<PAGE>
PEACHTREE FUNDS
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TELEPHONE: (800) 626-2275
August 5, 1996
Dear Shareholder of the Peachtree Government Money Market Fund,
Peachtree Equity Fund, Peachtree Bond Fund and/or Peachtree Georgia Tax-Free
Income Fund:
On behalf of the Board of Trustees of Peachtree Funds ("Peachtree
Funds"), we are pleased to invite you to a Special Meeting of the Shareholders
of Peachtree Funds to be held on September 23, 1996.
As you may recall, Bank South Corporation ("Bank South Corporation")
recently merged into NationsBank Corporation. Prior to the merger, Bank South
Corporation was the parent of Bank South, N.A. ("Bank South"), the prior
investment adviser to Peachtree Funds. Because this merger automatically
terminated Bank South's investment advisory agreement with Peachtree Funds, a
special meeting of shareholders of Peachtree Funds was held on January 9, 1996.
At that meeting, the shareholders of Peachtree Funds, among other things,
approved a new investment advisory agreement between Peachtree Funds and
NationsBanc Advisors, Inc. ("NBAI") and a new sub-advisory agreement between
NBAI and its affiliate, TradeStreet Investment Associates, Inc. ("TSIA").
In light of the merger, certain additional changes to the structure of
Peachtree Funds have been proposed. In this regard, the September 23, 1996
Special Meeting is being called to consider an Agreement and Plan of
Reorganization ("Plan") for the Peachtree Government Money Market Fund,
Peachtree Equity Fund, Peachtree Bond Fund and Peachtree Georgia Tax-Free Income
Fund (each a "Fund" and collectively the "Funds"). Under the Plan, each Fund's
assets would be acquired by a corresponding fund of Nations Fund Trust (the
"Trust") as indicated below:
Peachtree Fund Corresponding Fund of the Trust
Peachtree Government
Money Market Fund Nations Government Money Market Fund
Peachtree Equity Fund Nations Capital Growth Fund
Peachtree Bond Fund Nations Strategic Fixed Income Fund
Peachtree Georgia Tax-Free Nations Georgia Intermediate Municipal
Income Fund Bond Fund
<PAGE>
The corresponding funds of the Trust are sometimes referred to herein
as the "Acquiring Funds." Under the Plan, you would become a shareholder of the
corresponding Acquiring Fund and receive shares of such Acquiring Fund equal in
value at the time of issuance to your Fund shares. Shareholders of a Fund will
receive Primary A Shares of the corresponding Acquiring Fund. The shares you
receive will be free of commissions and sales loads, and there will be no
adverse federal income tax consequences. You may wish to separately consider any
state tax consequences in consultation with your tax advisor.
The primary purpose of combining the Funds and the Acquiring Funds is
to seek to achieve certain economies of scale and eliminate certain costs
associated with operating each Fund and its corresponding Acquiring Fund
separately although no such assurances can be made. Each Fund and its
corresponding Acquiring Fund have substantially similar investment objectives
and policies. In this regard:
(bullet)the Peachtree Government Money Market Fund, which seeks
to achieve current income consistent with stability of
principal and liquidity, and the Nations Government Money
Market Fund, which seeks as high a level of current income
as is consistent with liquidity and stability of
principal, both seek to achieve their objective by
investing in short-term marketable securities and
instruments issued or guaranteed by the U.S. Government or
any of its agencies, authorities or instrumentalities and
may also engage in reverse repurchase agreements and the
lending of portfolio securities;
(bullet)the Peachtree Equity Fund, which seeks to achieve
long-term growth of capital and income, and the Nations
Capital Growth Fund, which seeks growth of capital by
investing in companies that are believed to have superior
earnings growth potential, both seek to achieve their
objective by investing primarily in common stocks which
the relevant fund's investment adviser believes have
long-term growth potential;
(bullet)the Peachtree Bond Fund, which seeks to achieve current
income, and the Nations Strategic Fixed Income Fund, which
seeks total return by investing primarily in investment
grade fixed income securities, both seek to achieve their
objectives by investing primarily in investment grade
government, corporate, mortgage-backed, and asset-backed
bonds and other securities as well as CMOs; and
(bullet)the Peachtree Georgia Tax-Free Income Fund seeks to
provide current income, and Nations Georgia Intermediate
Municipal Bond Fund seeks a high level of current income,
both seek income that is exempt from federal and Georgia
state income taxes.
Although certain differences exist between the investment policies and
restrictions of each Fund and its corresponding Acquiring Fund, these
differences are not expected to appreciably increase the level of risk
associated with an investment in the Funds. There also are
2
<PAGE>
certain differences between the fee levels paid by the Funds and the
corresponding Acquiring Funds. For a discussion of these differences, see
"Summary Comparison of Investment Objectives and Policies" and "Summary
Comparison of Service Arrangements and Fees" in the accompanying Combined
Prospectus/Proxy Statement.
THE BOARD OF TRUSTEES OF PEACHTREE FUNDS HAS UNANIMOUSLY APPROVED THE
PLAN AND RECOMMENDS THAT SHAREHOLDERS OF EACH FUND VOTE FOR THE PLAN. The
accompanying Combined Prospectus/Proxy Statement provides details about the Plan
and the Acquiring Funds.
Attached are the formal Notice of Special Meeting and a Combined
Prospectus/Proxy Statement, together with a Proxy Card for you to mark, sign,
date and return to us. Please return your Proxy Card to us so that your vote
will be counted even if you do not attend the Special Meeting in person.
If you are also a shareholder of another portfolio of Peachtree Funds,
you will receive separate proxy materials, including a Proxy Card, relating to
each of those other portfolios. PLEASE REMEMBER TO COMPLETE AND RETURN EACH
PROXY CARD YOU RECEIVE FROM PEACHTREE FUNDS.
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES
THAT YOU OWN. PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY CARD TODAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
If you have any questions regarding the enclosed materials or the
Special Meeting, please call (800) 626-2275. We look forward to receiving your
completed Proxy Card very soon.
Sincerely,
Edward C. Gonzales
President
3
<PAGE>
PEACHTREE FUNDS
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TELEPHONE: (800) 626-2275
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
PEACHTREE GOVERNMENT MONEY MARKET FUND
PEACHTREE EQUITY FUND
PEACHTREE BOND FUND
PEACHTREE GEORGIA TAX-FREE INCOME FUND
TO BE HELD ON SEPTEMBER 23, 1996
TO THE SHAREHOLDERS of the Peachtree Government Money Market Fund,
Peachtree Equity Fund, Peachtree Bond Fund, and Peachtree Georgia Tax-Free
Income Fund (the "Funds") of Peachtree Funds ("Peachtree Funds"):
PLEASE TAKE NOTE that a SPECIAL MEETING OF SHAREHOLDERS of Peachtree
Funds will be held on Monday, September 23, 1996, at 2:00 p.m. (Eastern time) at
the offices of the Peachtree Funds, Federated Investors Tower, 19th Floor, 1001
Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779 (the "Special Meeting"). The
Special Meeting, with respect to the Funds, is being called for the purposes of
considering and voting upon:
(1) A proposal for each Fund to approve an Agreement and
Plan of Reorganization (the "Plan") for such Fund,
and the transactions contemplated thereby, which
include (a) the transfer of all of the assets of the
Peachtree Government Money Market Fund, Peachtree
Equity Fund, Peachtree Bond Fund, and Peachtree
Georgia Tax-Free Income Fund of Peachtree Funds to
Nations Government Money Market Fund, Nations Capital
Growth Fund, Nations Strategic Fixed Income Fund and
Nations Georgia Intermediate Municipal Bond Fund,
respectively, of Nations Fund Trust (the "Acquiring
Funds") in exchange for shares of the corresponding
Acquiring Fund, and the assumption by each Acquiring
Fund of stated liabilities of the corresponding Fund;
and (b) the distribution of shares of the
corresponding Acquiring Fund to shareholders of each
Fund.
(2) Such other business as may properly come before the
meeting, or any adjournment(s) thereof, including any
adjournment(s) necessary to obtain requisite quorums
and/or approvals.
YOUR TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF THIS
PROPOSAL.
The Board of Trustees of Peachtree Funds has fixed the close of
business on July 25, 1996, as the record date for the determination of Fund
shareholders entitled to receive notice of and to vote at the Special Meeting or
any adjournment(s) thereof. The enclosed Combined
1
<PAGE>
Prospectus/Proxy Statement contains further information regarding the meeting
and the proposals to be considered. The enclosed Proxy Card is intended to
permit you to vote even if you do not attend the meeting in person.
IN ORDER TO HAVE A QUORUM FOR ACTION ON THE PROPOSAL, THE HOLDERS OF
MORE THAN ONE-HALF OF EACH CLASS OF A FUND'S SHARES OUTSTANDING ON THE RECORD
DATE MUST BE PRESENT IN PERSON OR BY PROXY. THEREFORE, YOUR PROXY IS VERY
IMPORTANT TO US. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. SIGNED BUT UNMARKED PROXY CARDS WILL BE COUNTED IN DETERMINING WHETHER
A QUORUM IS PRESENT AND WILL BE VOTED IN FAVOR OF THE PROPOSAL.
By Order of the Board of Trustees
John W. McGonigle
Secretary
August 5, 1996
============================================================================
YOUR VOTE IS VERY IMPORTANT TO US
REGARDLESS OF THE NUMBER OF SHARES THAT
YOU OWN. PLEASE MARK, SIGN, DATE AND
RETURN YOUR PROXY CARD IMMEDIATELY.
ALSO REMEMBER TO COMPLETE AND RETURN
EACH PROXY CARD YOU RECEIVE FROM
PEACHTREE FUNDS FOR ANY PORTFOLIO OF
WHICH YOU ARE A SHAREHOLDER.
=============================================================================
2
<PAGE>
COMBINED PROSPECTUS/PROXY STATEMENT
Dated August 5, 1996
-----------------
Peachtree Funds
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Telephone: (800) 626-2275
Nations Fund Trust
111 Center Street
Little Rock, Arkansas 72201
Telephone: (800) 626-2275
--------------------
====================================================================
SHARES OF THE TRUST 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
ACQUIRING FUNDS INVOLVES CERTAIN RISKS, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
NATIONSBANK AND CERTAIN OF ITS AFFILIATES PROVIDE
CERTAIN OTHER SERVICES TO NATIONS FUND, FOR WHICH THEY ARE
COMPENSATED. STEPHENS INC., WHICH IS NOT AFFILIATED WITH
NATIONSBANK, IS THE SPONSOR AND ADMINISTRATOR AND
SERVES AS THE DISTRIBUTOR FOR NATIONS FUND.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE 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.
====================================================================
This Combined Prospectus/Proxy Statement is being furnished to
shareholders of the Peachtree Government Money Market Fund, Peachtree Equity
Fund, Peachtree Bond Fund and Peachtree Georgia Tax-Free Income Fund (the
"Funds") of Peachtree Funds ("Peachtree Funds") in connection with the
solicitation of proxies by the Board of Trustees of Peachtree Funds, to be
1
<PAGE>
used at a Special Meeting of Shareholders of Peachtree Funds ("Special Meeting")
to be held on September 23, 1996 at the offices of the Peachtree Funds,
Federated Investors Tower, 19th Floor, 1001 Liberty Avenue, Pittsburgh,
Pennsylvania 15222-3779 beginning at 2:00 p.m. (Eastern time).
The Trustees are seeking your approval of an Agreement and Plan of
Reorganization (the "Plan"), which contemplates that:
(i) Nations Government Money Market Fund of Nations Fund
Trust (the "Trust") will acquire all of the assets of
the Peachtree Government Money Market Fund in
exchange for shares of Nations Government Money
Market Fund and the assumption by Nations Government
Money Market Fund of stated liabilities of the
Peachtree Government Money Market Fund;
(ii) Nations Capital Growth Fund of the Trust will
acquire all of the assets of the Peachtree Equity
Fund in exchange for shares of Nations Capital Growth
Fund and the assumption by Nations Capital Growth
Fund of stated liabilities of the Peachtree Equity
Fund;
(iii) Nations Strategic Fixed Income Fund of the Trust
will acquire all of the assets of the Peachtree Bond
Fund in exchange for shares of Nations Strategic
Fixed Income Fund and the assumption by Nations
Strategic Fixed Income Fund of stated liabilities of
the Peachtree Bond Fund; and
(iv) Nations Georgia Intermediate Municipal Bond Fund of
the Trust will acquire all of the assets of the
Peachtree Georgia Tax-Free Income Fund in exchange
for shares of Nations Georgia Intermediate Municipal
Bond Fund and the assumption by Nations Georgia
Intermediate Municipal Bond Fund of stated
liabilities of the Peachtree Georgia Tax-Free Income
Fund.
Nations Government Money Market Fund, Nations Capital Growth Fund,
Nations Strategic Fixed Income Fund and Nations Georgia Intermediate Municipal
Bond Fund are sometimes collectively referred to herein as the "Acquiring
Funds." Following such exchange, the shares of the corresponding Acquiring Fund
received by each Fund will be distributed to the Fund shareholders and the Fund
will be dissolved and liquidated. Each of these exchange and distribution
transactions is sometimes referred to herein as the "Reorganization."
AN INVESTMENT IN THE NATIONS GOVERNMENT MONEY MARKET FUND IS NEITHER
INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT; AND THERE CAN BE NO ASSURANCE
THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE.
As a result of the Reorganization, you will receive full and fractional
Primary A Shares of the indicated Acquiring Fund equal in value when issued to
the shares of the Fund owned by you
2
<PAGE>
immediately prior to the transaction. No commissions or sales loads will be
charged in connection with the Reorganization and there will be no federal
income tax consequences. You may wish to consider separately any state tax
consequences in consultation with your tax advisor.
As discussed in detail herein, the investment objective and policies of
each Acquiring Fund are substantially similar to those of the corresponding
Fund. There are some differences between investment strategies, as well as
differences in fee levels, which are described in detail below.
This Combined Prospectus/Proxy Statement, which should be retained for
future reference, sets forth concisely the information about the Acquiring Funds
that a prospective investor, including shareholders of the Funds, should know
before investing. Additional information about the Reorganization is contained
in a separate Statement of Additional Information which has been filed with the
Securities and Exchange Commission (the "SEC") and is available without charge
by calling Nations Fund toll free at (800) 626-2275. The Statement of Additional
Information bears the same date as this Combined Prospectus/Proxy Statement and
is incorporated by reference herein.
The Prospectuses of the Acquiring Funds relating to their Primary A
Shares, dated July 31, 1996, are incorporated by reference into this Combined
Prospectus/Proxy Statement. In addition, a copy of the relevant Acquiring Fund's
Prospectus relating to its Primary A Shares, depending upon which corresponding
Fund you own, accompanies this Combined Prospectus/Proxy Statement. A copy of
the relevant Acquiring Fund's Annual Report for the fiscal period ended March
31, 1996 also accompanies this Combined Prospectus/Proxy Statement.
The following documents containing additional information about the
Funds have been filed with the SEC and are incorporated by reference herein: the
Funds' Prospectuses dated November 30, 1995, the Funds' Statements of Additional
Information, dated November 30, 1995, and the Funds' Semi-Annual Report for the
fiscal period ended March 31, 1996. Copies of these documents may be obtained
without charge by calling Nations Fund at (800) 626-2275.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
FEE TABLES........................................................................................... 5
SUMMARY OF REORGANIZATION ........................................................................... 9
RISK CONSIDERATIONS ................................................................................. 23
THE PROPOSED TRANSACTION ............................................................................ 25
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES..................................................... 33
ADDITIONAL COMPARATIVE INFORMATION .................................................................. 41
MISCELLANEOUS ....................................................................................... 42
</TABLE>
EXHIBIT A -- AGREEMENT AND PLAN OF REORGANIZATION
4
<PAGE>
FEE TABLES
The following tables a) compare the current fees and expenses for the
respective Funds and their corresponding Acquiring Funds, and b) show the
estimated fees and expenses for the corresponding Acquiring Fund on a pro forma
basis after giving effect to the Reorganization. The purposes of these tables is
to assist shareholders in understanding the various costs and expenses that
investors in these portfolios will bear as shareholders. The Examples show the
cumulative expenses attributable to a hypothetical $1,000 investment in the
Funds and Acquiring Funds over specified periods.
PEACHTREE GOVERNMENT MONEY MARKET FUND/
NATIONS GOVERNMENT MONEY MARKET FUND
<TABLE>
<CAPTION>
PEACHTREE NATIONS
GOVERNMENT MONEY GOVERNMENT MONEY
FUND SHARES/PRIMARY A SHARES MARKET FUND MARKET FUND PRO FORMA
<S> <C> <C> <C>
Shareholder Transaction Expenses for Fund Shares/Primary A Shares
Maximum Sales Load Imposed on Purchase of a Share (as a
percentage of Offering Price)*............................. None None None
Annual Fund Operating Expenses for Fund Shares/Primary A Shares
(as a percentage of average net assets):
Management Fees (after waivers and/or
reimbursements)**....................................... 0.20% 0.20% 0.20%
Shareholder Servicing Fees................................. None None None
12b-1 Fees................................................. None None None
Other Expenses ............................................ 0.34% 0.10% 0.10%
----- ----- -----
Total Fund Operating Expenses (after waivers and/or
reimbursements)**....................................... 0.54% 0.30% 0.30%
===== ===== =====
</TABLE>
- -------------------
* There are no sales loads or fees imposed on purchases, reinvested dividends or
redemption of shares.
** Absent fee waivers and/or reimbursements "Management Fees" and "Total Fund
Operating Expenses" for the Peachtree Government Money Market Fund would be
0.50% and 0.84%, respectively. Absent fee waivers and/or reimbursements
"Management Fees," "Other Expenses" and "Total Fund Operating Expenses"
for the Nations Government Money Market Fund would be 0.40%, 0.19% and
0.59%, respectively.
Example:
You would pay the following expenses on a $1,000 investment assuming
(1) a 5% annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Peachtree Government Money Market Fund $6 $17 $28 $63
Nations Government Money Market Fund (Primary A Shares) $3 $10 $17 $38
</TABLE>
5
<PAGE>
PEACHTREE EQUITY FUND/
NATIONS CAPITAL GROWTH FUND
<TABLE>
<CAPTION>
FUND SHARES/PRIMARY A SHARES PEACHTREE EQUITY NATIONS CAPITAL
FUND GROWTH FUND PRO FORMA
<S> <C> <C> <C>
Shareholder Transaction Expenses for Fund Shares/Primary A Shares
Maximum Sales Load Imposed on Purchase of a Share (as a
percentage of Offering Price)*............................. 3.75% None None
Annual Fund Operating Expenses for Fund Shares/Primary A
Shares (as a percentage of average net assets):
Management Fees (after waivers and/or
reimbursements) **..................................... 0.75% 0.75% 0.75%
Shareholder Servicing Fees................................. None None None
12b-1 Fees................................................. None None None
Other Expenses............................................. 0.25% 0.21% 0.21%
----- ----- -----
Total Fund Operating Expenses (after waivers and/or
reimbursements)**...................................... 1.00% 0.96% 0.96%
===== ===== =====
</TABLE>
- -------------------
* There are no sales loads or fees imposed on purchases, reinvested dividends
or redemption of shares.
** Absent fee waivers and/or reimbursements "Management Fees" and "Total Fund
Operating Expenses" for the Peachtree Equity Fund would be 0.75% and 1.09%,
respectively.
Example:
You would pay the following expenses on a $1,000 investment assuming
(1) a 5% annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Peachtree Equity Fund $47 $68 $91 $155
Nations Capital Growth Fund (Primary A Shares) $10 $31 $53 $118
</TABLE>
6
<PAGE>
PEACHTREE BOND FUND/
NATIONS STRATEGIC FIXED INCOME FUND
<TABLE>
<CAPTION>
NATIONS STRATEGIC
FUND SHARES/PRIMARY A SHARES PEACHTREE BOND FUND FIXED INCOME FUND PRO FORMA
<S> <C> <C> <C>
Shareholder Transaction Expenses for Fund Shares/Primary A Shares
Maximum Sales Load Imposed on Purchase of a Share (as a
percentage of Offering Price)*............................. 2.50% None None
Annual Fund Operating Expenses for Fund Shares/Primary A Shares (as a percentage
of average net assets):
Management Fees (after waivers and/or
reimbursements)**...................................... 0.60% 0.50% 0.50%
Shareholder Servicing Fees................................. None None None
12b-1 Fees................................................. None None None
Other Expenses ............................................ 0.42% 0.22% 0.22%
----- ----- -----
Total Fund Operating Expenses (after waivers and/or
reimbursements)**...................................... 1.02% 0.72% 0.72%
===== ===== =====
</TABLE>
- -------------------
* There are no sales loads or fees imposed on purchases, reinvested dividends
or redemption of shares.
** Absent fee waivers and/or reimbursements
"Management Fees" and "Total Fund Operating Expenses" for the Peachtree Bond
Fund would be 0.75% and 1.17%, respectively. Absent fee waivers and/or
reimbursements "Management Fees" and "Total Fund Operating Expenses" for the
Nations Strategic Fixed Income Fund would be 0.60% and 0.82%, respectively.
Example:
You would pay the following expenses on a $1,000 investment assuming
(1) a 5% annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Peachtree Bond Fund $35 $57 $80 $147
Nations Strategic Fixed Income Fund (Primary A Shares) $7 $23 $40 $89
</TABLE>
7
<PAGE>
PEACHTREE GEORGIA TAX-FREE INCOME FUND/
NATIONS GEORGIA INTERMEDIATE MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
NATIONS GEORGIA
PEACHTREE GEORGIA INTERMEDIATE
FUND SHARES/PRIMARY A SHARES TAX-FREE INCOME FUND MUNICIPAL BOND
FUND PRO FORMA
<S> <C> <C> <C>
Shareholder Transaction Expenses for Fund Shares/Primary A Shares
Maximum Sales Load Imposed on Purchase of a Share (as a
percentage of Offering Price)*............................. 2.50% None None
Annual Fund Operating Expenses for Fund Shares/Primary A
Shares (as a percentage of average net assets):
Management Fees after waivers and/or
reimbursements)**...................................... None 0.30% 0.30%
Shareholder Servicing Fees................................. None None None
12b-1 Fees................................................. None None None
Other Expenses (after waivers and/or reimbursements)**.... None 0.20% 0.20%
---- ----- -----
Total Fund Operating Expenses (after waivers and/or
reimbursements)**...................................... None 0.50% 0.50%
==== ===== =====
</TABLE>
- -------------------
* There are no sales loads or fees imposed on purchases, reinvested dividends or
redemption of shares.
** Absent fee waivers and/or reimbursements "Management Fees" and "Total Fund
Operating Expenses" for the Peachtree Georgia Tax-Free Income Fund would be
0.75% and 11.60%, respectively. Absent fee waivers and/or reimbursements
"Management Fees," "Other Expenses" and "Total Fund Operating Expenses" for
the Nations Georgia Intermediate Municipal Bond Fund would be 0.50%, 0.33% and
0.83%, respectively.
Example:
You would pay the following expenses on a $1,000 investment assuming
(1) a 5% annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Peachtree Georgia Tax-Free Income Fund $25 $25 $25 $25
Nations Georgia Intermediate Municipal Bond $5 $16 $28 $63
Fund (Primary A Shares)
</TABLE>
8
<PAGE>
SUMMARY OF REORGANIZATION
QUESTION AND ANSWER SUMMARY
Q. How will the Reorganization affect me?
A. The assets of each Fund will be combined with those of the
corresponding Acquiring Fund and you will become a shareholder of the Acquiring
Fund. You will receive Primary A Shares of the corresponding Acquiring Fund
equal in value at the time of issuance to the shares of the Fund that you held
immediately prior to the Reorganization.
Q. Why is the Reorganization being recommended?
A. The primary purposes of the proposed Reorganization are to
seek to achieve future economies of scale and eliminate certain costs
associated with operating the Funds and the Acquiring Funds separately. Each
Fund and its corresponding Acquiring Fund have similar investment objectives
and policies, as described in detail below. The Reorganization will result in
combining the assets of each Fund and its corresponding Acquiring Fund and
consolidating their operations.
Combining the assets of the Funds and the Acquiring Funds is
intended to provide various benefits to shareholders of the Funds who become
shareholders of the Acquiring Funds (as well as to existing and future
investors in the Acquiring Funds). For example, higher asset levels should
enable the Acquiring Funds to spread fixed and relatively fixed costs, such as
accounting, legal and printing expenses, over a larger asset base, thereby
reducing per-share expense levels. Higher asset levels also should benefit
portfolio management by permitting larger individual portfolio investments
(such as "round-lots" or other quantities that may result in reduced
transaction costs and/or more favorable pricing) and by providing the
opportunity for greater portfolio diversity. In addition, consolidating the
operations of the Funds and the Acquiring Funds should generally benefit the
Funds by promoting more efficient operations on a more cost-effective basis.
These benefits, in turn, should have a favorable effect on the performance of
the Acquiring Funds. Finally, shareholders of the Funds will benefit from the
lower total expense ratios (absent fee waivers) of the Acquiring Funds as
compared with the Funds.
The completion of the Reorganization is subject to the
satisfaction of a number of conditions (such as approval by the Funds'
shareholders), which are summarized below in "The Proposed Transaction --
Agreement and Plan of Reorganization" section. These conditions are stated in
the Plan, which is attached as Exhibit A to this Combined Prospectus/Proxy
Statement. There can be no assurance that the benefits described here can be
achieved.
Q. Will I have to pay any sales load, commission or
other transactional fee in connection with the Reorganization?
9
<PAGE>
A. No. The full value of your shares of the Funds will be
exchanged for Primary A Shares of the corresponding Acquiring Fund without any
sales load, commission or other transactional fee being imposed. NationsBanc
Advisors, Inc. ("NBAI"), a wholly owned subsidiary of NationsBank and the
Funds' and Acquiring Funds' investment adviser, or Stephens Inc. ("Stephens"),
the sponsor, distributor and administrator of the Trust, will bear the costs
associated with the Plan, such as printing and mailing costs and other expenses
associated with the Special Meeting. Of course, you may redeem your shares in
the Funds at any time before the effective date of the Reorganization, but
shareholders will not have dissenters' or appraisal rights.
Q. How will the fees paid by the Acquiring Funds compare to
those payable by the Funds?
A. Both before and after fee waivers and/or reimbursements
(with the exception of the Peachtree Georgia Tax-Free Income Fund), the total
per share operating expenses of the Primary A Shares of each Acquiring Fund are
lower than the total per share operating expenses of its corresponding Fund.
The after waivers and/or reimbursement total per share operating expenses of
the Nations Georgia Intermediate Municipal Bond Fund is higher than the
Peachtree Georgia Tax-Free Income Fund. However, it is not anticipated that the
current level of waivers and/or reimbursements with respect to the Peachtree
Georgia Tax-Free Income Fund would continue in the future, even in the absence
of the Reorganization.
