(PRELIMINARY PROXY MATERIAL:
FOR INFORMATION OF THE SECURITIES
AND EXCHANGE COMMISSION ONLY)
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
|X| Filed by the registrant
|_| Filed by a party other than the registrant
|X| Preliminary proxy statement
|_| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
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Nations Fund, Inc.
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Payment of filing fee (Check the appropriate box):
|X| $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
|_| $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
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((4) Proposed maximum aggregate value of transaction:
<PAGE>
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials
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|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
(PRELIMINARY PROXY MATERIAL:
FOR INFORMATION OF THE SECURITIES
AND EXCHANGE COMMISSION ONLY)
NATIONS FUND, INC.
101 South Tryon Street
33rd Floor
Charlotte, North Carolina 28255
Telephone: (800) 321-7854
May 20, 1996
Dear Shareholder:
We are pleased to invite you to a Special Meeting of the
Shareholders of Nations International Equity Fund (the "Fund") of Nations Fund,
Inc. ("Nations Fund") to be held on Wednesday, July 17, 1996. The Special
Meeting is being called to consider the approval of a new sub-advisory agreement
with Gartmore Global Partners, the successor entity to Nations Gartmore
Investment Management ("Nations Gartmore"), the previous sub-adviser to the
Fund.
Nations Gartmore, a joint venture that was structured as an
equally-owned general partnership between subsidiaries of NationsBank, N.A.
("NationsBank") and Gartmore plc ("Gartmore"), a U.K. company, served as
sub-investment adviser until it was succeeded by Gartmore Global Partners
pursuant to a change of control. This change of control resulted from National
Westminster Bank plc ("NatWest") acquiring a controlling interest in Gartmore
through a direct purchase from Compagnie de Suez and affiliated entities of
their indirect subsidiary Indosuez UK Asset Management Limited, which held 75%
of Gartmore's outstanding voting securities. NatWest also plans to acquire the
remaining portion of Gartmore's shares held by public shareholders through a
tender offer. Because Gartmore was an equal partner in Nations Gartmore with
NationsBank, the change of control of Gartmore resulted in a termination of the
then-existing sub-advisory agreement with Nations Gartmore.
Shareholders are asked to ratify and approve a new
sub-advisory agreement (which provides for no increase in sub-advisory fees
charged to NationsBanc Advisors, Inc. ("NBAI")) among Gartmore Global Partners,
NBAI and Nations Fund, on behalf of the Fund that became effective on April 10,
1996. The fee level and principal terms of the new advisory agreement and
proposed sub-advisory arrangement with Gartmore Global Partners are the same as
those previously in effect with Nations Gartmore.
The Board of Directors of Nations Fund unanimously recommends
that Shareholders vote FOR the item.
Attached are the formal Notice of Special Meeting and a Proxy
Statement, together with a Proxy Card for you to mark, sign, date and return to
us. Please return your Proxy
<PAGE>
(PRELIMINARY PROXY MATERIAL:
FOR INFORMATION OF THE SECURITIES
AND EXCHANGE COMMISSION ONLY)
Card to us so that your vote will be counted even if you do not attend the
Special Meeting in person.
YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN. PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY CARD TODAY, EITHER IN THE
ENCLOSED POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE (FRONT AND BACK) AT (617)
878-9327. If you have any questions regarding the enclosed materials or the
Special Meeting, please call Stephens Inc., the Fund's distributor, at (800)
321-7854. We look forward to receiving your completed Proxy Card very soon.
Sincerely,
A. Max Walker
President and Chairman of the
Board of Directors
<PAGE>
(PRELIMINARY PROXY MATERIAL:
FOR INFORMATION OF THE SECURITIES
AND EXCHANGE COMMISSION ONLY)
NATIONS FUND, INC.
101 South Tryon Street
33rd Floor
Charlotte, North Carolina 28255
Telephone: (800) 321-7854
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NATIONS INTERNATIONAL EQUITY FUND OF
NATIONS FUND, INC.
To Be Held on July 17, 1996
* * * *
TO THE SHAREHOLDERS of NATIONS INTERNATIONAL EQUITY FUND (the "Fund") of NATIONS
FUND, INC. ("Nations Fund"):
PLEASE TAKE NOTE that a SPECIAL MEETING OF SHAREHOLDERS (the
"Special Meeting") of the Fund will be held on Wednesday, July 17, 1996, at 9:00
a.m. (Eastern time) at 101 South Tryon Street, 33rd Floor, Charlotte, North
Carolina 28255. The Special Meeting is being called for the following purposes:
1. To ratify and approve a new sub-advisory agreement among
Gartmore Global Partners, NationsBanc Advisors, Inc.
("NBAI") and Nations Fund on behalf of the Fund. The terms
of the proposed sub-advisory agreement are identical in all
material respects to the terms of the previous sub-advisory
agreement with Nations Gartmore Investment Management. NBAI
would be obligated to pay all sub-advisory fees owed
Gartmore Global Partners and the level of sub-advisory fees
would be unchanged.
2. To transact such other business as may properly come before
the Special Meeting, or any adjournment(s) thereof,
including any adjournment(s) necessary to obtain requisite
quorums and/or approvals.
The Board of Directors of Nations Fund has fixed the close of
business on April 29, 1996 as the record date for the determination of
Shareholders entitled to receive notice of and to vote at the Special Meeting or
any adjournment(s) thereof. The enclosed Proxy Statement contains further
information regarding the meeting and the proposal to be considered. The
enclosed Proxy Card is intended to permit you to vote even if you do not attend
the meeting in person.
<PAGE>
(PRELIMINARY PROXY MATERIAL:
FOR INFORMATION OF THE SECURITIES
AND EXCHANGE COMMISSION ONLY)
YOUR PROXY IS VERY IMPORTANT TO US. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
TODAY, EITHER IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE (FRONT
AND BACK) AT (617) 878-9327. Signed but unmarked Proxy Cards will be counted in
determining whether a quorum is present and will be voted in favor of the
proposal.
By Order of the Board of Directors
Richard H. Blank, Jr.
Secretary
May 20, 1996
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YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS
OF THE NUMBER OF SHARES THAT YOU OWN.
PLEASE MARK, SIGN, DATE AND RETURN YOUR
PROXY CARD IMMEDIATELY.
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SHARES OF NATIONS FUND ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR ISSUED,
ENDORSED OR GUARANTEED BY, NATIONSBANK N.A. ("NATIONSBANK") OR ANY OF ITS
AFFILIATES. SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. AN INVESTMENT IN THE FUND INVOLVES CERTAIN RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.
NBAI IS THE INVESTMENT ADVISER TO THE FUND. NATIONSBANK AND CERTAIN OF ITS
AFFILIATES PROVIDE CERTAIN OTHER SERVICES TO NATIONS FUND, FOR WHICH THEY ARE
COMPENSATED. STEPHENS INC., WHICH IS NOT AFFILIATED WITH NATIONSBANK, IS THE
SPONSOR AND ADMINISTRATOR AND SERVES AS THE DISTRIBUTOR FOR NATIONS FUND.
