SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by
Rule 14a-b(e)(2))
(x ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to (section mark)240.14a-11(c) or
(section mark)240.14a-12
Nations Fund, Inc.
(Name of Registrant as Specified In Its Charter)
Nations Fund, Inc.
(Name of Person(s) Filing Proxy Statement If Other Than Registrant)
PAYMENT OF FILING FEE (Check the appropriate box):
( ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
( ) $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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: *
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
(Set forth the amount on which the filing fee is calculated and state how
it was determined)
(X) Fee previously paid with preliminary materials.
( ) 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: $
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
IMPORTANT NOTICE: PLEASE COMPLETE THE ENCLOSED PROXY CARD AND RETURN IT AS SOON
AS POSSIBLE.
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"), the Fund's investment adviser) 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 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)
871-7536. 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>
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.
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) 871-7536. 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
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.
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>
NATIONS FUND, INC.
101 SOUTH TRYON STREET
33RD FLOOR
CHARLOTTE, NORTH CAROLINA 28255
TELEPHONE: (800) 321-7854
PROXY STATEMENT
MAY 20, 1996
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
67,674,377.26 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 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 a 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 the 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
1
<PAGE>
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. 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 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, Nations Fund,
on behalf of 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 be paid 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. For the fiscal period
ended March 31, 1996, pursuant to the previous sub-advisory arrangements, NBAI
and/or the Fund paid Nations Gartmore $4,021,782 for sub-advisory services to
the Fund.
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 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
2
<PAGE>
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.
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
headquartered 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>
POSITION AT GARTMORE
NAME AND ADDRESS 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
Andrew J. Brown Committee Member Finance Director and Chairman, Gartmore Fund Managers
International Limited, Gartmore Money Management
Limited, Gartmore Administration Services Limited
David W. Watts Committee Member Investment Director, Gartmore plc, Executive Chairman of
Gartmore Pension Fund Managers Ltd. and Chairman,
Private Capital Ltd.
</TABLE>
3
<PAGE>
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:
<TABLE>
<CAPTION>
ANNUAL SUB-
FUND NAME ADVISORY FEE
<S> <C>
Nations Global Government Income Fund....................................... 0.54%
Nations Emerging Markets Fund............................................... 0.85%
Nations Pacific Growth Fund................................................. 0.70%
</TABLE>
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.
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 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.
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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:
<TABLE>
<CAPTION>
NAME AND NUMBER OF SHARES PERCENTAGE OF
ADDRESS BENEFICIALLY OWNED CLASS OWNED
<S> <C> <C>
PT NationsBank Equity Fund.............................. 11,888,735.66 17.55%
NationsBank Corp.
100 N. Tryon Street
Charlotte, NC 28255
</TABLE>
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, there were no affiliated broker
commissions paid on behalf of the Fund.
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.
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)
5
<PAGE>
871-7536. 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
6
<PAGE>
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 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
1
<PAGE>
(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 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 the 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 be 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 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.
2
<PAGE>
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.
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.
3
<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 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
4
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
FUND RATE OF COMPENSATION
<S> <C> <C>
1. Nations International Equity Fund 0.70% of average daily net assets
</TABLE>
5
<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 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
6
<PAGE>
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 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.
7
<PAGE>
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 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
1
******************************APPENDIX************************************
Please fold and detach card at perforation before mailing
NATIONS INTERNATIONAL EQUITY FUND Special Meeting of Shareholders-July 17, 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 on the reverse side, 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) 871-7536.
____________________________
____________________________
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)
<PAGE>
Please fold and detach card at perforation before mailing
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. PLEASE VOTE BY FILLING IN THE
APPROPRIATE BOX BELOW, AS SHOWN, USING BLUE OR BLACK INK OR
DARK PENCIL. DO NOT USE RED INK. [ ]
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.
FOR AGAINST 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.