Q. Who will advise the Acquiring Funds and provide other
services?
A. NBAI provides advisory services to the Acquiring Funds
under arrangements that are substantially similar to those currently in effect
between the Funds and NBAI. TradeStreet Investment Associates, Inc. ("TSIA"),
an affiliate of NBAI and the Funds' sub-adviser, provides sub-advisory services
to the Acquiring Funds. The contractual advisory fees payable by each Acquiring
Fund are no higher than the advisory fees payable by its corresponding Fund.
Stephens serves as distributor of the Acquiring Funds' shares and is the
administrator for the Acquiring Funds. In addition, First Data Investor
Services Group, Inc. ("First Data"), a wholly owned subsidiary of First Data
Corporation serves as the Funds' Transfer Agent and as co-administrator of the
Acquiring Funds. NationsBank of Texas, N.A. ("NationsBank Texas") is the
custodian of the Acquiring Funds. With the exception of NBAI and TSIA, each of
these service providers differs from the current service providers of the
Funds.
Q. Will I have to pay any federal income taxes as a result
of the Reorganization?
A. No. As a condition to the Reorganization, the Funds will
receive an opinion of counsel to the effect that the Reorganization will not
result in any gain or loss for federal income tax purposes to the Funds or
their shareholders under the Internal Revenue Code of 1986, as amended (the
"Code"). In addition, such opinion will indicate that the federal tax basis and
holding period of your Fund shares will carry over to the shares of the
corresponding Acquiring Fund that you receive in exchange therefor. Such
opinion will also indicate that the federal income tax holding period of your
Fund shares will carry over to the shares of the corresponding
10
<PAGE>
Acquiring Fund that you receive in exchange. You may wish to separately
consider any state and local tax consequences in consultation with your tax
advisor.
Q. Are the Acquiring Funds part of a family of funds?
A. Yes. The Acquiring Funds are part of Nations Fund Trust, which in
turn, is part of the Nations Fund Family, which includes all funds of the
Trust, Nations Fund, Inc., Nations Fund Portfolios, Inc. and Nations
Institutional Reserves. Each is a separate investment company registered under
the Investment Company Act of 1940 (the "1940 Act"). There are more than 40
separate investment portfolios in the Nations Fund Family.
APPROVAL AND CONSUMMATION OF THE PROPOSED TRANSACTION
The Board of Trustees of Peachtree Funds unanimously determined that
the Reorganization is in the best interests of the Funds and that the interests
of the existing shareholders of the Funds will not be diluted as a result of the
Reorganization. Similarly, the Board of Trustees of the Trust unanimously
determined that the Reorganization is in the best interests of the Acquiring
Funds and that the interests of existing shareholders of the Acquiring Funds
will not be diluted as a result of the Reorganization. Management of Peachtree
Funds believes that the proposed Reorganization of the Funds into the Acquiring
Funds may allow the Acquiring Funds to achieve future economies of scale and to
eliminate certain costs associated with operating the Funds and the Acquiring
Funds separately. In this regard, the Trust anticipates that the aggregate fees
and expenses of the Acquiring Funds will be reduced over time. Finally, except
with respect to the shareholders of the Peachtree Georgia Tax-Free Income Fund,
shareholders of the Funds will benefit immediately from the lower total expense
ratios (after fee waivers) of the Acquiring Funds as compare with the Funds. The
Peachtree Georgia Tax-Free Income Fund is too small to remain viable as a
separate fund, and, in the absence of the Reorganization it is not anticipated
that current fee waivers and expense reimbursements would continue. See "The
Proposed Transaction -- Reasons for the Proposed Transaction."
Shareholders of record of the Funds at the close of business on July
25, 1996 ("Record Date"), will be entitled to notice of and to vote at the
Special Meeting or any adjournment thereof. As of the Record Date, there were
100,670,554 outstanding shares of all portfolios of Peachtree Funds. Of these
shares, the following constituted shares of the Funds:
<TABLE>
<CAPTION>
Total Number of
Fund Shares Outstanding
<S> <C>
Peachtree Government Money Market Fund 33,512,103
Peachtree Equity Fund 7,654,033
Peachtree Bond Fund 7,983,477
Peachtree Georgia Tax-Free Income Fund 134,203
</TABLE>
11
<PAGE>
Each shareholder of the Funds will be entitled to one vote for
each share, and a fractional vote for each fractional share, held by such
shareholder. Shareholders holding a majority of the outstanding shares of each
of the Funds at the close of business on the Record Date will be deemed to
constitute a quorum for the transaction of business regarding the Plan at the
Special Meeting. To be approved with respect to a Fund, the Plan will require
the affirmative vote of the holders of a "majority of the outstanding voting
securities," as defined below, of the Fund eligible to vote on the matter. The
Reorganization with respect to each Fund is not contingent on the approval of
the Reorganization with respect to the other Funds. If a Fund's shareholders do
not approve the proposed Reorganization, Peachtree Funds' Board of Trustees will
consider what other alternatives would be in the shareholders' best interest.
SUMMARY COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The investment objective, policies and strategies of each Fund are
substantially similar to those of the corresponding Acquiring Fund. The
investment objective of each Fund is fundamental, which means that it cannot be
changed without a vote of the Fund's shareholders. The investment objective of
each Acquiring Fund is non-fundamental and may be changed by the Board of
Trustees of the Trust.
PEACHTREE GOVERNMENT MONEY MARKET FUND/NATIONS GOVERNMENT MONEY MARKET FUND
The Peachtree Government Money Market Fund's investment objective is to
achieve current income consistent with stability of principal and liquidity. The
Peachtree Government Money Market Fund seeks to achieve this objective by
investing in a portfolio of short-term securities issued by the U.S. Government,
its agencies or instrumentalities and backed by the full faith and credit of the
U.S. Government. It may also invest in repurchase agreements, securities issued
by other investment companies and may lend its portfolio securities to qualified
institutional investors. The average maturity of the securities in the Peachtree
Government Money Market Fund, computed on a dollar-weighted basis, will be 90
days or less.
The Nations Government Money Market Fund's investment objective is to
seek as high a level of current income as is consistent with liquidity and
stability of principal. The Nations Government Money Market Fund invests in
marketable securities and instruments issued or guaranteed by the U.S.
Government or any of its agencies, authorities or instrumentalities. The Nations
Government Money Market Fund may also purchase securities issued by other
investment companies, lend its portfolio securities to qualified institutional
investors and may engage in reverse repurchase agreements.
PEACHTREE EQUITY FUND/NATIONS CAPITAL GROWTH FUND
The Peachtree Equity Fund's investment objective is to achieve
long-term growth of capital and income. The Peachtree Equity Fund pursues its
investment objective by investing in
12
<PAGE>
the securities of high quality companies which the Peachtree Equity Fund's
investment adviser believes are undervalued as compared to present earnings.
The Nations Capital Growth Fund's investment objective is to seek
growth of capital by investing in companies that are believed to have superior
earnings growth potential. The Nations Capital Growth Fund pursues its
investment objective by investing in larger capitalization, high-quality
companies which possess above average earnings growth potential and also
companies whose securities appear to be undervalued.
PEACHTREE BOND FUND/NATIONS STRATEGIC FIXED INCOME FUND
The Peachtree Bond Fund's investment objective is to achieve current
income. The Peachtree Bond Fund pursues its investment objective by investing
primarily in investment grade bonds and other fixed income securities which
include U.S. Government, mortgage-backed, asset-backed and corporate bonds and
other securities as well as collateralized mortgage obligations ("CMOs") and
adjustable rate mortgages ("ARMs").
The Nations Strategic Fixed Income Fund's investment objective is to
seek total return by investing primarily in investment grade fixed income
securities. The Nations Strategic Fixed Income Fund invests in investment grade
bonds, including corporate bonds, U.S. Government obligations,
dollar-denominated debt obligations of foreign issuers, mortgage-backed
securities, asset-backed securities and CMOs.
PEACHTREE GEORGIA TAX-FREE INCOME FUND/NATIONS GEORGIA INTERMEDIATE MUNICIPAL
BOND FUND
The Peachtree Georgia Tax-Free Income Fund's investment objective is to
provide current income exempt from federal income tax and the personal income
taxes imposed by the State of Georgia. The Peachtree Georgia Tax-Free Income
Fund pursues its investment objective by investing primarily in securities
issued by or on behalf of the State of Georgia, its political subdivisions,
authorities and agencies and debt obligations of any state, territory, or
possession of the United States, including the District of Columbia, or any of
their political subdivisions. The Georgia Tax-Free Income Fund invests its
assets so that, under normal circumstances, at least 80% of its annual interest
income is exempt from federal income tax.
The Nations Georgia Intermediate Municipal Bond Fund's investment
objective is to seek high current income exempt from Federal and Georgia state
income taxes, consistent with moderate fluctuation of principal. The Nations
Georgia Intermediate Municipal Bond Fund invests in investment grade,
intermediate term municipal securities. Under normal market conditions, at least
65% of the value of the Nations Georgia Intermediate Municipal Bond Fund's total
assets is invested in municipal bonds, and substantially all of the Nations
Georgia Intermediate Municipal Bond Fund's assets are invested in debt
instruments issued by or on behalf of the State of Georgia and its political
subdivisions, agencies, instrumentalities and authorities. During normal market
conditions, as a matter of fundamental investment policy, the Nations Georgia
Intermediate Municipal Bond Fund invests at least 80% of its total net assets in
obligations the interest on which will be exempt from Federal and Georgia state
income tax.
13
<PAGE>
Although there are no restrictions on the average portfolio maturity of
the Peachtree Georgia Tax-Free Income Fund, the Nations Georgia Intermediate
Municipal Bond Fund maintains an average dollar weighted portfolio maturity of
between three to ten years, except during temporary defensive periods.
For more information on the investment objectives, policies and
restrictions of the Funds and the Acquiring Funds, see "Comparison of Investment
Objectives, Policies and Restrictions" below.
SUMMARY COMPARISON OF SERVICE ARRANGEMENTS AND FEES
The Funds and the Acquiring Funds have the same investment advisers,
and currently have different distributors, administrators, custodians and
transfer agents. However, these different entities provide substantially similar
services to the Funds and the Acquiring Funds.
INVESTMENT ADVISORY SERVICES
Investment Adviser. NBAI serves as investment adviser to both the Funds
and Acquiring Funds. Subject to the general supervision of Peachtree's Board of
Trustees and Nations Fund Trust's Board of Trustees, and in accordance with the
investment policies of each Fund and Acquiring Fund, NBAI formulates guidelines
and lists of approved investments for each Fund and Acquiring Fund, makes
decisions with respect to and places orders for the Fund's and Acquiring Fund's
purchases and sales of portfolio securities and maintains records relating to
such purchases and sales. With respect to the non-money market funds, NBAI is
authorized to allocate purchase and sale orders for portfolio securities to
certain financial institutions, including, in the case of agency transactions,
financial institutions which are affiliated with NBAI or which have sold shares
in such funds, if NBAI believes that the quality of the transaction and the
commission are comparable to what they would be with other qualified brokerage
firms. From time to time, to the extent consistent with their investment
objectives, policies and restrictions, the Funds and Acquiring Funds may invest
in securities of companies with which NationsBank has a lending relationship.
Effective January 9, 1996, Peachtree Funds entered into an Investment
Advisory Contract with NBAI. The Advisory Contract provides that in the absence
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
the obligations or duties of NBAI under the Advisory Contract, NBAI and its
affiliates shall not be liable to Peachtree Funds or to any shareholder for any
act or omission in the course of, or connected in any way with, rendering
services or for any losses that may be sustained in the purchase, holding, or
sale of any security.
The Advisory Contract will continue for two years from January 9, 1996,
unless terminated, and may be continued from year to year thereafter by the
Board of Trustees. The continuation of the Advisory Contract must be approved by
a majority vote of the Trustees, including a majority of the Non-Interested
Trustees, cast in person at a meeting called for that purpose. NBAI will have
the right, in any year, to notify Peachtree Funds in writing at least 60
14
<PAGE>
days before the Advisory Contract anniversary date that it does not desire a
renewal of the Advisory Contract. The Trustees, or a majority of the outstanding
voting shares of Peachtree Funds, may terminate the Advisory Contract at any
time without penalty by giving NBAI 60 days' written notice. The Advisory
Contract may not be assigned by NBAI and will terminate automatically in the
event of an assignment. The Advisory Contract provides that it may be amended by
a vote of both a majority of the Trustees, including a majority of the
Non-Interested Trustees, and on behalf of a Fund by the holders of a majority
of the outstanding voting shares of such Fund.
NBAI serves as investment adviser to the Funds. In return for its
advisory services to the Funds, NBAI is entitled to a monthly fee calculated at
the indicated annual rate of the Funds' average daily net assets:
INVESTMENT ADVISORY
FUND RATE OF COMPENSATION
Peachtree Government Money Market Fund 0.50%
Peachtree Equity Fund 0.75%
Peachtree Bond Fund 0.75%
Peachtree Georgia Tax-Free Income Fund 0.75%
For the fiscal period ended March 31, 1996, after waivers, the Funds
paid advisory fees at the indicated rate of the Funds' average daily net assets:
Peachtree Government Money Market Fund -- 0.20%; Peachtree Equity Fund -- 0.75%;
Peachtree Bond Fund -- 0.75%; and Peachtree Georgia Tax-Free Income Fund --
0.00%. NBAI and the Funds' administrator may terminate this voluntary fee waiver
at any time.
As of March 31, 1996, the Funds had the indicated amount of net
assets: Peachtree Government Money Market Fund -- $78,098,097; Peachtree Equity
Fund -- $111,757,147; Peachtree Bond Fund -- $78,614,768; and Peachtree Georgia
Tax-Free Income Fund -- $2,148,731.
NBAI also serves as investment adviser to the Acquiring Funds. In
return for its advisory services to the Acquiring Funds, NBAI is entitled to a
monthly fee calculated at the indicated annual rate of the Acquiring Funds'
average daily net assets:
INVESTMENT ADVISORY
ACQUIRING FUND RATE OF COMPENSATION
Nations Government Money Market Fund 0.40%
Nations Capital Growth Fund 0.75%
Nations Strategic Fixed Income Fund 0.60%
15
<PAGE>
Nations Georgia Intermediate Municipal Bond Fund 0.50%
Under its agreement with the Acquiring Funds, NBAI may waive (either
voluntarily or pursuant to applicable state limitations) advisory fees payable
by the Acquiring Funds. For the fiscal period ended March 31, 1996, after
waivers, the Acquiring Funds paid advisory fees at the indicated annual rate of
average daily net assets: Nations Government Money Market Fund -- 0.12%; Nations
Capital Growth Fund -- 0.75%; Nations Strategic Fixed Income Fund -- 0.50%; and
Nations Georgia Intermediate Municipal Bond Fund -- 0.17%.
As of March 31, 1996, the Acquiring Funds had the indicated amount of
total net assets: Nations Government Money Market Fund -- $481,444,223; Nations
Capital Growth Fund -- $902,311,873; Nations Strategic Fixed Income Fund --
$833,125,049; and Nations Georgia Intermediate Municipal Bond Fund --
$57,389,670.
Investment Sub-Adviser. Effective January 9, 1996, and pursuant to a
sub-advisory agreement, between NBAI and TSIA, and approved by the Peachtree
Funds' shareholders at the January 8, 1996 Joint Meeting of Shareholders (the
"Peachtree Sub-Advisory Agreement"), TSIA will act as Sub-Adviser to the Funds.
The Peachtree Sub-Advisory Agreement provides that TSIA will furnish
NBAI investment advice, statistical and other factual information, as may be
requested by NBAI. The Peachtree Sub-Advisory Agreement may be terminated by the
Trustees of the Trust or by a vote of a majority of the outstanding voting
securities of a Fund on sixty days' written notice to the NBAI or TSIA. TSIA
shall not be liable to the NBAI, the Trust, or to any of the Funds or to any
shareholder for any act or omission except due to willful misfeasance, bad
faith, gross negligence, or reckless disregard of the obligations or duties
under the Peachtree Sub-Advisory Agreement.
In return for its sub-advisory services to the Funds, TSIA is entitled
to receive from NBAI sub-advisory fees, computed daily and payable monthly at
the annual rates listed below as a percentage of the average daily net assets of
the Funds.
SUB-ADVISORY
FUND RATE OF COMPENSATION
Peachtree Georgia Tax-Free Income Fund 0.055%
Peachtree Government Money Market Fund 0.055%
Peachtree Bond Fund 0.15%
Peachtree Equity Fund 0.07%
On January 1, 1996 NBAI, TSIA and the Trust entered into a sub-advisory
agreement (the "Sub-Advisory Agreement") wherein TSIA would be appointed
Sub-Adviser to the Acquiring Funds.
16
<PAGE>
The Sub-Advisory Agreement provides that subject to the supervision of
NBAI and the Board of Trustees, TSIA will provide a continuous investment
program for each Fund, including investment research and management. The
investment activities of TSIA shall be subject to any directives of the Board of
Trustees. And the services furnished by TSIA are not exclusive and TSIA shall be
free to furnish similar services to others so long as its services under the
Sub-Advisory Agreement would not be impaired. TSIA will pay all expenses
incurred by it in connection with its activities under the Sub-Advisory
Agreement other than the cost of securities, commodities and other investments,
including transaction charges. Further, TSIA will not be liable in connection
with it performance, except where a loss results from willful misfeasance, bad
faith or gross negligence on the part of TSIA.
In return for its sub-advisory services to the Acquiring Funds, TSIA is
entitled to receive from NBAI sub-advisory fees, computed daily and payable
monthly at the annual rates listed below as a percentage of the average daily
net assets of the Acquiring Fund.
SUB-ADVISORY
ACQUIRING FUND RATE OF COMPENSATION
Nations Government Money Market Fund 0.055%
Nations Capital Growth Fund 0.25%
Nations Strategic Fixed Income Fund 0.15%
Nations Georgia Intermediate Municipal Bond Fund 0.07%
NBAI is a wholly owned subsidiary of NationsBank. NBAI has its
principal offices at One NationsBank Plaza, Charlotte, North Carolina 28225.
TSIA is a wholly owned banking 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. TSIA has its principal
offices at One NationsBank Plaza, Charlotte, North Carolina 28255.
Distribution and Shareholder Servicing Arrangements
Shares of the Funds are distributed by Federated Securities Corp.
("FSC"), a registered broker-dealer. FSC, a subsidiary of Federated Investors,
has its principal offices at Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779. The Funds have adopted a distribution plan (the "Distribution Plan")
pursuant to Rule 12b-1 under the 1940 Act which permits the Funds to reimburse
FSC up to 0.75% (but in the case of the Peachtree Government Money Market Fund,
up to 0.25%) of such Funds' average daily net assets for actual expenses
incurred by FSC in connection with the distribution of such shares. The Funds
currently do not reimburse FSC for such expenses. In addition, under a
Shareholder Servicing Plan, each Fund may pay up to 0.25% as a shareholder
services fee to certain financial institutions to compensate financial
17
<PAGE>
institutions which provide administrative and/or distribution related services.
The Funds currently are not paying any shareholder services fees.
Shares of the Acquiring Funds are distributed by Stephens, a full
service broker-dealer, pursuant to a distribution agreement. Stephens has its
principal offices at 111 Center Street, Little Rock, Arkansas 72201. Stephens
receives no compensation in connection with the distribution of the Primary A
Shares of the Acquiring Funds.
Other Services
Administrative Services. Administrative services, which may include
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, are provided to the Funds by
Federated Administrative Services ("FAS"). FAS, a subsidiary of Federated
Investors, has its principal offices at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. For its services, FAS is entitled to receive a fee at
the annual rate of 0.15% of the combined average daily net assets of all
portfolios of Peachtree Funds up to $250 million; 0.125% of the next $250
million of the combined average daily net assets; 0.10% of the next $250 million
of the combined average daily net assets; and 0.075% of the combined average net
assets in excess of $750 million. The fee is allocated among all portfolios of
Peachtree Funds based on their relative net assets. The administrative fee
received during any fiscal year shall be at least $100,000 per Fund.
Stephens, First Data, and NationsBank serve as administrator,
co-administrator, and sub-administrator, respectively, of the Acquiring Funds
under agreements with the Trust. First Data , a wholly owned subsidiary or First
Data Corporation, has its principal offices at One Exchange Place, Boston,
Massachusetts 02109. The administrative services provided by Stephens, First
Data and NationsBank are substantially identical to those provided by the
administrator of the Funds. In return for providing administrative services to
the Acquiring Funds and the other funds of the Trust, Stephens and First Data
are entitled to a combined fee at the annual rate of 0.10% of the aggregate
average daily net assets of each Acquiring Fund and NationsBank is entitled to a
monthly fee from Stephens based on an annual rate of .01% of the Acquiring
Funds' average daily net assets
Custodian, Transfer Agent and Other Service Providers. The Bank of New
York serves as the Funds' custodian and is located at 48 Wall Street, New York,
New York 10286. The Bank of New York maintains custody of the Funds' securities,
cash and other property in accordance with the 1940 Act. For such services, the
Bank of New York receives transaction fees and an annual fee from each Fund
based on the market value of the Fund's assets.
For the fiscal period ended March 31, 1996, the total annualized
operating expenses per share of the Funds were as follows:
18
<PAGE>
PEACHTREE FUND ANNUALIZED OPERATING EXPENSE RATIO
Peachtree Government Money Market Fund 0.54% of average net assets (0.84%
before waiver)
Peachtree Equity Fund 1.00% of average net assets (1.04%
before waiver)
Peachtree Bond Fund 1.02% of average net assets (1.08%
before waiver)
Peachtree Georgia Tax-Free Income Fund 0.00% of average net assets (9.85%
before waiver)
In addition, FSC provides transfer agency services to the Funds under
its administration agreement with the Funds.
NationsBank Texas serves as the Acquiring Funds' custodian. As such,
among other things, NationsBank Texas maintains custody of the securities, cash
and other property of the Acquiring Funds; delivers securities against payment
upon sale and pays for securities against delivery upon purchase; makes payments
on behalf of the Acquiring Funds for payments of dividends, distributions and
redemptions; endorses and collects on behalf of the Acquiring Funds all checks;
and receives all dividends and other distributions made on securities owned by
the Acquiring Funds. For such services, NationsBank Texas receives an
asset-based fee and transaction charges from the Acquiring Funds.
First Data serves as transfer agent for Primary A Shares of the
Acquiring Funds. For its services, First Data receives a monthly fee based on
the number of shareholder accounts it maintains and is reimbursed for its
out-of-pocket expenses.
For the fiscal year ended March 31, 1996, the total annualized expenses
per share of the Primary A Shares of the Acquiring Funds, after waivers, were as
follows:
19
<PAGE>
ACQUIRING FUND ANNUALIZED OPERATING EXPENSE RATIO
Nations Government Money Market Fund 0.30% of average daily net assets
(0.59% before waiver)
Nations Capital Growth Fund 0.96% of average daily net assets
(0.96% before waiver)
Nations Strategic Fixed Income Fund 0.72% of average daily net assets
(0.83% before waiver)
Nations Georgia Intermediate Municipal Bond 0.50% of average daily net assets
Fund (0.83% before waiver)
Houston, Houston & Donnelly, Pittsburgh, Pennsylvania, and Dickstein,
Shapiro & Morin, L.L.P., Washington, D.C., serve as counsel to Peachtree Funds.
Ernst & Young LLP, Pittsburgh, Pennsylvania, serves as the independent
accountants for Peachtree Fund, and, as such, has audited the financial
statements of Peachtree Funds.
Morrison & Foerster LLP, 2000 Pennsylvania Avenue, N.W., Suite 5500,
Washington, D.C. 20006, is counsel to Nations Fund and special counsel to
NationsBank.
Price Waterhouse LLP, serves as independent accountant to Nations Fund.
Its address is 160 Federal Street, Boston, Massachusetts 02110.
For a complete description of these arrangements, see the section in
the relevant Acquiring Fund's Prospectus entitled "How the Funds Are Managed --
Other Service Providers."
SUMMARY COMPARISON OF PURCHASE, REDEMPTION AND EXCHANGE PROCEDURES
PURCHASES. Shares of the Peachtree Government Money Market Fund are
offered at net asset value, without a sales load, to all investors. Shares of
the Peachtree Equity Fund, the Peachtree Bond Fund and Peachtree Georgia
Tax-Free Income Fund are offered at net asset value, without a sales load, to
certain trust customers of Bank South and investors who purchase Fund shares
through Bank South Investment Services, Inc.'s wrap fee program. Shares of the
Peachtree Equity Fund, the Peachtree Bond Fund and the Peachtree Georgia
Tax-Free Income Fund are also offered at net asset value, with a sliding-scale
sales load, to individual and institutional investors. Purchases of Fund shares
may be made on any day on which the New York Stock Exchange and Federal Reserve
Wire System are open for business. The minimum initial investment in each Fund
by an investor is $1,000 ($500 for individual retirement accounts) and the
minimum subsequent investment is $100. Investors who purchase shares of the
Peachtree Equity Fund, the Peachtree Bond Fund or the Peachtree Georgia Tax-Free
Income Fund who are not trust customers of Bank South or participants in the
Bank South Investment
20
<PAGE>
Services, Inc.'s wrap fee program are subject to an initial sales charge
according to the following schedules:
PEACHTREE EQUITY FUND
<TABLE>
<CAPTION>
Sales Load as a
Percentage of
Amount of Purchase Price Offering Price
------------------------ --------------
<S> <C>
Less than $100,000 3.75%
$100,000 but less than $250,000 3.25%
$250,000 but less than $500,000 2.75%
$500,000 but less than $750,000 2.25%
$750,000 but less than $1,000,000 1.00%
$1,000,000 but less than $2,000,000 0.50%
$2,000,000 or more 0.00%
</TABLE>
PEACHTREE BOND FUND AND PEACHTREE GEORGIA TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
Sales Load as a Percentage of
Offering Price
Amount of Purchase Price
<S> <C>
Less than $100,000 2.50%
$100,000 but less than $250,000 2.00%
$250,000 but less than $500,000 1.50%
$500,000 but less than $750,000 1.00%
$750,000 but less than $1,000,000 0.50%
$1,000,000 or more 0.00%
</TABLE>
The sales charge on such investors may be reduced through quantity
discounts and accumulated purchases, signing a letter of intent, using the
reinvestment privilege, or making concurrent purchases.
Primary A Shares of the Acquiring Funds are offered at net asset value
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 and endowments.
Primary A Shares may, at times, be sold to other similar categories of
investors. There is a minimum initial investment in Primary A Shares of $1,000
per record holder, but there is no minimum subsequent investment. Primary A
Shares of the non-money market funds may be purchased on any day on which the
New York Stock Exchange is open for trading. Primary A Shares of the money
market funds may be purchased on days which the Federal Reserve Bank of New York
is open for business.
