<PAGE> 1
[NATIONS FUNDS LOGO]
INVESTMENTS FOR A LIFETIME(SM)
LIFEGOALS
LIFEGOAL
INCOME AND GROWTH
PORTFOLIO
[WATERMARK IN BACKGROUND]
LIFEGOAL
BALANCED GROWTH
PORTFOLIO
LIFEGOAL
GROWTH
PORTFOLIO
SEMI-ANNUAL REPORT FOR THE PERIOD
ENDED SEPTEMBER 30, 1997
<PAGE> 2
THIS REPORT IS SUBMITTED FOR
THE GENERAL INFORMATION OF
SHAREHOLDERS OF NATIONS FUNDS.
THIS MATERIAL MUST BE PRECEDED OR
ACCOMPANIED BY A CURRENT NATIONS
FUNDS PROSPECTUS.
NATIONS FUNDS DISTRIBUTOR:
STEPHENS INC. STEPHENS INC., WHICH
IS NOT AFFILIATED WITH NATIONSBANK,
N.A., IS NOT A BANK, AND SECURITIES
OFFERED BY IT ARE NOT GUARANTEED BY [GRAPHIC DEPICTING BASKETS]
ANY BANK OR INSURED BY THE FDIC.
STEPHENS INC., MEMBER NYSE, SIPC.
NATIONS FUNDS INVESTMENT ADVISER:
NATIONSBANC ADVISORS, INC.
NATIONS FUNDS INVESTMENT SUB-ADVISERS:
TRADESTREET INVESTMENT ASSOCIATES, INC.,
GARTMORE GLOBAL PARTNERS AND BOATMEN'S
CAPITAL MANAGEMENT, INC.
- ---------------------
NOT FDIC-
INSURED
- ---------------------
MAY LOSE VALUE
- ---------------------
NO BANK GUARANTEE
- ---------------------
<PAGE> 3
NATIONS FUNDS
DEAR SHAREHOLDER:
The capital markets, particularly the U.S. stock markets, have continued to
surprise participants with solid investment returns through the first nine
months of 1997. But as we had anticipated in January, the markets have become
more volatile than in the previous two years. Stock investors have experienced
more daily swings exceeding one percent of value than at any time in the 1990s.
Bond investors have seen yields move up and down in a broad range for most of
the year. Meanwhile, municipal securities have enjoyed better total returns than
their taxable counterparts.
Investors have continued to benefit from the outstanding economic conditions in
the U.S. Employment is high and jobs are being produced at a 200,000-plus rate
monthly. The growth rate for the U.S. economy has exceeded three percent in real
terms (after inflation) for the past four quarters. Corporate profits are
exceeding Wall Street estimates and should finish the year up about twelve
percent, which would make 1997 a record sixth consecutive year of double-digit
profit growth. Inflation is perhaps the biggest surprise of all: retail
inflation has registered a benign 2.2 percent for the past year, and wholesale
inflation has actually dropped over the same period.
As we have noted, investors have been the beneficiaries of strong economic and
market conditions over the past three years. However, we do not subscribe to the
notion that the historical business cycle has been "repealed." Indeed, we
encourage investors to maintain reasonable expectations about the future. A
recent national survey of 750 mutual fund investors conducted by Montgomery
Asset Management found that those shareholders surveyed anticipated average
annual returns of 34 percent on their investments over the next decade. Such
results, roughly triple the average annual return from stocks over the past 60
years, demonstrate the strong exuberance in the marketplace and give us some
cause for concern. We believe investors should temper their expectations of the
future and enjoy the rewards of the recent past.
That being said, there is little on the horizon that would suggest trouble for
investors as 1997 draws to a close. We believe that the pattern of the past
several years will continue to hold true and should produce a reasonable
investment environment as we move into the new year. The economy continues its
vigorous pace, monetary policy is neutral, inflation is virtually absent, and
the profit picture remains intact. However, any changes on any of these fronts
could translate into market volatility. On behalf of our shareholders, we will
stay vigilant in our work as we pursue the Funds' investment objectives.
