SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
The Capitol Mutual Funds
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than 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: N/A
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2) Aggregate number of securities to which transaction applies: N/A
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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: N/A
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5) Total fee paid: N/A
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( ) 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: N/A
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2) Form, Schedule, or Registration Statement No.: N/A
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3) Filing Party: N/A
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4) Date Filed: N/A
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Nations Reserves
One Bank of America Plaza
101 South Tryon Street
Charlotte, North Carolina 28255
TELEPHONE: 800-653-9427
June 15, 2000
DEAR SHAREHOLDER:
On behalf of the Boards of Trustees of Nations Reserves (the "Trust") we
are pleased to invite you to special meetings of shareholders of the Trust's
Nations Asset Allocation Fund and Nations Blue Chip Fund (each a "Fund" and
together the "Funds") to be held jointly at 10:00 a.m., Eastern time, on
September 15, 2000, at One Bank of America Plaza, 33rd Floor, Charlotte, North
Carolina (the "Meetings").
At the Meetings, shareholders will be asked to approve an investment
sub-advisory agreement with Chicago Equity Partners, LLC ("Chicago Equity").
Chicago Equity has recently experienced a change in ownership, which has not
resulted, and is not expected to result, in any change to the Chicago Equity
personnel who manage the Funds or in the way that the Funds are managed.
Nevertheless, the federal securities laws require that shareholders of each
Fund be given the opportunity to approve a new investment sub-advisory
agreement in order to allow Chicago Equity to continue to serve as investment
sub-adviser to each Fund whenever this type of change occurs. Although the
terms of this agreement differ from those contained in the agreement previously
approved by shareholders, the general array of sub-advisory services provided
under the new agreement and the aggregate fees payable by each Fund for
advisory services remain unchanged. Approval of the investment sub-advisory
agreement will also have the effect of confirming the interim investment
sub-advisory agreement with Chicago Equity that was put in place after the
change in ownership, and pursuant to which Chicago Equity currently provides
investment sub-advisory services to the Funds.
Accordingly, we are soliciting your vote on a new investment sub-advisory
agreement that has been put in place for each Fund as a result of the change in
ownership of Chicago Equity.
None of the customary costs associated with this proxy solicitation will
be borne by the Funds or their shareholders.
THE TRUST'S BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO
APPROVE THE PROPOSED NEW SUB-ADVISORY AGREEMENT FOR YOUR FUND.
The formal Notice of Special Meetings, a Proxy Statement and a Proxy
Ballot are enclosed. The proposed new sub-advisory agreements and the reasons
for the unanimous recommendation of the Trust's Board are discussed in more
detail in the enclosed materials, which you should read carefully. If you have
any questions, please do not hesitate to contact the Trust at the toll-free
number set forth above.
We look forward to your attendance at the Meetings or to receiving your
Proxy Ballot(s) so that your shares may be voted at the Meetings.
Sincerely,
A. MAX WALKER
President and Chairman of the Board of
Trustees
<PAGE>
YOUR VOTE IS IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN. PLEASE VOTE BY RETURNING YOUR PROXY BALLOT TODAY, EITHER IN THE ENCLOSED
POSTAGE-PAID ENVELOPE OR BY TELEFACSIMILE AT (704) 388-2641. YOU MAY ALSO
SUBMIT YOUR PROXY BY A TOLL-FREE PHONE CALL OR BY VOTING ON-LINE, AS INDICATED
BELOW.
Two Quick And Easy Ways To Submit Your Proxy
As a valued Fund shareholder, your proxy vote is important to us. That's why
we've made it faster and easier to submit your proxy at your convenience, 24
hours a day. After reviewing the enclosed Proxy Statement, select one of the
following quick and easy methods to submit your proxy -- accurately and
quickly.
<TABLE>
<CAPTION>
On-Line By Toll-Free Phone Call
<S> <C>
1. Read the enclosed Proxy Statement and have 1. Read the enclosed Proxy
Statement and have your your Proxy Ballot(s)* at hand. Proxy Ballot(s)* at hand.
2. Go to Web site www.proxyvote.com 2. Call toll-free 1-800-690-6903.
3. Enter the 12-digit Control Number found on 3. Enter the 12-digit Control
Number found on your your Proxy Ballot(s). Proxy Ballot(s).
4. Submit your proxy using the easy-to-follow 4. Submit your proxy using the
instructions. easy-to-follow instructions.