REDEMPTIONS. Redemption orders for the Funds must be placed with
Bank South prior to 4:00 p.m. (Eastern time) in order for the order to be
accepted on that day. Shares may be redeemed on any day that a Fund computes its
net asset value. The Funds compute their net asset values at 4:00 p.m. (Eastern
time) (and for the Peachtree Government Money Market Fund, at
21
<PAGE>
12:00 noon (Eastern time) and 4:00 p.m. (Eastern time)), Monday through Friday,
except on: (i) days on which changes (if any) in the value of the Fund's
portfolio securities do not materially affect its net asset value; (ii) days
during which no shares are tendered for redemption and no orders to purchase
shares are received; and (iii) the following holidays: New Year's Day, Martin
Luther King Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day. The
Funds do not impose a redemption fee.
Primary A Shares of the Acquiring Funds may be redeemed in
accordance with the instructions and limitations pertaining to the shareholder's
account at his or her institution. The Trust may redeem a shareholder's Primary
A Shares if the investor's account drops below $500 as a result of redemptions
and the investor does not increase the balance to $500 on 60 days' written
notice. Redemption orders for shares of the Acquiring Funds may be placed before
4:00 p.m., Eastern time, (3:00 p.m., Eastern time, with respect to Nations
Government Money Market Fund) on any day that the Acquiring Funds are open for
business. Similarly, no fee is imposed on the redemption of Primary A Shares of
the Acquiring Funds.
EXCHANGES. Shares of a Fund may be exchanged for shares of the
other Funds or certain other funds designated by Bank South, which are
distributed by FSC, but are not advised by Bank South. Shares of a Fund with a
front-end sales load may be exchanged at net asset value for shares of other
funds with an equal front-end sales load or no sales load. However, if shares of
a Fund are exchanged for shares of another fund with a higher front-end sales
load than the Fund being exchanged, then the shareholder generally must pay the
difference between the maximum front-end sales charge applicable to the shares
being exchanged and those being acquired. The shares exchanged must have an
aggregate value of at least $1,000. The Funds impose a $10 service charge on
each exchange.
Primary A Shares of each Acquiring Fund may be exchanged for
Primary A Shares of any of the other funds of the Nations Fund Family which
offer Primary A Shares. For a listing of the funds of the Nations Fund Family,
see the Question and Answer Summary at the beginning of this Combined
Prospectus/Proxy Statement. An exchange of Primary A Shares for Primary A Shares
of another fund is made on the next calculated net asset value per share of each
fund after the exchange order is received. The Acquiring Fund and each of the
other funds of Nations Fund may limit the number of times this exchange feature
may be exercised by a shareholder within a specified period of time.
SUMMARY COMPARISON OF DIVIDEND POLICIES
Peachtree Government Money Market Fund and Peachtree Georgia
Tax-Free Income Fund declare dividends from net investment income daily and pay
the dividends monthly. Peachtree Equity Fund declares and pays dividends from
net investment income each fiscal quarter. Peachtree Bond Fund declares and pays
dividends from net investment income each month. Substantially all capital
gains, if any, are distributed at least annually by the Funds. Dividends and
distributions are automatically reinvested in additional shares unless the
shareholder has elected to receive such payment in cash.
22
<PAGE>
Nations Government Money Market Fund, Nations Strategic Fixed
Income Fund and Nations Georgia Intermediate Municipal Bond Fund declare
dividends from net investment income daily and pay the dividends monthly.
Nations Capital Growth Fund declares and pays dividends from net investment
income each quarter. Each Acquiring Fund's net realized capital gains (including
net short-term capital gains) are distributed at least annually. Dividends and
distributions of the Acquiring Funds are reinvested in additional Shares unless
the shareholder has elected to receive such payment in cash.
SUMMARY OF STRUCTURE AND ORGANIZATION
The Funds are part of Peachtree Funds, a Massachusetts business trust
registered as an open-end management investment company. Peachtree Funds
currently consists of five separate portfolios. The Acquiring Funds are part of
Nations Fund Trust, a Massachusetts business trust registered as an open-end
management investment company which was established in 1985 and which currently
consists of thirty-two separate portfolios. The number of portfolios of
Peachtree Funds and the Trust is subject to change.
RISK CONSIDERATIONS
Because the investment objective, policies, strategies and restrictions
of each Fund and its corresponding Acquiring Fund are substantially similar, the
overall level of investment risk should not materially change as a result of the
Reorganization. For additional information, see "Comparison of Investment
Objectives and Policies" and "Additional Comparative Information," below.
The following risk considerations that an investor should consider are
relevant to both the Funds and the Acquiring Funds (collectively the "funds" or
"fund"). Although NBAI will seek to achieve the investment objective of the
funds, there is no assurance that it will be able to do so. In addition, an
investment in either the Peachtree Government Money Market Fund or the Nations
Government Money Market Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that either fund will be able to
maintain a stable net asset value of $1.00 per share.
No single fund should be considered, by itself, to provide a complete
investment program for any investor. Investments in a Fund or an Acquiring Fund
are not insured against loss of principal.
Investments by a fund in common stocks and other equity securities are
subject to stock market risks. The value of the stocks that the fund holds, like
the broader stock market, may decline over short or even extended periods. The
value of a fund's investments in debt securities 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
23
<PAGE>
United States 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.
Since the Peachtree Georgia Tax-Free Income Fund and the Nations
Georgia Intermediate Municipal Bond Fund are non-diversified funds and invest
primarily in securities issued by entities located in a single state, each fund
is more susceptible to changes in value due to political or economic changes
affecting that state or its subdivisions.
Certain of the funds' investments constitute derivative securities,
which are securities whose value is derived, at least in part, from an
underlying index or reference rate. There are certain types of derivative
securities that can, under certain circumstances, significantly increase a
purchaser's exposure to market or other risks. NBAI, however, only purchases
derivative securities in circumstances where it believes such purchases are
consistent with such funds' investment objectives and do not unduly increase the
funds' exposure to market or other risks.
Certain funds may seek to achieve their investment objectives through
investments in securities of foreign issuers that involve risks not typically
associated with U.S. issuers. These considerations include the possibility of
expropriation or nationalization, exchange rate fluctuations, foreign taxation
and withholding, the unavailability of financial information or the difficulty
of interpreting financial information prepared under foreign accounting
standards, less liquidity and more volatility in foreign securities markets, the
impact of political, social, or diplomatic developments, and the difficulty of
assessing economic trends in foreign countries. It may also be more difficult to
enforce contractual obligations abroad than would be the case in the United
States because of differences in the legal systems. Transaction costs in foreign
securities may be higher. NBAI will consider these and other factors before
investing in foreign securities and will not make such investments unless, in
its opinion, such investments will meet a fund's standards and objective.
Lastly, certain funds may invest in certain options, futures and
currency swap strategies. When certain funds use financial futures and options
on financial futures as hedging devices, there is a risk that the prices of the
securities subject to the futures contracts may not correlate perfectly with the
prices of the securities in the fund's portfolio. This may cause the futures
contract and any related options to react differently than the portfolio
securities to market changes. In addition, expectations about the direction or
extent of market factors, such as interest rate movements, may not be realized.
In these events, a fund may lose money on the futures contract or option. In
addition, it is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. The fund's ability to
establish and close out futures and options positions depends on this secondary
market. Although NBAI will consider liquidity before entering into option
transactions, there is no assurance that a liquid secondary market on an
exchange or otherwise will exist for any particular futures contract or option
at any particular time. As of the date of this proxy/prospectus, no fund held
investments described in this paragraph.
24
<PAGE>
THE PROPOSED TRANSACTION
AGREEMENT AND PLAN OF REORGANIZATION
The Plan provides that all of the assets of each Fund as of the Closing
Date will be transferred to the corresponding Acquiring Fund in exchange for
Primary A Shares of the corresponding Acquiring Fund and the assumption by the
Acquiring Fund of stated liabilities of the Fund. The Closing Date is expected
to be on or about September 27, 1996. A copy of the Plan is attached as Exhibit
A to this Combined Prospectus/Proxy Statement. Although portions of the Plan are
summarized below, this summary is qualified in its entirety by reference to the
Plan.
Promptly after the Closing Date, each Fund will distribute the shares
of the corresponding Acquiring Fund to the Fund's respective shareholders of
record as of the close of business on the Closing Date. Shareholders of a Fund
will receive Primary A Shares of the corresponding Acquiring Fund. The Primary A
Shares of the corresponding Acquiring Fund which will be issued for distribution
to each Fund's shareholders will be equal in value to the shares of the Fund
held as of the Closing Date. Peachtree Funds will then take all necessary steps
to terminate the qualification, registration and classification of the Funds.
All issued and outstanding shares of the Funds will be redeemed and canceled on
the Funds' books in exchange for shares of the Acquiring funds distributed.
Primary A Shares of the Acquiring Funds will be represented only by book
entries; no share certificates will be issued unless expressly requested in
writing. Certificates are not issued for fractional shares.
The consummation of the proposed Reorganization is subject to the
satisfaction of a number of conditions set forth in the Plan, including
shareholder approval. The Funds may waive certain conditions at any time before
or after approval of the Plan by the shareholders. The Plan also may be
terminated and the Reorganization abandoned at any time by the mutual written
consent of the Funds and the Acquiring Funds; by either such party without
liability to the other party (unless such party is otherwise in default or in
breach of the Plan) if the closing does not occur within a specified time
period; or by either party without liability to the other party if the other
party materially breaches any of its representations, warranties or covenants or
does not fulfill a condition precedent under the Plan. The Reorganization also
is subject to the condition, which cannot be waived, of obtaining an opinion of
counsel to the effect that the Reorganization constitutes a tax-free
reorganization for federal income tax purposes. NBAI or Stephens will be liable
for the expenses incurred in connection with the Plan, whether or not the
proposed Reorganization is consummated.
Shareholders of the Funds will have no dissenters' rights or appraisal
rights. All shareholders of the Funds as of the Closing Date, including those
that voted against the approval of the Plan, will receive Primary A Shares of
the corresponding Acquiring Fund. All shareholders of the Funds have the right
at any time up to the next business day preceding the Closing Date to redeem
their shares at net asset value according to the procedures set forth in the
Funds' prospectuses.
25
<PAGE>
This summary does not purport to be a complete description of the Plan
and is subject to the terms and conditions of the Plan set forth in Exhibit A.
REASONS FOR THE PROPOSED TRANSACTION
Currently, the Funds and the Acquiring Funds are investment portfolios
of separate mutual fund companies. Although each Fund and its corresponding
Acquiring Fund have substantially similar investment objectives, policies and
restrictions, each must separately bear the costs of its operations.
Consolidating their separate operations should generally benefit the Funds'
shareholders by promoting more efficient operations on a more cost-effective
basis. In particular, each of the Acquiring Funds (except the Nations Georgia
Intermediate Municipal Bond Fund) currently operates and are expected to
continue to operate following consummation of the Reorganization, with lower
overall expense ratios than each of the Funds. Although the Peachtree Georgia
Tax-Free Income Fund currently operates with a lower overall expense ratio than
the Nations Georgia Intermediate Municipal Bond Fund as a result of the waiver
of investment advisory and other fees and this assumption of expenses by NBAI,
the Peachtree Funds, absent the Reorganization, do no expect these fee waivers
and expense reimbursements to continue indefinitely. Finally, because the Funds
and the Acquiring Funds receive investment advisory services from the same
investment adviser, NBAI, and because of the similarities between each Fund and
its corresponding Acquiring Fund, the considerations and risks involved with an
investment in the Acquiring Funds are expected to be comparable to those
associated with an investment in the Funds.
The transactions contemplated by the Plan were presented to the Board
of Trustees of Peachtree Funds for consideration at a Board meeting held on
February 29, 1996. The Board of Trustees of Peachtree Funds concluded
unanimously that the Reorganization is in the best interests of each Fund and
that the interests of its existing shareholders will not be diluted by the
Reorganization.
The Board of Trustees of Peachtree Funds, in reaching this conclusion,
considered the costs resulting from the separate operations of each Fund and the
corresponding Acquiring Fund in light of their substantially similar investment
objectives and policies. The Board of Trustees also considered the potential
expense savings, reduced per-share expenses, and benefits to the portfolio
management process that could result from combining the assets and operations of
the Funds and the Acquiring Funds. In this regard, the Board reviewed
information provided by the investment adviser, distributors and administrators
of the Funds and the Acquiring Funds, relating to the anticipated cost savings
to the shareholders of the Funds as a result of the Reorganization.
In particular, the Board determined that the elimination of duplicative
operations and the increase in asset levels of the Acquiring Funds after the
Reorganization should result in the following benefits for investors, although
there can be no assurances, of course, in this regard:
(1) ACHIEVEMENT OF REDUCED PER-SHARE EXPENSES AND
ECONOMIES OF SCALE. Combining the assets of the Funds with the assets
of the Acquiring Fund also should lead
26
<PAGE>
to reduced expenses, on a per-share basis, to the shareholders of the
Fund. Shareholders of the Peachtree Georgia Tax-Free Income Fund should
note that the total per share operating expenses, after fee waivers
and/or reimbursements, of the Primary A Shares of Nations Georgia
Intermediate Municipal Bond Fund are higher than those of the Peachtree
Georgia Tax-Free Income Fund. Before fee waivers and/or reimbursements,
however, the total per share operating expenses of the Primary A Shares
of Nations Georgia Intermediate Municipal Bond Fund are lower than
those of the Peachtree Georgia Tax-Free Income Fund. In this
connection, NBAI has advised the Board of Trustees of Peachtree Funds,
that there would be no assurance that it would continue to waive and/or
reimburse expenses of the Peachtree Georgia Tax-Free Income Fund on an
ongoing basis. The Peachtree Georgia Tax-Free Income Fund is too small
to remain viable as a separate fund, and, in the absence of the
Reorganization it is not anticipated that current fee waivers and
expense reimbursements would continue.
(2) BENEFITS TO THE PORTFOLIO MANAGEMENT PROCESS.
Higher asset levels also should enable the Acquiring Funds to purchase
larger individual portfolio investments (such as "round-lots" or other
quantities that may result in reduced transaction costs and/or other
more favorable pricing) and provide the opportunity for greater
portfolio diversity.
The Board of Trustees of Peachtree Funds based its decision to
recommend the proposed transaction on the consideration of a number of factors,
including, among other things:
(1) the terms and conditions of the Reorganization
and the fact that it would not result in a dilution of the existing
shareholders' interests;
(2) the comparability of each Fund's investment
objective, strategy and policies with those of its corresponding
Acquiring Fund, as well as the views of the investment adviser to the
Funds and the Acquiring Funds that any differences between the
investment policies and restrictions of each Fund and its corresponding
Acquiring Fund should not appreciably increase investment risks;
(3) the experience and resources of NBAI, and its
affiliates, with respect to providing investment management services
and the similarity between the Funds' and the Acquiring Funds'
respective distribution, administrative, transfer agency, shareholder
service and custody arrangements;
(4) the current and projected expense ratios, and
information regarding fees and expenses of the Funds, the Acquiring
Funds and other similar funds;
(5) the conditioning of the Reorganization on the
receipt of a legal opinion confirming the absence of any adverse
federal income tax consequences to the Funds or their shareholders
resulting from the Reorganization; and
27
<PAGE>
(6) other factors deemed relevant.
In particular, the Board considered per share operating expense ratios
(total operating expenses expressed as a percentage of average net assets) both
before and after fee waivers and expense reimbursements for the single class of
shares of the Funds and the Primary A Shares of the Acquiring Funds, and on a
pro forma basis after giving effect to the Reorganization. As of November 30,
1995, these expense ratios, after waivers and reimbursements, were:
ESTIMATED OPERATING EXPENSE RATIOS
PEACHTREE GOVERNMENT MONEY MARKET FUND / NATIONS GOVERNMENT
MONEY MARKET FUND
<TABLE>
<CAPTION>
Peachtree Government Money Nations Government Money Pro Forma
Market Fund Market Fund (reflects waivers)
<S> <C> <C>
0.54% 0.30% 0.30%
</TABLE>
PEACHTREE EQUITY FUND / NATIONS CAPITAL GROWTH FUND
<TABLE>
<CAPTION>
Nations Capital Pro Forma
Peachtree Equity Fund Growth Fund (reflects waivers)
<S> <C> <C>
1.00% 0.98% 0.98%
</TABLE>
PEACHTREE BOND FUND / NATIONS STRATEGIC FIXED INCOME FUND
<TABLE>
<CAPTION>
Nations Strategic Fixed Pro Forma
Peachtree Bond Fund Income Fund (reflects waivers)
<S> <C> <C>
1.02% 0.71% 0.71%
</TABLE>
PEACHTREE GEORGIA TAX-FREE INCOME FUND / NATIONS GEORGIA INTERMEDIATE
MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
Nations Georgia
Peachtree Georgia Tax-Free Intermediate Municipal Bond Pro Forma
Income Fund Fund (reflects waivers)
<S> <C> <C>
None 0.55% 0.55%
</TABLE>
28
<PAGE>
DESCRIPTION OF THE SECURITIES TO BE ISSUED
The Acquiring Funds consist of an unlimited number of units of
beneficial interest without par value of the Trust, which is an open-end series
management investment company organized as a Massachusetts business trust on May
6, 1985. Shares of the Acquiring Funds (other than the Nations Government Money
Market Fund) are divided into the following five classes of shares: Primary A
Shares, Primary B Shares, Investor A Shares, Investor C Shares and Investor N
Shares. Shares of Nations Government Money Market Fund are divided into the
following six classes of shares: Primary A Shares, Primary B Shares, Investor A
Shares, Investor B Shares, Investor C Shares and Investor D Shares. Shareholders
are entitled to one vote for each share held, and a fractional vote for
fractional shares held on matters on which they are entitled to vote. See
"Additional Comparative Information."
Information regarding the Primary B, Investor B, Investor C, Investor D
and Investor N Shares of the relevant Acquiring Fund is contained in the
prospectus for such Acquiring Fund which accompanies this Combined
Prospectus/Proxy Statement.
FEDERAL INCOME TAX CONSEQUENCES
As a condition to the closing of the Reorganization, Peachtree Funds
and the Trust must receive a favorable opinion from Morrison & Foerster LLP,
counsel to the Trust, substantially to the effect that, for federal income tax
purposes: (a) the Reorganization will constitute a "tax-free" reorganization
within the meaning of Sections 368(a)(1)(C) of the Code; (b) no gain or loss
will be recognized by the Acquiring Funds or the Funds as a result of the
Reorganization; (c) no gain or loss will be recognized by shareholders of the
Funds upon the exchange of their Fund shares for shares of the corresponding
Acquiring Fund; (d) the federal income tax basis of the Acquiring Fund shares
received by a Fund shareholder pursuant to the Reorganization will be the same
as the basis of the Fund shares exchanged; (e) the holding period of the
Acquiring Fund shares so received will include the period during which the Fund
shareholder held shares of the Fund, provided such shares were held as a capital
asset; (f) the federal income tax basis of each Fund's assets acquired by the
corresponding Acquiring Fund will be the same as the federal income tax basis of
such assets immediately prior to the Reorganization; (g) the holding period of
each Fund's assets acquired by the corresponding Acquiring Fund will include the
period during which those assets were held by the Fund; and (h) each Acquiring
Fund will succeed to the corresponding Acquired Fund's tax attributes, described
in Section 381(c) of the Code, as of the end of the Closing Date. Peachtree
Funds and the Trust do not intend to seek a private letter ruling with respect
to the tax effects of the Reorganization.
RELATED PROPOSALS OF INTEREST TO FUND SHAREHOLDERS
The Peachtree Prime Fund of Peachtree Funds also is considering the
approval of a reorganization with Nations Prime Fund, a portfolio of Nations
Fund, Inc. This matter will be considered by the shareholders of the Peachtree
Prime Fund at the Special Meeting. The consummation of the Plan with respect to
the Funds is not contingent on the approval of this matter by the Peachtree
Prime Fund.
29
<PAGE>
CAPITALIZATION
The following table shows the capitalization of the Acquiring Funds and
the Funds as of March 31, 1996 and on a pro forma basis as of that date after
giving effect to the Reorganization:
PEACHTREE GOVERNMENT MONEY MARKET FUND / NATIONS GOVERNMENT
MONEY MARKET FUND
<TABLE>
<CAPTION>
Pro Forma Combined
Peachtree Government Nations Government (Fund Shares/All
Money Market Fund Money Market Fund classes of Acquiring
Fund Fund Pro Forma Combined Fund Shares)
<S> <C> <C> <C> <C>
Net assets $78,098,097 $336,771,168 $414,869,265 $559,542,320
(Fund Shares) (Primary A Shares) (Fund Shares /
Primary A Shares)
Net asset per share $1.00 $1.00 $1.00 N/A
Shares outstanding 78,098,097 336,805,970 414,904,067 N/A
(Fund Shares) (Primary A Shares) (Fund Shares /
Primary A Shares)
Shares authorized Unlimited Unlimited Unlimited N/A
</TABLE>
30
<PAGE>
PEACHTREE EQUITY FUND / NATIONS CAPITAL GROWTH FUND
<TABLE>
<CAPTION>
Pro Forma Combined
(Fund Shares/All
classes of Acquiring
Peachtree Equity Fund Nations Capital Pro Forma Combined Fund Shares)
Growth Fund
<S> <C> <C> <C> <C>
Net assets $111,757,147 $839,300,160 $951,057,307 $1,014,069,020
(Fund Shares) (Primary A Shares) (Fund Shares /
Primary A Shares)
Net asset per share $12.95 $13.43 $13.43 N/A
(Fund Shares) (Primary A Shares) (Fund Shares /
Primary A Shares)
Shares outstanding 8,632,609 62,500,885 70,823,200 N/A
(Fund Shares) (Primary A Shares) (Fund Shares /
Primary A Shares)
Shares authorized Unlimited Unlimited Unlimited N/A
</TABLE>
31
<PAGE>
PEACHTREE BOND FUND / NATIONS STRATEGIC FIXED INCOME FUND
<TABLE>
<CAPTION>
Pro Forma Combined
(Fund Shares/All
Nations Strategic classes of Acquiring
Peachtree Bond Fund Fixed Income Fund Pro Forma Combined Fund Shares)
<S> <C> <C> <C> <C>
Net assets $78,614,768 $823,889,660 $902,504,428 $911,739,817
(Fund Shares) (Primary A Shares) (Fund Shares /
Primary A Shares)
Net asset per share $9.57 $9.93 $9.93 N/A
(Fund Shares) (Primary A Shares) (Fund Shares /
Primary A Shares)
Shares outstanding 8,214,477 82,995,242 90,914,569 N/A
(Fund Shares) (Primary A Shares) (Fund Shares /
Primary A Shares)
Shares authorized Unlimited Unlimited Unlimited N/A
</TABLE>
32
<PAGE>
PEACHTREE GEORGIA TAX-FREE INCOME FUND /
NATIONS GEORGIA INTERMEDIATE MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
Pro Forma Combined
Nations Georgia (Fund Shares/All
Peachtree Georgia Intermediate classes of Acquiring
Tax-Free Income Fund Municipal Bond Fund Pro Forma Combined Fund Shares)
<S> <C> <C> <C> <C>
Net assets $2,148,731 $38,221,500 $40,370,231 $59,538,401
(Fund Shares) (Primary A Shares) (Fund Shares /
Primary A Shares)
Net asset per share $10.02 $10.63 $10.63 N/A
(Fund Shares) (Primary A Shares) (Fund Shares /
Primary A Shares)
Shares outstanding 214,352 3,594,418 3,796,488 N/A
(Fund Shares) (Primary A Shares) (Fund Shares /
Primary A Shares)
Shares authorized Unlimited Unlimited Unlimited N/A
</TABLE>
<PAGE>
As of July 25, 1996, the net assets of the Peachtree Government Money
Market Fund and the Peachtree Equity Fund equaled more than 10% of the assets of
the corresponding Acquiring Fund, and pro forma financial statements have been
included in the Statement of Additional Information. As of July 25, 1996, the
net assets of the other Funds equaled less than 10% of the assets of the
corresponding Acquiring Fund, and therefore, pro forma financial statements are
not provided for such Funds.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVES AND POLICIES
The investment objective and policies of each Fund are substantially
similar to those of the corresponding Acquiring Fund. However, the investment
objective of each Fund is "fundamental" which means that it may not be changed
without the consent of a majority of the Fund's outstanding shares, as defined
in the 1940 Act. The investment objective of each Acquiring Fund is
"non-fundamental," which means that it may be changed without a vote of the
Acquiring Fund's shareholders.
33
<PAGE>
PEACHTREE GOVERNMENT MONEY MARKET FUND / NATIONS GOVERNMENT MONEY MARKET FUND
The Peachtree Government Money Market Fund's investment objective is to
achieve current income consistent with stability of principal and liquidity. The
Nations Government Money Market Fund has a substantially identical objective, to
seek as high a level of current income as is consistent with liquidity and
stability of principal.
The Peachtree Government Money Market Fund pursues its investment
objective by investing in a portfolio of short-term securities (maturing
generally in 13 months or less) issued by the U.S. Government, its agencies and
instrumentalities and backed by the full faith and credit of the U.S.
Government. The average maturity of U.S. Government securities in the Fund,
computed on a dollar-weighted basis, will be 90 days or less. U.S. Government
securities that the Fund may invest in include U.S. Treasury bills, other notes,
bonds and discount notes of U.S. Government agencies and instrumentalities. The
Fund may also invest in repurchase agreements, lend portfolio securities,
purchase securities on a when-issued or delayed delivery basis and invest in
securities of other investment companies.
Similarly, the Nations Government Money Market Fund seeks to achieve
its objective by investing in a diversified portfolio of U.S. Government
obligations generally with maturities of 397 days or less from the date of
purchase. Unlike the Peachtree Government Money Market Fund, which may only
invest in securities backed by the full faith and credit of the U.S. Government,
the Nations Government Money Market Fund may also invest in obligations of
federal agencies, authorities and instrumentalities, the interest and principal
of which are not guaranteed by the U.S. Government. Furthermore, the Nations
Government Money Market Fund also may invest in repurchase agreements, lend
portfolio securities, invest in securities of other investment companies and
invest in reverse repurchase agreements.
PEACHTREE EQUITY FUND / NATIONS CAPITAL GROWTH FUND
The Peachtree Equity Fund's investment objective is to achieve
long-term growth of capital and income. The Nations Capital Growth Fund's
investment objective is to seek growth of capital by investing in companies that
are believed to have superior earnings growth potential.
The Peachtree Equity Fund and Nations Capital Growth Fund both seek to
achieve their investment objective by investing primarily in common stocks. In
this regard, the Peachtree Equity Fund and Nations Capital Growth Fund, under
normal market conditions, invest at least 65% of their respective total assets
in common stocks. The investment advisers of Peachtree Equity Fund and Nations
Capital Growth Fund generally select common stocks for purchase based upon such
advisers' belief that the stocks are undervalued relative to the overall stock
market.
