UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use by the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
Nations Reserves
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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 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)(1) 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): N/A
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(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
NATIONS FUNDS TRUST
One Bank of America Plaza
101 South Tryon Street
Charlotte, North Carolina 28255
Telephone: 800-653-9427
January 20, 2001
DEAR SHAREHOLDER:
On behalf of the Boards of Trustees of Nations Reserves and Nations Funds
Trust, we are pleased to invite you to special meetings of shareholders of
Nations Marsico Growth & Income Fund, Nations Marsico Focused Equities Fund and
Nations Marsico 21st Century Fund (each a "Fund" and collectively, the "Funds")
to be held jointly at 10:00 a.m., Eastern time, on April 12, 2001, at One Bank
of America Plaza, 101 South Tryon Street, 33rd Floor, Charlotte, North Carolina
(the "Meetings").
At the Meetings, you will be asked to approve an investment sub-advisory
agreement with Marsico Capital Management, LLC ("Marsico Capital"). Marsico
Capital has recently experienced a change in ownership, which has not resulted
in, and is not expected to result in, any significant change to the Marsico
Capital 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 Marsico Capital to continue to serve as investment sub-adviser to
each Fund whenever this type of change occurs. The general array of sub-advisory
services provided under the new agreement and the aggregate fees payable by each
Fund for sub-advisory services remain unchanged from the previous sub-advisory
agreements. Approval of the new investment sub-advisory agreement also will have
the effect of confirming the interim investment sub-advisory agreements with
Marsico Capital that were put in place for each Fund after the change in
ownership, and pursuant to which Marsico Capital currently provides investment
sub-advisory services to the Funds. Accordingly, we are soliciting your vote on
the new investment sub-advisory agreement that is proposed to be put in place
for your Fund as a result of the change in ownership of Marsico Capital.
In addition, shareholders of each of Nations Marsico Focused Equities Fund
and Nations Marsico Growth & Income Fund also will be asked to approve a
proposed reorganization (the "Reorganization") into a successor mutual fund in
Nations Funds Trust, another registered investment company within the Nations
Funds family.
Each new mutual fund (each a "Successor Fund" and together, the "Successor
Funds") will have the same name, investment objective, investment adviser,
investment sub-adviser, principal investment strategies and investment risks as
those of your current Fund. In addition, the Reorganization will not result in
any change to the total operating expense ratios of the various classes of
shares. Similarly, the features and services that are available to shareholders
today will continue to be available to Successor Fund shareholders after the
Reorganization.
The Reorganization offers several benefits. First, the Reorganization is
one part of a broader initiative to streamline the operations of the Nations
Funds family, which currently consists of several registered
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investment companies. Over time, management expects to reduce the number of
registered investment companies in the Nations Funds family without necessarily
impacting investment alternatives. Streamlining the Nations Funds family may
allow it and the Successor Funds to achieve cost savings by reducing certain
accounting, legal and securities registration costs. Also, the Successor Funds
will be part of a Delaware business trust, which generally has greater
advantages as a business form than a Massachusetts business trust like Nations
Reserves.
If shareholder approval is obtained and the other conditions to the
Reorganization are satisfied, it is anticipated that each Fund would be
reorganized into its corresponding Successor Fund on or about June 8, 2001, when
Fund shares would be exchanged for shares of the same class of shares of the
corresponding Successor Fund of equal dollar value. The exchange in shares in
the Reorganization is expected to be tax-free under federal law.
None of the customary costs associated with this proxy solicitation will be
borne by the Funds or their shareholders.
THE BOARDS OF TRUSTEES OF NATIONS RESERVES AND NATIONS FUNDS TRUST
UNANIMOUSLY RECOMMEND THAT YOU VOTE TO APPROVE THE PROPOSED NEW SUB-ADVISORY
AGREEMENT. THE BOARD OF TRUSTEES OF NATIONS RESERVES UNANIMOUSLY RECOMMENDS THAT
YOU VOTE TO APPROVE THE PROPOSED REORGANIZATION.
The formal Notice of Special Meetings, Proxy Statement and Proxy Ballot(s)
are enclosed. Both the proposed new sub-advisory agreement and the
Reorganization, and the reasons for the unanimous recommendation of the Boards
of Trustees, 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 us 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 Boards
of Trustees of Nations Reserves and
Nations Funds Trust
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YOUR VOTE IS IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU
OWN. PLEASE VOTE BY SUBMITTING YOUR PROXY BALLOT(S) TODAY, EITHER IN THE
ENCLOSED POSTAGE-PAID ENVELOPE OR BY FAX 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.
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Vote On-Line Vote By Toll-Free Phone Call
1. Read the enclosed Proxy Statement and have 1. Read the enclosed Proxy Statement and have
your Proxy Ballot(s)* at hand. your 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 Proxy Ballot(s). your Proxy Ballot(s).
4. Submit your proxy using the easy-to-follow 4. Submit your proxy using the easy-to-follow
instructions. instructions.
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* Do not mail the Proxy Ballot(s) if submitting your Proxy by Internet, fax or
telephone.
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NATIONS RESERVES and NATIONS FUNDS TRUST
One Bank of America Plaza
101 South Tryon Street
Charlotte, North Carolina 28255
1-800-653-9427
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NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
To Be Held on April 12, 2001
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TO NATIONS MARSICO GROWTH & INCOME FUND AND NATIONS MARSICO FOCUSED EQUITIES
FUND SHAREHOLDERS:
PLEASE TAKE NOTE THAT special meetings of shareholders of Nations Marsico
Growth & Income Fund and Nations Marsico Focused Equities Fund of Nations
Reserves (each a "Fund" and together, the "Funds") will be held jointly at 10:00
a.m., Eastern time, on April 12, 2001, at One Bank of America Plaza, 101 South
Tryon Street, 33rd Floor, Charlotte, North Carolina, for the purpose of
considering and voting upon:
ITEM 1. A new investment sub-advisory agreement for each Fund with Marsico
Capital Management, LLC ("Marsico Capital").
ITEM 2. A proposed agreement and plan of reorganization dated as of January
20, 2001 (the "Reorganization Agreement"), by and between Nations Reserves,
on behalf of Nations Marsico Growth & Income Fund and Nations Marsico
Focused Equities Fund, and Nations Funds Trust, on behalf of corresponding
mutual funds (each a "Successor Fund" and together, the "Successor Funds").
The Reorganization Agreement provides for the transfer of the assets and
liabilities of each Fund to a corresponding Successor Fund, in exchange for
shares of equal value of designated classes of the corresponding Successor
Fund.
ITEM 3. Such other business as may properly come before the meetings or any
adjournment(s).