* Do not mail the Proxy Ballot(s) if submitting your proxy by Internet or telephone.
</TABLE>
<PAGE>
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
To Be Held on September 15, 2000
NATIONS RESERVES
One Bank of America Plaza
101 South Tryon Street
Charlotte, North Carolina 28255
800-653-9427
To Nations Asset Allocation Fund and Nations Blue Chip Fund Shareholders:
PLEASE TAKE NOTE THAT special meetings of the shareholders (the
"Meetings") of Nations Asset Allocation Fund and Nations Blue Chip Fund of
Nations Reserves will be jointly held at 10:00 a.m., Eastern time, on September
15, 2000 at One Bank of America Plaza, 33rd Floor, Charlotte, North Carolina,
for the purpose of considering and voting upon:
ITEM 1. To approve a new investment sub-advisory agreement with Chicago
Equity Partners, LLC.
ITEM 2. Such other business as may properly come before the Meeting or any
adjournment(s).
Item 1 is described in the attached Proxy Statement.
THE BOARD OF TRUSTEES OF NATIONS RESERVES UNANIMOUSLY RECOMMENDS THAT YOU
VOTE IN FAVOR OF THE PROPOSAL.
Shareholders of record as of the close of business on June 5, 2000 are
entitled to notice of, and to vote at, the Meetings or any adjournment(s)
thereof.
SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE EACH ACCOMPANYING PROXY BALLOT, WHICH IS BEING SOLICITED BY
THE TRUST'S BOARD OF TRUSTEES. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE
MEETINGS. SHAREHOLDERS ALSO MAY SUBMIT PROXIES: 1) BY FACSIMILE AT (704)
388-2641; 2) BY DIALING (800) 690-6903; OR 3) ON-LINE AT WEBSITE
WWW.PROXYVOTE.COM. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED
BY SUBMITTING TO THE TRUST A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY
DATED PROXY OR BY ATTENDING THE MEETINGS AND VOTING IN PERSON.
By Order of the Board of Trustees,
RICHARD H. BLANK, JR.
Secretary and Treasurer
June 15, 2000
<PAGE>
<PAGE>
Proxy Statement
Dated June 15, 2000
NATIONS RESERVES
One Bank of America Plaza
101 South Tryon Street
Charlotte, North Carolina 28255
1-800-653-9427
This proxy statement (this "Proxy") is furnished in connection with the
solicitation of proxies by the Board of Trustees of Nations Reserves (the
"Trust") at special meetings of shareholders of the Trust's Nations Asset
Allocation Fund (the "Asset Allocation Fund") and Nations Blue Chip Fund (the
"Blue Chip Fund") (each, a "Fund" and together, the "Funds") to be held
September 15, 2000 at 10:00 a.m. (Eastern time) at One Bank of America Plaza,
101 South Tryon Street, 33rd Floor, Charlotte, North Carolina. Throughout this
Proxy, the Board of Trustees of Reserves is sometimes referred to as the
"Board." In addition, the special meetings and any adjournment(s) are referred
to as the "Meetings." The Meetings have been called to consider the following
proposal:
o To approve a new investment sub-advisory agreement with Chicago Equity
Partners, LLC.
Additional information about the Funds and Chicago Equity Partners, LLC
("Chicago Equity") is available in the: prospectuses for the Funds; statements
of additional information, or SAIs, for the Funds; and each Fund's annual
report to shareholders, including audited financial statements.
All of this information is in documents filed with the Securities and
Exchange Commission (the "SEC"). The annual reports to shareholders for the
fiscal year ended March 31, 2000 have previously been mailed to shareholders.
Additional copies are available without charge by writing the address given
above or by calling 1-800-321-7854. Documents also are available on the website
of the SEC at www.sec.gov. It is expected that this Proxy will be mailed to
shareholders on or about June 15, 2000.
Special Note for Blue Chip Fund Shareholders Only
Shareholders of the Blue Chip Fund may recall that the Fund is a "feeder"
fund in a master/feeder structure where Nations Blue Chip Master Portfolio of
Nations Master Investment Trust serves as the master portfolio (the "Master
Portfolio"). Because the assets of the Fund are invested in the Master
Portfolio, investment advisory and sub-advisory services are provided at the
Master Portfolio level. Therefore, the new investment sub-advisory agreement
affecting the Fund is not a contract with the Fund directly but rather with
the Master Portfolio. As an interestholder in the Master Portfolio, the Fund
is "passing-through" the vote to Fund shareholders via this proxy
solicitation, and will vote its interests in the Master Portfolio in the same
proportion as Fund shareholders vote. In addition, in order to avoid confusion
of terms, throughout this Proxy, the terms Blue Chip Fund and Master Portfolio
(or Nations Blue Chip Master Portfolio) are sometimes used interchangeably.
