As filed with the Securities and Exchange Commission
on February 23, 1998
Registration No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. ___ |_|
Post-Effective Amendment No. ___ |_|
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1940 |_|
Amendment No. ___ |_|
(Check appropriate box or boxes)
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NATIONS FUND TRUST
(Exact Name of Registrant as specified in Charter)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)
--------------------------
Registrant's Telephone Number, including Area Code: (800) 626-2275
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(Name and Address of Agent for Service)
With copies to:
Robert M. Kurucza, Esq. Jeffrey A. Dalke, Esq.
Marco E. Adelfio, Esq. Drinker Biddle & Reath LLP
Morrison & Foerster LLP Philadelphia National Bank Building
2000 Pennsylvania Ave., N.W. 1345 Chestnut Street
Suite 5500 Philadelphia, PA 19107-2700
Washington, D.C. 20006
It is proposed that this filing will become effective on March 25, 1998 pursuant
to Rule 488.
No filing fee is required under the Securities Act of 1933 because an indefinite
number of shares of beneficial interest in the Registrant, without par value,
has previously been registered pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended. The Registrant filed on May 20, 1997, the
notice required by Rule 24f-2 for its fiscal year ended March 31, 1997 (File No.
2-97817; 811-4305).
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Nations Fund Trust
Cross-Reference Sheet
PART A
Item No. Item Caption Prospectus Caption
1 Beginning of Registration COVER PAGE OF REGISTRATION
Statement Outside Front STATEMENT CROSS-REFERENCE
Cover Page of Prospectus SHEET; FRONT COVER PAGE OF
PROXY STATEMENT/PROSPECTUS
2 Beginning and Outside Back TABLE OF CONTENTS
Cover Page of Prospectus
3 Fee Table, Synopsis , APPENDIX III -- EXPENSE
Information and Risk Factors SUMMARIES OF EMERALD FUNDS
PROXY AND THE CORRESPONDING NATIONS
FUNDS; SUMMARY -- PROPOSALS 1
AND 2 -- APPROVAL OF THE INTERIM
ADVISORY AGREEMENTS; SUMMARY --
PROPOSAL 3 -- APPROVAL OF THE
REORGANIZATION AGREEMENT; SUMMARY --
PRINCIPAL RISK FACTORS
4 Information About the INFORMATION RELATING TO
Transaction PROPOSALS 1 AND 2 -- APPROVAL OF
THE INTERIM ADVISORY
AGREEMENT AND INTERIM SUB-
ADVISORY AGREEMENT;
INFORMATION RELATING TO
PROPOSAL 3 -- APPROVAL OF THE
REORGANIZATION AGREEMENT
5 Information About the COMPARISON OF EMERALD AND
Registrant NATIONS; ADDITIONAL
INFORMATION ABOUT NATIONS
6 Information About COMPARISON OF EMERALD AND
the Company Being Acquired NATIONS; ADDITIONAL
INFORMATION ABOUT EMERALD
7 Voting Information INFORMATION RELATING TO VOTING
<PAGE>
MATTERS
8 Interest of Certain Persons NOT APPLICABLE
and Experts
9 Additional Information NOT APPLICABLE
Required for Reoffering by
Persons Deemed to be
Underwriters
PART B
Statement of Additional
Item No. Item Caption Information Caption
10 Cover Page COVER PAGE
11 Table of Contents TABLE OF CONTENTS
12 Additional Information About INCORPORATION OF DOCUMENTS BY
the Registrant REFERENCE IN STATEMENT OF
ADDITIONAL INFORMATION
13 Additional Information About NOT APPLICABLE
the Company Being Acquired
14 Financial Statements EXHIBITS TO STATEMENT OF
ADDITIONAL INFORMATION
PART C
Item No.
15-17 Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this Registration
Statement.
<PAGE>
The following items are hereby incorporated by reference:
Nations Fund Trust ("Nations")
From Post-Effective Amendment No. 49 of the Nations Registration Statement,
filed July 31, 1997 (SEC File Nos. 2-97817; 811-4305):
Prospectuses for the Primary A and Investor A Shares of the Nations
Balanced Assets Fund, Nations Disciplined Equity Fund, Nations Florida
Municipal Bond Fund, Nations Short-Term Income Fund, Nations Strategic
Fixed Income Fund and Nations Value Fund, dated August 1, 1997.
Prospectuses for the Primary A, Investor A and Daily Shares of the Nations
Tax Exempt Fund, dated August 1, 1997.
Statement of Additional Information for the Primary A and Investor A
Shares of the Nations Balanced Assets Fund, Nations Disciplined Equity
Fund, Nations Florida Municipal Bond Fund, Nations Short-Term Income Fund,
Nations Strategic Fixed Income Fund and Nations Value Fund, dated August
1, 1997.
Statement of Additional Information for the Primary A, Investor A and
Daily Shares of the Nations Tax Exempt Fund, dated August 1, 1997.
The audited financial statements and related independent accountants' reports
for the Nations Balanced Assets Fund, Nations Disciplined Equity Fund, Nations
Florida Municipal Bond Fund, Nations Short-Term Income Fund, Nations Strategic
Fixed Income Fund, Nations Tax Exempt Fund and Nations Value Fund, contained in
the Annual Report for the fiscal year ended March 31, 1997.
The unaudited financial statements for the Nations Balanced Assets Fund, Nations
Disciplined Equity Fund, Nations Florida Municipal Bond Fund, Nations Short-Term
Income Fund, Nations Strategic Fixed Income Fund, Nations Tax Exempt Fund and
Nations Value Fund, contained in the Semi-Annual Report for the six-month period
ended September 30, 1997.
Emerald Funds ("Emerald")
From Post-Effective Amendment No. 21 of the Emerald Registration Statement,
filed March 31, 1997 (SEC File Nos. 33-20658; 811-5515):
Prospectuses for the Institutional and Retail Shares of the Emerald
Balanced Fund, Emerald Equity Fund, Emerald Equity Value Fund, Emerald
Florida Tax-Exempt Fund, Emerald Managed Bond Fund and Emerald Short-Term
Fixed Income Fund, dated April 1, 1997, as supplemented.
<PAGE>
Prospectuses for the Institutional, Retail and Service Shares of the
Emerald Tax-Exempt Fund, dated April 1, 1997.
Statement of Additional Information for the Institutional and Retail
Shares of the Emerald Balanced Fund, Emerald Equity Fund, Emerald Equity
Value Fund, Emerald Florida Tax-Exempt Fund, Emerald Managed Bond Fund and
Emerald Short-Term Fixed Income Fund, dated April 1, 1997.
Statement of Additional Information for the Institutional, Retail and
Service Shares of the Emerald Tax-Exempt Fund, dated April 1, 1997.
From Post-Effective Amendment No. 22 of the Emerald Registration Statement,
filed January 30, 1998 (SEC File Nos. 33-20658; 811-5515):
Prospectuses for the Institutional and Retail Shares of the Emerald
Balanced Fund, Emerald Equity Fund, Emerald Equity Value Fund, Emerald
Florida Tax-Exempt Fund, Emerald Managed Bond Fund and Emerald Short-Term
Fixed Income Fund, dated January __, 1998.
Prospectuses for the Institutional, Retail and Service Shares of the
Emerald Tax-Exempt Fund, dated January __, 1998.
Statement of Additional Information for the Institutional and Retail
Shares of the Emerald Balanced Fund, Emerald Equity Fund, Emerald Equity
Value Fund, Emerald Florida Tax-Exempt Fund, Emerald Managed Bond Fund and
Emerald Short-Term Fixed Income Fund, dated January __, 1998.
Statement of Additional Information for the Institutional, Retail and
Service Shares of the Emerald Tax-Exempt Fund, dated January __, 1998.
The audited financial statements and related independent auditors' reports for
the Emerald Balanced Fund, Emerald Equity Fund, Emerald Equity Value Fund,
Emerald Florida Tax-Exempt Fund, Emerald Managed Bond Fund, Emerald Short-Term
Fixed Income Fund and Emerald Tax-Exempt, contained in the Annual Report for the
fiscal year ended November 30, 1997.
<PAGE>
EMERALD FUNDS
Emerald Balanced Fund
Emerald Equity Fund
Emerald Equity Value Fund
Emerald Florida Tax-Exempt Fund
Emerald Managed Bond Fund
Emerald Short-Term Fixed Income Fund
Emerald Tax-Exempt Fund
3435 Stelzer Road
Columbus, Ohio 43219-3035
March 30, 1998
Dear Shareholder:
On behalf of the Board of Trustees of Emerald Funds ("Emerald"), we are
pleased to invite you to a special meeting of shareholders of the Emerald Funds
named above (each an "Emerald Fund" and together, the "Emerald Funds") to be
held at 10:00 a.m. Eastern time on May 4, 1998 at Emerald's offices located at
3435 Stelzer Road, Columbus, Ohio (the "Meeting"). At the Meeting, you will be
asked:
(1) to ratify and approve an interim investment advisory agreement with
between your Fund and Barnett Capital Advisors, Inc. ("Barnett Capital")
for the period from January 9, 1998 forward (an "Interim Advisory
Agreement"), and, with respect to Emerald Tax-Exempt Fund, to ratify and
approve an interim investment sub-advisory agreement with Rodney Square
Management Corporation ("Rodney Square") for the period from January 9,
1998 forward (the "Interim Sub-Advisory Agreement"), and
(2) to consider a proposed reorganization of your Emerald Fund into a
corresponding portfolio of Nations Fund Trust (each a "Nations Fund" and
together, the "Nations Funds"), including the reorganization of Emerald as
a whole.
Background. As you may recall, Barnett Banks, Inc. recently merged into a
wholly-owned subsidiary of NationsBank Corporation ("NationsBank"). As a result
of the merger, Barnett Capital, the investment adviser to the Emerald Funds,
became an indirect wholly-owned subsidiary of NationsBank. This merger may have
caused the Emerald Funds' two separate then current investment advisory
agreements with Barnett Captial and, with respect to the Emerald Tax-Exempt
Fund, the then current investment sub-
<PAGE>
advisory agreement with Rodney Square to terminate automatically. To avoid any
potential disruption in advisory services provided to the Emerald Funds as a
result of these potential automatic terminations, the Board of Trustees of
Emerald approved two separate Interim Advisory Agreements with Barnett Capital,
and an Interim Sub-Advisory Agreement with Brandes (relevant to Emerald
Tax-Exempt Fund shareholders only). The terms and conditions of each Interim
Advisory Agreement (including fee levels) and the Interim Sub-Advisory Agreement
are identical to the prior agreements, except for the effective dates,
termination dates and certain fee escrow provisions.
At the upcoming Meeting, you also will be asked to approve a
reorganization of your Emerald Fund into a corresponding Nations Fund. The
Nations Funds are portfolios of an open-end investment company advised by
NationsBanc Advisors, Inc., a subsidiary of NationsBank, N.A. If all approvals
are obtained, the Emerald Funds will be reorganized into the corresponding
Nations Funds in May 1998, when your Emerald Funds portfolio shares will be
exchanged for shares of the corresponding Nations Funds portfolio of equal
value.
EMERALD'S BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO
APPROVE AN INTERIM ADVISORY AGREEMENT, THE INTERIM SUB-ADVISORY AGREEMENT (WITH
RESPECT TO EMERALD TAX-EXEMPT FUND SHAREHOLDERS ONLY) AND THE PROPOSED
REORGANIZATION.
Please note that Emerald Shareholders who hold shares of Emerald funds
other than those listed above will receive additional proxy materials under
separate cover with respect to similar proposals affecting those funds.
Shareholders should fill out the proxy card(s) for each of the Emerald funds in
which they hold shares in order to vote those shares.
In considering the proposed reorganization, you should note:
o Similar Objectives and Policies
The Emerald Funds are proposed to be reorganized into Nations Funds
portfolios with investment policies and objectives that are substantially
similar to those of the corresponding Emerald Funds.
o Similar Access Arrangements
Following the reorganization, you will enjoy access to Nations Funds
through distribution, transaction and shareholder servicing arrangements
that are substantially similar to the Emerald Funds' current arrangements.
<PAGE>
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 Emerald
Fund shares that you held immediately before the reorganization. The
reorganization will be tax-free under federal law, and no front-end or
contingent deferred sales loads will be charged in connection with the
exchange of Emerald Fund shares for Nations Fund shares.
o Operating Expenses Ratios
The annual fund operating expense ratio (after waivers) for the
corresponding Nations Fund classes after the reorganization is expected,
in most cases, to be no higher than the annual fund operating expense
ratio of your Emerald Fund class. Please see the enclosed materials for
further detail.
The proposed reorganization is expected to benefit Emerald Funds shareholders
by:
o offering shareholders the opportunity to exchange their shares within a
larger and more diverse family of more than 50 mutual fund portfolios; and
o providing opportunities for enhanced returns through combined investment
portfolios.
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 Emerald Funds named above, more than one Proxy Ballot
accompanies these materials. If you own shares in one or more of the Emerald
Funds 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 Special Meeting, you may vote by
proxy in either of the following ways:
1. Mark, sign, date and return the enclosed Proxy Ballot in the enclosed
postage-paid envelope; or
2. Mark, sign, date and fax the enclosed Proxy Ballot to ADP Proxy
Services at (XXX) XXX-XXXX.
Please return your Proxy Ballot or fax it to us so that your vote will be
counted.
<PAGE>
YOUR VOTE IS 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 (XXX) XXX-XXXX.
The interim advisory and sub-advisory arrangements with Barnett Capital
and Rodney Square, the proposed reorganization and the reasons for the Emerald
Board's unanimous recommendations are discussed in detail in the enclosed
materials, which you should read carefully. If you have any questions about
interim advisory and sub-advisory arrangements or the reorganization, please do
not hesitate to contact Emerald Funds toll free at 1-800-XXX-XXXX.
We look forward to seeing you at the Meeting or receiving your proxy so
that your shares may be voted at the Meeting.
Sincerely,
- --------------------
<PAGE>
EMERALD FUNDS
Emerald Balanced Fund
Emerald Equity Fund
Emerald Equity Value Fund
Emerald Florida Tax-Exempt Fund
Emerald Managed Bond Fund
Emerald Short-Term Fixed Income Fund
Emerald Tax-Exempt Fund
3435 Stelzer Road
Columbus, Ohio 43219
NOTICE OF SPECIAL SHAREHOLDERS MEETING
To Be Held On May 4, 1998
To Emerald Funds Shareholders:
NOTICE IS GIVEN THAT a special meeting of the shareholders (the "Meeting")
of the Emerald Balanced Fund, Emerald Equity Fund, Emerald Equity Value Fund,
Emerald Florida Tax-Exempt Fund, Emerald Managed Bond Fund, Emerald Short-Term
Fixed Income Fund and Emerald Tax-Exempt Fund (each an "Emerald Fund" and
together, the "Emerald Funds"), each of which is a series of Emerald Funds
("Emerald"), will be held at the Emerald offices located at 3435 Stelzer Road,
Columbus, Ohio, on May 4, 1998 at 10:00 a.m., Eastern time, for purpose of
considering and voting upon:
ITEM 1. A proposal to ratify and approve interim investment advisory
agreements between the Emerald Funds and Barnett Capital Advisors, Inc.,
and, with respect to the Emerald Tax-Exempt Fund, to ratify and approve an
interim investment sub-advisory agreement between Barnett Capital
Advisors, Inc. and Rodney Square Management Corporation, for the period
from January 9, 1998 forward.
ITEM 2. A proposal to approve an Agreement and Plan of Reorganization that
provides for the transfer of the assets and liabilities of each Emerald
Fund to a corresponding fund of Nations Fund Trust in exchange for shares
of designated classes of the corresponding Nations fund, and which
contemplates the reorganization of Emerald.
ITEM 3. Such other business as may properly come before the Meeting or any
adjournment(s).
Item 1 and Item 2 are described in the attached Combined Proxy
Statement/Prospectus. YOUR TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR
OF THE PROPOSALS.
<PAGE>
Shareholders of record as of the close of business on March 16, 1998 are
entitled to notice of, and to vote at, the Meeting or any adjournment(s)
thereof.
SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE EACH ACCOMPANYING PROXY CARD, WHICH IS BEING SOLICITED BY THE
EMERALD 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 EMERALD A WRITTEN NOTICE OF
REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE MEETING AND
VOTING IN PERSON.
By Order of the Trustees,
------------------
Jeffrey A. Dalke
Secretary
<PAGE>
COMBINED PROXY STATEMENT/PROSPECTUS
March 30, 1998
EMERALD FUNDS
3435 Stelzer Road
Columbus, Ohio 43219-3035
1-800-637-3759
NATIONS FUND TRUST
One NationsBank Plaza, 33rd Floor
Charlotte, North Carolina 28255
1-800-321-7854
In connection with the solicitation of proxies by the Board of Trustees of
Emerald Funds ("Emerald"), this combined proxy statement/prospectus
("Proxy/Prospectus") is furnished to shareholders of the Emerald Balanced Fund,
Emerald Equity Fund, Emerald Equity Value Fund, Emerald Florida Tax-Exempt Fund,
Emerald Managed Bond Fund, Emerald Short-Term Fixed Income Fund and Emerald
Tax-Exempt Fund (each an "Emerald Fund" and collectively the "Emerald Funds").
The Board of Trustees has called a Special Meeting of Shareholders (the
"Meeting") at 10:00 a.m. (Eastern time) on May 4, 1998 at Emerald's offices
located at 3435 Stelzer Road, Columbus, Ohio. At the Meeting, shareholders will
be asked:
(1) to ratify and approve interim investment advisory agreements
(the "Interim Advisory Agreements") with Barnett Capital Advisors, Inc.
for the period from January 9, 1998 forward, and, with respect to the
Emerald Tax-Exempt Fund, to ratify and approve an interim investment
sub-advisory agreement (the "Interim Sub-Advisory Agreement") with Rodney
Square Management Corporation for the period from January 9, 1998 forward;
and
(2) to approve a proposed Agreement and Plan of Reorganization dated
as of February [insert], 1998 (the "Reorganization Agreement") by and
between Emerald and Nations Fund Trust ("Nations"), which also
contemplates the reorganization of Emerald into the Nations Funds Family
(as defined below).
Copies of the Interim Advisory Agreements and Interim Sub-Advisory
Agreement, which shall be collectively referred to as the "Interim Agreements,"
are attached as Appendix I. The Reorganization Agreement is attached as Appendix
II.
Emerald and Nations are both registered open-end management investment
companies (mutual funds). Emerald and the Nations Funds Family offer money
market, bond, equity and international equity investment portfolios. The
Reorganization Agreement provides for the transfer of Fund Assets and
Liabilities (as those terms are defined in the Reorganization Agreement) of each
Emerald Fund to a corresponding
1
<PAGE>
investment portfolio of Nations (each a "Nations Fund" and collectively the
"Nations Funds") in exchange for shares ("Shares") of designated classes of the
corresponding Nations Fund having equal value (the "Reorganization").
In addition to offering shares in the Nations Funds and Emerald Funds,
Nations and Emerald each also offer shares in other series not part of this
Proxy/Prospectus. Emerald shareholders of those series are voting on similar
agreements and plans of reorganization that, in a like manner, would provide for
the reorganization of those series of Emerald into designated classes of
corresponding portfolios of two other registered investment companies--Nations
Fund, Inc. and Nations Institutional Reserves (together with Nations, the
"Nations Funds Family"). If the Reorganization Agreement and the agreements and
plans of reorganization affecting the other series of Emerald are approved and
consummated, Emerald will have transferred all of its assets and liabilities and
deregister as a registered investment company.
As a result of the Reorganization, shareholders of the Emerald Funds will
become shareholders of the Nations Funds. Table I below shows each class of each
Emerald Fund and the designated class of each corresponding Nations Fund:
Table I
Emerald Fund/Share Class Corresponding Nations Fund/ Share Class
Emerald Balanced Fund Nations Balanced Assets Fund
Retail Shares Investor A Shares
Institutional Shares Primary A Shares
Emerald Equity Fund Nations Disciplined Equity Fund
Retail Shares Investor A Shares
Institutional Shares Primary A Shares
Emerald Equity Value Fund Nations Value Fund
Retail Shares Investor A Shares
Institutional Shares Primary A Shares
Emerald Florida Tax-Exempt Fund Nations Florida Municipal Bond Fund
Retail Shares Investor A Shares
Institutional Shares Primary A Shares
Emerald Managed Bond Fund Nations Strategic Fixed Income Fund
Retail Shares Investor A Shares
Institutional Shares Primary A Shares
2
<PAGE>
Emerald Short-Term Fixed Income Fund Nations Short-Term Income Fund
Retail Shares Investor A Shares
Institutional Shares Primary A Shares
Emerald Tax-Exempt Fund Nations Tax Exempt Fund
Retail Shares Daily Shares
Institutional Shares Primary A Shares
Service Shares Investor A Shares
This Proxy/Prospectus sets forth concisely the information that an Emerald
Fund shareholder should know before voting, and should be retained for future
reference. Shareholders of the Emerald Equity Fund particularly should see
"Summary--Special Considerations Relating to the Emerald Equity Fund." It is
both Emerald's proxy statement for the Meeting and also a prospectus for the
Nations Funds.
Additional information is set forth in the statement of additional
information relating to this Proxy/Prospectus which is incorporated herein by
reference, and in the prospectuses dated April 1, 1997, as supplemented, for the
Emerald 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 Emerald or Nations at the respective telephone numbers or addresses
stated on the cover sheet of this Proxy/Prospectus. The information contained in
the Nations Fund prospectuses, dated August 1, 1997 and the prospectuses for the
Emerald Funds is incorporated by reference into this Proxy/Prospectus. In
addition, copies of the current prospectus for the designated share class of the
corresponding Nations Fund and the Annual Report for the year ended March 31,
1997 and the Semi-Annual Report for the period ended September 30, 1997,
accompanies this Proxy/Prospectus.
The following summarizes the proposals to be voted on by Emerald Fund
shareholders at the Meeting:
Proposal Shareholders Solicited
1. To ratify and approve Interim Shareholders of each Emerald Fund
Advisory Agreements and, with respect voting separately on the Interim
to the Emerald Tax-Exempt Fund only, Advisory Agreements, and
an Interim Sub-Advisory Agreement, shareholders of the Emerald Tax-
for the period from January 9, 1998 Exempt Fund voting separately on
forward. the Interim Sub-Advisory Agreement.
2. To approve a Reorganization Each Emerald Fund voting separately
Agreement providing for the transfer on the Reorganization Agreement,
of the assets and liabilities of the and with respect to the
Emerald Funds to corresponding reorganization of Emerald,
Nations Funds in exchange for Shares shareholders of all series of
of designated classes of the
3
<PAGE>
corresponding Nations Funds and for Emerald voting in the aggregate.
the reorganization of Emerald.
This Proxy/Prospectus is expected to be first sent to shareholders on or
about March [30], 1998.
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
PROXY/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 PROXY/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 EMERALD, NATIONS OR THEIR RESPECTIVE DISTRIBUTORS.
EACH MONEY MARKET FUND SEEKS TO MAINTAIN A NET ASSET VALUE OF $1.00 PER
SHARE. AN INVESTMENT IN A MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT A MONEY MARKET FUND WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
SHARES OF EMERALD 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 EMERALD FUNDS IS EMERALD
ASSET MANAGEMENT, INC. THE DISTRIBUTOR OF THE NATIONS FUNDS IS STEPHENS INC.
4
<PAGE>
TABLE OF CONTENTS
FEE TABLES.....................................................................6
SUMMARY........................................................................6
PROPOSAL 1--APPROVAL OF THE INTERIM AGREEMENTS............................6
Interim Agreements....................................................6
Emerald Board Consideration...........................................7
PROPOSAL 2--APPROVAL OF THE REORGANIZATION AGREEMENT......................8
Proposed Reorganization...............................................8
Overview of Emerald and Nations.......................................8
Special Considerations Relating to the Emerald Equity Fund...........10
Federal Income Tax Consequences......................................10
Nations and Emerald Boards' Consideration............................10
Principal Risk Factors...............................................11
Voting Information...................................................12
INFORMATION RELATING TO PROPOSAL 1--APPROVAL OF THE
INTERIM ADVISORY AGREEMENTS AND INTERIM SUB-ADVISORY
AGREEMENT.....................................................................13
The Merger of Barnett Banks, Inc. into NB Holdings Corporation.......13
The Interim Advisory Agreements and Interim Sub-Advisory Agreement...15
Information Regarding Barnett Capital and Rodney Square..............17
Payments to Barnett Capital or Rodney Square Affiliates..............19
Affiliated Broker Commissions........................................19
Approval of Emerald's Board of Trustees..............................20
INFORMATION RELATING TO PROPOSAL 2--APPROVAL OF THE
REORGANIZATION AGREEMENT......................................................21
Description of the Reorganization Agreement..........................21
Emerald Board Consideration..........................................22
Capitalization.......................................................24
Federal Income Tax Considerations....................................31
Other Information....................................................32
COMPARISON OF EMERALD AND NATIONS.............................................32
Investment Objectives and Policies...................................32
Investment Adviser and Other Service Providers.......................32
Emerald Funds' Advisory and Sub-Advisory Agreements..................34
Nations Funds' Advisory Agreements...................................34
<PAGE>
Other Service Providers..............................................37
Share Structure......................................................38
Distribution Plans and Shareholder Servicing Arrangements............39
Primary A Shares.....................................................40
Investor A Shares....................................................40
Daily Shares.........................................................40
Administration Agreements............................................41
Shareholder Transactions and Services................................41
INFORMATION RELATING TO VOTING MATTERS........................................41
General Information..................................................41
Shareholder and Board Approvals......................................43
Quorum...............................................................45
Annual Meetings and Shareholder Meetings.............................45
ADDITIONAL INFORMATION ABOUT NATIONS..........................................45
ADDITIONAL INFORMATION ABOUT EMERALD..........................................46
FINANCIAL STATEMENTS..........................................................47
OTHER BUSINESS................................................................47
SHAREHOLDER INQUIRIES.........................................................48
APPENDICES I INTERIM INVESTMENT ADVISORY AGREEMENTS
AND INTERIM SUB-ADVISORY AGREEMENT
II AGREEMENT AND PLAN OF REORGANIZATION
III EXPENSE SUMMARIES OF EMERALD FUNDS
AND THE CORRESPONDING NATIONS FUNDS
IV INVESTMENT OBJECTIVES, LIMITATIONS AND
CERTAIN SIGNIFICANT INVESTMENT POLICIES
OF THE OPERATING NATIONS FUNDS AND THE
CORRESPONDING EMERALD FUNDS
V SHAREHOLDER TRANSACTIONS AND SERVICES
OF THE NATIONS FUNDS AND THE CORRESPONDING
EMERALD FUNDS
<PAGE>
FEE TABLES
Retail and Service Class shareholders of all seven Emerald Funds, along
with Institutional Class shareholders of the Emerald Short-Term Fixed Income
Fund and Emerald Tax-Exempt Fund, are expected to experience lower total fund
operating expenses after the Reorganization. The Institutional Class shares of
the other Emerald Funds have total fund operating expense ratios that are lower
than those of the designated classes of the corresponding Nations Funds. Such
projections take into account voluntary fee waivers and/or expense
reimbursements, both of which may be terminated at any time. For detailed
information regarding pro forma expense information, see both Table III and
Appendix III to this Proxy/Prospectus.
SUMMARY
The following is a summary of certain information relating to the Interim
Agreements and the proposed Reorganization, and is qualified by reference to the
more complete information contained elsewhere in this Proxy/Prospectus, the
Prospectuses and Statements of Additional Information of Emerald and Nations,
and the Appendices attached hereto.
PROPOSAL 1--APPROVAL OF THE INTERIM AGREEMENTS
Interim Agreements. On January 9, 1998, Barnett Banks, Inc. merged with
and into NB Holdings Corporation, a subsidiary of NationsBank Corporation (the
"Holding Company Merger"). As a result of the Holding Company Merger, Barnett
Capital Advisors, Inc. ("Barnett Capital"), the investment adviser to the
Emerald Funds, became an indirect wholly-owned subsidiary of NationsBank
Corporation. As of January 9, 1998, Barnett Capital served as the Emerald Funds'
investment adviser pursuant to two separate investment advisory agreement
between Barnett Capital and Emerald, on behalf of the Emerald Funds; Rodney
Square Management Corporation ("Rodney Square"), a wholly-owned subsidiary of
Wilmington Trust Company, served as the investment sub-adviser to the Emerald
Tax-Exempt Fund pursuant to an investment sub-advisory agreement between Barnett
Capital and Rodney Square. Barnett Capital and Emerald considered the effect
that the Holding Company Merger would have on Emerald, and the possibility that
under Barnett Capital's investment advisory agreement and Rodney Square's
investment sub-advisory agreement with Barnett Capital with respect to the
Emerald Tax-Exempt Fund with the Emerald Funds and consistent with the
requirements of the Investment Company Act of 1940 (the "1940 Act"), the Holding
Company Merger might result in the automatic and immediate termination of the
investment advisory agreement. See "Information Relating to Proposal 1--Approval
of the Interim Advisory Agreement and Interim Sub-Advisory Agreement."
To ensure that these potential automatic terminations would not disrupt
the investment advisory and sub-advisory services provided to the Emerald Funds,
Emerald, Barnett
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Capital and Rodney Square obtained an exemptive order from the SEC (the "Order")
permitting Barnett Capital to continue to act as investment adviser to the
Emerald Funds, and Rodney Square to continue to act as investment sub-adviser to
the Emerald Tax-Exempt Fund under the Interim Agreements. In accordance with the
Order, the Interim Agreements are subject to ratification and approval by the
shareholders of the Emerald Funds, at a meeting to be held within 120 days of
January 9, 1998 (the "Interim Period"), or no later than May 9, 1998.
The Trustees of Emerald propose that the shareholders of each Emerald Fund
ratify and approve the Interim Advisory Agreements, and shareholders of the
Emerald Tax-Exempt Fund ratify and approve the Interim Sub-Advisory Agreement.
The advisory and sub-advisory fee rates payable under the Interim Advisory
Agreements and the Interim Sub-Advisory Agreement are identical to those under
the corresponding former agreements. Pending ratification and approval of the
Interim Advisory Agreements and the Interim Sub-Advisory Agreement, all fees
payable to Barnett Capital and Rodney Square are being held in escrow. The fees
escrowed for a particular Emerald Fund will be received by Barnett Capital and
Rodney Square only if the Interim Agreement and (for the Emerald Tax-Exempt
Fund) Interim Sub-Advisory Agreement for the relevant Fund are ratified and
approved by the Fund's shareholders. See "Information Relating to Proposal
1--Approval of the Interim Advisory Agreement--Approval of Emerald's Board of
Trustees."
If the Interim Agreements are ratified and approved by a Fund's
shareholders and the Reorganization of that Fund is approved and consummated,
the Interim Agreements will remain in effect through the Closing of the
Reorganization (as defined below). If the Interim Agreements are ratified and
approved by a Fund's shareholders and the Reorganization is not approved or
consummated, the Interim Agreements will remain in effect until November 30,
1998, and, thereafter, for so long as the Board of Trustees of Emerald continues
to renew and approve such agreements at least annually. If the Interim
Agreements for an Emerald Fund are not ratified and approved by that Fund's
shareholders, the fees held in escrow with respect to that Fund will be returned
to the Fund, and Emerald's Board of Trustees will consider what actions should
be taken with respect to management of the assets of that Fund until new
investment advisory arrangements are approved by the Fund's shareholders.
Emerald Board Consideration. A meeting of the Board of Trustees of Emerald
was held on November 13-14, 1997, at which time the Holding Company Merger and
its implications for the Emerald Funds were discussed. The Board met again on
December 8, 1997, and, after a full evaluation unanimously approved the Interim
Agreements. EMERALD'S BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
OF THE EMERALD FUNDS APPROVE THE INTERIM ADVISORY AGREEMENTS AND THAT
SHAREHOLDERS OF THE EMERALD TAX-EXEMPT FUND APPROVE THE INTERIM SUB-ADVISORY
AGREEMENT.
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At the December 8, 1997 meeting, the Board determined that payment of the
advisory fees to be earned during the Interim Period by Barnett Capital under
the Interim Advisory Agreements and by Rodney Square under the Interim
Sub-Advisory Agreement would be fair, based on the fact that (1) the fees that
are payable under these Interim Agreements, and the services to be provided
therefor, would be unchanged from the fees payable under the former investment
advisory agreements and investment sub-advisory agreement, (2) the fees will be
maintained in an interest-bearing escrow account until payment is approved or
disapproved by shareholders of a particular Emerald Fund, and (3) the nonpayment
of fees earned during that period would constitute an extreme inequity to
Barnett Capital and Rodney Square in view of the substantial services to be
provided by Barnett Capital to the Emerald Funds and Rodney Square to the
Emerald Tax-Exempt Fund, and the expenses incurred in connection with such
provision of services, under the Interim Agreements.
PROPOSAL 2--APPROVAL OF THE REORGANIZATION AGREEMENT
Proposed Reorganization. The Reorganization Agreement provides for: (1)
the transfer of all of the Fund Assets and Liabilities (as those terms are
defined in the Reorganization Agreement, which is attached hereto as Appendix
II) of each Emerald Fund to a corresponding Nations Fund in exchange for Shares
of designated classes of the corresponding Nations Fund; and (2) the
distribution of Nations Fund Shares to the shareholders of the Emerald Funds in
liquidation of the Emerald Funds. The Reorganization is subject to a number of
conditions with respect to each Emerald Fund, including Emerald Fund shareholder
approval. As noted above, the Reorganization Agreement also contemplates the
reorganization of Emerald into the Nations Funds Family, so a vote for or
against the approval of the Reorganization Agreement includes a vote for or
against the reorganization of Emerald into the Nations Funds Family. Following
the Reorganization, Emerald will wind up its affairs and deregister as an
investment company under the 1940 Act. It is possible that a majority of an
Emerald Fund's shareholders may approve the Reorganization Agreement while a
sufficient majority of all shareholders of Emerald series voting does not
approve the reorganization of Emerald. In such a case, the Board of Trustees
will contemplate what further action is appropriate action.
As a result of the proposed Reorganization, an Emerald Fund shareholder
will become a shareholder of the corresponding Nations Fund and will hold,
immediately after the Closing (as defined in the Reorganization Agreement),
Shares of the designated classes of the corresponding Nations Fund having a
total dollar value equal to the total dollar value of the shares of the Emerald
Fund that the shareholder held immediately before the Closing. The exchange of
each Emerald Fund's Fund Assets and Liabilities is expected to occur in May
1998, or such later date as may be provided in the Reorganization Agreement.
Overview of Emerald and Nations. The investment objectives, policies and
restrictions of the Emerald Funds are, in general, substantially similar to
those of their corresponding Nations Fund. There are, however, differences. For
example, the Emerald
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Equity Fund invests in securities based upon fundamental evaluations, while the
corresponding Nations Disciplined Equity Fund uses a quantitative analysis. The
Emerald Balanced Fund may invest up to 15% of its total assets in convertible
securities rated below investment grade, while the corresponding Nations
Balanced Assets Fund invests in obligations rated investment grade.
Additionally, the average weighted maturity of the Emerald Short-Term Fixed
Income Fund will not exceed three years, while the average weighted maturity of
the corresponding Nations Short-Term Income Fund will not exceed five years. For
additional information, see "Comparison of Emerald and Nations--Investment
Objectives and Policies," "Summary--Special Considerations for Shareholders of
the Emerald Equity Fund" and Appendix IV to this Proxy/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.
See "Comparison of Emerald and Nations--Investment Adviser and Other Service
Providers."
Table III, under "Comparison of Emerald and Nations--Investment Adviser
and Other Service Providers," shows the current total operating expenses for
each class of shares of each of the Emerald Funds along with the pro forma total
operating expenses that could be expected for each designated class of shares of
the corresponding Nations Fund after the Reorganization. Appendix III to this
Proxy/Prospectus provides additional information about the fees and expenses for
each of the Emerald Funds and corresponding Nations Funds. The Emerald Funds and
Nations Funds have a different administrator, distributor, transfer agent,
independent auditor and different trustees. See "Comparison of Emerald and
Nations--Investment Adviser and Other Service Providers."
Nations Balanced Assets Fund, Nations Disciplined Equity Fund, Nations
Florida Municipal Bond Fund, Nations Short-Term Income Fund, Nations Strategic
Fixed Income Fund and Nations Value Fund will each issue two classes of Shares
in the Reorganization: Investor A Shares and Primary A Shares. In addition,
Nations Tax Exempt Fund will issue three classes of Shares in the
Reorganization: Daily Shares, Investor A Shares and Primary A Shares. See
"Comparison of Emerald and Nations--Share Structure."
The purchase, redemption, dividend and other policies and procedures of
the Emerald Funds and the Nations Funds are generally similar. See "Comparison
of Emerald and Nations-Shareholder Transactions and Services" and Appendix V to
this Proxy/Prospectus. Similarly, the Nations Funds share classes being issued
in the Reorganization and Emerald Funds are sold at net asset value per share,
with no front-end or contingent deferred sales load. In addition, no front-end
or contingent deferred sales loads will be imposed on any of the shareholders of
the Emerald Funds in connection with the Reorganization.
Special Considerations Relating to the Emerald Equity Fund. Although
the investment objectives and policies of the Emerald Equity Fund and the
Nations Disciplined Equity Fund are substantially similar, there are some
differences in the stock selection process used by each Fund. In particular, the
Nations Disciplined Equity Fund places a
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<PAGE>
greater emphasis on quantitative analysis of potential portfolio securities than
does the Emerald Equity Fund. Partly as a result of these differences, NBAI and
TradeStreet, as investment adviser and investment sub-adviser, respectively, to
the Nations Disciplined Equity Fund, believe that it is appropriate to sell many
of the securities currently held by the Emerald Equity Fund (up to half of its
portfolio), and reinvest the proceeds in securities that meet applicable
quantitative standards, prior to the Reorganization. NBAI and TradeStreet
believe that repositioning this portfolio in this manner will cause the two
Funds to be in closer alignment when the Reorganization occurs.
Although this repositioning is likely to cause the Emerald Equity Fund to
realize, and distribute to shareholders prior to the Reorganization, capital
gains that might otherwise be unrealized as of the Reorganization, the expected
realization amounts and turnover rates are not outside the range experienced by
shareholders over the past several years. In addition, NBAI and TradeStreet have
been advised that some repositioning would have occurred as a result of the
change in control of Barnett Capital, even in the absence of the proposed
Reorganization.
The Emerald Board of Trustees, in approving the proposal to reorganize the
Emerald Equity Fund into the Nations Disciplined Equity Fund, considered various
aspects of such Reorganization, including the potential that Emerald Equity Fund
shareholders may experience a taxable gain distribution as a result of portfolio
security sales. The Emerald Board of Trustees also considered the viability of
various alternatives for the Fund but concluded that, even with the
repositioning described above, a reorganization into Nations Disciplined Equity
Fund would be in the best interests of Emerald Equity Fund shareholders. See
"Information Relating to Proposal 2--Approval of the Reorganization
Agreement--Emerald Board Consideration."
Federal Income Tax Consequences. The Reorganization is not expected to
result in the recognition, for federal income tax purposes, of gain or loss by
the Emerald Funds, the Nations Funds or their respective shareholders. The sale
of securities by the Emerald Funds prior to the Closing(s), whether in the
ordinary course of business or in anticipation of the Closing(s), could result
in a taxable capital gains distribution prior to the Closing(s). See
"Information Relating to Proposal 2--Approval of the Reorganization
Agreement--Federal Income Tax Considerations" for additional information.
Nations and Emerald Boards' Consideration. In considering the
Reorganization Agreement, the Board of Nations, including the non-interested
Trustees thereof, were advised by legal counsel, as well as by separate legal
counsel, as to their fiduciary duties under the 1940 Act and the required
determinations that the Board should make under the 1940 Act in connection with
the Reorganization. After considering the relevant factors, the Nations Board,
on behalf of the Nations Funds, including a majority of the non-interested
Trustees, found that participation in the Reorganization, as contemplated by the
Reorganization Agreement, 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.
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<PAGE>
In reviewing the proposed Reorganization, the Board of Emerald considered
the potential impact of the Reorganization on its shareholders, including (1)
the terms and conditions of the Reorganization Agreement, including provisions
intended to avoid the dilution of shareholder interests; (2) the capabilities,
practices and resources of the organizations that provide investment advisory
and certain other services to the Nations Funds, and the terms on which these
services are provided; (3) the shareholder services provided to Emerald
shareholders, compared with the shareholder services provided to Nations
shareholders; (4) the investment objectives, policies and limitations of the
Emerald Funds and the Nations Funds; (5) the historical investment performance
of the Emerald Funds and the Nations Funds; (6) the historical and projected
operating expenses of the Emerald Funds and the Nations Funds; and (7) the
anticipated tax consequences of the Reorganization. See "Information Relating to
Proposal 2--Approval of the Proposed Reorganization--Emerald Board
Consideration."
Based upon their evaluation of the information presented to them, and in
light of their fiduciary duties under Federal and state law, the Board of
Trustees of Emerald, including all of the non-interested members of the Board,
have determined that the proposed Reorganization is in the best interests of the
shareholders of each class of each Emerald Fund, and that the interests of such
shareholders will not be diluted as a result of the Reorganization. EMERALD'S
BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT EACH EMERALD FUND'S SHAREHOLDERS
APPROVE THE REORGANIZATION AGREEMENT.
Principal Risk Factors. Because of the general similarities of the
investment objectives, policies and restrictions of the Emerald Funds and their
corresponding Nations Funds, an investment in a Nations Fund involves risks that
are similar to those of the corresponding Emerald Fund. These investment risks,
in general, are those typically associated with investing in a portfolio of
common stocks in the case of the Emerald and Nations equity funds, a portfolio
of fixed-income securities in the case of the Emerald and Nations fixed-income
funds, a portfolio of municipal obligations in the case of the Emerald and
Nations municipal bond funds, and a portfolio of high quality, short-term money
market instruments in the case of the Emerald and Nations money market funds.
The risks associated with Nations Disciplined Equity Fund (and its
corresponding Emerald Equity Fund) and Nations Value Fund (and its corresponding
Emerald Equity Value 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. The U.S. stock markets tend to be cyclical, with periods when stock
prices generally rise and periods when prices generally decline. As of the date
of this Proxy/Prospectus, domestic stock markets were trading at or close to
record high levels and there can be no guarantee that such levels will continue.
An investment in Nations Strategic Fixed Income Fund (and its
corresponding Emerald Managed Bond Fund) and Nations Short-Term Income Fund (and
its
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<PAGE>
corresponding Emerald Short-Term Fixed Income 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 maximum average
weighted maturity of the Emerald Short-Term Fixed Income Fund is less than that
of Nations Short-Term Income Fund, the share price of the Nations Fund may
fluctuate more in response to interest rate changes than that of the Emerald
Fund.
An investment in Nations Florida Municipal Bond Fund (and its
corresponding Emerald Florida Tax-Exempt Fund) involves risks associated with
investing in a non-diversified portfolio of securities. Because each Fund
invests primarily in securities issued by entities located in Florida, such
Funds are more susceptible to changes in value due to political or economic
changes affecting Florida or its authorities, agencies and political
subdivisions.
An investment in Nations Tax Exempt Fund (and its corresponding Emerald
Tax-Exempt 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 Balanced Assets Fund (and its corresponding
Emerald Balanced Fund) involves risks typically associated with both a
fixed-income fund and an equity fund. The respective investment advisers
typically will allocate these Funds' assets among equities, fixed income
securities and cash equivalents, although a Fund's investment returns may be
strongly influenced by the investment adviser's outlook for future returns on
each asset class. Although the investment adviser for each Fund will attempt to
take advantage of changing economic conditions by increasing or decreasing the
ratio of stocks to fixed income securities or cash equivalents, there can be no
assurance that the investment adviser will maximize returns.
Voting Information. This Proxy/Prospectus is being furnished in connection
with the solicitation of proxies by Emerald's Board of Trustees at the Meeting.
Only shareholders of record at the close of business on March [16], 1998 will be
entitled to vote at the Meeting. Each whole or fractional share is entitled to a
whole or fractional vote, respectively. 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 Emerald 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."
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INFORMATION RELATING TO PROPOSAL 1--APPROVAL OF THE
INTERIM ADVISORY AGREEMENTS AND INTERIM SUB-ADVISORY
AGREEMENT
The Merger of Barnett Banks, Inc. into NB Holdings Corporation. On January
9, 1998, Barnett Banks, Inc. merged into NB Holdings Corporation, a wholly owned
subsidiary of NationsBank Corporation. As a result of this Holding Company
Merger, Barnett Capital became a wholly owned subsidiary of NationsBank
Corporation. Barnett Capital and Emerald considered the effect that the Holding
Company Merger would have on Emerald, and the possibility that under the terms
of the Emerald Funds' investment advisory agreements and Emerald Tax-Exempt
Fund's investment sub-advisory agreement, and under the 1940 Act, the Holding
Company Merger might result in the automatic and immediate termination of those
agreements.
Prior to the Holding Company Merger, Barnett Capital served as investment
adviser to the Emerald Funds pursuant to two separate investment advisory
agreements. The investment advisory agreement with respect to the Emerald
Balanced Fund, Emerald Equity Fund, Emerald Equity Value Fund, Emerald Florida
Tax-Exempt Fund, Emerald Managed Bond Fund and Emerald Short-Term Fixed Income
Fund was dated June 28, 1991 (as subsequently amended), was approved by the
shareholders of each of the Emerald Equity Fund and Emerald Florida Tax-Exempt
Fund on October 16, 1992 for the purpose of complying with certain conditions
imposed by the 1940 Act as well as by the SEC at that time in connection with
the registration of such Funds under the federal securities laws, by the sole
shareholder of each of the Emerald Balanced Fund, Emerald Managed Bond Fund and
Emerald Short-Term Fixed Income Fund on April 6, 1994 prior to each such Fund's
initial public offering, and by the shareholders of the Emerald Equity Value
Fund on August 19, 1996 prior to that Fund's initial public offering, and was
last approved by the Emerald Board of Trustees on November 13, 1997. Under the
agreement, Barnett was entitled to receive advisory fees at the annual rates of
0.60% of the average net assets of the Emerald Balanced Fund, 0.60% of the
average net assets of the Emerald Equity Fund, 0.60% of the average net assets
of the Emerald Equity Value Fund, 0.40% of the average net assets of the Emerald
Florida Tax-Exempt Fund, 0.40% of the average net assets of the Emerald Managed
Bond Fund and 0.40% of the average net assets of the Emerald Short-Term Fixed
Income Fund. For the fiscal year ended November 30, 1997, Barnett Capital
received advisory fees (after waivers) at the effective annual rates of 0.60%,
0.60%, 0.55%, 0.40%, 0.40%, and 0.40% of the average net assets of the Emerald
Balanced Fund, Emerald Equity Fund, Emerald Equity Value Fund, Emerald Florida
Tax-Exempt Fund, Emerald Managed Bond Fund and Emerald Short-Term Fixed Income
Fund, respectively, representing $560,612 with respect to the Emerald Balanced
Fund, $1,598,533 with respect to the Emerald Equity Fund, $61,495 with respect
to the Emerald Equity Value Fund, $464,431 with respect to the Emerald Florida
Tax-Exempt Fund, $347,005 with respect to the Emerald Managed Bond Fund and
$299,547 with respect to the Emerald Short-Term Fixed Income Fund.
The investment advisory agreement with respect to the Emerald Tax-Exempt
Fund was dated April 22, 1992, was last approved by shareholders of the Fund on
April 21,
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1992 for the purpose of revising the Agreement to permit entities other than the
Fund's sub-adviser at such time (which had determined to resign as sub-adviser)
to serve as sub-adviser to the Fund, and was last approved by the Emerald Board
of Trustees on November 13, 1997. Under the agreement, Barnett Capital was
entitled to receive advisory fees at the annual rate of 0.25% of the Fund's
average net assets. The advisory fees payable to Barnett Capital are not subject
to reduction as the assets of the Emerald Tax-Exempt Fund increase. However,
Barnett Capital has voluntarily agreed, until further notice to Emerald, to
waive all fees payable to it with respect to the Tax-Exempt Fund in excess of
the sub-advisory fees payable by Barnett Capital as described below. For the
fiscal year ended November 30, 1997, Barnett Capital received advisory fees
(after waivers) at the effective annual rate of 0.15% of the average net assets
of the Tax-Exempt Fund, representing $262,233. All of the fees received by
Barnett Capital were paid to Rodney Square pursuant to the arrangements
described above.
The sub-investment advisory agreement with respect to the Emerald
Tax-Exempt Fund was dated April 22, 1992, was approved by shareholders of the
Fund on April 21, 1992 for the purpose of approving Rodney Square as the Fund's
new sub-adviser, and was last approved by the Emerald Board of Trustees on
November 13, 1997. Under the agreement, Rodney Square was entitled to receive
sub-advisory fees from Barnett Capital at the annual rate of 0.15% of the
Tax-Exempt Fund's average net assets. For the fiscal year ended November 30,
1997, Rodney Square received sub-advisory fees (after waivers) at the effective
annual rate of 0.15% of the Tax-Exempt Fund's average net assets, representing
$262,233.
To ensure that the Holding Company Merger would not disrupt the investment
advisory and sub-advisory services provided to the Emerald Funds, Emerald,
Barnett Capital and Rodney Square obtained an exemptive Order from the SEC
permitting Barnett Capital and Rodney Square to continue to act as investment
adviser and sub-adviser, respectively, through the Interim Period, but prior to
obtaining the approval of the Interim Advisory Agreements by the shareholders of
the Emerald Funds and approval of the Interim Sub-Advisory Agreement by the
shareholders of the Emerald Tax-Exempt Fund. The Order also permits Barnett
Capital and Rodney Square to receive fees for the Interim Period from each
Emerald Fund, subject to approval by the Emerald Fund shareholders entitled to
vote at a meeting to be held during the Interim Period. In applying for the
Order, Barnett Capital agreed to take steps to ensure that the scope and quality
of the investment advisory services will be the same during the Interim Period
as previously provided to the Emerald Funds.
The Interim Advisory Agreements and Interim Sub-Advisory Agreement. The
terms and conditions of the Interim Advisory Agreements and Interim Sub-Advisory
Agreement are the same as those of the former investment advisory agreements
with Barnett Capital and the former investment sub-advisory agreement between
Barnett Capital and Rodney Square, respectively, except for provisions relating
to (1) the effective date (January 9, 1998), (2) the termination date (November
30, 1998) and (3) certain escrow provisions, that are described above.
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Under the Interim Advisory Agreements, Barnett is responsible for
providing a continuous investment program for each Emerald Fund, including
investment research and management with respect to all securities, investments,
cash and cash equivalents in the Funds, and is responsible for determining what
securities and other investments will be purchased, retained or sold by each of
the Fund and for maintaining all books and records with respect to each Fund's
securities transactions.
With respect to the Emerald Tax-Exempt Fund, some of Barnett Capital's
responsibilities under the Interim Advisory Agreement pertaining to that Fund
are performed by a sub-adviser. Subject to the oversight and supervision of
Barnett Capital and the Emerald Board of Trustees, Rodney Square provides a
continuous investment program for the Tax-Exempt Fund, including investment
management and research with respect to all securities, investments, cash and
cash equivalents. Rodney Square provides sub-advisory services to the Emerald
Tax-Exempt Fund in accordance with investment criteria and policies established
from time to time by Barnett Capital and the Fund's investment objective,
policies and restrictions.
The Interim Agreements also include provisions relating to other matters,
such as portfolio trading practices, expenses and standard of care. For example,
the Interim Agreements provide that in executing portfolio transactions and
selecting brokers or dealers, Barnett Capital and Rodney Square are to seek the
best overall terms available, and that investment decisions for the Emerald
Funds are to be made independently from those for other investment companies and
accounts managed by Barnett Capital and Rodney Square. Such other investment
companies and accounts may, however, invest in the same securities as the Funds.
In such cases, simultaneous transactions are inevitable. Under the Interim
Agreements, Barnett Capital and Rodney Square may aggregate, to the extent
permitted by law, the securities to be sold or purchased for the Funds with
those to be sold or purchased by other investment companies or accounts in
executing transactions. In addition, the Interim Agreements provide that to the
extent the purchase or sale of securities or other investments of the same
issuer may be deemed to be suitable for two or more accounts managed by Barnett
Capital or Rodney Square, the available securities or investments may be
allocated in a manner believed by Barnett Capital or Rodney Square to be
equitable to each account. In some instances, this investment procedure may
adversely affect the price paid or received by a Fund or the size of the
position obtainable for or disposed of by a Fund.
Although expected to be infrequent, Barnett Capital and Rodney Square are
allowed under the Interim Agreements to consider the amount of Emerald Fund
shares sold by broker-dealers and others (including those who may be connected
with Barnett Capital or Rodney Square) in allocating orders for purchases and
sales of portfolio securities. This allocation may involve the payment of
brokerage commissions or dealer concessions. Barnett Capital and Rodney Square
will not engage in this practice unless the execution capability of, and the
amount received by, such broker-dealer or other company is believed to be
comparable to what another qualified firm could offer. Portfolio securities may
not be purchased from or sold to Barnett Capital, Rodney Square, the Emerald
Funds'
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<PAGE>
distributor, or any affiliated person of any of them or Emerald, acting as
principal in the transaction, except as permitted by the SEC.
The Interim Agreements provide that Barnett Capital and Rodney Square will
pay all expenses incurred by them in connection with their activities under the
respective Agreements other than the cost of securities and other investments
(including brokerage commissions and other transaction costs, if any) purchased
or sold for the Emerald Funds. Barnett Capital and, with respect to the Emerald
Tax-Exempt Fund, Rodney Square also agree that if, in any fiscal year, the
aggregate expenses of any Fund (as defined under the securities regulations of
any state having jurisdiction over such Fund) exceed the expense limitations of
any such state, Emerald may deduct from the fees to be paid to Barnett Capital,
or Barnett Capital or, in the case of the Tax-Exempt Fund, Rodney Square, will
bear a portion of any excess to the extent required by state law. To Emerald's
knowledge, as of the date of this Proxy/Prospectus, the Emerald Funds are not
subject to any state expense limitations.
The Interim Agreements provide that Barnett Capital and Rodney Square will
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Emerald Funds in connection with the performance of the
respective Agreements, except a loss resulting from a breach of fiduciary duty
with respect to the receipt of compensation for services or loss resulting from
willful misfeasance, bad faith or negligence on their part in the performance of
their duties or from reckless disregard by them of their obligations and duties
thereunder.
