As filed with the Securities and Exchange Commission
on January 27, 1999
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. ___ |_|
Post-Effective Amendment No. ___ |_|
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1940 |_|
Amendment No. ___ |_|
(Check appropriate box or boxes)
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NATIONS FUND PORTFOLIOS, INC.
(Exact Name of Registrant as specified in Charter)
111 Center Street
Little Rock, Arkansas 72201
(Address of Principal Executive Offices, including Zip Code)
--------------------------
Registrant's Telephone Number, including Area Code: (800) 626-2275
Richard H. Blank, Jr.
c/o Stephens Inc.
111 Center Street
Little Rock, Arkansas 72201
(Name and Address of Agent for Service)
With copies to:
Robert M. Kurucza, Esq. Carl Frischling, Esq.
Marco E. Adelfio, Esq. Kramer, Levin, Naftalis
Morrison & Foerster LLP & Frankel
2000 Pennsylvania Ave., N.W. 919 3rd Avenue
Suite 5500 New York, New York 10022
Washington, D.C. 20006
It is proposed that this filing will become effective on February 26, 1999
pursuant to Rule 488.
No filing fee is required under the Securities Act of 1933 because an indefinite
number of shares of beneficial interest in the Registrant, without par value,
has previously been registered pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended. The Registrant filed on June 25, 1998, the
notice required by Rule 24f-2 for its fiscal year ended March 31, 1998 (File No.
33-89742; 811-08982).
<PAGE>
NATIONS FUND PORTFOLIOS, INC.
CROSS-REFERENCE SHEET
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- -------- ------------ ------------------
1 Beginning of Registration Statement COVER PAGE OF REGISTRATION
and Outside Front Cover Page of STATEMENT; CROSS-REFERENCE
Prospectus SHEET; FRONT COVER PAGE OF
PROXY STATEMENT/PROSPECTUS
2 Beginning and Outside Back Cover TABLE OF CONTENTS
Page of Prospectus
3 Fee Table, Synopsis Information, SUMMARY --FEE TABLES;
and Risk Factors APPENDIX II--EXPENSE
SUMMARIES OF THE FUNDS;
SUMMARY--PROPOSED
CONSOLIDATION;
SUMMARY--OVERVIEW OF THE
FUNDS; SUMMARY--FEDERAL
INCOME TAX CONSEQUENCES;
SUMMARY--BOARD CONSIDERATION;
SUMMARY--PRINCIPAL RISK
FACTORS; SUMMARY--VOTING
INFORMATION.
4 Information About the THE PROPOSED
Transaction CONSOLIDATION-DESCRIPTION OF
THE AGREEMENT; THE PROPOSED
CONSOLIDATION--BOARD
CONSIDERATION; THE PROPOSED
CONSOLIDATION--CAPITALIZATION
OF EACH FUND; THE PROPOSED
CONSOLIDATION--FEDERAL INCOME
TAX CONSEQUENCES.
5 Information About the Registrant ORGANIZATION OF THE COMPANY
6 Information About the Company Being NOT APPLICABLE
Acquired
<PAGE>
7 Voting Information VOTING MATTERS
8 Interest of Certain Persons and NOT APPLICABLE
Experts
9 Additional Information Required for NOT APPLICABLE
Reoffering by Persons Deemed to be
Underwriters
PART B
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STATEMENT OF ADDITIONAL
ITEM NO. ITEM CAPTION INFORMATION CAPTION
- -------- ------------ -------------------
10 Cover Page COVER PAGE
11 Table of Contents TABLE OF CONTENTS
12 Additional Information About the INCORPORATION OF DOCUMENTS BY
Registrant REFERENCE IN STATEMENT OF
ADDITIONAL INFORMATION
13 Additional Information About the NOT APPLICABLE
Company Being Acquired
14 Financial Statements EXHIBITS TO STATEMENT OF
ADDITIONAL INFORMATION
PART C
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ITEM NO.
- --------
15-17 Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C of this
Registration Statement.
<PAGE>
THE FOLLOWING ITEMS ARE HEREBY INCORPORATED BY REFERENCE INTO VARIOUS PARTS OF
THIS REGISTRATION STATEMENT:
NATIONS FUND PORTFOLIOS, INC. ("NATIONS")
From Post-Effective Amendment No. 8 of Nations' Registration Statement, filed
July 31, 1998 (SEC File Nos. 33-89742; 811-08982):
Prospectuses for the Primary A, Primary B, Investor A, Investor B and
Investor C Shares of Nations Pacific Growth Fund and Nations Emerging
Markets Fund, dated August 1, 1998, as supplemented.
Statement of Additional Information for the Nations Pacific Growth Fund
and Nations Emerging Markets Fund, dated August 1, 1998.
The audited financial statements and related independent accountants' reports
for the Nations Pacific Growth Fund and Nations Emerging Markets Fund contained
in the Annual Report for the fiscal year ended March 31, 1998.
The unaudited financial statements for the Nations Pacific Growth Fund and
Nations Emerging Markets Fund, contained in the Semi-Annual Report for the
fiscal period ended September 30, 1998.
<PAGE>
NATIONS FUND PORTFOLIOS, INC.
Nations Pacific Growth Fund
One NationsBank Plaza
Charlotte, NC 28255
TELEPHONE: (800) 652-5096
February 26, 1999
Dear Shareholder:
On behalf of the Board of Directors of Nations Fund Portfolios, Inc.
(the "Company"), we are pleased to invite you to a special meeting of
shareholders of the Company's Nations Pacific Growth Fund (the "Pacific Growth
Fund") to be held at 10:00 a.m. (Eastern time) on March 29, 1999, at the
Company's offices on the 33rd Floor, One NationsBank Plaza, Charlotte, North
Carolina (the "Meeting"). At the Meeting, you will be asked to approve a
proposed Agreement and Plan of Consolidation and Liquidation, dated as of
January __, 1999 (the "Consolidation Agreement"), by and between the Pacific
Growth Fund and the Company's Nations Emerging Markets Fund (the "Emerging
Markets Fund").
Because of market depreciation and redemption activity attributable to
the recent financial crises in Asia, the Pacific Growth Fund's assets have
recently declined to levels that make it inefficient for the Pacific Growth Fund
to continue to operate on a stand-alone basis. Accordingly, it is proposed that
the Pacific Growth Fund be consolidated into the Emerging Markets Fund, another
international equity mutual fund in the Nations Funds Family (the
"Consolidation"). The Consolidation has been proposed in order to offer
shareholders a more geographically diverse long-term international equity
investment than the Pacific Growth Fund's focused Pacific rim exposure, and to
avoid liquidation of the Fund. The proposed Consolidation would combine two
Funds with generally similar investment objectives into a single Fund. The
Consolidation is intended to benefit shareholders by:
(i) offering them total operating expense ratios (after waivers) that
are expected to be equal to those they currently experience;
(ii) improving efficiency in the operation of the Funds, including
potentially achieving economies of scale and greater portfolio diversification;
(iii) facilitating investment management, administration and marketing
of the combined Fund; and
(iv) eliminating duplicative shareholder costs and portfolio holdings.
<PAGE>
If shareholder approval is obtained and the other conditions to the
consolidation are satisfied, it is anticipated that the Pacific Growth Fund will
be consolidated into the Emerging Markets Fund in late March 1999, when your
Pacific Growth Fund shares will be exchanged for shares of the Emerging Markets
Fund of equal dollar value.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
TO APPROVE THE PROPOSED CONSOLIDATION.
The formal Notice of Special Meeting, a Combined Proxy
Statement/Prospectus and a Proxy Ballot are enclosed.
Whether or not you plan to attend the Special Meeting, you may vote by
proxy by Marking, signing, dating and returning the enclosed Proxy Ballot(s) in
the enclosed postage-paid envelope;
YOUR VOTE IS IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT
YOU OWN. PLEASE VOTE BY RETURNING YOUR PROXY BALLOT(S) TODAY, EITHER BY
TELEFACSIMLIE (FRONT AND BACK) AT (704) 388-2641 OR IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
The proposed Consolidation and the reasons for the unanimous
recommendation of the Company's Board are discussed in detail in the enclosed
materials, which you should read carefully. If you have any questions about the
Consolidation, please do not hesitate to contact the Company at the number set
forth above.
We look forward to seeing you at the Meeting or receiving your Proxy
Ballot(s) so that your shares may be voted at the Meeting.
Sincerely,
A. Max Walker
President and Chairman of the Board of Directors
2
<PAGE>
NATIONS FUND PORTFOLIOS, INC.
Nations Pacific Growth Fund
One NationsBank Plaza
Charlotte, NC 28255
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 20, 1999
To Pacific Horizon Fund Shareholders:
NOTICE IS GIVEN THAT a special meeting of the shareholders (the
"Meeting") of the Nations Pacific Growth Fund (the "Pacific Growth Fund"), a
series of Nations Fund Portfolios, Inc. (the "Company"), will be held at 10:00
a.m., Eastern time, on March 29, 1999, at the Company's offices on the 33rd
Floor, One NationsBank Plaza, Charlotte, North Carolina, for purpose of
considering and voting upon:
ITEM 1. A proposed Agreement and Plan of Consolidation and Liquidation,
dated January --, 1999 (the "Consolidation Agreement"), between the
Pacific Growth Fund and the Company's Nations Emerging Markets Fund
(the "Emerging Markets Fund" and, together with the Pacific Growth
Fund, the "Funds"). The Consolidation Agreement provides for the
transfer of the assets and liabilities of the Pacific Growth Fund to
the Emerging Markets Fund in exchange for shares of equal value of
corresponding classes of the Emerging Markets Fund (the
"Consolidation"). As a result of the Consolidation, shareholders of the
Pacific Growth Fund will become shareholders of the Emerging Markets
Fund.
ITEM 2. Such other business as may properly come before the Meeting or
any adjournment(s).
Item 1 is described in the attached Combined Proxy
Statement/Prospectus.
YOUR DIRECTORS UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF THE
PROPOSAL.
Shareholders of record as of the close of business on February 5, 1999
are entitled to notice of, and to vote at, the Meeting or any adjournment(s)
thereof.
<PAGE>
SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN PROMPTLY BY
TELEFACSIMILE (FRONT AND BACK) AT (704) 388-2641 OR IN THE ENCLOSED ENVELOPE
EACH ACCOMPANYING PROXY CARD, WHICH IS BEING SOLICITED BY THE COMPANY'S BOARD OF
DIRECTORS. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. SHAREHOLDERS MAY
ALSO RETURN PROXIES BY TELEFACSIMILE (FRONT AND BACK) AT (704) 388-2641. PROXIES
MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO THE
COMPANY A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY
ATTENDING THE MEETING AND VOTING IN PERSON.
By Order of the Board of Directors,
Richard H. Blank, Jr.
Secretary
<PAGE>
COMBINED PROXY STATEMENT/PROSPECTUS
Dated February 26, 1999
NATIONS FUND PORTFOLIOS, INC.
101 South Tryon Street
Charlotte, NC 28255
1-800-652-5096
This Combined Proxy Statement/Prospectus ("Proxy/Prospectus") is
furnished in connection with the solicitation of proxies by the Board of
Directors of Nations Fund Portfolios, Inc. (the "Company") at a Special Meeting
of Shareholders of the Company's Nations Pacific Growth Fund (the "Pacific
Growth Fund") to be held March 29, 1999 at 10:00 a.m. (Eastern time) at the
Company's offices at 101 South Tryon Street, 33rd Floor, Charlotte, North
Carolina. This Special Meeting and any adjournment(s) are referred to as the
"Meeting." The Meeting has been called to consider the following proposal, and
to conduct such other business as may come before the Meeting.
PROPOSAL: To approve an Agreement and Plan of Consolidation and
Liquidation dated January --, 1999 (the "Consolidation Agreement"),
between the Pacific Growth Fund and the Company's Nations Emerging
Markets Fund (the "Emerging Markets Fund" and, together with the
Pacific Growth Fund, the "Funds"). The Consolidation Agreement provides
for the transfer of the assets and liabilities of the Pacific Growth
Fund to the Emerging Markets Fund in exchange for shares of equal value
of corresponding classes of the Emerging Markets Fund (the
"Consolidation"). As a result of the Consolidation, shareholders of the
Pacific Growth Fund will become shareholders of the Emerging Markets
Fund.
This Proxy/Prospectus is the Pacific Growth Fund's Proxy Statement for
the Special Meeting of Shareholders and will be mailed to shareholders on or
about February 26 1999. The Proxy/Prospectus sets forth concisely the
information that a Pacific Growth Fund shareholder should know before voting and
should be retained for future reference.
Additional information about the Consolidation is set forth in the
Statement of Additional Information dated February 26, 1999. The information
contained in the Emerging Markets Fund prospectuses for the corresponding share
classes, dated August 1, 1998, as supplemented, is incorporated by reference
into this Proxy/Prospectus. In addition, a copy of the Emerging Markets Fund
prospectus for the corresponding share class(es) accompanies this
Proxy/Prospectus. The Annual Report for the year ended March 31, 1998 and the
Semi-Annual Report for the period ended September 30, 1998 for the Emerging
Markets Fund is the same Annual Report and Semi-Annual Report that Pacific
Growth Fund shareholders have already received. Additional copies of each
document are available without charge by calling or writing the Company at the
telephone number or address stated above. Each of these documents also is
available on the website of the Securities and Exchange Commission (the "SEC")
at www.sec.gov.
1
<PAGE>
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE EMERGING MARKETS FUND ARE NOT DEPOSITS OR OBLIGATIONS OF
OR GUARANTEED OR ENDORSED BY BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, NATIONSBANK, N.A. OR ANY OF THEIR AFFILIATES OR ANY OTHER BANK.
SUCH SHARES ARE NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
MUTUAL FUND SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL. THE DISTRIBUTOR OF THE NATIONS FUNDS IS STEPHENS INC.
2
<PAGE>
TABLE OF CONTENTS
PAGE
----
I. SUMMARY
About the Proposed Consolidation............................. x
A. The Consolidation Agreement......................... x
B. Purpose of the Consolidation........................ x
C. Overview of the Funds............................... x
D. Risk Factors........................................ x
E. Federal Income Tax Consequences..................... x
F. Board Consideration................................. x
. Voting Information........................................... x
II. ABOUT THE PROPOSED CONSOLIDATION
Description of the Consolidation Agreement................... x
Purpose of the Consolidation................................. x
Organization of the Company.................................. x
Capitalization of Each Fund.................................. x
Comparison of Investment Objectives and Policies............. x
Comparison of Total Expense Ratios........................... x
Investment Adviser and Other Service Providers............... x
Sales Loads, Shareholder Transactions and Services........... x
Federal Income Tax Consequences.............................. x
Board Consideration.......................................... x
Other Information............................................ x
III. INFORMATION RELATING TO VOTING MATTERS
General Information.......................................... x
Quorum....................................................... x
Annual Meetings and Shareholder Meetings..................... x
Shareholder Approvals........................................ x
Other Business............................................... x
IV. OTHER INFORMATION
How to Obtain Additional Information About the Funds......... x
Financial Statements......................................... x
Management's Discussion of Fund Performance.................. x
Shareholder Inquiries........................................ x
APPENDICES
I. THE CONSOLIDATION AGREEMENT
II. EXPENSE SUMMARIES OF THE FUNDS
III. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
3
<PAGE>
I. SUMMARY
The following is a summary of certain information relating to the
proposal to be considered at the Meeting. More complete information about the
proposal is contained throughout the Proxy/Prospectus.
ABOUT THE PROPOSED CONSOLIDATION
A. FEES AND EXPENSES. As shown below, as of December 31, 1998, the current and
PRO FORMA annualized total expense ratios of the relevant share class of the
Emerging Markets Fund (after fee waivers and/or expense reimbursements) are
equal to those of the Pacific Growth Fund; before fee waivers and/or expense
reimbursements, such current and PRO FORMA annualized total expense ratios of
the share classes of the Emerging Markets Fund are lower than those of the
Pacific Growth Fund. For more detail concerning fund expenses, see Appendix II.
TOTAL EXPENSE INFORMATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
PRO FORMA
PACIFIC GROWTH FUND/ TOTAL EMERGING MARKETS FUND/ TOTAL EMERGING MARKETS FUND/ TOTAL
SHARE CLASS OPERATING SHARE CLASS OPERATING CLASS POST-CONSOLIDATION OPERATING
EXPENSES EXPENSES EXPENSES
BEFORE/AFTER BEFORE/AFTER BEFORE/AFTER
WAIVERS WAIVERS WAIVERS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Pacific Growth Fund Emerging Markets Fund Emerging Markets Fund
Primary A Shares 3.11%/2.00% Primary A Shares 2.79%/2.00% Primary A Shares 2.46%/2.00%
Primary B Shares 3.71%/2.50% Primary B Shares 3.39%/2.50% Primary B Shares 3.06%/2.50%
Investor A Shares 3.36%/2.25% Investor A Shares 3.04%/2.25% Investor A Shares 2.71%/2.25%
Investor B Shares 4.11%/3.00% Investor B Shares 3.79%/3.00% Investor B Shares 3.46%/3.00%
Investor C Shares 4.11%/3.00% Investor C Shares 3.79%/3.00% Investor C Shares 3.46%/3.00%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B. THE CONSOLIDATION AGREEMENT. At a meeting held on October 7, 1998, the
Company's Board of Directors approved the Consolidation Agreement. If approved
by shareholders and all conditions to the proposed consolidation have been
satisfied, consummation of the consultation will result in shareholders of the
Pacific Growth Fund becoming shareholders of a corresponding class of the
Emerging Markets Fund. The Consolidation Agreement provides for (i) the transfer
of all of the assets and liabilities of the Pacific Growth Fund to the Emerging
Markets Fund in exchange for shares of designated classes of the Emerging
Markets Fund; and (ii) the distribution of these Emerging Markets Fund shares to
shareholders of the Pacific Growth Fund in liquidation of the Pacific Growth
Fund. Upon completion of the Consolidation, each Pacific Growth Fund shareholder
will hold shares of the Emerging Markets Fund that are equal in value to the
shares of the Pacific Growth Fund held by the shareholder immediately before the
Consolidation.
Shareholders of the Pacific Growth Fund would receive shares of the
class of the Emerging Markets Fund shown below:
4
<PAGE>
CONSOLIDATION MAP
WILL RECEIVE THE FOLLOWING
PACIFIC GROWTH FUND SHAREHOLDERS CLASSES OF EMERGING MARKETS
OWNING THE FOLLOWING CLASSES: FUND SHARES:
----------------------------- ------------
Primary A shares Primary A shares
Primary B shares Primary B shares
Investor A shares Investor A shares
Investor B shares Investor B shares
Investor C shares Investor C shares
The Consolidation Agreement must be approved by a vote of a majority of
the shareholders of the Pacific Growth Fund. The Meeting of the Pacific Growth
Fund's shareholders to vote on the Consolidation Agreement and other matters is
scheduled for March 29,1999. The Consolidation, if approved, is expected to
occur on or about March 31, 1999. For more information about the Consolidation
Agreement, see "About the Proposed Consolidation--Description of the
Consolidation Agreement."
C. PURPOSE OF THE CONSOLIDATION. Because of market depreciation and redemption
activity attributable to the recent financial crises in Asia, the Pacific Growth
Fund's assets have declined to [$12.5 million as of September 30, 1998.]
Accordingly, the Consolidation has been proposed in order to offer shareholders
a more geographically diverse long-term international equity investment than the
Pacific Growth Fund's focused Pacific Rim exposure. The proposed Consolidation
would combine two Funds with generally similar investment objectives into a
single Fund. The Consolidation is intended to benefit shareholders by: (i)
offering them total expense operating expense ratios (after waivers) that are
expected to be lower than those currently experienced; (ii) improving efficiency
in the operation of the Funds, including potentially achieving economies of
scale and greater portfolio diversification; (iii) facilitating investment
management, administration and marketing of the combined Fund; and (iv)
eliminating duplicative shareholder costs and portfolio holdings. For more
information about the purpose of the Consolidation, see "About the Proposed
Consolidation--Purpose of the Consolidation."
D. OVERVIEW OF THE FUNDS. Set forth below is a brief description of certain key
features of the Funds.
Investment Objectives and Policies. The investment objective and
policies of the Pacific Growth Fund are generally similar to the
investment objective and policies of the Emerging Markets Fund. Each
Fund seeks to provide investors with long-term capital appreciation by
investing primarily in equity securities of foreign companies. However,
while the Pacific Growth Fund typically invests in securities of
companies located in the Pacific Basin and the Far East (excluding
Japan), the Emerging Markets Fund typically invests in securities of
companies located in emerging market countries. Emerging market
countries include those located in the Pacific Basin and the Far East
(excluding Japan), but also include India and countries in Latin
America, Eastern Europe and Africa. For additional information about
the similarities and differences between the investment objectives and
policies of the Funds, see "About the Proposed
Consolidation--Comparison of Investment Objectives and Policies."
5
<PAGE>
Operating Expenses. Taking into account voluntary fee waivers and/or
expense reimbursements, total operating expenses of each class of
shares of the Emerging Markets Fund is expected to be the same as the
total operating expenses of the corresponding class of shares of the
Pacific Growth Fund. The current and PRO FORMA total operating expense
ratios for each Fund and class are shown on page [ ]. For more detailed
expense information, see "Appendix II."
Service Providers. The Funds have identical investment advisers,
investment sub-advisers, administrators, distributors, transfer agents
and independent auditors, as discussed under "About the Proposed
Consolidation--Investment Adviser and Other Service Providers."
Purchase, Redemption and Other Procedures. The purchase, redemption,
dividend, exchange and other policies and procedures of the Funds are
identical. PLEASE NOTE THAT NO FRONT-END OR CONTINGENT DEFERRED SALES
LOADS WILL BE IMPOSED ON ANY OF THE SHAREHOLDERS OF THE PACIFIC GROWTH
FUND AS A RESULT OF THE EXCHANGE OF SHARES IN THE CONSOLIDATION. For
more information concerning these policies and procedures, see "About
the Proposed Consolidation--Shareholder Transactions and Services."
E. RISK FACTORS. Because of the similarities of the investment
objectives and policies of the Funds, an investment in the Emerging Markets Fund
will generally involve risks that are similar to those of the Pacific Growth
Fund. For example, investment by a Fund in common stocks and other equity
securities are subject to stock market risk. The value of the stocks that a Fund
holds, like the broader stock market, may decline over short or even extended
periods. Investors should also understand and consider carefully the special
risks involved in foreign investing. Such risks include, but are not limited to:
(1) restrictions on foreign investment and repatriation of capital; (2)
fluctuations in currency exchange rates, which can significantly affect a Fund's
share price; (3) costs of converting foreign currency into U.S. dollars and U.S.
dollars into foreign currencies; (4) greater price volatility and less
liquidity; (5) settlement practices, including delays, which may differ from
those customary in U.S. markets; (6) exposure to political and economic risks,
including the risk of nationalization, expropriation of assets and war; (7)
possible impositions of foreign taxes and exchange control and currency
restrictions; (8) lack of uniform accounting, auditing and financial reporting
standards; (9) less governmental supervision of securities markets, brokers and
issuers of securities; (10) less financial information available to investors;
and (11) difficulty in enforcing legal rights outside the United States. Both
Funds are subject to these risks.