Also, any approvals made by the Board, on behalf of the Blue Chip Fund, that
are discussed in this Proxy, also were made by the Board of Nations Master
Investment Trust, on behalf of the Master Portfolio.
<PAGE>
Special Note Regarding Terms Used Throughout the Proxy
In order to avoid confusion and repetition in this Proxy, the term "Board"
should be understood to refer both to the Board of Reserves, acting on behalf
of the Asset Allocation Fund and Blue Chip Fund, and the Board of Nations
Master Investment Trust, acting on behalf of Nations Blue Chip Master
Portfolio, as the context requires. Additionally, the singular terms Previous
Agreement, Interim Agreement and New Agreement are used to refer both to the
Previous Agreement, Interim Agreement and New Agreement for the Trust, which
relate to the Asset Allocation Fund, and also to the separate Previous
Agreement, Interim Agreement and New Agreement for Nations Master Investment
Trust, which relate to Nations Blue Chip Master Portfolio.
APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT
Overview
The investment sub-adviser that manages the Blue Chip Fund and the equity
portion of the Asset Allocation Fund on a day-to-day basis is Chicago Equity.
In early 2000, Bank of America, N.A. ("Bank of America") entered into an
agreement with Chicago Equity Partners Corporation pursuant to which Chicago
Equity Partners Corporation agreed to merge into a new company to be named
Chicago Equity Partners, LLC, the ownership interests of which would be owned
by the principals of Chicago Equity Partners Corporation (the "Transaction").
Prior to the Transaction, Chicago Equity Partners Corporation was a wholly
owned subsidiary of Bank of America. Following the Transaction, which occurred
on April 30, 2000, Bank of America no longer owns any interest in Chicago
Equity.
The Transaction has not resulted, and is not expected to result, in any
change in the Chicago Equity personnel who manage the Funds or in the way that
the Funds are managed. Additionally, the investment objectives and principal
investment strategies of the Funds, and the investment advisory and
sub-advisory fees payable by the Funds have not changed, and are not expected
to change, as a result of the Transaction.
Nevertheless, in order to protect investors, the Investment Company Act of
1940 (the "1940 Act") effectively requires that an investment sub-advisory
agreement automatically terminate any time an investment sub-adviser undergoes
a change in ownership or control. Shareholders must then approve a new
agreement in order for the fund to continue to receive contractual sub-advisory
services. In order to ensure that a fund is not left without contractual
sub-advisory services after the automatic termination of a sub-advisory
agreement, but before shareholders can approve the new agreement, Rule 15a-4
under the 1940 Act allows a mutual fund's board of trustees to approve and put
into place an interim investment sub-advisory agreement, subject to certain
conditions.
The consummation of the Transaction has resulted in a "change of control"
of Chicago Equity Partners Corporation of the type that constitutes an
assignment and immediate termination of the investment sub-advisory agreement
last approved by each Fund's shareholders (the "Previous Agreement"). In
anticipation of the Transaction and to ensure a continuity of contractually
provided sub-advisory services to the Funds, on March 2, 2000, the Board
approved, for each Fund, both an interim investment sub-advisory agreement (the
"Interim Agreement") and also a new definitive investment sub-advisory
agreement (the "New Agreement") with Chicago Equity. Consequently, Chicago
Equity currently serves as investment sub-advisor to each Fund under the
Interim Agreement. Rule 15a-4 permits Chicago Equity to continue to so serve
until September 27, 2000 (which is 150 days from April 30, 2000), by which time
Fund shareholders will have had to consider approving the New Agreement.
