THE FOLLOWING ITEMS ARE HEREBY INCORPORATED BY REFERENCE:
NATIONS FUND TRUST ("NATIONS")
From Post-Effective Amendment No. 44 of the Nations Registration Statement,
filed July 25, 1996 (SEC File Nos. 2-97817; 811-4305):
Prospectuses for the Investor A, Investor N and Primary A Shares of the
Nations Strategic Growth Fund, Nations Disciplined Equity Fund, Nations
Value Fund, Nations Intermediate Municipal Bond Fund, Nations
Short-Intermediate Government Fund and Nations Municipal Income Fund,
dated July 31, 1996.
Prospectuses for the Daily, Investor B and Primary A Shares of the
Nations Tax Exempt Fund, dated July 31, 1996.
Statement of Additional Information for the Investor A, Investor N and
Primary A Shares of the Nations Strategic Growth Fund, Nations
Disciplined Equity Fund, Nations Value Fund, Nations Intermediate
Municipal Bond Fund, Nations Short-Intermediate Government Fund and
Nations Municipal Income Fund, dated July 31, 1996.
Statement of Additional Information for the Daily, Investor B and
Primary A Shares of the Nations Tax Exempt Fund, dated July 31, 1996.
The audited financial statements and related independent auditors' reports for
the Nations Strategic Growth Fund, Nations Disciplined Equity Fund, Nations
Value Fund, Nations Intermediate Municipal Bond Fund, Nations Short-Intermediate
Government Fund, Nations Tax Exempt Fund and Nations Municipal Income Fund,
contained in the Annual Report for the fiscal year ended March 31, 1996.
The unaudited financial statements and related independent auditors' reports for
the Nations Strategic Growth Fund, Nations Disciplined Equity Fund, Nations
Value Fund, Nations Intermediate Municipal Bond Fund, Nations Short-Intermediate
Government Fund, Nations Tax Exempt Fund and Nations Municipal Income Fund,
contained in the Semi-Annual Report for the six-month period ended September 30,
1996.
THE PILOT FUNDS ("PILOT")
From Post-Effective Amendment No. 33 of the Pilot Registration Statement, filed
November 12, 1996 (SEC File Nos. 2-78440; 811-3517):
Prospectuses for the Class A, Class B and Pilot Shares of the Pilot
Diversified Bond Income Fund, Pilot Growth Fund, Pilot Growth and
Income Fund, Pilot Intermediate Municipal Bond Fund, Pilot Intermediate
U.S. Government Securities Fund and Pilot Municipal Bond Fund, dated
January 2, 1997.
<PAGE>
Prospectuses for the Administration, Investor and Pilot Shares of the
Pilot Short-Term Tax-Exempt Diversified Fund and Pilot Missouri
Short-Term Tax-Exempt Fund, dated January 2, 1997.
Statement of Additional Information for the Class A, Class B and Pilot
Shares of the Pilot Diversified Bond Income Fund, Pilot Growth Fund,
Pilot Growth and Income Fund, Pilot Intermediate Municipal Bond Fund,
Pilot Intermediate U.S. Government Securities Fund and Pilot Municipal
Bond Fund, dated January 2, 1997.
Statement of Additional Information for the Administration, Investor
and Pilot Shares of the Pilot Short-Term Tax-Exempt Diversified Fund
and Pilot Missouri Short-Term Tax-Exempt Fund, dated January 2, 1997.
The audited financial statements and related independent auditors' reports for
the Pilot Diversified Bond Income Fund, Pilot Growth Fund, Pilot Growth and
Income Fund, Pilot Intermediate Municipal Bond Fund, Pilot Intermediate U.S.
Government Securities Fund, Pilot Municipal Bond Fund, Pilot Short-Term
Tax-Exempt Diversified Fund and Pilot Missouri Short-Term Tax-Exempt Fund,
contained in the Annual Report for the fiscal year ended August 31, 1996.
<PAGE>
THE PILOT FUNDS
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT GROWTH AND INCOME FUND
PILOT GROWTH FUND
PILOT DIVERSIFIED BOND INCOME FUND
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
PILOT MUNICIPAL BOND FUND
3435 Stelzer Road
Columbus, Ohio 43219
March 22, 1997
Dear Shareholder:
On behalf of the Board of Trustees of The Pilot Funds ("Pilot"), we are
pleased to invite you to a special meeting of the shareholders of the Pilot
funds named above (each a "Pilot Fund" and together, the "Pilot Funds") to be
held on April 28, 1997 at 10:00 a.m., Eastern time, at the offices of BISYS Fund
Services, Inc., 3435 Stelzer Road, Columbus, Ohio (the "Meeting"). At the
Meeting, shareholders of each Pilot Fund will be asked to consider a proposed
reorganization of their Pilot Fund into a corresponding portfolio of Nations
Fund Trust (each a "Nations Fund" and together the "Nations Funds").
BACKGROUND. As you may recall, Boatmen's Bancshares, Inc.
("Bancshares") recently merged into NationsBank Corporation. Prior to the
merger, Bancshares was the parent of Boatmen's Trust Company ("Boatmen's"),
investment adviser to the Pilot Funds. At Special Meetings of Pilot Fund
shareholders on December 18 and 20, 1996, you approved new investment advisory
arrangements with Boatmen's in anticipation of the Bancshares- NationsBank
Corporation merger.
At the upcoming Meeting, management is asking you to approve a
reorganization of your Pilot Fund into a corresponding Nations Fund. The Nations
Funds are an open-end investment company advised by NationsBanc Advisors, Inc.,
a subsidiary of NationsBank, N.A. If all approvals are obtained, the Pilot Funds
would be reorganized into the corresponding Nations Funds on or about May 16,
1997, when your Pilot Fund shares would be exchanged for shares of the
corresponding Nations Fund of equal value.
PILOT'S BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO
APPROVE THE PROPOSED REORGANIZATION.
<PAGE>
PLEASE NOTE THAT PILOT SHAREHOLDERS WHO HOLD SHARES OF PILOT FUNDS
OTHER THAN THOSE LISTED ABOVE WILL RECEIVE PROXY MATERIALS UNDER SEPARATE COVER
WITH RESPECT TO PROPOSALS AFFECTING THOSE FUNDS. SHAREHOLDERS SHOULD FILL OUT
THE PROXY CARD(S) FOR EACH OF THOSE PILOT FUNDS IN WHICH THEY HOLD SHARES IN
ORDER TO VOTE THOSE SHARES.
In considering these matters, you should note:
o SIMILAR OBJECTIVES AND POLICIES
The Pilot Funds are proposed to be reorganized into operating
Nations Funds with investment policies and objectives that are
substantially similar, and in some cases identical, to those of
the corresponding Pilot Funds.
o SIMILAR ACCESS ARRANGEMENTS
Following the reorganization, you will enjoy access to the Nations
Funds through distribution, transaction and shareholder servicing
arrangements that are substantially similar to the Pilot Funds'
current arrangements.
o SAME VALUE OF SHARES
The total dollar value of the Nations Fund shares you receive in
the reorganization will be the same as the total dollar value of
the Pilot Fund shares that you held immediately before the
Reorganization. The reorganization will be tax free, and no
front-end or contingent deferred sales loads will be charged in
connection with the exchange of Pilot Fund shares for Nations Fund
shares.
o OPERATING EXPENSE RATIOS
The annual fund operating expense ratio (after waivers) for the
corresponding Nations Fund classes after the reorganization is
expected to be no higher than the annual fund operating expense
ratio of your Pilot Fund class, except for Pilot Shares of the
Pilot Diversified Bond Income Fund, Class A and Pilot Shares of
the Pilot Growth and Income Fund and Pilot Shares of the Pilot
Intermediate U.S. Government Securities Fund.
The proposed reorganization is expected to benefit Pilot Fund
shareholders by:
o offering actual or potential reductions in total operating expense
ratios;
o offering shareholders the opportunity to join, and exchange their
shares within, a larger and more diverse family of more than 50
funds;
o offering access to a broader array of investment products, such as
a new line of funds-of-funds, and investment services, such as a
mutual fund asset allocation program, a mutual fund marketplace
and cash sweep programs; and
o providing opportunities for enhanced returns through combined
investment portfolios.
2
<PAGE>
The formal Notice of Special Meeting, a Combined Proxy
Statement/Prospectus and a Proxy Ballot are enclosed. If you own shares in more
than one of the Pilot Funds that is named above, more than one Proxy Ballot
accompanies these materials. If you own shares in one or more of the Pilot funds
that is not named above, you will be receiving separately a set of proxy
materials (including Proxy Ballot(s)) for the other fund(s).
Whether or not you plan to attend the Meeting, you may vote by proxy in
any of the following ways:
1. Mark, sign, date and return the enclosed Proxy Ballot in the
enclosed postage-paid envelop; or
2. Mark, sign, date and fax the enclosed Proxy Ballot to ADP Proxy
Services at (314) 466-7765.
Please return your Proxy Ballot or fax us so that your vote will be
counted.
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES
THAT YOU OWN. PLEASE VOTE BY RETURNING YOUR PROXY BALLOT TODAY, EITHER IN THE
ENCLOSED POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE AT (314) 466-7765.
The proposed reorganization and the reasons for the Pilot Board's
unanimous recommendation are discussed in detail in the enclosed materials,
which you should read carefully. If you have any questions about the
reorganization, please do not hesitate to call Pilot Funds toll free at
1-800-71-PILOT.
We look forward to seeing you at the Meeting or receiving your proxy so
that your shares may be voted at the Meeting.
Sincerely,
William J. Tomko
President
The Pilot Funds
3
<PAGE>
THE PILOT FUNDS
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT GROWTH AND INCOME FUND
PILOT GROWTH FUND
PILOT DIVERSIFIED BOND INCOME FUND
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
PILOT MUNICIPAL BOND FUND
3435 Stelzer Road
Columbus, Ohio 43219
NOTICE OF SPECIAL SHAREHOLDERS MEETING
TO BE HELD ON APRIL 28, 1997
To Pilot Fund Shareholders:
NOTICE IS GIVEN THAT a special meeting of the shareholders (the
"Meeting") of the Pilot Short-Term Tax-Exempt Diversified Fund, Pilot Missouri
Short-Term Tax-Exempt Fund, Pilot Growth and Income Fund, Pilot Growth Fund,
Pilot Diversified Bond Income Fund, Pilot Intermediate U.S. Government
Securities Fund, Pilot Intermediate Municipal Bond Fund, and Pilot Municipal
Bond Fund (each a "Pilot Fund" and together, the "Pilot Funds"), each of which
is a series of The Pilot Funds ("Pilot"), will be held at the offices of BISYS
Fund Services, Inc., 3435 Stelzer Road, Columbus, Ohio, on April 28, 1997 at
10:00 a.m., Eastern time, for purpose of considering and voting upon:
ITEM 1. A proposal to approve an Agreement and Plan of Reorganization
providing for the transfer of the assets and stated liabilities of each
Pilot Fund to a corresponding fund of Nations Fund, Inc. in exchange
for shares of designated classes of the corresponding Nations Fund.
ITEM 2. Such other business as may properly come before the Meeting or
any adjournment(s).
Item 1 is described in the attached Combined Proxy
Statement/Prospectus. YOUR TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR
OF THE PROPOSAL.
Shareholders of record as of the close of business on March 13, 1997
are entitled to notice of, and to vote at, the Meeting or any adjournment(s)
thereof.
4
<PAGE>
SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE EACH ACCOMPANYING PROXY CARD, WHICH IS BEING SOLICITED BY
THE PILOT BOARD OF TRUSTEES. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE
MEETING. SHAREHOLDERS ALSO MAY RETURN PROXIES BY TELEFAX. PROXIES MAY BE REVOKED
AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO PILOT A WRITTEN NOTICE OF
REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE MEETING AND
VOTING IN PERSON.
By Order of the Trustees,
George O. Martinez,
Secretary
5
<PAGE>
COMBINED PROXY STATEMENT/PROSPECTUS
DATED MARCH 22, 1997
THE PILOT FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219-3035
1-800-717-4568
NATIONS FUND TRUST
ONE NATIONSBANK PLAZA, 33RD FLOOR
CHARLOTTE, NORTH CAROLINA 28255
1-800-321-7854
This Combined Proxy Statement/Prospectus is furnished to shareholders of
the Pilot Diversified Bond Income Fund, Pilot Growth Fund, Pilot Growth and
Income Fund, Pilot Intermediate Municipal Bond Fund, Pilot Intermediate U.S.
Government Securities Fund, Pilot Municipal Bond Fund, Pilot Missouri Short-Term
Tax-Exempt Fund and Pilot Short-Term Tax-Exempt Diversified Fund (each a "Pilot
Fund" and collectively the "Pilot Funds") in connection with the solicitation of
proxies by the management of The Pilot Funds ("Pilot"). The Board of Trustees
has called a Special Meeting of Shareholders (the "Meeting") at 10:00 a.m.
(Eastern time) on April 28, 1997 at the offices of BISYS Fund Services, Inc.,
3435 Stelzer Road, Columbus, Ohio. At the Meeting, shareholders will be asked to
approve a proposed Agreement and Plan of Reorganization dated as of March 22,
1997 (the "Agreement") by and between Pilot and Nations Fund Trust ("Nations").
A copy of a form of the Agreement is attached as Appendix I.
Pilot and Nations are both registered open-end management investment
companies (mutual funds) that offer money market, tax-exempt, bond and equity
investment portfolios. The Agreement provides for the transfer of assets and
stated liabilities of each Pilot Fund to a corresponding investment portfolio of
Nations (each a "Nations Fund" and collectively the "Nations Funds") in exchange
for shares ("Shares") of comparable classes of the Nations Fund having equal
value (the "Reorganization"). As a result of the Reorganization, shareholders of
the Pilot Funds will become shareholders of the Nations Funds. Table I, under
"Information Relating to the Proposed Reorganization--Description of the
Agreement," shows each class of each Pilot Fund and the corresponding class of
each corresponding Nations Fund.
This Combined Proxy Statement/Prospectus sets forth concisely the
information that a Pilot shareholder should know before voting, and should be
retained for future reference. This Combined Proxy Statement/Prospectus is
accompanied by the following documents: (i) the Annual Report(s) for the Nations
Funds dated March 31, 1996, (ii) the Semi-Annual Report(s) for the Nations Funds
dated September 30, 1996 and (iii) the current prospectus(es) for the Nations
Funds, dated July 31, 1996. Additional information is set forth in the statement
of additional information relating to this Combined Proxy Statement/Prospectus,
dated the date hereof, which is incorporated herein by reference,
1
<PAGE>
and in the prospectuses dated January 2, 1997 for the Pilot Funds. Each of these
documents is on file with the Securities and Exchange Commission (the "SEC"),
and is available without charge by calling or writing Pilot or Nations at the
respective telephone numbers or addresses stated on the cover sheet of this
Combined Proxy Statement/Prospectus. The information contained in the Nations
Fund prospectuses and the prospectuses for the Pilot Funds is incorporated by
reference into this Combined Proxy Statement/Prospectus.
The following summarizes the proposal to be voted on by shareholders of
each Pilot Fund at the Meeting:
<TABLE>
<CAPTION>
PROPOSAL SHAREHOLDERS SOLICITED
<S> <C>
1. To approve an Agreement and Plan of Each Pilot Fund voting separately on a
Reorganization providing for the transfer of portfolio-by-portfolio basis.
the assets and liabilities of the Pilot Funds to
corresponding Nations Funds in exchange
for Shares of comparable classes of the
corresponding Nations Funds.
</TABLE>
This Combined Proxy Statement/Prospectus is Pilot's proxy statement for the
Meeting, and Nations' prospectus for the Shares of the Nations Funds.
This Combined Proxy Statement/Prospectus is expected to be first sent to
shareholders on or about March 22, 1997.
THE SECURITIES OF THE NATIONS FUNDS OFFERED HEREBY HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS COMBINED
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROXY
STATEMENT/PROSPECTUS AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY
REFERENCE AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PILOT, NATIONS OR THEIR
RESPECTIVE SPONSORS AND DISTRIBUTORS.
EACH MONEY MARKET FUND SEEKS TO MAINTAIN A NET ASSET VALUE OF $1.00 PER
SHARE. AN INVESTMENT IN A NATIONS MONEY MARKET
2
<PAGE>
FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO
ASSURANCE THAT A NATIONS MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
SHARES OF PILOT AND NATIONS ARE NOT DEPOSITS OR OBLIGATIONS OF OR
GUARANTEED OR ENDORSED BY, NATIONSBANK, N.A. OR ANY OF ITS AFFILIATES OR ANY
OTHER BANK. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. THE DISTRIBUTOR OF THE PILOT FUNDS IS PILOT FUNDS
DISTRIBUTORS, INC. AND THE SPONSOR IS BISYS FUND SERVICES LIMITED PARTNERSHIP.
THE DISTRIBUTOR AND SPONSOR OF THE NATIONS FUNDS IS STEPHENS INC.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
FEE TABLES...............................................................................................6
SUMMARY .................................................................................................6
Proposed Reorganization.............................................................................6
Principal Risk Factors..............................................................................8
Voting Information..................................................................................9
INFORMATION RELATING TO THE PROPOSED REORGANIZATION......................................................9
Description of the Agreement........................................................................9
Table I........................................................................................10
Pilot Board Consideration..........................................................................12
Capitalization.....................................................................................14
Table II -- Pro Forma Capitalization (as of December 31, 1996)................................15
Federal Income Tax Consequences....................................................................23
COMPARISON OF PILOT AND NATIONS.........................................................................24
Investment Objectives and Policies.................................................................24
Investment Adviser and Other Service Providers.....................................................24
Table III -- Total Expense Information.........................................................25
Other Service Providers for the Pilot Funds and Nations Funds..................................29
Share Structure....................................................................................30
Distribution Plans, Administration Plans and Shareholder
Servicing Arrangements.........................................................................31
Shareholder Transactions and Services..............................................................33
INFORMATION RELATING TO VOTING MATTERS..................................................................33
General Information................................................................................33
Shareholder and Board Approvals....................................................................35
Table IV(A)....................................................................................36
Table IV(B)....................................................................................40
Quorum.............................................................................................43
Annual Meeting and Shareholder Meetings............................................................46
ADDITIONAL INFORMATION ABOUT NATIONS....................................................................44
Pending Legal Proceedings..........................................................................46
ADDITIONAL INFORMATION ABOUT PILOT......................................................................45
FINANCIAL STATEMENTS....................................................................................45
OTHER BUSINESS..........................................................................................46
SHAREHOLDER INQUIRIES.....................................................................................
4
<PAGE>
APPENDICES I Agreement And Plan Of Reorganization
II Expense Summaries Of Pilot Funds And The Corresponding Nations Funds
III Investment Objectives, Limitations And Certain Significant Investment
Policies Of The Nations Funds And The Corresponding Pilot Funds
IV Shareholder Transactions And Services Of The Nations Funds And The
Corresponding Pilot Funds
</TABLE>
5
<PAGE>
FEE TABLES
Pro Forma Expense Information for each proposed reorganization is included
in Appendix II to this Combined Proxy Statement/Prospectus.
SUMMARY
PROPOSED REORGANIZATION. The Agreement provides for: (i) the transfer of
all of the assets and stated liabilities of each Pilot Fund to a corresponding
Nations Fund in exchange for Shares of comparable classes of the corresponding
Nations Fund; and (ii) the distribution of Nations Fund Shares to the
shareholders of the Pilot Funds in liquidation of the Pilot Funds. The
Reorganization is subject to a number of conditions with respect to each Pilot
Fund, including shareholder approval. Following the Reorganization, Pilot will
wind up its affairs and deregister as an investment company under the Investment
Company Act of 1940 (the "1940 Act").
As a result of the proposed Reorganization, a Pilot Fund shareholder will
become a shareholder of its corresponding Nations Fund and will hold,
immediately after the closing(s) of the Reorganization (the "Closing(s)"),
Shares of the comparable class of the corresponding Nations Fund having a total
dollar value equal to the total dollar value of the Shares of the Pilot Fund
that the shareholder held immediately before the Closing(s).
OVERVIEW OF PILOT AND NATIONS. The investment objectives, policies and
restrictions of the Pilot Funds are, in general, substantially similar to those
of their corresponding Nations Fund. There are, however, differences. For
example, the Missouri Short-Term Tax-Exempt Fund invests primarily in Missouri
municipal obligations that provide tax exempt income, while the corresponding
Nations Tax Exempt Fund invests primarily in general municipal obligations that
provide tax exempt income. As well, the average weighted maturity of the Pilot
Intermediate U.S. Government Securities Fund is between three and ten years,
while the average weighted maturity of the corresponding Nations
Short-Intermediate Government Fund is between three and five years and the
duration will not exceed five years. For additional information, see "Comparison
of Pilot and Nations--Investment Objectives and Policies" and Appendix III to
this Combined Proxy Statement/Prospectus.
NationsBanc Advisors, Inc. ("NBAI") currently serves as the investment
adviser to the Nations Funds. TradeStreet Investment Associates, Inc.
("TradeStreet") currently serves as investment sub-adviser to the Nations Funds.
Boatmen's Trust Company ("Boatmen's") currently serves as investment adviser to
the Pilot Funds. As used herein, the "Adviser" means NBAI, TradeStreet or
Boatmen's, as the context may require. See "Comparison of Pilot and
Nations--Investment Adviser and Other Service Providers."
6
<PAGE>
Table III, under "Comparison of Pilot and Nations--Investment Adviser and
Other Service Providers," shows the current (after waivers or reimbursements)
total operating expenses for each class of Pilot Fund along with the total
operating expenses (after waivers or reimbursements) that could be expected for
each class of Pilot Fund after the Reorganization. NBAI has committed to
maintain current (after waiver) expense ratios for all Nations Fund classes for
a period of at least two years after the Closing, absent extraordinary
circumstances or a reduction in fund assets that impacts fee levels (the
"Expense Commitment"). NBAI believes that the achievement of the PRO FORMA
expense levels is likely and that shareholders may, therefore, enjoy even lower
expense ratios than the levels to which the Adviser has committed.
Appendix II to this Combined Proxy Statement/Prospectus provides additional
information about the fees and expenses for each of the Nations Funds and
corresponding Pilot Funds. The Pilot Funds have a different administrator,
distributor, transfer agent, independent auditor and different
trustees/directors. See "Comparison of Pilot and Nations--Investment Adviser and
Other Service Providers."
Nations Strategic Fixed Income Fund, Nations Disciplined Equity Fund,
Nations Value Fund, Nations Intermediate Municipal Bond Fund, Nations
Short-Intermediate Government Fund and Nations Municipal Income Fund will each
issue three classes of Shares in the Reorganization: Investor A Shares, Investor
N Shares and Primary A Shares. In addition, Nations Tax Exempt Fund will each
issue three classes of Shares in the Reorganization: Daily Shares, Investor B
Shares and Primary A Shares. See "Comparison of Pilot and Nations--Share
Structure."
With certain exceptions, the purchase, redemption, dividend and other
policies and procedures of the Pilot Funds and the Nations Funds are generally
similar. Among the exceptions is that only the Pilot Shares issued by the Pilot
money market funds and the Investor B Shares of the Nations money market funds
offer checkwriting redemption privileges. See "Comparison of Pilot and
Nations-Shareholder Transactions and Services" and Appendix IV to this Combined
Proxy Statement/Prospectus.
The Nations Funds are sold at net asset value, with no front-end or
contingent deferred sales load, whereas the Pilot Funds charge a front-end sales
charge on their Class A Shares and a contingent deferred sales charge on their
Class B Shares. ALTHOUGH, NO FRONT-END OR CONTINGENT DEFERRED SALES CHARGE WILL
BE IMPOSED ON ANY OF THE SHAREHOLDERS IN CONNECTION WITH THE REORGANIZATION,
FORMER CLASS B SHAREHOLDERS WILL REMAIN SUBJECT TO THE CONTINGENT DEFERRED SALES
CHARGE STRUCTURE IN PLACE FOR PILOT CLASS B SHARES.
FEDERAL INCOME TAX CONSEQUENCES. Morrison & Foerster LLP, legal counsel to
Nations, will issue an opinion as of the Closing to the effect that, based on
certain assumptions, the Reorganization will not give rise to the recognition of
gain or loss for federal income tax purposes to the Pilot Funds, the Nations
Funds or their respective shareholders.
7
<PAGE>
The Agreement contemplates that, upon notice from Nations, ten days prior
to the Closing Date, a Pilot Fund must immediately sell prior to the Closing
Date, to the extent permissible and consistent with that Pilot Fund's own
investment objective and policies, any portfolio security identified by Nations
as impermissible under the investment objectives and limitations of the Nations
Fund into which the Pilot Fund is to be reorganized. Such a sale could result in
taxable capital gains for a Pilot Fund and its shareholders. The amount of such
taxable capital gains, if any, is expected to be minimal. See generally Appendix
I to this Combined Proxy Statement/Prospectus.
PILOT AND NATIONS BOARD CONSIDERATION. In considering the Agreement, the
Boards of Pilot and Nations, including the disinterested Directors and Trustees
thereof, were advised by their respective legal counsel, as well as by separate
legal counsel to the disinterested Directors and Trustees, as to their fiduciary
duties under the 1940 Act and the required determinations that each Board should
make under the 1940 Act in connection with the Reorganization. After considering
the relevant factors, as discussed in greater detail below under "Information
Relating to the Proposed Reorganization--Pilot Board Consideration," the Pilot
Board found, on behalf of the Pilot Funds, that participation in the
Reorganization, as contemplated by the Agreement, is in the best interests of
the Pilot Funds and that the interests of the shareholders of the Pilot Funds
would not be diluted as a result of the Reorganization. PILOT'S BOARD OF
TRUSTEES UNANIMOUSLY RECOMMENDS THAT PILOT SHAREHOLDERS APPROVE THE AGREEMENT.
Similarly, after considering the relevant factors, the Nations Board, on
behalf of the Nations Funds, found that participation in the Reorganizations, as
contemplated by the Plans of Reorganization, is in the best interests of the
Nations Funds and that the interests of the shareholders of the Nations Funds
will not be diluted as a result of the Reorganization.
PRINCIPAL RISK FACTORS. Because of the similarities of the investment
objectives, policies and restrictions of the Pilot Funds and their corresponding
Nations Funds, an investment in a Nations Fund involves risks that are similar
to those of the corresponding Pilot Fund. These investment risks, in general,
are those typically associated with investing in a portfolio of common stocks in
the case of the Pilot and Nations equity funds, a portfolio of fixed-income
securities in the case of the Pilot and Nations fixed-income funds, a portfolio
of municipal obligations in the case of the Pilot and Nations bond funds, and a
portfolio of high quality, short-term money market instruments in the case of
the Pilot and Nations money market funds.
The risks associated with Nations Value Fund (and its corresponding Pilot
Growth and Income Fund) and Nations Disciplined Equity Fund (and its
corresponding Pilot Growth Fund) are those associated with investments in common
stocks and other equity securities, which are generally stock market risks.
Stock values fluctuate in response to the activities of individual companies and
in response to general market and economic conditions and, accordingly, the
value of the stocks that a fund holds may decline over short or extended
periods.
8
<PAGE>
An investment in Nations Tax-Exempt Fund (and its corresponding Pilot
Missouri Short-Term Tax-Exempt Fund and Pilot Short-Term Tax-Exempt Diversified
Fund), involves risks typically associated with investing in a portfolio of high
quality, short-term money market instruments. In addition, these money market
funds attempt to maintain a stable net asset value of $1.00, although there is
no assurance that they will be able to do so.
An investment in Nations Strategic Fixed Income Fund (and its corresponding
Pilot Diversified Bond Income Fund), Nations Short-Intermediate Government Fund
(and its corresponding Pilot U.S. Government Securities Fund) and Nations
Intermediate Municipal Bond Fund (and its corresponding Pilot Intermediate
Municipal Bond Fund), involves risks typically associated with investing in a
portfolio of fixed-income securities, which is the risk that the value of that
security 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. For example, because the average weighted maturity of the Nations
Short-Intermediate Government Fund is less than that of its corresponding Pilot
U.S. Government Securities Fund the share price of the Pilot Fund may fluctuate
more in response to interest rate changes than that of the Nations Fund.
VOTING INFORMATION. This Combined Proxy is being furnished in connection
with the solicitation of proxies by Pilot's Board of Trustees at the Meeting.
Only shareholders of record at the close of business on March 13, 1997 will be
entitled to vote at the Meeting. Each whole or fractional share is entitled to a
whole or fractional vote. Shares represented by a properly executed proxy will
be voted in accordance with the instructions thereon or, if no specification is
made, the persons named as proxies will vote in favor of each proposal set forth
in the Notice of Meeting. Proxies may be revoked at any time before they are
exercised by submitting to Pilot a written notice of revocation or a
subsequently executed proxy or by attending the Meeting and voting in person.
For additional information, see "Information Relating to Voting Matters."
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
The terms and conditions of the Reorganization are set forth in the
Agreement. Significant provisions of the Agreement are summarized below;
however, this summary is qualified in its entirety by reference to the
Agreement, a copy of which is attached as Appendix I to this Combined Proxy
Statement/Prospectus.
DESCRIPTION OF THE AGREEMENT. The Agreement provides that at the Closing
the assets and stated liabilities of the Pilot Funds will be transferred to
Nations in exchange for full and fractional Shares of the corresponding Nations
Funds as shown in the following table.
9
<PAGE>
TABLE I
<TABLE>
<CAPTION>
PILOT FUND/SHARE CLASS CORRESPONDING NATIONS FUND/SHARE CLASS
<S> <C>
PILOT DIVERSIFIED BOND INCOME FUND NATIONS STRATEGIC FIXED INCOME FUND
Class A Shares Investor A Shares
Class B Shares Investor N Shares
Pilot Shares Primary A Shares
PILOT GROWTH FUND NATIONS DISCIPLINED EQUITY FUND
Class A Shares Investor A Shares
Class B Shares Investor N Shares
Pilot Shares Primary A Shares
PILOT GROWTH AND INCOME FUND NATIONS VALUE FUND
Class A Shares Investor A Shares
Class B Shares Investor N Shares
Pilot Shares Primary A Shares
PILOT INTERMEDIATE MUNICIPAL BOND FUND NATIONS INTERMEDIATE MUNICIPAL BOND FUND
Class A Shares Investor A Shares
Class B Shares Investor N Shares
Pilot Shares Primary A Shares
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND NATIONS SHORT-INTERMEDIATE GOVERNMENT FUND
Class A Shares Investor A Shares
Class B Shares Investor N Shares
Pilot Shares Primary A Shares
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND NATIONS TAX EXEMPT FUND
Administration Shares Investor B Shares
Investor Shares Daily Shares
Pilot Shares Primary A Shares
PILOT MUNICIPAL BOND FUND NATIONS MUNICIPAL INCOME FUND
Class A Shares Investor A Shares
Class B Shares Investor N Shares
Pilot Shares Primary A Shares
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND NATIONS TAX EXEMPT FUND
Administration Shares Investor B Shares
Investor Shares Daily Shares
Pilot Shares Primary A Shares
</TABLE>
10
<PAGE>
The Shares issued by each Nations Fund in the Reorganization will have an
aggregate dollar value equal to the aggregate dollar value of the Shares of the
respective Pilot Fund that are outstanding immediately before the Closing.
Immediately after the Closing, each Pilot Fund will distribute the Shares of the
Nations Fund received in the Reorganization to its shareholders in liquidation
of the Pilot Fund. Each shareholder owning Shares of a particular Pilot Fund at
the Closing will receive Shares of the comparable class of the corresponding
Nations Fund, and will receive any unpaid dividends or distributions that were
declared before the Closing on Pilot Fund Shares. Nations will establish an
account for each former shareholder of the Pilot Funds reflecting the
appropriate number of Nations Fund Shares distributed to that shareholder. These
accounts will be substantially identical to the accounts currently maintained by
Pilot for each shareholder. Shares of the Nations Funds are in uncertificated
form.
Although no formal action has been taken, upon completion of the
Reorganization, it is contemplated that if Pilot Shareholders approve the
Agreement, and shareholders of all other series of Pilot approve a similar
Agreement, all outstanding Shares of the Pilot Funds will be redeemed and
canceled in exchange for Shares of the Nations Funds distributed, and Pilot will
wind up its affairs and apply to be deregistered as an investment company under
the 1940 Act. Pilot would permanently close its stock transfer books as of the
close of business on the business day immediately preceding the Closing.
Exchange or redemption requests required after that time will be deemed to be
exchange or redemption requests for Shares of the Nations Funds.
The Reorganization is subject to a number of conditions, including approval
of the Agreement and the related matters described in this Combined Proxy
Statement/ Prospectus by Pilot shareholders at the Meeting; the receipt of
certain legal opinions described in the Agreement (which include an opinion of
counsel to Nations that the Nations Fund Shares issued in the Reorganization
will be validly issued, fully paid and non-assessable); the receipt of certain
certificates from the parties concerning the continuing accuracy of the
representations and warranties in the Agreement; the receipt of "comfort
letters" from the independent public accountants of Pilot and Nations regarding
various financial matters; any necessary exemptive relief or no-action
assurances requested from the SEC or its Staff with respect to Section 17(a) and
17(d) of the 1940 Act and Rule 17d-1 thereunder; and the parties' performance in
all material respects of their respective covenants and undertakings in the
Agreement. The Agreement contemplates that, upon notice from Nations, ten days
prior to the Closing Date, a Pilot Fund must immediately sell prior to the
Closing Date, to the extent permissible and consistent with that Pilot Fund's
own investment objective and policies, any portfolio security identified by
Nations as impermissible under the investment objectives and limitations of the
Nations Fund into which the Pilot Fund is to be reorganized. Such a sale could
result in taxable capital gains for a Pilot Fund and its shareholders.
11
<PAGE>
Assuming satisfaction of the conditions in the Agreement, it is expected
that the Closing will be effective at the close of business on May 16, 1997 or,
in accordance with the Agreement, such other date(s) as agreed to in writing by
the officers of the parties to the Agreement.
The Agreement provides that NBAI has committed to absorb substantially all
of the expenses associated with the Reorganization. See Appendix I to this
Combined Proxy Statement/Prospectus. A portion of the expenses to be incurred in
connection with the Reorganization, approximately $450,000, will be allocated to
the Nations Funds following the consummation of the Reorganization (the
"Allocated Amount"). NBAI will absorb all expenses of the Reorganization other
than the Allocated Amount. The Expense Commitment, as discussed above, will
cause NBAI, in effect, to absorb a substantial portion of the Allocated Amount
(approximately $320,000) through additional fee waivers. NBAI also will absorb
the portion of the remaining Allocated Amount that otherwise would be borne by
current Pilot Fund shareholders (approximately $31,000), by making a capital
contribution in this amount to the Pilot Funds prior to the Closing. The portion
of the Allocated Amount that remains after NBAI absorbs this $351,000
(approximately $99,000) will, in effect, be borne by current Nations Fund
shareholders. The Nations Funds Board approved this arrangement as being in the
best interest of shareholders in light of, among other things, the benefits to
such shareholders from the Expense Commitment, and the anticipated benefits
expected to accrue to these shareholders over time from the addition of
approximately $6 billion in assets (as of December 31, 1996) into the Nations
Funds through the Reorganization.
The Agreement also provides that the Reorganization may be abandoned at any
time prior to the Closing upon the mutual consent of both Pilot and Nations, or
by either Nations or Pilot under certain conditions. The Agreement further
provides that officers of Nations and of Pilot may amend, modify or supplement
the Agreement; provided, however, that following the Meeting, no such amendment
may have the effect of changing the provisions for determining the number of
Shares of the corresponding Nations Fund to be issued to the Pilot Fund
shareholders of any Pilot Fund without obtaining the Pilot Fund shareholders'
further approval.
PILOT BOARD CONSIDERATION. On August 29, 1996, Boatmen's Bancshares, Inc.
("Bancshares"), the parent of Boatmen's, the Pilot Funds' investment adviser,
entered into an Agreement and Plan of Merger with NationsBank Corporation, which
provided that Bancshares would merge with and into a wholly-owned subsidiary of
NationsBank Corporation (the "Holding Company Merger"). The Holding Company
Merger was consummated on January 7, 1997. In connection therewith, and
consistent with the requirements of the 1940 Act and the terms of the respective
investment advisory and management agreements, the change in control of the
Boatmen's resulted in the automatic and immediate termination of each investment
advisory agreement between Pilot, on behalf of the respective Pilot Fund, and
Boatmen's. To ensure that this automatic termination would not disrupt the
investment advisory services provided to the Pilot Funds, Pilot shareholders
approved at a December 18, 1996 meeting, new investment
12
<PAGE>
advisory agreements between Pilot, on behalf of the Pilot Funds (except the
Pilot Missouri Short-Term Tax Exempt Fund, Pilot Short-Term U.S. Treasury Fund,
Pilot Growth Fund and Pilot Diversified Bond Fund), and Boatmen's. At a December
20, 1996 meeting, Pilot shareholders approved new investment advisory agreements
between Pilot, on behalf of the Pilot Missouri Short-Term Tax Exempt Fund, Pilot
Short-Term U.S. Treasury Fund, Pilot Growth Fund and Pilot Diversified Bond
Fund, and Boatmen's.
At its December 4, 1996 meeting, the Pilot Board of Trustees was first
advised that Boatmen's and NationsBank, N.A. ("NationsBank") were considering
the possibility of recommending a consolidation of the Pilot Funds with the
Nations Funds following the Holding Company Merger. Thereafter, on January 31,
1997 and February 5, 1997, the Pilot Trustees met to consider formal proposals
by Boatmen's and NationsBank regarding the Reorganization.
In preparation for the meetings, the Trustees were provided with a variety
of information about the Reorganization, the Pilot Funds, the Nations Funds and
NationsBank. These materials summarized the principal features of the
Reorganization including the intention that each transaction be consummated on a
tax-free basis for the participating Funds and their shareholders. In addition,
the Pilot Trustees received comparative information for the Pilot Funds and
their corresponding Nations Funds with respect to the following matters: (a)
investment objectives and policies; (b) advisory, distribution and other
servicing arrangements; (c) expenses (with and without giving effect to current
expense limitations), including PRO FORMA expenses assuming consummation of the
Reorganization and expenses relative to peer groups, and (d) performance
relative to peer groups. The Pilot Trustees were also provided with information
about NationsBank and its investment advisory organization, including
information regarding those individuals with responsibility for each Nations
Fund, and the anticipated impact of the proposed Reorganization on Boatmen's,
NBAI and TradeStreet.
The Trustees were also advised that the parties to the Holding Company
Merger had stated their intention to meet the conditions of Section 15(f) of the
1940 Act with respect to the Pilot Funds and their successors. Section 15(f) of
the 1940 Act provides that when a change in control of an investment adviser
occurs, the investment adviser or any of its affiliated persons may receive any
amount or benefit in connection therewith as long as, among other things, no
"unfair burden" is imposed on the investment company as a result of the
transaction relating to the change of control, or any expenses or implied terms,
conditions or understandings applicable thereto. The term "unfair burden" as
defined by the 1940 Act includes any arrangement during the two-year period
after the transaction whereby the investment adviser (or predecessor or
successor adviser), or any "interested person" of any such adviser, receives or
is entitled to receive any compensation, directly or indirectly, from the
investment company or its security holders (other than fees for bona fide
investment advisory or other services) or from any person in connection with the
purchase or sale of securities or other property to, from or on behalf of the
investment company (other than fees for bona fide principal underwriting
services). Section 15(f) also requires that through January 7, 2000 (the
three-year period immediately following the
13
<PAGE>
Holding Company Merger), at least 75% of the Board of Trustees of the Pilot
Funds or its successor will not be "interested persons" of NBAI or Boatmen's
within the meaning of the 1940 Act. The Pilot Trustees were informed that the
Board of Trustees of the Nations Funds currently satisfy this requirement.
At the Trustees' meeting on February 5, 1997, NBAI and TradeStreet
represented to the Pilot Trustees that they would commit to the Expense
Commitment described above. Based upon this commitment and the current expense
ratio and expense limitation information provided for both the Pilot Funds and
the Nations Funds, the Pilot Trustees concluded that, for the foreseeable
future, the Reorganization would likely result in a substantial savings in
expenses to Pilot Fund shareholders.
During the course of their deliberations at the January 31 and February 5
meetings, the Trustees considered other potential benefits of the Reorganization
to Pilot shareholders, including convenient access via the exchange privilege to
a larger universe of funds within the Nations Fund Family and the availability
of other investment products offered by NationsBank. The Pilot Trustees further
noted that, in general, the performance of the Nations Funds was comparable to
or better than that of their corresponding Pilot Funds.
After consideration of the foregoing and other factors, and with the advice
and assistance of independent counsel, the Pilot Trustees unanimously determined
that the Reorganization is in the best interest of the shareholders of each
Pilot Fund, and that the interest of the shareholders of each Pilot Fund will
not be diluted as a result of such Reorganization.
CAPITALIZATION. The eight Pilot Funds would be reorganized into the seven
Nations Funds. The following table sets forth, as of December 31, 1996, (i) the
capitalization of each of the Pilot Funds; (ii) the capitalization of each of
the corresponding Nations Funds involved; and (iii) the pro forma capitalization
of each of the Nations Funds as adjusted to give effect to the Reorganization of
the foregoing Pilot Funds. The capitalization of each Pilot Fund and Nations
Fund is likely to be different at the Closing as a result of daily share
purchase and redemption activity in the Pilot Funds as well as the effects of
the Pilot Funds' other ongoing operations.
14
<PAGE>
TABLE II
PRO FORMA CAPITALIZATION (AS OF DECEMBER 31, 1996)
1. The table below reflects current and pro forma capitalization
information for the combination of the Pilot Diversified Bond Income Fund with
Nations Strategic Fixed Income Fund.
<TABLE>
<CAPTION>
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING PER SHARE
<S> <C> <C> <C>
Pilot Diversified Bond Income Fund $169,195 16,918 $10.00
(Class A) (Class A) (Class A)
$271,916 27,206 $9.99
(Class B) (Class B) (Class B)
$119,681,075 11,971,516 $10.00
(Pilot) (Pilot) (Pilot)
Nations Strategic Fixed Income Fund $6,899,238 701,466 $9.84
(Investor A) (Investor A) (Investor A)
$2,401,947 244,215 $9.84
(Investor N) (Investor N) (Investor N)
$973,548,070 98,984,205 $9.84
(Primary A) (Primary A) (Primary A)
Pro Forma Pilot Diversified Bond $7,068,433 718,661 $9.84
Income Fund and Nations Strategic (Class A/ (Class A/ (Class A/
Fixed Income Fund Investor A) Investor A) Investor A)
$2,673,863 271,849 $9.84
(Class B/ (Class B/ (Class B/
Investor N) Investor N) Investor N)
$1,093,229,145 111,146,916 $9.84
(Pilot/Primary A) (Pilot/Primary A) (Pilot/Primary A)
</TABLE>
15
<PAGE>
2. The table below reflects current and pro forma capitalization
information for the combination of the Pilot Growth Fund with Nations
Disciplined Equity Fund.
<TABLE>
<CAPTION>
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING PER SHARE
<S> <C> <C> <C>
Pilot Growth Fund $31,993 3,238 $9.88
(Class A) (Class A) (Class A)
$68,504 6,948 $9.86
(Class B) (Class B) (Class B)
$50,268,680 5,089,156 $9.88
(Pilot) (Pilot) (Pilot)
Nations Disciplined Equity Fund $6,980,775 377,954 $18.47
(Investor A) (Investor A) (Investor A)
$20,356,441 1,115,533 $18.25
(Investor N) (Investor N) (Investor N)
$109,667,772 5,926,669 $18.50
(Primary A) (Primary A) (Primary A)
Pro Forma Pilot Growth Fund and $7,012,768 379,686 $18.47
Nations Disciplined Equity Fund (Class A/ (Class A/ (Class A/
Investor A) Investor A) Investor A)
$20,424,945 1,119,287 $18.25
(Class B/ (Class B/ (Class B/
Investor N) Investor N) Investor N)
$159,936,452 8,643,895 $18.50
(Pilot/Primary A) (Pilot/Primary A) (Pilot/Primary A)
</TABLE>
16
<PAGE>
3. The table below reflects current and pro forma capitalization information for
the combination of the Pilot Growth and Income Fund with Nations Value Fund.
<TABLE>
<CAPTION>
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING PER SHARE
<S> <C> <C> <C>
Pilot Growth and Income Fund $6,544,742 474,526 $13.79
(Class A) (Class A) (Class A)
$5,069,369 367,483 $13.79
(Class B) (Class B) (Class B)
$357,080,937 25,882,323 $13.80
(Pilot) (Pilot) (Pilot)
Nations Value Fund $67,856,655 3,875,247 $17.51
(Investor A) (Investor A) (Investor A)
$98,775,116 5,660,541 $17.45
(Investor N) (Investor N) (Investor N)
$1,165,501,350 66,562,845 $17.51
(Primary A) (Primary A) (Primary A)
Pro Forma Pilot Growth and Income Fund $74,401,397 4,249,019 $17.51
and Nations Value Fund (Class A/ (Class A/ (Class A/
Investor A) Investor A) Investor A)
$103,844,485 5,951,049 $17.45
(Class B/ (Class B/ (Class B/
Investor N) Investor N) Investor N)
$1,522,582,287 86,955,817 $17.51
(Pilot/Primary A) (Pilot/Primary A) (Pilot/Primary A)
</TABLE>
17
<PAGE>
4. The table below reflects current and pro forma capitalization information for
the combination of the Pilot Intermediate Municipal Bond Fund with Nations
Intermediate Municipal Bond Fund.
<TABLE>
<CAPTION>
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING PER SHARE
<S> <C> <C> <C>
Pilot Intermediate Municipal Bond Fund $948,830 90,969 $10.43
(Class A) (Class A) (Class A)
$N/A N/A $N/A
(Class B) (Class B) (Class B)
$215,777,335 20,714,601 $10.42
(Pilot) (Pilot) (Pilot)
Nations Intermediate Municipal Bond $1,620,148 159,827 $10.13
Fund (Investor A) (Investor A) (Investor A)
$1,499,222 147,986 $10.13
(Investor N) (Investor N) (Investor N)
$91,619,119 9,046,521 $10.13
(Primary A) (Primary A) (Primary A)
Pro Forma Pilot Intermediate Municipal $2,568,978 253,492 $10.13
Bond Fund and Nations Intermediate (Class A/ (Class A/ (Class A/
Municipal Bond Fund Investor A) Investor A) Investor A)
$1,499,222 147,986 $10.13
(Class B/ (Class B/ (Class B/
Investor N) Investor N) Investor N)
$307,396,454 30,347,344 $10.13
(Pilot/Primary A) (Pilot/Primary A) (Pilot/Primary A)
</TABLE>
18
<PAGE>
5. The table below reflects current and pro forma capitalization information for
the combination of the Pilot Intermediate U.S. Government Securities Fund with
Nations Short-Intermediate Government Fund.
<TABLE>
<CAPTION>
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING PER SHARE
<S> <C> <C> <C>
Pilot Intermediate U.S. Government $1,523,830 149,766 $10.17
Securities Fund (Class A) (Class A) (Class A)
$N/A N/A $N/A
(Class B) (Class B) (Class B)
$234,806,238 23,073,595 $10.18
(Pilot) (Pilot) (Pilot)
Nations Short-Intermediate Government $45,261,925 11,149,410 $4.06
Fund (Investor A) (Investor A) (Investor A)
$11,846,309 2,918,289 $4.06
(Investor N) (Investor N) (Investor N)
$385,496,656 94,961,386 $4.06
(Primary A) (Primary A) (Primary A)
Pro Forma Pilot Intermediate U.S. $46,785,755 11,524,738 $4.06
Government Securities Fund and Nations (Class A/ (Class A/ (Class A/
Short-Intermediate Government Fund Investor A) Investor A) Investor A)
$11,846,309 2,918,289 $4.06
(Class B/ (Class B/ (Class B/
Investor N) Investor N) Investor N)
$620,302,984 152,795,435 $4.06
(Pilot/Primary A) (Pilot/Primary A) (Pilot/Primary A)
</TABLE>
19
<PAGE>
6. The table below reflects current and pro forma capitalization information for
the combination of the Pilot Municipal Bond Fund with Nations Municipal Income
Fund.
<TABLE>
<CAPTION>
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING PER SHARE
<S> <C> <C> <C>
Pilot Municipal Bond Fund $2,029,418 187,242 $10.84
(Class A) (Class A) (Class A)
$1,560,234 144,720 $10.78
(Class B) (Class B) (Class B)
$197,926,702 18,251,063 $10.84
(Pilot) (Pilot) (Pilot)
Nations Municipal Income Fund $15,903,697 1,437,140 $11.07
(Investor A) (Investor A) (Investor A)
$15,696,306 1,418,592 $11.07
(Investor N) (Investor N) (Investor N)
$70,025,133 6,327,875 $11.07
(Primary A) (Primary A) (Primary A)
Pro Forma Pilot Municipal Bond Fund $17,933,115 1,620,466 $11.07
and Nations Municipal Income Fund (Class A/ (Class A/ (Class A/
Investor A) Investor A) Investor A)
$17,256,540 1,559,535 $11.07
(Class B/ (Class B/ (Class B/
Investor N) Investor N) Investor N)
$267,951,835 24,207,433 $11.07
(Pilot/Primary A) (Pilot/Primary A) (Pilot/Primary A)
</TABLE>
20
<PAGE>
7. The table below reflects current and pro forma capitalization information for
the following three scenarios: Pilot Missouri Short-Term Tax-Exempt Fund is
combined with Nations Tax Exempt Fund (but Pilot Short-Term Tax-Exempt
Diversified Fund is not); Pilot Short-Term Tax-Exempt Diversified Fund is
combined with Nations Tax Exempt Fund (but Pilot Missouri Short-Term Tax-Exempt
Fund is not); and both Pilot Missouri Short-Term Tax-Exempt Fund and Pilot
Short-Term Tax-Exempt Diversified Fund are combined with Nations Tax Exempt
Fund.
<TABLE>
<CAPTION>
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING PER SHARE
<S> <C> <C> <C>
Pilot Missouri Short-Term Tax-Exempt $10,038,436 10,038,423 $1.00
Fund ("Fund A") (Administration) (Administration) (Administration)
$13,782,818 13,783,689 $1.00
(Investor) (Investor) (Investor)
$178,591,037 178,600,892 $1.00
(Pilot) (Pilot) (Pilot)
Pilot Short-Term Tax-Exempt $15,275,640 15,275,424 $1.00
Diversified Fund ("Fund B") (Administration) (Administration) (Administration)
$4,632,483 4,632,635 $1.00
(Investor) (Investor) (Investor)
$398,721,854 398,724,570 $1.00
(Pilot) (Pilot) (Pilot)
Nations Tax Exempt Fund ("Fund C") $151,294,115 151,301,000 $1.00
(Investor B) (Investor B) (Investor B)
$2,105 2,105 $1.00
(Daily) (Daily) (Daily)
$1,012,848,741 1,012,896,291 $1.00
(Primary A) (Primary A) (Primary A)
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING PER SHARE
<S> <C> <C> <C>
Pro Forma Pilot Missouri Short-Term $161,332,551 161,339,436 $1.00
Tax-Exempt Fund and Nations Tax Exempt (Administration/ (Administration/ (Administration/
Fund Investor B) Investor B) Investor B)
(Fund A + Fund C) $13,784,923 13,784,923 $1.00
(Investor/Daily) (Investor/Daily) (Investor/Daily)
$1,191,439,778 1,191,487,328 $1.00
(Pilot/Primary A) (Pilot/Primary A) (Pilot/Primary A)
Pro Forma Pilot Short-Term Tax-Exempt $166,569,755 166,576,640 $1.00
Diversified Fund and Nations Tax (Administration/ (Administration/ (Administration/
Exempt Fund Investor B) Investor B) Investor B)
(Fund B + Fund C) $4,634,588 4,634,588 $1.00
(Investor/Daily) (Investor/Daily) (Investor/Daily)
$1,411,570,595 1,411,618,145 $1.00
(Pilot/Primary A) (Pilot/Primary A) (Pilot/Primary A)
Pro Forma Pilot Missouri Short-Term $176,608,191 176,615,076 $1.00
Tax-Exempt Fund, Pilot Short-Term (Administration/ (Administration/ (Administration/
Tax-Exempt Diversified Fund and Investor B) Investor B) Investor B)
Nations Tax Exempt Fund $18,417,406 18,417,406 $1.00
(Fund A + Fund B + Fund C) (Investor/Daily) (Investor/Daily) (Investor/Daily)
$1,590,161,632 1,590,209,182 $1.00
(Pilot/Primary A) (Pilot/Primary A) (Pilot/Primary A)
</TABLE>
22
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES. Consummation of the Reorganization with
respect to each Pilot Fund is subject to the condition that Pilot and Nations
receive an opinion from Morrison & Foerster LLP to the effect that, for federal
income tax purposes, (i) the transfer of all or substantially all of a Pilot
Fund's assets in exchange for the corresponding Nations Fund Shares and the
assumption by each Nation Fund of the stated liabilities of the corresponding
Pilot Fund will constitute a "reorganization" within the meaning of Section
368(a)(1)(C) or 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended
(the "Code") and each Nations Fund and Pilot Fund will be a "party to a
reorganization" within the meaning of Section 368(b) of the Code; (ii) no gain
or loss will be recognized by a Pilot Fund upon the transfer of its assets to
the corresponding Nations Fund solely in exchange for the Nations Fund Shares or
the assumption of the stated liabilities of the Pilot Fund by the Nations Fund;
(iii) no gain or loss will be recognized by a Nations Fund upon (a) its receipt
of assets from the corresponding Pilot Fund solely in exchange for the Nations
Fund Shares, (b) the Nations Fund's assumption of the Pilot Fund's stated
liabilities, and (c) the constructive or actual distribution by the Pilot Fund
of the Nations Fund Shares to the Pilot Fund shareholders in exchange for their
Shares of the Pilot Fund; (iv) the aggregate federal income tax basis of a Pilot
Fund's assets received by the corresponding Nations Fund pursuant to the
Reorganization will be the same as the aggregate federal income tax basis of
those assets in the hands of the Pilot Fund immediately prior to the
Reorganization; (v) the holding period of a Pilot Fund's assets received by the
corresponding Nations Fund pursuant to the Reorganization will include the
period for which such assets have been held by the Pilot Fund; (vi) no gain or
loss will be recognized by a Pilot Fund on the distribution to its shareholders
of the Nations Fund Shares to be received by the Pilot Fund in the
Reorganization; (vii) no gain or loss will be recognized by the shareholders of
a Pilot Fund upon their receipt of the Nations Fund Shares in exchange for such
shareholders' Shares of the Pilot Fund; (viii) the federal income tax basis of
the Nations Fund Shares received by the shareholders of the corresponding Pilot
Fund will be the same as the federal income tax basis of the Pilot Fund Shares
exchanged by such shareholders pursuant to the Reorganization; (ix) the holding
period for the Nations Fund Shares for which Shares of the corresponding Pilot
Fund are exchanged pursuant to the Reorganization will include the period that
the Pilot Fund Shares have been held by the holder, provided that the Pilot Fund
Shares have been held as a capital asset by the holder; and (x) a Nations Fund
will succeed to and take into account the tax attributes described in Section
381(c) of the Code of the corresponding Pilot Fund as of the Closing Date,
subject to the conditions and limitations specified in the Code.
In the event that Pilot and Nations do not receive the foregoing opinion of
Morrison & Foerster LLP, the Reorganization will not take place and Pilot's
Board of Trustees will consider other alternatives.
Information about the similarities and differences between the Nations
Funds and the Pilot Funds to which they correspond regarding: the identity and
compensation of the investment adviser; the voting rights of shareholders, any
restrictions or material
23
<PAGE>
obligations associated with ownership of Shares; the share structure; the
identity of the principal underwriter, sales charges; any minimum initial or
subsequent investment; Rule 12b-1 plans, including associated fees and expenses;
and shareholder redemption, repurchase and exchange rights, is included in other
appropriately titled sections within this Combined Proxy Statement/Prospectus
and the Appendices hereto.
COMPARISON OF PILOT AND NATIONS
INVESTMENT OBJECTIVES AND POLICIES. The investment objectives, policies and
restrictions of the Nations Funds are, in general, similar to those of the Pilot
Funds. There are, however, certain differences. For example, although the Pilot
Missouri Short-Term Tax-Exempt Fund and its corresponding Nations Tax Exempt
Fund both primarily invest in the same types of securities-high quality money
market instruments, the Pilot Missouri Short-Term Tax-Exempt Fund invests in
primarily Missouri municipal obligations, while Nations Tax Exempt Fund invests
in general municipal obligations.
The Pilot Intermediate U.S. Government Securities Fund and its
corresponding Nations Short-Intermediate Government Fund are both funds that
invest in U.S. Government obligations. However, the Pilot Intermediate U.S.
Government Securities Fund will maintain an average weighted maturity between
three and ten years, while Nations Short-Intermediate Government Fund will
maintain an average weighted maturity of between three and five years and the
duration will not exceed five years.
Other differences are more fully discussed in Appendix III to this Combined
Proxy Statement/Prospectus. Additional information with respect to the
investment policies and restrictions of the Nations Funds and the Pilot Funds is
included in their respective prospectuses, which have been incorporated herein
by reference.
INVESTMENT ADVISER AND OTHER SERVICE PROVIDERS. Currently, NBAI serves as
the investment adviser for each of the Nations Funds, and Boatmen's serves as
investment adviser to the Pilot Funds. After the Reorganization, NBAI will serve
as the investment adviser to the Nations Funds.
The following table shows, as of November 30, 1996, (i) the current total
expense ratio of the Pilot Funds after waivers and (ii) the pro forma total
expense ratio of the corresponding Nations Funds, based upon the fee
arrangements, including waivers and reimbursements, that will be in place upon
consummation of the Reorganization. Table III shows that for all classes of
Pilot Funds, except Pilot Shares of the Pilot Diversified Bond Income Fund,
Class A and Pilot Shares of the Pilot Growth and Income Fund, Pilot Shares of
the Pilot Intermediate U.S. Government Securities Fund, total operating expenses
(after waivers) will be equal to or less than current total operating expenses.
Detailed pro forma expense information for each proposed reorganization is
included in Appendix II to this Combined Proxy Statement/Prospectus.
24
<PAGE>
TABLE III
TOTAL EXPENSE INFORMATION
<TABLE>
<CAPTION>
TOTAL FUND OPERATING PRO FORMA COMBINED
NAME OF EXPENSES FOR THE FISCAL TOTAL FUND OPERATING EXPENSES
PILOT FUND YEAR/PERIOD ENDED 11/30/96 (AFTER WAIVERS)
(AFTER WAIVERS)
<S> <C> <C>
Pilot Diversified Bond Income 0.90% 0.88%
Fund (Class A) (Class A/Investor A)
1.65% 1.33%
(Class B) (Class B/Investor N)
0.65% 0.68%
(Pilot) (Pilot/Primary A)
Pilot Growth Fund 1.00% 1.22%
(Class A) (Class A/Investor A)
2.00% 1.97%
(Class B) (Class B/Investor N)
1.00% 0.97%
(Pilot) (Pilot/Primary A)
Pilot Growth and Income Fund 0.93% 1.17%
(Class A) (Class A/Investor A)
1.68% 1.67%
(Class B) (Class B/Investor N)
0.68% 0.92%
(Pilot) (Pilot/Primary A)
Pilot Intermediate Municipal 0.87% 0.70%
Bond Fund (Class A) (Class A/Investor A)
1.62% 1.00%
(Class B) (Class B/Investor N)
0.62% 0.50%
(Pilot) (Pilot/Primary A)
Pilot Intermediate U.S. 0.81% 0.79%
Government Securities Fund (Class A) (Class A/Investor A)
1.56% 1.19%
(Class B) (Class B/Investor N)
0.56% 0.59%
(Pilot) (Pilot/Primary A)
Pilot Missouri Short-Term 0.65% 0.50%
Tax-Exempt Fund (Administration) (Admin./Investor B)
0.90% 0.80%
(Investor) (Investor/Daily)
0.40% 0.30%
(Pilot) (Pilot/Primary A)
Pilot Municipal Bond Fund 0.92% 0.80%
(Class A) (Class A/Investor A)
1.67% 1.35%
(Class B) (Class B/Investor N)
0.67% 0.60%
(Pilot) (Pilot/Primary A)
Pilot Short-Term Tax-Exempt 0.63% 0.50%
Diversified Fund (Administration) (Admin./Investor B)
0.88% 0.80%
(Investor) (Investor/Daily)
0.38% 0.30%
25
<PAGE>
TOTAL FUND OPERATING PRO FORMA COMBINED
NAME OF EXPENSES FOR THE FISCAL TOTAL FUND OPERATING EXPENSES
PILOT FUND YEAR/PERIOD ENDED 11/30/96 (AFTER WAIVERS)
(AFTER WAIVERS)
(Pilot) (Pilot/Primary A)
</TABLE>
PILOT FUNDS' ADVISORY CONTRACTS. In connection with the Holding Company
Merger, which was consummated on January 7, 1997, and consistent with the
requirements of the 1940 Act, the change in control of Boatmen's resulted in the
automatic and immediate termination of the investment advisory agreements
between Pilot, on behalf of the Pilot Funds, and Boatmen's. To ensure that this
automatic termination would not disrupt the investment advisory services
provided to the Pilot Funds, Pilot shareholders approved at a December 18, 1996
meeting, new investment advisory agreements between Pilot, on behalf of the
Pilot Funds (except the Pilot Missouri Short-Term Tax Exempt Fund, Pilot
Short-Term U.S. Treasury Fund, Pilot Growth Fund and Pilot Diversified Bond
Fund), and Boatmen's. At a December 20, 1996 meeting, Pilot shareholders
approved new investment advisory agreements between Pilot, on behalf of the
Pilot Missouri Short-Term Tax Exempt Fund, Pilot Short-Term U.S. Treasury Fund,
Pilot Growth Fund and Pilot Diversified Bond Fund, and Boatmen's. Accordingly,
Boatmen's continues to act as investment adviser to the Pilot Funds.
NATIONS FUNDS' ADVISORY CONTRACTS. NBAI serves as investment adviser to the
Nations Funds. Subject to the general supervision of Nations' Board of Trustees,
and in accordance with the investment policies of each Existing Nations Fund,
NBAI formulates guidelines and lists of approved investments and, makes
decisions with respect to and places orders for the 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 may invest in securities of companies with
which NationsBank has a lending relationship. NBAI may delegate certain
responsibilities to investment sub-advisers listed below.
TradeStreet currently serves as investment sub-adviser for the Nations
Funds and after the Reorganization, TradeStreet will serve as the investment
sub-adviser to the Nations Funds. For the services provided and expenses assumed
by TradeStreet, NBAI will pay TradeStreet at the annual rate of 0.055% of the
average daily net assets of Nations Tax Exempt Fund, 0.25% of the average daily
net assets of Nations Value Fund and Disciplined Equity Fund, 0.15% of the
average daily net assets of Nations Short-Intermediate Government Fund and
Nations Strategic Fixed Income Fund, and 0.07% of the average daily net assets
of Nations Intermediate Municipal Bond Fund and Nations Municipal Income Fund.
26
<PAGE>
From time to time, NBAI (and/or TradeStreet) may waive or reimburse (either
voluntarily or pursuant to applicable state limitations) advisory fees or
expenses payable by a Nations Fund.
The principal portfolio managers of the Nations Funds, along with their
positions with the Adviser and a brief summary of their business experience and
education are set forth below.
Nations Strategic Fixed Income Fund - Gregory H. Cobb is a Senior Product
Manager, Fixed Income Management for TradeStreet and Senior Portfolio Manager
for Nations Strategic Fixed Income Fund. Mr. Cobb has been Portfolio Manager for
Nations Strategic Fixed Income Fund since 1995. Prior to assuming his position
with TradeStreet, he was Vice President and Senior Portfolio Manager for the
Investment Management Group at NationsBank. Mr. Cobb has worked in the
investment community since 1987. His past experience includes portfolio
management of intermediate duration and insurance products for Trust Company
Bank and Barnett Bank Trust Company Inc. Mr. Cobb received a B.A. in Economics
from the University of North Carolina at Chapel Hill.
Nations Disciplined Equity Fund - Jeffrey C. Moser, a Chartered Financial
Analyst, is a Senior Product Manager, Equity Management for TradeStreet and
Senior Portfolio Manager for Nations Disciplined Equity Fund. Mr. Moser has been
Portfolio Manager of Nations Disciplined Equity Fund since 1995. Prior to
assuming his position with TradeStreet, he was Senior Vice President and Senior
Portfolio Manager for the Investment Management Group at NationsBank. Mr. Moser
has worked for the Investment Management Group at NationsBank since 1983 where
his responsibilities included institutional portfolio management and equity
analysis. Mr. Moser graduated Phi Beta Kappa with a B.S. in Mathematics from
Wake Forest University. He is a member of the Association for Investment
Management and Research as well as the North Carolina Society of Financial
Analysts, Inc.
Nations Value Fund - Sharon M. Herrmann, a Chartered Financial Analyst, is
a Director of Equity Management for Trade Street and Senior Portfolio Manager
for Nations Value Fund. Ms. Herrmann has been the Portfolio Manager of Nations
Value Fund since 1989. Prior to assuming her position with TradeStreet, she was
Senior Vice President and Portfolio Manager for the Investment Management Group
at NationsBank. Ms. Herrmann has worked for the Investment Management Group at
NationsBank since 1981 where her responsibilities included fund management and
institutional portfolio management. She attended Virginia Wesleyan College. Ms.
Herrmann is a member of the Association for Investment Management and Research
as well as the North Carolina Society of Financial Analysts, Inc.
Nations Intermediate Municipal Bond Fund - John C. Kohl is a Director of
Municipal Fixed Income Management for TradeStreet. He is responsible for
overseeing all municipal product management and is the Senior Portfolio Manager
for Nations Intermediate Municipal Bond Fund. Mr. Kohl has been Portfolio
Manager for the Fund since 1994.
27
<PAGE>
Prior to assuming his position with TradeStreet, he was Senior Vice President
and Senior Portfolio Manager for the Investment Management Group at NationsBank.
Mr. Kohl has worked in the investment community since 1979. His past experience
includes serving as Chief Investment Officer for London Pacific Life & Annuity,
Team Leader and Portfolio Manager for Harris Trust and Savings Bank, and
Management Consultant for asset-liability of Continental Bank. Mr. Kohl received
a joint B.A. in Economics and North American Studies from McGill University.
Nations Short Intermediate Government Fund - John S. Swaim is a Senior
Product Manager, Fixed Income Management for TradeStreet and Senior Portfolio
Manager for Nations Short-Intermediate Government Fund. Mr. Swaim has been
Portfolio Manager for the Fund since 1995. Prior to assuming his position with
TradeStreet, he was Vice President and Senior Portfolio Manager for the
Investment Management Group at NationsBank. Mr. Swaim has worked in the
investment community since 1986. His past experience includes derivative
products manager for the NationsBank Texas Corporate Investment Division
portfolio. Mr. Swaim received a B.S. from University of North Texas and an
M.B.A. from University of Texas at Arlington.
Nations Tax Exempt Fund - Melinda Allen Crosby is a Product Manager,
Municipal Fixed Income Management for TradeStreet and is Portfolio Manager for
Nations Tax Exempt Fund. She has been Portfolio Manager for Nations Tax Exempt
Fund since 1991. Prior to assuming her position with TradeStreet, she was Vice
President and Portfolio Manager for the Investment Management Group at
NationsBank. She has worked in the investment community since 1973. Her past
experience includes consulting and municipal credit analysis for NationsBank
Capital Markets. Ms. Crosby received a B.A. in Business Administration from the
University of North Carolina at Charlotte and an M.B.A. from the McColl School
of Business, Queens College. She was a founding member and past president of the
Southern Municipal Finance Society and participated in the establishment of the
National Federation of Municipal Analysts.
Nations Municipal Income Fund - Michele M. Poirier is a Senior Product
Manager, Municipal Fixed Income Management for TradeStreet and Senior Portfolio
Manager for Nations Municipal Income Fund. Ms. Poirier has been Portfolio
Manager for Nations Municipal Income Fund since 1992. Prior to assuming her
position with TradeStreet, 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.
Both NBAI and TradeStreet are wholly owned subsidiaries of NationsBank,
N.A. ("NationsBank"),which in turn is a wholly owned banking subsidiary of
NationsBank Corporation, a bank holding company organized as a North Carolina
Corporation. Both
28
<PAGE>
NBAI and TradeStreet have their principal offices at One NationsBank Plaza,
Charlotte, North Carolina 28225.
Boatmen's is an indirect subsidiary of NationsBank Corporation. Boatmen's
has its principal offices at 100 N. Broadway, St. Louis, Missouri 63178.
Morrison & Foerster LLP, counsel to Nations and special counsel to
NationsBank, has advised Nations and NationsBank that NationsBank and its
affiliates may perform the services contemplated by the advisory contracts
described above and the prospectuses for the Existing Nations Funds without
violation of the Glass-Steagall Act or other applicable laws or regulations.
Such counsel has pointed out, however, that there are no controlling judicial or
administrative interpretations or decisions and the future judicial or
administrative interpretations of, or decisions relating to, present federal or
state statutes, including the Glass-Steagall Act, and regulations relating to
the permissible activities of banks and their subsidiaries or affiliates, as
well as future changes in such statutes, regulations and judicial or
administrative decisions or interpretations, could prevent such entities from
continuing to perform, in whole or in part, such services. If any such entity
were prohibited from performing any of such services, it is expected that the
new agreements would be proposed or entered into with another entity or entities
qualified to perform such services.
OTHER SERVICE PROVIDERS. The other service providers for the Pilot Funds
and the Nations Funds are different, as forth in the table below.
OTHER SERVICE PROVIDERS
FOR THE PILOT FUNDS AND NATIONS FUNDS
<TABLE>
<CAPTION>
Pilot Funds Nations Funds
<S> <C> <C>
Distributor Pilot Funds Distributors, Inc. ("PFD") Stephens Inc. ("Stephens")
Administrator BISYS Fund Services Limited Partnership Stephens
Co-Administrator None First Data Investor
Services Group, Inc.
("First Data")
Sub-Administrator None NationsBank
Transfer Agent BISYS Fund Services, Inc. First Data
Sub-Transfer Agent Banker's Trust Company NationsBank of Texas, N.A.
("NationsBank of Texas")
Custodian Boatmen's NationsBank of Texas
29
<PAGE>
Pilot Funds Nations Funds
Sub-Custodian Banker's Trust Company The Bank of New York
Independent Accountants Arthur Andersen LLP Price Waterhouse LLP
</TABLE>
SHARE STRUCTURE. Both Pilot and Nations are registered as open-end
management investment companies under the 1940 Act. Currently, Pilot offers
fourteen funds. Immediately after the Reorganization, the Nations Fund Family,
which includes Nations, Nations Fund Trust, Nations Fund Portfolios, Inc.,
Nations Institutional Reserves and Nations LifeGoal Funds, Inc., will offer over
fifty funds.
Pilot is organized as a Massachusetts business trust and is subject to the
provisions of its Agreement and Declaration of Trust and By-Laws. Nations is
organized as a Maryland corporation and is subject to the provisions of its
Articles of Incorporation, as amended and supplemented, and By-Laws. Shares of
the Pilot Funds have a par value of $.001. Shares of Nations Funds are shares of
beneficial interest and are sold without par value. Shares of both the Pilot
Funds and Nations Funds are entitled to one vote for each full share held and
fractional votes for fractional Shares held, and will vote in the aggregate and
not by portfolio or class subject to certain notable exceptions for Pilot. In
particular, when a proposal affects less than all Pilot portfolios or classes,
only the affected portfolios or classes may vote on that proposal. Each
portfolio votes separately with respect to any proposal to approve its
investment advisory agreement, to change its fundamental investment objectives
or policies, or to adopt a plan of reorganization. Similarly, a class of a
portfolio votes separately with respect to any proposal to approve a plan of
distribution for that class.
Shares of the Pilot Funds and Nations Funds have no pre-emptive rights and
have only such conversion and exchange rights as the Board of Trustees of Pilot
or the Board of Directors of Nations, respectively, may grant in their
discretion. The Investor N Shares of the Nations Funds currently do not have a
conversion feature comparable to that of the Class B Shares of the Pilot Funds.
However, management of Nations will undertake to either implement such a feature
or present a shareholder proposal to Investor N Shareholders to add a comparable
conversion feature. When issued for payment as described in their respective
prospectuses, Nations Fund Shares and Pilot Fund Shares are fully paid and
non-assessable by either Nations or Pilot.
Each share of a class of a Nations Fund represents an equal proportionate
interest in a particular portfolio with other shares of the same class and is
entitled to cash dividends and distributions earned on such shares as are
declared in the discretion of the Nations Board of Trustees.
The accrued expenses of the Nations Funds, as well as certain expenses
attributable to each class of Shares, are deducted from accrued income before
dividends are declared. The Nations Funds' expenses included, but are not
limited to: fees paid to the Adviser,
30
<PAGE>
NationsBank, Stephens and First Data; interest; trustees' fees; federal and
state securities registration and qualification fees; brokerage fees and
commissions; costs of preparing and printing prospectuses for regulatory
purposes and for distribution to existing shareholders; charges of the Custodian
and Transfer Agent; certain insurance premiums; outside auditing and legal
expenses; costs of shareholder reports and shareholder meetings; other expenses
which are not expressly assumed by the Adviser, NationsBank, Stephens or First
Data under their respective agreements with Nations Fund; and any extraordinary
expenses. Each class of Shares may bear certain class specific costs associated
with retail transfer agency, shareholder servicing, sales support and
distribution. Any general expenses of Nations Fund that are not readily
identifiable as belonging to a particular investment portfolio are allocated
among all portfolios in the proportion that the assets of a portfolio bears to
the assets of Nations Fund or in such other manner as the Board of Trustees
deems appropriate.
Additional information concerning the attributes of the Shares issued by
Pilot and Nations is included in their respective prospectuses, which are
incorporated herein by reference.
DISTRIBUTION PLANS, ADMINISTRATION PLANS AND SHAREHOLDER SERVICING
ARRANGEMENTS. Shares of the Pilot Funds are distributed by PFD, a broker-dealer
registered with the Commission under the Securities Exchange Act of 1934, as
amended (the "1934 Act"). The Pilot Funds adopted Distribution Plans pursuant to
Rule 12b-l under the 1940 Act for its Class A and Class B Shares. Under these
Plans, PFD receives payments for distribution and support services. The
Distribution Plan for Class A Shares authorizes payments to PFD and service
organizations for personal services provided to Class A shareholders and/or the
maintenance of shareholder accounts. Payments under the Distribution Plan for
Class A Shares may not exceed 0.25% (on an annual basis) of the average daily
net assets of the outstanding Shares to which such Distribution Plan relates.
Distribution payments under the Distribution Plan for Class B Shares
may not exceed 1.00% (on an annual basis ) of the average daily net assets of
the Class B Shares. Not more than 0.25% of such value will be used to compensate
service organizations for personal services provided to Class B shareholders
and/or the maintenance of shareholder accounts. Not more than 0.75% of such
value will be paid to PFD as reimbursement for commissions and transaction fees
as well as expenses related to other promotional and distribution activities.
Actual distribution expenses paid by PFD with respect to Class B Shares for
any given year may exceed the distribution fees and contingent deferred sales
charges received with respect to those Shares. These excess expenses may be
reimbursed by a Pilot Fund or its Class B Shareholders out of contingent
deferred sales charges and distribution payments in future years as long as the
Distribution Plan for Class B Shares is in effect.
The Distributor has voluntarily agreed to limit the fees it receives on
Class A Shares from certain Pilot Funds. Pilot Shares pay no account
administration or Rule 12b-1 fees.
31
<PAGE>
Pilot Administration Shares pay an account administration fee of .25%, and Pilot
Investor Shares pay a Rule 12b-1 fee of 0.50%.
Shares of the Nations Funds are distributed by Stephens, a broker-dealer
registered with the Commission under the 1934 Act, pursuant to a Distribution
Agreement. Stephens receives no compensation in connection with the distribution
of Primary A Shares of the Nations Funds.
INVESTOR A SHARES. The Nations Funds have adopted an Amended and Restated
Shareholder Servicing and Distribution Plan (the "Investor A Plan") pursuant to
Rule 12b-1 under the 1940 Act with respect to each Fund's Investor A Shares. The
Investor A Plan provides that each Fund may pay Stephens or banks,
broker/dealers or other financial institutions that offer Shares of the Fund and
that have entered into a Sales Support Agreement with Stephens ("Selling
Agents") or a Shareholder Servicing Agreement with Nations Fund ("Servicing
Agents"), up to 0.10% (on an annualized basis) of the average daily net asset
value of Investor A Shares of the Money Market Funds and up to 0.25% (on an
annualized basis) of the average daily net asset value of the Non-Money Market
Funds.
INVESTOR B SHARES, INVESTOR N SHARES AND DAILY SHARES: In addition, the
Nations Funds have approved Amended and Restated Shareholder Servicing Plans
("Servicing Plans") with respect to the Investor B and Daily Shares of the Money
Market Funds and Investor N Shares of the Non-Money Market Funds. Pursuant to
the respective Servicing Plans, each Fund may pay Servicing Agents for certain
expenses that are incurred by the Servicing Agents in connection with
shareholder support services that are provided by the Servicing Agents. Payments
under the Servicing Plans will be calculated daily and paid monthly at a rate
set from time to time by the Board, provided that the annual rate may not exceed
0.25% of the average daily net asset value of the Money Market Funds' Investor B
Shares or the Daily Shares or Investor N Shares of the Non-Money Market Funds.
The Nations Funds also have approved Distribution Plans with respect to
Investor N Shares of the Non-Money Market Funds and Investor B and Daily Shares
of the Money Market Funds. Pursuant to the Distribution Plans, a Fund may
compensate or reimburse Stephens for any activities or expenses primarily
intended to result in the sale of such Fund's Shares, including for sales
related services provided by Selling Agents. Payments under a Fund's
Distribution Plan will be calculated daily and paid monthly at a rate or rates
set from time to time by the Board provided that the annual rate may not exceed
0.75% of the average daily net asset value of each Non-Money Market Fund's
Investor N Shares or 0.10% of the Investor B Shares of the Money Market Funds
and 0.45% Daily Shares of the Money Market Funds.
The Pilot Funds have entered into an Administration Agreement with BISYS
Fund Services Limited Partnership. Administrative services are provided to the
Nations Funds by Stephens and First Data as co-administrator and NationsBank as
sub-administrator to
32
<PAGE>
Stephens. The types of administrative services provided to the Pilot Funds and
Nations Funds are substantially similar. BISYS has agreed to voluntarily waive
its fees from, and reimburse certain expenses to, the Pilot Funds under certain
circumstances.
BISYS Fund Services, Inc., a wholly-owned subsidiary of The BISYS Group,
Inc. is the transfer agent for all classes of the Pilot Funds. Prior to April
26, 1996, Primary Fund Services Corporation was the transfer agent for Class A
Shares and Class B Shares of the Pilot Funds. First Data provides substantially
similar transfer agency services with respect to the Shares of the Nations
Funds.
Boatmen's is custodian for each of the Pilot Funds and Banker's Trust
Company is sub custodian for any foreign or certificated securities held by the
Pilot Funds. NationsBank of Texas is custodian for all classes of the Nations
Funds and The Bank of New York is sub-custodian for all classes of the Nations
Funds.
SHAREHOLDER TRANSACTIONS AND SERVICES. The Pilot Funds and the
corresponding Nations Funds offer generally similar shareholder services and
transactions. There are however, some differences. For example, while the Pilot
Funds charge a front-end sales charge on their Class A Shares and a contingent
deferred sales charge on their Class B Shares, the corresponding classes of the
Nations Funds charge neither a front-end nor contingent deferred sales charge on
any of the Shares they offer. However, after the Reorganization, former Class B
Shares will remain subject to the contingent deferred sales charge applicable to
their Class B Shares. In addition, except for Pilot Administration Shares and
Nations Investor B Shares, Nations and Pilot share classes have substantially
similar minimum investment requirements.
After the Reorganization, Nations will continue to honor any standing
instructions regarding the corresponding Pilot Fund classes, under arrangements
such as automatic withdrawal plans, systematic investment plans or dividend
reinvestment plans. In such cases, standing instructions will be subject to the
same or similar terms (e.g., minimum investments, account balances and minimum
transaction amounts) currently in effect, except that there may be exceptions
with respect to the timing of transactions which may need to be altered to
comport with Nations' procedures. Shareholders will be notified of any such
exceptions. After the Reorganization, any instructions given with respect to any
new account will be subject to the terms of the applicable Nations Fund class.
For a complete description and comparison of the terms applicable to standing
instructions and other account features regarding the Pilot and Nations Funds,
see Appendix IV to this Combined Proxy Statement/Prospectus.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION. This Combined Proxy Statement/Prospectus is being
furnished in connection with the solicitation of proxies for the Meeting by the
Board of Trustees of Pilot. It is expected that the solicitation of proxies will
be primarily by mail. Officers and service contractors of Pilot and Nations also
may solicit proxies by telefacsimile. In this connection, Pilot has retained ADP
Proxy Services to assist in the solicitation of proxies
33
<PAGE>
for the Reorganization. Shareholders may vote by (1) mail, by marking, signing,
dating and returning the enclosed Proxy Ballot in the enclosed postage-paid
envelope; or (2) telefacsimile, by marking, signing, dating and faxing the
enclosed Proxy Ballot to ADP Proxy Services at (314) 466-7765. Any shareholder
giving a proxy may revoke it at any time before it is exercised by submitting to
Pilot a written notice or revocation or a subsequently executed proxy or by
attending the Meeting and voting in person.
If a proxy solicitation agent is hired to conduct the proxy vote, the
expenses incurred as a result will not be borne by Pilot shareholders.
Only shareholders of record at the close of business on March 13, 1997 will
be entitled to vote at the Meeting. On that date, the following Pilot Shares
were outstanding and entitled to be voted.
<TABLE>
<CAPTION>
NAME OF PILOT FUND AND CLASS SHARES ENTITLED TO VOTE
<S> <C>
Pilot Diversified Bond Income Fund --
Class A Shares 14,915.758
Class B Shares 34,947.970
Pilot Shares 10,787,767.500
Pilot Growth Fund --
Class A Shares 10,104.149
Class B Shares 34,947.970
Pilot Shares 4,765,687.562
Pilot Growth and Income Fund --
Class A Shares 484,008.134
Class B Shares 382,303.810
Pilot Shares 25,451,887.388
Pilot Intermediate Municipal Bond Fund --
Class A Shares 80,106.148
Class B Shares 0
Pilot Shares 21,045,541.342
Pilot Intermediate U.S. Government Securities
Fund --
Class A Shares 125,249.581
Class B Shares 0
Pilot Shares 23,939,483.134
Pilot Missouri Short-Term Tax-Exempt Fund --
Administration Shares 14,116,719.730
Investor Class 16,915,774.900
Pilot Shares 200,252,728.660
Pilot Municipal Bond Fund --
Class A Shares 149,997.409
34
<PAGE>
NAME OF PILOT FUND AND CLASS SHARES ENTITLED TO VOTE
Class B Shares 144,122.376
Pilot Shares 18,442,154.647
Pilot Short-Term Tax-Exempt Diversified Fund --
Administration Shares 14,756,959.870
Investor Class 7,753,968.320
Pilot Shares 417,068,435.600
</TABLE>
Each whole and fractional share is entitled to a whole or fractional vote.
If the accompanying proxy is executed and returned in time for the Meeting,
the Shares covered thereby will be voted in accordance with the proxy on all
matters that may properly come before the Meeting.
SHAREHOLDER AND BOARD APPROVALS. The Agreement and related matters are
being submitted for approval at the Meeting by Pilot's shareholders pursuant to
the provisions of Pilot's Agreement and Declaration of Trust. With respect to
each Pilot Fund, approval of the Agreement requires the approval of a majority
of the outstanding Shares of that Pilot Fund voting separately on a
portfolio-by-portfolio basis. The Agreement provides that in the event the
Agreement is approved with respect to less than all of the Pilot Funds, the
failure of a Pilot Fund to consummate the transactions contemplated by the
Agreement shall not affect the consummation or validity of any other transaction
or reorganization contemplated by the Agreement.
The approval of the Agreement by the Board of Trustees of Pilot is
discussed above under "Information Relating to the Proposed
Reorganization--Board Consideration." The Agreement was approved by the Board of
Trustees of Nations at a meeting held on February 5-6, 1997.
As of March 13, 1997, the officers and Trustees of Pilot as a group owned
less than 1% of any of the Pilot Funds. As of March 13, 1997, the officers and
Trustees of Nations as a group owned less than 1% of any of the Nations Funds.
Table IV(A) shows the name, address and share ownership of each person known to
Pilot to have beneficial or record ownership with respect to 5% or more of a
class of a Pilot Fund as of March 13, 1997. Table IV(B) shows the name, address
and share ownership of each person known to Nations to have beneficial or record
ownership with respect to 5% or more of a class of a Nations Fund as of March
13, 1997.
TABLE IV(A)
<TABLE>
<CAPTION>
CLASS; AMOUNT OF PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND SHARES OWNED; OF OF OF FUND
35
<PAGE>
PILOT FUND ADDRESS TYPE OF OWNERSHIP CLASS FUND POST-CLOSING
<S> <C> <C> <C> <C> <C>
Pilot Edward Goldsich Class B; 9.73% 0.03% 0.00%
Diversified IRA 3,402.291 Shares;
Bond Income 5115 W. 81st St. Record Holder
Fund Prairie Village, KS
66208
Donaldson Lufkin & Class B; 12.88% 0.04% 0.00%
Jenrette Securities 4,503.969
Corporation Inc. Shares;
PO Box 2052 Record Holder
Jersey City, NJ
07303-9998
Sandra K. Hoots Class B; 13.22% 0.04% 0.00%
1165 Summit Circle 4,623.506 Shares;
Osage Beach, MO 65065 Record Holder
James D. Geskey Class B; 55.30% 0.18% 0.02%
Rollover IRA 19,338.267
800 S. Ocean Blvd, Shares;
Apt. 408 Record Holder
Deerfield Beach, FL
33441
Boatmen's Bancshares Pilot; 8.66% 8.62% 0.83%
Retirement Plan Trust 934,130.853
100 N. Broadway Shares;
St. Louis, MO 63178 Beneficial
Ownership
Pilot Growth Eric K. Schweitzer Class A; 5.12% 0.01% 0.00%
Fund 1344 Carriage Crossing 517.826 Shares;
Chesterfield, MO 63005 Record Holder
David F. Toth Class A; 5.14% 0.01% 0.00%
1711 Deercreek Ln 519.890 Shares;
St. Louis, MO 63124 Record Holder
J. Scott Murphy Class A; 5.15% 0.01% 0.00%
and Stacy E. Murphy 520.891 Shares;
JTWROS Record Holder
7804 Rollingwood West
Dr.
Columbia, MO 65202-7880
Alice J. Barner Class A; 5.96% 0.01% 0.01%
IRA 602.391 Shares;
777 S. Eisenhower Apt. Record Holder
16
Mason City, IA 50401
Robert E. Barner Class A; 13.64% 0.03% 0.01%
6 S. Willowgreen Ct. 1,379.014 Shares;
Mason City, IA Record Holder
50401-1632
Robert E. Barner Class A; 20.75% 0.04% 0.02%
Regular IRA 2,097.603 Shares;
777 S. Eisenhower Apt. Record Holder
16
Mason City, IA 50401
36
<PAGE>
CLASS; AMOUNT OF PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND SHARES OWNED; OF OF OF FUND
PILOT FUND ADDRESS TYPE OF OWNERSHIP CLASS FUND POST-CLOSING
Boatmen's Bancshares Pilot; 8.10% 8.06% 2.22%
Retirement Plan Trust 385,960.989
100 N. Broadway Shares;
St. Louis, MO 63178 Beneficial
Ownerhip
Pilot Thelma M. Roberts Class A; 5.23% 0.02% 0.01%
Intermediate Trst Thelma M. Roberts 4,692.217 Shares;
Municipal Bond Trust Dtd 2/24/94 Record Holder
Fund 1513 Meadow Hill Drive
Mountain Home, AR
72653-5065
Donaldson Lufkin Class A; 5.42% 0.23% 0.02%
Jenrette 4,856.911 Shares;
Securities Corporation Record Holder
Inc.
PO Box 2052
Jersey City, NJ
07303-9998
Elizabeth Carpenter Class A; 5.44% 0.02% 0.02%
Edgewood Apt. 8 4,877.749 Shares;
Laplata, MO 63549 Record Holder
Raymond T. or Mary Jo Class A; 8.43% 0.04% 0.02%
McCarthy TTEE The 7,557.034 Shares;
McCarthy Trust Record Holder
UA Dtd 3/18/91
2141 Englewood Terrace
Ct.
Chesterfield, MO 63017
Donaldson Lufkin Class A; 10.58% 0.04% 0.03%
Jenrette 9,480.945 Shares;
Securities Corporation Record Holder
Inc.