TO NATIONS MARSICO 21ST CENTURY FUND SHAREHOLDERS:
PLEASE TAKE NOTE THAT a special meeting of shareholders of Nations Marsico
21st Century Fund of Nations Funds Trust will be held at 10:00 a.m., Eastern
time, on April 12, 2001, at One Bank of America Plaza, 101 South Tryon Street,
33rd Floor, Charlotte, North Carolina, jointly with the special meetings noted
above for the purpose of considering and voting upon:
ITEM 1. A new investment sub-advisory agreement with Marsico Capital.
ITEM 2. Such other business as may properly come before the meeting or any
adjournment(s).
YOUR TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF EACH
PROPOSAL.
Shareholders of record as of the close of business on January 15, 2001 are
entitled to notice of, and to vote at, the meetings or any adjournment(s)
thereof.
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SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE THE ACCOMPANYING PROXY BALLOT(S), WHICH IS BEING SOLICITED BY
THE BOARDS OF TRUSTEES OF NATIONS RESERVES AND NATIONS FUNDS TRUST. THIS IS
IMPORTANT TO ENSURE A QUORUM AT THE MEETINGS. SHAREHOLDERS ALSO MAY SUBMIT THEIR
PROXIES: 1) BY FAX AT (704) 388-2641; 2) BY TELEPHONE AT (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 NATIONS RESERVES AND/OR NATIONS FUNDS TRUST
A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE
MEETINGS AND VOTING IN PERSON.
By Order of the Boards of Trustees,
RICHARD H. BLANK, JR.
Secretary of Nations Reserves and Nations Funds
Trust
January 20, 2001
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PROXY STATEMENT
Dated January 20, 2001
NATIONS RESERVES and NATIONS FUNDS TRUST
One Bank of America Plaza
101 South Tryon Street
Charlotte, North Carolina 28255
1-800-653-9427
This Proxy Statement ("Proxy") is furnished in connection with the
solicitation of proxies by the Board of Trustees of Nations Reserves
("Reserves") and the Board of Trustees of Nations Funds Trust ("Funds Trust") at
special meetings of shareholders of Nations Marsico Growth & Income Fund,
Nations Marsico Focused Equities Fund and Nations Marsico 21st Century Fund
(each a "Fund" and collectively, the "Funds"). The Board of Trustees of Reserves
and the Board of Trustees of Funds Trust are sometimes referred to as the
"Boards." The special meetings and any adjournment(s) are referred to as the
"Meetings." The Meetings have been called to consider the following proposals:
FOR NATIONS MARSICO GROWTH & INCOME FUND AND NATIONS MARSICO FOCUSED EQUITIES
FUND SHAREHOLDERS:
ITEM 1. A new investment sub-advisory agreement for each Fund with Marsico
Capital Management, LLC ("Marsico Capital").
ITEM 2. A proposed agreement and plan of reorganization dated as of January
20, 2001 (the "Reorganization Agreement"), by and between Reserves, on
behalf of Nations Marsico Growth & Income Fund and Nations Marsico Focused
Equities Fund and Nations Funds Trust, on behalf of corresponding mutual
funds (each a "Successor Fund" and together, the "Successor Funds"). The
Reorganization Agreement provides for the transfer of the assets and
liabilities of each Fund to a corresponding Successor Fund, in exchange for
shares of equal value of designated classes of the corresponding Successor
Fund.
ITEM 3. Such other business as may properly come before the Meetings or any
adjournment(s).
Each Successor Fund is referred to as a "successor" because each was
created to receive the assets and liabilities and to continue the operations of
its corresponding Fund. While there are some differences between the Funds and
their corresponding Successor Funds, which are discussed below, an investment in
a Successor Fund will be considered substantially the same as an investment in
its corresponding Fund.
FOR NATIONS MARSICO 21ST CENTURY FUND SHAREHOLDERS:
ITEM 1. A new investment sub-advisory agreement with Marsico Capital.
ITEM 2. Such other business as may properly come before the Meeting or any
adjournment(s).
Additional information about the Funds is available in their:
o Prospectuses;
o Statements of Additional Information, or SAIs; and
o Annual and Semi-Annual Reports to shareholders.
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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 and semi-annual reports to shareholders for the
fiscal period ended September 30, 2000 previously have 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.
Copies of the effective prospectuses of the Successor Funds will be
provided to shareholders at the time the Reorganization is consummated.
Shareholders may, after the Reorganization, obtain copies of the Statements of
Additional Information relating to the Successor Funds without charge by calling
1-800-321-7854 or by writing Funds Trust at: Nations Funds Trust, c/o Stephens
Inc., One Bank of America Plaza, 101 South Tryon Street, 33rd Floor, Charlotte,
North Carolina 28255.
It is expected that this Proxy will be mailed to shareholders on or about
January 20, 2001.
Special Note Regarding the Funds' Master/Feeder Structure and Terms Used
Throughout This Proxy
Shareholders of Nations Marsico Growth & Income Fund, Nations Marsico
Focused Equities Fund and Nations Marsico 21st Century Fund may recall that the
Funds are each "feeder" funds in a master/feeder structure where Nations
Marsico Growth & Income Master Portfolio, Nations Marsico Focused Equities
Master Portfolio and Nations Marsico 21st Century Master Portfolio,
respectively, of Nations Master Investment Trust serve as the master portfolio
(the "Master Portfolio"). Because the assets of each feeder Fund are invested
in the corresponding Master Portfolio, investment advisory and sub-advisory
services are provided at the Master Portfolio level. Therefore, the new
investment sub-advisory agreement affecting each feeder Fund is not a contract
with the Fund directly but rather with the Master Portfolio. As an
interestholder in the corresponding Master Portfolio, each Fund is
"passing-through" the vote to Fund shareholders via this proxy solicitation,
and will vote its interests in its Master Portfolio in the same proportion as
Fund shareholders vote. In addition, in order to avoid confusion of terms,
throughout this Proxy, the terms Fund and Master Portfolio are sometimes used
interchangeably. Also, any approvals made by the Boards, on behalf of the Funds
that are discussed in this Proxy, also were made by the Board of Nations Master
Investment Trust, on behalf of each Master Portfolio.
In order to avoid confusion and repetition in this Proxy, the term "Board"
should be understood to refer to the Board of Reserves, acting on behalf of
Nations Marsico Growth & Income Fund and Nations Marsico Focused Equities Fund,
the Board of Funds Trust, action on behalf of Nations Marsico 21st Century
Fund, and the Board of Nations Master Investment Trust, acting on behalf of the
Master Portfolios, as the context requires. Additionally, the singular terms
"Previous Agreement," "Interim Agreement" and "New Agreement" (which are
defined below) are used to refer to the separate Previous Agreements, Interim
Agreements and New Agreement with Nations Master Investment Trust, that relate
to the Master Portfolios.
