NATIONS FUND TRUST
NATIONS FUND, INC.
NATIONS RESERVES
Supplement dated January 3, 2000
to Prospectuses dated August 1 or October 1, 1999
A. The prospectuses for the Money Market Funds are supplemented by deleting the
paragraph in the "Principal Investment Strategies" section of each Fund's
description -- "The Fund may also invest in securities that aren't part of
its principal investment strategies, but it won't hold more than 10% of its
assets in any one type of these securities. These securities are described in
the SAI." -- and inserting the following for the respective Fund:
1. Nations Prime Fund, Nations Cash Reserves, and Nations Money Market
Reserves: Although not part of its principal investment strategies, the
Fund may also lend its portfolio securities to qualified institutional
investors and may engage in reverse repurchase agreements.
2. Nations Treasury Reserves, Nations Treasury Fund, Nations Tax-Exempt
Fund, Nations Municipal Reserves, Nations Government Reserves, Nations
Government Money Market Fund and Nations California Tax-Exempt
Reserves: Although not part of its principal investment strategies, the
Fund may also lend its portfolios securities to qualified institutional
investors.
B. The prospectuses for the Capital, Liquidity and Adviser Class Shares of
Nations Reserves Money Market Funds are hereby supplemented by:
1. deleting the first bullet point in the section entitled "About your
investment -- How orders are processed" and inserting the following:
o 5:00 p.m. Eastern time for Nations Cash Reserves, Nations Money
Market Reserves and Nations Treasury Reserves, except:
o Orders must be received for Nations Money Market Reserves and
Nations Treasury Reserves by 3:00 p.m. Eastern time on the last
business day of each calendar quarter and business days that
precede the national holidays observed by these Funds
o Orders must be received for Nations Cash Reserves by 3:00 p.m.
Eastern time on the last business day of the calendar year
2. deleting the third bullet point sentence in the section entitled "About
your investment -- Buying shares," and inserting the following:
o 5:00 p.m. Eastern time for Nations Cash Reserves, Nations Money
Market Reserves and Nations Treasury Reserves, except:
o Payment must be received for Nations Money Market Reserves and
Nations Treasury Reserves by 4:00 p.m. Eastern time on the last
business day of each calendar quarter and business days that
precede the national holidays observed by these Funds
o Payment must be received for Nations Cash Reserves by 4:00 p.m.
Eastern time on the last business day of the calendar year
C. The prospectuses for each of the Money Market Funds are hereby supplemented
by:
1. Changing the references in the second call-out sentence and
corresponding paragraph under the section entitled "How the Funds are
managed -- Other service providers," and all corresponding references
throughout the prospectuses, from First Data Investor Services Group,
Inc. ("First Data") to PFPC Inc. ("PFPC") and the listed address to 400
Bellevue Parkway, Wilmington, Delaware 19809.
2. Changing all references throughout the prospectuses from TradeStreet
Investment Associates, Inc. ("TradeStreet") to Banc of America Capital
Management, Inc. ("BACAP"), as of January 18, 2000.
NF-2000-MM
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NATIONS FUND TRUST
NATIONS FUND, INC.
NATIONS RESERVES
NATIONS LIFEGOAL FUNDS, INC.
(collectively, the "Nations Funds")
Supplement dated January 3, 2000
to Prospectuses dated August 1, October 1 or November 15, 1999
PLEASE TAKE NOTE of the following changes to your Nations Funds prospectus.
This supplement is in addition to any supplements you may have previously
received.
MONEY MARKET FUNDS
A. The prospectuses for the Money Market Funds are supplemented by deleting the
paragraph in the "Principal Investment Strategies" section of each Fund's
description -- "The Fund may also invest in securities that aren't part of
its principal investment strategies, but it won't hold more than 10% of its
assets in any one type of these securities. These securities are described in
the SAI." -- and inserting the following for the respective Fund:
1. Nations Prime Fund, Nations Cash Reserves and Nations Money Market
Reserves: Although not part of its principal investment strategies, the
Fund may also lend its portfolio securities to qualified institutional
investors and may engage in reverse repurchase agreements.