PO Box 2052
Jersey City, NJ
07303-9998
Donaldson Lufkin Class A; 10.64% 0.05% 0.03%
Jenrette 9,534.046 Shares;
Securities Corporation Record Holder
Inc.
PO Box 2052
Jersey City, NJ
07303-9998
Donaldson Lufkin Class A; 10.75% 0.05% 0.03%
Jenrette 9,638.931 Shares;
Securities Corporation Record Holder
Inc.
PO Box 2052
Jersey City, NJ
07303-9998
Stephens Inc. Class A; 24.33% 0.10% 0.07%
FBO A/C 78806218 21,799.346
PO Box 34127 Shares;
Little Rock, AR Record Holder
72203-4127
37
<PAGE>
CLASS; AMOUNT OF PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND SHARES OWNED; OF OF OF FUND
PILOT FUND ADDRESS TYPE OF OWNERSHIP CLASS FUND POST-CLOSING
Pilot Donaldson Lufkin Class A; 5.79% 0.03% 0.01%
Intermediate Jenrette 7,257.554 Shares;
U.S. Securities Corporation Record Holder
Government Inc.
Securities Fund PO Box 2052
Jersey City, NJ
07303-9998
Donaldson Lufkin Class A; 10.37% 0.05% 0.01%
Jenrette 12,995.392
Securities Corporation Shares;
Inc. Record Holder
PO Box 2052
Jersey City, NJ
07303-9998
Donaldson Lufkin Class A; 5.20% 0.03% 0.00%
Jenrette 6,515.647 Shares;
Securities Corporation Record Holder
Inc.
PO Box 2052
Jersey City, NJ
07303-9998
Donaldson Lufkin Class A; 5.30% 0.03% 0.00%
Jenrette 6,709.165 Shares;
Securities Corporation Record Holder
Inc.
PO Box 2052
Jersey City, NJ
07303-9998
Donaldson Lufkin Class A; 5.52% 0.03% 0.01%
Jenrette 6,924.805 Shares;
Securities Corporation Record Holder
Inc.
PO Box 2052
Jersey City, NJ
07303-2052
Donaldson Lufkin Class A; 5.54% 0.03% 0.01%
Jenrette 6,948.650 Shares;
Securities Corporation Record Holder
Inc.
PO Box 2052
Jersey City, NJ
07303-2052
Mildred L. DeMartini Class A; 5.63% 0.05% 0.03%
308 W. Chestnut 9,038.453 Shares;
Gillespie, IL 62033 Record Holder
Pilot Donaldson Lufkin Class A; 5.82% 0.05% 0.03%
Municipal Bond Jenrette 9,334.441 Shares;
Fund Securities Corporation Record Holder
Inc.
PO Box 2052
Jersey City, NJ
07303-9998
38
<PAGE>
CLASS; AMOUNT OF PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND SHARES OWNED; OF OF OF FUND
PILOT FUND ADDRESS TYPE OF OWNERSHIP CLASS FUND POST-CLOSING
Donaldson Lufkin Class A; 10.97% 0.10% 0.06%
Jenrette 17,583.215
Securities Corporation Shares;
Inc. Record Holder
PO Box 2052
Jersey City, NJ
07303-9998
Stephens Inc. FBO Class A; 11.17% 0.10% 0.06%
Acct 78900174 17,917.254
PO Box 34127 Shares;
Little Rock, AR 72203 Record Holder
Raymond T. Mary Jo Class A; 14.42% 0.12% 0.08%
McCarthy TTEES The 23,112.280
McCarthy Trust Shares;
UA Dtd 3/18/91 Record Holder
2141 Englewood Terrace
Ct.
Chesterfield, MO 63017
Donaldson Lufkin Class B; 5.60% 0.04% 0.03%
Jenrette 8,083.800 Shares;
Securities Corporation Record Holder
Inc.
PO Box 2052
Jersey City, NJ
07303-9998
Donaldson Lufkin Class B; 6.03% 0.05% 0.03%
Jenrette 8,694.252 Shares;
Securities Corporation Record Holder
Inc.
PO Box 2052
Jersey City, NJ
07303-9998
Donaldson Lufkin Class B; 6.80% 0.05% 0.03%
Jenrette 9,810.047 Shares;
Securities Corporation Record Holder
Inc.
PO Box 2052
Jersey City, NJ
07303
Donaldson Lufkin Class B; 8.25% 0.06% 0.04%
Jenrette 11,893.084
Securities Corporation Shares;
Inc. Record Holder
PO Box 2052
Jersey City, NJ
07303-9998
Donaldson Lufkin Class B; 15.87% 0.12% 0.08%
Jenrette 22,877.930
Securities Corporation Shares;
Inc. Record Holder
PO Box 2052
Jersey City, NJ
07303-2052
39
<PAGE>
CLASS; AMOUNT OF PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND SHARES OWNED; OF OF OF FUND
PILOT FUND ADDRESS TYPE OF OWNERSHIP CLASS FUND POST-CLOSING
Boatmen's Trust Co. of Pilot; 7.62% 7.50% 4.89%
St. Louis 1,403,775.186;
100 N. Broadway Beneficial
St. Louis, MO 63178 Ownership
Pilot Robert Sunderland Administration; 20.54% 0.67% 0.13%
Short-Term Tax PO Box 26900 2,959,416.92
Exempt Shawnee Mission, KS Shares;
Diversified 66228 Record Holder
Fund
Ed A. Schermerhorn Administration; 6.94% 0.23% 0.04%
2217 E. Skelly Dr. 1,024,173.82
Tulsa, OK 74105 Shares;
Record Holder
Frank Comfort Administration; 21.86% 0.73% 0.14%
4912 Cedar Dr. 3,226,238.98
W. Des Moines, IA Shares;
50266-1935 Record Holder
H.J. Freede Inc. Administration; 25.45% 0.85% 0.16%
c/o Ken Townsend- 3,756,378.94
Exec. Office Shares;
Boatmen's Bank - Record Holder
16 South
PO Box 25189
Oklahoma City, OK 73125
H.J. Freede Operating Administration; 5.63% 0.19% 0.04%
c/o Ken Townsend 831,244.80
Exec. Office Shares;
Boatmen's Bank Record Holder
16 South Wed.
PO Box 25189
Oklahoma City, OK 73125
MN Osborne & Assoc. Administration; 5.36% 0.18% 0.03%
Inc. 791,146.17
PO Box 1014 Shares;
Camden, AR Record Holder
71701-1014
Arkansas Valley Investor; 40.23% 0.71% 0.14%
Petroleum 3,118,998.32
Attn: Karen Shares;
5316 E. 73rd St. Record Holder
Tulsa, OK 74133
Stephens Inc. Investor; 40.00% 0.71% 0.14%
Omnibus Account 3,101,682.04
Attn: Jean Geiger Shares;
111 Center Street Record Holder
Little Rock, AR
72201
Boatmen's Trust Company Pilot; 100% 92.97% 17.80%
Attn: Fund Acctg 408,678,827.56
100 N. Broadway Shares;
DBT 0786 Record Holder
40
<PAGE>
CLASS; AMOUNT OF PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND SHARES OWNED; OF OF OF FUND
PILOT FUND ADDRESS TYPE OF OWNERSHIP CLASS FUND POST-CLOSING
St. Louis, MO 63102
Thermoflux, Inc. Investor; 5.79% 0.10% 0.02%
6506 S. Lewis 449,066.14
Ste. 116 Shares;
Tulsa, OK 74136 Record Holder
</TABLE>
TABLE IV(B)
<TABLE>
<CAPTION>
CLASS; AMOUNT OF PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND SHARES OWNED; OF OF OF FUND
NATIONS FUND ADDRESS TYPE OF OWNERSHIP CLASS FUND POST-CLOSING
<S> <C> <C> <C> <C> <C>
Nations Strategic Rental Uniform of Investor A; 7.37% 0.05% 0.04%
Fixed Income Fund Florence 48,092.856
P.O. Box 12410 Shares;
Florence, SC Record Holder
29504-0410
Sheryle ISAACS TTEE Investor A; 12.62% 0.08% 0.07%
Good Buy Sportswear 82,301.695
401K Savings Plan Shares;
2400 31st St. S Beneficially Owned
St. Petersburg,
FL 33712
Dean Witter Investor N; 9.93% 0.02% 0.02%
Reynolds Cust For 21,708.841
Robert A. Pierce Shares;
IRA Rollover Dated Beneficially Owned
6/14/93
10 Lavington Ct.
Columbia, SC
29209-1044
Conchita H. Investor N; 5.38% 0.01% 0.01%
Pecache MC PC 11,752.966
Anesthesia Shares;
Services Pension Beneficially Owned
Plan
610 West Avenue,
West
Madison, TN
37115-4422
NationsBank of Primary A; 97.39% 93.60% 84.63%
Texas NA 95,708,210.315
Attn: Adrian Shares;
Castillo Beneficially Owned
1401 Elm Street
11th Floor
Dallas, TX
75202-2911
Nations Ron Underwood & Investor A; 9.70% 0.41% 0.25%
Disciplined David Brown TTEES 29,538.491
Equity Fund Dallas Heart Group Shares;
41
<PAGE>
CLASS; AMOUNT OF PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND SHARES OWNED; OF OF OF FUND
NATIONS FUND ADDRESS TYPE OF OWNERSHIP CLASS FUND POST-CLOSING
401K Plan Beneficially Owned
11520 N Central
Expwy #105
Dallas, TX 75243
Jack B. Chadsey Investor A; 10.91% 0.46% 0.28%
9050 Hammock Lake 33,231.722 Shares;
Drive Record Holder
Miami, FL 33156
Zachary Taylor Investor A; 6.03% 0.26% 0.15%
TTEE FBO 18,367.337
Kleen Tex Shares;
Industries Inc. Beneficially Owned
PSP & 401K Savings
Plan and Trust
P.O. Box KTI
La Grange, CA
30241
NationsBank of Primary A; 98.97% 79.16% 47.50%
Texas NA 5,687,175.915
Attn: Adrian Shares;
Castillo Beneficially Owned
1401 Elm Street
11th Floor
Dallas, TX
75202-2911
Nations Value Fund NationsBank of Primary A; 95.78% 81.77% 61.19%
Texas NA 63,982,899.800
Attn: Adrian Shares;
Castillo Beneficially Owned
1401 Elm Street
11th Floor
Dallas, TX
75202-2911
Nations Lonnie K. Investor A; 11.03% 0.20% 0.07%
Intermediate Ledbetter and 21,668.752
Municipal Bond Sandra Ledbetter Shares;
Fund JTWROS Record Holder
P.O. Box 5687
Arlington, TX
76005-0000
Charles W. Doolin Investor A; 13.98% 0.25% 0.09%
3508 Harvard Ave. 27,468.244
Dallas, TX Shares;
75205-0000 Record Holder
Leslie T. Oliver & Investor A; 5.20% 0.09% 0.03%
James B. Oliver 10,217.112
Co-TTEES Margaret Shares;
Terrell Oliver Beneficially Owned
Rev Trust Dated
8-24-95
1836 N Alanton
Drive
Virginia Beach,
VA 23454
42
<PAGE>
CLASS; AMOUNT OF PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND SHARES OWNED; OF OF OF FUND
NATIONS FUND ADDRESS TYPE OF OWNERSHIP CLASS FUND POST-CLOSING
Laverne A. Nebel Investor A; 17.26% 0.31% 0.11%
TTEE 33,914.729
Laverne A. Nebel Shares;
Trust Beneficially Owned
Dtd 11/04/92
2248 Kingfisher
Lane
Clearwater, FL
34622-3322
Helen Goh & Investor A; 6.21% 0.11% 0.04%
Jeffrey M. Kadet 12,200.143
JTWROS Shares; Record
c/o Arthur Holder
Anderson & Co.
Moscow
225 N. Michigan
14th Floor
Chicago, IL 60601
Joanne B. Stegall Investor N; 9.84% 0.13% 0.05%
517 Cameo Terrace 14,537.902 Shares;
Chesapeake, VA Record Holder
23320
Eleanor B. Calkins Investor N; 6.61% 0.09% 0.03%
and W. D. Calkins 9,765.000 Shares;
JTTEN Record Holder
9602 Baseline
Dallas, TX 75243
Ellen Aston Paull Investor N; 10.57% 0.14% 0.05%
1407 N. Weston Lane 15,625.000 Shares;
Austin, TX 78733 Record Holder
Jane L. Winer and Investor N; 5.13% 0.07% 0.02%
Monty J. Strauss 7,578.391;
JTTEN Record Holder
4209 88th Street
Lubbock, TX 79423
Jerry Ann Bell Investor N; 6.43% 0.09% 0.03%
213 Lucille Lane 9,501.192 Shares;
Toccoa, GA 30577 Record Holder
Win Communication Investor N; 17.31% 0.23% 0.08%
Corp 25,570.539 Shares;
Attn: Bob Poole Record Holder
6755 Jimmy Carter
Blvd.
Norcross, GA
30071-1702
43
<PAGE>
CLASS; AMOUNT OF PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND SHARES OWNED; OF OF OF FUND
NATIONS FUND ADDRESS TYPE OF OWNERSHIP CLASS FUND POST-CLOSING
NationsBank of Primary A; 100.00% 96.18% 32.90%
Texas NA 10,562,378.306
Attn: Adrian Shares;
Castillo Beneficiallly
1401 Elm Street Owned
11th Floor
Dallas, TX
75202-2911
Nations Short- James Street Investor A; 5.49% 0.53% 0.44%
Intermediate Property Investors 587,309.126
Government Fund 600 Atlantic Ave. Shares;
Suite 2000 Record Holder
Boston, MA 02210
Burgess Pigment Co. Investor A; 7.47% 0.72% 0.59%
P.O. Box 349 Deck 798,940.107
Blvd. Shares;
Sandersville, GA Record Holder
31082
NationsBank of Primary A; 96.37% 82.89% 68.10%
Texas NA 91,885,934.980
Attn: Adrian Shares;
Castillo Beneficially Owned
1401 Elm Street
11th Floor
Dallas, TX
75202-2911
Nations Tax Hare & Co, Bank of Investor B; 8.09% 1.00% 0.71%
Exempt Fund New York 16,285,824.200
Attn: STIF/Master Shares;
Note Record Holder
One Wall Street
2nd Floor
New York, NY 10286
Alvin C. Copeland Investor B; 9.23% 1.14% 0.81%
1405 Airline Hwy 18,580,799.000
Metairie, LA 70001 Shares;
Record Holder
C. Robert Hanley Investor B; 6.98% 0.87% 0.61%
2808 Tarflower Way 14,057,505.540
Naples, FL 33942 Shares;
Record Holder
Stephens Inc for Daily Shares; 100.00% 0.00% 0.00%
the Exclusive 2,119.490 Shares;
Benefit of our Beneficially Owned
Customers
111 Center Street
Little Rock AR
72201
44
<PAGE>
CLASS; AMOUNT OF PERCENTAGE PERCENTAGE PERCENTAGE
NAME AND SHARES OWNED; OF OF OF FUND
NATIONS FUND ADDRESS TYPE OF OWNERSHIP CLASS FUND POST-CLOSING
NationsBank of Primary A; 100.00% 73.92% 52.31%
Texas NA 1,200,470,060.980
Attn: Adrian Shares;
Castillo Beneficially Owned
1401 Elm Street
11th Floor
Dallas, TX
75202-2911
Nations Municipal Irwin Grossman Investor A; 8.09% 1.13% 0.39%
Income Fund 540 Preston Commons 112,547.627
8117 Preston Road Shares;
Dallas, TX Record Holder
75225-6312
NationsBank of Primary A; 100.00% 70.93% 24.65%
Texas NA 7,076,689.161
Attn: Adrian Shares;
Castillo Beneficially Owned
1401 Elm Street
11th Floor
Dallas, TX
75202-2911
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company. Accordingly, to the extent that a
shareholder identified in the foregoing table is identified as the beneficial
holder or more than 25% of a class, or is identified as the holder of record of
more than 25% of a class and has voting and/or investment power, it may be
presumed to control such class.
QUORUM. In the event that a quorum is not present at the Meeting, or in the
event that a quorum is present at the Meeting but sufficient votes to approve
the Agreement are not received by one or more of the Pilot Funds, one or more
adjournment(s) may be proposed to permit further solicitation of proxies. Any
adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting, without the necessity of further notice. A
majority of the Shares voted, at a shareholder meeting of which a quorum is
present, shall decide any questions, except when a different vote is required or
permitted by any provision of the 1940 Act or other applicable law or by the
Pilot Agreement and Declaration of Trust or By-Laws. For purposes of determining
the presence of a quorum for transacting business at the Meeting, abstentions
will be treated as shares that are present at the Meeting but which have not
been voted. Abstentions will have the effect of a "no" vote for purposes of
obtaining the requisite approvals. Broker "non-votes" (that is, proxies from
brokers or nominees indicating that such persons have not received instructions
from the beneficial owners or other persons entitled to vote shares on a
particular matter with respect to which the brokers or nominees do not have
discretionary power) will be treated as abstentions, the effect of which is
described above.
45
<PAGE>
ANNUAL MEETING AND SHAREHOLDER MEETINGS. Neither Nations or Pilot presently
intends to hold annual meetings of shareholders for the election of
directors/trustees and other business unless otherwise required by the 1940 Act.
Under certain circumstances, however, shareholders of the Pilot Funds have the
right to call a meeting of shareholders if for a period of 75 days after written
request by shareholders holding at least a majority of the Shares then
outstanding of any Pilot Fund or class entitled to vote upon any matter
requiring action by the shareholders pursuant to the Pilot Agreement and
Declaration of Trust that a meeting be called to consider action on such
matters, then that majority may call and give notice of such meeting. Similarly,
under certain circumstances, shareholders may request that the Directors of
Nations call a shareholder meeting; the Secretary of Nations shall call a
meeting upon the written request of shareholders owning at least 10% of the
outstanding Shares entitled to vote and upon payment by such shareholders of the
estimated cost of preparing and mailing a notice of the meeting.
ADDITIONAL INFORMATION ABOUT NATIONS
Additional information about the Nations Funds is included in their
prospectuses and statements of additional information dated July 31, 1996, as
supplemented through the date hereof, copies of which, to the extent not
included herewith, may be obtained without charge by writing or calling Nations
at the address and telephone number set forth on the first page of this Combined
Proxy Statement/Prospectus. Nations is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended, and the 1940 Act, and in
accordance therewith it files reports, proxy materials and other information
with the SEC. Reports and other information filed by Nations can be inspected
and copied at the Public Reference Facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the offices of Nations listed above.
In addition, these materials can be inspected and copied at the SEC's Regional
Offices at 7 World Trade Center, Suite 1300, New York, New York 10048, and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials also can be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates.
Officers of Nations are elected by, and serve at the pleasure of, the Board
of Trustees. Officers of Nations receive no remuneration from Nations for their
services in such capacities.
PENDING LEGAL PROCEEDINGS. A purported class action lawsuit against, among
others, Nations Short-Intermediate Government Fund was filed by Lawrence Bergelt
on May 21, 1996. The complaint was amended and consolidated on July 11, 1996 in
the United States District Court for the Middle District of Florida, Tampa
Division by Mr. Bergelt and others in an action against the two funds,
NationsBank Corporation and certain of its affiliates, Dean Witter Distributors
and certain of its
46
<PAGE>
affiliates, and Stephens Inc. (Case No. 94-995-Civ.-T-23E). As relevant to
Nations Short-Intermediate Government Fund, plaintiffs allege that, among other
things, defendants violated the Securities Exchange Act of 1934 and various
state securities fraud statutes by employing a scheme to defraud plaintiffs into
purchasing shares of the fund and making untrue statements of material fact and
omitting to state material facts in connection with sales of shares of the
funds. Plaintiffs further allege that, among other things, defendants concealed
the risks associated with such funds by blurring the distinctions between banks
and non-bank subsidiaries and by obscuring the differences between traditional,
federally insured bank products and uninsured, non-depository products.
ADDITIONAL INFORMATION ABOUT PILOT
Additional information about the Pilot Funds is included in their
prospectuses and statements of additional information, dated January 2, 1997 as
supplemented through the date hereof, which have been filed with the SEC. Copies
of these prospectuses and the related statements of additional information may
be obtained without charge by or calling Pilot at the address and telephone
number set forth on the first page of this Combined Proxy Statement/Prospectus.
Reports and other information filed by Pilot can be inspected and copied at the
Public Reference Facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the offices of Pilot listed above. In addition,
these materials can be inspected and copied at the SEC's Regional Offices at 7
World Trade Center, Suite 1300, New York, New York 10048, and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials also can be obtained from the Public Reference Branch,
Office of Consumer Affairs and Information Services, Securities and Exchange
Commission, Washington, D.C. 20549, at prescribed rates.
FINANCIAL STATEMENTS
The unaudited financial statements and condensed financial information for
Shares of the Nations Funds for the semi-annual period ended September 30, 1996
are included or incorporated by reference in their prospectuses or statements of
additional information, or in the statement of additional information related to
this Combined Proxy Statement/Prospectus. The audited financial statements and
condensed financial information for Shares of the Pilot Fund for the annual
period ended August 31, 1996 are included or incorporated by reference in their
prospectuses or statements of additional information or in the statement of
additional information related to this Combined Proxy Statement/Prospectus, or
are included herein.
The annual financial statements and financial highlights have been audited
by independent auditors to the extent indicated in their reports thereon, also
incorporated by reference or included in such prospectuses and statements of
additional information, and
47
<PAGE>
have been incorporated herein by reference in reliance upon such reports given
upon the authority of such firms as experts in accounting and auditing.
The audited financial statements and financial highlights of the Nations
Funds as of and for the year ended March 31, 1996, have been incorporated by
reference herein and in the statement of additional information in reliance upon
the report of Price Waterhouse LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The financial statements and financial highlights of the Pilot Funds as of
and for the year ended August 31, 1996, have been incorporated by reference
herein and in the registration statement. These financial statements have been
audited by Arthur Andersen LLP, independent auditors, as stated in their
reports, which have also been incorporated by reference herein, and have been so
included upon the report of such firm given upon their authority as experts in
accounting and auditing.
OTHER BUSINESS
Pilot's Board of Trustees knows of no other business to be brought before
the Meeting. However, if any other matters come before the Meeting, it is the
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 form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to The Pilot Funds or to Nations
Fund, Inc. in writing at the address(es), or by phone at the phone number(s), on
the cover page of this Combined Proxy Statement/Prospectus.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED
TO MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
SHAREHOLDERS ALSO MAY RETURN PROXIES BY TELEFACSIMILE.
THE PILOT FUNDS WILL FURNISH, WITHOUT CHARGE, COPIES OF ITS AUGUST 31, 1996
ANNUAL SHAREHOLDERS REPORT TO ANY SHAREHOLDER UPON REQUEST ADDRESSED TO: THE
PILOT FUNDS 3435 STELZER ROAD, COLUMBUS, OHIO 43219-3035 OR BY TELEPHONE AT
1-800-717-4568
48
<PAGE>
APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made as of this 22nd day of March, 1997, by and between Nations Fund Trust
("Nations Fund"), a Massachusetts business trust, for itself and on behalf of
Nations Tax Exempt Fund, Nations Value Fund, Nations Disciplined Equity Fund,
Nations Strategic Fixed Income Fund, Nations Short-Intermediate Government Fund,
Nations Intermediate Municipal Bond Fund and Nations Municipal Income Fund (each
an "Acquiring Fund" and collectively, the "Acquiring Funds"), all portfolios of
Nations Fund, and The Pilot Funds ("Pilot Funds"), a Massachusetts business
trust, for itself and on behalf of Pilot Short-Term Tax-Exempt Diversified Fund,
Pilot Missouri Short-Term Tax-Exempt Fund, Pilot Growth and Income Fund, Pilot
Growth Fund, Pilot Diversified Bond Income Fund, Pilot Intermediate U.S.
Government Securities Fund, Pilot Intermediate Municipal Bond Fund and Pilot
Municipal Bond Fund (each an "Acquired Fund" and collectively, the "Acquired
Funds"), all portfolios of Pilot Funds.
In accordance with the terms and conditions set forth in this
Agreement, the parties desire that all of the assets of each Acquired Fund be
transferred to each Acquiring Fund corresponding thereto, as set forth in the
table attached hereto as Schedule A, in exchange for shares of specified classes
of the corresponding Acquiring Fund ("Acquiring Fund Shares") and the assumption
by each Acquiring Fund of the Stated Liabilities (as defined in paragraph 1.3)
of each corresponding Acquired Fund, and that such Acquiring Fund Shares be
distributed immediately after the Closing(s), 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 reorganization for each
Acquired Fund within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
In consideration of the promises and of the covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
1. REORGANIZATION OF ACQUIRED FUNDS
1.1 Subject to the terms and conditions herein set forth, and on
the basis of the representations and warranties contained
herein, each Acquired Fund shall assign, deliver and otherwise
transfer its assets as set forth in paragraph 1.2 (the "Fund
Assets") to its corresponding Acquiring Fund identified in
Schedule A, and such corresponding Acquiring Fund shall, as
consideration therefor, on the Closing Date (as defined in
paragraph 3.1), (i) deliver to such Acquired Fund full and
fractional
I-1
<PAGE>
Acquiring Fund Shares, the number of which shall be
determined by dividing (a) that portion of the value of the
Fund Assets, net of an Acquired Fund's Stated Liabilities,
computed in the manner and as of the time and date set forth
in paragraph 2.1, representative of the shares of beneficial
interest of each Acquired Fund, by (b) the net asset value of
one share of each Acquiring Fund's class of shares identified
in Schedule A, computed in the manner and as of the time and
date set forth in paragraph 2.2, and (ii) assume the Acquired
Fund's Stated Liabilities. Such transfer, delivery and
assumption shall take place at the closing(s) provided for in
paragraph 3.1 (hereinafter sometimes referred to as the
"Closing(s)"). Promptly after the Closing(s), each Acquired
Fund shall distribute the Acquiring Fund Shares to the
shareholders of the Acquired Fund in liquidation of the
Acquired Fund as provided in paragraph 1.4 hereof. Such
transaction(s) are hereinafter sometimes collectively referred
to as the "Reorganization(s)."
1.2.a. With respect to each Acquired Fund, the 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 the Closing Date.
1.2.b. At least fifteen (15) business days prior to the Closing Date,
each Acquired Fund will provide the corresponding Acquiring
Fund with a schedule of its securities and other assets and
its known liabilities, and such Acquiring Fund will provide
the Acquired Fund with a copy of the current investment
objective and policies applicable to each Acquiring Fund. Each
Acquired Fund reserves the right to sell any of the securities
or other assets shown on the list of the Fund's Assets prior
to the Closing Date but will not, without the prior approval
of the corresponding Acquiring Fund, acquire any additional
securities other than securities which the Acquiring Fund is
permitted to purchase in accordance with its stated investment
objective and policies. At least ten (10) business days prior
to the Closing Date, the Acquiring Fund will advise the
corresponding Acquired Fund of any investments of such
Acquired Fund shown on such schedule which the Acquiring Fund
would not be permitted to hold, pursuant to its stated
investment objective and policies or otherwise. In the event
that the Acquired Fund holds any investments that its
corresponding Acquiring Fund would not be permitted to hold
under its stated investment
I-2
<PAGE>
objective or policies, the
Acquired Fund, if requested by the Acquiring Fund and, to the
extent permissible and consistent with the Acquired Fund's own
investment objective and policies, will dispose of such
securities prior to the Closing Date. In addition, if it is
determined that the portfolios of the Acquired Fund and the
Acquiring Fund, when aggregated, would contain investments
exceeding certain percentage limitations to which the
Acquiring Fund is or will be subject with respect to such
investments, the Acquired Fund, if requested by the Acquiring
Fund and, to the extent permissible and consistent with the
Acquired Fund's own investment objective and policies, will
dispose of and/or reinvest a sufficient amount of such
investments as may be necessary to avoid violating such
limitations as of the Closing Date.
1.3. Each Acquired Fund will endeavor to discharge all of its
known liabilities and obligations prior to the Closing Date.
Each Acquiring Fund will assume all liabilities and
obligations disclosed on an unaudited statement of assets and
liabilities of the corresponding Acquired Fund prepared by or
on behalf of Pilot Funds as of the Applicable Valuation Date
(as defined in paragraph 2.1), in accordance with generally
accepted accounting principles consistently applied from the
prior audited period ("Stated Liabilities"). The Acquiring
Fund shall assume only the 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 the Closing(s) with respect to each Acquired
Fund, the Acquired Fund will distribute the Acquiring Fund
Shares received by the Acquired Fund pursuant to paragraph 1.1
PRO RATA to its shareholders of record determined as of the
close of business on the Closing Date ("Acquired Fund
Investors") in complete liquidation of the Acquired Fund. Such
distribution will be accomplished by an instruction, signed by
an appropriate officer of Pilot Funds, to transfer the
Acquiring Fund Shares then credited to the Acquired Fund's
account on the books of the Acquiring Fund to open accounts on
the books of the Acquiring Fund established and maintained by
the Acquiring Fund's transfer agent in the names of record of
the Acquired Fund Investors and representing the respective
PRO RATA number of shares of the Acquiring Fund due such
Acquired Fund Investor. In exchange for Acquiring Fund Shares
distributed, all issued and outstanding shares of beneficial
interest of the Acquired Fund will be redeemed and canceled
simultaneously therewith on the
I-3
<PAGE>
Acquired Fund's books; any outstanding share certificates
representing interests in the Acquired Fund thereafter will
represent the right to receive such number of Acquiring
Fund Shares after the Closing(s) as determined in accordance
with Section 1.1.
1.5. If a request shall be made for a change of the registration
of shares of each Acquiring Fund to another person from the
account of the shareholder in which name the shares are
registered in the records of the Acquired Fund it shall be a
condition of such registration of shares that there be
furnished the 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, the
certificates representing such shares, and that the person
requesting such registration shall pay to such Acquiring Fund
any transfer or other taxes required by reason of such
registration or establish to the reasonable satisfaction of
the Acquiring Fund that such tax has been paid or is not
applicable.
1.6. Following the transfer of assets by each Acquired Fund to the
corresponding Acquiring Fund, the assumption of the Acquired
Fund's Stated Liabilities by the Acquiring Fund, and the
distribution by the Acquired Fund of the Acquiring Fund Shares
received by it pursuant to paragraph 1.4, Pilot Funds shall
terminate the qualification, classification and registration
of such Acquired Fund at all appropriate federal and state
agencies. All reporting and other obligations of Pilot Funds
shall remain the exclusive responsibility of Pilot Funds up to
and including the date on which the particular Acquired Fund
is terminated and deregistered, subject to any reporting or
other obligations described in paragraph 4.10.
1.7. The failure of one Acquired Fund to consummate the
transactions contemplated hereby shall not affect the
consummation or validity of a Reorganization with respect to
any other Acquired Fund, and the provisions of this Agreement
shall be construed to effect this intent, including, without
limitation, as the context requires, construing the terms
"Acquiring Fund" and "Acquired Fund" as meaning only those
series of Nations Fund and Pilot Funds, respectively, which
are involved in a Reorganization as of a Closing Date.
I-4
<PAGE>
2. VALUATION
2.1. With respect to each Acquired Fund, the value of the Fund
Assets shall be the value of such assets computed as of the
time at which its net asset value is calculated pursuant to
the valuation procedures set forth in each Acquiring Fund's
then current prospectus and statement of additional
information on the Closing Date (such time and date being
herein called the "Applicable Valuation Date").
2.2. The net asset value of the share of a class of shares of an
Acquiring Fund shall be the net asset value per share of such
class computed on the Applicable Valuation Date, using the
valuation procedures set forth in the 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 the 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 Pilot Funds and each Acquired Fund
at the Closing(s).
3. CLOSING(S) AND CLOSING DATE
3.1. The Closing(s) for the Reorganization(s) shall occur on May
16, 1997, and/or on such other date(s) as may be mutually
agreed upon in writing by the officers of the parties hereto
(the "Closing Date"). The Closing(s) shall be held at the
offices of Stephens Inc., 111 Center Street, Suite 300, Little
Rock, Arkansas 72201 or at such other location as is mutually
agreeable to the parties. All acts taking place at the
Closing(s) shall be deemed to take place simultaneously as of
4:00 p.m. Eastern time on the Closing Date unless otherwise
provided.
3.2. Each Acquiring Fund's custodian shall deliver at the
Closing(s) 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 the
corresponding Acquiring Fund on the 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 the delivery of portfolio securities. Proper
delivery of cash shall
I-5
<PAGE>
be by wire to The Bank of New York, the
Acquiring Funds' Sub-Custodian, pursuant to instruction to be
delivered prior to the Closing(s).
3.3. Notwithstanding anything herein to the contrary, in the event
that on the Applicable Valuation Date (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall
be restricted or (b) trading or the reporting of trading on
such exchange or elsewhere shall be disrupted so that, in the
judgment of Nations Fund and Pilot Funds, accurate appraisal
of the value of the net assets of an Acquiring Fund or an
Acquired Fund is impracticable, the Applicable Valuation Date
and Closing Date shall be postponed until the first business
day after the 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, Pilot Funds shall provide
Nations Fund and its transfer agents with immediate access
from and after the Closing Date to (a) the computer,
electronic or such other forms of records containing the
names, addresses and taxpayer identification numbers of all of
the Acquired Fund investors ("Acquired Fund Investor") and the
number and percentage ownership of outstanding Acquired Fund
shares owned by such Acquired Fund Investor, all as of the
Applicable Valuation Date, and (b) all original documentation
(including all applicable Internal Revenue Service forms,
certificates, certifications and correspondence) relating to
the 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
the Secretary or Assistant Secretary of Pilot Funds, acting on
behalf of the Acquired Fund, a confirmation evidencing the
Acquiring Fund Shares credited on the 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 the books of each Acquiring Fund. At the
Closing(s), each party shall deliver to the 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 the Closing Date, each Acquired
Fund shall deliver, in accordance with Article 1 hereof, to
the corresponding Acquiring Fund a statement of the Fund
Assets and Stated Liabilities, together with a list of such
Acquired Fund's portfolio securities and
I-6
<PAGE>
other assets showing the respective adjusted bases and
holding periods thereof for income tax purposes, as of the
Closing Date, certified by an appropriate officer of Pilot
Funds.
3.6 Each Acquiring Fund will cause a confirmation statement to be
mailed or delivered to each corresponding Acquired Fund
Investor setting forth the number of Acquiring Fund Shares
registered in such Acquired Fund Investor's name.
4. COVENANTS WITH RESPECT TO THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS
4.1. Pilot Funds, with respect to the Acquired Funds, has called
or will call a meeting of Pilot Fund shareholders to consider
and act upon this Agreement, and to take all other actions
reasonably necessary to obtain the approval of the
transactions contemplated herein, including approval for each
Acquired Fund's liquidating distribution of the Acquiring Fund
Shares contemplated hereby, and for Pilot 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 Pilot Funds will
jointly prepare the 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 Pilot Funds with a current,
effective prospectus, including any supplements, relating to
the class of shares of each Acquiring Fund corresponding to
the class of shares of each Acquired Fund then outstanding for
incorporation within and/or distribution with the Proxy
Materials, and with such other information relating to the
Acquiring Funds as is reasonably necessary for the preparation
of the Proxy Materials.
4.2. Nations Fund, on behalf of each Acquiring Fund, will use its
best efforts to meet the requirements for the statutory
exemption provided by Section 15(f) of the Investment Company
Act of 1940 (the "1940 Act").
4.3. Pilot Funds, on behalf of each Acquired Fund, covenants that
the corresponding Acquiring Fund Shares to be issued hereunder
are not being acquired for the purpose of making any
distribution thereof, other than in accordance with the terms
of this Agreement.
I-7
<PAGE>
4.4. Pilot Funds, on behalf of each Acquired Fund, will assist the
corresponding Acquiring Fund in obtaining such information as
the Acquiring Fund reasonably requests concerning the record
and beneficial ownership of shares of each class of each
Acquired Fund.
4.5. Subject to the provisions hereof, Nations Fund, on its own
behalf and on behalf of each Acquiring Fund; and Pilot 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 the transactions contemplated
herein.
4.6. Pilot Funds, on behalf of each Acquired Fund, shall furnish
to its corresponding Acquiring Fund on the Closing Date, a
final statement of the total amount of each Acquired Fund's
assets and liabilities as of the Closing Date, which statement
shall be certified by an appropriate officer of Pilot 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 the
Closing Date, Pilot 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
Pilot Funds of such Acquired Fund's federal income tax
attributes that will be carried over to the corresponding
Acquiring Fund in the reorganization pursuant to Section 381
of the Code.
4.7. Nations Fund, on behalf of each Acquiring Fund, has prepared
and filed, or will prepare and file with the SEC a
registration statement on Form N-14 under the Securities Act
of 1933, as amended (the "1933 Act"), relating to the
Acquiring Fund Shares, which, without limitation, shall
include a proxy statement of Pilot Funds and the prospectuses
of the Acquiring Funds of Nations Fund relating to the
transactions contemplated by this Agreement (the "Registration
Statement"). Pilot Funds, on behalf of each Acquired Fund, has
provided or will provide each corresponding Acquiring Fund
with the materials and information necessary to prepare the
Proxy Materials for inclusion in the 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 the corresponding
I-8
<PAGE>
Acquiring Fund and as are reasonably necessary for the
preparation of the Registration Statement.
4.8. As soon after the Closing Date as is reasonably practicable,
Pilot 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 the 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 the Closing Date.
4.9. 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 the Code, for at least one (1) year following the Closing
Date.
4.10. Following the transfer of assets by each Acquired Fund to the
corresponding Acquiring Fund in exchange for Acquiring Fund
Shares and the assumption of the Stated Liabilities of the
Acquired Fund as contemplated herein, Pilot 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 the Closing Date and also
will take all other steps as are necessary and proper to
effect the termination or declassification of such Acquired
Funds of Pilot Funds in accordance with the laws of the
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 the Pilot Funds as follows:
5.1.a Nations Fund was duly created pursuant to its
Declaration of Trust by the Trustees for the purpose
of acting as a management investment company under
the 1940 Act and is validly existing under the laws
of the Commonwealth of Massachusetts, and the
Declaration of Trust directs the Trustees to manage
the affairs of Nations Fund and grants them all
powers necessary or desirable to carry out such
responsibility, including administering Nations Fund
business as
I-9
<PAGE>
currently conducted by Nations Fund and
as described in the current prospectuses of Nations
Fund; Nations Fund is registered as an investment
company classified as an open-end management company,
under the 1940 Act and its registration with the SEC
as an investment company is in full force and effect;
5.1.b. The Registration Statement, including the current
prospectuses and statement of additional information
of each Acquiring Fund, conform or will conform, at
all times up to and including the Closing Date, in
all material respects to the applicable requirements
of the 1933 Act and the 1940 Act and the 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 the statements therein, in light of
the circumstances under which they were made, not
misleading;
5.1.c. Each Acquiring Fund is not in violation of, and the
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;
5.1.d. Except as previously disclosed in writing to the
Pilot 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, the 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 the
conduct of their business, and Nations Fund knows of
no facts that might form the basis for the
institution of any such proceeding or investigation,
and no Acquiring Fund is a party to or subject to the
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 the transactions contemplated
herein;
I-10
<PAGE>
5.1.e. All issued and outstanding shares, including shares
to be issued in connection with the Reorganization,
of the class of the Acquiring Fund will, as of the
Closing Date, be duly authorized and validly issued
and outstanding, fully paid and non-assessable by
Nations Fund and the Acquiring Fund does not have
outstanding any option, warrants or other rights to
subscribe for or purchase any of its shares;
5.1.f. The execution, delivery and performance of this
Agreement on behalf of each Acquiring Fund will have
been duly authorized prior to the Closing Date by all
necessary action on the part of Nations Fund and the
Trustees, and this Agreement constitutes 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;
5.1.g. The Acquiring Fund Shares to be issued and delivered
to the corresponding Acquired Fund for the account of
the Acquired Fund Investors, pursuant to the terms
hereof, will have been duly authorized as of the
Closing Date and, when so issued and delivered, will
be duly and validly issued, fully paid and
non-assessable, and the shares of the class of the
Acquiring Fund issued and outstanding prior to the
Closing Date were offered and sold in compliance with
the applicable registration requirements, or
exemptions therefrom, of the 1933 Act, and all
applicable state securities laws, and the regulations
thereunder;
5.1.h. On the effective date of the Registration Statement,
at the time of the meeting of the Acquired Fund
shareholders and on the Closing Date, any written
information furnished by Nations Fund with respect to
an Acquiring Fund for use in the Proxy Materials, the
Registration Statement or any other materials
provided in connection with the Reorganization does
not and will not contain any untrue statement of a
material fact or omit to state a material fact
necessary to make the information provided not
misleading;
I-11
<PAGE>
5.1.i. No governmental consents, approvals, authorizations
or filings are required under the 1933 Act, , the
Securities Exchange Act of 1934 (the "1934 Act"), the
1940 Act or Massachusetts law for the execution of
this Agreement by Nations Fund, for itself and on
behalf of each Acquiring Fund, or the performance of
the Agreement by Nations Fund, for itself and on
behalf of each Acquiring Fund, except for the
effectiveness of the Registration Statement, any
necessary exemptive relief or no-action assurances
requested from the SEC or its Staff with respect to
Sections 17(a) and 17(d) of the 1940 Act and Rule
17d-1 thereunder, and such other 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 the Closing Date;
5.1.j. The Statement of Assets and Liabilities, Statement
of Operations and Statement of Changes in Net Assets
of each Acquiring Fund as of and for the year ended
March 31, 1996, audited by Price Waterhouse LLP
(copies of which have been or will be furnished to
the corresponding Acquired Fund) fairly present, in
all material respects, the financial condition of
each Acquiring Fund 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 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;
5.1.k. Since the date of the 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 the ordinary course of business. For the
full and partial taxable year from its inception
through the Closing Date, each Acquiring Fund of
Nations Fund has qualified, or will qualify, as a
separate regulated investment company under
Subchapter M of the Code and has taken all necessary
and required actions to maintain such status;
5.1.l. All federal and other tax returns and reports of
Nations Fund and each Acquiring Fund required by law
to be filed on or
I-12
<PAGE>
before the Closing Date have been
or will be filed, and all federal and other taxes
owed by Nations Fund on behalf of the Acquiring Funds
have been or will be paid so far as due, and to the
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
5.1.m. At the Closing Date, the Acquiring Funds will have
good and marketable title to their assets and full
right, power and authority to assign, deliver and
otherwise transfer such assets.
5.2. Pilot Funds, on behalf of itself and each Acquired Fund,
represents and warrants to Nations Fund as follows:
5.2.a. Pilot Funds was duly created pursuant to its
Agreement and Declaration of Trust by the Trustees
for the purpose of acting as a management investment
company under the 1940 Act and is validly existing
under the laws of the Commonwealth of Massachusetts,
and the Agreement and Declaration of Trust directs
the Trustees to manage the affairs of Pilot Funds and
grants them all powers necessary or desirable to
carry out such responsibility, including
administering Pilot Funds business as currently
conducted by Pilot Funds and as described in the
current prospectuses of Pilot Funds; Pilot Funds is
registered as an investment company classified as an
open-end management company, under the 1940 Act and
its registration with the SEC as an investment
company is in full force and effect;
5.2.b. All of the 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 the 1933 Act and state
securities laws;
5.2.c. The Acquired Funds are not in material violation of,
and the execution and the performance of the
Agreement by Pilot Funds for itself and on behalf of
each Acquired Fund does not and will not (i) violate
Pilot Funds' Agreement and 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
Pilot Funds is a
I-13
<PAGE>
party or by which its properties or
assets are bound, except as otherwise previously
disclosed in writing to the Acquiring Funds;
5.2.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 Pilot 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 the
conduct of its business, and Pilot Funds knows of no
facts that might form the basis for the institution
of any such proceeding or investigation, and no
Acquired Fund is a party to or subject to the
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 the transactions contemplated
herein;
5.2.e. The Statement of Assets and Liabilities, Statement
of Operations and Statement of Changes in Net Assets
of each Acquired Fund as of and for the year ended
August 31, 1996, audited by Arthur Andersen LLP
(copies of which have been or will be furnished to
the Acquiring Fund) fairly present, in all material
respects, the financial condition of each Acquired
Fund 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 Pilot Funds
that were not disclosed therein but that would be
required to be disclosed therein in accordance with
generally accepted accounting principles;
5.2.f. Since the date of the 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 the ordinary course of business, or any
incurrence by an Acquired Fund of indebtedness
maturing more than one year from the date such
indebtedness was incurred, except as otherwise
disclosed in writing to and accepted by the
corresponding Acquiring Fund, prior to the
I-14
<PAGE>
Closing Date (for the 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);
5.2.g. All federal and other tax returns and reports of
Pilot Funds and each Acquired Fund required by law
have been or will be filed, and all federal and other
taxes owed by Pilot Funds and each Acquired Fund
shall, with respect to all period ending on or before
the Closing Date, have been or will be paid so far as
due, and to the best of Pilot Funds' knowledge, no
such return is currently under audit and no
assessment has been asserted with respect to any such
return;
5.2.h. For the full and partial taxable year from its
inception through the Closing Date, each Acquired
Fund has qualified, or will qualify, as a separate
regulated investment company under Subchapter M of
the Code and has taken or will take all necessary and
required actions to maintain such status;
5.2.i. All issued and outstanding shares of each Acquired
Fund are, and on the Closing Date will be, duly
authorized and validly issued and outstanding, and
fully paid and non-assessable by Pilot Funds, and all
such shares will, at the time of the Closing(s), be
held by the persons and in the amounts set forth in
the 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;
5.2.j. At the 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, the corresponding Acquiring Fund
will acquire good and marketable title thereto,
subject to no restrictions on the ownership or
transfer thereof other than such restrictions as
might arise under the 1933 Act;
I-15
<PAGE>
5.2.k. The execution, delivery and performance of this
Agreement on behalf of the Acquired Funds will have
been duly authorized prior to the Closing Date by all
necessary action on the part of Pilot Funds and the
Trustees, and this Agreement constitutes a valid and
binding obligation of Pilot 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;
5.2.l. From the effective date of the Registration
Statement, through the time of the meeting of the
Acquired Fund Investors, and on the Closing Date, the
Registration Statement insofar as it relates to
materials provided by Pilot Funds or the Acquired
Funds, used in connection with the preparation of the
Registration Statement: (i) will comply in all
material respects with the applicable provisions of
the 1933 Act, the 1934 Act and the 1940 Act and the
regulations thereunder and (ii) will 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 the statements therein not
misleading, and as of such dates and times, any
written information furnished by Pilot Funds, on
behalf of the Acquired Funds, for use in the
Registration Statement or in any other manner that
may be necessary in connection with the transactions
contemplated hereby does not contain any untrue
statement of a material fact or omit to state a
material fact necessary to make the information
provided not misleading; and
5.2.m. No governmental consents, approvals, authorizations
or filings are required under the 1933 Act, the 1934
Act, the 1940 Act or Massachusetts law for the
execution of this Agreement by Pilot Funds, for
itself and on behalf of each Acquired Fund, or the
performance of the Agreement by Pilot Funds for
itself and on behalf of each Acquired Fund, except
for the effectiveness of the Registration Statement,
except for any necessary exemptive relief or
no-action assurances requested from the SEC or its
Staff with respect to Section 17(a) and 17(d) of the
1940 Act and Rule 17d-1 thereunder, and except for
such other consents, approvals, authorizations and
filings as have been made or received, and except for
such consents,
I-16
<PAGE>
approvals, authorizations and filings
as may be required subsequent to the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED FUNDS
The obligations of Pilot Funds to consummate the
Reorganization with respect to each Acquired Fund shall be subject to the
performance by Nations Fund, for itself and on behalf of each Acquiring Fund, of
all the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the 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 the date hereof
and, except as they may be affected by the transactions
contemplated herein, as of the Closing Date with the same
force and effect as if made on and as of the Closing Date.
6.2. Nations Fund, on behalf of each Acquiring Fund, shall have
delivered to Pilot Funds at the Closing(s) a certificate
executed on behalf of each corresponding Acquiring Fund by
Nations Fund's President, Secretary, Assistant Secretary, or
other authorized officer, in a form reasonably satisfactory to
the Pilot Funds and dated as of the Closing Date, to the
effect that the representations and warranties of Nations Fund
with respect to each Acquiring Fund made herein are true and
correct at and as of the Closing Date, except as they may be
affected by the 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 the Closing(s) 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 the
Closing Date, in a form (including the 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 the
effect that:
6.3.a. Nations Fund is a duly registered, open-end,
management investment company, and its registration
with the SEC as an
I-17
<PAGE>
investment company under the 1940
Act is in full force and effect;
6.3.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 the laws of the Commonwealth of
Massachusetts, and the Declaration of Trust directs
the Trustees to manage the 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
the current prospectuses of Nations Fund;
6.3.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
the Acquiring 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;
6.3.d. the Acquiring Fund Shares to be issued to the
Acquired Funds Investors pursuant to this Agreement
are duly registered under the 1933 Act on the
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;
6.3.e. the Registration Statement has become effective with
the SEC and, to the best of such counsel's knowledge,
no stop order suspending the effectiveness thereof
has been issued and no proceedings for that purpose
have been instituted or are pending or threatened;
6.3.f. no consent, approval, authorization, filing or order
of any court or governmental authority of the United
States or any state is required for the consummation
by Nations Fund of the Reorganization with respect to
each Acquiring Fund;
I-18
<PAGE>
6.3.g. to such counsel's knowledge, the execution and
delivery of the Agreement and the performance of its
terms by Nations Fund, and each Acquiring Fund, do
not violate or result in a violation of the Nations
Fund Declaration of Trust or Code of Regulations, or
any judgment, order or decree known to such counsel,
of any court or arbiter, to which Nations Fund is a
party, and, to such counsel's knowledge, will not
constitute a material breach of the terms, conditions
or provisions of, or constitute a default under, any
contract, undertaking, indenture or other agreement
by which Nations Fund is now bound or to which it is
now a party;
6.3.h. to such counsel's knowledge, (a) no legal or
governmental proceedings existing on or before the
date of mailing the Combined Proxy
Statement/Prospectus, involving Nations Fund or the
Acquiring Funds, are required to be described in the
Combined Proxy Statement/Prospectus which are not
described as required and (b) there are no contracts
or documents relating to Nations Fund or the
Acquiring Funds, known to such counsel, of a
character required to be described in the Combined
Proxy Statement/Prospectus or to be filed as an
exhibit to the Registration Statement that are not
described or filed as required; and
6.3.i. to such counsel's knowledge, except as otherwise
disclosed in the Registration Statement, no
litigation or administrative proceeding or
investigation of or before any court or governmental
body is presently pending or threatened against
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 the
provisions of any order, decree or judgment of any
court or governmental body that materially and
adversely affects, or would materially and adversely
affect, its business.
6.4 Each Acquired Fund also shall receive at the Closing(s) a
letter from Morrison & Foerster LLP, dated as of the Closing
Date, in a form reasonably satisfactory to each Acquired Fund,
substantially to the effect that: such counsel has
participated in conferences with representatives of Nations
Fund and its accountants concerning the Registration Statement
and has considered the matters required to be stated therein
and the statements contained therein, although such
I-19
<PAGE>
counsel has not independently verified the accuracy,
completeness or fairness of such statements. Based upon and
subject to the foregoing, nothing has come to such counsel's
attention that leads such counsel to believe that the
Registration Statement, at the time it became effective
with the SEC pursuant to Rule 488 under the 1933 Act or as
of the Closing Date, contained an untrue statement of a
material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading (it being understood that such counsel
has not been requested to and does not make any comment in
this paragraph with respect to the financial statements,
supporting schedules, footnotes, and other financial and
statistical information contained in the Registration
Statement.
6.5. As of the Closing Date with respect to the Reorganization of
each Acquired Fund, there shall have been no material change
in the investment objective, policies and restrictions nor any
material change in the investment management fees, fee levels
payable pursuant to the 12b-1 plan of distribution, other fees
payable for services provided to the Acquiring Funds, fee
waiver or expense reimbursement undertakings, or sales loads
of the Acquiring Funds from those fee amounts, undertakings
and sales load amounts described in the prospectus of each
Acquiring Fund delivered to the corresponding Acquired Fund
pursuant to paragraph 4.1 and in the Proxy Materials.
6.6. With respect to each Acquiring Fund, the Board of Trustees of
Nations Fund, including a majority of the "non-interested"
Trustees, has determined that the Reorganization is in the
best interests of each Acquiring Fund and that the interests
of the existing shareholders of each Acquiring Fund would not
be diluted as a result of the Reorganization.
6.7. Nations Fund shall have procured Directors'/Trustees'
liability insurance reasonably satisfactory to Pilot Funds.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUNDS
The obligations of Nations Fund to consummate the
Reorganization with respect to each Acquiring Fund shall be subject to the
performance by Pilot Funds of all the obligations to be performed by it
hereunder, with respect to each
I-20
<PAGE>
corresponding Acquired Fund, on or before the
Closing Date and, in addition thereto, the following conditions:
7.1. All representations and warranties of Pilot Funds with
respect to the Acquired Funds contained herein shall be true
and correct in all material respects as of the date hereof
and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing
Date.
7.2. Pilot Funds, on behalf of each Acquired Fund, shall have
delivered to each corresponding Acquiring Fund at the
Closing(s) a certificate executed on behalf of each Acquired
Fund, by Pilot Funds' President, Secretary or Assistant
Secretary, or other authorized officer, in form and substance
satisfactory to the Acquiring Funds and dated as of the
Closing Date, to the effect that the representations and
warranties of Pilot Funds with respect to each Acquired Fund
made herein is true and correct at and as of the Closing Date,
except as they may be affected by the 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 the Closing(s) a
favorable opinion from Goodwin, Proctor & Hoar LLP, counsel to
Pilot 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 the
Closing Date, in a form (including the 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 the
effect that:
7.3.a. Pilot Funds is a duly registered, open-end
investment company, and its registration with the SEC
as an investment company under the 1940 Act is in
full force and effect;
7.3.b. each Acquired Fund is a portfolio of Pilot Funds,
Pilot Funds is a business trust duly created pursuant
to its Agreement and Declaration of Trust, is validly
existing and in good standing under the laws of the
Commonwealth of Massachusetts, and the Agreement and
Declaration of Trust directs the Trustees to manage
the affairs of Pilot Funds and grants them all powers
necessary or desirable to carry out such
responsibility,
I-21
<PAGE>
including administering Pilot Funds' business as
described in the current prospectuses of Pilot Funds;
7.3.c. this Agreement has been duly authorized, executed
and delivered by Pilot Funds on behalf of Pilot 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 Pilot Funds,
enforceable against Pilot 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;
7.3.d. no consent, approval, authorization, filing or order
of any court or governmental authority of the United
States or any state is required for the consummation
of the 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 the Closing Date;
7.3.e. to such counsel's knowledge, the execution and
delivery of the Agreement and the performance of its
terms by Pilot Funds, and each Acquired Fund, do not
violate or result in a violation of the Pilot Funds'
Agreement and Declaration of Trust or By-Laws, or any
judgment, order or decree known to such counsel, of
any court or arbiter, to which Pilot Funds is a
party, and, to such counsel's knowledge, will not
constitute a material breach of the terms, conditions
or provisions of, or constitute a default under, any
contract, undertaking, indenture or other agreement
by which Pilot Funds is now bound or to which it is
now a party;
7.3.f. to such counsel's knowledge, (a) no legal or
governmental proceedings existing on or before the
date of mailing the Combined Proxy
Statement/Prospectus involving Pilot Funds or the
Acquired Funds, are required to be described in the
Combined Proxy Statement/Prospectus which are not
described as required and (b) there are no contracts
or documents relating to Pilot Funds or the Acquired
Funds,
I-22
<PAGE>
known to such counsel, of a character required
to be described in the Combined Proxy
Statement/Prospectus or to be filed as an exhibit to
the Registration Statement that are not described or
filed as required; and
7.3.g. to such counsel's knowledge, except as otherwise
disclosed in the Registration Statement, no
litigation or administrative proceeding or
investigation of or before any court or governmental
body is presently pending or threatened against Pilot
Funds or an Acquired Fund or any of their properties
or assets and neither Pilot Funds nor an Acquired
Fund is a party to or subject to the provisions of
any order, decree or judgment of any court or
governmental body that materially and adversely
affects, or would materially and adversely affect,
its business.
7.4. Each Acquired Fund also shall receive at the Closing(s) a
letter from Goodwin, Proctor & Hoar LLP, dated as of the
Closing Date, in a form reasonably satisfactory to each
Acquiring Fund, substantially to the effect that: such counsel
has participated in conferences with representatives of Pilot
Funds and its accountants concerning the Registration
Statement and has considered the matters required to be stated
therein and the statements contained therein, although such
counsel has not independently verified the accuracy,
completeness or fairness of such statements. Based upon and
subject to the foregoing, nothing has come to such counsel's
attention that leads such counsel to believe that the
Registration Statement, at the time it became effective with
the SEC pursuant to Rule 488 under the 1933 Act or as of the
Closing Date, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading (it being understood that such counsel has not been
requested to and does not make any comment in this paragraph
with respect to the financial statements, supporting
schedules, footnotes, and other financial and statistical
information contained in the Registration Statement.
7.5. Nations Fund, on behalf of each Acquiring Fund, shall have
received from Arthur Andersen LLP a letter addressed to
Nations Fund, on behalf of each Acquiring Fund, and dated as
of the Closing Date with respect to the Acquired Funds, in
form and substance satisfactory to Nations Fund, to the effect
that:
I-23
<PAGE>
7.5.a. they are independent accountants with respect to
Pilot Funds and each Acquired Fund within the meaning
of the 1933 Act and the applicable regulations
thereunder;
7.5.b. in their opinion, the audited financial statements
and the Per Share Data provided in accordance with
Item 3 in Form N-1A (the "Per Share Data") of the
Acquired Fund included or incorporated by reference
in the Registration Statement previously reported on
by them comply as to form in all material aspects
with the applicable accounting requirements of the
1933 Act and the published rules and regulations
thereunder;
7.5.c. on the basis of limited procedures agreed upon by
Nations Fund, on behalf of the Acquiring Funds and
Pilot Funds, on behalf of the Acquired Funds, and
described in such letter (but not an examination in
accordance with generally accepted auditing
standards), the information relating to the Acquired
Funds appearing in the Registration Statement that is
expressed in dollars or percentages of dollars (with
the exception of performance comparisons) has been
obtained from the accounting records of the Acquired
Funds or from schedules prepared by officers of Pilot
Funds having responsibility for financial and
reporting matters and such information is in
agreement with such records, schedules or
computations made therefrom.
7.6. Pilot Funds shall have delivered to the Acquiring Funds,
pursuant to paragraph 5.2(e), copies of financial statements
of each Acquired Fund as of and for the period ended August
31, 1996, audited by Arthur Andersen LLP.
7.7. With respect to each Acquired Fund, the Board of Trustees of
Pilot Funds, including a majority of "non-interested"
Trustees, has determined that the Reorganization is in the
best interests of each Acquired Fund and that the interests of
the existing investors in each Acquired Fund would not be
diluted as a result of the Reorganization.
I-24
<PAGE>
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUNDS AND THE
ACQUIRED FUNDS
The obligations of each Acquiring Fund and of each
corresponding Acquired Fund herein are the subject to the further conditions
that on or before the Closing Date with respect to each Acquiring Fund and each
corresponding Acquired Fund:
8.1. This Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the holders of the
outstanding shares of beneficial interest in each Acquired
Fund in accordance with the provisions of Pilot Funds'
Agreement and Declaration of Trust and the requirements of the
1940 Act, and certified copies of the resolutions evidencing
such approval shall have been delivered to each corresponding
Acquiring Fund.
8.2. On the 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 damages
or other relief in connection with, this Agreement or any of
the 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 the SEC
and of state securities authorities) deemed necessary by
Nations Fund, on behalf of the Acquiring Funds or by Pilot
Funds, on behalf of the Acquired Funds, to permit
consummation, in all material respects, of the transactions
contemplated herein shall have been obtained, except where
failure to obtain any such consent, order or permit would not,
in the opinion of the party asserting that the condition to
closing has not been satisfied, involve a risk of a material
adverse effect on the assets or properties of any of an
Acquiring Fund or its corresponding Acquired Fund.
8.4. The Registration Statement shall have become effective under
the 1933 Act, no stop orders suspending the effectiveness
thereof shall have been issued and, to the best knowledge of
the parties hereto, no investigation or proceeding for that
purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5. Except to the extent prohibited by Rule 19b-1 promulgated
under the 1940 Act, each Acquired Fund shall have declared a
dividend or dividends which, together with all previous such
dividends, shall have
I-25
<PAGE>
the effect of distributing to each Acquired Fund's
shareholders substantially all of its investment company
taxable income for all taxable years ending on or prior to
the 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 the Closing
Date (after reduction for any capital loss carry forward.)
8.6. The Acquiring Funds and the Acquired Funds shall have
received from Price Waterhouse LLP a letter dated as of the
Closing Date, in form and substance satisfactory to Nations
Fund and to Pilot Funds, to the effect that on the basis of
limited procedures agreed upon by Nations Fund, on behalf of
the Acquiring Funds and Pilot Funds, on behalf of the Acquired
Funds (but not an examination in accordance with generally
accepted auditing standards): (i) the data utilized in the
calculations of the projected expense ratio appearing in the
Registration Statement and Proxy Materials agree with
underlying accounting records of the Acquiring Funds and the
Acquired Funds or to written estimates by First Data and were
found to be mathematically correct; and (ii) certain other
procedures as considered necessary by Nations Funds.
8.7. Nations Fund and the Pilot Funds shall have received an
opinion of Morrison & Foerster LLP addressed to both the
Acquiring Funds and the Acquired Funds substantially to the
effect that, for federal income tax purposes:
8.7.a. the transfer of all or substantially all of an
Acquired Fund's assets in exchange for the
corresponding Acquiring Fund Shares and the
assumption by each Acquiring Fund of the Stated
Liabilities of the corresponding Acquired Fund will
constitute a "reorganization" within the meaning of
Section 368(a) of the Code and each Acquiring Fund
and Acquired Fund will be a "party to a
reorganization" within the meaning of Section 368(b)
of the Code;
8.7.b. no gain or loss will be recognized by an Acquired
Fund upon the transfer of its assets to the
corresponding Acquiring Fund solely in exchange for
the Acquiring Fund Shares or the assumption of the
Stated Liabilities of the Acquired Fund by the
Acquiring Fund;
8.7.c. no gain or loss will be recognized by an Acquiring
Fund upon (i) its receipt of assets from the
corresponding Acquired Fund solely in exchange for
the Acquiring Fund Shares, (ii) the Acquiring
I-26
<PAGE>
Fund's assumption of the Acquired Fund's Stated
Liabilities, and (iii) the constructive or actual
distribution by the Acquired Fund of the Acquiring
Fund Shares to the Acquired Fund shareholders in
exchange for their shares of the Acquired Fund;
8.7.d. the aggregate federal income tax basis of an
Acquired Fund's assets received by the corresponding
Acquiring Fund pursuant to the Reorganization will be
the same as the aggregate federal income tax basis of
those assets in the hands of the Acquired Fund
immediately prior to the Reorganization;
8.7.e. the holding period of an Acquired Fund's assets
received by the corresponding Acquiring Fund pursuant
to the Reorganization will include the period for
which such assets have been held by the Acquired
Fund;
8.7.f. no gain or loss will be recognized by an Acquired
Fund on the distribution to its shareholders of the
Acquiring Fund Shares to be received by the Acquired
Fund in the Reorganization;
8.7.g. no gain or loss will be recognized by the
shareholders of an Acquired Fund upon their receipt
of the Acquiring Fund Shares in exchange for such
shareholders' shares of the Acquired Fund;
8.7.h. the federal income tax basis of the Acquiring Fund
Shares received by the shareholders of the
corresponding Acquired Fund will be the same as the
federal income tax basis of the Acquired Fund shares
exchanged by such shareholders pursuant to the
Reorganization;
8.7.i the holding period for the Acquiring Fund Shares for
which shares of the corresponding Acquired Fund are
exchanged pursuant to the Reorganization will include
the period that the Acquired Fund shares have been
held by the holder, provided that the Acquired Fund
shares have been held as a capital asset by the
holder; and
8.7.j an Acquiring Fund will succeed to and take into
account the tax attributes described in Section
381(c) of the Code of the corresponding Acquired Fund
as of the Closing Date, subject to the conditions and
limitations specified in the Code.
I-27
<PAGE>
Notwithstanding anything herein to the contrary, neither an Acquiring Fund
nor its corresponding Acquired Fund may waive the condition set forth in this
paragraph 8.7.
9. BROKERAGE FEES AND EXPENSES
9.1. Nations Fund, for itself and on behalf of the Acquiring Funds
and Pilot Funds, on behalf of itself and on behalf of the
Acquired Funds, represent and warrant that there are no
brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
9.2. Except as otherwise provided herein, NationsBanc Advisors,
Inc. ("NBAI") will bear the expenses incurred in connection
with entering into and carrying out the provisions of this
Agreement. Certain expenses to be incurred in connection with
the Reorganization, approximately $450,000, will be allocated
to the Acquiring Funds following the consummation of the
Reorganization (the "Allocated Amount"). In addition, NBAI has
committed to maintain current (after waiver) expense ratios
for all Acquiring Funds for a period of at least two years
after the Closing, absent extraordinary circumstances or a
reduction in fund assets that impacts fee levels (the "Expense
Commitment"). Because of this Expense Commitment, NBAI will in
effect absorb a substantial portion of the Allocated Amount
(approximately $320,000) through such Expense Commitment. NBAI
also will absorb the portion of the Allocated Amount that
otherwise would be borne by current Acquired Fund
shareholders, approximately $31,000, by making a capital
contribution in this amount to the Pilot Funds prior to the
Closing.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. This Agreement constitutes the entire agreement between the
parties and supersedes any prior or contemporaneous
understanding or arrangement with respect to the subject
matter hereof.
10.2. The representations, warranties and covenants contained in
this Agreement or in any document delivered pursuant hereto or
in connection herewith shall survive the consummation of the
transactions contemplated herein.
I-28
<PAGE>
11. TERMINATION
11.1. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the
Closing:
11.1.a. by the mutual written consent of Nations Fund and
Pilot Funds;
11.1.b. by either Nations Fund or Pilot Funds by notice to
the other, without liability to the terminating party
on account of such termination (provided any such
termination shall not excuse the terminating party
from any liability arising out of a default or breach
of this Agreement by such terminating party) if such
Closing(s) shall not have occurred on or before
December 31, 1997; or
11.1.c. by either of Nations Fund or the Pilot Funds, in
writing without liability to the terminating party on
account of such termination (provided any such
termination shall not excuse the terminating party
from any liability arising out of a material default
or breach of this Agreement by such terminating
party), if (i) the other party shall fail to perform
in any material respect its agreements contained
herein required to be performed prior to the Closing
Date, (ii) the 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 the
obligations of the terminating party has not been met
and it reasonably appears that it will not or cannot
be met.
11.2. Termination of this Agreement pursuant to paragraphs 11.1(a)
or (b) shall terminate all obligations of the parties
hereunder with respect to the Acquired Fund and Acquiring Fund
affected by such termination, or with respect to Nations Fund
and Pilot Funds, as the case may be, and there shall be no
liability for damages on the part of Nations Fund or Pilot
Funds or the Trustees or officers of Nations Fund or Pilot
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.
I-29
<PAGE>
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in
such manner as may be mutually agreed upon in writing by the authorized officers
of Nations Fund, acting on behalf of each Acquiring Fund and the authorized
officers of Pilot Funds, acting on behalf of the shareholders of each Acquired
Fund; provided, however, that following the meeting of the shareholders of the
Acquired Funds, no such amendment may have the effect of changing the provisions
for determining the number of shares of the corresponding Acquiring Funds to be
issued to the Acquired Fund Investors under this Agreement to the detriment of
such Acquired Fund Investors, or otherwise materially and adversely affecting
such Acquired Fund, without the Acquired Fund obtaining the Acquired Fund
Investors' further approval except that nothing in this paragraph 12 shall be
construed to prohibit any Acquiring Fund and the corresponding Acquired Fund
from amending this Agreement to change the 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 and
Marco E. Adelfio
Morrison & Foerster LLP
2000 Pennsylvania Avenue, N.W., Suite 5500
Washington, D.C. 20006
For Pilot Funds, on behalf of itself and each Acquired
Fund:
Elizabeth Bruce
Boatmen's Trust Company
The Boatmen's Tower
I-30
<PAGE>
1000 North Broadway, 3rd Floor
St. Louis, Missouri 63178
with copies to:
Philip H. Newman
Goodwin, Procter & Hoar LLP
53 State Street, Exchange Place
Boston, MA 02109-2881
14. INDEMNIFICATION
14.1 Each Acquiring Fund will indemnify and hold harmless, out of
its assets but no other assets, the corresponding Acquired
Fund and such Fund's Trustees (for purposes of this paragraph
14.1, the "Indemnified Parties") against any and all expenses,
losses, claims, damages and liabilities at any time imposed
upon or reasonably incurred by any one or more of the
Indemnified Parties in connection with, arising out of, or
resulting from any claim, action, suit or proceeding in which
any one or more of the Indemnified Parties may be involved or
with which any one or more of the Indemnified Parties may be
threatened by reason of (i) any untrue statement or alleged
untrue statement of a material fact, provided or made by
Nations Fund or the Acquiring Fund, and relating to Nations
Fund or the Acquiring Fund contained in the Registration
Statement, or any amendment or supplement thereto, or arising
out of, or based upon, the omission or alleged omission to
state in the foregoing Registration Statement a material fact
relating to Nations Fund or the Acquiring Fund, required to be
stated therein or necessary to make the statements therein not
misleading; (ii) a breach of any representation or warranty
made in this Agreement by the Acquiring Fund; or (iii) any
other circumstance not involving (a) negligence or willful
misconduct in connection with the discharge of, or reckless
disregard of, any duties or responsibilities of the
Indemnified Party seeking indemnification hereunder; (b) a
circumstance pursuant to which such Indemnified Party would
have an obligation to provide an indemnification under Section
14.2; or (c) a breach of any of the representations or
warranties of Pilot Funds made in this Agreement. The
Acquiring Funds' obligation to indemnify an Indemnified Party
pursuant to this Section 14.1 shall include any amounts paid
by any one or more of the Indemnified Parties in a reasonable
compromise or settlement of any such claim, action, suit or
I-31
<PAGE>
proceeding, or threatened claim, action, suit or proceeding
made with the consent of the Acquiring Fund.
Each Acquiring Fund will not indemnify or hold harmless the
Indemnified Parties, identified in this paragraph 14.1, for
any expenses, losses, claims, damages and liabilities at any
time imposed upon or reasonably incurred by any one or more of
the Indemnified Parties in connection with, arising out of, or
resulting from any claim, action, suit or proceeding in which
any one or more of the Indemnified Parties may be involved or
with which any one or more of the Indemnified Parties may be
threatened by reason of any untrue statement or alleged untrue
statement of a material fact relating to Pilot Funds or the
Acquired Fund contained in the representations, warranties and
covenants of this Agreement or arising out of or based upon
the omission or alleged omission to state in the foregoing
representations, warranties and covenants, a material fact
relating to Pilot Funds or the Acquired Fund required to be
stated therein or necessary to make the statements therein not
misleading.
The Indemnified Parties will notify the Acquiring Fund in
writing within ten days after the receipt by any one or more
of the Indemnified Parties of any notice of legal process or
any suit brought against or claim made against such
Indemnified Party as to any matters covered by this paragraph
14.1. The Acquiring Fund shall be entitled to participate at
its own expense in the defense of any claim, action, suit or
proceeding covered by this paragraph 14.1, or, if it so
elects, to assume at its expense by counsel satisfactory to
the Indemnified Parties the defense of any such claim, action,
suit or proceeding, and, if the Acquiring Fund elects to
assume such defense, the Indemnified Parties shall be entitled
to participate in the defense of any such claim, action, suit
or proceeding at their own expense. The Acquiring Fund's
obligation under this paragraph 14.1 to indemnify and hold
harmless the Indemnified Parties shall constitute a guarantee
of payment so that the Acquiring Fund will pay in the first
instance any expenses, losses, claims, damages and liabilities
required to be paid by it under this paragraph 14.1 without
the necessity of the Indemnified Parties' first paying the
same.
14.2 Each Acquired Fund will indemnify and hold harmless, out of
its assets but no other assets, the corresponding Acquiring
Fund and such Fund's Trustees (for purposes of this paragraph
14.2, the "Indemnified
I-32
<PAGE>
Parties") against any and all expenses,
losses, claims, damages and liabilities at any time imposed
upon or reasonably incurred by any one or more of the
Indemnified Parties in connection with, arising out of, or
resulting from any claim, action, suit or proceeding in which
any one or more of the Indemnified Parties may be involved or
with which any one or more of the Indemnified Parties may be
threatened by reason of any untrue statement or alleged untrue
statement of a material fact, provided or made by Pilot Funds
or the Acquired Fund, and relating to Pilot Funds or the
Acquired Fund, contained in the Registration Statement, or any
amendment or supplement thereto, or arising out of or based
upon the omission or alleged omission to state in the
foregoing Registration Statement a material fact relating to
Pilot Funds or the Acquired Fund, required to be stated
therein or necessary to make the statements therein not
misleading, including, any amounts paid by any one or more of
the Indemnified Parties in a reasonable compromise or
settlement of any such claim, action, suit or proceeding, or
threatened claim, action, suit or proceeding made with the
consent of the Acquired Fund.
Each Acquired Fund, however, will not indemnify or hold
harmless the Indemnified Parties, identified in this paragraph
14.2, for any expenses, losses, claims, damages and
liabilities at any time imposed upon or reasonably incurred by
any one or more of the Indemnified Parties in connection with,
arising out of, or resulting from any claim, action, suit or
proceeding in which any one or more of the Indemnified Parties
may be involved or with which any one or more of the
Indemnified Parties may be threatened by reason of any untrue
statement or alleged untrue statement of a material fact
relating to Nations Fund or the Acquiring Fund contained in
the representations, warranties and covenants of this
Agreement or arising out of or based upon the omission or
alleged omission to state in the foregoing representations,
warranties and covenants, a material fact relating to Nations
Fund or the Acquiring Fund required to be stated therein or
necessary to make the statements relating to the Nations Fund
or the Acquiring Fund therein not misleading.
The Indemnified Parties will notify the Acquired Fund in
writing within ten days after the receipt by any one or more
of the Indemnified Parties of any notice of legal process or
any suit brought against or claim made against such
Indemnified Parties as to any matters covered by this
paragraph 14.2. The Acquired Fund shall be entitled to
I-33
<PAGE>
participate at its own expense in the defense of any claim,
action, suit or proceeding covered by this paragraph 14.2, or,
if it so elects, to assume at its expense by counsel
satisfactory to the Indemnified Parties the defense of any
such claim, action, suit or proceeding, and if the Acquired
Fund elects to assume such defense, the Indemnified Parties
shall be entitled to participate in the defense of any such
claim, action, suit or proceeding at their own expense. The
Acquired Fund's obligation under this paragraph 14.2 to
indemnify and hold harmless the Indemnified Parties shall
constitute a guarantee of payment so that the Acquired Fund
will pay in the first instance any expenses, losses, claims,
damages and liabilities required to be paid by it under this
paragraph 14.2 without the necessity of the Indemnified
Parties' first paying the same.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION
OF LIABILITY
15.1. The article and paragraph headings contained herein are for
reference purposes only and shall not affect in any way the
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 the 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.
15.2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
15.3. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
15.4. This Agreement shall bind and inure to the benefit of the
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 the
written consent of the 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 the parties
hereto and their respective successors and assigns, any rights
or remedies under or by reason of this Agreement.
I-34
<PAGE>
15.5. It is expressly agreed that the obligations of Nations Fund
hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents, or employees of
Nations Fund personally, but shall bind only the assets and
the property of the respective Acquiring Fund of Nations Fund,
as provided in its Declaration of Trust. The 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 the assets and the
property of the respective Acquiring Fund of Nations Fund as
provided in its Declaration of Trust.
15.6. No Acquired Fund shall have any liability for the obligations
of any other Acquired Fund hereunder and no Acquiring Fund
shall have any liability for the obligation of any other
Acquiring Fund hereunder.
15.7. It is expressly agreed that the obligations of Pilot Funds
hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents, or employees of
Pilot Funds personally, but shall bind only the assets and the
property of the respective Acquired Fund of Pilot Funds, as
provided in its Agreement and Declaration of Trust. The
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 the
assets and the property of the respective Acquired Fund of
Pilot Funds as provided in its Agreement and Declaration of
Trust.
I-35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their authorized officers, and attested by
their Secretaries as of the day and year first written above.
<TABLE>
<CAPTION>
<S> <C>
NATIONS FUND TRUST, for itself and on behalf of each
ATTEST: Acquiring Fund
/s/ Richard H. Blank, Jr. By: /s/ A. Max Walker
Richard H. Blank, Jr. A. Max Walker
Secretary President and Chairman of the Board of Trustees
THE PILOT FUNDS, for itself and on behalf of each
ATTEST: Acquired Fund
/s/ George O. Martinez By: /s/ William J. Tomko
George O. Martinez William J. Tomko
Secretary President
Agreed to and
Acknowledged as to Section 9.2 only:
NATIONSBANC ADVISORS, INC.
By: /s/ Mark H. Williamson
Mark H. Williamson
President
</TABLE>
I-36
<PAGE>
SCHEDULE A
<PAGE>
<TABLE>
<CAPTION>
ACQUIRED FUND ACQUIRING FUND
<S> <C>
Pilot Short-Term Tax-Exempt Diversified Fund Nations Tax Exempt Fund
Pilot Shares Primary A Shares
Investor Shares Daily Shares
Administration Shares Investor B Shares
Pilot Missouri Short-Term Tax-Exempt Fund Nations Tax Exempt Fund
Pilot Shares Primary A Shares
Investor Shares Daily Shares
Administration Shares Investor B Shares
Pilot Growth and Income Fund Nations Value Fund
Class A Shares Investor A Shares
Class B Shares Investor N Shares
Pilot Shares Primary A Shares
Pilot Growth Fund Nations Disciplined Equity Fund
Class A Shares Investor A Shares
Class B Shares Investor N Shares
Pilot Shares Primary A Shares
Pilot Diversified Bond Income Fund Nations Strategic Fixed Income Fund
Class A Shares Investor A Shares
Class B Shares Investor N Shares
Pilot Shares Primary A Shares
Pilot Intermediate U.S. Government Securities Fund Nations Short-Intermediate Government Fund
Class A Shares Investor A Shares
Class B Shares Investor N Shares
Pilot Shares Primary A Shares
Pilot Intermediate Municipal Bond Fund Nations Intermediate Municipal Bond Fund
Class A Shares Investor A Shares
Class B Shares Investor N Shares
Pilot Shares Primary A Shares
Pilot Municipal Bond Fund Nations Municipal Income Fund
Class A Shares Investor A Shares
Class B Shares Investor N Shares
Pilot Shares Primary A Shares
</TABLE>
I-37
<PAGE>
APPENDIX II
EXPENSE SUMMARIES OF PILOT FUNDS
AND THE CORRESPONDING NATIONS FUNDS
-----------------------------------------------
The following tables (a) compare the fees and expenses as of November 30,
1996 for the respective Pilot Funds and their corresponding Nations Funds and
(b) show the estimated fees and expenses for the corresponding Nations Funds on
a pro forma basis after giving effect to the reorganization. The purpose of
these tables is to assist shareholders in understanding the various costs and
expenses that investors in these portfolios will bear as shareholders. The
tables do not reflect any charges that may be imposed by institutions directly
on their customer accounts in connection with investments in the portfolios.
NBAI has committed to maintain current (after waiver) expense ratios for all
Nations Fund share classes for a period of at least two years after the Closing,
absent extraordinary circumstances or a reduction in fund assets that impacts
fee levels.
II-1
<PAGE>
PILOT DIVERSIFIED BOND INCOME FUND-CLASS A SHARES
NATIONS STRATEGIC FIXED INCOME FUND-INVESTOR A SHARES
<TABLE>
<CAPTION>
PILOT NATIONS
DIVERSIFIED STRATEGIC
BOND INCOME FIXED INCOME PRO FORMA
FUND FUND
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............ 4.00% None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None
Deferred Sales Load ................................ None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after waivers or reimbursements) *. 0.40% 0.50% 0.50%
12b-1 Fees.......................................... 0.25% 0.20% 0.20%
Other Expenses...................................... 0.25% 0.20% 0.18%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.90% 0.90% 0.88%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.55%,
0.60% and 0.60% ,respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 1.05%, 1.00% and 0.98%, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT DIVERSIFIED NATIONS
BOND INCOME STRATEGIC FIXED
FUND INCOME FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 49 $ 9 $ 9
3 years ........................................... 68 29 28
5 years ........................................... 88 50 49
10 years .......................................... 147 111 108
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-2
<PAGE>
PILOT DIVERSIFIED BOND INCOME FUND-CLASS B SHARES
NATIONS STRATEGIC FIXED INCOME FUND-INVESTOR N SHARES
<TABLE>
<CAPTION>
PILOT NATIONS
DIVERSIFIED STRATEGIC
BOND INCOME FIXED INCOME PRO FORMA
FUND FUND
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None
Deferred Sales Load(as a percentage of redemption
proceeds)* ..................................... 4.00% None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)**.. 0.40% 0.50% 0.50%
12b-1 Fees.......................................... 1.00% 0.65% 0.65%
Other Expenses .................................... 0.25% 0.20% 0.18%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)***................ 1.65% 1.35% 1.33%
==== ==== ====
</TABLE>
- --------------------
* Although Investor N Shares do not impose a contingent deferred sales
charge, Pilot Shareholders will remain subject to the contingent
deferred sales charge structure applicable to their Class B shares
originally purchased.
** Management Fees (before waivers or reimbursements) would be: 0.55%,
0.60% and 0.60%, respectively.
*** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 1.80%, 1.45% and 1.43%, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT DIVERSIFIED NATIONS
BOND INCOME STRATEGIC FIXED
FUND INCOME FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 57 $ 14 $ 14
3 years ........................................... 82 43 42
5 years ........................................... 110 74 73
10 years .......................................... 195 162 160
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-3
<PAGE>
PILOT DIVERSIFIED BOND INCOME FUND-PILOT SHARES
NATIONS STRATEGIC FIXED INCOME FUND-PRIMARY A SHARES
<TABLE>
<CAPTION>
PILOT NATIONS
DIVERSIFIED STRATEGIC
BOND INCOME FIXED INCOME PRO FORMA
FUND FUND
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None
Deferred Sales Load................................. None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)*... 0.40% 0.50% 0.50%
Other Expenses .................................... 0.25% 0.20% 0.18%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.65% 0.70% 0.68%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.55%,
0.60% and 0.60%, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 0.80%, 0.80% and 0.78%, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT DIVERSIFIED NATIONS
BOND INCOME STRATEGIC FIXED
FUND INCOME FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 7 $ 7 $ 7
3 years ........................................... 21 22 22
5 years ........................................... 36 39 38
10 years .......................................... 81 87 85
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-4
<PAGE>
PILOT GROWTH FUND-CLASS A SHARES
NATIONS DISCIPLINED EQUITY FUND-INVESTOR A SHARES
<TABLE>
<CAPTION>
NATIONS
PILOT GROWTH DISCIPLINED
FUND EQUITY FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............ 4.50% None None
Maximum Sales Load Imposed on
Reinvested Dividends ........................... None None None
Deferred Sales Load ............................... None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after waivers or reimbursements) *. 0.75% 0.75% 0.75%
12b-1 Fees.......................................... 0.25% 0.25% 0.25%
Other Expenses...................................... 0.25% 0.25% 0.22%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 1.25% 1.25% 1.22%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 1.00% for
Pilot Growth Fund.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 1.36% for Pilot Growth Fund.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
NATIONS
PILOT GROWTH DISCIPLINED
FUND EQUITY FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 58 $ 13 $ 12
3 years ........................................... 86 40 39
5 years ........................................... 116 69 67
10 years .......................................... 201 151 148
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-5
<PAGE>
PILOT GROWTH FUND-CLASS B SHARES
NATIONS DISCIPLINED EQUITY FUND-INVESTOR N SHARES
<TABLE>
<CAPTION>
NATIONS
PILOT GROWTH DISCIPLINED
FUND EQUITY FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None
Deferred Sales Load (as a percentage of redemption
proceeds)* ..................................... 4.50% None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)**.. 0.75% 0.75% 0.75%
12b-1 Fees.......................................... 1.00% 1.00% 1.00%
Other Expenses .................................... 0.25% 0.25% 0.22%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)***................ 2.00% 2.00% 1.97%
==== ==== ====
</TABLE>
- --------------------
* Although Investor N Shares do not impose a contingent deferred sales
charge, Pilot Shareholders will remain subject to the contingent
deferred sales charge structure applicable to their Class B shares
originally purchased.
** Management Fees (before waivers or reimbursements) would be 1.00% for
Pilot Growth Fund.
*** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 2.11% for Pilot Growth Fund.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
NATIONS
PILOT GROWTH DISCIPLINED
FUND EQUITY FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 66 $ 20 $ 20
3 years ........................................... 101 63 62
5 years ........................................... 138 108 106
10 years .......................................... 244 233 230
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-6
<PAGE>
PILOT GROWTH FUND-PILOT SHARES
NATIONS DISCIPLINED EQUITY FUND-PRIMARY A SHARES
<TABLE>
<CAPTION>
NATIONS
PILOT GROWTH DISCIPLINED
FUND EQUITY FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends (as a
percentage of offering price) .................. None None None
Deferred Sales Load (as a percentage of redemption
proceeds) ...................................... None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees*.................................... 0.75% 0.75% 0.75%
12b-1 Fees.......................................... 0.00% 0.00% 0.00%
Other Expenses (after waivers or reimbursements) ... 0.25% 0.25% 0.22%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 1.00% 1.00% 0.97%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 1.00% for
Pilot Growth Fund.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 1.11% for Pilot Growth Fund.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
NATIONS
PILOT GROWTH DISCIPLINED
FUND EQUITY FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 11 $ 10 $ 10
3 years ........................................... 35 32 31
5 years ........................................... 61 55 54
10 years .......................................... 135 122 119
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-7
<PAGE>
PILOT GROWTH AND INCOME FUND-CLASS A SHARES
NATIONS VALUE FUND-INVESTOR A SHARES
<TABLE>
<CAPTION>
PILOT GROWTH NATIONS VALUE
AND INCOME FUND FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............ 4.50% None None
Maximum Sales Load Imposed on
Reinvested Dividends .......................... None None None
Deferred Sales Load ................................ None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)*... 0.50% 0.75% 0.75%
12b-1 Fees.......................................... 0.25% 0.25% 0.25%
Other Expenses .................................... 0.18% 0.19% 0.17%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.93% 1.19% 1.17%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.75% for
Pilot Growth and Income Fund.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 1.18% for Pilot Growth and Income Fund.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT GROWTH AND NATIONS VALUE
INCOME FUND FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 54 $ 12 $ 12
3 years ........................................... 73 38 37
5 years ........................................... 94 65 64
10 years .......................................... 154 144 142
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-8
<PAGE>
PILOT GROWTH AND INCOME FUND-CLASS B SHARES
NATIONS VALUE FUND-INVESTOR N SHARES
<TABLE>
<CAPTION>
PILOT GROWTH NATIONS VALUE
AND INCOME FUND FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None
Deferred Sales Load (as a percentage of redemption 4.50% None None
proceeds)* .....................................
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)**.. 0.50% 0.75% 0.75%
12b-1 Fees.......................................... 1.00% 0.75% 0.75%
Other Expenses ..................................... 0.18% 0.19% 0.17%
----- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)***................ 1.68% 1.69% 1.67%
==== ==== ====
</TABLE>
- --------------------
* Although Investor N Shares do not impose a contingent deferred sales
charge, Pilot Shareholders will remain subject to the contingent
deferred sales charge structure applicable to their Class B shares
originally purchased.
** Management Fees (before waivers or reimbursements) would be: 0.75%
for Pilot Growth and Income Fund.
*** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 1.93% for Pilot Growth and Income Fund.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT GROWTH AND NATIONS VALUE
INCOME FUND FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 62 $ 17 $ 17
3 years ........................................... 88 53 53
5 years ........................................... 116 92 91
10 years .......................................... 199 200 198
- --------------------
</TABLE>
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-9
<PAGE>
PILOT GROWTH AND INCOME FUND-PILOT SHARES
NATIONS VALUE FUND-PRIMARY A SHARES
<TABLE>
<CAPTION>
PILOT GROWTH NATIONS VALUE
AND INCOME FUND FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends ........................... None None None
Deferred Sales Load ................................ None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)*... 0.50% 0.75% 0.75%
Other Expenses .................................... 0.18% 0.19% 0.17%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.68% 0.94% 0.92%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.75%
for Pilot Growth and Income Fund.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 0.93% for Pilot Growth and Income Fund.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT GROWTH AND NATIONS VALUE
INCOME FUND FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 7 $ 10 $ 9
3 years ........................................... 22 30 29
5 years ........................................... 38 52 51
10 years .......................................... 85 115 113
- --------------------
</TABLE>
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-10
<PAGE>
PILOT INTERMEDIATE MUNICIPAL BOND FUND-CLASS A SHARES
NATIONS INTERMEDIATE MUNICIPAL BOND FUND-INVESTOR A SHARES
<TABLE>
<CAPTION>
PILOT NATIONS
INTERMEDIATE INTERMEDIATE
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............ 4.00% None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None
Deferred Sales Load ................................ None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)*... 0.40% 0.20% 0.30%
12b-1 Fees.......................................... 0.25% 0.20% 0.20%
Other Expenses ..................................... 0.22% 0.30% 0.20%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.87% 0.70% 0.70%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.55%,
0.50% and 0.50%, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 1.02%, 1.00% and 0.90%, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PILOT NATIONS
INTERMEDIATE INTERMEDIATE
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND PRO FORMA
1 year ............................................ $ 49 $ 7 $ 7
3 years ........................................... 67 22 22
5 years ........................................... 86 39 39
10 years .......................................... 143 87 87
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
PILOT INTERMEDIATE MUNICIPAL BOND FUND-CLASS B SHARES
II-11
<PAGE>
NATIONS INTERMEDIATE MUNICIPAL BOND FUND-INVESTOR N SHARES
<TABLE>
<CAPTION>
PILOT NATIONS
INTERMEDIATE INTERMEDIATE
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ........... None None None
Maximum Sales Load Imposed on
Reinvested Dividends ........................... None None None
Deferred Sales Load (as a percentage of redemption
proceeds)* ..................................... 4.00% None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after waivers or reimbursements)**. 0.40% 0.20% 0.30%
12b-1 Fees.......................................... 1.00% 0.50% 0.50%
Other Expenses ..................................... 0.22% 0.30% 0.20%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)***................ 1.62% 1.00% 1.00%
==== ==== ====
</TABLE>
- --------------------
* Although Investor N Shares do not impose a contingent deferred sales
charge, Pilot Shareholders will remain subject to the contingent
deferred sales charge structure applicable to their Class B shares
originally purchased.
** Management Fees (before waivers or reimbursements) would be: 0.55%,
0.50% and 0.50%, respectively.
*** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 1.77%, 1.30% and 1.20%, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT NATIONS
INTERMEDIATE INTERMEDIATE
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 56 $ 10 $ 10
3 years ........................................... 81 32 32
5 years ........................................... 108 55 55
10 years .......................................... 192 122 122
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-12
<PAGE>
PILOT INTERMEDIATE MUNICIPAL BOND FUND-PILOT SHARES
NATIONS INTERMEDIATE MUNICIPAL BOND FUND-PRIMARY A SHARES
<TABLE>
<CAPTION>
PILOT NATIONS
INTERMEDIATE INTERMEDIATE
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends ........................... None None None
Deferred Sales Load ................................ None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)*... 0.40% 0.20% 0.30%
Other Expenses .................................... 0.22% 0.30% 0.20%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.62% 0.50% 0.50%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.55%,
0.50% and 0.50%, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 0.77%, 0.80% and 0.70%, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT NATIONS
INTERMEDIATE INTERMEDIATE
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 6 $ 5 $ 5
3 years ........................................... 20 16 16
5 years ........................................... 35 28 28
10 years .......................................... 77 63 63
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-13
<PAGE>
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND-CLASS A SHARES
NATIONS SHORT-INTERMEDIATE GOVERNMENT FUND-INVESTOR A SHARES
<TABLE>
<CAPTION>
PILOT NATIONS SHORT-
INTERMEDIATE U.S. INTERMEDIATE
GOVERNMENT GOVERNMENT
SECURITIES FUND FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............ 4.00% None None
Maximum Sales Load Imposed on
Reinvested Dividends ........................... None None None
Deferred Sales Load ................................ None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)*... 0.35% 0.40% 0.40%
12b-1 Fees.......................................... 0.25% 0.20% 0.20%
Other Expenses ..................................... 0.21% 0.22% 0.19%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.81% 0.82% 0.79%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.55%,
0.60% and 0.60%, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 1.01%, 1.02% and 0.99%, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT NATIONS
INTERMEDIATE U.S. SHORT-INTERMEDIATE
GOVERNMENT GOVERNMENT FUND
SECURITIES FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 48 $ 8 $ 8
3 years ........................................... 65 26 25
5 years ........................................... 83 46 44
10 years .......................................... 136 101 98
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-14
<PAGE>
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND-CLASS B SHARES
NATIONS SHORT-INTERMEDIATE GOVERNMENT FUND-INVESTOR N SHARES
<TABLE>
<CAPTION>
PILOT NATIONS SHORT-
INTERMEDIATE U.S. INTERMEDIATE
GOVERNMENT GOVERNMENT
SECURITIES FUND FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ........... None None None
Maximum Sales Load Imposed on
Reinvested Dividends ........................... None None None
Deferred Sales Load (as a percentage of redemption
proceeds)* ..................................... 4.00% None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)**.. 0.35% 0.40% 0.40%
12b-1 Fees.......................................... 1.00% 0.60% 0.60%
Other Expenses .................................... 0.21% 0.22% 0.19%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)***................ 1.56% 1.22% 1.19%
==== ==== ====
</TABLE>
- --------------------
* Although Investor N Shares do not impose a contingent deferred sales
charge, Pilot Shareholders will remain subject to the contingent
deferred sales charge structure applicable to their Class B shares
originally purchased.
* Management Fees (before waivers or reimbursements) would be: 0.55%,
0.60% and 0.60%, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 1.76%, 1.42% and 1.39%, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT NATIONS SHORT-
INTERMEDIATE U.S. INTERMEDIATE
GOVERNMENT GOVERNMENT
SECURITIES FUND FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 56 $ 12 $ 12
3 years ........................................... 79 39 38
5 years ........................................... 105 67 65
10 years .......................................... 186 148 144
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-15
<PAGE>
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND-PILOT SHARES
NATIONS SHORT-INTERMEDIATE GOVERNMENT FUND-PRIMARY A SHARES
<TABLE>
<CAPTION>
PILOT NATIONS SHORT-
INTERMEDIATE U.S. INTERMEDIATE
GOVERNMENT GOVERNMENT
SECURITIES FUND FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends ........................... None None None
Deferred Sales Load ............................... None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements) *.. 0.35% 0.40% 0.40%
Other Expenses ..................................... 0.21% 0.22% 0.19%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.56% 0.62% 0.59%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.55%,
0.60% and 0.60%, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 0.76%, 0.82% and 0.79%, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT NATIONS SHORT-
INTERMEDIATE U.S. INTERMEDIATE
GOVERNMENT GOVERNMENT
SECURITIES FUND FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 6 $ 6 $ 6
3 years ........................................... 18 20 19
5 years ........................................... 31 35 33
10 years .......................................... 70 77 74
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-16
<PAGE>
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND-ADMINISTRATION SHARES
NATIONS TAX-EXEMPT FUND-INVESTOR B SHARES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PILOT MISSOURI
SHORT-TERM TAX- NATIONS TAX-
EXEMPT FUND EXEMPT FUND PRO FORMA
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends ........................... None None None
Deferred Sales Load ................................ None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements) *.. 0.20% 0.15% 0.16%
12b-1 Fees.......................................... 0.25% 0.20% 0.20%
Other Expenses ..................................... 0.20% 0.15% 0.14%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.65% 0.50% 0.50%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.40%
and 0.40% for Nations Tax-Exempt Fund and Pro Forma, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 0.75% and 0.74% for Nations Tax-Exempt Fund and Pro Forma, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT MISSOURI
SHORT-TERM TAX- NATIONS TAX-
EXEMPT FUND EXEMPT FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 7 $ 5 $ 5
3 years ........................................... 21 16 16
5 years ........................................... 36 28 28
10 years .......................................... 81 63 63
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-17
<PAGE>
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND-INVESTOR SHARES
NATIONS TAX-EXEMPT FUND-DAILY SHARES
<TABLE>
<CAPTION>
PILOT MISSOURI
SHORT-TERM TAX- NATIONS
EXEMPT FUND TAX-EXEMPT FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ........... None None None
Maximum Sales Load Imposed on
Reinvested Dividends ........................... None None None
Deferred Sales Load................................. None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)*... 0.20% 0.15% 0.16%
12b-1 Fees.......................................... 0.50% 0.50% 0.50%
Other Expenses .................................... 0.20% 0.15% 0.14%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.90% 0.80% 0.80%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.40% and
0.40% for Nations Tax-Exempt Fund and Pro Forma, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 1.05% and 1.04% for Nations Tax-Exempt Fund and Pro Forma, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT MISSOURI
SHORT-TERM TAX- NATIONS TAX-
EXEMPT FUND EXEMPT FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 9 $ 8 $ 8
3 years ........................................... 29 26 26
5 years ........................................... 50 44 44
10 years .......................................... 111 99 99
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-18
<PAGE>
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND-PILOT SHARES
NATIONS TAX-EXEMPT FUND-PRIMARY A SHARES
<TABLE>
<CAPTION>
PILOT MISSOURI
SHORT-TERM TAX- NATIONS TAX-
EXEMPT FUND EXEMPT FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends ........................... None None None
Deferred Sales Load ................................ None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements) *.. 0.20% 0.15% 0.16%
12b-1 Fees.......................................... 0.00% 0.00% 0.00%
Other Expenses ..................................... 0.20% 0.15% 0.14%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.40% 0.30% 0.30%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.40%
and 0.40% for Nations Tax-Exempt Fund and Pro Forma, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 0.55% and 0.54% for Nations Tax-Exempt Fund and Pro Forma, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT MISSOURI
SHORT-TERM TAX- NATIONS TAX-
EXEMPT FUND EXEMPT FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 4 $ 3 $ 3
3 years ........................................... 13 10 10
5 years ........................................... 22 17 17
10 years .......................................... 51 38 38
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-19
<PAGE>
PILOT MUNICIPAL BOND FUND-CLASS A SHARES
NATIONS MUNICIPAL INCOME FUND-INVESTOR A SHARES
<TABLE>
<CAPTION>
NATIONS
PILOT MUNICIPAL MUNICIPAL
BOND FUND INCOME FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............ 4.50% None None
Maximum Sales Load Imposed on
Reinvested Dividends ........................... None None None
Deferred Sales Load ............................... None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)*... 0.45% 0.30% 0.40%
12b-1 Fees.......................................... 0.25% 0.20% 0.20%
Other Expenses .................................... 0.22% 0.30% 0.20%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.92% 0.80% 0.80%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.55%,
0.60% and 0.60%, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements)
would be: 1.02%, 1.10% and 1.00%, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
NATIONS
PILOT MUNICIPAL MUNICIPAL
BOND FUND INCOME FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 54 $ 8 $ 8
3 years ........................................... 73 26 26
5 years ........................................... 94 44 44
10 years .......................................... 153 99 99
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-20
<PAGE>
PILOT MUNICIPAL BOND FUND-CLASS B SHARES
NATIONS MUNICIPAL INCOME FUND-INVESTOR N SHARES
<TABLE>
<CAPTION>
NATIONS
PILOT MUNICIPAL MUNICIPAL
BOND FUND INCOME FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None
Deferred Sales Load (as a percentage of redemption
proceeds)*...................................... 4.50% None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)** 0.45% 0.30% 0.40%
12b-1 Fees.......................................... 1.00% 0.75% 0.75%
Other Expenses .................................... 0.22% 0.30% 0.20%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)*** 1.67% 1.35% 1.35%
==== ==== ====
</TABLE>
- --------------------
* Although Investor N Shares do not impose a contingent deferred sales
charge, Pilot Shareholders will remain subject to the contingent
deferred sales charge structure applicable to their Class B shares
originally purchased.
** Management Fees (before waivers or reimbursements) would be: 0.55%,
0.60% and 0.60%, respectively.
*** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 1.77%, 1.65% and 1.55%, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
NATIONS
PILOT MUNICIPAL MUNICIPAL
BOND FUND INCOME FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 62 $ 14 $ 14
3 years ........................................... 88 43 43
5 years ........................................... 116 74 74
10 years .......................................... 198 162 162
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-21
<PAGE>
PILOT MUNICIPAL BOND FUND-PILOT SHARES
NATIONS MUNICIPAL INCOME FUND-PRIMARY A SHARES
<TABLE>
<CAPTION>
NATIONS
PILOT MUNICIPAL MUNICIPAL
BOND FUND INCOME FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends ........................... None None None
Deferred Sales Load ................................ None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements) *.. 0.45% 0.30% 0.40%
Other Expenses ..................................... 0.22% 0.30% 0.20%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.67% 0.60% 0.60%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.55%,
0.60% and 0.60%, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 0.77%, 0.90% and 0.80%, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
NATIONS
PILOT MUNICIPAL MUNICIPAL
BOND FUND INCOME FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 7 $ 6 $ 6
3 years ........................................... 21 19 19
5 years ........................................... 37 33 33
10 years .......................................... 83 75 75
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-22
<PAGE>
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND-ADMINISTRATION SHARES
NATIONS TAX-EXEMPT FUND-INVESTOR B SHARES
<TABLE>
<CAPTION>
PILOT SHORT-TERM
TAX-EXEMPT NATIONS
DIVERSIFIED FUND TAX-EXEMPT FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ........... None None None
Maximum Sales Load Imposed on
Reinvested Dividends .......................... None None None
Deferred Sales Load ................................ None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)*... 0.20% 0.15% 0.16%
12b-1 Fees.......................................... 0.25% 0.20% 0.20%
Other Expenses .................................... 0.18% 0.15% 0.14%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.63% 0.50% 0.50%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.40%
and 0.40% for Nations Tax-Exempt Fund and Pro Forma, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 0.75% and 0.74% for Nations Tax-Exempt Fund and Pro Forma, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT SHORT-TERM
TAX-EXEMPT NATIONS TAX-
DIVERSIFIED FUND EXEMPT FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 6 $ 5 $ 5
3 years ........................................... 20 16 16
5 years ........................................... 35 28 28
10 years .......................................... 79 63 63
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-23
<PAGE>
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND-INVESTOR SHARES
NATIONS TAX-EXEMPT FUND-DAILY SHARES
<TABLE>
<CAPTION>
PILOT SHORT-TERM
TAX-EXEMPT NATIONS TAX-
DIVERSIFIED FUND EXEMPT FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends ........................... None None None
Deferred Sales Load ................................ None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after waivers or reimbursements)*.. 0.20% 0.15% 0.16%
12b-1 Fees.......................................... 0.50% 0.50% 0.50%
Other Expenses ..................................... 0.18% 0.15% 0.14%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.88% 0.80% 0.80%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.40%
and 0.40% for Nations Tax-Exempt Fund and Pro Forma, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 1.05% and 1.04% for Nations Tax-Exempt Fund and Pro Forma, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT SHORT-TERM
TAX-EXEMPT NATIONS TAX-
DIVERSIFIED FUND EXEMPT FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 9 $ 8 $ 8
3 years ........................................... 28 26 26
5 years ........................................... 49 44 44
10 years .......................................... 108 99 99
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-24
<PAGE>
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND-PILOT SHARES
NATIONS TAX-EXEMPT FUND-PRIMARY A SHARES
<TABLE>
<CAPTION>
PILOT SHORT-TERM
TAX-EXEMPT NATIONS TAX-
DIVERSIFIED FUND EXEMPT FUND PRO FORMA
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends .......................... None None None
Deferred Sales Load ............................... None None None
Redemption Fees .................................... None None None
Exchange Fee ....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)*... 0.20% 0.15% 0.16%
Other Expenses .................................... 0.18% 0.15% 0.14%
---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.38% 0.30% 0.30%
==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.40%
and 0.40% for Nations Tax-Exempt Fund and Pro Forma, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would
be: 0.55% and 0.54% for Nations Tax-Exempt Fund and Pro Forma, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT SHORT-TERM
TAX-EXEMPT NATIONS
DIVERSIFIED FUND TAX-EXEMPT FUND PRO FORMA
<S> <C> <C> <C>
1 year ............................................ $ 4 $ 3 $ 3
3 years ........................................... 12 10 10
5 years ........................................... 21 17 17
10 years .......................................... 48 38 38
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-25
<PAGE>
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND-ADMINISTRATION SHARES
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND-ADMINISTRATION SHARES
NATIONS TAX-EXEMPT FUND-INVESTOR B SHARES
<TABLE>
<CAPTION>
PILOT MISSOURI PILOT
SHORT-TERM SHORT-TERM NATIONS
TAX-EXEMPT FUND TAX-EXEMPT TAX-EXEMPT FUND PRO FORMA
DIVERSIFIED
FUND
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None None
Deferred Sales Load ............................... None None None None
Redemption Fees .................................... None None None None
Exchange Fee ....................................... None None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)*... 0.20% 0.20% 0.15% 0.16%
12b-1 Fees.......................................... 0.25% 0.25% 0.20% 0.20%
Other Expenses .................................... 0.20% 0.18% 0.15% 0.14%
---- ---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.65% 0.63% 0.50% 0.50%
==== ==== ==== ====
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.20%, 0.40%
and 0.40% for Pilot Short-Term Tax Exempt Diversified Fund, Nations
Tax-Exempt Fund and Pro Forma, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would be:
0.75% and 0.74% for Nations Tax-Exempt Fund and Pro Forma, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
</TABLE>
<TABLE>
<CAPTION>
PILOT MISSOURI PILOT SHORT-TERM
SHORT-TERM TAX-EXEMPT NATIONS
TAX-EXEMPT FUND DIVERSIFIED FUND TAX-EXEMPT FUND PRO FORMA
<S> <C> <C> <C> <C>
1 year ............................................ $ 7 $ 5 $ 5 $ 5
3 years ........................................... 21 16 16 16
5 years ........................................... 36 28 28 28
10 years .......................................... 81 63 63 63
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-26
<PAGE>
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND-INVESTOR SHARES
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND-INVESTOR SHARES
NATIONS TAX-EXEMPT FUND-DAILY SHARES
<TABLE>
<CAPTION>
PILOT MISSOURI PILOT
SHORT-TERM SHORT-TERM NATIONS
TAX-EXEMPT FUND TAX-EXEMPT TAX-EXEMPT FUND
DIVERSIFIED PRO FORMA
FUND
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None None
Deferred Sales Load ................................ None None None None
Redemption Fees .................................... None None None None
Exchange Fee ....................................... None None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after waivers or reimbursements) *. 0.20% 0.20% 0.15% 0.16%
12b-1 Fees.......................................... 0.50% 0.50% 0.50% 0.50%
Other Expenses...................................... 0.20% 0.18% 0.15% 0.14%
---- ---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.90% 0.88% 0.80% 0.80%
==== ==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.40% and 0.40%
for Nations Tax-Exempt Fund and Pro Forma, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would be:
1.05% and 1.04% for Nations Tax-Exempt Fund and Pro Forma, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT MISSOURI PILOT SHORT-TERM
SHORT-TERM TAX-EXEMPT NATIONS
TAX-EXEMPT FUND DIVERSIFIED FUND TAX-EXEMPT FUND PRO FORMA
<S> <C> <C> <C> <C>
1 year ............................................ $ 9 $ 9 $ 8 $ 8
3 years ........................................... 29 28 26 26
5 years ........................................... 50 49 44 44
10 years .......................................... 111 108 99 99
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-27
<PAGE>
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND-PILOT SHARES
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND-PILOT SHARES
NATIONS TAX-EXEMPT FUND-PRIMARY A SHARES
<TABLE>
<CAPTION>
PILOT MISSOURI PILOT
SHORT-TERM SHORT-TERM NATIONS
TAX-EXEMPT FUND TAX-EXEMPT TAX-EXEMPT FUND PRO FORMA
DIVERSIFIED
FUND
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None None
Deferred Sales Load ................................ None None None None
Redemption Fees .................................... None None None None
Exchange Fee ....................................... None None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees(after waivers or reimbursements)*... 0.20% 0.20% 0.15% 0.16%
Other Expenses .................................... 0.20% 0.18% 0.15% 0.14%
---- ---- ---- ----
TOTAL FUND OPERATING EXPENSES:
(after waivers or reimbursements)**................. 0.40% 0.38% 0.30% 0.30%
==== ==== ==== ====
</TABLE>
- --------------------
* Management Fees (before waivers or reimbursements) would be: 0.40% and 0.40%
for Nations Tax-Exempt Fund and Pro Forma, respectively.
** Total Fund Operating Expenses (before waivers or reimbursements) would be:
0.55% and 0.54% for Nations Tax-Exempt Fund and Pro Forma, respectively.
EXAMPLE:*
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PILOT MISSOURI PILOT SHORT-TERM
SHORT-TERM TAX-EXEMPT NATIONS
TAX-EXEMPT FUND DIVERSIFIED FUND TAX-EXEMPT FUND PRO FORMA
<S> <C> <C> <C> <C>
1 year ............................................ $ 4 $ 4 $ 3 $ 3
3 years ........................................... 13 12 10 10
5 years ........................................... 22 21 17 17
10 years .......................................... 51 48 38 38
</TABLE>
- --------------------
* THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED
AMOUNT.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the fund will bear directly
or indirectly.
II-28
<PAGE>
APPENDIX III
INVESTMENT OBJECTIVES, LIMITATIONS AND CERTAIN SIGNIFICANT INVESTMENT POLICIES
OF THE EXISTING NATIONS FUNDS AND
THE CORRESPONDING PILOT FUNDS
-----------------------------------------------
This Appendix sets forth the investment objectives, fundamental and certain
nonfundamental limitations and significant investment policies of the eight
Pilot Funds that will be reorganized into the seven Nations Funds, as well as
the investment objectives and significant investment policies of these Existing
Nations Funds. The following is qualified in its entirety by the more detailed
information included in the prospectuses and statements of additional
information for the Nations Funds and the corresponding Pilot Funds which are
incorporated by reference in this Combined Proxy Statement/Prospectus.
I. PILOT DIVERSIFIED BOND INCOME FUND/
NATIONS STRATEGIC FIXED INCOME FUND
A. Investment Objectives.
1. Pilot Diversified Bond Income Fund: to seek current income consistent
with preservation of capital by investing primarily in debt securities. The Fund
seeks total return as a secondary objective.
2. Nations Strategic Fixed Income Fund: to seek total return by investing
in investment grade fixed income securities.
Comment:
Both Funds invest at least 65% of their assets in fixed income (i.e.
"bond") securities which typically include bonds, notes, debentures,
asset-backed and mortgage-backed securities of governmental issuers or of
private issuers, U.S. Government obligations, and dollar-denominated debt
obligations of foreign issuers, including foreign corporations and foreign
governments, among others. The Funds may also invest in "high quality" money
market instruments which may include cash and cash equivalents, and repurchase
agreements. The average dollar-weighted maturity of the Pilot funds' portfolio
will be between five and fifteen years and the Nations fund's average
dollar-weighted maturity will be 10 years or less, and will, under no
circumstances, exceed 15 years.
While most obligations acquired by the Funds will be issued by
companies or governmental entities located within the United States, Nations
Strategic Fixed Income Fund may invest up to 25% of its assets in foreign
securities. Pilot Diversified Bond Income Fund does not intend to invest more
than 5% of its total assets in foreign securities.
III-1
<PAGE>
The Nations Strategic Fixed Income Fund will only invest in investment
grade debt obligations, which are obligations that have been rated in one of the
top four investment categories by at least one of the Nationally Recognized
Statistical Rating Organizations ("NRSRO") or, if not rated, determined by the
Adviser to be of comparable quality. The Pilot Diversified Bond Income Fund will
only purchase those debt securities rated in the top three categories by at
least one NRSRO, or if not rated, determined by Adviser to be of comparable
quality. Obligations that may be purchase by the Nations Strategic Fixed Income
Fund that are rated in the lowest of the top four investment grade rating
categories (rated "BBB" by at least one NRSRO) have speculative characteristics
and are more likely to lead to a weakened capacity to make principal and
interest payments than is the case with higher grade debt obligations.
Subsequent to its purchase by the Fund, a debt obligation may cease to be rated
or its rating may be reduced below the minimum rating required for purchase by
the Fund. The Adviser will consider such an event in determining whether to
continue to hold such obligation.
II. PILOT GROWTH FUND/NATIONS DISCIPLINED EQUITY FUND
A. Investment Objectives.
1. Pilot Growth Fund: to provide long-term capital growth by investing
primarily in equity securities.
2. Nations Disciplined Equity Fund: to seek growth of capital by investing
in companies that are expected to produce significant increases in earnings per
share.
Comment:
Under normal market conditions, both Funds invest at least 65% of their
assets in common stocks of companies the Adviser believes are likely to
experience significant increases in earnings. The goal of both Funds is
long-term capital appreciation, and therefore any dividend income either Fund
receives is incidental. The objectives are met with a focus on identifying
companies with positive historical earnings trends and superior sustainable
growth. Such companies, when experiencing superior returns, have the potential
to generate significant increases in per share earnings and subsequently, in the
stock price.
The Funds may also invest in debt obligations rated investment grade by
at least one NRSRO, or if unrated, are determined to be of comparable quality.
Pilot Growth Fund may invest 5% of its total assets in foreign securities, while
Nations Disciplined Equity Fund may invest up to 20% of its total assets in
foreign securities. Further, Pilot Growth Fund reserves the right to invest up
to 100% of its assets in cash, cash equivalents and debt obligations when the
Adviser deems it necessary during periods of unusual market activity. Similarly,
Nations Disciplined Equity Fund will invest in repurchase agreements and money
market instruments when market conditions warrant such investments.
III-2
<PAGE>
III. PILOT GROWTH AND INCOME FUND/NATIONS VALUE FUND
A. Investment Objectives.
1. Pilot Growth and Income Fund: to seek capital appreciation and current
income by investing primarily in common stocks of U.S. companies.
2. Nations Value Fund: to seek growth of capital by investing in companies
that are believed to be undervalued.
Comment:
Both of Funds invest primarily in equity securities which are
typically common stocks, preferred stocks and debt securities that are
convertible into common stocks. Both Funds will invest, during normal market and
economic conditions, at least 65% of their total assets in common stocks. In
addition, while both Funds concentrate their investments in publicly traded
common stocks of U.S. companies, they may also invest up to 20% of their total
assets in the securities of foreign issuers.
Pilot Growth and Income Fund invests in stocks which demonstrate
favorable prospects for capital growth and current dividend income based their
current earnings potential, existing resources and assets, trading liquidity,
marketing valuation and profitability.
Nations Value Fund invests in stocks selected from a universe of
companies, each of which has a market a capitalization of $500 million or more
and has an average trading volume of at least $3 million. These requirements
indicate to the Adviser that the Fund has adequate return to support normal
purchase and sale activities without affecting prevailing market prices of the
issuer's shares. Further, the Fund attempts to select companies with strong
total return potential and better opportunities for capital appreciation, by
using indicators such as lower price-to-earnings ratios.
Both Funds may also invest in other types of securities to meet
anticipated redemption requests, or as a temporary defensive measure if market
conditions warrant. These other investments may include: cash or cash
equivalents, debt obligations, money market instruments and repurchase
agreements.
IV. PILOT INTERMEDIATE MUNICIPAL BOND FUND/
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
A. Investment Objectives.
1. Pilot Intermediate Municipal Bond Fund: to seek current income free of
federal income tax as is consistent with preservation of capital.
III-3
<PAGE>
2. Nations Intermediate Municipal Bond Fund: to seek high current income
exempt from Federal income tax as is consistent with moderate fluctuation of
principal. The Fund invests in investment grade, intermediate-term municipal
securities.
Comment:
Both Funds seek to attain their objectives by investing primarily in
debt obligations issued by or on behalf of states, territories and possessions
of the United States, the District of Columbia and of their agencies,
authorities, instrumentalities, and political subdivisions which are exempt from
Federal income tax ("Municipal Obligations"). Each Fund, under normal market
conditions, will invest at least 80% of its net assets in Municipal Obligations.
The Funds are managed to seek capital appreciation and minimize loss due to
interest rate movements, which fluctuate inversely in relation to the value of
the Fund's portfolio. Both Funds invest in investment grade municipal
obligations.
Both Funds, although they do not currently intend to do so on a regular
basis, may invest more than 25% of its assets in Municipal Obligations, the
interest on which comes solely from the revenue of similar projects. The Funds
however, refrains from investing in projects as such due to the fact that a
concentration of securities issued by issuers in the same state or in industrial
development bonds, exposes the Funds to certain risks (including legal and
economic risks).
Pilot Intermediate Municipal Bond Fund has a relatively short average
dollar-weighted maturity; between three and ten years, though it is ordinarily
less than seven years. Similarly, Nations Intermediate Municipal Bond Fund has
an average dollar-weighted maturity of between three and ten years, with a
duration between five and six years.
Each Fund also has the ability to invest up to 20% of its net assets in
taxable obligations and private activity bonds. Taxable obligations may include
repurchase agreements and cash equivalents. Each Fund may also hold uninvested
cash reserves pending investment or during defensive periods.
V. PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND/
NATIONS SHORT-INTERMEDIATE GOVERNMENT FUND
A. Investment Objectives.
1. Pilot Intermediate U.S. Government Securities Fund: to seek total return
and preservation of capital by investing primarily in U.S. Government securities
and repurchase agreements collateralized by such securities.
2. Nations Short-Intermediate Government Fund: to seek high current income
consistent with modest fluctuation of principal. The Fund invests primarily in
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
III-4
<PAGE>
Comment:
These two Funds invest substantially all of their assets in U.S.
Government Obligations, which may consist of a variety of U.S. Government
securities, including U.S. Treasury bonds, notes and bills, and obligations of
many U.S. Government agencies and instrumentalities. U.S. Government Obligations
have historically had a low risk of loss of principal if held to maturity. The
Pilot Intermediate U.S. Government Securities Fund invests at least 65% of its
total assets in U.S. Government Obligations and repurchase agreements
collateralized by such securities; and also may invest up to 35% of its total
assets in debt securities of U.S. and foreign corporate and foreign government
issuers, ADRs, EDRs, zero coupon bonds and cash equivalents. Both Funds may also
invest in debt securities of foreign corporate and governmental issuers, as well
as "high quality" money market instruments which may include cash and cash
equivalents, and repurchase agreements.
Further, both Funds may invest in futures contracts and options.
Nations Short-Intermediate Government Fund may also invest in asset-backed and
mortgage-backed securities of governmental issuers or of private issuers,
including mortgage pass-through certificates and collateralized mortgage
obligations, real estate investment trust securities or mortgage-backed bonds.
Pilot Intermediate U.S. Government Securities Fund has an average
dollar-weighted maturity of between three and ten years, though usually less
than seven years. However, Nations Short-Intermediate Government Fund has a
shorter average dollar-weighted maturity of between three and five years, and
the duration will not exceed five years. In general, longer-term debt
instruments tend to fluctuate in value more than shorter-term debt instruments
in response to interest rate movements.
VI. PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND/
NATIONS TAX EXEMPT FUND
A. Investment Objectives.
1. Pilot Missouri Short-Term Tax-Exempt Fund: to seek as high a level of
current income which is exempt from federal income tax as is consistent with the
preservation of capital.
2. Nations Tax Exempt Fund: to seek as high a level of current interest
income exempt from Federal income taxes as is consistent with liquidity and
stability of principal.
Comment:
Each of these Funds is a money market fund and seeks to maintain a net
asset value of $1.00 per share, although there is no assurance that they will be
able to do so. Both Funds seek to attain their objectives by investing primarily
in Municipal Obligations which are debt
III-5
<PAGE>
obligations issued by or on behalf of states, territories and possessions of the
United States, the District of Columbia and of their agencies, authorities,
instrumentalities, and political subdivisions which are exempt from Federal
income tax. Each Fund may also hold uninvested cash reserves pending investment
or during defensive periods.
A difference between the Pilot Missouri Short-Term Tax-Exempt Fund and
the Nations Tax Exempt Fund is that the Pilot Missouri Short-Term Tax-Exempt
Fund invests exclusively in high quality money market instruments and invests at
least 80% of its assets in debt obligations issued by the State of Missouri,
except in certain instances when the Fund's Advisers deem that a temporary
defensive posture is appropriate. Nations Tax Exempt Fund does not concentrate
in municipal obligations of any one state or issuer but rather invests 80% of
its net assets in general Municipal Obligations, under normal market conditions.
Nations Tax Exempt Fund, however, may invest in private activity bonds, the
interest on which may be treated as a specific tax preference item under the
Federal alternative minimum tax, whereas the Pilot Missouri Short-Term
Tax-Exempt Fund may not.
Each Fund is a money market fund and, in accordance with Rule 2a-7
under the 1940 Act, may invest in instruments with remaining maturities not
exceeding 13 months, and the Funds' dollar-weighted average portfolio maturity
must not exceed 90 days. As provided for and defined in Rule 2a-7, each Fund may
only purchase "Eligible Securities" and only if, immediately after such
purchase: the Fund would have no more than 5% of its total assets in "First Tier
Securities" of any one issuer, excluding government securities and except as
otherwise permitted for temporary purposes and for certain guarantees and
unconditional puts; the Fund would own no more than 10% of the voting securities
of any one issuer; the Fund would have no more than 5% of its total assets in
"Second Tier Securities"; and the Fund would have no more than the greater of $1
million or 1% of its total assets in "Second Tier Securities" of any one issuer.
VII. PILOT MUNICIPAL BOND FUND/
NATIONS MUNICIPAL INCOME FUND
A. Investment Objectives.
1. Pilot Municipal Bond Fund: to seek current income free of federal income
tax as is consistent with preservation of capital.
2. Nations Municipal Income Fund: to seek high current income exempt from
Federal income tax with the potential for principal fluctuation associated with
investments in long-term municipal securities. The Fund invests in investment
grade, long-term municipal securities.
Comment:
III-6
<PAGE>
Both Funds seek to attain their objectives by investing primarily in
Municipal Obligations which are obligations issued by or on behalf of states,
territories and possessions of the United States, the District of Columbia and
of their agencies, authorities, instrumentalities, and political subdivisions
which are exempt from Federal income tax. Each Fund, under normal market
conditions, will invest at least 80% of its net assets in Municipal Obligations.
The Funds are managed to seek capital appreciation and minimize loss due to
interest rate movements, which fluctuate inversely in relation to the value of
the Fund's portfolio. Both Funds invest in investment grade Municipal
Obligations.
Although both Funds do not currently intend to do so on a regular
basis, they may invest more than 25% of its assets in Municipal Obligations, the
interest on which comes solely from the revenue of similar projects. The Funds
however, refrains from investing in projects as such due to the fact that a
concentration of securities issued by issuers in the same state or in industrial
development bonds, exposes the Funds to certain risks (including legal and
economic risks).
Pilot Municipal Bond Fund has an average dollar-weighted maturity;
between five and thirty years. Similarly, Nations Municipal Income Fund has an
average dollar-weighted maturity of greater than ten years, and a duration
between 7.5 and 9.5 years.
Each Fund also has the ability to invest up to 20% of its net assets in
taxable obligations and private activity bonds. Taxable obligations may include
repurchase agreements and cash equivalents. Each Fund may also hold uninvested
cash reserves pending investment or during defensive periods.
VIII. PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND/
NATIONS TAX EXEMPT FUND
A. Investment Objectives.
1. Pilot Short-Term Tax-Exempt Diversified Fund: to seek as high a level of
current income which is exempt from federal income tax as is consistent with the
preservation of capital.
2. Nations Tax Exempt Fund: to seek as high a level of current interest
income exempt from Federal income taxes as is consistent with liquidity and
stability of principal.
Comment:
Each of these Funds is a money market fund and seeks to maintain a net
asset value of $1.00 per share, although there is no assurance that they will be
able to do so. Both Funds seek to attain their objectives by investing primarily
in Municipal Obligations which are debt obligations issued by or on behalf of
states, territories and possessions of the United States, the District of
Columbia and of their agencies, authorities, instrumentalities, and political
subdivisions
III-7
<PAGE>
which are exempt from Federal income tax. Each Fund also may hold
uninvested cash reserves pending investment or during defensive periods.
Pilot Short-Term Tax-Exempt Diversified Fund invests exclusively in
high quality money market instruments and invests at least 80% of its assets in
Municipal Obligations, except in certain instances when the Fund's Advisers deem
that a temporary defensive posture is appropriate. Similarly, Nations Tax Exempt
Fund will invest 80% of its net assets in Municipal Obligations, under normal
market conditions. Nations Tax Exempt Fund, however, may invest in private
activity bonds, the interest on which may be treated as a specific tax
preference item under the Federal alternative minimum tax, whereas the Pilot
Short-Term Tax-Exempt Diversified Fund may not.
Each Fund is a money market fund and, in accordance with Rule 2a-7
under the 1940 Act, may invest in instruments with remaining maturities not
exceeding 13 months, and the Funds' dollar-weighted average portfolio maturity
must not exceed 90 days. As provided for and defined in Rule 2a-7, each Fund may
only purchase "Eligible Securities" and only if, immediately after such
purchase: the Fund would have no more than 5% of its total assets in "First Tier
Securities" of any one issuer, excluding government securities and except as
otherwise permitted for temporary purposes and for certain guarantees and
unconditional puts; the Fund would own no more than 10% of the voting securities
of any one issuer; the Fund would have no more than 5% of its total assets in
"Second Tier Securities"; and the Fund would have no more than the greater of $1
million or 1% of its total assets in "Second Tier Securities" of any one issuer.
III-8
<PAGE>
APPENDIX IV
SHAREHOLDER TRANSACTIONS AND SERVICES OF THE NATIONS FUNDS AND THE
CORRESPONDING PILOT FUNDS
-----------------------------------------------
This Appendix compares the shareholder transactions and services of the
Pilot Funds and the corresponding Nations Funds. The following is qualified in
its entirety by the more detailed information included in the prospectuses for
the Pilot Funds and Nations Funds which are incorporated by reference in this
Combined Proxy Statement/Prospectus. Unless otherwise indicated, terms used
herein and not otherwise defined have the same meanings as are given to them in
such prospectuses. Please note that after the Reorganization, Nations will
continue to honor any standing instructions regarding the corresponding Pilot
Fund classes, under arrangements such as automatic withdrawal plans, systematic
investment plans or dividend reinvestment plans. In such cases, standing
instructions will be subject to the same or similar terms (e.g., minimum
investments, account balances and minimum transaction amounts) currently in
effect, except that there may be exceptions with respect to the timing of
transactions which may need to be altered to comport with Nations procedures.
Shareholders will be notified of any such exceptions. After the Reorganization,
any instructions given with respect to any new account will be subject to the
terms of the applicable Nations Fund class.
I. PILOT FUNDS - CLASS A SHARES (Pilot Diversified Bond Income Fund, Pilot
Growth Fund, Pilot Growth and Income Fund, Pilot Intermediate Municipal Bond
Fund, Pilot Intermediate U.S. Government Securities Fund and Pilot Municipal
Bond Fund).
CORRESPONDING NATIONS FUNDS - INVESTOR A SHARES (Nations Strategic
Fixed Income Fund, Nations Disciplined Equity Fund, Nations Value Fund, Nations
Intermediate Municipal Bond Fund, Nations Short-Intermediate Government Fund and
Nations Municipal Income Fund).
A. Sales Charges and Exemptions
THE FRONT-END SALES CHARGE ON PURCHASES OF CLASS A SHARES OF THE PILOT
GROWTH FUND, PILOT GROWTH AND INCOME FUND, PILOT MUNICIPAL BOND FUND AND PILOT
U.S. GOVERNMENT SECURITIES FUND* VARIES WITH THE SIZE OF THE PURCHASE MADE
ACCORDING TO THE FOLLOWING SCHEDULE:
IV-1
<PAGE>
<TABLE>
<CAPTION>
Front-End Sales Charge
As A Percentage of:
Dealer Re-Allowance
Public As A Percentage of
Offering Price Net Asset Value Offering Price
<S> <C> <C> <C>
Amount of Investment
Less than $100,000.......................... 4.50% 4.71% 4.00%
$100,000 but less than $250,000............. 3.75% 3.90% 3.25%
$250,000 but less than $500,000............. 3.00% 3.09% 2.50%
$500,000 but less than $1,000,000........... 2.00% 2.04% 1.75%
$1,000,000 but less than $2,500,000......... 1.00% 1.01% 0.90%
$2,5000,000 and greater..................... None None None
</TABLE>
THE FRONT-END SALES CHARGE ON PURCHASES OF CLASS A SHARES OF THE PILOT
DIVERSIFIED BOND INCOME FUND, PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND
AND INTERMEDIATE MUNICIPAL FUND* VARIES WITH THE SIZE OF THE PURCHASE MADE
ACCORDING TO THE FOLLOWING SCHEDULE:
<TABLE>
<CAPTION>
Front-End Sales Charge
As A Percentage of:
Dealer Re-Allowance
Public As A Percentage of
Offering Price Net Asset Value Offering Price
<S> <C> <C> <C>
Amount of Investment
Less than $100,000.......................... 4.50% 4.71% 3.50%
$100,000 but less than $250,000............. 3.25% 3.36% 2.75%
$250,000 but less than $500,000............. 2.50% 2.56% 2.00%
$500,000 but less than $1,000,000........... 1.50% 1.52% 1.25%
$1,000,000 but less than $2,500,000......... 1.00% 1.01% 0.90%
$2,5000,000 and greater..................... None None None
</TABLE>
- --------------------
IV-2
<PAGE>
*In certain circumstances or for certain individuals or entities, the front-end
sales charge for Class A Shares of the Pilot Funds may be waived either because
of the nature of the investor or the reduced sales efforts required to attract
such investments.
THERE IS NO FRONT-END SALES CHARGE ON INVESTOR A SHARES OF THE NATIONS FUNDS.
B. Purchase Policies
<TABLE>
<CAPTION>
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
Minimum initial investment $1,000 for a regular account; $500 $1,000 for a regular account; $100
for IRA investors; $250 for for the Automatic Investment Plan;
non-working spousal IRAs; and $100 $500 for employee-regular accounts;
for investors participating in the $100 form employee-Automatic
Systematic Investment Plan; no Investment Plan; $500 for
minimum investment for 401(k) plans, tax-sheltered retirement plans;
simplified employee pension plans $1,000 for exchange transactions.
("SEPs"), salary
reduction-simplified employee
pension plans ("SAR-SEPs") or salary
reduction-IRAs ("SAR-IRAs).*
Minimum subsequent investments $100; $25 for subsequent investments $100 for a regular account; $100 for
made through the Systematic the Automatic Investment Plan; $100
Investment Plan. for employee-regular accounts; $50
form employee-Automatic Investment Plan;
$50 for tax-sheltered retirement
plans; $500 for exchange transactions.
Purchase methods Through Servicing Agents, Through BISYS Fund Services
Selling Agents, a Nations Fund in person; by mail; by wire; by
Personal Investment Planner Automatic Investment Plan; by
account; by mail; by wire; telephone.
by telephone.
</TABLE>
*The assets of such plans must reach an asset value of $1,000 ($500 for SEPs,
SAR-SEPs and SAR-IRAs) within one year of the account open date. If the assets
of such plans do not reach the minimum asset size within one year, Nations
reserves the right to redeem the Shares held by such plans on 60 days' written
notice.
C. Redemption Procedures
IV-3
<PAGE>
<TABLE>
<CAPTION>
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
Through an authorized selling or Yes Yes
servicing agent
By mail Yes Yes
By telephone Yes Yes
By wire Yes Yes
Check writing feature No No
By automatic withdrawal plan Yes (net asset value of account must Yes (net asset value of account must
be $10,000) be at least $5,000)
</TABLE>
Due to the high cost of maintaining fund accounts with small balances,
Nations reserves the right to close a shareholder's account and send the
shareholder the proceeds if the balance falls below $500. Share balances also
may be redeemed at the direction of an agent pursuant to arrangements between
the agent and its customers. Nations also may redeem Shares of the Nations Funds
involuntarily or make payment for redemption in readily marketable securities or
other property under certain circumstances in accordance with the 1940 Act.
Pilot similarly may, subject to certain restrictions, redeem
involuntarily, upon thirty days' written notice, Shares of a shareholder whose
account decreases to a value below $1,000.
D. Additional Shareholder Services
<TABLE>
<CAPTION>
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
Systematic/automatic investment plan Yes (in any amount from $25 to Yes (minimum amount $100)
$100,000)
Cross reinvestment privilege No Yes*
Reinstatement privilege Yes** Yes***
</TABLE>
* A shareholder's dividends', capital gains distributions, or both, may be
automatically reinvested in Shares of any other fund or any of the Pilot's other
investment portfolios.
** Within 120 days of a redemption, a shareholder may reinvest a portion of the
proceeds of such redemption in Investor A Shares of the same fund. The amount
reinvested is limited to an amount up to, but not exceeding, the redemption
proceeds (or
IV-4
<PAGE>
to the nearest full share if fractional Shares are not purchased).
A reinstatement request must be submitted within 120 days after the redemption.
***May be used once annually. A reinstatement request must be submitted within
90 days after the redemption. Class A Shareholders may reinvest all or a portion
of the redemption proceeds (plus the amount necessary to acquire a fractional
share to round off the purchase to the nearest full share) in Class A Shares of
any other fund without paying a sales load.
E. Share Exchanges
<TABLE>
<CAPTION>
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
By mail Yes Yes
By telephone Yes Yes
Minimum The Investor A Shares exchanged $1,000 for initial exchange;
must have a current value of at $100 minimum for subsequent
least $1,000 exchanges
Automatic exchange feature Yes. A shareholder may No
automatically exchange at least $25
on a monthly or quarterly basis
</TABLE>
Class A Shares of a Pilot fund may be exchanged for Class A
Shares of any other Pilot fund. Class A Shares purchased with a front-end sales
charge may be exchanged without the need to pay any additional front-end sales
charge on the Shares acquired through the exchange. If a shareholder has a
qualified trust, agency or custodian account with Boatmen's or its affiliates,
and the Shares are held in that account, the shareholder may also exchange your
current Class A Shares of a Pilot fund for Pilot Shares in the same Pilot fund.
Exchanges are subject to the minimum investment requirements imposed.
Investor A Shares of a Nations Fund may be exchanged for
Investor A Shares of any other Nations fund. Exchanges are subject to the
minimum investment requirements imposed.
II. PILOT FUNDS - CLASS B SHARES (Pilot Diversified Bond Income Fund, Pilot
Growth Fund, Pilot Growth and Income Fund, Pilot Intermediate Municipal Bond
Fund, Pilot Intermediate U.S. Government Securities Fund and Pilot Municipal
Bond Fund).
CORRESPONDING NATIONS FUNDS - INVESTOR N SHARES (Nations Strategic
Fixed Income Fund, Nations Disciplined Equity Fund, Nations
IV-5
<PAGE>
Value Fund, Nations
Intermediate Municipal Bond Fund, Nations Short-Intermediate Government Fund and
Nations Municipal Income Fund).
A. Sales Charges and Exemptions
THE CONTINGENT-DEFERRED SALES CHARGE ON PURCHASES OF CLASS B SHARES OF THE
PILOT GROWTH FUND, PILOT GROWTH AND INCOME FUND, PILOT MUNICIPAL BOND FUND AND
PILOT U.S. GOVERNMENT SECURITIES FUND* VARIES WITH THE SIZE OF THE PURCHASE MADE
ACCORDING TO THE FOLLOWING SCHEDULE:
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge (as a percentage
Number of Years Elapsed Since Purchase
of dollar amount subject to the charge
<S> <C>
One................................................ 4.50%
Two................................................ 4.00%
Three.............................................. 3.50%
Four............................................... 3.00%
Five............................................... 2.50%
Six................................................ 1.75%
After Six Years.................................... None
</TABLE>
THE CONTINGENT-DEFERRED SALES CHARGE ON PURCHASES OF CLASS B SHARES OF THE
PILOT DIVERSIFIED BOND INCOME FUND, PILOT INTERMEDIATE U.S. GOVERNMENT
SECURITIES FUND AND INTERMEDIATE MUNICIPAL FUND* VARIES WITH THE SIZE OF THE
PURCHASE MADE ACCORDING TO THE FOLLOWING SCHEDULE:
IV-6
<PAGE>
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge (as a percentage
Number of Years Elapsed Since Purchase of dollar amount subject to the charge
<S> <C>
One................................................ 4.00%
Two................................................ 3.50%
Three.............................................. 3.00%
Four............................................... 2.50%
Five............................................... 2.00%
Six................................................ 1.25%
After Six Years.................................... None
</TABLE>
THERE IS NO CONTINGENT-DEFERRED SALES CHARGE ON INVESTOR N SHARES OF THE
NATIONS FUNDS, HOWEVER, AFTER THE REORGANIZATION, FORMER PILOT FUND SHAREHOLDERS
WILL REMAIN SUBJECT TO THE CONTINGENT DEFERRED SALES CHARGES APPLICABLE AS
LISTED ABOVE. FORMER PILOT FUND SHAREHOLDERS WILL RECEIVE CREDIT FOR THE PERIOD
OF TIME THAT THEY HELD THEIR CLASS B SHARES.
B. Purchase Policies
<TABLE>
<CAPTION>
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
Minimum initial investment $1,000 for a regular account; $500 $1,000 for a regular account; $100
for IRA investors; $250 for for the Automatic Investment Plan;
non-working spousal IRAs; and $100 $500 for employee-regular accounts;
for investors participating in the $100 form employee-Automatic
Systematic Investment Plan; no Investment Plan; $500 for
minimum investment for 401(k) plans, tax-sheltered retirement plans;
simplified employee pension plans $1,000 for exchange transactions.
("SEPs"), salary
reduction-simplified employee
pension plans ("SAR-SEPs") or salary
reduction-IRAs ("SAR-IRAs).*
IV-7
<PAGE>
Minimum subsequent investments $100; $25 for subsequent investments $100 for a regular account; $100 for
made through the Systematic the Automatic Investment Plan; $100
Investment Plan. for employee-regular accounts; $50
form employee-Automatic Investment
Plan; $50 for tax-sheltered
retirement plans; $500
for exchange transactions.
Purchase methods Through Servicing Agents, Selling Through BISYS Fund Services in
Agents; by mail; by wire; by person; by mail; by wire; by
telephone. Automatic Investment Plan; by
telephone.
</TABLE>
*The assets of such plans must reach an asset value of $1,000 ($500 for SEPs,
SAR-SEPs and SAR-IRAs) within one year of the account open date. If the assets
of such plans do not reach the minimum asset size within one year, Nations
reserves the right to redeem the Shares held by such plans on 60 days' written
notice.
C. Redemption Procedures
<TABLE>
<CAPTION>
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
Through an authorized selling or Yes Yes
servicing agent
By mail Yes Yes
By telephone Yes Yes
By wire Yes Yes
Check writing feature No No
By automatic withdrawal plan Yes (net asset value of account must Yes (net asset value of account must
be $10,000 or more) be at least $5,000)
</TABLE>
Due to the high cost of maintaining Fund accounts with small balances,
Nations reserves the right to close a shareholder's account and send the
shareholder the proceeds if the balance falls below $500. Share balances also
may be redeemed at the direction of an agent pursuant to arrangements between
the agent and its customers. Nations also may redeem Shares of the Nations Funds
involuntarily or make payment for redemption in
IV-8
<PAGE>
readily marketable securities or other property under certain circumstances in
accordance with the 1940 Act.
Pilot similarly may, subject to certain restrictions, redeem
involuntarily, upon thirty days' written notice, Shares of a shareholder whose
account decreases to a value below $1,000.
D. Additional Shareholder Services
<TABLE>
<CAPTION>
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
Systematic/automatic investment plan Yes (in any amount from $25 to Yes (minimum amount $100)
$100,000)
Cross reinvestment privilege No Yes*
Reinstatement privilege Yes** No
</TABLE>
* A shareholder's dividends, capital gains distributions, or both, may be
automatically reinvested in Shares of any other fund or any of the Pilot's other
investment portfolios.
** Within 120 days of a redemption, may reinvest a portion of the proceeds of
such redemption in Investor A Shares of the same fund at the net asset value
next determined after a reinstatement request is received by the Transfer Agent,
together with the proceeds. The amount reinvested is limited to an amount up to,
but not exceeding, the redemption proceeds (or to the nearest full share if
fractional Shares are not purchased).
E. Share Exchanges
<TABLE>
<CAPTION>
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
By mail Yes Yes
By telephone Yes Yes
Minimum The Investor N Shares $1,000 for initial exchange;
exchanged must have a $100 minimum for
current value of at least subsequent exchanges
$1,000
Automatic exchange No No
feature
</TABLE>
IV-9
<PAGE>
Class B Shares of a Pilot fund may be exchanged for Class B
Shares of any other Pilot fund. Class B Shares may be exchanged without the
payment of any contingent-deferred sales charge at the time the exchange is
made. In determining the holding period for calculating the contingent-deferred
sales charge payable on redemption of Class B Shares, the holding period of the
Shares originally held will be added to the holding period of the Shares
acquired through exchange. Exchanges are subject to the minimum investment
requirements imposed.
Investor N Shares of a Nations fund may be exchanged for Investor N
Shares of any other Nations fund (except Nations Short-Term Income Fund and
Nations Short-Term Municipal Income Fund), Investor A Shares of the Nations
Short-Term Income Fund or Nations Short-Term Municipal Income Fund, or Investor
C Shares of a Nations money market fund. Exchanges are subject to the minimum
investment requirements imposed.
III. PILOT FUNDS - PILOT SHARES (Pilot Diversified Bond Income Fund, Pilot
Growth Fund, Pilot Growth and Income Fund, Pilot Intermediate Municipal Bond
Fund, Pilot Intermediate U.S. Government Securities Fund, Pilot Missouri
Short-Term Tax-Exempt Fund, Pilot Short-Term Tax-Exempt Diversified Fund and
Pilot Municipal Bond Fund).
CORRESPONDING NATIONS FUNDS - PRIMARY A SHARES (Nations Strategic Fixed
Income Fund, Nations Disciplined Equity Fund, Nations Value Fund, Nations
Intermediate Municipal Bond Fund, Nations Short-Intermediate Government Fund,
Nations Tax Exempt Fund and Nations Municipal Income Fund).
A. Sales Charges and Exemptions
THERE IS NO FRONT-END OR CONTINGENT-DEFERRED SALES CHARGE ON THE PILOT
SHARES OF THE PILOT FUNDS.
THERE IS NO FRONT-END OR CONTINGENT-DEFERRED SALES CHARGE ON THE PRIMARY A
SHARES OF THE NATIONS FUNDS.
B. Purchase Policies
<TABLE>
<CAPTION>
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
Minimum initial investment $500,000 for each record holder $500,000 (except for the money
market funds, in which case there is
no minimum)
Minimum subsequent investments None None
Purchase methods Primary A Shares may be sold Institutions may place orders
IV-10
<PAGE>
to NationsBank and its affiliates through the Pilot Funds' transfer
acting on behalf of bona fide trust agent.
customers. Primary A Shares also
may be sold to employee benefit
plans, charitable foundations,
endowments and to other funds in the
Nations Fund family.
C. Redemption Procedures
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
Through the transfer agent Yes Yes
By telephone Yes Yes
By wire Yes Yes
Check writing No Yes
</TABLE>
Due to the high cost of maintaining fund accounts with small balances,
Nations reserves the right to close a shareholder's account and send the
shareholder the proceeds if the balance falls below $500. Share balances also
may be redeemed at the direction of an agent pursuant to arrangements between
the agent and its customers. Nations also may redeem Shares of the Nations Funds
involuntarily or make payment for redemption in readily marketable securities or
other property under certain circumstances in accordance with the 1940 Act.
D. Additional Shareholder Services
None.
E. Share Exchanges
NATIONS FUNDS PILOT FUNDS
By mail Yes Yes
By telephone Yes Yes
Minimum None None
IV-11
<PAGE>
Pilot Shares may be exchanged for Class A Shares of the same
Pilot Fund without payment of a sales charge in connection with the distribution
of assets held in a qualified trust, agency or custodial account maintained with
Boatmen's or its affiliates. Pilot Shares of a Pilot fund may also be exchanged
for Pilot Shares of any of the other investment portfolios of the Pilot Funds.
Primary A Shares of a Nations fund may be exchanged for
Primary A Shares of any other Nations fund. Exchanges are subject to the minimum
investment requirements imposed.
IV. PILOT FUNDS - INVESTOR SHARES (Pilot Short-Term Diversified Assets Fund,
Pilot Short-Term Treasury Fund).
CORRESPONDING NATIONS FUNDS - DAILY SHARES (Nations Prime Fund, Nations
Treasury Fund).
A. Sales Charges and Exemptions
THERE IS NO FRONT-END OR CONTINGENT-DEFERRED SALES CHARGE ON THE INVESTOR
SHARES OF THE PILOT FUNDS.
THERE IS NO FRONT-END OR CONTINGENT-DEFERRED SALES CHARGE ON THE DAILY
SHARES OF THE NATIONS FUNDS.
B. Purchase Policies
<TABLE>
<CAPTION>
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
Minimum initial investment $1,000 for a regular account; $500 $1,000
for IRA investors; $250 for
non-working spousal IRAs; and $100
for investors participating in the
Systematic Investment Plan; no
minimum investment for 401(k) plans,
simplified employee pension plans
("SEPs"), salary
reduction-simplified employee
pension plans ("SAR-SEPs") or salary
reduction-IRAs ("SAR-IRAs).*
IV-12
<PAGE>
Minimum subsequent investments $100; $25 for subsequent investments $100 ($500 for subsequent
made through the Systematic investments made through the a
Investment Plan. systematic investment plan; $50 for
each subsequent investment made
through the plan)
Purchase methods Through banks, Through a service
broker-dealers or other financial organization, which includes
institution, which includes Boatmen's, by wiring funds to
NationsBank by wire or by telephone. Pilot's Custodian.
</TABLE>
C. Redemption Procedures
<TABLE>
<CAPTION>
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
Through an authorized selling or Yes Yes
servicing agent
By mail Yes Yes
By telephone Yes Yes
By wire Yes Yes
Check writing feature No No
By automatic withdrawal plan Yes (net asset value of account must Yes (net asset value of account must
be $10,000 or more) be $10,000 or more)
</TABLE>
Due to the high cost of maintaining fund accounts with small balances,
Nations reserves the right to close a shareholder's account and send the
shareholder the proceeds if the balance falls below $500. Share balances also
may be redeemed at the direction of an agent pursuant to arrangements between
the agent and its customers. Nations also may redeem Shares of the Nations funds
involuntarily or make payment for redemption in readily marketable securities or
other property under certain circumstances in accordance with the 1940 Act.
IV-13
<PAGE>
D. Additional Shareholder Services
<TABLE>
<CAPTION>
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
Reinstatement privilege Yes* No
</TABLE>
* Within 120 days of a redemption, may reinvest a portion of the proceeds of
such redemption in Investor A Shares of the same fund. The amount reinvested is
limited to an amount up to, but not exceeding, the redemption proceeds (or to
the nearest full share if fractional Shares are not purchased). A reinstatement
request must be submitted within 120 days after the redemption.
E. Share Exchanges
NATIONS FUNDS PILOT FUNDS
By mail Yes Yes
By telephone Yes Yes
Minimum $1,000 None
Investor Shares may be exchanged for Class B Shares of any
other Pilot fund, at the net asset value plus any applicable sales charge.
However, if a sales charge was previously paid on the investment represented by
the exchanged Shares, the exchange will be made at net asset value. Investor
Shares may also be exchanged for other Investor shares of the Pilot money market
funds.
Daily Shares of a Nations Fund may be exchanged for Investor C
Shares of non-money market Nations fund or Daily Shares of another Nations money
market fund. Exchanges are subject to the minimum investment requirements
imposed.
V. PILOT FUNDS - ADMINISTRATION SHARES (Pilot Missouri Short-Term Tax-Exempt
Fund and Pilot Short-Term Tax-Exempt Diversified Fund).
CORRESPONDING NATIONS FUNDS - INVESTOR B SHARES (Nations Tax Exempt
Fund).
A. Sales Charges and Exemptions
THERE IS NO FRONT-END OR CONTINGENT-DEFERRED SALES CHARGE ON THE
ADMINISTRATION SHARES OF THE PILOT FUNDS.
THERE IS NO FRONT-END OR CONTINGENT-DEFERRED SALES CHARGE ON THE INVESTOR B
SHARES OF THE NATIONS FUNDS.
IV-14
<PAGE>
B. Purchase Policies
<TABLE>
<CAPTION>
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
Minimum initial investment $25,000 $1,000
Minimum subsequent investments $1,000; $500 for subsequent $100 ($500 for subsequent
investments made through the investments made through the a
Systematic Investment Plan. systematic investment plan; $50 for
each subsequent investment made
through the plan)
Purchase Methods Through banks, Through a service
broker-dealers or other organization, which includes
financial institution, which Boatmen's, by wiring funds to
includes NationsBank by wire Pilot's Custodian.
or by telephone.
C. Redemption Procedures
NATIONS FUNDS PILOT FUNDS
Through an authorized selling or Yes Yes, if in accordance with the
servicing agent service organization account
By mail Yes Yes, if in accordance with the
service organization account
By telephone Yes Yes, if in accordance with the
service organization account
By wire No Yes, if in accordance with the
service organization account
Check writing feature Yes No
By automatic withdrawal plan Yes (net asset value of account must Yes (net asset value of account must
be $10,000 or more) be $10,000 or more)
</TABLE>
Due to the high cost of maintaining fund accounts with small balances,
Nations reserves the right to close a shareholder's account and send the
shareholder the proceeds if the balance falls below $500. Share balances also
may be redeemed at the direction of an agent pursuant to arrangements between
the agent and its customers. Nations also may redeem Shares of the Nations funds
involuntarily or make payment for redemption in
IV-15
<PAGE>
readily marketable securities or
other property under certain circumstances in accordance with the 1940 Act.
D. Additional Shareholder Services
<TABLE>
<CAPTION>
NATIONS FUNDS PILOT FUNDS
<S> <C> <C>
Systematic investment plan Yes (In any amount from $500) Yes ($500 initial investment and $50
for any subsequent investment)
E. Share Exchanges
NATIONS FUNDS PILOT FUNDS
By mail Yes Yes
By telephone Yes Yes
Minimum None None
</TABLE>
Administration Shares may be exchanged for Class A Shares of
any other Pilot fund, at the net asset value plus any applicable sales charge.
However, if a sales charge was previously paid on the investment represented by
the exchanged Shares, the exchange will be made at net asset value.
Administration Shares can be exchanged for other Administration Shares of the
Pilot money market funds.
Investor B Shares of a Nations Fund may be exchanged for
Investor B Shares of money market Nations fund. Exchanges are subject to the
minimum investment requirements imposed.
VI. DIVIDENDS AND DISTRIBUTIONS
All Nations Funds and Pilot Funds distribute their net capital gains to
shareholders at least annually. The following table shows the funds' policies
concerning the declaration and payment of dividends from net investment income.
IV-16
<PAGE>
A. DIVIDENDS DECLARED DAILY/PAID MONTHLY
Pilot Fund Nations Fund
Pilot Missouri Short-Term Nations Tax Exempt Fund
Tax-Exempt Fund Nations Strategic Fixed Income Fund
Pilot Short-Term Tax-Exempt Nations Intermediate Municipal Bond Fund
Diversified Fund Nations Short-Intermediate Government Fund
Pilot Diversified Bond Income Nations Municipal Income Fund
Fund
Pilot Intermediate U.S. Government
Securities Fund
Pilot Municipal Bond Fund
Pilot Intermediate Municipal Bond
Fund
B. DIVIDENDS DECLARED MONTHLY/PAID MONTHLY
Pilot Fund Nations Fund
Pilot Growth Fund None
Pilot Growth and Income Fund
C. DIVIDENDS DECLARED QUARTERLY/PAID QUARTERLY
Pilot Fund Nations Fund
None Nations Disciplined Equity Fund
Nations Value Fund
IV-17
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
DATED MARCH 22, 1997
THE PILOT FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219
(800) 71-PILOT
NATIONS FUND TRUST
ONE NATIONSBANK PLAZA
CHARLOTTE, NC 28255
(800) 626-2275
(APRIL 28, 1997 SPECIAL MEETING OF SHAREHOLDERS OF THE PILOT 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 Pilot to be
held April 21, 1997. Copies of the Combined Prospectus/Proxy Statement may be
obtained at no charge by writing or calling Pilot or Nations 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 the Investor A, Investor N and
Primary A Shares of the Nations Strategic Fixed Income Fund, Nations Disciplined
Equity Fund, Nations Value Fund, Nations Intermediate Municipal Bond Fund,
Nations Short-Intermediate Government Fund and Nations Municipal Income Fund is
contained in and incorporated herein by reference to the statement of additional
information for Investor A, Investor N and Primary A Shares of the Nations
Strategic Fixed Income Fund, Nations Disciplined Equity Fund, Nations Value
Fund, Nations Intermediate Municipal Bond Fund, Nations Short-Intermediate
Government Fund and Nations Municipal Income Fund dated July 31, 1996.
Further information about the Primary B, Daily and Primary A
Shares of the Nations Tax Exempt Fund is contained in and incorporated herein by
reference to the statement of additional information for the Primary B, Daily
and Primary A Shares of the Nations Tax Exempt Fund dated July 31, 1996.
The audited financial statements and related independent
auditors' report for Nations Strategic Fixed Income Fund, Nations Disciplined
Equity Fund, Nations Value Fund, Nations Intermediate Municipal Bond Fund,
Nations Short-Intermediate Government Fund, Nations Tax Exempt Fund and Nations
Municipal Income Fund contained in the Annual Report for the year
1
<PAGE>
ended March 31, 1996 are hereby incorporated by reference. No other parts of the
Annual Report are incorporated by reference.
The unaudited financial statements of the Fund for Nations
Strategic Fixed Income Fund, Nations Disciplined Equity Fund, Nations Value
Fund, Nations Intermediate Municipal Bond Fund, Nations Short-Intermediate
Government Fund, Nations Tax Exempt Fund and Nations Municipal Income Fund for
the six-month period ended September 30, 1996 are hereby incorporated by
reference.
Further information about the Class A, Class B and Pilot Shares of the
Pilot Diversified Bond Income Fund, Pilot Growth Fund, Pilot Growth and Income
Fund, Pilot Intermediate Municipal Bond Fund, Pilot Intermediate U.S. Government
Securities Fund and Pilot Municipal Bond Fund is contained in and incorporated
herein by reference to the statement of additional information for the Class A,
Class B and Pilot Shares of the Pilot Diversified Bond Income Fund, Pilot Growth
Fund, Pilot Growth and Income Fund, Pilot Intermediate Municipal Bond Fund,
Pilot Intermediate U.S. Government Securities Fund and Pilot Municipal Bond Fund
dated January 2, 1997.
Further information about the Investor, Administration and Pilot Shares
of the Pilot Missouri Short-Term Tax-Exempt Fund and Short-Term Tax-Exempt
Diversified Fund is contained in and incorporated herein by reference to the
statement of additional information for the Investor, Administration and Pilot
Shares of the Pilot Missouri Short-Term Tax-Exempt Fund and Short-Term
Tax-Exempt Diversified Fund dated January 2, 1997.
The audited financial statements and related independent auditors'
report for Pilot Diversified Bond Income Fund, Pilot Growth Fund, Pilot Growth
and Income Fund, Pilot Intermediate Municipal Bond Fund, Pilot Intermediate U.S.
Government Securities Fund, Pilot Municipal Bond Fund, Pilot Missouri Short-Term
Tax-Exempt Fund and Short-Term Tax-Exempt Diversified Fund contained in the
Annual Report for the year ended August 31, 1996 are hereby incorporated by
reference. No other parts of the Annual Report are incorporated by reference.
2
<PAGE>
TABLE OF CONTENTS
General Information............................................................4
Introductory Note to Pro Forma Financial Information...........................5
3
<PAGE>
GENERAL INFORMATION
The proposed Reorganization contemplates: (i) the transfer of
all of the assets and stated liabilities of each Pilot Fund to a corresponding
Nations Fund in exchange for Shares of comparable classes of the corresponding
Nations Fund; and (ii) the distribution of Nations Fund Shares to the
shareholders of the Pilot Funds in liquidation of the Pilot Funds. The
Reorganization is subject to a number of conditions with respect to each Pilot
Fund, including shareholder approval. Following the Reorganization, Pilot will
wind up its affairs and deregister as an investment company under the 1940 Act.
As a result of the proposed Reorganization, a Pilot Fund shareholder
will become a shareholder of its corresponding Nations Fund and will hold,
immediately after the Closing(s), Shares of the comparable class of the
corresponding Nations Fund having a total dollar value equal to the total dollar
value of the Shares of the Pilot Fund that the shareholder held immediately
before the Closing(s).
4
<PAGE>
INTRODUCTORY NOTE TO PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma information gives effect to
the proposed transfer of the assets and stated liabilities of the Pilot Funds to
the Nations Funds listed under Table I of the Combined Proxy
Statement/Prospectus, accounted for as if each transfer had occurred as of
September 30, 1996 and as if the Nations Funds had operated for the periods
then ended, except for the Nations Strategic Fixed Income
Fund/Pilot Diversified Bond and Nations Disciplined Equity/Pilot Growth
Fund transactions, which are accounted for as if occurred as of
December 31, 1996. However, it is possible that one or more of the Pilot Funds
will not approve the merger, in which case the resulting fund or funds
will be comprised of only those Pilot Funds that approve the
merger. In addition, each pro forma combining statement has been
prepared based upon the structure of the proposed fee and expense
structure of the applicable surviving Nations Fund.
The pro forma financial information should be read in
conjunction with the historical financial statements and notes thereto of the
Pilot Funds and Nations Funds included or incorporated by reference in this
Statement of Additional Information. Each combination of the above Pilot Funds
and Nations Funds will be accounted for as a tax-free reorganization.
5
<PAGE>
NATIONS FUND
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
INTERMEDIATE INTERMEDIATE DESCRIPTION INTERMEDIATE INTERMEDIATE
MUNICIPAL MUNICIPAL RATING MUNICIPAL MUNICIPAL
BOND FUND BOND FUND COMBINED MOODY'S S&P BOND FUND BOND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MUNICIPAL BONDS AND
NOTES - 98.0%
ALASKA - 1.7%
$3,280,000 $0 $3,280,000 Alaska State, Student Loan
Corporation, Student Loan
Revenue, Series A, AMT,
(AMBAC Insured),
5.250% 07/01/03 Aaa AAA $3,279,705 $0 $3,279,705
2,000,000 0 2,000,000 Anchorage, Alaska, GO, Series A,
(AMBAC Insured)
5.100% 08/01/07 Aaa AAA 1,962,360 0 1,962,360
---------------------------------------
5,242,065 0 5,242,065
---------------------------------------
ARIZONA - 4.3%
0 2,000,000 2,000,000 Arizona State Transportation
Board, Excise Tax Revenue
(AMBAC Insured),
5.500% 07/01/02 Aa AAA 0 2,082,500 2,082,500
955,000 0 955,000 Arizona State University,
Systems Revenue, Series A,
6.500% 07/01/01 A1 AA 1,029,060 0 1,029,060
0 300,000 300,000 Flagstaff, Arizona,
Series 1991 A,
(FGIC Insured),
8.500% 07/01/98 Aaa AAA 0 321,375 321,375
0 1,100,000 1,100,000 Glendale, Arizona, GO,
Refunding Bonds
(FGIC Insured),
4.950% 07/01/01 Aaa AAA 0 1,116,500 1,116,500
Maricopa County, Arizona:
0 300,000 300,000 High School District 210, GO,
Refunding Bonds, Series D,
6.700% 07/01/03 Aa AA 0 326,625 326,625
0 300,000 300,000 School District 48, GO,
Refunding Bonds, Series 1991,
6.000% 07/01/00 Aa AA 0 310,125 310,125
Mesa, Arizona, GO Refunding
Bonds:
0 3,000,000 3,000,000 (FGIC Insured),
5.350% 07/01/00 Aaa AAA 0 3,090,000 3,090,000
0 900,000 900,000 (MBIA Insured),
5.000% 07/01/03 Aaa AAA 0 909,000 909,000
0 900,000 900,000 Phoenix, Arizona, GO,
Refunding Bonds,
5.400% 07/01/97 Aa+ AA1 0 910,728 910,728
Pima County, Arizona, GO:
0 300,000 300,000 7.100% 07/01/99 NR NR 0 313,350 313,350
0 900,000 900,000 Refunding Bonds,
5.350% 07/01/00 A+ AA 0 924,750 924,750
0 400,000 400,000 Pima County, Arizona, School
District No. 1, GO, Refunding
Bonds, Pre-refunded 07/01/01
at @$101, (MBIA Insured),
6.700% 07/01/04 Aaa AAA 0 439,500 439,500
Salt River Project:
0 600,000 600,000 Agriculture Improvement &
Power District Revenue Bonds,
Series D, 5.100% 01/01/99 Aa AA 0 609,750 609,750
0 800,000 800,000 Agriculture Revenue Refunding
Bonds, Series C,
4.300% 01/01/02 Aa AA 0 781,000 781,000
0 400,000 400,000 Tempe, Arizona, Series 1992,
5.600% 07/01/00 Aa+ AA 0 415,000 415,000
---------------------------------------
1,029,060 12,550,203 13,579,263
---------------------------------------
CALIFORNIA - 3.6%
California State, GO:
0 300,000 300,000 5.700% 10/01/00 A+ A1 0 312,750 312,750
0 400,000 400,000 7.000% 08/01/04 A+ A1 0 452,000 452,000
0 2,000,000 2,000,000 California State, Public
Improvements, GO,
5.250% 03/01/00 A+ A1 0 2,045,000 2,045,000
0 300,000 1,100,000 California State, School and
Public Improvements, GO,
4.800% 03/01/00 A+ A1 0 1,109,625 1,109,625
0 900,000 900,000 Contra Costa, California Water
District Revenue Bonds,
Series G, (MBIA Insured),
5.400% 10/01/03 Aaa AAA 0 931,500 931,500
0 900,000 900,000 Los Angeles, California,
GO Bonds, Series A,
(MBIA Insured),
5.400% 09/01/03 Aaa AAA 0 930,375 930,375
Metropolitan Water District
Southern Revenue Bonds:
0 1,100,000 1,100,000 Series 1992,
4.850% 07/01/99 Aa AA 0 1,113,750 1,113,750
0 1,400,000 1,400,000 Series B,
4.100% 07/01/02 Aaa AAA 0 1,361,500 1,361,500
0 700,000 700,000 Riverside, California, Sewer
Revenue Refundings Bonds,
(FGIC Insured),
4.800% 08/01/01 Aaa AAA 0 704,375 704,375
1,000,000 1,000,000 2,000,000 Sacramento, California,
Cogeneration Authority
(Proctor & Gamble Company
Project),
5.700% 07/01/00 NR BBB- 1,023,600 0 1,023,600
<PAGE>
NATIONS FUND
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
INTERMEDIATE INTERMEDIATE DESCRIPTION INTERMEDIATE INTERMEDIATE
MUNICIPAL MUNICIPAL RATING MUNICIPAL MUNICIPAL
BOND FUND BOND FUND COMBINED MOODY'S S&P BOND FUND BOND FUND COMBINED
====================================================================================================================================
MUNICIPAL BONDS AND NOTES
(CONTINUED)
CALIFORNIA (CONTINUED)
$0 $600,000 $600,000 San Diego, California,
Open Space Park Facilities,
District No. 1,
GO, Refunding Bonds,
5.125% 01/01/00 Aa+ AAA $0 $614,250 $614,250
0 600,000 600,000 University of California,
Multiple Purpose Projects -
C, Revenue Refunding,
(AMBAC Insured),
4.800% 09/01/04 Aaa AAA 0 594,000 594,000
----------------------------------------
1,023,600 10,169,125 11,192,725
----------------------------------------
COLORADO - 2.6%
1,500,000 0 1,500,000 Arapahoe County, Colorado,
School District No. 5,
(Cherry Creek),
5.700% 07/01/00 Aa AA 1,642,545 0 1,642,545
0 300,000 300,000 Colorado Springs, Colorado,
Utility Authority,
Revenue, Series A
6.625% 11/15/04 Aa AA 0 326,250 326,250
Denver City & County,
GO Bonds:
0 300,000 300,000 6.375% 08/01/03 Aa AA 0 322,875 322,875
0 300,000 300,000 6.500% 08/01/04 Aa AA 0 323,250 323,250
0 400,000 400,000 Various Purposes,
Series A,
5.500% 08/01/99 Aa AA 0 411,500 411,500
0 1,195,000 1,195,000 La Plata County,
Colorado, School District,
#9R Durango, GO,
(MBIA Insured),
5.00% 11/01/02 Aaa AAA 0 1,211,431 1,211,431
Northglenn, Colorado,
GO Bonds:
0 1,500,000 1,500,000 5.250% 12/01/03+ Aaa AAA 0 1,546,875 1,546,875
0 1,500,000 1,500,000 5.250% 12/01/04+ Aaa AAA 0 1,543,125 1,543,125
0 900,000 900,000 Platte River Power
Authority, Revenue,
Series CC,
4.630% 06/01/00 A+ AA 0 900,000 900,000
----------------------------------------
1,642,545 6,585,306 8,227,851
----------------------------------------
CONNECTICUT - 1.3%
Connecticut State GO:
0 600,000 600,000 Refunding Bonds, Series B
5.650% 11/15/98 Aa- AA 0 618,000 618,000
0 300,000 300,000 Series A,
6.600% 03/01/04 NR AA 0 325,875 325,875
0 1,000,000 1,000,000 Connecticut State Public
Improvements, GO, Series B,
Refunding,
4.800% 03/15/01 Aa- AA 0 1,008,750 1,008,750
0 2,000,000 2,000,000 Connecticut State Special
Unemployment Compensation,
Revenue, Series A,
5.500% 11/15/00 Aaa AAA 0 2,065,000 2,065,000
----------------------------------------
0 4,017,625 4,017,625
----------------------------------------
DELAWARE - 0.3%
0 800,000 800,000 Delaware State School
Improvements, GO Bonds,
Series A,
4.600% 03/01/00 Aa+ AA1 0 802,000 802,000
----------------------------------------
DISTRICT OF COLUMBIA - 1.0%
0 1,100,000 1,100,000 District of Columbia, GO,
(AMBAC Insured),
7.000% 06/01/98 Aaa AAA 0 1,142,625 1,142,625
Washington D.C., Metropolitan
Area Transportation
Authority Revenue
Refunding, (FGIC Insured):
2,000,000 0 2,000,000 4.400% 01/01/00 Aaa AAA 1,993,760 0 1,993,760
100,000 0 100,000 4.900% 01/01/05 Aaa AAA 98,778 0 98,778
----------------------------------------
2,092,538 1,142,625 3,235,163
----------------------------------------
FLORIDA - 3.5%
0 1,000,000 1,000,000 Broward County, Florida,
School District, GO,
Refunding Bonds,
5.100% 2/15/02 Aa- A1 0 1,012,500 1,012,500
2,700,000 0 2,700,000 Duval County, Florida,
Housing Finance Authority
Refunding, (Greentree
Place Project),
6.750% 04/01/25 NR BBB+ 2,766,447 0 2,766,447
0 500,000 500,000 Florida State Board of
Education Capital Outlay,
GO, Refunding Bonds,
Series 1992A,
5.700% 06/01/03 Aa AA 0 526,250 526,250
Florida State Housing
Finance Agency, Refunding:
1,000,000 0 1,000,000 Multi-family Housing,
(Altamonte Project),
Series C,
7.000% 12/01/03 NR BBB+ 1,034,300 0 1,034,300
<PAGE>
NATIONS FUND
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
INTERMEDIATE INTERMEDIATE DESCRIPTION INTERMEDIATE INTERMEDIATE
MUNICIPAL MUNICIPAL RATING MUNICIPAL MUNICIPAL
BOND FUND BOND FUND COMBINED MOODY'S S&P BOND FUND BOND FUND COMBINED
====================================================================================================================================
MUNICIPAL BONDS AND NOTES
(CONTINUED)
FLORIDA (CONTINUED)
Florida State Housing Finance
Agency, Refunding (continued):
$2,000,000 $0 $2,000,000 Multi-family Housing
Revenue, (Andover Project),
Series E,
6.350% 05/01/26 NR BBB+ $2,017,820 $0 $2,017,820
Jacksonville, Florida,
Electric Authority,
St. Johns River:
0 1,500,000 1,500,000 Revenue Refunding Bonds,
Series 10,
4.600% 10/01/00 Aa AA1 0 1,513,125 1,513,125
0 300,000 300,000 Special Obligation Bonds,
6.400% 10/01/00 Aa AA1 0 321,375 321,375
0 1,000,000 1,000,000 Orlando, Florida, Utility
Commisssion, Water &
Electric Revenue
Refunding, Bonds,
5.200% 10/01/00 Aa AA1 0 1,028,750 1,028,750
0 600,000 600,000 Tampa, Florida, Guaranteed
Entitlement Revenue
Refunding Bonds,
(AMBAC Insured),
6.500% 10/01/99 Aaa AAA 0 636,000 636,000
-----------------------------------------
5,818,567 5,038,000 10,856,567
-----------------------------------------
GEORGIA - 2.1%
1,500,000 0 1,500,000 Burke County, Georgia,
Development Authority,
PCR, (Oglethorpe Power
Corporation), Series B,
4.700% 01/01/04 NR A+ 1,458,225 0 1,458,225
1,500,000 0 1,500,000 Fulco, Georgia, Hospital
Authority Revenue, Revenue
Anticipation Certificates,
5.100 10/01/05 A A 1,474,740 0 1,474,740
Georgia Municpal Electric
Authority, Power Revenue
Refunding Bonds:
0 300,000 300,000 Series Q,
7.400% 01/01/98 A A 0 310,125 310,125
0 300,000 300,000 Series U,
6.800% 01/01/03 A A 0 324,375 324,375
0 300,000 300,000 Georgia State, GO,
7.000% 01/01/00 Aa+ AAA 0 328,875 328,875
0 200,000 200,000 Georgia State Public
Improvements, GO, Series C,
6.500% 04/01/04 Aa+ AAA 0 221,000 221,000
Gwinnett County, Georgia, GO:
0 700,000 700,000 Refunding Bonds,
Series 1992,
4.875% 01/01/99 Aa+ AA1 0 708,750 708,750
0 1,615,000 1,615,000 Series A,
5.100% 02/01/01 Aa+ AA1 0 1,651,338 1,651,338
-----------------------------------------
2,932,965 3,544,463 6,477,428
-----------------------------------------
GUAM - 0.5%
1,500,000 0 1,500,000 Government of Guam, GO,
Series A
5.200% 11/15/08 NR BBB 1,414,815 0 1,414,815
-----------------------------------------
HAWAII - 3.5%
0 700,000 700,000 Hawaii County, Hawaii,
Series 1993A,
(FGIC Insured),
4.800% 05/01/00 Aaa AAA 0 703,500 703,500
Hawaii State, GO:
0 2,000,000 2,000,000 5.000% 03/01/03 Aa AA 0 2,017,500 2,017,500
0 600,000 600,000 Refunding Bonds,
Series 1992BW.
5.500% 03/01/99 Aa AA 0 614,250 614,250
0 900,000 900,000 Refunding Bonds, Series CC,
4.600% 02/01/00 Aa AA 0 901,125 901,125
0 1,000,000 1,000,000 School and Public
Improvements, Series BU,
5.850% 11/01/01 Aa AA 0 1,053,750 1,053,750
0 300,000 300,000 Series BZ,
5.400% 10/01/01 Aa AA 0 310,125 310,125
0 2,000,000 2,000,000 Series CJ,
5.625% 01/01/02 Aa AA 0 2,080,000 2,080,000
Honolulu City and County,
Hawaii, GO, Refunding Bonds:
0 600,000 600,000 Series B,
4.600% 10/01/99 Aa AA 0 601,500 601,500
0 900,000 900,000 1992 One,
5.375% 06/01/99 Aa AA 0 920,250 920,250
Hololulu City and County,
Public Improvements, GO:
0 1,300,000 1,300,000 Series A,
5.250% 01/01/01 Aa AA 0 1,327,625 1,327,625
0 500,000 500,000 Series 1994A,
5.000% 04/01/99 Aa AA 0 506,250 506,250
-----------------------------------
0 11,035,875 11,035,875
-----------------------------------
<PAGE>
NATIONS FUND
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
INTERMEDIATE INTERMEDIATE DESCRIPTION INTERMEDIATE INTERMEDIATE
MUNICIPAL MUNICIPAL RATING MUNICIPAL MUNICIPAL
BOND FUND BOND FUND COMBINED MOODY'S S&P BOND FUND BOND FUND COMBINED
====================================================================================================================================
MUNICIPAL BONDS AND NOTES
(CONTINUED)
ILLINOIS - 9.4%
$2,500,000 $0 $2,500,000 Chicago, Illinois, Gas
Supply Revenue,
6.875% 03/01/15 Aa3 AA- $2,681,950 $0 $2,681,950
0 1,100,000 1,100,000 Chicago, Illinois,
Metropolitan Water Capital
Improvement, GO,
5.000% 12/01/02 Aa AA 0 1,106,875 1,106,875
0 2,165,000 2,165,000 Chicago, Illinois,
Metropolitan Water
Reclamation District, GO,
5.750% 12/01/01 Aa AA 0 2,259,719 2,259,719
2,000,000 0 2,000,000 Chicago, Illinois, O'Hare
International Airport
Revenue, Passenger Facility
Charge, Series B, AMT,
(AMBAC Insured),
5.000% 01/01/02 Aaa AAA 1,998,940 0 1,998,940
Chicago, Illinois, School
Financing Authority, GO:
2,000,000 0 2,000,000 4.800% 06/01/04 Aaa AAA 1,952,760 0 1,952,760
1,160,000 0 1,160,000 Series A,
4.900% 06/01/05 Aaa AAA 1,131,139 0 1,131,139
0 600,000 600,000 Chicago Water Revenue
Refunding Bonds,
(AMBAC Insured),
5.600% 11/01/04 Aaa AAA 0 619,500 619,500
0 1,500,000 1,500,000 Cook County, Illinois, GO,
5.100% 11/12/03 Aaa AAA 0 1,511,250 1,511,250
0 100,000 100,000 Du Page County, Illinois,
Jail Project, GO,
Revenue Bonds,
9.000% 01/01/00 Aaa AAA 0 113,125 113,125
0 300,000 300,000 Du Page County, Illinois,
Stormwater Project, GO,
Revenue Bonds,
9.000% 01/01/00 Aaa AAA 0 339,375 339,375
0 900,000 900,000 Du Page County, Illinois,
Water Commission Revenue
Refunding Bonds,
5.000% 05/01/02 Aa AA1 0 913,500 913,500
Illinois State, GO Bonds:
0 1,450,000 1,450,000 5.000% 06/01/02 Aa- AA1 0 1,459,062 1,459,062
0 1,100,000 1,100,000 5.500% 08/01/03 Aa- A1 0 1,134,375 1,134,375
0 1,900,000 1,900,000 Sales Tax Revenue Bonds,
Series Q,
5.300% 06/15/00 Aaa A1 0 1,933,250 1,933,250
Illinois State Health
Facilities Authority
Revenue:
1,100,000 0 1,100,000 (Edward Hospital Project),
Series A,
5.750% 02/15/09 A A 1,080,838 0 1,080,838
1,000,000 0 1,000,000 (Lutheran General Health
Systems Project), Series C,
5.250% 04/01/02 A A+ 1,002,360 0 1,002,360
0 1,300,000 1,300,000 Illinois State Toll Highway,
Priority Revenue Refunding,
Series A,
4.500% 01/01/00 A A1 0 1,290,250 1,290,250
1,595,000 0 1,595,000 Lake County, Illinois,
High School District
No. 125, (Adlai E. Stevenson
High School),
5.000% 01/01/04 Aa1 NR 1,598,732 0 1,598,732
1,050,000 0 1,050,000 Lansing, Illinois, Sales
Tax Increment Revenue,
Refunding,
6.500% 12/01/02 NR BBB 1,099,182 0 1,099,182
2,000,000 0 2,000,000 Metropolitan Pier and
Expositon Authority,
Illinois, Dedicated Tax
Revenue Refunding,
(McCormick Place Expansion
Project), Series A,
(AMBAC Insured),
6.000% 12/15/06 Aaa AAA 2,115,560 0 2,115,560
0 600,000 600,000 Northwest Suburban Municipal
Water Agency, Revenue
Refunding Bonds,
(MBIA Insured),
5.400% 05/01/99 Aaa AAA 0 612,750 612,750
1,000,000 0 1,000,000 Regional Transportation
Authority, Illinois,
Series A, (FGIC Insured),
6.350% 11/01/04 Aaa AAA 1,075,470 0 1,075,470
0 500,000 500,000 Waukegan, Illinois, GO,
Refunding Bonds,
(FGIC Insured),
5.400% 01/01/00 Aaa AAA 0 511,875 511,875
----------------------------------------
15,736,931 13,804,906 29,541,837
----------------------------------------
INDIANA - 1.1%
0 900,000 900,000 Indiana Municipal Power
Supply System Revenue
Refunding Bonds,
Series B, (MBIA Insured),
5.375% 01/01/03 Aaa AAA 0 919,125 919,125
Indiana State Health
Facilities Financing
Authority, Hospital Revenue
Refunding, (Methodist
Hospital Inc. Project):
1,280,000 0 1,280,000 6.200% 09/15/00 Aa NR 1,348,109 0 1,348,109
1,040,000 0 1,040,000 6.500% 09/15/02 Aa NR 1,122,836 0 1,122,836
----------------------------------------
2,470,945 919,125 3,390,070
----------------------------------------
KANSAS - 0.1%
0 100,000 100,000 Johnson County, Kansas,
Unified School District
No. 229, GO, Refunding
Bonds, (FGIC Insured),
7.100% 03/01/99 Aaa AAA 0 102,506 102,506
0 300,000 300,000 Kansas State, Department of
Transportation Highway
Revenue Bonds,
Series A,
4.100% 09/01/00 Aa AA 0 291,750 291,750
--------------------------------------
0 394,256 394,256
--------------------------------------
<PAGE>
NATIONS FUND
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
INTERMEDIATE INTERMEDIATE DESCRIPTION INTERMEDIATE INTERMEDIATE
MUNICIPAL MUNICIPAL RATING MUNICIPAL MUNICIPAL
BOND FUND BOND FUND COMBINED MOODY'S S&P BOND FUND BOND FUND COMBINED
====================================================================================================================================
MUNICIPAL BONDS AND NOTES
(CONTINUED)
KENTUCKY - 0.2%
$0 $700,000 $700,000 Kentucky State Turnpike
Authority, Economic
Deveopment Revitalization
Project, (AMBAC Insured),
4.900% 07/01/00 Aaa AAA $0 $707,000 $707,000
---------------------------------------
LOUISIANA - 0.3%
Louisiana State:
0 300,000 300,000 GO,Refunding Bonds,
Series A,
6.600% 08/01/97 A- BAA1 0 305,136 305,136
0 700,000 700,000 Series A, (MBIA Insured),
6.700% 08/01/98 Aaa AAA 0 726,915 726,915
---------------------------------------
0 1,032,051 1,032,051
---------------------------------------
MAINE - 1.1%
0 1,000,000 1,000,000 Maine Municipal Bond
Bank, Series E,
5.250% 11/01/04 Aaa AAA 0 1,021,250 1,021,250
2,325,000 0 2,325,000 Maine State, Municpal Board
Refunding, Series A,
4.900% 11/01/02 Aa A+ 2,339,485 0 2,339,485
---------------------------------------
2,339,485 1,021,250 3,360,735
---------------------------------------
MARYLAND - 2.5%
1,500,000 0 1,500,000 Baltimore, Maryland,
Port Facilities Revenue,
Consolidated Coal Sales,
Series 85,
6.500% 12/01/10 Aa3 AA-/A-1+ 1,626,255 0 1,626,255
1,720,000 0 1,720,000 Maryland State
Transportation Authority,
Special Obligation Revenue,
(Baltimore/Washington D.C.