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APPROVAL OF THE NEW SUB-ADVISORY AGREEMENT
Overview
The investment sub-adviser that manages the Funds on a day-to-day basis is
Marsico Capital. In June 2000, Bank of America Corporation ("Bank of America"),
on behalf of itself and its subsidiaries, entered into a definitive agreement
with the general partner and limited partners of TFM Holdings, LLLP ("TFM
Holdings") pursuant to which Bank of America agreed to purchase their interests
in TFM Holdings (the "Transaction"). Prior to the Transaction, TFM Holdings
owned 50% of Marsico Capital. Following the Transaction, which occurred on
January 2, 2001, a Bank of America wholly-owned subsidiary, Marsico Management
Holdings, LLC, now owns 100% of Marsico Capital.
The Transaction has not resulted in any change in Marsico Capital 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, as amended (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 a 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 Marsico Capital of the type that constitutes an assignment and immediate
termination of the investment sub-advisory agreements 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 August 23, 2000 the Boards approved, for each Fund,
both an interim investment sub-advisory agreements (the "Interim Agreement") and
also a new definitive investment sub-advisory agreement (the "New Agreement")
with Marsico Capital. Consequently, Marsico Capital currently serves as
investment sub-adviser to each Fund under the Interim Agreement. Rule 15a-4
permits Marsico Capital to continue to so serve under the current Interim
Agreements until May 31, 2001 (which is 150 days from January 2, 2001).
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 Marsico
Capital 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 Marsico Capital; (iii) contains the same terms and conditions as the
Previous Agreement, except for required exceptions; and
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(iv) provides that compensation earned by Marsico Capital under the Interim
Agreement be held in an interest-bearing escrow account to be paid to Marsico
Capital only if the shareholders of the applicable Fund approve the New
Agreement, and that if shareholders do not approve the New Agreement, Marsico
Capital 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 identical to the Previous Agreement
(which was approved by Fund shareholders).
The term of the Interim Agreement is from January 2, 2001 through the date
that Fund shareholders approve a new investment sub-advisory agreement, but in
no case later than 150 days from January 2, 2001 -- or May 31, 2001. Under the
Interim Agreement, Marsico Capital is entitled to receive a sub-advisory fee at
the annual rate of 0.45% of the average daily net assets of each Fund.
The New Agreement is based on a new uniform form of agreement that the
entire Nations Funds family is in the process of implementing. Accordingly, the
New Agreement will be different in form than the Previous Agreement and Interim
Agreement (except with respect to Nations Marsico 21st Century Fund whose
Previous Agreement is the new uniform form of agreement). 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 Marsico Capital under
certain circumstances. Specifically, Marsico Capital 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 from: (i) willful misfeasance, bad faith or
negligence on the part of Marsico Capital or any of its officers, directors,
employees or agents in connection with their duties under the New Agreement;
(ii) reckless disregard by Marsico Capital or its officers, directors, employees
or agents of any of their obligations and duties under the New Agreement; or
(iii) any violations of federal or state securities laws, rules, regulations,
statutes and codes by Marsico Capital or any of its officers, directors,
employees or agents. In an attempt to further protect the Funds, the New
Agreement requires Marsico Capital 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 Marsico Capital becomes aware of any event or occurrence that could have a
material impact on the performance of its duties, the New Agreement requires
Marsico Capital 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.
In general, however, the Interim Agreement and New Agreement are similar.
Pursuant to both the Interim Agreement and New Agreement, Marsico Capital will
determine from time to time what securities and other investments will be
purchased, retained or sold by the Funds, and will place the daily orders for
the purchase or sale of securities. Under both agreements, Marsico Capital also
will provide additional services related to
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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 Marsico Capital 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 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 Marsico Capital, as that term is defined in
the 1940 Act (the "Non-Interested Trustees"). The investment sub-advisory fee
rate payable to Marsico Capital for each Fund under the New Agreement is the
same as that shown above for the Interim Agreement.
Copies of the Interim Agreement and New Agreement are available upon
request by writing or by calling Reserves or Funds Trust at the toll-free number
listed on the first page of this Proxy.
Board Consideration
Marsico Capital served as the sub-adviser to the Funds pursuant to the
Previous Agreement for Nations Marsico Growth & Income Fund and Nations Marsico
Focused Equities Fund, which is dated August 20, 1999, and was approved by the
sole shareholder of each such Fund on August 19, 1999. Marsico Capital also
served as the sub-adviser pursuant to the Previous Agreement for Nations Marsico
21st Century Fund, which is dated April 7, 2000, and was approved by the sole
shareholder of such Fund on April 7, 2000. The Interim Agreement and the New
Agreement were approved by the Boards, including a majority of the
Non-Interested Trustees, at regular in-person meetings held on August 23, 2000.
At the August 23, 2000 in-person meetings, the Boards were informed of the
Transaction, and the expected resulting assignment and termination of the Funds'
Previous Agreement. The Boards were provided with information concerning the
Interim Agreement and New Agreement and were informed of the standards that each
Board should apply in determining whether to approve the Interim Agreement and
New Agreement. The information provided by Marsico Capital 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
Marsico Capital's ability to perform its duties as set forth in the New
Agreement. In this regard, the Boards were advised by BAAI and Marsico Capital
that they did not expect that the Transaction would have a material effect on
the operations of the Funds or their shareholders. Marsico Capital also noted
that its management did not contemplate any material change in the day-to-day
operations of Marsico Capital and that the internal management structure of
Marsico Capital would remain largely unchanged after the Transaction.
5
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At the August 23, 2000 meetings, the Boards, including the Non-Interested
Trustees, unanimously approved the Interim Agreement and New Agreement.
Specifically, the Boards 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 Boards 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 Previous
Agreement. The Boards based their 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 Marsico Capital;
(iii) the continued employment by Marsico Capital of the investment
professionals then managing the assets of the Funds; (iv) the depth of
management experience with respect to Marsico Capital'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 Marsico Capital in
managing the Funds; (vi) that Fund shareholders would not bear any costs
associated with the proxy solicitation; and (vii) the greater efficiency in
administering a standard form of contract. In making the decision to recommend
approving the Interim Agreement and New Agreement, the factors that each Board
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
experience of Marsico Capital's advisory personnel. The Boards based their
determinations in this regard on discussions with representatives of Bank of
America, BAAI and Marsico Capital at the meetings and a review of materials
presented by Bank of America, BAAI and Marsico Capital. These materials included
a form of the Interim Agreement and New Agreement.