2. Nations Treasury Fund, Nations Treasury Reserves, Nations Tax-Exempt
Fund, Nations Municipal Reserves, Nations Government Reserves, Nations
Government Money Market Fund and Nations California Tax-Exempt
Reserves: Although not part of its principal investment strategies, the
Fund may also lend its portfolios securities to qualified institutional
investors.
B. The prospectuses for the Capital, Liquidity and Adviser Class Shares of
Nations Reserves Money Market Funds are hereby supplemented by:
1. deleting the first bullet point in the section entitled "About your
investment -- How orders are processed" and inserting the following:
o 5:00 p.m. Eastern time for Nations Cash Reserves, Nations Money
Market Reserves and Nations Treasury Reserves, except:
o Orders must be received for Nations Money Market Reserves and
Nations Treasury Reserves by 3:00 p.m. Eastern time on the last
business day of each calendar quarter and business days that
precede the national holidays observed by these Funds
o Orders must be received for Nations Cash Reserves by 3:00 p.m.
Eastern time on the last business day of the calendar year
2. deleting the third bullet point sentence in the section entitled "About
your investment -- Buying shares," and inserting the following:
o 5:00 p.m. Eastern time for Nations Cash Reserves, Nations Money
Market Reserves and Nations Treasury Reserves, except:
o Payment must be received for Nations Money Market Reserves and
Nations Treasury Reserves by 4:00 p.m. Eastern time on the last
business day of each calendar quarter and business days that
precede the national holidays observed by these Funds
o Payment must be received for Nations Cash Reserves by 4:00 p.m.
Eastern time on the last business day of the calendar year
C. The prospectuses for each of the Money Market Funds are hereby supplemented
by:
1. Changing the references in the second call-out sentence and
corresponding paragraph under the section entitled "How the Funds are
managed -- Other service providers," and all corresponding references
throughout the prospectuses, from First Data Investor Services Group,
Inc. ("First Data") to PFPC Inc. ("PFPC") and the listed address to 400
Bellevue Parkway, Wilmington, Delaware 19809.
NF-2000-01
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2. Changing all references throughout the prospectuses from TradeStreet
Investment Associates, Inc. ("TradeStreet") to Banc of America Capital
Management, Inc. ("BACAP"), as of January 18, 2000.
NON-MONEY MARKET FUNDS
D. The prospectuses which include Investor A Shares for each non-Money Market
Fund (except Nations Equity Index Fund, Nations Managed Index Fund, Nations
Managed SmallCap Index Fund, Nations Managed Value Index Fund and Nations
Managed SmallCap Value Index Fund) are hereby supplemented by:
1. Deleting the eleventh and fourteenth bullet point paragraphs under the
section entitled "About your investment -- When you might not have to
pay a sales charge -- Front-end sales charges," and inserting the
following:
o individuals receiving a distribution from a Bank of America trust or
other fiduciary account may use the proceeds of that distribution to
buy Investor A Shares without paying a front-end sales charge, as
long as the proceeds are invested in the Funds within 90 days of the
date of distribution
o registered personnel and employees of these broker/dealers and their
family members may buy Investor A Shares without paying a front-end
sales charge according to the internal policies and procedures of
the employing broker/dealer as long as these purchases are made for
their own investment purposes
2. Adding the following paragraph as the second to last paragraph under
the section entitled "About your investment -- When you might not have
to pay a sales charge -- Front-end sales charges:"
In addition, you can buy Investor A Shares without paying a sales
charge if you buy the shares with proceeds from the redemption of shares
of a nonaffiliated mutual fund as long as the redemption of the
nonaffiliated fund shares occurred within 45 days prior to the purchase of
the Investor A Shares. We must receive a copy of the confirmation of the
redemption transaction in order for you to avoid paying the sales charge.
