,
Primary B, Investor 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 Portfolio's shares. Any fees charged by an institution
directly to its customers' accounts in connection with investments in the
LifeGoal Portfolios will not be included in calculations of total return or
yield. The Company's annual report will contain additional performance
information and will be available upon request without charge from the LifeGoal
Portfolios' distributor or an investor's Institution, as defined below or by
calling Nations Funds at the toll-free number indicated on the cover of this
Prospectus.
The following information shows the average annual returns of the underlying
Nations Funds in which the LifeGoal Portfolios may invest. The performance of
the underlying Nations Funds is shown for illustrative purposes only and is not
intended to show LifeGoal Portfolio performance.
18
<PAGE>
NATIONS FUNDS
AVERAGE ANNUAL RETURNS -- PRIMARY A SHARES (UNAUDITED)
<TABLE>
<CAPTION>
1-Year Period
FUND NAME (DATE OF COMMENCEMENT OF OPERATIONS) Ended 3/31/98
<S> <C>
Nations Capital Growth Fund (9/30/92) 53.89%
Nations Disciplined Equity Fund (10/1/92) 48.65%
Nations Diversified Income Fund (10/30/92) 11.07%
Nations Emerging Growth Fund (12/4/92) 45.09%
Nations Emerging Markets Fund (6/30/95) (6.39)%
Nations Equity Income Fund (4/11/91) 37.21%
Nations International Equity Fund (12/2/91) 16.06%
Nations International Value Fund (12/27/95) 39.92%
Nations Managed Index Fund (8/1/96) 47.54%
Nations Managed SmallCap Index Fund (10/15/96) 47.71%
Nations Marsico Focused Equities Fund (12/31/97) N/A
Nations Marsico Growth & Income Fund (12/31/97) N/A
Nations Pacific Growth Fund (6/30/95) (28.35)%
Nations Short-Intermediate Government Fund (8/1/91) 9.11%
Nations Short-Term Income Fund (9/30/92) 6.89%
Nations Small Company Growth Fund (12/12/95) 49.41%
Nations Strategic Fixed Income Fund (10/30/92) 10.53%
Nations Value Fund (9/19/89) 38.53%
Nations Prime Fund (12/15/86) 5.61%
<CAPTION>
Inception
3-Year Period 5-Year Period through
FUND NAME (DATE OF COMMENCEMENT OF OPERATIONS) Ended 3/31/98 Ended 3/31/98 3/31/98
<S> <C> <C> <C>
Nations Capital Growth Fund (9/30/92) 29.63% 19.35% 19.47%
Nations Disciplined Equity Fund (10/1/92) 31.57% 21.56% 27.15%
Nations Diversified Income Fund (10/30/92) 9.05% 7.63% 8.73%
Nations Emerging Growth Fund (12/4/92) 25.18% 19.30% 17.92%
Nations Emerging Markets Fund (6/30/95) N/A N/A 2.97%
Nations Equity Income Fund (4/11/91) 25.40% 17.82% 17.18%
Nations International Equity Fund (12/2/91) 12.09% 10.68% 8.47%
Nations International Value Fund (12/27/95) N/A N/A 22.91%
Nations Managed Index Fund (8/1/96) N/A N/A 41.04%
Nations Managed SmallCap Index Fund (10/15/96) N/A N/A 29.41%
Nations Marsico Focused Equities Fund (12/31/97) N/A N/A 21.30%
Nations Marsico Growth & Income Fund (12/31/97) N/A N/A 20.30%
Nations Pacific Growth Fund (6/30/95) N/A N/A (9.86)%
Nations Short-Intermediate Government Fund (8/1/91) 6.71% 5.08% 6.66%
Nations Short-Term Income Fund (9/30/92) 6.74% 5.45% 5.45%
Nations Small Company Growth Fund (12/12/95) N/A N/A 25.39%
Nations Strategic Fixed Income Fund (10/30/92) 7.90% 6.07% 6.80%
Nations Value Fund (9/19/89) 28.85% 20.29% 16.64%
Nations Prime Fund (12/15/86) 5.59% 4.96% 6.00%
</TABLE>
How The LifeGoal Portfolios Are Managed
The business and affairs of the Company are managed under the supervision and
direction of its Board of Directors. The LifeGoal Portfolios' SAI contains the
names of and general background information concerning each Director of the
Company.
As described below, each LifeGoal Portfolio is advised by NBAI which is
responsible for the overall management and supervision of the investment
management of each LifeGoal Portfolio. Each LifeGoal Portfolio also is
sub-advised by TradeStreet which as a general matter is responsible for the
day-to-day investment decisions for the respective LifeGoal Portfolio.
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.
NationsBank Corporation, the parent company of NationsBank, has signed an
agreement to merge with BankAmerica Corporation. The proposed merger is subject
to certain regulatory approvals and must be approved by shareholders of both
holding companies. The merger is expected to close in
19
<PAGE>
the second half of 1998. NationsBank and NBAI have advised the LifeGoal
Portfolios that the merger will not reduce the level or quality of advisory and
other services provided to the LifeGoal Portfolios.
Investment Adviser: NationsBanc Advisors, Inc. serves as investment adviser to
the LifeGoal Portfolios and the Nations Funds. NBAI is a wholly owned
subsidiary of NationsBank, which in turn is a wholly owned banking subsidiary
of NationsBank Corporation, a bank holding company organized as a North
Carolina corporation. NBAI has its principal offices at One NationsBank Plaza,
Charlotte, North Carolina 28255.
TradeStreet Investment Associates, Inc., with principal offices at One
NationsBank Plaza, Charlotte, North Carolina 28255, serves as investment
sub-adviser to the LifeGoal Portfolios and most of the Nations Funds.
TradeStreet is a wholly owned subsidiary of NationsBank. TradeStreet provides
investment management services to individuals, corporations and institutions.
Gartmore Global Partners ("Gartmore"), with principal offices at One
NationsBank Plaza, Charlotte, North Carolina, 28255, serves as the investment
sub-adviser to three of the underlying Nations Funds. Gartmore is a joint
venture structured as a general partnership between NB Partner Corp., a wholly
owned subsidiary of NationsBank, and Gartmore U.S. Limited, an indirect, wholly
owned subsidiary of Gartmore Investment Management plc, a UK company which is
the holding company for a leading UK based international fund management group
of companies. National Westminster Bank plc and affiliated entities own 100% of
the equity of Gartmore plc.
Brandes Investment Partners, L.P. ("Brandes"), with principal offices at 12750
High Bluff Drive, San Diego, California 92130, serves as investment sub-adviser
to one of the underlying Nations Funds -- Nations International Value Fund.
Marsico Capital Management, LLC ("Marsico Capital"), located at 1200 17th
Street, Suite 1300, Denver, Colorado 80202, serves as the investment sub-adviser
to two of the underlying Nations Funds -- Nations Marsico Focused Equities Fund
- -- and Nations Marsico Growth & Income Fund. NationsBank has an option to
purchase up to 50% of Marsico Capital.
Subject to the general supervision of the Company's Board of Directors, and in
accordance with each LifeGoal Portfolio's investment policies, the Adviser is
responsible for allocating and reallocating each LifeGoal Portfolio's assets
among the Nations Funds in which it invests, and for rebalancing such portfolio
allocations. A LifeGoal Portfolio's investments are continuously monitored and
are reallocated as often as the Adviser deems appropriate. In addition,
portfolio allocations and performance are reviewed quarterly for rebalancing at
the discretion of the Adviser.
The Adviser has the ability to change the particular Nations Funds used as
underlying investments for the LifeGoal Portfolios. Among other things, the
Adviser may substitute or include other funds from the Nations Funds Family,
including any introduced subsequent to this Prospectus, as permissible
investments for the LifeGoal Portfolios. In the event the Adviser seeks to
invest the assets of a LifeGoal Portfolio in a Nations Fund not identified in
this Prospectus, the Company will amend or supplement the Prospectus to include
all pertinent information.
Both the LifeGoal Portfolios and Nations Funds have investment advisory
arrangements with NBAI. NBAI is entitled to receive advisory fees at an annual
rate of .25% of the average daily net assets of each LifeGoal Portfolio. NBAI
also has agreed to absorb all other expenses of the LifeGoal Portfolios (except
taxes, brokerage fees and commissions, extraordinary expenses, and any
applicable Rule 12b-1 fees, shareholder servicing fees and/or shareholder
administration fees). NBAI, in turn, compensates TradeStreet for investment
sub-advisory services at an annual rate of .05% of the average daily net assets
of each LifeGoal Portfolio. NBAI also receives advisory fees at varying rates
from the underlying Nations Funds, and pays TradeStreet, Gartmore, Brandes and
Marsico Capital sub-advisory fees for their services to the underlying Nations
Funds. From time to time, the Adviser may waive or reimburse (either
voluntarily or pursuant to applicable state expense limitations) advisory fees
and/or expenses payable by a LifeGoal Portfolio. Once commenced, waiver and
reimbursement arrangements may be discontinued at any time. In addition, the
Adviser may from time to time compensate Agents, as defined below, for
providing certain ser-
20
<PAGE>
vices to Customers. LifeGoal Portfolio's shareholders will indirectly pay their
proportionate share of the advisory fees and other expenses of any Nations Fund
in which the LifeGoal Portfolios are invested.
For the fiscal year ended March 31, 1998, the LifeGoal Portfolios paid NBAI
advisory fees at the indicated rates of the following LifeGoal Portfolios'
average daily net assets: Nations LifeGoal Growth Portfolio -- .25%; Nations
LifeGoal Balanced Growth Portfolio -- .25%; and Nations LifeGoal Income and
Growth Portfolio -- .25%.
For the fiscal year ended March 31, 1998, NBAI paid TradeStreet sub-advisory
fees at the indicated rates of the following LifeGoal Portfolios' average daily
net assets: Nations LifeGoal Growth Portfolio -- .05%; Nations LifeGoal
Balanced Growth Portfolio -- .05%; and Nations LifeGoal Income and Growth
Portfolio -- .05%.
NBAI, TradeStreet and certain of their affiliates provide advisory and other
services to Nations Funds for which they receive compensation. The level of
compensation received and services provided by them differs among the various
Nations Funds. These differences subject the Adviser to conflicts of interest,
in that the Adviser could increase its fee income or that of its affiliates, or
attain other direct or indirect benefits, by allocating LifeGoal Portfolio
assets to underlying Nations Funds that pay higher fees or provide other
benefits.
The Co-Portfolio Managers of the LifeGoal Portfolios are E. Keith Wirtz and C.
Thomas Clapp.
Mr. Wirtz is Managing Director and Chief Investment Officer of TradeStreet and
has been responsible for the firm's investment staff, strategy and policy since
December 1996. Prior to assuming his position with TradeStreet, from April 1992
through December 1996, he was Senior Vice President and Chief Investment
Officer of Bank of America's Investment Management Division. Mr. Wirtz has
worked in the investment community since 1981. His past experience includes
domestic and international portfolio management for both private and
institutional clients. Mr. Wirtz received his B.S. in Finance from Arizona
State University. He holds the Chartered Financial Analyst designation and is a
member of the Association for Investment Management and Research, as well as
the Los Angeles Analyst Society.
Mr. Clapp is Director of the Equity Management Group for TradeStreet. Prior to
assuming his position with TradeStreet in 1995, he was Senior Vice President
and Director of Research for the Investment Management Group at NationsBank.
Prior to joining NationsBank in 1992, Mr. Clapp was a Senior Portfolio Manager
with Royal Insurance Group. Mr. Clapp has worked in the investment community
since 1984. He received his B.A. in Economics from the University of North
Carolina at Chapel Hill and an M.B.A. from the University of South Carolina. 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.
Morrison & Foerster LLP, counsel to the Company and Nations Funds, and special
counsel to NationsBank and certain of its affiliates, has advised the Company
and Nations Funds that NationsBank and its affiliates may perform the services
contemplated by the various investment advisory agreements and this Prospectus
without violation of the Glass-Steagall Act. Such counsel has pointed out,
however, that there are no controlling judicial or administrative
interpretations or decisions and that future judicial or administrative
interpretations of, or decisions relating to, present federal or state
statutes, including the Glass-Steagall Act, and regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, as well
as future changes in such federal or state statutes, regulations and judicial
or administrative decisions or interpretations, could prevent such entities
from continuing to perform, in whole or in part, such services. If any such
entity were prohibited from performing any of such services, it is expected
that new agreements would be proposed or entered into with another entity or
entities qualified to perform such services.
Other Service Providers: Stephens Inc. ("Stephens"), a registered broker-dealer
with principal offices at 111 Center Street, Little Rock, Arkansas 72201,
serves as the administrator of the LifeGoal Portfolios pursuant to an
administration agreement. Pursuant to the terms of the administration
agreement, Stephens provides various admin-
21
<PAGE>
istrative and corporate secretarial services to the LifeGoal Portfolios,
including providing general oversight of other service providers, office space,
utilities and various legal and administrative services in connection with the
satisfaction of various regulatory requirements applicable to the LifeGoal
Portfolios. Stephens will not receive any fees from the LifeGoal Portfolios for
these services.
First Data Investor Services Group, Inc. ("First Data"), a wholly owned
subsidiary of First Data Corporation, with principal offices at One Exchange
Place, Boston, Massachusetts 02109, serves as the co-administrator of the
LifeGoal Portfolios. Under the co-administration agreement, First Data provides
various administrative and accounting services to the LifeGoal Portfolios
including performing the calculations necessary to determine net asset value
per share and dividends, preparing tax returns and financial statements and
maintaining the portfolio records and certain of the general accounting records
for the LifeGoal Portfolios. For the services rendered pursuant to the
co-administration agreement, First Data is entitled to receive a fee of $10,000
per year per LifeGoal Portfolio, which will be absorbed by NBAI.
For the fiscal period ended March 31, 1998, the LifeGoal Portfolios paid First
Data the following amounts for administration services; Nations LifeGoal Growth
Portfolio -- $4,959; Nations LifeGoal Balanced Growth Portfolio -- $4,959; and
Nations LifeGoal Income and Growth Portfolio -- $4,959.
Shares of the LifeGoal Portfolios are sold on a continuous basis by Stephens,
as the LifeGoal Portfolios' sponsor and distributor. The LifeGoal Portfolios
have entered into distribution agreements with Stephens which provide that
Stephens has the exclusive right to distribute shares of the LifeGoal
Portfolios. Stephens may pay service fees or commissions to selling agents that
assist customers in purchasing Investor A Shares of the LifeGoal Portfolios.
See "Shareholder Servicing and Distribution Plans."
First Data serves as the Transfer Agent (the "Transfer Agent") for each of
LifeGoal Portfolio's Investor A Shares. NationsBank serves as custodian for the
assets of each LifeGoal Portfolio.
Stephens, First Data and NationsBank all provide services at the underlying
Nations Funds level and are compensated directly by such Nations Funds for
those services.
PricewaterhouseCoopers LLP serves as independent accountant to the Company.
Their address is 160 Federal Street, Boston, Massachusetts 02110.
Expenses: Certain administrative and other fees and expenses will be charged at
the LifeGoal Portfolios and Nations Funds levels. However, redundancies of fees
and expenses between the LifeGoal Portfolios and Nations Funds will be minimal,
because distinct services are being provided at each fund level. For example,
the LifeGoal Portfolios pay advisory fees to the Adviser for its services in
allocating LifeGoal Portfolio assets among the underlying Nations Funds. These
services are distinct from the services provided by the Adviser to the Nations
Funds in managing the Nations Funds' individual portfolio securities.
NBAI, under its investment advisory agreement with the LifeGoal Portfolios, has
agreed to absorb all expenses of the LifeGoal Portfolios, except taxes,
brokerage fees and commissions, extraordinary expenses and any applicable Rule
12b-1 fees, shareholder servicing fees and/or shareholder administration fees.
The LifeGoal Portfolios' expenses that will be absorbed by NBAI include, but
are not limited to: fees paid to service providers other than the Adviser;
interest; Directors' fees; federal and state securities registration and
qualification fees; costs of preparing and printing prospectuses for regulatory
purposes and for distribution to existing shareholders; certain insurance
premiums; outside auditing and legal expenses; and costs of shareholder reports
and shareholder meetings. Investor A Shares also bear certain class specific
expenses, which are described under "Shareholder Servicing and Distribution
Plans," below.
The LifeGoal Portfolios do not pay any front-end sales loads or contingent
deferred sales charges in connection with the purchase or redemption of shares
of the Nations Funds. By investing in Primary A Shares of the Nations Funds,
the LifeGoal Portfolios also will not be subject to any asset-based sales
charges or service fees. The sales charges or service fees associated with
purchase of shares of the LifeGoal Portfolios will not exceed the limits
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set forth in Rule 2830 of the Conduct Rules of the NASD when aggregated with
sales charges or service fees, if any, that the LifeGoal Portfolios pay
relating to Nations Funds' shares.
The LifeGoal Portfolios' share of the Nations Funds' expenses may include
expenses that the LifeGoal Portfolios would not have incurred if it had not
been structured as a "fund of funds." For example, if a portfolio manager of
one Nations Fund purchases the same securities that the portfolio manager of
another Nations Fund is selling, there may be transaction charges and
commissions that achieve little or no benefit for the LifeGoal Portfolios. Such
transactions will be rare because the Nations Funds pursue a broad range of
investment strategies, and therefore invest in different types of securities.
Organization And History
The LifeGoal Portfolios are members of the Nations Funds Family, which consists
of the Company, Nations Fund Trust, Nations Fund, Inc., Nations Fund
Portfolios, Inc., Nations Annuity Trust and Nations Institutional Reserves. The
Nations Funds Family currently has more than 60 distinct investment portfolios
and total assets in excess of $40 billion.
Nations LifeGoal Funds, Inc.: The Company was incorporated in Maryland on July
3, 1996, commenced operations on October 2, 1996, and shares were offered to
the public on October 15, 1996. The Company's fiscal year end is March 31. As
of the date of this Prospectus, the authorized capital stock of Nations
LifeGoal Funds, Inc. consists of 1,200,000,000 shares of common stock, par
value of $.001 per share, which are divided into series or portfolios, each of
which includes several classes of shares. This Prospectus relates to the
Investor A Shares of the following three portfolios of the Company: LifeGoal
Growth Portfolio, LifeGoal Balanced Growth Portfolio, and LifeGoal Income and
Growth Portfolio. To obtain additional information regarding the LifeGoal
Portfolios' other classes of shares which may be available to you, contact your
Institution (as defined below) or Nations Funds at 1-800-321-7854.
Shares of each Portfolio and class have equal rights with respect to voting,
except that the holders of shares of a particular Portfolio or class will have
the exclusive right to vote on matters affecting only the rights of the holders
of such Portfolio or class. In the event of dissolution or liquidation, holders
of each class will receive pro rata, subject to the rights of creditors, (a)
the proceeds of the sale of that portion of the assets allocated to that class
held in the respective Portfolio of the Company, less (b) the liabilities of
the Company attributable to the respective Portfolio or class or allocated
among the Portfolios or classes based on the respective liquidation value of
each Portfolio or class.
Shareholders of the Company do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all Portfolios voting
together for election of directors may elect all of the members of the Board of
Directors of the Company. Meetings of shareholders may be called upon the
request of 10% or more of the outstanding shares of the Company. There are no
preemptive rights applicable to any of the Company's shares. The Company's
shares, when issued, will be fully paid and non-assessable.
As of August 1, 1998, NationsBank and its affiliates possessed or shared power
to dispose of or vote with respect to more than 25% of the outstanding shares
of the Company and therefore could be considered to be a controlling person of
the Company and each of the LifeGoal Portfolios for purposes of the 1940 Act.
For more detailed information concerning the percentage of each class or series
over which NationsBank and its affiliates possessed or shared power to dispose
or vote as of a certain date, see the SAI. 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.
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About Your Investment
How To Buy Shares
Investor A Shares are available to the following categories of Investors:
o Investors who purchase through accounts established with certain fee-based
investment advisers or financial planners, including Nations Funds
Personal Investment Planner accounts, wrap fee accounts and other
managed agency/asset allocation accounts.
o Directors, officers, and employees of NationsBank Corporation, its
affiliates and subsidiaries.
o Individuals investing a distribution received from a NationsBank trust
account and certain other rollovers or distributions received from
NationsBank fiduciary accounts.
o Current Investor A shareholders (other than Investor A shareholders who own
such shares exclusively through a cash sweep option) who purchased
Investor A Shares prior to August 1, 1997.
o Employee benefit plans making an initial investment of $1 million or more
in the Nations Funds Family.
o Investors (other than those described above) investing $1 million or more
in the Nations Funds Family through an Agent (as defined below) (a
"Substantial Investor"). In determining whether an investor qualifies
as a Substantial Investor, all current holdings of Funds in the
Nations Funds Family other than the Nations Funds money market or
index funds, Nations Short-Term Income Fund and Nations Short-Term
Municipal Income Fund, will be considered.
Purchase orders for Investor A Shares may be placed directly with a LifeGoal
Portfolio or through banks, broker/dealers or other financial institutions
(including certain affiliates of NationsBank) that have entered into a
shareholder servicing agreement ("Servicing Agreement") with Nations Funds
("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."
The LifeGoal Portfolios reserve the right, in their discretion, to make
Investor A Shares available to other categories of investors, including those
who become eligible in connection with a merger or reorganization.
There is a minimum initial investment of $1,000 in the LifeGoal Portfolios,
except that the minimum initial investment is:
o $500 for IRA investors;
o $250 for non-working spousal IRAs;
o $250 for accounts established with certain fee-based investment advisers
or financial planners, including wrap fee accounts and other managed
agency/asset allocation accounts; and
o $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"), Savings Incentives Method Plans for
Employees ("SIMPLE IRAs"), salary reduction-Individual Retirement Accounts
("SAR-IRAs") or similar types of accounts. However, the assets of such plans
must reach an asset value of $1,000 ($500 for SEPs, SAR-SEPs, SIMPLE IRAs, and
SAR-IRAs) within one year of the account open date. If the assets of such plans
do not reach the minimum asset size within one year, the Company reserves the
right to redeem the shares held by such plans on 60 days' written notice. The
minimum subsequent investment is $100, except for investments pursuant to the
Systematic Investment Plan described below.
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Investor 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 and Stephens reserve the right to reject any purchase order. The
issuance of Investor A Shares is recorded on the books of the LifeGoal
Portfolios, and share certificates are not issued unless expressly requested in
writing. Certificates are not issued for fractional shares.
Opening an Account Directly With a LifeGoal Portfolio: Certain investors may
open a regular (non-retirement) account directly with a LifeGoal Portfolio,
either by mail or by wire.
BY MAIL: Investors should complete a New Account Application and forward it,
along with a check made payable to the LifeGoal Portfolio, to:
LifeGoal Portfolio
P.O. Box 34602
Charlotte, NC 28254-4602
BY WIRE: Investors should call Nations Funds at 1-800-321-7854 for an account
number and use the following wire instructions:
LifeGoal Portfolio
c/o Boston Safe Deposit & Trust
ABA #011001234
DDA #154202
Account Name
- -------------------
Account Number
- -------------------
Fund Name
- -------------------
Investors should complete a New Account Application and mail it to the address
above.
RETIREMENT ACCOUNTS: For IRAs and other retirement accounts, investors should
call Nations Funds 1-800-321-7854.
ADDITIONAL PURCHASES: Additional purchases may be made by mail or wire. To
purchase additional shares by mail, send a check made payable to the LifeGoal
Portfolio with a reinvestment slip to the address set forth above. To purchase
additional shares by wire, follow the wiring instructions set forth above.
Effective Time of Purchases: Purchase orders for Investor A Shares in the
LifeGoal Portfolios which are received by Stephens, the Transfer Agent or their
respective agents before the close of regular trading 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. In the event that the Exchange
closes early, purchase orders received prior to closing will be priced as of
the time the Exchange closes and purchase orders received after the Exchange
closes will be deemed received on the next Business Day and priced according to
the net asset value determined on the next Business Day. Purchase orders 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 Funds' Custodian. Such payment must be received no later than 4:00 p.m.,
Eastern time, by the third Business Day following the receipt of the order, as
determined above. If funds are not received by such date, the order will not be
accepted and notice thereof will be given to the Agent placing the order.
Payment for orders which are not received or accepted will be returned after
prompt inquiry to the sending Agent.
The Agents are responsible for transmitting orders for purchases of Investor A
Shares by their customers ("Customers"), and delivering required funds, on a
timely basis. Stephens is responsible for transmitting orders it receives to
the Company.
Systematic Investment Plan: Under the LifeGoal Portfolios' Systematic
Investment Plan ("SIP"), a shareholder may automatically purchase Investor A
Shares. On a bi-monthly, monthly or quarterly basis, a shareholder may direct
cash to be transferred automatically from his/her checking or savings account
at any bank which is a member of the Automated Clearing House to his/her
LifeGoal Portfolio account. Transfers will occur on or about the 15th and/or
the last day of the applicable month. Subject to certain exceptions for
employees of NationsBank and its affiliates and pre-existing SIP accounts, the
systematic investment amount may be in any amount from $50 to $100,000. For
more information concerning the SIP, contact your Agent or Nations Funds.
Telephone Transactions: Investors may effect purchases, redemptions (up to
$50,000) and exchanges by telephone. See "How To Redeem
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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. Shareholders should be aware that during periods of
significant economic or market change, telephone transactions may be difficult
to complete.
How To Redeem Shares
For shareholders who open and maintain an account directly with a LifeGoal
Portfolio, redemption orders should be communicated to such LifeGoal Portfolio
by calling Nations Funds at 1-800-321-7854 or in writing. (Shareholders must
have established telephone features on their account in order to effect
telephone transactions.)
Redemption orders for Investor A Shares of the LifeGoal Portfolios which are
received by Stephens, the Transfer Agent or their respective agents before the
close of regular trading on the Exchange (currently 4:00 p.m., Eastern time) on
any Business Day are priced according to the net asset value next determined
after acceptance of the order. In the event that the Exchange closes early,
redemption orders received prior to closing will be priced as of the time the
Exchange closes and redemption orders received after the Exchange closes will
be deemed received on the next Business Day and priced according to the net
asset value determined on the next Business Day.
Redemption proceeds are normally sent by mail or wired within three Business
Days after receipt of the order by the LifeGoal Portfolio. For shareholders who
purchased their shares through an Agent, redemption orders should be
transmitted by telephone or in writing through the same Agent. Redemption
proceeds are normally remitted in federal funds wired to the redeeming Agent or
investor within three Business Days after receipt of the order by Stephens, by
the Transfer Agent or their respective agents. Redemption orders are effected
at the net asset value per share next determined after receipt of the order by
the LifeGoal Portfolio, Stephens, the Transfer Agent, or their respective
agents as the case may be. The Agents are responsible for transmitting
redemption orders to Stephens, the Transfer Agent or their respective agents
and for crediting their Customer's account with the redemption proceeds on a
timely basis. Redemption proceeds for shares purchased by check may not be
remitted until at least 15 days after the date of purchase to ensure that the
check has cleared; a certified check, however, is deemed to be cleared
immediately. No charge for wiring redemption payments is imposed by the
Company. There is no redemption charge.
The Company may redeem a shareholder's Investor A Shares upon 60 days' written
notice if the balance in the shareholder's account drops below $500 as a result
of redemptions. Share balances also may be redeemed at the direction of an
Agent pursuant to arrangements between the Agent and its Customers. The Company
also may redeem shares of the LifeGoal Portfolios involuntarily or make payment
for redemption in readily marketable securities or other property under certain
circumstances in accordance with the 1940 Act.
Prior to effecting a redemption of Investor A Shares represented by
certificates, the Transfer Agent must have received such certificates at its
principal office. All such certificates must be endorsed by the redeeming
shareholder or accompanied by a signed stock power, in each instance with the
signature guar-
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anteed 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.
Redemption Fee: A redemption fee of 1% of the current net asset value will be
assessed on certain Investor A Shares purchased after July 31, 1997 and
redeemed within 18 months of the date of purchase by a Substantial Investor (as
defined in "How to Buy Shares"). In addition, a 1% redemption fee will be
assessed on Investor A Shares purchased after such date by an employee benefit
plan that (i) made its initial investment after such date and (ii) redeemed
such shares within 18 months of purchase in connection with a complete
liquidation of such plan's holdings in the Nations Funds Family. This fee is
retained by the Fund or Funds for the benefit of the remaining shareholders and
is intended to encourage long-term investment in the Funds and to avoid
transaction and other expenses associated with short-term investments. The
Funds reserve the right to modify the terms of or terminate this fee at any
time.
Automatic Withdrawal Plan: An Automatic Withdrawal Plan ("AWP") may be
established by a new or existing shareholder of the LifeGoal Portfolios if the
value of the Investor A Shares in his/her accounts within the Nations Fund
Family (valued at the net asset value at the time of the establishment of the
AWP) equals $10,000 or more. 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 as necessary to meet withdrawal payments. Withdrawals will
reduce principal and may eventually deplete the shareholder's account. If a
shareholder desires to establish an AWP after opening an account, a signature
guarantee will be required. An AWP may be terminated by a shareholder on 30
days' written notice to his/her Agent or by the Company at any time.
How To Exchange Shares
The exchange feature enables a shareholder of Investor A Shares of a LifeGoal
Portfolio to acquire Investor A Shares of another fund in the Nations Fund
Family (which includes both LifeGoal Portfolios and Nations Funds) (other than
an index fund) when that shareholder believes that a shift between funds is an
appropriate investment decision. A qualifying exchange of Investor A Shares of
a LifeGoal Portfolio for Investor A Shares of another Nations Fund is made on
the basis of the next calculated net asset value per share of each fund after
the exchange order is received.
For shareholders who maintain an account directly with a LifeGoal Portfolio,
exchange requests should be communicated to the LifeGoal Portfolio by calling
Nations Funds at 1-800-321-7854 or in writing. For shareholders who purchased
their shares through an Agent, exchange requests should be communicated to the
Agent, who is responsible for transmitting the request to Stephens or to the
Transfer Agent.
The LifeGoal Portfolios and each of the other funds of the Nations Funds Family
may limit the number of times this exchange feature may be exercised by a
shareholder within a specified period of time. Also, the exchange feature may
be terminated or revised at any time by the LifeGoal Portfolios upon such
notice as may be required by applicable regulatory agencies (presently 60 days
for termination or material revision), provided that the exchange feature may
be terminated or materially revised without notice under certain unusual
circumstances.
The current prospectus for each Fund describes its investment objective and
policies, and shareholders should obtain a copy and examine it carefully before
exchanging to another fund. Exchanges are subject to the minimum investment
requirement and any other conditions imposed by each fund. In the case of any
shareholder holding a share certificate or certificates, no exchanges may be
made until all applicable share certificates have been
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<PAGE>
received by the Transfer Agent and deposited in the shareholder's account. An
exchange will be treated for federal income tax purposes the same as a
redemption of shares, on which the shareholder may realize a capital gain or
loss. However, the ability to deduct capital losses on an exchange may be
limited in situations where there is an exchange of shares within 90 days after
the shares are purchased.
The Investor A Shares exchanged must have a current value of at least $1,000
(except for exchanges through the Automatic Exchange Feature, which is
described below). The Company and Stephens reserve 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.
If Investor A Shares are exchanged for shares of the same class of another
fund, any redemption fee applicable to the original shares purchased will be
assessed upon the redemption of the acquired shares. The holding period of such
shares (for purposes of determining whether a redemption fee is applicable)
will be computed from the time of the initial purchase of the Investor A Shares
of a Fund, except that the holding period will not accrue while the shares
owned are Investor A shares of Nations Short-Term Municipal Income Fund,
Nations Short- Term Income Fund or a Nations Funds money market fund. If a
redemption fee ultimately is charged, it will be retained by the initial Fund
purchased.
Automatic Exchange Feature: Under the LifeGoal Portfolios' Automatic Exchange
Feature ("AEF") a shareholder may automatically exchange at least $25 on a
monthly or quarterly basis. A shareholder may direct proceeds to be exchanged
from one fund of Nations Fund to another as allowed by the applicable exchange
rules within the prospectus. Exchanges will occur on or about the 15th or the
last 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 Nations Funds.
Shareholder Servicing And Distribution Plans
The LifeGoal Portfolios' Shareholder Servicing and Distribution Plan (the
"Investor A Plan"), adopted pursuant to Rule 12b-1 under the 1940 Act, permits
the LifeGoal Portfolios to compensate (i) Servicing Agents and Selling Agents
for services provided to their Customers that own Investor A Shares and (ii)
Stephens for distribution-related expenses incurred in connection with Investor
A Shares. Aggregate payments under the Investor A Plan are calculated daily and
paid monthly at a rate or rates set from time to time by the LifeGoal
Portfolios, provided that the annual rate may not exceed .25% of the average
daily net asset value of the Investor A Shares of the LifeGoal Portfolios.
The fees payable to Servicing Agents under the Investor A Plan are used
primarily to compensate or reimburse Servicing Agents for shareholder services
provided, and related expenses incurred, by such Servicing Agents. The
shareholder services provided by Servicing Agents may include: (i) aggregating
and processing purchase and redemption requests for Investor A Shares from
Customers and transmitting net purchase and redemption orders to Stephens or
the Transfer Agent; (ii) providing Customers with a service that invests the
assets of their accounts in Investor A Shares pursuant to specific or
preauthorized instructions; (iii) processing dividend and distribution payments
from the LifeGoal Portfolios on behalf of Customers; (iv) providing information
periodically to Customers showing their positions in Investor A Shares; (v)
arranging for bank wires; and (vi) providing general shareholder liaison
services. The fees pay-
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able 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.
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 con-nection
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 pay-able 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.
The Adviser may also pay out of its own assets amounts to Stephens or other
broker/dealers in connection with the provision of administrative and/or
distribution related services to shareholders.
In addition, Stephens may, from time to time, at its expense or as an expense
for which it may be reimbursed under the Investor A Plan, pay a bonus or other
consideration or incentive to Agents who sell a minimum dollar amount of shares
of the LifeGoal Portfolios during a specified period of time. Stephens may
also, 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.
Stephens has also established a non-cash compensation program pursuant to which
broker/dealers or financial institutions that sell shares of the LifeGoal
Portfolios may earn additional compensation in the form of trips to sales
seminars or vacation destinations, tickets to sporting events, theater or other
entertainment, opportunities to participate in golf or other outings and gift
certificates for meals or merchandise. This non-cash compensation program may
be amended or terminated at any time by Stephens.
How The LifeGoal Portfolios Value
Their Shares
The net asset value of a share of each class is calculated by dividing the
total value of its assets, less liabilities, by the number of shares in the
class outstanding. Shares of the LifeGoal Portfolios are valued as of the close
of regular trading on the Exchange (currently 4:00 p.m., Eastern time) on each
Business Day. In the event that the Exchange closes early, shares of the
LifeGoal Portfolios will be priced as of the time the Exchange closes.
Currently, the days on which the Exchange is closed (other than weekends) are:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
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Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving and
Christmas.
The Nations Funds determine their net asset value per share on a daily basis.
The net asset value of the LifeGoal Portfolio shares will be determined by
reference to the net asset value of the underlying Nations Fund.
How Dividends And Distributions Are Made; Tax Information
Dividends and Distributions
Each LifeGoal Portfolio declares and pays dividends from net investment income
quarterly. Each LifeGoal Portfolio's net realized capital gains (including net
short-term capital gains) are distributed at least annually. Distributions from
capital gains are made after applying any available capital loss carryovers.
Distributions paid by the LifeGoal Portfolios with respect to one class of
shares may be greater or less than those paid with respect to another class of
shares due to the different expenses of the different classes.
Investor A Shares of LifeGoal Portfolios are eligible to receive dividends when
declared, provided, however, that the purchase order for such shares is
received at least one day prior to the dividend declaration and such shares
continue to be eligible for dividends through and including the day before the
redemption order is executed.
The net asset value of Investor A Shares in LifeGoal Portfolios will be reduced
by the amount of any dividend or distribution. Accordingly, dividends and
distributions on newly purchased Investor A Shares will represent, in
substance, a return of capital. However, such dividends and distributions would
nevertheless be taxable. Certain Agents may provide for the reinvestment of
dividends in the form of additional Investor A Shares of the same class in the
same LifeGoal Portfolio. Dividends and distributions are paid in cash within
five Business Days of the end of the quarter to which the payment relates.
Dividends and distributions payable to a shareholder are paid in cash within
five Business Days after a shareholder's complete redemption of his/her
Investor A Shares.
Tax Information
Each of the LifeGoal Portfolios intends to continue to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). In general, such qualification relieves a LifeGoal Portfolio of
liability for federal income tax to the extent all of its annual earnings are
distributed in accordance with the Code. Each LifeGoal Portfolio intends to
distribute substantially all of its earnings each taxable year.
Any distributions by a LifeGoal Portfolio of its net investment income
(including net foreign currency gains) and the excess, if any, of its net
short-term capital gain over its net long-term capital loss generally will be
taxable as ordinary income to shareholders whether such income is received in
cash or reinvested in additional shares.
Corporate shareholders in the LifeGoal Portfolios may be entitled to the
dividends-received deduction for distributions attributable to those underlying
funds investing in the stock of domestic corporations to the extent of the
total qualifying dividends received by the distributing fund.
Substantially all of the net realized long-term capital gains of the LifeGoal
Portfolios, if any, will be distributed at least annually to the LifeGoal
Portfolios' shareholders. The LifeGoal Portfolios will generally have no tax
liability with respect to such gains, and the distributions generally will be
taxable to shareholders as net capital gain, regardless of how long the
shareholders have held such LifeGoal Portfolios' shares and whether such gains
are received in cash or reinvested in additional shares. Noncorporate
shareholders may be taxed on such distributions at preferential rates.
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Each year, shareholders will be notified as to the amount and federal tax
status of all dividends and capital gain distributions paid during the prior
year. Such dividends and distributions may also be subject to state and local
taxes.
Dividends and capital gain distributions declared in October, November or
December of any year payable to shareholders of record on a specified date in
such months will be deemed to have been received by shareholders and paid by a
LifeGoal Portfolio on December 31 of such year in the event such dividends and
distributions are actually paid during January of the following year.
Federal law requires the Company to withhold 31% from any distributions paid by
the Company and/or redemptions (including exchanges and redemptions in-kind) to
individual shareholders unless the shareholder properly furnishes a certified,
correct Taxpayer Identification Number and certifies that withholding does not
apply. Such withholding is also required if the Internal Revenue Service
notifies the Company that the Taxpayer Identification Number provided by the
shareholder is incorrect or that the shareholder is otherwise subject to such
withholding. Amounts withheld are applied to the shareholder's federal tax
liability, and a refund may be obtained from the Internal Revenue Service if
withholding results in overpayment of tax. Federal law also requires the
LifeGoal Portfolios to withhold tax on dividends paid to certain foreign
shareholders.
The foregoing discussion is based on tax laws and regulations that were in
effect as of the date of this Prospectus and summarizes only some of the
important tax considerations generally affecting the LifeGoal Portfolios and
their shareholders. It is not intended as a substitute for careful tax
planning. Accordingly, potential investors should consult their tax advisors
with specific reference to their own tax situations and with respect to
foreign, state and local taxes. Further tax information is contained in the
SAI.
Financial Highlights
The following financial information has been derived from the audited financial
statements of the LifeGoal Portfolios. PricewaterhouseCoopers LLP is the
independent accountant to the LifeGoal Portfolios. The reports of
PricewaterhouseCoopers LLP for the most recent fiscal period of the LifeGoal
Portfolios accompany the financial statements for such period and are
incorporated by reference in the SAI, which is available upon request. For more
information see "Organization And History." Shareholders of the Portfolios will
receive unaudited semi-annual reports describing the Portfolios' investment
operations and annual financial statements audited by the LifeGoal Portfolios'
independent accountant.
31
<PAGE>
FOR AN INVESTOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
LifeGoal Growth Portfolio
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
Investor A Shares 03/31/98 03/31/97*
<S> <C> <C>
Operating performance:
Net asset value, beginning of year $ 10.15 $ 10.06
Net investment income/(loss) 0.05 (a) 0.12
Net realized and unrealized gain on investments 2.89 0.09
Net increase in net assets resulting from investment operations 2.94 0.21
Distributions:
Distributions from net investment income (0.01) (0.12)
Distributions in excess of net investment income (0.37) --
Distributions from net realized capital gains (0.21) --
Total distributions (0.59) (0.12)
Net asset value, end of year $ 12.50 $ 10.15
Total return++ 29.68% $ 2.05%
Ratios to average net assets/supplemental data:
Net assets, end of year (in 000's) $1,526 $ 681
Ratio of operating expenses to average net assets+++ 0.50% 0.50%+
Ratio of net investment income/(loss) to average net assets 0.40% 0.86%+
Portfolio turnover rate 69% 25%
</TABLE>
* LifeGoal Growth Portfolio Investor A Shares commenced investment operations
on October 2, 1996. Shares were offered to the public on October 15, 1996.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
Funds.
(a) Per share amounts have been calculated using the monthly average share
method, which more appropriately represents the per share data for the
period.
32
<PAGE>
FOR AN INVESTOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
LifeGoal Balanced Growth Portfolio
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
Investor A Shares 03/31/98 03/31/97*
<S> <C> <C>
Operating performance:
Net asset value, beginning of year $ 9.95 $ 10.05
Net investment income 0.28 (a) 0.19
Net realized and unrealized loss/gain on investments 1.79 (0.10)
Net increase/(decrease) in net assets resulting from investment operations 2.07 0.09
Distributions:
Distributions from net investment income (0.27) (0.19)
Distributions in excess of net investment income (0.31) --
Distributions from net realized capital gains (0.50) --
Total distributions (1.08) (0.19)
Net asset value, end of period $ 10.94 $ 9.95
Total return++ 21.76% 0.86%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 489 $ 94
Ratio of operating expenses to average net assets+++ 0.50% 0.50%+
Ratio of net investment income to average net assets 2.62% 3.69%+
Portfolio turnover rate 94% 1%
</TABLE>
* LifeGoal Balanced Growth Portfolio Investor A Shares commenced investment
operations on October 2, 1996. Shares were offered to the public on October
15, 1996.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
Funds.
(a) Per share amounts have been calculated using the monthly average share
method, which more appropriately represents the per share data for the
period.
33
<PAGE>
FOR AN INVESTOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
LifeGoal Income and Growth Portfolio
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
Investor A Shares 03/31/98 03/31/97*
<S> <C> <C>
Operating performance:
Net asset value, beginning of year $ 9.97 $ 10.03
Net investment income 0.41 (a) 0.31
Net realized and unrealized gain/loss on investments 0.89 (0.06)
Net increase in net assets resulting from investment operations 1.30 0.25
Distributions:
Distributions from net investment income (0.38) (0.31)
Distributions in excess of net investment income (0.11) --
Distributions from net realized capital gains (0.07) --
Total distributions (0.56) (0.31)
Net asset value, end of period $ 10.71 $ 9.97
Total return++ 13.38% 2.54%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 126 $ 131
Ratio of operating expenses to average net assets+++ 0.50% 0.50%+
Ratio of net investment income to average net assets 3.92% 6.09%+
Portfolio turnover rate 64% 2%
</TABLE>
* LifeGoal Income and Growth Portfolio Investor A Shares commenced investment
operations on October 2, 1996. Shares were offered to the public on October
15, 1996.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
Funds.
(a) Per share amounts have been calculated using the monthly average share
method, which more appropriately represents the per share data for the
period.
34
<PAGE>
<TABLE>
<S> <C>
Prospectus
Investor B Shares
August 1, 1998 LIFEGOAL PORTFOLIOS:
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
This Prospectus describes three diversified investment portfolios, LIFEGOAL LifeGoal Income and Growth Portfolio
GROWTH PORTFOLIO, LIFEGOAL BALANCED GROWTH PORTFOLIO and LIFEGOAL INCOME AND
GROWTH PORTFOLIO (each a "LifeGoal Portfolio" and, collectively, the "LifeGoal
Portfolios"), of Nations LifeGoal Funds, Inc. (the "Company"), an open-end
management investment company in the Nations Funds Family. The LifeGoal
Portfolios invest substantially all of their assets in certain other funds
within the Nations Funds Family. These underlying funds are referred to in this
Prospectus as "Nations Funds." This Prospectus describes one class of shares of
each LifeGoal Portfolio -- Investor B Shares.
This Prospectus sets forth concisely the information about each LifeGoal
Portfolio that a prospective purchaser of Investor B Shares should consider
before investing. Investors should read this Prospectus and retain it for
future reference. Additional information about the LifeGoal Portfolios is
contained in a separate Statement of Additional Information (the "SAI") that
has been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request without charge by writing or calling the Nations Funds
Family at its address or telephone number shown below. The SAI for the LifeGoal
Portfolios, dated August 1, 1998, is incorporated by reference in its entirety
into this Prospectus. The SEC maintains a Web site (http://www.sec.gov) that
contains the SAI, material incorporated by reference in this Prospectus and
other information regarding registrants that file electronically with the SEC.
NationsBanc Advisors, Inc. ("NBAI") is the investment adviser to each of the
LifeGoal Portfolios. TradeStreet Investment Associates, Inc. ("TradeStreet") is
the investment sub-adviser to the LifeGoal Portfolios. As used in this
Prospectus, the term "Adviser" refers to NBAI, TradeStreet, Gartmore Global
Partners, Brandes Investment Partners, L.P. and/or Marsico Capital Management
LLC as the context may require, see "How The Lifegoal Portfolios Are Managed."
SHARES OF THE NATIONS FUNDS 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 For Portfolio information call:
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER 1-800-321-7854
GOVERNMENT AGENCY. AN INVESTMENT IN THE LIFEGOAL PORTFOLIOS INVOLVES CERTAIN
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
NATIONSBANK AND CERTAIN OF ITS AFFILIATES PROVIDE SERVICES TO THE NATIONS FUNDS Nations Funds
FAMILY, FOR WHICH THEY ARE COMPENSATED. STEPHENS INC., WHICH IS NOT AFFILIATED c/o Stephens Inc.
WITH NATIONSBANK, IS THE SPONSOR AND ADMINISTRATOR AND SERVES AS THE One NationsBank Plaza
DISTRIBUTOR FOR THE LIFEGOAL PORTFOLIOS. 33rd Floor
Charlotte, NC 28255
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 (NATIONS FUNDS logo)
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
</TABLE>
NSI-97334-8/98
<PAGE>
Table Of Contents
About The LifeGoal Portfolios
Prospectus Summary 3
-----------------------------------------------------
Expenses Summary 4
-----------------------------------------------------
Objectives 6
-----------------------------------------------------
How Objectives Are Pursued 8
-----------------------------------------------------
Description Of Underlying Nations Funds
-- Investment Objectives, Policies And Practices 10
-----------------------------------------------------
How Performance Is Shown 18
-----------------------------------------------------
How The LifeGoal Portfolios Are Managed 19
-----------------------------------------------------
Organization And History 23
-----------------------------------------------------
About Your Investment
How To Buy Shares 24
-----------------------------------------------------
How To Redeem Shares 26
-----------------------------------------------------
How To Exchange Shares 28
-----------------------------------------------------
Shareholder Servicing and Distribution Plans 29
-----------------------------------------------------
How The LifeGoal Portfolios Value Their Shares 31
-----------------------------------------------------
How Dividends And Distributions Are Made;
Tax Information 31
-----------------------------------------------------
Financial Highlights 33
-----------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS, OR IN THE LIFEGOAL PORTFOLIOS' SAI
INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE LIFEGOAL
PORTFOLIOS OR THE DISTRIBUTOR. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY LIFEGOAL PORTFOLIOS OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
2
<PAGE>
About The LifeGoal Portfolios
Prospectus Summary
o TYPE OF COMPANY: Open-end management investment company.
o INVESTMENT OBJECTIVES AND POLICIES:
o LifeGoal Growth Portfolio's investment objective is to seek capital
appreciation through exposure to a variety of equity market segments.
o LifeGoal Balanced Growth Portfolio's investment objective is to seek total
return through a balanced portfolio of equity and fixed income securities.
o LifeGoal Income and Growth Portfolio's investment objective is to seek
current income and modest growth to protect against inflation and to preserve
purchasing power.