The common stocks selected for purchase by the Peachtree Equity Fund
generally are issued by high quality companies that are in the top 30% of their
industries with regard to revenues. However, the investment adviser also
considers other factors such as product position, market share, potential
earnings growth, or asset values, which may, in some cases, outweigh the
34
<PAGE>
importance of revenues. In contrast, Nations Capital Growth Fund normally
invests in larger capitalization, high-quality companies which possess above
average earnings growth potential. The Peachtree Equity Fund and Nations Capital
Growth Fund also may invest in preferred stocks, securities (debt and preferred
stock) convertible into common stocks, warrants and rights to purchase common
stocks and money market instruments. Both the Peachtree Equity Fund and Nations
Capital Growth Fund also may purchase the securities of foreign issuers.
However, the Peachtree Equity Fund restricts its investment in foreign
securities to securities that are traded publicly in the United States. There
may be additional risks involved with Nations Capital Growth Fund's investments
in foreign securities not traded on U.S. exchanges, including the possibility
that there may be less publicly available information about the issuer. In
addition, foreign stock markets generally are not as developed or as efficient
as those in the U.S., commissions may be higher than on U.S. exchanges, and
there generally is less government supervision and regulation of foreign stock
exchanges and brokers than in the U.S. Furthermore, Nations Capital Growth Fund
may be exposed to fluctuations in currency exchange rates and the costs of
converting foreign currencies into U.S. dollars and U.S. dollars into foreign
currencies.
PEACHTREE BOND FUND / NATIONS STRATEGIC FIXED INCOME FUND
The Peachtree Bond Fund's investment objective is to achieve current
income. The Nations Strategic Fixed Income Fund's investment objective is to
seek total return by investing primarily in investment grade fixed income
securities.
The Peachtree Bond Fund and Nations Strategic Fixed Income Fund both
seek to achieve their investment objectives by investing primarily in fixed
income securities. In this regard, the Peachtree Bond Fund seeks to achieve its
objective by investing, under normal market conditions, at least 65% of its
total assets in bonds. The Peachtree Bond Fund intends to maintain a
dollar-weighted average portfolio maturity of 15 years or less. The Peachtree
Bond Fund may invest in, among other things, domestic issues of corporate debt
obligations rated in one of the four highest rating categories by S&P, Fitch,
Duff & Phelps or Moody's (or unrated obligations determined by NBAI to be of
comparable quality), commercial paper which matures in 270 days or less so long
as at least two ratings are high quality ratings by S&P, Fitch, Duff & Phelps or
Moody's, U.S. Government securities, asset-backed securities in one of the two
highest rating categories by a nationally recognized statistical rating
organizations ("NRSRO") (or unrated obligations determined by NBAI to be of
comparable quality), U.S. dollar denominated debt obligations of foreign
issuers, repurchase agreements, time and savings deposits in commercial or
savings banks whose accounts are insured by FDIC and securities of other
investment companies. The Nations Strategic Fixed Income Fund has a
substantially similar investment policy except in meeting this policy, such Fund
(i) may invest in corporate debt obligations rated investment grade by one of
the six NRSROs (or, if not rated, determined by NBAI to be of comparable
quality), (ii) may invest in mortgage-backed securities that are not U.S.
Government securities, and (iii) may invest in asset-backed securities that are
rated below the top two categories by an NRSRO. Corporate debt obligations rated
in the fourth highest category have speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with higher
grade debt obligations. As of the date of this
35
<PAGE>
proxy/prospectus, the Peachtree Bond Fund had a dollar-weighted average
portfolio maturity that is consistent with the operations of Nations Strategic
Fixed Income Fund.
Nations Strategic Fixed Income Fund may invest the remainder of its
assets in dollar denominated debt obligations of foreign issuers, asset-backed
securities rated by one of the six NRSROs (or, if not rated, determined by NBAI
to be of comparable quality), dividend paying preferred and common stocks and
real estate investment trust securities.
The Peachtree Bond Fund and Nations Strategic Fixed Income Fund also
may lend their portfolio securities and may purchase and sell financial futures
and options on futures transactions. The Peachtree Bond Fund (i) will limit the
aggregate value of the assets underlying covered call options or put options
written by the fund to not more than 25% of its net assets, (ii) will limit the
premiums paid for options purchased by the fund to 20% of its net assets, and
(iii) will limit the margin deposits on futures contracts entered into by the
fund to 5% of its net assets. Nations Strategic Fixed Income Fund is subject to
similar limitations, except that the aggregate percentage in (iii) above is
subject to the further limit that immediately after entering into such
contracts, no more than 30% of the fund's total assets would be represented by
such contracts. In addition, Nations Strategic Fixed Income Fund may invest in
dollar roll transactions and a range of derivative securities including interest
rate swaps, caps and floors for hedging purposes and long calls. Dollar roll
transactions may be considered to be a form of leverage. When a fund engages in
leverage transactions, the net asset value of its shares may be subject to
greater fluctuation until the borrowing is paid off.
PEACHTREE GEORGIA TAX-FREE INCOME FUND / NATIONS GEORGIA INTERMEDIATE MUNICIPAL
BOND FUND
The Peachtree Georgia Tax-Free Income Fund's investment objective is to
provide current income exempt from federal income tax and the personal income
taxes imposed by the State of Georgia. The Nations Georgia Intermediate
Municipal Bond Fund's investment objective is to seek high current income exempt
from Federal and Georgia state income taxes consistent with moderate fluctuation
of principal. The Nations Georgia Intermediate Municipal Bond Fund invests
investment grade, intermediate-term municipal securities.
Under normal market conditions, the Peachtree Georgia Tax-Free Income
Fund invests at least 65% of its total assets in obligations issued by and on
behalf of the State of Georgia, its political subdivisions, authorities and
agencies; debt obligations of any state, territory, or possession of the United
States, including the District of Columbia, or any political subdivision of any
of these; and participation interests in any of the above obligations exempt
from both federal income tax and the personal income tax imposed by the State of
Georgia. Similarly, Nations Georgia Intermediate Municipal Bond Fund invests,
under normal market conditions, at least 65% of its total assets in municipal
bonds and substantially all of its assets in municipal securities issued by the
State of Georgia, its political subdivisions, agencies, instrumentalities and
authorities.
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<PAGE>
It is a fundamental policy of the Georgia Tax-Free Income Fund that it
will invest its assets so that, under normal circumstances, at least 80% of its
annual interest income is exempt from federal income tax (including alternative
minimum tax). Nations Georgia Intermediate Municipal Bond Fund also, as a matter
of fundamental policy, invests at least 80% of its net assets in obligations the
interest on which is exempt from regular Federal and Georgia state income taxes.
Under normal market conditions, both the Peachtree Georgia Tax-Free
Income Fund and Nations Georgia Intermediate Municipal Bond Fund may invest up
to 20% of their assets in taxable instruments and instruments subject to the
federal alternative minimum tax and, for temporary defensive purposes, may
invest in short-term taxable obligations in such proportions as, in NBAI's
opinion, prevailing market or economic conditions warrant.
Although there are no restrictions on the average or maximum portfolio
maturity of the Fund, Nations Georgia Intermediate Municipal Bond Fund will
maintain an average dollar weighted portfolio maturity of between three and ten
years, except during temporary defensive periods. Unlike the Peachtree Georgia
Tax-Free Income Fund, Nations Georgia Intermediate Municipal Bond Fund may loan
its portfolio securities to qualified institutional investors. In addition, the
Nations Georgia Intermediate Municipal Bond Fund may also invest in derivative
securities.
INVESTMENT RESTRICTIONS
The fundamental investment restrictions of the Funds and the Acquiring
Funds are substantially identical except for the following differences:
1. Each Acquiring Fund may not borrow money or issue senior securities
as defined in the 1940 Act except that (a) it may borrow money from banks for
temporary purposes in amounts up to one-third of the value of its total assets
at the time of the borrowing, provided that borrowings in excess of 5% of the
value of its total assets will be repaid prior to the purchase of portfolio
securities, (b) it may enter into commitments to purchase securities in
accordance with its investment program, including delayed delivery and
when-issued securities which may be considered the issuance of senior
securities, (c) it may issue multiple classes of shares in accordance with SEC
regulations, and (d) the purchase and sale of futures contracts and related
options shall not be considered to involve borrowing or the issuance of senior
securities. The Funds have similar investment restrictions except that
exceptions (b) and (d) are not included. Furthermore, the Funds' restriction
provides that the Funds will not borrow money for investment leverage, but
rather as a temporary, extraordinary, or emergency measure to facilitate
management of the portfolio by enabling the Funds to meet redemption requests
when the liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous.
2. The Acquiring Funds and the Funds may not sell securities short, but
the Acquiring Funds may sell short "against the box." A short sale is the sale
of a security that the fund does not own. A short sale is "against the box" if
at all times when the short position is open, the fund
37
<PAGE>
owns an equal amount of securities convertible into, or exchangeable without
further consideration for, securities of the same issuer as the securities sold
short.
3. The Acquiring Funds may not invest in real estate or real estate
limited partnerships interests unless such interests are listed on a national
stock exchange. The Funds may not invest in any real estate or real estate
limited partnership interests although it may invest in the securities of
companies whose business involves the purchase or sale of real estate or in
securities which are secured by real estate or which represent interests in real
estate.
In addition, the Acquiring Funds have the following non-fundamental
investment restrictions. Except as noted below, these non-fundamental investment
restrictions are substantially similar to fundamental investment restrictions of
the Funds. As discussed above, fundamental restrictions of a Fund may not be
changed without a vote of a majority of the outstanding voting securities of the
Fund; non-fundamental policies may be changed without a shareholder vote.
1. The Acquiring Funds may not purchase securities for the purpose of
exercising control.
2. The Acquiring Funds may not purchase or retain the securities of any
issuer if the officers, directors or Trustees of the Trust, its advisers or
managers owning beneficially more than one-half of one percent of the securities
of the issuer together own beneficially more than 5% of such securities.
3. The Acquiring Funds may not purchase oil, gas or mineral leases or
other interests, except that the Acquiring Funds may purchase and sell the
securities of companies engaged in the exploration, development, production,
refining, transporting and marketing of oil, gas or minerals.
4. The Acquiring Funds may not invest in warrants valued at the lower
of cost or market, in excess of 5% of the value of their respective assets, and
no more than 2% of the value of their respective net assets may be invested in
warrants that are not listed on the New York or American Stock Exchange.
5. The Nations Government Money Market Fund may not purchase securities
of any one issuer (other than U.S. Government obligations and repurchase
agreements fully collateralized by such obligations) if, immediately after such
purchase, more than 5% of the value of the Fund's assets would be invested in
the securities of such issuer. However, up to 25% of the Fund's total assets may
be invested for a period of three business days in the securities of a single
issuer without regard to such 5% limitation.
6. The Acquiring Funds may not invest more than 15% (in the case of the
Nations Government Money Market Fund, 10%) of the value of their respective net
assets in illiquid securities, including repurchase agreements, time deposits
and guaranteed investment contracts with maturities in excess of seven days,
illiquid restricted securities and other securities that are
38
<PAGE>
not readily marketable. For purposes of this restriction, illiquid securities do
not include securities which may be resold under Rule 144A or Section 4(2) under
the Securities Act of 1933 and which are deemed liquid under guidelines adopted
by the Trust's Board of Trustees.
7. The Acquiring Funds may not pledge, mortgage or hypothecate any
assets except to secure permitted borrowings and then only in an amount up to
33-1/3% of the value of the Acquiring Fund's total assets at the time of the
borrowing. The Funds' substantively identical fundamental restriction limits
such permitted actions to 15% of the value of the Fund's total assets at the
time of the borrowing.
8. The Acquiring Funds may not purchase puts, calls, straddles, spreads
and any combination thereof if by reason thereof the value of their aggregate
investment in such securities will exceed 5% of their respective total assets.
Such restriction does not apply to (i) the purchase of standby commitments and
futures contracts and related options, and (ii) short-term credits necessary for
the clearance of portfolio securities transactions. With respect to the Funds,
the Funds cannot write or purchase puts, calls or combinations thereof, except
(i) the Peachtree Equity Fund and the Peachtree Bond Fund may invest in futures
and options on futures, (ii) the Peachtree Equity Fund and the Peachtree Bond
Fund may write covered call options and purchase put options if it owns the
security covered by the put option and the premiums paid on all put options
outstanding do not exceed 5% of its total assets, and (iii) the Equity Portfolio
and Special Equity Portfolio may not invest more than 5% of their total assets
in puts, calls or combinations thereof.
Finally, the Acquiring Funds have a non-fundamental investment policy
which prohibits each Acquiring Fund from purchasing the securities of unseasoned
issuers (including their predecessors) that have been in operation for less than
three years if the Acquiring Fund's aggregate investment in such securities
would exceed 5% of its total assets. The Funds (except the Peachtree Government
Money Market Fund) also have a substantively identical, non-fundamental
investment restriction.
PORTFOLIO MANAGERS
Peachtree Equity Fund / Nations Capital Growth Fund
Philip J. Sanders, CFA, is a Senior Product Manager, Equity Management
for TSIA and Senior Portfolio Manager for Peachtree Equity Fund and Nations
Capital Growth Fund. Mr. Sanders has been Portfolio Manager for Nations Capital
Growth Fund since 1995 and Peachtree Equity Fund since 1996. Previously 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.
39
<PAGE>
Peachtree Bond Fund / Nations Strategic Fixed Income Fund
Gregory H. Cobb is a Senior Product Manager, Fixed Income Management
for TSIA and Senior Portfolio Manager for Nations Strategic Fixed Income Fund
and Peachtree Bond Fund. Mr. Cobb has been Portfolio Manager for Nations
Strategic Fixed Income Fund since 1995 and Peachtree Bond Fund since 1996.
Previously 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.
Peachtree Georgia Tax-Free Income Fund / Nations Georgia Intermediate
Municipal Bond Fund
Michele M. Poirier is a Senior Product Manager, Municipal Fixed Income
Management for TSIA and Senior Portfolio Manger for Nations Municipal Income
Fund, Nations Florida Intermediate Municipal Bond Fund, Nations Florida
Municipal Bond Fund, Nations Georgia Intermediate Municipal Bond Fund, Nations
Georgia Municipal Bond Fund, Nations South Carolina Intermediate Municipal Bond
Fund, Nations South Carolina Municipal Bond Fund and Peachtree Georgia Tax-Free
Income Fund. Ms. Poirier has been Portfolio Manager for Nations Municipal Income
Fund, Nations Florida Intermediate Municipal Bond Fund, Nations Georgia
Intermediate Municipal Bond Fund, South Carolina Intermediate Municipal Bond
Fund since 1992 and Peachtree Georgia Tax-Free Income Fund since 1996. She has
been Portfolio Manager for the other Funds since 1993. Previously she was senior
Vice President and Senior Portfolio Manager for the Investment Management Group
at NationsBank. She has worked in the investment community since 1974. Her past
experience includes serving as Director of Trading, Institutional Sales, and
Municipal Trader for Financial Service Corporation, Bankers Trust Company and
The Robinson-Humphrey Company respectively.
Ms. Poirier received a B.B.A. in Marketing from Georgia State University.
* * * *
It is not anticipated that the above-mentioned differences in
investment policies and restrictions will, individually or in the aggregate,
result in an appreciable variation between the level of investment risks
associated with an investment in each Fund. For a more complete description of
the Acquiring Funds' investment policies and restrictions, see "Objectives" and
"How Objectives Are Pursued" in the appropriate Acquiring Fund's Prospectus and
"Additional Information on Fund Investments" in the Acquiring Funds' Statement
of Additional Information. For a more complete description of the Funds'
investment policies and restrictions, including relevant risk factors, see
"Investment Objective," "Investment Policies," and "Certain Borrowing and
Investment Limitations" in the relevant Fund's Prospectus and "Investment
Objective and Policies" in the Funds' Statement of Additional Information.
40
<PAGE>
ADDITIONAL COMPARATIVE INFORMATION
COMPARISON OF RIGHTS OF SECURITY HOLDERS
Each of the Peachtree Funds and the Trust is a Massachusetts business
trust, registered under the 1940 Act as an open-end series management investment
company. Peachtree Funds was established under a Declaration of Trust dated
September 22, 1993. The Trust was organized under a Declaration of Trust dated
May 6, 1985. Both Peachtree Funds and the Trust are authorized to issue an
unlimited number of shares which may be divided into separate funds and
portfolios and separate classes of shares.
Each share of Peachtree Funds represents an equal proportionate
interest in that portfolio with each other share. Shares are entitled upon
liquidation to a pro rata share in the net assets of the portfolios.
Shareholders of Peachtree Funds have no preemptive rights. The Declaration of
Trust provides that the Trustees of Peachtree Funds may create additional
portfolios or classes of shares. All consideration received by Peachtree Funds
for shares of any additional series and all assets in which such consideration
is invested would belong to that portfolio and would be subject to the
liabilities related thereto.
Each share of the Acquiring Funds is without par value, represents an
equal proportionate interest in the related fund with other shares of the same
class, and is entitled to such dividends and distributions out of the income
earned on the assets belonging to such fund as are declared in the discretion of
the Trust's Board of Trustees. Once properly issued and outstanding, each share
is fully paid and nonassessable and has only such conversion or exchange rights
as the Board of Trustees grants in its discretion, and has no preemptive rights.
Shareholders have noncumulative voting rights, which means that the holders of a
plurality of the shares voting for the election of the Trust's Board of Trustees
can elect all of the Trust's Board of Trustees if they choose to do so. The
Trust normally does not hold annual meetings of shareholders, except as required
under the 1940 Act.
Shareholders of Peachtree Funds and the Trust are entitled to one vote
for each full share held and a proportionate fractional vote for each fractional
share held. Shareholders of each fund of the Trust vote in the aggregate and not
by fund, and shareholders of each fund vote in the aggregate and not by class
except as otherwise required by law or when the Board of Trustees of the Trust
determines the matter to be voted on affects only the interests of shareholders
of a particular fund or class. Shareholders of Peachtree Funds vote by
portfolio, and not in the aggregate, except when a vote by all portfolios or by
class is required by law. In addition, portfolios and funds vote in the
aggregate on such matters as the election of the Board of Trustees; shares are
voted by individual portfolio or fund on matters such as the approval of
investment advisory agreements; and shares are voted by class on such matters as
the approval of distribution plans adopted pursuant to Rule 12b-1 under the 1940
Act for such class.
41
<PAGE>
For a complete description of the attributes of the Funds' shares,
including how to purchase, redeem or exchange shares and certain restrictions
thereon, taxation of the Funds and its shareholders, and dividend and
distribution policies, see the sections in the Funds' Prospectuses entitled
"Investing in the Fund," "Redeeming Shares," "Shareholder Information," and "Tax
Information." Additional information about the Funds is included in their
Prospectuses, each dated November 30, 1995, which are incorporated by reference
herein, and in the Funds' Statement of Additional Information, dated November
30, 1995. Copies of the Statement of Additional Information may be obtained
without charge by calling Peachtree Funds at (800) 626-2275
For a more complete description of the attributes of the Acquiring
Funds' shares, including how to purchase, redeem or exchange shares, see the
sections in the Acquiring Funds' Prospectuses entitled "Organization and
History," "How to Buy Shares," "How to Redeem Shares," "How to Exchange Shares"
and "How Dividends and Distributions are Made; Tax Information." Additional
information about the Acquiring Funds is included in their Prospectuses dated
July 31, 1996, and Statement of Additional Information dated July 31, 1996,
copies of which may be obtained without charge by calling Nations Fund at (800)
626-2275
Additional information regarding the Reorganization is contained in the
Statement of Additional Information, dated August 5, 1996, to this Combined
Prospectus/Proxy Statement. The Statement of Additional Information is
incorporated by reference herein and may be obtained by calling Nations Fund at
(800) 626-2275.
MISCELLANEOUS
ADDITIONAL INFORMATION
The Trust and Peachtree Funds are each subject to the informational
requirements of the 1940 Act, and in accordance therewith each files reports,
proxy materials and other information with the SEC. Such reports, proxy
materials and other information may be inspected and copied at the public
reference facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549. Copies of such materials can be obtained from the Public Reference
Branch, Office of Consumer Affairs and Information Services, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
VOTING MATTERS
As defined by the 1940 Act, a "majority of the outstanding voting
securities" of a Fund means the vote of (i) 67% or more of the Fund's or class'
outstanding shares present at the Special Meeting, if the holders of more than
50% of the outstanding shares of the Fund are present or represented by proxy at
the Special Meeting, or (ii) more than 50% of the Fund's or class' outstanding
shares, whichever is less. Any proxy which is properly executed and received in
time to be voted at the Special Meeting will be counted in determining whether a
quorum is present and will be voted in accordance with the instructions marked
thereon. In the absence of any instructions, such proxy will be voted in favor
of the approval of the Plan. If the Plan is approved at the Special Meeting, the
effective date of the Reorganization ("Closing Date") is
42
<PAGE>
expected to be on or about September 27, 1996. Abstentions and "broker
non-votes" (i.e., proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owners or other persons
entitled to vote shares as to a particular matter with respect to which the
brokers or nominees do not have discretionary power to vote) will not be counted
for or against any proxy to which they relate, but will be counted for purposes
of determining whether a quorum is present and will be counted as votes present
for purposes of determining a "majority of the outstanding voting securities"
present at the Special Meeting. For this reason, abstentions and broker
non-votes will have the effect of a vote against the proposals.
The duly appointed Proxies may, in their discretion, vote upon such
other matters as properly may come before the Special Meeting or any
adjournment(s) thereof, including any proposal to adjourn a meeting at which a
quorum is present to permit the continued solicitation of proxies in favor of
the Reorganization. In case any such adjournment is proposed with respect to any
item, the duly appointed proxies will vote those proxies which they are entitled
to vote for such item in favor of adjournment, and will vote those proxies
required to be voted against such item against adjournment. A shareholder vote
may be taken on one of the items described in this Combined Prospectus/Proxy
Statement prior to any such adjournment if sufficient votes have been received
and it is otherwise appropriate. A shareholder of the Funds may revoke his or
her proxy at any time prior to its exercise by delivering written notice of
revocation or by executing and delivering a later-dated proxy to the Secretary
of Peachtree Funds, at Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779, or by attending the Special Meeting in person to vote the shares of
the Funds held by such shareholder. The date of the first mailing of this
Combined Prospectus/Proxy Statement to shareholders is approximately August 5,
1996.
SOLICITATION OF PROXIES AND PAYMENT OF EXPENSES
The cost of soliciting proxies for the Special Meeting, consisting
principally of printing and mailing expenses, together with the costs of any
supplementary solicitation and proxy soliciting services provided by third
parties, will be borne by NBAI or Stephens. Proxies will be solicited in the
initial, and any supplemental, solicitation by mail and may be solicited in
person, by telephone, telegraph, or other electronic means by officers of
Peachtree Funds.
43
<PAGE>
SECTION 17(B) EXEMPTIVE APPLICATION
The Trust and the Peachtree Funds ("Applicants") have requested an
order of the SEC pursuant to Section 17(b) of the 1940 Act granting an exemption
from Section 17(a) of the 1940 Act to permit the Applicants to consummate the
Reorganizations. The Reorganizations would be exempt from the prohibitions of
Section 17(a) by virtue of Rule 17a-8 except for the fact that the Funds may be
considered affiliated for reasons other than having a common investment adviser,
common directors and/or common officers. Because the Applicants believe that 1)
the terms of the proposed Reorganizations, including consideration to be paid or
received, are reasonable and fair and do not involve overreaching on the part of
any persons concerned; 2) the proposed Reorganizations are consistent with the
policies of each of the Acquired Funds and the Acquiring Funds; and 3) the
proposed transactions are consistent with the general purposes of the Act, it is
expected that the SEC will approve the Exemptive Application.
PEACHTREE FUNDS -- 5% OWNERSHIP AS OF JULY 25, 1996
<TABLE>
<CAPTION>
Amount Percentage Percentage of
Peachtree Fund Name and Address of Shares of Fund Fund Post-Closing
<S> <C> <C> <C> <C>
Georgia Tax-Free AGT CO TR U/A 14,041.47 10.81% 0.24%
Income Fund BETTY TRIP SIEMON
3 Okeechobee Court
Destin, FL 32541
CO TR U/W 28,154.34 21.46% 0.49%
KATHERINE K RAY
4506 Ridgegate Drive
Duluth, GA 30155-2322
Government Money BK SOUTH DIRECTORS 2,235,743.99 6.67% 0.47%
Market Fund DEFERRED COMP
420 Riverside Parkway
Atlanta, GA 30328
Walker School - Campaign 1,816,965.77 5.42% 0.38%
Fund
700 Cobb Parkway North
Marietta, GA 30062
EX ESTATE REUNETTE 6,085,938.29 18.17% 1.29%
HARRIS
W C Harris & Co
P.O. Box 727
Winder, GA 30680
TR U/A AMERICAN 2,110,536.45 6.30% 0.45%
CANCER GENERAL
American Cancer Society
Georgia Division Inc
2200 Lake Boulevard
44
<PAGE>
Atlanta, GA 30319
N W GA HEALTH 13,250,160.59 39.55% 2.81%
SYSTEM, INC
Promina Support Center
Acct Dept
P O Box 725504
Atlanta, GA 31139
Equity Fund PT NATIONSBANK 21,701,113.85 22.08% 2.87%
EQUITY FUND
NC1-007-21-02
Charlotte, NC 28255-0001
TR BANK SOUTH/ 713,980.92 7.53% 0.98%
EQUITY PS
3550 Cumberland Circle
Atlanta, GA 30339
SOUTHERN REG 611,276.09 6.59% 0.86%
MEDICAL CTR - DBP
P O Box 328
Riverdale, GA 30274
Bond Fund PT NATIONSBK NATIONS 2,173,689.12 28.70% 2.15%
FUNDS FIXED
NC1-007-21-02
Charlotte, NC 28255-0001
SOUTHERN REGIONAL 622,055.93 9.15% 0.61%
MEDICAL CTR - DBP
P O Box 328
Riverdale, GA 30274
BANK SOUTH FIXED 3,759,614.42 5.04% 0.38%
INCOME TPS
3550 Cumberland Circle
Atlanta, GA 30339
</TABLE>
NATIONS FUNDS -- PRIMARY A SHARES 5% OWNERSHIP AS OF JULY 25, 1996
<TABLE>
<CAPTION>
Percentage of
Amount Percentage Percentage Fund Post-
Peachtree Fund Name and Address of Shares of Fund of Class Closing
<S> <C> <C> <C> <C> <C>
Capital Growth Fund PT NATIONSBANK 6,780,691.58 11.24% 9.73% 9.78%
EQUITY FUND
NC1-002-08-12
Charlotte, NC 28255
Strategic Fixed Income ST NATIONS BALANCED 7,290,239.50 7.51%% 5.10% 7.17%
Fund FD FIXED
NC1-002-10-19
Charlotte, NC 28255
</TABLE>
45
<PAGE>
As of the close of business on July 25, 1996, the officers and
Trustees of the Trust as a group beneficially owned less than 1% of the
outstanding shares of any Acquiring Fund of the Trust. As of the close of
business on July 25, 1996, with the exception of Government Money Market Fund as
shown above, the officers and Trustees of Peachtree Funds as group beneficially
owned less than 1% of the outstanding shares of any Fund of Peachtree Funds. As
of the same date, NationsBank and its affiliates possessed or shared power to
dispose or vote with respect to more than 25% of the outstanding shares of the
Trust and therefore could be considered a controlling person of the Trust for
purposes of the 1940 Act.
