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
Filed by the registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement |X| Confidential, for use of
the Commission Only (as
permitted by Rule
14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NATIONS FUND, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant) Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| 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:
- ------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- ------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------------------
(5) Total fee paid:
- ------------------------------------------------------------------------------
|_| Fee paid previously 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:
<PAGE>
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(2) Form, Schedule or Registration Statement No.:
- ------------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<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) 652-5096
March 29, 1999
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, April 28, 1999. The Special Meeting is
being called to consider the approval of an amended sub-advisory agreement with
Gartmore Global Partners ("Gartmore") and to consider the approval of new
sub-advisory agreements with INVESCO Global Asset Management (N.A.), Inc.
("INVESCO") and Putnam Investment Management, Inc ("Putnam").
If approved, the Fund will retain INVESCO and Putnam to serve as
investment sub-advisers along with Gartmore, the Fund's current investment
sub-adviser. The Board of Directors of Nations Fund believes that the management
of the Fund's assets by multiple managers with different yet complementary
investment styles may improve the performance and stabilize returns of the Fund.
It is expected that Gartmore, INVESCO and Putnam will each manage approximately
one-third of the Fund's assets and each investment sub-adviser will receive fees
based on the actual amount of assets managed by such investment sub-adviser. The
advisory fee paid by the Fund to NationsBanc Advisors, Inc. ("NBAI"), the
investment adviser to the Fund, will not change as a result of the approval of
the amended sub-advisory agreement with Gartmore and the new sub-advisory
agreements with INVESCO and Putnam, and all sub-advisory fees will continue to
be paid out of NBAI's advisory fee. THIS WILL NOT RESULT AS AN INCREASE OF FEES
BORNE BY THE SHAREHOLDERS.
Shareholders are asked to approve the amended sub-advisory agreement
among Gartmore, NBAI and Nations Fund on behalf of the Fund, and to approve a
new sub-advisory agreement among INVESCO, NBAI and Nations Fund on behalf of the
Fund and a new sub-advisory agreement among Putnam, NBAI and Nations Fund on
behalf of the Fund. Together, Gartmore, INVESCO and Putnam will perform
substantially the same services for the Fund that Gartmore performs under the
current sub-advisory agreement in effect among Gartmore, NBAI and Nations Fund.
THE BOARD OF DIRECTORS OF NATIONS FUND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE ITEMS.
Attached are the formal Notice of Special Meeting and a Proxy
Statement, together with a Proxy Card. 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 RETURN YOUR PROXY CARD TODAY, EITHER IN THE ENCLOSED
POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE (FRONT AND BACK) AT (704) 388-2641. If
you have any questions regarding the enclosed materials or the Special Meeting,
please call (800) 652-5096. 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) 652-5096
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NATIONS INTERNATIONAL EQUITY FUND
OF
NATIONS FUND, INC.
TO BE HELD ON APRIL 28, 1999
* * * *
TO THE SHAREHOLDERS of Nations International Equity Fund (the "Fund"):
PLEASE TAKE NOTE that a SPECIAL MEETING OF SHAREHOLDERS (the "Special
Meeting") of the Fund will be held on Wednesday, April 28, 1999, at 10:00 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(a). To approve an amended sub-advisory agreement among Gartmore
Global Partners ("Gartmore"), NationsBanc Advisors, Inc.
("NBAI") and Nations Fund, Inc. ("Nations Fund") on behalf of
the Fund. The amended sub-advisory agreement contemplates that
the Fund may retain one or more other investment managers to
serve as investment sub-advisers to the Fund along with
Gartmore, the Fund's current investment sub-adviser. The total
level of advisory fees paid by the Fund, which includes
amounts paid to Gartmore as well as the current level of fees
paid to Gartmore, would not change under the amended
sub-advisory agreement.
1(b). To approve a new sub-advisory agreement among INVESCO Global
Asset Management (N.A.), Inc. ("INVESCO"), NBAI and Nations
Fund on behalf of the Fund. Under the new sub-advisory
agreement, the Fund and NBAI would retain INVESCO to serve as
investment sub-adviser to the Fund. The total level of
advisory fees paid by the Fund would not change under the new
sub-advisory agreement.
1(c). To approve a new sub-advisory agreement among Putnam
Investment Management, Inc. ("Putnam"), NBAI and Nations Fund
on behalf of the Fund. Under the new sub-advisory agreement,
the Fund and NBAI would retain Putnam to serve as investment
sub-adviser to the Fund. The total level of advisory fees paid
by the Fund would not change under the new sub-advisory
agreement.
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 February 26, 1999, 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 proposals 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>
YOUR PROXY IS VERY IMPORTANT TO US. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING IN PERSON, PLEASE RETURN THE ENCLOSED PROXY CARD TODAY, EITHER IN THE
ENCLOSED POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE (FRONT AND BACK) AT (704)
388-2641. Signed but unmarked Proxy Cards will be counted in determining whether
a quorum is present and will be voted in favor of the proposals.
By Order of the Board of Directors
Richard H. Blank, Jr.
Secretary and Treasurer
March 29, 1999
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YOUR VOTE IS VERY IMPORTANT TO US REGARDLESS
OF THE NUMBER OF SHARES THAT YOU OWN.
PLEASE 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"), BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION ("BANK OF AMERICA") OR ANY OF THEIR
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 CO-ADMINISTRATOR AND SERVES AS THE DISTRIBUTOR FOR NATIONS FUNDS.
<PAGE>
PROXY STATEMENT
MARCH 31, 1999
NATIONS FUND, INC.
101 SOUTH TRYON STREET
33RD FLOOR
CHARLOTTE, NORTH CAROLINA 28255
TELEPHONE: (800) 652-5096
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 (the "Directors"), to be used at a Special Meeting of Shareholders (the
"Special Meeting") of the Fund, to be held on Wednesday, April 28, 1999,
beginning at 10:00 a.m. (Eastern time) at 101 South Tryon Street, 33rd Floor,
Charlotte, North Carolina 28255. Your proxy is being solicited by Nations Fund
for the purposes set forth in the accompanying Notice of Special Meeting.
Shareholders of record of the Fund at the close of business on
February 26, 1999 (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 56,338,635.647 outstanding shares of the Fund. This proxy statement is
first being mailed to Shareholders on or about March 29, 1999.