International Airport
Project), Series A,
AMT, (FGIC Insured),
6.400% 07/01/19 Aaa AAA 1,771,841 0 1,771,841
Washington Suburban
Sanitation District
Authority, Maryland, Water
Supply Revenue, GO:
0 2,000,000 2,000,000 5.000% 06/01/04 Aa1 AA 0 2,012,500 2,012,500
2,500,000 0 2,500,000 4.900% 12/01/05 Aa1 AA 2,479,450 0 2,479,450
---------------------------------------
5,877,546 2,012,500 7,890,046
---------------------------------------
MASSACHUSETTS - 2.2%
Massachusetts State, GO:
Series B:
0 300,000 300,000 7.250% 04/01/99 A+ A1 0 319,125 319,125
0 1,000,000 1,000,000 Refunding,
5.000% 11/01/01 A+ A1 0 1,017,500 1,017,500
0 300,000 300,000 Series C,
7.000% 12/01/97 A+ A1 0 310,125 310,125
Series D:
0 400,000 400,000 6.375% 07/01/00 A+ A1 0 425,500 425,500
0 1,260,000 1,260,000 5.125% 11/01/01 Aaa AAA 0 1,285,200 1,285,200
0 1,500,000 1,500,000 Massachusetts State
Turnpike Authority,
Series A,
5.000% 06/01/99 A+ A1 0 1,522,500 1,522,500
2,000,000 0 2,000,000 New England Education
Loan Marketing Corporation,
Series A, AMT,
5.700% 07/01/05 A1 A- 2,034,240 0 2,034,240
---------------------------------------
2,034,240 4,879,950 6,914,190
---------------------------------------
MICHIGAN - 2.5%
2,500,000 0 2,500,000 Detroit, Michigan,
Convention Facilities
Revenue Refunding,
(Cobo Hall
Expansion Project),
(FSA Insured)
5.100% 09/30/04 Aaa AAA 2,500,000 0 2,500,000
Detroit, Michigan,
Refunding, GO:
2,000,000 0 2,000,000 5.800% 05/01/97 NR BBB 2,018,880 0 2,018,880
1,000,000 0 1,000,000 Series B,
6.750% 04/01/03 Ba1 BBB 1,059,170 0 1,059,170
Michigan State:
0 900,000 900,000 Recreation Program, GO,
Series 1992,
5.500% 11/01/99 Aa AA 0 928,125 928,125
0 600,000 600,000 Trunk Line, Series 1994A,
5.250% 11/15/00 Aa- A1 0 612,750 612,750
0 600,000 600,000 University of Michigan,
University Revenue
Refunding, Student Fee,
4.600% 04/01/99 Aa+ AA1 0 603,000 603,000
---------------------------------------
5,578,050 2,143,875 7,721,925
---------------------------------------
<PAGE>
NATIONS FUND
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
INTERMEDIATE INTERMEDIATE DESCRIPTION INTERMEDIATE INTERMEDIATE
MUNICIPAL MUNICIPAL RATING MUNICIPAL MUNICIPAL
BOND FUND BOND FUND COMBINED MOODY'S S&P BOND FUND BOND FUND COMBINED
====================================================================================================================================
MUNICIPAL BONDS AND NOTES
(CONTINUED)
MINNESOTA - 1.1%
$0 $900,000 $900,000 Metropolitan Council, GO,
Minneapolis-St. Paul, Series A,
5.000% 12/01/04 Aaa AAA $0 $902,250 $902,250
Minnesota State, GO:
0 900,000 900,000 Refunding Bonds,
4.875% 08/01/00 Aa+ AAA 0 912,375 912,375
0 300,000 300,000 Various Purpose,
6.400% 08/01/99 Aa+ AAA 0 316,125 316,125
0 300,000 300,000 Ramsey County, Minnesota,
GO, Refunding Capital
Improvement, Series C,
5.150% 12/01/00 Aa+ AAA 0 308,250 308,250
0 900,000 900,000 St. Paul, Minnesota, Sewer
Revenue Refunding Bonds,
(AMBAC Insured),
5.100% 12/01/01 Aaa AAA 0 909,000 909,000
-------------------------------------
0 3,348,000 3,348,000
-------------------------------------
MISSOURI - 10.2%
0 300,000 300,000 Clay County, Missouri,
Public School District 53,
GO, Series B,
(MBIA Insured),
5.000% 03/01/03 Aaa AAA 0 303,000 303,000
0 400,000 400,000 Columbia, Missouri, GO,
Refunding,
5.200% 10/01/00 Aa AA 0 411,000 411,000
0 100,000 100,000 Independence, Missouri,
School District, GO Bonds:
6.100% 03/01/01 NR A 0 105,750 105,750
Kansas City, Missouri:
0 300,000 300,000 Airport Revenue Bonds,
7.400% 09/01/98 A A 0 315,642 315,642
2,000,000 0 2,000,000 Kansas City, Missouri,
Industrial Development
Authority, PCR,
(General Motors Corporation
Project),
6.050% 04/01/06 A3 A- 2,060,140 0 2,060,140
0 1,000,000 1,000,000 Kansas City, Missouri,
Municipal Assistance
Revenue Bonds,
4.800% 04/15/03 Aaa AAA 0 995,000 995,000
0 200,000 200,000 Kansas City, Missouri,
Public Safety, GO Bonds,
6.200% 09/01/97 Aa AA 0 201,956 201,956
0 1,300,000 1,300,000 Kansas City, Missouri,
Pre-refunded 02/01/98 @ 102,
(FGIC Insured),
School District Building,
Leasehold Revenue, Series A,
7.900% 02/01/08 Aaa AAA 0 1,389,375 1,389,375
Kansas City, Missouri,
` Various Purpose:
0 300,000 300,000 6.300% 03/01/03 Aa AA 0 316,500 316,500
0 300,000 300,000 6.400% 03/01/04 Aa AA 0 316,500 316,500
0 600,000 600,000 6.000% 03/01/07 Aa AA 0 618,000 618,000
0 200,000 200,000 Kansas City, Missouri,
Water Revenue Bonds,
Series B, (AMBAC Insured),
6.600% 12/01/02 Aa AA 0 208,250 208,250
0 300,000 300,000 Mehlville, Missouri,
School District No. 9,
GO, (MBIA Insured),
5.000% 02/15/00 Aaa AAA 0 304,875 304,875
Missouri State:
0 1,000,000 1,000,000 Environmental Bonds,
5.500% 12/01/05 Aa A1 0 1,037,500 1,037,500
0 200,000 200,000 Environmental Improvement &
Energy Authority,
Water Pollution
Control Revenue Bonds,
Series A,
5.400% 07/01/97 NR AA 0 202,446 202,446
Missouri State, Health and
Educational Facilities
Authority Revenue:
Barnes Hospital:
0 200,000 200,000 6.550% 12/15/97 Aaa NR 0 206,500 206,500
0 200,000 200,000 6.650% 12/15/98 Aaa NR 0 210,500 210,500
0 200,000 200,000 6.750% 12/15/99 Aaa NR 0 214,250 214,250
Barnes-Jewish:
Series A:
0 1,200,000 1,200,000 4.000% 05/15/98 Aa AA 0 1,197,000 1,197,000
0 600,000 600,000 5.900% 05/15/04 Aa AA 0 635,250 635,250
Refunding and Improvement,
Christian Health, Series A,
(FGIC Insured):
0 300,000 300,000 6.250% 02/15/98 Aaa AAA 0 309,000 309,000
0 300,000 300,000 6.400% 02/15/00 Aaa AAA 0 318,750 318,750
0 600,000 600,000 Pre-refunded 02/15/01 @ $102,
6.600% 02/15/02 Aaa AAA 0 657,750 657,750
0 3,000,000 3,000,000 Drury College, Series A,++
3.250% 08/15/21 NR AA3 0 3,000,000 3,000,000
0 300,000 300,000 General Tuition, St. Louis
University, (AMBAC Insured),
6.100% 08/01/99 Aaa AAA 0 313,500 313,500
<PAGE>
NATIONS FUND
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
INTERMEDIATE INTERMEDIATE DESCRIPTION INTERMEDIATE INTERMEDIATE
MUNICIPAL MUNICIPAL RATING MUNICIPAL MUNICIPAL
BOND FUND BOND FUND COMBINED MOODY'S S&P BOND FUND BOND FUND COMBINED
====================================================================================================================================
MUNICIPAL BONDS AND NOTES
(CONTINUED)
MISSOURI (CONTINUED)
$0 $300,000 $300,000 Missouri Baptist Medical
Center, Series 1990A,
7.300% 07/01/99 NR NR $0 $322,500 $322,500
0 600,000 600,000 St. Louis University,
Refunding, (AMBAC Insured),
4.100% 10/01/00 Aaa AAA 0 588,750 588,750
0 1,000,000 1,000,000 St. Louis Childrens
Hospital, (MBIA Insured),
5.400% 06/01/99 Aaa AAA 0 1,027,500 1,027,500
0 100,000 100,000 St. Lukes Hospital,
Kansas City,
(MBIA Insured),
6.500% 11/15/02 Aaa AAA 0 109,250 109,250
St. Lukes Episcopal/
Presbyterian Hospital:
0 300,000 300,000 (FGIC Insured),
4.700% 12/01/98 Aaa AAA 0 304,124 304,124
0 200,000 200,000 (FGIC Insured),
6.600% 12/01/00 Aaa AAA 0 213,500 213,500
0 600,000 600,000 St. Lukes Health System,
(MBIA Insured),
4.250% 11/15/01 Aaa AAA 0 585,750 585,750
Sisters of Mercy,
Series E:
0 300,000 300,000 7.000% 06/01/98 Aa AA 0 313,125 313,125
0 700,000 700,000 7.000% 06/01/99 Aa AA 0 745,500 745,500
SSM Health Care:
0 400,000 400,000 (BIGI Insured),
7.000% 06/01/97 Aaa AAA 0 408,776 408,776
0 1,500,000 1,500,000 Series AA, (MBIA Insured),
5.400% 06/01/00 Aaa AAA 0 1,539,375 1,539,375
Series B, (MBIA Insured):
0 200,000 200,000 6.500% 06/01/98 Aaa AAA 0 207,750 207,750
0 200,000 200,000 6.400% 06/01/97 Aaa AAA 0 203,612 203,612
0 400,000 400,000 Missouri State Office
Building Special
Obligation Revenue,
Series A 1991,
5.900% 12/01/01 Aa AA 0 424,000 424,000
Missouri State, Third
State Building, GO,
Refunding Bonds:
0 900,000 900,000 Series A,
5.000% 08/01/01 Aaa AAA 0 918,000 918,000
0 300,000 300,000 Series B,
5.500% 11/01/01 Aaa AAA 0 313,125 313,125
Missouri State, Water
Pollution Control, GO,
Series B, Pre-refunded
11/01/01 @ $100:
0 200,000 200,000 5.700% 11/01/02 Aaa AAA 0 210,250 210,250
0 300,000 300,000 5.800% 11/01/03 Aaa AAA 0 316,875 316,875
Springfield, Missouri,
School District, No. R12,
School Building, GO,
Refunding Bonds:
Series A, (FGIC Insured):
0 300,000 300,000 6.400% 03/01/03 Aaa AAA 0 318,750 318,750
0 300,000 300,000 6.400% 03/01/04 Aaa AAA 0 318,375 318,375
0 300,000 300,000 6.250% 03/01/05 Aaa AAA 0 316,500 316,500
0 400,000 400,000 Springfield, Missouri,
Waterworks Revenue
Refunding Bonds,
Series B,
4.750% 05/01/02 A+ AA 0 401,000 401,000
0 600,000 600,000 St. Louis County,
Missouri, Pattonville
School District No. R-3,
GO, (FGIC Insured),
5.700% 02/01/01 Aaa AAA 0 626,250 626,250
0 1,300,000 1,300,000 St. Louis County, Missouri,
Refunding and Improvement,
Series A,
4.800% 02/01/03 Aaa AAA 0 1,298,375 1,298,375
St. Louis County, Missouri,
Regional Convention and
Sports Complex,
Series B:
0 200,000 200,000 6.200% 08/15/98 BBB+ A 0 205,250 205,250
0 100,000 100,000 6.300% 08/15/99 BBB+ A 0 103,625 103,625
St. Louis County, Missouri,
Rockwood School District
No. R-6, GO:
0 700,000 700,000 5.000% 02/01/03 NR AA 0 701,750 701,750
Pre-refunded 02/01/99 @
$100:
0 500,000 500,000 6.000% 02/01/01 NR AAA 0 519,375 519,375
0 400,000 400,000 6.000% 02/01/02 NR AAA 0 415,500 415,500
<PAGE>
NATIONS FUND
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
INTERMEDIATE INTERMEDIATE DESCRIPTION INTERMEDIATE INTERMEDIATE
MUNICIPAL MUNICIPAL RATING MUNICIPAL MUNICIPAL
BOND FUND BOND FUND COMBINED MOODY'S S&P BOND FUND BOND FUND COMBINED
====================================================================================================================================
MUNICIPAL BONDS AND NOTES
(CONTINUED)
MISSOURI (CONTINUED)
$0 $300,000 $300,000 St. Louis, Missouri,
School District, GO,
(FGIC Insured),
6.500% 04/01/03 Aaa AAA $0 $330,750 $330,750
Mississippi River
Subdivision, GO,
Refunding Bonds:
0 400,000 400,000 6.300% 02/15/01 Aaa AAA 0 422,000 422,000
0 400,000 400,000 6.400% 02/15/02 Aaa AAA 0 422,000 422,000
University of Missouri,
Revenue Refunding Bonds,
(AMBAC Insured):
Series A:
0 100,000 100,000 6.050% 11/01/96 Aaa AAA 0 100,212 100,212
0 200,000 200,000 6.100% 11/01/97 Aaa AAA 0 204,060 204,060
0 200,000 200,000 6.200% 11/01/98 Aaa AAA 0 207,000 207,000
Series B:
0 200,000 200,000 6.050% 11/01/96 Aaa AAA 0 200,425 200,425
0 200,000 200,000 6.100% 11/01/97 Aaa AAA 0 204,060 204,060
0 100,000 100,000 6.200% 11/01/98 Aaa AAA 0 103,500 103,500
-----------------------------------------
2,060,140 29,958,813 32,018,953
-----------------------------------------
NEBRASKA - 0.8%
0 1,000,000 1,000,000 Nebraska Public Power
District Revenue,
Power Supply System,
5.300% 01/01/02 A+ A1 0 1,020,000 1,020,000
Omaha, Nebraska, Public
Power District
Electric Revenue:
0 900,000 900,000 Series A,
5.400% 02/01/98 Aaa NR 0 916,875 916,875
0 600,000 600,000 Series D,
4.750% 02/01/04. Aa AA 0 591,000 591,000
-----------------------------------------
0 2,527,875 2,527,875
-----------------------------------------
NEVADA - 2.3%
0 400,000 400,000 Clark County,
Nevada, GO,
Revenue Bonds,
Series A, (AMBAC Insured),
5.500% 06/01/98 Aaa AAA 0 408,000 408,000
Clark County, Nevada,
School District, GO,
Series A:
0 300,000 300,000 (AMBAC Insured),
6.500% 06/01/02 Aaa AAA 0 324,375 324,375
1,500,000 0 1,500,000 (MBIA Insured),
6.700% 03/01/06 Aaa AAA 1,602,750 0 1,602,750
Nevada State, GO:
0 1,000,000 1,000,000 Bk. No. 38-39A,
6.000% 07/01/01 Aa NR 0 1,055,000 1,055,000
1,000,000 0 1,000,000 Municipal, Escrow to
Maturity,
7.000% 01/01/03 Aaa AAA 1,087,480 0 1,087,480
0 1,000,000 1,000,000 Series A,
5.800% 05/01/00 Aa AA 0 1,040,000 1,040,000
0 1,500,000 1,500,000 Washoe County, GO,
Refunding Bonds,
(AMBAC Insured),
5.000% 09/01/01 Aaa AAA 0 1,526,250 1,526,250
-----------------------------------------
2,690,230 4,353,625 7,043,855
-----------------------------------------
NEW JERSEY - 2.4%
0 1,100,000 1,100,000 Bergen County, New Jersey,
Utilities Authority,
Water Pollution
Control Revenue,
Series B, (FGIC Insured),
5.500% 12/15/02 Aaa AAA 0 1,145,375 1,145,375
0 3,000,000 3,000,000 New Jersey State, GO,
5.125% 01/01/02 Aa+ AA1 0 3,063,750 3,063,750
New Jersey State
Transportation Trust Fund
Authority:
0 1,100,000 1,100,000 Series A (AMBAC Insured),
5.200% 12/15/00 Aaa AAA 0 1,127,500 1,127,500
0 2,000,000 2,000,000 Series B (MBIA Insured),
5.000% 06/15/02 Aaa AAA 0 2,015,000 2,015,000
-----------------------------------------
0 7,351,625 7,351,625
-----------------------------------------
NEW MEXICO - 1.3%
0 1,400,000 1,400,000 Albuquerque, New Mexico,
GO Bonds, Series A and B,
4.700% 07/01/00 Aa AA 0 1,408,750 1,408,750
0 2,000,000 2,000,000 New Mexico State Capital
Project, GO Bonds,
5.250% 09/01/03 Aa+ AA1 0 2,025,000 2,025,000
0 600,000 600,000 New Mexico State Severance
Tax, Series B,
5.100% 07/01/00 Aa AA 0 612,000 612,000
-----------------------------------------
0 4,045,750 4,045,750
-----------------------------------------
<PAGE>
NATIONS FUND
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
INTERMEDIATE INTERMEDIATE DESCRIPTION INTERMEDIATE INTERMEDIATE
MUNICIPAL MUNICIPAL RATING MUNICIPAL MUNICIPAL
BOND FUND BOND FUND COMBINED MOODY'S S&P BOND FUND BOND FUND COMBINED
====================================================================================================================================
MUNICIPAL BONDS AND NOTES
(CONTINUED)
NEW YORK - 1.0%
$0 $300,000 $300,000 New York State, GO,
6.750% 06/15/99 A- A $0 $317,250 $317,250
New York State, Various
Purpose GO Bonds:
0 600,000 600,000 6.600% 11/15/98 A- A 0 629,250 629,250
0 1,100,000 1,100,000 6.700% 11/15/99 A- A 0 1,170,125 1,170,125
New York State Tollway
Authority Bonds,
Series B,
0 1,000,000 1,000,000 5.000% 04/01/00 Aaa AAA 0 1,015,000 1,015,000
---------------------------------------
0 3,131,625 3,131,625
---------------------------------------
NORTH CAROLINA - 0.1%
0 300,000 300,000 North Carolina State, GO,
5.600% 04/01/00 Aaa AAA 0 311,250 311,250
---------------------------------------
OHIO - 0.7%
0 1,000,000 1,000,000 Cleveland, Ohio, GO,
(AMBAC Insured),
4.900% 9/01/04 Aaa AAA 0 1,003,750 1,003,750
0 900,000 900,000 Columbus, Ohio, GO,
Refunding Bonds,
Series D,
4.750% 09/15/00 Aaa AAA 0 910,125 910,125
0 300,000 300,000 Ohio State Water
Development Authority
Revenue, Pure Water,
Series I, (MBIA Insured),
7.000% 06/01/99 Aaa AAA 0 320,250 320,250
---------------------------------------
0 2,234,125 2,234,125
---------------------------------------
OKLAHOMA - 0.7%
0 2,000,000 2,000,000 Tulsa, Oklahoma, GO,
5.130% 05/01/02 Aa AA 0 2,042,500 2,042,500
---------------------------------------
OREGON - 1.8%
0 3,000,000 3,000,000 Multnomah County, Oregon,
School District 1J,
GO, Portland,+
5.500% 06/01/05 Aa- AA 0 3,090,000 3,090,000
0 1,300,000 1,300,000 Portland, Oregon, Sewer
System Revenue,
Series A,
5.450% 06/01/03 A+ A1 0 1,350,375 1,350,375
0 1,300,000 1,300,000 Washington County,
Oregon, University
Sewer Agency,
(AMBAC Insured),
5.300% 10/01/01 Aaa AAA 0 1,339,000 1,339,000
---------------------------------------
0 5,779,375 5,779,375
---------------------------------------
PENNSYLVANIA - 2.3%
2,000,000 0 2,000,000 Geisinger Authority,
Pennsylvania, Health
Systems Revenue,
Series A,
6.000% 07/01/01 Aa AA 2,098,140 0 2,098,140
1,000,000 0 1,000,000 Pennsylvania Intergoverment
Cooperative Authority,
Special Tax Revenue,
Philadelphia Funding
Program, (FGIC Insured),
7.000% 06/15/05 Aaa AAA 1,140,470 0 1,140,470
2,500,000 0 2,500,000 Philadelphia, Pennsylvania,
Industrial Development
Authority, Industrial
Development Revenue
Refunding, (Ashland
Oil Inc. Project),
5.700% 06/01/05 Baa1 NR 2,540,950 0 2,540,950
1,500,000 0 1,500,000 Philadelphia, Pennsylvania,
Water and Wastewater
Systems, (FGIC Insured),
5.500% 06/15/03 Aaa AAA 1,554,285 0 1,554,285
---------------------------------------
7,333,845 0 7,333,845
---------------------------------------
PUERTO RICO - 0.4%
1,285,000 0 1,285,000 Commonwealth of Puerto
Rico, Highway and
Transportation Authority,
Highway Revenue Refunding,
Series V,
6.625% 07/01/12 Baa1 A 1,375,348 0 1,375,348
---------------------------------------
RHODE ISLAND - 0.3%
0 800,000 800,000 Pawtucket, Rhode Island,
GO Bonds, (FGIC Insured),
5.250% 04/15/01 Aaa AAA 0 820,000 820,000
---------------------------------------
SOUTH CAROLINA - 0.2%
500,000 0 500,000 York County, South
Carolina, Industrial
Development Revenue,
Exempt Facility,
(Hoechst Celanese
Corporation Project),
AMT, 5.700% 01/01/24 A2 A+ 482,865 0 482,865
---------------------------------------
<PAGE>
NATIONS FUND
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
INTERMEDIATE INTERMEDIATE DESCRIPTION INTERMEDIATE INTERMEDIATE
MUNICIPAL MUNICIPAL RATING MUNICIPAL MUNICIPAL
BOND FUND BOND FUND COMBINED MOODY'S S&P BOND FUND BOND FUND COMBINED
====================================================================================================================================
MUNICIPAL BONDS AND NOTES
(CONTINUED)
TENNESSEE - 0.9%
$0 $300,000 $300,000 Hamilton County, Tennessee,
Series 1994,
5.000% 07/01/00 NR AA $0 $304,500 $304,500
Metropolitan Government of
Nashville and Davidson
County, Tennessee:
0 600,000 600,000 Electric Revenue, Series B,
5.625% 05/15/03 Aa AA 0 624,750 624,750
1,000,000 0 1,000,000 Health and Education
Facilities Board Revenue,
Refunding and Improvement,
(Meharry Medical College
Project), (AMBAC Insured),
6.000% 12/01/08 Aaa AAA 1,059,340 0 1,059,340
0 900,000 900,000 Shelby County, Tennessee,
GO, Refunding Bonds,
Series A,
5.300% 03/01/98 Aa+ AA 0 914,625 914,625
----------------------------------------
1,059,340 1,843,875 2,903,215
----------------------------------------
TEXAS - 11.0%
0 700,000 700,000 Arlington, Texas, Permanent
Improvement Refunding Bonds,
4.800% 08/15/01 Aa AA 0 704,375 704,375
0 500,000 500,000 Austin, Texas, Public
Improvement Refunding Bonds,
4.500% 09/01/98 Aa AA 0 503,125 503,125
Austin, Texas, Utility System
Revenue Refunding Combined,
Series A:
0 1,100,000 1,100,000 5.000% 05/15/01 A A 0 1,102,750 1,102,750
0 500,000 500,000 (AMBAC Insured),
6.500% 11/15/03 Aaa AAA 0 542,500 542,500
1,000,000 0 1,000,000 Brazos, Texas, Higher Education
Authority Inc., Revenue
Refunding, Sr. Lien,
Series A-2, AMT,
(Guaranteed Student Loans),
6.050% 06/01/03 Aaa NR 1,042,730 0 1,042,730
0 900,000 900,000 Colorado River, Texas,
Municipal Water District,
(AMBAC Insured),
5.000% 01/01/04 Aaa AAA 0 895,500 895,500
0 2,000,000 2,000,000 Dallas-Fort Worth International
Airport Revenue Bonds,
(MBIA Insured),
4.750% 11/01/01 Aaa AAA 0 2,000,000 2,000,000
0 1,000,000 1,000,000 Dallas, Texas, GO,
Refunding Bonds,
5.200% 02/15/98 Aaa AA1 0 1,013,750 1,013,750
0 2,400,000 2,400,000 Dallas, Texas, Waterworks
and Sewer System Revenue
Refunding Bonds,
4.500% 04/01/00 Aa AA 0 2,403,000 2,403,000
0 900,000 900,000 Garland, Texas,GO,
Refunding Bonds,
5.500% 08/15/99 Aa AA 0 927,000 927,000
1,000,000 0 1,000,000 Gulf Coast, Texas, Industrial
Development Authority,
(Champion International
Corporation Project),
7.000% 04/01/04 Baa1 BBB 1,032,110 0 1,032,110
1,350,000 0 1,350,000 Harris County, Texas,
Health Facilities Development
Corporation, Hospital
Revenue Refunding, (Texas
Childrens Hospital Project),
(MBIA Insured),
6.000% 10/01/05 Aaa AAA 1,424,871 0 1,424,871
0 900,000 900,000 Houston, Texas, Refunding,
Series 1993D,
4.700% 03/01/01 Aa- AA 0 901,125 901,125
0 2,500,000 2,500,000 Houston, Texas, Water and
Sewer System Revenue, Series A,
(MBIA Insured),
5.800% 12/01/04 Aaa AAA 0 2,618,750 2,618,750
1,500,000 0 1,500,000 Irving, Texas, Independent
School District, Capital
Appreciation Refunding,
GO, (PSFG Insured),
Zero coupon 02/15/02 # Aaa AAA 1,152,705 0 1,152,705
Lower Colorado River Authority
Revenue:
0 400,000 400,000 Refunding Bonds,
6.900% 01/01/01 Aaa AAA 0 410,216 410,216
0 400,000 400,000 Pre-refunded 01/01/97 @ $102,
7.000% 01/01/03 Aa- AA 0 411,112 411,112
San Antonio Electric and Gas
Revenue, Refunding Bonds:
0 1,100,000 1,100,000 4.000% 02/01/00 Aa AA1 0 1,083,500 1,083,500
Libor Reserve 2:
0 1,000,000 1,000,000 5.200% 02/01/01 Aa AA1 0 1,117,875 1,117,875
0 1,000,000 1,000,000 5.200% 02/01/01 Aa AA1 0 1,023,750 1,023,750
Texas A&M University Revenue,
Refunding Bonds:
0 1,880,000 1,880,000 5.000% 05/15/02 Aa AA 0 1,894,100 1,894,100
0 2,200,000 2,200,000 5.950% 05/15/05 Aa AA 0 2,329,250 2,329,250
Texas State:
0 900,000 900,000 GO, Refunding, Series A,
5.700% 10/01/03 Aa AA 0 945,000 945,000
0 900,000 900,000 Public Finance Authority,
Series B,
5.000% 10/01/01 Aa AA 0 913,500 913,500
<PAGE>
NATIONS FUND
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
INTERMEDIATE INTERMEDIATE DESCRIPTION INTERMEDIATE INTERMEDIATE
MUNICIPAL MUNICIPAL RATING MUNICIPAL MUNICIPAL
BOND FUND BOND FUND COMBINED MOODY'S S&P BOND FUND BOND FUND COMBINED
====================================================================================================================================
MUNICIPAL BONDS AND NOTES
(CONTINUED)
TEXAS (CONTINUED)
Texas State (continued):
$1,000,000 $0 $1,000,000 Revenue Refunding,
Veterans Housing
Assistance, Series B-4,
AMT,
6.100% 12/01/06 Aa AA $1,028,430 $0 $1,028,430
0 1,100,000 1,100,000 Texas State Superconducting,
Series 1992C,
5.350% 04/01/01 Aa AA 0 1,130,250 1,130,250
University of Texas:
Permanent University
Revenue Fund:
0 2,000,000 2,000,000 5.000% 07/15/01 Aaa AAA 0 2,032,500 2,032,500
0 300,000 300,000 6.700% 07/01/05 Aaa AAA 0 330,750 330,750
Revenue Refunding Bond:
0 1,100,000 1,100,000 5.100% 08/15/99 Aa+ AA1 0 1,117,875 1,117,875
0 300,000 300,000 5.200% 08/15/00 Aa+ AA1 0 306,375 306,375
--------------------------------------
5,680,846 28,657,928 34,338,774
--------------------------------------
UTAH - 1.4%
0 300,000 300,000 Davis County, Utah,
School District, GO,
Bonds, Pre-refunded
12/01/01 @ $100,
(FGIC Insured),
6.450% 06/01/02 Aaa AAA 0 324,375 324,375
Intermountain Power Agency
Obligations:
0 2,000,000 2,000,000 5.050% 07/01/01 Aaa AAA 0 2,025,000 2,025,000
0 900,000 900,000 Power Supply Revenue
Refunding, Series B,
5.200% 07/01/98 Aa- AA 0 913,500 913,500
0 1,100,000 1,100,000 Utah State, GO, Bonds,
Series A and B,
4.400% 07/01/99 Aaa AAA 0 1,104,125 1,104,125
--------------------------------------
0 4,367,000 4,367,000
--------------------------------------
VIRGINIA - 3.9%
0 1,620,000 1,620,000 Chesapeake Bay Bridge
and Tunnel Revenue
Bonds, (FGIC Insured),
5.100% 07/01/01 Aaa AAA 0 1,648,350 1,648,350
1,000,000 0 1,000,000 Covington-Allegheny County,
Virginia, Industrial
Development Authority,
PCR, (Westvaco
Corporation Project),
5.900% 03/01/05 A1 A 1,124,380 0 1,124,380
0 1,100,000 1,100,000 Fairfax County, Virginia,
Refunding, Series A,
4.700% 06/01/00 Aaa AAA 0 1,111,000 1,111,000
1,330,000 0 1,330,000 Halifax County, Virginia,
Industrial Development
Authority, (Old Dominion
Electric Cooperative), AMT,
5.900% 12/01/02 NR A+ 1,374,941 0 1,374,941
1,500,000 0 1,500,000 Metropolitan Washington,
D.C., Airport Authority
of Virginia, General
Airport Revenue, Series A,
AMT, (MBIA Insured),
5.600% 10/01/06 Aaa AAA 1,531,080 0 1,531,080
Norfolk, GO Bonds:
0 1,000,000 1,000,000 5.250% 06/01/01 Aa AA 0 1,027,500 1,027,500
0 700,000 700,000 Refunding, Series A,
4.600% 06/01/01 Aa AA 0 700,000 700,000
0 1,100,000 1,100,000 Prince William County,
Refunding, Series C,
4.500% 08/01/01 Aa AA 0 1,097,250 1,097,250
Virginia State:
1,500,000 0 1,500,000 Public Facilities GO,
Series A,
5.400% 06/01/05 Aaa AAA 1,554,495 0 1,554,495
1,000,000 0 1,000,000 Public Schools Authority
Revenue, Series B,
6.650% 01/01/98 Aa AA 1,026,350 0 1,026,350
--------------------------------------
6,611,246 5,584,100 12,195,346
--------------------------------------
WASHINGTON - 8.6%
King County, Washington,
Refunding:
0 600,000 600,000 Series A,
5.250% 12/01/01 Aa+ AA1 0 618,750 618,750
0 2,500,000 2,500,000 Series C,
5.625% 06/01/02 Aa+ AA1 0 2,612,500 2,612,500
0 1,195,000 1,195,000 King County, Washington,
School District #415,
5.100% 06/01/04 Aaa AAA 0 1,199,481 1,199,481
0 3,000,000 3,000,000 Pierce County, Washington,
School District Refunding,
5.000% 12/01/03 Aaa AAA 0 3,037,500 3,037,500
Seattle, Washington,
Municipal Light and
Power Revenue:
1,750,000 0 1,750,000 Refunding,
4.800% 05/01/02 Aa AA 1,749,930 0 1,749,930
1,640,000 0 1,640,000 Series A,
5.750% 08/01/16 Aa AA 1,624,551 0 1,624,551
<PAGE>
NATIONS FUND
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
INTERMEDIATE INTERMEDIATE DESCRIPTION INTERMEDIATE INTERMEDIATE
MUNICIPAL MUNICIPAL RATING MUNICIPAL MUNICIPAL
BOND FUND BOND FUND COMBINED MOODY'S S&P BOND FUND BOND FUND COMBINED
====================================================================================================================================
MUNICIPAL BONDS AND NOTES
(CONTINUED)
WASHINGTON (CONTINUED)
$0 $1,500,000 $1,500,000 Snohomish County School
District 103,
5.150% 06/01/05 Aaa AAA $0 $1,509,375 $1,509,375
0 300,000 300,000 Snohomish County School
District 2, Series A,
(MBIA Insured),
6.800% 06/01/03 Aaa AAA 0 326,250 326,250
0 400,000 400,000 Spokane, GO,
8.500% 01/01/00 Aa AA 0 446,000 446,000
Tacoma, Washington,
Electric System Revenue
Refunding Bonds:
0 2,500,000 2,500,000 (AMBAC Insured),
5.900% 01/01/05 Aaa AAA 0 2,615,625 2,615,625
0 800,000 800,000 (FGIC Insured),
5.500% 01/01/01 Aaa AAA 0 823,000 823,000
0 1,000,000 1,000,000 Tacoma, Washington,
Series A,
5.750% 07/01/02 A+ A1 0 1,053,750 1,053,750
0 600,000 600,000 Tacoma, Washington,
Sewer Revenue Refunding,
Series B, (FGIC Insured),
5.500% 12/01/03 Aaa AAA 0 618,750 618,750
Washington State:
Public Power Supply:
Nuclear Project No. 1,
Series C:
0 700,000 700,000 7.250% 07/01/97 Aa AA1 0 715,211 715,211
0 600,000 600,000 7.300% 07/01/98 Aa AA1 0 626,250 626,250
0 1,000,000 1,000,000 5.500% 07/01/04 Aa AA1 0 1,017,500 1,017,500
1,150,000 0 1,150,000 Nuclear Project No. 2,
Series A, System Revenue
Refunding,
5.800% 07/01/07 Aa AA 1,166,790 0 1,166,790
0 300,000 300,000 Nuclear Project No. 3,
Series B,
7.100% 07/01/98 Aa AA1 0 312,375 312,375
0 900,000 900,000 Washington State,
Refunding, Series R92C,
5.600% 09/01/01 Aa AA 0 936,000 936,000
0 600,000 600,000 Pre-refunded 06/01/98 @
$100, 7.300% 06/01/00 Aa AAA 0 630,000 630,000
0 900,000 900,000 Series 93A,
5.250% 10/01/00 Aa AA 0 922,500 922,500
0 500,000 500,000 Series B,
6.300% 06/01/02 Aa AA 0 531,875 531,875
1,000,000 0 1,000,000 Series R-92-A, GO,
6.400% 09/01/03 Aa AA 1,075,420 0 1,075,420
0 600,000 600,000 Yakima County School
District No. 7,
(MBIA Insured),
5.500% 12/01/03 Aaa AAA 0 627,000 627,000
--------------------------------------
5,616,691 21,179,692 26,796,383
--------------------------------------
WISCONSIN - 2.8%
0 800,000 800,000 Milwaukee County,
Wisconsin, Series 1994A,
5.000% 12/01/00 Aa- A1 0 809,000 809,000
Milwaukee, Wisconsin,
Metropolitan Sewer
District, Series A:
0 300,000 300,000 7.000% 09/01/00 Aa AA 0 325,125 325,125
0 400,000 400,000 6.700% 10/01/00 Aa AA 0 430,000 430,000
0 600,000 600,000 Milwaukee, Wisconsin,
Refunding, Series 1992,
5.700% 06/01/99 Aa+ AA1 0 621,000 621,000
0 300,000 300,000 Milwaukee, Wisconsin,
Series BZ,
6.380% 06/15/03 Aa+ AA1 0 321,000 321,000
0 3,070,000 3,070,000 Sun Prairie Area School
District, GO,
5.500% 04/01/03 Aaa AAA 0 3,165,937 3,165,937
Wisconsin State, GO:
0 600,000 600,000 Series A,
5.750% 05/01/00 Aa AA 0 623,250 623,250
0 300,000 300,000 Series D,
6.000% 05/01/00 Aa AA 0 314,250 314,250
Wisconsin State,
Refunding, GO:
0 900,000 900,000 Series 1,
5.100% 11/01/01 Aa AA 0 918,000 918,000
1,240,000 0 1,240,000 Series 3,
4.250 11/01/99 Aa AA 1,236,057 0 1,236,057
--------------------------------------
1,236,057 7,527,562 8,763,619
--------------------------------------
TOTAL MUNICIPAL BONDS
AND NOTES
89,379,960 216,864,855 306,244,815
---------------------------------------------
<PAGE>
NATIONS FUND
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
SHARES VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
INTERMEDIATE INTERMEDIATE DESCRIPTION INTERMEDIATE INTERMEDIATE
MUNICIPAL MUNICIPAL RATING MUNICIPAL MUNICIPAL
BOND FUND BOND FUND COMBINED MOODY'S S&P BOND FUND BOND FUND COMBINED
====================================================================================================================================
MONEY MARKET FUND - 2.0%
3,099,000 0 3,099,000 AIM Tax-Exempt Fund $3,099,000 $0 $3,099,000
0 8,469 8,469 Federal Tax Exempt Money
Market Fund 0 3,281,421 3,281,421
----------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUNDS 3,099,000 3,281,421 6,380,421
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST
$304,576,048) $92,478,960 $220,146,276 $312,625,236
----------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------
+ When issued security.
++ Variable Rate Security. The interest rate
shown reflects the rate currently in effect.
# Yield to maturity is 5.384%.
ABBREVIATIONS:
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax
FGIC Federal Guaranty Insurance Corporation
FHA Federal Housing Authority
FNMA Federal National Mortgage Association
FSA Federal Security Assurance
GO General Obligation Bonds
MBIA Municipal Bond Investors Assurance
NR Not Rated
PCR Pollution Control Revenue
PSFG Permanent School Funding Guaranty
<PAGE>
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
Pro Forma Combining Statement of Assets and Liabilities
September 30, 1996
<TABLE>
<CAPTION>
Nations Intermediate Pilot Intermediate Adjustments to Pro Forma
Municipal Bond Fund Municipal Bond Fund Proforma Combined (Note 1)
------------------- ------------------- -------- -----------------
<S> <C> <C> <C> <C>
ASSETS:
Investments at Value (cost $90,512,293,
$214,063,755 and $304,576,048) $92,478,960 $220,146,276 - $312,625,236
Cash 64,129 - - 64,129
Income Receivable 1,420,258 3,148,978 - 4,569,236
Receivable for Fund Shares Sold 199,258 - - 199,258
Receivable due from Advisor - - 61,893 (a) 61,893
Unamortized Organization Costs 16,790 61,893 (61,893)(a) 16,790
------ ------ -------- ------
TOTAL ASSETS 94,179,395 223,357,147 0 317,536,542
LIABILITIES:
Income Distribution Payable 357,107 813,222 - 1,170,329
Payable for Investments Purchased 2,116,587 3,077,175 - 5,193,762
Payable for Fund Shares Redeemed 9,326 - - 9,326
Other Payables - 22,750 - 22,750
Accrued Expenses 57,683 181,218 - 238,901
------ ------- - -------
TOTAL LIABILITIES 2,540,703 4,094,365 0 6,635,068
--------- --------- - ---------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $91,638,692 $219,262,782 $0 $310,901,474
=========== ============ == ============
NET ASSETS BY CLASS:
Primary A $87,676,333 $218,280,893 $305,957,226
=========== ============ ============
Primary B n/a n/a $0
=== === ==
Investor A $1,538,471 $981,889 $2,520,360
========== ======== ==========
Investor C $941,199 n/a $941,199
======== === ========
Investor N $1,482,689 n/a $1,482,689
========== === ==========
SHARES OUTSTANDING BY CLASS:
Primary A 8,732,744 21,047,482 693,746 30,473,972
========= ========== ======= ==========
Primary B n/a n/a n/a 0
=== === === =
Investor A 153,235 94,559 3,240 251,033
======= ====== ===== =======
Investor C 93,743 n/a n/a 93,743
====== === === ======
Investor N 147,676 n/a n/a 147,676
======= === === =======
PRIMARY A SHARES:
Net Asset Value
per Share $10.04 $10.37 $10.04
====== ====== ======
PRIMARY B SHARES:
Net Asset Value per Share n/a n/a n/a
INVESTOR A SHARES:
Net Asset Value per Share $10.04 $10.38 $10.04
====== ====== ======
INVESTOR C SHARES:
Net Asset Value per Share $10.04 n/a $10.04
====== === ======
INVESTOR N SHARES:
Net Asset Value per Share $10.04 n/a $10.04
====== === ======
</TABLE>
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
(a) Unamortized Organization Costs of the acquired fund will be borne by
the Advisor.
<PAGE>
NATIONS INTERMEDIATE MUNICIPAL BOND FUND
PILOT INTERMEDIATE MUNICIPAL BOND FUND
Pro Forma Statement of Operations (Unaudited)
For the Twelve Month Period Ending September 30, 1996
<TABLE>
<CAPTION>
Nations Intermediate Pilot Intermediate Adjustments to Pro Forma
Municipal Bond Fund Municipal Bond Fund Proforma Combined (Note 1)
------------------- ------------------- -------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $4,407,288 $10,937,604 $15,344,892
---------- ----------- -----------
Total Investment Income 4,407,288 10,937,604 15,344,892
EXPENSES:
Investment Advisory 418,516 1,124,495 (102,227)(a) 1,440,784
Administration 83,703 231,868 (27,414)(a) 288,157
Portfolio Accounting Fee - 25,344 (25,344)(a) 0
Transfer Agent 70,950 40,886 - 111,836
Custodian 19,178 34,766 (8,692)(b) 45,252
Legal and Audit Fees 36,003 42,449 (42,449)(b) 36,003
Trustees' Fees 6,042 13,194 (13,194)(b) 6,042
Amortization of organization costs 11,285 19,914 (19,914)(c) 11,285
Other expenses 88,609 88,155 (22,039)(b) 154,726
------ ------ -------- -------
Subtotal 734,285 1,621,071 (261,272) 2,094,084
SHAREHOLDER SERVICING AND DISTRIBUTION FEES
Investor A 3,240 1,003 (201)(a) 4,042
Investor C 2,679 - N/A 2,679
Investor N 7,544 - N/A 7,544
Fees waived and/or reimbursed by
investment advisor (313,204) (295,213) (44,883)(d) (653,300)
--------- --------- ----------- ---------
TOTAL EXPENSES 434,544 1,326,861 (306,356) 1,455,049
------- --------- --------- ---------
NET INVESTMENT INCOME 3,972,744 9,610,743 306,356 13,889,843
========= ========= ======= ==========
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Realized Gain/(Loss) on securities 365,665 694,652 1,060,317
Change in unrealized appreciation/
(depreciation) on securities (307,504) (3,051,899) (3,359,403)
--------- ----------- -----------
Net Realized and Unrealized gain/(loss)
on investments 58,161 (2,357,247) (2,299,086)
====== =========== ===========
NET INCREASE/(DECREASE) IN ASSETS
RESULTING FROM OPERATIONS $4,030,905 $7,253,496 $306,356 $11,590,757
========== ========== ======== ===========
</TABLE>
LEGEND:
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
(C) ORGANIZATION EXPENSE OF THE ACQUIRED FUND IS NOT AN EXPENSE OF THE COMBINED
FUND.
(D) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY EXPENSE
REIMBURSEMENT.
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
<PAGE>
Nations Intermediate Municipal Bond Fund
Pilot Intermediate Municipal Bond 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 investment company. As of
September 30, 1996 the Trust offers thirty-two 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 Intermediate Municipal Bond Fund and the Pilot Intermediate Municipal
Bond Fund for the period ended September 30, 1996. These statements have been
derived from books and records utilized in calculating daily net asset value at
September 30, 1996.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pilot Intermediate Municipal Bond Fund in exchange for
shares of Nations Intermediate Municipal Bond 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
Pilot Intermediate Municipal Bond 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 Intermediate Municipal Bond Fund
Pilot Intermediate Municipal Bond Fund
Notes to Pro Forma Financial Statements (Unaudited)
For the period ended September 30, 1996, the Nations Intermediate Municipal Bond
Fund's investment advisory fee was computed based on the annual rate of 0.50% of
the average daily net assets. The administration fee was computed based on the
annual rate of 0.10% 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 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 Intermediate Municipal Bond Fund. Under the Investor A Plan,
aggregate payments may not exceed 0.20%, on an annualized basis, of the average
daily net assets of the Fund's Investor A Shares.
The Trust has also adopted a distribution plan pursuant to Rule 12b-1 under the
1940 Act with respect to Investor C Shares ("Investor C Distribution Plan") and
Investor N Shares ("Investor N Distribution Plan") of the Nations Intermediate
Municipal Bond Fund. Under the Investor C Distribution Plan and Investor N
Distribution Plan, aggregate payments may not exceed 0.25%, on an annualized
basis, of the average daily net assets of the Investor C Shares and Investor N
Shares, respectively, of the Fund.
The Trust has also adopted a shareholder servicing plan with respect to Investor
C Shares ("Investor C Servicing Plan") and Investor N Shares ("Investor N
Servicing Plan") of the Nations Intermediate Municipal Bond 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 Shares and Investor N Shares of the Fund.
2
<PAGE>
Nations Intermediate Municipal Bond Fund
Pilot Intermediate Municipal Bond Fund
Notes to Pro Forma Financial Statements (Unaudited)
2. Portfolio Valuation
Securities of Nations Intermediate Municipal Bond Fund are valued by an
independent pricing service approved by the Board of Trustees. Valuations are
based upon a matrix system and / or appraisals provided by the pricing service
which takes into consideration such factors as yields, prices, maturities, sell
features and ratings on comparable securities. Certain securities may be valued
by one or more principal market makers. Restricted securities, if any,
securities for which market quotations are not readily available and other
assets are valued at fair market value under the supervision of the Board of
Trustees. Short-term investments that mature in 60 days or less are valued at
amortized cost. Pilot Intermediate Municipal Bond 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 Intermediate Municipal Bond Fund which would have been issued
at September 30, 1996 in connection with the proposed reorganization. The pro
forma number of shares outstanding of 30,966,424 consists of 21,839,026
additional shares assumed issued in the reorganization plus 9,127,398 shares of
Nations Intermediate Municipal Bond Fund at September 30, 1996.
3
<PAGE>
NATIONS FUND
NATIONS MUNICIPAL INCOME FUND
PILOT MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
MUNICIPAL MUNICIPAL DESCRIPTIONS MUNICIPAL MUNICIPAL
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES - 97.2%
ALABAMA - 2.2%
$2,000,000 $0 $2,000,000 Birmingham, Alabama, Refunding, Series B, GO,
6.250% 04/01/12.................................... $2,096,200 $0 $2,096,200
3,000,000 0 3,000,000 Butler County, Alabama, Industrial Development Board,
Solid Waste Disposal Revenue, (James River Corporation
Project), 8.000% 09/01/28............................ 3,306,150 0 3,306,150
1,000,000 0 1,000,000 Morgan County-Decatur, Alabama, Healthcare Authority,
Hospital Revenue Refunding, (Decatur General Hospital),
(Connie Lee Insured),
6.250% 03/01/13..................................... 1,044,050 0 1,044,050
----------- --------- ----------
6,446,400 0 6,446,400
----------- --------- ---------
ALASKA - 1.2%
1,000,000 0 1,000,000 Anchorage, Alaska, Electric Utilities Revenue Refunding,
Senior Lien, (MBIA Insured),
8.000% 12/01/09..................................... 1,240,520 0 1,240,520
2,250,000 0 2,250,000 Anchorage, Alaska, Telephone Utilities Revenue Refunding,
Series A, (AMBAC Insured),
4.500% 12/01/02......................................2,189,610 0 2,189,610
------------- ------------ --------
3,430,130 0 3,430,130
------------- ----------- ---------
ARIZONA - 2.2%
Maricopa County, Arizona, Unified School District No. 48:
0 2,000,000 2,000,000 5.000% 07/01/14 ....................................... 0 1,865,000 1,865,000
1,000,000 0 1,000,000 (Scottsdale Refunding), Series B,
6.300% 07/01/04 .....................................1,089,310 0 1,089,310
0 400,000 400,000 Pima County, Arizona, Union School District, Series D,
(FGIC Insured), 6.100% 07/01/11....................... 0 414,000 414,000
0 2,000,000 2,000,000 Salt River Agriculture & Power Project, Series C,
6.250% 01/01/19 ....................................... 0 2,077,500 2,077,500
0 900,000 900,000 Tucson, Arizona, GO, Series 1984-G, (FGIC Insured),
6.250% 07/01/16 ....................................... 0 947,250 947,250
----------- ------------ ----------
1,089,310 5,303,750 6,393,060
---------- ------------- ---------
ARKANSAS - 0.4%
0 1,300,000 1,300,000 Arkansas Development Waste Systems Authority, Revolving
Fund, Series A,
5.700% 12/01/12....................................... 0 1,303,250 1,303,250
--------- ---------- ----------
CALIFORNIA - 5.0%
0 400,000 400,000 California State University, Revenue Bonds,
(FGIC Insured), 6.000% 11/01/10 ..................... 0 415,500 415,500
0 500,000 500,000 Long Beach, California, Water Revenue,
6.000% 05/01/14 ...................................... 0 510,625 510,625
Los Angeles, California:
0 1,000,000 1,000,000 Wastewater Systems Revenue, (MBIA Insured),
5.500% 06/01/14....................................... 0 982,500 982,500
0 200,000 200,000 Water & Power Revenue,
7.700% 05/15/07 ...................................... 0 213,750 213,750
Los Angeles County, California:
0 400,000 400,000 Sanitation District, Series A,
5.375% 10/01/13....................................... 0 383,500 383,500
0 500,000 500,000 Transportation Authority Revenue, (MBIA Insured),
5.625% 07/01/18....................................... 0 491,875 491,875
0 2,000,000 2,000,000 Metropolitan Water District, California, Series A,
(MBIA Insured), 5.750% 07/01/15....................... 0 2,022,500 2,022,500
0 500,000 500,000 San Francisco Bay Area, Rapid Transit Revenue,
(AMBAC Insured), 6.750% 07/01/11...................... 0 564,375 564,375
San Francisco, California:
0 2,595,000 2,595,000 Apartments Commission, Series 98, (FGIC Insured),
5.250% 05/01/13....................................... 0 2,494,444 2,494,444
0 700,000 700,000 Sewer Revenue, (AMBAC Insured),
5.500% 10/01/15....................................... 0 686,875 686,875
</TABLE>
<PAGE>
NATIONS FUND
NATIONS MUNICIPAL INCOME FUND
PILOT MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
MUNICIPAL MUNICIPAL DESCRIPTIONS MUNICIPAL MUNICIPAL
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES - (CONTINUED)
CALIFORNIA - (CONTINUED)
State of California, GO:
$0 $400,000 $400,000 9.100% 11/01/01 ................................... $0 $478,500 $478,500
0 200,000 200,000 9.000% 06/01/02 .................................. 0 241,000 241,000
0 1,000,000 1,000,000 9.000% 09/01/02 .................................. 0 1,118,750 1,118,750
0 1,000,000 1,000,000 7.000% 08/01/04................................... 0 1,130,000 1,130,000
0 200,000 200,000 7.200% 04/01/05................................... 0 229,000 229,000
0 700,000 700,000 7.000% 08/01/05................................... 0 795,375 795,375
0 400,000 400,000 7.100% 03/01/07................................... 0 458,000 458,000
State of California, Veteran's Bonds:
Series AM:
0 500,000 500,000 9.000% 10/01/02 .................................. 0 607,500 607,500
0 200,000 200,000 9.000% 10/01/03 .................................. 0 247,750 247,750
0 200,000 200,000 Series AN,
9.000% 04/01/05 .................................. 0 253,000 253,000
0 200,000 200,000 Series AQ,
9.100% 10/01/02 .................................. 0 244,000 244,000
0 500,000 500,000 University of California, Multiple Purpose
Projects, Junior Lien, Series C, (AMBAC Insured),
5.250% 09/01/16 ................................... 0 470,000 470,000
--------- ---------- ---------
0 15,038,819 15,038,819
-------- ---------- ----------
COLORADO - 2.1%
1,500,000 0 1,500,000 Arapahoe County, Colorado, Capital Improvement,
Transportation, Federal Highway Revenue Bonds,
Series E-470,
6.900% 08/31/15 .................................. 1,590,030 0 1,590,030
0 200,000 200,000 Colorado Springs, Colorado, Colorado Utilities Revenue,
6.500% 11/15/15................................... 0 216,750 216,750
0 2,500,000 2,500,000 Douglas County, Colorado, Sales Tax Revenue,
5.500% 10/15/11................................... 0 2,465,625 2,465,625
2,000,000 0 2,000,000 Jefferson County, Colorado, School District No. R-001, 0
(AMBAC Insured), 6.000% 12/15/06 ................ 2,110,300 0 2,110,300
---------- ------- --------
3,700,330 2,682,375 6,382,705
--------- ---------- ----------
CONNECTICUT - 1.7%
Connecticut State Housing Finance Authority Revenue,
(Housing Mortgage Finance Program):
1,930,000 0 1,930,000 Series A,
6.100% 05/15/13................................... 1,966,399 0 1,966,399
2,000,000 0 2,000,000 Series B,
6.700% 11/15/12 .................................. 2,099,300 0 2,099,300
0 1,000,000 1,000,000 State of Connecticut, GO, Series
5.300% 05/15/10 .................................. 0 983,750 983,750
---------- --------- -----------
4,065,699 983,750 5,049,449
---------- --------- -----------
DISTRICT OF COLUMBIA - 1.3%
0 3,905,000 3,905,000 District of Columbia, Revenue Bonds, (MBIA Insured),
5.750% 10/01/12................................... 0 3,865,950 3,865,950
-------- ----------- ---------
FLORIDA - 5.1%
0 2,500,000 2,500,000 Broward County, Florida, School District,
5.600% 02/15/07................................... 0 2,546,875 2,546,875
1,000,000 0 1,000,000 Dade County, Florida, Health Facilities Authority,
Miami Project), Series A, (MBIA Insured),
Hospital Revenue Refunding, (Baptist Hospital,
5.250% 05/15/21................................. 925,840 0 925,840
Jacksonville, Florida:
Electric Authority Revenue:
0 400,000 400,000 5.500% 10/01/13.................................. 0 394,500 394,500
0 2,000,000 2,000,000 5.375% 10/01/15.................................. 0 1,937,500 1,937,500
1,000,000 0 1,000,000 PCR, Refunding, (Anheuser-Busch Companies Project),
5.700% 08/01/31.................................. 979,160 0 979,160
1,000,000 0 1,000,000 Martin County, Florida, Industrial Development
Authority Revenue, (Indiantown Cogeneration Project),
Series A, AMT, 7.875% 12/15/25 ................... 1,128,280 0 1,128,280
</TABLE>
<PAGE>
NATIONS FUND
NATIONS MUNICIPAL INCOME FUND
PILOT MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
UNICIPAL MUNICIPAL DESCRIPTIONS MUNICIPAL MUNICIPAL
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES - (CONTINUED)
FLORIDA - (CONTINUED)
Orlando, Florida, Utilities Commission:
$0 $700,000 $700,000 5.500% 10/01/12........................................... $0 $686,875 $686,875
0 1,200,000 1,200,000 Series D,
6.750% 10/01/17............................................ 0 1,384,500 1,384,500
State of Florida, Board of Education Outlay:
0 500,000 500,000 6.125% 06/01/10 ........................................... 0 521,875 521,875
Series A:
0 1,000,000 1,000,000 5.500% 06/01/14 .......................................... 0 996,250 996,250
0 200,000 200,000 7.250% 06/01/23 .......................................... 0 220,000 220,000
0 300,000 300,000 Series B1,
7.875% 06/01/19............................................ 0 323,625 323,625
0 700,000 700,000 Series D,
5.000% 06/01/15............................................ 0 653,625 653,625
0 600,000 600,000 State of Florida, Jacksonville Transportation
Authority, 9.000% 01/01/04 ............................... 0 646,500 646,500
2,000,000 0 2,000,000 South Broward, Florida, Hospital District
Revenue Refunding, 5.500% 05/01/28........................ 1,894,100 0 1,894,100
---------- ------- ------------
4,927,380 10,312,125 15,239,505
---------- ------- ------------
GEORGIA - 6.1%
0 1,100,000 1,100,000 Atlanta, Georgia, GO,
5.600% 12/01/11 ............................................ 0 1,116,500 1,116,500
0 800,000 800,000 De Kalb County, Georgia, GO,
5.250% 01/01/20 ............................................ 0 766,000 766,000
0 200,000 200,000 Fulton County, Georgia, Water & Sewer Revenue,
(FGIC Insured), 6.375% 01/01/14 ........................... 0 219,000 219,000
Georgia Municipal Electric Power Authority:
Series B,
0 1,000,000 1,000,000 6.250% 01/01/12............................................. 0 1,058,750 1,058,750
Series V, (GO of Participants Insured):
0 300,000 300,000 6.500% 01/01/12 ............................................ 0 325,125 325,125
0 1,000,000 1,000,000 6.600% 01/01/18 ............................................ 0 1,093,750 1,093,750
0 400,000 400,000 Henry County, Georgia, GO, (MBIA Insured),
6.000% 08/01/14 ............................................ 0 417,500 417,500
1,000,000 0 1,000,000 Metropolitan Atlanta Rapid Transit Authority (MARTA),
Georgia, Sales Tax Revenue Refunding, Series P,
(AMBAC Insured), 6.100% 07/01/05 ............................ 1,074,180 0 1,074,180
1,000,000 0 1,000,000 Monroe County, Georgia, Development Authority, PCR,
(Oglethorpe Power Corporation), Series A,
6.800% 01/01/11 ............................................. 1,111,430 0 1,111,430
Savannah, Georgia, Hospital Authority, Revenue Refunding
3,000,000 0 3,000,000 and Improvement:(Candler Hospital Project),
7.000% 01/01/23............................................. 3,089,010 0 3,089,010
2,000,000 0 2,000,000 (St. Joseph's Hospital Project),
6.125% 07/01/12............................................ 2,059,120 0 2,059,120
2,690,000 0 2,690,000 Union County, Georgia, Housing Authority, Multi-family
Housing Revenue Refunding, (Hidden Lake Apartments),
Series S, (FHA/FNMA Insured), 7.125% 12/01/25............... 2,844,110 0 2,844,110
3,000,000 0 3,000,000 White County, Georgia, Industrial Development Authority Revenue
Refunding, (Clark-Schwebel Fiber Glass Company Project),
6.850% 06/01/10............................................. 3,129,330 0 3,129,330
----------- --------- ----------
13,307,180 4,996,625 18,303,805
----------- -------- ----------
HAWAII - 0.1%
0 200,000 200,000 State of Hawaii, GO, Series BW,
6.250% 03/01/12............................................ 0 214,500 214,500
------------ -------- ---------
ILLINOIS - 7.3%
Chicago, Illinois:
0 400,000 400,000 GO, Series 1993, (FGIC Insured),
5.375% 01/01/13 ......................................... 0 386,500 386,500
0 600,000 600,000 Metropolitan Water District,
5.500% 12/01/12 ......................................... 0 596,250 596,250
</TABLE>
<PAGE>
NATIONS FUND
NATIONS MUNICIPAL INCOME FUND
PILOT MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
MUNICIPAL MUNICIPAL DESCRIPTIONS MUNICIPAL MUNICIPAL
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES - (CONTINUED)
ILLINOIS - (CONTINUED)
Chicago, Illinois (continued):
$1,500,000 $0 $1,500,000 O'Hare International Airport, Special Facilities Revenue
Refunding, (American Airlines Inc. Project),
8.200% 12/01/24.................................... $1,740,090 $0 $1,740,090
0 400,000 400,000 Park District, (FGIC Insured),
6.050% 01/01/03.................................... 0 408,000 408,000
0 2,000,000 2,000,000 Cook County, Illinois, GO,
5.900% 11/15/16................................... 0 2,015,000 2,015,000
Du Page County, Illinois:
0 600,000 600,000 GO,
5.500% 01/01/13................................... 0 591,750 591,750
0 600,000 600,000 Jail Project,
5.600% 01/01/21.................................. 0 594,000 594,000
0 600,000 600,000 Water Commission Revenue,
5.250% 05/01/14................................... 0 563,250 563,250
1,000,000 0 1,000,000 Illinois State Development Finance Authority, PCR, Refunding,
(Edison Company Project), Series D, (AMBAC Insured),
6.750% 03/01/15................................... 1,085,350 0 1,085,350
Illinois State, GO:
0 200,000 200,000 9.500% 11/01/03.................................. 0 213,614 213,614
0 400,000 400,000 8.000% 10/01/04................................. 0 423,540 423,540
2,000,000 0 2,000,000 Illinois State Health Facilities Authority Revenue,
(OSF Healthcare System), 6.000% 11/15/10 ......... 1,999,840 0 1,999,840
1,500,000 0 1,500,000 Illinois State Sales Tax Revenue Refunding, Series V,
6.375% 06/15/17 ................................. 1,567,920 0 1,567,920
1,000,000 0 1,000,000 Illinois State Toll Highway Authority Revenue, Series A,
(FGIC Insured),
6.200% 01/01/16 ............................... 1,041,120 0 1,041,120
3,000,000 0 3,000,000 Metropolitan Pier and Exposition Authority, Illinois,
State Tax Revenue, Capital Appreciation, Refunding,
Series A, (MBIA Insured), Zero coupon 12/15/13+.... 1,086,510 0 1,086,510
1,000,000 0 1,000,000 Regional Transportation Authority, Illinois, Revenue Bonds,
Series A, (AMBAC Insured),
6.500% 06/01/15 ................................... 1,073,390 0 1,073,390
State of Illinois, GO:
0 2,340,000 2,340,000 5.875% 06/01/11.................................... 0 2,369,250 2,369,250
0 2,000,000 2,000,000 6.000% 02/01/16.................................... 0 2,055,000 2,055,000
0 800,000 800,000 5.500% 08/01/18.................................... 0 771,000 771,000
0 600,000 600,000 5.800% 04/01/19.................................... 0 597,000 597,000
Revenue Bonds,
0 700,000 700,000 5.250% 06/15/18.................................... 0 647,500 647,500
-----------------------------
9,594,220 12,231,654 21,825,874
-----------------------------
INDIANA - 1.9%
2,500,000 0 2,500,000 Franklin, Indiana, Economic Development Revenue
Refunding, (Hoover Universal Inc. Project Guaranteed),
6.100% 12/01/04 .................................... 2,633,550 0 2,633,550
1,000,000 0 1,000,000 Indiana State Health Facilities Financing
Authority,
Hospital Revenue Refunding, (Methodist Hospital Inc.
Project), Series A, 5.750% 09/01/15 ................ 985,220 0 985,220
2,000,000 0 2,000,000 Indianapolis, Indiana, Airport Authority, Special
Facilities Revenue, (Federal Express Corporation Project),
7.100% 01/15/17 ................................ 2,128,880 0 2,128,880
----------- ------- ---------
5,747,650 0 5,747,650
----------- ------- ---------
KANSAS - 1.7%
2,000,000 0 2,000,000 Kansas City, Kansas, Utilities System Revenue Refunding
and Improvement, (FGIC Insured),
6.250% 09/01/14.................................... 2,108,700 0 2,108,700
Kansas State, Department of Transportation, Highway
0 2,000,000 2,000,000 Revenue: 6.000% 09/01/07......................... 0 2,125,000 2,125,000
0 700,000 700,000 5.375% 03/01/13................................... 0 682,500 682,500
----------- -------- --------
2,108,700 2,807,5004,916,200
----------- -------- --------
KENTUCKY - 0.3%
0 1,000,000 1,000,000 Kentucky State Turnpike Authority, Economic Development
Revenue, 5.625% 07/01/15.......................... 0 1,000,000 1,000,000
------- -------- ----------
</TABLE>
<PAGE>
NATIONS FUND
NATIONS MUNICIPAL INCOME FUND
PILOT MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
MUNICIPAL MUNICIPAL DESCRIPTIONS MUNICIPAL MUNICIPAL
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES - (CONTINUED)
LOUISIANA - 0.1%
$0 $400,000 $400,000 State of Louisiana, GO, Series B,
8.000% 05/01/03.................................. $0 $417,316 $417,316
---------- ----------- -----------
MAINE - 0.2%
0 700,000 700,000 State of Maine, Turnpike Authority, (MBIA Insured),
6.000% 07/01/14.................................. 0 721,875 721,875
---------- ----------- -----------
MASSACHUSETTS - 2.9%
Commonwealth of Massachusetts, GO:
0 2,000,000 2,000,000 5.500% 06/01/10.................................. 0 1,987,500 1,987,500
0 2,500,000 2,500,000 Series A, (MBIA Insured),
5.750% 02/01/13.................................. 0 2,528,125 2,528,125
0 3,675,000 3,675,000 Massachusetts Bay Transportation Authority,
Revenue Bonds, Series A, (GO of Authority Insured),
5.750% 03/01/18................................... 0 3,675,000 3,675,000
0 500,000 500,000 Massachusetts Water Reserve Authority, Revenue Bonds,
(MBIA Insured),
5.900% 08/01/16.................................. 0 507,500 507,500
---------- ----------- -----------
0 8,698,125 8,698,125
---------- ----------- -----------
MICHIGAN - 4.5%
0 1,750,000 1,750,000 Byron Center, Michigan Public Schools, GO,
(MBIA Insured), 5.970% 05/01/15................ 0 1,793,750 1,793,750
0 1,400,000 1,400,000 Ferndale, Michigan School District, GO, (FGIC Insured),
5.375% 05/01/16................................. 0 1,351,000 1,351,000
0 1,010,000 1,010,000 Grand Rapids, Michigan County College, GO,
5.450% 05/01/12................................. 0 998,638 998,638
0 300,000 300,000 Hudsonville, Michigan Public Schools, GO,
(FGIC Insured), 6.000% 05/01/14................ 0 309,375 309,375
0 1,250,000 1,250,000 Kalamazoo, Michigan School District, GO,
5.650% 05/01/14................................. 0 1,260,937 1,260,937
0 1,000,000 1,000,000 Lakeshore, Michigan Public Schools, GO,
5.750% 05/01/15................................. 0 1,002,500 1,002,500
0 1,000,000 1,000,000 Michigan State Environmental Protection Program, GO,
6.250% 11/01/12............................... 0 1,082,500 1,082,500
3,000,000 0 3,000,000 Michigan State Job Development Authority, PCR,
(General Motors Corporation),
5.550% 04/01/09............................... 2,960,940 0 2,960,940
0 1,000,000 1,000,000 Michigan Trunk Line, Revenue Bonds, Series A,
(FGIC Insured), 5.300% 05/01/11.............. 0 992,500 992,500
0 1,700,000 1,700,000 Oxford, Michigan Area Community School, GO,
(FGIC Insured), 5.300% 05/01/11............. 0 1,646,875 1,646,875
---------- ----------- -----------
2,960,940 10,438,075 13,399,015
---------- ----------- -----------
MISSISSIPPI - 0.3%
1,000,000 0 1,000,000 Claiborne County, Mississippi, PCR,
(Systems Energy Resource Inc. Project),
6.200% 02/01/26............................ 961,060 0 961,060
---------- ----------- -----------
MISSOURI - 9.2%
0 1,000,000 1,000,000 Independence, Missouri, GO,
6.250% 03/01/11.............................. 0 1,070,000 1,070,000
0 200,000 200,000 Jackson County, Missouri, Industrial Development
Authority, (BIGI Insured),
8.250% 07/01/07.............................. 0 210,570 210,570
0 300,000 300,000 Jefferson City, Missouri, School District, GO,
6.700% 03/01/11.............................. 0 337,875 337,875
Kansas City, Missouri, GO:
0 400,000 400,000 5.750% 10/01/07............................. 0 410,000 410,000
0 1,000,000 1,000,000 6.000% 03/01/08.............................. 0 1,026,250 1,026,250
0 400,000 400,000 5.750% 10/01/11.............................. 0 404,000 404,000
Kansas City, Missouri:
0 500,000 500,000 Airport Revenue, (MBIA Insured),
7.200% 09/01/09.............................. 0 546,875 546,875
0 400,000 400,000 Revenue Bonds,
7.200% 09/01/08.............................. 0 437,500 437,500
</TABLE>
<PAGE>
NATIONS FUND
NATIONS MUNICIPAL INCOME FUND
PILOT MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
MUNICIPAL MUNICIPAL DESCRIPTIONS MUNICIPAL MUNICIPAL
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES - (CONTINUED)
MISSOURI - (CONTINUED)
$0 $400,000 $400,000 Melville, Missouri, School District No. 9, GO, (MBIA Insured),
6.000% 02/15/13.............................................. $0 $414,500 $414,500
Missouri Environmental & Energy Resource Authority:
0 500,000 500,000 (Springfield Project), Series A,
7.000% 10/01/10.............................................. 0 548,750 548,750
(State Revolving Fund - Multipart Project), Series A:
0 400,000 400,000 6.450% 07/01/08.............................................. 0 434,500 434,500
0 300,000 300,000 6.875% 06/01/14.............................................. 0 327,375 327,375
0 400,000 400,000 6.550% 07/01/14.............................................. 0 431,000 431,000
0 200,000 200,000 6.050% 07/01/15.............................................. 0 204,250 204,250
0 1,000,000 1,000,000 5.750% 01/01/16.............................................. 0 1,011,250 1,011,250
(Union Electric Company Project), Series A:
0 200,000 200,000 7.400% 05/01/20.............................................. 0 218,000 218,000
0 1,100,000 1,100,000 (AMBAC Insured),
7.400% 05/01/20.............................................. 0 1,201,750 1,201,750
Missouri Health & Education Facilities Authority:
0 1,500,000 1,500,000 (Barnes Hospital Project),
7.125% 12/15/09.............................................. 0 1,676,250 1,676,250
0 400,000 400,000 (Children's Mercy Hospital Project), (MBIA Insured),
5.625% 05/15/12.............................................. 0 394,500 394,500
(Deaconess Health Services Project), (FGIC Insured):
0 500,000 500,000 6.750% 04/01/07.............................................. 0 515,390 515,390
0 500,000 500,000 6.750% 04/01/15.............................................. 0 514,295 514,295
0 290,000 290,000 (Jewish Hospital of St. Louis Project),
7.250% 07/01/15.............................................. 0 298,303 298,303
0 500,000 500,000 (Sister's of Mercy Project), Series A,
6.250% 06/01/15.............................................. 0 523,125 523,125
(SSM Health Care Projects):
0 900,000 900,000 (BIGI Insured),
7.750% 06/01/16.............................................. 0 969,750 969,750
0 200,000 200,000 (MBIA Insured),
7.000% 06/01/15.............................................. 0 214,000 214,000
0 400,000 400,000 (St. Louis Universities Project), Series A, (AMBAC Insured),
7.750% 06/01/07.............................................. 0 416,264 416,264
(St. Louis University Project), (AMBAC Insured):
0 700,000 700,000 5.000% 10/01/10.............................................. 0 665,000 665,000
0 200,000 200,000 6.500% 08/01/16.............................................. 0 215,500 215,500
0 1,000,000 1,000,000 5.125% 10/01/16.............................................. 0 935,000 935,000
(St. Luke's Episcopal-Presbyterian Project), (FGIC Insured):
0 200,000 200,000 6.800% 12/01/03.............................................. 0 214,500 214,500
0 900,000 900,000 6.875% 12/01/07.............................................. 0 932,625 932,625
0 1,745,000 1,745,000 Missouri Housing Development Commission, Single Family-Homeowner
Loan, Series A, (GNMA/FHA/VA Insured),
6.100% 09/01/14.............................................. 0 1,762,450 1,762,450
0 300,000 300,000 Missouri State Office Buildings, Revenue Bonds,
6.400% 12/01/10.............................................. 0 315,750 315,750
0 1,625,000 1,625,000 Missouri Water Pollution Control, GO, Series A,
5.600% 04/01/15.............................................. 0 1,637,187 1,637,187
0 400,000 400,000 Ritenour, Missouri School District, GO, (FGIC Insured),
6.00% 02/01/10............................................... 0 410,000 410,000
0 400,000 400,000 Rolla, Missouri School District, No. 31, GO,
6.375% 03/01/14.............................................. 0 421,500 421,500
Springfield, Missouri:
0 800,000 800,000 Motorworks Revenue, Series A,
5.500% 05/01/19.............................................. 0 783,000 783,000
0 400,000 400,000 School District, No. R-12, GO, (MBIA Insured),
5.250% 03/01/11.............................................. 0 384,500 384,500
</TABLE>
<PAGE>
NATIONS FUND
NATIONS MUNICIPAL INCOME FUND
PILOT MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
MUNICIPAL MUNICIPAL DESCRIPTIONS MUNICIPAL MUNICIPAL
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES - (CONTINUED)
MISSOURI - (CONTINUED)
St. Louis County, Missouri, GO:
$0 $200,000 $200,000 Parkway School District, Series A,
6.000% 07/01/10................................... $0 $207,250 $207,250
0 500,000 500,000 Pattonville School District, (FGIC Insured),
6.250% 02/01/10................................... 0 537,500 537,500
0 500,000 500,000 Series B,
5.400% 02/01/10................................... 0 496,875 496,875
0 200,000 200,000 St. Louis, Missouri, Industrial Development Authority,
(Anheuser-Busch Project),
6.620% 05/01/16................................... 0 220,500 220,500
0 500,000 500,000 University City, Missouri, School District, GO,
(MBIA Insured), 6.200% 02/15/14.................. 0 526,250 526,250
University, Missouri:
0 400,000 400,000 Series A, (AMBAC Insured),
6.500% 11/01/11................................... 0 429,500 429,500
0 200,000 200,000 Series B, (AMBAC Insured),
6.500% 11/01/11................................... 0 214,750 214,750
0 800,000 800,000 University Hospital & Clinics Improvement Revenue,
7.375% 11/01/10................................... 0 900,000 900,000
0 500,000 500,000 University Revenue Refunding and Improvement
- System Facilities,5.375% 11/01/13.............. 0 489,375 489,375
---------- -------------- -------------
0 27,455,334 27,455,334
---------- -------------- -------------
NEBRASKA - 0.5%
Nebraska Public Power Supply Systems:
0 800,000 800,000 6.125% 01/01/15................................... 0 818,000 818,000
0 400,000 400,000 5.750% 01/01/20................................... 0 396,000 396,000
0 400,000 400,000 Omaha, Nebraska, Public Power Electric Revenue,
6.200% 02/01/17................................... 0 433,500 433,500
---------- -------------- -------------
0 1,647,500 1,647,500
---------- -------------- -------------
NEVADA - 1.8%
0 1,400,000 1,400,000 Clark County, Nevada, GO, Series A, (MBIA Insured),
6.000% 06/01/12.................................. 0 1,454,250 1,454,250
0 1,000,000 1,000,000 Las Vegas-Clark County, Nevada, Library District, GO,
(FGIC Insured),
6.000% 02/01/12.................................. 0 1,032,500 1,032,500
0 1,000,000 1,000,000 Nevada Municipal Bank, GO, Series A,
5.500% 11/01/17.................................. 0 967,500 967,500
0 800,000 800,000 Nevada Municipal Project No. 42, GO,
5.875% 09/01/12.................................. 0 813,000 813,000
1,000,000 0 1,000,000 Nevada State, GO, (Project No. 40-41-A),
6.375% 12/01/17................................. 1,034,030 0 1,034,030
----------- ------------- -------------
1,034,030 4,267,250 5,301,280
---------- -------------- -------------
NEW JERSEY - 0.6%
1,010,000 0 1,010,000 North Brunswick Township, New Jersey, Unlimited Tax,
GO, 6.400% 05/15/08 ............................ 1,089,164 0 1,089,164
0 500,000 500,000 State of New Jersey, GO, Series B,
6.250% 01/15/05................................ 0 543,750 543,750
---------- -------------- -------------
1,089,164 543,750 1,632,914
---------- -------------- -------------
NEW MEXICO - 0.2%
0 400,000 400,000 New Mexico State University, Revenue Bonds,
5.750% 04/01/16 ............................... 0 406,000 406,000
0 200,000 200,000 Santa Fe, New Mexico, Revenue Bonds,
(AMBAC Insured), 6.250% 06/01/15............. 0 217,000 217,000
---------- -------------- ------------
0 623,000 623,000
---------- -------------- -------------
NEW YORK - 2.4%
0 2,000,000 2,000,000 Municipal Assistance Corporation for New York,
5.200% 07/01/08 ............................... 0 2,002,500 2,002,500
0 2,000,000 2,000,000 New York Energy Authority, Revenue Bonds,
6.100% 08/15/00 ............................... 0 2,022,500 2,022,500
0 3,000,000 3,000,000 New York State, Assistance Corporation Revenue,
Series A, 6.000% 04/01/16..................... 0 3,045,000 3,045,000
---------- -------------- -------------
0 7,070,000 7,070,000
---------- -------------- -------------
</TABLE>
<PAGE>
NATIONS FUND
NATIONS MUNICIPAL INCOME FUND
PILOT MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
MUNICIPAL MUNICIPAL DESCRIPTIONS MUNICIPAL MUNICIPAL
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES - (CONTINUED)
NORTH CAROLINA - 1.1%
$0 $1,000,000 1,000,000 North Carolina Municipal Power Agency, Catawba
Electric No. 1, (MBIA Insured),
6.000% 01/01/10 ................................. $0 $1,051,250 $1,051,250
0 2,000,000 2,000,000 North Carolina Power Revenue, (Easton Municipal
Power Project),Series A, (FGIC Insured),
6.200% 01/01/12................................. 0 2,075,000 2,075,000
----------- ----------- ----------
0 3,126,250 3,126,250
----------- ----------- ----------
OHIO - 1.3%
1,000,000 0 1,000,000 Dayton, Ohio, Special Facilities Revenue,
(Air Freight Corporation Project), Serie F,
6.050% 10/01/09............................... 1,010,410 0 1,010,410
0 700,000 700,000 Lakota, Ohio, School District, GO, (AMBAC Insured),
6.250% 12/01/14............................... 0 738,500 738,500
1,000,000 0 1,000,000 Lucas County, Ohio, Hospital Revenue,
(Flower Hospital Project), 6.125% 12/01/13... 1,088,310 0 1,088,310
1,000,000 0 1,000,000 Ohio State Air Quality Development Authority,
PCR, Refunding, (Ohio Edison Company), Class A,
5.950% 05/15/29................................ 910,790 0 910,790
----------- ----------- ----------
3,009,510 738,500 3,748,010
----------- ----------- ----------
OREGON - 1.9%
0 2,000,000 2,000,000 Chemetka, Oregon, Community College District, GO,
(FGIC Insured), 5.800% 06/01/12 .............. 0 2,035,000 2,035,000
0 2,900,000 2,900,000 Portland, Oregon, Sewer Systems Revenue,
6.250% 06/01/15 ............................... 0 3,034,125 3,034,125
State of Oregon, GO:
0 200,000 200,000 8.750% 10/01/97 ............................... 0 209,326 209,326
0 200,000 200,000 11.000% 12/01/99 .............................. 0 238,750 238,750
----------- ----------- ----------
0 5,517,201 5,517,201
----------- ----------- ----------
PENNSYLVANIA - 2.5%
2,000,000 0 2,000,000 Lehigh County, Pennsylvania, Industrial Development
Authority, PCR, Refunding, (Pennsylvania Power
and Light Company Project), Series A, (MBIA Insured),
6.400% 11/01/21 ............................... 2,105,440 0 2,105,440
0 500,000 500,000 Pennsylvania Higher Education Facilities, Facilities
Revenue, Series J, (AMBAC Insured),
5.625% 06/15/19 ................................ 0 488,750 488,750
1,000,000 0 1,000,000 Philadelphia, Pennsylvania, Gas Works Revenue Refunding,
14th Series, 6.250% 07/01/08................... 1,023,620 0 1,023,620
1,725,000 0 1,725,000 Philadelphia, Pennsylvania, Hospital and Higher Education
Facilities Authority, Hospital Revenue, (Frankford
Hospital Project), Series A, 6.000% 06/01/14.. 1,695,365 0 1,695,365
2,000,000 0 2,000,000 Philadelphia, Pennsylvania, Industrial Development
Authority, Industrial Development Revenue
Refunding, (Ashland Oil Inc. Project),
5.700% 06/01/05............................... 2,032,760 0 2,032,760
----------- ----------- ----------
6,857,185 488,750 7,345,935
----------- ----------- ----------
RHODE ISLAND - 1.0%
0 2,845,000 2,845,000 State of Rhode Island, GO, Series A, (MBIA Insured),
5.600% 08/01/10 ................................ 0 2,862,781 2,862,781
----------- ----------- ----------
SOUTH CAROLINA - 2.4%
0 1,000,000 1,000,000 Piedmont Municipal Power Agency, Series A,
(FGIC Insured), 6.500% 01/01/16 ................ 0 1,105,000 1,105,000
2,000,000 0 2,000,000 South Carolina State Housing Finance and
Development Authority, Homeownership
Mortgage Purchase, Series A, 6.375% 07/01/16...... 2,041,220 0 2,041,220
2,000,000 0 2,000,000 Spartanburg County, South Carolina, Solid
Waste Disposal Facilities Revenue, (BMW Project),
7.550% 11/01/24 ................................. 2,169,560 0 2,169,560
2,000,000 0 2,000,000 York County, South Carolina, Industrial
Development Revenue, Exempt Facility,
(Hoechst Celanese Corporation Project), AMT,
5.700% 01/01/24 ................................ 1,931,460 0 1,931,460
----------- ----------- ----------
6,142,240 1,105,000 7,247,240
----------- ----------- ----------
</TABLE>
<PAGE>
NATIONS FUND
NATIONS MUNICIPAL INCOME FUND
PILOT MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
MUNICIPAL MUNICIPAL DESCRIPTIONS MUNICIPAL MUNICIPAL
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES - (CONTINUED)
TENNESSEE - 2.5%
$2,000,000 $0 $2,000,000 Humphreys County, Tennesse, Industrial Development
Board, Solid Waste Disposal Revenue, (duPont (E.I.)
AMT, de Nemours & Company Project), 6.700% 05/01/24..$2,131,880 $0 $2,131,880
2,500,000 0 2,500,000 Maury County, Tennessee, Industrial Development
Board, PCR, Multi-Modal, Refunding, (Saturn
Corporation Project), General Motors
Guaranty Agreement, 6.500% 09/01/24.................. 2,604,975 0 2,604,975
1,750,000 0 1,750,000 McMinn County, Tennessee, Industrial Development
Board, Solid Waste Recycling Facility Revenue,
(Calhoun Newsprint Project), AMT, 7.400% 12/01/22.... 1,880,760 0 1,880,760
0 1,000,000 1,000,000 Memphis, Tennessee, GO,
5.200% 11/01/10 ................................... 0 966,250 966,250
----------- ------------ ----------
6,617,615 966,250 7,583,865
----------- ------------ -----------
TEXAS - 9.1%
4,000,000 0 4,000,000 Alliance Airport Authority Inc., Texas, Special
Facilities Revenue, (American Airlines Inc.