DOCUMENTS INCORPORATED BY REFERENCE
The Prospectuses of the Acquiring Funds relating to their Primary
A Shares, dated July 31, 1996, are incorporated by reference into this Combined
Prospectus/Proxy Statement. In addition, the Funds' Prospectuses dated November
30, 1995, are incorporated by reference into this Combined Prospectus/Proxy
Statement and may be obtained by calling Nations Fund at (800) 626-2275. Copies
of documents requested will be sent by first-class mail to the requesting
shareholder within one business day of receipt of the request.
OTHER BUSINESS
The Board of Trustees of the Peachtree Funds knows of no other
business to be brought before the Special Meeting. However, if any other matters
come before the Special Meeting, including any proposal to adjourn the meeting
to permit the continued solicitation of proxies in favor of any of the
proposals, it is their intention that Proxies which do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed Proxy Card.
FUTURE SHAREHOLDER PROPOSALS
Pursuant to rules adopted by the SEC under the Securities Exchange
Act of 1934 Act (the "1934 Act"), investors may request inclusion in the Board's
proxy statement for shareholder meetings certain proposals for action which they
intend to introduce at such meeting. Any shareholder proposals must be presented
within a reasonable time before the proxy materials for the next meeting are
sent to shareholders. The submission of a proposal does not guarantee its
inclusion in Peachtree Funds' proxy statement and is subject to limitations
under the 1934 Act. It is not presently anticipated that the Trust or Peachtree
Funds will hold regular meetings of investors, and no anticipated date of the
next meeting can be provided.
46
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement")
is made as of this 1st day of August, 1996, by and between Nations Fund Trust
("Nations Fund"), a Massachusetts business trust, for itself and on behalf of
Nations Government Money Market Fund, Nations Capital Growth Fund, Nations
Strategic Fixed Income Fund and Nations Georgia Intermediate Municipal Bond Fund
(individually, an "Acquiring Fund"), each a portfolio of Nations Fund, and
Peachtree Funds ("Peachtree Funds"), a Massachusetts business trust, for itself
and on behalf of Peachtree Government Money Market Fund, Peachtree Equity Fund,
Peachtree Bond Fund and Peachtree Georgia Tax-Free Income Fund (individually, an
"Acquired Fund"), each a portfolio of Peachtree Funds.
In accordance with each terms and conditions set forth in this
Agreement, each parties desire that all of each assets of each Acquired Fund be
transferred to each Acquiring Fund corresponding thereto, as set forth in each
table attached hereto as Schedule A, in exchange for shares of beneficial
interest of Primary A Shares of each corresponding Acquiring Fund ("Acquiring
Fund Shares") and each assumption by such Acquiring Fund of each Stated
Liabilities (as defined in paragraph 1.3) of each Acquired Fund, and that such
Acquiring Fund Shares be distributed immediately after each Closing, as defined
in this Agreement, by each Acquired Fund to its shareholders in liquidation of
each Acquired Fund. This Agreement is intended to be and is adopted as a plan of
reorganization within each meaning of Section 368(a)(1)(C) of each Internal
Revenue Code of 1986, as amended (each "Code").
In consideration of each premises and of each covenants and
agreements hereinafter set forth, each parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
1. REORGANIZATION OF ACQUIRED FUND
1.1 Subject to each terms and conditions herein set
forth, and on each basis of each representations and warranties contained
herein, each Acquired Fund shall assign, deliver and otherwise transfer its
assets as set forth in paragraph 1.2 (each "Fund Assets") to its corresponding
Acquiring Fund identified in Schedule A, and each corresponding Acquiring Fund
shall, as consideration therefor, on each Closing Date (as defined in paragraph
3.1), (i) deliver to such Acquired Fund full and fractional Acquiring Fund
Shares, each corresponding class and number of which shall be determined by
dividing (a) that portion of each value of each Fund Assets, net of an Acquired
Fund's Stated Liabilities, computed in each manner and as of each time and date
set forth in paragraph 2.1, representative of each shares of beneficial interest
of each Acquired Fund, by (b) each net asset value of one share of each
Acquiring Fund's class of shares identified in Schedule A, computed in each
manner and as of each time and date set forth in paragraph 2.2, and (ii) assume
each Acquired Fund's Stated Liabilities. Such transfer, delivery and assumption
shall take place at each closing(s) provided for in paragraph 3.1 (hereinafter
sometimes referred to as each "Closing(s)"). Promptly after each Closing(s),
each Acquired
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Fund shall distribute each Acquiring Fund Shares to each shareholders of each
Acquired Fund in liquidation of each Acquired Fund as provided in paragraph 1.4
hereof. Such transaction(s) are hereinafter sometimes collectively referred to
as each "Reorganization(s)."
1.2 (a) With respect to each Acquired Fund, each Fund
Assets shall consist of all property and assets of any nature whatsoever,
including, without limitation, all cash, cash equivalents, securities, claims
and receivables (including dividend and interest receivables) owned by each
Acquired Fund, and any prepaid expenses shown as an asset on each Acquired
Fund's books on each Closing Date.
(b) At least fifteen (15) business days prior to
each Closing Date, each Acquired Fund will provide each corresponding Acquiring
Fund with a schedule of its securities and other assets and its known
liabilities, and such Acquiring Fund will provide such Acquired Fund with a copy
of each current investment objective and policies applicable to each Acquiring
Fund. Each Acquired Fund reserves each right to sell any of each securities or
other assets shown on each list of each Fund's Assets prior to each Closing Date
but will not, without each prior approval of each corresponding Acquiring Fund,
acquire any additional securities other than securities which each Acquiring
Fund is permitted to purchase in accordance with its stated investment objective
and policies. At least ten (10) business days prior to each Closing Date, each
Acquiring Fund will advise each corresponding Acquired Fund of any investments
of such Acquired Fund shown on such schedule which each Acquiring Fund would not
be permitted to hold, pursuant to its stated investment objective and policies
or otherwise. In each event that each Acquired Fund holds any investments that
its corresponding Acquiring Fund would not be permitted to hold under its stated
investment objective or policies, each Acquired Fund, if requested by each
Acquiring Fund, will dispose of such securities prior to each Closing Date to
each extent practicable. In addition, if it is determined that each portfolios
of each Acquired Fund and each Acquiring Fund, when aggregated, would contain
investments exceeding certain percentage limitations to which each Acquiring
Fund is or will be subject with respect to such investments, each Acquired Fund,
if requested by each Acquiring Fund, will dispose of and/or reinvest a
sufficient amount of such investments as may be necessary to avoid violating
such limitations as of each Closing Date.
1.3 Each Acquired Fund will endeavor to discharge all of
its known liabilities and obligations prior to each Closing Date. Each Acquiring
Fund will assume all liabilities and obligations reflected on an unaudited
statement of assets and liabilities of each corresponding Acquired Fund prepared
by or on behalf of Peachtree Funds as of each Applicable Valuation Date (as
defined in paragraph 2.1), in accordance with generally accepted accounting
principles consistently applied from each prior audited period ("Stated
Liabilities"). Each Acquiring Fund shall assume only each Stated Liabilities of
its corresponding Acquired Fund, and no other liabilities or obligations,
whether absolute or contingent, known or unknown, accrued or unaccrued.
1.4 Promptly after each Closing with respect to each
Acquired Fund, each Acquired Fund will distribute each Acquiring Fund Shares
received by each Acquired Fund pursuant to paragraph 1.1 pro rata to its
shareholders of record determined as of each close of business on each Closing
Date ("Acquired Fund Investors") in complete liquidation of each
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Acquired Fund. Such distribution will be accomplished by an instruction, signed
by an appropriate officer of Peachtree Funds, to transfer each Acquiring Fund
Shares then credited to each Acquired Fund's account on each books of each
Acquiring Fund to open accounts on each books of each Acquiring Fund established
and maintained by each Acquiring Fund's transfer agent in each names of record
of each Acquired Fund Investors and representing each respective pro rata number
of shares of each Acquiring Fund due such Acquired Fund Investor. In exchange
for Acquiring shares distributed, all issued and outstanding shares of
beneficial interest of each Acquired Fund will be redeemed and canceled
simultaneously therewith on each Acquired Fund's books; any outstanding share
certificates representing interests in each Acquired Fund will represent each
right to receive such number of Acquiring Fund Shares after each Closing as
determined in accordance with Section 1.1.
1.5 If any request shall be made for a change of each
registration of shares of each Acquiring Fund to another person from each
account of each shareholder in which name each shares are registered in each
records of each Acquired Fund it shall be a condition of such registration of
shares that there be furnished each Acquiring Fund an instrument of transfer
properly endorsed, accompanied by appropriate signature guarantees and otherwise
in proper form for transfer and, if any of such shares are outstanding in
certificated form, each certificates representing such shares, and that each
person requesting such registration shall pay to each Acquiring Fund any
transfer or other taxes required by reason of such registration or establish to
each reasonable satisfaction of each Acquiring Fund that such tax has been paid
or is not applicable.
1.6 Following each transfer of assets by each Acquired
Fund to each corresponding Acquiring Fund, each assumption of each Acquired
Fund's Stated Liabilities by each Acquiring Fund, and each distribution by each
Acquired Fund of each Acquiring Fund Shares received by it pursuant to paragraph
1.4, Peachtree Funds shall terminate each qualification, classification and
registration of such Acquired Fund at all appropriate federal and state
agencies. Any reporting or other responsibility of Peachtree Funds is and shall
remain each responsibility of Peachtree Funds up to and including each date on
which each particular Acquired Fund is terminated and deregistered, subject to
any reporting or other obligations described in paragraph 4.9.
1.7 Each failure of each Acquired Fund to consummate
each transactions contemplated hereby shall not affect each consummation or
validity of a Reorganization with respect to any other Acquired Fund, and each
provision of this Agreement shall be construed to effect this intent, including,
without limitation, as each context requires, construing each terms "Acquiring
Fund" and "Acquired Fund" as meaning only those series of Nations Fund and
Peachtree Funds, respectively, which are involved in a Reorganization as of a
Closing Date.
2. VALUATION
2.1 With respect to each Acquired Fund, each value of
each Fund Assets shall be each value of such assets computed as of each time at
which its net asset value is calculated pursuant to each valuation procedures
set forth in each Acquiring Fund's then current Prospectus and Statement of
Additional Information on each Closing Date, or at such time on such earlier or
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later date as may mutually be agreed upon in writing among each parties hereto
(such time and date being herein called each "Applicable Valuation Date").
2.2 Each net asset value of each share of a class of
shares of an Acquiring Fund shall be each net asset value per share of such
class computed on each Applicable Valuation Date, using each market valuation
procedures set forth in each Acquiring Fund's then current Prospectus and
Statement of Additional Information.
2.3 All computations of value contemplated by this
Article 2 shall be made by each respective Acquiring Fund's co-administrator,
First Data Investor Services Group, Inc. ("First Data") in accordance with its
regular practice as pricing agent and reviewed by its independent accountants.
Each Acquiring Fund shall cause its Co-Administrator to deliver a copy of its
valuation report, reviewed by its independent accountants to Peachtree Funds and
each Acquired Fund at each Closing.
3. CLOSING(S) AND CLOSING DATE
3.1 Each Closing for each Reorganization shall occur on
September 27, 1996, and/or on such other date(s) as may be mutually agreed upon
in writing by each parties hereto (each, a "Closing Date"). Each Closing(s)
shall be held at each offices of Stephens Inc., 111 Center Street, Suite 300,
Little Rock, Arkansas 72201 or at such other location as is mutually agreeable
to each parties hereto. All acts taking place at each Closing(s) shall be deemed
to take place simultaneously as of 4:00 p.m. Eastern time on each Closing Date
unless otherwise provided.
3.2 Each Acquiring Fund's custodian shall deliver at
each Closing a certificate of an authorized officer stating that: (a) each
Acquired Fund's portfolio securities, cash and any other assets have been
delivered in proper form to each corresponding Acquiring Fund on each Closing
Date and (b) all necessary taxes including all applicable federal and state
stock transfer stamps, if any, have been paid, or provision for payment shall
have been made, by such Acquired Fund in conjunction with each delivery of
portfolio securities. Proper delivery of cash shall be by wire to NationsBank of
Texas, N.A., each Acquiring Fund's Custodian, pursuant to instruction to be
delivered prior to each Closing.
3.3 Notwithstanding anything herein to each contrary, in
each event that on each Applicable Valuation Date (a) each New York Stock
Exchange shall be closed to trading or trading thereon shall be restricted or
(b) trading or each reporting of trading on such exchange or elsewhere shall be
disrupted so that, in each judgment of Nations Fund and Peachtree Funds,
accurate appraisal of each value of each net assets of an Acquiring Fund or an
Acquired Fund is impracticable, each Applicable Valuation Date shall be
postponed until each first business day after each day when trading shall have
been fully resumed without restriction or disruption and reporting shall have
been restored.
3.4 With respect to each Acquired Fund, Peachtree Funds
shall provide Nations Fund and its transfer agents with immediate access from
and after each Closing Date to (a) each computer, electronic or such other forms
of records containing each names, addresses
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and taxpayer identification numbers of all of each Acquired Fund Investors and
each number and percentage ownership of outstanding Acquired Fund shares owned
by each such Acquired Fund Investor, all as of each Applicable Valuation Date,
and (b) all original documentation (including all applicable Internal Revenue
Service forms, certificates, certifications and correspondence) relating to each
Acquired Fund Investors' taxpayer identification numbers and their liability for
or exemption from back-up withholding. Each corresponding Acquiring Fund shall
issue and deliver to each Secretary or Assistant Secretary of Peachtree Funds,
acting on behalf of each Acquired Fund, a confirmation evidencing each Acquiring
Fund Shares credited on each Closing Date or shall provide evidence satisfactory
to each Acquired Fund that such Acquiring Fund Shares have been credited to each
Acquired Fund's account on each books of each Acquiring Fund. At each
Closing(s), each party shall deliver to each other such bills of sale, checks,
assignments, share certificates, if any, receipts or other documents of
transfer, assignment or conveyance as such other party or its counsel may
reasonably request.
3.5 Within thirty (30) days after each Closing Date,
each Acquired Fund shall deliver, in accordance with Article 1 hereof, to each
corresponding Acquiring Fund a statement of each Fund Assets and Stated
Liabilities, together with a list of such Acquired Fund's portfolio securities
and other assets showing each respective adjusted bases and holding periods
thereof for income tax purposes, as of each Closing Date, certified by an
appropriate officer of Peachtree Funds.
4. COVENANTS WITH RESPECT TO EACH OF EACH ACQUIRING FUNDS AND EACH
ACQUIRED FUNDS
4.1 With respect to each Acquired Fund, Peachtree Funds
has called or will call a meeting of Acquired Fund shareholders to consider and
act upon this Agreement and to take all other actions reasonably necessary to
obtain each approval of each transactions contemplated herein, including
approval for each Acquired Fund's liquidating distribution of each Acquiring
Fund Shares contemplated hereby, and for Peachtree Funds to terminate each
Acquired Fund's qualification, classification and registration if requisite
approvals are obtained with respect to each Acquired Fund. Nations Fund and
Peachtree have jointly prepared each notice of meeting, form of proxy and proxy
statement (collectively, "Proxy Materials") to be used in connection with such
meeting; provided that Nations Fund has furnished or will furnish Peachtree
Funds with a current, effective prospectus, including any supplements, relating
to each class of shares of each Acquiring Fund corresponding to each shares of
each Acquired Fund then outstanding for incorporation within and/or distribution
with each Proxy Materials, and with such other information relating to each
Acquiring Funds as is reasonably necessary for each preparation of each Proxy
Materials.
4.2 Peachtree Funds, on behalf of each Acquired Fund,
covenants that each corresponding Acquiring Fund Shares to be issued hereunder
are not being acquired for each purpose of making any distribution thereof,
other than in accordance with each terms of this Agreement.
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4.3 Peachtree Funds, on behalf of each Acquired Fund,
will assist each corresponding Acquiring Fund in obtaining such information as
each Acquiring Fund reasonably requests concerning each beneficial ownership of
shares of each class of each Acquired Fund.
4.4 Subject to each provisions hereof, Nations Fund, on
its own behalf and on behalf of each Acquiring Fund; and Peachtree Funds, on its
own behalf and on behalf of each Acquired Fund, will take, or cause to be taken,
all actions, and do, or cause to be done, all things reasonably necessary,
proper or advisable to consummate and make effective each transactions
contemplated herein.
4.5 Peachtree Funds, on behalf of each Acquired Fund,
shall furnish to its corresponding Acquiring Fund on each Closing Date, a final
statement of each total amount of each Acquired Fund's assets and liabilities as
of each Closing Date, which statement shall be certified by an appropriate
officer of Peachtree Funds as being determined in accordance with generally
accepted accounting principles consistently applied and as being valued in
accordance with paragraph 2.1 hereof. As promptly as practicable, but in any
case within sixty (60) days after each Closing Date, Peachtree Funds, on behalf
of each Acquired Fund, shall furnish its corresponding Acquiring Fund, in such
form as is reasonably satisfactory to Nations Fund, on behalf of each Acquiring
Fund, a statement certified by an officer of Peachtree Funds of such Acquired
Fund's income and gains or losses for federal income tax purposes that will be
carried over to each Acquiring Fund pursuant to Section 381 of each Code.
4.6 Nations Fund, on behalf of each Acquiring Fund, has
prepared and filed, or will prepare and file with each Securities and Exchange
Commission (each "SEC") a registration statement on Form N-14 under each
Securities Act of 1933, as amended (each "1933 Act"), relating to each Acquiring
Fund Shares (each "Registration Statement"). Peachtree Funds, on behalf of each
Acquired Fund, has provided or will provide each corresponding Acquiring Fund
with each Proxy Materials for inclusion in each Registration Statement, prepared
in accordance with paragraph 4.1, and with such other information and documents
relating to each Acquired Fund as are requested by each corresponding Acquiring
Fund and as are reasonably necessary for each preparation of each Registration
Statement.
4.7 As soon after each Closing Date as is reasonably
practicable, Peachtree Funds, on behalf of each Acquired Fund: (a) shall prepare
and file all federal and other tax returns and reports of each Acquired Fund
required by law to be filed with respect to all periods ending on or before each
Closing Date but not theretofore filed and (b) shall pay all federal and other
taxes shown as due thereon and/or all federal and other taxes that were unpaid
as of each Closing Date.
4.8 With respect to each Acquiring Fund, Nations Fund
agrees to use all reasonable efforts to operate in accordance with its then
current Prospectus and Statement of Additional Information prepared in
accordance with Form N-1A, including qualifying as a regulated investment
company under Subchapter M of each Code, for at least one (1) year following
each Closing Date.
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4.9 Following each transfer of assets by each Acquired
Fund to each corresponding Acquiring Fund in exchange for Acquiring Fund Shares
and each assumption of each Stated Liabilities of each Acquired Fund as
contemplated herein, Peachtree Funds will file any final regulatory reports,
including but not limited to any Form N-SAR and Rule 24f-2 filings with respect
to such Acquired Fund(s), promptly after each Closing Date and also will take
all other steps as are necessary and proper to effect each termination or
declassification of such Acquired Funds of Peachtree Funds in accordance with
each laws of each Commonwealth of Massachusetts and other applicable
requirements.
5. REPRESENTATIONS AND WARRANTIES
5.1 Nations Fund, on behalf of itself and each
Acquiring Fund, represents and warrants to each Peachtree Funds as follows:
(a) Nations Fund was duly created pursuant to its
Declaration of Trust by each Trustees for each purpose of acting as a management
investment company under each Investment Company Act of 1940 (each "1940 Act")
and is validly existing under each laws of each Commonwealth of Massachusetts,
and each Declaration of Trust directs each Trustees to manage each affairs of
Nations Fund and grants them all powers necessary or desirable to carry out such
responsibility, including administering Nations Fund business as currently
conducted by Nations Fund and as described in each current Prospectuses of
Nations Fund; Nations Fund is registered as an investment company classified as
an open-end management company, under each 1940 Act and its registration with
each SEC as an investment company is in full force and effect;
(b) Each Registration Statement, including each
current Prospectus and Statement of Additional Information of each Acquiring
Fund, conform or will conform, at all times up to and including each Closing
Date, in all material respects to each applicable requirements of each 1933 Act
and each 1940 Act and each regulations thereunder and do not include or will not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make each statements therein,
in light of each circumstances under which they were made, not misleading;
(c) Each Acquiring Fund is not in violation of, and
each execution, delivery and performance of this Agreement by Nations Fund for
itself and on behalf of each Acquiring Fund will not (i) violate Nations Fund's
Declaration of Trust or Code of Regulations, or (ii) result in a breach or
violation of, or constitute a default under any material agreement or material
instrument, to which Nations Fund is a party or by which its properties or
assets are bound.
(d) Except as previously disclosed in writing to
each Peachtree Funds, no litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or, to Nations Fund's knowledge, threatened against Nations Fund or its
business, each Acquiring Funds or any of their properties or assets, which, if
adversely determined, would materially and adversely affect Nations Fund or an
Acquiring Fund's financial condition or each conduct of their business, and
Nations Fund knows of no facts that might form
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each basis for each institution of any such proceeding or investigation, and no
Acquiring Fund is a party to or subject to each provisions of any order, decree
or judgment of any court or governmental body which materially and adversely
affects, or is reasonably likely to materially and adversely affect, its
business or its ability to consummate each transactions contemplated herein;
(e) All issued and outstanding shares, including
shares to be issued in connection with each Reorganization, of each class of
each Acquiring Fund will, as of each Closing Date, be duly authorized and
validly issued and outstanding, fully paid and non-assessable and each Acquiring
Fund does not have outstanding any option, warrants or other rights to subscribe
for or purchase any of its shares;
(f) Each execution, delivery and performance of
this Agreement on behalf of each Acquiring Fund will have been duly authorized
prior to each Closing Date by all necessary action on each part of Nations Fund,
each Trustees and each Acquiring Fund, and this Agreement will constitute a
valid and binding obligation of Nations Fund and each Acquiring Fund enforceable
in accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, arrangement, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles;
(g) Each Acquiring Fund Shares to be issued and
delivered to each corresponding Acquired Fund for each account of each Acquired
Fund Investors, pursuant to each terms hereof, will have been duly authorized as
of each Closing Date and, when so issued and delivered, will be duly and validly
issued, fully paid and non-assessable, and each shares of each class of each
Acquiring Fund issued and outstanding prior to each Closing Date were offered
and sold in compliance with each applicable registration requirements, or
exemptions therefrom, of each 1933 Act, and all applicable state securities
laws, and each regulations thereunder;
(h) On each effective date of each Registration
Statement, at each time of each meeting of each Acquired Fund shareholders and
on each Closing Date, any written information furnished by Nations Fund with
respect to an Acquiring Fund for use in each Proxy Materials, each Registration
Statement or any other materials provided in connection with each Reorganization
does not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make each information provided not
misleading;
(i) No governmental consents, approvals,
authorizations or filings are required under each 1933 Act, each Securities
Exchange Act of 1934 (each "1934 Act"), each 1940 Act or Massachusetts law for
each execution of this Agreement by Nations Fund, for itself and on behalf of
each Acquiring Fund, or each performance of each Agreement by Nations Fund, for
itself and on behalf of each Acquiring Fund, except for such consents,
approvals, authorizations and filings as have been made or received, and except
for such consents, approvals, authorizations and filings as may be required
subsequent to each Closing Date;
(j) Each Statement of Assets and Liabilities,
Statement of Operations and Statement of Changes in Net Assets of each Acquiring
Fund as of and for each year ended
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March 31, 1996, audited by Price Waterhouse LLP (copies of which have been or
will be furnished to each corresponding Acquired Fund) fairly present, in all
material respects, each Acquiring Fund's financial condition as of such date and
its results of operations for such period in accordance with generally accepted
accounting principles consistently applied and as of such dates there were no
liabilities of any Acquiring Fund (contingent or otherwise) known to Nations
Fund that were not disclosed therein but that would be required to be disclosed
therein in accordance with generally accepted accounting principles;
(k) Since each date of each most recent audited
financial statements, there has not been any material adverse change in any
Acquiring Fund's financial condition, assets, liabilities or business, other
than changes occurring in each ordinary course of business;
(l) For each full and partial taxable year from its
inception through each Closing Date, each Acquiring Fund of Nations Fund has
qualified as a separate regulated investment company under Subchapter M of each
Code and has taken all necessary and required actions to maintain such status;
(m) All federal and other tax returns and reports
of Nations Fund and each Acquiring Fund required by law to be filed on or before
each Closing Date have been or will be filed, and all federal and other taxes
owed by Nations Fund on behalf of each Acquiring Funds have been or will be paid
so far as due, and to each best of Nations Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to any
such return; and
(n) At each Closing Date, each Acquiring Fund will
have good and marketable title to its assets and full right, power and authority
to assign, deliver and otherwise transfer such assets.