Sincerely,
/s/ A. Max Walker /s/ Mark Williamson
- ----------------------------------- -------------------------------------
A. Max Walker Mark Williamson
President and Chairman of the Board President, NationsBanc Advisors, Inc.
September 30, 1997
ADDENDUM
Since the date of this report, equity markets worldwide have experienced
enormous volatility sparked by events in the Pacific Rim. However, the U.S.
economic picture remains positive -- fundamentals have not changed. Although we
expect continued volatility, our long-term view of the domestic market remains
intact.
November 26, 1997
1
<PAGE> 4
NATIONS FUNDS
Nations LifeGoal Income and Growth Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
- -----------------------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
===============================================================================================
<S> <C> <C> <C>
INVESTMENT COMPANY SECURITIES -- 100.6%
13,217 Nations Equity Income Fund -- 21.9%................................. $182,395
5,739 Nations International Equity Fund -- 9.8%........................... 81,717
29 Nations Prime Fund -- 0.0%#......................................... 29
30,215 Nations Short-Intermediate Government Fund -- 14.8%................. 123,579
46,122 Nations Short-Term Income Fund -- 54.1%............................. 450,611
--------
TOTAL INVESTMENT COMPANY SECURITIES (Cost $819,552)................. 838,331
========
TOTAL INVESTMENTS (Cost $819,552*)........................................ 100.6% 838,331
OTHER ASSETS AND LIABILITIES (NET)........................................ (0.6) (4,979)
----- --------
NET ASSETS................................................................ 100.0% $833,352
===== ========
</TABLE>
- ---------------
* Aggregate cost for Federal tax purposes.
# Amount represents less than 0.1%.
SEE NOTES TO FINANCIAL STATEMENTS.
2
<PAGE> 5
NATIONS FUNDS
Nations LifeGoal Balanced Growth Portfolio
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
- ----------------------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
==============================================================================================
<S> <C> <C> <C>
INVESTMENT COMPANY SECURITIES -- 100.0%
68,163 Nations Diversified Income Fund -- 19.2%......................... $ 710,266
12,596 Nations Emerging Growth Fund -- 5.7%............................. 212,111
27,948 Nations Equity Income Fund -- 10.4%.............................. 385,689
34,840 Nations Global Government Income Fund -- 9.3%.................... 343,175
378,839 Nations International Equity Fund -- 14.5%....................... 538,826
16,133 Nations Managed SmallCap Index Fund -- 5.8%...................... 214,082
25 Nations Prime Fund -- 0.0%#...................................... 25
70,700 Nations Strategic Fixed Income Fund -- 19.0%..................... 704,883
27,972 Nations Value Fund -- 16.1%...................................... 595,530
----------
TOTAL INVESTMENT COMPANY SECURITIES (Cost $3,486,202)............ 3,704,587
==========
TOTAL INVESTMENTS (Cost $3,486,202*)................................... 100.0% 3,704,587
OTHER ASSETS AND LIABILITIES (NET)..................................... (0.0) (1,360)
----- ----------
NET ASSETS............................................................. 100.0% $3,703,227
===== ==========
</TABLE>
- ---------------
* Aggregate cost for Federal tax purposes.
# Amount represents less than 0.1%.
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE> 6
NATIONS FUNDS
Nations LifeGoal Growth Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
- -----------------------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1)
===============================================================================================
<S> <C> <C> <C>
INVESTMENT COMPANY SECURITIES -- 99.8%
31,894 Nations Disciplined Equity Fund -- 15.6%.......................... $ 706,142
42,192 Nations Emerging Growth Fund -- 15.7%............................. 710,518
60,335 Nations International Equity Fund -- 19.0%........................ 859,177
36,124 Nations Managed SmallCap Index Fund -- 10.6%...................... 479,372
39,325 Nations Pacific Growth Fund -- 8.5%............................... 383,024
19 Nations Prime Fund -- 0.0%#....................................... 19
64,417 Nations Value Fund -- 30.4%....................................... 1,371,443
----------
TOTAL INVESTMENT COMPANY SECURITIES (Cost $4,191,670)............. 4,509,695
==========
TOTAL INVESTMENTS (Cost $4,191,670*).................................... 99.8% 4,509,695
OTHER ASSETS AND LIABILITIES (NET)...................................... 0.2 9,828
----- ----------
NET ASSETS.............................................................. 100.0% $4,519,523
===== ==========
</TABLE>
- ---------------
* Aggregate cost for Federal tax purposes.