Project), AMT, 7.000% 12/01/11 ................... 4,355,400 0 4,355,400
Austin, Texas, Utility System Revenue:
0 1,000,000 1,000,000 7.300% 05/15/17.................................. 0 1,118,750 1,118,750
(BIGI Insured),
0 400,000 400,000 8.625% 11/15/12................................... 0 474,500 474,500
Series A:
0 500,000 500,000 9.500% 05/15/15 .................................. 0 580,625 580,625
0 700,000 700,000 8.000% 11/15/16................................... 0 794,500 794,500
0 395,000 395,000 Austin, Texas, Water, Sewer and Electric Revenue,
14.000% 11/15/01.................................. 0 506,475 506,475
0 3,610,000 3,610,000 Bexar, Texas, Metropolitan Water Distribution,
Waterworks Revenue, (MBIA Insured),
6.000% 05/01/15................................... 0 3,691,225 3,691,225
1,000,000 0 1,000,000 Brazos River Authority, Texas, Revenue Refunding,
(Houston Light & Power Company Project), Series B,
(MBIA Insured), 6.375% 04/01/12 ................. 1,057,360 0 1,057,360
0 2,575,000 2,575,000 Carrollton, Texas, Farmers Branch School District, GO,
(PSFG Insured), 5.700% 02/15/17 ................. 0 2,575,000 2,575,000
Cypress-Fairbanks, Texas, School District, GO, (PSFG
0 400,000 400,000 insured): 5.750% 02/01/08........................ 0 408,000 408,000
0 1,275,000 1,275,000 5.750% 02/15/16 .................................. 0 1,282,969 1,282,969
0 1,000,000 1,000,000 Dallas, Texas, School District, GO, (PSFG Insured),
5.700% 08/15/12 ................................. 0 1,006,250 1,006,250
0 1,075,000 1,075,000 Denton, Texas, Utility Systems Revenue,
5.700% 12/01/10 ................................. 0 1,076,344 1,076,344
Harris County, Texas:
0 200,000 200,000 GO,
7.800% 01/01/03 .................................. 0 231,500 231,500
0 700,000 700,000 Toll Road Revenue,
6.750% 08/01/14 .................................. 0 756,875 756,875
0 500,000 500,000 Houston, Texas, Water Systems Revenue,
7.400% 12/01/07................................... 0 530,000 530,000
1,500,000 0 1,500,000 Lubbock, Texas, Health Facilities Development
Corporation, Revenue Refunding, (St. Joseph
Health System Project), 5.500% 07/01/14.......... 1,453,620 0 1,453,620
San Antonio, Texas:
Electric & Gas Revenue, (MBIA Insured):
0 1,000,000 1,000,000 5.375% 02/01/16................................... 0 965,000 965,000
0 2,000,000 2,000,000 5.375% 02/01/18................................... 0 1,915,000 1,915,000
1,000,000 0 1,000,000 Electricity & Gas Refunding, Revenue Bonds,
5.750% 02/01/11................................... 1,012,070 0 1,012,070
0 1,100,000 1,100,000 Water Revenue, (MBIA Insured),
6.500% 05/15/10................................... 0 1,178,375 1,178,375
----------- ----------- ----------
7,878,450 19,091,388 26,969,838
------------ ----------- ----------
</TABLE>
<PAGE>
NATIONS FUND
NATIONS MUNICIPAL INCOME FUND
PILOT MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
MUNICIPAL MUNICIPAL DESCRIPTIONS MUNICIPAL MUNICIPAL
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES - (CONTINUED)
UTAH - 1.5%
Intermountain Power Agency, Utah Power Supply Revenue:
$0 $2,000,000 $2,000,000 5.000% 07/01/16...................................... $0 $1,825,000 $1,825,000
0 500,000 500,000 5.250% 07/01/17 ..................................... 0 466,875 466,875
0 800,000 800,000 5.500% 07/01/20 ..................................... 0 759,000 759,000
0 1,300,000 1,300,000 Salt Lake City, Utah, Water & Sewer Revenue,
(AMBAC Insured),6.100% 02/01/14 ..................... 0 1,339,000 1,339,000
---------- ------------ -----------
0 4,389,875 4,389,875
---------- ------------ -----------
VIRGINIA - 0.7%
2,000,000 0 2,000,000 Covington-Allegheny County, Virginia, Industrial
Development Authority, PCR, (Westvaco Corporation
Project), 6.650% 09/01/18 .......................... 2,132,500 0 2,132,500
---------- ------------ -----------
WASHINGTON - 11.0%
0 2,480,000 2,480,000 Clark County, Sewer Revenue,
5.800% 12/01/11................................... 0 2,504,800 2,504,800
King County, Washington, GO:
Library Systems Revenue,
0 1,035,000 1,035,000 6.150% 12/01/10 .................................. 0 1,090,631 1,090,631
School District No. 415,
0 2,000,000 2,000,000 5.800% 06/01/13 .................................. 0 2,022,500 2,022,500
0 900,000 900,000 King & Snow Counties, Washington, School District ,
GO, 6.300% 06/01/13 ............................ 0 933,750 933,750
2,500,000 0 2,500,000 Public Industrial Corporation, Port Camas -
Washougal, Washington, PCR, (James River
Corporation Project), 6.700% 04/01/23........... 2,534,700 0 2,534,700
Seattle Municipality:
0 300,000 300,000 GO,
5.650% 01/01/20 ............................... 0 295,125 295,125
0 2,000,000 2,000,000 Sewer Revenue, Series X, (FGIC Insured),
5.500% 01/01/16................................ 0 1,937,500 1,937,500
Seattle, Washington:
0 2,000,000 2,000,000 GO, Series A,
5.625% 01/15/10 ............................... 0 2,010,000 2,010,000
Light & Power Revenue:
0 2,000,000 2,000,000 6.625% 07/01/16 .............................. 0 2,132,500 2,132,500
0 500,000 500,000 Series B,
5.750% 08/01/08 .............................. 0 510,000 510,000
0 1,400,000 1,400,000 Water Systems Revenue,
5.500% 06/01/18............................... 0 1,351,000 1,351,000
State of Washington, GO:
0 300,000 300,000 7.750% 12/01/07 .............................. 0 321,750 321,750
0 300,000 300,000 Public Improvements, Series A-AT-6,
6.250% 02/01/11 .............................. 0 321,000 321,000
0 5,000,000 5,000,000 Series A,
6.750% 02/01/15 .............................. 0 5,681,250 5,681,250
0 500,000 500,000 Tacoma, Washington, Electrical Systems Revenue, Series B,
(AMBAC Insured),
5.900% 01/01/05............................... 0 523,125 523,125
Washington State:
0 500,000 500,000 Public Improvements, Fuel Sales Tax Revenue, GO,
8.900% 10/01/03................................. 0 524,400 524,400
Public Power Supply System Revenue, (Systems
Nuclear Project No. 1):(Systems Nuclear
0 200,000 200,000 Project No. 1): 14.375% 07/01/01 .............. 0 250,250 250,250
0 4,000,000 4,000,000 5.750% 07/01/11 ............................... 0 3,975,000 3,975,000
0 300,000 300,000 Series B,
7.250% 07/01/09 ............................... 0 340,500 340,500
Public Power Supply System, Revenue Refunding:
0 400,000 400,000 (Systems Nuclear Project No. 2), Series A,
7.250% 07/01/06................................ 0 452,500 452,500
3,000,000 0 3,000,000 (Systems Nuclear Project No. 3), Series B,
(FSA Insured), 5.400% 07/01/05 ................ 3,022,620 0 3,022,620
---------- ------------ -----------
5,557,320 27,177,581 32,734,901
---------- ------------ -----------
</TABLE>
<PAGE>
NATIONS FUND
NATIONS MUNICIPAL INCOME FUND
PILOT MUNICIPAL BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS PILOT SECURITY NATIONS PILOT
MUNICIPAL MUNICIPAL DESCRIPTIONS MUNICIPAL MUNICIPAL
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES - (CONTINUED)
WEST VIRGINIA - 0.3%
$0 $1,000,000 $1,000,000 West Virginia University Revenue,
(AMBAC Insured), 5.750% 04/01/16 ............. $0 $1,002,500 $1,002,500
------------ ------------- -------------
WISCONSIN - 0.3%
0 1,000,000 1,000,000 Wisconsin State, GO, Series 1,
5.800% 11/01/08............................... 0 1,038,750 1,038,750
------------- ------------- -------------
WYOMING - 0.3%
1,000,000 0 1,000,000 Campbell County, Wyoming,
School District No. 001 Gillette,
(School Board Guarantee), 5.550% 06/01/06..... 1,021,680 0 1,021,680
------------- ------------- -------------
--------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS AND NOTES $99,678,693 $190,127,349 $289,806,042
--------------------------------------------------------------------------------------------------
SHORT-TERM MUNICIPAL NOTE - 0.6%
FLORIDA - 0.6%
0 1,800,000 1,800,000 St. Lucie County, Florida, PCR,
____% 01/01/26................................ 0 1,800,000 1,800,000
----------------------------------------------------
SHARES
MONEY MARKET FUNDS - 2.2%
1,276,000 0 1,276,000 AIM Tax-Exempt Fund........................... 1,276,000 0 1,276,000
0 5,130,078 5,130,078 Federated Tax-Exempt Money Market Fund........ 0 5,130,078 5,130,078
--------------------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUNDS 1,276,000 5,130,078 6,406,078
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $282,560,580*)........$100,954,693 $197,057,427 $298,012,120
--------------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------
* Aggregate cost for Federal tax purposes.
+ Yield to maturity is 6.050%.
ABBREVIATIONS:
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax
BIGI Bond Investors Guarantee Insurance
FGIC Federal Guaranty Insurance Corporation
FHA Federal Housing Authority
FNMA Federal National Mortgage Association
FSA Federal Security Assurance
GNMA Government National Mortgage Association
GO General Obligation Bonds
MBIA Municipal Bond Investors Assurance
NR Not Rated
PCR Pollution Control Revenue
PSFG Permanent School Funding Guaranty
VA Veteran's Administration
<PAGE>
Nations Municipal Income Fund
Pilot Municipal Bond 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 investment company. As of
September 30, 1996 the Trust offers thirty-two 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 Municipal Income Fund and the Pilot Municipal Bond Fund for the period
ended September 30, 1996. These statements have been derived from books and
records utilized in calculating daily net asset value at September 30, 1996.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pilot Municipal Bond Fund in exchange for shares of
Nations Municipal Income 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 Pilot Municipal Bond 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.
For the period ended September 30, 1996, the Nations Municipal Income Fund's
investment advisory fee was computed based on the annual rate of
<PAGE>
Nations Municipal Income Fund
Pilot Municipal Bond Fund
Notes to Pro Forma Financial Statements (Unaudited)
0.60% of the average daily net assets. The administration fee was computed based
on the annual rate of 0.10% 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 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 Municipal Income Fund. Under the Investor A Plan, aggregate payments
may not exceed 0.20%, on an annualized basis, of the average daily net assets of
the Fund's Investor A Shares.
The Trust has also adopted a distribution plan pursuant to Rule 12b-1 under the
1940 Act with respect to Investor C Shares ("Investor C Distribution Plan") and
Investor N Shares ("Investor N Distribution Plan") of the Nations Municipal
Income Fund. Under the Investor C Distribution Plan and Investor N Distribution
Plan, aggregate payments may not exceed 0.25% and 0.50%, on an annualized basis,
of the average daily net assets of the Investor C Shares and Investor N Shares,
respectively, of the Fund.
The Trust has also adopted a shareholder servicing plan with respect to Investor
C Shares ("Investor C Servicing Plan") and Investor N Shares ("Investor N
Servicing Plan") of the Nations Municipal Income 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
Shares and Investor N Shares of the Fund.
2
<PAGE>
Nations Municipal Income Fund
Pilot Municipal Bond Fund
Notes to Pro Forma Financial Statements (Unaudited)
2. Portfolio Valuation
Securities of Nations Municipal Income Fund are valued by an independent pricing
service approved by the Board of Trustees. Valuations are based upon a matrix
system and / or appraisals provided by the pricing service which takes into
consideration such factors as yields, prices, maturities, sell features and
ratings on comparable securities. Certain securities may be valued by one or
more principal market makers. Restricted securities, if any, securities for
which market quotations are not readily available and other assets are valued at
fair market value under the supervision of the Board of Trustees. Short-term
investments that mature in 60 days or less are valued at amortized cost. Pilot
Municipal Bond 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 Municipal Income Fund which would have been issued at
September 30, 1996 in connection with the proposed reorganization. The pro forma
number of shares outstanding of 27,103,648 consists of 17,870,892 additional
shares assumed issued in the reorganization plus 9,232,756 shares of Nations
Municipal Income Fund at September 30, 1996.
3
<PAGE>
NATIONS MUNICIPAL INCOME FUND
PILOT MUNICIPAL BOND FUND
Pro Forma Combining Statement of Assets and Liabilities
September 30, 1996
<TABLE>
<CAPTION>
Nations Municipal Pilot Municipal Adjustments to Pro Forma
Income Fund Bond Fund Proforma Combined (Note 1)
----------------- --------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments at Value
(cost $95,057,120,
$187,503,460 and
$282,560,580) $100,954,693 $197,057,427 - $298,012,120
Cash 778 - - 778
Income Receivable 1,775,386 3,312,720 - 5,088,106
Receivable for Fund
Shares Sold 68,872 - - 68,872
Receivable due
from Advisor - - 61,357 (a) 61,357
Unamortized Organization
Costs - 61,357 (61,357)(a) 0
----------- ------ -------- -----------
TOTAL ASSETS 102,799,729 200,431,505 0 303,231,234
LIABILITIES:
Income Distribution Payable 352,969 799,492 - 1,152,461
Payable for Investments
Purchased 1,077,090 3,884,733 - 4,961,823
Payable for fund
shares redeemed 262,916 - - 262,916
Other Payables - 14,969 - 14,969
Accrued Expenses 80,478 186,202 - 266,680
------ ------- - -------
TOTAL LIABILITIES 1,773,453 4,885,397 0 6,658,850
--------- --------- - ---------
NET ASSETS APPLICABLE TO
SHARES OUTSTANDING $101,026,276 $195,546,108 $0 $296,572,384
============ ============ == ============
NET ASSETS BY CLASS:
Primary A $67,485,274 $192,244,372 $259,729,646
=========== ============ ============
Primary B n/a n/a n/a
=== === ===
Investor A $15,319,733 $1,943,365 $17,263,098
=========== ========== ===========
Investor C $1,908,070 n/a $1,908,070
========== === ==========
Investor N $16,313,199 $1,358,372 $17,671,571
=========== ========== ===========
SHARES OUTSTANDING BY CLASS:
Primary A 6,167,456 17,817,366 (248,219) 23,736,603
========= ========== ========= ==========
Primary B n/a n/a n/a n/a
=== === === ===
Investor A 1,400,069 180,219 (2,615) 1,577,673
========= ======= ======= =========
Investor C 174,377 n/a n/a 174,377
======= === === =======
Investor N 1,490,854 126,632 (2,491) 1,614,995
========= ======= ======= =========
PRIMARY A SHARES:
Net Asset Value per Share $10.94 $10.79 $10.94
====== ====== ======
PRIMARY B SHARES:
Net Asset Value per Share n/a n/a n/a
=== === ===
INVESTOR A SHARES:
Net Asset Value per Share $10.94 $10.78 $10.94
====== ====== ======
INVESTOR C SHARES:
Net Asset Value per Sha $10.94 n/a $10.94
====== === ======
INVESTOR N SHARES:
Net Asset Value per Share $10.94 $10.73 $10.94
====== ====== ======
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
(a) Unamortized Organization Costs of the acquired fund will be borne by the Advisor.
</TABLE>
<PAGE>
NATIONS MUNICIPAL INCOME FUND
PILOT MUNICIPAL BOND FUND
Pro Forma Combining Statement of Operations (Unaudited)
For the Twelve Month Period Ending September 30, 1996
<TABLE>
<CAPTION>
Nations Municipal Pilot Municipal Adjustments to Pro Forma
Income Fund Bond Fund Proforma Combined (Note 1)
----------- --------- -------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $6,628,814 $10,094,192 $16,723,006
---------- ----------- -----------
Total Investment Income 6,628,814 10,094,192 16,723,006
EXPENSES:
Investment Advisory 662,811 932,854 84,805 (a) 1,680,470
Administration 110,469 190,600 (20,991)(a) 280,078
Portfolio Accounting Fee - 21,301 (21,301)(a) 0
Transfer Agent 81,475 36,160 - 117,635
Custodian 19,921 38,652 (9,663)(b) 48,910
Legal and Audit Fees 44,105 27,436 (27,436)(b) 44,105
Trustees' Fees 7,056 9,898 (9,898)(b) 7,056
Amortization of organization costs 0 19,884 (19,884)(c) 0
Other expenses 97,161 84,660 (21,165)(b) 160,656
------ ------ -------- -------
Subtotal 1,022,998 1,361,445 (45,533) 2,338,910
SHAREHOLDER SERVICING AND
DISTRIBUTION FEES
Investor A 47,250 3,061 (612)(a) 49,699
Investor C 11,963 - N/A 11,963
Investor N 128,052 8,044 (2,011)(a) 134,086
Fees waived and/or reimbursed by
investment advisor (355,043) (172,044) (145,101)(d) (672,188)
--------- --------- ------------ ---------
TOTAL EXPENSES 855,220 1,200,506 (193,257) 1,862,469
------- --------- --------- ---------
NET INVESTMENT INCOME 5,773,594 8,893,686 193,257 14,860,537
========= ========= ======= ==========
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS:
Realized Gain/(Loss)
on securities 756,369 1,315,495 2,071,864
Change in unrealized
appreciation/(depreciation)
on securities 572,700 24,570 597,270
-------
Net Realized and Unrealized
gain/(loss) on investments 1,329,069 1,340,065 2,669,134
========= ========= =========
NET INCREASE/(DECREASE) IN
ASSETS RESULTING FROM
OPERATIONS $7,102,663 $10,233,751 $193,257 $17,529,671
========== =========== ======== ===========
LEGEND:
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
(C) ORGANIZATION EXPENSE OF THE ACQUIRED FUND IS NOT AN EXPENSE OF THE COMBINED FUND.
(D) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY EXPENSE REIMBURSEMENT.
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
</TABLE>
<PAGE>
Nations Municipal Income Fund
Pilot Municipal Bond 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 investment company. As of
September 30, 1996 the Trust offers thirty-two 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 Municipal Income Fund and the Pilot Municipal Bond Fund for the period
ended September 30, 1996. These statements have been derived from books and
records utilized in calculating daily net asset value at September 30, 1996.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pilot Municipal Bond Fund in exchange for shares of
Nations Municipal Income 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 Pilot Municipal Bond 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.
For the period ended September 30, 1996, the Nations Municipal Income Fund's
investment advisory fee was computed based on the annual rate of
<PAGE>
Nations Municipal Income Fund
Pilot Municipal Bond Fund
Notes to Pro Forma Financial Statements (Unaudited)
0.60% of the average daily net assets. The administration fee was computed based
on the annual rate of 0.10% 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 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 Municipal Income Fund. Under the Investor A Plan, aggregate payments
may not exceed 0.20%, on an annualized basis, of the average daily net assets of
the Fund's Investor A Shares.
The Trust has also adopted a distribution plan pursuant to Rule 12b-1 under the
1940 Act with respect to Investor C Shares ("Investor C Distribution Plan") and
Investor N Shares ("Investor N Distribution Plan") of the Nations Municipal
Income Fund. Under the Investor C Distribution Plan and Investor N Distribution
Plan, aggregate payments may not exceed 0.25% and 0.50%, on an annualized basis,
of the average daily net assets of the Investor C Shares and Investor N Shares,
respectively, of the Fund.
The Trust has also adopted a shareholder servicing plan with respect to Investor
C Shares ("Investor C Servicing Plan") and Investor N Shares ("Investor N
Servicing Plan") of the Nations Municipal Income 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
Shares and Investor N Shares of the Fund.
2
<PAGE>
Nations Municipal Income Fund
Pilot Municipal Bond Fund
Notes to Pro Forma Financial Statements (Unaudited)
2. Portfolio Valuation
Securities of Nations Municipal Income Fund are valued by an independent pricing
service approved by the Board of Trustees. Valuations are based upon a matrix
system and / or appraisals provided by the pricing service which takes into
consideration such factors as yields, prices, maturities, sell features and
ratings on comparable securities. Certain securities may be valued by one or
more principal market makers. Restricted securities, if any, securities for
which market quotations are not readily available and other assets are valued at
fair market value under the supervision of the Board of Trustees. Short-term
investments that mature in 60 days or less are valued at amortized cost. Pilot
Municipal Bond 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 Municipal Income Fund which would have been issued at
September 30, 1996 in connection with the proposed reorganization. The pro forma
number of shares outstanding of 27,103,648 consists of 17,870,892 additional
shares assumed issued in the reorganization plus 9,232,756 shares of Nations
Municipal Income Fund at September 30, 1996.
3
<PAGE>
NATIONS FUND
NATIONS STRATEGIC FIXED INCOME FUND
PILOT DIVERSIFIED BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS NATIONS
STRATEGIC PILOT SECURITY STRATEGIC PILOT
FIXED DIVERSIFIED DESCRIPTIONS FIXED DIVERSIFIED
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
ASSET-BACKED SECURITIES - 10.1%
$15,000,000 $0 $15,000,000 American Express Company, Master
Trust, Series 1994-3, Class A,
7.850% 08/15/05 $15,988,950 $0 $15,988,950
16,500,000 0 16,500,000 AT&T Universal Card, Master Trust,
Series 95-2A,
5.950% 10/17/02 16,278,240 0 16,278,240
5,000,000 0 5,000,000 Chase Manhattan Credit Card Master Trust,
Series 1996-4, Class A,
6.730% 02/15/03 5,068,750 0 5,068,750
Discover Card Master Trust:
0 3,000,000 3,000,000 Series 1995-2, Class A,
6.550% 02/18/03 0 3,013,110 3,013,110
4,400,000 0 4,400,000 Series 1996-3, Class B,
6.250% 08/18/08 4,158,000 0 4,158,000
7,750,000 0 7,750,000 EQCC Home Equity Loan Trust,
Series 1996-2, Class A2,
6.700% 09/15/08 7,779,527 0 7,779,527
8,500,000 0 8,500,000 Ford Credit Auto Loan Master Trust,
Series 1996-1, Class A,
5.500% 02/15/01 8,205,135 0 8,205,135
Olymic Automobile Receivables Trust:
15,275,000 0 15,275,000 Series 1996-C, Class A4,
6.800% 03/15/02 15,449,135 0 15,449,135
12,920,000 0 12,920,000 Series 1996-D, Class A4,
6.050% 08/15/02 12,841,188 0 12,841,188
7,250,000 0 7,250,000 Prime Credit Card Master Trust,
Series 1992-2, Class B2,
7.950% 11/15/02 7,538,867 0 7,538,867
6,100,000 0 6,100,000 Spiegel Master Trust, Series 1994-B,
Class A,
8.150% 06/15/04 6,425,969 0 6,425,969
10,075,000 0 10,075,000 Standard Credit Card Master Trust,
Series 1995, Class 9B,
6.650% 10/07/07 9,813,655 0 9,813,655
------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES 109,547,416 3,013,110 112,560,526
------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 28.4%
BANKING AND FINANCE - 17.5%
0 1,000,000 1,000,000 ABN Amro Bank N.V., Sub. Notes,
7.550% 06/28/06 0 1,035,370 1,035,370
8,000,000 0 8,000,000 ADVANTA Corporation, MTN,
7.075% 09/15/99 8,061,280 0 8,061,280
8,500,000 0 8,500,000 Ahmanson (H.F.) & Company, MTN,
6.530% 06/01/98 8,559,500 0 8,559,500
0 3,500,000 3,500,000 Association Corporation of America N.A.,
Sr. Notes,
7.250% 05/15/99 0 3,592,680 3,592,680
0 1,500,000 1,500,000 BankAmerica Corporation, Sub. Notes,
6.200% 02/15/26 0 1,415,025 1,415,025
8,875,000 0 8,875,000 Bankers Trust Company, Notes,
7.750% 12/01/26 8,561,712 0 8,561,712
9,140,000 0 9,140,000 Banponce Financial Corporation, MTN,
6.550% 10/10/00 9,111,940 0 9,111,940
7,500,000 0 7,500,000 Beneficial Corporation, MTN,
8.100% 11/23/98 7,753,425 0 7,753,425
</TABLE>
<PAGE>
NATIONS FUND
NATIONS STRATEGIC FIXED INCOME FUND
PILOT DIVERSIFIED BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS NATIONS
STRATEGIC PILOT SECURITY STRATEGIC PILOT
FIXED DIVERSIFIED DESCRIPTIONS FIXED DIVERSIFIED
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$9,875,000 $0 $9,875,000 Bladex,
7.000% due 09/24/99 $9,943,631 $0 $9,943,631
Capital One Bank, Notes:
5,750,000 0 5,750,000 6.610% 06/22/99 5,749,310 0 5,749,310
9,000,000 0 9,000,000 7.200% 07/19/99 9,100,890 0 9,100,890
Dean Witter Discover & Company, Notes,
0 300,000 300,000 6.250% 03/15/00 0 297,840 297,840
5,000,000 0 5,000,000 6.750% 08/15/00 5,036,250 2,518,125 7,554,375
8,075,000 2,500,000 10,575,000 First USA Bank, Notes,
5.850% 02/22/01 7,729,390 0 7,729,390
Ford Motor Credit Corporation:
8,000,000 0 8,000,000 MTN,
6.060% 12/27/00 7,860,880 0 7,860,880
0 2,500,000 2,500,000 Notes,
6.250% 02/26/98 0 2,506,225 2,506,225
0 1,000,000 1,000,000 General Electric Capital Corporation,
Deb.,
8.500% 07/24/08 0 1,124,020 1,124,020
General Motors Acceptance Corporation,
MTN:
0 3,000,000 3,000,000 7.875% 02/28/97 0 3,008,940 3,008,940
7,750,000 0 7,750,000 6.250% 10/18/99 7,724,193 0 7,724,193
Goldman Sachs Group, L.P., Notes:
4,000,000 0 4,000,000 6.200% 02/15/01** 3,948,120 0 3,948,120
7,500,000 0 7,500,000 7.200% 11/01/06** 7,596,525 0 7,596,525
0 1,000,000 1,000,000 Household Finance Company, Notes,
7.250% 07/01/06 0 1,020,900 1,020,900
8,000,000 0 8,000,000 International Lease, MTN,
6.270% 02/10/99 8,010,720 0 8,010,720
Lehman Brothers Holdings:
4,300,000 0 4,300,000 MTN,
9.000% 09/28/01 4,621,425 0 4,621,425
13,425,000 0 13,425,000 Notes,
6.650% 11/08/00 13,388,753 0 13,388,753
5,000,000 0 5,000,000 Liberty Mutual, Notes,
8.500% 05/15/25** 5,362,150 0 5,362,150
0 1,000,000 1,000,000 Merrill Lynch & Company, Inc., Notes,
7.000% 03/15/06 0 995,040 995,040
5,000,000 0 5,000,000 Midland Bank Plc, Sub. Notes,
7.625% 06/15/06 5,177,300 0 5,177,300
0 3,500,000 3,500,000 NationsBank Corporation, Sr. Notes,
7.500% 02/15/97 0 3,506,545 3,506,545
Salomon Inc.:
8,525,000 0 8,525,000 Notes,
6.625% 11/30/00 8,484,762 0 8,484,762
4,175,000 0 4,175,000 Sr. Notes,
7.000% 06/15/03 4,117,552 0 4,117,552
5,375,000 0 5,375,000 Travelers Group, Inc.,
6.450% 10/18/99 5,379,730 0 5,379,730
12,300,000 0 12,300,000 Wells Fargo & Company,
7.950% 12/01/26 12,196,680 0 12,196,680
--------------------------------------------
173,476,118 21,020,710 194,496,828
--------------------------------------------
BROKERAGE - 1.0%
4,825,000 0 4,825,000 Morgan Stanley Group, Inc., Guaranteed Sub. Deb.,
8.030% 02/28/17 4,868,425 0 4,868,425
6,700,000 0 6,700,000 Paine Webber Group, Inc., Sr. Notes,
7.300% 10/15/03 6,725,996 0 6,725,996
-------------------------------------------
11,594,421 0 11,594,421
-------------------------------------------
</TABLE>
<PAGE>
NATIONS FUND
NATIONS STRATEGIC FIXED INCOME FUND
PILOT DIVERSIFIED BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS NATIONS
STRATEGIC PILOT SECURITY STRATEGIC PILOT
FIXED DIVERSIFIED DESCRIPTIONS FIXED DIVERSIFIED
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
ENERGY - 0.1%
$0 $700,000 $700,000 Shell Oil Company, Notes,
6.700% 08/15/02 $0 $702,863 $702,863
---------------------------------------------
ENTERTAINMENT - 1.9%
Time Warner Inc., Notes:
14,550,000 0 14,550,000 7.450% 02/01/98 14,710,196 0 14,710,196
5,500,000 0 5,500,000 9.125% 01/15/13 6,004,350 0 6,004,350
---------------------------------------------
20,714,546 0 20,714,546
---------------------------------------------
HEALTH CARE - 0.2%
0 1,000,000 1,000,000 Columbia/HCA Healthcare, Notes,
7.250% 05/20/08 0 1,015,580 1,015,580
0 1,500,000 1,500,000 SmithKline Beecham Corporation, MTN,
7.500% 05/01/02 0 1,524,585 1,524,585
---------------------------------------------
0 2,540,165 2,540,165
---------------------------------------------
INDUSTRIAL - 4.1%
7,250,000 0 7,250,000 Auburn Hills Trust Certificates, Deb.,
12.000% 05/01/20++ 10,990,565 0 10,990,565
7,500,000 0 7,500,000 Freeport McMoRan C&G,
7.500% 11/15/06 7,360,275 0 7,360,275
PDV America, Inc., Sr. Notes:
3,600,000 0 3,600,000 7.250% 08/01/98 3,593,628 0 3,593,628
Gtd. Sr. Notes:
4,475,000 0 4,475,000 7.750% 08/01/00 4,436,828 0 4,436,828
2,530,000 0 2,530,000 7.875% 08/01/03 2,498,679 0 2,498,679
16,580,000 0 16,580,000 Tennesse Valley Authority, Deb.,
5.980% 04/01/36 16,839,311 0 16,839,311
---------------------------------------------
45,719,286 0 45,719,286
---------------------------------------------
PUBLISHING - 1.3%
News America Holdings Inc., Sr. Notes:
10,000,000 0 10,000,000 7.500% 03/01/00 10,228,600 0 10,228,600
4,250,000 0 4,250,000 Gtd. Sr. Notes,
8.500% 02/15/05 4,551,538 0 4,551,538
---------------------------------------------
14,780,138 0 14,780,138
---------------------------------------------
RETAIL - 1.8%
0 1,000,000 1,000,000 May Department Stores, Notes,
7.150% 08/15/04 0 1,019,960 1,019,960
0 4,000,000 4,000,000 Penny (J.C.) Company, Notes,
6.875% 06/15/99 0 4,045,960 4,045,960
Sears Roebuck Acceptance Corporation:
9,500,000 0 9,500,000 MTN,
6.690% 04/30/01 9,526,220 0 9,526,220
0 1,000,000 1,000,000 Notes,
6.750% 09/15/05 0 984,930 984,930
Wal-Mart Stores, Inc., Notes:
0 550,000 550,000 5.500% 03/01/98 0 547,465 547,465
0 3,500,000 3,500,000 8.625% 04/01/01 0 3,771,950 3,771,950
---------------------------------------------
9,526,220 10,370,265 19,896,485
---------------------------------------------
TELECOMMUNICATIONS - 0.1%
0 1,000,000 1,000,000 Southwestern Bell Telephone Company, Notes,
6.625% 04/01/05 0 989,450 989,450
----------------------------------------------
UTILITIES - 0.4%
0 4,500,000 4,500,000 National Rural Utilities Company, Notes,
6.500% 09/15/02 0 4,440,825 4,440,825
----------------------------------------------
------------------------------------------------------------------------------
TOTAL CORPORATE BONDS AND NOTES 275,810,729 40,064,278 315,875,007
------------------------------------------------------------------------------
</TABLE>
<PAGE>
NATIONS FUND
NATIONS STRATEGIC FIXED INCOME FUND
PILOT DIVERSIFIED BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
===================================================================================================================================
NATIONS NATIONS
STRATEGIC PILOT SECURITY STRATEGIC PILOT
FIXED DIVERSIFIED DESCRIPTIONS FIXED DIVERSIFIED
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
FOREIGN BONDS - 2.1%
$5,675,000 $0 $5,675,000 Corporacion Andina De Fomento,
7.375% 07/21/00 $5,777,150 $0 $5,777,150
12,500,000 0 12,500,000 Hydro-Quebec,
9.000% 03/07/01 13,488,000 0 13,488,000
4,680,000 0 4,680,000 Skandia Capital AB,
Guaranteed Eurobonds,
6.000% 11/02/98 4,647,240 0 4,647,240
----------------------------------------------------------------------------------
TOTAL FOREIGN BONDS 23,912,390 0 23,912,390
----------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES - 24.8%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) CERTIFICATES - 6.5%
10,000,000 0 10,000,000 6.450% 02/20/02 10,065,600 0 10,065,600
7,500,000 0 7,500,000 6.800% 02/20/02 7,563,225 0 7,563,225
12,345,011 0 12,345,011 6.500% 08/01/10 12,206,130 0 12,206,130
33,854,498 0 33,854,498 7.000% 08/01/11 33,882,598 0 33,882,598
9,058,670 0 9,058,670 7.500% 09/12/26 9,067,095 0 9,067,095
-----------------------------------------------
72,784,648 0 72,784,648
-----------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) CERTIFICATES - 14.2%
22,000,000 0 22,000,000 7.180% 10/01/03 22,202,840 0 22,202,840
10,050,000 0 10,050,000 7.530% 10/12/06 10,082,160 0 10,082,160
5,381,012 0 5,381,012 7.000% 09/01/11 5,374,286 0 5,374,286
10,889,070 0 10,889,070 9.000% 08/01/24 11,504,956 0 11,504,956
15,819,524 0 15,819,524 7.500% 09/01/25 15,826,959 0 15,826,959
16,336,767 0 16,336,767 8.000% 09/15/25 16,734,894 0 16,734,894
2,891,647 0 2,891,647 6.500% 03/01/26 2,757,908 0 2,757,908
13,934,429 0 13,934,429 6.500% 04/01/26 13,289,962 0 13,289,962
23,291,820 0 23,291,820 7.000% 04/01/26 22,789,416 0 22,789,416
17,531,503 0 17,531,503 8.500% 06/01/26 18,172,455 0 18,172,455
16,856,325 0 16,856,325 8.500% 07/01/26 17,472,592 0 17,472,592
0 2,000,000 2,000,000 7.270% 07/27/26 0 2,056,559 2,056,559
------------------------------------------------
156,208,428 2,056,559 158,264,987
------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) CERTIFICATES - 4.1%
56,605 0 56,605 9.000% 04/15/20 60,372 0 60,372
5,104,944 0 5,104,944 8.000% 03/15/23 5,235,682 0 5,235,682
774,020 0 774,020 9.500% 01/15/25 837,482 0 837,482
10,611,407 0 10,611,407 9.500% 02/15/25 11,481,436 0 11,481,436
4,726,312 0 4,726,312 8.000% 08/15/25 4,825,234 0 4,825,234
4,318,006 0 4,318,006 7.000% 01/15/26 4,223,529 0 4,223,529
11,638,603 0 11,638,603 8.500% 02/15/26 12,060,669 0 12,060,669
3,015,140 0 3,015,140 8.500% 08/15/26 3,124,439 0 3,124,439
2,944,281 0 2,944,281 9.000% 09/15/26 3,101,594 0 3,101,594
----------------------------------------------
44,950,437 0 44,950,437
----------------------------------------------
--------------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES 273,943,513 2,056,559 276,000,072
--------------------------------------------------------------------------------
U.S. GOVERNEMENT AGENCY SECURITY - 0.2%
0 2,000,000 2,000,000 Federal Farm Credit Bank,
6.040% 01/19/06 0 1,911,880 1,911,880
--------------------------------------------------------
</TABLE>
<PAGE>
NATIONS FUND
NATIONS STRATEGIC FIXED INCOME FUND
PILOT DIVERSIFIED BOND FUND
COMBINED PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
====================================================================================================================================
NATIONS NATIONS
STRATEGIC PILOT SECURITY STRATEGIC PILOT
FIXED DIVERSIFIED DESCRIPTIONS FIXED DIVERSIFIED
INCOME BOND INCOME BOND
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
U.S. TREASURY OBLIGATIONS - 34.3%
U.S. TREASURY BONDS - 13.2%
$21,500,000 $23,500,000 $45,000,000 7.500% 11/15/16 $23,273,750 $25,438,750 $48,712,500
33,235,000 0 33,235,000 8.125% 08/15/19 38,443,589 0 38,443,589
51,265,000 0 51,265,000 6.250% 08/15/23 48,060,938 0 48,060,938
12,500,000 0 12,500,000 6.500% 11/15/26 12,267,625 0 12,267,625
---------------------------------------------
122,045,902 25,438,750 147,484,652
---------------------------------------------
U.S. TREASURY NOTES - 19.9%
0 9,900,000 9,900,000 6.500% 08/15/97 0 9,958,806 9,958,806
0 9,000,000 9,000,000 6.125% 05/15/98 0 9,043,560 9,043,560
0 2,000,000 2,000,000 8.875% 11/15/98 0 2,104,380 2,104,380
0 4,500,000 4,500,000 6.750% 05/31/99 0 4,576,635 4,576,635
0 9,550,000 9,550,000 7.125% 02/29/00 0 9,832,012 9,832,012
4,800,000 0 4,800,000 6.625% 06/30/01 4,877,232 0 4,877,232
36,700,000 0 36,700,000 6.250% 10/31/01 36,734,498 0 36,734,498
0 1,800,000 1,800,000 6.250% 02/15/03 0 1,797,750 1,797,750
26,795,000 0 26,795,000 5.750% 08/15/03 25,991,150 0 25,991,150
0 5,500,000 5,500,000 7.875% 11/15/04 0 6,001,875 6,001,875
0 1,600,000 1,600,000 6.500% 05/15/05 0 1,610,752 1,610,752
0 1,000,000 1,000,000 6.500% 08/15/05 0 1,006,410 1,006,410
66,395,000 0 66,395,000 7.000% 07/15/06 68,978,429 0 68,978,429
39,375,000 0 39,375,000 6.500% 10/15/06 39,590,381 39,590,381
--------------------------------------------
176,171,690 45,932,180 222,103,870
--------------------------------------------
U.S. TREASURY STRIP - 1.2%
60,000,000 0 60,000,000 zero coupon 05/15/19 12,988,200 0 12,988,200
--------------------------------------------
-------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS 311,205,792 71,370,930 382,576,722
-------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 0.1%
0 473,256 473,256 Lehman Brothers
0.000% 01/02/97 0 473,256 473,256
520,000 0 520,000 Smith Barney
6.500% 01/02/97 520,000 0 520,000
-------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 13,000,000 473,256 993,256
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $1,109,110,762) 994,939,840 118,890,013 1,113,829,853
-------------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------------
** Security exempt from registration under Rule 144A of the Securities Act of
1933.
These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
++ Step coupon bond. Effective yield was 12.39% at acquisition date.
ABBREVIATION:
MTN - Medium Term Note
<PAGE>
NATIONS STRATEGIC FIXED INCOME FUND
PILOT DIVERSIFIED BOND FUND
Pro Forma Combining Statement of Assets and Liabilities
December 31, 1996
<TABLE>
<CAPTION>
Nations Strategic Fixed Pilot Diversified Adjustments to Pro Forma
Income Fund Bond Fund Proforma Combined (Note 1)
----------- --------- -------- -----------------
<S> <C> <C> <C> <C>
ASSETS:
Investments at Value (cost $991,165,165,$117,945,598
and $1,109,110,762) $994,939,840 $118,890,013 - $1,113,829,853
Cash 184 - - 184
Income Receivable 14,927,101 1,891,740 - 16,818,841
Receivable for Investments Sold 4,944,367 - - 4,944,367
Prepaid and Other Assets 31,723 - - 31,723
Unamortized Organization Costs 3,362 - - 3,362
----- - - -----
TOTAL ASSET 1,014,846,577 120,781,753 1,135,628,331
LIABILITIES:
Income Distribution Payable 5,305,816 605,623 - 5,911,440
Payable for Investments Purchased 4,912,505 - - 4,912,505
Deferred Income on Paydowns 336,997 - - 336,997
Other Payables 342 - - 342
Accrued Expenses 685,657 53,944 - 739,601
------- ------ - -------
TOTAL LIABILITIES 11,241,318 659,567 11,900,886
---------- ------- ----------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $1,003,605,259 $120,122,186 $1,123,727,445
============== ============ ==============
NET ASSETS BY CLASS:
Primary A $973,566,820 $119,681,075 $1,093,247,895
============ ============ ==============
Primary B $19,696,252 n/a $19,696,252
=========== === ===========
Investor A $6,899,409 $169,195 $7,068,604
========== ======== ==========
Investor C $1,040,741 n/a $1,040,741
========== === ==========
Investor N $2,402,036 $271,916 $2,673,952
========== ======== ==========
SHARES OUTSTANDING BY CLASS:
Primary A 98,984,205 11,971,516 196,664 111,152,385
======== ========== ======= ===========
Primary B 2,002,600 n/a n/a 2,002,600
========= === === =========
Investor A 701,466 16,918 284 718,668
======= ====== === =======
Investor C 105,816 n/a n/a 105,816
======= === === =======
Investor N 244,215 27,206 440 271,861
======= ====== === =======
PRIMARY A SHARES:
Net Asset Value per Share $9.84 $10.00 $9.84
===== ====== =====
PRIMARY B SHARES:
Net Asset Value per Share $9.84 n/a $9.84
===== === =====
INVESTOR A SHARES:
Net Asset Value per Share $9.84 $10.00 $9.84
===== ====== =====
INVESTOR C SHARES:
Net Asset Value per Share $9.84 n/a $9.84
===== === =====
INVESTOR N SHARES:
Net Asset Value per Share $9.84 $9.99 $9.84
===== ===== =====
</TABLE>
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
<PAGE>
NATIONS STRATEGIC FIXED INCOME FUND
PILOT DIVERSIFIED BOND FUND
Pro Forma Statement of Operations (Unaudited)
December 31, 1996
<TABLE>
<CAPTION>
Period From 01/01/96- Period From 10/20/96-
thru 12/31/96 thru 12/31/96
Nations Strategic Fixed Pilot Diversified Adjustments to Pro Forma
Income Fund Bond Fund Proforma Combined (Note 1)
----------- --------- -------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $59,335,894 $2,341,537 - $61,677,431
---------- --------- - ----------
Total Investment Income 59,335,894 2,341,537 61,677,431
EXPENSES:
Investment Advisory 5,474,174 124,054 11,278 (a) 5,609,506
Administration 912,558 27,023 (4,663)(a) 934,917
Portfolio Accounting Fee - 8,280 (8,280)(a) 0
Transfer Agent 614,815 5,949 - 620,764
Custodian 122,097 2,736 (684)(b) 124,149
Legal and Audit Fees 101,215 4,752 (4,752)(b) 101,215
Trustees' Fees 49,463 1,368 (1,368)(b) 49,463
Amortization of
organization costs 4,032 - - 4,032
Other expenses 197,080 12,084 (3,021)(b) 206,143
------- ------ ------- -------
Subtotal 7,475,434 186,246 (11,490) 7,650,189
SHAREHOLDER SERVICING AND DISTRIBUTION FEES
Primary B 26,257 N/A N/A 26,257
Investor A 13,458 194 (38)(a) 13,614
Investor C 2,449 N/A N/A 2,449
Investor N 16,006 30 (11)(a) 16,025
Fees waived and/or reimbursed
by investment advisor (1,055,221) (26,625) 4,069 (c) (1,077,777)
----------- -------- ------ ---------
Total Expenses 6,478,383 159,845 (7,470) 6,630,758
--------- ------- ------- ---------
NET INVESTMENT INCOME 52,857,511 2,181,692 7,470 55,046,673
========== ========= ===== ==========
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Realized Gain/(Loss)
on securities 10,811,402 502,263 11,313,665
Realized Gain/(Loss)
on written options (210,786) - (210,786)
Change in unrealized
appreciation/
depreciation)
on securities 51,955,979 944,416 52,900,395
---------- ------- ----------
Net Realized and
Unrealized gain/
(loss)on investments 62,556,595 1,446,679 64,003,274
========== ========= ==========
NET INCREASE/(DECREASE)
IN ASSETS RESULTING $115,414,106 $3,628,371 $7,470 $119,049,947
============ ========== ====== ============
LEGEND:
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
(C) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY EXPENSE REIMBURSEMENT.
</TABLE>
<PAGE>
Nations Strategic Fixed Income Fund
Pilot Diversified Bond Income 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 investment company. As of
December 31, 1996, the Trust offers thirty-three 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 Strategic Fixed Income Fund and the Pilot Diversified Bond Income Fund
for the twelve month period ended December 31, 1996. These statements have been
derived from books and records utilized in calculating daily net asset value at
December 31, 1996.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pilot Diversified Bond Income Fund in exchange for
shares of Nations Strategic Fixed Income 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
Pilot Diversified Bond Income 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 Strategic Fixed Income Fund
Pilot Diversified Bond Income Fund
Notes to Pro Forma Financial Statements (Unaudited)
For the twelve month period ended December 31, 1996, the Nations Strategic Fixed
Income Fund's investment advisory fee was computed based on the annual rate of
0.60% of the average daily net assets. The administration fee was computed based
on the annual rate of 0.10% 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 that are part of the Nations
Fund Family) on a combined basis.
The Trust has adopted a shareholder administration plan ("Administration Plan")
for the Primary B Shares of the Nations Strategic Fixed Income Fund. Under the
Administration Plan, aggregate payments may not exceed 0.50%, on an annualized
basis, of the average daily net assets of the Fund's Primary B Shares.
The Trust has also 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 Strategic Fixed Income Fund. Under the Investor A Plan,
aggregate payments may not exceed 0.20% on an annualized basis, of the average
daily net assets of the Fund's Investor A Shares.
The Trust has also adopted a distribution plan pursuant to Rule 12b-1 under the
1940 Act with respect to Investor C Shares ("Investor C Distribution Plan") and
Investor N Shares ("Investor N Distribution Plan") of the Nations Strategic
Fixed Income Fund. Under the Investor C Distribution Plan and Investor N
Distribution Plan, aggregate payments may not exceed 0.25% and 0.40%, on an
annualized basis, of the average daily net assets of the Investor C Shares and
Investor N Shares, respectively, of the Fund.
The Trust has also adopted a shareholder servicing plan with respect to Investor
C Shares ("Investor C Servicing Plan") and Investor N Shares ("Investor N
Servicing Plan") of the Nations Strategic Fixed Income Fund. Under the Investor
C Servicing Plan and Investor N Servicing Plan, aggregate
2
<PAGE>
Nations Strategic Fixed Income Fund
Pilot Diversified Bond Income Fund
Notes to Pro Forma Financial Statements (Unaudited)
payments may not exceed 0.25%, on an annualized basis, of the average daily net
assets of the Investor C Shares and Investor N Shares of the Fund.
2. Portfolio Valuation
Securities of Nations Strategic Fixed Income Fund are valued using broker
quotations or prices provided by a pricing service. Certain securities are
valued using broker quotations that are based on a matrix pricing system which
considers such factors as security prices, yields and maturities. The value of
mortgage-backed securities can be significantly affected by changes in interest
rates. Certain securities may be valued by one or more principal market makers.
Restricted securities, if any, securities for which market quotations are not
readily available and other assets 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. Pilot Diversified Bond Income 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 Strategic Fixed Income Fund which would have been issued at
December 31, 1996 in connection with the proposed reorganization. The pro forma
number of shares outstanding of 114,251,330 consists of 12,213,028 shares
assumed issued in the reorganization plus 102,038,302 shares of Nations
Strategic Fixed Income Fund at December 31, 1996.
3
<PAGE>
NATIONS FUND
NATIONS SHORT-INTERMEDIATE GOVERNMENT FUND
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND
COMBINED PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRICIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT
NATIONS INTERMEDIATE SECURITY NATIONS INTERMEDIATE
SHORT- U.S. DESCRIPTIONS SHORT- U.S.
INTERMEDIATE GOVERNMENT INTERMEDIATE GOVERNMENT
GOVERNMENT SECURITIES GOVERNMENT SECURITIES
FUND FUND COMBINED FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATION - 0.1% Drexel
Burnham Lambert, Series S,
Class 2,
<S> <C> <C> <C> <C> <C> <C> <C>
$528,081 $0 $528,081 9.000% 08/01/18 $535,009 $0 $535,009
----------------------------------------
GOVERNMENT GUARANTEED BONDS - 0.4%
2,291,000 0 2,291,000 Second Attransco Tanker Corporation,
Series A,
8.500% 06/15/02 2,350,612 0 2,350,612
454,000 0 454,000 Third Attransco Tanker Corporation,
8.200% 11/01/97 462,576 0 462,576
----------------------------------------
-----------------------------------------------------------------------------------------
TOTAL GOVERNMENT GUARANTEED BONDS 2,813,188 0 2,813,188
-----------------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES - 26.3%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) CERTIFICATES - 8.7%
62,540 0 62,540 6.500% 09/01/03 62,281 62,281
612,412 0 612,412 8.500% 04/01/08 631,226 631,226
6,598,283 0 6,598,283 8.500% 08/01/09 6,851,855 6,851,855
1,552,900 0 1,552,900 7.170% + 11/01/24 1,602,158 1,602,158
2,778,668 0 2,778,668 6.240% + 06/01/25 2,834,686 2,834,686
4,002,691 0 4,002,691 5.493% + 02/01/26 4,063,972 4,063,972
1,938,761 0 1,938,761 5.100% + 05/01/26 1,937,850 1,937,850
3,081,391 0 3,081,391 7.460% + 09/01/30 3,167,577 3,167,577
REMIC:
269,425 0 269,425 Series 77, Class F,
8.500% 06/15/17 268,665 0 268,665
933,039 0 933,039 Series 105, Class D,
6.000% 01/15/19 928,075 0 928,075
30 Year Gold Pass Thru:
20,671,375 0 20,671,375 7.000% 12/01/25 19,992,941 0 19,992,941
18,022,454 0 18,022,454 6.500% 04/01/26 16,946,693 0 16,946,693
----------------------------------------
----------------------------------------
59,287,979 0 59,287,979
----------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) CERTIFICATES - 13.4%
1,700,000 0 1,700,000 8.150% 05/11/98 1,749,674 0 1,749,674
15,000,000 0 15,000,000 7.900% 04/10/02 15,077,400 0 15,077,400
13,739,403 0 13,739,403 7.500% 06/25/03 13,881,056 0 13,881,056
8,000,000 0 8,000,000 7.550% 06/10/04 7,993,760 0 7,993,760
4,000,000 0 4,000,000 8.550% 12/10/04 4,066,880 0 4,066,880
11,006,187 0 11,006,187 8.500% 11/01/09 11,429,154 0 11,429,154
2,968,109 0 2,968,109 10.000% 04/01/14 3,235,209 0 3,235,209
5,312,601 0 5,312,601 9.000% 04/01/16 5,581,525 0 5,581,525
9,978,560 0 9,978,560 7.000% 12/01/25 9,632,404 0 9,632,404
4,010,258 0 4,010,258 6.500% 04/01/26 3,765,873 0 3,765,873
14,724,291 0 14,724,291 8.000% 07/01/26 14,853,128 0 14,853,128
----------------------------------------
91,266,063 0 91,266,063
----------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA)CERTIFICATES - 4.2%
4,641,249 0 4,641,249 8 500% (27 Pools) 02/15/05 - 08/15/08 4,835,710 0 4,835,710
3,114,953 0 3,114,953 9.000% 09/15/09 3,252,198 0 3,252,198
8,235,628 0 8,235,628 8.000% 05/15/22 8,351,421 0 8,351,421
8,645,922 0 8,645,922 7.500% 02/15/24 8,575,717 0 8,575,717
4,040,000 0 4,040,000 7.500% 04/15/26 3,994,550 0 3,994,550
----------------------------------------
29,009,596 0 29,009,596
----------------------------------------
----------------------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES 179,563,638 0 179,563,638
----------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES - 0.2%
Student Loan Marketing Association:
500,000 0 500,000 4.815% + 06/01/98 491,080 0 491,080
1,000,000 0 1,000,000 5.360% + 08/02/99 995,550 0 995,550
----------------------------------------
---------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY SECURITIES 1,486,630 0 1,486,630
---------------------------------------------------------------------------------
</TABLE>
<PAGE>
NATIONS FUND
NATIONS SHORT-INTERMEDIATE GOVERNMENT FUND
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND
COMBINED PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRICIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT
NATIONS INTERMEDIATE NATIONS INTERMEDIATE
SHORT- U.S. SECURITY SHORT- U.S.
INTERMEDIATE GOVERNMENT DESCRIPTIONS INTERMEDIATE GOVERNMENT
GOVERNMENT SECURITIES GOVERNMENT SECURITIES
FUND FUND COMBINED FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
U S TREASURY OBLIGATIONS - 68.7%
U S TREASURY BONDS - 0.9%
<S> <C> <C> <C> <C> <C> <C> <C>
$74,000 $0 $74,000 7.250% 11/15/96 $74,173 $0 $74,173
6,000,000 0 6,000,000 8.875% 11/15/98 6,319,680 0 6,319,680
--------------------------------------------
6,393,853 0 6,393,853
-------------------------------------------
U S TREASURY NOTES - 67.8%
0 36,000,000 36,000,000 6.500% 08/15/97
0 11,000,000 11,000,000 8.125% 02/15/98 0 36,213,840 36,213,840
5,000,000 0 5,000,000 4.875% 04/30/98 0 11,304,260 11,304,260
0 24,000,000 24,000,000 6.125% 05/15/98 4,989,050 0 4,989,050
1,850,000 0 1,850,000 4.750% 09/30/98 0 24,030,000 24,030,000
27,000,000 0 27,000,000 6.375% 05/15/99 1,803,454 0 1,803,454
0 16,000,000 16,000,000 6.750% 06/30/99 27,080,190 0 27,080,190
16,000,000 0 16,000,000 6.000% 08/15/99 0 16,197,440 16,197,440
14,000,000 0 14,000,000 8.500% 02/15/00 15,887,520 0 15,887,520
58,000,000 58,000,000 7.125% 02/29/00 14,896,840 0 14,896,840
16,000,000 0 16,000,000 6.250% 08/31/00 0 59,340,960 59,340,960
8,000,000 25,000,000 33,000,000 5.625% 11/30/00 15,909,920 0 15,909,920
12,000,000 0 12,000,000 5.625% 02/28/01 7,767,520 24,273,500 32,041,020
140,000,000 0 140,000,000 6.375% 03/31/01 11,628,720 0 11,628,720
6,000,000 0 6,000,000 6.500% 08/31/01 139,627,600 0 139,627,600
0 31,000,000 31,000,000 6.250% 02/15/03 6,005,640 0 6,005,640
0 11,000,000 11,000,000 7.875% 11/15/04 0 30,505,860 30,505,860
3,000,000 0 3,000,000 7.500% 02/15/05 0 11,821,590 11,821,590
3,157,020 0 3,157,020
-------------------------------------------
248,753,474 213,687,450 462,440,924
-------------------------------------------
----------------------------------------------------------------------------
TOTAL U S TREASURY OBLIGATIONS 255,147,327 213,687,450 468,834,777
----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 4.3%
0 3,848,578 3,848,578 Lehman Brothers,
5.200% 09/30/96 0 3,848,578 3,848,578
25,814,000 0 25,814,000 Smith Barney,
5.680% 09/30/96 25,814,000 0 25,814,000
------------------------------------------
-----------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 25,814,000 3,848,578 29,662,578
-----------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $685,397,344) 465,359,792 217,536,028 682,895,820
-----------------------------------------------------------------------------------
+ Variable rate security. The interest rate shown reflects the rate in effect at
September 30, 1996.
ABBREVIATIONS:
Gold Payments are on accelerated 45 day payment cycle instead of regular 75 day cycle.
REMIC Real Estate Mortgage Investment Conduit
</TABLE>
<PAGE>
NATIONS SHORT INTERMEDIATE GOVERNMENT FUND
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND
Pro Forma Combining Statement of Assets and Liabilities
September 30, 1996
<TABLE>
<CAPTION>
Pilot Intermediate
Nations Short Intmdt. U.S. Government Adjustments to Pro Forma
Government Fund Securities Fund Proforma Combined (Note 1)
--------------- --------------- -------- -----------------
<S> <C> <C> <C> <C>
ASSETS:
Investments at Value
(cost $465,889,042,$219,508,302
and $685,397,344) $465,359,792 $217,536,028 - $682,895,820
Cash 157 - - 157
Income Receivable 3,668,598 3,302,727 - 6,971,325
Receivable for Fund Shares Sold 4,454,471 - - 4,454,471
Receivable for Investments Sold 1,103,416 13,382,930 - 14,486,346
Receivable due from Advisor - - 61,488 (a) 61,488
Prepaid and Other Assets 1,395 - - 1,395
Unamortized Organization Costs - 61,488 (61,488)(a) 0
----------- ------ -------- -----------
TOTAL ASSETS 474,587,829 234,283,173 0 708,871,002
LIABILITIES:
Income Distribution Payable 2,272,805 1,017,165 - 3,289,970
Other Payables - 328,344 - 328,344
Payable for fund shares redeemed 2,396,959 - - 2,396,959
Accrued Expenses 308,552 152,506 - 461,058
------- ------- - -------
TOTAL LIABILITIES 4,978,316 1,498,016 0 6,476,332
--------- --------- - ---------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $469,609,513 $232,785,157 $0 $702,394,670
============ ============ == ============
NET ASSETS BY CLASS:
Primary A $393,234,020 $231,727,202 $624,961,222
============ ============ ============
Primary B $5,745,850 n/a $5,745,850
========== === ==========
Investor A $47,842,743 $1,057,955 $48,900,698
=========== ========== ===========
Investor C $10,516,945 n/a $10,516,945
=========== === ===========
Investor N $12,269,955 n/a $12,269,955
=========== === ===========
SHARES OUTSTANDING BY CLASS:
Primary A 97,574,983 22,618,061 34,881,485 155,074,529
========== ========== ========== ===========
Primary B 1,426,293 n/a n/a 1,426,293
========= === === =========
Investor A 11,872,151 103,297 159,234 12,134,682
========== ======= ======= ==========
Investor C 2,609,681 n/a n/a 2,609,681
========= === === =========
Investor N 3,044,817 n/a n/a 3,044,817
========= === === =========
PRIMARY A SHARES:
Net Asset Value per Share $4.03 $10.25 $4.03
===== ====== ======
PRIMARY B SHARES:
Net Asset Value per Share $4.03 n/a $4.03
===== === =====
INVESTOR A SHARES:
Net Asset Value per Share $4.03 $10.24 $4.03
===== ====== =====
INVESTOR C SHARES:
Net Asset Value per Share $4.03 n/a $4.03
===== === =====
INVESTOR N SHARES:
Net Asset Value per Share $4.03 n/a $4.03
===== === =====
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
(a) Unamortized Organization Costs of the acquired fund will be borne by the Advisor.
</TABLE>
<PAGE>
NATIONS SHORT INTERMEDIATE GOVERNMENT FUND
PILOT INTERMEDIATE U.S. GOVERNMENT SECURITIES FUND
Pro Forma Statement of Operations (Unaudited)
For the Twelve Month Period Ending September 30, 1996
<TABLE>
<CAPTION>
Nations Short Intmdt. U.S. Government Adjustments to Pro Forma
Government Fund Securities Fund Proforma Combined (Note 1)
--------------- --------------- -------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $30,429,703 $12,950,490 $43,380,193
----------- ----------- -----------
Total Investment Income 30,429,703 12,950,490 43,380,193
EXPENSES:
Investment Advisory 2,954,812 1,122,720 102,065 (a) 4,179,597
Administration 492,468 233,255 (29,124)(a) 696,600
Portfolio Accounting Fee - 11,992 (11,992)(a) 0
Transfer Agent 311,605 35,822 (7,000)(b) 340,427
Custodian 75,822 36,144 (9,036)(b) 102,930
Legal and Audit Fees 96,731 32,441 (32,441)(b) 96,731
Trustees' Fees 29,143 10,305 (10,305)(b) 29,143
Amortization of
organization costs 5,726 19,884 (19,884)(c) 5,726
Other expenses 233,940 84,810 (31,203)(b) 287,547
------- ------ -------- -------
4,200,246 1,587,373 (48,920) 5,738,700
SHAREHOLDER SERVICING AND
DISTRIBUTION FEES
Primary B 3,155 - - 3,155
Investor A 114,481 1,906 (381)(a) 116,006
Investor C 59,368 - N/A 59,368
Investor N 82,384 - N/A 82,384
Fees waived and/or reimbursed by
investment advisor (1,043,673) (394,066) 44,540 (d) (1,393,199)
----------- --------- ------ --- -----------
TOTAL EXPENSES 3,415,961 1,195,213 (4,761) 4,606,414
--------- --------- ------- ---------
NET INVESTMENT INCOME 27,013,742 11,755,277 4,761 38,773,779
========== ========== ===== ==========
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Realized Gain/(Loss) on securities (5,427,605) 3,397,070 (2,030,535)
Change in unrealized appreciation/
(depreciation) on securities 144,437,245 (7,304,234) 37,133,011
----------- ----------- -----------
Net Realized and Unrealized gain/(loss)
on investments 139,009,640 (3,907,164) 135,102,476
=========== =========== ===========
NET INCREASE/(DECREASE) IN ASSETS
RESULTING FROM OPERATIONS $166,023,382 $7,848,113 $4,761 $173,876,255
============ ========== ====== ============
LEGEND:
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
(C) ORGANIZATION EXPENSE OF THE ACQUIRED FUND IS NOT AN EXPENSE OF THE COMBINED FUND.
(D) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY EXPENSE REIMBURSEMENT.
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
</TABLE>
<PAGE>
Nations Short-Intermediate Government Fund
Pilot Intermediate U.S. Government Securities 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 investment company. As of
September 30, 1996, the Trust offers thirty-two 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 Short-Intermediate Government Fund and the Pilot Intermediate U.S.
Government Securities Fund for the twelve month period ended September 30, 1996.
These statements have been derived from books and records utilized in
calculating daily net asset value at September 30, 1996.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pilot Intermediate U.S. Government Securities Fund in
exchange for shares of Nations Short-Intermediate Government 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 Pilot Intermediate U.S. Government Securities 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
<PAGE>
Nations Short-Intermediate Government Fund
Pilot Intermediate U.S. Government Securities Fund
Notes to Pro Forma Financial Statements (Unaudited)
with the historical financial statements of the funds incorporated by reference
in the Statement of Additional Information.
For the twelve month period ended September 30, 1996, the Nations
Short-Intermediate Government Securities Fund's investment advisory fee was
computed based on the annual rate of 0.60% of the average daily net assets. The
administration fee was computed based on the annual rate of 0.10% 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 that are part of the Nations Fund Family) on a combined basis.
The Trust has adopted a shareholder administration plan ("Administration Plan")
for the Primary B Shares of the Nations Short-Intermediate Government Fund.
Under the Administration Plan, aggregate payments may not exceed 0.35%, on an
annualized basis, of the average daily net assets of the Fund's Primary B
Shares.
The Trust has also 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 Short-Intermediate Government Fund. Under the Investor A
Plan, aggregate payments may not exceed 0.20% on an annualized basis, of the
average daily net assets of the Fund's Investor A Shares.
The Trust has also adopted a distribution plan pursuant to Rule 12b-1 under the
1940 Act with respect to Investor C Shares ("Investor C Distribution Plan") and
Investor N Shares ("Investor N Distribution Plan") of the Nations
Short-Intermediate Government Fund. Under the Investor C Distribution Plan and
Investor N Distribution Plan, aggregate payments may not exceed 0.25%
2
<PAGE>
Nations Short-Intermediate Government Fund
Pilot Intermediate U.S. Government Securities Fund
Notes to Pro Forma Financial Statements (Unaudited)
and 0.35%, on an annualized basis, of the average daily net assets of the
Investor C Shares and Investor N Shares, respectively, of the Fund.
The Trust has also adopted a shareholder servicing plan with respect to Investor
C Shares ("Investor C Servicing Plan") and Investor N Shares ("Investor N
Servicing Plan") of the Nations Short-Intermediate Government 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 Shares and Investor N Shares of the Fund.
2. Portfolio Valuation
Securities of Nations Short-Intermediate Government Fund are valued using broker
quotations or prices provided by a pricing service. Certain securities are
valued using broker quotations that are based on a matrix pricing system which
considers such factors as security prices, yields and maturities. The value of
mortgage-backed securities can be significantly affected by changes in interest
rates. Certain securities may be valued by one or more principal market makers.
Restricted securities, if any, securities for which market quotations are not
readily available and other assets 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. Pilot Intermediate U.S. Government
Securities Fund uses similar rules for determining portfolio valuation.
3
<PAGE>
Nations Short-Intermediate Government Fund
Pilot Intermediate U.S. Government Securities Fund
Notes to Pro Forma Financial Statements (Unaudited)
3. Capital Shares
The pro forma net asset value per share assumes the issuance of additional
shares of Nations Short-Intermediate Government Fund which would have been
issued at September 30, 1996 in connection with the proposed reorganization. The
pro forma number of shares outstanding of 174,290,002 consists of 57,762,077
shares assumed issued in the reorganization plus 116,527,925 shares of Nations
Short-Intermediate Government Fund at September 30, 1996.
4
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
COMBINED PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT
MISSOURI MISSOURI
NATIONS SHORT-TERM NATIONS SHORT-TERM
TAX EXEMPT TAX-EXEMPT SECURITY TAX EXEMPT TAX-EXEMPT
FUND FUND COMBINED DESCRIPTIONS FUND FUND COMBINED
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL BONDS AND NOTES - 97.2%
ALABAMA - 3.1%
Alabama (State of), Housing Finance
Authority,
Multi-family Housing,
AmSouth Bank N A , Birmingham LOC:
$6,400,000 $0 $6,400,000 (Ski Lodge III), Series A,
3.900% 03/01/15 + $6,400,000 $0 $6,400,000
6,000,000 0 6,000,000 (Turtle Lake Project), Series F,
4.000% 09/01/23 + 6,000,000 0 6,000,000
1,690,000 0 1,690,000 Birmingham, Alabama, Industrial Development
Board,
(Avondale - Phase III ),
AmSouth Bank N.A., Birmingham LOC,
4.250% 06/01/00 + 1,690,000 0 1,690,000
25,200,000 0 25,200,000 Birmingham, Alabama, Medical Clinic Board
Revenue,
(University of Alabama
Health Services), Morgan Guaranty
Trust Company,
New York LOC,
4.100% 12/01/26 ++ . 25,200,000 0 25,200,000
3,740,000 0 3,740,000 Gadsden, Alabama, Industrial Development
Board,
Industrial Development Revenue,
(Keystone Foods Corporation Project),
AMT,
Bank of Scotland LOC,
4.000% 05/01/04 + 3,740,000 0 3,740,000
4,000,000 0 4,000,000 Mobile, Alabama, Industrial Development
Board,
(IB Chemical Company Project),
Industrial Bank of Japan Ltd. LOC,
4.050% 12/01/97 + 4,000,000 0 4,000,000
0 1,300,000 1,300,000 Northern Alabama Environmental Inprovement
Authority,
VRN 12/01/00 ++ 0 1,300,000 1,300,000
2,000,000 0 2,000,000 Opelika, Alabama, Industrial Development
Board,
(Flowers Baking Company Project),
Trust Company Bank LOC,
3.900% 12/01/99 + 2,000,000 0 2,000,000
---------------------------------------
49,030,000 1,300,000 50,330,000
---------------------------------------
ALASKA - 0.3%
5,000,000 0 5,000,000 Valdez, Alaska, Marine Term Revenue,
(Arco Transportation Project),
Series B, Atlantic Richfield Guaranteed,
3.950% 05/01/31 + 5,000,000 0 5,000,000
---------------------------------------
ARIZONA - 5.0%
Apache (County of), Arizona, Industrial
Development
Authority, PCR,
(Tuscon Electric Power):
5,500,000 0 5,500,000 Series 83A, Barclays Bank Plc LOC,
3.850% 12/15/18 + 5,500,000 0 5,500,000
29,300,000 0 29,300,000 Series A, Chemical Bank LOC,
3.850% 06/15/20 + 29,300,000 0 29,300,000
8,000,000 0 8,000,000 Goodyear, Arizona, Industrial Development
Authority,
(Walle Corporation Project),
AMT, PNC Bank LOC,
4.000% 05/01/15 + 8,000,000 0 8,000,000
4,200,000 0 4,200,000 Maricopa (County of), Arizona, Industrial
Development Authority,
Multi-family Housing Revenue, (Privado
Park
Apartments Project),
Series A, AMT, Bank One, Phoenix LOC,
4.000% 06/01/34 + 4,200,000 0 4,200,000
Maricopa (County of), Arizona, Unified
School District:
10,000,000 0 10,000,000 No. 210 Phoenix, Tax Anticipation Notes,
Series A,
4.400% 07/31/97 10,031,998 0 10,031,998
5,000,000 0 5,000,000 No. 213 Tempe, Tax Anticipation Notes,
Series A,
4.400% 07/31/97 5,015,999 0 5,015,999
3,000,000 0 3,000,000 Mesa, Arizona, Development Corporation
Revenue,
Special Tax, Series B,
Westdeutsche Landesbank LOC,
3.650% 10/10/96 3,000,000 0 3,000,000
Pima (County of), Arizona, Industrial
Development
Authority, (Tuscon Electric),
Series A:
9,000,000 0 9,000,000 Bank of America LOC,
3.800% 07/01/22 + 9,000,000 0 9,000,000
7,700,000 0 7,700,000 Societe Generale LOC,
3.900% 06/15/22 + 7,700,000 0 7,700,000
---------------------------------------
81,747,997 0 81,747,997
---------------------------------------
ARKANSAS - 0.8%
9,100,000 0 9,100,000 Little Rock, Arkansas, Health Facilities
Board,
Hospital Revenue, (Southwest Hospital
Project),
FGIC Insured, Bank of Nova Scotia SBPA,
3.675% 10/01/18 + . 9,100,000 0 9,100,000
3,250,000 0 3,250,000 Lowell, Arkansas, Industrial Development
Revenue,
(Little Rock Newspapers Inc.
Project), AMT,
Bank of New York LOC,
4.050% 06/01/31 + 3,250,000 0 3,250,000
---------------------------------------
12,350,000 0 12,350,000
---------------------------------------
CALIFORNIA - 0.9%
500,000 0 500,000 Los Angeles, California, Regional
Airports,
(Los Angeles International Airport),
Wachovia Bank LOC,
3.900% 12/01/24 ++ 500,000 0 500,000
5,000,000 0 5,000,000 San Diego, California, Tax Anticipation
Notes, Series A,
4.500% 07/02/97 5,027,100 0 5,027,100
10,500,000 0 10,500,000 Student Education Loan Marketing
Corporation,
Student Loan Revenue,
Series A, Dresdner Bank LOC,
3.900% 11/01/02 + 10,500,000 0 10,500,000
---------------------------------------
16,027,100 0 16,027,100
---------------------------------------
COLORADO - 3.1%
0 250,000 250,000 Adams Arapahoe Counties School
District 28,
10.000% 12/01/96 0 252,557 252,557
Colorado (State of), Housing Finance
Authority,
Multi-family Housing Revenue:
2,900,000 0 2,900,000 (Central Park Convention Center),
Chemical Bank LOC,
3.400% 05/01/97 + 2,900,000 0 2,900,000
13,000,000 0 13,000,000 (Grants Plaza), Series A, Bankers
Trust Company LOC,
3.925% 11/01/09 + 13,000,000 0 13,000,000
2,000,000 0 2,000,000 Colorado (State of), Post Secondary
Educational Authority,
Economic Development
Revenue, Bank One LOC,
3.950% 06/01/11 + 2,000,000 0 2,000,000
Denver (City & County of), Colorado,
Airport
Revenue, AMT:
3,500,000 0 3,500,000 Series F, Bank of Montreal LOC,
3.950% 11/15/25 + 3,500,000 0 3,500,000
5,000,000 0 5,000,000 Series G, Credit Local de France LOC,
3.950% 11/15/25 + 5,000,000 0 5,000,000
2,205,000 0 2,205,000 El Paso (County of), Colorado, Multi-
family Housing Revenue,
(Briarglen
Apartments Project), General
Electric Capital
Corporation Guarantee,
3.900% 12/01/24 + 2,205,000 0 2,205,000
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
COLORADO (CONTINUED)
$21,000,000 $0 $21,000,000 Moffat (County of), Colorado,
PCR, CFC Guarantee,
3.950% 07/01/20 + $21,000,000 $0 $21,000,000
2,000,000 0 2,000,000 University of Colorado, University
Revenues, Morgan
Guaranty Trust Company SBPA,
Series A,
3.850% 06/01/20 + 2,000,000 0 2,000,000
---------------------------------------
51,605,000 252,557 51,857,557
---------------------------------------
CONNECTICUT - 0.1%
2,100,000 0 2,100,000 Connecticut (State of), Housing Finance
Authority, AMT,
3.650% 04/10/97 2,100,000 0 2,100,000
---------------------------------------
DELAWARE - 1.5%
24,000,000 0 24,000,000 Delaware (State of), Economic Development
Authority Revenue, Hospital
Billing, Series C, MBIA Insured,
Morgan Stanley Group, Inc. SBPA,
3.900% 12/01/15 + 24,000,000 0 24,000,000
---------------------------------------
DISTRICT OF COLUMBIA - 0.2%
2,900,000 0 2,900,000 District of Columbia, Hospital Revenue,
(Columbia Women's Hospital),
Series A, Mitsubishi Bank Ltd. LOC,
4.000% 07/01/20 + 2,900,000 0 2,900,000
---------------------------------------
2,900,000 0 2,900,000
---------------------------------------
FLORIDA - 6.1%
10,810,000 0 10,810,000 Broward (County of), Florida, Housing
Finance Authority, Multi-family
Housing Revenue, (Fishermans Project),
Continental Casualty Surety Bond,
3.600% 11/01/07 + 10,810,000 0 10,810,000
Dade (County of), Florida, Industrial
Development Authority:
2,200,000 0 2,200,000 (Dolphins Stadium Project), Series C,
Societe Generale LOC,
3.850% 01/01/16 + 2,200,000 0 2,200,000
3,000,000 0 3,000,000 (Phase II Furniture Corporation Project),
AMT, Sun Bank N.A. LOC,
4.000% 11/01/14 + 3,000,000 0 3,000,000
14,998,500 0 14,998,500 Florida (State of), Board of Education,
Capital Outlay, BTP-179,
Bankers Trust Company LOC,
3.800% 06/01/01 + 14,998,500 0 14,998,500
Florida (State of), Housing Finance Agency,
Multi-family Housing Revenue:
2,400,000 0 2,400,000 (Clear Lake Project), Series D,
Continental Casualty Surety Bond,
3.600% 01/01/34 + 2,400,000 0 2,400,000
4,800,000 0 4,800,000 (Lake RMK Project), Southtrust Bank LOC,
4.100% 06/01/07 + . 4,800,000 0 4,800,000
5,000,000 0 5,000,000 (Lakeside Project), Series B, Bankers
Trust Company LOC,
3.925% 08/01/06 + 5,000,000 0 5,000,000
7,000,000 0 7,000,000 (Woodlands Project), Citibank LOC,
3.800% 12/01/07 + 7,000,000 0 7,000,000
6,000,000 0 6,000,000 Jacksonville, Florida, Health Facilities
Authority, Hospital Revenue,
(Baptist Health Properties Project),
Barnett Bank, Florida LOC,
4.100% 06/01/20 ++ 6,000,000 0 6,000,000
2,500,000 0 2,500,000 Key West, Florida, Community Redevelopment
Agency Revenue, (Pier House Joint
Venture), PNC Bank, Ohio LOC,
3.850% 01/01/98 + 2,500,000 0 2,500,000
10,385,000 0 10,385,000 Orange (County of), Florida, Health
Facilities Authority Revenue,
(SHCC Services Inc. Project), Sun
Bank N.A. LOC,
3.800% 12/01/23 + 10,385,000 0 10,385,000
5,000,000 0 5,000,000 Orange (County of), Florida, Housing
Finance Agency, Series B, AMT,
3.650% 04/01/97 5,000,000 0 5,000,000
0 Putnam (County of), Development Authority,
PCR, Florida Power & Light Company,
VRN 09/01/24 ++ 0 0 0
3,350,000 0 3,350,000 St. Lucie (County of), Florida, Industrial
Development Authority,
(Florida Convalescent Centers Project),
Series A, Toronto Dominion Bank LOC,
3.650% 01/01/11 +++ 3,350,000 0 3,350,000
St. Lucie (County of), Florida, PCR,
(Florida Power and Light Company):
4,500,000 0 4,500,000 3.650% 10/25/96 4,500,000 0 4,500,000
8,025,000 0 8,025,000 3.650% 11/22/96 8,025,000 0 8,025,000
5,000,000 0 5,000,000 3.650% 11/22/96 5,000,000 0 5,000,000
0 2,000,000 2,000,000 VRN 01/01/26 0 2,000,000 2,000,000
2,000,000 0 2,000,000 University of Northern Florida, Capital
Improvement, First Union National Bank of
North Carolina LOC,
3.800% 11/01/24 + 2,000,000 0 2,000,000
0 2,100,000 2,100,000 Volusia County Health Facility Revenue,
Robobank Nederland LOC,
VRN 09/01/20 ++ 0 2,100,000 2,100,000
---------------------------------------
96,968,500 4,100,000 101,068,500
---------------------------------------
GEORGIA - 4.3%
10,000,000 0 10,000,000 Albany-Dougherty, Georgia, Payroll
Development Authority, PCR,
(Philip Morris Companies Inc. Project),
3.900% 10/01/05 + 10,000,000 0 10,000,000
3,800,000 0 3,800,000 Cobb (County of), Georgia, Residential
Care
Facilities for the Elderly Authority,
(North
Georgia Presbyterian Homes, Inc.
Project),
Trust Company Bank LOC,
3.900% 08/01/18 + 3,800,000 0 3,800,000
3,000,000 0 3,000,000 Columbia (County of), Georgia, Residential
Care Facilities for the Elderly Authority,
(Augusta Residential Center on Aging),
Trust Company Bank LOC,
3.900% 01/01/21 + 3,000,000 0 3,000,000
2,250,000 0 2,250,000 Columbus, Georgia, Housing Authority,
Multi-family Housing Revenue,
(Quail Ridge
Project), Colombus Bank &
Trust Company LOC,
4.150% 02/01/05 + 2,250,000 0 2,250,000
3,755,000 0 3,755,000 Columbus, Georgia, Industrial
Development Revenue, (Parisian Inc.
Project),
Columbus Bank & Trust Company LOC,
4.200% 04/01/07 + 3,755,000 0 3,755,000
Dekalb (County of), Georgia, Hospital
Authority,
Revenue Anticipation Certificates:
3,960,000 0 3,960,000 (Dekalb Medical Center Project),
Trust Company Bank LOC,
3.900% 09/01/09 + 3,960,000 0 3,960,000
2,000,000 0 2,000,000 (Egleston Childrens Health), Series A,
SunTrust Bank, Atlanta LOC,
3.800% 12/01/17 + 2,000,000 0 2,000,000
Dekalb (County of), Georgia, Housing
Authority,
Multi-family Housing Revenue:
5,430,000 0 5,430,000 (Haystack Apartment Projects), AMT,
General
Electric Capital Corporation LOC,
4.150% 12/01/20 + 5,430,000 0 5,430,000
6,625,000 0 6,625,000 (Stone Mill Run Apartments Project),
Series A, AMT, First Tennessee Bank
LOC,
4.000% 08/01/27 + 6,625,000 0 6,625,000
5,000,000 0 5,000,000 (Terrace Club Project), Series B,
Southtrust Bank LOC,
4.000% 11/01/15 + 5,000,000 0 5,000,000
2,900,000 0 2,900,000 Greene (County of), Georgia, Industrial
Development Authority Revenue,
(Chipman-Union Inc. Project), Series A,
AMT, Trust Company Bank LOC,
4.000% 03/01/05 + 2,900,000 0 2,900,000
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
GEORGIA (CONTINUED)
$3,700,000 $0 $3,700,000 Gwinnett (County of), Georgia,
Industrial Development Revenue,
(United Stationers Company Project),
PNC Bank LOC,
3.850% 12/31/02 + . $3,700,000 $0 $3,700,000
3,000,000 0 3,000,000 Henry (County of), Georgia, Development
Authority Revenue, (Georgia-Pacific
Corporation Project), Trust Company Bank LOC,
3.900% 05/01/04 + 3,000,000 0 3,000,000
0 1,000,000 1,000,000 Monroe (County of), Development Authority,
PCR,
VRN 07/01/25 ++** 0 1,000,000 1,000,000
5,000,000 0 5,000,000 Smyrna, Georgia, Multi-family Housing
Authority Revenue, (Post VY Project),
FNMA Collateralized,
3.850% 06/01/25 + 5,000,000 0 5,000,000
4,000,000 0 4,000,000 Tallapoosa, Georgia, Development
Authority
Revenue, (U.S. Canada
Company Project), Harris Trust &
Savings Bank LOC,
3.850% 02/01/15 + 4,000,000 0 4,000,000
5,000,000 0 5,000,000 Thomaston-Upson (County of), Georgia,
Industrial Development Revenue,
(Quad/Thomaston Project), First Union
National Bank, Charlotte LOC,
3.950% 04/01/00 + 5,000,000 0 5,000,000
---------------------------------------
69,420,000 1,000,000 70,420,000
---------------------------------------
IDAHO - 1.8%
20,000,000 0 20,000,000 Idaho Health Facilities Authority,
Holy Cross Health Sytems
Corporation Revenue, Morgan
Guaranty Trust Company LOC,
3.850% 12/01/23 + 20,000,000 0 20,000,000
9,000,000 0 9,000,000 Idaho (State of), Tax Anticipation Notes,
4.500% 06/30/97 9,038,681 0 9,038,681
--------------------------------------
29,038,681 0 29,038,681
--------------------------------------
ILLINOIS - 9.2%
5,775,000 0 5,775,000 Chicago, Illinois, Industrial Development
Revenue, (Eli's Chicago's Finest Inc.),
First Bank LOC,
4.050% 11/01/26 + 5,775,000 0 5,775,000
Chicago, Illinois, O'Hare International
Airport
American Airlines Inc., AMT,
Royal Bank of Canada LOC:
3,500,000 0 3,500,000 Series C,
4.000% 12/01/17++ 3,500,000 0 3,500,000
3,000,000 0 3,000,000 Series D,
4.000% 12/01/17++ 3,000,000 0 3,000,000
Illinois (State of), Development
Finance Authority:
26,100,000 0 26,100,000 (Chicago Symphony Orchestra),
Northern Trust Company LOC,
3.900% 12/01/28 + 26,100,000 0 26,100,000
2,025,000 0 2,025,000 (L. Karp & Sons Inc.), American
National Bank & Trust Company,
Chicago LOC,
4.150% 09/01/05 + 2,025,000 0 2,025,000
2,000,000 0 2,000,000 (Residential Rental - River Oak),
AMT, Swiss Bank LOC,
3.900% 12/15/19 + 2,000,000 0 2,000,000
9,000,000 0 9,000,000 (Roosevelt University Project),
American
National Bank & Trust Company LOC,
3.850% 04/01/25 + 9,000,000 0 9,000,000
2,200,000 0 2,200,000 Illinois (State of), Development Finance
Authority, Economic Development Revenue,
(Addison 450 LP Project), American National
Bank & Trust Company LOC,
4.000% 12/01/09 + 2,200,000 0 2,200,000
Illinois (State of), Development Finance
Authority, Industrial Development Revenue:
2,000,000 0 2,000,000 (MTI Project), AMT, Industrial Bank
of Japan Ltd., NY LOC,
4.125% 01/01/09 + 2,000,000 0 2,000,000
3,200,000 0 3,200,000 (Randolph Pickle Corporation), AMT,
American National Bank & Trust Company
LOC,
4.050% 06/01/12 + 3,200,000 0 3,200,000
2,515,000 0 2,515,000 (Xavier University), American National
Bank & Trust Company LOC,
3.850% 10/01/12 + 2,515,000 0 2,515,000
Illinois (State of), Development Finance
Authority, PCR:
2,500,000 0 2,500,000 (Diamond Star Meters Project),
Mitsubishi Bank Ltd. LOC,
4.100% 12/01/08 ++ 2,500,000 0 2,500,000
7,100,000 0 7,100,000 (Edison Company Project), Series C,
ABN-AMRO Bank LOC,
3.850% 03/01/09 + 7,100,000 0 7,100,000
(Illinois Power Company Project), AMT:
6,500,000 0 6,500,000 Canadian Imperial Bank of Canada LOC,
3.850% 02/13/97 # 6,500,000 0 6,500,000
Illinois (State of), Development Finance
Authority, PCR (Continued):
9,300,000 0 9,300,000 Series B, AMT, Mitsubishi Bank Ltd. LOC,
4.000% 03/01/17 + 9,300,000 0 9,300,000
Illinois (State of), Educational Facilities
Revenue:
3,700,000 0 3,700,000 (Illinois Institute of Technology),
Series A, NBD Bank N.A.; Northern
Trust Company;
and Harris Trust & Savings Bank LOC,
3.850% 09/01/25 + 3,700,000 0 3,700,000
12,930,000 0 12,930,000 (University Pooled Financing Program),
FGIC Insured,
First National Bank of Chicago SBPA,
3.900% 12/02/05 + 12,930,000 0 12,930,000
Illinois (State of), Health Facilities
Authority Revenue:
(Evanston Hospital Corporation Project):
5,000,000 0 5,000,000 3.750% 02/28/97 5,000,000 0 5,000,000
7,000,000 0 7,000,000 Series B,
3.150% 01/31/97 . 7,000,000 0 7,000,000
5,000,000 0 5,000,000 Series 96,
3.950% 08/15/97 5,000,000 0 5,000,000
6,700,000 0 6,700,000 (The Streeterville Corporation Project),
First National Bank of Chicago LOC,
3.850% 08/15/24 + 6,700,000 0 6,700,000
4,500,000 0 4,500,000 Kane (County of), Illinois, Revenue Bonds,
(Glenwood School For Boys),
Harris Trust & Savings Bank, Illinois
LOC,
3.850% 02/01/28 + 4,500,000 0 4,500,000
3,200,000 0 3,200,000 Kane (County of), Illinois, Unified School
District No. 304,
Tax Anticipation Warrants,
4.150% 12/03/96 3,202,133 0 3,202,133
4,600,000 0 4,600,000 Orland Park, Illinois,
Industrial Development Revenue,
(Panduit Corporation Project), AMT,
Wachovia Bank LOC,
4.000% 04/01/31 + 4,600,000 0 4,600,000
7,195,000 0 7,195,000 Richton Park, Illinois,
Industrial Development Revenue,
(Sinter Metals Inc. Project),
AMT, Mellon Bank LOC,
4.050% 04/01/16 + 7,195,000 0 7,195,000
1,900,000 0 1,900,000 Southwestern Illinois Development
Authority, Industrial Development
Revenue,
(Robinson Steel Company Inc. Project),
AMT,
American National Bank & Trust
Company LOC,
4.000% 12/01/06 + 1,900,000 0 1,900,000
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
ILLINOIS (Continued)
$3,000,000 $0 $3,000,000 Winnebago & Boone (Counties of), Illinois,
School District No. 205,
Tax Anticipation Warrants, FSA Insured,
4.350% 10/30/96 $3,002,803 0 $3,002,803
--------------------------------------
151,444,936 0 151,444,936
--------------------------------------
INDIANA - 4.7%
7,000,000 0 7,000,000 Carmel Clay, Indiana, Tax Anticipation
Warrants, General Funding,
3.750% 12/31/96 7,003,347 0 7,003,347
30,000,000 0 30,000,000 Indiana (State of), Bond Bank, Advance
Funding Program, Promissory Notes,
4.250% 01/09/97 30,069,210 0 30,069,210
Indiana (State of), Development Finance
Authority, Economic Development Revenue:
2,400,000 0 2,400,000 (Fischer Enterprises Ltd Project),
PNC Bank LOC,
4.000% 11/01/01 + 2,400,000 0 2,400,000
2,600,000 0 2,600,000 (Walker-Williams Lumber), AMT,
Columbus Bank & Trust Company LOC,
4.200% 01/01/09 + 2,600,000 0 2,600,000
2,500,000 0 2,500,000 Indianapolis, Indiana, Economic Development
Revenue,
(Art Center of Indianapolis Project),
Bank One, Indiana LOC,
3.950% 02/01/98 + 2,500,000 0 2,500,000
3,300,000 0 3,300,000 Indianapolis, Indiana, Multi-family Housing
Revenue, (El Beulah Retirement Village),
National Bank of Detroit LOC,
3.850% 03/01/21 + 3,300,000 0 3,300,000
3,500,000 0 3,500,000 Purdue University, Indiana, University
Revenue,
Student Fee, Series K,
3.800% 07/01/20 + 3,500,000 0 3,500,000
16,255,000 0 16,255,000 Sullivan, Indiana, PCR, National
Rural/CFC Insured,
3.550% 10/25/96 16,255,000 0 16,255,000
9,500,000 0 9,500,000 Vigo (County of), Indiana,
General Funded Warrants,
3.500% 12/27/96 9,503,312 0 9,503,312
-------------------------------------
77,130,869 0 77,130,869
-------------------------------------
IOWA - 0.4%
7,000,000 0 7,000,000 Iowa (State of), Corporation Warrant
Certificates, Series A,
FSA Insured-State Aid Withholding,
4.750% 06/27/97 # 7,039,672 0 7,039,672
-------------------------------------
KANSAS - 1.4%
9,600,000 0 9,600,000 Kansas (State of), Development Finance
Authority,
(Seaboard Projects), Series A,
AMT, Bank of New York LOC,
4.050% 12/02/25 + 9,600,000 0 9,600,000
10,200,000 0 10,200,000 Olathe, Kansas, Educational Facilities
Revenue,
(Kansas Independent College
Association),
Series A, Marine Midland Bank LOC,
3.800% 07/01/24 + 10,200,000 0 10,200,000
3,000,000 0 3,000,000 Wichita, Kansas, Industrial Revenue,
(Brenner Tank Inc. Project), AMT,
Bank One LOC,
4.050% 12/01/05 + 3,000,000 0 3,000,000
---------------------------------------
22,800,000 0 22,800,000
---------------------------------------
KENTUCKY - 2.0%
1,800,000 0 1,800,000 Hopkinsville, Kentucky, Industrial
Building
Revenue, (Brazeway Inc. Project), AMT,
4.000% 06/01/04 + 1,800,000 0 1,800,000
5,000,000 0 5,000,000 Jefferson (County of), Kentucky, Board
of Education Revenue, Anticipation
Notes,
Series N,
3.970% 06/30/97 5,002,515 0 5,002,515
6,200,000 0 6,200,000 Kentucky League of Cities, Revenue
Anticipation Notes, (Madisonville),
Series B,
Bank One, Kentucky LOC,
3.950% 03/01/97 + 6,200,000 0 6,200,000
2,600,000 0 2,600,000 Kentucky (Rural), Economic Development
Authority, Industrial Building Revenue,
(Technos Corporation Project), AMT,
Industrial Bank of Japan, Ltd. LOC,
4.400% 12/01/09 + 2,600,000 0 2,600,000
3,500,000 0 3,500,000 Lebanon, Kentucky, Industrial Development
Revenue, (Wallace
Computer Services Inc.), AMT, Wachovia
Bank, Georgia LOC,
4.000% 06/01/19 + 3,500,000 0 3,500,000
4,525,000 0 4,525,000 Lexington-Fayette, Kentucky, Psychiatric
Hospital Revenue, (Charter Ridge Hospital
Project), Bankers Trust Company LOC,
3.750% 03/01/05 + 4,525,000 0 4,525,000
Lexington-Fayette, Kentucky, Urban County
Airport Corporation Revenue, AMT,
Credit Local de France LOC:
1,100,000 0 1,100,000 Series A,
4.100% 04/01/24 ++ 1,100,000 0 1,100,000
3,100,000 0 3,100,000 Series B,
4.100% 04/01/24 ++ 3,100,000 0 3,100,000
5,630,000 0 5,630,000 Louisville and Jefferson (Counties of),
Kentucky, Visitors and Convention
Commission,
FSA Insured,
3.950% 01/01/24 + 5,630,000 0 5,630,000
--------------------------------------
33,457,515 0 33,457,515
--------------------------------------
LOUISIANA - 2.7%
8,000,000 0 8,000,000 Ascension Parish, Louisiana, PCR,
(Borden Inc. Project),
Credit Suisse LOC,
3.900% 12/01/09 + 8,000,000 0 8,000,000
6,050,000 0 6,050,000 Caddo Parish, Louisiana, Industrial
Development Board, (Frymaster
Corporation Project),
Chemical Bank LOC,
3.850% 01/01/03 + 6,050,000 0 6,050,000
5,100,000 0 5,100,000 Louisiana (State of), Public
Facilities Authority, Hospital Revenue,
(Charter Forest Hospital Project),
Bankers Trust Company LOC,
3.850% 12/01/13 + 5,100,000 0 5,100,000
20,225,000 0 20,225,000 Louisiana (State of), Public Facilities
Authority, PCR, (Ciba-Geigy Corporation
Project),
Swiss Bank LOC,
3.900% 12/01/04 + 20,225,000 0 20,225,000
4,700,000 0 4,700,000 South Louisiana, Port Commission, Marine
Term Facilities Revenue,
(Occidental Petroleum), Credit Suisse LOC,
3.900% 07/01/21 + 4,700,000 0 4,700,000
--------------------------------------
44,075,000 0 44,075,000
--------------------------------------
MAINE - 1.4%
18,150,000 0 18,150,000 Maine (State of), Solid Waste Resources
Recovery Revenue, Series K, AMT,
Midland Bank Plc LOC,
3.950% 07/01/12+ 18,150,000 0 18,150,000
5,000,000 0 5,000,000 Maine (State of), Tax Anticipation Notes,
4.500% 06/27/97 + 5,022,155 0 5,022,155
--------------------------------------
23,172,155 0 23,172,155
--------------------------------------
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
MARYLAND - 1.0%
$6,600,000 $0 $6,600,000 Baltimore (City of), Maryland, Economic
Development Authority Revenue,
(Blue Circle Inc.
