NATIONS FUND TRUST
NATIONS FUND, INC.
NATIONS RESERVES
NATIONS LIFEGOAL FUNDS, INC.
(collectively, the "Nations Funds")
Supplement dated January 3, 2000
to Prospectuses dated August 1, October 1 or November 15, 1999
PLEASE TAKE NOTE of the following changes to your Nations Funds
prospectus. This supplement is in addition to any supplements you may have
previously received.
MONEY MARKET FUNDS
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A. The prospectuses for the Money Market Funds are supplemented by deleting the
paragraph in the "Principal Investment Strategies" section of each Fund's
description -- "The Fund may also invest in securities that aren't part of
its principal investment strategies, but it won't hold more than 10% of its
assets in any one type of these securities. These securities are described
in the SAI." -- and inserting the following for the respective Fund:
1. Nations Prime Fund, Nations Cash Reserves and Nations Money Market
Reserves: Although not part of its principal investment strategies, the
Fund may also lend its portfolio securities to qualified institutional
investors and may engage in reverse repurchase agreements.
2. Nations Treasury Fund, Nations Treasury Reserves, Nations Tax-Exempt
Fund, Nations Municipal Reserves, Nations Government Reserves, Nations
Government Money Market Fund and Nations California Tax-Exempt
Reserves: Although not part of its principal investment strategies, the
Fund may also lend its portfolios securities to qualified institutional
investors.
B. The prospectuses for the Capital, Liquidity and Adviser Class Shares of
Nations Reserves Money Market Funds are hereby supplemented by:
1. deleting the first bullet point in the section entitled "About your
investment -- How orders are processed" and inserting the following:
o 5:00 p.m. Eastern time for Nations Cash Reserves, Nations Money
Market Reserves and Nations Treasury Reserves, except:
o Orders must be received for Nations Money Market Reserves and
Nations Treasury Reserves by 3:00 p.m. Eastern time on the last
business day of each calendar quarter and business days that precede
the national holidays observed by these Funds
o Orders must be received for Nations Cash Reserves by 3:00 p.m.
Eastern time on the last business day of the calendar year
2. deleting the third bullet point sentence in the section entitled
"About your investment -- Buying shares," and inserting the following:
o 5:00 p.m. Eastern time for Nations Cash Reserves, Nations Money
Market Reserves and Nations Treasury Reserves, except:
o Payment must be received for Nations Money Market Reserves and
Nations Treasury Reserves by 4:00 p.m. Eastern time on the last
business day of each calendar quarter and business days that precede
the national holidays observed by these Funds
o Payment must be received for Nations Cash Reserves by 4:00 p.m.
Eastern time on the last business day of the calendar year
C. The prospectuses for each of the Money Market Funds are hereby supplemented
by:
1. Changing the references in the second call-out sentence and
corresponding paragraph under the section entitled "How the Funds are
managed -- Other service providers," and all corresponding references
throughout the prospectuses, from First Data Investor Services Group,
Inc. ("First Data") to PFPC Inc. ("PFPC") and the listed address to 400
Bellevue Parkway, Wilmington, Delaware 19809.
NF-2000-01
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2. Changing all references throughout the prospectuses from TradeStreet
Investment Associates, Inc. ("TradeStreet") to Banc of America Capital
Management, Inc. ("BACAP"), as of January 18, 2000.
NON-MONEY MARKET FUNDS
D. The prospectuses which include Investor A Shares for each non-Money Market
Fund (except Nations Equity Index Fund, Nations Managed Index Fund, Nations
Managed SmallCap Index Fund, Nations Managed Value Index Fund and Nations
Managed SmallCap Value Index Fund) are hereby supplemented by:
1. Deleting the eleventh and fourteenth bullet point paragraphs under the
section entitled "About your investment -- When you might not have to
pay a sales charge -- Front-end sales charges," and inserting the
following:
o individuals receiving a distribution from a Bank of America trust or
other fiduciary account may use the proceeds of that distribution to
buy Investor A Shares without paying a front-end sales charge, as
long as the proceeds are invested in the Funds within 90 days of the
date of distribution
o registered personnel and employees of these broker/dealers and their
family members may buy Investor A Shares without paying a front-end
sales charge according to the internal policies and procedures of
the employing broker/dealer as long as these purchases are made for
their own investment purposes
2. Adding the following paragraph as the second to last paragraph under
the section entitled "About your investment -- When you might not have
to pay a sales charge -- Front-end sales charges:"
In addition, you can buy Investor A Shares without paying a sales
charge if you buy the shares with proceeds from the redemption of shares
of a nonaffiliated mutual fund as long as the redemption of the
nonaffiliated fund shares occurred within 45 days prior to the purchase
of the Investor A Shares. We must receive a copy of the confirmation of
the redemption transaction in order for you to avoid paying the sales
charge.
