-----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, K+Cq/VeFKaNgqtRH8F/lrrfHXJEr28JPF2s5tBwTXfefPUFd1x38dgngN09FcS1m FyuAfYM+N4mjfvy4jNdpcg== 0000950144-03-011475.txt : 20031014 0000950144-03-011475.hdr.sgml : 20031013 20031014165617 ACCESSION NUMBER: 0000950144-03-011475 CONFORMED SUBMISSION TYPE: N-14AE PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20031014 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONS FUNDS TRUST CENTRAL INDEX KEY: 0001097519 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-14AE SEC ACT: 1933 Act SEC FILE NUMBER: 333-109684 FILM NUMBER: 03940111 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 N-14AE 1 g84911nv14ae.txt NATIONS FUNDS TRUST N-14AE As filed with the Securities and Exchange Commission on October 14, 2003 Registration No. 333-_____ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------------- FORM N-14 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X| Pre-Effective Amendment No. ___ |_| Post-Effective Amendment No. ___ |_| REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1940 |_| Amendment No. ___ |_| (Check appropriate box or boxes) ------------------------ NATIONS FUNDS TRUST (Exact Name of Registrant as specified in Charter) 101 South Tryon Street Charlotte, NC 28255 (Address of Principal Executive Offices, including Zip Code) -------------------------- Registrant's Telephone Number, including Area Code: (800) 321-7854 Robert B. Carroll c/o Bank of America Corporation One Bank of America Plaza 101 South Tryon Street Charlotte, NC 28255 (Name and Address of Agent for Service) With copies to: Marco E. Adelfio, Esq. Steven G. Cravath, Esq. Morrison & Foerster LLP 2000 Pennsylvania Ave., N.W. Suite 5500 Washington, D.C. 20006 It is proposed pursuant to Rule 488 under the Securities Act of 1933 that this filing will become effective on November 13, 2003. No filing fee is required under the Securities Act of 1933 because an indefinite number of shares of beneficial interest in the Registrant, without par value, has previously been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended. The Registrant filed on June 24, 2003, the notice required by Rule 24f-2 for its fiscal year ended March 31, 2003 (File Nos. 333-89661; 811-9645). NATIONS FUNDS TRUST CROSS-REFERENCE SHEET PART A ITEM NO. ITEM CAPTION PROSPECTUS CAPTION - -------- ------------ ------------------ 1 Beginning of Registration COVER PAGE OF REGISTRATION Statement and Outside Front STATEMENT; CROSS-REFERENCE SHEET; Cover Page of Prospectus FRONT COVER PAGE OF PROXY STATEMENT/PROSPECTUS 2 Beginning and Outside Back TABLE OF CONTENTS Cover Page of Prospectus 3 Fee Table, Synopsis Information, SUMMARY -- OVERVIEW OF FEES; and Risk Factors OVERVIEW OF THE REORGANIZATION AGREEMENT; OVERVIEW OF INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES; OVERVIEW OF SERVICE PROVIDERS; OVERVIEW OF PURCHASE, REDEMPTION, DISTRIBUTION, EXCHANGE AND OTHER POLICIES AND PROCEDURES; OVERVIEW OF U.S. FEDERAL INCOME TAX CONSEQUENCES; PRINCIPAL RISK FACTORS. 4 Information About THE REORGANIZATIONS -- the Transaction DESCRIPTION OF THE REORGANIZATION AGREEMENT; BENEFITS OF, AND REASONS FOR, THE REORGANIZATIONS; BOARD CONSIDERATION; COMPARISON OF INVESTMENT MANAGEMENT, INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES; COMPARISON OF FUNDAMENTAL INVESTMENT POLICIES; COMPARISON OF FORMS OF BUSINESS ORGANIZATIONS; COMPARISON OF ADVISORY AND OTHER SERVICE ARRANGEMENTS AND FEES; COMPARISON OF PURCHASE, REDEMPTION, DISTRIBUTION AND EXCHANGE POLICIES AND OTHER SHAREHOLDER TRANSACTIONS AND SERVICES; MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES; CAPITALIZATION 5 Information About the Registrant N/A 6 Information About the Fund Being ADDITIONAL INFORMATION ABOUT Acquired THE TRUSTS 7 Voting Information VOTING MATTERS -- GENERAL INFORMATION; QUORUM; SHAREHOLDER APPROVAL; PRINCIPAL SHAREHOLDERS; ANNUAL MEETINGS AND SHAREHOLDER MEETINGS 8 Interest of Certain Persons NOT APPLICABLE and Experts 9 Additional Information Required NOT APPLICABLE for Reoffering by Persons Deemed to be Underwriters PART B STATEMENT OF ADDITIONAL ITEM NO. ITEM CAPTION INFORMATION CAPTION - -------- ------------ ----------------------- 10 Cover Page COVER PAGE 11 Table of Contents TABLE OF CONTENTS 12 Additional Information About INCORPORATION OF DOCUMENTS BY the Registrant REFERENCE IN STATEMENT OF ADDITIONAL INFORMATION 13 Additional Information About INCORPORATION OF DOCUMENTS BY the Fund Being Acquired REFERENCE IN STATEMENT OF ADDITIONAL INFORMATION 14 Financial Statements EXHIBITS TO STATEMENT OF ADDITIONAL INFORMATION PART C ITEM NO. - -------- 15-17 Information required to be included in Part C is set forth under the appropriate Item, so numbered, in Part C of this Registration Statement. NATIONS FUNDS TRUST NATIONS SEPARATE ACCOUNT TRUST ONE BANK OF AMERICA PLAZA 101 SOUTH TRYON STREET CHARLOTTE, NORTH CAROLINA 28255 TELEPHONE: (800) 321-7854 November 13, 2003 DEAR SHAREHOLDER: We are pleased to invite you to special meetings of shareholders of Nations Capital Growth Fund and Nations (Annuity) Capital Growth Portfolio ("Funds"). The meetings will be held jointly at 10:00 a.m., Eastern time, on January 16, 2004 at One Bank of America Plaza, 101 South Tryon Street, 33rd Floor, Charlotte, North Carolina. At the meetings, you will be asked to approve a reorganization ("Reorganization") of your Fund into a corresponding acquiring mutual fund (an "Acquiring Fund") in the Nations Funds family, as shown below: YOU WOULD RECEIVE SHARES OF THIS IF YOU OWN SHARES IN THIS FUND ACQUIRING FUND IN THE REORGANIZATION - -------------------------------------------------------------------------------- Nations Capital Growth Fund -> Nations Marsico Growth Fund Primary A Shares Primary A Shares Investor A Shares Investor A Shares Investor B Shares Investor B Shares Investor C Shares Investor C Shares - -------------------------------------------------------------------------------- Nations (Annuity) Capital Growth -> Nations (Annuity) Marsico Growth Portfolio Portfolio - -------------------------------------------------------------------------------- Management and the Boards of Trustees believe that each Reorganization offers Fund shareholders the opportunity to invest in an Acquiring Fund with better long-term viability, the potential for superior long-term performance and an improved risk-reward profile (that is, a fund with less performance volatility). In addition, the features and services that are available to you today will continue to be available to you as an Acquiring Fund shareholder after the Reorganization. However, in connection with their approval of the Reorganizations, the Boards of Trustees have changed the Funds' investment objectives, principal investment strategies and adviser/sub-adviser structures to align them with those of the Acquiring Funds. Prior to these changes, your Fund had a single investment adviser (Banc of America Capital Management, LLC ("BACAP"). Each Acquiring Fund has both a primary investment adviser (BACAP) and an investment sub-adviser (Marsico Capital Management, LLC ("Marsico Capital")). Marsico Capital and BACAP follow different approaches to investing, as described in the accompanying combined Proxy Statement/Prospectus. In addition, the Acquiring Funds charge a higher investment advisory fee than the Funds. Accordingly, after the Reorganization of your Fund, we expect that you'll pay higher fund fees. Nevertheless, both management and the Boards of Trustees believe that this increase in fees is outweighed by the potential benefits that the Acquiring Funds offer. THE BOARDS OF TRUSTEES OF NATIONS FUNDS TRUST AND NATIONS SEPARATE ACCOUNT TRUST UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR THE PROPOSED REORGANIZATION OF YOUR FUND. If shareholder approval is obtained and the other conditions to the Reorganization are satisfied, it is anticipated that your Fund will be reorganized into its Acquiring Fund on or about December 12, 2003, when Fund shares will be exchanged for shares of the same class of shares of the Acquiring Fund of equal dollar value. It is expected that the exchange of shares in each Reorganization should be tax-free for U.S. federal income tax purposes. The formal Notice of Special Meetings, Combined Proxy Statement/Prospectus and Proxy Ballot are enclosed. The Reorganizations and the reasons for the unanimous recommendation of the Boards of Trustees are discussed in more detail in the enclosed materials, which you should read carefully. If you have any questions, please do not hesitate to contact us at the toll-free number set forth above. We look forward to your attendance at the meeting or to receiving your Proxy Ballot so that your shares may be voted at the meeting. Sincerely, EDWARD D. BEDARD President (interim) and Chief Executive Officer (interim) of Nations Funds Trust and Nations Separate Account Trust YOUR VOTE IS IMPORTANT TO US REGARDLESS OF THE NUMBER OF SHARES THAT YOU OWN. PLEASE VOTE BY SUBMITTING YOUR PROXY BALLOT 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 ballot 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* at hand. your Proxy Ballot* at hand. 2. Go to the Web site printed on your proxy ballot 2. Call the toll-free number on your Proxy Ballot. 3. Enter the Control Number found on 3. Enter the Control Number found on your Proxy Ballot. your Proxy Ballot. 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 IF SUBMITTING YOUR PROXY BY INTERNET OR TELEPHONE. ii NATIONS FUNDS TRUST NATIONS SEPARATE ACCOUNT TRUST ONE BANK OF AMERICA PLAZA 101 SOUTH TRYON STREET CHARLOTTE, NORTH CAROLINA 28255 TELEPHONE: (800) 321-7854 NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS To Be Held on January 16, 2004 SHAREHOLDERS: PLEASE TAKE NOTE THAT special meetings of shareholders of Nations Capital Growth Fund and Nations (Annuity) Capital Growth Portfolio will be held jointly at 10:00 a.m., Eastern time, on January 16, 2004 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 that provides for the reorganization of Nations Capital Growth Fund and Nations (Annuity) Capital Growth Portfolio into Nations Marsico Growth Fund and Nations (Annuity) Marsico Growth Portfolio, respectively. ITEM 2. Such other business as may properly come before the meeting or any adjournment(s). Item 1 is described in the attached Combined Proxy Statement/Prospectus. THE BOARDS OF TRUSTEES OF NATIONS FUNDS TRUST AND NATIONS SEPARATE ACCOUNT TRUST UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF THE PROPOSAL. Shareholders of record as of the close of business on November 1, 2003 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, WHICH IS BEING SOLICITED BY THE BOARDS OF TRUSTEES OF NATIONS FUNDS TRUST AND NATIONS SEPARATE ACCOUNT TRUST. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE MEETINGS. SHAREHOLDERS ALSO MAY SUBMIT THEIR PROXY: 1) BY TELEPHONE AT THE TOLL-FREE NUMBER SHOWN ON THEIR PROXY BALLOT; OR 2) ON-LINE AT THE WEBSITE PRINTED ON THE PROXY BALLOT. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING TO NATIONS FUNDS TRUST OR NATIONS SEPARATE ACCOUNT TRUST A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE MEETINGS AND VOTING IN PERSON. By Order of the Boards of Trustees, ROBERT B. CARROLL Secretary of Nations Funds Trust and Nations Separate Account Trust November 13, 2003 iii COMBINED PROXY STATEMENT/PROSPECTUS Dated November 13, 2003 NATIONS FUNDS TRUST NATIONS SEPARATE ACCOUNT TRUST ONE BANK OF AMERICA PLAZA 101 SOUTH TRYON STREET CHARLOTTE, NORTH CAROLINA 28255 TELEPHONE: (800) 321-7854 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 this Proxy/Prospectus. This Proxy/Prospectus, which should be retained for future reference, sets forth concisely information about the proposed Reorganizations, and information about each Acquiring Fund 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 each Acquiring Fund. It is expected that this Proxy/Prospectus will be mailed to shareholders on or about November 15, 2003. Additional information about each Fund and its Acquiring Fund 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 each Fund and Acquiring Fund is legally deemed to be part of this Proxy/Prospectus and is incorporated by reference. In addition, a copy of the appropriate Acquiring Fund prospectus also accompanies this Proxy/Prospectus. Nations Capital Growth Fund's prospectus and annual report to shareholders for the fiscal year ended March 31, 2003 previously have been mailed to shareholders. Nations (Annuity) Capital Growth Portfolio's prospectus, annual report for the fiscal year ended December 31, 2002 and semi-annual report for the fiscal period ended June 30, 2003 previously have been mailed to shareholders. The SAI relating to this Proxy/Prospectus also is incorporated by reference and is dated November 13, 2003. Additional copies of any of these documents are available without charge by writing to the address given above or by calling (800) 321-7854. These documents also are available on the SEC's 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 the Reorganization Agreement dated as of November 13, 2003 that provides for the Reorganization of each Fund into its respective Acquiring Fund. Special Note for Nations Capital Growth Fund Shareholders Only Nations Marsico Growth Fund, which is the Acquiring Fund of Nations Capital Growth Fund, is a "feeder" fund in a master/feeder structure where Nations Marsico Growth Master Portfolio of Nations Master Investment Trust serves as the "master" portfolio (the "Master Portfolio"). Because the assets of the Acquiring Fund are invested in the Master Portfolio, investment advisory and sub-advisory services are provided at the Master Portfolio level. In order to avoid confusion of terms, throughout this Proxy Statement the term Acquiring Fund or Nations Marsico Growth Fund should also be considered to refer to Nations Marsico Growth Master Portfolio, where the context requires. 1 TABLE OF CONTENTS
Page No. -------- SUMMARY.......................................................................................................... 3 OVERVIEW OF FEES........................................................................................ 3 OVERVIEW OF THE REORGANIZATION AGREEMENT................................................................ 3 OVERVIEW OF INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES................................... 3 OVERVIEW OF SERVICE PROVIDERS........................................................................... 4 OVERVIEW OF PURCHASE, REDEMPTION, DISTRIBUTION, EXCHANGE AND OTHER POLICIES AND PROCEDURES.............. 4 OVERVIEW OF U.S. FEDERAL INCOME TAX CONSEQUENCES........................................................ 5 PRINCIPAL RISK FACTORS.................................................................................. 5 THE REORGANIZATIONS.............................................................................................. 6 DESCRIPTION OF THE REORGANIZATION AGREEMENT............................................................. 6 BOARD CONSIDERATION..................................................................................... 6 BENEFITS OF, AND REASONS FOR, THE REORGANIZATION........................................................ 7 COMPARISON OF INVESTMENT MANAGEMENT, INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES.......... 8 COMPARISON OF PERFORMANCE............................................................................... 11 COMPARISON OF FUNDAMENTAL INVESTMENT POLICIES........................................................... 13 COMPARISON OF FORMS OF BUSINESS ORGANIZATION............................................................ 13 COMPARISON OF ADVISORY AND OTHER SERVICE ARRANGEMENTS AND FEES.......................................... 13 COMPARISON OF PURCHASE, REDEMPTION, DISTRIBUTION AND EXCHANGE POLICIES AND OTHER SHAREHOLDER TRANSACTIONS AND SERVICES......................................................................... 14 MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES........................................................... 14 CAPITALIZATION.......................................................................................... 16 VOTING MATTERS................................................................................................... 17 GENERAL INFORMATION..................................................................................... 17 QUORUM.................................................................................................. 18 SHAREHOLDER APPROVAL.................................................................................... 18 PRINCIPAL SHAREHOLDERS.................................................................................. 18 ANNUAL MEETINGS AND SHAREHOLDER MEETINGS................................................................ 20 ADDITIONAL INFORMATION ABOUT THE TRUSTS.......................................................................... 20 FINANCIAL STATEMENTS.................................................................................... 20 LEGAL PROCEEDINGS....................................................................................... 20 OTHER BUSINESS.......................................................................................... 22 SHAREHOLDER INQUIRIES................................................................................... 22
APPENDICES A - GLOSSARY B - EXPENSE SUMMARIES OF THE FUNDS AND ACQUIRING FUNDS C--MANAGEMENT'S DISCUSSION OF THE ACQUIRING FUNDS' PERFORMANCE 2 SUMMARY The following is an overview of certain information relating to the proposed Reorganizations. More complete information is contained throughout the Proxy/Prospectus and its Appendices. OVERVIEW OF FEES The following table shows: (i) the current total operating expense ratios of the Funds; and (ii) the pro forma total operating expense ratios of the Acquiring Funds. The table shows that the pro forma total operating expense ratios of the Acquiring Funds after the Reorganizations are expected to be higher than they are for the Funds. All expense ratios shown are annualized. Pro forma total operating expense ratios are based on the fee arrangements that will be in place upon consummation of the Reorganizations. For more detailed information comparing the fees and expenses of each Fund and Acquiring Fund, see Appendix B.