<PAGE>
(PRELIMINARY PROXY MATERIAL:
FOR INFORMATION OF THE SECURITIES
AND EXCHANGE COMMISSION ONLY)
PROXY STATEMENT
MAY 20, 1996
NATIONS FUND, INC.
101 South Tryon Street
33rd Floor
Charlotte, North Carolina 28255
Telephone: (800) 321-7854
This Proxy Statement is being furnished to Shareholders of Nations
International Equity Fund (the "Fund") of Nations Fund, Inc. ("Nations Fund") in
connection with the solicitation of proxies by the Board of Directors of Nations
Fund, to be used at a Special Meeting of Shareholders (the "Special Meeting") of
the Fund, to be held on Wednesday, July 17, 1996 beginning at 9:00 a.m. (Eastern
time) at 101 South Tryon Street, 33rd Floor, Charlotte, North Carolina 28255.
Your proxy is being solicited for the purposes set forth in the accompanying
Notice of Special Meeting.
Shareholders of record of the Fund at the close of business on
April 29, 1996 (the "Record Date"), are entitled to notice of and to vote at the
Special Meeting or any adjournment(s) thereof. As of the Record Date, there were
__________ outstanding shares of the Fund. This proxy statement is first being
mailed to Shareholders on or about May 20, 1996.
BACKGROUND OF THE PROPOSAL
The Fund is a diversified, open-end investment company advised by
NationsBanc Advisors, Inc. ("NBAI"). NBAI is a wholly owned subsidiary of
NationsBank, N.A. ("NationsBank"), which in turn is a wholly owned banking
subsidiary of NationsBank Corporation, a bank holding company organized as a
North Carolina corporation. NBAI has its principal offices at One NationsBank
Plaza, Charlotte, North Carolina 28255. Stephens Inc. ("Stephens"), with
principal offices at 111 Center Street, Little Rock, Arkansas 72201, serves as
Administrator to the Fund. Through April 10, 1996, sub-advisory services were
provided to NBAI and the Fund by Nations Gartmore Investment Management
("Nations Gartmore") pursuant to a sub-advisory agreement among NBAI, Nations
Gartmore and Nations Fund on behalf of the Fund (the "Previous Sub-Advisory
Agreement"). Nations Gartmore was a joint venture structured as a general
partnership between NB Partner Corp., a wholly owned subsidiary of NationsBank,
and Gartmore U.S. Limited, a wholly owned subsidiary of Gartmore plc.
("Gartmore"), a UK company listed on the London Stock Exchange. Compagnie de
Suez and affiliated entities (collectively, "Compagnie de Suez") owned 75% of
the equity of Gartmore.
On April 10, 1996, National Westminster Bank plc ("NatWest")
acquired a controlling interest in Gartmore from Compagnie de Suez through a
direct purchase from Companie de Suez of its indirect subsidiary Indosuez UK
Asset Management Limited, which held 75% of Gartmore's
<PAGE>
outstanding voting securities the ("Acquisition"). NatWest also plans to acquire
the remaining portion of Gartmore's shares held by public shareholders through a
tender offer. Because Gartmore was an equal partner in Nations Gartmore with
NationsBank, the change of control of Gartmore constituted an assignment of the
Previous Sub-Advisory Agreement within the meaning of Section 2(a)(4) of the
Investment Company Act of 1940 (the "1940 Act"). By operation of law, and
consistent with the express terms of the Previous Sub-Advisory Agreement, this
assignment resulted in an immediate termination of such Agreement.
Gartmore Global Partners is the successor entity to Nations
Gartmore resulting from the change of control. The Board of Directors has
approved new sub-advisory agreement among Gartmore Global Partners, NBAI and
Nations Fund on behalf of the Fund (the "New Sub-Advisory Agreement"). The New
Sub-Advisory Agreement became effective April 10, 1996, upon consummation of the
Acquisition. The Board of Directors believes that the New Sub-Advisory Agreement
is in the best interests of the Fund and its Shareholders, and recommends that
Shareholders vote to ratify and approve New Sub-Advisory Agreement.
ITEM 1. APPROVAL OF NEW SUB-ADVISORY AGREEMENT WITH GARTMORE GLOBAL PARTNERS
At the Special Meeting, the Shareholders of the Fund will be asked
to vote on a proposal to ratify and approve the New Sub-Advisory Agreement among
Gartmore Global Partners, NBAI, as the Fund's investment adviser, and Nations
Fund on behalf of the Fund.
Nations Gartmore served as the sub-adviser to the Fund pursuant to
the Previous Sub-Advisory Agreement, which was dated as of January 1, 1996 and
terminated as of April 10, 1996, upon consummation of the Acquisition. The New
Sub-Advisory Agreement was approved by the Board of Directors of Nations Fund,
including a majority of the directors who are not parties to the New
Sub-Advisory Agreement or interested persons of any such parties, other than as
directors of Nations Fund, at a special meeting held on March 12, 1996,
contingent on Shareholder approval of the New Sub-Advisory Agreement. The
Directors also approved engaging the services of Gartmore Global Partners in the
interim period pending Shareholder approval of the New Sub-Advisory Agreement to
ensure continuity of investment management to the Fund following the
consummation of the Acquisition and to allow Shareholders a reasonable period to
consider the New Sub-Advisory Agreement. The Securities and Exchange Commission
("SEC") issued an Exemptive Order on March 25, 1996, to permit Gartmore Global
Partners to provide sub-investment advisory services to the Fund during the
interim period.
The New Sub-Advisory Agreement became effective as of April 10,
1996, and will remain in effect until such Agreement is approved or disapproved
by Shareholders. If ratified and approved, the New Sub-Advisory Agreement will
continue in effect as described below. If the New Sub-Advisory Agreement is not
ratified and approved by Shareholders, the Board of Directors intends to
continue the interim relationship with Gartmore Global Partners at least until
<PAGE>
it is able to evaluate and obtain necessary approval of alternative advisory
arrangements. The New Sub-Advisory Agreement is reproduced as Exhibit A to this
Proxy Statement.
In connection with the SEC Exemptive Order discussed above, the
Fund has entered into an escrow arrangement with Bank of New York, as escrow
agent, whereby the Fund deposits into an interest-bearing escrow account
obtained by Bank of New York that portion of NBAI's fees payable under the New
Sub-Advisory Agreement by NBAI to Gartmore Global Partners. The amounts held in
the escrow account (including interest earned on such paid fees) would be paid
to Gartmore Global Partners only upon approval by Fund Shareholders of the New
Sub-Advisory Agreement. In the absence of such Shareholder approval, such
amounts in the escrow account would paid be to the Fund. The supplement to the
New Sub-Advisory Agreement, setting forth the escrow arrangement, is reproduced
as Exhibit B to this Proxy Statement.