E. The prospectuses for Nations Managed Value Index Fund and Nations Managed
SmallCap Value Index Fund are hereby supplemented by:
1. Adding the following bullet point paragraph at the end of the section
entitled "About the Index Funds -- Nations Managed Value Index Fund --
Risks and other things to consider":
Proposed reorganization -- On December 9, 1999, the Board of Trustees
of Nations Fund Trust approved an Agreement and Plan of Reorganization
(the "Plan"). Under the Plan, Nations Managed Index Fund, a series of
Nations Fund Trust, will acquire all of the assets of Nations Managed
Value Index Fund, also a series of Nations Fund Trust, in exchange for
corresponding shares of equal value of Nations Managed Index Fund and
the assumption by Nations Managed Index Fund of all liabilities of
Nations Managed Value Index Fund. If this Plan is approved by
shareholders of Nations Managed Value Index Fund at a special meeting
of shareholders that will likely be called for late April 2000, the
reorganization is expected to occur in mid-May 2000.
2. Adding the following bullet point paragraph at the end of the section
entitled "About the Index Funds -- Nations Managed SmallCap Value Index
Fund -- Risks and other things to consider":
Proposed reorganization -- On December 9, 1999, the Board of Trustees
of Nations Fund Trust approved an Agreement and Plan of Reorganization
(the "Plan"). Under the Plan, Nations Managed SmallCap Index Fund, a
series of Nations Fund Trust, will acquire all of the assets of Nations
Managed SmallCap Value Index Fund, also a series of Nations Fund Trust,
in exchange for corresponding shares of equal value of Nations Managed
SmallCap Index Fund and the assumption by Nations Managed SmallCap
Index Fund of all liabilities of Nations Managed SmallCap Value Index
Fund. If this Plan is approved by shareholders of Nations Managed
SmallCap Value Index Fund at a special meeting of shareholders that
will likely be called for late April 2000, the reorganization is
expected to occur in mid-May 2000.
F. As of January 18, 2000, the prospectuses for Nations Value Fund, Nations
Balanced Assets Fund, Nations Equity Index Fund, Nations Managed Index Fund,
Nations Managed SmallCap Index Fund, Nations Managed Value Index Fund,
Nations Managed SmallCap Value Index Fund, Nations Equity Income Fund,
Nations Disciplined Equity Fund, Nations Capital Growth Fund, Nations
Emerging Growth Fund, and Nations Small Company Growth Fund are hereby
supplemented by:
1. deleting the reference to Structured Products Management Team for
Nations Equity Income Fund and Nations Disciplined Equity Fund under
the sections entitled "About the Equity Funds -- About the sub-adviser"
and "How the Funds are managed -- Investment sub-advisers --
TradeStreet Investment Associates, Inc.," and inserting Growth
Strategies Management Team in its place.
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2. deleting the reference to Core Growth Management Team for Nations
Capital Growth Fund under the sections entitled "About the Equity Funds
-- About the sub-adviser" and "How the Funds are managed -- Investment
sub-advisers -- TradeStreet Investment Associates, Inc.," and inserting
Growth Strategies Management Team in its place.
3. deleting the reference to Strategic Growth Management Team for Nations
Emerging Growth Fund under the sections entitled "About the Equity
Funds -- About the sub-adviser" and "How the Funds are managed --
Investment sub-advisers -- TradeStreet Investment Associates, Inc.,"
and inserting Growth Strategies Management Team in its place.
4. deleting the reference to Strategic Growth Management Team for Nations
Small Company Growth Fund under the sections entitled "About the Equity
Funds -- About the sub-adviser" and "How the Funds are managed --
Investment sub-advisers -- TradeStreet Investment Associates, Inc.,"
and inserting SmallCap Strategies Management Team in its place.