Pro Forma Total Total Operating Operating Expense Acquiring Fund/Share Class Expense Fund/Share Class Ratios Post-Reorganization Ratios ---------------- --------- ------------------- ------ Nations Capital Growth Fund -> Nations Marsico Growth Fund Primary A Shares 1.03% Primary A Shares 1.11% Investor A Shares 1.28% Investor A Shares 1.36% Investor B Shares 2.03% Investor B Shares 2.11% Investor C Shares 2.03% Investor C Shares 2.11% Nations (Annuity) Capital -> Nations (Annuity) Marsico Growth Portfolio 1.00% Growth Portfolio 1.14%
OVERVIEW OF THE REORGANIZATION AGREEMENT The document that governs the Reorganizations 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 the Acquiring Fund; and (ii) the distribution of the Acquiring Fund shares to Fund shareholders in liquidation of their Fund. In other words, as a result of the Reorganizations, Fund shareholders will become shareholders of the corresponding Acquiring Fund and will hold, immediately after the Reorganizations, Acquiring Fund shares of the same class and having a total dollar value equal to the total dollar value of the Fund shares that the shareholder held immediately before the Reorganizations. The Reorganizations are expected to occur on or about January 23, 2004. It is expected that the exchange of Fund shares for corresponding Acquiring Fund shares in the Reorganizations should be tax-free for U.S. federal income tax purposes. Fund shareholders will not pay any sales charge or sales load on the exchange. BACAP and/or its affiliates will bear the customary expenses of each Reorganization. The Funds will bear certain expenses such as brokerage commissions and other transaction charges in connection with the sale of any securities in anticipation of, or as a result of, the Reorganizations. For more information about the Reorganizations and the Reorganization Agreement, see "The Reorganizations - Description of the Reorganization Agreement." OVERVIEW OF INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES As described in more detail under "The Reorganizations - Board Consideration," in approving the Reorganizations, the Boards took note that BACAP, as of September 30, 2003, planned to begin downsizing and eventually eliminate its Growth Strategies Team (which then managed the day-to-day investment operations of the 3 Funds). Marsico Capital agreed to manage the Funds for an interim period between October 1, 2003 and such time as the Funds were reorganized (if approved by shareholders). Accordingly, and in anticipation of the Reorganizations, the Boards approved changes to the Funds' investment objectives and principal investment strategies to align them compatibly with the investment style and approach of Marsico Capital. As a result, each Fund and its Acquiring Fund currently have identical investment objectives and principal investment strategies. Prior to October 1, 2003, the investment objectives and principal investment strategies of each Fund and its Acquiring Fund were generally similar - - both the Funds and Acquiring Funds generally sought growth of capital by investing in large-capitalization equity securities. However, there were important differences, particularly in the investment approach employed by the Funds' investment adviser (BACAP) and the Acquiring Funds' investment sub-adviser (Marsico Capital). In the case of the Funds, BACAP's Growth Strategies Team identified stocks using both an analytical process and quantitative analysis. Starting with a universe of companies with market capitalization of at least $1 billion, the Team first assessed the investment potential of companies and their industries by evaluating the growth prospects of the company's industry and the company's relative competitive position in the industry. The Team then used quantitative analysis to decide when to invest. Evaluating each company's earnings trends and stock valuations, the Team tried to determine when a company is reasonably valued. In actively managing the Funds, the Team considered the characteristics of the Russell 1000 Growth Index as a general baseline. In the case of the Acquiring Funds (and also the Funds currently), co-managers Thomas F. Marsico and James A. Hillary of Marsico Capital (hereinafter referred to as Marsico Capital) use an approach that combines "top-down" economic analysis with "bottom-up" stock selection. The "top-down" approach takes into consideration such macroeconomic factors as interest rates, inflation, the regulatory environment and the global competitive landscape. In addition, Marsico Capital examines such factors as the most attractive global investment opportunities, industry consolidation and the sustainability of economic trends. As a result of the "top-down" analysis, Marsico Capital identifies sectors, industries and companies which it believes should benefit from the overall trends that Marsico Capital has observed. Marsico Capital then employs "bottom-up" stock selection by looking for individual companies with earnings growth potential that may not be recognized by the market at large. In managing the Acquiring Funds, Marsico Capital does not limit itself to any particular capitalization range, although it primarily invests in larger capitalization companies. For additional information about the similarities and differences between the investment objectives and principal investment strategies and investment approach of the Funds and Acquiring Funds, see "The Reorganizations - Comparison of Investment Management, Investment Objectives and Principal Investment Strategies." OVERVIEW OF SERVICE PROVIDERS Each Fund and Acquiring Fund currently have identical service providers. Prior to October 1, 2003, each Fund and Acquiring Fund had identical service providers, including BACAP as investment adviser, except that the Funds were not additionally served by an investment sub-adviser. Whereas BACAP provided the day-to-day portfolio management services for the Funds, Marsico Capital provides those services to the Acquiring Funds (as well as the Funds currently). Please see the chart under "The Reorganizations - Comparison of Advisory and Other Service Arrangements and Fees," and the discussion under "The Reorganizations - Investment Advisory and Sub-Advisory Services and Fees" for more information. OVERVIEW OF PURCHASE, REDEMPTION, DISTRIBUTION, EXCHANGE AND OTHER POLICIES AND PROCEDURES Nations Capital Growth Fund and Nations Marsico Growth Fund each offer four classes of shares: Primary A Shares, Investor A Shares, Investor B Shares and Investor C Shares. In addition, Nations Marsico Growth Fund offers R Shares (which aren't a part of the Reorganizations). Nations (Annuity) Capital Growth Portfolio and 4 Nations (Annuity) Marsico Growth Portfolio each offer a single, unnamed class of shares. The purchase, redemption, distribution, exchange and other policies and procedures of each share class of the Funds are identical to those of the same share class of the Acquiring Funds. For more information concerning these policies and procedures, see "The Reorganizations - Comparison of Purchase, Redemption, Distribution and Exchange Policies and other Shareholder Transactions and Services." OVERVIEW OF U.S. FEDERAL INCOME TAX CONSEQUENCES An important condition to completing each Reorganization is that the Trusts receive a tax opinion to the effect that although not free from doubt, each Reorganization should qualify as a "reorganization" for U.S. federal income tax purposes. As such, the Reorganizations should not be taxable for these purposes to the Funds, the Acquiring Funds or their shareholders. Holders of the Portfolio's shares through variable annuity and life insurance contracts should not be affected by the Reorganization for U.S. federal income tax purposes. Sales of securities by Nations Capital Growth Fund prior to its Reorganization, or by Nations Marsico Growth Fund after the Reorganization, whether in the ordinary course of business or in connection with the Reorganization, could result in taxable distributions to Nations Capital Growth Fund shareholders. It is expected that a portion of Nations Capital Growth Fund's securities will be sold in connection with its Reorganization. It is also expected that the use of a significant portion of Nations Capital Growth Fund's realized and unrealized losses, if any, will be limited for U.S. federal income tax purposes and the benefit of such losses to Nations Capital Growth Fund shareholders may be diminished as a result of the Reorganization. See "The Reorganizations - Material U.S. Federal Income Tax Consequences" for additional information. PRINCIPAL RISK FACTORS The following principal investment risks are relevant to an investment in the Funds and the Acquiring Funds: - Investment strategy risk - Marsico Capital chooses stocks for the Funds and Acquiring Funds, respectively, that they believe have growth potential. There is a risk that the value of these investments will not rise as high as Marsico Capital expects, or will fall. - Stock market risk - The value of the stocks the Funds and the Acquiring Funds hold can be affected by changes in U.S. or foreign economies and financial markets, and the companies that issue the stocks, among other things. Stock prices can rise or fall over short as well as long periods. In general, stock markets tend to move in cycles, with periods of rising prices and periods of falling prices. - Technology and technology-related risk - The Funds and Acquiring Funds may invest in technology and technology-related companies, which can be significantly affected by obsolescence of existing technology, short product cycles, falling prices and profits, and competition from new market entrants. - Foreign investment risk - The Funds and Acquiring Funds may invest up to 25% of their assets in foreign securities (Prior to October 1, 2003, the Funds could only invest up to 20% of their assets in foreign securities). Accordingly, the Funds and Acquiring Funds may be affected by the risks of foreign investing. Foreign investments may be riskier than U.S. investments because of political and economic conditions, changes in currency exchange rates, foreign controls on investment, difficulties selling some securities and lack of or limited financial information. Significant levels of foreign taxes, including withholding taxes, also may apply to some foreign investments. - Investing in Nations Marsico Growth Master Portfolio - Nations Marsico Growth Fund, which is the Acquiring Fund of Nations Capital Growth Fund, is a "feeder" fund in a master/feeder structure where Nations Marsico Growth Master Portfolio of Nations Master Investment Trust serves as the "master" portfolio (the "Master Portfolio"). Other mutual funds and eligible investors can buy beneficial interests in the Master Portfolio. All investors in the Master Portfolio invest under the same terms and conditions as the Acquiring Fund and pay a proportionate share of the Master Portfolio's expenses. Other feeder funds that 5 invest in the Master Portfolio may have different share prices and returns than the Fund because different feeder funds typically have varying sales charges, and ongoing administrative and other expenses. The Acquiring Fund could withdraw its entire investment from the Master Portfolio if it believes it's in the best interests of the Acquiring Fund to do so (for example, if the Master Portfolio changed its investment objective). It is unlikely that this would happen, but if it did, the Fund's portfolio could be less diversified and therefore less liquid, and expenses could increase. The Acquiring Fund might also have to pay brokerage, tax or other charges. THE REORGANIZATIONS 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 each Fund to its corresponding Acquiring Fund in exchange for shares of the Acquiring Fund; and (ii) the distribution of the Acquiring Fund shares to Fund shareholders in liquidation of the 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 each Reorganization also is conditioned upon each Trust receiving an opinion from Morrison & Foerster LLP to the effect that, although not free from doubt, each Reorganization should qualify as a "reorganization" for U.S. federal income tax purposes. The Reorganization Agreement provides that either Reorganization may be abandoned at any time before Closing by a 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 a Board, and with or without the approval of Fund 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 appropriate Board with or without the approval of shareholders). At Closing, 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 BACAP and/or its affiliates will bear the customary expenses associated with each Reorganization. The Funds will bear certain expenses such as brokerage commissions and other transaction charges in connection with the sale of any securities in anticipation of, or as a result of, the Reorganizations. A copy of the Reorganization Agreement is available at no charge by calling (800) 321-7854 or writing the Trust 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). BOARD CONSIDERATION In August 2003, BACAP advised the Boards that it planned, as part of personnel realignment, to begin downsizing and eventually eliminate its Growth Strategies Team, which provided day-to-day investment management services to the Funds. Partly as a result of this realignment of personnel at BACAP, Fund management proposed to the Boards, and the Boards approved, that as of October 1, 2003, Marsico Capital be appointed investment sub-adviser to the Funds and that the Funds' investment objectives and principal investment strategies be aligned with those of the Acquiring Funds so that they could be made more compatible with the current investment style and approach of Marsico Capital. Marsico Capital agreed to manage the Funds for the interim period between October 1, 2003 and such time as the Funds are reorganized (assuming shareholder approval). Shareholder approval was not needed to effect these steps. However, shareholder approval is needed to consummate the Reorganizations. If the Reorganizations are not approved by shareholders, the Boards would then consider what alternatives are available for the Funds, including whether to begin the process of liquidating the Funds in light of the viability concerns described below. 6 At meetings held on August 27, 2003, the Boards considered and unanimously approved the Reorganization Agreement and recommended that Fund shareholders vote for it at the Meetings. During deliberations, the Boards (with the advice and assistance of independent counsel) reviewed and considered, among other things: (1) the Reorganizations as a result both of the downsizing and eventual elimination of BACAP's Growth Strategies Team, and also as part of a continuing initiative to streamline and improve the offerings of the Nations Funds family; (2) various potential shareholder benefits of the Reorganizations and the Reorganization Agreement; (3) the current asset levels of the Funds and the combined pro forma asset levels of their corresponding Acquiring Funds; (4) the historical performance results of the Funds and their corresponding Acquiring Funds; (5) the prior investment objectives and principal investment strategies of the Funds and investment approaches employed by the BACAP Growth Strategies Team, and their relative compatibility with the investment objectives and principal investment strategies of the Acquiring Funds and investment approaches employed by Marsico Capital; (6) the historical performance volatility of the Funds (as managed by BACAP's Growth Strategies Team) compared with that of the Acquiring Funds (as managed by Marsico Capital); (7) the fact that Fund shareholders will experience no change in shareholder services; (8) the fact that the Acquiring Funds are expected to have a higher investment advisory fee and, accordingly, higher total operating expense ratios than their corresponding Funds; (9) the expected U.S. federal income tax consequences of the Reorganizations, including limitations on the use of realized and unrealized losses for U.S. federal income tax purposes and the potential diminution of the ability to use such losses to offset future gains; (10) the substantial overlap of common holdings (as of September 10, 2003 there was a correlation of portfolio holdings between each Fund and Acquiring Fund, representing over 67% of each Funds' assets); (11) the potential costs of repositioning Fund assets, either in anticipation of the Reorganizations or after the Reorganizations; (12) that the Funds would bear the expenses associated with the Reorganizations; and (13) the potential benefits of the Reorganizations to other persons, including BACAP and its affiliates (e.g., the benefit of consolidating resources within BACAP and its affiliates (including Marsico Capital), and the retention by Marsico Capital of the increased portion of the investment advisory fees). At special telephonic meetings held on September 19, 2003, the Boards again considered the Reorganizations and concluded that each Reorganization, on balance, was in the best interest of shareholders. The Boards considered the factors enumerated in the paragraph above, evaluating them in light of the developments described under "Additional Information About the Trusts--Legal Proceedings." The Boards also considered the additional fact that BACAP agreed that either it or its affiliates would assume the customary costs of each Reorganization. Based upon their evaluation of the information presented to them, and in light of their fiduciary duties under federal and state law, the Trustees, including all of the non-interested Trustees, determined that participation in the Reorganizations, as contemplated by the Reorganization Agreement, was in the best interests of both the Funds and the Acquiring Funds, and that the interests of the Funds' shareholders would not be diluted as a result of the Reorganizations. BENEFITS OF, AND REASONS FOR, THE REORGANIZATION Management and the Boards have proposed the Reorganizations both as result of the elimination of BACAP's Growth Strategies Team and as part of a continuing initiative to streamline and improve the offerings of the Nations Funds family. This involves seeking to offer funds that can achieve long-term viability and offer the potential for superior long-term performance and less performance volatility. - ACHIEVING LONG-TERM VIABILITY. The Reorganizations will combine each Fund's assets with those of its Acquiring Fund, resulting in combined portfolios that are significantly larger than the Funds. Generally, the larger a mutual fund, the better the chance that it will exist viably over the long-term. This is true because larger mutual funds have more buying power (for example, they can purchase round lots of securities and often negotiate better securities contracts) and are generally less negatively impacted by abrupt asset inflows and redemptions. Nations Capital Growth Fund has experienced net redemptions for nine of the last eleven years, including six years in a row (1998-2003). If the Fund were to continue to experience net redemptions, the Fund's 7 viability could eventually come under question. The Reorganizations would allow Fund shareholders the opportunity to be invested in a combined Acquiring Fund that could offer the benefits that come with larger asset size. - THE POTENTIAL FOR SUPERIOR LONG-TERM PERFORMANCE AND LESS PERFORMANCE VOLATILITY. Management and the Boards believe that the net redemptions described above have been due in large part to the Funds' relative underperformance. The Acquiring Funds have outperformed their respective corresponding Funds and also the Lipper Large Cap Growth Category and the S&P 500 for every standardized performance period since their inception. Although past performance can be no guarantee of future results, past performance can help a shareholder compare the relative risks of investing in a fund and also how a particular portfolio manager's style has been implemented over a period of time. The Acquiring Funds also have had less volatility than the Funds--that is to say, the Acquiring Funds have had steadier historical performance results. Management and the Boards believe that this is more in keeping with what Nations Funds family shareholders have come to expect. THE BOARDS UNANIMOUSLY RECOMMEND THAT FUND SHAREHOLDERS VOTE TO APPROVE THE REORGANIZATION AGREEMENT. COMPARISON OF INVESTMENT MANAGEMENT, INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES Each Fund and its Acquiring Fund currently have identical investment objectives and principal investment strategies. Prior to October 1, 2003, the investment objectives and principal investment strategies of each Fund and its Acquiring Fund were generally similar - - both the Funds and Acquiring Funds generally sought growth of capital by investing in large-capitalization equity securities. However, there were important differences, particularly in the investment approach employed by the Funds' investment adviser (BACAP) and the Acquiring Funds' investment sub-adviser (Marsico Capital), as shown below.
NATIONS CAPITAL GROWTH FUND NATIONS MARSICO GROWTH FUND - ------------------------------------------------------------------------------------------------------------------------------ INVESTMENT The Fund seeks growth of capital by investing in The Acquiring Fund seeks long-term growth of OBJECTIVE companies that are believed to have superior capital. earnings growth potential. - ------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL The Fund normally invests at least 65% of its The Acquiring Fund invests all of its assets in INVESTMENT assets in common stocks of companies that have one Nations Marsico Growth Master Portfolio (the STRATEGIES or more of the following characteristics: Master Portfolio). The Master Portfolio has the same investment objective as the Acquiring Fund. - above-average earnings growth compared with the Russell 1000 Growth Index The Master Portfolio invests primarily in equity securities of large capitalization companies that - established operating histories, strong are selected for their growth potential. It balance sheets and favorable financial generally holds a core position of between 35 and performance 50 securities. It may hold up to 25% of its assets in foreign securities. - above-average return on equity compared with the Russell 1000 Growth Index The Fund may also invest up to 20% of its assets in foreign securities. - ------------------------------------------------------------------------------------------------------------------------------ APPROACH TO The Fund may also invest in securities that aren't The Master Portfolio may also invest in securities INVESTING AND part of its principal investment strategies, but that aren't part of its principal investment SELLING it won't hold more than 10% of its assets in any strategies, but it won't hold more than 10% of its one type of these securities. These securities are assets in any one type of these securities. These
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NATIONS CAPITAL GROWTH FUND NATIONS MARSICO GROWTH FUND described in the SAI. securities are described in the SAI. The team identifies stocks using a disciplined Marsico Capital uses an approach that combines analytical process. Starting with a universe of "top-down" economic analysis with "bottom-up" companies with market capitalization of at least stock selection. The "top-down" approach takes $1 billion, the team assesses the investment into consideration such macroeconomic factors as potential of these companies and their industries interest rates, inflation, the regulatory by evaluating: environment and the global competitive landscape. In addition, Marsico Capital also examines such - the growth prospects of the company's factors as the most attractive global investment industry opportunities, industry consolidation and the sustainability of economic trends. As a result of - the company's relative competitive the "top-down" analysis, Marsico Capital position in the industry identifies sectors, industries and companies which it believes should benefit from the overall trends The team believes that this analysis identifies that Marsico Capital has observed. companies with favorable long-term growth potential, competitive advantages and sensible Marsico Capital then looks for individual business strategies. The team then uses companies with earnings growth potential that may quantitative analysis to decide when to invest, not be recognized by the market at large. In evaluating each company's earnings trends and determining whether a particular company is stock valuations, among other things, to try to suitable for investment, Marsico Capital focuses determine when it is reasonably valued. on a number of different attributes including the company's specific market expertise or dominance, In actively managing the portfolio, the team its franchise durability and pricing power, solid considers the characteristics of the Russell 1000 fundamentals (e.g., a strong balance sheet, Growth Index as a general baseline. The index improving returns on equity, the ability to characteristics evaluated by the team include risk generate free cash flow, apparent use of and sector diversification, as well as individual conservative accounting standards and transparent securities holdings. The team may sell a security financial disclosure), strong and ethical when its price reaches a target set by the team, management, apparent commitment to shareholder the company's growth prospects are deteriorating, interests and reasonable valuations in the context when the team believes other investments are more of projected growth rates. This is called attractive, or for other reasons. "bottom-up" stock selection. The team may use various strategies, consistent As part of this fundamental, "bottom-up" research, with the Fund's investment objective, to try to Marsico Capital may visit with various levels of a reduce the amount of capital gains distributed to company's management as well as with its shareholders. For example, the team: customers, suppliers and competitors. Marsico Capital also prepares detailed earnings and cash - may limit the number of buy and sell flow models of companies. These models permit transactions it makes Marsico Capital to project earnings growth and other important characteristics under different - may try to sell shares that have the scenarios. Each model is customized to follow a lowest tax burden on shareholders particular company and is intended to replicate and describe a company's past, present and future - may offset capital gains by selling performance. The models include quantitative securities to realize a capital loss information and detailed narratives that reflect updated interpretations of corporate data. While the Fund may try to manage its capital gain distributions, it will not be able to completely Marsico Capital may sell a security when it avoid making taxable distributions. These believes there is a deterioration in the company's strategies also may be affected by changes in tax financial situation, the security is overvalued, laws and regulations, or by court decisions. when there is a negative development in the
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NATIONS CAPITAL GROWTH FUND NATIONS MARSICO GROWTH FUND company's competitive, regulatory or economic environment, or for other reasons.
NATIONS (ANNUITY) CAPITAL GROWTH PORTFOLIO NATIONS (ANNUITY) MARSICO GROWTH PORTFOLIO - ------------------------------------------------------------------------------------------------------------------------------ INVESTMENT The Fund seeks growth of capital by investing in The Acquiring Fund seeks long-term growth of OBJECTIVE companies that are believed to have superior earnings capital. growth potential. - ------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL The Fund normally invests at least 65% of its The Acquiring Fund invests primarily in equity INVESTMENT assets in common stocks of companies that have one securities of large capitalization companies that STRATEGIES or more of the following characteristics: are selected for their growth potential. It generally holds a core position of between 35 and - above-average earnings growth compared 50 securities. It may hold up to 25% of its assets with the Russell 1000 Growth Index in foreign securities. - established operating histories, strong balance sheets and favorable financial performance - above-average return on equity compared with the Russell 1000 Growth Index The Fund may also invest up to 20% of its assets in foreign securities. - ------------------------------------------------------------------------------------------------------------------------------ APPROACH TO The Fund may also invest in securities that aren't The Acquiring Fund may also invest in securities INVESTING AND part of its principal investment strategies, but that aren't part of its principal investment SELLING it won't hold more than 10% of its assets in any strategies, but it won't hold more than 10% of its one type of these securities. These securities assets in any one type of these securities. These are described in the SAI. securities are described in the SAI. The team identifies stocks using a disciplined Marsico Capital uses an approach that combines analytical process. Starting with a universe of "top-down" economic analysis with "bottom-up" companies with market capitalization of at least stock selection. The "top-down" approach takes $1 billion, the team assesses the investment into consideration such macroeconomic factors as potential of these companies and their industries interest rates, inflation, the regulatory by evaluating: environment and the global competitive landscape. In addition, Marsico Capital also examines such - the growth prospects of the company's factors as the most attractive global investment industry opportunities, industry consolidation and the sustainability of economic trends. As a result of - the company's relative competitive the "top-down" analysis, Marsico Capital position in the industry identifies sectors, industries and companies which it believes should benefit from the overall trends The team believes that this analysis identifies that Marsico Capital has observed. companies with favorable long-term growth potential, competitive advantages and sensible Marsico Capital then looks for individual business strategies. The team then uses companies with earnings growth potential that may quantitative analysis to decide when to invest, not be recognized by the market at large. In evaluating each company's earnings trends and determining whether a particular company is stock valuations, among other things, to try to suitable for investment, Marsico Capital focuses determine when it is reasonably valued. on a number of different attributes including the company's specific market expertise or dominance, In actively managing the portfolio, the team its franchise durability and pricing power, solid considers the characteristics of the Russell 1000 fundamentals (e.g., a strong balance
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NATIONS (ANNUITY) CAPITAL GROWTH PORTFOLIO NATIONS (ANNUITY) MARSICO GROWTH PORTFOLIO Growth Index as a general baseline. The index sheet, improving returns on equity, the ability to characteristics evaluated by the team include risk generate free cash flow, apparent use of and sector diversification, as well as individual conservative accounting standards and transparent securities holdings. financial disclosure), strong and ethical management, apparent commitment to shareholder The team may sell a security when its price interests and reasonable valuations in the context reaches a target set by the team, the company's of projected growth rates. This is called growth prospects are deteriorating, when the team "bottom-up" stock selection. believes other investments are more attractive, or for other reasons. As part of this fundamental, "bottom-up" research, Marsico Capital may visit with various levels of a company's management as well as with its customers, suppliers and competitors. Marsico Capital also prepares detailed earnings and cash flow models of companies. These models permit Marsico Capital to project earnings growth and other important characteristics under different scenarios. Each model is customized to follow a particular company and is intended to replicate and describe a company's past, present and future performance. The models include quantitative information and detailed narratives that reflect updated interpretations of corporate data. Marsico Capital may sell a security when it believes there is a deterioration in the company's financial situation, the security is overvalued, when there is a negative development in the company's competitive, regulatory or economic environment, or for other reasons.