# Amount represents less than 0.1%.
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE> 7
NATIONS FUNDS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 1997 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------
NATIONS NATIONS
LIFEGOAL LIFEGOAL NATIONS
INCOME AND BALANCED LIFEGOAL
GROWTH GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
=====================================
<S> <C> <C> <C>
ASSETS:
Investments, at value. See accompanying schedules (Note 1).......... $838,331 $3,704,587 $4,509,695
Dividends receivable................................................ 2,895 7,818 --
Receivable for Portfolio shares sold................................ 351 -- 25,470
Receivable for investment securities sold........................... 14,667 16,570 --
--------- ---------- ----------
Total Assets................................................... 856,244 3,728,975 4,535,165
--------- ---------- ----------
LIABILITIES:
Investment advisory fee payable (Note 2)............................ 418 1,792 1,092
Shareholder servicing and distribution fees payable (Note 3)........ 315 2,103 2,680
Due to custodian.................................................... 4,434 687 --
Payable for Portfolio shares redeemed............................... 15,000 147 --
Payable for investment securities purchased......................... 2,725 21,019 11,870
--------- ---------- ----------
Total Liabilities.............................................. 22,892 25,748 15,642
--------- ---------- ----------
NET ASSETS.......................................................... $833,352 $3,703,227 $4,519,523
========= ========== ==========
Investments, at cost................................................ $819,552 $3,486,202 $4,191,670
========= ========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE> 8
NATIONS FUNDS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED) SEPTEMBER 30, 1997 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------
NATIONS NATIONS
LIFEGOAL LIFEGOAL NATIONS
INCOME AND BALANCED LIFEGOAL
GROWTH GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
======================================
<S> <C> <C> <C>
NET ASSETS CONSIST OF:
Undistributed net investment income/(distributions in excess of net
investment income)................................................ $ 536 $ 1,263 $ (456)
Accumulated net realized gain on investments........................ 2,961 40,596 58,090
Net unrealized appreciation of investments.......................... 18,779 218,385 318,025
Paid-in capital..................................................... 811,076 3,442,983 4,143,864
-------- ---------- ----------
$833,352 $3,703,227 $4,519,523
======== ========== ==========
NET ASSETS:
Primary A Shares.................................................... $614,890 $2,516,605 $1,559,371
======== ========== ==========
Primary B Shares.................................................... -- $ 23,943 $ 6,046
======== ========== ==========
Investor A Shares................................................... $139,083 $ 405,413 $1,400,361
======== ========== ==========
Investor B Shares................................................... $ 52,559 $ 182,129 $1,376,835
======== ========== ==========
Investor C Shares................................................... $ 26,820 $ 575,137 $ 176,910
======== ========== ==========
SHARES OUTSTANDING:
Primary A Shares.................................................... 58,620 227,043 126,906
======== ========== ==========
Primary B Shares.................................................... -- 2,160 492
======== ========== ==========
Investor A Shares................................................... 13,259 36,576 114,046
======== ========== ==========
Investor B Shares................................................... 5,010 16,433 112,054
======== ========== ==========
Investor C Shares................................................... 2,557 51,879 14,431
======== ========== ==========
PRIMARY A SHARES:
Net asset value, offering and redemption price per share............ $ 10.49 $ 11.08 $ 12.29
======== ========== ==========
PRIMARY B SHARES:
Net asset value, offering and redemption price per share............ -- $ 11.08 $ 12.29
======== ========== ==========
INVESTOR A SHARES:
Net asset value, offering and redemption price per share............ $ 10.49 $ 11.08 $ 12.28
======== ========== ==========
INVESTOR B SHARES:
Net asset value, offering and redemption price per share............ $ 10.49 $ 11.08 $ 12.29
======== ========== ==========
INVESTOR C SHARES:
Net asset value and offering price per share*....................... $ 10.49 $ 11.09 $ 12.26
======== ========== ==========
</TABLE>
- ---------------
* Redemption price per share is equal to Net Asset Value less any applicable
contingent deferred sales charge.
