Government & Corporate Bond Funds

Nations Funds
Notes to financial statements (continued) (unaudited)
Realized gains and losses are computed based on the 2. Investment advisory fee, sub-advisory fee,
specific identification of securities sold. Interest income, administration fee and related party transactions
adjusted for accretion of discounts and amortization of
premiums, is earned from settlement date and recorded
on an accrual basis. Dividend income is recorded on exdividend
date. Each Fund’s investment income and
realized and unrealized gains and losses are allocated
among its share classes based upon the relative net assets
of each class of shares.
Funds Trust has entered into an investment advisory
agreement (the ‘‘Investment Advisory Agreement’’) with
BA Advisors, a wholly-owned subsidiary of Bank of
America, N.A. (‘‘Bank of America’’), which in turn is a
wholly-owned banking subsidiary of Bank of America
Corporation, a bank holding company organized as a
Delaware corporation, pursuant to which BA Advisors
The Feeder Funds record their share of the investment provides investment advisory services to the Funds.
income and realized and unrealized gains and losses Under the terms of the Investment Advisory Agreement,
reported by the Master Portfolios on a daily basis. The BA Advisors is entitled to receive an advisory fee,
investment income and realized and unrealized gains and calculated daily and payable monthly, based on the
losses are allocated daily to investors in the Master
following annual rates multiplied by the average daily net
Portfolios based upon the relative value of their
assets of each Fund:
investments in the Master Portfolios. Annual rate
Dividends and distributions to shareholders: It is the
policy of each Fund (except Intermediate Bond and High
Yield Bond) to declare dividends from net investment
Short-Term Income, Short-Intermediate*********** 0.30%
Government Bond **************************** 0.40%
Strategic Income ***************************** 0.50%
Fees on average Fees on average
income daily and to pay such dividends monthly. Fees on average daily net assets daily net assets
Intermediate Bond and High Yield Bond Funds declare
daily net assets between $200 Exceeding $250
up to $200 million and $250 million million
and pay dividends monthly. The Funds may declare and
pay distribution of net investment income more
Government
frequently. Each Fund will distribute net realized capital Securities ** 0.50% 0.45% 0.40%
gains (including net short-term capital gains) at least
annually after the fiscal year in which the capital gains
were earned, unless offset by any available capital loss
carryforward. Income distributions and capital gain
distributions on a Fund level are determined in
The Feeder Funds indirectly pay for investment advisory
services through their investments in their corresponding
Master Portfolios (see Note 2 of Notes to financial
statements of the Master Portfolios).
accordance with federal income tax regulations which Funds Trust has entered into a sub-advisory agreement
may differ from accounting principles generally accepted with BA Advisors and Banc of America Capital
in the United States of America.
Management, LLC (‘‘BACAP’’), a wholly-owned
Federal income tax: Each Fund intends to continue to
qualify as a regulated investment company by complying
with the applicable requirements of the Internal Revenue
Code of 1986, as amended, and by distributing
subsidiary of Bank of America, pursuant to which
BACAP is entitled to receive a sub-advisory fee from BA
Advisors at the maximum annual rate of 0.15% of each
Fund’s average daily net assets.
substantially all of its earnings to its shareholders.
The Feeder Funds indirectly pay for sub-advisory services
Therefore, no provision is made for federal income or through their investments in their corresponding Master
excise taxes.
Portfolios (See Note 2 of Notes to financial statements of
Expenses: General expenses of Funds Trust are
the Master Portfolios).
allocated to the Funds based upon their relative net assets Stephens Inc. (‘‘Stephens’’) and BA Advisors serve as
or other expense allocation methodologies determined by co-administrators of Funds Trust. Under the cothe
nature of the expense. Expenses directly attributable administration agreement, Stephens and BA Advisors are
to a Fund or class of shares are charged to such Fund or currently entitled to receive a combined fee, computed
class. The Feeder Funds record their share of the daily and paid monthly, at the maximum annual rate of
expenses reported by the Master Portfolios on a daily 0.22% of the average daily net assets of all Funds except
basis. The expenses are allocated daily to investors in the for Intermediate Bond Fund, which pays a monthly fee at
Master Portfolios based upon the relative value of the the maximum annual rate of 0.17% of its average daily
Feeder Funds’ investments in the Master Portfolios. net assets and High Yield Bond Fund, which pays a
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