-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Py9j/srqwYr+oZbZd+5720rDkzN6Pr7pTV6BLVYp6WO2ht9zxIomze8WmjeeOjO5 raKyzeLDAVi/LVoJzn6lAg== 0000950109-02-000365.txt : 20020413 0000950109-02-000365.hdr.sgml : 20020413 ACCESSION NUMBER: 0000950109-02-000365 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20020122 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONS FUNDS TRUST CENTRAL INDEX KEY: 0001097519 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 333-89661 FILM NUMBER: 02514366 BUSINESS ADDRESS: STREET 1: ONE BANK OF AMERICA PLAZA CITY: CHARLOTTE STATE: NC ZIP: 28255 BUSINESS PHONE: 8003217854 MAIL ADDRESS: STREET 1: ONE BANKOF AMERICA PLAZA CITY: CHARLOTTE STATE: NC ZIP: 28255 497 1 d497.txt 497C - NATIONS FUNDS TRUST NATIONS FUND TRUST One Bank of America Plaza 101 South Tryon Street Charlotte, North Carolina 28255 Telephone: (800) 653-9427 January 14, 2002 Dear Shareholder: We are pleased to invite you to special meetings of shareholders of Nations Georgia Intermediate Municipal Bond Fund, Nations Maryland Intermediate Municipal Bond Fund, Nations North Carolina Intermediate Municipal Bond Fund, Nations South Carolina Intermediate Municipal Bond Fund, Nations Tennessee Intermediate Municipal Bond Fund, Nations Texas Intermediate Municipal Bond Fund, Nations Virginia Intermediate Municipal Bond Fund (the "Intermediate-Term Municipal Funds") and Nations Georgia Municipal Bond Fund, Nations Maryland Municipal Bond Fund, Nations North Carolina Municipal Bond Fund, Nations South Carolina Municipal Bond Fund, Nations Tennessee Municipal Bond Fund, Nations Texas Municipal Bond Fund and Nations Virginia Municipal Bond Fund (the "Long-Term Municipal Funds") (collectively, the "Funds"). The meetings will be held jointly at 10:00 a.m., Eastern time, on March 27, 2002, at One Bank of America Plaza, 101 South Tryon Street, 33rd Floor, Charlotte, North Carolina (the "Meetings"). At the Meetings, you will be asked to approve the proposed reorganization (the "Reorganization") of your Fund into an acquiring mutual fund (an "Acquiring Fund") in Nations Funds Trust, another registered investment company within the Nations Funds family. The investment objective, principal investment strategies and investment risks of each Acquiring Fund will be identical to those of the corresponding Intermediate-Term Municipal Fund. If you hold shares of an existing Intermediate-Term Municipal Fund, the Reorganization will not change the investment approach applied to your investment. The Reorganization will, however, change the investment approach applied to an investment in a Long-Term Municipal Fund by generally shortening the average dollar-weighted maturity and duration of your investment. The Reorganization will not cause a change to the investment adviser and sub-adviser who currently manage your Fund. In addition, the Reorganization will not result in any increase in total operating expense ratios (before or after waivers and/or reimbursements), and in many cases will actually result in a reduction in such ratios. The features and services that are available to you today as a shareholder will continue to be available to you as an Acquiring Fund shareholder after the Reorganization. THE BOARD OF TRUSTEES OF NATIONS FUND TRUST UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSED REORGANIZATION. The Reorganization offers several potential benefits. First, management and the Board of Trustees believe that combining like Funds should lead to various benefits that come from greater asset size, including potential economies of scale by eliminating certain duplicative costs associated with maintaining those Funds as separate series and by spreading remaining costs over a larger, combined asset base. The Reorganization is part of a broader initiative to streamline the operations of the Nations Funds family, which currently consists of several registered investment companies. As part of the broader initiative, management expects to reduce the number of registered investment companies in the Nations Funds family without necessarily impacting investment alternatives. Streamlining the Nations Funds family in this fashion may lead to additional cost savings by reducing accounting, legal and securities registration costs. Also, the Acquiring Funds will be part of a Delaware business trust, which generally is viewed as having more flexibility in its operations than a Massachusetts business trust like Nations Fund Trust. Finally, each Acquiring Fund will have more flexibility in its investment policies than your current Fund, including policies that would permit it to adopt a "master-feeder" structure. A master-feeder structure, if adopted in the future, would allow an Acquiring Fund to access other distribution channels that might not otherwise be available, thereby potentially achieving additional economies of scale and other benefits that come from greater asset size. If shareholder approval is obtained and the other conditions to the Reorganization are satisfied, it is anticipated that each Fund will be reorganized into its corresponding Acquiring Fund on or about May 10, 2002, when Fund shares will be exchanged for shares of the same class of shares of the corresponding Acquiring Fund of equal dollar value. The exchange of shares in the Reorganization is expected to be tax-free under federal income tax law. Shareholders are not expected to bear any of the customary expenses of the Reorganization because of existing expense arrangements. The formal Notice of Special Meetings, Combined Proxy Statement/Prospectus and Proxy Ballot(s) are enclosed. The Reorganization and the reasons for the unanimous recommendation of the Board are discussed in more detail in the enclosed materials, which you should read carefully. If you have any questions, please do not hesitate to contact us at the toll-free number set forth above. We look forward to your attendance at the Meetings or to receiving your Proxy Ballot(s) so that your shares may be voted at the Meetings. Sincerely, A. MAX WALKER President and Chairman of the Board of Trustees of Nations Fund Trust YOUR VOTE IS IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU OWN. PLEASE VOTE BY SUBMITTING YOUR PROXY BALLOT(S) TODAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY ALSO SUBMIT YOUR PROXY BY A TOLL-FREE PHONE CALL OR BY VOTING ON-LINE, AS INDICATED BELOW. Two Quick And Easy Ways To Submit Your Proxy As a valued Fund shareholder, your proxy vote is important to us. That's why we've made it faster and easier to submit your proxy at your convenience, 24 hours a day. After reviewing the enclosed Combined Proxy Statement/Prospectus ("Proxy/Prospectus ") select one of the following quick and easy methods to submit your proxy--accurately and quickly .
Vote On-Line Vote By Toll-Free Phone Call 1. Read the enclosed Proxy/Prospectus and have 1. Read the enclosed Proxy/Prospectus and have your Proxy Ballot(s) * at hand. your Proxy Ballot(s) * at hand. 2. Go to Web site www.proxyvote.com 2. Call the toll-free number on your Proxy Ballot(s). 3. Enter the 12-digit Control Number found on 3. Enter the 12-digit Control Number found on your Proxy Ballot(s). your Proxy Ballot(s). 4. Submit your proxy using the easy-to-follow 4. Submit your proxy using the easy-to-follow instructions. instructions.
* Do not mail the Proxy Ballot(s) if submitting your proxy by Internet or telephone. 2 NATIONS FUND TRUST One Bank of America Plaza 101 South Tryon Street Charlotte, North Carolina 28255 Telephone: (800) 653-9427 NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS To Be Held on March 27, 2002 Shareholders: PLEASE TAKE NOTE THAT special meetings of shareholders of Nations Georgia Intermediate Municipal Bond Fund, Nations Maryland Intermediate Municipal Bond Fund, Nations North Carolina Intermediate Municipal Bond Fund, Nations South Carolina Intermediate Municipal Bond Fund, Nations Tennessee Intermediate Municipal Bond Fund, Nations Texas Intermediate Municipal Bond Fund, Nations Virginia Intermediate Municipal Bond Fund, Nations Georgia Municipal Bond Fund, Nations Maryland Municipal Bond Fund, Nations North Carolina Municipal Bond Fund, Nations South Carolina Municipal Bond Fund, Nations Tennessee Municipal Bond Fund, Nations Texas Municipal Bond Fund and Nations Virginia Municipal Bond Fund (collectively, the "Funds") of Nations Fund Trust will be jointly held at 10:00 a.m., Eastern time, on March 27, 2002, at One Bank of America Plaza, 101 South Tryon Street, 33rd Floor, Charlotte, North Carolina, for the purpose of considering and voting upon: Item 1. A proposed agreement and plan of reorganization dated as of January 1, 2002 that provides for the reorganization of your Fund into a corresponding acquiring fund. Item 2. Such other business as may properly come before the meetings or any adjournment(s). Item 1 is described in the attached Combined Proxy Statement/Prospectus. THE BOARD OF TRUSTEES OF NATIONS FUND TRUST UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSAL. Shareholders of record as of the close of business on December 27, 2001 are entitled to notice of, and to vote at, the meetings or any adjournment(s) thereof. SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE THE ACCOMPANYING PROXY BALLOT(S), WHICH IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF NATIONS FUND TRUST. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE MEETINGS. SHAREHOLDERS ALSO MAY SUBMIT THEIR PROXIES: 1) BY TELEPHONE AT THE TOLL-FREE NUMBER SHOWN ON THEIR PROXY BALLOT(S); OR 2) ON-LINE AT THE WEBSITE WWW.PROXYVOTE.COM. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO NATIONS FUND TRUST A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE MEETINGS AND VOTING IN PERSON. By Order of the Board of Trustees, RICHARD H. BLANK, JR. Secretary of Nations Fund Trust January 14, 2002 COMBINED PROXY STATEMENT/PROSPECTUS Dated January 14, 2002 NATIONS FUND TRUST One Bank of America Plaza 101 South Tryon Street Charlotte, North Carolina 28255 Telephone: (800) 653-9427 For ease of reading, certain terms or names that are used in this Proxy/Prospectus have been shortened or abbreviated. A list of these terms and their corresponding full names or definitions can be found at the end of this Proxy/Prospectus in Appendix A. A shareholder may find it helpful to review the terms and names in Appendix A before reading the Proxy/Prospectus. This Proxy/Prospectus, which should be retained for future reference, sets forth concisely the information about the proposed Reorganization of the Funds into corresponding Acquiring Funds, and the information about the Acquiring Funds that a shareholder should know before deciding how to vote. It is both a proxy statement for the Meetings and a prospectus offering shares in the Acquiring Funds. However, it is not a prospectus for shareholders of the Intermediate-Term Municipal Funds because these Funds are proposed to be reorganized into Acquiring Funds that are "shell" funds--that is to say, they have identical investment objectives, principal investment strategies and risks as those Funds. Additional information about the Funds and Acquiring Funds is available in their prospectuses, statements of additional information (or SAIs) and annual and semi-annual reports to shareholders. The information contained in the prospectuses for the Funds and Acquiring Funds is legally deemed to be part of this Proxy/Prospectus and is incorporated by reference. For Long-Term Municipal Fund shareholders, a copy of each applicable Acquiring Fund prospectus also accompanies this Proxy/Prospectus. The Funds' prospectuses, annual reports to shareholders for the fiscal year ended March 31, 2001 and semi-annual reports to shareholders for the fiscal period ended September 30, 2001 previously have been mailed to shareholders. The SAI relating to this Proxy/Prospectus also is incorporated by reference and is dated January 14, 2002. Additional copies of any of these documents are available without charge by writing to the address given above or by calling (800) 653-9427. These documents also are available on the SEC website at www.sec.gov. THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROXY/PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The Meetings have been called to consider a Reorganization Agreement dated as of January 1, 2002 that provides for the reorganization of each Fund into a corresponding Acquiring Fund. It is expected that this Proxy/Prospectus will be mailed to shareholders on or about January 14, 2002. At the Meetings, shareholders will be asked to approve the reorganization of each Fund into an Acquiring Fund as set forth below. 1
Will Be Reorganized into these Acquiring Funds of These Funds Nations Funds Trust - ------------------------------------------------------------------------------------------------------------------------------------ Georgia Intermediate Municipal Bond Fund [GRAPHIC] Georgia Intermediate Municipal Bond Fund Georgia Municipal Bond Fund (acquiring) Thin Arrow - ------------------------------------------------------------------------------------------------------------------------------------ Maryland Intermediate Municipal Bond Fund [GRAPHIC] Maryland Intermediate Municipal Bond Fund Maryland Municipal Bond Fund (acquiring) Thin Arrow - ------------------------------------------------------------------------------------------------------------------------------------ North Carolina Intermediate Municipal Bond Fund [GRAPHIC] North Carolina Intermediate Municipal Bond Fund North Carolina Municipal Bond Fund (acquiring) Thin Arrow - ------------------------------------------------------------------------------------------------------------------------------------ South Carolina Intermediate Municipal Bond Fund [GRAPHIC] South Carolina Intermediate Municipal Bond Fund South Carolina Municipal Bond Fund (acquiring) Thin Arrow - ------------------------------------------------------------------------------------------------------------------------------------ Tennessee Intermediate Municipal Bond Fund [GRAPHIC] Tennessee Intermediate Municipal Bond Fund Tennessee Municipal Bond Fund (acquiring) Thin Arrow - ------------------------------------------------------------------------------------------------------------------------------------ Texas Intermediate Municipal Bond Fund [GRAPHIC] Texas Intermediate Municipal Bond Fund Texas Municipal Bond Fund (acquiring) Thin Arrow - ------------------------------------------------------------------------------------------------------------------------------------ Virginia Intermediate Municipal Bond Fund [GRAPHIC] Virginia Intermediate Municipal Bond Fund Virginia Municipal Bond Fund (acquiring) Thin Arrow - ------------------------------------------------------------------------------------------------------------------------------------
2 TABLE OF CONTENTS
Page No. -------- SUMMARY......................................................................................... 4 Fee Tables................................................................................... 4 Overview of the Reorganization Agreement..................................................... 6 Overview of Investment Objective and Principal Investment Strategies......................... 6 Overview of Service Providers................................................................ 6 Overview of Purchase, Redemption, Distribution, Exchange and Other Procedures................ 7 Federal Income Tax Consequences.............................................................. 7 Principal Risk Factors....................................................................... 7 THE REORGANIZATION.............................................................................. 9 Description of the Reorganization Agreement.................................................. 9 Reasons for the Reorganization and Other Considerations...................................... 9 Board Consideration.......................................................................... 10 Comparison of Investment Management, Investment Objective and Principal Investment Strategies................................................................................. 11 Comparison of Investment Policies and Restrictions........................................... 13 Comparison of Forms of Business Organization................................................. 13 Comparison of Advisory and Other Service Arrangements and Fees............................... 14 Investment Advisory and Sub-Advisory Services and Fees....................................... 15 Comparison of Purchase, Redemption, Distribution and Exchange Policies and Other Shareholder Transactions and Services.................................................................. 15 Material Federal Income Tax Consequences..................................................... 15 Capitalization............................................................................... 17 VOTING MATTERS.................................................................................. 24 General Information.......................................................................... 24 Quorum....................................................................................... 25 Shareholder Approval......................................................................... 25 Principal Shareholders....................................................................... 25 Annual Meetings and Shareholder Meetings..................................................... 40 ADDITIONAL INFORMATION ABOUT THE TRUST AND NATIONS FUNDS TRUST.................................. 40 Financial Statements......................................................................... 40 Other Business............................................................................... 41 Shareholder Inquiries........................................................................ 41 APPENDICES A--GLOSSARY B--EXPENSE SUMMARIES OF THE FUNDS AND ACQUIRING FUNDS C--COMPARISON OF FUNDAMENTAL POLICIES AND LIMITATIONS OF THE FUNDS AND THE ACQUIRING FUNDS
3 SUMMARY The following is an overview of certain information relating to the proposed Reorganization. More complete information is contained throughout the Proxy/Prospectus and its Appendices. Fee Tables The table shows: (i) the current expense ratios of each Fund; and (ii) the pro forma expense ratios of the corresponding Acquiring Funds. The table shows that the pro forma expense ratios (before and after waivers and/or reimbursements) of the Acquiring Funds after the Reorganization are expected to be no higher (and in many cases are expected to be lower) than they are for the Funds. All expense ratios shown are annualized total operating expense ratios. Pro forma expense ratios are based upon the fee arrangements that will be in place upon consummation of the Reorganization and assume in each case that both Funds' shareholders approve the Reorganization. It is possible that one Fund's shareholders will approve the Reorganization while the shareholders of the other Fund involved in the Reorganization do not. These scenarios (if they result in any change to a shareholder's current expense ratios) are shown, along with other detailed pro forma expense information, in Appendix B. Total Operating Expense Information
Pro Forma Total Operating Total Operating Expense Ratios Expense Ratios Before/After Combined Acquiring Before/After Waivers and/or Fund/Class Post- Waivers and/or Fund/Share Class Reimbursements* Reorganization Reimbursements* - ---------------- --------------- ------------------ ---------------- Georgia Intermediate Municipal Bond Fund Primary A Shares 0.75%/0.50% Investor A Shares (Arrow-Down) [GRAPHIC] 1.00%/0.75% Investor B Shares 1.75%/1.50% Georgia Intermediate Investor C Shares 1.75%/1.50% Municipal Bond Fund (acquiring) Georgia Municipal Bond Fund Primary A Shares 0.73%/0.50% Primary A Shares 1.17%/0.60% Investor A Shares 0.98%/0.75% Investor A Shares (Arrow-Up) [GRAPHIC] 1.42%/0.85% Investor B Shares 1.73%/1.50% Investor B Shares 2.17%/1.60% Investor C Shares 1.73%/1.50% Investor C Shares 2.17%/1.60% - -------------------------------------------------------------------------------------------------------------- Maryland Intermediate Municipal Bond Fund Primary A Shares 0.74%/0.50% Investor A Shares (Arrow-Down) [GRAPHIC] 0.99%/0.75% Investor B Shares 1.74%/1.50% Maryland Intermediate Investor C Shares 1.74%/1.50% Municipal Bond Fund (acquiring) Maryland Municipal Bond Fund Primary A Shares 0.72%/0.50% Primary A Shares 1.07%/0.60% Investor A Shares 0.97%/0.75% Investor A Shares (Arrow-Up) [GRAPHIC] 1.32%/0.85% Investor B Shares 1.72%/1.50% Investor B Shares 2.07%/1.60% Investor C Shares 1.72%/1.50% Investor C Shares 2.07%/1.60% - -------------------------------------------------------------------------------------------------------------- North Carolina Intermediate Municipal Bond Fund Primary A Shares 0.73%/0.50% Investor A Shares (Arrow-Down) [GRAPHIC] 0.98%/0.75% Investor B Shares 1.73%/1.50% North Carolina Intermediate Investor C Shares 1.73%/1.50% Municipal Bond Fund (acquiring) North Carolina Municipal Bond Fund Primary A Shares 0.72%/0.50% Primary A Shares 1.05%/0.60% Investor A Shares 0.97%/0.75% Investor A Shares (Arrow-Up) [GRAPHIC] 1.30%/0.85% Investor B Shares 1.72%/1.50% Investor B Shares 2.05%/1.60% Investor C Shares 1.72%/1.50% Investor C Shares 2.05%/1.60%
4
Pro Forma Total Operating Total Operating Expense Ratios Expense Ratios Before/After Combined Acquiring Before/After Waivers and/or Fund/Class Post- Waivers and/or Fund/Share Class Reimbursements* Reorganization Reimbursements* - ---------------- --------------- ------------------ ---------------- South Carolina Intermediate Municipal Bond Fund Primary A Shares 0.72%/0.50% Investor A Shares (Arrow-Down) [GRAPHIC] 0.97%/0.75% Investor B Shares 1.72%/1.50% South Carolina Intermediate Investor C Shares 1.72%/1.50% Municipal Bond Fund (acquiring) South Carolina Municipal Bond Fund Primary A Shares 0.71%/0.50% Primary A Shares 1.10%/0.60% Investor A Shares 0.96%/0.75% Investor A Shares (Arrow-Up) [GRAPHIC] 1.35%/0.85% Investor B Shares 1.71%/1.50% Investor B Shares 2.10%/1.60% Investor C Shares 1.71%/1.50% Investor C Shares 2.10%/1.60% - ------------------------------------------------------------------------------------------------------------------------------- Tennessee Intermediate Municipal Bond Fund Primary A Shares 0.90%/0.50% Investor A Shares (Arrow-Down) [GRAPHIC] 1.15%/0.75% Investor B Shares 1.90%/1.50% Tennessee Intermediate Investor C Shares 1.90%/1.50% Municipal Bond Fund (acquiring) Tennessee Municipal Bond Fund Primary A Shares 0.86%/0.50% Primary A Shares 1.88%/0.60% Investor A Shares 1.11%/0.75% Investor A Shares (Arrow-Up) [GRAPHIC] 2.13%/0.85% Investor B Shares 1.86%/1.50% Investor B Shares 2.88%/1.60% Investor C Shares 1.86%/1.50% Investor C Shares 2.88%/1.60% - ------------------------------------------------------------------------------------------------------------------------------- Texas Intermediate Municipal Bond Fund Primary A Shares 0.71%/0.50% Investor A Shares (Arrow-Down) [GRAPHIC] 0.96%/0.75% Investor B Shares 1.71%/1.50% Texas Intermediate Municipal Investor C Shares 1.71%/1.50% Bond Fund (acquiring) Primary A Shares 0.71%/0.50% Texas Municipal Bond Fund Investor A Shares 0.96%/0.75% Primary A Shares 1.56%/0.60% Investor B Shares 1.71%/1.50% Investor A Shares (Arrow-Up) [GRAPHIC] 1.81%/0.85% Investor C Shares 1.71%/1.50% Investor B Shares 2.56%/1.60% Investor C Shares 2.56%/1.60% - ------------------------------------------------------------------------------------------------------------------------------- Virginia Intermediate Municipal Bond Fund Primary A Shares 0.71%/0.50% Investor A Shares (Arrow-Down) [GRAPHIC] 0.96%/0.75% Investor B Shares 1.71%/1.50% Virginia Intermediate Investor C Shares 1.71%/1.50% Municipal Bond Fund (acquiring) Virginia Municipal Bond Fund Primary A Shares 0.70%/0.50% Primary A Shares 1.09%/0.60% Investor A Shares 0.95%/0.75% Investor A Shares (Arrow-Up) [GRAPHIC] 1.34%/0.85% Investor B Shares 1.70%/1.50% Investor B Shares 2.09%/1.60% Investor C Shares 1.70%/1.50% Investor C Shares 2.09%/1.60%
- -------- * The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. 5 Overview of the Reorganization Agreement The document that governs the Reorganization is the Reorganization Agreement. It provides for: (i) the transfer of all of the assets and liabilities of each Fund to its corresponding Acquiring Fund in exchange for shares of equal value of the same classes of the Acquiring Fund; and (ii) the distribution of the Acquiring Fund shares to Fund shareholders in liquidation of that Fund. The Reorganization Agreement also contemplates that, assuming the Reorganization is approved by Fund shareholders, as well as by shareholders of all other funds of the Trust that are being asked to approve separate reorganizations of their funds, officers of the Trust will dissolve the Trust under the laws of the Commonwealth of Massachusetts and also de-register the Trust under the 1940 Act. The Reorganization is subject to a number of conditions, including approval by Fund shareholders. As a result of the Reorganization, Fund shareholders will become shareholders of the corresponding Acquiring Fund and will hold, immediately after the Reorganization, Acquiring Fund shares having a total dollar value equal to the total dollar value of the shares of the Fund that the shareholder held immediately before the Reorganization. The Reorganization is expected to occur on May 10, 2002. The exchange of Fund shares for corresponding Acquiring Fund shares in the Reorganization is expected to be tax-free under federal income tax law and Fund shareholders will not pay any sales charge or sales load on the exchange. The Funds and their shareholders are not expected to bear any of the customary costs of the Reorganization because of total expense caps that have been put in place. The Funds, however, ordinarily bear certain expenses such as brokerage commissions and other transaction charges, as well as interest on borrowed money, and will bear these expenses and extraordinary expenses that may be associated with the Reorganization. For more information about the Reorganization and the Reorganization Agreement, see "The Reorganization--Description of the Reorganization Agreement." Overview of Investment Objective and Principal Investment Strategies The investment objective, principal investment strategies and investment risks of the Intermediate-Term Municipal Funds and their corresponding Acquiring Funds are identical. The investment objective and principal investment strategies of the Long-Term Municipal Funds and their corresponding Acquiring Funds are substantially similar. The foremost differences between the Long-Term Municipal Funds and their Acquiring Funds are their respective average dollar-weighted maturities and durations. The Long-Term Municipal Funds generally have an average dollar-weighted maturity of more than seven years and have a duration of more than six years. They have both a high income potential and a high-risk exposure, as compared with the Intermediate-Term Municipal Funds. The Acquiring Funds, which are intermediate-term municipal bond funds, generally have an average dollar-weighted maturity of between three and ten years and a duration of between three and six years. They have moderate income potential and risk exposure, as compared with the Long-Term Municipal Funds. This means, among other things, that Long-Term Municipal Fund shareholders can expect to move into an Acquiring Fund that, over the long-term, may not achieve the same level of investment return as their Fund, but should generally be subject to lower risk. For additional information about these and other similarities and differences between the investment objectives and principal investment strategies of the Funds and Acquiring Funds, see "The Reorganization-- Comparison of Investment Management, Investment Objective and Principal Investment Strategies." Overview of Service Providers The Funds and Acquiring Funds have the same service providers, including BA Advisors as investment adviser and BACAP as investment sub-adviser. Please see the discussion under "The Reorganization--Comparison of Advisory and Other Service Arrangements and Fees." 6 Overview of Purchase, Redemption, Distribution, Exchange and Other Procedures The purchase, redemption, distribution, exchange and other policies and procedures of each share class of the Funds are identical to those of the corresponding share class of the Acquiring Funds, except in one case. Certain purchase and redemption policies of the Investor A and Investor B Shares of the Long-Term Funds and their Acquiring Funds differ. In particular, the front-end sales charge applicable to the Investor A Shares and contingent deferred sales charge applicable to the Investor B Shares of the Long-Term Funds and their Acquiring Funds differ. The sales charges of the Acquiring Funds that may apply are generally lower than those of the Long-Term Funds. Purchases and redemptions by Long-Term Municipal Fund shareholders of Investor A and Investor B Shares made prior to the Reorganization will be subject to the applicable Long-Term Municipal Fund sales charge schedule. After the Reorganization, additional purchases by former Long-Term Municipal Fund shareholders will be subject to the Intermediate-Term Municipal Fund sales charge schedule that applies, while redemptions of shares purchased prior to the Reorganization by former Long-Term Municipal Fund shareholders will be subject to the terms that applied at the time those shares were purchased. Former Long-Term Municipal Fund shareholders will received credit for the period of time they held their shares prior to the Reorganization in determining the amount of their contingent deferred sales charge, if any. For more information concerning these policies and procedures, see "The Reorganization--Comparison of Purchase, Redemption, Distribution and Exchange Policies and other Shareholder Transactions and Services." Federal Income Tax Consequences The Reorganization is not expected to result in the recognition of gain or loss, for federal income tax purposes, by the Funds, the Acquiring Funds or their respective shareholders. However, the sale of securities by any Fund prior to the Reorganization, whether in the ordinary course of business or in anticipation of the Reorganization, could result in taxable distributions to such Fund's shareholders. See "The Reorganization--Material Federal Income Tax Consequences" for additional information. Since their inception, each of the Funds and Acquiring Funds believes it has qualified as a "regulated investment company" under the Code. Accordingly, each Fund and Acquiring Fund believes it has been, and expects to continue to be, relieved of any federal income tax liability on its taxable income distributed to shareholders. Principal Risk Factors Each of the Acquiring Funds has these types of risks and considerations: . Investment strategy risk--The Acquiring Funds are considered to be non-diversified because they invest most of their assets in securities that pay interest that is free from federal and state income tax (if any) in one state. The value of the Acquiring Funds and the amount of interest that they pay could also be affected by the financial conditions of the state, its public authorities and local governments. . Interest rate risk--The prices of fixed income securities will tend to fall when interest rates rise. In general, fixed income securities with longer terms tend to fall more in value when interest rates rise than fixed income securities with shorter terms. . Credit risk--The Acquiring Funds could lose money if the issuer of a fixed income security is unable to pay interest or repay principal when it's due. Credit risk usually applies to most fixed income securities, but is generally not a factor for U.S. government obligations. Some of the securities in which the Acquiring Funds invest are not rated investment grade and are generally considered speculative because they present a greater risk of loss, including default, than higher quality debt securities. These securities typically pay a premium--a high interest rate or yield--because of the increased risk of loss. These securities also can be subject to greater price volatility. . Derivatives risk--The use of derivatives presents risks different from, and possibly greater than, the risks associated with investing directly in traditional securities. Among the risks presented are market risk, 7 credit risk, management risk and liquidity risk. The use of derivatives can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivatives. These risks are heightened when the management team uses derivatives to enhance the return of the Acquiring Funds or as a substitute for a position or security, rather than solely to hedge (or offset) the risk of a position or security held. The success of management's derivatives strategies will depend on its ability to assess and predict the impact of market or economic developments on the underlying asset, index or rate and the derivative itself, without the benefit of observing the performance of the derivative under all possible market conditions. Liquidity risk exists when a security cannot be purchased or sold at the time desired, or cannot be purchased or sold without adversely affecting the price. The management team is not required to utilize derivatives to reduce risks. . Changing distribution levels--The level of monthly income distributions paid by an Acquiring Fund depends on the amount of income paid by the securities held. It is not guaranteed and will change. Changes in the value of the securities, however, generally should not affect the amount of income they pay. . Holding cash--The Acquiring Funds may hold cash while waiting to make an investment, as a temporary defensive strategy, or if the team believes that attractive tax-exempt instruments are not available. Any uninvested cash an Acquiring Fund holds does not earn income. . Tax considerations--Most of the distributions paid by an Acquiring Fund come from interest on municipal securities, and are generally free from federal income tax and state income tax (if any), but may be subject to the federal alternative minimum tax, and other state and local taxes. Any portion of a distribution that comes from income from non-exempt sources such as income from other kinds of securities or from realized capital gains is generally subject to federal, state and local taxes. Shares of an Acquiring Fund would not be suitable investments for tax-deferred plans and tax-exempt investors. . State specific risk--State specific risk is the chance that an Acquiring Fund, because it invests primarily in securities issued by a state and its municipalities, is more vulnerable to unfavorable developments in that state. . Changing to a feeder fund--Unlike traditional mutual funds, which invest in individual securities, a "feeder fund" invests all of its net investable assets in another fund, called a "master portfolio." Other feeder funds generally also invest in a master portfolio. The master portfolio invests in individual securities and has the same investment objective, investment strategies and principal risks as the feeder funds. This structure can help reduce a feeder fund's expenses because its assets are combined with those of other feeder funds. If a master portfolio doesn't attract other feeder funds, however, a feeder fund's expenses could be higher than those of a traditional mutual fund. Each Acquiring Fund may become a feeder fund if the Board decides this would be in the best interests of shareholders. We don't require shareholder approval to make the change, but we'll notify you if it happens. If a Fund becomes a feeder fund, it will have the additional risks of investing in a master portfolio. Comparison to the Funds: The Intermediate-Term Municipal Funds and their corresponding Acquiring Funds share identical risks, both in type and degree. The Long-Term Municipal Funds and their corresponding Acquiring Funds share identical types of risks, although the degree to which the Long-Term Municipal Fund are exposed to certain types of risks (such as interest rate risk and credit risk) is heightened because the Long-Term Municipal Funds generally will have a longer average dollar-weighted maturity and duration than their Acquiring Funds. Accordingly, Long-Term Municipal Fund shareholders will move into investments that are generally less risky. In addition, the Funds do not have the ability to convert to feeder funds in a master-feeder structure without shareholder approval. The Acquiring Funds will have that ability and accordingly, if the structure is adopted, the Acquiring Funds have the additional considerations relevant to an investment in a feeder fund. 8 THE REORGANIZATION Description of the Reorganization Agreement As noted in the Summary, the Reorganization Agreement is the governing document of the Reorganization. Among other things, it provides for: (i) the transfer of all of the assets and liabilities of a Fund to its Acquiring Fund in exchange for shares of equal value of the same classes of the Acquiring Fund; and (ii) the distribution of Acquiring Fund shares to Fund shareholders in liquidation of their Fund. The Reorganization Agreement also sets forth representations and warranties of the parties, describes the mechanics of the transaction and includes a number of conditions to the completion of the Reorganization, such as the requirement that a good standing certificate be obtained by each party and that no stop-orders or similar regulatory barriers have been issued by the SEC. The completion of the Reorganization also is conditioned upon the Trust and Nations Funds Trust receiving an opinion from Morrison & Foerster LLP that the exchange of shares contemplated under the Reorganization will be tax-free under federal income tax law. The Reorganization Agreement provides that the Reorganization may be abandoned at any time before Closing by either party if any condition is not satisfied, or otherwise, by mutual consent of the parties. At any time before or (to the extent permitted by law) after approval of the Reorganization Agreement by Fund shareholders: (i) the parties may, by written agreement authorized by the Board of the Trust or Nations Funds Trust, as applicable, and with or without the approval of their shareholders, amend any of the provisions of the Reorganization Agreement; and (ii) either party may waive any default by the other party for the failure to satisfy any of the conditions to its obligations (the waiver to be in writing and authorized by the respective Board with or without the approval of shareholders). Additionally, the Reorganization Agreement provides that the Reorganization of one Fund is not conditioned upon the Reorganization of any other Fund. Upon completion of the Reorganization, all outstanding shares of each Fund will be canceled. Exchange or redemption requests received thereafter will be deemed to be exchange or redemption requests for shares of the corresponding Acquiring Fund. The Reorganization Agreement provides that a Fund will only bear customary expenses of the Reorganization to the extent that the Fund's total operating expenses have not exceeded certain total operating expense "caps" that have been put in place. Because of these total operating expense caps, it is not expected that the Funds will bear the customary expenses associated with the Reorganization, including proxy solicitation costs. The Funds, however, ordinarily bear certain expenses such as brokerage commissions and other transaction charges, as well as interest on borrowed money, and will bear these expenses and extraordinary expenses that may be associated with the Reorganization. A copy of the Reorganization Agreement is available at no charge by calling (800) 653-9427 or writing Nations Funds at the address listed on the first page of the Proxy/Prospectus. A copy of the Reorganization Agreement is also available at the SEC's website (www.sec.gov). Reasons for the Reorganization and Other Considerations . The Nations Funds Family Reorganization. The Reorganization is the final phase of a broader initiative begun two years ago to streamline the operations of the Nations Funds Family. A primary goal of the initiative is to reduce the number of registered investment companies in the Nations Funds Family without necessarily impacting investment alternatives. This final phase would reorganize all of the remaining Funds of the Trust and the funds of the other fund companies in the Nations Funds Family into series of Nations Funds Trust. Management and the Board believe that operating fewer registered investment companies offers potential efficiencies and benefits to shareholders over the long-term. These efficiencies and benefits include potential cost savings from the reduction of accounting, legal, filing and securities registration costs. If shareholders of the Funds approve the Reorganization (and shareholders of all of the other funds of the Trust approve similar reorganizations), management will de-register and dissolve the Trust. 9 The Acquiring Funds will be part of a Delaware business trust, which generally is viewed as having more flexibility in its operations than a Massachusetts business trust (like the Trust). Also, as part of Nations Funds Trust, the Acquiring Funds will be governed under a more flexible charter document which can be amended by Nations Funds Trust's Board without the necessity of soliciting shareholders, thereby saving costs relating to proxy solicitations on certain routine matters. Specifically, the Acquiring Funds will have greater flexibility in their investment policies, including policies that, for example, will permit them to: . adopt a "master-feeder" structure. A master-feeder structure will only be adopted if the Board approves the change as being in the best interests of an Acquiring Fund and its shareholders. In evaluating this change, the Board will consider both the potential benefits and disadvantages of this type of structure. One potential advantage is that feeder funds investing in the same master portfolio can reduce their expenses through sharing of the costs of managing and administering a larger combined pool of assets. Converting to a master portfolio can provide access to other distribution channels--such as private investment companies or offshore fund investors--that would not otherwise be available to stand-alone mutual funds. One potential disadvantage is that if there are other feeders in the master portfolio, an Acquiring Fund's voting impact on the master portfolio could be diminished. Additionally, if the Acquiring Fund were to withdraw its investment from the master portfolio, the withdrawal could result in a distribution in kind of portfolio securities (as opposed to a distribution of cash) by the master portfolio to the Acquiring Fund. That distribution could result in a less diversified portfolio of investments and could adversely affect the liquidity of the Acquiring Fund's investment portfolio. In addition, if securities were distributed, the Acquiring Fund generally would incur brokerage commissions, capital gains or losses, and/or other charges if it converted the securities to cash. . participate in interfund lending among the Nations Funds Family. Management expects to file an exemptive application with the SEC that would permit funds in the Nations Funds Family to lend to and borrow money from each other for temporary purposes. At any particular time, the Funds may need to borrow money for temporary purposes to satisfy redemption requests, to cover unanticipated cash shortfalls such as a trade "fail" in which cash payment for a security sold by a Fund has been delayed, or for other temporary purposes. The Funds currently have a line of credit with their custodian, which is designed to cover these borrowing needs. The interfund lending arrangements are expected to reduce the Acquiring Funds' potential borrowing costs and provide the lending Acquiring Funds with the ability to earn interest on short-term lendings to other Nations Funds. The Funds' fundamental investment policies currently prohibit the Funds from participating in the proposed interfund lending arrangements. The Acquiring Funds, however, have adopted fundamental investment policies that will allow them to take advantage of these arrangements, assuming that the SEC issues an exemptive order. . With respect to the Long-Term Municipal Funds only. The primary reason for the Reorganization is that combining the Long-Term Municipal Funds with the Intermediate-Term Municipal Funds would result in corresponding Acquiring Funds with significantly larger asset size (assuming both Funds' shareholders approve the Reorganization). Because of the potential for economies of scale that could result from larger asset size, management and the Board may be able to offer Long-Term Municipal Fund shareholders a similar investment (in the Acquiring Funds) that will have lower total operating expense ratios (both before and after waivers and/or reimbursements and assuming each Fund's shareholders approve the Reorganizations). Board Consideration The Board of the Trust unanimously voted to approve the Reorganization Agreement at a special meeting held on October 10, 2001. During deliberations, the Board (with the advice and assistance of independent counsel) reviewed and considered, among other things: (1) the Reorganization as part of a broader initiative to streamline the operations of the Nations Funds Family; (2) the various aspects of the Reorganization and the 10 Reorganization Agreement, including the fact that the Acquiring Funds will be part of a Delaware business trust that will allow the Acquiring Funds to be operated with greater flexibility; (3) the current asset levels of the Funds and the pro forma asset levels of the Acquiring Funds; (4) the investment advisory and other fees paid by the Funds, and the historical and projected expense ratios of the Funds, as compared with those of their corresponding Acquiring Funds; (5) the expected cost savings for shareholders of all of the Long-Term Municipal Funds; (6) the generally better historical performance record but heightened risk exposure of the Long-Term Municipal Funds as compared with the Intermediate-Term Municipal Funds; (7) the investment objectives and principal investment strategies of the Funds, and their relative compatibility with those of their corresponding Acquiring Funds; (8) the fact that Fund shareholders will experience no change in shareholder services; (9) the fact that the Acquiring Funds as part of Nations Funds Trust will have greater flexibility in their investment policies and will be governed under a more flexible charter document which could be amended by the Board of Nations Funds Trust without the necessity of soliciting shareholders, thereby potentially saving future costs relating to proxy solicitations on certain routine matters; (10) the anticipated tax-free nature of the exchange of shares in the Reorganization; and (11) potential benefits of the Reorganization, if any, to other persons, including BA Advisors and its affiliates (e.g., the benefit of consolidating resources within BA Advisors and its affiliates). The Board also considered that the Funds will not bear the customary expenses of the Reorganization to the extent those expenses, combined with other ongoing Fund expenses, exceed certain total expense "caps" that have been put in place. Because of these total expense caps, the Board noted that it does not expect that the Funds will bear any of the customary expenses associated with the Reorganization, such as solicitation costs. The Board also noted that the Funds, however, ordinarily bear brokerage commissions and other transaction charges, interest on borrowed money, and will bear those expenses and extraordinary expenses that may be associated with the Reorganization. Based upon its evaluation of the information presented to it, and in light of the fiduciary duties under federal and state law, the Board of the Trust, including all of the non-interested Trustees, determined that participation in the Reorganization, as contemplated by the Reorganization Agreement, was in the best interests of each Fund, and that the shares of each Fund will not be diluted as a result of the Reorganization. Similarly, the Board of Trustees of Nations Funds Trust, including all of the non-interested Trustees, also evaluated the Reorganization and based upon its evaluation of the information presented to it, and in light of its fiduciary duties under federal and state law, determined that participation in the Reorganization, as contemplated by the Reorganization Agreement, was in the best interests of the Acquiring Funds and that the shares of the Acquiring Funds will not be diluted as a result of the Reorganization. THE BOARD OF THE TRUST UNANIMOUSLY RECOMMENDS THAT FUND SHAREHOLDERS VOTE TO APPROVE THE REORGANIZATION AGREEMENT. Comparison of Investment Management, Investment Objective and Principal Investment Strategies The investment objective, principal investment strategies and investment risks of the Intermediate-Term Municipal Funds and their corresponding Acquiring Funds are identical.
Intermediate-Term Municipal Funds Acquiring Funds --------------------------- --------------- Investment Objective The Funds seek high current No change income exempt from federal and state income taxes* consistent with moderate fluctuation of principal.
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Intermediate-Term Municipal Funds Acquiring Funds --------------------------- --------------- Principal Investment Strategies The Funds normally invest at least Under normal circumstances, the 80% of their assets in investment Funds invest at least 80% of their grade intermediate-term municipal net assets plus investment securities. The Funds also borrowings in securities that pay normally invest at least 80% of interest that is generally free from their assets in securities that pay federal income tax and state income interest that is generally free from tax.* The Fund also normally federal income tax and state invests at least 80% of its assets in income tax.* investment grade intermediate-term municipal securities. Average Dollar Weighted Maturity 3 to 10 years No change Duration 3 to 6 years No change Income Potential Moderate No change Risk Potential Moderate No change.
- -------- * Georgia, Maryland, North Carolina, South Carolina and Virginia impose state income taxes. Tennessee imposes the Tennessee Hall Income Tax and Texas imposes no state income tax. The investment objective, principal investment strategies and investment risks of the Long-Term Municipal Funds and their corresponding Acquiring Funds are similar.
Long-Term Municipal Funds Acquiring Funds ------------------------- --------------- Investment Objective The Funds seek high current The Funds seek high current income income exempt from federal and exempt from federal and state state income taxes* with the income taxes* consistent with potential for principal fluctuation moderate fluctuation of principal. associated with investments in long-term municipal securities. Principal Investment Strategies The Funds normally invest at least Under normal circumstances, the 80% of their assets in investment Funds invest at least 80% of their grade long-term municipal net assets plus investment securities. The Funds also borrowings in securities that pay normally invest at least 80% of interest that is generally free from their assets in securities that pay federal income tax and state income interest that is generally free from tax.* The Fund also normally federal income tax and state invests at least 80% of its assets in income tax.* investment grade intermediate-term municipal securities. Average Dollar Weighted Maturity more than 7 years 3 to 10 years Duration more than 6 years 3 to 6 years Income Potential High Moderate Risk Potential High Moderate
- -------- * Georgia, Maryland, North Carolina, South Carolina and Virginia impose state income taxes. Tennessee imposes the Tennessee Hall Income Tax and Texas imposes no state income tax. 12 The foremost difference between the Long-Term Municipal Funds and their Acquiring Funds are their respective average dollar-weighted maturities and durations. The average dollar-weighted maturity is the average length of time until the debt securities held by a Fund reach maturity. In general, the longer the average dollar-weighted maturity, the more a Fund's share price will fluctuate in response to changes in interest rates. Duration is a measure of a security's or portfolio's sensitivity to changes in interest rates. The Long-Term Municipal Funds generally have an average dollar-weighted maturity of more than seven years and have a duration of more than six years. The Long-Term Municipal Funds have both a high income potential and a high risk potential as compared with the Intermediate-Term Municipal Funds. Their Acquiring Funds, which are intermediate municipal bond funds, generally have an average dollar-weighted maturity of between three and 10 years and a duration of between three and six years. The income potential and risk potential for these Acquiring Funds are moderate as compared with the Long-Term Municipal Funds. This means, among other things, that Long-Term Municipal Fund shareholders can expect to move into an Acquiring Fund that, over the long-term, may not achieve the same level of investment return as their Fund. Comparison of Investment Policies and Restrictions The Acquiring Funds will have a more streamlined set of fundamental investment policies. Some of the Funds' current fundamental investment policies may limit their portfolio management team(s) from investing in a security or engaging in investment techniques (such as selling a security short) even though consistent with a Fund's investment objective and believed to be a good investment. One reason for the Reorganization is to remove these restrictions that unnecessarily hamper the portfolio management team's investment discretion. Some of these restrictions were originally put in place by the Funds as a result of the directives of various state securities commissions. Changes to federal securities laws have superseded these directives and are, accordingly, no longer necessary. In addition, as discussed above, the Funds currently have fundamental investment policies that prohibit them from participating in interfund lending arrangements. The Acquiring Funds, however, have fundamental investment policies that will permit them to take part in these arrangements. Another reason for the Reorganization is management's desire to have uniform investment policies for all funds in the Nations Funds Family. Uniform policies should lead to efficiencies in administering the Funds' activities, including ensuring compliance with law and internal procedures. The Funds and Acquiring Funds have identical non-fundamental investment policies. For a detailed comparison of the fundamental investment policies of the Funds and the Acquiring Funds, see Appendix C to this Proxy/Prospectus. Comparison of Forms of Business Organization Federal securities laws largely govern the way that mutual funds operate, but they do not cover every aspect of a fund's existence and operation. State law and a fund's governing documents fill in most of these gaps and typically create additional operational rules and restrictions that funds must follow. The Funds are series of a Massachusetts business trust. The Acquiring Funds are series of a Delaware business trust. While the differences between these two forms of organization are not extensive, one advantage of a Delaware business trust is its potential for greater flexibility. Generally, under Delaware business trust law, a mutual fund's governing instrument, called a declaration of trust, may establish the way it will operate with few state law requirements or prohibitions. Thus, mutual funds organized in Delaware generally have more flexibility in their operations and greater certainty about any operational restrictions than mutual funds organized elsewhere. The following discussion outlines some of the differences between the Trust (which is a Massachusetts business trust) and Nations Funds Trust (which is a Delaware business trust). 13 . The Board of Trustees. The Board of Nations Funds Trust has eleven Trustees, ten of whom currently serve as Trustees of the Trust, with the eleventh currently serving in an advisory capacity to the Board of the Trust. . Governing Law. Unlike Massachusetts business trust law, the Delaware Business Trust Act has been specifically drafted to accommodate the unique governance needs of investment companies and provides that its policy is to give maximum freedom of contract to the trust instrument (discussed below) of a Delaware business trust. For example, Delaware law provides that, should a Delaware trust issue multiple series of shares, each series will not be liable for the debts of another series. Although remote, this is a potential risk in the case of a Massachusetts business trust, where state law does not clearly provide that one series is not liable for the debts of another. In addition, Delaware has obtained a favorable national reputation for its business laws and business environment. The Delaware courts, which may be called upon to interpret the Delaware Business Trust Act, are among the nation's most highly respected and have particular expertise in corporate matters. Accordingly, there is a well-established body of precedent, which may be relevant in deciding issues pertaining to a Delaware business trust, which is not the case in Massachusetts. . Governing Documents. Massachusetts and Delaware business trusts are governed by similar sets of documents, typically called declarations of trust and by-laws. These governing documents are generally similar, although the Declaration of Trust of Nations Funds Trust (the Delaware business trust) generally is the clearer and more flexible document. For example, it provides that Nations Funds Trust, or any series of Nations Funds Trust, may be dissolved at any time by the Board of Nations Funds Trust upon written notice to shareholders. In addition, Nations Funds Trust's Declaration of Trust, as permitted by Delaware law, provides that shareholders of series of Nations Funds Trust would be entitled to vote on mergers, acquisitions and consolidations involving such series, only to the extent required by federal securities law. Thus, by operating under Nations Funds Trust's Declaration of Trust, the Acquiring Funds will limit shareholder votes to those matters expressly required under the federal securities laws, and could save costs by not having to schedule special shareholder meetings and solicit shareholder proxies. Although shareholders of an Acquiring Fund of Nations Funds Trust may no longer have certain voting rights, it is anticipated that the Acquiring Funds would benefit from a reduction in expenses associated with potential proxy solicitations on these matters. In general, the attributes of a share of beneficial interest in the case of a Massachusetts business trust are comparable to those of a share of beneficial interest of a Delaware business trust such as Nations Funds Trust, i.e., shares are entitled to one vote per share held and fractional votes for fractional shares held. . Shareholder Liability. Under Massachusetts law, shareholders may, in certain circumstances, be held personally liable for the debts and obligations of a Massachusetts business trust. In contrast, under Delaware law, shareholders of a Delaware business trust like Nations Funds Trust are not personally liable for the debts and obligations of such trust. Comparison of Advisory and Other Service Arrangements and Fees The Funds and the Acquiring Funds have the same service providers. Immediately after the Reorganization, these service providers are expected to continue to serve the Acquiring Funds in the capacities indicated below.
Service Providers for the Funds and the Acquiring Funds - ------------------------------------------------------- Investment Adviser.......... BA Advisors Investment Sub-Adviser...... BACAP Distributor................. Stephens Inc. Co-Administrator............ BA Advisors Co-Administrator............ Stephens Inc. Sub-Administrator........... The Bank of New York
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Service Providers for the Funds and the Acquiring Funds ------------------------------------------------------- Custodian.............. The Bank of New York Transfer Agent......... PFPC Inc. Sub-Transfer Agent..... Bank of America (for Primary A shares only) Independent Accountants PricewaterhouseCoopers LLP
Investment Advisory and Sub-Advisory Services and Fees BA Advisors serves as the investment adviser for each Fund and each Acquiring Fund, which pay an advisory fee, computed daily and paid monthly, to BA Advisors based on their average daily net assets. Currently the maximum advisory fee rate for each of the Intermediate-Term Municipal Funds and Intermediate-Term Municipal Funds (acquiring) is 0.40%. The maximum advisory fee rate for each of the Long-Term Municipal Funds is 0.50%./*/ BACAP serves as the sub-adviser for each Fund and Acquiring Fund. BA Advisors pays BACAP sub-advisory fees from the investment advisory fees it receives from the Funds. Currently, BA Advisors advises over 75 mutual funds in the Nations Funds Family. BACAP, currently managing more that $125 billion, acts as investment manager for individuals, corporations and financial institutions, and is sub-adviser to private investment companies and more than 60 mutual funds in the Nations Funds Family. BA Advisors and the Acquiring Funds are seeking an exemptive order from the SEC that would permit BA Advisors to engage a different or additional sub-adviser for an Acquiring Fund, to continue the engagement of a sub-adviser who has experienced a change in its ownership or corporate structure or under an agreement that has materially changed, with the approval of the Board of Nations Funds Trust, but without submitting the sub-advisory change to a vote of the Acquiring Fund's shareholders, under certain circumstances. If this exemptive order is granted and the Reorganization is approved, BA Advisors or the Acquiring Funds will inform shareholders of any such sub-advisory change, which may include: (i) engaging new or additional sub-advisers, (ii) terminating or replacing one or more sub-advisers, or (iii) materially amending an existing sub-advisory agreement. Unless and until this exemptive order is granted and the proposed Reorganization is approved, consistent with applicable law, the Funds and Acquiring Funds will continue to submit any sub-advisory change to shareholders for approval. Comparison of Purchase, Redemption, Distribution and Exchange Policies and Other Shareholder Transactions and Services After the Reorganization, Fund shareholders will hold shares of the same class of the Acquiring Fund that they held in each Fund. For example, a Fund shareholder who owns Investor A shares will, immediately after the Reorganization, hold Investor A shares in the corresponding Acquiring Fund. Accordingly, all of the purchase, redemption, distribution, and exchange policies as well as other shareholder transactions and services applicable to a shareholder's share class will remain unaffected and unchanged by the Reorganization. No sales charges or sales loads will be imposed in connection with the exchange of shares in the Reorganization. Material Federal Income Tax Consequences As noted, the exchange of shares in the Reorganization is expected to be tax-free under federal income tax law. The following discussion summarizes the material federal income tax consequences of the Reorganization that are applicable to Fund shareholders. It is based on the Code, applicable Treasury Regulations, judicial - -------- * Currently, BA Advisors is under a contractual commitment to cap Fund level expenses for the Intermediate-Term Municipal Funds and Intermediate-Term Municipal Funds (acquiring) at 0.50% and Long-Term Municipal Funds at 0.60% until July 31, 2002. The waivers and/or reimbursements necessary to maintain those expense levels may come from BA Advisors's advisory fees, administration fees and/or other fees and expenses (excluding Rule 12b-1/shareholder servicing fees), at BA Advisors's discretion. After July 31, 2002, there is no guarantee that these waivers and/or reimbursements will continue. 15 authority, and administrative rulings and practice, all as of the date of this Proxy/Prospectus and all of which are subject to change, including changes with retroactive effect. The discussion below does not address any state, local or foreign tax consequences of the Reorganization. A Fund shareholder's tax treatment may vary depending upon his or her particular situation. A Fund shareholder also may be subject to special rules not discussed below if they are a certain kind of shareholder, including: an insurance company; a tax-exempt organization; a financial institution or broker-dealer; a person who is neither a citizen nor a resident of the United States or is an entity that is not organized under the laws of the United States or political subdivision thereof; a holder of Fund shares as part of a hedge, straddle or conversion transaction; or a person that does not hold Fund shares as a capital asset at the time of the Reorganization. Neither the Trust nor Nations Funds Trust has requested or will request an advance ruling from the Internal Revenue Service as to the federal income tax consequences of the Reorganization or any related transaction. The Internal Revenue Service may adopt positions contrary to that discussed below and such positions could be sustained. A Fund shareholder is urged to consult with his or her own tax advisors and financial planners as to the particular tax consequences of the Reorganization to the Fund shareholder, including the applicability and effect of any state, local or foreign laws, and the effect of possible changes in applicable tax laws. The Reorganization, with respect to each Fund and its corresponding Acquiring Fund, is intended to qualify as a "reorganization" for federal income tax purposes. In this regard, the obligation of the Funds and the Acquiring Funds to consummate the Reorganization is conditioned upon the receipt by the Trust and Nations Funds Trust of an opinion of Morrison & Foerster LLP reasonably acceptable to the Trust and Nations Funds Trust substantially to the effect that the Reorganization, with respect to each Fund and its corresponding Acquiring Fund, will be treated for federal income tax purposes as a tax-free reorganization under Section 368(a) of the Code and, in such connection, that the Fund and its corresponding Acquiring Fund will each be a party to a reorganization within the meaning of Section 368(b) of the Code. Provided that the Reorganization so qualifies, the opinion will state that: . Neither the Funds, the Acquiring Funds nor their respective shareholders will recognize any gain or loss pursuant to the Reorganization. . A Fund shareholder's aggregate tax basis for the Acquiring Fund shares received pursuant to the Reorganization will equal such shareholder's aggregate tax basis in Fund shares held immediately before the Reorganization. . A Fund shareholder's holding period for the Acquiring Fund shares received pursuant to the Reorganization will include the period during which the Fund shares are held. The tax opinion of Morrison & Foerster LLP described above will be based upon facts, representations and assumptions to be set forth or referred to in the opinion and the continued accuracy and completeness of representations made by the Trust, on behalf of their respective Funds, and Nations Funds Trust, on behalf of the Acquiring Funds, which if incorrect in any material respect would jeopardize the conclusions reached by Morrison & Foerster LLP in the opinion. In addition, in the event that the Trust and/or Nations Funds Trust are unable to obtain the tax opinion, they are permitted under the Reorganization Agreement to waive the receipt of such tax opinion as a condition to their obligation to consummate the Reorganization. Regardless of whether the acquisition of the assets and liabilities of each Fund by the corresponding Acquiring Fund qualifies as a tax-free reorganization as described above, the sale of securities by the Fund prior to the Reorganization, whether in the ordinary course of business or in anticipation of the Reorganization, could result in a taxable distribution to Fund shareholders. Since its formation, each Fund and Acquiring Fund believes it has qualified as a separate "regulated investment company" under the Code. Accordingly, each Fund and Acquiring Fund believes it has been, and expects to continue to be, relieved of federal income tax liability on its taxable income distributions to its shareholders. 16 Capitalization The following tables show the total net assets, number of shares outstanding and net asset value per share of each Fund and Acquiring Fund. This information is generally referred to as the "capitalization." The term "pro forma capitalization" means the expected capitalization of each Acquiring Fund after it has combined with its corresponding Fund, i.e., as if the Reorganization had already occurred. The tables show several combination scenarios of the Funds. They show the possibility of one Fund approving the Reorganization but not the other (e.g., Fund A + Fund C or Fund B + Fund C). They also show the possibility of both Funds approving the Reorganization (e.g., Fund A + Fund B + Fund C). These capitalization tables are based on figures as of August 31, 2001. The ongoing investment performance and daily share purchase and redemption activity of the Funds and Acquiring Funds affects capitalization. Therefore, the capitalization on the Closing date may vary from the capitalization shown in the following tables.