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE> 9
NATIONS FUNDS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
NATIONS NATIONS
LIFEGOAL LIFEGOAL NATIONS
INCOME AND BALANCED LIFEGOAL
GROWTH GROWTH GROWTH
PORTFOLIO(a) PORTFOLIO(a) PORTFOLIO(a)
===============================================
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................................................... $16,470 $ 72,185 $ 29,757
------- -------- --------
EXPENSES:
Investment advisory fee (Note 2)............................. 745 3,927 3,156
Shareholder servicing and distribution fees (Note 3):
Primary B Shares........................................... -- 9 1
Investor A Shares.......................................... 183 371 1,386
Investor B Shares.......................................... 66 132 663
Investor C Shares.......................................... 51 1,577 509
------- -------- --------
Total expenses.......................................... 1,045 6,016 5,715
------- -------- --------
NET INVESTMENT INCOME........................................ 15,425 66,169 24,042
------- -------- --------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTES 1
AND 4):
Net realized gain on investments during the period........... 15 5,473 1,159
Capital gain distributions received.......................... 2,325 34,565 53,699
Net unrealized appreciation of investments during the
period..................................................... 23,793 291,629 400,169
------- -------- --------
Net realized and unrealized gain on investments.............. 26,133 331,667 455,027
------- -------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......... $41,558 $397,836 $479,069
======= ======== ========
</TABLE>
- ---------------
(a) Nations LifeGoal Income and Growth Portfolio's, Nations LifeGoal Balanced
Growth Portfolio's and Nations LifeGoal Growth Portfolio's Investor B Shares
commenced operations on August 7, 1997, August 13, 1997 and August 12, 1997,
respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 10
NATIONS FUNDS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
NATIONS NATIONS
LIFEGOAL LIFEGOAL NATIONS
INCOME AND BALANCED LIFEGOAL
GROWTH GROWTH GROWTH
PORTFOLIO(a) PORTFOLIO(a) PORTFOLIO(a)
=========================================
<S> <C> <C> <C>
Net investment income................................................ $ 15,425 $ 66,169 $ 24,042
Net realized gain on investments during the period................... 15 5,473 1,159
Capital gain distributions received.................................. 2,325 34,565 53,699
Unrealized appreciation of investments during the period............. 23,793 291,629 400,169
-------- ---------- ----------
Net increase in net assets resulting from operations................. 41,558 397,836 479,069
Distributions to shareholders from net investment income:
Primary A Shares................................................... (9,990) (48,532) (11,384)
Primary B Shares................................................... -- (165) --
Investor A Shares.................................................. (4,044) (6,920) (11,890)
Investor B Shares.................................................. (466) (902) --
Investor C Shares.................................................. (464) (9,082) (1,398)
Net increase in net assets from Portfolio share transactions
(Note 5):
Primary A Shares................................................... 373,163 150,083 423,118
Primary B Shares................................................... -- 23,612 6,025
Investor A Shares.................................................. 786 281,773 521,273
Investor B Shares.................................................. 52,561 180,310 1,348,925
Investor C Shares.................................................. 25,589 510,140 73,356
-------- ---------- ----------
Net increase in net assets........................................... 478,693 1,478,153 2,827,094
NET ASSETS:
Beginning of period.................................................. 354,659 2,225,074 1,692,429
-------- ---------- ----------
End of period........................................................ $833,352 $3,703,227 $4,519,523
======== ========== ==========
Undistributed net investment income/(distributions in excess of net
investment income) at end of period................................ $ 536 $ 1,263 $ (456)
======== ========== ==========
</TABLE>
- ---------------