Each Interim Agreement provides that, if approved by the shareholders of
an Emerald Fund, the Interim Agreement will continue in effect with respect to
that Fund until November 30, 1998. Thereafter, the Agreement will continue in
effect with respect to that Fund for successive annual periods, provided that
its continuance is approved at least annually (1) by the vote of a majority of
those members of Emerald's Board of Trustees who are not "interested persons"
(as that term is defined in the 1940 Act) of any party to the Agreement cast in
person at a meeting called for the purpose of voting on such approval and (2) by
the Board or by vote of a majority of the outstanding shares of the Fund.
Each Interim Agreement will terminate automatically in the event of its
assignment. Each Interim Agreement also provides that it is terminable with
respect to any Emerald Fund, without payment of any penalty, by Emerald (by vote
of Emerald's Board of Trustees or by vote of a majority of the outstanding
voting securities of such Fund), by Barnett Capital or, in the case of the
Interim Sub-Advisory Agreement, by Barnett Capital or Rodney Square on 60 days'
written notice.
The Interim Advisory Agreements permit Barnett Capital (subject to any
shareholder approval required by law) to retain a sub-adviser in connection with
the performance of its advisory services, as stated above. Except with respect
to the Emerald Tax-Exempt Fund for which Barnett Capital has retained a
sub-adviser as described above, Barnett Capital intends to provide all of the
services stated in the Interim Advisory Agreement. In
16
<PAGE>
addition, the Interim Advisory Agreement with respect to the Emerald Balanced
Fund, Emerald Equity Fund, Emerald Equity Value Fund, Emerald Florida Tax-Exempt
Fund, Emerald Managed Bond Fund and Emerald Short-Term Fixed Income Fund
expressly permits the Interim Advisory Agreement to be amended with respect to
the Emerald Equity Value Fund without shareholder approval to the extent allowed
by the 1940 Act.
The advisory fees payable by each Emerald Fund under the Interim Advisory
Agreements, as described below, are the separate obligation of that particular
Fund (and not the joint obligation of all Emerald Funds). Sub-advisory fees
payable to Rodney Square under the Interim Sub-Advisory Agreement with respect
to the Emerald Tax-Exempt Fund are paid by Barnett Capital and not by the Fund.
Information Regarding Barnett Capital and Rodney Square. Prior to the
Holding Company Merger, Barnett Capital was a wholly-owned subsidiary of Barnett
Bank, N.A. which, in turn, was a wholly-owned subsidiary of Barnett Banks, Inc.,
which was a publicly-held bank holding company located in Jacksonville, Florida.
Upon consummation of the Holding Company Merger, Barnett Capital became a
wholly-owned subsidiary of NB Holdings Corporation which, in turn, is an
indirect wholly-owned subsidiary of NationsBank Corporation. As of February 15,
1998, no persons owned beneficially or of record 10% or more of any class of
issued and outstanding voting securities of NationsBank Corporation.
Barnett Capital is organized as a corporation under the laws of the State
of Florida and is registered as an investment adviser with the SEC under the
Investment Advisers Act of 1940. In addition to serving as investment adviser to
the Emerald Fund, Barnett Capital acts as investment adviser to individuals,
trusts, estates and institutions and as investment adviser to Emerald's other
investment portfolios, including the Emerald Prime Advantage Institutional,
Emerald Treasury Advantage Institutional, Emerald Prime and Treasury Funds, four
other money market portfolios whose net assets at _____________, 1998 were
$______, $______, $________ and $_______, respectively. Under the terms of the
investment advisory agreements relating to these portfolios, Barnett Capital is
entitled to an advisory fee at the annual rate of .10% of the average net assets
of each of the Emerald Prime Advantage Institutional Fund and Emerald Treasury
Advantage Institutional Fund and at the annual rate of .25% of the average net
assets of each of the Emerald Prime Fund and Emerald Treasury Fund, which fees
are not subject to reduction as the value of each portfolio's net assets
increases. Barnett Capital has informed Emerald, however, of its intention to
reduce the annual rate of its advisory fees with respect to each of the Emerald
Prime Fund and Emerald Treasury Fund to the following rates: .25% of the first
$600 million of each portfolio's net assets; .23% of each portfolio's net assets
over $600 million but not exceeding $1 billion; .21% of the next $1 billion of
each portfolio's net assets; and .19% of each portfolio's net assets over $2
billion.
As of ____________, 1998, Barnett Capital had approximately $__ billion of
assets under management. Barnett Capital's principal offices are located at 9000
Southside Boulevard, Building 100, Jacksonville, Florida 32256. The name and
principal occupation of the principal executive officer and each director of
Barnett Capital as of
17
<PAGE>
______________, 1998 were as follows: Jack A. Ablin, Director, President and
Chief Executive Officer; Holly D. Deem, Director and ______________; Martin E.
Gaet, III, Director and ______________; and Richard S. Gershin, Director and
______________. All of the above persons may be reached c/o Barnett Capital
Advisers, Inc., 9000 Southside Boulevard, Building 100, Jacksonville, Florida
32256.
Rodney Square is organized as a Delaware corporation and is registered as
an investment adviser with the SEC under the Investment Advisers Act of 1940. In
addition to serving as sub-adviser to the Emerald's Tax-Exempt Fund, Rodney
Square also serves as investment adviser or sub-adviser to the following
investment companies that have similar investment objectives: [identify
investment companies and describe net assets at ____________, 1998 and fee
arrangements.]
As of _____________, 1998, Rodney Square had approximately $__ billion in
assets under management. Rodney Square's principal offices are located at Rodney
Square North, Wilmington, Delaware 19890. All of the capital stock of Rodney
Square is owned by Wilmington Trust Company, a Delaware banking corporation,
which is, in turn, a wholly-owned subsidiary of Wilmington Trust Corporation, a
publicly-held bank holding corporation ("WTC"). Wilmington Trust Company and WTC
also maintain their principal offices in Wilmington, Delaware. As of
___________, 1998, to Emerald's knowledge, no person owned beneficially or of
record 10% or more of any class of issued and outstanding voting securities of
WTC.
The name and principal occupation of the chief executive officer and each
director of Rodney Square as of ____________, 1998 were as follows: [to be
provided].
At the time of their approval of the Interim Advisory Agreements, three of
the six members of Emerald's Board of Trustees were considered to be
"interested" Trustees within the meaning of the 1940 Act for the following
reasons. Marshall M. Criser, Chairman of the Emerald Board of Trustees, was a
director of Barnett Banks, Inc., owned shares of Barnett Banks, Inc. and
maintained money market deposit accounts with a Barnett Banks, Inc. banking
subsidiary, and is currently of counsel (and was formerly a shareholder) of a
law firm which has represented Barnett Capital and its affiliates within the
preceding two years. John G. Grimsley, the Trust's President and a member of the
Board, is a partner of a law firm which has represented Barnett Capital and its
affiliates within the preceding two years and also owned shares of Barnett
Banks, Inc. Albert D. Ernest, Jr., a member of the Board, owned shares of
Barnett Banks, Inc.
Payments to Barnett Capital or Rodney Square Affiliates. During the fiscal
year ended November 30, 1997, affiliates of Barnett Capital have received fees
pursuant to certain distribution and/or shareholder servicing plans that have
been in effect during such year. The table below sets forth the amounts of
payments made to such affiliates by the Emerald Funds.
Shareholder
18
<PAGE>
Emerald Fund Distribution Fees Servicing Fees
- ------------ ----------------- --------------
Balanced Fund
Equity Fund
Equity Value Fund
Florida Tax-Exempt Fund
Managed Bond Fund
Short-Term Fixed Income Fund
Tax-Exempt Fund
During the fiscal year ended November 30, 1997, the Emerald Funds paid no
fees to affiliates of Rodney Square.
Affiliated Broker Commissions. During the fiscal year ended November 30,
1997, the Emerald Funds paid no brokerage commissions in connection with
purchases and sales of portfolio securities to any party that would be treated
as an affiliated broker as defined in Item 22(a)(1)(ii) of Schedule 14A under
the Securities Exchange Act of 1934.
For the services provided and expenses assumed pursuant to the Interim
Advisory Agreements, Emerald Funds pays Barnett Capital fees which range from
0.25% to 1.00% of the average daily net assets of a particular Emerald Fund.
Barnett Capital, under the Interim Sub-Advisory Agreement, with respect to the
Emerald Tax-Exempt Fund, pays Rodney Square a fee equal to 0.15% of the
Tax-Exempt Fund's average daily net assets. However, pending ratification and
approval of the Interim Advisory Agreements, all fees payable to Barnett Capital
and Rodney Square under the Interim Advisory Agreements are being held in
escrow. These escrowed fees will be received by Barnett Capital and Rodney
Square only if the respective Interim Advisory Agreements are ratified and
approved by Emerald Fund shareholders entitled to vote. The fees payable to
Barnett Capital are not subject to reduction as the value of each Fund's net
assets increases. From time to time, however, Barnett Capital and/or Rodney
Square may waive fees or reimburse the Emerald Funds for expenses voluntarily,
although there is no guarantee that such waivers would continue.
Approval of Emerald's Board of Trustees. At a meeting on December 8, 1997,
the Emerald Board of Trustees, including all of the Trustees who are not
interested persons (as that term is defined in the 1940 Act) of Emerald (other
than as Trustees), Barnett Capital, Rodney Square or NationsBank, N.A.
("NationsBank"), approved the Interim Advisory Agreements and Interim
Sub-Advisory Agreement, which became effective upon the consummation of the
Holding Company Merger on January 9, 1998. In considering whether to approve the
Interim Agreements and to submit such agreements to shareholders for their
approval, the Board of Trustees considered the following factors: (1) Barnett
Capital's representations that it would provide investment advisory services and
other services to the Emerald Funds of a scope and quality at least equivalent,
in the Board's judgment, to the scope and quality of services previously
provided to the Emerald Funds; (2) the substantially identical terms and
conditions contained in the Interim Agreements as compared to the prior
investment advisory agreements and investment sub-
19
<PAGE>
advisory agreement; and (3) Barnett Capital's representation that in the event
of any material change in personnel providing services under the Interim
Advisory Agreements during the Interim Period, the Board of Trustees of Emerald
would be consulted for the purpose of assuring themselves that the services
provided would not be diminished in scope or quality. Additionally, the Trustees
considered the benefits that would be obtained by the Emerald Funds in
maintaining continuity in investment advisory services for the Funds during the
Interim Period, and determined that continuity was advantageous to the Funds as
it would serve to minimize uncertainty and confusion, and would minimize any
potential disruption resulting from the Holding Company Merger in the advisory
services provided to the Emerald Funds.
Based upon the foregoing factors, which were considered material by the
Emerald Board of Trustees, the Trustees concluded that approval of the Interim
Agreements was in the best interests of the Emerald Fund shareholders and
Emerald. The Board of Trustees further concluded that payment of the advisory
fees under the Interim Agreements would be appropriate and fair considering
that: (1) the fees that are payable under the Interim Agreements, and the
services to be provided therefor, would be unchanged from the fees payable under
the former investment advisory agreements and investment sub-advisory agreement,
(2) the fees will be maintained in an interest-bearing escrow account until
payment is approved or disapproved by shareholders of a particular Emerald Fund,
and (3) the nonpayment of fees earned during that period would constitute an
extreme inequity to Barnett Capital and Rodney Square in view of the substantial
services provided by Barnett Capital to the Emerald Funds and Rodney Square to
the Emerald Tax-Exempt Fund during the Interim Period, and the expenses incurred
in connection with such provision of services, under the Interim Agreements.
With respect to the approval of the Interim Advisory Agreements, each
Emerald Fund will vote separately. With respect to the approval of the Interim
Sub-Advisory Agreement, the Emerald Tax-Exempt Fund will vote separately.
EMERALD'S BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT EMERALD FUND
SHAREHOLDERS RATIFY AND APPROVE THE INTERIM ADVISORY AGREEMENTS, AND THAT
SHAREHOLDERS OF THE EMERALD TAX-EXEMPT FUND RATIFY AND APPROVE THE INTERIM
SUB-ADVISORY AGREEMENT, FOR THE PERIOD FROM JANUARY 9, 1998 FORWARD.
INFORMATION RELATING TO PROPOSAL 2 --
APPROVAL OF THE REORGANIZATION AGREEMENT
The terms and conditions of the Reorganization are set forth in the
Reorganization Agreement. Significant provisions of the Reorganization Agreement
are summarized below; however, this summary is qualified in its entirety by
reference to the Reorganization Agreement, a copy of which is attached as
Appendix II to this Proxy/Prospectus.
20
<PAGE>
Description of the Reorganization Agreement. The Reorganization Agreement
provides that at the Closing(s) the Fund Assets and Liabilities (as those terms
are defined in the Reorganization Agreement) of the Emerald Funds will be
transferred to Nations, as shown in Table I (see page 2 of this
Proxy/Prospectus), in exchange for full and fractional Shares of the designated
classes of the corresponding Nations Funds.
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 Emerald Fund that are outstanding immediately before the Closing.
Immediately after the Closing, each Emerald Fund will distribute the Shares of
the Nations Fund received in the Reorganization to its shareholders in
liquidation of the Emerald Fund. Each shareholder owning shares of a particular
Emerald Fund at the Closing will receive Shares of the designated class of the
corresponding Nations Fund, and will receive any unpaid dividends or
distributions that were declared before the Closing on Emerald Fund shares.
Nations will establish an account for each former shareholder of the Emerald
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 Emerald for each shareholder. Shares of the Nations
Funds are in uncertificated form.
As indicated above, Emerald shareholders of those series of Emerald not
part of this Proxy/Prospectus are voting on similar agreements and plans of
reorganization that, in a like manner, would provide for the reorganization of
those series of Emerald into designated classes of corresponding portfolios of
Nations Fund Trust and Nations Institutional Reserves--other registered
investment companies in the Nations Funds Family. If the Reorganization
Agreement and the agreements and plans of reorganization affecting the other
series of Emerald are approved by a majority of all series of Emerald voting in
the aggregate and are consummated, Emerald will have transferred all of its
assets and liabilities as of the Closing(s), and all outstanding shares of the
Emerald Funds will be redeemed and canceled in exchange for Shares of the
Nations Funds distributed, and Emerald will wind up its affairs and apply to be
deregistered as an investment company under the 1940 Act. Emerald would
permanently close its stock transfer books as of the close of business on the
business day immediately preceding the Closing(s).
The Reorganization is subject to a number of conditions, including
approval of the Reorganization Agreement and the related matters described in
this Proxy/Prospectus by Emerald shareholders at the Meeting; approval by a
majority of all series of Emerald voting in the aggregate of the Reorganization
of Emerald; the receipt of certain legal opinions described in the
Reorganization Agreement (which include an opinion of Nations' counsel addressed
to Emerald 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 Reorganization Agreement; the receipt of
certain letters from the independent auditors of Emerald and independent
accountants of 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
21
<PAGE>
undertakings in the Reorganization Agreement. The Reorganization Agreement also
provides that if the difference between the per share net asset value of the
Emerald Tax-Exempt Fund and its corresponding Nations Fund equals or exceeds
$.0025 at the close of business on the day preceding the time at which the
Reorganization is to be effective, as computed using the market values of such
Funds' assets, either party may postpone the Closing with respect to such Fund
until such time as the per share difference is less than $.0025.
The Reorganization Agreement provides that Emerald and Nations will each
be responsible for its own expenses in connection with the Reorganization.
However, NBAI has agreed to assume all ordinary expenses associated with the
Reorganization. The Reorganization Agreement also provides, among other things,
that the Reorganization may be abandoned at any time prior to the Closing upon
the mutual consent of both Emerald and Nations, or by either Nations or Emerald
under certain conditions; and that officers of Nations and of Emerald may amend,
modify or supplement the Reorganization 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 shareholders of any Emerald Fund without obtaining the
Emerald Fund shareholders' further approval.
Emerald Board Consideration. At meetings held on November 13-14, 1997 and
December 8, 1997, the Emerald Board of Trustees was advised that Barnett Capital
and NBAI were considering the possibility of recommending a consolidation of
Emerald with the Nations Family of Funds following the Holding Company Merger.
The Emerald Board then met again on January 15, 1998 and on February 12, 1998 to
consider a reorganization proposal by NBAI and its affiliates. In preparation
for the meetings, the Trustees were provided with a variety of information about
the Reorganization, the Nations Funds and NationsBank. These materials
summarized the principal features of the Reorganization including the intention
that the Reorganization be consummated on a tax-free basis for each Fund and its
shareholders. In addition, the Emerald Trustees received comparative information
for the Emerald Funds and their corresponding Nations Funds with respect to the
following matters: (1) investment objectives and policies; (2) advisory,
distribution and other servicing arrangements; (3) 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 (4) performance relative to peer groups. The Emerald Trustees were
also provided with information about NationsBank and its investment advisory
organizations, including information regarding those individuals with
responsibility for each Nations Fund.
The proposal that the Emerald Funds be reorganized into the Nations Funds
as set forth in the Reorganization Agreement was unanimously approved by the
Board of Trustees on February 12, 1998. In connection with its approval of the
Reorganization Agreement, and the transactions contemplated therein, Emerald's
Board of Trustees considered that, as a result of the Holding Company Merger,
certain of the shareholders of both the Emerald Funds and Nations Funds were
currently customers of NationsBank and its affiliates. The Board also considered
NBAI's belief that the Reorganization would
22
<PAGE>
eliminate certain duplicative shareholder costs and market overlap, facilitate
consolidation of NBAI's managerial resources and enhance generally operational
efficiencies and focus with respect to the mutual funds advised by NBAI.
During its deliberations, Emerald's Board of Trustees (with the advice and
assistance of counsel) reviewed, among other things: (1) the potential effect of
the Reorganization on the shareholders of the Emerald Funds; (2) the
capabilities, practices and resources of NBAI and the Nation Funds' other
service providers; (3) the investment advisory and other fees paid by the
Nations Funds, and the historical and projected expense ratios of the Nations
Funds as compared with those of the Emerald Funds; (4) the expected cost-savings
for certain of the Emerald Funds, including Emerald funds not part of this
Proxy/Prospectus, as a result of the Reorganization; (5) the investment
objectives, policies and limitations of the Nations Funds and their relative
compatibility with those of the Emerald Funds; (6) the historical investment
performance records of the Emerald fund(s), including the Emerald Funds
described in this Proxy/Prospectus moving into operating Nations Funds; (7) the
shareholder services offered by Nations; (8) the terms and conditions of the
Reorganization Agreement, including those provisions that were intended to avoid
dilution of the interests of Emerald's shareholders; (9) the anticipated tax
consequences of the Reorganization for the respective Emerald Funds and their
shareholders; (10) the number of investment portfolio options that would be
available to shareholders after the Reorganization; (11) the resolution of
matters relating to Emerald's administration and transfer agency agreements
without cost to Emerald; and (12) the potential benefits of the Reorganization
to other persons, especially NBAI and its affiliates.
In connection with the foregoing, Emerald's Board of Trustees noted NBAI
would assume all ordinary expenses associated with the Reorganization. With
respect to each Nations Fund, Emerald's Trustees further noted that the total
operating expense ratios after the Reorganization, taking into account voluntary
fee waivers and with the exception of the Institutional Class shares of five of
the seven Emerald Funds, would be equal to or lower than those of the Emerald
Funds before the Reorganization.
After consideration of the foregoing and other factors, the Emerald
Trustees unanimously determined that the Reorganization is in the best interest
of the shareholders of each Emerald Fund, and that the interest of the
shareholders of each Emerald Fund will not be diluted as a result of such
Reorganization.
Capitalization. As proposed, the seven Emerald Funds would be reorganized
into the seven corresponding Nations Funds. The following table sets forth, as
of November 30, 1997: (1) the capitalization of each of the Emerald Funds; (2)
the capitalization of each of the corresponding Nations Funds; and (3) the pro
forma capitalization of each of the Nations Funds as adjusted to give effect to
the Reorganization of the Emerald Funds. The capitalization of each Emerald Fund
and Nations Fund is likely to be different at the Closing as a result of daily
share purchase and redemption activity in the Emerald Funds and Nations Funds as
well as the effects of the other ongoing operations of the respective Funds
prior to Closing.
23
<PAGE>
Table II
Capitalization (as of November 30, 1997)
1. The table below reflects current and pro forma capitalization
information for the combination of the Emerald Balanced Fund with Nations
Balanced Assets Fund.
<TABLE>
<CAPTION>
Net Asset Value
Total Net Assets Shares Outstanding Per Share
<S> <C> <C> <C>
Emerald Balanced Fund $8,291,845 595,508 $13.92
(Retail) (Retail) (Retail)
$76,868,196 5,564,606 $13.81
(Institutional) (Institutional) (Institutional)
Nations Balanced Assets Fund $14,232,673 1,337,198 $10.64
(Investor A) (Investor A) (Investor A)
$103,695,913 9,714,217 $10.67
(Primary A) (Primary A) (Primary A)
Pro Forma Combined Fund $22,524,518 2,116,239 $10.64
(Retail/ (Retail/ (Retail/
Investor A) Investor A) Investor A)
$180,564,109 16,915,218 $10.67
(Institutional/ (Institutional/ (Institutional/
Primary A) Primary A) Primary A)
</TABLE>
24
<PAGE>
2. The table below reflects current and pro forma capitalization
information for the combination of the Emerald Equity Fund with Nations
Disciplined Equity Fund.
<TABLE>
<CAPTION>
Net Asset Value
Total Net Assets Shares Outstanding Per Share
<S> <C> <C> <C>
Emerald Equity Fund $48,442,554 2,692,460 $17.99
(Retail) (Retail) (Retail)
$233,977,362 12,894,783 $18.15
(Institutional) (Institutional) (Institutional)
Nations Disciplined Equity Fund $18,895,922 978,068 $19.32
(Investor A) (Investor A) (Investor A)
$99,127,639 5,116,031 $19.38
(Primary A) (Primary A) (Primary A)
Pro Forma Combined Fund $67,338,476 3,485,493 $19.32
(Retail/ (Retail/ (Retail/
Investor A) Investor A) Investor A)
$333,105,001 17,191,730 $19.38
(Institutional/ (Institutional/ (Institutional/
Primary A) Primary A) Primary A)
</TABLE>
25
<PAGE>
3. The table below reflects current and pro forma capitalization
information for the combination of the Emerald Equity Value Fund with Nations
Value Fund.
<TABLE>
<CAPTION>
Net Asset Value
Total Net Assets Shares Outstanding Per Share
<S> <C> <C> <C>
Emerald Equity Value Fund $4,100,737 269,391 $15.22
(Retail) (Retail) (Retail)
$18,164,157 1,190,578 $15.26
(Institutional) (Institutional) (Institutional)
Nations Value Fund $125,670,308 7,126,688 $17.63
(Investor A) (Investor A) (Investor A)
$2,324,178,774 131,769,865 $17.64
(Primary A) (Primary A) (Primary A)
Pro Forma Combined Fund $129,771,045 7,359,238 $17.63
(Retail/ (Retail/ (Retail/
Investor A) Investor A) Investor A)
$2,342,342,931 132,799,686 $17.64
(Institutional/ (Institutional/ (Institutional/
Primary A) Primary A) Primary A)
</TABLE>
26
<PAGE>
4. The table below reflects current and pro forma capitalization
information for the combination of the Emerald Florida Tax-Exempt Fund with
Nations Florida Municipal Bond Fund.
<TABLE>
<CAPTION>
Net Asset Value
Total Net Assets Shares Outstanding Per Share
<S> <C> <C> <C>
Emerald Florida Tax-Exempt $80,399,223 7,143,927 $11.25
Fund (Retail) (Retail) (Retail)
$39,064,802 3,467,292 $11.27
(Institutional) (Institutional) (Institutional)
Nations Florida Municipal $1,956,226 197,738 $9.89
Bond Fund (Investor A) (Investor A) (Investor A)
$28,780,232 2,909,136 $9.89
(Primary A) (Primary A) (Primary A)
Pro Forma Combined Fund $82,355,449 8,324,601 $9.89
(Retail/ (Retail/ (Retail/
Investor A) Investor A) Investor A)
$67,845,034 6,857,868 $9.89
(Institutional/ (Institutional/ (Institutional/
Primary A) Primary A) Primary A)
</TABLE>
27
<PAGE>
5. The table below reflects current and pro forma capitalization
information for the combination of the Emerald Managed Bond Fund with Nations
Strategic Fixed Income Fund.
<TABLE>
<CAPTION>
Net Asset Value
Total Net Assets Shares Outstanding Per Share
<S> <C> <C> <C>
Emerald Managed Bond Fund $2,278,409 220,220 $10.35
(Retail) (Retail) (Retail)
$99,067,439 9,619,825 $10.30
(Institutional) (Institutional) (Institutional)
Nations Strategic Fixed Income $20,267,619 2,023,006 $10.02
Fund (Investor A) (Investor A) (Investor A)
$1,810,022,262 180,661,651 $10.02
(Primary A) (Primary A) (Primary A)
Pro Forma Combined Fund $22,546,028 2,250,424 $10.02
(Retail/ (Retail/ (Retail/
Investor A) Investor A) Investor A)
$1,909,089,701 190,549,754 $10.02
(Institutional/ (Institutional/ (Institutional/
Primary A) Primary A) Primary A)
</TABLE>
28
<PAGE>
6. The table below reflects current and pro forma capitalization
information for the combination of the Emerald Short-Term Fixed Income Fund with
Nations Short-Term Income Fund.
<TABLE>
<CAPTION>
Net Asset Value
Total Net Assets Shares Outstanding Per Share
<S> <C> <C> <C>
Emerald Short-Term Fixed Income Fund $4,452,311 445,111 $10.00
(Retail) (Retail) (Retail)
$93,446,918 9,339,203 $10.01
(Institutional) (Institutional) (Institutional)
Nations Short-Term Income Fund $11,627,453 1,191,943 $9.76
(Investor A) (Investor A) (Investor A)
$406,941,023 41,715,554 $9.76
(Primary A) (Primary A) (Primary A)
Pro Forma Combined Fund $16,079,764 1,648,354 $9.76
(Retail/ (Retail/ (Retail/
Investor A) Investor A) Investor A)
$500,387,941 51,294,804 $9.76
(Institutional/ (Institutional/ (Institutional/
Primary A) Primary A) Primary A)
</TABLE>
29
<PAGE>
7. The table below reflects current and pro forma capitalization
information for the combination of the Emerald Tax-Exempt Fund with Nations Tax
Exempt Fund. Total Net Assets are shown using [market values].
<TABLE>
<CAPTION>
Net Asset Value
Total Net Assets Shares Outstanding Per Share
<S> <C> <C> <C>
Emerald Tax-Exempt Fund $59,172,862 59,185,380 $1.00
(Retail) (Retail) (Retail)
$129,886,489 129,924,939 $1.00
(Institutional) (Institutional) (Institutional)
$554,880 555,707 $1.00
(Service) (Service) (Service)
Nations Tax Exempt Fund $10,076,375 10,077,827 $1.00
(Daily) (Daily) (Daily)
$1,791,573,148 1,791,831,354 $1.00
(Primary A) (Primary A) (Primary A)
$157,495,739 157,518,438 $1.00
(Investor A) (Investor A) (Investor A)
Pro Forma Combined Fund $69,249,237 69,263,207 $1.00
(Retail/Daily) (Retail/Daily) (Retail/Daily)
$1,921,459,637 1,921,756,293 $1.00
(Institutional/ (Institutional/ (Institutional/
Primary A) Primary A) Primary A)
$158,050,619 158,074,145 $1.00
(Service/ (Service/ (Service/
Investor A) Investor A) Investor A)
</TABLE>
30
<PAGE>
Federal Income Tax Considerations. Each Nations Fund and each Emerald Fund
intends to qualify as of the Closing(s), as a separate "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, each Emerald Fund and each corresponding Nations Fund has been, and
expects to continue to be, relieved of federal income tax liability.
Consummation of the Reorganization with respect to each Emerald Fund and
the corresponding Nations Fund is subject to the condition that Emerald and
Nations receive an opinion from Morrison & Foerster LLP to the effect that, for
federal income tax purposes: (i) the transfer of all of the Fund Assets and
Liabilities (as each term is defined in the Reorganization Agreement) of an
Emerald Fund to the corresponding Nations Fund in exchange for the Nations Fund
Shares, and the distribution of those Nations Fund Shares to shareholders of the
Emerald Fund, will constitute a "reorganization" within the meaning of Section
368(a) of the Code, and the Emerald Fund and the Nations Fund will each 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 the Emerald Fund upon the transfer of
its Fund Assets and Liabilities to the Nations Fund solely in exchange for the
Nations Fund Shares; (iii) no gain or loss will be recognized by the Nations
Fund upon the receipt of the assets and assumption of liabilities of the Emerald
Fund solely in exchange for the Nations Fund Shares; (iv) the basis of the
Emerald Fund's assets received by the Nations Fund pursuant to the
Reorganization will be the same as the basis of those assets in the hands of the
Emerald Fund immediately prior to the Reorganization; (v) the holding period of
the Emerald Fund's assets in the hands of the Nations Fund will include the
period for which such assets have been held by the Emerald Fund; (vi) no gain or
loss will be recognized by the Emerald Fund on the distribution to its
shareholders of the Nations Fund Shares to be received by the Emerald Fund in
the Reorganization; (vii) no gain or loss will be recognized by the shareholders
of the Emerald Fund upon their receipt of the Nations Fund Shares in exchange
for such shareholders' shares of the Emerald Fund; (viii) the basis of the
Nations Fund Shares received by the shareholders of the Emerald Fund will be the
same as the basis of the Emerald Fund shares surrendered by such shareholders
pursuant to the Reorganization; (ix) the holding period for the Nations Fund
Shares received by the Emerald Fund shareholders will include the period during
which such shareholders held the Emerald Fund shares surrendered in exchange
therefor, provided that such Emerald Fund shares are held as a capital asset in
the hands of the Emerald Fund shareholders on the date of the exchange; and (x)
each Nations Fund will succeed to and take into account the tax attributes
described in Section 381(c) of the Code of the Emerald Fund as of the Closing
Date, subject to the conditions and limitations specified in the Code.
Shareholders of the Emerald Funds should note, however that the sale of
securities by the Emerald Funds prior to the Closing(s) whether in the ordinary
course of business or in anticipation of the Closing(s), could result in a
taxable capital gains distribution prior to the Closing(s).
Nations and Emerald have not sought, and will not seek, a private ruling
from the Internal Revenue Service ("IRS") with respect to the tax consequences
of the Reorganization. The opinion of Morrison & Foerster LLP with respect to
the tax
31
<PAGE>
consequences of the Reorganization is not binding on the IRS and does not
preclude the IRS from adopting a contrary position. Shareholders should consult
their own advisers concerning the potential tax consequences of the
Reorganization to them, including any applicable foreign, state and local income
tax consequences.
Other Information. Information about the similarities and differences
between the Nations Funds and the Emerald Funds to which they correspond
regarding: investment objectives and policies; the identity and compensation of
the investment adviser; the voting rights of shareholders; any restrictions or
material obligations associated with ownership of Shares; the share structure;
the identity of the principal underwriter; 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 Proxy/Prospectus and the Appendices
hereto.
COMPARISON OF EMERALD AND NATIONS
Investment Objectives and Policies. The investment objectives, policies
and restrictions of the Emerald Funds are, in general, substantially similar to
those of their corresponding Nations Fund. There are, however, certain
differences. For example, the Emerald Equity Fund invests in securities selected
on the basis of fundamental investment value and growth prospects that Barnett
Capital believes exceed those of the general economy, while the corresponding
Nations Disciplined Equity Fund selects stock for its portfolio using a
quantitative analysis. As well, the Emerald Balanced Fund may invest up to 15%
of its total assets in convertible securities rated below investment grade,
while the corresponding Nations Balanced Assets Fund invests in obligations
rated investment grade. Additionally, the average weighted maturity of the
Emerald Short-Term Fixed Income Fund will not exceed three years, while the
average weighted maturity of the corresponding Nations Short-Term Income Fund
will not exceed five years.
Other differences are more fully discussed in Appendix IV to this
Proxy/Prospectus. Shareholders of the Emerald Equity Fund should see
"Summary--Special Considerations Relating to the Emerald Equity Fund."
Additional information with respect to the investment policies and restrictions
of the Nations Funds and the Emerald Funds is included in their respective
prospectuses, which have been incorporated herein by reference.
Investment Adviser and Other Service Providers. Currently, Barnett Capital
serves as investment adviser to the Emerald Funds and Rodney Square serves as
investment sub-adviser to the Emerald Tax-Exempt Fund. NBAI serves as the
investment adviser to the Nations Funds and TradeStreet serves as the investment
sub-adviser to the Nations Funds.
The following table shows, as of November 30, 1997, (i) the current total
expense ratio of the Emerald Funds before and after fee waivers and/or expense
reimbursements and (ii) the pro forma total expense ratio of the corresponding
Nations Funds, based upon the fee arrangements, before and after fee waivers
and/or expense reimbursements, that will be in
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<PAGE>
place upon consummation of the Reorganization. Detailed pro forma expense
information for each proposed reorganization is included in Appendix III to this
Proxy/Prospectus.
TABLE III
Total Expense Information
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Emerald Fund Total Corresponding Total Combined Fund/Share Pro Forma
Share Class Operating Nations Fund/Share Class Operating Class Post-Reorganization Total
Expenses Expenses Operating
Before/After Before/After Expenses
Waivers Waivers Before/After
------- ------- Waivers
--------
- ------------------------------------------------------------------------------------------------------------------------------
Emerald Balanced Fund Nations Balanced Assets Fund Nations Balanced Assets Fund
Retail Shares 1.32%/1.31% Investor A Shares 1.27%/1.27% Investor A Shares 1.26%/1.26%
Institutional Shares 0.79%/0.79% Primary A Shares 1.02%/1.02% Primary A Shares 1.01%/1.01%
- ------------------------------------------------------------------------------------------------------------------------------
Emerald Equity Fund Nations Disciplined Equity Fund Nations Disciplined Equity Fund
Retail Shares 1.32%/1.32% Investor A Shares 1.26%/1.26% Investor A Shares 1.25%/1.25%
Institutional Shares 0.76%/0.76% Primary A Shares 1.01%/1.01% Primary A Shares 0.94%/0.94%
- ------------------------------------------------------------------------------------------------------------------------------
Emerald Equity Value Fund Nations Value Fund Nations Value Fund
Retail Shares 2.10%/1.54% Investor A Shares 1.21%/1.21% Investor A Shares 1.19%/1.19%
Institutional Shares 0.93%/0.79% Primary A Shares 0.96%/0.96% Primary A Shares 1.00%/1.00%
- ------------------------------------------------------------------------------------------------------------------------------
Emerald Florida Tax-Exempt Fund Nations Florida Municipal Bond Fund Nations Florida Municipal Bond Fund
Retail Shares 1.11%/0.93% Investor A Shares 1.07%/0.80% Investor A Shares 1.00%/0.80%
Institutional Shares 0.58%/0.58% Primary A Shares 0.87%/0.60% Primary A Shares 0.80%/0.60%
- ------------------------------------------------------------------------------------------------------------------------------
Emerald Managed Bond Fund Nations Strategic Fixed Income Fund Nations Strategic Fixed Income Fund
Retail Shares 2.01%/1.10% Investor A Shares 1.03%/0.93% Investor A Shares 1.00%/0.90%
Institutional Shares 0.57%/0.57% Primary A Shares 0.83%/0.73% Primary A Shares 0.80%/0.70%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Emerald Short-Term Fixed Income Nations Short-Term Income Fund Nations Short-Term Income Fund
Fund Investor A Shares 1.01%/0.71% Investor A Shares 1.00%/0.70%
Retail Shares 1.22%/1.03% Primary A Shares 0.81%/0.51% Primary A Shares 0.80%/0.50%
Institutional Shares 0.61%/0.61%
- ------------------------------------------------------------------------------------------------------------------------------
Emerald Tax-Exempt Fund Nations Tax Exempt Fund Nations Tax Exempt Fund
Retail Shares 0.97%/0.87% Daily Shares 1.04%/0.80% Daily Shares 1.04%/0.80%
Institutional Shares 0.41%/0.31% Primary A Shares 0.54%/0.30% Primary A Shares 0.54%/0.30%
Service Shares 1.71%/0.73% Investor A Shares 0.89%/0.65% Investor A Shares 0.89%/0.65%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Emerald Funds' Advisory and Sub-Advisory Agreements. For a description of
the Interim Agreements, see "Information Relating to Proposal 1--Approval of the
Interim Agreements."
Nations Funds' Advisory Agreements. 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 Nations Fund,
NBAI has discretionary authority to manage each Nations Fund. The investment
advisory agreement provides that in the absence of willful misfeasance, bad
faith, negligence or reckless disregard of obligations or duties thereunder on
the part of NBAI or any of its officers, directors, employees or agents, NBAI
shall not be subject to liability to Nations or to any shareholder of a Nations
Fund for any act or omission in the course of, or connected with, rendering
services thereunder or for any losses that may be sustained in the purchase,
holding or sale of any security. For the services provided and expenses assumed,
NBAI is entitled to a fee calculated at the annual rate of: 0.40% of the average
daily net assets of Nations Tax Exempt Fund; 0.60% of the average daily net
assets of Nations Florida Municipal Bond Fund, Nations Strategic Fixed Income
Fund and Nations Short-Term Income Fund; and 0.75% of the average daily net
assets of Nations Balanced Assets Fund, Nations Disciplined Equity and Nations
Value Fund. From time to time, however, NBAI and its affiliates voluntarily may
waive fees or reimburse the Nations Funds for expenses, although there is no
guarantee that such waivers or reimbursements would continue.
TradeStreet serves as investment sub-adviser for the Nations Funds. For
the services provided and expenses assumed by TradeStreet, NBAI pays, out of the
fees it receives from the Nations Funds, fees to TradeStreet at the annual rate
of: 0.055% of the average daily net assets of Nations Tax Exempt Fund; 0.20% of
the average daily net assets of Nations Balanced Assets Fund, Nations
Disciplined Equity Fund and Nations Value Fund; 0.15% of the average daily net
assets of Nations Short-Term Income Fund and Nations
34
<PAGE>
Strategic Fixed Income Fund; and 0.07% of the average daily net assets of
Nations Florida Municipal Bond Fund.
For the fiscal period from April 1, 1996 to March 31, 1997, after waivers,
Nations Fund Trust paid NBAI under an investment advisory agreement at the
indicated rates of the following Funds' average daily net assets: Nations Value
Fund--0.75%, Nations Disciplined Equity Fund--0.75%, Nations Balanced Assets
Fund--0.75%, Nations Short-Term Income Fund--0.30%, Nations Strategic Fixed
Income Fund--0.50%, Nations Florida Municipal Bond Fund--0.27% and Nations Tax
Exempt Fund--0.16%.
For the fiscal period from April 1, 1996 to March 31, 1997, after waivers,
NBAI paid TradeStreet under an investment sub-advisory agreement at the
indicated rates of the following Funds' average daily net assets: Nations Value
Fund--0.25%, Nations Disciplined Equity Fund--0.25%, Nations Balanced Assets
Fund--0.25%, Nations Short-Term Income Fund--0.15%, Nations Strategic Fixed
Income Fund--0.15%, Nations Florida Municipal Bond Fund--0.07% and Nations Tax
Exempt Fund--0.055%.
Both NBAI and TradeStreet are wholly owned subsidiaries of NationsBank,
which in turn is a wholly owned banking subsidiary of NationsBank Corporation, a
bank holding company organized as a North Carolina corporation. Both NBAI and
TradeStreet have their principal offices at One NationsBank Plaza, Charlotte,
North Carolina 28225.
The principal portfolio managers of the Nations Funds, along with their
positions with the NBAI and/or TradeStreet and a brief summary of their business
experience and education are set forth below.
Nations Balanced Assets Fund - Julie L. Hale is a Senior Product Manager,
Equity Management for TradeStreet and Senior Portfolio Manager for Nations
Balanced Assets Fund. Ms. Hale has been Portfolio Manager for the Nations
Balanced Assets Fund since 1995. Prior to assuming her position with
TradeStreet, she was Vice President and Senior Portfolio Manager for the
Investment Management Group at NationsBank. She has worked in the investment
community since 1981. Her past experience includes research analysis and
portfolio management for Mercantile Safe Deposit and Trust Company and National
City Bank. Ms. Hale received a B.S. in Business and Finance from Mount St.
Mary's College and an M.B.A. from Kent State University. She holds the Chartered
Financial Analyst designation and is a member of the Association for Investment
Management and Research as well as the North Carolina Society of Security
Analysts, Inc. She is also a member of the National Association for Petroleum
Investment Analysts and the World Affairs Council of Washington, D.C.
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
35
<PAGE>
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 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 Florida Municipal Bond Fund - Michele M. Poirier is a Director,
Municipal Fixed Income Management for TradeStreet and is Senior Portfolio
Manager for Nations Florida Municipal Bond Fund. Ms. Poirier has been Portfolio
Manager for the Fund since 1993. 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.
Nations Short-Term Income Fund - J. Patrick Frith is a Portfolio Manager,
Fixed Income Management for TradeStreet and Portfolio Manager of Nations
Short-Term Income Fund. Mr. Frith has been the Portfolio Manager of Nations
Short-Term Income Fund since October 1997. Previously he was Vice President and
Senior Portfolio Manager of the Investment Management Group at NationsBank. Mr.
Frith received a B.S. from the University of Virginia with a double-major in
Marketing and Management Information Systems. He also received an M.B.A. from
the Colgate Darden Graduate School of Business Administration at the University
of Virginia. Mr. Frith holds the Chartered Financial Analyst designation and is
a member of the Association for Investment
36
<PAGE>
Management and Research as well as the North Carolina Society of Financial
Analysts, Inc.
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.
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 in the prospectuses for the 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 Emerald Funds
and the Nations Funds are different, as forth in the table below.
Other Service Providers
for the Emerald Funds and Nations Funds
<TABLE>
<CAPTION>
Emerald Funds Nations Funds
------------- -------------
<S> <C> <C>
Distributor Emerald Asset Management, Inc. Stephens Inc. ("Stephens")
Administrator BISYS Fund Services Limited Partnership Stephens
Co-Administrator Not Applicable First Data Investor Services
Group, Inc.("First Data")
Sub-Administrator Not Applicable NationsBanc Advisors, Inc.
Transfer Agent BISYS Fund Services, Inc. First Data
37
<PAGE>
Emerald Funds Nations Funds
------------- -------------
Sub-Transfer Agent Not Applicable NationsBank of Texas N.A.
Custodian The Bank of New York NationsBank of Texas N.A.
Sub-Custodian Not Applicable The Bank of New York
Independent Auditors and Independent KPMG Peat Marwick LLP Price Waterhouse LLP
Accountants, respectively
</TABLE>
Emerald Asset Management Inc. and BISYS Fund Services Limited Partnerships
maintain offices at 3435 Stelzer Road, Columbus, Ohio 43219. Stephens Inc.
maintains offices at 111 Center Street, Little Rock, Arkansas 72201 and Final
Data Investor Services Group, Inc. maintains offices at One Exchange Place,
Boston, Massachusetts 02109.
Share Structure. Both Emerald and Nations are registered as open-end
management investment companies under the 1940 Act. Currently, Emerald offers
fourteen funds. The Nations Fund complex, which includes several registered
investment companies, will offer over sixty funds immediately after the
Reorganization.
Emerald is organized as a Massachusetts business trust and is subject to
the provisions of its Agreement and Declaration of Trust and Code of
Regulations. Nations also is organized as a Massachusetts business trust and is
subject to the provisions of its Declaration of Trust, as amended and
supplemented, and By-Laws. Shares of the Emerald Funds have a par value of
$.001. Shares of Nations Funds are sold without par value. Shares of both the
Emerald Funds and Nations Funds are entitled to one vote for each full share
held and fractional votes for fractional shares held.
Emerald Fund shareholders will vote in the aggregate and not by portfolio
or class subject to certain notable exceptions. In particular, when a proposal
affects less than all Emerald 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 portfolio or class of a portfolio votes separately
with respect to any proposal to approve a plan of distribution for that
portfolio or class.
In accordance with Nations' Agreement and Declaration of Trust, all shares
of a series of Nations are entitled to vote by individual series, except (1)
when required by the 1940 Act, shares will be voted in the aggregate and not by
individual series, and (2) when the Trustees have determined that the matter
affects only the interests of one or more series, then only shareholders of such
series shall be entitled to vote thereon. There is no cumulative voting in the
election of Trustees for Nations and shares may be voted in person or by proxy.
38
<PAGE>
Shares of the Emerald Funds and Nations Funds have no pre-emptive rights
and have only such conversion and exchange rights as the Board of Trustees of
Emerald or the Board of Directors of Nations, respectively, may grant in their
discretion. When issued for payment as described in their respective
prospectuses, Nations Fund Shares and Emerald Fund Shares are fully paid and
non-assessable by either Nations or Emerald.
Both Emerald and Nations are authorized to create multiple investment
portfolios and to create multiple share classes representing interests in a
single portfolio. Currently Nations offers Investor A shares, Investor B shares,
Investor C shares, Primary A shares, Primary B shares and Daily shares. Each
share class has varying pricing and distribution structures.
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 (including those that are not relevant to
this Proxy/Prospectus), are deducted from accrued income before dividends are
declared. The Nations Funds' expenses included, but are not limited to: fees
paid to NBAI, 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 NBAI, NationsBank, Stephens or First Data
under their respective agreements with Nations Funds; 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 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 or in such other manner as the Board of Trustees deems appropriate.
Additional information concerning the attributes of the shares issued by
the Emerald Funds and Nations Funds is included in their respective
prospectuses, which are incorporated herein by reference.
Distribution Plans and Shareholder Servicing Arrangements. Shares of the
Emerald Funds are distributed by Emerald Asset Management, Inc. ("EAM"), a
wholly-owned subsidiary of The BISYS Group, Inc. The Emerald Funds have adopted
a Combined Amended and Restated Distribution and Service Plan pursuant to Rule
12b-l under the 1940 Act for its Retail Class shares. Under the Plan, the
Emerald Funds pay service organizations (such as securities dealers, financial
institutions and other industry professionals) for distribution assistance
and/or the provision of shareholder liaison
39
<PAGE>
services at an annual rate not to exceed 0.25% of the average daily net asset
value of each Emerald Fund's outstanding Retail Class shares.
The Emerald Funds also have adopted a Shareholder Processing Plan for its
Retail Class shares. Under such plan service organizations agree to provide
various shareholder processing services, such as providing necessary personnel
and facilities to establish and maintain shareholders accounts and records for
clients; assisting in aggregating and processing purchase, exchange and
redemption orders with EAM; arranging for wiring of funds; transmitting and
receiving funds in connection with client orders to purchase or redeem shares;
processing dividends payments; providing the information to the Funds necessary
for accounting or subaccounting; and providing such other similar services as
may reasonably be requested. Payments for these services may not exceed 0.25%
(on an annual basis) of the average daily net asset value of a Fund's
outstanding Retail shares.
The Emerald Funds also have adopted a Shareholder and Processing Services
Plan pursuant to which Service Shares are sold to institutional investors which
enter into service agreements with the Emerald. The service agreements require
the service organizations, which may include Barnett Capital, BISYS and their
affiliates, to provide support services to their customers who are beneficial
owners of Service shares in return for payment s by a Fund which may not exceed
0.35% (on an annualized basis) of the average daily net asset value of the
Service shares beneficially owned by their customers. Holders of the Funds'
Service shares bear all fees paid to service organizations for their services
under the plan. The plan does not cover, and the fees thereunder are not payable
to service organizations with respect to, Institutional shares or Retail shares.
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.
Primary A Shares. 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 ("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 in the
Nations Funds Family.
In addition, the Directors have approved a shareholder servicing plan
("Servicing Plan") with respect to Investor A shares of Nations Prime Fund and
Nations Treasury Fund, pursuant to which the Funds may pay servicing agents that
have entered into a servicing agreement with Nations for certain shareholder
support services that are
40
<PAGE>
provided by the servicing agents. Payments under the Servicing Plan calculated
daily and paid monthly at a rate or rates set from time to time by Nations,
provided that the annual rate may not exceed 0.25% of the average daily net
asset value of each Fund's Investor A shares.
Daily Shares: In addition, the Nations Funds have approved an Amended and
Restated Shareholder Servicing Plan ("Servicing Plan") with respect to the Daily
Shares of the Nations Tax Exempt Fund. Pursuant to the Servicing Plan, the Fund
may compensate servicing agents for shareholder support services that are
provided by the servicing agents to their customers that own Daily Shares.
Payments under the Servicing Plan will be calculated daily and paid monthly at a
rate set from time to time by the Board of Trustees, provided that the annual
rate may not exceed 0.25% of the average daily net asset value of the Fund's
Daily Shares. The shareholder services provided by servicing agents may include
general shareholder liaison services; processing purchase, exchange and
redemption requests from customers and placing orders with Stephens or the
transfer agent; processing dividend and distribution payments; providing sales
information; arranging for bank wires and providing such other services as may
be reasonably requested.
Pursuant to Rule 12b-1 of the 1940 Act, the Trustees of Nations also have
adopted a distribution plan ("Distribution Plan") with respect to Daily Shares
of the Nations Tax Exempt Fund. Under the Distribution Plan, a Fund may
compensate or reimburse Stephens for any activities or expenses primarily
intended to result in the sale of Daily Shares. Payments to Stephens under the
Fund's Distribution Plan will be calculated daily and paid monthly at a rate or
rates set from time to time by the Board of Trustees, provided that the annual
rate may not exceed 0.45% of the average daily net asset value of the Fund's
Daily Shares. Payments to Stephens under the Distribution Plan will be used
primarily to compensate or reimburse Stephens for distribution services provided
by Stephens and related expenses incurred by Stephens, including payments by
Stephens to compensate or reimburse selling agents for sales support services
provided by such selling agents.
Administration Agreements. The Emerald 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 Stephens. The
types of administrative services provided to the Emerald Funds and Nations Funds
by their respective Administrators (and, in the case of the Nations Funds,
Co-Administrator) are substantially similar.
Shareholder Transactions and Services. The Emerald Funds and the
corresponding Nations Funds offer generally similar shareholder services and
transactions. There are however, some differences. For example, the minimum
initial and subsequent investment amount for Emerald Funds' Institutional shares
is generally $5,000, while the minimum amount for the corresponding Primary A
shares of the Nations Funds is $250,000. For a detailed comparison of
shareholder transactions and services see Appendix V.
41
<PAGE>
INFORMATION RELATING TO VOTING MATTERS
General Information. This Proxy/Prospectus is being furnished in
connection with the solicitation of proxies for the Meeting by the Board of
Trustees of Emerald. It is expected that the solicitation of proxies will be
primarily by mail. Officers and service contractors of Emerald and Nations also
may solicit proxies by telefacsimile. In this connection, Emerald has retained
ADP Proxy Services to assist in the solicitation of proxies for the
Reorganization. Shareholders may vote (1) by mail, by marking, signing, dating
and returning the enclosed Proxy Ballot in the enclosed postage-paid envelope;
or (2) by telefacsimile, by marking, signing, dating and faxing the enclosed
Proxy Ballot to ADP Proxy Services at [insert]. Any shareholder giving a proxy
may revoke it at any time before it is exercised by submitting to Emerald a
written notice or revocation or a subsequently executed proxy or by attending
the Meeting and voting in person.
Any expenses incurred as a result of hiring ADP Proxy Services or any
other proxy solicitation agent will be borne by NBAI.
Only shareholders of record at the close of business on March 16, 1998
will be entitled to vote at the Meeting. On that date, the following Emerald
Shares were outstanding and entitled to be voted.
Name of Emerald Fund and Class Shares Entitled to Vote
Emerald Balanced Fund --
Retail Shares
Institutional Shares
Total Shares
Emerald Equity Fund --
Retail Shares
Institutional Shares
Total Shares
Emerald Equity Value Fund --
Retail Shares
Institutional Shares
Total Shares
Emerald Florida Tax-Exempt Fund --
Retail Shares
Institutional Shares
Total Shares
Emerald Managed Bond Fund --
Retail Shares
Institutional Shares
Total Shares
42
<PAGE>
Name of Emerald Fund and Class Shares Entitled to Vote
Emerald Short-Term Fixed Income Fund --
Retail Shares
Institutional Shares
Total Shares
Emerald Tax-Exempt Fund --
Retail Shares
Institutional Shares
Service Shares
Total Shares
Each whole and fractional share of an Emerald Fund 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 Interim Advisory Agreements, the
Interim Sub-Advisory Agreement and the Reorganization Agreement are being
submitted for approval at the Meeting by Emerald's shareholders pursuant to the
Order and the provisions of Emerald's Agreement and Declaration of Trust. With
respect to each Emerald Fund, approval and ratification of the Interim Advisory
Agreements requires the approval of a majority of the outstanding shares of that
Emerald Fund voting separately on a portfolio-by-portfolio basis. With respect
to the Emerald Tax-Exempt Fund, approval of the Interim Sub-Advisory Agreement
requires the approval of a majority of the outstanding shares of that Emerald
Fund voting separately on a portfolio-by-portfolio basis. The Reorganization
Agreement must be approved by a majority of the outstanding shares of the
Emerald Funds voting separately on a portfolio-by-portfolio basis and the
reorganization of Emerald contemplated therein must be approved by a majority of
the shares outstanding and entitled to vote, voting in the aggregate, of all of
the series of Emerald, including those funds that are not part of this
Proxy/Prospectus. A vote for the Reorganization Agreement includes a vote for
the reorganization of Emerald; correspondingly, a vote against the
Reorganization Agreement is a vote against the reorganization of Emerald.
Separate proxy solicitation materials are being mailed to the shareholders of
all other series of Emerald seeking the approval of similar agreements and plans
of reorganization and, consequently, also Emerald's reorganization.
The Reorganization Agreement provides that in the event the Reorganization
Agreement is approved with respect to less than all of the Emerald Funds, the
failure of an Emerald Fund to consummate the transactions contemplated by the
Reorganization Agreement shall not affect the consummation or validity of the
Reorganization with respect to any other Emerald Funds. It is possible that a
majority of an Emerald Fund's shareholders may approve the Reorganization
Agreement while a sufficient majority of all
43
<PAGE>
shareholders of Emerald series voting in the aggregate does not vote to approve
the reorganization of Emerald. In such a case, the Board of Trustees will
contemplate what further action is appropriate.