Net Asset Value Fund Net Assets Shares Outstanding Per Share - ---- --------------- ------------------ --------------- Georgia Municipal Bond Fund $17,340,930.12 1,703,963.81 $10.18 (Fund A) (Primary A) (Primary A) (Primary A) $1,867,891.78 183,555.46 $10.18 (Investor A) (Investor A) (Investor A) $8,378,382.08 823,099.67 $10.18 (Investor B) (Investor B) (Investor B) $263,022.90 25,853.90 $10.17 (Investor C) (Investor C) (Investor C) Georgia Intermediate Municipal Bond Fund $135,014,227.08 12,330,758.41 $10.95 (Fund B) (Primary A) (Primary A) (Primary A) $12,220,579.88 1,115,986.87 $10.95 (Investor A) (Investor A) (Investor A) $6,820,798.70 622,918.11 $10.95 (Investor B) (Investor B) (Investor B) $904,859.03 82,631.98 $10.95 (Investor C) (Investor C) (Investor C) Georgia Intermediate Municipal Bond Fund $0 0 $0 (acquiring) (Primary A) (Primary A) (Primary A) (Fund C) $0 0 $0 (Investor A) (Investor A) (Investor A) $0 0 $0 (Investor B) (Investor B) (Investor B) $0 0 $0 (Investor C) (Investor C) (Investor C) Pro Forma Combined Fund $17,340,930.12 1,703,963.81 $10.18 (Fund A + Fund C) (Primary A) (Primary A) (Primary A) $1,867,891.78 183,555.46 $10.18 (Investor A) (Investor A) (Investor A) $8,378,382.08 823,099.67 $10.18 (Investor B) (Investor B) (Investor B) $263,022.90 25,853.90 $10.17 (Investor C) (Investor C) (Investor C)
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Net Asset Value Fund Net Assets Shares Outstanding Per Share - ---- --------------- ------------------ --------------- Pro Forma Combined Fund $135,014,227.08 12,330,758.41 $10.95 (Fund B + Fund C) (Primary A) (Primary A) (Primary A) $12,220,579.88 1,115,986.87 $10.95 (Investor A) (Investor A) (Investor A) $6,820,798.70 622,918.11 $10.95 (Investor B) (Investor B) (Investor B) $904,859.03 82,631.98 $10.95 (Investor C) (Investor C) (Investor C) Pro Forma Combined Fund $152,355,157.20 13,914,493.88 $10.95 (Fund A + Fund B + Fund C) (Primary A) (Primary A) (Primary A) $14,088,471.66 1,286,563.28 $10.95 (Investor A) (Investor A) (Investor A) $15,199,180.78 1,388,084.50 $10.95 (Investor B) (Investor B) (Investor B) $1,167,881.93 106,651.30 $10.95 (Investor C) (Investor C) (Investor C) - --------------------------------------------------------------------------------------------- Maryland Municipal Bond Fund $21,136,761.85 2,061,386.47 $10.25 (Fund A) (Primary A) (Primary A) (Primary A) $2,795,579.44 272,694.90 $10.25 (Investor A) (Investor A) (Investor A) $17,907,148.10 1,746,427.34 $10.25 (Investor B) (Investor B) (Investor B) $374,574.31 36,546.40 $10.25 (Investor C) (Investor C) (Investor C) Maryland Intermediate Municipal Bond Fund $177,756,772.16 15,984,468.85 $11.12 (Fund B) (Primary A) (Primary A) (Primary A) $18,424,422.69 1,656,887.71 $11.12 (Investor A) (Investor A) (Investor A) $5,258,837.09 472,917.99 $11.12 (Investor B) (Investor B) (Investor B) $793,748.58 71,377.72 $11.12 (Investor C) (Investor C) (Investor C) Maryland Intermediate Municipal Bond Fund $0 0 $0 (acquiring) (Primary A) (Primary A) (Primary A) (Fund C) $0 0 $0 (Investor A) (Investor A) (Investor A) $0 0 $0 (Investor B) (Investor B) (Investor B) $0 0 $0 (Investor C) (Investor C) (Investor C) Pro Forma Combined Fund $21,136,761.85 2,061,386.47 $10.25 (Fund A + Fund C) (Primary A) (Primary A) (Primary A) $2,795,579.44 272,694.90 $10.25 (Investor A) (Investor A) (Investor A) $17,907,148.10 1,746,427.34 $10.25 (Investor B) (Investor B) (Investor B) $374,574.31 36,546.40 $10.25 (Investor C) (Investor C) (Investor C)
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Net Asset Value Fund Net Assets Shares Outstanding Per Share - ---- --------------- ------------------ --------------- Pro Forma Combined Fund $177,756,772.16 15,984,468.85 $11.12 (Fund B + Fund C) (Primary A) (Primary A) (Primary A) $18,424,422.69 1,656,887.71 $11.12 (Investor A) (Investor A) (Investor A) $5,258,837.09 472,917.99 $11.12 (Investor B) (Investor B) (Investor B) $793,748.58 71,377.72 $11.12 (Investor C) (Investor C) (Investor C) - --------------------------------------------------------------------------------- Pro Forma Combined Fund $198,893,534.01 17,885,155.43 $11.12 (Fund A + Fund B + Fund C) (Primary A) (Primary A) (Primary A) $21,220,002.13 1,908,291.04 $11.12 (Investor A) (Investor A) (Investor A) $23,165,985.19 2,083,276.39 $11.12 (Investor B) (Investor B) (Investor B) $1,168,322.89 105,061.26 $11.12 (Investor C) (Investor C) (Investor C) North Carolina Municipal Bond $22,818,829.03 2,251,777.25 $10.13 Fund (Primary A) (Primary A) (Primary A) (Fund A) $3,103,805.56 306,372.14 $10.13 (Investor A) (Investor A) (Investor A) $16,356,279.12 1,614,044.61 $10.13 (Investor B) (Investor B) (Investor B) $182,173.97 17,981.57 $10.13 (Investor C) (Investor C) (Investor C) North Carolina Intermediate $183,543,944.01 17,149,858.43 $10.70 Municipal Bond Fund (Primary A) (Primary A) (Primary A) (Fund B) $11,648,893.07 1,088,393.30 $10.70 (Investor A) (Investor A) (Investor A) $5,506,397.03 514,520.05 $10.70 (Investor B) (Investor B) (Investor B) $113,920.31 10,642.90 $10.70 (Investor C) (Investor C) (Investor C) North Carolina Intermediate $0 0 $0 Municipal Bond Fund (Primary A) (Primary A) (Primary A) (acquiring) (Fund C) $0 0 $0 (Investor A) (Investor A) (Investor A) $0 0 $0 (Investor B) (Investor B) (Investor B) $0 0 $0 (Investor C) (Investor C) (Investor C) Pro Forma Combined Fund $22,818,829.03 2,251,777.25 $10.13 (Fund A + Fund C) (Primary A) (Primary A) (Primary A) $3,103,805.56 306,372.14 $10.13 (Investor A) (Investor A) (Investor A) $16,356,279.12 1,614,044.61 $10.13 (Investor B) (Investor B) (Investor B) $182,173.97 17,981.57 $10.13 (Investor C) (Investor C) (Investor C)
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Net Asset Value Fund Net Assets Shares Outstanding Per Share - ---- --------------- ------------------ --------------- Pro Forma Combined Fund $183,543,944.01 17,149,858.43 $10.70 (Fund B + Fund C) (Primary A) (Primary A) (Primary A) $11,648,893.07 1,088,393.30 $10.70 (Investor A) (Investor A) (Investor A) $5,506,397.03 514,520.05 $10.70 (Investor B) (Investor B) (Investor B) $113,920.31 10,642.90 $10.70 (Investor C) (Investor C) (Investor C) Pro Forma Combined Fund $206,362,773.04 19,281,989.18 $10.70 (Fund A + Fund B + Fund C) (Primary A) (Primary A) (Primary A) $14,752,698.63 1,378,391.77 $10.70 (Investor A) (Investor A) (Investor A) $21,862,676.15 2,042,857.64 $10.70 (Investor B) (Investor B) (Investor B) $296,094.28 27,662.34 $10.70 (Investor C) (Investor C) (Investor C) - --------------------------------------------------------------------------------------------------- South Carolina Municipal Bond Fund $19,917,463.51 1,896,606.46 $10.50 (Fund A) (Primary A) (Primary A) (Primary A) $1,598,591.64 152,331.77 $10.49 (Investor A) (Investor A) (Investor A) $8,147,580.59 776,037.12 $10.50 (Investor B) (Investor B) (Investor B) $167,759.23 15,977.99 $10.50 (Investor C) (Investor C) (Investor C) South Carolina Intermediate Municipal Bond Fund $223,657,894.25 20,802,006.86 $10.75 (Fund B) (Primary A) (Primary A) (Primary A) $16,820,698.66 1,564,715.98 $10.75 (Investor A) (Investor A) (Investor A) $7,387,922.53 687,141.50 $10.75 (Investor B) (Investor B) (Investor B) $2,911,224.99 270,698.57 $10.75 (Investor C) (Investor C) (Investor C) South Carolina Intermediate Municipal Bond Fund $0 0 $0 (acquiring) (Primary A) (Primary A) (Primary A) (Fund C) $0 0 $0 (Investor A) (Investor A) (Investor A) $0 0 $0 (Investor B) (Investor B) (Investor B) $0 0 $0 (Investor C) (Investor C) (Investor C) Pro Forma Combined Fund $19,917,463.51 1,896,606.46 $10.50 (Fund A + Fund C) (Primary A) (Primary A) (Primary A) $1,598,591.64 152,331.77 $10.49 (Investor A) (Investor A) (Investor A) $8,417,580.59 776,037.12 $10.50 (Investor B) (Investor B) (Investor B) $167,759.23 15,977.99 $10.50 (Investor C) (Investor C) (Investor C)
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Net Asset Value Fund Net Assets Shares Outstanding Per Share - ---- ---------------- ------------------ --------------- Pro Forma Combined Fund $223,657,894.25 20,802,006.86 $10.75 (Fund B + Fund C) (Primary A) (Primary A) (Primary A) $16,820,698.66 1,564,715.98 $10.75 (Investor A) (Investor A) (Investor A) $7,387,922.53 687,141.50 $10.75 (Investor B) (Investor B) (Investor B) $2,911,224.99 270,698.57 $10.75 (Investor C) (Investor C) (Investor C) Pro Forma Combined Fund $243,575,357.76 22,654,493.28 $10.75 (Fund A + Fund B + Fund C) (Primary A) (Primary A) (Primary A) $18,419,290.30 1,713,422.16 $10.75 (Investor A) (Investor A) (Investor A) $15,535,503.12 1,444,937.85 $10.75 (Investor B) (Investor B) (Investor B) $3,078,984.22 286,297,56 $10.75 (Investor C) (Investor C) (Investor C) - ----------------------------------------------------------------------------------------------- Tennessee Municipal Bond Fund $4,672,538.39 448,916.47 $10.41 (Fund A) (Primary A) (Primary A) (Primary A) $1,839,990.02 176,743.49 $10.41 (Investor A) (Investor A) (Investor A) 3,106,945.69 298,497.13 $10.41 (Investor B) (Investor B) (Investor B) $243,276.33 23,371.15 $10.41 (Investor C) (Investor C) (Investor C) Tennessee Intermediate Municipal Bond Fund $ 40,800,560.80 3,884,427.48 $10.50 (Fund B) (Primary A) (Primary A) (Primary A) $ 8,520,828.66 811,265.08 $10.50 (Investor A) (Investor A) (Investor A) $ 1,369,725.86 130,392.88 $10.50 (Investor B) (Investor B) (Investor B) $ 2,910.42 278.32 $10.46 (Investor C) (Investor C) (Investor C) Tennessee Intermediate Municipal Bond Fund $ 0 0 $0 (acquiring) (Primary A) (Primary A) (Primary A) (Fund C) $ 0 0 $0 (Investor A) (Investor A) (Investor A) $ 0 0 $0 (Investor B) (Investor B) (Investor B) $ 0 0 $0 (Investor C) (Investor C) (Investor C) Pro Forma Combined Fund $4,672,538.39 448,916.47 $10.41 (Fund A + Fund C) (Primary A) (Primary A) (Primary A) $1,839,990.02 176,743.49 $10.41 (Investor A) (Investor A) (Investor A) 3,106,945.69 298,497.13 $10.41 (Investor B) (Investor B) (Investor B) $243,276.33 23,371.15 $10.41 (Investor C) (Investor C) (Investor C)
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Net Asset Value Fund Net Assets Shares Outstanding Per Share - ---- --------------- ------------------ --------------- Pro Forma Combined Fund $40,800,560.80 3,884,427.48 $10.50 (Fund B + Fund C) (Primary A) (Primary A) (Primary A) $8,520,828.66 811,265.08 $10.50 (Investor A) (Investor A) (Investor A) $1,369,725.86 130,392.88 $10.50 (Investor B) (Investor B) (Investor B) $2,910.42 278.32 $10.46 (Investor C) (Investor C) (Investor C) Pro Forma Combined Fund $45,473,099.19 4,329,277.65 $10.50 (Fund A + Fund B + Fund C) (Primary A) (Primary A) (Primary A) $10,360,818.68 986,449.88 $10.50 (Investor A) (Investor A) (Investor A) $4,476,671.55 426,162.72 $10.50 (Investor B) (Investor B) (Investor B) $246,186.75 23,542.55 $10.46 (Investor C) (Investor C) (Investor C) - ------------------------------------------------------------------------------------------ Texas Municipal Bond Fund $8,354,234.53 818,256.87 $10.21 (Fund A) (Primary A) (Primary A) (Primary A) $553,535,32 54,216.30 $10.21 (Investor A) (Investor A) (Investor A) $5,153,722.14 504,760.24 $10.21 (Investor B) (Investor B) (Investor B) $4,489.19 435.37 $10.31 (Investor C) (Investor C) (Investor C) Texas Intermediate Municipal Bond Fund $282,718,894.62 27,073,098.14 $10.44 (Fund B) (Primary A) (Primary A) (Primary A) $6,548,980.09 627,203.16 $10.44 (Investor A) (Investor A) (Investor A) $2,049,541.19 196,275.86 $10.44 (Investor B) (Investor B) (Investor B) $2,867.32 274.59 $10.44 (Investor C) (Investor C) (Investor C) Texas Intermediate Municipal Bond Fund $0 0 $0 (acquiring) (Fund C) (Primary A) (Primary A) (Primary A) $0 0 $0 (Investor A) (Investor A) (Investor A) $0 0 $0 (Investor B) (Investor B) (Investor B) $0 0 $0 (Investor C) (Investor C) (Investor C) Pro Forma Combined Fund $8,354,234.53 818,256.87 $10.21 (Fund A + Fund C) (Primary A) (Primary A) (Primary A) $553,535,32 54,216.30 $10.21 (Investor A) (Investor A) (Investor A) $5,153,722.14 504,760.24 $10.21 (Investor B) (Investor B) (Investor B) $4,489.19 435.37 $10.31 (Investor C) (Investor C) (Investor C)
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Net Asset Value Fund Net Assets Shares Outstanding Per Share - ---- --------------- ------------------ --------------- Pro Forma Combined Fund $282,718,894.62 27,073,098.14 $10.44 (Fund B + Fund C) (Primary A) (Primary A) (Primary A) $6,548,980.09 627,203.16 $10.44 (Investor A) (Investor A) (Investor A) $2,049,541.19 196,275.86 $10.44 (Investor B) (Investor B) (Investor B) $2,867.32 274.59 $10.44 (Investor C) (Investor C) (Investor C) Pro Forma Combined Fund $291,073,129.15 27,873,097.77 $10.44 (Fund A + Fund B + Fund C) (Primary A) (Primary A) (Primary A) $7,102,515.41 680,215.86 $10.44 (Investor A) (Investor A) (Investor A) $7,203,263.33 689,825.95 $10.44 (Investor B) (Investor B) (Investor B) $7,356.51 704.50 $10.44 (Investor C) (Investor C) (Investor C) - --------------------------------------------------------------------------------------------- Virginia Municipal Bond Fund $24,405,484.15 2,442,485.88 $9.99 (Fund A) (Primary A) (Primary A) (Primary A) $947,188.30 94,892.72 $9.98 (Investor A) (Investor A) (Investor A) $10,555,849.41 1,056,438.45 $9.99 (Investor B) (Investor B) (Investor B) $56,462.16 5,651.75 $9.99 (Investor C) (Investor C) (Investor C) Virginia Intermediate Municipal Bond Fund $255,868,867.83 23,199,277.67 $11.03 (Fund B) (Primary A) (Primary A) (Primary A) $44,127,009.86 4,000,847.38 $11.03 (Investor A) (Investor A) (Investor A) $8,751,214.03 793,509.25 $11.03 (Investor B) (Investor B) (Investor B) $670,072.55 60,757.61 $11.03 (Investor C) (Investor C) (Investor C) Virginia Intermediate Municipal Bond Fund $0 0 $0 (acquiring) (Primary A) (Primary A) (Primary A) (Fund C) $0 0 $0 (Investor A) (Investor A) (Investor A) $0 0 $0 (Investor B) (Investor B) (Investor B) $0 0 $0 (Investor C) Investor C) (Investor C) Pro Forma Combined Fund $24,405,484.15 2,442,485.88 $9.99 (Fund A + Fund C) (Primary A) (Primary A) (Primary A) $947,188.30 94,892.72 $9.98 (Investor A) (Investor A) (Investor A) $10,555,849.41 1,056,438.45 $9.99 (Investor B) (Investor B) (Investor B) $56,462.16 5,651.75 $9.99 (Investor C) (Investor C) (Investor C)
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Net Asset Value Fund Net Assets Shares Outstanding Per Share ---- --------------- ------------------ --------------- Pro Forma Combined Fund $255,868,867.83 23,199,277.67 $11.03 (Fund B + Fund C) (Primary A) (Primary A) (Primary A) $44,127,009.86 4,000,847.38 $11.03 (Investor A) (Investor A) (Investor A) $8,751,214.03 793,509.25 $11.03 (Investor B) (Investor B) (Investor B) $670,072.55 60,757.61 $11.03 (Investor C) (Investor C) (Investor C) Pro Forma Combined Fund $280,274,351.98 25,412,089.29 $11.03 (Fund A + Fund B + Fund C) (Primary A) (Primary A) (Primary A) $45,074,198.16 4,086,725.75 $11.03 (Investor A) (Investor A) (Investor A) $19,307,063.44 1,750,652.35 $11.03 (Investor B) (Investor B) (Investor B) $726,534.71 65,877.21 $11.03 (Investor C) (Investor C) (Investor C)
VOTING MATTERS General Information This Proxy/Prospectus is being furnished in connection with the solicitation of proxies for the Meetings by the Trust's Board. It is expected that the solicitation of proxies will be primarily by mail. Officers and service contractors of the Trust also may solicit proxies by telephone or otherwise. Shareholders may submit their proxy: (1) by mail, by marking, signing, dating and returning the enclosed proxy ballot(s) in the enclosed postage-paid envelope; (2) by phone at the toll-free number on the proxy ballot(s); or (3) by on-line voting at www.proxyvote.com. Any shareholder submitting a proxy may revoke it at any time before it is exercised at the Meetings by submitting to the Trust a written notice of revocation addressed to the Trust at the address shown on the cover page of this Proxy/Prospectus, by submitting a subsequently executed proxy or by attending the Meetings and voting in person. Only shareholders of record at the close of business on December 27, 2001 will be entitled to vote at the Meetings. On that date the following were the number shares outstanding and entitled to vote for each Fund. Each whole and fractional share of a Fund is entitled to a whole or fractional vote. Georgia Intermediate Municipal Bond Fund....... 14,037,766.117 shares Georgia Municipal Bond Fund.................... 2,694,237.283 shares Maryland Intermediate Municipal Bond Fund...... 18,650,455.077 shares Maryland Municipal Bond Fund................... 4,116,516.409 shares North Carolina Intermediate Municipal Bond Fund 18,862,837.466 shares North Carolina Municipal Bond Fund............. 4,158,103.269 shares South Carolina Intermediate Municipal Bond Fund 22,930,474.294 shares South Carolina Municipal Bond Fund............. 2,689,624.136 shares Tennessee Intermediate Municipal Bond Fund..... 4,958,356.923 shares Tennessee Municipal Bond Fund.................. 930,075.147 shares Texas Intermediate Municipal Bond Fund......... 27,122,036.265 shares Texas Municipal Bond Fund...................... 1,373,377.232 shares Virginia Intermediate Municipal Bond Fund:..... 26,694,891.799 shares Virginia Municipal Bond Fund:.................. 3,528,124.504 shares
If the accompanying proxy ballot(s) is executed and returned in time for the Meetings, the shares covered thereby will be voted in accordance with the proxy on all matters that may properly come before the Meetings. 24 Quorum A quorum is constituted with respect to a Fund by the presence in person or by proxy of the holders of more than one-half of the outstanding shares of the Fund entitled to vote at the Meetings. For purposes of determining the presence of a quorum for transacting business at the Meetings, abstentions will be treated as shares that are present at the Meetings but which have not been voted. Accordingly, abstentions will have the effect of a "no" vote for purposes of obtaining the requisite approvals of the Reorganization Agreement. Broker "non-votes" (that is, proxies from brokers or nominees indicating that such persons have not received instructions from the beneficial owners or other persons entitled to vote shares on a particular matter with respect to which the brokers or nominees do not have discretionary power) will be treated the same as abstentions. In certain circumstances, brokers or nominees that are members of the New York Stock Exchange may vote the shares of beneficial owners who do not otherwise submit voting instructions to their broker or nominee. In the event that a quorum is not present at the Meetings, or in the event that a quorum is present at the Meetings but sufficient votes to approve the Reorganization Agreement are not received by a Fund, one or more adjournment(s) may be proposed under Massachusetts law and the Trust's Declaration of Trust to permit further solicitation of proxies for a reasonable period in order to obtain a requisite vote. Any such adjournment(s) will require the affirmative vote of a majority of those shares affected by the adjournment(s) that are represented at the Meetings in person or by proxy. If a quorum is present, the persons named as proxies will vote those proxies which they are entitled to vote FOR the particular proposal for which a quorum exists in favor of such adjournment(s), and will vote those proxies required to be voted AGAINST such proposal against any adjournment(s). Shareholder Approval The Reorganization Agreement is being submitted for approval at the Meetings by each respective Fund's shareholders pursuant to the Trust's Declaration of Trust, and was unanimously approved and recommended by the Trust's Board at special meetings held on October 10, 2001. The Reorganization Agreement, which contemplates the dissolution of the Trust, must be approved by the affirmative vote of a majority of the outstanding shares of a Fund. The Reorganization of any Fund is not conditioned upon the Reorganization of any other Fund. Accordingly, it is possible that one or more Fund(s)' shareholders will not approve the Reorganization and such Fund(s) will not be reorganized. In this event, the Board(s) will consider what further action is appropriate. A vote of the shareholders of the Acquiring Funds is not being solicited, since their approval or consent is not necessary for the Reorganization. Principal Shareholders The table below shows the name, address and share ownership of each person known to the Trust to have ownership with respect to 5% or more of a class of a Fund as of December 4, 2001. Each shareholder is known to own as of record the shares indicated below. Any shareholder known to the Trust to own such shares beneficially is designated by an asterisk.
Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing Georgia Intermediate NFSC FEBO # W14-004162 69,425.93 5.61% 0.49% 0.85% Municipal Bond ALICE HINTON RAY Investor A Fund P O BOX 415 DACULA GA 30019
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Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing WACHOVIA BANK NA CO-TTEE 66,436.25 5.37% 0.47% 0.40% OF LSW-S Investor A P O BOX 3073 301 N MAIN ST MC NC-31057 WINSTON-SALEM NC 27150 WACHOVIA SECURITIES, INC. 164,129.53 13.28% 1.17% 0.98% FBO 402-08416-17 Investor A P.O. BOX 1220 CHARLOTTE, NC 28201-1220 NFSC FEBO # W14-086592 78,319.28 6.33% 0.56% 0.47% JAMES T WILLOUGHBY Investor A 451 CHESTNUT HILL RD MARIETTA GA 30064 NFSC FEBO # W14-095494 68,036.84 5.50% 0.48% 0.41% BRAD WEITZ TTEE Investor A SANDY WEITZ TRUST U/A 12/30/92 3100 ARDEN RD NW ATLANTA GA 30305 WACHOVIA SECURITIES, INC 32,890.61 5.31% 0.23% 0.20% FBO 564-70080-19 Investor B P.O. BOX 1220 CHARLOTTE, NC 28201-1220 WACHOVIA SECURITIES, INC. 254,882.29 41.19% 1.81% 1.52% FBO 564-70081-18 Investor B P.O. BOX 1220 CHARLOTTE, NC 28201-1220 NFSC FEBO # W14-652571 51,822.33 48.32% 0.37% 0.31% LETTY C CAGLE Investor C DOUGLAS CAGLE APT 318 8592 ROSWELL RD ATLANTA GA 30350 PAINEWEBBER FOR THE 17,929.25 16.71% 0.13% 0.11% BENEFIT OF KAY S COLLINS Investor C 1512 NORTH CHENEY DR VIDALIA GA 30474-4322 NFSC FEBO # W14-005215 18,192.44 16.96% 0.13% 0.11% ROBERT NETOLICKA Investor C MARIA D KITTEL NETOLICKA 340 PINE VALLEY ROAD MARIETTA GA 30067 BANK OF AMERICA NA 12,128,349.73 99.98% 86.14% 82.44% ATTN TONY FARRER Primary A TX1-945-08-18 411 NORTH AKARD ST DALLAS TX 75201-3307 Georgia Municipal NFSC FEBO # W14-004162 73,990.75 43.13% 2.73% 0.85% Bond Fund ALICE HINTON RAY Investor A P O BOX 415 DACULA GA 30019
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Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing NFSC FEBO # W14-725382 28,016.40 16.33% 1.03% 0.17% EDD PRICE Investor A LYNN PRICE AAA TANK TESTERS PO BOX 789 BRAZELTON GA 30517 NFSC FEBO # W14-749877 30,509.61 17.78% 1.13% 0.18% HUNTER R HUGHES III Investor A C/O ROGERS & HARDIN 229 PEACHTREE ST NW 2700 INTERNATIONAL TOWER ATLANTA GA 30350 NFSC FEBO # X09-188107 11,389.75 6.64% 0.42% 0.07% GERTRUDE P ALTFATER Investor A 8592 ROSWELL RD APT 422 ATLANTA GA 30350-1889 MERRILL LYNCH, PIERCE, 6,423.32 24.69% 0.24% 0.04% FENNER & SMITH INC FOR THE Investor C SOLE BENEFIT OF ITS CUSTOMERS ATTENTION: SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3 RD FLOOR JACKSONVILLE FL 32246 AUREATHA W FLOWERS 1,362.75 5.23% 0.05% 0.01% 4 MIDDLE PLANTATION RD NW Investor C ATLANTA GA 30318 MORGAN KEEGAN & 8,904.59 34.23% 0.33% 0.05% COMPANY, INC. Investor C FBO JUANITA G. BINION 5814 PARK CENTRAL AVE. NORCROSS GA 30092 MORGAN KEEGAN & 8,904.59 34.23% 0.33% 0.05% COMPANY, INC. Investor C FBO RICHARD BINION JR. 5814 PARK CENTRAL AVE. NORCROSS GA 30092 BANK OF AMERICA NA 1,712,817.25 99.98% 63.23% 82.44% ATTN TONY FARRER Primary A TX1-945-08-18 411 NORTH AKARD ST DALLAS TX 75201-3307 Maryland NFSC FEBO # W13-061581 350,490.02 21.38% 1.89% 1.55% Intermediate ROBERT GLADSTONE Investor A Municipal Bond LESLIE GLADSTONE Fund 2468 BELMONT RD NW WASHINGTON DC 20008 NFSC FEBO # W38-007404 91,221.33 5.56% 0.49% 0.40% VINCENT L SALVATORI Investor A CAROL H SALVATORI 2652 GREENBRIAR RD ANNAPOLIS MD 21401
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Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing NFSC FEBO # W38-697320 26,783.98 5.51% 0.14% 0.12% CORNELIUS R LOVE III Investor B 600 CORNELIUS POINT RD STEVENSVILLE MD 21666 PRUDENTIAL SECURITIES INC. 27,162.88 5.59% 0.15% 0.12% FBO Investor B MS LAUREL R G MORENO TTEE MIRO GUDELSKY TRUST UA DTD 10/14/91 FBO MIRO GUDELSKY POTOMAC MD 20854-1334 NFSC FEBO # W13-776971 9,391.68 8.10% 0.05% 0.04% ELIZABETH W NICHOLSON Investor C 408 GREAT FALLS ROAD ROCKVILLE MD 20850 NFSC FEBO # W38-636932 45,331.82 39.10% 0.24% 0.20% JOSEPH J HOCK III Investor C GLORIA D HOCK 1342 ASTER DR GLEN BURNIE MD 21061 NFSC FEBO # W38-081264 45,495.91 39.24% 0.25% 0.20% DOUGLAS S GOODWIN Investor C REVOCABLE TRUS DOUGLAS S GOODWIN U/A 02/09/01 2224 CREST ROAD BALTIMORE MD 21209 BANK OF AMERICA NA 16,241,752.54 99.72% 87.66% 80.48% ATTN TONY FARRER Primary A TX1-945-08-18 411 NORTH AKARD ST DALLAS TX 75201-3307 Maryland Municipal NFSC FEBO # W13-640379 75,583.09 24.20% 1.83% 0.33% Bond Fund CAROL C CHILDS Investor A PETER W HOUSE 4210 LEEWARD PL BETHESDA MD 20816 NFSC FEBO # W38-052230 23,877.39 7.64% 0.58% 0.11% ANNA CIMINI Investor A TOD ANGELO R CIMINI TOD ROBERT D CIMINI 10410 FRANK TIPPETT RD CHELTENHAM MD 20623 NFSC FEBO # W13-094960 23,664.72 7.57% 0.57% 0.10% BESS H TURETSKY Investor A RITA L LEGGETT 11220 WOODSON AVE KENSINGTON MD 20895 FIRST SOUTHWEST COMPANY 17,031.43 5.45% 0.41% 0.08% FBO KAREN M DRAKE Investor A #25400676 1700 PACIFIC AVE. SUITE 500 DALLAS, TX 75201
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Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing NFSC FEBO # W13-105503 17,773.33 5.69% 0.43% 0.08% BIRCH E BAYH Investor A KATHERINE H BAYH 3805 BLACKTHORN STREET CHEVY CHASE MD 20815 FIRST SOUTHWEST COMPANY 30,994.58 9.92% 0.75% 0.14% FBO BARRY P DRAKE Investor A 25402246 1700 PACIFIC AVE. SUITE 500 DALLAS, TX 75201-4652 MERRILL LYNCH, PIERCE, 4,061.31 10.44% 0.10% 0.02% FENNER & SMITH INC FOR THE SOLE Investor C BENEFIT OF ITS CUSTOMERS ATTENTION: SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246 NFSC FEBO # W38-028541 22,434.56 57.67% 0.54% 0.10% ELIZABETH GREGORY Investor C PO BOX 2327 OCEAN CITY MD 21843 NFSC FEBO # W38-077046 5,004.89 12.86% 0.12% 0.02% MARY H SEMEL Investor C TOD PETER M SEMEL TOD HILARY SEMEL 3704 N CHARLES STREET UNIT 904 BALTIMORE MD 21218 NFSC FEBO # W38-079847 1,956.17 5.02% 0.05% 0.01% JOSEPH C DUBAY Investor C ANNE DUBAY 20 LOCUST DR BALTIMORE MD 21228 BANK OF AMERICA NA 1,994,338.99 99.98% 48.27% 80.48% ATTN TONY FARRER Primary A TX1-945-08-18 411 NORTH AKARD ST DALLAS TX 75201-3307 North Carolina NFSC FEBO # W16-714542 75,683.64 7.13% 0.40% 0.33% Intermediate W FRANK DOWD JR Investor A Municipal Bond P O BOX 35430 Fund CHARLOTTE NC 28235 NFSC FEBO # W26-656267 66,382.28 6.25% 0.35% 0.29% EILEEN M FRIARS Investor A 3516 FOXCROFT ROAD CHARLOTTE NC 28211 NFSC FEBO # X68-061336 105,952.78 9.98% 0.56% 0.46% JULIA E CLARK Investor A 4600 TROY'S MTN LN DURHAM NC 27705 ARROW & CO 102,754.45 9.68% 0.54% 0.45% PO BOX 30010 Investor A DURHAM NC 27702-3010
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Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing NFSC FEBO # W27-002879 38,667.29 7.13% 0.20% 0.17% JACK CARTWRIGHT Investor B 1040 CANTERING RD HIGH POINT NC 27262 NFSC FEBO # W27-706680 6,537.93 27.94% 0.03% 0.03% HAZEL A D'ORANGE Investor C 2551 BATTERY PLACE WILMINGTON NC 28403 NFSC FEBO # W27-734004 2,553.03 10.91% 0.01% 0.01% BARBARA B COYNER Investor C 513 LAKE BOONE TRAIL RALEIGH NC 27608 WACHOVIA SECURITIES, INC. 4,672.90 19.97% 0.02% 0.02% FBO 205-04678-16 Investor C P.O. BOX 1220 CHARLOTTE, NC 28201-1220 WACHOVIA SECURITIES, INC. 1,191.71 5.09% 0.01% 0.01% FBO 205-05103-18 Investor C P.O. BOX 1220 CHARLOTTE, NC 28201-1220 NFSC FEBO # W17-664693 1,461.00 6.24% 0.01% 0.01% KAREN H BIRD Investor C DONALD A BIRD PO BOX 636 ELLENBORO NC 28040 DONALDSON LUFKIN 3,101.23 13.25% 0.02% 0.01% JENRETTE SECURITIES Investor C CORPORATION INC. P. O. BOX 2052 JERSEY CITY NJ 07303-9998 DONALDSON LUFKIN 1,417.77 6.06% 0.01% 0.01% JENRETTE SECURITIES Investor C CORPORATION INC. P. O. BOX 2052 JERSEY CITY NJ 07303-9998 BANK OF AMERICA NA 17,275,869.08 99.84% 91.27% 84.53% ATTN TONY FARRER Primary A TX1-945-08-18 411 NORTH AKARD ST DALLAS TX 75201-3307 North Carolina NFSC FEBO # 679-149853 27,417.63 7.98% 0.67% 0.12% Municipal Bond MICHAEL T VOWELL Investor A Fund CATHERINE L VOWELL 19025 PENINSULA POINT RD CORNELIUS NC 28031 NFSC FEBO # W16-038083 28,511.19 8.30% 0.69% 0.12% RICHARD B PRIORY Investor A JOAN E PRIORY 3520 PROVIDENCE ROAD CHARLOTTE NC 28211
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Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing NFSC FEBO # 579-276618 40,112.26 11.68% 0.97% 0.17% GEORGE C BOWER JR TTEE Investor A JAMES R BRASWELL MARITAL TRUST FBO BRONNIE L BRASWELL 300 E WADE ST WADESBORO NC 28170-2231 RITA B GOURLAY & 997.22 5.19% 0.02% 0.00% THOMAS A GOURLAY JTWROS Investor C 2771 LONG BAY DR SE SOUTHPORT NC 28461 MERRILL LYNCH, PIERCE, 3,271.90 17.04% 0.08% 0.01% FENNER & SMITH INC FOR THE Investor C SOLE BENEFIT OF ITS CUSTOMERS ATTENTION: SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246 NFSC FEBO # W16-699632 2,860.98 14.90% 0.07% 0.01% JOHN R TAYLOR Investor C EDNA H TAYLOR 802 HIDDEN CREEK CIR SALISBURY NC 28147 NFSC FEBO # NC4-157236 2,835.76 14.77% 0.07% 0.01% FLORENCE H MOORE EX Investor C E/O MICHAEL T MOORE 4034 CHURCHHILL RD CHARLOTTE NC 28211 NFSC FEBO # X68-076554 3,601.95 18.76% 0.09% 0.02% CHARLES R MIANNAY Investor C MAGDALENE M MIANNAY 105 SEXTANT CT NEW BERN NC 28562 NFSC FEBO # NC4-157678 5,114.23 26.64% 0.12% 0.02% T RANDOLPH PERKINS Investor C CHRISTINA B PERKINS 2508 FLINTGROVE RD CHARLOTTE NC 28226 BANK OF AMERICA NA 2,207,979.81 99.98% 53.59% 84.53% ATTN TONY FARRER Primary A TX1-945-08-18 411 NORTH AKARD ST DALLAS TX 75201-3307 South Carolina SEI TRUST CO 91,789.63 5.54% 0.40% 0.36% Intermediate C/O BERTHA, JORDAN, & Investor A Municipal Bond GRIFFIN Fund ATTN: MUTUAL FUND ADMINISTRATOR ONE FREEDOM VALLEY DRIVE OAKS, PA 19456
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Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing DEAN WITTER FOR THE 93,632.96 5.65% 0.41% 0.36% BENEFIT OF D PIERRE G Investor A CAMERON JR. TTEE PO BOX 250 CHURCH STREET STATION NEW YORK, NY 10008-0250 DEAN WITTER FOR THE 193,810.41 11.69% 0.84% 0.75% BENEFIT OF J C BERNARD & Investor A PO BOX 250 CHURCH STREET STATION NEW YORK, NY 10008-0250 NFSC FEBO # W15-645788 79,922.78 11.34% 0.35% 0.31% GUSTAVE J CRISPYN Investor B MILDRED M CRISPYN 2382 CAT TAIL POND RD JOHNS ISLAND SC 29455 NFSC FEBO # W15-636169 24,138.43 7.87% 0.11% 0.09% PETER B & FRIEDA B GRIFFIN Investor C TTEE THE HOBART W GRIFFIN & FRIEDA B GRIFFIN TR, U/A 1/31/92 116 DUNBARTON CIR AIKEN SC 29803 NFSC FEBO # W15-013765 15,799.21 5.15% 0.07% 0.06% CAROLINE M LUTZ Investor C 26 FIDDLERS TRACE FRIPP ISLAND SC 29920 WEXFORD CLEARING 21,959.42 7.16% 0.10% 0.09% SERVICES CORP FBO Investor C GARY D MITCHELL 1003 MEADOW LN ANDERSON SC 29621-1916 WEXFORD CLEARING 23,745.30 7.74% 0.10% 0.09% SERVICES CORP FBO Investor C MARSHALL H ROBERSON & GEORGIA T ROBERSON JT TEN 1001 THORNEHILL DR ANDERSON SC 29621-1560 NFSC FEBO # W15-020141 81,505.25 26.58% 0.35% 0.32% GIRARD M BLOUNT JR Investor C 4569 CARRIAGE RUN CIRCLE MURRELLS INLET SC 29576 BANK OF AMERICA NA 20,306,123.29 100.00% 88.39% 86.05% ATTN TONY FARRER Primary A TX1-945-08-18 411 NORTH AKARD ST DALLAS TX 75201-3307
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Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing South Carolina MERRILL LYNCH, PIERCE, 8,132.66 6.98% 0.46% 0.05% Municipal FENNER & SMITH INC FOR THE Investor A Bond Fund SOLE BENEFIT OF ITS CUSTOMERS ATTENTION: SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246 WACHOVIA BANK NA 8,819.04 7.57% 0.33% 0.03% INVESTMENT MGR Investor A CHARLES D ERB TTEE FOR CHARLES D ERB TRUST U/A DTD 10/4/88 PO BOX 3073 M/C NC-31057 WINSTON-SALEM NC 27150 NFSC FEBO # 679-136298 9,494.81 8.15% 0.35% 0.04% LOUISE B ROSS Investor A LOUISE B ROSS TTEE U/A 10/22/1997 PO BOX 908 BAMBERG SC 29003 NFSC FEBO # W17-039020 27,291.53 23.43% 1.01% 0.11% DONNA R CART TTEE Investor A DONNA ROBINSON CART U/A 5/23/00 1140 PARTRIDGE RD SPARTANBURG SC 29302 DONALDSON LUFKIN 9,323.00 8.00% 0.34% 0.04% JENRETTE Investor A SECURITIES CORPORATION INC. P. O. BOX 2052 JERSEY CITY, NJ 07303-9998 PAINEWEBBER FOR THE 10,422.62 8.94% 0.38% 0.04% BENEFIT OF Investor A JOHN STEVENSON METCALF 2287 SHORELINE DRIVE JOHNS ISLAND SC 29455-8631 NFSC FEBO # W16-000981 48,614.72 6.61% 1.79% 0.19% PETER R ANDERSON Investor B EMMY LOU ANDERSON 207 SEA MARSH DRIVE KIAWAH ISLAND SC 29455 NFSC FEBO # W38-006564 50,544.04 6.87% 1.87% 0.20% HENRY A STROHMINGER JR Investor B 1426 N WACCAMAW DR GARDEN CITY SC 29576 MERRILL LYNCH, PIERCE, 4,296.11 6.67% 0.46% 0.05% FENNER & SMITH INC FOR THE Investor C SOLE BENEFIT OF ITS CUSTOMERS ATTENTION: SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246
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Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing NFSC FEBO # W15-013684 6,208.04 9.64% 0.23% 0.02% OLGA WEINSTEIN TTEE Investor C OLGA WEINSTEIN REVOCABLE TRUST U/A 4/28/99 56 FORT ROYAL CHARLESTON SC 29407 PAINEWEBBER FOR THE 4,771.00 7.41% 0.18% 0.02% BENEFIT OF HENRY SMYTHE Investor C U/W/O EDITH G DUKES 5 EXCHANGE PL CHARLESTON SC 29401-2530 PAINEWEBBER FOR THE 4,771.00 7.41% 0.18% 0.02% BENEFIT OF HENRY SMYTHE Investor C TTEE U/W/O ETHEL BENNETT 5 EXCHANGE PL CHARLESTON SC 29401-2530 DONALDSON LUFKIN 16,912.25 26.28% 0.62% 0.07% JENRETTE SECURITIES Investor C CORPORATION INC. P. O. BOX 2052 JERSEY CITY, NJ 07303-9998 DONALDSON LUFKIN 27,085.61 42.09% 1.00% 0.11% JENRETTE SECURITIES Investor C CORPORATION INC. P. O. BOX 2052 JERSEY CITY NJ 07303-9998 BANK OF AMERICA NA 1,792,881.04 100.00% 66.20% 86.05% ATTN TONY FARRER Primary A TX1-945-08-18 411 NORTH AKARD ST DALLAS TX 75201-3307 Tennessee RALPH S GRAHAM TTEE 63,217.39 7.20% 1.28% 1.08% Intermediate RALPH S GRAHAM REV LIV Investor A Municipal Bond TRUST U/A DTD 08/14/1990 Fund PO BOX 235 BIG SANDY TN 38221 NFSC FEBO # W25-680427 104,887.29 11.95% 2.12% 1.79% BOB G LONG Investor A PO BOX 266 HERMITAGE TN 37076 NFSC FEBO # W25-683256 130,111.56 14.83% 2.63% 2.22% MARSHALL T POLK III Investor A PO BOX 90148 NASHVILLE TN 37209 NFSC FEBO # W25-684716 62,383.89 7.11% 1.26% 1.06% JAMES R KELLAM III Investor A 3605 SYCAMORE LANE NASHVILLE TN 37215 CHARLES R HULSHOF & 47,230.29 5.38% 0.96% 0.80% CHERYL T HULSHOF Investor A JT TEN 8225 MARYLAND LANE BRENTWOOD TN 37027-7332
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Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing NFSC FEBO # X75-157139 53,523.97 6.10% 1.08% 0.91% ALEXANDER HEARD Investor A JEAN HEARD 2100 GOLF CLUB LN NASHVILLE TN 37215-1224 NFSC FEBO # W25-620670 9,613.32 6.82% 0.19% 0.16% JOLENE H JORDAN Investor B P O BOX 1736 CORDOVA TN 38088 NFSC FEBO # W25-605689 8,661.05 6.14% 0.18% 0.15% TERENCE M KELLY Investor B BARBARA M KELLY 272 HIDDEN LAKE RD HENDERSONVILLE TN 37075 NFSC FEBO # W25-695467 9,557.57 6.78% 0.19% 0.16% GARY ARMOR HALL Investor B VICKI B HALL 16609 MIZZEN COURT CORNELIUS NC 28031 NFSC FEBO # W25-695556 14,980.56 10.63% 0.30% 0.26% CHARLES R COOKSEY Investor B JULIE E COOKSEY 4767 CARTHAGE HWY LEBANON TN 37087 NFSC FEBO # W25-008028 17,056.62 12.11% 0.35% 0.29% DAVID A LOCKMILLER Investor B CARLOTTA E LOCKMILLER 4343 LEBANON RD APT#1711 HERMITAGE TN 37076 LPL FINANCIAL SERVICES 4,757.37 79.36% 0.10% 0.08% A/C 7111-6228 Investor C 9785 TOWNE CENTRE DRIVE SAN DIEGO CA 92121-1968 PAINEWEBBER FOR THE BENEFIT OF 0,955.33 15.93% 0.02% 0.02% FRANK SCOTT Investor C 913 LAKEMONT DR NASHVILLE TN 37220-2112 BANK OF AMERICA NA 3,919,334.40 100.00% 79.29% 73.73% ATTN TONY FARRER Primary A TX1-945-08-18 411 NORTH AKARD ST DALLAS TX 75201-3307 Tennessee Municipal NFSC FEBO # W25-682101 13,513.10 6.96% 1.45% 0.23% Bond Fund ALLENE ELLIS Investor A JOYCE ROSE 2544 BEARWALLOW RD ASHLAND CITY TN 37015 NFSC FEBO # W25-002658 108,369.65 55.85% 11.65% 1.85% WILLIAM W PUGH JR Investor A 734 EMORY VALLEY RD #104 OAK RIDGE TN 37830
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Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing NFSC FEBO # W25-063657 24,869.43 12.81% 2.67% 0.42% MARY SMITH BANIC Investor A 605 W VANDERBILT DR OAK RIDGE TN 37830 NFSC FEBO # W25-073784 13,095.02 6.74% 1.41% 0.22% JOHN E MCBEE Investor A BANK OF AMERICA COLLATERAL 427 LYNNWEED BLVD NASHVILLE TN 37205 NFSC FEBO # W23-731293 19,136.19 6.42% 2.06% 0.33% B/G MADISON MCBRAYER Investor B 1168 CUMBERLAND ROAD CHATTANOOGA TN 37419 NFSC FEBO # W25-683620 17,223.06 5.78% 1.85% 0.29% ROSE MARIE ST CLAIR Investor B 222 ANDREWS DRIVE CLARKSVILLE TN 37042 NFSC FEBO # W25-690961 20,325.00 6.82% 2.19% 0.35% ELIZABETH D CAMPBELL Investor B 3037 SMITH SPRINGS RD ANTIOCH TN 37013 NFSC FEBO # W25-794732 19,367.02 6.50% 2.08% 0.33% NANCY C DAVIS Investor B HENRY G DAVIS 2201 BOWMAN RD FRANKLIN TN 37064 J CHASE COLE 8,484.39 31.36% 0.91% 0.14% 511 UNION ST STE 2100 Investor C NASHVILLE TN 37219 MERRILL LYNCH, PIERCE, 8,290.38 30.65% 0.89% 0.14% FENNER & SMITH INC FOR THE SOLE Investor C BENEFIT OF ITS CUSTOMERS ATTENTION: SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246 NFSC FEBO # W25-617954 4,416.10 16.32% 0.47% 0.08% FRANK W CONDURELIS Investor C JANE E CONDURELIS 806 BRENTVIEW DR NASHVILLE TN 37220 NFSC FEBO # W25-009660 2,535.77 9.37% 0.27% 0.04% DONALD J SOUTHARD SR Investor C BARBARA C SOUTHARD 278 JOE BYRD LN CLINTON TN 37716 LPL FINANCIAL SERVICES 2,394.64 8.85% 0.26% 0.04% A/C 7111-6228 Investor C 9785 TOWNE CENTRE DRIVE SAN DIEGO CA 92121-1968
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Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing BANK OF AMERICA NA 410,865.38 99.92% 44.18% 73.73% ATTN TONY FARRER Primary A TX1-945-08-18 411 NORTH AKARD ST DALLAS TX 75201-3307 Texas Intermediate MOTCO 201,878.47 33.64% 0.74% 0.77% Municipal Bond P O BOX 17001-TRUST Investor A Fund SAN ANTONIO TX 78217 MADELINE O'DONNELL 43,993.54 7.33% 0.16% 0.15% 2395 NICHOLS CANYON RD Investor A HOLLYWOOD CA 90046 SECURED TRUST BANK 101,413.37 16.89% 0.37% 0.35% SUITE 100 Investor A 1909 SOUTH BROADWAY TYLER TX 75701 NFSC FEBO # W40-682470 19,782.09 10.15% 0.07% 0.07% A G MARTIN Investor B NELLIE L MARTIN 2011 32ND ST LUBBOCK TX 79411 NFSC FEBO # W18-719404 22,726.78 11.66% 0.08% 0.08% MONTINE T WISDOM Investor B 6335 W NORTHWEST HWY #1318 DALLAS TX 75225 NFSC FEBO # W40-678880 34,294.19 17.60% 0.13% 0.12% JAMES ROBERT MALLORY Investor B FAITH K MALLORY 2400 WINTON TERR E FORT WORTH TX 76109 NFSC FEBO # W41-600997 19,317.45 9.91% 0.07% 0.07% OLIVER ROOFING SYSTEMS Investor B PO BOX 180191 AUSTIN TX 78718 STEPHENS INC 278.08 100.00% 0.00% 0.00% ATTN: CINDY COLE Investor C 111 CENTER STREET LITTLE ROCK AR 72201 BANK OF AMERICA NA 26,564,723.60 99.79% 96.83% 95.09% ATTN TONY FARRER Primary A TX1-945-08-18 411 NORTH AKARD ST DALLAS TX 75201-3307 Texas Municipal SHIRLEY A WAGNER 2,874.99 9.05% 0.21% 0.01% Bond Fund 3002 SAN PAULA Investor A DALLAS TX 75228-0000 MOTCO 19,584.24 61.65% 1.44% 0.07% P O BOX 17001-TRUST Investor A SAN ANTONIO TX 78217
37
Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing NFSC FEBO # W40-650790 2,742.71 8.63% 0.20% 0.01% SETH W LEHMBERG Investor A ROSE MARY LEHMBERG 2201 MEADOW LANE TAYLOR TX 76574 EDWARD D JONES AND CO 2,853.79 8.98% 0.21% 0.01% F/A/O Investor A ADOLPH F SCHMIDT & ELVIRA H SCHMIDT EDJ# 512-06113-1-3 P O BOX 2500 MARYLAND HEIGHTS MO 630438500 NFSC FEBO # W23-739839 29,406.47 6.05% 2.15% 0.10% TERRY M JOHNSON Investor B PAULA M JOHNSON PO BOX 1227 WOLFFORTH TX 79382 NFSC FEBO # W40-604062 25,082.99 5.16% 1.84% 0.09% STEVEN SMITH TTEE Investor B PAMELA C SMITH TR C/O SPENCO MEDICAL CORP PO BOX 2501 WACO TX 76702 NFSC FEBO # W23-726141 27,561.82 5.67% 2.02% 0.10% HOWARD D WOMACK Investor B 291 FM 1078 ORANGE TX 77632 NFSC FEBO # W40-609048 44,079.44 9.07% 3.23% 0.15% JANE M MCCARVER EX Investor B E/O A G MCCARVER 901 W INDIANNA STE A MIDLAND TX 79701 MERRILL LYNCH, PIERCE, 1,568.67 83.17% 0.11% 0.01% FENNER & SMITH INC FOR THE Investor C SOLE BENEFIT OF ITS CUSTOMERS ATTENTION: SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246 STEPHENS INC 317.38 16.82% 0.02% 0.00% ATTN: CINDY COLE Investor C 111 CENTER STREET LITTLE ROCK AR 72201 BANK OF AMERICA NA 822,087.62 99.96% 60.24% 95.09% ATTN TONY FARRER Primary A TX1-945-08-18 411 NORTH AKARD ST DALLAS TX 75201-3307
38
Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing Virginia MERRILL LYNCH, PIERCE, 5,414.98 8.09% 0.02% 0.02% Intermediate FENNER & SMITH INC FOR THE Investor C Municipal Bond SOLE BENEFIT OF ITS Fund CUSTOMERS ATTENTION: SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246 NFSC FEBO # W13-003441 3,663.50 5.47% 0.01% 0.01% HAROLD R CRAMER Investor C DONNA CRAMER 2051 CROSSING GATE WAY VIENNA VA 22181 DOROTHY LEE WALSHE 10,222.79 15.28% 0.04% 0.03% 5801 MILL SPRING RD Investor C MIDLOTHIAN VA 23112 NFSC FEBO # W26-049425 6,819.26 10.19% 0.02% 0.04% COLLIN PEEL Investor C MARGIE PEEL 195 FAIRWAY LN WYTHEVILLE VA 24382 NFSC FEBO # W26-066940 3,761.28 5.62% 0.01% 0.01% ANDREW L GRAHAM JR Investor C ELRICA S GRAHAM 708 WREN DRIVE PULASKI VA 24301 BANK OF AMERICA NA 22,963,138.69 99.71% 82.25% 80.52% ATTN TONY FARRER Primary A TX1-945-08-18 411 NORTH AKARD ST DALLAS TX 75201-3307 Virginia Municipal CIBC WORLD MARKETS CORP. 9,132.63 5.43% 0.26% 0.03% Bond Fund FBO 033-23264-12 Investor A P.O. BOX 3484 CHURCH STREET STATION NEW YORK, NY 10008-3484 CIBC WORLD MARKETS CORP. 20,496.16 12.19% 0.58% 0.07% FBO 033-23266-10 Investor A P.O. BOX 3484 CHURCH STREET STATION NEW YORK, NY 10008-3484 PAINEWEBBER FOR THE 11,195.41 6.66% 0.31% 0.04% BENEFIT OF Investor A DAVID HALSTEAD METCALF 2325 ROCKY TOP ROAD CHARLOTTESVILLE VA 22911-8575 NFSC FEBO # W26-074497 14,889.47 8.85% 0.42% 0.05% NANCY L GRDEN Investor A 410 52ND STREET VA BEACH VA 23451 NFSC FEBO # W13-101680 49,630.76 29.53% 1.40% 0.16% ALBERT E STEIDEL Investor A 6167 COBBS RD ALEXANDRIA VA 22310
39
Percentage Percentage of Total Shares/ Percentage of Fund Fund Post Fund Name and Address Class of Class (All Classes) Closing NFSC FEBO # W26-049425 5,295.16 94.27% 0.15% 0.04% COLLIN PEEL Investor C MARGIE PEEL 195 FAIRWAY LN WYTHEVILLE VA 24382 STEPHENS INC 321.33 5.72% 0.01% 0.00% ATTN: CINDY COLE Investor C 111 CENTER STREET LITTLE ROCK AR 72201 BANK OF AMERICA NA 2,380,341.10 100.00% 66.92% 80.52% ATTN TONY FARRER Primary A TX1-945-08-18 411 NORTH AKARD ST DALLAS TX 75201-3307
For purposes of the 1940 Act, any person who owns directly or through one or more controlled companies more than 25% of the voting securities of a company is presumed to "control" such company. Accordingly, to the extent that a shareholder identified in the foregoing table is identified as the beneficial holder of more than 25% of a class, or is identified as the holder of record of more than 25% of a class and has voting and/or investment power, it may be presumed to control such class. As of December 27, 2001, Bank of America had voting control of 81.41% of the outstanding shares of Georgia Intermediate Municipal Bond Fund; 61.68% of the outstanding shares of Georgia Municipal Bond Fund; 85.91% of the outstanding shares of Maryland Intermediate Municipal Bond Fund; 50.19% of the outstanding shares of Maryland Municipal Bond Fund; 89.64% of the outstanding shares of North Carolina Intermediate Municipal Bond Fund; 53.43% of the outstanding shares of North Carolina Municipal Bond Fund; 87.84% of the outstanding shares of South Carolina Intermediate Municipal Bond Fund; 65.28% of the outstanding shares of South Carolina Municipal Bond Fund; 78.59% of the outstanding shares of Tennessee Intermediate Municipal Bond Fund; 44.18% of the outstanding shares of Tennessee Municipal Bond Fund; 94.73% of the outstanding shares of Texas Intermediate Municipal Bond Fund; 55.53% of the outstanding shares of Texas Municipal Bond Fund; 79.60% of the outstanding shares of Virginia Intermediate Municipal Bond Fund; and 65.26% of the outstanding shares of Virginia Municipal Bond Fund. Accordingly, Bank of America may be considered to "control" the Funds. The address of Bank of America is: 411 N. Akard Street, TX1-945-0818, Dallas, TX 75201. Bank of America's control is likely to increase the chance that the Funds' shareholders will approve the proposed items. As of December 27, 2001, the officers and Trustees of the Trust as a group did not own more than 1% of any class of any Fund. Annual Meetings and Shareholder Meetings Neither the Trust nor Nations Funds Trust presently holds annual meetings of shareholders for the election of Trustees and other business unless otherwise required by the 1940 Act. ADDITIONAL INFORMATION ABOUT THE TRUST AND NATIONS FUNDS TRUST Financial Statements The audited financial statements and financial highlights for shares of the Funds for the annual period ended March 31, 2001, and unaudited financial statements for shares of the Funds for the semi-annual period ended September 30, 2001, are incorporated by reference in their prospectuses or SAIs, or in the SAI related to this Proxy/Prospectus. 40 The annual financial statements and financial highlights of the Funds for the year ended March 31, 2001 have been audited by PricewaterhouseCoopers LLP, independent accountants, to the extent indicated in their reports thereon, and have been incorporated by reference in the SAI to this Proxy/Prospectus, in reliance upon such reports given upon the authority of such firm as an expert in accounting and auditing. Other Business The Boards know of no other business to be brought before the Meetings. However, if any other matters properly come before the Meetings, it is the intention that proxies which do not contain specific restrictions to the contrary will be voted on such matters in accordance with the judgment of the persons named in the enclosed form of proxy. Shareholder Inquiries Shareholders may find more information about the Funds and Acquiring Funds in the following documents: . Annual and semi-annual reports The annual and semi-annual reports contain information about Fund investments and performance, the financial statements and the independent accountants' reports. The annual report also includes a discussion about the market conditions and investment strategies that had a significant effect on each Fund's performance during the period. Because the Acquiring Funds are new portfolios, they have not yet completed a fiscal year and, accordingly, do not yet have an annual or semi-annual report. . Statement of Additional Information The SAI for the Funds and Acquiring Funds contains additional information about the Funds and Acquiring Funds and their policies. The SAI is legally part of their prospectuses (they are incorporated by reference). Copies have been filed with the SEC. Shareholders may obtain free copies of these documents, request other information about the Funds or Acquiring Funds and make shareholder inquiries by contacting Nations Funds: By telephone: (800) 653-9427 By mail: Nations Funds c/o Stephens Inc. One Bank of America Plaza 33/rd/ Floor Charlotte, NC 28255 On the Internet: www.nations-funds.com Information about the Funds and Acquiring Funds can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at (202) 942-8090. The reports and other information about the Funds are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC's Public Reference Section, Washington, D.C. 20549-0102. 41 APPENDIX A Glossary
Term Used in Proxy/Prospectus Definition - ----------------------------- ---------- 1933 Act........................... Securities Act of 1933, as amended 1934 Act........................... Securities Exchange Act of 1934, as amended 1940 Act........................... Investment Company Act of 1940, as amended Acquiring Fund(s).................. Georgia Intermediate Municipal Bond Fund (acquiring), Maryland Intermediate Municipal Bond Fund (acquiring), North Carolina Intermediate Municipal Bond Fund (acquiring), South Carolina Intermediate Municipal Bond Fund (acquiring), Tennessee Intermediate Municipal Bond Fund (acquiring), Texas Intermediate Municipal Bond Fund (acquiring) and Virginia Intermediate Municipal Bond Fund (acquiring) (each a Fund of Funds Trust) Adviser............................ BA Advisors and/or BACAP, as the context may require BA Advisors........................ Banc of America Advisors, LLC BACAP.............................. Banc of America Capital Management, LLC Bank of America.................... Bank of America, N.A. Board.............................. Any one Board of Trustees of the Trust or Nations Funds Trust Boards............................. Both the Boards of the Trust and Nations Funds Trust Closing............................ Closing of the Reorganization, expected to occur on May 10, 2002 Code............................... Internal Revenue Code of 1986, as amended Company(ies)....................... One or more of the registered investment companies in the Nations Funds Family (i.e., Nations Fund Trust, Nations Fund, Inc., Nations Funds Trust, Nations Separate Account Trust, Nations Reserves, Nations Master Investment Trust) Fund(s)............................ Nations Georgia Intermediate Municipal Bond Fund, Nations Maryland Intermediate Municipal Bond Fund, Nations North Carolina Intermediate Municipal Bond Fund, Nations South Carolina Intermediate Municipal Bond Fund, Nations Tennessee Intermediate Municipal Bond Fund, Nations Texas Intermediate Municipal Bond Fund, Nations Virginia Intermediate Municipal Bond Fund, Nations Georgia Municipal Bond Fund, Nations Maryland Municipal Bond Fund, Nations North Carolina Municipal Bond Fund, Nations South Carolina Municipal Bond Fund, Nations Tennessee Municipal Bond Fund, Nations Texas Municipal Bond Fund and/or Nations Virginia Municipal Bond Fund Georgia Intermediate Bond Fund..... Nations Georgia Intermediate Municipal Bond Fund Georgia Bond Fund.................. Nations Georgia Municipal Bond Fund Georgia Fund(s).................... One or more of Georgia Intermediate Bond Fund and Georgia Bond Fund Intermediate-Term Municipal Fund(s) Georgia Intermediate Municipal Bond Fund, Maryland Intermediate Municipal Bond Fund, North Carolina Intermediate Municipal Bond Fund, South Carolina Intermediate Municipal Bond Fund, Tennessee Intermediate Municipal Bond Fund, Texas Intermediate Municipal Bond Fund and Virginia Intermediate Municipal Bond Fund (each a Fund of the Trust)
A-1
Term Used in Proxy/Prospectus Definition - ----------------------------- ---------- Long-Term Municipal Fund(s).......... Georgia Municipal Bond Fund, Maryland Municipal Bond Fund, North Carolina Municipal Bond Fund, South Carolina Municipal Bond Fund, Tennessee Municipal Bond Fund, Texas Municipal Bond Fund and Virginia Municipal Bond Fund (each a Fund of the Trust) Maryland Intermediate Bond Fund...... Nations Maryland Intermediate Municipal Bond Fund Maryland Bond Fund................... Nations Maryland Municipal Bond Fund Maryland Fund(s)..................... One or more of Maryland Intermediate Bond Fund and Maryland Bond Fund Meeting(s)........................... The shareholder meetings of the Funds that will be jointly held at 10:00 a.m., Eastern time, on March 27, 2002, at One Bank of America Plaza, 101 South Tryon Street, 33rd Floor, Charlotte, North Carolina Nations Funds or Nations Funds Family The fund complex that is comprised of the Companies North Carolina Intermediate Bond Fund Nations North Carolina Intermediate Municipal Bond Fund North Carolina Bond Fund............. Nations North Carolina Municipal Bond Fund North Carolina Fund(s)............... One or more of North Carolina Intermediate Bond Fund and North Carolina Bond Fund Proxy/Prospectus..................... This combined proxy statement/prospectus Reorganization....................... The reorganization of the Fund(s) into the Acquiring Fund(s) Reorganization Agreement............. The Agreement and Plan of Reorganization dated January 1, 2002 by and between Nations Fund Trust, on behalf of the Funds, and Nations Funds Trust, on behalf of the Acquiring Funds SEC.................................. United States Securities and Exchange Commission South Carolina Intermediate Bond Fund Nations South Carolina Intermediate Municipal Bond Fund South Carolina Bond Fund............. Nations South Carolina Municipal Bond Fund South Carolina Fund(s)............... One or more of South Carolina Intermediate Bond Fund and South Carolina Bond Fund Tennessee Intermediate Bond Fund..... Nations Tennessee Intermediate Municipal Bond Fund Tennessee Bond Fund.................. Nations Tennessee Municipal Bond Fund Tennessee Fund(s).................... One or more of Tennessee Intermediate Bond Fund and Tennessee Bond Fund Texas Intermediate Bond Fund......... Nations Texas Intermediate Municipal Bond Fund Texas Bond Fund...................... Nations Texas Municipal Bond Fund Texas Fund(s)........................ One or more of Texas Intermediate Bond Fund and Texas Bond Fund Trust................................ Nations Fund Trust Virginia Intermediate Bond Fund...... Nations Virginia Intermediate Municipal Bond Fund Virginia Bond Fund................... Nations Virginia Municipal Bond Fund Virginia Fund(s)..................... One or more of Virginia Intermediate Bond Fund and Virginia Bond Fund
A-2 APPENDIX B Expense Summaries of the Funds and Acquiring Funds The following tables describe the fees and expenses associated with holding Fund and Acquiring Fund shares. In particular, the tables (a) compare the fees and expenses as of August 31, 2001, for each class of each Fund and the corresponding class of the Acquiring Fund, and (b) show the estimated fees and expenses for each combined Acquiring Fund on a pro forma basis after giving effect to the Reorganization. The pro forma expense presentations also are shown where a Long-Term Municipal Fund approves the Reorganization but the Intermediate-Term Municipal Fund does not. However, the pro forma expense presentations are not shown in the case where the Intermediate-Term Municipal Fund approves the Reorganization but the Long-Term Municipal Fund does not, because in each such case fees and expenses for the Acquiring Fund would remain exactly the same as that of the Fund prior to the Reorganization. The fund operating expense levels shown in this Proxy/Prospectus assume net asset levels as of August 31, 2001; 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. B-1 IF ONLY GEORGIA MUNICIPAL BOND FUND IS REORGANIZED: Primary A Shares
Pro Forma Georgia Int. Georgia Muni. Muni. Bond Fund Bond Fund (acquiring) ------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value......................................... none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees........................................................... 0.50% 0.40% . Other expenses............................................................ 0.67% 0.67% ----- ----- . Total annual Fund operating expenses...................................... 1.17% 1.07% . Fee waivers and/or reimbursements......................................... (0.57)% (0.57)% ----- ----- . Total net expenses/1/..................................................... 0.60% 0.50% ===== =====
- -------- /1/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Primary A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Georgia Muni. Bond Fund........................... $61 $315 $589 $1,370 Pro Forma Georgia Int. Muni. Bond Fund (acquiring) $51 $284 $535 $1,254
B-2 IF BOTH GEORGIA INTERMEDIATE MUNICIPAL BOND FUND AND GEORGIA MUNICIPAL BOND FUND ARE REORGANIZED: Primary A Shares
Pro Forma Georgia Int. Georgia Int. Georgia Muni. Muni. Bond Muni. Bond Fund Bond Fund Fund (acquiring) ------------- ------------ --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price............................................. none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value............. none none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................ 0.50% 0.40% 0.40% . Other expenses............................................. 0.67% 0.35% 0.33% ----- ----- ----- . Total annual Fund operating expenses....................... 1.17% 0.75% 0.73% . Fee waivers and/or reimbursements.......................... (0.57)% (0.25)% (0.23)% ----- ----- ----- . Total net expenses/1/...................................... 0.60% 0.50% 0.50% ===== ===== =====
- -------- /1/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Primary A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Georgia Muni. Bond Fund.......................... $61 $315 $589 $1,370 Georgia Int. Muni. Bond Fund..................... $51 $215 $392 $ 907 Pro Forma Georgia Int. Muni Bond Fund (acquiring) $51 $210 $383 $ 885
B-3 IF ONLY MARYLAND MUNICIPAL BOND FUND IS REORGANIZED: Primary A Shares
Pro Forma Maryland Int. Maryland Muni. Muni. Bond Fund Bond Fund (acquiring) -------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................................... none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value....................................... none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Other expenses.......................................................... 0.57% 0.57% ----- ----- . Total annual Fund operating expenses.................................... 1.07% 0.97% . Fee waivers and/or reimbursements....................................... (0.47)% (0.47)% ----- ----- . Total net expenses/1/................................................... 0.60% 0.50% ===== =====
- -------- /1/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Primary A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Maryland Muni. Bond Fund.......................... $61 $294 $545 $1,263 Pro Forma Maryland Int. Muni Bond Fund (acquiring) $51 $262 $490 $1,147
B-4 IF BOTH MARYLAND INTERMEDIATE MUNICIPAL BOND FUND AND MARYLAND MUNICIPAL BOND FUND ARE REORGANIZED: Primary A Shares
Pro Forma Maryland Int. Maryland Int. Maryland Muni. Muni. Bond Muni. Bond Fund Bond Fund Fund (acquiring) -------------- ------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................... none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value............. none none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................ 0.50% 0.40% 0.40% . Other expenses............................................. 0.57% 0.34% 0.32% ----- ----- ----- . Total annual Fund operating expenses....................... 1.07% 0.74% 0.72% . Fee waivers and/or reimbursements.......................... (0.47)% (0.24)% (0.22)% ----- ----- ----- . Total net expenses/1/...................................... 0.60% 0.50% 0.50% ===== ===== =====
- -------- /1/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Primary A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Maryland Muni. Bond Fund.......................... $61 $294 $545 $1,263 Maryland Int. Muni. Bond Fund..................... $51 $212 $388 $ 896 Pro Forma Maryland Int. Muni Bond Fund (acquiring) $51 $208 $379 $ 874
B-5 IF ONLY NORTH CAROLINA MUNICIPAL BOND FUND IS REORGANIZED: Primary A Shares
Pro Forma North Carolina North Carolina Int. Muni. Bond Muni. Bond Fund Fund (acquiring) --------------- ---------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................................... none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value....................................... none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Other expenses.......................................................... 0.55% 0.55% ----- ----- . Total annual Fund operating expenses.................................... 1.05% 0.95% . Fee waivers and/or reimbursements....................................... (0.45)% (0.45)% ----- ----- . Total net expenses/1/................................................... 0.60% 0.50% ===== =====
- -------- /1/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Primary A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- North Carolina Muni. Bond Fund.......................... $61 $289 $536 $1,242 Pro Forma North Carolina Int. Muni Bond Fund (acquiring) $51 $258 $482 $1,125
B-6 IF BOTH NORTH CAROLINA INTERMEDIATE MUNICIPAL BOND FUND AND NORTH CAROLINA MUNICIPAL BOND FUND ARE REORGANIZED: Primary A Shares
Pro Forma North North Carolina Carolina Int. North Carolina Int. Muni. Muni. Bond Fund Muni. Bond Fund Bond Fund (acquiring) --------------- -------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price..................................... none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value....... none none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................... 0.50% 0.40% 0.40% . Other expenses.......................................... 0.55% 0.33% 0.32% ----- ----- ----- . Total annual Fund operating expenses.................... 1.05% 0.73% 0.72% . Fee waivers and/or reimbursements....................... (0.45)% (0.23)% (0.22)% ----- ----- ----- . Total net expenses/1/................................... 0.60% 0.50% 0.50% ===== ===== =====
- -------- /1/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Primary A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- North Carolina Muni. Bond Fund........................... $61 $289 $536 $1,242 North Carolina Int. Muni. Bond Fund...................... $51 $210 $383 $ 885 Pro Forma North Carolina Int. Muni. Bond Fund (acquiring) $51 $208 $379 $ 874
B-7 IF ONLY SOUTH CAROLINA MUNICIPAL BOND FUND IS REORGANIZED: Primary A Shares
Pro Forma South Carolina Int. South Carolina Muni. Bond Fund Muni. Bond Fund (acquiring) --------------- ------------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................................... none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value....................................... none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Other expenses.......................................................... 0.60% 0.60% ----- ----- . Total annual Fund operating expenses.................................... 1.10% 1.00% . Fee waivers and/or reimbursements....................................... (0.50)% (0.50)% ----- ----- . Total net expenses/1/................................................... 0.60% 0.50% ===== =====
- -------- /1/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Primary A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- South Carolina Muni. Bond Fund.......................... $61 $300 $558 $1,295 Pro Forma South Carolina Int. Muni Bond Fund (acquiring) $51 $269 $504 $1,179
B-8 IF BOTH SOUTH CAROLINA INTERMEDIATE MUNICIPAL BOND FUND AND SOUTH CAROLINA MUNICIPAL BOND FUND ARE REORGANIZED: Primary A Shares
Pro Forma South Carolina South Carolina Int. South Carolina Int. Muni. Muni. Bond Fund Muni. Bond Fund Bond Fund (acquiring) --------------- -------------- ------------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price...................................... none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value.. none none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees.......................................... 0.50% 0.40% 0.40% . Other expenses........................................... 0.60% 0.32% 0.31% ----- ----- ----- . Total annual Fund operating expenses..................... 1.10% 0.72% 0.71% . Fee waivers and/or reimbursements........................ (0.50)% (0.22)% (0.21)% ----- ----- ----- . Total net expenses/1/.................................... 0.60% 0.50% 0.50% ===== ===== =====
- -------- /1/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Primary A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- South Carolina Muni. Bond Fund.......................... $61 $300 $558 $1,295 South Carolina Int. Muni. Bond Fund..................... $51 $208 $379 $ 874 Pro Forma South Carolina Int. Muni Bond Fund (acquiring) $51 $206 $374 $ 863
B-9 IF ONLY TENNESSEE MUNICIPAL BOND FUND IS REORGANIZED: Primary A Shares
Pro Forma Tennessee Int. Tennessee Muni. Muni. Bond Fund Bond Fund (acquiring) --------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................................. none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value..................... none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees................................................ 0.50% 0.40% . Other expenses................................................. 1.38% 1.38% ----- ----- . Total annual Fund operating expenses........................... 1.88% 1.78% . Fee waivers and/or reimbursements.............................. (1.28)% (1.28)% ----- ----- . Total net expenses/1/.......................................... 0.60% 0.50% ===== =====
- -------- /1/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Primary A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Tennessee Muni. Bond Fund.......................... $61 $466 $897 $2,096 Pro Forma Tennessee Int. Muni Bond Fund (acquiring) $51 $435 $844 $1,989
B-10 IF BOTH TENNESSEE INTERMEDIATE MUNICIPAL BOND FUND AND TENNESSEE MUNICIPAL BOND FUND ARE REORGANIZED: Primary A Shares
Pro Forma Tennessee Int. Tennessee Int. Tennessee Muni. Muni. Bond Muni. Bond Fund Bond Fund Fund (acquiring) --------------- -------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................... none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value............. none none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................ 0.50% 0.40% 0.40% . Other expenses............................................. 1.38% 0.50% 0.46% ----- ----- ----- . Total annual Fund operating expenses....................... 1.88% 0.90% 0.86% . Fee waivers and/or reimbursements.......................... (1.28)% (0.40)% (0.36)% ----- ----- ----- . Total net expenses/1/...................................... 0.60% 0.50% 0.50% ===== ===== =====
- -------- /1/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Primary A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Tennessee Muni. Bond Fund........................... $61 $466 $897 $2,096 Tennessee Int. Muni. Bond Fund...................... $51 $247 $459 $1,071 Pro Forma Tennessee Int. Muni. Bond Fund (acquiring) $51 $238 $441 $1,027
B-11 IF ONLY TEXAS MUNICIPAL BOND FUND IS REORGANIZED: Primary A Shares
Pro Forma Texas Int. Muni. Texas Muni. Bond Fund Bond Fund (acquiring) ----------- ---------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value......................................... none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees........................................................... 0.50% 0.40% . Other expenses............................................................ 1.06% 1.06% ----- ----- . Total annual Fund operating expenses...................................... 1.56% 1.46% . Fee waivers and/or reimbursements......................................... (0.96)% (0.96)% ----- ----- . Total net expenses/1/..................................................... 0.60% 0.50% ===== =====
- -------- /1/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Primary A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Texas Muni. Bond Fund........................... $61 $398 $759 $1,775 Pro Forma Texas Int. Muni. Bond Fund (acquiring) $51 $367 $706 $1,664
B-12 IF BOTH TEXAS INTERMEDIATE MUNICIPAL BOND FUND AND TEXAS MUNICIPAL BOND FUND ARE REORGANIZED: Primary A Shares
Pro Forma Texas Int. Texas Muni. Texas Int. Muni. Muni. Bond Fund Bond Fund Bond Fund (acquiring) ----------- ---------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................... none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value............. none none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................ 0.50% 0.40% 0.40% . Other expenses............................................. 1.06% 0.31% 0.31% ----- ----- ----- . Total annual Fund operating expenses....................... 1.56% 0.71% 0.71% . Fee waivers and/or reimbursements.......................... (0.96)% (0.21)% (0.21)% ----- ----- ----- . Total net expenses/1/...................................... 0.60% 0.50% 0.50% ===== ===== =====
- -------- /1/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Primary A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Texas Muni. Bond Fund.......................... $61 $398 $759 $1,775 Texas Int. Muni. Bond Fund..................... $51 $206 $374 $ 863 Pro Forma Texas Int. Muni Bond Fund (acquiring) $51 $206 $374 $ 863
B-13 IF ONLY VIRGINIA MUNICIPAL BOND FUND ARE REORGANIZED: Primary A Shares
Pro Forma Virginia Int. Virginia Muni. Muni. Bond Fund Bond Fund (acquiring) -------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value......................................... none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees........................................................... 0.50% 0.40% . Other expenses............................................................ 0.59% 0.59% ----- ----- . Total annual Fund operating expenses...................................... 1.09% 0.99% . Fee waivers and/or reimbursements......................................... (0.49)% (0.49)% ----- ----- . Total net expenses/1/..................................................... 0.60% 0.50% ===== =====
- -------- /1/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Primary A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Virginia Muni. Bond Fund.......................... $61 $298 $553 $1,285 Pro Forma Virginia Int. Muni Bond Fund (acquiring) $51 $266 $499 $1,168
B-14 IF BOTH VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND AND VIRGINIA MUNICIPAL BOND FUND ARE REORGANIZED: Primary A Shares
Pro Forma Virginia Int. Virginia Int. Virginia Muni. Muni. Bond Muni. Bond Fund Bond Fund Fund (acquiring) -------------- ------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................................. none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value..................... none none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees................................................ 0.50% 0.40% 0.40% . Other expenses................................................. 0.59% 0.31% 0.30% ----- ----- ----- . Total annual Fund operating expenses........................... 1.09% 0.71% 0.70% . Fee waivers and/or reimbursements.............................. (0.49)% (0.21)% (0.20)% ----- ----- ----- . Total net expenses/1/.......................................... 0.60% 0.50% 0.50% ===== ===== =====
- -------- /1/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Primary A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Virginia Muni. Bond Fund.......................... $61 $298 $553 $1,285 Virginia Int. Muni. Bond Fund..................... $51 $206 $374 $ 863 Pro Forma Virginia Int. Muni Bond Fund (acquiring) $51 $204 $370 $ 852
B-15 IF ONLY GEORGIA MUNICIPAL BOND FUND IS REORGANIZED: Investor A Shares
Pro Forma Georgia Int. Georgia Muni. Muni. Bond Fund Bond Fund (acquiring) ------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................................... 4.75% 3.25% . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 0.25% 0.25% . Other expenses.......................................................... 0.67% 0.67% ----- ----- . Total annual Fund operating expenses.................................... 1.42% 1.32% . Fee waivers and/or reimbursements....................................... (0.57)% (0.57)% ----- ----- . Total net expenses/2/................................................... 0.85% 0.75% ===== =====
- -------- /1/ A 1.00% maximum deferred sales charge applies to investors who buy $1 million or more of Investor A Shares and sell them within eighteen months of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Georgia Muni. Bond Fund.......................... $558 $850 $1,164 $2,052 Pro Forma Georgia Int. Muni Bond Fund (acquiring) $399 $676 $ 973 $1,817
B-16 IF BOTH GEORGIA INTERMEDIATE MUNICIPAL BOND FUND AND GEORGIA MUNICIPAL BOND FUND ARE REORGANIZED: Investor A Shares
Pro Forma Georgia Int. Georgia Int. Georgia Muni. Muni. Bond Muni. Bond Fund Bond Fund Fund (acquiring) ------------- ------------ --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................................. 4.75% 3.25% 3.25% . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................. none none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees................................................ 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees............ 0.25% 0.25% 0.25% . Other expenses................................................. 0.67% 0.35% 0.33% ----- ----- ----- . Total annual Fund operating expenses........................... 1.42% 1.00% 0.98% . Fee waivers and/or reimbursements.............................. (0.57)% (0.25)% (0.23)% ----- ----- ----- . Total net expenses/2/.......................................... 0.85% 0.75% 0.75% ===== ===== =====
- -------- /1/ A 1.00% maximum deferred sales charge applies to investors who buy $1 million or more of Investor A Shares and sell them within eighteen months of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Georgia Muni. Bond Fund.......................... $558 $850 $1,164 $2,052 Georgia Int. Muni. Bond Fund..................... $399 $609 $ 837 $1,489 Pro Forma Georgia Int. Muni Bond Fund (acquiring) $399 $605 $ 828 $1,469
B-17 IF ONLY MARYLAND MUNICIPAL BOND FUND IS REORGANIZED: Investor A Shares
Pro Forma Maryland Int. Maryland Muni. Muni. Bond Fund Bond Fund (acquiring) -------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................................... 4.75% 3.25% . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 0.25% 0.25% . Other expenses.......................................................... 0.57% 0.57% ----- ----- . Total annual Fund operating expenses.................................... 1.32% 1.22% . Fee waivers and/or reimbursements....................................... (0.47)% (0.47)% ----- ----- . Total net expenses/2/................................................... 0.85% 0.75% ===== =====
- -------- /1/ A 1.00% maximum deferred sales charge applies to investors who buy $1 million or more of Investor A Shares and sell them within eighteen months of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Maryland Muni. Bond Fund.................... $558 $830 $1,122 $1,953 Pro Forma Maryland Int. Muni Bond Fund $399 $655 $ 931 $1,716 (acquiring)...............................