6
<PAGE>
Certain of the risks associated with investments by the Funds in
foreign securities are heightened with respect to investment in developing
countries and emerging markets countries. Political and economic structures in
many emerging market countries, especially those in Eastern Europe, the Pacific
Basin, and the Far East, may be undergoing significant evolution and rapid
development, and may lack the social, political and economic stability
characteristic of more developed countries. Investing in emerging markets
securities also involves risks which are in addition to the usual risks inherent
in foreign investments. Some emerging market countries may have fixed or managed
currencies that are not free-floating against the U.S. dollar. Further, certain
currencies may not be traded internationally and some countries with emerging
securities markets have sustained long periods of substantially high inflation
or rapid fluctuation in inflation rates which can have negative effects on a
country's economy or securities markets.
Additionally, while the Funds intend, under normal market conditions,
to invest in securities of issuers located at least three different countries,
they may from time to time invest all of their assets in securities of issuers
located in one country. In such a case, events occurring in that country are
more likely to affect the Funds' investments.
F. FEDERAL INCOME TAX CONSEQUENCES. Shareholders of the Pacific Growth Fund
whose shares are held directly or in a taxable account and whose tax basis
differs from the value of the Emerging Markets Fund shares received by them at
the Closing will recognize a taxable gain or loss for federal income tax
purposes. Conversely, shareholders who hold Pacific Growth Fund shares in a
tax-deferred retirement account will not recognize a taxable gain or loss as a
result of the Consolidation. For more information about the tax consequences of
the Consolidation, see "About the Proposed Consolidation--Federal Income Tax
Consequences."
G. BOARD CONSIDERATION. In considering the Consolidation Agreement, the Board of
Directors of the Company, including the non-interested Directors, were advised
by their legal counsel as to their fiduciary duties under Maryland law and the
Investment Company Act of 1940, as amended (the "1940 Act") and the required
determinations that the Board should make under the Act in connection with the
Consolidation. After considering the relevant factors, the Board of Directors of
the Company, including a majority of the non-interested Directors, found on
behalf of the Pacific Growth Fund, that participation in the Consolidation, as
contemplated by the Consolidation Agreement, is in the best interests of the
Pacific Growth Fund and that the interests of the shareholders of the Pacific
Growth Fund will not be diluted as a result of the Consolidation. Similarly, the
Board found on behalf of the Emerging Markets Fund, that participation in the
Consolidation, as contemplated by the Consolidation Agreement, is in the best
interests of the Emerging Markets Fund and that the interests of the
shareholders of the Emerging Markets Fund will not be diluted as a result of the
Consolidation. For more information on the Board's considerations, see "About
the Proposed Consolidation--Board Consideration."
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT PACIFIC
GROWTH FUND SHAREHOLDERS VOTE FOR THE CONSOLIDATION AGREEMENT.
7
<PAGE>
VOTING INFORMATION.
This Proxy/Prospectus is being furnished in connection with the
solicitation of proxies by the Company's Board of Directors for the Meeting.
Only Pacific Growth Fund shareholders of record at the close of business on
February 5, 1999 will be entitled to vote at the Meeting. Each whole or
fractional share is entitled to a whole or fractional vote. Shares represented
by a properly executed proxy will be voted in accordance with the instructions
thereon or, if no specification is made, the persons named as proxies will vote
in favor of each proposal set forth in the Notice of Meeting. Proxies may be
revoked at any time before they are exercised by attending the meeting and
voting in person or by submitting to the Company (i) a written notice of
revocation or (ii) a subsequently executed proxy. For additional information,
including a description of the shareholder votes required for approval of the
proposal to be considered at the Meeting, see "Information Relating to Voting
Matters."
8
<PAGE>
II. ABOUT THE PROPOSED CONSOLIDATION
Important information about the Consolidation and the Consolidation
Agreement is summarized below. This summary is qualified by reference to the
Appendices at the end of this document.
DESCRIPTION OF THE CONSOLIDATION AGREEMENT. The Consolidation Agreement
provides that at the closing of the Consolidation (the "Closing") the assets and
liabilities of the Pacific Growth Fund will be transferred to the Emerging
Markets Fund in exchange for full and fractional shares of designated classes of
the Emerging Markets Fund. Primary A, Primary B, Investor A, Investor B and
Investor C shares of the Pacific Growth Fund will receive Primary A, Primary B,
Investor A, Investor B and Investor C shares, respectively, of the Emerging
Markets Fund.
The shares issued by the Emerging Markets Fund in the Consolidation
will have an aggregate value equal to the aggregate value of the shares of the
Pacific Growth Fund that are outstanding immediately before the Closing.
Immediately after the transfer of its assets and liabilities in
exchange for Emerging Markets Fund shares, the Pacific Growth Fund will
distribute the shares of the Emerging Markets Fund received in the Consolidation
to its shareholders in liquidation of the Pacific Growth Fund and in exchange
for the outstanding shares of the Pacific Growth Fund. Each Pacific Growth Fund
shareholder at the Closing will receive shares of the corresponding class of the
Emerging Markets Fund (as specified in the foregoing table on p. 4) of equal
value, and will receive any unpaid dividends or distributions that were declared
before the Closing on Pacific Growth Fund shares. The Emerging Markets Fund will
establish an account for each former shareholder of the Pacific Growth Fund
reflecting the appropriate number of Emerging Markets Fund shares distributed to
the shareholder. These accounts will be identical in all material respects to
the accounts currently maintained by the Pacific Growth Fund for each
shareholder.
Upon completion of the Consolidation, all outstanding shares of the
Pacific Growth Fund will be canceled, and the Pacific Growth Fund will wind up
its affairs and be dissolved under Maryland law. The stock transfer books of the
Pacific Growth Fund will be permanently closed as of the close of business on
the business day immediately preceding the Closing. Exchange or redemption
requests received thereafter will be deemed to be exchange or redemption
requests for shares of the Emerging Markets Fund distributed to the former
shareholders of the Pacific Growth Fund.
Each Fund will bear a PRO RATA portion of all Consolidation expenses,
including the costs associated with the Meeting and the Voting Materials. The
total of the costs that the Pacific Growth Fund will bear are estimated to be
$_______.
9
<PAGE>
PURPOSE OF THE CONSOLIDATION. As discussed above, because of market
depreciation and redemption activity attributable to the recent financial crises
in Asia, the Pacific Growth Fund's assets have declined to [$12.5 million
dollars as of September 30, 1998.] Accordingly, the Consolidation has been
proposed in order to offer shareholders a more geographically diverse, long-term
international equity investment than the Pacific Growth Fund's focused Pacific
Rim exposure. Management believes that the Consolidation would strengthen the
future viability of the Emerging Markets Fund on a combined basis. Both Funds
are currently of a relatively small size with little or no expectation of a
material addition of assets in the near future. The Board also considered that,
in light of volatility in the Asian markets, it would be desirable to combine
the Pacific Growth Fund into the Emerging Markets Fund to allow shareholders of
the Pacific Growth Fund greater geographical diversification. In this regard,
the Emerging Markets Fund does not intend to acquire all of the Pacific Growth
Fund's Asian-focused securities.
In addition, management believes the Consolidation will help the
combined Fund achieve economies of scale and eventually lower its transaction
costs and ongoing expenses. The Consolidation should also help eliminate
duplicative shareholder costs and facilitate the administration and marketing of
the combined Fund. Although some of these benefits will accrue to the investment
adviser, administrator and distributor of the Fund, some will be passed through
to shareholders. The benefits passed through to shareholders are expected to
include reductions in operating expense levels and greater portfolio
diversification.
ORGANIZATION OF THE COMPANY. The Company is registered as an open-end
management investment company under the 1940 Act and currently offers three
separate funds. The Company is one of several registered investment companies in
the Nations Funds Family, which collectively offer over sixty separate funds.
The Company is organized as a Maryland corporation and is subject to
the provisions of its Articles of Incorporation and By-Laws. Shares of the Funds
each have a par value of $.001 per share. Shares of the Funds are entitled to
one vote for each full share held and fractional votes for fractional shares
held, and will vote in the aggregate and not by class except as otherwise
required by law or when class voting is permitted by the Company's Board of
Directors. Shares of the Funds have no preemptive rights and have only such
conversion and exchange rights as the Company's Board of Directors may grant in
its discretion. When issued for payment as described in their respective
prospectuses, each Fund's shares are fully paid and non-assessable.
Each share of a class of a Fund represents an equal proportionate
interest in the Fund with other shares of the same class. Each share is entitled
to cash dividends and distributions earned on such shares as may be declared in
the discretion of the Board of Directors. Shares of each class bear a PRO RATA
portion of all operating expenses paid by the Fund, except that certain expenses
relating to class-specific services (such as distribution and shareholder
servicing fees) may be allocated to a particular class.
CAPITALIZATION OF EACH FUND. The following table shows the total net
assets, number of shares outstanding and net asset value per share of each Fund.
This information is generally referred to as the "capitalization" of each Fund.
The term "PRO FORMA capitalization" simply means the capitalization of the
Emerging Markets Fund after it has combined with the Pacific Growth Fund, I.E.,
as if the Consolidation had already occurred.
10
<PAGE>
The following table sets forth as of December 31, 1998 the
capitalization of each Fund and the PRO FORMA capitalization of the Emerging
Markets Fund adjusted to give effect to the Consolidation. The ongoing
investment performance and daily share purchase and redemption activity of each
Fund affects capitalization. Therefore, the capitalization of each Fund on the
Closing Date is likely to vary from the capitalization shown in the following
table.
PRO FORMA CAPITALIZATION TABLE AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
- --------------------------------- -------------------------- ---------------------- -----------------------
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING PER SHARE
- --------------------------------- -------------------------- ---------------------- -----------------------
<S> <C> <C> <C>
Pacific Growth Fund $9,754,999 1,605,791 $6.07
(Primary A Shares) (Primary A Shares) (Primary A Shares)
$11,248 1,851 $6.08
(Primary B Shares) (Primary B Shares) (Primary B Shares)
$696,794 115,060 $5.06
(Investor A Shares) (Investor A Shares) (Investor A Shares)
$919,023 152,641 $6.02
(Investor B Shares) (Investor B Shares) (Investor B Shares)
$46,699 5,949 $6.00
(Investor C Shares) (Investor C Shares) (Investor C Shares)
- --------------------------------- -------------------------- ---------------------- -----------------------
Emerging Markets Fund $14,335,962 1,923,099 $7.45
(Primary A Shares) ( Primary A Shares) (Primary A Shares)
$12,983 1,751 $7.41
(Primary B Shares) (Primary B Shares) (Primary B Shares)
$342,530 46,166 $7.42
(Investor A Shares) (Investor A Shares) (Investor A Shares)
$722,016 98,395 $7.34
(Investor B Shares) (Investor B Shares) (Investor B Shares)
$90,133 12,312 $7.32
(Investor C Shares) (Investor C Shares) (Investor C Shares)
- --------------------------------- -------------------------- ---------------------- -----------------------
11
<PAGE>
- -------------------------------- -------------------------- ---------------------- -----------------------
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING PER SHARE
- --------------------------------- -------------------------- ---------------------- -----------------------
PRO FORMA Emerging Markets Fund $24,090,961 3,232,495 $7.45
(Primary A Shares) (Primary A Shares) (Primary A Shares)
$24,231 3,269 $7.41
(Primary B Shares) (Primary B Shares) (Primary B Shares)
$1,039,324 140,074 $7.42
(Investor A Shares) (Investor A Shares) (Investor A Shares)
$1,641,039 223,602 $7.4
(Investor B Shares) (Investor B Shares) (Investor B Shares)
$125,832 17,189 $7.32
(Investor C Shares) (Investor C Shares) (Investor C Shares)
- --------------------------------- -------------------------- ---------------------- -----------------------
</TABLE>
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES. The investment
objectives and policies of the Funds, except as described below, are generally
similar. The chart below highlights the investment objective of each Fund and
some of each Fund's key investment policies. Additional information about each
Fund's investment objective and policies is contained in its prospectus and
statement of additional information.
Both Funds invest in companies in emerging market countries such as the
Pacific Basin and the Far East. However, the Emerging Markets Fund invests in a
broader range of emerging market countries. In particular, the Emerging Markets
Fund doesn't limit its investments to the Pacific Basin and the Far East as the
Pacific Growth Fund does.
<TABLE>
<CAPTION>
- ------------------ -------------------------------------------------- ------------------------------------------------
PACIFIC GROWTH FUND EMERGING MARKETS FUND
- ------------------ -------------------------------------------------- ------------------------------------------------
<S> <C> <C>
Investment The Pacific Growth Fund seeks to provide The Emerging Markets Fund seeks to provide
Objective: investors with long-term capital growth by investors with long-term growth by investing
investing primarily in equity securities of
primarily in equity securities of companies in
companies in the Pacific Basin and the Far East
emerging market countries. (excluding Japan).
- ------------------ -------------------------------------------------- ------------------------------------------------
Investment Under normal conditions, the Fund invests Under normal market conditions, the Fund
Policies: primarily in equity securities of countries in invests at least 65% of its total assets in
the Pacific Basin and the Far East (except equity securities of companies in emerging
Japan). The Pacific Basin and the Far East markets countries. The Fund considers
include Australia, Hong Kong, India, Indonesia, countries with emerging markets to include the
South Korea, Malaysia, New Zealand, Pakistan, following: (i) countries with an emerging
China, the Philippines, Singapore, Sri Lanka, stock market as defined by the International
Taiwan, Thailand, and other markets that may Finance Corporation; (ii) countries with low-
develop in the region. to middle-income economies according to the
World Bank; and (iii) countries listed in
Although the Fund may not invest in securities World Bank publications as developing.
issued by companies that conduct their principal Emerging market countries include, but are not
business in Japan, the Fund may invest in limited to: Argentina, Brazil, Chile, China,
securities that are traded on the Japanese stock the Czech Republic, Columbia, Ecuador, Greece,
exchange. Hong Kong, Indonesia, India, Malaysia, Mexico,
the Philippines, Poland, Portugal, Peru,
Russia, Singapore, South Africa, Thailand,
Taiwan and Turkey.
12
<PAGE>
- ------------------ -------------------------------------------------- ------------------------------------------------
PACIFIC GROWTH FUND EMERGING MARKETS FUND
- ------------------ -------------------------------------------------- ------------------------------------------------
The Fund is diversified and intends, under normal The Fund is diversified and intends, under normal
circumstances to invest in at least normal circumstances to invest in at least normal
circumstances to invest in at least three three circumstances to invest in at least three three
different countries, although it may different different countries, although it may different
countries, although it may invest all invest all countries, although it may invest all invest all
or a significant portion of its or a significant or a significant portion of its or a significant
portion of its assets in a assets in a single portion of its assets in a assets in a single
country. country.
The Fund focuses on equity securities but also The Fund focuses on equity securities but also
may invest in investment-grade debt may invest in may invest in investment-grade debt may invest in
investment-grade debt obligation. investment-grade debt obligation.
The Fund may invest in forward foreign exchange The Fund may invest in forward foreign exchange
contracts. contracts.
The Fund also may temporarily invest all of its The Fund also may temporarily invest all of its
assets in U.S. financial markets or in U.S. assets in U.S. financial markets or in U.S.
dollar-denominated instruments. dollar-denominated instruments.
- ------------------ -------------------------------------------------- ------------------------------------------------
</TABLE>
COMPARISON OF TOTAL EXPENSE RATIOS. As with all mutual funds, each
class of the Funds incurs various costs and expenses in connection with its
daily activities. The total of these costs and expenses is the "total expense
ratio" and is expressed as a percentage of the average daily net assets of each
class.
13
<PAGE>
The following table shows, as of December 31, 1998, (i) the current
annualized total expense ratio of the Pacific Growth Fund and Emerging Markets
Fund before and after fee waivers and/or expense reimbursements and (ii) the PRO
FORMA annualized total expense ratio of the Emerging Markets Fund, before and
after fee waivers and/or expense reimbursements, based upon the fee arrangements
that will be in place upon consummation of the Consolidation. This table shows
that the Emerging Markets Fund's PRO FORMA expense ratios both after waivers
and/or expense reimbursements are equal to those of the Pacific Growth Fund, and
that, before waivers and/or expense reimbursements, are lower than those of the
Pacific Growth Fund.
<TABLE>
<CAPTION>
TOTAL EXPENSE INFORMATION
- --------------------------------------------------------------------------------------------------------------------------------
PRO FORMA
PACIFIC GROWTH FUND/ TOTAL EMERGING MARKETS FUND/ TOTAL EMERGING MARKETS FUND/ TOTAL
SHARE CLASS OPERATING SHARE CLASS OPERATING CLASS POST-CONSOLIDATION OPERATING
EXPENSES EXPENSES EXPENSES
BEFORE/AFTER BEFORE/AFTER BEFORE/AFTER
WAIVERS WAIVERS WAIVERS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Pacific Growth Fund Emerging Markets Fund Emerging Markets Fund
Primary A Shares 3.11%/2.00% Primary A Shares 2.79%/2.00% Primary A Shares 2.46%/2.00%
Primary B Shares 3.71%/2.50% Primary B Shares 3.39%/2.50% Primary B Shares 3.06%/2.50%
Investor A Shares 3.36%/2.25% Investor A Shares 3.04%/2.25% Investor A Shares 2.71%/2.25%
Investor B Shares 4.11%/3.00% Investor B Shares 3.79%/3.00% Investor B Shares 3.46%/3.00%
Investor C Shares 4.11%/3.00% Investor C Shares 3.79%/3.00% Investor C Shares 3.46%/3.00%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT ADVISER AND OTHER SERVICE PROVIDERS. The Funds have the same
service providers. Upon completion of the Consolidation, these service providers
will continue to serve the Funds in the capacities indicated below.
SERVICE PROVIDERS FOR THE FUNDS
Investment Adviser NationsBanc Advisors, Inc. ("NBAI")
Investment Sub-Adviser Gartmore Global Partners ("Gartmore")
Distributor Stephens Inc. ("Stephens)
Co-Administrator NBAI
Co-Administrator Stephens
Sub-Administrator The Bank of New York
Custodian The Bank of New York
14
<PAGE>
Transfer Agent First Data Investor Services
Group, Inc.
Sub-Transfer Agent NationsBank, N.A. (for Primary
A and B shares only)
Independent Auditors PricewaterhouseCoopers LLP
Investment Advisory Services. NBAI is the investment adviser for each
Fund. Each Fund pays an advisory fee, computed daily and paid monthly, to NBAI
based on each Fund's average daily net assets. The advisory fee rate for the
Pacific Growth Fund is 0.90%. The advisory fee rate for the Emerging Markets
Fund is 1.10%. Gartmore is the investment sub-adviser for each Fund. NBAI pays
Gartmore sub-advisory fees, computed daily and paid monthly, at the annual rate
of 0.70% of Pacific Growth Fund's average daily net assets and 0.85% of Emerging
Markets Fund's average daily net assets. Gartmore is a joint venture structured
as a Delaware general partnership between NB Partner Corp., a wholly owned
subsidiary of NationsBank and Gartmore U.S. Limited, an indirect wholly owned
subsidiary of Gartmore Investment Management plc ("Gartmore, plc"), a publicly
listed U.K. Company which is the holding company for a leading U.K.-based
international fund management group of companies. National Westminster Bank plc
and affiliated parties own 100% of the equity of Gartmore plc.
Distribution and Shareholder Servicing Arrangements. Shares of the
Funds are distributed by Stephens, a broker-dealer registered under the
Securities Exchange Act of 1934 (the "1934 Act"). Pursuant to the Funds'
distribution plans adopted pursuant to Rule 12b-1 under the Act by certain
classes of the Funds, each Fund may compensate or reimburse Stephens for any
activities or expenses primarily intended to result in the sale of such Fund's
shares, including sales related services provided by banks, broker/dealers or
other financial institutions ("Selling Agents") that have entered into a sales
support agreement with Stephens. Pursuant to the Funds' shareholder servicing
plans adopted by certain classes of the Funds, each Fund may compensate or
reimburse broker/dealers, banks and other financial institutions ("Servicing
Agents") which provide shareholder support services to their customers who own
shares of a Fund. The Company has adopted identical distribution and shareholder
servicing plans for the corresponding classes within both the Pacific Growth
Fund and Emerging Markets Fund as follows.
PRIMARY A SHARES. Primary A Shares of the Funds are not subject to any
distribution or shareholder servicing fees.
PRIMARY B SHARES. The Company has entered into a shareholder
administration plan whereby the Funds may compensate Servicing Agents which
provide shareholder support services to their customers who own Primary B Shares
of the Funds. Pursuant to this shareholder administration plan, the Funds may
compensate Servicing Agents up to 0.60%, on an annual basis, of the net asset
value of the shares held by the customers of such Servicing Agents.
15
<PAGE>
INVESTOR A SHARES. The Funds have adopted a shareholder servicing and
distribution plan pursuant to Rule 12b-1 under the 1940 Act with respect to each
Fund's Investor A Shares. This shareholder servicing and distribution plan
provides that each Fund may pay Stephens, selling agents that have entered into
a sales support agreement with Stephens, or servicing agents that have entered
into a Shareholder Servicing Agreement with the Funds, up to 0.25% (on an
annualized basis) of the average daily net asset value of the Investor A Shares
of the Funds.
INVESTOR B SHARES AND INVESTOR C SHARES. The Funds have adopted
distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Investor B Shares and Investor C Shares of the Funds. Pursuant to these
distribution plans, each Fund may pay Stephens for expenses incurred in
connection with the marketing or distribution of the Fund's shares, including
sales related services provided by selling agents that have entered into a sales
support agreement with Stephens. Payments under these distribution plans will be
calculated daily and paid monthly and may not exceed 0.75% on an annualized
basis of the average daily net asset value of the Investor B Shares and Investor
C Shares of each Fund. The Funds have also adopted shareholder servicing plans
with respect to the Investor B Shares and Investor C Shares of the Funds.
Pursuant to these shareholder servicing plans, each Fund may compensate or
reimburse servicing agents, which may include BankAmerica, that provide
shareholder support services to their customers who own shares of a Fund.
Payments under these shareholder servicing plans will be calculated daily and
paid monthly and may not exceed 0.25% (on an annual basis) of the average daily
net assets of the Investor B Shares and Investor C Shares of each Fund.