APPROVAL OF THE AMENDED SUB-ADVISORY AGREEMENT WITH GARTMORE GLOBAL PARTNERS AND
EACH NEW SUB-ADVISORY AGREEMENT WITH INVESCO GLOBAL ASSET MANAGEMENT (N.A.),
INC. AND PUTNAM INVESTMENT MANAGEMENT, INC.
BACKGROUND
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 BankAmerica Corporation, a bank holding company organized as a
Delaware corporation. NBAI has its principal offices at One BankAmerica Plaza,
Charlotte, North Carolina 28255. Stephens Inc. ("Stephens"), with principal
offices at 111 Center Street, Little Rock, Arkansas 72201, serves as
co-administrator and distributor to the Fund. NBAI serves as co-administrator,
with Stephens, to the Fund. Investment sub-advisory services are provided to
NBAI and the Fund by Gartmore Global Partners ("Gartmore") pursuant to an
investment sub-advisory agreement among NBAI, Gartmore and Nations Fund on
behalf of the Fund (the "Current Sub-Advisory Agreement"). Gartmore is a joint
venture structured as a general partnership between NB Partner Corp., a wholly
owned subsidiary of NationsBank, and Gartmore U.S. Limited, an indirect, wholly
owned subsidiary of Gartmore Investment Management plc ("Gartmore plc"), a
United Kingdom ("UK") company which is the holding company for a leading UK
based international fund management group of companies. National Westminster
Bank plc and affiliated entities (collectively, "NatWest") own 100% of the
equity of Gartmore plc.
Over the past several months, the management of NBAI has undertaken a
review and analysis of the international sub-advisory services provided to the
Fund and of international sub-advisory services in general. As a result of this
review, NBAI recommended to the Directors that they approve the retention of
INVESCO Global Asset Management (N.A.), Inc. ("INVESCO") and Putnam Investment
Management, Inc. ("Putnam") to serve as investment sub-advisers for the Fund
along with Gartmore, the current investment sub-adviser to the Fund. At a
special meeting of the Board of Directors of the Fund on December 2, 1998, the
Directors, including a majority of the non-interested Directors, considered and
approved NBAI's proposal to make certain non-material amendments to the Current
Sub-Advisory Agreement ("Amended Sub-Advisory Agreement) and to approve two new
investment
1
<PAGE>
sub-advisory agreements among (i) NBAI, INVESCO and Nations Fund and (ii) NBAI,
Putnam and Nations Fund (each a "New Sub-Advisory Agreement"). In addition to
approval by the Directors, approval of the Amended Sub-Advisory Agreement and
each New Sub-Advisory Agreement requires the affirmative vote of a majority of
the outstanding shares of the Fund (see "Procedural Matters" below). This proxy
statement is being furnished to solicit your vote on the Amended Sub-Advisory
Agreement and each New Sub-Advisory Agreement. The Directors believe that the
Amended Sub-Advisory Agreement and the New Sub-Advisory Agreements are in the
best interests of the Fund and its Shareholders, and recommend that Shareholders
vote to approve the Amended Sub-Advisory Agreement and the New Sub-Advisory
Agreements. The investment objective and policies of the Fund will remain the
same. Approval of the Amended Sub-Advisory Agreement and each New Sub-Advisory
Agreement will have no effect on the number of shares you own or the value of
those shares.
At the Special Meeting, Shareholders of the Fund will be asked to vote
on a proposal to approve the Amended Sub-Advisory Agreement and to vote to
approve the New Sub-Advisory Agreement among INVESCO, NBAI, as the Fund's
investment adviser, and Nations Fund on behalf of the Fund and the New
Sub-Advisory Agreement among Putnam, NBAI, as the Fund's investment adviser, and
Nations Fund on behalf of the Fund, respectively.
Gartmore serves as the investment sub-adviser to the Fund pursuant to
the Current Sub-Advisory Agreement dated April 10, 1996. At a special meeting of
the Directors on December 2, 1998, the Directors, including a majority of the
Directors who are not interested persons, as that term is defined in the
Investment Company Act of 1940 (the "1940 Act") approved certain non-material
changes to the Current Sub-Advisory Agreement to accommodate the Fund's
retaining one or more other investment sub-advisers (in addition to Gartmore) to
sub-advise the Fund. The Amended Sub-Advisory Agreement, which is substantially
identical to the Current Sub-Advisory Agreement, is marked to show changes and
is attached as Appendix 1.
At the December 2, 1998 meeting of the Directors, the Directors also
approved New Sub-Advisory Agreements which provide for the retention of INVESCO
and Putnam as new co-investment sub-advisers to the Fund with Gartmore. Each New
Sub-Advisory Agreement was approved by the Directors, including a majority of
the Directors who are not parties to the New Sub-Advisory Agreements or
interested persons of any such parties, other than as Directors of Nations Fund,
contingent upon Shareholder approval of each New Sub-Advisory Agreement. The
form of each New Sub-Advisory Agreement, as approved by the Directors, for
INVESCO and Putnam are attached as Appendix 2 and Appendix 3, respectively.
Under the Amended Sub-Advisory Agreement and each New Sub-Advisory
Agreement Gartmore, INVESCO and Putnam will collectively have substantially the
same duties that Gartmore alone currently has under the Current Sub-Advisory
Agreement. NBAI's current contractual advisory fee level of 0.90% of the average
daily net assets of the Fund will not change as a result of approval of the
Amended Sub-Advisory Agreement or each of the New Sub-Advisory Agreements, and
NBAI, not the Fund or Nations Fund, will continue to be responsible for payment
of all sub-advisory fees to each of the three investment sub-advisers. Under the
Amended Sub-Advisory Agreement and each New Sub-Advisory Agreement, it is
expected that each investment sub-adviser will be responsible for managing
approximately one-third of the Fund's assets. The actual percentage of the
Fund's assets under the management of each of the sub-advisers at any given
point in time will likely vary, owing to subscription and redemption activity
and market movements. In addition, under the Investment Advisory Agreement, NBAI
maintains the right to allocate assets among the investment sub-advisers based
on different percentages. In managing the allocation among sub-advisers, NBAI
may consider, among other things, the investment sub-advisers' relative
performance and their respective investment styles. Each investment sub-adviser
will receive fees based on the actual amount of the assets managed by such
investment sub-adviser. The aggregate fees, computed daily and payable monthly,
paid by NBAI to the three investment sub-advisers, would not exceed 0.70% on an
annual basis of the average daily net assets of the Fund managed by Gartmore;
0.55% for those assets by INVESCO; and 0.65% for those assets managed by Putnam.