Project), Den Danske Bank LOC,
3.800% 12/01/17 + $6,600,000 $0 $6,600,000
3,300,000 0 3,300,000 Baltimore (City of), Maryland, Port
Facilities Authority, (Occidental
Petroleum Company),
National Westminster Bank Plc LOC,
3.500% 10/14/11 +++ 3,300,000 0 3,300,000
4,750,000 0 4,750,000 Maryland (State of), Economic
Development Revenue,
(General Binding Corporation
Project), AMT, Harris Trust &
Savings Bank LOC,
4.000% 03/01/26 + 4,750,000 0 4,750,000
2,300,000 0 2,300,000 Maryland (State of), Industrial
Development Finance Authority,
(Rock-Tennessee Converting Company),
AMT, Trust Company Bank LOC,
4.000% 05/01/06 + 2,300,000 0 2,300,000
---------------------------------------
16,950,000 0 16,950,000
---------------------------------------
MICHIGAN - 1.2%
3,425,000 0 3,425,000 Jackson (County of), Michigan, Economic
Development Corporation, Industrial
Development Revenue, (Jackson
Association LLC), Bank One, Dayton LOC,
3.950% 10/01/14 + 3,425,000 0 3,425,000
8,000,000 0 8,000,000 Michigan (State of), Hospital Financing
Authority Revenue,
(St. Mary Hospital of Livonia),
Series A, Comerica Bank LOC,
3.950% 07/01/17 + 8,000,000 0 8,000,000
3,000,000 0 3,000,000 Michigan (State of), Housing Development
Authority, Limited Obligation Revenue,
(Pine Ridge Project), National
Westminster Bank Plc LOC,
3.900% 10/01/07 + 3,000,000 0 3,000,000
2,600,000 0 2,600,000 Michigan (State of), Strategic Funding Ltd.
Obligation Revenue, (Uni Boring
Company Inc.), National Bank of
Detroit LOC,
3.900% 12/01/98 + 2,600,000 0 2,600,000
0 2,400,000 2,400,000 University of Michigan Revenue, Medical
Services Plan, Series A,
VRN 12/01/27 ++ 0 2,400,000 2,400,000
------------------------------------------
17,025,000 2,400,000 19,425,000
------------------------------------------
MINNESOTA - 1.1%
5,500,000 0 5,500,000 Duluth, Minnesota, Health Care
Facilities Revenue, (Miller-Dwan
Medical Center),
Series A, Citibank LOC,
3.800% 04/01/19 + . 5,500,000 0 5,500,000
6,050,000 0 6,050,000 Minneapolis, Minnesota, Community
Development Agency Revenue,
(Arena Acquisition Project),
Series A, First Bank LOC,
3.850% 10/01/24 + 6,050,000 0 6,050,000
6,000,000 0 6,000,000 Rochester (City of), Minnesota, Health
Care Facilities Revenue, (Mayo
Medical Center),
Series 92,
3.650% 10/24/96 6,000,000 0 6,000,000
-------------------------------------
17,550,000 0 17,550,000
-------------------------------------
MISSISSIPPI - 0.7%
6,200,000 0 6,200,000 Lawrence (County of), Mississippi, PCR,
(Georgia-Pacific Corporation Project),
Bank of Tokyo LOC,
3.925% 12/01/00 + 6,200,000 0 6,200,000
2,900,000 0 2,900,000 Mississippi Business Finance Corporation,
Industrial Development Revenue, AMT:
(Choctaw Maid Farms Inc. Project),
Rabobank Nederland LOC,
4.000% 03/01/10 + 2,900,000 0 2,900,000
3,000,000 0 3,000,000 (Nitek Metal Services Inc.
Project), AMT, Bank of Tokyo LOC,
4.050% 03/01/05 + 3,000,000 0 3,000,000
-------------------------------------
12,100,000 0 12,100,000
-------------------------------------
MISSOURI - 11.4%
Berkeley IDR Bonds:
0 5,000,000 5,000,000 (Flight Safety International, Inc.
Project)
VRN 09/01/04 + 0 5,000,000 5,000,000
0 5,000,000 5,000,000 (Wetterau Project),
VRN 07/01/08 + 0 5,000,000 5,000,000
0 10,800,000 10,800,000 Columbia Water & Electric Revenue Bonds,
Series B
Toronto Dominion Bank LOC,
VRN 12/01/15 + 0 10,800,000 10,800,000
0 4,100,000 4,100,000 Columbia Special Obligation, Toronto
Dominion Bank, LOC,
VRN 06/01/08 + 0 4,100,000 4,100,000
0 1,400,000 1,400,000 Independence IDR, (Resthaven Project,)
VRN 02/01/25 + 0 1,400,000 1,400,000
Kansas City, Missouri, Industrial
Development Revenue,
5,000,000 0 5,000,000 (Owens-Illinois Inc. Project),
3.750% 12/31/08 + 5,000,000 0 5,000,000
0 2,400,000 2,400,000 Kansas City, Missouri, Multi-family
Housing Revenue, Timblane Village
Apartments
Project, Security Pacific National
Bank LOC,
VRN 06/01/08 + 0 2,400,000 2,400,000
Mexico IDR Bonds, Weterau Inc.:
0 810,000 810,000 Project A,
VRN 12/01/98 + 0 810,000 810,000
0 815,000 815,000 Project B,
VRN 12/01/98 + 0 815,000 815,000
0 900,000 900,000 Minneapolis & St. Paul Housing Authority,
VRN 08/15/25 ++ 0 900,000 900,000
Missouri (State of), Health & Educational
Facilities Authority Revenue:
0 2,000,000 2,000,000 4.500% 09/08/97 0 2,010,831 2,010,831
0 1,600,000 1,600,000 VRN 09/01/09 + 0 1,600,000 1,600,000
0 3,050,000 3,050,000 VRN 09/01/10 + 0 3,050,000 3,050,000
0 1,500,000 1,500,000 VRN 11/01/19 + 0 1,500,000 1,500,000
0 4,370,000 4,370,000 (Barnes Jewish, Inc.), Series A
3.900% 05/15/97 0 4,376,968 4,376,968
0 2,000,000 2,000,000 (Branson School District Advanced
Funding Program),
4.500% 09/08/97 0 2,010,831 2,010,831
0 6,625,000 6,625,000 (Drury College), Series A,
VRN 08/15/21 ++ 0 6,625,000 6,625,000
0 2,000,000 2,000,000 (Pattonville School District
Advanced Funding Program),
4.500% 09/08/97 0 2,010,831 2,010,831
0 5,800,000 5,800,000 Series C,
VRN 06/01/19 + 0 5,800,000 5,800,000
0 7,000,000 7,000,000 (Rockers & College Project),
VRN 06/01/14 + 0 7,000,000 7,000,000
(Sisters of Mercy Health):
0 1,300,000 1,300,000 Series A,
3.600% 12/01/96 0 1,300,000 1,300,000
10,000,000 0 10,000,000 Series B, ABN-AMRO Bank LOC.
3.800% 12/01/16 + 10,000,000 0 10,000,000
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
MISSOURI (CONTINUED)
Missouri (State of), Health & Educational
Facilities Authority Revenue (Continued):
$0 $9,500,000 $9,500,000 (St. Frances Medical Center), Series A,
Local de France LOC,
VRN 06/01/26 ++ $0 $9,500,000 $9,500,000
(St. Louis University Project),
0 345,000 345,000 4.00% 10/01/96 0 345,000 345,000
0 2,800,000 2,800,000 VRN 12/01/05 ++** 0 2,800,000 2,800,000
(Washington University Project),
0 7,000,000 7,000,000 VRN 11/01/25 + 0 7,000,000 7,000,000
0 1,400,000 1,400,000 VRN 09/01/30 ++ 0 1,400,000 1,400,000
0 4,300,000 4,300,000 VRN 09/01/30 ++** 0 4,300,000 4,300,000
0 7,900,000 7,900,000 Series C,
VRN 09/01/30 ++ 0 7,900,000 7,900,000
Missouri (State of), Environment
Improvement & Energy Authority:
0 8,000,000 8,000,000 VRN 07/01/17 ** 0 8,000,000 8,000,000
0 2,000,000 2,000,000 PCR,
VRN 06/01/23 + 0 2,000,000 2,000,000
0 2,795,000 2,795,000 Sanwa Bank LOC,
VRN 10/01/02 0 2,795,000 2,795,000
0 600,000 600,000 Missouri Water Pollution Control, Series B,
7.750% 11/01/96 0 602,291 602,291
0 1,505,000 1,505,000 Moberly Hospital Authority, Pre-refunded,
8.750% 03/01/16 ++ 0 1,580,692 1,580,692
9,725,000 0 9,725,000 Platte (County of), Missouri, Industrial
Development Authority, Multi-family
Housing
Revenue, (Wexford Place Project),
Bank One LOC,
3.950% 04/01/28 + 9,725,000 0 9,725,000
St. Charles (County of), Missouri,
Development Authority,
Industrial Revenue:
0 3,070,000 3,070,000 (Casalon Apartments),
VRN 09/01/25 + 0 3,070,000 3,070,000
0 3,175,000 3,175,000 (Westchester Apartment Projects),
VRN 10/01/11 + 0 3,175,000 3,175,000
2,400,000 0 2,400,000 (Venture Stores Inc. Project),
Bank of Nova Scotia LOC,
3.900% 10/01/06 + 2,400,000 0 2,400,000
St. Louis County IDR:
0 8,000,000 8,000,000 VRN 12/01/03 + 0 8,000,000 8,000,000
0 5,500,000 5,500,000 VRN 12/01/05 + 0 5,500,000 5,500,000
0 3,785,000 3,785,000 VRN 07/15/06 0 3,785,000 3,785,000
0 4,000,000 4,000,000 VRN 05/01/09 + 0 4,000,000 4,000,000
0 785,000 785,000 (Rockwell School),
VRN 02/01/97 0 795,687 795,687
0 2,500,000 2,500,000 St. Louis Tax and Revenue Anticipation
Notes,
4.750% 06/30/97 0 2,514,011 2,514,011
0 13,000,000 13,000,000 University of Missouri Capital Projects,
4.750% 06/30/97 0 13,079,172 13,079,172
----------------------------------------
27,125,000 160,651,314 187,776,314
----------------------------------------
NEBRASKA - 0.5%
5,000,000 0 5,000,000 Omaha, Nebraska, Public Power District,
3.550% 10/25/96 5,000,000 0 5,000,000
4,000,000 0 4,000,000 York, Nebraska, Industrial Development
Revenue,
(Sunstrand Corporation
Project), AMT, Union Bank of
Switzerland LOC,
3.650% 08/01/17 + 4,000,000 0 4,000,000
---------------------------------------
9,000,000 0 9,000,000
---------------------------------------
NEW HAMPSHIRE - 0.9%
15,500,000 0 15,500,000 New Hampshire (State of), Housing Finance
Authority, Series 1,
(Multi-family Housing, Manchester),
PNC Bank LOC,
3.850% 12/01/12 + 15,500,000 0 15,500,000
---------------------------------------
NEW JERSEY - 0.3%
5,000,000 0 5,000,000 Jersey City, New Jersey, Anticipation
Notes,
4.500% 09/26/97 5,021,313 0 5,021,313
---------------------------------------
NEW MEXICO - 0.2%
3,100,000 0 3,100,000 Albuquerque, New Mexico, (Charter
Hospital Inc.
Project), Bankers Trust Company LOC,
3.850% 03/01/14 + 3,100,000 0 3,100,000
---------------------------------------
NEW YORK - 0.3%
5,000,000 0 5,000,000 Great Neck North, New York, Water
Authority,
Systems Revenue, Series A, FGIC
Insured,
3.800% 01/01/20 + 5,000,000 0 5,000,000
0 1,600,000 1,600,000 New York City Municipal Water Financing
Authority,
Water & Sewer System
Revenue, Series A, FGIC Insured, 0 1,600,000 1,600,000
---------------------------------------
VRN 06/15/25 ++ 5,000,000 1,600,000 6,600,000
---------------------------------------
NORTH CAROLINA - 2.8%
8,000,000 0 8,000,000 Bladen (County of), North Carolina,
Industrial
Facilities and Pollution Control Financing
Authority, (BCH Energy LP Project), AMT,
Bank of Tokyo LOC,
4.050% 11/01/20 + 8,000,000 0 8,000,000
10,855,000 0 10,855,000 Charlotte (County of), North Carolina,
Housing
Authority, Multi-family Housing
Revenue,
(Merrywood Senior Adult Project),
AMT, Branch
Banking and Trust Company LOC,
3.950% 06/01/11 + 10,855,000 0 10,855,000
3,000,000 0 3,000,000 Iredell, (County of), North Carolina,
Industrial
Facilities and Pollution Control Financing
Authority, (Sullivan Corporation Project),
AMT, Bank One LOC,
4.050% 01/01/11 + 3,000,000 0 3,000,000
Mecklenburg (County of), North Carolina,
Industrial Facilities and Pollution
Control
Finance Authority:
2,000,000 0 2,000,000 (Sterigenics International Project), AMT,
Comerica Bank, California LOC,
3.950% 03/01/16 + 2,000,000 0 2,000,000
2,125,000 0 2,125,000 (Virkler Company Project), AMT,
4.050% 12/01/04 + 2,125,000 0 2,125,000
9,020,000 0 9,020,000 Mecklenburg (County of), North Carolina,
Series B, GO,
4.700% 03/01/97 . 9,074,560 0 9,074,560
4,400,000 0 4,400,000 Randolph (County of), North Carolina,
Industrial Facilities and Pollution
Control Financing
Authority, (Wayne Steel Inc.), AMT,
Bank One, Akron LOC,
4.050% 09/01/05 + 4,400,000 0 4,400,000
3,300,000 0 3,300,000 Stanley (County of), North Carolina,
Industrial Development Authority, PCR,
(General Signal Corporation),
Wachovia Bank LOC,
3.900% 12/01/00 + 3,300,000 0 3,300,000
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
NORTH CAROLINA (CONTINUED)
$3,810,000 $0 $3,810,000 Winston-Salem, North Carolina, (Risk
Acceptance Management Corporation
Project), Certificates of Participation,
Series 1988, National Westminster
Bank Plc SBPA,
3.950% 07/01/09 + $3,810,000 $0 $3,810,000
---------------------------------------
46,564,560 0 46,564,560
---------------------------------------
OHIO - 1.5%
0 700,000 700,000 Columbus, Ohio School District,
4.00% 12/01/96 0 700,553 700,553
2,425,000 0 2,425,000 Defiance (County of), Ohio, Industrial
Development Revenue, Isaac
Property Company, Series A, Key Bank
LOC,
2.850% 07/01/00 + 2,425,000 0 2,425,000
4,200,000 0 4,200,000 Lorain (County of), Ohio, Hospital
Revenue, (Humility of Mary Health Care
Corporation Hospital), Series B, PNC
Bank LOC,
3.850% 12/15/03 + 4,200,000 0 4,200,000
Ohio (State of), Air Quality
Developement Authority:
0 1,600,000 1,600,000 VRN 12/01/15 ++ 0 1,600,000 1,600,000
10,000,000 0 10,000,000 (Duquesne Power), Union Bank
of Switzerland LOC,
3.950% 07/16/97 . 10,000,000 0 10,000,000
0 Ohio, (State of), Highway GO,
4.500% due 05/15/97 0 0 0
3,500,000 0 3,500,000 Ohio (State of), Water Development
Authority, AMT, Union Bank of
Switzerland LOC,
3.800% 05/01/97 3,500,000 0 3,500,000
2,400,000 0 2,400,000 St. Marys, Ohio, Industrial
Development Revenue,
(Setex Inc. Project), AMT,
Industrial Bank of Japan Ltd. LOC,
4.400% 12/01/01 + 2,400,000 0 2,400,000
---------------------------------------
22,525,000 2,300,553 24,825,553
---------------------------------------
OKLAHOMA - 0.4%
5,890,000 0 5,890,000 Oklahoma (State of), Housing Finance
Agency, Single Family Housing
Revenue, PFloats PT41,
AMT, GNMA Collateralized,
Commerzbank SBPA,
4.050% 08/01/18 + 5,890,000 0 5,890,000
--------------------------------------
OREGON - 0.5%
Portland (City of), Oregon, Multi-family
Housing Revenue:
1,000,000 0 1,000,000 (Union Station Project), AMT, U.S.
National Bank LOC,
4.000% 12/01/27 + 1,000,000 0 1,000,000
5,500,000 0 5,500,000 (University Park Apartments Project),
Chase Manhattan Bank LOC,
3.850% 10/01/11 + 5,500,000 0 5,500,000
2,000,000 0 2,000,000 Washington (County of), Oregon, Housing
Authority, Multi-family Housing
Revenue,
(Cedar Mill Project), AMT,
Societe Generale LOC,
3.950% 09/20/25 + 2,000,000 0 2,000,000
--------------------------------------
8,500,000 0 8,500,000
--------------------------------------
PENNSYLVANIA - 4.5%
Allegheny (County of) Hospital
Development Authority,
0 1,590,000 1,590,000 VRN 03/01/18 + 0 1,590,000 1,590,000
Allegheny (County of), Pennsylvania,
Industrial Development Authority,
Duquesne Power:
5,000,000 0 5,000,000 Canadian Imperial Bank of
Commerce LOC,
3.750% 11/07/96 5,000,000 0 5,000,000
9,800,000 0 9,800,000 United Jewish Federation,
Series B, PNC Bank LOC,
3.850% 10/01/25 + . 9,800,000 0 9,800,000
Delaware Valley, Pennsylvania,
Regional Finance Authority:
10,000,000 0 10,000,000 Local Government Revenue,
Series C, Midland Bank LOC,
3.950% 12/01/20 + 10,000,000 0 10,000,000
14,700,000 0 14,700,000 Series 1986, Midland Bank Plc LOC,
3.950% 08/01/16 + 14,700,000 0 14,700,000
10,000,000 0 10,000,000 Philadelphia, Pennsylvania,
School District, Tax and
Revenue Anticipation Notes,
4.500% 06/30/97 10,035,876 0 10,035,876
5,025,000 0 5,025,000 Union (County of), Pennsylvania,
Hospital Authority Revenue,
(Evangelical Community Hospital),
Series B, PNC Bank LOC,
3.850% 10/01/23 + 5,025,000 0 5,025,000
Venango (City of), Pennsylvania,
Industrial Development Authority
Revenue, AMT,
National Westminster Bank Plc LOC:
10,300,000 0 10,300,000 3.700% 10/11/96 10,300,000 0 10,300,000
7,150,000 0 7,150,000 3.700% 10/22/96 7,150,000 0 7,150,000
---------------------------------------
72,010,876 1,590,000 73,600,876
---------------------------------------
RHODE ISLAND - 0.2%
4,000,000 0 4,000,000 Rhode Island (State of), Industrial
Facilities Corporation, Industrial
Development
Revenue, (Handy & Harman Electric
Project), Bank of Nova Scotia LOC,
3.950% 04/01/04 + 4,000,000 0 4,000,000
---------------------------------------
SOUTH CAROLINA - 2.8%
6,100,000 0 6,100,000 Charleston, South Carolina, Hospital
Facilities Revenue, (Brown Schools
Charleston),
Bankers Trust Company LOC,
3.650% 06/01/11 + 6,100,000 0 6,100,000
5,000,000 0 5,000,000 Charleston, South Carolina, Tax
Anticipation Notes, GO,
3.600% 03/14/97 5,002,151 0 5,002,151
8,700,000 0 8,700,000 Greenville (County of),
South Carolina, School
District, GO,
3.500% 03/01/97 8,706,966 0 8,706,966
5,250,000 0 5,250,000 Kershaw (County of), South Carolina,
Industrial Development Revenue,
(Deroyal Textiles Inc. Project),
AMT, Third National Bank,
Nashville LOC,
4.000% 12/01/07 + 5,250,000 0 5,250,000
2,370,000 0 2,370,000 South Carolina (State of),
Housing Authority, Rental Housing
Revenue,
(Hampton Pointe Apartments Project),
Bank of New York LOC,
3.950% 12/01/07 + 2,370,000 0 2,370,000
South Carolina (State of), Jobs,
Economic Development Authority,
Health Facilities Revenue:
5,960,000 0 5,960,000 (Martha Franks Baptist Center Project),
Wachovia Bank, Columbia LOC,
3.900% 04/01/19 + 5,960,000 0 5,960,000
3,400,000 0 3,400,000 (Specialty Equipment Companies Project),
AMT, Barclays Bank Plc LOC,
4.050% 11/01/10 + 3,400,000 0 3,400,000
10,000,000 0 10,000,000 University of South Carolina, Athletic
Facilities Revenue, Bond
Anticipation Notes,
3.200% 02/28/97 10,000,000 0 10,000,000
---------------------------------------
46,789,117 0 46,789,117
---------------------------------------
TENNESSEE - 1.7%
2,600,000 0 2,600,000 Chattanooga, Tennessee, Industrial
Development Board, (Warehouse
Row Limited Project),
ABN-AMRO Bank, Nevada LOC,
3.850% 12/15/12 + 2,600,000 0 2,600,000
6,969,000 0 6,969,000 Cumberland (County of), Tennessee,
Industrial Development Board,
Industrial Development Revenue,
(Crossville Ceramics Company Project),
American National Bank & Trust Company LOC,
3.850% 01/01/00 + 6,969,000 0 6,969,000
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
TENNESSEE (CONTINUED)
$2,300,000 $0 $2,300,000 Jackson (County of), Tennessee,
Industrial Development Board,
(Essette Project), Series A,
Bank of America, Illinois LOC,
3.950% 08/01/00 + $2,300,000 $0 $2,300,000
13,150,000 0 13,150,000 Metropolitan Government of Nashvill
& Davidson (Counties of), Tennessee,
Health and Educational Facilities Board,
(Vanderbilt University),
3.500% 01/15/97 # 13,155,445 0 13,155,445
3,245,000 0 3,245,000 Shelby (County of), Tennessee, Health
Educational & Housing Facilities Board,
Multi-family Housing Revenue,
(Flag Manor), AMT,
Federal Home Loan Bank, Indianapolis LOC,
4.000% 01/01/23 + 3,245,000 0 3,245,000
----------------------------------------
28,269,445 0 28,269,445
----------------------------------------
TEXAS - 6.8%
3,800,000 0 3,800,000 Bexar (County of), Texas, (Army Retirement),
Series 85-B,
Rabobank Nederland LOC,
3.625% 07/01/11 + 3,800,000 0 3,800,000
1,000,000 0 1,000,000 Brazos River, Texas, Higher Educational
Authority, (Hoffman-Laroche),
Bankers Trust Company LOC,
3.750% 04/01/02 + 1,000,000 0 1,000,000
3,000,000 0 3,000,000 El Paso, Texas, Multi-family Housing
Finance Corporation,
(Viva Apartments Project), AMT,
General Electric Capital Corporation LOC,
4.100% 09/01/23 + 3,000,000 0 3,000,000
4,700,000 0 4,700,000 (Methodist Hospital), Methodist Hospital
and Morgan Guaranty Trust Company SBPA,
4.000% 12/01/25 ++ 4,700,000 0 4,700,000
2,000,000 0 2,000,000 (St. Luke's Episcopal Hospital), Series A,
St. Luke's Episcopal SBPA,
4.000% 02/15/21 ++ 2,000,000 0 2,000,000
3,300,000 0 3,300,000 (St. Luke's Episcopal Hospital),
Series C, Morgan Guaranty Trust Company SBPA,
4.000% 02/15/16++ 3,300,000 0 3,300,000
Harris (County of), Texas:
Health Facilities Revenue, Development
Corporation Hospital Revenue:
0 1,000,000 1,000,000 (St. Luke's Episcopal Hospital), Series D,
Morgan Guaranty Trust Company SBPA,
VRN 02/15/16 ++ 0 1,000,000 1,000,000
Industrial Development Corporation,
Industrial Development Revenue, AMT:
4,000,000 0 4,000,000 (Forged Products Inc. Project), Banc
One LOC,
4.050% 05/01/03 + 4,000,000 0 4,000,000
4,200,000 0 4,200,000 (Zeon Chemicals Project), Industrial
Bank of Japan, Ltd. LOC,
4.400% 02/01/09 + 4,200,000 0 4,200,000
10,500,000 0 10,500,000 Toll Road, Unlimited Tax, Series G,
Morgan Guaranty Trust Company SBPA,
3.800% 08/01/20 + 10,500,000 0 10,500,000
3,700,000 0 3,700,000 McAllen, Texas, Health Facilities
Development Revenue, PNC Bank LOC,
3.900% 12/01/24 + 3,700,000 0 3,700,000
9,200,000 0 9,200,000 Port Development Corporation,
(Pasadena Term Company Project),
ABN-AMRO Bank LOC,
4.050% 12/01/04 + 9,200,000 0 9,200,000
2,600,000 0 2,600,000 Sulphur Springs, Texas, Industrial
Development Authority,
(Hon Industrial Inc. Project),
Credit Suisse LOC,
3.950% 12/01/13 + 2,600,000 0 2,600,000
17,635,000 0 17,635,000 Texas (State of), Municipal Power
Agency Revenue, Pre-refunded at 100%,
14.625% 03/01/97 18,414,317 0 18,414,317
40,000,000 0 40,000,000 Texas (State of), Tax and Revenue
Anticipation Notes, Series A,
4.750% 08/29/97 40,281,151 0 40,281,151
--------------------------------------
110,695,468 1,000,000 111,695,468
--------------------------------------
UTAH - 1.6%
5,000,000 0 5,000,000 Intermountain Power Agency, Utah,
Power Supply Revenue, Series F,
Morgan Guaranty Trust Company LOC,
3.930% 06/16/97 # . 5,000,000 0 5,000,000
3,200,000 0 3,200,000 Murray (County of), Utah, Industrial
Development Authority, (Hunter
Douglas
Realty Property), AMT,
ABN-AMRO Bank LOC,
4.000% 09/01/14 + 3,200,000 0 3,200,000
1,900,000 0 1,900,000 Salt Lake (City of), Utah,
Airport Revenue, Series A, AMT,
Credit Suisse, New York LOC,
3.900% 06/01/98 + 1,900,000 0 1,900,000
14,300,000 0 14,300,000 Salt Lake (City of), Utah, Health
Care Facilities Revenue, Class A,
Westdeutsche Landesbank SBPA,
3.800% 01/01/20 + 14,300,000 0 14,300,000
0 1,700,000 1,700,000 Salt Lake County, PCR,
VRN 08/01/07 ++ 0 1,700,000 1,700,000
---------------------------------------
24,400,000 1,700,000 26,100,000
---------------------------------------
VIRGINIA - 0.8%
2,500,000 0 2,500,000 Colonial Heights, Virginia, Industrial
Development Authority, (Philip
Morris
Companies Project),
3.900% 03/01/05 + 2,500,000 0 2,500,000
3,900,000 0 3,900,000 Greensville (County of), Virginia,
Industrial Development Authority,
PCR,
(Perdue Farms Inc. Project),
AMT, Trust Company Bank LOC,
4.000% 10/01/06 + 3,900,000 0 3,900,000
3,300,000 0 3,300,000 Roanoke, Virginia, Industrial Development
Authority, Hospital Revenue,
(Roanoke Memorial Hospital Project),
Series C, (Carilion Health Systems),
Morgan Guaranty Trust Company SBPA,
3.750% 07/01/19 + 3,300,000 0 3,300,000
0 1,300,000 1,300,000 Peninsula Ports Authority, Coal Term,
VRN 07/01/16 ++ 0 1,300,000 1,300,000
2,000,000 0 2,000,000 Spotsylvania (County of), Virginia,
Industrial Development Revenue,
(Carlisle Corporation Project),
Trust Company Bank LOC,
3.900% 06/01/08 + 2,000,000 0 2,000,000
---------------------------------------
11,700,000 1,300,000 13,000,000
---------------------------------------
WASHINGTON - 2.9%
Pierce (County of), Washington:
5,500,000 0 5,500,000 Economic Development Authority,
(CSX Corporation Project),
Deutsche Bank LOC,
3.900% 11/01/96 # 5,500,000 0 5,500,000
3,000,000 0 3,000,000 Housing Authority Revenue,
(Eagles Watch Project), Key Bank,
Washington LOC,
3.750% 10/01/20 + 3,000,000 0 3,000,000
Washington (State of), GO:
25,500,000 0 25,500,000 Series 96A, Landesbank Hessen SBPA,
3.900% 06/01/20 + 25,500,000 0 25,500,000
4,015,000 0 4,015,000 Series A,
6.500% 07/01/97 4,090,787 0 4,090,787
7,075,000 0 7,075,000 Washington (State of), Housing Finance
Authority, Multi-family Mortgage
Revenue,
(Inglenook Court Project), AMT, Bank
of America LOC,
4.150% 07/01/25 ++ 7,075,000 0 7,075,000
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
WASHINGTON (CONTINUED)
$3,000,000 $0 $3,000,000 Washington (State of), Student Loan
Finance Association, Series B, AMT,
National Westminster Bank Plc LOC,
3.700% 01/01/04 + $3,000,000 $0 $3,000,000
----------------------------------------
48,165,787 0 48,165,787
----------------------------------------
WEST VIRGINIA - 2.0%
10,000,000 0 10,000,000 Fayette (County of), West Virginia,
County Commission, Solid Waste
Disposal Facilities
Revenue, (Georgia-Pacific
Corporation Project), AMT,
Industrial Bank of Japan Ltd. LOC,
3.700% 05/01/18 + 10,000,000 0 10,000,000
23,580,000 0 23,580,000 West Virginia (State of), Hospital
Finance Authority, Hospital Revenue,
(St. Mary's Hospital Project),
Bank One LOC,
3.900% 10/01/12 + 23,580,000 0 23,580,000
---------------------------------------
33,580,000 0 33,580,000
---------------------------------------
WISCONSIN - 1.8%
4,000,000 0 4,000,000 Menomonee Falls, Wisconsin,
Industrial Development Authority
Revenue,
(Jemma LLC Project), AMT,
Bank One, Milwaukee LOC,
4.050% 09/01/14 + 4,000,000 0 4,000,000
Oshkosh, Wisconsin, Area School
District, Tax and Revenue Anticipation
Promissory Notes:
5,000,000 0 5,000,000 4.250% 08/20/97 5,012,743 0 5,012,743
4,500,000 0 4,500,000 4.500% 08/20/97 4,521,066 0 4,521,066
2,395,000 0 2,395,000 Pleasant Prairie, Wisconsin, Industrial
Development Authority Revenue,
(Nucon
Corporation Project), AMT,
American National Bank & Trust
Company, LOC,
4.000% 02/01/22 + 2,395,000 0 2,395,000
5,200,000 0 5,200,000 Pewaukee, Wisconsin, School District,
Tax and Revenue Anticipation Notes,
4.500% 09/22/97 5,220,358 0 5,220,358
8,520,000 0 8,520,000 Wisconsin (State of), Health Facilities
Authority, (Daughters of Charity),
3.850% 11/01/16 + 8,520,000 0 8,520,000
--------------------------------------
29,669,167 0 29,669,167
--------------------------------------
----------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS AND NOTES 1,420,438,158 179,194,424 1,599,632,582
----------------------------------------------------------------------------------------
SHORT TERM PUTS - 0.4%
MISSOURI - 0.4%
0 7,000,000 7,000,000 Missouri State Improvement & Energy Board,
VRN 06/01/14 ** 0 7,000,000 7,000,000
----------------------------------------
----------------------------------------------------------------------------------------
TOTAL SHORT TERM PUTS 0 7,000,000 7,000,000
----------------------------------------------------------------------------------------
TAX-FREE COMMERCIAL PAPER - 2.2%
MISSOURI - 2.2%
Independence Missouri, Water Utility Revenues:
0 5,350,000 5,350,000 3.450% 10/01/96 0 5,350,000 5,350,000
0 3,400,000 3,400,000 3.500% 10/04/96 0 3,400,000 3,400,000
0 1,385,000 1,385,000 Kansas City Missouri, School District Building,
3.650% 02/01/96 0 1,385,902 1,385,902
Missouri Environmental Improvement & Energy:
0 3,000,000 3,000,000 3.600% 10/09/96 0 3,000,000 3,000,000
0 5,000,000 5,000,000 3.800% 03/19/97 ** 0 5,000,000 5,000,000
0 5,000,000 5,000,000 3.650% 11/19/96 0 5,000,000 5,000,000
Missouri Health & Education Facilities Authority:
0 4,000,000 4,000,000 3.450% 10/10/96 0 4,000,000 4,000,000
0 8,600,000 8,600,000 3.550% 10/15/96 0 8,600,000 8,600,000
----------------------------------------
0 35,735,902 35,735,902
----------------------------------------
----------------------------------------------------------------------------------------
TOTAL TAX-FREE COMMERCIAL PAPER 0 35,735,902 35,735,902
----------------------------------------------------------------------------------------
MONEY MARKET FUNDS - 0.2%
100,000 0 100,000 AIM Tax-Exempt Fund . 100,000 0 100,000
0 1,044,920 1,044,920 Federated Tax-Exempt Obligation Fund 0 1,044,920 1,044,920
25,000 2,741,200 2,766,200 Fidelity Institutional Tax-Exempt Cash Fund ** 25,000 2,741,200 2,766,200
----------------------------------------
----------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUNDS 125,000 3,786,120 3,911,120
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $1,646,279,604) $1,420,563,158 $225,716,446 $1,646,279,604
----------------------------------------------------------------------------------------
</TABLE>
+ Variable rate demand notes payable upon not more than seven calendar
days' notice. The interest rate shown reflects the rate in effect at
September 30, 1996.
++ Variable rate demand notes payable upon not more than one calendar
day's notice. The interest rate shown reflects the rate in effect at
September 30, 1996.
+++ Variable rate demand notes payable upon not more than thirty calendar
days' notice. The interest rate shown reflects the rate in effect at
September 30, 1996.
# Put date.
## Amount represents less than 0.1%.
* When issued security.
** Security that has been sold or will be sold prior to the Closing.
ABBREVIATIONS:
AMT Alternative Minimum Tax
CFC Cooperative Finance Corporation
FGIC Federal Guaranty Investment Corporation
FNMA Federal National Mortgage Association
FSA Financial Security Assurance
GNMA Government National Mortgage Association
GO General Obligation
LOC Letter of Credit
PCR Pollution Control Revenue
SBPA Standby Bond Purchase Agreement
<PAGE>
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT
Pro Forma Combining Statement of Assets and Liabilities
September 30, 1996
<TABLE>
<CAPTION>
Nations Tax Exempt Pilot Missouri Adjustments to Pro Forma
Fund Short-Term Tax-Exempt Proforma Combined (Note 1)
---- --------------------- -------- -----------------
<S> <C> <C> <C> <C>
ASSETS:
Investments at Value (cost $1,420,563,158,
$225,716,44 and $1,646,279,604) $1,420,563,158 $225,716,446 - $1,646,279,604
Cash 271,962 49 - 272,011
Income Receivable 7,715,431 1,102,244 - 8,817,675
Receivable for Fund Shares Sold 612,239 - - 612,239
Receivable due from Advisor - - - 0
Prepaid and Other Assets 3,237 - - 3,237
----- ---- ------------ ----- -----
TOTAL ASSETS 1,429,166,027 226,818,739 - 1,655,984,766
LIABILITIES:
Income Distribution Payable 3,398,534 540,990 - 3,939,524
Payable for Investments Purchased 31,700,519 - - 31,700,519
Payable for fund shares redeemed 90,744 - - 90,744
Accrued Expenses 462,953 103,962 - 566,915
------- ------- ---- -------
TOTAL LIABILITIES 35,652,750 644,952 - 36,297,702
---------- ------- - ----------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $1,393,513,277 $226,173,786 $0 $1,619,687,063
============== ============ == ==============
NET ASSETS BY CLASS:
Primary A $1,010,789,693 $199,573,275 $1,210,362,968
============== ============ ==============
Primary B $15,852,017 n/a $15,852,017
=========== === ===========
Investor A $131,947,939 n/a $131,947,939
============ === ============
Investor B $180,923,839 $12,275,062 $193,198,901
============ =========== ============
Investor C $53,986,789 n/a $53,986,789
=========== === ===========
Investor D $13,000 $14,325,449 $14,338,449
======= =========== ===========
SHARES OUTSTANDING BY CLASS:
Primary A 1,010,836,299 199,583,672 1,210,419,971
============= =========== =============
Primary B 15,852,552 n/a 15,852,552
========== === ==========
Investor A 131,953,867 n/a 131,953,867
=========== === ===========
Investor B 180,932,032 12,275,076 193,207,108
=========== ========== ===========
Investor C 53,989,247 n/a 53,989,247
========== === ==========
Investor D 13,001 14,326,360 14,339,361
====== ========== ==========
PRIMARY A SHARES:
Net Asset Value per Share $1.00 $1.00 $1.00
===== ===== =====
PRIMARY B SHARES:
Net Asset 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 $1.00 $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 $1.00 $1.00
===== ===== =====
</TABLE>
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT
Pro Forma Statement of Operations (Unaudited)
For the Twelve Month Period Ending September 30, 1996
<TABLE>
<CAPTION>
Nations Tax Exempt Pilot Missouri Adjustments to Pro Forma
Fund Short-Term Tax-Exempt Proforma Combined (Note 1)
---- --------------------- -------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $50,430,787 $8,245,979 $58,676,766
----------- ---------- -----------
Total Investment Income 50,430,787 8,245,979 58,676,766
EXPENSES:
Investment Advisory 5,515,689 462,146 462,146 (a) 6,439,981
Administration 1,378,363 255,939 (24,307) (a) 1,609,995
Portfolio Accounting Fee - 14,300 (14,300) (a) 0
Transfer Agent 324,282 11,005 - 335,287
Custodian 225,538 68,183 (17,046) (b) 276,675
Legal and Audit Fees 183,083 58,899 (58,899) (b) 183,083
Trustees' Fees 88,841 8,171 (8,171) (b) 88,841
Amortization of organization costs - 35,247 (35,247) (c) 0
Other expenses 382,154 66,825 (16,706) (b) 432,273
------- ------ -------- -------
Subtotal 8,097,949 980,715 287,470 9,366,134
SHAREHOLDER SERVICING AND DISTRIBUTION FEES
Primary B 30,715 - N/A 30,715
Investor A 321,072 - N/A 321,072
Investor B 287,650 27,737 (5,547) (a) 309,840
Investor C 81,414 - N/A 81,414
Investor D 13 65,782 N/A 65,795
Fees waived and/or reimbursed by
investment advisor (3,987,020) - (563,982) (d) (4,551,003)
----------- --------- --------- --- -----------
TOTAL EXPENSES 4,831,793 1,074,234 (282,060) 5,623,967
--------- --------- --------- ---------
NET INVESTMENT INCOME 45,598,994 7,171,745 282,060 53,052,799
========== ========= ======= ==========
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Realized Gain/(Loss) on securities - 20,359 20,359
---- ------ ------
Net Realized and Unrealized gain/(loss)
on investments 0 20,359 20,359
= ====== ======
NET INCREASE/(DECREASE) IN ASSETS
RESULTING FROM OPERATIONS $45,598,994 $7,192,104 $282,060 $53,073,158
=========== ========== ======== ===========
</TABLE>
LEGEND:
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
(C) ORGANIZATION EXPENSE OF THE ACQUIRED FUND IS NOT AN EXPENSE OF THE COMBINED
FUND.
(D) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY EXPENSE
REIMBURSEMENT.
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
<PAGE>
Nations Tax Exempt Fund
Pilot Missouri Short-Term Tax-Exempt Fund
Notes to Pro Forma Financial Statements (Unaudited)
1. Basis of Combination
Nations FundTrust (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end investment company. As of
September 30, 1996, the Trust offers thirty-two 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 Tax Exempt Fund and the Pilot Missouri Short-Term Tax-Exempt Fund for
the twelve month period ended September 30, 1996. These statements have been
derived from books and records utilized in calculating daily net asset value at
September 30, 1996.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pilot Missouri Short-Term Tax-Exempt Fund in exchange
for shares of Nations Tax Exempt 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 Pilot Missouri
Short-Term Tax-Exempt 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 Tax Exempt Fund
Pilot Missouri Short-Term Tax-Exempt Fund
Notes to Pro Forma Financial Statements (Unaudited)
For the twelve month period ended September 30, 1996, the Nations Tax Exempt
Fund's investment advisory fee was computed based on the annual rate of 0.40% of
average daily net assets. The administration fee was computed based on the
annual rate of 0.10% 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 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
("Primary B Servicing Plan"), Investor A Shares ("Investor A Servicing Plan"),
Investor B Shares ("Investor B Servicing Plan"), Investor C Shares ("Investor C
Servicing Plan") and Investor D Shares ("Investor D Servicing Plan") of Nations
Tax Exempt Fund. Under the Primary B Servicing Plan, Investor A Servicing Plan,
Investor B Servicing Plan, Investor C Servicing Plan and Investor D Servicing
Plan, aggregate payments may not exceed 0.25%, 0.25%, 0.20%, 0.15% and 0.25%, on
an annualized basis, of the average daily net assets of the Primary B Shares,
Investor A Shares, Investor B Shares, Investor C Shares and Investor D Shares,
respectively, of the Fund.
The Trust has adopted a distribution plan ("Investor D Distribution Plan")
pursuant to Rule 12b-1 under the 1940 Act for the Investor D Shares of the
Nations Tax Exempt 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 of the Fund
2. Portfolio Valuation
Securities of Nations Tax Exempt 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
2
<PAGE>
Nations Tax Exempt Fund
Pilot Missouri Short-Term Tax-Exempt Fund
Notes to Pro Forma Financial Statements (Unaudited)
amortization to maturity of any discount or premium, as long as the effect of
fluctuating interest rates on the fair market value of the instrument is not
significant. Pilot Missouri Short-Term Tax-Exempt 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 Tax Exempt Fund which would have been issued at September 30,
1996 in connection with the proposed reorganization. The pro forma number of
shares outstanding of 1,619,762,107 consists of 226,185,109 shares assumed
issued in the reorganization plus 1,393,576,998 shares of Nations Tax Exempt
Fund at September 30, 1996.
3
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES - 93.5%
ALABAMA - 2.5%
Alabama (State of), Housing
Finance Authority, Multi-family
Housing, AmSouth Bank N A,
Birmingham LOC:
$6,400,000 $0 $0 $6,400,000 (Ski Lodge III), Series A,
3.900% 03/01/15 + $6,400,000 $0 $0 $6,400,000
6,000,000 0 0 6,000,000 (Turtle Lake Project), Series F,
4.000% 09/01/23 + 6,000,000 0 0 6,000,000
1,690,000 0 0 1,690,000 Birmingham, Alabama, Industrial
Development Board, (Avondale -
Phase III ), AmSouth Bank N.A.,
Birmingham LOC,
4.250% 06/01/00 + 1,690,000 0 0 1,690,000
25,200,000 0 0 25,200,000 Birmingham, Alabama, Medical
Clinic Board Revenue,(University
of Alabama Health Services),
Morgan Guaranty Trust Company,
New York LOC,
4.100% 12/01/26 ++ . 25,200,000 0 0 25,200,000
3,740,000 0 0 3,740,000 Gadsden, Alabama, Industrial
Development Board, Industrial
Development Revenue,(Keystone
Foods Corporation Project), AMT,
Bank of Scotland LOC,
4.000% 05/01/04 + 3,740,000 0 0 3,740,000
4,000,000 0 0 4,000,000 Mobile, Alabama, Industrial
Development Board, (IB Chemical
Company Project), Industrial Bank
of Japan Ltd. LOC,
4.050% 12/01/97 + 4,000,000 0 0 4,000,000
0 1,300,000 0 1,300,000 Northern Alabama Environmental
Inprovement Authority,
VRN 12/01/00 ++ 0 1,300,000 0 1,300,000
2,000,000 0 0 2,000,000 Opelika, Alabama, Industrial
Development Board, (Flowers
Baking Company Project),
Trust Company Bank LOC,
3.900% 12/01/99 + 2,000,000 0 0 2,000,000
----------------------------------------------------
49,030,000 1,300,000 0 50,330,000
----------------------------------------------------
ALASKA - 0.2%
5,000,000 0 0 5,000,000 Valdez, Alaska, Marine Term
Revenue, (Arco Transportation
Project), Series B, Atlantic
Richfield Guaranteed,
3.950% 05/01/31 + 5,000,000 0 0 5,000,000
----------------------------------------------------
ARIZONA - 4.0%
Apache (County of), Arizona,
Industrial Development
Authority, PCR,
(Tuscon Electric Power):
5,500,000 0 0 5,500,000 Series 83A, Barclays Bank
Plc LOC,
3.850% 12/15/18 + 5,500,000 0 0 5,500,000
29,300,000 0 0 29,300,000 Series A, Chemical Bank LOC,
3.850% 06/15/20 + 29,300,000 0 0 29,300,000
8,000,000 0 0 8,000,000 Goodyear, Arizona, Industrial
Development Authority, (Walle
Corporation Project),
AMT, PNC Bank LOC,
4.000% 05/01/15 + 8,000,000 0 0 8,000,000
4,200,000 0 0 4,200,000 Maricopa (County of), Arizona,
Industrial Development
Authority, Multi-family Housing
Revenue, (Privado Park
Apartments Project),
Series A, AMT, Bank One,
Phoenix LOC,
4.000% 06/01/34 + 4,200,000 0 0 4,200,000
Maricopa (County of), Arizona
Unified School District:
10,000,000 0 0 10,000,000 No. 210 Phoenix, Tax
Anticipation Notes, Series A,
4.400% 07/31/97 10,031,998 0 0 10,031,998
5,000,000 0 0 5,000,000 No. 213 Tempe, Tax Anticipation
Notes, Series A,
4.400% 07/31/97 5,015,999 0 0 5,015,999
3,000,000 0 0 3,000,000 Mesa, Arizona, Development
Corporation Revenue, Special
Tax, Series B,
Westdeutsche Landesbank LOC,
3.650% 10/10/96 3,000,000 0 0 3,000,000
Pima (County of), Arizona,
Industrial Development
Authority, (Tuscon Electric),
Series A:
9,000,000 0 0 9,000,000 Bank of America LOC,
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
3.800% 07/01/22 + 9,000,000 0 0 9,000,000
7,700,000 0 0 7,700,000 Societe Generale LOC,
3.900% 06/15/22 + 7,700,000 0 0 7,700,000
----------------------------------------------------
81,747,997 0 0 81,747,997
----------------------------------------------------
ARKANSAS - 0.7%
$0 $0 $1,785,000 $1,785,000 Jonesboro Residential Housing,
3.800% 05/01/97 $0 $0 $1,785,000 $1,785,000
9,100,000 0 0 9,100,000 Little Rock, Arkansas, Health
Facilities Board, Hospital
Revenue, (Southwest Hospital
Project), FGIC Insured, Bank of
Nova Scotia SBPA,
3.675% 10/01/18 + . 9,100,000 0 0 9,100,000
3,250,000 0 0 3,250,000 Lowell, Arkansas, Industrial
Development Revenue,
(Little Rock Newspapers Inc.
Project), AMT, Bank of
New York LOC,
4.050% 06/01/31 + 3,250,000 0 0 3,250,000
----------------------------------------------------
12,350,000 0 1,785,000 14,135,000
----------------------------------------------------
CALIFORNIA - 0.7%
500,000 0 0 500,000 Los Angeles, California,
Regional Airports, (Los Angeles
International Airport),
Wachovia Bank LOC,
3.900% 12/01/24 ++ 500,000 0 0 500,000
5,000,000 0 0 5,000,000 San Diego, California, Tax
Anticipation Notes, Series A,
4.500% 07/02/97 5,027,100 0 0 5,027,100
10,500,000 0 0 10,500,000 Student Education Loan
Marketing Corporation, Student
Loan Revenue,
Series A, Dresdner Bank LOC,
3.900% 11/01/02 + 10,500,000 0 0 10,500,000
----------------------------------------------------
16,027,100 0 0 16,027,100
----------------------------------------------------
COLORADO - 3.0%
0 250,000 0 250,000 Adams Arapahoe Counties School
District 28,
10.000% 12/01/96 0 252,557 0 252,557
0 0 5,000,000 5,000,000 Arapahoe County School
District #005,
4.500% 06/30/97 0 0 5,023,528 5,023,528
Colorado (State of), Housing
Finance Authority, Multi-family
Housing Revenue:
2,900,000 0 0 2,900,000 (Central Park Convention
Center), Chemical Bank LOC,
3.400% 05/01/97 + 2,900,000 0 0 2,900,000
13,000,000 0 0 13,000,000 (Grants Plaza), Series A,
Bankers Trust Company LOC,
3.925% 11/01/09 + 13,000,000 0 0 13,000,000
2,000,000 0 0 2,000,000 Colorado (State of), Post
Secondary Educational
Authority, Economic Development
Revenue, Bank One LOC,
3.950% 06/01/11 + 2,000,000 0 0 2,000,000
0 0 5,000,000 5,000,000 Denver (City & County of),
Colorado,
5.000% 10/01/96 0 0 5,000,000 5,000,000
Denver (City & County of),
Colorado, Airport Revenue, AMT:
3,500,000 0 0 3,500,000 Series F, Bank of Montreal LOC,
3.950% 11/15/25 + 3,500,000 0 0 3,500,000
5,000,000 0 0 5,000,000 Series G, Credit Local de
France LOC,
3.950% 11/15/25 + 5,000,000 0 0 5,000,000
2,205,000 0 0 2,205,000 El Paso (County of), Colorado,
Multi-family Housing Revenue,
(Briarglen Apartments Project),
General Electric Capital
Corporation Guarantee,
3.900% 12/01/24 + 2,205,000 0 0 2,205,000
21,000,000 0 0 21,000,000 Moffat (County of), Colorado,
PCR, CFC Guarantee,
3.950% 07/01/20 + 21,000,000 0 0 21,000,000
2,000,000 0 0 2,000,000 University of Colorado,
University Revenues, Morgan
Guaranty Trust Company SBPA,
Series A,
3.850% 06/01/20 + 2,000,000 0 0 2,000,000
----------------------------------------------------
51,605,000 252,557 10,023,528 61,881,085
----------------------------------------------------
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
CONNECTICUT - 0.1%
2,100,000 0 0 2,100,000 Connecticut (State of), Housing
Finance Authority, AMT,
3.650% 04/10/97 2,100,000 0 0 2,100,000
----------------------------------------------------
DELAWARE - 1.2%
24,000,000 0 0 24,000,000 Delaware (State of), Economic
Development Authority Revenue,
Hospital Billing, Series C,
MBIA Insured, Morgan Stanley
Group, Inc. SBPA,
3.900% 12/01/15 + 24,000,000 0 0 24,000,000
----------------------------------------------------
DISTRICT OF COLUMBIA - 0.8%
$2,900,000 $0 $0 $2,900,000 District of Columbia, Hospital
Revenue, (Columbia Women's
Hospital), Series A, Mitsubishi
Bank Ltd. LOC,
4.000% 07/01/20 + $2,900,000 $0 $0 $2,900,000
District of Columbia Revenue,
ACES-Georgetown University:
0 0 5,700,000 5,700,000 Series C,
VRN 04/01/12 + 0 0 5,700,000 5,700,000
0 0 7,300,000 7,300,000 Series D,
VRN 04/01/17 + 0 0 7,300,000 7,300,000
0 0 1,100,000 1,100,000 Series E,
VRN 04/01/18 + 0 0 1,100,000 1,100,000
----------------------------------------------------
2,900,000 0 14,100,000 17,000,000
----------------------------------------------------
FLORIDA - 5.9%
10,810,000 0 0 10,810,000 Broward (County of), Florida,
Housing Finance Authority,
Multi-family Housing Revenue,
(Fishermans Project),
Continental Casualty Surety
Bond,
3.600% 11/01/07 + 10,810,000 0 0 10,810,000
Dade (County of), Florida,
Industrial Development
Authority:
2,200,000 0 0 2,200,000 (Dolphins Stadium Project),
Series C, Societe Generale LOC,
3.850% 01/01/16 + 2,200,000 0 0 2,200,000
3,000,000 0 0 3,000,000 (Phase II Furniture Corporation
Project), AMT, Sun Bank N.A.LOC,
4.000% 11/01/14 + 3,000,000 0 0 3,000,000
14,998,500 0 0 14,998,500 Florida (State of), Board of
Education, Capital Outlay,
BTP-179, Bankers Trust Company
LOC,
3.800% 06/01/01 + 14,998,500 0 0 14,998,500
Florida (State of), Housing
Finance Agency, Multi-family
Housing Revenue:
2,400,000 0 0 2,400,000 (Clear Lake Project), Series D,
Continental Casualty Surety
Bond,
3.600% 01/01/34 + 2,400,000 0 0 2,400,000
4,800,000 0 0 4,800,000 (Lake RMK Project), Southtrust
Bank LOC,
4.100% 06/01/07 + . 4,800,000 0 0 4,800,000
5,000,000 0 0 5,000,000 (Lakeside Project), Series B,
Bankers Trust Company LOC,
3.925% 08/01/06 + 5,000,000 0 0 5,000,000
7,000,000 0 0 7,000,000 (Woodlands Project),
Citibank LOC,
3.800% 12/01/07 + 7,000,000 0 0 7,000,000
6,000,000 0 0 6,000,000 Jacksonville, Florida, Health
Facilities Authority, Hospital
Revenue,(Baptist Health
Properties Project), Barnett
Bank, Florida LOC,
4.100% 06/01/20 ++ 6,000,000 0 0 6,000,000
2,500,000 0 0 2,500,000 Key West, Florida, Community
Redevelopment Agency Revenue,
(Pier House Joint
Venture), PNC Bank, Ohio LOC,
3.850% 01/01/98 + 2,500,000 0 0 2,500,000
0 0 3,900,000 3,900,000 Manatee (County of), PCR,
(Florida Power & Light Co.
Project),
VRN 09/01/24 ++ 0 0 3,900,000 3,900,000
0 0 5,400,000 5,400,000 Martin (County of), PCR,
VRN 09/01/24 ++ 0 0 5,400,000 5,400,000
10,385,000 0 0 10,385,000 Orange (County of), Florida,
Health Facilities Authority
Revenue,
(SHCC Services Inc. Project),
Sun Bank N.A. LOC,
3.800% 12/01/23 + 10,385,000 0 0 10,385,000
5,000,000 0 0 5,000,000 Orange (County of), Florida,
Housing Finance Agency,
Series B, AMT,
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
3.650% 04/01/97 5,000,000 0 0 5,000,000
0 0 2,680,000 2,680,000 Putnam (County of), Development
Authority, PCR, Florida Power &
Light Company,
VRN 09/01/24 ++ 0 0 2,680,000 2,680,000
3,350,000 0 0 3,350,000 St. Lucie (County of), Florida,
Industrial Development
Authority,(Florida Convalescent
Centers Project), Series A,
Toronto Dominion Bank LOC,
3.650% 01/01/11 +++ 3,350,000 0 0 3,350,000
St. Lucie (County of), Florida,
PCR, (Florida Power and Light
Company):
4,500,000 0 0 4,500,000 3.650% 10/25/96 4,500,000 0 0 4,500,000
8,025,000 0 0 8,025,000 3.650% 11/22/96 8,025,000 0 0 8,025,000
5,000,000 0 0 5,000,000 3.650% 11/22/96 5,000,000 0 0 5,000,000
0 2,000,000 6,700,000 8,700,000 VRN 01/01/26 0 2,000,000 6,700,000 8,700,000
FLORIDA (CONTINUED)
$2,000,000 $0 $0 $2,000,000 University of Northern Florida,
Capital Improvement, First
Union National Bank of
North Carolina LOC,
3.800% 11/01/24 + $2,000,000 $0 $0 $2,000,000
0 2,100,000 0 2,100,000 Volusia County Health Facility
Revenue, Robobank Nederland LOC,
VRN 09/01/20 ++ 0 2,100,000 0 2,100,000
----------------------------------------------------
96,968,50 4,100,000 18,680,000 119,748,500
----------------------------------------------------
GEORGIA - 4.4%
10,000,000 0 0 10,000,000 Albany-Dougherty, Georgia,
Payroll Development
Authority, PCR,
(Philip Morris Companies Inc.
Project),
3.900% 10/01/05 + 10,000,000 0 0 10,000,000
0 0 1,000,000 1,000,000 Burke (County of), Development
Authority, PCR, Georgia Power
Plant Project, 4th Series,
VRN 09/30/96 ++** 0 0 1,000,000 1,000,000
0 0 6,000,000 6,000,000 Cobb (County of), Development
Authority, PCR, Georgia Power
Plant Project, Trust Company
Bank LOC,
VRN 07/01/11 +** 0 0 6,000,000 6,000,000
3,800,000 0 0 3,800,000 Cobb (County of), Georgia,
Residential Care Facilities for
the Elderly Authority, (North
Georgia Presbyterian Homes, Inc.
Project), Trust Company Bank LOC,
3.900% 08/01/18 + 3,800,000 0 0 3,800,000
3,000,000 0 0 3,000,000 Columbia (County of), Georgia,
Residential Care Facilities for
the Elderly Authority,
(Augusta Residential Center on
Aging), Trust Company Bank LOC,
3.900% 01/01/21 + 3,000,000 0 0 3,000,000
2,250,000 0 0 2,250,000 Columbus, Georgia, Housing
Authority, Multi-family Housing
Revenue, (Quail Ridge Project),
Colombus Bank & Trust Company
LOC,
4.150% 02/01/05 + 2,250,000 0 0 2,250,000
3,755,000 0 0 3,755,000 Columbus, Georgia, Industrial
Development Revenue, (Parisian
Inc. Project), Columbus Bank &
Trust Company LOC,
4.200% 04/01/07 + 3,755,000 0 0 3,755,000
0 0 2,200,000 2,200,000 Dekalb (County of), Georgia,
Atlantic Jewish Federation,
Wachovia Bank LOC,
VRN 08/01/21 + 0 0 2,200,000 2,200,000
Dekalb (County of), Georgia,
Hospital Authority, Revenue
Anticipation Certificates:
3,960,000 0 0 3,960,000 (Dekalb Medical Center Project),
Trust Company Bank LOC,
3.900% 09/01/09 + 3,960,000 0 0 3,960,000
2,000,000 0 0 2,000,000 (Egleston Childrens Health),
Series A, SunTrust Bank,
Atlanta LOC,
3.800% 12/01/17 + 2,000,000 0 0 2,000,000
Dekalb (County of), Georgia,
Housing Authority, Multi-family
Housing Revenue:
5,430,000 0 0 5,430,000 (Haystack Apartment Projects),
AMT, General Electric Capital
Corporation LOC,
4.150% 12/01/20 + 5,430,000 0 0 5,430,000
6,625,000 0 0 6,625,000 (Stone Mill Run Apartments
Project), Series A, AMT, First
Tennessee Bank LOC,
4.000% 08/01/27 + 6,625,000 0 0 6,625,000
5,000,000 0 0 5,000,000 (Terrace Club Project),
Series B, Southtrust Bank LOC,
4.000% 11/01/15 + 5,000,000 0 0 5,000,000
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 6,600,000 6,600,000 Fulco Hospital Authority
Revenue, Piedmont Hospital
Project, Trust Company Bank LOC,
VRN 02/01/07 + 0 0 6,600,000 6,600,000
2,900,000 0 0 2,900,000 Greene (County of), Georgia,
Industrial Development Authority
Revenue,(Chipman-Union Inc.
Project), Series A, AMT, Trust
Company Bank LOC,
4.000% 03/01/05 + 2,900,000 0 0 2,900,000
3,700,000 0 0 3,700,000 Gwinnett (County of), Georgia,
Industrial Development Revenue,
(United Stationers Company
Project), PNC Bank LOC,
3.850% 12/31/02 + . 3,700,000 0 0 3,700,000
3,000,000 0 0 3,000,000 Henry (County of), Georgia,
Development Authority Revenue,
(Georgia-Pacific Corporation
Project), Trust Company Bank LOC,
3.900% 05/01/04 + 3,000,000 0 0 3,000,000
0 1,000,000 400,000 1,400,000 Monroe (County of), Development
Authority, PCR,
VRN 07/01/25 ++ 0 1,000,000 400,000 1,400,000
5,000,000 0 0 5,000,000 Smyrna, Georgia, Multi-family
Housing Authority Revenue,
(Post VY Project),
FNMA Collateralized,
3.850% 06/01/25 + 5,000,000 0 0 5,000,000
GEORGIA (CONTINUED)
$0 $0 $2,400,000 $2,400,000 State of Georgia, GO
6.500% 12/01/96 $0 $0 $2,411,785 $2,411,785
4,000,000 0 0 4,000,000 Tallapoosa, Georgia, Development
Authority Revenue, (U.S. Canada
Company Project), Harris Trust
& Savings Bank LOC,
3.850% 02/01/15 + 4,000,000 0 0 4,000,000
5,000,000 0 0 5,000,000 Thomaston-Upson (County of),
Georgia, Industrial Development
Revenue,(Quad/Thomaston
Project), First Union National
Bank, Charlotte LOC,
3.950% 04/01/00 + 5,000,000 0 0 5,000,000
0 0 510,000 510,000 Walton County, School District,
5.00% 01/01/97 0 0 511,369 511,369
----------------------------------------------------
69,420,000 1,000,000 19,123,154 89,543,154
----------------------------------------------------
IDAHO - 1.4%
20,000,000 0 0 20,000,000 Idaho Health Facilities
Authority, Holy Cross Health
Sytems Corporation Revenue,
Morgan Guaranty Trust Company LOC,
3.850% 12/01/23 + 20,000,000 0 0 20,000,000
9,000,000 0 0 9,000,000 Idaho (State of), Tax
Anticipation Notes,
4.500% 06/30/97 9,038,681 0 0 9,038,681
----------------------------------------------------
29,038,681 0 0 29,038,681
----------------------------------------------------
ILLINOIS - 7.8%
5,775,000 0 0 5,775,000 Chicago, Illinois, Industrial
Development Revenue, (Eli's
Chicago's Finest Inc.),
First Bank LOC,
4.050% 11/01/26 + 5,775,000 0 0 5,775,000
Chicago, Illinois, O'Hare
International Airport, American
Airlines Inc., AMT,
Royal Bank of Canada LOC:
3,500,000 0 0 3,500,000 Series C,
4.000% 12/01/17++ 3,500,000 0 0 3,500,000
3,000,000 0 0 3,000,000 Series D,
4.000% 12/01/17++ 3,000,000 0 0 3,000,000
Du Page Water Commission
Revenue, Pre-refunded:
0 0 1,250,000 1,250,000 6.800% 5/01/97 0 0 1,296,374 1,296,374
0 0 4,250,000 4,250,000 6.875% 5/01/97 0 0 4,407,641 4,407,641
Illinois (State of),
Development Finance Authority:
26,100,000 0 0 26,100,000 (Chicago Symphony Orchestra),
Northern Trust Company LOC,
3.900% 12/01/28 + 26,100,000 0 0 26,100,000
2,025,000 0 0 2,025,000 (L. Karp & Sons Inc.), American
National Bank & Trust Company,
Chicago LOC,
4.150% 09/01/05 + 2,025,000 0 0 2,025,000
2,000,000 0 0 2,000,000 (Residential Rental - River
Oak), AMT, Swiss Bank LOC,
3.900% 12/15/19 + 2,000,000 0 0 2,000,000
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
9,000,000 0 0 9,000,000 (Roosevelt University Project),
American National Bank & Trust
Company LOC,
3.850% 04/01/25 + 9,000,000 0 0 9,000,000
2,200,000 0 0 2,200,000 Illinois (State of), Development
Finance Authority, Economic
Development Revenue,(Addison
450 LP Project), American
National Bank & Trust Company LOC,
4.000% 12/01/09 + 2,200,000 0 0 2,200,000
Illinois (State of), Development
Finance Authority, Industrial
Development Revenue:
2,000,000 0 0 2,000,000 (MTI Project), AMT, Industrial
Bank of Japan Ltd., NY LOC,
4.125% 01/01/09 + 2,000,000 0 0 2,000,000
3,200,000 0 0 3,200,000 (Randolph Pickle Corporation),
AMT, American National Bank &
Trust Company LOC,
4.050% 06/01/12 + 3,200,000 0 0 3,200,000
2,515,000 0 0 2,515,000 (Xavier University), American
National Bank & Trust Company LOC,
3.850% 10/01/12 + 2,515,000 0 0 2,515,000
Illinois (State of), Development
Finance Authority, PCR:
2,500,000 0 0 2,500,000 (Diamond Star Meters Project),
Mitsubishi Bank Ltd. LOC,
4.100% 12/01/08 ++ 2,500,000 0 0 2,500,000
7,100,000 0 0 7,100,000 (Edison Company Project),
Series C, ABN-AMRO Bank LOC,
3.850% 03/01/09 + 7,100,000 0 0 7,100,000
(Illinois Power Company
Project), AMT:
6,500,000 0 0 6,500,000 Canadian Imperial Bank of
Canada LOC,
3.850% 02/13/97 # 6,500,000 0 0 6,500,000
ILLINOIS (CONTINUED)
Illinois (State of), Development
Finance Authority, PCR (Continued):
$9,300,000 $0 $0 $9,300,000 Series B, AMT, Mitsubishi Bank
Ltd. LOC,
4.000% 03/01/17 + $9,300,000 $0 $0 $9,300,000
Illinois (State of), Educational
Facilities Revenue:
3,700,000 0 0 3,700,000 (Illinois Institute of
Technology), Series A, NBD Bank
N.A.; Northern Trust Company;
and Harris Trust & Savings Bank LOC,
3.850% 09/01/25 + 3,700,000 0 0 3,700,000
12,930,000 0 0 12,930,000 (University Pooled Financing
Program), FGIC Insured,
First National Bank of Chicago
SBPA,
3.900% 12/02/05 + 12,930,000 0 0 12,930,000
Illinois (State of), Health
Facilities Authority Revenue:
(Evanston Hospital Corporation
Project):
5,000,000 0 0 5,000,000 3.750% 02/28/97 5,000,000 0 0 5,000,000
7,000,000 0 0 7,000,000 Series B,
3.150% 01/31/97 7,000,000 0 0 7,000,000
5,000,000 0 0 5,000,000 Series 96,
3.950% 08/15/97 5,000,000 0 0 5,000,000
6,700,000 0 0 6,700,000 (The Streeterville Corporation
Project), First National Bank
of Chicago LOC,
3.850% 08/15/24 + 6,700,000 0 0 6,700,000
Illinois (State of), Sales
Tax Revnue, Pre-refunded:
0 0 1,400,000 1,400,000 7.500% 06/15/06 0 0 1,463,258 1,463,258
0 0 1,000,000 1,000,000 7.600% 06/15/07 0 0 1,045,872 1,045,872
4,500,000 0 0 4,500,000 Kane (County of), Illinois,
Revenue Bonds, (Glenwood School
For Boys), Harris Trust &
Savings Bank, Illinois LOC,
3.850% 02/01/28 + 4,500,000 0 0 4,500,000
3,200,000 0 0 3,200,000 Kane (County of), Illinois,
Unified School District No. 304,
Tax Anticipation Warrants,
4.150% 12/03/96 3,202,133 0 0 3,202,133
4,600,000 0 0 4,600,000 Orland Park, Illinois, Industrial
Development Revenue,(Panduit
Corporation Project), AMT,
Wachovia Bank LOC,
4.000% 04/01/31 + 4,600,000 0 0 4,600,000
7,195,000 0 0 7,195,000 Richton Park, Illinois,
Industrial Development Revenue,
(Sinter Metals Inc. Project),
AMT, Mellon Bank LOC,
4.050% 04/01/16 + 7,195,000 0 0 7,195,000
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
1,900,000 0 0 1,900,000 Southwestern Illinois
Development Authority,
Industrial Development Revenue,
(Robinson Steel Company Inc.
Project), AMT, American National
Bank & Trust Company LOC,
4.000% 12/01/06 + 1,900,000 0 0 1,900,000
3,000,000 0 0 3,000,000 Winnebago & Boone (Counties of),
Illinois, School District No. 205,
Tax Anticipation Warrants,
FSA Insured,
4.350% 10/30/96 3,002,803 0 0 3,002,803
----------------------------------------------------
151,444,936 0 8,213,145 159,658,081
----------------------------------------------------
INDIANA - 4.1%
7,000,000 0 0 7,000,000 Carmel Clay, Indiana, Tax
Anticipation Warrants, General
Funding,
3.750% 12/31/96 7,003,347 0 0 7,003,347
0 0 6,700,000 6,700,000 Indiana Health Facilities
Finance Authority, Hospital
Revenue, ACES-Methodist
Hospital, Series B,
VRN 09/01/22 +** 0 0 6,700,000 6,700,000
30,000,000 0 0 30,000,000 Indiana (State of), Bond Bank,
Advance Funding Program,
Promissory Notes,
4.250% 01/09/97 30,069,210 0 0 30,069,210
Indiana (State of), Development
Finance Authority, Economic
Development Revenue:
2,400,000 0 0 2,400,000 (Fischer Enterprises Ltd
Project), PNC Bank LOC,
4.000% 11/01/01 + 2,400,000 0 0 2,400,000
2,600,000 0 0 2,600,000 (Walker-Williams Lumber), AMT,
Columbus Bank & Trust Company LOC,
4.200% 01/01/09 + 2,600,000 0 0 2,600,000
2,500,000 0 0 2,500,000 Indianapolis, Indiana, Economic
Development Revenue,(Art Center
of Indianapolis Project), Bank
One, Indiana LOC,
3.950% 02/01/98 + 2,500,000 0 0 2,500,000
INDIANA (CONTINUED)
$3,300,000 $0 $0 $3,300,000 Indianapolis, Indiana,
Multi-family Housing Revenue,
(El Beulah Retirement Village),
National Bank of Detroit LOC,
3.850% 03/01/21 + $3,300,000 $0 $0 $3,300,000
3,500,000 0 0 3,500,000 Purdue University, Indiana,
University Revenue, Student Fee,
Series K,
3.800% 07/01/20 + 3,500,000 0 0 3,500,000
16,255,000 0 0 16,255,000 Sullivan, Indiana, PCR, National
Rural/CFC Insured,
3.550% 10/25/96 16,255,000 0 0 16,255,000
9,500,000 0 0 9,500,000 Vigo (County of), Indiana,
General Funded Warrants,
3.500% 12/27/96 9,503,312 0 0 9,503,312
----------------------------------------------------
77,130,869 0 6,700,000 83,830,869
----------------------------------------------------
IOWA - 0.3%
7,000,000 0 0 7,000,000 Iowa (State of), Corporation
Warrant Certificates, Series A,
FSA Insured-State Aid
Withholding,
4.750% 06/27/97 # 7,039,672 0 0 7,039,672
----------------------------------------------------
KANSAS - 1.1%
9,600,000 0 0 9,600,000 Kansas (State of), Development
Finance Authority, (Seaboard
Projects), Series A, AMT, Bank
of New York LOC,
4.050% 12/02/25 + 9,600,000 0 0 9,600,000
10,200,000 0 0 10,200,000 Olathe, Kansas, Educational
Facilities Revenue, (Kansas
Independent College
Association), Series A, Marine
Midland Bank LOC,
3.800% 07/01/24 + 10,200,000 0 0 10,200,000
3,000,000 0 0 3,000,000 Wichita, Kansas, Industrial
Revenue, (Brenner Tank Inc.
Project), AMT, Bank One LOC,
4.050% 12/01/05 + 3,000,000 0 0 3,000,000
----------------------------------------------------
22,800,000 0 0 22,800,000
----------------------------------------------------
KENTUCKY - 1.9%
1,800,000 0 0 1,800,000 Hopkinsville, Kentucky,
Industrial Building Revenue,
(Brazeway Inc. Project), AMT,
4.000% 06/01/04 + 1,800,000 0 0 1,800,000
5,000,000 0 0 5,000,000 Jefferson (County of), Kentucky,
Board of Education Revenue,
Anticipation Notes,
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
Series N,
3.970% 06/30/97 5,002,515 0 0 5,002,515
6,200,000 0 0 6,200,000 Kentucky League of Cities,
Revenue Anticipation Notes,
(Madisonville), Series B,
Bank One, Kentucky LOC,
3.950% 03/01/97 + 6,200,000 0 0 6,200,000
2,600,000 0 0 2,600,000 Kentucky (Rural), Economic
Development Authority,
Industrial Building Revenue,
(Technos Corporation Project),
AMT, Industrial Bank of Japan,
Ltd. LOC,
4.400% 12/01/09 + 2,600,000 0 0 2,600,000
3,500,000 0 0 3,500,000 Lebanon, Kentucky, Industrial
Development Revenue, (Wallace
Computer Services Inc.), AMT,
Wachovia Bank, Georgia LOC,
4.000% 06/01/19 + 3,500,000 0 0 3,500,000
4,525,000 0 0 4,525,000 Lexington-Fayette, Kentucky,
Psychiatric Hospital Revenue,
(Charter Ridge Hospital Project),
Bankers Trust Company LOC,
3.750% 03/01/05 + 4,525,000 0 0 4,525,000
Lexington-Fayette, Kentucky,
Urban County Airport Corporation
Revenue, AMT, Credit Local de
France LOC:
1,100,000 0 0 1,100,000 Series A,
4.100% 04/01/24 ++ 1,100,000 0 0 1,100,000
3,100,000 0 0 3,100,000 Series B,
4.100% 04/01/24 ++ 3,100,000 0 0 3,100,000
5,630,000 0 0 5,630,000 Louisville and Jefferson
(Counties of), Kentucky,
Visitors and Convention
Commission, FSA Insured,
3.950% 01/01/24 + 5,630,000 0 0 5,630,000
0 0 5,900,000 5,900,000 Mason (County of), Eastern
Kentucky Power Company, CFC LOC,
VRN 10/15/14 + 0 0 5,900,000 5,900,000
----------------------------------------------------
33,457,515 0 5,900,000 39,357,515
----------------------------------------------------
LOUISIANA - 2.4%
$8,000,000 $0 $0 $8,000,000 Ascension Parish, Louisiana,
PCR, (Borden Inc. Project),
Credit Suisse LOC,
3.900% 12/01/09 + $8,000,000 $0 $0 $8,000,000
6,050,000 0 0 6,050,000 Caddo Parish, Louisiana,
Industrial Development Board,
(Frymaster Corporation Project),
Chemical Bank LOC,
3.850% 01/01/03 + 6,050,000 0 0 6,050,000
0 0 1,000,000 1,000,000 East Baton Rouge, Mortgage
Finance Authority,
Single-family Housing,
3.850% 10/01/26 + 1,000,000 1,000,000
5,100,000 0 0 5,100,000 Louisiana (State of), Public
Facilities Authority, Hospital
Revenue,(Charter Forest
Hospital Project), Bankers
Trust Company LOC,
3.850% 12/01/13 + 5,100,000 0 0 5,100,000
20,225,000 0 0 20,225,000 Louisiana (State of), Public
Facilities Authority, PCR,
(Ciba-Geigy Corporation Project),
Swiss Bank LOC,
3.900% 12/01/04 + 20,225,000 0 0 20,225,000
0 0 4,000,000 4,000,000 Louisiana (State of), Reference,
Series A,
7.00% 08/01//02 0 0 4,180,303 4,180,303
4,700,000 0 0 4,700,000 South Louisiana, Port
Commission, Marine Term
Facilities Revenue,
(Occidental Petroleum), Credit
Suisse LOC,
3.900% 07/01/21 + 4,700,000 0 0 4,700,000
----------------------------------------------------
44,075,000 0 5,180,303 49,255,303
----------------------------------------------------
MAINE - 1.1%
18,150,000 0 0 18,150,000 Maine (State of), Solid Waste
Resources Recovery Revenue,
Series K, AMT,
Midland Bank Plc LOC,
3.950% 07/01/12+ 18,150,000 0 0 18,150,000
5,000,000 0 0 5,000,000 Maine (State of), Tax
Anticipation Notes,
4.500% 06/27/97 + 5,022,155 0 0 5,022,155
----------------------------------------------------
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
23,172,155 0 0 23,172,155
----------------------------------------------------
MARYLAND - 0.8%
6,600,000 0 0 6,600,000 Baltimore (City of), Maryland,
Economic Development Authority
Revenue, (Blue Circle Inc.
Project), Den Danske Bank LOC,
3.800% 12/01/17 + 6,600,000 0 0 6,600,000
3,300,000 0 0 3,300,000 Baltimore (City of), Maryland,
Port Facilities Authority,
(Occidental Petroleum Company),
National Westminster Bank
Plc LOC,
3.500% 10/14/11 +++ 3,300,000 0 0 3,300,000
4,750,000 0 0 4,750,000 Maryland (State of), Economic
Development Revenue, (General
Binding Corporation Project),
AMT, Harris Trust & Savings
Bank LOC,
4.000% 03/01/26 + 4,750,000 0 0 4,750,000
2,300,000 0 0 2,300,000 Maryland (State of), Industrial
Development Finance Authority,
(Rock-Tennessee Converting
Company), AMT, Trust Company
Bank LOC,
4.000% 05/01/06 + 2,300,000 0 0 2,300,000
----------------------------------------------------
16,950,000 0 0 16,950,000
----------------------------------------------------
MICHIGAN - 1.6%
3,425,000 0 0 3,425,000 Jackson (County of), Michigan,
Economic Development
Corporation, Industrial
Development Revenue, (Jackson
Association LLC), Bank One,
Dayton LOC,
3.950% 10/01/14 + 3,425,000 0 0 3,425,000
8,000,000 0 0 8,000,000 Michigan (State of), Hospital
Financing Authority Revenue,
(St. Mary Hospital of Livonia),
Series A, Comerica Bank LOC,
3.950% 07/01/17 + 8,000,000 0 0 8,000,000
3,000,000 0 0 3,000,000 Michigan (State of), Housing
Development Authority, Limited
Obligation Revenue,(Pine Ridge
Project), National Westminster
Bank Plc LOC,
3.900% 10/01/07 + 3,000,000 0 0 3,000,000
2,600,000 0 0 2,600,000 Michigan (State of), Strategic
Funding Ltd. Obligation Revenue,
(Uni Boring Company Inc.),
National Bank of Detroit LOC,
3.900% 12/01/98 + 2,600,000 0 0 2,600,000
0 0 4,150,000 4,150,000 Michigan (State of),
Underground Revenue Bonds,
(AMBAC - LOC),
5.000% 05/01/97 0 0 4,180,427 4,180,427
0 0 7,600,000 7,600,000 University of Michigan,
Hospital Revenue, Series A,
VRN 12/01/19 ++ 0 0 7,600,000 7,600,000
MICHIGAN (CONTINUED)
$0 $2,400,000 $800,000 $3,200,000 University of Michigan Revenue,
Medical Services Plan, Series A,
VRN 12/01/27 ++ $0 $2,400,000 $800,000 $3,200,000
----------------------------------------------------
17,025,000 2,400,000 12,580,427 32,005,427
----------------------------------------------------
MINNESOTA - 1.2%
5,500,000 0 0 5,500,000 Duluth, Minnesota, Health Care
Facilities Revenue, (Miller-Dwan
Medical Center), Series A,
Citibank LOC,
3.800% 04/01/19 + . 5,500,000 0 0 5,500,000
6,050,000 0 0 6,050,000 Minneapolis, Minnesota,
Community Development Agency
Revenue,(Arena Acquisition
Project), Series A, First
Bank LOC,
3.850% 10/01/24 + 6,050,000 0 0 6,050,000
Minneapolis, Minnesota, School
District, Tax & AID:
0 0 3,000,000 3,000,000 4.500% 09/09/97 * 0 0 3,017,620 3,017,620
0 0 3,000,000 3,000,000 TAN, Series B, (SD Credit
Program - LOC),
4.000% 03/14/97 0 0 3,009,786 3,009,786
0 0 1,600,000 1,600,000 Minneapolis, Minnesota, Special
School District, (SD Credit
Program - LOC),
5.000% 02/01/97 0 0 1,607,804 1,607,804
6,000,000 0 0 6,000,000 Rochester (City of), Minnesota,
Health Care Facilities Revenue,
(Mayo Medical Center),
Series 92,
3.650% 10/24/96 6,000,000 0 0 6,000,000
----------------------------------------------------
17,550,000 0 7,635,210 25,185,210
----------------------------------------------------
MISSISSIPPI - 0.9%
0 0 5,000,000 5,000,000 Grenada (County of), Georgia
Pacific Corporation Project,
Sumitomo Bank LOC,
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
VRN 12/01/14 +++ 0 0 5,000,000 5,000,000
6,200,000 0 0 6,200,000 Lawrence (County of),
Mississippi, PCR,
(Georgia-Pacific Corporation
Project), Bank of Tokyo LOC,
3.925% 12/01/00 + 6,200,000 0 0 6,200,000
2,900,000 0 0 2,900,000 Mississippi Business Finance
Corporation, Industrial
Development Revenue, AMT:
(Choctaw Maid Farms Inc.
Project), Rabobank Nederland LOC,
4.000% 03/01/10 + 2,900,000 0 0 2,900,000
3,000,000 0 0 3,000,000 (Nitek Metal Services Inc.
Project), AMT, Bank of Tokyo LOC,
4.050% 03/01/05 + 3,000,000 0 0 3,000,000
0 0 2,100,000 2,100,000 Mississippi State, GO,
4.500% 09/01/97 0 0 2,111,732 2,111,732
----------------------------------------------------
12,100,000 0 7,111,732 19,211,732
----------------------------------------------------
MISSOURI - 12.8%
Berkeley IDR Bonds:
0 5,000,000 0 5,000,000 (Flight Safety International,
Inc. Project)
VRN 09/01/04 + 0 5,000,000 0 5,000,000
0 5,000,000 0 5,000,000 (Wetterau Project),
VRN 07/01/08 + 0 5,000,000 0 5,000,000
0 10,800,000 0 10,800,000 Columbia Water & Electric
Revenue Bonds, Series B,
Toronto Dominion Bank LOC,
VRN 12/01/15 + 0 10,800,000 0 10,800,000
0 4,100,000 0 4,100,000 Columbia Special Obligation,
Toronto Dominion Bank, LOC,
VRN 06/01/08 + 0 4,100,000 0 4,100,000
0 1,400,000 0 1,400,000 Independence IDR, (Resthaven
Project,)
VRN 02/01/25 + 0 1,400,000 0 1,400,000
Kansas City, Missouri,
Industrial Development Revenue:
0 0 4,000,000 4,000,000 VRN 12/31/08 + 0 0 4,000,000 4,000,000
5,000,000 0 0 5,000,000 (Owens-Illinois Inc. Project),
3.750% 12/31/08 + 5,000,000 0 0 5,000,000
0 2,400,000 14,700,000 17,100,000 Kansas City, Missouri,
Multi-family Housing Revenue,
Timblane Village Apartments
Project, Security Pacific
National Bank LOC,
VRN 06/01/08 + 0 2,400,000 14,700,000 17,100,000
Mexico IDR Bonds, Weterau Inc.:
0 810,000 0 810,000 Project A,
VRN 12/01/98 + 0 810,000 0 810,000
0 815,000 0 815,000 Project B,
VRN 12/01/98 + 0 815,000 0 815,000
MISSOURI (CONTINUED)
$0 $900,000 $0 $900,000 Minneapolis & St. Paul Housing
Authority,
VRN 08/15/25 ++ $0 $900,000 $0 $900,000
Missouri (State of), Health &
Educational Facilities
Authority Revenue:
0 2,000,000 0 2,000,000 4.500% 09/08/97 0 2,010,831 0 2,010,831
0 1,600,000 0 1,600,000 VRN 09/01/09 + 0 1,600,000 0 1,600,000
0 3,050,000 2,550,000 5,600,000 VRN 09/01/10 + 0 3,050,000 2,550,000 5,600,000
0 1,500,000 0 1,500,000 VRN 11/01/19 + 0 1,500,000 0 1,500,000
0 0 1,500,000 1,500,000 (ACES-SSM Health Care
Project), Series A, Industrial
Bank of Japan LOC,
VRN 12/01/15 + 0 0 1,500,000 1,500,000
0 0 15,490,000 15,490,000 (Barnes Hospital Project),
Morgn Stanley LOC,
VRN 12/01/15 + 0 0 15,490,000 15,490,000
0 4,370,000 0 4,370,000 (Barnes Jewish, Inc.),
Series A
3.900% 05/15/97 0 4,376,968 0 4,376,968
0 2,000,000 0 2,000,000 (Branson School District
Advanced Funding Program),
4.500% 09/08/97 0 2,010,831 0 2,010,831
0 0 250,000 250,000 (Christian Health Servies,
Series B, Morgan Guaranty LOC,
VRN 11/01/19 + 0 0 250,000 250,000
0 6,625,000 0 6,625,000 (Drury College), Series A,
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
VRN 08/15/21 ++ 0 6,625,000 0 6,625,000
0 2,000,000 0 2,000,000 (Pattonville School District
Advanced Funding Program),
4.500% 09/08/97 0 2,010,831 0 2,010,831
0 5,800,000 0 5,800,000 Series C,
VRN 06/01/19 + 0 5,800,000 0 5,800,000
0 7,000,000 0 7,000,000 (Rockers & College Project),
VRN 06/01/14 + 0 7,000,000 0 7,000,000
(Sisters of Mercy Health):
0 0 9,600,000 9,600,000 VRN 06/01/19 + 0 0 9,600,000 9,600,000
0 1,300,000 0 1,300,000 Series A,
3.600% 12/01/96 0 1,300,000 0 1,300,000
10,000,000 0 0 10,000,000 Series B, ABN-AMRO Bank LOC.