SALES LOADS, SHAREHOLDER TRANSACTIONS AND SERVICES. Primary A Shares
and Primary B Shares of the Funds are offered at net asset value without a
front-end sales load or contingent deferred sales charge. Investor A Shares of
the Funds are offered with a maximum sales load of 5.75% as a percentage of the
offering price. Certain Investor A Shares that are purchased at net asset value
are subject to a maximum deferred sales charge of 1.00% of the lower of the
original purchase price or redemption proceeds. Investor A Shares that were
purchased by investors investing $1 million or more between July 31, 1997 and
November 15, 1998 are subject to a 1.00% redemption fee if the Investor A Shares
are held less than 18 months. Investor B Shares of the Funds are subject to a
maximum deferred sales charge of 5.00% of the lower of the original purchase
price or redemption proceeds. Effective January 19, 1999, Investor C Shares of
the Funds are subject to a maximum deferred sales charge of 1.00% of the lower
of the original purchase price or redemption proceeds.
The respective purchase, redemption, exchange, dividend and other
policies and procedures of the classes of Funds are identical.
FEDERAL INCOME TAX CONSEQUENCES. The Applicants intend that the
Consolidation will not qualify as a "reorganization," within the meaning of
Section 368(a) of the Code, and that the Pacific Growth Fund and the Emerging
Markets Fund will each not be a "party to a reorganization," within the meaning
of Section 368(b) of the Code.
16
<PAGE>
Accordingly, the Consolidation of the Pacific Growth Fund into the
Emerging Markets Fund is expected to be a taxable event to the Pacific Growth
Fund and its shareholders with the exception of shareholders who hold shares in
a tax-deferred retirement account.
If the Consolidation is approved, the Pacific Growth Fund expects to
sell most or all of its portfolio securities prior to the Closing. The proceeds
of such sales will be held in temporary investments or reinvested in assets that
qualify to be held by the Emerging Markets Fund. The need for the Pacific Growth
Fund to dispose of assets prior to the Closing may result in its selling of
portfolio securities at a disadvantageous time and could result in Pacific
Growth Fund realizing losses that would not otherwise have been realized. The
gain from such dispositions, if any, will be distributed to the Pacific Growth
Fund's shareholders, and will be taxable to shareholders whose shares are held
in taxable accounts. In addition, shareholders of the Pacific Growth Fund whose
shares are held in taxable (I.E., non-retirement) accounts will generally
recognize a gain or loss, for federal income tax purposes, on the difference
between the fair market value of the Emerging Markets Fund shares received in
the Consolidation and their federal income tax basis in their shares of the
Pacific Growth Fund relinquished at the time of and in the exchange. Assuming no
changes in the market value of the Pacific Growth Fund's portfolio securities,
in the absence of the Consolidation, a shareholder would, over time, recognize
tax consequences. The federal income tax basis in shares of the Emerging Markets
Fund received in the exchange by all Pacific Growth Fund shareholders will be
the fair market value of those shares immediately preceding the Closing and the
holding period for such shares will begin the day following the Closing.
Consummation of the Consolidation is subject to the condition that the Company
receive an opinion from Morrison & Foerster LLP confirming the foregoing federal
income tax consequences.
The Company has not sought a tax ruling from the Internal Revenue
Service ("IRS"). The opinion of counsel is not binding on the IRS and does not
preclude the IRS from adopting a contrary position. Shareholders may wish to
consult their own tax advisors concerning the potential tax consequences to
them, including state and local income tax consequences.
BOARD CONSIDERATION. The Company's Board of Directors unanimously voted
to approve the Consolidation Agreement at a meeting held on October 7, 1998. In
reviewing the proposed Consolidation, the Board considered the potential impact
of the Consolidation on each Fund's shareholders, including, the taxable nature
of the Consolidation. In particular the Board considered the fact that (a) a
many of Pacific Growth Fund shareholders hold their shares in non-taxable
retirement or employee benefit accounts and (b) that, in light of the net asset
value performance of the Pacific Growth Fund, most shareholders have a basis in
their shares that equals or exceeds the current value of their shares (and
therefore that they would realize, if anything, a loss rather than a gain). The
Board of Directors (with the advice and assistance of independent counsel)
reviewed, among other things: (1) the future viability of the Pacific Growth
Fund; (2) the expected cost-savings for the Pacific Growth Fund, as a result of
the Consolidation; (3) the investment objective, policies and limitations of the
Emerging Markets Fund, their compatibility with those of the Pacific Growth Fund
and the relative performance of the Pacific Growth and Emerging Markets Funds;
(4) the terms and conditions of the Consolidation, including those provisions
that were intended to avoid dilution of the interests of the Pacific Growth
Fund's shareholders; (5) the anticipated tax consequences of the Consolidation
for the Pacific Growth Fund and its shareholders; and (6) the investment
advisory and other fees paid by the Emerging Markets Fund, and the historical
and projected expense ratios of the Emerging Markets Fund as compared with those
of the Pacific Growth Fund. The Board considered corresponding factors on behalf
of the Emerging Markets Fund. Based upon its evaluation of these factors, and in
light of their fiduciary duties under federal and state law, the Company's Board
of Directors, including all of the non-interested members of the Board, have
determined that the proposed Consolidation is in the best interests of the
shareholders of each Fund and that the interests of the shareholders of the
respective Funds will not be diluted as a result of the Consolidation.
17
<PAGE>
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE CONSOLIDATION AGREEMENT.
OTHER INFORMATION. The Consolidation may be abandoned at any time
before the Closing upon the mutual consent of both Funds. At any time before or
(to the extent permitted by law) after approval of the agreement by the
shareholders of the Pacific Growth Fund (i) the parties may, by written
agreement authorized by the Company's Board of Directors and with or without the
approval of their shareholders, amend any of the provisions of the Consolidation
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 Company's Board of Directors with or without the
approval of such party's shareholders).
III. INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION. The Proxy/Prospectus is being furnished in
connection with the solicitation of proxies for the Meeting by the Company's
Board of Directors. It is expected that the solicitation of proxies will be
primarily by mail. Officers and agents of the Company also may solicit proxies
by telephone, telegraph or personal interview. [In this connection, the Company
has retained A.D.P. Proxy Services to assist in the solicitation of proxies with
the Consolidation.] The cost of the solicitation will be paid by the Funds and
is estimated to be $_____________. Any shareholder giving a proxy may revoke it
at any time before it is exercised (i) by submitting to the Company a written
notice of revocation, (ii) by submitting to the Company a subsequently executed
proxy or by attending the Meeting and voting in person.
Only shareholders of record at the close of business on February
15,1999, will be entitled to vote at the Meeting. On that date, the following
number of Pacific Growth Fund shares were outstanding and entitled to be voted.
PACIFIC GROWTH FUND SHARES ENTITLED TO BE VOTED
Primary A shares _______________________
Primary B shares _______________________
Investor A shares _______________________
Investor B shares _______________________
Investor C shares _______________________
Each whole and fractional share is entitled to a whole or fractional
vote.
18
<PAGE>
If the accompanying proxy is executed and returned in time for the
Meeting, the shares covered thereby will be voted in accordance with the proxy
on all matters that may properly come before the Meeting.
Significant Shareholders. As of February 15, 1999, the officers and
Directors show of the Company as a group owned less than 1% of any of the Funds.
The tables below show the name, address and share ownership of each person known
to the Company to have beneficial or record ownership with respect to 5% or more
of a class of a Fund as of February 15, 1999.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
- ----------------- ------------------------ -------------------- -------------- --------------- ----------------
CLASS; AMOUNT OF
PACIFIC GROWTH SHARES OWNED; TYPE PERCENTAGE PERCENTAGE OF PERCENTAGE OF
FUND NAME AND ADDRESS OF OWNERSHIP OF CLASS FUND FUND
---- ----------------- --------- ----- ---- POST-CLOSING
------------
- ----------------- ------------------------ -------------------- -------------- --------------- ----------------
- ----------------- ------------------------ -------------------- -------------- --------------- ----------------
CLASS; AMOUNT OF
EMERGING SHARES OWNED; TYPE PERCENTAGE PERCENTAGE OF PERCENTAGE OF
MARKETS FUND NAME AND ADDRESS OF OWNERSHIP OF CLASS FUND FUND
------------ ----------------- --------- ----- ---- POST-CLOSING
------------
- ----------------- ------------------------ -------------------- -------------- --------------- ----------------
</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.
QUORUM. In the event that a quorum is not present at the Meeting, or in
the event that a quorum is present at the Meeting but sufficient votes to
approve the Consolidation Agreement are not received, one or more adjournment(s)
may be proposed to permit further solicitation of proxies. Any adjourned session
or sessions may be held, after the date set for the original Meeting without
notice except announcement at the Meeting, but, under Maryland law, no more than
120 days after the record date. 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 Meeting 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).
19
<PAGE>
A quorum is constituted with respect to the Pacific Growth Fund by the
presence in person or by proxy of the holders of more than 50% of the
outstanding shares of the Pacific Growth Fund entitled to vote at the Meeting.
For purposes of determining the presence of a quorum for transacting business at
the Meeting, abstentions will be treated as shares that are present at the
Meeting but which have not been voted. Abstentions will have the effect of a
"no" vote for purposes of obtaining the requisite approvals of the Consolidation
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.
ANNUAL MEETINGS AND SHAREHOLDER MEETINGS. The Company does not
presently intend to hold annual meetings of shareholders for the election of
directors and other business unless otherwise required by the 1940 Act. Under
certain circumstances, however, holders of at least 10% of the outstanding
shares of either Fund have the right to call a meeting of shareholders.
OTHER BUSINESS. The Company's Board of Directors knows of no other
business to be brought before the Meeting. However, if any other matters come
before the Meeting, 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.
IV. OTHER INFORMATION
HOW TO OBTAIN ADDITIONAL INFORMATION ABOUT THE FUNDS. Additional
information about each Fund is included in its most recent prospectus and
statement of additional information. You may obtain a prospectus or statement of
additional information without charge by calling 1-800-321-7854 or by writing
the Company at Nations Fund Portfolios, Inc., c/o Stephens Inc., NationsBank,
One NationsBank Plaza, 33rd Floor, Charlotte, NC 28255.
This Proxy/Prospectus is accompanied by the current prospectus for the
Emerging Markets Fund.
Reports and other information filed by the Company can be inspected and
copied at the Public Reference Facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549. In addition, these materials can be
inspected and copied at the SEC's Regional Offices at 7 World Trade Center,
Suite 1300, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
also can be obtained from the Public Reference Branch, Office of Consumer
Affairs and Information Services, Securities and Exchange Commission,
Washington, D.C. 20549, at prescribed rates.
20
<PAGE>
The information contained in each Fund's prospectus is incorporated by
reference into this Proxy/Prospectus.
FINANCIAL STATEMENTS. The unaudited financial statements and financial
highlights for the Funds for the six-month period ended September 30, 1998, and
the audited financial statements, financial highlights and the independent
accountants report thereon for the fiscal year ended March 31, 1998, are
incorporated by reference into the Statement of Additional Information related
to this Proxy/Prospectus. The Financial Highlights included therein are
incorporated by reference into this Proxy/Prospectus.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. A discussion by Fund
management of the Funds' recent performance can be found at Appendix III.
SHAREHOLDER INQUIRIES. For additional information call 1-800-652-5096
or write to Nations Fund Portfolios, Inc. at the address on the cover page of
this Proxy/Prospectus.
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE
REQUESTED TO MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT BY
TELEFACSIMILE (FRONT AND BACK) AT (704) 388-2641 OR IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
21
<PAGE>
APPENDIX I
AGREEMENT AND PLAN OF
CONSOLIDATION AND LIQUIDATION
FOR
NATIONS PACIFIC GROWTH FUND
AND
NATIONS EMERGING MARKETS FUND
OF NATIONS FUND PORTFOLIOS, INC.
January [ ], 1999
<PAGE>
This AGREEMENT AND PLAN OF CONSOLIDATION AND LIQUIDATION (the
"Agreement") is made as of this [_____] day of January, 1999 by Nations Fund
Portfolios, Inc. ("Nations Portfolios"), a Maryland corporation, for itself and
on behalf of Nations Pacific Growth Fund (the "Pacific Growth Fund"), and
Nations Emerging Markets Fund (the "Emerging Markets Fund").
WHEREAS, Nations Portfolios is an open-end management investment
company registered with the Securities and Exchange Commission (the "SEC") under
the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the parties desire that the Fund Assets and Liabilities (as
defined below) of the Pacific Growth Fund be conveyed to and be acquired and
assumed by the Emerging Markets Fund, in exchange for shares of equal U.S.
dollar value of the Emerging Markets Fund which shall thereafter promptly be
distributed to the shareholders of the Pacific Growth Fund in connection with
its liquidation as described in this Agreement (the "Consolidation"); and
WHEREAS, the parties intend that the Consolidation does not qualify as
a "reorganization," within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and that the Pacific Growth Fund and the
Emerging Markets Fund will each not be a "party to a reorganization," within the
meaning of Section 368(b) of the Code, with respect to the Consolidation.
NOW, THEREFORE, in accordance with the terms and conditions described
herein, the Pacific Growth Fund and the Emerging Markets Fund shall be
consolidated as follows:
1. Conveyance of Fund Assets and Liabilities of the Pacific Growth
Fund.
(a) Except as provided below, at the Effective Time of the
Consolidation (as defined in Section 8) all assets of every kind, and all
interests, rights, privileges and powers of the Pacific Growth Fund (the "Fund
Assets"), subject to all liabilities of the Pacific Growth Fund existing as of
the Effective Time of the Consolidation (the "Liabilities"), shall be
transferred by the Pacific Growth Fund to the Emerging Markets Fund and shall be
accepted and assumed by the Emerging Markets Fund, as more particularly set
forth in this Agreement, such that at and after the Effective Time of the
Consolidation: (i) all Fund Assets of the Pacific Growth Fund shall become the
assets of the Emerging Markets Fund; and (ii) all Liabilities of the Pacific
Growth Fund shall attach to the Emerging Markets Fund, enforceable against the
Emerging Markets Fund to the same extent as if originally incurred by it.
Notwithstanding the foregoing, the Pacific Growth Fund and the Emerging Markets
Fund shall mutually agree upon liabilities (the "Retained Liabilities") as shall
be retained by the Pacific Growth Fund and not transferred, accepted or assumed
by the Emerging Markets Fund pursuant to this Subsection 1(a).
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<PAGE>
(b) It is understood and agreed that the Fund Assets shall
include all property and assets of any nature whatsoever, including, without
limitation, all cash, cash equivalents, securities, claims (whether absolute or
contingent, known or unknown, accrued or unaccrued) and receivables (including
dividend and interest receivables) owned or exercisable by the Pacific Growth
Fund, and any deferred or prepaid expenses shown as an asset on the Pacific
Growth Fund's books, that the Liabilities of the Pacific Growth Fund shall
include all liabilities, whether known or unknown, accrued or unaccrued,
absolute or contingent, in all cases, existing at the Effective Time of the
Consolidation.
(c) At least fifteen (15) business days prior to the Closing
Date (as defined in Section 8), the Pacific Growth Fund will provide to, or
cause to be provided to, the Emerging Markets Fund, a schedule of its
securities, other assets and its known liabilities. It is understood and agreed
that the Pacific Growth Fund may sell any of the securities or other assets
shown on such schedule prior to the Effective Time of the Consolidation but will
not, without the prior approval of the Emerging Markets Fund, acquire any
additional securities other than securities that the Emerging Markets Fund is
not permitted to purchase in accordance with its stated investment objective and
policies. At least ten (10) business days prior to the Closing Date, the
Emerging Markets Fund will advise the Pacific Growth Fund of any investments of
the Pacific Growth Fund shown on such schedule that the Emerging Markets Fund
would not be permitted to hold, pursuant to its stated investment objective and
policies or otherwise. The Pacific Growth Fund, if requested by the Emerging
Markets Fund, will dispose of any such securities prior to the Closing Date to
the extent practicable and consistent with applicable legal requirements. In
addition, if it is determined that the investment portfolios of the Pacific
Growth Fund and Emerging Markets Fund, when aggregated, would contain
investments exceeding certain percentage limitations applicable to the Emerging
Markets Fund, the Pacific Growth Fund, if requested by the Emerging Markets
Fund, will dispose of a sufficient amount of such investments as may be
necessary to avoid violating such limitations as of the Effective Time of the
Consolidation.
(d) The Fund Assets shall be transferred and conveyed to the
Emerging Markets Fund on the following basis:
(1) In exchange for the transfer of the Fund Assets, the
Emerging Markets Fund shall simultaneously issue to the Pacific Growth
Fund at the Effective Time of the Consolidation full and fractional
Primary A Shares, Primary B Shares, Investor A Shares, Investor B
Shares and Investor C Shares of the Emerging Markets Fund having an
aggregate net asset value equal to the net value of the Fund Assets
minus Liabilities so conveyed and assumed, all determined in accordance
with this Agreement. In this regard, the number of full and fractional
shares of the Emerging Markets Fund delivered to the Pacific Growth
Fund shall be determined by dividing the value of the Fund Assets minus
Liabilities, computed in the manner and as of the time and date set
forth in this Agreement, by the net asset value of one Emerging Markets
Fund Primary A, Primary B, Investor A, Investor B or Investor C Share,
computed in the manner and as of the time and date set forth in this
Agreement.
2
<PAGE>
(2) The net asset value of shares to be delivered by the
Emerging Markets Fund, and the net value of the Fund Assets minus
Liabilities to be conveyed by the Pacific Growth Fund and assumed by
the Emerging Markets Fund, shall, in each case, be determined as of the
Valuation Time as defined in Section 3. The net asset value of Primary
A Shares, Primary B Shares, Investor A Shares, Investor B Shares and
Investor C Shares of the Emerging Markets Fund shall be computed in
accordance with its then current valuation procedures. In determining
the value of the Fund Assets, each security to be included in the Fund
Assets shall be priced in accordance with the Emerging Markets Fund's
then current valuation procedures.
2. Liquidation of the Pacific Growth Fund. At the Effective Time of the
Consolidation, the Pacific Growth Fund shall make a liquidating distribution to
its shareholders as follows: Shareholders of record of the Pacific Growth Fund
shall be credited with full and fractional shares of the respective Primary A
Shares, Primary B Shares, Investor A Shares, Investor B Shares and Investor C
Shares that are issued by the Emerging Markets Fund in connection with the
Consolidation corresponding to the Pacific Growth Fund shares that are held of
record by the shareholder at the Effective Time of the Consolidation. Each such
shareholder also shall have the right to receive any unpaid dividends or other
distributions which were declared before the Effective Time of the Consolidation
with respect to the Pacific Growth Fund shares that are held of record by the
shareholder at the Effective Time of the Consolidation, and Nations Portfolios
shall record on its books the ownership of the respective Emerging Markets Fund
shares by such shareholders (the "Transferor Record Holders"). All of the issued
and outstanding shares of the Pacific Growth Fund at the Effective Time of the
Consolidation shall be redeemed and canceled on the books of Nations Portfolios
at such time. As soon as reasonably possible after the Effective Time of the
Consolidation, Nations Portfolios shall wind up the affairs of the Pacific
Growth Fund and shall file any final regulatory reports, including but not
limited to any Form N-SAR and Rule 24f-2 filings, with respect to the Pacific
Growth Fund, and also shall take all other steps as are necessary and proper to
effect the termination or declassification of the Pacific Growth Fund in
accordance with all applicable laws. In conjunction with the foregoing, the
Pacific Growth Fund, prior to the winding up of its affairs, shall utilize any
Cash Transfer made pursuant to Subsection 1(d)(1) to repay any and all Retained
Liabilities.
3. Valuation Time. The "Valuation Time" shall be the time as of which
the net asset value of each class of shares of each of the Pacific Growth Fund
and the Emerging Markets Fund is determined pursuant to their respective
valuation procedures on the Closing Date or such earlier or later time as may be
mutually agreed to in writing by the parties hereto.
3
<PAGE>
4. Certain Representations, Warranties and Agreements of Nations
Portfolios on behalf of the Pacific Growth Fund. Nations Portfolios, on behalf
of itself and, where appropriate, the Pacific Growth Fund, represents and
warrants to, and agrees with, Nations Portfolios on behalf of the Emerging
Markets Fund as follows, with such representations, warranties and agreements
made on behalf of the Pacific Growth Fund on a several (and not joint, or joint
and several) basis:
(a) Nations Portfolios is a corporation, duly created, validly
existing and in good standing under the laws of the State of Maryland. Nations
Portfolios is registered with the SEC as an open-end management investment
company under the 1940 Act, and such registration is in full force and effect.
(b) Nations Portfolios has the power to own all of its
properties and assets and to consummate the transactions contemplated herein,
and has all necessary federal, state and local authorizations to carry on its
business as now being conducted and to consummate the transactions contemplated
by this Agreement.
(c) This Agreement has been duly authorized by the Board of
Directors of Nations Portfolios on behalf of the Pacific Growth Fund, and
executed and delivered by duly authorized officers of Nations Portfolios, and
represents a valid and binding contract, enforceable in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency, reorganization,
arrangement, moratorium, and other similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles. The
execution and delivery of this Agreement does not, and, subject to the approval
of shareholders referred to in Section 6, the consummation of the transactions
contemplated by this Agreement will not, violate the Articles of Incorporation
or By-Laws of Nations Portfolios or any material agreement or arrangement to
which it is a party or by which it is bound.
(d) The Pacific Growth Fund has elected to qualify and has
qualified as a regulated investment company under Part I of Subchapter M of
Subtitle A, Chapter 1, of the Code, as of and since its first taxable year; has
been a regulated investment company under such Part of the Code at all times
since the end of its first taxable year when it so qualified; and qualifies and
shall continue to qualify as a regulated investment company for its taxable year
ending upon its liquidation.
(e) Nations Portfolios has valued, and will continue to value,
the portfolio securities and other assets of the Pacific Growth Fund in
accordance with applicable legal requirements.
(f) The proxy materials included within the Registration
Statement on Form N-14 (the "N-14 Registration Statement") from its effective
date with the SEC, through the time of the shareholders meeting referred to in
Section 6 and the Effective Time of the Consolidation, insofar as they relate to
Nations Portfolios, (i) shall comply in all material respects with the
provisions of the Securities Exchange Act of 1934 as amended (the "1934 Act")
and the 1940 Act, the rules and regulations thereunder, and state securities
laws, and (ii) shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein not misleading.
4
<PAGE>
(g) All of the issued and outstanding shares of the Pacific
Growth Fund have been validly issued and are fully paid and non-assessable, and
were offered for sale and sold in conformity with the registration requirements
of all applicable federal and state securities laws.
(h) Nations Portfolios shall operate the business of the Pacific
Growth Fund in the ordinary course between the date hereof and the Effective
Time of the Consolidation, it being agreed that such ordinary course of business
will include the declaration and payment of customary dividends and
distributions and any other dividends and distributions deemed advisable in
anticipation of the Consolidation. Notwithstanding anything herein to the
contrary, Nations Portfolios may take all appropriate action necessary in order
for Nations Portfolios to receive the opinion provided for in Sections 9(e) and
10(g).
(i) At the Effective Time of the Consolidation, the Pacific
Growth Fund will have good and marketable title to the Fund Assets and full
right, power and authority to assign, deliver and otherwise transfer such
assets.