E. The prospectuses for Nations Managed Value Index Fund and Nations Managed
SmallCap Value Index Fund are hereby supplemented by:
1. Adding the following bullet point paragraph at the end of the section
entitled "About the Index Funds -- Nations Managed Value Index Fund --
Risks and other things to consider:"
Proposed reorganization -- On December 9, 1999, the Board of Trustees
of Nations Fund Trust approved an Agreement and Plan of Reorganization
(the "Plan"). Under the Plan, Nations Managed Index Fund, a series of
Nations Fund Trust, will acquire all of the assets of Nations Managed
Value Index Fund, also a series of Nations Fund Trust, in exchange for
corresponding shares of equal value of Nations Managed Index Fund and
the assumption by Nations Managed Index Fund of all liabilities of
Nations Managed Value Index Fund. If this Plan is approved by
shareholders of Nations Managed Value Index Fund at a special meeting
of shareholders that will likely be called for late April 2000, the
reorganization is expected to occur in mid-May 2000.
2. Adding the following bullet point paragraph at the end of the section
entitled "About the Index Funds -- Nations Managed SmallCap Value Index
Fund -- Risks and other things to consider:"
Proposed reorganization -- On December 9, 1999, the Board of Trustees
of Nations Fund Trust approved an Agreement and Plan of Reorganization
(the "Plan"). Under the Plan, Nations Managed SmallCap Index Fund, a
series of Nations Fund Trust, will acquire all of the assets of
Nations Managed SmallCap Value Index Fund, also a series of Nations
Fund Trust, in exchange for corresponding shares of equal value of
Nations Managed SmallCap Index Fund and the assumption by Nations
Managed SmallCap Index Fund of all liabilities of Nations Managed
SmallCap Value Index Fund. If this Plan is approved by shareholders of
Nations Managed SmallCap Value Index Fund at a special meeting of
shareholders that will likely be called for late April 2000, the
reorganization is expected to occur in mid-May 2000.
F. As of January 18, 2000, the prospectuses for Nations Value Fund, Nations
Balanced Assets Fund, Nations Equity Index Fund, Nations Managed Index
Fund, Nations Managed SmallCap Index Fund, Nations Managed Value Index
Fund, Nations Managed SmallCap Value Index Fund, Nations Equity Income
Fund, Nations Disciplined Equity Fund, Nations Capital Growth Fund, Nations
Emerging Growth Fund, and Nations Small Company Growth Fund are hereby
supplemented by:
1. deleting the reference to Structured Products Management Team for
Nations Equity Income Fund and Nations Disciplined Equity Fund under
the sections entitled "About the Equity Funds -- About the sub-adviser"
and "How the Funds are managed -- Investment sub-advisers --
TradeStreet Investment Associates, Inc.," and inserting Growth
Strategies Team in its place.
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2. deleting the reference to Core Growth Management Team for Nations
Capital Growth Fund under the sections entitled "About the Equity Funds
-- About the sub-adviser" and "How the Funds are managed -- Investment
sub-advisers -- TradeStreet Investment Associates, Inc.," and inserting
Growth Strategies Team in its place.
3. deleting the reference to Strategic Growth Management Team for Nations
Emerging Growth Fund under the sections entitled "About the Equity
Funds -- About the sub-adviser" and "How the Funds are managed --
Investment sub-advisers -- TradeStreet Investment Associates, Inc.,"
and inserting Growth Strategies Team in its place.
4. deleting the reference to Strategic Growth Management Team for Nations
Small Company Growth Fund under the sections entitled "About the Equity
Funds -- About the sub-adviser" and "How the Funds are managed --
Investment sub-advisers -- TradeStreet Investment Associates, Inc.,"
and inserting SmallCap Strategies Team in its place.