5.2 Peachtree Funds, on behalf of itself and each
Acquired Fund, represents and warrants to Nations Fund as follows:
(a) Peachtree Funds was duly created pursuant to
its Declaration of Trust by each Trustees for each purpose of acting as a
management investment company under each 1940 Act and is validly existing under
each laws of each Commonwealth of Massachusetts, and each Declaration of Trust
directs each Trustees to manage each affairs of Peachtree Funds and grants them
all powers necessary or desirable to carry out such responsibility, including
administering Peachtree Funds business as currently conducted by Peachtree Funds
and as described in each current Prospectuses of Peachtree Funds; Peachtree
Funds is registered as an investment company classified as an open-end
management company, under each 1940 Act and its registration with each SEC as an
investment company is in full force and effect;
(b) All of each issued and outstanding shares
representing units of beneficial interest of each Acquired Fund have been
offered and sold in compliance in all material respects with applicable
registration requirements of each 1933 Act and state securities laws;
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(c) Each Acquired Funds are not in material
violation of, and each execution and each performance of each Agreement by
Peachtree Funds for itself and on behalf of each Acquired Fund does not and will
not (i) violate Peachtree Funds' Declaration of Trust or By-Laws, or (ii) result
in a breach or violation of, or constitute a default under, any term of any
material agreement or material instrument to which Peachtree Funds is a party or
by which its properties or assets are bound;
(d) Except as previously disclosed in writing to
Nations Fund, no litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or, to Peachtree
Funds' knowledge, threatened against any Acquired Fund or any of its properties
or assets which, if adversely determined, would materially and adversely affect
such Acquired Fund's financial condition or each conduct of its business, and
Peachtree Funds knows of no facts that might form each basis for each
institution of any such proceeding or investigation, and no Acquired Fund is a
party to or subject to each provisions of any order, decree or judgment of any
court or governmental body that materially and adversely affects, or is
reasonably likely to materially and adversely affect, its business or its
ability to consummate each transactions contemplated herein;
(e) Each Statement of Assets and Liabilities,
Statement of Operations and Statement of Changes in Net Assets of each Acquired
Fund as of and for each year ended September 30, 1995, audited by Ernst & Young,
LLP (copies of which have been or will be furnished to each Acquiring Fund)
fairly present, in all material respects, each Acquired Fund's financial
condition as of such date and its results of operations for such period in
accordance with generally accepted accounting principles consistently applied,
and as of such date there were no liabilities of any Acquired Fund (contingent
or otherwise) known to Peachtree Funds that were not disclosed therein but that
would be required to be disclosed therein in accordance with generally accepted
accounting principles;
(f) Since each date of each most recent audited
financial statements, there has not been any material adverse change in any
Acquired Fund's financial condition, assets, liabilities or business, other than
changes occurring in each ordinary course of business, or any incurrence by an
Acquired Fund of indebtedness maturing more than one year from each date such
indebtedness was incurred, except as otherwise disclosed in writing to and
accepted by each corresponding Acquiring Fund, prior to each Closing Date (for
each purposes of this subparagraph (f), neither a decline in an Acquired Fund's
net asset value per share nor a decrease in an Acquired Fund's size due to
redemptions shall be deemed to constitute a material adverse change);
(g) All federal and other tax returns and reports
of Peachtree Funds and each Acquired Fund required by law have been or will be
filed, and all federal and other taxes owed by Peachtree Funds or each Acquired
Fund shall, with respect to all period ending on or before each Closing Date,
have been or will be paid so far as due, and to each best of Peachtree Funds'
knowledge, no such return is currently under audit and no assessment has been
asserted with respect to any such return;
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(h) For each full and partial taxable year from its
inception through each Closing Date, each Acquired Fund has qualified as a
separate regulated investment company under Subchapter M of each Code and has
taken all necessary and required actions to maintain such status;
(i) All issued and outstanding shares of each
Acquired Fund are, and on each Closing Date will be, duly authorized and validly
issued and outstanding, and fully paid and non-assessable, and all such shares
will, at each time of each Closing, be held by each persons and in each amounts
set forth in each list of Acquired Fund Investors provided to each corresponding
Acquiring Fund, pursuant to paragraph 3.4, and no Acquired Fund has outstanding
any options, warrants or other rights to subscribe for or purchase any of its
shares, nor is there outstanding any security convertible into any of its
shares;
(j) At each Closing Date, each Acquired Fund will
have good and marketable title to its Fund Assets and full right, power and
authority to assign, deliver and otherwise transfer such Fund Assets hereunder,
and upon delivery and payment for such Fund Assets as contemplated herein, each
corresponding Acquiring Fund will acquire good and marketable title thereto,
subject to no restrictions on each ownership or transfer thereof other than such
restrictions as might arise under each 1933 Act;
(k) Each execution, delivery and performance of
this Agreement on behalf of each Acquired Funds will have been duly authorized
prior to each Closing Date by all necessary action on each part of Peachtree
Funds, each Trustees and each Acquired Fund, and this Agreement will constitute
a valid and binding obligation of Peachtree Funds and each Acquired Fund
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, arrangement, moratorium and other
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles;
(l) From each effective date of each Registration
Statement, through each time of each meeting of each Acquired Fund Investors,
and on each Closing Date, each Proxy Materials: (i) comply in all material
respects with each applicable provisions of each 1933 Act, each 1934 Act and
each 1940 Act and each regulations thereunder and (ii) do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make each statements therein not misleading, and
as of such dates and times, any written information furnished by Peachtree
Funds, on behalf of each Acquired Funds, for use in each Registration Statement
or in any other manner that may be necessary in connection with each
transactions contemplated hereby does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make each
information provided not misleading; and
(m) No governmental consents, approvals,
authorizations or filings are required under each 1933 Act, each 1934 Act, each
1940 Act or Massachusetts law for each execution of this Agreement by Peachtree
Funds, for itself and on behalf of each Acquired Fund, or each performance of
each Agreement by Peachtree Funds for itself and on behalf of each Acquired
Fund, except for such consents, approvals, authorizations and filings as have
been made or received, and except for such consents, approvals, authorizations
and filings as may be required subsequent to each Closing Date.
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6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED FUNDS
Each obligations of Peachtree Funds to consummate each
Reorganization with respect to each Acquired Fund shall be subject to each
performance by Nations Fund, for itself and on behalf of each Acquiring Fund, of
all each obligations to be performed by it hereunder on or before each Closing
Date and, in addition thereto, each following conditions with respect to each
corresponding Acquiring Fund:
6.1 All representations and warranties of Nations Fund
with respect to each Acquiring Fund contained herein shall be true and correct
in all material respects as of each date hereof and, except as they may be
affected by each transactions contemplated herein, as of each Closing Date with
each same force and effect as if made on and as of each Closing Date.
6.2 Nations Fund, on behalf of each Acquiring Fund,
shall have delivered to Peachtree Funds at each Closing a certificate executed
on behalf of each corresponding Acquiring Fund by Nations Fund's President,
Secretary or Assistant Secretary in a form reasonably satisfactory to each
Peachtree Funds and dated as of each Closing Date, to each effect that each
representations and warranties of Nations Fund with respect to each Acquiring
Fund made herein are true and correct at and as of each Closing Date, except as
they may be affected by each transactions contemplated herein, and as to such
other matters as such Acquired Fund shall reasonably request.
6.3 Each Acquired Fund shall have received at each
Closing a favorable opinion of Morrison & Foerster LLP, counsel to Nations Fund
(based upon or subject to such representations, assumptions, limitations or
opinions of local counsel as such counsel may deem appropriate or necessary),
dated as of each Closing Date, in a form (including each representations,
assumptions, limitations or opinions of local counsel upon which it is based or
to which it is subject) reasonably satisfactory to each Acquired Fund,
substantially to each effect that:
(a) Nations Fund is a duly registered, open-end,
management investment company, and its registration with each SEC as an
investment company under each 1940 Act is in full force and effect; (b)
each Acquiring Fund is a portfolio of Nations Fund, which is a business
trust duly created pursuant to its Declaration of Trust, is validly
existing and in good standing under each laws of each Commonwealth of
Massachusetts, and each Declaration of Trust directs each Trustees to
manage each affairs of Nations Fund and grants them all powers
necessary or desirable to carry out such responsibility, including
administering Nations Fund's business as described in each current
Prospectuses of Nations Fund; (c) this Agreement has been duly
authorized, executed and delivered on behalf of Nations Fund and each
Acquiring Fund and, assuming due authorization, execution and delivery
of this Agreement on behalf of each Acquired Funds, is a valid and
binding obligation of Nations Fund enforceable against Nations Fund in
accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, arrangement, moratorium and other similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles; (d) each Acquiring Fund Shares
to be issued to each Acquired Funds Investors pursuant to this
12
<PAGE>
Agreement are duly registered under each 1933 Act on each appropriate
form, and are duly authorized and upon such issuance will be validly
issued and outstanding and fully paid and non-assessable, and no
shareholder of an Acquiring Fund has any preemptive rights to
subscription or purchase in respect thereof; (e) each Registration
Statement has become effective with each SEC and, to each best of such
counsel's knowledge, no stop order suspending each effectiveness
thereof has been issued and no proceedings for that purpose have been
instituted or are pending or threatened; (f) no consent, approval,
authorization, filing or order of any court or governmental authority
of each United States or any state is required for each consummation by
Nations Fund of each Reorganization with respect to each Acquiring
Fund; and (g) to each best knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to Nations Fund
or an Acquiring Fund or any of their properties or assets and neither
Nations Fund nor any Acquiring Fund is a party to or subject to each
provisions of any order, decree or judgment of any court or
governmental body that materially and adversely affects its business.
6.4 As of each Closing Date with respect to each
Reorganization of each Acquired Fund, there shall have been no material change
in each investment objective, policies and restrictions nor any material change
in each investment management fees, fee levels payable pursuant to each 12b-1
plan of distribution, other fees payable for services provided to each Acquiring
Funds, fee waiver or expense reimbursement undertakings, or sales loads of each
Acquiring Funds from those fee amounts, undertakings and sales load amounts
described in each Prospectus of each Acquiring Fund delivered to each
corresponding Acquired Fund pursuant to paragraph 4.1 and in each Proxy
Materials.
6.5 With respect to each Acquiring Fund, each Board of
Trustees of Nations Fund shall have determined that each Reorganization is in
each best interests of each Acquiring Fund and that each interests of each
existing shareholders of each Acquiring Fund would not be diluted as a result of
each Reorganization.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUNDS
Each obligations of Nations Fund to consummate each
Reorganization with respect to each Acquiring Fund shall be subject to each
performance by Peachtree Funds of all each obligations to be performed by it
hereunder, with respect to each corresponding Acquired Fund, on or before each
Closing Date and, in addition thereto, each following conditions:
7.1 All representations and warranties of Peachtree
Funds with respect to each Acquired Funds contained herein shall be true and
correct in all material respects as of each date hereof and, except as they may
be affected by each transactions contemplated by this Agreement, as of each
Closing Date, with each same force and effect as if made on and as of each
Closing Date.
7.2 Peachtree Funds, on behalf of each Acquired Fund,
shall have delivered to each corresponding Acquiring Fund at each Closing a
certificate executed on behalf of each
13
<PAGE>
Acquired Fund, by Peachtree Funds' President, Secretary or Assistant Secretary,
in form and substance satisfactory to each Acquiring Funds and dated as of each
Closing Date, to each effect that each representations and warranties of Nations
Fund with respect to each Acquired Fund made herein is true and correct at and
as of each Closing Date, except as they may be affected by each transactions
contemplated herein and as to such other matters as each Acquiring Fund shall
reasonably request.
7.3 Each Acquiring Fund shall have received at each
Closing a favorable opinion from Dickstein, Shapiro & Morin, L.L.P., counsel to
Peachtree Funds (based upon or subject to such representations, assumptions,
limitations or opinions of local counsel as such counsel may deem appropriate or
necessary), dated as of each Closing Date, in a form (including each
representations, assumptions, limitations or opinions of local counsel upon
which it is based or to which it is subject) reasonably satisfactory to such
Acquiring Fund, substantially to each effect that:
(a) Peachtree Funds is a duly registered, open-end
investment company, and its registration with each SEC as an investment
company under each 1940 Act is in full force and effect; (b) each
Acquired Fund is a portfolio of Peachtree Funds, Peachtree Funds is a
business trust duly created pursuant to its Declaration of Trust, is
validly existing and in good standing under each laws of each
Commonwealth of Massachusetts, and each Declaration of Trust directs
each Trustees to manage each affairs of Peachtree Funds and grants them
all powers necessary or desirable to carry out such responsibility,
including administering Peachtree Funds' business as described in each
current Prospectuses of Peachtree Funds; (c) this Agreement has been
duly authorized, executed and delivered by Peachtree Funds on behalf of
Peachtree Funds and each Acquired Fund and, assuming due authorization,
execution and delivery of this Agreement on behalf of each Acquiring
Fund, is a valid and binding obligation of Peachtree Funds, enforceable
against Peachtree Funds in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, arrangement,
moratorium and other similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles; (d) no
consent, approval, authorization, filing or order of any court or
governmental authority of each United States or any state is required
for each consummation of each Reorganization with respect to each
Acquired Fund, except for such consents, approvals, authorizations and
filings as have been made or received, and except for such consents,
approvals, authorizations and filings as may be required subsequent to
each Closing Date; and (e) to each best knowledge of such counsel, no
litigation or administrative proceeding or investigation of or before
any court or governmental body is presently pending or threatened as to
Peachtree Funds or an Acquired Fund or any of their properties or
assets and neither Peachtree Funds nor an Acquired Fund is a party to
or subject to each provisions of any order, decree or judgment of any
court or governmental body that materially and adversely effects its
business.
7.4 Nations Fund, on behalf of each Acquiring Fund,
shall have received from Ernst & Young, LLP a letter addressed to Nations Fund,
on behalf of each Acquiring Fund, and dated as of each Closing Date with respect
to each Acquired Funds, in form and substance satisfactory to Nations Fund, to
each effect that:
14
<PAGE>
(a) they are independent accountants with respect
to Peachtree Funds and each Acquired Fund within each meaning of each 1933 Act
and each applicable regulations thereunder;
(b) in their opinion, each audited financial
statements and each Per Share Data provided in accordance with Item 3 in Form
N-1A (each "Per Share Data") of each Acquired Fund included or incorporated by
reference in each Registration Statement and Proxy Statement and previously
reported on by them comply as to form in all material aspects with each
applicable accounting requirements of each 1933 Act and each published rules and
regulations thereunder;
(c) on each basis of limited procedures agreed upon
by Nations Fund, on behalf of each Acquiring Funds and Peachtree Funds, on
behalf of each Acquired Funds, and described in such letter (but not an
examination in accordance with generally accepted auditing standards), each
information relating to each Acquired Funds appearing in each Registration
Statement and Proxy Statement that is expressed in dollars or percentages of
dollars (with each exception of performance comparisons) has been obtained from
each accounting records of each Acquired Funds or from schedules prepared by
officers of Peachtree Funds having responsibility for financial and reporting
matters and such information is in agreement with such records, schedules or
computations made therefrom.
7.5 Peachtree Funds shall have delivered to each
Acquiring Funds, pursuant to paragraph 5.2(e), copies of financial statements of
each Acquired Fund as of and for each period ended September 30, 1995, audited
by Ernst & Young, LLP.
7.6 With respect to each Acquired Fund, each Board of
Trustees of Peachtree Funds shall have determined that each Reorganization is in
each best interests of each Acquired Fund and that each interests of each
existing investors in each Acquired Fund would not be diluted as a result of
each Reorganization.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH ACQUIRING
FUNDS AND EACH ACQUIRED FUNDS
Each obligations of each Acquiring Fund and of each
corresponding Acquired Fund herein are each subject to each further conditions
that on or before each Closing Date with respect to each Acquiring Fund and each
corresponding Acquired Fund:
8.1 This Agreement and each transactions contemplated
herein shall have been approved by each requisite vote of each holders of each
outstanding shares of beneficial interest in each Acquired Fund in accordance
with each provisions of Peachtree Funds' Declaration of Trust and each
requirements of each 1940 Act, and certified copies of each resolutions
evidencing such approval shall have been delivered to each corresponding
Acquiring Fund.
8.2 On each Closing Date, no action, suit or other
proceeding shall be pending before any court or governmental agency in which it
is sought to restrain or prohibit, or obtain
15
<PAGE>
damages or other relief in connection with, this Agreement or any of each
transactions contemplated herein.
8.3 All consents of other parties and all other
consents, orders, approvals and permits of federal, state and local regulatory
authorities (including, without limitation, those of each SEC and of state
securities authorities) deemed necessary by Nations Fund, on behalf of each
Acquiring Funds or by Peachtree Funds, on behalf of each Acquired Funds, to
permit consummation, in all material respects, of each transactions contemplated
herein shall have been obtained, except where failure to obtain any such
consent, order or permit would not, in each opinion of each party asserting that
each condition to closing has not been satisfied, involve a risk of a material
adverse effect on each assets or properties of any of an Acquiring Fund or its
corresponding Acquired Fund.
8.4 Each Registration Statement shall have become
effective under each 1933 Act, no stop orders suspending each effectiveness
thereof shall have been issued and, to each best knowledge of each parties
hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under each 1933 Act.
8.5 Each Acquired Fund shall have declared a dividend
or dividends which, together with all previous such dividends, shall have each
effect of distributing to each Acquired Fund's shareholders substantially all of
each Acquired Fund's investment company taxable income for all taxable years
ending on or prior to each Closing Date (computed without regard to any
deduction for dividends paid) and substantially all of its net capital gain for
all taxable years ending on or prior to each Closing Date (after reduction for
any capital loss carry forward.)
8.6 Each Acquiring Funds and each Acquired Funds shall
have received from Price Waterhouse LLP a letter dated as of each Closing Date,
in form and substance satisfactory to Nations Fund and to Peachtree Funds, to
each effect that on each basis of limited procedures agreed upon by Nations
Fund, on behalf of each Acquiring Funds and Peachtree Funds, on behalf of each
Acquired Funds (but not an examination in accordance with generally accepted
auditing standards): (i) each data utilized in each calculations of each
projected expense ratio appearing in each Registration Statement and Proxy
Materials agree with underlying accounting records of each Acquiring Funds and
each Acquired Funds or to written estimates by Stephens Inc. and were found to
be mathematically correct; and (ii) each calculation of net asset value per
share of each Acquired Fund as of each Valuation Date was determined in
accordance with generally accepted accounting practices and each corresponding
portfolio valuation practices of each Acquiring Fund.
8.7 Nations Fund and each Peachtree Funds shall have
received each opinion of Morrison & Foerster LLP addressed to both each
Acquiring Funds and each Acquired Funds substantially to each effect that, for
federal income tax purposes:
(a) each transfer of all or substantially all of
each Acquired Fund assets in exchange for each corresponding Acquiring
Fund Shares and each assumption by each Acquiring Fund of certain
identified liabilities of each corresponding Acquired Fund will
constitute a "reorganization" within each meaning of Sections
368(a)(1)(C) of
16
<PAGE>
each Code and each Acquiring Fund and Acquired Fund will be a "party to
a reorganization" within each meaning of Section 368(b) of each Code;
(b) no gain or loss will be recognized by an Acquiring Fund upon each
receipt of each assets of each corresponding Acquired Fund solely in
exchange for each Acquiring Fund Shares and each assumption by each
Acquiring Fund of certain identified liabilities of each Acquired Fund
or upon each distribution of Acquiring Fund Shares in exchange for
their Shares of each Acquired Fund; (c) no gain or loss will be
recognized by an Acquired Fund upon each transfer of each Acquired Fund
assets to each corresponding Acquiring Fund in exchange for each
Acquiring Fund Shares and each assumption by each Acquiring Fund of
certain identified liabilities of each Acquired Fund or upon each
distribution (whether actual or constructive) of each Acquiring Fund
Shares to shareholders in exchange for their shares of each Acquired
Fund; (d) no gain or loss will be recognized by each Acquired Fund
Shareholders upon each exchange of their Acquired Fund Shares for each
Acquiring Fund Shares; (e) each aggregate federal income tax basis for
each Acquiring Fund Shares received by each of each Acquired Fund
Shareholders pursuant to each Reorganization will be each same as each
aggregate federal income tax basis of each Shareholder's Acquired Fund
shares exchanged therefor; (f) each holding period of each Acquiring
Fund Shares to be received by each Acquired Fund Shareholder will
include each period during which each Acquired Fund shares exchanged
therefor were held by such shareholder (provided each Acquired Fund
shares were held as capital assets); (g) each federal income tax basis
of each Acquired Fund assets acquired by each Acquiring Fund will be
each same as each federal income tax basis of such assets in each hands
of each Acquired Fund immediately prior to each Reorganization, and
each holding period of each assets of each Acquired Fund received by
each Acquiring Fund will include each period during which those assets
were held by each Acquired Fund; and (h) each Acquiring Fund will
succeed to corresponding Acquired Fund's tax attributes described in
Section 381(c) of each Code as of each end of each Closing Date
Notwithstanding anything herein to each contrary, neither an Acquiring Fund nor
its corresponding Acquired Fund may waive each condition set forth in this
paragraph 8.7.
9. BROKERAGE FEES AND EXPENSES
9.1 Nations Fund, for itself and on behalf of each
Acquiring Funds and Peachtree Funds, on behalf of itself and on behalf of each
Acquired Funds, represent and warrant that there are no brokers or finders
entitled to receive any payments in connection with each transactions provided
for herein.
9.2 Except as may be otherwise provided herein, each
Acquired Fund and each Acquiring Fund shall be liable for their respective
expenses incurred in connection with entering into and carrying out each
provisions of this Agreement, whether or not each transactions contemplated
hereby are consummated. Each expenses payable by each Acquired Fund hereunder
shall include (i) fees and expenses of its counsel and independent accountants
incurred in connection with each Reorganization; (ii) all fees and expenses
related to each liquidation of each Acquired Fund; (iii) fees and expenses of
each Acquired Fund's custodian and transfer
17
<PAGE>
agent(s) incurred in connection with each Reorganization; and (iv) any special
pricing fees associated with each valuation of an Acquired Fund's portfolio on
each Applicable Valuation Date. Each expenses payable by each Acquiring Fund
hereunder shall include (i) fees and expenses of its counsel and independent
accountants incurred in connection with each Reorganization; (ii) expenses
associated with preparing this Agreement and preparing and filing each
Registration Statement under each 1933 Act covering each Acquiring Fund Shares
to be issued in each Reorganization; (iii) registration or qualification fees
and expenses of preparing and filing such forms, if any, as are necessary under
applicable state securities laws to qualify each Acquiring Fund Shares to be
issued in connection with each Reorganization; (iv) any fees and expenses of
each Acquiring Fund's custodian and transfer agent(s) incurred in connection
with each Reorganization; and (v) any special pricing fees associated with each
valuation of an Acquiring Fund's portfolio on an Applicable Valuation Date.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 This Agreement constitutes each entire agreement
between each parties and supersedes any prior or contemporaneous understanding
or arrangement with respect to each subject matter hereof.
10.2 Each representations, warranties and covenants
contained in this Agreement or in any document delivered pursuant hereto or in
connection herewith shall not survive each consummation of each transactions
contemplated herein.
11. TERMINATION
11.1 This Agreement may be terminated and each
transactions contemplated hereby may be abandoned at any time prior to each
Closing:
(a) by each mutual written consent of Nations Fund
and Peachtree Funds;
(b) by either Nations Fund or each Peachtree Funds
by notice to each other, without liability to each terminating party on account
of such termination (provided any such termination shall not excuse each
terminating party from any liability arising out of a default or breach of this
Agreement by such terminating party) if such Closing shall not have occurred on
or before December 31, 1996; or
(c) by either of Nations Fund or each Peachtree
Funds, in writing without liability to each terminating party on account of such
termination (provided any such termination shall not excuse each terminating
party from any liability arising out of a material default or breach of this
Agreement by such terminating party), if (i) each other party shall fail to
perform in any material respect its agreements contained herein required to be
performed prior to each Closing Date, (ii) each other party materially breaches
or shall have breached any of its representations, warranties or covenants
contained herein, or (iii) any other express condition precedent to each
obligations of each terminating party has not been met and it reasonably appears
that it will not or cannot be met.
18
<PAGE>
11.2 Termination of this Agreement pursuant to
paragraphs 11.1(a) or (b) shall terminate all obligations of each parties
hereunder with respect to each Acquired Fund and Acquiring Fund affected by such
termination, or with respect to Nations Fund and Peachtree Funds, as each case
may be, and there shall be no liability for damages on each part of Nations Fund
or Peachtree Funds or each trustees or officers of Nations Fund or Peachtree
Funds, to any other party or its trustees or officers on account of termination
pursuant to paragraphs 11.1(a) or (b); provided, however, that notwithstanding
any termination of this Agreement pursuant to paragraph 11.1, such termination
shall not relieve either party of its respective obligations pursuant to Section
9.2 hereof.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in
such manner as may be mutually agreed upon in writing by each authorized
officers of Nations Fund, acting on behalf of each Acquiring Fund and each
authorized officers of Peachtree Funds, acting on behalf of each shareholders of
each Acquired Fund; provided, however, that following each meeting of each
shareholders of each Acquired Funds, no such amendment may have each effect of
changing each provisions for determining each number of shares of each
corresponding Acquiring Funds to be issued to each Acquired Fund Investors under
this Agreement to each detriment of such Acquired Fund Investors, or otherwise
materially and adversely affecting such Acquired Fund, without each Acquired
Fund obtaining each Acquired Fund Investors' further approval except that
nothing in this paragraph 12 shall be construed to prohibit any Acquiring Fund
and each corresponding Acquired Fund from amending this Agreement to change each
Closing Date or Applicable Valuation Date by mutual agreement.
13. NOTICES
Any notice, report, statement or demand required or permitted
by any provision of this Agreement shall be in writing and shall be given by
prepaid telegraph, telecopy, certified mail or overnight express courier
addressed to:
For Nations Fund, on behalf of itself and each
Acquiring Fund:
Richard H. Blank, Jr.
Secretary
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
With copies to:
Robert M. Kurucza, Esquire and
Marco E. Adelfio, Esquire
Morrison & Foerster LLP
2000 Pennsylvania Avenue, N.W.
Suite 5500
19
<PAGE>
Washington, D.C. 20006
For Peachtree Funds, on behalf of itself and each
Acquired Fund:
Grant Anderson
Corporate Counsel
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Matthew G. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION
OF LIABILITY
14.1 Each article and paragraph headings contained
herein are for reference purposes only and shall not affect in any way each
meaning or interpretation of this Agreement. All references herein to Articles,
paragraphs, subparagraphs or Exhibits shall be construed as referring to
Articles, paragraphs or subparagraphs hereof or Exhibits hereto, respectively.
Whenever each terms hereto, hereunder, herein or hereof are used in this
Agreement, they shall be construed as referring to this entire Agreement, rather
than to any individual Article, paragraph, subparagraph or sentence.
14.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
14.3 This Agreement shall be governed by and construed
in accordance with each laws of each Commonwealth of Massachusetts.
14.4 This Agreement shall bind and inure to each
benefit of each parties hereto and their respective successors and assigns, but
no assignment or transfer hereof or of any rights or obligations hereunder shall
be made by any party without each written consent of each other parties. Nothing
herein expressed or implied is intended or shall be construed to confer upon or
give any person, firm or corporation, other than each parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
14.5 It is expressly agreed that each obligations of
Nations Fund hereunder shall not be binding upon any of each Trustees,
shareholders, nominees, officers, agents, or employees of Nations Funds
personally, but shall bind only each assets and each property of each respective
Acquiring Fund of Nations Fund, as provided in its Declaration of Trust. Each
execution and delivery by such officers shall not be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only each assets and each property of each respective Acquiring
Fund of Nations Fund as provided in its Declaration of Trust.
20
<PAGE>
14.6 It is expressly agreed that each obligations of
Peachtree Funds hereunder shall not be binding upon any of each Trustees,
shareholders, nominees, officers, agents, or employees of Peachtree Funds
personally, but shall bind only each assets and each property of each respective
Acquired Fund of Peachtree Funds, as provided in its Declaration of Trust. Each
execution and delivery by such officers shall not be deemed to have been made by
any of them individually or to impose any liability on any of them individually
or to impose any liability on any of them personally, but shall bind only each
assets and each property of each respective Acquired Fund of Peachtree as
provided in its Declaration of Trust.