(a) Nations LifeGoal Income and Growth Portfolio's, Nations LifeGoal Balanced
Growth Portfolio's and Nations LifeGoal Growth Portfolio's Investor B Shares
commenced operations on August 7, 1997, August 13, 1997 and August 12, 1997,
respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 11
NATIONS FUNDS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------------------
FOR THE PERIOD ENDED MARCH 31, 1997
NATIONS NATIONS
LIFEGOAL LIFEGOAL NATIONS
INCOME AND BALANCED LIFEGOAL
GROWTH GROWTH GROWTH
PORTFOLIO(a) PORTFOLIO(a) PORTFOLIO(a)
=========================================
<S> <C> <C> <C>
Net investment income................................................ $ 2,297 $ 8,648 1,982
Net realized gain/(loss) on investments during the period............ (34) (146) 1,056
Capital gain distributions received.................................. 655 704 2,176
Unrealized depreciation of investments during the period............. (5,014) (73,244) (82,144)
-------- ---------- ---------
Net decrease in net assets resulting from operations................. (2,096) (64,038) (76,930)
Distributions to shareholders from net investment income:
Primary A Shares................................................... (1,688) (7,739) (1,219)
Investor A Shares.................................................. (531) (162) (588)
Investor C Shares.................................................. (3) (52) (1)
Net increase in net assets from Portfolio share transactions
(Note 5):
Primary A Shares................................................... 195,503 2,153,893 939,556
Investor A Shares.................................................. 132,419 95,005 707,365
Investor C Shares.................................................. 960 18,021 84,008
-------- ---------- ---------
Net increase in net assets........................................... 324,564 2,194,928 1,652,191
NET ASSETS:
Beginning of period.................................................. 30,095 30,146 40,238
-------- ---------- ---------
End of period........................................................ $354,659 $2,225,074 1,692,429
======== ========== =========
Undistributed net investment income at end of period................. $ 75 $ 695 174
======== ========== =========
</TABLE>
- ---------------
(a) Nations LifeGoal Income and Growth Portfolio, Nations LifeGoal Balanced
Growth Portfolio and Nations LifeGoal Growth Portfolio commenced investment
operations on October 2, 1996. Shares were offered to the public on October
15, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 12
NATIONS FUNDS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY
- ---------------------------------------------------------------------------------------------
NATIONS LIFEGOAL INCOME AND GROWTH PORTFOLIO
SIX MONTHS ENDED
SEPTEMBER 30, 1997(b) PERIOD ENDED
(UNAUDITED) MARCH 31, 1997(a)
---------------------- --------------------
SHARES DOLLARS SHARES DOLLARS
================================================
<S> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold..................................... 51,839 $ 531,092 19,568 $197,843
Issued as reinvestment of dividends...... 548 5,666 169 1,688
Redeemed................................. (16,103) (163,595) (401) (4,028)
------- --------- ------ --------
Net increase............................. 36,284 $ 373,163 19,336 $195,503
======= ========= ====== ========
INVESTOR A SHARES:
Sold..................................... 4,143 $ 42,720 13,267 $133,673
Issued as reinvestment of dividends...... 362 3,743 52 524
Redeemed................................. (4,390) (45,677) (175) (1,778)
------- --------- ------ --------
Net increase............................. 115 $ 786 13,144 $132,419
======= ========= ====== ========
INVESTOR B SHARES:
Sold..................................... 4,965 $ 52,094
Issued as reinvestment of dividends...... 45 467
------- ---------
Net increase............................. 5,010 $ 52,561
======= =========
INVESTOR C SHARES:
Sold..................................... 2,436 $ 25,325 96 $ 960
Issued as reinvestment of dividends...... 45 464 -- --
Redeemed................................. (20) (200) -- --
------- --------- ------ --------
Net increase............................. 2,461 $ 25,589 96 $ 960
======= ========= ====== ========
</TABLE>
- ---------------
(a) Nations LifeGoal Income and Growth Portfolio commenced operations on October
2, 1996. Shares were offered to the public on October 15, 1996.