5. deleting the reference to Structured Products Management Team for
Nations Equity Index Fund, Nations Managed Index Fund, Nations Managed
SmallCap Index Fund, Nations Managed Value Index Fund and Nations
Managed SmallCap Value Index Fund under the sections entitled "About
the Index Funds -- About the sub-adviser" and "How the Funds are
managed -- Investment sub-advisers -- TradeStreet Investment
Associates, Inc.," and inserting Quantitative Strategies Team in its
place.
6. deleting the reference to Value Management Team for Nations Value Fund
under the sections entitled "About the Equity Funds -- About the
sub-adviser" and "How the Funds are managed -- Investment sub-advisers
-- TradeStreet Investment Associates, Inc.," and inserting Value
Strategies Team in its place.
7. deleting the reference to Value Management Team for Nations Balanced
Assets Fund under the sections entitled "About the Balanced Funds --
About the sub-adviser" and "How the Funds are managed -- Investment
sub-advisers -- TradeStreet Investment Associates, Inc.," and inserting
Investment Strategies Team in its place.
G. The prospectuses for each of the non-Money Market Funds are hereby
supplemented by:
1. Changing the references in the second call-out sentence and
corresponding paragraph under the section entitled "How the Funds are
managed -- Other service providers,"and all corresponding references
throughout the prospectuses, from First Data Investor Services Group,
Inc. ("First Data") to PFPC Inc. ("PFPC") and the listed address to 400
Bellevue Parkway, Wilmington, Delaware 19809.
2. Changing all references throughout the prospectuses from TradeStreet
Investment Associates, Inc. ("TradeStreet") to Banc of America Capital
Management, Inc. ("BACAP"), as of January 18, 2000.
H. As of February 14, 2000, the prospectuses for Nations U.S. Government Bond
Fund and Nations Strategic Equity Fund are hereby supplemented by replacing
all references to Boatmen's Capital Management, Inc. ("Boatmen's") as
investment sub-adviser to U.S. Government Bond Fund and Bank of America
Investment Management ("BAIM") as investment sub-adviser to Nations
Strategic Equity Fund with Banc of America Capital Management, Inc.
("BACAP"). In addition, as of the same date, substituting a reference in
the sections entitled "About the Equity Funds -- About the sub-adviser" and
"How the Funds are managed -- Investment sub-advisers" to reflect that
BACAP's Fixed Income Management Team makes the day-to-day investment
decisions for Nations U.S. Government Bond Fund and that BACAP's Growth
Strategies Team makes the day-to-day investment decisions for Nations
Strategic Equity Fund.
I. The prospectuses for Nations Emerging Growth Fund, Nations Disciplined
Equity Fund, Nations Equity Index Fund, Nations Managed SmallCap Index
Fund, Nations Diversified Income Fund, Nations Strategic Equity Fund,
Nations Strategic Fixed Income Fund, Nations Small Company Growth Fund and
Nations Capital Income Fund are hereby supplemented as follows:
1. Changing all references throughout the prospectuses from Nations
Emerging Growth Fund to Nations MidCap Growth Fund, as of March 15,
2000.
2. Changing all references throughout the prospectuses from Nations
Disciplined Equity Fund to Nations Aggressive Growth Fund, as of April
17, 2000.
3. Changing all references throughout the prospectuses from Nations Equity
Index Fund to Nations LargeCap Index Fund, as of March 15, 2000.
4. Changing all references throughout the prospectuses from Nations
Managed SmallCap Index Fund to Nations SmallCap Index Fund, as of May
12, 2000.
5. Changing all references throughout the prospectuses from Nations
Diversified Income Fund to Nations Strategic Income Fund, as of March
15, 2000.
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6. Changing all references throughout the prospectuses from Nations
Strategic Equity Fund to Nations Strategic Growth Fund, as of February
14, 2000.
7. Changing all references throughout the prospectuses from Nations
Strategic Fixed Income Fund to Nations Investment Grade Bond Fund, as
of March 15, 2000.
8. Changing all references throughout the prospectuses from Nations Small
Company Growth Fund to Nations Small Company Fund, as of March 15,
2000.