APPROVAL OF THE AMENDED SUB-ADVISORY AGREEMENT OR EACH OF THE NEW SUB-ADVISORY
AGREEMENTS WOULD NOT RESULT IN AN INCREASE IN ADVISORY FEES PAID DIRECTLY BY THE
FUND.
2
<PAGE>
CONSIDERATIONS OF THE FUND'S BOARD OF DIRECTORS
Over a period of several months, NBAI conducted a careful review and
analysis of international investment sub-advisers and the international
sub-advisory services provided to the Fund. This process began with a review of
international investment managers, which were screened on the basis of, among
other factors, stability of organization, management investment style,
historical performance and reputation. As a result of this review, several
investment managers were selected for further evaluation. As a result of this
evaluation, NBAI recommended to the Directors at a meeting of the Board of
Directors on December 2, 1998, that the Fund retain INVESCO and Putnam to be
co-investment sub-advisers to the Fund in addition to Gartmore. At this meeting,
a majority of the Directors, including a majority of the Directors who are not
interested persons, as that term is defined in the 1940 Act and who are not
interested persons of Gartmore, INVESCO or Putnam, approved the Amended
Sub-Advisory Agreement and each of the New Sub-Advisory Agreements subject to
Shareholder approval. By approving the Amended Sub-Advisory Agreement and each
New Sub-Advisory Agreement, the Directors have acted in what they believe to be
the best interest of the Shareholders of the Fund.
The Directors believe that managing the Fund's assets with multiple
managers, each with a distinct yet complementary investment style, may result in
better performance and more stable returns by the Fund over time. It is expected
that the multi-manager approach may lead to less volatility in the Fund's
performance by offering diverse management styles. It is also believed that
these diverse management styles may lead to enhanced performance. In particular,
Gartmore combines "top down," regional allocation with a stock selection process
focusing on unexpected growth. INVESCO focuses exclusively on stock selection
("bottom up"), seeking sustainable growth company investments. Putnam is a "core
manager," with little or no bias toward growth or value style investing, that
combines stock selection ("bottom up") and country allocation ("top down"). The
Directors considered that Gartmore, INVESCO and Putnam all have considerable
experience in managing international portfolios and have proven records of
achieving strong investment performance. The Directors also considered that
NBAI's current advisory fee level will remain unchanged and NBAI will pay
sub-advisory fees to the three investment advisers out of its current advisory
fee.
The Board based its decision to recommend that Shareholders approve
the Amended Sub-Advisory Agreement and approve each New Sub-Advisory Agreement
on the following material factors: (i) the desire to improve the performance of
the Fund through diversification of investment managers and investment styles;
(ii) the complementary investment styles of Gartmore, INVESCO and Putnam; (iii)
the desire to reduce the risk of volatile investment performance associated with
relying on a single investment manager; (iv) the strength of the historical
investment performance of INVESCO and Putnam; (v) recent enhancements in
Gartmore's investment management process; (vi) the quality of the management,
personnel, and experience of Gartmore, INVESCO and Putnam, (vii) the absence of
an increase in advisory fees paid by the Fund; and (viii) the absence of
substantive changes in the type of services provided to the Fund as a result of
the ratification and approval of the Amended Sub-Advisory Agreement and the
approval of each New Sub-Advisory Agreement. In making its decision to recommend
approving the Amended Sub-Advisory Agreement and each New Sub-Advisory
Agreement, the factors that the Board considered most important were the
expected improvement in management of Fund assets as a result of employing three
investment sub-advisers with distinct yet complementary styles of management,
the strength of the historical investment performance and the quality of
management of INVESCO and Putnam and the continuation of the current advisory
fees paid by the Fund. The Directors based their determinations on discussions
with representatives of NBAI, Gartmore, INVESCO and Putnam at the December 2,
1998 meeting and a review of materials presented by NBAI, Gartmore, Putnam and
INVESCO in connection with that meeting. These materials included forms of the
Amended Sub-Advisory Agreement and the New Sub-Advisory Agreements, personnel
information and comparative historical performance data.
INFORMATION REGARDING THE AMENDED SUB-ADVISORY AGREEMENT AND EACH NEW
SUB-ADVISORY AGREEMENT
Pursuant to the Amended Sub-Advisory Agreement and each New
Sub-Advisory Agreement, Gartmore, INVESCO and Putnam, subject to the policies
and control of Nations Fund's Board of Directors and the overall supervision of
NBAI and Nations Fund, each 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
3
<PAGE>
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 Amended Sub-Advisory
Agreement and each New Sub-Advisory Agreement will become effective and remain
in effect for a two-year period following the date of such approval. Thereafter,
the Amended Sub-Advisory Agreement and each 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 the 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 Amended Sub-Advisory Agreement or either 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 Amended Sub-Advisory Agreement and each 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 Amended Sub-Advisory Agreement and each New
Sub-Advisory Agreement will terminate automatically in the event of its
assignment. The Amended Sub-Advisory Agreement and each New Sub-Advisory
Agreement provides that Gartmore, INVESCO and Putnam, respectively, shall not be
liable for any act or omission in the course of, or connected with, rendering
services thereunder, except by reason of Gartmore's willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reckless
disregard of its duties and obligations thereunder or INVESCO's or Putnam's
respective willful misfeasance, bad faith or negligence in the performance of
its duties, or by reckless disregard of its duties and obligations thereunder.
INFORMATION REGARDING THE SUB-ADVISERS
Gartmore Global Partners, located at Gartmore House, 16-18 Monument
Street, London EC3R 8AJ, England, is a joint venture structured as a general
partnership between NB Partner Corp., a wholly owned subsidiary of NationsBank,
and Gartmore U.S. Limited, an indirect, wholly owned subsidiary of Gartmore
Investment Management plc ("Gartmore plc"), a UK holding company. National
Westminster Bank plc and affiliated entities own 100% of the equity of Gartmore
plc.