COMPARISON OF PERFORMANCE Set forth below is a comparison of the performance of the Funds with that of the Acquiring Funds: NATIONS CAPITAL GROWTH FUND AND NATIONS MARSICO GROWTH FUND The following bar chart and table show you how the Fund and Acquiring Fund have performed in the past, and can help you understand the risks of investing in the Fund. A Fund's past performance is no guarantee of how it will perform in the future. NATIONS CAPITAL GROWTH FUND YEAR BY YEAR TOTAL RETURN (%) AS OF DECEMBER 31 EACH YEAR* The bar chart shows you how the performance of the fund's Investor A Shares has varied from year to year. These returns do not reflect deductions of sales charges or account fees, if any, and would be lower if they did.
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- 7.53% -1.55% 28.56% 18.29% 30.36% 29.73% 23.57% -12.17% -15.75% -30.63% *Year-to-date return as of June 30, 2003: 12.59%
BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD BEST: 4TH QUARTER 1998: 28.21% WORST: 3RD QUARTER 2001: -18.79%
NATIONS MARSICO GROWTH FUND YEAR BY YEAR TOTAL RETURN (%) AS OF DECEMBER 31 EACH YEAR* The bar chart shows you how the performance of the fund's Investor A Shares has varied from year to year. These returns do not reflect deductions of sales charges or account fees, if any, and would be lower if they did.
1998 1999 2000 2001 2002 ---- ---- ---- ---- ---- 38.62% 52.11% -15.47% -19.76% -15.29% *Year-to-date return as of June 30, 2003: 12.45%
BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD BEST: 4TH QUARTER 1999: 35.19% WORST: 3RD QUARTER 2001: -17.33%
Average annual total return as of December 31, 2002 The table shows the Fund and Acquiring Fund's Primary A Shares average annual total returns (i) before taxes, (ii) after taxes on distributions and (iii) after taxes on distributions and sale of shares. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. The actual after-tax returns for an investor would depend on the investor's tax situation and may differ from those shown in the table. In addition, the after-tax returns shown in the table are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or retirement accounts. 11 The table also shows the average annual total return before taxes for Investor A, Investor B and Investor C Shares of the Fund and Acquiring Fund, however, it does not show after-tax returns for those classes and those classes' after-tax returns each will vary from the after-tax returns shown for the Primary A Shares of the Fund and Acquiring Fund. The table also compares the returns of the Fund for each period with the Russell 1000 Growth Index (an unmanaged index which measures the performance of the largest U.S. companies based on total market capitalization, with high price-to-book ratios and forecasted growth rates relative to the Russell 1000 Index as a whole). It also compares the returns of the Acquiring Fund for each period with the S&P 500 (an unmanaged index of 500 widely held common stocks weighted by market capitalization). Neither index is available for investment and do not reflect fees, brokerage commissions, taxes or other expenses of investing.
LIFE OF 1 YEAR 5 YEARS 10 YEARS FUND* - ----------------------------------------------------------------------------------------------------------------- Nations Capital Growth Fund Primary A Shares Returns Before Taxes -30.43% -3.55% 5.88% 6.51% Nations Marsico Growth Fund Primary A Shares Returns Before Taxes -15.08% 4.05% n/a 4.05% - ----------------------------------------------------------------------------------------------------------------- Nations Capital Growth Fund Primary A Shares Returns After Taxes on Distributions -30.43% -5.57% 2.98% 3.65% Nations Marsico Growth Fund Primary A Shares Returns After Taxes on Distributions -15.08% 3.97% n/a 3.97% - ----------------------------------------------------------------------------------------------------------------- Nations Capital Growth Fund Primary A Shares Returns After Taxes on Distributions and Sale of Fund Shares -18.69% -1.99% 4.85% 5.40% Nations Marsico Growth Fund Primary A Shares Returns After Taxes on Distributions and Sale of Acquiring Fund Shares -9.26% 3.27% n/a 3.27% - ----------------------------------------------------------------------------------------------------------------- Nations Capital Growth Fund Investor A Shares Returns Before Taxes -34.61% -4.96% 5.00% 5.64% Nations Marsico Growth Fund Investor A Shares Returns Before Taxes -20.15% 2.69% n/a 2.69% - ----------------------------------------------------------------------------------------------------------------- Nations Capital Growth Fund Investor B Shares Returns Before Taxes -34.51% -4.73% n/a 5.28% Nations Marsico Growth Fund Investor B Shares Returns Before Taxes -20.13% 2.84% n/a 2.84% - ----------------------------------------------------------------------------------------------------------------- Nations Capital Growth Fund Investor C Shares Returns Before Taxes -31.83% -4.55% 4.92% 5.54% Nations Marsico Growth Fund Investor C Shares Returns Before Taxes -16.76% 3.21% n/a 3.21% - ----------------------------------------------------------------------------------------------------------------- S&P 500 (reflects no deductions for fees, expenses or taxes) -22.09% -0.58% n/a -0.58% - ----------------------------------------------------------------------------------------------------------------- Russell 1000 Growth Index (reflects no deductions for fees, expenses or taxes) -27.88% -3.84% 6.70% 7.24%
*The inception date of Nations Capital Growth Fund's Primary A Shares, Investor A Shares, Investor B Shares and Investor C Shares is September 30, 1992, October 2, 1992, June 7, 1993 and October 2, 1992, respectively. The return for the index shown is from the inception of Investor A Shares. The inception date of Nations Marsico Growth Fund's Primary A Shares, Investor A Shares, Investor B Shares and Investor C Shares is December 31, 1997. The return for the index shown is from that date. NATIONS (ANNUITY) CAPITAL GROWTH PORTFOLIO AND NATIONS (ANNUITY) MARSICO GROWTH PORTFOLIO The following bar chart and table show you how the Fund and Acquiring Fund have performed in the past, and can help you understand the risks of investing in the Fund. A Fund's past performance is no guarantee of how it will perform in the future. NATIONS (ANNUITY) CAPITAL GROWTH PORTFOLIO YEAR BY YEAR TOTAL RETURN (%) AS OF DECEMBER 31 EACH YEAR* The bar chart shows you how the performance of the fund has varied from year to year. These returns do not reflect deductions of sales charges or account fees, if any, and would be lower if they did.
1999 2000 2001 2002 ---- ---- ---- ---- 18.27% -11.51% -11.91% -30.06%
BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD BEST: 4TH QUARTER 2001: 15.61% WORST: 2ND QUARTER 2002: -18.61%
NATIONS (ANNUITY) MARSICO GROWTH PORTFOLIO YEAR BY YEAR TOTAL RETURN (%) AS OF DECEMBER 31 EACH YEAR* The bar chart shows you how the performance of the fund has varied from year to year. These returns do not reflect deductions of sales charges or account fees, if any, and would be lower if they did.
1999 2000 2001 2002 ---- ---- ---- ---- 55.10% -12.42% -17.63% -16.13%
BEST AND WORST QUARTERLY RETURNS DURING THIS PERIOD BEST: 4TH QUARTER 1999: 36.77% WORST: 2ND QUARTER 2001: -16.31%
Average annual total return as of December 31, 2002 The table shows the Fund's average annual total return for each period, compared with the Russell 1000 Growth Index (an unmanaged index which measures the performance of the largest U.S. companies based on total market capitalization, with high price-to-book ratios and forecasted growth rates relative to the Russell 1000 Index 12 as a whole) and the Acquiring Fund's average annual total return for each period, compared with the S&P 500 (an unmanaged index of 500 widely held common stocks weighted by market capitalization)
LIFE OF 1 YEAR 5 YEARS 10 YEARS FUND* - --------------------------------------------------------------------------------------------------------------- Nations Capital Growth Portfolio -30.06% n/a n/a -6.71% Nations Marsico Growth Portfolio -16.13% n/a n/a 2.84% - --------------------------------------------------------------------------------------------------------------- Russell 1000 Growth Index (reflects no deductions or expenses) -27.88% n/a n/a -6.84% S&P 500 (reflects no deductions for fees or expenses) -22.09% n/a n/a -3.30%
*The inception date of Nations Marsico Growth Portfolio is March 27, 1998. The return for the index shown is from that date. The inception date of Nations Capital Growth Portfolio is March 27, 1998. The returns for the index shown are from that date. COMPARISON OF FUNDAMENTAL INVESTMENT POLICIES A fundamental policy is typically an investment limitation or restriction that cannot be changed without shareholder approval. The Funds and their corresponding Acquiring Funds have identical fundamental investment policies and can be found in the Funds' and Acquiring Funds' statements of additional information, which are available to shareholders at no cost by contacting the Funds at the address or toll-free telephone number shown on the front cover of the Proxy/Prospectus. COMPARISON OF FORMS OF BUSINESS ORGANIZATION Nations Capital Growth Fund and Nations Marsico Growth Fund are each series of Nations Funds Trust, which is a Delaware statutory trust. Accordingly, they are governed by identical provisions of Delaware state law and by the same Amended and Restated Declaration of Trust. Nations (Annuity) Capital Growth Portfolio and Nations (Annuity) Marsico Growth Portfolio are each series of Nations Separate Account Trust, which is a Delaware statutory trust. Accordingly, they are governed by identical provisions of Delaware state law and by the same Amended and Restated Declaration of Trust. COMPARISON OF ADVISORY AND OTHER SERVICE ARRANGEMENTS AND FEES The Funds and the Acquiring Funds currently have identical service providers. Immediately after the Reorganizations, these service providers are expected to continue to serve the Acquiring Funds in the capacities indicated below. Prior to October 1, 2003 the Funds and the Acquiring Funds had identical service provides, except that the Funds were not served by an investment sub-adviser. Service Providers for the Funds and the Acquiring Funds Investment Adviser BACAP Investment Sub-Adviser: Marsico Capital for the Funds and Acquiring Funds; no investment sub-adviser for the Funds prior to October 1, 2003 Distributor BACAP Distributors Administrator BACAP Distributors Sub-Administrator The Bank of New York Custodian The Bank of New York Independent Accountants PricewaterhouseCoopers LLP BACAP serves as the investment adviser for the Funds and the Acquiring Funds. The Funds pay an investment advisory fee of 0.65%, computed daily and paid monthly, to BACAP based on its average daily net assets. The Acquiring Funds pay an investment advisory fee of 0.75%, computed daily and paid monthly, to BACAP based on its average daily net assets. BACAP pays Marsico Capital investment sub-advisory fees from the 13 investment advisory fees it receives from the Funds and Acquiring Funds. Prior to October 1, 2003, the Funds had no investment sub-adviser. The investment adviser and/or some of its other service providers for Nations (Annuity) Capital Growth Portfolio have agreed to limit total annual operating expenses to 1.00% until April 30, 2004. If the Reorganization of Nations (Annuity) Capital Growth Portfolio is consummated, there is no agreement in place to limit the total annual operating expenses of its Acquiring Fund. The investment adviser is entitled to recover from the Fund any fees waived or expenses reimbursed for a three year period following the date of such waiver or reimbursement under this arrangement if such recovery does not cause the Fund's expenses to exceed the expense limitations in effect at the time of recovery. The corresponding Acquiring Fund - Nations (Annuity) Marsico Growth Portfolio - does not have any expense limitations currently in place. BACAP is a wholly-owned subsidiary of Bank of America, which in turn is an indirect wholly-owned banking subsidiary of Bank of America Corporation, a financial services holding company organized as a Delaware corporation. The principal office of BACAP is One Bank of America Plaza, Charlotte, N.C. 28255. Marsico Capital is located at 1200 17th Street, Suite 1300, Denver, CO 80202. Thomas F. Marsico is Chairman and Chief Executive Officer of Marsico Capital. Prior to forming Marsico Capital in September 1997, Mr. Marsico had 18 years of experience as a securities analyst/portfolio manager. Marsico Capital is a wholly-owned subsidiary of Bank of America. COMPARISON OF PURCHASE, REDEMPTION, DISTRIBUTION AND EXCHANGE POLICIES AND OTHER SHAREHOLDER TRANSACTIONS AND SERVICES After the Reorganizations, Fund shareholders will hold shares of the same class of the Acquiring Fund that they held in the Fund prior to the Reorganization. For example, a Fund shareholder who owns Investor A shares will, immediately after the Fund's 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 Reorganizations. No sales charges or sales loads will be imposed in connection with the exchange of shares in the Reorganizations. MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES The following discussion summarizes the material U.S. federal income tax consequences of the Reorganizations that are applicable to Fund shareholders. It is based on the Code, applicable Treasury regulations, judicial 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 Reorganizations. A Fund shareholder's tax treatment may vary depending upon its particular situation. A Fund shareholder also may be subject to special rules not discussed below if it is a certain kind of Fund shareholder, including, but not limited to: an insurance company; a tax-exempt organization; a financial institution or broker-dealer; a person who is neither a citizen nor resident of the United States or entity that is not organized under the laws of the United States or political subdivision thereof; a holder of Fund shares as part of a hedge, straddle or conversion transaction; a person that does not hold Fund shares as a capital asset at the time of the Reorganization; or an entity taxable as a partnership for U.S. federal income tax purposes. 14 Neither Trust has requested or will request an advance ruling from the Internal Revenue Service as to the U.S. federal income tax consequences of the Reorganizations or any related transaction. The Internal Revenue Service could adopt positions contrary to those discussed below and such positions could be sustained. Fund shareholders are urged to consult with their own tax advisors and financial planners as to the particular tax consequences of the Reorganizations to them, including the applicability and effect of any state, local or foreign laws, and the effect of possible changes in applicable tax laws. The obligation of the Trusts to consummate the Reorganizations is conditioned upon their receipt of an opinion of Morrison & Foerster LLP substantially to the effect that each Reorganization should be treated as a "reorganization" under Section 368(a) of the Code and that each Fund and the corresponding Acquiring Fund should be a "party to a reorganization," within the meaning of Section 368(b) of the Code, with respect to each Reorganization. Provided that the Reorganizations so qualify and the Funds and Acquiring Funds are so treated, for U.S. federal income tax purposes, with respect to each Reorganization, generally: - Neither the Fund nor the corresponding Acquiring Fund should recognize any gain or loss as a result of the Reorganization. - A Fund shareholder should not recognize any gain or loss as a result of the receipt of corresponding Acquiring Fund shares in exchange for such shareholder's Fund shares pursuant to the Reorganization. - A Fund shareholder's aggregate tax basis in the corresponding Acquiring Fund shares received pursuant to the Reorganization should equal such shareholder's aggregate tax basis in Fund shares held immediately before the Reorganization. - A Fund shareholder's holding period for the corresponding Acquiring Fund shares received pursuant to the Reorganization should include the period during which the shareholder held Fund shares. However, holders of Nations (Annuity) Capital Growth Portfolio shares through variable annuity and life insurance contracts should not be affected for U.S. federal income tax purposes by the Portfolio's Reorganization, regardless of whether the Reorganization qualifies as a "reorganization" for such purposes. The tax opinion 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 each Trust, including representations in a certificate to be delivered by the management of each Trust, which if incorrect in any material respect would jeopardize the conclusions reached in the opinion. In addition, the tax opinion will state that it is not free from doubt. In order for each Reorganization to qualify as a "reorganization" for U.S. federal income tax purposes, among other things, each Acquiring Fund must satisfy a "continuity of business enterprise" requirement. To satisfy this requirement, each Acquiring Fund must either continue to hold a "substantial portion" of the corresponding Fund's historic securities or continue the corresponding Fund's "historic business." Because most of the securities held by the Funds selected by BACAP may be sold in order to reinvest the proceeds of such sales in the securities selected by Marsico Capital, the requirement may only be met if the Acquiring Fund is deemed to continue the historic business of the corresponding Fund. Based upon representations by management. The tax opinion will state that the continuity of business enterprise requirement should be met in the Reorganizations. Nonetheless, as a result of the absence of authority on point, this conclusion is not free from doubt. Nations Marsico Growth Fund's ability to use any capital loss carryforwards and, potentially, any unrealized capital losses, once realized in the hands of Nations Marsico Growth Fund will be subject to an annual limitation, such that losses in excess of the limitation cannot be used in the taxable year and must be carried forward. The limitation generally equals the product of the net asset value of Nations Capital Growth Fund at the time of its Reorganization and the "long-term tax-exempt rate," published by the Internal Revenue Service, in effect at such time. Because capital loss carryforwards generally expire eight taxable years following realization (including the short taxable year resulting from this Reorganization), this limitation also may cause some or all of Nations Capital 15 Growth Fund's losses to be unusable or increase the amount of such losses that would otherwise be unusable. As of the date of this Proxy/Prospectus, Nations Capital Growth Fund has sufficiently small capital loss carryforwards and unrealized capital losses that it does not appear that this limitation would materially affect Nations Marsico Growth Fund's use of such losses. However, since the actual limitation cannot be determined until the time of the Reorganization, no assurance can be given to this effect. Although Nations Capital Growth Fund shareholders will benefit from any capital loss carryforwards and unrealized capital losses of Nations Marsico Growth Fund, Nations Capital Growth Fund's losses that remain available to Nations Marsico Growth Fund will inure to the benefit to both Nations Capital Growth Fund and Nations Marsico Growth Fund shareholders. Therefore, a Nations Capital Growth Fund shareholder may pay more taxes, or pay taxes sooner, than such shareholder otherwise would if the Reorganization did not occur. Since holders of Nations (Annuity) Capital Growth Portfolio shares through variable annuity and life insurance contracts are only taxed on those shares through their contracts, such holders are not affected by realized or unrealized losses within the Portfolio or any limitations on the use of those losses as a result of its Reorganization. Since its formation, each of the Funds and Acquiring Funds believes it has qualified as a separate "regulated investment company" under the Code. Accordingly, each of the Funds and Acquiring Funds believes that it has been, and expects to continue to be, relieved of U.S. federal income tax liability to the extent that it makes distributions of its taxable income and gains to its shareholders. Prior to the Reorganizations, the Funds generally are required to make or declare one or more distributions of its previously undistributed net investment income and realized capital gains, including capital gains on securities disposed of in connection with the Reorganizations. A Fund shareholder must include any such distributions in such shareholder's taxable income. CAPITALIZATION The following table shows the net assets, shares outstanding and net asset value per share of the Funds and Acquiring Funds. This information is generally referred to as "capitalization." The term "pro forma capitalization" means the expected capitalization of the Acquiring Funds after they have combined with their corresponding Funds, i.e., as if the Reorganizations had already occurred. This capitalization table is based on figures as of September 10, 2003. The ongoing investment performance and daily share purchase and redemption activity of the Funds and Acquiring Funds affect capitalization. Therefore, the capitalization on the Closing date may vary from the capitalization shown in the following tables.