B-18 IF BOTH MARYLAND INTERMEDIATE MUNICIPAL BOND FUND AND MARYLAND MUNICIPAL BOND FUND ARE REORGANIZED: Investor A Shares
Pro Forma Maryland Int. Maryland Int. Maryland Muni. Muni. Bond Muni. Bond Fund Bond Fund Fund (acquiring) -------------- ------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................... 4.75% 3.25% 3.25% . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.......... none none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................ 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees........ 0.25% 0.25% 0.25% . Other expenses............................................. 0.57% 0.34% 0.32% ----- ----- ----- . Total annual Fund operating expenses....................... 1.32% 0.99% 0.97% . Fee waivers and/or reimbursements.......................... (0.47)% (0.24)% (0.22)% ----- ----- ----- . Total net expenses/2/...................................... 0.85% 0.75% 0.75% ===== ===== =====
- -------- /1/ A 1.00% maximum deferred sales charge applies to investors who buy $1 million or more of Investor A Shares and sell them within eighteen months of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Maryland Muni. Bond Fund.......................... $558 $830 $1,122 $1,953 Maryland Int. Muni. Bond Fund..................... $399 $607 $ 832 $1,479 Pro Forma Maryland Int. Muni Bond Fund (acquiring) $399 $603 $ 824 $1,458
B-19 IF ONLY NORTH CAROLINA MUNICIPAL BOND FUND IS REORGANIZED: Investor A Shares
Pro Forma North Carolina North Carolina Int. Muni. Muni. Bond Fund Bond Fund (acquiring) -------------- ------------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................................... 4.75% 3.25% . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 0.25% 0.25% . Other expenses.......................................................... 0.55% 0.55% ----- ----- . Total annual Fund operating expenses.................................... 1.30% 1.20% . Fee waivers and/or reimbursements....................................... (0.45)% (0.45)% ----- ----- . Total net expenses/2/................................................... 0.85% 0.75% ===== =====
- -------- /1/ A 1.00% maximum deferred sales charge applies to investors who buy $1 million or more of Investor A Shares and sell them within eighteen months of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- North Carolina Muni. Bond Fund........................... $558 $826 $1,114 $1,934 Pro Forma North Carolina Int. Muni. Bond Fund (acquiring) $399 $651 $ 922 $1,696
B-20 IF BOTH NORTH CAROLINA INTERMEDIATE MUNICIPAL BOND FUND AND NORTH CAROLINA MUNICIPAL BOND FUND ARE REORGANIZED: Investor A Shares
Pro Forma North Carolina North Carolina Int. North Carolina Int. Muni. Muni. Bond Fund Muni. Bond Fund Bond Fund (acquiring) --------------- -------------- ------------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price......................... 4.75% 3.25% 3.25% . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.. none none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................. 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees......... 0.25% 0.25% 0.25% . Other expenses.............................................. 0.55% 0.33% 0.32% ----- ----- ----- . Total annual Fund operating expenses........................ 1.30% 0.98% 0.97% . Fee waivers and/or reimbursements........................... (0.45)% (0.23)% (0.22)% ----- ----- ----- . Total net expenses/2/....................................... 0.85% 0.75% 0.75% ===== ===== =====
- -------- /1/ A 1.00% maximum deferred sales charge applies to investors who buy $1 million or more of Investor A Shares and sell them within eighteen months of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- North Carolina Muni. Bond Fund........................... $558 $826 $1,114 $1,934 North Carolina Int. Muni. Bond Fund...................... $399 $605 $ 828 $1,469 Pro Forma North Carolina Int. Muni. Bond Fund (acquiring) $399 $603 $ 824 $1,458
B-21 IF ONLY SOUTH CAROLINA MUNICIPAL BOND FUND IS REORGANIZED: Investor A Shares
Pro Forma South Carolina Int. South Carolina Muni. Bond Fund Muni. Bond Fund (acquiring) --------------- ------------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................................... 4.75% 3.25% . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 0.25% 0.25% . Other expenses.......................................................... 0.60% 0.60% ------- ------- . Total annual Fund operating expenses.................................... 1.35% 1.25% . Fee waivers and/or reimbursements....................................... (0.50)% (0.50)% ------- ------- . Total net expenses/2/................................................... 0.85% 0.75% ======= =======
- -------- /1/ A 1.00% maximum deferred sales charge applies to investors who buy $1 million or more of Investor A Shares and sell them within eighteen months of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- South Carolina Muni. Bond Fund........................... $558 $836 $1,135 $1,983 Pro Forma South Carolina Int. Muni. Bond Fund (acquiring) $399 $661 $ 943 $1,746
B-22 IF BOTH SOUTH CAROLINA INTERMEDIATE MUNICIPAL BOND FUND AND SOUTH CAROLINA MUNICIPAL BOND FUND ARE REORGANIZED: Investor A Shares
Pro Forma South Carolina South Carolina Int. South Carolina Int. Muni. Muni. Bond Fund Muni. Bond Fund Bond Fund (acquiring) --------------- -------------- ------------------- Shareholder Fees (fees paid directly from your investment)..................... . Maximum sales charge (load) imposed on purchases, as a % of offering price.................................... 4.75% 3.25% 3.25% . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.. none none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets)........... . Management fees............................................. 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees......... 0.25% 0.25% 0.25% . Other expenses.............................................. 0.60% 0.32% 0.31% ----- ----- ----- . Total annual Fund operating expenses........................ 1.35% 0.97% 0.96% . Fee waivers and/or reimbursements........................... (0.50)% (0.22)% (0.21)% ----- ----- ----- . Total net expenses/2/....................................... 0.85% 0.75% 0.75% ===== ===== =====
- -------- /1/ A 1.00% maximum deferred sales charge applies to investors who buy $1 million or more of Investor A Shares and sell them within eighteen months of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- South Carolina Muni. Bond Fund........................... $558 $836 $1,135 $1,983 South Carolina Int. Muni. Bond Fund...................... $399 $603 $ 824 $1,458 Pro Forma South Carolina Int. Muni. Bond Fund (acquiring) $399 $601 $ 819 $1,448
B-23 IF ONLY TENNESSEE MUNICIPAL BOND FUND IS REORGANIZED: Investor A Shares
Pro Forma Tennessee Int. Tennessee Muni. Muni. Bond Fund Bond Fund (acquiring) --------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................................... 4.75% 3.25% . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 0.25% 0.25% . Other expenses.......................................................... 1.38% 1.38% ----- ----- . Total annual Fund operating expenses.................................... 2.13% 2.03% . Fee waivers and/or reimbursements....................................... (1.28)% (1.28)% ----- ----- . Total net expenses/2/................................................... 0.85% 0.75% ===== =====
- -------- /1/ A 1.00% maximum deferred sales charge applies to investors who buy $1 million or more of Investor A Shares and sell them within eighteen months of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Tennessee Muni. Bond Fund.......................... $558 $993 $1,454 $2,728 Pro Forma Tennessee Int. Muni Bond Fund (acquiring) $399 $821 $1,269 $2,510
B-24 IF BOTH TENNESSEE INTERMEDIATE MUNICIPAL BOND FUND AND TENNESSEE MUNICIPAL BOND FUND ARE REORGANIZED: Investor A Shares
Pro Forma Tennessee Int. Tennessee Int. Tennessee Muni. Muni. Bond Muni. Bond Fund Bond Fund Fund (acquiring) --------------- -------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price............................................. 4.75% 3.25% 3.25% . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.......... none none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................ 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees........ 0.25% 0.25% 0.25% . Other expenses............................................. 1.38% 0.50% 0.46% ----- ----- ----- . Total annual Fund operating expenses....................... 2.13% 1.15% 1.11% . Fee waivers and/or reimbursements.......................... (1.28)% (0.40)% (0.36)% ----- ----- ----- . Total net expenses/2/...................................... 0.85% 0.75% 0.75% ===== ===== =====
- -------- /1/ A 1.00% maximum deferred sales charge applies to investors who buy $1 million or more of Investor A Shares and sell them within eighteen months of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Tennessee Muni. Bond Fund........................... $558 $993 $1,454 $2,728 Tennessee Int. Muni. Bond Fund...................... $399 $640 $ 901 $1,644 Pro Forma Tennessee Int. Muni. Bond Fund (acquiring) $399 $632 $ 884 $1,603
B-25 IF ONLY TEXAS MUNICIPAL BOND FUND IS REORGANIZED: Investor A Shares
Pro Forma Texas Int. Muni. Texas Muni. Bond Fund Bond Fund (acquiring) ----------- ---------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price 4.75% 3.25% . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/...................................... none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees........................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees....................... 0.25% 0.25% . Other expenses............................................................ 1.06% 1.06% ----- ----- . Total annual Fund operating expenses...................................... 1.81% 1.71% . Fee waivers and/or reimbursements......................................... (0.96)% (0.96)% ----- ----- . Total net expenses/2/..................................................... 0.85% 0.75% ===== =====
- -------- /1/ A 1.00% maximum deferred sales charge applies to investors who buy $1 million or more of Investor A Shares and sell them within eighteen months of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Texas Muni. Bond Fund........................... $558 $929 $1,325 $2,429 Pro Forma Texas Int. Muni. Bond Fund (acquiring) $399 $756 $1,137 $2,204
B-26 IF BOTH TEXAS INTERMEDIATE MUNICIPAL BOND FUND AND TEXAS MUNICIPAL BOND FUND ARE REORGANIZED: Investor A Shares
Pro Forma Texas Int. Texas Muni. Texas Int. Muni. Muni. Bond Fund Bond Fund Bond Fund (acquiring) ----------- ---------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................... 4.75% 3.25% 3.25% . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.......... none none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................ 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees........ 0.25% 0.25% 0.25% . Other expenses............................................. 1.06% 0.31% 0.31% ----- ----- ----- . Total annual Fund operating expenses....................... 1.81% 0.96% 0.96% . Fee waivers and/or reimbursements.......................... (0.96)% (0.21)% (0.21)% ----- ----- ----- . Total net expenses/2/...................................... 0.85% 0.75% 0.75% ===== ===== =====
- -------- /1/ A 1.00% maximum deferred sales charge applies to investors who buy $1 million or more of Investor A Shares and sell them within eighteen months of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Texas Muni. Bond Fund........................... $558 $929 $1,325 $2,429 Texas Int. Muni. Bond Fund...................... $399 $601 $ 819 $1,448 Pro Forma Texas Int. Muni. Bond Fund (acquiring) $399 $601 $ 819 $1,448
B-27 IF ONLY VIRGINIA MUNICIPAL BOND FUND IS REORGANIZED: Investor A Shares
Pro Forma Virginia Int. Virginia Muni. Muni. Bond Fund Bond Fund (acquiring) -------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................................... 4.75% 3.25% . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 0.25% 0.25% . Other expenses.......................................................... 0.59% 0.59% ----- ----- . Total annual Fund operating expenses.................................... 1.34% 1.24% . Fee waivers and/or reimbursements....................................... (0.49)% (0.49)% ----- ----- . Total net expenses/2/................................................... 0.85% 0.75% ===== =====
- -------- /1/ A 1.00% maximum deferred sales charge applies to investors who buy $1 million or more of Investor A Shares and sell them within eighteen months of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Virginia Muni. Bond Fund........................... $558 $834 $1,131 $1,973 Pro Forma Virginia Int. Muni. Bond Fund (acquiring) $399 $659 $ 939 $1,736
B-28 IF BOTH VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND AND VIRGINIA MUNICIPAL BOND FUND ARE REORGANIZED: Investor A Shares
Pro Forma Virginia Virginia Int. Virginia Muni. Int. Muni. Muni. Bond Fund Bond Fund Bond Fund (acquiring) -------------- ---------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................................. 4.75% 3.25% 3.25% . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................. none none none Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees................................................ 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees............ 0.25% 0.25% 0.25% . Other expenses................................................. 0.59% 0.31% 0.30% ----- ----- ----- . Total annual Fund operating expenses........................... 1.34% 0.96% 0.95% . Fee waivers and/or reimbursements.............................. (0.49)% (0.21)% (0.20)% ----- ----- ----- . Total net expenses/2/.......................................... 0.85% 0.75% 0.75% ===== ===== =====
- -------- /1/ A 1.00% maximum deferred sales charge applies to investors who buy $1 million or more of Investor A Shares and sell them within eighteen months of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor A Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Virginia Muni. Bond Fund........................... $558 $834 $1,131 $1,973 Virginia Int. Muni. Bond Fund...................... $399 $601 $ 819 $1,448 Pro Forma Virginia Int. Muni. Bond Fund (acquiring) $399 $599 $ 815 $1,437
B-29 IF ONLY GEORGIA MUNICIPAL BOND FUND IS REORGANIZED: Investor B Shares
Pro Forma Georgia Int. Georgia Muni. Muni. Bond Fund Bond Fund (acquiring) ------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................................................... none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... 5.00% 3.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 1.00% 1.00% . Other expenses.......................................................... 0.67% 0.67% ----- ----- . Total annual Fund operating expenses.................................... 2.17% 2.07% . Fee waivers and/or reimbursements....................................... (0.57)% (0.57)% ----- ----- . Total net expenses/2/................................................... 1.60% 1.50% ===== =====
- -------- /1/ This charge decreases over time. Different charges apply to Investor B Shares bought before January 1, 1996 and after July 31, 1997. The maximum deferred sales charge (load) of 5.00% will apply to Acquiring Fund shareholders for those Georgia Municipal Bond Fund shares purchased prior to the closing of the Reorganization. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor B Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Georgia Muni. Bond Fund.......................... $663 $924 $1,312 $2,267 Pro Forma Georgia Int. Muni Bond Fund (acquiring) $453 $794 $1,061 $2,162
If you bought Investor B Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Georgia Muni. Bond Fund.......................... $163 $624 $1,112 $2,267 Pro Forma Georgia Int. Muni Bond Fund (acquiring) $153 $594 $1,061 $2,162
B-30 IF BOTH GEORGIA INTERMEDIATE MUNICIPAL BOND FUND AND GEORGIA MUNICIPAL BOND FUND ARE REORGANIZED: Investor B Shares
Pro Forma Georgia Int. Georgia Int. Georgia Muni. Muni. Bond Muni. Bond Fund Bond Fund Fund (acquiring) ------------- ------------ --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................................. none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................. 5.00% 3.00% 3.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees................................................ 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees............ 1.00% 1.00% 1.00% . Other expenses................................................. 0.67% 0.35% 0.33% ----- ----- ----- . Total annual Fund operating expenses........................... 2.17% 1.75% 1.73% . Fee waivers and/or reimbursements.............................. (0.57)% (0.25)% (0.23)% ----- ----- ----- . Total net expenses/2/.......................................... 1.60% 1.50% 1.50% ===== ===== =====
- -------- /1/ This charge decreases over time. Different charges apply to Investor B Shares bought before January 1, 1996 and after July 31, 1997. The maximum deferred sales charge (load) of 5.00% will apply to Acquiring Fund shareholders for those Georgia Municipal Bond Fund shares purchased prior to the closing of the Reorganization. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor B Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Georgia Muni. Bond Fund.......................... $663 $924 $1,312 $2,267 Georgia Int. Muni. Bond Fund..................... $453 $727 $ 926 $1,843 Pro Forma Georgia Int. Muni Bond Fund (acquiring) $453 $723 $ 917 $1,823
If you bought Investor B Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Georgia Muni. Bond Fund.......................... $163 $624 $1,112 $2,267 Georgia Int. Muni. Bond Fund..................... $153 $527 $ 926 $1,843 Pro Forma Georgia Int. Muni Bond Fund (acquiring) $153 $523 $ 917 $1,823
B-31 IF ONLY MARYLAND MUNICIPAL BOND FUND IS REORGANIZED: Investor B Shares
Pro Forma Maryland Int. Maryland Muni. Muni. Bond Fund Bond Fund (acquiring) -------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................................... none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... 5.00% 3.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 1.00% 1.00% . Other expenses.......................................................... 0.57% 0.57% ----- ----- . Total annual Fund operating expenses.................................... 2.07% 1.97% . Fee waivers and/or reimbursements....................................... (0.47)% (0.47)% ----- ----- . Total net expenses/2/................................................... 1.60% 1.50% ===== =====
- -------- /1/ This charge decreases over time. Different charges apply to Investor B Shares bought before January 1, 1996 and after July 31, 1997. The maximum deferred sales charge (load) of 5.00% will apply to Acquiring Fund shareholders for those Maryland Municipal Bond Fund shares purchased prior to the closing of the Reorganization. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor B Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Maryland Muni. Bond Fund.......................... $663 $903 $1,270 $2,170 Pro Forma Maryland Int. Muni Bond Fund (acquiring) $453 $773 $1,019 $2,063
If you bought Investor B Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Maryland Muni. Bond Fund.......................... $163 $603 $1,070 $2,170 Pro Forma Maryland Int. Muni Bond Fund (acquiring) $153 $573 $1,019 $2,063
B-32 IF BOTH MARYLAND INTERMEDIATE MUNICIPAL BOND FUND AND MARYLAND MUNICIPAL BOND FUND ARE REORGANIZED: Investor B Shares
Pro Forma Maryland Int. Maryland Int. Maryland Muni. Muni. Bond Muni. Bond Fund Bond Fund Fund (acquiring) -------------- ------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................... none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.......... 5.00% 3.00% 3.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................ 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees........ 1.00% 1.00% 1.00% . Other expenses............................................. 0.57% 0.34% 0.32% ----- ----- ----- . Total annual Fund operating expenses....................... 2.07% 1.74% 1.72% . Fee waivers and/or reimbursements.......................... (0.47)% (0.24)% (0.22)% ----- ----- ----- . Total net expenses/2/...................................... 1.60% 1.50% 1.50% ===== ===== =====
- -------- /1/ This charge decreases over time. Different charges apply to Investor B Shares bought before January 1, 1996 and after July 31, 1997. The maximum deferred sales charge (load) of 5.00% will apply to Acquiring Fund shareholders for those Maryland Municipal Bond Fund shares purchased prior to the closing of the Reorganization. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor B Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Maryland Muni. Bond Fund.......................... $663 $903 $1,270 $2,170 Maryland Int. Muni. Bond Fund..................... $453 $725 $ 921 $1,833 Pro Forma Maryland Int. Muni Bond Fund (acquiring) $453 $720 $ 913 $1,813
If you bought Investor B Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Maryland Muni. Bond Fund.......................... $163 $603 $1,070 $2,170 Maryland Int. Muni. Bond Fund..................... $153 $525 $ 921 $1,833 Pro Forma Maryland Int. Muni Bond Fund (acquiring) $153 $520 $ 913 $1,813
B-33 IF ONLY NORTH CAROLINA MUNICIPAL BOND FUND IS REORGANIZED: Investor B Shares
Pro Forma North Carolina Int. North Carolina Muni. Bond Fund Muni. Bond Fund (acquiring) --------------- ------------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................................................... none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... 5.00% 3.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 1.00% 1.00% . Other expenses.......................................................... 0.55% 0.55% ----- ----- . Total annual Fund operating expenses.................................... 2.05% 1.95% . Fee waivers and/or reimbursements....................................... (0.45)% (0.45)% ----- ----- . Total net expenses/2/................................................... 1.60% 1.50% ===== =====
- -------- /1/ This charge decreases over time. Different charges apply to Investor B Shares bought before January 1, 1996 and after July 31, 1997. The maximum deferred sales charge (load) of 5.00% will apply to Acquiring Fund shareholders for those North Carolina Municipal Bond Fund shares purchased prior to the closing of the Reorganization. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor B Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- North Carolina Muni. Bond Fund.......................... $663 $899 $1,262 $2,150 Pro Forma North Carolina Int. Muni Bond Fund (acquiring) $453 $769 $1,011 $2,043
If you bought Investor B Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- North Carolina Muni. Bond Fund................ $163 $599 $1,062 $2,150 North Carolina Int. Muni Bond Fund (acquiring) $153 $569 $1,011 $2,043
B-34 IF BOTH NORTH CAROLINA INTERMEDIATE MUNICIPAL BOND FUND AND NORTH CAROLINA MUNICIPAL BOND FUND ARE REORGANIZED: Investor B Shares
Pro Forma North Carolina North Carolina North Carolina Int. Muni. Bond Int. Muni. Muni. Bond Fund Fund Bond Fund (acquiring) -------------- -------------- ------------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price..................................... none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.... 5.00% 3.00% 3.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................... 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees..... 1.00% 1.00% 1.00% . Other expenses.......................................... 0.55% 0.33% 0.32% ----- ----- ----- . Total annual Fund operating expenses.................... 2.05% 1.73% 1.72% . Fee waivers and/or reimbursements....................... (0.45)% (0.23)% (0.22)% ----- ----- ----- . Total net expenses/2/................................... 1.60% 1.50% 1.50% ===== ===== =====
- -------- /1/ This charge decreases over time. Different charges apply to Investor B Shares bought before January 1, 1996 and after July 31, 1997. The maximum deferred sales charge (load) of 5.00% will apply to Acquiring Fund shareholders for those North Carolina Municipal Bond Fund shares purchased prior to the closing of the Reorganization. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor B Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- North Carolina Muni. Bond Fund.......................... $663 $899 $1,262 $2,150 North Carolina Int. Muni. Bond Fund..................... $453 $723 $ 917 $1,823 Pro Forma North Carolina Int. Muni Bond Fund (acquiring) $453 $720 $ 913 $1,813
If you bought Investor B Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- North Carolina Muni. Bond Fund.......................... $163 $599 $1,062 $2,150 North Carolina Int. Muni. Bond Fund..................... $153 $523 $ 917 $1,823 Pro Forma North Carolina Int. Muni Bond Fund (acquiring) $153 $520 $ 913 $1,813
B-35 IF ONLY SOUTH CAROLINA MUNICIPAL BOND FUND IS REORGANIZED: Investor B Shares
Pro Forma South Carolina Int. South Carolina Muni. Bond Fund Muni. Bond Fund (acquiring) --------------- ------------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................................................... none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... 5.00% 3.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 1.00% 1.00% . Other expenses.......................................................... 0.60% 0.60% ----- ----- . Total annual Fund operating expenses.................................... 2.10% 2.00% . Fee waivers and/or reimbursements....................................... (0.50)% (0.50)% ----- ----- . Total net expenses/2/................................................... 1.60% 1.50% ===== =====
- -------- /1/ This charge decreases over time. Different charges apply to Investor B Shares bought before January 1, 1996 and after July 31, 1997. The maximum deferred sales charge (load) of 5.00% will apply to Acquiring Fund shareholders for those South Carolina Municipal Bond Fund shares purchased prior to the closing of the Reorganization. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor B Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- South Carolina Muni. Bond Fund........................... $663 $910 $1,283 $2,199 Pro Forma South Carolina Int. Muni. Bond Fund (acquiring) $453 $779 $1,032 $2,093
If you bought Investor B Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- South Carolina Muni. Bond Fund........................... $163 $610 $1,083 $2,199 Pro Forma South Carolina Int. Muni. Bond Fund (acquiring) $153 $579 $1,032 $2,093
B-36 IF BOTH SOUTH CAROLINA INTERMEDIATE MUNICIPAL BOND FUND AND SOUTH CAROLINA MUNICIPAL BOND FUND ARE REORGANIZED: Investor B Shares
Pro Forma South Carolina South Carolina South Carolina Int. Muni. Bond Int. Muni. Muni. Bond Fund Fund Bond Fund (acquiring) -------------- -------------- ------------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price..................................... none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.... 5.00% 3.00% 3.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................... 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees..... 1.00% 1.00% 1.00% . Other expenses.......................................... 0.60% 0.32% 0.31% ----- ----- ----- . Total annual Fund operating expenses.................... 2.10% 1.72% 1.71% . Fee waivers and/or reimbursements....................... (0.50)% (0.22)% (0.21)% ----- ----- ----- . Total net expenses/2/................................... 1.60% 1.50% 1.50% ===== ===== =====
- -------- /1/ This charge decreases over time. Different charges apply to Investor B Shares bought before January 1, 1996 and after July 31, 1997. The maximum deferred sales charge (load) of 5.00% will apply to Acquiring Fund shareholders for those South Carolina Municipal Bond Fund shares purchased prior to the closing of the Reorganization. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor B Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- South Carolina Muni. Bond Fund.......................... $663 $910 $1,283 $2,199 South Carolina Int. Muni. Bond Fund..................... $453 $720 $ 913 $1,813 Pro Forma South Carolina Int. Muni Bond Fund (acquiring) $453 $718 $ 909 $1,803
If you bought Investor B Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- South Carolina Muni. Bond Fund.......................... $163 $610 $1,083 $2,199 South Carolina Int. Muni. Bond Fund..................... $153 $520 $ 913 $1,813 Pro Forma South Carolina Int. Muni Bond Fund (acquiring) $153 $518 $ 909 $1,803
B-37 IF ONLY TENNESSEE MUNICIPAL BOND FUND IS REORGANIZED: Investor B Shares
Pro Forma Tennessee Int. Tennessee Muni. Muni. Bond Fund Bond Fund (acquiring) --------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................................... none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... 5.00% 3.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 1.00% 1.00% . Other expenses.......................................................... 1.38% 1.38% ----- ----- . Total annual Fund operating expenses.................................... 2.88% 2.78% . Fee waivers and/or reimbursements....................................... (1.28)% (1.28)% ----- ----- . Total net expenses/2/................................................... 1.60% 1.50% ===== =====
- -------- /1/ This charge decreases over time. Different charges apply to Investor B Shares bought before January 1, 1996 and after July 31, 1997. The maximum deferred sales charge (load) of 5.00% will apply to Acquiring Fund shareholders for those Tennessee Municipal Bond Fund shares purchased prior to the closing of the Reorganization. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor B Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Tennessee Muni. Bond Fund........................... $663 $1,071 $1,605 $2,933 Pro Forma Tennessee Int. Muni. Bond Fund (acquiring) $453 $ 941 $1,356 $2,835
If you bought Investor B Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Tennessee Muni. Bond Fund........................... $163 $771 $1,405 $2,933 Pro Forma Tennessee Int. Muni. Bond Fund (acquiring) $153 $741 $1,356 $2,835
B-38 IF BOTH TENNESSEE INTERMEDIATE MUNICIPAL BOND FUND AND TENNESSEE MUNICIPAL BOND FUND ARE REORGANIZED: Investor B Shares
Pro Forma Tennessee Int. Tennessee Muni. Tennessee Int. Muni. Bond Fund Bond Fund Muni. Bond Fund (acquiring) --------------- --------------- --------------- Shareholder Fees (fees paid directly from your investment)................. . Maximum sales charge (load) imposed on purchases, as a % of offering price..................................... none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.... 5.00% 3.00% 3.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................... 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees..... 1.00% 1.00% 1.00% . Other expenses.......................................... 1.38% 0.50% 0.46% ----- ----- ----- . Total annual Fund operating expenses.................... 2.88% 1.90% 1.86% . Fee waivers and/or reimbursements....................... (1.28)% (0.40)% (0.36)% ----- ----- ----- . Total net expenses/2/................................... 1.60% 1.50% 1.50% ===== ===== =====
- -------- /1/ This charge decreases over time. Different charges apply to Investor B Shares bought before January 1, 1996 and after July 31, 1997. The maximum deferred sales charge (load) of 5.00% will apply to Acquiring Fund shareholders for those Tennessee Municipal Bond Fund shares purchased prior to the closing of the Reorganization. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor B Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Tennessee Muni. Bond Fund........................... $663 $1,071 $1,605 $2,933 Tennessee Int. Muni. Bond Fund...................... $453 $ 758 $ 989 $1,994 Pro Forma Tennessee Int. Muni. Bond Fund (acquiring) $453 $ 750 $ 972 $1,954
If you bought Investor B Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Tennessee Muni. Bond Fund........................... $163 $771 $1,405 $2,933 Tennessee Int. Muni. Bond Fund...................... $153 $558 $ 989 $1,994 Pro Forma Tennessee Int. Muni. Bond Fund (acquiring) $153 $550 $ 972 $1,954
B-39 IF ONLY TEXAS MUNICIPAL BOND FUND IS REORGANIZED: Investor B Shares
Pro Forma Texas Int. Texas Muni. Muni. Bond Fund Bond Fund (acquiring) ----------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/...................................... 5.00% 3.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees........................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees....................... 1.00% 1.00% . Other expenses............................................................ 1.06% 1.06% ----- ----- . Total annual Fund operating expenses...................................... 2.56% 2.46% . Fee waivers and/or reimbursements......................................... (0.96)% (0.96)% ----- ----- . Total net expenses/2/..................................................... 1.60% 1.50% ===== =====
- -------- /1 //T/his charge decreases over time. Different charges apply to Investor B Shares bought before January 1, 1996 and after July 31, 1997. The maximum deferred sales charge (load) of 5.00% will apply to Acquiring Fund shareholders for those Texas Municipal Bond Fund shares purchased prior to the closing of the Reorganization. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor B Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Texas Muni. Bond Fund........................... $663 $1,005 $1,474 $2,639 Pro Forma Texas Int. Muni. Bond Fund (acquiring) $453 $ 875 $1,224 $2,537
If you bought Investor B Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Texas Muni. Bond Fund........................... $163 $705 $1,274 $2,639 Pro Forma Texas Int. Muni. Bond Fund (acquiring) $153 $675 $1,224 $2,537
B-40 IF BOTH TEXAS INTERMEDIATE MUNICIPAL BOND FUND AND TEXAS MUNICIPAL BOND FUND ARE REORGANIZED: Investor B Shares
Pro Forma Texas Int. Texas Muni. Texas Int. Muni. Bond Fund Bond Fund Muni. Bond Fund (acquiring) ----------- --------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price....................................... none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.... 5.00% 3.00% 3.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................... 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees..... 1.00% 1.00% 1.00% . Other expenses.......................................... 1.06% 0.31% 0.31% ----- ----- ----- . Total annual Fund operating expenses.................... 2.56% 1.71% 1.71% . Fee waivers and/or reimbursements....................... (0.96)% (0.21)% (0.21)% ----- ----- ----- . Total net expenses/2/................................... 1.60% 1.50% 1.50% ===== ===== =====
- -------- /1/ This charge decreases over time. Different charges apply to Investor B Shares bought before January 1, 1996 and after July 31, 1997. The maximum deferred sales charge (load) of 5.00% will apply to Acquiring Fund shareholders for those Texas Municipal Bond Fund shares purchased prior to the closing of the Reorganization. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor B Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Texas Muni. Bond Fund........................... $663 $1,005 $1,474 $2,639 Texas Int. Muni. Bond Fund...................... $453 $ 718 $ 909 $1,803 Pro Forma Texas Int. Muni. Bond Fund (acquiring) $453 $ 718 $ 909 $1,803
If you bought Investor B Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Texas Muni. Bond Fund........................... $163 $705 $1,274 $2,639 Texas Int. Muni. Bond Fund...................... $153 $518 $ 909 $1,803 Pro Forma Texas Int. Muni. Bond Fund (acquiring) $153 $518 $ 909 $1,803
B-41 IF ONLY VIRGINIA MUNICIPAL BOND FUND IS REORGANIZED: Investor B Shares
Pro Forma Virginia Int. Virginia Muni. Muni. Bond Fund Bond Fund (acquiring) -------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/...................................... 5.00% 3.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees........................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees....................... 1.00% 1.00% . Other expenses............................................................ 0.59% 0.59% ----- ----- . Total annual Fund operating expenses...................................... 2.09% 1.99% . Fee waivers and/or reimbursements......................................... (0.49)% (0.49)% ----- ----- . Total net expenses/2/..................................................... 1.60% 1.50% ===== =====
- -------- /1/ This charge decreases over time. Different charges apply to Investor B Shares bought before January 1, 1996 and after July 31, 1997. The maximum deferred sales charge (load) of 5.00% will apply to Acquiring Fund shareholders for those Virginia Municipal Bond Fund shares purchased prior to the closing of the Reorganization. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor B Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Virginia Muni. Bond Fund........................... $663 $908 $1,279 $2,189 Pro Forma Virginia Int. Muni. Bond Fund (acquiring) $453 $777 $1,027 $2,083
If you bought Investor B Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Virginia Muni. Bond Fund........................... $163 $608 $1,079 $2,189 Pro Forma Virginia Int. Muni. Bond Fund (acquiring) $153 $577 $1,027 $2,083
B-42 IF BOTH VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND AND VIRGINIA MUNICIPAL BOND FUND ARE REORGANIZED: Investor B Shares
Pro Forma Virginia Int. Virginia Int. Virginia Muni. Muni. Bond Muni. Bond Fund Bond Fund Fund (acquiring) -------------- ------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price............................................. none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.......... 5.00% 3.00% 3.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................ 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees........ 1.00% 1.00% 1.00% . Other expenses............................................. 0.59% 0.31% 0.30% ----- ----- ----- . Total annual Fund operating expenses....................... 2.09% 1.71% 1.70% . Fee waivers and/or reimbursements.......................... (0.49)% (0.21)% (0.20)% ----- ----- ----- . Total net expenses/2/...................................... 1.60% 1.50% 1.50% ===== ===== =====
- -------- /1/ This charge decreases over time. Different charges apply to Investor B Shares bought before January 1, 1996 and after July 31, 1997. The maximum deferred sales charge (load) of 5.00% will apply to Acquiring Fund shareholders for those Virginia Municipal Bond Fund shares purchased prior to the closing of the Reorganization. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor B Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Virginia Muni. Bond Fund.......................... $663 $908 $1,279 $2,189 Virginia Int. Muni. Bond Fund..................... $453 $718 $ 909 $1,803 Pro Forma Virginia Int. Muni Bond Fund (acquiring) $453 $716 $ 904 $1,793
If you bought Investor B Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Virginia Muni. Bond Fund.......................... $163 $608 $1,079 $2,189 Virginia Int. Muni. Bond Fund..................... $153 $518 $ 909 $1,803 Pro Forma Virginia Int. Muni Bond Fund (acquiring) $153 $516 $ 904 $1,793
B-43 IF ONLY GEORGIA MUNICIPAL BOND FUND IS REORGANIZED: Investor C Shares
Pro Forma Georgia Int. Georgia Muni. Muni. Bond Fund Bond Fund (acquiring) ------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................................................... none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... 1.00% 1.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 1.00% 1.00% . Other expenses.......................................................... 0.67% 0.67% ----- ----- . Total annual Fund operating expenses.................................... 2.17% 2.07% . Fee waivers and/or reimbursements....................................... (0.57)% (0.57)% ----- ----- . Total net expenses/2/................................................... 1.60% 1.50% ===== =====
- -------- /1/ This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor C Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Georgia Muni. Bond Fund.......................... $263 $624 $1,112 $2,459 Pro Forma Georgia Int. Muni Bond Fund (acquiring) $253 $594 $1,061 $2,355
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Georgia Muni. Bond Fund.......................... $163 $624 $1,112 $2,459 Pro Forma Georgia Int. Muni Bond Fund (acquiring) $153 $594 $1,061 $2,355
B-44 IF BOTH GEORGIA INTERMEDIATE MUNICIPAL BOND FUND AND GEORGIA MUNICIPAL BOND FUND ARE REORGANIZED: Investor C Shares
Pro Forma Georgia Int. Georgia Muni. Georgia Int. Muni. Bond Fund Bond Fund Muni. Bond Fund (acquiring) ------------- --------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price....................................... none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.... 1.00% 1.00% 1.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................... 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees..... 1.00% 1.00% 1.00% . Other expenses.......................................... 0.67% 0.35% 0.33% ----- ----- ----- . Total annual Fund operating expenses.................... 2.17% 1.75% 1.73% . Fee waivers and/or reimbursements....................... (0.57)% (0.25)% (0.23)% ----- ----- ----- . Total net expenses/2/................................... 1.60% 1.50% 1.50% ===== ===== =====
- -------- /1/ This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor C Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Georgia Muni. Bond Fund.......................... $263 $624 $1,112 $2,459 Georgia Int. Muni. Bond Fund..................... $253 $527 $ 926 $2,042 Pro Forma Georgia Int. Muni Bond Fund (acquiring) $253 $523 $ 917 $2,022
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Georgia Muni. Bond Fund.......................... $163 $624 $1,112 $2,459 Georgia Int. Muni. Bond Fund..................... $153 $527 $ 926 $2,042 Pro Forma Georgia Int. Muni Bond Fund (acquiring) $153 $523 $ 917 $2,022
B-45 IF ONLY MARYLAND MUNICIPAL BOND FUND IS REORGANIZED: Investor C Shares
Pro Forma Maryland Int. Maryland Muni. Muni. Bond Fund Bond Fund (acquiring) -------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................................................... none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... 1.00% 1.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 1.00% 1.00% . Other expenses.......................................................... 0.57% 0.57% ----- ----- . Total annual Fund operating expenses.................................... 2.07% 1.97% . Fee waivers and/or reimbursements....................................... (0.47)% (0.47)% ----- ----- . Total net expenses/2/................................................... 1.60% 1.50% ===== =====
- -------- /1/ This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor C Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Maryland Muni. Bond Fund.......................... $263 $603 $1,070 $2,363 Pro Forma Maryland Int. Muni Bond Fund (acquiring) $253 $573 $1,019 $2,258
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Maryland Muni. Bond Fund.......................... $163 $603 $1,070 $2,363 Pro Forma Maryland Int. Muni Bond Fund (acquiring) $153 $573 $1,019 $2,258
B-46 IF BOTH MARYLAND INTERMEDIATE MUNICIPAL BOND FUND AND MARYLAND MUNICIPAL BOND FUND ARE REORGANIZED: Investor C Shares
Pro Forma Maryland Int. Maryland Int. Maryland Muni. Muni. Bond Muni. Bond Fund Bond Fund Fund (acquiring) -------------- ------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price.......................................... none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.......... 1.00% 1.00% 1.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................ 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees........ 1.00% 1.00% 1.00% . Other expenses............................................. 0.57% 0.34% 0.32% ----- ----- ----- . Total annual Fund operating expenses....................... 2.07% 1.74% 1.72% . Fee waivers and/or reimbursements.......................... (0.47)% (0.24)% (0.22)% ----- ----- ----- . Total net expenses/2/...................................... 1.60% 1.50% 1.50% ===== ===== =====
- -------- /1/ This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor C Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Maryland Muni. Bond Fund.......................... $263 $603 $1,070 $2,363 Maryland Int. Muni. Bond Fund..................... $253 $525 $ 921 $2,032 Pro Forma Maryland Int. Muni Bond Fund (acquiring) $253 $520 $ 913 $2,012
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Maryland Muni. Bond Fund.......................... $163 $603 $1,070 $2,363 Maryland Int. Muni. Bond Fund..................... $153 $525 $ 921 $2,032 Pro Forma Maryland Int. Muni Bond Fund (acquiring) $153 $520 $ 913 $2,012
B-47 IF ONLY NORTH CAROLINA MUNICIPAL BOND FUND IS REORGANIZED: Investor C Shares
Pro Forma North Carolina North Carolina Int. Muni. Bond Muni. Bond Fund Fund (acquiring) -------------- ------------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................................................... none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... 1.00% 1.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 1.00% 1.00% . Other expenses.......................................................... 0.55% 0.55% ----- ----- . Total annual Fund operating expenses.................................... 2.05% 1.95% . Fee waivers and/or reimbursements....................................... (0.45)% (0.45)% ----- ----- . Total net expenses/2/................................................... 1.60% 1.50% ===== =====
- -------- /1/ This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor C Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- North Carolina Muni. Bond Fund.......................... $263 $599 $1,062 $2,343 Pro Forma North Carolina Int. Muni Bond Fund (acquiring) $253 $569 $1,011 $2,239
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- North Carolina Muni. Bond Fund.......................... $163 $599 $1,062 $2,343 Pro Forma North Carolina Int. Muni Bond Fund (acquiring) $153 $569 $1,011 $2,239
B-48 IF BOTH NORTH CAROLINA INTERMEDIATE MUNICIPAL BOND FUND AND NORTH CAROLINA MUNICIPAL BOND FUND ARE REORGANIZED: Investor C Shares
Pro Forma North Carolina North Carolina North Carolina Int. Muni. Muni. Bond Int. Muni. Bond Fund Fund Bond Fund (acquiring) -------------- -------------- -------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price............................................. none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.......... 1.00% 1.00% 1.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................ 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees........ 1.00% 1.00% 1.00% . Other expenses............................................. 0.55% 0.33% 0.32% ----- ----- ----- . Total annual Fund operating expenses....................... 2.05% 1.73% 1.72% . Fee waivers and/or reimbursements.......................... (0.45)% (0.23)% (0.22)% ----- ----- ----- . Total net expenses/2/...................................... 1.60% 1.50% 1.50% ===== ===== =====
- -------- /1/ This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor C Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- North Carolina Muni. Bond Fund.......................... $263 $599 $1,062 $2,343 North Carolina Int. Muni. Bond Fund..................... $253 $523 $ 917 $2,022 Pro Forma North Carolina Int. Muni Bond Fund (acquiring) $253 $520 $ 913 $2,012
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- North Carolina Muni. Bond Fund.......................... $163 $599 $1,062 $2,343 North Carolina Int. Muni. Bond Fund..................... $153 $523 $ 917 $2,022 Pro Forma North Carolina Int. Muni Bond Fund (acquiring) $153 $520 $ 913 $2,012
B-49 IF ONLY SOUTH CAROLINA MUNICIPAL BOND FUND IS REORGANIZED: Investor C Shares
Pro Forma South Carolina Int. South Carolina Muni. Bond Fund Muni. Bond Fund (acquiring) --------------- ------------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................................................... none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... 1.00% 1.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 1.00% 1.00% . Other expenses.......................................................... 0.60% 0.60% ----- ----- . Total annual Fund operating expenses.................................... 2.10% 2.00% . Fee waivers and/or reimbursements....................................... (0.50)% (0.50)% ----- ----- . Total net expenses/2/................................................... 1.60% 1.50% ===== =====
- -------- /1/ This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor C Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- South Carolina Muni. Bond Fund.......................... $263 $610 $1,083 $2,392 Pro Forma South Carolina Int. Muni Bond Fund (acquiring) $253 $579 $1,032 $2,287
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- South Carolina Muni. Bond Fund.......................... $163 $610 $1,083 $2,392 Pro Forma South Carolina Int. Muni Bond Fund (acquiring) $153 $579 $1,032 $2,287
B-50 IF BOTH SOUTH CAROLINA INTERMEDIATE MUNICIPAL BOND FUND AND SOUTH CAROLINA MUNICIPAL BOND FUND ARE REORGANIZED: Investor C Shares
Pro Forma South Carolina South Carolina Int. South Carolina Int. Muni. Muni. Bond Fund Muni. Bond Fund Bond Fund (acquiring) --------------- -------------- ------------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price......................................... none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.. 1.00% 1.00% 1.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................. 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees......... 1.00% 1.00% 1.00% . Other expenses.............................................. 0.60% 0.32% 0.31% ----- ----- ----- . Total annual Fund operating expenses........................ 2.10% 1.72% 1.71% . Fee waivers and/or reimbursements........................... (0.50)% (0.22)% (0.21)% ----- ----- ----- . Total net expenses/2/....................................... 1.60% 1.50% 1.50% ===== ===== =====
- -------- /1/ This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. 2 The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor C Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- South Carolina Muni. Bond Fund.......................... $263 $610 $1,083 $2,392 South Carolina Int. Muni. Bond Fund..................... $253 $520 $ 913 $2,012 Pro Forma South Carolina Int. Muni Bond Fund (acquiring) $253 $518 $ 909 $2,002
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- South Carolina Muni. Bond Fund.......................... $163 $610 $1,083 $2,392 South Carolina Int. Muni. Bond Fund..................... $153 $520 $ 913 $2,012 Pro Forma South Carolina Int. Muni Bond Fund (acquiring) $153 $518 $ 909 $2,002
B-51 IF ONLY TENNESSEE MUNICIPAL BOND FUND IS REORGANIZED: Investor C Shares
Pro Forma Tennessee Int. Tennessee Muni. Muni. Bond Fund Bond Fund (acquiring) --------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price................................................................... none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.................................... 1.00% 1.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees......................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees..................... 1.00% 1.00% . Other expenses.......................................................... 1.38% 1.38% ----- ----- . Total annual Fund operating expenses.................................... 2.88% 2.78% . Fee waivers and/or reimbursements....................................... (1.28)% (1.28)% ----- ----- . Total net expenses/2/................................................... 1.60% 1.50% ===== =====
- -------- /1/ This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor C Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Tennessee Muni. Bond Fund.......................... $263 $771 $1,405 $3,113 Pro Forma Tennessee Int. Muni Bond Fund (acquiring) $253 $741 $1,356 $3,016
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Tennessee Muni. Bond Fund........................... $163 $771 $1,405 $3,113 Pro Forma Tennessee Int. Muni. Bond Fund (acquiring) $153 $741 $1,356 $3,016
B-52 IF BOTH TENNESSEE INTERMEDIATE MUNICIPAL BOND FUND AND TENNESSEE MUNICIPAL BOND FUND ARE REORGANIZED: Investor C Shares
Pro Forma Tennessee Int. Tennessee Int. Tennessee Muni. Muni. Bond Muni. Bond Fund Bond Fund Fund (acquiring) --------------- -------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % offering price............................................. none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.......... 1.00% 1.00% 1.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................ 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees........ 1.00% 1.00% 1.00% . Other expenses............................................. 1.38% 0.50% 0.46% ----- ----- ----- . Total annual Fund operating expenses....................... 2.88% 1.90% 1.86% . Fee waivers and/or reimbursements.......................... (1.28)% (0.40)% (0.36)% ----- ----- ----- . Total net expenses/2/...................................... 1.60% 1.50% 1.50% ===== ===== =====
- -------- /1/ This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor C Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Tennessee Muni. Bond Fund.......................... $263 $771 $1,405 $3,113 Tennessee Int. Muni. Bond Fund..................... $253 $558 $ 989 $2,190 Pro Forma Tennessee Int. Muni Bond Fund (acquiring) $253 $550 $ 972 $2,150
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Tennessee Muni. Bond Fund.......................... $163 $771 $1,405 $3,113 Tennessee Int. Muni. Bond Fund..................... $153 $558 $ 989 $2,190 Pro Forma Tennessee Int. Muni Bond Fund (acquiring) $153 $550 $ 972 $2,150
B-53 IF ONLY TEXAS MUNICIPAL BOND FUND IS REORGANIZED: Investor C Shares
Pro Forma Texas Int. Muni. Texas Muni. Bond Fund Bond Fund (acquiring) ----------- ---------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/...................................... 1.00% 1.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees........................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees....................... 1.00% 1.00% . Other expenses............................................................ 1.06% 1.06% ----- ----- . Total annual Fund operating expenses...................................... 2.56% 2.46% . Fee waivers and/or reimbursements......................................... (0.96)% (0.96)% ----- ----- . Total net expenses/2/..................................................... 1.60% 1.50% ===== =====
- -------- /1/ This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor C Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Texas Muni. Bond Fund........................... $263 $705 $1,274 $2,823 Pro Forma Texas Int. Muni. Bond Fund (acquiring) $253 $675 $1,224 $2,724
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Texas Muni. Bond Fund........................... $163 $705 $1,274 $2,823 Pro Forma Texas Int. Muni. Bond Fund (acquiring) $153 $675 $1,224 $2,724
B-54 IF BOTH TEXAS INTERMEDIATE MUNICIPAL BOND FUND AND TEXAS MUNICIPAL BOND FUND ARE REORGANIZED: Investor C Shares
Pro Forma Texas Int. Muni. Texas Muni. Texas Int. Muni. Bond Fund Bond Fund Bond Fund (acquiring) ----------- ---------------- ---------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price............................................. none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.......... 1.00% 1.00% 1.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................ 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees........ 1.00% 1.00% 1.00% . Other expenses............................................. 1.06% 0.31% 0.31% ----- ----- ----- . Total annual Fund operating expenses....................... 2.56% 1.71% 1.71% . Fee waivers and/or reimbursements.......................... (0.96)% (0.21)% (0.21)% ----- ----- ----- . Total net expenses/2/...................................... 1.60% 1.50% 1.50% ===== ===== =====
- -------- /1/ This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor C Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Texas Muni. Bond Fund........................... $263 $705 $1,274 $2,823 Texas Int. Muni. Bond Fund...................... $253 $518 $ 909 $2,002 Pro Forma Texas Int. Muni. Bond Fund (acquiring) $253 $518 $ 909 $2,002
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Texas Muni. Bond Fund........................... $163 $705 $1,274 $2,823 Texas Int. Muni. Bond Fund...................... $153 $518 $ 909 $2,002 Pro Forma Texas Int. Muni. Bond Fund (acquiring) $153 $518 $ 909 $2,002
B-55 IF ONLY VIRGINIA MUNICIPAL BOND FUND IS REORGANIZED: Investor C Shares
Pro Forma Virginia Int. Muni. Virginia Muni. Bond Fund Bond Fund (acquiring) -------------- ------------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/...................................... 1.00% 1.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees........................................................... 0.50% 0.40% . Distribution (12b-1) and Shareholder servicing fees....................... 1.00% 1.00% . Other expenses............................................................ 0.59% 0.59% ----- ----- . Total annual Fund operating expenses...................................... 2.09% 1.99% . Fee waivers and/or reimbursements......................................... (0.49)% (0.49)% ----- ----- . Total net expenses/2/..................................................... 1.60% 1.50% ===== =====
- -------- /1/ This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor C Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Virginia Muni. Bond Fund.......................... $263 $608 $1,079 $2,382 Pro Forma Virginia Int. Muni Bond Fund (acquiring) $253 $577 $1,027 $2,277
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Virginia Muni. Bond Fund.......................... $163 $608 $1,079 $2,382 Pro Forma Virginia Int. Muni Bond Fund (acquiring) $153 $577 $1,027 $2,277
B-56 IF BOTH VIRGINIA INTERMEDIATE MUNICIPAL BOND FUND AND VIRGINIA MUNICIPAL BOND FUND ARE REORGANIZED: Investor C Shares
Pro Forma Virginia Int. Virginia Int. Virginia Muni. Muni. Bond Muni. Bond Fund Bond Fund Fund (acquiring) -------------- ------------- --------------- Shareholder Fees (fees paid directly from your investment) . Maximum sales charge (load) imposed on purchases, as a % of offering price............................................. none none none . Maximum deferred sales charge (load) as a % of the lower of the original purchase price or net asset value/1/.......... 1.00% 1.00% 1.00% Annual Fund Operating Expenses (Expenses that are deducted from the Fund's assets) . Management fees............................................ 0.50% 0.40% 0.40% . Distribution (12b-1) and Shareholder servicing fees........ 1.00% 1.00% 1.00% . Other expenses............................................. 0.59% 0.31% 0.30% ----- ----- ----- . Total annual Fund operating expenses....................... 2.09% 1.71% 1.70% . Fee waivers and/or reimbursements.......................... (0.49)% (0.21)% (0.20)% ----- ----- ----- . Total net expenses/2/...................................... 1.60% 1.50% 1.50% ===== ===== =====
- -------- /1 /This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. /2/ The Funds' investment adviser and/or some of its other service providers have agreed to waive fees and/or reimburse expenses until July 31, 2002. The figures shown here are after waivers and/or reimbursements. There is no guarantee that these waivers and/or reimbursements will continue after this date. Example This example is intended to help you compare the cost of investing in this Fund with the cost of investing in other mutual funds. This example assumes: you invest $10,000 in Investor C Shares of the fund for the time periods indicated and then sell all of your shares at the end of those periods; you reinvest all dividends and distributions in the fund; your investment has a 5% return each year; the fund's operating expenses remain the same as shown in the table above; and the waivers and/or reimbursements shown above expire July 31, 2002 and are not reflected in the 3, 5 and 10 year examples. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Virginia Muni. Bond Fund........................... $263 $608 $1,079 $2,382 Virginia Int. Muni. Bond Fund...................... $253 $518 $ 909 $2,002 Pro Forma Virginia Int. Muni. Bond Fund (acquiring) $253 $516 $ 904 $1,992
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares:
Fund 1 year 3 years 5 years 10 years - ---- ------ ------- ------- -------- Virginia Muni. Bond Fund........................... $163 $608 $1,079 $2,382 Virginia Int. Muni. Bond Fund...................... $153 $518 $ 909 $2,002 Pro Forma Virginia Int. Muni. Bond Fund (acquiring) $153 $516 $ 904 $1,992
B-57 APPENDIX C Comparison of Fundamental Policies and Limitations of the Funds and the Acquiring Funds Fundamental Investment Policies and Limitations
The Funds may not: The Acquiring Funds may not: - ------------------ ---------------------------- 1. Under normal market conditions, a Fund will invest 1. Under normal circumstances, a Fund will invest at at least 80% of its net assets plus investment least 80% of its net assets plus investment borrowings in securities that pay interest exempt borrowings in securities that pay interest exempt from federal income tax and applicable state from federal income tax, other than the federal individual income tax, if any. alternative minimum tax, and applicable state individual income tax, if any. 2. Underwrite securities issued by any other person, 2. Underwrite any issue of securities within the except to the extent that the purchase of securities meaning of the 1933 Act except when it might and the later disposition of such securities in technically be deemed to be an underwriter either accordance with the Fund's investment program (a) in connection with the disposition of a portfolio may be deemed an underwriting. This restriction security, or (b) in connection with the purchase of shall not limit a Fund's ability to invest in securities securities directly from the issuer thereof in issued by other registered investment companies. accordance with its investment objective. This restriction shall not limit the Fund's ability to invest in securities issued by other registered investment companies. 3. Invest in real estate or real estate limited partnership 3. Purchase or sell real estate, except a Fund may interests. (A Fund may, however, purchase and sell purchase securities of issuers which deal or invest securities secured by real estate or interests therein in real estate and may purchase securities which are or issued by issuers which invest in real estate or secured by real estate or interests in real estate. interests therein.) This restriction does not apply to real estate limited partnerships listed on a national stock exchange (e.g., the NYSE). 4. Purchase or sell commodity contracts except that 4. Purchase or sell commodities, except that a Fund each Fund may, to the extent appropriate under its may to the extent consistent with its investment investment policies, purchase publicly traded objective, invest in securities of companies that securities of companies engaging in whole or in part purchase or sell commodities or which invest in in such activities, may enter into futures contracts such programs, and purchase and sell options, and related options, may engage in transactions on a forward contracts, futures contracts, and options on when-issued or forward commitment basis, and may futures contracts. This limitation does not apply to enter into forward currency contracts in accordance foreign currency transactions including without with its investment policies limitation forward currency contracts. 5. Make loans, except that a Fund may purchase and 5. Make loans, except to the extent permitted by the hold debt instruments (whether such instruments are 1940 Act, the rules and regulations thereunder and part of a public offering or privately placed), may any exemptive relief obtained by the Funds. enter into repurchase agreements and may lend portfolio securities in accordance with its investment policies.