The terms of the New Sub-Advisory Agreement are substantively the
same as the Previous Sub-Advisory Agreement. Under the New Sub-Advisory
Agreement, Gartmore Global Partners is entitled to receive an advisory fee at
the annual rate of 0.70% of the average daily net assets of the Fund. Nations
Gartmore was entitled to receive the identical fee under the Previous
Sub-Advisory Agreement. The duties that Gartmore Global Partners will be
required to perform under the New Sub-Advisory Agreement are essentially the
same as those provided by Nations Gartmore under the Previous Sub-Advisory
Agreement. In addition, there will be no material changes in the personnel who
provide services under the New Sub-Advisory Agreement. Accordingly, the Fund
would receive the same sub-advisory services, provided in the same manner and at
the same fee levels, as it received under the Previous Sub-Advisory Agreement.
The Directors believe that the New Sub-Advisory Agreement enables
the Fund to continue to benefit from the level of expertise in international
money management previously associated with Nations Gartmore. The Directors also
believe that the engagement of Gartmore Global Partners allows Nations Fund, and
the other investment companies comprising the Nations Fund Family, to continue
to effectively pursue a strategy of offering to investors, including
Shareholders in the Fund, enhanced access to a wide range of international and
global money management products. Moreover, the Directors believe that Gartmore
Global Partners will benefit from enhanced resources and greater asset size
associated with NatWest. NatWest is one of the world's largest commercial and
investment banking firms, with over $47 billion under management.
At a special meeting held on March 12, 1996, the Directors,
including a majority of the Directors who are not interested persons, as that
term is defined in the 1940 Act, of Nations Fund, and who will not be interested
persons of Gartmore Global Partners (the "Non-Interested Directors"), approved
the New Sub-Advisory Agreement. By approving the New Sub-Advisory Agreement, the
Directors have acted in what they believe to be the best interest of the
Shareholders of Nations Fund.
The Board based its decision to recommend the approval of the New
Sub-Advisory Agreement on the following material factors: (i) the absence of
material changes in the overall form of the Previous Sub-Advisory Agreement, the
sub-investment advisory fees, or the level of
<PAGE>
service provided the Fund; (ii) the financial strength and increased asset size
of NatWest; (iii) the continued employment by Gartmore Global Partners of
investment professionals previously employed by Nations Gartmore to manage the
assets of the Fund; (iv) the management, personnel, experience and operations
contemplated with respect to Gartmore Global Partners following the change of
control, including the depth and investment experience of the portfolio
management staff of Gartmore Global Partners, including those persons who would
be involved in the daily management of the Fund; and (v) the amount,
significance and nature of soft dollar credits that may be earned by the Fund
and that would entitle Gartmore Global Partners to receive certain services from
broker/dealers, including, but not limited to, research, news services, or
market quotations. In making its decision to recommend approving the New
Sub-Advisory Agreement, the factors that the Board considered most important
were the absence of changes to the level of service provided to the Fund, the
continuation of the sub-advisory fee charged under the Previous Sub-Advisory
Agreement, the similarity of all material terms contained in the New
Sub-Advisory Agreement to those contained in the Previous Sub-Advisory Agreement
and the composition of Gartmore Global Partners' advisory personnel. The
Directors based their determinations in this regard on discussions with
representatives of NationsBank, NBAI and Gartmore Global Partners at the meeting
and a review of materials presented by NationsBank, NBAI and Gartmore Global
Partners in connection with the meeting. These materials included a form of the
New Sub-Advisory Agreement and comparative fee data.
Pursuant to the New Sub-Advisory Agreement, Gartmore Global
Partners, subject to the policies and control of Nations Fund's Board of
Directors and the overall supervision of NBAI and Nations Fund, renders research
and advisory services to NBAI and Nations Fund with respect to the Fund, in
accordance with the investment objective, policies and restrictions of the Fund.
NBAI retains authority over the management of the Fund and the investment and
disposition of the Fund's assets, and NBAI may reject any investment
recommendation or decision for the Fund if it determines that such
recommendation or decision is not consistent with the best interests of the
Fund.
If approved by Shareholders at the Meeting, the New Sub-Advisory
Agreement will remain in effect for a one-year period following the date of such
approval. Thereafter, the New Sub-Advisory Agreement will continue in effect for
successive periods not to exceed one year, provided that such continuance is
specifically approved at least annually by the Board of Directors of Nations
Fund, or by a vote of a majority of the outstanding shares of the Fund, and in
either case by a majority of the Directors who are not parties to the New
Sub-Advisory Agreement or interested persons (as defined in the 1940 Act) of any
such parties other than as Directors of Nations Fund. The New Sub-Advisory
Agreement may be terminated on 60 days' written notice at any time by NBAI,
without the payment of any penalty, by a vote of a majority of the Fund's
outstanding voting securities or by a vote of a majority of Nations Fund's Board
of Directors. The New Sub-Advisory Agreement will terminate automatically in the
event of its assignment. The New Sub-Advisory Agreement provides that Gartmore
Global Partners shall not be liable for any act or omission in the course of, or
connected with, rendering services thereunder, except by reason of Gartmore
Global Partners' willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reckless disregard of its duties and
obligations thereunder.
<PAGE>
Information Regarding the Sub-Adviser
Nations Gartmore, the predecessor entity to Gartmore Global
Partners, was formed as a Delaware general partnership as of January 1, 1995.
Gartmore Global Partners consists of two general partners, NB Partner Corp., a
wholly owned subsidiary of NationsBank, and Gartmore U.S. Limited, a wholly
owned subsidiary of Gartmore. As described above, NatWest acquired a controlling
interest in Gartmore. NB Partner Corp. and Gartmore Global Partners are
headquartered at One NationsBank Plaza, Charlotte, North Carolina 28255.
NationsBank is headquartered at One NationsBank Corporate Center, Charlotte,
North Carolina 28255. NatWest is headquarted at 41 Lothbury, London EC2P 2BP,
England and Gartmore is headquartered at Gartmore House, 16-18 Monument Street,
London EC3R 8AJ, England. Gartmore Global Partners is managed by a six-person
management committee, with three members appointed by each partner, and
day-to-day affairs are managed by a chief executive officer and a chief
investment officer.
The principal executive officers of Gartmore Global Partners are listed
below. The business address of each such individual is 101 South Tryon Street,
NationsBank Plaza, Charlotte, North Carolina 28255.
<TABLE>
<CAPTION>
Name and Address Position at Gartmore Global Partners Principal Occupation
<S> <C> <C>
Charles G. Smith IV Chief Executive Officer Chief Executive Officer, Gartmore
Global Partners
Andrew N.R. Fleming Chief Investment Officer Chief Investment Officer, Gartmore
Global Partners; Director of
International Investments, Gartmore
Investment Limited, Investment
Director, Gartmore Capital
Management Ltd.