The LifeGoal Portfolios are designed for long-term investors seeking the
benefits of asset allocation and diversification. Unlike traditional mutual
funds, which invest directly in individual securities, the LifeGoal
Portfolios pursue their investment objectives by allocating their assets
among various Nations Funds.
o INVESTMENT ADVISER: NationsBanc Advisors, Inc. serves as the investment
adviser to the LifeGoal Portfolios. NBAI provides investment management
services to more than 60 other funds in the Nations Funds Family. TradeStreet
Investment Associates, Inc., an affiliate of NBAI, provides investment
sub-advisory services to the LifeGoal Portfolios. For more information about
the investment adviser and investment sub-adviser to the LifeGoal Portfolios,
see "How The LifeGoal Portfolios Are Managed."
o DIVIDENDS AND DISTRIBUTIONS: Each LifeGoal Portfolio declares and pays
dividends from net investment income quarterly. Each LifeGoal Portfolio's net
realized capital gains, including net short-term capital gains, are
distributed at least annually.
o RISK FACTORS: Although NBAI, together with TradeStreet, seek to achieve the
investment objective of each LifeGoal Portfolio, there is no assurance that
they will be able to do so. Investments in a LifeGoal Portfolio are not
insured against loss of principal. Investments by a LifeGoal Portfolio in
shares of a Nations Fund that holds stocks are subject to stock market risk,
which is the risk that the value of the stocks held by Nations Funds may
decline over short or even extended periods. In addition, certain of the
Nations Funds may invest in securities of smaller and newer issuers.
Investments in such companies may present greater opportunities for capital
appreciation because of high potential earnings growth, but also present
greater risks than investments in more established companies with longer
operating histories and greater financial capacity. Investments by a LifeGoal
Portfolio in shares of a Nations Fund that holds debt securities are subject
to interest rate risk, which is the risk that the value of the debt
securities, including U.S. Government Obligations (as defined below), held by
Nations Funds may be adversely affected by changes in market interest rates.
The value of Nations Funds' investments in debt securities will tend to
decrease when interest rates rise and increase when interest rates fall. In
addition, debt securities which are not issued or guaranteed 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
3
<PAGE>
than U.S. markets and markets that are characterized by less governmental
supervision and lower disclosure standards. Certain of Nations Funds'
investments may constitute derivative securities. Certain types of
derivative securities can, under particular circumstances, significantly
increase an investor's exposure to market and other risks. For a discussion
of these and other factors, see "How Objectives Are Pursued -- General
Characteristics and Risk Factors of the Major Asset Classes" and
"Description of Underlying Nations Funds -- Principal Risk Considerations."
o 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. The minimum
subsequent investment is $100, except for investments pursuant to the
Systematic Investment Plan. See "How To Buy Shares."
Expenses Summary
Expenses are one of several factors to consider when investing in a LifeGoal
Portfolio. The following tables summarize estimated shareholder transaction and
operating expenses as a percentage of net assets for Investor B Shares of each
LifeGoal Portfolio. The Examples show the cumulative expenses attributable to a
hypothetical $1,000 investment in each LifeGoal Portfolio over specified
periods.
LIFEGOAL PORTFOLIOS INVESTOR B SHARES
<TABLE>
<CAPTION>
LifeGoal LifeGoal
LifeGoal Balanced Income and
Growth Growth Growth
Shareholder Transaction Expenses Portfolio Portfolio Portfolio
<S> <C> <C> <C>
Sales Load Imposed on Purchases None None None
- ----------------------------------------------------------------------------------------------------------
Maximum Deferred Sales Load (as a percentage of the lower of the original
purchase price or redemption proceeds)(1) 5.00% 5.00% 5.00%
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management Fees .25% .25% .25%
- ----------------------------------------------------------------------------------------------------------
Rule 12b-1 Fees .75% .75% .75%
- ----------------------------------------------------------------------------------------------------------
Shareholder Servicing Fees .25% .25% .25%
- ----------------------------------------------------------------------------------------------------------
Other Expenses .00% .00% .00%
- ----------------------------------------------------------------------------------------------------------
Total Operating Expenses 1.25% 1.25% 1.25%
</TABLE>
(1) Investor B Shares purchased after July 31, 1997 are subject to the Deferred
Sales Charge as set forth in the applicable schedule. The Maximum Deferred
Sales Charge is 5.00% in the first year after purchase, declining to 1.00%
in the sixth year after purchase and eliminated thereafter. For the
applicable Deferred Sales Charge schedule see "How To Redeem Shares --
Contingent Deferred Sales Charge."
4
<PAGE>
Examples: You would pay the following expenses on a $1,000 investment in
Investor B Shares of the indicated LifeGoal Portfolio, assuming indirect
expenses (the LifeGoal Portfolios' share of the expenses incurred by the
underlying Nations Funds) at the midpoint of the after waiver ranges shown
below, and further assuming: (1) a 5% annual return and (2) redemption at the
end of each time period.
<TABLE>
<CAPTION>
LifeGoal LifeGoal
LifeGoal Balanced Income and
Growth Growth Growth
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
1 Year $ 72 $ 71 $ 70
- -------------------------------------------
3 Years $ 97 $ 95 $ 91
- -------------------------------------------
5 Years $135 $131 $125
- -------------------------------------------
10 Years $228 $220 $207
</TABLE>
You would pay the following expenses on a $1,000 investment in Investor B
Shares of the indicated LifeGoal Portfolio, assuming indirect expenses (the
LifeGoal Portfolios' share of the expenses incurred by the underlying Nations
Funds) at the midpoint of the after waiver ranges shown below and further
assuming: a 5% annual return but no redemption.
<TABLE>
<CAPTION>
LifeGoal LifeGoal
LifeGoal Balanced Income and
Growth Growth Growth
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
1 Year $ 22 $ 21 $ 20
- -------------------------------------------
3 Years $ 67 $ 63 $ 61
- -------------------------------------------
5 Years $115 $111 $105
- -------------------------------------------
10 Years $228 $220 $207
</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 B Shares of a LifeGoal Portfolio can expect. The figures in the above
tables show the basis on which payments will be made, except that Other
Expenses are estimated for the LifeGoal Portfolios' current fiscal year and the
Examples include indirect expenses for the underlying Nations Funds' most
recent fiscal year (or estimates thereof for new funds). Long-term shareholders
of the Funds could pay more in sales charges than the economic equivalent of
the maximum front-end sales charges applicable to mutual funds sold by members
of the National Association of Securities Dealers, Inc. For more complete
descriptions of the LifeGoal Portfolios' operating expenses, see "How The
LifeGoal Portfolios Are Managed." For a more complete description of the Rule
12b-1 and shareholder servicing fees payable by the LifeGoal Portfolios, see
"Shareholder Servicing And Distribution Plans."
THE FOREGOING SHOULD NOT BE CONSIDERED TO BE AN ACTUAL REPRESENTATION OF PAST
OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES AND RATES OF RETURN MAY BE
GREATER OR LESS THAN THOSE SHOWN.
5
<PAGE>
LifeGoal Portfolios' Indirect Expenses
Based on the annualized expense ratios for the Primary A share of each of the
selected underlying Nations Fund's investments for its fiscal period ended
March 31, 1998 and the expected percentage investment ranges in the underlying
Nations Funds, the range of the weighted average indirect expense ratio for
each LifeGoal Portfolio is as follows:
<TABLE>
<CAPTION>
(before fee
(after fee waivers waivers and/or
and/or expense expense
reimbursements) reimbursements)
<S> <C> <C>
LifeGoal Growth Portfolio .56% to 1.22% .88% to 1.37%
- ------------------------------------------------------------------------------
LifeGoal Balanced Growth Portfolio .61% to 1.00% .87% to 1.15%
- ------------------------------------------------------------------------------
LifeGoal Income and Growth Portfolio .49% to .89% .74% to 1.10%
</TABLE>
The indirect expense ratios fluctuate within these ranges depending upon how
assets are allocated among the Nations Funds. The LifeGoal Portfolios will be
invested in the Primary A Shares of the underlying Nations Funds and, under
normal market conditions, will be allocated among the various fund categories
in the percentages shown below. Under extraordinary circumstances, a LifeGoal
Portfolio's investment in one or more Nations Funds might exceed these ranges.
For temporary defensive purposes, any LifeGoal Portfolio may invest up to 100%
of its assets in Nations Prime Fund, a money market fund.
Objectives
o LIFEGOAL GROWTH PORTFOLIO -- LifeGoal Growth Portfolio's investment objective
is to seek capital appreciation through exposure to a variety of equity
market segments.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Large-Capitalization Domestic Equity Funds 40-75% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marsico Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
- -----------------------------------------------------------------------------------------------
Small/Mid-Capitalization Domestic Equity Funds 15-35% Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Nations Small Company Growth Fund
- -----------------------------------------------------------------------------------------------
Core International Equity Funds 10-20% Nations International Equity Fund
Nations International Value Fund
- -----------------------------------------------------------------------------------------------
Non-Core International Equity Funds 0-10% Nations Emerging Markets Fund
Nations Pacific Growth Fund
</TABLE>
6
<PAGE>
o LIFEGOAL BALANCED GROWTH PORTFOLIO -- LifeGoal Balanced Growth Portfolio's
investment objective is to seek total return through a balanced portfolio
of equity and fixed income securities.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Large-Capitalization Domestic Equity Funds 20-40% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marsico Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
- -----------------------------------------------------------------------------------------------
Small/Mid-Capitalization Domestic Equity Funds 10-20% Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Nations Small Company Growth Fund
- -----------------------------------------------------------------------------------------------
Core International Equity Funds 5-15% Nations International Equity Fund
Nations International Value Fund
- -----------------------------------------------------------------------------------------------
Core Bond Funds 40-60% Nations Diversified Income Fund
Nations Strategic Fixed Income Fund
</TABLE>
o LIFEGOAL INCOME AND GROWTH PORTFOLIO -- LifeGoal Income and Growth
Portfolio's investment objective is to seek current income and modest
growth to protect against inflation and to preserve purchasing power.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Large-Capitalization Domestic Equity Funds 10-30% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marsico Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
- -------------------------------------------------------------------------------------------------
Small/Mid Capitalization Domestic Equity Funds 0-10% Nations Small Company Growth Fund
- -------------------------------------------------------------------------------------------------
Core International Equity Funds 0-10% Nations International Equity Fund
Nations International Value Fund
- -------------------------------------------------------------------------------------------------
Short Duration Bond Funds 50-90% Nations Short-Term Income Fund
Nations Short-Intermediate Government
Fund
- -------------------------------------------------------------------------------------------------
Money Market Funds 0-20% Nations Prime Fund
</TABLE>
The LifeGoal Portfolios are intended primarily for long-term investors. The
LifeGoal Portfolios are structured as "funds of funds" that allocate
substantially all of their assets to investments in Primary A Shares of various
Nations Funds. The performance of the LifeGoal Portfolios will, therefore,
correspond to the performance of the various underlying Nations Funds.
Additional information about the underlying Nations Funds, including their
investment objectives, investment policies and practices, is set forth below
under "Descriptions of Underlying Nations Funds -- Investment Objectives,
Policies and Practices." The Adviser allocates and reallocates each LifeGoal
Portfolio's assets among the underlying Nations Funds identified above, and
potentially other Nations Funds, based on the percentage ranges shown above for
the various fund categories. As discussed below under "The Asset Allocation
Process," a LifeGoal Portfolio's actual investment allocation may deviate from
the percentage ranges shown above, over the short or long term.
7
<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 (i.e. -- international
stocks, domestic stocks and bonds) in varying portions to gain exposure to the
different return/risk characteristics of each asset class. Asset classes and
market segments (large, mid and small capitalization stocks) tend to react in
different ways to changes in economic conditions. Therefore, an investment
approach that combines various market segments and asset classes may reduce
overall portfolio volatility.
The assets of each LifeGoal Portfolio are allocated among various asset classes
through their investment in different fund categories. Each LifeGoal Portfolio
has its own asset allocation strategy which gives it a distinctive risk profile
and offers different return potential. Investors should select the LifeGoal
Portfolio (or Portfolios) which best matches their investment goals, risk
tolerance and investment horizon.
In general, the greater the LifeGoal Portfolio's percentage allocation to
equity funds, the greater the potential return and risk of share price decline.
Because of equity funds' greater risks, investors in the LifeGoal Portfolios
that have a higher allocation to equity funds should have a longer investment
horizon. In general, the greater the LifeGoal Portfolio's percentage allocation
to bond funds, the greater the potential price stability; however, returns may
be lower.
Investment performance will vary based on many factors, including market
conditions and the composition of a LifeGoal Portfolio's portfolio. Investment
performance also often reflects the risks associated with a LifeGoal
Portfolio's investment objective and policies. These factors should be
considered when comparing a LifeGoal Portfolio's investment results to those of
other mutual funds and to market indexes.
Although the Adviser will seek to achieve the investment objective of each
LifeGoal Portfolio, there is no assurance that it will be able to do so. No
single LifeGoal Portfolio should be considered, by itself, to provide a
complete investment program for any investor. The net asset value of the shares
of a LifeGoal Portfolio fluctuates based on fluctuations in the values of the
underlying Nations Funds' shares, which, in turn, fluctuate based on market
conditions and other factors. Therefore, investors should not rely upon
LifeGoal Portfolios for short-term financial needs. The LifeGoal Portfolios are
not intended to provide a vehicle for participating in short-term swings in the
stock market and their shares are not insured against loss of principal.
The Asset Allocation Process
Subject to the general supervision of the Company's Board of Directors, the
Adviser is responsible for allocating and reallocating each LifeGoal
Portfolio's assets among the Nations Funds in which it invests, and for
rebalancing such portfolio allocations. In this context, allocation is the
process of setting or changing the weightings of the different fund categories
and Nations Funds within a particular LifeGoal Portfolio's portfolio. The
"weightings" of the different fund categories and Nations Funds within a
particular LifeGoal Portfolio's portfolio are the percentage targets that the
Adviser sets for investment in a particular fund category or Nations Fund. All
fund category weightings will be within the overall percentage ranges shown
above. Rebalancing is the process of bringing portfolio allocations back into
alignment with the applicable weightings. A LifeGoal Portfolio's investments
are continuously monitored and are reallocated as often as the Adviser deems
appropriate. In addition, portfolio allocations and performance are reviewed at
least monthly for rebalancing at the discretion of the Adviser.
Although the Adviser may rebalance each LifeGoal Portfolio's holdings
quarterly, it expects to rebalance less often. Thus, at any given time, it is
possible that the percentage of a particular LifeGoal Portfolio's assets
actually invested in a particular
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Nations Fund or fund category will not correspond precisely with the applicable
weightings. Also, depending on the frequency of rebalancings, the extent of any
such deviation could continue for some time.
The Adviser has adopted certain policies designed to reduce the extent and
duration of such deviations. For example, if any fund category percentage
ranges are exceeded, the Adviser will allocate new investment dollars to the
other fund categories. Likewise, the Adviser will allocate new investment
dollars to fund categories whose minimum percentages have not been met.
Redemption requests, however, will generally be met by redeeming shares of
underlying Nations Funds according to the applicable weightings.
Determining the asset allocation applicable to each LifeGoal Portfolio is a two
step process. The first step is determining the broad asset classes for each
LifeGoal Portfolio -- large and small capitalization domestic stocks, foreign
stocks, bonds and money market securities. In making this determination, the
Adviser will consult the relevant historical data for the returns of each asset
class in various economic scenarios. Those returns will be reviewed in the
context of the Adviser's outlook for the economy and markets and adjusted for
reasonableness. The second step in the process is to determine the particular
Nations Funds in which each LifeGoal Portfolio will invest. The Adviser looks
at historic returns and valuations to determine which Nations Funds are most
appropriate. Determining how the individual Nations Funds may interact with one
another within a portfolio is a critical part of this second step.
Although it is expected that the LifeGoal Portfolios will invest in the Nations
Funds identified in "Description of Underlying Nations Funds," the Adviser has
the discretion to change the particular Nations Funds used as underlying
investments for the LifeGoal Portfolios. Among other things, the Adviser may
substitute or include other funds from the Nations Funds Family, including any
funds introduced subsequent to the date of this Prospectus, as permissible
investments for the LifeGoal Portfolios.
General Characteristics and Risk Factors of the Major Asset Classes
The underlying Nations Funds invest primarily in various stocks, bonds and
money market securities. This section provides a brief summary of the general
characteristics and overall risk factors associated with these asset classes.
Additional information is provided under "Description of Underlying Nations
Funds" below and in the prospectuses of the underlying Nations Funds.
Common stocks represent ownership in a company. Stock prices move with changes
in a company's current earnings and its prospects for the future, and with
overall stock market conditions. Stocks offer the potential for price
appreciation and rising dividends. While smaller companies usually reinvest
their earnings back into the company and therefore pay minimal, if any,
dividends, they offer the possibility of greater appreciation.
Historically, stocks have provided higher returns than bonds or money market
securities. Therefore, they have also provided the greatest protection against
inflation and the resulting erosion of purchasing power. However, the
additional return has been accompanied by additional volatility. Equity
investors should have a long-term investment horizon and be willing to accept
the inevitable periods of market declines.
Bonds are a contract. The issuer has an obligation to pay a specified rate of
interest (which may be fixed or variable) at specified times and to repay the
bond's principal value upon maturity. Bonds are subject to credit risk and to
interest rate risk. Credit risk refers to the possibility that a bond's price
may fall due to a credit downgrade or a principal or interest payment default.
Interest rate risk refers to a bond's price movement in response to changes in
market interest rates. As a general rule, when market interest rates rise, bond
prices fall. Typically, the longer the maturity of a bond, the greater the
potential price fluctuation.
Money market securities are short-term debt obligations issued primarily by the
U.S. Government, government agencies or corporations. High quality money market
securities are very low risk investments; their low risk, however, is
accompanied by lower potential returns relative to other investments.
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Investment Company Securities: Each of the LifeGoal Portfolios intends, as a
fundamental policy, to concentrate investments by investing 25% or more of its
total assets in the mutual fund industry.
Although some of the Nations Funds in which the LifeGoal Portfolios invest do
not necessarily share the same investment objective as the investing LifeGoal
Portfolio, those Nations Funds will be selected by the Adviser based on the
asset allocation process described above.
Although each LifeGoal Portfolio intends to invest substantially all of its
assets in some or all of the underlying Nations Funds, each LifeGoal Portfolio
reserves the right to invest in obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, repurchase agreements, and
money market instruments with respect to any assets not so invested in Nations
Funds. It is not expected that any LifeGoal Portfolio will invest more than 5%
of its assets in any of these direct investments.
Investment Limitations: Each LifeGoal Portfolio is subject to a number of
investment limitations, which are described in the SAI. Among other things, the
LifeGoal Portfolios' fundamental policies permit them to borrow money from
banks for temporary or emergency purposes, subject to percentage and other
limitations, and to enter into forward purchase commitments and issue multiple
classes of shares. The investment objective, policies and limitations of each
LifeGoal Portfolio, unless otherwise specified, may be changed without a vote
of the LifeGoal Portfolio's shareholders. If the investment objective, policies
or limitations of a LifeGoal Portfolio change, shareholders should consider
whether the LifeGoal Portfolio remains an appropriate investment in light of
their current position and needs.
The Nations Funds also have adopted certain investment restrictions which may
be more or less restrictive than those applicable to the LifeGoal Portfolios,
thereby allowing a LifeGoal Portfolio to participate in certain investment
strategies indirectly that are prohibited under the investment restrictions
described in the LifeGoal Portfolios' SAI. The investment restrictions of the
underlying Nations Funds are set forth in their respective prospectuses and
statements of additional information.
Portfolio Turnover: Generally, LifeGoal Portfolios will purchase portfolio
securities for capital appreciation or investment income, or both, and not for
short-term trading profits. The LifeGoal Portfolios' portfolio turnover rates
are not expected to exceed 50% annually.
Description of Underlying Nations Funds --
Investment Objectives, Policies and Practices
The LifeGoal Portfolios seek to achieve their investment objectives by
investing in certain Nations Funds (each, a "Fund"). The following section
provides summaries of the Nations Funds' investment objectives, policies and
practices. These summaries are intended to help investors understand some of
the more significant aspects of the underlying Nations Funds, but are not
intended to be comprehensive disclosures of all policies, practices and risks
associated with investments by the LifeGoal Portfolios in the Nations Funds. To
receive a prospectus for any underlying Nations Fund, which contains more
complete information, please call Nations Funds at 1-800-321-7854.
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:
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o above-average earnings growth relative to Standard & Poor's 500 Composite
Stock Price Index ("S&P 500 Index")(1);
o established operating histories, strong balance sheets and favorable
financial characteristics; and
o above-average return on equity relative to 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. In selecting stocks for the Fund,
the Adviser utilizes quantitative analysis and optimization tools. This
approach seeks to identify companies with improving profit potential through
analysis of earnings forecasts issued by investment banks, broker/ dealers and
other investment professionals. The Adviser believes that companies
experiencing such earnings trends have the potential to generate significant
increases in per share earnings. The Adviser also believes that companies with
increasing earnings should experience positive trends in their stock price.
Under normal market conditions, the Fund invests at least 65% of its total
assets in common stocks of domestic issuers. The Fund also may invest in
preferred stocks, securities convertible into common stock, warrants and rights
to purchase common stock, options, and U.S. Government and corporate debt
securities, and foreign securities.
Nations Emerging Growth Fund: The Fund's investment objective is to seek capital
appreciation by investing in emerging growth companies that are believed to have
superior long-term earnings growth prospects. The Fund invests primarily in
emerging growth companies with revenues between $50 million and $1.5 billion and
a debt ratio of less than 50% of capitalization. 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 managing the Fund, the Adviser applies a disciplined
process with rigorous fundamental analysis providing the basis for stock
selection. Its methodology combines fundamental, valuation and momentum-based
disciplines in portfolio construction. 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
greater than that of larger companies. Accordingly, while they may have greater
potential for gains, they also carry greater downside risk.
Nations Equity Income Fund: The Fund's investment objective is to seek current
income and growth of capital by investing primarily in companies with
above-average dividend yields. The investment program of the Fund is based on
several premises. First, dividends are normally a more stable and predictable
source of return than capital appreciation. Second, diversifying equity
holdings in a manner that includes every major economic sector 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 provided by the stocks in the S&P 500
Index with less volatility. Collectively, these traits may be combined in such
a fashion as to produce returns in excess of the market, as measured by the S&P
500 Index, on a comparable risk basis.
Under normal circumstances, the Fund will invest at least 65% of its assets in
income-producing common stocks, including securities convertible into or
ultimately exchangeable for common stock (i.e., convertible bonds or
convertible preferred stock), whose prospects for dividend growth and capital
appreciation are considered favorable by the Adviser. The Fund also may invest
its assets in fixed-income securities (corporate and government bonds of
various maturities), preferred stocks and war-
- ---------------------
(1) "Standard & Poor's" and "Standard & Poor's 500" are trademarks of The
McGraw-Hill Companies, Inc.
11
<PAGE>
rants 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 that (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 market capitalization weighted index consisting of 500 common stocks chosen
for market size, liquidity and industry group representation.
Unlike traditional index funds, the Fund has a "managed" overlay. 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 300 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 80% of its total assets in common stocks which are included in
the S&P 500 Index. The Fund is expected, however, to maintain a position in
high-quality short-term debt securities and money market instruments to meet
redemption requests.
Nations Managed SmallCap Index Fund: The Fund's investment objective is to seek,
over the long-term, to provide a total return that (gross of fees and expenses)
exceeds that of 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 market capitalization weighted index
consisting of 600 domestic stocks which captures the economic and industry
characteristics of small stock performance.
Unlike traditional index funds, the Fund has a "managed" overlay. 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 400 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 80% 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 Marsico Focused Equities Fund: The Fund's investment objective is to
seek long-term growth of capital. The Fund is a non-diversified fund that
pursues its objective by normally investing in a core position of 20-30 common
stocks. In choosing stocks, the Adviser attempts to identify individual
companies with earnings growth potential that may not be recognized by the
market at large. In seeking such opportunities, the Adviser looks for a
combination of four factors: change (products, markets and technologies that
are in flux), franchise (brand franchises that can be leveraged), global reach
(companies that consider world markets rather than local markets) and themes
(companies that are moving with, not against, major social, economic and
cultural shifts). Once an opportunity is identified, it is subject to a
disciplined analytical process that takes into consideration such macroeconomic
factors as interest rates, inflation, the regulatory environment, the global
competitive landscape, and such microeconomic factors as company fundamentals,
market franchise and company management.
Under normal circumstances the Fund invests at least 65% of its assets in large
capitalization common stocks selected for their growth potential. The Fund also
may invest to a lesser degree, in other
- ---------------------
(2) "Standard & Poor's" and "Standard & Poor's SmallCap 600" are trademarks of
The McGraw-Hill Companies, Inc.
12
<PAGE>
types of securities such as preferred stocks, warrants, convertible securities
and debt securities.
Nations Marsico Growth & Income Fund: The Fund's investment objective is to seek
long-term growth of capital with a limited emphasis on income. The Fund will
typically invest in large capitalization stocks. The Fund may invest in any
combination of common stocks, preferred stocks, warrants, convertible securities
and debt securities. In building the portfolio, the Adviser seeks to identify
individual companies with earnings growth potential not recognized by the market
at large. In seeking such opportunities, the Adviser looks for a combination of
four factors: change (products, markets and technologies that are in flux),
franchise (brand franchise that can be leveraged), global reach (companies that
consider world markets rather than local markets) and themes (companies that are
moving with, not against, major social, economic and cultural shifts). Once an
opportunity is identified, it is subject to a disciplined analytical process
that takes into consideration marcoeconomic factors such as interest rates,
inflation, the regulatory environment, the global competitive landscape, and
company fundamentals, such as market franchise and company management.
Under normal circumstances, the Fund invests up to 75% of its assets in equity
securities selected primarily for their growth potential and at least 25% of
its assets in securities with income potential. However, in adverse market
conditions, the Fund may reduce the growth component of its portfolio to 25% of
its total assets. Additionally, the Adviser may shift the Fund's assets between
the growth and income components based on relevant market, financial and
economic conditions.
Nations Small Company Growth Fund: The Fund's investment objective is to seek
long-term capital growth by investing capital primarily in equity securities.
In pursuing its investment objective, under normal circumstances, the Fund will
invest at least 65% of its total assets in equity securities of companies with
a market capitalization of $1 billion or less. The investment philosophy of
Nations Small Company Growth Fund is based on the premise that stock prices are
driven by earnings growth and that superior stock market returns occur when a
company experiences rapid and accelerating earnings growth due to improving
fundamentals.
In managing the Fund, the Adviser applies a disciplined process with rigorous
fundamental analysis providing the basis for stock selection. Its methodology
combines fundamental, valuation and momentum-based disciplines in portfolio
construction. Overall, the Fund's strategy is to own those investments offering
both attractive fundamental valuation and relatively good prospects for
earnings improvement. Typically, two types of companies are condidates for
purchase: (i) mature companies which may have fallen from a larger market value
due to business difficulties, but which now exhibit improving prospects; and
(ii) smaller or younger companies which are experiencing strong trends in
earnings growth, but remain reasonably valued and therefore offer premium
growth at a discount in comparison to other companies.
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 securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("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
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<PAGE>
as those in Latin America, Eastern Europe, the Pacific Basin, the Far East,
Africa and India. Under normal market conditions, the Fund will invest at least
65% of its total assets in equity securities of companies in emerging markets.
The Fund also may invest in other types of instruments, including debt
securities. The Fund intends to invest in at least three different countries,
although it may, from time to time, invest all of its assets in a single
country. In such cases, events occurring in such country are more likely to
affect the Fund's investments.
Nations International Equity Fund: The Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of
non-United States companies in Europe, Australia, the Far East and other areas,
including developing countries. The Fund invests in both established and
developing markets around the world. While emphasizing established markets, the
Fund typically has some exposure to the more rapidly growing markets of the
Pacific Basin, Latin America and Eastern Europe.
Under normal market conditions, the Fund will invest at least 65% of its assets
in common stocks of non-United States companies and may invest up to 35% of its
assets in any other type of security, including convertible securities,
preferred stocks, and various debt securities. Under normal circumstances, the
Fund invests in at least three different countries. Under unusual
circumstances, however, the Fund may invest all of its assets in one or two
countries. In such cases, events occuring in those countries are more likely to
affect the Fund's investments.
Nations International Value Fund: The Fund's investment objective is to seek
long-term capital appreciation by investing primarily in equity securities of
foreign issuers, including emerging markets countries. The Fund pursues its
investment objective, under normal circumstances, by investing its assets in
the securities of issuers in at least three different foreign countries.
Although the Fund may invest in companies of various sizes it typically invests
in established companies. The Adviser is committed to the use of the Graham &
Dodd-style value investing approach as introduced in the classic book SECURITY
ANALYSIS. The Adviser's approach to selecting stocks for the Fund is value
driven and it seeks to purchase a diversified group of businesses at prices
that research indicates are below true long-term, or intrinsic, value. In so
doing the Adviser seeks to secure not only a possible margin of safety against
price declines, but also an attractive opportunity for profit over the business
cycle. In analyzing a company's long-term value, the Adviser uses sources of
information such as company reports, filings with the SEC, computer databases,
industry publications, brokerage firm research reports and interviews with
company management.
Under normal circumstances, the Fund intends to invest at least 65% of its
total assets in equity securities of non-U.S. issuers whose market
capitalizations exceed $1 billion at the time of purchase. Although the Fund
intends to invest primarily in equity securities listed on stock exchanges it
also may invest in equity securities traded over the counter and in private
placements. Typically, no more than 5% of the total Fund assets will be
invested in any one equity security at the time of purchase. Countries in which
the Fund may invest include, but are not limited to, the nations of Western
Europe, North and South America, Australia, Africa and Asia. During temporary
defensive periods in response to unusual and adverse conditions, the Fund's
assets may be invested without limitation in short-term debt instruments and in
securities of U.S. issuers.
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
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<PAGE>
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 loss 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 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 of the
Fund will not exceed five years 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 will it
exceed 15 years. Under normal market conditions, the Fund will invest at least
65% of the total value of its assets in government, corporate and
mortgage-related 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 have
longer maturities. The Fund may invest in U.S. Treasury bills, notes and bonds
and other instruments issued directly by the U.S. Government. The Fund may also
invest in bank and commercial instruments that may be available in the money
markets, high quality short-term taxable obligations issued by state and local
governments, and repurchase agreements relating to U.S. Government Obligations.
Although the Fund is permitted to invest a portion of its assets in second tier
securities (as defined below) in accordance with Rule 2a-7 under the Investment
Company Act of 1940, as amended (the "1940 Act"), the Fund invests only in
first tier securities (as defined below). 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 Trad-
15
<PAGE>
ing Commission-approved U.S. and foreign exchange-traded financial futures and
options thereon for market exposure and/or risk-management. Each of the Funds
may lend their portfolio securities to qualified institutional investors,
engage in repurchase agreement transactions, and invest in restricted, private
placement and other illiquid securities. Certain Nations Funds may 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.
Under Rule 2a-7 of the 1940 Act, a Money Market Fund is limited to acquiring
obligations with a remaining maturity of 397 days or less, or obligations with
greater maturities, provided such obligations are subject to demand features or
resets which are less than 397 days, and to maintaining a dollar-weighted
average portfolio maturity of 90 days or less. Quality requirements generally
limit investments to U.S. dollar denominated instruments determined to present
minimal credit risks which, at the time of acquisition, are rated in the first
or second rating categories (known as "first tier" and "second tier"
securities, respectively) by the required number of nationally recognized
statistical rating organizations (each an "NRSRO") or, if unrated by any NRSRO,
are (i) comparable in priority and security to a class of short- term
securities of the same issuer that has the required rating, or (ii) determined
to be comparable in quality to securities having the required rating. The
diversification requirements provide generally that a Money Market Fund may not
at the time of acquisition invest more than 5% of its assets in securities of
any one issuer except that up to 25% of total assets may be invested in the
first tier securities of a single issuer for three business days. Securities
issued by the U.S. Government, its agencies, authorities or instrumentalities
are exempt from the quality requirements, other than minimal credit risk. In
the event that a Fund's investment restrictions or permissible investments are
more restrictive than the requirements of Rule 2a-7, the Fund's own
restrictions will govern.
Principal Risk Considerations: Investments by a Nations Fund in common stocks
and other equity securities are subject to stock market risk. 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;
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<PAGE>
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 Funds may invest in securities of smaller and newer issuers.
Investments in such companies may present greater opportunities for capital
appreciation because of high potential earnings growth, but also present
greater risks than investments in more established companies with longer
operating histories and greater financial capacity.
Nations Marsico Focused Equities Fund, as a non-diversified fund, may invest in
fewer issuers than a diversified fund. Therefore, appreciation or depreciation
of an investment in a single issuer could have a greater impact on the Fund's
net asset value. The Fund reserves the right to become a diversified fund by
limiting the investments in which more than 5% of its total assets are
invested.
In addition, the Euro will become the single currency in at least 11 European
nations used in many financial transactions. Accordingly, the German mark,
French franc and other national currencies will no longer be used. Although the
impact of implementing the Euro is not possible to predict, the transition
could have an effect on the financial markets and economic environment in
Europe and other parts of the world. For example, investors may begin to view
those countries participating in the Economic Monetary Union as a single
combined entity and may alter their investment behavior accordingly. In
response to any such effect of the Euro implementation, the Adviser may need to
adapt its investment policies and strategy.
Certain of the U.S. Government Obligations that may be purchased by a Nations
Fund (or, under certain circumstances, directly by a LifeGoal Portfolio) are
not backed by the U.S. Treasury. For example, some U.S. Government Obligations
are supported only by the credit of the issuer/guarantor or by the right of the
issuer/guarantor to borrow from the U.S. Government. In addition, the market
value of U.S. Government Obligations may fluctuate due to fluctuations in
market interest rates. Certain types of U.S. Government Obligations are subject
to fluctuations in maturity, yield or value due to their structure or contract
terms.
Certain of the underlying Nations Funds may invest in derivative securities
("derivatives"). A derivative is a financial instrument whose value is based,
at least partly, on the value of an underlying stock, stock index, future or
other security. Examples of such derivatives include futures contracts,
options, interest rate and currency swap transactions. Certain types of
derivatives can, under certain circumstances, significantly increase an
investor's exposure to market or other risks.
Year 2000 Issue: Many computer programs employed throughout the world use two
digits to identify the year. Unless modified, these programs may not correctly
handle the change from "99" to "00" on January 1, 2000, and may not be able to
perform necessary functions. Any failure to adapt these programs in time could
hamper the Funds' operations. The Funds' principal service providers have
advised the Funds that they have been actively working on implementing
necessary changes to their systems, and that they expect that their systems
will be adapted in time, although there can be no assurance of success. Because
the Year 2000 issue affects virtually all organizations, the companies or
governmental entities in which the Funds invest could be adversely impacted by
the Year 2000 issue, although the extent of such impact cannot be predicted. To
the extent the impact on a portfolio holding is negative, a Fund's return could
be adversely affected.
Please consult the SAI and the prospectus of the particular Nations Fund for
more information about investment practices and risks.
17
<PAGE>
How Performance Is Shown
From time to time, the LifeGoal Portfolios may advertise the total return and
yield of a class of shares. In addition, the LifeGoal Portfolios may advertise
the total return and yield of the Primary A Shares of certain underlying
Nations Funds. TOTAL RETURN AND YIELD FIGURES ARE BASED ON HISTORICAL DATA AND
ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The "total return" of a class
of shares of a LifeGoal Portfolio or Nations Fund may be calculated on an
average annual total return basis or an aggregate total return basis. Average
annual total return refers to the average annual compounded rates of return
over one-, five-, and ten-year periods or the life of a LifeGoal Portfolio or
Nations Fund (as stated in a LifeGoal Portfolio's advertisement) that would
equate an initial amount invested at the beginning of a stated period to the
ending redeemable value of the investment (reflecting the deduction of any
applicable contingent deferred sales charge ("CDSC")), assuming the
reinvestment of all dividend and capital gain 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 or may not reflect a deduction of the CDSC.
"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. The yield on a class of shares does not reflect the
deduction of any applicable CDSC.
Investment performance, which will vary, is based on many factors, including
market conditions, the composition of a LifeGoal Portfolio's or Nations Fund's
portfolio and operating expenses. Investment performance also often reflects
the risks associated with a LifeGoal Portfolio's or Nations Fund's investment
objective and policies. These factors should be considered when comparing a
LifeGoal Portfolio's or Nations Fund's investment results to those of other
mutual funds and other investment vehicles. Since net asset value and yields
fluctuate, yield data cannot necessarily be used to compare an investment in
the LifeGoal Portfolios or Nations Funds 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 B Shares, the LifeGoal Portfolios offer Primary A,
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 Portfolio's shares. Any quotation of total return or yield
not reflecting CDSCs would be reduced if such sales charges were reflected. Any
fees charged by an institution directly to its customers' accounts in
connection with investments in the LifeGoal Portfolios will not be included in
calculations of total return or yield. The Company's annual report will contain
additional performance information and will be available upon request without
charge from the LifeGoal Portfolios' distributor or an investor's Institution,
as defined below or by calling Nations Funds at the toll-free number indicated
on the cover of this Prospectus.
The following information shows the average annual returns of the underlying
Nations Funds in which the LifeGoal Portfolios may invest. The performance of
the underlying Nations Funds is shown for illustrative purposes only and is not
intended to show LifeGoal Portfolio performance.
18
<PAGE>
NATIONS FUNDS
AVERAGE ANNUAL RETURNS -- PRIMARY A SHARES (UNAUDITED)
<TABLE>
<CAPTION>
1-Year Period
FUND NAME (DATE OF COMMENCEMENT OF OPERATIONS) Ended 3/31/98
- --------------------------------------------------------------------
<S> <C>
Nations Capital Growth Fund (9/30/92) 53.89%
- --------------------------------------------------------------------
Nations Disciplined Equity Fund (10/1/92) 48.65%
- --------------------------------------------------------------------
Nations Diversified Income Fund (10/30/92) 11.07%
- --------------------------------------------------------------------
Nations Emerging Growth Fund (12/4/92) 45.09%
- --------------------------------------------------------------------
Nations Emerging Markets Fund (6/30/95) ( 6.39)%
- --------------------------------------------------------------------
Nations Equity Income Fund (4/11/91) 37.21%
- --------------------------------------------------------------------
Nations International Equity Fund (12/2/91) 16.06%
- --------------------------------------------------------------------
Nations International Value Fund (12/27/95) 39.92%
- --------------------------------------------------------------------
Nations Managed Index Fund (8/1/96) 47.54%
- --------------------------------------------------------------------
Nations Managed SmallCap Index Fund (10/15/96) 47.71%
- --------------------------------------------------------------------
Nations Marsico Focused Equities Fund (12/31/97) N/A
- --------------------------------------------------------------------
Nations Marsico Growth & Income Fund (12/31/97) N/A
- --------------------------------------------------------------------
Nations Pacific Growth Fund (6/30/95) (28.35)%
- --------------------------------------------------------------------
Nations Short-Intermediate Government Fund (8/1/91) 9.11%
- --------------------------------------------------------------------
Nations Short-Term Income Fund (9/30/92) 6.89%
- --------------------------------------------------------------------
Nations Small Company Growth Fund (12/12/95) 49.41%
- --------------------------------------------------------------------
Nations Strategic Fixed Income Fund (10/30/92) 10.53%
- --------------------------------------------------------------------
Nations Value Fund (9/19/89) 38.53%
- --------------------------------------------------------------------
Nations Prime Fund (12/15/86) 5.61%
<CAPTION>
Inception
3-Year Period 5-Year Period through
FUND NAME (DATE OF COMMENCEMENT OF OPERATIONS) Ended 3/31/98 Ended 3/31/98 3/31/98
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nations Capital Growth Fund (9/30/92) 29.63% 19.35% 19.47%
- ---------------------------------------------------------------------------------------------------------
Nations Disciplined Equity Fund (10/1/92) 31.57% 21.56% 27.15%
- ---------------------------------------------------------------------------------------------------------
Nations Diversified Income Fund (10/30/92) 9.05% 7.63% 8.73%
- ---------------------------------------------------------------------------------------------------------
Nations Emerging Growth Fund (12/4/92) 25.18% 19.30% 17.92%
- ---------------------------------------------------------------------------------------------------------
Nations Emerging Markets Fund (6/30/95) N/A N/A 2.97%
- ---------------------------------------------------------------------------------------------------------
Nations Equity Income Fund (4/11/91) 25.40% 17.82% 17.18%
- ---------------------------------------------------------------------------------------------------------
Nations International Equity Fund (12/2/91) 12.09% 10.68% 8.47%
- ---------------------------------------------------------------------------------------------------------
Nations International Value Fund (12/27/95) N/A N/A 22.91%
- ---------------------------------------------------------------------------------------------------------
Nations Managed Index Fund (8/1/96) N/A N/A 41.04%
- ---------------------------------------------------------------------------------------------------------
Nations Managed SmallCap Index Fund (10/15/96) N/A N/A 29.41%
- ---------------------------------------------------------------------------------------------------------
Nations Marsico Focused Equities Fund (12/31/97) N/A N/A 21.30%
- ---------------------------------------------------------------------------------------------------------
Nations Marsico Growth & Income Fund (12/31/97) N/A N/A 20.30%
- ---------------------------------------------------------------------------------------------------------
Nations Pacific Growth Fund (6/30/95) N/A N/A (9.86)%
- ---------------------------------------------------------------------------------------------------------
Nations Short-Intermediate Government Fund (8/1/91) 6.71% 5.08% 6.66%
- ---------------------------------------------------------------------------------------------------------
Nations Short-Term Income Fund (9/30/92) 6.74% 5.45% 5.45%
- ---------------------------------------------------------------------------------------------------------
Nations Small Company Growth Fund (12/12/95) N/A N/A 25.39%
- ---------------------------------------------------------------------------------------------------------
Nations Strategic Fixed Income Fund (10/30/92) 7.90% 6.07% 6.80%
- ---------------------------------------------------------------------------------------------------------
Nations Value Fund (9/19/89) 28.85% 20.29% 16.64%
- ---------------------------------------------------------------------------------------------------------
Nations Prime Fund (12/15/86) 5.59% 4.96% 6.00%
</TABLE>
How The LifeGoal Portfolios Are Managed
The business and affairs of the Company are managed under the supervision and
direction of its Board of Directors. The LifeGoal Portfolios' SAI contains the
names of and general background information concerning each Director of the
Company.
As described below, each LifeGoal Portfolio is advised to NBAI which is
responsible for the overall management and supervision of the investment
management of each LifeGoal Portfolio. Each Portfolio also is sub-advised by
TradeStreet, which as a general matter is responsible for the day-to-day
investment decisions for the respective LifeGoal Portfolio.
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.
NationsBank Corporation, the parent company of NationsBank, has signed an
agreement to merge with BankAmerica Corporation. The proposed merger is subject
to certain regulatory approvals and must be approved by shareholders of both
holding companies. The merger is expected to close in
19
<PAGE>
the second half of 1998. NationsBank and NBAI have advised the Portfolios that
the merger will not reduce the level or quality of advisory and other services
provided to the Portfolios.
Investment Adviser: NationsBanc Advisors, Inc. serves as investment adviser to
the LifeGoal Portfolios and the Nations Funds. NBAI is a wholly owned
subsidiary of NationsBank, which in turn is a wholly owned banking subsidiary
of NationsBank Corporation, a bank holding company organized as a North
Carolina corporation. NBAI has its principal offices at One NationsBank Plaza,
Charlotte, North Carolina 28255.
TradeStreet Investment Associates, Inc., with principal offices at One
NationsBank Plaza, Charlotte, North Carolina 28255, serves as investment
sub-adviser to the LifeGoal Portfolios and the Nations Funds. TradeStreet is a
wholly owned subsidiary of NationsBank. TradeStreet provides investment
management services to individuals, corporations and institutions.
Gartmore Global Partners ("Gartmore"), with principal offices at One
NationsBank Plaza, Charlotte, North Carolina, 28255, serves as the investment
sub-adviser to three of the underlying Nations Funds. Gartmore is a joint
venture structured as a general partnership between NB Partner Corp., a wholly
owned subsidiary of NationsBank, and Gartmore U.S. Limited, an indirect, wholly
owned subsidiary of Gartmore Investment Management plc, a UK company which is
the holding company for a leading UK based international fund management group
of companies. National Westminster Bank plc and affiliated entities own 100% of
the equity of Gartmore Investment Management plc.
Brandes Investment Partners, L.P. ("Brandes"), with principal offices at 12750
High Bluff Drive, San Diego, California 92130 serves as investment sub-adviser
to one of the underlying Nations Funds -- Nations International Value Fund.
Marsico Capital Management, LLC ("Marsico Capital"), located at 1200 17th
Street, Suite 1300, Denver, Colorado 80202, serves as the investment sub-adviser
to two of the underlying Nations Funds -- Nations Marsico Focused Equities Fund
and Nations Marsico Growth & Income Fund. NationsBank has an option to purchase
up to 50% of Marsico Capital.
Subject to the general supervision of the Company's Board of Directors, and in
accordance with each LifeGoal Portfolio's investment policies, the Adviser is
responsible for allocating and reallocating each LifeGoal Portfolio's assets
among the Nations Funds in which it invests, and for rebalancing such portfolio
allocations. A LifeGoal Portfolio's investments are continuously monitored and
are reallocated as often as the Adviser deems appropriate. In addition,
portfolio allocations and performance are reviewed quarterly for rebalancing at
the discretion of the Adviser.
The Adviser has the ability to change the particular Nations Funds used as
underlying investments for the LifeGoal Portfolios. Among other things, the
Adviser may substitute or include other funds from the Nations Funds Family,
including any introduced subsequent to this Prospectus, as permissible
investments for the LifeGoal Portfolios. In the event the Adviser seeks to
invest the assets of a LifeGoal Portfolio in a Nations Fund not identified in
this Prospectus, the Company will amend or supplement the Prospectus to include
all pertinent information.
Both the LifeGoal Portfolios and Nations Funds have investment advisory
arrangements with NBAI. NBAI is entitled to receive advisory fees at an annual
rate of .25% of the average daily net assets of each LifeGoal Portfolio. NBAI
also has agreed to absorb all other expenses of the LifeGoal Portfolios (except
taxes, brokerage fees and commissions, extraordinary expenses, and any
applicable Rule 12b-1 fees, shareholder servicing fees and/or shareholder
administration fees). NBAI, in turn, compensates TradeStreet for sub-advisory
services at an annual rate of .05% of the average daily net assets of each
LifeGoal Portfolio. NBAI also receives advisory fees at varying rates from the
underlying Nations Funds, and pays TradeStreet, Gartmore, Brandes and Marsico
Capital sub-advisory fees for their services to the underlying Nations Funds.
From time to time, the Adviser may waive or reimburse (either voluntarily or
pursuant to applicable state expense limitations) advisory fees and/or expenses
payable by a LifeGoal Portfolio. Once commenced, waiver and reimbursement
arrangements may be discontinued at any time. In addition, the Adviser may from
time to time compensate Agents, as defined below, for providing certain
services to Custom-
20
<PAGE>
ers. LifeGoal Portfolios' shareholders will indirectly pay their proportionate
share of the advisory fees and other expenses of any Nations Fund in which the
LifeGoal Portfolios are invested.
For the fiscal year ended March 31, 1998, the LifeGoal Portfolios paid NBAI
advisory fees at the indicated rates of the following LifeGoal Portfolios'
average daily net assets: Nations LifeGoal Growth Portfolio -- .25%; Nations
LifeGoal Balanced Growth Portfolio -- .25%; and Nations LifeGoal Income and
Growth Portfolio -- .25%.
