Nations Institutional Reserves
(formerly known as The Capitol Mutual Funds)
Supplement dated February 12, 1997
to Prospectuses dated August 31, 1996
The prospectuses for the Adviser Class, Capital Class, Liquidity Class and
Market Class Shares for all Funds of Nations Institutional Reserves
(collectively, the "Funds") are hereby supplemented by:
1. Adding the following paragraph regarding The Bank of New York as
the Funds' sub-custodian under the heading "How The Funds Are
Managed":
The Bank of New York ("BONY") has entered into an
agreement with each of the Funds and NationsBank of Texas, N.A.,
whereby BONY will serve as sub-custodian ("Sub-Custodian") for
the assets of each Fund.
2. Adding the following paragraphs regarding fees to be received by
NationsBank of Texas, N.A. and The Bank of New York for serving
as the Funds' custodian and sub-custodian, respectively, under
the heading "How The Funds Are Managed":
In return for providing custodial services to all Funds of
the Nations Funds Family, NationsBank of Texas is entitled to
receive, in addition to out of pocket expenses, fees at the rate
of (i) $300,000 per annum, to be paid monthly in payments of
$25,000 for custodian services for up to and including 50 Funds;
and (ii) $6,000 per annum, to be paid in equal monthly payments,
for custodian services for each additional Fund above 50 Funds.
BONY is located at 90 Washington Street, New York, New
York 10286. In return for providing sub-custodial services, BONY
shall receive, in addition to out of pocket expenses, fees at the
rate of (i) 3/4 of one basis point per annum on the aggregate net
assets of all Nations' Non-Money Market Funds up to $10 billion;
and (ii) 1/2 of one basis point on the excess.