James B. Sommers Committee Member NationsBank Corporation President,
NationsBank Trust
John W. Munce Committee Member Executive Vice President, NationsBank
Mark H. Williamson Committee Member Senior Vice President, NationsBank
Paul Myners Committee Member Executive Chairman, Gartmore plc
<PAGE>
Andrew J. Brown Committee Member Finance Director and Chairman,
Gartmore Fund Managers International
Limited, Gartmore Money Management
Limited, Gartmore Administration
Services Limited
David W. Watt Committee Member Investment Director, Gartmore plc,
Executive Chairman of Gartmore
Pension Fund Managers Ltd. and
Chairman, Private Capital Ltd.
</TABLE>
It is contemplated that Gartmore Global Partners will be retained
as sub-investment adviser to Nations Fund Portfolios, Inc. an investment company
in the Nations Fund Family that currently has three funds. The Shareholders of
the funds listed below also have been asked to ratify and approve a new
sub-advisory agreement with Gartmore Global Partners at a meeting scheduled for
July 17, 1996. The proposed sub-advisory fees (as a percent of average daily net
assets) for such funds are as follows:
Annual
Fund Name Sub-Advisory Fee
Nations Global Government Income Fund 0.54%
Nations Emerging Markets Fund 0.85%
Nations Pacific Growth Fund 0.70%
No officer or director of Nations Fund is an officer, employee,
director, general partner or shareholder of NationsBank, Gartmore Global
Partners or affiliates thereof.
Nations Fund's Board of Directors recommends that you vote to
ratify and approve the New Sub-Advisory Agreement between Gartmore Global
Partners, NBAI and Nations Fund on behalf of the Fund.
<PAGE>
MISCELLANEOUS
Procedural Matters
Each Shareholder of the Fund will be entitled to one vote for each
share and a fractional vote for each fractional share held by such Shareholder
with respect to any proposal on which the Shareholder is entitled to vote.
Shareholders holding a majority of the outstanding shares of the Fund at the
close of business on the Record Date will constitute a quorum for the approval
of the proposal described in the accompanying Notice of Special Meeting and in
this Proxy Statement (the "Proposal").
As used herein, a "1940 Act Vote" of the shares of the Fund means
a vote of the holders of the lesser of (a) More than fifty percent (50%) of the
outstanding shares of the Fund or (b) sixty-seven percent (67%) or more of the
shares of the Fund present at the meeting if more than fifty percent (50%) of
the outstanding shares of the Fund are represented at the meeting in person or
by proxy. All shares will be voted on a combined, Fund-wide basis, and not by
class. A 1940 Act Vote of the shares of the Fund is required to approve the
Proposal.
Any proxy card which is properly executed and received in time to
be voted at the Special Meeting will be counted in determining whether a quorum
is present and will be voted in accordance with the instructions marked thereon.
In the absence of instructions, any such proxy card will be voted in favor of
the Proposal. Abstentions and "broker non-votes" (i.e., proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owners or other persons entitled to vote shares as to a particular
matter with respect to which the brokers or nominees do not have discretionary
power to vote) will not be counted for or against any proxy to which they
relate, but will be counted for purposes of determining whether a quorum is
present and will be counted as votes present for purposes of determining a
majority of the outstanding shares of the Fund present at the Special Meeting.
For this reason, abstentions and broker non-votes will have the effect of a vote
against the Proposal.
If, by the time scheduled for the Special Meeting, a quorum is not
present, or if a quorum is present but sufficient votes in favor of the Proposal
are not received, the persons named as proxies may move for one or more
adjournments of the Special Meeting to permit further solicitation of proxies
with respect to the Proposal. Any such adjournment(s) will require the
affirmative vote of a majority of the shares present in person or by proxy at
the session of the Special Meeting to be adjourned. The persons named as proxies
will vote in favor of such adjournment(s) those shares which they are entitled
to vote which have voted in favor of the Proposal. They will vote against any
such adjournment(s) those proxies required to be voted against the Proposal.
The duly appointed proxies may, in their discretion, vote upon
such other matters as may come before the Special Meeting or any adjournment(s)
thereof, including any proposal to adjourn a meeting at which a quorum is
present to permit the continued solicitation of proxies in favor of the
Proposal. A Shareholder of the Fund may revoke his or her proxy at any time
prior
<PAGE>
to its exercise by delivering written notice of revocation or by executing and
delivering a later-dated proxy to the Secretary of Nations Fund, at the address
set forth on the cover page of this Proxy Statement, or by attending the Special
Meeting in person to vote the Shares held by such Shareholder.
Signed but unmarked proxy cards will be counted in determining
whether a quorum is present and will be voted in favor of the Proposal.
Additional Information
The Fund will furnish, without charge, a copy of the annual report
and most recent semi-annual report, succeeding the annual report, if any, by
writing Nations Fund, Inc., 101 South Tryon Street, 33rd Floor, Charlotte, North
Carolina 28255, or by calling (800) 321-7854. Nations Fund is subject to the
informational requirements of the Securities Exchange Act of 1934 (the "1934
Act") and the 1940 Act, and in accordance therewith files reports, proxy
material and other information with the Securities and Exchange Commission (the
"SEC"). Such reports, proxy materials and other information may be inspected and
copied at the public reference facilities of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such materials can be obtained from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates.
Solicitation of Proxies and Payment of Expenses
The cost of soliciting proxies for the Special Meeting, consisting
principally of printing and mailing expenses, together with the costs of any
supplementary solicitation and proxy soliciting services provided by third
parties, will not be borne by the Fund. Proxies will be solicited in the
initial, and any supplemental, solicitation by mail and may be solicited in
person, by telephone, telegraph, telefacsimile, or other electronic means by
officers of Nations Fund, personnel of NationsBank and/or Stephens, or an agent
of Nations Fund for compensation to be paid by the NationsBank and/or Stephens.
Substantial Shareholders
As of the close of business on the record date, there were no
persons known to Nations Fund to be beneficial owners of 5% or more of the
outstanding Shares of the Fund, [except as follows:]
Name and Number of Shares Percentage of
Address Beneficially Owned Class Owned
[------------------ ------------- -------%]
<PAGE>
As of the close of business on the Record Date, the officers and
Directors of Nations Fund as a group beneficially owned less than 1% of the
outstanding Shares of the Fund.
Affiliated Broker Commissions
For the fiscal year ended May 31, 1996, the Fund paid $_______ in
brokerage commissions to ___________, which was then treated, for purposes of
Rule 17e-1 under the 1940 Act, as an affiliated broker, as that term is defined
under Rule 14a-101 of the 1934 Act.