Information Regarding Marsico Capital
Marsico Capital was established in 1997 by Thomas F. Marsico and TFM
Holdings. It is a Delaware limited liability company. The principal source of
Marsico Capital's income is professional fees received from providing continuing
investment advice. Marsico Capital provides investment advice to registered
mutual funds that are distributed to retail investors as well as mutual funds
that serve as funding vehicles for variable life insurance policies and variable
annuity contracts. Marsico Capital also provides investment advice to
institutions and individuals and to private funds. Prior to forming Marsico
Capital, Mr. Marsico served as the portfolio manager of the Janus Twenty Fund
from January 31, 1988 through August 11, 1997, and served in the same capacity
for the Janus Growth and Income Fund from May 31, 1991 through August 11, 1997.
Marsico Capital is located at 1200 17th Street, Suite 1300, Denver, Colorado
80202.
The Board of Directors of Marsico Capital is presently comprised of Thomas
F. Marsico, the Chairman and Chief Executive Officer; Barbara M. Japha, the
President; Christopher J. Marsico, the Chief Operating Officer; Robert H.
Gordon; Frank L. Gentry; and Owen G. Shell.
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Prior to the Transaction, the outstanding interests of Marsico Capital were
held of record by TFM Holdings and Bank of America through its ownership of
Marsico Management Holdings, LLC.
Marsico Capital also provides investment advisory services to funds which
are not members of the Nations Funds family. The shareholders of the funds of
The Marsico Investment Fund -- Marsico Focus Fund, Marsico Growth & Income Fund,
Marsico 21st Century Fund and Marsico International Opportunities Fund -- were
asked to approve a new advisory agreement with Marsico Capital at meetings held
on November 9, 2000.
Appendix II sets forth the fees and other information regarding certain
other investment companies sub-advised by Marsico Capital.
The aggregate amount paid to Marsico Capital (or its predecessor) for each
Fund (or its predecessor) for the period April 1, 1999 through March 31, 2000
was as follows: $1,601,756.65 for Nations Marsico Growth & Income Fund and
$5,761,597.36 for Nations Marsico Focused Equities Fund. Nations Marsico 21st
Century Fund has not yet completed a single fiscal year. Accordingly, the
sub-advisory fees paid to Marsico Capital are not included here. The aggregate
amount paid to Marsico Capital (or its predecessor) for all of the mutual funds
in the Nations Funds family (or their predecessors) for the period April 1, 1999
through March 31, 2000 was $7,918,285.65.
For the fiscal year ended March 31, 2000, Marsico Capital (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, Funds Trust and Nations Master
Investment Trust, owns shares of Bank of America. No other officer or Trustee of
Reserves, Funds Trust or Nations Master Investment Trust is an officer,
employee, director, general partner or shareholder of BAAI, Marsico Capital or
any of their affiliates.
Other Information
BAAI serves as the investment adviser to the corresponding Master
Portfolio of Nations Marsico Growth & Income Fund, Nations Marsico Focused
Equities Fund and Nations Marsico 21st Century Fund. BAAI also serves as the
Funds' co-administrator. BAAI is a wholly-owned subsidiary of Bank of America,
N.A., which in turn is a wholly-owned banking subsidiary of Bank of America, a
bank holding company organized in Delaware. 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.
7
<PAGE>
FOR NATIONS MARSICO GROWTH & INCOME FUND AND NATIONS MARSICO FOCUSED EQUITIES
FUND SHAREHOLDERS ONLY -- APPROVAL OF
REORGANIZATION AGREEMENT
THE REORGANIZATION
Description of the Proposal
At the Meetings, the shareholders of each of Nations Marsico Growth &
Income Fund and Nations Marsico Focused Equities Fund will be asked to approve
the Reorganization Agreement. If shareholder approval is obtained, and the other
conditions to the closing of the Reorganization (the "Closing") are met,
shareholders will receive shares of the same class of the corresponding
Successor Fund equal in value to their holdings of Fund shares immediately
before the Reorganization. Each Fund will then be terminated and liquidated.
Each Successor Fund will have the same name, investment objective,
investment adviser, investment sub-adviser, principal investment strategies and
investment risks as its corresponding Fund. In addition, the Reorganization will
not result in any change to the total operating expense ratios of the various
classes of shares. Similarly, the features and services that are available to
Fund shareholders today will continue to be available to Successor Fund
shareholders after the Reorganization. However, the Successor Funds differ in
some respects from the Funds, and these differences are described in more detail
below.
It is possible that a majority of a Fund's shareholders entitled to vote do
not approve the Reorganization. In such a case, shareholders will retain their
shares in their Fund and the Board of Trustees of Reserves will contemplate what
further action is appropriate.
The Meetings are scheduled for April 12, 2001, and the Reorganization, if
approved, is expected to occur on or about June 8, 2001.
Description of the Reorganization Agreement
The Reorganization Agreement is the governing document of the
Reorganization. Among other things, it provides for (i) the transfer of all of
the assets and liabilities of each Fund to its corresponding Successor Fund in
exchange for shares of equal value of the same classes of the Successor Fund;
and (ii) the distribution of such Successor Fund shares to shareholders of the
respective Fund in liquidation of that Fund. The completion of the
Reorganization is conditioned upon Reserves and Funds Trust receiving an opinion
from Morrison & Foerster LLP that the exchange of shares contemplated under the
Reorganization will be tax-free under federal income tax law. The Reorganization
Agreement includes a number of other conditions for completion of the
Reorganization, sets forth representations and warranties of the parties and
describes the mechanics of the transaction.
8
<PAGE>
The Reorganization Agreement also provides that the Reorganization may be
abandoned at any time before the Closing upon the mutual consent of Reserves and
Funds Trust. At any time before or (to the extent permitted by law) after
approval of the Reorganization Agreement by Fund shareholders: (i) the parties
may, by written agreement authorized by the Board of Reserves and the Board of
Funds Trust and with or without the approval of their shareholders, amend any of
the provisions of the Reorganization Agreement; and (ii) either party may waive
any default by the other party or the failure to satisfy any of the conditions
to its obligations (the waiver to be in writing and authorized by the Board of
Trustees of Reserves or the Board of Trustees of Funds Trust with or without the
approval of the parties' shareholders).
Upon completion of the Reorganization, all outstanding shares of each Fund
will be canceled. Exchange or redemption requests received thereafter will be
deemed to be exchange or redemption requests for shares of the corresponding
Successor Fund. At Closing, the assets of each Fund will be transferred to the
corresponding Successor Fund as described above.