5. deleting the reference to Structured Products Management Team for
Nations Equity Index Fund, Nations Managed Index Fund, Nations Managed
SmallCap Index Fund, Nations Managed Value Index Fund and Nations
Managed SmallCap Value Index Fund under the sections entitled "About
the Index Funds -- About the sub-adviser" and "How the Funds are
managed -- Investment sub-advisers -- TradeStreet Investment
Associates, Inc.," and inserting Quantitative Strategies Management
Team in its place.
6. deleting the reference to Value Management Team for Nations Value Fund
and Nations Balanced Assets Fund under the section entitled "About the
Balanced Funds -- About the sub-adviser" and "How the Funds are managed
-- Investment sub-advisers -- TradeStreet Investment Associates, Inc.,"
and inserting Value Strategies Management Team in its place.
G. The prospectuses for each of the non-Money Market Funds are hereby
supplemented by:
1. Changing the references in the second call-out sentence and
corresponding paragraph under the section entitled "How the Funds are
managed -- Other service providers,"and all corresponding references
throughout the prospectuses, from First Data Investor Services Group,
Inc. ("First Data") to PFPC Inc. ("PFPC") and the listed address to 400
Bellevue Parkway, Wilmington, Delaware 19809.
2. Changing all references throughout the prospectuses from TradeStreet
Investment Associates, Inc. ("TradeStreet") to Banc of America Capital
Management, Inc. ("BACAP"), as of January 18, 2000.
H. As of February 14, 2000, the prospectuses for Nations U.S. Government Bond
Fund and Nations Strategic Equity Fund are hereby supplemented by replacing
all references to Boatmen's Capital Management, Inc. ("Boatmen's") as
investment sub-adviser to U.S. Government Bond Fund and Bank of America
Investment Management ("BAIM") as investment sub-adviser to Nations Strategic
Equity Fund with Banc of America Capital Management, Inc. ("BACAP"). In
addition, as of the same date, substituting a reference in the sections
entitled "About the Equity Funds -- About the sub-adviser" and "How the Funds
are managed -- Investment sub-advisers" to reflect that BACAP's Fixed Income
Management Team makes the day-to-day investment decisions for Nations U.S.
Government Bond Fund and that BACAP's Growth Strategies Management Team makes
the day-to-day investment decisions for Nations Strategic Equity Fund.
I. The prospectuses for Nations Emerging Growth Fund, Nations Disciplined Equity
Fund, Nations Equity Index Fund, Nations Managed SmallCap Index Fund, Nations
Diversified Income Fund, Nations Strategic Equity Fund, Nations Strategic
Fixed Income Fund, Nations Small Company Growth Fund and Nations Capital
Income Fund are hereby supplemented as follows:
1. Changing all references throughout the prospectuses from Nations
Emerging Growth Fund to Nations MidCap Growth Fund, as of March 15,
2000.
2. Changing all references throughout the prospectuses from Nations
Disciplined Equity Fund to Nations Aggressive Growth Fund, as of April
17, 2000.
3. Changing all references throughout the prospectuses from Nations Equity
Index Fund to Nations LargeCap Index Fund, as of March 15, 2000.
4. Changing all references throughout the prospectuses from Nations
Managed SmallCap Index Fund to Nations SmallCap Index Fund, as of May
12, 2000.
5. Changing all references throughout the prospectuses from Nations
Diversified Income Fund to Nations Strategic Income Fund, as of March
15, 2000.
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6. Changing all references throughout the prospectuses from Nations
Strategic Equity Fund to Nations Strategic Growth Fund, as of February
14, 2000.
7. Changing all references throughout the prospectuses from Nations
Strategic Fixed Income Fund to Nations Investment Grade Bond Fund, as
of March 15, 2000.
8. Changing all references throughout the prospectuses from Nations Small
Company Growth Fund to Nations Small Company Fund, as of March 15,
2000.
9. Changing all references throughout the prospectuses from Nations
Capital Income Fund to Nations Convertible Securities Fund, as of March
15, 2000.