Other Business
The Board of Directors of Nations Fund knows of no other business
to be brought before the Special Meeting. However, if any other matters come
before the Special Meeting, including any proposal to adjourn the meeting to
permit the continued solicitation of proxies in favor of the Proposal, it is
their intention that Proxy Cards which do not contain specific restrictions to
the contrary will be voted on such matters in accordance with the judgment of
the persons named as proxies.
Future Shareholder Proposals
Pursuant to rules adopted by the SEC under the 1934 Act, investors
may request inclusion in the Board's proxy statement for Shareholder meetings
certain proposals for action which they intend to introduce at such meeting. Any
Shareholder proposals must be presented a reasonable time before the proxy
materials for the next meeting are sent to Shareholders. The submission of a
proposal does not guarantee its inclusion in Nation Fund's proxy statement and
is subject to limitations under the 1934 Act. It is not presently anticipated
that Nations Fund will hold regular meetings of Shareholders, and no anticipated
date of the next meeting can be provided.
<PAGE>
YOUR PROXY IS VERY IMPORTANT TO US. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
TODAY, EITHER IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE (FRONT
AND BACK) AT [(617) 878-9327]. Signed but unmarked Proxy Cards will be counted
in determining whether a quorum is present and will be voted in favor of the
proposal.
By Order of the Board of Directors
Richard H. Blank, Jr.
Secretary
May 20, 1996
<PAGE>
(PRELIMINARY PROXY MATERIAL:
FOR INFORMATION OF THE SECURITIES
AND EXCHANGE COMMISSION ONLY)
EXHIBIT A
SUB-ADVISORY AGREEMENT
NATIONS FUND, INC.
THIS AGREEMENT is made this 10th day of April, 1996, by and among
NATIONSBANC ADVISORS, INC., a North Carolina corporation (the "Adviser"),
GARTMORE GLOBAL PARTNERS, a general partnership organized under the laws of the
State of Delaware (the "Sub-Adviser"), and NATIONS FUND, INC. (the "Company"),
on behalf of the portfolio or portfolios of the Company as now or hereafter may
be identified on Schedule I hereto (each a "Fund" and collectively, the
"Funds").
RECITALS
WHEREAS, the Company is a Maryland corporation registered under
the Investment Company Act of 1940, as amended (the "1940 Act") as an open-end,
series management investment company; and
WHEREAS, the Adviser is a national bank that serves as investment
adviser to other registered investment companies and various investment
accounts; and
WHEREAS, the Sub-Adviser is registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), as an investment adviser
and engages in the business of acting as an investment adviser, and is regulated
by the Investment Management Regulatory Organization Limited ("IMRO") of the
United Kingdom in the conduct of its investment business and is a member of
IMRO; and
WHEREAS, the Adviser and the Company have entered into an
Investment Advisory Agreement of even date herewith (the "Investment Advisory
Agreement"), pursuant to which the Adviser shall act as investment adviser with
respect to the Funds; and
WHEREAS, pursuant to such Investment Advisory Agreement, the
Adviser, with the approval of the Company, wishes to retain the Sub-Adviser for
purposes of rendering advisory services to the Adviser and the Company in
connection with the Funds upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Appointment of Sub-Adviser. The Adviser hereby appoints, and
the Company hereby approves, the Sub-Adviser to render investment research and
advisory services to the Adviser and the Company with respect to the Funds,
under the supervision of the Adviser and
<PAGE>
subject to the policies and control of the Company's Board of Directors, and the
Sub-Adviser hereby accepts such appointment, all subject to the terms and
conditions contained herein.
2. Investment Services. The specific duties of the Adviser
delegated to the Sub-Adviser shall be the following:
(a) obtaining and evaluating pertinent information about
significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy generally
or the Funds specifically, and whether concerning the individual issuers
whose securities are included in the Funds or the activities in which
such issuers engage, or with respect to securities which the Adviser or
Sub-Adviser considers desirable for inclusion in the Funds;
(b) investing and reinvesting, on an ongoing basis, assets
held in the Funds in strict accordance with the investment policies of
the Funds as set forth in the registration statement of the Company with
respect to the Funds, as the same may be amended from time to time;
(c) in accordance with policies and procedures established
by the Board of Directors of the Company and the Adviser, selecting
brokers and dealers to execute portfolio transactions for the Funds and
selecting the markets on or in which the transactions will be executed;
(d) voting, either in person or by general or limited
proxy, or refraining from voting, any securities held in the Funds for
any purposes; exercising or selling any subscription or conversion
rights; consenting to and joining in or opposing any voting trusts,
reorganizations, consolidations, mergers, foreclosures and liquidations
and in connection therewith, depositing securities, and accepting and
holding other property received therefor, all as may be considered
appropriate by the Sub-Adviser; and
(e) performing other acts necessary or appropriate in
connection with the proper management of the Funds, consistent with its
obligations hereunder, and as may be directed by the Adviser and/or the
Company's Board of Directors.
In carrying out its obligations under clauses (b) to (e),
inclusive, of this Paragraph 2, the Sub-Adviser shall act only as agent of the
Company and/or the Fund and shall not act as principal. The Sub-Adviser shall
not be responsible for the administration of the Fund, for the execution and
settlement of transactions in securities or derivative instruments nor for the
custody of any such securities or instruments or documents of title and the
Sub-Adviser shall not hold any money or other assets of the Fund or the Company.
3. Control by Board of Directors. As is the case with respect to
the Adviser under the Investment Advisory Agreement, any investment activities
undertaken by the Sub-Adviser pursuant to this Agreement, as well as any other
activities undertaken by the Sub-Adviser with respect to the Funds, shall at all
times be subject to any directives of the Board of Directors
2
<PAGE>
of the Company. Without limiting the right of the Board of Directors of the
Company to issue directives, the Board of Directors shall take into
consideration any views or opinions that may be expressed by the Adviser of
Sub-Adviser in formulating policies, procedures and directives. The Sub-Adviser
shall not be obligated to conform its activities to any directive of the Board
of Directors of the Company to the extent that compliance with such directive
would be in contravention of any law, rule or regulation applicable to the
Sub-Adviser.
4. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-Adviser shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder;
(b) the provisions of the registration statement of the
Company applicable to the Funds, as the same may be amended from time to
time, under the Securities Act of 1933 and the 1940 Act;
(c) the Conduct of Business Rules of IMRO ("IMRO Rules") to
the extent that the IMRO Rules are not inconsistent with any applicable
requirements under the 1940 Act, the Advisers Act or other United States
federal or state law; and
(d) such policies and procedures that may be established by
the Board of Directors of the Company and communicated to the
Sub-Adviser from time to time.
In addition, any code of ethics adopted by the Sub-Adviser
pursuant to Rule 17j-1 under the 1940 Act shall include policies, prohibitions
and procedures which substantially conform to the recommendations regarding
personal investing approved by the Board of Governors of the Investment Company
Institute on June 30, 1994, as such recommendations may amended from time to
time.