21
<PAGE>
IN WITNESS WHEREOF, each of each parties hereto has caused
this Agreement to be duly executed by its authorized officer, and attested by
its Secretary.
NATIONS FUND TRUST, for itself and on
ATTEST: behalf of each Acquiring Fund
/s/ Richard H. Blank Jr. By: /s/ A. Max Walker
Richard H. Blank, Jr. A. Max Walker
Secretary President and Chairman of
each Board of Trustees
PEACHTREE FUNDS, for itself and
ATTEST: on behalf of each Acquired Fund
/s/ John W. Mcgonigle By: /s/ Edward C. Gonzales
John W. McGonigle Edward C. Gonzales
Secretary President
22
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Acquiring Fund Acquired Fund
<S> <C>
Nations Government Money Market Fund Peachtree Government Money Market Fund
Primary A Shares
Nations Capital Growth Fund Peachtree Equity Fund
Primary A Shares
Nations Strategic Fixed Income Fund Peachtree Bond Fund
Primary A Shares
Nations Georgia Intermediate Municipal Bond Fund Peachtree Georgia Tax-Free Income Fund
Primary A Shares
</TABLE>
23
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
DATED AUGUST 5, 1996
PEACHTREE FUNDS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
(800) 626-2275
NATIONS FUND TRUST
ONE NATIONSBANK PLAZA
CHARLOTTE, NC 28255
(800) 626-2275
(SEPTEMBER 23, 1996 SPECIAL MEETING OF SHAREHOLDERS OF PEACHTREE FUNDS)
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Combined Prospectus/Proxy Statement dated the
date hereof, for the Special Meeting of Shareholders of Peachtree Funds to be
held September 23, 1996. Copies of the Combined Prospectus/Proxy Statement may
be obtained at no charge by writing or calling Peachtree Funds or the Trust at
the addresses or telephone numbers set forth above. Unless otherwise indicated,
capitalized terms used herein and not otherwise defined have the same meanings
as are given to them in the Combined Prospectus/Proxy Statement.
INCORPORATION OF DOCUMENTS BY REFERENCE IN STATEMENT OF ADDITIONAL INFORMATION
Further information about Primary A Shares of the Acquiring Funds is
contained in and incorporated herein by reference to the statement of additional
information for the Primary A Shares of each Acquiring Fund dated July 31, 1996.
The audited financial statements and related independent auditors'
report for the Acquiring Funds contained in the Annual Report for the fiscal
period ended March 31, 1996 are hereby incorporated by reference.
No other parts of the Annual Report are incorporated by reference.
Further information about the shares of the Funds is contained in and
incorporated herein by reference to the statement of additional information for
the shares of each Fund dated November 30, 1995.
The audited financial statements for the Funds for the year ended
September 30, 1995 contained in each Fund's Annual Report, and the unaudited
financial statements contained in each Fund's Semi-Annual Report for the
six-month period ended March 31, 1996, are hereby incorporated by reference.
1
<PAGE>
TABLE OF CONTENTS
General
Information................................................................3
Introductory Note to Pro Forma Financial Information.......................4
2
<PAGE>
GENERAL INFORMATION
As a result of the merger of Bank South into NationsBank onJanuary 9,
1996, the investment advisory agreements between the Peachtree Funds and Bank
South, in accordance with applicable law and their terms, terminated
automatically. Shortly thereafter, new Advisory and Sub-Advisory Contracts were
approved by the shareholders of each Fund in order to ensure continuity in the
provision of investment advisory services to the Funds.
Accordingly, the Board of Trustees of Peachtree Funds is proposing that
the shareholders of the Funds approve an Agreement and Plan of Reorganization
for the Funds, and the transactions contemplated thereby, which include (a) the
transfer of all of the assets of the Funds to the corresponding Acquiring Funds
of the Trust in exchange for Primary A Shares of the corresponding Acquiring
Fund, and the assumption of stated liabilities of the Fund by each corresponding
Acquiring Fund ; and (b) the distribution of shares of the corresponding
Acquiring Fund to shareholders of each Fund.
The Primary A Shares issued by the Trust will have an aggregate value
equal to the aggregate value of the shares of the respective Funds that are
outstanding immediately before the Closing.
After the transfer of their assets and liablilities in exchange for
Acquiring Fund Primary A Shares, the Funds will distribute the Primary A Shares
of the Acquiring Funds to their shareholders in liquidation of the Funds. Each
shareholder owning shares of a particular Fund at the Closing will receive
Primary A Shares of the corresponding Acquiring Fund, as specified above, of
equal value, and will receive any unpaid dividends or distributions that were
declared before the Closing on shares of the Funds. The Trust will establish an
account for each former shareholder of the Funds reflecting the approprite
number of Primary A Shares distributed to the shareholder. These accounts will
be identical to the accounts currently maintained by Peachtree Funds for each
shareholder. Upon completion of the Reorganization, all outstanding shares of
the Funds will be redeemed and canceled in exchange for Primary A Shares of the
Acquring Funds, and Peachtree Funds will wind up its affairs, and be
deregistered as an investment company under the 1940 Act.
3
<PAGE>
INTRODUCTORY NOTE TO PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information gives effect to
the proposed transfer of the assets and liabilities of the Funds and Acquiring
Funds listed earlier in this Statement of Additional Information.
The pro forma financial should be read in conjunction with the
historical financial statements and notes thereto of the Funds and Acquiring
Funds included or incorporated by reference in this Statement of Additional
Information. Pro forma financial information giving effect to the proposed
transfer of the assets and liabilities of the Peachtree Bond Fund to the Nations
Strategic Fixed Income Fund, and the Peachtree Georgia Tax-Free Income Fund to
the Nations Georgia Intermediate Municipal Bond Fund, is not presented in this
Statement of Additional Information because, as of June 28, 1996, the aggregate
net asset value of the Peachtree Bond Fund was less than 10% of the aggregate
net asset value of Nations Strategic Fixed Income Fund, and the aggregate net
asset value of the Peachtree Georgia Tax-Free Income Fund was less than 10% of
the aggregate net asset value of Nations Georgia Intermediate Municipal Income
Fund.
4
<PAGE>
Nations Fund Trust
Expense Ratio Pro Forma
<TABLE>
<CAPTION>
Nations Peachtree
Government Money Government Money Combined
Market Fund Market Fund Pro Forma
<S> <C> <C> <C>
Net Assets March 31, 1996 $481,444,223 $78,098,097 $559,542,320
Operating Expense Ratio:
Primary A Shares-
Gross Expense Ratio 0.59% 0.84% 0.58%
Expense Waiver -0.29% -0.30% -0.28%
Net Primary A Expense Ratio 0.30% 0.54% 0.30%
Other Classes:
Primary B Shares 0.55% * n/a 0.55% *
Investor A Shares 0.65% ** n/a 0.65% **
Investor B Shares 0.55% *** n/a 0.55% ***
Investor C Shares 0.55% # n/a 0.55% #
Investor D Shares 0.61% @ n/a 0.61% @
</TABLE>
Legend:
* Based upon effective ssp fee of .25%.
** Based upon effective 12b-1/ssp fee of .35%.
*** Based upon effective ssp fee of .25%.
# Based upon effective ssp fee of .25%.
@ Based upon effective ssp fee of .3125%.
<PAGE>
Nations Fund Trust
Expense Ratio Pro Forma
<TABLE>
<CAPTION>
Nations Peachtree
Capital Growth Equity Combined
Fund Fund Pro Forma
<S> <C> <C> <C>
Net Assets March 31, 1996 $902,311,873 $111,757,147 $1,014,069,020
Operating Expense Ratio:
Primary A Shares-
Gross Expense Ratio 0.98% 1.06% 0.97%
Expense Waiver 0.00% -0.06% 0.00%
Net Primary A Expense R 0.98% 1.00% 0.97%
Other Classes:
Investor A Shares 1.23% * n/a 1.22% *
Investor C Shares 1.86% ** n/a 1.85% **
Investor N Shares 1.98% *** n/a 1.97% ***
</TABLE>
Legend:
* Based upon effective 12b-1 fee of .25%.
** Based upon effective 12b-1/ssp fee of .8750%.
*** Based upon effective 12b-1/ssp fee of 1.00%.
<PAGE>
NATIONS FUND
Nations Capital Growth Fund
Peachtree Equity Fund
Combined Portfolio of Investments
March 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
Nations SECURITY Nations
Capital Growth Peachtree DESCRIPTIONS Capital Growth Peachtree
Fund Equity Fund Combined Fund Equity Fund Combined
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCK-95.3%
Aerospace & Defense-0.5%
0 19,000 19,000 Boeing Co. .............. $0 $1,645,875 $1,645,875
0 67,000 67,000 Loral Corp. ............. 0 3,283,000 3,283,000
0 4,928,875 4,928,875
Automotive-0.8%
0 20,000 20,000 Chrysler Corp. .......... 0 1,245,000 1,245,000
0 25,000 25,000 Eaton Corp. ............. 0 1,506,250 1,506,250
0 40,000 40,000 Echlin, Inc. ............ 0 1,450,000 1,450,000
0 20,000 20,000 General Motors Corp. .... 0 1,065,000 1,065,000
0 28,000 28,000 General Motors Corp. Class H 0 1,771,000 1,771,000
0 50,000 50,000 Superior Industries International, Inc. 0 1,250,000 1,250,000
0 8,287,250 8,287,250
Building Materials-0.1%
0 32,000 32,000 Masco Corp. ............. 0 928,000 928,000
Business Equipment & Peripherals-5.3%
431,800 26,800 458,600 Bay Networks, Inc.+...... 13,277,850 824,100 14,101,950
375,700 0 375,700 cisco Systems, Inc.+..... 17,423,088 0 17,423,088
80,600 0 80,600 International Business Machine
Corp. 8,956,675 0 8,956,675
303,400 15,000 318,400 Madge Networks N.V.+ .... 12,173,925 601,875 12,775,800
51,831,538 1,425,975 53,257,513
Chemicals - Specialty-0.7%
0 20,000 20,000 Imperial Chemical Industries
PLC, ADR 0 1,140,000 1,140,000
0 58,750 58,750 R.P.M. Inc., Ohio ....... 0 910,625 910,625
93,700 0 93,700 Sigma-Aldrich Corp. ..... 5,364,325 0 5,364,325
5,364,325 2,050,625 7,414,950
Computer Manufacturers-1.2%
67,400 19,000 86,400 Hewlett Packard Company . 6,335,600 1,786,000 8,121,600
96,300 0 96,300 Sun Microsystems Inc. +.. 4,213,125 0 4,213,125
10,548,725 1,786,000 12,334,725
Diversified Healthcare-2.3%
252,500 0 252,500 Columbia/HCA Healthcare
Corporation 14,581,875 0 14,581,875
182,400 0 182,400 U.S. Healthcare Inc. .... 8,367,600 0 8,367,600
22,949,475 0 22,949,475
</TABLE>
<PAGE>
NATIONS FUND
Nations Capital Growth Fund
Peachtree Equity Fund
Combined Portfolio of Investments
March 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
Nations SECURITY Nations
Capital Growth Peachtree DESCRIPTIONS Capital Growth Peachtree
Fund Equity Fund Combined Fund Equity Fund Combined
<S> <C> <C> <C> <C> <C> <C>
Drugs-6.3%
177,700 10,000 187,700 Bristol-Myers Squibb Co. $15,215,562 $856,250 $16,071,812
140,000 25,000 165,000 Merck & Company Inc. .... 8,715,000 1,556,250 10,271,250
228,400 60,000 288,400 Mylan Labs Inc. ......... 4,796,400 1,260,000 6,056,400
205,700 20,000 225,700 Pfizer Inc. ............. 13,781,900 1,340,000 15,121,900
0 33,000 33,000 Scherer R.P. Corp.+ ..... 0 1,447,875 1,447,875
227,500 0 227,500 Schering-Plough Corporation 13,223,438 0 13,223,438
0 30,000 30,000 Smithkline Beecham PLC, ADR 0 1,545,000 1,545,000
55,732,300 8,005,375 63,737,675
Drugs - Medical Supplies-8.0%
350,300 35,000 385,300 Abbott Laboratories ..... 14,274,725 1,426,250 15,700,975
352,400 0 352,400 Baxter International Inc. 15,946,100 0 15,946,100
145,000 0 145,000 Becton, Dickinson & Company 11,871,875 0 11,871,875
145,900 0 145,900 Boston Scientific Corporation + 6,711,400 0 6,711,400
0 20,000 20,000 Forest Labs, Inc.+....... 0 975,000 975,000
151,500 0 151,500 Johnson & Johnson ...... 13,975,875 0 13,975,875
262,800 0 262,800 Medtronic Inc. .......... 15,669,450 0 15,669,450
78,449,425 2,401,250 80,850,675
Electrical Equipment-4.4%
0 49,500 49,500 Andrew Corp.+ ........... 0 1,893,375 1,893,375
203,700 22,000 225,700 Emerson Electric Company 16,448,775 1,776,500 18,225,275
282,700 25,000 307,700 General Electric Company 22,015,263 1,946,875 23,962,138
38,464,038 5,616,750 44,080,788
Electrical Components-1.8%
0 80,000 80,000 American Business Products, Inc. 0 1,810,000 1,810,000
116,000 34,000 150,000 Intel Corp. ............. 6,597,500 1,933,750 8,531,250
80,600 23,000 103,600 Motorola, Inc. .......... 4,271,800 1,219,000 5,490,800
40,000 40,000 Sensormatic Electronics Corp. 0 810,000 810,000
0 25,000 25,000 Texas Instruments, Inc. . 0 1,271,875 1,271,875
10,869,300 7,044,625 17,913,925
</TABLE>
<PAGE>
NATIONS FUND
Nations Capital Growth Fund
Peachtree Equity Fund
Combined Portfolio of Investments
March 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
Nations SECURITY Nations
Capital Growth Peachtree DESCRIPTIONS Capital Growth Peachtree
Fund Equity Fund Combined Fund Equity Fund Combined
<S> <C> <C> <C> <C> <C> <C>
Energy-9.1%
145,000 29,000 174,000 Amoco Corp. ............. $10,476,250 $2,095,250 $12,571,500
0 25,000 25,000 Anadarko Petroleum Corp. 0 1,387,500 1,387,500
0 33,000 33,000 Baker Hughes, Inc. ...... 0 965,250 965,250
368,500 0 368,500 Enron Corp. ............. 13,588,438 0 13,588,438
148,400 0 148,400 Kerr-McGee Corp. ........ 9,423,400 0 9,423,400
0 10,000 10,000 Mapco, Inc. ............. 0 558,750 558,750
165,000 0 165,000 Mobil Corp. ............. 19,119,375 0 19,119,375
100,000 15,000 115,000 Royal Dutch Petroleum Co. 14,125,000 2,118,750 16,243,750
64,000 18,000 82,000 Schlumberger Ltd. ....... 5,064,000 1,424,250 6,488,250
185,900 0 185,900 Western Atlas, Inc.+..... 11,154,000 0 11,154,000
82,950,463 8,549,750 91,500,213
Engineering & Construction-1.1%
158,600 0 158,600 Fluor Corp. ............. 10,892,700 0 10,892,700
Finance - Services-3.0%
0 17,000 17,000 American Express Co. .... 0 839,375 839,375
0 20,000 20,000 Barnett Bks Inc. ........ 0 1,245,000 1,245,000
0 10,000 10,000 Chubb Corp. ............. 0 938,750 938,750
186,600 0 186,600 Dean Witter, Discover & Company 10,682,850 0 10,682,850
0 48,000 48,000 Federal Natl Mtg Assn ... 0 1,530,000 1,530,000
0 19,000 19,000 Morgan J P & Co Inc. .... 0 1,577,000 1,577,000
200,000 0 200,000 Morgan Stanley Group, Inc. 10,350,000 0 10,350,000
0 45,000 45,000 Signet Banking Corp. .... 0 1,119,375 1,119,375
0 25,000 25,000 Suntrust Bks Inc. ....... 0 1,750,000 1,750,000
21,032,850 8,999,500 30,032,350
Food & Beverages-5.2%
159,100 0 159,100 CPC International Inc. .. 11,037,562 0 11,037,562
186,800 0 186,800 Coca-Cola Company ....... 15,434,350 0 15,434,350
0 93,000 93,000 Flowers Industries, Inc. 0 1,255,500 1,255,500
0 50,000 50,000 IBP Inc. ................ 0 1,281,250 1,281,250
300,000 27,000 327,000 PepsiCo Inc. ............ 18,975,000 1,707,750 20,682,750
0 18,000 18,000 Philip Morris Companies, Inc. 0 1,579,500 1,579,500
0 35,000 35,000 Sara Lee Corp. .......... 0 1,141,875 1,141,875
45,446,912 6,965,875 52,412,787
Forest Products & Paper-1.8%
117,300 0 117,300 Kimberly-Clark Corp. .... 8,738,850 0 8,738,850
157,650 0 157,650 Mead Corp. .............. 8,513,100 0 8,513,100
0 26,000 26,000 Weyerhaeuser Co. ........ 0 1,199,250 1,199,250
17,251,950 1,199,250 18,451,200
</TABLE>
<PAGE>
NATIONS FUND
Nations Capital Growth Fund
Peachtree Equity Fund
Combined Portfolio of Investments
March 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
Nations SECURITY Nations
Capital Growth Peachtree DESCRIPTIONS Capital Growth Peachtree
Fund Equity Fund Combined Fund Equity Fund Combined
<S> <C> <C> <C> <C> <C> <C>
Health & Beauty-0.9%
0 20,000 20,000 Bausch & Lomb, Inc. ..... $0 $740,000 $740,000
120,000 24,000 144,000 Gillette Company ........ 6,210,000 1,242,000 7,452,000
32,500 0 32,500 Revlon Corp. ............ 893,750 0 893,750
7,103,750 1,982,000 9,085,750
Household Products-2.1%
235,000 11,000 246,000 Procter & Gamble Co. ... 19,916,250 932,250 20,848,500
Imaging-0.9%
122,000 0 122,000 Eastman Kodak Co. ....... 8,662,000 0 8,662,000
Industrial Conglomerates-1.7%
285,300 0 285,300 AlliedSignal Inc. ....... 16,868,362 0 16,868,362
Insurance-5.6%
325,500 0 325,500 AFLAC, Inc. ............. 10,171,875 0 10,171,875
145,600 6,200 151,800 American International
Group, Inc. 13,631,800 580,475 14,212,275
93,500 4,000 97,500 General Re Corp. ........ 13,627,625 583,000 14,210,625
143,900 0 143,900 MGIC Investment Corp. ... 7,842,550 0 7,842,550
166,800 0 166,800 UNUMC Corp. ............. 9,924,600 0 9,924,600
55,198,450 1,163,475 56,361,925
Leisure-3.3%
282,600 0 282,600 Circus Circus Enterprises Inc.+ 9,502,425 0 9,502,425
87,500 0 87,500 Disney (Walt) Co. ....... 5,589,063 0 5,589,063
246,000 0 246,000 Time Warner Inc. ....... 10,055,250 0 10,055,250
0 20,000 20,000 Viacom Inc. ............. 0 842,500 842,500
172,800 0 172,800 Viacom Inc., Class B+.... 7,279,200 0 7,279,200
32,425,938 842,500 33,268,438
Long Distance-1.1%
135,800 20,000 155,800 AT&T Corp. .............. 8,317,750 1,225,000 9,542,750
0 60,000 60,000 MCI Communications, Inc. 0 1,815,000 1,815,000
8,317,750 3,040,000 11,357,750
Machinery & Equipment-0.8%
0 82,000 82,000 Agco Corp. .............. 0 1,978,250 1,978,250
61,900 25,000 86,900 Caterpillar, Inc. ....... 4,209,200 1,700,000 5,909,200
4,209,200 3,678,250 7,887,450
</TABLE>
<PAGE>
NATIONS FUND
Nations Capital Growth Fund
Peachtree Equity Fund
Combined Portfolio of Investments
March 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
Nations SECURITY Nations
Capital Growth Peachtree DESCRIPTIONS Capital Growth Peachtree
Fund Equity Fund Combined Fund Equity Fund Combined
<S> <C> <C> <C> <C> <C> <C>
Media-1.2%
442,000 0 442,000 K-III Communications Corp. $5,138,250 $0 $5,138,250
0 18,000 18,000 Reuters Holdings PLC .... 0 1,172,250 1,172,250
187,500 0 187,500 Tele-Communications Liberty
Media Group, Class A+....... 4,945,312 0 4,945,312
0 20,000 20,000 Times Mirror Co. ........ 0 787,500 787,500
10,083,562 1,959,750 12,043,312
Metals & Mining-2.1%
261,200 0 261,200 Crown Cork & Seal Inc. .. 12,733,500 0 12,733,500
118,300 30,000 148,300 Nucor Corp. ............. 6,994,489 1,773,750 8,768,239
19,727,989 1,773,750 21,501,739
Miscellaneous-0.2%
0 24,000 24,000 Millipore ............... 0 918,000 918,000
0 27,000 27,000 Tenneco Inc. ............ 0 1,508,625 1,508,625
0 2,426,625 2,426,625
Money Center Banks & Thrifts-2.7%
190,000 0 190,000 Bank of New York Inc. ... 9,785,000 0 9,785,000
100,000 0 100,000 Citicorp ................ 8,000,000 0 8,000,000
264,200 0 264,200 Norwest Corp. ........... 9,709,350 0 9,709,350
27,494,350 0 27,494,350
Movies/Entertainment-0.4%
0 40,000 40,000 Harley Davidson Inc. .... 0 1,555,000 1,555,000
0 10,000 10,000 Hilton Hotels Corp. ..... 0 940,000 940,000
0 24,000 24,000 McDonalds Corp. ......... 0 1,152,000 1,152,000
0 3,647,000 3,647,000
Retail - Speciality-3.9%
0 25,000 25,000 Autozone Inc.+........... 0 846,875 846,875
15,000 15,000 Barnes & Noble, Inc.+.... 0 521,250 521,250
0 23,000 23,000 Circuit City Stores, Inc. 0 687,125 687,125
70,000 30,000 100,000 Home Depot, Inc. ........ 3,351,250 1,436,250 4,787,500
0 21,756 21,756 Limited, Inc. ........... 0 413,364 413,364
282,000 30,000 312,000 Lowe's Companies Inc. ... 10,081,500 1,072,500 11,154,000
412,700 45,000 457,700 Office Depot Inc.+ ...... 8,099,237 883,125 8,982,362
390,050 0 390,050 OfficeMax, Inc.+ ........ 9,458,712 0 9,458,712
0 15,000 15,000 Penney (J. C.) Inc. ..... 0 746,250 746,250
0 25,000 25,000 Toys R Us, Inc. ......... 0 675,000 675,000
0 25,000 25,000 Wal-Mart Stores, Inc. ... 0 578,125 578,125
30,990,699 7,859,864 38,850,563
</TABLE>
<PAGE>
NATIONS FUND
Nations Capital Growth Fund
Peachtree Equity Fund
Combined Portfolio of Investments
March 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
Nations SECURITY Nations
Capital Growth Peachtree DESCRIPTIONS Capital Growth Peachtree
Fund Equity Fund Combined Fund Equity Fund Combined
<S> <C> <C> <C> <C> <C> <C>
Software & Services-7.9%
160,500 10,700 171,200 BMC Software, Inc. ...... $8,787,375 $585,825 $9,373,200
93,900 0 93,900 Broderbund Software Corp.+ 3,544,725 0 3,544,725
258,700 0 258,700 Ceridian Corp. +......... 11,124,100 0 11,124,100
0 20,000 20,000 Computer Association
International, Inc. 0 1,432,500 1,432,500
195,300 0 195,300 First Data Corp. ........ 13,768,650 0 13,768,650
152,600 0 152,600 Informix Corp.+.......... 4,024,825 0 4,024,825
150,400 18,000 168,400 Microsoft Corporation +.. 15,510,000 1,856,250 17,366,250
94,150 0 94,150 Oracle Systems Corporation+ 4,436,819 0 4,436,819
234,000 16,800 250,800 Parametric Technology Corp.+ 9,155,250 657,300 9,812,550
84,000 0 84,000 PeopleSoft, Inc. ........ 4,830,000 0 4,830,000
75,181,744 4,531,875 79,713,619
Telecommunication Systems &
Speciality Equipment-4.7%
201,500 0 201,500 Ericsson (L.M.) Telecommunications Company,
Class B, ADR ........ 4,307,062 0 4,307,062
470,100 13,200 483,300 Glenayre Technologies Inc.+ 17,981,325 504,900 18,486,225
120,900 0 120,900 Nokia Corporation, Class A, ADR 4,140,825 0 4,140,825
264,100 0 264,100 Paging Network Inc. +.... 6,602,500 0 6,602,500
143,500 0 143,500 QUALCOMM Inc. +.......... 5,955,250 0 5,955,250
199,100 0 199,100 360 (Degrees) Communications Co.+ 4,753,512 0 4,753,512
0 34,000 34,000 Telefonos De Mexico S.A.
de C.V., ADR 0 1,117,750 1,117,750
0 43,000 43,000 Worldcom, Inc. .......... 0 1,978,000 1,978,000
43,740,474 3,600,650 47,341,124
Telephone - Cable and Cellular-4.0%
238,700 0 238,700 AirTouch Communications + 7,429,537 0 7,429,537
346,200 0 346,200 Century Telephone Enterprises 10,991,850 0 10,991,850
507,200 0 507,200 Comcast Corporation, Class A 8,971,100 0 8,971,100
190,500 0 190,500 Frontier Corp. .......... 6,000,750 0 6,000,750
196,000 0 196,000 Vodafone Group, ADR ..... 7,350,000 0 7,350,000
40,743,237 0 40,743,237
Transportation-0.4%
0 70,000 70,000 Atlantic Southeast Airlines, Inc. 0 1,793,750 1,793,750
0 53,000 53,000 Southwest Airlines Co. .. 0 1,570,125 1,570,125
0 30,000 30,000 Swift Transportation, Inc. 0 532,500 532,500
0 3,896,375 3,896,375
TOTAL COMMON STOCK $852,447,756 $109,523,464 $961,971,220
</TABLE>
<PAGE>
NATIONS FUND
Nations Capital Growth Fund
Peachtree Equity Fund
Combined Portfolio of Investments
March 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
Nations SECURITY Nations
Capital Growth Peachtree DESCRIPTIONS Capital Growth Peachtree
Fund Equity Fund Combined Fund Equity Fund Combined
<S> <C> <C> <C> <C> <C> <C>
Principal Amount SHORT TERM INVESTMENTS-4.7%
Repurchase Agreement-4.7%
$47,084,000 $0 $47,084,000 Agreement with CS First Boston Corporation,
5.260% dated 03/29/96, to be repurchased
at $47,104,638 on 04/01/96, collateralized by:
$48,261,159 U.S. Treasury Bonds,
7.500% - 12.000% due
05/15/05-05/15/18 $47,084,000 $0 $47,084,000
TOTAL SHORT TERM INVESTMENTS $47,084,000 $0 $47,084,000
TOTAL INVESTMENTS (COST $818,176,007*) $899,531,756 $109,523,464 $1,009,055,200
</TABLE>
* Aggregate cost for Federal tax purposes.