With respect to the approval of the Interim Agreements, the term "majority
of the outstanding shares" of an Emerald Fund means the lessor of (i) 67% of the
shares of the particular Fund present at the Meeting if the holders of more than
50% of the outstanding shares of such Fund are present or (ii) more than 50% of
the outstanding shares of the particular Fund. With respect to the approval of
the Reorganization Agreement and the reorganization contemplated therein, the
term "majority of the outstanding shares" of Emerald or an Emerald Fund means
more than 50% of the outstanding shares of Emerald or the particular Emerald
Fund, as applicable. The vote of the shareholders of the Nations Funds is not
being solicited, since their approval or consent is not necessary for the
Reorganization.
The approval of the Interim Advisory Agreements by the Board of Trustees
of Emerald is discussed above under "Information Relating to Proposal
1--Approval of the Interim Agreements-Emerald Board Consideration." The approval
of the Reorganization Agreement by the Board of Trustees of Emerald is discussed
above under "Information Relating to Proposal 2--Approval of the Reorganization
Agreement -Emerald Board Consideration." The Reorganization Agreement was
approved by the Board of Trustees of Nations at a meeting held on January 16,
1998.
As of March 16, 1998, the officers and Trustees of Emerald as a group
owned less than 1% of any of the Emerald Funds. As of March 16, 1998, 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 Emerald to have beneficial or record ownership with respect to
5% or more of a class of a Emerald Fund as of March 16, 1998. 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 16, 1998.
TABLE IV(A)
<TABLE>
<CAPTION>
Class; Amount of Percentage Percentage Percentage
Name and Shares Owned; of of of Fund
Emerald Fund Address Type of Ownership Class Fund Post-Closing
<S> <C> <C> <C> <C> <C>
</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>
</TABLE>
44
<PAGE>
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 of 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.
Nations and Emerald have been advised by NationsBank that the shares of
each Emerald Fund over which NationsBank and its affiliates have voting power
may be voted: by NationsBank itself in its capacity as fiduciary; by NationsBank
pursuant to instruction from underlying beneficial holders; or by one or more
independent fiduciaries.
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 Interim Agreements and/or the Reorganization Agreement are not
received by one or more of the Emerald 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. Any such adjournment(s) will require the affirmative vote of a
majority of those shares affected by the adjournment(s) that are represented at
the Meeting in person or by proxy. If a quorum is present, the persons named as
proxies will vote those proxies which they are entitled to vote FOR the
particular proposal for which a quorum exists in favor of such adjournment(s),
and will vote those proxies required to be voted AGAINST such proposal against
any adjournment(s). A shareholder vote may be taken with respect to one or more
Emerald Funds (but not the other Emerald Funds) on some or all matters before
any such adjournment(s) if sufficient votes have been received for approval. A
quorum is constituted with respect to Emerald or an Emerald Fund by the presence
in person or by proxy of the holders of more than 50% of the outstanding shares
of Emerald or the Emerald Fund entitled to vote at the Meeting. 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 not be treated as shares that are present at the
Meeting and, accordingly, could make it more difficult to obtain the requisite
approvals.
Annual Meetings and Shareholder Meetings. Neither Nations or Emerald
presently intends to hold annual meetings of shareholders for the election of
trustees and other business unless otherwise required by the 1940 Act. Under
certain circumstances, however, holders of at least 10% of the outstanding
shares of either Emerald or Nations have the right to call a meeting of
shareholders.
45
<PAGE>
ADDITIONAL INFORMATION ABOUT NATIONS
Additional information about the Nations Funds is included in their
prospectuses and statements of additional information dated August 1, 1997, 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
Proxy/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.
Information included in this Proxy/Prospectus concerning Nations was
provided by Nations.
ADDITIONAL INFORMATION ABOUT EMERALD
Additional information about the Emerald Funds is included in their
prospectuses and statements of additional information, dated April 1, 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 writing or calling Emerald at the address and
telephone number set forth on the first page of this Proxy/Prospectus. Reports
and other information filed by Emerald 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 Emerald 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.
Information included in this Proxy/Prospectus concerning Emerald was
provided by Emerald.
46
<PAGE>
FINANCIAL STATEMENTS
The unaudited financial statements and condensed financial information for
shares of the Nations Funds for the semi-annual period ended September 30, 1997
are included or incorporated by reference in their prospectuses or statements of
additional information, or in the statement of additional information related to
this Proxy/Prospectus. The audited financial statements and condensed financial
information for shares of the Emerald Fund for the annual period ended November
30, 1997 are included or incorporated by reference in their prospectuses or
statements of additional information or in the statement of additional
information related to this Proxy/Prospectus, or are included herein.
The annual financial statements and financial highlights of the Nations
Funds have been audited by Price Waterhouse LLP, independent accountants, to the
extent indicated in their reports thereon, also incorporated by reference or
included in such prospectuses and statements of additional information, and 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, 1997, have been incorporated by
reference herein and in the statement of additional information in reliance upon
the report of Price Waterhouse LLP, independent accountants, which is also
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The audited financial statements and financial highlights of the Emerald
Funds for the year ended November 30, 1997, have been incorporated by reference
herein and in the registration statement. These financial statements have been
audited by KPMG Peat Marwick 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
Emerald's Board of Trustees knows of no other business to be brought
before the Meeting. However, if any other matters properly 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.
47
<PAGE>
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to Emerald or to Nations in writing
at the address(es), or by phone at the phone number(s), on the cover page of
this Proxy/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.
EMERALD WILL FURNISH, WITHOUT CHARGE, COPIES OF ITS NOVEMBER 30, 1997
ANNUAL REPORTS TO ANY SHAREHOLDER UPON REQUEST ADDRESSED TO: EMERALD FUNDS 3435
STELZER ROAD, COLUMBUS, OHIO 43219-3035 OR BY TELEPHONE AT 1-800-717-3759.
48
<PAGE>
APPENDIX I
Interim Investment Advisory Agreements and
Interim Sub-Advisory Agreement
-------------------------------
INVESTMENT ADVISORY AGREEMENT
(Equity Fund, Short-Term Fixed Income
Fund, U.S. Government Securities Fund, Florida
Tax-Exempt Fund, Small Capitalization Fund, Balanced Fund
Managed Bond Fund, International Equity Fund,
Equity Value Fund, Prime Advantage Institutional Fund
and Treasury Advantage Institutional Fund)
AGREEMENT made as of January 9, 1998 between EMERALD FUNDS, a
Massachusetts business trust (herein called the "Trust"), and BARNETT CAPITAL
ADVISORS, INC., a wholly-owned indirect subsidiary of Barnett Banks, Inc.
(herein called the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to
furnish investment advisory and other services to the Trust for certain of the
Trust's portfolios, including its Equity Fund, Short-Term Fixed Income Fund,
U.S. Government Securities Fund, Florida Tax-Exempt Fund, Small Capitalization
Fund, Balanced Fund, Managed Bond Fund, International Equity Fund, Equity Value
Fund, Prime Advantage Institutional Fund and Treasury Advantage Institutional
Fund ("the Funds") and the Investment Adviser is willing to so furnish such
services;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) The Trust hereby appoints the Investment Adviser to act as
investment adviser to the Trust's Equity Fund, Short-Term Fixed Income Fund,
U.S. Government Securities Fund, Florida Tax-Exempt Fund, Small Capitalization
Fund, Balanced Fund, Managed Bond Fund, International Equity Fund, Equity Value
Fund, Prime Advantage Institutional Fund and Treasury Advantage Institutional
Fund, for the period and on the terms set forth in this Agreement. The
Investment Adviser accepts such appointment and agrees to furnish the services
herein set forth for the compensation herein provided.
(b) In the event that the Trust establishes one or more
portfolios other than the Funds with respect to which it desires to retain the
Investment Adviser to act as investment adviser hereunder, it shall notify the
Investment Adviser in
<PAGE>
writing. If the Investment Adviser is willing to render such services under this
Agreement it shall notify the Trust in writing whereupon such portfolio shall
become a Fund hereunder and shall be subject to the provisions of this Agreement
to the same extent as the Funds named above in subparagraph (a) except to the
extent that said provisions (including those relating to the compensation
payable by the Fund to the Investment Adviser) are modified with respect to such
Fund in writing by the Trust and the Investment Adviser at the time.
(c) It is understood that the Investment Adviser may from time
to time employ or associate with such person or persons as the Investment
Adviser may believe to be particularly fitted to assist it in the performance of
this Agreement with respect to the International Equity Fund, Equity Value Fund,
Prime Advantage Institutional Fund and Treasury Advantage Institutional Fund;
provided, however, that the compensation of such person or persons shall be paid
by the Investment Adviser. In addition, notwithstanding any such employment or
association, the Investment Adviser shall itself (i) in the case of all such
Funds (A) establish and monitor general investment criteria and policies for
such Funds, (B) review and analyze on a periodic basis such Funds' portfolio
holdings and transactions in order to determine their appropriateness in light
of such Funds' shareholder base, and (C) review and analyze on a periodic basis
the policies established by any sub-adviser for such Funds with respect to the
placement of orders for the purchase and sale of portfolio securities; and (ii)
in the case of the International Equity Fund and Equity Value Fund (D) provide
for the investment of such Funds' cash balances to the extent not provided for
by any sub-adviser, (E) review, monitor, analyze and report to the Board of
Trustees on the performance of any sub-adviser, (F) recommend, either in its
sole discretion or in conjunction with any sub-adviser, potential changes in
investment policy, (G) furnish to the Board of Trustees or any sub-adviser
reports, statistics and economic information as may be requested, (H) review
investments in such Funds on a periodic basis for compliance with such Funds'
investment objectives, policies and restrictions as stated in their
Prospectuses; and (I) review jointly with any sub-adviser country and regional
investment allocation guidelines for such Funds, as well as investment hedging
guidelines, if any. Subject to the foregoing, it is agreed that investment
advisory services to the International Equity Fund, Equity Value Fund, Prime
Advantage Institutional Fund or Treasury Advantage Institutional Fund may be
provided by a sub-investment adviser (the "Sub-Adviser") pursuant to a
sub-advisory agreement agreeable to the Trust and approved in accordance with
the provisions of the 1940 Act (the "Sub-Advisory Agreement").
-2-
<PAGE>
2. Delivery of Documents.
The Trust has furnished the Investment Adviser with copies
properly certified or authenticated of each of the following:
(a) The Trust's Agreement and Declaration of Trust, as
filed with the State Secretary of the Commonwealth of
Massachusetts on March 16, 1988, and any amendments thereto
(such Agreement and Declaration of Trust, as presently in
effect and as it shall from time to time be amended, is herein
called the "Declaration of Trust");
(b) The Trust's Code of Regulations and any amendments
thereto;
(c) Resolutions of the Trust's Board of Trustees
authorizing the appointment of the Investment Adviser and
approving this Agreement;
(d) The Trust's Notification of Registration on Form
N-8A under the 1940 Act as filed with the Securities and
Exchange Commission on March 21, 1988 and any amendments
thereto;
(e) The Trust's Registration Statement on Form N-1A
under the Securities Act of 1933 as amended ("1933 Act") (File
No. 33-20658) and under the 1940 Act as filed with the
Securities and Exchange Commission on March 21, 1988 and any
amendments thereto; and
(f) The most recent prospectuses of the Funds (such
prospectuses together with the related statement of additional
information, as presently filed with the Securities and
Exchange Commission and all amendments and supplements
thereto, are herein called "Prospectuses").
The Trust will furnish the Investment Adviser from time to time with copies of
all amendments of or supplements to the foregoing, if any.
-3-
<PAGE>
3. Services.
Subject to the supervision of the Trust's Board of Trustees,
the Investment Adviser will be responsible for the management of, and will
provide a continuous investment program for, the investment portfolio of each
Fund, including investment research and management with respect to all
securities, investments, cash and cash equivalents in the Funds. The Investment
Adviser will determine from time to time what securities and other investments
will be purchased, retained or sold by each of the Funds. The Investment Adviser
will provide the services rendered by it under this Agreement in accordance with
each Fund's investment objective, policies and restrictions as stated in the
Prospectus for each Fund and resolutions of the Trust's Board of Trustees.
Without limiting the generality of the foregoing, the Investment Adviser is
hereby specifically authorized to invest and reinvest the assets of a Fund, in
its discretion as investment adviser, in (i) variable amount demand notes of
corporate borrowers held by the Investment Adviser for the investment of monies
held by the Investment Adviser in its capacity as fiduciary, agent and custodian
and (ii) securities of other investment companies whether or not the same are
advised or managed by the Investment Adviser or another affiliated person of the
Trust. The Investment Adviser further agrees that it will:
(a) Establish and monitor investment criteria and policies for
each Fund;
(b) Update each Fund's cash availability throughout the day as
required;
(c) Maintain historical tax lots for each portfolio security
held by the Funds;
(d) Transmit trades to the Trust's custodian for proper
settlement;
(e) Maintain all books and records with respect to each Fund's
securities transactions;
(f) Supply the Trust and its Board of Trustees with reports,
statistical data and economic information as requested; and
(g) Prepare a quarterly broker security transaction summary
and monthly security transaction listing for each Fund.
-4-
<PAGE>
4. Other Covenants.
The Investment Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of
the Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with other applicable law;
(b) will use the same skill and care in providing such
services as it uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(c) will place orders pursuant to its investment
determinations for each Fund either directly with the issuer or with any broker
or dealer. In executing portfolio transactions and selecting brokers or dealers,
the Investment Adviser will use its best efforts to seek on behalf of the Funds
the best overall terms available. In assessing the best overall terms available
for any transaction, the Investment Adviser shall consider all factors that it
deems relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker
or dealer, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In evaluating the best overall
terms available, and in selecting the broker-dealer to execute a particular
transaction, the Investment Adviser may also consider the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934) provided to the Funds and other accounts over which the Investment
Adviser or an affiliate of the Investment Adviser exercises investment
discretion. The Investment Adviser is authorized, subject to the prior approval
of the Trust's Board of Trustees, to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for any of the Funds which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if,
but only if, the Investment Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer -- viewed in terms of that particular
transaction or in terms of the overall responsibilities of the Investment
Adviser to the Funds. In addition, the Investment Adviser is authorized to take
into account the sale of shares of the Trust in allocating purchase and sale
orders for portfolio securities to brokers or dealers (including brokers and
dealers that are affiliated with the Investment Adviser or the Trust's principal
underwriter), provided that the Investment Adviser believes that the quality of
-5-
<PAGE>
the transaction and the commission are comparable to what they would be with
other qualified firms. In no instance, however, will portfolio securities be
purchased from or sold to the Investment Adviser, the Trust's principal
underwriter, or any affiliated person of either the Trust, the Investment
Adviser, or the principal underwriter, acting as principal in the transaction,
except to the extent permitted by the Securities and Exchange Commission; and
(d) will maintain a policy and practice of conducting its
investment advisory services hereunder independently of the commercial banking
operations of its affiliates. When the Investment Adviser makes investment
recommendations for a Fund, its investment advisory personnel will not inquire
or take into consideration whether the issuer of securities proposed for
purchase or sale for the Fund's account are customers of the commercial
department of any of the Investment Adviser's affiliates. In dealing with
commercial customers, the Investment Adviser's affiliates will not inquire or
take into consideration whether securities of those customers are held by the
Funds.
5. Services Not Exclusive.
The services furnished by the Investment Adviser hereunder are
deemed not to be exclusive, and the Investment Adviser shall be free to furnish
similar services to others so long as its services under this Agreement are not
impaired thereby. To the extent that the purchase or sale of securities or other
investments of the same issuer may be deemed by the Investment Adviser to be
suitable for two or more accounts managed by the Investment Adviser, the
available securities or investments may be allocated in a manner believed by the
Investment Adviser to be equitable to each account. It is recognized that in
some cases this procedure may adversely affect the price paid or received by a
Fund or the size of the position obtainable for or disposed of by a Fund.
6. Books and Records.
In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Investment Adviser hereby agrees that all records which it
maintains for each Fund are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Investment Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under the 1940 Act.
-6-
<PAGE>
7. Expenses.
During the term of this Agreement, the Investment Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased or sold for the Funds. In addition, if in any fiscal year the
aggregate expenses of the Equity Fund, U.S. Government Securities Fund or
Florida Tax-Exempt Fund (as defined under the securities regulations of any
state having jurisdiction over such Fund) exceed the expense limitations of any
such state, the Trust may deduct from the fees to be paid hereunder, or the
Investment Adviser will bear, to the extent required by state law, that portion
of the excess which bears the same relation to the total of such excess as the
Investment Adviser's fee hereunder with respect to such Fund bears to the total
fee otherwise payable for the fiscal year by the Trust pursuant to this
Agreement and the administration agreement between the Trust and its
administrator with respect to such Fund. With respect to the other Funds, if in
any fiscal year the aggregate expenses of any Fund (as defined under the
securities regulations of any state having jurisdiction over such Fund) exceed
the expense limitation of any such state, the Trust may deduct from the fees to
be paid hereunder, or the Investment Adviser will bear, to the extent required
by state law, that portion of the excess which bears the same relation to the
total of such excess as the Investment Adviser's fees hereunder with respect to
the Fund bears to the total fees otherwise payable with respect to such Fund for
the fiscal year by the Trust hereunder and under the administration agreement
between the Trust and its administrator. The Investment Adviser's obligation is
not limited to the amount of its fees hereunder. Such deduction or payment, if
any, will be estimated and accrued daily and paid on a monthly basis.
-7-
<PAGE>
8. Compensation.
For the services provided and the expenses assumed pursuant to
this Agreement, the Trust will pay the Investment Adviser, and the Investment
Adviser will accept as full compensation therefor from the Trust, a fee,
computed daily and payable monthly, at the following annual rates of the average
daily net assets of each respective Fund as follows: Equity Fund -- 0.60%;
Short-Term Fixed Income Fund -- 0.40%; U.S. Government Securities Fund -- 0.40%;
Florida Tax-Exempt Fund -- 0.40%; Small Capitalization Fund -- 1.00%; Balanced
Fund -- 0.60%; Managed Bond Fund -- 0.40%; International Equity Fund - 1.00%;
Equity Value Fund - 0.60%; Prime Advantage Institutional Fund - 0.10%; and
Treasury Advantage Institutional Fund - 0.10%. Such respective fee as is
attributable to each Fund shall be a separate charge to such Fund and shall be
the several (and not joint or joint and several) obligation of each such Fund.
The fees payable by a Fund under this Section 8 for the period beginning on the
date of this Agreement and ending on the date the shareholders of the Fund
approve this Agreement shall be maintained in an interest-bearing escrow account
until such time as such Fund's shareholders approve the payment to the
Investment Adviser. If a Fund's shareholders do not approve the payment to the
Investment Adviser of such fees for such period, the balance in the escrow
account shall be paid to the Fund.
9. Limitation of Liability.
The Investment Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the performance of this Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or negligence on the part of
the Investment Adviser in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
-8-
<PAGE>
10. Duration and Termination.
This Agreement shall become effective as of the date hereof
with respect to the Funds listed in Section 1(a) hereof, and with respect to any
additional Fund, on the date of receipt by the Trust of notice from the
Investment Adviser in accordance with Section 1(b) hereof that the Investment
Adviser is willing to serve as investment adviser with respect to such Fund,
provided that this Agreement (as supplemented by the terms specified in any
notice and agreement pursuant to Section 1(b) hereof) shall have been approved
by the shareholders of such additional Fund in accordance with the requirements
of the 1940 Act. Unless sooner terminated as provided herein, this Agreement
shall continue in effect until May 9, 1998 and, if approved by the shareholders
of a Fund on or before such date, shall continue in effect as to that Fund for
an additional period ending on November 30, 1998. Thereafter, if not terminated,
this Agreement shall automatically continue in effect as to a particular Fund
for successive annual periods ending on November 30, provided such continuance
is specifically approved at least annually (a) by the vote of a majority of
those members of the Trust's Board of Trustees who are not interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting such approval, and (b) by the Trust's Board of Trustees or by vote of
a majority of the outstanding voting securities of such Fund. Notwithstanding
the foregoing, this Agreement may be terminated as to any Fund at any time,
without the payment of any penalty, by the Trust (by vote of the Trust's Board
of Trustees or by vote of a majority of the outstanding voting securities of
such Fund), or by the Investment Adviser, on sixty days' written notice. This
Agreement will immediately terminate in the event of its assignment. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning as such terms
have in the 1940 Act.)
11. Amendment of This Agreement.
No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought. No amendment of this Agreement shall be effective as to a
particular Fund (in the case of the International Equity Fund, Equity Value
Fund, Prime Advantage Institutional Fund and Treasury Advantage Institutional
Fund, only to the extent required by the 1940 Act) until approved by vote of a
majority of the outstanding voting securities of such Fund.
-9-
<PAGE>
12. Miscellaneous.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and shall be governed by New York law.
13. Names.
The names "Emerald Funds" and "Trustees of Emerald Funds"
refer respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Agreement and
Declaration of Trust dated March 15, 1988, which is hereby referred to and a
copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of "Emerald Funds" entered into in the name or on behalf thereof by
any of the Trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, shareholders, or
representatives of the Trust personally, but bind only the Trust Property, and
all persons dealing with any class of shares of the Trust must look solely to
the Trust Property belonging to such class for the enforcement of any claims
against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
EMERALD FUNDS
Attest: (a Massachusetts business trust)
/s/ Jeffrey A. Dalke By /s/ John G. Grimsley
- -------------------- -----------------------
[Seal]
BARNETT CAPITAL ADVISORS, INC.
Attest:
By /s/ Jack A. Ablin
- ------------------------- ------------------------
[Seal]
-10-
<PAGE>
INVESTMENT ADVISORY AGREEMENT
(Tax-Exempt Fund)
AGREEMENT made as of January 9, 1998, between EMERALD FUNDS, a
Massachusetts business trust (herein called the "Trust"), and BARNETT CAPITAL
ADVISORS, INC., a wholly-owned indirect subsidiary of Barnett Banks, Inc.
(herein called the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to
furnish investment advisory and other services to the Trust for its Tax-Exempt
Fund portfolio (the "Fund"), and the Investment Adviser is willing to so furnish
such services;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment.
The Trust hereby appoints the Investment Adviser to provide
the investment advisory and other services set forth herein to the Trust for its
Tax-Exempt Fund for the period and on the terms set forth in this Agreement. The
Investment Adviser accepts such appointment and agrees to furnish the services
herein set forth for the compensation herein provided.
2. Subcontractors.
It is understood that the Investment Adviser will from time to
time employ or associate with such person or persons as the Investment Adviser
may believe to be particularly fitted to assist it in the performance of this
Agreement; provided, however, that the compensation of such person or persons
shall be paid by the Investment Adviser. In addition, notwithstanding any such
employment or association, the Investment Adviser shall itself (a) establish and
monitor general investment criteria and policies for the Fund, (b) review and
analyze on a periodic basis the Fund's portfolio holdings and transactions in
order to determine their appropriateness in light of the Fund's shareholder
base, and (c) review and analyze on a periodic basis the policies established by
any sub-adviser for the Fund with respect to the placement of orders for the
purchase and sale of portfolio securities. Without limiting the generality of
the foregoing, it is agreed that investment advisory services to the
<PAGE>
Fund shall be provided by a sub-investment adviser (the "SubAdviser") pursuant
to a sub-advisory agreement agreeable to the Trust and approved in accordance
with the provisions of the 1940 Act (the "Sub-Advisory Agreement").
3. Delivery of Documents.
The Trust has furnished the Investment Adviser with copies
properly certified or authenticated of each of the following:
(a) The Trust's Agreement and Declaration of Trust, as filed
with the State Secretary of the Commonwealth of Massachusetts on
March 16, 1988, and any amendments thereto (such Agreement and
Declaration of Trust, as presently in effect and as it shall from
time to time be amended, is herein called the "Declaration of
Trust");
(b) The Trust's Code of Regulations and any amendments
thereto;
(c) Resolutions of the Trust's Board of Trustees authorizing
the appointment of the Investment Adviser and approving this
Agreement;
(d) The Trust's Notification of Registration on Form N-8A
under the 1940 Act as filed with the Securities and Exchange
Commission on March 21, 1988 and any amendments thereto;
(e) The Trust's Registration Statement on Form N-1A under the
Securities Act of 1933 as amended ("1933 Act") (File No. 33-20658)
and under the 1940 Act as filed with the Securities and Exchange
Commission on March 21, 1988 and any amendments thereto; and
(f) The most recent prospectus of the Fund (such prospectus
together with the related statement of additional information, as
presently in effect and all amendments and supplements thereto, are
herein called "Prospectus").
The Trust will furnish the Investment Adviser from time to time with copies of
all amendments of or supplements to the foregoing, if any.
-2-
<PAGE>
4. Services.
Subject to the supervision of the Trust's Board of Trustees,
the Investment Adviser will be responsible for the management of, and will
provide a continuous investment program for, the Fund, including investment
research and management with respect to all securities, investments, cash and
cash equivalents in the Fund. The Investment Adviser will determine from time to
time what securities and other investments will be purchased, retained or sold
by the Fund. The Investment Adviser will provide the services rendered by it
under this Agreement in accordance with the Fund's investment objective,
policies and restrictions as stated in the Prospectus and resolutions of the
Trust's Board of Trustees. Without limiting the generality of the foregoing, the
Investment Adviser is hereby specifically authorized to invest and reinvest the
assets of the Fund, in its discretion as investment adviser, in (i) variable
amount demand notes of corporate borrowers held by the Investment Adviser in its
capacity as fiduciary, agent and custodian and (ii) securities of other
investment companies whether or not the same are advised or managed by the
Investment Adviser or another affiliated person of the Trust. The Investment
Adviser further agrees that it will:
(a) Establish and monitor general investment criteria and
policies for the Fund;
(b) Update the Fund's cash availability throughout the day as
required;
(c) Maintain historical tax lots for each portfolio security
held by the Fund;
(d) Transmit trades to the Trust's custodian for proper
settlement;
(e) Maintain appropriate books and records with respect to the
Fund's securities transactions;
(f) Supply the Trust and its Board of Trustees with reports,
statistical data and economic information as requested; and
(g) Prepare a quarterly broker security transaction summary
and, if requested in advance, monthly security transaction listing
for the Fund.
-3-
<PAGE>
5. Other Covenants.
The Investment Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of
the Securities and Exchange Commission and will in addition conduct
its activities under this Agreement in accordance with other
applicable law;
(b) will use the same skill and care in providing such
services as it uses in providing services to fiduciary accounts for
which it has investment responsibilities;
(c) will place orders pursuant to its investment
determinations for the Fund either directly with the issuer or with
any broker or dealer. In executing portfolio transactions and
selecting brokers or dealers, the Investment Adviser will use its
best efforts to seek on behalf of the Fund the best overall terms
available. In assessing the best overall terms available for any
transaction, the Investment Adviser shall consider all factors that
it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness
of the commission, if any, both for the specific transaction and on
a continuing basis. In evaluating the best overall terms available,
and in selecting the broker-dealer to execute a particular
transaction, the Investment Adviser may also consider the brokerage
and research services (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934) provided to the Fund and
other accounts over which the Investment Adviser or an affiliate of
the Investment Adviser exercises investment discretion. The
Investment Adviser is authorized, subject to the prior approval of
the Trust's Board of Trustees, to pay to a broker or dealer who
provides such brokerage and research services a commission for
executing a portfolio transaction for the Fund which is in excess of
the amount of commission another broker or dealer would have charged
for effecting that transaction if, but only if, the Investment
Adviser determines in good faith that such commission was reasonable
in relation to the value of the brokerage and research services
provided by such broker or dealer -- viewed in terms of that
particular transaction or in terms of the overall responsibilities
of the Investment Adviser to the Fund.
-4-
<PAGE>
In addition, the Investment Adviser is authorized to take into
account the sale of shares of the Trust in allocating purchase and
sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the
Investment Adviser, Sub-Adviser or the Trust's principal
underwriter), provided that the Investment Adviser believes that the
quality of the transaction and the commission are comparable to what
they would be with other qualified firms. In no instance, however,
will portfolio securities be purchased from or sold to the
Investment Adviser, Sub-Adviser, the Trust's principal underwriter,
or any affiliated person of either the Trust, the Investment
Adviser, Sub-Adviser or the principal underwriter, acting as
principal in the transaction, except to the extent permitted by the
Securities and Exchange Commission; and
(d) will maintain a policy and practice of conducting its
investment advisory services hereunder independently of the
commercial banking operations of its affiliates. When the Investment
Adviser makes investment recommendations for the Fund, its
investment advisory personnel will not inquire or take into
consideration whether the issuer of securities proposed for purchase
or sale for the Fund's account are customers of the commercial
department of any of the Investment Adviser's affiliates. In dealing
with commercial customers, the Investment Adviser's affiliates will
not inquire or take into consideration whether securities of those
customers are held by the Fund.
6. Services Not Exclusive.
The services furnished by the Investment Adviser hereunder are
deemed not to be exclusive, and the Investment Adviser shall be free to furnish
similar services to others so long as its services under this Agreement are not
impaired thereby. To the extent that the purchase or sale of securities or other
investments of the same issuer may be deemed by the Investment Adviser to be
suitable for two or more accounts managed by the Investment Adviser, the
available securities or investments may be allocated in a manner believed by the
Investment Adviser to be equitable to each account. It is recognized that in
some cases this procedure may adversely affect the price paid or received by the
Fund or the size of the position obtainable for or disposed of by the Fund.
-5-
<PAGE>
7. Books and Records.
In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Investment Adviser hereby agrees that all records which it
maintains for the Fund are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Investment Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under the 1940 Act.
8. Expenses.
During the term of this Agreement, the Investment Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased or sold for the Fund. In addition, if in any fiscal year the aggregate
expenses of the Fund (as defined under the securities regulations of any state
having jurisdiction over the Fund) exceed the expense limitations of any such
state, the Investment Adviser will reimburse the Trust, to the extent required
by state law, for 50% of such excess expenses of the Fund. The Investment
Adviser's obligation is not limited to the amount of its fees hereunder. Such
reimbursement, if any, will be estimated and accrued daily and paid on a monthly
basis.
9. Compensation.
For the services provided and the expenses assumed pursuant to
this Agreement, the Trust will pay the Investment Adviser, and the Investment
Adviser will accept as full compensation therefor from the Trust, a fee,
computed daily and payable monthly, at the annual rate of .25% of the average
daily net assets of the Fund. Such fee shall be a separate charge to the Fund
and shall be the several (and not joint or joint and several) obligation of the
Fund. The fees payable by the Fund under this Section 9 for the period beginning
on the date of this Agreement and ending on the date the shareholders of the
Fund approve this Agreement shall be maintained in an interest-bearing escrow
account until such time as the Fund's shareholders approve the payment of such
fees to the Investment Adviser. If the Fund's shareholders do not approve the
payment to the Investment Adviser of such fees for such period, the balance in
the escrow account shall be paid to the Fund.
-6-
<PAGE>
10. Limitation of Liability.
The Investment Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the performance of this Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or negligence on the part of
the Investment Adviser in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
11. Duration and Termination.
This Agreement shall become effective as of the date hereof.
Unless sooner terminated as provided herein, this Agreement shall continue in
effect until May 9, 1998 and, if approved by the shareholders of the Fund on or
before such date, shall continue in effect for an additional period ending on
November 30, 1998. Thereafter, if not terminated, this Agreement shall
automatically continue in effect for successive annual periods ending on
November 30, provided such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of the Trust's Board of
Trustees who are not interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting such approval, and (b) by
the Trust's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund. Notwithstanding the foregoing, this Agreement may be
terminated as to the Fund at any time, without the payment of any penalty, by
the Trust (by vote of the Trust's Board of Trustees or by vote of a majority of
the outstanding voting securities of the Fund), or by the Investment Adviser, on
sixty days' written notice. This Agreement will immediately terminate in the
event of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meaning as such terms have in the 1940 Act.)
12. Amendment of This Agreement.
No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought. No amendment of this Agreement shall be effective until
approved by vote of a majority of the outstanding voting securities of the Fund.
-7-
<PAGE>
13. Miscellaneous.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and shall be governed by New York law.
14. Names.
The names "Emerald Funds" and "Trustees of Emerald Funds"
refer respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Agreement and
Declaration of Trust dated March 15, 1988, which is hereby referred to and a
copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of "Emerald Funds" entered into in the name or on behalf thereof by
any of the Trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, shareholders, or
representatives of the Trust personally, but bind only the Trust Property, and
all persons dealing with any class of shares of the Trust must look solely to
the Trust Property belonging to such class for the enforcement of any claims
against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of the day and year first
above written.
EMERALD FUNDS
(a Massachusetts business trust)
Attest:
/s/ Jeffrey A. Dalke By /s/ John G. Grimsley
- ------------------------------- --------------------------------------
[Seal]
Attest: BARNETT CAPITAL ADVISORS, INC.
By /s/ Jack A. Ablin
- ------------------------------- --------------------------------------
[Seal]
-8-
<PAGE>
SUB-INVESTMENT ADVISORY AGREEMENT
(Tax-Exempt Fund)
AGREEMENT made as of January 9, 1998 between BARNETT CAPITAL
ADVISORS, INC., a wholly-owned indirect subsidiary of Barnett Banks, Inc.
(herein called the "Adviser"), and RODNEY SQUARE MANAGEMENT CORPORATION, a
Delaware corporation (herein called the "Sub-Adviser").
WHEREAS, EMERALD FUNDS, a Massachusetts business trust (herein
called the "Trust"), is registered as an open-end, management investment company
under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, pursuant to an Investment Advisory Agreement by and between
the Trust and the Adviser (herein called the "Investment Advisory Agreement"),
the Adviser has agreed to furnish investment advisory services to the Trust with
respect to its Tax-Exempt Fund investment portfolio (the "Fund"); and
WHEREAS, the Investment Advisory Agreement authorizes the Adviser to
sub-contract investment advisory services with respect to the Fund to the
Sub-Adviser pursuant to a sub-advisory agreement agreeable to the Trust and
approved in accordance with the provisions of the 1940 Act; and
WHEREAS, this Agreement has been so approved, and the Sub-Adviser is
willing to furnish sub-advisory services to the Fund upon the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
The Adviser hereby appoints the Sub-Adviser to act as sub-investment
adviser to the Trust's Tax-Exempt Fund for the period and on the terms set forth
in this Agreement. The SubAdviser accepts such appointment and agrees to furnish
the services herein set forth for the compensation herein provided.
<PAGE>
2. Services of Sub-Adviser.
Subject to the oversight and supervision of the Adviser and the
Trust's Board of Trustees, the Sub-Adviser will provide a continuous investment
program for the Fund, including investment research and management with respect
to all securities, investments, cash and cash equivalents in the Fund. The
Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Fund. The Sub-Adviser
will provide the services rendered by it under this Agreement in accordance with
the investment criteria and policies established from time to time for the Fund
by the Adviser, the Fund's investment objective, policies and restrictions as
stated in the Trust's Prospectus and Statement of Additional Information for the
Fund, and resolutions of the Trust's Board of Trustees.
The Sub-Adviser further agrees that it will:
(a) Provide information to the Fund's accountant for the purpose of
updating the Fund's cash availability throughout the day as required;
(b) Maintain historical tax lots for each portfolio security held by
the Fund;
(c) Transmit trades to the Trust's custodian for proper settlement;
(d) Maintain all books and records with respect to the Fund that are
required to be maintained under Rule 31a-1(f) under the 1940 Act;
(e) Supply the Trust and its Board of Trustees with reports,
statistical data and economic information as requested; and
(f) Prepare a quarterly broker security transaction summary and, if
requested in advance, monthly security transaction listing for the Fund.
3. Other Covenants.
The Sub-Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its activities
under this Agreement in accordance with other applicable law;
-2-
<PAGE>
(b) will use the same skill and care in providing such services as
it uses in providing services to fiduciary accounts for which it has investment
responsibilities;
(c) will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or dealer. In
executing portfolio transactions and selecting brokers or dealers, the
Sub-Adviser will use its best efforts to seek on behalf of the Fund the best
overall terms available. In assessing the best overall terms available for any
transaction, the Sub-Adviser shall consider all factors that it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any, both for the specific transaction
and on a continuing basis. In evaluating the best overall terms available, and
in selecting the broker-dealer to execute a particular transaction, the
Sub-Adviser may also consider the brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to the Fund or other accounts over which the Sub-Adviser or an
affiliate of the Sub-Adviser exercises investment discretion. The Sub-Adviser is
authorized, subject to the prior approval of the Adviser and the Trust's Board
of Trustees, to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for the
Fund which is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if, but only if, the
Sub-Adviser determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer -- viewed in terms of that particular transaction or in terms
of the overall responsibilities of the Sub-Adviser to the Fund. In addition, the
Sub-Adviser is authorized to take into account the sale of shares of the Trust
in allocating purchase and sale orders for portfolio securities to brokers or
dealers (including brokers and dealers that are affiliated with the Adviser,
Sub-Adviser or the Trust's principal underwriter), provided that the Sub-Adviser
believes that the quality of the transaction and the commission are comparable
to what they would be with other qualified firms. In no instance, however, will
portfolio securities be purchased from or sold to the Adviser, Sub-Adviser, the
Trust's principal underwriter or any affiliated person of either the Trust, the
Adviser, Sub-Adviser, or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Securities and Exchange
Commission; and
(d) will maintain a policy and practice of conducting
-3-
<PAGE>
its sub-investment advisory services hereunder independently of its, and any of
its affiliates', commercial banking operations. When the Sub-Adviser makes
investment recommendations for the Fund, its investment advisory personnel will
not inquire or take into consideration whether the issuers of securities
proposed for purchase or sale for the Fund's account are customers of its, or
any of its affiliates', commercial department. In dealing with commercial
customers, the commercial department of the SubAdviser, or any of its
affiliates, will not inquire or take into consideration whether securities of
those customers are held by the Fund.
4. Services Not Exclusive.
The services furnished by the Sub-Adviser hereunder are deemed not
to be exclusive, and the Sub-Adviser shall be free to furnish similar services
to others so long as its services under this Agreement are not impaired thereby.
To the extent that the purchase or sale of securities or other investments of
the same issuer may be deemed by the Sub-Adviser to be suitable for two or more
accounts managed by the Sub-Adviser, the available securities or investments may
be allocated in a manner believed by the Sub-Adviser to be equitable to each
account. It is recognized that in some cases this procedure may adversely affect
the price paid or received by the Fund or the size of the position obtainable
for or disposed of by the Fund.
5. Books and Records.
In compliance with the requirements of Rule 31a-3 under the 1940
Act, the Sub-Adviser hereby agrees that all records which it maintains for the
Fund are the property of the Trust and further agrees to surrender promptly to
the Trust any of such records upon the Trust's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by it under this Agreement.
-4-
<PAGE>
6. Expenses.
During the term of this Agreement, the Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage commissions and other transaction costs, if any) purchased or sold for
the Fund. In addition, if in any fiscal year the aggregate expenses of the Fund
(as defined under the securities regulations of any state having jurisdiction
over the Fund) exceed the expense limitations of any such state, the Sub-Adviser
will reimburse the Trust, to the extent required by state law, for 50% of such
excess expenses of the Fund; provided that to the extent the Adviser reimburses
the Trust for such expenses, then the Sub-Adviser will make its reimbursement
hereunder to the Adviser instead; and provided further that such reimbursement
will not be required to the extent that the Sub-Adviser's fee has been reduced
pursuant to Section 7 hereof as a result of reimbursements made by the Adviser
to the Trust. The Sub-Adviser's obligation with respect to the Fund is limited
to the amount of its fees hereunder from the Fund. Such reimbursement, if any,
will be estimated and accrued daily and paid on a monthly basis.
7. Compensation.
For the services provided and the expenses assumed pursuant to this
Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser will accept
as full compensation therefor, a fee, computed daily and payable monthly, at the
annual rate of .15% of the average daily net assets of the Fund minus such
amount, if any, that the Adviser has reimbursed the Trust in the event the
aggregate expenses of the Fund exceed the expense limitations of any state
having jurisdiction over the Fund. Such fee shall be a separate charge to the
Fund and shall be the several (and not joint or joint and several) obligation of
the Fund. The fees payable by the Adviser under this Section 7 for the period
beginning on the date of this Agreement and ending on the date the shareholders
of the Fund approve this Agreement shall be maintained in an interest-bearing
escrow account until such time as the Fund's shareholders approve the payment of
such fees to the Sub-Adviser. If the Fund's shareholders do not approve the
payment to the Sub-Adviser of such fees for such period, the balance in the
escrow account shall be paid to the Fund. The Sub-Adviser acknowledges that it
shall not be entitled to any further compensation from either the Adviser or the
Trust in respect of the services provided and expenses assumed by it under this
Agreement.
-5-
<PAGE>
8. Limitation of Liability.
The Sub-Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
performance of this Agreement, except that the Sub-Adviser shall be liable to
the Trust for any loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services or any loss resulting from willful
misfeasance, bad faith or negligence on the part of the Sub-Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
9. Duration and Termination.
This Agreement will become effective as of the date first above
written. Unless sooner terminated as provided herein this Agreement shall
continue in effect until May 9, 1998 and, if approved by the shareholders of the
Fund on or before such date, shall continue in effect for an additional period
ending on November 30, 1998. Thereafter, if not terminated, this Agreement shall
automatically continue in effect for successive annual periods ending on
November 30, provided such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of the Trust's Board of
Trustees who are not interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting such approval, and (b) by
the Trust's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund. Notwithstanding the foregoing, this Agreement may be
terminated as to the Fund at any time, without the payment of any penalty, by
the Adviser or by the Trust (by vote of the Trust's Board of Trustees or by vote
of a majority of the outstanding voting securities of the Fund), on sixty days'
written notice to the Sub-Adviser, or by the Sub-Adviser, on sixty days' written
notice to the Trust, provided that in each such case, notice shall be given
simultaneously to the Adviser. In addition, notwithstanding anything herein to
the contrary, in the event of the termination of the Investment Advisory
Agreement with respect to the Fund for any reason (whether by the Trust, by the
Adviser or by operation of law) this Agreement shall terminate upon the
effective date of such termination of the Investment Advisory Agreement. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" shall have the same meaning
as such terms have in the 1940 Act.)
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<PAGE>
10. Amendment of This Agreement.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought. No amendment of this Agreement shall be effective until approved by vote
of a majority of the outstanding voting securities of the Fund.
11. Miscellaneous.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and shall be governed by Delaware law.
IN WITNESS WHEREOF, the parties hereto have caused this
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<PAGE>
instrument to be executed by their officers designated below as of the day and
year first above written.
BARNETT CAPITAL ADVISORS, INC.
BY: /s/ Jack A. Ablin
-----------------
TITLE: President
-------------
RODNEY SQUARE MANAGEMENT
CORPORATION
BY: /s/ Joseph M. Fahey, Jr.
------------------------
TITLE: Vice-President
--------------------
<PAGE>
APPENDIX II
Agreement and Plan of Reorganization
----------------------------
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is
made as of this ___ day of February, 1998, by and between Nations Fund Trust
("Nations Fund"), a Massachusetts business trust, for itself and on behalf of
Nations Balanced Assets Fund, Nations Disciplined Equity Fund, Nations Florida
Municipal Bond Fund, Nations Short-Term Income Fund, Nations Strategic Fixed
Income Fund, Nations Tax Exempt Fund and Nations Value Fund (each an "Acquiring
Fund" and collectively the "Acquiring Funds"), all portfolios of Nations Fund,
and Emerald Funds ("Emerald Funds"), a Massachusetts business trust, for itself
and on behalf of the Emerald Balanced Fund, Emerald Equity Fund, Emerald Equity
Value Fund, Emerald Florida Tax-Exempt Fund, Emerald Managed Bond Fund, Emerald
Short-Term Fixed Income Fund and Emerald Tax-Exempt Fund (each an "Acquired
Fund" and collectively the "Acquired Funds"), all portfolios of Emerald Funds.
In accordance with the terms and conditions set forth in this
Agreement, the parties desire that all of the Fund Assets (as defined in
paragraph 1.2.a.) 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
Liabilities (as defined in paragraph 1.3) of each corresponding Acquired Fund
("Liabilities"), 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
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in paragraph 1.2.a (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 each
corresponding Acquired Fund the full and fractional number of
shares of each of its share classes calculated by dividing the
value of the Fund Assets of the corresponding Acquired Fund, net
of the Acquired Fund's Liabilities, that are so conveyed and are
attributable to each of the Acquiring Fund's respective share
classes set forth in Schedule A, computed in the manner and as
of the time and date set forth in this Agreement, by the net
asset value of one Acquiring Fund share of the particular share
class that is to be delivered with respect thereto, computed in
the manner and as of the time and date set forth in this
Agreement; and (ii) assume all of such Acquired Fund's
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
Liabilities of which it is aware, 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
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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 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 of the corresponding
Acquired Fund, accrued, absolute, contingent or otherwise
existing, as of the Closing Date, which liabilities shall
include any obligation of the Emerald Funds to indemnify Emerald
Funds Trustees and officers, acting in their capacities as such,
to the fullest extent permitted by law and the Emerald Funds
Agreement and Declaration of Trust, as in effect as of the date
of this Agreement ("Liabilities"). The Liabilities assumed by
Nations Fund on behalf of an Acquiring Fund shall be separate
Liabilities of such Acquiring Fund, and not joint or joint and
several liabilities of any other Acquiring Fund.
1.4. Promptly after the Closing(s) with respect to each Acquired
Fund, the Acquired Fund will distribute the shares of the
Acquiring Fund class received by the Acquired Fund pursuant to
paragraph 1.1 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.
Acquired Fund Investors will be credited with full and
fractional shares of the class that is issued by the
corresponding Acquiring Fund under this Agreement with respect
to the shares of the Acquired Fund that are held by the Acquired
Fund Investors. Such distribution will be accomplished by an
instruction, signed by an
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<PAGE>
appropriate officer of Emerald 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
Investors. 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 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 an Acquiring Fund to another person from the account
of the shareholder in which name the shares are registered in
the records of the corresponding Acquired Fund it shall be a
condition of such registration of shares that there be furnished
to 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 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, Emerald 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 Emerald Funds shall remain
the exclusive responsibility of Emerald 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 4.9.
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<PAGE>
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
Emerald Funds, respectively, which are involved in a
Reorganization as of a Closing Date.
2. VALUATION
2.1.a. 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 on the Closing Date
(such time and date being herein called the "Applicable
Valuation Date"). The net asset value of the Fund Assets to be
transferred by the Acquired Funds shall be computed by Emerald
Funds and shall be subject to adjustment by the amount, if any,
agreed to by Nations Fund and the respective Acquired Funds. In
determining the value of the securities transferred by the
Acquired Funds to the Acquiring Funds, except as provided in
sub-paragraph 2.1.b., each security shall be priced in
accordance with the pricing policies and procedures of the
Acquiring Funds as described in its then current prospectuses
and statements of additional information. For such purposes,
price quotations and the security characteristics relating to
establishing such quotations shall be determined by Emerald
Funds, provided that such determination shall be subject to the
approval of Nations Fund. Emerald Funds and Nations Fund agree
to use all commercially reasonable efforts to resolve any
material pricing differences between the prices of portfolio
securities determined in accordance with the pricing policies
and procedures of Emerald Funds and those determined in
accordance with the pricing policies and procedures of the
Acquiring Funds prior to the Applicable Valuation Date.
2.1.b. It is understood and agreed that the net asset value of the Fund
Assets of the Emerald Tax-Exempt Fund shall be based on the
amortized cost valuation procedures that have been adopted by
the Board of Trustees of Emerald Funds; provided that if the
difference between the per share net asset values of the Emerald
Tax-Exempt Fund and the corresponding Acquiring Fund equals or
exceeds $.0025 on the Applicable Valuation Date, as computed by
using market values in
5
<PAGE>
accordance with the policies and procedures established by
Nations Fund (or as otherwise mutually determined by the Boards
of Trustees of Emerald Funds and Nations Funds), either party
shall have the right to postpone the Applicable Valuation Date
and Closing Date with respect to the Emerald Tax-Exempt Fund
until such time as the per share difference is less than $.0025.
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.
3. CLOSING(S) AND CLOSING DATE
3.1. The Closing(s) for the Reorganization(s) shall occur on May 15,
1998, and/or on such other date(s) as may be mutually agreed
upon in writing by the officers of the parties hereto (a
"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
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 Emerald Funds,
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<PAGE>
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, Emerald 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 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 Emerald 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, assumptions of liability, 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
Liabilities, together with a list of such Acquired Fund's
portfolio securities and 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 Emerald Funds.
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<PAGE>
4. COVENANTS WITH RESPECT TO THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS
4.1. Emerald Funds, with respect to the Acquired Funds, has called or
will call a meeting of Emerald Fund shareholders to consider and
act upon this Agreement, and to take such 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 Emerald 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 Emerald 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 Emerald 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. Emerald Funds, on behalf of each Acquired Fund, covenants that
each Acquired Fund shall not sell or otherwise dispose of any
Acquiring Fund Shares to be received in the transactions
contemplated herein, except in distribution to its shareholders
in accordance with the terms of this Agreement.
4.3. Emerald 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.
4.4. Subject to the provisions hereof, Nations Fund, on its own
behalf and on behalf of each Acquiring Fund, and Emerald 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.
4.5. Emerald Funds, on behalf of each Acquired Fund, shall furnish to
its corresponding Acquiring Fund on the Closing Date, a final
statement
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<PAGE>
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 Emerald 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, Emerald 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 Emerald
Funds of such Acquired Fund's federal income tax attributes and
the tax bases in its assets that will be carried over to the
corresponding Acquiring Fund in the reorganization pursuant to
Section 381 of the Code.
4.6. Nations Fund, on behalf of each Acquiring Fund, has prepared and
filed, or will prepare and file with the Securities and Exchange
Commission ("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 Emerald Funds and
the prospectuses of the Acquiring Funds of Nations Fund relating
to the transactions contemplated by this Agreement (the
"Registration Statement"). Emerald 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 Acquiring Fund and as
are reasonably necessary for the preparation of the Registration
Statement.
4.7. As soon after the Closing Date as is reasonably practicable,
Emerald Funds, on behalf of each Acquired Fund 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.
4.8. With respect to each Acquiring Fund, Nations Fund agrees to use
all reasonable efforts to operate in accordance with its then
current prospectus and statement of additional information
prepared in accordance with Form N-1A, including qualifying as a
"regulated
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investment company" under the Code, for at least one (1) year
following the Closing Date.
4.9. Following the transfer of assets by each Acquired Fund to the
corresponding Acquiring Fund in exchange for Acquiring Fund
Shares and the assumption of all Liabilities of the Acquired
Fund as contemplated herein, Emerald 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 Emerald 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 Emerald 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
Investment Company Act of 1940, as amended (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 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
10
<PAGE>
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 does not and 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 Emerald
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;
5.1.e. All issued and outstanding shares, including shares to
be issued in connection with the Reorganization, of each
Acquiring Fund class 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
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<PAGE>
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, and no shareholder of an
Acquiring Fund shall have any preemptive right of
subscription or purchase in respect thereto;
5.1.h. From the effective date of the Registration Statement,
through 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;
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
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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, 1997, audited by Price Waterhouse LLP, and the
unaudited Statement of Assets and Liabilities, Statement
of Operations and Statement of Changes in Net Assets of
each Acquiring Fund as of and for the six-month period
ended September 30, 1997 (copies of which have been or
will be furnished to the corresponding Acquired Fund),
present fairly, in all material respects, the financial
position of each Acquiring Fund as of such date and the
results of its operations and the changes in its Net
Assets for the period then ended in accordance with
generally accepted accounting principles consistently
applied and as of such date there were no Liabilities of
any Acquiring Fund 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 position,
assets, liabilities or business, other than changes
occurring in the ordinary course of business, or any
incurrence by an Acquiring 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 Acquired Fund prior to
the Closing Date (for the purposes of this subparagraph
(k), neither a decline in an Acquiring Fund's net asset
value per share nor a decrease in an Acquiring Fund's
size due to redemptions shall be deemed to constitute a
material adverse change);
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 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
13
<PAGE>
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;
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; and
5.1.n. Each Acquiring Fund intends to qualify as a "regulated
investment company" under the Code, and each Acquiring
Fund that has conducted material investment operations
prior to the Closing Date has elected to qualify and has
qualified as a "regulated investment company" under the
Code, as of and since its first taxable year; has been a
"regulated investment company" under the Code at all
times since the end of its first taxable year when it so
qualified; and qualifies and shall continue to qualify
as a "regulated investment company" under the Code for
its current taxable year.
5.2. Emerald Funds, on behalf of itself and each Acquired Fund, represents
and warrants to Nations Fund as follows:
5.2.a. Emerald 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
provides that the affairs of Emerald Funds shall be managed by
the Trustees and grants them all powers necessary or desirable
to carry out such responsibility, including administering
Emerald Funds business as currently conducted by Emerald Funds
and as described in the current prospectuses of Emerald Funds;
Emerald 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
14
<PAGE>
registration requirements of the 1933 Act and state securities
laws;
5.2.c. The Acquired Funds are not in violation of, and the execution,
delivery and performance of this Agreement by Emerald Funds for
itself and on behalf of each Acquired Fund does not and will not
(i) violate Emerald Funds' Agreement and 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 Emerald Funds is a 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 Emerald 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
Emerald 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 November 30, 1997, audited by KPMG
Peat Marwick LLP (copies of which have been or will be furnished
to the corresponding 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 known to Emerald Funds that
were not disclosed therein but
15
<PAGE>
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 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 Emerald Funds
and each Acquired Fund required by law to be filed on or before
the Closing Date, have been or will be filed, and all federal
and other taxes owed by Emerald Funds on behalf of the Acquired
Funds, have been or will be paid so far as due, and to the best
of Emerald Funds' knowledge, no such return is currently under
audit and no assessment has been asserted with respect to any
such return;
5.2.h. Each Acquired Fund has elected to qualify and has qualified as a
"regulated investment company" under the Code, as of and since
its first taxable year; has been a "regulated investment
company" under the Code at all times since the end of its first
taxable year when it so qualified; and qualifies and shall
continue to qualify as a "regulated investment company" under
the Code for its taxable year ending upon its liquidation;
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 Emerald
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
16
<PAGE>
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 or
securities laws, and except for any liens or transfer tax liens
arising in connection with the transfer of Fund Assets pursuant
to this Agreement;
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
Emerald Funds and the Trustees, and this Agreement constitutes a
valid and binding obligation of Emerald 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 Emerald Funds shareholders, and
on the Closing Date, the Registration Statement insofar as it
relates to materials provided by Emerald 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 Emerald 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
17
<PAGE>
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 Emerald
Funds, for itself and on behalf of each Acquired Fund, or the
performance of the Agreement by Emerald Funds for itself and on
behalf of each Acquired 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 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
such consents, approvals, authorizations and filings as may be
required subsequent to the Closing Date, it being understood,
however, that this Agreement and the transactions contemplated
herein must be approved by the shareholders of the Acquired
Funds as described in paragraph 8.1.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRED FUNDS
The obligations of Emerald 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 Emerald 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
18
<PAGE>
reasonably satisfactory to Emerald 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 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 company 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 Acquired
Funds, is a valid and binding obligation of Nations Fund
enforceable against Nations Fund in accordance with its
terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, arrangement, moratorium and
other similar laws of general applicability relating to
or affecting creditors' rights and to general equity
principles;
19
<PAGE>
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;
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
("Combined Proxy/Prospectus), involving Nations Fund or
the Acquiring Funds, are required to be described in the
Combined Proxy/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/Prospectus or to be filed as an
exhibit to the Registration Statement that are not
described or filed as required; and
20
<PAGE>
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. 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 notice of meeting, form of proxy and
Combined Proxy/Prospectus (collectively, "Proxy Materials").