J. The prospectuses for Nations Disciplined Equity Fund, Nations Managed
SmallCap Index Fund and Nations U.S. Government Bond Fund are hereby
supplemented by replacing the discussion of each Fund under the section
entitled "About the Funds," with the attached for each respective Fund as of
February 14, 2000 for Nations U.S. Government Bond Fund, April 17, 2000 for
Nations Disciplined Equity Fund and May 12, 2000 for Nations Managed SmallCap
Index Fund. In the case of Nations U.S. Government Bond Fund, the attached
reflects changes to the Fund's investment strategies. In the case of Nations
Disciplined Equity Fund and Nations Managed SmallCap Index Fund, the attached
reflects changes to the name, investment objective, investment strategies and
stated risks of each Fund. Please also note that, effective April 17, 2000,
Nations Disciplined Equity Fund will compare its performance to the Russell
1000 index, an unmanaged index which measures the performance of the 1,000
largest U.S. companies based on total market capitalization.
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About the Equity Fund
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
About the sub-adviser
Banc of America Capital Management, Inc. (BACAP) is this Fund's sub-adviser.
BACAP's Quantitative Strategies Management Team makes the day-to-day investment
decisions for the Fund.
Nations Aggressive Growth Fund
[GRAPHIC OMITTED] Investment objective
This Fund seeks capital appreciation.
[GRAPHIC OMITTED] Principal investment strategies
The Fund normally invests at least 65% of its assets in common
stocks of large and medium-sized U.S. companies. These
companies typically have a market capitalization of $500
million or more.
The Fund may also invest in securities that aren't part of its principal
investment strategies, but it won't hold more than 10% of its assets in any one
type of these securities. These securities are described in the SAI.
The management team uses a combination of fundamental and quantitative analysis
to help construct a portfolio of 50 to 75 securities of companies diversified
across industry sectors. The team's investment process begins with a review of
all major U.S. companies with a market capitalization of $500 million or more
with the goal of discovering potential industry leaders.
When selecting investments, the team looks for securities it believes are
attractively priced with increasing earnings. It uses quantitative analysis,
which is an analysis of a company's financial information, and fundamental
analysis to:
o identify companies with above-average growth potential, a strong
competitive position and effective management strategies; and
o identify companies presenting tactical opportunities, such as companies
likely to experience cyclical profit recovery or exhibiting structural
change
The management team may use various strategies, consistent with the Fund's
investment objective, to try to reduce the amount of capital gains it
distributes to shareholders. For example, the team:
o will focus on long-term investments to try and limit the number of buy and
sell transactions
o will try to sell securities that have the lowest tax burden on shareholders
o may offset capital gains by selling securities to realize a capital loss
o will invest primarily in securities with lower dividend yields
o may use options instead of selling securities
While the Fund tries to manage capital gain distributions, it will not be able
to completely avoid making taxable distributions. These strategies also may be
affected by changes in tax laws and regulations, or by court decisions.
The team may sell a security when it forecasts a decline in industry
profitability, it believes a company's competitive position erodes
significantly, management strategies prove ineffective or a company's price
exceeds a reasonable value.
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[GRAPHIC OMITTED] Risks and other things to consider
Nations Aggressive Growth Fund has the following risks:
o Investment strategy risk -- The team uses quantitative and
fundamental analysis to select securities it believes are
attractively priced with increased earnings. There is a risk
that the value of these investments will not rise as high as
the team expects, or will fall.
o Stock market risk -- The value of the stocks the Fund holds
can be affected by changes in the U.S. or foreign economies
and financial markets, and the companies that issue the
stocks, among other things. Stock prices can rise or fall
over short as well as long periods. In general, stock
markets tend to move in cycles, with periods of rising
prices and periods of falling prices. As of the date of this
prospectus, the markets, as measured by the S&P 500 and
other commonly used indices, were trading at or close to
record levels. There can be no guarantee that these levels
will continue.