(j) At the Effective Time of the Consolidation, all federal and
other tax returns and reports of the Pacific Growth Fund required by law to have
been filed by such time shall have been filed, and all federal and other taxes
shall have been paid so far as due, or provision shall have been made for the
payment thereof and, to the best knowledge of management of Nations Portfolios,
no such return or report shall be currently under audit and no assessment shall
have been asserted with respect to such returns or reports.
5. Certain Representations, Warranties and Agreements of Nations
Portfolios on behalf of the Emerging Markets Fund. Nations Portfolios, on behalf
of itself and where appropriate, the Emerging Markets Fund, represents and
warrants to, and agrees with Nations Portfolios on behalf of the Pacific Growth
Fund as follows, with such representations, warranties and agreements made on
behalf of the Emerging Markets Fund on a several (and not joint, or joint and
several) basis:
(a) Nations Portfolios is a corporation duly created, validly
existing and in good standing under the laws of the State of Maryland. Nations
Portfolios is registered with the SEC as an open-end management investment
company under the 1940 Act and such registration is in full force and effect.
(b) Nations Portfolios has the power to own all of its
properties and assets and to consummate the transactions contemplated herein,
and has all necessary federal, state and local authorizations to carry on its
business as now being conducted and to consummate the transactions contemplated
by this Agreement.
5
<PAGE>
(c) This Agreement has been duly authorized by the Board of
Directors of Nations Portfolios on behalf of the Emerging Markets Fund, and
executed and delivered by duly authorized officers of Nations Portfolios, and
represents a valid and binding contract, enforceable in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement will not, violate the Articles of
Incorporation or By-Laws of Nations Portfolios or any material agreement or
arrangement to which it is a party or by which it is bound.
(d) The Emerging Markets Fund has elected to qualify and has
qualified as a regulated investment company under Part I of Subchapter M of
Subtitle A, Chapter 1, of the Code, as of and since its first taxable year; has
been a regulated investment company under such Part of the Code at all times
since the end of its first taxable year when it so qualified; and qualifies and
shall continue to qualify as a regulated investment company for its current
taxable year.
(e) Nations Portfolios has valued, and will continue to value,
the portfolio securities and other assets of the Emerging Markets Fund in
accordance with applicable legal requirements.
(f) The N-14 Registration Statement, including the proxy
materials contained therein, from its effective date with the SEC through the
time of the shareholders meeting referred to in Section 6 and at the Effective
Time of the Consolidation, insofar as it relates to Nations Portfolios, or the
Emerging Markets Fund, or the Primary A Shares, Primary B Shares, Investor A
Shares, Investor B Shares or Investor C Shares of the Emerging Markets Fund to
be issued pursuant thereto (i) shall comply in all material respects with the
provisions of the Securities Act of 1933, as amended, (the "1933 Act"), the 1934
Act and the 1940 Act, the rules and regulations thereunder, and state securities
laws, and (ii) shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein not misleading.
(g) The shares of the Emerging Markets Fund to be issued and
delivered to the Pacific Growth Fund for the account of the shareholders of the
Pacific Growth Fund, pursuant to the terms hereof, shall have been duly
authorized as of the Effective Time of the Consolidation and, when so issued and
delivered, shall be duly and validly issued, fully paid and non-assessable, and
no shareholder of the Emerging Markets Fund shall have any preemptive right of
subscription or purchase in respect thereto.
(h) All of the issued and outstanding shares of the Emerging
Markets Fund have been validly issued and are fully paid and non-assessable, and
were offered for sale and sold in conformity with the registration requirements
of all applicable federal and state securities laws.
6
<PAGE>
(i) Nations Portfolios shall operate the business of the
Emerging Markets Fund in the ordinary course between the date hereof and the
Effective Time of the Consolidation, except that Nations Portfolios shall
complete all measures in respect of the Emerging Markets Fund prior to the
Effective Time of the Consolidation to ensure that the Consolidation does not
qualify as a "reorganization," within the meaning of Section 368 of the Code,
regardless of whether such measures are in the ordinary course. It is
understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions and any other dividends and
distributions deemed advisable in anticipation of the Consolidation.
(j) At the Effective Time of the Consolidation, all federal and
other tax returns and reports of the Emerging Markets Fund required by law to
have been filed by such time shall have been filed, and all federal and other
taxes shall have been paid so far as due, or provision shall have been made for
the payment thereof and, to the best knowledge of management of Nations
Portfolios, no such return or report shall be currently under audit and no
assessment shall have been asserted with respect to such returns or reports.
6. Shareholder Action. As soon as practicable after the effective date
of the N-14 Registration Statement Nations Portfolios shall hold a meeting(s) of
the shareholders of the Pacific Growth Fund for the purpose of considering and
voting upon:
(a) approval of this Agreement and the Consolidation
contemplated hereby; and
(b) such other matters as may be determined by the Board of
Directors of Nations Portfolios.
7. Regulatory Filings. As soon as practicable, Nations Portfolios shall
file an N-14 Registration Statement with the SEC, which shall include all proxy
materials required in connection with the Pacific Growth Fund shareholder
approval referenced in Section 6, and, where required, with appropriate state
securities regulatory authorities.
8. Closing Date, Effective Time of the Consolidation. The "Closing
Date" shall be [_________], 1998, or such earlier or later date as may be
mutually agreed in writing by the parties hereto. Delivery of the Fund Assets
and the shares of the Emerging Markets Fund to be issued pursuant to Section 1
and the liquidation of the Pacific Growth Fund pursuant to Section 2 shall occur
on the day following the Closing Date, whether or not such day is a business
day, or on such other date, and at such place and time, as may be mutually
agreed in writing, by the parties hereto. The date and time at which such
actions are taken are referred to herein as the "Effective Time of the
Consolidation." To the extent any Fund Assets are, for any reason, not
transferred at the Effective Time of the Consolidation, Nations Portfolios shall
cause such Fund Assets to be transferred in accordance with this Agreement at
the earliest practicable date thereafter.
9. Conditions to Nations Portfolios' Obligations on Behalf of the
Pacific Growth Fund. The obligations of Nations Portfolios hereunder shall be
subject to the following conditions precedent:
7
<PAGE>
(a) This Agreement and the Consolidation shall have been
approved by the Board of Directors of Nations Portfolios and by a majority of
the shareholders of the Pacific Growth Fund in the manner required by applicable
law and this Agreement.
(b) All representations and warranties of Nations Portfolios
made in this Agreement shall be true and correct in all material respects as if
made at and as of the Valuation Time and the Effective Time of the
Consolidation.
(c) Nations Portfolios shall have delivered a certificate
executed in its name by its President or Vice President and its Treasurer or
Assistant Treasurer, in a form reasonably satisfactory and dated as of the
Closing Date, to the effect that the representations and warranties of the
Emerging Markets Fund made in this Agreement are true and correct at and as of
the Valuation Time and that, to the best of its knowledge, the Fund Assets
include only assets which the Emerging Markets Fund may properly acquire under
its investment objectives, policies and limitations and may otherwise be
lawfully acquired by the Emerging Markets Fund.
(d) Nations Portfolios shall have received an opinion of
Morrison & Foerster LLP, as counsel to Nations Portfolios in form reasonably
satisfactory to Nations Portfolios and dated the Closing Date, substantially to
the effect that (i) Nations Portfolios is a corporation duly established and
validly existing under the laws of the State of Maryland; (ii) the shares of the
Emerging Markets Fund to be delivered to the Pacific Growth Fund as provided for
by this Agreement are duly authorized and upon delivery will be validly issued,
fully paid and non-assessable by Nations Portfolios; (iii) this Agreement has
been duly authorized, executed and delivered by Nations Portfolios, and
represents a legal, valid and binding contract, enforceable in accordance with
its terms, subject to the effect of bankruptcy, insolvency, moratorium,
fraudulent conveyance and similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, and such counsel
shall express no opinion with respect to the application of equitable principles
in any proceeding whether at law or in equity; (iv) the execution and delivery
of this Agreement did not, and the consummation of the transactions contemplated
by this Agreement will not, violate the Articles of Incorporation or By-Laws of
Nations Portfolios or any material contract known to such counsel to which
Nations Portfolios is a party or by which it is bound; and (v) no consent,
approval, authorization or order of any court or governmental authority is
required for the consummation by Nations Portfolios of the transactions
contemplated by this Agreement, except such as have been obtained under the 1933
Act, the 1934 Act, the 1940 Act, the rules and regulations under those Acts and
such as may be required by state securities laws or such as may be required
subsequent to the Effective Time of the Consolidation. Such opinion may rely on
the opinion of other counsel to the extent set forth in such opinion, provided
such other counsel is reasonably acceptable to Nations Portfolios.
(e) Nations Portfolios shall have received an opinion of
Morrison & Foerster LLP, based upon reasonable representations made in
certificates provided by Nations Portfolios, its affiliates and/or principal
shareholders of the Pacific Growth Fund and/or the Emerging Markets Fund,
addressed to Nations Portfolios in a form reasonably satisfactory to them, and
dated the Closing Date, with respect to the matters specified in Subsection
10(g).
8
<PAGE>
(f) Nations Portfolios shall have received (i) a memorandum
addressed to Nations Portfolios, in a form reasonably satisfactory to them,
prepared by [____________], or another person approved by the parties,
concerning the registration of shares to be issued by Nations Portfolios
pursuant to this Agreement under applicable state securities laws or the
exemption from registration under such laws, and (ii) assurance reasonably
satisfactory to it that all permits and other authorizations necessary under
state securities laws to consummate the transactions contemplated by this
Agreement have been obtained.
(g) The N-14 Registration Statement shall have become effective
under the 1933 Act and no stop order suspending the effectiveness shall have
been instituted, or to the knowledge of Nations Portfolios, contemplated by the
SEC.
(h) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
(i) The SEC shall not have issued any unfavorable advisory
report under Section 25(b) of the 1940 Act nor instituted any proceeding seeking
to enjoin consummation of the transactions contemplated by this Agreement under
Section 25(c) of the 1940 Act.
(j) Nations Portfolios on behalf of the Pacific Growth Fund
shall have performed and complied in all material respects with each of its
agreements and covenants required by this Agreement to be performed or complied
with by it prior to or at the Valuation Time and the Effective Time of the
Consolidation.
(k) Nations Portfolios shall have received a duly executed
instrument whereby the Emerging Markets Fund assumes all of the liabilities of
the Pacific Growth Fund (except in respect of the Retained Liabilities to be
retained by the Pacific Growth Fund and not transferred, accepted or assumed by
the Emerging Markets Fund pursuant to Subsection 1(a)).
9
<PAGE>
(l) Nations Portfolios shall have received a letter from
PricewaterhouseCoopers LLP addressed to Nations Portfolios in form reasonably
satisfactory to them, and dated the Closing Date, to the effect that (a) they
are independent accountants with respect to Pacific Horizon Funds and each
Acquired Fund within the meaning of the 1933 Act and the applicable regulations
thereunder; (b) in their opinion, the audited financial statements and the per
share data provided in accordance with Item 3 in Form N-1A (the "Per Share
Data") of the Acquired Fund included or incorporated by reference in the
Registration Statement previously reported on by them comply as to form in all
material aspects with the applicable accounting requirements of the 1933 Act and
the published rules and regulations thereunder; and (c) on the basis of limited
procedures agreed upon by Nations Funds, on behalf of the Acquiring Funds and
Pacific Horizon Funds, on behalf of the Acquired Funds, and described in such
letter (but not an examination in accordance with generally accepted auditing
standards), the data used in the calculation of any figure expressed numerically
or in dollars or percentages of appearing in the Registration Statement under:
(a) "About the Proposed Consolidation--Pro Forma Capitalization Table As of
September 30, 1998" in the Combined Proxy Statement/Prospectus; (b) "About the
Proposed Consolidation--Comparison of Total Expense Ratios" in the Combined
Proxy Statement/Prospectus; (c) "Appendix II -- Expense Summaries of the Pacific
Growth Fund and the Emerging Markets Fund" in the Combined Proxy
Statement/Prospectus; and (d) the PRO FORMA financial statements in the
Statement of Additional Information, agree with the underlying accounting
records of the Pacific Growth Fund and Emerging Markets Fund or with written
estimates provided by officers of Nations Portfolios having responsibility for
financial and reporting matters, and were found to be mathematically correct.
10. Conditions to Nations Portfolios' Obligations on behalf of the
Emerging Markets Fund. The obligations of Nations Portfolios hereunder shall be
subject to the following conditions precedent:
(a) This Agreement and the Consolidation shall have been
approved by the Board of Directors of Nations Portfolios on behalf of the
Emerging Markets Fund and by a majority of the shareholders of the Pacific
Growth Fund in the manner required by applicable law and this Agreement.
(b) Nations Portfolios shall have delivered to Nations
Portfolios a statement of assets and liabilities of the Pacific Growth Fund,
showing the tax costs of such securities by lot and the holding periods of such
securities, as of the Valuation Time, certified by the Treasurer or Assistant
Treasurer of Nations Portfolios as having been prepared in accordance with
generally accepted accounting principles consistently applied.
(c) Nations Portfolios shall have duly executed and delivered to
Nations Portfolios such bills of sale, assignments, certificates and other
instruments of transfer ("Transfer Documents") as Nations Portfolios may deem
necessary or desirable to transfer all of the Pacific Growth Fund's right, title
and interest in and to the Fund Assets.
(d) All representations and warranties of Nations Portfolios
made in this Agreement shall be true and correct in all material respects as if
made at and as of the Valuation Time and the Effective Time of the
Consolidation.
10
<PAGE>
(e) Nations Portfolios shall have delivered a certificate
executed in its name by its President or Vice President and its Treasurer or
Assistant Treasurer, in a form reasonably satisfactory and dated as of the
Closing Date, to the effect that the representations and warranties of the
Pacific Growth Fund made in this Agreement are true and correct at and as of the
Valuation Time.
(f) Nations Portfolios shall have received an opinion of
Morrison & Foerster LLP, as counsel to Nations Portfolios, in a form reasonably
satisfactory to Nations Portfolios and dated the Closing Date, substantially to
the effect that (i) Nations Portfolios is a corporation duly established and
validly existing under the laws of the State of Maryland; (ii) this Agreement
has been duly authorized, executed and delivered by Nations Portfolios and
represents a legal, valid and binding contract, enforceable in accordance with
its terms, subject to the effect of bankruptcy, insolvency, moratorium,
fraudulent conveyance and similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, and such counsel
shall express no opinion with respect to the application of equitable principles
in any proceeding, whether at law or in equity; (iii) the execution and delivery
of this Agreement did not, and the consummation of the transactions contemplated
by this Agreement will not, violate the Articles of Incorporation or By-Laws of
Nations Portfolios or any material contract known to such counsel to which
Nations Portfolios is a party or by which it is bound; and (iv) no consent,
approval, authorization or order of any court or governmental authority is
required for the consummation by Nations Portfolios of the transactions
contemplated by this Agreement, except such as have been obtained under the 1933
Act, the 1934 Act, the 1940 Act, the rules and regulations under those Acts and
such as may be required under the state securities laws or such as may be
required subsequent to the Effective Time of the Consolidation. Such opinion may
rely on the opinion of other counsel to the extent set forth in such opinion,
provided such other counsel is reasonably acceptable to Nations Portfolios.
(g) Nations Portfolios shall have received an opinion of
Morrison & Foerster LLP, based upon reasonable representations made in
certificates provided by Nations Portfolios, its affiliates and/or principal
shareholders of the Pacific Growth Fund and/or the Emerging Markets Fund,
addressed to Nations Portfolios in a form reasonably satisfactory to Nations
Portfolios, and dated the Closing Date, substantially to the effect that, for
federal income tax purposes, the Consolidation will not qualify as a
"reorganization," within the meaning of Section 368(a) of the Code, and the
Pacific Growth Fund and the Emerging Markets Fund will each not be a "party to a
reorganization," within the meaning of Section 368(b) of the Code, with respect
to the Consolidation.
(h) The Fund Assets to be transferred to the Emerging Markets
Fund under this Agreement shall include no assets which the Emerging Markets
Fund may not properly acquire pursuant to its investment objectives, policies or
restrictions or may not otherwise lawfully acquire.
(i) The N-14 Registration Statement shall have become effective
under the 1933 Act and no stop order suspending such effectiveness shall have
been instituted or, to the knowledge of Nations Portfolios, contemplated by the
SEC.
11
<PAGE>
(j) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency in which it is sought to
restrain or prohibit or obtain damages or other relief in connection with this
Agreement or the transactions contemplated herein.
(k) The SEC shall not have issued any unfavorable advisory
report under Section 25(b) of the 1940 Act nor instituted any proceeding seeking
to enjoin consummation of the transactions contemplated by this Agreement under
Section 25(c) of the 1940 Act.
(l) Nations Portfolios on behalf of the Emerging Markets Fund
shall have performed and complied in all material respects with each of its
agreements and covenants required by this Agreement to be performed or complied
with by it prior to or at the Valuation Time and the Effective Time of the
Consolidation.
11. Survival of Representations and Warranties. The representations and
warranties of Nations Portfolios on behalf of the Emerging Markets Fund set
forth in this Agreement shall survive the delivery of the Fund Assets to the
Emerging Markets Fund and the issuance of the shares of the Emerging Markets
Fund at the Effective Time of the Consolidation.
12. Termination of Agreement. This Agreement may be terminated by a
party at or, in the case of Subsection 12(c), below, at any time prior to, the
Effective Time of the Consolidation by a vote of a majority of its Board of
Directors as provided below:
(a) By Nations Portfolios on behalf of the Emerging Markets Fund
if the conditions set forth in Section 11 are not satisfied as specified in said
Section;
(b) By Nations Portfolios on behalf of the Pacific Growth Fund
if the conditions set forth in Section 10 are not satisfied as specified in said
Section; and
(c) By mutual written consent of both parties.
13. Governing Law. This Agreement and the transactions contemplated
hereby shall be governed, construed and enforced in accordance with the laws of
the State of Maryland, except to the extent preempted by federal law.
14. Brokerage Fees and Expenses.
(a) Nations Portfolios represents and warrants that there are no
brokers or finders entitled to receive any payments in connection with the
transactions provided for herein.
(b) Each of the Pacific Growth Fund and the Emerging Markets
Fund shall be liable for its own expenses incurred in connection with entering
into and carrying out the provisions of this Agreement, whether or not the
transactions contemplated hereby are consummated.
12
<PAGE>
15. Amendments
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
Nations Portfolios, acting on behalf of either the Pacific Growth Fund or
Nations Portfolios, acting on behalf of the Emerging Markets Fund; provided,
however, that following the meeting of the shareholders of the Pacific Growth
Fund, no such amendment may have the effect of changing the provisions for
determining the number of shares of the Emerging Markets Fund to be issued to
the Transferor Record Holders under this Agreement to the detriment of such
Transferor Record Holders, or otherwise materially and adversely affecting the
Pacific Growth Fund, without the Pacific Growth Fund obtaining its shareholders'
further approval.
At any time prior to or (to the fullest extent permitted by law)
after approval of this Agreement by the shareholders of the Pacific Growth Fund
Nations Portfolios, on behalf of either the Pacific Growth Fund, or Nations
Portfolios, on behalf of the Emerging Markets Fund, may waive any breach by
Nations Portfolios, on behalf of either fund, or the failure to satisfy any of
the conditions to its obligations (such waiver to be in writing and authorized
by the Board of Directors).
16. Counterparts
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers designated below as of the date first
written above.
<TABLE>
<CAPTION>
<S> <C>
NATIONS FUND PORTFOLIOS, INC.
On behalf of the Pacific Growth Fund
ATTEST:
_____________________________________ By: _______________________________________
Name: Richard H. Blank, Jr.
Title: Secretary
NATIONS FUND PORTFOLIOS, INC.
On behalf of the Emerging Markets Fund
ATTEST:
_____________________________________ By: _______________________________________
Name: Richard H. Blank, Jr.
Title: Secretary
</TABLE>
13
<PAGE>
APPENDIX II
EXPENSE SUMMARIES OF THE PACIFIC GROWTH FUND
AND EMERGING MARKETS FUND
-----------------------------------------------
The following tables (a) compare the fees and expenses as of December
31, 1998, for each class of the Pacific Growth Fund and the corresponding
classes of the Emerging Markets Fund and (b) show the estimated fees and
expenses for the combined Fund on a PRO FORMA basis after giving effect to the
reorganization. The Funds' total expense ratios reflect limitations that
management has voluntarily put in place as of December 31, 1998. The purpose of
these tables is to assist shareholders in understanding the various costs and
expenses that investors in these portfolios will bear as shareholders. The
tables do not reflect any charges that may be imposed by institutions directly
on their customer accounts in connection with investments in the portfolios. The
fund operating expense levels shown in this Proxy/Prospectus assume current net
asset levels; PRO FORMA expense levels shown should not be considered an actual
representation of future expenses or performance. Such PRO FORMA expense levels
project anticipated levels but may be greater or less than those shown.
2
<PAGE>
PACIFIC GROWTH FUND-PRIMARY A SHARES
EMERGING MARKETS FUND-PRIMARY A SHARES
<TABLE>
<CAPTION>
PACIFIC GROWTH EMERGING COMBINED FUND
FUND MARKETS FUND PRO FORMA
---- ------------ ---------
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None
Maximum Deferred Sales Load
(as a percentage of redemption proceeds) ....... None None None
Redemption Fees .................................... None None None
Exchange Fees ...................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after fee waivers)(1).............. 0.00% 0.31% 0.64%
12b-1 Fees/Shareholder Servicing Fees............... 0.00% 0.00% 0.00%
Other Expenses (after expense reimbursements)....... 2.00% 1.69% 1.36%
---- ---- ----
TOTAL FUND OPERATING EXPENSES (AFTER FEE WAIVERS AND 2.00% 2.00% 2.00%
==== ==== ====
EXPENSE REIMBURSEMENTS):(2)
</TABLE>
- --------------------
(1) Absent fee waivers, management fees would be 0.90% for the Pacific
Growth Fund and 1.10% for the Emerging Markets Fund and the Combined Fund.
(2) Absent fee waivers and expense reimbursements, total fund operating
expenses would be 3.11% for the Pacific Growth Fund, 2.79% for the Emerging
Markets Fund and 2.46% for the Combined Fund.
EXAMPLE: (3)
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
PACIFIC GROWTH EMERGING COMBINED FUND
FUND MARKETS FUND PRO FORMA
---- ------------ ---------
1 year ........... $20 $20 $20
3 years .......... 63 63 63
5 years .......... 108 108 108
10 years ......... 233 233 233
- --------------------
(3) THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED AMOUNT.
THIS EXAMPLE ASSUMES THAT ALL DIVIDENDS AND OTHER DISTRIBUTIONS ARE
REINVESTED AND THAT THE PERCENTAGE AMOUNTS LISTED UNDER TOTAL FUND OPERATING
EXPENSES ABOVE REMAIN THE SAME IN THE YEARS SHOWN.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
3
<PAGE>
PACIFIC GROWTH FUND-PRIMARY B SHARES
EMERGING MARKETS FUND-PRIMARY B SHARES
<TABLE>
<CAPTION>
PACIFIC GROWTH EMERGING COMBINED FUND
FUND MARKETS FUND PRO FORMA
---- ------------ ---------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None
Maximum Deferred Sales Load None None None
(as a percentage of redemption proceeds) .......