9. Changing all references throughout the prospectuses from Nations
Capital Income Fund to Nations Convertible Securities Fund, as of March
15, 2000.
J. The prospectuses for Nations Disciplined Equity Fund, Nations Managed
SmallCap Index Fund and Nations U.S. Government Bond Fund are hereby
supplemented by replacing the discussion of each Fund under the section
entitled "About the Funds," with the attached for each respective Fund as
of February 14, 2000 for Nations U.S. Government Bond Fund, April 17, 2000
for Nations Disciplined Equity Fund and May 12, 2000 for Nations Managed
SmallCap Index Fund. In the case of Nations U.S. Government Bond Fund, the
attached reflects changes to the Fund's investment strategies. In the case
of Nations Disciplined Equity Fund and Nations Managed SmallCap Index Fund,
the attached reflects changes to the name, investment objective, investment
strategies and stated risks of each Fund. Please also note that, effective
April 17, 2000, Nations Disciplined Equity Fund will compare its
performance to the Russell 1000 Growth index, an unmanaged index which
measures the performance of the largest U.S. companies based on total
market capitalization, with high price-to-book ratios and forecasted growth
relative to the Russell 1000 index as a whole.
K. As of January 18, 2000, the prospectuses for the LifeGoal Portfolios are
hereby supplemented by substituting a reference in the sections entitled
"About the LifeGoal Portfolios -- About the sub-adviser" and "How the
Portfolios are managed -- Investment sub-advisers -- TradeStreet Investment
Associates, Inc.," to reflect that BACAP's Investment Strategies Team makes
the day-to-day investment decisions for each of the LifeGoal Portfolios. In
addition, with respect to the underlying Nations Funds that a LifeGoal
Portfolio may invest in, references to a Fund name, investment sub-adviser
or management team are changed as appropriate to reflect the changes set
forth above.
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ABOUT THE EQUITY FUND
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About the sub-adviser
Banc of America Capital Management, Inc. (BACAP) is this Fund's
sub-adviser. BACAP's Growth Strategies Team makes the day-to-day
investment decisions for the Fund.
NATIONS AGGRESSIVE GROWTH FUND
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INVESTMENT OBJECTIVE
This Fund seeks capital appreciation.
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PRINCIPAL INVESTMENT STRATEGIES
The Fund normally invests at least 65% of its assets in common stocks
of large and medium-sized U.S. companies. These companies typically
have a market capitalization of $500 million or more.
The Fund may also invest in securities that aren't part of its principal
investment strategies, but it won't hold more than 10% of its assets in any
one type of these securities. These securities are described in the SAI.
The management team uses a combination of fundamental and quantitative
analysis to help construct a portfolio of 50 to 75 securities of companies
diversified across industry sectors. The team's investment process begins with
a review of all major U.S. companies with a market capitalization of $500
million or more with the goal of discovering potential industry leaders.
When selecting investments, the team looks for securities it believes are
attractively priced with increasing earnings. It uses quantitative analysis,
which is an analysis of a company's financial information, and fundamental
analysis to:
o identify companies with above-average growth potential, a strong
competitive position and effective management strategies; and
o identify companies presenting tactical opportunities, such as companies
likely to experience cyclical profit recovery or exhibiting structural
change
The management team may use various strategies, consistent with the Fund's
investment objective, to try to reduce the amount of capital gains it
distributes to shareholders. For example, the team:
o will focus on long-term investments to try and limit the number of buy
and sell transactions
o will try to sell securities that have the lowest tax burden on
shareholders
o may offset capital gains by selling securities to realize a capital
loss
o will invest primarily in securities with lower dividend yields
o may use options instead of selling securities
While the Fund tries to manage capital gain distributions, it will not be able
to completely avoid making taxable distributions. These strategies also may be
affected by changes in tax laws and regulations, or by court decisions.
The team may sell a security when it forecasts a decline in industry
profitability, it believes a company's competitive position erodes
significantly, management strategies prove ineffective or a company's price
exceeds a reasonable value.