C-1
The Funds may not: The Acquiring Funds may not: - ------------------ ---------------------------- 6. Borrow money or issue senior securities as defined 6. Borrow money or issue senior securities except to in the 1940 Act except that (a) a Fund may borrow the extent permitted by the 1940 Act, the rules and money from banks for temporary purposes in regulations thereunder and any exemptive relief amounts up to one-third of the value of such Fund's obtained by the Funds. total assets at the time of borrowing, provided that borrowings in excess of 5% of the value of such Fund's total assets will be repaid prior to the purchase of additional portfolio securities by such Fund, (b) a Fund may enter into commitments to purchase securities in accordance with the Fund's investment program, including delayed delivery and when-issued securities, which commitments may be considered the issuance of senior securities, and (c) a Fund may issue multiple classes of shares in accordance with SEC regulations or exemptions under the 1940 Act. The purchase or sale of futures contracts and related options shall not be considered to involve the borrowing of money or issuance of senior securities. Each Fund may enter into reverse repurchase agreements or dollar roll transactions. The purchase or sale of futures contracts and related options shall not be considered to involve the borrowing of money or issuance of senior securities. 7. Purchase any securities which would cause 25% or 7. Purchase any securities which would cause 25% or more of the value of the Fund's total assets at the more of the value of its total assets at the time of time of such purchase to be invested in the securities purchase to be invested in the securities of one or of one or more issuers conducting their principal more issuers conducting their principal business activities in the same industry, provided that this activities in the same industry, provided that: (a) limitation does not apply to investments in there is no limitation with respect to obligations obligations issued or guaranteed by the U.S. issued or guaranteed by the U.S. Government, any Government, any state or territory of the United state or territory of the United States, or any of States, or any of their agencies, instrumentalities or their agencies, instrumentalities or political political subdivisions. In addition, this limitation subdivisions, and (b) notwithstanding this does not apply to investments by "money market limitation or any other fundamental investment funds" as that term is used under the 1940 Act, in limitation, assets may be invested in the securities obligations of domestic banks. of one or more management investment copies to the extent permitted by the 1940 Act, the rules and regulations thereunder and any exemptive relief obtained by the Funds. 8. Purchase any securities on margin (except for such 8. No corresponding policy. short-term credits as are necessary for the clearance of purchases and sales of portfolio securities) or sell any securities short (except against the box.) For purposes of this restriction, the deposit or payment by the Fund of initial or maintenance margin connection with futures contracts and related options and options on securities is not considered to be the purchase of a security on margin.
C-2 PRX-1 Statement of Additional Information Dated January 14, 2002 NATIONS FUND TRUST NATIONS FUNDS TRUST One Bank of America Plaza 101 South Tryon Street, 33rd Floor Charlotte, North Carolina 28255 1-800-321-7854 March 28, 2002 Special Meeting of Shareholders of Nations Georgia Intermediate Municipal Bond Fund, Nations Maryland Intermediate Municipal Bond Fund, Nations North Carolina Intermediate Municipal Bond Fund, Nations South Carolina Intermediate Municipal Bond Fund, Nations Tennessee Intermediate Municipal Bond Fund, Nations Texas Intermediate Municipal Bond Fund, Nations Virginia Intermediate Municipal Bond Fund, Nations Georgia Municipal Bond Fund, Nations Maryland Municipal Bond Fund, Nations North Carolina Municipal Bond Fund, Nations South Carolina Municipal Bond Fund, Nations Tennessee Municipal Bond Fund, Nations Texas Municipal Bond Fund and Nations Virginia Municipal Bond Fund This SAI is not a prospectus but should be read in conjunction with the Proxy/Prospectus dated the date hereof, for the Special Meetings of Shareholders of the Funds to be held on March 28, 2002. Copies of the Proxy/Prospectus may be obtained at no charge by writing or calling Nations Fund Trust 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 SAI Further information about the Primary A Shares, Investor A Shares, Investor B Shares and Investor C Shares of the Funds is contained in (and incorporated herein by reference) the SAI for the Funds dated August 1, 2001, as supplemented. The Annual Reports for the Funds, including their audited financial statements and related Report of Independent Accountants for the year ended March 31, 2001 are incorporated herein by reference. The Semi-Annual Reports for the Funds, including their unaudited financial statements for the period ended September 30, 2001 are incorporated herein by reference. 1 Table of Contents General Information .......................................................... 3 Introductory Note to Pro Forma Financial Information ......................... 4 2 General Information The Reorganization contemplates the transfer of the assets and liabilities of the Funds to the Acquiring Funds in exchange for shares of designated classes of the corresponding Acquiring Funds of equal value. The shares issued by an Acquiring Fund will have an aggregate dollar value equal to the aggregate dollar value of the shares of each corresponding Fund that are outstanding immediately before the closing of the Reorganization. Immediately after the Closing, each Fund will distribute the shares of its corresponding Acquiring Fund received in the Reorganization to its shareholders in liquidation of such Fund. Each shareholder owning shares of a Fund at the Closing will receive shares of the designated class of the corresponding Acquiring Fund, and will receive any unpaid dividends or distributions that were declared before the Closing on the Funds' shares. Nations Funds Trust will establish an account for each former shareholder of the Funds reflecting the number of Acquiring Fund shares distributed to that shareholder. If the Reorganization Agreement is approved and consummated, the Funds will transfer all of their assets and liabilities, as of the Closing, and all outstanding shares of the Funds will be redeemed and canceled in exchange for shares of the corresponding Acquiring Fund, and if all of the other funds of Nations Fund Trust also approve the reorganization of their fund, Nations Fund Trust will be de-registered under the 1940 Act and dissolved under Massachusetts law. For further information about the transaction, see the Proxy/Prospectus. 3 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 Funds to the Acquiring Funds accounted for as if the transfer had occurred as of September 30, 2001. In addition, the pro forma combined statement of operations has been prepared as if the transfer had occurred at the beginning of the fiscal year ended September 30, 2001 and is based upon the proposed fee and expense structure of the Acquiring Funds. The pro forma financial information should be read in conjunction with the historical financial statements and notes thereto of the Funds and the Acquiring Funds included or incorporated herein by reference in this Statement of Additional Information. The combination of the above Funds and the Acquiring Funds will be accounted for as a tax-free reorganization. Pro forma information giving effect to the proposed transfer of assets and liabilities of Nations Texas Intermediate Municipal Bond Fund and Nations Texas Municipal Bond Fund to Nations Intermediate Municipal Bond Fund (acquiring), is not presented in this SAI because, as of November 1, 2001, the aggregate net asset value of Nations Texas Municipal Bond Fund was less than 10% of the aggregate net asset value of Nations Intermediate Municipal Bond Fund. Pro forma information giving effect to the proposed transfer of assets and liabilities of the Intermediate-Term Municipal Bond Funds to the corresponding Acquiring Fund is not presented in this SAI because this transaction would result in a "shell" transaction with no change to the Schedule of Investments and Statements of Assets and Liabilities or Statement of Operations of the Intermediate-Term Municipal Bond Funds. 4 Nations Georgia Municipal Bond Fund/Nations Georgia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) September 30, 2001
Nations Georgia Intermediate Nations Municipal Nations Georgia Nations Bond Georgia Intermediate Nations Georgia Fund Municipal Municipal Georgia Intermediate (acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund* Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------- Municipal bonds and notes - 97.0% Georgia - 97.0% $1,000 $1,000 Atlanta, Georgia, Airport Facilities Revenue Refunding, Series 2000A, (FGIC Insured), 5.600% 01/01/30 Aaa AAA $1,037 $- $1,037 1,000 1,000 Cartersville, Georgia, Development Authority, Sewer Facilities Revenue Refunding, (Anheuser-Busch Companies, Inc. Project) Series 1997, AMT, 6.125% 05/01/27 A1 A+ 1,045 - 1,045 1,000 1,000 Chatham County, Georgia, Hospital Medical Authority, Revenue, (Memorial Health Medical Center Project) Series 2001A, 6.125% 01/01/24 A3 A- 1,043 - 1,043 Clayton County, Georgia, Water and Sewer 1,000 1,000 Authority, Revenue, Series 2000, 5.600% 05/01/18 Aa3 AA 1,065 - 1,065 500 500 Columbia County, Georgia, School District, GO, Series 1994A, (MBIA Insured), Prerefunded 04/01/04 @ 102, 6.250% 04/01/13 Aaa AAA 552 - 552 1,000 1,000 DeKalb County, Georgia, Development Authority, Revenue, (Emory University Project) Series 1994A, 6.000% 10/01/14 Aa1 AA 1,065 - 1,065 East Point, Georgia, Building Authority, 2,490 2,490 Revenue, Series 2000, (FSA Insured), 5.700%+ 02/01/19 Aaa AAA 952 - 952 1,000 1,000 Effingham County, Georgia, Development Authority, Solid Waste Disposal Revenue, (Fort James Corporation Project) Series 1998, AMT, 5.625% 07/01/18 Baa3 BBB- 964 - 964 1,000 1,000 Forsyth County, Georgia, School District, GO, Series 1999, 6.000% 02/01/15 Aa2 AA- 1,124 - 1,124 1,000 1,000 Fulco, Georgia, Hospital Authority, Revenue Anticipation Certificates, (St. Joseph Hospital Project) Series 1994, 5.500% 10/01/14 Aaa NR 1,077 - 1,077 500 500 Fulton County, Georgia, Development Authority Revenue, (Clark Atlanta University Project) Series 1995, (CONNIE LEE Insured), 5.125% 01/01/10 Baa3 AAA 530 - 530 1,300 1,300 Fulton County, Georgia, Water and Sewer Revenue, Series 1998, 4.750% 01/01/20 A1 AA- 1,242 - 1,242 1,000 1,000 Georgia State, GO, Series 1999D, 5.800% 11/01/13 Aaa AAA 1,123 - 1,123 1,050 1,050 Georgia State, Housing and Finance Authority, Single-Family Mortgage Revenue, Series 1998B-3, 4.400% 06/01/17 Aa2 AAA 1,054 - 1,054 1,075 1,075 Georgia State, Housing and Finance Authority, Single-Family Mortgage Revenue, Series 1998B-2, AMT, 6.100% 06/01/31 Aa2 AAA 1,121 - 1,121 1,000 1,000 Georgia, George L. Smith II World Congress Center Authority, Revenue Refunding, (Domed Stadium Project) Series 2000, AMT, (MBIA Insured), 6.000% 07/01/05 Aaa AAA 1,091 - 1,091 1,000 1,000 Henry County, Georgia, Hospital Authority, Revenue, (Henry Medical Center Project) Series 1997, (AMBAC Insured), 6.000% 07/01/29 Aaa AAA 1,097 - 1,097 500 500 Lawrenceville, Georgia, Housing Authority, Multi-Family Housing Revenue, (Knollwood Park, LP Project) Series 1997, AMT (FNMA COLL), Mandatory Put 06/01/15 @100, 6.250% 12/01/29 NR AAA 533 - 533 1,000 1,000 Metropolitan Atlanta Rapid Transit Authority, Georgia, Revenue, Series 1998B, (MBIA Insured), 5.100% 07/01/15 Aaa AAA 1,035 - 1,035 500 500 Peach County, Georgia, School District, GO, Series 1994, (State Aid Withholding, MBIA Insured), 6.500% 02/01/08 Aaa AAA 576 - 576 1,000 1,000 Private Colleges and Universities Facilities Authority, Georgia, Revenue Refunding, (Mercer University Project) Series 1999A, 5.250% 10/01/20 A3 NR 1,001 - 1,001 1,000 1,000 Private Colleges and Universities Facilities Authority, Georgia, Revenue Refunding, (Mercer University Project) Series 1999A, 5.375% 10/01/29 A3 NR 999 - 999 1,000 1,000 Richmond County, Georgia, Development Authority, Environment Improvement Revenue, (International Paper Company Project) Series 2001A, 5.150% 03/01/15 Baa2 BBB 997 - 997 1,000 1,000 Roswell, Georgia, GO, Series 1995, 5.600% 02/01/10 Aaa AAA 1,068 - 1,068
Nations Georgia Municipal Bond Fund/Nations Georgia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001
Nations Georgia Nations Intermediate Nations Georgia Nations Municipal Bond Georgia Intermediate Nations Georgia Fund Municipal Municipal Combined Georgia Intermediate (acquir- Bond Bond Pro Municipal Municipal ing) Fund Fund Forma Bond Bond Combined Pro Principal Principal Principal Moody's Fund* Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - --------------------------------------------------------------------------------------------------------------------------------- Municipal bonds and notes - (continued) Georgia - (continued) $500 $500 Savannah, Georgia, Hospital Authority, Hospital Improvement Revenue Refunding, (Candler Hospital Project) Series 1992, Prerefunded 01/01/03 @ 102, 7.000% 01/01/23 Ba1 BB $538 $- $538 1,000 1,000 Savannah, Georgia, Hospital Authority, Revenue, (St. Josephs - Candler Health Systems Project) Series 1998B, (FSA Insured), 5.250% 07/01/10 Aaa NR 1,075 - 1,075 500 500 Union County, Georgia, Housing Authority, Multi- Family Housing Revenue Refunding, (Hidden Lake Apartments Ltd. Project) Series 1994A, (FHA/FNMA COLL), 7.125% 12/01/25 Aaa NR 528 - 528 1,000 1,000 White County, Georgia, Industrial Development Authority, Revenue Refunding, (Springs Industries, Inc. Project) Series 1992, 6.850% 06/01/10 NR BB+ 1,018 - 1,018 ----------------------------------- 26,550 - 26,550 ----------------------------------- Total municipal bonds and notes (Cost $24,762 and $0, respectively) 26,550 - 26,550 Shares Shares Shares ----------------------------------- (000) (000) (000) - ----------------------------- Investment companies - 2.1% (Cost $563 and $0, respectively) 563 563 Nations Municipal Reserves# 563 - 563 ----------------------------------- $27,113 - $27,113 ----------------------------------- - ------------------- * If the Georgia Municipal Bond Fund approves the Reorganization, and the Georgia Intermediate Municipal Bond Fund does not, the Georgia Municipal Bond Fund will be reorganized into an Acquiring Fund that is an intermediate-term municipal bond fund. In this event, the management team will, in all likelihood, be required to sell a significant portion of the Georgia Municipal Bond Fund's longer-term municipal bonds (either in anticipation of or after the Reorganization) and purchase new intermediate-term municipal bonds in order to abide by the Acquiring Fund's investment objective and principal investment strategies. + Zero coupon security. The rate shown reflects the yield to maturity. # Money market mutual fund registered under the Investment Company Act of 1940, as amended, and sub-advised by Banc of America Capital Management, LLC.
Nations Georgia Municipal Bond Fund / Nations Georgia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Net Assets (unaudited) September 30, 2001
Nations Georgia Intermediate Nations Municipal Nations Georgia Bond Fund Georgia Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ----------------------------------------- ------------ Total Investments $ 27,113 $ -- $ -- $ 27,113 Other Assets and Liabilities: Receivable for investment securities sold 548 -- 548 Receivable for Fund shares sold 85 -- 85 Interest receivable 442 -- 442 Receivable from investment advisor 3 42 (a) 45 Payable for Fund shares redeemed (25) -- (25) Administration fee payable (5) -- (5) Shareholder servicing and distribution fees payable (12) -- (12) Distributions payable (99) -- (99) Payable for investment securities purchased (635) -- (635) Accrued Trustees' fees and expenses (37) -- (37) Accrued expenses and other liabilities (20) (42)(a) (62) ----------------------------------------- ------------ Total Other Assets and Liabilities 245 -- -- 245 ----------------------------------------- ------------ Net Assets $ 27,358 $ -- $ -- $ 27,358 ========================================= ============ Net Assets by Class: Primary A $ 17,130,044 $ -- $ -- $ 17,130,044 Investor A 1,832,221 -- -- 1,832,221 Investor B 8,134,493 -- -- 8,134,493 Investor C 260,936 -- -- 260,936 ----------------------------------------- ------------ $ 27,357,694 $ -- $ -- $ 27,357,694 ----------------------------------------- ------------ Shares Outstanding by Class: Primary A 1,698,646 -- -- 1,698,646 Investor A 181,698 -- -- 181,698 Investor B 806,448 -- -- 806,448 Investor C 25,884 -- -- 25,884 ----------------------------------------- ------------ 2,712,676 -- -- 2,712,676 ----------------------------------------- ------------ Net Asset Value per Share by Class: Primary A $ 10.08 $ -- $ -- $ 10.08 Investor A $ 10.08 $ -- $ -- $ 10.08 Investor B $ 10.09 $ -- $ -- $ 10.09 Investor C $ 10.08 $ -- $ -- $ 10.08
(a) Adjustment reflects estimated costs of Reorganization. See Notes to Pro Forma Financial Statements Nations Georgia Municipal Bond Fund / Nations Georgia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Operations (unaudited) Twelve Month Period Ending September 30, 2001
Nations Georgia Intermediate Nations Municipal Nations Georgia Bond Fund Georgia Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) -------------------------------------------- ---------- Investment Income: Interest $ 1,498 $ -- $ -- $ 1,498 -------------------------------------------- ---------- Expenses: Investment advisory fee 138 -- (27)(a) 111 Administration fee 61 -- -- 61 Transfer agent fee 8 -- -- 8 Custodian fees 1 -- -- 1 Legal and audit fees 45 -- -- 45 Registration and filing fees 2 -- -- 2 Trustees' fees and expenses 24 -- -- 24 Printing expense 13 -- -- 13 Other 3 -- 42 (b) 45 -------------------------------------------- ---------- Subtotal 295 -- 15 310 -------------------------------------------- ---------- Shareholder servicing and distribution fees: Investor A Shares 5 -- -- 5 Investor B Shares 91 -- -- 91 Investor C Shares 2 -- -- 2 -------------------------------------------- ---------- Total expenses 393 -- 15 408 -------------------------------------------- ---------- Fees waived and/or expenses reimbursed by investment advisor, administrator, and/or distributor (131) -- (42)(b) (173) -------------------------------------------- ---------- Net Expenses 262 -- (27) 235 -------------------------------------------- ---------- Net Investment Income 1,236 -- 27 1,263 -------------------------------------------- ---------- Net Realized And Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) on investments 94 -- 94 Net change in unrealized appreciation/ (depreciation) of investments 1,123 -- 1,123 -------------------------------------------- ---------- Net realized and unrealized gain/(loss) on investments 1,217 -- 1,217 -------------------------------------------- ---------- Net Increase/(Decrease) in Net Assets Resulting From Operations $ 2,453 $ -- $ 27 $ 2,480 ============================================ ========== Legend: - ------- (a) Reflects adjustment to the acquiring fund's contractual fee obligations. (b) Adjustment reflects estimated costs of Reorganization.
See Notes to Pro Forma Financial Statements Nations Georgia Municipal Bond Fund Nations Georgia Intermediate Municipal Bond Fund (acquiring) Notes to Pro Forma Combining Financial Statements (unaudited) 1. Basis of Combination The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange described in the next paragraph occurred as of September 30, 2001 and the unaudited Pro Forma Combining Statement of Operations for the year ended September 30, 2001 assumes the exchange occurred as of October 1, 2000. These statements have been derived from books and records utilized in calculating daily net asset value of each fund at September 30, 2001 and for the twelve month period then ended. The pro forma statements give effect to the proposed reorganization ("Reorganization") of Nations Georgia Municipal Bond Fund (the "Fund") and Nations Georgia Intermediate Municipal Bond Fund (acquiring) (the "Acquiring Fund"). The Reorganization provides for the transfer of the assets and liabilities of the Fund to the Acquiring Fund, in exchange for shares of equal value of designated classes of the Acquiring Fund. The Reorganization is expected to be done on a tax-free basis whereby the Acquiring Fund will assume the market value and cost basis of the portfolio positions in the Fund and the results of operations of the Fund for pre-combination periods will not be restated. These financial statements present the Reorganization of the Fund into the Acquiring Fund. It is possible that both Nations Georgia Municipal Bond Fund and Nations Georgia Intermediate Municipal Bond Fund approve the Reorganization - that scenario is shown after these notes. The Funds will only bear the expenses of the Reorganization if those expenses do not exceed certain expense "caps" that have been put in place by the investment adviser. Because of these caps, it is not expected that the Funds will bear the costs associated with the Reorganization, including solicitation costs. 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 the Fund and the Acquiring Fund, with certain expenses adjusted to reflect the expected expenses of the Acquiring Fund. Nations Georgia Municipal Bond Fund/Nations Georgia Intermediate Municipal Bond Fund/Nations Georgia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) September 30, 2001
Nations Georgia Intermediate Nations Municipal Nations Georgia Nations Bond Georgia Intermediate Nations Georgia Fund Municipal Municipal Georgia Intermediate (acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - 98.6% Georgia - 93.2% $ - $ 1,000 $ 1,000 Alpharetta, Georgia, GO, Series 1992, 6.000% 05/01/03 Aa2 AA $ - $ 1,056 $ 1,056 1,000 1,000 Atlanta, Georgia, Airport Facilities Revenue Refunding, Series 1996, (AMBAC Insured), 5.000% 01/01/03 Aaa AAA 1,032 1,032 1,000 1,000 Atlanta, Georgia, Airport Facilities Revenue Refunding, Series 1996, (AMBAC Insured), 6.000% 01/01/03 Aaa AAA 1,044 1,044 1,000 4,000 5,000 Atlanta, Georgia, Airport Facilities Revenue Refunding, Series 2000A, (FGIC Insured), 5.600% 01/01/30 Aaa AAA 1,037 4,147 5,184 2,000 2,000 Atlanta, Georgia, Urban Residential Finance Authority, Multi-Family Revenue Refunding, (Housing City Plaza Project) Series 1998, AMT, (FNMA COLL), Mandatory Put 12/01/08 @ 100, 4.550% 12/01/28 NR AAA 2,004 2,004 2,750 2,750 Atlanta, Georgia, Water and Wastewater Authority, Revenue, Series 1999A, (FGIC Insured), 5.000% 11/01/38 Aaa AAA 2,651 2,651 2,750 2,750 Bibb County, Georgia, GO, Series 1993, 5.500% 01/01/08 Aa3 AA 2,889 2,889 1,000 1,000 Brunswick and Glynn County, Georgia, Development Authority, Revenue Refunding, (Georgia-Pacific Corporation Project) Series 1998, AMT, 5.550% 03/01/26 Baa3 NR 922 922 1,500 1,500 Burke County, Georgia, Development Authority, PCR, (Oglethorpe Power Corporation Project) Series 1994B, 4.700% 01/01/04 A3 A 1,552 1,552 2,500 2,500 Cartersville, Georgia, Development Authority, Sewer Facilities Revenue Refunding, (Anheuser-Busch Companies, Inc. Project) Series 1997, AMT, 5.625% 05/01/09 A1 A+ 2,696 2,696 1,000 1,000 Cartersville, Georgia, Development Authority, Sewer Facilities Revenue Refunding, (Anheuser-Busch Companies, Inc. Project) Series 1997, AMT, 6.125% 05/01/27 A1 A+ 1,045 1,045 1,000 2,000 3,000 Chatham County, Georgia, Hospital Medical Authority, Revenue, (Memorial Health Medical Center Project) Series 2001A, 6.125% 01/01/24 A3 A- 1,043 2,086 3,129 1,000 1,000 Cherokee County, Georgia, School System GO Refunding, Series 1992, 5.900% 06/01/02 A2 NR 1,025 1,025 1,000 1,000 Cherokee County, Georgia, School System GO, Series 1993, (AMBAC Insured), 5.875% 02/01/09 Aaa AAA 1,111 1,111 640 640 Cherokee County, Georgia, Water and Sewer Authority, Revenue Refunding, Series 1993, (MBIA Insured), 5.300% 08/01/09 Aaa AAA 686 686 1,000 1,000 Clarke County, Georgia, Hospital Authority, Revenue, (Athens Regional Medical Center Project) Series 1993, (MBIA Insured), Prerefunded 01/01/03 @ 102, 5.750% 01/01/08 Aaa AAA 1,061 1,061 1,000 1,000 Clarke County, Georgia, School District, GO Refunding, Series 1993, (FGIC Insured), 5.100% 07/01/04 Aaa AAA 1,061 1,061 3,190 3,190 Clayton County, Georgia, Hospital Authority, Revenue Anticipation Certificates, (Southern Regional Medical Center Project) Series 1998A, (MBIA Insured), 5.250% 08/01/09 Aaa AAA 3,456 3,456 1,000 1,000 Clayton County, Georgia, Water and Sewer Authority, Revenue Refunding, Series 1993, (MBIA Insured), 5.400% 05/01/07 Aaa AAA 1,048 1,048 2,000 2,000 Clayton County, Georgia, Water and Sewer Authority, Revenue, Series 2000, 6.250% 05/01/17 Aa3 AA 2,258 2,258 1,000 1,000 Clayton County, Georgia, Water and Sewer Authority, Revenue, Series 2000, 5.600% 05/01/18 Aa3 AA 1,065 1,065 2,000 2,000 Cobb County and Marietta, Georgia, Water Authority, Revenue Refunding, Series 1993, 5.000% 11/01/03 Aa1 AA 2,105 2,105
Nations Georgia Municipal Bond Fund/Nations Georgia Intermediate Municipal Bond Fund/Nations Georgia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001
Nations Georgia Intermediate Nations Municipal Nations Georgia Nations Bond Georgia Intermediate Nations Georgia Fund Municipal Municipal Georgia Intermediate (acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) Georgia - (continued) $ - $ 1,000 $ 1,000 Cobb County, Georgia, Detention Buildings and Facilities GO, Series 1993, 5.300% 01/01/08 Aaa AAA $ - $ 1,038 $ 1,038 1,200 1,200 Cobb County, Georgia, Kennestone Hospital Authority, Revenue, Series 1992A, 5.600% 04/01/05 Aa2 AA- 1,237 1,237 1,000 1,000 Cobb County, Georgia, Kennestone Hospital Authority, Revenue, Series 1992A, 5.700% 04/01/06 Aa2 AA- 1,030 1,030 2,000 2,000 Cobb County, Georgia, School District, GO, Series 1991B, 6.150% 02/01/03 Aa1 AA 2,098 2,098 2,000 2,000 Cobb County, Georgia, School District, GO, Series 1995, 4.800% 02/01/04 Aa1 AA 2,092 2,092 1,000 1,000 Cobb County, Georgia, Water and Sewer Authority, Revenue Refunding, Series 1993A, 5.400% 07/01/08 Aaa AAA 1,046 1,046 500 500 Columbia County, Georgia, School District, GO, Series 1994A, (MBIA Insured), Prerefunded 04/01/04 @ 102, 6.250% 04/01/13 Aaa AAA 552 552 2,250 2,250 Columbus, Georgia, Water and Sewer Authority, Revenue Refunding, Series 1992, (FGIC Insured), 6.000% 05/01/03 Aaa AAA 2,375 2,375 1,000 1,000 Columbus, Georgia, Water and Sewer Authority, Revenue Refunding Series 1993, 5.100% 05/01/03 A1 A+ 1,039 1,039 525 525 Dalton, Georgia, Building Authority, Revenue, Series 1993, 5.000% 07/01/02 Aa3 NR 536 536 1,500 1,500 Dalton, Georgia, Multiple Utilities Revenue Refunding, Series 1997, (MBIA Insured), 4.450% 01/01/03 Aaa AAA 1,538 1,538 1,000 4,000 5,000 DeKalb County, Georgia, Development Authority, Revenue, (Emory University Project) Series 1994A, 6.000% 10/01/14 Aa1 AA 1,065 4,259 5,324 1,000 1,000 DeKalb County, Georgia, School District, GO Refunding, Series 1993, 5.000% 07/01/03 Aa2 AA 1,044 1,044 1,000 1,000 Downtown Savannah Authority, Georgia, Revenue Refunding, (Chatham County Project) Series 1993A, 5.000% 01/01/11 A1 AA 1,026 1,026 3,490 3,490 East Point, Georgia, Building Authority, Revenue, Series 2000, (FSA Insured), 5.600%+ 02/01/18 Aaa AAA 1,432 1,432 2,490 2,490 East Point, Georgia, Building Authority, Revenue, Series 2000, (FSA Insured), 5.700%+ 02/01/19 Aaa AAA 952 952 1,000 4,440 5,440 Effingham County, Georgia, Development Authority, Solid Waste Disposal Revenue, (Fort James Corporation Project) Series 1998, 5.625% 07/01/18 Baa3 BBB- 964 4,278 5,242 1,000 1,000 Fayette County, Georgia, School District, GO Refunding, Series 1992, AMT, (FGIC Insured), 6.100% 03/01/03 Aaa AAA 1,035 1,035 1,000 1,000 2,000 Forsyth County, Georgia, School District, GO, Series 1999, 6.000% 02/01/15 Aa2 AA- 1,124 1,125 2,249 1,000 1,000 Fulco, Georgia, Hospital Authority, Revenue Anticipation Certificates, (Georgia Baptist Health Care Project) Series 1992A, Prerefunded 09/01/02 @ 102, 6.000% 09/01/03 Baa1 NR 1,053 1,053 2,000 2,000 Fulco, Georgia, Hospital Authority, Revenue Anticipation Certificates, (St. Joseph Hospital Project) Series 1994, 4.900% 10/01/03 Aaa NR 2,098 2,098 1,000 1,000 2,000 Fulco, Georgia, Hospital Authority, Revenue Anticipation Certificates, (St. Joseph Hospital Project) Series 1994, 5.500% 10/01/14 Aaa NR 1,077 1,077 2,154 2,000 2,000 Fulco, Georgia, Hospital Authority, Revenue Anticipation Certificates, Health Systems Revenue, (Catholic Health East Project) Series 1998A, (MBIA Insured), 4.600% 11/15/09 Aaa AAA 2,075 2,075 1,000 1,000 Fulton and DeKalb Counties, Georgia, Hospital Authority, GO Refunding Certificates, (Grady Memorial Hospital Project) Series 1993, (MBIA Insured), 5.250% 01/01/04 Aaa AAA 1,051 1,051
Nations Georgia Municipal Bond Fund/Nations Georgia Intermediate Municipal Bond Fund/Nations Georgia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Nations Georgia Georgia Intermediate Municipal Bond Municipal Bond Combined Pro Fund Fund Forma Principal Principal Principal amount amount amount (000) (000) (000) Description - ---------------------------------------------------------------------------------------------------------------------------------- Municipal bonds and notes - (continued) Georgia - (continued) $ - $ 1,025 $ 1,025 Fulton County, Georgia, Building Authority, Revenue, (County Government and Health Facilities Project) Series 1992A, 5.700% 01/01/04 500 500 Fulton County, Georgia, Development Authority, Revenue, (Clark Atlanta University Project) Series 1995, (CONNIE LEE Insured), 5.125% 01/01/10 1,735 1,735 Fulton County, Georgia, Development Authority, Revenue, (Georgia Tech Foundation Facilities Project) Series 1997A, 5.000% 09/01/17 2,900 2,900 Fulton County, Georgia, Housing Authority, Multi-Family Housing Revenue, (Concorde Place Apartments Project) Series 1996A, AMT, Prerefunded 07/01/08 @100, 6.375% 01/01/27 1,500 1,500 Fulton County, Georgia, School District, GO Refunding, Series 1991, 6.250% 05/01/04 1,300 1,300 Fulton County, Georgia, Water and Sewer Revenue, Series 1998, 4.750% 01/01/20 1,500 1,500 Georgia State, GO Refunding, Series 1992A, 6.250% 03/01/06 1,200 1,200 Georgia State, GO, Series 1992B, 6.000% 03/01/04 2,750 2,750 Georgia State, GO, Series 1993C, 6.500% 07/01/05 1,000 2,000 3,000 Georgia State, GO, Series 1999D, 5.800% 11/01/13 835 835 Georgia State, Housing and Finance Authority, Revenue, (Home Ownership Program) Series 1992B, AMT, 6.600% 06/01/25 1,050 1,050 Georgia State, Housing and Finance Authority, Single-Family Mortgage Revenue, Series 1998B-3, 4.400% 06/01/17 1,075 1,075 Georgia State, Housing and Finance Authority, Single-Family Mortgage Revenue, Series 1998B-2, AMT, 6.100% 06/01/31 1,000 1,000 Georgia State, Tollway Authority, Revenue Refunding, (Georgia 400 Project) Series 1998, 5.000% 07/01/07 1,000 3,880 4,880 Georgia, George L. Smith II World Congress Center Authority, Revenue Refunding, (Domed Stadium Project) Series 2000, AMT, (MBIA Insured), 6.000% 07/01/05 1,500 1,500 Georgia, Municipal Gas Authority, Gas Tax Revenue, (Southern Storage Gas Project) Series 1994, 6.000% 07/01/04 1,000 1,000 Griffin-Spalding County, Georgia, School System, GO, Series 1996, (State Aid Withholding, FSA Insured), 5.250% 02/01/10 1,000 1,000 Hall County, Georgia, School District, GO Refunding, Series 1992B, 6.300% 12/01/05 2,000 2,000 Hall County, Georgia, School District, GO, Series 1994, (AMBAC Insured), Prerefunded 12/01/04 @ 102, 6.700% 12/01/14 1,000 1,000 Henry City and County, Georgia, Water and Sewer Authority, Improvement Revenue Refunding, Series 1993A, 5.000% 02/01/07 1,550 1,550 Henry County, Georgia, Hospital Authority, Revenue, (Henry Medical Center Project) Series 1997, (AMBAC Insured), Prerefunded 07/01/07 @ 102, 5.250% 07/01/09 1,000 2,000 3,000 Henry County, Georgia, Hospital Authority, Revenue, (Henry Medical Center Project) Series 1997, (AMBAC Insured), 6.000% 07/01/29 1,000 1,000 Henry County, Georgia, School District, GO, Series 1992A, 5.700% 08/01/02 2,000 2,000 Houston County, Georgia, School District, GO, Series 1996, (State Aid Withholding, MBIA Insured), 5.500% 03/01/16 Georgia Intermediate Nations Municipal Bond Nations Georgia Fund Georgia Intermediate (acquiring) Municipal Bond Municipal Bond Combined Pro Fund Fund Forma Moody's S&P Value Value Value Ratings (000) (000) (000) - -------------------------------------------------------------------------------------------- Aa3 AA $ - $ 1,081 $ 1,081 Baa3 AAA 530 530 Aa1 AA+ 1,752 1,752 NR AAA 3,319 3,319 Aa2 AA 1,630 1,630 A1 AA- 1,242 1,242 Aaa AAA 1,684 1,684 Aaa AAA 1,291 1,291 Aaa AAA 3,088 3,088 Aaa AAA 1,123 2,247 3,370 NR AA+ 867 867 Aa2 AAA 1,054 1,054 Aa2 AAA 1,121 1,121 Aaa AAA 1,077 1,077 Aaa AAA 1,091 4,233 5,324 NR A- 1,619 1,619 Aaa AAA 1,028 1,028 A1 NR 1,126 1,126 Aaa AAA 2,277 2,277 A2 NR 1,048 1,048 Aaa AAA 1,712 1,712 Aaa AAA 1,097 2,195 3,292 Aa3 AA- 1,029 1,029 Aaa AAA 2,024 2,024
Nations Georgia Municipal Bond Fund/ Nations Georgia Intermediate Municipal Bond Fund/Nations Georgia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Georgia Intermediate Municipal Nations Bond Nations Georgia Nations Fund Georgia Intermediate Nations Georgia (acquir- Municipal Municipal Georgia Intermediate ing) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) Georgia - (continued) $ 500 $ - $ 500 Lawrenceville, Georgia, Housing Authority, Multi-Family Housing Revenue, (Knollwood Park, LP Project) Series 1997, AMT (FNMA COLL), Mandatory Put 06/01/15 @100, 6.250% 12/01/29 NR AAA $ 533 $ - $ 533 1,000 1,000 Macon, Georgia, Water Authority, Water and Sewer Revenue Refunding, Series 1994A, 4.700% 10/01/04 Aa3 AA- 1,056 1,056 1,000 1,000 Macon-Bibb County, Georgia, Industrial Authority, Industrial Revenue, (Weyerhaeuser Company Project) Series 1982, 9.000% 10/01/07 A3 A- 1,289 1,289 1,000 1,000 Meriwether County, Georgia, School District, GO, Series 1996, (State Aid Withholding, FSA Insured), 5.500% 02/01/16 Aaa AAA 1,053 1,053 3,000 3,000 Metropolitan Atlanta Rapid Transit Authority, Georgia, Revenue Refunding, Series 1992P, (AMBAC Insured), 5.900% 07/01/03 Aaa AAA 3,179 3,179 540 540 Metropolitan Atlanta Rapid Transit Authority, Georgia, Revenue, Series 1983D, 7.000% 07/01/11 Aaa AAA 666 666 2,500 2,500 Metropolitan Atlanta Rapid Transit Authority, Georgia, Revenue, Series 1998B, (MBIA Insured), 5.100% 07/01/13 Aaa AAA 2,623 2,623 1,000 2,000 3,000 Metropolitan Atlanta Rapid Transit Authority, Georgia, Revenue, Series 1998B, (MBIA Insured), 5.100% 07/01/15 Aaa AAA 1,035 2,070 3,105 1,000 1,000 Monroe County, Georgia, Development Authority, PCR, (Oglethorpe Power Corporation Project) Series 1992A, 6.800% 01/01/12 A3 A 1,174 1,174 1,100 1,100 Paulding County, Georgia, School District, GO, Series 1992A, 6.400% 02/01/04 A2 A 1,189 1,189 500 500 Peach County, Georgia, School District, GO, Series 1994, (State Aid Withholding, MBIA Insured), 6.500% 02/01/08 Aaa AAA 576 576 1,000 1,000 Private Colleges and Universities Facilities Authority, Georgia, Revenue, (Agnes Scott College Project) Series 1999, (MBIA Insured), 4.800% 06/01/16 Aaa AAA 1,006 1,006 1,400 1,400 Private Colleges and Universities Facilities Authority, Georgia, Revenue, (Emory University Project) Series 1992C, 5.750% 10/01/02 Aa1 AA 1,449 1,449 1,000 1,000 Private Colleges and Universities Facilities Authority, Georgia, Revenue Refunding, (Mercer University Project) Series 1999A, 5.250% 10/01/20 A3 NR 1,001 1,001 1,000 1,000 Private Colleges and Universities Facilities Authority, Georgia, Revenue Refunding, (Mercer University Project) Series 1999A, 5.375% 10/01/29 A3 NR 999 999 1,000 1,000 Richmond County, Georgia, Board of Education, GO Refunding, Series 1993, (FGIC Insured), 4.700% 11/01/06 Aaa AAA 1,047 1,047 1,000 2,000 3,000 Richmond County, Georgia, Development Authority, Environment Improvement Revenue, (International Paper Company Project) Series 2001A, 5.150% 03/01/15 Baa2 BBB 997 1,993 2,990 1,000 2,000 3,000 Roswell, Georgia, GO, Series 1995, 5.600% 02/01/10 Aaa AAA 1,068 2,135 3,203 2,000 2,000 Roswell, Georgia, GO, Series 2000, 5.500% 02/01/12 Aaa AAA 2,179 2,179 1,000 1,000 Savannah, Georgia, Economic Development Authority, Revenue Refunding, (Union Camp Corporation Project) Series 1993, 5.150% 05/01/02 Baa2 NR 1,014 1,014 500 500 Savannah, Georgia, Hospital Authority, Hospital Improvement Revenue Refunding, (Candler Hospital Project) Series 1992, Prerefunded 01/01/03 @ 102, 7.000% 01/01/23 Ba1 BB 538 538 1,250 1,250 Savannah, Georgia, Hospital Authority, Revenue Refunding, (Candler Hospital Project) Series 1992, Prerefunded 01/01/03 @ 102, 7.000% 01/01/11 Ba1 BB 1,345 1,345
Nations Georgia Municipal Bond Fund/ Nations Georgia Intermediate Municipal Bond Fund/Nations Georgia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Georgia Intermediate Municipal Nations Bond Nations Georgia Nations Fund Georgia Intermediate Nations Georgia (acquir- Municipal Municipal Georgia Intermediate ing) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) Georgia - (continued) $ - $ 1,225 $ 1,225 Savannah, Georgia, Hospital Authority, Revenue, (St. Josephs - Candler Health Systems Project) Series 1998A, (FSA Insured), 5.250% 07/01/11 Aaa NR $ - $ 1,310 $ 1,310 1,310 1,310 Savannah, Georgia, Hospital Authority, Revenue, (St. Josephs - Candler Health Systems Project) Series 1998A, (FSA Insured), 5.250% 07/01/12 Aaa NR 1,390 1,390 1,000 1,000 Savannah, Georgia, Hospital Authority, Revenue, (St. Josephs - Candler Health Systems Project) Series 1998B, (FSA Insured), 5.250% 07/01/10 Aaa NR 1,075 1,075 1,500 1,500 Savannah, Georgia, Resource Recovery Development Authority, Revenue Refunding, (Savannah Energy Systems Company Project) Series 1992, 5.850% 12/01/01 A1 AA- 1,509 1,509 1,000 1,000 Savannah, Georgia, Water and Sewer Improvement Revenue Refunding, Series 1993, 5.100% 12/01/09 Aa3 AA- 1,032 1,032 500 500 Union County, Georgia, Housing Authority, Multi-Family Housing Revenue Refunding, (Hidden Lake Apartments Ltd. Project) Series 1994A, (FHA/FNMA COLL), 7.125% 12/01/25 Aaa NR 528 528 1,000 2,570 3,570 White County, Georgia, Industrial Development Authority, Revenue Refunding, (Springs Industries, Inc. Project) Series 1992, 6.850% 06/01/10 NR BB+ 1,018 2,616 3,634 ------------------------- 26,550 142,123 168,673 ------------------------- Florida - 1.1% 2,000 2,000 Florida State, Board of Education Lottery Revenue, Series 2001B, 5.000% 07/01/20 Aaa AAA 1,996 1,996 ------------------------- Louisiana - 1.7% 2,000 2,000 Calcasieu Parish, Lousiana, Industrial Development Board, PCR Refunding, (Occidental Petroleum Project) Series 2001, 4.800% 12/01/06 Baa2 BBB 2,072 2,072 1,000 1,000 Plaquemines, Louisiana, Port Harbour and District Marine Terminal Facilities Revenue Refunding, (Electro-Coal Project) Series 2001B, 5.000% 09/01/07 A3 A- 1,025 1,025 ------------------------- 3,097 3,097 ------------------------- Minnesota - 1.0% 1,785 1,785 Minneapolis, Minnesota, GO, Series 1998, 4.750% 12/01/26 Aa1 AAA 1,712 1,712 ------------------------- Texas - 0.6% 1,000 1,000 Brazos River Authority, Texas, PCR Refunding, (Texas Electric Company Project) Series 2001A, AMT, Mandatory Put 04/01/04 @ 100, 4.950% 10/01/30 NR BBB 1,023 1,023 ------------------------- Virginia - 1.0% 1,750 1,750 Louisa, Virginia, Industrial Development Authority, Solid Waste and Sewage Disposal Revenue, (Virginia Electric and Power Company Project) Series 2001A, AMT, Mandatory Put 03/01/02 @ 100, 4.000% 03/01/31 P1 A- 1,754 1,754 ------------------------- Total municipal bonds and notes (Cost $24,762 and $143,989, respectively) 26,550 151,705 178,255 ------------------------- Shares Shares Shares (000) (000) (000) - ------------------------------ Investment companies - 0.4% (Cost $563 and $171, respectively) 563 171 734 Nations Municipal Reserves# 563 171 734 ------------------------- Total investments - 99.0% (Cost $25,325 and $144,160, respectively) $ 27,113 $151,876 $178,989 -------------------------
- ------------------------------ + Zero coupon security. The rate shown reflects the yield to maturity. # Money market mutual fund registered under the Investment Company Act of 1940, as amended, and sub-advised by Banc of America Capital Management, LLC.