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About the Index Fund
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
About the sub-adviser
Banc of America Capital Management, Inc. (BACAP) is this Fund's sub-adviser.
BACAP's Quantitative Strategies Management Team makes the day-to-day investment
decisions for the Fund.
[GRAPHIC OMITTED]
What is an index fund?
Index funds use a "passive" or "indexing" investment approach, which attempts to
duplicate the performance of a specific market index.
Correlation measures how closely a fund's returns match those of an index. A
perfect correlation of 1.0 means that the net asset value of the fund increases
or decreases in exact proportion to changes in the index.
Nations SmallCap Index Fund
[GRAPHIC OMITTED] Investment objective
This Fund seeks investment results that (before fees and
expenses) correspond to the total return of the Standard &
Poor's SmallCap 600 Stock Price Index (S&P SmallCap 600).
[GRAPHIC OMITTED] Principal investment strategies
The Fund normally invests at least 80% of its assets in common
stocks that are included in the S&P SmallCap 600. The S&P
SmallCap 600 is an unmanaged index of 600 common stocks
weighted by market capitalization. It is not available for
investment.
The Fund may buy stock index futures and other financial futures as substitutes
for the underlying securities in the S&P SmallCap 600.
The Fund may also invest in securities that aren't part of its principal
investment strategies, but it won't hold more than 10% of its assets in any one
type of these securities. These securities are described in the SAI.
Different common stocks have different weightings in the S&P SmallCap 600,
depending on the amount of stock outstanding and the stock's current price. In
trying to match the performance of the S&P SmallCap 600, the management team
will try to allocate the Fund's portfolio among common stocks in approximately
the same weightings as the S&P SmallCap 600, beginning with the most heavily
weighted stocks that make up a larger portion of the value of the S&P SmallCap
600.
The team generally will try to match the composition of the S&P SmallCap 600 as
closely as possible. The team starts with the stocks that make up a larger
portion of the value of the S&P SmallCap 600. It may not always invest in
stocks that make up the smaller percentages because it may be more difficult
and costly to make relatively small transactions. The team may remove a stock
from the Fund's holdings or not invest in a stock if it believes that the stock
is not liquid enough, or for other reasons. The team can substitute stocks that
are not included in the S&P SmallCap 600, if it believes these stocks have
similar characteristics.
The Fund tries to achieve a correlation of at least 0.95 with the S&P SmallCap
600 on an annual basis (before fees and expenses). The Fund's ability to track
the S&P SmallCap 600 is affected by transaction costs and other expenses,
changes in the composition of the S&P SmallCap 600, changes in the number of
shares issued by the companies represented in the S&P SmallCap 600, and by the
timing and amount of shareholder purchases and redemptions, among other things.
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Equity mutual funds, like other investors in equity securities, incur
transaction costs, such as brokerage costs, when they buy and sell securities.
The management team tries to minimize these costs for the Fund by using program
trades and crossing networks.
The team may sell a stock when its percentage weighting in the index is
reduced, when the stock is removed from the index, or for other reasons.
[GRAPHIC OMITTED] Risks and other things to consider
Nations SmallCap Index Fund has the following risks:
o Investment strategy risk - This Fund tries to match (before
fees and expenses) the returns of the S&P 600, and is not
actively managed. There is no assurance that the returns of
the Fund will match the returns of the S&P 600. The value of
the Fund will rise and fall with the performance of the S&P
600.
o Stock market risk - The value of the stocks the Fund holds
can be affected by changes in U.S. or foreign economies and
financial markets, and the companies that issue the stocks,
among other things. Stock prices can rise or fall over short
as well as long periods. In general, stock markets tend to
move in cycles, with periods of rising prices and periods of
falling prices. As of the date of this prospectus, the stock
markets, as measured by the S&P 600 and other commonly used
indices, were trading at or close to record levels. There
can be no guarantee that these levels will continue.
o Futures risk - This Fund may use futures contracts as a
substitute for the securities included in the index. There
is a risk that this could result in losses, reduce returns,
increase transaction costs or increase the Fund's
volatility.