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RISKS AND OTHER THINGS TO CONSIDER
Nations Aggressive Growth Fund has the following risks:
o INVESTMENT STRATEGY RISK -- The team uses quantitative and fundamental
analysis to select securities it believes are attractively priced with
increased earnings. There is a risk that the value of these investments
will not rise as high as the team expects, or will fall.
o STOCK MARKET RISK -- The value of the stocks the Fund holds can be
affected by changes in the U.S. or foreign economies and financial
markets, and the companies that issue the stocks, among other things.
Stock prices can rise or fall over short as well as long periods. In
general, stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. As of the date of this
prospectus, the markets, as measured by the S&P 500 and other commonly
used indices, were trading at or close to record levels. There can be
no guarantee that these levels will continue.
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ABOUT THE INDEX FUND
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ABOUT THE SUB-ADVISER
Banc of America Capital Management, Inc. (BACAP) is this Fund's
sub-adviser. BACAP's Quantitative Strategies Team makes the
day-to-day investment decisions for the Fund.
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WHAT IS AN INDEX FUND?
Index funds use a "passive" or "indexing" investment approach,
which attempts to duplicate the performance of a specific market
index.
Correlation measures how closely a fund's returns match those of
an index. A perfect correlation of 1.0 means that the net asset
value of the fund increases or decreases in exact proportion to
changes in the index.
NATIONS SMALLCAP INDEX FUND
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INVESTMENT OBJECTIVE
This Fund seeks investment results that (before fees and expenses)
correspond to the total return of the Standard & Poor's SmallCap 600
Index (S&P SmallCap 600).
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PRINCIPAL INVESTMENT STRATEGIES
The Fund normally invests at least 80% of its assets in common stocks
that are included in the S&P SmallCap 600. The S&P SmallCap 600 is an
unmanaged index of 600 common stocks weighted by market capitalization.
It is not available for investment.
The Fund may buy stock index futures and other financial futures as
substitutes for the underlying securities in the S&P SmallCap 600.
The Fund may also invest in securities that aren't part of its principal
investment strategies, but it won't hold more than 10% of its assets in any
one type of these securities. These securities are described in the SAI.
Different common stocks have different weightings in the S&P SmallCap 600,
depending on the amount of stock outstanding and the stock's current price. In
trying to match the performance of the S&P SmallCap 600, the management team
will try to allocate the Fund's portfolio among common stocks in approximately
the same weightings as the S&P SmallCap 600, beginning with the most heavily
weighted stocks that make up a larger portion of the value of the S&P SmallCap
600.
The team generally will try to match the composition of the S&P SmallCap 600
as closely as possible. The team starts with the stocks that make up a larger
portion of the value of the S&P SmallCap 600. It may not always invest in
stocks that make up the smaller percentages because it may be more difficult
and costly to make relatively small transactions. The team may remove a stock
from the Fund's holdings or not invest in a stock if it believes that the
stock is not liquid enough, or for other reasons. The team can substitute
stocks that are not included in the S&P SmallCap 600, if it believes these
stocks have similar characteristics.
The Fund tries to achieve a correlation of at least 0.95 with the S&P SmallCap
600 on an annual basis (before fees and expenses). The Fund's ability to track
the S&P SmallCap 600 is affected by transaction costs and other expenses,
changes in the composition of the S&P SmallCap 600, changes in the number of
shares issued by the companies represented in the S&P SmallCap 600, and by the
timing and amount of shareholder purchases and redemptions, among other
things.
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Equity mutual funds, like other investors in equity securities, incur
transaction costs, such as brokerage costs, when they buy and sell securities.
The management team tries to minimize these costs for the Fund by using
program trades and crossing networks.
The team may sell a stock when its percentage weighting in the index is
reduced, when the stock is removed from the index, or for other reasons.
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RISKS AND OTHER THINGS TO CONSIDER
Nations SmallCap Index Fund has the following risks:
o INVESTMENT STRATEGY RISK - This Fund tries to match (before fees and
expenses) the returns of the S&P 600, and is not actively managed.
There is no assurance that the returns of the Fund will match the
returns of the S&P 600. The value of the Fund will rise and fall with
the performance of the S&P 600.
o STOCK MARKET RISK - The value of the stocks the Fund holds can be
affected by changes in U.S. or foreign economies and financial markets,
and the companies that issue the stocks, among other things. Stock
prices can rise or fall over short as well as long periods. In general,
stock markets tend to move in cycles, with periods of rising prices and
periods of falling prices. As of the date of this prospectus, the stock
markets, as measured by the S&P 600 and other commonly used indices,
were trading at or close to record levels. There can be no guarantee
that these levels will continue.
o FUTURES RISK - This Fund may use futures contracts as a substitute for
the securities included in the index. There is a risk that this could
result in losses, reduce returns, increase transaction costs or
increase the Fund's volatility.