For the fiscal year ended March 31, 1998, NBAI paid TradeStreet sub-advisory
fees at the indicated rates of the following LifeGoal Portfolios' average daily
net assets: Nations LifeGoal Growth Portfolios -- .05%; Nations LifeGoal
Balanced Growth Portfolio -- .05%; and Nations LifeGoal Income and Growth
Portfolio -- .05%.
NBAI, TradeStreet and certain of their affiliates provide advisory and other
services to Nations Funds for which they receive compensation. The level of
compensation received and services provided by them differs among the various
Nations Funds. These differences subject the Adviser to conflicts of interest,
in that the Adviser could increase its fee income or that of its affiliates, or
attain other direct or indirect benefits, by allocating LifeGoal Portfolio
assets to underlying Nations Funds that pay higher fees or provide other
benefits.
The Co-Portfolio Managers of the LifeGoal Portfolios are E. Keith Wirtz and C.
Thomas Clapp.
Mr. Wirtz is Managing Director and Chief Investment Officer of TradeStreet and
has been responsible for the firm's investment staff, strategy and policy since
December 1996. Prior to assuming his position with TradeStreet, from April 1992
through December 1996, he was Senior Vice President and Chief Investment
Officer of Bank of America's Investment Management Division. Mr. Wirtz has
worked in the investment community since 1981. His past experience includes
domestic and international portfolio management for both private and
institutional clients. Mr. Wirtz received his B.S. in Finance from Arizona
State University. He holds the Chartered Financial Analyst designation and is a
member of the Association for Investment Management and Research, as well as
the Los Angeles Analyst Society.
Mr. Clapp is Director of the Equity Management Group for TradeStreet. Prior to
assuming his position with TradeStreet in 1995, he was Senior Vice President
and Director of Research for the Investment Management Group at NationsBank.
Prior to joining NationsBank in 1992, Mr. Clapp was a Senior Portfolio Manager
with Royal Insurance Group. Mr. Clapp has worked in the investment community
since 1984. He received his B.A. in Economics from the University of North
Carolina at Chapel Hill and M.B.A. from the University of South Carolina. 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.
Morrison & Foerster LLP, counsel to the Company and Nations Funds, and special
counsel to NationsBank and certain of its affiliates, has advised the Company
and Nations Funds that NationsBank and its affiliates may perform the services
contemplated by the various investment advisory agreements and this Prospectus
without violation of the Glass-Steagall Act. Such counsel has pointed out,
however, that there are no controlling judicial or administrative
interpretations or decisions and that future judicial or administrative
interpretations of, or decisions relating to, present federal or state
statutes, including the Glass-Steagall Act, and regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, as well
as future changes in such federal or state statutes, regulations and judicial
or administrative decisions or interpretations, could prevent such entities
from continuing to perform, in whole or in part, such services. If any such
entity were prohibited from performing any of such services, it is expected
that new agreements would be proposed or entered into with another entity or
entities qualified to perform such services.
Other Service Providers: Stephens Inc. ("Stephens"), a registered broker-dealer
with principal offices at 111 Center Street, Little Rock, Arkansas 72201,
serves as the administrator of the LifeGoal Portfolios pursuant to an
Administration Agreement. Pursuant to the terms of the Administration
Agreement, Stephens provides various admin-
21
<PAGE>
istrative and corporate secretarial services to the LifeGoal Portfolios,
including providing general oversight of other service providers, office space,
utilities and various legal and administrative services in connection with the
satisfaction of various regulatory requirements applicable to the LifeGoal
Portfolios. Stephens will not receive any fees from the LifeGoal Portfolios for
these services.
First Data Investor Services Group, Inc. ("First Data"), a wholly owned
subsidiary of First Data Corporation, with principal offices at One Exchange
Place, Boston, Massachusetts 02109, serves as the co-administrator of the
LifeGoal Portfolios. Under the Co-Administration Agreement, First Data provides
various administrative and accounting services to the LifeGoal Portfolios
including performing the calculations necessary to determine net asset value
per share and dividends, preparing tax returns and financial statements and
maintaining the portfolio records and certain of the general accounting records
for the LifeGoal Portfolios. For the services rendered pursuant to the
Co-Administration Agreement, First Data is entitled to receive a fee of $10,000
per year per LifeGoal Portfolio, which will be absorbed by NBAI.
For the fiscal period ended March 31, 1998, the LifeGoal Portfolios paid First
Data the following amounts for administration services: Nations LifeGoal Growth
Portfolio -- $4,959; Nations LifeGoal Balanced Growth Portfolio -- $4,959; and
Nations LifeGoal Income and Growth Portfolio -- $4,959.
Shares of the LifeGoal Portfolios are sold on a continuous basis by Stephens,
as the LifeGoal Portfolios' sponsor and distributor. The LifeGoal Portfolios
have entered into distribution agreements with Stephens which provide that
Stephens has the exclusive right to distribute shares of the LifeGoal
Portfolios. Stephens may pay service fees or commissions to Institutions that
assist customers in purchasing Investor B Shares of LifeGoal Portfolios.
First Data serves as the transfer agent (the "Transfer Agent") for each of
LifeGoal Portfolio's Investor B Shares. NationsBank serves as custodian for the
assets of each LifeGoal Portfolio.
Stephens, First Data, and NationsBank all provide services at the underlying
Nations Funds level and are compensated directly by such Nations Funds for
those services.
PricewaterhouseCoopers LLP serves as independent accountant to the Company.
Their address is 160 Federal Street, Boston, Massachusetts 02110.
Expenses: Certain administrative and other fees and expenses will be charged at
the LifeGoal Portfolios and Nations Funds levels. However, redundancies of fees
and expenses between the LifeGoal Portfolios and Nations Funds will be minimal,
because distinct services are being provided at each fund level. For example,
the LifeGoal Portfolios pay advisory fees to the Adviser for its services in
allocating LifeGoal Portfolio assets among the underlying Nations Funds. These
services are distinct from the services provided by the Adviser to the Nations
Funds in managing the Nations Funds' individual portfolio securities.
NBAI, under its investment advisory agreement with the LifeGoal Portfolios, has
agreed to absorb all expenses of the LifeGoal Portfolios, except taxes,
brokerage fees and commissions, extraordinary expenses and any applicable Rule
12b-1 fees, shareholder servicing fees and/or shareholder administration fees.
The LifeGoal Portfolios' expenses that will be absorbed by NBAI include, but
are not limited to: fees paid to service providers other than the Adviser;
interest; directors' fees; federal and state securities registration and
qualification fees; costs of preparing and printing prospectuses for regulatory
purposes and for distribution to existing shareholders; certain insurance
premiums; outside auditing and legal expenses; and costs of shareholder reports
and shareholder meetings. Investor B Shares also bear certain class specific
expenses, which are described under "Shareholder Servicing and Distribution
Plans," below.
The LifeGoal Portfolios do not pay any front-end sales loads or contingent
deferred sales charges in connection with the purchase or redemption of shares
of the Nations Funds. By investing in Primary A Shares of the Nations Funds,
the LifeGoal Portfolios also will not be subject to any asset-based sales
charges or service fees. The sales charges or service fees associated with
purchase of shares of the LifeGoal Portfolios will not exceed the limits set
forth in Rule 2830 of the Conduct Rules of the NASD when aggregated with sales
charges or service fees, if any, that the LifeGoal Portfolios pay relating to
Nations Funds shares.
The LifeGoal Portfolios' share of the Nations Funds' expenses may include
expenses that the LifeGoal Portfolios would not have incurred if it had not
22
<PAGE>
been structured as a "fund of funds." For example, if a portfolio manager of
one Nations Fund purchases the same securities that the portfolio manager of
another Nations Fund is selling, there may be transaction charges and
commissions that achieve little or no benefit for the LifeGoal Portfolios. Such
transactions will be rare because the Nations Funds pursue a broad range of
investment strategies, and therefore invest in different types of securities.
Organization And History
The LifeGoal Portfolios are members of the Nations Fund Family, which consists
of the Company, Nations Fund Trust, Nations Fund, Inc., Nations Fund
Portfolios, Inc., Nations Annuity Trust and Nations Institutional Reserves. The
Nations Fund Family currently has more than 60 distinct investment portfolios
and total assets in excess of $40 billion.
Nations LifeGoal Funds, Inc.: The Company was incorporated in Maryland on July
3, 1996 and commenced operations on October 2, 1996, and shares were offered to
the public on October 15, 1996. The Company's fiscal year end is March 31. As
of the date of this Prospectus, the authorized capital stock of LifeGoal Funds,
Inc. consists of 1,500,000,000 shares of common stock, par value of $.001 per
share, which are divided into series or portfolios, each of which includes
several classes of shares. This Prospectus relates to the Investor B Shares of
the following three portfolios of the Company: LifeGoal Growth Portfolio,
LifeGoal Balanced Growth Portfolio and LifeGoal Income and Growth Portfolio. To
obtain additional information regarding the LifeGoal Portfolios' other classes
of shares which may be available to you, contact your Agent, (as defined below)
or Nations Funds at 1-800-321-7854.
Shares of each Portfolio and class have equal rights with respect to voting,
except that the holders of shares of a particular Portfolio or class will have
the exclusive right to vote on matters affecting only the rights of the holders
of such Portfolio or class. In the event of dissolution or liquidation, holders
of each class will receive pro rata, subject to the rights of creditors, (a)
the proceeds of the sale of that portion of the assets allocated to that class
held in the respective Portfolio of the Company, less (b) the liabilities of
the Company attributable to the respective Portfolio or class or allocated
among the Portfolios or classes based on the respective liquidation value of
each Portfolio or class.
Shareholders of the Company do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all Portfolios voting
together for election of directors may elect all of the members of the Board of
Directors of the Company. Meetings of shareholders may be called upon the
request of 10% or more of the outstanding shares of the Company. There are no
preemptive rights applicable to any of the Company's shares. The Company's
shares, when issued, will be fully paid and non-assessable.
As of August 1, 1998, NationsBank and its affiliates possessed or shared power
to dispose of or vote with respect to more than 25% of the outstanding shares
of the Company and therefore could be considered to be a controlling person of
the Company and each of the LifeGoal Portfolios for purposes of the 1940 Act.
For more detailed information concerning the percentage of each class or series
over which NationsBank and its affiliates possessed or shared power to dispose
or vote as of a certain date, see the SAI. 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.
23
<PAGE>
About Your Investment
How To Buy Shares
The LifeGoal Portfolios have established various procedures for purchasing
Investor B Shares in order to accommodate different investors. Purchase orders
for Investor B 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 Funds ("Servicing Agents") and/or a sales support agreement ("Sales
Support Agreement") with Stephens ("Selling Agents").
Certain investors desiring to invest $1 million or more (including current
holdings) in the Nations Fund Family may be eligible to purchase Investor A
Shares. See "How To Redeem Shares."
The LifeGoal Portfolios reserve the right, in their discretion, to make
Investor B Shares available to other categories of investors, including those
who become eligible in connection with a merger or reorganization.
There is a minimum initial investment of $1,000 in the Funds, except that the
minimum initial investment is:
o $500 for "IRA" investors;
o $250 for non-working spousal IRAs; and
o $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"), Savings Incentives Method Plans for
Employees ("SIMPLE IRAs"), salary reduction-Individual Retirement Accounts
("SAR-IRAs") or similar types of accounts. However, the assets of such plans
must reach an asset value of $1,000 ($500 for SEPs, SAR-SEPs, SIMPLE IRAs, 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 B 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 B Shares. Servicing Agents and Selling
Agents are sometimes referred to hereafter as "Agents." From time to time the
Agents, Stephens and Nations Funds may agree to voluntarily reduce the maximum
fees payable for sales support or shareholder services.
The Company and Stephens reserve the right to reject any purchase order. The
issuance of Investor B Shares is recorded on the books of the LifeGoal
Portfolios, and share certificates are not issued unless expressly requested in
writing. Certificates are not issued for fractional shares.
Effective Time of Purchases: Purchase orders for Investor B Shares in the
LifeGoal Portfolios which are received by Stephens, the Transfer Agent or their
respective agents before the close of regular trading 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. In the event that the Exchange
closes early, purchase orders received prior to closing will be priced as of
the time the Exchange closes and purchase orders received after the Exchange
closes will be deemed received on the next Business Day and priced according to
the net asset value determined on the next Business Day. Purchase orders are
not executed until 4:00 p.m., Eastern time, on the Business Day
24
<PAGE>
on which immediately available funds in payment of the purchase price are
received by the Portfolios' Custodian. Such payment must be received no later
than 4:00 p.m., Eastern time, by the third Business Day following the receipt
of the order, as determined above. 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 B
Shares by their Customers, and delivering required funds, on a timely basis.
Stephens is responsible for transmitting orders it receives to the Company.
Systematic Investment Plan: Under the LifeGoal Portfolios' Systematic
Investment Plan ("SIP"), a shareholder may automatically purchase Investor B
Shares. On a bi-monthly, monthly or quarterly basis, a shareholder may direct
cash to be transferred automatically from his/her checking or savings account
at any bank which is a member of the Automated Clearing House to his/her
LifeGoal Portfolio account. Transfers will occur on or about the 15th and/or
the last day of the applicable month. Subject to certain exceptions for
employees of NationsBank and its affiliates and pre-existing SIP accounts, the
systematic investment amount may be in any amount from $50 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.
Shareholders should be aware that during periods of significant economic or
market change, telephone transactions may be difficult to complete.
Conversion Feature: Except for Investor B Shares held by employee benefit
plans, Investor B Shares purchased after July 31, 1997, that have been
outstanding for the number of years set forth in the schedule below will, at
the end of the month in which the anniversary of such share purchase occurs,
automatically convert to Investor A Shares.
Except for Investor B Shares held by employee benefit plans, Investor B Shares
purchased prior to August 1, 1997, will automatically convert to Investor A
Shares at the end of the month in which the ninth anniversary of such share
purchase occurs.
Upon conversion, shareholders will receive Investor A Shares having total
dollar value equal to the total dollar value of their Investor B Shares,
without the imposition of any sales charge or any other charge. The operating
expenses applicable to Investor A Shares, which are lower than those applicable
to Investor B Shares, shall thereafter be applied to such newly converted
shares. Shareholders holding converted shares will benefit from the lower
annual operating expenses of Investor A Shares, which will have a positive
effect on total returns. In each case, shareholders have the right to decline
an automatic conversion by notifying their Agent or the Transfer Agent within
90 days before a conversion that they do not desire such conversion.
25
<PAGE>
Reinvestments of dividends and distributions in Investor B Shares will be
considered a new purchase for purposes of the conversion schedules set forth
below. If a shareholder effects one or more exchanges among Investor B Shares
of the Non-Money Market Funds of Nations Funds during such period, the holding
period for shares so exchanged will be counted toward such period.
CONVERSION SCHEDULE
<TABLE>
<CAPTION>
Year of
Amount of Purchase Conversion
- -----------------------------------
<S> <C>
$ 0-$249,999 9th
- -----------------------------------
$250,000-$499,999 6th
- -----------------------------------
$500,000-$999,999 5th
</TABLE>
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 for
Investor B Shares of the LifeGoal Portfolios which are received by Stephens,
the Transfer Agent or their respective agents before the close of regular
trading on the Exchange (currently 4:00 p.m., Eastern time) on any Business Day
are priced according to the net asset value next determined after acceptance of
the order. In the event that the Exchange closes early, redemption orders
received prior to closing will be priced as of the time the Exchange closes and
redemption orders received after the Exchange closes will be deemed received on
the next Business Day and priced according to the net asset value determined on
the next Business Day. 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 B
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 B Shares upon 60 days' written
notice if the balance in the shareholder's account drops below $500 as a result
of redemptions. Share balances also may be redeemed at the direction of an
Agent pursuant to arrangements between the Agent and its Customers. The Company
also may redeem shares of the LifeGoal Portfolios involuntarily or make payment
for redemption in readily marketable securities or other property under certain
circumstances in accordance with the 1940 Act.
Prior to effecting a redemption of Investor B 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.
Rights of Accumulation: An investor may be entitled to a reduced CDSC or to
purchase Investor A Shares through Rights of Accumulation. To qualify for a
reduced CDSC or to purchase Investor A Shares, an investor must notify the
Servicing Agent through which the Investor B Shares are or would be purchased,
which in turn must notify Stephens, the Transfer Agent or their respective
agents at the time of purchase. Reductions in CDSCs or the availability of
Investor A Shares may be modified or terminated at any time and are subject to
confirmation of an investor's holdings. An investor who has previously invested
in the Nations
26
<PAGE>
Funds Family (excluding the Nations Funds money market and index funds, Nations
Short-Term Income Fund and Nations Short-Term Municipal Income Fund) may
aggregate holdings in such shares with current purchases to determine the
applicable CDSC schedule or the availability of Investor A Shares for current
purchases. An investor's aggregate investment in the Nations Funds Family for
this purpose is the total value (based on the higher of current net asset value
or the public offering price originally paid) of: (a) current purchases, and
(b) Investor A Shares, Investor B Shares or Investor C Shares that are already
beneficially owned by the investor (excluding the Nations Funds money market
and index funds, Nations Short-Term Income Fund and Nations Short-Term
Municipal Income Fund).
Contingent Deferred Sales Charge: Subject to certain waivers specified below,
Investor B Shares purchased after July 31, 1997, may be subject to a CDSC if
such shares are redeemed within the years designated in the applicable CDSC
schedule set forth below. No CDSC is imposed on increases in net asset value
above the initial purchase price, or shares acquired by reinvestment of
distributions. Subject to the waivers described below, the amount of the CDSC
is determined as a percentage of the lesser of the net asset value or the
purchase price of the shares being redeemed. The amount of the CDSC will depend
on the number of years since you invested, according to the following table:
CDSC SCHEDULES
Shares Purchased After July 31, 1997
in amount of $0-$249,999
<TABLE>
<CAPTION>
CDSC as a
Percentage of
Dollar
Amount Subject
Year Since Purchase Made to Charge
- ------------------------------------------
<S> <C>
First 5.0%
- ------------------------------------------
Second 4.0%
- ------------------------------------------
Third 3.0%
- ------------------------------------------
Fourth 3.0%
- ------------------------------------------
Fifth 2.0%
- ------------------------------------------
Sixth 1.0%
- ------------------------------------------
Seventh and thereafter None
</TABLE>
Shares Purchased After July 31, 1997
in amount of $250,000-$499,999
<TABLE>
<CAPTION>
CDSC as a
Percentage of
Dollar
Amount Subject
Year Since Purchase Made to Charge
- ------------------------------------------
<S> <C>
First 3.0%
- ------------------------------------------
Second 2.0%
- ------------------------------------------
Third 1.0%
- ------------------------------------------
Fourth and thereafter None
</TABLE>
Shares Purchased After July 31, 1997
in amount of $500,000-$999,999*
<TABLE>
<CAPTION>
CDSC as a
Percentage of
Dollar
Amount Subject
Year Since Purchase Made to Charge
- ------------------------------------------
<S> <C>
First 2.0%
- ------------------------------------------
Second 1.0%
- ------------------------------------------
Third and thereafter None
</TABLE>
* Except as noted below, Investor B Shares are not available to purchasers
desiring to invest $1 million or more, other than employee benefit plans whose
initial investment is less than $1 million. Such employee benefit plans will
continue to be subject to this CDSC schedule even after their aggregate
holdings in the Nations Funds Family as described above reaches $1 million.
In determining whether a CDSC is payable on any redemption, the Fund will first
redeem shares not subject to any charge, and then shares resulting in the
lowest possible CDSC. Solely for purposes of determining the number of years
from the date of purchase of shares, all purchases are deemed to have been made
on the trade date of the transaction.
The CDSC will be waived on redemptions of Investor B Shares (i) following the
death or disability (as defined in the Internal Revenue Code of 1986, as
amended (the "Code")) of a shareholder (including a registered joint owner),
(ii) in connection with the following retirement plan distributions: (a) by
qualified plans, (except in cases of plan level terminations); (b)
distributions from an IRA following attainment of age 59 1/2; (c) a tax-free
return of an excess contribution to an IRA, and (d) distributions from a
qualified retirement plan that are not subject to the 10% additional federal
with-
27
<PAGE>
drawal tax pursuant to Section 72(t)(2) of the Code, (iii) payments made to pay
medical expenses which exceed 7.5% of income and distributions to pay for
insurance by an individual who has separated from employment and who has
received unemployment compensation under a federal or state program for at
least 12 weeks, (iv) effected pursuant to the Company's right to liquidate a
shareholder's account, including instances where the aggregate net asset value
of the Investor B shares held in the account is less than the minimum account
size, (v) 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 (vi) 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 B Shares in the account.
Shareholders are responsible for providing evidence sufficient to establish
that they are eligible for any waiver of the CDSC. The Company may terminate
any waiver of the CDSC by providing notice in the LifeGoal Portfolios'
Prospectus, but any such termination would affect only shares purchased after
such termination.
Reinstatement Privilege: Within 120 days after a redemption of Investor B
Shares of a LifeGoal Portfolio, a shareholder may reinvest any portion of the
proceeds of such redemption in Investor B Shares of the same LifeGoal
Portfolio. The amount which may be so reinvested is limited to an amount up to,
but not exceeding, the redemption proceeds (or to the nearest full share if
fractional shares are not purchased). A shareholder exercising this privilege
would receive a pro rata credit for any CDSC paid in connection with the prior
redemption. A shareholder may not exercise this privilege with the proceeds of
a redemption of shares previously purchased through the reinvestment privilege.
In order to exercise this privilege, a written order for the purchase of
Investor B Shares, together with the proceeds, must be received by the Transfer
Agent or by Stephens within 120 days after the redemption.
Automatic Withdrawal Plan: An Automatic Withdrawal Plan ("AWP") may be
established by a new or existing shareholder of the LifeGoal Portfolios if the
value of the Investor B 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 B 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 B 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 B 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 to exchange funds as specified below
when the shareholder believes that a shift between funds is an appropriate
investment decision. The exchange feature enables a shareholder of Investor B
Shares of a LifeGoal Portfolio to acquire shares of the same class that are
offered by another fund in the Nations Funds (except Nations Short-Term Income
Fund and Nations Short-Term Municipal Income Fund), Investor A Shares of
Nations Short-Term Income Fund or Nations Short-Term Municipal Income Fund, or
Investor C Shares of a Nations Funds' money market fund. 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 B Shares
that meets the requirements discussed in this section. If a share-
28
<PAGE>
holder acquires Investor B Shares of another fund through an exchange, any CDSC
schedule applicable (CDSCs may apply to shares purchased prior to January 1,
1996 or after July 31, 1997) to the original shares purchased will be applied
to any redemption of the acquired shares. If a shareholder exchanges Investor B
Shares of a fund for Investor C Shares of a money market fund or Investor A
Shares of Nations Short-Term Income Fund or Nations Short-Term Municipal Income
Fund, the acquired shares will remain subject to the CDSC schedule applicable
to the Investor B Shares exchanged. The holding period (for purposes of
determining the applicable rate of the CDSC) does not accrue while the shares
owned are Investor C Shares of a Nations Funds money market fund or Investor A
Shares of Nations Short-Term Income Fund or Nations Short-Term Municipal Income
Fund. As a result, the CDSC that is ultimately charged upon a redemption is
based upon the total holding period of Investor B Shares of a fund that charges
a CDSC.
The LifeGoal Portfolios and each of the other funds of the Nations Funds 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), provided that the exchange feature may be terminated or
materially revised without notice under certain unusual circumstances.
The current prospectus for each 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 B Shares exchanged must have a current value of at least $1,000
(except for exchange through the AEF). The Company and Stephens 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. 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
Shareholder Servicing Plan: The LifeGoal Portfolios' servicing plan ("Servicing
Plan") permits the LifeGoal Portfolios to compensate Servicing Agents for
services provided to their Customers that own Investor B Shares. Payments under
the LifeGoal Portfolios' Servicing Plan are 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 .25% of the average daily net asset value of the
Investor B Shares.
The fees payable under the Servicing Plan are used primarily to compensate or
reimburse Servicing
29
<PAGE>
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 B 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 B Shares
pursuant to specific or preauthorized instructions; (iii) processing dividend
and distribution payments from the LifeGoal Portfolios on behalf of Customers;
(iv) providing information periodically to Customers showing their positions in
Investor B 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 LifeGoal Portfolios'
Servicing Plan described above and the terms of the Servicing Agreements. See
the SAI for more details on the Servicing Plan.
Distribution Plan: Pursuant to Rule 12b-1 under the 1940 Act, the Directors of
the Company have approved a Distribution Plan with respect to Investor B Shares
of the LifeGoal Portfolios. Pursuant to the Distribution Plan, the LifeGoal
Portfolios may compensate or reimburse Stephens for any activities or expenses
primarily intended to result in the sale of the LifeGoal Portfolios' Investor B
Shares. Payments under the LifeGoal Portfolios' 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 LifeGoal Portfolios' Investor B Shares.
The fees payable under the Distribution Plan are used primarily to compensate
or reimburse Stephens for distribution services provided by it, and related
expenses incurred, including payments by Stephens to compensate or reimburse
Selling Agents for sales support services provided, and related expenses
incurred, by such Selling Agents. Payments under the Distribution Plan may be
made with respect to the following expenses: the cost of preparing, printing
and distributing prospectuses, sales literature and advertising materials,
commissions, incentive compensation or other compensation to, and expenses of,
account executives or other employees of Stephens or the Selling Agents;
overhead and other office expenses; opportunity costs relating to the
foregoing; and any other costs and expenses relating to distribution or sales
support activities. The overhead and other office expenses referenced above may
include, without limitation, (i) the expenses of operating Stephens' or the
Selling Agents' offices in connection with the sale of LifeGoal Portfolios'
shares, including rent, the salaries and employee benefit costs of
administrative, operations and support personnel, utility costs, communications
costs and the costs of stationery and supplies, (ii) the costs of client sales
seminars and travel related to distribution and sales support activities, and
(iii) other expenses relating to distribution and sales support activities.
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 LifeGoal
Portfolios' Distribution Plan described above and the terms of the Sales
Support Agreement between Selling Agents and Stephens. See the SAI for more
details on the Distribution Plan.
The Company understands that Agents may charge fees to their Customers who are
the owners of Investor B 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.
The Adviser may also pay out of its own assets amounts to Stephens or other
broker/dealers in connection with the provision of administrative and/or
distribution related services to shareholders.
In addition, 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
30
<PAGE>
or other consideration or incentive to Agents who sell a minimum dollar amount
of shares of the LifeGoal Portfolios during a specified period of time.
Stephens may also, from time to time, pay additional consideration to Agents
not to exceed 5.00% of the offering price per share on all sales of Investor B
Shares as an expense of Stephens or for which Stephens may be reimbursed under
the Distribution Plan. Any such additional consideration or incentive program
may be terminated at any time by Stephens.
Stephens has also established a non-cash compensation program, pursuant to
which broker/dealers or financial institutions that sell shares of the LifeGoal
Portfolios may earn additional compensation in the form of trips to sales
seminars or vacation destinations, tickets to sporting events, theater or other
entertainment, opportunities to participate in golf or other outings and gift
certificates for meals or merchandise. This non-cash compensation program may
be amended or terminated at any time by Stephens.
How The LifeGoal Portfolios Value Their Shares
The net asset value of a share of each class is calculated by dividing the
total value of its assets, less liabilities, by the number of shares in the
class outstanding. Shares of the LifeGoal Portfolios are valued as of the close
of regular trading on the Exchange (currently 4:00 p.m., Eastern time) on each
Business Day. In the event that the Exchange closes early, shares of the
LifeGoal Portfolios will be priced as of the time the Exchange closes.
Currently, the days on which the Exchange is closed (other than weekends) are:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day (observed), Independence Day, Labor Day, Thanksgiving and
Christmas.
The Nations Funds determine their net asset value per share on a daily basis.
The net asset value of the LifeGoal Portfolio shares will be determined by
reference to the net asset value of the underlying Nations Fund.
How Dividends And Distributions Are Made; Tax Information
Dividends and Distributions
Each LifeGoal Portfolio declares and pays dividends from net investment income
quarterly. Each LifeGoal Portfolio's net realized capital gains (including net
short-term capital gains) are distributed at least annually. Distributions from
capital gains are made after applying any available capital loss carryovers.
Distributions paid by the LifeGoal Portfolios with respect to one class of
shares may be greater or less than those paid with respect to another class of
shares due to the different expenses of the different classes.
Investor B Shares of LifeGoal Portfolios are eligible to receive dividends when
declared, provided, however, that the purchase order for such shares is
received at least one day prior to the dividend declaration and such shares
continue to be eligible for dividends through and including the day before the
redemption order is executed.
The net asset value of Investor B Shares in LifeGoal Portfolios will be reduced
by the amount of any dividend or distribution. Accordingly, dividends and
distributions on newly purchased Investor B Shares represent, in substance, a
return of capital. However, such dividends and distributions would nevertheless
be taxable. Certain Agents may provide for the reinvestment of dividends in the
form of additional Investor B Shares of the same class in the same LifeGoal
Portfolio. Dividends and distri-
31
<PAGE>
butions are paid in cash within five Business Days of the end of the quarter to
which the payment 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 B Shares.
Tax Information
Each of the LifeGoal Portfolios intends to continue to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). In general, such qualification relieves a LifeGoal Portfolio of
liability for federal income tax to the extent all of its annual earnings are
distributed in accordance with the Code. Each LifeGoal Portfolio intends to
distribute substantially all of its earnings each taxable year.
Any distributions by a LifeGoal Portfolio of its net investment income
(including net foreign currency gains) and the excess, if any, of its net
short-term capital gain over its net long-term capital loss generally will be
taxable as ordinary income to shareholders , whether such income is received in
cash or reinvested in additional shares.
Corporate shareholders in the LifeGoal Portfolios may be entitled to the
dividends-received deduction for distributions attributable to those underlying
funds investing in the stock of domestic corporations to the extent of the
total qualifying dividends received by the distributing fund.
Substantially all of the net realized long-term capital gains of the LifeGoal
Portfolios, if any, will be distributed at least annually to the LifeGoal
Portfolios' shareholders. The LifeGoal Portfolios will generally have no tax
liability with respect to such gains, and the distributions generally will be
taxable to shareholders as net capital gain, regardless of how long the
shareholders have held such LifeGoal Portfolios' shares and whether such gains
are received in cash or reinvested in additional shares. Noncorporate
shareholders may be taxed on such distributions at preferential rates.
Each year, shareholders will be notified as to the amount and federal tax
status of all dividends and capital gain distributions paid during the prior
year. Such dividends and distributions may also be subject to state and local
taxes.
Dividends and capital gain distributions declared in October, November or
December of any year payable to shareholders of record on a specified date in
such months will be deemed to have been received by shareholders and paid by a
LifeGoal Portfolio on December 31 of such year in the event such dividends and
distributions are actually paid during January of the following year.
Federal law requires the Company to withhold 31% from any capital gain
distributions paid by the Company and/or redemptions (including exchanges and
redemptions in-kind) to individual shareholders unless the shareholder properly
furnishes a certified, correct Taxpayer Identification Number and certifies
that withholding does not apply. Such withholding is also required if the
Internal Revenue Service notifies the Company that the Taxpayer Identification
Number provided by the shareholder is incorrect or that the shareholder is
otherwise subject to such withholding. Amounts withheld are applied to the
shareholder's federal tax liability, and a refund may be obtained from the
Internal Revenue Service if withholding results in overpayment of tax. Federal
law also requires the LifeGoal Portfolios to withhold tax on dividends paid to
certain foreign shareholders.
The foregoing discussion is based on tax laws and regulations that were in
effect as of the date of this Prospectus and summarizes only some of the
important tax considerations generally affecting the LifeGoal Portfolios and
their shareholders. It is not intended as a substitute for careful tax
planning. Accordingly, potential investors should consult their tax advisors
with specific reference to their own tax situations and with respect to
foreign, state and local taxes. Further tax information is contained in the
SAI.
32
<PAGE>
Financial Highlights
The following financial information has been derived from the audited financial
statements of the LifeGoal Portfolios. PricewaterhouseCoopers LLP is the
independent accountant to the LifeGoal Portfolios. The reports of
PricewaterhouseCoopers LLP for the most recent fiscal period of the LifeGoal
Portfolios accompany the financial statements for such period and are
incorporated by reference in the SAI, which is available upon request. For more
information see "Organization And History." Shareholders of the Portfolios will
receive unaudited semi-annual reports describing the Portfolios' investment
operations and annual financial statements audited by the LifeGoal Portfolios'
independent accountant.
FOR AN INVESTOR B SHARE OUTSTANDING THROUGHOUT THE PERIOD
LifeGoal Growth Portfolio
<TABLE>
<CAPTION>
PERIOD
ENDED
Investor B Shares 03/31/98*
- -----------------------------------------------------------------------------
<S> <C>
Operating performance:
Net asset value, beginning of year $ 11.98
- -----------------------------------------------------------------------------
Net investment income/(loss) (0.02)(a)
- -----------------------------------------------------------------------------
Net realized and unrealized gain on investments 0.99
- -----------------------------------------------------------------------------
Net increase in net assets resulting from investment operations 0.97
- -----------------------------------------------------------------------------
Distributions:
Distributions from net investment income (0.01)
- -----------------------------------------------------------------------------
Distributions in excess of net investment income (0.24)
- -----------------------------------------------------------------------------
Distributions from net realized capital gains (0.21)
- -----------------------------------------------------------------------------
Total distributions (0.46)
- -----------------------------------------------------------------------------
Net asset value, end of year $ 12.49
- -----------------------------------------------------------------------------
Total return++ 8.55%
- -----------------------------------------------------------------------------
Ratios to average net assets/supplemental data:
Net assets, end of year (in 000's) $5,829
- -----------------------------------------------------------------------------
Ratio of operating expenses to average net assets+++ 1.25%+
- -----------------------------------------------------------------------------
Ratio of net investment income/(loss) to average net assets (0.35)%+
- -----------------------------------------------------------------------------
Portfolio turnover rate 69%
</TABLE>
* LifeGoal Growth Portfolio Investor B Shares commenced investment operations
on August 12, 1997.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
Funds.
(a) Per share amounts have been calculated using the monthly average shares
method, which more appropriately represents the per share for the period.
33
<PAGE>
FOR AN INVESTOR B SHARE OUTSTANDING THROUGHOUT THE PERIOD
LifeGoal Balanced Growth Portfolio
<TABLE>
<CAPTION>
PERIOD
ENDED
Investor B Shares 03/31/98*
- ---------------------------------------------------------------------------------------
<S> <C>
Operating performance:
Net asset value, beginning of year $ 10.88
- ---------------------------------------------------------------------------------------
Net investment income 0.11 (a)
- ---------------------------------------------------------------------------------------
Net realized and unrealized gain/(loss) on investments 0.87
- ---------------------------------------------------------------------------------------
Net increase/(decrease) in net assets resulting from investment operations 0.98
- ---------------------------------------------------------------------------------------
Distributions:
Distributions from net investment income (0.20)
- ---------------------------------------------------------------------------------------
Distributions in excess of net investment income (0.24)
- ---------------------------------------------------------------------------------------
Distributions from net realized capital gains (0.50)
- ---------------------------------------------------------------------------------------
Total distributions (0.94)
- ---------------------------------------------------------------------------------------
Net asset value, end of year $ 10.92
- ---------------------------------------------------------------------------------------
Total return++ 9.70%
- ---------------------------------------------------------------------------------------
Ratios to average net assets/supplemental data:
Net assets, end of year (in 000's) $4,917
- ---------------------------------------------------------------------------------------
Ratio of operating expenses to average net assets+++ 1.25%+
- ---------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 1.87%+
- ---------------------------------------------------------------------------------------
Portfolio turnover rate 94%
</TABLE>
* LifeGoal Balanced Growth Portfolio Investor B Shares commenced investment
operations on August 13, 1997.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
Funds.
(a) Per share amounts have been calculated using the monthly average share
method, which more appropriately represents the per share data for the
period.
34
<PAGE>
FOR AN INVESTOR B SHARE OUTSTANDING THROUGHOUT THE PERIOD
LifeGoal Income and Growth Portfolio
<TABLE>
<CAPTION>
PERIOD
ENDED
Investor B Shares 03/31/98
- -------------------------------------------------------------------------------
<S> <C>
Operating performance:
Net asset value, beginning of year $ 10.51
- -------------------------------------------------------------------------------
Net investment income 0.19 (a)
- -------------------------------------------------------------------------------
Net realized and unrealized gain/(loss) on investments 0.36
- -------------------------------------------------------------------------------
Net increase in net assets resulting from investment operations 0.55
- -------------------------------------------------------------------------------
Distributions:
Distributions from net investment income (0.22)
- -------------------------------------------------------------------------------
Distributions in excess of net investment income (0.07)
- -------------------------------------------------------------------------------
Distributions from net realized capital gains (0.07)
- -------------------------------------------------------------------------------
Total distributions (0.36)
- -------------------------------------------------------------------------------
Net asset value, end of period $ 10.70
- -------------------------------------------------------------------------------
Total return++ 5.33%
- -------------------------------------------------------------------------------
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $1,212
- -------------------------------------------------------------------------------
Ratio of operating expenses to average net assets+++ 1.25%+
- -------------------------------------------------------------------------------
Ratio of net investment income to average net assets 3.17%+
- -------------------------------------------------------------------------------
Portfolio turnover rate 64%
</TABLE>
* LifeGoal Income and Growth Portfolio Investor B Shares commenced investment
operations on August 7, 1997.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
Funds.
(a) Per share amounts have been calculated using the monthly average share
method, which more appropriately represents the per share data for the
period.
35
<PAGE>
<TABLE>
<S> <C>
LIFEGOAL PORTFOLIOS:
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
Prospectus
Investor C Shares
August 1, 1998
This Prospectus describes three diversified investment portfolios, LifeGoal
Growth Portfolio, LifeGoal Balanced Growth Portfolio and LIFEGOAL INCOME AND
GROWTH PORTFOLIO (each a "LifeGoal Portfolio" and, collectively, the "LifeGoal
Portfolios"), of Nations LifeGoal Funds, Inc. (the "Company"), an open-end
management investment company in the Nations Funds Family. The LifeGoal
Portfolios invest substantially all of their assets in certain other funds
within the Nations Funds Family. These underlying funds are referred to in this
Prospectus as "Nations Funds". This Prospectus describes one class of shares of
each LifeGoal Portfolio -- Investor C Shares.
This Prospectus sets forth concisely the information about each LifeGoal
Portfolio that a prospective purchaser of Investor C Shares should consider
before investing. Investors should read this Prospectus and retain it for
future reference. Additional information about the LifeGoal Portfolios is
contained in a separate Statement of Additional Information (the "SAI") that
has been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request without charge by writing or calling the Nations Funds
Family at its address or telephone number shown below. The SAI for the LifeGoal
Portfolios, dated August 1, 1998, is incorporated by reference in its entirety
into this Prospectus. The SEC maintains a Web site (http://www.sec.gov) that
contains the SAI, material incorporated by reference in this Prospectus and
other information regarding registrants that file electronically with the SEC.
NationsBanc Advisors, Inc. ("NBAI") is the investment adviser to each of the
LifeGoal Portfolios. TradeStreet Investment Associates, Inc. ("TradeStreet") is
the investment sub-adviser to the LifeGoal Portfolios. As used in this
Prospectus, the term "Adviser" refers to NBAI, TradeStreet, Gartmore Global
Partners, Brandes Investment Partners, L.P. and/or Marsico Capital Management,
LLC as the context may require, see "How The LifeGoal Portfolios Are Managed."
SHARES OF THE NATIONS FUNDS FAMILY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR For Portfolio
ISSUED, ENDORSED OR GUARANTEED BY, NATIONSBANK, N.A. (NATIONSBANK) OR ANY OF information call:
ITS AFFILIATES. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL 1-800-321-7854
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. AN INVESTMENT IN THE LIFEGOAL PORTFOLIOS INVOLVES CERTAIN
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. Nations Funds
c/o Stephens Inc.
NATIONSBANK AND CERTAIN OF ITS AFFILIATES PROVIDE SERVICES TO THE NATIONS FUNDS One NationsBank Plaza
FAMILY, FOR WHICH THEY ARE COMPENSATED. STEPHENS INC., WHICH IS NOT AFFILIATED 33rd Floor
WITH NATIONSBANK, IS THE SPONSOR AND ADMINISTRATOR AND SERVES AS THE Charlotte, NC 28255
DISTRIBUTOR FOR THE LIFEGOAL PORTFOLIOS.
[Nations Fund Logo]
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.
</TABLE>
NF-96703-8/98
<PAGE>
Table Of Contents
Prospectus Summary 3
-----------------------------------------------------
About The
LifeGoal
Portfolios
Expenses Summary 4
-----------------------------------------------------
Objectives 6
-----------------------------------------------------
How Objectives Are Pursued 8
-----------------------------------------------------
Description Of Underlying Nations Funds --
Investment Objectives, Policies And Practices 10
-----------------------------------------------------
How Performance Is Shown 18
-----------------------------------------------------
How The LifeGoal Portfolios Are Managed 19
-----------------------------------------------------
Organization And History 23
-----------------------------------------------------
How To Buy Shares 24
-----------------------------------------------------
About Your
Investment
How To Redeem Shares 25
-----------------------------------------------------
How To Exchange Shares 26
-----------------------------------------------------
Shareholder Servicing and Distribution Plans 27
-----------------------------------------------------
How The LifeGoal Portfolios Value Their Shares 28
-----------------------------------------------------
How Dividends And Distributions Are Made;
Tax Information 29
-----------------------------------------------------
Financial Highlights 31
-----------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS, OR IN THE LIFEGOAL PORTFOLIOS' SAI
INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE LIFEGOAL
PORTFOLIOS OR THE DISTRIBUTOR. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING BY LIFEGOAL PORTFOLIOS OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
2
<PAGE>
About The LifeGoal Portfolios
Prospectus Summary
o TYPE OF COMPANY: Open-end management investment company.
o INVESTMENT OBJECTIVES AND POLICIES:
o LifeGoal Growth Portfolio's investment objective is to seek capital
appreciation through exposure to a variety of equity market segments.
o LifeGoal Balanced Growth Portfolio's investment objective is to seek total
return through a balanced portfolio of equity and fixed income securities.
o LifeGoal Income and Growth Portfolio's investment objective is to seek
current income and modest growth to protect against inflation and to
preserve purchasing power.
The LifeGoal Portfolios are designed for long-term investors seeking the
benefits of asset allocation and diversification. Unlike traditional mutual
funds, which invest directly in individual securities, the LifeGoal
Portfolios pursue their investment objectives by allocating their assets
among various Nations Funds.
o INVESTMENT ADVISER: NationsBanc Advisors, Inc. serves as the investment
adviser to the LifeGoal Portfolios. NBAI provides investment management
services to more than 60 other funds in the Nations Funds Family.
TradeStreet Investment Associates, Inc., an affiliate of NBAI, provides
investment sub-advisory services to the LifeGoal Portfolios. For more
information about the investment adviser and investment sub-adviser to the
LifeGoal Portfolios, see "How the LifeGoal Portfolios Are Managed."
o DIVIDENDS AND DISTRIBUTIONS: Each LifeGoal Portfolio declares and pays
dividends from net investment income quarterly. Each LifeGoal Portfolio's
net realized capital gains, including net short-term capital gains, are
distributed at least annually.
o RISK FACTORS: Although NBAI, together with Tradestreet, seek to achieve the
investment objective of each LifeGoal Portfolio, there is no assurance that
they will be able to do so. Investments in a LifeGoal Portfolio are not
insured against loss of principal. Investments by a LifeGoal Portfolio in
shares of a Nations Fund that holds stocks are subject to stock market
risk, which is the risk that the value of the stocks held by Nations Funds
may decline over short or even extended periods. In addition, certain of
the Nations Funds may invest in securities of smaller and newer issuers.
Investments in such companies may present greater opportunities for capital
appreciation because of high potential earnings growth, but also present
greater risks than investments in more established companies with longer
operating histories and greater financial capacity. Investments by a
LifeGoal Portfolio in shares of a Nations Fund that holds debt securities
are subject to interest rate risk, which is the risk that the value of the
debt securities, including U.S. Government Obligations (as defined below),
held by Nations Funds may be adversely affected by changes in market
interest rates. The value of Nations Funds' investments in debt securities
will tend to decrease when interest rates rise and increase when interest
rates fall. In addition, debt securities which are not issued or guaranteed
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
3
<PAGE>
than U.S. markets and markets that are characterized by less governmental
supervision and lower disclosure standards. Certain of Nations Funds'
investments may constitute derivative securities. Certain types of
derivative securities can, under particular circumstances, significantly
increase an investor's exposure to market and other risks. For a discussion
of these and other factors, see "How Objectives Are Pursued -- General
Characteristics and Risk Factors of the Major Asset Classes" and
"Description of Underlying Nations Funds -- Principal Risk Considerations."
o 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 $50 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. The minimum
subsequent investment is $100, except for investments pursuant to the
Systematic Investment Plan. See "How To Buy Shares."
Expenses Summary
Expenses are one of several factors to consider when investing in a LifeGoal
Portfolio. The following tables summarize estimated shareholder transaction and
operating expenses as a percentage of net assets for Investor C Shares of each
LifeGoal Portfolio. The Examples show the cumulative expenses attributable to a
hypothetical $1,000 investment in each LifeGoal Portfolio over specified
periods.
LIFEGOAL PORTFOLIOS INVESTOR C SHARES
<TABLE>
<CAPTION>
LifeGoal LifeGoal
LifeGoal Balanced Income and
Growth Growth Growth
Shareholder Transaction Expenses Portfolio Portfolio Portfolio
<S> <C> <C> <C>
Sales Load Imposed on Purchases None None None
Deferred Sales Load None None None
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management Fees .25% .25% .25%
Rule 12b-1 Fees .75% .75% .75%
Shareholder Servicing Fees .25% .25% .25%
Other Expenses .00% .00% .00%
Total Operating Expenses 1.25% 1.25% 1.25%
</TABLE>
4
<PAGE>
Examples: You would pay the following expenses on a $1,000 investment in
Investor C Shares of the indicated LifeGoal Portfolio, assuming indirect
expenses (the LifeGoal Portfolios' share of the expenses incurred by the
underlying Nations Funds) at the midpoint of the after waiver ranges shown
below, and further assuming: (1) a 5% annual return and (2) redemption at the
end of each time period.
<TABLE>
<CAPTION>
LifeGoal LifeGoal
LifeGoal Balanced Income and
Growth Growth Growth
Portfolio Portfolio Portfolio
<S> <C> <C> <C>
1 Year $ 22 $ 21 $ 20
3 Years $ 67 $ 65 $ 61
5 Years $115 $111 $105
10 Years $247 $239 $226
</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 C Shares of a LifeGoal Portfolio can expect. The figures in the above
tables show the basis on which payments will be made, except that Other
Expenses are estimated for the LifeGoal Portfolios' current fiscal year and the
Examples include indirect expenses for the underlying Nations Funds' most
recent fiscal year (or estimates thereof for new funds). Long-term shareholders
of the Funds could pay more in sales charges than the economic equivalent of
the maximum front-end sales charges applicable to mutual funds sold by members
of the National Association of Securities Dealers, Inc. For more complete
descriptions of the LifeGoal Portfolios' operating expenses, see "How The
LifeGoal Portfolios Are Managed." For a more complete description of the Rule
12b-1 and shareholder servicing fees payable by the LifeGoal Portfolios, see
"Shareholder Servicing And Distribution Plans."
THE FOREGOING SHOULD NOT BE CONSIDERED TO BE AN ACTUAL REPRESENTATION OF PAST
OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES AND RATES OF RETURN MAY BE
GREATER OR LESS THAN THOSE SHOWN.