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<PAGE>
Description of the Interim Agreement and the New Agreement
In accordance with the terms of Rule 15a-4, the Interim Agreement (i) does
not provide for any increase in the compensation to be received by Chicago
Equity from that provided in the Previous Agreement; (ii) provides that the
Board, or a majority of a Fund's outstanding shares, may terminate the Interim
Agreement at any time, without payment of any penalty, on ten (10) days'
written notice to Chicago Equity; (iii) contains the same terms and conditions
as the Previous Agreement, except for required exceptions; and (iv) provides
that compensation earned by Chicago Equity under the Interim Agreement be held
in an interest-bearing escrow account to be paid to Chicago Equity only if the
shareholders of the applicable Fund approve the New Agreement (thereby
confirming the Interim Agreement), and that if shareholders do not approve the
New Agreement, Chicago Equity shall be entitled to a portion of such
compensation that equals its costs incurred in providing services under such
Interim Agreement (plus interest earned on that amount while in escrow). Except
for these differences and its effective date, the Interim Agreement is
otherwise identical to the Previous Agreement (which was approved by Fund
shareholders).
The term of the Interim Agreement is from April 30, 2000 through the date
that Fund shareholders approve a new investment sub-advisory agreement, but in
no case later than 150 days from April 30, 2000 -- or September 27, 2000. Under
the Interim Agreement, Chicago Equity is entitled to receive a sub-advisory fee
at the annual rate of 0.25% of the average daily net assets of the Blue Chip
Fund and of the equity portion of the Asset Allocation Fund.
The New Agreement is based on a new uniform form of agreement that the
entire Nations Funds complex is in the process of implementing. Accordingly,
the New Agreement will be different in form than the Previous Agreement and
Interim Agreement, although the scope and type of services under the New
Agreement are substantially the same as those provided under the Previous
Agreement and Interim Agreement.
This new form of agreement is more efficient for the Funds and Banc of
America Advisors, Inc. ("BAAI") -- the Funds' investment adviser -- to utilize
because of its standardization. In addition, the New Agreement benefits the
Funds by providing for the indemnification of the Funds by Chicago Equity under
certain circumstances. Specifically, Chicago Equity agrees to hold the Funds
harmless from any and all direct or indirect claims, losses, liabilities or
damages resulting from a breach of fiduciary duty with respect to the receipt
of compensation for services arising (i) from willful misfeasance, bad faith or
negligence on the part of Chicago Equity or any of its officers, directors,
employees or agents in connection with their duties under the New Agreement,
(ii) from reckless disregard by Chicago Equity or its officers, directors,
employees or agents of any of their obligations and duties under the New
Agreement, or (iii) from any violations of federal or state securities laws,
rules, regulations, statutes and codes by Chicago Equity or any of its
officers, directors, employees or agents. In an attempt to further protect the
Funds, the New Agreement requires Chicago Equity to maintain a blanket bond and
professional liability insurance in an amount acceptable to BAAI.
The New Agreement contains additional provisions that are intended to
ensure continued consistency in the services provided to the Funds. For
example, if Chicago Equity becomes aware of any event or occurrence that could
have a material impact on the performance of its duties, the New Agreement
requires Chicago Equity to provide notice of such event to BAAI and the Funds.
This will enable BAAI and the Funds to avoid any interruptions in the
sub-advisory services provided to the Funds that might result from events
beyond the control of the Funds.
3
<PAGE>
In general, however, the Interim Agreement and New Agreement are similar.
Pursuant to both the Interim Agreement and New Agreement, Chicago Equity will
determine from time to time what securities and other investments will be
purchased, retained or sold by the Blue Chip Fund and the equity portion of the
Asset Allocation Fund, and will place the daily orders for the purchase or sale
of securities. Under both, Chicago Equity also will provide additional services
related to the continuous investment program, including recordkeeping services;
will comply with all applicable rules and regulations of the SEC; will 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; will use
its best efforts to seek on behalf of the Funds the best overall terms
available when executing portfolio transactions, and in evaluating the best
overall terms available, may consider the brokerage and research services
provided to the Funds and/or other accounts over which Chicago Equity exercises
investment discretion. Under both the Interim Agreement and the New Agreement,
BAAI retains authority over the management of the Funds and the investment and
disposition of the Funds' assets.
If approved by shareholders at the Special Meetings, the New Agreement
will remain in effect for a two-year period following the date of such
approval. Thereafter, the New 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, or by a vote of a majority of the
outstanding shares of each of the Funds, and in either case by a majority of
the Trustees who are not interested persons of the Funds or Chicago Equity, as
that term is defined in the 1940 Act (the "Non-Interested Trustees"). The
investment sub-advisory fee rates payable to Chicago Equity under the New
Agreement are the same as those shown above for the Interim Agreement.