FUND NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE - ------------------------------------------------------------------------------------------------------------------------- Nations Capital Growth Fund $137,132,399 20,862,010 $ 6.57 (Fund A) (Primary A) (Primary A) (Primary A) $ 31,719,592 4,937,649 $ 6.42 (Investor A) (Investor A) (Investor A) $ 23,267,893 4,017,352 $ 5.79 (Investor B) (Investor B) (Investor B) $ 3,203,559 547,276 $ 5.85 (Investor C) (Investor C) (Investor C) Totals: $195,323,443 ============ - ------------------------------------------------------------------------------------------------------------------------- Nations Marsico Growth Fund $194,522,543 13,676,137 $14.22 (Fund B) (Primary A) (Primary A) (Primary A) $416,963,780 29,565,876 $14.10 (Investor A) (Investor A) (Investor A) $164,557,327 12,146,841 $13.55 (Investor B) (Investor B) (Investor B) $105,329,713 7,765,655 $13.56 (Investor C) (Investor C) (Investor C) Totals: $881,373,363 ============ - ------------------------------------------------------------------------------------------------------------------------- Nations Marsico Growth Fund Pro $331,654,942 23,319,766 $14.22 Forma Combined Fund (Primary A) (Primary A) (Primary A) (Fund A + Fund B) $448,683,372 31,815,492 $14.10
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FUND NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE - ------------------------------------------------------------------------------------------------------------------------- (Investor A) (Investor A) (Investor A) $ 187,825,210 13,864,029 $13.55 (Investor B) (Investor B) (Investor B) $ 108,533,272 8,001,906 $13.56 (Investor C) (Investor C) (Investor C) Totals: $1,076,696,796 ==============
FUND NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE - ------------------------------------------------------------------------------------------------------------------------- Nations (Annuity) Capital Growth $ 16,620,786 2,047,581 $ 8.12 Portfolio (Fund A) - ------------------------------------------------------------------------------------------------------------------------- Nations (Annuity) Marsico Growth $ 76,776,942 5,697,503 $13.48 Portfolio (Fund B) - ------------------------------------------------------------------------------------------------------------------------- Nations (Annuity) Marsico Growth $ 93,397,728 6,930,499 $13.48 Portfolio Pro Forma Combined Fund (Fund A + Fund B) Totals: $93,397,727.71 ==============
VOTING MATTERS GENERAL INFORMATION This Proxy/Prospectus is being furnished in connection with the solicitation of proxies for the Meetings by the Boards. It is expected that the solicitation of proxies will be primarily by mail. Officers and service contractors of the Trusts 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 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 the website printed on the proxy ballot. Any shareholder submitting a proxy may revoke it at any time before it is exercised at the Meetings by submitting a written notice of revocation addressed to one of the Trusts at the address shown on the cover page of this Proxy/Prospectus, or a subsequently executed proxy or by attending the Meetings and voting in person. Only shareholders of record at the close of business on September 10, 2003 will be entitled to vote at the Meetings. On that date, there were 30,364,286.85 Nations Capital Growth Fund shares outstanding and entitled to vote, and 2,047,581.19 Nations (Annuity) Capital Growth Portfolio shares outstanding and entitled to vote. Each whole and fractional share of a Fund is entitled to a whole or fractional vote. If the accompanying proxy ballot 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. SPECIAL NOTE FOR SHAREHOLDERS OF NATIONS (ANNUITY) CAPITAL GROWTH PORTFOLIO The Hartford Life Insurance Company and AIG SunAmerica (the "Insurance Companies") are the legal owners of all Fund shares held in the separate account, which is registered as a unit investment trust under the 1940 Act and where the Insurance Companies set aside and invest the assets of certain of its annuity contracts. Accordingly, the Insurance Companies have the right to vote at the Meeting. To the extent required by federal securities laws or regulations, the Insurance Companies will: (i) notify each annuity contract owner ("Owner") of the Meeting if the shares held for that Owner's contract may be voted; (ii) send proxy materials and a form of instructions that each Owner can use to tell its Insurance Company how to vote the Fund shares held for such contract; (iii) arrange for the handling and tallying of proxies received from Owners; (iv) vote all Fund shares attributable to such Owner's contract according to instructions received from such Owner, and (iv) vote all Fund shares for which no voting instructions are received in the same proportion as shares for which instructions have been received. 17 QUORUM A quorum is constituted with respect to each Fund by the presence in person or by proxy of the holders of at least one-third 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 approval 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 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 to permit further solicitation of proxies in order to obtain a requisite vote. Either Fund shareholder Meeting may be adjourned for a reasonable period of time. Any such adjournment(s) will require the affirmative vote of a majority of those shares affected by the adjournment(s) that are represented at the Meeting in person or by proxy. If a quorum is present, the persons named as proxies will vote those proxies which they are entitled to vote FOR the particular proposal for which a quorum exists in favor of such adjournment(s), and will vote those proxies required to be voted AGAINST such proposal against any adjournment(s). SHAREHOLDER APPROVAL The Reorganization Agreement must be approved by a "vote of a majority of the outstanding voting securities" of a Fund, as defined in by the 1940 Act, which means the affirmative vote of the lesser of: a) 67% or more of the shares present at the Meeting, if the holders of more than 50% of Fund shares are present or represented by proxy; or b) more than 50% of the Fund's outstanding shares. A vote of the shareholders of the Acquiring Fund is not being solicited, since its 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 Trusts to have ownership with respect to 5% or more of a class of the Fund as of November 1, 2003. Each shareholder is known to own as of record the shares indicated below. Any shareholder known to the Trusts to own such shares beneficially is designated by an asterisk.
PERCENTAGE PERCENTAGE OF OF TOTAL SHARES/ PERCENTAGE FUND ACQUIRING FUND NAME AND ADDRESS CLASS OF CLASS (ALL CLASSES) FUND POST CLOSING
18
PERCENTAGE PERCENTAGE OF OF TOTAL SHARES/ PERCENTAGE FUND ACQUIRING FUND NAME AND ADDRESS CLASS OF CLASS (ALL CLASSES) FUND POST CLOSING
19
PERCENTAGE PERCENTAGE OF OF TOTAL SHARES/ PERCENTAGE FUND ACQUIRING FUND NAME AND ADDRESS CLASS OF CLASS (ALL CLASSES) FUND POST CLOSING
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 November 1, 2003, Bank of America had voting control of ____% of Nations Capital Growth Fund's outstanding shares. Accordingly, Bank of America may be considered to "control" Nations Capital Growth Fund. The address of Bank of America is: 411 N. Akard Street, TX1-945-0818, Dallas, TX 75201. Bank of America's control of a Fund is likely to increase the chance that the Fund's shareholders will approve the Reorganization. As of November 1, 2003, the officers and Trustees of the Trust as a group did not own more than 1% of any class of the Funds or Acquiring Funds. ANNUAL MEETINGS AND SHAREHOLDER MEETINGS Neither 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 TRUSTS FINANCIAL STATEMENTS The audited financial statements and financial highlights for shares of Nations Capital Growth Fund and Nations Marsico Growth Fund for the annual period ended March 31, 2003 are incorporated by reference in their prospectuses or SAI and in the SAI related to this Proxy/ Prospectus. The audited financial statements and financial highlights for shares of Nations (Annuity) Capital Growth Portfolio and Nations (Annuity) Marsico Growth Portfolio for the annual period ended December 31, 2002, along with the unaudited financial statements for the semi-annual period ended June 30, 2003, are incorporated by reference in their prospectuses or SAI and in the SAI related to this Proxy/ Prospectus. The annual financial statements and financial highlights of the Funds and Acquiring Funds have been audited, other than the unaudited subsequent event footnote dated October 14, 2003, 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. LEGAL PROCEEDINGS On September 3, 2003, the Office of the Attorney General for the State of New York ("NYAG") simultaneously filed and settled a complaint against Canary Capital Partners, LLC, et al. (collectively, "Canary"). The complaint alleged, among other things, that Canary engaged in improper trading with certain mutual funds in the Nations Funds family (the "Nations Funds"). Specifically, the NYAG alleged that Canary engaged in activities that it characterized as "market timing" and also "late trading." Nations Funds and the Boards are cooperating fully with the NYAG, the SEC and other regulators in connection with these inquiries. 20 On September 8, 2003, the Board's independent trustees announced that they would retain an independent firm to evaluate the extent of any adverse monetary impact to any Nations Fund in which the Nations Funds' adviser permitted a discretionary market-timing agreement. They also announced that they would evaluate whether any additional steps are appropriate to assure Nations Funds shareholders that the Nations Funds are being managed in their best interests. In addition, the independent trustees announced that the Board, with the assistance of the independent firm, will conduct a review of the issues relating to late trading in Nations Funds, consider the results of the review of these issues being conducted by Bank of America Corporation, and take action as appropriate. On the same date, Bank of America Corporation announced that, to the extent that the independent trustees, after consultation with the independent firm, determine that Nations Funds shareholders were adversely affected by such discretionary market-timing agreement, the adviser will make appropriate restitution. Appropriate restitution will also be made to the extent that it is determined that Nations Funds shareholders were adversely impacted by any late trading activities. Bank of America Corporation also announced that the adviser will promptly return to Nations Funds that were the subject of a market-timing agreement all management and investment advisory fees it received as a result of such agreement. On September 16, 2003, the NYAG announced a criminal action, and the SEC announced a civil action, against a former employee of Banc of America Securities, LLC, a selling agent affiliated with the Nations Funds' distributor and adviser. The complaints allege that this employee played a key role in enabling Canary to engage in "late trading" of shares of Nations Funds and other mutual funds in violation of state and federal law. As of October 14, 2003, management is aware that the following lawsuits have been filed in connection with these circumstances: - On September 3, 2003, Shirley M. McLain and Keith Nichols, plaintiffs identifying themselves as Nations Funds shareholders, filed a purported class action lawsuit against Bank of America, Nations Funds and Banc of America Capital Management, LLC in the District Court in Denver, Colorado. The suit alleges, among other things, that the defendants violated their fiduciary duty to plaintiffs. The action seeks, among other things, damages and the payment of the plaintiff's attorneys' and experts' fees. - On September 5, 2003, Leann Lin, a plaintiff identifying herself as a Nations Funds shareholder, filed a purported class action lawsuit against Bank of America Corporation, Bank of America, N.A., Banc of America Capital Management LLC, Nations Fund Trust and Robert H. Gordon in the U.S. District Court for the Central District of California. The suit alleges, among other things, that the defendants made false and misleading statements in Nations Funds prospectuses in violation of Sections 11, 12(2) and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The action seeks, among other things, compensatory damages and the payment of the plaintiff's attorneys' and experts' fees. - On September 8, 2003, Samuel T. Cohen, a plaintiff identifying himself as a Nations Funds shareholder, filed a purported class action lawsuit against Nations Funds, Bank of America Corporation, Banc of America Capital Management LLC, Banc of America Advisors, LLC, Nations Fund, Inc., Robert H. Gordon, Theodore H. Sihpol, III, Charles D. Bryceland, Edward J. Stern, Canary Capital Partners, LLC, Canary Investment Management, LLC, Canary Capital Partners, Ltd. and John Does 1-100 in the U.S. District Court for the Southern District of New York. The suit alleges, among other things, that the defendants made false and misleading statements in Nations Funds prospectuses in violation of Sections 11 and 15 of the Securities Act of 1933, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Section 206 of the Investment Advisers Act of 1940. The action seeks, among other things, compensatory damages and the payment of the plaintiff's attorneys' and experts' fees. 21 - On September 9, 2003, John Golisano, a plaintiff identifying himself as a Nations Funds shareholder, filed a purported class action lawsuit against Bank of America Corporation, Nations Institutional Reserves Convertible Securities Fund, Nations International Equity Primary Fund, Nations Emerging Markets Fund, Nations Fund Inc. Small Company Fund, Bank of America, N.A., Banc of America Capital Management, LLC, BACAP Distributors, LLC, Stephens Inc., Edward J. Stern, Canary Investment Management, LLC, Canary Capital Partners, Ltd., and Does 1-100 in the U.S. District Court for the District of New Jersey. The suit alleges, among other things, that the defendants violated their fiduciary duty to the plaintiffs in violation of Sections 36(a) and (b) of the Investment Company Act of 1940. The action seeks, among other things, proven damages. - On September 12, 2003, James McLain, a plaintiff identifying himself as a Nations Funds shareholder, filed a purported class action lawsuit against Bank of America Corporation, Banc of America Advisors, LLC, Banc of America Capital Management, LLC, Nations Funds Trust, Banc of America Securities, LLC and Doe Defendants 1-100 in the North Carolina General Court of Justice, Superior Court Division, Mecklenburg County. The suit alleges, among other things, that the defendants violated their fiduciary duty to the plaintiffs and breached contracts with the plaintiffs. The action seeks, among other things, restitution, punitive damages and attorneys' fees. - On September 22, 2003, Roderick L. Rohher, a plaintiff identifying himself as a Nations Funds shareholder, filed a purported class action lawsuit against Nations Capital Growth Fund, Nations Marsico 21st Century Fund, Nations Marsico Focused Equities Fund, Nations Marsico Growth Fund, Nations MidCap Growth Fund, Nations Strategic Growth Fund, Nations Asset Allocation Fund, Nations MidCap Value Fund, Nations SmallCap Value Fund, Nations Value Fund, Nations Global Value Fund, Nations International Equity Fund, Nations International Value Fund, Nations Marsico International Opportunities Fund, Nations Bond Fund, Nations Government Securities Fund, Nations High Yield Bond Fund, Nations Intermediate Bond Fund, Nations Short-Intermediate Government Fund, Nations Short-Term Income Fund, Nations Strategic Income Fund, Nations CA Intermediate Municipal Bond Fund, Nations CA Municipal Bond Fund, Nations FL Intermediate Municipal Bond Fund, Nations FL Municipal Bond Fund, Nations GA Intermediate Municipal Bond Fund, Nations Intermediate Municipal Bond Fund, Nations Kansas Municipal Income Fund, Nations MD Intermediate Municipal Bond Fund, Nations Municipal Income Fund, Nations NC Intermediate Municipal Bond Fund, Nations SC Intermediate Municipal Bond Fund, Nations Short-Term Municipal Income Fund, Nations TN Intermediate Municipal Bond Fund, Nations TX Intermediate Municipal Bond Fund, Nations VA Intermediate Municipal Bond Fund, Nations LargeCap Enhanced Core Fund, Nations LargeCap Index Fund, Nations MidCap Index Fund, Nations SmallCap Index Fund, Nations LifeGoal Balanced Growth Portfolio, Nations LifeGoal Growth Portfolio, Nations LifeGoal Income and Growth Portfolio, Nations Convertible Securities Fund, Nations CA Tax-Exempt Reserves, Nations Cash Reserves, Nations Government Reserves, Nations Money Market Reserves, Nations Municipal Reserves, Nations Tax-Exempt Reserves, Nations Treasury Reserves, Bank of America Corporation, Banc of America Capital Management, LLC, Banc of America Advisors, LLC, Robert H. Gordon, Theodore H. Sihpol, III, Charles D. Bryceland, Edward J. Stern, Canary Capital Partners, LLC, Canary Investment Management, LLC, Canary Capital Partners, LTD and John Does 1-100, in the United States District Court for the Central District of California. The suit alleges, among other things, that the defendants violated Sections 11 and 15 of the Securities Act of 1933, Sections 10(b), 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 and Section 206 of the Investment Advisers Act of 1940. The action seeks, among other things, damages and the payment of the plaintiff's attorneys' and experts' fees. - On September 26, 2003, Margo A. Bode, a plaintiff identifying herself as a Nations Funds shareholder, filed a purported class action lawsuit against Bank of America Corporation, Banc of America Capital Management, LLC, Banc of America Advisors, LLC, Nations Fund, Inc., Nations Capital Growth Fund, Nations Marsico 21st Century Fund, Nations Marsico Equities Fund, Nations Marsico Focused Equities Fund, Nations Marsico Growth Fund, Nations MidCap Growth Fund, Nations Small Company Fund, Nations Strategic Growth Fund, Nations Asset Allocation Fund, Nations MidCap Value Fund, Nations Value Fund, Nations Global Value Fund, Nations International Equity Fund, Nations International Value Fund, Nations Marsico International Opportunities Fund, Nations Bond Fund, Nations Government Securities Fund, Nations High Yield Bond Fund, Nations Intermediate Bond Fund, Nations Short Intermediate Government Fund, Nations Short-Term Income Fund, Nations Strategic Income Fund, Nations CA Intermediate Municipal Bond Fund, Nations CA Municipal Bond Fund, Nations FL Intermediate Municipal Bond Fund, Nations FL Municipal Bond Fund, Nations GA Intermediate Municipal Bond Fund, Nations Intermediate Municipal Bond Fund, Nations Kansas Municipal Income Fund, Nations MD Intermediate Municipal Bond Fund, Nations Municipal Income Fund, Nations NC Intermediate Municipal Bond Fund, Nations SC Intermediate Municipal Bond Fund, Nations Short Term Municipal Income Fund, Nations TN Intermediate Municipal Bond Fund, Nations TX Intermediate Municipal Bond Fund, Nations VA Intermediate Municipal Bond Fund, Nations Large Cap Enhanced Core Fund, Nations Large Cap Index Fund, Nations Mid Cap Index Fund, Nations Small Cap Index Fund, Nations LifeGoal Balanced Growth Portfolio, Nations LifeGoal Growth Portfolio, Nations LifeGoal Income and Growth Portfolio, Nations Convertible Securities Fund, Nations CA Tax Exempt Reserves, Nations Cash Reserves, Nations Government Reserves, Nations Money Market Reserves, Nations Municipal Reserves, Nations Tax-Exempt Reserves, Nations Treasury Reserves, Robert H. Gordon, Theodore H. Sihpol, III, Charles D. Bryceland, Edward J. Stern, Canary Capital Partners, LLC, Canary Investment Management, LLC, Canary Capital Partners, LTD and John Does 1-100, in the United States District Court for the District of New Jersey. The suit alleges, among other things, that the defendants violated Sections 11 and 15 of the Securities Act of 1933, Sections 10(b), 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934, Sections 36(a) and 36(b) of the Investment Company Act of 1940 and breach of fiduciary duty. The action seeks, among other things, damages and the payment of the plaintiff's attorneys' and experts' fees. - On September 26, 2003, Kathleen A. Sussman and Howard Segal, plaintiffs identifying themselves as Nations Funds shareholders, filed a purported class action lawsuit against Nations Capital Growth Fund, Nations Marsico 21st Century Fund, Nations Marsico Focused Equities Fund, Nations Marsico Growth Fund, Nations MidCap Growth Fund, Nations Strategic Growth Fund, Nations Asset Allocation Fund, Nations MidCap Value Fund, Nations SmallCap Value Fund, Nations Value Fund, Nations Global Value Fund, Nations International Equity Fund, Nations International Value Fund, Nations Marsico International Opportunities Fund, Nations Bond Fund, Nations Government Securities Fund, Nations High Yield Bond Fund, Nations Intermediate Bond Fund, Nations Short-Intermediate Government Fund, Nations Short-Term Income Fund, Nations Strategic Income Fund, Nations CA Intermediate Municipal Bond Fund, Nations CA Municipal Bond Fund, Nations FL Intermediate Municipal Bond Fund, Nations FL Municipal Bond Fund, Nations GA Intermediate Municipal Bond Fund, Nations Intermediate Municipal Bond Fund, Nations Kansas Municipal Income Fund, Nations MD Intermediate Municipal Bond Fund, Nations Municipal Income Fund, Nations NC Intermediate Municipal Bond Fund, Nations SC Intermediate Municipal Bond Fund, Nations Short-Term Municipal Income Fund, Nations TN Intermediate Municipal Bond Fund, Nations TX Intermediate Municipal Bond Fund, Nations VA Intermediate Municipal Bond Fund, Nations LargeCap Enhanced Core Fund, Nations LargeCap Index Fund, Nations MidCap Index Fund, Nations SmallCap Index Fund, Nations LifeGoal Balanced Growth Portfolio, Nations LifeGoal Growth Portfolio, Nations LifeGoal Income and Growth Portfolio, Nations Convertible Securities Fund, Nations CA Tax-Exempt Reserves, Nations Cash Reserves, Nations Government Reserves, Nations Money Market Reserves, Nations Municipal Reserves, Nations Tax-Exempt Reserves, Nations Treasury Reserves, Bank of America Corporation, Banc of America Capital Management, LLC, Banc of America Advisors, LLC, Robert H. Gordon, Theodore H. Sihpol, III, Charles D. Bryceland, Edward J. Stern, Canary Capital