5
<PAGE>
LifeGoal Portfolios' Indirect Expenses
Based on 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, 1998 and the expected percentage investment ranges in the underlying
Nations Funds, the range of the weighted average indirect expense ratio for
each LifeGoal Portfolio is as follows:
<TABLE>
<CAPTION>
(before fee
(after fee waivers waivers and/or
and/or expense expense
reimbursements) reimbursements)
<S> <C> <C>
LifeGoal Growth Portfolio .56% to 1.22% .88% to 1.37%
LifeGoal Balanced Growth Portfolio .61% to 1.00% .87% to 1.15%
LifeGoal Income and Growth Portfolio .49% to .89% .74% to 1.10%
</TABLE>
The indirect expense ratios fluctuate within these ranges depending upon how
assets are allocated among the Nations Funds. The LifeGoal Portfolios will be
invested in the Primary A Shares of the underlying Nations Funds and, under
normal market conditions, will be allocated among the various fund categories
in the percentages shown below. Under extraordinary circumstances, a LifeGoal
Portfolio's investment in one or more Nations Funds might exceed these ranges.
For temporary defensive purposes, any LifeGoal Portfolio may invest up to 100%
of its assets in Nations Prime Fund, a money market mutual fund.
Objectives
o LIFEGOAL GROWTH PORTFOLIO -- LifeGoal Growth Portfolio's investment objective
is to seek capital appreciation through exposure to a variety of equity
market segments.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
<S> <C> <C>
Large-Capitalization Domestic Equity Funds 40-75% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marsico Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
Small/Mid-Capitalization Domestic Equity Funds 15-35% Nations Emerging Growth Fund Nations
Managed SmallCap Index Fund
Nations Small Company Growth Fund
Core International Equity Funds 10-20% Nations International Equity Fund
Nations International Value Fund
Non-Core International Equity Funds 0-10% Nations Emerging Markets Fund Nations
Pacific Growth Fund
</TABLE>
6
<PAGE>
o LIFEGOAL BALANCED GROWTH PORTFOLIO -- LifeGoal Balanced Growth Portfolio's
investment objective is to seek total return through a balanced portfolio
of equity and fixed income securities.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
<S> <C> <C>
Large-Capitalization Domestic Equity Funds 20-40% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marsico Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
Small/Mid-Capitalization Domestic Equity Funds 10-20% Nations Emerging Growth Fund
Nations Managed SmallCap Index Fund
Nations Small Company Growth Fund
Core International Equity Funds 5-15% Nations International Equity Fund
Nations International Value Fund
Core Bond Funds 40-60% Nations Diversified Income Fund
Nations Strategic Fixed Income Fund
</TABLE>
o LIFEGOAL INCOME AND GROWTH PORTFOLIO -- LifeGoal Income and Growth
Portfolio's investment objective is to seek current income and modest
growth to protect against inflation and to preserve purchasing power.
<TABLE>
<CAPTION>
FUND CATEGORY RANGE FUNDS
<S> <C> <C>
Large-Capitalization Domestic Equity Funds 10-30% Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Equity Income Fund
Nations Managed Index Fund
Nations Marsico Focused Equities Fund
Nations Marsico Growth & Income Fund
Nations Value Fund
Small/Mid-Capitalization Domestic Equity Funds 0-10% Nations Small Company Growth Fund
Core International Equity Funds 0-10% Nations International Equity Fund
Nations International Value Fund
Short Duration Bond Funds 50-90% Nations Short-Term Income Fund
Nations Short-Intermediate Government
Fund
Money Market Funds 0-20% Nations Prime Fund
</TABLE>
The LifeGoal Portfolios are intended primarily for long-term investors. The
LifeGoal Portfolios are structured as "funds of funds" that allocate
substantially all of their assets to investments in Primary A Shares of various
Nations Funds. The performance of the LifeGoal Portfolios will, therefore,
correspond to the performance of the various underlying Nations Funds.
Additional information about the underlying Nations Funds, including their
investment objectives, investment policies and practices, is set forth below
under "Descriptions of Underlying Nations Funds -- Investment Objectives,
Policies and Practices." The Adviser allocates and reallocates each LifeGoal
Portfolio's assets among the underlying Nations Funds identified above, and
potentially other Nations Funds, based on the percentage ranges shown above for
the various fund categories. As discussed below under "The Asset Allocation
Process," a LifeGoal Portfolio's actual investment allocation may deviate from
the percentage ranges shown above, over the short or long term.
7
<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 (i.e. -- international
stocks, domestic stocks and bonds) in varying portions to gain exposure to the
different return/risk characteristics of each asset class. Asset classes and
market segments (large, mid and small capitalization stocks) tend to react in
different ways to changes in economic conditions. Therefore, an investment
approach that combines various market segments and asset classes may reduce
overall portfolio volatility.
The assets of each LifeGoal Portfolio are allocated among various asset classes
through their investment in different fund categories. Each LifeGoal Portfolio
has its own asset allocation strategy which gives it a distinctive risk profile
and offers different return potential. Investors should select the LifeGoal
Portfolio (or Portfolios) which best matches their investment goals, risk
tolerance and investment horizon.
In general, the greater the LifeGoal Portfolio's percentage allocation to
equity funds, the greater the potential return and risk of share price decline.
Because of equity funds' greater risks, investors in the LifeGoal Portfolios
that have a higher allocation to equity funds should have a longer investment
horizon. In general, the greater the LifeGoal Portfolio's percentage allocation
to bond funds, the greater the potential price stability; however, returns may
be lower.
Investment performance will vary based on many factors, including market
conditions and the composition of a LifeGoal Portfolio's portfolio. Investment
performance also often reflects the risks associated with a LifeGoal
Portfolio's investment objective and policies. These factors should be
considered when comparing a LifeGoal Portfolio's investment results to those of
other mutual funds and to market indexes.
Although the Adviser will seek to achieve the investment objective of each
LifeGoal Portfolio, there is no assurance that it will be able to do so. No
single LifeGoal Portfolio should be considered, by itself, to provide a
complete investment program for any investor. The net asset value of the shares
of a LifeGoal Portfolio fluctuates based on fluctuations in the values of the
underlying Nations Funds' shares, which, in turn, fluctuate based on market
conditions and other factors. Therefore, investors should not rely upon
LifeGoal Portfolios for short-term financial needs. The LifeGoal Portfolios are
not intended to provide a vehicle for participating in short-term swings in the
stock market and their shares are not insured against loss of principal.
The Asset Allocation Process
Subject to the general supervision of the Company's Board of Directors, the
Adviser is responsible for allocating and reallocating each LifeGoal
Portfolio's assets among the Nations Funds in which it invests, and for
rebalancing such portfolio allocations. In this context, allocation is the
process of setting or changing the weightings of the different fund categories
and Nations Funds within a particular LifeGoal Portfolio's portfolio. The
"weightings" of the different fund categories and Nations Funds within a
particular LifeGoal Fund's portfolio are the percentage targets that the
Adviser sets for investment in a particular fund category or Nations Fund. All
fund category weightings will be within the overall percentage ranges shown
above. Rebalancing is the process of bringing portfolio allocations back into
alignment with the applicable weightings. A LifeGoal Portfolio's investments
are continuously monitored and are reallocated as often as the Adviser deems
appropriate. In addition, portfolio allocations and performance are reviewed at
least monthly for rebalancing at the discretion of the Adviser.
Although the Adviser may rebalance each LifeGoal Portfolio's holdings
quarterly, it expects to rebalance less often. Thus, at any given time, it is
possible that the percentage of a particular LifeGoal Portfolio's assets
actually invested in a particular
8
<PAGE>
Nations Fund or fund category will not correspond precisely with the applicable
weightings. Also, depending on the frequency of rebalancings, the extent of any
such deviation could continue for some time.
The Adviser has adopted certain policies designed to reduce the extent and
duration of such deviations. For example, if any fund category percentage
ranges are exceeded, the Adviser will allocate new investment dollars to the
other fund categories. Likewise, the Adviser will allocate new investment
dollars to fund categories whose minimum percentages have not been met.
Redemption requests, however, will generally be met by redeeming shares of
underlying Nations Funds according to the applicable weightings.
Determining the asset allocation applicable to each LifeGoal Portfolio is a two
step process. The first step is determining the broad asset classes for each
LifeGoal Portfolio -- large and small capitalization domestic stocks, foreign
stocks, bonds and money market securities. In making this determination, the
Adviser will consult the relevant historical data for the returns of each asset
class in various economic scenarios. Those returns will be reviewed in the
context of the Adviser's outlook for the economy and markets and adjusted for
reasonableness. The second step in the process is to determine the particular
Nations Funds in which each LifeGoal Portfolio will invest. The Adviser looks
at historic returns and valuations to determine which Nations Funds are most
appropriate. Determining how the individual Nations Funds may interact with one
another within a portfolio is a critical part of this second step.
Although it is expected that the LifeGoal Portfolios will invest in the Nations
Funds identified in "Description of Underlying Nations Funds," the Adviser has
the discretion to change the particular Nations Funds used as underlying
investments for the LifeGoal Portfolios. Among other things, the Adviser may
substitute or include other funds from the Nations Funds Family, including any
funds introduced subsequent to the date of this Prospectus, as permissible
investments for the LifeGoal Portfolios.
General Characteristics and Risk Factors of the Major Asset Classes
The underlying Nations Funds invest primarily in various stocks, bonds and
money market securities. This section provides a brief summary of the general
characteristics and overall risk factors associated with these asset classes.
Additional information is provided under "Description of Underlying Nations
Funds" below and in the prospectuses of the underlying Nations Funds.
Common stocks represent ownership in a company. Stock prices move with changes
in a company's current earnings and its prospects for the future, and with
overall stock market conditions. Stocks offer the potential for price
appreciation and rising dividends. While smaller companies usually reinvest
their earnings back into the company and therefore pay minimal, if any,
dividends, they offer the possibility of greater appreciation.
Historically, stocks have provided higher returns than bonds or money market
securities. Therefore, they have also provided the greatest protection against
inflation and the resulting erosion of purchasing power. However, the
additional return has been accompanied by additional volatility. Equity
investors should have a long-term investment horizon and be willing to accept
the inevitable periods of market declines.
Bonds are a contract. The issuer has an obligation to pay a specified rate of
interest (which may be fixed or variable) at specified times and to repay the
bond's principal value upon maturity. Bonds are subject to credit risk and to
interest rate risk. Credit risk refers to the possibility that a bond's price
may fall due to a credit downgrade or a principal or interest payment default.
Interest rate risk refers to a bond's price movement in response to changes in
market interest rates. As a general rule, when market interest rates rise, bond
prices fall. Typically, the longer the maturity of a bond, the greater the
potential price fluctuation.
Money market securities are short term debt obligations issued primarily by the
U.S. Government, government agencies or corporations. High quality money market
securities are very low risk invest-
9
<PAGE>
ments; their low risk, however, is accompanied by lower potential returns
relative to other investments.
Investment Company Securities: Each of the LifeGoal Portfolios intends, as a
fundamental policy, to concentrate investments by investing 25% or more of its
total assets in the mutual fund industry.
Although some of the Nations Funds in which the LifeGoal Portfolios invest do
not necessarily share the same investment objective as the investing LifeGoal
Portfolio, those Nations Funds will be selected by the Adviser based on the
asset allocation process described above.
Although each LifeGoal Portfolio intends to invest substantially all of its
assets in some or all of the underlying Nations Funds, each LifeGoal Portfolio
reserves the right to invest in obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, repurchase agreements, and
money market instruments with respect to any assets not so invested in Nations
Funds. It is not expected that any LifeGoal Portfolio will invest more than 5%
of its assets in any of these direct investments.
Investment Limitations: Each LifeGoal Portfolio is subject to a number of
investment limitations, which are described in the SAI. Among other things, the
LifeGoal Portfolios' fundamental policies permit them to borrow money from
banks for temporary or emergency purposes, subject to percentage and other
limitations, and to enter into forward purchase commitments and issue multiple
classes of shares. The investment objective, policies and limitations of each
LifeGoal Portfolio, unless otherwise specified, may be changed without a vote
of the LifeGoal Portfolio's shareholders. If the investment objective, policies
or limitations of a LifeGoal Portfolio change, shareholders should consider
whether the LifeGoal Portfolio remains an appropriate investment in light of
their current position and needs.
The Nations Funds also have adopted certain investment restrictions which may
be more or less restrictive than those applicable to the LifeGoal Portfolios,
thereby allowing a LifeGoal Portfolio to participate in certain investment
strategies indirectly that are prohibited under the investment restrictions
described in the LifeGoal Portfolios' SAI. The investment restrictions of the
underlying Nations Funds are set forth in their respective prospectuses and
statements of additional information.
Portfolio Turnover: Generally, LifeGoal Portfolios will purchase portfolio
securities for capital appreciation or investment income, or both, and not for
short-term trading profits. The LifeGoal Portfolios' portfolio turnover rates
are not expected to exceed 50% annually.
Description of Underlying Nations Funds -- Investment Objectives,
Policies and Practices
The LifeGoal Portfolios seek to achieve their investment objectives by
investing in certain Nations Funds (each, a "Fund"). The following section
provides summaries of the Nations Funds' investment objectives, policies and
practices. These summaries are intended to help investors understand some of
the more significant aspects of the underlying Nations Funds, but are not
intended to be comprehensive disclosures of all policies, practices and risks
associated with investments by the LifeGoal Portfolios in the Nations Funds. To
receive a prospectus for any underlying Nations Fund, which contains more
complete information, please call Nations Funds at 1-800-321-7854.
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
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in companies which share some of the following characteristics:
o above-average earnings growth relative to Standard & Poor's 500 Composite
Stock Price Index ("S&P 500 Index")(1);
o established operating histories, strong balance sheets and favorable
financial characteristics; and
o 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. In selecting stocks for the Fund,
the Adviser utilizes quantitative analysis and optimization tools. This
approach seeks to identify companies with improving profit potential through
analysis of earnings forecasts issued by investment banks, broker/ dealers and
other investment professionals. The Adviser believes that companies
experiencing such earnings trends have the potential to generate significant
increases in per share earnings. The Adviser also believes that companies with
increasing earnings should experience positive trends in their stock price.
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.
- ---------------------
1 "Standard & Poor's" and "Standard & Poor's 500" are trademarks of The
McGraw-Hill Companies, Inc.
Nations Emerging Growth Fund: The Fund's investment objective is to seek capital
appreciation by investing in emerging growth companies that are believed to have
superior long-term earnings growth prospects. The Fund invests primarily in
emerging growth companies with revenues between $50 million and $1.5 billion and
a debt ratio of less than 50% of capitalization. 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 managing the Fund, the Adviser applies a disciplined
process with rigorous fundamental analysis providing the basis for stock
selection. Its methodology combines fundamental, valuation and momentum-based
disciplines in portfolio construction. 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
greater than that of larger companies. Accordingly, while they may have greater
potential for gains, they also carry greater downside risk.
Nations Equity Income Fund: The Fund's investment objective is to seek current
income and growth of capital by investing primarily in companies with
above-average dividend yields. The investment program of the Fund is based on
several premises. First, dividends are normally a more stable and predictable
source of return than capital appreciation. Second, diversifying equity
holdings in a manner that includes every major economic sector 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 provided by the stocks in the S&P 500
Index with less volatility. Collectively, these traits may be combined in such
a fashion as to produce returns in excess of the market, as measured by the S&P
500 Index, on a comparable risk basis.
Under normal circumstances, the Fund will invest at least 65% of its assets in
income-producing common stocks, including securities convertible into or
ultimately exchangeable for common stock (i.e., convertible bonds or
convertible preferred stock), whose prospects for dividend growth and capital
appreciation are considered favorable by the Adviser. The Fund also may invest
its assets in fixed--
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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 that (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 market capitalization weighted index consisting of 500 common stocks chosen
for market size, liquidity and industry group representation.
Unlike traditional index funds, the Fund has a "managed" overlay. 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 300 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 80% of its total assets in common stocks which are included in
the S&P 500 Index. The Fund is expected, however, to maintain a position in
high-quality short-term debt securities and money market instruments to meet
redemption requests.
Nations Managed SmallCap Index Fund: The Fund's investment objective is to seek,
over the long-term, to provide a total return that (gross of fees and expenses)
exceeds that of 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 market capitalization weighted index
consisting of 600 domestic stocks which captures the economic and industry
characteristics of small stock performance.
Unlike traditional index funds, the Fund has a "managed" overlay. 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 400 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 80% 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 Marsico Focused Equities Fund: The Fund's investment objective is to
seek long-term growth of capital. The Fund is a non-diversified fund that
pursues its objective by normally investing in a core position of 20-30 common
stocks. In choosing stocks, the Adviser attempts to identify individual
companies with earnings growth potential that may not be recognized by the
market at large. In seeking such opportunities, the Adviser looks for a
combination of four factors: change (products, markets and technologies that
are in flux), franchise (brand franchises that can be leveraged), global reach
(companies that consider world markets rather than local markets) and themes
(companies that are moving with, not against, major social, economic and
cultural shifts). Once an opportunity is identified, it is subject to a
disciplined analytical process that takes into consideration such macroeconomic
factors as interest rates, inflation, the regulatory environment, the global
competitive landscape, and such microeconomic factors as company fundamentals,
market franchise and company management.
Under normal circumstances the Fund invests at least 65% of its assets in large
capitalization common stocks selected for their growth potential. The Fund also
may invest to a lesser degree, in other
- ---------------------
2 "Standard & Poor's" and "Standard & Poor's SmallCap 600" are trademarks of
The McGraw-Hill Companies, Inc.
12
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types of securities such as preferred stocks, warrants, convertible securities
and debt securities.
Nations Marsico Growth & Income Fund:
The Fund's investment objective is to seek long-term growth of capital with a
limited emphasis on income. The Fund will typically invest in large
capitalization stocks. The Fund may invest in any combination of common stocks,
preferred stocks, warrants, convertible securities and debt securities. In
building the portfolio, the Adviser seeks to identify individual companies with
earnings growth potential not recognized by the market at large. In seeking
such opportunities, the Adviser looks for a combination of four factors: change
(products, markets and technologies that are in flux), franchise (brand
franchise that can be leveraged), global reach (companies that consider world
markets rather than local markets) and themes (companies that are moving with,
not against, major social, economic and cultural shifts). Once an opportunity
is identified, it is subject to a disciplined analytical process that takes
into consideration macroeconomic factors such as interest rates, inflation, the
regulatory environment, the global competitive landscape, and company
fundamentals, such as market franchise and company management.
Under normal circumstances, the Fund invests up to 75% of its assets in equity
securities selected primarily for their growth potential and at least 25% of
its assets in securities with income potential. However, in adverse market
conditions, the Fund may reduce the growth component of its portfolio to 25% of
its total assets. Additionally, the Adviser may shift the Fund's assets between
the growth and income components based on relevant market, financial and
economic conditions.
Nations Small Company Growth Fund: The Fund's investment objective is to seek
long-term capital growth by investing capital primarily in equity securities.
In pursuing its investment objective, under normal circumstances, the Fund will
invest at least 65% of its total assets in equity securities of companies with
a market capitalization of $1 billion or less. The investment philosophy of
Nations Small Company Growth Fund is based on the premise that stock prices are
driven by earnings growth and that superior stock market returns occur when a
company experiences rapid and accelerating earnings growth due to improving
fundamentals.
In managing the Fund, the Adviser applies a disciplined process with rigorous
fundamental analysis providing the basis for stock selection. Its methodology
combines fundamental, valuation and momentum-based disciplines in portfolio
construction. Overall, the Fund's strategy is to own those investments offering
both attractive fundamental valuation and relatively good prospects for
earnings improvement. Typically, two types of companies are candidates for
purchase: (i) mature companies which may have fallen from a larger market value
due to business difficulties, but which now exhibit improving prospects; and
(ii) smaller or younger companies which are experiencing strong trends in
earnings growth, but remain reasonably valued and therefore offer premium
growth at a discount in comparison to other companies.
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
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<PAGE>
normal market conditions, the Fund will invest at least 65% of its total assets
in equity securities of companies in emerging markets. The Fund also may invest
in other types of instruments, including debt securities. The Fund intends to
invest in at least three different countries, although it may, from time to
time, invest all of its assets in a single country. In such cases, events
occurring in such country are more likely to affect the Fund's investments.
Nations International Equity Fund: The Fund's investment objective is to seek
long-term capital growth by investing primarily in equity securities of
non-United States companies in Europe, Australia, the Far East and other areas,
including developing countries. The Fund invests in both established and
developing markets around the world. While emphasizing established markets, the
Fund typically has some exposure to the more rapidly growing markets of the
Pacific Basin, Latin America and Eastern Europe.
Under normal market conditions, the Fund will invest at least 65% of its assets
in common stocks of non-United States companies and may invest up to 35% of its
assets in any other type of security, including convertible securities,
preferred stocks, and various debt securities. Under normal circumstances, the
Fund invests in at least three different countries. Under unusual
circumstances, however, the Fund may invest all of its assets in one or two
countries. In such cases, events occuring in those countries are more likely to
affect the Fund's investments.
Nations International Value Fund: The Fund's investment objective is to seek
long-term capital appreciation by investing primarily in equity securities of
foreign issuers including emerging markets countries. The Fund pursues its
investment objective, under normal circumstances, by investing its assets in
the securities of issuers in at least three different foreign countries.
Although the Fund may invest in companies of various sizes it typically invests
in established companies. The Adviser is committed to the use of the Graham &
Dodd-style value investing approach as introduced in the classic book SECURITY
ANALYSIS. The Adviser's approach to selecting stocks for the Fund is value
driven and it seeks to purchase a diversified group of businesses at prices
that research indicates are below true long-term, or intrinsic, value. In so
doing the Adviser seeks to secure not only a possible margin of safety against
price declines, but also an attractive opportunity for profit over the business
cycle. In analyzing a company's long-term value, the Adviser uses sources of
information such as company reports, filings with the SEC, computer databases,
industry publications, brokerage firm research reports and interviews with
company management.
Under normal circumstances, the Fund intends to invest at least 65% of its
total assets in equity securities of non-U.S. issuers whose market
capitalizations exceed $1 billion at the time of purchase. Although the Fund
intends to invest primarily in equity securities listed on stock exchanges it
also may invest in equity securities traded over the counter and in private
placements. Typically, no more than 5% of total Fund assets will be invested in
any one equity security at the time of purchase. Countries in which the Fund
may invest include, but are not limited to, the nations of Western Europe,
North and South America, Australia, Africa and Asia. During temporary defensive
periods in response to unusual and adverse conditions, the Fund's assets may be
invested without limitation in short-term debt instruments and in securities of
U.S. issuers.
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
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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 loss 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 U.S. Government Obligations. 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 of the
Fund will not exceed five years 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 will it
exceed 15 years. Under normal market conditions, the Fund will invest at least
65% of the total value of its assets in government, corporate and
mortgage-related 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 have
longer maturities. The Fund may invest in U.S. Treasury bills, notes and bonds
and other instruments issued directly by the U.S. Government. The Fund may also
invest in bank and commercial instruments that may be available in the money
markets, high quality short-term taxable obligations issued by state and local
governments, and repurchase agreements relating to U.S. Government Obligations.
Although the Fund is permitted to invest a portion of its assets in second tier
securities (as defined below) in accordance with Rule 2a-7 under the Investment
Company Act of 1940, as amended (the "1940 Act"), the Fund invests only in
first tier securities (as defined below). 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--
15
<PAGE>
traded financial futures and options thereon for market exposure and/or
risk-management. Each of the Funds may lend their portfolio securities to
qualified institutional investors, engage in repurchase agreement transactions
and invest in restricted, private placement and other illiquid securities.
Certain Nations Funds may 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.
Under Rule 2a-7 of the 1940 Act, a Money Market Fund is limited to acquiring
obligations with a remaining maturity of 397 days or less, or obligations with
greater maturities, provided such obligations are subject to demand features or
resets which are less than 397 days, and to maintaining a dollar-weighted
average portfolio maturity of 90 days or less. Quality requirements generally
limit investments to U.S. dollar denominated instruments determined to present
minimal credit risks which, at the time of acquisition, are rated in the first
or second rating categories (known as "first tier" and "second tier"
securities, respectively) by the required number of nationally recognized
statistical rating organizations (each an "NRSRO") or, if unrated by any NRSRO,
are (i) comparable in priority and security to a class of short-term securities
of the same issuer that has the required rating, or (ii) determined to be
comparable in quality to securities having the required rating. The
diversification requirements provide generally that a Money Market Fund may not
at the time of acquisition invest more than 5% of its assets in securities of
any one issuer except that up to 25% of total assets may be invested in the
first tier securities of a single issuer for three business days. Additionally,
no more than 5% of total assets may be invested, at the time of acquisition, in
second tier securities in the aggregate, and any investment in second tier
securities of one issuer is limited to the greater of 1% of total assets or one
million dollars. Securities issued by the U.S. Government, its agencies,
authorities or instrumentalities are exempt from the quality requirements,
other than minimal credit risk. In the event that a Fund's investment
restrictions or permissible investments are more restrictive than the
requirements of Rule 2a-7, the Fund's own restrictions will govern.
Principal Risk Considerations: Investments by a Nations Fund in common stocks
and other equity securities are subject to stock market risk. 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 repatria-
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tion 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 Funds may invest in securities of smaller and newer issuers.
Investments in such companies may present greater opportunities for capital
appreciation because of high potential earnings growth, but also present
greater risks than investments in more established companies with longer
operating histories and greater financial capacity.
Nations Marsico Focused Equities Fund, as a non-diversified fund, may invest in
fewer issuers than a diversified fund. Therefore, appreciation or depreciation
of an investment in a single issuer could have a greater impact on the Fund's
net asset value. The Fund reserves the right to become a diversified fund by
limiting the investments in which more than 5% of its total assets are
invested.
In addition, the Euro will become the single currency in at least 11 European
nations used in many financial transactions. Accordingly, the German mark,
French franc and other national currencies will no longer be used. Although the
impact of implementing the Euro is not possible to predict, the transition
could have an effect on the financial markets and economic environment in
Europe and other parts of the world. For example, investors may begin to view
those countries participating in the Economic Monetary Union as a single
combined entity and may alter their investment behavior accordingly. In
response to any such effect of the Euro implementation, the Adviser may need to
adapt its investment policies and strategy.
Certain of the U.S. Government Obligations that may be purchased by a Nations
Fund (or, under certain circumstances, directly by a LifeGoal Portfolio) are
not backed by the U.S. Treasury. For example, some U.S. Government Obligations
are supported only by the credit of the issuer/guarantor or by the right of the
issuer/guarantor to borrow from the U.S. Government. In addition, the market
value of U.S. Government Obligations may fluctuate due to fluctuations in
market interest rates. Certain types of U.S. Government Obligations are subject
to fluctuations in maturity, yield or value due to their structure or contract
terms.
Certain of the underlying Nations Funds may invest in derivative securities
("derivatives"). A derivative is a financial instrument whose value is based,
at least partly, on the value of an underlying stock, stock index, future or
other security. Examples of such derivatives include futures contracts,
options, interest rate and currency swap transactions. Certain types of
derivatives can, under certain circumstances, significantly increase an
investor's exposure to market or other risks.
Year 2000 Issue: Many computer programs employed throughout the world use two
digits to identify the year. Unless modified, these programs may not correctly
handle the change from "99" to "00" on January 1, 2000, and may not be able to
perform necessary functions. Any failure to adapt these programs in time could
hamper the LifeGoal Portfolios' operations. The LifeGoal Portfolios' principal
service providers have advised the LifeGoal Portfolios that they have been
actively working on implementing necessary changes to their systems, and that
they expect that their systems will be adapted in time, although there can be
no assurance of success. Because the Year 2000 issue affects virtually all
organizations, the companies or governmental entities in which the LifeGoal
Portfolios invest could be adversely impacted by the Year 2000 issue, although
the extent of such impact cannot be predicted. To the extent the impact on a
portfolio holding is negative, a LifeGoal Portfolio's return could be adversely
affected.
Please consult the SAI and the prospectus of the particular Nations Fund for
more information about investment practices and risks.
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<PAGE>
How Performance Is Shown
From time to time, the LifeGoal Portfolios may advertise the total return and
yield of a class of shares. In addition, the LifeGoal Portfolios may advertise
the total return and yield of the Primary A Shares of certain underlying
Nations Funds. TOTAL RETURN AND YIELD FIGURES ARE BASED ON HISTORICAL DATA AND
ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. The "total return" of a class
of shares of a LifeGoal Portfolio or Nations Fund may be calculated on an
average annual total return basis or an aggregate total return basis. Average
annual total return refers to the average annual compounded rates of return
over one-, five-, and ten-year periods or the life of a LifeGoal Portfolio or
Nations Fund (as stated in a LifeGoal Portfolio's 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
dividends and capital gain distributions. Aggregate total return reflects the
total percentage change in the value of the investment over the measuring
period again assuming the reinvestment of all dividends and capital gain
distributions. Total return may also be presented for other periods.
"Yield" of a class of shares of a non-money market fund is calculated by
dividing the annualized net investment income per share during a recent 30-day
(or one month) period of the class by the maximum public offering price per
share on the last day of that period. "Yield" of a class of shares of a money
market fund, such as the Nations Prime Fund, is calculated by annualizing the
income generated by an investment in such class over a seven-day period, and
showing it as a percentage of that investment. "Effective yield" assumes
reinvestment of income.
Investment performance, which will vary, is based on many factors, including
market conditions, the composition of a LifeGoal Portfolio's or Nations Fund's
portfolio and operating expenses. Investment performance also often reflects
the risks associated with a LifeGoal Portfolio's or Nations Fund's investment
objective and policies. These factors should be considered when comparing a
LifeGoal Portfolio's or Nations Fund's investment results to those of other
mutual funds and other investment vehicles. Since net asset value and yields
fluctuate, yield data cannot necessarily be used to compare an investment in
the LifeGoal Portfolios or Nations Fund with bank deposits, savings accounts,
and similar investment alternatives which often provide an agreed-upon or
guaranteed fixed yield for a stated period of time.
In addition to Investor C Shares, the LifeGoal Portfolios offer Primary A,
Primary B, Investor A and Investor B 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 Portfolio's shares. Any fees charged by an institution
directly to its customers' accounts in connection with investments in the
LifeGoal Portfolios will not be included in calculations of total return or
yield. The Company's annual report will contain additional performance
information and will be available upon request without charge from the LifeGoal
Portfolios' distributor or an investor's Institution, as defined below or by
calling Nations Funds at the toll-free number indicated on the cover of this
Prospectus.
The following information shows the average annual returns of the underlying
Nations Funds in which the LifeGoal Portfolios may invest. The performance of
the underlying Nations Funds is shown for illustrative purposes only and is not
intended to show LifeGoal Portfolio performance.
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NATIONS FUNDS
AVERAGE ANNUAL RETURNS -- PRIMARY A SHARES (UNAUDITED)
<TABLE>
<CAPTION>
1-Year Period
FUND NAME (DATE OF COMMENCEMENT OF OPERATIONS) Ended 3/31/98
<S> <C>
Nations Capital Growth Fund (9/30/92) 53.89%
Nations Disciplined Equity Fund (10/1/92) 48.65%
Nations Diversified Income Fund (10/30/92) 11.07%
Nations Emerging Growth Fund (12/4/92) 45.09%
Nations Emerging Markets Fund (6/30/95) (6.39)%
Nations Equity Income Fund (4/11/91) 37.21%
Nations International Equity Fund (12/2/91) 16.06%
Nations International Value Fund (12/27/95) 39.92%
Nations Managed Index Fund (8/1/96) 47.54%
Nations Managed SmallCap Index Fund (10/15/96) 47.71%
Nations Marsico Focused Equities Fund (12/31/97) N/A
Nations Marsico Growth & Income Fund (12/31/97) N/A
Nations Pacific Growth Fund (6/30/95) (28.35)%
Nations Short-Intermediate Government Fund (8/1/91) 9.11%
Nations Short-Term Income Fund (9/30/92) 6.89%
Nations Small Company Growth Fund (12/12/95) 49.41%
Nations Strategic Fixed Income Fund (10/30/92) 10.53%
Nations Value Fund (9/19/89) 38.53%
Nations Prime Fund (12/15/86) 5.61%
<CAPTION>
Inception
3-Year Period 5-Year Period through
FUND NAME (DATE OF COMMENCEMENT OF OPERATIONS) Ended 3/31/98 Ended 3/31/98 3/31/98
<S> <C> <C> <C>
Nations Capital Growth Fund (9/30/92) 29.63% 19.35% 19.47%
Nations Disciplined Equity Fund (10/1/92) 31.57% 21.56% 27.15%
Nations Diversified Income Fund (10/30/92) 9.05% 7.63% 8.73%
Nations Emerging Growth Fund (12/4/92) 25.18% 19.30% 17.92%
Nations Emerging Markets Fund (6/30/95) N/A N/A 2.97%
Nations Equity Income Fund (4/11/91) 25.40% 17.82% 17.18%
Nations International Equity Fund (12/2/91) 12.09% 10.68% 8.47%
Nations International Value Fund (12/27/95) N/A N/A 22.91%
Nations Managed Index Fund (8/1/96) N/A N/A 41.04%
Nations Managed SmallCap Index Fund (10/15/96) N/A N/A 29.41%
Nations Marsico Focused Equities Fund (12/31/97) N/A N/A 21.30%
Nations Marsico Growth & Income Fund (12/31/97) N/A N/A 20.30%
Nations Pacific Growth Fund (6/30/95) N/A N/A (9.86)%
Nations Short-Intermediate Government Fund (8/1/91) 6.71% 5.08% 6.66%
Nations Short-Term Income Fund (9/30/92) 6.74% 5.45% 5.45%
Nations Small Company Growth Fund (12/12/95) N/A N/A 25.39%
Nations Strategic Fixed Income Fund (10/30/92) 7.90% 6.07% 6.80%
Nations Value Fund (9/19/89) 28.85% 20.29% 16.64%
Nations Prime Fund (12/15/86) 5.59% 4.96% 6.00%
</TABLE>
How The LifeGoal Portfolios Are Managed
The business and affairs of the Company are managed under the supervision and
direction of its Board of Directors. The LifeGoal Portfolios' SAI contains the
names of and general background information concerning each Director of the
Company.
As described below, each LifeGoal Portfolio is advised by NBAI which is
responsible for the overall management and supervision of the investment
management of each LifeGoal Portfolio. Each LifeGoal Portfolio also is
sub-advised by TradeStreet which as a general matter is responsible for the
day-to-day investment decisions for the respective LifeGoal Portfolio.
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.
NationsBank Corporation, the parent company of NationsBank, has signed an
agreement to merge with BankAmerica Corporation. The proposed merger is subject
to certain regulatory approvals and must be approved by shareholders of both
holding companies. The merger is expected to close in the second half of 1998.
NationsBank and NBAI have advised the LifeGoal Portfolios that the merger will
not reduce the level or quality of advisory and other services provided to the
LifeGoal Portfolios.
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Investment Adviser: NationsBanc Advisors, Inc. serves as investment adviser to
the LifeGoal Portfolios and the Nations Funds. NBAI is a wholly owned
subsidiary of NationsBank, which in turn is a wholly owned banking subsidiary
of NationsBank Corporation, a bank holding company organized as a North
Carolina corporation. NBAI has its principal offices at One NationsBank Plaza,
Charlotte, North Carolina 28255.
TradeStreet Investment Associates, Inc., with principal offices at One
NationsBank Plaza, Charlotte, North Carolina 28255, serves as investment
sub-adviser to the LifeGoal Portfolios and the Nations Funds. TradeStreet is a
wholly owned subsidiary of NationsBank. TradeStreet provides investment
management services to individuals, corporations and institutions.
Gartmore Global Partners ("Gartmore"), with principal offices at One
NationsBank Plaza, Charlotte, North Carolina, 28255, serves as the investment
sub-adviser to three of the underlying Nations Funds. Gartmore is a joint
venture structured as a general partnership between NB Partner Corp., a wholly
owned subsidiary of NationsBank, and Gartmore U.S. Limited, an indirect, wholly
owned subsidiary of Gartmore Investment Management plc, a UK company which is
the holding company for a leading UK based international fund management group
of companies. National Westminster Bank plc and affiliated entities own 100% of
the equity of Gartmore Investment Management plc.
Brandes Investment Partners, L.P. ("Brandes"), with principal offices at 12750
High Bluff Drive, San Diego, California 92130, serves as investment sub-adviser
to one of the underlying Nations Funds -- Nations International Value Fund.
Marsico Capital Management, LLC ("Marsico Capital"), located at 1200 17th
Street, Suite 1300, Denver, Colorado 80202, serves as the investment sub-adviser
to two of the underlying Nations Funds -- Nations Marsico Focused Equities Fund
and Nations Marsico Growth & Income Fund. NationsBank has an option to purchase
up to 50% of Marsico Capital.
Subject to the general supervision of the Company's Board of Directors, and in
accordance with each LifeGoal Portfolio's investment policies, the Adviser is
responsible for allocating and reallocating each LifeGoal Portfolio's assets
among the Nations Funds in which it invests, and for rebalancing such portfolio
allocations. A LifeGoal Portfolio's investments are continuously monitored and
are reallocated as often as the Adviser deems appropriate. In addition,
portfolio allocations and performance are reviewed quarterly for rebalancing at
the discretion of the Adviser.
The Adviser has the ability to change the particular Nations Funds used as
underlying investments for the LifeGoal Portfolios. Among other things, the
Adviser may substitute or include other funds from the Nations Funds Family,
including any introduced subsequent to this Prospectus, as permissible
investments for the LifeGoal Portfolios. In the event the Adviser seeks to
invest the assets of a LifeGoal Portfolio in a Nations Fund not identified in
this Prospectus, the Company will amend or supplement the Prospectus to include
all pertinent information.
Both the LifeGoal Portfolios and Nations Funds have investment advisory
arrangements with NBAI. NBAI is entitled to receive advisory fees at an annual
rate of .25% of the average daily net assets of each LifeGoal Portfolio. NBAI
also has agreed to absorb all other expenses of the LifeGoal Portfolios (except
taxes, brokerage fees and commissions, extraordinary expenses, and any
applicable Rule 12b-1 fees, shareholder servicing fees and/or shareholder
administration fees). NBAI, in turn, compensates TradeStreet for sub-advisory
services at an annual rate of .05% of the average daily net assets of each
LifeGoal Portfolio. NBAI also receives advisory fees at varying rates from the
underlying Nations Funds, and pays TradeStreet, Gartmore, Brandes and Marsico
Capital sub-advisory fees for their services to the underlying Nations Funds.
From time to time, the Adviser may waive or reimburse (either voluntarily or
pursuant to applicable state expense limitations) advisory fees and/or expenses
payable by a LifeGoal Portfolio. Once commenced, waiver and reimbursement
arrangements may be discontinued at any time. In addition, the Adviser may from
time to time compensate Agents, as defined below, for providing certain
services to Customers. LifeGoal Portfolio's shareholders will indirectly pay
their proportionate share of the advisory fees and other expenses of any
Nations Fund in which the LifeGoal Portfolios are invested.
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<PAGE>
For the fiscal year ended March 31, 1998, the LifeGoal Portfolios paid NBAI
advisory fees at the indicated rates of the following LifeGoal Portfolios'
average daily net assets: Nations LifeGoal Growth Portfolio -- .25%; Nations
LifeGoal Balanced Growth Portfolio -- .25%; and Nations LifeGoal Income and
Growth Portfolio -- .25%.
For the fiscal year ended March 31, 1998, NBAI paid TradeStreet sub-advisory
fees at the indicated rates of the following LifeGoal Portfolios' average daily
net assets: Nations LifeGoal Growth Portfolio -- .05%; Nations LifeGoal
Balanced Growth Portfolio -- .05%; and Nations LifeGoal Income and Growth
Portfolio -- .05%.
NBAI, TradeStreet and certain of their affiliates provide advisory and other
services to Nations Funds for which they receive compensation. The level of
compensation received and services provided by them differs among the various
Nations Funds. These differences subject the Adviser to conflicts of interest,
in that the Adviser could increase its fee income or that of its affiliates, or
attain other direct or indirect benefits, by allocating LifeGoal Portfolio
assets to underlying Nations Funds that pay higher fees or provide other
benefits.
The Co-Portfolio Managers for the LifeGoal Portfolios are E. Keith Wirtz and C.
Thomas Clapp.
Mr. Wirtz is Managing Director and Chief Investment Officer of TradeStreet and
has been responsible for the Firm's investment staff, strategy and policy since
December 1996. Prior to assuming his position with TradeStreet, from April 1992
through December 1996, he was Senior Vice President and Chief Investment
Officer of Bank of America's Investment Management Division. Mr. Wirtz has
worked in the investment community since 1981. His past experience includes
domestic and international portfolio management for both private and
institutional clients. Mr. Wirtz received his B.S. in Finance from Arizona
State University. He holds the Chartered Financial Analyst designation and is a
member of the Association for Investment Management and Research, as well as
the Los Angeles Analyst Society.
Mr. Clapp is Director of the Equity Management Group for TradeStreet. Prior to
assuming his position with TradeStreet in 1995, he was Senior Vice President
and Director of Research for the Investment Management Group at NationsBank.
Prior to joining NationsBank in 1992, Mr. Clapp was a Senior Portfolio Manager
with Royal Insurance Group. Mr. Clapp has worked in the investment community
since 1984. He received his B.A. in Economics from the University of North
Carolina at Chapel Hill and an M.B.A. from the University of South Carolina. 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.
Morrison & Foerster LLP, counsel to the Company and Nations Funds, and special
counsel to NationsBank and certain of its affiliates, has advised the Company
and Nations Funds that NationsBank and its affiliates may perform the services
contemplated by the various investment advisory agreements and this Prospectus
without violation of the Glass-Steagall Act. Such counsel has pointed out,
however, that there are no controlling judicial or administrative
interpretations or decisions and that future judicial or administrative
interpretations of, or decisions relating to, present federal or state
statutes, including the Glass-Steagall Act, and regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, as well
as future changes in such federal or state statutes, regulations and judicial
or administrative decisions or interpretations, could prevent such entities
from continuing to perform, in whole or in part, such services. If any such
entity were prohibited from performing any of such services, it is expected
that new agreements would be proposed or entered into with another entity or
entities qualified to perform such services.
Other Service Providers: Stephens Inc. ("Stephens"), a registered broker-dealer
with principal offices at 111 Center Street, Little Rock, Arkansas 72201,
serves as the administrator of the LifeGoal Portfolios pursuant to an
Administration Agreement. Pursuant to the terms of the Administration
Agreement, Stephens provides various administrative and corporate secretarial
services to the LifeGoal Portfolios, including providing general oversight of
other service providers, office space, utilities and various legal and
administrative services in connection with the satisfaction of various regu-
21
<PAGE>
latory requirements applicable to the LifeGoal Portfolios. Stephens will not
receive any fees from the LifeGoal Portfolios for these services.
First Data Investor Services Group, Inc. ("First Data"), a wholly owned
subsidiary of First Data Corporation, with principal offices at One Exchange
Place, Boston, Massachusetts 02109, serves as the co-administrator of the
LifeGoal Portfolios. Under the Co-Administration Agreement, First Data provides
various administrative and accounting services to the LifeGoal Portfolios
including performing the calculations necessary to determine net asset value
per share and dividends, preparing tax returns and financial statements and
maintaining the portfolio records and certain of the general accounting records
for the LifeGoal Portfolios. For the services rendered pursuant to the
Co-Administration Agreement, First Data is entitled to receive a fee of $10,000
per year per LifeGoal Portfolio, which will be absorbed by NBAI.
For the fiscal period ended March 31, 1998, the LifeGoal Portfolios paid First
Data the following amounts for administration services: Nations LifeGoal Growth
Portfolio -- $4,959; Nations LifeGoal Balanced Growth Portfolio -- $4,959;
and Nations LifeGoal Income and Growth Portfolio -- $4,959.
Shares of the LifeGoal Portfolios are sold on a continuous basis by Stephens,
as the LifeGoal Portfolios' sponsor and distributor. The LifeGoal Portfolios
have entered into distribution agreements with Stephens which provide that
Stephens has the exclusive right to distribute shares of the LifeGoal
Portfolios. Stephens may pay service fees or commissions to Institutions that
assist customers in purchasing Investor C Shares of LifeGoal Portfolios.
First Data serves as the transfer agent (the "Transfer Agent") for each of
LifeGoal Portfolio's Investor C Shares. NationsBank serves as custodian for the
assets of each LifeGoal Portfolio.
Stephens, First Data, and NationsBank all provide services at the underlying
Nations Funds level and are compensated directly by such Nations Funds for
those services.
PriceWaterhouseCoopers LLP serves as independent accountant to the Company.
Their address is 160 Federal Street, Boston, Massachusetts 02110.
Expenses: Certain administrative and other fees and expenses will be charged at
the LifeGoal Portfolios and Nations Funds levels. However, redundancies of fees
and expenses between the LifeGoal Portfolios and Nations Funds will be minimal,
because distinct services are being provided at each fund level. For example,
the LifeGoal Portfolios pay advisory fees to the Adviser for its services in
allocating LifeGoal Portfolio assets among the underlying Nations Funds. These
services are distinct from the services provided by the Adviser to the Nations
Funds in managing the Nations Funds' individual portfolio securities.
NBAI, under its investment advisory agreement with the LifeGoal Portfolios, has
agreed to absorb all expenses of the LifeGoal Portfolios, except taxes,
brokerage fees and commissions, extraordinary expenses and any applicable Rule
12b-1 fees, shareholder servicing fees and/or shareholder administration fees.
The LifeGoal Portfolios' expenses that will be absorbed by NBAI include, but
are not limited to: fees paid to service providers other than the Adviser;
interest; directors' fees; federal and state securities registration and
qualification fees; costs of preparing and printing prospectuses for regulatory
purposes and for distribution to existing shareholders; certain insurance
premiums; outside auditing and legal expenses; and costs of shareholder reports
and shareholder meetings. Investor C Shares also bear certain class specific
expenses, which are described under "Shareholder Servicing and Distribution
Plans," below.
The LifeGoal Portfolios do not pay any front-end sales loads or contingent
deferred sales charges in connection with the purchase or redemption of shares
of the Nations Funds. By investing in Primary A Shares of the Nations Funds,
the LifeGoal Portfolios also will not be subject to any asset-based sales
charges or service fees. The sales charges or service fees associated with
purchase of shares of the LifeGoal Portfolios will not exceed the limits set
forth in Rule 2830 of the Conduct Rules of the NASD when aggregated with sales
charges or service fees, if any, that the LifeGoal Portfolios pay relating to
Nations Funds shares.
The LifeGoal Portfolios' share of the Nations Funds' expenses may include
expenses that the LifeGoal Portfolios would not have incurred if it had not
been structured as a "fund of funds." For example,
22
<PAGE>
if a portfolio manager of one Nations Fund purchases the same securities that
the portfolio manager of another Nations Fund is selling, there may be
transaction charges and commissions that achieve little or no benefit for the
LifeGoal Portfolios. Such transactions will be rare because the Nations Funds
pursue a broad range of investment strategies, and therefore invest in
different types of securities.
Organization And History
The LifeGoal Portfolios are members of the Nations Funds Family, which consists
of the Company, Nations Funds Trust, Nations Fund, Inc., Nations Fund
Portfolios, Inc., Nations Annuity Trust and Nations Institutional Reserves. The
Nations Funds Family currently has more than 60 distinct investment portfolios
and total assets in excess of
$40 billion.
Nations LifeGoal Funds, Inc.: The Company was incorporated in Maryland on July
3, 1996 and commenced operations on October 2, 1996, and shares were offered to
the public on October 15, 1996. The Company's fiscal year end is March 31. As
of the date of this Prospectus, the authorized capital stock of Nations
LifeGoal Funds, Inc. consists of 1,200,000,000 shares of common stock, par
value of $.001 per share, which are divided into series or portfolios, each of
which includes several classes of shares. This Prospectus relates to the
Investor C Shares of the following three portfolios of the Company: LifeGoal
Growth Portfolio, LifeGoal Balanced Growth Portfolio and LifeGoal Income and
Growth Portfolio. To obtain additional information regarding the LifeGoal
Portfolios' other classes of shares which may be available to you, contact your
Agent, (as defined below) or Nations Funds at 1-800-321-7854.