Redemption Fees .................................... None None None
Exchange Fees ...................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after fee waivers)(1).............. 0.00% 0.31% 0.64%
12b-1 Fees/Shareholder Servicing Fees(2)............ 0.50% 0.50% 0.50%
Other Expenses(after expense reimbursements) ....... 2.00% 1.69% 1.36%
---- ---- ----
TOTAL FUND OPERATING EXPENSES (AFTER FEE WAIVERS AND 2.50% 2.50% 2.50%
==== ==== ====
EXPENSE REIMBURSEMENTS):(3)
</TABLE>
- --------------------
(1) Absent fee waivers, management fees would be 0.90% for the Pacific
Growth Fund and 1.10% for the Emerging Markets Fund and the Combined Fund.
(2) Absent fee waivers, distribution and shareholder servicing fees
would be 0.60% for the Pacific Growth Fund, Emerging Markets Fund and the
Combined Fund.
(3) Absent fee waivers and expense reimbursements, total fund operating
expenses would be 3.71% for the Pacific Growth Fund, 3.39% for the Emerging
Markets Fund and 3.06% for the Combined Fund.
EXAMPLE: (4)
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
PACIFIC GROWTH EMERGING COMBINED FUND
FUND MARKETS FUND PRO FORMA
---- ------------ ---------
1 year ............... $25 $25 $25
3 years .............. 78 78 78
5 years .............. 133 133 133
10 years ............. 284 284 284
- --------------------
(4) THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED AMOUNT.
THIS EXAMPLE ASSUMES THAT ALL DIVIDENDS AND OTHER DISTRIBUTIONS ARE
REINVESTED AND THAT THE PERCENTAGE AMOUNTS LISTED UNDER TOTAL FUND OPERATING
EXPENSES ABOVE REMAIN THE SAME IN THE YEARS SHOWN.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
4
<PAGE>
PACIFIC GROWTH FUND-INVESTOR A SHARES
EMERGING MARKETS FUND-INVESTOR A SHARES
<TABLE>
<CAPTION>
PACIFIC GROWTH EMERGING COMBINED FUND
FUND MARKETS FUND PRO FORMA
---- ------------ ---------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ 5.75% 5.75% 5.75%
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None
Maximum Deferred Sales Load
(as a percentage of redemption proceeds)(1)..... 1.00% 1.00% 1.00%
Redemption Fees .................................... None None None
Exchange Fees ...................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after fee waivers)(2).............. 0.00% 0.31% 0.64%
12b-1 Fees/Shareholder Servicing Fees............... 0.25% 0.25% 0.25%
Other Expenses (after expense reimbursements) ...... 2.00% 1.69% 1.36%
---- ---- ----
TOTAL FUND OPERATING EXPENSES (AFTER FEE WAIVERS AND 2.25% 2.25% 2.25%
==== ==== ====
EXPENSE REIMBURSEMENTS):(3)
</TABLE>
- --------------------
(1) Certain Investor A Shares that are purchased at net asset value are
subject to a Deferred Sales Load if redeemed within a specified time after
purchase.
(2) Absent fee waivers, management fees would be 0.90% for the Pacific
Growth Fund and 1.10% for the Emerging Markets Fund and the Combined Fund.
(3) Absent fee waivers and expense reimbursements, total fund operating
expenses would be 3.36% for the Pacific Growth Fund, 3.04% for the Emerging
Markets Fund and 2.71% for the Combined Fund.
EXAMPLE: (4)
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
PACIFIC GROWTH EMERGING COMBINED FUND
FUND MARKETS FUND PRO FORMA
---- ------------ ---------
1 year ............. $79 $79 $79
3 years ............ 124 124 124
5 years ............ 171 171 171
10 years ........... 302 302 302
- --------------------
(4) THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED AMOUNT.
THIS EXAMPLE ASSUMES THAT ALL DIVIDENDS AND OTHER DISTRIBUTIONS ARE
REINVESTED AND THAT THE PERCENTAGE AMOUNTS LISTED UNDER TOTAL FUND OPERATING
EXPENSES ABOVE REMAIN THE SAME IN THE YEARS SHOWN.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
5
<PAGE>
PACIFIC GROWTH FUND-INVESTOR B SHARES
EMERGING MARKETS FUND-INVESTOR B SHARES
<TABLE>
<CAPTION>
PACIFIC GROWTH EMERGING COMBINED FUND
FUND MARKETS FUND PRO FORMA
---- ------------ ---------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None
Maximum Deferred Sales Load
(as a percentage of redemption proceeds)(1)..... 5.00% 5.00% 5.00%
Redemption Fees .................................... None None None
Exchange Fees....................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after fee waivers)(2).............. 0.00% 0.31% 0.64%
12b-1 Fees/Shareholder Servicing Fees............... 1.00% 1.00% 1.00%
Other Expenses (after expense reimbursements) ..... 2.00% 1.69% 1.36%
---- ---- ----
TOTAL FUND OPERATING EXPENSES (AFTER FEE WAIVERS AND 3.00% 3.00% 3.00%
==== ==== ====
EXPENSE REIMBURSEMENTS):(3)
</TABLE>
- --------------------
(1) Investor B Shares purchased prior to January 1, 1996 or after July
31, 1997 are subject to the Deferred Sales Load as set forth in the applicable
schedule in the prospectus. The Maximum Deferred Sales Charge is 5.00% in the
first year after purchase, declining to 1.00% in the sixth year after purchase
and eliminated thereafter.
(2) Absent fee waivers, management fees would be 0.90% for the Pacific
Growth Fund and 1.10% for the Emerging Markets Fund and the Combined Fund.
(3) Absent fee waivers and expense reimbursements, total fund operating
expenses would be 4.11% for the Pacific Growth Fund, 3.79% for the Emerging
Markets Fund and 3.46% for the Combined Fund.
6
<PAGE>
EXAMPLE: (4)
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
PACIFIC GROWTH EMERGING COMBINED FUND
FUND MARKETS FUND PRO FORMA
---- ------------ ---------
1 year ............... $80 $80 $80
3 years .............. 123 123 123
5 years .............. 178 178 178
10 years ............. 314 314 314
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) no redemption:
PACIFIC GROWTH EMERGING COMBINED FUND
FUND MARKETS FUND PRO FORMA
---- ------------ ---------
1 year ........................ $30 $30 $30
3 years ....................... 93 93 93
5 years ....................... 158 158 158
10 years ...................... 314 314 314
- --------------------
(4) THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED AMOUNT.
THIS EXAMPLE ASSUMES THAT ALL DIVIDENDS AND OTHER DISTRIBUTIONS ARE
REINVESTED AND THAT THE PERCENTAGE AMOUNTS LISTED UNDER TOTAL FUND OPERATING
EXPENSES ABOVE REMAIN THE SAME IN THE YEARS SHOWN.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
7
<PAGE>
PACIFIC GROWTH FUND-INVESTOR C SHARES
EMERGING MARKETS FUND-INVESTOR C SHARES
<TABLE>
<CAPTION>
PACIFIC GROWTH EMERGING COMBINED FUND
FUND MARKETS FUND PRO FORMA
---- ------------ ---------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ............ None None None
Maximum Sales Load Imposed on
Reinvested Dividends............................ None None None
Maximum Deferred Sales Load
(as a percentage of redemption proceeds) ....... 1.00% 1.00% 1.00%
Redemption Fees .................................... None None None
Exchange Fees ...................................... None None None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees (after fee waivers)(2).............. 0.00% 0.31% 0.64%
12b-1 Fees/Shareholder Servicing Fees............... 1.00% 1.00% 1.00%
Other Expenses (after expense reimbursements)....... 2.00% 1.69% 1.36%
---- ---- ----
TOTAL FUND OPERATING EXPENSES (AFTER FEE WAIVERS AND 3.00% 3.00% 3.00%
==== ==== ====
EXPENSE REIMBURSEMENTS):(3)
</TABLE>
- --------------------
(1) Investor C share that are purchased at net asset value are subject
to a Deferred Sales Load if redeemed within one year of purchase.
(2) Absent fee waivers, management fees would be 0.90% for the Pacific
Growth Fund and 1.10% for the Emerging Markets Fund and the Combined Fund.
(3) Absent fee waivers and expense reimbursements, total fund operating
expenses would be 4.11% for the Pacific Growth Fund, 3.79% for the Emerging
Markets Fund and 3.46% for the Combined Fund.
EXAMPLE: (4)
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% gross annual return and (2) redemption at the end of each time period:
PACIFIC GROWTH EMERGING COMBINED FUND
FUND MARKETS FUND PRO FORMA
---- ------------ ---------
1 year .................... $40 $40 $40
3 years ................... 93 93 93
158 158 158 158
10 years .................. 334 334 334
You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% gross annual return and (2) no redemption:
PACIFIC GROWTH EMERGING COMBINED FUND
FUND MARKETS FUND PRO FORMA
---- ------------ ---------
1 year ..................... $30 $30 $30
3 years .................... 93 93 93
5 years .................... 158 158 158
10 years ................... 334 334 334
8
<PAGE>
- -------------------
(3) THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES
WHICH MAY BE MORE OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS
HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
ANNUAL RETURN; ACTUAL RETURN MAY BE GREATER OR LESS THAN THE ASSUMED AMOUNT.
THESE EXAMPLES ASSUME THAT ALL DIVIDENDS AND OTHER DISTRIBUTIONS ARE
REINVESTED AND THAT THE PERCENTAGE AMOUNTS LISTED UNDER TOTAL FUND OPERATING
EXPENSES ABOVE REMAIN THE SAME IN THE YEARS SHOWN.
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly.
9
<PAGE>
APPENDIX III--MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
10
<PAGE> 22
Nations
Pacific Growth
Fund Portfolio Manager Commentary*
IN THE FOLLOWING INTERVIEW, MS. TEOH SHARES HER VIEWS ON
NATIONS PACIFIC GROWTH FUND'S PERFORMANCE FOR THE
12-MONTH PERIOD ENDED MARCH 31, 1998 AND HER CURRENT
OUTLOOK.
<TABLE>
<S> <C>
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S PHILOSOPHY AND STYLE.
Seok Teoh is Principal The Fund emphasizes growth at a reasonable price in
Portfolio Manager of Nations selecting regions, markets and stocks. By combining active,
Pacific Growth Fund and bottom-up stock selection with risk-controlled country
Portfolio Manager on the Far allocation, we aim to build a portfolio with optimal
East Team of Gartmore Global risk/return characteristics. Local contacts, fundamental
Partners, investment research and seasoned judgment are vital to our investment
sub-adviser to the Fund. process.
INVESTMENT OBJECTIVE WHAT WERE REGIONAL ECONOMIC AND MARKET CONDITIONS LIKE
The Fund seeks long-term DURING THE REPORTING PERIOD?
capital growth by investing During the 12 months ended March 31, 1998, stock markets in
primarily in equity securities the Pacific region (excluding Japan) plunged to levels not
of companies in the Pacific seen since April 1993. At the beginning of the period, the
Basin and the Far East markets of Hong Kong, Korea and Taiwan were buoyant leading
(excluding Japan). up to the transfer of Hong Kong to China on July 1, 1997.
PERFORMANCE REVIEW One day after the handover, however, Thailand devalued its
For the 12-month period ended currency, the baht, as a first step toward a much-needed
March 31, 1998, Nations Pacific economic overhaul. This triggered a wave of currency
Growth Fund Primary A Shares devaluations across Asia -- prompted in part by speculative
provided a total return of attacks on regional currencies -- leading to soaring
(28.35)%. interest rates, a general squeeze on credit, multiple bank
failures, several corporate bankruptcies and plummeting
stock market levels.
In October 1997, Taiwan's central bank reversed an earlier
decision to support its local currency through intervention,
which led to higher interest rates. As a result, Hong Kong,
whose currency is pegged to the U.S. dollar, was also forced
to raise interest rates to defend against currency
speculators. By November 1997, the crisis had spread to
Korea, which joined Indonesia and Thailand in seeking
emergency credit from the International Monetary Fund (IMF)
to prevent debt moratoriums.
Pacific Rim stock markets started to recover during January
1998, with Korea and Thailand posting huge gains, but the
rebound in Korea was short-lived. Indonesia, plagued by food
riots and President Suharto's refusal to cooperate with IMF
reforms, continued to suffer stock market setbacks.
*The outlook of this Fund's portfolio manager may differ
from that presented for other Nations Funds mutual funds.
Source for all statistical data -- Gartmore Global Partners.
INVESTING IN INTERNATIONAL INVESTMENTS MAY INVOLVE SPECIAL
RISKS, INCLUDING FOREIGN TAXATION, CURRENCY RISKS, RISKS
ASSOCIATED WITH POSSIBLE DIFFERENCES IN FINANCIAL STANDARDS
AND OTHER MONETARY AND POLITICAL RISKS ASSOCIATED WITH
FUTURE POLITICAL AND ECONOMIC DEVELOPMENTS.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
</TABLE>
18
<PAGE> 23
Nations
Pacific Growth
Fund Portfolio Manager Commentary continued ...
<TABLE>
<S> <C>
THE FUND'S PERFORMANCE WAS The Australian stock market -- which had offered a measure
HELPED BY OUR EARLY MOVE TO AN of stability during the worst of the Pacific Rim market
OVERWEIGHT STANCE IN AUSTRALIA. decline -- began to lose some of its buoyancy toward the end
of the reporting period because of a fall in commodity
stocks and concerns about the effects of the Asian financial
crisis on intraregional trade.
WHAT COUNTRY ALLOCATION DECISIONS CONTRIBUTED THE MOST TO
THE FUND'S PERFORMANCE?
The Fund's performance was helped by our early move to an
overweight stance in Australia, which became a relative
"safe haven" for investors in the Pacific region during the
crisis. Early in the period, the Fund benefited from an
initially overweight exposure to Hong Kong. Our decision to
underweight the Malaysian stock market during the period was
also beneficial.
WHAT COUNTRY ALLOCATION DECISIONS DETRACTED FROM THE FUND'S
PERFORMANCE?
The Fund's underweight position in Taiwan, which
consistently outperformed the benchmark Morgan Stanley
Capital International Combined Far East (ex Japan) Free
Index (MSCI Far East Index)** during the period, was the
biggest detriment to the Fund's performance. While we have
been steadily increasing exposure to the Taiwanese stock
market, access to direct investments for foreign investors
remains limited.
A SUBSTANTIAL WEIGHTING IN DID ANY PARTICULAR SECTOR DECISIONS CONTRIBUTE TO THE FUND'S
FINANCIAL AND UTILITY STOCKS IN PERFORMANCE?
HONG KONG ADDED VALUE TO THE A substantial weighting in financial and utility stocks in
FUND. Hong Kong added value to the Fund, as both sectors sustained
momentum for much of the period. For example, financial
stocks rose 27.2% in U.S. dollar terms during the period,
while the broad blue-chip stocks in Hong Kong fell 1.2%.
Conversely, low exposure to financial stocks in southeast
Asian markets such as Indonesia and Thailand helped the
Fund. In addition, the Fund benefited from its emphasis on
the stocks of export-oriented issuers in Korea, Singapore
and Taiwan.
WHAT ARE SOME EXAMPLES OF STOCKS HELD BY THE FUND THAT
PERFORMED PARTICULARLY WELL?
Among the Fund's best performing stocks were Telstra (an
Australia-based telecommunications company), HSBC Holdings
(Hong Kong's largest commercial bank) and Siliconware
(Taiwan), an electronics firm.***
**The Morgan Stanley Capital International Combined Far East
(ex Japan) Free Index is an unmanaged,
capitalization-weighted index that tracks 7 countries and
represents only those securities that are available for
investment by international investors. It is unavailable for
investment.
***Portfolio holdings were current as of March 31, 1998, are
subject to change and may not be representative of current
holdings.
</TABLE>
19
<PAGE> 24
Nations
Pacific Growth
Fund Portfolio Manager Commentary continued ...
<TABLE>
<S> <C>
WHAT INVESTMENT DECISIONS HINDERED OVERALL FUND PERFORMANCE
DURING THE PERIOD?
Overexposure to mid-capitalization stocks in Malaysia and
Indonesia hurt performance, as did heavy exposure to
financial stocks in Malaysia and Singapore early in the
period. Among individual stocks, Rashid Hussain (Malaysia),
Woodside Petroleum (Australia) and RHB Capital (Malaysia)
had disappointing performance.
WHAT IS YOUR REGIONAL ECONOMIC AND MARKET OUTLOOK FOR THE
YEAR AHEAD?
Developments in Japan will be crucial to the performance of
stock markets throughout Asia because of Japan's importance
as an economic engine for the region. Outside of Japan,
Malaysia continues to be the market that matters most. It
remains a significant part of the benchmark MSCI Far East
Index, and we are wary of its prospects -- particularly in
the banking sector, which we believe is vulnerable to
further trouble.
The health of the Chinese economy will be another key factor
that could help or hinder a medium-term recovery in Asia.
Strong deflationary pressure in China, caused by massive
restructuring plans, could hamper the pace of economic
recovery in Asia during the coming year.
Also important will be the outcome of the standoff between
Indonesian President Suharto and the IMF, which is pressing
for economic reforms and an end to political cronyism. Left
unaddressed, conditions in Indonesia could result in
hyperinflation.
In Hong Kong, the recent budget demonstrated the former
colony's fiscal strength and the government's commitment to
stability in the residential property market.
WHAT INVESTMENT OPPORTUNITIES DO YOU ANTICIPATE IN THIS
ENVIRONMENT?
We believe that the property sector in Hong Kong could be
favorable if the outlook for interest rates improves. In
Thailand, we are encouraged by progress in restructuring the
corporate and banking sectors. Otherwise, markets such as
Taiwan, the Philippines and Singapore should continue to
offer opportunities for bargain hunters, as current stock
values are low and longer-term earnings prospects are
positive.
</TABLE>
20
<PAGE> 25
Nations
Pacific Growth
Fund Portfolio Manager Commentary continued ...
<TABLE>
<S> <C>
HOW ARE YOU POSITIONING THE FUND TO TAKE ADVANTAGE OF THESE
ANTICIPATED DEVELOPMENTS?
We have already begun to take advantage of current low
prices for selected stocks in Taiwan, the Philippines and
Singapore. In Taiwan, we favor domestic companies and
exporters. The Fund remains underweighted in Hong Kong but
not aggressively so. We will seek to add selectively to the
Fund's Hong Kong property stocks, but only if the
interest-rate outlook is positive. In Thailand, we expect to
add to the Fund's blue-chip stock holdings if this is
justified by the medium-term outlook for profits.
</TABLE>
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/98)
[PIE CHART]
0.9% Other
1.0% New Zealand
1.3% Indonesia
2.2% South Korea
2.3% Thailand
4.7% Philippines
9.4% Malaysia
10.9% Singapore
11.3% Taiwan
18.5% Australia
37.5% Hong Kong
<TABLE>
<C> <S> <C>
TOP TEN HOLDINGS
(AS A % OF NET ASSETS AS OF 3/31/98)
-----------------------------------------
1 HSBC Holdings plc 6.4%
-----------------------------------------
2 Telstra Corporation Ltd., ADR 5.2%
-----------------------------------------
3 Hutchison Whampoa Ltd. 4.5%
-----------------------------------------
4 Taiwan American Fund Ltd. 4.2%
-----------------------------------------
5 Hang Seng Bank Ltd. 3.7%
-----------------------------------------
6 CLP Holdings Ltd. 3.4%
-----------------------------------------
7 Cheung Kong Holdings Ltd. 3.4%
-----------------------------------------
8 Sun Hung Kai Properties 3.2%
-----------------------------------------
9 Rothmans of Pall Mall 3.1%
-----------------------------------------
10 ASE Test Ltd., GDR 3.0%
-----------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT AS
OF MARCH 31, 1998, ARE SUBJECT TO
CHANGE AND MAY NOT BE REPRESENTATIVE
OF CURRENT HOLDINGS.
21
<PAGE> 26
Nations
Pacific Growth
Fund Performance
GROWTH OF $10,000 INVESTMENT
Primary A Shares (as of 3/31/98)
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
Measurement Period 'Pacific Growth 'MSCI Far
(Fiscal Year Covered) Fund $7,517' East Index $7,389'
<S> <C> <C>
June 30 1995 10000 10000
9710 10383
1995 9745 10894
10266 11101
10383 11168
10282 10670
1996 10773 9796
10491 8763
11509 10514
9938 9135
1997 7238 7190
Mar. 31 1998 7517 7389
</TABLE>
Investor B Shares (as of 3/31/98)*
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
Measurement Period 'Pacific Growth 'MSCI Far
(Fiscal Year Covered) Fund $7,097' East Index $7,389'
<S> <C> <C>
June 30 1995 10000 10000
9690 10383
1995 9698 10894
10188 11101
10279 11168
10148 10670
1996 10609 9796
10309 8763
11279 10514
9718 9135
1997 7054 7190
Mar. 31 1998 7097 7389
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN
Primary A Shares
SINCE INCEPTION
(6/30/95 through 3/31/98) (9.86)%
The charts to the left show the growth
in value of a hypothetical $10,000
investment in Primary A and Investor B
Shares of Nations Pacific Growth Fund
from the date each class of shares was
first offered. The Morgan Stanley
Capital International Combined Far East
(ex Japan) Free Index ("MSCI Far East
Index") is an unmanaged,
capitalization-weighted index that
tracks 7 countries and represents only
those securities that are available for
investment by international investors.
It is unavailable for investment. The
performance shown reflects the
performance of Primary A and Investor B
Shares. The performance of Primary B,
Investor A, and Investor C Shares may
vary based on the differences in sales
loads and fees paid by the shareholders
investing in each class.
AVERAGE ANNUAL TOTAL RETURN
Investor B Shares
SINCE
INCEPTION NAV CDSC*
(6/30/95 through
3/31/98) (10.75)% (11.72)%
</TABLE>
TOTAL RETURN (AS OF 3/31/98)
<TABLE>
<CAPTION>
PRIMARY A PRIMARY B INVESTOR A INVESTOR B INVESTOR C
<S> <C> <C> <C> <C> <C> <C>
Inception Date 6/30/95 6/28/96 6/30/95 6/30/95 6/30/95
NAV CDSC*
- ------------------------------------------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE (28.35)% (28.77)% (28.59)% (29.04)% (32.57)% (28.91)%
- ------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
Since Inception (9.86)% (17.22)% (10.12)% (10.75)% (11.72)% (10.53)%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual total returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
Figures at net asset value (NAV) do not reflect any sales charges.