Partners, LLC, Canary Investment Management, LLC and Canary Capital Partners, Inc., in the United States District Court for the Central District of California. The suit alleges, among other things, that the defendants violated Sections 11 and 15 of the Securities Act of 1933, Sections 10(b), 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 and Section 206 of the Investment Advisers Act of 1940. The action seeks, among other things, damages and the payment of the plaintiff's attorneys' and experts' fees. - On September 30, 2003, A. Duane Wahl, a plaintiff identifying himself as a Nations Funds shareholder, filed a purported class action lawsuit against Nations Capital Growth Fund, Nations Marsico 21st Century Fund, Nations Marsico Equities Fund, Nations Marsico Focused Equities Fund, Nations Marsico Growth Fund, Nations MidCap Growth Fund, Nations Small Company Fund, Nations Strategic Growth Fund, Nations Asset Allocation Fund, Nations MidCap Value Fund, Nations SmallCap Value Fund, Nations Value Fund, Nations Global Value Fund, Nations International Equity Fund, Nations International Value Fund, Nations Marsico International Opportunities Fund, Nations Bond Fund, Nations Government Securities Fund, Nations High Yield Bond Fund, Nations Intermediate Bond Fund, Nations Short-Intermediate Government Fund, Nations Short-Term Income Fund, Nations Strategic Income Fund, Nations CA Intermediate Municipal Bond Fund, Nations CA Municipal Bond Fund, Nations FL Intermediate Municipal Bond Fund, Nations FL Municipal Bond Fund, Nations GA Intermediate Municipal Bond Fund, Nations Intermediate Municipal Bond Fund, Nations Kansas Municipal Income Fund, Nations MD Intermediate Municipal Bond Fund, Nations Municipal Income Fund, Nations NC Intermediate Municipal Bond Fund, Nations SC Intermediate Municipal Bond Fund, Nations Short-Term Municipal Income Fund, Nations TN Intermediate Municipal Bond Fund, Nations TX Intermediate Municipal Bond Fund, Nations VA Intermediate Municipal Bond Fund, Nations LargeCap Enhanced Core Fund, Nations LargeCap Index Fund, Nations MidCap Index Fund, Nations SmallCap Index Fund, Nations LifeGoal Balanced Growth Portfolio, Nations LifeGoal Growth Portfolio, Nations LifeGoal Income and Growth Portfolio, Nations Convertible Securities Fund, Nations CA Tax-Exempt Reserves, Nations Cash Reserves, Nations Government Reserves, Nations Money Market Reserves, Nations Municipal Reserves, Nations Tax-Exempt Reserves, Nations Treasury Reserves, Bank of America Corporation, Banc of America Capital Management, LLC, Banc of America Advisors, LLC, Robert H. Gordon, Theodore H. Sihpol, III, Charles D. Bryceland, Edward J. Stern, Canary Capital Partners, LLC, Canary Investment Management, LLC, Canary Capital Partners, LTD and John Does 1-100, in the United States District Court for the Southern District of New York. The suit alleges, among other things, that the defendants violated Sections 11 and 15 of the Securities Act of 1933, Sections 10(b), 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934 and Section 206 of the Investment Advisers Act of 1940. The action seeks, among other things, damages and the payment of the plaintiff's attorneys' and experts' fees. Additional lawsuits presenting allegations and requests for relief that are not materially different from those described here may be filed against these and related parties in the near future arising out of these circumstances. 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 the Funds' 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 the Funds' and Acquiring Funds' performance during the period. - SAI The SAI for the Funds and Acquiring Funds contain additional information about the Funds and Acquiring Funds and their permissible investments and policies. The SAI is legally part of their prospectuses (it is 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) 321-7854 By mail: Nations Funds One Bank of America Plaza 33rd Floor Charlotte, NC 28255 On the Internet: www.nationsfunds.com 22 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. 23 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)................................ Nations Marsico Growth Fund and/or Nations (Annuity) Marsico Growth Portfolio BACAP............................................ Banc of America Capital Management, LLC BACAP Distributors............................... BACAP Distributors, LLC Bank of America.................................. Bank of America, N.A. Board(s)......................................... The Board(s) of Trustees of a Trust Closing.......................................... Closing of the Reorganization, expected to occur on or about December 12, 2003 Code............................................. Internal Revenue Code of 1986, as amended Fund(s).......................................... Nations Capital Growth Fund and/or Nations (Annuity) Capital Growth Portfolio Meeting(s)....................................... The shareholder meeting(s) of the Fund(s) that will be held at 10:00 a.m., Eastern time, on December 5, 2003, at One Bank of America Plaza, 101 South Tryon Street, 33rd Floor, Charlotte, North Carolina Nations Funds.................................... The funds that comprise the open-end family of mutual funds advised by BACAP. Proxy/Prospectus................................. This Combined Proxy Statement/Prospectus Reorganization(s)................................ The reorganization(s) of the Fund(s) into the Acquiring Fund(s) as provided for in the Reorganization Agreement Reorganization Agreement......................... The Agreement and Plan of Reorganization dated October 8, 2003 S&P 500.......................................... Standard & Poor's 500 Composite Stock Price Index, which is an unmanaged index of 500 widely held common stocks SAI.............................................. Statement of Additional Information SEC.............................................. United States Securities and Exchange Commission. Trust(s)......................................... Nations Funds Trust, a registered investment company and Delaware statutory trust and/or Nations Separate Account Trust, a registered investment company and Delaware statutory trust Trustees......................................... The trustees of the Boards
A-1 APPENDIX B EXPENSE SUMMARIES OF THE FUNDS AND ACQUIRING FUNDS The following tables describe the current fees and expenses associated with holding Fund and Acquiring Fund shares. In particular, the tables (a) compare the fees and expenses as of July 31, 2003, for each class of the Funds and Acquiring Funds, and (b) show the estimated fees and expenses for the combined Acquiring Funds on a pro forma basis after giving effect to the Reorganizations. 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 PRIMARY A SHARES
Pro Forma Nations Marsico Growth Fund Nations Capital Nations Marsico (after the Growth Fund Growth Fund Reorganization) ----------- ----------- --------------- 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............................................. 0.65% 0.75% 0.75% - - Other expenses.............................................. 0.38% 0.37% 0.36% ---- ---- ---- - - Total annual Fund operating expenses........................ 1.03% 1.12% 1.11% ==== ==== ====
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; and the fund's operating expenses remain the same as shown in the table above. 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 -------- -------- -------- -------- Nations Capital Growth Fund $ 105 $ 328 $ 569 $ 1,259 Nations Marsico Growth Fund $ 114 $ 356 $ 617 $ 1,363 Pro Forma Nations Marsico Growth Fund $ 113 $ 353 $ 612 $ 1,352 (after the Reorganization)
B-2 INVESTOR A SHARES
Pro Forma Nations Marsico Growth Fund Nations Capital Nations Marsico (after the Growth Fund Growth Fund Reorganization) ----------- ----------- --------------- SHAREHOLDER FEES (fees paid directly from your investment) - - Maximum sales charge (load) imposed on purchases, as a % of offering price............................. 5.75% 5.75% 5.75% - - 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................................................. 0.65% 0.75% 0.75% - - Distribution (12b-1) and Shareholder servicing fees............. 0.25% 0.25% 0.25% - - Other expenses.................................................. 0.38% 0.37% 0.36% ---- ---- ---- - - Total annual Fund operating expenses............................ 1.28% 1.37% 1.36% ==== ==== ====
- ------------------------------ (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. 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; and the fund's operating expenses remain the same as shown in the table above. 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 Nations Capital Growth Fund $ 698 $ 958 $ 1,238 $ 2,034 Nations Marsico Growth Fund $ 707 $ 985 $ 1,283 $ 2,130 Pro Forma Nations Marsico Growth Fund $ 706 $ 982 $ 1,278 $ 2,119 (after the Reorganization)
B-3 INVESTOR B SHARES
Pro Forma Nations Marsico Growth Fund Nations Capital Nations Marsico (after the Growth Fund Growth Fund Reorganization) ----------- ----------- --------------- 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% 5.00% 5.00% ANNUAL FUND OPERATING EXPENSES (Expenses that are deducted from the Fund's assets) - - Management fees................................................. 0.65% 0.75% 0.75% - - Distribution (12b-1) and Shareholder servicing fees............. 1.00% 1.00% 1.00% - - Other expenses.............................................. 0.38% 0.37% 0.36% ---- ---- ---- - - Total annual Fund operating expenses........................ 2.03% 2.12% 2.11% ==== ==== ====
- ------------------------------ (1)This charge decreases over time. 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; and the fund's operating expenses remain the same as shown in the table above. 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 Nations Capital Growth Fund $ 706 $ 937 $ 1,293 $ 2,166 Nations Marsico Growth Fund $ 715 $ 964 $ 1,339 $ 2,261 Pro Forma Nations Marsico Growth Fund $ 714 $ 961 $ 1,334 $ 2,250 (after the Reorganization)
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 Nations Capital Growth Fund $ 206 $ 637 $ 1,093 $ 2,166 Nations Marsico Growth Fund $ 215 $ 664 $ 1,139 $ 2,261 Pro Forma Nations Marsico Growth Fund $ 214 $ 661 $ 1,134 $ 2,250 (after the Reorganization)
B-4 INVESTOR C SHARES
Pro Forma Nations Marsico Growth Fund Nations Capital Nations Marsico (after the Growth Fund Growth Fund Reorganization) ----------- ----------- --------------- 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...................................... 0.65% 0.75% 0.75% - - Distribution (12b-1) and Shareholder servicing fees................................................. 1.00% 1.00% 1.00% - - Other expenses....................................... 0.38% 0.37% 0.36% ---- ---- ---- - - Total annual Fund operating expenses............. 2.03% 2.12% 2.11% ==== ==== ====
- ------------------------------ (1)This charge applies to investors who buy Investor C Shares and sell them within one year of buying them. 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; and the fund's operating expenses remain the same as shown in the table above. 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 Nations Capital Growth Fund $306 $637 $1,093 $2,358 Nations Marsico Growth Fund $315 $664 $1,139 $2,452 Pro Forma Nations Marsico Growth Fund $314 $661 $1,134 $2,441 (after the Reorganization)
If you bought Investor C Shares, you would pay the following expenses if you didn't sell your shares within one year of buying them:
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS Nations Capital Growth Fund $206 $637 $1,093 $2,358 Nations Marsico Growth Fund $215 $664 $1,139 $2,452 Pro Forma Nations Marsico Growth Fund $214 $661 $1,134 $2,441 (after the Reorganization)
B-5
Pro Forma Nations (Annuity) Nations (Annuity) Nations (Annuity) Marsico Growth Capital Growth Marsico Growth Portfolio (after the Portfolio Portfolio Reorganization) --------- --------- --------------- 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...................................... 0.65% 0.75% 0.75% - - Other expenses....................................... 0.72% 0.40% 0.39% ------ ------ ---- - - Waivers and/or reimbursements(1)..................... (0.37%) (0.00%) (0.00%) ------ ------ ----- - - Total annual Fund operating expenses................. 1.00% 1.15% 1.14% ====== ====== =====
- ------------------------------ (1)The Fund's investment adviser and/or some of its other service providers have agreed to waive fees until April 30, 2004. There is no guarantee that this waiver will continue. 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 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; and the fund's operating expenses remain the same as shown in the table above. The waivers and/or reimbursements shown in the table above expire April 30, 2004 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 Nations Capital Growth Portfolio $102 $397 $715 $1,614 Nations Marsico Growth Portfolio $117 $365 $633 $1,398 Pro Forma Nations Marsico Growth $116 $362 $628 $1,386 Portfolio (after the Reorganization)
B-6 APPENDIX C MANAGEMENT'S DISCUSSION OF THE ACQUIRING FUNDS' PERFORMANCE C-1 STATEMENT OF ADDITIONAL INFORMATION DATED NOVEMBER 13, 2003 NATIONS FUNDS TRUST One Bank of America Plaza, 33rd Floor Charlotte, North Carolina 28255 1-800-653-9427 (JANUARY 16, 2004 SPECIAL MEETING OF SHAREHOLDERS OF NATIONS FUNDS TRUST) This Statement of Additional Information is not a prospectus but should be read in conjunction with the Proxy/Prospectus dated the date hereof, for the Special Meeting of Shareholders of Nations Capital Growth Fund (the "Fund") of Nations Funds Trust (the "Trust") to be held on January 16, 2004. Copies of the Proxy/Prospectus may be obtained at no charge by writing or calling the 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 STATEMENT OF ADDITIONAL INFORMATION Further information about the Primary A Shares, Investor A Shares, Investor B Shares, and Investor C Shares of the Fund and its Acquiring Fund is contained in and incorporated herein by reference to the Statement of Additional Information for the Fund and Acquiring Fund dated August 1, 2003, as supplemented. The audited financial statements and related Report of Independent Accountants for the fiscal year ended March 31, 2003 for the Fund and Acquiring Fund are incorporated herein by reference with the additional unaudited subsequent event shown below added under Note 13 to the Trust's financial statements. No other parts of the annual report are incorporated herein by reference. Since March 31, 2003, the date of the most recent annual report to shareholders, the following unaudited subsequent events have occurred. This note is as of October 14, 2003 and has not been audited. On September 3, 2003, the Office of the Attorney General for the State of New York ("NYAG") simultaneously filed and settled a complaint against Canary Capital Partners, LLC, et al. (collectively, "Canary"). The complaint alleged, among other things, that Canary engaged in improper trading in certain Nations Funds. Specifically, the NYAG alleged that Canary engaged in activities that it characterized as "market timing" and also "late trading." On September 8, 2003, Bank of America Corporation announced that, to the extent that the independent trustees determine that Nations Funds shareholders were adversely affected by a discretionary market-timing agreement or late trading activities, the adviser will make appropriate restitution. Bank of America Corporation also announced that the adviser will promptly return to Nations Funds that were the subject of a market-timing agreement all management and investment advisory fees it received as a result of such agreement. In addition, Bank of America Corporation has also agreed to make appropriate reimbursement of costs incurred by Nations Funds in connection with this matter. On September 16, 2003, the NYAG announced a criminal action, and the SEC announced a civil action, against a former employee of Banc of America Securities, LLC, a selling agent affiliated with the Nations Funds' distributor and adviser. In connection with these events, various lawsuits have been filed, some of which name Nations Funds, among others, as defendants. Nations Funds cannot predict the outcome of the litigation. 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 Fund to its Acquiring Fund in exchange for shares of the same classes of the Acquiring Fund. The shares issued by the Acquiring Fund will have an aggregate dollar value equal to the aggregate dollar value of the shares of the Fund that are outstanding immediately before the Closing of the Reorganization. The Acquiring Fund will serve as the accounting survivor in the Reorganization. Immediately after the Closing, the Fund will distribute the shares of the Acquiring Fund received in the Reorganization to its shareholders in liquidation of the Fund. Each shareholder owning shares of the Fund at the Closing will receive shares of the same class of the Acquiring Fund, and will receive any unpaid distributions that were declared before the Closing on the Fund shares. If the Reorganization Agreement is approved and consummated, the Fund will transfer all of its assets and liabilities, as of the Closing, and all outstanding shares of the Fund will be redeemed and canceled in exchange for shares of the Acquiring Fund. 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 Fund to the Acquiring Fund accounted for as if the transfer had occurred as of March 31, 2003. 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 March 31, 2003 and based upon the proposed fee and expense structure of the Acquiring Fund. The pro forma combined statement of operations has been prepared by adding the statement of operations at March 31, 2003 for the Fund to the statement of operations for the Acquiring Fund and making adjustments for changes in the expense structure of the combined fund. The pro forma financial information should be read in conjunction with the historical financial statements and notes thereto of the Fund and the Acquiring Fund included or incorporated herein by reference in this Statement of Additional Information. 4 NATIONS CAPITAL GROWTH FUND/NATIONS MARSICO GROWTH MASTER PORTFOLIO PRO FORMA COMBINING SCHEDULE OF INVESTMENTS (UNAUDITED) MARCH 31, 2003
NATIONS MARSICO GROWTH NATIONS MASTER NATIONS NATIONS MARSICO PORTFOLIO NATIONS MARSICO CAPITAL GROWTH (NEW) CAPITAL GROWTH GROWTH MASTER COMBINED PRO GROWTH MASTER COMBINED PRO FUND PORTFOLIO FORMA FUND PORTFOLIO FORMA VALUE VALUE VALUE SHARES SHARES SHARES DESCRIPTION (000) (000) (000) - ------- --------- ------------ -------------------------------------------- ------- --------- ------------ COMMON STOCKS - 91.3% AEROSPACE AND DEFENSE - 0.2% 24,697 24,697 United Technologies Corporation $ 1,427 $ - $ 1,427 ------- ------- ------- AIRLINES - 1.0% 188,480 188,480 Ryanair Holdings plc, ADR+ 7,816 7,816 ------- ------- ------- AUTOMOTIVE - 1.6% 447,260 447,260 Bayerische Motoren Werke (BMW) AG 12,397 12,397 ------- ------- ------- BEVERAGES - 2.3% 23,514 89,058 112,572 Anheuser-Busch Companies, Inc. 1,096 4,151 5,247 116,170 116,170 Coca-Cola Company 4,702 4,702 115,934 115,934 Heineken NV 4,300 4,300 89,893 89,893 PepsiCo, Inc. 3,596 3,596 ------- ------- ------- 9,394 8,451 17,845 ------- ------- ------- BROADCASTING AND CABLE - 5.1% 100,150 100,150 AOL Time Warner Inc.+ 1,088 1,088 54,258 263,958 318,216 Clear Channel Communications, Inc.+ 1,840 8,953 10,793 127,050 127,050 Cox Communications, Inc., Class A+ 3,952 3,952 266,114 266,114 The Walt Disney Company 4,529 4,529 78,028 471,300 549,328 Viacom Inc., Class B+ 2,850 17,213 20,063 ------- ------- ------- 9,730 30,695 40,425 ------- ------- ------- COMMERCIAL BANKING - 3.4% 139,450 579,788 719,238 Citigroup Inc. 4,805 19,974 24,779 19,750 19,750 Fifth Third Bancorp 990 990 25,150 25,150 Wells Fargo & Company 1,131 1,131 ------- ------- ------- 6,926 19,974 26,900 ------- ------- ------- COMMERCIAL SERVICES - 1.1% 74,734 74,734 eBay Inc.+ 6,374 6,374 48,450 48,450 Expedia, Inc.+ 2,503 2,503 ------- ------- ------- 8,877 8,877 ------- ------- ------- COMPUTERS AND OFFICE EQUIPMENT - 3.2% 139,600 619,656 759,256 Dell Computer Corporation+ 3,813 16,923 20,736 44,400 44,400 International Business Machines Corporation 3,482 3,482 18,125 18,125 Lexmark International, Inc.+ 1,213 1,213 ------- ------- ------- 8,508 16,923 25,431 ------- ------- ------- CONSTRUCTION - 0.1% 24,462 24,462 Jacobs Engineering Group Inc.+ 1,028 1,028 ------- ------- ------- CONSUMER CREDIT AND MORTGAGES - 2.9% 36,000 36,000 American Express Company 1,196 1,196 79,925 249,228 329,153 Fannie Mae 5,223 16,287 21,510 ------- ------- ------- 6,419 16,287 22,706 ------- ------- ------- DEPARTMENT AND DISCOUNT STORES - 3.6% 85,450 85,450 Kohl's Corporation+ 4,835 4,835 46,175 46,175 Target Corporation 1,351 1,351 142,632 286,046 428,678 Wal-Mart Stores, Inc. 7,421 14,883 22,304 ------- ------- ------- 13,607 14,883 28,490 ------- ------- ------- DIVERSIFIED MANUFACTURING - 4.1% 13,675 13,675 3M Company 1,778 1,778 461,000 753,906 1,214,906 General Electric Company 11,756 19,225 30,981 ------- ------- ------- 13,534 19,225 32,759 ------- ------- -------
NATIONS CAPITAL GROWTH FUND/NATIONS MARSICO GROWTH MASTER PORTFOLIO PRO FORMA COMBINING SCHEDULE OF INVESTMENTS (UNAUDITED) MARCH 31, 2003