Shares of each Portfolio and class have equal rights with respect to voting,
except that the holders of shares of a particular Portfolio or class will have
the exclusive right to vote on matters affecting only the rights of the holders
of such Portfolio or class. In the event of dissolution or liquidation, holders
of each class will receive pro rata, subject to the rights of creditors, (a)
the proceeds of the sale of that portion of the assets allocated to that class
held in the respective Portfolio of the Company, less (b) the liabilities of
the Company attributable to the respective Portfolio or class or allocated
among the Portfolios or classes based on the respective liquidation value of
each Portfolio or class.
Shareholders of the Company do not have cumulative voting rights, and therefore
the holders of more than 50% of the outstanding shares of all Portfolios voting
together for election of directors may elect all of the members of the Board of
Directors of the Company. Meetings of shareholders may be called upon the
request of 10% or more of the outstanding shares of the Company. There are no
preemptive rights applicable to any of the Company's shares. The Company's
shares, when issued, will be fully paid and non-assessable.
As of August 1, 1998, NationsBank and its affiliates possessed or shared power
to dispose of or vote with respect to more than 25% of the outstanding shares
of the Company and therefore could be considered to be a controlling person of
the Company and each of the LifeGoal Portfolios for purposes of the 1940 Act.
For more detailed information concerning the percentage of each class or series
over which NationsBank and its affiliates possessed or shared power to dispose
or vote as of a certain date, see the SAI. 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.
23
<PAGE>
About Your Investment
How To Buy Shares
The LifeGoal Portfolios have established various procedures for purchasing
Investor C Shares in order to accommodate different investors. Purchase orders
for Investor C Shares may be placed through banks, broker/dealers or other
financial institutions (including certain affiliates of NationsBank) that have
entered into a shareholder servicing agreement ("Servicing Agreement") with
Nations Funds ("Servicing Agents") and/or a sales support agreement ("Sales
Support Agreement") with Stephens ("Selling Agents").
The LifeGoal Portfolios reserve the right, in their discretion, to make
Investor C Shares available to other categories of investors, including those
who become eligible in connection with a merger or reorganization.
There is a minimum initial investment of $1,000, except that the minimum
initial investment is:
o $500 for "IRA" investors;
o $250 for non-working spousal IRAs; and
o $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"), Savings Incentives Method Plans for
Employees ("SIMPLE IRAs"), salary reduction-Individual Retirement Accounts
("SAR-IRAs") or similar types of accounts. However, the assets of such plans
must reach an asset value of $1,000 ($500 for SEPs, SAR-SEPs, SIMPLE IRAs, 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 Funds may agree to voluntarily reduce the maximum
fees payable for sales support or shareholder services.
The Company and Stephens reserves the right to reject any purchase order. The
issuance of Investor C Shares is recorded on the books of the LifeGoal
Portfolios, and share certificates are not issued unless expressly requested in
writing. Certificates are not issued for fractional shares.
Effective Time of Purchases: Purchase orders for Investor C Shares in the
LifeGoal Portfolios which are received by Stephens, the Transfer Agent or their
respective agents before the close of regular trading 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. In the event that the Exchange
closes early, purchase orders received prior to closing will be priced as of
the time the Exchange closes and purchase orders received after the Exchange
closes will be deemed received on the next Business Day and priced according to
the net asset value determined on the next Business Day. Purchase orders 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 Portfolios' Custodian. Such payment must be received no later than 4:00
p.m., Eastern time, by the third
24
<PAGE>
Business Day following receipt of the order, as determined above. If funds are
not received by such date, the order will not be accepted and notice thereof
will be given to the Agent placing the order. Payment for orders which are not
received or accepted will be returned after prompt inquiry to the sending
Agent.
The Agents are responsible for transmitting orders for purchases of Investor C
Shares by their Customers, and delivering required funds, on a timely basis.
Stephens is responsible for transmitting orders it receives to the Company.
Systematic Investment Plan: Under the LifeGoal Portfolios' Systematic
Investment Plan ("SIP"), a shareholder may automatically purchase Investor C
Shares. On a bi-monthly, monthly or quarterly basis, a shareholder may direct
cash to be transferred automatically from his/her checking or savings account
at any bank which is a member of the Automated Clearing House to his/her
LifeGoal Portfolio account. Transfers will occur on or about the 15th and/or
the last day of the applicable month. Subject to certain exceptions for
employees of NationsBank and its affiliates and pre-existing SIP accounts, the
systematic investment amount may be in any amount from $50 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.
Shareholders should be aware that during periods of significant economic or
market change, telephone transactions may be difficult to complete.
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 for
Investor C Shares of the LifeGoal Portfolios which are received by Stephens,
the Transfer Agent or their respective agents before the close of regular
trading on the Exchange (currently 4:00 p.m., Eastern time) on any Business Day
are priced according to the net asset value next determined after acceptance of
the order. In the event that the Exchange closes early, redemption orders
received prior to closing will be priced as of the time the Exchange closes and
redemption orders received after the Exchange closes will be deemed received on
the next Business Day and priced according to the net asset value determined on
the next Business Day. 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 or their respective agents. The Agents are responsible for
transmitting redemption orders to Stephens or to the Transfer Agent or their
respective agents 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. 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
or their respective agents. However, redemption proceeds for shares purchased
by check may not be remitted until at least 15 days after
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<PAGE>
the date of purchase to ensure that the check has cleared; a certified check,
however, is deemed to be cleared immediately.
The Company may redeem a shareholder's Investor C Shares upon 60 days' written
notice if the balance in the shareholder's account drops below $500 as a result
of redemptions. Share balances also may be redeemed at the direction of an
Agent pursuant to arrangements between the Agent and its Customers. The Company
also may redeem shares of the LifeGoal Portfolios 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.
Automatic Withdrawal Plan: An Automatic Withdrawal Plan ("AWP") may be
established by a new or existing shareholder of the LifeGoal Portfolios if the
value of the Investor C Shares in his/ her accounts within the Nations Fund
Family (valued at the net asset value at the time of the establishment of the
AWP) equals $10,000 or more. 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 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
Portfolio to acquire Investor C Shares of another fund in the Nations Funds
Family (which includes both LifeGoal Portfolios and Nations Funds) when that
shareholder believes that a shift between funds is an appropriate investment
decision. A qualifying exchange is based on the next calculated net asset value
per share of each fund after the exchange order is received. The LifeGoal
Portfolios and each of the other funds of the Nations Funds 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), provided that the exchange feature may be terminated or materially
revised without notice under certain unusual circumstances.
The current prospectus for each 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 exchanges through the Automatic Exchange Feature, which
26
<PAGE>
is described below). Nations Funds and Stephens 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. An
investormay 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.
Automatic Exchange Feature: Under the LifeGoal Portfolios' Automatic Exchange
Feature ("AEF") a shareholder may automatically exchange at least $25 on a
monthly or quarterly basis. A shareholder may direct proceeds to be exchanged
from one Nations Fund to another as allowed by the applicable exchange rules
within the prospectus. Exchanges will occur on or about the 15th or the last
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 or
Nations Funds.
Shareholder Servicing And Distribution Plans
Pursuant to Rule 12b-1 under the 1940 Act, the Directors have approved a
Distribution Plan with respect to Investor C Shares of the LifeGoal Portfolios.
Pursuant to the Distribution Plan, the LifeGoal Portfolios may compensate or
reimburse Stephens for any activities or expenses primarily intended to result
in the sale of the LifeGoal Portfolios' Investor C Shares. Payments under the
Investor C Distribution Plan will be calculated daily and paid monthly at a
rate or rates set from time to time by the Directors, provided that the annual
rate may not exceed .75% of the average daily net asset value of the
Portfolios' Investor C Shares.
The fees payable under the Distribution Plan are used (i) to compensate Selling
Agents for providing sales support assistance relating to Investor C Shares,
(ii) to pay for 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 SAI for more details on the
Distribution Plan.
The Directors also have approved a shareholder servicing plan ("Servicing
Plan") for the Portfolios which permits the LifeGoal Portfolios to compensate
Servicing Agents for services provided to their Customers that own Investor C
Shares. Payments under the Servicing Plan are calculated daily and paid monthly
at a rate or rates set from time
27
<PAGE>
to time by the LifeGoal Portfolios, provided that the annual rate may not
exceed .25% of the average daily net asset value of the LifeGoal Portfolios'
Investor C Shares.
The fees payable under the Servicing Plan are used primarily to compensate or
reimburse Servicing Agents for shareholder services provided, and related
expenses incurred, by such Servicing Agents. The shareholder services provided
by Servicing Agents may include: (i) aggregating and processing purchase and
redemption requests for Investor C Shares from Customers and transmitting net
purchase and redemption orders to Stephens or the Transfer Agent; (ii)
providing Customers with a service that invests the assets of their accounts in
Investor C Shares pursuant to specific or preauthorized instructions; (iii)
processing dividend and distribution payments from the LifeGoal Portfolios on
behalf of Customers; (iv) providing information periodically to Customers
showing their positions in Investor C Shares; (v) arranging for bank wires; and
(vi) providing general shareholder liaison services.
The Company may suspend or reduce payments under the Servicing Plan at any
time, and payments are subject to the continuation of the Servicing Plan
described above and the terms of the Servicing Agreements. See the SAI for more
details on the Servicing Plan.
The Company understands that Agents may charge fees to their Customers who are
the owners of Investor C Shares for various services provided in connection
with a Customer's account. These fees would be in addition to any amounts
received by a Selling Agent under its Sales Support Agreement with Stephens or
by a Servicing Agent under its Servicing Agreement with the Company. The Sales
Support Agreements and Servicing Agreements require Agents to disclose to their
Customers any compensation payable to the Agent by Stephens or the Company and
any other compensation payable by the Customers for various services provided
in connection with their accounts. Customers should read this Prospectus in
light of the terms governing their accounts with their Agents.
The Adviser may also pay out of its own assets amounts to Stephens or other
broker/dealers in connection with the provision of administrative and/or
distribution related services to shareholders.
In addition, Stephens may, from time to time, at its expense or as an expense
for which it may be reimbursed under the Distribution Plan, pay a bonus or
other consideration or incentive to Agents who sell a minimum dollar amount of
shares of the LifeGoal Portfolios during a specified period of time. Stephens
may also, from time to time, pay additional consideration to Agents not to
exceed .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. Any such additional consideration or incentive program may
be terminated at any time by Stephens.
Stephens has also established a non-cash compensation program, pursuant to
which broker/dealers or financial institutions that sell shares of the LifeGoal
Portfolios may earn additional compensation in the form of trips to sales
seminars or vacation destinations, tickets to sporting events, theater or other
entertainment, opportunities to participate in golf or other outings and gift
certificates for meals or merchandise. This non-cash compensation program may
be amended or terminated at any time by Stephens.
How The LifeGoal Portfolios Value Their Shares
The net asset value of a share of each class is calculated by dividing the
total value of its assets, less liabilities, by the number of shares in the
class outstanding. Shares of the LifeGoal Portfolios are valued as of the close
of regular trading, on the Exchange (currently 4:00 p.m., Eastern time) on each
Business Day. In the event that the Exchange closes early, shares of the
LifeGoal Portfolios will
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<PAGE>
be priced as of the time the Exchange closes. Currently, the days on which the
Exchange is closed (other than weekends) are: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day (observed),
Independence Day, Labor Day, Thanksgiving and Christmas.
The Nations Funds determine their net asset value per share on a daily basis.
The net asset value of the LifeGoal Portfolio shares will be determined by
reference to the net asset value of the underlying Nations Fund.
How Dividends And Distributions Are Made; Tax Information
Dividends and Distributions
Each LifeGoal Portfolio declares and pays dividends from net investment income
quarterly. Each LifeGoal Portfolio's net realized capital gains (including net
short-term capital gains) are distributed at least annually. Distributions from
capital gains are made after applying any available capital loss carryovers.
Distributions paid by the LifeGoal Portfolios with respect to one class of
shares may be greater or less than those paid with respect to another class of
shares due to the different expenses of the different classes.
Investor C Shares of LifeGoal Portfolios are eligible to receive dividends when
declared, provided, however, that the purchase order for such shares is
received at least one day prior to the dividend declaration and such shares
continue to be eligible for dividends through and including the day before the
redemption order is executed.
The net asset value of Investor C Shares in LifeGoal Portfolios will be reduced
by the amount of any dividend or distribution. Accordingly, dividends and
distributions on newly purchased shares represent, in substance, a return of
capital. However, such dividends and distributions would nevertheless be
taxable. Certain Agents may provide for the reinvestment of dividends in the
form of additional Investor C Shares of the same class in the same LifeGoal
Portfolio. Dividends and distributions are paid in cash within five Business
Days of the end of the quarter to which the payment relates. Dividends and
distributions payable to a shareholder are paid in cash within five Business
Days after a shareholder's complete redemption of his/her Investor C Shares.
Tax Information
Each of the LifeGoal Portfolios intends to continue to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). In general, such qualification relieves a LifeGoal Portfolio of
liability for federal income tax to the extent all of its annual earnings are
distributed in accordance with the Code. Each LifeGoal Portfolio intends to
distribute substantially all of its earnings each taxable year.
Any distributions by a LifeGoal Portfolio of its net investment income
(including net foreign currency gains) and the excess, if any, of its net
short-term capital gain over its net long-term capital loss generally will be
taxable as ordinary income to shareholders whether such income is received in
cash or reinvested in additional shares.
Corporate shareholders in the LifeGoal Portfolios may be entitled to the
dividends-received deduction for distributions attributable to those underlying
funds investing in the stock of domestic corporations to the extent of the
total qualifying dividends received by the distributing fund.
Substantially all of the net realized long-term capital gains of the LifeGoal
Portfolios, if any, will be distributed at least annually to the LifeGoal
Portfolios' shareholders. The LifeGoal Portfolios will generally have no tax
liability with respect to such gains, and the distributions generally will be
taxable to shareholders as net capital gain, regardless of how long the
shareholders have held such LifeGoal Portfolios' shares and whether such gains
are received in cash or reinvested in additional shares.
29
<PAGE>
Noncorporate shareholders may be taxed on such distributions at preferential
rates.
Each year, shareholders will be notified as to the amount and federal tax
status of all dividends and capital gain distributions paid during the prior
year. Such dividends and distributions may also be subject to state and local
taxes.
Dividends and capital gain distributions declared in October, November or
December of any year payable to shareholders of record on a specified date in
such months will be deemed to have been received by shareholders and paid by a
LifeGoal Portfolio on December 31 of such year in the event such dividends and
distributions are actually paid during January of the following year.
Federal law requires the Company to withhold 31% from any capital gain
distributions paid by the Company and/or redemptions (including exchanges and
redemptions in-kind) to individual shareholders unless the shareholder properly
furnishes a certified, correct Taxpayer Identification Number and certifies
that withholding does not apply. Such withholding is also required if the
Internal Revenue Service notifies the Company that the Taxpayer Identification
Number provided by the shareholder is incorrect or that the shareholder is
otherwise subject to such withholding. Amounts withheld are applied to the
shareholder's federal tax liability, and a refund may be obtained from the
Internal Revenue Service if withholding results in overpayment of tax. Federal
law also requires the LifeGoal Portfolios to withhold tax on dividends paid to
certain foreign shareholders.
The foregoing discussion is based on tax laws and regulations that were in
effect as of the date of this Prospectus and summarizes only some of the
important tax considerations generally affecting the LifeGoal Portfolios and
their shareholders. It is not intended as a substitute for careful tax
planning. Accordingly, potential investors should consult their tax advisors
with specific reference to their own tax situations and with respect to
foreign, state and local taxes. Further tax information is contained in the
SAI.
30
<PAGE>
Financial Highlights
The following financial information has been derived from the audited financial
statements of the LifeGoal Portfolios. PricewaterhouseCoopers LLP is the
independent accountant to the LifeGoal Portfolios. The reports of
PricewaterhouseCoopers LLP for the most recent fiscal period of the LifeGoal
Portfolios accompany the financial statements for such period and are
incorporated by reference in the SAI, which is available upon request. For more
information see "Organization And History." Shareholders of the Portfolios will
receive unaudited semi-annual reports describing the Portfolios' investment
operations and annual financial statements audited by the Portfolios'
independent accountant.
FOR AN INVESTOR C SHARE OUTSTANDING THROUGHOUT EACH PERIOD
LifeGoal Growth Portfolio
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
Investor C Shares 03/31/98 03/31/97*
<S> <C> <C>
Operating performance:
Net asset value, beginning of period $ 10.15 $ 10.06
Net investment income/(loss) (0.02)(a) 0.11
Net realized and unrealized gain on investments 2.89 0.09
Net increase in net assets resulting from investment operations 2.87 0.20
Distributions:
Distributions from net investment income (0.01) (0.11)
Distributions in excess of net investment income (0.34) --
Distributions from net realized capital gains (0.21) --
Total distributions (0.56) (0.11)
Net asset value, end of period $ 12.46 $ 10.15
Total return++ 28.89% 2.01%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 342 $ 82
Ratio of operating expenses to average net assets+++ 1.09% 0.75%+
Ratio of net investment income/(loss) to average net assets (0.19)% 0.61%+
Portfolio turnover rate 69% 25%
</TABLE>
* LifeGoal Growth Portfolio Investor C Shares commenced investment operations
on October 2, 1996. Shares were offered to the public on October 15, 1996.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
Funds.
(a) Per share amounts have been calculated using the monthly average share
method, which more appropriately represents the per share data for the
period.
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<PAGE>
FOR AN INVESTOR C SHARE OUTSTANDING THROUGHOUT EACH PERIOD
LifeGoal Balanced Growth Portfolio
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
Investor C Shares 03/31/98 03/31/97*
<S> <C> <C>
Operating performance:
Net asset value, beginning of period $ 9.95 $ 10.05
Net investment income 0.23 (a) 0.19
Net realized and unrealized gain/(loss) on investments 1.78 (0.10)
Net increase/(decrease) in net assets resulting from investment operations 2.01 0.09
Distributions:
Distributions from net investment income (0.25) (0.19)
Distributions in excess of net investment income (0.29) --
Distributions from net realized capital gains (0.50) --
Total distributions (1.04) (0.19)
Net asset value, end of period $ 10.92 $ 9.95
Total return++ 21.10% 0.85%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 737 $ 18
Ratio of operating expenses to average net assets+++ 1.09% 0.75%+
Ratio of net investment income to average net assets 2.03% 3.44%+
Portfolio turnover rate 94% 1%
</TABLE>
* LifeGoal Balanced Growth Portfolio Investor C Shares commenced investment
operations on October 2, 1996. Shares were offered to the public on October
15, 1996.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
Funds.
(a) Per share amounts have been calculated using the monthly average share
method, which more appropriately represents the per share data for the
period.
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<PAGE>
FOR AN INVESTOR C SHARE OUTSTANDING THROUGHOUT EACH PERIOD
LifeGoal Income And Growth Portfolio
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
Investor C Shares 03/31/98 03/31/97*
<S> <C> <C>
Operating performance:
Net asset value, beginning of period $ 9.97 $ 10.03
Net investment income 0.36 (a) 0.31
Net realized and unrealized gain/(loss) on investments 0.89 (0.06)
Net increase in net assets resulting from investment operations 1.25 0.25
Distributions:
Distributions from net investment income (0.35) (0.31)
Distributions in excess of net investment income (0.10) --
Distributions from net realized capital gains (0.07) --
Total distributions (0.52) (0.31)
Net asset value, end of period $ 10.70 $ 9.97
Total return++ 12.83% 2.54%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 87 $ 1
Ratio of operating expenses to average net assets+++ 1.09% 0.75%+
Ratio of net investment income to average net assets 3.33% 5.84%+
Portfolio turnover rate 64% 2%
</TABLE>
* LifeGoal Income and Growth Portfolio Investor C Shares commenced investment
operations on October 2, 1996. Shares were offered to the public on October
15, 1996.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
Funds.
(a) Per share amounts have been calculated using the monthly average share
method, which more appropriately represents the per share data for the
period.
33
<PAGE>
LIFEGOAL FUNDS, INC.
STATEMENT OF ADDITIONAL INFORMATION
LIFEGOAL GROWTH PORTFOLIO
LIFEGOAL BALANCED GROWTH PORTFOLIO
LIFEGOAL INCOME AND GROWTH PORTFOLIO
INVESTOR A, INVESTOR B, INVESTOR C SHARES AND PRIMARY A AND PRIMARY B SHARES
AUGUST 1, 1998
This Statement of Additional Information ("SAI") provides supplementary
information pertaining to shares representing interests in the above listed
three investment portfolios of LifeGoal Funds, Inc. (individually, a "LifeGoal
Portfolio" and collectively, the "LifeGoal Portfolios"). This SAI is not a
prospectus and should be read only in conjunction with the current prospectuses
for the aforementioned LifeGoal Portfolios related to the class or series of
shares in which one is interested, dated August 1, 1998, for the Investor A,
Investor B, Investor C, Primary A and Primary B Shares (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 Funds c/o Stephens Inc., One NationsBank Plaza, 33rd
Floor, Charlotte, North Carolina 28255, or by calling Nations Funds at
1-800-982-2271.
<PAGE>
TABLE OF CONTENTS
Page
----
INTRODUCTION......................................................... 1
ADDITIONAL INFORMATION ON LIFEGOAL PORTFOLIO INVESTMENTS
General...................................................... 1
Fundamental Investment Limitations........................... 2
ADDITIONAL INFORMATION ON UNDERLYING NATIONS
FUNDS' INVESTMENTS................................................... 5
General...................................................... 5
When-Issued Securities....................................... 5
Foreign Currency Transactions................................ 6
Futures, Options and Other Derivative
Instruments................................................. 7
Risk Factors Associated with Futures and
Options Transactions........................................ 16
Interest Rate Transactions................................... 19
Asset-Backed Securities...................................... 20
Special Situations........................................... 24
Equity Swap Contracts........................................ 24
Lower Rated Debt Securities.................................. 25
Repurchase Agreements........................................ 26
Reverse Repurchase Agreements................................ 27
Securities Lending........................................... 27
Short Sales.................................................. 28
Guaranteed Investment Contracts.............................. 28
Illiquid Securities.......................................... 28
Commercial Instruments....................................... 29
Real Estate Investment Trusts................................ 29
NET ASSET VALUE...................................................... 29
Purchases and Redemptions.................................... 29
Investment Strategy.......................................... 30
Net Asset Value Determination................................ 30
Exchanges.................................................... 30
DESCRIPTION OF SHARES................................................ 31
Dividends and Distributions.................................. 31
ADDITIONAL INFORMATION CONCERNING TAXES.............................. 32
Qualification as a Regulated Investment
Company....................................................... 32
Excise Tax on Regulated Investment Companies.................. 33
Sale or Redemption of Shares.................................. 33
Tax Rates..................................................... 34
Foreign Shareholders.......................................... 34
Taxation of Nations Funds..................................... 35
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Effect of Future Legislation; Local Tax
Considerations.............................................. 35
DIRECTORS AND OFFICERS OF LIFEGOAL PORTFOLIOS......................... 35
Directors, Trustees and Officers of Underlying Nations Funds.. 40
Compensation Table............................................ 42
SECURITY HOLDERS...................................................... 43
INVESTMENT ADVISORY, ADMINISTRATION, CUSTODY,
TRANSFER AGENCY, SHAREHOLDER SERVICING, SHAREHOLDER
ADMINISTRATION AND DISTRIBUTION AGREEMENTS............................ 47
The Company and Its Common Stock.............................. 47
Investment Advisory Arrangements of the LifeGoal Portfolios... 47
Investment Advisory Arrangements of the Underlying Nations
Funds..........................................................50
Investment Styles............................................. 57
Administrator and Co-Administrator............................ 62
Distributor................................................... 64
Distribution Plans and Shareholder Servicing
Arrangements for Investor Shares............................. 65
Investor A Shares...................................... 65
Investor B Shares...................................... 66
Investor C Shares...................................... 67
Information Applicable to Investor A,
Investor B and Investor C Shares............................. 69
Shareholder Administration Plan
(Primary B Shares)........................................... 70
Expenses...................................................... 71
Transfer Agents and Custodians................................ 72
INDEPENDENT ACCOUNTANT AND REPORTS.................................... 72
COUNSEL............................................................... 73
Pending Legal Proceedings..................................... 73
ADDITIONAL INFORMATION ON PERFORMANCE................................. 73
Yield Calculations............................................ 74
Total Return Calculations..................................... 74
SCHEDULE A - Description of Ratings...................................A-1
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INTRODUCTION
LifeGoal Funds, Inc. (the "Company") is a diversified open-end management
investment company. The rules and regulations of the Securities and Exchange
Commission (the "SEC") require all mutual funds to furnish prospective investors
certain information concerning the activities of the mutual fund being
considered for investment. This information about the Company is included in
various Prospectuses. The Prospectuses relate to the shares of LifeGoal Growth
Portfolio, LifeGoal Balanced Growth Portfolio and LifeGoal Income and Growth
Portfolio (each a "LifeGoal Portfolio" and collectively, the "LifeGoal
Portfolios"). The Primary A and Primary B Shares are collectively referred to
herein as "Primary Shares" and the Investor A, Investor B and Investor C Shares
are collectively referred to as "Investor Shares." NationsBanc Advisors, Inc.
("NBAI") is the investment adviser to the LifeGoal Portfolios. TradeStreet
Investment Associates, Inc. ("TradeStreet") is investment sub-adviser. As used
herein the "Adviser" shall mean NBAI and/or TradeStreet as the context may
require.
Each LifeGoal Portfolio may (i) own more than 3% of the total outstanding
stock of a registered investment company which is a member of the Nations Funds
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 Funds Family.
Each LifeGoal Portfolio will concentrate more than 25% of its assets in the
mutual fund industry. However, each of the underlying mutual funds in which the
LifeGoal Portfolios will invest will not concentrate 25% or more of its total
assets in any one industry.
This SAI is intended to furnish prospective investors with additional
information concerning the Company and the LifeGoal Portfolios. Some of the
information required to be in this SAI is also included in the LifeGoal
Portfolios current Prospectuses, and, in order to avoid repetition, this SAI
will reference sections of the Prospectuses. Additionally, the Prospectuses and
this SAI omit certain information contained in "Part C" of the registration
statement filed with the SEC. Copies of the registration statement, including
items omitted from the Prospectuses and this SAI, may be obtained from the SEC.
ADDITIONAL INFORMATION ON THE LIFEGOAL PORTFOLIO INVESTMENTS
GENERAL
Information concerning each LifeGoal Portfolio's investment objective is
set forth in each of the Prospectuses under the headings "Prospectus Summary"
and "How Objectives Are Pursued". There can be no assurance that the LifeGoal
Funds will achieve their objectives. The principal features of the LifeGoal
Funds' investment programs and the primary risks associated with those
investment programs are discussed in the Prospectuses under the heading "How
Objectives Are Pursued". The principal features and certain risks of the
underlying Nations Funds are discussed in the Prospectuses under the heading
"Description of Underlying Nations Funds."
Under extraordinary circumstances, the LifeGoal Portfolios may invest 100%
of their assets in Nations Prime Fund. Such circumstances that would prompt a
shift in the allocation of assets for defensive purposes by the Adviser include
concerns about a precipitous decline in the net asset value of any of the
underlying Nations Funds or similar volatility in the Nasdaq National Market,
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.
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Although each LifeGoal Portfolio intends to invest substantially all of
its assets in underlying Nations Funds, each LifeGoal Portfolio reserves the
right to invest assets not so invested in government securities, repurchase
agreements and money market instruments.
FUNDAMENTAL INVESTMENT LIMITATIONS
Each LifeGoal Portfolio is subject to a number of investment limitations.
The following investment limitations are matters of fundamental policy and may
not be changed without the affirmative vote of the holders of a majority of the
LifeGoal Fund's outstanding shares.
Under the Investment Company Act of 1940, as amended ("1940 Act"), such
approval requires the affirmative vote, at a meeting of shareholders of a
LifeGoal Portfolio, of (i) at least 67% of the shares of the LifeGoal Portfolio
present at the meeting, if the holders of more than 50% of the outstanding
shares of the LifeGoal Portfolio are present in person or by represented proxy;
or (ii) more than 50% of the outstanding shares of the LifeGoal Portfolio,
whichever is less.
The LifeGoal Portfolios may not:
1. Borrow money or issue senior securities as defined in the 1940 Act except
that (a) a Portfolio may borrow money from banks for temporary or emergency
purposes in amounts up to one-third of the value of such Portfolio's total
assets at the time of borrowing, provided that borrowings in excess of 5% of
the value of such Portfolio's total assets will be repaid prior to the
purchase of additional portfolio securities by such Portfolio, (b) a
Portfolio may enter into commitments to purchase securities in accordance
with the Portfolio's investment program, including delayed delivery and
when-issued securities, which commitments may be considered the issuance of
senior securities, and (c) a Portfolio may issue multiple classes of shares
in accordance with SEC regulations or exemptions under the 1940 Act. The
purchase or sale of futures contracts and related options shall not be
considered to involve the borrowing of money or issuance of senior
securities.
2. Purchase any securities on margin (except for such short-term credits as
are necessary for the clearance of purchases and sales of portfolio
securities) or sell any securities short (except against the box.) For
purposes of this restriction, the deposit or payment by the Portfolio of
initial or maintenance margin connection with futures contracts and related
options and options on securities is not considered to be the purchase of a
security on margin.
3. Underwrite securities issued by any other person, except to the extent
that the purchase of securities and the later disposition of such securities
in accordance with the Portfolio's investment program may be deemed an
underwriting. This restriction shall not limit a Fund's ability to invest in
securities issued by other registered investment companies.
4. Invest in real estate or real estate limited partnership interests. (Each
Portfolio may, however, purchase and sell securities secured by real estate
or interests therein or issued by issuers which invest in real estate or
interests therein.) This restriction does not apply to real estate limited
partnerships listed on a national stock exchange (e.g., the New York Stock
Exchange).
5. Purchase or sell commodity contracts except that each Portfolio may, to
the extent appropriate under its investment policies, purchase publicly
traded securities of companies engaging in whole or in part in such
activities, may enter into futures contracts and related options, may engage
in transactions on a when-issued or forward commitment basis, and may enter
into forward currency contracts in accordance with its investment policies.
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6. Make loans, except that a Portfolio may purchase and hold debt instruments
(whether such instruments are part of a public offering or privately placed),
may enter into repurchase agreements and may lend portfolio securities in
accordance with its investment policies.
7. The LifeGoal Portfolios will be diversified and each Portfolio may not
purchase securities of any one issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities or
securities of other investment companies) if, immediately after such
purchase, more than 5% of the value of such Portfolio's total assets would be
invested in the securities of such issuer, except that up to 25% of the value
of the Portfolio's total assets may be invested without regard to these
limitations and with respect to 75% of such Portfolio's assets, such
Portfolio will not hold more than 10% of the voting securities of any issuer.
8. Each LifeGoal Portfolio will concentrate its investments in the securities
of other investment companies.
In addition, certain non-fundamental investment restrictions are also
applicable to the LifeGoal Portfolio, including the following:
1. No Portfolio of the Company will purchase or retain the securities of
any issuer if the officers, or directors of the Company, its advisers, or
managers owning beneficially more than one half of one percent of the
securities of each issuer together own beneficially more than five
percent of such securities.
2. No Portfolio of the Company will purchase securities of unseasoned
issuers, including their predecessors, that have been in operation for
less than three years, if by reason thereof the value of such Portfolio's
investment in such classes of securities would exceed 5% of such
Portfolio's total assets. For purposes of this limitation, issuers
include predecessors, sponsors, controlling persons, general partners,
guarantors and originators of underlying assets which have less than
three years of continuous operation or relevant business experience.
3. No Portfolio will purchase puts, calls, straddles, spreads and any
combination thereof if by reason thereof the value of its aggregate
investment in such classes of securities will exceed 5% of its total
assets except that: (a) this restriction shall not apply to standby
commitments, (b) this restriction shall not apply to a Portfolio's
transactions in futures contracts and related options, and (c) a
Portfolio may obtain short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities.
4. No Portfolio will invest in warrants, valued at the lower of cost or
market, in excess of 5% of the value of such Portfolio's assets, and no
more than 2% of the value of the Portfolio's net assets may be invested
in warrants that are not listed on principal domestic or foreign
exchanges (for purposes of this undertaking, warrants acquired by a
Portfolio in units or attached to securities will be deemed to have no
value).
5. No Portfolio of the Company will purchase securities of companies for
the purpose of exercising control.
6. No Portfolio of the Company will invest more than 15% of the value of
its net assets in illiquid securities, including repurchase agreements
with remaining maturities in excess of seven days, time deposits with
maturities in excess of seven days, restricted securities, and other
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securities which are not readily marketable. For purposes of this
restriction, illiquid securities shall not include securities which may
be resold under Rule 144A under the Securities Act of 1933 that the Board
of Directors, or its delegate, determines to be liquid, based upon the
trading markets for the specific security.
7. No Portfolio of the Company will mortgage, pledge or hypothecate any
assets except to secure permitted borrowings and then only in an amount
up to one-third of the value of the Portfolio's total assets at the time
of borrowing. For purposes of this limitation, collateral arrangements
with respect to the writing of options, futures contracts, options on
futures contracts, and collateral arrangements with respect to initial
and variation margin are not considered to be a mortgage, pledge or
hypothecation of assets.
8. No Portfolio of the Company will purchase oil, gas or mineral leases
or other interests (a Portfolio may, however, purchase and sell the
securities of companies engaged in the exploration, development,
production, refining, transporting and marketing of oil, gas or
minerals).
Notwithstanding the foregoing restrictions, the underlying mutual funds in
which LifeGoal Portfolios may invest have adopted their own investment
restrictions which may be more or less restrictive than those listed above,
thereby allowing a LifeGoal Portfolio to participate in certain investment
strategies indirectly that are prohibited under the fundamental and
non-fundamental investment restrictions listed above and in a LifeGoal Portfolio
Prospectus. The investment restrictions of these underlying mutual funds are set
forth in their respective statements of additional information.
ADDITIONAL INFORMATION ON UNDERLYING NATIONS FUNDS'
INVESTMENTS
GENERAL
Information concerning the investment objective and policies of each
underlying Nations Fund is set forth in each of their prospectuses under the
headings "Objectives," "How Objectives Are Pursued," and "Appendix A" and their
respective SAIs. As is the case with the LifeGoal Portfolios, there can be no
assurance that the underlying Nations Funds will achieve their objectives. The
principal features of the Nations Funds' investment programs and the primary
risks associated with those investment programs are discussed in their
prospectuses under the heading "How Objectives Are Pursued" and "Appendix A."
ASSET-BACKED SECURITIES
IN GENERAL. 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
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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 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 Fund may invest
may include those issued or guaranteed by GNMA, FNMA and 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
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 funds to pay debt service on the CMOs
or make scheduled distribution on the multi-class pass-through securities.
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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 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 obligations 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
in 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 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 refinancings, 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 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.
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The purchase of non-mortgage-backed securities raises considerations
peculiar to the 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.
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. The Nations Prime Fund will limit
purchases of commercial instruments to instruments which: (a) if rated by at
least two Nationally Rated Statistical Rating Organizations ("NRSROs"), are
rated in the highest rating category for short-term debt obligations given by
such organizations, or if only rated by one such organization, are rated in the
highest rating category for short-term debt obligations given by such
organization; or (b) if not rated, are (i) comparable in priority and security
to a class of short-term instruments of the same issuer that has such rating(s),
or (ii) of comparable quality to such instruments as determined by Nations Fund,
Inc.'s Board of Directors on the advice of the Adviser.
Investments by a Fund in commercial paper will consist of issues rated in
a manner consistent with such Fund's investment policies and objectives. In
addition, the 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 such Funds as previously
described.
Variable-rate master demand notes are unsecured instruments that permit
the indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate. While some of these notes are not rated by credit rating
agencies, issuers of variable rate master demand notes must satisfy the Adviser
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that similar criteria to that set forth above with respect to the issuers of
commercial paper purchasable by the Nations Prime Fund are met. Variable-rate
instruments acquired by a Fund will be rated at a level consistent with such
Fund's investment objective and policies of high quality as determined by a
major rating agency or, if not rated, will be of comparable quality as
determined by the Adviser.
Variable- and floating-rate instruments are unsecured instruments that
permit the indebtedness thereunder to vary. While there may be no active
secondary market with respect to a particular variable or floating rate
instrument purchased by a Fund, a Fund may, from time to time as specified in
the instrument, demand payment of the principal or may resell the instrument to
a third party. The absence of an active secondary market, however, could make it
difficult for a Fund to dispose of an instrument if the issuer defaulted on its
payment obligation or during periods when a Fund is not entitled to exercise its
demand rights, and a Fund could, for these or other reasons, suffer a loss. A
Fund may invest in variable and floating rate instruments only when the Adviser
deems the investment to involve minimal credit risk. If such instruments are not
rated, the Adviser will consider the earning power, cash flows, and other
liquidity ratios of the issuers of such instruments and will continuously
monitor their financial status to meet payment on demand. In determining average
weighted portfolio maturity, an instrument will be deemed to have a maturity
equal to the longer of the period remaining to the next interest rate adjustment
or the demand notice period specified in the instrument.
COMBINED TRANSACTIONS
Certain Funds may enter into multiple transactions, including multiple
options transactions, multiple futures transactions, multiple forward foreign
currency exchange contracts and any combination of futures, options and forward
foreign currency exchange contracts ("component" transactions), instead of a
single transaction, as part of a single hedging strategy when, in the opinion of
the Adviser, it is in the best interest of a Fund to do so and where underlying
hedging strategies are permitted by a Fund's investment policies. A combined
transaction, while part of a single hedging strategy, may contain elements of
risk that are present in each of its component transactions. (See above for the
risk characteristics of certain transactions.)
CONVERTIBLE SECURITIES
The Small Company Growth Fund may invest in convertible securities, such
as bonds, notes, debentures, preferred stocks and other securities that may be
converted into common stock. All convertible securities purchased by the Fund
will be rated in the top two categories by an Nationally Recognized Statistical
Rating Organization ("NRSRO") or, if unrated, determined by the Adviser to be of
comparable quality. Investments in convertible securities can provide income
through interest and dividend payments, as well as, an opportunity for capital
appreciation by virtue of their conversion or exchange features.
The convertible securities in which the Funds may invest include
fixed-income and zero coupon debt securities, and preferred stock that may be
converted or exchanged at a stated or determinable exchange ratio into
underlying shares of common stock. The exchange ratio for any particular
convertible security may be adjusted from time to time due to stock splits,
dividends, spin-offs, other corporate distributions or scheduled changes in the
exchange ratio. Convertible debt securities and convertible preferred stocks,
until converted, have general characteristics similar to both debt and equity
securities. Although to a lesser extent than with debt securities, generally,
the market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline. In
addition, because of the conversion exchange feature, the market value of
convertible securities typically changes as the market value of the underlying
common stock changes,
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and, therefore, also tends to follow movements in the general market for equity
securities. A unique feature of convertible securities is that as the market
price of the underlying common stock declines, convertible securities tend to
trade increasingly on a yield basis, and so may not experience market value
declines to the same extent as the underlying common stock. When the market
price of the underlying common stock increases, the price of a convertible
security tends to rise as a reflection of the value of the underlying common
stock, although typically not as much as the price of the underlying common
stock. While no securities investments are without risk, investments in
convertible securities generally entail less risk than investments in common
stock of the same issuer.
As debt securities, convertible securities are investments which provide
for a stream of income or, in the case of zero coupon securities, accretion of
income with generally higher yields than common stocks. Of course, like all debt
securities, there can be no assurance of income or principal payments because
the issuers of the convertible securities may default on their obligations.
Convertible securities generally offer lower yields than non-convertible
securities of similar quality because of their conversion exchange features.
Convertible securities generally are subordinated to other similar debt
securities but not to non-convertible securities of the same issuer. Convertible
bonds, as corporate debt obligations, are senior in right of payment to all
equity securities, and convertible preferred stock is senior to common stock, of
the same issuer. However, convertible bonds and convertible preferred stock
typically have lower coupon rates than similar non-convertible securities.
Convertible securities may be issued as fixed income obligations that pay
current income or as zero coupon notes and bonds, including Liquid Yield Option
Notes ("LYONs"). Zero coupon securities pay no cash income and are sold at
substantial discounts from their value at maturity. When held to maturity, their
entire income, which consists of accretion of discount, comes from the
difference between the issue price and their value at maturity. Zero coupon
convertible securities offer the opportunity for capital appreciation because
increases (or decreases) in the market value of such securities closely follow
the movements in the market value of the underlying common stock. Zero coupon
convertible securities generally are expected to be less volatile than the
underlying common stocks because they usually are issued with short maturities
(15 years or less) and are issued with options and/or redemption features
exercisable by the holder of the obligation entitling the holder to redeem the
obligation and receive a defined cash payment.
CORPORATE DEBT SECURITIES
Certain Funds may invest in corporate debt securities of domestic issuers
of all types and maturities, such as bonds, debentures, notes and commercial
paper. Corporate debt securities may involve equity features, such as conversion
or exchange rights or warrants for the acquisition of stock of the same or a
different issuer, participation based on revenue, sales or profit, or the
purchase of common stock or warrants in a unit transaction (where corporate debt
obligations and common stock are offered as a unit). Each Fund may also invest
in corporate debt securities of foreign issuers.
The corporate debt securities in which the Funds will invest will be rated
investment grade by at least one NRSRO (E.G., BBB or above by Standard & Poor's
Corporation ("S&P") or Baa or above by Moody's Investors Services, Inc.
("Moody's")). Commercial paper purchased by the Funds will be rated in the top
two categories by a NRSRO. Corporate debt securities that are not rated may be
purchased by such Funds if they are determined by the Adviser to be of
comparable quality under the direction of the Board of Directors of the Company.
If the rating of any corporate debt security held by a Fund falls below such
ratings or if the Adviser determines that an unrated corporate debt security is
no longer of comparable quality, then such security shall be disposed of in an
orderly manner as quickly as possible. A description of these ratings is
attached as an Appendix to this Statement of Additional Information.
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CUSTODIAL RECEIPTS
Certain Funds may also acquire custodial receipts that evidence ownership
of future interest payments, principal payments or both on certain U.S.
Government notes or bonds. Such notes and bonds are held in custody by a bank on
behalf of the owners. These custodial receipts are known by various names,
including "Treasury Receipts," "Treasury Investors Growth Receipts" and
"Certificates of Accrual on Treasury Securities." Although custodial receipts
are not considered U.S. Government securities, they are indirectly issued or
guaranteed as to principal and interest by the U.S. Government, its agencies,
authorities or instrumentalities. Custodial receipts will be treated as illiquid
securities.
DELAYED DELIVERY TRANSACTIONS
In a delayed delivery transaction, the Fund relies on the other party to
complete the transaction. If the transaction is not completed, the Fund may miss
a price or yield considered to be advantageous.
DOLLAR ROLL TRANSACTIONS
Certain Funds may enter into "dollar roll" transactions, which consist of
the sale by a Fund to a bank or broker/dealer (the "counterparty") of GNMA
certificates or other mortgage-backed securities together with a commitment to
purchase from the counterparty similar, but not identical, securities at a
future date, at the same price. The counterparty receives all principal and
interest payments, including prepayments, made on the security while it is the
holder. A Fund receives a fee from the counterparty as consideration for
entering into the commitment to purchase. Dollar rolls may be renewed over a
period of several months with a different repurchase price and a cash settlement
made at each renewal without physical delivery of securities. Moreover, the
transaction may be preceded by a firm commitment agreement pursuant to which the
Fund agrees to buy a security on a future date. Dollar roll transactions consist
of the sale by a fund of mortgage-backed or other asset-backed securities,
together with a commitment to purchase similar, but not identical, securities at
a future date, at the same price. In addition, a Fund is paid a fee as
consideration for entering into the commitment to purchase. If the broker/dealer
to whom a Fund sells the security becomes insolvent, the Fund's right to
purchase or repurchase the security may be restricted; the value of the security
may change adversely over the term of the dollar roll; the security that the
Fund is required to repurchase may be worth less than the security that the Fund
originally held, and the return earned by the Fund with the proceeds of a dollar
roll may not exceed transaction costs.
The entry into dollar rolls involves potential risks of loss that are
different from those related to the securities underlying the transactions. For
example, if the counterparty becomes insolvent, the Fund's right to purchase
from the counterparty might be restricted. Additionally, the value of such
securities may change adversely before the Fund is able to purchase them.
Similarly, the Fund may be required to purchase securities in connection with a
dollar roll at a higher price than may otherwise be available on the open
market. Since, as noted above, the counterparty is required to deliver a
similar, but not identical security to the Fund, the security that the Fund is
required to buy under the dollar roll may be worth less than an identical
security. Finally, there can be no assurance that the Fund's use of the cash
that it receives from a dollar roll will provide a return that exceeds borrowing
costs.
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 Fund the amount, if any, by which the notional amount
of the Equity Swap Contract would have increased in value had it been
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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 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 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 Fund on the notional amount. A Fund will
only enter into Equity Swap Contracts on a net basis, i.e., the two parties'
obligations are netted out, with the 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
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 Fund will succeed in pursuing
contractual remedies. A 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 Fund will closely monitor the credit of Equity Swap Contract counterparties in
order to minimize this risk.
Certain Funds may from time to time enter into the opposite side of Equity
Swap Contracts (i.e., where a 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 Fund's equity market exposure consistent with the Fund's
objective. These positions are sometimes referred to as Reverse Equity Swap
Contracts.
Equity Swap Contracts will not be used to leverage a Fund. A 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 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 Fund owns would exceed 15% of the Fund's total
assets.
The Adviser does not believe that a Fund's obligations under Equity Swap
Contracts or Reverse Equity Swap Contracts are senior securities and,
accordingly, the Fund will not treat them as being subject to its borrowing
restrictions. However, the net amount of the excess, if any, of a 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 Fund's custodian.
FOREIGN CURRENCY TRANSACTIONS
As described in the Prospectuses, certain 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 Fund may purchase or sell forward foreign currency exchange
contracts ("forward contracts") to attempt to minimize the risk to the Fund from
adverse changes in the relationship between the U.S. dollar and foreign
currencies. A Fund may also 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
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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 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 Fund's portfolio securities
or in foreign exchange rates, or prevent loss if the prices of these securities
should decline.
A Fund may enter into a forward contract, for example, when it enters 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, it may enter
into a forward sale contract to sell an amount of that foreign currency
approximating the value of some or all of the 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, it may enter into a
forward purchase contract to buy that foreign currency for a fixed dollar amount
(a "position hedge").
A Fund may, however, 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 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 Fund's custodian will segregate cash, U.S. Government securities or
other high-quality debt securities having a value equal to the aggregate amount
of the 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 Fund's
commitments with respect to such contracts. As an alternative to segregating all
or part of such securities, the Fund may purchase a call option permitting the
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 Fund may
purchase a put option permitting the 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.
The Funds are dollar-denominated mutual funds and therefore consideration
is given to hedging part or all of the portfolio back to U.S. dollars from
international currencies. All decisions to hedge are based upon an analysis of
the relative value of the U.S. dollar on an international purchasing power
parity
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basis (purchasing power parity is a method for determining the relative
purchasing power of different currencies by comparing the amount of each
currency required to purchase a typical bundle of goods and services to domestic
markets) and an estimation of short-term interest rate differentials (which
affect both the direction of currency movements and also the cost of hedging).
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 equity
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, 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 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.
While futures contracts based on securities do provide for the delivery
and acceptance of securities, such deliveries and acceptances are seldom made.