5. Compensation. The Adviser shall pay the Sub-Adviser, as
compensation for services rendered hereunder, fees, payable monthly, at the
annual rates indicated on Schedule I hereto, as such Schedule may be
supplemented and amended from time to time. It is understood that the Adviser
shall be responsible for the Sub-Adviser's fee for its services hereunder, and
the Sub-Adviser agrees that it shall have no claim against the Company or the
Fund with respect to compensation under this Agreement. The Sub-Adviser's fees
shall be pro-rated for portions of months in which sub-advisory services are
provided.
The average daily net asset value of the Funds shall be determined
in the manner set forth in the Articles of Incorporation and registration
statement of the Company, as amended from time to time.
6. Expenses of the Funds. All of the ordinary business expenses
incurred by the Sub-Adviser in the operations of the Funds and the offering of
their shares shall be borne by the Funds unless specifically provided otherwise
in this Agreement. These expenses borne by the
3
<PAGE>
Funds include but are not limited to brokerage commissions, taxes, legal,
auditing, or governmental fees, the cost of preparing share certificates,
custodian, transfer agent and shareholder service agent costs, expenses of
issue, sale, redemption and repurchase of shares, directors and shareholder
meetings, the cost of preparing and distributing reports and notices to
shareholders, the fees and other expenses incurred by the Funds in connection
with membership in investment company organizations and the cost of printing
copies of prospectuses and statements of additional information distributed to
the Funds' shareholders.
7. Expense Limitation. If, for any fiscal year a Fund, the amount
of the aggregate advisory fee which the Company would otherwise be obligated to
pay with respect to the Fund is reduced pursuant to expense limitation
provisions of the Investment Advisory Agreement, the fee which the Sub-Adviser
would otherwise receive pursuant to this Agreement shall be reduced
proportionately.
8. Non-Exclusivity. The services of the Sub-Adviser to the Adviser
and the Company with respect to the Fund are not to be deemed to be exclusive,
and the Sub-Adviser shall be free to render investment advisory and
administrative or other services to others (including other investment
companies) and to engage in other activities. It is understood and agreed that
the officers and directors of the Sub-Adviser are not prohibited from engaging
in any other business activity or from rendering services to any other person,
or from serving as partners, officers, directors or trustees of any other firm
or trust, including other investment advisory companies.
9. Records. The Sub-Adviser shall provide to the Adviser, with
respect to the orders the Sub-Adviser places for the purchases and sales of
portfolio securities of the Funds, the documents and records required pursuant
to Rule 31a-1 under the 1940 Act as well as such records as the Funds'
administrator reasonably requests to be maintained, including, but not limited
to, trade tickets and confirmations for portfolio trades. All such records shall
be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1. All such records will be the property of the Funds and
will be available for inspection and use by the Funds. The Sub-Adviser will
promptly notify the Adviser and the Fund's administrator if it experiences any
difficulty in providing the records in an accurate and complete manner.
10. Term and Approval. This Agreement shall become effective when
approved, and shall thereafter continue from year to year, provided that the
continuation of the Agreement is specifically approved at least annually:
(a)(i) by the Company's Board of Directors or (ii) by the
vote of "a majority of the outstanding voting securities" of the Fund
(as defined in Section 2(a)(42) of the 1940 Act); and
(b) by the affirmative vote of a majority of the Directors
of the Company who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of a party to this Agreement
(other than as Directors of the Company), by votes cast in person at a
meeting specifically called for such purpose.
4
<PAGE>
11. Termination. This Agreement may be terminated at any time with
respect to a Fund, without the payment of any penalty, by vote of the Company's
Board of Directors or by vote of a majority of the Fund's outstanding voting
securities, or by the Adviser, or by the Sub-Adviser on sixty (60) days' written
notice to the other parties to this Agreement. Any party entitled to notice may
waive the notice provided for herein. This Agreement shall automatically
terminate in the event of its assignment, the term "assignment" for purposes of
this paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act.
This Agreement shall automatically terminate 120 days after its effectiveness if
the Fund's shareholders have not ratified and approved it within such period.
The Agreement shall automatically terminate upon the effectiveness of a
Sub-Advisory Agreement between the Company on behalf of the Fund and Gartmore
Global Partners.
12. Liability of Sub-Adviser. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Sub-Adviser or any of its officers,
directors, employees or agents, the Sub-Adviser shall not be subject to
liability to the Adviser or to the Company for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security. For purposes of
this paragraph and paragraph 13, brokers or dealers selected to execute
portfolio transactions for the Fund in accordance with Paragraph 2(c) hereof
shall not be considered agents of the Sub-Adviser.
13. Indemnification. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of duties hereunder on the part of
the Sub-Adviser, or any officers, directors, employees or agents thereof, the
Company hereby agrees to indemnify and hold harmless the Sub-Adviser against all
claims, actions, suits or proceedings at law or in equity whether brought by a
private party or a governmental department, commission, board, bureau, agency or
instrumentality of any kind, (a) arising from the advertising, solicitation,
sale, purchase or pledge of securities, whether of the Funds or other
securities, undertaken by the Funds or the Company's officers, directors,
employees, agents or affiliates, or (b) resulting from any violations of the
securities laws, rules, regulations, statutes and codes, whether federal or of
any state, by the Funds, or the Company's officers, directors, employees or
affiliates.
14. Notices. Any notices under this Agreement shall be in writing
and shall be duly given if delivered, mailed (postage prepaid, effective upon
receipt) or telegraphed, telexed or transmitted by similar telecommunications
device (effective upon completion of transmission, with a confirming copy
delivered or mailed postage prepaid) to such address or number as may be
designated for the receipt of such notice, with a copy to the Company. Until
further notice, it is agreed that the address and telefax number of the Company
shall be 111 Center Street, Little Rock, Arkansas 72201, Fax No. (501) 377-2331;
that of the Sub-Adviser shall be Gartmore House, 16-18 Monument Street, London
EC3R 8AJ, England, Fax No. 71-782-2075; and that of the Adviser shall be c/o
Mutual Fund Group, 33rd Floor, One NationsBank Plaza, Charlotte, North Carolina
28255, Fax No. (704) 388-2187.
5
<PAGE>
15. Questions of Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such term or provision of the 1940 Act and to interpretations thereof, if
any, by the United States courts or in the absence of any controlling
6
<PAGE>
decision of any such court, by rules, regulations or orders of the Securities
and Exchange Commission issued pursuant to the 1940 Act. In addition, where the
effect of a requirement of the 1940 Act reflected in any provision of this
Agreement is revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
16. IMRO Rules. Addendum A attached hereto sets forth certain
requirements under the IMRO Rules which are applicable to the Sub-Adviser, that
are expressly incorporated herein and made a part hereof, but only to the extent
that such requirements are not inconsistent with any applicable requirements
under the 1940 Act, the Advisers Act or other United States federal or state
law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in triplicate by their respective officers on the day and year
first written above.