6.5. 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.
6.6. For the period beginning at the Closing Date of the last
Reorganization to occur and ending not less than six years
thereafter, Nations Fund shall provide, or cause to be provided,
liability coverage at least comparable to the liability coverage
currently applicable to the Trustees and officers of Emerald
Funds, covering the actions of the current Trustees and officers
of Emerald Funds for the period they served as such.
21
<PAGE>
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
Emerald Funds of all the obligations to be performed by it hereunder, with
respect to each corresponding Acquired Fund, on or before the Closing Date and,
in addition thereto, the following conditions:
7.1. All representations and warranties of Emerald 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. Emerald 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
Emerald Funds' President, Secretary or Assistant Secretary, or
other authorized officer, in form and substance reasonably
satisfactory to the Acquiring Funds and dated as of the Closing
Date, to the effect that the representations and warranties of
Emerald Funds with respect to each Acquired 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 each Acquiring Fund shall reasonably
request.
7.3. Each Acquiring Fund shall have received at the Closing(s) a
favorable opinion of Drinker Biddle & Reath LLP, counsel to
Emerald 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. Emerald Funds is a duly registered, open-end management
investment company, and its registration with the SEC as
an investment company under the 1940 Act is in full
force and effect;
22
<PAGE>
7.3.b. each Acquired Fund is a portfolio of Emerald Funds,
Emerald 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 provides that the affairs of
Emerald Funds shall be managed by the Trustees and
grants them all powers necessary or desirable to carry
out such responsibility, including administering Emerald
Funds' business as described in the current prospectuses
of Emerald Funds;
7.3.c. this Agreement has been duly authorized, executed and
delivered by Emerald Funds, for itself and on behalf of
the Acquired Funds and, assuming due authorization,
execution and delivery of this Agreement on behalf of
each Acquiring Fund, is a valid and binding obligation
of Emerald Funds, enforceable against Emerald Funds in
accordance with its terms, subject to the affect of
bankruptcy, insolvency, reorganization, arrangement,
moratorium and other similar laws of general
applicability relating to or affecting creditors' rights
and court decisions with respect thereto, and such
counsel will express no opinion with respect to the
application of equitable principles in any proceeding,
whether at law or in equity;
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 by Emerald Funds 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
Emerald Funds, and each Acquired Fund, do not violate or
result in a violation of the Emerald Funds' Agreement
and Declaration of Trust or Code of Regulations, or any
judgment, order or decree known to such counsel, of any
court or arbiter, to which Emerald Funds is a party,
and, to such counsel's knowledge, will not constitute a
material breach of the terms, conditions or
23
<PAGE>
provisions of, or constitute a default under, any
contract, undertaking, indenture or other agreement by
which Emerald 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/Prospectus involving
Emerald Funds or the Acquired Funds, are required to be
described in the Combined Proxy/Prospectus which are not
described as required and (b) there are no contracts or
documents relating to Emerald Funds or the Acquired
Funds, known to such counsel, of a character required to
be described in the Combined Proxy/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 Emerald Funds or an
Acquired Fund or any of their properties or assets and
neither Emerald 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. Nations Fund, on behalf of each Acquiring Fund, shall have
received from KPMG Peat Marwick 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:
7.4.a. they are independent accountants with respect to Emerald
Funds and each Acquired Fund within the meaning of the
1933 Act and the applicable regulations thereunder;
7.4.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
24
<PAGE>
the 1933 Act and the published rules and regulations
thereunder;
7.4.c. on the basis of limited procedures agreed upon by
Nations Fund, on behalf of the Acquiring Funds and
Emerald 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 Emerald Funds having
responsibility for financial and reporting matters and
such information is in agreement with such records,
schedules or computations made therefrom.
7.5. Emerald 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 November 30,
1997, audited by KPMG Peat Marwick LLP.
7.6. With respect to each Acquired Fund, the Board of Trustees of
Emerald 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.
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 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 Emerald Funds' Agreement
and Declaration of Trust and the 1940 Act, and certified copies
of the resolutions evidencing
25
<PAGE>
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 Emerald 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 that has conducted material
investment operations prior to the Closing Date shall have
declared a dividend or dividends, with a record date and
ex-dividend date prior to the Applicable Valuation Date, which,
together with all previous dividends, shall have the effect of
distributing to each Acquired Fund's shareholders substantially
all of its investment company taxable income, if any, for all
taxable periods or 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, if any, realized
for all taxable periods or years ending on or prior to the
Closing Date (after reduction for any capital loss carry
forward.)
8.6. Nations Fund, on behalf of each Acquiring Fund, and Emerald
Funds, on behalf of each Acquired Fund, shall have received from
Price Waterhouse LLP a letter dated as of the Closing Date, in
form and
26
<PAGE>
substance satisfactory to Nations Fund and to Emerald Funds, to
the effect that on the basis of limited procedures agreed upon
by Nations Fund, on behalf of the Acquiring Funds and Emerald
Funds, on behalf of the Acquired Funds (but not an examination
in accordance with generally accepted auditing standards): (a)
nothing came to their attention that caused them to believe that
the unaudited pro forma financial statements included in the
Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of Rule
11-02 of Regulation S-X or that the pro forma adjustments have
not properly been applied to the historical amounts in the
compilation of those amounts, (b) the data used in the
calculation of the current and pro forma expense ratios of the
Acquiring Funds appearing in the Registration Statement agree
with underlying records of the Acquiring Funds or to written
estimates provided by officers of Nations Fund having
responsibility for financial and reporting matters and were
found to be mathematically correct, and (c) the calculation of
the net value of the Acquired Fund Assets and the net asset
value of the Acquiring Fund shares, in each case as of the
Applicable Valuation Date, were determined in accordance with
the pricing policies and procedures of the Acquiring Funds as
described in their then current prospectuses and statements of
additional information.
8.7. Nations Fund and Emerald Funds shall have received an opinion of
Morrison & Foerster LLP addressed to both Nations Fund and
Emerald Funds in a form reasonably satisfactory to them, and
dated as of the Closing Date, substantially to the effect that
on the basis of facts, representations, and assumptions set
forth in such opinion:
8.7.a. each Reorganization will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and
each Acquiring Fund and the corresponding Acquired Fund
will each 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 and Liabilities to the
corresponding Acquiring Fund solely in exchange for the
Acquiring Fund Shares;
8.7.c. no gain or loss will be recognized by an Acquiring Fund
upon the receipt of the assets and assumption of
Liabilities of the
27
<PAGE>
corresponding Acquired Fund solely in exchange for the Acquiring
Fund Shares;
8.7.d. the basis of an Acquired Fund's assets received by the
corresponding Acquiring Fund pursuant to the
Reorganization will be the same as the 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 in the
hands of the corresponding Acquiring Fund 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
corresponding Acquiring Fund Shares in exchange for such
shareholders' shares of the Acquired Fund;
8.7.h. the basis of the Acquiring Fund Shares received by the
shareholders of the corresponding Acquired Fund will be
the same as the basis of the Acquired Fund shares
surrendered by such shareholders pursuant to the
Reorganization;
8.7.i the holding period for the Acquiring Fund Shares
received by the Acquired Fund shareholders will include
the period during which such shareholders held the
Acquired Fund shares surrendered therefor, provided that
such Acquired Fund shares are held as a capital asset in
the hands of the Acquired Fund shareholders on the date
of the exchange; and
8.7.j each 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.
8.8. Nations Fund and Emerald Funds shall have received (a) a
memorandum addressed to Nations Fund and the Emerald Funds, in
form reasonably satisfactory to them, prepared by Morrison &
Foerster LLP concerning the filing of notices and/or other
documents,
28
<PAGE>
and the payment of fees, in connection with the shares to be
issued by Nations Fund pursuant to this Agreement under
applicable state securities laws or the exemption from such
filing and payment requirements under such laws, and (b)
assurance reasonably satisfactory to each of them that all
permits and other authorizations necessary under state
securities laws to consummate the transactions contemplated by
this Agreement have been obtained.
8.9. The SEC shall not have issued any unfavorable advisory report
under Section 25(b) of the 1940 Act nor instituted any
proceeding seeking to enjoin consummation of the transactions
contemplated by this Agreement under Section 25(c) of the 1940
Act.
In rendering such opinion described in this paragraph 8.7, Morrison &
Foerster LLP may require and, to the extent they deem necessary and appropriate,
may rely upon representations made in certificates of Nations Fund and Emerald
Funds, their affiliates, and principal shareholders. 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 Emerald 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. NationsBanc Advisors, Inc. and/or affiliates shall bear the
customary expenses associated with the transactions contemplated
by this Agreement.
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
29
<PAGE>
connection herewith shall survive the consummation of the
transactions contemplated herein.
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
Emerald Funds;
11.1.b. by either Nations Fund or Emerald 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, 1998,
or such other date as may be agreed to by the parties;
or
11.1.c. by either of Nations Fund or the Emerald 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
materially 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 Emerald
Funds, as the case may be, and there shall be no liability for
damages on the part of Nations Fund or Emerald Funds or the
Trustees or officers of Nations Fund or Emerald Funds, on
account of termination pursuant to
30
<PAGE>
paragraphs 11.1(a) or (b), except as provided in paragraphs
11.1(a) or (b); provided, however, that notwithstanding any
termination of this Agreement pursuant to paragraph 11.1, such
termination shall not relieve either party of its respective
obligations pursuant to Section 9.2 hereof.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
Nations Fund, acting on behalf of each Acquiring Fund and the authorized
officers of Emerald 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 Emerald Fund(s)'
shareholders 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.
At any time prior to or (to the fullest extent permitted by law)
after approval of this Agreement by the shareholders of Emerald Funds either
party may waive any breach by the other party or the failure to satisfy any of
the conditions to its obligations (such waiver to be in writing and authorized
by the Board of Trustees of the waiving party, or any appropriate officer of
either party, with or without the approval of such party's shareholders).
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.
31
<PAGE>
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 Emerald Funds, on behalf of itself and each Acquired
Fund:
Marshall M. Criser
McGuire, Woods, Battle & Booth LLP
3300 Barnett Center
50 N. Laura Street, Suite 3400
Jacksonville, FL 32203
with copies to:
Jeffrey A. Dalke
Drinker Biddle & Reath LLP
1345 Chestnut Street
Philadelphia, PA 19107-3496
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1. 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 Schedules shall
be construed as referring to articles, paragraphs or
subparagraphs hereof or Schedules 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.
14.2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
32
<PAGE>
14.3. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
14.4. 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.
14.5. 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.
14.6. 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.
14.7. The names "Emerald Funds" and "Trustees of Emerald Funds" refer
respectively to the trust created and the Trustees, as trustees
but not individually or personally, acting from time to time
under an Agreement and Declaration of Trust dated March 15,
1988, which is hereby referred to and a copy of which is on file
at the Office of the State Secretary of the Commonwealth of
Massachusetts and at the principal office of the Trust. The
obligations of "Emerald Funds" entered into in the name or on
behalf thereof by any of the Trustees, representatives or agents
are made not individually, but in such capacities, and are not
binding upon any of the Trustees, shareholders, or
representatives of the Trust personally, but bind only the trust
property, and all persons dealing with any class of shares of
the Trust must look solely to the trust property belonging to
such class for the enforcement of any claims against the Trust.
33
<PAGE>
14.8. Any announcement or similar publicity with respect to this
Agreement or the transactions contemplated herein shall be made
only at such time and in such manner as the parties shall agree;
provided that nothing herein shall prevent either party upon
notice to the other party from making such public announcements
as such party's counsel may consider advisable in order to
satisfy the party's legal and contractual obligations in such
regard.
34
<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.
NATIONS FUND TRUST, for itself and on
behalf of each Acquiring Fund
ATTEST:
____________________________ By:______________________________________
Richard H. Blank, Jr. A. Max Walker
Secretary President and Chairman of the Board of
Trustees
EMERALD FUNDS, for itself and on behalf
ATTEST: of each Acquired Fund
____________________________ By:______________________________________
35
<PAGE>
SCHEDULE A
Acquired Fund Acquiring Fund
- ------------- --------------
Emerald Balanced Fund Nations Balanced Assets Fund
Institutional Shares Primary A Shares
Retail Shares Investor A Shares
Emerald Equity Fund Nations Disciplined Equity Fund
Institutional Shares Primary A Shares
Retail Shares Investor A Shares
Emerald Equity Value Fund Nations Value Fund
Institutional Shares Primary A Shares
Retail Shares Investor A Shares
Emerald Florida Tax-Exempt Fund Nations Florida Municipal Bond Fund
Institutional Shares Primary A Shares
Retail Shares Investor A Shares
Emerald Managed Bond Fund Nations Strategic Fixed Income Fund
Institutional Shares Primary A Shares
Retail Shares Investor A Shares
Emerald Short-Term Fixed Income Fund Nations Short-Term Income Fund
Institutional Shares Primary A Shares
Retail Shares Investor A Shares
36
<PAGE>
Acquired Fund Acquiring Fund
- ------------- --------------
Emerald Tax-Exempt Fund Nations Tax Exempt Fund
Institutional Shares Primary A Shares
Retail Shares Daily Shares
Service Shares Investor A Shares
<PAGE>
APPENDIX III
Expense Summaries of Emerald Funds
and the Corresponding Nations Funds
-----------------------------------------------
The following tables (a) compare the fees and expenses as of November 30,
1997, for the respective Emerald 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. The
fund operating expense levels shown in this Proxy/Prospectus assume current net
asset levels; pro forma expense levels shown should not be considered an actual
representation of future expenses or performance. Such pro forma expense levels
project anticipated levels but may be greater or less than those shown.
III-1
<PAGE>
EMERALD BALANCED FUND - INSTITUTIONAL SHARES
NATIONS BALANCED ASSETS FUND - PRIMARY A SHARES
<TABLE>
<CAPTION>
Emerald Nations Balanced Combined Fund
Balanced Fund Assets 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............................ 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 .................................... 0.60% 0.75% 0.75%
Other Expenses...................................... 0.19% 0.27% 0.26%
---- ---- ----
Total Fund Operating Expenses:........................... 0.79% 1.02% 1.01%
==== ==== ====
- --------------------
</TABLE>
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>
Emerald Balanced Nations Balanced Combined Fund
Fund Assets Fund Pro Forma
---- ----------- ---------
<S> <C> <C> <C>
1 year ............................................ $ 8 $10 $10
3 years ........................................... 25 32 32
5 years ........................................... 44 56 56
10 years .......................................... 98 125 124
- --------------------
</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. This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund
Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-2
<PAGE>
EMERALD BALANCED FUND - RETAIL SHARES
NATIONS BALANCED ASSETS FUND - INVESTOR A SHARES
<TABLE>
<CAPTION>
Nations
Emerald Balanced Combined Fund
Balanced Fund Assets 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 None 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 .................................... 0.60% 0.75% 0.75%
12b-1 Fees.......................................... 0.25% 0.25% 0.25%
Shareholder Processing Plan......................... 0.25% - -
Other Expenses (after reimbursements)*.............. 0.21% 0.27% 0.26%
---- ---- ----
Total Fund Operating Expenses:
(after waivers or reimbursements)**................. 1.31% 1.27% 1.26%
==== ==== ====
- --------------------
</TABLE>
* Other Expenses (absent reimbursements) would be: 0.22% for Emerald
Balanced Fund.
** Total Fund Operating Expenses (absent reimbursements) would be:
1.32% for Emerald Balanced 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>
Emerald Balanced Nations Balanced Combined Fund
Fund Assets Fund Pro Forma
---- ----------- ---------
<S> <C> <C> <C>
1 year ............................................ $13 $13 $13
3 years ........................................... 42 40 40
5 years ........................................... 72 70 69
10 years .......................................... 158 153 152
- --------------------
</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. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-3
<PAGE>
EMERALD EQUITY FUND - INSTITUTIONAL SHARES
NATIONS DISCIPLINED EQUITY FUND-PRIMARY A SHARES
<TABLE>
<CAPTION>
Nations
Emerald Equity Disciplined Combined Fund
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................................. 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 .................................... 0.60% 0.75% 0.75%
Other Expenses .................................... 0.16% 0.26% 0.25%
---- ---- ----
Total Fund Operating Expenses: .......................... 0.76% 1.01% 1.00%
==== ==== ====
- --------------------
</TABLE>
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
Emerald Equity Disciplined Combined Fund
Fund Equity Fund Pro Forma
---- ----------- ---------
<S> <C> <C> <C>
1 year ............................................ $ 8 $10 $10
3 years ........................................... 24 32 32
5 years ........................................... 42 56 55
10 years .......................................... 94 124 122
- --------------------
</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. This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund
Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-4
<PAGE>
EMERALD EQUITY FUND - RETAIL SHARES
NATIONS DISCIPLINED EQUITY FUND - INVESTOR A SHARES
<TABLE>
<CAPTION>
Nations
Emerald Equity Disciplined Combined Fund
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 ........................... 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 .................................... 0.60% 0.75% 0.75%
12b-1 Fees.......................................... 0.25% 0.25% 0.25%
Shareholder Processing Plan......................... 0.25% - -
Other Expenses...................................... 0.22% 0.26% 0.25%
---- ---- ----
Total Fund Operating Expenses:........................... 1.32% 1.26% 1.25%
==== ==== ====
- --------------------
</TABLE>
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
Emerald Equity Disciplined Combined Fund
Fund Equity Fund Pro Forma
---- ----------- ---------
<S> <C> <C> <C>
1 year ............................................ $13 $13 $13
3 years ........................................... 42 40 40
5 years ........................................... 72 69 69
10 years .......................................... 159 152 151
- --------------------
</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. This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund
Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-5
<PAGE>
EMERALD EQUITY VALUE FUND - INSTITUTIONAL SHARES
NATIONS VALUE FUND - PRIMARY A SHARES
<TABLE>
<CAPTION>
Emerald Equity Nations Value Combined Fund
Value 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 None 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)*.................... 0.55% 0.75% 0.75%
Other Expenses (after reimbursements)**............. 0.24% 0.21% 0.19%
---- ---- ----
Total Fund Operating Expenses:
(after waivers or reimbursements)***................ 0.79% 0.96% 0.94%
==== ==== ====
- --------------------
</TABLE>
* Management Fees (absent waivers) would be: 0.60% for Emerald Equity Value
Fund.
** Other Expenses (absent reimbursements) would be: 0.33% for Emerald Equity
Value Fund.
*** Total Fund Operating Expenses (absent waivers and/or reimbursements) would
be: 0.93% for Emerald Equity Value 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>
Emerald Equity Nations Value Combined Fund
Value Fund Fund Pro Forma
---------- ---- ---------
<S> <C> <C> <C>
1 year ............................................ $ 8 $10 $10
3 years ........................................... 25 31 30
5 years ........................................... 44 53 52
10 years .......................................... 98 118 115
- --------------------
</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. This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund
Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-6
<PAGE>
EMERALD EQUITY VALUE FUND - RETAIL SHARES
NATIONS VALUE FUND - INVESTOR A SHARES
<TABLE>
<CAPTION>
Emerald Equity Nations Value Combined Fund
Value Fund 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 None 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 wiavers)*.................... 0.55% 0.75% 0.75%
12b-1 Fees.......................................... 0.25% 0.25% 0.25%
Shareholder Processing Plan......................... 0.25% - -
Other Expenses (after reimbursements)**............. 0.49% 0.21% 0.19%
---- ---- ----
Total Fund Operating Expenses:
(after waivers or reimbursements)***................ 1.54% 1.21% 1.19%
==== ==== ====
- --------------------
</TABLE>
* Management Fees (absent waivers) would be .60% for Emerald Equity
Value Fund.
** Other Expenses (absent reimbursements) would be: 1.00% for Emerald
Equity Value Fund.
*** Total Fund Operating Expenses (absent waivers and/or reimbursements)
would be: 2.10% for Emerald Equity Value 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>
Emerald Equity Nations Value Combined Fund
Value Fund Fund Pro Forma
---------- ---- ---------
<S> <C> <C> <C>
1 year ............................................ $16 $12 $12
3 years ........................................... 49 38 38
5 years ........................................... 84 66 65
10 years .......................................... 183 147 144
- --------------------
</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. This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund
Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-7
<PAGE>
EMERALD FLORIDA TAX-EXEMPT FUND - INSTITUTIONAL SHARES
NATIONS FLORIDA MUNICIPAL BOND FUND - PRIMARY A SHARES
<TABLE>
<CAPTION>
Emerald Florida Nations Florida
Tax-Exempt Municipal Bond Combined Fund
Fund 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 .......................... 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)*..................... 0.40% 0.40% 0.40%
Other Expenses (after reimbursements)**............. 0.18% 0.20% 0.20%
---- ---- ----
Total Fund Operating Expenses:
(after waivers or reimbursements)***................ 0.58% 0.60% 0.60%
==== ==== ====
- --------------------
</TABLE>
* Management Fees (absent waivers) would be: 0.60% for Nations Florida
Municipal Bond Fund and the Combined Fund.
** Other Expenses (absent reimbursements) would be: 0.27% for Nations
Florida Municipal Bond Fund.
*** Total Operating Expenses (absent waivers or reimbursements) would
be: 0.87% and 0.80%, respectively, for Nations Florida Municipal
Bond Fund and the Combined 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 Florida
Emerald Florida Municipal Bond Combined Fund
Tax-Exempt Fund Fund Pro Forma
--------------- ---- ---------
<S> <C> <C> <C>
1 year ............................................ $ 6 $ 6 $ 6
3 years ........................................... 19 19 19
5 years ........................................... 32 33 33
10 years .......................................... 73 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. This example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed under
Total Fund Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-8
<PAGE>
EMERALD FLORIDA TAX-EXEMPT FUND - RETAIL SHARES
NATIONS FLORIDA MUNICIPAL BOND - INVESTOR A SHARES
<TABLE>
<CAPTION>
Combined Fund
Emerald Florida Nations Florida Pro Forma
Tax-Exempt Fund Municipal Bond 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 None 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)*..................... 0.40% 0.40% 0.40%
12b-1 Fees.......................................... 0.25% 0.20% 0.20%
Shareholder Processing Plan......................... 0.25% - -
Other Expenses(after reimbursements)**.............. 0.03% 0.20% 0.20%
----- ---- ----
Total Fund Operating Expenses:
(after waivers or reimbursements)***................ 0.93% 0.80% 0.80%
==== ==== ====
- --------------------
</TABLE>
* Management Fees (absent waivers) would be: 0.60% for Nations Florida
Municipal Bond Fund and the Combined Fund.
** Other Expenses (absent reimbursements) would be: 0.21% and 0.27%,
respectively, for Emerald Florida Tax-Exempt Fund and Nations
Florida Municipal Bond Fund.
*** Total Fund Operating Expenses (absent waivers or reimbursements)
would be: 1.11%, 1.07% 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 Florida
Emerald Florida Municipal Bond Combined Fund
Tax-Exempt Fund Fund Pro Forma
--------------- ---- ---------
<S> <C> <C> <C>
1 year ............................................ $ 9 $ 8 $ 8
3 years ........................................... 30 26 26
5 years ........................................... 51 44 44
10 years .......................................... 114 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. This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund
Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-9
<PAGE>
EMERALD MANAGED BOND FUND - INSTITUTIONAL SHARES
NATIONS STRATEGIC FIXED INCOME FUND - PRIMARY A SHARES
<TABLE>
<CAPTION>
Emerald Nations Strategic
Managed Bond Fixed Income Combined Fund
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)*..................... 0.40% 0.50% 0.50%
Other Expenses .................................... 0.17% 0.23% 0.20%
---- ---- ----
Total Fund Operating Expenses:
(after waivers or reimbursements)**................. 0.57% 0.73% 0.70%
==== ==== ====
- --------------------
</TABLE>
* Management Fees (absent waivers) would be: 0.60% for Nations
Strategic Fixed Income Fund and the Combined Fund.
** Total Fund Operating Expenses (absent waivers) would be: 0.83% and
0.80%, respectively, for Nations Strategic Fixed Income Fund and the
Combined 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
Emerald Managed Strategic Fixed Combined Fund
Bond Fund Income Fund Pro Forma
--------- ----------- ---------
<S> <C> <C> <C>
1 year ............................................ $ 6 $ 7 $ 7
3 years ........................................... 18 23 22
5 years ........................................... 32 41 39
10 years .......................................... 71 91 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. This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund
Operating Expenses above remain the same in the years shown.
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.
<PAGE>
EMERALD MANAGED BOND FUND - RETAIL SHARES
NATIONS STRATEGIC FIXED INCOME FUND - INVESTOR A SHARES
<TABLE>
<CAPTION>
Emerald Nations Strategic
Managed Bond Fixed Income Combined Fund
Fund Fund Pro Forma
---- ---- ---------
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............ 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)*..................... 0.40% 0.50% 0.50%
12b-1 Fees.......................................... 0.25% 0.20% 0.20%
Shareholder Processing Plan......................... 0.25% - -
Other Expenses(after reimbursements)**.............. 0.20% 0.23% 0.20%
---- ---- ----
Total Fund Operating Expenses:
(after waivers or reimbursements)***................ 1.10% 0.93% 0.90%
==== ==== ====
- --------------------
</TABLE>
* Management Fees (absent waivers) would be: 0.60% for Nations Strategic
Fixed Income Fund and the Combined Fund.
** Other Expenses (absent reimbursements) would be: 1.11% for Emerald
Managed Bond Fund.
*** Total Fund Operating Expenses (absent waivers or reimbursements) would
be: 2.01%, 1.03% 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
Emerald Managed Strategic Fixed Combined Fund
Bond Fund Income Fund Pro Forma
--------- ----------- ---------
<S> <C> <C> <C>
1 year ............................................ $11 $ 9 $ 9
3 years ........................................... 35 30 29
5 years ........................................... 61 51 50
10 years .......................................... 134 114 111
- --------------------
</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. This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund
Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-10
<PAGE>
EMERALD SHORT-TERM FIXED INCOME FUND - INSTITUTIONAL SHARES
NATIONS SHORT-TERM INCOME FUND - PRIMARY A SHARES
<TABLE>
<CAPTION>
Emerald
Short-Term Nations
Fixed Income Short-Term Combined Fund
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 None 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)*.................... 0.40% 0.30% 0.30%
Other Expenses ..................................... 0.21% 0.21% 0.20%
---- ---- ----
Total Fund Operating Expenses:
(after waivers or reimbursements)**................. 0.61% 0.51% 0.50%
==== ==== ====
- --------------------
</TABLE>
* Management Fees (absent waivers) would be: 0.60% for Nations
Short-Term Income Fund and the Combined Fund.
** Total Fund Operating Expenses (absent waivers) would be: 0.81% and
0.80%,. respectively for Nations Short-Term Income Fund and the
Combined 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>
Emerald Nations
Short-Term Fixed Short-Term Combined Fund
Income Income Fund Pro Forma
------ ----------- ---------
<S> <C> <C> <C>
1 year ............................................ $ 6 $ 5 $ 5
3 years ........................................... 20 16 16
5 years ........................................... 34 29 28
10 years .......................................... 76 64 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. This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund
Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-12
<PAGE>
EMERALD SHORT-TERM FIXED INCOME FUND - RETAIL SHARES
NATIONS SHORT-TERM INCOME FUND - INVESTOR A SHARES
<TABLE>
<CAPTION>
Emerald Nations
Short-Term Short-Term Combined Fund
Income 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)*..................... 0.40% 0.30% 0.30%
12b-1 Fees......................................... 0.25% 0.20% 0.20%
Shareholder Processing Plan......................... 0.25% - -
Other Expenses(after reimbursement)** .............. 0.13% 0.21% 0.20%
---- ---- ----
Total Fund Operating Expenses:
(after waivers or reimbursements)***................ 1.03% 0.71% 0.70%
==== ==== =====
</TABLE>
- --------------------
* Management Fees (absent waivers) would be: 0.60% for Nations
Short-Term Income Fund and the Combined Fund.
** Other Expenses (absent reimbursements) would be: 0.32% for Emerald
Short-Term Fixed Income Fund.
*** Total Fund Operating Expenses (absent waivers or reimbursements)
would be: 1.22%, 1.01% 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>
Emerald Nations
Short-Term Fixed Short-Term Combined Fund
Income Fund Income Fund Pro Forma
----------- ----------- ---------
<S> <C> <C> <C>
1 year ............................................ $11 $ 7 $ 7
3 years ........................................... 33 23 22
5 years ........................................... 57 40 39
10 years .......................................... 126 88 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. This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund
Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-13
<PAGE>
EMERALD TAX-EXEMPT FUND - INSTITUTIONAL SHARES
NATIONS TAX EXEMPT FUND - PRIMARY A SHARES
<TABLE>
<CAPTION>
Emerald Nations Tax Combined Fund
Tax-Exempt Fund Exempt 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 ........................... 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)*..................... 0.15% 0.16% 0.16%
Other Expenses ..................................... 0.16% 0.14% 0.14%
---- ---- ----
Total Fund Operating Expenses:
(after waivers or reimbursements)**................. 0.31% 0.30% 0.30%
==== ==== ====
- --------------------
</TABLE>
* Management Fees (absent waivers) would be: 0.25%, 0.40% and 0.40%,
respectively.
** Total Fund Operating Expenses (absent waivers) would be: 0.41%,
0.54% and 0.54%, 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>
Emerald Nations Tax Combined Fund
Tax-Exempt Fund Exempt Fund Pro Forma
--------------- ----------- ---------
<S> <C> <C> <C>
1 year ............................................ $ 3 $ 3 $ 3
3 years ........................................... 10 10 10
5 years ........................................... 17 17 17
10 years .......................................... 39 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. This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund
Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-14
<PAGE>
EMERALD TAX-EXEMPT FUND - SERVICE SHARES
NATIONS TAX EXEMPT FUND - INVESTOR A SHARES
<TABLE>
<CAPTION>
Emerald Nations Tax Combined Fund
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 (as a percentage of redemption None 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)*..................... 0.15% 0.16% 0.16%
12b-1 Fees.......................................... 0.35% 0.35% 0.35%
Other Expenses (after reimbursements)**............. 0.23% 0.14% 0.14%
---- ---- ----
Total Fund Operating Expenses:
(after waivers or reimbursements)***................ 0.73% 0.65% 0.65%
==== ==== ====
- --------------------
</TABLE>
* Management Fees (absent waivers) would be: 0.25%, 0.40% and 0.40%,
respectively.
** Other Expenses (absent reimbursements) would be: 1.11% for Emerald
Tax-Exempt Fund.
** Total Fund Operating Expenses (absent waivers or reimbursements)
would be: 1.71%, 0.89% and 0.89%, 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>
Emerald Nations Tax Combined Fund
Tax-Exempt Fund Exempt Fund Pro Forma
--------------- ----------- ---------
<S> <C> <C> <C>
1 year ............................................ $ 7 $ 7 $ 7
3 years ........................................... 23 21 21
5 years ........................................... 41 36 36
10 years .......................................... 91 81 81
- --------------------
</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. This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund
Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-15
<PAGE>
EMERALD TAX-EXEMPT FUND - RETAIL SHARES
NATIONS TAX EXEMPT FUND - DAILY SHARES
<TABLE>
<CAPTION>
Emerald Nations Tax Combined Fund
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) *.................... 0.15% 0.16% 0.16%
12b-1 Fees.......................................... 0.25% 0.50% 0.50%
Shareholder Processing Plan......................... 0.25% - -
Other Expenses ..................................... 0.22% 0.14% 0.14%
---- ---- ----
Total Fund Operating Expenses:
(after waivers or reimbursements)**................. 0.87% 0.80% 0.80%
==== ==== ====
- --------------------
</TABLE>
* Management Fees (absent waivers) would be: 0.25%, 0.40% and 0.40%,
respectively.
** Total Fund Operating Expenses (absent waivers) would be: 0.97%,
1.04% and 1.04%, 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>
Emerald Nations Tax Combined Fund
Tax-Exempt Fund Exempt Fund Pro Forma
--------------- ----------- ---------
<S> <C> <C> <C>
1 year ............................................ $ 9 $ 8 $ 8
3 years ........................................... 28 26 26
5 years ........................................... 48 44 44
10 years .......................................... 107 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. This example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed under Total Fund
Operating Expenses above remain the same in the years shown.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
III-16
<PAGE>
APPENDIX IV
Investment Objectives, Limitations and Certain Significant Investment Policies
of the Operating Nations Funds and the Corresponding Emerald Funds
This Appendix sets forth the investment objectives, fundamental and
certain non-fundamental limitations and significant investment policies of the
seven Emerald Funds that will be reorganized into the seven Nations Funds, as
well as the investment objectives, fundamental and non-fundamental limitations
and significant investment policies of 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 Emerald Funds and the
corresponding Nations Funds which are incorporated by reference in this
Proxy/Prospectus.
I. EMERALD BALANCED FUND/NATIONS BALANCED ASSETS FUND
A. Investment Objectives.
1. Emerald Balanced Fund: to provide an attractive investment return
through a combination of growth of capital and current income.
2. Nations Balanced Assets Fund: to seek total return by investing in
equity and fixed income securities.
Comment: Both Funds seek to achieve their objectives by allocating assets
among three major asset groups: equity securities, fixed-income securities and
cash equivalents. The Emerald Balanced Fund's policy dictates that at all times
at least 25% of total asset value is invested in fixed income securities and no
more than 75% of assets is invest in equity securities. The Nations Balanced
Assets Fund also maintains at least 25% of total asset value in fixed income
securities, under normal market conditions. Both Funds may also invest up to 25%
in securities of foreign issuers.
The Emerald Balanced Fund may invest in U.S. Government Obligations,
corporate bonds, mortgage securities, senior debt securities, preferred stocks
and common stocks. Equity securities acquired may include common stock,
preferred stock and debt instruments convertible into common stock. The Fund
also may invest in equity securities of small capitalization companies and cash
equivalents. Not more than 15% of the Fund's total assets may be invested in
convertible securities rated below-investment grade at the time of purchase.
Nation Balanced Assets Fund invests in common and preferred stocks of U.S.
corporations and of foreign issuers, as well as securities convertible into
common stocks, and other types of securities having common stock
characteristics. The Fund also invests in government, corporate and municipal
debt securities as well as mortgaged-backed and asset-backed
IV-1
<PAGE>
securities. Debt obligations acquired by the Fund will be rated investment grade
at the time of purchase or, if unrated, determined by the Adviser to be of
comparable quality.
II. EMERALD EQUITY FUND/NATIONS DISCIPLINED EQUITY FUND
A. Investment Objectives.
1. Emerald Equity Fund: to seek long-term capital appreciation by
investing primarily in common stocks (secondary objective: potential
income growth through investments).
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: The Emerald Equity Fund normally invests at least 65% of total
assets in equity securities which include common stocks, preferred stock and
debt instruments convertible into common stock. The remainder of the Fund's
assets may be invested in cash, or cash equivalents, and up to 25% of its assets
may be invested in equity securities of small capitalization companies.
Under normal market conditions, the Nations Disciplined Equity Fund
invests at least 65% of total assets in common stocks of domestic issuers and
the remainder of Fund assets may be invested in equity and debt instruments
including preferred stock and securities convertible into common stock.
The Emerald Equity Fund generally invests in larger companies with market
capitalizations exceeding $5 billion, whereas, the Nations Disciplined Equity
Fund invests primarily in medium- and large-sized companies with market
capitalizations of $500 million or greater.
The Nations Disciplined Equity Fund is limited to investing in investment
grade debt securities, including convertible securities, and may not invest in
debt securities rated below the top four investment categories. However, the
Emerald Equity Fund may invest up to 15% of total assets in convertible
securities rated below investment grade.
The Emerald Equity Fund may invest up to 25% of total assets in securities
of foreign issuers. However, the Nations Disciplined Equity Fund may only invest
up to 20% of total assets in foreign securities. Both Funds may invest money
market instruments and repurchase agreements.
The management styles of the Emerald Equity Fund and the Nations
Disciplined Equity differ in that the Emerald Equity Fund invests in equity
securities selected on the basis of fundamental investment value and growth
prospects that Barnett Capital believes exceed those of the general economy,
whereas, for Nations Disciplined Equity Fund NBAI selects stocks for purchase
utilizing quantitative analysis and optimization tools. Accordingly, the
resulting portfolio holdings do not align as closely as the similar investment
objectives would indicate. See Section "Summary -- Special Consideration
Relating to the Emerald Equity Fund."
III. EMERALD EQUITY VALUE FUND/NATIONS VALUE FUND
IV-2
<PAGE>
A. Investment Objectives.
1. Emerald Equity Value Fund: to seek long-term capital appreciation.
2. Nations Value Fund: to seek growth of capital by investing in companies
that are believed to be undervalued.
Comment: The Emerald Equity Value Fund normally invests at least 75% of
total assets in common stock, preferred stock and debt securities convertible
into common stock. The Fund primarily invests in companies having
capitalizations that exceed $100 million. Not more than 15% of the Fund's total
assets may be invested in convertible securities rated below-investment grade at
the time of purchase.
Under normal market conditions, the Nations Value Fund invests at least
65% in common stock and invests in preferred stock and securities convertible
into common stock in addition to common stock. The Fund normally invests in
companies that have a market capitalization of $500 million or more and have an
average daily trading volume of $3 million.
Both Funds may invest in money market instruments, repurchase agreements
and obligations of the U.S. Government, its agencies or instrumentalities.
However, the Nations Value Fund is limited to holding an aggregate of 20% of its
total assets in obligations issued or guaranteed as to payment of principal and
interest by the U.S. Government and investment grade securities of domestic
companies.
Both Funds may invest in foreign securities. The Emerald Equity may invest
up to 25% of total assets in the securities of foreign issuers, whereas, the
Nations Value Fund is restricted to 20% of total assets invested in foreign
securities.
IV. EMERALD FLORIDA TAX-EXEMPT FUND/NATIONS FLORIDA MUNICIPAL BOND FUND
A. Investment Objectives.
1. Emerald Florida Tax-Exempt Fund: to seek to provide high tax-free
income and current liquidity. (secondary objective: long-term
capital appreciation potential).
2. Nations Florida Municipal Bond Fund: to seek high current income
exempt from federal income and Florida state intangibles taxes with
the potential for principal fluctuation associated with investments
in long-term municipal securities.
Comment: The Emerald Florida Tax-Exempt Fund primarily invests its assets
in municipal obligations that are rated investment grade or above by one or more
NRSROs at the time of purchase. The Nations Florida Municipal Bond Fund invests
in investment grade, long-term municipal securities. Both Funds invest at least
80% of their total net assets in obligations the interest on which is exempt
from federal income tax except during temporary defensive periods.
IV-3
<PAGE>
Under normal market conditions, the Emerald Florida Tax-Exempt Fund will
invest at least 65% of its net assets in securities issued by the state of
Florida and its municipalities, counties and other taxing districts, as well as
in other securities exempt from the Florida intangibles tax. Under normal market
conditions, at least 80% of the Nations Florida Municipal Bond Fund's net assets
will be invested in municipal securities and debt instruments, issued by or on
behalf of the state of Florida and its political subdivisions, agencies,
instrumentalities and authorities. Both Funds may invest up to 20% of net assets
in taxable instruments and private activity bonds, the interest on which may be
subject to federal alternative minimum tax.
The Emerald Florida Tax-Exempt Fund may invest, without limitation, in
securities that have remaining maturities of more than ten years. Under normal
conditions, the average dollar-weighted maturity of the Nations Florida
Municipal Bond Fund will be greater than ten years and duration will be between
seven and nine and one half years.
V. EMERALD MANAGED BOND FUND/NATIONS STRATEGIC FIXED INCOME FUND
A. Investment Objectives.
1. Emerald Managed Bond Fund: to seek a high level of current income
and secondarily capital appreciation.
2. Nations Strategic Fixed Income Fund: to seek total return by
investing in investment grade fixed income securities.
Comment: The Emerald Managed Bond Fund invests substantially all of its
assets in investment grade debt obligations and normally will invest at least
65% of total assets in debt obligations rated "A" or better by at least one
NRSRO. Nations Strategic Fixed Income Fund invests at least 65% of total assets
in investment grade fixed income securities. Although most obligations acquired
by the Funds will be issued by companies or governmental entities within the
United States both Funds may invest in foreign securities. Unlike the Emerald
Managed Bond Fund which limits such investments to 35% of total assets, the
Nations Strategic Fixed Income Fund may only invest up to 25% of its assets in
foreign securities.
The average weighted maturity of the Emerald Managed Bond Fund may be
longer or shorter than ten years depending on prevailing market and economic
conditions. However, the Nations Strategic Fixed Income Fund has an expected
average weighted maturity that will be ten years or less and under no
circumstances will the maturity exceed 15 years.
Both Funds may also invest in high-quality cash-equivalents, convertible
stock, asset-backed securities, mortgaged-related securities, municipal
securities and repurchase agreements.
VI. EMERALD SHORT-TERM FIXED INCOME FUND/NATIONS SHORT-TERM INCOME FUND
A. Investment Objectives.
IV-4
<PAGE>
1. Emerald Short-Term Fixed Income Fund: to seek consistently positive
current income with relative stability of principal by investing in
investment grade securities and high quality money market
instruments.
2. Nations Short-Term Income Fund: to seek high current income
consistent with minimal fluctuation of principal.
Comment: Both Funds invest substantially all of their assets in investment
grade debt obligations, and under normal market conditions will invest at least
65% of total assets in such obligations. Additionally, the Emerald Fund normally
invests at least 65% of total assets in debt obligations rated "A" or better by
at least one NRSRO. Although most obligations acquired by the Funds will be
issued by companies or governmental entities within the United States the Funds
may invest in foreign securities. The Emerald Short-Term Fixed Income Fund
limits such investments to 35% of total assets, however, the Nations Short-Term
Income Fund may only invest up to 25% of its assets in foreign securities.
The average weighted maturity of the Emerald Short-Term Fixed Income Fund
will not exceed three years, whereas, Nations Short-Term Income Fund has an
expected average weighted maturity that will not exceed five years and a
duration that will not exceed three years.
Both Funds may also invest in high-quality cash-equivalents, convertible
stock, asset-backed securities, mortgaged-related securities, municipal
securities and repurchase agreements.
VII. EMERALD TAX-EXEMPT FUND/NATIONS TAX EXEMPT FUND
B. Investment Objectives.
1. Emerald Tax-Exempt Fund: to seek to provide current income that is
exempt from federal income taxes, consistent with liquidity, the
preservation of capital and a stable net asset value.
2. Nations Tax Exempt Fund: to seek as high a level of current 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. As a matter of fundamental policy both Funds invest at
least 80% or more of their respective net assets in municipal obligations.
Nations Tax Exempt Fund may invest in instruments issued by certain trusts,
partnerships and other special purpose issuers, including pass-through
certificates.
Both Funds may also invest up to 20% of net assets in private activity
bonds subject to alternative minimum tax. Neither Fund knowingly purchases
securities, the interest on which is subject to federal tax, and the Funds both
may hold uninvested cash reserves.
IV-5
<PAGE>
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
thirteen months, and the Funds' dollar-weighted average portfolio maturity must
not exceed 90 days. Both Funds limit their investments to "First Tier
Securities" as defined by Rule 2a-7.
IV-6
<PAGE>
APPENDIX V
Shareholder Transactions and Services of the Nations Funds and the
Corresponding Emerald Funds
-----------------------------------------------
This Appendix compares the shareholder transactions and services of the
Emerald Funds and the corresponding Nations Funds. The following is qualified in
its entirety by the more detailed information included in the prospectuses for
the Emerald Funds and Nations Funds which are incorporated by reference in this
Proxy/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 Emerald 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. Emerald Funds - Retail Shares (Emerald Balanced Fund, Emerald Equity Fund,
Emerald Equity Value Fund, Emerald Florida Tax-Exempt Fund, Emerald Managed Bond
Fund and Emerald Short-Term Fixed Income Fund).
Corresponding Nations Funds - Investor A Shares (Nations Balanced Assets
Fund, Nations Disciplined Equity Fund, Nations Value Fund, Nations Florida
Municipal Bond Fund, Nations Strategic Fixed Income Fund and Nations Short-Term
Income Fund).
A. Sales Charges and Exemptions
There is no sales charge on either the Retail Shares of the Emerald Funds
or the Investor A Shares of the Nations Funds.
V-1
<PAGE>
B. Purchase Policies
<TABLE>
<CAPTION>
Nations Funds Emerald Funds
------------- -------------
<S> <C> <C>
Minimum initial investment $1,000 for a regular account; $500 $1,000 for a regular account**; $500
for IRA investors; $250 for for investors participating in the
non-working spousal IRAs; $100 for E-Z Matic Investment Plan; $50 for
investors participating in the investors participating in the
Systematic Investment Plan; no Periodic Investment Plan; $1,000 for
minimum investment for 401(k) plans, IRA investors; $250 for non-working
simplified employee pension plans spousal IRAs; no minimum investment
("SEPs"), Savings Incentives Method for 401(k) Plans, Qualified
Plans for Employees ("SIMPLE IRAs") Retirement Plans and SEP-IRAs.
and salary reduction-IRAs
("SAR-IRAs").*
Minimum subsequent investments $100; $50 for subsequent investments $100 for regular accounts*** and
made through the Systematic investors in the E-Z Matic
Investment Plan. Investment Plan; $50 for investors
in the Periodic Investment Plan; no minimum
investment for IRAs, 401(k) Plans,
Qualified Retirement Plans and SEP-IRAs.
Purchase methods Through Selling Agents, Servicing Through Barnett Investments, Inc.,
Agents, a Nations Fund Personal Service Organizations; by mail; by
Investment Planner account; by mail; wire; by telephone; an E-Z Matic
by wire; by telephone and a Investment account and Periodic
Systematic Investment Plan. Investment schedule account.
</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.
** If the investment is made through a qualified account at a Service
Organization whose clients have made total investments of at least $1,000,000
the investor qualifies for a $100 minimum initial investment; employees of the
Adviser and its affiliates qualify for a $500 minimum initial investment.
***Employees of the Adviser and its affiliates qualify for a $50 minimum
subsequent investment.
V-2
<PAGE>
C. Redemption Procedures
<TABLE>
Nations Funds Emerald 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 Funds may redeem Investor A Shares if the balance in a shareholder's
account with the Fund drops below $500 as a result of redemptions, and the
shareholder does not increase the balance to at least $500 on 60 days' written
notice. Share balances also may be redeemed at the direction of an agent
pursuant to arrangements between the agent and its customer. 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.
Emerald may redeem Retail Shares involuntarily if the balance of an
account (other than an IRA or Qualified Retirement Plan account) decreases to a
value below $1,000 due to shareholder redemptions, and the shareholder does not
increase such balance to $1,000 upon 30 days' written notice. Share balances
also may be redeemed at the direction of an institution pursuant to arrangements
between the institution and its customer.
D. Additional Shareholder Services
<TABLE>
<CAPTION>
Nations Funds Emerald Funds
------------- -------------
<S> <C> <C>
Systematic/automatic Yes (in any amount from $50 to Yes (debits shareholder's bank
investment plan $100,000). account and purchases shares either
once or twice a month in amounts as
specified by the shareholder).
</TABLE>
V-3
<PAGE>
E. Share Exchanges
<TABLE>
<CAPTION>
Nations Funds Emerald Funds
------------- -------------
<S> <C> <C>
By mail Yes Yes
By telephone Yes Yes
Minimum The Investor A Shares exchanged must The Retail Shares exchanged must
have a current value of at least have a current value of at least $500
$1,000
Automatic exchange feature Yes. A shareholder may No
automatically exchange at least $25
on a monthly or quarterly basis.
</TABLE>
Retail Shares of the Emerald Funds may be exchanged for Retail Shares of
another Emerald Fund.
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. Emerald Funds - Institutional Shares (Emerald Balanced Fund, Emerald
Equity Fund, Emerald Equity Value Fund, Emerald Florida Tax-Exempt Fund, Emerald
Managed Bond Fund, Emerald Short-Term Fixed Income Fund and Emerald Tax-Exempt
Fund).
Corresponding Nations Funds - Primary A Shares (Nations Balanced Assets
Fund, Nations Disciplined Equity Fund, Nations Value Fund, Nations Florida
Municipal Bond Fund, Nations Strategic Fixed Income Fund, Nations Short-Term
Income Fund and Nations Tax Exempt Fund).
V-4
<PAGE>
A. Sales Charges and Exemptions
There is no front-end or contingent-deferred sales charge on the
Institutional Shares of the Emerald Funds or the Primary A Shares of the Nations
Funds.
B. Purchase Policies
<TABLE>
<CAPTION>
Nations Funds Emerald Funds
------------- -------------
<S> <C> <C>
Minimum initial $250,000 $250,000 for non-money market funds;
investment $5,000 for money market funds; there
is no minimum initial investment
requirements for transfers of assets
by Barnett's customers from other
banks or financial institutions.
Minimum subsequent None None for non-money market
investments funds; $100 for money market
funds.
Purchase methods Primary A Shares may be sold to Sold to Barnett Bank, N.A.
NationsBank and its affiliates ("Barnett") and its affiliates, as
acting on behalf of bona fide trust well as Barnett's correspondent
customers. Primary A Shares also banks and other institutions acting
may be sold to employee benefit on behalf of themselves or their
plans, charitable foundations, customers who maintain qualified
endowments and to other funds in the trust, agency or custodial
Nations Fund family. accounts. All share purchases are
effected through a customer's
account at Barnett or another
institution.
</TABLE>
C. Redemption Procedures
Nations Funds Emerald Funds
------------- -------------
Through the transfer agent Yes Yes
By telephone Yes Yes
By wire Yes Yes
V-5
<PAGE>
Check writing Not Applicable Not Applicable
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 as a result of
redemptions, and the shareholder does not increase the balance to at least $500
on 60 days' written notice. 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.
With respect to the Emerald Money Market Funds, an involuntarily
redemption on Institutional shares may occur if the balance of an account (other
than an IRA or Qualified Retirement Plan account) decreases to a value below
$4,000 due to shareholder redemptions, and the shareholder does not increase
such balance to $4,000 upon 30 days' written notice. Share balances also may be
redeemed at the direction of an institution pursuant to arrangements between the
institution and its customer.
D. Additional Shareholder Services
None.
E. Share Exchanges
Nations Funds Emerald Funds
------------- -------------
By mail Yes Yes
By telephone Yes Yes
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.
Institutional Shares of the Emerald Funds may be exchanged for
Institutional Shares of any other Emerald Fund. Non money-market and money
market fund exchanges are subject to the $250,000 and $5,000 respective minimum
investment requirements imposed.
v-6
<PAGE>
III. Emerald Funds - Service Shares (Emerald Tax-Exempt Fund).
Corresponding Nations Funds - Investor A Shares (Nations Tax Exempt Fund).
A. Sales Charges and Exemptions
There is no front-end or contingent-deferred sales charge on the Service
Shares of the Emerald Funds or the Investor A Shares of the Nations Funds.
B. Purchase Policies
<TABLE>
<CAPTION>
Nations Funds Emerald Funds
------------- -------------
<S> <C> <C>
Minimum initial investment $1,000 for a regular account; $500 $5,000; there is no minimum initial
for IRA investors; $250 for investment requirements for
non-working spousal IRAs; $100 for transfers of assets by Barnett's
investors participating in the customers from other banks or
Systematic Investment Plan; no financial institutions.
minimum investment for 401(k) plans,
simplified employee pension plans
("SEPs"), Savings Incentives Method
Plans for Employees ("SIMPLE IRAs")
and salary reduction-IRAs
("SAR-IRAs").*
Minimum subsequent investments $100; $50 for subsequent investments $100
made through the Systematic
Investment Plan.
Purchase methods Through Selling Agents, Servicing Sold to Barnett Bank, N.A.
Agents, a Nations Fund Personal ("Barnett") and its affiliates, as
Investment Planner account; by mail; well as Barnett's correspondent
by wire; by telephone and a banks and other institutions acting
Systematic Investment Plan. on behalf of themselves or their
customers who maintain qualified trust,
agency or custodial accounts. All share
purchases are effected through a
customer's account at Barnett or another
institution
</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
V-7
<PAGE>
within one year, Nations reserves the right to redeem the Shares held by such
plans on 60 days' written notice. C. Redemption Procedures
Nations Funds Emerald Funds
------------- -------------
Through an authorized selling or Yes Yes
servicing agent
By mail Yes Yes
By telephone Yes Yes
By wire Yes Yes
Check writing feature Yes No
By automatic withdrawal plan Yes (net asset value of No
account must be $10,000)
Due to the high cost of maintaining fund accounts with small balances,
Nations Funds may redeem Investor A Shares if the balance in a shareholder's
account with the Fund drops below $500 as a result of redemptions, and the
shareholder does not increase the balance to at least $500 on 60 days' written
notice. Share balances also may be redeemed at the direction of an agent
pursuant to arrangements between the agent and its customer. 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.
Emerald may redeem Service Shares involuntarily if the balance of an
account decreases to a value below $4,000 due to shareholder redemptions, and
the shareholder does not increase such balance to $4,000 upon 60 days' written
notice. Share balances also may be redeemed at the direction of an institution
pursuant to arrangements between the institution and its customer.
D. Additional Shareholder Services
Nations Funds Emerald Funds
------------- -------------
Systematic/automatic Yes (in any amount from $50 No
investment plan to $100,000).