Copies of the Interim Agreement and New Agreement are available upon
request by writing or calling the Trust at the toll-free number listed above.
Board Consideration
Chicago Equity Partners Corporation served as the sub-adviser to the Funds
pursuant to the Previous Agreement, which is dated May 21, 1999, and was
approved by the sole shareholder of each Fund on May 20, 1999. The Interim
Agreement and the New Agreement were approved by the Board, including a
majority of the non-interested trustees, at regular in-person meetings held on
March 2-3, 2000.
At the March 2-3, 2000 in-person meetings, the Board was informed of the
Transaction, and the expected resulting assignment and termination of the
Funds' Previous Agreement. The Board was provided with information concerning
the Interim Agreement and New Agreement and was informed of the standards that
the Board should apply in determining whether to approve the Interim Agreement
and New Agreement. The information provided by Chicago Equity and BAAI to the
Boards included a description of the Transaction, investment sub-advisory
comparative fee information and a discussion of how the Transaction would
affect Chicago Equity's ability to perform its duties as set forth in the New
Agreement. In this regard, the Boards were advised by BAAI and Chicago Equity
that they did not expect that the Transaction will have a material effect on
the operations of the Funds or their shareholders. Chicago Equity also noted
that its management did not contemplate any material change in the day-to-day
operations of Chicago Equity Partners Corporation and that the internal
management structure of Chicago Equity Partners Corporation will remain largely
unchanged after the Transaction.
The Board also was advised that, as part of the agreement between Bank of
America and Chicago Equity Partners Corporation governing the Transaction, Bank
of America had agreed that if Chicago Equity did not earn
4
<PAGE>
an amount at least equal to the approximate projected investment sub-advisory
fees from the Master Portfolio and Asset Allocation Fund in the 12-month period
following the Transaction, then the purchase price paid by Chicago Equity
Partners Corporation to Bank of America in connection with the Transaction
would be correspondingly reduced. The Board also was advised that this purchase
price adjustment agreement was intended to address the possibility that Chicago
Equity might not be approved by shareholders or by the Board. In addition, the
Board was advised that this agreement by Bank of America in no way bound the
Board or otherwise affected its duties or rights with respect to the Interim
Agreement and New Agreement and that the Board should evaluate and approve the
Interim Agreement and New Agreement independent of this commitment.
At the March 2-3 meetings, the Board, including the Non-Interested
Trustees, unanimously approved the respective Interim Agreement and New
Agreement. Specifically, the Board determined that the compensation payable
under the Interim Agreement and New Agreement was fair and reasonable and did
not reflect an increase in compensation from the Previous Agreement. The Board
also determined that the scope and quality of services to be provided to the
Funds under the Interim Agreement and New Agreement would be at least
equivalent to the scope and quality of services provided under the
corresponding New Agreement. The Board based its decision to recommend the
approval of the Interim Agreement and New Agreement on the following material
factors: (i) the scope and type of services under the Interim Agreement and New
Agreement, the sub-advisory fees, and the level of service provided to the
Funds; (ii) the representations made with respect to the financial strength of
Chicago Equity; (iii) the continued employment by Chicago Equity of investment
professionals previously employed by Chicago Equity to manage the assets of the
Funds; (iv) the depth of management experience with respect to Chicago Equity's
personnel following the change of control, including those persons who would be
involved in the daily management of the Funds; (v) the strong investment record
of Chicago Equity in managing the Funds; and (vi) that Fund shareholders would
not bear any costs associated with the proxy solicitation. In making its
decision to recommend approving the Interim Agreement and New Agreement, the
factors that the Boards considered most important were the absence of changes
to the level of service provided to the Funds, the fact that the sub-advisory
fee rate to be charged under the Interim Agreement and New Agreement were no
higher than those rates under the Previous Agreement, the substantially similar
scope and type of services provided under the Interim Agreement and New
Agreement and the composition of Chicago Equity's advisory personnel. The Board
based its determinations in this regard on discussions with representatives of
Bank of America, BAAI and Chicago Equity at the meetings and a review of
materials presented by Bank of America, BAAI and Chicago Equity. These
materials included a form of the Interim Agreement and New Agreement.