3.800% 12/01/16 + 10,000,000 0 0 10,000,000
0 0 6,100,000 6,100,000 Series D,
VRN 06/01/19 + 0 0 6,100,000 6,100,000
0 9,500,000 0 9,500,000 (St. Frances Medical Center),
Series A, Local de France LOC,
VRN 06/01/26 ++ 0 9,500,000 0 9,500,000
(St. Louis University Project),
0 345,000 0 345,000 4.00% 10/01/96 0 345,000 0 345,000
0 2,800,000 0 2,800,000 VRN 12/01/05 ++ 0 2,800,000 0 2,800,000
(Washington University Project),
0 7,000,000 0 7,000,000 VRN 11/01/25 + 0 7,000,000 0 7,000,000
0 1,400,000 0 1,400,000 VRN 09/01/30 ++ 0 1,400,000 0 1,400,000
0 4,300,000 0 4,300,000 VRN 09/01/30 ++ 0 4,300,000 0 4,300,000
0 7,900,000 0 7,900,000 Series C,
VRN 09/01/30 ++ 0 7,900,000 0 7,900,000
Missouri (State of),
Environment Improvement &
Energy Authority:
0 8,000,000 9,500,000 17,500,000 VRN 07/01/17 ** 0 8,000,000 9,500,000 17,500,000
0 2,000,000 0 2,000,000 PCR,
VRN 06/01/23 + 0 2,000,000 0 2,000,000
0 2,795,000 3,000,000 5,795,000 Sanwa Bank LOC,
VRN 10/01/02 0 2,795,000 3,000,000 5,795,000
0 600,000 0 600,000 Missouri Water Pollution
Control, Series B,
7.750% 11/01/96 0 602,291 0 602,291
0 1,505,000 0 1,505,000 Moberly Hospital Authority,
Pre-refunded,
8.750% 03/01/16 ++ 0 1,580,692 0 1,580,692
9,725,000 0 0 9,725,000 Platte (County of), Missouri,
Industrial Development
Authority, Multi-family Housing
Revenue, (Wexford Place
Project), Bank One LOC,
3.950% 04/01/28 + 9,725,000 0 0 9,725,000
MISSOURI (CONTINUED)
St. Charles (County of),
Missouri, Development
Authority, Industrial Revenue:
$0 $3,070,000 $0 $3,070,000 (Casalon Apartments),
VRN 09/01/25 + $0 $3,070,000 $0 $3,070,000
0 3,175,000 0 3,175,000 (Westchester Apartment Projects),
VRN 10/01/11 + 0 3,175,000 0 3,175,000
2,400,000 0 0 2,400,000 (Venture Stores Inc. Project),
Bank of Nova Scotia LOC,
3.900% 10/01/06 + 2,400,000 0 0 2,400,000
St. Louis County IDR:
0 8,000,000 0 8,000,000 VRN 12/01/03 + 0 8,000,000 0 8,000,000
0 5,500,000 0 5,500,000 VRN 12/01/05 + 0 5,500,000 0 5,500,000
0 3,785,000 0 3,785,000 VRN 07/15/06 0 3,785,000 0 3,785,000
0 4,000,000 0 4,000,000 VRN 05/01/09 + 0 4,000,000 0 4,000,000
0 785,000 0 785,000 (Rockwell School),
VRN 02/01/97 0 795,687 0 795,687
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 1,000,000 1,000,000 St. Louis Industrial
Development Authority,
VRN 05/01/2009 0 0 1,000,000 1,000,000
0 2,500,000 3,500,000 6,000,000 St. Louis Tax and Revenue
Anticipation Notes,
4.750% 06/30/97 0 2,514,011 3,519,615 6,033,626
0 13,000,000 2,400,000 15,400,000 University of Missouri
Capital Projects,
4.750% 06/30/97 0 13,079,172 2,413,126 15,492,298
----------------------------------------------------
27,125,000 160,651,314 73,622,741 261,399,055
----------------------------------------------------
MONTANA - 0.0%
0 0 1,400,000 1,400,000 Montana Health Facilities
Authority Revenue, (Healthcare
Pooled Loan Project),
Series A, FGIC Insured,
VRN 12/0/1/15 + 0 0 1,400,000 1,400,000
0 0 5,800,000 5,800,000 Montana State Boeard of
Investments, Payroll Tax
Workers Compensation,
VRN 06/01/20 + 0 0 5,800,000 5,800,000
----------------------------------------------------
0 0 7,200,000 7,200,000
----------------------------------------------------
NEBRASKA - 0.4%
5,000,000 0 0 5,000,000 Omaha, Nebraska, Public Power
District,
3.550% 10/25/96 5,000,000 0 0 5,000,000
4,000,000 0 0 4,000,000 York, Nebraska, Industrial
Development Revenue,
(Sunstrand Corporation
Project), AMT, Union Bank of
Switzerland LOC,
3.650% 08/01/17 + 4,000,000 0 0 4,000,000
----------------------------------------------------
9,000,000 0 0 9,000,000
----------------------------------------------------
NEW HAMPSHIRE - 0.8%
15,500,000 0 0 15,500,000 New Hampshire (State of),
Housing Finance Authority,
Series 1, (Multi-family
Housing, Manchester), PNC
Bank LOC,
3.850% 12/01/12 + 15,500,000 0 0 15,500,000
----------------------------------------------------
NEW JERSEY - 0.2%
5,000,000 0 0 5,000,000 Jersey City, New Jersey,
Anticipation Notes,
4.500% 09/26/97 5,021,313 0 0 5,021,313
----------------------------------------------------
NEW MEXICO - 0.2%
3,100,000 0 0 3,100,000 Albuquerque, New Mexico,
(Charter Hospital Inc.
Project), Bankers Trust
Company LOC,
3.850% 03/01/14 + 3,100,000 0 0 3,100,000
----------------------------------------------------
NEW YORK - 0.2%
5,000,000 0 0 5,000,000 Great Neck North, New York,
Water Authority, Systems
Revenue, Series A, FGIC
Insured,
3.800% 01/01/20 + 5,000,000 0 0 5,000,000
0 0 4,100,000 4,100,000 New York City, Series B,
VRN 10/01/20 ++ 0 0 4,100,000 4,100,000
0 0 1,300,000 1,300,000 New York City, Series B-4, GO,
VRN 08/15/22 ++ 0 0 1,300,000 1,300,000
0 1,600,000 16,400,000 18,000,000 New York City Municipal Water
Financing Authority, Water &
Sewer System Revenue,
Series A, FGIC Insured, 0 1,600,000 16,400,000 18,000,000
----------------------------------------------------
VRN 06/15/25 ++ 5,000,000 1,600,000 21,800,000 28,400,000
----------------------------------------------------
NORTH CAROLINA - 3.0%
$8,000,000 $0 $0 $8,000,000 Bladen (County of), North
Carolina, Industrial
Facilities and Pollution
Control Financing Authority,
(BCH Energy LP Project), AMT,
Bank of Tokyo LOC,
4.050% 11/01/20 + $8,000,000 $0 $0 $8,000,000
10,855,000 0 0 10,855,000 Charlotte (County of), North
Carolina, Housing Authority,
Multi-family Housing Revenue,
(Merrywood Senior Adult
Project), AMT, Branch Banking
and Trust Company LOC,
3.950% 06/01/11 + 10,855,000 0 0 10,855,000
3,000,000 0 0 3,000,000 Iredell, (County of), North
Carolina, Industrial
Facilities and Pollution
Control Financing Authority,
(Sullivan Corporation
Project), AMT, Bank One LOC,
4.050% 01/01/11 + 3,000,000 0 0 3,000,000
Mecklenburg (County of),
North Carolina, Industrial
Facilities and Pollution
Control
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
Finance Authority:
2,000,000 0 0 2,000,000 (Sterigenics International
Project), AMT, Comerica Bank,
California LOC,
3.950% 03/01/16 + 2,000,000 0 0 2,000,000
2,125,000 0 0 2,125,000 (Virkler Company Project), AMT,
4.050% 12/01/04 + 2,125,000 0 0 2,125,000
9,020,000 0 0 9,020,000 Mecklenburg (County of),
North Carolina, Series B, GO,
4.700% 03/01/97 . 9,074,560 0 0 9,074,560
Raleigh Durham Airport
Authority, Royal Bank of
Canada - LOC:
0 0 5,300,000 5,300,000 VRN 11/01/15 ++ 0 0 5,300,000 5,300,000
0 0 9,450,000 9,450,000 Special Facilities Revenue,
American Airlines, Series A,
VRN 11/01/15 ++ 0 0 9,450,000 9,450,000
4,400,000 0 0 4,400,000 Randolph (County of), North
Carolina, Industrial Facilities
and Pollution Control Financing
Authority, (Wayne Steel Inc.),
AMT, Bank One, Akron LOC,
4.050% 09/01/05 + 4,400,000 0 0 4,400,000
3,300,000 0 0 3,300,000 Stanley (County of), North
Carolina, Industrial
Development Authority, PCR,
(General Signal Corporation),
Wachovia Bank LOC,
3.900% 12/01/00 + 3,300,000 0 0 3,300,000
3,810,000 0 0 3,810,000 Winston-Salem, North Carolina,
(Risk Acceptance Management
Corporation Project),
Certificates of Participation,
Series 1988, National
Westminster Bank Plc SBPA,
3.950% 07/01/09 + 3,810,000 0 0 3,810,000
----------------------------------------------------
46,564,560 0 14,750,000 61,314,560
----------------------------------------------------
OHIO - 1.6%
0 700,000 0 700,000 Columbus, Ohio School District,
4.00% 12/01/96 0 700,553 0 700,553
2,425,000 0 0 2,425,000 Defiance (County of), Ohio,
Industrial Development Revenue,
Isaac Property Company,
Series A, Key Bank LOC,
2.850% 07/01/00 + 2,425,000 0 0 2,425,000
4,200,000 0 0 4,200,000 Lorain (County of), Ohio,
Hospital Revenue, (Humility
of Mary Health Care
Corporation Hospital),
Series B, PNC Bank LOC,
3.850% 12/15/03 + 4,200,000 0 0 4,200,000
Ohio (State of), Air Quality
Developement Authority:
0 1,600,000 2,300,000 3,900,000 VRN 12/01/15 ++ 0 1,600,000 2,300,000 3,900,000
0 0 1,200,000 1,200,000 VRN 12/01/15 ++ 0 0 1,200,000 1,200,000
10,000,000 0 0 10,000,000 (Duquesne Power), Union Bank
of Switzerland LOC,
3.950% 07/16/97 . 10,000,000 0 0 10,000,000
0 0 5,000,000 5,000,000 Ohio, (State of), Highway GO,
4.500% due 05/15/97 0 0 5,021,000 5,021,000
3,500,000 0 0 3,500,000 Ohio (State of), Water
Development Authority, AMT,
Union Bank of Switzerland LOC,
3.800% 05/01/97 3,500,000 0 0 3,500,000
2,400,000 0 0 2,400,000 St. Marys, Ohio, Industrial
Development Revenue,
(Setex Inc. Project), AMT,
Industrial Bank of Japan
Ltd. LOC,
4.400% 12/01/01 + 2,400,000 0 0 2,400,000
----------------------------------------------------
22,525,000 2,300,553 8,521,000 33,346,553
----------------------------------------------------
OKLAHOMA - 0.3%
5,890,000 0 0 5,890,000 Oklahoma (State of), Housing
Finance Agency, Single Family
Housing Revenue, PFloats PT41,
AMT, GNMA Collateralized,
Commerzbank SBPA,
4.050% 08/01/18 + 5,890,000 0 0 5,890,000
----------------------------------------------------
OREGON - 0.4%
Portland (City of), Oregon,
Multi-family Housing Revenue:
$1,000,000 $0 $0 $1,000,000 (Union Station Project), AMT,
U.S. National Bank LOC,
4.000% 12/01/27 + $1,000,000 $0 $0 $1,000,000
5,500,000 0 0 5,500,000 (University Park Apartments
Project), Chase Manhattan
Bank LOC,
3.850% 10/01/11 + 5,500,000 0 0 5,500,000
2,000,000 0 0 2,000,000 Washington (County of),
Oregon, Housing Authority,
Multi-family Housing Revenue,
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
(Cedar Mill Project), AMT,
Societe Generale LOC,
3.950% 09/20/25 + 2,000,000 0 0 2,000,000
----------------------------------------------------
8,500,000 0 0 8,500,000
----------------------------------------------------
PENNSYLVANIA - 4.7%
Allegheny (County of) Hospital
Development Authority:
0 1,590,000 0 1,590,000 VRN 03/01/18 + 0 1,590,000 0 1,590,000
0 0 2,600,000 2,600,000 VRN 03/01/20 ++ 0 0 2,600,000 2,600,000
0 0 8,650,000 8,650,000 VRN 03/01/20 + 0 0 8,650,000 8,650,000
Allegheny (County of),
Pennsylvania, Industrial
Development Authority,
Duquesne Power:
5,000,000 0 0 5,000,000 Canadian Imperial Bank of
Commerce LOC,
3.750% 11/07/96 5,000,000 0 0 5,000,000
9,800,000 0 0 9,800,000 United Jewish Federation,
Series B, PNC Bank LOC,
3.850% 10/01/25 + . 9,800,000 0 0 9,800,000
Delaware Valley, Pennsylvania,
Regional Finance Authority:
10,000,000 0 0 10,000,000 Local Government Revenue,
Series C, Midland Bank LOC,
3.950% 12/01/20 + 10,000,000 0 0 10,000,000
14,700,000 0 0 14,700,000 Series 1986, Midland Bank
Plc LOC,
3.950% 08/01/16 + 14,700,000 0 0 14,700,000
10,000,000 0 0 10,000,000 Philadelphia, Pennsylvania,
School District, Tax and
Revenue Anticipation Notes,
4.500% 06/30/97 10,035,876 0 0 10,035,876
0 0 11,200,000 11,200,000 Temple University Higher
Education Revenue,
4.625% 05/20/97 0 0 11,265,723 11,265,723
5,025,000 0 0 5,025,000 Union (County of),
Pennsylvania, Hospital
Authority Revenue,(Evangelical
Community Hospital), Series B,
PNC Bank LOC,
3.850% 10/01/23 + 5,025,000 0 0 5,025,000
Venango (City of),
Pennsylvania, Industrial
Development Authority Revenue,
AMT, National Westminster
Bank Plc LOC:
10,300,000 0 0 10,300,000 3.700% 10/11/96 10,300,000 0 0 10,300,000
7,150,000 0 0 7,150,000 3.700% 10/22/96 7,150,000 0 0 7,150,000
----------------------------------------------------
72,010,876 1,590,000 22,515,723 96,116,599
----------------------------------------------------
RHODE ISLAND - 0.2%
4,000,000 0 0 4,000,000 Rhode Island (State of),
Industrial Facilities
Corporation, Industrial
Development Revenue, (Handy &
Harman Electric Project),
Bank of Nova Scotia LOC,
3.950% 04/01/04 + 4,000,000 0 0 4,000,000
----------------------------------------------------
SOUTH CAROLINA - 2.4%
6,100,000 0 0 6,100,000 Charleston, South Carolina,
Hospital Facilities Revenue,
(Brown Schools Charleston),
Bankers Trust Company LOC,
3.650% 06/01/11 + 6,100,000 0 0 6,100,000
5,000,000 0 0 5,000,000 Charleston, South Carolina,
Tax Anticipation Notes, GO,
3.600% 03/14/97 5,002,151 0 0 5,002,151
8,700,000 0 0 8,700,000 Greenville (County of),
South Carolina, School
District, GO,
3.500% 03/01/97 8,706,966 0 0 8,706,966
5,250,000 0 0 5,250,000 Kershaw (County of), South
Carolina, Industrial
Development Revenue,
(Deroyal Textiles Inc.
Project), AMT, Third National
Bank, Nashville LOC,
4.000% 12/01/07 + 5,250,000 0 0 5,250,000
2,370,000 0 0 2,370,000 South Carolina (State of),
Housing Authority, Rental
Housing Revenue,(Hampton
Pointe Apartments Project),
Bank of New York LOC,
3.950% 12/01/07 + 2,370,000 0 0 2,370,000
SOUTH CAROLINA (CONTINUED)
South Carolina (State of),
Jobs, Economic Development
Authority, Health Facilities
Revenue:
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
$5,960,000 $0 $0 $5,960,000 (Martha Franks Baptist Center
Project), Wachovia Bank,
Columbia LOC,
3.900% 04/01/19 + $5,960,000 $0 $0 $5,960,000
3,400,000 0 0 3,400,000 (Specialty Equipment Companies
Project), AMT, Barclays Bank
Plc LOC,
4.050% 11/01/10 + 3,400,000 0 0 3,400,000
10,000,000 0 0 10,000,000 University of South Carolina,
Athletic Facilities Revenue,
Bond Anticipation Notes,
3.200% 02/28/97 10,000,000 0 0 10,000,000
0 0 2,050,000 2,050,000 York, (County of), (Electric
Project NRU-84-N-1), CFC LOC,
VRN 09/15/14 + 0 0 2,050,000 2,050,000
----------------------------------------------------
46,789,117 0 2,050,000 48,839,117
----------------------------------------------------
TENNESSEE - 1.4%
2,600,000 0 0 2,600,000 Chattanooga, Tennessee,
Industrial Development Board,
(Warehouse Row Limited Project),
ABN-AMRO Bank, Nevada LOC,
3.850% 12/15/12 + 2,600,000 0 0 2,600,000
6,969,000 0 0 6,969,000 Cumberland (County of),
Tennessee, Industrial
Development Board,
Industrial Development
Revenue, (Crossville Ceramics
Company Project), American
National Bank & Trust
Company LOC,
3.850% 01/01/00 + 6,969,000 0 0 6,969,000
2,300,000 0 0 2,300,000 Jackson (County of), Tennessee,
Industrial Development Board,
(Essette Project), Series A,
Bank of America, Illinois LOC,
3.950% 08/01/00 + 2,300,000 0 0 2,300,000
13,150,000 0 0 13,150,000 Metropolitan Government of
Nashville & Davidson (Counties
of), Tennessee, Health and
Educational Facilities Board,
(Vanderbilt University),
3.500% 01/15/97 # 13,155,445 0 0 13,155,445
3,245,000 0 0 3,245,000 Shelby (County of), Tennessee,
Health Educational & Housing
Facilities Board, Multi-family
Housing Revenue, (Flag Manor),
AMT, Federal Home Loan Bank,
Indianapolis LOC,
4.000% 01/01/23 + 3,245,000 0 0 3,245,000
----------------------------------------------------
28,269,445 0 0 28,269,445
----------------------------------------------------
TEXAS - 6.8%
3,800,000 0 0 3,800,000 Bexar (County of), Texas,
(Army Retirement), Series 85-B,
Rabobank Nederland LOC,
3.625% 07/01/11 + 3,800,000 0 0 3,800,000
1,000,000 0 0 1,000,000 Brazos River, Texas, Higher
Educational Authority,
(Hoffman-Laroche), Bankers
Trust Company LOC,
3.750% 04/01/02 + 1,000,000 0 0 1,000,000
0 0 1,065,000 1,065,000 Dallas Waterworks & Sewer,
Series A,
5.900% 10/01/96 0 0 1,065,000 1,065,000
0 0 1,650,000 1,650,000 Dallas Waterworks Revenue Bonds,
8.000% due 10/01/97 0 0 1,711,975 1,711,975
3,000,000 0 0 3,000,000 El Paso, Texas, Multi-family
Housing Finance Corporation,
(Viva Apartments Project),
AMT, General Electric Capital
Corporation LOC,
4.100% 09/01/23 + 3,000,000 0 0 3,000,000
0 0 2,000,000 2,000,000 Gulf Coast Waste Disposal
Authority,
VRN 10/01/17 0 0 2,000,000 2,000,000
Harris (County of), Texas:
Health Facilities Revenue,
Development Corporation
Hospital Revenue:
0 0 3,700,000 3,700,000 (Children's Hospital),
Series B2, NationsBank of
Texas SBPA,
VRN 10/01/19 + 0 0 3,700,000 3,700,000
4,700,000 0 0 4,700,000 (Methodist Hospital),
Methodist Hospital and Morgan
Guaranty Trust Company SBPA,
4.000% 12/01/25 ++ 4,700,000 0 0 4,700,000
2,000,000 0 0 2,000,000 (St. Luke's Episcopal Hospital),
Series A, St. Luke's Episcopal
SBPA,
4.000% 02/15/21 ++ 2,000,000 0 0 2,000,000
0 0 2,200,000 2,200,000 (St. Luke's), Series B
VRN 02/15/16 ++ 0 0 2,200,000 2,200,000
3,300,000 0 5,200,000 8,500,000 (St. Luke's Episcopal Hospital),
Series C, Morgan Guaranty
Trust Company SBPA,
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
4.000% 02/15/16++ 3,300,000 5,200,000 8,500,000
TEXAS (CONTINUED)
Harris (County of), Texas:
Health Facilities Revenue,
Development Corporation
Hospital Revenue:
$0 $1,000,000 $5,200,000 $6,200,000 (St. Luke's Episcopal Hospital),
Series D, Morgan Guaranty
Trust Company SBPA,
VRN 02/15/16 ++ $0 $1,000,000 $5,200,000 $6,200,000
Industrial Development
Corporation, Industrial
Development Revenue, AMT:
4,000,000 0 0 4,000,000 (Forged Products Inc. Project),
Banc One LOC,
4.050% 05/01/03 + 4,000,000 0 0 4,000,000
4,200,000 0 0 4,200,000 (Zeon Chemicals Project),
Industrial Bank of Japan,
Ltd. LOC,
4.400% 02/01/09 + 4,200,000 0 0 4,200,000
10,500,000 0 0 10,500,000 Toll Road, Unlimited Tax,
Series G, Morgan Guaranty
Trust Company SBPA,
3.800% 08/01/20 + 10,500,000 0 0 10,500,000
0 0 2,000,000 2,000,000 Houston, GO,
5.500% 04/01/97 0 0 2,017,521 2,017,521
0 0 335,000 335,000 Lewisville Water & Sewer
Revenue, Pre-refunded,
8.050% 02/15/97 0 0 340,429 340,429
0 0 1,500,000 1,500,000 Klein Independent School
District, Pre-refunded,
6.875% 08/01/97 0 0 1,537,310 1,537,310
3,700,000 0 0 3,700,000 McAllen, Texas, Health
Facilities Development
Revenue, PNC Bank LOC,
3.900% 12/01/24 + 3,700,000 0 0 3,700,000
0 0 1,805,000 1,805,000 North Harris, Montgomery
Community College District, GO,
6.100% due 02/15/97 0 0 1,821,574 1,821,574
9,200,000 0 0 9,200,000 Port Development Corporation,
(Pasadena Term Company Project),
ABN-AMRO Bank LOC,
4.050% 12/01/04 + 9,200,000 0 0 9,200,000
2,600,000 0 0 2,600,000 Sulphur Springs, Texas,
Industrial Development
Authority, (Hon Industrial
Inc. Project), Credit Suisse LOC,
3.950% 12/01/13 + 2,600,000 0 0 2,600,000
17,635,000 0 0 17,635,000 Texas (State of), Municipal
Power Agency Revenue,
Pre-refunded at 100%,
14.625% 03/01/97 18,414,317 0 0 18,414,317
0 0 1,000,000 1,000,000 Texas (State of), Public
Finance Authority, Series A,
6.000% 10/01/96 0 0 1,000,000 1,000,000
40,000,000 0 0 40,000,000 Texas (State of), Tax and
Revenue Anticipation Notes,
Series A,
4.750% 08/29/97 40,281,151 0 0 40,281,151
----------------------------------------------------
110,695,468 1,000,000 27,793,809 139,489,277
----------------------------------------------------
UTAH - 1.4%
5,000,000 0 0 5,000,000 Intermountain Power Agency,
Utah, Power Supply Revenue,
Series F, Morgan Guaranty
Trust Company LOC,
3.930% 06/16/97 # 5,000,000 0 0 5,000,000
3,200,000 0 0 3,200,000 Murray (County of), Utah,
Industrial Development
Authority, (Hunter Douglas
Realty Property), AMT,
ABN-AMRO Bank LOC,
4.000% 09/01/14 + 3,200,000 0 0 3,200,000
1,900,000 0 0 1,900,000 Salt Lake (City of), Utah,
Airport Revenue, Series A, AMT,
Credit Suisse, New York LOC,
3.900% 06/01/98 + 1,900,000 0 0 1,900,000
14,300,000 0 0 14,300,000 Salt Lake (City of), Utah,
Health Care Facilities Revenue,
Class A, Westdeutsche
Landesbank SBPA,
3.800% 01/01/20 + 14,300,000 0 0 14,300,000
0 1,700,000 2,000,000 3,700,000 Salt Lake County, PCR,
VRN 08/01/07 ++ 0 1,700,000 2,000,000 3,700,000
----------------------------------------------------
24,400,000 1,700,000 2,000,000 28,100,000
----------------------------------------------------
VIRGINIA - 0.6%
2,500,000 0 0 2,500,000 Colonial Heights, Virginia,
Industrial Development
Authority, (Philip Morris
Companies Project),
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
3.900% 03/01/05 + 2,500,000 0 0 2,500,000
3,900,000 0 0 3,900,000 Greensville (County of),
Virginia, Industrial
Development Authority, PCR,
(Perdue Farms Inc. Project),
AMT, Trust Company Bank LOC,
4.000% 10/01/06 + 3,900,000 0 0 3,900,000
VIRGINIA (CONTINUED)
$3,300,000 $0 $0 $3,300,000 Roanoke, Virginia, Industrial
Development Authority, Hospital
Revenue,(Roanoke Memorial
Hospital Project), Series C,
(Carilion Health Systems),
Morgan Guaranty Trust Company
SBPA,
3.750% 07/01/19 + $3,300,000 $0 $0 $3,300,000
0 1,300,000 0 1,300,000 Peninsula Ports Authority,
Coal Term,
VRN 07/01/16 ++ 0 1,300,000 0 1,300,000
2,000,000 0 0 2,000,000 Spotsylvania (County of),
Virginia, Industrial
Development Revenue,
(Carlisle Corporation Project),
Trust Company Bank LOC,
3.900% 06/01/08 + 2,000,000 0 0 2,000,000
----------------------------------------------------
11,700,000 1,300,000 0 13,000,000
----------------------------------------------------
WASHINGTON - 3.0%
Pierce (County of), Washington:
5,500,000 0 0 5,500,000 Economic Development Authority,
(CSX Corporation Project),
Deutsche Bank LOC,
3.900% 11/01/96 # 5,500,000 0 0 5,500,000
3,000,000 0 0 3,000,000 Housing Authority Revenue,
(Eagles Watch Project), Key
Bank, Washington LOC,
3.750% 10/01/20 + 3,000,000 0 0 3,000,000
Washington (State of), GO:
25,500,000 0 0 25,500,000 Series 96A, Landesbank
Hessen SBPA,
3.900% 06/01/20 + 25,500,000 0 0 25,500,000
4,015,000 0 0 4,015,000 Series A,
6.500% 07/01/97 4,090,787 0 0 4,090,787
7,075,000 0 0 7,075,000 Washington (State of),
Housing Finance Authority,
Multi-family Mortgage Revenue,
(Inglenook Court Project),
AMT, Bank of America LOC,
4.150% 07/01/25 ++ 7,075,000 0 0 7,075,000
Washington (State of),
Public Power Supply System,
Nuclear Project Number 3:
0 0 5,200,000 5,200,000 Series 3A-1, Bank of
America LOC,
VRN 07/01/18 + 0 0 5,200,000 5,200,000
0 0 7,300,000 7,300,000 Series 3A-2, Bank of Japan,
Ltd. LOC,
VRN 07/01/18 + 0 0 7,300,000 7,300,000
3,000,000 0 0 3,000,000 Washington (State of),
Student Loan Finance
Association, Series B, AMT,
National Westminster Bank
Plc LOC,
3.700% 01/01/04 + 3,000,000 0 0 3,000,000
----------------------------------------------------
48,165,787 0 12,500,000 60,665,787
----------------------------------------------------
WEST VIRGINIA - 1.6%
10,000,000 0 0 10,000,000 Fayette (County of), West
Virginia, County Commission,
Solid Waste Disposal
Facilities Revenue,
(Georgia-Pacific Corporation
Project), AMT, Industrial
Bank of Japan Ltd. LOC,
3.700% 05/01/18 + 10,000,000 0 0 10,000,000
23,580,000 0 0 23,580,000 West Virginia (State of),
Hospital Finance Authority,
Hospital Revenue,(St. Mary's
Hospital Project),
Bank One LOC,
3.900% 10/01/12 + 23,580,000 0 0 23,580,000
----------------------------------------------------
33,580,000 0 0 33,580,000
----------------------------------------------------
WISCONSIN - 1.5%
4,000,000 0 0 4,000,000 Menomonee Falls, Wisconsin,
Industrial Development
Authority Revenue,(Jemma LLC
Project), AMT, Bank One,
Milwaukee LOC,
4.050% 09/01/14 + 4,000,000 0 0 4,000,000
Oshkosh, Wisconsin, Area
School District, Tax and
Revenue Anticipation
Promissory Notes:
5,000,000 0 0 5,000,000 4.250% 08/20/97 5,012,743 0 0 5,012,743
4,500,000 0 0 4,500,000 4.500% 08/20/97 4,521,066 0 0 4,521,066
2,395,000 0 0 2,395,000 Pleasant Prairie, Wisconsin,
Industrial Development
Authority Revenue, (Nucon
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
Corporation Project), AMT,
American National Bank &
Trust Company, LOC,
4.000% 02/01/22 + 2,395,000 0 0 2,395,000
5,200,000 0 0 5,200,000 Pewaukee, Wisconsin, School
District, Tax and Revenue
Anticipation Notes,
4.500% 09/22/97 5,220,358 0 0 5,220,358
8,520,000 0 0 8,520,000 Wisconsin (State of),
Health Facilities Authority,
(Daughters of Charity),
3.850% 11/01/16 + 8,520,000 0 0 8,520,000
----------------------------------------------------
29,669,167 0 0 29,669,167
----------------------------------------------------
-----------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS AND NOTES 1,420,438,158 179,194,424 309,785,772 1,909,418,354
-----------------------------------------------------------------------------------------
SHORT TERM PUTS - 1.2%
ILLINOIS - 0.6%
$0 $0 $12,000,000 $12,000,000 Chicago, GO Limited, Morgan
Guaranty LOC,
3.650% 10/31/96 $0 $0 $12,000,000 $12,000,000
----------------------------------------------------
MISSOURI - 0.3%
0 7,000,000 0 7,000,000 Missouri State Improvement
& Energy Board,
VRN 06/01/14 0 7,000,000 0 7,000,000
----------------------------------------------------
PENNSYLVANIA - 0.2%
0 0 4,500,000 4,500,000 Cumberland County Municipa
Authority, PNC Bank LOC,
VRN 06/01/97 0 0 4,500,000 4,500,000
----------------------------------------------------
------------------------------------------------------------------------------------------
TOTAL SHORT TERM PUTS 0 7,000,000 16,500,000 23,500,000
------------------------------------------------------------------------------------------
TAX-FREE COMMERCIAL PAPER - 5.0%
FLORIDA - 0.7%
0 0 13,950,000 13,950,000 Sunshine State, Government
Finance Commission,
3.600% 12/12/96 0 0 13,950,000 13,950,000
----------------------------------------------------
GEORGIA - 0.8%
0 0 2,000,000 2,000,000 Georgia Municipal Gas
Authority,
3.500% 10/16/96 0 0 2,000,000 2,000,000
0 0 15,000,000 15,000,000 Municipal Electric Authority,
3.600% 11/08/96 0 0 15,000,000 15,000,000
----------------------------------------------------
0 0 17,000,000 17,000,000
----------------------------------------------------
ILLINOIS - 0.2%
0 0 3,350,000 3,350,000 Cook County Health Fund,
3.500% 10/01/96 0 0 3,350,000 3,350,000
----------------------------------------------------
KANSAS - 0.1%
0 0 2,000,000 2,000,000 Burlington, PCR,
3.600% 10/16/96 0 0 2,000,000 2,000,000
----------------------------------------------------
MISSOURI - 2.7%
0 0 3,300,000 3,300,000 Anne Arundel County, Part
Facilities,
3.700% 12/13/96 0 0 3,300,000 3,300,000
Independence Missouri,
Water Utility Revenues:
0 5,350,000 0 5,350,000 3.450% 10/01/96 0 5,350,000 0 5,350,000
0 3,400,000 0 3,400,000 3.500% 10/04/96 0 3,400,000 0 3,400,000
0 1,385,000 0 1,385,000 Kansas City Missouri,
School District Building,
3.650% 02/01/96 0 1,385,900 0 1,385,902
Missouri Environmental
Improvement & Energy:
0 3,000,000 0 3,000,000 3.600% 10/09/96 0 3,000,000 0 3,000,000
0 5,000,000 0 5,000,000 3.800% 03/19/97 0 5,000,000 0 5,000,000
0 5,000,000 7,000,000 12,000,000 3.650% 11/19/96 0 5,000,000 7,000,000 12,000,000
<PAGE>
NATIONS FUND
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED FUND
COMBINED PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 1996
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
PILOT PILOT PILOT PILOT
MISSOURI SHORT-TERM MISSOURI SHORT-TERM
NATIONS SHORT-TERM TAX-EXEMPT NATIONS SHORT-TERM TAX-EXEMPT
TAX EXEMPT TAX-EXEMPT DIVERSIFIED SECURITY TAX EXEMPT TAX-EXEMPT DIVERSIFIED
FUND FUND FUND COMBINED DESCRIPTIONS FUND FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
0 0 2,000,000 2,000,000 3.650% 11/19/96 0 0 2,000,000 2,000,000
0 0 7,475,000 7,475,000 3.700% 02/14/97 7,475,000 7,475,000
Missouri Health & Education
Facilities Authority:
0 4,000,000 0 4,000,000 3.450% 10/10/96 0 4,000,000 0 4,000,000
0 8,600,000 0 8,600,000 3.550% 10/15/96 0 8,600,000 0 8,600,000
----------------------------------------------------
0 35,735,902 19,775,000 55,510,902
----------------------------------------------------
NEW YORK - 0.2%
0 0 5,000,000 5,000,000 New York City, NY,
3.700% 02/21/97 0 0 5,000,000 5,000,000
----------------------------------------------------
TAX-FREE COMMERCIAL PAPER
(CONTINUED)
TEXAS - 0.3%
$0 $0 $6,100,000 $6,100,000 San Antonio, Electric & Gas,
Series A,
3.600% 10/10/96 $0 $0 $6,100,000 $6,100,000
----------------------------------------------------
-----------------------------------------------------------------------------------------
TOTAL TAX-FREE COMMERCIAL PAPER 0 35,735,902 67,175,000 102,910,902
-----------------------------------------------------------------------------------------
MONEY MARKET FUNDS - 0.3%
100,000 0 0 100,000 AIM Tax-Exempt Fund 100,000 0 0 100,000
0 1,044,920 2,142,703 3,187,623 Federated Tax-Exempt
Obligation Fund 0 1,044,920 2,142,703 3,187,623
25,000 2,741,200 0 2,766,200 Fidelity Institutional
Tax-Exempt Cash Fund 25,000 2,741,200 0 2,766,200
----------------------------------------------------
-----------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUNDS 125,000 3,786,120 2,142,703 6,053,823
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $2,041,883,079) $1,420,563,158 $225,716,446 $395,603,475 $2,041,883,079
-----------------------------------------------------------------------------------------
</TABLE>
+ Variable rate demand notes payable upon not more than seven calendar
days' notice. The interest rate shown reflects the rate in effect at
September 30, 1996.
++ Variable rate demand notes payable upon not more than one calendar
day's notice. The interest rate shown reflects the rate in effect at
September 30, 1996.
+++ Variable rate demand notes payable upon not more than thirty calendar
days' notice. The interest rate shown reflects the rate in effect at
September 30, 1996.
# Put date.
## Amount represents less than 0.1%.
* When issued security.
** Security that has been sold or will be sold prior to Closing.
ABBREVIATIONS:
AMT Alternative Minimum Tax
CFC Cooperative Finance Corporation
FGIC Federal Guaranty Investment Corporation
FNMA Federal National Mortgage Association
FSA Financial Security Assurance
GNMA Government National Mortgage Association
GO General Obligation
LOC Letter of Credit
PCR Pollution Control Revenue
SBPA Standby Bond Purchase Agreement
<PAGE>
NATIONS TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED
Pro Forma Combining Statement of Assets and Liabilities
September 30, 1996
<TABLE>
<CAPTION>
Nations Tax Exempt Pilot Missouri Pilot Short-Term
Fund Short-Term Tax-Exempt Tax-Exempt Diversified
---- --------------------- ----------------------
<S> <C> <C> <C>
ASSETS:
Investments at Value (cost $1,420,563,158, $1,683,365,524
and $3,103,928,682) $1,420,563,158 $225,716,446 $395,603,475
Cash 271,962 $49 93
Income Receivable 7,715,431 1,102,244 2,451,356
Receivable for Fund Shares Sold 612,239 - -
Receivable due from Advisor - - -
Prepaid and Other Assets 3,237 - -
Unamortized Organization Costs - - 25,145
- - ------
TOTAL ASSETS 1,429,166,027 226,818,739 398,080,069
LIABILITIES:
Income Distribution Payable 3,398,534 540,990 1,017,729
Payable for Investments Purchased 31,700,519 - 6,732,974
Payable for fund shares redeemed 90,744 - -
Other Payables - - 27,492
Accrued Expenses 462,953 103,962 173,110
------- ------- -------
TOTAL LIABILITIES 35,652,750 644,952 7,951,305
---------- ------- ---------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $1,393,513,277 $226,173,786 $390,128,764
============== ============ ============
NET ASSETS BY CLASS:
Primary A $1,010,789,693 $199,573,275 $372,331,928
============== ============ ============
Primary B $15,852,017 n/a n/a
=========== === ===
Investor A $131,947,939 n/a n/a
============ === ===
Investor B $180,923,839 $12,275,062 $14,187,532
============ =========== ===========
Investor C $53,986,789 n/a n/a
=========== === ===
Investor D $13,000 $14,325,449 $3,609,303
======= =========== ==========
SHARES OUTSTANDING BY CLASS:
Primary A 1,010,836,299 199,583,672 372,304,050
============= =========== ===========
Primary B 15,852,552 n/a n/a
========== === ===
Investor A 131,953,867 n/a n/a
=========== === ===
Investor B 180,932,032 12,275,076 14,186,256
=========== ========== ==========
Investor C 53,989,247 n/a n/a
========== === ===
Investor D 13,001 14,326,360 3,609,311
====== ========== =========
PRIMARY A SHARES:
Net Asset Value per Share $1.00 $1.00 $1.00
===== ===== =====
PRIMARY B SHARES:
Net Asset Value per Share $1.00 n/a n/a
===== === ===
INVESTOR A SHARES:
Net Asset Value per Share $1.00 n/a n/a
===== === ===
INVESTOR B SHARES:
Net Asset Value per Share $1.00 $1.00 $1.00
===== ===== =====
INVESTOR C SHARES:
Net Asset Value per Share $1.00 n/a n/a
===== === ===
INVESTOR D SHARES:
Net Asset Value per Share $1.00 $1.00 $1.00
===== ===== =====
</TABLE>
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
(a) Unamortized Organization Costs of the acquired fund will be borne by
the Advisor.
<TABLE>
<CAPTION>
Adjustments to Pro Forma
Proforma Combined (Note 1)
-------- -----------------
<S> <C> <C>
ASSETS:
Investments at Value (cost $1,420,563,158, $1,683,365,524
and $3,103,928,682) - $2,041,883,079
Cash - 272,104
Income Receivable - 11,269,031
Receivable for Fund Shares Sold - 612,239
Receivable due from Advisor 25,145 (a) 25,145
Prepaid and Other Assets - 3,237
Unamortized Organization Costs (25,145)(a) 0
-------- -
TOTAL ASSETS 0 2,054,064,834
LIABILITIES:
Income Distribution Payable - 4,957,253
Payable for Investments Purchased - 38,433,493
Payable for fund shares redeemed - 90,744
Other Payables - 27,492
Accrued Expenses - 740,026
- -------
TOTAL LIABILITIES 0 36,297,702
- ----------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $0 $2,009,815,827
== ==============
NET ASSETS BY CLASS:
Primary A $1,582,694,897
==============
Primary B $15,852,017
===========
Investor A $131,947,939
============
Investor B $207,386,433
============
Investor C $53,986,789
===========
Investor D $17,947,752
===========
SHARES OUTSTANDING BY CLASS:
Primary A 1,582,724,022
=============
Primary B 15,852,552
==========
Investor A 131,953,867
===========
Investor B 207,393,365
===========
Investor C 53,989,247
==========
Investor D 17,948,672
==========
PRIMARY A SHARES:
Net Asset Value per Share $1.00
=====
PRIMARY B SHARES:
Net Asset Value per Share $1.00
=====
INVESTOR A SHARES:
Net Asset Value per Share $1.00
=====
INVESTOR B SHARES:
Net Asset Value per Share $1.00
=====
INVESTOR C SHARES:
Net Asset Value per Share $1.00
=====
INVESTOR D SHARES:
Net Asset Value per Share $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 TAX EXEMPT FUND
PILOT MISSOURI SHORT-TERM TAX-EXEMPT
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED
Pro Forma Statement of Operations (Unaudited)
For the Twelve Month Period Ending September 30, 1996
<TABLE>
<CAPTION>
Nations Tax Exempt Pilot Missouri Pilot Short-Term
Fund Short-Term Tax-Exempt Tax-Exempt Diversified
---- --------------------- ----------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $50,430,787 $8,245,979 $14,075,831
----------- ---------- -----------
Total Investment Income 50,430,787 8,245,979 14,075,831
EXPENSES:
Investment Advisory 5,515,689 462,146 784,700
Administration 1,378,363 255,939 432,988
Portfolio Accounting Fee - 14,300 21,599
Transfer Agent 324,282 11,005 12,609
Custodian 225,538 68,183 41,925
Legal and Audit Fees 183,083 58,899 105,460
Trustees' Fees 88,841 8,171 17,457
Amortization of organization costs 0 35,247 18,882
Other expenses 382,154 66,825 147,219
------- ------ -------
Subtotal 8,097,949 980,715 1,582,839
SHAREHOLDER SERVICING AND DISTRIBUTION FEES
Primary B 30,715 - -
Investor A 321,072 - -
Investor B 287,650 27,737 33,939
Investor C 81,414 - -
Investor D 13 65,782 1,915
Fees waived and/or reimbursed by
investment advisor (3,987,020) - (128,578)
---------- - ---------
TOTAL EXPENSES 4,831,793 1,074,234 1,490,115
--------- --------- ---------
NET INVESTMENT INCOME 45,598,994 7,171,745 12,585,716
========== ========= ==========
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Realized Gain/(Loss) on securities - 20,359 56,904
- ------ ------
Net Realized and Unrealized gain/(loss)
on investments 0 20,359 56,904
= ====== ======
NET INCREASE/(DECREASE) IN ASSETS
RESULTING FROM OPERATIONS $45,598,994 $7,192,104 $12,642,620
=========== ========== ===========
</TABLE>
LEGEND:
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
(C) ORGANIZATION EXPENSE OF THE ACQUIRED FUND IS NOT AN EXPENSE OF THE
COMBINED FUND.
(D) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY
EXPENSE REIMBURSEMENT.
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Adjustments to Pro Forma
Proforma Combined (Note 1)
-------- -----------------
<S> <C> <C>
INVESTMENT INCOME:
Interest $58,676,766
-----------
Total Investment Income 58,676,766
EXPENSES:
Investment Advisory 1,246,846 (a) 8,009,381
Administration (64,945)(a) 2,002,345
Portfolio Accounting Fee (35,899)(a) 0
Transfer Agent - 347,896
Custodian (27,527)(b) 308,119
Legal and Audit Fees (164,359)(b) 183,083
Trustees' Fees (25,628)(b) 88,841
Amortization of organization costs (54,129)(c) 0
Other expenses (53,511)(b) 542,687
-------- -------
Subtotal 820,848 9,899,512
SHAREHOLDER SERVICING AND DISTRIBUTION FEES
Primary B N/A 30,715
Investor A N/A 321,072
Investor B (12,335)(a) 336,991
Investor C N/A 81,414
Investor D N/A 67,710
Fees waived and/or reimbursed by
investment advisor (94,544)(d) (4,081,564)
----------- -----------
TOTAL EXPENSES 713,969 6,655,850
------- ---------
NET INVESTMENT INCOME (713,969) 52,020,916
========= ==========
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Realized Gain/(Loss) on securities 20,359
------
Net Realized and Unrealized gain/(loss)
on investments 20,359
======
NET INCREASE/(DECREASE) IN ASSETS
RESULTING FROM OPERATIONS ($713,969) $52,041,275
========== ===========
</TABLE>
LEGEND:
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
(C) ORGANIZATION EXPENSE OF THE ACQUIRED FUND IS NOT AN EXPENSE OF THE
COMBINED FUND.
(D) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY
EXPENSE REIMBURSEMENT.
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
<PAGE>
Nations Tax Exempt Fund
Pilot Missouri Short-Term Tax-Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Notes to Pro Forma Financial Statements (Unaudited)
1. Basis of Combination
Nations FundTrust (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end investment company. As of
September 30, 1996, the Trust offers thirty-two 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 Tax Exempt Fund, the Pilot Short-Term Tax-Exempt Diversified Fund and
the Pilot Missouri Short-Term Tax-Exempt Fund for the twelve month period ended
September 30, 1996. These statements have been derived from books and records
utilized in calculating daily net asset value at September 30, 1996.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pilot Short-Term Tax-Exempt Diversified Fund and the
Pilot Missouri Short-Term Tax-Exempt Fund in exchange for shares of Nations Tax
Exempt 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 Pilot Short-Term Tax-Exempt Diversified Fund and
the Pilot Missouri Short-Term Tax-Exempt 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
<PAGE>
Nations Tax Exempt Fund
Pilot Missouri Short-Term Tax-Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Notes to Pro Forma Financial Statements (Unaudited)
with the historical financial statements of the funds incorporated by reference
in the Statement of Additional Information.
For the twelve month period ended September 30, 1996, the Nations Tax Exempt
Fund's investment advisory fee was computed based on the annual rate of 0.40% of
average daily net assets. The administration fee was computed based on the
annual rate of 0.10% 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 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
("Primary B Servicing Plan"), Investor A Shares ("Investor A Servicing Plan"),
Investor B Shares ("Investor B Servicing Plan"), Investor C Shares ("Investor C
Servicing Plan") and Investor D Shares ("Investor D Servicing Plan") of Nations
Tax Exempt Fund. Under the Primary B Servicing Plan, Investor A Servicing Plan,
Investor B Servicing Plan, Investor C Servicing Plan and Investor D Servicing
Plan, aggregate payments may not exceed 0.25%, 0.25%, 0.20%, 0.15% and 0.25%, on
an annualized basis, of the average daily net assets of the Primary B Shares,
Investor A Shares, Investor B Shares, Investor C Shares and Investor D Shares,
respectively, of the Fund.
The Trust has adopted a distribution plan ("Investor D Distribution Plan")
pursuant to Rule 12b-1 under the 1940 Act for the Investor D Shares of the
Nations Tax Exempt 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 of the Fund
2
<PAGE>
Nations Tax Exempt Fund
Pilot Missouri Short-Term Tax-Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Notes to Pro Forma Financial Statements (Unaudited)
2. Portfolio Valuation
Securities of Nations Tax Exempt 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 fair market value of the instrument is not significant.
Pilot Short-Term Tax-Exempt Diversified Fund and Pilot Missouri Short-Term
Tax-Exempt Fund use 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 Tax Exempt Fund which would have been issued at September 30,
1996 in connection with the proposed reorganization. The pro forma number of
shares outstanding of 2,009,861,725 consists of 390,099,618 shares assumed
issued for Pilot Short-Term Tax-Exempt Diversified Fund and 226,185,109 shares
assumed issued for Pilot Missouri Short-Term Tax-Exempt Fund in the
reorganization plus 1,393,576,998 shares of Nations Tax Exempt Fund at September
30, 1996.
3
<PAGE>
Nations Fund
Nations Tax Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Combined Portfolio of Investments (Continued)
September 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
Pilot Pilot
Short-Term Short-Term
Nations Tax Exempt Nations Tax Exempt
Tax Exempt Diversified SECURITY Tax Exempt Diversified
Fund Fund DESCRIPTIONS Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES - 95.3%
ALABAMA - 2.7%
Alabama (State of), Housing
Finance Authority, Multi-family
Housing, AmSouth Bank N A ,
Birmingham LOC:
<S> <C> <C> <C> <C> <C> <C>
$6,400,000 $0 $6,400,000 (Ski Lodge III), Series A,
3.900% 03/01/15 + $6,400,000 $0 $6,400,000
6,000,000 0 6,000,000 (Turtle Lake Project), Series F,
4.000% 09/01/23 + 6,000,000 0 6,000,000
1,690,000 0 1,690,000 Birmingham, Alabama, Industrial
Development Board, (Avondale -
Phase III ),
AmSouth Bank N.A., Birmingham LOC,
4.250% 06/01/00 + 1,690,000 0 1,690,000
25,200,000 0 25,200,000 Birmingham, Alabama, Medical
Clinic Board Revenue, (University
of Alabama Health Services),
Morgan Guaranty Trust Company,
New York LOC,
4.100% 12/01/26 ++ 25,200,000 0 25,200,000
3,740,000 0 3,740,000 Gadsden, Alabama, Industrial
Development Board, Industrial
Development Revenue, (Keystone
Foods Corporation Project), AMT,
Bank of Scotland LOC,
4.000% 05/01/04 + 3,740,000 0 3,740,000
4,000,000 0 4,000,000 Mobile, Alabama, Industrial
Development Board,
(IB Chemical Company Project),
Industrial Bank of Japan Ltd. LOC,
4.050% 12/01/97 + 4,000,000 0 4,000,000
2,000,000 0 2,000,000 Opelika, Alabama, Industrial
Development Board, (Flowers
Baking Company Project),
Trust Company Bank LOC,
3.900% 12/01/99 + 2,000,000 0 2,000,000
-------------------------------------------------------
49,030,000 0 49,030,000
--------------------------------------------------------
ALASKA - 0.3%
5,000,000 0 5,000,000 Valdez, Alaska, Marine Term
Revenue, (Arco Transportation
Project), Series B, Atlantic
Richfield Guaranteed,
3.950% 05/01/31 + 5,000,000 0 5,000,000
--------------------------------------------------------
ARIZONA - 4.5%
Apache (County of), Arizona,
Industrial Development Authority,
PCR,
(Tuscon Electric Power):
5,500,000 0 5,500,000 Series 83A, Barclays Bank Plc LOC,
3.850% 12/15/18 + 5,500,000 0 5,500,000
29,300,000 0 29,300,000 Series A, Chemical Bank LOC,
3.850% 06/15/20 + 29,300,000 0 29,300,000
8,000,000 0 8,000,000 Goodyear, Arizona, Industrial
Development Authority,
(Walle Corporation Project),
AMT, PNC Bank LOC,
4.000% 05/01/15 + 8,000,000 0 8,000,000
4,200,000 0 4,200,000 Maricopa (County of), Arizona,
Industrial Development Authority,
Multi-family Housing Revenue,
(Privado Park Apartments Project),
Series A, AMT, Bank One,
Phoenix LOC,
4.000% 06/01/34 + 4,200,000 0 4,200,000
Maricopa (County of), Arizona,
Unified School District:
10,000,000 0 10,000,000 No. 210 Phoenix, Tax Anticipation
Notes, Series A,
4.400% 07/31/97 10,031,998 0 10,031,998
5,000,000 0 5,000,000 No. 213 Tempe, Tax Anticipation
Notes, Series A,
4.400% 07/31/97 5,015,999 0 5,015,999
3,000,000 0 3,000,000 Mesa, Arizona, Development
Corporation Revenue, Special Tax,
Series B,
Westdeutsche Landesbank LOC,
3.650% 10/10/96 3,000,000 0 3,000,000
Pima (County of), Arizona,
Industrial Development Authority,
(Tuscon Electric), Series A:
9,000,000 0 9,000,000 Bank of America LOC,
3.800% 07/01/22 + 9,000,000 0 9,000,000
7,700,000 0 7,700,000 Societe Generale LOC,
3.900% 06/15/22 + 7,700,000 0 7,700,000
-----------------------------------------------------
81,747,997 0 81,747,997
-----------------------------------------------------
ARKANSAS - 0.8%
0 1,785,000 1,785,000 Jonesboro Residential Housing,
3.800% 05/01/97 0 1,785,000 1,785,000
9,100,000 0 9,100,000 Little Rock, Arkansas, Health
Facilities Board, Hospital
Revenue, (Southwest Hospital Project),
FGIC Insured, Bank of Nova
Scotia SBPA,
3.675% 10/01/18 + 9,100,000 0 9,100,000
3,250,000 0 3,250,000 Lowell, Arkansas, Industrial
Development Revenue,
(Little Rock Newspapers
Inc. Project), AMT, Bank
of New York LOC,
4.050% 06/01/31 + 3,250,000 0 3,250,000
-----------------------------------------------------
12,350,000 1,785,000 14,135,000
-----------------------------------------------------
CALIFORNIA - 0.8%
500,000 0 500,000 Los Angeles, California,
Regional Airports, (Los Angeles
International Airport),
Wachovia Bank LOC,
3.900% 12/01/24 ++ 500,000 0 500,000
5,000,000 0 5,000,000 San Diego, California, Tax
Anticipation Notes, Series A,
4.500% 07/02/97 5,027,100 0 5,027,100
10,500,000 0 10,500,000 Student Education Loan Marketing
Corporation, Student Loan Revenue,
Series A, Dresdner Bank LOC,
3.900% 11/01/02 + 10,500,000 0 10,500,000
-----------------------------------------------------
16,027,100 0 16,027,100
-----------------------------------------------------
COLORADO - 3.4%
0 5,000,000 5,000,000 Arapahoe County School District #005,
4.500% 06/30/97 0 5,023,528 5,023,528
Colorado (State of), Housing
Finance Authority, Multi-family
Housing Revenue:
2,900,000 0 2,900,000 (Central Park Convention Center),
Chemical Bank LOC,
3.400% 05/01/97 + 2,900,000 0 2,900,000
13,000,000 0 13,000,000 (Grants Plaza), Series A,
Bankers Trust Company LOC,
3.925% 11/01/09 + 13,000,000 0 13,000,00
2,000,000 0 2,000,000 Colorado (State of), Post
Secondary Educational
Authority, Economic Development
Revenue, Bank One LOC,
3.950% 06/01/11 + 2,000,000 0 2,000,000
0 5,000,000 5,000,000 Denver (City & County of), Colorado,
5.000% 10/01/96 0 5,000,000 5,000,000
Denver (City & County of), Colorado,
Airport Revenue, AMT:
3,500,000 0 3,500,000 Series F, Bank of Montreal LOC,
3.950% 11/15/25 + 3,500,000 0 3,500,000
5,000,000 0 5,000,000 Series G, Credit Local de France LOC,
3.950% 11/15/25 + 5,000,000 0 5,000,000
2,205,000 0 2,205,000 El Paso (County of), Colorado,
Multi-family Housing Revenue,
(Briarglen Apartments Project),
General Electric Capital
Corporation Guarantee,
3.900% 12/01/24 + 2,205,000 0 2,205,000
<PAGE>
Nations Fund
Nations Tax Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Combined Portfolio of Investments (Continued)
September 30, 1996
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
Pilot Pilot
Short-Term Short-Term
Nations Tax Exempt Nations Tax Exempt
Tax Exempt Diversified SECURITY Tax Exempt Diversified
Fund Fund DESCRIPTIONS Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COLORADO (Continued)
$21,000,000 $0 $21,000,000 Moffat (County of), Colorado,
PCR, CFC Guarantee,
3.950% 07/01/20 + $21,000,000 $0 $21,000,000
2,000,000 0 2,000,000 University of Colorado,
University Revenues, Morgan
Guaranty Trust Company SBPA,
Series A,
3.50% 06/01/20 + 2,000,000 0 2,000,000
-----------------------------------------------------
51,605,000 10,023,528 61,628,528
-----------------------------------------------------
CONNECTICUT - 0.1%
2,100,000 0 2,100,000 Connecticut (State of),
Housing Finance Authority, AMT,
3.650% 04/10/97 2,100,000 0 2,100,000
------------------------------------------------------
DELAWARE - 1.3%
24,000,000 0 24,000,000 Delaware (State of), Economic
Development Authority
Revenue, Hospital
Billing, Series C, MBIA
Insured, Morgan Stanley
Group, Inc. SBPA,
3.900% 12/01/15 + 24,000,000 0 24,000,000
-------------------------------------------------------
DISTRICT OF COLUMBIA - 0.9%
2,900,000 0 2,900,000 District of Columbia, Hospital
Revenue, (Columbia Women's
Hospital),
Series A, Mitsubishi Bank Ltd. LOC,
4.000% 07/01/20 + 2,900,000 0 2,900,000
District of Columbia Revenue,
ACES-Georgetown University:
0 5,700,000 5,700,000 Series C,
VRN 04/01/12 + 0 5,700,000 5,700,000
0 7,300,000 7,300,000 Series D,
VRN 04/01/17 + 0 7,300,000 7,300,000
0 1,100,000 1,100,000 Series E,
VRN 04/01/18 + 0 1,100,000 1,100,000
-----------------------------------------------------
2,900,000 14,100,000 17,000,000
-----------------------------------------------------
FLORIDA - 6.4%
10,810,000 0 10,810,000 Broward (County of),
Florida, Housing Finance
Authority, Multi-family
Housing Revenue, (Fishermans
Project), Continental Casualty
Surety Bond,
3.600% 11/01/07 + 10,810,000 0 10,810,000
Dade (County of), Florida,
Industrial Development Authority:
2,200,000 0 2,200,000 (Dolphins Stadium Project), Series C,
Societe Generale LOC,
3.850% 01/01/16 + 2,200,000 0 2,200,000
3,000,000 0 3,000,000 (Phase II Furniture Corporation
Project), AMT, Sun Bank N.A. LOC,
4.000% 11/01/14 + 3,000,000 0 3,000,000
14,998,500 0 14,998,500 Florida (State of), Board of
Education, Capital Outlay, BTP-179,
Bankers Trust Company LOC,
3.800% 06/01/01 + 14,998,500 0 14,998,500
Florida (State of), Housing
Finance Agency, Multi-family
Housing Revenue:
2,400,000 0 2,400,000 (Clear Lake Project), Series D,
Continental Casualty Surety Bond,
3.600% 01/01/34 + 2,400,000 0 2,400,000
4,800,000 0 4,800,000 (Lake RMK Project), Southtrust Bank LOC,
4.100% 06/01/07 + 4,800,000 0 4,800,000
5,000,000 0 5,000,000 (Lakeside Project), Series B,
Bankers Trust Company LOC,
3.925% 08/01/06 + 5,000,000 0 5,000,000
7,000,000 0 7,000,000 (Woodlands Project), Citibank LOC,
3.800% 12/01/07 + 7,000,000 0 7,000,000
6,000,000 0 6,000,000 Jacksonville, Florida, Health
Facilities Authority, Hospital Revenue,
Baptist Health Properties Project),
Barnett Bank, Florida LOC,
4.100% 06/01/20 ++ 6,000,000 0 6,000,000
2,500,000 0 2,500,000 Key West, Florida, Community
Redevelopment Agency Revenue,
(Pier House Joint Venture), PNC
Bank, Ohio LOC,
3.850% 01/01/98 + 2,500,000 0 2,500,000
0 3,900,000 3,900,000 Manatee (County of), PCR,
(Florida Power & Light Co. Project),
VRN 09/01/24 ++ 0 3,900,000 3,900,000
0 5,400,000 5,400,000 Martin (County of), PCR,
VRN 09/01/24 ++ 0 5,400,000 5,400,000
10,385,000 0 10,385,000 Orange (County of), Florida,
Health Facilities Authority
Revenue,(SHCC Services Inc.
Project), Sun Bank N.A. LOC,
3.800% 12/01/23 + 10,385,000 0 10,385,000
5,000,000 0 5,000,000 Orange (County of), Florida,
Housing Finance Agency, Series
B, AMT,
3.650% 04/01/97 5,000,000 0 5,000,000
0 2,680,000 2,680,000 Putnam (County of), Development
Authority, PCR, Florida Power &
Light Company,
VRN 09/01/24 ++ 0 2,680,000 2,680,000
3,350,000 0 3,350,000 St. Lucie (County of), Florida,
Industrial Development Authority,
(Florida Convalescent Centers
Project), Series A, Toronto
Dominion Bank LOC,
3.650% 01/01/11 +++ 3,350,000 0 3,350,000
St. Lucie (County of), Florida,
PCR, (Florida Power and Light Company):
4,500,000 0 4,500,000 3.650% 10/25/96 4,500,000 0 4,500,000
8,025,000 0 8,025,000 3.650% 11/22/96 8,025,000 0 8,025,000
5,000,000 0 5,000,000 3.650% 11/22/96 5,000,000 0 5,000,000
0 6,700,000 6,700,000 VRN 01/01/26 0 6,700,000 6,700,000
2,000,000 0 2,000,000 University of Northern Florida,
Capital Improvement, First Union
National Bank of North Carolina LOC,
3.800% 11/01/24 + 2,000,000 0 2,000,000
-----------------------------------------------------
96,968,500 18,680,000 115,648,500
-----------------------------------------------------
GEORGIA - 4.9%
10,000,000 0 10,000,000 Albany-Dougherty, Georgia,
Payroll Development Authority,
PCR, (Philip Morris Companies
Inc. Project),
3.900% 10/01/05 + 10,000,000 0 10,000,000
0 1,000,000 1,000,000 Burke (County of), Development
Authority, PCR, Georgia Power Plant
Project, 4th Series,
VRN 09/30/96 ++** 0 1,000,000 1,000,000
0 6,000,000 6,000,000 Cobb (County of), Development
Authority, PCR, Georgia
Power Plant Project,
Trust Company Bank LOC,
VRN 07/01/11 +** 0 6,000,000 6,000,000
3,800,000 0 3,800,000 Cobb (County of), Georgia,
Residential Care Facilities
for the Elderly Authority, (North
Georgia Presbyterian Homes,
Inc. Project), Trust Company
Bank LOC,
3.900% 08/01/18 + 3,800,000 0 3,800,000
3,000,000 0 3,000,000 Columbia (County of), Georgia,
Residential Care Facilities for
the Elderly Authority,
(Augusta Residential Center
on Aging), Trust Company Bank LOC,
3.900% 01/01/21 + 3,000,000 0 3,000,000
2,250,000 0 2,250,000 Columbus, Georgia, Housing
Authority, Multi-family Housing
Revenue, (Quail Ridge Project),
Colombus Bank & Trust Company LOC,
4.150% 02/01/05 + 2,250,000 0 2,250,000
</TABLE>
<PAGE>
Nations Fund
Nations Tax Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Combined Portfolio of Investments (Continued)
September 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
Pilot Pilot
Short-Term Short-Term
Nations Tax Exempt Nations Tax Exempt
Tax Exempt Diversified SECURITY Tax Exempt Diversified
Fund Fund DESCRIPTIONS Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GEORGIA (Continued)
$3,755,000 $0 $3,755,000 Columbus, Georgia, Industrial
Development Revenue, (Parisian Inc.
Project),
Columbus Bank & Trust Company LOC,
4.200% 04/01/07 + $3,755,000 $0 $3,755,000
0 2,200,000 2,200,000 Dekalb (County of), Georgia, Atlantic
Jewish Federation, Wachovia Bank LOC,
VRN 08/01/21 + 0 2,200,000 2,200,000
Dekalb (County of), Georgia, Hospital
Authority, Revenue Anticipation
Certificates:
3,960,000 0 3,960,000 (Dekalb Medical Center Project),
Trust Company Bank LOC,
3.900% 09/01/09 + 3,960,000 0 3,960,000
2,000,000 0 2,000,000 (Egleston Childrens Health),
Series A, SunTrust Bank, Atlanta LOC,
3.800% 12/01/17 + 2,000,000 0 2,000,000
Dekalb (County of), Georgia,
Housing Authority, Multi-family
Housing Revenue:
5,430,000 0 5,430,000 (Haystack Apartment Projects), AMT,
General Electric Capital Corporation
LOC,
4.150% 12/01/20 + 5,430,000 0 5,430,000
6,625,000 0 6,625,000 (Stone Mill Run Apartments Project),
Series A, AMT, First Tennessee Bank LOC,
4.000% 08/01/27 + 6,625,000 0 6,625,000
5,000,000 0 5,000,000 (Terrace Club Project), Series B,
Southtrust Bank LOC,
4.000% 11/01/15 + 5,000,000 0 5,000,000
0 6,600,000 6,600,000 Fulco Hospital Authority Revenue,
Piedmont Hospital Project,
Trust Company Bank LOC,
VRN 02/01/07 + 0 6,600,000 6,600,000
2,900,000 0 2,900,000 Greene (County of), Georgia,
Industrial Development
Authority Revenue,
(Chipman-Union Inc. Project),
Series A, AMT, Trust Company
Bank LOC,
4.000% 03/01/05 + 2,900,000 0 2,900,000
3,700,000 0 3,700,000 Gwinnett (County of), Georgia,
Industrial Development Revenue,
(United Stationers Company
Project), PNC Bank LOC,
3.850% 12/31/02 + . 3,700,000 0 3,700,000
3,000,000 0 3,000,000 Henry (County of), Georgia,
Development Authority
Revenue, (Georgia-Pacific
Corporation Project), Trust
Company Bank LOC,
3.900% 05/01/04 + 3,000,000 0 3,000,000
0 400,000 400,000 Monroe (County of), Development
Authority, PCR,
VRN 07/01/25 ++** 0 400,000 400,000
5,000,000 0 5,000,000 Smyrna, Georgia, Multi-family
Housing Authority Revenue,
(Post VY Project),
FNMA Collateralized,
0 2,400,000 2,400,000 State of Georgia, GO
6.500% 12/01/96 0 2,411,785 2,411,785
4,000,000 0 4,000,000 Tallapoosa, Georgia,
Development Authority Revenue,
(U.S. Canada Company Project),
Harris Trust & Savings Bank LOC,
3.850% 02/01/15 + 4,000,000 0 4,000,000
5,000,000 0 5,000,000 Thomaston-Upson (County of),
Georgia, Industrial
Development Revenue,
Quad/Thomaston Project),
First Union National Bank,
Charlotte LOC,
3.950% 04/01/00 + 5,000,000 0 5,000,000
0 510,000 510,000 Walton County, School District,
5.00% 01/01/97 0 511,369 511,369
-----------------------------------------------------
69,420,000 19,123,154 88,543,154
-----------------------------------------------------
IDAHO - 1.6%
20,000,000 0 20,000,000 Idaho Health Facilities
Authority, Holy Cross Health Sytems
Corporation Revenue, Morgan
Guaranty Trust Company LOC,
3.850% 12/01/23 + 20,000,000 0 20,000,000
9,000,000 0 9,000,000 Idaho (State of),
Tax Anticipation Notes,
4.500% 06/30/97 9,038,681 0 9,038,681
-----------------------------------------------------
29,038,681 0 29,038,681
-----------------------------------------------------
ILLINOIS - 8.8%
5,775,000 0 5,775,000 Chicago, Illinois, Industrial
Development Revenue, (Eli's
Chicago's Finest Inc.),
First Bank LOC,
4.050% 11/01/26 + 5,775,000 0 5,775,000
Chicago, Illinois, O'Hare
International Airport,
American Airlines Inc., AMT,
Royal Bank of Canada LOC:
3,500,000 0 3,500,000 Series C,
4.000% 12/01/17++ 3,500,000 0 3,500,000
3,000,000 0 3,000,000 Series D,
4.000% 12/01/17++ 3,000,000 0 3,000,000
Du Page Water Commission
Revenue, Pre-refunded:
0 1,250,000 1,250,000 6.800% 5/01/97 0 1,296,374 1,296,374
0 4,250,000 4,250,000 6.875% 5/01/97 0 4,407,641 4,407,641
Illinois (State of),
Development Finance Authority:
26,100,000 0 26,100,000 (Chicago Symphony Orchestra),
Northern Trust Company LOC,
3.900% 12/01/28 + 26,100,000 0 26,100,000
2,025,000 0 2,025,000 (L. Karp & Sons Inc.),
American National Bank &
Trust Company, Chicago LOC,
4.150% 09/01/05 + 2,025,000 0 2,025,000
2,000,000 0 2,000,000 (Residential Rental - River Oak),
AMT, Swiss Bank LOC,
3.900% 12/15/19 + 2,000,000 0 2,000,000
9,000,000 0 9,000,000 (Roosevelt University Project),
American National Bank
& Trust Company LOC,
3.850% 04/01/25 + 9,000,000 0 9,000,000
2,200,000 0 2,200,000 Illinois (State of),
Development Finance Authority,
Economic Development Revenue,
(Addison 450 LP Project),
American National Bank & Trust
Company LOC,
4.000% 12/01/09 + 2,200,000 0 2,200,000
Illinois (State of),
Development Finance Authority,
Industrial Development Revenue:
2,000,000 0 2,000,000 (MTI Project), AMT, Industrial
Bank of Japan Ltd., NY LOC,
4.125% 01/01/09 + 2,000,000 0 2,000,000
3,200,000 0 3,200,000 (Randolph Pickle Corporation),
AMT, American National Bank
& Trust Company LOC,
4.050% 06/01/12 + 3,200,000 0 3,200,000
2,515,000 0 2,515,000 (Xavier University), American
National Bank & Trust Company LOC,
3.850% 10/01/12 + 2,515,000 0 2,515,000
Illinois (State of), Development
Finance Authority, PCR:
2,500,000 0 2,500,000 (Diamond Star Meters Project),
Mitsubishi Bank Ltd. LOC,
4.100% 12/01/08 ++ 2,500,000 0 2,500,000
7,100,000 0 7,100,000 (Edison Company Project),
Series C, ABN-AMRO Bank LOC,
3.850% 03/01/09 + 7,100,000 0 7,100,000
(Illinois Power Company Project), AMT:
6,500,000 0 6,500,000 Canadian Imperial Bank of Canada LOC,
3.850% 02/13/97 # 6,500,000 0 6,500,000
Illinois (State of),
Development Finance Authority,
PCR (Continued):
9,300,000 0 9,300,000 Series B, AMT, Mitsubishi Bank Ltd. LOC,
4.000% 03/01/17 + 9,300,000 0 9,300,000
<PAGE>
Nations Fund
Nations Tax Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Combined Portfolio of Investments (Continued)
September 30, 1996
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
Pilot Pilot
Short-Term Short-Term
Nations Tax Exempt Nations Tax Exempt
Tax Exempt Diversified SECURITY Tax Exempt Diversified
Fund Fund DESCRIPTIONS Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ILLINOIS (Continued)
Illinois (State of), Educational
Facilities Revenue:
$3,700,000 $0 $3,700,000 (Illinois Institute of Technology),
Series A, NBD Bank N.A.;
Northern Trust Company;
and Harris Trust & Savings Bank LOC,
3.850% 09/01/25 + $3,700,000 $0 $3,700,000
12,930,000 0 12,930,000 (University Pooled Financing
Program), FGIC Insured,
First National Bank of Chicago SBPA,
3.900% 12/02/05 + 12,930,000 0 12,930,000
Illinois (State of), Health
Facilities Authority Revenue:
(Evanston Hospital Corporation Project):
5,000,000 0 5,000,000 3.750% 02/28/97 5,000,000 0 5,000,000
7,000,000 0 7,000,000 Series B,
3.150% 01/31/97 . 7,000,000 0 7,000,000
5,000,000 0 5,000,000 Series 96,
3.950% 08/15/97 5,000,000 0 5,000,000
6,700,000 0 6,700,000 (The Streeterville Corporation
Project), First National Bank of
Chicago LOC,
3.850% 08/15/24 + 6,700,000 0 6,700,000
Illinois (State of), Sales
Tax Revnue, Pre-refunded:
0 1,400,000 1,400,000 7.500% 06/15/06 0 1,463,258 1,463,258
0 1,000,000 1,000,000 7.600% 06/15/07 0 1,045,872 1,045,872
4,500,000 0 4,500,000 Kane (County of), Illinois,
Revenue Bonds, (Glenwood School
For Boys),
Harris Trust & Savings Bank,
Illinois LOC,
3.850% 02/01/28 + 4,500,000 0 4,500,000
3,200,000 0 3,200,000 Kane (County of), Illinois,
Unified School District No. 304,
Tax Anticipation Warrants,
4.150% 12/03/96 3,202,133 0 3,202,133
4,600,000 0 4,600,000 Orland Park, Illinois, Industrial
Development Revenue,
(Panduit Corporation Project),
AMT, Wachovia Bank LOC,
4.000% 04/01/31 + 4,600,000 0 4,600,000
7,195,000 0 7,195,000 Richton Park, Illinois,
Industrial Development Revenue,
(Sinter Metals Inc. Project),
AMT, Mellon Bank LOC,
4.050% 04/01/16 + 7,195,000 0 7,195,000
1,900,000 0 1,900,000 Southwestern Illinois
Development Authority,
Industrial Development Revenue,
(Robinson Steel Company
Inc. Project), AMT,
American National Bank & Trust
Company LOC,
4.000% 12/01/06 + 1,900,000 0 1,900,000
3,000,000 0 3,000,000 Winnebago & Boone (Counties of),
Illinois, School District No. 205,
Tax Anticipation Warrants,
FSA Insured,
4.350% 10/30/96 3,002,803 0 3,002,803
-----------------------------------------------------
151,444,936 8,213,145 159,658,081
-----------------------------------------------------
INDIANA - 4.6%
7,000,000 0 7,000,000 Carmel Clay, Indiana, Tax
Anticipation Warrants,
General Funding,
3.750% 12/31/96 7,003,347 0 7,003,347
0 6,700,000 6,700,000 Indiana Health Facilities
Finance Authority, Hospital
Revenue, ACES-Methodist
Hospital, Series B,
VRN 09/01/22 + 0 6,700,000 6,700,000
30,000,000 0 30,000,000 Indiana (State of), Bond Bank,
Advance Funding Program,
Promissory Notes,
4.250% 01/09/97 30,069,210 0 30,069,210
Indiana (State of),
Development Finance Authority,
Economic Development Revenue:
2,400,000 0 2,400,000 (Fischer Enterprises Ltd Project),
PNC Bank LOC,
4.000% 11/01/01 + 2,400,000 0 2,400,000
2,600,000 0 2,600,000 (Walker-Williams Lumber), AMT,
Columbus Bank & Trust Company LOC,
4.200% 01/01/09 + 2,600,000 0 2,600,000
2,500,000 0 2,500,000 Indianapolis, Indiana,
Economic Development Revenue,
(Art Center of Indianapolis
Project), Bank One, Indiana LOC,
3.950% 02/01/98 + 2,500,000 0 2,500,000
3,300,000 0 3,300,000 Indianapolis, Indiana,
Multi-family Housing Revenue,
(El Beulah Retirement Village),
National Bank of Detroit LOC,
3.850% 03/01/21 + 3,300,000 0 3,300,000
3,500,000 0 3,500,000 Purdue University, Indiana,
University Revenue, Student
Fee, Series K,
3.800% 07/01/20 + 3,500,000 0 3,500,000
16,255,000 0 16,255,000 Sullivan, Indiana, PCR,
National Rural/CFC Insured,
3.550% 10/25/96 16,255,000 0 16,255,000
9,500,000 0 9,500,000 Vigo (County of), Indiana,
General Funded Warrants,
3.500% 12/27/96 9,503,312 0 9,503,312
-----------------------------------------------------
77,130,869 6,700,000 83,830,869
-----------------------------------------------------
IOWA - 0.4%
7,000,000 0 7,000,000 Iowa (State of), Corporation
Warrant Certificates, Series A,
FSA Insured-State Aid Withholding,
4.750% 06/27/97 # 7,039,672 0 7,039,672
-----------------------------------------------------
KANSAS - 1.3%
9,600,000 0 9,600,000 Kansas (State of),
Development Finance Authority,
(Seaboard Projects), Series A,
AMT, Bank of New York LOC,
4.050% 12/02/25 + 9,600,000 0 9,600,000
10,200,000 0 10,200,000 Olathe, Kansas, Educational
Facilities Revenue, (Kansas
Independent College Association),
Series A, Marine Midland Bank LOC,
3.800% 07/01/24 + 10,200,000 0 10,200,000
3,000,000 0 3,000,000 Wichita, Kansas, Industrial
Revenue, (Brenner Tank Inc. Project),
AMT,
Bank One LOC,
4.050% 12/01/05 + 3,000,000 0 3,000,000
-----------------------------------------------------
22,800,000 0 22,800,000
-----------------------------------------------------
KENTUCKY - 2.2%
1,800,000 0 1,800,000 Hopkinsville, Kentucky,
Industrial Building Revenue,
(Brazeway Inc. Project), AMT,
4.000% 06/01/04 + 1,800,000 0 1,800,000
5,000,000 0 5,000,000 Jefferson (County of),
Kentucky, Board of Education
Revenue, Anticipation Notes,
Series N,
3.970% 06/30/97 5,002,515 0 5,002,515
6,200,000 0 6,200,000 Kentucky League of Cities,
Revenue Anticipation Notes,
(Madisonville), Series B,
Bank One, Kentucky LOC,
3.950% 03/01/97 + 6,200,000 0 6,200,000
2,600,000 0 2,600,000 Kentucky (Rural), Economic
Development Authority,
Industrial Building Revenue,
(Technos Corporation Project),
AMT, Industrial Bank of Japan,
Ltd. LOC,
4.400% 12/01/09 + 2,600,000 0 2,600,000
3,500,000 0 3,500,000 Lebanon, Kentucky, Industrial
Development Revenue, (Wallace
Computer Services Inc.), AMT,
Wachovia Bank, Georgia LOC,
4.000% 06/01/19 + 3,500,000 0 3,500,000
<PAGE>
Nations Fund
Nations Tax Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Combined Portfolio of Investments (Continued)
September 30, 1996
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
Pilot Pilot
Short-Term Short-Term
Nations Tax Exempt Nations Tax Exempt
Tax Exempt Diversified SECURITY Tax Exempt Diversified
Fund Fund DESCRIPTIONS Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
KENTUCKY (Continued)
$4,525,000 $0 $4,525,000 Lexington-Fayette, Kentucky,
Psychiatric Hospital Revenue,
(Charter Ridge Hospital
Project), Bankers Trust Company LOC,
3.750% 03/01/05 + $4,525,000 $0 $4,525,000
Lexington-Fayette, Kentucky, Urban
County Airport Corporation Revenue,
AMT,
Credit Local de France LOC:
1,100,000 0 1,100,000 Series A,
4.100% 04/01/24 ++ 1,100,000 0 1,100,000
3,100,000 0 3,100,000 Series B,
4.100% 04/01/24 ++ 3,100,000 0 3,100,000
5,630,000 0 5,630,000 Louisville and Jefferson
(Counties of), Kentucky,
Visitors and Convention Commission,
FSA Insured,
3.950% 01/01/24 + 5,630,000 0 5,630,000
0 5,900,000 5,900,000 Mason (County of), Eastern
Kentucky Power Company, CFC LOC,
VRN 10/15/14 + 0 5,900,000 5,900,000
-----------------------------------------------------
33,457,515 5,900,000 39,357,515
-----------------------------------------------------
LOUISIANA - 2.7%
8,000,000 0 8,000,000 Ascension Parish, Louisiana,
PCR, (Borden Inc. Project),
Credit Suisse LOC,
3.900% 12/01/09 + 8,000,000 0 8,000,000
6,050,000 0 6,050,000 Caddo Parish, Louisiana,
Industrial Development Board,
(Frymaster Corporation Project),
Chemical Bank LOC,
3.850% 01/01/03 + 6,050,000 0 6,050,000
0 1,000,000 1,000,000 East Baton Rouge, Mortgage
Finance Authority,
Single-family Housing,
3.850% 10/01/26 + 1,000,000 1,000,000
5,100,000 0 5,100,000 Louisiana (State of),
Public Facilities Authority,
Hospital Revenue,
(Charter Forest Hospital Project),
Bankers Trust Company LOC,
3.850% 12/01/13 + 5,100,000 0 5,100,000
20,225,000 0 20,225,000 Louisiana (State of),
Public Facilities Authority,
PCR, (Ciba-Geigy
Corporation Project),
Swiss Bank LOC,
3.900% 12/01/04 + 20,225,000 0 20,225,000
0 4,000,000 4,000,000 Louisiana (State of),
Reference, Series A,
7.00% 08/01//02 0 4,180,303 4,180,303
4,700,000 0 4,700,000 South Louisiana, Port
Commission, Marine Term
Facilities Revenue,
(Occidental Petroleum),
Credit Suisse LOC,
3.900% 07/01/21 + 4,700,000 0 4,700,000
-----------------------------------------------------
44,075,000 5,180,303 49,255,303
-----------------------------------------------------
MAINE - 1.3%
18,150,000 0 18,150,000 Maine (State of), Solid Waste
Resources Recovery Revenue,
Series K, AMT,
Midland Bank Plc LOC,
3.950% 07/01/12+ 18,150,000 0 18,150,000
5,000,000 0 5,000,000 Maine (State of), Tax
Anticipation Notes,
4.500% 06/27/97 + 5,022,155 0 5,022,155
-----------------------------------------------------
23,172,155 0 23,172,155
-----------------------------------------------------
MARYLAND - 0.9%
6,600,000 0 6,600,000 Baltimore (City of),
Maryland, Economic
Development Authority
Revenue, (Blue Circle Inc.
Project), Den Danske Bank LOC,
3.800% 12/01/17 + 6,600,000 0 6,600,000
3,300,000 0 3,300,000 Baltimore (City of),
Maryland, Port Facilities
Authority, (Occidental
Petroleum Company),
National Westminster Bank Plc LOC,
3.500% 10/14/11 +++ 3,300,000 0 3,300,000
4,750,000 0 4,750,000 Maryland (State of), Economic
Development Revenue,
(General Binding Corporation
Project), AMT, Harris Trust &
Savings Bank LOC,
4.000% 03/01/26 + 4,750,000 0 4,750,000
2,300,000 0 2,300,000 Maryland (State of), Industrial
Development Finance Authority,
(Rock-Tennessee Converting
Company), AMT, Trust Company
Bank LOC,
4.000% 05/01/06 + 2,300,000 0 2,300,000
-----------------------------------------------------
16,950,000 0 16,950,000
-----------------------------------------------------
MICHIGAN - 1.6%
3,425,000 0 3,425,000 Jackson (County of), Michigan,
Economic Development
Corporation, Industrial
Development Revenue, (Jackson
Association LLC), Bank One,
Dayton LOC,
3.950% 10/01/14 + 3,425,000 0 3,425,000
8,000,000 0 8,000,000 Michigan (State of), Hospital
Financing Authority Revenue,
(St. Mary Hospital of Livonia),
Series A, Comerica Bank LOC,
3.950% 07/01/17 + 8,000,000 0 8,000,000
3,000,000 0 3,000,000 Michigan (State of), Housing
Development Authority,
Limited Obligation Revenue,
(Pine Ridge Project), National
Westminster Bank Plc LOC,
3.900% 10/01/07 + 3,000,000 0 3,000,000
2,600,000 0 2,600,000 Michigan (State of), Strategic
Funding Ltd. Obligation
Revenue, (Uni Boring Company
Inc.), National Bank of
Detroit LOC,
3.900% 12/01/98 + 2,600,000 0 2,600,000
0 4,150,000 4,150,000 Michigan (State of),
Underground Revenue
Bonds, (AMBAC - LOC),
5.000% 05/01/97 0 4,180,427 4,180,427
0 7,600,000 7,600,000 University of Michigan,
Hospital Revenue, Series A,
VRN 12/01/19 ++ 0 7,600,000 7,600,000
0 800,000 800,000 University of Michigan Revenue,
Medical Services Plan, Series A,
VRN 12/01/27 ++ 0 800,000 800,000
-----------------------------------------------------
17,025,000 12,580,427 29,605,427
-----------------------------------------------------
MINNESOTA - 1.4%
5,500,000 0 5,500,000 Duluth, Minnesota, Health
Care Facilities Revenue,
(Miller-Dwan Medical Center),
Series A, Citibank LOC,
3.800% 04/01/19 + . 5,500,000 0 5,500,000
6,050,000 0 6,050,000 Minneapolis, Minnesota,
Community Development Agency Revenue,
(Arena Acquisition Project),
Series A, First Bank LOC,
3.850% 10/01/24 + 6,050,000 0 6,050,000
Minneapolis, Minnesota, School
District, Tax & AID:
0 3,000,000 3,000,000 4.500% 09/09/97 * 0 3,017,620 3,017,620
0 3,000,000 3,000,000 TAN, Series B, (SD Credit
Program - LOC),
4.000% 03/14/97 0 3,009,786 3,009,786
0 1,600,000 1,600,000 Minneapolis, Minnesota,
Special School District,
(SD Credit Program - LOC),
5.000% 02/01/97 0 1,607,804 1,607,804
6,000,000 0 6,000,000 Rochester (City of),
Minnesota, Health Care
Facilities Revenue, (Mayo
Medical Center),
Series 92,
3.650% 10/24/96 6,000,000 0 6,000,000
-----------------------------------------------------
17,550,000 7,635,210 25,185,210
-----------------------------------------------------
MISSISSIPPI - 1.1%
0 5,000,000 5,000,000 Grenada (County of), Georgia
Pacific Corporation Project,
Sumitomo Bank LOC,
VRN 12/01/14 +++ 0 5,000,000 5,000,000
<PAGE>
Nations Fund
Nations Tax Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Combined Portfolio of Investments (Continued)
September 30, 1996
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
Pilot Pilot
Short-Term Short-Term
Nations Tax Exempt Nations Tax Exempt
Tax Exempt Diversified SECURITY Tax Exempt Diversified
Fund Fund DESCRIPTIONS Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MISSISSIPPI (Continued)
$6,200,000 $0 $6,200,000 Lawrence (County of),
Mississippi, PCR,
(Georgia-Pacific
Corporation Project), Bank
of Tokyo LOC,
3.925% 12/01/00 + $6,200,000 $0 $6,200,000
2,900,000 0 2,900,000 Mississippi Business
Finance Corporation,
Industrial Development
Revenue, AMT:
(Choctaw Maid Farms Inc.
Project), Rabobank
Nederland LOC,
4.000% 03/01/10 + 2,900,000 0 2,900,000
3,000,000 0 3,000,000 (Nitek Metal Services
Inc. Project), AMT, Bank
of Tokyo LOC,
4.050% 03/01/05 + 3,000,000 0 3,000,000
0 2,100,000 2,100,000 Mississippi State, GO,
4.500% 09/01/97 0 2,111,732 2,111,732
-----------------------------------------------------
12,100,000 7,111,732 19,211,732
-----------------------------------------------------
MISSOURI - 5.5%
Kansas City, Missouri,
Industrial Development Revenue:
0 4,000,000 4,000,000 VRN 12/31/08 + 0 4,000,000 4,000,000
5,000,000 0 5,000,000 (Owens-Illinois Inc. Project),
3.750% 12/31/08 + 5,000,000 0 5,000,000
0 14,700,000 14,700,000 Kansas City, Missouri,
Multi-family Housing Revenue,
Timblane Village Apartments
Project, Security Pacific
National Bank LOC,
VRN 06/01/08 + 0 14,700,000 14,700,000
Missouri (State of), Health
& Educational Facilities
Authority Revenue:
0 2,550,000 2,550,000 VRN 09/01/10 + 0 2,550,000 2,550,000
0 1,500,000 1,500,000 (ACES-SSM Health Care Project),
Series A, Industrial Bank
of Japan LOC,
VRN 12/01/15 + 0 1,500,000 1,500,000
0 15,490,000 15,490,000 (Barnes Hospital Project),
Morgn Stanley LOC,
VRN 12/01/15 + 0 15,490,000 15,490,000
0 250,000 250,000 (Christian Health Servies,
Series B, Morgan Guaranty LOC,
VRN 11/01/19 + 0 250,000 250,000
(Sisters of Mercy Health):
0 9,600,000 9,600,000 VRN 06/01/19 + 0 9,600,000 9,600,000
10,000,000 0 10,000,000 Series B, ABN-AMRO Bank LOC.