Nations Georgia Municipal Bond Fund / Nations Georgia Intermediate Municipal Bond Fund / Nations Georgia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Net Assets (unaudited) September 30, 2001 Nations Georgia Intermediate Nations Municipal Nations Georgia Bond Fund Georgia Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ------------------------------------------------------- -------------- Total Investments $ 27,113 $ 151,876 $ -- $ 178,989 Other Assets and Liabilities: Receivable for investment securities sold 548 251 799 Receivable for Fund shares sold 85 103 188 Interest receivable 442 2,248 2,690 Receivable from investment advisor 3 -- 103 (a) 106 Payable for Fund shares redeemed (25) (140) (165) Investment advisory fee payable -- (21) (21) Administration fee payable (5) (25) (30) Shareholder servicing and distribution fees payable (12) (13) (25) Distributions payable (99) (573) (672) Payable for investment securities purchased (635) (247) (882) Accrued Trustees' fees and expenses (37) (40) (77) Accrued expenses and other liabilities (20) (39) (103) (a) (162) ------------------------------------------------------- -------------- Total Other Assets and Liabilities 245 1,504 -- 1,749 ------------------------------------------------------- -------------- Net Assets $ 27,358 $ 153,380 $ -- $ 180,738 ======================================================= =============== Net Assets by Class: Primary A $ 17,130,044 $ 133,614,472 $ -- $ 150,744,516 Investor A 1,832,221 12,174,053 -- 14,006,274 Investor B 8,134,493 6,676,892 -- 14,811,385 Investor C 260,936 914,275 -- 1,175,211 ------------------------------------------------------- -------------- $ 27,357,694 $ 153,379,692 $ -- $ 180,737,386 ------------------------------------------------------- -------------- Shares Outstanding by Class: Primary A 1,698,646 12,245,332 (128,523) (b) 13,815,455 Investor A 181,698 1,115,603 (13,758) (b) 1,283,543 Investor B 806,448 611,899 (60,848) (b) 1,357,499 Investor C 25,884 83,782 (1,967) (b) 107,699 ------------------------------------------------------- -------------- 2,712,676 14,056,616 (205,096) 16,564,196 ------------------------------------------------------- -------------- Net Asset Value per Share by Class: Primary A $ 10.08 $ 10.91 $ -- $ 10.91 Investor A $ 10.08 $ 10.91 $ -- $ 10.91 Investor B $ 10.09 $ 10.91 $ -- $ 10.91 Investor C $ 10.08 $ 10.91 $ -- $ 10.91
(a) Adjustment reflects estimated costs of Reorganization. (b) Reflects the issuance of Nations Georgia Intermediate Municipal Bond Fund shares to holders of shares of Nations Georgia Municipal Bond Fund. See Notes to Pro Forma Financial Statements
Nations Georgia Municipal Bond Fund / Nations Georgia Intermediate Municipal Bond Fund / Nations Georgia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Operations (unaudited) Twelve Month Period Ending September 30, 2001 Nations Georgia Intermediate Nations Municipal Nations Georgia Bond Fund Georgia Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ------------------------------------------------ ----------------- Investment Income: Interest $1,498 $7,643 $ - $9,141 ------------------------------------------------ ----------------- Expenses: Investment advisory fee 138 588 (35)(a) 691 Administration fee 61 323 - 384 Transfer agent fee 8 40 - 48 Custodian fees 1 10 - 11 Legal and audit fees 45 51 (45)(b) 51 Registration and filing fees 2 2 (2)(b) 2 Trustees' fees and expenses 24 25 (24)(b) 25 Printing expense 13 17 (12)(b) 18 Other 3 12 100 (b),(c) 115 ------------------------------------------------ ----------------- Subtotal 295 1,068 (18) 1,345 ------------------------------------------------ ----------------- Shareholder servicing and distribution fees: Investor A Shares 5 30 - 35 Investor B Shares 91 67 - 158 Investor C Shares 2 8 - 10 ------------------------------------------------ ----------------- Total expenses 393 1,173 (18) 1,548 ------------------------------------------------ ----------------- Fees waived and/or expenses reimbursed by investment advisor, administrator, and/or distributor (131) (334) (7)(c),(d) (472) ------------------------------------------------ ----------------- Net Expenses 262 839 (25) 1,076 ------------------------------------------------ ----------------- Net Investment Income 1,236 6,804 25 8,065 ------------------------------------------------ ----------------- Net Realized And Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) on investments 94 (179) (85) Net change in unrealized appreciation/ (depreciation) of investments 1,123 5,400 6,523 ------------------------------------------------ ----------------- Net realized and unrealized gain/(loss) on investments 1,217 5,221 6,438 ------------------------------------------------ ----------------- Net Increase/(Decrease) in Net Assets Resulting From Operations $2,453 $12,025 $25 $14,503 ================================================ =================
Legend: (a) Reflects adjustment to the acquiring fund's contractual fee obligations. (b) Adjustment reflects expected savings when the two funds become one. (c) Adjustment reflects estimated costs of Reorganization. (d) Adjustment reflects reduction in fund level expenses as a result of the lower fund level expense cap. See Notes to Pro Forma Financial Statements Nations Georgia Municipal Bond Fund Nations Georgia Intermediate Municipal Bond Fund Nations Georgia Intermediate Municipal Bond Fund (acquiring) Notes to Pro Forma Combining Financial Statements (unaudited) 1. Basis of Combination The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange described in the next paragraph occurred as of September 30, 2001 and the unaudited Pro Forma Combining Statement of Operations for the year ended September 30, 2001 assumes the exchange occurred as of October 1, 2000. These statements have been derived from books and records utilized in calculating daily net asset value of each fund at September 30, 2001 and for the twelve month period then ended. The pro forma statements give effect to the proposed reorganization (the "Reorganization") of Nations Georgia Municipal Bond Fund ("Georgia Municipal Bond Fund") and Nations Georgia Intermediate Municipal Bond Fund ("Georgia Intermediate Municipal Bond Fund") into Nations Georgia Intermediate Municipal Bond Fund (acquiring) (the "Acquiring Fund"). The Reorganization provides for the transfer of the assets and liabilities of Georgia Municipal Bond Fund and Georgia Intermediate Municipal Bond Fund to the Acquiring Fund, in exchange for shares of equal value of designated classes of the Acquiring Fund. The Reorganization is expected to be done on a tax-free basis whereby the Acquiring Fund will assume the market value and cost basis of the portfolio positions in the Georgia Municipal Bond Fund and Georgia Intermediate Municipal Bond Fund and the results of operations of Georgia Municipal Bond Fund and Georgia Intermediate Municipal Bond Fund for pre-combination periods will not be restated. It is not expected that the investment adviser or sub-adviser will sell any securities of either acquired fund, in anticipation of or as a result of the Reorganization, other than in the normal course of business. The Funds will only bear the expenses of the Reorganization if those expenses do not exceed certain expense "caps" that have been put in place by the investment adviser. Because of these caps, it is not expected that the Funds will bear the costs associated with the Reorganization, including solicitation costs. 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 Acquiring Fund, with certain expenses adjusted to reflect the expected expenses of the Acquiring Fund. Nations Maryland Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) September 30, 2001
Nations Maryland Intermediate Nations Municipal Nations Maryland Nations Bond Maryland Intermediate Nations Maryland Fund Municipal Municipal Maryland Intermediate(acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund* Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - 94.1% Maryland - 77.6% $ 500 $- $ 500 Anne Arundel County, Maryland, Consolidated General Improvement Aa1 AA+ $ 527 $- $ 527 GO Refunding, Series 1995, 5.300% 04/01/10 500 500 Anne Arundel County, Maryland, Consolidated General Improvement Aa2 AA+ 520 - 520 GO, Series 1993, 5.250% 07/15/11 1,000 1,000 Baltimore, Maryland, Consolidated Public Improvement GO, Aaa AAA 1,092 - 1,092 Series 1998B, (FGIC Insured), 6.500% 10/15/08 800 800 Calvert County, Maryland, PCR Refunding (Baltimore Gas and A2 A 834 - 834 Electric Company Project) Series 1993, 5.550% 07/15/14 Aaa AAA 253 - 253 250 250 Cumberland, Maryland, GO Refunding, Series 1994A, (FGIC Insured), 5.250% 05/01/21 Aa2 AA 1,114 - 1,114 1,000 1,000 Harford County, Maryland, GO, Series 1997, 5.500% 12/01/07 1,900 1,900 Howard County, Maryland, Consolidated Public Improvement GO, Aaa AAA 1,970 - 1,970 Series 2000A, 5.250% 02/15/17 500 500 Maryland State, Community Development Administration,Department of Housing and Community Development, Revenue, (Residential Aa2 NR 521 - 521 Project) Series 1998B,AMT, 4.950% 09/01/11 810 810 Maryland State, Community Development Administration, Department of Housing and Community Development, Revenue, (Residential Aa2 NR 868 - 868 Project) Series 2000A, 5.500% 09/01/12 1,000 1,000 Maryland State, Community Development Administration, Department Aa2 NR 1,064 - 1,064 of Housing and Community Development, Revenue, Series 1999H, AMT, 6.000% 09/01/17 495 495 Maryland State, Economic Development Corporation, Student Housing Baa3 NR 499 - 499 Revenue, (Salisbury Collegiate Housing Project) Series 1999A, 5.300% 06/01/08 575 575 Maryland State, Economic Development Corporation, Student Housing Baa3 NR 581 - 581 Revenue, (Salisbury Collegiate Housing Project) Series 1999A, 5.600% 06/01/11 2,000 2,000 Maryland State, Economic Development Corporation, Student Housing Baa3 NR 1,959 - 1,959 Revenue, (Salisbury Collegiate Housing Project) Series 1999A, 5.750% 06/01/29 1,000 1,000 Maryland State, Economic Development Corporation, Student Housing Baa3 NR 1,009 - 1,009 Revenue, (Salisbury Collegiate Housing Project) Series 1999A, 6.000% 06/01/30 300 300 Maryland State, Health and Higher Education Facilities Authority, A1 AA- 314 - 314 Revenue Refunding, (Johns Hopkins Hospital Project) Series 1993, 5.600% 07/01/09 2,000 2,000 Maryland State, Health and Higher Education Facilities Authority, Aa2 AA 2,299 - 2,299 Revenue, (Johns Hopkins University Project) Series 1999, 6.000% 07/01/39 330 330 Maryland State, Health and Higher Education Facilities Authority, A2 A 320 - 320 Revenue, (Loyola College Project) Series 1999, 5.000% 10/01/39 425 425 Maryland State, Industrial Development Financing Authority, Revenue (American Center for Physics Facilities Project) Series 1992, NR A 454 - 454 (GTY AGMT), Prerefunded 01/01/03 @ 102, 6.375% 01/01/12 500 500 Maryland State, Stadium Authority, Lease Revenue, (Ocean City Aa2 AA+ 526 - 526 Convention Center Project) Series 1995, 5.375% 12/15/13 Aaa AAA 1,080 - 1,080 1,000 1,000 Maryland State, State and Local Facilities Loan GO, Series 1999-2, 5.000% 07/15/07 Aaa AAA 1,137 - 1,137 1,000 1,000 Maryland State, State and Local Facilities Loan GO, Series 2000, 5.750% 08/01/11 760 760 Maryland State, Transportation Authority, Revenue, (Transportation Aaa AAA 905 - 905 Facilities Project) Series 1978, 6.800% 07/01/16
Nations Maryland Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited)(continued) September 30, 2001
Nations Maryland Intermediate Nations Municipal Nations Maryland Nations Bond Maryland Intermediate Nations Maryland Fund Municipal Municipal Maryland Intermediate(acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund* Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and Notes(continued) Maryland - (continued) $ 300 $ - $ 300 Maryland State, Transportation Authority, Revenue, (Transportation Facilities Project) Series 1992, 5.750% 07/01/15 A1 A+ $ 306 $ - $ 306 1,500 1,500 Montgomery County, Maryland, Consolidated Public Improvement GO, Series 1992A, 5.800% 07/01/07 Aaa AAA 1,680 - 1,680 935 935 Northeast Maryland, Solid Waste Disposal Authority, Revenue, (Ogden Martin Systems - Montgomery County Residential Receivables Project) Series 1993A, AMT, 6.300% 07/01/16 A2 NR 974 - 974 1,000 1,000 Prince Georges County, Maryland, Consolidated Public Improvement GO, Series 1999, (FSA Insured), 5.125% 10/01/16 Aaa AAA 1,038 - 1,038 1,000 1,000 Prince Georges County, Maryland, Consolidated Public Improvement GO, Series 2000, 5.250% 10/01/18 Aa3 AA 1,046 - 1,046 500 500 Prince Georges County, Maryland, PCR Refunding, (Potomac Electric Power Project) Series 1995, 5.750% 03/15/10 A1 A 561 - 561 500 500 Prince Georges County, Maryland, Solid Waste Management System Revenue, Unrefunded Balance, Series 1993, 5.200% 06/15/06 Aaa AAA 526 - 526 500 500 Prince Georges County, Maryland, Stormwater Management, GO, Series 1993, 5.500% 03/15/13 Aa3 AA 518 - 518 2,500 2,500 University of Maryland, Systems Auxiliary Facilities and Tuition Revenue, Series 1996A, 5.600% 04/01/13 Aa3 AA+ 2,670 - 2,670 1,000 1,000 University of Maryland, Systems Auxiliary Facilities and Tuition Revenue, Series 1997A, 5.125% 04/01/13 Aa3 AA+ 1,052 - 1,052 1,000 1,000 University of Maryland, Systems Auxiliary Facilities and Tuition Revenue, Series 2000A, 5.250% 10/01/11 Aa3 AA+ 1,091 - 1,091 1,290 1,290 Wicomico County, Maryland, Public Improvement GO, Series 1997, (MBIA Insured), 4.800% 12/01/10 Aaa AAA 1,361 - 1,361 ------------------------- District of Columbia - 1.0% 32,669 - 32,669 350 350 Washington, District of Columbia, Metropolitan Area Transportation ------------------------- Authority, Revenue Refunding, Series 1993, (FGIC Insured), 6.000% 07/01/10 Aaa AAA 402 - 402 Florida - 2.4% ---------------------- 1,000 1,000 Florida State, Board of Education Lottery Revenue, Series 2001B, 5.000% 07/01/20 Aaa AAA 998 - 998 Guam - 1.5% ---------------------- 600 600 Guam, Government GO, Series 1993A, 5.200% 11/15/08 NR BBB- 620 - 620 Mississippi - 1.2% ---------------------- 500 500 Warren County, Mississippi, Environmental Improvement Revenue Refunding, (International Paper Company Project) Series 2000A, AMT, 6.700% 08/01/18 Baa2 BBB 529 - 529 Puerto Rico - 2.2% ---------------------- 500 500 Puerto Rico, Electric Power Authority, Power Revenue Refunding, Series 1995Y, (MBIA Insured), 6.500% 07/01/06 Aaa AAA 575 - 575 315 315 Puerto Rico, Housing Bank and Finance Agency, Single-Family Mortgage Revenue, (Affordable Housing Mortgage-Portfolio I) Series 1995, AMT, (GNMA/FNMA/FHLMC COLL), 6.100% 10/01/15 Aaa AAA 332 - 332 ---------------------- 907 - 907 ----------------------
Nations Maryland Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited)(continued) September 30, 2001
Nations Maryland Intermediate Nations Municipal Nations Maryland Nations Bond Maryland Intermediate Nations Maryland Fund Municipal Municipal Maryland Intermediate(acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund* Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and Notes(Continued) Tennessee - 3.5% $ 1,355 $ - $ 1,355 Maury County, Tennessee, Industrial Development Board, Multi-Modal PCR Refunding, (General Motors Corporation - Saturn Corporation Project) Series 1994, 6.500% 09/01/24 A2 A $ 1,470 $ - $ 1,470 ----------------------------- Texas - 2.3% 1,000 1,000 Houston, Texas, Independent School District, GO Refunding, Series 1999A, (PSF-GTD), 5.000% 02/15/24 Aaa AAA 975 - 975 ----------------------------- Washington - 2.4% 1,000 1,000 Washington State, Motor Vehicle Fuel Tax, GO, Series 1997D, (FGIC Insured) 5.375% 01/01/22 Aaa AAA 1,013 - 1,013 ----------------------------- Total municipal bonds and notes (Cost $36,847 and $0, respectively) 39,583 - 39,583 ----------------------------- Shares Shares Shares (000) (000) (000) - -------------------------- Investment companies - 5.1% (Cost $2,153 and $0, respectively) 2,153 - 2,153 2,153 - 2,153 Nations Municipal Reserves# ----------------------------- Total investments - 99.2% (Cost $39,000 and $0, respectively) $ 41,736 - $ 41,736 ----------------------------- - ------------------------------ * If the Maryland Municipal Bond Fund approves the Reorganization, and the Maryland Intermediate Municipal Bond Fund does not, the Maryland Municipal Bond Fund will be reorganized into an Acquiring Fund that is an intermediate-term municipal bond fund. In this event, the management team will, in all likelihood, be required to sell a significant portion of the Maryland Municipal Bond Fund's longer-term municipal bonds (either in anticipation of or after the Reorganization) and purchase new intermediate-term municipal bonds in order to abide by the Acquiring Fund's investment objective and principal investment strategies. # Money market mutual fund registered under the Investment Company Act of 1940, as amended, and sub-advised by Banc of America Capital Management, LLC.
Nations Maryland Municipal Bond Fund / Nations Maryland Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Net Assets (unaudited) September 30, 2001
Nations Maryland Intermediate Nations Municipal Nations Maryland Bond Fund Maryland Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ----------------------------------------- ------------ Total Investments $ 41,736 $ -- $ -- $ 41,736 Other Assets and Liabilities: Cash 1 -- 1 Receivable for investment securities sold 4 -- 4 Receivable for Fund shares sold 100 -- 100 Interest receivable 602 -- 602 Receivable from investment advisor -- -- 43 (a) 43 Payable for Fund shares redeemed (133) (133) Investment advisory fee payable (1) -- (1) Administration fee payable (7) -- (7) Shareholder servicing and distribution fees payable (26) -- (26) Distribution payable (136) -- (136) Accrued Trustees' fees and expenses (37) -- (37) Accrued expenses and other liabilities (25) -- (43)(a) (68) ----------------------------------------- ------------ Total Other Assets and Liabilities 342 -- -- 342 ----------------------------------------- ------------ Net Assets $ 42,078 $ -- $ -- $ 42,078 ----------------------------------------- ------------ ----------------------------------------- ------------ Net Assets by Class: Primary A $ 20,900,745 $ -- $ -- $ 20,900,745 Investor A 2,882,480 -- -- 2,882,480 Investor B 17,920,944 -- -- 17,920,944 Investor C 373,867 -- -- 373,867 ----------------------------------------- ------------ $ 42,078,036 $ -- $ -- $ 42,078,036 ----------------------------------------- ------------ Shares Outstanding by Class: Primary A 2,047,335 -- -- 2,047,335 Investor A 282,412 -- -- 282,412 Investor B 1,755,472 -- -- 1,755,472 Investor C 36,639 -- -- 36,639 ----------------------------------------- ------------ 4,121,858 -- -- 4,121,858 ----------------------------------------- ------------ Net Asset Value per Share by Class: Primary A $ 10.21 $ -- $ -- $ 10.21 Investor A $ 10.21 $ -- $ -- $ 10.21 Investor B $ 10.21 $ -- $ -- $ 10.21 Investor C $ 10.20 $ -- $ -- $ 10.20
(a) Adjustment reflects estimated costs of Reorganization. See Notes to Pro Forma Financial Statements Nations Maryland Municipal Bond Fund / Nations Maryland Intermediate Municipal Bond Fund(acquiring) Pro Forma Combining Statement of Operations (unaudited) Twelve Month Period Ending September 30, 2001
Nations Maryland Intermediate Nations Municipal Nations Maryland Bond Fund Maryland Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) -------------------------------------------- ---------- Investment Income: Interest $ 2,035 $ -- $ -- $ 2,035 -------------------------------------------- ---------- Expenses: Investment advisory fee 194 -- (40)(a) 154 Administration fee 86 -- -- 86 Transfer agent fee 11 -- -- 11 Custodian fees 4 -- -- 4 Legal and audit fees 44 -- -- 44 Registration and filing fees 2 -- -- 2 Trustees' fees and expenses 24 -- -- 24 Printing expense 16 -- -- 16 Other 4 -- 43 (b) 47 -------------------------------------------- ---------- Subtotal 385 -- 3 388 -------------------------------------------- ---------- Shareholder servicing and distribution fees: Investor A Shares 5 -- -- 5 Investor B Shares 168 -- -- 168 Investor C Shares 2 -- -- 2 -------------------------------------------- ---------- Total expenses 560 -- 3 563 -------------------------------------------- ---------- Fees waived and/or expenses reimbursed by investment advisor, administrator, and/or distributor (150) -- (43) (b) (193) -------------------------------------------- ---------- Net Expenses 410 -- (40) 370 -------------------------------------------- ---------- Net Investment Income 1,625 -- 40 1,665 -------------------------------------------- ---------- Net Realized And Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) on investments -- -- -- Net change in unrealized appreciation/ (depreciation) of investments 2,023 -- 2,023 -------------------------------------------- ---------- Net realized and unrealized gain/(loss) on investments 2,023 -- 2,023 -------------------------------------------- ---------- Net Increase/(Decrease) in Net Assets Resulting From Operations $ 3,648 $ -- $ 40 $3,688 -------------------------------------------- ---------- -------------------------------------------- ---------- Legend: (a) Reflects adjustment to the acquiring fund's contractual fee obligations. (b) Adjustment reflects estimated costs of Reorganization.
See Notes to Pro Forma Financial Statements Nations Maryland Municipal Bond Fund Nations Maryland Intermediate Municipal Bond Fund (acquiring) Notes to Pro Forma Combining Financial Statements (unaudited) 1. Basis of Combination The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange described in the next paragraph occurred as of September 30, 2001 and the unaudited Pro Forma Combining Statement of Operations for the year ended September 30, 2001 assumes the exchange occurred as of October 1, 2000. These statements have been derived from books and records utilized in calculating daily net asset value of each fund at September 30, 2001 and for the twelve month period then ended. The proforma statements give effect to the proposed reorganization ("Reorganization) of Nations Maryland Municipal Bond Fund (the "Fund") and Nations Maryland Intermediate Municipal Bond Fund (acquiring) (the "Acquiring Fund"). The Reorganization provides for the transfer of the assets and liabilities of the Fund to the Acquiring Fund, in exchange for shares of equal value of designated classes of the Acquiring Fund. The Reorganization is expected to be done on a tax-free basis whereby the Acquiring Fund will assume the market value and cost basis of the portfolio positions in the Fund and the results of operations of the Fund for pre-combination periods will not be restated. These financial statements present the Reorganization of the Fund into the Acquiring Fund. It is possible that both Nations Maryland Municipal Bond Fund and Nations Maryland Intermediate Municipal Bond Fund approve the Reorganization--that scenario is shown after these notes. The Funds will only bear the expenses of the Reorganization if those expenses do not exceed certain expense "caps" that have been put in place by the investment adviser. Because of these caps, it is not expected that the Funds will bear the costs associated with the Reorganization, including solicitation costs. 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 the Fund and the Acquiring Fund, with certain expenses adjusted to reflect the expected expenses of the Acquiring Fund.
Nations Maryland Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) September 30, 2001 Nations Maryland Intermediate Municipal Nations Bond Nations Maryland Nations Fund Maryland Intermediate Nations Maryland (acquir- Municipal Municipal Maryland Intermediate ing) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - 97.3% Maryland - 84.4% $ - $ 1,000 $ 1,000 Anne Arundel County, Maryland, Consolidated General Improvement GO, Series 1993, 5.125% 07/15/08 Aa2 AA+ $ - $ 1,043 $ 1,043 500 500 Anne Arundel County, Maryland, Consolidated General Improvement GO Refunding, Series 1995, 5.300% 04/01/10 Aa1 AA+ 527 527 500 500 Anne Arundel County, Maryland, Consolidated General Improvement GO, Series 1993, 5.250% 07/15/11 Aa2 AA+ 520 520 2,855 2,855 Anne Arundel County, Maryland, GO, Series 1995, 5.200% 04/01/08 Aa1 AA+ 3,020 3,020 1,375 1,375 Baltimore County, Maryland, Metropolitan District, Special Assignment GO Refunding, Series 1992, 5.750% 05/01/02 Aaa AAA 1,404 1,404 1,000 1,000 Baltimore County, Maryland, Metropolitan District, Special Assignment GO Refunding, Series 1992, 5.800% 05/01/03 Aaa AAA 1,040 1,040 1,720 1,720 Baltimore, Maryland, Consolidated Public Improvement GO, Series 1991C, (FGIC Insured), 6.200% 10/15/02 Aaa AAA 1,792 1,792 1,075 1,075 Baltimore, Maryland, Consolidated Public Improvement GO, Series 1991C, (FGIC Insured), 6.375% 10/15/07 Aaa AAA 1,245 1,245 1,000 1,000 Baltimore, Maryland, Consolidated Public Improvement GO, Series 1993A, (AMBAC Insured), 5.300% 10/15/06 Aaa AAA 1,046 1,046 1,740 1,740 Baltimore, Maryland, Consolidated Public Improvement GO, Series 1997A, (FGIC Insured), 5.300% 10/15/16 Aaa AAA 1,832 1,832 1,000 1,000 Baltimore, Maryland, Consolidated Public Improvement GO, Series 1998B, (FGIC Insured), 6.500% 10/15/08 Aaa AAA 1,092 1,092 1,000 1,000 Baltimore, Maryland, Convention Center Revenue Refunding, Series 1998, (MBIA Insured), 5.000% 09/01/06 Aaa AAA 1,080 1,080 1,725 1,725 Baltimore, Maryland, Exchanged Revenue, Series 1996A, (FGIC Insured), 5.900% 07/01/10 Aaa AAA 1,970 1,970 1,000 1,000 Baltimore, Maryland, GO, Series 1989B, (MBIA Insured), 7.000% 10/15/04 Aaa AAA 1,125 1,125 1,000 1,000 Baltimore, Maryland, GO, Series 1989B, (MBIA Insured), 7.050% 10/15/07 Aaa AAA 1,193 1,193 1,750 1,750 Baltimore, Maryland, Port Facilities Revenue, (E.I. duPont de Nemours and Company Project) Series 1985, 6.500% 12/01/10 Aa3 AA- 1,848 1,848 1,000 1,000 Baltimore, Maryland, Revenue Refunding, (Wastewater Projects) Series 1993A, (MBIA Insured), 5.100% 07/01/04 Aaa AAA 1,064 1,064 1,000 1,000 Baltimore, Maryland, Revenue Refunding, (Wastewater Projects) Series 1994A, (FGIC Insured), 5.000% 07/01/22 Aaa AAA 1,019 1,019 800 800 Calvert County, Maryland, PCR Refunding (Baltimore Gas and Electric Company Project) Series 1993, 5.550% 07/15/14 A2 A 834 834 1,810 1,810 Charles County, Maryland, Consolidated Public Improvement GO Refunding, Series 1992, (AMBAC Insured), 5.900% 01/15/03 Aaa AAA 1,865 1,865 250 250 Cumberland, Maryland, GO Refunding, Series 1994A, (FGIC Insured), 5.250% 05/01/21 Aaa AAA 253 253 2,135 2,135 Frederick County, Maryland, GO Refunding, Series 1993, 5.350% 07/01/05 Aa2 AA 2,215 2,215 1,000 1,000 Frederick County, Maryland, GO, Series 1991B, 6.300% 07/01/06 Aa2 AA 1,051 1,051 2,000 2,000 Frederick, Maryland, Consolidated Public Improvement GO Refunding, Series 1992, (FGIC Insured), 5.750% 12/01/01 Aaa AAA 2,012 2,012
Nations Maryland Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Maryland Intermediate Nations Municipal Nations Maryland Nations Bond Maryland Intermediate Nations Maryland Fund Municipal Municipal Maryland Intermediate (acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) Maryland - (continued) $ - $ 2,240 $ 2,240 Frederick, Maryland, Consolidated Public Improvement GO Refunding, Series 1992, (FGIC Insured), 6.000% 12/01/05 Aaa AAA $ - $ 2,379 $ 2,379 1,000 1,000 Harford County, Maryland, GO, Series 1997, 5.500% 12/01/07 Aa2 AA 1,114 1,114 1,455 1,455 Harford County, Maryland, Public Improvement GO, Series 1992, 5.300% 09/01/03 Aa2 AA 1,524 1,524 1,545 1,545 Howard County, Maryland, Consolidated Public Improvement GO Refunding, Series 1993A, 5.000% 08/15/03 Aaa AAA 1,620 1,620 20 20 Howard County, Maryland, Consolidated Public Improvement GO, Series 1993A, Prerefunded 08/15/05 @ 100, 5.250% 08/15/06 Aaa AAA 22 22 1,500 1,500 Howard County, Maryland, Consolidated Public Improvement GO, Series 2000A, 5.250% 02/15/16 Aaa AAA 1,563 1,563 1,900 1,900 Howard County, Maryland, Consolidated Public Improvement GO, Series 2000A, 5.250% 02/15/17 Aaa AAA 1,970 1,970 2,000 2,000 Howard County, Maryland, Consolidated Public Improvement GO, Series 2000A, 5.250% 02/15/18 Aaa AAA 2,064 2,064 1,000 1,000 Howard County, Maryland, Metropolitan District, GO Refunding, Series 1991B, 6.000% 08/15/03 Aaa AAA 1,066 1,066 1,980 1,980 Howard County, Maryland, Public Improvement GO, Unrefunded Balance, Series 1993A, 5.250% 08/15/06 Aaa AAA 2,091 2,091 1,530 1,530 Laurel, Maryland, Public Improvement GO Refunding, 1996A, (FGIC Insured), 5.000% 10/01/11 Aaa AAA 1,609 1,609 1,200 1,200 Maryland State, Certificates of Participation Refunding, (State Highway and Motor Vehicle Administration Project) Series 1992, 5.800% 06/01/02 Aa3 AA+ 1,215 1,215 1,410 1,410 Maryland State, Certificates of Participation Revenue, (Aviation Administration Facilities Project) Series 1999, AMT, 4.750% 05/01/07 Aa3 AA+ 1,497 1,497 500 500 Maryland State, Community Development Administration, Department of Housing and Community Development, Revenue, (Residential Project) Series 1998B,AMT, 4.950% 09/01/11 Aa2 NR 521 521 810 810 Maryland State, Community Development Administration, Department of Housing and Community Development, Revenue, (Residential Project) Series 2000A, 5.500% 09/01/12 Aa2 NR 868 868 1,000 1,000 Maryland State, Community Development Administration, Department of Housing and Community Development, Revenue, (Single-Family Program) Series 1997-1, (FHA COLL), 4.950% 04/01/07 Aa2 NR 1,065 1,065 4,000 4,000 Maryland State, Community Development Administration, Department of Housing and Community Development, Revenue, (Single-Family Program) Series 1998-3, AMT, 4.500% 04/01/08 Aa2 NR 4,123 4,123 1,685 1,685 Maryland State, Community Development Administration, Department of Housing and Community Development, Revenue, (Single-Family Program) Series 1998-3, AMT, 4.700% 04/01/10 Aa2 NR 1,742 1,742 3,250 3,250 Maryland State, Community Development Administration, Department of Housing and Community Development, Revenue, Series 1999A, AMT, 5.350% 07/01/41 Aa2 NR 3,229 3,229 2,410 2,410 Maryland State, Community Development Administration, Department of Housing and Community Development, Revenue, Series 1999D, AMT, 5.375% 09/01/24 Aa2 NR 2,424 2,424 1,000 2,000 3,000 Maryland State, Community Development Administration, Department of Housing and Community Development, Revenue, Series 1999H, AMT, 6.000% 09/01/17 Aa2 NR 1,064 2,128 3,192
Nations Maryland Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Maryland Intermediate Nations Municipal Nations Maryland Nations Bond Maryland Intermediate Nations Maryland Fund Municipal Municipal Maryland Intermediate (acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) Maryland - (continued) $ - $ 3,900 $ 3,900 Maryland State, Community Development Administration, Development Revenue, (Lexington Terrace Senior Housing, LP Project) Series 1998B, AMT, 3.900% 10/01/02 Aaa NR $ - $ 3,905 $ 3,905 3,000 3,000 Maryland State, Community Development Administration, Development Revenue, (Lexington Terrace Townhomes, LP Project) Series 1998A, AMT, 3.900% 10/01/02 Aaa NR 3,003 3,003 495 495 Maryland State, Economic Development Corporation, Student Housing Revenue, (Salisbury Collegiate Housing Project) Series 1999A, 5.300% 06/01/08 Baa3 NR 499 499 575 575 Maryland State, Economic Development Corporation, Student Housing Revenue, (Salisbury Collegiate Housing Project) Series 1999A, 5.600% 06/01/11 Baa3 NR 581 581 2,000 2,000 4,000 Maryland State, Economic Development Corporation, Student Housing Revenue, (Salisbury Collegiate Housing Project) Series 1999A, 5.750% 06/01/29 Baa3 NR 1,959 1,959 3,918 1,000 500 1,500 Maryland State, Economic Development Corporation, Student Housing Revenue, (Salisbury Collegiate Housing Project) Series 1999A, 6.000% 06/01/30 Baa3 NR 1,009 505 1,514 945 945 Maryland State, Economic Development Corporation, Student Housing Revenue, Series 1999A, 5.600% 06/01/10 Baa3 NR 957 957 1,000 1,000 Maryland State, Economic Development Corporation, Student Housing Revenue, Series 1999A, 5.700% 06/01/12 Baa3 NR 1,014 1,014 815 815 Maryland State, Economic Development Corporation, Student Housing Revenue, Series 1999A, 6.000% 06/01/19 Baa3 NR 831 831 1,000 1,000 Maryland State, GO, Series 1998, 5.000% 07/15/11 Aaa AAA 1,066 1,066 2,700 2,700 Maryland State, Health and Higher Education Facilities Authority, Revenue Refunding, (Johns Hopkins Hospital Project) Series 1993, 5.250% 07/01/04 A1 AA- 2,866 2,866 1,500 1,500 Maryland State, Health and Higher Education Facilities Authority, Revenue Refunding, (Johns Hopkins Hospital Project) Series 1993, 5.400% 07/01/06 A1 AA- 1,582 1,582 3,050 3,050 Maryland State, Health and Higher Education Facilities Authority, Revenue Refunding, (Johns Hopkins Hospital Project) Series 1993, 5.500% 07/01/07 A1 AA- 3,207 3,207 300 300 Maryland State, Health and Higher Education Facilities Authority, Revenue Refunding, (Johns Hopkins Hospital Project) Series 1993, 5.600% 07/01/09 A1 AA- 314 314 1,000 1,000 Maryland State, Health and Higher Education Facilities Authority, Revenue Refunding, (University of Maryland Medical Systems Project) Series 1993, (FGIC Insured), 5.200% 07/01/04 Aaa AAA 1,061 1,061 510 510 Maryland State, Health and Higher Education Facilities Authority, Revenue, (College of Notre Dame Project) Series 1998, (MBIA Insured), 4.600% 10/01/14 Aaa AAA 522 522 430 430 Maryland State, Health and Higher Education Facilities Authority, Revenue, (Howard County General Hospital Project) Series 1993, 5.125% 07/01/03 Aaa NR 444 444 1,000 1,000 Maryland State, Health and Higher Education Facilities Authority, Revenue, (Howard County General Hospital Project) Series 1993, 5.500% 07/01/13 Aaa NR 1,067 1,067 1,000 1,000 Maryland State, Health and Higher Education Facilities Authority, Revenue, (Howard County General Hospital Project) Series 1993, 5.500% 07/01/21 Aaa NR 1,046 1,046 2,000 2,000 Maryland State, Health and Higher Education Facilities Authority, Revenue, (John Hopkins Hospital Redevelopment Project) Series 1979, 5.750% 07/01/09 Aaa AAA 2,254 2,254 1,000 1,000 Maryland State, Health and Higher Education Facilities Authority, Revenue, (Johns Hopkins Medical Project) Series 1998, 5.000% 07/01/29 Aaa AAA 993 993
Nations Maryland Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001
Nations Maryland Intermediate Municipal Nations Bond Nations Maryland Nations Fund Maryland Intermediate Nations Maryland (acquir- Municipal Municipal Maryland Intermediate ing) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) Maryland - (continued) $ 2,000 $ 2,000 $ 4,000 Maryland State, Health and Higher Education Facilities Authority, Revenue, (Johns Hopkins University Project) Series 1999, 6.000% 07/01/39 Aa2 AA $2,299 $ 2,298 $ 4,597 330 330 Maryland State, Health and Higher Education Facilities Authority, Revenue, (Loyola College Project) Series 1999, 5.000% 10/01/39 A2 A 320 320 1,100 1,100 Maryland State, Industrial Development Financing Authority, Revenue Refunding, (American Center for Physics Facilities Project) Series 2001, (GTY AGMT), 3.650% 12/15/05 Aa3 NR 1,127 1,127 425 425 Maryland State, Industrial Development Financing Authority, Revenue (American Center for Physics Facilities Project) Series 1992, (GTY AGMT), Prerefunded 01/01/03 @ 102, 6.375% 01/01/12 NR A 454 454 500 500 Maryland State, Stadium Authority, Lease Revenue, (Ocean City Convention Center Project) Series 1995, 5.375% 12/15/13 Aa2 AA+ 526 526 1,500 1,500 Maryland State, State and Local Facilities Loan GO, Series 1995-2, 5.000% 10/15/04 Aaa AAA 1,601 1,601 1,550 1,550 Maryland State, State and Local Facilities Loan GO, Series 1996-2, 5.250% 06/15/11 Aaa AAA 1,658 1,658 1,000 1,000 Maryland State, State and Local Facilities Loan GO, Series 1999-2, 5.000% 07/15/07 Aaa AAA 1,080 1,080 1,000 1,970 2,970 Maryland State, State and Local Facilities Loan GO, Series 2000, 5.750% 08/01/11 Aaa AAA 1,137 2,240 3,377 645 645 Maryland State, Transportation Authority, Revenue, (Transportation Facilities Project) Series 1978, 6.625% 07/01/03 Aaa AAA 676 676 760 760 Maryland State, Transportation Authority, Revenue, (Transportation Facilities Project) Series 1978, 6.800% 07/01/16 Aaa AAA 905 905 300 300 Maryland State, Transportation Authority, Revenue, (Transportation Facilities Project) Series 1992, 5.750% 07/01/15 A1 A+ 306 306 2,300 2,300 Maryland State, Transportation Authority, Transportation Revenue, Series 1991, 6.500% 07/01/04 A1 A+ 2,354 2,354 4,000 4,000 Maryland State, Transportation Authority, Transportation Revenue, Series 1992, 5.700% 07/01/05 A1 A+ 4,383 4,383 2,800 2,800 Maryland State, Transportation Authority, Transportation Revenue, Series 1992, 5.800% 07/01/06 A1 A+ 3,115 3,115 2,000 2,000 Montgomery County, Maryland, Consolidated Public Improvement GO Refunding, Series 1992A, 5.600% 07/01/04 Aaa AAA 2,154 2,154 1,000 1,000 Montgomery County, Maryland, Consolidated Public Improvement GO Refunding, Series 1992A, 5.750% 07/01/06 Aaa AAA 1,112 1,112 1,500 1,500 Montgomery County, Maryland, Consolidated Public Improvement GO, Series 1992A, 5.800% 07/01/07 Aaa AAA 1,680 1,680 3,500 3,500 Montgomery County, Maryland, Consolidated Public Improvement GO, Series 1993A, 4.900% 10/01/07 Aaa AAA 3,662 3,662 1,000 1,000 Montgomery County, Maryland, Consolidated Public Improvement GO, Series 1997A, 5.375% 05/01/08 Aaa AAA 1,099 1,099 1,000 1,000 Montgomery County, Maryland, Consolidated Public Improvement GO, Series 1997A, 5.375% 05/01/13 Aaa AAA 1,073 1,073 3,000 3,000 Montgomery County, Maryland, GO, Series 1991B, Prerefunded 10/01/01 @ 102, 6.100% 10/01/05 Aaa AAA 3,061 3,061 1,500 1,500 Montgomery County, Maryland, Housing Opportunities Commission, Multi-Family Mortgage Revenue, Series 2000A, 6.100% 07/01/30 Aaa NR 1,588 1,588
Nations Maryland Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001
Nations Maryland Intermediate Municipal Nations Bond Nations Maryland Nations Fund Maryland Intermediate Nations Maryland (acquir- Municipal Municipal Maryland Intermediate ing) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) Maryland - (continued) $ - $ 845 $ 845 Montgomery County, Maryland, Housing Opportunities Commission, Single-Family Mortgage Revenue, Series 1997A, 5.400% 07/01/08 Aa2 NR $ - $ 918 $ 918 1,500 1,500 Northeast Maryland, Solid Waste Disposal Authority, Revenue, (Montgomery County Resource Recreation Project) Series 1993A, AMT, 6.000% 07/01/07 A2 NR 1,659 1,659 935 935 Northeast Maryland, Solid Waste Disposal Authority, Revenue, (Ogden Martin Systems - Montgomery County Residential Receivables Project) Series 1993A, AMT, 6.300% 07/01/16 A2 NR 974 974 630 630 Ocean City, Maryland, GO Refunding, Series 1991, (MBIA Insured), Prerefunded 11/01/01 @ 102, 6.100% 11/01/04 Aaa AAA 645 645 1,000 1,000 Prince Georges County, Maryland, Consolidated Public Improvement GO Refunding, Series 1991, 6.500% 07/01/02 Aa3 AA 1,024 1,024 1,000 1,000 Prince Georges County, Maryland, Consolidated Public Improvement GO Refunding, Series 1992A, (MBIA Insured), 5.400% 03/01/02 Aaa AAA 1,014 1,014 1,000 1,000 Prince Georges County, Maryland, Consolidated Public Improvement GO, Series 1992, 5.600% 01/15/03 Aa3 AA 1,030 1,030 1,800 1,800 Prince Georges County, Maryland, Consolidated Public Improvement GO, Series 1992, 5.900% 01/15/06 Aa3 AA 1,854 1,854 2,000 2,000 Prince Georges County, Maryland, Consolidated Public Improvement GO, Series 1999, 5.000% 10/01/12 Aaa AAA 2,125 2,125 1,000 2,300 3,300 Prince Georges County, Maryland, Consolidated Public Improvement GO, Series 1999, (FSA Insured), 5.125% 10/01/16 Aaa AAA 1,038 2,387 3,425 1,000 1,000 Prince Georges County, Maryland, Consolidated Public Improvement GO, Series 2000, 5.125% 10/01/08 Aa3 AA 1,090 1,090 1,000 1,000 Prince Georges County, Maryland, Consolidated Public Improvement GO, Series 2000, 5.125% 10/01/10 Aa3 AA 1,092 1,092 1,000 2,000 3,000 Prince Georges County, Maryland, Consolidated Public Improvement GO, Series 2000, 5.250% 10/01/18 Aa3 AA 1,046 2,092 3,138 2,500 2,500 Prince Georges County, Maryland, Consolidated Public Improvement GO, Series 2000, 5.250% 10/01/19 Aa3 AA 2,598 2,598 485 485 Prince Georges County, Maryland, Housing Authority, Single-Family Mortgage Revenue, Series 2000A, AMT, 6.150% 08/01/19 NR AAA 515 515 500 1,000 1,500 Prince Georges County, Maryland, PCR Refunding, (Potomac Electric Power Project) Series 1995, 5.750% 03/15/10 A1 A 561 1,122 1,683 2,000 2,000 Prince Georges County, Maryland, Solid Waste Management Systems Authority, Revenue Refunding, Series 1993, (FSA Insured), 5.100% 06/15/05 Aaa AAA 2,108 2,108 500 500 Prince Georges County, Maryland, Solid Waste Management System Revenue, Unrefunded Balance, Series 1993, 5.200% 06/15/06 Aaa AAA 526 526 500 500 Prince Georges County, Maryland, Stormwater Management, GO, Series 1993, 5.500% 03/15/13 Aa3 AA 518 518 1,200 1,200 Queen Annes County, Maryland, School and Public Facilities GO, Series 2000, 5.250% 01/15/14 Aaa AAA 1,277 1,277 1,000 1,000 Rockville, Maryland, GO Refunding, Series 1993, 4.750% 04/15/05 Aa1 AA+ 1,027 1,027 1,000 1,000 St. Mary's County, Maryland, GO, Series 1995, (MBIA Insured), 5.700% 03/01/08 Aaa AAA 1,081 1,081
Nations Maryland Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited)(continued) September 30, 2001 Nations Maryland Intermediate Municipal Nations Bond Nations Maryland Nations Fund Maryland Intermediate Nations Maryland (acquir- Municipal Municipal Maryland Intermediate ing) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) Maryland - (continued) $ - $ 2,000 $ 2,000 University of Maryland, Systems Auxiliary Facilities and Tuition Revenue Refunding, Series 1993C, 4.900% 10/01/08 Aa3 AA+ $ - $ 2,067 $ 2,067 745 745 University of Maryland, Systems Auxiliary Facilities and Tuition Revenue, Series 1992A, 6.000% 02/01/04 Aa3 AA+ 762 762 2,500 1,020 3,520 University of Maryland, Systems Auxiliary Facilities and Tuition Revenue, Series 1996A, 5.600% 04/01/13 Aa3 AA+ 2,670 1,089 3,759 3,115 3,115 University of Maryland, Systems Auxiliary Facilities and Tuition Revenue, Series 1996A, 5.600% 04/01/14 Aa3 AA+ 3,312 3,312 1,000 1,000 University of Maryland, Systems Auxiliary Facilities and Tuition Revenue, Series 1997A, 5.125% 04/01/13 Aa3 AA+ 1,052 1,052 1,975 1,975 University of Maryland, Systems Auxiliary Facilities and Tuition Revenue, Series 2000A, 5.000% 10/01/08 Aa3 AA+ 2,141 2,141 1,000 1,575 2,575 University of Maryland, Systems Auxiliary Facilities and Tuition Revenue, Series 2000A, 5.250% 10/01/11 Aa3 AA+ 1,091 1,718 2,809 1,000 1,000 Washington County, Maryland, Consolidated Public Improvement GO Refunding, Series 1993, (FGIC Insured), 5.250% 01/01/06 Aaa AAA 1,044 1,044 1,000 1,000 Washington County, Maryland, Sanitation District, GO Refunding, Series 1993F, (FGIC Insured), 5.250% 01/01/06 Aaa AAA 1,044 1,044 1,000 1,000 Washington Suburban Sanitation District Authority, Maryland, General Construction GO, Series 2000, 5.250% 06/01/22 Aaa AAA 1,023 1,023 3,440 3,440 Washington Suburban Sanitation District Authority, Maryland, Water Supply GO Refunding, Series 1993, 5.100% 12/01/07 Aaa AAA 3,620 3,620 2,010 2,010 Washington Suburban Sanitation District Authority, Maryland, Water Supply GO, Series 1992, Prerefunded 06/01/02 @ 102, 5.800% 06/01/03 Aaa AAA 2,100 2,100 1,000 1,000 Washington Suburban Sanitation District Authority, Maryland, Water Supply GO, Series 1993, 5.000% 06/01/03 Aaa AAA 1,043 1,043 1,290 1,290 Wicomico County, Maryland, Public Improvement GO, Series 1997, (MBIA Insured), 4.800% 12/01/10 Aaa AAA 1,361 1,361 1,355 1,355 Wicomico County, Maryland, Public Improvement GO, Series 1997, (MBIA Insured), 4.900% 12/01/11 Aaa AAA 1,429 1,429 1,425 1,425 Wicomico County, Maryland, Public Improvement GO, Series 1997, (MBIA Insured), 5.000% 12/01/12 Aaa AAA 1,502 1,502 -------------------------- 32,669 172,260 204,929 -------------------------- Alabama - 1.3% 3,000 3,000 Courtland, Alabama, Industrial Development Board, Solid Waste Disposal Revenue, (Champion International Corporation Project) Series 1992, AMT, 7.000% 06/01/22 Baa2 BBB 3,104 3,104 ------------------------- California - 1.0% 2,000 2,000 Sacramento County, California, Single Family Mortgage Revenue, Series 1991A, AMT, 7.250% 10/01/23 Aaa AAA 2,471 2,471 ------------------------- Colorado - 0.6% 3,800 3,800 Colorado, E-470 Public Highway Authority, Revenue, Capital Appreciation, Series 1997B, (MBIA Insured), 5.280%+ 09/01/18 Aaa AAA 1,573 1,573 -------------------------
Nations Maryland Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Maryland Intermediate Municipal Nations Bond Nations Maryland Nations Fund Maryland Intermediate Nations Maryland (acquir- Municipal Municipal Maryland Intermediate ing) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ----------------------------------------------------------------------------------------------------------------------------------- Municipal bonds and notes- (continued) District of Columbia - 1.0% $ - $2,000 $ 2,000 Washington, District of Columbia, Metropolitan Area Transportation Authority, Revenue Refunding, Series 1993, (FGIC Insured), 5.000% 07/01/06 Aaa AAA $ - $ 2,114 $ 2,114 350 350 Washington, District of Columbia, Metropolitan Area Transportation Authority, Revenue Refunding, Series 1993, (FGIC Insured), 6.000% 07/01/10 Aaa AAA 402 402 ----------------------------- 402 2,114 2,516 ----------------------------- Florida - 1.2% 1,000 2,000 3,000 Florida State, Board of Education Lottery Revenue, Series 2001B, 5.000% 07/01/20 Aaa AAA 998 1,996 2,994 ------------------------------ Guam - 0.3% 600 600 Guam, Government GO, Series 1993A, 5.200% 11/15/08 NR BBB- 620 620 ----------------------------- Michigan - 0.9% 2,000 2,000 Southfield, Michigan, Library Building Authority, GO, Series 2000, (MBIA Insured), 5.500% 05/01/24 Aaa AAA 2,065 2,065 ----------------------------- Mississippi - 2.0% 1,000 1,000 Mississippi State, Hospital Facilities and Equipment Authority, Revenue, (Forrest County General Hospital Project) Series 2000, (FSA Insured), 5.625% 01/01/20 Aaa NR 1,046 1,046 3,100 3,100 Mississippi State, Hospital Facilities and Equipment Authority, Revenue, (Forrest County General Hospital Project) Series 2000, FSA Insured), 5.500% 01/01/24 Aaa NR 3,180 3,180 500 500 Warren County, Mississippi, Environmental Improvement Revenue Refunding, (International Paper Company Project) Series 2000A, AMT, 6.700% 08/01/18 Baa2 BBB 529 529 ----------------------------- 529 4,226 4,755 ----------------------------- Oklahoma - 0.7% 2,000 2,000 Tulsa, Oklahoma, Municipal Airport Transportation Revenue Refunding, Series 2000B, AMT, Mandatory Put 12/01/08 @ 100, 6.000% 06/01/35 Ba2 BB 1,780 1,780 ----------------------------- Puerto Rico - 0.4% 500 500 Puerto Rico, Electric Power Authority, Power Revenue Refunding, Series 1995Y, (MBIA Insured), 6.500% 07/01/06 Aaa AAA 575 575 315 315 Puerto Rico, Housing Bank and Finance Agency, Single-Family Mortgage Revenue, (Affordable Housing Mortgage-Portfolio I) Series 1995, AMT, (GNMA/FNMA/FHLMC COLL), 6.100% 10/01/15 Aaa AAA 332 332 ----------------------------- 907 907 ----------------------------- South Carolina - 0.4% 1,010 1,010 South Carolina, Jobs Economic Development Authority, Economic Development Revenue, (Valley Proteins Inc. Project) Series 1995, (Harris Bank LOC), 2.350% 04/01/10 NR A-1+ 1,010 1,010 ------------------------------ Tennessee - 0.6% 1,355 1,355 Maury County, Tennessee, Industrial Development Board, Multi-Modal PCR Refunding, (General Motors Corporation - Saturn Corporation Project) Series 1994, 6.500% 09/01/24 A2 A 1,470 1,470 -----------------------------
Nations Maryland Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund/Nations Maryland Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Maryland Intermediate Municipal Nations Bond Nations Maryland Nations Fund Maryland Intermediate Nations Maryland (acquir- Municipal Municipal Maryland Intermediate ing) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes--(continued) Texas - 2.1% $ - $ 2,000 $ 2,000 Brazos River Authority, Texas, PCR Refunding, (Texas Electric Company Project) Series 2001A, AMT, Mandatory Put 04/01/04 @ 100, 4.950% 10/01/30 NR BBB $ - $ 2,045 $ 2,045 1,000 1,000 Houston, Texas, Independent School District, GO Refunding, Series 1999A, (PSF-GTD), 5.000% 02/15/24 Aaa AAA 975 975 2,000 2,000 Texas State, Water Development Board, Revenue, Series 1997, 5.000% 07/15/12 Aaa AAA 2,080 2,080 ------------------------------------- 975 4,125 5,100 ------------------------------------- Washington - 0.4% 1,000 1,000 Washington State, Motor Vehicle Fuel Tax, GO, Series 1997D,(FGIC Insured) 5.375% 01/01/22 Aaa AAA 1,013 1,013 ------------------------------------- Total municipal bonds and notes (Cost $36,847 and $187,056, respectively) 39,583 196,724 236,307 ------------------------------------- Shares Shares Shares (000) (000) (000) - ---------------------------------- Investment companies - 1.6% (Cost $2,153 and $1,671, respectively) 2,153 1,671 3,824 Nations Municipal Reserves# 2,153 1,671 3,824 ------------------------------------- Total investments - 98.9% (Cost $39,000 and $188,727, respectively) $ 41,736 $ 198,395 $ 240,131 -------------------------------------
- ---------------- + Zero coupon security. The rate shown reflects the yield to maturity. # Money market mutual fund registered under the Investment Company Act of 1940, as amended, and sub-advised by Banc of America Capital Management, LLC.
Nations Maryland Municipal Bond Fund / Nations Maryland Intermediate Municipal Bond Fund / Nations Maryland Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Net Assets (unaudited) September 30, 2001 Nations Maryland Intermediate Nations Municipal Nations Maryland Bond Fund Maryland Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ------------------------------------------------------ --------------- Total Investments $ 41,736 $ 198,395 $ - $ 240,131 Other Assets and Liabilities: Cash 1 - 1 Receivable for investment securities sold 4 - 4 Receivable for Fund shares sold 100 152 252 Interest receivable 602 3,303 3,905 Receivable from investment advisor - - 111 (a) 111 Payable for Fund shares redeemed (133) (78) (211) Investment advisory fee payable (1) (30) (31) Administration fee payable (7) (33) (40) Shareholder servicing and distribution fees payable (26) (12) (38) Distribution payable (136) (733) (869) Payable for investment securities purchased - (95) (95) Accrued Trustees' fees and expenses (37) (41) (78) Accrued expenses and other liabilities (25) (54) (111)(a) (190) --------------------------------------------------- ---------------- Total Other Assets and Liabilities 342 2,379 - 2,721 --------------------------------------------------- ---------------- Net Assets $ 42,078 $ 200,774 $ - $ 242,852 =================================================== ================ Net Assets by Class: Primary A $ 20,900,745 $ 176,217,959 $ - $ 197,118,704 Investor A 2,882,480 18,412,585 - 21,295,065 Investor B 17,920,944 5,353,121 - $ 23,274,065 Investor C 373,867 790,349 - 1,164,216 --------------------------------------------------- ---------------- $ 42,078,036 $ 200,774,014 $ - $ 242,852,050 --------------------------------------------------- ---------------- Shares Outstanding by Class: Primary A 2,047,335 15,927,404 (157,575)(b) 17,817,164 Investor A 282,412 1,664,304 (21,790)(b) 1,924,926 Investor B 1,755,472 483,860 (135,133)(b) 2,104,199 Investor C 36,639 71,436 (2,835)(b) 105,240 ---------------------------------------------------- ---------------- 4,121,858 18,147,004 (317,333) 21,951,529 ---------------------------------------------------- ---------------- Net Asset Value per Share by Class: Primary A $ 10.21 $ 11.06 $ - $ 11.06 Investor A $ 10.21 $ 11.06 $ - $ 11.06 Investor B $ 10.21 $ 11.06 $ - $ 11.06 Investor C $ 10.20 $ 11.06 $ - $ 11.06
(a) Adjustment reflects estimated costs of Reorganization. (b) Reflects the issuance of Nations Maryland Intermediate Municipal Bond Fund shares to holders of shares of Nations Maryland Municipal Bond Fund. See Notes to Pro Forma Financial Statements
Nations Maryland Municipal Bond Fund / Nations Maryland Intermediate Municipal Bond Fund / Nations Maryland Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Operations (unaudited) Twelve Month Period Ending September 30, 2001 Nations Maryland Intermediate Nations Municipal Nations Maryland Bond Fund Maryland Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) --------------------------------------------- ---------- Investment Income: Interest $2,035 $10,258 $ - $12,293 --------------------------------------------- --------- Expenses: Investment advisory fee 194 800 (40)(a) 954 Administration fee 86 441 - 527 Transfer agent fee 11 57 - 68 Custodian fees 4 15 - 19 Legal and audit fees 44 55 (44)(b) 55 Registration and filing fees 2 3 (2)(b) 3 Trustees' fees and expenses 24 24 (24)(b) 24 Printing expense 16 20 (15)(b) 21 Other 4 21 107 (b),(c) 132 -------------------------------------------- --------- Subtotal 385 1,436 (18) 1,803 -------------------------------------------- --------- Shareholder servicing and distribution fees: Investor A Shares 5 44 - 49 Investor B Shares 168 52 - 220 Investor C Shares 2 3 - 5 -------------------------------------------- --------- Total expenses 560 1,535 (18) 2,077 -------------------------------------------- --------- Fees waived and/or expenses reimbursed by investment advisor, administrator, and/or distributor (150) (435) (22)(c),(d) (607) -------------------------------------------- --------- Net Expenses 410 1,100 (40) 1,470 -------------------------------------------- --------- Net Investment Income 1,625 9,158 40 10,823 -------------------------------------------- --------- Net Realized And Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) on investments - 197 197 Net change in unrealized appreciation/ (depreciation) of investments 2,023 6,800 8,823 --------------------------------------------- --------- Net realized and unrealized gain/(loss) on investments 2,023 6,997 9,020 --------------------------------------------- --------- Net Increase/(Decrease) in Net Assets Resulting From Operations $3,648 $16,155 $ 40 $19,843 ============================================= =========
Legend: - ------- (a) Reflects adjustment to the acquiring fund's contractual fee obligations. (b) Adjustment reflects expected savings when the two funds become one. (c) Adjustment reflects estimated costs of Reorganization. (d) Adjustment reflects reduction in fund level expenses as a result of the lower fund level expense cap. See Notes to Pro Forma Financial Statements Nations Maryland Municipal Bond Fund Nations Maryland Intermediate Municipal Bond Fund Nations Maryland Intermediate Municipal Bond Fund (acquiring) Notes to Pro Forma Combining Financial Statements (unaudited) 1. Basis of Combination The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange described in the next paragraph occurred as of September 30, 2001 and the unaudited Pro Forma Combining Statement of Operations for the year ended September 30, 2001 assumes the exchange occurred as of October 1, 2000. These statements have been derived from books and records utilized in calculating daily net asset value of each fund at September 30, 2001 and for the twelve month period then ended. The pro forma statements give effect to the proposed reorganization (the "Reorganization") of Nations Maryland Municipal Bond Fund ("Maryland Municipal Bond Fund") and Nations Maryland Intermediate Municipal Bond Fund ("Maryland Intermediate Municipal Bond Fund") into Nations Maryland Intermediate Municipal Bond Fund (acquiring) (the "Acquiring Fund"). The Reorganization provides for the transfer of the assets and liabilities of Maryland Municipal Bond Fund and Maryland Intermediate Municipal Bond Fund to the Acquiring Fund, in exchange for shares of equal value of designated classes of the Acquiring Fund. The Reorganization is expected to be done on a tax-free basis whereby the Acquiring Fund will assume the market value and cost basis of the portfolio positions in the Maryland Municipal Bond Fund and Maryland Intermediate Municipal Bond Fund and the results of operations of Maryland Municipal Bond Fund and Maryland Intermediate Municipal Bond Fund for pre-combination periods will not be restated. It is not expected that the investment adviser or sub-adviser will sell any securities of either acquired fund, in anticipation of or as a result of the Reorganization, other than in the normal course of business. The Funds will only bear the expenses of the Reorganization if those expenses do not exceed certain expense "caps" that have been put in place by the investment adviser. Because of these caps, it is not expected that the Funds will bear the costs associated with the Reorganization, including solicitation costs. 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 Acquiring Fund, with certain expenses adjusted to reflect the expected expenses of the Acquiring Fund. Nations North Carolina Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) September 30, 2001
Nations North Carolina Nations Intermediate Nations North Nations Municipal North Carolina Nations North Bond Carolina Intermediate North Carolina Fund Municipal Municipal Combined Carolina Intermediate(acquiring) Bond Bond Pro Municipal Municipal Combined Fund Fund Forma Bond Bond Pro Principal Principal Principal Moody's Fund* Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - 97.9% North Carolina- 97.9% $1,000 $- $1,000 Charlotte, North Carolina, GO, Series 2000, 5.500% 06/01/12 Aaa AAA $1,104 $- $1,104 525 525 Charlotte, North Carolina, Health Care Systems Revenue, Unrefunded Balance, (Mecklenburg Hospital Authority Project) Series 1992, 6.250% 01/01/20 Aa3 AA 537 - 537 975 975 Charlotte-Mecklenburg Hospital Authority, Revenue, Series 1992, Prerefunded 01/01/02 @ 102, 6.250% 01/01/20 Aa3 AA 1,005 - 1,005 1,000 1,000 Craven County, North Carolina, Industrial Facilities and Pollution Control Financing Authority, PCR Refunding, (Weyerhaeuser Company Project) Series 1992, 6.350% 01/01/10 NR A- 1,034 - 1,034 1,000 1,000 Cumberland County, North Carolina, GO, Series 1998, (FGIC Insured), 5.000% 03/01/17 Aaa AAA 1,024 - 1,024 1,305 1,305 Greensboro, North Carolina, Combined Enterprise Systems Revenue, Series 1998A, 5.500% 06/01/08 Aa3 AA- 1,436 - 1,436 1,000 1,000 Greensboro, North Carolina, Public Improvement GO, Series 1998, 4.700% 04/01/10 Aa1 AAA 1,052 - 1,052 1,000 1,000 Greenville, North Carolina, Utilities Commission Revenue, Series 2000A, (MBIA Insured), 5.500% 09/01/19 Aaa AAA 1,042 - 1,042 1,000 1,000 Haywood County, North Carolina, Industrial Facilities and Pollution Control Financing Authority, Solid Waste Disposal Revenue Refunding, (Champion International Corporation Project) Series 1999, AMT, 6.400% 11/01/24 Baa2 NR 1,044 - 1,044 1,000 1,000 Haywood County, North Carolina, Industrial Facilities and Pollution Control Financing Authority, Solid Waste Disposal Revenue, (Champion International Corporation Project) Series 1993, AMT, 5.500% 10/01/18 Baa2 BBB 972 - 972 1,925 1,925 Johnston County, North Carolina, GO, Series 2000, (FGIC Insured), 5.500% 03/01/15 Aaa AAA 2,088 - 2,088 2,000 2,000 Martin County, North Carolina, Industrial Facilities and Pollution Control Financing Authority, Solid Waste Disposal Revenue,(Weyerhaeuser Company Project) Series 1993, AMT, 5.650% 12/01/23 A3 A- 1,946 - 1,946 1,000 1,000 Mecklenburg County, North Carolina, GO Refunding, Series 1993, 6.000% 04/01/11 Aaa AAA 1,157 - 1,157 2,000 2,000 Mecklenburg County, North Carolina, Industrial Facilities and Pollution Control Financing Authority, Revenue Refunding, (Fluor Corporation Project) Series 1993, 5.250% 12/01/09 NR A 2,043 - 2,043 1,000 1,000 Monroe, North Carolina, Combined Enterprise Systems, Revenue, Series 1994, Prerefunded 03/01/04 @102, 6.000% 03/01/14 A3 A 1,094 - 1,094 1,000 1,000 Morganton, North Carolina, Water and Sewer GO, Series 1995, (FGIC Insured), 5.600% 06/01/10 Aaa AAA 1,072 - 1,072 500 500 New Hanover County, North Carolina, GO, Series 2001, 4.600% 06/01/14 Aa2 AA- 506 - 506 1,000 1,000 New Hanover County, North Carolina, Industrial Facilities and Pollution Control Financing Authority, Solid Waste Disposal Revenue, (Occidental Petroleum Corporation Project) Series 1994, AMT, 6.500% 08/01/14 Baa3 BBB 1,025 - 1,025 1,000 1,000 North Carolina, Appalachian State University, Revenue Refunding, Series 1998, (MBIA Insured), 5.000% 05/15/18 Aaa AAA 1,008 - 1,008 1,210 1,210 North Carolina, Housing Finance Agency, (Home Ownership Project) Series 1998A, AMT, 5.200% 01/01/20 Aa2 AA 1,218 - 1,218 1,130 1,130 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Gaston Memorial Hospital Project) Series 1995, (AMBAC-TCRS Insured), 5.250% 02/15/07 Aaa AAA 1,219 - 1,219 860 860 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Halifax Regional Medical Center, Inc. Project) Series 1998, 4.600% 08/15/06 Baa1 NR 854 - 854
Nations North Carolina Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001
Nations North Nations Carolina Nations North Nations Nations Intermediate North Carolina North North Municipal Carolina Intermediate Carolina Carolina Bond Municipal Municipal Combined Bond Intermediate(acquiring) Bond Bond Pro Fund Municipal Combined Fund Fund Forma Municipal Bond Pro Principal Principal Principal Moody's Fund* Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - 97.9% North Carolina - (continued) 1,500 $ - $1,500 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Pitt County Memorial Hospital Project) Series 1998B, 4.750% 12/01/28 Aa3 AA- $1,378 $- $1,378 1,000 1,000 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Rex Hospital, Inc. Project) Series 1993, Prerefunded 06/01/03 @ 102, 6.250% 06/01/17 Aaa A+ 1,082 - 1,082 1,000 1,000 North Carolina, Medical Care Commission, Hospital Revenue, (Pitt County Memorial Hospital Project) Series 1998B, 5.000% 12/01/18 Aa3 AA- 985 - 985 1,000 1,000 North Carolina, Municipal Power Agency Number 1, Revenue Refunding, (Catawba Electric Project) Series 1992, (FGIC Insured), 6.200% 01/01/18 Aaa AAA 1,055 - 1,055 1,500 1,500 Onslow County, North Carolina, Combined Enterprise Systems, Revenue, Series 1994, (MBIA Insured), 5.875% 06/01/09 Aaa AAA 1,629 - 1,629 1,000 1,000 Orange County, North Carolina, GO, Series 1994, 5.500% 02/01/14 Aa1 AA+ 1,043 - 1,043 1,000 1,000 Orange County, North Carolina, GO, Series 2000, 5.300% 04/01/17 Aa1 AA+ 1,053 - 1,053 1,000 1,000 Pitt County, North Carolina, Certificates of Participation,(School Facilities Project) Series 2000B, 5.500% 04/01/25 Aaa AAA 1,037 - 1,037 1,000 1,000 Pitt County, North Carolina, Hospital Revenue, (Pitt County Memorial Hospital Project) Series 1995, 5.250% 12/01/21 Aaa NR 1,016 - 1,016 1,000 1,000 Randolph County, North Carolina, Certificates of Participation, Series 2000, (FSA Insured), 5.500% 06/01/15 Aaa AAA 1,067 - 1,067 1,000 1,000 Randolph County, North Carolina, Certificates of Participation, Series 2000, (FSA Insured), 5.750% 06/01/22 Aaa AAA 1,060 - 1,060 1,000 1,000 Wake County, North Carolina, GO, Series 2001B, 4.500% 02/01/14 Aaa AAA 1,002 - 1,002 1,000 1,000 Wilmington, North Carolina, Water Authority, GO, Series 1994, 5.700% 06/01/15 Aa3 AA- 1,049 - 1,049 1,000 1,000 Wilson, North Carolina, GO, Series 2000, (AMBAC Insured), 5.100% 06/01/14 Aaa AAA 1,061 - 1,061 Total municipal bonds and notes ------------------------- (Cost $ 38,417 and $0, respectively) 40,997 - 40,997 Shares Shares Shares ------------------------- (000) (000) (000) - -------------------------- Investment companies - 2.0% 839 - 839 (Cost $839 and $0, respectively) ------------------------- 839 839 Nations Municipal Reserves# Total investments - 99.9% $41,836 - $41,836 (Cost $39,256 and $0, respectively) ------------------------- - ---------- * If the North Carolina Municipal Bond Fund approves the Reorganization, and the North Carolina Intermediate Municipal Bond Fund does not, the North Carolina Municipal Bond Fund will be reorganized into an Acquiring Fund that is an intermediate-term municipal bond fund. In this event, the management team will,in all likelihood, be required to sell a significant portion of the North Carolina Municipal Bond Fund's longer-term municipal bonds (either in anticipation of or after the Reorganization) and purchase new intermediate-term municipal bonds in order to abide by the Acquiring Fund's investment objective and principal investment strategies. # Money market mutual fund registered under the Investment Company Act of 1940,as amended, and sub-advised by Banc of America Capital Management, LLC.