22
<PAGE> 27
Nations
Emerging Markets
Fund Portfolio Manager Commentary*
IN THE FOLLOWING INTERVIEW, MR. EHRMANN SHARES HIS VIEWS
ON NATIONS EMERGING MARKETS FUND'S PERFORMANCE FOR THE
12-MONTH PERIOD ENDED MARCH 31, 1998 AND HIS CURRENT
OUTLOOK.
<TABLE>
<S> <C>
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S PHILOSOPHY AND STYLE.
Philip Ehrmann is Principal The Fund emphasizes growth at a reasonable price in
Portfolio Manager of Nations selecting regions, markets and stocks. By combining active,
Emerging Markets Fund and is bottom-up stock selection with risk-controlled country
the Head of the Emerging allocation, we aim to build a portfolio with optimal
Markets Team for Gartmore risk/return characteristics. Because emerging markets can
Global Partners, investment change rapidly, the ability to move freely between markets
sub-adviser to the Fund. to take advantage of shifting economic conditions is
INVESTMENT OBJECTIVE important to our active management style. Therefore, we
The Fund seeks long-term emphasize larger, more liquid securities.
capital growth by investing WHAT WERE ECONOMIC AND MARKET CONDITIONS LIKE IN THE
primarily in equity securities EMERGING MARKETS ARENA DURING THE REPORTING PERIOD?
of companies in emerging market Without question, the overriding influence on emerging
countries, such as those in markets during the 12 months ended March 31, 1998, was the
Latin America, Eastern Europe, precipitous fall in stock markets across Asia. Although the
the Pacific Basin, the Far storm clouds had been gathering since the beginning of the
East, Africa and India. period -- with deteriorating economic fundamentals putting
PERFORMANCE REVIEW pressure on corporate earnings across the region -- what
For the 12-month period ended became a fully blown Asian currency crisis sparked a global
March 31, 1998, Nations decline in stock values in October 1997, from which
Emerging Markets Fund Primary A non-Asian emerging markets could hardly escape.
Shares provided a total return The Asian crisis, however, did not prevent emerging markets
of (6.39)%. outside the region from rising for the period as a whole --
testimony to the diverse nature of these markets. Latin
American markets came under heavy pressure but recovered
their poise fairly quickly and ended the period 11.2% higher
in U.S. dollar terms as measured by the International
Finance Corporation (IFC) Latin America Index. Mexico's rise
was particularly strong (+25.2% in U.S. dollar terms), while
Brazil (+12.5%) and Argentina (+14.0%) enjoyed reasonably
good returns in U.S. dollar terms.
*The outlook of this Fund's portfolio manager may differ
from that presented for other Nations Funds mutual funds.
Source for all statistical data -- Gartmore Global Partners
INVESTING IN INTERNATIONAL INVESTMENTS MAY INVOLVE SPECIAL
RISKS, INCLUDING FOREIGN TAXATION, CURRENCY RISKS, RISKS
ASSOCIATED WITH POSSIBLE DIFFERENCES IN FINANCIAL STANDARDS
AND OTHER MONETARY AND POLITICAL RISKS ASSOCIATED WITH
FUTURE POLITICAL AND ECONOMIC DEVELOPMENTS.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
</TABLE>
23
<PAGE> 28
Nations
Emerging Markets
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
Among emerging European markets, Portugal soared 86.1% and
Hungary gained 46.7% in U.S. dollar terms. Elsewhere, India
registered a gain of 5.1% in U.S. dollar terms. Russia
attracted investor interest and was added to the benchmark
IFC Investables Index in November 1997.**
HOW DID U.S. STOCK MARKET VOLATILITY IN 1997 AFFECT THE
EMERGING MARKETS?
Emerging markets clearly felt the impact of stock market
volatility in the U.S. during the period. Historically, the
correlation between the emerging markets and the U.S. stock
market has been relatively low. For example, over the past
five years, the correlation between the Standard & Poor's
500 Composite Stock Price Index (S&P 500 Index) and the IFC
Composite was only about 0.4. (The higher the correlation
between the two indexes, the more they would be expected to
rise and fall in lockstep. A perfect correlation would be
1.0.) For the reporting period, however, the correlation
between the IFC Composite and the S&P 500 was unusually
high, at approximately 0.8. This higher correlation was
somewhat of an anomaly, reflecting the extreme effects of
the October 1997 plunge on Wall Street, which sent stock
markets down across the world.+
The Fund gained the most WHAT COUNTRY OR REGIONAL ALLOCATION DECISIONS CONTRIBUTED
benefit from an underweighting THE MOST TO THE FUND'S PERFORMANCE?
in the Far East relative to the The Fund gained the most benefit from an underweighting in
IFC Investables Index. In the Far East relative to the IFC Investables Index. In
particular, our early reduction particular, our early reduction in exposure to Malaysia and
in exposure to Malaysia and lack of exposure to Thailand added relative value, as these
lack of exposure to Thailand markets were among the hardest hit by the Asian financial
added relative value. crisis. At the same time, the Fund's overweight position in
Latin America added value, as did exposure to emerging
European markets such as Hungary, Poland and Portugal.
WHAT OTHER INVESTMENT DECISIONS CONTRIBUTED TO THE FUND'S
PERFORMANCE?
The Fund enjoyed notably strong relative performance in
Israel, primarily due to its investment in Supersol, the
country's leading food retailer; this investment has
recently been sold. In South Africa, the Fund's investment
in Nedcor helped lead to outperformance. In Brazil, the Fund
realized higher returns through investments in such leading
companies as Telebras.++
**The IFC Latin America Index is an unmanaged,
capitalization-weighted index which tracks stocks in
Argentina, Brazil, Chile, Colombia, Mexico, Peru and
Venezuela. It is unavailable for investment.
+The IFC Composite is used in the computations as opposed to
the IFC Investables Index because of the composite's longer
history. The IFC Composite Index is a
capitalization-weighted index, investing in 32 countries
from the perspective of domestic investors. It is unmanaged
and unavailable for investment. The S&P 500 index is a
market-capitalization-weighted Index that measures the
market value of 400 industrial stocks, 60 transportation and
utility company stocks and 40 financial issues. It is
unmanaged and unavailable for investment.
++Portfolio holdings were current as of March 31, 1998, are
subject to change and may not be representative of current
holdings.
The IFC Investables Index is an unmanaged,
capitalization-weighted index which tracks more than 4,400
stocks in 25 emerging markets in Asia, Latin America,
Eastern Europe, Africa and the Middle East. It is
unavailable for investment.
</TABLE>
24
<PAGE> 29
Nations
Emerging Markets
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
WHAT ARE SOME EXAMPLES OF STOCKS IN THE FUND THAT PERFORMED
PARTICULARLY WELL?
Among the Fund's best performing individual stocks were oil
and gas company Tatneft (Russia), Yapi Kredi Bank (Turkey),
Hellenic Bottling (Greece) and cement company Cimpor
(Portugal).
WHAT INVESTMENT DECISIONS HINDERED OVERALL PORTFOLIO
PERFORMANCE DURING THE PERIOD?
The Fund was underweighted in Turkey, where the stock market
rose impressively during the period. In terms of stock
selection, performance was also hurt by our decision to hold
United Engineers (Malaysia), a cash-rich company that was
effectively forced to acquire a nearly bankrupt construction
company in the wake of the Asian crisis. Other stocks with
disappointing performance for the period included LG
Information & Communications (Korea) and Resorts World
(Malaysia).
WHAT IS YOUR ECONOMIC AND MARKET OUTLOOK FOR THE EMERGING
MARKETS IN THE YEAR AHEAD?
In Latin America, most stock market valuations remain
reasonable. This is particularly true in Brazil, where
cyclical economic conditions are favorable and interest
rates are still high but falling rapidly. Monetary policy
has been tightened in Mexico, which we had expected and
believe to be appropriate. Low oil prices, if they persist,
could restrain output growth in Mexico, but this restraint
is not unwelcome if it causes Mexican authorities to
maintain tight monetary policy.
In Asia, progress will likely be slow. The process of
recapitalizing the Thai, Korean and Indonesian banking
systems is only beginning. Until economic and corporate
fundamentals stabilize, these markets are likely to remain
vulnerable and volatile.
WHAT INVESTMENT OPPORTUNITIES DO YOU ANTICIPATE IN THIS
ENVIRONMENT?
Thailand and Korea are emerging from the Asian crisis with
some credit and may present selective opportunities.
Similarly, Malaysia, which has avoided an external debt
crisis, has announced reforms in the recent budget which, if
implemented, would provide clear evidence of an improving
trend.
In Brazil, confidence has been bolstered by a rapid
reduction in domestic interest rates, which have fallen from
over 40% at the peak of the Asian currency debacle to less
than 30%.
Among European emerging markets, economic and market
fundamentals look positive in Hungary and Poland. In
addition, Greece has now committed itself to fiscal and
monetary discipline that is likely to act as the precursor
to lower interest rates and sustained growth. However, the
Portuguese stock market, having outperformed other markets
in the IFC Investables Index so strongly, could suffer from
profit-taking.
</TABLE>
25
<PAGE> 30
Nations
Emerging Markets
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
HOW ARE YOU POSITIONING THE FUND TO TAKE ADVANTAGE OF THESE
ANTICIPATED DEVELOPMENTS?
We are likely to maintain the Fund's overweightings in
Hungary, Poland and Latin America. In Asia, we have begun to
reduce the magnitude of the Fund's substantial
underweighting by adding positions for the first time in
almost two years. The Fund's Asian investments, however, are
focused only on the strongest business franchises currently
selling at what we believe to be deeply depressed prices.
</TABLE>
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/98)
[PIE CHART]
26.6% Other
4.8% Taiwan
3.9% Greece
4.5% Chile
4.6% Malaysia
5.1% India
5.2% Argentina
5.3% Hong Kong
7.0% South Africa
14.4% Mexico
18.6% Brazil
<TABLE>
<C> <S> <C>
TOP TEN HOLDINGS
(AS A % OF NET ASSETS AS OF 3/31/98)
-----------------------------------------
1 Telebras, ADR 5.1%
-----------------------------------------
2 East European Development 3.2%
Fund
-----------------------------------------
3 Petroleo Brasileiros NPV 2.5%
-----------------------------------------
4 Carso Global Telecom, ADR 2.5%
-----------------------------------------
5 Amalgamated Banks of South 2.3%
Africa
-----------------------------------------
6 Compania Vale do Rio Doce, 2.2%
ADR
-----------------------------------------
7 Grupo Carso SA de CV, ADR 2.2%
-----------------------------------------
8 Grupo Televisa SA, GDR 1.9%
-----------------------------------------
9 Formosa Fund, IDR 1.9%
-----------------------------------------
10 CEMIG Companhia, New, ADR 1.9%
-----------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT AS
OF MARCH 31, 1998, ARE SUBJECT TO
CHANGE AND MAY NOT BE REPRESENTATIVE
OF CURRENT HOLDINGS.
26
<PAGE> 31
Nations
Emerging Markets
Fund Performance
GROWTH OF $10,000 INVESTMENT
Primary A Shares (as of 3/31/98)
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) 'Emerging Markets $10,839' 'IFC Investables Index $9,460'
<S> <C> <C>
June 30 1995 10000 10000
9880 9853
1995 9782 9560
10342 10147
10761 10850
10410 10492
1996 10636 10314
11580 11304
12680 12079
12312 10993
1997 10318 8814
Mar. 31 1998 10839 9460
</TABLE>
Investor B Shares (as of 3/31/98)*
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) 'Emerging Markets $10,252' 'IFC Investables Index $9,460'
<S> <C> <C>
June 30 1995 10000 10000
9850 9853
1995 9730 9560
10260 10147
10650 10850
10280 10492
1996 10471 10314
11377 11304
12433 12079
12040 10993
1997 10069 8814
Mar. 31 1998 10252 9460
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN
Primary A Shares
SINCE INCEPTION
(6/30/95 through 3/31/98) 2.97%
The charts to the left show the growth
in value of a hypothetical $10,000
investment in Primary A and Investor B
Shares of Nations Emerging Markets Fund
from the date each class of shares was
first offered. The IFC Investables
Index is an unmanaged,
capitalization-weighted index which
tracks more than 4,400 stocks in 25
emerging markets in Asia, Latin
America, Eastern Europe, Africa and the
Middle East. It is unavailable for
investment. The performance shown
reflects the performance of Primary A
and Investor B Shares. The performance
of Primary B, Investor A and Investor C
Shares may vary based on the
differences in sales loads and fees
paid by the shareholders investing in
each class.
AVERAGE ANNUAL TOTAL RETURN
Investor B Shares
SINCE INCEPTION NAV CDSC*
(6/30/95 through 3/31/98) 1.97% 0.91%
</TABLE>
TOTAL RETURN (AS OF 3/31/98)
<TABLE>
<CAPTION>
PRIMARY A PRIMARY B INVESTOR A INVESTOR B INVESTOR C
<S> <C> <C> <C> <C> <C> <C>
Inception Date 6/30/95 6/28/96 6/30/95 6/30/95 6/30/95
NAV CDSC*
- -----------------------------------------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE (6.39)% (6.80)% (6.60)% (7.25)% (11.89)% (7.17)%
- -----------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
Since Inception 2.97% 0.02% 2.74% 1.97% 0.91% 2.19%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual total returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
Figures at net asset value (NAV) do not reflect any sales charges.
27
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
DATED FEBRUARY 26, 1999
NATIONS FUND PORTFOLIOS, INC.
101 South Tryon Street, 33rd Floor
Charlotte, North Carolina 28255
1-800-321-7854
(MARCH 29, 1999 SPECIAL MEETING OF SHAREHOLDERS OF NATIONS PACIFIC GROWTH FUND)
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Proxy/Prospectus dated the date hereof, for the
Special Meeting of Shareholders of Nations Pacific Growth Fund to be held on
March 29, 1999. Copies of the Proxy/Prospectus may be obtained at no charge by
writing or calling Nations at the address or telephone number set forth above.
Unless otherwise indicated, capitalized terms used herein and not otherwise
defined have the same meanings as are given to them in the Proxy/Prospectus.
INCORPORATION OF DOCUMENTS BY REFERENCE IN STATEMENT OF ADDITIONAL INFORMATION
Further information about the Primary A, Primary B, Investor A,
Investor B and Investor C Shares of Nations Pacific Growth Fund and Nations
Emerging Markets Fund is contained in and incorporated herein by reference to
the statement of additional information for Nations Pacific Growth Fund and
Nations Emerging Markets Fund, dated August 1, 1998, as supplemented.
The audited financial statements and related Report of Independent
Accountants for the year ended March 31, 1998 and the unaudited financial
statements for the semi-annual period ended September 30, 1998 for the Nations
Pacific Growth Fund and Nations Emerging Markets Fund are incorporated herein by
reference. No other parts of the annual and semi-annual reports are incorporated
herein by reference.
1
<PAGE>
TABLE OF CONTENTS
General Information...........................................................x
Introductory Note to PRO FORMA Financial Information..........................x
2
<PAGE>
GENERAL INFORMATION
The Consolidation contemplates the transfer of all of the assets and
liabilities of each class of the Pacific Growth Fund to a corresponding class of
the Emerging Markets Fund in exchange for Shares of designated classes of the
Emerging Markets Fund.
The Shares issued by Nations will have an aggregate value equal to the
aggregate value of the shares of the respective class of the Pacific Growth Fund
that were outstanding immediately before the Closing.
After the transfer of their assets and liabilities in exchange for
Shares of the Emerging Markets Fund, the Company will distribute the Shares of
the Emerging Markets Fund to the Pacific Growth Fund shareholders in liquidation
of that Fund. Each shareholder owning shares of a particular class of the
Pacific Growth Fund at the Closing will receive Shares of the corresponding
class of the Emerging Markets Fund of equal value, and will receive any unpaid
dividends or distributions that were declared before the Closing on shares of
the Pacific Growth Fund. Nations will establish an account for each former
shareholder of the Pacific Growth Fund reflecting the appropriate number of
Emerging Markets Fund Shares distributed to the shareholder. These accounts will
be substantially identical to the accounts maintained by Nations for each
shareholder. Upon completion of the consolidation with respect to the Pacific
Growth Fund, all outstanding shares of that Fund will have been redeemed and
cancelled in exchange for Shares of the Emerging Markets Fund distributed.
For further information about the transaction, see the
Proxy/Prospectus.
3
<PAGE>
INTRODUCTORY NOTE TO PRO FORMA FINANCIAL INFORMATION
The following unaudited PRO FORMA information gives effect to the
proposed transfer of the assets and liabilities of the Pacific Growth Fund to
the Emerging Markets Fund, accounted for as if the transfer had occurred as of
September 30, 1998. In addition, the PRO FORMA combined statement has been
prepared based upon the proposed fee and expense structure of the surviving
combined Fund (i.e., Emerging Markets Fund).
The PRO FORMA financial information should be read in conjunction with
the historical financial statements and notes thereto of the Emerging Markets
Fund and Pacific Growth Fund included or incorporated herein by reference in
this Statement of Additional Information. The combination of such Funds will be
accounted for as a taxable consolidation.
4
<PAGE>
<TABLE>
<CAPTION>
Nations Pacific Growth Fund/Nations Emerging Markets Fund
Pro Forma Combining Schedule of Investments (unaudited)
September 30, 1998
Nations
Nations Pacific Emerging Combined Pro
Growth Fund Markets Fund Forma
Shares/Par Shares/Par Shares/Par Description
- ------------- ------------- ------------- -----------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK - 83.51%
Argentina - 2.22%
150,000 150,000 Astra Cia Argentina De Petroleo SA
11,000 11,000 Banco De Galicia y Buenos Aires SA de CV, ADR
24,000 24,000 Perez Companc SA, ADR
75,000 75,000 Siderca SA
- ------------- ------------- -------------
- 260,000 260,000
- ------------- ------------- -------------
AUSTRALIA - 14.83%
41,643 * 41,643 AMP Ltd.
49,000 * 49,000 Commonwealth Bank of Australia
199,000 * 199,000 Foster's Brewing Group Ltd.
109,000 * 109,000 Goodman Fielder Ltd.
18,000 * 18,000 Lend Lease Corporation Ltd.
26,000 * 26,000 National Australia Bank Ltd.
38,000 * 38,000 News Corporation Ltd. (The)
55,292 * 55,292 Southern Pacific Petroleum NL
188,000 * 188,000 TAB Ltd.
18,000 * 18,000 Telstra Corporation Ltd., ADR
39,000 * 39,000 Woodside Petroleum Ltd.
- ------------- ------------- -------------
780,935 - 780,935
- ------------- ------------- -------------
BRAZIL - 3.69%
Companhia Brasileira de Distribuicao Grupo
11,700 11,700 Pao de Acucar, ADR
14,500 14,500 Companhia Energetica de Minas Gerais, ADR (CEMIG)
8,000 8,000 Telecomunicacoes Brasileiras SA, ADR (Telebras)
- ------------- ------------- -------------
- 34,200 34,200
- ------------- ------------- -------------
CHILE - 2.49%
18,000 18,000 Cia de Telecomunicaciones de Chile SA, ADR
17,500 17,500 Enersis SA, ADR
- ------------- ------------- -------------
- 35,500 35,500
- ------------- ------------- -------------
EGYPT - 0.96%
18,000 18,000 Suez Cement Company, GDR
- ------------- ------------- -------------
- 18,000 18,000
- ------------- ------------- -------------
GREECE - 4.83%
4,500 4,500 Alpha Credit Bank
6,000 6,000 Hellenic Bottling Company SA
21,224 21,224 Hellenic Telecommunication Organization SA (OTE)
8,000 8,000 National Bank Of Greece SA, GDR
5,000 5,000 STET Hellas Telecommunications SA, ADR
- ------------- ------------- -------------
- 44,724 44,724
- ------------- ------------- -------------
HONG KONG - 14.52%
66,000 * 66,000 Cheung Kong (Holdings) Ltd.
108,000 * 18,000 126,000 CLP Holdings Ltd.
209,000 * 209,000 Hong Kong Telecommunications Ltd.
161,000 * 161,000 Hongkong Electric Holdings Ltd.
28,000 * 28,000 HSBC Holdings PLC
130,000 * 58,000 188,000 Hutchison Whampoa Ltd.
60,000 * 60,000 Television Broadcasts Ltd.
138,000 * 138,000 VTech Holdings Ltd.
- ------------- ------------- -------------
900,000 76,000 976,000
- ------------- ------------- -------------
HUNGARY - 2.29%
13,000 13,000 Demaz Rt, GDR
11,000 11,000 Magyar Tavkozlesi Rt, ADR (Matav)
13,100 13,100 MOL Magyar Olaj-es Gazipari Rt, GDR
- ------------- ------------- -------------
- 37,100 37,100
- ------------- ------------- -------------
INDIA - 2.71%
70,000 70,000 Reliance Industries Ltd., GDR
35,000 35,000 Videsh Sanchar Nigam Ltd., GDR
- ------------- ------------- -------------
- 105,000 105,000
- ------------- ------------- -------------
INDONESIA - 0.77%
26,000 * 26,000 Gulf Indonesia Resources Ltd.
- ------------- ------------- -------------
26,000 - 26,000
- ------------- ------------- -------------
ISRAEL - 2.64%
160,000 160,000 Bank Hapoalim
<CAPTION>
Nations Pacific Nations Emerging Combined Pro
Growth Fund Markets Fund Forma
Value (000) Value (000) Value (000)
- ------------------------------------------------
<S> <C> <C>
$ - $ 166 $ 166
174 174
195 195
90 90
--------------------------------------
0 625 625
--------------------------------------
505 505
580 580
434 434
143 143
384 384
314 314
245 245
59 59
310 310
1,001 1,001
204 204
--------------------------------------
4,179 0 4,179
--------------------------------------
153 153
334 334
552 552
--------------------------------------
0 1,039 1,039
--------------------------------------
344 344
357 357
--------------------------------------
0 701 701
--------------------------------------
269 269
--------------------------------------
0 269 269
--------------------------------------
335 335
148 148
509 509
215 215
155 155
--------------------------------------
0 1,362 1,362
--------------------------------------
306 306
527 88 615
411 411
554 554
513 513
685 305 990
153 153
550 550
--------------------------------------
3,699 393 4,092
--------------------------------------
156 156
238 238
252 252
--------------------------------------
0 646 646
--------------------------------------
378 378
385 385
--------------------------------------
0 763 763
--------------------------------------
216 216
--------------------------------------
216 0 216
--------------------------------------
391 391
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nations
Nations Pacific Emerging Combined Pro
Growth Fund Markets Fund Forma
Shares/Par Shares/Par Shares/Par Description
- ------------- ------------- ------------- -----------------------------------------------------------
<S> <C> <C> <C>
239,000 239,000 Bank Leumi Le-Israel
- ------------- ------------- -------------
- 399,000 399,000
- ------------- ------------- -------------
MALAYSIA - 2.45%
185,000 185,000 Berjaya Sports Toto Berhad
28,000 * 200,000 228,000 Malaysia International Shipping Berhad, Foreign Shares
47,000 * 47,000 Petronas Gas Berhad
33,000 * 33,000 Rothmans of Pall Mall (Malaysia) Berhad
150,000 150,000 Telekom Malaysia Berhad
- ------------- ------------- -------------
108,000 535,000 643,000
- ------------- ------------- -------------
MEXICO - 7.74%
6,000 6,000 ARA SA de CV, ADR
77,000 77,000 Carso Global Telecom, ADR
23,000 23,000 Cifra SA de CV, ADR
21,500 21,500 Empresas ICA Sociedad Controladora SA de CV, ADR
60,000 60,000 Grupo Carso SA de CV, ADR
500,000 500,000 Grupo Corvi SA, UBL Shares
18,000 18,000 Grupo Imsa SA de CV, ADR
8,000 8,000 Grupo Televisa SA, GDR
90,000 90,000 Kimberly-Clark de Mexico SA de CV 'A'
15,500 15,500 Panamerican Beverages Inc., Class A
- ------------- ------------- -------------
- 819,000 819,000
- ------------- ------------- -------------
NEW ZEALAND - 0.45%
19,000 * 19,000 Telecom Corporation of New Zealand Ltd.