V-8
<PAGE>
E. Share Exchanges
<TABLE>
<CAPTION>
Nations Funds Emerald Funds
------------- -------------
<S> <C> <C>
By mail Yes Yes
By telephone Yes Yes
Minimum The Investor A Shares exchanged The Service shares exchanged
must must have a current must have a current value of
value of at least $1,000 at least $5,000
Automatic Yes. A shareholder may No
automatically exchange at least
$25 on a monthly or quarterly basis.
</TABLE>
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.
Service shares of an Emerald Fund may be exchanged for Service shares
of any other Emerald Fund. Exchanges are subject to the minimum investment
requirements imposed.
IV. Emerald Funds - Retail Shares (Emerald Tax-Exempt Fund).
Corresponding Nations Funds - Daily Shares (Nations Tax Exempt Fund).
A. Sales Charges and Exemptions
There is no front-end or contingent-deferred sales charge on the Retail Shares
of the Emerald Funds or the Daily Shares of the Nations Funds.
V-9
<PAGE>
B. Purchase Policies
<TABLE>
<CAPTION>
Nations Funds Emerald Funds
------------- -------------
<S> <C> <C>
Minimum initial investment $1,000 for a regular account; $500 $1,000 for a regular account**; $500
for IRA investors; $250 for for investors participating in the
non-working spousal IRAs; $100 for E-Z Matic Investment Plan; $50 for
investors participating in the investors participating in the
Systematic Investment Plan; no Periodic Investment Plan; $1,000 for
minimum investment for 401(k) plans, IRA investors; $250 for non-working
simplified employee pension plans spousal IRAs; no minimum investment
("SEPs"), Savings Incentives Method for 401(k) Plans, Qualified
Plans for Employees ("SIMPLE IRAs") Retirement Plans and SEP-IRAs.
and salary reduction-IRAs
("SAR-IRAs").*
Minimum subsequent investments $100; $50 for subsequent investments $100 for regular accounts*** and
made through the Systematic investors in the E-Z Matic
Investment Plan. Investment Plan; $50 for investors
in the Periodic Investment Plan;
no minimum investment for IRAs, 401(k)
Plans, Qualified Retirement
Plans and SEP-IRAs
Purchase methods Through Selling Agents, Servicing Through Barnett Investments, Inc.,
Agents, a Nations Fund Personal Service Organizations; by mail; by
Investment Planner account; by mail; wire; by telephone; an E-Z Matic
by wire; by telephone and a Investment account and Periodic
Systematic Investment Plan. Investment schedule account.
</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.
** If the investment is made through a qualified account at a Service
Organization whose clients have made total investments of at least $1,000,000
the investor qualifies for a $100 minimum initial investment; employees of the
Adviser and its affiliates qualify for a $500 minimum initial investment.
*** Employees of the Adviser and its affiliates qualify for a $50 minimum
subsequent investment.
V-10
<PAGE>
C. Redemption Procedures
<TABLE>
<CAPTION>
Nations Funds Emerald 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 Yes (net asset value of account must
must be $10,000) be at least $5,000)
</TABLE>
Due to the high cost of maintaining fund accounts with small balances,
Nations Funds may redeem Daily Shares if the balance in a shareholder's account
with the Fund drops below $500 as a result of redemptions, and the shareholder
does not increase the balance to at least $500 on 60 days' written notice. Share
balances also may be redeemed at the direction of an agent pursuant to
arrangements between the agent and its customer. 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.
Emerald may redeem Retail Shares involuntarily if the balance of an
account (other than an IRA or Qualified Retirement Plan account) decreases to a
value below $1,000 due to shareholder redemptions, and the shareholder does not
increase such balance to $1,000 upon 30 days' written notice. Share balances
also may be redeemed at the direction of an institution pursuant to arrangements
between the institution and its customer.
D. Additional Shareholder Services
<TABLE>
<CAPTION>
Nations Funds Emerald Funds
------------- -------------
<S> <C> <C>
Systematic/automatic investment plan Yes (in any amount from $50 to Yes (debits shareholder's bank
$100,000). account and purchases shares either
once or twice a month in amounts as
specified by the shareholder).
</TABLE>
V-11
<PAGE>
E. Share Exchanges
Nations Funds Emerald Funds
------------- -------------
By mail Yes Yes
By telephone Yes Yes
Minimum The Daily Shares exchanged The Retail shares exchanged
must have a current value of at must have a current value of
least $1,000 at least $500
Automatic Yes. A shareholder may No
automatically exchange at least
$25 on a montrhly or quarterly
basis
Retail Shares of a Fund may be exchanged for Retail Shares of another
Emerald Fund.
Daily Shares of a Nations Fund may be exchanged for Investor C Shares of
any other Nations non-money market fund and Daily Shares of any Nations money
market fund. Exchanges are subject to the minimum investment requirements
imposed.
VI. Dividends and Distributions
A. Dividends Declared Daily/Paid Monthly
Emerald Fund Nations Fund
Emerald Florida Tax-Exempt Fund Nations Florida Municipal Bond Fund
Emerald Managed Bond Fund Nations Strategic Fixed Income Fund
Emerald Short-Term Fixed Income Fund Nations Short-Term Income Fund
Emerald Tax -Exempt Fund Nations Tax Exempt Fund
B. Dividends Declared Monthly/Paid Monthly
Emerald Fund Nations Fund
None Nations Disciplined Equity Fund
Nations Value Fund
C. Dividends Declared Quarterly/Paid Quarterly
Emerald Fund Nations Fund
V-12
<PAGE>
Emerald Balanced Fund Nations Balanced Assets Fund
Emerald Equity Fund
Emerald Equity Value Fund
V-13
<PAGE>
Statement of Additional Information
Dated March 30, 1998
Emerald Funds
3435 Stelzer Road
Columbus, Ohio 43219
(800) 637-3759
Nations Fund Trust
One NationsBank Plaza
Charlotte, NC 28255
(800) 626-2275
(May 4, 1998 Special Meeting of Shareholders of Emerald Funds)
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Proxy/Prospectus dated the date hereof, for the
Special Meeting of Shareholders of Emerald to be held on May 4, 1998. Copies of
the Proxy/Prospectus may be obtained at no charge by writing or calling Emerald
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 Proxy/Prospectus.
Incorporation of Documents by Reference in Statement of Additional Information
Further information about the Investor A and Primary A Shares of the
Nations Balanced Assets Fund, Nations Disciplined Equity Fund, Nations Value
Fund, Nations Florida Municipal Bond Fund, Nations Strategic Fixed Income Fund,
Nations Short-Term Income Fund, and the Investor A, Primary A and Daily Shares
of Nations Tax-Exempt Fund, is contained in and incorporated herein by reference
to the statement of additional information for Investor A and Primary A Shares
of the Nations Balanced Assets Fund, Nations Disciplined Equity Fund, Nations
Value Fund, Nations Florida Municipal Bond Fund, Nations Strategic Fixed Income
Fund, Nations Short-Term Income Fund, and the Investor A, Primary A and Daily
Shares of Nations Tax-Exempt Fund, dated August 1, 1997.
The audited financial statements and related Report of Independent
Auditors for Nations Balanced Assets Fund, Nations Disciplined Equity Fund,
Nations Value Fund, Nations Florida Municipal Bond Fund, Nations Strategic Fixed
Income Fund, Nations Short-Term Income Fund and Nations Tax-Exempt Fund
contained in the Annual Report(s) for Nations Balanced Assets Fund, Nations
Disciplined Equity Fund, Nations Value Fund, Nations Florida Municipal Bond
Fund, Nations Strategic Fixed Income Fund, Nations Short-Term Income Fund and
Nations Tax-Exempt Fund for the year ended March 31, 1997 are hereby
incorporated herein by reference. No other parts of the Annual Report(s) are
incorporated herein by reference.
1
<PAGE>
The unaudited financial statements for Nations Balanced Assets Fund,
Nations Disciplined Equity Fund, Nations Value Fund, Nations Florida Municipal
Bond Fund, Nations Strategic Fixed Income Fund, Nations Short-Term Income Fund
and Nations Tax-Exempt Fund contained in the Semi-Annual Report(s) for Nations
Balanced Assets Fund, Nations Disciplined Equity Fund, Nations Value Fund,
Nations Florida Municipal Bond Fund, Nations Strategic Fixed Income Fund,
Nations Short-Term Income Fund and Nations Tax-Exempt Fund for the six-month
period ended September 30, 1997 are hereby incorporated herein by reference. No
other parts of the Semi-Annual Report(s) are incorporated herein by reference.
Further information about the Retail and Institutional Shares of the
Emerald Balanced Fund, Emerald Equity Fund, Emerald Equity Value Fund, Emerald
Florida Tax-Exempt Fund, Emerald Managed Bond Fund, Emerald Short-Term Fixed
Income Fund and the Retail, Institutional and Service Shares of the Emerald
Tax-Exempt Fund is contained in and incorporated herein by reference to the
statement(s) of additional information for the Retail and Institutional Shares
of the Emerald Balanced Fund, Emerald Equity Fund, Emerald Equity Value Fund,
Emerald Florida Tax-Exempt Fund, Emerald Managed Bond Fund, Emerald Short-Term
Fixed Income Fund and the Retail, Institutional and Service Shares of the
Emerald Tax-Exempt Fund, dated April 1, 1997.
The audited financial statements and related Report of Independent
Auditors for the Emerald Balanced Fund, Emerald Equity Fund, Emerald Equity
Value Fund, Emerald Florida Tax-Exempt Fund, Emerald Managed Bond Fund, Emerald
Short-Term Fixed Income Fund and Emerald Tax-Exempt Fund contained in the Annual
Report(s) for Emerald Balanced Fund, Emerald Equity Fund, Emerald Equity Value
Fund, Emerald Florida Tax-Exempt Fund, Emerald Managed Bond Fund, Emerald
Short-Term Fixed Income Fund and Emerald Tax-Exempt Fund for the year ended
November 30, 1997 are hereby incorporated herein by reference. No other parts of
the Annual Report(s) are incorporated herein by reference.
2
<PAGE>
Table of Contents
General Information............................................4
Introductory Note to Pro Forma Financial Information...........5
3
<PAGE>
General Information
The Reorganization contemplates the transfer of all of the Fund Assets and
Liabilities (as those terms are defined in the Reorganization Agreement) of each
Emerald Fund to a corresponding Nations Fund in exchange for Shares of
designated classes of the corresponding Nations Fund.
The Shares issued by Nations will have an aggregate value equal to the
aggregate value of the shares of the respective Emerald Funds that were
outstanding immediately before the Closing.
After the transfer of their Fund Assets and Liabilities in exchange for
Shares of the Nations Funds, the Emerald Funds will distribute the Shares of the
Nations Funds to their shareholders in liquidation of the Emerald Funds. Each
shareholder owning shares of a particular Emerald Fund at the Closing will
receive Shares of the corresponding Nations Fund of equal value, and will
receive any unpaid dividends or distributions that were declared before the
Closing on shares of the Emerald Funds. Nations will establish an account for
each former shareholder of the Emerald Funds reflecting the appropriate number
of Nations Fund Shares distributed to the shareholder. These accounts will be
substantially identical to the accounts maintained by Emerald for each
shareholder. Upon completion of the reorganization with respect to all Emerald
funds, all outstanding shares of the Emerald Funds will be redeemed and
cancelled in exchange for Shares of the Nations Funds distributed, and Emerald
will wind up its affairs and be deregistered as an investment company under the
1940 Act.
For further information about the transaction, see the Proxy/Prospectus.
4
<PAGE>
Introductory Note to Pro Forma Financial Information
The following unaudited pro forma information gives effect to the proposed
transfer of the Fund Assets and Liabilities (as those terms are defined in the
Reorganization Agreement) of the Emerald Funds to the Nations Funds, accounted
for as if each transfer had occurred as of November 30, 1997 and as if the
Nations Funds had operated for the year then ended. However, it is possible that
one or more of the Emerald Funds will not approve the merger, in which case the
resulting fund or funds will be comprised of only those Emerald 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.
Pro forma financial information giving effect to the proposed transfer of
Fund Assets and Liabilities of the Emerald Managed Bond Fund to Nations
Strategic Fixed Income Fund, Emerald Tax-Exempt Fund to Nations Tax-Exempt Fund
and Emerald Equity Value Fund to Nations Value Fund, is not presented in this
Statement of Additional Information because, as of January [ ], 1998, the
aggregate net asset value of the Emerald Managed Bond Fund was less than 10% of
the aggregate net asset value of Nations Strategic Fixed Income Fund, the
aggregate net asset value of the Emerald Tax-Exempt Fund was less than 10% of
the aggregate net asset value of Nations Tax-Exempt Fund and the aggregate net
asset value of the Emerald Equity Value Fund was less than 10% of the aggregate
net asset value of Nations Value Fund.
The pro forma financial information should be read in conjunction with the
historical financial statements and notes thereto of the Emerald Funds and
Nations Funds included or incorporated herein by reference in this Statement of
Additional Information. Each combination of the above Emerald Funds and Nations
Funds will be accounted for as a tax-free reorganization. For more information
concerning this aspect of the Reorganization, see "Information Relating to
Proposal 2-Approval of the Reorganization Agreement-Federal Income Tax
Considerations" in the Proxy/Prospectus.
5
<PAGE>
NATIONS FUNDS
Nations Balanced Assets Fund/Emerald Balanced Fund
Pro Forma Combining Schedule of Investments
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
===================================================================================================================================
Nations Emerald Pro Forma Nations Emerald Pro Forma
Balanced Balanced Combining Balanced Balanced Combining
Assets Fund Fund Portfolios Assets Fund Fund Portfolios
===================================================================================================================================
<C> <C> <C> <S> <C> <C> <C>
COMMON STOCKS - 61.1%
Aerospace and Defense - 2.7%
39,825 0 39,825 Litton Industries, Inc.+ ..................... $2,006,184 $0 $2,006,184
24,250 0 24,250 Lockheed Martin Corporation .................. 2,365,891 0 2,365,891
24,575 0 24,575 Raytheon Company ............................. 1,374,664 0 1,374,664
35,350 0 35,350 TRW Inc. ..................................... 2,006,112 0 2,006,112
----------------------------------------------
7,752,851 0 7,752,851
----------------------------------------------
Apparel and Textiles - 0.6%
55,225 0 55,225 Fruit of the Loom Inc., Class A+ ............. 1,287,433 0 1,287,433
0 14,300 14,300 Tommy Hilfiger Corporation+ .................. 0 561,275 561,275
----------------------------------------------
1,287,433 561,275 1,848,708
----------------------------------------------
Automobile Parts Manufacturers - 1.7%
89,550 0 89,550 Cooper Tire and Rubber Inc ................... 2,003,681 0 2,003,681
25,850 0 25,850 Echilin Inc. ................................. 819,122 0 819,122
0 11,000 11,000 Lear Corporation+ ............................ 0 514,938 514,938
31,200 0 31,200 Snap-On Inc .................................. 1,370,850 0 1,370,850
----------------------------------------------
4,193,653 514,938 4,708,591
----------------------------------------------
Banks - 2.1%
0 10,500 10,500 BankAmerica Corporation ...................... 0 766,500 766,500
0 4,600 4,600 Chase Manhattan Bank ......................... 0 499,675 499,675
7,900 0 7,900 Citicorp ..................................... 947,506 0 947,506
0 2,195 2,195 Imperial Bancorp+ ............................ 0 102,479 102,479
31,600 0 31,600 PNC Bank Corporation ......................... 1,700,475 0 1,700,475
0 3,450 3,450 Saint Paul Bancorp Inc. ...................... 0 84,525 84,525
34,775 0 34,775 SouthTrust Corporation ....................... 1,895,238 0 1,895,238
----------------------------------------------
4,543,219 1,453,179 5,996,398
----------------------------------------------
Beverages - 1.2%
27,300 0 27,300 Anheuser-Bush Companies, Inc. ................ 1,179,019 0 1,179,019
0 12,600 12,600 Pan American Beverage ........................ 0 431,550 431,550
26,700 23,000 49,700 PepsiCo Inc. ................................. 984,562 848,125 1,832,687
----------------------------------------------
2,163,581 1,279,675 3,443,256
----------------------------------------------
Building Products - Air & Heating - 0.7%
30,150 0 30,150 Armstrong World International ................ 2,078,466 0 2,078,466
----------------------------------------------
Chemicals - Basic - 1.6%
22,150 0 22,150 Dow Chemical Company ......................... 2,187,312 0 2,187,312
0 8,700 8,700 Imperial Chemical Industries PLC ............ 0 517,107 517,107
33,850 0 33,850 PPG Industries, Inc. ......................... 1,961,184 0 1,961,184
----------------------------------------------
4,148,496 517,107 4,665,603
----------------------------------------------
Chemicals - Specialty - 2.4%
26,700 0 26,700 BetzDearborn, Inc. ........................... 1,625,363 0 1,625,363
53,200 0 53,200 Ferro Corporation ............................ 2,038,225 0 2,038,225
29,050 0 29,050 Great Lakes Chemical Corporation ............. 1,303,619 0 1,303,619
39,000 0 39,000 Union Carbide Corporation .................... 1,720,875 0 1,720,875
----------------------------------------------
6,688,082 0 6,688,082
----------------------------------------------
Computer Services - 0.3%
0 13,700 13,700 Bay Networks Inc. + .......................... 0 411,856 411,856
6,350 0 6,350 Automatic Data Processing Inc. ............... 357,187 0 357,187
----------------------------------------------
357,187 411,856 769,043
----------------------------------------------
Computer Software - 1.4%
19,250 0 19,250 Adobe Systems, Inc. . ........................ 808,500 0 808,500
0 3,800 3,800 Citrix Systems Inc.+ .. ...................... 0 272,175 272,175
0 16,600 16,600 Cadence Design Systems, Inc.+ . .............. 0 419,150 419,150
0 13,050 13,050 Computer Associates Inc ...................... 0 679,416 679,416
0 18,100 18,100 Iomega Corporation+ .......................... 0 595,038 595,038
0 12,300 12,300 McAfee Associates Inc.+ ...................... 0 562,725 562,725
0 4,100 4,100 Microsoft Corporation +.. .................... 0 580,150 580,150
----------------------------------------------
808,500 3,108,654 3,917,154
----------------------------------------------
Computer Hardware - 2.6%
0 8,800 8,800 Adaptec, Inc.+ . ............................ 0 435,600 435,600
0 12,300 12,300 Compaq Computers Corporation+. ............... 0 767,982 767,982
0 14,800 14,800 National Semiconductor Corporation+.. ........ 0 490,250 490,250
28,750 0 28,750 Hewlett Packard Company.. .................... 1,755,547 0 1,755,547
19,900 8,200 28,100 Intel Corporation . .......................... 1,544,737 636,525 2,181,262
0 9,600 9,600 Quantum Corporation+ ......................... 0 255,600 255,600
99,550 0 99,550 Silicon Graphics, Inc ........................ 1,306,594 0 1,306,594
0 5,000 5,000 Texas Instruments, Inc. ...................... 0 246,250 246,250
----------------------------------------------
4,606,878 2,832,207 7,439,085
----------------------------------------------
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
NATIONS FUNDS
Nations Balanced Assets Fund/Emerald Balanced Fund
Pro Forma Combining Schedule of Investments (continued)
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
===================================================================================================================================
Nations Emerald Pro Forma Nations Emerald Pro Forma
Balanced Balanced Combining Balanced Balanced Combining
Assets Fund Fund Portfolios Assets Fund Fund Portfolios
===================================================================================================================================
<C> <C> <C> <S> <C> <C> <C>
COMMON STOCKS - (continued)
Construction - 0.8%
59,700 0 59,700 Fluor Corporation ............................ $2,145,469 $0 $2,145,469
----------------------------------------------
Containers - 0.3%
19,950 0 19,950 Crown Cork & Seal Inc ........................ 973,809 0 973,809
----------------------------------------------
Cosmetics and Toiletry - 0.9%
0 6,100 6,100 Blyth Industries, Inc.+ ...................... 0 156,694 156,694
0 31,300 31,300 Dial Corporation ............................. 0 606,437 606,437
0 4,700 4,700 Gillette Corporation ......................... 0 433,869 433,869
24,700 0 24,700 Kimberly-Clark Corporation ................... 1,285,944 0 1,285,944
----------------------------------------------
1,285,944 1,197,000 2,482,944
----------------------------------------------
Data Processing/Management - 0.9%
0 9,700 9,700 Cisco Systems, Inc.+ ......................... 0 836,625 836,625
60,825 0 60,825 First Data Corporation........................ 1,722,108 0 1,722,108
----------------------------------------------
1,722,108 836,625 2,558,733
----------------------------------------------
Drugs - 0.4%
17,700 0 17,700 American Home Products Corporation............ 1,236,787 1,236,787
----------------------------------------------
Electric Power - 1.8%
24,500 0 24,500 Baltimore Gas & Electric Company ............. 751,844 0 751,844
38,900 0 38,900 DPL Inc. ..................................... 1,021,125 0 1,021,125
25,350 0 25,350 Duke Energy Corporation ...................... 1,318,200 0 1,318,200
78,400 0 78,400 Entergy Corporation .......................... 2,038,400 0 2,038,400
----------------------------------------------
5,129,569 0 5,129,569
----------------------------------------------
Electronics - 3.4%
42,350 0 42,350 Amp Inc. .. .................................. 1,839,578 0 1,839,578
43,100 0 43,100 Johnson Controls . ........................... 1,974,519 0 1,974,519
32,150 0 32,150 Motorola, Inc. . ............................. 2,021,431 0 2,021,431
75,800 0 75,800 LSI Logic .. ................................. 1,762,350 0 1,762,350
0 10,300 10,300 Philips Electronics.. ........................ 0 690,100 690,100
0 12,500 12,500 SCI Systems, Inc.+ . ......................... 0 572,656 572,656
0 10,500 10,500 Tech Data Corporation+. ...................... 0 423,938 423,938
0 9,600 9,600 Teradyne, Inc.+. ............................. 0 315,000 315,000
----------------------------------------------
7,597,878 2,001,694 9,599,572
----------------------------------------------
Environmental Services - 0.3%
0 14,700 14,700 Calenergy Co., Inc.+ ......................... 0 488,775 488,775
0 11,700 11,700 USA Waste Services Inc. + .................... 0 386,831 386,831
----------------------------------------------
0 875,606 875,606
----------------------------------------------
Financial Services - 0.5%
0 3,100 3,100 Americredit Corporation+.. ................... 0 85,638 85,638
0 19,100 19,100 Green Tree Financial Corporation.. ........... 0 584,937 584,937
0 11,700 11,700 Morgan Stanley Dean Witter, Discover & Company 0 635,456 635,456
----------------------------------------------
0 1,306,031 1,306,031
----------------------------------------------
Food Producers - 1.5%
0 26,200 26,200 ConAgra, Inc.. ............................... 0 941,563 941,563
0 14,200 14,200 Dean Foods Comapny ........................... 0 754,375 754,375
0 21,200 21,200 Interstate Bakeries Corporation .............. 0 732,725 732,725
29,350 0 29,350 Nabisco Holdings Corporation, Class A.. ...... 1,368,444 0 1,368,444
0 10,500 10,500 Sara Lee Corporation.. ....................... 0 555,188 555,188
----------------------------------------------
1,368,444 2,983,851 4,352,295
----------------------------------------------
Food Retailers - 0.9%
0 12,600 12,600 Safeway, Inc.+. .............................. 0 765,449 765,449
36,925 0 36,925 Safeco.. ..................................... 1,804,709 0 1,804,709
----------------------------------------------
1,804,709 765,449 2,570,158
----------------------------------------------
Furniture and Appliances - 1.2%
0 21,400 21,400 General Electric Company .. .................. 0 1,578,250 1,578,250
79,100 0 79,100 Rubbermaid, Inc. . ........................... 1,918,175 0 1,918,175
----------------------------------------------
1,918,175 1,578,250 3,496,425
----------------------------------------------
Insurance - 2.7%
17,775 0 17,775 Aetna Inc. ................................... 1,339,790 0 1,339,790
0 7,400 7,400 Allstate Financial Corporation.. ............. 0 635,475 635,475
15,600 0 15,600 Berkley (W.R.) Corporation.. ................. 649,350 0 649,350
0 13,000 13,000 Conseco, Inc.. ............................... 0 605,313 605,313
0 21,750 21,750 SunAmerica Inc ............................... 0 880,875 880,875
0 19,050 19,050 Travelers Group, Inc.. ....................... 0 962,025 962,025
29,725 0 29,725 Hartford Financial Services Group Inc ........ 2,489,469 0 2,489,469
----------------------------------------------
4,478,609 3,083,688 7,562,297
----------------------------------------------
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
NATIONS FUNDS
Nations Balanced Assets Fund/Emerald Balanced Fund
Pro Forma Combining Schedule of Investments (continued)
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
===================================================================================================================================
Nations Emerald Pro Forma Nations Emerald Pro Forma
Balanced Balanced Combining Balanced Balanced Combining
Assets Fund Fund Portfolios Assets Fund Fund Portfolios
===================================================================================================================================
<C> <C> <C> <S> <C> <C> <C>
COMMON STOCKS - (continued)
Machinery and Equipment - 2.2%
0 9,300 9,300 Caterpillar Inc. ............................. $0 $445,819 $445,819
33,400 0 33,400 Foster Wheeler Corp .......................... 1,029,137 0 1,029,137
32,525 0 32,525 General Signal Corporation ................... 1,327,426 0 1,327,426
47,500 0 47,500 Harnischfeger Corporation .................... 1,813,906 0 1,813,906
31,550 0 31,550 Nordson Corporation .......................... 1,656,375 0 1,656,375
----------------------------------------------
5,826,844 445,819 6,272,663
----------------------------------------------
Media - 0.3%
0 12,400 12,400 New York Times, Class A ...................... 0 736,250 736,250
----------------------------------------------
Medical Products and Supplies - 2.5%
19,050 0 19,050 Abbott Laboratories .......................... 1,238,250 0 1,238,250
22,225 0 22,225 Amgen, Inc. .................................. 1,136,253 0 1,136,253
0 9,500 9,500 Boston Scientific Corporation+ ............... 0 429,281 429,281
24,300 0 24,300 Becton, Dickinson & Company .................. 1,252,969 0 1,252,969
23,975 0 23,975 Johnson & Johnson ............................ 1,508,927 0 1,508,927
24,150 0 24,150 Mead Corporation ............................. 1,559,184 0 1,559,184
----------------------------------------------
6,695,583 429,281 7,124,864
----------------------------------------------
Medical Services - 1.2%
0 9,900 9,900 Baxter International ......................... 0 501,188 501,188
0 5,300 5,300 Medpart/Mullkin Inc. ......................... 0 131,175 131,175
0 17,600 17,600 MedPartners, Inc+ ............................ 0 435,600 435,600
0 21,240 21,240 Tenet Healthcare Corporation+ ................ 0 673,043 673,043
0 23,800 23,800 HEALTHSOUTH Corporation+ ..................... 0 624,750 624,750
58,800 0 58,800 Beverly Enterprises+ ......................... 999,600 0 999,600
----------------------------------------------
999,600 2,365,756 3,365,356
----------------------------------------------
Metals and Mining - 0.7%
149,400 0 149,400 Bethlehem Steel .............................. 1,531,350 0 1,531,350
0 5,300 5,300 Minnesota Mining & Manufacturing Company ..... 0 516,419 516,419
----------------------------------------------
1,531,350 516,419 2,047,769
----------------------------------------------
Miscellaneous Services - 0.2%
0 21,200 21,200 Accustaff, Inc. + ............................ 0 626,725 626,725
----------------------------------------------
Miscellaneous Manufacturer - 0.7%
42,400 0 42,400 Dexter Corporation ........................... 1,688,050 0 1,688,050
0 7,300 7,300 CN Coltec Inustries+ ......................... 0 170,181 170,181
----------------------------------------------
1,688,050 170,181 1,858,231
----------------------------------------------
Oil - Domestic - 2.6%
9,800 0 9,800 Amoco Corporation ............................ 882,000 0 882,000
21,650 0 21,650 Apache Corporation ........................... 795,637 0 795,637
0 8,500 8,500 Helmrich & Payne ............................. 0 646,531 646,531
28,300 0 28,300 Repsol S.A., ADR ............................. 1,220,437 0 1,220,437
0 28,500 28,500 USX - Marathon Group ......................... 0 976,125 976,125
21,500 0 21,500 Unocal Corporation ........................... 855,969 0 855,969
65,675 0 65,675 Ultramar Diamond Shamrock Corporation ........ 1,998,983 0 1,998,983
----------------------------------------------
5,753,026 1,622,656 7,375,682
----------------------------------------------
Oil - International - 1.5%
18,925 0 18,925 Mobil Corporation ............................ 1,361,417 0 1,361,417
0 10,371 10,371 British Petroleum PLC ADR+ ................... 0 860,793 860,793
53,250 0 53,250 Dillars International ........................ 1,946,953 0 1,946,953
----------------------------------------------
3,308,370 860,793 4,169,163
----------------------------------------------
Paper Products - 0.5%
0 8,500 8,500 International Paper .......................... 0 403,219 403,219
44,600 0 44,600 Lousianna - Pacific ......................... 900,363 0 900,363
----------------------------------------------
900,363 403,219 1,303,582
----------------------------------------------
Pharmaceuticals - 2.0%
0 12,600 12,600 Bristol-Myers Squibb Company ................. 0 1,179,674 1,179,674
0 13,700 13,700 Dura Pharmaceuticals+ ........................ 0 601,088 601,088
0 14,100 14,100 Eli Lilly & Company .......................... 0 889,180 889,180
0 12,300 12,300 Elan Corporation PLC, ADR+ ................... 0 648,825 648,825
0 8,600 8,600 Merck & Company, Inc. ........................ 0 813,238 813,238
0 13,500 13,500 Pfizer Inc. .................................. 0 982,124 982,124
0 4,400 4,400 Warner Lambert Company ....................... 0 615,450 615,450
----------------------------------------------
0 5,729,579 5,729,579
----------------------------------------------
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
NATIONS FUNDS
Nations Balanced Assets Fund/Emerald Balanced Fund
Pro Forma Combining Schedule of Investments (continued)
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
===================================================================================================================================
Nations Emerald Pro Forma Nations Emerald Pro Forma
Balanced Balanced Combining Balanced Balanced Combining
Assets Fund Fund Portfolios Assets Fund Fund Portfolios
===================================================================================================================================
<C> <C> <C> <S> <C> <C> <C>
COMMON STOCKS - (continued)
Recreation - 2.0%
1 0 1 Ascent Entertainment Group, Inc.+ ............ $9 $0 $9
0 11,400 11,400 Callaway Golf ................................ 0 363,375 363,375
17,800 0 17,800 Disney (Walt) Company ........................ 1,689,887 0 1,689,887
0 12,200 12,200 Gtech Holdings Corporation+ .................. 0 392,688 392,688
0 21,000 21,000 Mattel, Inc. ................................. 0 841,312 841,312
0 16,800 16,800 Tyco ......................................... 0 659,400 659,400
60,075 0 60,075 Hasbro Inc ................................... 1,745,930 0 1,745,930
----------------------------------------------
3,435,826 2,256,775 5,692,601
----------------------------------------------
Restaurants and Lodging - 1.6%
0 10,400 10,400 HFS, Inc.+ ................................... 0 713,700 713,700
107,200 0 107,200 La Quinta Inns Inc ........................... 2,036,800 0 2,036,800
81,400 0 81,400 Wendy's International Inc .................... 1,709,400 0 1,709,400
----------------------------------------------
3,746,200 713,700 4,459,900
----------------------------------------------
Retail - Discount - 1.1%
0 16,825 16,825 Consolidated Stores Corporation+ ............. 0 818,115 818,115
0 16,300 16,300 CompUSA, Inc. + .............................. 0 595,969 595,969
0 11,500 11,500 Home Depot, Inc. ............................. 0 643,281 643,281
49,250 0 49,250 Woolworth Corporation+ ....................... 1,065,031 0 1,065,031
----------------------------------------------
1,065,031 2,057,365 3,122,396
----------------------------------------------
Retail - General - 0.6%
34,450 0 34,450 Sears, Roebuck & Company ..................... 1,578,241 0 1,578,241
----------------------------------------------
Retail - Specialty - 1.6%
0 26,700 26,700 General Nutrition Companies+ ................. 0 911,137 911,137
164,500 0 164,500 Heilig-Meyers Company ........................ 2,128,219 0 2,128,219
0 27,875 27,875 Staples+ ..................................... 0 785,727 785,727
0 1,350 1,350 Tuesday Morning Corporation+ ................. 0 33,581 33,581
0 29,850 29,850 U.S. Office Products Company+ ................ 0 593,269 593,269
----------------------------------------------
2,128,219 2,323,714 4,451,933
----------------------------------------------
Steel - 0.8%
0 11,200 11,200 USX United States Steel Corporation .......... 0 350,700 350,700
41,275 0 41,275 Nucor Corporation ............................ 2,063,750 0 2,063,750
----------------------------------------------
2,063,750 350,700 2,414,450
----------------------------------------------
Telecommunications - 1.8%
0 11,500 11,500 ADC Telcommunications, Inc.+ ................. 0 427,656 427,656
37,600 0 37,600 Aspect Communications ........................ 843,650 0 843,650
85,350 0 85,350 Atmel Corporation ............................ 1,915,041 0 1,915,041
35,150 0 35,150 DSC Communications ........................... 793,072 0 793,072
0 3,100 3,100 Lucent Technologies .......................... 0 248,388 248,388
22,800 0 22,800 MCI Communications Corporation ............... 1,001,775 0 1,001,775
----------------------------------------------
4,553,538 676,044 5,229,582
----------------------------------------------
Tobacco - 0.6%
42,050 0 42,050 Philip Morris Companies Inc .................. 1,829,175 0 1,829,175
----------------------------------------------
Transportation - 0.7%
0 6,300 6,300 AMR Corporation+ ............................. 0 763,481 763,481
14,800 0 14,800 Burlington Northern Santa Fe Inc. ............ 1,354,200 0 1,354,200
----------------------------------------------
1,354,200 763,481 2,117,681
----------------------------------------------
Utilities - Natural Gas - 0.6%
0 10,400 10,400 Columbia Gas System, Inc.+ ................... 0 756,600 756,600
27,350 0 27,350 Equitable Resources Inc. ..................... 885,456 0 885,456
----------------------------------------------
885,456 756,600 1,642,056
----------------------------------------------
Utilities - Telephone - 1.5%
15,925 0 15,925 Ameritech Corporation ........................ 1,227,220 0 1,227,220
29,900 0 29,900 GTE Corporation .............................. 1,511,819 0 1,511,819
0 26,200 26,200 LCI International, Inc.+ ..................... 0 722,136 722,136
0 28,200 28,200 WorldCom, Inc.+ .............................. 0 902,399 902,399
----------------------------------------------
2,739,039 1,624,535 4,363,574
----------------------------------------------
Wire and Cable Products - 0.9%
85,650 0 85,650 Bard (CR) Inc. ............................... 2,564,147 0 2,564,147
----------------------------------------------
TOTAL COMMON STOCKS .......................... 122,935,855 50,736,677 173,672,532
==============================================
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
NATIONS FUNDS
Nations Balanced Assets Fund/Emerald Balanced Fund
Pro Forma Combining Schedule of Investments (continued)
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT DESCRIPTION VALUE
===================================================================================================================================
Nations Emerald Pro Forma Nations Emerald Pro Forma
Balanced Balanced Combining Balanced Balanced Combining
Assets Fund Fund Portfolios Assets Fund Fund Portfolios
===================================================================================================================================
<C> <C> <C> <S> <C> <C> <C>
ASSET-BACKED SECURITIES - 2.2%
$990,000 $0 $990,000 Chase Manhattan Credit Card Master Trust,
Series 1996-4, Class A, 6.730% 02/15/03 ... $998,663 $0 $998,663
1,350,000 0 1,350,000 Circuit City Credit Card Master Trust,
Series 1995-1, Class A, 6.375% 08/15/05 .. 1,354,641 0 1,354,641
1,550,000 0 1,550,000 CS First Boston Mortgage Securities
Corporation, Series 1996-2, Class A4,
6.620% 02/25/18 ........................... 1,559,687 0 1,559,687
EQCC Home Equity Loan Trust:
1,000,000 0 1,000,000 Series 1996-2, Class A2,
6.700% 09/15/08 .......................... 1,004,063 0 1,004,063
1,250,000 0 1,250,000 Premier Auto,
6.530% 12/06/03 .............................. 1,258,594 0 1,258,594
----------------------------------------------
TOTAL ASSET-BACKED SECURITIES 6,175,648 0 6,175,648
==============================================
CORPORATE BONDS AND NOTES - 13.2%
Automotive - 0.7%
1,180,000 0 1,180,000 Ford Motor Credit Company, MTN,
7.500% 08/01/26. ........................... 1,261,514 0 1,261,514
0 500,000 500,000 Ford Motor Credit Company, MTN,
6.80% 04/23/01 ............................. 0 508,136 508,136
0 250,000 250,000 General Motors Acceptance Corporation,
Putable 06/01/00 @ 100
8.875% 06/01/10 .............................. 0 297,652 297,652
----------------------------------------------
1,261,514 805,788 2,067,302
----------------------------------------------
Banking and Finance - 7.2%
900,000 0 900,000 AON Capital Trust, Class A,
8.205% 01/01/27 ........................... 989,658 0 989,658
2,300,000 0 2,300,000 Associates Corporation N.A.,
6.750% 07/15/01 ........................... 2,328,796 0 2,328,796
1,300,000 0 1,300,000 BankAmerica Capital,
8.000% 12/15/26 ........................... 1,371,526 0 1,371,526
1,245,000 0 1,245,000 Bayerische L:andesbank,
6.200% 2/09/06 ............................ 1,217,062 0 1,217,062
900,000 0 900,000 Bear Stearns Company, Senior Notes,
6.750% 05/01/01 ........................... 907,965 0 907,965
0 350,000 350,000 American Express Credit Corp.
Putable 9/20/98 @ 100
8.500% 06/15/99 ........................... 0 361,229 361,229
0 1,000,000 1,000,000 BankAmerica Capital BAC,
6.330% 1/15/98 /.............................. 0 988,362 988,362
1,125,000 0 1,125,000 Chrysler Financial Corporation, Sub. Notes,
6.375% 01/28/00 ........................... 1,126,913 0 1,126,913
650,000 0 650,000 GE Global Insurance Corporation,
7.000% 02/15/26 .............................. 665,451 0 665,451
0 1,000,000 1,000,000 Hutchinson Wampo Putable 8/01/09 @ 100
6.99% 8/01/37 ................................ 0 954,441 954,441
0 500,000 500,000 IAD Bank,
8.400% 09/01/09 .............................. 0 589,060 589,060
1,250,000 0 1,250,000 Lehman Brothers Holdings, MTN,
6.850% 10/08/99 ........................... 1,262,925 0 1,262,925
0 1,000,000 1,000,000 Merrill Lynch & Company,
6.700% 08/01/00 ........................... 0 1,012,127 1,012,127
1,100,000 0 1,100,000 Merrill Lynch & Company,
6.550% 08/01/04 ........................... 1,102,794 0 1,102,794
0 1,000,000 1,000,000 Norwest Financial Inc.,
7.250% 3/15/00 ............................... 0 1,022,893 1,022,893
Paine Webber Group:
800,000 0 800,000 7.700% 02/11/00 ........................... 823,800 0 823,800
825,000 0 825,000 7.300% 10/15/03 ........................... 858,363 0 858,363
0 1,500,000 1,500,000 Travelers Commercial Credit, Putable
06/01/02 @ 100 6.630% 6/01/15 ............. 0 1,511,834 1,511,834
1,250,000 0 1,250,000 Union Planters Corporation, Sub. Notes,
6.750% 11/01/05 ........................... 1,249,212 0 1,249,212
----------------------------------------------
13,904,465 6,439,946 20,344,411
----------------------------------------------
Beverage - 0.4%
Coca Cola Enterprises:
425,000 0 425,000 6.950% 11/15/26 ............................. 426,012 0 426,012
0 500,000 500,000 8.000% 1/04/05 .............................. 0 553,355 553,355
----------------------------------------------
426,012 553,355 979,367
----------------------------------------------
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
NATIONS FUNDS
Nations Balanced Assets Fund/Emerald Balanced Fund
Pro Forma Combining Schedule of Investments (continued)
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT DESCRIPTION VALUE
===================================================================================================================================
Nations Emerald Pro Forma Nations Emerald Pro Forma
Balanced Balanced Combining Balanced Balanced Combining
Assets Fund Fund Portfolios Assets Fund Fund Portfolios
===================================================================================================================================
<C> <C> <C> <S> <C> <C> <C>
CORPORATE BONDS AND NOTES - (continued)
Electrical - 0.2%
$0 $500,000 $500,000 General Electric 8.3% 9/20/09 Putable
09/20/98 @ 100 ............................ $0 $575,067 $575,067
----------------------------------------------
Entertainment - 0.5%
615,000 0 615,000 Walt Disney Company,
6.750% 03/30/06 ........................... 628,758 0 628,758
825,000 0 825,000 FMT Fingerhut 1996-1A,
6.450% 02/20/02 ........................... 829,125 0 829,125
----------------------------------------------
1,457,883 0 1,457,883
----------------------------------------------
Industrial - 1.6%
940,000 0 940,000 Auburn Hills Trust Certificates, Deb.,
12.000% 05/01/20++ ........................ 1,479,626 0 1,479,626
350,000 0 350,000 News America Holdings,
7.700% 10/30/2025 ......................... 354,477 0 354,477
750,000 0 750,000 Popular North America,
6.625% 10/27/02 ........................... 756,210 0 756,210
1,350,000 0 1,350,000 Sears Roebuck Acceptance Corporation, MTN,
6.540% 02/20/03 ........................... 1,359,032 0 1,359,032
710,000 0 710,000 Xerox Capital Trust I,
8.000% 02/01/27 ........................... 738,883 0 738,883
----------------------------------------------
4,688,228 0 4,688,228
----------------------------------------------
Insurance - 0.2%
0 500,000 500,000 CNA Financial Corporation, Sr. Note,
8.88% 3/1/98 ................................. 0 503,607 503,607
----------------------------------------------
Oil - International - 0.1%
0 150,000 150,000 Texaco Capital Income Inc.,
8.65% 1/30/98 ................................ 0 150,649 150,649
----------------------------------------------
Retail - 0.4%
0 1,000,000 1,000,000 Safeco Capital Trust,
8.072% 7/15/37 ............................... 0 1,020,621 1,020,621
----------------------------------------------
Utilities Electric - 1.2%
0 500,000 500,000 Central Illinois Public Service Company,
Callable 05/15/98 @ 105.95,
8.5% 5/15/22 .............................. 0 532,441 532,441
0 1,150,000 1,150,000 Citizens Utilities Company, Putable
8/15/03 @ 100, 6.80% 8/15/26 .............. 0 1,197,660 1,197,660
0 750,000 750,000 Northern Power,
5.5% 02/01/99 ................................ 0 745,383 745,383
0 1,000,000 1,000,000 Wisconsin Electric Power Company,
9.13% 9/01/24 ................................ 0 1,061,209 1,061,209
----------------------------------------------
0 3,536,693 3,536,693
----------------------------------------------
Utilities Telephone - 0.7%
0 400,000 400,000 AT&T Corporation Callable 1/15/02
8.125% 01/15/22 ............................. 0 427,805 427,805
0 500,000 500,000 Chesapeake & Potomac Company of Maryland,
8.00% 10/15/29 ............................... 0 588,821 588,821
0 875,000 875,000 NYNEX Capital Funding Company, VRN
7.63% 10/15/09 ............................... 0 995,158 995,158
0 50,000 50,000 PACIFIC Telephone & Telegraph
7.25% 02/01/08 ............................... 0 50,806 50,806
----------------------------------------------
0 2,062,590 2,062,590
----------------------------------------------
TOTAL CORPORATE BONDS AND NOTES .............. 21,738,102 15,648,316 37,386,418
==============================================
MORTGAGE-BACKED SECURITIES - 10.1%
Federal Home Loan Mortgage Corporation (FHLMC) Certificates - 2.8%
0 660,000 660,000 6.20% 9/08/08 ................................ 0 640,626 640,626
0 120,872 120,872 8.0% 6/01/99 ................................. 0 123,662 123,662
0 228,296 228,296 8.0% 7/1/10 .................................. 0 233,979 233,979
0 73,300 73,300 8.50% 7/1/98 ................................. 0 74,396 74,396
0 319,111 319,111 8.5% 2/1/00 .................................. 0 326,703 326,703
0 124,361 124,361 8.50% CMO 02/15/21 ........................... 0 127,002 127,002
0 312,552 312,552 Gold 6.0% 3/1/26 ............................. 0 300,353 300,353
2,094,248 0 2,094,248 Gold 6.500% 08/01/10 ....................... 2,096,845 0 2,096,845
0 2,118,784 2,118,784 Gold 7.50% 9/01/10 ........................... 0 2,173,385 2,173,385
1,796,726 0 1,796,726 Gold, 8.00% 09/01/25 ......................... 1,857,923 0 1,857,923
----------------------------------------------
3,954,768 4,000,106 7,954,874
----------------------------------------------
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
NATIONS FUNDS
Nations Balanced Assets Fund/Emerald Balanced Fund
Pro Forma Combining Schedule of Investments (continued)
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT DESCRIPTION VALUE
===================================================================================================================================
Nations Emerald Pro Forma Nations Emerald Pro Forma
Balanced Balanced Combining Balanced Balanced Combining
Assets Fund Fund Portfolios Assets Fund Fund Portfolios
===================================================================================================================================
<C> <C> <C> <S> <C> <C> <C>
MORTGAGE-BACKED SECURITIES - (continued)
Federal National Mortgage Association
(FNMA) Certificates - 3.6%
$0 $500,000 $500,000 6.35% 06/10/05 ............................... $0 $505,743 $505,743
0 1,000,000 1,000,000 6.14% 01/21/04 ............................... 0 982,213 982,213
0 1,000,000 1,000,000 6.48% 02/18/04 ............................... 0 991,151 991,151
0 790,730 790,730 7.00% 01/25/21 ............................... 0 786,676 786,676
0 657,051 657,051 7.00% 05/01/27 ............................... 0 659,613 659,613
0 642,654 642,654 7.50% 08/01/08 ............................... 0 659,106 659,106
1,469,712 0 1,469,712 7.50% 09/01/25 ............................... 1,501,855 0 1,501,855
0 439,334 439,334 7.50% 9/1/26 ................................. 0 448,771 448,771
0 209,131 209,131 7.50% 9/1/26 ................................. 0 213,623 213,623
0 153,906 153,906 8.00% 06/1/99 ................................ 0 157,147 157,147
1,264,063 0 1,264,063 8.00% 09/15/25 ............................... 1,315,421 0 1,315,421
0 0 8.00% 08/15/27 ............................... 0 0 0
0 1,134,121 1,134,121 8.50% 8/1/11 ................................. 0 1,201,692 1,201,692
840,661 0 840,661 9.00% 08/01/24 ............................... 895,565 0 895,565
----------------------------------------------
3,712,841 6,605,735 10,318,576
----------------------------------------------
Government National Mortgage Association
(GNMA) Certificates - 3.7%
0 207,371 207,371 7.5% 6/15/26 ................................. 0 211,804 211,804
0 444,122 444,122 7.5% 9/15/26 ................................. 0 453,618 453,618
1,072,847 0 1,072,847 7.50% 02/15/27 ............................... 1,094,304 0 1,094,304
0 219,111 219,111 7.50% 6/15/27 ............................... 0 223,736 223,736
2,374,198 0 2,374,198 7.50% 10/15/27 ............................... 2,421,682 0 2,421,682
5,901,812 0 5,901,812 8.00% 08/15/27 ............................... 6,104,687 0 6,104,687
0 7,642 7,642 10.0% 02/15/18 ............................... 0 8,398 8,398
----------------------------------------------
9,620,673 897,556 10,518,229
----------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES ............. 17,288,282 11,503,397 28,791,679
==============================================
U.S. TREASURY SECURITIES - 3.7%
U.S. Treasury Bond - 1.8%
0 425,000 425,000 5.75% 11/15/00 .............................. 0 424,336 424,336
2,115,000 0 2,115,000 6.250% 08/15/23 .............................. 2,149,030 0 2,149,030
0 1,075,000 1,075,000 6.75% 8/15/26 ................................ 0 1,165,703 1,165,703
0 500,000 500,000 9.25% 2/15/16 ................................ 0 670,157 670,157
0 500,000 500,000 12.00% 8/15/13 ............................... 0 730,626 730,626
----------------------------------------------
2,149,030 2,990,822 5,139,852
----------------------------------------------
U.S. Treasury Notes - 1.8%
0 750,000 750,000 5.75% 10/31/02 .............................. 0 746,485 746,485
3,480,000 0 3,480,000 6.00% 08/15/99 ............................... 3,490,858 0 3,490,858
715,000 0 715,000 6.125% 08/15/07. ............................. 728,743 0 728,743
0 200,000 200,000 7.00% 07/15/06 ............................... 0 214,250 214,250
----------------------------------------------
4,219,601 960,735 5,180,336
----------------------------------------------
U.S. Treasury Strips - 0.1%
0 500,000 500,000 STRIPS 8/15/08 ............................... 0 263,589 263,589
----------------------------------------------
TOTAL U.S. TREASURY SECURITIES.. ............. 6,368,631 4,215,146 10,583,777
==============================================
UNIT INVESTMENT TRUSTS - 0.4%
Unit Investment Trusts - 0.4%
0 14,900 14,900 S&P 400 Mid-Cap Depository Receipts, Series 1 0 939,864 939,864
0 2,500 2,500 S&P 500 Depository Receipts, Series 1 ........ 0 239,297 239,297
----------------------------------------------
TOTAL UNIT INVESTMENT TRUSTS. ................ 0 1,179,161 1,179,161
==============================================
TAXABLE MUNICIPAL SECURITY - 0.4%
California - 0.4%
0 1,000,000 1,000,000 Los Angeles Airport Callable 5/15/97
@ 100 Insured by AMBAC 5.50% 5/15/98 ...... 0 999,181 999,181
==============================================
TOTAL SECURITIES ............................. 174,506,518 84,281,878 258,788,396
==============================================
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
NATIONS FUNDS
Nations Balanced Assets Fund/Emerald Balanced Fund
Pro Forma Combining Schedule of Investments (continued)
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT DESCRIPTION VALUE
===================================================================================================================================
Nations Emerald Pro Forma Nations Emerald Pro Forma
Balanced Balanced Combining Balanced Balanced Combining
Assets Fund Fund Portfolios Assets Fund Fund Portfolios
===================================================================================================================================
<C> <C> <C> <S> <C> <C> <C>
CASH SWEEP ACCOUNT - 0.3%
$0 $871,766 $871,766 Bank of New York ............................. $0 $871,766 $871,766
==============================================
REPURCHASE AGREEMENT - 7.2%
20,523,000 0 20,523,000 Agreement with Smith Barney, 5.50% dated
11/28/97, to be repurchased at $20,532,406
on 12/01/97 .................................. 20,523,000 0 20,523,000
==============================================
TOTAL INVESTMENTS (Cost $191,502,433, $71,658,428 and $263,160,861) .. 98.6% 195,029,518 85,153,644 280,183,162
OTHER ASSETS AND LIABILITIES (Net).. ................................. 1.4% 4,029,616 6,397 4,036,013
------------------------------------------------------------
NET ASSETS ........................................................... 100.0% $199,059,134 85,160,041 284,219,175
============================================================
</TABLE>
- ----------
+ Non-income producing security.
++ Step coupon bond. Current rate remains in effect through maturity date.
Effective yield was 12.39% at acquisition date.
ABBREVIATIONS:
ADR American Depositary Receipt
GOLD Payments are on an accelerated 45-day payment cycle instead of 75-day
cycle
MTN Medium Term Note
See Notes to Pro Forma Financial Statements
<PAGE>
NATIONS BALANCED ASSETS FUND
EMERALD BALANCED FUND
Pro Forma Combining Statement of Assets and Liabilities (unaudited)
November 30, 1997
<TABLE>
<CAPTION>
Nations Emerald Adjustments
Balanced Balanced to Pro Forma
Assets Fund Fund Pro Forma Combined (Note 1)
----------- ---- --------- -----------------
<S> <C> <C> <C> <C>
ASSETS:
Investments at Value (cost $191,502,433, $71,658,428
and $263,160,861) $195,029,518 $85,153,644 -- $280,183,162
Cash 47 -- -- 47
Receivable for Investments Sold 3,040,502 -- -- 3,040,502
Income Receivable 939,917 553,047 -- 1,492,964
Receivable for Fund Shares Sold 324,417 17,500 -- 341,917
Prepaid and Other Assets 23,045 2,672 -- 25,717
Receivable due from Investment Adviser -- -- 17,129 (a) 17,129
Unamortized Organization Costs -- 17,129 (17,129) (a) --
-- ------ -------- --
Total Assets 199,357,446 85,743,992 0 285,101,438
----------- ---------- - -----------
LIABILITIES:
Income Distribution Payable -- 491,051 -- 491,051
Payable for fund shares redeemed -- 14,484 -- 14,484
Accrued Expenses and other payables 298,312 78,416 -- 376,728
------- ------ -- -------
Total Liabilities 298,312 583,951 0 882,263
------- ------- - -------
Net Assets Applicable to Shares Outstanding $199,059,134 $85,160,041 $0 $284,219,175
============ =========== == ============
Net Assets by Class:
Primary A $103,695,913 $76,868,196 -- $180,564,109
============ =========== == ============
Primary B $7,025,579 -- -- $7,025,579
========== == == ==========
Investor A $14,232,673 $8,291,845 -- $22,524,518
=========== ========== == ===========
Investor B $2,326,585 -- -- $2,326,585
========== == == ==========
Investor C $71,778,382 -- -- $71,778,382
=========== == == ===========
Shares Outstanding by Class:
Primary A 9,714,217 5,564,606 1,636,395 16,915,218
========= ========= ========= ==========
Primary B 659,740 -- -- 659,740
======= == == =======
Investor A 1,337,198 595,508 183,533 2,116,239
========= ======= ======= =========
Investor B 220,055 -- -- 220,055
======= == == =======
Investor C 6,766,905 -- -- 6,766,905
========= == == =========
Primary A Shares:
Net Asset Value per Share $10.67 $13.81 $10.67
====== ====== ======
Primary B Shares:
Net Asset Value per Share $10.65 n/a $10.65
====== === ======
Investor A Shares:
Net Asset Value per Share $10.64 $13.92 $10.64
====== ====== ======
Investor B Shares:
Net Asset Value per Share $10.57 n/a $10.57
====== === ======
Investor C Shares:
Net Asset Value per Share $10.61 n/a $10.61
====== === ======
</TABLE>
See Notes to Pro Forma Financial Statements
(a) Unamortized Organization Costs of the acquired fund will be borne by the
Advisor.