Information Regarding Chicago Equity
Chicago Equity Partners Corporation was established in 1998 as a wholly
owned subsidiary of Bank of America and is the successor to the Bank of America
Institutional Equity Group. On April 30, 2000, Chicago Equity Partners
Corporation merged into Chicago Equity Partners, LLC, a limited liability
company. Chicago Equity is an investment adviser registered under the
Investment Advisers Act of 1940, as amended. The principal source of Chicago
Equity's income is professional fees received from the management of client
portfolios. Chicago Equity manages the assets of fiduciary and other
institutional accounts. Chicago Equity is located at 180 North LaSalle Street,
Chicago, Illinois 60601.
5
<PAGE>
The owners and principal executive officers of Chicago Equity are listed
below. The address for each is: c/o Chicago Equity Partners, LLC, 180 North
LaSalle Street, Chicago, Illinois 60601.
<TABLE>
<CAPTION>
Name Position at Chicago Equity Principal Occupation(s)
------------------ ------------------------------------- -------------------------------
<S> <C> <C>
James Miller Chairman of the Board, President same as position at Chicago
and Chief Executive Officer Equity
Patrick Lynch Senior Vice President and Treasurer Director of Sales and Client
Services and Senior Vice
President of Chicago Equity
Robert Kramer Senior Vice President and Secretary Investment Adviser, Co-Manager
of Research and Senior Vice
President of Chicago Equity
David Coughenour Senior Vice President Investment Adviser, Co-Manager
of Research and Senior Vice
President of Chicago Equity
David Johnsen Senior Vice President Investment Adviser, Co-Manager
of Research and Senior Vice
President of Chicago Equity
</TABLE>
The aggregate amount paid to Chicago Equity (or its predecessor) for each
Fund (or its predecessor) for the period March 31, 1999 through March 31, 2000
was as follows: $2,414,195 for the Blue Chip Fund and $921,089 for the Asset
Allocation Fund. The aggregate amount paid to Chicago Equity (or its
predecessor) for each mutual fund in the Nations Funds family (or their
predecessors) for the period March 31, 1999 through March 31, 2000 was
$3,224,657.
For the fiscal year ended March 31, 2000, Chicago Equity (or its
predecessor) did not waive or otherwise reduce the compensation entitled to it
for providing investment sub-advisory services to the Funds (or their
predecessor).
James B. Sommers, a trustee of Reserves and Nations Master Investment
Trust, owns shares of Bank of America Corporation. No other officer or trustee
of Reserves or Nations Master Investment Trust is an officer, employee,
director, general partner or shareholder of BAAI, Chicago Equity or any of
their affiliates.
Other Information
BAAI serves as the Funds' investment adviser, except for the Blue Chip
Fund, whose investment advisory services are provided at the Master Portfolio
level. BAAI also serves as the Funds' co-administrator. Its address is 101
South Tryon Street, Charlotte, North Carolina 28255. Stephens Inc. serves as
the Funds' principal underwriter and co-administrator. Its address is 111
Center Street, Little Rock, Arkansas 72201.
VOTING INFORMATION
General Information
This Proxy is being furnished in connection with the solicitation of
proxies for the Meetings by the Board. It is expected that the solicitation of
proxies will be primarily by mail. Officers and service contractors of Reserves
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<PAGE>
also may solicit proxies by telephone or otherwise. In this connection, each
has retained ADP Proxy Services to assist in the solicitation of proxies.
Shareholders may submit their proxy: (1) by mail, by marking, signing, dating
and returning the enclosed proxy ballot(s) in the enclosed postage-paid
envelope; (2) by fax, by marking, signing, dating and faxing the enclosed proxy
ballot(s) to ADP Proxy Services at (704) 388-2641; (3) by phone at (800)
690-6903; or 4) by on-line voting at www.proxyvote.com. Any shareholder
submitting a proxy may revoke it at any time before it is exercised at the
Meetings by submitting to Reserves, a written notice of revocation addressed to
Reserves, at the address shown on the cover page of this Proxy, or a
subsequently executed proxy or by attending the Meetings and voting in person.
Any expenses incurred as a result of hiring ADP Proxy Services or any
other proxy solicitation agent will be borne by BAAI, Chicago Equity and/or
their affiliates.
Only shareholders of record at the close of business on June 5, 2000 will
be entitled to vote at the Meetings. On that date, 21,575,811 shares of the
Asset Allocation Fund and 30,292,029 shares of the Blue Chip Fund were
outstanding and entitled to be voted. Each whole and fractional share of a Fund
is entitled to a whole or fractional vote.