The Reorganization Agreement provides that BAAI and/or its affiliates will
bear all customary expenses associated with the Reorganization. Neither the
Funds nor their shareholders will not bear any of these costs.
A copy of the Reorganization Agreement is available at no charge by calling
or writing Reserves at the toll-free number or address listed on the first page
of the Proxy. Copies of the Reorganization Agreement are also available at the
SEC's website (www.sec.gov).
THE BOARD OF TRUSTEES OF RESERVES UNANIMOUSLY RECOMMENDS THAT FUND
SHAREHOLDERS VOTE FOR THE REORGANIZATION AGREEMENT.
Reasons for the Reorganization
The Reorganization offers several benefits to Fund shareholders:
o The Reorganization is part of a broader initiative to streamline the
operations of the Nations Funds family, which currently consists of several
registered investment companies. Over time, management expects to reduce
the number of registered investment companies in the Nations Funds family
without necessarily impacting investment alternatives. Management believes
that if it were permitted to operate the same number of mutual funds with
fewer registered investment companies, certain efficiencies and benefits to
shareholders in the Nations Funds family should accrue over the long term.
These benefits may include, among other things, cost savings relating to
the reduction of certain accounting, legal and securities registration
costs.
o The Successor Funds will be part of a Delaware business trust, which
generally is viewed as having more advantages as a business form than a
Massachusetts business trust like Reserves. As part of Funds Trust, the
Successor Funds would have greater flexibility in their investment
policies. Also, as part of Funds Trust, the Successor Funds would be
governed under a more flexible charter document which could be amended by
Funds Trust's Board without the necessity of soliciting shareholders,
thereby otherwise saving costs relating to proxy solicitations on certain
routine matters.
9
<PAGE>
o Neither Fund nor Successor Fund shareholders will bear any of the customary
costs associated with the Reorganization, including solicitation costs.
After the Reorganization there will be no change to the investment adviser
or sub-adviser who currently manage each Fund. In addition, the Reorganization
will not result in any change to the total operating expense ratios of the
various classes of each Fund. Similarly, the features and services that are
available to Fund shareholders today will also be available to Successor Fund
shareholders after the Reorganization. The exchange of shares in the
Reorganization is expected to be tax-free under federal law.
Board Consideration
The Board of Trustees of Reserves unanimously voted to approve the
Reorganization Agreement at a meeting held on August 23, 2000. During
deliberations, the Board (with the advice and assistance of independent counsel)
reviewed and considered, among other things: (1) the various aspects of the
Reorganization and the Reorganization Agreement; (2) the Reorganization as part
of a broader initiative to streamline the operations of the Nations Funds
family; (3) the fact that the Successor Funds, as part of Funds Trust, would
have greater flexibility in their investment policies and would be governed
under a more flexible charter document which could be amended by the Board
without the necessity of soliciting shareholders, thereby otherwise saving costs
relating to proxy solicitations on certain routine matters; (4) the investment
objective, principal investment strategies and investment risks of the Funds and
their corresponding Successor Funds are identical; (5) the anticipated tax-free
nature of the exchange of shares in the Reorganization; (6) the fact that total
operating expense ratios charged to each Successor Fund class after the
Reorganization would be no higher than that of the corresponding Fund class
prior to the Reorganization; (7) the fact that the expenses associated with the
Reorganization would not be borne by Fund or Successor Fund shareholders; (8)
that shareholders would remain invested in the Fund if a Fund's shareholders did
not approve the Reorganization; (9) potential benefits of the Reorganization, if
any, to other persons, including BAAI and its affiliates (e.g., the benefit of
consolidating resources within BAAI and its affiliates); and (10) the
efficiencies incurred by combining this proposal with the request for the
approval of the New Agreement for Marsico Capital for which management is
required by law to proxy Fund shareholders.
Based upon its evaluation of the information presented to it, and in light
of their fiduciary duties under federal and state law, the Board of Trustees of
Reserves, including all of the Non-Interested Trustees, determined that
participation in the Reorganization, as contemplated by the Reorganization
Agreement, was in the best interests of each Fund, and that the shares of each
Fund will not be diluted as a result of the Reorganization.
THE BOARD OF TRUSTEES OF RESERVES UNANIMOUSLY RECOMMENDS THAT FUND
SHAREHOLDERS VOTE TO APPROVE THE REORGANIZATION AGREEMENT.
10
<PAGE>
Comparison of the Funds and Successor Funds
As noted above, there are some differences between the Funds and their
corresponding Successor Funds, which are summarized below:
o After the Reorganization, Fund shareholders will hold shares in series of
Funds Trust, a registered investment company in the Nations Funds family.
Unlike Reserves, which is a Massachusetts business trust, Funds Trust is a
Delaware business trust.
o The Funds and the Successor Funds will have somewhat different fundamental
and non-fundamental investment policies. As part of Funds Trust, the
successor Funds will have greater flexibility in their investment policies.
Comparison of Forms of Business Organization
Federal securities laws largely govern the way that mutual funds operate,
but they do not cover every aspect of a fund's existence and operation. State
law and a fund's governing documents fill in most of the gaps and typically
create additional operational rules and restrictions that funds must follow. As
noted, Reserves is a Massachusetts business trust. The proposed Reorganization
would reorganize each Fund into series of Funds Trust, which is a Delaware
business trust. There are few differences between these forms of organization,
although one advantage to a Delaware business trust is its potentially greater
flexibility. Generally, under Delaware business trust law, a mutual fund's
governing instrument, called a declaration of trust, may establish the way it
will operate with few state law requirements or prohibitions. Thus, mutual funds
organized in Delaware generally have more flexibility in their operations and
certainty about any operational restrictions because the restrictions are
written in the fund's declaration of trust.
The following discussion outlines some of the differences between the state
law and charter documents that currently govern Reserves's Funds and that which
apply to the Successor Funds as series of Funds Trust.
o The Board of Trustees. The Successor Funds will be governed by a Board of
Trustees. The Board of Funds Trust will have eleven Trustees, ten of whom
currently serve as Trustees of Reserves with the eleventh currently serving
in an advisory capacity to the Board of Trustees of Reserves.
o Governing Documents. Massachusetts and Delaware business trusts are
governed by similar sets of documents, each called a declaration of trust
and by-laws. These governing documents are generally similar, although
there are some differences. For example, Funds Trust's Declaration of
Trust, as permitted by Delaware law, provides that shareholders of series
of Funds Trust would be entitled to vote on mergers, acquisitions and
consolidations involving such series, only to the extent required by
federal securities law. By limiting mandatory shareholder votes to those
matters expressly required under the federal securities laws, the Funds
will save costs by not having to schedule special shareholder meetings and
solicit shareholder proxies. Although shareholders of series of Funds Trust
will no longer have certain rights outlined above, it is anticipated that
the Successor Funds will benefit from a reduction in expenses associated
with potential proxy solicitations on these matters.