<PAGE>
NATIONS BALANCED ASSETS FUND
EMERALD BALANCED FUND
Pro Forma Statement of Operations (Unaudited)
For the Twelve Month Period Ending November 30, 1997
<TABLE>
<CAPTION>
Nations Emerald Adjustments
Balanced Balanced to Pro Forma
Assets Fund Fund Pro Forma Combined (Note 1)
----------- ---- --------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $3,394,973 $593,774 -- $3,988,747
Interest 6,205,358 2,540,841 -- 8,746,199
--------- --------- -- ----------
Total Investment Income 9,600,331 3,134,615 -- 12,734,946
--------- ---------- -- ----------
EXPENSES:
Investment Advisory 1,775,083 560,612 139,282 (a) 2,474,977
Administration 236,533 72,413 21,051 (a) 329,997
Transfer Agent 221,867 21,211 -- 243,078
Custodian (d) 51,712 30,082 -- 81,794
Legal and Audit Fees 37,809 4,242 (4,242) (b) 37,809
Trustees' Fees 8,123 1,334 (1,334) (b) 8,123
Amortization of organization costs 1,009 12,620 (12,620) (c) 1,009
Other expenses 79,148 38,194 -- 117,342
------ ------ -- -------
Subtotal 2,411,284 740,708 142,137 3,294,129
Shareholder servicing and distribution fees
Primary B 32,073 -- -- 32,073
Investor A 25,484 35,984 N/A 61,468
Investor B 571,164 -- N/A 571,164
Investor C 13,246 -- N/A 13,246
Fees waived and/or reimbursed by
investment advisor -- (641) 641 (b) 0
-- ----- --- -
Total Expenses 3,053,251 776,051 142,778 3,972,080
--------- ------- ------- ---------
NET INVESTMENT INCOME 6,547,080 2,358,564 (142,778) 8,762,866
--------- --------- --------- ---------
Net Realized and Unrealized Gain/(Loss)
on Investments:
Realized Gain/(Loss) on securities and future 32,254,255 11,083,990 -- 43,338,245
transactions
Net realized gains from foreign currency
transactions -- 0 -- 0
Change in unrealized appreciation/
(depreciation) on securities and futures 901,058 (274,169) -- 626,889
Net change in unrealized appreciation from translation of
assets and liabilities denominated in foreign currencies -- 0 -- 0
Net Realized and Unrealized gain/(loss)
on investments and futures 33,155,313 10,809,821 43,965,134
---------- ---------- ----------
Net Increase/(Decrease) in net assets
resulting from operations $39,702,393 $13,168,385 ($142,778) $52,728,000
=========== =========== ========== ===========
</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) Net of expense offset arrangements amounts to less than .01% of average
net assets.
See Notes to Pro Forma Financial Statements.
<PAGE>
Nations Balanced Assets Fund
Emerald Balanced Fund
Notes to Pro Forma Combining 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
November 30, 1997 the Trust offers thirty-five separate portfolios. The
unaudited Pro Forma Combining Portfolio of Investments and the unaudited Pro
Forma Combining Statement of Assets and Liabilities assumes the exchange
described in the next paragraph occurred as of November 30, 1997 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of December 1, 1996. These statements have been derived from books
and records utilized in calculating daily net asset value of each fund at
November 30, 1997 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Emerald Balanced Fund in exchange for shares of
Nations Balanced Assets 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 Emerald Balanced 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 unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
<PAGE>
Nations Balanced Assets Fund
Emerald Balanced Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
For the twelve month period ended November 30, 1997, the Nations Balanced Assets
Fund's investment advisory fee was computed based on the annual rate of 0.75% of
its 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 which 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 Balanced Assets 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 Balanced Assets 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 B Shares ("Investor B Distribution Plan") and
Investor C Shares ("Investor C Distribution Plan") of the Nations Balanced
Assets Fund. Under the Investor B Distribution Plan and Investor C Distribution
Plan, aggregate payments may not exceed 0.75% and 0.75%, on an annualized basis,
of the average daily net assets of the Investor B Shares and Investor C Shares
respectively, of the Fund.
The Trust has also adopted a shareholder servicing plan with respect to Investor
B Shares ("Investor B Servicing Plan") and Investor C Shares ("Investor C
Servicing Plan") of the Nations Balanced Assets Fund. Under
2
<PAGE>
Nations Balanced Assets Fund
Emerald Balanced Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
the Investor B Servicing Plan and Investor C Servicing Plan, aggregate payments
may not exceed 0.25% on an annualized basis of the average daily net assets of
the Investor B Shares and Investor C Shares of the Fund.
2. Portfolio Valuation
Securities of Nations Balanced Assets 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
(but not including securities reported on the NASDAQ National Market System) 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. Securities
reported on the NASDAQ National Market System are valued at the last sale price
on the valuation date. Debt obligations are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and may
reflect appropriate factors such as yield, type of issue, coupon rate, maturity
and general market conditions. 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. Emerald
Balanced Fund uses similar rules for determining portfolio valuation.
3
<PAGE>
Nations Balanced Assets Fund
Emerald Balanced Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
3. Capital Shares
The pro forma net asset value per share assumes the issuance of additional
shares of Nations Balanced Assets Fund which would have been issued at November
30, 1997 in connection with the proposed reorganization. The pro forma number of
shares outstanding of 26,678,157 consists of 7,980,042 shares assumed issued in
the reorganization plus 18,698,115 shares of Nations Balanced Assets Fund at
November 30, 1997.
4
<PAGE>
Nations Short-Term Income Fund/Emerald Short-Term Fixed Income Fund
Pro Forma Combining Schedule of Investments
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT DESCRIPTION VALUE
===================================================================================================================================
Emerald
Nations Short-Term Pro Forma Nations Emerald Pro Forma
Short-Term Fixed Income Combining Short-Term Short-Term Combining
Income Fund Fund Portfolios Income Fund Fixed Income Fund Portfolios
===================================================================================================================================
<C> <C> <C> <S> <C> <C> <C>
ASSET-BACKED SECURITIES - 22.8%
$10,300,000 $0 $10,300,000 Banc One Credit Card Master Trust,
Series 1994-C, Class A, 7.800% 11/15/98 . $10,435,136 $0 $10,435,136
7,900,000 0 7,900,000 BankBoston Revenue, 6.480% 07/15/08 ..... 7,959,250 0 7,959,250
11,000,000 0 11,000,000 Chase Manhattan Auto Owner Trust,
Series 1996-C, Class A4, 6.150% 03/15/02 10,958,750 0 10,958,750
7,000,000 0 7,000,000 Discover Card Master Trust, Series
1995-2, Class A, 6.550% 02/15/03 ........ 7,041,510 0 7,041,510
9,345,000 0 9,345,000 EQCC Home Equity Loan Trust, Series
1996-2, Class A2, 6.700% 09/15/08 ....... 9,382,969 0 9,382,969
9,000,000 0 9,000,000 Fingerhut Metris Master Trust,
Series 1996-1, Class A, 6.450% 02/20/02 . 9,045,000 0 9,045,000
6,000,000 0 6,000,000 Green Tree Financial Corporation,
Series 1996-9, Class A2, 6.250% 01/15/28 6,001,860 0 6,001,860
6,350,000 0 6,350,000 Household Affinity Credit Card Master
Trust I, Series 1993-1, Class B,
5.300% 09/15/00 ......................... 6,266,625 0 6,266,625
10,500,000 0 10,500,000 IMC Home Equity Loan Trust, Series
1997-1, Class A3, 6.820% 10/25/11 ....... 10,532,813 0 10,532,813
4,668,867 0 4,668,867 Keystone Auto Grantor Trust, Series
1996-B, Class A, 6.150% 04/15/03** ...... 4,667,410 0 4,667,410
10,400,000 0 10,400,000 Premier Auto, 6.320% 03/06/02 ........... 10,406,448 0 10,406,448
5,500,000 0 5,500,000 Prime Credit Card Master Trust,
Series 1992-2, Class B2, 7.950% 11/15/02 5,642,615 0 5,642,615
5,350,000 0 5,350,000 Sears Credit Account Master Trust,
Series 1995-4, Class A, 6.250% 01/15/03 . 5,353,317 0 5,353,317
10,300,000 0 10,300,000 Spiegel Master Trust, Series 1995-A,
Class A, 7.500% 09/15/04 ................ 10,580,036 0 10,580,036
5,150,000 0 5,150,000 Standard Credit Card Market,
Series 1993-3, Class A, 5.500% 02/07/00 . 5,109,727 0 5,109,727
---------------------------------------------
TOTAL ASSET-BACKED SECURITIES ........... 119,383,466 0 119,383,466
=============================================
CORPORATE BONDS AND NOTES - 59.4%
Banking - 6.3%
0 4,000,000 4,000,000 BankAmerica Capital BAC, 6.330%
01/15/98*** ............................. 0 3,953,448 3,953,448
9,142,000 0 9,142,000 Chemical Bank (N.Y.) Corporation,
9.750% 06/15/99 ......................... 9,599,008 0 9,599,008
9,600,000 0 9,600,000 First Chicago NBD Corporation, Sr.
Notes, 6.250% 07/21/00 .................. 9,613,824 0 9,613,824
0 700,000 700,000 South Trust Bank, Alabama, 5.580%
02/06/06 ................................ 0 682,889 682,889
9,000,000 0 9,000,000 Union Planters National Bank, Notes
6.470% 10/29/99 ......................... 9,057,240 0 9,057,240
---------------------------------------------
28,270,072 4,636,337 32,906,409
---------------------------------------------
Brokerage - 9.6%
0 1,000,000 1,000,000 Donaldson, Lufkin & Jenrette, MTN,
5.630% 02/15/16. ........................ 0 985,477 985,477
Goldman Sachs Group, L.P., Notes:
0 1,000,000 1,000,000 6.200% 12/15/00** ..................... 0 991,559 991,559
3,400,000 0 3,400,000 6.875% 09/15/99** ..................... 3,448,076 0 3,448,076
Lehman Brothers Holdings Inc., MTN:
8,475,000 0 8,475,000 6.850% 10/08/99 ....................... 8,562,632 0 8,562,632
0 2,000,000 2,000,000 7.380% 05/15/07 ....................... 0 2,132,204 2,132,204
Merrill Lynch & Company, MTN:
0 149,000 149,000 10.380% 02/01/99 ...................... 0 156,063 156,063
5,000,000 0 5,000,000 6.475% 03/01/00 ....................... 5,034,450 0 5,034,450
0 500,000 500,000 Morgan Stanley Group, Inc., Notes,
7.500% 09/01/99 ......................... 0 510,890 510,890
Paine Webber Group Inc., Sr. Notes:
2,500,000 2,000,000 4,500,000 6.250% 06/15/98 ....................... 2,503,800 2,000,816 4,504,616
8,800,000 0 8,800,000 7.700% 02/11/00 ....................... 9,061,800 0 9,061,800
4,500,000 0 4,500,000 Salomon Inc., MTN, 9.000% 02/15/99 ...... 4,651,065 0 4,651,065
10,000,000 0 10,000,000 Smith Barney Holdings, Inc., Notes, .....
7.980% 03/01/00 ......................... 10,322,900 0 10,322,900
---------------------------------------------
43,584,723 6,777,009 50,361,732
---------------------------------------------
Captive Finance - 2.0%
AT&T Capital Corporation, MTN:
9,850,000 0 9,850,000 5.650% 01/15/99 ....................... 9,790,900 0 9,790,900
0 1,000,000 1,000,000 7.800% 02/10/98 ....................... 0 1,003,477 1,003,477
---------------------------------------------
9,790,900 1,003,477 10,794,377
---------------------------------------------
Computer Software - 0.4%
0 2,000,000 2,000,000 IBM Corporation, 6.040% 08/07/00 ........ 0 1,998,060 1,998,060
---------------------------------------------
Construction/Agricultural
Equipment - 0.5%
0 1,000,000 1,000,000 Caterpillar Finance Corporation,
MTN, 6.840% 09/15/99 .................... 0 1,011,033 1,011,033
0 1,500,000 1,500,000 John Deere Capital Corporation,
MTN, 6.000% 02/01/99 .................... 0 1,500,176 1,500,176
---------------------------------------------
0 2,511,209 2,511,209
---------------------------------------------
Diversified Electronic Products - 0.5%
0 2,950,000 2,950,000 Harris Corporation, Note, 6.650%
08/01/06 ................................ 0 3,007,035 3,007,035
---------------------------------------------
Electrical Products - 0.6%
0 3,000,000 3,000,000 Black & Decker, 6.630% 11/15/00 ......... 0 3,024,333 3,024,333
---------------------------------------------
Financial - 23.2%
0 3,380,000 3,380,000 American Express Master Trust 92,
6.600% 07/15/99 ......................... 0 3,407,850 3,407,850
7,100,000 0 7,100,000 Aristar, Inc., Notes, 6.125% 12/01/00 ... 7,051,436 0 7,051,436
Associates Corporation N.A.:
8,500,000 0 8,500,000 6.375% 06/15/00 ....................... 8,519,890 0 8,519,890
0 4,000,000 4,000,000 5.781% 02/21/98*** .................... 0 3,987,600 3,987,600
9,300,000 0 9,300,000 Banponce Financial Corporation,
MTN, 6.560% 04/22/99 .................... 9,357,009 0 9,357,009
6,700,000 0 6,700,000 Bear Stearns Companies, Inc.,
MTN, 6.560% 06/20/00 .................... 6,763,516 0 6,763,516
0 3,000,000 3,000,000 Chase Capital II, 6.250% 02/01/98*** .... 0 2,878,017 2,878,017
11,000,000 0 11,000,000 Chrysler Financial Corporation,
Notes, 6.375% 01/28/00 .................. 11,018,700 0 11,018,700
0 1,000,000 1,000,000 Commercial Credit, 10.000% 05/01/99 0 1,050,151 1,050,151
7,000,000 0 7,000,000 Dean Witter Discover and Company,
MTN, 7.580% 06/11/01 .................... 7,261,660 0 7,261,660
Finova Capital Corporation, Notes:
3,000,000 0 3,000,000 6.380% 04/15/99 ....................... 3,016,830 0 3,016,830
6,500,000 0 6,500,000 6.250% 08/15/00 ....................... 6,475,105 0 6,475,105
1,950,000 0 1,950,000 Fletcher Challenge Finance USA,
9.800% 06/15/98 ......................... 1,988,727 0 1,988,727
Ford Motor Credit Company, MTN:
0 1,500,000 1,500,000 5.670% 02/15/01 ....................... 0 1,475,856 1,475,856
0 1,000,000 1,000,000 6.110% 12/28/01 ....................... 0 991,613 991,613
</TABLE>
See Notes to Pro Forma Financial Statements.
<PAGE>
Nations Short-Term Income Fund/Emerald Short-Term Fixed Income Fund
Pro Forma Combining Schedule of Investments (continued)
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
===================================================================================================================================
Emerald
Nations Short-Term Pro Forma Nations Emerald Pro Forma
Short-Term Fixed Income Combining Short-Term Short-Term Combining
Income Fund Fund Portfolios Income Fund Fixed Income Fund Portfolios
===================================================================================================================================
<C> <C> <C> <S> <C> <C> <C>
CORPORATE BONDS AND NOTES (continued)
Financial (continued) General Motors
Acceptance Corporation,
MTN:
$0 $3,500,000 $3,500,000 5.910% 01/29/98*** .................... $0 $3,505,772 $3,505,772
0 1,000,000 1,000,000 5.630% 02/25/00 ....................... 0 986,536 986,536
5,000,000 0 5,000,000 7.375% 06/22/00 ....................... 5,124,550 0 5,124,550
8,850,000 0 8,850,000 Heller Financial, Inc., MTN, 6.510%
09/20/99 ................................ 8,928,145 0 8,928,145
4,500,000 0 4,500,000 Norwest Financial Inc., Sr. Notes,
8.375% 01/15/00 ......................... 4,599,585 0 4,599,585
10,000,000 0 10,000,000 NYNEX, MTN, 6.720% 06/15/98** ........... 10,050,000 0 10,050,000
1,850,000 0 1,850,000 PACCAR Financial Corporation,
5.910% 10/15/99 ......................... 1,844,524 0 1,844,524
0 2,500,000 2,500,000 Residential Accredit Loans, Inc.,
6.750% 09/25/27 ......................... 0 2,489,050 2,489,050
8,000,000 0 8,000,000 Salomon Inc., 7.000% 05/15/99 ........... 8,070,560 0 8,070,560
0 1,000,000 1,000,000 Transamerica Finance Corporation,
6.380% 11/15/01 ......................... 0 1,000,668 1,000,668
---------------------------------------------
100,070,237 21,773,113 121,843,350
---------------------------------------------
Foreign Government Issues - 0.8%
0 2,000,000 2,000,000 Croatia Government National, 7.000%
02/27/02 ................................ 0 1,905,000 1,905,000
0 2,000,000 2,000,000 Province of Quebec, Note, 7.500%
07/15/02 ................................ 0 2,086,440 2,086,440
---------------------------------------------
0 3,991,440 3,991,440
---------------------------------------------
Independent Finance - 1.5%
North American Mortgage Company, MTN:
2,500,000 0 2,500,000 5.800% 11/02/98 ....................... 2,490,075 0 2,490,075
5,500,000 0 5,500,000 5.840% 11/04/98 ....................... 5,479,980 0 5,479,980
---------------------------------------------
7,970,055 0 7,970,055
---------------------------------------------
Industrial - 8.7%
Comdisco, Inc., MTN:
5,000,000 0 5,000,000 6.470% 09/30/98 ....................... 5,015,250 0 5,015,250
5,000,000 0 5,000,000 6.500% 06/15/00 ....................... 5,009,750 0 5,009,750
3,000,000 0 3,000,000 Crane Company, Notes, 7.250% 06/15/99 ... 3,038,760 0 3,038,760
3,786,000 0 3,786,000 Hertz Corporation, Sr. Notes, 7.000%
04/15/01 ................................ 3,850,703 0 3,850,703
8,140,000 0 8,140,000 News America Holdings Inc., Sr.
Notes, 7.500% 03/01/00 .................. 8,304,754 0 8,304,754
6,250,000 0 6,250,000 PDV America, Inc., Sr. Notes, 7.750%
08/01/00 ................................ 6,436,688 0 6,436,688
10,000,000 0 10,000,000 Time Warner-Pats, 4.900% 07/29/99** ..... 9,770,200 0 9,770,200
4,000,000 0 4,000,000 Union Oil of California, MTN, 8.810%
05/18/98 ................................ 4,048,120 0 4,048,120
---------------------------------------------
45,474,225 0 45,474,225
---------------------------------------------
Packaged Goods/Cosmetics - 0.3%
0 1,586,000 1,586,000 Federal Express, 9.880% 04/01/02 ........ 0 1,789,547 1,789,547
---------------------------------------------
Railroads - 0.5%
0 3,000,000 3,000,000 Mass Transit Railway, 6.000% 10/01/00 ... 0 2,934,351 2,934,351
---------------------------------------------
Retail - 1.9% Sears,
Roebuck & Company, MTN:
7,300,000 0 7,300,000 6.230% 07/12/00 ....................... 7,300,000 0 7,300,000
Series I:
0 1,500,000 1,500,000 6.110% 11/15/05 ....................... 0 1,510,145 1,510,145
0 1,000,000 1,000,000 6.150% 11/15/05 ....................... 0 1,006,491 1,006,491
---------------------------------------------
7,300,000 2,516,636 9,816,636
---------------------------------------------
Utiltiy - Electric - 2.6%
0 1,700,000 1,700,000 Arizona Public Service, Note, 5.750%
09/15/00 ................................ 0 1,672,220 1,672,220
0 1,345,000 1,345,000 Carolina Power & Light, Note, 6.130%
02/01/00 ................................ 0 1,344,161 1,344,161
8,299,000 0 8,299,000 Columbia Gas System, Series A, 6.390%
11/28/00 ................................ 8,344,312 0 8,344,312
0 900,000 900,000 Southern California Edison, Note,
5.880% 01/15/01 ......................... 0 892,244 892,244
0 750,000 750,000 Southern California Edison, Series
93-E, Note, 5.450% 06/15/98 ............. 0 747,862 747,862
0 700,000 700,000 Virginia Electric & Power, Series D,
MTN, 7.910% 12/13/01 .................... 0 739,019 739,019
---------------------------------------------
8,344,312 5,395,506 13,739,818
---------------------------------------------
TOTAL CORPORATE BONDS AND NOTES ......... 250,804,524 61,358,053 312,162,577
=============================================
FOREIGN BONDS AND NOTES - 5.1%
Bladex, Notes:
0 2,250,000 2,250,000 7.050% 07/19/99** ..................... 0 2,261,025 2,261,025
8,000,000 0 8,000,000 7.000% 09/24/99** ..................... 8,018,960 0 8,018,960
7,000,000 0 7,000,000 Corporacion Andina De Fomento,
Eurobonds, 6.625% 10/14/98** ............ 7,028,000 0 7,028,000
9,500,000 0 9,500,000 Skandia Capital AB, Guaranteed
Eurobonds, 6.000% 11/02/98 .............. 9,500,000 0 9,500,000
---------------------------------------------
TOTAL FOREIGN BONDS AND NOTES ........... 24,546,960 2,261,025 26,807,985
=============================================
MORTGAGE-BACKED SECURITIES - 6.2%
Federal Home Loan Bank - 0.1%
0 500,000 500,000 6.320% 12/26/00 ....................... 0 498,978 498,978
---------------------------------------------
Federal Home Loan Mortgage Corporation - 0.4%
0 1,291,002 1,291,002 5.500% 07/01/01 ....................... 0 1,271,921 1,271,921
0 843,695 843,695 7.500% 09/01/01 ....................... 0 860,383 860,383
---------------------------------------------
0 2,132,304 2,132,304
---------------------------------------------
Federal National Mortgage Association - 5.7%
0 3,000,000 3,000,000 6.770% 05/18/00 ....................... 0 3,010,485 3,010,485
0 2,306,325 2,306,325 6.000% 06/01/01 ....................... 0 2,292,417 2,292,417
14,557,622 0 14,557,622 6.000% 11/01/03 ....................... 14,325,864 0 14,325,864
0 1,095,430 1,095,430 6.000% 05/01/04 ....................... 0 1,087,313 1,087,313
0 992,113 992,113 6.500% 08/01/04 ....................... 0 993,640 993,640
0 1,571,338 1,571,338 7.500% 11/01/09 ....................... 0 1,609,160 1,609,160
</TABLE>
See Notes to Pro Forma Financial Statements.
<PAGE>
Nations Short-Term Income Fund/Emerald Short-Term Fixed Income Fund
Pro Forma Combining Schedule of Investments (continued)
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
===================================================================================================================================
Emerald
Nations Short-Term Pro Forma Nations Emerald Pro Forma
Short-Term Fixed Income Combining Short-Term Short-Term Combining
Income Fund Fund Portfolios Income Fund Fixed Income Fund Portfolios
===================================================================================================================================
<C> <C> <C> <S> <C> <C> <C>
MORTGAGE-BACKED SECURITIES (continued)
Federal National Mortgage Association (continued)
REMIC:
$0 $1,950,000 $1,950,000 7.000% 07/25/00 ....................... $0 $1,967,507 $1,967,507
0 1,219,676 1,219,676 7.000% 06/18/01 ....................... 0 1,234,184 1,234,184
0 3,380,000 3,380,000 4.000% 06/25/18 ....................... 0 3,183,453 3,183,453
---------------------------------------------
14,325,864 15,378,159 29,704,023
---------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES ........ 14,325,864 18,009,441 32,335,305
=============================================
MUNICIPAL BOND - 0.2%
0 1,000,000 1,000,000 Los Angeles Airport, 5.500% 05/15/98 .... 0 999,181 999,181
=============================================
U.S. TREASURY OBLIGATIONS - 4.8%
U.S. Treasury Bills - 0.5%
0 2,750,000 2,750,000 5.200% 10/15/98 ....................... 0 2,625,626 2,625,626
---------------------------------------------
U.S. Treasury Notes - 4.3%
12,000,000 0 12,000,000 5.875% 01/31/99 ....................... 12,015,000 0 12,015,000
0 3,000,000 3,000,000 5.880% 07/31/99 ....................... 0 3,002,814 3,002,814
0 3,000,000 3,000,000 5.880% 08/31/99 ....................... 0 3,003,753 3,003,753
0 2,500,000 2,500,000 5.880% 02/15/00 ....................... 0 2,503,128 2,503,128
0 2,000,000 2,000,000 5.750% 10/31/02 ....................... 0 1,990,626 1,990,626
---------------------------------------------
12,015,000 10,500,321 22,515,321
---------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS ......... 12,015,000 13,125,947 25,140,947
=============================================
TOTAL SECURITIES ........................ 421,075,814 95,753,647 516,829,461
=============================================
REPURCHASE AGREEMENT - 0.3%
1,718,000 0 1,718,000 Agreement with Smith Barney, 5.680%
dated 11/28/97 to be repurchased at
$1,718,813 on 12/01/97 .................
1,718,000 0 1,718,000
---------------------------------------------
CASH SWEEP ACCOUNT - 0.3%
0 1,314,038 1,314,038 Bank of New York ........................ 0 1,314,038 1,314,038
---------------------------------------------
TOTAL INVESTMENTS (Cost $422,565,873, $96,728,832 and $519,294,705) 99.1% 422,793,814 97,067,685 519,861,499
OTHER ASSETS AND LIABILITIES (Net) ................................. 0.9 3,722,822 831,544 4,554,366
---------- --------------------------------------------
NET ASSETS ......................................................... 100.0% $426,516,636 97,899,229 524,415,865
========== ============================================
</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.
*** Floating Rate Note.
ABBREVIATION:
MTN Medium Term Note
See Notes to Pro Forma Financial Statements.
<PAGE>
NATIONS SHORT-TERM INCOME FUND
EMERALD SHORT-TERM FIXED INCOME FUND
Pro Forma Combining Statement of Assets and Liabilities (unaudited)
November 30, 1997
<TABLE>
<CAPTION>
Nations Short-Term Emerald Short-Term Adjustments to Pro Forma
Income Fund Fixed Income Fund Pro Forma Combined (Note 1)
----------- ----------------- --------- -----------------
<S> <C> <C> <C> <C>
ASSETS:
Investments at Value (cost $422,565,873,$96,728,832
and $519,294,705) $422,793,814 $97,067,685 -- $519,861,499
Cash 649 -- -- 649
Income Receivable 5,952,932 1,121,337 -- 7,074,269
Receivable for Fund Shares Sold -- 188,079 -- 188,079
Receivable due from Investment Adviser -- -- 17,128 (a) 17,128
Deferred Organization Costs -- 17,128 (17,128) (a) --
Prepaid and Other Assets 107,929 3,671 -- 111,600
-------- ------ -- -------
Total Assets 428,855,324 98,397,900 -- 527,253,224
------------ ----------- -- -----------
LIABILITIES:
Income Distribution Payable 2,022,626 439,224 -- 2,461,850
Payable for fund shares redeemed 2,440 1,101 -- 3,541
Accrued Expenses 313,622 58,346 -- 371,968
-------- ------- -- -------
Total Liabilities 2,338,688 498,671 -- 2,837,359
---------- -------- -- ---------
Net Assets Applicable to Shares Outstanding $426,516,636 $97,899,229 $524,415,865
============ =========== ============
Net Assets by Class:
Primary A/Institutional $406,941,023 $93,446,918 -- $500,387,941
============= ============ == ============
Primary B $9,879 n/a -- $9,879
======= === == ======
Investor A/Retail $11,627,453 $4,452,311 -- $16,079,764
============ =========== == ===========
Investor B $4,931,934 n/a -- $4,931,934
=========== === == ==========
Investor C $3,006,347 n/a -- $3,006,347
=========== === == ==========
Shares Outstanding by Class:
Primary A/Institutional 41,715,554 9,339,203 240,047 51,294,804
=========== ========== ======= ==========
Primary B 1,013 n/a -- 1,013
====== === = =====
Investor A/Retail 1,191,943 445,111 11,300 1,648,354
========== ======== ======= =========
Investor B 505,564 n/a -- 505,564
======== === = =======
Investor C 308,136 n/a -- 308,136
======== === = =======
Primary A Shares:
Net Asset Value per Share $9.76 $10.01 $9.76
===== ======= =====
Primary B Shares:
Net Asset Value per Share $9.75 n/a $9.75
===== === =====
Investor A Shares:
Net Asset Value per Share $9.76 $10.00 $9.76
===== ======= =====
Investor B Shares:
Net Asset Value per Share $9.76 n/a $9.76
===== === =====
Investor C Shares:
Net Asset Value per Share $9.76 n/a $9.76
===== === =====
</TABLE>
See Notes to Pro Forma Financial Statements
(a) Unamortized Organization Costs of the acquired fund will be borne by the
Adviser.
<PAGE>
NATIONS SHORT-TERM INCOME FUND
EMERALD SHORT-TERM FIXED INCOME FUND
Pro Forma Combining Statement of Operations (Unaudited)
For the Twelve Month Period Ending November 30, 1997
<TABLE>
<CAPTION>
Nations Short-Term Emerald Short-Term Adjustments to Pro Forma
Income Fund Fixed Income Fund Pro Forma Combined (Note 1)
----------- ----------------- --------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest and Dividends $17,103,158 $4,706,507 -- $21,809,665
----------- ---------- -- -----------
Total Investment Income 17,103,158 4,706,507 -- 21,809,665
----------- ---------- -- -----------
EXPENSES:
Investment Advisory 1,621,107 299,547 149,952 (a) 2,070,606
Administration 270,184 58,033 16,884 (a) 345,101
Transfer Agent 187,188 16,163 -- 203,351
Custodian (e) 34,193 11,895 -- 46,088
Legal and Audit Fees 50,893 4,919 (4,919) (b) 50,893
Trustees' Fees 13,877 2,847 (2,847) (b) 13,877
Other Expenses 152,741 53,317 (25,344) (b) 180,714
Amortization of organization costs 3,360 12,585 (12,585) (c) 3,360
----------- ---------- -------- -----------
Subtotal 2,333,543 459,306 121,141 2,913,990
Shareholder servicing and distribution fees
Primary B 2,596 0 -- 2,596
Investor A/Retail 15,250 9,856 (5,914) (a) 19,192
Investor C 15,965 0 -- 15,965
Investor B 20,301 0 -- 20,301
Fees waived and/or reimbursed by
investment advisor (809,644) (8,106) (217,553) (d) (1,035,303)
----------- ---------- -------- -----------
Total Expenses 1,578,011 461,056 (102,326) 1,936,741
----------- ---------- -------- -----------
NET INVESTMENT INCOME 15,525,147 4,245,451 102,326 19,872,924
----------- ---------- -------- -----------
Net Realized and Unrealized Gain/(Loss)
on Investments:
Realized Gain/(Loss) on securities 611,430 (126,627) -- 484,803
Change in unrealized appreciation/
(depreciation) on securities (1,128,677) (150,440) -- (1,279,117)
----------- ---------- -----------
Net Realized and Unrealized gain/(loss)
on investments (517,247) (277,067) -- (794,314)
----------- ---------- -----------
Net Increase/(Decrease) in net assets
resulting from operations $15,007,900 $3,968,384 $102,326 $19,078,610
=========== ========== ======== ===========
</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.
(e) Net of expense offset arrangements amount to less than .01% of average net
assets.
See Notes to Pro Forma Financial Statements
<PAGE>
Nations Short-Term Income Fund
Emerald Short-Term Fixed Income Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
Nations Short-Term Income Fund
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
November 30, 1997 the Trust offers thirty-five separate portfolios. The
unaudited Pro Forma Combining Portfolio of Investments and the unaudited Pro
Forma Combining Statement of Assets and Liabilities assumes the exchange
described in the next paragraph occurred as of November 30, 1997 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of December 1, 1996. These statements have been derived from books
and records utilized in calculating daily net asset value of each fund at
November 30, 1997 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Emerald Short-Term Fixed Income Fund in exchange for
shares of Nations Short-Term 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 Emerald Short-Term
Fixed 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 unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
<PAGE>
Emerald Short-Term Fixed Income Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
For the twelve month period ended November 30, 1997, the Nations Short-Term
Income Fund's investment advisory fee was computed based on the annual rate of
0.60% of its 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 which 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-Term Income 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-Term 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 B Shares ("Investor B Distribution Plan") and
Investor C Shares ("Investor C Distribution Plan") of the Nations Short-Term
Income Fund. Under the Investor B Distribution Plan and Investor C Distribution
Plan, aggregate payments may not exceed 0.10% and 0.10%, on an annualized basis,
of the average daily net assets of the Investor B Shares and Investor C Shares
respectively, of the Fund.
The Trust has also adopted a shareholder servicing plan with respect to Investor
B Shares ("Investor B Servicing Plan") and Investor C Shares
2
<PAGE>
("Investor C Servicing Plan") of the Nations Short-Term Income Fund. Under the
Investor B Servicing Plan and Investor C Servicing Plan, aggregate payments may
not exceed 0.25% on an annualized basis of the average daily net assets of the
Investor B Shares and Investor C Shares of the Fund.
2. Portfolio Valuation
Certain securities of Nations Short-Term 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,
redemption features and credit 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. Emerald Short-Term Fixed 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 Short-Term Income Fund which would have been issued at
November 30, 1997 in connection with the proposed reorganization. The pro forma
number of shares outstanding of 53,757,871 consists of 10,035,661 shares assumed
issued in the reorganization plus 43,722,210 shares of Nations Short-Term Income
Fund at November 30, 1997.
3
<PAGE>
NATIONS FUNDS
Nations Disciplined Equity Fund/Emerald Equity Fund
Pro Forma Combining Schedule of Investments
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
====================================================================================================================================
Nations Emerald Pro Forma Nations Emerald Pro Forma
Disciplined Equity Combined Disciplined Equity Combined
Equity Fund Fund Portfolios Equity Fund Fund Portfolios
====================================================================================================================================
COMMON STOCKS - 96.7%
<C> <C> <C> <S> <C> <C> <C>
Aerospace and Defense - 0.6%
35,600 0 35,600 United Technologies Corporation ............ $ 2,667,775 0 2,667,775
--------------------------------------
Apparel and Textiles - 2.1%
63,700 0 63,700 Liz Claiborne Inc. ......................... 3,200,925 0 3,200,925
0 76,400 76,400 Tommy Hilfiger Corp.+ ...................... 0 2,998,700 2,998,700
59,100 0 59,100 VF Corp .................................... 2,729,681 0 2,729,681
--------------------------------------
5,930,606 2,998,700 8,929,306
--------------------------------------
Automotive and Truck Manufacturers - 1.3%
63,800 0 63,800 Ford Motor Company ......................... 2,743,400 0 2,743,400
0 59,300 59,300 Lear Corp.+ ................................ 0 2,775,981 2,775,981
--------------------------------------
2,743,400 2,775,981 5,519,381
--------------------------------------
Automobile Parts Manufacturers - 0.6%
27,500 0 27,500 Eaton Corporation .......................... 2,597,031 0 2,597,031
--------------------------------------
Banks - 3.7%
49,900 0 49,900 Ahmanson (H.F.) & Company .................. 2,969,050 0 2,969,050
43,500 56,800 100,300 BankAmerica Corporation .................... 3,175,500 4,146,400 7,321,900
26,100 24,700 50,800 Chase Manhattan Corporation ................ 2,835,113 2,683,038 5,518,151
--------------------------------------
8,979,663 6,829,438 15,809,101
--------------------------------------
Beverages - 1.6%
0 68,600 68,600 Panamerican Beverages, Inc. Class A ........ 0 2,349,550 2,349,550
0 122,400 122,400 PepsiCo, Inc. .............................. 0 4,513,500 4,513,500
--------------------------------------
0 6,863,050 6,863,050
--------------------------------------
Biotechnology - 0.7%
0 58,100 58,100 Elan Corp., PLC ADR + ...................... 0 3,064,775 3,064,775
--------------------------------------
Chemicals - Basic - 1.8%
60,000 0 60,000 Cytec Industries Inc.+ ..................... 2,745,000 0 2,745,000
0 47,200 47,200 Imperial Chemical Industries PLC ADR ....... 0 2,805,450 2,805,450
26,100 0 26,100 Rohm & Haas Company ........................ 2,399,569 0 2,399,569
--------------------------------------
5,144,569 2,805,450 7,950,019
--------------------------------------
Computer Related - 5.5%
0 52,300 52,300 Cisco Systems, Inc. + ...................... 0 4,510,875 4,510,875
55,800 66,850 122,650 Compaq Computer Corporation+ ............... 3,484,012 4,173,946 7,657,958
43,700 0 43,700 Dell Computer Corporation+ ................. 3,678,994 0 3,678,994
0 97,100 97,100 Iomega Corp. + ............................. 0 3,192,162 3,192,162
0 52,300 52,300 Quantum Corp. + ............................ 0 1,392,488 1,392,488
53,200 0 53,200 Storage Technology Corporation+ ............ 3,434,725 0 3,434,725
--------------------------------------
10,597,731 13,269,471 23,867,202
--------------------------------------
Computer Software - 4.6%
0 89,350 89,350 Cadence Design Systems, Inc. + ............. 0 2,256,088 2,256,088
0 20,700 20,700 Citrix Systems, Inc. + ..................... 0 1,482,638 1,482,638
0 70,612 70,612 Computer Associates International, Inc. .... 0 3,676,262 3,676,262
106,500 0 106,500 Compuware Corporation+ ..................... 3,720,844 0 3,720,844
0 67,000 67,000 McAfee Associates, Inc.+ ................... 0 3,065,250 3,065,250
18,100 21,800 39,900 Microsoft Corporation+ ..................... 2,561,150 3,084,699 5,645,849
--------------------------------------
6,281,994 13,564,937 19,846,931
--------------------------------------
Consumer Specialties - 0.2%
0 33,200 33,200 Blyth Industries, Inc. + ................... 0 852,825 852,825
--------------------------------------
Contract Drilling - 0.9%
0 50,900 50,900 Helmerich & Paine, Inc ..................... 0 3,871,581 3,871,581
--------------------------------------
Cosmetics & Toiletry - 0.5%
0 24,800 24,800 Gillette Co. ............................... 0 2,289,350 2,289,350
--------------------------------------
Diversified - 2.6%
0 122,600 122,600 General Electric Co ........................ 0 9,041,749 9,041,749
21,600 0 21,600 Loews Corporation .......................... 2,292,300 0 2,292,300
--------------------------------------
</TABLE>
See Notes to Pro Forma Financial Statements.
<PAGE>
NATIONS FUNDS
Nations Disciplined Equity Fund/Emerald Equity Fund
Pro Forma Combining Schedule of Investments (continued)
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
====================================================================================================================================
Nations Emerald Pro Forma Nations Emerald Pro Forma
Disciplined Equity Combined Disciplined Equity Combined
Equity Fund Fund Portfolios Equity Fund Fund Portfolios
====================================================================================================================================
<C> <C> <C> <S> <C> <C> <C>
COMMON STOCKS - (continued)
Diversified Commercial Services - 0.8%
0 112,800 112,800 Accustaff, Inc. + .......................... $ 0 $ 3,334,650 $ 3,334,650
--------------------------------------
Drugs - 6.4%
0 66,800 66,800 Bristol Myers Squibb Co .................... 0 6,254,149 6,254,149
0 74,600 74,600 Dura Pharmaceuticals, Inc. + ............... 0 3,273,075 3,273,075
0 75,800 75,800 Eli Lilly & Co. ............................ 0 4,780,137 4,780,137
0 46,700 46,700 Merck & Company Inc. ....................... 0 4,416,069 4,416,069
0 73,000 73,000 Pfizer, Inc. ............................... 0 5,310,749 5,310,749
0 24,200 24,200 Warner Lambert Co .......................... 0 3,384,975 3,384,975
--------------------------------------
0 27,419,154 27,419,154
--------------------------------------
Electrical Equipment - 0.6%
52,000 0 52,000 Sundstrand Corporation ..................... 2,668,250 0 2,668,250
--------------------------------------
Electric Power - 0.2%
36,395 0 36,395 PG&E Corporation ........................... 1,028,159 0 1,028,159
--------------------------------------
Electronics - 5.4%
0 47,700 47,700 Adaptec, Inc. + ............................ 0 2,361,150 2,361,150
0 44,400 44,400 Intel Corp. ................................ 0 3,446,550 3,446,550
81,700 80,900 162,600 National Semiconductor Corporation+ ........ 2,706,313 2,679,813 5,386,126
0 55,100 55,100 Philips Electronics ........................ 0 3,691,700 3,691,700
0 65,300 65,300 SCI Systems, Inc. + ........................ 0 2,991,556 2,991,556
0 55,600 55,600 Tech Data Corp. + .......................... 0 2,244,850 2,244,850
0 52,600 52,600 Teradyne, Inc. + ........................... 0 1,725,938 1,725,938
0 26,800 26,800 Texas Instruments, Inc. .................... 0 1,319,900 1,319,900
--------------------------------------
2,706,313 20,461,457 23,167,770
--------------------------------------
Entertainment - 0.5%
0 65,700 65,700 Gtech Holdings Corp. + ..................... 0 2,114,719 2,114,719
--------------------------------------
Environmental Services - 1.9%
0 79,400 79,400 Calenergy Co., Inc. + ...................... 0 2,640,050 2,640,050
0 90,800 90,800 Tyco International Ltd ..................... 0 3,563,900 3,563,900
0 62,500 62,500 USA Waste Services, Inc. + ................. 0 2,066,406 2,066,406
--------------------------------------
0 8,270,356 8,270,356
--------------------------------------
Financial Services - 5.6%
45,400 0 45,400 GreenPoint Financial Corporation ........... 3,024,775 0 3,024,775
0 101,500 101,500 Green Tree Financial Corp. ................. 0 3,108,438 3,108,438
0 63,400 63,400 Morgan Stanley Dean Witter, Discover & Co. . 0 3,443,413 3,443,413
102,375 0 102,375 Paine Webber Group, Inc. ................... 3,442,359 0 3,442,359
20,200 0 20,200 SLM Holding Corporation .................... 2,608,325 0 2,608,325
66,350 101,349 167,699 Travelers Group Inc. ....................... 3,350,675 5,118,125 8,468,800
--------------------------------------
12,426,134 11,669,976 24,096,110
--------------------------------------
Food Retailers - 1.7%
53,194 67,000 120,194 Safeway Inc.+ .............................. 3,231,535 4,070,250 7,301,785
--------------------------------------
Food Producers - 3.7%
0 139,200 139,200 ConAgra, Inc ............................... 0 5,002,500 5,002,500
0 76,600 76,600 Dean Foods Co. ............................. 0 4,069,375 4,069,375
0 112,800 112,800 Interstate Bakeries Corp. .................. 0 3,898,650 3,898,650
0 56,400 56,400 Sara Lee Corp. ............................. 0 2,982,150 2,982,150
--------------------------------------
0 15,952,675 15,952,675
--------------------------------------
Healthcare - 2.3%
0 131,600 131,600 HEALTHSOUTH Corp. + ........................ 0 3,454,500 3,454,500
0 121,800 121,800 MedPartners, Inc. + ........................ 0 3,014,550 3,014,550
0 114,440 114,440 Tenet Healthcare Corp. + ................... 0 3,626,318 3,626,318
--------------------------------------
0 10,095,368 10,095,368
--------------------------------------
</TABLE>
See Notes to Pro Forma Financial Statements.
<PAGE>
NATIONS FUNDS
Nations Disciplined Equity Fund/Emerald Equity Fund
Pro Forma Combining Schedule of Investments (continued)
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
====================================================================================================================================
Nations Emerald Pro Forma Nations Emerald Pro Forma
Disciplined Equity Combined Disciplined Equity Combined
Equity Fund Fund Portfolios Equity Fund Fund Portfolios
====================================================================================================================================
<C> <C> <C> <S> <C> <C> <C>
COMMON STOCKS - (continued)
Hotels & Resorts - 0.9%
0 55,600 55,600 HFS, Inc + ................................. $0 $3,815,550 $3,815,550
--------------------------------------
Housewares - 0.5%
88,000 0 88,000 Premark International, Inc. ................ 2,299,000 0 2,299,000
--------------------------------------
Insurance - 4.8%
0 40,600 40,600 Allstate Corp .............................. 0 3,486,525 3,486,525
15,700 0 15,700 CIGNA Corporation .......................... 2,625,825 0 2,625,825
0 69,500 69,500 Conseco, Inc ............................... 0 3,236,094 3,236,094
75,000 0 75,000 Equitable Companies, Inc. .................. 3,576,562 0 3,576,562
51,300 0 51,300 MGIC Investment Corporation................. 2,997,844 0 2,997,844
0 116,100 116,100 SunAmerica, Inc ............................ 0 4,702,050 4,702,050
--------------------------------------
9,200,231 11,424,669 20,624,900
--------------------------------------
Machinery and Equipment - 3.0%
50,700 49,800 100,500 Caterpillar Inc. ........................... 2,430,431 2,387,288 4,817,719
36,600 0 36,600 Cummins Engine Inc. ........................ 2,356,125 0 2,356,125
69,700 0 69,700 Ingersoll-Rand Company ..................... 2,848,988 0 2,848,988
63,000 0 63,000 Parker-Hannifin Corporation ................ 2,803,500 0 2,803,500
--------------------------------------
10,439,044 2,387,288 12,826,332
--------------------------------------
Medical Products and Supplies - 2.0%
0 53,400 53,400 Baxter International, Inc. ................. 0 2,703,375 2,703,375
0 51,500 51,500 Boston Scientific Corp. + .................. 0 2,327,156 2,327,156
58,800 0 58,800 Guidant Corporation ........................ 3,777,900 0 3,777,900
--------------------------------------
3,777,900 5,030,531 8,808,431
--------------------------------------
Metals and Mining - 1.2%
0 29,000 29,000 Minnesota Mining & Manufacturing Co. ....... 0 2,825,688 2,825,688
32,200 0 32,200 Phelps Dodge Corporation ................... 2,133,250 0 2,133,250
--------------------------------------
2,133,250 2,825,688 4,958,938
--------------------------------------
Office Equipment - 0.7%
0 159,300 159,300 U.S. Office Products Co. + ................. 0 3,166,088 3,166,088
--------------------------------------
Oil - Domestic - 2.6%
41,300 0 41,300 Pennzoil Company ........................... 2,751,613 0 2,751,613
88,900 154,300 243,200 USX-Marathon Group (New) ................... 3,044,825 5,284,775 8,329,600
--------------------------------------
5,796,438 5,284,775 11,081,213
--------------------------------------
Oil - International - 2.4%
34,100 55,358 89,458 British Petroleum Company Plc, ADR+. ....... 2,830,300 4,594,714 7,425,014
49,000 0 49,000 Texaco Inc. ................................ 2,768,500 0 2,768,500
--------------------------------------
5,598,800 4,594,714 10,193,514
--------------------------------------
Oil Refining and Marketing - 0.5%
65,800 0 65,800 Valero Energy Corporation .................. 2,064,475 0 2,064,475
--------------------------------------
Oil Services - 0.6%
65,700 0 65,700 Baker Hughes Inc. .......................... 2,751,188 0 2,751,188
--------------------------------------
Paper & Related Products - 1.1%
68,100 0 68,100 Fort James Corporation ..................... 2,664,412 0 2,664,412
0 46,500 46,500 International Paper Co. .................... 0 2,205,844 2,205,844
--------------------------------------
2,664,412 2,205,844 4,870,256
--------------------------------------
Printing and Publishing - 0.9%
0 65,900 65,900 New York Times Co., Class A ................ 0 3,912,813 3,912,813
--------------------------------------
Recreation - 1.5%
0 61,400 61,400 Callaway Golf Co ........................... 0 1,957,125 1,957,125
0 111,600 111,600 Mattel, Inc. ............................... 0 4,470,975 4,470,975
--------------------------------------
0 6,428,100 6,428,100
--------------------------------------
Retail - Discount - 2.8%
0 89,550 89,550 Consolidated Stores Corp. + ................ 0 4,354,369 4,354,369
0 150,500 150,500 Staples, Inc. + ............................ 0 4,242,219 4,242,219
97,900 0 97,900 TJX Companies Inc. ......................... 3,377,550 0 3,377,550
--------------------------------------
3,377,550 8,596,588 11,974,138
--------------------------------------
</TABLE>
See Notes to Pro Forma Financial Statements.
<PAGE>
NATIONS FUNDS
Nations Disciplined Equity Fund/Emerald Equity Fund
Pro Forma Combining Schedule of Investments (continued)
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
====================================================================================================================================
Nations Emerald Pro Forma Nations Emerald Pro Forma
Disciplined Equity Combined Disciplined Equity Combined
Equity Fund Fund Portfolios Equity Fund Fund Portfolios
====================================================================================================================================
<C> <C> <C> <S> <C> <C> <C>
COMMON STOCKS - (continued)
Retail - 5.0%
0 86,800 86,800 CompUSA, Inc. + ............................ $0 $3,173,625 $3,173,625
76,400 0 76,400 Costco Companies, Inc.+ .................... 3,385,475 0 3,385,475
48,600 0 48,600 Dayton Hudson Corporation .................. 3,228,862 0 3,228,862
0 168,900 168,900 Dial Corporation ........................... 0 3,272,438 3,272,438
0 142,200 142,200 General Nutrition Companies (GNC) + ........ 0 4,852,575 4,852,575
0 61,200 61,200 Home Depot, Inc. ........................... 0 3,423,375 3,423,375
--------------------------------------
6,614,337 14,722,013 21,336,350
--------------------------------------
Steel - 1.1%
80,700 71,200 151,900 USX-U.S. Steel Group ....................... 2,526,919 2,229,450 4,756,369
--------------------------------------
Telecommunications - 4.0%
0 60,600 60,600 ADC Telecommunications, Inc. + ............. 0 2,253,563 2,253,563
0 74,100 74,100 Bay Networks Inc + ......................... 0 2,227,631 2,227,631
0 142,500 142,500 LCI International Inc. + ................... 0 3,927,656 3,927,656
33,200 16,600 49,800 Lucent Technologies ........................ 2,660,150 1,330,075 3,990,225
0 150,400 150,400 WorldCom, Inc. + ........................... 0 4,812,799 4,812,799
--------------------------------------
2,660,150 14,551,724 17,211,874
--------------------------------------
Transportation - Airlines - 1.7%
0 33,600 33,600 AMR Corporation + .......................... 0 4,071,900 4,071,900
36,900 0 36,900 UAL Corporation+ ........................... 3,136,500 0 3,136,500
--------------------------------------
3,136,500 4,071,900 7,208,400
--------------------------------------
Trucking and Shipping - 0.7%
44,500 0 44,500 Federal Express Corporation+ ............... 2,984,281 0 2,984,281
--------------------------------------
Utilities - Natural Gas - 2.2%
38,800 52,700 91,500 Columbia Gas Systems Inc.+ ................. 2,822,700 3,833,925 6,656,625
65,300 0 65,300 NICOR Inc. ................................. 2,628,325 0 2,628,325
--------------------------------------
5,451,025 3,833,925 9,284,950
--------------------------------------
Utilities - Telephone - 0.5%
78,200 0 78,200 Cincinnati Bell Inc. ....................... 2,306,900 0 2,306,900
--------------------------------------
TOTAL COMMON STOCKS ........................ 145,077,860 270,697,572 415,775,432
======================================
CASH SWEEP ACCOUNT - 0.4%
0 1,774,342 1,774,342 Bank of New York ........................... 0 1,774,342 1,774,342
======================================
UNIT INVESTMENT TRUSTS - 2.3%
0 85,300 85,300 S&P 400 Mid-Cap Depository Receipts,
Series I ................................... 0 5,380,564 5,380,564
0 47,500 47,500 S&P 500 Depository Receipts, Series I ...... 0 4,546,641 4,546,641
--------------------------------------
TOTAL UNIT INVESTMENT TRUSTS ............... 0 9,927,205 9,927,205
======================================
TOTAL INVESTMENTS (Cost $103,585,079, $211,541,142 and $315,126,221)........... 99.4% 145,077,860 282,399,119 427,476,979
OTHER ASSETS AND LIABILITIES (Net)............................................. 0.6 2,577,764 20,797 2,598,561
----- ------------ ----------- -----------
NET ASSETS..................................................................... 100.0% $147,655,624 282,419,916 430,075,540
===== ============ =========== ===========
</TABLE>
- -------
+Non-income producing security
ABBREVIATION
ADR American Depositary Receipt
<PAGE>
NATIONS DISCIPLINED EQUITY FUND
EMERALD EQUITY FUND
Pro Forma Combining Statement of Assets and Liabilities (unaudited)
November 30, 1997
<TABLE>
<CAPTION>
Nations Disciplined Emerald Equity Adjustments to Pro Forma
Equity Fund Fund Pro Forma Combined (Note 1)
----------- ---- --------- -----------------
<S> <C> <C> <C> <C>
ASSETS:
Investments at Value (cost $103,585,079,
$211,541,142 and $315,126,221) $145,077,860 $282,399,119 -- $427,476,979
Cash 44,778 -- -- 44,778
Income Receivable 283,192 273,369 -- 556,561
Receivable for Fund Shares Sold 511,854 6,058 -- 517,912
Receivable for Investments Sold 4,433,888 -- -- 4,433,888
Prepaid and Other Assets 5,471 6,906 -- 12,377
----- ----- - ------
Total Assets 150,357,043 282,685,452 0 433,042,495
=========== =========== == ===========
LIABILITIES:
Income Distribution Payable -- 15,474 -- 15,474
Capital Gain Payable 2,504,186 -- -- 2,504,186
Payable for fund shares redeemed -- 33,979 -- 33,979
Accrued Expenses and other payables 197,233 216,083 -- 413,316
------- ------- - -------
Total Liabilities 2,701,419 265,536 0 2,966,955
--------- ------- -- ---------
Net Assets Applicable to Shares Outstanding $147,655,624 $282,419,916 $0 $430,075,540
============ ============ == ============
Net Assets by Class:
Primary A/Institutional $99,127,639 $233,977,362 -- $333,105,001
=========== ============ = ============
Primary B $317,545 n/a -- $317,545
======== === == ========
Investor A/Retail $18,895,922 $48,442,554 -- $67,338,476
=========== =========== == ===========
Investor B $914,223 n/a -- $914,223
======== === == ========
Investor C $28,400,295 n/a -- $28,400,295
=========== === == ===========
Shares Outstanding by Class:
Primary A/Institutional 5,116,031 12,894,783 (819,084) 17,191,730
========= ========== ======== ==========
Primary B 16,428 n/a -- 16,428
====== === == ======
Investor A/Retail 978,068 2,692,460 (185,035) 3,485,493
======= ========= ======== =========
Investor B 47,565 n/a -- 47,565
====== === == ======
Investor C 1,501,467 n/a -- 1,501,467
========= === == =========
Primary A Shares:
Net Asset Value per Share $19.38 $18.15 $19.38
====== ====== ======
Primary B Shares:
Net Asset Value per Share $19.33 n/a $19.33
====== === ======
Investor A Shares:
Net Asset Value per Share $19.32 $17.99 $19.32
====== ====== ======
Investor B Shares:
Net Asset Value per Share $19.22 n/a $19.22
====== === ======
Investor C Shares:
Net Asset Value per Share $18.92 n/a $18.92
====== === ======
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
NATIONS DISCIPLINED EQUITY FUND
EMERALD EQUITY FUND
Pro Forma Statement of Operations (unaudited)
For the Twelve Month Period Ending November 30, 1997
<TABLE>
<CAPTION>
Nations Disciplined Emerald Equity Adjustments to Pro Forma
Equity Fund Fund Pro Forma Combined (Note 1)
----------- ---- --------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $2,149,467 $2,505,394 -- 4,654,861
Interest 120,978 11,984 -- 132,962
----------- ----------- ------------
Total Investment Income 2,270,445 2,517,378 -- 4,787,823
----------- ----------- ------------
EXPENSES:
Investment Advisory 1,197,809 1,598,533 399,896 (a) 3,196,238
Administration 159,617 206,476 60,072 (a) 426,165
Transfer Agent 90,233 53,239 -- 143,472
Custodian (d) 30,090 31,442 (10,000)(b) 51,532
Legal and Audit Fees 23,653 18,667 -- 42,320
Trustees' Fees 4,470 13,868 (10,000)(b) 8,338
Amortization of organization costs 2,999 -- -- 2,999
Other expenses 102,676 115,847 -- 218,523
----------- ----------- ------------
Subtotal 1,611,547 2,038,072 439,968 4,089,587
Shareholder servicing and distribution fees
Primary B 5,668 -- -- 5,668
Investor A/Retail 23,832 207,422 (103,711)(a) 127,543
Investor C 232,677 -- N/A 232,677
Investor B 4,450 -- N/A 4,450
Fees waived and/or reimbursed by
investment advisor 0 (129) 129 (a) 0
----------- ----------- ------------
Total Expenses 1,878,174 2,245,365 336,386 4,459,925
----------- ----------- ------------
NET INVESTMENT INCOME 392,271 272,013 (336,386) 327,898
----------- ----------- ------------
Net Realized and Unrealized Gain/(Loss)
on Investments:
Realized Gain/(Loss) on securities 32,183,199 53,127,398 -- 85,310,597
Change in unrealized appreciation/
(depreciation) on securities 34,052,149 2,983,542 -- 37,035,691
----------- ----------- ------------
Net Realized and Unrealized gain/(loss)
on investments 66,235,348 56,110,940 -- 122,346,288
----------- ----------- ------------
Net Increase/(Decrease) in net assets
resulting from operations $66,627,619 $56,382,953 ($336,386) $122,674,186
=========== =========== ========== ============
</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.