Generally, a futures contract is terminated by entering into an offsetting
transaction. A Fund will incur brokerage fees when it purchases and sells
futures contracts. At the time such a purchase or sale is made, a 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 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. As noted
in their respective Prospectuses, certain Funds may enter into transactions in
futures contracts for the purpose of hedging a relevant portion of their
portfolios. A Fund may enter into transactions in futures contracts that are
based on 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 Fund. For example, a 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 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 Fund could protect against such decline by
selling fixed income securities, but such a strategy would involve higher
transaction
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costs than the sale of futures contracts and, if interest rates again declined,
the 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 the
above-referenced Funds, which hold or intend to acquire long-term debt
securities, is to protect a 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 Fund, and interest rates were expected to increase, the 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 Fund. If interest rates did increase, the value of the debt
securities in the Fund would decline, but the value of the futures contracts to
the Fund would increase at approximately the same rate thereby keeping the net
asset value of the Fund from declining as much as it otherwise would have. When
a Fund is not fully invested and a decline in interest rates is anticipated,
which would increase the cost of fixed income securities that the 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 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 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 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 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 Fund to act in anticipation of such an interest
rate decline without having to sell its portfolio securities. To the extent a
Fund enters into futures contracts for this purpose, the segregated assets
maintained by a Fund will consist of cash, cash equivalents or high quality debt
securities of the Fund in an amount equal to the difference between the
fluctuating market value of such futures contract and the aggregate value of the
initial deposit and variation margin payments made by the Fund with respect to
such futures contracts.
STOCK INDEX FUTURES CONTRACTS. As described in the Prospectuses, certain
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 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 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 Fund may utilize stock index futures contracts in
anticipation of changes in the composition of its portfolio. For example, in the
event that a 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 Fund's futures positions would be closed out. A Fund may also
sell futures contracts in connection with this strategy, in order to
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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. As described in the Prospectuses, an option
on a futures contract gives the purchaser (the "holder") the right, but not the
obligation, to purchase a 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. As described in the Prospectuses, certain Funds may purchase put
options on futures contracts in which such 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 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. As described in the Prospectuses, certain Funds
may purchase put options on stock index futures contracts, stock indices or
equity securities for the purpose of hedging the relevant portion of their
portfolio securities against an anticipated market-wide decline or against
declines in the values of individual portfolio securities, and they may purchase
call options on such futures contracts as a hedge against a market advance when
they are not fully invested. A Fund would write options on such futures
contracts primarily for the purpose of terminating 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 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 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 Fund would receive a fee, or a "premium," for the writing of
the option. For example, where the 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 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 Fund could sustain a loss on
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the transaction that may not be offset by the premium received. In addition, a
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 the Fund 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 Fund or an increase in the price of
securities that it plans to purchase for the Fund. Expenses and losses incurred
as a result of such hedging strategies will reduce the Fund's current return. A
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
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
options as set forth in CFTC Rule 32.4, a Fund will not make these investments.
The ability of a 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 Fund will be able to utilize these instruments effectively
for the purposes stated below. Furthermore, a Fund's ability to engage in
options and futures transactions may be limited by tax considerations. Although
a 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 Fund
will not engage in options and futures transactions leveraging purposes.
WRITING COVERED OPTIONS ON SECURITIES. A Fund may write covered call
options and covered put options on securities 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 Fund give the holder the right to buy
the underlying securities from a Fund at a stated exercise price; put options
give the holder the right to sell the underlying security to the Fund at a
stated price.
A Fund may write only covered options, which means that, so long as the
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 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 Fund may also write combinations of covered puts and calls on the
same underlying security.
A Fund will receive a premium from writing a put or call option, which
increases the 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 of the
market price of the underlying security. By writing a call option, a 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 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.
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A 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 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 Fund.
PURCHASING PUT AND CALL OPTIONS ON SECURITIES. A Fund 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 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 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.
A Fund 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 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 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. A Fund 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 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 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 Fund's
index option or futures contract resulting from the increase in the
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index. If, on the other hand, the Adviser expects general stock market prices to
decline, a 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 Fund may also be expected to decline, but that decrease
would be offset in part by the increase in the value of the Fund's position in
such put option or futures contract.
PURCHASE AND SALE OF INTEREST RATE FUTURES. A Fund may purchase and sell
interest rate futures contracts on foreign government securities including, but
not limited to, debt securities of the governments and central banks of France,
Germany, Denmark and Japan for the purpose of hedging fixed income and interest
sensitive securities against the adverse effects of anticipated movements in
interest rates.
A 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 Fund will fall,
thus reducing the net asset value of the 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 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
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 Fund's
investments that are being hedged. While a 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. A Fund may purchase and write call and put options on non-U.S. stock
index and interest rate futures contracts. A 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 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 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 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, a Fund
may buy or sell currency futures contracts and related options. If a fall in
exchange rates for a particular currency is anticipated, a 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 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 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 Fund will be covered.
A currency futures contract sale creates an obligation by a Fund, as
seller, to deliver the amount of currency called for in the contract at a
specified future time for a special price. A currency futures contract purchase
creates an obligation by a Fund, as purchaser, to take delivery of an amount of
currency
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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 Fund will write (sell) only covered put and call options on currency
futures. This means that a 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 Fund will, so long as it is obligated as the
writer of 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 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 Fund falls below 100% of the market value of the call written by
the Fund, a 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 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 Fund. In the case of put options on currency futures written by the Fund,
the Fund will hold the aggregate exercise price in cash, Treasury bills, or
other high grade short-term 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 put written and the
market value of the puts purchased or the currency futures sold maintained by a
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 Fund
falls below 100% of the market value of the put options written by the Fund, a
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 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 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 Fund's assets. The Adviser
intends to limit a Fund's writing of over-the-counter options in accordance with
the following procedure. Each 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 Fund has in place with
such primary dealers will provide that the 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 Fund for writing the option,
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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 Fund will treat all or a
part of the formula price as illiquid for purposes of the 15% test imposed by
the SEC staff.
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 Fund may make
cash contributions to a deposit fund of the insurance company's general or
separate accounts. The insurance company then credits to a Fund guaranteed
interest. 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 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.
A Fund will only purchase GICs from issuers which, at the time of
purchase, meet quality and credit standards established by the Adviser.
Generally, GICs are not assignable or transferable without the permission of the
issuing insurance companies, and an active secondary market in GICs does not
currently exist. Also, a 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.
A Money Market Fund will acquire GlCs so that they, together with other
instruments in such Fund's portfolio which are not readily marketable, will not
exceed applicable limitations on such Fund's investments in illiquid securities.
A Money Market Fund will restrict its investments in GlCs to those having a term
of 397 days or less. In determining average weighted portfolio maturity, a GIC
will be deemed to have a maturity equal to the period of time remaining under
the next readjustment of the guaranteed interest rate.
ILLIQUID SECURITIES
Certain of the Funds may invest up to 15% of their net assets, 10% with
respect to Nations Prime Fund, 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.
INTEREST RATE TRANSACTIONS
Among the strategic transactions into which a Fund may enter are interest
rate swaps and the purchase or sale of related caps and floors. The 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 Fund anticipates purchasing at a later
date. A 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 Fund may be
obligated to pay. Interest rate swaps involve the exchange by a 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
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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 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 Fund receiving or paying, as the case may
be, only the net amount of the two payments. In as much as these swaps, caps and
floors are entered into for good faith hedging purposes, the Adviser and the
Fund believe such obligations do not constitute senior securities under the
Investment Company Act of 1940 (the "1940 Act") and, accordingly, will not treat
them as being subject to its borrowing restrictions. A 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 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 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 Fund's net obligation, if any.
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 Fund's portfolio, with a commensurate effect
on the value of the Fund's shares. Therefore, an investment in the Fund should
not be considered as a complete investment program and may not be appropriate
for all investors.
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,
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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 may buyers. Each Fund's
policies regarding lower rated debt securities is not fundamental and may 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 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 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 Fund. If an issuer exercises these rights during periods of declining
interest rates, a Fund may have to replace the security with a lower yielding
security, thus resulting in a decreased return to a 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.
OTHER INVESTMENT COMPANIES
In seeking to attain their investment objectives, the Funds may invest in
securities issued by other investment companies within the limits prescribed by
the 1940 Act. Each Fund currently intends to limit its investments so that, as
determined immediately after a securities purchase is made: (a) not more than 5%
of the value of its total assets will be invested in the securities of any one
investment company; (b) not more than 10% of the value of its total assets will
be invested in the aggregate in securities of investment companies as a group;
and (c) not more than 3% of the outstanding voting stock of any one investment
company will be owned by the Fund or by the Company as a whole. As a shareholder
of another investment company, a Fund would bear, along with other shareholders,
its pro rata portion of the other investment company's expenses, including
Advisory fees. These expenses would be in addition to the Advisory and other
expenses that a Fund bears in connection with its own operations. The Adviser
has agreed to remit to the respective investing Fund fees payable to it under
its respective Investment
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Advisory Agreement with an affiliated money market Fund to the extent such fees
are based upon the investing Fund's assets invested in shares of the affiliated
money market fund.
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.
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 or 1986, as amended.
REPURCHASE AGREEMENTS
The repurchase price under the repurchase agreements described in the
Prospectuses generally equals the price paid by a Fund plus interest negotiated
on the basis of current short-term rates (which may be more or less than the
rate on the securities underlying the repurchase agreement). Securities subject
to repurchase agreements will be held by the Trust's custodian, or a
sub-custodian, in a segregated account or in the Federal Reserve/Treasury
book-entry system. Repurchase agreements are considered to be loans by the Trust
under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS
At the time a 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 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 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 Funds'
obligation to repurchase the securities. Reverse repurchase agreements are
speculative techniques involving leverage, and are subject to asset coverage
requirements if the Funds do not establish and maintain a segregated account (as
described above). In addition, some or all of the proceeds received by a 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 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 Funds' asset coverage and other factors at the time of a reverse repurchase,
the Funds may not establish a segregated account when the Adviser believes it is
not in the best interests of the Funds to do so. In this case, such reverse
repurchase agreements will be considered borrowings subject to the asset
coverage described above.
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RISK FACTORS ASSOCIATED WITH FUTURES AND OPTIONS TRANSACTIONS
The effective use of options and futures strategies depends on, among
other things, a Fund's ability to terminate options and futures positions at
times when its the Adviser deems it desirable to do so. Although a Fund 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 Fund will be able to effect closing transactions at any particular time
or at an acceptable price. A 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 Fund may purchase and sell
options in the over-the-counter market. A 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 Fund.
Options and futures markets can be highly volatile and transactions of
this type carry a 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 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 the
Funds' futures and options transactions.
RISK OF IMPERFECT CORRELATION. A 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 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 Fund might not be successful and the 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
fund securities. In such instances, a 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 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
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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 Fund will not be able to establish hedging
positions, or that any hedging strategy adopted will be insufficient to
completely protect the Fund.
A Fund will purchase or sell futures contracts or options only if, in the
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 Fund's portfolio for the hedge to be effective.
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 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 a Fund 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 Fund, which could require the 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 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 Fund's overall performance may be poorer than if
it had not entered into any such contract. For example, if a 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 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 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.
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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 strategies
regarding the Funds' investments.
REGULATIONS ON THE USE OF FUTURES AND OPTIONS CONTRACTS. Regulations of
the CFTC require that the 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 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 Fund, and accrued profits on such positions. In addition, a 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
Fund's total assets.
When a Fund purchases a futures contract, an amount of cash or cash
equivalents or high quality debt securities will be segregated with the 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 Funds' ability to engage in the hedging transactions described herein
may be limited by the current federal income tax requirement that a 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 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.
SECURITIES LENDING
To increase return on portfolio securities, certain of the 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 Fund involved exceeds 33% 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. Pursuant to the securities loan agreement a Fund is able to
terminate the securities loan upon notice of not more than five business days
and thereby secure the return to the Fund of securities identical to the
transferred securities upon termination of the loan.
SHORT SALES
As described in the Prospectuses, certain Funds may from time to time
enter into short sales transactions. A Fund will not make short sales of
securities nor maintain a short position unless at all
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times when a short position is open, such 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 Fund for the purpose of
deferring recognition of gain or loss for federal income tax purposes.
SPECIAL SITUATIONS
As described in the Prospectuses, certain 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.
STRIPPED SECURITIES
Certain of the Funds may purchase stripped securities issued or guaranteed
by the U.S. Government, where the principal and interest components are traded
independently under the Separate Trading of Registered Interest and Principal of
Securities program ("STRIPS"). Under STRIPS, the principal and interest
components are individually numbered and separately issued by the U.S. Treasury
at the request of depository financial institutions, which then trade the
component parts independently.
In addition, the Fund may purchase stripped mortgage-backed securities
("SMBS") issued by the U.S. Government (or a U.S. Government agency or
instrumentality) or by private issuers such as banks and other institutions. If
the underlying obligations experience greater than anticipated prepayments of
principal, the Fund may fail to fully recover its initial investment. The market
value of the class consisting entirely of principal payments can be extremely
volatile in response to changes in interest rates. The yields on a class of SMBS
that receives all or most of the interest are generally higher than prevailing
market yields on other mortgage-backed obligations because their cash flow
patterns are also volatile and there is a greater risk that the initial
investment will not be full recovered. SMBS issued by the U.S. Government (or a
U.S. Government agency or instrumentality) may be considered liquid under
guidelines established by the Company's Board of Directors if they can be
disposed of promptly in the ordinary course of business at a value reasonably
close to that used in the calculation of the Fund's per share net asset value.
Although stripped securities may not pay interest to holders prior to
maturity, Federal income tax regulations require a Fund to recognize as interest
income a portion of the bond's discount each year. This income must then be
distributed to shareholders along with other income earned by the Fund. To the
extent that any shareholders in the Fund elect to receive their dividends in
cash rather than reinvest such dividends in additional Fund shares, cash to make
these distributions will have to be provided from the assets of the Fund or
other sources such as proceeds of sales of Fund shares and/or sales of portfolio
securities. In such cases, the Fund will not be able to purchase additional
income producing securities with cash used to make such distributions and its
current income may ultimately be reduced as a result.
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U.S. AND FOREIGN BANK OBLIGATIONS
These obligations include negotiable certificates of deposit, banker's
acceptances and fixed time deposits. Each Fund limits its investments in
domestic bank obligations to banks having total assets in excess of $1 billion
and subject to regulation by the U.S. Government. Each Fund may also invest in
certificates of deposit issued by members of the Federal Deposit Insurance
Corporation ("FDIC") having total assets of less than $1 billion, provided that
the Fund will at no time own more than $100,000 principal amount of certificates
of deposit (or any higher principal amount which in the future may be fully
covered by FDIC insurance) of any one of those issuers. Fixed time deposits are
obligations which are payable at a stated maturity date and bear a fixed rate of
interest. Generally, fixed time deposits may be withdrawn on demand by a Fund,
but they may be subject to early withdrawal penalties which vary depending upon
market conditions and the remaining maturity of the obligation. Although fixed
time deposits do not have a market, there are no contractual restrictions on a
Fund's right to transfer a beneficial interest in the deposit to a third party.
Each Fund limits its investments in foreign bank obligations (i.e.,
obligations of foreign branches and subsidiaries of domestic banks, and domestic
and foreign branches and agencies of foreign banks) to obligations of banks
which at the time of investment are branches or subsidiaries of domestic banks
which meet the criteria in the preceding paragraphs or are branches or agencies
of foreign banks which (i) have more than $10 billion, or the equivalent in
other currencies, in total assets; (ii) in terms of assets are among the 75
largest foreign banks in the world; (iii) have branches or agencies in the
United States; and (iv) in the opinion of the Adviser, pursuant to the
established by the Board of Directors of the Company, are of an investment
quality comparable to obligations of domestic banks which may be purchased by a
Fund. These obligations may be general obligations of the parent bank in
addition to the issuing branch or subsidiary, but the parent bank's obligations
may be limited by the terms of the specific obligation or by governmental
regulation. Each Fund also limits its investments in foreign bank obligations to
banks, branches and subsidiaries located in Western Europe (United Kingdom,
France, Germany, Belgium, The Netherlands, Italy and Switzerland), Scandinavia
(Denmark and Sweden), Australia, Japan, the Cayman Islands, the Bahamas and
Canada. Each Fund will limit its investment in securities of foreign banks to
not more than 20% of total assets at the time of investment.
Each Fund may also make interest-bearing savings deposits in commercial
and savings banks in amounts not in excess of 5% of the total assets of the
Fund.
U.S. GOVERNMENT OBLIGATIONS
Each Fund may invest in U.S. Government obligations. Examples of the types
of U.S. Government obligations that may be held by the Funds include, in
addition to U.S. Treasury bonds, notes and bills, the obligations of the Federal
Home Loan Banks, Federal Farm Credit Banks, Federal Land Banks, Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage Association,
Federal National Mortgage Association, General Services Administration, Student
Loan Marketing Association, Central Bank for Cooperatives, Federal Home Loan
Mortgage Corporation, Federal Intermediate Credit Banks, Tennessee Valley
Authority, Resolution Funding Corporation and Maritime Administration.
Obligations guaranteed as to principal or interest by the U.S. Government, its
agencies, authorities or instrumentalities are deemed to include: (a) securities
for which the payment of principal and interest is backed by an irrevocable
letter of credit issued by the U.S. Government, its agencies, authorities or
instrumentalities and (b) participations in loans made to foreign governments or
their agencies that are so guaranteed. The secondary market for certain of these
participations is limited. If such participations are illiquid they will not be
purchased.
28
<PAGE>
U.S. Government obligations include principal and interest components of
securities issued or guaranteed by the U.S. Treasury if the components are
traded independently under the Separate Trading of Registered Interest and
Principal of Securities program. Obligations issued or guaranteed as to
principal or interest by the U.S. Government, its agencies, authorities or
instrumentalities may also be acquired in the form of custodial receipts. These
receipts evidence ownership of future interest payments, principal payments or
both on certain notes or bonds issued by the U.S. Government, its agencies,
authorities or instrumentalities.
USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS
Options, futures and forward foreign currency contracts that obligate a
Fund to provide cash, securities or currencies to complete such transactions
will entail that Fund to either segregate assets in an account with, or on the
books of, the Company's custodian, or otherwise "covering" the transaction as
described below. For example, a call option written by a Fund will require the
Fund to hold the securities subject to the call (or securities convertible into
the needed securities without additional consideration) or liquid assets
sufficient to meet the obligation by purchasing and delivering the securities if
the call is exercised. A call option written on an index will require that Fund
to have portfolio securities that correlate with the index. A put option written
by a Fund also will require that Fund to have available assets sufficient to
purchase the securities the Fund would be obligated to buy if the put is
exercised.
A forward foreign currency contract that obligates a Fund to provide
currencies will require the Fund to hold currencies or liquid securities
denominated in a foreign currency which will equal the Fund's obligations. Such
a contract requiring the purchase of currencies also requires segregation.
Unless a segregated account consists of the securities, cash or currencies
that are the subject of the obligation, a Fund will hold cash, U.S. Government
securities and other high grade liquid debt obligations in a segregated account.
These assets cannot be transferred while the obligation is outstanding unless
replaced with other suitable assets. In the case of an index-based transaction,
a Fund could own securities substantially replicating the movement of the
particular index.
In the case of a futures contract, a Fund must deposit initial margin and
variation margin, as often as daily, if the position moves adversely, sufficient
to meet its obligation to purchase or provide securities or currencies, or to
pay the amount owed at the expiration of an index-based futures contract.
Similarly, options on futures contracts require a Fund to deposit margin to the
extent necessary to meet the Fund's commitments.
In lieu of such assets, such transactions may be covered by other means
consistent with applicable regulatory policies. A Fund may enter into
off-setting transactions so that its combined position, coupled with any
segregated assets, equals its net outstanding obligation in related options and
hedging transactions. For example, a Fund could purchase a put option if the
strike price of that option is the same or higher than the strike price of a put
option sold by that Fund. Moreover, instead of segregating assets if a Fund held
a futures or forward contract, it could purchase a put option on the same
futures or forward contract with a strike price as high or higher than the price
of the contract held. Of course, the off-setting transaction must terminate at
the time of or after the primary transaction.
VARIABLE- AND FLOATING-RATE INSTRUMENTS
The Funds may purchase variable-rate and floating rate obligations as
described in the Prospectuses. If such instrument is not rated, the Adviser will
consider the earning power, cash flows,
29
<PAGE>
and other liquidity ratios of the issuers and guarantors of such obligations
and, if the obligation is subject to a demand feature, will monitor their
financial status to meet payment on demand. In determining average weighted
portfolio maturity, a variable-rate demand instrument issued or guaranteed by
the U.S. Government or an agency or instrumentality thereof will be deemed to
have a maturity equal to the period remaining until the obligations next
interest rate adjustment. Other variable-rate obligations will be deemed to have
a maturity equal to the longer of the period remaining to the next interest rate
adjustment or the time a Fund can recover payment of principal as specified in
the instrument. Variable-rate demand notes held by a Money Market Fund may have
maturities of more than 397 days, provided (i) the Fund is entitled to payment
principal on not more than 30 days' notice, or at specified intervals not
exceeding 397 days (upon not more than 30 days' notice), and (ii) the rate of
interest on such note is adjusted automatically at periodic intervals which may
extend up to 397 days.
The variable- and-floating rate demand instruments that the Funds may
purchase include participations in Municipal Securities purchased from and owned
by financial institutions, primarily banks. Participation interests provide a
Fund with a specified undivided interest (up to 100%) in the underlying
obligation and the right to demand payment of the unpaid principal balance plus
accrued interest on the participation interest from the institution upon a
specified number of days' notice, not to exceed 30 days. Each participation
interest is backed by an irrevocable letter of credit or guarantee of a bank
that the Adviser has determined meets the prescribed quality standards for the
Funds. The bank typically retains fees out of the interest paid on the
obligation for servicing the obligation, providing the letter of credit, and
issuing the repurchase commitment.
WARRANTS
The Funds are permitted to invest in warrants. Warrants are privileges
issued by corporations enabling the owner to subscribe to and purchase a
specified number of shares of the corporation at a specified price during a
specified period of time. The prices of warrants do not necessarily correlate
with the prices of the underlying securities. The purchase of warrants involves
the risk that the purchaser could lose the purchase value of the warrant if the
right to subscribe to additional shares is not exercised prior to the warrant's
expiration. Also, the purchase of warrants involves the risk that the effective
price paid for the warrant added to the subscription price of the related
security may exceed the value of the subscribed security's market price such as
when there is no movement in the level of the underlying security.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS
A Fund may agree to purchase securities on a when-issued basis or enter
into a forward commitment to purchase securities. When a Fund engages in these
transactions, its custodian will segregate cash, U.S. government securities or
other high quality debt obligations equal to the amount of the commitment.
Normally, the custodian will segregate portfolio securities to satisfy a
purchase commitment, and in such a case a Fund may be required subsequently to
segregate additional assets in order to ensure that the value of the segregated
assets remains equal to the amount of the Fund's commitment. Because a Fund will
segregate cash or liquid assets to satisfy its purchase commitments in the
manner described, the Fund's liquidity and ability to manage its portfolio might
be adversely affected in the event its commitments to purchase when-issued
securities ever exceeded 25% of the value of its assets. In the case of a
forward commitment to sell portfolio securities, the Fund's custodian will hold
the portfolio securities themselves in a segregated account while the commitment
is outstanding.
A Fund will make commitments to purchase securities on a when-issued basis
or to purchase or sell securities on a forward commitment basis only with the
intention of completing the transaction and
30
<PAGE>
actually purchasing or selling the securities. If deemed advisable as a matter
of investment strategy, however, a Fund may dispose of or renegotiate a
commitment after it is entered into, and may sell securities it has committed to
purchase before those securities are delivered to the Fund on the settlement
date. In these cases the Fund may realize a capital gain or loss.
When a Fund engages in when-issued and forward commitment transactions, it
relies on the other party to consummate the trade. Failure of such party to do
so may result in the Fund's incurring a loss or missing an opportunity to obtain
a price considered to be advantageous.
The value of the securities underlying a when-issued purchase or a forward
commitment to purchase securities, and any subsequent fluctuations in their
value, is taken into account when determining the net asset value of a Fund
starting on the date the Fund agrees to purchase the securities. The Fund does
not earn dividends on the securities it has committed to purchase until they are
paid for and delivered on the settlement date. When the Fund makes a forward
commitment to sell securities it owns, the proceeds to be received upon
settlement are included in the Fund's assets. Fluctuations in the value of the
underlying securities are not reflected in the Fund's net asset value as long as
the commitment remains in effect.
NET ASSET VALUE
PURCHASES AND REDEMPTIONS
See "How To Buy Shares" and "How To Redeem Shares" in the Prospectuses for
a complete description of the manner in which Shares of the various classes of
the LifeGoal Portfolios may be purchased and redeemed.
The LifeGoal Portfolios are available for a variety of retirement plans,
including IRAs, that allow investors to shelter some of their income from taxes.
Investors should contact the LifeGoal Portfolios or their Selling Agents for
details concerning retirement plans.
The right of redemption may be suspended or the date of payment postponed
when (a) trading on the New York Stock Exchange is restricted, as determined by
applicable rules and regulations of the SEC, (b) the New York Stock Exchange is
closed for other than customary weekend and holiday closings, (c) the SEC has by
order permitted such suspension, or (d) an emergency as determined by the SEC
exists making disposal of portfolio securities or the valuation of the net
assets of a LifeGoal Portfolio of the Company not reasonably practicable.
INVESTMENT STRATEGY
Investing the same dollar amount at regular intervals is an investment
strategy known as Dollar Cost Averaging. Using this strategy, investors purchase
a greater number of shares when a LifeGoal Portfolio's price is low and fewer
shares when the price is high. As a result, the average purchase price for
shares will be less than their average cost. Dollar Cost Averaging does not
provide assurance of making a profit or any guarantee against loss in
continually declining markets. Investors should evaluate whether they are able
to make regular investments through periods of declining price levels before
deciding to use this investment technique.
EXPENSE RATIOS FOR UNDERLYING NATIONS FUNDS (PRIMARY A SHARES)
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<PAGE>
The following table provides the annualized expense ratios for Primary A Shares
of each of the selected underlying Nations Funds for its fiscal period ended
March 31, 1998.
- ----------------------------------------------------------------------------
(before fee
(after fee waivers
waivers and/or and/or
expense expense
reimbursements) reimbursements)
- ----------------------------------------------------------------------------
Nations Disciplined Equity Fund
- ----------------------------------------------------------------------------
Nations Capital Growth Fund
- ----------------------------------------------------------------------------
Nations Value Fund
- ----------------------------------------------------------------------------
Nations Small Company Growth Fund
- ----------------------------------------------------------------------------
Nations Marsico Focused Equities Fund
- ----------------------------------------------------------------------------
Nations Marsico Growth & Income Fund
- ----------------------------------------------------------------------------
Nations Equity Income Fund
- ----------------------------------------------------------------------------
Nations Managed Index Fund
- ----------------------------------------------------------------------------
Nations Emerging Growth Fund
- ----------------------------------------------------------------------------
Nations Managed SmallCap Index Fund
- ----------------------------------------------------------------------------
Nations International Equity Fund
- ----------------------------------------------------------------------------
Nations International Value Fund
- ----------------------------------------------------------------------------
Nations Pacific Growth Fund
- ----------------------------------------------------------------------------
Nations Emerging Markets Fund
- ----------------------------------------------------------------------------
Nations Prime Fund
- ----------------------------------------------------------------------------
Nations Strategic Fixed Income Fund
- ----------------------------------------------------------------------------
Nations Diversified Income Fund
- ----------------------------------------------------------------------------
Nations Short-Intermediate Government Fund
- ----------------------------------------------------------------------------
Nations Short-Term Income Fund
- ----------------------------------------------------------------------------
NET ASSET VALUE DETERMINATION
Shares of the common stock of each class of shares of each LifeGoal
Portfolio that are offered by the Prospectuses are sold at their respective net
asset value next determined after the receipt of the purchase order.
Shareholders may at any time redeem all or a portion of their shares at net
asset value next determined following receipt of a redemption order, less any
contingent deferred sales charge applicable to Investor C Shares.
The net asset value per share of each of the LifeGoal Portfolios is
determined at the times and in the manner described in the Prospectuses.
Portfolio securities of a LifeGoal Portfolio for which market quotations
are not readily available, if any, are valued at fair value as determined in
good faith by or under the supervision of the Company's officers in a manner
specifically authorized by the Board of Directors of the Company. Short-term
obligations having 60 days or less to maturity are valued at amortized cost,
which approximates market value.
Generally, trading in U.S. Government securities and money market
instruments is substantially completed each day at various times prior to the
close of the New York Stock Exchange. The values of
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<PAGE>
such securities, if any, used in computing the net asset value of the shares of
a Portfolio are determined as of such times. Occasionally, events affecting the
value of such securities may occur between the times at which they are
determined and the close of the New York Stock Exchange, which will not be
reflected in the computation of net asset value. If during such periods events
occur which materially affect the value of such securities, the securities will
be valued at their fair market value as determined in good faith by the
directors.
EXCHANGES
By use of the exchange privilege, the holder of Investor Shares and/or
Primary Shares authorizes the transfer agent or the shareholder's financial
institution to rely on telephonic instructions from any person representing
himself to be the investor and reasonably believed to be genuine. The transfer
agent's or a financial institution's records of such instructions are binding.
Exchanges are taxable transactions for federal income tax purposes; therefore, a
shareholder will realize a capital gain or loss depending on whether the
Investor Shares and/or Primary Shares being exchanged have a value which is more
or less than their adjusted cost basis.
The Company may limit the number of times the exchange privilege may be
exercised by a shareholder within a specified period of time. Also, the exchange
privilege may be terminated or revised at any time by the Company upon such
notice as may be required by applicable regulatory agencies (presently sixty
days for termination or material revision), provided that the exchange privilege
may be terminated or materially revised without notice under certain unusual
circumstances.
The Prospectuses for the Investor Shares and Primary Shares of each
LifeGoal Portfolio describe the exchange privileges available to holders of such
Investor Shares and Primary Shares, respectively.
DESCRIPTION OF SHARES
DIVIDENDS AND DISTRIBUTIONS
Each LifeGoal Portfolio anticipates distributing substantially all of its
investment company taxable income for each taxable year. Such distributions will
be taxable to shareholders as ordinary income and treated as dividends for
federal income tax purposes.
A LifeGoal Portfolio may either retain or distribute to shareholders its
net capital gain for each taxable year. Each LifeGoal Portfolio currently
intends to distribute any such amounts. If net capital gain is distributed and
designated as a capital gain dividend, it will be taxable to shareholders as
long-term capital gain, regardless of the length of time the shareholder has
held his/her Shares or whether such gain was recognized by the LifeGoal
Portfolio prior to the date on which the shareholder acquired his/her shares.
Conversely, if a LifeGoal Portfolio elects to retain its net capital gain, the
LifeGoal Portfolio will be taxed thereon (except to the extent of any available
capital loss carryovers) at the applicable corporate tax rate. If a Portfolio
elects to retain its net capital gain, it is expected that the LifeGoal
Portfolio also will elect to have shareholders treated as if each received a
distribution of his or her pro rata share of such gain, with the result that
each shareholder will be required to report his or her pro rata share of such
gain on his or her tax return as long-term capital gain, will receive a
refundable tax credit for his or her share of tax paid by the LifeGoal Portfolio
on the gain and will increase the basis for his or her Shares by an amount equal
to the deemed distribution less the tax credit.
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<PAGE>
Dividends and distributions from net investment income, for each LifeGoal
Portfolio are declared and paid quarterly, and capital gains distributions are
declared and paid annually. The Investor A, Investor B, Investor C and Primary B
Shares of the LifeGoal Portfolios accrue additional expense, not borne by the
Primary A Shares, as a result of the applicable Rule 12b-1 Plan, Shareholder
Servicing Plan and/or Shareholder Administration Plan. Consequently, a separate
calculation is made to arrive at the net asset value per share and dividends of
each class of shares of the LifeGoal Portfolios.
Net investment income for the LifeGoal Portfolios for dividend purposes
consists of (i) interest accrued and original issue discount earned on a
LifeGoal Portfolio's assets, (ii) less accrued expenses directly attributable to
the LifeGoal Portfolio and the general expenses of the Company prorated to a
LifeGoal Portfolio on the basis of its relative net assets, plus dividend or
distribution income on a LifeGoal Portfolio's assets.
ADDITIONAL INFORMATION CONCERNING TAXES
The following is only a summary of certain additional tax considerations
generally affecting the LifeGoal Portfolios and their shareholders that are not
described in the Prospectuses. No attempt is made to present a detailed
explanation of the tax treatment of each Portfolio or its shareholders, and the
discussion here and in the Prospectuses is not intended as a substitute for
careful tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
Each LifeGoal Portfolio expects to qualify as a regulated investment
company under Subchapter M of the Code. As a regulated investment company, each
LifeGoal Portfolio is not subject to federal income tax on the portion of its
net investment income (i.e., taxable interest, dividends and other taxable
ordinary income, net of expenses) and capital gain net income (i.e., the excess
of capital gains over capital losses) that it distributes to shareholders,
provided that it distributes at least 90% of its investment company taxable
income (i.e., net investment income and the excess of net short-term capital
gain over net long-term capital loss) and at least 90% of its tax-exempt income
(net of expenses allocable thereto) for the taxable year (the "Distribution
Requirement"), and satisfies certain other requirements of the Code that are
described below. Distributions by a LifeGoal Portfolio made during the taxable
year or, under specified circumstances, within twelve months after the close of
the taxable year, will be considered distributions of income and gains of the
taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must (i) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (ii) derive less
than 30% of its gross income from gains from the sale or other disposition of
stock, securities or options thereon held for less than three months.
In addition to satisfying the requirements described above, each LifeGoal
Portfolio must satisfy an asset diversification test in order to qualify as a
regulated investment company. Under this test, (i) at least 50% of the market
value of each LifeGoal Portfolio's assets is represented by cash, U.S.
Government obligations, the securities of other regulated investment companies,
and other securities limited in respect of any one issuer to an amount not
greater than 5% of its total assets and 10% of the outstanding voting securities
of such issuer, and (ii) not more than 25% of the value of its total assets is
34
<PAGE>
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 regulated investment company
controls and which are determined to be engaged in the same or similar trades or
businesses or related trades or businesses.
If for any taxable year a LifeGoal Portfolio does not qualify as a
regulated investment company, all of its taxable income (including its net
capital gain) will be subject to tax at regular corporate rates without any
deduction for distributions to shareholders, and such distributions will be
taxable as ordinary dividends to the extent of the LifeGoal Portfolio's current
and accumulated earnings and profits.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A nondeductible 4% excise tax will be imposed on each LifeGoal Portfolio
(other than to the extent of the LifeGoal Portfolio's tax-exempt income) to the
extent it does not meet certain minimum distribution requirements by the end of
each calendar year. Each LifeGoal Portfolio intends to actually or be deemed to
distribute substantially all of its net investment income and net capital gains
by the end of each calendar year and, thus, expects not to be subject to the
excise tax.
SALE OR REDEMPTION OF SHARES
A shareholder will recognize gain or loss on the sale or redemption of
shares of a LifeGoal Portfolio in an amount equal to the difference between the
proceeds of the sale or redemption and the shareholder's adjusted tax basis in
the shares sold or redeemed. All or a portion of any loss so recognized may be
disallowed if the shareholder purchases substantially identical shares within 30
days before or after the sale or redemption. In general, any gain or loss
arising from (or treated as arising from) the sale or redemption of shares of a
LifeGoal Portfolio will in most cases be considered capital in nature and will
be long-term capital gain or loss if the shares were held for longer than one
year.
If a shareholder receives a designated capital gain distribution (to be
treated by the shareholder as a long-term capital gain) with respect to any
LifeGoal Portfolio share and such share is held for six months or less, then
(unless otherwise disallowed) any loss on the sale or exchange of that share
will be treated as a long-term capital loss to the extent of the designated
capital gain distribution. In addition, any loss realized by a shareholder upon
the sale or redemption of LifeGoal Portfolio shares held less than six months is
disallowed to the extent of any exempt-interest dividends received thereon by
the shareholder. These rules shall not apply, however, to losses incurred under
a periodic redemption plan.
If a shareholder exchanges or otherwise disposes of LifeGoal Portfolio
shares within 90 days of having acquired such shares and if, as a result of
having acquired those shares, the shareholder subsequently pays a reduced sales
charge on a new purchase of shares of the LifeGoal Portfolio or of a different
regulated investment company ("new shares"), the sales charge previously
incurred acquiring the LifeGoal Portfolio's shares shall not be taken into
account (to the extent such previous sales charges do not exceed the reduction
in sales charges on the purchase of the new shares) for the purpose of
determining the amount of gain or loss on the disposition, but will be treated
as having been incurred in the acquisition of the new shares.
The Company may make payment for redemptions in readily marketable
securities or other property if it is appropriate to do so in light of the
Company's responsibilities under the 1940 Act. Such payments in-kind shall also
result in recognized gain or loss, and most likely be capital in nature, to a
redeeming shareholder on the difference between the fair market value of the
securities received and the shareholder's adjusted tax basis in the LifeGoal
Portfolio shares sold or redeemed.
35
<PAGE>
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
Under the Code, a nonresident alien individual, foreign estate (i.e., the
income of which is not subject to federal income taxation regardless of its
source), foreign trust (i.e, a U.S. court is not able to exercise primary
supervision over administration of that trust or a U.S. fiduciary does not have
authority to control substantial decisions of that trust), foreign corporation
(each a "foreign shareholder"), or foreign shareholder who or that is a partner
of an entity taxable as a partnership for federal income tax purposes ("a
foreign partner") will be subject to U.S. withholding tax (at a 30% or lower
income treaty rate, if applicable) on distributions of net investment income by
a LifeGoal Portfolio to such foreign shareholder (or, in the case of a foreign
partner, such foreign partner's share of partnership income attributable to such
distributions). Withholding will not apply if a dividend paid by the Fund to a
foreign shareholder is "effectively connected" with a U.S. trade or business
(or, if an income tax treaty applies, is attributable to such foreign
shareholder's U.S. "permanent establishment"), in which case the reporting and
withholding requirements applicable to U.S. residents or domestic corporations
will apply. Distributions of net long-term capital gains are not subject to tax
withholding, but in the case of a foreign shareholder who is a nonresident alien
individual, such distributions ordinarily will be subject to U.S. income tax at
a rate of 30% if the individual is physically present in the U.S. for more than
182 days during the taxable year.
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.
36
<PAGE>
Rules of state and local taxation for ordinary income dividends, exempt-interest
dividends and capital gain dividends from regulated investment companies often
differ from the rules for U.S. federal income taxation described above.
Distributions of net investment income may be taxable to shareholders as
dividend income under state or local law even though a substantial portion of
such distributions may be derived from interest on U.S. Government Obligations,
which, if realized directly, would be exempt from such taxes. Shareholders are
urged to consult their tax advisors as to the consequences of these and other
state and local tax rules affecting investment in the LifeGoal Portfolios.
DIRECTORS AND OFFICERS OF THE LIFEGOAL PORTFOLIOS
The directors and executive officers of the Company and their principal
occupations 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>
<S> <C>
PRINCIPAL OCCUPATIONS
DURING PAST 5 YEARS
POSITION WITH AND CURRENT
NAME ADDRESS AND AGE THE COMPANIES DIRECTORSHIPS
- -------------------------- --------------- --------------------------------
Edmund L. Benson, III, 61 Director/Trustee Director, President and
Saunders & Benson, Inc. Treasurer, Saunders & Benson,
728 East Main Street Inc. (Insurance); Trustee,
Suite 400 Nations Institutional Reserves
Richmond, VA 23219 and Nations Fund Trust,
Director, Nations Fund, Inc.,
Nations LifeGoal Funds, Inc.,
and Nations Fund Portfolios, Inc.
James Ermer, 55 Director/Trustee Senior Vice President- Finance,
13705 Hickory Nut Point CSX Corporation (transportation
Midlothian, VA 23112 and natural resources);
Director, National Mine Service;
Director, Lawyers Title
Corporation; Trustee, Nations
Institutional Reserves and
Nations Fund Trust; Director,
Nations Fund, Inc., Nations
LifeGoal Funds, Inc., and
Nations Fund Portfolios, Inc.
William H. Grigg, 65 Director /Trustee Chairman Emeritus, Duke Power
Duke Power Co. Co., since July, 1997; April
422 South Church Street 1994 to July 1997, Chairman and
PB04G Chief Executive Officer;
Charlotte, NC 28242-0001 November 1991 to April 1994,
Vice Chairman, from April 1988
to November 1991, Executive Vice
President -- Customer Group,
Director, Coltec Industries,
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., Nations
LifeGoal Funds, Inc. and Nations
Fund Portfolios, Inc.; Trustee,
Nations Institutional Reserves
and Nations Fund Trust.
Thomas F. Keller, 66 Director/Trustee R.J. Reynolds Industries
Fuqua School of Business Professor of Business
P.O. Box 90120 Administration and former Dean,
Duke University Fuqua School of Business, Duke
Durham, NC 27708 University; Director, LADD
Furniture, Inc.; Director,
Wendy's International Inc.,
American Business Products,
Dimon Inc., Biogen, Inc.,
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., Nations
LifeGoal Funds, Inc., and
Nations Fund Portfolios,
Inc.;Trustee, Nations
Institutional Reserves, Nations
Fund Trust, the Mentor Funds,
Mentor Institutional Trust, Cash
Resource Trust.
Carl E. Mundy, Jr., 63 Director/Trustee Commandant, United States Marine
9308 Ludgate Drive Corps, from July 1991 to July
Alexandria, VA 22309 1995; Commanding General, Marine
Forces Atlantic, from June 1990
to June 1991; Director, Nations
Fund, Inc., Nations LifeGoal
Funds, Inc., and Nations Fund
37
<PAGE>
Portfolios, Inc.; Trustee,
Nations Institutional Reserves
and Nations Fund Trust.
James B. Sommers*, 59 Director/Trustee President, NationsBank Trust,
from January 1992 to September
1996; Executive Vice President,
NationsBank Corporation, from
January 1992 to May 1997;
Principal, Bainbridge &
Associates; Partner, Villa LLC;
Chairman, Central Piedmont
Community College Foundation;
Trustee, Central Piedmont
Community College; Board of
Commissioners,
Charlotte/Mecklenberg Hospital
Authority; Director, Nations
Fund, Inc., Nations Fund
Portfolios, Inc. and Nations
LifeGoal Funds, Inc.; Trustee,
Nations Institutional Reserves
and Nations Fund Trust.
A. Max Walker*, 76 President, Financial consultant; Formerly,
4580 Windsor Gate Court Director/Trustee President, A. Max Walker, Inc.;
Atlanta, GA 30342 and Director and Chairman of the
Chairman of the Board, Hatteras Income
Board 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.,
Nations LifeGoal Funds, Inc.,
and Nations Fund Portfolios.
Inc.; President and Chairman of
the Board of Trustees, Nations
Institutional Reserves and
Nations Fund Trust.
Charles B. Walker, 59 Director/Trustee Since 1989, Director, Executive
Ethyl Corporation Vice President, Chief Financial
330 South Fourth Street Officer and Treasurer, Ethyl
Richmond, VA 23219 Corporation (chemicals,
plastics, and aluminum
manufacturing); since 1994, Vice
Chairman, Ethyl Corporation and
Vice Chairman, Chief Financial
Officer and Treasurer, Albemarle
Corporation, Director, Nations
Fund, Inc., Nations LifeGoal
Funds, Inc, and Nations Fund
Portfolios, Inc.; Trustee,
Nations Institutional Reserves
and Nations Fund Trust.
Thomas S. Word, Jr.*, 60 Partner, McGuire Woods Battle &
McGuire, Woods, Battle Fund, Inc., Nations LifeGoal
& Boothe Boothe (law); Director, Vaughan
One James Center Funds, Inc., and Nations Fund
Richmond, VA 23219 Bassett Furniture Company,
Portfolios, Inc.; Trustee,
Director VB Williams Furniture
Nations Institutional Reserves
Company, Inc.; Director,
NationsDirector/Trustee and
Nations Fund Trust.
Richard H. Blank, Jr., 41 Secretary Since 1994, Vice President of
Stephens Inc. Mutual Fund 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., Nations LifeGoal
Funds, Inc., and Nations Fund
Portfolios, Inc.
Michael W. Nolte, 37 Assistant Associate, Financial Services
Stephens Inc. Secretary Group of Stephens Inc.
Louise P. Newcomb, 45 Assistant Corporate Syndicate Associate,
Stephens Inc. Secretary Stephens Inc.
James E. Banks, 42 Assistant Since 1993, Attorney, Stephens
Stephens Inc. Secretary Inc.; Associate Corporate
Counsel, Federated Investors;
from 1991 to 1993, Staff
Attorney, Securities and
Exchange Commission from 1988 to
1991
Richard H. Rose, 43 Treasurer Since 1994, Vice President,
First Data Investor Services Division Manager, First Data
Group, Inc. Investor Services Group, Inc.
One Exchange Place since 1988, Senior Vice
Boston, MA 02109 President, The Boston Company
Advisors. Inc.; Treasurer,
Nations Institutional Reserves,
Nations Fund Trust, Nations
Fund, Inc., Nations LifeGoal
Funds, Inc., and Nations Fund
Portfolios, Inc.
Steven Levy, 33 Assistant Since 1997, Vice President of
Treasurer Fund Accounting, First Data
Investor Services Group, Inc.;
Prior to 1997, Investment
38
<PAGE>
Operations Manager, Franklin
Templeton Group and Assistant
Vice President of Fund
Accounting, Scudder Stevens and
Clark, Inc.
</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, Treasurer, and 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 Funds Family. Richard H. Blank, Jr., Richard H. Rose,
Joseph C. Viselli, Steven Levy, 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., Nations LifeGoal Funds, Inc. and Nations
Institutional Reserves.
As of the date of this SAI, the directors and officers of the Company as a
group owned less than 1% of the outstanding shares of each of the LifeGoal
Portfolios.
The Company has adopted a Code of Ethics which, among other things,
prohibits each access person of the Company from purchasing or selling
securities when such person knows or should have known that, at the time of the
transaction, the security (i) was being considered for purchase or sale by a
LifeGoal Portfolio, or (ii) was being purchased or sold by a LifeGoal Portfolio.
For purposes of the Code of Ethics, an access person means (i) a Director or
officer of the Company, (ii) any employee of the Company (or any company in a
control relationship with the Company) who, in the course of his/her regular
duties, obtains information about, or makes recommendations with respect to, the
purchase or sale of securities by the Company, and (iii) any natural person in a
control relationship with the Company who obtains information concerning
recommendations made to the Company regarding the purchase or sale of
securities. Portfolio managers and other persons who assist in the investment
process are subject to additional restrictions, including a requirement that
they disgorge to the Company any profits realized on short-term trading (i.e.,
the purchase/sale or sale/purchase of securities within any 60-day period). The
above restrictions do not apply to purchases or sales of certain types of
securities, including mutual fund shares, money market instruments and certain
U.S. Government securities. To facilitate enforcement, the Code of Ethics
generally requires that the Company's access persons, other than its
"disinterested" Directors, submit reports to the Company's designated compliance
person regarding transactions involving securities which are eligible for
purchase by a Fund.
The Directors and officers of the LifeGoal Portfolios will receive
compensation from the LifeGoal Portfolios as follows: an annual retainer of
$1,000 ($3,000 for the Chairman of the Board), plus $500 per portfolio, and
meeting fees of $1,000 for in-person meetings and $500 for telephone meetings.
The Compensation Table below sets forth their aggregate compensation in such
capacity.
DIRECTORS, TRUSTEES AND OFFICERS OF UNDERLYING NATIONS FUNDS
The directors, trustees and officers of the underlying Nations Funds in
which the LifeGoal Portfolios invest are identical to the persons above-named
under the heading "Directors And Officers of the LifeGoal Portfolios".