11
<PAGE>
o Shareholder Liability. Under Massachusetts law, and correspondingly
Reserves's Declaration of Trust, shareholders may, under certain
circumstances, be personally liable for the debts and obligations of
Reserves. By contrast, under Delaware law, interestholders of a Delaware
business trust like Funds Trust are not liable for the debts and
obligations of Funds Trust.
Comparison of Investment Policies and Restrictions
Each Fund's investment objective, principal investment strategies and
investment risks will not change as a result of the Reorganization. However, as
noted, the Successor Funds will have a more streamlined set of fundamental and
non-fundamental investment policies and restrictions. Some of each Fund's
current investment policies and restrictions may limit its portfolio manager
from investing in a security that is both consistent with the investment
objective of such Fund and that may be a good investment. One reason for
changing some of these investment policies is to remove restrictions that
unnecessarily hamper the portfolio manager's investment discretion. Many of
these restrictions were put in place by the Funds as a result of the directives
of various state securities commissions. Changes to federal securities laws have
superseded these directives. Another reason is the desire to migrate towards
uniform investment policies for all funds in the Nations Funds family.
For a detailed comparison of the fundamental investment policies and
limitations of the Funds and Successor Funds, see Appendix I to this Proxy.
12
<PAGE>
OTHER INFORMATION ABOUT THE REORGANIZATION
Investment Adviser and Other Service Providers
The Funds and Successor Funds have the same service providers. Upon
completion of the Reorganization, these service providers will continue to serve
the Successor Funds in the capacities indicated below.
<TABLE>
<CAPTION>
Service Providers for the Fund and the Successor Fund
<S> <C>
Investment Adviser BAAI
Investment Sub-Adviser Marsico Capital Management,
LLC
Distributor Stephens Inc.
Co-Administrator BAAI
Co-Administrator Stephens Inc.
Sub-Administrator The Bank of New York
Custodian The Bank of New York
Transfer Agent PFPC Inc.
Sub-Transfer Agent Bank of America, N.A.
(for Primary A and B shares only)
Independent Auditors PricewaterhouseCoopers LLP
</TABLE>
BAAI and the Funds are currently seeking an exemptive order from the SEC
that would permit BAAI to engage a different or additional sub-adviser for a
Fund or to continue the engagement of a sub-adviser who has experienced a change
in its ownership or corporate structure or under an agreement that has
materially changed, with the approval of the respective Fund's Board, but
without submitting the sub-advisory change to a vote of the Fund's shareholders,
under certain circumstances. If this exemptive order is granted and the proposed
Reorganization is approved, the Funds or BAAI will inform shareholders of any
such sub-advisory change, which may include: (i) engaging new or additional
sub-advisers; (ii) terminating or replacing one or more sub-advisers; or (iii)
materially amending an existing sub-advisory agreement. Until this exemptive
order is granted and the proposed Reorganization is approved, consistent with
applicable law, the Funds will continue to submit any such sub-advisory changes
to the Funds' shareholders for approval.
Comparison of Fees and Expenses
The Reorganization will not result in any change to the total operating
expense ratios of the various classes.
13
<PAGE>
Comparison of Purchase, Redemption, Distribution and Exchange Policies and
Other Shareholder Transactions and Services
As a result of the Reorganization, Fund shareholders will hold shares of
the same class of the corresponding Successor Fund that they held in each Fund.
For example, a Fund shareholder who owns Investor A shares will, immediately
after the Reorganization, hold Investor A shares in the corresponding Successor
Fund. Accordingly, all of the purchase, redemption, distribution and exchange
policies and other shareholder transactions and services applicable to a
shareholder's share class will remain unaffected and unchanged by the
Reorganization. As noted, no sales charge or sales load will be imposed in
connection with the exchange of shares in the Reorganization.
Accounting Treatment of the Reorganization
The Successor Funds will become the accounting successor of their
corresponding Fund as of the Closing, which means that the financial statements
and performance history of each Fund and its classes will become those of the
corresponding Successor Fund and its corresponding classes as though such
financial statements and performance history were that Successor Fund's own.
Federal Income Tax Consequences
As noted, the exchange of shares in the Reorganization is expected to be
tax free under federal income tax law.
The following discussion summarizes the material federal income tax
consequences of the Reorganization that are applicable to Fund shareholders. It
is based on the Internal Revenue Code of 1986, as amended (the "Code"),
applicable Treasury Regulations, judicial authority, and administrative rulings
and practice, all as of the date of this Proxy and all of which are subject to
change, including changes with retroactive effect. The discussion below does not
address any state, local or foreign tax consequences of the Reorganization. A
Fund shareholder's tax treatment may vary depending upon his or her particular
situation.
The obligation of the Funds and the Successor Funds to consummate the
Reorganization is conditioned upon the receipt by Reserves and Funds Trust of an
opinion of Morrison & Foerster LLP. Such opinion must be reasonably acceptable
to Reserves and Funds Trust substantially to the effect that, on the basis of
the representations set forth or referred to in the opinion, the Reorganization,
with respect to each Fund and its corresponding Successor Fund, will be treated
for federal income tax purposes as a tax-free reorganization under Section
368(a) of the Code and that the Fund and its corresponding Successor Fund will
each be a party to a reorganization within the meaning of Section 368(b) of the
Code. Provided that the Reorganization so qualifies and each Fund and its
corresponding Successor Fund are so treated:
o Neither the Funds nor the Successor Funds will recognize any gain or loss
as a result of the Reorganization.
14
<PAGE>
o A Fund shareholder will not recognize any gain or loss as a result of the
receipt of Successor Fund shares in exchange for such shareholder's Fund
shares pursuant to the Reorganization.
o A Fund shareholder's aggregate tax basis for the Successor Fund shares
received pursuant to the Reorganization will equal such shareholder's
aggregate tax basis in Fund shares held immediately before the
Reorganization.
o A Fund shareholder's holding period for the Successor Fund shares received
pursuant to the Reorganization will include the period during which the
Fund shares are held.
The tax opinion of Morrison & Foerster LLP described above is based upon
facts, representations and assumptions to be set forth or referred to in the
opinion, and on the continued accuracy and completeness of representations made
by Reserves, on behalf of the Funds, and Funds Trust, on behalf of the Successor
Funds, including representations in certificates to be delivered to Morrison &
Foerster LLP by the management of each of Reserves and Funds Trust, which if
incorrect in any material respect would jeopardize the conclusions reached by
Morrison & Foerster LLP in the opinion. In addition, in the event that Reserves
and Funds Trust are unable to obtain the tax opinion, they are permitted under
the Reorganization Agreement to waive the receipt of such tax opinion as a
condition to their obligation to consummate the Reorganization.