3.800% 12/01/16 + 10,000,000 0 10,000,000
0 6,100,000 6,100,000 Series D,
VRN 06/01/19 + 0 6,100,000 6,100,000
Missouri (State of), Environment
Improvement & Energy Authority:
0 9,500,000 9,500,000 VRN 07/01/17 ** 0 9,500,000 9,500,000
0 3,000,000 3,000,000 Sanwa Bank LOC,
VRN 10/01/02 0 3,000,000 3,000,000
9,725,000 0 9,725,000 Platte (County of), Missouri,
Industrial Development
Authority, Multi-family Housing
Revenue, (Wexford Place
Project), Bank One LOC,
3.950% 04/01/28 + 9,725,000 0 9,725,000
St. Charles (County of), Missouri,
Development Authority,
Industrial Revenue:
2,400,000 0 2,400,000 (Venture Stores Inc. Project),
Bank of Nova Scotia LOC,
3.900% 10/01/06 + 2,400,000 0 2,400,000
0 1,000,000 1,000,000 St. Louis Industrial
Development Authority,
VRN 05/01/2009 0 1,000,000 1,000,000
0 3,500,000 3,500,000 St. Louis Tax and Revenue
Anticipation Notes,
4.750% 06/30/97 0 3,519,615 3,519,615
0 2,400,000 2,400,000 University of Missouri
Capital Projects,
4.750% 06/30/97 0 2,413,126 2,413,126
-----------------------------------------------------
27,125,000 73,622,741 100,747,741
----------------------------------------------------
MONTANA - 0.0%
0 1,400,000 1,400,000 Montana Health Facilities
Authority Revenue,
(Healthcare Pooled
Loan Project), Series A,
FGIC Insured,
VRN 12/0/1/15 + 0 1,400,000 1,400,000
0 5,800,000 5,800,000 Montana State Boeard of
Investments, Payroll Tax
Workers Compensation,
VRN 06/01/20 + 0 5,800,000 5,800,000
-----------------------------------------------------
0 7,200,000 7,200,000
-----------------------------------------------------
NEBRASKA - 0.5%
5,000,000 0 5,000,000 Omaha, Nebraska, Public
Power District,
3.550% 10/25/96 5,000,000 0 5,000,000
4,000,000 0 4,000,000 York, Nebraska, Industrial
Development Revenue,
(Sunstrand Corporation
Project), AMT, Union Bank
of Switzerland LOC,
3.650% 08/01/17 + 4,000,000 0 4,000,000
---------------------------------------------------
9,000,000 0 9,000,000
----------------------------------------------------
NEW HAMPSHIRE - 0.9%
15,500,000 0 15,500,000 New Hampshire (State of),
Housing Finance Authority,
Series 1,
Multi-family Housing, Manchester),
PNC Bank LOC,
3.850% 12/01/12 + 15,500,000 0 15,500,000
---------------------------------------------------
NEW JERSEY - 0.3%
5,000,000 0 5,000,000 Jersey City, New Jersey,
Anticipation Notes,
4.500% 09/26/97 5,021,313 0 5,021,313
-----------------------------------------------------
NEW MEXICO - 0.2%
3,100,000 0 3,100,000 Albuquerque, New Mexico,
(Charter Hospital Inc.
Project), Bankers Trust
Company LOC,
3.850% 03/01/14 + 3,100,000 0 3,100,000
-----------------------------------------------------
NEW YORK - 0.3%
5,000,000 0 5,000,000 Great Neck North, New York,
Water Authority, Systems
Revenue, Series A, FGIC Insured,
3.800% 01/01/20 + 5,000,000 0 5,000,000
0 4,100,000 4,100,000 New York City, Series B,
VRN 10/01/20 ++ 0 4,100,000 4,100,000
0 1,300,000 1,300,000 New York City, Series B-4, GO,
VRN 08/15/22 ++ 0 1,300,000 1,300,000
0 16,400,000 16,400,000 New York City Municipal Water
Financing Authority,
Water & Sewer System
Revenue, Series A, FGIC Insured, 0 16,400,000 16,400,000
-----------------------------------------------------
VRN 06/15/25 ++ 5,000,000 21,800,000 26,800,000
-----------------------------------------------------
<PAGE>
Nations Fund
Nations Tax Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Combined Portfolio of Investments (Continued)
September 30, 1996
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
Pilot Pilot
Short-Term Short-Term
Nations Tax Exempt Nations Tax Exempt
Tax Exempt Diversified SECURITY Tax Exempt Diversified
Fund Fund DESCRIPTIONS Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NORTH CAROLINA - 3.4%
$8,000,000 $0 $8,000,000 Bladen (County of), North
Carolina, Industrial
Facilities and Pollution
Control Financing
Authority, (BCH Energy
LP Project), AMT, Bank of
Tokyo LOC,
4.050% 11/01/20 + $8,000,000 $0 $8,000,000
10,855,000 0 10,855,000 Charlotte (County of),
North Carolina, Housing
Authority, Multi-family
Housing Revenue,
(Merrywood Senior Adult
Project), AMT, Branch Banking
and Trust Company LOC,
3.950% 06/01/11 + 10,855,000 0 10,855,000
3,000,000 0 3,000,000 Iredell, (County of),
North Carolina, Industrial
Facilities and Pollution
Control Financing
Authority, (Sullivan
Corporation Project), AMT,
Bank One LOC,
4.050% 01/01/11 + 3,000,000 0 3,000,000
Mecklenburg (County of), North
Carolina, Industrial
Facilities and Pollution Control
Finance Authority:
2,000,000 0 2,000,000 (Sterigenics International Project),
AMT, Comerica Bank, California LOC,
3.950% 03/01/16 + 2,000,000 0 2,000,000
2,125,000 0 2,125,000 (Virkler Company Project), AMT,
4.050% 12/01/04 + 2,125,000 0 2,125,000
9,020,000 0 9,020,000 Mecklenburg (County of),
North Carolina, Series B, GO,
4.700% 03/01/97 . 9,074,560 0 9,074,560
Raleigh Durham Airport Authority,
Royal Bank of Canada - LOC:
0 5,300,000 5,300,000 VRN 11/01/15 ++ 0 5,300,000 5,300,000
0 9,450,000 9,450,000 Special Facilities Revenue,
American Airlines, Series A,
VRN 11/01/15 ++ 0 9,450,000 9,450,000
4,400,000 0 4,400,000 Randolph (County of), North
Carolina, Industrial
Facilities and Pollution
Control Financing
Authority, (Wayne Steel Inc.),
AMT, Bank One, Akron LOC,
4.050% 09/01/05 + 4,400,000 0 4,400,000
3,300,000 0 3,300,000 Stanley (County of), North Carolina,
Industrial Development Authority, PCR,
(General Signal Corporation),
Wachovia Bank LOC,
3.900% 12/01/00 + 3,300,000 0 3,300,000
3,810,000 0 3,810,000 Winston-Salem, North Carolina,
(Risk Acceptance Management
Corporation Project),
Certificates of Participation,
Series 1988, National Westminster
Bank Plc SBPA,
3.950% 07/01/09 + 3,810,000 0 3,810,000
-----------------------------------------------------
46,564,560 14,750,000 61,314,560
-----------------------------------------------------
OHIO - 1.7%
2,425,000 0 2,425,000 Defiance (County of), Ohio,
Industrial Development Revenue, Isaac
Property Company, Series A,
Key Bank LOC,
2.850% 07/01/00 + 2,425,000 0 2,425,000
4,200,000 0 4,200,000 Lorain (County of), Ohio, Hospital
Revenue, (Humility of Mary
Health Care Corporation Hospital),
Series B, PNC Bank LOC,
3.850% 12/15/03 + 4,200,000 0 4,200,000
Ohio (State of), Air Quality
Developement Authority:
0 2,300,000 2,300,000 VRN 12/01/15 ++ 0 2,300,000 2,300,000
0 1,200,000 1,200,000 VRN 12/01/15 ++ 1,200,000 1,200,000
10,000,000 0 10,000,000 (Duquesne Power), Union Bank of
Switzerland LOC,
3.950% 07/16/97 . 10,000,000 0 10,000,000
0 5,000,000 5,000,000 Ohio, (State of), Highway GO,
4.500% due 05/15/97 0 5,021,000 5,021,000
3,500,000 0 3,500,000 Ohio (State of), Water Development
Authority, AMT, Union Bank
of Switzerland LOC,
3.800% 05/01/97 3,500,000 0 3,500,000
2,400,000 0 2,400,000 St. Marys, Ohio, Industrial
Development Revenue,
(Setex Inc. Project), AMT,
Industrial Bank of Japan Ltd. LOC,
4.400% 12/01/01 + 2,400,000 0 2,400,000
-----------------------------------------------------
22,525,000 8,521,000 31,046,000
-----------------------------------------------------
OKLAHOMA - 0.3%
5,890,000 0 5,890,000 Oklahoma (State of), Housing
Finance Agency, Single
Family Housing Revenue,
PFloats PT41,
AMT, GNMA Collateralized,
Commerzbank SBPA,
4.050% 08/01/18 + 5,890,000 0 5,890,000
-----------------------------------------------------
OREGON - 0.5%
Portland (City of), Oregon,
Multi-family Housing Revenue:
1,000,000 0 1,000,000 (Union Station Project), AMT, U.S.
National Bank LOC,
4.000% 12/01/27 + 1,000,000 0 1,000,000
5,500,000 0 5,500,000 (University Park Apartments
Project), Chase Manhattan Bank LOC,
3.850% 10/01/11 + 5,500,000 0 5,500,000
2,000,000 0 2,000,000 Washington (County of),
Oregon, Housing Authority,
Multi-family Housing Revenue,
(Cedar Mill Project), AMT,
Societe Generale LOC,
3.950% 09/20/25 + 2,000,000 0 2,000,000
-----------------------------------------------------
8,500,000 0 8,500,000
-----------------------------------------------------
PENNSYLVANIA - 5.2%
Allegheny (County of) Hospital
Development Authority:
0 2,600,000 2,600,000 VRN 03/01/20 ++ 0 2,600,000 2,600,000
0 8,650,000 8,650,000 VRN 03/01/20 + 0 8,650,000 8,650,000
Allegheny (County of),
Pennsylvania, Industrial
Development Authority,
Duquesne Power:
5,000,000 0 5,000,000 Canadian Imperial Bank
of Commerce LOC,
3.750% 11/07/96 5,000,000 0 5,000,000
9,800,000 0 9,800,000 United Jewish Federation, Series
B, PNC Bank LOC,
3.850% 10/01/25 + . 9,800,000 0 9,800,000
Delaware Valley, Pennsylvania,
Regional Finance Authority:
10,000,000 0 10,000,000 Local Government Revenue, Series
C, Midland Bank LOC,
3.950% 12/01/20 + 10,000,000 0 10,000,000
14,700,000 0 14,700,000 Series 1986, Midland Bank Plc LOC,
3.950% 08/01/16 + 14,700,000 0 14,700,000
10,000,000 0 10,000,000 Philadelphia, Pennsylvania, School
District, Tax and Revenue Anticipation Notes,
4.500% 06/30/97 10,035,876 0 10,035,876
0 11,200,000 11,200,000 Temple University Higher Education Revenue,
4.625% 05/20/97 0 11,265,723 11,265,723
5,025,000 0 5,025,000 Union (County of), Pennsylvania, Hospital
Authority Revenue,
(Evangelical Community Hospital), Series B,
PNC Bank LOC, 3.850% 10/01/23 + 5,025,000 0 5,025,000
Venango (City of), Pennsylvania, Industrial
Development Authority Revenue, AMT,
National Westminster Bank Plc LOC:
10,300,000 0 0,300,000 3.700% 10/11/96 10,300,000 0 10,300,000
7,150,000 0 7,150,000 3.700% 10/22/96 7,150,000 0 7,150,000
<PAGE>
Nations Fund
Nations Tax Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Combined Portfolio of Investments (Continued)
September 30, 1996
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
Pilot Pilot
Short-Term Short-Term
Nations Tax Exempt Nations Tax Exempt
Tax Exempt Diversified SECURITY Tax Exempt Diversified
Fund Fund DESCRIPTIONS Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------
72,010,876 22,515,723 94,526,599
-----------------------------------------------------
RHODE ISLAND - 0.2%
4,000,000 0 4,000,000 Rhode Island (State of), Industrial
Facilities Corporation, Industrial
Development Revenue, (Handy & Harman
Electric Project),
Bank of Nova Scotia LOC,
3.950% 04/01/04 + 4,000,000 0 4,000,000
------------------------------------------------
SOUTH CAROLINA - 2.7%
$6,100,000 $0 $6,100,000 Charleston, South Carolina, Hospital Facilities
Revenue, (Brown Schools Charleston), Bankers
Trust Company LOC, 3.650% 06/01/11 + $6,100,000 $0 $6,100,000
5,000,000 0 5,000,000 Charleston, South Carolina, Tax Anticipation
Notes, GO, 3.600% 03/14/97
5,002,151 0 5,002,151
8,700,000 0 8,700,000 Greenville (County of), South Carolina, School
District, GO, 3.500% 03/01/97 8,706,966 0 8,706,966
5,250,000 0 5,250,000 Kershaw (County of), South Carolina, Industrial
Development Revenue,(Deroyal Textiles Inc.
Project), AMT, Third National Bank, Nashville
LOC, 4.000% 12/01/07 + 5,250,000 0 5,250,000
2,370,000 0 2,370,000 South Carolina (State of), Housing Authority,
Rental Housing Revenue, (Hampton Pointe
Apartments Project), Bank of New York LOC,
3.950% 12/01/07 + 2,370,000 0 2,370,000
South Carolina (State of),
Jobs, Economic Development Authority,
Health Facilities Revenue:
5,960,000 0 5,960,000 (Martha Franks Baptist Center Project),
Wachovia Bank, Columbia LOC,
3.900% 04/01/19 + 5,960,000 0 5,960,000
3,400,000 0 3,400,000 (Specialty Equipment Companies Project), AMT,
Barclays Bank Plc LOC, 4.050% 11/01/10 +
3,400,000 0 3,400,000
10,000,000 0 10,000,000 University of South Carolina, Athletic
Facilities Revenue, Bond Anticipation Notes,
3.200% 02/28/97 10,000,000 0 10,000,000
0 2,050,000 2,050,000 York, (County of), (Electric
Project NRU-84-N-1), CFC LOC,
VRN 09/15/14 +
0 2,050,000 2,050,000
--------------------------------------------------
46,789,117 2,050,000 48,839,117
--------------------------------------------------
TENNESSEE - 1.6%
2,600,000 0 2,600,000 Chattanooga, Tennessee,
Industrial Development Board,
(Warehouse Row Limited Project)
ABN-AMRO Bank, Nevada LOC,
3.850% 12/15/12 + 2,600,000 0 2,600,000
6,969,000 0 6,969,000 Cumberland (County of),
Tennessee, Industrial
Development Board,
Industrial Development
Revenue, (Crossville
Ceramics Company Project),
American National Bank &
Trust Company LOC,
3.850% 01/01/00 + 6,969,000 0 6,969,000
2,300,000 0 2,300,000 Jackson (County of),
Tennessee, Industrial
Development Board,
(Essette Project), Series A,
Bank of America, Illinois LOC,
3.950% 08/01/00 + 2,300,000 0 2,300,000
13,150,000 0 13,150,000 Metropolitan Government of
Nashville & Davidson
(Counties of), Tennessee,
Health and Educational
Facilities Board, (Vanderbilt
University),
3.500% 01/15/97 #
Housing Facilities Board,
Multi-family Housing
Revenue, (Flag Manor), AMT,
Federal Home Loan Bank,
Indianapolis LOC,
4.000% 01/01/23 + 3,245,000 0 3,245,000
--------------------------------------------------
28,269,445 0 28,269,445
TEXAS - 7.6%
3,800,000 0 3,800,000 Bexar (County of), Texas,
(Army Retirement), Series 85-B,
Rabobank Nederland LOC,
3.625% 07/01/11 + 3,800,000 0 3,800,000
1,000,000 0 1,000,000 Brazos River, Texas, Higher
Educational Authority,
(Hoffman-Laroche),
Bankers Trust Company LOC,
3.750% 04/01/02 + 1,000,000 0 1,000,000
0 1,065,000 1,065,000 Dallas Waterworks & Sewer,
Series A, 5.900% 10/01/96 0 1,065,000 1,065,000
0 1,650,000 1,650,000 Dallas Waterworks Revenue
Bonds, 8.000% due 10/01/97 0 1,711,975 1,711,975
3,000,000 0 3,000,000 El Paso, Texas, Multi-family
Housing Finance Corporation,
(Viva Apartments Project),
AMT, General Electric 3,000,000 0 3,000,000
0 2,000,000 2,000,000 Gulf Coast Waste Disposal
Authority, VRN 10/01/17 0 2,000,000 2,000,000
Harris (County of), Texas:
Health Facilities Revenue,
Development Corporation
Hospital Revenue:
0 3,700,000 3,700,000 (Children's Hospital),
Series B2, NationsBank of
VRN 10/01/19 +** 0 3,700,000 3,700,000
4,700,000 0 4,700,000 (Methodist Hospital),
Methodist Hospital and
Morgan Guaranty Trust
Company SBPA,
4.000% 12/01/25 ++ 4,700,000 0 4,700,000
2,000,000 0 2,000,000 (St. Luke's Episcopal
Hospital), Series A, St.
Luke's Episcopal SBPA,
4.000% 02/15/21 ++ 2,000,000 0 2,000,000
0 2,200,000 2,200,000 (St. Luke's), Series B
VRN 02/15/16 ++ 0 2,200,000 2,200,000
3,300,000 5,200,000 8,500,000 (St. Luke's Episcopal
Hospital), Series C, Morgan
Guaranty Trust Company SBPA,
4.000% 02/15/16++ 3,300,000 5,200,000 8,500,000
Harris (County of), Texas:
Health Facilities Revenue,
Development Corporation
Hospital Revenue:
0 5,200,000 5,200,000 (St. Luke's Episcopal
Hospital), Series D, Morgan
Guaranty Trust Company SBPA,
VRN 02/15/16 ++ 5,200,000 5,200,000
Industrial Development
Corporation, Industrial
Development Revenue, AMT:
4,000,000 0 4,000,000 (Forged Products Inc.
Project), Banc One LOC,
4.050% 05/01/03 + 4,000,000 0 4,000,000
4,200,000 0 4,200,000 (Zeon Chemicals Project),
Industrial Bank of Japan,
Ltd. LOC,
4.400% 02/01/09 + 4,200,000 0 4,200,000
10,500,000 0 10,500,000 Toll Road, Unlimited Tax,
Series G, Morgan Guaranty
Trust Company SBPA,
3.800% 08/01/20 + 10,500,000 0 10,500,000
2,000,000 2,000,000 Houston, GO,
5.500% 04/01/97 0 2,017,521 2,017,521
335,000 335,000 Lewisville Water & Sewer Revenue,
Pre-refunded,
8.050% 02/15/97 0 340,429 340,429
0 1,500,000 1,500,000 Klein Independent School 0 1,537,310 1,537,310
3,700,000 0 3,700,000 McAllen, Texas, Health
Facilities Development
Revenue, PNC Bank LOC,
3.900% 12/01/24 + 3,700,000 0 3,700,000
<PAGE>
Nations Fund
Nations Tax Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Combined Portfolio of Investments (Continued)
September 30, 1996
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
Pilot Pilot
Short-Term Short-Term
Nations Tax Exempt Nations Tax Exempt
Tax Exempt Diversified SECURITY Tax Exempt Diversified
Fund Fund DESCRIPTIONS Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0 1,805,000 1,805,000 North Harris, Montgomery
Community College District, GO,
6.100% due 02/15/97 0 1,821,574 1,821,574
9,200,000 0 9,200,000 Port Development Corporation,
Pasadena Term Company Project),
ABN-AMRO Bank LOC,
4.050% 12/01/04 + 9,200,000 0 9,200,000
TEXAS (Continued)
$2,600,000 $0 $2,600,000 Sulphur Springs, Texas,
Industrial Development Authority,
(Hon Industrial Inc.
Project), Credit Suisse LOC,
3.950% 12/01/13 + $2,600,000 $0 $2,600,000
17,635,000 0 17,635,000 Texas (State of), Municipal
Power Agency Revenue,
Pre-refunded at 100%,
14.625% 03/01/97
Finance Authority, Series A,
6.000% 10/01/96 0 1,000,000 1,000,000
40,000,000 0 40,000,000 Texas (State of), Tax and
Revenue Anticipation Notes,
Series A, 4.750% 08/29/97 -----------------------------------------------------
110,695,468 27,793,809 138,489,277
-----------------------------------------------------
UTAH - 1.5%
5,000,000 0 5,000,000 Intermountain Power Agency,Utah, Power
Supply Revenue, Series F, Morgan Guaranty
Trust Company LOC,
3.930% 06/16/97 # . 5,000,000 0 5,000,000
3,200,000 0 3,200,000 Murray (County of), Utah,
Industrial Development Authority,
(Hunter Douglas Realty Property), AMT,
ABN-AMRO Bank LOC, 4.000% 09/01/14 + 3,200,000 0 3,200,000
1,900,000 0 1,900,000 Salt Lake (City of), Utah,
Airport Revenue, Series A, AMT,
Credit Suisse, New York
LOC, 3.900% 06/01/98 + 1,900,000 0 1,900,000
14,300,000 0 14,300,000 Salt Lake (City of), Utah,
Health Care Facilities Revenue, Class A,
Westdeutsche Landesbank SBPA,
3.800% 01/01/20 + 14,300,000 0 14,300,000
0 2,000,000 2,000,000 Salt Lake County, PCR,
VRN 08/01/07 ++ 0 2,000,000 2,000,000
-----------------------------------------------------
24,400,000 2,000,000 26,400,000
-----------------------------------------------------
VIRGINIA - 0.6%
2,500,000 0 2,500,000 Colonial Heights, Virginia,
Industrial Development Authority,
(Philip Morris Companies Project),
3.900% 03/01/05 + 2,500,000 0 2,500,000
3,900,000 0 3,900,000 Greensville (County of),
Virginia, Industrial Development
Authority, PCR, (Perdue Farms Inc. Project),
AMT, Trust Company Bank LOC,
4.000% 10/01/06 + 3,900,000 0 3,900,000
3,300,000 0 3,300,000 Roanoke, Virginia, Industrial
Development Authority, Hospital Revenue,
(Roanoke Memorial Hospital
Project), Series C, (Carilion Health Systems),
Company SBPA, 3.750% 07/01/19 + 3,300,000 0 3,300,000
2,000,000 0 2,000,000 Spotsylvania (County of),
Virginia, Industrial Development Revenue,
(Carlisle Corporation
Project), Trust Company Bank LOC,
3.900% 06/01/08 + 2,000,000 0 2,000,000
-------------------------------------------------
11,700,000 0 11,700,000
-------------------------------------------------
WASHINGTON - 3.3%
Pierce (County of), Washington:
5,500,000 0 5,500,000 Economic Development Authority,
(CSX Corporation Project), Deutsche Bank LOC,
3.900% 11/01/96 # 5,500,000 0 5,500,000
3,000,000 0 3,000,000 Housing Authority Revenue,
(Eagles Watch Project), Key Bank,
Washington LOC, 3.750% 10/01/20 + 3,000,000 0 3,000,000
Washington (State of), GO:
25,500,000 0 25,500,000 Series 96A, Landesbank
Hessen SBPA, 3.900% 06/01/20 + 25,500,000 0 25,500,000
4,015,000 0 4,015,000 Series A, 6.500% 07/01/97 .. 4,090,787 0 4,090,787
7,075,000 0 7,075,000 Washington (State of), Housing
Finance Authority, Multi-family Mortgage Revenue,
(Inglenook Court Project),
AMT, Bank of America LOC,
4.150% 07/01/25 ++ 7,075,000 0 7,075,000
Washington (State of), Public
Power Supply System, Nuclear Project Number 3:
0 5,200,000 5,200,000 Series 3A-1, Bank of America LOC,
VRN 07/01/18 + 0 5,200,000 5,200,000
0 7,300,000 7,300,000 Series 3A-2, Bank of Japan, Ltd. LOC,
VRN 07/01/18 + 0 7,300,000 7,300,000
3,000,000 0 3,000,000 Washington (State of), Student
Loan Finance Association, Series B, AMT,
National Westminster Bank Plc 3,000,000 0 3,000,000
-----------------------------------------------------
,165,787 12,500,000 60,665,787
-----------------------------------------------------
WEST VIRGINIA - 1.8%
10,000,000 0 10,000,000 Fayette (County of), West
Virginia, County Commission, Solid Waste
Disposal Facilities Revenue, (Georgia-Pacific
Corporation Project), AMT, Industrial Bank
of Japan Ltd. LOC,
3.700% 05/01/18 + 10,000,000 0 10,000,000
23,580,000 0 23,580,000 West Virginia (State of),
Hospital Finance Authority, Hospital Revenue,
(St. Mary's Hospital Project), Bank One LOC,
3.900% 10/01/12 + 23,580,000 0 23,580,000
-----------------------------------------------------
33,580,000 0 33,580,000
-----------------------------------------------------
WISCONSIN - 1.6%
4,000,000 0 4,000,000 Menomonee Falls, Wisconsin, Industrial
Development Authority Revenue,
(Jemma LLC Project), AMT, Bank One,
Milwaukee LOC,
4.050% 09/01/14 + 4,000,000 0 4,000,000
Oshkosh, Wisconsin, Area School District,
Tax and Revenue Anticipation Promissory Notes:
5,000,000 0 5,000,000 4.250% 08/20/97 5,012,743 0 5,012,743
4,500,000 0 4,500,000 4.500% 08/20/97 4,521,066 0 4,521,066
2,395,000 0 2,395,000 Pleasant Prairie, Wisconsin, Industrial
Development Authority Revenue, (Nucon
Corporation Project), AMT, American National
Bank & Trust Company, LOC,
4.000% 02/01/22 + 2,395,000 0 2,395,000
5,200,000 0 5,200,000 Pewaukee, Wisconsin, School District, Tax and
Revenue Anticipation Notes,
4.500% 09/22/97 5,220,358 0 5,220,358
8,520,000 0 8,520,000 Wisconsin (State of), Health Facilities
Authority, (Daughters of Charity),
3.850% 11/01/16 + 8,520,000 0 8,520,000
-----------------------------------------------
29,669,167 0 29,669,167
--------------------------------------------------
----------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS AND NOTES 1,420,438,158 309,785,772 1,730,223,930
----------------------------------------------------------------------------------------------------
<PAGE>
Nations Fund
Nations Tax Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Combined Portfolio of Investments (Continued)
September 30, 1996
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
Pilot Pilot
Short-Term Short-Term
Nations Tax Exempt Nations Tax Exempt
Tax Exempt Diversified SECURITY Tax Exempt Diversified
Fund Fund DESCRIPTIONS Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SHORT TERM PUTS - 0.9%
ILLINOIS - 0.7%
$0$12,000,000$12,000,000 Chicago, GO Limited, Morgan
Guaranty LOC,
3.650% 10/31/96 $0 $12,000,000 $12,000,000
-----------------------------------------------------
PENNSYLVANIA - 0.2%
0 4,500,000 4,500,000 Cumberland County Municipal
Authority, PNC Bank LOC,
VRN 06/01/97 0 4,500,000 4,500,000
------------------------------------------------------
TOTAL SHORT TERM PUTS 0 16,500,000 16,500,000
-------------------------------------------------------------------------------------
TAX-FREE COMMERCIAL PAPER - 3.7%
FLORIDA - 0.8%
13,950,000 13,950,000 Sunshine State, Government
Finance Commission,
3.600% 12/12/96 13,950,000 13,950,000
-----------------------------------------------------
GEORGIA - 0.9%
2,000,000 2,000,000 Georgia Municipal Gas Authority,
3.500% 10/16/96 2,000,000 2,000,000
15,000,000 15,000,000 Municipal Electric Authority,
3.600% 11/08/96 15,000,000 15,000,000
-----------------------------------------------------
0 17,000,000 17,000,000
-----------------------------------------------------
ILLINOIS - 0.2%
3,350,000 3,350,000 Cook County Health Fund,
3.500% 10/01/96 3,350,000 3,350,000
--------------------------------------------------------
KANSAS - 0.1%
2,000,000 2,000,000 Burlington, PCR,
3.600% 10/16/96 2,000,000 2,000,000
--------------------------------------------------------
MISSOURI - 1.1%
3,300,000 3,300,000 Anne Arundel County, Part Facilities,
3.700% 12/13/96 ** 3,300,000 3,300,000
Missouri Environmental Improvement & Energy:
7,000,000 7,000,000 3.650% 11/19/96 7,000,000 7,000,000
2,000,000 2,000,000 3.650% 11/19/96 2,000,000 2,000,000
7,475,000 7,475,000 3.700% 02/14/97 7,475,000 7,475,000
--------------------------------------------------------
19,775,000
-----------------------------------------------------
NEW YORK - 0.3%
5,000,000 5,000,000 New York City, NY,
3.700% 02/21/97 5,000,000 5,000,000
--------------------------------------------------------
TEXAS - 0.3%
6,100,000 6,100,000 San Antonio, Electric & Gas, Series A,
3.600% 10/10/96 6,100,000 6,100,000
--------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
TOTAL TAX-FREE COMMERCIAL PAPER 0 67,175,000 67,175,000
-------------------------------------------------------------------------------------
MONEY MARKET FUNDS - 0.1%
100,000 0 100,000 AIM Tax-Exempt Fund . 100,000 0 100,000
0 2,142,703 2,142,703 Federated Tax-Exempt Obligation Fund 0 2,142,703 2,142,703
25,000 0 25,000 Fidelity Institutional Tax-Exempt Cash Fund 25,000 0 25,000
-----------------------------------------------------
-------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUNDS 125,000 2,142,703 2,267,703
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $1,816,166,633) $1,420,563,158 $395,603,475 $1,816,166,633
-------------------------------------------------------------------------------------
</TABLE>
+ Variable rate demand notes payable upon not more than seven calendar
days' notice. The interest rate shown reflects the rate in effect at
September 30, 1996.
++ Variable rate demand notes payable upon not more than one calendar
day's notice. The interest rate shown reflects the rate in
effect at September 30, 1996.
+++ Variable rate demand notes payable upon not more than thirty calendar
days' notice. The interest rate shown reflects the rate in
effect at September 30, 1996.
# Put date.
## Amount represents less than 0.1%.
* When issued security.
** Security that has been sold or will be sold prior to the Closing.
ABBREVIATIONS:
AMT Alternative Minimum Tax
CFC Cooperative Finance Corporation
FGIC Federal Guaranty Investment Corporation
FNMA Federal National Mortgage Association
FSA Financial Security Assurance
GNMA Government National Mortgage Association
GO General Obligation
LOC Letter of Credit
PCR Pollution Control Revenue
SBPA Standby Bond Purchase Agreement
<PAGE>
NATIONS TAX EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED
Pro Forma Combining Statement of Assets and Liabilities
September 30, 1996
<TABLE>
<CAPTION>
Nations Tax Exempt Pilot Short-Term Adjustments to Pro Forma
Fund Tax-Exempt Diversified Proforma Combined (Note 1)
<S> <C> <C> <C> <C>
ASSETS:
Investments at Value (cost $1,420,563,158, $395,603,475
and $1,816,166,633) $1,420,563,158 $395,603,475 - $1,816,166,633
Cash 271,962 93 - 272,055
Income Receivable 7,715,431 2,451,356 - 10,166,787
Receivable for Fund Shares Sold 612,239 - - 612,239
Receivable due from Advisor - - 25,145 (a) 25,145
Prepaid and Other Assets 3,237 - - 3,237
Unamortized Organization Costs - 25,145 (25,145)(a) 0
Total Assets 1,429,166,027 398,080,069 0 1,827,246,096
LIABILITIES:
Income Distribution Payable 3,398,534 1,017,729 - 4,416,263
Payable for Investments Purchased 31,700,519 6,732,974 - 38,433,493
Payable for fund shares redeemed 90,744 - - 90,744
Other Payables - 27,492 - 27,492
Accrued Expenses 462,953 173,110 - 636,063
Total Liabilities 35,652,750 7,951,305 0 43,604,055
Net Assets Applicable to Shares Outstanding $1,393,513,277 $390,128,764 $0 $1,783,642,041
Net Assets by Class:
Primary A $1,010,789,693 $372,331,928 $1,383,121,621
Primary B $15,852,017 n/a $15,852,017
Investor A $131,947,939 n/a $131,947,939
Investor B $180,923,839 $14,187,532 $195,111,371
Investor C $53,986,789 n/a $53,986,789
Investor D $13,000 $3,609,303 $3,622,303
Shares Outstanding by Class:
Primary A 1,010,836,299 372,304,050 1,383,140,349
Primary B 15,852,552 n/a 15,852,552
Investor A 131,953,867 n/a 131,953,867
Investor B 180,932,032 14,186,256 195,118,288
Investor C 53,989,247 n/a 53,989,247
Investor D 13,001 3,609,311 3,622,312
Primary A Shares:
Net Asset Value per Share $1.00 $1.00 $1.00
Primary B Shares:
Net Asset 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 $1.00 $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 $1.00 $1.00
See Notes to Proforma Financial Statements
</TABLE>
(a)Unamortized Organization Costs of the acquired fund will be borne by the
Advisor.
<PAGE>
NATIONS TAX EXEMPT FUND
PILOT SHORT-TERM TAX-EXEMPT DIVERSIFIED
Pro Forma Statement of Operations (Unaudited)
For the Twelve Month Period Ending September 30, 1996
<TABLE>
<CAPTION>
Nations Tax Exempt Pilot Short-Term Adjustments to Pro Forma
Fund Tax-Exempt Diversified Proforma Combined (Note 1)
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $50,430,787 $14,075,831 $64,506,618
Total Investment Income 50,430,787 14,075,831 64,506,618
EXPENSES:
Investment Advisory 5,515,689 784,700 784,700 (a) 7,085,089
Administration 1,378,363 432,988 (40,079)(a) 1,771,272
Portfolio Accounting Fee - 21,599 (21,599)(a) 0
Transfer Agent 324,282 12,609 - 336,891
Custodian 225,538 41,925 (10,481)(b) 256,982
Legal and Audit Fees 183,083 105,460 (105,460)(b) 183,083
Trustees' Fees 88,841 17,457 (17,457)(b) 88,841
Amortization of organization costs 0 18,882 (18,882)(c) 0
Other expenses 382,154 147,219 (36,805)(b) 492,568
Subtotal 8,097,949 1,582,839 533,937 10,214,725
Shareholder servicing and distribution fees
Primary B 30,715 - N/A 30,715
Investor A 321,072 - N/A 321,072
Investor B 287,650 33,939 (6,788)(a) 314,802
Investor C 81,414 - N/A 81,414
Investor D 13 1,915 N/A 1,928
Fees waived and/or reimbursed by
investment advisor (3,987,020) (128,578) (818,034)(d) (4,933,632)
Total Expenses 4,831,793 1,490,115 (290,884) 6,031,023
NET INVESTMENT INCOME 45,598,994 12,585,716 290,884 58,475,595
Net Realized and Unrealized Gain/(Loss)
on Investments:
Realized Gain/(Loss) on securities - 56,904 56,904
Net Realized and Unrealized gain/(loss)
on investments 0 56,904 56,904
Net Increase/(Decrease) in assets
resulting from operations $45,598,994 $12,642,620 $290,884 $58,532,499
</TABLE>
Legend:
(a)Reflects adjustment to the acquiring fund contractual fee obligation.
(b)Adjustment reflects expected savings when the two funds become one.
(c)Organization expense of the acquired fund is not an expense of the
combined fund.
(d)Reflects adjustment to the level of the acquiring fund's voluntary
expense reimbursement.
See Notes to Proforma Financial Statements
<PAGE>
<PAGE>
Nations Tax Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Notes to Pro Forma Financial Statements (Unaudited)
1. Basis of Combination
Nations FundTrust (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end investment company. As of
September 30, 1996, the Trust offers thirty-two 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 Tax Exempt Fund and the Pilot Short-Term Tax-Exempt Diversified Fund for
the twelve month period ended September 30, 1996. These statements have been
derived from books and records utilized in calculating daily net asset value at
September 30, 1996.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pilot Short-Term Tax-Exempt Diversified Fund in
exchange for shares of Nations Tax Exempt 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
Pilot Short-Term Tax-Exempt Diversified 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 Tax Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Notes to Pro Forma Financial Statements (Unaudited)
For the twelve month period ended September 30, 1996, the Nations Tax Exempt
Fund's investment advisory fee was computed based on the annual rate of 0.40% of
average daily net assets. The administration fee was computed based on the
annual rate of 0.10% 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 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
("Primary B Servicing Plan"), Investor A Shares ("Investor A Servicing Plan"),
Investor B Shares ("Investor B Servicing Plan"), Investor C Shares ("Investor C
Servicing Plan") and Investor D Shares ("Investor D Servicing Plan") of Nations
Tax Exempt Fund. Under the Primary B Servicing Plan, Investor A Servicing Plan,
Investor B Servicing Plan, Investor C Servicing Plan and Investor D Servicing
Plan, aggregate payments may not exceed 0.25%, 0.25%, 0.20%, 0.15% and 0.25%, on
an annualized basis, of the average daily net assets of the Primary B Shares,
Investor A Shares, Investor B Shares, Investor C Shares and Investor D Shares,
respectively, of the Fund.
The Trust has adopted a distribution plan ("Investor D Distribution Plan")
pursuant to Rule 12b-1 under the 1940 Act for the Investor D Shares of the
Nations Tax Exempt 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 of the Fund
2. Portfolio Valuation
Securities of Nations Tax Exempt 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
2
<PAGE>
Nations Tax Exempt Fund
Pilot Short-Term Tax-Exempt Diversified Fund
Notes to Pro Forma Financial Statements (Unaudited)
amortization to maturity of any discount or premium, as long as the effect of
fluctuating interest rates on the fair market value of the instrument is not
significant. Pilot Short-Term Tax-Exempt Diversified 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 Tax Exempt Fund which would have been issued at September 30,
1996 in connection with the proposed reorganization. The pro forma number of
shares outstanding of 1,783,676,616 consists of 390,099,618 shares assumed
issued in the reorganization plus 1,393,576,998 shares of Nations Tax Exempt
Fund at September 30, 1996.
3
<PAGE>
<PAGE>
NATIONS FUND
NATIONS VALUE FUND
PILOT GROWTH AND INCOME FUND
COMBINED PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES VALUE
==================================================================================================================================
PILOT SECURITY PILOT
NATIONS GROWTH AND DESCRIPTIONS NATIONS GROWTH AND
VALUE INCOME VALUE INCOME
FUND FUND COMBINED FUND FUND COMBINED
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS - 95.5%
AEROSPACE AND DEFENSE - 3.9%
259,350 50,000 309,350 Lockheed Martin Corporation $ 23,373,918 $ 4,506,250 $ 27,880,168
444,800 110,000 554,800 Raytheon Company 24,742,000 6,118,750 30,860,750
--------------------------------------------------
48,115,918 10,625,000 58,740,918
--------------------------------------------------
APPAREL AND TEXTILES - 0.2%
88,000 0 88,000 Liz Claiborne Inc. 3,278,000 0 3,278,000
--------------------------------------------------
AUTOMOBILE AND TRUCK MANUFACTURERS - 2.4%
825,200 170,000 995,200 Ford Motor Company 25,787,500 5,312,500 31,100,000
225,200 0 225,200 ITT Industries Inc. 5,432,950 0 5,432,950
--------------------------------------------------
31,220,450 5,312,500 36,532,950
--------------------------------------------------
AUTOMOBILE PARTS MANUFACTURERS - 1.6%
306,800 0 306,800 Echlin Inc. 9,625,850 0 9,625,850
317,000 0 317,000 Goodyear Tire & Rubber Company 14,621,625 0 14,621,625
--------------------------------------------------
24,247,475 0 24,247,475
--------------------------------------------------
BANKS - 6.7%
344,700 0 344,700 Bank of Boston Corporation 19,949,513 0 19,949,513
562,000 0 562,000 Bank of New York Inc. 16,508,750 0 16,508,750
0 71,330 71,330 BankAmerica Corporation 0 5,857,976 5,857,976
324,700 75,305 400,005 Chase Manhattan Corporation 26,016,588 6,033,813 32,050,401
120,000 0 120,000 Citicorp 10,875,000 0 10,875,000
251,000 0 251,000 Mellon Bank Corporation 14,871,750 0 14,871,750
--------------------------------------------------
88,221,601 11,891,789 100,113,390
--------------------------------------------------
BEVERAGES - 1.0%
529,400 0 529,400 PepsiCo Inc. 14,955,550 0 14,955,550
--------------------------------------------------
BREWERY - 0.3%
0 115,000 115,000 Anheuser-Busch Companies Inc. 0 4,326,875 4,326,875
--------------------------------------------------
CHEMICALS - BASIC - 1.9%
389,000 0 389,000 Mallinckrodt Group Inc. 16,192,125 0 16,192,125
192,000 0 192,000 Rohm & Haas Company 12,576,000 0 12,576,000
--------------------------------------------------
28,768,125 0 28,768,125
--------------------------------------------------
CHEMICALS - SPECIALTY - 1.1%
412,000 0 412,000 Morton International Inc., Industries 16,377,000 0 16,377,000
--------------------------------------------------
COAL, GAS AND PIPELINE - 1.6%
590,400 0 590,400 Coastal Corporation 24,354,000 0 24,354,000
--------------------------------------------------
COMPUTER RELATED - 3.9%
0 145,430 145,430 Apple Computer, Inc. 0 3,226,728 3,226,728
0 145,000 145,000 Automatic Data Processing, Inc. 0 6,325,625 6,325,625
282,000 0 282,000 COMPAQ Computer Corporation+ 18,083,250 0 18,083,250
89,200 0 89,200 Digital Equipment Corporation + 3,188,900 0 3,188,900
0 58,863 58,863 Electronic Arts+ 0 2,200,005 2,200,005
55,600 0 55,600 International Business Machines Corporation 6,922,200 0 6,922,200
291,600 0 291,600 Sun Microsystems Inc.+ 18,115,650 0 18,115,650
--------------------------------------------------
46,310,000 11,752,358 58,062,358
--------------------------------------------------
CONSTRUCTION - 0.2%
0 90,000 90,000 Owens-Corning Fiberglass Corporation+ 0 3,318,750 3,318,750
--------------------------------------------------
CONTAINERS - 1.6%
400,000 130,000 530,000 Crown Cork & Seal Inc. 18,450,000 5,996,250 24,446,250
--------------------------------------------------
DIVERSIFIED - 2.7%
316,800 0 316,800 AlliedSignal Inc. 20,869,200 0 20,869,200
495,000 0 495,000 Hanson, Plc, ADR 6,125,625 0 6,125,625
</TABLE>
<PAGE>
NATIONS FUND
NATIONS VALUE FUND
PILOT GROWTH AND INCOME FUND
COMBINED PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES VALUE
=================================================================================================================================
PILOT SECURITY PILOT
NATIONS GROWTH AND DESCRIPTIONS NATIONS GROWTH AND
VALUE INCOME VALUE INCOME
FUND FUND COMBINED FUND FUND COMBINED
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS - (CONTINUED)
DIVERSIFIED - (CONTINUED)
150,000 0 150,000 Tenneco Inc. $ 7,518,750 $ 0 $ 7,518,750
387,000 0 387,000 Viad Corporation 5,418,000 0 5,418,000
---------------------------------------------
39,931,575 0 39,931,575
---------------------------------------------
DRUGS - 5.4%
329,500 0 329,500 Bristol-Myers Squibb Company 31,755,562 0 31,755,562
0 80,490 80,490 Merck & Company, Inc. 0 5,664,484 5,664,484
139,000 0 139,000 Rhone-Poulenc Rorer, Inc. 10,233,875 0 10,233,875
428,000 0 428,000 Schering-Plough Corporation 26,322,000 0 26,322,000
0 110,000 110,000 SmithKline Beecham Plc, ADR, Class A 0 6,696,250 6,696,250
---------------------------------------------
68,311,437 12,360,734 80,672,171
---------------------------------------------
ELECTRIC POWER - 4.8%
370,000 0 370,000 Baltimore Gas & Electric Company 9,666,250 0 9,666,250
555,061 0 555,061 CINergy Corporation 17,137,508 0 17,137,508
555,000 0 555,000 DPL Inc. 12,973,125 0 12,973,125
205,000 0 205,000 General Public Utilities Corporation 6,303,750 0 6,303,750
667,000 0 667,000 New York State Electric & Gas Company 14,674,000 0 14,674,000
0 266,110 266,110 PacifiCorp 0 5,488,519 5,488,519
0 220,960 220,960 Unicom Corporation 0 5,551,620 5,551,620
---------------------------------------------
60,754,633 11,040,139 71,794,772
---------------------------------------------
ELECTRICAL EQUIPMENT - 1.3%
0 95,000 95,000 Cooper Industries, Inc. 0 4,108,750 4,108,750
176,000 0 176,000 General Electric Company 16,016,000 0 16,016,000
---------------------------------------------
16,016,000 4,108,750 20,124,750
---------------------------------------------
ELECTRONICS - 2.2%
420,000 0 420,000 Harris Corporation 27,352,500 0 27,352,500
0 100,000 100,000 Motorola, Inc. 0 5,162,500 5,162,500
---------------------------------------------
27,352,500 5,162,500 32,515,000
---------------------------------------------
ENVIRONMENTAL SERVICES - 0.4%
0 175,000 175,000 WMX Technologies, Inc. 0 5,753,125 5,753,125
---------------------------------------------
FINANCIAL SERVICES - 1.6%
229,845 0 229,845 Bear Stearns Companies Inc. 5,343,896 0 5,343,896
150,000 0 150,000 Dean Witter, Discover & Company 8,250,000 0 8,250,000
0 45,000 45,000 Federal Home Loan Mortgage Corporation 0 4,404,375 4,404,375
252,000 0 252,000 Paine Webber Group, Inc. 5,292,000 0 5,292,000
---------------------------------------------
18,885,896 4,404,375 23,290,271
---------------------------------------------
FOOD PRODUCERS - 2.5%
0 330,000 330,000 Archer-Daniels-Midland Company 0 6,352,500 6,352,500
328,000 0 328,000 Nabisco Holdings Corporation, Class A 10,373,000 0 10,373,000
551,600 0 551,600 Quaker Oats Company 20,202,350 0 20,202,350
---------------------------------------------
30,575,350 6,352,500 36,927,850
---------------------------------------------
FOOD RETAILERS - 0.9%
326,600 0 326,600 Safeway Inc. + 13,921,325 0 13,921,325
---------------------------------------------
HEALTH CARE - 0.3%
0 80,000 80,000 Columbia/HCA Healthcare Corporation 0 4,550,000 4,550,000
---------------------------------------------
HOUSEHOLD PRODUCTS - 3.9%
1,036,200 0 1,036,200 First Brands Corporation 27,070,725 0 27,070,725
0 82,290 82,290 Kimberly-Clark Corporation 0 7,251,806 7,251,806
0 140,000 140,000 Rubbermaid, Inc. 0 3,430,000 3,430,000
423,000 0 423,000 Tupperware Corporation 20,727,000 0 20,727,000
---------------------------------------------
47,797,725 10,681,806 58,479,531
---------------------------------------------
INDUSTRIAL CONGLOMERATES - 0.4%
350,000 0 350,000 Premark International Inc. 6,606,250 0 6,606,250
---------------------------------------------
</TABLE>
<PAGE>
NATIONS FUND
NATIONS VALUE FUND
PILOT GROWTH AND INCOME FUND
COMBINED PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES VALUE
===================================================================================================================================
PILOT SECURITY PILOT
NATIONS GROWTH AND DESCRIPTIONS NATIONS GROWTH AND
VALUE INCOME VALUE INCOME
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS - (CONTINUED)
INSURANCE - 6.6%
0 35,000 35,000 Aetna Inc. 0 $ 2,463,125 $ 2,463,125
217,900 0 217,900 CIGNA Corporation 26,120,762 0 26,120,762
154,700 40,000 194,700 General Re Corporation 21,928,725 5,670,000 27,598,725
352,200 0 352,200 ITT Hartford Group Inc. 20,779,800 0 20,779,800
374,700 0 374,700 Lincoln National Corporation Ltd. 16,439,963 0 16,439,963
0 58,190 58,190 Marsh & McLennan Company 0 5,651,704 5,651,704
-------------------------------------------------------
85,269,250 13,784,829 99,054,079
--------------------------------------------------------
MEDICAL PRODUCTS AND SUPPLIES - 1.4%
122,000 0 122,000 Baxter International Inc. 5,703,500 0 5,703,500
358,200 0 358,200 Becton, Dickinson & Company 15,850,350 0 15,850,350
--------------------------------------------------------
21,553,850 0 21,553,850
--------------------------------------------------------
MEDICAL SERVICES - 1.4%
644,000 0 644,000 Humana Inc.+ 13,041,000 0 13,041,000
342,067 0 342,067 MedPartners/Mullikin Inc.+ 7,782,024 0 7,782,024
--------------------------------------------------------
20,823,024 0 20,823,024
--------------------------------------------------------
METALS AND MINING - 1.1%
239,500 0 239,500 ASARCO Inc. 6,376,688 0 6,376,688
204,400 0 204,400 Reynolds Metals Company 10,449,950 0 10,449,950
--------------------------------------------------------
16,826,638 0 16,826,638
--------------------------------------------------------
OFFICE EQUIPMENT - 2.0%
569,400 0 569,400 Xerox Corporation 30,534,075 0 30,534,075
--------------------------------------------------------
OIL - DOMESTIC - 2.8%
193,000 0 193,000 Amoco Corporation 13,582,375 0 13,582,375
0 50,000 50,000 Atlantic Richfield Company 0 6,375,000 6,375,000
510,000 0 510,000 Phillips Petroleum Company 21,802,500 0 21,802,500
--------------------------------------------------------
35,384,875 6,375,000 41,759,875
--------------------------------------------------------
OIL - INTERNATIONAL - 5.4%
154,000 0 154,000 British Petroleum Company, ADS 19,250,000 0 19,250,000
0 90,400 90,400 Chevron Corporation 0 5,661,300 5,661,300
209,800 0 209,800 Exxon Corporation 17,465,850 0 17,465,850
261,300 0 261,300 Mobil Corporation 30,245,475 0 30,245,475
0 49,110 49,110 Royal Dutch Petroleum Company 0 7,667,299 7,667,299
--------------------------------------------------------
66,961,325 13,328,599 80,289,924
--------------------------------------------------------
OIL SERVICES - 0.6%
109,200 0 109,200 Schlumberger Ltd. 9,227,400 0 9,227,400
--------------------------------------------------------
PAPER AND FOREST PRODUCTS - 1.6%
0 105,000 105,000 International Paper Company 0 4,462,500 4,462,500
243,900 0 243,900 Mead Corporation 14,298,638 0 14,298,638
0 110,000 110,000 Temple-Inland, Inc. 0 5,802,500 5,802,500
--------------------------------------------------------
14,298,638 10,265,000 24,563,638
PHOTO AND OPTICAL - 0.7%
232,500 0 232,500 Polaroid Corporation 10,230,000 0 10,230,000
--------------------------------------------------------
PRINTING AND PUBLISHING - 0.2%
131,300 0 131,300 World Color Press, Inc.+ 2,921,425 0 2,921,425
--------------------------------------------------------
RECREATION - 1.0%
553,125 0 553,125 Mattel, Inc. 14,312,109 0 14,312,109
--------------------------------------------------------
RETAIL - GENERAL - 2.5%
0 186,690 186,690 Dayton Hudson Corporation 0 6,160,770 6,160,770
421,700 0 421,700 Federated Department Stores Inc.+ 14,074,238 0 14,074,238
292,000 75,340 367,340 May Department Stores Company 14,198,500 3,663,407 17,861,907
-------------------------------------------------------
28,272,738 9,824,177 38,096,915
--------------------------------------------------------
</TABLE>
<PAGE>
NATIONS FUND
NATIONS VALUE FUND
PILOT GROWTH AND INCOME FUND
COMBINED PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
SHARES VALUE
====================================================================================================================================
PILOT SECURITY PILOT
NATIONS GROWTH AND DESCRIPTIONS NATIONS GROWTH AND
VALUE INCOME VALUE INCOME
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS - (CONTINUED)
RETAIL - SPECIALTY - 0.4%
125,097 0 125,097 Limited Inc. $ 2,392,480 $ 0 $ 2,392,480
0 145,670 145,670 Toys 'R' Us+ 0 4,242,639 4,242,639
----------------------------------------------
2,392,480 4,242,639 6,635,119
----------------------------------------------
SEMICONDUCTORS - 1.9%
292,400 0 292,400 Intel Corporation 27,905,925 0 27,905,925
----------------------------------------------
TELECOMMUNICATIONS - 0.4%
60,700 0 60,700 Lucent Technologies 2,784,613 0 2,784,613
0 200,000 200,000 Tele-Communications, Inc., Class A+ 0 2,987,500 2,987,500
----------------------------------------------
2,784,613 2,987,500 5,772,113
----------------------------------------------
TOBACCO - 2.1%
302,000 43,000 345,000 Philip Morris Companies Inc. 27,104,500 3,859,250 30,963,750
----------------------------------------------
TRANSPORTATION - AIRLINES - 1.5%
306,000 0 306,000 Delta Air Lines, Inc. 22,032,000 0 22,032,000
----------------------------------------------
TRANSPORTATION - RAILROADS - 1.1%
194,000 0 194,000 Burlington Northern Santa Fe Inc. 16,368,750 0 16,368,750
----------------------------------------------
UTILITIES - NATURAL GAS - 1.5%
140,000 0 140,000 Consolidated Natural Gas Company 7,507,500 0 7,507,500
291,000 0 291,000 Williams Companies Inc. 14,841,000 0 14,841,000
---------------------------------------------
22,348,500 0 22,348,500
----------------------------------------------
UTILITIES - TELEPHONE - 4.9%
200,000 130,000 330,000 AT&T Corporation 10,450,000 6,792,500 17,242,500
540,000 0 540,000 BellSouth Corporation 19,980,000 0 19,980,000
514,500 0 514,500 GTE Corporation 19,808,250 0 19,808,250
0 220,000 220,000 MCI Communications Corporation 0 5,637,500 5,637,500
209,000 0 209,000 SBC Communications Inc. 10,058,125 0 10,058,125
-----------------------------------------------
60,296,375 12,430,000 72,726,375
----------------------------------------------
OTHER - 1.6%
432,100 0 432,100 Rockwell International Corporation 24,359,637 0 24,359,637
----------------------------------------------
---------------------------------------------------------------------------------------
TOTAL COMMON STOCKS $1,236,658,937 $194,734,445 $ 1,431,393,382
---------------------------------------------------------------------------------------
PREFERRED STOCK - 0.0%#
HEALTH CARE - 0.0%#
0 7,892 7,892 Aetna Services, Inc. 0 575,129 575,129
----------------------------------------------
PRINCIPAL AMOUNT REPURCHASE AGREEMENT - 4.1%
----------------
$61,433,000 $0 $61,433,000 SMITH BARNEY
5.680% 09/30/96 61,433,000 0 61,433,000
----------------------------------------------
REPURCHASE AGREEMENT - TERM - 0.4%
0 5,812,776 5,812,776 LEHMAN BROTHERS
5.200% 10/01/96 0 5,812,776 5,812,776
----------------------------------------------
---------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $1,241,107,780) $1,298,091,937 $201,122,350 $ 1,499,214,287
---------------------------------------------------------------------------------------
</TABLE>
+ Non-income producing security.
# Amount represents less than 0.1%.
ABBREVIATIONS:
ADR American Depositary Receipt
ADS American Depositary Share
<PAGE>
PILOT GROWTH AND INCOME FUND
Pro Forma Combining Statement of Assets and Liabilities
September 30, 1996
<TABLE>
<CAPTION>
Nations Value Pilot Growth and Adjustments to Pro Forma
Fund Income Fund Proforma Combined (Note 1)
---- ----------- -------- -----------------
<S> <C> <C> <C> <C>
ASSETS:
Investments at Value (cost $1,067,678,243,
$173,429,537 and $1,241,107,780) $1,298,091,937 $201,122,350 - $1,499,214,287
Cash 730 - - 730
Income Receivable 2,356,364 501,517 - 2,857,881
Receivable for Fund Shares Sold 18,120,235 175 - 18,120,410
Receivable for Investments Sold 15,426,097 236,808 - 15,662,905
Receivable due from Advisor - - 64,544 (a) 64,544
Prepaid and Other Assets 2,916 - - 2,916
Unamortized Organization Costs - 64,544 (64,544)(a) 0
------- ------ -------- -
TOTAL ASSETS 1,333,998,279 201,925,394 0 1,535,923,673
LIABILITIES:
Income Distribution Payable - 399,753 - 399,753
Payable for Investments Purchased 29,328,590 - - 29,328,590
Payable for fund shares redeemed 9,190,447 7,745 - 9,198,192
Accrued Expenses 1,150,678 176,768 - 1,327,446
--------- ------- - ---------
TOTAL LIABILITIES 39,669,715 584,265 0 40,253,980
---------- ------- - ----------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $1,294,328,564 $201,341,129 $0 $1,495,669,693
============== ============ == ==============
NET ASSETS BY CLASS:
Primary A $1,118,232,978 $192,072,241 $1,310,305,219
============== ============ ==============
Primary B $16,416,887 n/a $16,416,887
=========== === ===========
Investor A $61,536,873 $5,040,558 $66,577,431
=========== ========== ===========
Investor C $5,628,453 n/a $5,628,453
========== === ==========
Investor N $92,513,373 $4,228,331 $96,741,704
=========== ========== ===========
SHARES OUTSTANDING BY CLASS:
Primary A 63,740,651 14,390,528 (3,442,175) 74,689,004
========== ========== =========== ==========
Primary B 935,719 n/a n/a 935,719
======= === === =======
Investor A 3,507,129 377,787 (90,514) 3,794,402
========= ======= ======== =========
Investor C 322,767 n/a n/a 322,767
======= === === =======
Investor N 5,289,238 316,743 (74,998) 5,530,983
========= ======= ======== =========
PRIMARY A SHARES:
Net Asset Value per Share $17.54 $13.35 $17.54
====== ====== ======
PRIMARY B SHARES:
Net Asset Value per Share $17.54 n/a $17.54
====== === ======
INVESTOR A SHARES:
Net Asset Value per Share $17.55 $13.34 $17.55
====== ====== ======
INVESTOR C SHARES:
Net Asset Value per Share $17.44 n/a $17.44
====== === ======
INVESTOR N SHARES:
Net Asset Value per Share $17.49 $13.35 $17.49
====== ====== ======
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
(a) Unamortized Organization Costs of the acquired fund will be borne by the Advisor.
</TABLE>
<PAGE>
NATIONS VALUE FUND
PILOT GROWTH AND INCOME FUND
Pro Forma Statement of Operations (Unaudited)
For the Twelve Month Period Ending September 30, 1996
<TABLE>
<CAPTION>
Nations Value Pilot Growth and Adjustments to Pro Forma
Fund Income Fund Proforma Combined (Note 1)
---- ----------- -------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends and Interest $29,219,822 $4,110,869 $33,330,691
----------- ---------- -----------
Total Investment Income 29,219,822 4,110,869 33,330,691
EXPENSES:
Investment Advisory 8,698,291 1,188,637 - 9,886,928
Administration 1,159,773 181,260 (22,776)(a) 1,318,257
Portfolio Accounting Fee - 10,225 (10,225)(a) 0
Transfer Agent 698,117 39,060 (70,000)(b) 667,177
Custodian 154,469 44,874 (33,656)(b) 165,688
Legal and Audit Fees 125,148 24,358 (34,358)(b) 115,148
Trustees' Fees 66,453 6,987 (6,987)(b) 66,453
Amortization of organization costs - 20,706 (20,706)(c) 0
Other expenses 206,490 55,259 (55,259)(b) 206,490
------- ------ -------- -------
Subtotal 11,108,742 1,571,366 (253,967) 12,426,141
SHAREHOLDER SERVICING AND DISTRIBUTION FEES
Primary B 9,957 - N/A 9,957
Investor A 132,912 6,419 N/A 139,331
Investor C 28,108 - N/A 28,108
Investor N 654,738 24,914 (6,229)(a) 673,424
Fees waived and/or reimbursed by
investment advisor - (390,300) 390,300 (d) 0
---------- --------- ------- --- -----------
TOTAL EXPENSES 11,934,457 1,212,399 130,105 13,276,961
---------- --------- ------- ----------
NET INVESTMENT INCOME 17,285,365 2,898,470 (130,105) 20,053,730
========== ========= ========= ==========
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Realized Gain/(Loss) on securities 116,738,521 9,332,358 126,070,879
Change in unrealized appreciation/
(depreciation) on securities 48,114,691 9,895,603 58,010,294
----------
Net Realized and Unrealized gain/(loss)
on investments 164,853,212 19,227,961 184,081,173
=========== ========== ===========
NET INCREASE/(DECREASE) IN ASSETS
RESULTING FROM OPERATIONS $182,138,577 $22,126,431 ($130,105) $204,134,903
============ =========== ========== ============
</TABLE>
LEGEND:
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
(C) ORGANIZATION EXPENSE OF THE ACQUIRED FUND IS NOT AN EXPENSE OF THE COMBINED
FUND.
(D) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY EXPENSE
REIMBURSEMENT.
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
<PAGE>
Nations Value Fund
Pilot Growth and Income 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 September 30, 1996 the Trust offers thirty-two 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 Value Fund and the Pilot Growth and Income Fund for the
twelve month period ended September 30, 1996. These statements have been derived
from books and records utilized in calculating daily net asset value at
September 30, 1996.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pilot Growth and Income Fund in exchange for shares of
the Nations Value 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 Pilot Growth and Income
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.
For the twelve month period ended September 30, 1996, the Nations Value Fund's
investment advisory fee was computed based on the annual rate of 0.75% of
average daily net assets. The administration fee was computed based on the
annual rate of 0.10% of average daily net assets of the Trust and the investment
portfolios of Nations Fund, Inc. and Nations Fund Portfolios,
<PAGE>
Nations Value Fund
Pilot Growth and Income Fund
Notes to Pro Forma Financial Statements (Unaudited)
Inc. (two other registered open-end investment companies that are part of the
Nations Fund Family) on a combined basis.
The Trust has adopted a shareholder administration plan ("Administration Plan")
for the Primary B Shares of the Nations Value Fund. Under the Administration
Plan, aggregate payments may not exceed 0.50%, on an annualized basis, of the
average daily net assets of the Fund's Primary B Shares.
The Trust has also 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 Value 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 has also adopted a distribution plan pursuant to Rule 12b-1 under the
1940 Act with respect to Investor C Shares ("Investor C Distribution Plan") and
Investor N Shares ("Investor N Distribution Plan") of the Nations Value Fund.
Under the Investor C Distribution Plan and Investor N Distribution Plan,
aggregate payments may not exceed 0.25% and 0.50%, on an annualized basis, of
the average daily net assets of the Investor C Shares and Investor N Shares,
respectively, of the Fund.
The Trust has also adopted a shareholder servicing plan with respect to Investor
C Shares ("Investor C Servicing Plan") and Investor N Shares ("Investor N
Servicing Plan") of the Nations Value 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 Shares and
Investor N Shares of the Fund.
2
<PAGE>
Nations Value Fund
Pilot Growth and Income Fund
Notes to Pro Forma Financial Statements (Unaudited)
2. Portfolio Valuation
Securities of Nations Value Fund which are traded on a recognized stock exchange
are valued at the last sale price on the securities exchange on which such
securities are primarily traded or 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 asked prices. Certain securities
may be valued by one or more principal market makers. Restricted securities, if
any, securities for which market quotations are not readily available and other
assets are valued at fair market value under the supervision of the Board of
Trustees. Short-term investments that mature in 60 days or less are valued at
amortized cost. Pilot Growth and Income 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 Value Fund which would have been issued at September 30, 1996
in connection with the proposed reorganization. The pro forma number of shares
outstanding of 85,272,875 consists of 11,477,371 shares assumed issued in the
reorganization plus 73,795,504 shares of Nations Value Fund at September 30,
1996.
3
<PAGE>
NATIONS FUND
NATIONS DISCIPLINED EQUITY FUND
PILOT GROWTH FUND
COMBINED PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES VALUE
====================================================================================================================================
NATIONS SECURITY NATIONS
DISCIPLINED PILOT DESCRIPTIONS DISCIPLINED PILOT
EQUITY GROWTH EQUITY GROWTH
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS - 98.4%
AEROSPACE AND DEFENSE - 4.0%
0 854 854 Boeing Company $0 $90,874 $90,874
0 7,900 7,900 Lockheed Martin Corporation 0 722,850 722,850
51,000 0 51,000 McDonnell Douglas Corporation 3,264,000 0 3,264,000
0 5,500 5,500 Northrop Grumman Corporation 0 455,125 455,125
0 16,000 16,000 Orbital Sciences Corporation+ 0 276,000 276,000
42,100 0 42,100 United Technologies Corporation 2,778,600 0 2,778,600
---------------------------------------------
6,042,600 1,544,849 7,587,449
---------------------------------------------
APPAREL AND TEXTILES - 3.8%
71,400 0 71,400 Fruit of the Loom Inc., Class A+ 2,704,275 0 2,704,275
66,600 22,800 89,400 Liz Claiborne Inc. 2,572,425 880,650 3,453,075
0 19,400 19,400 Nike Inc. 0 1,159,150 1,159,150
---------------------------------------------
5,276,700 2,039,800 7,316,500
---------------------------------------------
BANKS - 4.4%
29,100 0 29,100 BankAmerica Corporation 2,902,725 0 2,902,725
31,600 0 31,600 Chase Manhattan Corporation 2,820,300 0 2,820,300
78,000 0 78,000 SouthTrust Corporation 2,720,250 0 2,720,250
---------------------------------------------
8,443,275 0 8,443,275
---------------------------------------------
BIO SPECIALTY PHARMACEUTICALS - 0.7%
0 23,300 23,300 Amgen Inc.+ 0 1,266,937 1,266,937
---------------------------------------------
BUILDING-MOBIL HOMES - 0.6%
0 86,250 86,250 Clayton Homes, Inc. 0 1,164,375 1,164,375
---------------------------------------------
CAPACITORS - 0.3%
0 27,590 27,590 KEMET Corporation+ 0 641,467 641,467
---------------------------------------------
CHEMICALS - BASIC - 3.1%
72,000 0 72,000 Cytec Industries Inc.+ 2,925,000 0 2,925,000
63,000 0 63,000 Goodrich (B.F.) Company 2,551,500 0 2,551,500
0 12,350 12,350 Monsanto Company 0 480,106 480,106
---------------------------------------------
5,476,500 480,106 5,956,606
---------------------------------------------
CHEMICALS - SPECIALTY - 0.3%
0 16,700 16,700 Cabot Corporation 0 419,588 419,588
0 5,100 5,100 Morton International Inc., Industries 0 207,825 207,825
---------------------------------------------
0 627,413 627,413
---------------------------------------------
COMPUTER MANUFACTURERS - 1.6%
0 5,500 5,500 Diebold, Inc. 0 345,812 345,812
58,600 0 58,600 Storage Technology Corporation+ 2,790,825 0 2,790,825
---------------------------------------------
2,790,825 345,812 3,136,637
---------------------------------------------
COMPUTER RELATED - 5.5%
0 3,100 3,100 CDW Computer Center Inc.+ 0 183,869 183,869
0 12,300 12,300 cisco Systems, Inc.+ 0 782,588 782,588
0 40,000 40,000 Comdisco, Inc. 0 1,270,000 1,270,000
34,500 23,400 57,900 COMPAQ Computer Corporation+ 2,561,625 1,737,450 4,299,075
49,300 0 49,300 Dell Computer Corporation+ 2,619,062 0 2,619,062
0 14,100 14,100 Hewlett-Packard Company 0 708,525 708,525
0 27,120 27,120 Sun Microsystems Inc.+ 0 696,645 696,645
---------------------------------------------
5,180,687 5,379,077 10,559,764
---------------------------------------------
COMPUTER SERVICES - 0.7%
0 16,500 16,500 Computer Associates International Inc. 0 820,875 820,875
0 14,800 14,800 Wallace Computer Services, Inc. 0 510,600 510,600
---------------------------------------------
0 1,331,475 1,331,475
---------------------------------------------
COMPUTER SOFTWARE - 1.7%
0 10,300 10,300 BMC Software, Inc.+ 0 426,163 426,163
47,900 0 47,900 Compuware Corporation+ 2,400,988 0 2,400,988
0 10,000 10,000 SunGard Data Systems Inc.+ 0 395,000 395,000
---------------------------------------------
2,400,988 821,163 3,222,151
--------------------------------------------
<PAGE>
NATIONS FUND
NATIONS DISCIPLINED EQUITY FUND
PILOT GROWTH FUND
COMBINED PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
SHARES VALUE
====================================================================================================================================
NATIONS SECURITY NATIONS
DISCIPLINED PILOT DESCRIPTIONS DISCIPLINED PILOT
EQUITY GROWTH EQUITY GROWTH
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
COMMON STOCKS - (CONITNUED)
CONSTRUCTION - 1.1%
0 24,700 24,700 Case Corporation $0 $1,346,150 $1,346,150
0 21,500 21,500 Centex Corporation 0 808,938 808,938
----------------------------------------------
0 2,155,088 2,155,088
----------------------------------------------
COSMETICS AND TOILETRY - 0.3%
0 3,500 3,500 Gillette Company 0 272,125 272,125
0 2,900 2,900 Proctor & Gamble Company 0 311,750 311,750
----------------------------------------------
0 583,875 583,875
----------------------------------------------
DRUGS - 1.4%
0 14,430 14,430 Cardinal Health, Inc. 0 840,548 840,548
0 12,300 12,300 Merck & Company Inc. 0 974,775 974,775
0 13,300 13,300 Schering-Plough Coporation 0 861,175 861,175
----------------------------------------------
0 2,676,498 2,676,498
----------------------------------------------
ELECTRIC POWER - 3.1%
0 10,000 10,000 CalEnergy Co., Inc.+ 0 336,250 336,250
88,800 0 88,800 CMS Energy Corporation 2,985,900 0 2,985,900
63,900 0 63,900 Texas Utilities Company 2,603,925 0 2,603,925
----------------------------------------------
5,589,825 336,250 5,926,075
----------------------------------------------
ELECTRONICS - 0.4%
0 4,800 4,800 Dynatech Corporation+ 0 212,400 212,400
0 11,900 11,900 SCI Systems, Inc.+ 0 531,038 531,038
----------------------------------------------
0 743,438 743,438
----------------------------------------------
ENGINES - 0.0%#
0 1 1 Stewart & Stevenson Services, Inc. 0 29 29
----------------------------------------------
ENVIRONMENTAL - 1.5%
33,050 0 33,050 Johnson Controls Inc. 2,739,019 0 2,739,019
----------------------------------------------
EXPLORATION AND DRILLING - 0.6%
0 9,500 9,500 Burlington Resources Inc. 0 478,562 478,562
0 11,300 11,300 Helmerich & Payne Inc. 0 589,013 589,013
----------------------------------------------
0 1,067,575 1,067,575
----------------------------------------------
FINANCIAL SERVICES - 6.5%
0 31,400 31,400 Federal National Mortgage Association 0 1,169,650 1,169,650
48,663 0 48,663 Morgan Stanley Group, Inc. 2,779,874 0 2,779,874
103,650 0 103,650 Paine Webber Group Inc. 2,915,156 0 2,915,156
28,800 0 28,800 Student Loan Marketing Association 2,682,000 0 2,682,000
63,500 0 63,500 Travelers Group Inc. 2,881,312 0 2,881,312
----------------------------------------------
11,258,342 1,169,650 12,427,992
----------------------------------------------
FOOD PRODUCERS - 0.7%
0 9,340 9,340 Campbell Soup Company 0 749,535 749,535
0 12,900 12,900 Hershey Foods Corporation 0 564,375 564,375
----------------------------------------------
0 1,313,910 1,313,910
----------------------------------------------
FOOD RETAILERS - 3.2%
0 7,200 7,200 Albertson's, Inc. 0 256,500 256,500
64,094 0 64,094 Safeway Inc.+ 2,740,019 0 2,740,019
53,300 0 53,300 Vons Companies, Inc.+ 3,191,337 0 3,191,337
----------------------------------------------
5,931,356 256,500 6,187,856
----------------------------------------------
FURNITURE AND APPLIANCES - 0.1%
0 7,100 7,100 Black & Decker Corporation 0 213,888 213,888
----------------------------------------------
INSURANCE - 4.2%
20,900 0 20,900 CIGNA Corporation 2,855,462 0 2,855,462
0 13,800 13,800 CMAC Investment Corporation 0 507,150 507,150
0 18,300 18,300 Fremont General Corporation 0 567,300 567,300
0 17,140 17,140 Mercury General Corporation 0 899,850 899,850
38,600 0 38,600 MGIC Investment Corporation 2,933,600 0 2,933,600
<PAGE>
NATIONS FUND
NATIONS DISCIPLINED EQUITY FUND
PILOT GROWTH FUND
COMBINED PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
SHARES VALUE
====================================================================================================================================
NATIONS SECURITY NATIONS
DISCIPLINED PILOT DESCRIPTIONS DISCIPLINED PILOT
EQUITY GROWTH EQUITY GROWTH
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
COMMON STOCKS - (CONITNUED)
INSURANCE - (CONTINUED)
0 7,900 7,900 Vesta Insurance Group, Inc. $0 $247,862 $247,862
--------------------------------------------
5,789,062 2,222,162 8,011,224
--------------------------------------------
MACHINERY AND EQUIPMENT - 5.1%
35,800 0 35,800 Caterpillar Inc. 2,693,950 0 2,693,950
54,400 5,200 59,600 Dover Corporation 2,733,600 261,300 2,994,900
0 19,100 19,100 IDEX Corporation 0 761,612 761,612
0 6,200 6,200 Illinois Tool Works Inc. 0 495,225 495,225
58,500 0 58,500 Ingersoll-Rand Company 2,603,250 0 2,603,250
--------------------------------------------
8,030,800 1,518,137 9,548,937
--------------------------------------------
MEDIA - 0.3%
0 16,900 16,900 Time Warner Inc. 0 633,750 633,750
--------------------------------------------
MEDICAL PRODUCTS AND SUPPLIES - 3.7%
0 5,100 5,100 Baxter International Inc. 0 209,100 209,100
0 14,340 14,340 Becton, Dickinson & Company 0 621,998 621,998
48,700 0 48,700 Guidant Corporation 2,775,900 0 2,775,900
0 15,700 15,700 Johnson & Johnson 0 781,075 781,075
68,700 0 68,700 United States Surgical Corporation 2,705,062 0 2,705,062
--------------------------------------------
5,480,962 1,612,173 7,093,135
--------------------------------------------
MEDICAL SERVICES - 0.6%
0 15,500 15,500 Health Care and Retirement Corporation+ 0 443,687 443,687
0 17,200 17,200 United Healthcare Corporation 0 774,000 774,000
-------------------------------------------
0 1,217,687 1,217,687
-------------------------------------------
METAL PROCESSORS - 0.3%
0 13,100 13,100 Kaydon Corporation 0 617,338 617,338
-------------------------------------------
OIL - DOMESTIC - 9.1%
0 18,400 18,400 Amoco Corporation 0 1,481,200 1,481,200
48,800 0 48,800 Louisiana Land & Exploration Company 2,616,900 0 2,616,900
48,900 12,900 61,800 Pennzoil Company 2,762,850 728,850 3,491,700
62,300 0 62,300 Phillips Petroleum Company 2,756,775 0 2,756,775
0 15,300 15,300 Tosco Corporation 0 1,210,612 1,210,612
69,400 12,100 81,500 Unocal Corporation 2,819,375 491,562 3,310,937
108,400 0 108,400 USX-Marathon Group (New) 2,588,050 0 2,588,050
--------------------------------------------
13,543,950 3,912,224 17,456,174
--------------------------------------------
OIL - INTERNATIONAL - 3.2%
20,500 0 20,500 British Petroleum Company, ADS 2,898,188 0 2,898,188
27,800 5,100 32,900 Texaco Inc. 2,727,875 500,438 3,228,313
--------------------------------------------
5,626,063 500,438 6,126,501
-------------------------------------------
OIL SERVICES - 2.7%
78,100 37,700 115,800 Baker Hughes Inc. 2,694,450 1,300,650 3,995,100
0 6,300 6,300 Halliburton Company 0 379,575 379,575
0 9,800 9,800 Western Atlas, Inc.+ 0 694,575 694,575
--------------------------------------------
2,694,450 2,374,800 5,069,250
--------------------------------------------
PAPER AND FOREST PRODUCTS - 3.0%
62,750 0 62,750 Harnischfeger Industries Inc. 3,019,844 0 3,019,844
82,400 0 82,400 James River Corporation 2,729,500 0 2,729,500
--------------------------------------------
5,749,344 0 5,749,344
--------------------------------------------
PHOTO AND OPTICAL - 1.4%
33,600 0 33,600 Eastman Kodak Company 2,696,400 0 2,696,400
--------------------------------------------
RADIO - 0.3%
0 18,700 18,700 Infinity Broadcasting Corporation+ 0 628,788 628,788
--------------------------------------------
RECREATION - 1.8%
0 13,441 13,441 Disney (Walt) Company 0 935,830 935,830
80,100 0 80,100 Fleetwood Enterprises Inc. 2,202,750 0 2,202,750
<PAGE>
NATIONS FUND
NATIONS DISCIPLINED EQUITY FUND
PILOT GROWTH FUND
COMBINED PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
SHARES VALUE
====================================================================================================================================
NATIONS SECURITY NATIONS
DISCIPLINED PILOT DESCRIPTIONS DISCIPLINED PILOT
EQUITY GROWTH EQUITY GROWTH
FUND FUND COMBINED FUND FUND COMBINED
====================================================================================================================================
COMMON STOCKS - (CONITNUED)
RECREATION - (CONTINUED)
0 14,000 14,000 International Game Technology $0 $255,500 $255,500
---------------------------------------------
2,202,750 1,191,330 3,394,080
---------------------------------------------
RETAIL - DISCOUNT - 2.9%
60,100 0 60,100 TJX Companies Inc. 2,847,238 0 2,847,238
119,600 0 119,600 Woolworth Corporation+ 2,616,250 0 2,616,250
---------------------------------------------
5,463,488 0 5,463,488
---------------------------------------------
RETAIL - GENERAL - 1.4%
68,500 0 68,500 Dayton Hudson Corporation 2,688,625 0 2,688,625
---------------------------------------------
RETAIL - SPECIALTY - 1.1%
0 16,600 16,600 Lands' End, Inc.+ 0 439,900 439,900
0 35,300 35,300 PETsMART, Inc.+ 0 772,187 772,187
0 22,070 22,070 Tiffany & Co. 0 808,314 808,314
---------------------------------------------
0 2,020,401 2,020,401
---------------------------------------------
SAVINGS AND LOANS - 2.9%
87,400 0 87,400 Ahmanson (H.F.) & Company 2,840,500 0 2,840,500
55,700 0 55,700 Greenpoint Financial Corporation 2,631,825 0 2,631,825
---------------------------------------------
5,472,325 0 5,472,325
---------------------------------------------
SEMICONDUCTORS - 1.1%
0 26,025 26,025 Analog Devices, Inc.+ 0 881,597 881,597
0 24,300 24,300 Cirrus Logic, Inc. 0 376,650 376,650
0 5,050 5,050 Intel Corporation 0 661,234 661,234
0 8,900 8,900 VLSI Technology, Inc.+ 0 212,487 212,487
---------------------------------------------
0 2,131,968 2,131,968
---------------------------------------------
TELECOMMUNICATIONS - 0.2%
0 7,800 7,800 Tellabs, Inc.+ 0 293,475 293,475
---------------------------------------------
TOBACCO - 0.1%
0 1,157 1,157 Philip Morris Companies Inc. 0 130,307 130,307
---------------------------------------------
TRANSPORTATION - AIRLINES - 1.5%
44,800 0 44,800 UAL Corporation+ 2,800,000 0 2,800,000
---------------------------------------------
UTILITIES - NATURAL GAS - 2.9%
48,700 0 48,700 Consolidated Natural Gas Company 2,690,675 0 2,690,675
78,100 0 78,100 NICOR Inc. 2,792,075 0 2,792,075
---------------------------------------------
5,482,750 0 5,482,750
---------------------------------------------
UTILITIES - TELEPHONE - 2.4%
46,700 0 46,700 Cincinnati Bell Inc. 2,866,213 0 2,866,213
0 10,900 10,900 GTE Corporation 0 495,950 495,950
0 23,500 23,500 SBC Communications Inc. 0 1,216,125 1,216,125
---------------------------------------------
2,866,213 1,712,075 4,578,288
---------------------------------------------
OTHER - 0.6%
0 20,340 20,340 Rockwell International Corporation 0 1,238,198 1,238,198
---------------------------------------------
-------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 137,717,299 50,114,426 187,831,725
-------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NATIONS FUND
NATIONS DISCIPLINED EQUITY FUND
PILOT GROWTH FUND
COMBINED PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
===================================================================================================================================
NATIONS SECURITY NATIONS
DISCIPLINED PILOT DESCRIPTIONS DISCIPLINED PILOT
EQUITY GROWTH EQUITY GROWTH
FUND FUND COMBINED FUND FUND COMBINED
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
U.S. TREASURY BILL - 0.1%
$0 $150,000 $150,000 0.000% 06/05/97 $0 $146,740 $146,740
---------------------------------------------
REPURCHASE AGREEMENTS - 0.6%
0 297,381 297,381 LEHMAN BROTHERS
0.000% 01/02/97 0 297,381 297,381
815,000 0 815,000 SMITH BARNEY
6.500% 01/02/97 815,000 0 815,000
------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 815,000 297,381 1,112,381
------------------------------------------------------------------------------------
NUMBER OF CONTRACTS FUTURES CONTRACT - LONG POSITION - 0.9%
-------------------
0 5 5 S&P 500, March 1997 0 1,861,250 1,861,250
---------------------------------------------
------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $162,440,166) $138,532,299 $52,419,797 $190,952,096
------------------------------------------------------------------------------------
</TABLE>
+ Non-income producing security.
# Amount is less than 0.1%.
ABBREVIATION:
ADS American Depositary Share
<PAGE>
NATIONS DISCIPLINED EQUITY FUND
PILOT GROWTH FUND
Pro Forma Combining Statement of Assets and Liabilities
December 31, 1996
<TABLE>
<CAPTION>
Nations Disciplined Pilot Growth Adjustments to Pro Forma
Equity Fund Fund Proforma Combined (Note 1)
----------- ---- -------- -----------------
<S> <C> <C> <C> <C>
ASSETS:
Investments at Value (cost $118,051,708,
$44,388,458 and $162,440,166) $138,532,299 $52,419,797 - $190,952,096
Cash 825 - - 825
Income Receivable 198,412 32,688 - 231,100
Receivable for Fund Shares Sold 801 168.03 - 969
Appreciation/ Depreciation on Futures - (36,500) - (36,500)
Prepaid and Other Assets 6,225 - - 6,225
----- - - -----
Total Assets 138,738,561 52,416,153 191,154,714
LIABILITIES:
Income Distribution Payable - 4,656 - 4,656
Miscellaneous Liabilities 19,025 - - 19,025
Payable for Investments Purchased - 175,188 - 175,188
Accrued Expenses 141,992 5,882 - 147,874
------- ----- - -------
Total Liabilities 161,017 185,726 - 346,743
------- ------- - -------
Net Assets Applicable to Shares Outstanding $138,577,544 $52,230,427 $190,807,971
============ =========== ============
Net Assets by Class:
Primary A $109,671,445 $50,268,680 $159,940,125
============ =========== ============
Primary B $1,153,176 n/a $1,153,176
========== === ==========
Investor A $6,980,968 $31,993 $7,012,961
========== ======= ==========
Investor C $414,949 n/a $414,949
======== === ========
Investor N $20,357,005 $68,504 $20,425,509
=========== ======= ===========
Shares Outstanding by Class:
Primary A 5,926,669 5,089,156 (2,372,626) 8,643,199
========= ========= =========== =========
Primary B 62,337 n/a n/a 62,337
====== === === ======
Investor A 377,954 3,238 (1,506) 379,686
======= ===== ======= =======
Investor C 22,503 n/a n/a 22,503
====== === === ======
Investor N 1,115,533 6,948 (3,194) 1,119,287
========= ===== ======= =========
Primary A Shares:
Net Asset Value per Share $18.50 $9.88 $18.50
====== ===== ======
Primary B Shares:
Net Asset Value per Share $18.50 n/a $18.50
====== === ======
Investor A Shares:
Net Asset Value per Share $18.47 $9.88 $18.47
====== ===== ======
Investor C Shares:
Net Asset Value per Share $18.44 n/a $18.44
====== === ======
Investor N Shares:
Net Asset Value per Share $18.25 $9.86 $18.25
====== ===== ======
</TABLE>
See Notes to Proforma Financial Statements
<PAGE>
NATIONS DISCIPLINED EQUITY FUND
PILOT GROWTH FUND
Pro Forma Combining Statement of Operations (Unaudited)
December 31, 1996
<TABLE>
<CAPTION>
Period From 01/01/96- Period From 10/20/96-
thru 12/31/96 thru 12/31/96
Nations Disciplined Pilot Growth Adjustments to Pro Forma
Equity Fund Fund Proforma Combined (Note 1)
----------- ---- -------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends and Interest $2,450,351 $90,854 $2,541,205
---------- ------- ----------
Total Investment Income 2,450,351 90,854 2,541,205
EXPENSES:
Investment Advisory 1,061,843 95,092 (25,758)(a) 1,131,177
Administration 141,585 11,294 (2,055)(a) 150,824
Portfolio Accounting Fee - 2,170 (2,170)(a) 0
Transfer Agent 94,230 2,664 (5,000)(b) 91,894
Custodian 30,273 2,160 (540)(b) 31,893
Legal and Audit Fees 29,054 6,192 (6,192)(b) 29,054
Trustees' Fees 7,202 576 (576)(b) 7,202
Other expenses 66,659 13,176 (8,294)(b) 71,541
------ ------ ------- ------
Subtotal 1,430,846 133,324 (50,585) 1,513,585
Shareholder servicing and distribution fees
Primary B 1,871 N/A N/A 1,871
Investor A 10,651 89 N/A 10,740
Investor C 1,639 N/A N/A 1,639
Investor N 188,213 9 N/A 188,222
Fees waived and/or reimbursed by
investment advisor (639) (30,535) 30,535 (c) (639)
----- -------- ------ --- -----
Total Expenses 1,632,581 102,887 (20,050) 1,715,418
--------- ------- -------- ---------
NET INVESTMENT INCOME 817,770 (12,033) (20,050) 4,256,622
======= ======== ======== =========
Net Realized and Unrealized Gain/(Loss)
on Investments:
Realized Gain/(Loss) on securities 17,812,795 7,924,056 25,736,851
Change in unrealized appreciation/
(depreciation) on securities 9,765,365 8,031,339 17,796,704
--------- --------- ----------
Net Realized and Unrealized gain/(loss) 9049.41372
on investments 27,578,160 15,955,394 43,533,554
========== ========== ==========
Net Increase/(Decrease) in assets
resulting from operations $28,395,930 $15,943,361 ($20,050) $47,790,177
=========== =========== ========= ===========
</TABLE>
LEGEND:
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
(C) REFLECTS ADJUSTMENT TO THE LEVEL OF THE ACQUIRING FUND'S VOLUNTARY EXPENSE
REIMBURSEMENT.
SEE NOTES TO PROFORMA FINANCIAL STATEMENTS
<PAGE>
NATIONS DISCIPLINED EQUITY FUND
Pilot Growth 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 December 31, 1996 the Trust offers thirty-three 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 Disciplined Equity Fund and the Pilot Growth Fund for
the twelve month period ended December 31, 1996. These statements have been
derived from books and records utilized in calculating daily net asset value at
December 31, 1996.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Pilot Growth Fund in exchange for shares of the
Nations Disciplined Equity 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 Pilot Growth 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.
For the twelve month period ended December 31, 1996, the Nations Disciplined
Equity Fund's investment advisory fee was computed based on the annual rate of
0.75% of average daily net assets. The administration fee was computed based on
the annual rate of 0.10% of average daily net
<PAGE>
NATIONS DISCIPLINED EQUITY FUND
Pilot Growth Fund
Notes to Pro Forma Financial Statements (Unaudited)
assets of the Trust and the investment portfolios of Nations Fund, Inc. And
Nations Fund Portfolios, Inc. (two other registered open-end investment
companies that are part of the Nations Fund Family) on a combined basis.
The Trust has adopted a shareholder administration plan ("Administration Plan")
for the Primary B Shares of the Nations Disciplined Equity Fund. Under the
Administration Plan, aggregate payments may not exceed 0.50%, on an annualized
basis, of the average daily net assets of the Fund's Primary B Shares.
The Trust has also 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 Disciplined Equity 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 has also adopted a distribution plan pursuant to Rule 12b-1 under the
1940 Act with respect to Investor C Shares ("Investor C Distribution Plan") and
Investor N Shares ("Investor N Distribution Plan") of the Nations Disciplined
Equity Fund. Under the Investor C Distribution Plan and Investor N Distribution
Plan, aggregate payments may not exceed 0.25% and 0.75%, on an annualized basis,
of the average daily net assets of the Investor C Shares and Investor N Shares,
respectively, of the Fund.
The Trust has also adopted a shareholder servicing plan with respect to Investor
C Shares ("Investor C Servicing Plan") and Investor N Shares ("Investor N
Servicing Plan") of the Nations Disciplined Equity 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
Shares and Investor N Shares of the Fund.
2
<PAGE>
NATIONS DISCIPLINED EQUITY FUND
Pilot Growth Fund
Notes to Pro Forma Financial Statements (Unaudited)
2. Portfolio Valuation
Securities of Nations Disciplined Equity Fund which are traded on a recognized
stock exchange are valued at the last sale price on the securities exchange on
which such securities are primarily traded or 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 asked prices.
Certain securities may be valued by one or more principal market makers.
Restricted securities, if any, securities for which market quotations are not
readily available and other assets are valued at fair market value under the
supervision of the Board of Trustees. Shore-term investments that mature in 60
days or less are valued at amortized cost. Pilot Growth 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 Disciplined Equity Fund which would have been issued at
December 31, 1996 in connection with the proposed reorganization. The pro forma
number of shares outstanding of 10,227,012 consists of 2,722,016 shares assumed
issued in the reorganizing plus 7,504,996 shares of Nations Disciplined Equity
Fund at December 31, 1996.
3
<PAGE>