INVESCO Global Asset Management (N.A.), Inc., with principal offices
located at 1315 Peachtree Street, N.E., Atlanta, Georgia 30309, was founded in
1997 as a division of INVESCO Global a publicly traded investment management
firm located in London, England, and a wholly owned subsidiary of AMVESCAP PLC,
a publicly traded UK financial holding company also located in London, England
that, through its subsidiaries, engages in international investment management.
Putnam Investment Management, Inc., with principal offices located at
One Post Office Square, Boston, Massachusetts 02109, is a wholly owned
subsidiary of Putnam Investments, Inc., an investment management firm founded in
1937 which, except for shares held by employees is owned by Marsh & McLennan
Companies, a publicly traded professional services firm that engages, through
its subsidiaries in the business of insurance brokerage, investment management
and consulting.
<TABLE>
<CAPTION>
Name and Address Position at Gartmore Principal Occupation
- ---------------- -------------------- --------------------
<S> <C> <C>
Andrew J. Brown Director Joint Chief Executive
16-18 Monument St. Officer, Gartmore
London EC3R 8AJ
Peter Chambers Director Head of Active Equities,
16-18 Monument St. Gartmore
London EC3R 8AJ
Chris Russell Director Head of Overseas
16-18 Monument St. Businesses, Gartmore
London EC3R 8AJ
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Name and Address Position at Gartmore Principal Occupation
- ---------------- -------------------- --------------------
<S> <C> <C>
Stephen Watson Chief Investment Officer Chief Investment Officer,
16-18 Monument St. Gartmore
London EC3R 8AJ
Martin E. Galt III Director
101 South Tryon
Charlotte, NC 28255
Robert H. Gordon Director President, NBAI
101 South Tryon
Charlotte, NC 28255
E. Keith Wirtz Director Chief Investment Officer,
101 South Tryon TradeStreet
Charlotte, NC 28255
Name and Address Position at INVESCO Principal Occupation
- ---------------- ------------------- --------------------
Luis A. Aguilar Director Vice President,
136 Mobile Avenue Secretary, General Counsel
Atlanta, GA 30305
The Honorable Michael D. Benson Director Chairman
59 Pursers Cross Road, Fulham
London, UK SW6 4QY
Stephen A. Dana Director
116 Peachtree Battle Avenue
Atlanta, GA 30305
William L. Davidson Vice President Portfolio Manager
53 Barbara Lane, NW
Atlanta, GA 30327
Erik B. Granade Vice President Portfolio Manager
318 Camden Road, NE
Atlanta, GA 30309
Kirk F. Holland Vice President Director of Marketing
9212 Chastain Drive North America
Atlanta, GA 30342
Deborah A. Lamb Assistant Secretary Director of Compliance
3765 Rivaridge Drive
Marietta, GA 30062
5
<PAGE>
John D. Rogers Director CEO, President, Managing
118 Blackland Road, NW Director
Atlanta, GA 30342
Wendell M. Starke Director
201 The Prado, NE
Atlanta, GA 30309
Name and Address Position at Putnam Principal Occupation
- ---------------- ------------------ --------------------
Lawrence J. Lasser President, Chief Executive President, CEO of Putnam
Putnam Investments Officer, Director Investments, Inc.
One Post Office Square
Boston, MA 02129
George Putnam Director Chairman of the Trustees
Putnam Investments of Putnam Funds
One Post Office Square
Boston, MA 02129
Gordon H. Silver Director, Senior Senior Administrative
Putnam Investments Administrative Officer of Office of Putnam
One Post Office Square Putnam Investments, Inc. Investments
Boston, MA 02129
</TABLE>
No officer or Director of Nations Fund is an officer, employee,
director, general partner or shareholder of NBAI, Gartmore, INVESCO or Putnam or
affiliates thereof.
NATIONS FUND'S BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO APPROVE
THE AMENDED SUB-ADVISORY AGREEMENT AMONG GARTMORE, NBAI AND NATIONS FUND ON
BEHALF OF THE FUND, THAT YOU VOTE TO APPROVE THE NEW SUB-ADVISORY AGREEMENT
AMONG INVESCO, NBAI AND NATIONS FUND ON BEHALF OF THE FUND AND THAT YOU VOTE TO
APPROVE THE NEW SUB-ADVISORY AGREEMENT AMONG PUTNAM, 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 proposals described in the accompanying Notice of Special Meeting and in
this Proxy Statement (each a "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 each
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 each
Proposal. Abstentions
6
<PAGE>
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 each 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 a 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 such Proposal(s). 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(s). They will vote against any
such adjournment(s) those proxies required to be voted against the Proposal(s).
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(s). 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.
Signed but unmarked proxy cards will be counted in determining whether
a quorum is present and will be voted in favor of each Proposal.
ADDITIONAL INFORMATION
NATIONS 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) 652-5096. 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 prescribed rates, Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549.
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 or its affiliates and/or
Stephens, or an agent of Nations Fund for compensation to be paid by NationsBank
or its affiliates 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:
7
<PAGE>
<TABLE>
<CAPTION>
CLASS; AMOUNT OF
SHARES OWNED;
NAME AND ADDRESS TYPE OF OWNERSHIP PERCENTAGE OF CLASS PERCENTAGE OF FUND
---------------- ----------------- ------------------- ------------------
<S> <C> <C> <C>
NationsBank of Texas, Primary A; 94.35% 89.54%
N.A. 50,448,340.273
Attn: Tony Farrer Record
1401 Elm Street
11th Floor
Dallas, TX 75202-2911
Stephens, Inc. Primary B; 100.00% 0.00%
Attn: Cindy Cole 0.847
111 Center Street
Little Rock, AR 72201
Charles Schwab & Co. Inc. Investor A; 31.80% 0.60%
Special Custody Account 335,329.731 Record
For Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
C A Porterfield & Investor C; 10.95% 0.01%
Rosalee Moxley & Frank 6,924.808 Record
Minton TTEES FBO
Starmount Company
Employees
Tax Deferred Savings Plan
P.O. Box 10349
Greensboro, NC
27404-0349
C A Porterfield & Investor C; 10.55% 1.18%
Rosalee Moxley & Frank 6,671.514 Record
Minton TTEES FBO
Starmount Company
Employees
Capital Accumulation Plan
P.O. Box 10349
Greensboro, NC
27404-0349
H. Grayson Mitchell Jr. Investor C; 10.51% 1.18%
and John Rawls TTEE FBO 6,646.032 Record
Grayson Mitchell Inc.