Certain shareholders, including insurance companies, tax-exempt
organizations, financial institutions or broker-dealers, a person who is neither
a citizen nor resident of the United States or entity that is not organized
under the laws of the United States or political subdivision thereof, a holder
of Fund shares as part of a hedge, straddle or conversion transaction, or a
person that does not hold Fund shares as a capital asset at the time of the
Reorganization may also be subject to special rules not discussed below.
Neither Reserves nor Funds Trust has requested or will request an advance
ruling from the Internal Revenue Service as to the federal income tax
consequences of the Reorganization or any related transaction. The Internal
Revenue Service may adopt positions contrary to that discussed below and such
positions could be sustained. A Fund shareholder is urged to consult with its
own tax advisors and financial planners as to the particular tax consequences of
the Reorganization to the Fund shareholder, including the applicability and
effect of any state, local or foreign laws, and the effect of possible changes
in applicable tax laws.
Regardless of whether the acquisition of the assets and liabilities of each
Fund by the corresponding Successor Fund qualifies as a tax-free reorganization
as described above, the sale of securities by the Fund prior to the
Reorganization, whether in the ordinary course of business or in anticipation of
the Reorganization, could result in a taxable distribution to Fund shareholders.
Since its formation, each Fund and Successor Fund believes it has qualified
as a separate "regulated investment company" under the Code. Accordingly, each
Fund and Successor Fund believes it has been, and expects to continue to be,
relieved of federal income tax liability on its taxable income distributions to
its shareholders.
15
<PAGE>
VOTING MATTERS
General Information
This Proxy is being furnished in connection with the solicitation of
proxies for the Meetings by the Boards. It is expected that the solicitation of
proxies will be primarily by mail. Officers and service contractors of Reserves
and Funds Trust also may solicit proxies by telephone or otherwise. In this
connection, Reserves and Funds Trust have 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 and/or Funds Trust a written notice of
revocation addressed to Reserves and/or Funds Trust 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 and/or its affiliates.
Only shareholders of record at the close of business on January 15, 2001
will be entitled to vote at the Meetings. On that date, xxx,xxx,xxx shares of
Nations Marsico Growth & Income Fund, xxx,xxx,xxx shares of Nations Marsico
Focused Equities Fund and xxx,xxx,xxx shares of Nations Marsico 21st Century
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 Nations Marsico Growth & Income
Fund and Nations Marsico Focused Equities 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. A quorum is constituted with respect to
Nations Marsico 21st Century Fund by the presence in person or by proxy of the
holders of one-third of the outstanding shares of such Fund entitled to vote at
the Meeting.
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 and the Reorganization 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
16
<PAGE>
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 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 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. With respect to Nations Marsico Growth & Income
Fund, Nations Marsico Focused Equities Fund and Nations Marsico 21st Century
Fund, the New Agreement must be approved by a majority of the outstanding
interests in the corresponding Master Portfolio. Each of Nations Marsico Growth
& Income Fund, Nations Marsico Focused Equities Fund and Nations Marsico 21st
Century Fund will cast its interests in its corresponding Master Portfolio in
the same proportion as those votes present and cast at the Meeting of each such
Fund's shareholders, assuming that such Meetings are convened with a quorum of
shareholders.
If the New Agreement is not approved by May 31, 2001, Marsico Capital 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.
The Reorganization Agreement must be approved by a majority of the shares
of each relevant Fund present at the Meetings in person or by proxy.
A vote of the shareholders of the Successor Funds is not being solicited,
since their approval or consent is not necessary for the Reorganization.
17
<PAGE>
Principal Shareholders
The table below shows the name, address and share ownership of each person
known to Reserves and Funds Trust to have ownership with respect to 5% or more
of a class of a Fund as of January 15, 2001. Each shareholder is known to own as
of record the shares indicated below. Any shareholder known to Reserves and/or
Funds Trust to own such shares beneficially is designated by an asterisk.
<TABLE>
<CAPTION>
Percentage of
Class; Amount of Percentage Percentage Fund Post
Fund Name and Address Shares Owned of Class of Fund Closing
------- ------------------ ----------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
[TBD]
</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 January 15, 2001, Bank of America, N.A.
had voting control of [ ]% of Nations Marsico Growth & Income Fund's outstanding
shares, [ ]% of Nations Marsico Focused Equities Fund's outstanding shares and
[ ]% of Nations Marsico 21st Century Fund's outstanding shares. Accordingly, the
Bank of America may be considered to "control" such Funds. The address of Bank
of America, N.A. is: 1401 Elm Street, 11th Floor, Dallas, TX 75202-2911. Bank of
America, N.A.'s control is likely to increase the chance that the Funds'
shareholders will approve the proposed items.
As of January 15, 2001, the officers and Trustees of each of Reserves and
Funds Trust, together, owned less than 1% of any class of a Fund.
Annual Meetings and Shareholder Meetings
Neither Reserves nor Funds Trust presently holds annual meetings of
shareholders for the election of Trustees and other business unless otherwise
required by the 1940 Act.
18
<PAGE>
OTHER BUSINESS
The Boards know 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 and/or Funds Trust 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 AND/OR FUNDS TRUST WILL FURNISH, WITHOUT CHARGE, COPIES OF THE
MARCH 31, 2000 ANNUAL REPORT AND THE SEPTEMBER 30, 2000 SEMI-ANNUAL REPORT FOR
NATIONS MARSICO GROWTH & INCOME FUND, NATIONS MARSICO FOCUSED EQUITIES FUND AND
NATIONS MARSICO 21ST CENTURY FUND TO ANY SHAREHOLDER UPON REQUEST ADDRESSED TO:
NATIONS RESERVES OR NATIONS FUNDS TRUST, ONE BANK OF AMERICA PLAZA, 101 SOUTH
TRYON STREET, CHARLOTTE, N.C. 28255 OR BY TELEPHONE AT 1-800-321-7854.