(d) Net of expense offset arrangements amounts to less than .01% of average
net assets.
See Notes to Pro Forma Financial Statements
<PAGE>
Nations Disciplined Equity Fund
Emerald Equity Fund
Notes to Pro Forma Combining 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
November 30, 1997 the Trust offers thirty-five separate portfolios. The
unaudited Pro Forma Combining Portfolio of Investments and the unaudited Pro
Forma Combining Statement of Assets and Liabilities assumes the exchange
described in the next paragraph occurred as of November 30, 1997 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of December 1, 1996. These statements have been derived from books
and records utilized in calculating daily net asset value of each fund at
November 30, 1997 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Emerald Equity Fund in exchange for shares of 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 Emerald Equity Fund for
pre-combination periods will not be restated. The pro forma statements do not
reflect the expenses of either fund in carrying out its obligations under the
proposed Agreement and Plan of Reorganization.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
<PAGE>
Nations Disciplined Equity Fund
Emerald Equity Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
For the twelve month period ended November 30, 1997, the Nations Disciplined
Equity Fund's investment advisory fee was computed based on the annual rate of
0.75% of its 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 which 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 B Shares ("Investor B Distribution Plan") and
Investor C Shares ("Investor C Distribution Plan") of the Nations Disciplined
Equity Fund. Under the Investor B Distribution Plan and Investor C Distribution
Plan, aggregate payments may not exceed 0.75% and 0.75%, on an annualized basis,
of the average daily net assets of the Investor B Shares and Investor C Shares
respectively, of the Fund.
The Trust has also adopted a shareholder servicing plan with respect to Investor
B Shares ("Investor B Servicing Plan") and Investor C Shares
2
<PAGE>
Nations Disciplined Equity Fund
Emerald Equity Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
("Investor C Servicing Plan") of the Nations Disciplined Equity Fund. Under the
Investor B Servicing Plan and Investor C Servicing Plan, aggregate payments may
not exceed 0.25% on an annualized basis of the average daily net assets of the
Investor B Shares and Investor C Shares of the Fund.
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
(but not including securities reported on the NASDAQ National Market System) 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. Securities
reported on the NASDAQ National Market System are valued at the last sale price
on the valuation date. 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. Emerald
Equity Fund uses similar rules for determining portfolio valuation.
3. Capital Shares
The pro forma net asset value per share assumes the issuance of additional
shares of Nations Disciplined Equity Fund which would have been issued at
November 30, 1997 in connection with the proposed reorganization. The pro forma
number of shares outstanding of 22,242,683 consists of 14,583,124 shares
assumed issued in the reorganization plus 7,659,559 shares of Nations
Disciplined Equity Fund at November 30, 1997.
3
<PAGE>
Nations Florida Municipal Bond Fund/Emerald Florida Tax-Exempt Fund
Pro Forma Combining Schedule of Investments
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SECURITY DESCRIPTIONS
==================================================================================================================
Nations Emerald
Florida Florida Pro Forma
Municipal Tax-Exempt Combining
Bond Fund Fund Portfolios
==================================================================================================================
MUNICIPAL BONDS AND NOTES - 93.5%
<C> <C> <C> <S>
FLORIDA - 79.4%
Alachua County, Florida, Health Facilities Authority, Revenue Refunding:
$1,000,000 $ 0 $1,000,000 (Santa Fe Healthcare Facilities Project), ETM,
6.000% 11/15/09. ........................................................
1,000,000 0 1,000,000 (Shands Teaching Hospitals and Clinics Inc. Project), Series A,
(MBIA Insured),
5.000% 12/01/04 .........................................................
1,000,000 0 1,000,000 Alachua County, Florida, Public Improvement Revenue Refunding,
(FSA Insured),
5.000% 08/01/14 ........................................................
0 2,550,000 2,550,000 Brevard County, Florida, Health Care Facility Authority Revenue,
(Holmes Regional), (MBIA Insured)
5.630% 10/01/14 ........................................................
1,000,000 0 1,000,000 Canaveral, Florida, Port Authority Revenue Refunding, Port Improvement,
Series B, (FGIC Insured),
5.700% 06/01/13. ........................................................
0 2,250,000 2,250,000 Charlotte County, Florida, Utility Revenue, (FGIC Insured),
5.630% 10/01/16. ........................................................
1,000,000 0 1,000,000 Citrus County, Florida, PCR Refunding, Crystal River, (Florida Power
Corporation), Series B,
6.350% 02/01/22 .........................................................
Collier County, Florida, Health Facilities Authority Revenue,
(The Moorings, Inc. Project):
0 700,000 700,000 6.250% 12/01/07 .........................................................
0 700,000 700,000 6.380% 12/01/08 .........................................................
0 5,175,000 5,175,000 7.000% 12/01/19. ........................................................
0 2,500,000 2,500,000 Dade County, Florida, Aviation Revenue, (AMT),
(MBIA Insured),
5.750% 10/01/12 .........................................................
1,000,000 0 1,000,000 Dade County, Florida, Health Facilities Authority, Hospital Revenue
Refunding, (Baptist Hospital, Miami Project), Series A, (MBIA Insured),
5.250% 05/15/21 .........................................................
1,000,000 0 1,000,000 Dade County, Florida, School District Revenue Refunding, GO, Series A,
(MBIA Insured),
6.125% 06/01/14 .........................................................
1,500,000 0 1,500,000 Dade County, Florida, Water and Sewer System Revenue Refunding,
(FGIC Insured),
5.000% 10/01/13 .........................................................
Escambia County, Florida, PCR, (Champion International Corporation
Project), AMT:
1,000,000 0 1,000,000 6.900% 08/01/22. ........................................................
1,000,000 0 1,000,000 6.400% 09/01/30. ........................................................
0 3,000,000 3,000,000 Florida Housing Finance Agency, (MBIA Insured)
5.750% 07/01/14 .........................................................
Florida State Board of Education, GO, Capital Outlay, Public Education:
Series A,
0 2,500,000 2,500,000 5.250% 06/01/16 .........................................................
0 3,000,000 3,000,000 5.000% 06/01/18 .........................................................
Refunding, Series A,
1,000,000 0 1,000,000 5.000% 06/01/08 .........................................................
Refunding Series D,
1,000,000 0 1,000,000 5.125% 06/01/18 .........................................................
1,000,000 0 1,000,000 Unrefunded Balance, Series A,
7.250% 06/01/23 .........................................................
1,000,000 0 1,000,000 Florida State Department of Transportation, Fuel Sales Tax Revenue,
(Right-of-Way Bridge), GO,
5.375% 07/01/26 .........................................................
Florida State Housing Finance Agency, Refunding:
Multi-family Housing:
1,000,000 0 1,000,000 (Altamonte Project), Series C,
7.000% 12/01/24. ........................................................
845,000 0 845,000 Single-family Mortgage, Series B, AMT, (GNMA/FNMA Collateral),
6.550% 07/01/17 .........................................................
500,000 0 500,000 (The Vinyards Project), Series H,
6.500% 11/01/25. ........................................................
Florida State Jacksonville Transportation Authority, GO, Refunding:
1,000,000 0 1,000,000 6.000% 07/01/05 .........................................................
1,000,000 0 1,000,000 5.000% 07/01/19. ........................................................
Florida State Municipal Power Agency Revenue:
(Stanton II Project),
Pre-refunded, (AMBAC Insured),
1,000,000 0 1,000,000 6.500% 10/01/20 .........................................................
(St. Lucie Project),
Refunding, (FGIC Insured),
0 1,500,000 1,500,000 5.250% 10/01/21 .........................................................
0 3,000,000 3,000,000 Gainsville, Florida, Utility System Revenue, Series B,
6.500% 10/01/11. ........................................................
<CAPTION>
SECURITY DESCRIPTIONS VALUE
=================================================================================================================
Nations Emerald
Florida Florida Pro Forma
Municipal Tax-Exempt Combining
Bond Fund Fund Portfolios
=================================================================================================================
<S> <C> <C> <C>
FLORIDA - 79.4%
Alachua County, Florida, Health Facilities Authority, Revenue Refunding:
(Santa Fe Healthcare Facilities Project), ETM,
6.000% 11/15/09 ........................................................ $1,079,280 $ 0 $1,079,280
(Shands Teaching Hospitals and Clinics Inc. Project), Series A,
(MBIA Insured),
5.000% 12/01/04 ........................................................ 1,036,450 0 1,036,450
Alachua County, Florida, Public Improvement Revenue Refunding,
(FSA Insured),
5.000% 08/01/14 ....................................................... 992,110 0 992,110
Brevard County, Florida, Health Care Facility Authority Revenue,
(Holmes Regional), (MBIA Insured)
5.630% 10/01/14 ....................................................... 0 2,656,412 2,656,412
Canaveral, Florida, Port Authority Revenue Refunding, Port Improvement,
Series B, (FGIC Insured),
5.700% 06/01/13 ........................................................ 1,044,200 1,044,200
Charlotte County, Florida, Utility Revenue, (FGIC Insured),
5.630% 10/01/16 ........................................................ 0 2,339,663 2,339,663
Citrus County, Florida, PCR Refunding, Crystal River, (Florida Power
Corporation), Series B,
6.350% 02/01/22 ........................................................ 1,067,990 0 1,067,990
Collier County, Florida, Health Facilities Authority Revenue,
(The Moorings, Inc. Project):
6.250% 12/01/07 ........................................................ 0 758,282 758,282
6.380% 12/01/08 ........................................................ 0 760,361 760,361
7.000% 12/01/19 ........................................................ 0 5,673,456 5,673,456
Dade County, Florida, Aviation Revenue, (AMT),
(MBIA Insured),
5.750% 10/01/12 ........................................................ 0 2,633,850 2,633,850
Dade County, Florida, Health Facilities Authority, Hospital Revenue
Refunding, (Baptist Hospital, Miami Project), Series A, (MBIA Insured),
5.250% 05/15/21 ........................................................ 977,550 0 977,550
Dade County, Florida, School District Revenue Refunding, GO, Series A,
(MBIA Insured),
6.125% 06/01/14 ........................................................ 1,073,160 0 1,073,160
Dade County, Florida, Water and Sewer System Revenue Refunding,
(FGIC Insured),
5.000% 10/01/13 ........................................................ 1,490,175 0 1,490,175
Escambia County, Florida, PCR, (Champion International Corporation
Project), AMT:
6.900% 08/01/22 ........................................................ 1,110,740 0 1,110,740
6.400% 09/01/30 ........................................................ 1,084,090 0 1,084,090
Florida Housing Finance Agency, (MBIA Insured)
5.750% 07/01/14 ........................................................ 0 3,084,210 3,084,210
Florida State Board of Education, GO, Capital Outlay, Public Education:
Series A,
5.250% 06/01/16 ........................................................ 0 2,516,725 2,516,725
5.000% 06/01/18 ........................................................ 0 2,921,160 2,921,160
Refunding, Series A,
5.000% 06/01/08 ........................................................ 1,031,350 0 1,031,350
Refunding Series D,
5.125% 06/01/18 ........................................................ 980,720 0 980,720
Unrefunded Balance, Series A,
7.250% 06/01/23 ........................................................ 1,083,670 0 1,083,670
Florida State Department of Transportation, Fuel Sales Tax Revenue,
(Right-of-Way Bridge), GO,
5.375% 07/01/26 ........................................................ 1,001,800 0 1,001,800
Florida State Housing Finance Agency, Refunding:
Multi-family Housing:
(Altamonte Project), Series C,
7.000% 12/01/24 ........................................................ 1,101,060 0 1,101,060
Single-family Mortgage, Series B, AMT, (GNMA/FNMA Collateral),
6.550% 07/01/17 ........................................................ 893,790 0 893,790
(The Vinyards Project), Series H,
6.500% 11/01/25 ........................................................ 519,220 0 519,220
Florida State Jacksonville Transportation Authority, GO, Refunding:
6.000% 07/01/05 ........................................................ 1,098,880 0 1,098,880
5.000% 07/01/19 ........................................................ 970,400 0 970,400
Florida State Municipal Power Agency Revenue:
(Stanton II Project),
Pre-refunded, (AMBAC Insured),
6.500% 10/01/20 ........................................................ 1,113,770 0 1,113,770
(St. Lucie Project),
Refunding, (FGIC Insured),
5.250% 10/01/21 ........................................................ 0 1,475,850 1,475,850
Gainsville, Florida, Utility System Revenue, Series B,
6.500% 10/01/11 ........................................................ 0 3,481,410 3,481,410
</TABLE>
See Notes to Pro Forma Financial Statements.
<PAGE>
Nations Florida Municipal Bond Fund/Emerald Florida Tax-Exempt Fund
Pro Forma Combining Schedule of Investments
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SECURITY DESCRIPTIONS
==================================================================================================================
Nations Emerald
Florida Florida Pro Forma
Municipal Tax-Exempt Combining
Bond Fund Fund Portfolios
==================================================================================================================
MUNICIPAL BONDS AND NOTES - (continued)
<C> <C> <C> <S>
FLORIDA - (continued)
$ 0 $2,000,000 $2,000,000 Hillsborough County, Florida, Aviation Authority Revenue,
(Refunding-Tampa International Airport), Series B,
5.130% 10/01/17. ........................................................
1,000,000 0 1,000,000 Hillsborough County, Florida, Industrial Development Authority, PCR,
(Tampa Electric Company Project),
8.000% 05/01/22. ........................................................
1,000,000 0 1,000,000 Hillsborough County, Florida, Utility Refunding Revenue, (MBIA Insured),
5.500% 08/01/12. ........................................................
0 2,000,000 2,000,000 Jacksonville, Florida, Electric Authority Revenue,
(Water & Sewer System), Series A,
5.400% 10/01/15. ........................................................
Jacksonville, Florida, Health Facilities Authority, Hospital Revenue:
1,500,000 0 1,500,000 (Daughters Of Charity), Series A,
5.000% 11/15/15. ........................................................
Series B,
1,000,000 0 1,000,000 5.250% 08/15/27. ........................................................
750,000 0 750,000 Jacksonville, Florida, PCR Refunding, (Anheuser-Busch
Companies Project),
5.700% 08/01/31 .........................................................
Jacksonville, Florida, Sales Tax Revenue,
(River City Renaissance Project):
0 5,000,000 5,000,000 5.650% 10/01/14 .........................................................
0 5,000,000 5,000,000 5.380% 10/01/18 .........................................................
0 2,430,000 2,430,000 Leon County, Florida, Capital Improvement Revenue,
(AMBAC Insured),
5.250% 10/01/17 .........................................................
Martin County, Florida, Industrial Development Authority Revenue,
(Indiantown Cogeneration Project) (AMT):
Series A,
1,000,000 2,500,000 3,500,000 7.875% 12/15/25 .........................................................
Series B,
0 2,500,000 2,500,000 8.050% 12/15/25 .........................................................
0 2,620,000 2,620,000 Miami Beach, Florida, Water and Sewer Revenue, (FSA Insured),
5.380% 09/01/15. ........................................................
North Broward, Florida, Hospital Revenue, (MBIA Insured):
1,000,000 0 1,000,000 6.250% 01/01/06. ........................................................
0 2,000,000 2,000,000 5.250% 01/15/17. ........................................................
0 5,000,000 5,000,000 Okaloosa County, Florida, Gas Distribution Tax Revenue,
(MBIA Insured),
6.880% 10/01/19 ........................................................
Orange County, Florida, Health Facilities Authority Revenue Refunding,
(Orlando Regional Medical Center Hospital), (MBIA Insured):
Series A,
0 4,520,000 4,520,000 6.250% 10/01/16. ........................................................
Series B,
1,000,000 0 1,000,000 5.000% 10/01/10. ........................................................
0 3,000,000 3,000,000 Orlando, Florida, Utility Commission Water and Electric Revenue,
(Refunding), Series D,
6.750% 10/01/17. ........................................................
1,000,000 0 1,000,000 Orange County, Florida, Sales Tax Revenue, Series B,
5.375% 01/01/24. ........................................................
1,000,000 0 1,000,000 Orange County, Florida, Tourist Development Tax Revenue, Series B,
(MBIA Insured),
6.000% 10/01/14 .........................................................
1,000,000 0 1,000,000 Osceola County, Florida, Health Facilities Authority Revenue Refunding,
Lutheran Good Samaritan Society, (AMBAC Insured),
6.000% 05/01/10. ........................................................
1,500,000 0 1,500,000 Palm Beach County, Florida, Health Facilities Authority Revenue,
(Good Samaritans Health System),
6.200% 10/01/11. ........................................................
665,000 0 665,000 Palm Beach County, Florida, Housing Finance Authority, Single-family
Mortgage Purchase Revenue, Series A, (GNMA/FNMA Collateral),
6.500% 10/01/21 .........................................................
0 6,000,000 6,000,000 Palm Beach County, Florida, Solid Waste Authority Revenue,
(AMBAC Insured),
6.000% 10/01/10 .........................................................
0 2,000,000 2,000,000 Pensacola, Florida, Airport Revenue, (AMT), (MBIA Insured),
5.630% 10/01/14 .........................................................
1,000,000 0 1,000,000 Polk County, Florida, Industrial Development Authority, Solid Waste
Disposal Facilities Revenue, (Tampa Electric Company Project),
5.850% 12/01/30 .........................................................
950,000 0 950,000 Putnam County, Florida, Development Authority, PCR, (Seminole
Electric Cooperative, Inc. Project), Series H4,
3.700% 03/15/14+ ........................................................
<CAPTION>
SECURITY DESCRIPTIONS VALUE
=================================================================================================================
Nations Emerald
Florida Florida Pro Forma
Municipal Tax-Exempt Combining
Bond Fund Fund Portfolios
=================================================================================================================
<S> <C> <C> <C>
FLORIDA - (continued)
Hillsborough County, Florida, Aviation Authority Revenue,
(Refunding-Tampa International Airport), Series B,
5.130% 10/01/17 ...................................................... $ 0 $1,974,360 $1,974,360
Hillsborough County, Florida, Industrial Development Authority, PCR,
(Tampa Electric Company Project),
8.000% 05/01/22 ...................................................... 1,158,330 0 1,158,330
Hillsborough County, Florida, Utility Refunding Revenue, (MBIA Insured),
5.500% 08/01/12 ...................................................... 1,028,000 0 1,028,000
Jacksonville, Florida, Electric Authority Revenue,
(Water & Sewer System), Series A,
5.400% 10/01/15 ...................................................... 0 2,028,620 2,028,620
Jacksonville, Florida, Health Facilities Authority, Hospital Revenue:
(Daughters Of Charity), Series A,
5.000% 11/15/15 ...................................................... 1,449,930 0 1,449,930
Series B,
5.250% 08/15/27 ...................................................... 980,740 0 980,740
Jacksonville, Florida, PCR Refunding, (Anheuser-Busch
Companies Project),
5.700% 08/01/31 ...................................................... 770,460 0 770,460
Jacksonville, Florida, Sales Tax Revenue,
(River City Renaissance Project):
5.650% 10/01/14 ...................................................... 0 5,211,450 5,211,450
5.380% 10/01/18 ...................................................... 0 5,001,350 5,001,350
Leon County, Florida, Capital Improvement Revenue,
(AMBAC Insured),
5.250% 10/01/17 ...................................................... 0 2,444,750 2,444,750
Martin County, Florida, Industrial Development Authority Revenue,
(Indiantown Cogeneration Project) (AMT):
Series A,
7.875% 12/15/25 ...................................................... 1,162,110 2,910,100 4,072,210
Series B,
8.050% 12/15/25 ...................................................... 0 2,934,425 2,934,425
Miami Beach, Florida, Water and Sewer Revenue, (FSA Insured),
5.380% 09/01/15 ...................................................... 0 2,670,592 2,670,592
North Broward, Florida, Hospital Revenue, (MBIA Insured):
6.250% 01/01/06 ...................................................... 1,089,600 0 1,089,600
5.250% 01/15/17 ...................................................... 0 1,992,700 1,992,700
Okaloosa County, Florida, Gas Distribution Tax Revenue,
(MBIA Insured),
6.880% 10/01/19 ..................................................... 0 5,802,999 5,802,999
Orange County, Florida, Health Facilities Authority Revenue Refunding,
(Orlando Regional Medical Center Hospital), (MBIA Insured):
Series A,
6.250% 10/01/16 ...................................................... 0 5,143,037 5,143,037
Series B,
5.000% 10/01/10 ...................................................... 1,004,440 0 1,004,440
Orlando, Florida, Utility Commission Water and Electric Revenue,
(Refunding), Series D,
6.750% 10/01/17 ...................................................... 0 3,612,990 3,612,990
Orange County, Florida, Sales Tax Revenue, Series B,
5.375% 01/01/24 ...................................................... 989,570 0 989,570
Orange County, Florida, Tourist Development Tax Revenue, Series B,
(MBIA Insured),
6.000% 10/01/14 ...................................................... 1,068,470 0 1,068,470
Osceola County, Florida, Health Facilities Authority Revenue Refunding,
Lutheran Good Samaritan Society, (AMBAC Insured),
6.000% 05/01/10 ...................................................... 1,073,070 0 1,073,070
Palm Beach County, Florida, Health Facilities Authority Revenue,
(Good Samaritans Health System),
6.200% 10/01/11 ...................................................... 1,590,510 0 1,590,510
Palm Beach County, Florida, Housing Finance Authority, Single-family
Mortgage Purchase Revenue, Series A, (GNMA/FNMA Collateral),
6.500% 10/01/21 ...................................................... 706,130 0 706,130
Palm Beach County, Florida, Solid Waste Authority Revenue,
(AMBAC Insured),
6.000% 10/01/10 ...................................................... 0 6,689,879 6,689,879
Pensacola, Florida, Airport Revenue, (AMT), (MBIA Insured),
5.630% 10/01/14 ...................................................... 0 2,068,940 2,068,940
Polk County, Florida, Industrial Development Authority, Solid Waste
Disposal Facilities Revenue, (Tampa Electric Company Project),
5.850% 12/01/30 ...................................................... 1,031,190 0 1,031,190
Putnam County, Florida, Development Authority, PCR, (Seminole
Electric Cooperative, Inc. Project), Series H4,
3.700% 03/15/14+ ..................................................... 949,839 0 949,839
</TABLE>
See Notes to Pro Forma Financial Statements.
<PAGE>
Nations Florida Municipal Bond Fund/Emerald Florida Tax-Exempt Fund
Pro Forma Combining Schedule of Investments
November 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SECURITY DESCRIPTIONS
==================================================================================================================
Nations Emerald
Florida Florida Pro Forma
Municipal Tax-Exempt Combining
Bond Fund Fund Portfolios
==================================================================================================================
MUNICIPAL BONDS AND NOTES - (continued)
<C> <C> <C> <S>
FLORIDA - (continued)
$2,000,000 $ 0 $2,000,000 South Broward, Florida, Hospital District Revenue Refunding,
(FSA Insured),
5.500% 05/01/28..........................................................
0 4,000,000 4,000,000 South Miami, Florida, Health Facilities Revenue, (MBIA Insured),
5.380% 10/01/16..........................................................
0 2,500,000 2,500,000 Sunrise Lakes, Florida, Phase 4 Recreation District Revenue,
(Series A),
6.750% 08/01/24..........................................................
Tampa, Florida, Sports Authority Revenue, (MBIA Insured),
(Stadium Project):
1,000,000 0 1,000,000 5.125% 01/01/12..........................................................
0 2,000,000 2,000,000 5.250% 01/01/17..........................................................
(Tampa Bay Arena),
0 2,500,000 2,500,000 5.750% 10/01/15..........................................................
Venice, Florida, Health Facilities Revenue Refunding, (Venice Hospital
Inc. Project):
900,000 0 900,000 5.600% 12/01/05..........................................................
1,000,000 0 1,000,000 5.700% 12/01/06..........................................................
1,000,000 0 1,000,000 Volusia County, Florida, Educational Facilities Authority Revenue, Series A
6.125% 10/15/26 .........................................................
GUAM - 7.5%
Guam Airport Authority Revenue:
Series A,
0 3,820,000 3,820,000 6.380% 10/01/10 .........................................................
Series B,
0 2,435,000 2,435,000 6.400% 10/01/05 .........................................................
0 2,500,000 2,500,000 Guam Government, GO, Series A,
5.750% 09/01/04 .........................................................
0 3,000,000 3,000,000 Guam Power Authority Revenue, Series A,
6.750% 10/01/24 .........................................................
PUERTO RICO - 6.6%
0 4,190,000 4,190,000 Puerto Rico, Commonwealth, (MBIA Insured),
6.500% 07/01/15 .........................................................
0 2,000,000 2,000,000 Puerto Rico, Commonwealth Infrastructure Finance Authority,
Series A, (AMBAC Insured),
5.000% 07/01/16 .........................................................
0 1,000,000 1,000,000 Puerto Rico, Electric Power Authority Revenue,
Series AA, (MBIA Insured),
5.250% 07/01/17 .........................................................
0 1,000,000 1,000,000 Puerto Rico, Industrial Tourist EDL Medical and Environmental
Control Facility Financing Authority,
(Auxilio Mutuo Hospital), Series A, (MBIA Insured),
6.250% 07/01/16 .........................................................
995,000 0 995,000 Puerto Rico, Housing, Bank and Finance Agency, Single-family Mortgage
Revenue, (Affordable Housing Mortgage-Portfolio I), AMT, (GNMA/
FNMA/FHLMC Collateral),
6.250% 04/01/29 .........................................................
1,000,000 0 1,000,000 Puerto Rico Municipal Finance Agency, Series B,
5.000% 07/01/99..........................................................
TOTAL MUNICIPAL BONDS AND NOTES
U.S. GOVERNMENT AGENCY OBLIGATION - 1.8%
0 3,000,000 3,000,000 Federal Home Loan Bank,
6.810% 09/04/02.
Shares
- ------------------------------------
MONEY MARKET FUNDS - 5.7%
2,417,000 0 2,417,000 AIM Tax-Exempt Fund .......................................................
0 5,044,322 5,044,322 Dreyfus Municipal Cash Management Plus Fund ...............................
292,000 0 292,000 Nuveen Tax-Exempt Fund ....................................................
0 1 1 Provident Institutional Municipal Fund ....................................
0 1,813,692 1,813,692 Valiant Tax-Free Money Market Fund ........................................
TOTAL MONEY MARKET FUNDS
<CAPTION>
SECURITY DESCRIPTIONS VALUE
=================================================================================================================
Nations Emerald
Florida Florida Pro Forma
Municipal Tax-Exempt Combining
Bond Fund Fund Portfolios
=================================================================================================================
MUNICIPAL BONDS AND NOTES - (continued)
<S> <C> <C> <C>
FLORIDA - (continued)
South Broward, Florida, Hospital District Revenue Refunding,
(FSA Insured),
5.500% 05/01/28 ...................................................... $ 2,003,520 $ 0 $ 2,003,520
South Miami, Florida, Health Facilities Revenue, (MBIA Insured),
5.380% 10/01/16 ...................................................... 0 4,034,680 4,034,680
Sunrise Lakes, Florida, Phase 4 Recreation District Revenue,
(Series A),
6.750% 08/01/24 ...................................................... 0 2,766,075 2,766,075
Tampa, Florida, Sports Authority Revenue, (MBIA Insured),
(Stadium Project):
5.125% 01/01/12 ...................................................... 1,008,800 0 1,008,800
5.250% 01/01/17 ...................................................... 0 2,011,600 2,011,600
(Tampa Bay Arena),
5.750% 10/01/15 ...................................................... 0 2,714,800 2,714,800
Venice, Florida, Health Facilities Revenue Refunding, (Venice Hospital
Inc. Project):
5.600% 12/01/05 ...................................................... 970,533 0 970,533
5.700% 12/01/06 ...................................................... 1,083,820 0 1,083,820
Volusia County, Florida, Educational Facilities Authority Revenue,
Series A, 6.125% 10/15/26 ............................................. 1,048,090 0 1,048,090
------------ ------------ ------------
42,917,557 90,314,726 133,232,283
------------ ------------ ------------
GUAM - 7.5%
Guam Airport Authority Revenue:
Series A,
6.380% 10/01/10 ....................................................... 0 4,095,919 4,095,919
Series B,
6.400% 10/01/05 ....................................................... 0 2,615,190 2,615,190
Guam Government, GO, Series A,
5.750% 09/01/04 ....................................................... 0 2,528,450 2,528,450
Guam Power Authority Revenue, Series A,
6.750% 10/01/24 ....................................................... 0 3,268,710 3,268,710
------------ ------------ ------------
0 12,508,269 12,508,269
------------ ------------ ------------
PUERTO RICO - 6.6%
Puerto Rico, Commonwealth, (MBIA Insured),
6.500% 07/01/15 ....................................................... 0 4,916,756 4,916,756
Puerto Rico, Commonwealth Infrastructure Finance Authority,
Series A, (AMBAC Insured),
5.000% 07/01/16 ....................................................... 0 1,976,060 1,976,060
Puerto Rico, Electric Power Authority Revenue,
Series AA, (MBIA Insured),
5.250% 07/01/17 ....................................................... 0 1,005,990 1,005,990
Puerto Rico, Industrial Tourist EDL Medical and Environmental
Control Facility Financing Authority,
(Auxilio Mutuo Hospital), Series A, (MBIA Insured),
6.250% 07/01/16 ....................................................... 0 1,085,400 1,085,400
Puerto Rico, Housing, Bank and Finance Agency, Single-family Mortgage
Revenue, (Affordable Housing Mortgage-Portfolio I), AMT, (GNMA/
FNMA/FHLMC Collateral),
6.250% 04/01/29 ....................................................... 1,037,049 0 1,037,049
Puerto Rico Municipal Finance Agency, Series B,
5.000% 07/01/99 ...................................................... 1,015,700 0 1,015,700
------------ ------------ ------------
2,052,749 8,984,206 11,036,955
------------ ------------ ------------
TOTAL MUNICIPAL BONDS AND NOTES ......................................... 44,970,306 11,807,201 156,777,507
============ ============ ============
Federal Home Loan Bank,
6.810% 09/04/02 ....................................................... 0 3,000,000 3,000,000
============ ============ ============
AIM Tax-Exempt Fund ..................................................... 2,417,000 0 2,417,000
Dreyfus Municipal Cash Management Plus Fund ............................. 0 5,044,322 5,044,322
Nuveen Tax-Exempt Fund .................................................. 292,000 0 292,000
Provident Institutional Municipal Fund .................................. 0 1 1
Valiant Tax-Free Money Market Fund ...................................... 0 1,813,692 1,813,692
------------ ------------ ------------
TOTAL MONEY MARKET FUNDS ................................................ 2,709,000 6,858,015 9,567,015
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TOTAL INVESTMENTS (Cost $45,089,755, $113,566,211 and $158,655,966).... 101.0 47,679,306 121,665,216 169,344,522
OTHER ASSETS AND LIABILITIES (Net) .................................... (1.0) 533,862 (2,201,191) (1,667,329)
----- ------------- ------------- -------------
NET ASSETS............................................................. 100.0% $ 48,213,168 $ 119,464,025 $ 167,677,193
===== ============= ============= =============
</TABLE>
- ----------
+ Variable rate note. The interest rate shown reflects the rate in effect at
November 30, 1997.
See Notes to Pro Forma Financial Statements.
ABBREVIATIONS:
AMBAC American Municipal Bond Assurance Corporation
AMT Alternative Minimum Tax
ETM Escrow to Maturity
FGIC Federal Guaranty Insurance Corporation
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
FSA Financial Security Assurance
GNMA Government National Mortgage Association
GO General Obligation
MBIA Municipal Bond Investors Assurance
PCR Pollution Control Revenue
<PAGE>
NATIONS FLORIDA MUNICIPAL BOND FUND
EMERALD FLORIDA TAX-EXEMPT FUND
Pro Forma Combining Statement of Assets and Liabilities (unaudited)
November 30, 1997
<TABLE>
<CAPTION>
Nations Florida Emerald Florida Adjustments to Pro Forma
Municipal Bond Fund Tax-Exempt Fund Pro Forma Combined (Note 1)
------------------- --------------- --------- -----------------
<S> <C> <C> <C> <C>
ASSETS:
Investments at Value (cost $45,089,755,$113,566,211
and $158,655,966) $47,679,306 $121,665,216 -- $169,344,522
Cash 926 -- -- 926
Income Receivable 776,669 1,735,947 -- 2,512,616
Receivable for Fund Shares Sold 10,000 679,862 -- 689,862
Prepaid and Other Assets 1,082 66,720 -- 67,802
----- ------ -- ------
Total Assets 48,467,983 124,147,745 -- 172,615,728
---------- ----------- -- -----------
LIABILITIES:
Income Distribution Payable -- 454,200 -- 454,200
Payable for Investments Purchased 174,610 3,897,900 -- 4,072,510
Payable for fund shares redeemed -- 183,107 -- 183,107
Accrued Expenses and other payables 80,205 148,513 -- 228,718
------ ------- -- -------
Total Liabilities 254,815 4,683,720 -- 4,938,535
------- --------- -- ---------
Net Assets Applicable to Shares Outstanding $48,213,168 $119,464,025 $0 $167,677,193
=========== ============ == ============
Net Assets by Class:
Primary A/Institutional $28,780,232 $39,064,802 -- $67,845,034
=========== =========== == ===========
Primary B n/a n/a -- n/a
=== === == ===
Investor A/Retail $1,956,226 $80,399,223 -- $82,355,449
========== =========== == ===========
Investor B $2,690 n/a -- $2,690
========== =========== == ===========
Investor C $17,474,020 n/a -- $17,474,020
=========== =========== == ===========
Shares Outstanding by Class:
Primary A/Institutional 2,909,136 3,467,292 481,440 6,857,868
========= ========= ======= =========
Primary B n/a n/a -- n/a
=== === == ===
Investor A/Retail 197,738 7,143,927 982,936 8,324,601
======= ========= ======= =========
Investor B 272 n/a -- 272
=== === == ===
Investor C 1,766,309 n/a -- 1,766,309
========= === == =========
Primary A Shares:
Net Asset Value per Share $9.89 $11.27 $9.89
===== ====== =====
Primary B Shares:
Net Asset Value per Share n/a n/a n/a
=== === ===
Investor A Shares:
Net Asset Value per Share $9.89 $11.25 $9.89
===== ====== =====
Investor B Shares:
Net Asset Value per Share $9.89 n/a $9.89
===== === =====
Investor C Shares:
Net Asset Value per Share $9.89 n/a $9.89
===== === =====
</TABLE>
See Notes to Pro Forma Financial Statements
<PAGE>
NATIONS FLORIDA MUNICIPAL BOND FUND
EMERALD FLORIDA TAX-EXEMPT FUND
Pro Forma Statement of Operations (Unaudited)
For the Twelve Month Period Ending November 30, 1997
<TABLE>
<CAPTION>
Nations Florida Emerald Florida Adjustments to Pro Forma
Municipal Bond Fund Tax-Exempt Fund Pro Forma Combined (Note 1)
------------------- --------------- --------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest and Dividends $2,309,576 $6,539,826 -- $8,849,402
---------- ---------- ----------
Total Investment Income 2,309,576 6,539,826 -- 8,849,402
---------- ---------- ----------
EXPENSES:
Investment Advisory 250,711 464,431 232,444 (a) 947,586
Administration 41,785 89,984 26,162 (a) 157,931
Transfer Agent 32,825 26,371 - 59,196
Custodian (e) 4,798 15,938 (9,000) (b) 11,736
Legal and Audit Fees 15,042 9,283 (2,000) (b) 22,325
Trustees' Fees 848 6,735 (5,735) (b) 1,848
Amortization of organization costs 208 24 (24) (c) 208
Other expenses 26,319 87,565 (44,000) (b) 69,884
---------- ---------- -------- ----------
Subtotal 372,536 700,331 197,847 1,270,714
Shareholder servicing and distribution fees
Investor A 3,905 399,848 (239,909) (a) 163,844
Investor B 137,649 -- N/A 137,649
Investor C 252 -- N/A 252
Fees waived and/or reimbursed by
investment advisor and administrator (122,517) (150,286) (50,325) (d) (323,128)
---------- ---------- -------- ----------
Total Expenses 391,825 949,893 (92,387) 1,249,331
---------- ---------- -------- ----------
NET INVESTMENT INCOME 1,917,751 5,589,933 92,387 7,600,071
---------- ---------- -------- ----------
Net Realized and Unrealized Gain/(Loss)
on Investments:
Realized Gain/(Loss) on securities (2,787,695) 922,783 -- (1,864,912)
Change in unrealized appreciation/
(depreciation) on securities 870,699 981,574 -- 1,852,273
---------- ---------- ----------
Net Realized and Unrealized gain/(loss)
on investments (1,916,996) 1,904,357 -- (12,639)
---------- ---------- ----------
Net Increase in net assets
resulting from operations $ 755 $7,494,290 $ 92,387 $7,587,432
========== ========== ======== ==========
</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.
(e) Net of expense offset arrangements amounts to less than .01% of average
net assets.
See Notes to Pro Forma Financial Statements
<PAGE>
Nations Florida Municipal Bond Fund
Emerald Florida Tax-Exempt Fund
Notes to Pro Forma Combining 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
November 30, 1997 the Trust offers thirty-five separate portfolios. The
unaudited Pro Forma Combining Portfolio of Investments and the unaudited Pro
Forma Combining Statement of Assets and Liabilities assumes the exchange
described in the next paragraph occurred as of November 30, 1997 and the
unaudited Pro Forma Combining Statement of Operations assumes the exchange
occurred as of December 1, 1996. These statements have been derived from books
and records utilized in calculating daily net asset value of each fund at
November 30, 1997 and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Emerald Florida Tax-Exempt Fund in exchange for shares
of Nations Florida 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 Emerald Florida
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 unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
<PAGE>
Nations Florida Municipal Bond Fund
Emerald Florida Tax-Exempt Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
For the twelve month period ended November 30, 1997, the Nations Florida
Municipal Bond Fund's investment advisory fee was computed based on the annual
rate of 0.60% 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 which 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 Florida 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 B Shares ("Investor B Distribution Plan") and
Investor C Shares ("Investor C Distribution Plan") of the Nations Florida
Municipal Bond Fund. Under the Investor B Distribution Plan and Investor C
Distribution Plan, aggregate payments may not exceed 0.53% and 0.37%, on an
annualized basis, of the average daily net assets of the Investor B Shares and
Investor C Shares respectively, of the Fund.
The Trust has also adopted a shareholder servicing plan with respect to Investor
B Shares ("Investor B Servicing Plan") and Investor C Shares ("Investor C
Servicing Plan") of the Nations Florida Municipal Bond Fund. Under
2
<PAGE>
Nations Florida Municipal Bond Fund
Emerald Florida Tax-Exempt Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
the Investor B Servicing Plan and Investor C Servicing Plan, aggregate payments
may not exceed 0.25% on an annualized basis of the average daily net assets of
the Investor B Shares and Investor C Shares of the Fund.
2. Portfolio Valuation
Securities of Nations Florida 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, redemption features
and credit ratings on comparable securities. Certain securities may be valued by
one or more principal market makers. Restricted securities, securities for which
market quotations are not readily available, and other assets are valued by the
investment adviser under the supervision of the Board of Trustees. Short-term
investments that mature in 60 days or less are valued at amortized cost. Emerald
Florida Tax-Exempt Fund uses similar rules for determining portfolio valuation.
3
<PAGE>
Nations Florida Municipal Bond Fund
Emerald Florida Tax-Exempt Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
3. Capital Shares
The pro forma net asset value per share assumes the issuance of additional
shares of Nations Florida Municipal Bond Fund which would have been issued at
November 30, 1997 in connection with the proposed reorganization. The pro forma
number of shares outstanding of 16,949,050 consists of 12,075,595 shares assumed
issued in the reorganization plus 4,873,455 shares of Nations Florida Municipal
Bond Fund at November 30, 1997.
4
<PAGE>
NATIONS FUND TRUST
ONE NATIONSBANK PLAZA
33rd Floor
Charlotte, NC 28255
1-800-626-2275
FORM N-14
PART C
OTHER INFORMATION
Item 15 Indemnification
Article IX, Section 9.3 of Registrant's Declaration of Trust,
incorporated by reference as Exhibit (1)(a) hereto, provides for the
indemnification of Registrant's trustees and employees. Indemnification of
Registrant's administrator, principal underwriter, custodian and transfer agent
is provided for, respectively, in:
1. Administration Agreement with Stephens Inc.;
2. Co-Administration Agreement with First Data Investors Services
Group, Inc.;
3. Distribution Agreement with Stephens Inc.;
4. Mutual Fund Custody and Sub-Custody Agreement with NationsBank
of Texas N.A. and The Bank of New York;
5. Transfer Agency Agreement with NationsBank of Texas N.A.; and
6. Transfer Agency and Registrar Agreement with First Data
Investors Services Group, Inc.
The Registrant has entered into a Cross Indemnification Agreement
with Nations Fund, Inc. (the "Company") and Nations Fund Portfolios, Inc.
("Portfolios"), dated June 27, 1995. The Company and/or Portfolios will
indemnify and hold harmless the Trust against any losses, claims, damages or
liabilities, to which the Trust may become subject, under the Securities Act of
1933 (the "Act") and the Investment Company Act of 1940 (the "1940 Act") insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Prospectuses, any Preliminary Prospectuses,
the Registration Statements, any other Prospectuses relating to the securities,
or any amendments or supplements to the foregoing (hereinafter referred to
collectively as the "Offering Documents"), or arise out of or are based upon the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that
C-1
<PAGE>
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Offering Documents in reliance upon and in conformity
with written information furnished to the Primary By the Company and/or
Portfolios expressly for use therein; and will reimburse the Trust for any legal
or other expenses reasonably incurred by the Trust in connection with
investigating or defending any such action or claim; provided, however, that the
Company and/or Portfolios shall not be liable in any such case to the extent
that any such loss, claim, damage, or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in the Offering Documents in reliance upon and in conformity with written
information furnished to the Company and/or Portfolios by the Trust expressly
for use in the Offering Documents.
Promptly after receipt by an indemnified party above the notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the commencement
thereof; but the omission to so notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal expenses of other counsel
or any other expenses, in such case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs of
investigation.
Registrant has obtained from a major insurance carrier a directors'
and officers' liability policy covering certain types of errors and omissions.
In no event will Registrant indemnify any of its trustees, officers, employees,
or agents against any liability to which such person would otherwise be subject
by reason of his/her willful misfeasance, bad faith, gross negligence in the
performance of his/her duties, or by reason of his reckless disregard of the
duties involved in the conduct of his/her office or arising under his/her
agreement with Registrant. Registrant will comply with Rule 484 under the
Securities Act of 1933 and Release No. 11330 under the 1940 Act, as amended, in
connection with any indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended, may be permitted to trustees, officers, and
controlling persons of Registrant pursuant to the foregoing provisions, or
otherwise, Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Registrant
of expenses incurred or paid by a trustee, officer, or controlling person of
Registrant in the successful defense of any action, suit, or proceeding) is
asserted by such
C-2
<PAGE>
trustee, or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 16 Exhibits
All references to the "Registration Statement" in the following list
of Exhibits refer to the Registrant's Registration Statement on Form N-1A (File
Nos. 2-97817; 811-4305). All references to the "Emerald Registration Statement"
in the following list of Exhibits refer to the Emerald Funds' Registration
Statement on Form N-1A (File Nos. 33-20658; 811-5515).
Exhibit Number Description
(1)(a) Declaration of Trust dated May 6, 1985, is incorporated herein
by reference to the Registration Statement, filed May 17,
1985.
(1)(b) Certificate pertaining to classification of shares dated May
17, 1985, is incorporated herein by reference to the
Registration Statement, filed May 17, 1985.
(1)(c) Amendment dated July 27, 1987, to Declaration of Trust is
incorporated by reference to Registrant's Post-Effective
Amendment No. 4 to the Registration Statement, filed January
29, 1988.
(1)(d) Amendment dated September 13, 1989, to Declaration of Trust is
incorporated by reference to Registrant's Post-Effective
Amendment No. 8 to the Registration Statement, filed March 16,
1990.
(1)(e) Certificate pertaining to classification of shares dated
August 24, 1990, is incorporated by reference to Registrant's
Post-Effective Amendment No. 11 to the Registration Statement,
filed September 26, 1990.
(1)(f) Amendment dated November 26, 1990, to Declaration of Trust is
incorporated by reference to Registrant's Post-Effective
Amendment No. 13 to the Registration Statement, filed January
18, 1991.
(1)(g) Certificate pertaining to classification of shares dated July
18, 1991, is incorporated by reference to Registrant's
Post-Effective Amendment No. 16 to the Registration Statement,
filed July 23, 1991.
(1)(h) Amendment dated March 26, 1992, to Declaration of Trust is
incorporated by reference to Registrant's Post-Effective
Amendment No. 19 to the Registration Statement, filed March
30, 1992.
C-3
<PAGE>
Exhibit Number Description
(1)(i) Certificate relating to classification of shares is
incorporated by reference to Registrant's Amendment No. 19,
filed March 30, 1992.
(1)(j) Amendment dated September 21, 1992, to Declaration of Trust,
is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 to the Registration Statement, filed December
23, 1992.
(1)(k) Amendment dated March 26, 1993, to the Declaration of Trust,
is incorporated by reference to Registrant's Post-Effective
Amendment No. 27 to the Registration Statement, filed May 27,
1993.
(1)(l) Certificate relating to the establishment of the Money Market
Funds' Investor C shares dated July 8, 1993, is incorporated
by reference to Registrant's Post-Effective Amendment No. 29
to the Registration Statement, filed September 30, 1993.
(1)(m) Certificate relating to the establishment of Equity Index
Fund, Short-Term Municipal Income Fund, Florida Municipal Bond
Fund, Georgia Municipal Bond Fund, Maryland Municipal Bond
Fund, North Carolina Municipal Bond Fund, South Carolina
Municipal Bond Fund, Tennessee Municipal Bond Fund, Texas
Municipal Bond Fund and Virginia Municipal Bond Fund dated
September 22, 1993, is incorporated by reference to
Registrant's Amendment No. 29, filed on September 30, 1993.
(1)(n) Certificate relating to the establishment of the Special
Equity Fund is incorporated by reference to Registrant's
Post-Effective Amendment No. 30 to the Registration Statement,
filed on December 1, 1993.
(1)(o) Certificate relating to the redesignation of Investor B Shares
and Investor C Shares of the Non-Money Market Funds to
"Investor C Shares" and "Investor N Shares," respectively, is
incorporated by reference by Post-Effective Amendment No. 32,
filed March 29, 1994.
(1)(p) Certificate relating to the Classification of Shares of the
Money Market Fund and the Tax Exempt Fund creating "Investor D
Shares," is incorporated by reference to Post-Effective
Amendment No. 36, filed January 31, 1995.
(1)(q) Certification of Shares relating to the renaming of Nations
Special Equity Fund is incorporated by reference to
Post-Effective Amendment No. 36, filed January 31, 1995.
C-4
<PAGE>
Exhibit Number Description
(1)(r) Certificate relating to the establishment of Nations
Tax-Managed Equity Fund's Series of Shares is incorporated by
reference to Post-Effective Amendment No. 40, filed October
20, 1995.
(2)(a) Amendment and Restated Code of Regulations as approved and
adopted by Registrant's Board of Trustees is incorporated by
reference to Registrant's Pre-Effective Amendment No. 2 to the
Registration Statement, filed October 4, 1985.
(2)(b) Amendment to the Code of Regulations as approved and adopted
by Registrant's Board of Trustees on June 24, 1992, is
incorporated by reference to Registrant's Post-Effective
Amendment No. 22 to the Registration Statement, filed July 30,
1992.
(3) Not Applicable.
(4) Form of Agreement and Plan of Reorganization, filed herewith
as Appendix II to the Combined Prospectus/Proxy Statement.
(5) Not Applicable.
(6)(a) Investment Advisory Agreement between NationsBanc Advisors,
Inc., ("NBAI") and the Registrant is incorporated by reference
to Post-Effective Amendment No. 41, filed January 29, 1996.
(6)(b) Sub-Advisory Agreement among NBAI, TradeStreet Investment
Associates, Inc. ("TradeStreet") and the Registrant is
incorporated by reference to Post-Effective Amendment No. 41,
filed January 29, 1996.
(7) Distribution Agreement between Stephens Inc. and Registrant
for all classes of shares of Nations Fund Trust is
incorporated by reference to Post-Effective Amendment No. 37,
filed March 31, 1995.
(8) Not Applicable.
(9)(a) Mutual Fund Custody Agreement among Registrant, NationsBank of
Texas, N.A. ("NationsBank Texas") and The Bank of New York,
dated October 18, 1996 is incorporated by reference to
Post-Effective Amendment No. __, filed May 16, 1997.
(10)(a) Form of Shareholder Servicing Agreement relating to Primary B
Shares is incorporated by reference to Post-Effective
Amendment No. 27, filed May 27, 1993.
C-5
<PAGE>
Exhibit Number Description
(10)(b) Shareholder Servicing Plan for Investor A Shares is
incorporated by reference to Post-Effective Amendment No. 32,
filed March 29, 1994.
(10)(c) Forms of Shareholder Servicing Agreement for Investor A Shares
are incorporated by reference to Post-Effective Amendment No.
32, filed March 29, 1994.
(10)(d) Shareholder Servicing Plan for Investor B Shares of the money
market funds and Investor C Shares (formerly Investor B
Shares) of the Non-Money Market Funds, is incorporated by
reference to Post-Effective Amendment No. 32, filed March 29,
1994.
(10)(e) Forms of Shareholder Servicing Agreement for Investor B Shares
of the Money Market Funds and Investor C Shares (formerly
Investor B Shares) of the Non-Money Market Funds, are
incorporated by reference to Post-Effective Amendment No. 32,
filed March 29, 1994.
(10)(f) Shareholder Servicing Plan for Investor C Shares of the money
market funds and Investor N Shares (formerly Investor C
Shares) of the Non-Money Market Funds, is incorporated by
reference to Post-Effective Amendment No. 32, filed March 29,
1994.
(10)(g) Forms of Shareholder Servicing Agreement for Investor C Shares
of the Money Market Funds and Investor N Shares (formerly
Investor C Shares) of the Non-Money Market Funds are
incorporated by reference to Post-Effective Amendment No. 32,
filed March 29, 1994.
(10)(h) Amended and Restated Shareholder Servicing and Distribution
Plan Pursuant to Rule 12b-1 for Investor A Shares is
incorporated by reference to Post-Effective Amendment No. 32,
filed March 29, 1994.
(10)(i) Form of Sales Support Agreement for Investor A Shares is
incorporated by reference to Post-Effective Amendment No. 32,
filed March 29, 1994.
(10)(j) Amended and Restated Distribution Plan for Investor B Shares
of the Money Market Funds and Investor C Shares (formerly
Investor B Shares) of the Non-Money Market Funds, is
incorporated by reference to Post-Effective Amendment No. 32,
filed March 29, 1994.
(10)(k) Form of Sales Support Agreement for Investor B Shares of the
Money Market Funds and Investor C Shares (formerly Investor B
Shares) of the Non-Money Market Funds is incorporated by
reference to Post-Effective Amendment No. 32, filed March 29,
1994.