Nations North Carolina Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Net Assets (unaudited) September 30, 2001
Nations North Carolina Intermediate Nations Municipal Nations North Carolina Bond Fund North Carolina Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ----------------------------------------- ------------ Total Investments $ 41,836 $ -- $ -- $ 41,836 Other Assets and Liabilities: Cash 1 -- -- 1 Interest receivable 638 -- -- 638 Receivable from investment advisor -- -- 42 (a) 42 Payable for Fund shares redeemed (369) -- -- (369) Investment advisory fee payable (1) -- -- (1) Administration fee payable (7) -- -- (7) Shareholder servicing and distribution fees payable (22) -- -- (22) Distributions payable (147) -- -- (147) Accrued Trustees' fees and expenses (38) -- -- (38) Accrued expenses and other liabilities (27) -- (42)(a) (69) ----------------------------------------- ------------ Total Other Assets and Liabilities 28 -- -- 28 ----------------------------------------- ------------ Net Assets $ 41,864 $ -- $ -- $ 41,864 ========================================= ============ Net Assets by Class: Primary A $ 22,635,827 $ -- $ -- $ 22,635,827 Investor A 3,402,540 -- -- 3,402,540 Investor B 15,644,691 -- -- 15,644,691 Investor C 181,435 -- -- 181,435 ----------------------------------------- ------------ $ 41,864,493 $ -- $ -- $ 41,864,493 ----------------------------------------- ------------ Shares Outstanding by Class: Primary A 2,249,741 -- -- 2,249,741 Investor A 338,264 -- -- 338,264 Investor B 1,554,916 -- -- 1,554,916 Investor C 18,037 -- -- 18,037 ----------------------------------------- ------------ 4,160,958 -- -- 4,160,958 ----------------------------------------- ------------ Net Asset Value per Share by Class: Primary A $ 10.06 $ -- $ -- $ 10.06 Investor A $ 10.06 $ -- $ -- $ 10.06 Investor B $ 10.06 $ -- $ -- $ 10.06 Investor C $ 10.06 $ -- $ -- $ 10.06
(a) Adjustment reflects estimated costs of Reorganization. See Notes to Pro Forma Financial Statements Nations North Carolina Municipal Bond Fund / Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Operations (unaudited) Twelve Month Period Ending September 30, 2001
Nations North Carolina Intermediate Nations Municipal Nations North Carolina Bond Fund North Carolina Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) -------------------------------------------- ---------- Investment Income: Interest $ 2,189 $ -- $ -- $ 2,189 -------------------------------------------- ---------- Expenses: Investment advisory fee 205 -- (42)(a) 163 Administration fee 90 -- -- 90 Transfer agent fee 11 -- -- 11 Custodian fees 4 -- -- 4 Legal and audit fees 45 -- -- 45 Registration and filing fees 2 -- -- 2 Trustees' fees and expenses 24 -- -- 24 Printing expense 14 -- -- 14 Other 4 -- 44 (b) 48 -------------------------------------------- ---------- Subtotal 399 -- 2 401 -------------------------------------------- ---------- Shareholder servicing and distribution fees: Investor A Shares 6 -- -- 6 Investor B Shares 168 -- -- 168 Investor C Shares 2 -- -- 2 -------------------------------------------- ---------- Total expenses 575 -- 2 577 -------------------------------------------- ---------- Fees waived and/or expenses reimbursed by investment advisor, administrator, and/or distributor (152) -- (44)(b) (196) -------------------------------------------- ---------- Net Expenses 423 -- (42) 381 -------------------------------------------- ---------- Net Investment Income 1,766 -- 42 1,808 -------------------------------------------- ---------- Net Realized And Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) on investments 152 -- 152 Net change in unrealized appreciation/ (depreciation) of investments 1,589 -- 1,589 -------------------------------------------- ---------- Net realized and unrealized gain/(loss) on investments 1,741 -- 1,741 -------------------------------------------- ---------- Net Increase/(Decrease) in Net Assets Resulting From Operations $3,507 $ -- $ 42 $ 3,549 ============================================ ========== Legend: (a) Reflects adjustment to the acquiring fund's contractual fee obligations. (b) Adjustment reflects estimated costs of Reorganization.
See Notes to Pro Forma Financial Statements Nations North Carolina Municipal Bond Fund Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Notes to Pro Forma Combining Financial Statements (unaudited) 1. Basis of Combination The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange described in the next paragraph occurred as of September 30, 2001 and the unaudited Pro Forma Combining Statement of Operations for the year ended September 30, 2001 assumes the exchange occurred as of October 1, 2000. These statements have been derived from books and records utilized in calculating daily net asset value of each fund at September 30, 2001 and for the twelve month period then ended. The proforma statements give effect to the proposed reorganization ("Reorganization") of Nations North Carolina Municipal Bond Fund (the "Fund") and Nations North Carolina Intermediate Municipal Bond Fund (acquiring) (the "Acquiring Fund"). The Reorganization provides for the transfer of the assets and liabilities of the Fund to the Acquiring Fund,in exchange for shares of equal value of designated classes of the Acquiring Fund. The Reorganization is expected to be done on a tax-free basis whereby the Acquiring Fund will assume the market value and cost basis of the portfolio positions in the Fund and the results of operations of the Fund for pre-combination periods will not be restated. These financial statements present the Reorganization of the Fund into the Acquiring Fund. It is possible that both Nations North Carolina Municipal Bond Fund and Nations North Carolina Intermediate Municipal Bond Fund approve the Reorganization - that scenario is shown after these notes. The Funds will only bear the expenses of the Reorganization if those expenses do not exceed certain expense "caps" that have been put in place by the investment adviser. Because of these caps, it is not expected that the Funds will bear the costs associated with the Reorganization, including solicitation costs. 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 the Fund and the Acquiring Fund, with certain expenses adjusted to reflect the expected expenses of the Acquiring Fund.
Nations North Carolina Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) September 30, 2001 Nations North Carolina Nations Intermediate Nations North Nations Municipal North Carolina North Bond Carolina Intermediate Nations Carolina Fund Municipal Municipal Combined North Carolina Intermediate (acquiring) Bond Bond Pro Municipal Municipal Combined Fund Fund Forma Bond Bond Pro Principal Principal Principal Fund Fund Forma amount amount amount Moody's S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - -------------------------------------------------------------------------------------------------------------------------------- Municipal bonds and notes - 97.4% North Carolina - 95.7% $ - $ 1,000 $ 1,000 Brunswick County, North Carolina, Certificates of Participation, Series 2000, 5.500% 06/01/20 Aaa AAA $ - $1,041 $ 1,041 1,000 1,000 Buncombe County, North Carolina, GO Refunding, Series 1993, Prerefunded 07/01/02 @ 102, 5.000% 03/01/03 Aa2 AA 1,036 1,036 5 5 Buncombe County, North Carolina, Metropolitan Sewer District, Sewer System Revenue, Unrefunded Balance, Series 1992B, 6.750% 07/01/16 A1 NR 5 5 2,000 2,000 Cabarrus County, North Carolina, Certificates of Participation, Installment Financing Contract, Series 2001, 5.500% 04/01/13 Aa3 AA- 2,184 2,184 1,500 1,500 Cabarrus County, North Carolina, GO, (MBIA Insured), 5.300% 02/01/13 Aaa AAA 1,592 1,592 1,200 1,200 Charlotte, North Carolina, Airport Revenue, Series 1999B, AMT, (MBIA Insured), 4.750% 07/01/05 Aaa AAA 1,258 1,258 1,275 1,275 Charlotte, North Carolina, Airport Revenue, Series 1999B, AMT, (MBIA Insured), 4.850% 07/01/06 Aaa AAA 1,343 1,343 1,260 1,260 Charlotte, North Carolina, Airport Revenue, Series 1999B, AMT, (MBIA Insured), 5.000% 07/01/07 Aaa AAA 1,333 1,333 1,000 1,000 Charlotte, North Carolina, Airport Revenue, Series 1999B, AMT, (MBIA Insured), 6.000% 07/01/24 Aaa AAA 1,069 1,069 1,000 1,000 Charlotte, North Carolina, GO, Series 2000, 5.500% 06/01/12 Aaa AAA 1,104 1,104 1,000 1,000 Charlotte, North Carolina, GO Refunding, Series 1993, 4.500% 02/01/03 Aaa AAA 1,028 1,028 1,240 1,240 Charlotte, North Carolina, Health Care Systems Revenue, Unrefunded Balance, (Mecklenburg Hospital Authority Project) Series 1992, 6.375% 01/01/09 Aa3 AA 1,276 1,276 525 425 950 Charlotte, North Carolina, Health Care Systems Revenue, Unrefunded Balance, (Mecklenburg Hospital Authority Project) Series 1992, 6.250% 01/01/20 Aa3 AA 537 435 972 1,000 1,000 Charlotte, North Carolina, Water and Sewer GO, Series 1994, Prerefunded 02/01/04 @ 102, 5.800% 02/01/16 Aaa AAA 1,088 1,088 1,670 1,670 Charlotte, North Carolina, Water and Sewer GO, Series 1996, 5.500% 05/01/06 Aaa AAA 1,831 1,831 1,855 1,855 Charlotte, North Carolina, Water and Sewer GO, Series 1998, 4.750% 02/01/12 Aaa AAA 1,942 1,942 2,545 2,545 Charlotte, North Carolina, Water and Sewer Systems Revenue, Series 1999, 5.375% 06/01/19 Aa1 AAA 2,631 2,631 2,000 2,000 Charlotte-Mecklenburg Hospital Authority, Revenue, (Carolinas Healthcare System Project) Series 1997A, 5.000% 01/15/17 Aa3 AA 1,994 1,994 4,500 4,500 Charlotte-Mecklenburg Hospital Authority, Revenue, (Carolinas Healthcare System Project) Series 1997A, 5.125% 01/15/22 Aa3 AA 4,458 4,458 760 760 Charlotte-Mecklenburg Hospital Authority, Revenue, Series 1992, Prerefunded 01/01/02 @ 102, 6.375% 01/01/09 Aa3 AA 783 783 975 (a) 705 1,680 Charlotte-Mecklenburg Hospital Authority, Revenue, Series 1992, Prerefunded 01/01/02 @ 102, 6.250% 01/01/20 Aa3 AA 1,005 726 1,731 2,500 2,500 Cleveland County, North Carolina, GO Refunding, Series 1993, (FGIC Insured), 5.100% 06/01/02 Aaa AAA 2,549 2,549 1,000 1,000 Cleveland County, North Carolina, GO Refunding, Series 1993, (FGIC Insured), 5.100% 06/01/05 Aaa AAA 1,043 1,043
Nations North Carolina Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations North Carolina Nations Intermediate Nations North Nations Municipal North Carolina Nations North Bond Carolina Intermediate North Carolina Fund Municipal Municipal Combined Carolina Intermediate (acquiring) Bond Bond Pro Municipal Municipal Combined Fund Fund Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount Description S&P Value Value Value (000) (000) (000) Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) North Carolina - (continued) $ - $ 2,000 $ 2,000 Coastal Regional Solid Waste Management Authority, North Carolina, Solid Waste Disposal System Revenue, Series 1992, Prerefunded 06/01/02 @ 102, 6.300% 06/01/04 A3 BBB+ $ - $ 2,095 $ 2,095 1,490 1,490 Concord, North Carolina, Certificate of Participation, Series 2001, (MBIA Insured), 5.000% 06/01/17 Aaa AAA 1,505 1,505 500 500 Concord, North Carolina, GO Refunding, Series 1992, 6.200% 06/01/05 Aa2 AA- 520 520 1,000 1,000 Concord, North Carolina, Utilities System Revenue, Series 1993, (MBIA Insured), 5.200% 12/01/02 Aaa AAA 1,034 1,034 1,000 1,000 Craven County, North Carolina, Industrial Facilities and Pollution Control Financing Authority, PCR Refunding, (Weyerhaeuser Company Project) Series 1992, 6.350% 01/01/10 NR A- 1,034 1,034 1,000 1,000 Cumberland County, North Carolina, GO, Series 1998, (FGIC Insured), 5.000% 03/01/17 Aaa AAA 1,024 1,024 2,120 2,120 Cumberland County, North Carolina, GO Refunding, Series 1998, (FGIC Insured), 4.750% 02/01/10 Aaa AAA 2,228 2,228 1,720 1,720 Durham and Wake County, North Carolina, Special Apartment District, GO Refunding, Series 1992, 5.750% 04/01/03 Aaa AAA 1,758 1,758 2,300 2,300 Durham and Wake County, North Carolina, Special Apartment District, GO Refunding, Series 1993, 5.000% 04/01/03 Aaa AAA 2,381 2,381 1,500 1,500 Durham County, North Carolina, GO Refunding, Series 1992, 5.200% 03/01/07 Aaa AAA 1,540 1,540 2,000 2,000 Durham County, North Carolina, GO, Series 1992, Prerefunded 02/01/02 @ 102, 5.750% 02/01/06 Aaa AAA 2,064 2,064 1,000 1,000 Durham, North Carolina, Water and Sewer Utility System, Revenue, Series 2001, 5.250% 06/01/16 Aa3 AA 1,044 1,044 1,150 1,150 Fayetteville, North Carolina, Public Works Commission, Revenue Refunding, Series 1997, (FSA Insured), 5.250% 03/01/07 Aaa AAA 1,244 1,244 2,000 2,000 Forsyth County, North Carolina, GO Refunding, Series 1993A, 4.750% 03/01/06 Aaa AAA 2,089 2,089 1,305 1,305 Greensboro, North Carolina, Combined Enterprise Systems Revenue, Series 1998A, 5.500% 06/01/08 Aa3 AA- 1,436 1,436 1,000 1,000 Greensboro, North Carolina, Combined Enterprise Systems Revenue, Series 1998A, 5.000% 06/01/18 Aa3 AA- 1,006 1,006 1,000 1,000 Greensboro, North Carolina, Public Improvement GO, Series 1998, 4.700% 04/01/10 Aa1 AAA 1,052 1,052 2,000 2,000 Greenville, North Carolina, Combined Enterprise Systems Revenue, Series 1994, 6.000% 09/01/10 A2 A+ 2,188 2,188 1,000 1,000 Greenville, North Carolina, Utilities Commission Revenue, Series 2000A, (MBIA Insured), 5.500% 09/01/19 Aaa AAA 1,042 1,042 2,000 2,000 Halifax County, North Carolina, Industrial Facilities and Pollution Control Financing Authority, Revenue, (International Paper Company Project) Series 2001A, AMT, 5.900% 09/01/25 Baa2 BBB 1,993 1,993 1,000 3,000 4,000 Haywood County, North Carolina, Industrial Facilities and Pollution Control Financing Authority, Solid Waste Disposal Revenue Refunding, (Champion International Corporation Project) Series 1999, AMT, 6.400% 11/01/24 Baa2 NR 1,044 3,132 4,176 1,000 1,000 2,000 Haywood County, North Carolina, Industrial Facilities and Pollution Control Financing Authority, Solid Waste Disposal Revenue, (Champion International Corporation Project) Series 1993, AMT, 5.500% 10/01/18 Baa2 BBB 972 972 1,944
Nations North Carolina Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations North Carolina Nations Intermediate Nations North Nations Municipal North Carolina Nations North Bond Carolina Intermediate North Carolina Fund Municipal Municipal Combined Carolina Intermediate (acquiring) Bond Bond Pro Municipal Municipal Combined Fund Fund Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount Description S&P Value Value Value (000) (000) (000) Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) North Carolina - (continued) $ - $ 1,095 $ 1,095 Iredell County, North Carolina, GO, Series 1997, 4.750% 02/01/16 Aa3 A+ $ - $ 1,095 $ 1,095 1,955 1,955 Iredell County, North Carolina, Public Facilities Corporate Installment Payment Revenue, (School Projects) Series 2000, (AMBAC Insured), 5.500% 06/01/09 Aaa NR 2,155 2,155 2,180 2,180 Iredell County, North Carolina, Public Facilities Corporate Installment Payment Revenue, (School Projects) Series 2000, (AMBAC Insured), 5.125% 06/01/18 Aaa NR 2,217 2,217 1,305 1,305 Johnston County, North Carolina, GO, Series 2000, (FGIC Insured), 5.500% 03/01/12 Aaa AAA 1,433 1,433 1,925 1,925 Johnston County, North Carolina, GO, Series 2000, (FGIC Insured), 5.500% 03/01/15 Aaa AAA 2,088 2,088 2,700 2,700 Johnston County, North Carolina, GO, Series 2000, (FGIC Insured), 5.500% 03/01/16 Aaa AAA 2,909 2,909 1,160 1,160 Lee County, North Carolina, GO, Series 1992, 6.000% 02/01/06 A1 A+ 1,193 1,193 575 575 Lower Cape Fear, North Carolina, Water and Sewer Authority, Revenue, Series 1993, AMT, 5.200% 03/01/04 A2 BBB 600 600 2,000 2,000 Martin County, North Carolina, Industrial Facilities and Pollution Control Financing Authority, Solid Waste Disposal Revenue, (Weyerhaeuser Company Project) Series 1993, AMT, 5.650% 12/01/23 A3 A- 1,946 1,946 1,800 1,800 Mecklenburg County, North Carolina, GO, Series 2000D, 5.000% 04/01/11 Aaa AAA 1,928 1,928 1,000 1,000 Mecklenburg County, North Carolina, GO Refunding, Series 1993, 6.000% 04/01/11 Aaa AAA 1,157 1,157 2,000 1,000 3,000 Mecklenburg County, North Carolina, Industrial Facilities and Pollution Control Financing Authority, Revenue Refunding, (Fluor Corporation Project) Series 1993, 5.250% 12/01/09 NR A 2,043 1,022 3,065 1,000 1,000 Monroe, North Carolina, Combined Enterprise Systems, Revenue, Series 1994, Prerefunded 03/01/04 @102, 6.000% 03/01/14 A3 A 1,094 1,094 1,000 1,000 Morganton, North Carolina, Water and Sewer GO, Series 1995, (FGIC Insured), 5.600% 06/01/10 Aaa AAA 1,072 1,072 1,195 1,195 Morganton, North Carolina, Water and Sewer GO, Series 1995, (FGIC Insured), 5.700% 06/01/11 Aaa AAA 1,280 1,280 2,220 2,220 New Hanover County, North Carolina, GO, Series 1995, 5.500% 03/01/10 Aa2 AA- 2,366 2,366 1,725 1,725 New Hanover County, North Carolina, GO, Series 2000, 5.300% 11/01/02 Aa2 AA- 1,782 1,782 500 1,250 1,750 New Hanover County, North Carolina, GO, Series 2001, 4.600% 06/01/14 Aa2 AA- 506 1,265 1,771 2,000 2,000 New Hanover County, North Carolina, GO, Series 2001, 5.000% 06/01/17 Aa2 AA- 2,057 2,057 1,000 1,000 New Hanover County, North Carolina, Industrial Facilities and Pollution Control Financing Authority, Solid Waste Disposal Revenue, (Occidental Petroleum Corporation Project) Series 1994, AMT, 6.500% 08/01/14 Baa3 BBB 1,025 1,025 4,000 4,000 North Carolina State, GO, Series 1997A, 5.100% 03/01/06 Aaa AAA 4,306 4,306 2,550 2,550 North Carolina State, GO, Series 1999, 4.500% 04/01/02 Aaa AAA 2,580 2,580 5,000 5,000 North Carolina State, GO, Series 2001A, 4.750% 03/01/14 Aaa AAA 5,138 5,138 1,000 1,000 North Carolina, Appalachian State University, Revenue Refunding, Series 1998, (MBIA Insured), 5.000% 05/15/18 Aaa AAA 1,008 1,008 2,165 2,165 North Carolina, Eastern Municipal Power Authority, Revenue, Series 1986A, 5.000% 01/01/17 Aaa BBB 2,239 2,239 1,000 1,000 North Carolina, Educational Facilities Finance Agency, Revenue, (Duke University Project) Series 1991C, AMT, 6.625% 10/01/08 Aa1 AA+ 1,023 1,023
Nations North Carolina Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited)(continued) September 30, 2001 Nations North Carolina Nations Intermediate Nations North Nations Municipal North Carolina Nations North Bond Carolina Intermediate North Carolina Fund Municipal Municipal Carolina Intermediate (acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) North Carolina - (continued) $ 1,210 $ - $ 1,210 North Carolina, Housing Finance Agency, (Home Ownership Project) Series 1998A, AMT, 5.200% 01/01/20 Aa2 AA $ 1,218 $ - $ 1,218 1,750 1,750 North Carolina, Housing Finance Agency, (Home Ownership Project) Series 2000A-8, AMT, 5.950% 07/01/10 Aa2 AA 1,923 1,923 1,210 1,210 North Carolina, Housing Finance Agency, (Home Ownership Project) Series 2000A-8, AMT, 6.050% 07/01/12 Aa2 AA 1,317 1,317 1,950 1,950 North Carolina, Housing Finance Agency, Multi-Family Housing Revenue Refunding, Series 1992B, (FHA COLL), 6.900% 07/01/24 Aa2 NR 2,034 2,034 990 990 North Carolina, Housing Finance Agency, Revenue, (Home Ownership Project) Series 1999A-6, AMT, 6.000% 01/01/16 Aa2 AA 1,050 1,050 1,500 1,500 North Carolina, Housing Finance Agency, Revenue, Series 1999A-3, AMT 5.150% 01/01/19 Aa2 AA 1,499 1,499 4,000 4,000 North Carolina, Housing Finance Agency, Single-Family Housing Revenue, (Home Ownership Project) Series 1998A-1, AMT, 5.350% 01/01/17 Aa2 AA 4,106 4,106 580 580 North Carolina, Housing Finance Agency, Single-Family Housing Revenue, Series 1991R, (FHA COLL), 6.350% 03/01/03 Aa2 AA 591 591 585 585 North Carolina, Housing Finance Agency, Single-Family Housing Revenue, Series 1991R, (FHA COLL), 6.350% 09/01/03 Aa2 AA 600 600 805 805 North Carolina, Housing Finance Agency, Single-Family Housing Revenue, Series 1994Y, 6.300% 09/01/15 Aa2 AA 837 837 2,500 2,500 North Carolina, Housing Finance Agency, Student Housing Revenue, (Appalachian Student Housing Project) Series 2000A, (First Union National Bank LOC), Mandatory Put 09/01/03 @ 100, 4.750% 07/01/31 Aa3 NR 2,560 2,560 2,985 2,985 North Carolina, Housing Financing Agency, Series 1999A-5, AMT, 5.550% 01/01/19 Aa2 AA 3,056 3,056 2,605 2,605 North Carolina, Medical Care Commission, Health Care Facilities Revenue Refunding, (Novant Health, Inc. Project) Series 1998A, (MBIA Insured), 5.000% 10/01/08 Aaa AAA 2,783 2,783 2,000 2,000 North Carolina, Medical Care Commission, Health Care Facilities Revenue Refunding, (Presbyterian Health Care Services Project) Series 1993, 5.250% 10/01/04 A1 AA- 2,122 2,122 1,000 1,000 North Carolina, Medical Care Commission, Health Care Facilities Revenue Refunding, (Presbyterian Health Care Services Project) Series 1993, 5.300% 10/01/05 A1 AA- 1,057 1,057 3,000 3,000 North Carolina, Medical Care Commission, Health Care Facilities Revenue Refunding, (Presbyterian Health Care Services Project) Series 1993, 5.500% 10/01/14 A1 AA- 3,082 3,082 2,000 2,000 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Carolina Medicorp Inc. Project) Series 1996, 5.100% 05/01/07 A1 AA- 2,128 2,128 1,715 1,715 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Carolina Medicorp Inc. Project) Series 1996, 5.125% 05/01/08 A1 AA- 1,807 1,807 2,000 2,000 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Duke University Hospital Project) Series 1996C, 5.250% 06/01/17 Aa3 AA 2,020 2,020 2,000 2,000 North Carolina, Medical Care Commission, Health Care Facilitiies Revenue, (Gaston Memorial Hospital Project) Series 1995, (AMBAC-TCRS Insured), 5.000% 02/15/05 Aaa AAA 2,120 2,120 1,130 1,130 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Gaston Memorial Hospital Project) Series 1995, (AMBAC-TCRS Insured), 5.250% 02/15/07 Aaa AAA 1,219 1,219
Nations North Carolina Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations North Carolina Nations Intermediate Nations North Nations Municipal North Carolina Nations North Bond Carolina Intermediate North Carolina Fund Municipal Municipal Combined Carolina Intermediate (acquiring) Bond Bond Pro Municipal Municipal Combined Fund Fund Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount Description S&P Value Value Value (000) (000) (000) Ratings (000) (000) (000) - ----------------------------------------------------------------------------------------------------------------------------------- Municipal bonds and notes - (continued) North Carolina - (continued) $ 860 $ - $ 860 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Halifax Regional Medical Center, Inc. Project) Series 1998, 4.600% 08/15/06 Baa1 NR $ 854 $ - $ 854 1,795 1,795 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Halifax Regional Medical Center, Inc. Project) Series 1998, 4.600% 08/15/07 Baa1 NR 1,765 1,765 1,500 1,500 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Moore Regal Hospital Project) Series 1993, 5.200% 10/01/13 Aa3 AA- 1,531 1,531 1,500 1,500 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Pitt County Memorial Hospital Project) Series 1998B, 4.750% 12/01/28 Aa3 AA- 1,378 1,378 1,930 1,930 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Rex Hospital, Inc. Project) Series 1993, 5.400% 06/01/02 A1 A+ 1,968 1,968 1,620 1,620 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Rex Hospital, Inc. Project) Series 1993, Prerefunded 06/01/03 @ 102, 5.600% 06/01/04 Aaa A+ 1,736 1,736 1,000 3,000 4,000 North Carolina, Medical Care Commission, Health Care Facilities Revenue, (Rex Hospital, Inc. Project) Series 1993, Prerefunded 06/01/03 @ 102, 6.250% 06/01/17 Aaa A+ 1,082 3,247 4,329 1,000 1,000 North Carolina, Medical Care Commission, Hospital Revenue Refunding, (Stanley Memorial Hospital Project) Series 1996, (AMBAC Insured), 5.250% 10/01/06 Aaa AAA 1,084 1,084 1,000 1,000 North Carolina, Medical Care Commission, Hospital Revenue, (Pitt County Memorial Hospital Project) Series 1998B, 5.000% 12/01/18 Aa3 AA- 985 985 1,000 1,000 North Carolina, Municipal Power Agency Number 1, Revenue Refunding, (Catawba Electric Project) Series 1992, (FGIC Insured), 6.200% 01/01/18 Aaa AAA 1,055 1,055 2,000 2,000 North Carolina, Municipal Power Agency Number 1, Revenue, Series 1992, (MBIA-IBC Insured), 7.250% 01/01/07 Aaa AAA 2,337 2,337 1,000 1,000 North Carolina, State Education Assistance Authority, Revenue, Series 1995A, AMT, (GTD STD LNS), 5.300% 07/01/03 A2 NR 1,037 1,037 1,500 1,500 Onslow County, North Carolina, Combined Enterprise Systems, Revenue, Series 1994, (MBIA Insured), 5.875% 06/01/09 Aaa AAA 1,629 1,629 1,625 1,625 Orange County, North Carolina, GO, Series 1994, 5.500% 02/01/12 Aa1 AA+ 1,756 1,756 1,000 1,000 Orange County, North Carolina, GO, Series 1994, 5.500% 02/01/14 Aa1 AA+ 1,043 1,043 1,000 1,000 Orange County, North Carolina, GO, Series 2000, 5.300% 04/01/17 Aa1 AA+ 1,053 1,053 4,645 4,645 Orange County, North Carolina, GO, Series 2000, 5.300% 04/01/18 Aa1 AA+ 4,864 4,864 1,390 1,390 Pitt County, North Carolina, Certificates of Participation, (School Facilities Project) Series 2000B, 5.750% 04/01/16 Aaa AAA 1,510 1,510 1,000 1,000 Pitt County, North Carolina, Certificates of Participation, (School Facilities Project) Series 2000B, 5.500% 04/01/25 Aaa AAA 1,037 1,037 1,000 1,000 Pitt County, North Carolina, Hospital Revenue, (Pitt County Memorial Hospital Project) Series 1995, 5.250% 12/01/21 Aaa NR 1,016 1,016 1,240 1,240 Pitt County, North Carolina, Revenue Refunding, (Pitt County Memorial Hospital Project) Series 1995, 5.375% 12/01/10 Aaa NR 1,327 1,327 2,800 2,800 Pitt County, North Carolina, Revenue, (Pitt County Memorial Hospital Project) Series 1991B, (MBIA Insured), Prerefunded 12/01/01 @ 102, 6.750% 12/01/14 Aaa AAA 2,878 2,878
Nations North Carolina Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited)(continued) September 30, 2001 Nations North Carolina Nations Intermediate Nations North Nations Municipal North Carolina Nations North Bond Carolina Intermediate North Carolina Fund Municipal Municipal Carolina Intermediate(acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) North Carolina - (continued) $ - $ 1,000 $ 1,000 Raleigh, North Carolina, Combined Enterprise System Revenue, Series 1996, 5.250% 03/01/07 Aa1 AAA $ - $ 1,085 $ 1,085 1,910 1,910 Raleigh, North Carolina, GO, Series 1996, 5.300% 06/01/16 Aaa AAA 1,996 1,996 1,000 1,000 Randolph County, North Carolina, Certificates of Participation, Series 2000, (FSA Insured), 5.200% 06/01/12 Aaa AAA 1,068 1,068 1,000 1,000 Randolph County, North Carolina, Certificates of Participation, Series 2000, (FSA Insured), 5.300% 06/01/13 Aaa AAA 1,066 1,066 1,595 1,595 Randolph County, North Carolina, Certificates of Participation, Series 2000, (FSA Insured), 5.500% 06/01/14 Aaa AAA 1,714 1,714 1,000 1,000 Randolph County, North Carolina, Certificates of Participation, Series 2000, (FSA Insured), 5.500% 06/01/15 Aaa AAA 1,067 1,067 1,000 1,000 Randolph County, North Carolina, Certificates of Participation, Series 2000, (FSA Insured), 5.750% 06/01/22 Aaa AAA 1,060 1,060 2,000 2,000 Randolph County, North Carolina, GO, Series 1992, Prerefunded 05/01/02 @ 102, 6.250% 05/01/08 Aa3 AA- 2,089 2,089 1,000 1,000 Robeson County, North Carolina, Industrial Facilities, PCR Refunding (Campbell Soup Company Project) Series 1991, 6.400% 12/01/06 NR A 1,136 1,136 1,050 1,050 Stanly County, North Carolina, GO, Series 2001, (AMBAC Insured), 4.800% 02/01/19 Aaa AAA 1,039 1,039 500 500 Union County, North Carolina, School District, GO, Series 1992, Prerefunded 03/01/02 @ 101.5, 5.800% 03/01/05 Aa3 AA- 515 515 1,690 1,690 University of North Carolina, Chapel Hill, Hospital Revenue Refunding Series 1999, (AMBAC Insured), 5.250% 02/15/12 Aaa AAA 1,803 1,803 1,000 1,000 University of North Carolina, Chapel Hill, University Revenue Refunding, Series 1992, 5.500% 02/15/02 A1 AA 1,013 1,013 1,000 1,000 University of North Carolina, Charlotte, Revenue Refunding, (Housing and Dining Systems Project) Series 1993M, (MBIA Insured), 4.800% 01/01/04 Aaa AAA 1,044 1,044 3,500 3,500 University of North Carolina, University Utilities Systems Revenue Refunding, Series 1993, 5.200% 08/01/06 Aa1 AA 3,624 3,624 1,000 1,000 University of North Carolina, University Utilities Systems Revenue Refunding, Series 1993, 5.000% 08/01/09 Aa1 AA 1,030 1,030 1,600 1,600 University of North Carolina, University Utilities Systems Revenue Refunding, Series 1993, 5.000% 08/01/11 Aa1 AA 1,640 1,640 1,000 1,000 Wake County, North Carolina, GO Refunding, Series 1993, 4.700% 04/01/05 Aaa AAA 1,035 1,035 1,000 2,000 3,000 Wake County, North Carolina, GO, Series 2001B, 4.500% 02/01/14 Aaa AAA 1,002 2,004 3,006 3,065 3,065 Wake County, North Carolina, Hospital Revenue, Series 1993, (MBIA Insured), 5.125% 10/01/26 Aaa AAA 3,116 3,116 1,000 1,000 Wake County, North Carolina, Public Improvement GO, Series 1994, 4.600% 02/01/06 Aaa AAA 1,040 1,040 1,200 1,200 Wayne County, North Carolina, GO Refunding, Series 1993, (MBIA Insured), 4.900% 04/01/05 Aaa AAA 1,275 1,275 1,000 1,000 Wilmington, North Carolina, Public Improvement GO, Series 1997A, (FGIC Insured), 5.000% 04/01/11 Aaa AAA 1,060 1,060 1,000 1,000 Wilmington, North Carolina, Public Improvement GO, Series 1997A, (FGIC Insured), 5.000% 04/01/13 Aaa AAA 1,047 1,047
Nations North Carolina Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations North Carolina Nations Intermediate Nations North Nations Municipal North Carolina Nations North Bond Carolina Intermediate North Carolina Fund Municipal Municipal Combined Carolina Intermediate(acquiring) Bond Bond Pro Municipal Municipal Combined Fund Fund Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount Description S&P Value Value Value (000) (000) (000) Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) North Carolina - (continued) $ 1,000 $ - $ 1,000 Wilmington, North Carolina, Water Authority, GO, Series 1994, 5.700% 06/01/15 Aa3 AA- $1,049 $ - $ 1,049 1,000 1,000 Wilson, North Carolina, GO, Series 2000, (AMBAC Insured), 5.100% 06/01/14 Aaa AAA 1,061 1,061 ------------------------------ 40,997 196,197 237,194 Puerto Rico - 0.5% ------------------------------ 1,000 1,000 Puerto Rico, Electric Power Authority, Power Revenue Series 1995Y, (MBIA Insured), Refunding, 7.000% 07/01/07 Aaa AAA 1,187 1,187 South Carolina - 0.7% ------------------------------ 1,500 1,500 Calhoun County, South Carolina, Solid Waste Disposal Facility Revenue, (Carolina Eastman Company Project) Series 1992, AMT, 6.750% 05/01/17 A2 A+ 1,798 1,798 Washington - 0.5% ------------------------------ 1,150 1,150 Washington State, Public Power Supply Systems, Revenue Refunding, Series 1993A, (MBIA-IBC Insured), 5.800% 07/01/07 Aaa AAA 1,276 1,276 ------------------------------ Total municipal bonds and notes (Cost $ 38,417 and $190,216, respectively) 40,997 200,458 241,455 ------------------------------ Shares Shares Shares (000) (000) (000) - ---------------------------- Investment companies - 1.7% (Cost $839 and $3,281, respectively) 839 3,281 4,120 Nations Municipal Reserves# 839 3,281 4,120 ------------------------------ Total investments - 99.1% (Cost $39,256 and $193,497, respectively) $41,836 $203,739 $245,575 ------------------------------
- -------------------------------------------- # Money market mutual fund registered under the Investment Company Act of 1940, as amended, and sub-advised by Banc of America Capital Management, LLC. (a) It is expected that all or a portion of this security will be sold at the time of the closing of the reorganization.
Nations North Carolina Municipal Bond Fund / Nations North Carolina Intermediate Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Net Assets (unaudited) September 30, 2001 Nations North Carolina Intermediate Nations Municipal Nations North Carolina Bond Fund North Carolina Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ---------------------------------------------------------- ----------------- Total Investments $ 41,836 $ 203,739 $ - $ 245,575 Other Assets and Liabilities: Cash 1 1 2 Receivable for Fund shares sold - 570 570 Receivable from investment advisor - - 104 (a) 104 Interest receivable 638 2,996 3,634 Payable for Fund shares redeemed (369) (13) (382) Investment advisory fee payable (1) (31) (32) Administration fee payable (7) (34) (41) Shareholder servicing and distribution fees payable (22) (10) (32) Distributions payable (147) (754) (901) Payable for investment securities purchased - (370) (370) Accrued Trustees' fees and expenses (38) (39) (77) Accrued expenses and other liabilities (27) (53) (104)(a) (184) ----------------------------------------------------------- ---------------- Total Other Assets and Liabilities 28 2,263 - 2,291 ----------------------------------------------------------- ---------------- Net Assets $ 41,864 $ 206,002 $ - $ 247,866 ============================================================ ================ Net Assets by Class: Primary A $ 22,635,827 $ 188,811,398 $ - $ 211,447,225 Investor A 3,402,540 11,310,826 - 14,713,366 Investor B 15,644,691 5,756,313 - 21,401,004 Investor C 181,435 123,773 - 305,208 ----------------------------------------------------------- ----------------- $ 41,864,493 $ 206,002,310 $ - $ 247,866,803 ----------------------------------------------------------- ----------------- Shares Outstanding by Class: Primary A 2,249,741 17,714,679 (126,305)(b) 19,838,115 Investor A 338,264 1,061,150 (19,076)(b) 1,380,338 Investor B 1,554,916 540,078 (87,309)(b) 2,007,685 Investor C 18,037 11,611 (1,017)(b) 28,631 -------------------------------------------------------- ------------------ 4,160,958 19,327,518 (233,707) 23,254,769 -------------------------------------------------------- ------------------ Net Asset Value per Share by Class: Primary A $ 10.06 $ 10.66 $ - $ 10.66 Investor A $ 10.06 $ 10.66 $ - $ 10.66 Investor B $ 10.06 $ 10.66 $ - $ 10.66 Investor C $ 10.06 $ 10.66 $ - $ 10.66
(a) Adjustment reflects estimated costs of Reorganization. (b) Reflects the issuance of Nations North Carolina Intermediate Municipal Bond Fund shares to holders of shares of Nations North Carolina Municipal Bond Fund. See Notes to Pro Forma Financial Statements
Nations North Carolina Municipal Bond Fund / Nations North Carolina Intermediate Municipal Bond Fund/Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Operations (unaudited) Twelve Month Period Ending September 30, 2001 Nations North Carolina Intermediate Nations Municipal Nations North Carolina Bond Fund North Carolina Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ------------------------------------------------- ------------- Investment Income: Interest $2,189 $10,108 $ - $12,297 ------------------------------------------------- ------------- Expenses: Investment advisory fee 205 786 (47)(a) 944 Administration fee 90 432 - 522 Transfer agent fee 11 54 - 65 Custodian fees 4 14 - 18 Legal and audit fees 45 55 (45)(b) 55 Registration and filing fees 2 2 (2)(b) 2 Trustees' fees and expenses 24 25 (24)(b) 25 Printing expense 14 20 (13)(b) 21 Other 4 18 100 (b),(c) 122 ----------------------------------------------- ------------- Subtotal 399 1,406 (31) 1,774 ----------------------------------------------- ------------- Shareholder servicing and distribution fees: Investor A Shares 6 27 - 33 Investor B Shares 168 53 - 221 Investor C Shares 2 2 - 4 ----------------------------------------------- ------------- Total expenses 575 1,488 (31) 2,032 ----------------------------------------------- ------------- Fees waived and/or expenses reimbursed by investment advisor, administrator, and/or distributor (152) (425) (10)(c),(d) (587) ----------------------------------------------- ------------- Net Expenses 423 1,063 (41) 1,445 ----------------------------------------------- ------------- Net Investment Income 1,766 9,045 41 10,852 ----------------------------------------------- ------------- Net Realized And Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) on investments 152 167 319 Net change in unrealized appreciation/ (depreciation) of investments 1,589 6,363 7,952 ----------------------------------------------- ------------- Net realized and unrealized gain/(loss) on investments 1,741 6,530 8,271 ----------------------------------------------- ------------- Net Increase/(Decrease) in Net Assets Resulting From Operations $3,507 $15,575 $41 $19,123 =============================================== =============
Legend: - ------ (a) Reflects adjustment to the acquiring fund's contractual fee obligations. (b) Adjustment reflects expected savings when the two funds become one. (c) Adjustment reflects estimated costs of Reorganization. (d) Adjustment reflects reduction in fund level expenses as a result of the lower fund level expense cap. See Notes to Pro Forma Financial Statements Nations North Carolina Municipal Bond Fund Nations North Carolina Intermediate Municipal Bond Fund Nations North Carolina Intermediate Municipal Bond Fund (acquiring) Notes to Pro Forma Combining Financial Statements (unaudited) 1. Basis of Combination The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange described in the next paragraph occurred as of September 30, 2001 and the unaudited Pro Forma Combining Statement of Operations for the year ended September 30, 2001 assumes the exchange occurred as of October 1, 2000. These statements have been derived from books and records utilized in calculating daily net asset value of each fund at September 30, 2001 and for the twelve month period then ended. The pro forma statements give effect to the proposed reorganization (the "Reorganization") of Nations North Carolina Municipal Bond Fund ("North Carolina Municipal Bond Fund") and Nations North Carolina Intermediate Municipal Bond Fund ("North Carolina Intermediate Municipal Bond Fund") into Nations North Carolina Intermediate Municipal Bond Fund (acquiring) (the "Acquiring Fund"). The Reorganization provides for the transfer of the assets and liabilities of North Carolina Municipal Bond Fund and North Carolina Intermediate Municipal Bond Fund to the Acquiring Fund, in exchange for shares of equal value of designated classes of the Acquiring Fund. The Reorganization is expected to be done on a tax-free basis whereby the North Carolina Municipal Bond Fund and North Carolina Intermediate Municipal Bond Fund will assume the market value and cost basis of the portfolio positions in the North Carolina Municipal Bond Fund and North Carolina Intermediate Municipal Bond Fund and the results of operations of North Carolina Municipal Bond Fund and North Carolina Intermediate Municipal Bond Fund for pre-combination periods will not be restated. The Funds will only bear the expenses of the Reorganization if those expenses do not exceed certain expense "caps" that have been put in place by the investment adviser. Because of these caps, it is not expected that the Funds will bear the costs associated with the Reorganization, including solicitation costs. 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 Acquiring Fund, with certain expenses adjusted to reflect the expected expenses of the Acquiring Fund. Nations South Carolina Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) September 30, 2001
Nations South Carolina Nations Intermediate Nations South Nations Municipal South Carolina Nations South Bond Carolina Intermediate South Carolina Fund Municipal Municipal Combined Carolina Intermediate (acquiring) Bond Bond Pro Municipal Municipal Combined Fund Fund Forma Bond Bond Pro Principal Principal Principal Moody's Fund* Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ----------------------------------------------------------------------------------------------------------------------------------- Municipal bonds and notes - 95.2% South Carolina - 95.2% $ 500 $ - $ 500 Charleston County, South Carolina, Hospital Facilities, Revenue Refunding and Improvement, (Bon Secours Health Systems Project) Series 1993, (FSA Insured), 5.625% 08/15/25 Aaa AAA $ 535 $ - $ 535 1,000 1,000 Chester County, South Carolina, IDR Refunding, (Springs Industries Inc. Project) Series 1992, 7.350% 02/01/14 NR BB+ 1,024 - 1,024 1,500 1,500 Columbia, South Carolina, Waterworks and Sewer Systems Revenue Refunding, Series 1993, 5.500% 02/01/09 Aa2 AA 1,646 - 1,646 2,700 2,700 Columbia, South Carolina, Waterworks and Sewer Systems Revenue, Series 1991, 2.670%+ 02/01/03 Aa2 AA 2,605 - 2,605 1,500 1,500 Darlington County, South Carolina, IDR, (Sonoco Products Company Project) Series 1995, AMT, 6.125% 06/01/25 A2 A- 1,540 - 1,540 2,000 2,000 Georgetown County, South Carolina, PCR Refunding, (International Paper Company Project) Series 1999A, 5.125% 02/01/12 Baa2 BBB 1,986 - 1,986 1,040 1,040 Greenville, South Carolina, Hospital Facilities Revenue Refunding, Series 1996B, (GTY-AGMT), 5.250% 05/01/23 Aa3 AA 1,033 - 1,033 1,500 1,500 Greenville, South Carolina, Water Utility Improvement Waterworks Revenue, Series 1997, 5.500% 02/01/22 Aa1 AA 1,547 - 1,547 1,000 1,000 Greenwood County, South Carolina, Hospital Facilities Revenue, (Self Memorial Hospital Project) Series 2001, 5.500% 10/01/26 A2 A+ 985 - 985 1,100 1,100 Horry County, South Carolina, Hospital Facilities Revenue, (Conway Hospital, Inc. Project) Series 1998, (AMBAC Insured), 4.750% 07/01/10 Aaa AAA 1,148 - 1,148 1,575 1,575 Medical University of South Carolina, Hospital Facilities, Revenue Refunding, Series 1999, 5.500% 07/01/09 Baa2 BBB+ 1,693 - 1,693 1,000 1,000 Oconee County, South Carolina, School District, GO, Series 1994, (MBIA Insured), 5.100% 01/01/13 Aaa AAA 1,025 - 1,025 1,000 1,000 Piedmont Municipal Power Agency, South Carolina, Electric Revenue Refunding, Series 1996B, (MBIA Insured), 5.250% 01/01/09 Aaa AAA 1,070 - 1,070 1,000 1,000 South Carolina State, Capital Improvement GO, Series 2001A, 3.500% 01/01/16 Aaa AAA 866 - 866 2,000 2,000 South Carolina State, Public Service Authority, Revenue Refunding, Series 1999A, (MBIA Insured), 5.625% 01/01/13 Aaa AAA 2,191 - 2,191 1,000 1,000 South Carolina, Educational Facilities for Non- Profit Institutions, Revenue, (Furman University Project) Series 1996A, (MBIA Insured), 5.500% 10/01/26 Aaa AAA 1,024 - 1,024 1,000 1,000 South Carolina, Jobs Economic Development Authority, Hospital Facilities Revenue, (Palmetto Health Alliance Project) Series 2000A, 7.125% 12/15/15 Baa2 BBB 1,076 - 1,076 2,000 2,000 South Carolina, Jobs Economic Development Authority, Hospital Facilities Revenue, Series 1999, (FSA Insured), 5.300% 02/01/14 Aaa AAA 2,100 - 2,100 1,000 1,000 South Carolina, Transportation Infrastructure Revenue, Series 1998A, (MBIA Insured), 5.000% 10/01/12 Aaa AAA 1,049 - 1,049 1,000 1,000 Spartanburg County, South Carolina, Health Services District, Hospital Revenue Refunding, Series 1997B, (MBIA Insured), 5.125% 04/15/17 Aaa AAA 1,010 - 1,010 1,250 1,250 Spartanburg, South Carolina, Sewer District, Sewer Systems Revenue, Series 1999B, (MBIA Insured), 5.000% 03/01/26 Aaa AAA 1,236 - 1,236 ---------------------------------- 28,389 - 28,389 ----------------------------------
Nations South Carolina Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001
South Carolina Intermediate Nations Nations Municipal Bond Nations South Carolina Nations South Carolina Fund South Carolina Intermediate South Carolina Intermediate (acquiring) Municipal Bond Municipal Bond Combined Pro Municipal Bond Municipal Bond Combined Pro Fund Fund Forma Fund* Fund Forma Shares Shares Shares Moody's S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Investment companies - 3.4% (Cost $1,019 and $0, respectively) $ 1,019 $ - $ 1,019 1,019 - 1,019 Nations Municipal Reserves# -------------------------------------------- Total investments - 98.6% (Cost $27,363 and $0, respectively) $ 29,408 $ - $ 29,408 -------------------------------------------- - ------------------------------------ * If the South Carolina Municipal Bond Fund approves the Reorganization, and the South Carolina Intermediate Municipal Bond Fund does not, the South Carolina Municipal Bond Fund will be reorganized into an Acquiring Fund that is an intermediate-term municipal bond fund. In this event, the management team will, in all likelihood, be required to sell a significant portion of the South Carolina Municipal Bond Fund's longer-term municipal bonds (either in anticipation of or after the Reorganization) and purchase new intermediate-term municipal bonds in order to abide by the Acquiring Fund's investment objective and principal investment strategies. + Zero coupon security. The rate shown reflects the yield to maturity. # Money market mutual fund registered under the Investment Company Act of 1940, as amended, and sub-advised by Banc of America Capital Management, LLC.
Nations South Carolina Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Net Assets (unaudited) September 30, 2001
Nations South Carolina Intermediate Nations Municipal Nations South Carolina Bond Fund South Carolina Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ---------------------------------------------------------------------------- Total Investments $ 29,408 $ - $ - $ 29,408 Other Assets and Liabilities: Cash 1 - 1 Receivable for Fund shares sold 330 - 330 Interest receivable 341 - 341 Receivable from investment advisor 2 - 42 (a) 44 Payable for Fund shares redeemed (1) - (1) Administration fee payable (5) - (5) Shareholder servicing and distribution fees payable (11) - (11) Distributions payable (122) - (122) Payable for investment securities purchased (50) - (50) Accrued Trustees' fees and expenses (38) - (38) Accrued expenses and other liabilities (24) - (42)(a) (66) ------------------------------------------------------ -------------- Total Other Assets and Liabilities 423 - - 423 ------------------------------------------------------ -------------- Net Assets $ 29,831 $ - $ - $ 29,831 ====================================================== ============== Net Assets by Class: Primary A $ 19,772,279 $ - $ - $ 19,772,279 Investor A 1,480,549 - - 1,480,549 Investor B 7,955,840 - - 7,955,840 Investor C 622,464 - - 622,464 ------------------------------------------------------ -------------- $ 29,831,132 $ - $ - $ 29,831,132 ------------------------------------------------------ -------------- Shares Outstanding by Class: Primary A 1,897,129 - - 1,897,129 Investor A 142,155 - - 142,155 Investor B 763,549 - - 763,549 Investor C 59,732 - - 59,732 ------------------------------------------------------ -------------- 2,862,565 - - 2,862,565 ------------------------------------------------------ -------------- Net Asset Value per Share by Class: Primary A $ 10.42 $ - $ - $ 10.42 Investor A $ 10.42 $ - $ - $ 10.42 Investor B $ 10.42 $ - $ - $ 10.42 Investor C $ 10.42 $ - $ - $ 10.42
(a) Adjustment reflects estimated costs of Reorganization. See Notes to Pro Forma Financial Statements Nations South Carolina Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Operations (unaudited) Twelve Month Period Ending September 30, 2001
Nations South Carolina Intermediate Nations Municipal Nations South Carolina Bond Fund South Carolina Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ------------------------------------------------------ ------------------ Investment Income: Interest $ 1,842 $ - $ - $1,842 ------------------------------------------------------ --------------- Expenses: Investment advisory fee 172 - (34)(a) 138 Administration fee 75 - - 75 Transfer agent fee 8 - - 8 Custodian fees 3 - - 3 Legal and audit fees 44 - - 44 Registration and filing fees 1 - - 1 Trustees' fees and expenses 24 - - 24 Interest expense 1 - - 1 Printing expense 13 - - 13 Other 1 - 42(b) 43 ------------------------------------------------------ --------------- Subtotal 342 - 8 350 ------------------------------------------------------ --------------- Shareholder servicing and distribution fees: Investor A Shares 4 - - 4 Investor B Shares 84 - - 84 Investor C Shares 1 - - 1 ------------------------------------------------------ --------------- Total expenses 431 - 8 439 ------------------------------------------------------ --------------- Fees waived and/or expenses reimbursed by investment advisor, administrator, and/or distributor (138) - (42)(b) (180) ------------------------------------------------------ --------------- Net Expenses 293 - (34) 259 ------------------------------------------------------ --------------- Net Investment Income 1,549 - 34 1,583 ------------------------------------------------------ --------------- Net Realized And Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) on investments 412 - 412 Net change in unrealized appreciation/ (depreciation) of investments 1,370 - 1,370 ------------------------------------------------------ --------------- Net realized and unrealized gain/(loss) on investments 1,782 - 1,782 ------------------------------------------------------ --------------- Net Increase/(Decrease) in Net Assets Resulting From Operations $ 3,331 $ - $34 $ 3,365 ====================================================== ===============
Legend: - ------- (a) Reflects adjustment to the acquiring fund's contractual fee obligations. (b) Adjustment reflects estimated costs of Reorganization. See Notes to Pro Forma Financial Statements Nations South Carolina Municipal Bond Fund Nations South Carolina Intermediate Municipal Bond Fund (acquiring) Notes to Pro Forma Combining Financial Statements (unaudited) 1. Basis of Combination The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange described in the next paragraph occurred as of September 30, 2001 and the unaudited Pro Forma Combining Statement of Operations for the year ended September 30, 2001 assumes the exchange occurred as of October 1, 2000. These statements have been derived from books and records utilized in calculating daily net asset value of each fund at September 30, 2001 and for the twelve month period then ended. The pro forma statements give effect to the proposed reorganization ("Reorganization") of Nations South Carolina Municipal Bond Fund (the "Fund") and Nations South Carolina Intermediate Municipal Bond Fund (acquiring) (the "Acquiring Fund"). The Reorganization provides for the transfer of the assets and liabilities of the Fund to the Acquiring Fund, in exchange for shares of equal value of designated classes of the Acquiring Fund. The Reorganization is expected to be done on a tax-free basis whereby the Acquiring Fund will assume the market value and cost basis of the portfolio positions in the Fund and the results of operations of the Fund for pre-combination periods will not be restated. These financial statements present the Reorganization of the Fund into the Acquiring Fund. It is possible that both Nations South Carolina Municipal Bond Fund and Nations South Carolina Intermediate Municipal Bond Fund approve the Reorganization - that scenario is shown after these notes. The Funds will only bear the expenses of the Reorganization if those expenses do not exceed certain expense "caps" that have been put in place by the investment adviser. Because of these caps, it is not expected that the Funds will bear the costs associated with the Reorganization, including solicitation costs. 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 the Fund and the Acquiring Fund, with certain expenses adjusted to reflect the expected expenses of the Acquiring Fund.