If the accompanying proxy ballot(s) is executed and returned in time for
the Meetings, the shares covered thereby will be voted in accordance with the
proxy on all matters that may properly come before the Meetings.
Quorum
A quorum is constituted with respect to each Fund by the presence in
person or by proxy of the holders of more than one-half of the outstanding
shares of each Fund entitled to vote at their Meetings.
For purposes of determining the presence of a quorum for transacting
business at the Meetings, abstentions will be treated as shares that are
present at the Meetings but which have not been voted. Accordingly, abstentions
will have the effect of a "no" vote for purposes of obtaining the requisite
approvals of the New Agreement. Broker "non-votes" (that is, proxies from
brokers or nominees indicating that such persons have not received instructions
from the beneficial owners or other persons entitled to vote shares on a
particular matter with respect to which the brokers or nominees do not have
discretionary power) will be treated the same as abstentions.
In the event that a quorum is not present for any of the Meetings, or in
the event that a quorum is present at such Meetings but sufficient votes to
approve any proposed item are not received by a Fund, one or more
adjournment(s) may be proposed to permit further solicitation of proxies. Any
such adjournment(s) will require the affirmative vote of a majority of those
shares affected by the adjournment(s) that are represented at the Meetings in
person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies which they are entitled to vote FOR the particular proposal
for which a quorum exists in favor of such adjournment(s), and will vote those
proxies required to be voted AGAINST such proposal against any adjournment(s).
Shareholder Approval
The New Agreement is being submitted for approval at the Meetings by each
Fund's shareholders pursuant to the charter documents of Reserves, and were
unanimously approved by the Board at meetings held on March 2-3, 2000. The 1940
Act requires that the New Agreement must be approved by a "majority of the
outstanding shares" of a Fund. The 1940 Act defines the term "majority of the
outstanding shares" to mean the lesser
7
<PAGE>
of: (i) 67% or more of the shares of the Fund present at the Meeting if the
holders of more than 50% of the outstanding shares of the Fund are present; or
(ii) more than 50% of the outstanding shares of the Fund. Accordingly, the New
Agreement must be approved by a majority of the outstanding shares of the Asset
Allocation Fund and, with respect to the Blue Chip Fund, a majority of the
outstanding interests of the Master Portfolio. The Blue Chip Fund will cast its
interests in the Master Portfolio in the same proportion as those votes present
and cast at the Meeting of the Blue Chip Fund shareholders, assuming that such
Meeting is convened with a quorum of shareholders.
If the New Agreement is not approved by shareholders by September 27,
2000, Chicago Equity would be entitled to receive for the period covered by the
Interim Agreement a portion of such compensation that equals its costs incurred
in providing services under the Interim Agreement (plus interest earned on that
amount while in escrow). If the New Agreement is not approved for a Fund, the
Board will consider what further action is appropriate.
Principal Shareholders
The table below shows the name, address and share ownership of each person
known to Reserves to have ownership with respect to 5% or more of a class of a
Fund as of June 5, 2000. Each shareholder is known to own of record the shares
indicated below. Any shareholder known to Reserves to own such shares
beneficially is designated by an asterisk.