401K Plan
P.O. Box 128
Emporia, VA 23847
Tatsushi T. Kubo, Investor C; 9.54% 1.07%
Max W. Dahlgren, & John 6,032.458 Record
Rawls TTEES FBO
EPIC Products
International
Corporation 401(K) Plan
2801 East Randol Mill
Road
Arlington, TX 76011
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
CLASS; AMOUNT OF
SHARES OWNED;
NAME AND ADDRESS TYPE OF OWNERSHIP PERCENTAGE OF CLASS PERCENTAGE OF FUND
---------------- ----------------- ------------------- ------------------
<S> <C> <C> <C>
E. Larry Fonts TTEE FBO Investor C; 8.68% 0.97%
Central Dallas 5,489.022 Record
Association
Profit Sharing Plan
1201 Elm Street
Suite 5310
Dallas, TX 75270
NFSC FEBO #W17-662682 Investor C; 5.98% 0.67%
NFSC/FMTC IRA Rollover 3,783.659 Record
FBO Linda G. Walker
7 Sally Street
Spartanburg, SC 29301
James B. Ford and Investor C; 5.94% 0.67%
Joanne W. Ford JTTEN 3756.064 Record
25 Century Blvd.
Suite 605
Nashville, TN 37214
</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 March 31, 1998, 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 RETURN THE ENCLOSED PROXY CARD TODAY, EITHER IN
THE ENCLOSED POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE (FRONT AND
9
<PAGE>
BACK) AT (704) 388-2641. 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 and Treasurer
March 29, 1999
10
<PAGE>
APPENDIX 1
FORM OF SUB-ADVISORY AGREEMENT
NATIONS FUND, INC.
THIS AGREEMENT is made this 15th day of April, 1999, 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 some portion or
all of the assets of the Funds as the Adviser may determine from time to time,
under the supervision of the Adviser and subject to
<PAGE>
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
2
<PAGE>
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
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 continue in effect until the second anniversary of its
effective date. Thereafter, if not terminated, this Agreement shall continue in
effect for successive annual periods ending on January 1, 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)
4
<PAGE>
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.
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 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:__________________________
A. Max Walker
President and Chairman of the
Board of Directors
NATIONSBANC ADVISORS, INC.
By:__________________________
Robert H. Gordon
President
GARTMORE GLOBAL PARTNERS
By:__________________________
Name:_____________________
President
6
<PAGE>
SCHEDULE I
The Adviser shall pay the Sub-Adviser as full compensation for services
provided and expenses assumed hereunder, a sub-advisory fee for each Fund,
computed daily and payable monthly at the annual rates listed below as a
percentage of the average daily net assets of the Fund under its management:
Fund Rate of Compensation
---- --------------------
1. Nations International Equity Fund 0.70% of average daily net assets
<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, to the Fund
<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.
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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 of 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.
4
<PAGE>
APPENDIX 2
SUB-ADVISORY AGREEMENT
NATIONS FUND, INC.
THIS AGREEMENT is made as of April __, 1999 among NATIONSBANC ADVISORS,
INC., a North Carolina corporation (herein called the "Adviser"), INVESCO Global
Asset Management (N.A.), Inc., a Delaware corporation (herein called the
"Sub-Adviser") and NATIONS FUND, INC. (the "Company"), on behalf of the
portfolio(s) 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 registered with the Securities and Exchange
Commission (the "Commission") 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 registered with the Commission under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and engages in
the business of acting as an investment adviser; and
WHEREAS, the Sub-Adviser is also registered under the Advisers Act, as
an investment adviser and engages in the business of acting as an investment
adviser; and
WHEREAS, the Adviser and the Company have entered into an Investment
Advisory Agreement (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.
The Adviser hereby appoints the Sub-Adviser to act as investment
sub-adviser to the Funds for the period and on the terms set forth in this
Agreement. The Sub-Adviser accepts such appointment and agrees to furnish the
services herein
<PAGE>
set forth for the compensation herein provided.
2. Services of Sub-Adviser.
Subject to the oversight and supervision of the Adviser and the
Company's Board of Directors, the Sub-Adviser will provide a continuous
investment program for all of the assets of the Funds, or for such portion of
the assets of the Funds as the Adviser may determine from time to time,
including investment research and management with respect to all securities and
investments, and except for such cash balances of the Funds as may, from time to
time, be managed by the Adviser. Subject to the terms of this Agreement, the
Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Funds. The Sub-Adviser
will provide the services rendered by it under this Agreement in accordance with
the investment criteria and policies established from time to time for the Funds
by the Adviser, the Funds' investment objectives, policies and restrictions as
stated in the Prospectus(es) and Statement(s) of Additional Information for the
Funds, the operating policies and procedures of the Funds, and resolutions of
the Funds' Board of Directors.
The Sub-Adviser further agrees that it will:
(a) Provide information to the Funds' accountant for the purpose of
updating the Funds' cash availability throughout the day as
required;
(b) Maintain historical tax lots for each portfolio security held by the
Funds;
(c) Transmit trades to the Company's custodian for proper settlement in
accordance with the Company's procedures;
(d) Maintain all books and records with respect to the Funds that are
required to be maintained under Rule 31a-l(f) under the 1940 Act;
(e) Supply the Adviser, the Company and the Company's Board of Directors
with reports, statistical data and economic information as
requested; and
(f) Prepare a quarterly broker security transaction summary and, if
requested in advance, monthly security transaction listing for the
Funds.