NATIONS MARSICO GROWTH NATIONS MASTER NATIONS NATIONS MARSICO PORTFOLIO NATIONS MARSICO CAPITAL GROWTH (NEW) CAPITAL GROWTH GROWTH MASTER COMBINED PRO GROWTH MASTER COMBINED PRO FUND PORTFOLIO FORMA FUND PORTFOLIO FORMA VALUE VALUE VALUE SHARES SHARES SHARES DESCRIPTION (000) (000) (000) - ------- --------- ------------ -------------------------------------------- ------- --------- ------------ COMMON STOCKS - (CONTINUED) ELECTRIC POWER - NUCLEAR - 0.2% 107,802 107,802 Duke Energy Corporation $ - $ 1,567 $ 1,567 ------- ------- ------- FINANCE - MISCELLANEOUS - 4.5% 993 993 Berkshire Hathaway Inc., Class B+ 2,122 2,122 10,837 292,744 303,581 SLM Corporation 1,202 32,471 33,673 ------- ------- ------- 3,324 32,471 35,795 ------- ------- ------- FOOD AND DRUG STORES - 0.5% 145,475 145,475 Walgreen Company 4,289 4,289 ------- ------- ------- HEALTH SERVICES - 9.5% 75,200 340,826 416,026 HCA Inc. 3,110 14,097 17,207 35,300 277,156 312,456 Quest Diagnostics Inc.+ 2,107 16,543 18,650 60,075 368,012 428,087 UnitedHealth Group Inc. 5,507 33,735 39,242 ------- ------- ------- 10,724 64,375 75,099 ------- ------- ------- HOUSEHOLD PRODUCTS - 3.8% 61,900 61,900 Colgate-Palmolive Company 3,370 3,370 52,550 246,860 299,410 Procter & Gamble Company 4,679 21,983 26,662 ------- ------- ------- 8,049 21,983 30,032 ------- ------- ------- HOUSING AND FURNISHING - 1.8% 173,086 173,086 Lennar Corporation 9,269 9,269 131,864 131,864 M.D.C. Holdings, Inc. 5,061 5,061 ------- ------- ------- 14,330 14,330 ------- ------- ------- INSURANCE - 0.8% 19,750 19,750 Ambac Financial Group, Inc. 998 998 44,325 44,325 American International Group, Inc. 2,192 2,192 44,800 44,800 XL Capital Ltd., Class A 3,171 3,171 ------- ------- ------- 6,361 6,361 ------- ------- ------- INTEGRATED OIL - 0.5% 111,131 111,131 Exxon Mobil Corporation 3,884 3,884 ------- ------- ------- INVESTMENT SERVICES - 1.5% 38,100 67,772 105,872 Goldman Sachs Group, Inc. 2,594 4,614 7,208 81,140 81,140 Lehman Brothers Holdings Inc. 4,686 4,686 ------- ------- ------- 2,594 9,300 11,894 ------- ------- ------- LODGING AND RECREATION - 3.0% 168,505 168,505 Four Seasons Hotels Inc. 4,578 4,578 24,075 48,654 72,729 Harley-Davidson, Inc. 956 1,932 2,888 191,534 191,534 MGM Mirage Inc.+ 5,602 5,602 46,500 46,500 Starwood Hotels & Resorts Worldwide, Inc. 1,106 1,106 613,952 613,952 Wynn Resorts, Ltd.+ 9,480 9,480 ------- ------- ------- 2,062 21,592 23,654 ------- ------- ------- MEDICAL DEVICES AND SUPPLIES - 4.7% 84,625 84,625 Abbott Laboratories 3,183 3,183 23,825 23,825 Cardinal Health, Inc. 1,357 1,357 149,597 123,986 273,583 Johnson & Johnson 8,657 7,175 15,832 62,151 62,151 Medtronic, Inc. 2,804 2,804 50,125 50,125 St. Jude Medical, Inc.+ 2,444 2,444 237,498 237,498 Zimmer Holdings, Inc.+ 11,550 11,550 ------- ------- ------- 18,445 18,725 37,170 ------- ------- -------
NATIONS CAPITAL GROWTH FUND/NATIONS MARSICO GROWTH MASTER PORTFOLIO PRO FORMA COMBINING SCHEDULE OF INVESTMENTS (UNAUDITED) MARCH 31, 2003
NATIONS MARSICO GROWTH NATIONS MASTER NATIONS NATIONS MARSICO PORTFOLIO NATIONS MARSICO CAPITAL GROWTH (NEW) CAPITAL GROWTH GROWTH MASTER COMBINED PRO GROWTH MASTER COMBINED PRO FUND PORTFOLIO FORMA FUND PORTFOLIO FORMA VALUE VALUE VALUE SHARES SHARES SHARES DESCRIPTION (000) (000) (000) - ------- --------- ------------ -------------------------------------------- ------- --------- ------------ COMMON STOCKS - (CONTINUED) NETWORKING AND TELECOMMUNICATIONS EQUIPMENT - 4.5% 553,600 1,114,194 1,667,794 Cisco Systems, Inc.+ $7,186 $14,463 $21,649 40,000 337,808 377,808 QUALCOMM Inc. 1,442 12,181 13,623 ------- ------- ------- 8,628 26,644 35,272 ------- ------- ------- PHARMACEUTICALS - 9.2% 82,525 366,116 448,641 Amgen Inc.+ 4,750 21,069 25,819 43,975 43,975 Eli Lilly and Company 2,513 2,513 56,325 459,026 515,351 Genentech, Inc.+ 1,972 16,071 18,043 181,238 181,238 IDEC Pharmaceuticals Corporation+ 6,238 6,238 62,850 62,850 Merck & Company, Inc. 3,443 3,443 310,019 310,019 Pfizer Inc. 9,661 9,661 62,769 62,769 Pharmacia Corporation 2,718 2,718 79,975 79,975 Teva Pharmaceutical Industries Ltd., ADR* 3,331 3,331 33,725 33,725 Wyeth 1,275 1,275 ------- ------- ------- 29,663 43,378 73,041 ------- ------- ------- RAILROADS, TRUCKING AND SHIPPING - 2.1% 231,502 231,502 FedEx Corporation 12,749 12,749 42,450 42,450 Union Pacific Corporation 2,334 2,334 25,325 25,325 United Parcel Service, Inc., Class B 1,444 1,444 ------- ------- ------- 3,778 12,749 16,527 ------- ------- ------- SEMICONDUCTORS - 0.9% 370,907 370,907 Intel Corporation 6,039 6,039 85,917 85,917 Texas Instruments Inc. 1,406 1,406 ------- ------- ------- 7,445 7,445 ------- ------- ------- SOFTWARE - 6.6% 24,875 24,875 Affiliated Computer Services, Inc., Class A+ 1,101 1,101 41,400 163,524 204,924 Electronic Arts Inc.+ 2,428 9,589 12,017 184,688 184,688 Intuit Inc.+ 6,870 6,870 377,287 599,142 976,429 Microsoft Corporation 9,135 14,505 23,640 204,375 475,198 679,573 Oracle Corporation+ 2,217 5,155 7,372 55,325 55,325 PeopleSoft, Inc.+ 846 846 ------- ------- ------- 15,727 36,119 51,846 ------- ------- ------- SPECIALTY STORES - 4.7% 144,540 144,540 Bed Bath & Beyond Inc.+ 4,992 4,992 88,825 88,825 Home Depot, Inc. 2,163 2,163 43,425 423,000 466,425 Lowe's Companies, Inc. 1,773 17,266 19,039 437,726 437,726 Tiffany & Company 10,943 10,943 ------- ------- ------- 3,936 33,201 37,137 ------- ------- ------- TELECOMMUNICATIONS SERVICES - 3.3% 176,995 176,995 Echostar Communications Corporation+ 5,112 5,112 1,547,836 1,547,836 Nextel Communications, Inc., Class A+ 20,725 20,725 ------- ------- ------- 25,837 25,837 ------- ------- ------- TOBACCO - 0.3% 72,138 72,138 Altria Group, Inc. 2,161 2,161 ------- ------- ------- UNIT INVESTMENT TRUST - 0.3% 24,250 24,250 Standard & Poor's Depositary Receipts 2,055 2,055 ------- ------- ------- TOTAL COMMON STOCKS (COST $184,760 AND $499,531, RESPECTIVELY) 202,670 518,827 721,497 ------- ------- -------
NATIONS CAPITAL GROWTH FUND/NATIONS MARSICO GROWTH MASTER PORTFOLIO PRO FORMA COMBINING SCHEDULE OF INVESTMENTS (UNAUDITED) MARCH 31, 2003
NATIONS MARSICO NATIONS GROWTH NATIONS MARSICO NATIONS MASTER CAPITAL GROWTH NATIONS MARSICO PORTFOLIO GROWTH MASTER COMBINED PRO CAPITAL GROWTH (NEW) FUND PORTFOLIO FORMA GROWTH MASTER COMBINED PRO PRINCIPAL PRINCIPAL PRINCIPAL FUND PORTFOLIO FORMA AMOUNT AMOUNT AMOUNT VALUE VALUE VALUE (000) (000) (000) DESCRIPTION (000) (000) (000) ----- ----- ----- ----------- ----- ----- ----- CORPORATE BONDS AND NOTES - 0.1% HOUSING AND FURNISHING - 0.1% (COST $0 AND $539, RESPECTIVELY) $ -- $ 550 $ 550 M.D.C. Holdings, Inc., 8.375% 02/01/08 $ -- $ 573 $ 573 -------- -------- --------- SHARES SHARES SHARES ------ ------ ------ PREFERRED STOCKS - 0.3% AUTOMOTIVE - 0.3% (COST $0 AND $3,521, RESPECTIVELY) 9,843 9,843 Porsche AG 2,771 2,771 -------- -------- --------- PRINCIPAL PRINCIPAL PRINCIPAL AMOUNT AMOUNT AMOUNT (000) (000) (000) ----- ----- ----- SHORT TERM INVESTMENTS - 8.9% FEDERAL HOME LOAN BANK (FHLB) - 8.9% (COST $0 AND $70,200, RESPECTIVELY) $ -- $ 70,200 $ 70,200 1.140%*** 04/01/03 70,198 70,198 -------- -------- --------- SHARES SHARES SHARES (000) (000) (000) ----- ----- ----- INVESTMENT COMPANIES - 4.5% Ishares Russell 1000 Growth 60 60 Nations Cash Reserves, Capital 2,151 2,151 10,018 23,931 33,949 Class Shares# 10,018 23,931 33,949 -------- -------- --------- TOTAL INVESTMENT COMPANIES (COST $12,267 AND $23,931, RESPECTIVELY) 12,169 23,931 36,100 -------- -------- --------- TOTAL INVESTMENTS - 105.1% (COST $197,027 AND $597,722, RESPECTIVELY) $214,839 $616,300 $ 831,139 -------- -------- ---------
+ Non-income producing security. *** Zero coupon security. The rate shown reflects the yield to maturity at March 31, 2003. * Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified buyers. # Money market mutual fund registered under the Investment Company Act of 1940, as amended, and advised by Banc of America Capital Management, LLC. ABBREVIATIONS: ADR - American Depositary Receipt NATIONS CAPITAL GROWTH FUND / NATIONS MARSICO GROWTH FUND Pro Forma Combining Statement of Assets and Liabilities (unaudited) March 31, 2003
Nations Marsico Growth Nations Fund Nations Marsico (new) Capital Growth Growth Adjustments to Proforma Fund Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ---------- ---------- ------------- ---------- TOTAL INVESTMENTS $ 214,839 $ -- $ (214,839) $ -- Nations Master Investment Trust, Marsico Growth Master Portfolio Investments in securities 578,153 214,839(a) 792,992 OTHER ASSETS AND LIABILITIES: Cash 1 -- -- 1 Receivable for Fund shares sold 401 3,132 3,533 Dividends receivable 265 -- 265 Collateral on securities loaned (3,729) -- (3,729) Payable for Fund shares redeemed (475) (1,177) (1,652) Investment advisory fee payable (116) -- (116) Administration fee payable (41) (61) (102) Shareholder servicing and distribution fees payable (27) (218) (245) Accrued Trustees' fees and expenses (119) (42) (161) Accrued expenses and other liabilities (153) (166) -- (319) ------------- ------------- ----------- ------------- Total Other Assets and Liabilities (3,993) 1,468 -- (2,525) ------------- ------------- ----------- ------------- NET ASSETS $ 210,846 $ 579,621 $ -- $ 790,467 ============= ============= =========== ============= NET ASSETS BY CLASS: Primary A $ 158,017,317 $ 106,436,226 $ -- $ 264,453,543 Investor A 28,895,531 279,840,120 -- 308,735,651 Investor B 21,125,096 137,431,463 -- 158,556,559 Investor C 2,806,561 55,912,804 -- 58,719,365 ------------- ------------- ----------- ------------- $ 210,844,505 $ 579,620,613 $ -- $ 790,465,118 ------------- ------------- ----------- ------------- SHARES OUTSTANDING BY CLASS: Primary A 28,172,270 8,907,990 (14,949,064)(b) 22,131,196 Investor A 5,265,628 23,595,558 (2,829,243)(b) 26,031,943 Investor B 4,255,398 12,022,912 (2,407,183)(b) 13,871,127 Investor C 559,361 4,885,627 (314,032)(b) 5,130,956 ------------- ------------- ----------- ------------- 38,252,657 49,412,087 (20,499,522) 67,165,222 ------------- ------------- ----------- ------------- NET ASSET VALUE PER SHARE BY CLASS: Primary A $ 5.61 $ 11.95 $ -- $ 11.95 Investor A $ 5.49 $ 11.86 $ -- $ 11.86 Investor B $ 4.96 $ 11.43 $ -- $ 11.43 Investor C $ 5.02 $ 11.44 $ -- $ 11.44
(a) Investment securities from Nations Capital Growth Fund invested in the Nations Marsico Growth Master Portfolio. (b) Reflects the issuance of Nations Marsico Growth Fund shares to holders of shares of Nations Capital Growth Fund. SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS NATIONS CAPITAL GROWTH FUND / NATIONS MARSICO GROWTH FUND Pro Forma Combining Statement of Operations (unaudited) Twelve Month Period Ending March 31, 2003
Nations Marsico Growth Nations Fund Nations Marsico (new) Capital Growth Growth Adjustments to Proforma Fund Fund Pro Forma Combined (in 000's) (in 000's) (in 000's) (in 000's) ---------- ---------- ---------- ---------- INVESTMENT INCOME: Interest $ -- -- $ -- $ -- Dividends 3,038 -- (3,038)(a) -- Dividend income from affiliated funds 168 -- (168)(a) -- Securities lending 14 -- (14)(a) -- Allocated from Portfolio: Interest -- $ 599 -- 599 Dividends -- 3,548 3,038 (a) 6,586 Dividend income from affiliated funds -- 2 168 (a) 170 Securities lending -- 73 14 (a) 87 Expenses -- (4,472) (2,456)(a), (b) (6,928) --------- --------- --------- --------- Total Investment Income 3,220 (250) (2,456) 514 --------- --------- --------- --------- EXPENSES: Investment advisory fee 1,838 -- (1,838)(b) -- Administration fee 650 668 (284)(b) 1,034 Transfer agent fee 89 513 -- 602 Custodian fees 25 -- (25)(c) -- Legal and audit fees 84 72 (84)(c) 72 Registration and filing fees 69 67 (69)(c) 67 Trustees' fees and expenses 17 17 (17)(c) 17 Interest expense 1 -- -- 1 Printing expense 70 199 (28)(c) 241 Other 11 21 (11)(c) 21 --------- --------- --------- --------- Subtotal 2,854 1,557 (2,356) 2,055 --------- --------- --------- --------- Shareholder servicing and distribution fees: Investor A Shares 76 613 -- 689 Investor B Shares 292 1,649 -- 1,941 Investor C Shares 35 398 -- 433 --------- --------- --------- --------- Total expenses 3,257 4,217 (2,356) 5,118 --------- --------- --------- --------- Fees waived by investment advisor and/or administrator -- -- -- -- Fees reduced by credits allowed by the custodian (1) -- 1 (a) -- --------- --------- --------- --------- Net Expenses 3,256 4,217 (2,355) 5,118 --------- --------- --------- --------- NET INVESTMENT INCOME/(LOSS) (36) (4,467) (101) (4,604) --------- --------- --------- --------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: Net realized gain/(loss) from: Security transactions (45,359) -- 45,359 (a) -- Allocated from Portfolio: Security transactions -- (55,285) (45,359)(a) (100,644) Foreign currency transactions -- (5) -- (5) --------- --------- --------- --------- Net realized gain/(loss) on investments (45,359) (55,290) -- (100,649) --------- --------- --------- --------- Change in unrealized appreciation/(depreciation) of: Securities (61,387) -- 61,387 (a) -- Securities allocated from Portfolio -- (54,489) (61,387)(a) (115,876) --------- --------- --------- --------- Net change in unrealized appreciation/ (depreciation) of investments (61,387) (54,489) -- (115,876) --------- --------- --------- --------- Net realized and unrealized gain/(loss) on investments (106,746) (109,779) -- (216,525) --------- --------- --------- --------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($106,782) ($114,246) ($ 101) ($221,129) ========= ========= ========= =========
LEGEND: (A) REFLECTS CONVERSION TO A FEEDER FUND. (B) REFLECTS ADJUSTMENTS TO THE ACQUIRING FUND'S CONTRACTUAL FEE OBLIGATIONS. (C) ADJUSTMENT REFLECTS EXPECTED SAVINGS WHEN THE TWO FUNDS BECOME ONE. SEE NOTES TO PRO FORMA FINANCIAL STATEMENTS NATIONS CAPITAL GROWTH FUND NATIONS MARSICO GROWTH FUND NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF COMBINATION Nations Funds Trust ("Funds Trust") and Nations Master Investment Trust ("Master Trust") each are registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end investment company. As of March 31, 2003, Funds Trust offered fifty-nine separate portfolios and Master Trust offered eleven separate portfolios. The unaudited Pro Forma Combining Statement of Assets and Liabilities assumes the exchange described in the next paragraph occurred as of March 31, 2003 and the unaudited Pro Forma Combining Statement of Operations for the year ended March 31, 2003 assumes the exchange occurred as of April 1, 2002. These statements have been derived from books and records utilized in calculating daily net asset value of each fund at March 31, 2003 and for the twelve month period then ended. The pro forma statements give effect to the proposed reorganization (the "Reorganization") of Nations Capital Growth Fund into Nations Marsico Growth Fund (the "Acquiring Fund"). The Reorganization provides for the transfer of the assets and liabilities of Nations Capital Growth Fund to the Acquiring Fund, in exchange for shares of equal value of designated classes of the Acquiring Fund. Upon the closing of the Reorganization, the assets received, including the securities received in the transaction, will be contributed to the Nations Marsico Growth Master Portfolio in exchange for interests in that Master Portfolio. 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 Nations Capital Growth Fund and the results of operations of Nations Capital Growth 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 Investment Adviser, Banc of America Capital Management, LLC, will bear the customary costs associated with the Reorganization, including proxy solicitation. 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 efficiencies of the Acquiring Fund. 3. SUBSEQUENT EVENTS (UNAUDITED) Since March 31, 2003, the date of the most recent annual report to shareholders, the following events have occurred. On September 3, 2003, the Office of the Attorney General for the State of New York ("NYAG") simultaneously filed and settled a complaint against Canary Capital Partners, LLC, et al. (collectively, "Canary"). The complaint alleged, among other things, that Canary engaged in improper trading in certain Nations Funds. Specifically, the NYAG alleged that Canary engaged in activities that it characterized as "market timing" and also "late trading." On September 8, 2003, Bank of America Corporation announced that, to the extent that the independent trustees determine that Nations Funds shareholders were adversely affected by a discretionary market-timing agreement or late trading activities, the adviser will make appropriate restitution. Bank of America Corporation also announced that the adviser will promptly return to Nations Funds that were the subject of a market-timing agreement all management and investment advisory fees it received as a result of such agreement. In addition, Bank of America Corporation has also agreed to make appropriate reimbursement of costs incurred by Nations Funds in connection with this matter. On September 16, 2003, the NYAG announced a criminal action, and the SEC announced a civil action, against a former employee of Banc of America Securities, LLC, a selling agent affiliated with the Nations Funds' distributor and adviser. In connection with these events, various lawsuits have been filed, some of which name Nations Funds, among others, as defendants. Nations Funds cannot predict the outcome of the litigation. NATIONS FUNDS TRUST ONE BANK OF AMERICA PLAZA 33rd FLOOR CHARLOTTE, NC 28255 1-800-653-9427 FORM N-14 PART C OTHER INFORMATION Item 15. Indemnification. Article VII of the Declaration of Trust filed as Exhibit 1 to the Registration Statement (defined below) is incorporated by reference. Indemnification of the Registrant's administrator, distributor, custodian and transfer agents is provided for, respectively, in the Registrant's: 1. Administration Agreement with BACAP Distributors, LLC ("BACAP Distributors"); 2. Sub-Administration Agreement with The Bank of New York ("BNY") and BACAP Distributors; 3. Distribution Agreement with BACAP Distributors; 4. Custody Agreement with BNY; 5. Custody Agreement with Bank of America, N.A. ("Bank of America") 6. Transfer Agency and Services Agreement with PFPC Inc. ("PFFC"); and 7. Sub-Transfer Agency and Services Agreement with PFFC and Bank of America. The Registrant has entered into a Cross Indemnification Agreement with Nations Fund Trust (the "Trust") Nations Fund, Inc. (the "Company"), Nations Reserves ("Reserves") and Nations Master Investment Trust ("Master Trust") dated February 14, 2000. The Trust, the Company, Reserves and/or Master Trust will indemnify and hold harmless the Registrant against any losses, claims, damages or liabilities, to which the Registrant may become subject, under the Securities Act of 1933, as amended (the "1933 Act") and the Investment Company Act of 1940, as amended (the "1940 Act") or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any prospectuses, any preliminary prospectuses, the registration statements, any other prospectuses relating to the securities, or any amendments or supplements to the foregoing (hereinafter referred to collectively as the "Offering Documents"), or arise out of or are based upon the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Offering Documents in reliance upon and in conformity with written information furnished to the Registrant by the Trust, the Company, Reserves and/or Master Trust expressly for use therein; and will reimburse the Registrant for any legal or other expenses reasonably incurred by the Registrant in connection with investigating or defending any such action or claim; 1 provided, however, that the Trust, the Company, Reserves and/or Master Trust shall not be liable in any such case to the extent that any such loss, claim, damage, or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Offering Documents in reliance upon and in conformity with written information furnished to the Trust, the Company, Reserves and/or Master Trust by the Registrant expressly for use in the Offering Documents. Promptly after receipt by an indemnified party above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission to so notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, to assume the defense thereof, with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. The Registrant has obtained from a major insurance carrier a trustees' and officers' liability policy covering certain types of errors and omissions. In no event will the Registrant indemnify any of its trustees, officers, employees, or agents against any liability to which such person would otherwise be subject by reason of his/her willful misfeasance, bad faith, gross negligence in the performance of his/her duties, or by reason of his/her reckless disregard of the duties involved in the conduct of his/her office or arising under his agreement with the Registrant. The Registrant will comply with Rule 484 under the 1933 Act and Release No. 11330 under the 1940 Act, in connection with any indemnification. Insofar as indemnification for liabilities arising under the 1933 Act may be permitted to trustees, officers and controlling persons of the Registrant by the Registrant pursuant to the Declaration of Trust or otherwise, the Registrant is aware that in the opinion of the Securities and Exchange Commission ("SEC") such indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any act, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication of such issues. Item 16. Exhibits. All references to the "Registration Statement" in the following list of Exhibits refer to the Registrant's Registration Statement on Form N-1A (File Nos. 333-89661; 811-9645). 2
EXHIBIT NUMBER DESCRIPTION (1) Amended and Restated Declaration of Trust last amended July 28, 2003, to be filed by amendment to the Registration Statement. (2) Not Applicable. (3) Not Applicable. (4) Agreement and Plan of Reorganization, filed herewith. (5) Not Applicable. (6)(a) Investment Advisory Agreement with Banc of America Capital Management, LLC ("BACAP") dated January 1, 2003, incorporated by reference to Post-Effective Amendment No. 33 to the Registration Statement, filed on September 3, 2003. (6)(b) BACAP Assumption Agreement on behalf of the LifeGoal Portfolios dated January 1, 2003, incorporated by reference to Post-Effective Amendment No. 30 to the Registration Statement, filed on June 18, 2003. (6)(c) Investment Advisory Agreement between BACAP and the Registrant on behalf of the Fixed Income Sector Portfolios dated January 1, 2003, incorporated by reference to Post-Effective Amendment No. 30 to the Registration Statement, filed on June 18, 2003. (6)(d) BACAP Assumption Agreement on behalf of the Fixed Income Sector Portfolios dated January 1, 2003, incorporated by reference to Post-Effective Amendment No. 30 to the Registration Statement, filed on June 18, 2003. (6)(e) Investment Sub-Advisory Agreement among BACAP, Brandes Investment Partners, L.P. and the Registrant dated January 1, 2003, incorporated by reference to Post-Effective Amendment No. 32 to the Registration Statement, filed on July 31, 2003. (7) Distribution Agreement with BACAP Distributors dated January 1, 2003, incorporated by reference to Post-Effective Amendment No. 33 to the Registration Statement, filed on September 3, 2003. (8) Deferred Compensation Bonus Plan dated December 9, 1999 last amended February 28, 2002, incorporated by reference to Post-Effective Amendment No. 20, filed May 1, 2002. (9)(a) Amended and Restated Custody Agreement with BNY dated July 2, 2001, Schedule I dated August 1, 2003, incorporated by reference to Post-Effective Amendment No. 33 to the Registration Statement, filed on September 3, 2003.