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ABOUT THE FIXED INCOME FUND
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ABOUT THE SUB-ADVISER
Banc of America Capital Management, Inc. (BACAP) is this Fund's
sub-adviser. BACAP's Fixed Income Management Team makes the
day-to-day investment decisions for the Fund.
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MORTGAGE-BACKED SECURITIES
This Fund invests in mortgage-backed securities. Mortgage-backed
securities tend to pay higher income than U.S. Treasury bonds and
other government-backed bonds with similar maturities, but also
have specific risks associated with them. They pay a monthly
amount that includes a portion of the principal on the underlying
mortgages, as well as interest.
NATIONS U.S. GOVERNMENT BOND FUND
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INVESTMENT OBJECTIVE
This Fund seeks total return and preservation of capital by investing
in U.S. Government securities and repurchase agreements collateralized
by such securities.
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PRINCIPAL INVESTMENT STRATEGIES
This Fund normally invests at least 65% of its assets in U.S.
government obligations and repurchase agreements secured by these
securities.
It may also invest in:
o mortgage-related securities issued by governments or corporations
o asset-backed securities or municipal securities rated investment grade
at the time of investment, or unrated if the portfolio management team
believes they are of comparable quality to investment grade securities
at the time of investment
o corporate debt securities, including bonds, notes and debentures rated
investment grade at the time of investment, or unrated if the portfolio
management team believes they are of comparable quality to investment
grade securities at the time of investment
The Fund may also invest in securities that aren't part of its principal
investment strategies, but it won't hold more than 10% of its assets in any
one type of these securities. These securities are described in the SAI.
Normally, the Fund's average dollar-weighted maturity will be between five and
30 years.
When selecting individual investments, the portfolio management team:
o looks at a fixed income security's potential to generate both income
and price appreciation
o allocates assets primarily among U.S. government obligations, including
securities issued by government agencies, mortgage-backed securities
and U.S. Treasury securities, based on how they have performed in the
past, and on how they are expected to perform under current market
conditions. The team may change the allocations when market conditions
change
o selects securities using structure analysis, which evaluates the
characteristics of a security, including its call features, coupons and
expected timing of cash flows
The team may sell a security when it believes the security is overvalued,
there is a deterioration in the security's credit rating or in the issuer's
financial situation, when other investments are more attractive, or for other
reasons.
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RISKS AND OTHER THINGS TO CONSIDER
Nations U.S. Government Bond Fund has the following risks:
o INVESTMENT STRATEGY RISK - There is a risk that the value of the
investments that the portfolio management team chooses will not rise as
high as the team expects, or will fall.
o INTEREST RATE RISK - The prices of fixed income securities will tend to
fall when interest rates rise. In general, fixed income securities with
longer terms tend to fall more in value when interest rates rise than
fixed income securities with shorter terms.
o CREDIT RISK - The Fund could lose money if the issuer of a fixed income
security is unable to pay interest or repay principal when it's due.
Credit risk usually applies to most fixed income securities, but is
generally not a factor for U.S. government obligations.
o DERIVATIVES RISK - This Fund may invest in derivatives. There is a risk
that these investments could result in losses, reduce returns, increase
transaction costs or increase the Fund's volatility.
o CHANGING DISTRIBUTION LEVELS - The level of monthly income
distributions paid by the Fund depends on the amount of income paid by
the securities the Fund holds. It is not guaranteed and will change.
Changes in the value of the securities, however, generally should not
affect the amount of income they pay.
o PREPAYMENT AND EXTENSION RISK - The value of the Fund's mortgage-backed
securities can fall if the owners of the underlying mortgages pay off
their mortgages sooner than expected, which could happen when interest
rates fall, or later than expected, which could happen when interest
rates rise. If the underlying mortgages are paid off sooner than
expected, the Fund may have to reinvest this money in mortgage-backed
securities that have lower yields.
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