3. Other Covenants.
The Sub-Adviser agrees that it will:
(a) Comply with all applicable laws, rules and regulations, including
all applicable Rules and Regulations of the Commission;
(b) Use the same skill and care in providing such services as it uses in
providing services to fiduciary accounts for which it has investment
responsibilities;
(c) Place orders pursuant to its investment determinations for the Funds
either directly with the issuer or with any broker or dealer. In
executing portfolio
2
<PAGE>
transactions and selecting brokers or dealers, the Sub-Adviser will
use its best efforts to seek on behalf of the Funds the best overall
terms available. In assessing the best overall terms available for
any transaction, the Sub-Adviser shall consider all factors that it
deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a
continuing basis. In evaluating the best overall terms available,
and in selecting the broker-dealer to execute a particular
transaction, the Sub-Adviser may also consider the brokerage and
research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) provided to the Funds or other
accounts over which the Sub-Adviser or an affiliate of the
Sub-Adviser exercises investment discretion. The Sub-Adviser is
authorized, subject to the prior approval of the Adviser and the
Company's Board of Directors, to pay to a broker or dealer who
provides such brokerage and research services a commission for
executing a portfolio transaction for the Funds which is in excess
of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the
Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer -- viewed in terms of
that particular transaction or in terms of the overall
responsibilities of the Sub-Adviser to the Funds. In addition, the
Sub-Adviser is authorized to take into account the sale of shares of
the Company in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that
are affiliated with the Adviser, Sub-Adviser or the Company's
principal underwriter), provided that the Sub-Adviser believes that
the quality of the transaction and the commission are comparable to
what they would be with other qualified firms. In no instance,
however, will portfolio securities be purchased from or sold to the
Adviser, Sub-Adviser, the Company's principal underwriter or any
affiliated person of either the Company, the Adviser, Sub-Adviser,
or the Company's principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Commission;
(d) Adhere to the policies and procedures of the Company adopted on
behalf of the Funds;
(e) Use its best efforts to perform its duties and obligations under
this Agreement without: (a) any failure of its computer systems, or
those used by it in the performance of its duties hereunder,
properly to record, store, process, calculate or present calendar
dates falling on and after, and time spans including, September 9,
1999, January 1, 2000 or February 29, 2000 (the "Subject Dates") as
a result of the occurrence, or use of data containing any such
Subject Dates; (b) any failure of its computer systems, or those
used by it in the performance of its duties hereunder, to calculate
3
<PAGE>
any information dependent on or relating to dates on or after the
Subject Dates; or (c) any loss of functionality or performance with
respect to the maintenance of records or processing of data
containing dates falling on or after the Subject Dates; and
(f) Treat confidentially and as proprietary information of the Company,
all records and other information relative to the Company maintained
by the Sub-Adviser, and will not use such records and information
for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in
writing by the Company, which approval shall not be unreasonably
withheld and may not be withheld where the Sub-Adviser may be
exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Company.
4. Services Not Exclusive.
The services furnished by the Sub-Adviser hereunder are deemed not to be
exclusive, and the Sub-Adviser shall be free to furnish similar services to
others so long as its services under this Agreement are not impaired thereby. To
the extent that the purchase or sale of securities or other investments of the
same issuer may be deemed by the Sub-Adviser to be suitable for two or more
accounts managed by the Sub-Adviser, the available securities or investments may
be allocated in a manner believed by the Sub-Adviser to be equitable to each
account. It is recognized that in some cases this procedure may adversely affect
the price paid or received by the Funds or the size of the position obtainable
for or disposed of by the Funds.
5. Books and Records.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Sub-Adviser hereby agrees that all records which it maintains for the Funds
are the property of the Company and further agrees to surrender promptly to the
Company any of such records upon the Company's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act,
the records required to be maintained by it under this Agreement.
6. Expenses.
During the term of this Agreement, the Sub-Adviser will pay all expenses
incurred by it in connection with its activities under this Agreement other than
the cost of securities, commodities and other investments (including brokerage
commissions, custodial charges and other transaction costs, if any) purchased or
sold for the Funds.
7. Expense Limitation.
If, for any fiscal year of 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
4
<PAGE>
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. 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 Funds with respect to
compensation under this Agreement.
For purposes of this Section, 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, which shall be promptly provided by the Company to the Sub-Adviser and to
which the Sub-Adviser will be bound to adhere to upon receipt.
9. Limitation of Liability.
The Sub-Adviser shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Company in connection with the
performance of this Agreement, except that the Sub-Adviser shall be liable to
the Company for any loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or any loss resulting from willful
misfeasance, bad faith or negligence on the part of the Sub-Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
10. Indemnification.
The Sub-Adviser shall indemnify and hold harmless the Funds and the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance by the Sub-Adviser of its
duties under this Agreement, provided, however, that the Sub-Adviser shall not
be required to indemnify or otherwise hold the Adviser harmless under this
Section 10 where the claim against, or the loss, liability or damage experienced
by the Funds or the Adviser, is caused by or is otherwise directly related to
the Funds' or the Adviser's own willful misfeasance, bad faith or negligence, or
to the reckless disregard by the Adviser of its duties under this Agreement.
11. Duration and Termination.
This Agreement will become effective as of the later of (a) the date
first written above, (b) the date on which it is approved by a majority of the
outstanding voting securities of the Fund(s), or (c) the date(s) on which the
Fund(s) commence(s) operations. Unless sooner terminated as provided herein,
this Agreement shall continue in effect until the second anniversary of its
effective date. Thereafter, if not terminated, this Agreement shall continue in
effect for successive annual periods ending on January 1, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the
5
<PAGE>
Company's Board of Directors who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting such
approval, and (b) by the vote of a majority of the Company's Board of Directors
or by the vote of a majority of the outstanding voting securities of the Funds.
Notwithstanding the foregoing, this Agreement may be terminated as to the Funds
at any time, without the payment of any penalty, by the Adviser or by the
Company (by vote of the Company's Board of Directors or by vote of a majority of
the outstanding voting securities of the Funds), on sixty days' written notice
to the Sub-Adviser, or by the Sub-Adviser, on ninety days' written notice to the
Company, provided that in each such case, notice shall be given simultaneously
to the Adviser. In addition, notwithstanding anything herein to the contrary, in
the event of the termination of the Investment Advisory Agreement with respect
to the Funds for any reason (whether by the Company, by the Adviser or by
operation of law) this Agreement shall terminate upon the effective date of such
termination of the Investment Advisory Agreement. This Agreement will also
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning as such terms
have in the 1940 Act.)
12. Amendment of This Agreement.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought. To the extent required by the 1940 Act, no amendment of this Agreement
shall be effective until approved by vote of a majority of the outstanding
voting securities of the Fund(s).
13. Miscellaneous.
The captions in this Agreement are included for convenience of reference
only, and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Maryland law.
14. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers of the day and year first written above.
NATIONS FUND, INC.,
on behalf of the Funds
By: _______________________________________
A. Max Walker
President and Chairman of the
Board of Directors
NATIONSBANC ADVISORS, INC.
By: _______________________________________
Robert H. Gordon
President
INVESCO Global Asset Management (N.A.), Inc.
By: _______________________________________
Kirk F. Holland
Global Partner
7
<PAGE>
SCHEDULE I
The Adviser shall pay the Sub-Adviser as full compensation for services
provided and expenses assumed hereunder, a sub-advisory fee for each Fund,
computed daily and payable monthly at the annual rates listed below as a
percentage of the average daily net assets of the Fund under its management:
FUND RATE OF COMPENSATION
---- --------------------
Nations International Equity Fund 0.55% of average daily net assets
8
<PAGE>
APPENDIX 3
FORM OF SUB-ADVISORY AGREEMENT
NATIONS FUND, INC.
THIS AGREEMENT is made as of April ___, 1999 among NATIONSBANC ADVISORS,
INC., a North Carolina corporation (herein called the "Adviser"), Putnam
Investment Management, Inc., a Massachusetts corporation (herein called the
"Sub-Adviser") and NATIONS FUND, INC. (the "Company"), on behalf of the
portfolio(s) 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 registered with the Securities and Exchange
Commission (the "Commission") 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 registered with the Commission under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and engages in
the business of acting as an investment adviser; and
WHEREAS, the Sub-Adviser is also registered under the Advisers Act, as
an investment adviser and engages in the business of acting as an investment
adviser; and
WHEREAS, the Adviser and the Company have entered into an Investment
Advisory Agreement (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.
The Adviser hereby appoints the Sub-Adviser to act as investment
sub-adviser to the Funds for the period and on the terms set forth in this
Agreement. The Sub-Adviser accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
<PAGE>
2. Services of Sub-Adviser.
Subject to the oversight and supervision of the Adviser and the
Company's Board of Directors, the Sub-Adviser will provide a continuous
investment program for all of the assets of the Funds, or for such portion of
the assets of the Funds as the Adviser may determine from time to time,
including investment research and management with respect to all securities and
investments, and except for such cash balances of the Funds as may, from time to
time, be managed by the Adviser. Subject to the terms of this Agreement, the
Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Funds. The Sub-Adviser
will provide the services rendered by it under this Agreement in accordance with
the investment criteria and policies established from time to time for the Funds
by the Adviser, the Funds' investment objectives, policies and restrictions as
stated in the Prospectus(es) and Statement(s) of Additional Information for the
Funds, the operating policies and procedures of the Funds, and resolutions of
the Funds' Board of Directors (in each such case, to the extent such items are
delivered in writing to the Sub-Adviser). The Sub-Adviser shall not be
responsible for the administrative affairs of the Company including, but not
limited to, portfolio accounting and pricing of the Company's shares.
The Sub-Adviser further agrees that it will:
(a) Provide information to the Funds' accountant for the purpose of
updating the Funds' cash availability once a day at a mutually
agreed upon time;
(b) Maintain historical tax lots for each portfolio security held by the
Funds under procedures agreed between the parties hereto;
(c) Transmit trades to the Company's custodian for proper settlement in
accordance with agreed procedures;
(d) Maintain all books and records with respect to the Funds that are
required to be maintained under Rule 31a-l(f) under the 1940 Act;
(e) Supply the Adviser, the Company and the Company's Board of Directors
with reports, statistical data and economic information as
requested; and
(f) Prepare a quarterly broker security transaction summary and, if
requested in advance, monthly security transaction listing for the
Funds.
3. Other Covenants.
The Sub-Adviser agrees that it will:
(a) Comply with all applicable laws, rules and regulations, including
all applicable Rules and Regulations of the Commission;
2
<PAGE>
(b) Use the same skill and care in providing such services as it uses in
providing services to fiduciary accounts for which it has investment
responsibilities;
(c) Place orders pursuant to its investment determinations for the Funds
either directly with the issuer or with any broker or dealer. In
executing portfolio transactions and selecting brokers or dealers,
the Sub-Adviser will use its best efforts to seek on behalf of the
Funds the best overall terms available. In assessing the best
overall terms available for any transaction, the Sub-Adviser shall
consider all factors that it deems relevant, including the breadth
of the market in the security, the price of the security, the
financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. In evaluating
the best overall terms available, and in selecting the broker-dealer
to execute a particular transaction, the Sub-Adviser may also
consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to the Funds or other accounts over which the Sub-Adviser
or an affiliate of the Sub-Adviser exercises investment discretion.
The Sub-Adviser is authorized, subject to the prior approval of the
Adviser and the Company's Board of Directors, to pay to a broker or
dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Funds which
is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if, but only if,
the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer -- viewed in terms of
that particular transaction or in terms of the overall
responsibilities of the Sub-Adviser to the Funds. In addition, the
Sub-Adviser is authorized to take into account the sale of shares of
the Company in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that
are affiliated with the Adviser, Sub-Adviser or the Company's
principal underwriter), provided that the Sub-Adviser believes that
the quality of the transaction and the commission are comparable to
what they would be with other qualified firms. In no instance,
however, will portfolio securities be purchased from or sold to the
Adviser, Sub-Adviser, the Company's principal underwriter, any
affiliated person of the Sub-Adviser, or to any affiliated person of
either the Company, the Adviser or the Company's principal
underwriter, acting as principal in the transaction identified to
the Sub-Adviser as such an affiliate, except to the extent permitted
by the Commission;
(d) Adhere to the policies and procedures of the Company adopted on
behalf of the Funds and delivered to the Sub-Adviser;
3
<PAGE>
(e) Use its best efforts to perform its duties and obligations under
this Agreement without: (a) any failure of its computer systems, or
those used by it in the performance of its duties hereunder,
properly to record, store, process, calculate or present calendar
dates falling on and after, and time spans including, September 9,
1999, January 1, 2000 or February 29, 2000 (the "Subject Dates") as
a result of the occurrence, or use of data containing any such
Subject Dates; (b) any failure of its computer systems, or those
used by it in the performance of its duties hereunder, to calculate
any information dependent on or relating to dates on or after the
Subject Dates; or (c) any loss of functionality or performance with
respect to the maintenance of records or processing of data
containing dates falling on or after the Subject Dates; and
(f) Treat confidentially and as proprietary information of the Company,
all records and other information relative to the Company maintained
by the Sub-Adviser, and will not use such records and information
for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in
writing by the Company, which approval shall not be unreasonably
withheld and may not be withheld where the Sub-Adviser may be
exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Company.