39
<PAGE>
COMPENSATION TABLE
TOTAL COMPENSATION
AGGREGATE FROM REGISTRANT
COMPENSATION AND FUND COMPLEX
NAME OF PERSON/ FROM REGISTRANT PAID TO DIRECTORS
POSITION (1) (2) (3)(4)
------------ --- ------
Edmund L. Benson, III $7,000.00 $86,201.07
Director
James Ermer $7,000.00 $59,000.00
Director
William H. Grigg $7,000.00 $117,533.68
Director
Thomas F. Keller $7,000.00 $116,115.17
Director
A. Max Walker $9,000.00 $89,000.00
Chairman of the Board
Charles B. Walker $7,000.00 $59,000.00
Director
Thomas S. Word $7,000.00 $109,255.23
Director
Carl E. Mundy, Jr., $6,000.00 $54,000.00
Director
James B. Sommers $4,875.00 $43,875.00
Director
---------- ----------
Totals: $61,875.00 $733,980.15
(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 LifeGoal Portfolio, 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 Funds complex.
40
<PAGE>
(4) Total compensation amounts include deferred compensation (including
interest) from other investment companies in the Nations Funds complex,
payable to or accrued for the following Directors: Edmund L. Benson, III
($53,201.00); William H. Grigg ($94,534.00); Thomas F. Keller ($93,115.00);
and Thomas S. Word ($102,255.00). The LifeGoal Directors are not eligible for
deferred compensation from the Company.
41
<PAGE>
SECURITY HOLDERS
The name, address and percentage of ownership of each person who is known
by the Registrant to have owned of record or beneficially five percent or more
of any of the LifeGoal Portfolios as of July 1, 1998 is:
<TABLE>
<CAPTION>
<S> <C>
LIFEGOAL GROWTH PORTFOLIO
Sidney C Adger TTEE for Investor A Tucker S. Zengerle and Investor C
Hawaiian Marine Imports Inc 8.7706% Lynda S. Zengerle JTWROS 5.8899%
Employee Profit Sharing Plan 5108 Moorland Lane
1234 N Post Oak Rd Ste 130 Bethesda, MD 20814-6118
Houston, TX 77055
Steinberg Marital Trust Investor A Dean Witter Reynolds Cust Investor C
5177 Richmond #530 5.2824% for Leonard M. King 5.267%
Houston, TX 77056 IRA Rollover Dated
12/11/97
1412 Cap'n Sams Road
John's Island, SC 29455
Fannie Steinberg Family Trust Investor C NationsBank of Texas TTEE Primary A
5177 Richmond #530 25.9842% NB 401K Plan 81.8327%
Houston, TX 77056 U/A DTD 01/01/1983
PO Box 2518
Houston, TX 77252-2518
Steinberg Marital Trust Investor C NationsBank of Texas NA Primary A
5177 Richmond #530 9.1001% Attn: Adrian Castillo 8.6487%
Houston, TX 77056 1401 Elm Street 11th Floor
Dallas, TX 75202-2911
Council R. Renfrow TTEE FBO Investor C BNY Cust IRA FBO
Coastal Finance Company 8.5496% Frank W. Timpa
40l(k) Plan PO Box 612 Primary B
PO Box 1216 Fort Myers, FL 33902-0000 99.7922%
807 Arendell Street
Morehead City, NC 28557
Jasson G. Zengerle and Investor C Nationalbank of South Carolina Investor B
Lynda S. Zengerle JTWROS 6.4069% TTEE 6.5701%
5108 Moorland Lane Elsie A. Holton Charitable
Bethesda, MD 20814-6118 Remainder Trust DTD
9-10-97
PO Box 1299
Charleston, SC 29402-1299
LIFEGOAL BALANCED GROWTH PORTFOLIO
H Kenneth Armstrong and Investor A NationsBank of Texas TTEE Primary A
Larry A Ceppos TTEED FBO 6.382% NB 401K Plan 15.2187%
Armstrong Donohue & Ceppos U/A DTD 01/01/1983
401 (K) & Profit Sharing Plan PO Box 2518
204 Monroe St Suite 101 Houston, TX 77252-2518
Rockville, MD 20850
42
<PAGE>
Teeter Realty Co. Inc. Investor C BNY Cust Rollover IRA FBO Primary B
207 S Broad Street 38.5156% Michael Cardelino 84.2472%
Mooresville, NC 28115 1712 Flatwood Drive
Flower Mound, TX 75028
Richard M. Wood and Investor C BNY Cust SEP IRA FBO Primary B
Freda Wood JTTEN 27.3018% Ronald E. Ross 15.1662%
4349 Oakwood Cl 4004 New Town Road
Little River, SC 29566 Waxhaw, NC 28173-9759
Donald R. Atkins and Investor C Dorothy A. Rosenberg and Investor B
David R. Morgan TTEES 10.5366% Dorothy R. Oberreuter 5.8986%
Lyndon Steel 40lK Profit JTTEN
Sharing Pl 2707 Wrexham Court
1947 Union Cross Road Herndon, VA 20171-2405
Winston Salem, NC 27107
E. Larry Fonts TTEE FBO Investor C Dean Witter Reynolds Cust Investor B
Central Dallas Association 9.4569% for Robert W. Crawford 5.8202
Profit Sharing Plan IRA STD/Rollover DTD
1201 Elm Street Suite 5310 01/05/98
Dallas, TX 75270 13204 Trails End Court
Manassas, VA 20112-5504
James Hightower Art Hightower Investor C Dean Witter Reynolds Cust Investor B
and William Hightower 5.8483% for 5.6647%
TTEES FBO Rufus A. Cambell
Hightower Construction Co Inc. IRA STD/Rollover DTD
40lK Profit Sharing Plan 01/12/98
PO Box 1369 219 Catoctin Circle, NE
Goose Creek, SC 29445 Leesburg, VA 20176-2410
Barnett Bank NA TTEE-Barnett Primary A Jack Overcash Investor B
Employees Savings & Thrift 82.2962% Highway 21 North Box 539 5.4351%
Plan Mooresville, NC 28115
U/A DTD 12/31/1984-LFG BLD
GR FD
Attn: Mut FD Dept M/C
F19-100-03-01
PO Box 40200
Jacksonville, FA
32203-0200
LIFEGOAL INCOME & GROWTH PORTFOLIO
BNY Cust for Investor A NationsBank Of Texas NA Primary A
Charles L W Haw 35.1113% Attn: Adrian Castillo 34.8608%
Sep IRA Plan 1401 Elm St 11th Floor
2031 W 56th St Dallas, TX 75202-2911
Mission Hills, KS 66208
BNY Cust Rollover IRA FBO Investor A Barnett Bank NA TTEE - Primary A
Marietta J Tomlin 7.8553% Barnett 12.1639%
2392 Ashebury Ct Best Plan-- Nations
Buford, GA 30519 Lifegoal Inc &
Gro UAD 12/31/84
Attn: Mut FD Dept M/C
Fl9-100-03-01 PO Box 40200
Jacksonville, FL 32203-0200
43
<PAGE>
BNY Cust FBO Marsha L Investor A Stephens Inc Primary B
Brewer 6.9925% Attn: Cindy Cole 100%
Sep IRA Plan 111 Center St
9907 Floyd St Little Rock, AR 72201
Overland Park, KS 66212
Donald A Atkins and Investor C Roy L Rivers And Rebecca Investor B
David R Morgan TTEES 57.01% Griffin 6.8231%
Lyndon Steel 401K Profit Frambes JTTEN
Sharing Pl 322 Rivers Rd
1947 Union Cross RD Fayetteville, GA
Winston Salem, NC 27107 30214-3121
E Larry Fonts TTEE FBO Investor C Dean Witter Reynolds Cust Investor B
Central Dallas Association 18.0338% for 6.2488%
Profit Sharing Plan Carolyn B Stewart
1201 Elm Street Suite 5310 IRA Rollover Dated
Dallas, TX 75270 11/24/95
#3 Harrow Pl
Greensboro, NC 27455
James Hightower Art Investor C Dean Witter Reynolds Cust Investor B
Hightower and 16.7592% for 5.9285
Willam Hightower TTEES FBO Robert Goodman
Hightower Construction Co IRA Rollover Dated
Inc 10/31/97
401K Profit Sharing Plan 103 56th Place SE
PO Box 1369 Washington DC 20019-6571
Goose Creek, SC 29445
BNY Cust FBO Investor C Dean Witter Reynolds Cust Investor B
William T Ledford 5.2451% For Betty L Thomas 5.8169%
SAR/SEP IRA IRA Standard Dated
5519 Dallas High Shoals Rd 02/20/96
Dallas, NC 28034 5532 Margaret Wallace Rd
Matthews, NC 28105/2113
NationsBank Of Texas TTEE Primary A Dean Witter Reynolds Cust Investor B
NB 401K Plan 49.9572% for 5.3624%
U/A DTD 01/01/1983 George H Kirby Sr
PO Box 2518 IRA STD/Rollover DTD
Houston, TX 77252-2518 03/06/98
12309 Caldwell Rd
Charlotte, Nc 28213
</TABLE>
44
<PAGE>
INVESTMENT ADVISORY, ADMINISTRATION, CUSTODY,
TRANSFER AGENCY, SHAREHOLDER SERVICING AND
DISTRIBUTION AGREEMENTS
THE COMPANY AND ITS COMMON STOCK
The Company is a diversified open-end management investment company
organized as a corporation under the laws of the State of Maryland on July 3,
1996. The Company offers shares of common stock which represent interests in one
of three separate LifeGoal Portfolios. This SAI relates to the following
LifeGoal Portfolios of the Company: LifeGoal Growth Portfolio, LifeGoal Balanced
Growth Portfolio and LifeGoal Income and Growth Portfolio. Each LifeGoal
Portfolio offers the following separate classes of shares: Primary A Shares,
Primary B Shares, Investor A Shares, Investor B and Investor C Shares. Shares of
each LifeGoal Portfolio of the Company are redeemable at the net asset value
(less, in the case of Investor B and Investor C Shares, any applicable
contingent deferred sales charge ("CDSC")) thereof at the option of the holders
thereof or in certain circumstances at the option of the Company. For
information concerning the methods of redemption and the rights of share
ownership, consult the Prospectuses under the captions "How To Buy Shares," "How
To Redeem Shares" and "Organization And History."
As used in this SAI and in the Prospectuses, the term "majority of the
outstanding shares" of the Company, a particular LifeGoal Portfolio or a
particular class of shares of a LifeGoal Portfolio means, respectively, the vote
of the lesser of (i) 67% or more of the shares of the Company, LifeGoal
Portfolio or class (as appropriate) present at a meeting of shareholders, if the
holders of more than 50% of the outstanding shares entitled to vote, are present
or represented by proxy, or (ii) more than 50% of the outstanding shares of the
Company, LifeGoal Portfolio or class.
The Board of Directors may classify or reclassify any unissued shares of
the Company into shares of any class, classes or LifeGoal Portfolio in addition
to those already authorized by setting or changing in any one or more respects,
from time to time, prior to the issuance of such shares, the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption, of such shares
and, pursuant to such classification or reclassification to increase or decrease
the number of authorized shares of any LifeGoal Portfolio or class. Any such
classification or reclassification will comply with the provisions of the 1940
Act. Fractional shares shall have the same rights as full shares to the extent
of their proportionate interest.
INVESTMENT ADVISORY ARRANGEMENTS OF THE LIFEGOAL PORTFOLIOS
NBAI serves as investment adviser to the LifeGoal Portfolios pursuant to
an Investment Advisory Agreement. NBAI is a wholly owned subsidiary of
NationsBank, N.A. ("NationsBank"), which in turn is a wholly owned banking
subsidiary of NationsBank Corporation, a bank holding company organized as a
North Carolina corporation. NBAI has its principal offices at One NationsBank
Plaza, Charlotte, North Carolina 28255.
NBAI also serves as investment adviser to Nations Fund, Inc., Nations Fund
Portfolios, Inc., Nations Fund Trust, Nations LifeGoal Funds, Inc. and Nations
Institutional Reserves, each a registered investment company that is part of the
Nations Funds 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,
45
<PAGE>
Inc., each a closed-end diversified management investment company traded on the
New York Stock Exchange.
The Investment Advisory Agreement was approved by the Company's Board of
Directors at the October 11, 1996 Meeting of the Board of Directors and by the
initial shareholder. It provides that NBAI may delegate its duties to a
sub-adviser. The Investment Advisory Agreement provides that in the absence of
willful misfeasance, bad faith, negligence or reckless disregard of obligations
or duties thereunder on the part of NBAI, or any of its officers, directors,
employees or agents, NBAI shall not be subject to liability to the Company or to
any shareholder of the Company for any act or omission in the course of, or
connected with, rendering services thereunder or for any losses that may be
sustained in the purchase, holding or sale of any security. NBAI will receive
fees for providing advisory services at the annual rate of .25% of the average
daily value of each LifeGoal Portfolio's net assets during the preceding month.
NBAI also has agreed to absorb all other expenses of the LifeGoal Portfolios
(except taxes, brokerage fees and commissions, extraordinary expenses, and any
applicable Rule 12b-1 fees, shareholder servicing fees and/or shareholder
administration fees). NBAI also is compensated for providing advisory services
to the underlying Nations Funds in which the LifeGoal Portfolios invest. The
Investment Advisory Agreement shall become effective with respect to a LifeGoal
Portfolio if and when approved by the Directors of the Company, and if so
approved, shall thereafter continue from year to year, provided that such
continuation of the Agreement is specifically approved at least annually by (a)
(i) the Company's Board of Directors or (ii) the vote of "a majority of the
outstanding voting securities" of a LifeGoal Portfolio (as defined in Section
2(a)(42) of the 1940 Act), and (b) the affirmative vote of a majority of the
Company's Directors who are not parties to such Agreement or "interested
persons" (as defined in the 1940 Act) of a party to such Agreement (other than
as Directors of the Company), by votes cast in person at a meeting specifically
called for such purpose. The Investment Advisory Agreement will terminate
automatically in the event of its assignment, and is terminable with respect to
a LifeGoal Portfolio at any time without penalty by the Company (by vote of the
Board of Directors or by vote of a majority of the outstanding voting securities
of a LifeGoal Portfolio) or by NBAI on 60 days' written notice.
The dollar amount of investment advisory fees paid by each LifeGoal
Portfolio of the Company to NBAI and the dollar amount of advisory fees
voluntarily reduced by NBAI for the Company's fiscal period ended March 31, 1998
were as follows:
Advisory
Net Fees Expenses
Advisory Voluntarily Reimbursed
Fees Waived by Adviser
---- ------ ----------
LifeGoal Growth Portfolio $10,146 $ 0 $ 0
LifeGoal Balanced Growth Portfolio 8,202 0 0
LifeGoal Income and Growth Portfolio 2,167 0 0
TradeStreet Investment Associates, Inc. ("TradeStreet") with principal
offices at One NationsBank Plaza, Charlotte, North Carolina serves as investment
sub-adviser to the LifeGoal Portfolios. TradeStreet is a wholly owned subsidiary
of NationsBank. TradeStreet provides investment management services to
individuals, corporations and institutions.
The Sub-Advisory Agreement was approved by the Company's Board of
Directors on October 11, 1996 and by the initial shareholder. It provides that
TradeStreet, subject to the supervision of NBAI
46
<PAGE>
and the Board of Directors of the Company, will be primarily responsible for
managing the assets of each LifeGoal Portfolio. TradeStreet will receive fees
for providing such services at the annual rate of .05% of the average daily
value of each LifeGoal Portfolio's net assets during the preceding month.
TradeStreet is also compensated for providing sub-advisory services to most of
the underlying Nations Funds in which the LifeGoal Portfolio invest. The
Sub-Advisory Agreement will continue in effect for an initial term of two years
from its effective date and continues in effect from year to year thereafter
only if such continuance is specifically approved at least annually by the
Company's Board of Directors and the affirmative vote of a majority of the
directors who are not parties to the Sub-Advisory Agreement or "interested
persons" of any such party by votes cast in person at a meeting called for such
purpose. The respective LifeGoal Portfolios, NBAI or TradeStreet may terminate
the Sub-Advisory Agreement, on 60 days' written notice without penalty. The
Sub-Advisory Agreement terminates automatically in the event of its
"assignment," as defined in the 1940 Act.
The dollar amount of investment advisory fees paid by NBAI on behalf of
each LifeGoal Portfolio to TradeStreet, as sub-adviser, and the dollar amount of
advisory fees voluntarily reduced by TradeStreet for the Company's fiscal year
ended March 31, 1997 from commencement of operations were as follows:
Advisory
Net Fees Expenses
Advisory Voluntarily Reimbursed
Fees Waived by Adviser
---- ------ ----------
LifeGoal Growth Portfolio $ $ $
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
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 $27
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.
47
<PAGE>
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 performed investment
company management functions as employees of NationsBank continue to perform
such services as employees of NBAI and TradeStreet. The restructuring did not
change the scope and nature of investment advisory services provided to the
LifeGoal Portfolios.
Gartmore Global Partners, with principal offices at One NationsBank Plaza,
Charlotte, North Carolina 28255, serves as investment sub-adviser to Nations
Fund Portfolios, Inc. and the International Equity Fund of Nations Fund, Inc.,
pursuant to a sub-advisory agreement. Gartmore Global Partners is a joint
venture structured as a Delaware general partnership between NB Partner Corp., a
wholly owned subsidiary of NationsBank, and Gartmore U.S. Limited, an indirect
wholly owned subsidiary of Gartmore Investment Management plc ("Gartmore plc"),
a U.K. company, which is the holding company for a leading UK-based
international fund management group of companies. National Westminster Bank plc
and affiliated entities (collectively, "NatWest") own 100% of the equity of
Gartmore plc.
Pursuant to the terms of certain advisory and sub-advisory agreements,
NBAI and Gartmore Global Partners, subject at all times to the control of the
applicable Boards of Directors and in conformance with the stated policies of
the applicable Nations Fund, select and manage the investments of the Nations
Funds. NBAI obtains and evaluates economic, statistical and financial
information to formulate and implement investment policies for the Nations
Funds. The sub-advisory agreement of these Funds provides that Gartmore Global
Partners shall not be liable to the Company or to its shareholders for any act
or omission by NBAI or Gartmore Global Partners or for any loss sustained by the
Company or by its shareholders except in the case of NBAI's or Gartmore Global
Partners' willful misfeasance, bad faith, gross negligence or reckless disregard
of duty on the part of NBAI or Gartmore Global Partners, as the case may be.
TradeStreet serves as investment sub-adviser to all of the Funds except
those for which Gartmore Global Partners serves as investment sub-adviser. The
terms and provisions of the sub-advisory agreements are substantially similar,
except with respect to fee levels, to the terms and provisions of the
Sub-Advisory Agreement with the Company.
Marsico Capital serves as investment sub-adviser to the Marsico Focused
Equities Fund and Marsico Growth & Income Fund, pursuant to an Investment
Sub-Advisory Agreement, dated _______.Thomas F. Marsico is Chairman and Chief
Executive Officer of Marsico Capital and has voting control of the company.
Prior to forming Marsico Capital in September 1997, Mr. Marsico had 18 years of
experience as a securities analyst/portfolio manager. NationsBank has an option
to purchase up to 50% of Marsico Capital.
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: .25% of the first $250
million of the average daily net assets of Nations Prime Fund, plus .20% of the
average daily net assets of such Fund in excess of $250 million; .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; .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; .75% of the first $100 million of the
Nations Equity Income Fund's average daily net assets, plus .70% of the Nations
Equity Income Fund's average daily net assets in
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excess of $100 million and up to $250 million, plus .60% of the Fund's average
daily net assets in excess of $250 million; .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; .90% of the average daily net assets of Nations
Pacific Growth Fund and .70% of the average daily net assets of Nations Global
Government Income 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 .055% of Nations Prime
Fund's average daily net assets; .20% of Nations Equity Income Fund's average
daily net assets; .25% of Nations Value Fund's Nations Capital Growth Fund's,
Nations Emerging Growth Fund's and Nations Disciplined Equity Fund's average
daily net assets; .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, computed daily and paid monthly at the annual rates of .70%
of Nations International Equity Fund's average daily net assets; .85% of Nations
Emerging Markets Fund's average daily net assets; .70% of Nations Pacific Growth
Fund's average daily net assets and .54% of Nations Global Government Income
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 year from April 1, 1996 to March 31, 1997, after waivers,
Nations Fund Trust paid NBAI under the current Investment Advisory Agreement
advisory fees at the indicated rates of the following Funds' average daily net
assets: Nations Value Fund -- .75%; Nations Capital Growth Fund --
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.75%; Nations Emerging Growth Fund -- .75%; Nations Disciplined Equity Fund --
.75%; Nations Managed Index Fund -- .06%; Nations Managed SmallCap Index Fund --
.00%; Nations Short-Intermediate Government Fund -- .40%; Nations Short-Term
Income Fund -- .30%; Nations Diversified Income Fund -- .50%; and Nations
Strategic Fixed Income Fund -- .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 year from April 1, 1996 to March 31, 1997, 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 -- .16%; Nations Equity Income Fund -- .67%; and
Nations International Equity Fund -- .90%.
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 -- 0.25% and Nations Pacific
Growth Fund -- 0.20%.
For the fiscal year from April 1, 1996 to March 31, 1997, 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 -- 1.10%; Nations Pacific Growth Fund --
.90%; and Nations Global Government Income Fund -- .70%.
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 year from April 1, 1996 to March 31, 1997, 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 -- .25%; Nations Capital Growth Fund -- .25%; Nations Emerging Growth
Fund -- .25%; Nations Disciplined Equity Fund -- .25%; Nations Managed Index
Fund -- .10%; Nations Managed SmallCap Index Fund -- .10%; Nations
Short-Intermediate Government Fund -- .15%; Nations Diversified Income Fund --
.15%; Nations Strategic Fixed Income Fund -- .15%; Nations Prime Fund -- .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%.
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For the fiscal year from April 1, 1996 to March 31, 1997, after waivers,
NBAI paid Gartmore Global Partners sub-advisory fees at the indicated rates of
the following Funds average daily net assets: Nations Emerging Markets Fund --
.85%; Nations Pacific Growth Fund -- .70%; Nations International Equity Fund --
.70%; and Nations Global Government Income Fund -- .54%.
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 of 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 is a Director of Equity Management for TradeStreet
and Senior Portfolio Manager for Nations Value Fund. Ms. Herrmann has been
the Portfolio Manager of Nations Value Fund since 1989. She has been
Portfolio manager of Nations Prime Fund since 1988. 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 is a Senior Product Manager, Equity Management for
TradeStreet and Senior Portfolio Manager for Nations Equity Income Fund. Mr.
Williams has been the Portfolio Manager of 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 is Principal Portfolio Manager of Nations International
Equity Fund and has been the Portfolio Manager since February, 1995. He joined
Gartmore as a Global Fund Manager in 1993 and currently holds the position of
Head of the International and Global Portfolio 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 of 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 & Pitman 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.
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Seok Teoh is Principal Portfolio Manager of 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 Securities 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 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.
Scott A. Billeadeau is a Senior Portfolio Manager, Equity Management
for TradeStreet and Senior Portfolio Manager for Nations Emerging Growth Fund
and Nations Small Company Growth Fund. Mr. Billeadeau has been Portfolio
Manager of the Funds since June 1997. Previously he was Senior Analyst and
Senior Portfolio Manager for BankAmerica's Pacific Horizon Aggressive Growth
Fund at Security Pacific Corp. since 1991. Mr. Billeadeau has worked in the
investment community since 1986. His past experience also includes
quantitative analysis for American Express Financial Advisors, Inc. Mr.
Billeadeau received an AB in Economics from Princeton University. He holds
the Chartered Financial Analyst designation and is a member of the
Association for Investment Management and Research, as well as the Seattle
Society of Securities Analysts.
Jeffrey C. Moser is a Senior Product Manager, Equity Management for
TradeStreet 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, Nations
Managed Index Fund and Nations Managed SmallCap Index Fund. He has been
Portfolio Manager for these Funds since their inception. Prior to assuming his
position with TradeStreet in 1996, 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.
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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 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 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.
Brad Pope is a Product Manager, Fixed Income Management for TradeStreet
and Portfolio Manager for Nations Short-Term Income Fund. He is a senior member
of the Fixed Income Team. As such, his responsibilities include setting duration
policy for the Nations Funds fixed income funds. Mr. Pope has been the Portfolio
Manager for Nations Short-Term Income Fund since August 1996. Prior to assuming
this position, he was a manager in the structured products area. He joined the
Investment Management Group at NationsBank, TradeStreet's predecessor
organization in 1988. Mr. Pope has over nine years of investment experience,
including working on the trading floor of the Chicago Board of Trade. Mr. Pope
received a B.B.A. in Finance from the University of Texas at Austin.
Mark Rimmer is Principal Portfolio Manager of Nations Global Government
Income Fund and has been the Portfolio Manager since the Fund's inception. He
has been associated with Gartmore since 1990 as an International Fixed Income
Fund Manager. Previously, Mr. Rimmer managed multi-currency funds for
institutional clients at Gulf International Bank in Bahrain, and prior to that
he was a senior trader for Sumitomo International, London. He graduated from
Cambridge University with a degree in Economics.
INVESTMENT STYLES
Discipline Management Style. When you invest in any fund in the
Nations Funds Family, you can be assured your money is managed according to a
disciplined investment strategy; one that remains in place regardless of market
conditions. We believe this structured approach to managing
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portfolio securities may provide you with consistent performance over time. The
advisers to the underlying Nations Funds use various investment strategies
during the process of constructing and managing the underlying Nations Funds'
portfolios. These strategies have been categorized into investment styles which
consist of (i) Fixed Income Style, (ii) Growth Equity Style, (iii) Value Equity
Style, (iv) Equity Income Style, (v) Emerging Markets and Pacific Growth Style
and (vi) Global Government Income Style. Investment Styles described below
relate to the Diversified Income, Short-Intermediate Government, Short-Term
Income, Strategic Fixed Income, Capital Growth, Emerging Growth, Value,
International Equity Income, Equity Income, Emerging Markets, Pacific Growth and
Global Government Income Funds.
FIXED INCOME STYLE. The Nations Diversified Income, Government Securities,
Short-Intermediate Government, Short-Term Income and Strategic Fixed Income, are
managed by their Adviser using the Fixed Income Style. Fixed Income Style
investment philosophy is premised on the belief that a well diversified
portfolio of fixed income securities that emphasizes a combination of
investments strategies will capture relative value in the bond market.
In order to pursue this goal, the Fixed Income Style includes certain
biases. Their adviser reduces the risk by investing in many different issuers.
This is done by setting a maximum percentage permitted of any single issuer in
any portfolio. Focus on high credit quality is the second bias. Holdings are
concentrated in the upper end of the quality spectrum. Securities of less than
the highest quality are used only when the team of credit analysts support the
conclusion that the quality will remain stable or improve, and that it offers
attractive potential in expected return. The third bias is to de-emphasize
interest rate forecasts. The performance of a portfolio therefore is not held
hostage to the accuracy of a rate forecast.
This philosophy attempts to achieve consistent results while minimizing
risk. Five strategies are also utilized by the Fixed Income Style Group
Portfolio Managers to meet this objective.
Sector Spread Anomalies: When sectors of the bond market are over or under
valued, the allocation in the portfolios is adjusted accordingly. Such decisions
are made based on a sound analysis of historical bond values as well as a review
of current market conditions and its impact on future values.
Yield Curve Anomalies: Unusual shapes in the yield curve or the degree of
steepness in the yield curve provide opportunities to outperform fixed income
indices. Such opportunities are reviewed by our specialists for return
enhancement under a variety of possible interest rate shifts before they are
implemented.
Coupon/Quality Opportunities: High or low coupon securities may represent
investment value based on supply and demand conditions for bonds. There are also
times when upgrading or downgrading of the credit quality of a bond can enhance
a portfolio's return. Funds hold lower quality bonds only when the expected
reward is substantial compared to the potential risks, and credit analysis
supports the conclusion that the credit quality is stable or improving.
Security Analysis: A full staff of credit analysts is dedicated to
supporting fixed income credit decisions. This staff gains additional support
from a substantial equity research team when analyzing bonds from corporate
issuers.
Duration Management: The duration (price volatility of a bond in relation
to interest rate movements) of the portfolios may be altered by 10% shorter or
longer than the portfolios normal
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benchmark. Changes in duration are made infrequently and only when they are
supported by economic expectations and an assessment of value.
A final portfolio consists of securities that have been selected by the
Fixed Income Style Group Portfolio Managers, in-house industry specialists and
expert Wall Street sources all working together.
GROWTH EQUITY STYLE. The Capital Growth and Emerging Growth Funds are
managed by their adviser using the Growth Equity style. Growth Equity Style
investment philosophy seeks companies with superior growth prospects selling at
reasonable prices that, over time, should outperform the market.
Emphasis is placed on a "value adjusted for growth" stock selection
process. Essential to this style is their adviser's belief that absolute
valuation does not capture the powerful effects of inflation. Therefore,
relative price/earnings ranges of stocks going back 5 years are examined rather
than static absolute price/earnings ratio.
Inflation causes the market price/earnings ratio of a stock to expand or
contract. Investors are willing to pay a higher price for stock in a company in
periods of low inflation. The inverse is also true. The premium paid for growth
will increase as inflation declines and decreases as inflation rises.
The stock selection process begins with a universe of financially strong
companies. The selection process selects companies with a market capitalization
greater than $500 million (large, established companies) and a strong price
momentum (growth in share price over the last 18 months). This results in a
universe of approximately 750 companies.
These 750 companies are the universe from which their adviser's industry
specialists make their final decision for inclusion in an investment portfolio.
In accordance with the Growth Equity Style, portfolio managers focus on those
stocks among the universe with the lowest price/earnings ratio and are in
industries with above average earnings growth potential. The final portfolio of
stocks is then constructed by our Growth Equity Group Senior Portfolio Managers
who work closely with the in-house industry specialists, as well as expert Wall
Street sources.
In summary, the Growth Equity Style seeks to produce a diverse portfolio
of large capitalization growth stocks, that over time, should outperform the
market.
VALUE EQUITY STYLE. The Value Fund is managed by its adviser using the
Value Equity Style. The Value Equity Style investment philosophy is premised on
the belief that a well diversified portfolio of undervalued companies exhibiting
low price/earnings ratios will over time outperform the market while incurring
lower than market risk.
This style utilizes a "bottom-up" approach to stock selection, focusing on
well proven factors of fundamental valuation. A low price/earnings ratio and
above market dividend yield are two of the biases which reduce market risk. A
catalyst for earnings improvement is also one of this Style's requirements as it
assists with the "timing" of the purchase of a particular company.
Stock selection process begins with a team of 10 in-house research
specialists aided by a computerized screening model. Starting with approximately
a 2,000 company universe, stocks must first pass a rigorous screening process
that selects only those companies that possess strong financial quality and a
market capitalization greater than $500 million. This results in a universe of
approximately 900 companies, representing all of the 54 major U.S. industries
and approximately 10 economic sectors.
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A more sophisticated screening process is then applied to the 900 company
universe. The companies are then ranked based on the following factor
weightings:
The top one-third, or approximately 300 companies, result in the final
universe from which the industry specialists make initial selections for a Fund.
To insure adherence to the discipline, price objectives (buy and sell prices)
are set for each company purchased, based on sound fundamental analysis. A final
diversified portfolio of approximately 65 issues is constructed by the Value
Equity Style Group Senior Portfolio Managers working closely with in-house
industry specialists, as well as expert Wall Street sources.
In summary, the low price/earnings ratio, value discipline seeks to
produce a well diversified portfolio of high quality companies, that over time,
should outperform the market, thereby adding value while incurring below-market
risk.
DISCIPLINED EQUITY STYLE. The Nations Disciplined Equity Fund is managed
by its adviser using Disciplined Equity Style. Disciplined Equity Style
investment philosophy seeks to identify companies which offer future near-term
earnings momentum.
Its adviser pursues this investment philosophy through the use of a
proprietary computerized tracking system (the "Alpha Model") which monitors the
earnings per share estimates of approximately 3,000 Wall Street analysts, and
through conventional security analysis. In utilizing the computerized tracking
system, its adviser identifies companies with respect to which there has been a
change in the consensus analyst estimate of earnings per share. Its adviser
believes that such a change often signifies the beginning of a trend for the
company, rather than an isolated occurrence, and that such trend ultimately will
be reflected in the share price of the company. Its adviser then buys or sells
stocks for the Fund based on the results of this analysis.
In selecting stocks pursuant to Disciplined Equity Style, its adviser also
uses conventional security analysis techniques. Starting with a universe of
approximately 2,000 companies with large market capitalizations, its adviser
eliminates stocks that have relatively low trading activity, as well as stocks
of companies of poor credit quality and those which, in the opinion of its
adviser, are overpriced. From the available pool of stocks that meet all of the
criteria, approximately 40 to 50 are selected for inclusion in the Fund's
portfolio.
Its adviser strives to keep the assets of the Fund fully invested at all
times, except as required to meet expected liquidity needs.
EQUITY INCOME STYLE. The Equity Income Fund is managed by its adviser
using Equity Income Style. Equity Income Style investment philosophy is premised
on the belief that a diversified portfolio of stocks with an above average yield
can provide long-term returns, higher than that of the S&P 500 Index (the "S&P
500") and with less volatility.
This style utilizes a "low volatility" approach to stock selection,
focusing on tested factors of fundamental stock valuation. Volatility is reduced
through selecting stocks with Beta Coefficient ("Beta") of less than 1.0 (Beta
is a measurement of volatility relative to the stock market as a whole, which
has a Beta of 1.0). The Equity Income Style seeks to maintain a yield on the
portfolio of at least 50% higher than the dividend yield for the S&P 500. Its
adviser reduces risk by investing in both common stocks and convertible
securities.
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Equity Income Style stock selection process begins with a team of in-house
research specialists aided by a computerized screening process. Starting with a
2000 company universe, stocks must first pass a rigorous screening process that
selects companies with a yield only one-third less than the S&P 500 and market
capitalization greater than $500 million. Often stocks with below average yields
grow faster than those with average yields. Therefore, over time, a portfolio
may earn more income by purchasing stocks with below average yields. Stocks are
then ranked relative to other stocks within their industry.
A more sophisticated screening process is then applied to the universe.
Each company is ranked based on the following factor weightings: (i) market
style analyzes correlations between crucial stock characteristics (price/book
ratios, dividends yields, and return on assets) and price performance; (ii)
Insider Trading looks at filings with the SEC and evaluates them by title, date,
transaction size and historical performance; (iii) Earnings Expectations
evaluates changes in annual earnings estimates and quarterly earnings surprises,
and (iv) Price Momentum monitors relative price strength with short term under
performance. The final portfolio of approximately 70 issues is constructed by
the Equity Income Style Group senior portfolio managers working closely with
in-house industry specialists, as well as expert Wall Street sources.
INTERNATIONAL EQUITY INCOME STYLE. The International Equity Fund is
managed by its adviser using International Equity Style. International Equity
Income Style investment philosophy is premised on the belief that a diversified
portfolio of equity securities of established, non-United States issuers can
provide long-term growth of capital and income.
This style focuses on the country selection process by utilizing
macroeconomic forecasts to identify areas of the world which will exhibit
relatively strong growth within the context of a modest inflation and low
interest rate environment. The political factors and market liquidity
constraints which can affect stock market valuations are also taken into
consideration by its adviser prior to making stock selections.
The stock selection process begins with the elimination of equity
securities with a market capitalization of less than $250 million. The next step
in the process is the ranking of each country and industry sector by relative
price/earnings ratio using an historical range of not less than ten years from
an universe of approximately 1000 stocks. In addition to the relative historical
price/earnings ratio the portfolio managers also employ a fundamental analysis
of growth opportunities, management and future direction of these stocks.
The International Equity Fund is a dollar-denominated mutual fund and
therefore, consideration is given to hedging part or all of the portfolio back
to U.S. dollars from international currencies. All decisions to hedge are based
upon an analysis of the relative value of the U.S. dollar on an international
purchasing power parity basis (purchasing power parity is a method for
determining the relative purchasing power of different currencies by comparing
the amount of each currency required to purchase a typical bundle of goods and
services to domestic markets) and an estimation of short-term interest rate
differentials (which affect both the direction of currency movements and also
the cost of hedging).
EMERGING MARKETS AND PACIFIC GROWTH FUNDS STYLE. The Emerging Markets and
Pacific Growth Funds utilize an investment philosophy that emphasizes investment
in reasonably priced growth stocks. This philosophy assumes that superior
earnings growth will lead to greater investment returns. In the case of global
or international portfolios this philosophy concentrates on stock selection and
asset allocation aimed at strategically overweighting growing markets while
avoiding those with less
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possibility of appreciation. This investment approach is designed to add value
while also providing diversification to minimize risk.
Gartmore selects stocks for its portfolios using rigorous stock selection
criteria. Their analysis is designed to discover securities which demonstrate a
potential for above market earnings growth rates while maintaining reasonable
valuation levels and whose parent corporations show strong balance sheets and
quality management. In order to ascertain these facts, Gartmore representatives
make on site inspections of the companies under review, as well as their
competitors, suppliers and customers.
The allocation of assets is determined by portfolio managers based on both
qualitative and quantitative research. This research includes the identification
of investment themes, political and economic trends, price/earnings ratios, real
interest rates and earnings growth projections. These factors determine
economic, market, interest rate and currency forecasts which are, in turn, used
to determine regional allocations.
Utilizing the investment strategy set forth above, Nations Emerging
Markets Fund invests in securities of companies located in emerging market
countries. These countries include, but are not limited to: Argentina, Brazil,
Chile, China, Czech Republic, Colombia, Ecuador, Greece, Hong Kong, Indonesia,
India, Malaysia, Mexico, The Philippines, Poland, Portugal, Peru, Russia,
Singapore, South Africa, Thailand, Taiwan, and Turkey.
GLOBAL GOVERNMENT INCOME FUND STYLE. The Global Government Income Fund
bases its investment decisions on an analysis of longer term economic trends
which are believed to be key to successful fixed income investing. This tendency
to take into account long term economic trends is coupled with the practice of
investing primarily in investment grade government securities which minimize the
investor's credit risk.
This investment policy is effected by carefully analyzing interest rate
forecasts and currency movements for various markets and using this information
to determine regional allocations. These allocations are then adjusted to
reflect the portfolio manager's perception of the most favorable markets and
issuers. Fundamental economic strength, credit quality and interest rate trends
are the principal factors considered by the portfolio's management in
determining whether to increase or decrease the emphasis placed on a particular
country or type of security.
ADMINISTRATOR AND CO-ADMINISTRATOR
The Company has retained Stephens Inc. ("Administrator") as the
administrator and First Data Investors Services Group, Inc. (the
"Co-Administrator") as the co-administrator of the LifeGoal Portfolios.
The Administrator and Co-Administrator serve under an administration
agreement ("Administration Agreement") and co-administration agreement
("Co-Administration Agreement"), respectively, each of which was approved by the
Board of Directors on July 10, 1996. The Administrator receives, as compensation
for its services rendered under the Administration Agreement and as agent for
the Co-Administrator for the services it provides under the Co-Administration
Agreement, an administrative fee of $10,000 per year per LifeGoal Portfolio,
which will be absorbed by NBAI.
Pursuant to the Administration Agreement, the Administrator has agreed to,
among other things, (i) maintain office facilities for the LifeGoal Portfolios,
(ii) furnish statistical and research data, data processing, clerical, and
internal executive and administrative services to the Company, (iii) furnish
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corporate secretarial services to the Company, including coordinating the
preparation and distribution of materials for Board of Directors meetings, (iv)
coordinate the provision of legal advice to the Company with respect to
regulatory matters, (v) coordinate the preparation of reports to the Company's
shareholders and the SEC, including annual and semi-annual reports, (vi)
coordinate the provision of services to the Company by the Co-Administrator, the
Transfer Agents and the Custodians, and (vii) generally assist in all aspects of
the Company's operations. Additionally, the Administrator is authorized to
receive, as agent for the Co-Administrator, the fees payable to the
Co-Administrator by the Company for its services rendered under the
Co-Administration Agreement. The Administrator bears all expenses incurred in
connection with the performance of its services.
Pursuant to the Co-Administration Agreement, the Co-Administrator has
agreed to, among other things, (i) provide accounting and bookkeeping services
for the LifeGoal Portfolios, (ii) compute each Portfolio's net asset value and
net income, (iii) accumulate information required for the Company's reports to
shareholders and the SEC, (iv) prepare and file the Company's federal and state
tax returns, (v) perform monthly compliance testing for the Company, and (vi)
prepare and furnish the Company monthly broker security transaction summaries
and transaction listings and performance information. The Co-Administrator bears
all expenses incurred in connection with the performance of its services.
The Administration Agreement and the Co-Administration Agreement may be
terminated by a vote of a majority of the Board of Directors, or by the
Administrator or Co-Administrator, respectively, on 60 days' written notice
without penalty. The Administration Agreement and Co-Administration Agreement
are not assignable without the written consent of the non-assigning party.
Furthermore, the Administration Agreement and the Co-Administration Agreement
provide that the Administrator and Co-Administrator, respectively, shall not be
liable to the LifeGoal Portfolios or to their shareholders except in the case of
the Administrator's or Co-Administrator's respective willful misfeasance, bad
faith, gross negligence or reckless disregard of duty.
The dollar amount of combined administration fees paid to Stephens and
First Data for the period ended March 31, 1997 was as follows:
Net
Administration Administration Fees
Fees Voluntarily Waived
LifeGoal Growth Portfolio $ 4,959 $0
LifeGoal Balanced Growth Portfolio 4,959 0
LifeGoal Income and Growth Portfolio 4,959 0
DISTRIBUTOR
Stephens Inc. (the "Distributor") serves as the principal underwriter
and distributor of the shares of the LifeGoal Portfolios.
At a meeting held on July 10, 1996, the Board of Directors selected
Stephens Inc. as Distributor, and approved a distribution agreement
("Distribution Agreement") with the Distributor. Pursuant to the Distribution
Agreement, the Distributor, as agent, sells shares of the LifeGoal Portfolios on
a continuous basis and transmits purchase and redemption orders that its
receives to the Company or the Transfer
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Agent (as defined under the caption "Transfer Agents and Custodian").
Additionally, the Distributor has agreed to use appropriate efforts to solicit
orders for the sale of shares and to undertake such advertising and promotion as
it believes appropriate in connection with such solicitation. Pursuant to the
Distribution Agreement, the Distributor, at its own expense, finances those
activities which are primarily intended to result in the sale of shares of the
LifeGoal Portfolios, including, but not limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing of prospectuses to other
than existing shareholders, and the printing and mailing of sales literature.
The Distributor, however, may be reimbursed for all or a portion of such
expenses to the extent permitted by a distribution plan adopted by the Company
pursuant to Rule 12b-1 under the 1940 Act.
The Distribution Agreement will continue year to year as long as such
continuance is approved at least annually by (i) the Board of Directors or a
vote of the majority (as defined in the 1940 Act) of the outstanding voting
securities of a LifeGoal Portfolio and (ii) a majority of the directors who are
not parties to the Distribution Agreement or "interested persons" of any such
party by a vote cast in person at a meeting called for such purpose. The
Distribution Agreement is not assignable and is terminable with respect to a
Portfolio, without penalty, on 60 days' notice by the Board of Directors, the
vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of such LifeGoal Portfolio, or by the Distributor.
DISTRIBUTION PLANS AND SHAREHOLDER SERVICING ARRANGEMENTS FOR INVESTOR SHARES
INVESTOR A SHARES
The Company has adopted a Shareholder Servicing and Distribution Plan (the
"Investor A Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to
each LifeGoal Portfolio's Investor A Shares. The Investor A Plan provides that
each LifeGoal Portfolio may pay the Distributor or banks, broker/dealers or
other financial institutions that offer shares of the Fund and that have entered
into a Sales Support Agreement with the Distributor ("Selling Agents") or a
Shareholder Servicing Agreement with the Company ("Servicing Agents"), up to
0.25% (on an annualized basis) of the average daily net asset value of such
LifeGoal Portfolio.
Payments under the Investor A Plan may be made to the Distributor for
reimbursements of distribution-related expenses actually incurred by the
Distributor, including, but not limited to, expenses of organizing and
conducting sales seminars, printing of prospectuses and statements of additional
information (and supplements thereto) and reports for other than existing
shareholders, preparation and distribution of advertising material and sales
literature and costs of administering the Investor A Plan, or to Servicing
Agents that have entered into a Shareholder Servicing Agreement with the Company
for providing shareholder support services to their customers ("Customers")
which hold of record or beneficially Investor A Shares of a Fund. Such
shareholder support services provided by Servicing Agents to holders of Investor
A Shares of the LifeGoal Portfolios may include (i) aggregating and processing
purchase and redemption requests for Investor A Shares from their Customers and
transmitting promptly net purchase and redemption orders to the Company's
distributor or transfer agent; (ii) providing their Customers with a service
that invests the assets of their accounts in Investor A Shares pursuant to
specific or pre-authorized instructions; (iii) processing dividend and
distribution payments from the Company on behalf of their Customers; (iv)
providing information periodically to their Customers showing their positions in
Investor A Shares; (v) arranging for bank wires; (vi) responding to their
Customers' inquiries concerning their investment in Investor A Shares; (vii)
providing subaccounting with respect to Investor A Shares beneficially owned by
their Customers or the information necessary for subaccounting; (viii) if
required by law, forwarding shareholder communications from the Company (such as
proxies, shareholder reports, annual and semi-annual
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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 LifeGoal Portfolio would not be contractually obligated to
pay the Distributor for any expenses not previously reimbursed by the LifeGoal
Portfolio.
For the fiscal period ended March 31, 1997, no fees were paid to the
Distributor in connection with Investor A Shares of the Portfolios.
INVESTOR B SHARES
The Directors of the Company have approved a Distribution Plan in
accordance with Rule 12b-1 under the 1940 Act for the Investor B Shares of the
LifeGoal Portfolios (the "Investor B Plan"). Pursuant to the Investor B Plan,
each Portfolio may pay the Distributor for certain expenses that are incurred in
connection with the distribution of shares. Payments under the Investor B 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 B Shares of a Portfolio. Payments to
the Distributor pursuant to the Investor B Plan will be used (i) to compensate
Selling Agents for providing sales support assistance relating to Investor B
Shares, (ii) for promotional activities intended to result in the sale of
Investor B Shares such as to pay for 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
B Shares. Currently, substantially all fees paid pursuant to the Investor B 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 B Shares. Fees received by the Distributor pursuant to the Investor B
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 B 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 B Shares of
the LifeGoal Portfolios. Such Selling Agents will be compensated at the annual
rate of up to 0.75% of the average daily net asset value of the Investor B
Shares of the LifeGoal Portfolios held of record or beneficially by such
Customers. The sales support services provided by Selling Agents may include
providing distribution assistance and promotional activities intended to result
in the sales of shares such as paying for the preparation, printing and
distribution of prospectuses to other than current shareholders.
Fees paid pursuant to the Investor B Plan are accrued daily and paid
monthly, and are charged as expenses of the relevant shares of a LifeGoal
Portfolio as accrued. Expenses incurred by the Distributor pursuant to the
Investor B Plan in any given year may exceed the sum of the fees received under
the Investor B 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 B Plan is in effect. If the
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Investor B Plan were terminated or not continued, a LifeGoal Portfolio would not
be contractually obligated to pay the Distributor for any expenses not
previously reimbursed by the LifeGoal Portfolio or recovered through contingent
deferred sales charges.
In addition, the Directors have approved a Shareholder Servicing Plan
("Servicing Plan") with respect to the Investor B Shares of the LifeGoal
Portfolios (the "Investor B Servicing Plan"). Pursuant to the Investor B
Servicing Plan, each LifeGoal Portfolio 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 B Servicing Plan
will be calculated daily and paid monthly at a rate set from time to time by the
Board of Directors, provided that the annual rate may not exceed 0.25% of the
average daily net asset value of the LifeGoal Portfolios' Investor B Shares. The
shareholder services provided by the Servicing Agents may include (i)
aggregating and processing purchase and redemption requests for such Investor B
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 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 such
Investor B Shares; (v) arranging for bank wires; (vi) responding to Customers'
inquiries concerning their investment in such Investor B Shares; (vii) providing
subaccounting with respect to such Investor B 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 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.