3 (9)(b) Custody Agreement with Bank of America, incorporated by reference to Post-Effective Amendment No. 11 to the Registration Statement, filed July 31, 2001. (10)(a) Shareholder Administration Plan relating to Primary B Shares, Exhibit A amended August 1, 2003, incorporated by reference to Post-Effective Amendment No. 33 to the Registration Statement, filed on September 3, 2003. (10)(b) Shareholder Servicing and Distribution Plan relating to Investor A Shares, Exhibit A amended August 1, 2003, incorporated by reference to Post-Effective Amendment No. 33 to the Registration Statement, filed on September 3, 2003. (10)(c) Form of Shareholder Servicing and Distribution Plan relating to Investor R Shares, dated September [ ], 2003, incorporated by reference to Post-Effective Amendment No. 31, filed July 3, 2003. (10)(d) Distribution Plan relating to Investor B Shares, Exhibit A amended July 18, 2003, incorporated by reference to Post-Effective Amendment No. 32, filed July 31, 2003. (10)(e) Distribution Plan relating to Investor C Shares, Exhibit A amended July 18, 2003, incorporated by reference to Post-Effective Amendment No. 32, filed July 31, 2003. (10)(g) Distribution Plan relating to Daily Class Shares, Exhibit A amended October 8, 2002, incorporated by reference to Post-Effective Amendment No. 32, filed July 31, 2003. (10)(h) Distribution Plan relating to Investor Class Shares, Exhibit A amended October 8, 2002, incorporated by reference to Post-Effective Amendment No. 32, filed July 31, 2003. (10)(i) Distribution Plan relating to Liquidity Class Shares, Exhibit A amended October 8, 2002, incorporated by reference to Post-Effective Amendment No. 32, filed July 31, 2003. (10)(j) Distribution Plan relating to Market Class Shares, Exhibit A amended October 8, 2002, incorporated by reference to Post-Effective Amendment No. 32, filed July 31, 2003. (10)(k) Distribution Plan relating to Service Class Shares, Exhibit A amended October 8, 2002, incorporated by reference to Post-Effective Amendment No. 32, filed July 31, 2003. (11) Opinion and Consent of Counsel - Morrison & Foerster LLP, filed herewith. (12) See Item 17 (3) of this Part C.
4 (13)(a) Administration Agreement between the Registrant and BACAP Distributors, Schedule A dated August 1, 2003, incorporated by reference to Post-Effective Amendment No. 33 to the Registration Statement, filed on September 3, 2003. (13)(b) Sub-Administration Agreement among the Registrant, BNY and BACAP Distributors, Schedule I dated August 1, 2003, incorporated by reference to Post-Effective Amendment No. 33 to the Registration Statement, filed on September 3, 2003. (13)(c) Shareholder Servicing Plan relating to Investor B Shares, Exhibit I amended July 18, 2003, incorporated by reference to Post-Effective Amendment No. 32 to the Registration Statement, filed July 31, 2003. (13)(d) Shareholder Servicing Plan relating to Investor C Shares, Exhibit I amended July 18, 2003, incorporated by reference to Post-Effective Amendment No. 32 to the Registration Statement, filed July 31, 2003. (13)(e) Shareholder Servicing Plan relating to Adviser Class Shares, Exhibit I amended May 10, 2002, incorporated by reference to Post-Effective Amendment No. 26 to the Registration Statement, filed July 31, 2002. (13)(f) Shareholder Servicing Plan relating to Daily Class Shares, Exhibit I amended May 10, 2002, incorporated by reference to Post-Effective Amendment No. 26 to the Registration Statement, filed July 31, 2002. (13)(g) Shareholder Servicing Plan relating to Investor Class Shares, Exhibit I amended May 10, 2002, incorporated by reference to Post-Effective Amendment No. 26 to the Registration Statement, filed July 31, 2002. (13)(h) Shareholder Servicing Plan relating to Liquidity Class Shares, Exhibit I amended May 10, 2002, incorporated by reference to Post-Effective Amendment No. 26 to the Registration Statement, filed July 31, 2002. (13)(i) Shareholder Servicing Plan relating to Market Class Shares, Exhibit I amended May 10, 2002, incorporated by reference to Post-Effective Amendment No. 26 to the Registration Statement, filed July 31, 2002. (13)(j) Shareholder Servicing Plan relating to Service Class Shares, Schedule I amended May 10, 2002, incorporated by reference to Post-Effective Amendment No. 26 to the Registration Statement, filed July 31, 2002. (13)(k) Shareholder Administration Plan relating to Investor B and Investor C Shares, Exhibit I amended May 10, 2002, incorporated by reference to Post-Effective Amendment No. 26 to the Registration Statement, filed July 31, 2002.
5 (13)(l) Shareholder Administration Plan relating to Institutional Class Shares, Exhibit I amended May 10, 2002, incorporated by reference to Post-Effective Amendment No. 26 to the Registration Statement, filed July 31, 2002. (13)(m) Shareholder Administration Plan relating to Trust Class Shares, Exhibit I amended May 10, 2002, incorporated by reference to Post-Effective Amendment No. 26 to the Registration Statement, filed July 31, 2002. (13)(n) Transfer Agency and Services Agreement between PFPC (formerly First Data Investor Services Group, Inc.) and the Nations Funds family dated June 1, 1995, Schedule G dated August 1, 2003, incorporated by reference to Post-Effective Amendment No. 33 to the Registration Statement, filed September 3, 2003. (13)(o) Adoption Agreement and Amendment to Transfer Agency and Services Agreement dated February 14, 2000, incorporated by reference to Post-Effective Amendment No. 1 to the Registration Statement, filed February 10, 2000. (13)(p) Amendment to Transfer Agency and Services Agreement dated January 1, 1999, incorporated by reference to Post-Effective Amendment No. 1 to the Registration Statement, filed February 10, 2000. (13)(q) Sub-Transfer Agency Agreement between PFPC and Bank of America, dated September 11, 1995, Schedule A dated August 1, 2003, incorporated by reference to Post-Effective Amendment No. 33 to the Registration Statement, filed September 3, 2003. (13)(r) Amendment No. 1 to the Sub-Transfer Agency and Services Agreement dated January 3, 2000, incorporated by reference to Post-Effective Amendment No. 6 to the Registration Statement, filed December 27, 2000. (13)(s) Amendment No. 2 to the Sub-Transfer Agency and Services Agreement dated December 1, 2000, incorporated by reference to Post-Effective Amendment No. 6 to the Registration Statement, filed December 27, 2000. (13)(t) Amended and Restated Foreign Custody Manager Agreement between BNY and the Nations Funds family dated July 2, 2001, Appendix dated August 1, 2003, incorporated by reference to Post-Effective Amendment No. 33 to the Registration Statement, filed September 3, 2003. (13)(u) Cross Indemnification Agreement among Nations Fund Trust, Nations Fund, Inc., Nations Reserves, Nations Master Investment Trust and the Registrant dated February 14, 2000, incorporated by reference to Post-Effective Amendment No. 1 to the Registration Statement, filed February 10, 2000.
6 (14) Consent of Independent Accountants -- PricewaterhouseCoopers LLP, filed herewith. (15) Not Applicable. (16)(a) Powers of Attorney for Edmund L. Benson, Charles B. Walker, Thomas S. Word, Jr., William H. Grigg, Thomas F. Keller, Carl E. Mundy, Jr., James B. Sommers, Cornelius J. Pings, William P. Carmichael, and Edward D. Bedard, incorporated by reference to Post-Effective Amendment No. 29 to the Registration Statement, filed April 21, 2003. (16)(b) Powers of Attorney for Minor Mickel Shaw, incorporated by reference to Post-Effective Amendment No. 30 to the Registration Statement, filed June 18, 2003. (17)(a) Form of Proxy Ballot, filed herewith. (17)(b) Prospectuses for the Primary A, Investor A, Investor B and Investor C Shares of Nations Capital Growth Fund and Nations Marsico Growth Fund, dated August 1, 2003, are incorporated by reference to Post-Effective Amendment No. 32 to the Registration Statement, as filed on July 31, 2003. (17)(c) Statements of Additional Information for the Primary A, Investor A, Investor B and Investor C Shares of Nations Capital Growth Fund and Nations Marsico Growth Fund, dated August 1, 2003, are incorporated by reference to Post-Effective Amendment No. 32 to the Registration Statement on Form N-1A, filed July 31, 2003.
Item 17. Undertakings. (1) Registrant agrees that, prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, the reoffering prospectus will contain the information called for by the applicable registration form for the reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act of 1933, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. (3) The undersigned Registrant agrees to file, by post-effective amendment, an opinion of counsel or a copy of an IRS ruling supporting the tax consequences of the Reorganization within a reasonable time after receipt of such opinion or ruling. 7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form N-14 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Charlotte, State of North Carolina on the 14th day of October, 2003. NATIONS FUNDS TRUST By: * ------------------------------------- Edward D. Bedard President and Chief Executive Officer By: /s/ Robert Carroll ------------------------------------- Robert B. Carroll *Attorney-in-Fact Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on N-14 has been signed below by the following persons in the capacities and on the date indicated: SIGNATURES TITLE DATE ---------- ----- ---- * Chairman October 14, 2003 - ----------------------- of the Board of Trustees (William P. Carmichael) * Chief Financial October 14, 2003 - ----------------------- Officer (Principal Financial (Gerald Murphy) and Accounting Officer) * Trustee October 14, 2003 - ----------------------- (Edmund L. Benson, III) * Trustee October 14, 2003 - ------------------------ (William H. Grigg) * Trustee October 14, 2003 - ----------------------- (Thomas F. Keller) * Trustee October 14, 2003 - ----------------------- (Carl E. Mundy, Jr.) * Trustee October 14, 2003 - ----------------------- (Cornelius J. Pings) * Trustee October 14, 2003 - ----------------------- (James B. Sommers) * Trustee October 14, 2003 - ----------------------- (Charles B. Walker) * Trustee October 14, 2003 - ----------------------- (Thomas S. Word) * Trustee October 14, 2003 - ----------------------- (Minor Mickel Shaw) /s/ Robert Carroll - ----------------------- Robert B. Carroll *Attorney-in-Fact EXHIBIT INDEX NATIONS FUNDS TRUST FILE NO. 333-
Exhibit No. Description - ---------- ----------- (4) Agreement and Plan of Reorganization (11) Opinion and Consent of Counsel - Morrison & Foerster LLP (14) Consent of Independent Accountants -- PricewaterhouseCoopers LLP (17)(a) Form of Proxy Ballot
EX-99.4 3 g84911exv99w4.txt AGREEMENT & PLAN OF REORGANIZATION AGREEMENT AND PLAN OF REORGANIZATION This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of November 13, 2003 by and between Nations Funds Trust ("Funds Trust"), a Delaware statutory trust, for itself and on behalf of its Nations Capital Growth Fund (the "Target Fund") and Funds Trust, for itself and on behalf of its Nations Marsico Growth Fund (the "Acquiring Fund"). WHEREAS, Funds Trust is an open-end management investment company registered with the Securities and Exchange Commission (the "SEC") under the Investment Company Act of 1940, as amended (the "1940 Act"); WHEREAS, the parties desire that the Fund Assets and Liabilities (as defined below) of the Target Fund be conveyed to and assumed by the Acquiring Fund in exchange for shares of equal U.S. dollar value of such Acquiring Fund which shall thereafter promptly be distributed to the shareholders of the Target Fund in connection with its liquidation as described in this Agreement and set forth in Schedule A attached hereto (the acquisition and assumption of the Target Fund's Fund Assets and Liabilities by the Acquiring Fund is the "Reorganization"); and WHEREAS, the parties intend that the Reorganization qualify as a "reorganization," within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that the Acquiring Fund and Target Fund will each be a "party to a reorganization," within the meaning of Section 368(b) of the Code, with respect to the Reorganization. NOW, THEREFORE, in accordance with the terms and conditions described herein, the Target Fund and Acquiring Fund shall be consolidated as follows: 1. Conveyance of Fund Assets and Liabilities of the Target Fund. (a) Except as provided below, at the Effective Time of the Reorganization (as defined in Section 8) all assets of every kind, and all interests, rights, privileges and powers of the Target Fund (the "Fund Assets"), subject to all liabilities of the Target Fund existing as of the Effective Time of the Reorganization (the "Liabilities"), shall be transferred by the Target Fund to the Acquiring Fund and shall be accepted and assumed by such Acquiring Fund, as more particularly set forth in this Agreement, such that at and after the Effective Time of the Reorganization: (i) all Fund Assets of the Target Fund shall become the assets of the Acquiring Fund; and (ii) all Liabilities of the Target Fund shall attach to the Acquiring Fund, enforceable against the Acquiring Fund to the same extent as if originally incurred by the Acquiring Fund. (b) It is understood and agreed that the Fund Assets shall include all property and assets of any nature whatsoever, including, without limitation, all cash, cash equivalents, securities, claims (whether absolute or contingent, known or unknown, accrued or unaccrued) and receivables (including dividend and interest receivables) owned or exercisable by the Target Fund, and any deferred or prepaid expenses shown as an asset on such Target Fund's books, that the Liabilities of the Target Fund shall include all liabilities, whether known or unknown, accrued or unaccrued, absolute or contingent, in all cases, existing at the Effective Time of the Reorganization. (c) At least fifteen (15) business days prior to the Closing Date (as defined in Section 8), the Target Fund will provide to, or cause to be provided to, the Acquiring Fund, a schedule of its securities, other assets and its known liabilities. It is understood and agreed that the Target Fund may sell any of the securities or other assets shown on such schedule prior to the Effective Time of the Reorganization but will not, without the prior approval of the Acquiring Fund, acquire any additional securities other than securities that such 1 Acquiring Fund is permitted to purchase in accordance with its stated investment objective and policies. At least ten (10) business days prior to the Closing Date, the Acquiring Fund will advise the Target Fund of any investments of the Target Fund shown on such schedule that the Acquiring Fund would not be permitted to hold, pursuant to its stated investment objective and policies or otherwise. The Target Fund, if requested by the Acquiring Fund, will dispose of any such securities prior to the Closing Date to the extent practicable and consistent with applicable legal requirements. In addition, if it is determined that the investment portfolios of the Target Fund and its Acquiring Fund, when aggregated, would contain investments exceeding certain percentage limitations applicable to the Acquiring Fund, the Target Fund, if requested by the Acquiring Fund, will dispose of a sufficient amount of such investments as may be necessary to avoid violating such limitations as of the Effective Time of the Reorganization. (d) The Fund Assets shall be transferred and conveyed to the Acquiring Fund on the following basis: (1) In exchange for the transfer of the Fund Assets, the Acquiring Fund shall simultaneously issue to the Target Fund at the Effective Time of the Reorganization full and fractional shares of such Acquiring Fund, as set forth in Schedule A attached hereto, having an aggregate net asset value equal to the net value of the Fund Assets minus Liabilities so conveyed and assumed, all determined in accordance with this Agreement. In this regard, the number of full and fractional shares of the Acquiring Fund delivered to the Target Fund shall be determined by dividing the value of the Fund Assets minus Liabilities, computed in the manner and as of the time and date set forth in this Agreement, by the net asset value of one Acquiring Fund share of such designated class, computed in the manner and as of the time and date set forth in this Agreement. (2) The net asset value of shares to be delivered by the Acquiring Fund, and the net value of the Fund Assets minus Liabilities to be conveyed by the Target Fund and assumed by the Acquiring Fund, shall, in each case, be determined as of the Valuation Time as defined in Section 3. The net asset value of shares of the Acquiring Fund shall be computed in accordance with its then current valuation procedures. In determining the value of the Fund Assets, each security to be included in the Fund Assets shall be priced in accordance with the Acquiring Fund's then current valuation procedures. 2. Liquidation of the Target Fund. At the Effective Time of the Reorganization, the Target Fund shall make a liquidating distribution to its shareholders as follows: Shareholders of record of the Target Fund shall be credited with full and fractional shares of the respective shares that are issued by the Acquiring Fund in connection with the Reorganization corresponding to the Target Fund shares that are held of record by the shareholder at the Effective Time of the Reorganization. Each such shareholder also shall have the right to receive any unpaid dividends or other distributions which were declared before the Effective Time of the Reorganization with respect to the Target Fund shares that are held of record by the shareholder at the Effective Time of the Reorganization, and Funds Trust shall record on its books the ownership of the Acquiring Fund shares by such shareholders (the "Transferor Record Holders"). All of the issued and outstanding shares of the Target Fund at the Effective Time of the Reorganization shall be redeemed and canceled on the books of Funds Trust at such time. As soon as reasonably possible after the Effective Time of the Reorganization, shall wind up the affairs of the Target Fund and shall file any final regulatory reports, including but not limited to any Form N-SAR and Rule 24f-2 filings, with respect to the Target Fund, and also shall take all other steps as are necessary and proper to effect the termination or declassification of the Target Fund in accordance with all applicable laws. 2 3. Valuation Time. The "Valuation Time" shall be the time as of which the net asset value of each class of shares of the Target Fund and the Acquiring Fund is determined pursuant to their respective valuation procedures on the Closing Date or such earlier or later time as may be mutually agreed to in writing by the parties hereto. 4. Certain Representations, Warranties and Agreements of Funds Trust on behalf of the Target Fund. Funds Trust, for itself and, where appropriate, on behalf of the Target Fund, represents and warrants to, and agrees with, Funds Trust, on behalf of the Acquiring Fund as follows, with such representations, warranties and agreements made on behalf of the Target Fund on a several (and not joint, or joint and several) basis: (a) Funds Trust is a statutory trust, duly formed, validly existing and in good standing under the laws of the State of Delaware. Funds Trust is registered with the SEC as an open-end management investment company under the 1940 Act, and such registration is in full force and effect. (b) Funds Trust has the power to own all of its properties and assets and to consummate the transactions contemplated herein, and has all necessary federal, state and local authorizations to carry on its business as now being conducted and to consummate the transactions contemplated by this Agreement. (c) This Agreement has been duly authorized by the Board of Trustees of Funds Trust on behalf of the Target Fund, and has been executed and delivered by duly authorized officers of Funds Trust, and represents a valid and binding contract, enforceable in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, reorganization, arrangement, moratorium, and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement will not, violate the Amended and Restated Declaration of Trust of Funds Trust, or any material agreement or arrangement to which Funds Trust is a party or by which it is bound. (d) The Target Fund has qualified as a "regulated investment company" under Part I of Subchapter M of Subtitle A, Chapter 1, of the Code (a "RIC"), in respect of each taxable year since the commencement of its operations, and will continue to so qualify until the Effective Time. (e) Funds Trust has valued, and will continue to value, the portfolio securities and other assets of the Target Fund in accordance with applicable legal requirements. (f) All of the issued and outstanding shares of the Target Fund have been validly issued and are fully paid and non-assessable, and were offered for sale and sold in conformity with the registration requirements of all applicable federal and state securities laws. (g) Funds Trust shall operate the business of the Target Fund in the ordinary course between the date hereof and the Effective Time of the Reorganization, except that Funds Trust shall complete all measures in respect of the Target Fund prior to the Effective Time of the Reorganization to ensure that each Reorganization qualifies as a "reorganization" within the meaning of Section 368(a) of the Code, regardless of whether such measures are in the ordinary course. It is understood that such ordinary course of business will include the declaration and payment of customary dividends and distributions and any other dividends and distributions deemed advisable in anticipation of the Reorganization. Notwithstanding anything herein to the contrary, Funds Trust shall take all appropriate action necessary in order for it to receive the opinion provided for in Sections 7(f) and 8(d). 