NATIONS FUND, INC.,
on behalf of the Funds
By: /s/ A. Max Walker
A. Max Walker
President and Chairman of the
Board of Directors
NATIONSBANC ADVISORS, INC.
By: /s/ Mark H. Williamson
Mark H. Williamson
President and Director
GARTMORE GLOBAL PARTNERS
By: /s/ Charles G. Smith IV
Charles G. Smith IV
President
7
<PAGE>
SCHEDULE I
Fund Rate of Compensation
1. Nations International Equity Fund 0.70% of average daily net assets
8
<PAGE>
ADDENDUM A
1. To the extent that the Sub-Adviser receives any commissions or other forms of
remuneration, directly or indirectly, in connection with Fund transactions, no
portion of the Sub-Adviser's accrued investment advisory fee shall be abated
thereby.
2. Subject to the supervision of the Adviser and the policies and ultimate
control of the Company's Board of Directors, the Sub-Adviser shall advise the
Company and the Adviser on the management of the Funds' investments in
accordance with the terms of this Agreement and in accordance with the
investment parameters (including, inter alia, percentage limitations, quality
standards, investment selection criteria and types of permissible investments
and investment techniques, such as borrowing, options and futures transactions,
portfolio securities lending, etc.) established pursuant to the investment
objectives, policies and restrictions specifically embodied in the Company's
Registration Statement on Form N-1A, and any amendments thereto, under the
Securities Act of 1933 and the 1940 Act (the "Fund's Registration Statement").
3. The Sub-Adviser shall not have or maintain custody of any securities, cash or
other assets of the Funds. Custody of the Funds' assets will be maintained by
the custodian bank pursuant to an agreement approved by the Funds' Board of
Directors. It is expected that such custodian, or any successor thereto, will
not be an "Associate" of the Sub-Adviser as that term is defined under IMRO
Rules.
4. In the event the Funds or the Adviser has a significant complaint regarding
the services provided by the Sub-Adviser under the Sub-Advisory Agreement by
and among the Company, the Adviser and the Sub-Adviser, a Fund officer should
communicate such complaint to the Sub-Adviser, whereupon such complaint will be
recorded on a standard form prepared by the Sub-Adviser for such purposes. The
Sub-Adviser's complaints procedure requires that if a complaint has not been
cleared within twenty-one (21) days, the Sub-Adviser must so advise IMRO and
the Fund also must be advised that it has the right to issue its complaint
directly with a referee appointed by IMRO.
5. The Sub-Adviser will provide to the Funds' Board of Directors written
financial reports and analyses on the Funds' securities transactions and the
operations of comparable investment companies on a quarterly basis or more
frequently as requested by the Board of Directors. Such reports and analyses
shall include information as at the last day of an applicable reporting period.
6. The Funds may from time to time request or instruct the Sub-Adviser, directly
or through the Adviser, to act or not to act regarding certain Fund-related
investment and/or operational matters. Such request or instructions will be
communicated orally or in writing to the Sub-Adviser, directly or through the
Adviser and will be acknowledged in the same manner in which they are
communicated. To the extent that a particular request or instruction is, or may
be, refused (i.e., because it (a) is in contravention of (i) a law or
regulation, (ii) an investment policy of the Fund, or (iii) a provision of this
Agreement or (b) is not operationally feasible), such refusal shall be
communicated by the Sub-Adviser, including through the Adviser, and the Fund
9
<PAGE>
and the Sub-Adviser, upon advice of counsel, shall discuss alternatives and
determine an appropriate course of action which will be reported to the full
Board at the next meeting of the Fund's Board of Directors for its approval.
7. Notwithstanding that all required disclosure concerning the risks associated
with the Funds' permissible investments and investment techniques is included
in the Funds' Registration Statement, which Statement is intended for review by
the investors in the Funds and to be retained by them for future reference,
with respect to the Funds' specified use of options and futures transactions,
the following shall be specifically noted herein:
"Options and futures markets can be highly volatile and transactions of
this type carry a high risk of loss. Moreover, a relatively small
adverse market movement with respect to these types of transactions may
result not only in loss of the original investment but also in
unquantifiable further loss exceeding any margin deposited."
Further, in managing the Funds' assets, the Sub-Adviser shall consider the
risks associated with the Fund's permissible investments and investment
techniques.
8. The Sub-Adviser or its representatives may from time to time recommend to the
Funds or effect on behalf of the Funds with respect to Fund transactions in
securities the subject of a recent new issue, the price of which transactions
may have been influenced by bids made or transactions effected for the purpose
of stabilizing the price of those securities. Such transactions would at all
times be effected in accordance with the provisions of IMRO Rule 14 and, in
particular, with the conditions of the IMRO Rule 14.02, including the
requirement that the Sub-Adviser, with respect to any specific transaction,
communicate to the Fund orally or in writing a statement in a form
substantially similar to that which is set forth in IMRO Rule 14.02(c). In
addition, with respect to these transactions, it is understood when executing
this Agreement and thereafter when approving the continuance of this Agreement
in accordance with its terms, that management of the Fund has carefully read
the following paragraphs in order to enable Fund management to judge whether it
wishes a Fund's assets to be invested at all in such securities or, if so,
whether it wishes to authorize the Sub-Adviser generally to effect transactions
in such securities on behalf of the Fund without further reference to Fund
management or whether Fund management wishes to be consulted before any
particular transaction is effected on behalf of the Fund.
Stabilization is a process whereby the market price of a security is pegged or
fixed during the period in which a new issue of securities is sold to the
public. Stabilization may take place in the new issue or in other securities
related to the new issue in such a way that the price of the other securities
may affect the price of the new issue or vice versa.
The reason stabilization is permitted is that when a new issue is brought to
market the sudden glut will sometimes force the price lower for a period of
time before buyers are found for the securities on offer.
As long as it obeys a strict set of rules, the "stabilizing manager," normally
the issuing house chiefly responsible for bringing a new issue to market, is
entitled to buy securities in the market
10
<PAGE>
that it has previously sold to investors or allotted to institutions who were
included in the new issue but who have decided not to continue participating.
The effect of this may be to keep the price at a higher level than would
otherwise be the case during the period of stabilizing.
The rules referred to above in the immediately preceding paragraph limit the
period in which the stabilizing manager may stabilize, fix the price at which
it may stabilize (in the case of shares and warrants but not bonds), and
require the stabilizing manager to disclose that it may be (but not that it is)
stabilizing. The fact that a new issue or a related security is being
stabilized does not in itself mean that investors are not interested in the
issue, but neither should the existence of transactions in an issue where the
stabilizing may take place be relied upon as an indication that investors are
interested in the new issue or interested in purchasing at the price at which
transactions are taking place.