+ Non-income producing security.
<PAGE>
NATIONS CAPITAL GROWTH FUND
Peachtree Equity Fund
Pro Forma Combining Statement of Assets and Liabilities
March 31, 1996
<TABLE>
<CAPTION>
Nations Capital Peachtree Adjustments to Pro Forma
Growth Fund Equity Fund Proforma Combined (Note 1)
<S> <C> <C> <C> <C>
ASSETS:
Investments at Value (cost $734,167,861,$84,008,146
and $818,176,007) $899,531,756 $109,523,464 - $1,009,055,220
Cash 254,944 - - 254,944
Dividend Receivable 650,620 185,136 - 835,756
Income Receivable 20,639 - - 20,639
Receivable for Investments Sold 5,950,341 5,331,872 - 11,282,213
Receivable for Fund Shares Sold 2,251,490 - - 2,251,490
Receivable due from Advisor - - 21,591 (a) 21,591
Unamortized organization costs 6,053 21,591 (21,591)(a) 6,053
Total Assets 908,665,843 115,062,063 0 1,023,727,906
LIABILITIES:
Payable for fund shares redeemed 5,450,616 5,463 - 5,456,079
Payable for Investments Purchased - 3,173,364 - 3,173,364
Accrued Expenses 903,354 126,089 - 1,029,443
Total Liabilities 6,353,970 3,304,916 0 9,658,886
Net Assets Applicable to Shares Outstanding $902,311,873 $111,757,147 $0 $1,014,069,020
Net Assets by Class:
Primary A $839,300,160 $111,757,147 - $951,057,307
Investor A $18,311,125 n/a - $18,311,125
Investor C $3,655,183 n/a - $3,655,183
Investor N $41,045,405 n/a - $41,045,405
Shares Outstanding by Class:
Primary A 62,500,885 8,632,609 (310,294)(b) 70,823,200
Investor A 1,365,645 n/a - 1,365,645
Investor C 275,575 n/a - 275,575
Investor N 3,084,488 n/a - 3,084,488
Primary A Shares:
Net Asset Value per Share $13.43 $12.95 $13.43
Investor A Shares:
Net Asset Value per Share $13.41 n/a $13.41
Investor C Shares:
Net Asset Value per Share $13.26 n/a $13.26
Investor N Shares:
Net Asset Value per Share $13.31 n/a $13.31
</TABLE>
See Notes to Proforma Financial Statements
(a) Unamortized Organization Costs of the acquired fund will be borne by
the Advisor.
(b) Adjustment to Peachtree Equity Fund shares outstanding to reflect issuance
of Nations Capital Growth Fund shares in exchange for Peachtree Fund assets.
<PAGE>
NATIONS CAPITAL GROWTH FUND
Peachtree Equity Fund
Pro Forma Statement of Operations (Unaudited)
For the Twelve Months Ended March 31, 1996
<TABLE>
<CAPTION>
Nations Capital Peachtree Adjustments to Pro Forma
Growth Fund Equity Fund Proforma Combined (Note 1)
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $2,853,756 $283,546 0 $3,137,302
Dividends 10,423,775 2,042,605 0 12,466,380
Total Investment Income 13,277,532 2,326,151 0 15,603,683
EXPENSES:
Investment Advisory 6,641,999 903,231 0 7,545,230
Administration 885,600 168,667 (64,000)(a) 990,267
Portfolio Accounting Fee - 49,996 (49,996)(a) 0
Transfer Agent 636,304 48,615 (14,000)(a) 670,919
Custodian 113,116 30,098 0 143,214
Legal and Audit Fees 184,015 19,611 (14,000)(a) 189,626
Trustees' Fees 22,873 3,245 (3,245)(a) 22,873
Amortization of organization costs 4,036 4,943 (4,943)(b) 4,035
Other expenses 190,785 44,343 (38,500)(a) 196,628
Subtotal 8,678,727 1,272,749 (188,684) 9,762,792
Shareholder servicing and distribution fees
Investor A 38,550 N/A 0 38,550
Investor C 27,931 N/A 0 27,931
Investor N 366,335 N/A 0 366,335
Fees waived and/or reimbursed by
investment advisor 0 (68,189) 68,189 0
Total Expenses 9,111,543 1,204,560 (120,495) 10,195,608
NET INVESTMENT INCOME 4,165,989 1,121,591 120,495 5,408,075
Net Realized and Unrealized Gain/(Loss)
on Investments:
Realized Gain/(Loss) on securities 130,147,698 5,395,670 0 135,543,368
Change in unrealized appreciation/
(depreciation) on securities 67,650,875 21,873,263 0 89,524,138
Net Realized and Unrealized gain/(loss)
on investments 197,798,573 27,268,933 0 225,067,506
Net Increase/(Decrease) in assets
resulting from operations $201,964,562 $28,390,524 $120,495 $230,475,581
</TABLE>
(a) Adjustment reflects expected savings when the two funds become one.
(b) Organization expense of the acquired fund is not an expense of the
combined fund.
<PAGE>
Nations Capital Growth Fund
Peachtree Equity Fund
Notes to Pro Forma Financial Statements (Unaudited)
1. Basis of Combination
Nations Fund Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. As of March 31, 1996 the Trust offers
thirty-one separate portfolios. The unaudited Pro Forma Combining
Portfolio of Investments and Statement of Assets and Liabilities and
the Statement of Operations reflect the accounts of the Nations
Capital Growth Fund and the Peachtree Equity Fund for the twelve month
period ending March 31, 1996. These statements have been derived from
books and records utilized in calculating daily net asset value at
March 31, 1996.
The pro forma statements give effect to the proposed transfer of the
assets and stated liabilities of the Peachtree Equity Fund in exchange
for shares of Nations Capital Growth Fund. Under generally accepted
accounting principles, the historical cost of investment securities
will be carried forward to the surviving entity and the results of
operations of the Peachtree Equity Fund for pre-combination periods
will not be restated. The pro forma statements do not reflect the
expenses of either fund in carrying out its obligations under the
proposed Agreement and Plan of Reorganization.
The Pro Forma Combining Portfolio of Investments and Statement of
Assets and Liabilities and the Statement of Operations should be read
in conjunction with the historical financial statements of the funds
incorporated by reference in the Statement of Additional Information.
<PAGE>
Nations Capital Growth Fund
Peachtree Equity Fund
Notes to Pro Forma Financial Statements (Unaudited)
For the twelve month period ended March 31, 1996, the Nations Capital
Growth Funds' investment advisory fee was computed based on the annual
rate of .75% of the average daily net assets. The administration fee
was computed based on the annual rate of .10% of average daily net
assets of the Trust and the investment portfolios of Nations Fund,
Inc. and Nations Fund Portfolios, Inc. (two other registered open-end
investment companies consisting of five and three portfolios,
respectively that are part of the Nations Fund Family) on a combined
basis.
The Trust has adopted a shareholder servicing and distribution plan
("Investor A Plan") pursuant to Rule 12b-1 under the 1940 Act for the
Investor A Shares of the Nations Capital Growth Fund. Under the
Investor A Plan, aggregate payments may not exceed 0.25% on an
annualized basis, of the average daily net assets of the Fund's
Investor A Shares.
The Trust also has adopted a distribution plan pursuant to Rule 12b-1
under the 1940 Act with respect to Investor C ("Investor C Plan") and
Investor N ("Investor N Plan") Shares of the Nations Capital Growth
Fund. Under the Investor C Plan and Investor N Plan, aggregate
payments may not exceed 0.75%, on an annualized basis, of the average
daily net assets of the Investor C or Investor N Shares, respectively,
of the Fund.
The Trust has also adopted a shareholder servicing plan with respect
to Investor C ("Investor C Servicing Plan") and Investor N ("Investor
N Servicing Plan") Shares of the Nations Capital Growth Fund. Under
the Investor C Servicing Plan and Investor N Servicing Plan, aggregate
payments may not exceed 0.25%, on an annualized basis, of the average
daily net assets of the Investor C or Investor N Shares of the Fund.
2
<PAGE>
Nations Capital Growth Fund
Peachtree Equity Fund
Notes to Pro Forma Financial Statements (Unaudited)
2. Portfolio Valuation
Securities of Nations Capital Growth Fund which are traded on a
recognized stock exchange are valued at the last sales price on the
securities exchange on which such securities are primarily traded at
the last sale price on the national securities market. Securities
traded only on over-the-counter markets are valued on the basis of the
closing over-the-counter bid prices or if no sale occurred on such day
at the mean of the current bid and ask prices. Certain securities may
be valued by one or more principal market makers. Restricted
securities, if any, and other assets for which market quotations are
not readily available are valued at fair value under the supervision
of the Board of Trustees. Short-term investments that mature in 60
days or less are valued at amortized cost. Peachtree Equity Fund uses
similar rules for determining portfolio valuation.
3. Capital Shares
The pro forma net asset value per share assumes the issuance of
additional shares of Nations Capital Growth Fund which would have been
issued at March 31, 1996 in connection with the proposed
reorganization. The pro forma number of shares outstanding of
75,548,908 consists of 8,322,315 shares assumed issued in the
reorganization plus 67,226,593 shares of Nations Capital Growth Fund
at March 31, 1996.
3
<PAGE>
NATIONS FUND
Nations Government Money Market Fund
Peachtree Government Money Market Fund
Combined Portfolio of Investments
March 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
Nations Peachtree SECURITY Nations Peachtree
Government Government DESCRIPTIONS Government Government
Money Market Money Market Money Market Money Market
Fund Fund Combined Fund Fund Combined
<S> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS-89.2%
Federal Farm Credit Bank-13.1%
$10,000,000 $0 $10,000,000 Discount note.........04/01/96 $10,000,000 $0 $10,000,000
8,900,000 0 8,900,000 Discount note.........04/08/96 8,891,232 0 8,891,232
8,000,000 0 8,000,000 Discount note.........04/09/96 7,990,631 0 7,990,631
10,000,000 0 10,000,000 Discount note.........04/15/96 9,979,855 0 9,979,855
10,000,000 0 10,000,000 Discount note.........04/18/96 9,974,878 0 9,974,878
5,000,000 0 5,000,000 Discount note.........05/30/96 4,954,849 0 4,954,849
10,000,000 0 10,000,000 Discount note.........08/05/96 9,828,850 0 9,828,850
3,735,000 0 3,735,000 Discount note.........08/14/96 3,666,229 0 3,666,229
8,000,000 0 8,000,000 Discount note.........08/15/96 7,854,329 0 7,854,329
73,140,853 0 73,140,853
Federal Farm Credit Bank
Floating Rate Notes-3.6%
15,000,000 0 15,000,000 5.290% +..............04/01/96 +++ 14,998,943 0 14,998,943
5,000,000 0 5,000,000 5.330% +..............04/01/96 +++ 5,000,190 0 5,000,190
19,999,133 0 19,999,133
Federal Farm Credit Bank Note-1.4%
8,000,000 0 8,000,000 5.750%................08/01/96 7,998,061 0 7,998,061
Federal Home Loan Bank-24.8%
9,000,000 0 9,000,000 Discount note.........04/01/96 9,000,000 0 9,000,000
5,000,000 0 5,000,000 Discount note.........04/02/96 4,999,288 0 4,999,288
3,200,000 0 3,200,000 Discount note.........04/03/96 3,199,063 0 3,199,063
1,900,000 0 1,900,000 Discount note.........04/08/96 1,898,020 0 1,898,020
16,000,000 0 16,000,000 Discount note.........04/22/96 15,951,933 0 15,951,933
5,000,000 0 5,000,000 Discount note.........04/29/96 4,978,767 0 4,978,767
10,000,000 0 10,000,000 Discount note.........05/03/96 9,951,111 0 9,951,111
5,000,000 0 5,000,000 Discount note.........05/06/96 4,975,792 0 4,975,792
6,595,000 0 6,595,000 Discount note.........05/09/96 6,559,218 0 6,559,218
5,000,000 0 5,000,000 Discount note.........05/22/96 4,962,671 0 4,962,671
5,000,000 0 5,000,000 Discount note.........05/28/96 4,959,704 0 4,959,704
10,000,000 0 10,000,000 Discount note.........06/07/96 9,908,992 0 9,908,992
10,000,000 0 10,000,000 Discount note.........06/10/96 9,905,111 0 9,905,111
5,000,000 0 5,000,000 Discount note.........05/14/96 4,948,405 0 4,948,405
10,000,000 0 10,000,000 Discount note.........06/19/96 9,890,278 0 9,890,278
10,000,000 0 10,000,000 Discount note.........06/20/96 9,892,222 0 9,892,222
8,000,000 0 8,000,000 Discount note.........06/27/96 7,906,813 0 7,906,813
5,000,000 0 5,000,000 Discount note.........07/09/96 4,934,000 0 4,934,000
10,000,000 0 10,000,000 Discount note.........07/16/96 9,858,667 0 9,858,667
138,680,055 0 138,680,055
</TABLE>
<PAGE>
NATIONS FUND
Nations Government Money Market Fund
Peachtree Government Money Market Fund
Combined Portfolio of Investments
March 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
Nations Peachtree SECURITY Nations Peachtree
Government Government DESCRIPTIONS Government Government
Money Market Money Market Money Market Money Market
Fund Fund Combined Fund Fund Combined
<S> <C> <C> <C> <C> <C> <C>
Federal Home Loan Bank
Floating Rate Notes-9.3%
$20,000,000 $0 $20,000,000 5.290% +..............04/01/96 +++ $19,998,623 $0 $19,998,623
25,000,000 0 25,000,000 5.330% +..............04/01/96 +++ 24,999,128 0 24,999,128
7,000,000 0 7,000,000 4.833% ++.............04/29/96 +++ 7,000,000 0 7,000,000
51,997,751 0 51,997,751
Federal Home Loan Bank Notes-14.8%
10,000,000 0 10,000,000 6.010%................05/15/96 9,999,219 0 9,999,219
10,000,000 0 10,000,000 5.705%................06/10/96 9,994,384 0 9,994,384
13,000,000 0 13,000,000 5.695%................06/26/96 13,018,068 0 13,018,068
5,000,000 0 5,000,000 4.860%................02/07/97 4,995,392 0 4,995,392
25,000,000 0 25,000,000 5.265%................03/13/97 25,000,000 0 25,000,000
7,000,000 0 7,000,000 5.392%................03/18/97 7,000,000 0
7,000,000
0 13,000,000 13,000,000 5.030%-5.150%.........04/01/96-05/29/96 0 12,959,480 12,959,480
70,007,063 12,959,480 82,966,543
Federal Home Loan Mortgage Corp.-5.3%
0 29,650,000 29,650,000 5.020%-5.280%.........04/11/96-06/03/96 0 29,543,992 29,543,992
Student Loan Marketing Association
Floating Rate Notes-11.6%
10,000,000 0 10,000,000 5.720% +..............04/02/96 +++ 10,000,000 0 10,000,000
25,000,000 0 25,000,000 5.290% +..............04/02/96 +++ 25,000,000 0 25,000,000
14,800,000 0 14,800,000 5.310% +..............04/02/96 +++ 14,800,000 0 14,800,000
15,000,000 0 15,000,000 5.420% +..............04/02/96 +++ 15,000,000 0 15,000,000
64,800,000 0 64,800,000
Tennessee Valley Authority-5.3%
5,000,000 0 5,000,000 Discount note ........04/03/96 4,998,539 0 4,998,539
8,000,000 10,000,000 18,000,000 Discount note ,
5.000%.............05/03/96 7,964,373 9,955,556 17,919,929
7,000,000 0 7,000,000 Discount note ........07/26/96 6,887,222 0 6,887,222
19,850,134 9,955,556 29,805,690
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS $446,473,050 $52,459,028 $498,932,078
U.S. TREASURY OBLIGATIONS-8.6%
U.S. Treasury Bills-2.6%
10,000,000 0 10,000,000 Discount note ........11/14/96 9,692,289 0 9,692,289
5,000,000 0 5,000,000 Discount note ........02/06/97 4,794,826 0 4,794,826
14,487,115 0 14,487,115
</TABLE>
<PAGE>
NATIONSFUND
Nations Government Money Market Fund
Peachtree Government Money Market Fund
Combined Portfolio of Investments
March 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
Nations Peachtree SECURITY Nations Peachtree
Government Government DESCRIPTIONS Government Government
Money Market Money Market Money Market Money Market
Fund Fund Combined Fund Fund Combined
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Notes-6.0%
$20,000,000 $13,000,000 $33,000,000 6.250%-8.000%.........04/30/96-02/28/97 $20,304,986 $13,046,897 $33,351,883
TOTAL U.S. TREASURY OBLIGATIONS $34,792,101 $13,046,897 $47,838,998
REPURCHASE AGREEMENT-2.3%
0 12,706,000 12,706,000 CS First Boston Corp., 5.230%, due 04/01/1996# 0 12,706,000 12,706,000
Shares MONEY MARKET FUND-0.0%
217,500 0 217,500 Dreyfus Treasury Prime Cash Management Fund 217,500 0 217,500
TOTAL INVESTMENTS (COST $559,694,576*) $481,482,651 $78,211,925 $559,694,576
</TABLE>
# The repurchase agreement is fully collateralized by U.S.
government and/or agency obligations based on market prices of
March 31, 1996.
* Aggregate cost for Federal tax purposes.
+ Variable rate security. The interest rate shown reflects the
rate in effect at March 31, 1996.
++ Variable rate security. The interest rate shown is tied to the
cost of Funds Index and resets on a delayed basis.
+++ Reset date. Interest rates reset either daily, weekly or
monthly.
<PAGE>
NATIONS GOVERNMENT MONEY MARKET FUND
Peachtree Government Money Market Fund
Pro Forma Combining Statement of Assets and Liabilities
March 31, 1996
<TABLE>
<CAPTION>
Nations Peachtree
Government Government Adjustments to Pro Forma
Money Market Fund Money Market Fund Proforma Combined (Note 1)
<S> <C> <C> <C> <C>
ASSETS:
Investments at Value (cost $481,482,651,
$78,211,925 and $559,694,576) $481,482,651 $78,211,925 - $559,694,576
Cash 118 901 - 1,019
Income Receivable 1,772,352 213,615 - 1,985,967
Dividend Receivable 9,453 - - 9,453
Receivable Due from Advisor - - 22,223 (a) 22,223
Receivable for Fund Shares Sold 203,425 - - 203,425
Prepaid Expenses 4,612 - - 4,612
Unamortized Amortization Costs - 22,223 (22,223) (a) -
Total Assets 483,472,611 78,448,664 0 561,921,275
LIABILITIES:
Income Distribution Payable 1,679,297 315,565 - 1,994,862
Payable for fund shares redeemed 167,462 - - 167,462
Accrued Expenses 181,629 35,002 - 216,631
Total Liabilities 2,028,388 350,567 0 2,378,955
Net Assets Applicable to Shares Outstanding $481,444,223 $78,098,097 $0 $559,542,320
Net Assets by Class:
Primary A $336,771,168 $78,098,097 - $414,869,265
Primary B $31,580,841 n/a - $31,580,841
Investor A $48,742,499 n/a - $48,742,499
Investor B $62,617,025 n/a - $62,617,025
Investor C $1,730,573 n/a - $1,730,573
Investor D $2,117 n/a - $2,117
Shares Outstanding by Class:
Primary A 336,805,970 78,098,097 - 414,904,067
Primary B 31,584,104 n/a - 31,584,104
Investor A 48,747,536 n/a - 48,747,536
Investor B 62,623,496 n/a - 62,623,496
Investor C 1,730,751 n/a - 1,730,751
Investor D 2,117 n/a - 2,117
Primary A Shares:
Net Asset Value per Share $1.00 $1.00 $1.00
Primary B Shares:
Net Assets Value per Share $1.00 n/a $1.00
Investor A Shares:
Net Asset Value per Share $1.00 n/a $1.00
Investor B Shares:
Net Asset Value per Share $1.00 n/a $1.00
Investor C Shares:
Net Asset Value per Share $1.00 n/a $1.00
Investor D Shares:
Net Asset Value per Share $1.00 n/a $1.00
</TABLE>
See Notes to Proforma Financial Statements
(a) Unamortized Organization Costs of the acquired fund will be borne by
the Advisor.
<PAGE>
NATIONS GOVERNMENT MONEY MARKET FUND
Peachtree Government Money Market Fund
Pro Forma Statement of Operations (Unaudited)
For the Twelve Months Ended March 31, 1996
<TABLE>
<CAPTION>
Nations Peachtree
Government Government Adjustments to Pro Forma
Money Market Fund Money Market Fund Proforma Combined (Note 1)
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $28,307,769 $3,841,234 - $32,149,003
Total Investment Income 28,307,769 3,841,234 0 32,149,003
EXPENSES:
Investment Advisory 1,960,619 334,344 (66,869) (a) 2,228,094
Administration 489,959 97,891 (40,000) (a) 547,850
Portfolio Accounting Fee - 35,912 (35,912) (a) 0
Transfer Agent 133,697 27,392 - 161,089
Custodian 76,541 8,899 - 85,440
Legal and Audit Fees 95,835 13,706 (8,500) (a) 101,041
Trustees' Fees 12,570 2,074 (2,074) (a) 12,570
Amortization of organization costs - 4,543 (4,543) (b) -
Other expenses 111,314 36,966 (29,000) (a) 119,280
Subtotal 2,880,534 561,727 (186,898) 3,255,363
Shareholder servicing and distribution fees
Primary B 129,302 N/A N/A 129,302
Investor A 95,143 N/A N/A 95,143
Investor B 87,781 N/A N/A 87,781
Investor C 3,758 N/A N/A 3,758
Investor D 6 N/A N/A 6
Fees waived and/or reimbursed by
investment advisor (1,405,655) (200,607) 8,842 (1,597,420)
Total Expenses 1,790,869 361,120 (178,056) 1,973,933
NET INVESTMENT INCOME 26,516,900 3,480,114 178,056 30,175,070
Realized Gain/(Loss) on securities (101,078) - - (101,078)
Net Increase/(Decrease) in assets
resulting from operations $26,415,822 $3,480,114 $178,056 $30,073,992
</TABLE>
(a) Adjustment reflects expected savings when the two funds become one.
(b) Organization expense of the acquired fund is not an expense of the
combined fund.
<PAGE>
Nations Government Money Market
Fund
Peachtree Government Money Market Fund
Notes to Pro Forma Financial Statements (Unaudited)
1. Basis of Combination
Nations Fund Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. As of March 31, 1996, the Trust offers
thirty-one separate portfolios. The unaudited Pro Forma Combining
Portfolio of Investments and Statement of Assets and Liabilities and
the Statement of Operations reflect the accounts of the Nations
Government Money Market Fund and the Peachtree Government Money Market
Fund for the twelve month period ending March 31, 1996. These
statements have been derived from books and records utilized in
calculating daily net asset value at March 31, 1996.
The pro forma statements give effect to the proposed transfer of the
assets and stated liabilities of the Peachtree Government Money Market
Fund in exchange for shares of Nations Government Money Market Fund.
Under generally accepted accounting principles, the historical cost of
investment securities will be carried forward to the surviving entity
and the results of operations of the Peachtree Government Money Market
Fund for pre-combination periods will not be restated. The pro forma
statements do not reflect the expenses of either fund in carrying out
its obligations under the proposed Agreement and Plan of
Reorganization.
<PAGE>
Nations Government Money Market
Fund
Peachtree Government Money Market Fund
Notes to Pro Forma Financial Statements (Unaudited)
The Pro Forma Combining Portfolio of Investments and Statement of
Assets and Liabilities and the Statement of Operations should be read
in conjunction with the historical financial statements of the funds
incorporated by reference in the Statement of Additional Information.
For the twelve month period ended March 31, 1996, the Nations Government
Money Market Fund's investment advisory fee was computed based on the
annual rate of .40% of the average daily net assets. The administration
fee was computed based on the annual rate of .10% of average daily net
assets of the Trust and the investment portfolios of Nations Fund, Inc.
and Nations Fund Portfolios, Inc. (two other registered open-end
investment companies consisting of five and three portfolios,
respectively that are part of the Nations Fund Family) on a combined
basis.
The Trust has adopted a shareholder servicing plan for the Primary B
Shares of the Funds. Payments under the Primary B Servicing Plan are
accrued daily and paid monthly at a rate that will not exceed .25% on an
annualized basis, of the average daily net assets of the Primary B
Shares of the funds.
The Trust has adopted a distribution plan ("Investor A Plan"and the
"Investor B Plan") pursuant to Rule 12b-1 under the 1940 Act for the
Investor A Shares and the Investor B Shares and a shareholder servicing
plan ("Investor A Servicing Plan" and the "Investor B Servicing Plan")
of the Nations Government Money Market Fund. Under the Investor A Plan
and the Investor B Plan, aggregate payments may not exceed 0.10% on an
annualized basis, of the average daily net assets of the Fund's Investor
A and Investor B shares, respectively. Under the Investor A Servicing
Plan and Investor B Servicing Plan, aggregate payments may not exceed
0.25% on an annualized basis, of the average daily net assets of the
Fund's Investor A Shares and Investor B Shares, respectively.
2
<PAGE>
Nations Government Money Market
Fund
Peachtree Government Money Market Fund
Notes to Pro Forma Financial Statements (Unaudited)
The Trust also has adopted a shareholder servicing plan with respect to
Investor C ("Investor C Servicing Plan") and Investor D ("Investor D
Servicing Plan") Shares of the Nations Government Money Market Fund.
Under the Investor C Servicing Plan and Investor D Servicing Plan,
aggregate payments may not exceed 0.25%, on an annualized basis, of the
average daily net assets of the Investor C or Investor D Shares,
respectively.
The Trust has adopted a distribution plan with respect to Investor D
("Investor D Plan") of the Nations Government Money Market Fund. Under
the Investor D Distribution Plan, aggregate payments may not exceed
0.25%, on an annualized basis, of the average daily net assets of the
Investor D Shares.
2. Portfolio Valuation
Securities of both Nations Government Money Market Fund and Peachtree
Government Money Market Fund are valued on the basis of amortized cost,
which approximates market value. Amortized cost valuation involves
valuing an instrument at its cost initially and thereafter assuming a
constant amortization to maturity of any discount or premium, as long as
the effect of fluctuating interest rates on the market value of the
instrument is not significant.
3. Capital Shares
The pro forma net asset value per share assumes the issuance of
additional shares of Nations Government Money Market Fund which would
have been issued at March 31, 1996 in connection with the proposed
reorganization. The pro forma number of shares outstanding of
559,592,071 consists of 78,098,097 of additional shares assumed issued
in the reorganization plus 481,493,974 shares of Nations Government
Money Market Fund at March 31, 1996.
3
<PAGE>