3 (h) At the Effective Time of the Reorganization, the Target Fund will have good and marketable title to the Fund Assets and full right, power and authority to assign, deliver and otherwise transfer such assets. (i) At the Effective Time of the Reorganization, all federal and other tax returns and reports of the Target Fund required by law to have been filed by such time shall have been filed, and all federal and other taxes shall have been paid so far as due, or provision shall have been made for the payment thereof and, to the best knowledge of management of Funds Trust, no such return or report shall be currently under audit and no assessment shall have been asserted with respect to such returns or reports. 5. Certain Representations, Warranties and Agreements of Funds Trust on behalf of the Acquiring Fund. Funds Trust, on behalf of itself and where appropriate, on behalf of the Acquiring Fund, represents and warrants to, and agrees with, Funds Trust on behalf of the Target Fund as follows: (a) Funds Trust is a statutory business trust duly formed, validly existing and in good standing under the laws of the State of Delaware and is registered with the SEC as an open-end management investment company under the 1940 Act and such registration is in full force and effect. (b) Funds Trust has the power to own all of its properties and assets and to consummate the transactions contemplated herein, and has all necessary federal, state and local authorizations to carry on its business as now being conducted and to consummate the transactions contemplated by this Agreement. (c) This Agreement has been duly authorized by the Board of Trustees of Funds Trust on behalf of the Acquiring Fund, and executed and delivered by duly authorized officers of Funds Trust, and represents a valid and binding contract, enforceable in accordance with its terms, subject as to enforcement to bankruptcy, insolvency, reorganization, arrangement, moratorium and other similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement will not, violate the Amended and Restated Declaration of Trust of Funds Trust or any material agreement or arrangement to which it is a party or by which it is bound. (d) The Acquiring Fund has qualified as a RIC in respect of each taxable year since the commencement of its operations and will continue to so qualify for its current taxable year. (e) Funds Trust has valued, and will continue to value, the portfolio securities and other assets of the Acquiring Fund in accordance with applicable legal requirements. (f) The shares of the Acquiring Fund to be issued and delivered to the Target Fund for the account of the shareholders of the Target Fund, pursuant to the terms hereof, shall have been duly authorized as of the Effective Time of the Reorganization and, when so issued and delivered, shall be duly and validly issued, fully paid and non-assessable, and no shareholder of the Acquiring Fund shall have any preemptive right of subscription or purchase in respect thereto. (g) All of the issued and outstanding shares of the Acquiring Fund have been validly issued and are fully paid and non-assessable, and were offered for sale and sold in conformity with the registration requirements of all applicable federal and state securities laws. 4 (h) Funds Trust shall operate the business of the Acquiring Fund in the ordinary course between the date hereof and the Effective Time of the Reorganization, it being understood that such ordinary course of business will include the declaration and payment of customary dividends and distributions and any other dividends and distributions deemed advisable in anticipation of the Reorganization. Notwithstanding anything herein to the contrary, Funds Trust shall take all appropriate action necessary in order for Funds Trust to receive the opinion provided for in Section 8(d). (i) At the Effective Time of the Reorganization, all federal and other tax returns and reports of the Acquiring Fund required by law to have been filed by such time shall have been filed, and all federal and other taxes shall have been paid so far as due, or provision shall have been made for the payment thereof and, to the best knowledge of management of Funds Trust, no such return or report shall be currently under audit and no assessment shall have been asserted with respect to such returns or reports. 6. Closing Date, Effective Time of the Reorganization. The "Closing Date" shall be December 12, 2003, or, such earlier or later date as may be mutually agreed in writing by the parties hereto. Delivery of the Fund Assets and each class of shares of the Acquiring Fund to be issued pursuant to Section 1 and the liquidation of the Target Fund pursuant to Section 2 shall occur on the day following the Closing Date, whether or not such day is a business day, or on such other date, and at such place and time, as may be mutually agreed in writing, by the parties hereto. The date and time at which such actions are taken are referred to herein as the "Effective Time of the Reorganization." To the extent any Fund Assets are, for any reason, not transferred at the Effective Time of the Reorganization, Funds Trust shall cause such Fund Assets to be transferred in accordance with this Agreement at the earliest practicable date thereafter. 7. Conditions to Funds Trust's Obligations on Behalf of the Acquiring Fund. The obligations of Funds Trust hereunder shall be subject to the following conditions precedent: (a) This Agreement and the Reorganization shall have been approved by the Board of Trustees of Funds Trust in the manner required by Funds Trust's Amended and Restated Declaration of Trust, applicable law and this Agreement. (b) All representations and warranties of Funds Trust made in this Agreement shall be true and correct in all material respects as if made at and as of the Valuation Time and the Effective Time of the Reorganization. (c) Funds Trust shall have delivered to Funds Trust, on behalf of the Acquiring Fund, a statement of assets and liabilities of the Target Fund, showing the tax basis of such assets for federal income tax purposes by lot and the holding periods of such assets, as of the Valuation Time. (d) Funds Trust shall have duly executed and delivered to Funds Trust, on behalf of the Acquiring Fund, such bills of sale, assignments, certificates and other instruments of transfer ("Transfer Documents") as Funds Trust may deem necessary or desirable to transfer all of the Target Fund's rights, title and interest in and to the Fund Assets. (e) Funds Trust shall have delivered a certificate executed in its name executed by an appropriate officer, in a form reasonably satisfactory to Funds Trust, on behalf of the Acquiring Fund, and dated as of the Closing Date, to the effect that the representations and warranties of Funds Trust on behalf of the Target Fund made in this Agreement are true and correct at and as of the Valuation Time and that, to the best of its knowledge, the Fund Assets include only assets which the Acquiring Fund may properly acquire under its investment objective, policies and limitations. 5 (f) Funds Trust shall have received an opinion of Morrison & Foerster LLP dated as of the Closing Date in a form reasonably satisfactory to it, upon which the Acquiring Fund and its shareholders may rely, based upon representations reasonably acceptable to Morrison & Foerster LLP made in certificates provided by Funds Trust, its affiliates and/or principal shareholders to Morrison & Foerster LLP, substantially to the effect that, although not free from doubt, the Reorganization should qualify as a "reorganization," within the meaning of Section 368(a) of the Code, and the Acquiring Fund and Target Fund should each be a "party to a reorganization," within the meaning of Section 368(b) of the Code, with respect to the Reorganization. (g) The N-14 Registration Statement shall have become effective and no stop order suspending the effectiveness shall have been instituted, or to the knowledge of Funds Trust, contemplated by the SEC. (h) No action, suit or other proceeding shall be threatened or pending before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein. (i) The SEC shall not have issued any unfavorable advisory report under Section 25(b) of the 1940 Act nor instituted any proceeding seeking to enjoin consummation of the transactions contemplated by this Agreement under Section 25(c) of the 1940 Act. (j) Funds Trust, on behalf of the Target Fund, shall have performed and complied in all material respects with each of its agreements and covenants required by this Agreement to be performed or complied with by it prior to or at the Valuation Time and the Effective Time of the Reorganization. (k) Funds Trust shall have received a duly executed instrument whereby the Acquiring Fund assumes all of the liabilities of the Target Fund. (l) Except to the extent prohibited by Rule 19b-1 under the 1940 Act, prior to the Valuation Time, the Target Fund shall have declared a dividend or dividends, with a record date and ex-dividend date prior to the Valuation Time, which, together with all previous dividends, shall have the effect of distributing to the Target Fund shareholders all of its previously undistributed (i) "investment company taxable income" within the meaning of Section 852(b) of the Code (determined without regard to Section 852(b)(2)(D) of the Code), (ii) excess of (A) the amount specified in Section 852(a)(1)(B)(i) of the Code over (B) the amount specified in Section 852(a)(1)(B)(ii) of the Code, and (iii) "net capital gain" (within the meaning of Section 1222(11) of the Code), if any, realized in taxable periods or years ending on or before the Effective Time. 8. Conditions to Funds Trust's Obligations on behalf of the Target Fund. The obligations of Funds Trust hereunder shall be subject to the following conditions precedent: (a) This Agreement and the Reorganization shall have been approved by the Board of Trustees of Funds Trust on behalf of the Acquiring Fund. (b) All representations and warranties of Funds Trust made in this Agreement shall be true and correct in all material respects as if made at and as of the Valuation Time and the Effective Time of the Reorganization. (c) Funds Trust shall have delivered a certificate executed in its name by an appropriate officer, in a form reasonably satisfactory to Funds Trust, on behalf of the Target Fund, and dated as of the Closing Date, to the effect that the representations and warranties of 6 the Acquiring Fund made in this Agreement are true and correct at and as of the Valuation Time. (d) Funds Trust shall have received an opinion of Morrison & Foerster LLP dated as of the Closing Date in a form reasonably satisfactory to it, upon which the Target Fund and its shareholders may rely, based upon representations reasonably acceptable to Morrison & Foerster LLP made in certificates provided by Funds Trust, its affiliates and/or principal shareholders to Morrison & Foerster LLP, with respect to the tax matters specified in Subsection 9(f) (e) The N-14 Registration Statement shall have become effective and no stop order suspending such effectiveness shall have been instituted or, to the knowledge of Funds Trust, contemplated by the SEC. (f) No action, suit or other proceeding shall be threatened or pending before any court or governmental agency in which it is sought to restrain or prohibit or obtain damages or other relief in connection with this Agreement or the transactions contemplated herein. (g) The SEC shall not have issued any unfavorable advisory report under Section 25(b) of the 1940 Act nor instituted any proceeding seeking to enjoin consummation of the transactions contemplated by this Agreement under Section 25(c) of the 1940 Act. (h) Funds Trust on behalf of the Acquiring Fund shall have performed and complied in all material respects with each of its agreements and covenants required by this Agreement to be performed or complied with by it prior to or at the Valuation Time and the Effective Time of the Reorganization. 9. Tax Matters (a) Funds Trust hereby represents and warrants that it shall use its best efforts to cause the Reorganization to qualify, and will not (whether before or after consummation of the Reorganization) take any actions that could prevent the Reorganization from qualifying, as a "reorganization" under the provisions of Section 368 of the Code. (b) Except where otherwise required by law, the parties shall not take a position on any tax returns inconsistent with the treatment of the Reorganization for tax purposes as a "reorganization," within the meaning of Section 368(a) of the Code and the Acquiring Fund and the Target Fund will comply with the record keeping and information filing requirements of Section 1.368-3 of the Treasury Regulation in accordance therewith. 10. Survival of Representations and Warranties. The representations and warranties of Funds Trust on behalf of the Acquiring Fund and the Target Fund set forth in this Agreement shall survive the delivery of the Fund Assets to the Acquiring Fund and the issuance of the shares of the Acquiring Fund at the Effective Time of the Reorganization to Target Fund shareholders. 11. Termination of Agreement. This Agreement may be terminated by a party at or, in the case of Subsection 11(c), below, at any time prior to, the Effective Time of the Reorganization by a vote of a majority of its Board members as provided below: (a) By Funds Trust on behalf of the Acquiring Fund if the conditions set forth in Section 9 are not satisfied as specified in said Section; (b) By Funds Trust on behalf of the Target Fund if the conditions set forth in Section 10 are not satisfied as specified in said Section; 7 (c) By mutual written consent of the parties. 12. Governing Law. This Agreement and the transactions contemplated hereby shall be governed, construed and enforced in accordance with the laws of the State of Delaware, except to the extent preempted by federal law. 13. Brokerage Fees and Expenses. (a) Funds Trust represents and warrants that there are no brokers or finders entitled to receive any payments in connection with the transactions provided for herein. (b) The Target Fund will be responsible for the expenses related to entering into and carrying out the provisions of this Agreement, whether or not the transactions contemplated hereby are consummated. To the extent that such expenses exceed contractual total operating expense ratio caps in place for the Target Fund, Banc of America Capital Management, LLC or any of its affiliates will bear such excess expenses. 14. Amendments. This Agreement may be amended, modified or supplemented in such manner as may be mutually agreed upon in writing by the authorized officers of Funds Trust, acting on behalf of the Target Fund or Funds Trust, acting on behalf of the Acquiring Fund: (a) Funds Trust on behalf of the Target Fund, may waive any breach by Funds Trust, on behalf of the Acquiring Fund, or the failure to satisfy any of the conditions to its obligations (such waiver to be in writing and signed by an officer of such registered investment company); (b) Funds Trust, on behalf of the Acquiring Fund, may waive any breach by Funds Trust on behalf of the Target Fund, or the failure to satisfy any of the conditions to either of their obligations (such waiver to be in writing and signed by an officer of such registered investment company). 15. Miscellaneous. The Reorganization of the Target Fund into the Acquiring Fund (including the representations and warranties and conditions precedent made or required to occur in connection therewith) shall not be conditioned on any other Reorganization contemplated either under this Agreement or any other agreement and plan of reorganization. 8 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers designated below as of the date first written above. NATIONS FUNDS TRUST On behalf of the Target Fund identified on Schedule A By:_____________________________ Gerry Murphy Chief Financial Officer (interim) and Treasurer NATIONS FUNDS TRUST On behalf of the Acquiring Fund identified on Schedule A By:_____________________________ Gerry Murphy Chief Financial Officer (interim) and Treasurer 9 SCHEDULE A SHAREHOLDERS OWNING SHARES OF THE WOULD RECEIVE SHARES OF THE FOLLOWING FOLLOWING TARGET FUND AND CLASSES ACQUIRING FUND AND CLASSES OF FUNDS OF FUNDS TRUST: TRUST: Nations Capital Growth Fund Nations Marsico Growth Fund Primary A Shares Primary A Shares Investor A Shares Investor A Shares Investor B Shares Investor B Shares Investor C Shares Investor C Shares 10 EX-99.11 4 g84911exv99w11.txt OPINION OF MORRISON & FOERSTER October 14, 2003 Nations Funds Trust One Bank of America Plaza 33rd Floor Charlotte, NC 28255 Re: Units of Beneficial Interest of Nations Funds Trust Ladies/Gentlemen: We refer to the Registration Statement on Form N-14 (the "Registration Statement") of Nations Funds Trust (the "Trust") relating to the registration of an indefinite number of units of beneficial interest (the "Shares"), of certain series of the Trust (the "Funds"). We have been requested by the Trust to furnish this opinion as Exhibit 11 to the Registration Statement. We have examined documents relating to the organization of the Trust and the authorization and issuance of the Shares. We have also made such inquiries of the Trust and examined such questions of law as we have deemed necessary for the purpose of rendering the opinion set forth herein. We have assumed the genuineness of all signatures and the authenticity of all items submitted to us as originals and the conformity with originals of all items submitted to us as copies. Based upon and subject to the foregoing, we are of the opinion that: The issuance of the Shares by the Trust has been duly and validly authorized by all appropriate action and, assuming delivery in accordance with the description set forth in the Combined Proxy Statement/Prospectus included in the Registration Statement, the Shares will be legally issued, fully paid and nonassessable by the Trust. We consent to the inclusion of this opinion as an exhibit to the Registration Statement. In addition, we hereby consent to the use of our name and to the description of advice rendered by our firm under the heading "The Reorganization - -- Material U.S. Nations Funds Trust October 14, 2003 Page Two Federal Income Tax Consequences" in the Combined Proxy Statement/Prospectus. We also consent to the use of our name and to the reference to our firm under the heading "Counsel" in the Statement of Additional Information, which is incorporated by reference into this Registration Statement. Very truly yours, /s/ MORRISON & FOERSTER LLP MORRISON & FOERSTER LLP EX-99.14 5 g84911exv99w14.txt CONSENT OF PRICEWATERHOUSECOOPERS CONSENT OF INDEPENDENT AUDITORS We hereby consent to the incorporation by reference in this Registration Statement on Form N-14 of our report dated May 16, 2003, relating to the financial statements and financial highlights (including the unaudited subsequent event footnote dated October 14, 2003) which appears in the March 31, 2003 Annual Report to Shareholders of Nations Capital Growth Fund and Nations Marsico Growth Fund, which are also incorporated by reference into the Registration Statement. We also consent to the references to us under the headings "Financial Statements" and "Comparison of Advisory and Other Service Arrangements and Fees" in such Registration Statement. PricewaterhouseCoopers LLP New York, New York October 14, 2003 EX-99.17(A) 6 g84911exv99w17xay.txt FORM OF PROXY BALLOT Nations Funds Nations Capital Growth Fund 101 South Tryon Street 33rd Floor Special Meeting of Shareholders One Bank of America Plaza to be held on January 16, 2004 Charlotte, North Carolina 28255 The undersigned hereby appoints Robert B. Carroll, Paul Caldarelli and Michael Simons (the "Proxies"), and each of them, attorneys and proxies of the undersigned, each with power of substitution and resubstitution, to attend, vote and act for the undersigned at the Special Meeting of Shareholders of Nations Capital Growth 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 January 16, 2004, and at any adjournment(s) thereof. The Proxies shall cast votes according to the number of shares of Nations Capital Growth 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 NATIONS CAPITAL GROWTH FUND AND THE COMBINED PROXY STATEMENT/PROSPECTUS, DATED NOVEMBER 13, 2003. THIS PROXY IS SOLICITED ON BEHALF OF NATIONS CAPITAL GROWTH 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 NATIONS CAPITAL GROWTH FUND 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 that provides for the reorganization of Nations Capital Growth Fund into Nations Marsico Growth 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-----