Nations South Carolina Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund/ Nations South Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) September 30, 2001 Nations South Carolina Nations Intermediate Nations South Nations Municipal South Carolina Nations South Bond Carolina Intermediate South Carolina Fund Municipal Municipal Carolina Intermediate (acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - 98.3% South Carolina - 96.5% $ - $ 1,100 $ 1,100 Anderson County, South Carolina, GO Revenue Refunding, Series 1992, 6.400% 04/01/03 Aa3 AA- $ - $ 1,144 $ 1,144 1,300 1,300 Anderson County, South Carolina, GO Revenue Refunding, Series 1992, 6.500% 04/01/04 Aa3 AA- 1,352 1,352 1,240 1,240 Anderson County, South Carolina, Sewer Authority, Revenue Refunding, Series 1993, (FGIC Insured), 5.200% 07/01/03 Aaa AAA 1,299 1,299 1,000 1,000 Anderson County, South Carolina, Sewer Authority, Revenue Refunding, Series 1993, (FGIC Insured), 5.500% 07/01/06 Aaa AAA 1,055 1,055 1,500 1,500 Anderson County, South Carolina, Sewer Authority, Revenue Refunding, Series 1993, (FGIC Insured), 5.600% 07/01/07 Aaa AAA 1,593 1,593 1,000 1,000 Anderson County, South Carolina, Sewer Authority, Revenue Refunding, Series 1993, (FGIC Insured), 5.600% 07/01/08 Aaa AAA 1,062 1,062 1,725 1,725 Beaufort County, South Carolina, School District, GO, Series 2000B, (SCSDE), 5.500% 03/01/16 Aa1 AA+ 1,819 1,819 1,200 1,200 Beaufort County, South Carolina, School District, GO, Series 2000C, (SCSDE), 5.125% 03/01/12 Aa1 AA+ 1,266 1,266 1,000 1,000 Berkeley County, South Carolina, Refunding and Improvement Authority, GO, Series 1993, (FGIC Insured), 5.300% 05/01/04 Aaa AAA 1,058 1,058 1,000 1,000 Berkeley County, South Carolina, Refunding and Improvement Authority, GO, Series 1993, (FGIC Insured), 5.400% 05/01/05 Aaa AAA 1,055 1,055 1,000 1,000 Berkeley County, South Carolina, Refunding and Improvement Authority, GO, Series 1993, (FGIC Insured), 5.500% 05/01/06 Aaa AAA 1,052 1,052 2,500 2,500 Berkeley County, South Carolina, School District, GO, Series 2000, (SCSDE Insured), 5.000% 04/01/21 Aa1 AA+ 2,491 2,491 1,000 1,000 Camden, South Carolina, Combined Public Utilities Revenue Refunding and Improvement, Series 1997, (MBIA Insured), 5.500% 03/01/17 Aaa AAA 1,046 1,046 3,000 3,000 Charleston County, South Carolina, Hospital Facilities, Revenue Refunding and Improvement, (Bon Secours Health Systems Project) Series 1993, (FSA Insured), 5.500% 08/15/10 Aaa AAA 3,181 3,181 500 500 Charleston County, South Carolina, Hospital Facilities, Revenue Refunding and Improvement, (Bon Secours Health Systems Project) Series 1993, (FSA Insured), 5.625% 08/15/25 Aaa AAA 535 535 1,000 1,000 Charleston County, South Carolina, Hospital Facilities, Revenue Refunding and Improvement, (Medical Society Health Project) Series 1992, (MBIA Insured), 6.000% 10/01/09 Aaa AAA 1,057 1,057 2,370 2,370 Charleston County, South Carolina, Hospital Facilities, Revenue, (Care Alliance Health Services Project) Series 1999A, (FSA Insured), 5.125% 08/15/15 Aaa AAA 2,489 2,489 1,000 1,000 Charleston County, South Carolina, Public Improvement Authority, GO, Series 1994, (State Aid Withholding), Prerefunded 06/01/06 @ 100, 5.500% 06/01/14 Aa1 AA+ 1,097 1,097 1,000 1,000 Charleston County, South Carolina, Revenue, (Alliance Health Services Project) Series 1999A, (FSA Insured), 5.000% 08/15/12 Aaa AAA 1,049 1,049 1,040 1,040 Charleston County, South Carolina, Solid Waste User Fee Revenue, Series 1994, (MBIA Insured), 5.800% 01/01/06 Aaa AAA 1,136 1,136 5,105 5,105 Charleston, South Carolina, Waterworks and Sewer Capital Improvement Revenue Refunding, Series 1998, 5.250% 01/01/08 A1 AA- 5,514 5,514
Nations South Carolina Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations South Carolina Nations Intermediate Nations South Nations Municipal South Carolina Nations South Bond Carolina Intermediate South Carolina Fund Municipal Municipal Carolina Intermediate (acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) South Carolina - (continued) $ - $ 9,500 $ 9,500 Charleston, South Carolina, Waterworks and Sewer Capital Improvement Revenue Refunding, Series 1998, (FGIC Insured), 4.500% 01/01/24 Aaa AAA $ - $ 8,662 $ 8,662 1,000 1,000 Charleston, South Carolina, Waterworks and Sewer Revenue Refunding, Series 1991, 5.750% 01/01/04 A1 AA- 1,027 1,027 1,000 1,000 Chester County, South Carolina, IDR Refunding, (Springs Industries Inc. Project) Series 1992, 7.350% 02/01/14 NR BB+ 1,024 1,024 1,000 1,000 Columbia, South Carolina, Parking Facilities Revenue Refunding, Series 1994, (AMBAC Insured), 5.750% 12/01/09 Aaa AAA 1,069 1,069 1,500 5,500 7,000 Columbia, South Carolina, Waterworks and Sewer Systems Revenue Refunding, Series 1993, 5.500% 02/01/09 Aa2 AA 1,646 6,035 7,681 2,700 2,700 Columbia, South Carolina, Waterworks and Sewer Systems Revenue, Series 1991, 2.670%+ 02/01/03 Aa2 AA 2,605 2,605 1,750 1,750 Darlington County, South Carolina, IDR, (Nucor Corporation Project) Series 1993A, AMT, 5.750% 08/01/23 A1 AA- 1,776 1,776 1,500 1,500 Darlington County, South Carolina, IDR, (Sonoco Products Company Project) Series 1995, AMT, 6.125% 06/01/25 A2 A- 1,540 1,540 2,000 2,000 Darlington County, South Carolina, PCR, (Carolina Power and Light - Annual Tender Project) Series 1983, 6.600% 11/01/10 A2 BBB+ 2,140 2,140 1,000 1,000 Darlington County, South Carolina, PCR, (Carolina Power and Light - Annual Tender Project) Series 1983, (MBIA-IBC Insured), 6.600% 11/01/10 Aaa AAA 1,071 1,071 1,250 1,250 Florence, South Carolina, Water and Sewer Revenue Refunding, Series 1993, (AMBAC Insured), 5.150% 03/01/06 Aaa AAA 1,305 1,305 1,225 1,225 Georgetown County, South Carolina, Environmental Revenue, (International Paper Company Project) Series 1997A, AMT, 5.700% 10/01/21 Baa2 BBB 1,190 1,190 2,000 4,000 6,000 Georgetown County, South Carolina, PCR Refunding, (International Paper Company Project) Series 1999A, 5.125% 02/01/12 Baa2 BBB 1,986 3,973 5,959 2,480 2,480 Georgetown County, South Carolina, School District, GO, Series 2000, (SCSDE), 5.500% 03/01/09 Aa1 AA+ 2,735 2,735 1,000 1,000 Grand Strand, South Carolina, Water and Sewer Authority, Revenue Refunding, Series 1992, (MBIA Insured), 6.000% 06/01/02 Aaa AAA 1,025 1,025 1,950 1,950 Grand Strand, South Carolina, Water and Sewer Authority, Revenue Refunding, Series 1992, (MBIA Insured), 6.300% 06/01/05 Aaa AAA 2,039 2,039 1,000 1,000 Grand Strand, South Carolina, Water and Sewer Authority, Revenue Refunding, Series 1992, (MBIA Insured), 6.400% 06/01/07 Aaa AAA 1,046 1,046 1,000 1,000 Greenville, South Carolina, Hospital Facilities Revenue Refunding, Series 1993C, 5.300% 05/01/04 Aa3 AA 1,054 1,054 4,000 4,000 Greenville, South Carolina, Hospital Facilities Revenue Refunding, Series 1993C, 5.400% 05/01/05 Aa3 AA 4,203 4,203 2,400 2,400 Greenville, South Carolina, Hospital Facilities Revenue Refunding, Series 1993C, 5.500% 05/01/11 Aa3 AA 2,485 2,485 1,000 1,000 Greenville, South Carolina, Hospital Facilities Revenue Refunding, Series 1996A, (GTY-AGMT), 5.400% 05/01/07 Aa3 AA 1,079 1,079 4,000 4,000 Greenville, South Carolina, Hospital Facilities Revenue Refunding, Series 1996B, (GTY-AGMT), 5.250% 05/01/17 Aa3 AA 4,029 4,029
Nations South Carolina Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations South Carolina Nations Intermediate Nations South Nations Municipal South Carolina Nations South Bond Carolina Intermediate South Carolina Fund Municipal Municipal Carolina Intermediate (acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) South Carolina - (continued) $ 1,040 $ - $ 1,040 Greenville, South Carolina, Hospital Facilities Revenue Refunding, Series 1996B, (GTY-AGMT), 5.250% 05/01/23 Aa3 AA $1,033 $ - $ 1,033 1,385 1,385 Greenville, South Carolina, Hospital Facilities Revenue, Series 2001, 5.500% 05/01/26 Aaa AAA 1,429 1,429 2,000 2,000 Greenville, South Carolina, Water Utility Improvement Waterworks Revenue, Series 1997, 6.000% 02/01/06 Aa1 AA 2,216 2,216 1,000 1,000 Greenville, South Carolina, Water Utility Improvement Waterworks Revenue, Series 1997, 6.000% 02/01/08 Aa1 AA 1,122 1,122 1,500 1,500 Greenville, South Carolina, Water Utility Improvement Waterworks Revenue, Series 1997, 5.500% 02/01/22 Aa1 AA 1,547 1,547 2,000 2,000 Greenwood County, South Carolina, Hospital Facilities Revenue, (Self Memorial Hospital Project) Series 2001, 5.500% 10/01/21 A2 A+ 1,990 1,990 1,000 1,000 Greenwood County, South Carolina, Hospital Facilities Revenue, (Self Memorial Hospital Project) Series 2001, 5.500% 10/01/26 A2 A+ 985 985 1,885 1,885 Greenwood, South Carolina, Combined Public Utilities, Revenue Refunding and Improvement, Series 1993, (AMBAC Insured), 5.500% 12/01/06 Aaa AAA 2,003 2,003 2,000 2,000 Greenwood, South Carolina, Combined Public Utilities, Revenue Refunding and Improvement, Series 1993, (AMBAC Insured), 5.500% 12/01/07 Aaa AAA 2,138 2,138 1,060 1,060 Greenwood, South Carolina, Combined Public Utilities, Revenue Refunding and Improvement, Series 1993, (AMBAC Insured), 5.500% 12/01/08 Aaa AAA 1,133 1,133 1,000 1,000 Hilton Head Island, South Carolina, GO, Series 2001, 5.000% 03/01/13 Aa3 AA 1,040 1,040 1,100 1,100 Horry County, South Carolina, Hospital Facilities Revenue, (Conway Hospital, Inc. Project) Series 1998, (AMBAC Insured), 4.750% 07/01/10 Aaa AAA 1,148 1,148 1,200 1,200 Horry County, South Carolina, Hospital Facilities Revenue, (Conway Hospital, Inc. Project) Series 1998, (AMBAC Insured), 4.875% 07/01/11 Aaa AAA 1,254 1,254 1,275 1,275 Horry County, South Carolina, School District, GO, Series 1995B, (MBIA Insured, SCSDE), 5.700% 03/01/16 Aaa AAA 1,306 1,306 1,725 1,725 Lancaster County, South Carolina, School District, GO, Series 1991, (MBIA Insured), Prerefunded 07/01/02 @ 102, 6.500% 07/01/07 Aaa AAA 1,816 1,816 1,180 1,180 Lexington County, South Carolina, Health Services District, Revenue Refunding, (Health Service District and Lexmed, Inc. Project) Series 1997, (FSA Insured), 5.500% 11/01/06 Aaa AAA 1,294 1,294 5,000 5,000 Lexington County, South Carolina, Health Services District, Revenue Refunding, Series 1997, (FSA Insured), 5.125% 11/01/21 Aaa AAA 4,997 4,997 2,000 2,000 Lexington, South Carolina, Water and Sewer Authority, Revenue, Series 1997, 5.450% 04/01/19 NR AA 2,036 2,036 4,500 4,500 Medical University of South Carolina, Hospital Facilities, Revenue Refunding, Series 1990A, 7.000% 07/01/02 Baa2 BBB+ 4,560 4,560 3,725 3,725 Medical University of South Carolina, Hospital Facilities, Revenue Refunding, Series 1990A, 7.200% 07/01/05 Baa2 BBB+ 3,775 3,775 1,575 1,575 Medical University of South Carolina, Hospital Facilities, Revenue Refunding, Series 1999, 5.500% 07/01/09 Baa2 BBB+ 1,693 1,693 2,500 2,500 Myrtle Beach, South Carolina, Water and Sewer Improvement Revenue Refunding, Series 1993, (MBIA Insured), 5.000% 03/01/03 Aaa AAA 2,590 2,590 1,750 1,750 North Charleston, South Carolina, GO Refunding, Series 1993, 5.600% 08/01/07 A2 AA- 1,843 1,843
Nations South Carolina Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations South Carolina Nations Intermediate Nations South Nations Municipal South Carolina Nations South Bond Carolina Intermediate South Carolina Fund Municipal Municipal Carolina Intermediate(acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) South Carolina - (continued) $ - $ 1,725 $ 1,725 North Charleston, South Carolina, GO Refunding, Series 1993, Refunding, 5.750% 08/01/08 A2 AA- $ - $ 1,815 $ 1,815 1,000 1,000 North Charleston, South Carolina, Sewer District, Revenue Series 1992A, (MBIA Insured), 6.000% 07/01/02 Aaa AAA 1,028 1,028 1,000 1,000 Oconee County, South Carolina, School District, GO, Series 1994, (MBIA Insured), 5.100% 01/01/13 Aaa AAA 1,025 1,025 1,850 1,850 Piedmont Municipal Power Agency, South Carolina, Electric Revenue Refunding, Series 1991, (FGIC Insured), 6.850% 01/01/07 Aaa AAA 1,894 1,894 1,600 1,600 Piedmont Municipal Power Agency, South Carolina, Electric Revenue Refunding, Series 1992, (MBIA Insured), 6.000% 01/01/05 Aaa AAA 1,749 1,749 1,000 4,000 5,000 Piedmont Municipal Power Agency, South Carolina, Electric Revenue Refunding, Series 1996B, (MBIA Insured), 5.250% 01/01/09 Aaa AAA 1,070 4,280 5,350 2,040 2,040 Richland County, South Carolina, GO Refunding, Series 1991, 5.900% 12/01/01 Aa1 AA 2,053 2,053 2,020 2,020 Richland County, South Carolina, GO Refunding, Series 1994B, (State Aid Withholding), 4.750% 03/01/03 Aa1 AA 2,086 2,086 2,120 2,120 Richland County, South Carolina, GO Refunding, Series 1994B, (State Aid Withholding), 4.850% 03/01/04 Aa1 AA 2,221 2,221 2,250 2,250 Richland County, South Carolina, GO Refunding, Series 1994B, (State Aid Withholding), 4.950% 03/01/05 Aa1 AA 2,355 2,355 4,000 4,000 Richland County, South Carolina, PCR Refunding, (Union Camp Corporation Project) Series 1992C, 5.875% 11/01/02 Baa2 BBB 4,121 4,121 6,000 6,000 Richland County, South Carolina, School District Number 1, GO, Series 1996, (SCSDE), 4.625% 03/01/22 Aa1 AA+ 5,605 5,605 1,330 1,330 Richland County, South Carolina, School District Number 2, GO Refunding, Series 1994A, (MBIA Insured, SCSDE), 4.800% 03/01/03 Aaa AAA 1,374 1,374 1,590 1,590 Richland County, South Carolina, School District Number 2, GO Refunding, Series 1994A, (MBIA Insured, SCSDE), 4.900% 03/01/04 Aaa AAA 1,668 1,668 1,655 1,655 Richland County, South Carolina, School District Number 2, GO Refunding, Series 1994A, (MBIA Insured, SCSDE), 5.000% 03/01/05 Aaa AAA 1,756 1,756 1,000 1,000 Rock Hill, South Carolina, Combined Public Utility Systems Revenue, Series 1991, (FGIC Insured), 6.200% 01/01/03 Aaa AAA 1,023 1,023 2,000 2,000 Rock Hill, South Carolina, School District Number 3, GO Refunding, Series 1992B, (FGIC Insured, SCSDE), 5.900% 02/01/02 Aaa AAA 2,025 2,025 6,135 6,135 South Carolina State, Capital Improvement GO, Series 1996A, 3.500% 07/01/06 Aaa AAA 6,207 6,207 3,350 3,350 South Carolina State, Capital Improvement GO, Series 2001A, 3.500% 01/01/15 Aaa AAA 2,953 2,953 1,000 1,000 South Carolina State, Capital Improvement GO, Series 2001A, 3.500% 01/01/16 Aaa AAA 866 866 1,245 1,245 South Carolina State, GO, Series 2000A, 4.800% 03/01/09 Aaa AAA 1,322 1,322 5,000 5,000 South Carolina State, Housing Finance and Development Authority, Multi-Family Housing Revenue, (United Dominion Realty Trust Project) Series 1994, AMT, Mandatory Put 05/01/04 @ 100, 6.500% 05/01/24 NR BBB- 5,081 5,081 2,200 2,200 South Carolina State, Housing Finance and Development Authority, Rental Housing Revenue, (Windsor Shores Project) Series 1993B, (FHA Insured), 5.600% 07/01/16 NR AA 2,215 2,215
Nations South Carolina Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations South Carolina Nations Intermediate Nations South Nations Municipal South Carolina Nations South Bond Carolina Intermediate South Carolina Fund Municipal Municipal Carolina Intermediate (acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) South Carolina - (continued) $ - $ 4,450 $ 4,450 South Carolina State, Housing Finance and Development Authority, Revenue Refunding, Series 1992A, (FNMA/FHA COLL), 6.800% 11/15/11 Aaa NR $ - $ 4,575 $ 4,575 1,250 1,250 South Carolina State, Jobs Economic Development Authority, Hospital Facility Revenue, (Georgetown Memorial Hospital Project) Series 2001, 5.250% 02/01/21 NR AA 1,232 1,232 4,565 4,565 South Carolina State, Port Authority, Revenue, Series 1998, AMT, (FSA Insured), 5.250% 07/01/13 Aaa AAA 4,750 4,750 3,495 3,495 South Carolina State, Ports Authority, Ports Revenue, Series 1991, AMT, (AMBAC Insured), 6.750% 07/01/21 Aaa AAA 3,579 3,579 3,000 3,000 South Carolina State, Public Service Authority, Revenue Refunding, Series 1992A, 6.200% 07/01/05 Aa2 AA- 3,125 3,125 1,000 1,000 South Carolina State, Public Service Authority, Revenue Refunding, Series 1993A, 5.200% 07/01/03 Aa2 AA- 1,045 1,045 1,500 1,500 South Carolina State, Public Service Authority, Revenue Refunding, Series 1993A, (MBIA Insured), 5.300% 07/01/05 Aaa AAA 1,570 1,570 2,000 2,000 South Carolina State, Public Service Authority, Revenue Refunding, Series 1993C, (AMBAC Insured), 5.100% 01/01/11 Aaa AAA 2,054 2,054 2,000 2,000 South Carolina State, Public Service Authority, Revenue Refunding, Series 1999A, (MBIA Insured), 5.625% 01/01/13 Aaa AAA 2,191 2,191 1,000 1,000 South Carolina State, Public Service Authority, Revenue, Series 1991B, 6.700% 07/01/02 Aa2 AA- 1,023 1,023 1,000 4,000 5,000 South Carolina, Educational Facilities for Non-Profit Institutions Revenue, (Furman University Project) Series 1996A, (MBIA Insured), 5.500% 10/01/26 Aaa AAA 1,024 4,096 5,120 1,500 1,500 South Carolina, Jobs Economic Development Authority, Hospital Facilities Revenue, (Oconee Memorial Hospital, Inc. Project) Series 1995, (CONNIE LEE Insured), 6.150% 03/01/15 NR AAA 1,637 1,637 1,000 4,500 5,500 South Carolina, Jobs Economic Development Authority, Hospital Facilities Revenue, (Palmetto Health Alliance Project) Series 2000A, 7.125% 12/15/15 Baa2 BBB 1,076 4,840 5,916 6,500 6,500 South Carolina, Jobs Economic Development Authority, Hospital Facilities Revenue, (South Carolina Baptist Hospital Project) Series 1993, (AMBAC Insured), 5.450% 08/01/15 Aaa AAA 6,665 6,665 2,000 2,375 4,375 South Carolina, Jobs Economic Development Authority, Hospital Facilities Revenue, Series 1999, (FSA Insured), 5.300% 02/01/14 Aaa AAA 2,100 2,494 4,594 1,000 1,000 South Carolina, State Public Service Authority, Revenue Refunding, Series 1992A, 6.375% 07/01/11 Aa2 AA- 1,047 1,047 1,000 1,000 South Carolina, Transportation Infrastructure Revenue, Series 1998A, (MBIA Insured), 5.000% 10/01/12 Aaa AAA 1,049 1,049 1,000 1,000 South Carolina, Transportation Infrastructure Revenue, Series 1998A, (MBIA Insured), 4.500% 10/01/17 Aaa AAA 957 957 1,025 1,025 Spartanburg County, South Carolina, GO, Series 1992, 5.800% 02/01/05 Aa2 AA 1,082 1,082 1,005 1,005 Spartanburg County, South Carolina, GO, Series 1992, 5.700% 02/01/06 Aa2 AA 1,056 1,056 1,000 1,000 Spartanburg County, South Carolina, GO, Series 1992, 5.700% 02/01/09 Aa2 AA 1,056 1,056 1,000 1,000 Spartanburg County, South Carolina, Health Services District, Hospital Revenue Refunding, Series 1997B, (MBIA Insured), 5.125% 04/15/17 Aaa AAA 1,010 1,010
Nations South Carolina Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations South Carolina Nations Intermediate Nations South Nations Municipal South Carolina Nations South Bond Carolina Intermediate South Carolina Fund Municipal Municipal Carolina Intermediate (acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) South Carolina - (continued) $ - $ 2,850 $ 2,850 Spartanburg, South Carolina, Sewer District, Sewer Systems Revenue, Series 1997, (MBIA Insured), Prerefunded 06/01/07 @ 101, 5.500% 06/01/27 Aaa AAA $ - $ 3,166 $ 3,166 1,250 1,250 Spartanburg, South Carolina, Sewer District, Sewer Systems Revenue, Series 1999B, (MBIA Insured), 5.000% 03/01/26 Aaa AAA 1,236 1,236 3,445 3,445 Spartanburg, South Carolina, Waterworks and Sewer Systems Authority, Revenue, Unrefunded Balance, Series 1992, 6.200% 06/01/09 A1 AA- 3,565 3,565 1,000 1,000 West Columbia, South Carolina, Water and Sewer Revenue Refunding, Series 1992, (MBIA Insured), 6.300% 10/01/07 Aaa AAA 1,057 1,057 1,000 1,000 Western Carolina, Regional Sewer Systems Authority, Revenue Refunding, Series 1992, (AMBAC Insured), Prerefunded 03/01/02 @ 101, 5.800% 03/01/03 Aaa AAA 1,025 1,025 1,000 1,000 Western Carolina, Regional Sewer Systems Authority, Revenue Refunding, Series 1992, (AMBAC Insured), Prerefunded 03/01/02 @ 101, 5.900% 03/01/04 Aaa AAA 1,026 1,026 2,500 2,500 Western Carolina, Regional Sewer Systems Authority, Revenue Refunding, Series 1993, (FGIC Insured), 5.000% 03/01/02 Aaa AAA 2,530 2,530 1,000 1,000 Western Carolina, Regional Sewer Systems Authority, Revenue Refunding, Series 1993, (FGIC Insured), 5.500% 03/01/10 Aaa AAA 1,054 1,054 2,500 2,500 York County, South Carolina, Exempt Facilities IDR, (Hoechst Celanese Corporation Project) Series 1994, AMT, 5.700% 01/01/24 Baa2 BBB 2,411 2,411 ------------------------- 28,389 237,848 266,237 ------------------------- Illinois - 0.8% 2,300 2,300 Chicago, Illinois, Midway Apartment Revenue, Series 1998B, (MBIA Insured), 5.000% 01/01/31 Aaa AAA 2,198 2,198 ------------------------- Texas - 1.0% 1,000 1,000 Brazos River Authority, Texas, PCR Refunding, (Texas Electric Company Project) Series 2001A, AMT, Mandatory Put 04/01/04 @ 100, 4.950% 10/01/30 NR BBB 1,023 1,023 2,000 2,000 Dallas-Fort Worth, Texas, International Airport Facilities Improvement, Corporate Revenue Refunding, (American Airlines Project) Series 2000C, AMT, Mandatory Put 11/01/07 @ 100, 6.150% 05/01/29 Ba2 BB 1,824 1,824 ------------------------ 2,847 2,847 ------------------------ Total municipal bonds and notes (Cost $26,344 and $230,017, respectively) 28,389 242,893 271,282 ------------------------- Shares Shares Shares (000) (000) (000) - ------------------------------ Investment companies - 0.7% (Cost $1,019 and $949, respectively) 1,019 949 1,968 Nations Municipal Reserves# 1,019 949 1,968 -------------------------- Total investments - 99.0% (Cost $27,363 and $230,966, respectively) $ 29,408 $243,842 $273,250 --------------------------
- ------------------------------ + Zero coupon security. The rate shown reflects the yield to maturity. # Money market mutual fund registered under the Investment Company Act of 1940, as amended, and sub-advised by Banc of America Capital Management, LLC.
Nations South Carolina Municipal Bond Fund/ Nations South Carolina Intermediate Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Net Assets (unaudited) September 30, 2001 Nations South Carolina Intermediate Nations Municipal Nations South Carolina Bond Fund South Carolina Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ------------------------------------------------- --------------------- Total Investments $ 29,408 $ 243,842 $ - $ 273,250 Other Assets and Liabilities: Cash 1 - 1 Receivable for Fund shares sold 330 208 538 Interest receivable 341 3,415 3,756 Receivable from investment advisor 2 - 105 (a) 107 Payable for Fund shares redeemed (1) (50) (51) Investment advisory fee payable - (40) (40) Administration fee payable (5) (41) (46) Shareholder servicing and distribution fees payable (11) (18) (29) Distributions payable (122) (984) (1,106) Payable for investment securities purchased (50) (29) (79) Accrued Trustees' fees and expenses (38) (40) (78) Accrued expenses and other liabilities (24) (58) (105) (a) (187) ------------------------------------------------- --------------------- Total Other Assets and Liabilities 423 2,363 - 2,786 ------------------------------------------------- --------------------- $ 29,831 $ 246,205 $ - $ 276,036 ================================================= ===================== Net Assets by Class: Primary A $ 19,772,279 $ 219,145,420 $ - $ 238,917,699 Investor A 1,480,549 16,734,438 - 18,214,987 Investor B 7,955,840 7,266,803 - 15,222,643 Investor C 622,464 3,058,311 - 3,680,775 ------------------------------------------------- --------------------- $ 29,831,132 $ 246,204,972 $ - $ 276,036,104 ------------------------------------------------- --------------------- Shares Outstanding by Class: Primary A 1,897,129 20,490,504 (47,524) (b) 22,340,109 Investor A 142,155 1,564,948 (3,656) (b) 1,703,447 Investor B 763,549 679,461 (19,317) (b) 1,423,693 Investor C 59,732 285,887 (1,558) (b) 344,061 ------------------------------------------------- --------------------- 2,862,565 23,020,800 (72,055) 25,811,310 ------------------------------------------------- --------------------- Net Asset Value per Share by Class: Primary A $ 10.42 $ 10.69 $ - $ 10.69 Investor A $ 10.42 $ 10.69 $ - $ 10.69 Investor B $ 10.42 $ 10.69 $ - $ 10.69 Investor C $ 10.42 $ 10.70 $ - $ 10.70
(a) Adjustment reflects estimated costs of Reorganization. (b) Reflects the issuance of Nations South Carolina Intermediate Municipal Bond Fund shares to holders of shares of Nations South Carolina Municipal Bond Fund. See Notes to Pro Forma Financial Statements
Nations South Carolina Municipal Bond Fund/ Nations South Carolina Intermediate Municipal Bond Fund/Nations South Carolina Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Operations (unaudited) Twelve Month Period Ending September 30, 2001 Nations South Carolina Intermediate Nations Municipal Nations South Carolina Bond Fund South Carolina Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ---------------------------------------------------- ----------------- Investment Income: Interest $1,842 $13,154 $ - $14,996 ---------------------------------------------------- ----------------- Expenses: Investment advisory fee 172 970 (28)(a) 1,114 Administration fee 75 534 - 609 Transfer agent fee 8 67 - 75 Custodian fees 3 15 - 18 Legal and audit fees 44 58 (44)(b) 58 Registration and filing fees 1 5 (1)(b) 5 Trustees' fees and expenses 24 25 (24)(b) 25 Interest expense 1 1 - 2 Printing expense 13 20 (12)(b) 21 Other 1 17 104 (b),(c) 122 ---------------------------------------------------- ----------------- Subtotal 342 1,712 (5) 2,049 ---------------------------------------------------- ----------------- Shareholder servicing and distribution fees: Investor A Shares 4 42 - 46 Investor B Shares 84 72 - 156 Investor C Shares 1 23 - 24 ---------------------------------------------------- ----------------- Total expenses 431 1,849 (5) 2,275 ---------------------------------------------------- ----------------- Fees waived and/or expenses reimbursed by investment advisor, administrator, and/or distributor (138) (498) (28)(c),(d) (664) ---------------------------------------------------- ----------------- Net Expenses 293 1,351 (33) 1,611 ---------------------------------------------------- ----------------- Net Investment Income 1,549 11,803 33 13,385 ---------------------------------------------------- ----------------- Net Realized And Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) on investments 412 (165) 247 Net change in unrealized appreciation/ (depreciation) of investments 1,370 7,390 8,760 ---------------------------------------------------- ----------------- Net realized and unrealized gain/(loss) on investments 1,782 7,225 9,007 ---------------------------------------------------- ----------------- Net Increase/(Decrease) in Net Assets Resulting From Operations $3,331 $19,028 $ 33 $22,392 ==================================================== =================
Legend: (a) Reflects adjustment to the acquiring fund's contractual fee obligations. (b) Adjustment reflects expected savings when the two funds become one. (c) Adjustment reflects estimated costs of Reorganization. (d) Adjustment reflects reduction in fund level expenses as a result of the lower fund level expense cap. See Notes to Pro Forma Financial Statements Nations South Carolina Municipal Bond Fund Nations South Carolina Intermediate Municipal Bond Fund/ Nations South Carolina Intermediate Municipal Bond Fund (acquiring) Notes to Pro Forma Combining Financial Statements (unaudited) 1. Basis of Combination The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange described in the next paragraph occurred as of September 30, 2001 and the unaudited Pro Forma Combining Statement of Operations for the year ended September 30, 2001 assumes the exchange occurred as of October 1, 2000. These statements have been derived from books and records utilized in calculating daily net asset value of each fund at September 30, 2001 and for the twelve month period then ended. The pro forma statements give effect to the proposed reorganization (the "Reorganization") of Nations South Carolina Municipal Bond Fund ("South Carolina Municipal Bond Fund") and Nations South Carolina Intermediate Municipal Bond Fund ("South Carolina Intermediate Municipal Bond Fund") into Nations South Carolina Intermediate Municipal Bond Fund (acquiring) (the "Acquiring Fund"). The Reorganization provides for the transfer of the assets and liabilities of South Carolina Municipal Bond Fund and South Carolina Intermediate Municipal Bond Fund to the Acquiring Fund, in exchange for shares of equal value of designated classes of the Acquiring Fund. The Reorganization is expected to be done on a tax-free basis whereby the Acquiring Fund will assume the market value and cost basis of the portfolio positions in the South Carolina Municipal Bond Fund and South Carolina Intermediate Municipal Bond Fund and the results of operations of South Carolina Municipal Bond Fund and South Carolina Intermediate Municipal Bond Fund for pre-combination periods will not be restated. It is not expected that the investment adviser or sub-adviser will sell any securities of either acquired fund, in anticipation of or as a result of the Reorganization, other than in the normal course of business. The Funds will only bear the expenses of the Reorganization if those expenses do not exceed certain expense "caps" that have been put in place by the investment adviser. Because of these caps, it is not expected that the Funds will bear the costs associated with the Reorganization, including solicitation costs. 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 Acquiring Fund, with certain expenses adjusted to reflect the expected expenses of the Acquiring Fund.
Nations Tennessee Municipal Bond Fund/Nations Tennessee Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) September 30, 2001 Nations Tennessee Nations Intermediate Nations Tennessee Nations Municipal Tennessee Intermediate Nations Tennessee Bond Municipal Municipal Combined Tennessee Intermediate Fund Bond Bond Pro Municipal Municipal (acquiring) Fund Fund Forma Bond Bond Combined Principal Principal Principal Moody's Fund* Fund Pro Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - 98.0% Tennessee - 98.0% $ 250 $ - $ 250 Anderson County, Tennessee, GO Refunding, Series 2001, (FSA Insured), 5.000% 04/01/13 Aaa AAA 262 $ - $ 262 500 500 Blount County, Tennessee, Public Building Authority, Public Facility Revenue, Series 1998, (FGIC Insured), 5.000% 04/01/19 Aaa AAA 497 - 497 250 250 Chattanooga-Hamilton County, Tennessee, Hospital Authority, Revenue Refunding, (Erlanger Medical Center Project) Series 1993, (FSA Insured), 5.500% 10/01/07 Aaa AAA 275 - 275 740 740 Hamilton County, Tennessee, GO Refunding, Series 1998B, 5.100% 08/01/24 Aa1 NR 757 - 757 575 575 Humphreys County, Tennessee, Industrial Development Board, Solid Waste Disposal Revenue, (E.I. duPont de Nemours and Company Project) Series 1994, AMT, 6.700% 05/01/24 Aa3 AA- 610 - 610 400 400 Knox County, Tennessee, Health Educational and Housing Facilities Board, Hospital Facilities Improvement Revenue Refunding, (Baptist Health System of East Tennessee, Inc. Project) Series 1996, (CONNIE LEE Insured), 5.500% 04/15/11 Aaa AAA 429 - 429 300 300 Knox County, Tennessee, Health Educational and Housing Facilities Board, Revenue Refunding, (Fort Sanders Alliance Project) Series 1993, (MBIA Insured), 7.250% 01/01/09 Aaa AAA 359 - 359 500 500 Knox County, Tennessee, Health Educational and Housing Facilities Board, Revenue, (University Health Systems Inc. Project) Series 1999, 5.750% 04/01/19 Baa1 NR 504 - 504 200 200 Loudon County, Tennessee, Industrial Development Board, Solid Waste Disposal Revenue, (Kimberly-Clark Corporation Project) Series 1993, AMT, 6.200% 02/01/23 Aa2 AA 205 - 205 500 500 Maury County, Tennessee, Industrial Development Board, Multi-Modal PCR Refunding, (General Motors Corporation - Saturn Corporation Project) Series 1994, 6.500% 09/01/24 A2 A 542 - 542 250 250 McMinn County, Tennessee, Industrial Development Board, Recycling Facilities Revenue, (Bowater Inc. Project) Series 1992, AMT, 7.400% 12/01/22 Baa3 BBB 264 - 264 300 300 Memphis, Tennessee, Electric System Revenue Refunding, Series 1993, 4.900% 01/01/11 Aa3 AA 306 - 306 400 400 Memphis, Tennessee, GO, Series 2000, 5.000% 04/01/17 Aa2 AA 404 - 404 500 500 Memphis-Shelby County, Tennessee, Airport Authority, Special Facilities and Project Revenue Refunding, (Federal Express Corporation Project) Series 1997, 5.350% 09/01/12 Baa2 BBB 485 - 485 350 350 Metropolitan Government, Nashville and Davidson County, Tennessee, Electric Revenue, Series 1996A, Prerefunded 05/15/06 @ 102, 5.625% 05/15/14 Aa3 AA 391 - 391 400 400 Metropolitan Government, Nashville and Davidson County, Tennessee, Electric Revenue, Series 1998B, 5.500% 05/15/13 Aa3 AA 442 - 442 300 300 Metropolitan Government, Nashville and Davidson County, Tennessee, Health and Educational Facilities Board, Improvement Revenue Refunding, (Meharry Medical College Project) Series 1996, (AMBAC Insured), 6.000% 12/01/09 Aaa AAA 341 - 341 500 500 Metropolitan Government, Nashville and Davidson County, Tennessee, Health and Educational Facilities Board, Improvement Revenue Refunding, (Meharry Medical College Project) Series 1996, (AMBAC Insured), 6.000% 12/01/16 Aaa AAA 572 - 572
Nations Tennessee Municipal Bond Fund/Nations Tennessee Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001
Nations Tennessee Intermediate Nations Municipal Nations Tennessee Nations Bond Tennessee Intermediate Nations Tennessee Fund Municipal Municipal Combined Tennessee Intermediate (acquiring) Bond Bond Pro Municipal Municipal Combined Fund Fund Forma Bond Bond Pro Principal Principal Principal Moody's Fund* Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ----------------------------------------------------------------------------------------------------------------------------------- Municipal bonds and notes - (continued) Tennessee - (continued) $ 250 $ - $ 250 Metropolitan Government, Nashville and Davidson County, Tennessee, Revenue, (Meharry Medical College Project) Series 1994, (AMBAC Insured), Prerefunded 12/01/04 @ 102, 7.000% 12/01/11 Aaa AAA $ 287 $ - $ 287 300 300 Metropolitan Government, Nashville and Davidson County, Tennessee, Water and Sewer Systems Revenue Refunding, Series 1993, (FGIC Insured), 5.200% 01/01/13 Aaa AAA 323 - 323 250 250 Sumner County, Tennessee, Health Educational and Housing Facilities Board, Revenue Refunding, (Sumner Regional Health Systems, Inc. Project) Series 1994, 7.000% 11/01/03 NR A- 268 - 268 250 250 Tennessee State, Local Development Authority, Revenue Refunding, (State Loan Program) Series 1993A, 5.750% 03/01/11 A2 A 260 - 260 300 300 Tennessee, Housing Development Agency, Revenue, (Home Ownership Program) Series 1998, AMT, 4.750% 07/01/08 Aa2 AA 312 - 312 500 500 Williamson County, Tennessee, GO, Series 2000, 5.350% 03/01/17 Aa1 NR 521 - 521 ---------------------------------- 9,616 - 9,616 ---------------------------------- Shares Shares Shares (000) (000) (000) -------------------------------- Investment companies - 1.3% (Cost $124 and $0, respectively) 124 124 Nations Municipal Reserves# 124 - 124 ---------------------------------- Total investments - 99.3% (Cost $9,159 and $0, respectively) $ 9,740 - $ 9,740 ----------------------------------
- ---------------------------------------- * If the Tennessee Municipal Bond Fund approves the Reorganization, and the Tennessee Intermediate Municipal Bond Fund does not, the Tennessee Municipal Bond Fund will be reorganized into an Acquiring Fund that is an intermediate-term municipal bond fund. In this event, the management team will, in all likelihood, be required to sell a significant portion of the Tennessee Municipal Bond Fund's longer-term municipal bonds (either in anticipation of or after the Reorganization) and purchase new intermediate-term municipal bonds in order to abide by the Acquiring Fund's investment objective and principal investment strategies. # Money market mutual fund registered under the Investment Company Act of 1940, as amended, and sub-advised by Banc of America Capital Management, LLC. Nations Tennessee Municipal Bond Fund/Nations Tennessee Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Net Assets (unaudited) September 30, 2001
Nations Tennessee Intermediate Nations Municipal Nations Tennessee Bond Fund Tennessee Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) --------------------------------------------- -------------- Total Investments $ 9,740 $ - $ - $ 9,740 Other Assets and Liabilities: Cash 1 - 1 Interest receivable 156 - 156 Receivable from investment advisor 8 - 41 (a) 49 Administration fee payable (2) - (2) Shareholder servicing and distribution fees payable (4) - (4) Distributions payable (35) - (35) Accrued Trustees' fees and expenses (37) - (37) Accrued expenses and other liabilities (18) - (41)(a) (59) --------------------------------------------- ------------- Total Other Assets and Liabilities 69 - - 69 --------------------------------------------- ------------- Net Assets $ 9,809 $ - $ - $ 9,809 ============================================= ============= Net Assets by Class: Primary A $ 4,581,735 $ - $ - $4,581,735 Investor A 1,897,996 - - 1,897,996 Investor B 3,087,147 - - 3,087,147 Investor C 241,808 - - 241,808 --------------------------------------------- ------------- $ 9,808,686 $ - $ - $9,808,686 --------------------------------------------- ------------- Shares Outstanding by Class: Primary A 443,952 - - 443,952 Investor A 183,872 - - 183,872 Investor B 299,129 - - 299,129 Investor C 23,428 - - 23,428 --------------------------------------------- ------------- 950,381 - - 950,381 --------------------------------------------- ------------- Net Asset Value per Share by Class: Primary A $ 10.32 $ - $ - $ 10.32 Investor A $ 10.32 $ - $ - $ 10.32 Investor B $ 10.32 $ - $ - $ 10.32 Investor C $ 10.32 $ - $ - $ 10.32
(a) Adjustment reflects estimated costs of Reorganization. See Notes to Pro Forma Financial Statements Nations Tennessee Municipal Bond Fund/Nations Tennessee Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Operations (unaudited) Twelve Month Period Ending September 30, 2001
Nations Tennessee Intermediate Nations Municipal Nations Tennessee Bond Fund Tennessee Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ------------------------------------------------------------------- Investment Income: Interest $541 $ - $ - $541 ------------------------------------- -------- Expenses: Investment advisory fee 50 - (10)(a) 40 Administration fee 23 - - 23 Transfer agent fee 3 - - 3 Custodian fees 1 - - 1 Legal and audit fees 47 - - 47 Trustees' fees and expenses 24 - - 24 Printing expense 13 - - 13 Other 2 - 41 (b) 43 ------------------------------------- -------- Subtotal 163 - 31 194 ------------------------------------- -------- Shareholder servicing and distribution fees: Investor A Shares 4 - - 4 Investor B Shares 36 - - 36 Investor C Shares 2 - - 2 ------------------------------------- -------- Total expenses 205 - 31 236 ------------------------------------- -------- Fees waived and/or expenses reimbursed by investment advisor, administrator, and/or distributor (103) - (41)(b) (144) ------------------------------------- -------- Net Expenses 102 - (10) 92 ------------------------------------- -------- Net Investment Income 439 - 10 449 ------------------------------------- -------- Net Realized And Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) on investments 65 - 65 Net change in unrealized appreciation/ (depreciation) of investments 430 - 430 ------------------------------------- -------- Net realized and unrealized gain/(loss) on investments 495 - 495 ------------------------------------- -------- Net Increase/(Decrease) in Net Assets Resulting From Operations $934 $ - $10 $944 ===================================== ========
Legend: - ------- (a) Reflects adjustment to the acquiring fund's contractual fee obligations. (b) Adjustment reflects estimated costs of Reorganization. See Notes to Pro Forma Financial Statements Nations Tennessee Municipal Bond Fund Nations Tennessee Intermediate Municipal Bond Fund (acquiring) Notes to Pro Forma Combining Financial Statements (unaudited) 1. Basis of Combination The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange described in the next paragraph occurred as of September 30, 2001 and the unaudited Pro Forma Combining Statement of Operations for the year ended September 30, 2001 assumes the exchange occurred as of October 1, 2000. These statements have been derived from books and records utilized in calculating daily net asset value of each fund at September 30, 2001 and for the twelve month period then ended. The proforma statements give effect to the proposed reorganization ("Reorganization") of Nations Tennessee Municipal Bond Fund (the "Fund") and Nations Tennessee Intermediate Municipal Bond Fund (acquiring) (the "Acquiring Fund"). The Reorganization provides for the transfer of the assets and liabilities of the Fund to the Acquiring Fund, in exchange for shares of equal value of designated classes of the Acquiring Fund. The Reorganization is expected to be done on a tax-free basis whereby the Acquiring Fund will assume the market value and cost basis of the portfolio positions in the Fund and the results of operations of the Fund for pre-combination periods will not be restated. These financial statements present the Reorganization of Nations Tennessee Municipal Bond Fund into the Acquiring Fund. It is possible that both Nations Tennessee Municipal Bond Fund and Nations Tennessee Intermediate Municipal Bond Fund approve the Reorganization - that scenario is shown after these notes. The Funds will only bear the expenses of the Reorganization if those expenses do not exceed certain expense "caps" that have been put in place by the investment adviser. Because of these caps, it is not expected that the Funds will bear the costs associated with the Reorganization, including solicitation costs. 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 the Fund and the Acquiring Fund, with certain expenses adjusted to reflect the expected expenses of the Acquiring Fund.
Nations Tennessee Municipal Bond Fund/Nations Tennessee Intermediate Municipal Bond Fund/Nations Tennessee Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) September 30, 2001 Nations Tennessee Intermediate Nations Municipal Nations Tennessee Nations Bond Tennessee Intermediate Nations Tennessee Fund Municipal Municipal Tennessee Intermediate (acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - 95.1% Tennessee - 93.1% $ 250 $ 1,285 $ 1,535 Anderson County, Tennessee, GO Refunding, Series 2001, (FSA Insured), 5.000% 04/01/13 Aaa AAA $ 262 $ 1,344 $ 1,606 1,000 1,000 Anderson County, Tennessee, Health and Educational Facilities Board, Revenue Refunding, (Methodist Medical Center - Oak Ridge Project) Series 1993, 5.400% 07/01/04 A1 NR 1,022 1,022 500 500 Blount County, Tennessee, Public Building Authority, Public Facility Revenue, Series 1998, (FGIC Insured), 5.000% 04/01/19 Aaa AAA 497 497 1,700 1,700 Chattanooga-Hamilton County, Tennessee, Hospital Authority, Revenue Refunding, (Erlanger Medical Center Project) Series 1993, (FSA Insured), 5.375% 10/01/04 Aaa AAA 1,821 1,821 250 1,000 1,250 Chattanooga-Hamilton County, Tennessee, Hospital Authority, Revenue Refunding, (Erlanger Medical Center Project) Series 1993, (FSA Insured), 5.500% 10/01/07 Aaa AAA 275 1,099 1,374 740 740 Hamilton County, Tennessee, GO Refunding, Series 1998B, 5.100% 08/01/24 Aa1 NR 757 757 575 575 Humphreys County, Tennessee, Industrial Development Board, Solid Waste Disposal Revenue, (E.I. duPont de Nemours and Company Project) Series 1994, AMT, 6.700% 05/01/24 Aa3 AA- 610 610 400 1,600 2,000 Knox County, Tennessee, Health Educational and Housing Facilities Board, Hospital Facilities Improvement Revenue Refunding, (Baptist Health System of East Tennessee, Inc. Project) Series 1996,(CONNIE LEE Insured), 5.500% 04/15/11 Aaa AAA 429 1,715 2,144 500 500 Knox County, Tennessee, Health Educational and Housing Facilities Board, Hospital Facilities Revenue, (Sanders Alliance Project) Series 1993A, (MBIA Insured), 4.900% 01/01/05 Aaa AAA 528 528 300 300 Knox County, Tennessee, Health Educational and Housing Facilities Board, Revenue Refunding, (Fort Sanders Alliance Project) Series 1993, (MBIA Insured), 7.250% 01/01/09 Aaa AAA 359 359 500 1,500 2,000 Knox County, Tennessee, Health Educational and Housing Facilities Board, Revenue, (University Health Systems Inc. Project) Series 1999, 5.750% 04/01/19 Baa1 NR 504 1,513 2,017 1,250 1,250 Knox County, Tennessee, Public Improvement GO, Series 1998, 4.750% 04/01/19 Aa2 AA 1,210 1,210 1,330 1,330 Lawrenceburg, Tennessee, Public Building Authority, Water and Sewer GO, Series 2001B, (FSA Insured), 5.500% 07/01/16 Aaa AAA 1,412 1,412 200 200 Loudon County, Tennessee, Industrial Development Board, Solid Waste Disposal Revenue, (Kimberly-Clark Corporation Project) Series 1993, AMT, 6.200% 02/01/23 Aa2 AA 205 205 500 2,500 3,000 Maury County, Tennessee, Industrial Development Board, Multi-Modal PCR Refunding, (General Motors Corporation - Saturn Corporation Project) Series 1994, 6.500% 09/01/24 A2 A 542 2,713 3,255 1,000 1,000 Maury County, Tennessee, Industrial Development Board, Solid Waste Disposal Revenue, Occidental Petroleum Corporation- AMT, (GTD-AGMT), 6.250% 08/01/18 Baa2 BBB- 1,026 1,026 250 1,000 1,250 McMinn County, Tennessee, Industrial Development Board, Recycling Facilities Revenue, (Bowater Inc. Project) Series 1992, AMT, 7.400% 12/01/22 Baa3 BBB 264 1,054 1,318 1,000 1,000 Memphis, Tennessee, Electric System Revenue Refunding, Series 1992, 6.000% 01/01/05 Aa3 AA 1,089 1,089 300 300 Memphis, Tennessee, Electric System Revenue Refunding, Series 1993, 4.900% 01/01/11 Aa3 AA 306 306
Nations Tennessee Municipal Bond Fund/Nations Tennessee Intermediate Municipal Bond Fund/ Nations Tennessee Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Tennessee Intermediate Nations Municipal Nations Tennessee Nations Bond Tennessee Intermediate Nations Tennessee Fund Municipal Municipal Tennessee Intermediate(acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) Tennessee - (continued) $ 400 $ 2,100 $ 2,500 Memphis, Tennessee, GO, Series 2000, 5.000% 04/01/17 Aa2 AA $ 404 $ 2,122 $ 2,526 1,500 1,500 Memphis, Tennessee, Water Division, Revenue Refunding, Series 1992, 5.900% 01/01/04 Aaa AAA 1,600 1,600 1,000 1,000 Memphis-Shelby County, Tennessee, Airport Authority, Special Facilities and Project Revenue Refunding, (Federal Express Corporation Project) Series 1992, 6.750% 09/01/12 Baa2 BBB 1,025 1,025 500 500 Memphis-Shelby County, Tennessee, Airport Authority, Special Facilities and Project Revenue Refunding, (Federal Express Corporation Project) Series 1997, 5.350% 09/01/12 Baa2 BBB 485 485 350 350 Metropolitan Government, Nashville and Davidson County, Tennessee, Electric Revenue, Series 1996A, Prerefunded 05/15/06 @ 102, 5.625% 05/15/14 Aa3 AA 391 391 400 1,600 2,000 Metropolitan Government, Nashville and Davidson County, Tennessee, Electric Revenue, Series 1998B, 5.500% 05/15/13 Aa3 AA 442 1,766 2,208 1,000 1,000 Metropolitan Government, Nashville and Davidson County, Tennessee, GO Refunding, Series 1993, 5.250% 05/15/07 Aa2 AA 1,083 1,083 505 505 Metropolitan Government, Nashville and Davidson County, Tennessee, Health and Educational Facilities Board, Improvement Revenue Refunding, (Meharry Medical College Project) Series 1996, (AMBAC Insured), 6.000% 12/01/08 Aaa AAA 572 572 300 295 595 Metropolitan Government, Nashville and Davidson County, Tennessee, Health and Educational Facilities Board, Improvement Revenue Refunding, (Meharry Medical College Project) Series 1996, (AMBAC Insured), 6.000% 12/01/09 Aaa AAA 341 336 677 500 500 Metropolitan Government, Nashville and Davidson County, Tennessee, Health and Educational Facilities Board, Improvement Revenue Refunding, (Meharry Medical College Project) Series 1996, (AMBAC Insured), 6.000% 12/01/16 Aaa AAA 572 572 1,000 1,000 Metropolitan Government, Nashville and Davidson County, Tennessee, Multi-Family Housing Revenue, (Enchantment, Inc. - Welch Bend Apartments Project) Series 1996A, (FNMA COLL), Mandatory Put 01/01/07 @ 100, 5.500% 01/01/27 NR AAA 1,030 1,030 250 250 Metropolitan Government, Nashville and Davidson County, Tennessee, Revenue, (Meharry Medical College Project) Series 1994, (AMBAC Insured), Prerefunded 12/01/04 @ 102, 7.000% 12/01/11 Aaa AAA 287 287 300 300 Metropolitan Government, Nashville and Davidson County, Tennessee, Water and Sewer Systems Revenue Refunding, Series 1993, (FGIC Insured), 5.200% 01/01/13 Aaa AAA 323 323 1,645 1,645 Rutherford County, Tennessee, Public Improvement GO, Series 1996, 6.000% 04/01/06 Aa2 AA 1,827 1,827 1,280 1,280 Shelby County, Tennessee, GO Refunding, Series 1996B, 5.200% 12/01/09 Aa3 AA+ 1,364 1,364 1,000 1,000 Shelby County, Tennessee, GO Refunding, Series 1999B, 5.250% 04/01/11 Aa3 AA+ 1,088 1,088 520 520 Shelby County, Tennessee, Health Educational and Housing Facilities Board, Revenue, (Lebonheur Childrens Medical Center Project) Series 1993D, (MBIA Insured), 5.300% 08/15/04 Aaa AAA 557 557 500 500 Shelby County, Tennessee, Health Educational and Housing Facilities Board, Revenue, (Methodist Health Systems, Inc. Project) Series 1995, (MBIA Insured), 6.250% 08/01/09 Aaa AAA 569 569 2,000 2,000 Shelby County, Tennessee, Health Educational and Housing Facilities Board, Revenue, (St. Jude's Childrens Research Project) Series 1999, 5.375% 07/01/24 NR AA 1,988 1,988
Nations Tennessee Municipal Bond Fund/Nations Tennessee Intermediate Municipal Bond Fund/ Nations Tennessee Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Tennessee Intermediate Nations Municipal Nations Tennessee Nations Bond Tennessee Intermediate Nations Tennessee Fund Municipal Municipal Tennessee Intermediate(aquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) Tennessee - (continued) $ - $ 400 $ 400 Shelby County, Tennessee, Public Improvement GO Refunding, Series 1999A, 4.750% 05/01/21 Aa3 AA+ $ - $ 381 $ 381 500 500 Shelby County, Tennessee, Public Improvement GO, Series 1996A, 5.625% 06/01/06 Aa3 AA+ 549 549 250 250 Sumner County, Tennessee, Health Educational and Housing Facilities Board, Revenue Refunding, (Sumner Regional Health Systems, Inc. Project) Series 1994, 7.000% 11/01/03 NR A- 268 268 1,000 1,000 Sumner County, Tennessee, Resource Authority, Revenue, Series 1993, (AMBAC Insured), 5.125% 08/01/03 Aaa AAA 1,048 1,048 1,500 1,500 Tennergy Corporation, Tennessee, Gas Revenue, Series 1999, (MBIA Insured), 5.000% 06/01/07 Aaa AAA 1,558 1,558 1,000 1,000 Tennessee State, GO, Series 1994A, Prerefunded 03/01/04 @ 101.5, 5.200% 03/01/05 Aa2 AA 1,071 1,071 1,000 1,000 Tennessee State, GO, Series 1995A, 7.000% 03/01/03 Aa2 AA 1,063 1,063 500 500 Tennessee State, School Board Authority, Higher Education Facilities Revenue, Series 1992A, Prerefunded 05/01/02 @ 101.5, 6.000% 05/01/05 Aa2 AA- 519 519 250 250 Tennessee State, Local Development Authority, Revenue Refunding, (State Loan Program) Series 1993A, 5.750% 03/01/11 A2 A 260 260 1,120 1,120 Tennessee, Housing Development Agency, Revenue, (Home Ownership Program) Series 1997, AMT, 3.360%+ 07/01/03 Aa2 AA 1,056 1,056 1,215 1,215 Tennessee, Housing Development Agency, Revenue, (Home Ownership Program) Series 1997, AMT, 3.680%+ 07/01/04 Aa2 AA 1,099 1,099 2,500 2,500 Tennessee, Housing Development Agency, Revenue, (Home Ownership Program) Series 1997-3A, AMT, 4.620%+ 01/01/08 Aa2 AA 1,884 1,884 300 785 1,085 Tennessee, Housing Development Agency, Revenue, (Home Ownership Program) Series 1998, AMT, 4.750% 07/01/08 Aa2 AA 312 816 1,128 1,135 1,135 Tennessee, Housing Development Agency, Revenue, (Home Ownership Program) Series 1998, AMT, 4.850% 07/01/09 Aa2 AA 1,180 1,180 500 700 1,200 Williamson County, Tennessee, GO, Series 2000, 5.350% 03/01/17 Aa1 NR 521 730 1,251 ------------------------- 9,616 47,427 57,043 ------------------------- Missouri - 2.0% 1,275 1,275 West Plains, Missouri, Industrial Development Authority, Hospital Revenue, (Ozarks Medical Center Project) Series 1997, 5.250% 11/15/07 NR BB+ 1,236 1,236 ------------------------- Total municipal bonds and notes (Cost $9,035 and $46,374, respectively) 9,616 48,663 58,279 ------------------------- Shares Shares Shares (000) (000) (000) - ------------------------------------ Investment companies - 3.9% (Cost $124 and $2,304, respectively) 124 2,304 2,428 Nations Municipal Reserves# 124 2,304 2,428 ------------------------- Total investments - 99.0% (Cost $9,159 and $48,678, respectively) $ 9,740 $50,967 $60,707 ---------------------------
- --------------------------------------------------------------------- + Zero coupon security. The rate shown reflects the yield to maturity. # Money market mutual fund registered under the Investment Company Act of 1940, as amended, and sub-advised by Banc of America Capital Management, LLC.