4. Services Not Exclusive.
The services furnished by the Sub-Adviser hereunder are deemed not to be
exclusive, and the Sub-Adviser shall be free to furnish similar services to
others so long as its services under this Agreement are not impaired thereby. To
the extent that the purchase or sale of securities or other investments of the
same issuer may be deemed by the Sub-Adviser to be suitable for two or more
accounts managed by the Sub-Adviser, the available securities or investments may
be allocated in a manner believed by the Sub-Adviser to be equitable to each
account. It is recognized that in some cases this procedure may adversely affect
the price paid or received by the Funds or the size of the position obtainable
for or disposed of by the Funds.
5. Books and Records.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Sub-Adviser hereby agrees that all records which it maintains for the Funds
are the property of the Company and further agrees to surrender promptly to the
Company any of such records upon the Company's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act,
the records required to be maintained by it under this Agreement.
6. Expenses.
4
<PAGE>
During the term of this Agreement, the Sub-Adviser will pay all expenses
incurred by it in connection with its activities under this Agreement other than
the cost of securities, commodities and other investments (including brokerage
commissions, custodial charges and other transaction costs, if any) purchased or
sold for the Funds.
7. Expense Limitation.
If, for any fiscal year of 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. 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 Funds with respect to
compensation under this Agreement.
For purposes of this Section, 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.
9. Limitation of Liability.
The Sub-Adviser shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Company in connection with the
performance of this Agreement, except that the Sub-Adviser shall be liable to
the Company for any loss resulting from a breach of fiduciary duty, if any, with
respect to the receipt of compensation for services or for any loss resulting
from willful misfeasance, bad faith or negligence on the part of the Sub-Adviser
in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
10. Indemnification.
The Sub-Adviser shall indemnify and hold harmless the Funds and the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) resulting from
willful misfeasance, bad faith or negligence on the part of the Sub-Adviser in
connection with the performance of its duties under this Agreement or resulting
from any violations of securities laws, rules, regulations, statutes and codes,
whether federal or of any state, by the Sub-Adviser.
11. Duration and Termination.
This Agreement will become effective as of the later of (a) the date
first written above, (b) the date on which it is approved by a majority of the
outstanding voting securities of the
5
<PAGE>
Fund(s), or (c) the date(s) on which the Fund(s) commence(s) operations. Unless
sooner terminated as provided herein, this Agreement shall continue in effect
until the second anniversary of its effective date. Thereafter, if not
terminated, this Agreement shall continue in effect for successive annual
periods ending on January 1, provided such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of the
Company's Board of Directors who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting such
approval, and (b) by the vote of a majority of the Company's Board of Directors
or by the vote of a majority of the outstanding voting securities of the Funds.
Notwithstanding the foregoing, this Agreement may be terminated as to the Funds
at any time, without the payment of any penalty, by the Adviser or by the
Company (by vote of the Company's Board of Directors or by vote of a majority of
the outstanding voting securities of the Funds), on sixty days' written notice
to the Sub-Adviser, or by the Sub-Adviser, on ninety days' written notice to the
Company, provided that in each such case, notice shall be given simultaneously
to the Adviser. In addition, notwithstanding anything herein to the contrary, in
the event of the termination of the Investment Advisory Agreement with respect
to the Funds for any reason (whether by the Company, by the Adviser or by
operation of law) this Agreement shall terminate upon the effective date of such
termination of the Investment Advisory Agreement. This Agreement will also
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning as such terms
have in the 1940 Act.)
12. Amendment of This Agreement.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought. To the extent required by the 1940 Act, no amendment of this Agreement
shall be effective until approved by vote of a majority of the outstanding
voting securities of the Fund(s).
13. Miscellaneous.
The captions in this Agreement are included for convenience of reference
only, and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Maryland law.
14. Name of Sub-Adviser.
The Company and the Adviser hereby agree not to use the name "Putnam
Investment Management, Inc." or any derivative thereof or any description of the
Sub-Adviser or any affiliates, in the Company's Registration Statement, or in
any sales literature, advertisement or other document distributed to the public
without the consent of the Sub-Adviser; provided, however, the consent of the
Sub-Adviser shall not be required for any use of its name which
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<PAGE>
merely refers in accurate and factual terms to its appointment and/or its
services hereunder or which is required by the Securities and Exchange
Commission or over state securities authority or any other appropriate
regulatory, governmental or judicial authorities.
15. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers of the day and year first written above.
NATIONS FUND, INC.,
on behalf of the Funds
By: ______________________________
A. Max Walker
President and Chairman of the
Board of Directors
NATIONSBANC ADVISORS, INC.
By: ______________________________
Robert H. Gordon
President
Putnam Investment Management, Inc.
By: ______________________________
7
<PAGE>
SCHEDULE I
The Adviser shall pay the Sub-Adviser as full compensation for services
provided and expenses assumed hereunder, a sub-advisory fee for each Fund,
computed daily and payable monthly at the annual rates listed below as a
percentage of the average daily net assets of the Fund under its management:
FUND RATE OF COMPENSATION
---- --------------------
Nations International Equity Fund 0.65% of average daily net assets
[Break Points to be added]
8
<PAGE>
PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING
NATIONS INTERNATIONAL EQUITY FUND
SPECIAL MEETING OF SHAREHOLDERS-APRIL 28, 1999
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 10:00 a.m. (Eastern time) on Wednesday,
April 28, 1999, 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 MARCH 29, 1999.
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 BY THE ENCLOSED POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE (FRONT AND
BACK) AT (704) 388-2641.
---------------------------------
---------------------------------
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.
<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.
1. To approve the amended sub-advisory agreement with Gartmore Global
Partners and to approve each new sub-advisory agreement with INVESCO
Global Asset Management (N.A.), Inc. and Putnam Investment
Management, Inc.
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.
---------------------------------
(please date)