For the fiscal period ended March 31, 1997, no fees were paid to the
Distributor in connection with Investor B Shares of the Portfolios, as the
shares were not yet in service.
INVESTOR C SHARES
The Directors of the Company have approved a Distribution Plan in
accordance with Rule 12b-1 under the 1940 Act for the Investor C Shares of the
LifeGoal Portfolios (the "Investor C Plan"). Pursuant to the Investor C Plan,
each Portfolio may pay the Distributor for certain expenses that are incurred in
connection with the distribution of shares. Payments under the Investor C Plan
will be calculated daily and paid monthly at a rate set from time to time by the
Board of Directors provided that the annual rate may not exceed 0.75% of the
average daily net asset value of Investor C Shares of a Portfolio. Payments to
the Distributor pursuant to the Investor C Plan will be used (i) to compensate
Selling Agents for providing sales support assistance relating to Investor C
Shares, (ii) for promotional activities intended to result in the sale of
Investor C Shares such as to pay for the 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
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the extent permitted by the SEC) and will not be used to pay any general and
administrative expenses of the Distributor.
Pursuant to the Investor C Plan, the Distributor may enter into Sales
Support Agreements with Selling Agents for providing sales support services to
their Customers who are the record or beneficial owners of Investor C Shares of
the LifeGoal Portfolios. Such Selling Agents will be compensated at the annual
rate of up to 0.75% of the average daily net asset value of the Investor C
Shares of the LifeGoal Portfolios held of record or beneficially by such
Customers. The sales support services provided by Selling Agents may include
providing distribution assistance and promotional activities intended to result
in the sales of shares such as paying for the preparation, printing and
distribution of prospectuses to other than current shareholders.
Fees paid pursuant to the Investor C Plan are accrued daily and paid
monthly, and are charged as expenses of the relevant shares of a Fund as
accrued. Expenses incurred by the Distributor pursuant to the Investor C Plan in
any given year may exceed the sum of the fees received under the Investor C Plan
and payments received pursuant to contingent deferred sales charges. Any such
excess may be recovered by the Distributor in future years so long as the
Investor C Plan is in effect. If the Investor C Plan were terminated or not
continued, a LifeGoal Portfolio would not be contractually obligated to pay the
Distributor for any expenses not previously reimbursed by the LifeGoal Portfolio
or recovered through contingent deferred sales charges.
In addition, the Directors have approved a Shareholder Servicing Plan
("Servicing Plan") with respect to the Investor C Shares of the LifeGoal
Portfolios (the "Investor C Servicing Plan"). Pursuant to the Investor C
Servicing Plan, each LifeGoal Portfolio may pay banks, broker/dealers or other
financial institutions that have entered into a Shareholder Servicing Agreement
with Nations Fund ("Servicing Agents") for certain expenses that are incurred by
the Servicing Agents in connection with shareholder support services that are
provided by the Servicing Agents. Payments under the Investor C Servicing Plan
will be calculated daily and paid monthly at a rate set from time to time by the
Board of Directors, provided that the annual rate may not exceed 0.25% of the
average daily net asset value of the LifeGoal Portfolios' Investor C Shares. The
shareholder services provided by the Servicing Agents may include (i)
aggregating and processing purchase and redemption requests for such Investor C
Shares from Customers and transmitting promptly net purchase and redemption
orders to the Company's distributor or transfer agent; (ii) providing Customers
with a service that invests the assets of their accounts in such Investor C
Shares pursuant to specific or pre-authorized instructions; (iii) processing
dividend and distribution payments from the Company on behalf of Customers; (iv)
providing information periodically to Customers showing their positions in such
Investor C Shares; (v) arranging for bank wires; (vi) responding to Customers'
inquiries concerning their investment in such Investor C Shares; (vii) providing
subaccounting with respect to such Investor C Shares beneficially owned by
Customers or providing the information necessary for subaccounting; (viii) if
required by law, forwarding shareholder communications from the Company (such as
proxies, shareholder reports, annual and semi-annual financial 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.
For the fiscal period ended March 31, 1997, no fees were paid to the
Distributor in connection with Investor C Shares of the Portfolios.
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INFORMATION APPLICABLE TO INVESTOR A, INVESTOR B AND INVESTOR C SHARES
The Investor A Plan, the Investor B Plan, the Investor B Servicing 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")
Conduct Rules 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 (except
for the Investor B Plan and Investor B Servicing Plan, approved on June 4,
1997). 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,
Investor B or Investor C Shares and the holders of such shares. The Plans have
been approved by the initial shareholder.
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, Investor B 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 B Servicing Plan and 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 managers subject to the jurisdiction of the
SEC or the Department of Labor, are urged to consult their legal advisers 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
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broker/dealers, banks and other financial institutions that are dealers of
record or holders of record or which have a servicing relationship with the
beneficial owners of Primary B Shares ("Servicing Agents"). The Administration
Plan provides that pursuant to the Administration Agreements, Servicing Agents
shall provide the shareholder support services as set forth therein to their
Customers who may from time to time own of record or beneficially Primary B
Shares in consideration for the payment of up to 0.60% (on an annualized basis)
of the net asset value of such shares. Such services may include: (i)
aggregating and processing purchase, exchange and redemption requests for
Primary B Shares from Customers and transmitting promptly net purchase and
redemption orders with the Distributor or the transfer agents; (ii) providing
Customers with a service that invests the assets of their accounts in Primary B
Shares pursuant to specific or pre-authorized instructions; (iii) processing
dividend and distribution payments from the Company on behalf of Customers; (iv)
providing information periodically to Customers showing their positions in
Primary B Shares; (v) arranging for bank wires; (vi) responding to Customer
inquiries concerning their investment in Primary B Shares; (vii) providing
sub-accounting with respect to Primary B Shares beneficially owned by Customers
or the information necessary for sub-accounting; (viii) if required by law,
forwarding shareholder communications (such as proxies, shareholder reports
annual and semi-annual financial statements and dividend, distribution and tax
notices) to Customers; (ix) forwarding to Customers proxy statements and proxies
containing any proposals regarding an Administration Agreement; (x) employee
benefit plan recordkeeping, administration, custody and trustee services; (xi)
general shareholder liaison services; and (xii) providing such other similar
services as may reasonably be requested to the extent permitted under applicable
statutes, rules, or regulations.
The Administration Plan also provides that in no event may the portion of
the shareholder administration fee that constitutes a "service fee," as the term
is defined in the NASD Servicing Plan Rule, exceed 0.25% of the average daily
net asset value of the Primary B Shares of a Portfolio. In addition, to the
extent any portion of the fees payable under the Plan is deemed to be for
services primarily intended to result in the sale of LifeGoal Portfolio Primary
B Shares, such fees are deemed approved and may be paid under the Administration
Plan. Accordingly, the Administration Plan has been approved and will be
operated pursuant to Rule 12b-1 under the 1940 Act. Such Plan shall continue in
effect as long as the Board of Directors, including a majority of the Qualified
Directors, specifically approves the Plan at least annually.
EXPENSES
The Administrator and/or Co-Administrator furnishes, without additional
cost to the Company, the services of the Treasurer and Secretary of the Company
and such other personnel (other than the personnel of the Adviser or
Sub-Adviser) as are required for the proper conduct of the Company's affairs.
The Distributor bears the incremental expenses of printing and distributing
prospectuses used by the Distributor or furnished by the Distributor to
investors in connection with the public offering of the Company's Shares and the
costs of any other promotional or sales literature, except that to the extent
permitted under the Plans relating to the Investor A, Investor B and Investor C
Shares of each LifeGoal Portfolio, sales-related expenses incurred by the
Distributor may be reimbursed by the Company.
The Company pays, or causes to be paid, all other expenses of the Company,
including without limitation: the fees of the Adviser, the Sub-Adviser, the
Administrator and Co-Administrator; the charges and expenses of any registrar,
any custodian or depository appointed by the Company for the safekeeping of its
cash, fund securities and other property, and any stock transfer, dividend or
accounting agent or agents appointed by the Company; brokerage commissions
chargeable to the Company in connection with fund securities transactions to
which the Company is a party; all taxes, including securities issuance and
transfer taxes; corporate fees payable by the Company to federal, state or other
governmental agencies; all costs and expenses in connection with the
registration and maintenance of registration of the
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Company and its shares with the SEC 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. The Adviser, under its investment advisory agreement with the
LifeGoal Portfolios, has agreed to absorb all expenses of the LifeGoal
Portfolios, included those listed above, except for taxes, brokerage fees and
commissions, extraordinary expenses and any applicable Rule 12b-1 fees,
shareholder servicing fees and/or shareholder administration fees.
Expenses of the Company which are not directly attributable to the
operations of any class of shares of LifeGoal Portfolio are pro-rated among all
classes of shares of LifeGoal Portfolios of the Company based upon the relative
net assets of each class or LifeGoal Portfolio. Expenses of the Company which
are not directly attributable to a specific class of shares but are directly
attributable to a specific LifeGoal Portfolio are prorated among all the classes
of shares of such LifeGoal Portfolio based upon the relative net assets of each
such class of shares. Expenses of the Company which are directly attributable to
a class of shares are charged against the income available for distribution as
dividends to such class of shares.
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,
produces statements with respect to account activity for the Company and its
shareholders for these services.
NationsBank of Texas, N.A. serves as custodian (the "Custodian") for the
portfolio securities (except for shares of underlying Nations Funds) and cash of
the LifeGoal Portfolios. Except with respect to shares of underlying
NationsFunds, the Custodian maintains custody of the LifeGoal Portfolios'
securities, cash and other property, delivers securities against payment upon
sale and pays for securities against delivery upon purchase, makes payments on
behalf of the LifeGoal Portfolios for payments of dividends, distributions and
redemptions, endorses and collects on behalf of the LifeGoal Portfolios all
checks, and receives all dividends and other distributions made on securities
owned by the LifeGoal Portfolios. The Company maintains direct custody of the
LifeGoal Portfolios' shares of underlying Nations Funds.
INDEPENDENT ACCOUNTANT AND REPORTS
66
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The Board of Directors has selected Price Waterhouse LLP, 160 Federal
Street, Boston, Massachusetts 02110 as the Company's independent accountant to
audit the Company's books and review the Company's tax returns for the LifeGoal
Portfolios' fiscal years ending on and after March 31, 1997.
The Annual Report for the fiscal period ended March 31, 1997, is hereby
incorporated by reference in this SAI. The Annual Report will be sent free of
charge with this SAI to any shareholder who requests this SAI.
COUNSEL
Morrison & Foerster LLP serves as legal counsel to the Company. Its
address is 2000 Pennsylvania Avenue, N.W., Washington, D.C. 20006.
PENDING LEGAL PROCEEDINGS
A purported class action lawsuit against, among others, Nations
Short-Intermediate Government Fund was filed by Lawrence Bergelt on May 21,
1996. The complaint was amended and consolidated on July 11, 1996 in the United
States District Court for the Middle District of Florida, Tampa Division by Mr.
Bergelt and others in an action against the Nations Government Securities Fund,
NationsBank Corporation and certain of its affiliates, Dean Witter Distributors
and certain of its affiliates, and Stephens Inc. (Case No. 94-995-Civ.-T-23E).
As relevant to Nations Short-Intermediate Government Fund, plaintiffs allege
that, among other things, defendants violated the Securities Exchange Act of
1934 and various state securities fraud statutes by employing a scheme to
defraud plaintiffs into purchasing shares of the fund and making untrue
statements of material fact and omitting to state material facts in connection
with sales of shares of the fund. Plaintiffs further allege that, among other
things, defendants concealed the risks associated with the fund by blurring the
distinctions between banks and non-bank subsidiaries and by obscuring the
differences between traditional, federally insured bank products and uninsured,
non-depository products.
ADDITIONAL INFORMATION ON PERFORMANCE
Yield information and other performance information for the Company's
LifeGoal Portfolios may be obtained by calling the Company at (800) 321-7854.
From time to time, the yield and total return of a LifeGoal Portfolio's
Investor Shares and Primary Shares may be quoted in advertisements, shareholder
reports, and other communications to shareholders. Each LifeGoal Portfolio of
the Company also may quote information obtained from the Investment Company
Institute, national financial publications, trade journals and other industry
sources 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.
The international investment philosophy of certain of the underlying
Nation Funds is based on the premise that significant opportunities exist
outside of the United States. In fact, two-thirds of the world's investment
opportunities are outside of the United States and foreign stock markets have
consistently outperformed the U.S. stock market. Adding foreign stocks to a
domestic portfolio can help reduce risk and lower portfolio volatility because
world markets do not move in sync. From time to time, the LifeGoal Portfolios
might point out these opportunities and the differences that exist through
investing in overseas countries in marketing materials that reference underlying
Nations Funds.
67
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YIELD CALCULATIONS
The yield of the Primary Shares and Investor Shares of the LifeGoal
Portfolios is a measure of the net investment income per share (as defined)
earned over a 30-day period expressed as a percentage of the maximum offering
price of a share of such classes at the end of the period. Yield figures are
determined by dividing the net investment income per share earned during the
specified 30-day period by the maximum offering price per share on the last day
of the period, according to the following formula:
Yield = 2[(a-b + 1)6 1]
cd
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = average daily number of shares outstanding during the
period that were entitled to receive dividends
d = maximum offering price per share on the last day of
the period
For purposes of yield quotation, income is calculated in accordance with
standardized methods applicable to all stock and bond mutual funds. In general,
interest income is reduced with respect to bonds trading at a premium over their
par value by subtracting a portion of the premium from income on a daily basis,
and is increased with respect to bonds trading at a discount by adding a portion
of the discount to daily income. Capital gains and losses are excluded from the
calculation.
Income calculated for the purposes of calculating a LifeGoal Portfolio's
yield differs from income as determined for other accounting purposes. Because
of the different accounting methods used, and because of the compounding assumed
in yield calculations, the yield quoted for a LifeGoal Portfolio may differ from
the rate of distributions a LifeGoal Portfolio paid over the same period or the
rate of income reported in the LifeGoal Portfolios' financial statements.
TOTAL RETURN CALCULATIONS
Total return measures both the net investment income generated by, and the
effect of any realized or unrealized appreciation or depreciation of the
underlying investments in a Portfolio. The LifeGoal Portfolios' average annual
and cumulative total return figures are computed in accordance with the
standardized methods prescribed by the SEC.
Average annual total return figures are computed by determining the
average annual compounded rates of return over the periods indicated in the
advertisement, sales literature or shareholders' report that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
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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
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.
For the fiscal period ended March 31, 1997, the average annual total
return for the Portfolios of the Company was as follows:
Average Annual Total Return
Period Ended
3/31/97
-------
(a) Growth Portfolio
Primary A Shares 2.10%
Primary B Shares N/A
Investor A Shares 2.05%
Investor B Shares N/A
Investor C Shares 2.01%
(b) Balanced Growth Portfolio
69
<PAGE>
Primary A Shares 0.90%
Primary B Shares N/A
Investor A Shares 0.86%
Investor B Shares N/A
Investor C Shares 0.85%
(c) Income and Growth Portfolio
Primary A Shares 2.59%
Primary B Shares N/A
Investor A Shares 2.54%
Investor B Shares N/A
Investor C Shares 2.54%
The Primary Shares and Investor Shares of the LifeGoal Portfolios may also
quote their distribution rates, which express the historical amount of income
dividends paid to their shareholders during a three-month period as a percentage
of the maximum offering price per share on the last day of such period.
The performance figures of the LifeGoal Portfolios as described above will
vary from time to time depending upon market and economic conditions, the
composition of their portfolios and operating expenses. These factors should be
considered when comparing the performance figures of the LifeGoal Portfolios
with those of other investment companies and investment vehicles.
The LifeGoal Portfolios may quote information obtained from the Investment
Company Institute, national financial publications, trade journals and other
industry sources in its advertising and sales literature. In addition, the
LifeGoal Portfolios may compare the performance and yield of a class or series
of shares to those of other mutual funds with similar investment objectives and
to other relevant indices or to rankings prepared by independent services or
other financial or industry publications that monitor the performance of mutual
funds. For example, the performance and yield of a class of shares in a LifeGoal
Portfolio may be compared to data prepared by Lipper Analytical Services, Inc.
Performance and yield data as reported in national financial publications such
as Money Magazine, Forbes, Barron's, The Wall Street Journal, and The New York
Times, or in publications of a local or regional nature, also may be used in
comparing the performance of a class of shares in a LifeGoal Portfolio.
70
<PAGE>
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 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.
A-1
<PAGE>
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.
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
A-2
<PAGE>
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.
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:
A-3
<PAGE>
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 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.
A-4
<PAGE>
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 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-5
<PAGE>
A-1+ Where issues possess a particularly strong credit feature.
A-1 Obligations supported by the highest capacity for timely
repayment.
A-2 Obligations supported by a good capacity for timely repayment.
A-6
<PAGE>
NATIONS LIFEGOAL FUNDS, INC.
FILE NOS. 333-09703; 811-07745
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Included in Part B:
Audited Financial Statements for LifeGoal Growth Portfolio, LifeGoal
Balanced Growth Portfolio and LifeGoal Income and Growth Portfolio:
Schedule of Investments for March 31, 1998
Statements of Assets and Liabilities for March 31, 1998
Statements of Operations for the fiscal period ended March 31, 1998
Statements of Changes in Net Assets for period ended March 31, 1998
Notes to Financial Statements
Report of Public Accountants dated May 15, 1998
Included in Part C:
Consent of Independent Accountants
(b) Exhibits
Exhibit
Number Description
(1) Articles of Incorporation, dated July 3, 1996 is incorporated by
reference to the Registration Statement on Form N1-A, filed on August
7, 1996
(1)(b) Form of Articles of Amendment is incorporated by reference to
Pre-Effective Amendment No. 1, filed October 9, 1996
(2) By-Laws, dated July 10, 1996 is incorporated by reference to the
Registration Statement on Form N1-A, filed on August 7, 1996
(3) Not Applicable
(4) None
(5)(a) Form of Investment Advisory Agreement between Nations LifeGoal Funds,
Inc. and NationsBanc Advisors, Inc. is incorporated by reference to
Pre-Effective Amendment No. 1, filed October 9, 1996
(5)(b) Form of Sub-Advisory Agreement with NationsBanc Advisors, Inc.,
TradeStreet Investment Associates, Inc. and Nations LifeGoal Funds,
Inc. on behalf of LifeGoal Growth Fund, LifeGoal Balanced Growth Fund
and LifeGoal Income and Growth Fund is incorporated by reference to
Pre-Effective Amendment No. 1, filed October 9, 1996
(6)(a) Form of Distribution Agreement between Stephens Inc. and Nations
LifeGoal Funds, Inc. is incorporated by reference to the Registration
Statement on Form N1-A, filed on August 7, 1996
(6)(b) Form of Sales Support Agreement is incorporated by reference to the
Registration Statement on Form N1-A, filed on August 7, 1996
(6)(c) Form of Shareholder Servicing Agreement is incorporated by reference
to the Registration Statement on Form N1-A, filed on August 7, 1996
(7) Deferred Compensation Plan, to be filed by Amendment.
(8) Form of Custody Agreement between Nations LifeGoal Funds, Inc. and
NationsBank of Texas, N.A. is incorporated by reference to the
Registration Statement on Form N1-A, filed on August 7, 1996
(9)(a) Transfer Agency Agreement, to be filed by Amendment
(9)(b) Form of Amendment to Transfer Agency and Services Agreement is
incorporated by reference to the Registration Statement on Form N1-A
filed on August 7, 1996
(9)(c) Supplement to Transfer Agency and Services Agreement, to be filed by
Amendment
(9)(d) Sub-Transfer Agency and Services Agreement, to be filed by Amendment
(9)(e) Form of Amendment to Sub-Transfer Agency and Services Agreement is
incorporated by reference to the Registration Statement on Form N1-A
filed on August 7, 1996
(9)(f) Form of Administration Agreement between Stephens Inc. and Nations
LifeGoal Funds, Inc. is incorporated by reference to the Registration
Statement on Form N1-A filed on August 7, 1996
(9)(g) Form of Co-Administration Agreement between First Data Investor
Services Group, Inc. and Nations LifeGoal Funds, Inc. is incorporated
by reference to the Registration Statement on Form N1-A filed on
August 7, 1996
(10) Opinion and Consent of Counsel, filed herewith
(11) Consent of Independent Accountants -- PricewaterhouseCoopers LLP filed
herewith.
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15)(a) Form of Shareholder Servicing and Distribution Plan, Investor A
Shares, is incorporated by reference to the Registration Statement on
Form N1-A, filed on August 7, 1996
(15)(b) Form of Shareholder Servicing Plan, Investor C Shares is incorporated
by reference to the Registration Statement on Form N1-A, filed on
August 7, 1996
(15)(c) Form of Distribution Plan, Investor C Shares is incorporated by
reference to the Registration Statement on Form N1-A, filed on August
7, 1996
(15)(d) Form of Shareholder Administration Plan, Primary B Shares is
incorporated by reference to the Registration Statement on Form N1-A,
filed on August 7, 1996
(16) Schedule for Computation of Performance Data, to be filed by Amendment
(17) Not Applicable
(18) Rule 18f-3 Multi-Class Plan is incorporated by reference to
Pre-Effective Amendment No. 1, filed October 9, 1996
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.
The following information is as of July 1, 1998.
Number of
Title of Class Record Holders
- ------------------------------------ --------------
LifeGoal Growth Portfolio -Investor A 334
-Investor B 512
-Investor C 48
-Primary A 5
-Primary B 2
LifeGoal Balanced Growth Portfolio -Investor A 86
-Investor B 205
-Investor C 18
-Primary A 5
-Primary B 1
LifeGoal Income and Growth
Portfolio -Investor A 20
-Investor B 67
-Investor C 11
-Primary A 5
-Primary B 1
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.
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 Annuity 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, 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, 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 call a meeting for the purpose of voting upon
the question or removal of a trustee or trustees when requested in
writing to do so by the holders of at least 10% of a Fund's outstanding
shares of beneficial interest and in connection with such meeting to
comply with the provisions of Section 16(c) of the 1940 Act, as amended,
relating to shareholder communications.
(b) 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 certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Little
Rock, State of Arkansas on the 29th day of July, 1998.
NATIONS LIFEGOAL FUNDS, INC.
By: *
--------------------------------
A. Max Walker
President and Chairman of the Board of Directors
By: /s/ Richard H. Blank, Jr.
Richard H. Blank, Jr.
* Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the date indicated:
SIGNATURES TITLE DATE
* President and Chairman July 29, 1998
- -------------------------- of the Board of Directors
(A. Max Walker) (Principal Executive Officer)
* Treasurer July 29, 1998
- -------------------------- Vice President
(Richard H. Rose) (Principal Financial and
Accounting Officer)
* Director July 29, 1998
- --------------------------
(Edmund L. Benson, III)
* Director July 29, 1998
- --------------------------
(James Ermer)
* Director July 29, 1998
- --------------------------
(William H. Grigg)
* Director July 29, 1998
- --------------------------
(Thomas F. Keller)
* Director July 29, 1998
- --------------------------
(Carl E. Mundy, Jr.)
* Director July 29, 1998
- --------------------------
(Charles B. Walker)
* Director July 29, 1998
- --------------------------
(Thomas S. Word)
* Director July 29, 1998
- --------------------------
(James B. Sommers)
/s/ Richard H. Blank, Jr.
Richard H. Blank, Jr.
*Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBITS
EX-27.011 Financial Data Schedules - LifeGoal Balanced Growth Portfolio -
Primary A
EX-27.012 Financial Data Schedules - LifeGoal Balanced Growth Portfolio -
Primary B
EX-27.013 Financial Data Schedules - LifeGoal Balanced Growth Portfolio -
Investor A
EX-27.014 Financial Data Schedules - LifeGoal Balanced Growth Portfolio -
Investor B
EX-27.015 Financial Data Schedules - LifeGoal Balanced Growth Portfolio -
Investor C
EX-27.021 Financial Data Schedules - LifeGoal Growth Portfolio - Primary A
EX-27.022 Financial Data Schedules - LifeGoal Growth Portfolio - Primary B
EX-27.023 Financial Data Schedules - LifeGoal Growth Portfolio - Investor A
EX-27.024 Financial Data Schedules - LifeGoal Growth Portfolio - Investor B
EX-27.025 Financial Data Schedules - LifeGoal Growth Portfolio - Investor C
EX-27.031 Financial Data Schedules - LifeGoal Income and Growth Portfolio -
Primary A
EX-27.032 Financial Data Schedules - LifeGoal Income and Growth Portfolio -
Investor A
EX-27.033 Financial Data Schedules - LifeGoal Income and Growth Portfolio -
Investor B
EX-27.034 Financial Data Schedules - LifeGoal Income and Growth Portfolio -
Investor C
EX-99.B10 Opinion of Counsel
EX-99.B11 Opinion of Independent Accountants
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>021
<NAME>NATIONS LIFEGOAL FUNDS BALANCED GROWTH PRA
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 5,947,610
<INVESTMENTS-AT-VALUE> 6,228,336
<RECEIVABLES> 180,859
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,409,195
<PAYABLE-FOR-SECURITIES> 10,382
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 126,122
<TOTAL-LIABILITIES> 136,504
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (34,988)
<SHARES-COMMON-STOCK> 9,471
<SHARES-COMMON-PRIOR> 212,550
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 95,983
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 280,726
<NET-ASSETS> 103,468
<DIVIDEND-INCOME> 102,363
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 23,275
<NET-INVESTMENT-INCOME> 79,088
<REALIZED-GAINS-CURRENT> 255,675
<APPREC-INCREASE-CURRENT> 353,970
<NET-CHANGE-FROM-OPS> 688,733
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (24,128)
<DISTRIBUTIONS-OF-GAINS> (27,930)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 27,766
<NUMBER-OF-SHARES-REDEEMED> (235,596)
<SHARES-REINVESTED> 4,751
<NET-CHANGE-IN-ASSETS> 4,047,617
<ACCUMULATED-NII-PRIOR> 695
<ACCUMULATED-GAINS-PRIOR> 558
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,202
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23,275
<AVERAGE-NET-ASSETS> 1,430,132
<PER-SHARE-NAV-BEGIN> 9.95
<PER-SHARE-NII> 0.33
<PER-SHARE-GAIN-APPREC> 1.74
<PER-SHARE-DIVIDEND> (0.28)
<PER-SHARE-DISTRIBUTIONS> (0.32)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.92
<EXPENSE-RATIO> 0.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>022
<NAME>NATIONS LIFEGOAL FUNDS BALANCED GROWTH PRB
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 5,947,610
<INVESTMENTS-AT-VALUE> 6,228,336
<RECEIVABLES> 180,859
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,409,195
<PAYABLE-FOR-SECURITIES> 10,382
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 126,122
<TOTAL-LIABILITIES> 136,504
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,821
<SHARES-COMMON-STOCK> 2,375
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 95,983
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 280,726
<NET-ASSETS> 25,981
<DIVIDEND-INCOME> 102,363
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 23,275
<NET-INVESTMENT-INCOME> 79,088
<REALIZED-GAINS-CURRENT> 255,675
<APPREC-INCREASE-CURRENT> 353,970
<NET-CHANGE-FROM-OPS> 688,733
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (24,128)
<DISTRIBUTIONS-OF-GAINS> (27,930)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,174
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 201
<NET-CHANGE-IN-ASSETS> 4,047,617
<ACCUMULATED-NII-PRIOR> 695
<ACCUMULATED-GAINS-PRIOR> 558
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,202
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23,275
<AVERAGE-NET-ASSETS> 13,914
<PER-SHARE-NAV-BEGIN> 10.95
<PER-SHARE-NII> 0.16
<PER-SHARE-GAIN-APPREC> 0.77
<PER-SHARE-DIVIDEND> (0.20)
<PER-SHARE-DISTRIBUTIONS> (0.24)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.94
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>023
<NAME>NATIONS LIFEGOAL FUNDS BALANCED GROWTH INVA
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 5,947,610
<INVESTMENTS-AT-VALUE> 6,228,336
<RECEIVABLES> 180,859
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,409,195
<PAYABLE-FOR-SECURITIES> 10,382
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 126,122
<TOTAL-LIABILITIES> 136,504
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 462,517
<SHARES-COMMON-STOCK> 44,683
<SHARES-COMMON-PRIOR> 9,408
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 95,983
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 280,726
<NET-ASSETS> 489,045
<DIVIDEND-INCOME> 102,363
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 23,275
<NET-INVESTMENT-INCOME> 79,088
<REALIZED-GAINS-CURRENT> 255,675
<APPREC-INCREASE-CURRENT> 353,970
<NET-CHANGE-FROM-OPS> 688,733
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9,659)
<DISTRIBUTIONS-OF-GAINS> (11,180)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 38,251
<NUMBER-OF-SHARES-REDEEMED> (6,328)
<SHARES-REINVESTED> 3,352
<NET-CHANGE-IN-ASSETS> 4,047,617
<ACCUMULATED-NII-PRIOR> 695
<ACCUMULATED-GAINS-PRIOR> 558
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,202
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23,275
<AVERAGE-NET-ASSETS> 343,367
<PER-SHARE-NAV-BEGIN> 9.95
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> 1.79
<PER-SHARE-DIVIDEND> (0.27)
<PER-SHARE-DISTRIBUTIONS> (0.31)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.94
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 024
<NAME>NATIONS LIFEGOAL FUNDS BALANCED GROWTH INVB
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 5,947,610
<INVESTMENTS-AT-VALUE> 6,228,336
<RECEIVABLES> 180,859
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,409,195
<PAYABLE-FOR-SECURITIES> 10,382
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 126,122
<TOTAL-LIABILITIES> 136,504
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,749,344
<SHARES-COMMON-STOCK> 450,164
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 95,983
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 280,726
<NET-ASSETS> 4,917,310
<DIVIDEND-INCOME> 102,363
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 23,275
<NET-INVESTMENT-INCOME> 79,088
<REALIZED-GAINS-CURRENT> 215,885
<APPREC-INCREASE-CURRENT> 353,970
<NET-CHANGE-FROM-OPS> 688,733
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (31,123)
<DISTRIBUTIONS-OF-GAINS> (36,027)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 464,087
<NUMBER-OF-SHARES-REDEEMED> (22,243)
<SHARES-REINVESTED> 8,320
<NET-CHANGE-IN-ASSETS> 4,047,617
<ACCUMULATED-NII-PRIOR> 695
<ACCUMULATED-GAINS-PRIOR> 558
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,202
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23,275
<AVERAGE-NET-ASSETS> 947,267
<PER-SHARE-NAV-BEGIN> 10.88
<PER-SHARE-NII> 0.11
<PER-SHARE-GAIN-APPREC> 0.87
<PER-SHARE-DIVIDEND> (0.20)
<PER-SHARE-DISTRIBUTIONS> (0.24)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.92
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 025
<NAME>NATIONS LIFEGOAL FUNDS BALANCED GROWTH INVC
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 5,947,610
<INVESTMENTS-AT-VALUE> 6,228,336
<RECEIVABLES> 180,859
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,409,195
<PAYABLE-FOR-SECURITIES> 10,382
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 126,122
<TOTAL-LIABILITIES> 136,504
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 693,288
<SHARES-COMMON-STOCK> 67,487
<SHARES-COMMON-PRIOR> 1,763
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 95,983
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 280,726
<NET-ASSETS> 736,887
<DIVIDEND-INCOME> 102,363
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 23,275
<NET-INVESTMENT-INCOME> 79,088
<REALIZED-GAINS-CURRENT> 215,885
<APPREC-INCREASE-CURRENT> 353,970
<NET-CHANGE-FROM-OPS> 688,733
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (14,412)
<DISTRIBUTIONS-OF-GAINS> (16,683)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 69,661
<NUMBER-OF-SHARES-REDEEMED> (9,689)
<SHARES-REINVESTED> 5,752
<NET-CHANGE-IN-ASSETS> 4,047,617
<ACCUMULATED-NII-PRIOR> 695
<ACCUMULATED-GAINS-PRIOR> 558
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,202
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23,275
<AVERAGE-NET-ASSETS> 547,314
<PER-SHARE-NAV-BEGIN> 9.95
<PER-SHARE-NII> 0.23
<PER-SHARE-GAIN-APPREC> 1.78
<PER-SHARE-DIVIDEND> (0.25)
<PER-SHARE-DISTRIBUTIONS> (0.29)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.92
<EXPENSE-RATIO> 1.09
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>011
<NAME>NATIONS LIFEGOAL FUNDS GROWTH PRA
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 7,580,645
<INVESTMENTS-AT-VALUE> 7,999,863
<RECEIVABLES> 10,125
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,009,988
<PAYABLE-FOR-SECURITIES> 9,496
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,763
<TOTAL-LIABILITIES> 16,259
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 211,636
<SHARES-COMMON-STOCK> 23,152
<SHARES-COMMON-PRIOR> 91,607
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 235,808
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 419,218
<NET-ASSETS> 289,138
<DIVIDEND-INCOME> 36,427
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 32,764
<NET-INVESTMENT-INCOME> 3,663
<REALIZED-GAINS-CURRENT> 438,472
<APPREC-INCREASE-CURRENT> 501,362
<NET-CHANGE-FROM-OPS> 943,497
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (523)
<DISTRIBUTIONS-OF-GAINS> (18,071)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 60,356
<NUMBER-OF-SHARES-REDEEMED> (129,990)
<SHARES-REINVESTED> 1,179
<NET-CHANGE-IN-ASSETS> 6,301,300
<ACCUMULATED-NII-PRIOR> 174
<ACCUMULATED-GAINS-PRIOR> 3,232
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 32,764
<AVERAGE-NET-ASSETS> 833,333
<PER-SHARE-NAV-BEGIN> 10.15
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> 2.87
<PER-SHARE-DIVIDEND> (0.01)
<PER-SHARE-DISTRIBUTIONS> (0.39)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.49
<EXPENSE-RATIO> 0.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>012
<NAME>NATIONS LIFEGOAL FUNDS GROWTH PRB
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 7,580,645
<INVESTMENTS-AT-VALUE> 7,999,863
<RECEIVABLES> 10,125
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,009,988
<PAYABLE-FOR-SECURITIES> 9,496
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,763
<TOTAL-LIABILITIES> 16,259
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,260
<SHARES-COMMON-STOCK> 513
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 235,808
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 419,218
<NET-ASSETS> 6,405
<DIVIDEND-INCOME> 36,427
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 32,764
<NET-INVESTMENT-INCOME> 3,663
<REALIZED-GAINS-CURRENT> 438,472
<APPREC-INCREASE-CURRENT> 501,362
<NET-CHANGE-FROM-OPS> 943,497
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4)
<DISTRIBUTIONS-OF-GAINS> (125)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 492
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 21
<NET-CHANGE-IN-ASSETS> 6,301,300
<ACCUMULATED-NII-PRIOR> 174
<ACCUMULATED-GAINS-PRIOR> 3,232
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 32,764
<AVERAGE-NET-ASSETS> 3,087
<PER-SHARE-NAV-BEGIN> 12.25
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 0.70
<PER-SHARE-DIVIDEND> (0.01)
<PER-SHARE-DISTRIBUTIONS> (0.25)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.49
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>013
<NAME>NATIONS LIFEGOAL FUNDS GROWTH INV A
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 7,580,645
<INVESTMENTS-AT-VALUE> 7,999,863
<RECEIVABLES> 10,125
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,009,988
<PAYABLE-FOR-SECURITIES> 9,496
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,763
<TOTAL-LIABILITIES> 16,259
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,330,784
<SHARES-COMMON-STOCK> 122,071
<SHARES-COMMON-PRIOR> 67,126
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 235,808
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 419,218
<NET-ASSETS> 1,526,402
<DIVIDEND-INCOME> 36,427
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 32,764
<NET-INVESTMENT-INCOME> 3,663
<REALIZED-GAINS-CURRENT> 438,472
<APPREC-INCREASE-CURRENT> 501,362
<NET-CHANGE-FROM-OPS> 943,497
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,271)
<DISTRIBUTIONS-OF-GAINS> (43,960)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 90,784
<NUMBER-OF-SHARES-REDEEMED> (41,776)
<SHARES-REINVESTED> 5,937
<NET-CHANGE-IN-ASSETS> 6,301,300
<ACCUMULATED-NII-PRIOR> 174
<ACCUMULATED-GAINS-PRIOR> 3,232
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 32,764
<AVERAGE-NET-ASSETS> 1,255,474
<PER-SHARE-NAV-BEGIN> 10.15
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 2.89
<PER-SHARE-DIVIDEND> (0.01)
<PER-SHARE-DISTRIBUTIONS> (0.37)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.50
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 014
<NAME>NATIONS LIFEGOAL FUNDS GROWTH INVB
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 7,580,645
<INVESTMENTS-AT-VALUE> 7,999,863
<RECEIVABLES> 10,125
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,009,988
<PAYABLE-FOR-SECURITIES> 9,496
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,763
<TOTAL-LIABILITIES> 16,259
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,482,703
<SHARES-COMMON-STOCK> 466,894
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 235,808
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 419,218
<NET-ASSETS> 5,829,395
<DIVIDEND-INCOME> 36,427
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 32,764
<NET-INVESTMENT-INCOME> 3,663
<REALIZED-GAINS-CURRENT> 438,472
<APPREC-INCREASE-CURRENT> 501,362
<NET-CHANGE-FROM-OPS> 943,497
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,868)
<DISTRIBUTIONS-OF-GAINS> (64,597)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 473,938
<NUMBER-OF-SHARES-REDEEMED> (15,987)
<SHARES-REINVESTED> 8,943
<NET-CHANGE-IN-ASSETS> 6,301,300
<ACCUMULATED-NII-PRIOR> 174
<ACCUMULATED-GAINS-PRIOR> 3,232
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 32,764
<AVERAGE-NET-ASSETS> 1,779,949
<PER-SHARE-NAV-BEGIN> 11.98
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> 0.99
<PER-SHARE-DIVIDEND> (0.01)
<PER-SHARE-DISTRIBUTIONS> (0.24)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.49
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 015
<NAME>NATIONS LIFEGOAL FUNDS GROWTH INVC
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 7,580,645
<INVESTMENTS-AT-VALUE> 7,999,863
<RECEIVABLES> 10,125
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,009,988
<PAYABLE-FOR-SECURITIES> 9,496
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,763
<TOTAL-LIABILITIES> 16,259
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 307,320
<SHARES-COMMON-STOCK> 27,471
<SHARES-COMMON-PRIOR> 8,070
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 235,808
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 419,218
<NET-ASSETS> 342,389
<DIVIDEND-INCOME> 36,427
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 32,764
<NET-INVESTMENT-INCOME> 3,663
<REALIZED-GAINS-CURRENT> 438,472
<APPREC-INCREASE-CURRENT> 501,362
<NET-CHANGE-FROM-OPS> 943,497
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5,926)
<DISTRIBUTIONS-OF-GAINS> (3,162)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,299
<NUMBER-OF-SHARES-REDEEMED> (1,724)
<SHARES-REINVESTED> 826
<NET-CHANGE-IN-ASSETS> 6,301,300
<ACCUMULATED-NII-PRIOR> 174
<ACCUMULATED-GAINS-PRIOR> 3,232
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 10,146
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 32,764
<AVERAGE-NET-ASSETS> 189,434
<PER-SHARE-NAV-BEGIN> 10.15
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> 2.89
<PER-SHARE-DIVIDEND> (0.01)
<PER-SHARE-DISTRIBUTIONS> (0.34)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.46
<EXPENSE-RATIO> 1.09
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>031
<NAME>NATIONS LIFEGOAL FUNDS INCOME AND GROWTH PRA
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 1,863,058
<INVESTMENTS-AT-VALUE> 1,902,803
<RECEIVABLES> 6,847
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,909,650
<PAYABLE-FOR-SECURITIES> 6,960
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,620
<TOTAL-LIABILITIES> 8,580
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 451,386
<SHARES-COMMON-STOCK> 44,441
<SHARES-COMMON-PRIOR> 22,336
<ACCUMULATED-NII-CURRENT> 1,178
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 19,676
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 39,745
<NET-ASSETS> 475,660
<DIVIDEND-INCOME> 38,342
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 5,210
<NET-INVESTMENT-INCOME> 33,132
<REALIZED-GAINS-CURRENT> 33,372
<APPREC-INCREASE-CURRENT> 44,759
<NET-CHANGE-FROM-OPS> 111,263
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (15,224)
<DISTRIBUTIONS-OF-GAINS> (4,487)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 52,950
<NUMBER-OF-SHARES-REDEEMED> (31,482)
<SHARES-REINVESTED> 637
<NET-CHANGE-IN-ASSETS> 1,546,411
<ACCUMULATED-NII-PRIOR> 75
<ACCUMULATED-GAINS-PRIOR> 621
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,167
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,210
<AVERAGE-NET-ASSETS> 454,657
<PER-SHARE-NAV-BEGIN> 9.97
<PER-SHARE-NII> 0.43
<PER-SHARE-GAIN-APPREC> 0.89
<PER-SHARE-DIVIDEND> (0.40)
<PER-SHARE-DISTRIBUTIONS> (0.12)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.70
<EXPENSE-RATIO> 0.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>033
<NAME>NATIONS LIFEGOAL FUNDS INCOME AND GROWTH INVA
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 1,863,058
<INVESTMENTS-AT-VALUE> 1,902,803
<RECEIVABLES> 6,847
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,909,650
<PAYABLE-FOR-SECURITIES> 6,960
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,620
<TOTAL-LIABILITIES> 8,580
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117,902
<SHARES-COMMON-STOCK> 11,790
<SHARES-COMMON-PRIOR> 13,144
<ACCUMULATED-NII-CURRENT> 1,178
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 19,676
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 39,745
<NET-ASSETS> 126,242
<DIVIDEND-INCOME> 38,342
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 5,210
<NET-INVESTMENT-INCOME> 33,132
<REALIZED-GAINS-CURRENT> 33,372
<APPREC-INCREASE-CURRENT> 44,759
<NET-CHANGE-FROM-OPS> 111,263
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5,043)
<DISTRIBUTIONS-OF-GAINS> (1,487)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,308
<NUMBER-OF-SHARES-REDEEMED> (7,324)
<SHARES-REINVESTED> 662
<NET-CHANGE-IN-ASSETS> 1,546,411
<ACCUMULATED-NII-PRIOR> 75
<ACCUMULATED-GAINS-PRIOR> 621
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,167
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,210
<AVERAGE-NET-ASSETS> 137,709
<PER-SHARE-NAV-BEGIN> 9.97
<PER-SHARE-NII> 0.41
<PER-SHARE-GAIN-APPREC> 0.89
<PER-SHARE-DIVIDEND> (0.38)
<PER-SHARE-DISTRIBUTIONS> (0.11)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.71
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 034
<NAME>NATIONS LIFEGOAL FUNDS INCOME AND GROWTH INVB
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 1,863,058
<INVESTMENTS-AT-VALUE> 1,902,803
<RECEIVABLES> 6,847
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,909,650
<PAYABLE-FOR-SECURITIES> 6,960
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,620
<TOTAL-LIABILITIES> 8,580
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,186,902
<SHARES-COMMON-STOCK> 113,231
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,178
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 19,676
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 39,745
<NET-ASSETS> 1,212,122
<DIVIDEND-INCOME> 38,342
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 5,210
<NET-INVESTMENT-INCOME> 33,132
<REALIZED-GAINS-CURRENT> 33,372
<APPREC-INCREASE-CURRENT> 44,759
<NET-CHANGE-FROM-OPS> 111,263
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10,359)
<DISTRIBUTIONS-OF-GAINS> (3,053)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 113,062
<NUMBER-OF-SHARES-REDEEMED> (1,072)
<SHARES-REINVESTED> 1,241
<NET-CHANGE-IN-ASSETS> 1,546,411
<ACCUMULATED-NII-PRIOR> 75
<ACCUMULATED-GAINS-PRIOR> 621
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,167
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,210
<AVERAGE-NET-ASSETS> 233,942
<PER-SHARE-NAV-BEGIN> 10.51
<PER-SHARE-NII> 0.19
<PER-SHARE-GAIN-APPREC> 0.36
<PER-SHARE-DIVIDEND> (0.22)
<PER-SHARE-DISTRIBUTIONS> (0.07)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.70
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 035
<NAME>NATIONS LIFEGOAL FUNDS INCOME AND GROWTH INVC
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 1,863,058
<INVESTMENTS-AT-VALUE> 1,902,803
<RECEIVABLES> 6,847
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,909,650
<PAYABLE-FOR-SECURITIES> 6,960
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,620
<TOTAL-LIABILITIES> 8,580
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 84,281
<SHARES-COMMON-STOCK> 8,133
<SHARES-COMMON-PRIOR> 96
<ACCUMULATED-NII-CURRENT> 1,178
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 19,676
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 39,745
<NET-ASSETS> 87,046
<DIVIDEND-INCOME> 38,342
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 5,210
<NET-INVESTMENT-INCOME> 33,132
<REALIZED-GAINS-CURRENT> 33,372
<APPREC-INCREASE-CURRENT> 44,759
<NET-CHANGE-FROM-OPS> 111,263
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,816)
<DISTRIBUTIONS-OF-GAINS> (410)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,493
<NUMBER-OF-SHARES-REDEEMED> (4,672)
<SHARES-REINVESTED> 216
<NET-CHANGE-IN-ASSETS> 1,546,411
<ACCUMULATED-NII-PRIOR> 75
<ACCUMULATED-GAINS-PRIOR> 621
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,167
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,210
<AVERAGE-NET-ASSETS> 40,740
<PER-SHARE-NAV-BEGIN> 9.97
<PER-SHARE-NII> 0.36
<PER-SHARE-GAIN-APPREC> 0.89
<PER-SHARE-DIVIDEND> (0.35)
<PER-SHARE-DISTRIBUTIONS> (0.10)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.70
<EXPENSE-RATIO> 1.09
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
EX-99.B10
[MORRISON & FOERSTER LLP LETTERHEAD]
July 29, 1998
Nations Lifegoal Funds, Inc.
111 Center Street
Little Rock, AR 72201
Re: Shares of Common Stock of Nations LifeGoal Funds, Inc.
Ladies and Gentlemen:
We refer to Post-Effective Amendment No. 4 and Amendment No. 5 to the
Registration Statement on Form N-1A (SEC File Nos. 333-09703; 811-07745) (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 the Company's three prtfolios: namely,
LifeGoal Growth Portfolio, LifeGoal Balanced Growth Portfolio and LifeGoal
Income and Growth Portfolio (collectively, the "Shares").
We have been requested by the Company to furnish this opinion as Exhibit
10 to the Registration Statement.
We have examined such records, documents, instruments, and certificates of
public officials and of the Company, 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 also verified with the Company's
transfer agent the maximum number of shares issued by the Company during the
fiscal period ended March 31, 1998. 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 by the Company have been duly and
validly authorized by all appropriate action, and assuming delivery by sale or
in accord with the Company's dividend reinvestment plan in accordance with the
description set forth in the Registration Statement, as amended, 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 hereby consent to the use of our name and to the reference
to our firm under the caption "Counsel" in the Statement of Additional
Information, and the description of advice rendered by our firm under the
heading "How The LifeGoal Portfolios Are Managed" in the Prospectuses, which are
included as part of the Registration Statement.
Very truly yours,
/S/ MORRISON & FOERSTER LLP
MORRISON & FOERSTER LLP
EX-99.B11
[PRICEWATERHOUSECOOPERS LLP LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 4 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated May 28, 1998, relating to the financial
statements and financial highlights appearing in the March 31, 1998 Annual
Report to Shareholders of Nations LifeGoal Funds, Inc., which is also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the headings "Financial Highlights" and "How The
LifeGoal Portfolios Are Managed - Other Service Providers" in the Prospectuses
and under the heading "Independent Accountant and Reports" in the Statement of
Additional Information.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
July 27, 1998