Nations Tennessee Municipal Bond Fund / Nations Tennessee Intermediate Municipal Bond Fund/Nations Tennessee Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Net Assets (unaudited) September 30, 2001 Nations Tennessee Intermediate Nations Municipal Nations Tennessee Bond Fund Tennessee Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) --------------------------------------------- -------------- Total Investments $ 9,740 $ 50,967 $ -- $ 60,707 Other Assets and Liabilities: Cash 1 -- 1 Receivable for Fund shares sold -- 50 50 Interest receivable 156 723 879 Receivable from investment advisor 8 -- 8 Administration fee payable (2) (8) (10) Shareholder servicing and distribution fees payable (4) (4) (8) Distributions payable (35) (182) (217) Accrued Trustees' fees and expenses (37) (38) (75) Accrued expenses and other liabilities (18) (24) (42) --------------------------------------------- ------------- Total Other Assets and Liabilities 69 517 -- 586 --------------------------------------------- ------------- Net Assets $ 9,809 $ 51,484 $ -- $ 61,293 ============================================= ============ Net Assets by Class: Primary A $ 4,581,735 $ 41,525,102 $ -- $ 46,106,837 Investor A 1,897,996 8,516,240 -- 10,414,236 Investor B 3,087,147 1,439,979 -- 4,527,126 Investor C 241,808 2,909 -- 244,717 --------------------------------------------- ------------- $ 9,808,686 $ 51,484,230 $ -- $ 61,292,916 --------------------------------------------- ------------- Shares Outstanding by Class: Primary A 443,952 3,967,015 (6,346) (a) 4,404,621 Investor A 183,872 813,625 (2,593) (a) 994,904 Investor B 299,129 137,552 (4,273) (a) 432,408 Investor C 23,428 279 (222) (a) 23,485 --------------------------------------------- ------------- 950,381 4,918,471 (13,434) 5,855,418 --------------------------------------------- ------------- Net Asset Value per Share by Class: Primary A $ 10.32 $ 10.47 $ -- $ 10.47 Investor A $ 10.32 $ 10.47 $ -- $ 10.47 Investor B $ 10.32 $ 10.47 $ -- $ 10.47 Investor C $ 10.32 $ 10.42 $ -- $ 10.42
- --------------- (a) Reflects the issuance of Nations Tennessee Intermediate Municipal Bond Fund shares to holders of shares of Nations Tennesse Municipal Bond Fund. See Notes to Pro Forma Financial Statements
Nations Tennessee Municipal Bond Fund / Nations Tennessee Intermediate Municipal Bond Fund/Nations Tennessee Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Operations (unaudited) Twelve Month Period Ending September 30, 2001 Nations Tennessee Intermediate Nations Municipal Nations Tennessee Bond Fund Tennessee Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ---------------------------------------------------- -------------- Investment Income: Interest $541 $2,484 $ - $3,025 ---------------------------------------------------- -------------- Expenses: Investment advisory fee 50 195 (12)(a) 233 Administration fee 23 106 - 129 Transfer agent fee 3 13 - 16 Custodian fees 1 4 - 5 Legal and audit fees 47 45 (47)(b) 45 Registration and filing fees - 1 - 1 Trustees' fees and expenses 24 24 (24)(b) 24 Printing expense 13 14 (13)(b) 14 Other 2 6 99 (b),(c) 107 --------------------------------------------- -------------- Subtotal 163 408 3 574 --------------------------------------------- -------------- Shareholder servicing and distribution fees: Investor A Shares 4 20 - 24 Investor B Shares 36 15 - 51 Investor C Shares 2 - - 2 --------------------------------------------- -------------- Total expenses 205 443 3 651 --------------------------------------------- -------------- Fees waived and/or expenses reimbursed by investment advisor, administrator, and/or distributor (103) (166) (11)(c),(d) (280) --------------------------------------------- -------------- Net Expenses 102 277 (8) 371 --------------------------------------------- -------------- Net Investment Income 439 2,207 8 2,654 --------------------------------------------- -------------- Net Realized And Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) on investments 65 69 134 Net change in unrealized appreciation/ (depreciation) of investments 430 2,164 2,594 --------------------------------------------- -------------- Net realized and unrealized gain/(loss) on investments 495 2,233 2,728 --------------------------------------------- -------------- Net Increase/(Decrease) in Net Assets Resulting From Operations $934 $4,440 $ 8 $5,382 ============================================= ==============
Legend: - ------- (a) Reflects adjustment to the acquiring fund's contractual fee obligations. (b) Adjustment reflects expected savings when the two funds become one. (c) Adjustment reflects estimated costs of Reorganization. (d) Adjustment reflects reduction in fund level expenses as a result of the lower fund level expense cap. See Notes to Pro Forma Financial Statements Nations Tennessee Municipal Bond Fund Nations Tennessee Intermediate Municipal Bond Fund Nations Tennessee Intermediate Municipal Bond Fund (acquiring) Notes to Pro Forma Combining Financial Statements (unaudited) 1. Basis of Combination The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange described in the next paragraph occurred as of September 30, 2001 and the unaudited Pro Forma Combining Statement of Operations for the year ended September 30, 2001 assumes the exchange occurred as of October 1, 2000. These statements have been derived from books and records utilized in calculating daily net asset value of each fund at September 30, 2001 and for the twelve month period then ended. The pro forma statements give effect to the proposed reorganization (the "Reorganization") of Nations Tennessee Municipal Bond Fund ("Tennessee Municipal Bond Fund") and Nations Tennessee Intermediate Municipal Bond Fund ("Tennessee Intermediate Municipal Bond Fund") into Nations Tennessee Intermediate Municipal Bond Fund (acquiring) (the "Acquiring Fund"). The Reorganization provides for the transfer of the assets and liabilities of Tennessee Municipal Bond Fund and Tennessee Intermediate Municipal Bond Fund to the Acquiring Fund, in exchange for shares of equal value of designated classes of the Acquiring Fund. The Reorganization is expected to be done on a tax-free basis whereby the Acquiring Fund will assume the market value and cost basis of the portfolio positions in the Tennessee Municipal Bond Fund and Tennessee Intermediate Municipal Bond Fund and the results of operations of Tennessee Municipal Bond Fund and Tennessee Intermediate Municipal Bond Fund for pre-combination periods will not be restated. It is not expected that the investment adviser or sub-adviser will sell any securities of either acquired fund, in anticipation of or as a result of the Reorganization, other than in the normal course of business. The Funds will only bear the expenses of the Reorganization if those expenses do not exceed certain expense "caps" that have been put in place by the investment adviser. Because of these caps, it is not expected that the Funds will bear the costs associated with the Reorganization, including solicitation costs. 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 Acquiring Fund, with certain expenses adjusted to reflect the expected expenses of the Acquiring Fund. Nations Virginia Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) September 30, 2001
Nations Virginia Intermediate Nations Municipal Nations Virginia Nations Bond Virginia Intermediate Nations Virginia Fund Municipal Municipal Virginia Intermediate(acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund* Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - 98.5% Virginia - 81.3% $1,000 $ - $1,000 Arlington County, Virginia, Industrial Development Authority, Facilities Revenue Refunding, (Lee Gardens Housing Corporation-Housing Mortgage - Woodbury Park Apartments Project) Series 1998A, 5.450% 01/01/29 NR A $ 960 $ - $ 960 1,000 1,000 Chesapeake, Virginia, Water and Sewer GO, Series 1995A, 5.375% 12/01/20 Aa2 AA 1,024 - 1,024 500 500 Covington-Allegheny County, Virginia, IDR Refunding, (Westvaco Corporation Project) Series 1994, 6.650% 09/01/18 Baa1 BBB 525 - 525 500 500 Fairfax County, Virginia, Industrial Development Authority, Health Care Revenue Refunding, (Inova Health Systems Project) Series 1996, 5.500% 08/15/10 Aa2 AA 536 - 536 1,000 1,000 Fairfax County, Virginia, Public Improvement GO, Series 1999B, 5.500% 12/01/16 Aaa AAA 1,066 - 1,066 1,000 1,000 Fairfax County, Virginia, Water and Sewer Revenue Refunding, Series 1993, (AMBAC Insured), 5.500% 11/15/13 Aaa AAA 1,043 - 1,043 1,000 1,000 Fairfax County, Virginia, Water Authority, Water Revenue, Series 2000, 5.625% 04/01/25 Aa1 AAA 1,057 - 1,057 1,000 1,000 Fairfax County, Virginia, Water Authority, Water Revenue, Unrefunded Balance, Series 1992, 6.000% 04/01/22 Aa1 AAA 1,082 - 1,082 800 800 Giles County, Virginia, Industrial Development Authority, Exempt Facilities Revenue, (Hoechst Celanese Corporation Project) Series 1995, AMT, 5.950% 12/01/25 Baa2 BBB 781 - 781 1,000 1,000 Giles County, Virginia, Industrial Development Authority, Solid Waste Disposal Facilities Revenue, (Hoechst Celanese Corporation Project) Series 1992, AMT, 6.625% 12/01/22 Baa2 BBB 1,031 - 1,031 400 400 Halifax County, Virginia, Industrial Development Authority, Hospital Revenue Refunding, (Halifax Regional Hospital, Inc. Project) Series 1998, 5.250% 09/01/17 NR A 398 - 398 500 500 Hanover County, Virginia, Industrial Development Authority, Revenue, (Memorial Regional Medical Center Project) Series 1995, (MBIA Insured), 5.500% 08/15/25 Aaa AAA 508 - 508 500 500 Henrico County, Virginia, Industrial Development Authority, Public Facilities Lease Revenue, Series 1994, Prerefunded 08/01/05 @ 102, 7.000% 08/01/13 Aa2 AA 581 - 581 500 500 Henry County, Virginia, GO, Series 1994, 5.750% 07/15/07 A2 A 537 - 537 700 700 James City and County, Virginia, GO, Series 1995, (FGIC Insured, State Aid Withholding), 5.250% 12/15/14 Aaa AAA 730 - 730 765 765 Loudoun County, Virginia, Industrial Development Authority, Hospital Revenue, (Loudoun Hospital Center Project) Series 1995, (FSA Insured), 5.600% 06/01/09 Aaa AAA 817 - 817 500 500 Loudoun County, Virginia, Industrial Development Authority, Hospital Revenue, (Loudoun Hospital Center Project) Series 1995, (FSA Insured), 5.800% 06/01/20 Aaa AAA 520 - 520 2,000 2,000 Montgomery County, Virginia, Industrial Development Lease Authority, Revenue, Series 2000B, (AMBAC Insured), 5.500% 01/15/22 Aaa AAA 2,090 - 2,090 500 500 Peninsula Ports Authority, Virginia, Health Care Facilities Revenue Refunding, (Riverside Health System Project) Series 1992A, Prerefunded 07/01/02 @ 102, 6.625% 07/01/18 Aaa AAA 527 - 527 500 500 Pittsylvania County, Virginia, Public Improvement GO, Series 1994, Prerefunded 07/01/04 @ 102, 5.850% 07/01/08 A3 AAA 550 - 550 1,000 1,000 Prince William County, Virginia, Industrial Development Authority, Lease Revenue, (ATCC Project) Series 1996, 6.000% 02/01/14 Aa3 NR 1,045 - 1,045
Nations Virginia Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001
Nations Virginia Intermediate Nations Municipal Nations Virginia Nations Bond Virginia Intermediate Nations Virginia Fund Municipal Municipal Virginia Intermediate(acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund* Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) Virginia - (continued) $ 500 $ - $ 500 Prince William County, Virginia, Park Authority, Revenue, Series 1994, Prerefunded 10/15/04 @ 102, 6.875% 10/15/16 NR NR $ 568 $ - $ 568 500 500 Richmond, Virginia, GO Refunding, Series 1995B, (FGIC Insured, State Aid Withholding), 5.000% 01/15/21 Aaa AAA 498 - 498 1,000 1,000 Staunton, Virginia, Industrial Development Authority, Educational Facilities Revenue, (Mary Baldwin College Project) Series 1996, 6.600% 11/01/14 NR NR 1,064 - 1,064 1,500 1,500 Suffolk, Virgina, Redevelopment And Housing Authority, Multi-Family Housing Revenue Refunding, (Windsor Ltd. Partnership Project) Series 2001, (FNMA Insured), Mandatory Put 07/01/11 @ 100, 4.850% 07/01/31 Aaa NR 1,557 - 1,557 500 500 Upper Occoquan, Virginia, Sewer Authority, Regional Sewer Revenue, Series 1995A, (MBIA Insured), 5.000% 07/01/25 Aaa AAA 493 - 493 1,000 1,000 Virginia Beach, Virginia, Public Improvement GO, Series 2000, 5.500% 03/01/18 Aa1 AA+ 1,060 - 1,060 500 500 Virginia Beach, Virginia, Public Improvement GO Refunding, Series 1994, (State Aid Withholding), 5.750% 11/01/08 Aa1 AA+ 538 - 538 1,035 1,035 Virginia State, Housing Development Authority, Commonwealth Mortgage Revenue, Series 2001D-1, 4.750% 07/01/12 Aa1 AA+ 1,058 - 1,058 640 640 Virginia State, Public School Authority, Revenue, Series 1994A, (State Aid Withholding), 6.125% 08/01/11 Aa1 AA 687 - 687 1,070 1,070 Virginia State, Residenital Authority, Infrastructure Revenue, Series 2000A, (MBIA Insured), 5.500% 05/01/21 Aaa AAA 1,118 - 1,118 750 750 Virginia State, Resource Authority, Sewer Systems Revenue, (Hopewell Regional Wastewater Facilities Project) Series 1995A, AMT, 6.000% 10/01/15 NR AA 799 - 799 500 500 Virginia State, Resource Authority, Water and Sewer Systems Revenue, (Fauquier County Water and Sanitation Project) Series 1994C, 6.125% 05/01/14 NR AA 531 - 531 1,800 1,800 West Point, Virginia, Industrial Development Authority, Solid Waste Disposal Revenue,(Chesapeake Corporation Project) Series 1994A, AMT, 6.375% 03/01/19 Ba2 BB 1,646 - 1,646 --------------------------- 29,025 - 29,025 ---------------------------
Nations Virginia Intermediate Nations Municipal Nations Virginia Nations Bond Virginia Intermediate Nations Virginia Fund Municipal Municipal Virginia Intermediate(acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund* Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Florida - 9.0% $2,000 $ - $2,000 Florida State, Board of Education Lottery Revenue, Series 2001B, Aaa AAA 1,996 - 1,996 5.000% 07/01/20 1,195 1,195 Miami-Dade County, Florida, Health Authority, Hospital Revenue Refunding, (Miami Childrens Hospital Project) Series 2001, Aaa AAA 1,220 - 1,220 (AMBAC Insured), -------------------------- 4.375% 08/15/10 3,216 - 3,216 -------------------------- Mississippi - 5.3% 1,285 1,285 Mississippi State, Hospital Facilities and Equipment Authority, Revenue, (Forrest County General Hospital Project) Series 2000, Aaa NR 1,345 - 1,345 (FSA Insured), 5.625% 01/01/20 500 500 Warren County, Mississippi, Environmental Improvement Revenue Baa2 BBB 529 - 529 Refunding, (International Paper Company Project) -------------------------- Series 2000A, AMT, 6.700% 08/01/18 1,874 - 1,874 -------------------------- Wisconsin - 2.9% 1,000 1,000 Wisconsin State, Health and Educational Facilities Revenue, (Agnesian Healthcare Project) Series 2001, 6.000% 07/01/21 A3 A- 1,029 - 1,029 -------------------------- Total municipal bonds and notes 35,144 - 35,144 (Cost $33,348 and $0, respectively) --------------------------
Nations Virginia Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001
Nations Virginia Nations Nations Intermediate Nations Virginia Nations Virginia Municipal Bond Virginia Intermediate Virginia Intermediate Fund Municipal Municipal Combined Municipal Municipal (acquiring) Bond Bond Pro Bond Bond Combined Pro Fund Fund Forma Moody's Fund* Fund Forma Shares Shares Shares S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ----------------------------------------------------------------------------------------------------------------------- Investment companies - 0.6% (Cost $232 and $0, respectively) 232 - 232 Nations Municipal Reserves# $ 232 $ - $ 232 ---------------------------------------- Total investments - 99.1% (Cost $33,580 and $0, respectively) $ 35,376 $ - $ 35,376 ----------------------------------------
- -------------------------------- * If the Virginia Municipal Bond Fund approves the Reorganization, and the Virginia Intermediate Municipal Bond Fund does not, the Virginia Municipal Bond Fund will be reorganized into an Acquiring Fund that is an intermediate-term municipal bond fund. In this event, the management team will, in all likelihood, be required to sell a significant portion of the Virginia Municipal Bond Fund's longer-term municipal bonds (either in anticipation of or after the Reorganization) and purchase new intermediate-term municipal bonds in order to abide by the Acquiring Fund's investment objective and principal investment strategies. # Money market mutual fund registered under the Investment Company Act of 1940, as amended, and sub-advised by Banc of America Capital Management, LLC. Nations Virginia Municipal Bond Fund / Nations Virginia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Net Assets (unaudited) September 30, 2001
Nations Virginia Intermediate Nations Municipal Nations Virginia Bond Fund Virginia Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ------------------------------------------------- -------------- Total Investments $ 35,376 $ - $ - $ 35,376 Other Assets and Liabilities: Receivable for investment securities sold 38 - 38 Receivable for Fund shares sold 1 - 1 Interest receivable 535 - 535 Receivable from investment advisor - - 43 (a) 43 Payable for Fund shares redeemed (38) - (38) Administration fee payable (6) - (6) Shareholder servicing and distribution fees payable (14) - (14) Distributions payable (133) - (133) Accrued Trustees' fees and expenses (38) - (38) Accrued expenses and other liabilities (24) - (43)(a) (67) ------------------------------------------------- -------------- Total Other Assets and Liabilities 321 - - 321 ------------------------------------------------- -------------- Net Assets $ 35,697 $ - $ - $ 35,697 ================================================== ============== Net Assets by Class: Primary A $ 24,144,521 $ - $ - $ 24,144,521 Investor A 1,181,119 - - 1,181,119 Investor B 10,315,879 - - 10,315,879 Investor C 55,080 - - 55,080 -------------------------------------------------- -------------- $ 35,696,599 $ - $ - $ 35,696,599 -------------------------------------------------- -------------- Shares Outstanding by Class: Primary A 2,438,210 - - 2,438,210 Investor A 119,393 - - 119,393 Investor B 1,041,755 - - 1,041,755 Investor C 5,563 - - 5,563 -------------------------------------------------- -------------- 3,604,921 - - 3,604,921 -------------------------------------------------- -------------- Net Asset Value per Share by Class: Primary A $ 9.90 $ - $ - $ 9.90 Investor A $ 9.89 $ - $ - $ 9.89 Investor B $ 9.90 $ - $ - $ 9.90 Investor C $ 9.90 $ - $ - $ 9.90
(a) Adjustment reflects estimated costs of Reorganization. See Notes to Pro Forma Financial Statements Nations Virginia Municipal Bond Fund / Nations Virginia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Operations (unaudited) Twelve Month Period Ending September 30, 2001
Nations Virginia Intermediate Nations Municipal Nations Virginia Bond Fund Virginia Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined in 000's) (in 000's) (in 000's) (in 000's) ------------------------------------------------- ----------------- Investment Income: Interest $ 1,788 $ - $ - $ 1,788 ------------------------------------------------- ----------------- Expenses: Investment advisory fee 161 - (32)(a) 129 Administration fee 70 - - 70 Transfer agent fee 10 - - 10 Custodian fees 2 - - 2 Legal and audit fees 45 - - 45 Registration and filing fees 2 - - 2 Trustees' fees and expenses 24 - - 24 Printing expense 16 - - 16 Other 4 - 43 (b) 47 ------------------------------------------------- ----------------- Subtotal 334 - 11 345 ------------------------------------------------- ----------------- Shareholder servicing and distribution fees: Investor A Shares 2 - - 2 Investor B Shares 106 - - 106 Investor C Shares - - - - ------------------------------------------------- ----------------- Total expenses 442 - 11 453 ------------------------------------------------- ----------------- Fees waived and/or expenses reimbursed by investment advisor, administrator, and/or distributor (141) - (43)(b) (184) ------------------------------------------------- ----------------- Net Expenses 301 - (32) 269 ------------------------------------------------- ----------------- Net Investment Income 1,487 - 32 1,519 ------------------------------------------------- ----------------- Net Realized And Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) on investments 36 - 36 Net change in unrealized appreciation/ (depreciation) of investments 1,169 - 1,169 ------------------------------------------------- ----------------- Net realized and unrealized gain/(loss) on investments 1,205 - 1,205 ------------------------------------------------- ----------------- Net Increase/(Decrease) in Net Assets Resulting From Operations $2,692 $ - $ 32 $ 2,724 ================================================= =================
Legend: - ------- (a) Reflects adjustment to the acquiring fund's contractual fee obligations. (b) Adjustment reflects estimated costs of Reorganization. See Notes to Pro Forma Financial Statements Nations Virginia Municipal Bond Fund Nations Virginia Intermediate Municipal Bond Fund (acquiring) Notes to Pro Forma Combining Financial Statements (unaudited) 1. Basis of Combination The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange described in the next paragraph occurred as of September 30, 2001 and the unaudited Pro Forma Combining Statement of Operations for the year ended September 30, 2001 assumes the exchange occurred as of October 1, 2000. These statements have been derived from books and records utilized in calculating daily net asset value of each fund at September 30, 2001 and for the twelve month period then ended. The proforma statements give effect to the proposed reorganization ("Reorganization") of Nations Virginia Municipal Bond Fund (the "Fund") and Nations Virginia Intermediate Municipal Bond Fund (acquiring) (the "Acquiring Fund"). The Reorganization provides for the transfer of the assets and liabilities of the Fund to the Acquiring Fund, in exchange for shares of equal value of designated classes of the Acquiring Fund. The Reorganization is expected to be done on a tax-free basis whereby the Acquiring Fund will assume the market value and cost basis of the portfolio positions in the Fund and the results of operations of the Fund for pre-combination periods will not be restated. These financial statements present the Reorganization of the Fund into the Acquiring Fund. It is possible that both Nations Virginia Municipal Bond Fund and Nations Virginia Intermediate Municipal Bond Fund approve the Reorganization - - that scenario is shown after these notes. The Funds will only bear the expenses of the Reorganization if those expenses do not exceed certain expense "caps" that have been put in place by the investment adviser. Because of these caps, it is not expected that the Funds will bear the costs associated with the Reorganization, including solicitation costs. 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 the Fund and the Acquiring Fund, with certain expenses adjusted to reflect the expected expenses of the Acquiring Fund.
Nations Virginia Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) September 30, 2001 Nations Virginia Intermediate Municipal Nations Bond Nations Virginia Nations Fund Virginia Intermediate Nations Virginia (acquir- Municipal Municipal Virginia Intermediate ing) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - 98.3% Virginia - 90.4% $ - $ 2,000 $ 2,000 Alexandria, Virginia, Redevelopment and Housing Authority, Multi-Family Housing Mortgage Revenue, (Buckingham Village Apartments Project) Series 1996A, AMT, 6.050% 07/01/16 NR A+ $ - $ 2,068 $ 2,068 1,000 1,000 Amherst, Virginia, Industrial Development Authority, Revenue Refunding, (Georgia-Pacific Corporation Project) Series 1998, AMT, 5.250% 02/01/11 Baa3 NR 1,036 1,036 3,285 3,285 Arlington County, Virginia, GO Refunding, Series 1993, 6.000% 06/01/12 Aaa AAA 3,814 3,814 3,000 3,000 Arlington County, Virginia, GO, Series 1993, 5.000% 07/15/03 Aaa AAA 3,138 3,138 2,345 2,345 Arlington County, Virginia, GO, Series 1994, 5.400% 08/01/02 Aaa AAA 2,409 2,409 3,865 3,865 Arlington County, Virginia, GO, Series 1999, (State Aid Witholding), 5.250% 06/01/16 Aaa AAA 4,023 4,023 1,000 2,000 3,000 Arlington County, Virginia, Industrial Development Authority, Facilities Revenue Refunding, (Lee Gardens Housing Corporation-Housing Mortgage - Woodbury Park Apartments Project) Series 1998A, 5.450% 01/01/29 NR A 960 1,921 2,881 1,000 1,000 Arlington County, Virginia, Industrial Development Authority, Facilities Revenue, (The Nature Conservancy Project) Series 1997A, 5.450% 07/01/27 Aa1 NR 1,026 1,026 2,000 2,000 Arlington County, Virginia, Industrial Development Authority, IDR Refunding, (Ogden Martin Systems Project) Series 1998A, (FSA Insured), 5.250% 01/01/05 Aaa AAA 2,138 2,138 3,515 3,515 Arlington County, Virginia, Industrial Development Authority, Revenue, (Ogden Martin Systems of Union-Alexandria/Arlington Project) Series 1998B, AMT, (FSA Insured), 5.250% 01/01/09 Aaa AAA 3,755 3,755 2,000 2,000 Arlington County, Virginia, Industrial Development Authority, Revenue, (Ogden Martin Systems of Union-Alexandria/Arlington Project) Series 1998B, AMT, (FSA Insured), 5.250% 01/01/10 Aaa AAA 2,129 2,129 2,000 2,000 Brunswick County, Virginia, Industrial Development Authority, Correctional Facility Lease Revenue, Series 1996, (MBIA Insured), 5.250% 07/01/04 Aaa AAA 2,133 2,133 1,000 1,000 Charlottesville-Albemarle, Virginia, Airport Authority, Revenue Refunding, Series 1995, AMT, 6.125% 12/01/09 NR BBB 1,047 1,047 6,195 6,195 Chesapeake, Virginia, GO Refunding, Series 1993, 5.125% 12/01/05 Aa2 AA 6,708 6,708 1,000 1,000 Chesapeake, Virginia, GO, Series 1998, (State Aid Withholding), 4.650% 08/01/11 Aa2 AA 1,043 1,043 1,525 1,525 Chesapeake, Virginia, Public Improvement GO, Series 1996, (State Aid Withholding), 5.000% 05/01/03 Aa2 AA 1,587 1,587 2,000 2,000 Chesapeake, Virginia, Water and Sewer GO, Series 1995A, (State Aid Withholding), 7.000% 12/01/09 Aa2 AA 2,326 2,326 1,000 1,000 Chesapeake, Virginia, Water and Sewer GO, Series 1995A, 5.375% 12/01/20 Aa2 AA 1,024 1,024 2,000 2,000 Chesterfield County, Virginia, GO Refunding, Series 1991, 5.900% 07/15/02 Aaa AAA 2,046 2,046 1,000 1,000 Chesterfield County, Virginia, GO, Series 1990B, 6.500% 01/01/02 Aaa AAA 1,011 1,011 1,000 1,000 Chesterfield County, Virginia, Water and Sewer Authority, Revenue Refunding, Series 1992, 6.200% 11/01/05 Aa2 AA 1,060 1,060 1,320 1,320 Covington-Allegheny County, Virginia, Industrial Development Authority, PCR Refunding, (Westvaco Corporation Project) Series 1994, 5.900% 03/01/05 Baa1 BBB 1,402 1,402 500 500 Covington-Allegheny County, Virginia, IDR Refunding, (Westvaco Corporation Project) Series 1994, 6.650% 09/01/18 Baa1 BBB 525 525 15,585 15,585 Fairfax County, Virginia, Economic Development Authority, Resource Recovery, Revenue Refunding, Series 1998A, AMT, (AMBAC Insured), 5.950% 02/01/07 Aaa AAA 17,190 17,190
Nations Virginia Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Virginia Intermediate Nations Municipal Nations Virginia Nations Bond Virginia Intermediate Nations Virginia Fund Municipal Municipal Virginia Intermediate(acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) Virginia - (continued) $ - $ 3,385 $ 3,385 Fairfax County, Virginia, Economic Development Authority, Resource Recovery, Revenue Refunding, Series 1998A, AMT, (AMBAC Insured), 6.050% 02/01/09 Aaa AAA $ - $ 3,788 $ 3,788 1,000 1,000 Fairfax County, Virginia, GO, Series 1998, (State Aid Withholding), 4.800% 04/01/10 Aa1 AA+ 1,062 1,062 500 500 Fairfax County, Virginia, Industrial Development Authority, Health Care Revenue Refunding, (Inova Health Systems Project) Series 1996, 5.500% 08/15/10 Aa2 AA 536 536 2,000 2,000 Fairfax County, Virginia, Public Improvement GO, Series 1997A, 6.000% 06/01/04 Aaa AAA 2,168 2,168 1,000 1,000 Fairfax County, Virginia, Public Improvement GO, Series 1999B, 5.500% 12/01/16 Aaa AAA 1,066 1,066 3,000 3,000 Fairfax County, Virginia, Sewer Revenue Refunding, Series 1993,(AMBAC Insured), 5.500% 11/15/09 Aaa AAA 3,217 3,217 3,135 3,135 Fairfax County, Virginia, Water and Sewer Authority, Revenue Refunding, Series 1993, (AMBAC Insured), 5.100% 11/15/04 Aaa AAA 3,346 3,346 1,000 1,000 Fairfax County, Virginia, Water and Sewer Revenue Refunding, Series 1993, (AMBAC Insured), 5.500% 11/15/13 Aaa AAA 1,043 1,043 1,000 2,000 3,000 Fairfax County, Virginia, Water Authority, Water Revenue, Series 2000, 5.625% 04/01/25 Aa1 AAA 1,057 2,113 3,170 1,000 2,000 3,000 Fairfax County, Virginia, Water Authority, Water Revenue, Unrefunded Balance, Series 1992, 6.000% 04/01/22 Aa1 AAA 1,082 2,164 3,246 800 800 Giles County, Virginia, Industrial Development Authority, Exempt Facilities Revenue, (Hoechst Celanese Corporation Project)Series 1995, AMT, 5.950% 12/01/25 Baa2 BBB 781 781 1,000 2,000 3,000 Giles County, Virginia, Industrial Development Authority, Solid Waste Disposal Facilities Revenue, (Hoechst Celanese Corporation Project) Series 1992, AMT, 6.625% 12/01/22 Baa2 BBB 1,031 2,062 3,093 5,000 5,000 Goochland County, Virginia, Industrial Development Authority, (Old Dominion Electric Cooperative Project) Series 1998, AMT, 4.250% 12/01/02 NR NR 5,011 5,011 1,200 1,200 Halifax County, Virginia, Industrial Development Authority, Hospital Revenue Refunding, (Halifax Regional Hospital, Inc. Project) Series 1998, 4.900% 09/01/10 NR A 1,214 1,214 400 400 Halifax County, Virginia, Industrial Development Authority, Hospital Revenue Refunding, (Halifax Regional Hospital, Inc. Project) Series 1998, 5.250% 09/01/17 NR A 398 398 2,500 2,500 Hampton Roads, Virginia, Sanitation District, Capital Improvement Revenue Refunding, Series 1993 4.500% 10/01/02 Aa3 AA 2,557 2,557 500 1,000 1,500 Hanover County, Virginia, Industrial Development Authority, Revenue,(Memorial Regional Medical Center Project) Series 1995,(MBIA Insured), 5.500% 08/15/25 Aaa AAA 508 1,019 1,527 2,105 2,105 Henrico County, Virginia, Industrial Development Authority, Revenue, Series 1994, 7.500% 08/01/02 Aa2 AA 2,198 2,198 500 500 Henrico County, Virginia, Industrial Development Authority, Public Facilities Lease Revenue, Series 1994, Prerefunded 08/01/05 @ 102, 7.000% 08/01/13 Aa2 AA 581 581 3,500 3,500 Henrico County, Virginia, Industrial Development Authority, Solid Waste Revenue, (Browning-Ferris Project) Series 1995, AMT, (GTY-AGMT), Mandatory Put 12/01/05 @ 100, 5.300% 12/01/11 B1 BB- 3,343 3,343 1,500 1,500 Henrico County, Virginia, Water and Sewer Authority, Revenue Refunding, Series 1992, 6.200% 05/01/04 Aa2 AAA 1,534 1,534 2,420 2,420 Henrico County, Virginia, Water and Sewer Authority, Revenue Refunding, Series 1992, 6.300% 05/01/05 Aa2 AAA 2,477 2,477 500 500 Henry County, Virginia, GO, Series 1994, 5.750% 07/15/07 A2 A 537 537
Nations Virginia Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund/Nations Virginia Intermediate Municiple Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Virginia Intermediate Nations Municipal Nations Virginia Nations Bond Virginia Intermediate Nations Virginia Fund Municipal Municipal Combined Virginia Intermediate (acquiring) Bond Bond Pro Municipal Municipal Combined Fund Fund Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - -------------------------------------------------------------------------------------------------------------------------------- Municipal bonds and notes - (continued) Virginia - (continued) $ - $ 1,915 $ 1,915 James City and County, Virginia, GO, Series 1995, (FGIC Insured, State Aid Withholding), 5.000% 12/15/08 Aaa AAA $ - $ 2,042 $ 2,042 700 700 James City and County, Virginia, GO, Series 1995, (FGIC Insured, State Aid Withholding), 5.250% 12/15/14 Aaa AAA 730 730 1,000 1,000 Leesburg, Virginia, GO Refunding, Series 1993, 5.500% 08/01/06 A1 A+ 1,058 1,058 2,000 2,000 Loudoun County, Virginia, Improvement GO Refunding, Series 1993A, (State Aid Withholding), 5.000% 10/01/02 Aa1 AA+ 2,056 2,056 1,500 1,500 Loudoun County, Virginia, Industrial Development Authority, Hospital Revenue, (Loudoun Hospital Center Project) Series 1995, (FSA Insured), 5.500% 06/01/08 Aaa AAA 1,606 1,606 765 1,000 1,765 Loudoun County, Virginia, Industrial Development Authority, Hospital Revenue, (Loudoun Hospital Center Project) Series 1995, (FSA Insured), 5.600% 06/01/09 Aaa AAA 817 1,069 1,886 500 500 Loudoun County, Virginia, Industrial Development Authority, Hospital Revenue, (Loudoun Hospital Center Project) Series 1995, (FSA Insured), 5.800% 06/01/20 Aaa AAA 520 520 5,000 5,000 Loudoun County, Virginia, Industrial Development Authority, Revenue,Air Force Retired Officers - Falcons Landing Project) Series 1994A, Prerefunded 11/01/04 @ 103, 8.750% 11/01/24 Aaa AAA 6,021 6,021 2,250 2,250 Louisa, Virginia, Industrial Development Authority, Solid Waste and Sewage Disposal Revenue, (Virginia Electric and Power Company Project) Series 2001A, AMT, Mandatory Put 03/01/02 @ 100, 4.000% 03/01/31 P1 A- 2,255 2,255 1,140 1,140 Lynchburg, Virginia, Public Improvement GO, Series 1997, 5.400% 05/01/17 Aa3 AA 1,184 1,184 1,000 1,000 Medical College of Virginia, Hospital Authority, General Revenue, Series 1998, (MBIA Insured), 4.800% 07/01/11 Aaa AAA 1,050 1,050 2,000 2,000 Montgomery County, Virginia, Industrial Development Lease Authority, Revenue, Series 2000B, (AMBAC Insured), 5.500% 01/15/22 Aaa AAA 2,090 2,090 1,000 1,000 Newport News, Virginia, GO, Series 1998, 5.000% 03/01/18 Aa2 AA 1,010 1,010 5,000 5,000 Newport News, Virginia, Public Improvement GO Refunding, Series 1993B, (State Aid Withholding), 5.200% 11/01/04 Aa2 AA 5,342 5,342 1,000 1,000 Newport News, Virginia, Water and Sewer Authority, GO Refunding, Series 1993B, (State Aid Withholding), 5.100% 11/01/03 Aa2 AA 1,055 1,055 1,095 1,095 Newport News, Virginia, Water and Sewer Authority, GO, Series 1992A, 5.600% 06/01/02 Aa2 AA 1,120 1,120 3,500 3,500 Norfolk, Virginia, Capital Improvement GO Refunding, Series 1998, (FGIC Insured State Aid Withholding), 5.000% 07/01/11 Aaa AAA 3,717 3,717 2,250 2,250 Norfolk, Virginia, Redevelopment and Housing Authority, Educational Facilities Revenue, (Tidewater Community College Campus Project) Series 1995, 5.875% 11/01/15 Aa1 AA+ 2,404 2,404 2,000 2,000 Norfolk, Virginia, Water Revenue, Series 1995, (MBIA Insured), 5.700% 11/01/10 Aaa AAA 2,163 2,163 500 500 Peninsula Ports Authority, Virginia, Health Care Facilities Revenue Refunding, (Riverside Health System Project) Series 1992A, Prerefunded 07/01/02 @102, 6.625% 07/01/18 Aaa AAA 527 527 500 500 Pittsylvania County, Virginia, Public Improvement GO, Series 1994, Prerefunded 07/01/04 @ 102, 5.850% 07/01/08 A3 AAA 550 550 1,000 1,000 Portsmouth, Virginia, GO Refunding, Series 1993, 5.000% 08/01/02 A1 AA- 1,024 1,024
Nations Virginia Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Virginia Intermediate Nations Municipal Nations Virginia Nations Bond Virginia Intermediate Nations Virginia Fund Municipal Municipal Combined Virginia Intermediate (acquiring) Bond Bond Pro Municipal Municipal Combined Fund Fund Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - --------------------------------------------------------------------------------------------------------------------------- Municipal bonds and notes - (continued) Virginia - (continued) $ - $ 1,000 $ 1,000 Portsmouth, Virginia, GO Refunding, Series 1993, 5.250% 08/01/04 A1 AA- $ - $ 1,063 $ 1,063 3,710 3,710 Portsmouth, Virginia, Public Improvement GO Refunding, Series 2001A, (FGIC Insured), 5.500% 06/01/17 Aaa AAA 3,865 3,865 1,525 1,525 Prince William County, Virginia, Industrial Development Authority, Hospital Revenue Refunding, (Potomac Hospital Corporation Project) Series 1995, 6.550% 10/01/05 Aaa NR 1,636 1,636 1,300 1,300 Prince William County, Virginia, Industrial Development Authority, Hospital Revenue Refunding, (Prince William Hospital Project) Series 1993, 5.625% 04/01/12 A2 NR 1,333 1,333 1,000 1,000 Prince William County, Virginia, Industrial Development Authority, Lease Revenue, (ATCC Project) Series 1996, 6.000% 02/01/14 Aa3 NR 1,045 1,045 500 500 Prince William County, Virginia, Park Authority, Revenue, Series 1994, Prerefunded 10/15/04 @ 102, 6.875% 10/15/16 NR NR 568 568 1,000 1,000 Prince William County, Virginia, Park Authority, Water and Sewer Systems, Revenue Refunding, Series 1994, Prerefunded 10/15/04 @102, 6.300% 10/15/07 NR NR 1,120 1,120 3,000 3,000 Prince William County, Virginia, Service Authority, Revenue Refunding, Series 1993, (FGIC Insured), 5.000% 07/01/21 Aaa AAA 2,970 2,970 500 1,000 1,500 Richmond, Virginia, GO Refunding, Series 1995B, (FGIC Insured, State Aid Withholding), 5.000% 01/15/21 Aaa AAA 498 996 1,494 110 110 Richmond, Virginia, Metropolitian Authority Expressway Revenue, Series 1992B, (FGIC Insured), Prerefunded 07/15/02 @ 102, 6.250% 07/15/22 Aaa AAA 116 116 690 690 Richmond, Virginia, Metropolitian Authority Expressway Revenue, Unrefunded Balance, Series 1992B, (FGIC Insured), 6.250% 07/15/22 Aaa AAA 720 720 2,300 2,300 Richmond, Virginia, Public Improvement GO Refunding, Series 1993A, (State Aid Withholding), 6.500% 01/15/02 A1 AA 2,329 2,329 1,430 1,430 Richmond, Virginia, Public Improvement GO, Series 1993B, (State Aid Withholding), 5.500% 07/15/09 A1 AA 1,583 1,583 2,855 2,855 Richmond, Virginia, Public Improvement, Refunding GO, Series 1999A, (FSA Insured), 5.000% 01/15/19 Aaa AAA 2,867 2,867 1,115 1,115 Roanoke County, Virginia, IDR, (Hollins College Project) Series 1998, 5.200% 03/15/17 NR A 1,128 1,128 1,100 1,100 Spotsylvania County, Virginia, GO Refunding, Series 1998, (FSA Insured), 4.375% 07/15/05 Aaa AAA 1,154 1,154 1,900 1,900 Spotsylvania County, Virginia, GO Refunding, Series 1998, (FSA Insured), 4.400% 07/15/06 Aaa AAA 1,995 1,995 2,000 2,000 Spotsylvania County, Virginia, GO Refunding, Series 1998, (FSA Insured), 4.400% 07/15/07 Aaa AAA 2,091 2,091 2,320 2,320 Spotsylvania County, Virginia, Public Improvement GO, Series 1992, Prerefunded 07/15/02 @ 102, 5.875% 07/15/09 A1 AA- 2,434 2,434 1,000 2,535 3,535 Staunton, Virginia, Industrial Development Authority, Educational Facilities Revenue, (Mary Baldwin College Project) Series 1996, 6.600% 11/01/14 NR NR 1,064 2,697 3,761 1,035 1,035 Suffolk Virginia, GO, Unrefunded Balance, Series 1993, 5.750% 08/01/08 Aa2 AA- 1,109 1,109 1,500 4,300 5,800 Suffolk, Virgina, Redevelopment And Housing Authority, Multi-Family Housing Revenue Refunding, (Windsor Ltd. Partnership Project) Series 2001, (FNMA Insured), Mandatory Put 07/01/11 @ 100, 4.850% 07/01/31 Aaa NR 1,557 4,462 6,019 1,110 1,110 Suffolk, Virginia, GO Refunding, Series 1993, 5.400% 08/01/04 Aa2 AA- 1,184 1,184
Nations Virginia Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Virginia Intermediate Nations Municipal Nations Virginia Nations Bond Virginia Intermediate Nations Virginia Fund Municipal Municipal Virginia Intermediate (acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) Virginia - (continued) $ - $ 465 $ 465 Suffolk, Virginia, GO Refunding, Series 1993, Prerefunded 08/01/03 @ 102, 5.750% 08/01/08 Aa2 AA- $ - $ 502 $ 502 500 500 Upper Occoquan, Virginia, Sewer Authority, Regional Sewer Revenue, Series 1995A, (MBIA Insured), 5.000% 07/01/25 Aaa AAA 493 493 2,300 2,300 Virginia Beach, Virginia, GO Refunding, Series 1993, 5.400% 07/15/08 Aa1 AA+ 2,530 2,530 3,060 3,060 Virginia Beach, Virginia, Public Improvement GO, Series 2000, 5.500% 03/01/17 Aa1 AA+ 3,258 3,258 1,000 2,805 3,805 Virginia Beach, Virginia, Public Improvement GO, Series 2000, 5.500% 03/01/18 Aa1 AA+ 1,060 2,972 4,032 500 500 Virginia Beach, Virginia, Public Improvement GO Refunding, Series 1994, (State Aid Withholding), 5.750% 11/01/08 Aa1 AA+ 538 538 1,790 1,790 Virginia Beach, Virginia, Water and Sewer Revenue, Series 2000, 5.250% 08/01/17 Aa3 AA 1,854 1,854 1,935 1,935 Virginia Beach, Virginia, Water and Sewer Revenue, Series 2000, 5.250% 08/01/18 Aa3 AA 1,994 1,994 2,035 2,035 Virginia Beach, Virginia, Water and Sewer Revenue, Series 2000, 5.250% 08/01/19 Aa3 AA 2,084 2,084 2,145 2,145 Virginia Beach, Virginia, Water and Sewer Revenue, Series 2000, 5.250% 08/01/20 Aa3 AA 2,184 2,184 1,000 1,000 Virginia Commonwealth, Transportation Board, Transportation Program Revenue, (Oak Grove Connector Project) Series 1997A, 5.250% 05/15/22 Aa1 AA+ 1,011 1,011 1,245 1,245 Virginia Commonwealth, Transportation Board, Transportation Revenue Refunding, (U.S. Route 58 Corridor Program Project) Series 1997C, 5.125% 05/15/19 Aa1 AA+ 1,260 1,260 2,465 2,465 Virginia Port Authority, Virginia, Commonwealth Port Fund Revenue, Series 1996, AMT, 5.550% 07/01/12 Aa1 AA+ 2,593 2,593 1,000 1,000 Virginia Port Authority, Virginia, Commonwealth Port Fund Revenue, Series 1997, AMT, (MBIA Insured), 5.650% 07/01/17 Aaa AAA 1,042 1,042 1,210 1,210 Virginia Port Authority, Virginia, Port Facilities Revenue, Series 1997, AMT, (MBIA Insured), 6.000% 07/01/07 Aaa AAA 1,344 1,344 2,655 2,655 Virginia State, Housing Development Authority, Revenue, (Rental Housing Project) Series 2000B, AMT, 5.875% 08/01/15 Aa1 AA+ 2,781 2,781 1,430 1,430 Virginia State, Housing Development Authority, Commonwealth Mortgage Revenue, Series 1995D-3, 6.000% 01/01/12 Aa1 AA+ 1,521 1,521 1,470 1,470 Virginia State, Housing Development Authority, Commonwealth Mortgage Revenue, Series 1995D-3, 6.000% 07/01/12 Aa1 AA+ 1,563 1,563 1,695 1,695 Virginia State, Housing Development Authority, Commonwealth Mortgage Revenue, Series 1995D-3, 6.100% 01/01/15 Aa1 AA+ 1,790 1,790 3,595 3,595 Virginia State, Housing Development Authority, Commonwealth Mortgage Revenue, Series 2000B-3, 5.950% 07/01/14 Aa1 AA+ 3,894 3,894 2,455 2,455 Virginia State, Housing Development Authority, Commonwealth Mortgage Revenue, Series 2000B-4, 5.500% 01/01/15 Aa1 AA+ 2,568 2,568 1,035 1,035 Virginia State, Housing Development Authority, Commonwealth Mortgage Revenue, Series 2001D-1, 4.750% 07/01/12 Aa1 AA+ 1,058 1,058 2,000 2,000 Virginia State, Public Building Authority, Building Revenue Refunding,(Correctional Facilities Project) Series 1992A, 5.800% 08/01/02 Aa1 NR 2,026 2,026 1,480 1,480 Virginia State, Public School Authority, Revenue Refunding, Series 1993B, (State Aid Withholding), 5.100% 01/01/05 Aa1 AA 1,574 1,574 2,195 2,195 Virginia State, Public School Authority, Revenue, Series 1993A, (State Aid Withholding), 5.400% 01/01/08 Aa1 AA 2,281 2,281
Nations Virginia Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Virginia Intermediate Nations Municipal Nations Virginia Nations Bond Virginia Intermediate Nations Virginia Fund Municipal Municipal Virginia Intermediate (acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) Virginia - (continued) $ 640 $ - $ 640 Virginia State, Public School Authority, Revenue, Series 1994A, (State Aid Withholding), 6.125% 08/01/11 Aa1 AA $687 $ - $ 687 1,070 1,070 Virginia State, Residenital Authority, Series 2000A, (MBIA Insured), Infrastructure Revenue, 5.500% 05/01/21 Aaa AAA 1,118 1,118 1,120 1,120 Virginia State, Resource Authority, Infrastructure Revenue, Series 2000A, (MBIA Insured), 5.500% 05/01/22 Aaa AAA 1,168 1,168 820 820 Virginia State, Resource Authority, Sewer Systems Revenue Refunding, (Harrisonburg-Rockingham Project) Series 1998, 4.700% 05/01/11 NR AA 853 853 2,970 2,970 Virginia State, Resource Authority, Sewer Systems Revenue Refunding, (Harrisonburg-Rockingham Project) Series 1998, 5.000% 05/01/18 NR AA 2,997 2,997 750 1,000 1,750 Virginia State, Resource Authority, Sewer Systems Revenue, (Hopewell Regional Wastewater Facilities Project) Series 1995A, AMT, 6.000% 10/01/15 NR AA 799 1,065 1,864 2,000 2,000 Virginia State, Resource Authority, Systems Revenue Refunding, Series 1998, 5.000% 05/01/22 NR AA 1,972 1,972 500 500 Virginia State, Resource Authority, Water and Sewer Systems Revenue, (Fauquier County Water and Sanitation Project) Series 1994C, 6.125% 05/01/14 NR AA 531 531 2,470 2,470 Virginia State, Resource Authority, Water and Sewer Systems Revenue Refunding, (Washington County Service Project) Series 1993, 5.150% 10/01/07 NR AA 2,590 2,590 1,020 1,020 Virginia State, Resource Authority, Water and Sewer Systems Revenue, (Suffolk Project) Series 1996A, 5.500% 04/01/17 NR AA 1,067 1,067 1,000 1,000 Virginia State, Resource Authority, Water and Sewer Systems Revenue, (Sussex Service Authority Project) Series 1998, 4.625% 10/01/18 NR AA 967 967 5,345 5,345 Virginia State, Transportation Board Authority, Transportation Contract Revenue, (Northern Virginia Transportation District Project) Series 1996A, 5.125% 05/15/21 Aa1 AA+ 5,342 5,342 3,150 3,150 Virginia State, Transportation Board Authority, Transportation Revenue Refunding, (U.S. Route 28 Project) Series 1992, 6.000% 04/01/02 Aa1 AA+ 3,211 3,211 3,000 3,000 Virginia State, Transportation Board Authority, Transportation Revenue Refunding, (U.S. Route 58 Corridor Development Program) Series 1993A, 4.900% 05/15/03 Aa1 AA+ 3,120 3,120 5,390 5,390 Virginia State, Transportation Board Authority, Transportation Revenue Refunding, (U.S. Route 58 Corridor Development Program) Series 1993A, 5.500% 05/15/09 Aa1 AA+ 5,621 5,621 2,105 2,105 Virginia State, Transportation Board Authority, Transportation Revenue, (U.S. Route 58 Corridor Development Program) Series 1993B, 5.100% 05/15/05 Aa1 AA+ 2,213 2,213 1,700 1,700 Virginia State, Virginia Commonwealth University, Revenue Refunding, Series 1994D, 4.350% 07/01/02 A1 AA- 1,722 1,722 2,350 2,350 Virginia, Biotechnology Research Park Authority, Lease Revenue, (Biotechnology Two Project) Series 1996, 5.750% 09/01/05 Aa1 AA+ 2,587 2,587 2,475 2,475 Virginia, Chesapeake Bay Bridge and Tunnel Commission District, Revenue, Series 1995, (FGIC Insured), 5.875% 07/01/10 Aaa AAA 2,679 2,679 2,000 2,000 Virginia, College Building Authority, Educational Facilities Revenue Refunding, (University of Richmond Project) Series 1992, 5.625% 11/01/02 Aa2 AA 2,026 2,026 2,000 2,000 Virginia, College Building Authority, Facilities Revenue,(Equipment Leasing Program) Series 1997, 5.000% 02/01/02 Aa2 AA+ 2,019 2,019 2,300 2,300 Virginia, College Building Authority, Virginia Educational Facilities Revenue, (Public Higher Education Financing Program) Series 1999A, 5.375% 09/01/12 Aa1 AA 2,484 2,484
Nations Virginia Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Virginia Intermediate Nations Municipal Nations Virginia Nations Bond Virginia Intermediate Nations Virginia Fund Municipal Municipal Combined Virginia Intermediate (acquiring) Bond Bond Pro Municipal Municipal Combined Fund Fund Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ----------------------------------------------------------------------------------------------------------------------------------- Municipal bonds and notes - (continued) Virginia - (continued) $ - $ 5,000 $ 5,000 Virginia, Southeastern Public Service Authority, Revenue Refunding,Series 1993A, (MBIA Insured), 5.100% 07/01/08 Aaa AAA $ - $ 5,399 $ 5,399 275 275 Washington County, Virginia, Industrial Development Authority, Hospital Facility Revenue Refunding, (Johnston Memorial Hospital Project) Series 1995, 5.625% 07/01/02 A2 NR 281 281 1,000 1,000 Washington County, Virginia, Industrial Development Authority, Hospital Facility Revenue Refunding, (Johnston Memorial Hospital Project) Series 1995, Prerefunded 07/01/05 @ 102, 6.000% 07/01/14 A2 NR 1,120 1,120 1,600 1,600 Waynesboro, Virginia, Industrial Development Authority Revenue, (Sunnyside Presbyterian Home Project) Series 1997, (First Union National Bank LOC), 2.700% 12/15/28 NR A-1 1,600 1,600 1,800 2,250 4,050 West Point, Virginia, Industrial Development Authority, Solid Waste Disposal Revenue, (Chesapeake Corporation Project) Series 1994A, AMT, 6.375% 03/01/19 Ba2 BB 1,646 2,058 3,704 --------------------------------- 29,025 280,098 309,123 --------------------------------- Alabama - 0.6% 2,000 2,000 Mobile, Alabama, Industrial Devlopment Board, PCR Refunding, (International Paper Company Project) Series 1998B, 4.750% 04/01/10 Baa2 BBB 1,944 1,944 --------------------------------- District of Columbia - 0.6% 1,000 1,000 Metropolitan Washington, District of Columbia, Airport Authority, Virginia General Airport Revenue Refunding, Series 1998B, AMT,(MBIA Insured), 5.250% 10/01/10 Aaa AAA 1,051 1,051 1,000 1,000 Metropolitan Washington, District of Columbia, Airport Authority, Virginia General Airport Revenue, Series 1992A, AMT, (MBIA Insured), 6.500% 10/01/05 Aaa AAA 1,048 1,048 --------------------------------- 2,099 2,099 --------------------------------- Florida - 0.9% 2,000 2,000 Florida State, Board of Education Lottery Revenue, Series 2001B, 5.000% 07/01/20 Aaa AAA 1,996 1,996 1,195 1,195 Miami-Dade County, Florida, Health Authority, Hospital Revenue Refunding, (Miami Childrens Hospital Project) Series 2001, (AMBAC Insured), 4.375% 08/15/10 Aaa AAA 1,220 1,220 --------------------------------- 3,216 3,216 --------------------------------- Georgia - 0.4% 1,450 1,450 Richmond County, Georgia, Development Authority, Environment Improvement Revenue, (International Paper Company Project) Series 2001A, 5.150% 03/01/15 Baa2 BBB 1,445 1,445 --------------------------------- Maine - 0.8% 2,500 2,500 Baileyville, Maine, PCR, (Georgia- Pacific Corporation Project) Series 1998, 4.750% 06/01/05 Baa3 NR 2,588 2,588 --------------------------------- Michigan - 0.6% 2,000 2,000 Southfield, Michigan, Library Building Authority, GO, Series 2000, (MBIA Insured), 5.500% 05/01/24 Aaa AAA 2,065 2,065 --------------------------------- Mississippi - 0.6% 1,285 1,285 Mississippi State, Hospital Facilities and Equipment Authority, Revenue, (Forrest County General Hospital Project) Series 2000, (FSA Insured), 5.625% 01/01/20 Aaa NR 1,345 1,345 500 500 Warren County, Mississippi, Environmental Improvement Revenue Refunding, (International Paper Company Project) Series 2000A, AMT, 6.700% 08/01/18 Baa2 BBB 529 529 --------------------------------- 1,874 1,874 ---------------------------------
Nations Virginia Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Schedule of Investments (unaudited) (continued) September 30, 2001 Nations Virginia Intermediate Nations Municipal Nations Virginia Nations Bond Virginia Intermediate Nations Virginia Fund Municipal Municipal Virginia Intermediate(acquiring) Bond Bond Combined Municipal Municipal Combined Fund Fund Pro Forma Bond Bond Pro Principal Principal Principal Moody's Fund Fund Forma amount amount amount S&P Value Value Value (000) (000) (000) Description Ratings (000) (000) (000) - ------------------------------------------------------------------------------------------------------------------------------------ Municipal bonds and notes - (continued) New York - 0.6% $ - $ 2,005 $ 2,005 New York City, New York, Industrial Development Agency, Civic Facility Revenue, (Polytechnic University Project) Series 2000, 5.750% 11/01/10 Baa3 BBB- $ - $ 2,190 $ 2,190 ------------------------------- South Carolina - 0.7% 2,000 2,000 Calhoun County, South Carolina, Solid Waste Disposal Facility Revenue, (Carolina Eastman Company Project) Series 1992, AMT, 6.750% 05/01/17 A2 A+ 2,398 2,398 ------------------------------- Texas - 0.3% 1,000 1,000 Socorro, Texas, Independent School District, GO, Series 1998, (PSF-GTD), 5.250% 08/15/28 Aaa AAA 1,001 1,001 ------------------------------- Washington - 1.5% 5,035 5,035 Washington State, Motor Vehicle Fuel Tax, GO, Series 1997F, 5.375% 07/01/22 Aa1 AA+ 5,100 5,100 ------------------------------- Wisconsin - 0.3% 1,000 1,000 Wisconsin State, Health and Educational Facilities Revenue, (Agnesian Healthcare Project) Series 2001, 6.000% 07/01/21 A3 A- 1,029 1,029 ------------------------------- Total municipal bonds and notes (Cost $33,348 and $286,278, respectively) 35,144 300,928 336,072 ------------------------------- Shares Shares Shares (000) (000) (000) - -------------------------------- Investment companies - 0.7% (Cost $232 and $2,324, respectively) 232 2,324 2,556 Nations Municipal Reserves# 232 2,324 2,556 ------------------------------- Total investments - 99.0% (Cost $33,580 and $288,602, respectively) $35,376 $303,252 $338,628 -------------------------------
+ Zero coupon security. The rate shown reflects the yield to maturity. # Money market mutual fund registered under the Investment Company Act of 1940, as amended, and sub-advised by Banc of America Capital Management, LLC.
Nations Virginia Municipal Bond Fund/ Nations Virginia Intermediate Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Net Assets (unaudited) September 30, 2001 Nations Virginia Intermediate Nations Municipal Nations Virginia Bond Fund Virginia Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) --------------------------------------------------- ------------------------ Total Investments $ 35,376 $ 303,252 $ - $ 338,628 Other Assets and Liabilities: Receivable for investment securities sold 38 376 414 Receivable for Fund shares sold 1 29 30 Interest receivable 535 4,583 5,118 Receivable from investment advisor - - 112 (a) 112 Payable for Fund shares redeemed (38) (323) (361) Investment advisory fee payable - (52) (52) Administration fee payable (6) (51) (57) Shareholder servicing and distribution fees payable (14) (22) (36) Distributions payable (133) (1,089) (1,222) Payable for investment securities purchased - (251) (251) Accrued Trustees' fees and expenses (38) (48) (86) Accrued expenses and other liabilities (24) (71) (112) (a) (207) ----------------------------------------------------- ---------------------- Total Other Assets and Liabilities 321 3,081 - 3,402 ----------------------------------------------------- ---------------------- Net Assets $ 35,697 $ 306,333 $ - $ 342,030 ===================================================== ====================== Net Assets by Class: Primary A $ 24,144,521 $252,862,539 $ - $ 277,007,060 Investor A 1,181,119 44,094,550 - 45,275,669 Investor B 10,315,879 8,667,199 - 18,983,078 Investor C 55,080 708,950 - 764,030 ------------------------------------------------------ ---------------------- $ 35,696,599 $ 306,333,238 $ - $ 342,029,837 ------------------------------------------------------ ---------------------- Shares Outstanding by Class: Primary A 2,438,210 23,022,674 (239,255) (b) 25,221,629 Investor A 119,393 4,014,730 (11,823) (b) 4,122,300 Investor B 1,041,755 789,104 (102,240) (b) 1,728,619 Investor C 5,563 64,552 (547) (b) 69,568 ------------------------------------------------------ --------------------- 3,604,921 27,891,060 (353,865) 31,142,116 ------------------------------------------------------ --------------------- Net Asset Value per Share by Class: Primary A $ 9.90 $ 10.98 $ - $ 10.98 Investor A $ 9.89 $ 10.98 $ - $ 10.98 Investor B $ 9.90 $ 10.98 $ - $ 10.98 Investor C $ 9.90 $ 10.98 $ - $ 10.98 (a) Adjustment reflects estimated costs of Reorganization. (b) Reflects the issuance of Nations Virginia Intermediate Municipal Bond Fund shares to holders of shares of Nations Virginia Municipal Bond Fund. See Notes to Pro Forma Financial Statements
Nations Virginia Municipal Bond Fund / Nations Virginia Intermediate Municipal Bond Fund/Nations Virginia Intermediate Municipal Bond Fund (acquiring) Pro Forma Combining Statement of Net Assets (unaudited) Twelve Month Period Ending September 30, 2001 Nations Virginia Intermediate Nations Municipal Nations Virginia Bond Fund Virginia Intermediate (acquiring) Municipal Municipal Adjustments to Proforma Bond Fund Bond Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) --------------------------------------------------- ----------------------- Total Investments Interest $ 1,788 $ 15,709 $ - $17,497 --------------------------------------------------- ----------------------- Expenses: Investment advisory fee 161 1,221 (34)(a) 1,348 Administration fee 70 672 - 742 Transfer agent fee 10 87 - 97 Custodian fees 2 18 - 20 Legal and audit fees 45 62 (45)(b) 62 Registration and filing fees 2 7 (2)(b) 7 Trustees' fees and expenses 24 24 (24)(b) 24 Printing expense 16 23 (15)(b) 24 Other 4 23 108 (b),(c) 135 --------------------------------------------------- ----------------------- Subtotal 334 2,137 (12) 2,459 --------------------------------------------------- ----------------------- Shareholder servicing and distribution fees: Investor A Shares 2 109 - 111 Investor B Shares 106 88 - 194 Investor C Shares - 7 - 7 -------------------------------------------------- ----------------------- Total expenses 442 2,341 (12) 2,771 -------------------------------------------------- ----------------------- Fees waived and/or expenses reimbursed by investment advisor, administrator, and/or distributor (141) (610) (20)(c),(d) (771) -------------------------------------------------- ----------------------- Net Expenses 301 1,731 (32) 2,000 -------------------------------------------------- ----------------------- Net Investment Income 1,487 13,978 32 15,497 -------------------------------------------------- ----------------------- Net Realized And Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) on investments 36 728 764 Net change in unrealized appreciation/ (depreciation) of investments 1,169 9,812 10,981 --------------------------------------------------- ----------------------- Net realized and unrealized gain/(loss) on investments 1,205 10,540 11,745 --------------------------------------------------- ----------------------- Net Increase/(Decrease) in Net Assets Resulting From Operations $2,692 $24,518 $32 $27,242 =================================================== =======================
Legend: (a) Reflects adjustment to the acquiring fund's contractual fee obligations. (b) Adjustment reflects expected savings when the two funds become one. (c) Adjustment reflects estimated costs of Reorganization. (d) Adjustment reflects reduction in fund level expenses as a result of the lower fund level expense cap. See Notes to Pro Forma Financial Statements Nations Virginia Municipal Bond Fund Nations Virginia Intermediate Municipal Bond Fund Nations Virginia Intermediate Municipal Bond Fund (acquiring) Notes to Pro Forma Combining Financial Statements (unaudited) 1. Basis of Combination The unaudited Pro Forma Combining Statement of Net Assets assumes the exchange described in the next paragraph occurred as of September 30, 2001 and the unaudited Pro Forma Combining Statement of Operations for the year ended September 30, 2001 assumes the exchange occurred as of October 1, 2000. These statements have been derived from books and records utilized in calculating daily net asset value of each fund at September 30, 2001 and for the twelve month period then ended. The pro forma statements give effect to the proposed reorganization (the "Reorganization") of Nations Virginia Municipal Bond Fund ("Virginia Municipal Bond Fund") and Nations Virginia Intermediate Municipal Bond Fund ("Virginia Intermediate Municipal Bond Fund") into Nations Virginia Intermediate Municipal Bond Fund (acquiring) (the "Acquiring Fund"). The Reorganization provides for the transfer of the assets and liabilities of Virginia Municipal Bond Fund and Virginia Intermediate Municipal Bond Fund to the Acquiring Fund, in exchange for shares of equal value of designated classes of the Acquiring Fund. The Reorganization is expected to be done on a tax-free basis whereby the Acquiring Fund will assume the market value and cost basis of the portfolio positions in the Virginia Municipal Bond Fund and Virginia Intermediate Municipal Bond Fund and the results of operations of Virginia Municipal Bond Fund and Virginia Intermediate Municipal Bond Fund for pre-combination periods will not be restated. It is not expected that the investment adviser or sub-adviser will sell any securities of either acquired fund, in anticipation of or as a result of the Reorganization, other than in the normal course of business. The Funds will only bear the expenses of the Reorganization if those expenses do not exceed certain expense "caps" that have been put in place by the investment adviser. Because of these caps, it is not expected that the Funds will bear the costs associated with the Reorganization, including solicitation costs. 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 Acquiring Fund, with certain expenses adjusted to reflect the expected expenses of the Acquiring Fund. EXHIBIT INDEX ------------- Nations Funds Trust File No. 333-74316 Exhibit Number Description - -------------- ----------- EX.-99.17(a) Form of Proxy Ballot EX-99.17A 3 dex9917a.txt FORM OF PROXY BALLOT FORM OF PROXY BALLOT Nations Funds [Insert Fund Name Here] 101 South Tryon Street 33rd Floor Special Meeting of Shareholders One Bank of America Plaza to be held on March 27, 2002 Charlotte, North Carolina 28255 The undersigned hereby appoints Richard H. Blank, Jr., Michael Simons and Carolyn Wyse (the "Proxies"), and each of them, attorneys and proxies of the undersigned, each with power of substitution and resubstitution, to attend, vote and act for the undersigned at the Special Meeting of Shareholders of the fund to be held at One Bank of America Plaza, 101 South Tryon Street, 33rd Floor, Charlotte, North Carolina 28255, at 10:00 a.m. (Eastern time) on March 27, 2002, and at any adjournment(s) thereof. The Proxies shall cast votes according to the number of shares of the fund which the undersigned may be entitled to vote with respect to the proposal set forth below, in accordance with the specification indicated, if any, and shall have all the powers which the undersigned would possess if personally present. The undersigned hereby revokes any prior proxy to vote at such meeting, and hereby ratifies and confirms all that said Proxies, or any of them, may lawfully do by virtue hereof or thereof. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF THE FUND AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED JANUARY 14, 2002. THIS PROXY IS SOLICITED ON BEHALF OF THE FUND'S BOARD. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, EITHER BY THE ENCLOSED POSTAGE PAID ENVELOPE, OR BY TELEPHONE OR BY INTERNET. To vote by Telephone: 1) Read the Combined Proxy Statement/Prospectus and have the Proxy Ballot below at hand. 2) Call toll-free 1-800-690-6903. 3) Enter the 12-digit control number set forth on the Proxy Ballot and follow the simple instructions. To vote by Internet: 1) Read the Combined Proxy Statement/Prospectus and have the Proxy Ballot below at hand. 2) Go to the website www.proxyvote.com. 3) Enter the 12-digit control number set forth on the Proxy Ballot and follow the simple instructions. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED - -------------------------------------------------------------------------------- [Insert Fund Name Here] THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE TAKEN ON THE PROPOSAL BELOW. IN THE ABSENCE OF ANY SPECIFICATION, THIS PROXY WILL BE VOTED IN FAVOR OF THE PROPOSAL. -------- Vote on Proposal 1. A proposed agreement and plan of reorganization dated as of January 1, 2002 that provides for the reorganization of your fund into a corresponding acquiring fund. FOR AGAINST ABSTAIN [_] [_] [_] In their discretion, the Proxies, and each of them, are authorized to vote upon any other business that may properly come before the meeting, or any adjournment(s) thereof, including any adjournment(s) necessary to obtain requisite quorums and/or approvals. Please sign below 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. ----------------------- -------- Signature Date ----------------------- -------- Signature (Joint Owners) Date - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----