9. A report containing the Funds' financial statements (including the contents
and valuation of the Funds) shall be submitted to shareholders and to the
Securities and Exchange Commission at least semi-annually. Such reports shall
include information as at the last day of any semi-annual period for which such
reports relate. To the extent that any performance information is included in
such report, it shall conform to the standards set forth in the Funds'
Registration Statement.
10. Except as permitted by or pursuant to Section 17 of the 1940 Act and the
Rules promulgated thereunder, the Sub-Adviser, or an "affiliate" thereof (as
that term is defined in the 1940 Act), may not effect transactions: (i) with or
for the Funds in which the Sub-Adviser or such affiliate has directly or
indirectly a material interest or a relationship of any kind with another party
which may involve a conflict with the Sub-Adviser's responsibilities to the
Funds as a sub-investment adviser; or (ii) with or through the agency or
another person with whom the Sub-Adviser or such affiliate maintains an
arrangement as described in Rule 6.01 of Chapter IV of the IMRO Rules.
11. Upon termination of the Sub-Advisory Agreement by and among the Company, the
Adviser and the Sub-Adviser, unless otherwise directed by the Fund's Board of
Directors, all securities positions and other portfolio transactions then in
progress shall be transferred to the successor investment adviser selected by
the Board of Directors.
12. The Sub-Adviser shall be entitled at its discretion to disclose any
information known to it relating to the Fund's business or affairs to the
Securities and Investment Board or to IMRO on the terms that the information so
disclosed shall not without its consent be further disclosed otherwise than is
permitted in respect of Restricted Information under the provisions of Part
VIII of the Financial Services Act of 1986.
11
<PAGE>
(PRELIMINARY PROXY MATERIAL:
FOR INFORMATION OF THE SECURITIES
AND EXCHANGE COMMISSION ONLY)
EXHIBIT B
SUPPLEMENT TO THE
SUB-ADVISORY AGREEMENT
NATIONS FUND, INC.
THIS SUPPLEMENT is made this 10th day of April, 1996 to the
SUB-ADVISORY AGREEMENT (the "Agreement") among NATIONSBANC ADVISORS, INC. (the
"Adviser"), GARTMORE GLOBAL PARTNERS (the "Sub-Adviser") and NATIONS FUND, INC.
(the "Company") on behalf of the portfolio or portfolios of the Company as now
or hereafter may be identified on Schedule I to the Agreement (each a "Fund" and
collectively, the "Funds") dated as of April 10, 1996.
WHEREAS, the parties joined in an exemptive application (the
"Application") filed with the Securities and Exchange Commission requesting
various relief pursuant to Section 6(c) of the Investment Company Act of 1940
(the "1940 Act");
WHEREAS, in connection with the Application, and as a condition to
obtaining the relief requested therein, the parties agreed to various terms,
including, among others, that the Agreement provide for the escrow of fees to be
paid to the Sub-Adviser until such time as the Agreement is approved by the
shareholders of the Fund.
NOW, THEREFORE, the parties agree that the Agreement be
supplemented to provide as follows:
Escrow of Fees. During the period of time commencing on the
effective date of the Agreement, and continuing until the earlier of: (a) such
time as the Agreement is approved by a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act); (b) the 120th day following
the termination of the sub-advisory arrangements in place for the Fund as of
March 12, 1996; or (c) September 30, 1996, the fees payable to the Sub-Adviser
under the Agreement shall be paid into an interest-bearing escrow account (the
"Account") which shall be maintained by an escrow agent. Such escrow agent shall
not be an affiliated party (as defined in the 1940 Act) of any of the parties
hereto. All amounts paid into the Account (including interest earned on such
fees) may be paid to the Sub-Adviser only upon the approval, by a majority of
the outstanding voting securities of the Fund (as defined in the 1940 Act), of
the Agreement. In the event that the shareholders of the Fund fail to approve
the Agreement prior to the earlier of the dates specified in subparts (a) or (b)
above, all moneys in the Account shall be paid to the Fund. All parties hereto
expressly acknowledge that the escrow agent may release the moneys in the
Account only upon receipt of a certificate from an officer of the Company (who
shall not be an interested person of the Sub-Adviser (as defined in the 1940
Act)) stating that the moneys are to be delivered to the Sub-Adviser and that
the Agreement has been approved by a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act) or, in the event that the
shareholders of the Fund failed to approve the
1
<PAGE>
Agreement prior to the earlier of the dates specified in subparts (a) or (b)
above, that the moneys in the Account are to be delivered to the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this SUPPLEMENT
to be executed in triplicate by their respective officers on the day and year
first written above.
NATIONS FUND, INC.,
on behalf of the Fund
By: /s/ A. Max Walker
A. Max Walker
President and Chairman of the
Board of Directors
NATIONSBANC ADVISORS, INC.
By: /s/ Mark H. Williamson_
Mark H. Williamson
President and Director
GARTMORE GLOBAL PARTNERS
By: /s/ Charles G. Smith IV
Charles G. Smith IV
President
2
<PAGE>
(PRELIMINARY PROXY MATERIAL:
FOR INFORMATION OF THE SECURITIES
AND EXCHANGE COMMISSION ONLY)
PROXY CARD
NATIONS FUND, INC.
* * *
NATIONS INTERNATIONAL EQUITY FUND
Special Meeting of Shareholders
May 20, 1996
The undersigned hereby appoints Richard H. Blank, Jr., Louise P.
Newcomb and James E. Banks, Jr. (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 Nations International Equity Fund (the "Fund") of Nations Fund,
Inc. ("Nations Fund") to be held at 101 South Tryon Street, 33rd Floor,
Charlotte, North Carolina 28255, at 9:00 a.m. (Eastern time) on Wednesday, July
17, 1996, and at any adjournment(s) thereof. The Proxies shall cast votes
according to the number of shares of the Fund which the undersigned may be
entitled to vote with respect to the proposal set forth below, in accordance
with the specification indicated, if any, and shall have 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 Proxies, or any of them, may lawfully do by virtue hereof
or thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE FUND AND THE PROXY STATEMENT, DATED MAY 20, 1996.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS ON BEHALF OF THE FUND AND
NATIONS FUND. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY,
EITHER IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE (FRONT AND
BACK) AT (617) 878-9327.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSAL. IN THE ABSENCE OF ANY SPECIFICATION, THIS PROXY
WILL BE VOTED IN FAVOR OF THE PROPOSAL.
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(PRELIMINARY PROXY MATERIAL:
FOR INFORMATION OF THE SECURITIES
AND EXCHANGE COMMISSION ONLY)
(1) To ratify and approve the new sub-advisory agreement among
Gartmore Global Partners, NationsBanc Advisors, Inc. and Nations
Fund, Inc. on behalf of the Fund.
|_| YES |_| NO |_| ABSTAIN
In their discretion, the Proxies, and each 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.
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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.
_______________________________, 1996
(Please Date)
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