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About the Fixed Income Fund
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
About the sub-adviser
Banc of America Capital Management, Inc. (BACAP) is this Fund's sub-adviser.
BACAP's Fixed Income Management Team makes the day-to-day investment decisions
for the Fund.
[GRAPHIC OMITTED]
Mortgage-backed securities
This Fund invests in mortgage-backed securities. Mortgage-backed securities tend
to pay higher income than U.S. Treasury bonds and other government-backed bonds
with similar maturities, but also have specific risks associated with them. They
pay a monthly amount that includes a portion of the principal on the underlying
mortgages, as well as interest.
Nations U.S. Government Bond Fund
[GRAPHIC OMITTED] Investment objective
This Fund seeks total return and preservation of capital by
investing in U.S. Government securities and repurchase
agreements collateralized by such securities.
[GRAPHIC OMITTED] Principal investment strategies
This Fund normally invests at least 65% of its assets in U.S.
government obligations and repurchase agreements secured by
these securities.
It may also invest in:
o mortgage-related securities issued by governments or corporations
o asset-backed securities or municipal securities rated investment grade at
the time of investment, or unrated if the portfolio management team believes
they are of comparable quality to investment grade securities at the time of
investment
o corporate debt securities, including bonds, notes and debentures rated
investment grade at the time of investment, or unrated if the portfolio
management team believes they are of comparable quality to investment grade
securities at the time of investment
The Fund may also invest in securities that aren't part of its principal
investment strategies, but it won't hold more than 10% of its assets in any one
type of these securities. These securities are described in the SAI.
Normally, the Fund's average dollar-weighted maturity will be between five and
30 years.
When selecting individual investments, the portfolio management team:
o looks at a fixed income security's potential to generate both income and
price appreciation
o allocates assets primarily among U.S. government obligations, including
securities issued by government agencies, mortgage-backed securities and
U.S. Treasury securities, based on how they have performed in the past, and
on how they are expected to perform under current market conditions. The
team may change the allocations when market conditions change
o selects securities using structure analysis, which evaluates the
characteristics of a security, including its call features, coupons and
expected timing of cash flows
The team may sell a security when it believes the security is overvalued, there
is a deterioration in the security's credit rating or in the issuer's financial
situation, when other investments are more attractive, or for other reasons.
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[GRAPHIC OMITTED] Risks and other things to consider
Nations U.S. Government Bond Fund has the following risks:
o Investment strategy risk - There is a risk that the value of
the investments that the portfolio management team chooses
will not rise as high as the team expects, or will fall.
o Interest rate risk - The prices of fixed income securities
will tend to fall when interest rates rise. In general,
fixed income securities with longer terms tend to fall more
in value when interest rates rise than fixed income
securities with shorter terms.
o Credit risk - The Fund could lose money if the issuer of a
fixed income security is unable to pay interest or repay
principal when it's due. Credit risk usually applies to most
fixed income securities, but is generally not a factor for
U.S. government obligations.
o Derivatives risk - This Fund may invest in derivatives.
There is a risk that these investments could result in
losses, reduce returns, increase transaction costs or
increase the Fund's volatility.
o Changing distribution levels - The level of monthly income
distributions paid by the Fund depends on the amount of
income paid by the securities the Fund holds. It is not
guaranteed and will change. Changes in the value of the
securities, however, generally should not affect the amount
of income they pay.
o Prepayment and extension risk - The value of the Fund's
mortgage-backed securities can fall if the owners of the
underlying mortgages pay off their mortgages sooner than
expected, which could happen when interest rates fall, or
later than expected, which could happen when interest rates
rise. If the underlying mortgages are paid off sooner than
expected, the Fund may have to reinvest this money in
mortgage-backed securities that have lower yields.
10