<TABLE>
<CAPTION>
Class; Amount of Percentage Percentage
Fund Name and Address Shares Owned of Class of Fund
------------------------ ------------------------------ ------------------ ------------ -----------
<S> <C> <C> <C> <C>
Nations Blue Chip Fund State Street Bank & Trust Co Investor C; 75.39% 1.40%
TTEE 398,909.519
FBO Coastgear & Company
105 Rosemont Avenue
Westwood, MA 02090
Bank of America, NA Primary A; 97.72% 3.51%
Attn: Tony Farrer 984,152.569
1401 Elm Street 11th Floor
Dallas, TX 75202-2911
Stephens, Inc. Primary B; 100.00% 0.00%
Attn: Cindy Cole .701
111 Center Street
Little Rock, AR 72201
Seafirst Bank Seafirst; 100.00% 46.91%
FBO Retirement Services 15,329,262.500
PO Box 84248
Seattle, WA 98124-5548
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Class; Amount of Percentage Percentage
Fund Name and Address Shares Owned of Class of Fund
------------------------------- ------------------------------ ----------------- ------------ ------------
<S> <C> <C> <C> <C>
Nations Asset Allocation Fund State Street Bank & Trust Co Investor C; 74.88% 0.44%
TTEE 82,594.585
FBO Coastgear & Company
105 Rosemont Avenue
Westwood, MA 02090
Michael R. Miller* Investor C; 5.92% 0.00%
PO Box 1295 6,531.044
Pompano Beach, FL
33061-1295
NFSC FEBO W14-636150 Investor C; 5.07% 0.00%
Arthur R Dolegowski 5,589.684
Valerie Dolegowski
2176 Chancery Drive
Loveloand, CO 80538
Bank of America, NA Primary A; 100.00% 6.93%
Attn: Tony Farrer 1,281,034.043
1401 Elm Street 11th Floor
Dallas, TX 75202-2911
Stephens, Inc. Primary B; 100.00% 0.00%
Attn: Cindy Cole 1.072
111 Center Street
Little Rock, AR 72201
Seafirst Bank Seafirst; 100.00% 46.00%
FBO Retirement Services 11,575,746.605
PO Box 84248
Seattle, WA 98124-5548
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a
company is presumed to "control" such company. Accordingly, to the extent that
a shareholder identified in the foregoing table is identified as the beneficial
holder of more than 25% of a class, or is identified as the holder of record of
more than 25% of a class and has voting and/or investment power, it may be
presumed to control such class. As of June 5, 2000, neither Bank of America nor
its affiliates controlled more than 25% of the voting securities of the Asset
Allocation Fund, the Blue Chip Fund or the Master Portfolio.
As of June 5, 2000, the officers and trustees of Reserves and Nations
Master Investment Trust, as a group, owned less than 1% of any class of a Fund.
Annual Meetings and Shareholder Meetings
Reserves presently does not hold annual meetings of shareholders for the
election of Trustees and other business unless otherwise required by the 1940
Act.
9
<PAGE>
OTHER BUSINESS
The Board knows of no other business to be brought before the Meetings.
However, if any other matters properly come before the Meetings, it is the
intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to Reserves in writing at the
address, or by phone at the phone number, on the cover page of this Proxy.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETINGS ARE REQUESTED
TO MARK, SIGN AND DATE THE ENCLOSED PROXY BALLOT(S) AND RETURN IT IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
SHAREHOLDERS ALSO MAY SUBMIT PROXIES BY FAX, TELEPHONE OR ON-LINE.
RESERVES WILL FURNISH, WITHOUT CHARGE, COPIES OF THE FUNDS' MARCH 31, 2000
ANNUAL REPORT TO ANY SHAREHOLDER UPON REQUEST ADDRESSED TO: NATIONS RESERVES,
ONE BANK OF AMERICA PLAZA, 101 SOUTH TRYON STREET, CHARLOTTE, N.C. 28255 OR BY
TELEPHONE AT 1-800-321-7854.
10
<PAGE>
Please fold and detach card at perforation before mailing
NATIONS ASSET ALLOCATION FUND
Special Meeting of Shareholders to be held on September 15, 2000
The undersigned hereby appoints Richard H. Blank and Carolyn Wyse (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 Asset Allocation
Fund (the "Fund") of Nations Reserves ("Nations") to be held at One Bank of
America Plaza, 101 South Tryon Street, 33rd Floor, Charlotte, North Carolina
28255, at 10:00 a.m. (Eastern time) on September 15, 2000, 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 JUNE 15, 2000.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE FUND AND
NATIONS. 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.
ITEM 1. To approve a new investment sub-advisory agreement with Chicago Equity
Partners, LLC.
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.
----------------------- --------
Signature Date
----------------------- --------
Signature (Joint Owners) Date
<PAGE>
Please fold and detach card at perforation before mailing
NATIONS BLUE CHIP FUND
Special Meeting of Shareholders to be held on September 15, 2000
The undersigned hereby appoints Richard H. Blank and Carolyn Wyse (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 Blue Chip Fund
(the "Fund") of Nations Reserves ("Nations") to be held at One Bank of America
Plaza, 101 South Tryon Street, 33rd Floor, Charlotte, North Carolina 28255, at
10:00 a.m. (Eastern time) on September 15, 2000, 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 JUNE 15, 2000.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES ON BEHALF OF THE FUND AND
NATIONS. 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.
ITEM 1. To approve a new investment sub-advisory agreement with Chicago Equity
Partners, LLC.
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.
----------------------- --------
Signature Date
----------------------- --------
Signature (Joint Owners) Date