19
<PAGE>
APPENDIX I
COMPARISON OF FUNDAMENTAL POLICIES AND LIMITATIONS OF THE FUNDS AND
THE SUCCESSOR FUNDS
Fundamental Investment Policies and Limitations
<TABLE>
<S> <C>
The Funds may not: The Successor Funds may not:
1. Underwrite any issue of securities within the 1. Underwrite any issue of securities within the
meaning of the 1933 Act except when a Fund meaning of the 1933 Act except when it might
might technically be deemed to be an technically be deemed to be an underwriter
underwriter either (a) in connection with the either (a) in connection with the disposition of
disposition of a portfolio security, or (b) in a portfolio security, or (b) in connection with
connection with the purchase of securities the purchase of securities directly from the
directly from the issuer thereof in accordance issuer thereof in accordance with its investment
with its investment objective. This restriction objective. This restriction shall not limit the
shall not limit the Fund's ability to invest in Fund's ability to invest in securities issued by
securities issued by other registered investment other registered investment companies.
companies.
2. Purchase or sell real estate, except a Fund may 2. Purchase or sell real estate, except a Fund may
purchase securities of issuers which deal or purchase securities of issuers which deal or
invest in real estate and may purchase securities invest in real estate and may purchase securities
which are secured by real estate or interests in which are secured by real estate or interests in
real estate. real estate.
3. Purchase or sell commodities, except that a 3. Purchase or sell commodities, except that a
Fund may to the extent consistent with its Fund may to the extent consistent with its
investment objective, invest in securities of investment objective, invest in securities of
companies that purchase or sell commodities or companies that purchase or sell commodities or
which invest in such programs, and purchase which invest in such programs, and purchase
and sell options, forward contracts, futures and sell options, forward contracts, futures
contracts, and options on futures contracts. This contracts, and options on futures contracts. This
limitation does not apply to foreign currency limitation does not apply to foreign currency
transactions including without limitation transactions including without limitation
forward currency contracts. forward currency contracts.
</TABLE>
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<TABLE>
<S> <C>
4. Purchase any securities which would cause 25% 4. Purchase any securities which would cause 25%
or more of the value of its total assets at the or more of the value of its total assets at the
time of purchase to be invested in the securities time of purchase to be invested in the securities
of one or more issuers conducting their of one or more issuers conducting their
principal business activities in the same principal business activities in the same
industry, provided that: (a) there is no limitation industry, provided that: (a) there is no limitation
with respect to obligations issued or guaranteed with respect to obligations issued or guaranteed
by the U.S. Government, any state or territory by the U.S. Government, any state or territory
of the United States, or any of their agencies, of the United States, or any of their agencies,
instrumentalities or political subdivisions, and instrumentalities or political subdivisions, and
(b) notwithstanding this limitation or any other (b) notwithstanding this limitation or any other
fundamental investment limitation, assets may fundamental investment limitation, assets may
be invested in the securities of one or more be invested in the securities of one or more
management investment companies to the management investment companies to the
extent permitted by the 1940 Act, the rules and extent permitted by the 1940 Act, the rules and
regulations thereunder and any exemptive relief regulations thereunder and any exemptive relief
obtained by the Funds. obtained by the Funds.
5. Make loans, except to the extent permitted by 5. Make loans, except to the extent permitted by
the 1940 Act, the rules and regulations the 1940 Act, the rules and regulations
thereunder and any exemptive relief obtained thereunder and any exemptive relief obtained
by the Funds. by the Funds.
6. Borrow money, issue senior securities or 6. Borrow money or issue senior securities except
mortgage, pledge or hypothecate assets except to the extent permitted by the 1940 Act, the
to the extent permitted by the 1940 Act, the rules and regulations thereunder and any
rules and regulations thereunder and any exemptive relief obtained by the Funds.
exemptive relief obtained by the Funds.
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
7. Except for the Marsico Focused Equities Fund, 7. Except for Nations Marsico Focused Equities
purchase securities (except securities issued or Fund, purchase securities (except securities
guaranteed by the U.S. Government, its issued or guaranteed by the U.S. Government,
agencies or instrumentalities) of any one issuer its agencies or instrumentalities) of any one
if, as a result, more than 5% of its total assets issuer if, as a result, more than 5% of its total
will be invested in the securities of such issuer assets will be invested in the securities of such
or it would own more than 10% of the voting issuer or it would own more than 10% of the
securities of such issuer, except that (a) up to voting securities of such issuer, except that
25% of its total assets may be invested without (a) up to 25% of its total assets may be
regard to these limitations and (b) a Fund's invested without regard to these limitations and
assets may be invested in the securities of one (b) a Fund's assets may be invested in the
or more management investment companies to securities of one or more management
the extent permitted by the 1940 Act. The investment companies to the extent permitted
Marsico Focused Equities Fund may not by the 1940 Act, the rules and regulations
purchase securities of any one issuer (other than thereunder and any exemptive relief obtained
U.S. Government Obligations) if, immediately by the Funds.
after such purchase, more than 25% of the
value of a Fund's total assets would be invested
in the securities of one issuer, and with respect
to 50% of such Fund's total assets, more than
5% of its assets would be invested in the
securities of one issuer.
</TABLE>
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APPENDIX II
<TABLE>
<CAPTION>
Sub-Advisory
Assets in Millions Total Fee to
(as of July 31, 2000) Advisory Fee Marsico Capital
----------------------- -------------- ---------------
<S> <C> <C> <C>
Marsico Focus Fund .......................................... 0.85% 0.85%
Marsico Growth & Income Fund ................................ 0.85% 0.85%
Marsico 21st Century Fund ................................... 0.85% 0.85%
Marsico International Opportunities Fund .................... 0.85% 0.85%
Marsico Capital Growth Portfolio, a series of American
Skandia Advisor Funds, Inc. ............................... $ 1,887.7 0.90% 0.45%
Marsico Capital Growth Fund, a series of American
Skandia Advisory Funds, Inc. .............................. $ 1,073.6 1.00% 0.45%
Style Select Series Focus Portfolio Fund .................... $ 645.9 0.85% 0.40%
Style Select Focused Growth & Income Portfolio Fund ......... $ 103.4 1.00% 0.45%
Seasons Series Trust Focus Growth Portfolio
Variable Annuity .......................................... $ 5.0 1.00% 0.40%*
Frank Russell Investment Company Equity I fund .............. $ 126.4 0.55% 0.35%
Frank Russell Investment Company Diversified
Equity Fund ............................................... $ 124.2 0.73% 0.35%
Enterprise Capital Appreciation Fund ........................ $ 285.6 0.75% 0.45%
Enterprise Accumulation Trust Variable Annuity .............. $ 68.7 0.75% 0.45%
</TABLE>
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* A $100,000 bonus fee may be payable annually to the sub-adviser based upon
performance.
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Nations Reserves
Exhibit Index
Exhibit No. Description
----------- -----------
EX-1 Form of Proxy Ballots
EX-2 Form of Agreement and Plan of Reorganization