30,000 * 30,000 Telecom Corporation of New Zealand Ltd., IR Shares
- ------------- ------------- -------------
49,000 - 49,000
- ------------- ------------- -------------
PHILIPPINES - 0.65%
103,000 * 103,000 Ayala Corporation, Class B
300,000 * 300,000 Ayala Land Inc., Class B
6,100 * 6,100 Philippine Long Distance Telephone Company
- ------------- ------------- -------------
409,100 - 409,100
- ------------- ------------- -------------
POLAND - 0.66%
18,000 18,000 Bank Handlowy W Warszawie
- ------------- ------------- -------------
- 18,000 18,000
- ------------- ------------- -------------
PORTUGAL - 2.51%
7,000 7,000 Cimpor-Cimentos de Portugal, SGPS SA
13,500 13,500 Companhia de Seguros Mundial Confianca SA
6,500 6,500 Portugal Telecom SA, ADR
- ------------- ------------- -------------
- 27,000 27,000
- ------------- ------------- -------------
SINGAPORE - 4.91%
11,000 * 11,000 Creative Technology Ltd.
43,564 * 43,564 Singapore Press Holdings Ltd., Alien Shares
326,073 * 326,073 Singapore Technologies Engineering Ltd.
241,000 * 241,000 Singapore Telecommunications Ltd.
67,000 * 67,000 Venture Manufacturing (Singapore) Ltd.
- ------------- ------------- -------------
688,637 - 688,637
- ------------- ------------- -------------
SOUTH AFRICA - 3.19%
43,500 43,500 ABSA Group Ltd.
15,000 15,000 Liberty Life Association of Africa Ltd.
11,500 11,500 Nedcor Ltd., GDR
23,000 23,000 Rembrandt Group Ltd.
12,500 12,500 South African Breweries Ltd.
- ------------- ------------- -------------
- 105,500 105,500
- ------------- ------------- -------------
SOUTH KOREA - 4.14%
13,000 * 13,000 Korea Electric Power Corporation
35,000 35,000 LG Electronics
4,700 * 4,700 Pohang Iron & Steel Company Ltd., ADR
800 * 10,500 11,300 Samsung Electronics
77 * 77 Samsung Electronics, GDR 1/2 Vtg.
19,000 * 27,000 46,000 SK Telecom Company Ltd., ADR
- ------------- ------------- -------------
37,577 72,500 110,077
- ------------- ------------- -------------
TAIWAN - 3.51%
16,640 * 16,640 ASE Test Ltd., GDR
9,840 * 35,000 44,840 Siliconware Precision Industries Company, GDR
10,150 * 28,000 38,150 Taiwan Semiconductor Manufacturing Company Ltd., ADR
- ------------- ------------- -------------
36,630 63,000 99,630
- ------------- ------------- -------------
THAILAND - 0.62%
<CAPTION>
Nations Pacific Nations Emerging Combined Pro
Growth Fund Markets Fund Forma
Value (000) Value (000) Value (000)
- ------------------------------------------------
<S> <C> <C>
353 353
- ------------------------------------------------
0 744 744
- ------------------------------------------------
121 121
23 166 189
66 66
118 118
196 196
- ------------------------------------------------
207 483 690
- ------------------------------------------------
122 122
376 376
296 296
126 126
360 360
79 79
176 176
155 155
216 216
276 276
- ------------------------------------------------
0 2,182 2,182
- ------------------------------------------------
73 73
53 53
- ------------------------------------------------
126 0 126
- ------------------------------------------------
12 12
44 44
128 128
- ------------------------------------------------
184 0 184
- ------------------------------------------------
185 185
- ------------------------------------------------
0 185 185
- ------------------------------------------------
195 195
278 278
234 234
- ------------------------------------------------
0 707 707
- ------------------------------------------------
101 101
361 361
313 313
403 403
206 206
- ------------------------------------------------
1,384 0 1,384
- ------------------------------------------------
158 158
228 228
188 188
138 138
188 188
- ------------------------------------------------
0 900 900
- ------------------------------------------------
180 180
286 286
65 65
22 287 309
1 1
134 191 325
- ------------------------------------------------
402 764 1,166
- ------------------------------------------------
152 152
81 289 370
124 343 467
- ------------------------------------------------
357 632 989
- ------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nations
Nations Pacific Emerging Combined Pro
Growth Fund Markets Fund Forma
Shares/Par Shares/Par Shares/Par Description
- ------------- ------------- ------------- -----------------------------------------------------------
<S> <C> <C> <C>
20,000 * 20,000 PTT Exploration and Production Public Company Ltd.
- ------------- ------------- -------------
20,000 - 20,000
- ------------- ------------- -------------
TURKEY - 0.73%
18,000,000 18,000,000 Yapi ve Kredi Bankasi AS
- ------------- ------------- -------------
- 18,000,000 18,000,000
- ------------- ------------- -------------
- ------------- ------------- -------------
3,055,879 20,649,524 23,705,403 TOTAL COMMON STOCK
- ------------- ------------- -------------
(COST $11,930, $19,032 AND $30,962 RESPECTIVELY)
CONVERTIBLE BONDS - 2.24%
GERMANY - 1.66%
800,000 (1) 800,000 Elektrim SA Conv., 2.000% 05/30/04
- ------------- ------------- -------------
- 800,000 800,000
- ------------- ------------- -------------
SINGAPORE - 0.58%
180,000 * 180,000 Fullerton Global Corporation, Discount Note, 04/02/03
- ------------- ------------- -------------
180,000 - 180,000
- ------------- ------------- -------------
- ------------- ------------- -------------
180,000 800,000 980,000 TOTAL CONVERTIBLE BONDS
- ------------- ------------- -------------
(COST $163, $526 AND $689 RESPECTIVELY)
INVESTMENT COMPANIES - 21.48%
SAUDI ARABIA - 1.27%
55,000 55,000 The Saudi Arabia Investment Fund
- ------------- ------------- -------------
- 55,000 55,000
- ------------- ------------- -------------
SUPRANATIONAL - 0.49%
10,000 10,000 East Europe Development Fund
- ------------- ------------- -------------
- 10,000 10,000
- ------------- ------------- -------------
TAIWAN - 4.13%
51,000 * 51,000 Taiwan American Fund Ltd.
53,000 53,000 Taiwan Index Fund
- ------------- ------------- -------------
51,000 53,000 104,000
- ------------- ------------- -------------
TURKEY - 0.28%
5,200,000 5,200,000 Haci Omer Sabanci Holding AS
- ------------- ------------- -------------
- 5,200,000 5,200,000
- ------------- ------------- -------------
UNITED STATES - 15.31%
1,309,113 * 3,005,739 4,314,852 Nations Cash Reserves
- ------------- ------------- -------------
1,309,113 3,005,739 4,314,852
- ------------- ------------- -------------
- ------------- ------------- -------------
1,360,113 8,323,739 9,683,852 TOTAL INVESTMENT COMPANIES
- ------------- ------------- -------------
(COST $2,255, $4,655 AND $6,910 RESPECTIVELY)
PREFERRED STOCK - BRAZIL - 3.07%
24,000,000 24,000,000 Banco Bradesco SA NPV
540,000 540,000 Companhia Cervejaria Brahma NPV
14,500 14,500 Companhia Vale do Rio Doce, ADR
1,150,000 1,150,000 Petroleo Brasileiro SA NPV (Petrobras)
1,249,998 1,249,998 Telecomunicacoes de Sao Paulo SA NPV (Telesp)
- ------------- ------------- -------------
- 26,954,498 26,954,498 TOTAL PREFERRED STOCK
- ------------- ------------- -------------
(COST $0, $1,338 AND $1,338 RESPECTIVELY)
RIGHTS - 0.02%
Brazil - 0%
2,902,850 2,902,850 Banco Bradesco SA NPV
- ------------- ------------- -------------
- 2,902,850 2,902,850
- ------------- ------------- -------------
SOUTH KOREA - 0.02%
- 1,156 1,156 Samsung Electronics
- ------------- ------------- -------------
- 1,156 1,156
- ------------- ------------- -------------
TAIWAN - 0%
37 * 37 Asustek Computer Inc.
- ------------- ------------- -------------
37 - 37
- ------------- ------------- -------------
- ------------- ------------- -------------
37 2,904,006 2,904,043 TOTAL RIGHTS
- ------------- ------------- -------------
(COST $0, $0 AND $0 RESPECTIVELY)
<CAPTION>
Nations Pacific Nations Emerging Combined Pro
Growth Fund Markets Fund Forma
Value (000) Value (000) Value (000)
- ------------------------------------------------
<S> <C> <C>
176 176
- ------------------------------------------------
176 0 176
- ------------------------------------------------
204 204
- ------------------------------------------------
0 204 204
- ------------------------------------------------
- ------------------------------------------------
10,930 12,599 23,529
- ------------------------------------------------
467 467
- ------------------------------------------------
0 467 467
- ------------------------------------------------
163 163
- ------------------------------------------------
163 0 163
- ------------------------------------------------
- ------------------------------------------------
163 467 630
- ------------------------------------------------
358 358
- ------------------------------------------------
0 358 358
- ------------------------------------------------
138 138
- ------------------------------------------------
0 138 138
- ------------------------------------------------
663 663
501 501
- ------------------------------------------------
663 501 1,164
- ------------------------------------------------
80 80
- ------------------------------------------------
0 80 80
- ------------------------------------------------
1,309 3,006 4,315
- ------------------------------------------------
1,309 3,006 4,315
- ------------------------------------------------
- ------------------------------------------------
1,972 4,083 6,055
- ------------------------------------------------
142 142
212 212
212 212
118 118
181 181
- ------------------------------------------------
0 865 865
- ------------------------------------------------
0 0
- ------------------------------------------------
0 0 0
- ------------------------------------------------
0 7 7
- ------------------------------------------------
0 7 7
- ------------------------------------------------
0 0
- ------------------------------------------------
0 0 0
- ------------------------------------------------
- ------------------------------------------------
0 7 7
- ------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nations
Nations Pacific Emerging Combined Pro
Growth Fund Markets Fund Forma
Shares/Par Shares/Par Shares/Par Description
- ------------- ------------- ------------- -----------------------------------------------------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATION - 2.22%
625,000 * 625,000 U.S. Treasury Bill, Discount Note, 10/01/98
- ------------- ------------- -------------
625,000 - 625,000
- ------------- ------------- -------------
(COST $625, $0 AND $625 RESPECTIVELY)
WARRANTS - 0.1%
Brazil - 0.01%
59,969 59,969 Companhia Cervejaria Brahma, Expire 04/30/03
4,990 4,990 Companhia Cervejaria Brahma, Preferred, Expire 04/30/03
- ------------- ------------- -------------
- 64,959 64,959
- ------------- ------------- -------------
INDONESIA - 0%
230,000 * 230,000 PT Bank Dagang Nasional Indonesia Tbk, Expire 02/14/20
- ------------- ------------- -------------
230,000 - 230,000
- ------------- ------------- -------------
PHILIPPINES - 0.09%
118,000 * 118,000 Jollibee Foods Company, Expire 03/25/03
- ------------- ------------- -------------
118,000 - 118,000
- ------------- ------------- -------------
- ------------- ------------- -------------
348,000 64,959 412,959 TOTAL WARRANTS
- ------------- ------------- -------------
(COST $126, $3 AND $129 RESPECTIVELY)
- ------------- ------------- -------------
5,569,029 59,696,726 65,265,755 TOTAL INVESTMENTS - 112.64%
- ------------- ------------- -------------
(COST $15,099, $25,554 AND $40,653 RESPECTIVELY)
<CAPTION>
Nations Pacific Nations Emerging Combined Pro
Growth Fund Markets Fund Forma
Value (000) Value (000) Value (000)
- ------------------------------------------------
<S> <C> <C>
625 625
- ------------------------------------------------
625 0 625
- ------------------------------------------------
2 2
- ------------------------------------------------
0 2 2
- ------------------------------------------------
0 0
- ------------------------------------------------
0 0 0
- ------------------------------------------------
25 25
- ------------------------------------------------
25 0 25
- ------------------------------------------------
- ------------------------------------------------
25 2 27
- ------------------------------------------------
- ------------------------------------------------
$ 13,715 $ 18,023 $ 31,738
- ------------------------------------------------
</TABLE>
(1) Par value in German Marks.
* Nations Pacific Growth Fund is holding certain securities which may not
meet the investment objective of the combined Fund and most likely will be
liquidated prior to merger date.
<PAGE>
<TABLE>
<CAPTION>
NATIONS PACIFIC GROWTH FUND / NATIONS EMERGING MARKETS FUND
Pro Forma Combining Statement of Net Assets (unaudited)
September 30,1998
Nations
Nations Pacific Emerging Adjustments to Pro Forma
Growth Fund Markets Fund Pro Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
================== ================= =============== =============
<S> <C> <C> <C> <C>
TOTAL INVESTMENTS $ 13,715 $ 18,023 $ - $ 31,738
OTHER ASSETS AND LIABILITIES:
Receivable for investments sold 232 4,377 4,609
Collateral for securities loaned (1,309) (3,006) (4,315)
Payable for Fund shared redeemed (522) (3,197) (3,719)
Other 327 (464) (137)
------------------------------------------------------- -------------
Total Other Assets and Liabilities (1,272) (2,290) - (3,562)
------------------------------------------------------- -------------
NET ASSETS $ 12,443 $ 15,733 $ - $ 28,176
======================================================= =============
NET ASSETS BY CLASS:
Primary A $ 11,086 $ 14,649 $ - $ 25,735
Primary B 10 11 - 21
Investor A 497 345 - 842
Investor B 819 668 - 1,487
Investor C 31 60 - 91
------------------------------------------------------- -------------
$ 12,443 $ 15,733 $ - $ 28,176
------------------------------------------------------- -------------
SHARES OUTSTANDING BY CLASS:
Primary A 2,086 2,283 (359)(a) 4,010
Primary B 2 2 - 4
Investor A 94 54 (16)(a) 132
Investor B 155 106 (25)(a) 236
Investor C 6 10 (1)(a) 15
------------------------------------------------------- -------------
2,343 2,455 (401) 4,397
------------------------------------------------------- -------------
NET ASSET VALUE PER SHARE BY CLASS:
Primary A $ 5.32 $ 6.42 $ - $ 6.42
Primary B $ 5.32 $ 6.38 $ - $ 6.38
Investor A $ 5.30 $ 6.38 $ - $ 6.38
Investor B $ 5.28 $ 6.32 $ - $ 6.32
Investor C $ 5.26 $ 6.30 $ - $ 6.30
</TABLE>
(a) Reflects the issuance of Nations Emerging Markets Fund shares to holders of
shares of Nations Pacific Growth Fund.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
NATIONS PACIFIC GROWTH FUND / NATIONS EMERGING MARKETS FUND
Pro Forma Combining Statement of Operations (unaudited)
Twelve Month Period Ending September 30,1998
Nations
Nations Pacific Emerging Adjustments to Pro Forma
Growth Fund Markets Fund Pro Forma Combined
(in 000's) (in 000's) (in 000's) (in 000's)
================== ================= =============== =============
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $267 $90 $0 $357
Dividends (net of foreign withholding taxes
of $0 and $50, respectively) 1,289 1,409 - 2,698
Securities lending 66 131 - 197
--------------------------------------------------------- -----------
Total Investment Income 1,622 1,630 - 3,252
--------------------------------------------------------- -----------
EXPENSES:
Investment Advisory 460 745 102 (a) 1,307
Administration 51 68 119
Transfer Agent 52 54 106
Custodian (c) 87 77 (29)(b) 135
Legal and Audit Fees 34 38 (34)(b) 38
Registration & Filing 52 61 113
Directors Fees 19 36 55
Interest Expense - - -
Amortization of organization costs 31 29 (31)(d) 29
Other expenses 36 33 69
--------------------------------------------------------- -----------
Subtotal 822 1,141 8 1,971
--------------------------------------------------------- -----------
SHAREHOLDER SERVICING AND DISTRIBUTION FEES
Primary A 1 - - 1
Investor A 2 3 - 5
Investor B 11 7 - 18
Investor C - 6 - 6
--------------------------------------------------------- -----------
Subtotal 14 16 - 30
--------------------------------------------------------- -----------
Fees waived and/or reimbursed by investment
advisor, administrator and/or distributor - - -
--------------------------------------------------------- -----------
TOTAL EXPENSES 836 1,157 8 2,001
--------------------------------------------------------- -----------
--------------------------------------------------------- -----------
NET INVESTMENT INCOME 786 473 (8) 1,251
--------------------------------------------------------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) from:
Security transactions (35,015) (16,843) (51,858)
Futures contracts (205) - (205)
Forward foreign exchange contracts
and foreign currency transactions (740) (135) (875)
--------------------------------------------------------- -----------
Net realized gain/(loss) on investments (35,960) (16,978) (52,938)
--------------------------------------------------------- -----------
Change in unrealized appreciation/
(depreciation) of:
Securities (5,921) (21,099) (27,020)
Futures contracts (14) - (14)
Forward foreign exchange contracts,
foreign currencies and other net
assets 139 (880) (741)
--------------------------------------------------------- -----------
Net change in unrealized appreciation/
(depreciation) of investments (5,796) (21,979) (27,775)
--------------------------------------------------------- -----------
Net realized and unrealized gain/(loss)
on investments (41,756) (38,957) - (80,713)
--------------------------------------------------------- -----------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ($40,970) ($38,484) ($8) ($79,462)
========================================================= ===========
</TABLE>
LEGEND:
(A) REFLECTS ADJUSTMENT TO THE ACQUIRING FUND CONTRACTUAL FEE OBLIGATION.
(B) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE.
(C) NET OF EXPENSE OFFSET ARRANGEMENTS AMOUNTS TO LESS THAN .01% OF AVERAGE NET
ASSETS.
(D) ADJUSTMENT REFLECTS ORGANIZATION COSTS OF MERGED FUND ASSUMED BY NBAI.
SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS
<PAGE>
Nations Pacific Growth Fund
Nations Emerging Markets Fund
Notes to Pro Forma Combining Financial Statements (unaudited)
1. Basis of Combination
Nations Fund, Inc. (the "Company") and Nations Fund Portfolios, Inc. ("Nations
Portfolios") are each registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end investment company. As of September 30,
1998, the Company offers nine separate portfolios and Nations Portfolios offers
three separate portfolios. The unaudited Pro Forma Combining Statement of Net
Assets assumes the exchange described in the next paragraph occurred as of
September 30, 1998 and the unaudited Pro Forma Combining Statement of Operations
for the year ended September 30, 1998 assumes the exchange occurred as of
October 1, 1997. These statements have been derived from books and records
utilized in calculating daily net asset value of each fund at September 30, 1998
and for the twelve month period then ended.
The pro forma statements give effect to the proposed transfer of the assets and
stated liabilities of the Nations Pacific Growth Fund in exchange for shares of
Nations Emerging Markets Fund. Under generally accepted accounting principles,
the market value of investment securities of the Nations Pacific Growth Fund
will be carried forward as the cost basis to the surviving entity and the
results of operations of the Nations Emerging Markets Fund for pre-combination
periods will not be restated. The pro forma statements do not reflect the
expenses of either fund in carrying out its obligations under the proposed
Agreement and Plan of Reorganization, which are not considered to be material.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
2. Pro Forma Operations
Pro forma operating expenses include the actual expenses of each fund and the
combined fund, with certain expenses adjusted to reflect the expected expenses
of the combined entity.
<PAGE>
NATIONS FUND PORTFOLIOS, INC.
101 SOUTH TRYON STREET
33RD FLOOR
CHARLOTTE, NC 28255
1-800-626-2275
FORM N-14
PART C
OTHER INFORMATION
Item 15. Indemnification.
Under the terms of the Maryland Corporation Law and Nations Fund
Portfolios, Inc.'s ("Nations") Articles of Incorporation and By-Laws,
incorporated by reference as Exhibits (1) and 2 hereto, provides for the
indemnification of Nations directors and employees. Indemnification of Nation's
principal underwriter, custodian, and transfer agent is provided for,
respectively, in Nations':
1. Administration Agreement with Stephens Inc.;
2. Co-Administration Agreement with First Data Investors Services Group, Inc.;
3. Distribution Agreement with Stephens Inc.;
4. Custody Agreement with The Bank of New York;
5. Transfer Agency and Registrar Agreement with First Data Investors Services
Group, Inc.
Nations has entered into a Cross Indemnification Agreement with Nations
Fund Trust (the "Trust") and Nations Fund, Inc. (the "Company") dated June 27,
1995. The Trust and/or Compnay will indemnify and hold Nations harmless against
any losses, claims, damages or liabilities, to which Nations may become subject,
under the Securities Act of 1933, as amended (the "1933 Act") and Investment
Company Act, as amended (the "1940 Act") or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in any prospectuses, any preliminary prospectuses, the
registration statements, any other prospectuses relating to the securities, or
any amendments or supplements to the foregoing (hereinafter referred to
C-1
<PAGE>
collectively as the "Offering Documents"), or arise out of or are based upon the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Offering Documents in
reliance upon and in conformity with written information furnished to Nations by
the Trust and/or Company expressly for use therein; and will reimburse Nations
for any legal or other expenses reasonably incurred by Nations in connection
with investigating or defending any such action or claim; provided, however,
that the Trust and/or Company shall not be liable in any such case to the extent
that any such loss, claim, damage, or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in the Offering Documents in reliance upon and in conformity with written
information furnished to the Trust and/or Company by Nations expressly for use
in the Offering Documents.
Promptly after receipt by an indemnified party above of notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such subsection,
notify the indemnifying party in writing of the commencement thereof; but the
omission to so notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under such
subsection. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation.
Nations has obtained from a major insurance carrier a directors' and
officers' liability policy covering certain types of errors and omissions. In no
event will Nations indemnify any of its directors, officers, employees, or
agents against any liability to which such person would otherwise be subject by
reason of his/her willful misfeasance, bad faith, gross negligence in the
performance of his/her duties, or by reason of his/her reckless disregard of the
duties involved in the conduct of his/her office or arising under his agreement
with Nations. Nations will comply with Rule 484 under the 1933 Act and Release
No. 11330 under the 1940 Act, in connection with any indemnification.