C-6
<PAGE>
Exhibit Number Description
(10)(l) Distribution Plan for Investor B (Investor N Shares) of the
Non-Money Market Funds is incorporated by reference to
Post-Effective Amendment No. 32, filed March 29, 1994.
(10)(m) Form of Sales Support Agreement for Investor B (Investor N
Shares) of the Non-Money Market Funds is incorporated by
reference to Post-Effective Amendment No. 32, filed March 29,
1994.
(10)(n) Shareholder Administration Plan for Primary B Shares is
incorporated by reference to Post-Effective Amendment No. 41,
filed January 29, 1996.
(10)(o) Transfer Agency Agreement between Registrant and NationsBank
Texas, dated April 25, 1992, relating to the Trust Shares (now
known as Primary Shares) of the Government, Tax Exempt, Money
Market, Income, Equity, Value, Managed Bond, Municipal Income,
Georgia Municipal Bond, Maryland Municipal Bond, South
Carolina Municipal Bond, Virginia Municipal Bond and
Short-Intermediate Government Funds, is incorporated by
reference to Post-Effective Amendment No. 22, filed April 5,
1992.
(10)(p) Amendment No. 1 dated September 28, 1992, to the Transfer
Agency Agreement between Registrant and NationsBank Texas,
dated April 25, 1992, relating to the Trust Shares (now known
as Primary Shares) of the Capital Growth Fund Emerging Growth
Fund, Balanced Assets Fund, Short-Term Income Fund, Adjustable
Rate Government Fund, Diversified Income Fund, Strategic Fixed
Income Fund, Mortgaged-Backed Securities Fund, Florida
Municipal Bond Fund, North Carolina Municipal Bond Fund and
Texas Municipal Bond Fund, is incorporated by reference to
Post-Effective Amendment No. 26, filed March 26, 1993.
(10)(q) Amendment No. 2 dated February 3, 1993, to the Transfer Agency
Agreement between Registrant and NationsBank Texas, dated
April 25, 1992, relating to the Tennessee Municipal Bond Fund
and Municipal Income Fund, is incorporated by reference to
Post-Effective Amendment No. 26, filed March 26, 1993.
(10)(r) Amendment No. 3 to the Transfer Agency Agreement relating to
the Equity Index Fund, Florida Municipal Bond Fund, Georgia
Municipal Bond Fund, Maryland Municipal Bond Fund, North
Carolina Municipal Bond Fund, South Carolina Municipal Bond
Fund, Tennessee Municipal Bond Fund, Texas Municipal Bond Fund
and Virginia Municipal Bond Fund, is incorporated by reference
to Post-Effective Amendment No. 29, filed September 30, 1993.
C-7
<PAGE>
Exhibit Number Description
(10)(s) Amendment No. 4 to the Transfer Agency Agreement relating to
Nations Tax-Managed Equity Fund is incorporated by reference
to Post-Effective Amendment No. 40, filed October 20, 1995.
(10)(t) Cross Indemnification Agreement dated June 27, 1995, between
the Trust, Nations Fund, Inc. and Nations Fund Portfolios,
Inc. incorporated by reference to Post-Effective No. 39, filed
September 28, 1995.
(11) Opinion and Consent of Morrison & Foerster LLP, filed
herewith.
(12) See Item 17(3) of this Part C.
(13)(a) Prototype Individual Retirement Account Plan, is incorporated
by reference to post-Effective Amendment No. 26, filed March
26, 1993.
(13)(b) Administration Agreement between Stephens Inc. and Registrant
is incorporated by reference to Post-Effective Amendment No.
37, filed March 31, 1995.
(13)(c) Co-Administration Agreement between The Boston Company
Advisors, Inc. and Registrant is incorporated by reference to
Post-Effective Amendment No. 37, filed March 31, 1995.
(13)(d) Shareholder Administration Agreement for Trust B Shares (now
known as Primary B Shares) is incorporated by reference to
Post-Effective Amendment No. 41, filed January 29, 1996.
14(a) Consent of Independent Auditors-Price Waterhouse LLP, filed
herewith.
14(b) Consent of Independent Auditors-Price Waterhouse LLP, filed
herewith.
14(c) Consent of Independent Auditors-KPMG Peat Marwick LLP, filed
herewith.
15 Not Applicable.
16 Powers of Attorney, filed herewith.
17(a) Declaration, pursuant to Rule 24f-2 under the Investment
Company Act of 1940, of the Registrant, filed herewith.
17(b) Form of Proxy Ballot, filed herewith.
C-8
<PAGE>
Exhibit Number Description
17(c)(i) Prospectuses and Statements of Additional Information for
Primary A and Investor A Shares for Nations Balanced Assets
Fund, Nations Disciplined Equity Fund, Nations Florida
Municipal Bond Fund, Nations Short-Term Income Fund, Nations
Strategic Fixed Income Fund and Nations Value Fund, and
Prospectuses for Primary A, Investor A and Daily Shares for
Nations Tax Exempt Fund, incorporated by reference to
Post-Effective Amendment No. 49 to the Registration
Statement, as filed on July 31, 1997.
17(c)(ii) Prospectuses and Statements of Additional Information, as
supplemented, for Institutional and Retail Shares for Emerald
Balanced Fund, Emerald Equity Fund, Emerald Equity Value Fund,
Emerald Florida Tax-Exempt Fund, Emerald Managed Bond Fund and
Emerald Short-Term Fixed Income Fund and Prospectuses for
Institutional, Retail and Service Shares of Emerald Tax-Exempt
Fund, incorporated by reference to Post-Effective Amendment
No. 21 to the Emerald Registration Statement, as filed on
March 31, 1997.
17(c)(iii) Prospectuses and Statements of Additional Information, as
supplemented, for Institutional and Retail Shares for Emerald
Balanced Fund, Emerald Equity Fund, Emerald Equity Value Fund,
Emerald Florida Tax-Exempt Fund, Emerald Managed Bond Fund and
Emerald Short-Term Fixed Income Fund and Prospectuses for
Institutional, Retail and Service Shares of Emerald Tax-Exempt
Fund, incorporated by reference to Post-Effective Amendment
No. 22 to the Emerald Registration Statement, as filed on
January 30, 1998.
17(c)(iv) Annual Reports for Nations Balanced Assets Funds, Nations
Disciplined Equity Fund, Nations Florida Municipal Bond Fund,
Nations Short-Term Income Fund, Nations Strategic Fixed Income
Fund, Nations Tax Exempt Fund and Nations Value Fund for the
year ended March 31, 1997, filed on _______________________.
17(c)(v) Annual Reports for Emerald Balanced Fund, Emerald Equity Fund,
Emerald Equity Value Fund, Emerald Florida Tax-Exempt Fund,
Emerald Managed Bond Fund and Emerald Short-Term Fixed Income
Fund for the year ended November 30, 1997, filed
_______________________.
17(c)(vi) Semi-Annual Reports for Nations Balanced Assets Fund, Nations
Disciplined Equity Fund, Nations Florida Municipal Bond Fund,
Nations Short-Term Income Fund, Nations Strategic Fixed Income
Fund, Nations Tax Exempt Fund and Nations Value Fund for the
period ended September 30, 1997, filed on
________________________.
Item 17 Undertakings.
C-9
<PAGE>
Exhibit Number Description
(1) Registrant agrees that, prior to any public reoffering of the
securities registered through the use of a prospectus which is
a part of this registration statement by any person or party
who is deemed to be an underwriter within the meaning of Rule
145(c) of the Securities Act of 1933, the reoffering
prospectus will contain the information called for by the
applicable registration form for the reofferings by person who
may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that
is filed under paragraph (1) above will be filed as part of an
amendment to the registration statement and will not be used
until the amendment is effective, and that, in determining any
liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and
the offering of the securities at that time shall be deemed to
be he initial bona fide offering of them.
(3) The undersigned Registrant agrees to file, by post-effective
amendment, an opinion of counsel or a copy of an IRS ruling
supporting the tax consequences of the Reorganization within a
reasonable time after receipt of such opinion or ruling.
C-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement on Form N-14 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Little Rock, State of Arkansas on the 5th day of February, 1998.
NATIONS FUND TRUST
By: *
--------------------------------------
A. Max Walker
President and Chairman
of the Board of Trustees
By: /s/ Richard H. Blank, Jr.
--------------------------------------
Richard H. Blank, Jr.
*Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities and on the date indicated:
SIGNATURES TITLE DATE
---------- ----- ----
* President and Chairman February 5, 1998
- -------------------------------- of the Board of Trustees
(A. Max Walker) (Principal Executive Officer)
* Treasurer February 5, 1998
- -------------------------------- Vice President
(Richard H. Rose) (Principal Financial and
Accounting Officer)
* Trustee February 5, 1998
- --------------------------------
(Edmund L. Benson, III)
* Trustee February 5, 1998
- --------------------------------
(James Ermer)
* Trustee February 5, 1998
- --------------------------------
(William H. Grigg)
* Trustee February 5, 1998
- --------------------------------
(Thomas F. Keller)
* Trustee February 5, 1998
- --------------------------------
(Carl E. Mundy, Jr.)
* Trustee February 5, 1998
- --------------------------------
(Charles B. Walker)
* Trustee February 5, 1998
- --------------------------------
(Thomas S. Word)
* Trustee February 5, 1998
- --------------------------------
(James B. Sommers)
/s/ Richard H. Blank, Jr.
- --------------------------------
Richard H. Blank, Jr.
*Attorney-in-Fact
<PAGE>
Nations Fund Trust
File Nos. 2-97817; 811-4305
Exhibit Number Description
- -------------- -----------
Ex-99.11 Opinion and Consent of Morrison & Foerster LLP
Ex-99.14(a) Opinion and Consent of Auditors - Price Waterhouse LLP
Ex-99.14(b) Opinion and Consent of Auditors - Price Waterhouse LLP
Ex-99.14(c) Opinion and Consent of Auditors - KPMG Peat Marwick LLP
Ex-99.16 Powers of Attorney
Ex-99.17(a) Declaration pursuant to Rule 24f-2 under the Investment
Company Act of 1940 of the Registrant
Ex-99.17(b) Form of Proxy Ballot
Ex-99.11
[MORRISON & FOERSTER LLP LETTERHEAD]
February 23, 1998
Nations Fund Trust
One NationsBank Plaza
Charlotte, NC 28255
Re: Units of Beneficial Interest of Nations Fund Trust
Ladies/Gentlemen:
We refer to the Registration Statement on Form N-14 (the "Registration
Statement") of Nations Fund Trust (the "Trust") relating to the registration of
an indefinite number of units of beneficial interest (the "Shares"), of certain
Funds of the Trust (the "Funds").
We have been requested by the Trust to furnish this opinion as Exhibit
11 to the Registration Statement.
We have examined documents relating to the organization of the Trust
and the authorization and issuance of the Shares. We have also made such
inquiries of the Trust and examined such questions of law as we have deemed
necessary for the purpose of rendering the opinion set forth herein. We have
assumed the genuineness of all signatures and the authenticity of all items
submitted to us as originals and the conformity with originals of all items
submitted to us as copies.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance of the Shares by the Trust has been duly and validly
authorized by all appropriate action and, assuming delivery in accordance with
the description set forth in the Combined Proxy Statement/Prospectus included in
the Registration Statement, the Shares will be legally issued, fully paid and
nonassessable by the Trust.
<PAGE>
Nations Fund Trust
February 23, 1998
Page Two
We consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
In addition, we hereby consent to the use of our name and to the
description of advice rendered by our firm under the headings "Information
Relating to Proposal 2 -- Approval of the Reorganization Agreement -- Federal
Income Tax Considerations" and "Comparison of Nations and Emerald -- Nations
Funds' Advisory Contracts" in the Combined Proxy Statement/Prospectus, under the
heading "How The Funds Are Managed" in the Prospectuses, and under the heading
"Counsel" in the Statement of Additional Information, which are incorporated by
reference into the Registration Statement.
Very truly yours,
/s/ MORRISON & FOERSTER LLP
MORRISON & FOERSTER LLP
Exhibit 99.14(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Combined Proxy
Statement/Prospectus and Statement of Additional Information constituting parts
of this Registration Statement on Form N-14 (the "Registration Statement") of
our report dated May 15, 1997, relating to the financial statements and
financial highlights of Nations Balanced Assets Fund, Nations Disciplined Equity
Fund, Nations Value Fund, Nations Florida Municipal Bond Fund, Nations Strategic
Fixed Income Fund, Nations Short-Term Income Fund and Nations Tax Exempt Fund
(the "Funds") appearing in the March 31, 1997 Annual Report to Shareholders,
which financial statements and financial highlights are also incorporated by
reference into the Registration Statement. We also consent to the references to
us under the heading "Financial Statements" and in paragraphs 5.1.j. and 8.6 of
the Agreement and Plan of Reorganization in such Combined Proxy
Statement/Prospectus. We further consent to the references to us under the
headings "Financial Highlights" and "How The Funds Are Managed -- Other Service
Providers" in the Prospectuses of the Funds dated August 1, 1997 and under the
heading "Independent Accountants and Reports" in the Statement of Additional
Information of the Funds dated August 1, 1997 which are incorporated by
reference into the Registration Statement.
/s/ PRICE WATERHOUSE LLP
Boston, Massachusetts
February 17, 1998
Exhibit 99.14(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses and
Statements of Additional Information constituting parts of Post-Effective
Amendment No. 21 to the registration statement on Form N-1A (the "Registration
Statement") dated April 1, 1997, of our report dated January 22, 1997, relating
to the financial statements and financial highlights appearing in the November
30, 1996 Annual Report to Shareholders of the Emerald Funds, which are also
incorporated by reference into the Registration Statement and into the Proxy
Statement/Prospectus and Statement of Additional Information constituting parts
of the registration statement on Form N-14 for Nations Fund Trust. We also
consent to the references to us under the heading "Financial Highlights" in the
Prospectuses dated April 1, 1997 and under the heading "Financial Statements" in
the Statements of Additional Information dated April 1, 1997.
/s/ PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
February 19, 1998
Exhibit 99.14(c)
Independent Auditors' Consent
The Board of Trustees of
Emerald Funds,
Nations Institutional Reserves,
Nations Fund Trust and
The Board of Directors of
Nations Fund, Inc.:
We consent to the use of our reports dated January 21, 1998 and addressed to the
Shareholders and Board of Trustees of the Emerald Funds which are incorporated
by reference herein and to the reference to our firm under the headings "Other
Service Providers for the Emerald Funds and Nations Funds" and Financial
Statements" in the combined Proxy Statement/Prospectuses for the Nations
Institutional Reserves, Nations Fund Trust and Nations Fund, Inc. (collectively,
Nations) and "Incorporation of Documents by Reference in Statement of Additional
Information" in the Statements of Additional Information for Nations.
/s/ KPMG Peat Marwick LLP
Columbus, Ohio
February 29, 2998
POWER OF ATTORNEY
Edmund L. Benson, III, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Fund Trust (the "Trust") to comply with
the Investment Company Act of 1940, as amended, and the Securities Act of 1933,
as amended (the "1933 Act"), and any rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Trust's Registration Statement(s) on Form N-14
pursuant to the 1933 Act, and to qualify or register for sale any securities in
any state including specifically, but without limiting the generality of the
foregoing, the power and authority to sign, in the name and on behalf of the
undersigned as a trustee of the Trust, such Registration Statement(s), and any
and all amendments thereto, filed with the Securities and Exchange Commission
under the 1933 Act, and any other instruments or documents related thereto, and
the undersigned does hereby ratify and confirm all that said attorneys and
agents, individually or collectively, shall do or cause to be done by virtue
thereof.
Dated: February 6, 1998
/s/ Edmund L. Benson, III
---------------------------------------
Edmund L. Benson, III
<PAGE>
POWER OF ATTORNEY
James Ermer, whose signature appears below, does hereby constitute
and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M. Kurucza, Marco
E. Adelfio and Steven G. Cravath, each individually, his true and lawful
attorneys and agents, with power of substitution or resubstitution, to do any
and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Fund Trust (the "Trust") to comply with
the Investment Company Act of 1940, as amended, and the Securities Act of 1933,
as amended (the "1933 Act"), and any rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Trust's Registration Statement(s) on Form N-14
pursuant to the 1933 Act, and to qualify or register for sale any securities in
any state including specifically, but without limiting the generality of the
foregoing, the power and authority to sign, in the name and on behalf of the
undersigned as a trustee of the Trust, such Registration Statement(s), and any
and all amendments thereto, filed with the Securities and Exchange Commission
under the 1933 Act, and any other instruments or documents related thereto, and
the undersigned does hereby ratify and confirm all that said attorneys and
agents, individually or collectively, shall do or cause to be done by virtue
thereof.
Dated: February 6, 1998
/s/ James Ermer
---------------------------------------
James Ermer
<PAGE>
POWER OF ATTORNEY
William H. Grigg, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Fund Trust (the "Trust") to comply with
the Investment Company Act of 1940, as amended, and the Securities Act of 1933,
as amended (the "1933 Act"), and any rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Trust's Registration Statement(s) on Form N-14
pursuant to the 1933 Act, and to qualify or register for sale any securities in
any state including specifically, but without limiting the generality of the
foregoing, the power and authority to sign, in the name and on behalf of the
undersigned as a trustee of the Trust, such Registration Statement(s), and any
and all amendments thereto, filed with the Securities and Exchange Commission
under the 1933 Act, and any other instruments or documents related thereto, and
the undersigned does hereby ratify and confirm all that said attorneys and
agents, individually or collectively, shall do or cause to be done by virtue
thereof.
Dated: February 10, 1998
/s/ William H. Grigg
---------------------------------------
William H. Grigg
<PAGE>
POWER OF ATTORNEY
Thomas F. Keller, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Fund Trust (the "Trust") to comply with
the Investment Company Act of 1940, as amended, and the Securities Act of 1933,
as amended (the "1933 Act"), and any rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Trust's Registration Statement(s) on Form N-14
pursuant to the 1933 Act, and to qualify or register for sale any securities in
any state including specifically, but without limiting the generality of the
foregoing, the power and authority to sign, in the name and on behalf of the
undersigned as a trustee of the Trust, such Registration Statement(s), and any
and all amendments thereto, filed with the Securities and Exchange Commission
under the 1933 Act, and any other instruments or documents related thereto, and
the undersigned does hereby ratify and confirm all that said attorneys and
agents, individually or collectively, shall do or cause to be done by virtue
thereof.
Dated: February 6, 1998
/s/ Thomas F. Keller
---------------------------------------
Thomas F. Keller
<PAGE>
POWER OF ATTORNEY
A. Max Walker, whose signature appears below, does hereby constitute
and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M. Kurucza, Marco
E. Adelfio and Steven G. Cravath, each individually, his true and lawful
attorneys and agents, with power of substitution or resubstitution, to do any
and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Fund Trust (the "Trust") to comply with
the Investment Company Act of 1940, as amended, and the Securities Act of 1933,
as amended (the "1933 Act"), and any rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Trust's Registration Statement(s) on Form N-14
pursuant to the 1933 Act, and to qualify or register for sale any securities in
any state including specifically, but without limiting the generality of the
foregoing, the power and authority to sign, in the name and on behalf of the
undersigned as an officer of the Trust, such Registration Statement(s), and any
and all amendments thereto, filed with the Securities and Exchange Commission
under the 1933 Act, and any other instruments or documents related thereto, and
the undersigned does hereby ratify and confirm all that said attorneys and
agents, individually or collectively, shall do or cause to be done by virtue
thereof.
Dated: February 6, 1998
/s/ A. Max Walker
---------------------------------------
A. Max Walker
<PAGE>
POWER OF ATTORNEY
Charles B. Walker, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Fund Trust (the "Trust") to comply with
the Investment Company Act of 1940, as amended, and the Securities Act of 1933,
as amended (the "1933 Act"), and any rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Trust's Registration Statement(s) on Form N-14
pursuant to the 1933 Act, and to qualify or register for sale any securities in
any state including specifically, but without limiting the generality of the
foregoing, the power and authority to sign, in the name and on behalf of the
undersigned as a trustee of the Trust, such Registration Statement(s), and any
and all amendments thereto, filed with the Securities and Exchange Commission
under the 1933 Act, and any other instruments or documents related thereto, and
the undersigned does hereby ratify and confirm all that said attorneys and
agents, individually or collectively, shall do or cause to be done by virtue
thereof.
Dated: February 6, 1998
/s/ Charles B. Walker
---------------------------------------
Charles B. Walker
<PAGE>
POWER OF ATTORNEY
Thomas S. Word, Jr., whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Fund Trust (the "Trust") to comply with
the Investment Company Act of 1940, as amended, and the Securities Act of 1933,
as amended (the "1933 Act"), and any rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Trust's Registration Statement(s) on Form N-14
pursuant to the 1933 Act, and to qualify or register for sale any securities in
any state including specifically, but without limiting the generality of the
foregoing, the power and authority to sign, in the name and on behalf of the
undersigned as a trustee of the Trust, such Registration Statement(s), and any
and all amendments thereto, filed with the Securities and Exchange Commission
under the 1933 Act, and any other instruments or documents related thereto, and
the undersigned does hereby ratify and confirm all that said attorneys and
agents, individually or collectively, shall do or cause to be done by virtue
thereof.
Dated: February 6, 1998
/s/ Thomas S. Word, Jr.
---------------------------------------
Thomas S. Word, Jr.
<PAGE>
POWER OF ATTORNEY
Richard H. Rose, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Fund Trust (the "Trust") to comply with
the Investment Company Act of 1940, as amended, and the Securities Act of 1933,
as amended (the "1933 Act"), and any rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Trust's Registration Statement(s) on Form N-14
pursuant to the 1933 Act, and to qualify or register for sale any securities in
any state including specifically, but without limiting the generality of the
foregoing, the power and authority to sign, in the name and on behalf of the
undersigned as an officer of the Trust, such Registration Statement(s), and any
and all amendments thereto, filed with the Securities and Exchange Commission
under the 1933 Act, and any other instruments or documents related thereto, and
the undersigned does hereby ratify and confirm all that said attorneys and
agents, individually or collectively, shall do or cause to be done by virtue
thereof.
Dated: February 6, 1998
/s/ Richard H. Rose
---------------------------------------
Richard H. Rose
<PAGE>
POWER OF ATTORNEY
Carl E. Mundy, Jr., whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Fund Trust (the "Trust") to comply with
the Investment Company Act of 1940, as amended, and the Securities Act of 1933,
as amended (the "1933 Act"), and any rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Trust's Registration Statement(s) on Form N-14
pursuant to the 1933 Act, and to qualify or register for sale any securities in
any state including specifically, but without limiting the generality of the
foregoing, the power and authority to sign, in the name and on behalf of the
undersigned as an officer of the Trust, such Registration Statement(s), and any
and all amendments thereto, filed with the Securities and Exchange Commission
under the 1933 Act, and any other instruments or documents related thereto, and
the undersigned does hereby ratify and confirm all that said attorneys and
agents, individually or collectively, shall do or cause to be done by virtue
thereof.
Dated: February 9, 1998
/s/ Carl E. Mundy, Jr.
---------------------------------------
Carl E. Mundy, Jr.
<PAGE>
POWER OF ATTORNEY
James B. Sommers, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., Robert M.
Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually, his true and
lawful attorneys and agents, with power of substitution or resubstitution, to do
any and all acts and things and to execute any and all instruments which said
attorneys and agents, each individually, may deem necessary or advisable or
which may be required to enable Nations Fund Trust (the "Trust") to comply with
the Investment Company Act of 1940, as amended, and the Securities Act of 1933,
as amended (the "1933 Act"), and any rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Trust's Registration Statement(s) on Form N-14
pursuant to the 1933 Act, and to qualify or register for sale any securities in
any state including specifically, but without limiting the generality of the
foregoing, the power and authority to sign, in the name and on behalf of the
undersigned as an officer of the Trust, such Registration Statement(s), and any
and all amendments thereto, filed with the Securities and Exchange Commission
under the 1933 Act, and any other instruments or documents related thereto, and
the undersigned does hereby ratify and confirm all that said attorneys and
agents, individually or collectively, shall do or cause to be done by virtue
thereof.
Dated: February 7, 1998
/s/ James B. Sommers
---------------------------------------
James B. Sommers
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 24F-2: ANNUAL NOTICE OF SECURITIES SOLD, PURSUANT TO
RULE 24F-2
READ INSTRUCTIONS AT END OF FORM BEFORE PREPARING FORM.
PLEASE PRINT OR TYPE.
- --------------------------------------------------------------------------------
1. NAME AND ADDRESS OF ISSUER:
Nations Fund Trust
111 Center Street
Little Rock, AR 72201
- --------------------------------------------------------------------------------
2. NAME OF EACH SERIES OR CLASS OF FUNDS FOR WHICH THIS NOTICE IS FILED:
Nations Government Money Market Fund-Primary A Shares. Nations Government Money
Market Fund-Primary B Shares. Nations Government Money Market Fund-Investor A
Shares. Nations Government Money Market Fund-Investor B Shares. Nations
Government Money Market Fund-Investor C Shares. Nations Government Money Market
Fund-Daily Shares. Nations Tax Exempt Fund-Primary A Shares. Nations Tax Exempt
Fund-Primary B Shares. Nations Tax Exempt Fund-Investor A Shares. Nations Tax
Exempt Fund-Investor B Shares. Nations Tax Exempt Fund-Investor C Shares.
Nations Tax Exempt Fund-Daily Shares. Nations Value Fund-Primary A Shares.
Nations Value Fund-Primary B Shares. Nations Value Fund-Investor A Shares.
Nations Value Fund-Investor C Shares. Nations Value Fund-Investor N Shares.
Nations Capital Growth Fund-Primary A Shares. Nations Capital Growth
Fund-Primary B Shares. Nations Capital Growth Fund-Investor A Shares. Nations
Capital Growth Fund-Investor C Shares. Nations Capital Growth Fund-Investor N
Shares. Nations Emerging Growth Fund-Primary A Shares. Nations Emerging Growth
Fund-Primary B Shares. Nations Emerging Growth Fund-Investor A Shares. Nations
Emerging Growth Fund-Investor C Shares. Nations Emerging Growth Fund-Investor N
Shares. Nations Balanced Assets Fund-Primary A Shares. Nations Balanced Assets
Fund-Primary B Shares. Nations Balanced Assets Fund-Investor A Shares. Nations
Balanced Assets Fund-Investor C Shares. Nations Balanced Assets Fund-Investor N
Shares. Nations Equity Index Fund-Primary A Shares. Nations Equity Index
Fund-Primary B Shares. Nations Equity Index Fund-Investor A Shares. Nations
Disciplined Equity Fund-Primary A Shares. Nations Disciplined Equity
Fund-Primary B Shares. Nations Disciplined Equity Fund-Investor A Shares.
Nations Disciplined Equity Fund-Investor C Shares. Nations Disciplined Equity
Fund-Investor N Shares. Nations Short-Intermediate Government Fund-Primary A
Shares. Nations Short-Intermediate Government Fund-Primary B Shares. Nations
Short-Intermediate Government Fund-Investor A Shares. Nations Short-Intermediate
Government Fund-Investor C Shares. Nations Short-Intermediate Government
Fund-Investor N Shares. Nations Managed Index Fund-Primary A Shares. Nations
Managed Index Fund-Primary B Shares. Nations Managed Index Fund-Investor A
Shares. Nations Managed Index Fund-Investor C Shares. Nations Managed SmallCap
Index Fund-Primary A Shares. Nations Managed SmallCap Index Fund-Primary B
Shares. Nations Managed SmallCap Index Fund-Investor A Shares. Nations Managed
SmallCap Index Fund-Investor C Shares. Nations Short-Term Income Fund-Primary A
Shares. Nations Short-Term Income Fund-Primary B Shares. Nations Short-Term
Income Fund-Investor A Shares. Nations Short-Term Income Fund-Investor C Shares.
Nations Short-Term Income Fund-Investor N
<PAGE>
Shares. Nations Diversified Income Fund-Primary A Shares. Nations Diversified
Income Fund-Primary B Shares. Nations Diversified Income Fund-Investor A Shares.
Nations Diversified Income Fund-Investor C Shares. Nations Diversified Income
Fund-Investor N Shares. Nations Strategic Fixed Income Fund-Primary A Shares.
Nations Strategic Fixed Income Fund-Primary B Shares. Nations Strategic Fixed
Income Fund-Investor A Shares. Nations Strategic Fixed Income Fund-Investor C
Shares. Nations Strategic Fixed Income Fund-Investor N Shares. Nations Florida
Intermediate Municipal Bond Fund-Primary A Shares. Nations Florida Intermediate
Municipal Bond Fund-Investor A Shares. Nations Florida Intermediate Municipal
Bond Fund-Investor C Shares. Nations Florida Intermediate Municipal Bond
Fund-Investor N Shares. Nations Florida Municipal Bond Fund-Primary A Shares.
Nations Florida Municipal Bond Fund-Investor A Shares. Nations Florida Municipal
Bond Fund-Investor C Shares. Nations Florida Municipal Bond Fund-Investor N
Shares. Nations Georgia Intermediate Municipal Bond Fund-Primary A Shares.
Nations Georgia Intermediate Municipal Bond Fund-Investor A Shares. Nations
Georgia Intermediate Municipal Bond Fund-Investor C Shares. Nations Georgia
Intermediate Municipal Bond Fund-Investor N Shares. Nations Georgia Municipal
Bond Fund-Primary A Shares. Nations Georgia Municipal Bond Fund-Investor A
Shares. Nations Georgia Municipal Bond Fund-Investor C Shares. Nations Georgia
Municipal Bond Fund-Investor N Shares. Nations Maryland Intermediate Municipal
Bond Fund-Primary A Shares. Nations Maryland Intermediate Municipal Bond
Fund-Investor A Shares. Nations Maryland Intermediate Municipal Bond
Fund-Investor C Shares. Nations Maryland Intermediate Municipal Bond
Fund-Investor N Shares. Nations Maryland Municipal Bond Fund-Primary A Shares.
Nations Maryland Municipal Bond Fund-Investor A Shares. Nations Maryland
Municipal Bond Fund-Investor C Shares. Nations Maryland Municipal Bond
Fund-Investor N Shares. Nations North Carolina Intermediate Municipal Bond
Fund-Primary A Shares. Nations North Carolina Intermediate Municipal Bond
Fund-Investor A Shares. Nations North Carolina Intermediate Municipal Bond
Fund-Investor C Shares. Nations North Carolina Intermediate Municipal Bond
Fund-Investor N Shares. Nations North Carolina Municipal Bond Fund-Primary A
Shares. Nations North Carolina Municipal Bond Fund-Investor A Shares. Nations
North Carolina Municipal Bond Fund-Investor C Shares. Nations North Carolina
Municipal Bond Fund-Investor N Shares. Nations South Carolina Intermediate
Municipal Bond Fund-Primary A Shares. Nations South Carolina Intermediate
Municipal Bond Fund-Investor A Shares. Nations South Carolina Intermediate
Municipal Bond Fund-Investor C Shares. Nations South Carolina Intermediate
Municipal Bond Fund-Investor N Shares. Nations South Carolina Municipal Bond
Fund-Primary A Shares. Nations South Carolina Municipal Bond Fund-Investor A
Shares. Nations South Carolina Municipal Bond Fund-Investor C Shares. Nations
South Carolina Municipal Bond Fund-Investor N Shares. Nations Tennessee
Intermediate Municipal Bond Fund-Primary A Shares. Nations Tennessee
Intermediate Municipal Bond Fund-Investor A Shares. Nations Tennessee
Intermediate Municipal Bond Fund-Investor C Shares. Nations Tennessee
Intermediate Municipal Bond Fund-Investor N Shares. Nations Tennessee Municipal
Bond Fund-Primary A Shares. Nations Tennessee Municipal Bond Fund-Investor A
Shares. Nations Tennessee Municipal Bond Fund-Investor C Shares. Nations
Tennessee Municipal Bond Fund-Investor N Shares. Nations Texas Intermediate
Municipal Bond Fund-Primary A Shares. Nations Texas Intermediate Municipal Bond
Fund-Investor A Shares. Nations Texas Intermediate Municipal Bond Fund-Investor
C Shares. Nations Texas Intermediate Municipal Bond Fund-Investor N Shares.
Nations Texas Municipal Bond Fund-Primary A Shares. Nations Texas Municipal Bond
Fund-Investor A Shares. Nations Texas Municipal Bond Fund-Investor C Shares.
Nations Texas Municipal Bond Fund-Investor N Shares. Nations Virginia
Intermediate Municipal Bond Fund-Primary A Shares. Nations Virginia Intermediate
Municipal Bond Fund-Investor A Shares. Nations Virginia Intermediate Municipal
Bond Fund-Investor C Shares. Nations Virginia Intermediate Municipal Bond
Fund-Investor N Shares. Nations Virginia Municipal Bond Fund-Primary A Shares.
Nations Virginia Municipal Bond Fund-Investor A Shares. Nations Virginia
Municipal Bond Fund-Investor C
2
<PAGE>
Shares. Nations Virginia Municipal Bond Fund-Investor N Shares. Nations
Short-Term Municipal Income Fund-Primary A Shares. Nations Short-Term Municipal
Income Fund-Investor A Shares. Nations Short-Term Municipal Income Fund-Investor
C Shares. Nations Short-Term Municipal Income Fund-Investor N Shares. Nations
Intermediate Municipal Bond Fund-Primary A Shares. Nations Intermediate
Municipal Bond Fund-Investor A Shares. Nations Intermediate Municipal Bond
Fund-Investor C Shares. Nations Intermediate Municipal Bond Fund-Investor N
Shares. Nations Municipal Income Fund-Primary A Shares. Nations Municipal Income
Fund-Investor A Shares. Nations Municipal Income Fund-Investor C Shares. Nations
Municipal Income Fund-Investor N Shares.
- --------------------------------------------------------------------------------
3. INVESTMENT COMPANY ACT FILE NUMBER: 811-4305
SECURITIES ACT FILE NUMBER: 2-97817
- --------------------------------------------------------------------------------
4. LAST DAY OF FISCAL YEAR FOR WHICH THIS NOTICE IS FILED:
MARCH 31, 1997
- --------------------------------------------------------------------------------
5. CHECK BOX IF THIS NOTICE IS BEING FILED MORE THAN 180 DAYS AFTER THE CLOSE
OF THE ISSUER'S FISCAL YEAR END FOR PURPOSES OF REPORTING SECURITIES SOLD AFTER
THE CLOSE OF THE FISCAL YEAR BUT BEFORE TERMINATION OF THE ISSUER'S 24F-2
DECLARATION: [ ]
- --------------------------------------------------------------------------------
6. DATE OF TERMINATION OF ISSUER'S DECLARATION UNDER RULE 24F-2(A)(1), IF
APPLICABLE (SEE INSTRUCTION A.6):
N/A
- --------------------------------------------------------------------------------
7. NUMBER AND AMOUNT OF SECURITIES OF THE SAME CLASS OR SERIES WHICH HAD BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OTHER THAN PURSUANT TO RULE 24F-2 IN
A PRIOR FISCAL YEAR, BUT WHICH REMAINED UNSOLD AT THE BEGINNING OF THE FISCAL
YEAR:
N/A
- --------------------------------------------------------------------------------
8. NUMBER AND AMOUNT OF SECURITIES REGISTERED DURING THE FISCAL YEAR OTHER
THAN PURSUANT TO RULE 24F-2:
N/A
- --------------------------------------------------------------------------------
9. NUMBER AND AGGREGATE SALE PRICE OF SECURITIES SOLD DURING THE FISCAL YEAR:
NUMBER: 4,040,136,351 SHARES
SALE PRICE: $6,713,457,126.00
- --------------------------------------------------------------------------------
10. NUMBER AND AGGREGATE SALE PRICE OF SECURITIES SOLD DURING THE FISCAL YEAR
IN RELIANCE UPON REGISTRATION PURSUANT TO RULE 24F-2:
NUMBER: 4,040,136,351 SHARES
SALE PRICE: $6,713,457,126.00
- --------------------------------------------------------------------------------
3
<PAGE>
11. NUMBER AND AGGREGATE SALE PRICE OF SECURITIES ISSUED DURING THE FISCAL YEAR
IN CONNECTION WITH DIVIDEND REINVESTMENT PLANS, IF APPLICABLE (SEE INSTRUCTION
B.7):
NUMBER: 34,041,780 SHARES
SALE PRICE: +265,655,029.00
- --------------------------------------------------------------------------------
12. CALCULATION OF REGISTRATION FEE:
(i) Aggregate sale price of securities sold during the fiscal year
in reliance on Rule 24f-2 (from Item 10):
$6,713,457,126.00
(ii) Aggregate price of shares issued in connection with
dividend reinvestment plans (from Item 11, if applicable):
$265,655,029.00
(iii) Aggregate price of shares redeemed or repurchased during
the fiscal year (if applicable):
-6,282,055,703.00
(iv) Aggregate price of shares redeemed or repurchased and
previously applied as a reduction to filing fees pursuant to Rule 24e-2
(if applicable):
0.00
(v) Net aggregate price of securities sold and issued during
the fiscal year in reliance on Rule 24f-2 [line (i), plus line (ii),
less line (iii), plus line (iv)] (if applicable):
$697,056,452.00
(vi) Multiplier prescribed by Section 6(b) of the Securities
Act of 1933 or other applicable law or regulation (see
Instruction C.6):
X 1/33 OF 1%
(vii) Fee due [line (i) or line (v) multiplied by line (vi)]:
$211,229.23
INSTRUCTION: ISSUERS SHOULD COMPLETE LINES (II), (III), (IV) AND (V) ONLY IF THE
FORM IS BEING FILED WITHIN 60 DAYS AFTER THE CLOSE OF THE ISSUER'S FISCAL YEAR.
See Instruction C.3.
Check box if fees are being remitted to the Commission's lockbox depository as
described in Section 3a of the Commission's Rule of Informal and Other
Procedures (17CFR 202.3a). [ X ]
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
Date of mailing or wire transfer of filing fees to the Commission's lockbox
depository:
MAY 19, 1997
- --------------------------------------------------------------------------------
SIGNATURES
This report has been signed below by the following persons on behalf of the
issuer and in the capacities and on the dates indicated.
By: \s\ JAMES EDWARD BANKS, JR.
ASSISTANT SECRETARY
Date: MAY 20, 1997
- --------------------------------------------------------------------------------
5
[MORRISON & FOERSTER LLP LETTERHEAD]
May 19, 1997
Nations Fund Trust
111 Center Street
Little Rock, AR 72201
Re: Issuance and Sale of Shares of Beneficial Interest
of Nations Fund Trust; Registration on Form N-1A
Pursuant to Rule 24f-2
Ladies and Gentlemen:
Nations Fund Trust (the "Trust") has requested our opinion in connection
with the sale or issuance by the Trust of 4,076,484,822 shares of beneficial
interest (the "Shares"), in the aggregate, of all classes of Shares of all
portfolios of the Trust (collectively, the "Funds").
We have examined documents relating to the organization of the Trust and
the authorization for registration and sale of Shares of each of the Funds. The
opinion given below only relates to the law of the Commonwealth of
Massachusetts, the laws under which the Trust was organized, and is subject to
the condition that the Trust is in compliance with the provisions of any
applicable laws, regulations and permits of any state or foreign country in
which any Shares of any of the Funds are sold.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance and sale of the Shares by the Trust have been duly and
validly authorized by all appropriate action and, assuming delivery by sale or
in accord with the Funds' dividend reinvestment plan was in accordance with the
description set forth in the Trust's current prospectuses under the Securities
Act of 1933, the Shares have been legally issued, fully paid and are
non-assessable.
We consent to the submission of a copy of this opinion to the Securities
and Exchange Commission in connection with the filing of the Trust's Rule 24f-2
Notice, as amended, under the Investment Company Act of 1940, as amended.
Very truly yours,
/S/ MORRISON & FOERSTER LLP
MORRISON & FOERSTER LLP
PROXY CARD
EMERALD FUNDS
EMERALD BALANCED FUND
Special Meeting of Shareholders-May 4, 1998
The undersigned hereby appoints Martin R. Dean and Hugh J. Fanning (the
"Proxies") and each of them, attorneys and proxies of the undersigned, each with
power of substitution and resubstitution, to attend, vote and act for the
undersigned at the Special Meeting of Shareholders of Emerald Funds ("Emerald")
to be held at the offices of Emerald, 3435 Stelzer Road, Columbus, Ohio 43219,
at 10:00 a.m. (Eastern time), on Monday, May 4, 1998, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Emerald Balanced Fund (the "Fund") which the undersigned may be
entitled to vote with respect to the proposals set forth below, in accordance
with the specification indicated, if any, and with all the powers which the
undersigned would possess if personally present. The undersigned hereby revokes
any prior proxy to vote at such meeting, and hereby ratifies and confirms all
that said attorneys and Proxies, or either of them, may lawfully do by virtue
thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED MARCH 30, 1998.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF EMERALD, WHICH UNANIMOUSLY
RECOMMENDS THAT YOU VOTE IN FAVOR OF BOTH PROPOSALS. YOU MAY VOTE BY FAXING THE
PROXY BALLOT TO A.D.P. PROXY SERVICES AT (____) __________ OR BY MAILING IT IN
THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU MARK, SIGN AND DATE
YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSALS.
(1) To ratify and approve an interim investment advisory agreement
with Barnett Capital Advisors, Inc., and to ratify and approve an
interim investment sub-advisory agreement with Brandes Investment
Partners, L.P., for the period from January 9, 1998 forward.
|_|YES |_|NO |_|ABSTAIN
(2) To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, that
provides for the transfer of all of the assets and liabilities of
the Fund to a corresponding fund of Nations Fund Trust in exchange
for shares of a designated class of such Nations fund, and which
contemplates the reorganization of Emerald.
|_|YES |_|NO |_|ABSTAIN
THESE PROPOSALS HAVE BEEN PROPOSED BY EMERALD.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
_____________________________
_____________________________, 1998
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
EMERALD FUNDS
EMERALD EQUITY FUND
Special Meeting of Shareholders-May 4, 1998
The undersigned hereby appoints Martin R. Dean and Hugh J. Fanning (the
"Proxies") and each of them, attorneys and proxies of the undersigned, each with
power of substitution and resubstitution, to attend, vote and act for the
undersigned at the Special Meeting of Shareholders of Emerald Funds ("Emerald")
to be held at the offices of Emerald, 3435 Stelzer Road, Columbus, Ohio 43219,
at 10:00 a.m. (Eastern time), on Monday, May 4, 1998, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Emerald Equity Fund (the "Fund") which the undersigned may be
entitled to vote with respect to the proposals set forth below, in accordance
with the specification indicated, if any, and with all the powers which the
undersigned would possess if personally present. The undersigned hereby revokes
any prior proxy to vote at such meeting, and hereby ratifies and confirms all
that said attorneys and Proxies, or either of them, may lawfully do by virtue
thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED MARCH 30, 1998.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF EMERALD, WHICH UNANIMOUSLY
RECOMMENDS THAT YOU VOTE IN FAVOR OF BOTH PROPOSALS. YOU MAY VOTE BY FAXING THE
PROXY BALLOT TO A.D.P. PROXY SERVICES AT (____) __________ OR BY MAILING IT IN
THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU MARK, SIGN AND DATE
YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSALS.
(1) To ratify and approve an interim investment advisory agreement
with Barnett Capital Advisors, Inc., for the period from January 9,
1998 forward.
|_|YES |_|NO |_|ABSTAIN
(2) To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, that
provides for the transfer of all of the assets and liabilities of
the Fund to a corresponding fund of Nations Fund Trust in exchange
for shares of a designated class of such Nations fund, and which
contemplates the reorganization of Emerald.
|_|YES |_|NO |_|ABSTAIN
THESE PROPOSALS HAVE BEEN PROPOSED BY EMERALD.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
_____________________________
_____________________________, 1998
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
EMERALD FUNDS
EMERALD EQUITY VALUE FUND
Special Meeting of Shareholders-May 4, 1998
The undersigned hereby appoints Martin R. Dean and Hugh J. Fanning (the
"Proxies") and each of them, attorneys and proxies of the undersigned, each with
power of substitution and resubstitution, to attend, vote and act for the
undersigned at the Special Meeting of Shareholders of Emerald Funds ("Emerald")
to be held at the offices of Emerald, 3435 Stelzer Road, Columbus, Ohio 43219,
at 10:00 a.m. (Eastern time), on Monday, May 4, 1998, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Emerald Equity Value Fund (the "Fund") which the undersigned may
be entitled to vote with respect to the proposals set forth below, in accordance
with the specification indicated, if any, and with all the powers which the
undersigned would possess if personally present. The undersigned hereby revokes
any prior proxy to vote at such meeting, and hereby ratifies and confirms all
that said attorneys and Proxies, or either of them, may lawfully do by virtue
thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED MARCH 30, 1998.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF EMERALD, WHICH UNANIMOUSLY
RECOMMENDS THAT YOU VOTE IN FAVOR OF BOTH PROPOSALS. YOU MAY VOTE BY FAXING THE
PROXY BALLOT TO A.D.P. PROXY SERVICES AT (____) __________ OR BY MAILING IT IN
THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU MARK, SIGN AND DATE
YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSALS.
(1) To ratify and approve an interim investment advisory agreement
with Barnett Capital Advisors, Inc., for the period from January 9,
1998 forward.
|_|YES |_|NO |_|ABSTAIN
(2) To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, that
provides for the transfer of all of the assets and liabilities of
the Fund to a corresponding fund of Nations Fund Trust in exchange
for shares of a designated class of such Nations fund, and which
contemplates the reorganization of Emerald.
|_|YES |_|NO |_|ABSTAIN
THESE PROPOSALS HAVE BEEN PROPOSED BY EMERALD.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
_____________________________
_____________________________, 1998
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
EMERALD FUNDS
EMERALD FLORIDA TAX-EXEMPT FUND
Special Meeting of Shareholders-May 4, 1998
The undersigned hereby appoints Martin R. Dean and Hugh J. Fanning (the
"Proxies") and each of them, attorneys and proxies of the undersigned, each with
power of substitution and resubstitution, to attend, vote and act for the
undersigned at the Special Meeting of Shareholders of Emerald Funds ("Emerald")
to be held at the offices of Emerald, 3435 Stelzer Road, Columbus, Ohio 43219,
at 10:00 a.m. (Eastern time), on Monday, May 4, 1998, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Emerald Florida Tax-Exempt Fund (the "Fund") which the undersigned
may be entitled to vote with respect to the proposals set forth below, in
accordance with the specification indicated, if any, and with all the powers
which the undersigned would possess if personally present. The undersigned
hereby revokes any prior proxy to vote at such meeting, and hereby ratifies and
confirms all that said attorneys and Proxies, or either of them, may lawfully do
by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED MARCH 30, 1998.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF EMERALD, WHICH UNANIMOUSLY
RECOMMENDS THAT YOU VOTE IN FAVOR OF BOTH PROPOSALS. YOU MAY VOTE BY FAXING THE
PROXY BALLOT TO A.D.P. PROXY SERVICES AT (____) __________ OR BY MAILING IT IN
THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU MARK, SIGN AND DATE
YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSALS.
(1) To ratify and approve an interim investment advisory agreement
with Barnett Capital Advisors, Inc., for the period from January 9,
1998 forward.
|_|YES |_|NO |_|ABSTAIN
(2) To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, that
provides for the transfer of all of the assets and liabilities of
the Fund to a corresponding fund of Nations Fund Trust in exchange
for shares of a designated class of such Nations fund, and which
contemplates the reorganization of Emerald.
|_|YES |_|NO |_|ABSTAIN
THESE PROPOSALS HAVE BEEN PROPOSED BY EMERALD.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
_____________________________
_____________________________, 1998
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
EMERALD FUNDS
EMERALD MANAGED BOND FUND
Special Meeting of Shareholders-May 4, 1998
The undersigned hereby appoints Martin R. Dean and Hugh J. Fanning (the
"Proxies") and each of them, attorneys and proxies of the undersigned, each with
power of substitution and resubstitution, to attend, vote and act for the
undersigned at the Special Meeting of Shareholders of Emerald Funds ("Emerald")
to be held at the offices of Emerald, 3435 Stelzer Road, Columbus, Ohio 43219,
at 10:00 a.m. (Eastern time), on Monday, May 4, 1998, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Emerald Managed Bond Fund (the "Fund") which the undersigned may
be entitled to vote with respect to the proposals set forth below, in accordance
with the specification indicated, if any, and with all the powers which the
undersigned would possess if personally present. The undersigned hereby revokes
any prior proxy to vote at such meeting, and hereby ratifies and confirms all
that said attorneys and Proxies, or either of them, may lawfully do by virtue
thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED MARCH 30, 1998.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF EMERALD, WHICH UNANIMOUSLY
RECOMMENDS THAT YOU VOTE IN FAVOR OF BOTH PROPOSALS. YOU MAY VOTE BY FAXING THE
PROXY BALLOT TO A.D.P. PROXY SERVICES AT (____) __________ OR BY MAILING IT IN
THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU MARK, SIGN AND DATE
YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSALS.
(1) To ratify and approve an interim investment advisory agreement
with Barnett Capital Advisors, Inc., for the period from January 9,
1998 forward.
|_|YES |_|NO |_|ABSTAIN
(2) To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, that
provides for the transfer of all of the assets and liabilities of
the Fund to a corresponding fund of Nations Fund Trust in exchange
for shares of a designated class of such Nations fund, and which
contemplates the reorganization of Emerald.
|_|YES |_|NO |_|ABSTAIN
THESE PROPOSALS HAVE BEEN PROPOSED BY EMERALD.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
_____________________________
_____________________________, 1998
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
EMERALD FUNDS
EMERALD SHORT-TERM FIXED INCOME FUND
Special Meeting of Shareholders-May 4, 1998
The undersigned hereby appoints Martin R. Dean and Hugh J. Fanning (the
"Proxies") and each of them, attorneys and proxies of the undersigned, each with
power of substitution and resubstitution, to attend, vote and act for the
undersigned at the Special Meeting of Shareholders of Emerald Funds ("Emerald")
to be held at the offices of Emerald, 3435 Stelzer Road, Columbus, Ohio 43219,
at 10:00 a.m. (Eastern time), on Monday, May 4, 1998, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Emerald Short-Term Fixed Income Fund (the "Fund") which the
undersigned may be entitled to vote with respect to the proposals set forth
below, in accordance with the specification indicated, if any, and with all the
powers which the undersigned would possess if personally present. The
undersigned hereby revokes any prior proxy to vote at such meeting, and hereby
ratifies and confirms all that said attorneys and Proxies, or either of them,
may lawfully do by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED MARCH 30, 1998.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF EMERALD, WHICH UNANIMOUSLY
RECOMMENDS THAT YOU VOTE IN FAVOR OF BOTH PROPOSALS. YOU MAY VOTE BY FAXING THE
PROXY BALLOT TO A.D.P. PROXY SERVICES AT (____) __________ OR BY MAILING IT IN
THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU MARK, SIGN AND DATE
YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSALS.
(1) To ratify and approve an interim investment advisory agreement
with Barnett Capital Advisors, Inc., and to ratify and approve an
interim investment sub-advisory agreement with Rodney Square
Management Corporation, for the period from January 9, 1998 forward.
|_|YES |_|NO |_|ABSTAIN
(2) To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, that
provides for the transfer of all of the assets and liabilities of
the Fund to a corresponding fund of Nations Fund Trust in exchange
for shares of a designated class of such Nations fund, and which
contemplates the reorganization of Emerald.
|_|YES |_|NO |_|ABSTAIN
THESE PROPOSALS HAVE BEEN PROPOSED BY EMERALD.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
_____________________________
_____________________________, 1998
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
<PAGE>
PROXY CARD
EMERALD FUNDS
EMERALD TAX-EXEMPT FUND
Special Meeting of Shareholders-May 4, 1998
The undersigned hereby appoints Martin R. Dean and Hugh J. Fanning (the
"Proxies") and each of them, attorneys and proxies of the undersigned, each with
power of substitution and resubstitution, to attend, vote and act for the
undersigned at the Special Meeting of Shareholders of Emerald Funds ("Emerald")
to be held at the offices of Emerald, 3435 Stelzer Road, Columbus, Ohio 43219,
at 10:00 a.m. (Eastern time), on Monday, May 4, 1998, and at any adjournment or
adjournments thereof. The proxies will cast votes according to the number of
shares of the Emerald Tax-Exempt Fund (the "Fund") which the undersigned may be
entitled to vote with respect to the proposals set forth below, in accordance
with the specification indicated, if any, and with all the powers which the
undersigned would possess if personally present. The undersigned hereby revokes
any prior proxy to vote at such meeting, and hereby ratifies and confirms all
that said attorneys and Proxies, or either of them, may lawfully do by virtue
thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED MARCH 30, 1998.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF EMERALD, WHICH UNANIMOUSLY
RECOMMENDS THAT YOU VOTE IN FAVOR OF BOTH PROPOSALS. YOU MAY VOTE BY FAXING THE
PROXY BALLOT TO A.D.P. PROXY SERVICES AT (____) __________ OR BY MAILING IT IN
THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE YOU MARK, SIGN AND DATE
YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. PROXIES RETURNED WITHOUT ANY SPECIFICATION
WILL BE VOTED IN FAVOR OF THE PROPOSALS.
(1) To ratify and approve an interim investment advisory agreement
with Barnett Capital Advisors, Inc., and to ratify and approve an
interim investment sub-advisory agreement with Rodney Square
Management Corporation, for the period from January 9, 1998 forward.
|_|YES |_|NO |_|ABSTAIN
(2) To approve an Agreement and Plan of Reorganization, attached to
the Combined Proxy Statement/Prospectus for the Meeting, that
provides for the transfer of all of the assets and liabilities of
the Fund to a corresponding fund of Nations Fund Trust in exchange
for shares of a designated class of such Nations fund, and which
contemplates the reorganization of Emerald.
|_|YES |_|NO |_|ABSTAIN
THESE PROPOSALS HAVE BEEN PROPOSED BY EMERALD.
<PAGE>
In their discretion, the Proxies, and either of them, are authorized to
vote upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain
requisite quorums and/or approvals.
_____________________________
_____________________________, 1998
Please sign above exactly as your name(s) appear(s) hereon. Corporate proxies
should be signed in full corporate name by an authorized officer. Each joint
owner should sign personally. Fiduciaries should give full titles as such.
(Please Date)