Insofar as indemnification for liability arising under the 1933 Act may
be permitted to directors, officers, and controlling persons of Nations pursuant
to the foregoing provisions, or otherwise, Nations has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Nations of expenses incurred or paid by a
director, officer, or controlling person of Nations in the successful defense of
any action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, Nations
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
C-2
<PAGE>
Item 16. Exhibits.
All references to the "Registration Statement" in the following list of
Exhibits refer to Nations' Registration Statement on Form N-1A (File Nos.
33-89742; 811-08982).
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
(1)(a) Articles of Incorporation dated January 20, 1995 are
incorporated by reference to Post-Effective Amendment No. 10,
filed on November 5, 1998.
(1)(b) Articles Supplementary dated April 20, 1995, are incorporated
by reference to Post-Effective Amendment No. 10, filed on
November 5, 1998.
(1)(c) Articles Supplementary dated March 18, 1996, are incorporated
by reference to Post-Effective Amendment No. 10, filed on
November 5, 1998.
(2) By-Laws dated January 25, 1995, are incorporated by reference
to Post-Effective Amendment No. 10, filed on November 5, 1998.
(3) Not Applicable.
(4) Form of Agreement and Plan of Consolidation and Liquidation,
filed herewith as Appendix I to the Combined Prospectus/Proxy
Statement.
(5) Not Applicable.
(6)(a) Investment Advisory Agreement between NBAI and Nations is
incorporated by reference to Post-Effective Amendment No. 10,
filed November 5, 1998.
(6)(b) Sub-Advisory Agreement between Gartmore Global Partners and
Nations is incorporated by reference to Post-Effective
Amendment No. 10, filed November 5, 1998.
(7) Distribution Agreement between Nations and Stephens is
incorporated by reference to Post-Effective Amendment No. 10,
filed November 5, 1998.
(8) Not Applicable.
(9)(a) Distribution Agreement between Registrant and Stephens Inc.
dated March 31, 1993, is incorporated by reference to
Post-Effective Amendment No. 10 filed on November 5, 1998.
C-3
<PAGE>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
(9)(b) Global Custody Agreement between Nations and Morgan Guaranty
Trust Company of New York is incorporated by reference to the
Pre-Effective Amendment, filed September 28, 1995.
(10)(a) Form of Shareholder Services Plan relating to the Investor B
Shares, is incorporated by reference to Post-Effective
Amendment No. 10, filed on November 5, 1998.
(l0)(b) Forms of Shareholder Servicing Agreement, is incorporated by
reference to Post-Effective Amendment No. 10, filed on November
5, 1998.
(l0)(c) Shareholder Servicing and Distribution Plan for Investor A
Shares incorporated by reference to Post-Effective Amendment
No. 10, filed on November 5, 1998.
(l0)(d) Forms of Shareholder Servicing Plan for Investor C Shares are
incorporated by reference to Post-Effective Amendment No. 10,
filed on November 5, 1998.
(10)(e) Amended and Restated Shareholder Servicing and Distribution
Plan pursuant to Rule 12b-1, relating to Investor A Shares, is
incorporated by reference to Post-Effective Amendment No. 10,
filed on November 5, 1998.
(10)(f) Form of Sales Support Agreement, relating to Investor A Shares
is incorporated by reference to Post-Effective Amendment No.
39, filed on November 5, 1998.
(10)(g) Form of Sales Support Agreement is incorporated by reference to
Post-Effective Amendment No. 10 filed on November 5, 1998.
(10)(h) Shareholder Administration Plan for Primary B Shares is
incorporated by reference to Post-Effective Amendment No. 10,
filed November 5, 1998.
(l0)(i) Transfer Agency Agreement between Nations and The Shareholder
Services Group, Inc., dated June 1, 1995, is incorporated by
reference to Post-Effective Amendment No. 10, filed on November
5, 1998.
C-4
<PAGE>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
(l0)(j) Cross-Indemnification dated June 27, 1995 among Nations,
Nations Fund Trust and Nations Fund, Inc. is incorporated by
reference to Post-Effective Amendment No. 10, filed on November
5, 1998.
(11) Opinion and Consent of Morrison & Foerster LLP, filed herewith.
(12) See Item 17(3) of this Part C.
(13)(a) Administration Agreement between Stephens and Nations is
incorporated by reference to Post-Effective Amendment No. 10,
filed November 5, 1998.
(13)(b) Co-Administration Agreement between First Data Investor
Services Group, Inc. and Nations is incorporated by reference
to Post-Effective Amendment No. 10, filed November 5, 1998.
(13)(c) Shareholder Administration Agreement for Primary B Shares is
incorporated by reference to Post-Effective Amendment No. 10,
filed November 5, 1998.
14 Consent of Independent Accountants - PricewaterhouseCoopers
LLP, filed herewith.
15 Not Applicable
16 Powers of Attorney, filed herewith.
17(a) Declaration, pursuant to Rule 24f-2 under the Investment
Company Act of 1940, of the Registrant, filed herewith.
17(b) Forms of Proxy Ballot, filed herewith.
17(c)(i) Prospectuses and Statements of Additional Information for
Primary A, Primary B, Investor A, Investor B and Investor C
Shares of Nations Pacific Growth Fund, and Primary A, Primary
B, Investor A, Investor B, and Investor C Shares of Nations
Emerging Markets Fund, dated August 1, 1998, are incorporated
by reference to Post-Effective Amendment No. 8 to the
Registration Statement, as filed on July 31, 1998.
C-5
<PAGE>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
17(c)(ii) Annual Reports for Nations Pacifc Growth Fund and Nations
Emerging Markets Fund for the fiscal year ended March 31, 1998,
filed on June 10, 1998.
17(c)(iii) Semi-Annual Reports for Nations Pacific Growth Fund and Nations
Emerging Markets Fund for the period ended September 30, 1998,
filed on December 9, 1998.
Item 17. Undertakings.
(1) Nations agrees that, prior to any public reoffering of the
securities registered through the use of a prospectus
which is a part of this registration statement by any
person or party who is deemed to be an underwriter within
the meaning of Rule 145(c) of the Securities Act of 1933,
the reoffering prospectus will contain the information
called for by the applicable registration form for the
reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items
of the applicable form.
(2) The undersigned registrant agrees that every prospectus
that is filed under paragraph (1) above will be filed as
part of an amendment to the registration statement and
will not be used until the amendment is effective, and
that, in determining any liability under the Securities
Act of 1933, each post-effective amendment shall be deemed
to be a new registration statement for the securities
offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide
offering of them.
(3) The undersigned Registrant agrees to file, by
post-effective amendment, an opinion of counsel or a copy
of an IRS ruling supporting the tax consequences of the
Reorganization within a reasonable time after receipt of
such opinion or ruling.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement on Form N-14 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Little Rock, State of Arkansas on the 27th day of January, 1999.
NATIONS FUND PORTFOLIOS, INC.
By: *
-------------------------------------
A. Max Walker
President and Chairman
of the Board of Directors
By: /s/Richard H. Blank, Jr.
-------------------------------------
Richard H. Blank, Jr.
*Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities and on the date indicated:
SIGNATURES TITLE DATE
---------- ----- ----
* President and Chairman January 27, 1999
- ----------------------------- of the Board of Directors
(A. Max Walker) (Principal Executive Officer)
/s/ Richard H. Blank, Jr. Treasurer January 27, 1999
- ----------------------------- (Principal Financial and
(Richard H. Blank, Jr.) Accounting Officer)
* Director January 27, 1999
- -----------------------------
(Edmund L. Benson, III)
* Director January 27, 1999
- -----------------------------
(James Ermer)
* Director January 27, 1999
- -----------------------------
(William H. Grigg)
* Director January 27, 1999
- -----------------------------
(Thomas F. Keller)
* Director January 27, 1999
- -----------------------------
(Carl E. Mundy, Jr.)
* Director January 27, 1999
- -----------------------------
(Charles B. Walker)
* Director January 27, 1999
- -----------------------------
(Thomas S. Word)
* Director January 27, 1999
- -----------------------------
(James B. Sommers)
/s/Richard H. Blank, Jr.
- -------------------------
Richard H. Blank, Jr.
*Attorney-in-Fact
<PAGE>
NATIONS FUND PORTFOLIOS, INC.
FILE NOS. 33-89742; 811-08982
Exhibit Number Description
- -------------- -----------
Ex-99.11 Opinion and Consent of Morrison & Foerster LLP
Ex-99.14 Opinion and Consent of Accountants --
PricewaterhouseCoopers LLP
Ex-99.16 Powers of Attorney
Ex-99.17 Form of Proxy Ballot
EXH. 99.11
[MORRISON & FOERSTER LLP LETTERHEAD]
January 27, 1999
Nations Fund Portfolios, Inc.
One NationsBank Plaza
Charlotte, NC 28255
Re: Units of Beneficial Interest of Nations Fund Portfolios, Inc.
Ladies and Gentlemen:
We refer to the Registration Statement on Form N-14 (the "Registration
Statement") of Nations Fund Portfolios, Inc. (the "Company") relating to the
registration of an indefinite number of units of beneficial interest (the
"Shares"), of certain Funds of the Company (the "Funds").
We have been requested by the Company to furnish this opinion as
Exhibit 11 to the Registration Statement.
We have examined documents relating to the organization of the Company
and the authorization and issuance of the Shares. We have also made such
inquiries of the Company and examined such questions of law as we have deemed
necessary for the purpose of rendering the opinion set forth herein. We have
assumed the genuineness of all signatures and the authenticity of all items
submitted to us as originals and the conformity with originals of all items
submitted to us as copies.
Based upon and subject to the foregoing, we are of the opinion that:
The issuance of the Shares by the Company has been duly and validly
authorized by all appropriate action and, assuming delivery in accordance with
the description set forth in the Combined Proxy Statement/Prospectus included in
the Registration Statement, the Shares will be legally issued, fully paid and
nonassessable by the Company.
<PAGE>
Nations Fund Portfolios, Inc.
January 27, 1999
Page Two
We consent to the inclusion of this opinion as an exhibit to the
Registration Statement.
In addition, we hereby consent to the use of our name and to the
description of advice rendered by our firm under the headings "The
Consolidation--Federal Income Tax Considerations" in the Combined Proxy
Statement/Prospectus, under the heading "How The Funds Are Managed" in the
Prospectuses, and under the heading "Counsel" in the Statement of Additional
Information, which are incorporated by reference into the Registration
Statement.
Very truly yours,
/s/ MORRISON & FOERSTER LLP
MORRISON & FOERSTER LLP
EXH. 99.14
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Combined Proxy
Statement/ Prospectus and Statement of Additional Information constituting parts
of this Registration Statement on Form N-14 (the "Registration Statement") of
our report dated May 28, 1998, relating to the financial statements and
financial highlights of Nations Pacific Growth Fund and Nations Emerging Markets
Fund appearing in the March 31, 1998 Annual Report to Shareholders, which
financial statements and financial highlights are also incorporated by reference
into the Registration Statement. We also consent to the reference to us under
the heading "Investment Adviser and Other Service Providers" in such Combined
Proxy Statement/Prospectus. We further consent to the references to us under the
headings "Financial Highlights" and "How The Funds Are Managed - Other Service
Providers" in the Prospectuses of the Funds dated August 1, 1998, as
supplemented, and under the heading "Independent Accountants and Reports" in the
Statement of Additional Information of the Funds dated August 1, 1998 which are
incorporated by reference into the Registration Statement.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 27, 1999
EX.99.16
POWER OF ATTORNEY
A. Max Walker, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., James E. Banks,
Jr., Robert M. Kurucza, Marco E. Adelfio and Steven G. Cravath, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable Nations Fund
Portfolios, Inc. (the "Company"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933 (the "1933 Act"), and any other
applicable federal securities laws, or rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Company's Registration Statement on Form N-14
pursuant to the 1933 Act, and any and all amendments thereto, and to determine
the states in which appropriate filings should be made and to take any and all
necessary and appropriate actions to make any and all such filings, and any and
all amendments thereto, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as a director of the Company, such Registration
Statement and filings, any and all exemptive applications under the 1933 Act,
and any and all amendments and any other instruments or documents related
thereto, and the undersigned does hereby ratify and confirm all that said
attorneys and agents, individually or collectively, shall do or cause to be done
by virtue hereof.
Dated: January 21, 1999
/s/ A. Max Walker
-----------------
A. Max Walker
<PAGE>
EX.99.16
POWER OF ATTORNEY
Edmund L. Benson, III, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., James E. Banks,
Jr., Robert M. Kurucza, Marco E. Adelfio and Steven G. Cravath, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable Nations Fund
Portfolios, Inc. (the "Company"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933 (the "1933 Act"), and any other
applicable federal securities laws, or rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Company's Registration Statement on Form N-14
pursuant to the 1933 Act, and any and all amendments thereto, and to determine
the states in which appropriate filings should be made and to take any and all
necessary and appropriate actions to make any and all such filings, and any and
all amendments thereto, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as a director of the Company, such Registration
Statement and filings, any and all exemptive applications under the 1933 Act,
and any and all amendments and any other instruments or documents related
thereto, and the undersigned does hereby ratify and confirm all that said
attorneys and agents, individually or collectively, shall do or cause to be done
by virtue hereof.
Dated: January 21, 1999
/s/Edmund L. Benson, III
------------------------
Edmund L. Benson, III
<PAGE>
EX.99.16
POWER OF ATTORNEY
James Ermer, whose signature appears below, does hereby constitute
and appoint R. Gregory Feltus, Richard H. Blank, Jr., James E. Banks, Jr.,
Robert M. Kurucza, Marco E. Adelfio and Steven G. Cravath, each individually,
his true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, each individually, may deem
necessary or advisable or which may be required to enable Nations Fund
Portfolios, Inc. (the "Company"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933 (the "1933 Act"), and any other
applicable federal securities laws, or rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Company's Registration Statement on Form N-14
pursuant to the 1933 Act, and any and all amendments thereto, and to determine
the states in which appropriate filings should be made and to take any and all
necessary and appropriate actions to make any and all such filings, and any and
all amendments thereto, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as a director of the Company, such Registration
Statement and filings, any and all exemptive applications under the 1933 Act,
and any and all amendments and any other instruments or documents related
thereto, and the undersigned does hereby ratify and confirm all that said
attorneys and agents, individually or collectively, shall do or cause to be done
by virtue hereof.
Dated: January 20, 1999
/s/ James Ermer
------------------------
James Ermer
<PAGE>
EX.99.16
POWER OF ATTORNEY
William H. Grigg, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., James E. Banks,
Jr., Robert M. Kurucza, Marco E. Adelfio and Steven G. Cravath, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable Nations Fund
Portfolios, Inc. (the Company"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933 (the "1933 Act"), and any other
applicable federal securities laws, or rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Company's Registration Statement on Form N-14
pursuant to the 1933 Act, and any and all amendments thereto, and to determine
the states in which appropriate filings should be made and to take any and all
necessary and appropriate actions to make any and all such filings, and any and
all amendments thereto, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as a director of the Company, such Registration
Statement and filings, any and all exemptive applications under the 1933 Act,
and any and all amendments and any other instruments or documents related
thereto, and the undersigned does hereby ratify and confirm all that said
attorneys and agents, individually or collectively, shall do or cause to be done
by virtue hereof.
Dated: January 20, 1999
/s/ William H. Grigg
------------------------
William H. Grigg
<PAGE>
EX.99.16
POWER OF ATTORNEY
Thomas F. Keller, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., James E. Banks,
Jr., Robert M. Kurucza, Marco E. Adelfio and Steven G. Cravath, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable Nations Fund
Portfolios, Inc. (the "Company"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933 (the "1933 Act"), and any other
applicable federal securities laws, or rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Company's Registration Statement on Form N-14
pursuant to the 1933 Act, and any and all amendments thereto, and to determine
the states in which appropriate filings should be made and to take any and all
necessary and appropriate actions to make any and all such filings, and any and
all amendments thereto, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as a director of the Company, such Registration
Statement and filings, any and all exemptive applications under the 1933 Act,
and any and all amendments and any other instruments or documents related
thereto, and the undersigned does hereby ratify and confirm all that said
attorneys and agents, individually or collectively, shall do or cause to be done
by virtue hereof.
Dated: January 20, 1999
/s/Thomas F. Keller
------------------------
Thomas F. Keller
<PAGE>
EX.99.16
POWER OF ATTORNEY
Carl E. Mundy, Jr., whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., James E. Banks,
Jr., Robert M. Kurucza, Marco E. Adelfio and Steven G. Cravath, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable Nations Fund
Portfolios, Inc. (the "Company"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933 (the "1933 Act"), and any other
applicable federal securities laws, or rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Company's Registration Statement on Form N-14
pursuant to the 1933 Act, and any and all amendments thereto, and to determine
the states in which appropriate filings should be made and to take any and all
necessary and appropriate actions to make any and all such filings, and any and
all amendments thereto, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as a director of the Company, such Registration
Statement and filings, any and all exemptive applications under the 1933 Act,
and any and all amendments and any other instruments or documents related
thereto, and the undersigned does hereby ratify and confirm all that said
attorneys and agents, individually or collectively, shall do or cause to be done
by virtue hereof.
Dated: January 21, 1999
/s/Carl E. Mundy
------------------------
Carl E. Mundy, Jr.
<PAGE>
EX.99.16
POWER OF ATTORNEY
Charles B. Walker, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., James E. Banks,
Jr., Robert M. Kurucza, Marco E. Adelfio and Steven G. Cravath, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable Nations Fund
Portfolios, Inc. (the "Company"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933 (the "1933 Act"), and any other
applicable federal securities laws, or rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Company's Registration Statement on Form N-14
pursuant to the 1933 Act, and any and all amendments thereto, and to determine
the states in which appropriate filings should be made and to take any and all
necessary and appropriate actions to make any and all such filings, and any and
all amendments thereto, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as a director of the Company, such Registration
Statement and filings, any and all exemptive applications under the 1933 Act,
and any and all amendments and any other instruments or documents related
thereto, and the undersigned does hereby ratify and confirm all that said
attorneys and agents, individually or collectively, shall do or cause to be done
by virtue hereof.
Dated: January 20, 1999
/s/Charles B. Walker
------------------------
Charles B. Walker
<PAGE>
EX.99.16
POWER OF ATTORNEY
Thomas S. Word, Jr., whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., James E. Banks,
Jr., Robert M. Kurucza, Marco E. Adelfio and Steven G. Cravath, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable Nations Fund
Portfolios, Inc. (the "Company"), to comply with the Investment Company Act of
1940, as amended and the Securities Act of 1933 (the "1933 Act"), and any other
applicable federal securities laws, or rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Company's Registration Statement on Form N-14
pursuant to the 1933 Act, and any and all amendments thereto, and to determine
the states in which appropriate filings should be made and to take any and all
necessary and appropriate actions to make any and all such filings, and any and
all amendments thereto, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as a director of the Company, such Registration
Statement and filings, any and all exemptive applications under the 1933 Act,
and any and all amendments and any other instruments or documents related
thereto, and the undersigned does hereby ratify and confirm all that said
attorneys and agents, individually or collectively, shall do or cause to be done
by virtue hereof.
Dated: January 21, 1999
/s/Thomas S. Word, Jr.
------------------------
Thomas S. Word, Jr.
<PAGE>
EX.99.16
POWER OF ATTORNEY
James B. Sommers, whose signature appears below, does hereby
constitute and appoint R. Gregory Feltus, Richard H. Blank, Jr., James E. Banks,
Jr., Robert M. Kurucza, Marco E. Adelfio and Steven G. Cravath, each
individually, his true and lawful attorneys and agents, with power of
substitution or resubstitution, to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, each individually, may
deem necessary or advisable or which may be required to enable Nations Fund
Portfolios, Inc. (the "Company"), to comply with the Investment Company Act of
1940, as amended, and the Securities Act of 1933 (the "1933 Act"), and any other
applicable federal securities laws, or rules, regulations or requirements of the
Securities and Exchange Commission in respect thereof, in connection with the
filing and effectiveness of the Company's Registration Statement on Form N-14
pursuant to the 1933 Act, and any and all amendments thereto, and to determine
the states in which appropriate filings should be made and to take any and all
necessary and appropriate actions to make any and all such filings, and any and
all amendments thereto, including specifically, but without limiting the
generality of the foregoing, the power and authority to sign in the name and on
behalf of the undersigned as a director of the Company, such Registration
Statement and filings, any and all exemptive applications under the 1933 Act,
and any and all amendments and any other instruments or documents related
thereto, and the undersigned does hereby ratify and confirm all that said
attorneys and agents, individually or collectively, shall do or cause to be done
by virtue hereof.
Dated: January 20, 1999
/s/ James B. Sommers
------------------------
James B. Sommers
EXH. 99.17
PROXY CARD
NATIONS FUND PORTFOLIOS, INC.
PACIFIC GROWTH FUND
SPECIAL MEETING OF SHAREHOLDERS-MARCH 29, 1999
The undersigned hereby appoints ________ and ________ (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 Fund Portfolios, Inc. (the
"Company") to be held at 101 South Tryon Street, 33rd Floor, Charlotte, North
Carolina, at 10:00 a.m. (Eastern time), on Friday, March 29, 1999, and at any
adjournment or adjournments thereof. The proxies will cast votes according to
the number of shares of the Nations Pacific Growth Fund (the "Fund") which the
undersigned may be entitled to vote with respect to the proposals set forth
below, in accordance with the specification indicated, if any, and with 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 attorneys and Proxies, or either of them,
may lawfully do by virtue thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED FEBRUARY 26,
1999.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY, WHICH
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. YOU MAY VOTE BY
MAILING THE PROXY BALLOT IN THE ENCLOSED POSTAGE PAID ENVELOPE. PLEASE MAKE SURE
YOU MARK, SIGN AND DATE YOUR PROXY CARD.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSAL. PROXIES RETURNED WITHOUT ANY SPECIFICATION WILL
BE VOTED IN FAVOR OF THE PROPOSAL.
To approve an Agreement and Plan of Consolidation and Liquidation,
dated January [ ], 1999 (the "Consolidation Agreement") between
the Pacific Growth Fund and the Company's Emerging Markets Fund.
The Consolidation Agreement provides for the transfer of all of
the assets and liabilities of the Pacific Growth Fund to the
Emerging Markets Fund in exchange for shares of equal value of
designated classes of the Emerging Markets Fund (the
"Consolidation"). As a result of the Consolidation, the
shareholders of the Pacific Growth Fund will become shareholders
of the Emerging Markets Fund.
|_|YES |_|NO |_|ABSTAIN
<PAGE>
EXH. 99.17
THIS PROPOSAL HAS BEEN PROPOSED BY THE COMPANY.
In their discretion, the Proxies, and either 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.
_____________________________
_____________________________, 1999
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.
(Please Date)