(b) Nations LifeGoal Income and Growth Portfolio's Investor B Shares commenced
operations on August 7, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 13
NATIONS FUNDS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------------
NATIONS LIFEGOAL BALANCED GROWTH PORTFOLIO NATIONS LIFEGOAL GROWTH PORTFOLIO
SIX MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, 1997(b) PERIOD ENDED SEPTEMBER 30, 1997(b) PERIOD ENDED
(UNAUDITED) MARCH 31, 1997(a) (UNAUDITED) MARCH 31, 1997(a)
--------------------- ---------------------- ---------------------- ----------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
====================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold................... 26,293 $ 276,784 209,694 $2,155,343 55,163 $ 633,449 102,688 $1,097,781
Issued as reinvestment
of dividends......... 4,479 48,239 770 7,739 1,001 11,426 118 1,220
Redeemed............... (16,279) (174,940) (914) (9,189) (20,865) (221,757) (15,199) (159,445)
------- ---------- ------- ---------- ------- ---------- ------- ----------
Net increase........... 14,493 $ 150,083 209,550 $2,153,893 35,299 $ 423,118 87,607 $ 939,556
======= ========== ======= ========== ======= ========== ======= ==========
PRIMARY B SHARES:
Sold................... 2,145 $ 23,447 492 $ 6,025
Issued as reinvestment
of dividends......... 15 165 -- --
Redeemed............... -- -- -- --
------- ---------- ------- ----------
Net increase........... 2,160 $ 23,612 492 $ 6,025
======= ========== ======= ==========
INVESTOR A SHARES:
Sold................... 27,351 $ 283,710 9,407 $ 94,998 60,958 $ 679,692 67,184 $ 707,978
Issued as reinvestment
of dividends......... 556 6,004 16 157 997 11,387 57 588
Redeemed............... (739) (7,941) (15) (150) (15,035) (169,806) (115) (1,201)
------- ---------- ------- ---------- ------- ---------- ------- ----------
Net increase........... 27,168 $ 281,773 9,408 $ 95,005 46,920 $ 521,273 67,126 $ 707,365
======= ========== ======= ========== ======= ========== ======= ==========
INVESTOR B SHARES:
Sold................... 16,336 $ 179,241 112,061 $1,349,010
Issued as reinvestment
of dividends......... 97 1,069 -- --
Redeemed............... -- -- (7) (85)
------- ---------- ------- ----------
Net increase........... 16,433 $ 180,310 112,054 $1,348,925
======= ========== ======= ==========
INVESTOR C SHARES:
Sold................... 53,110 $ 542,213 1,998 $ 20,417 6,254 $ 72,153 8,070 $ 84,008
Issued as reinvestment
of dividends......... 844 9,082 5 52 123 1,403 -- --
Redeemed............... (3,838) (41,155) (240) (2,448) (16) (200) -- --
------- ---------- ------- ---------- ------- ---------- ------- ----------
Net increase........... 50,116 $ 510,140 1,763 $ 18,021 6,361 $ 73,356 8,070 $ 84,008
======= ========== ======= ========== ======= ========== ======= ==========
</TABLE>
- ---------------
(a) The Portfolios commenced operations on October 2, 1996. Shares were offered
to the public on October 15, 1996.
(b) Nations LifeGoal Balanced Growth Portfolio's and Nations LifeGoal Growth
Portfolio's Investor B Shares commenced operations on August 13, 1997 and
August 12, 1997, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 14
NATIONS FUNDS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PRIMARY A PRIMARY A INVESTOR A INVESTOR A INVESTOR B INVESTOR C INVESTOR C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES
---------- --------- ---------- ---------- ---------- ---------- ----------
SIX MONTHS SIX MONTHS PERIOD SIX MONTHS
ENDED PERIOD ENDED PERIOD ENDED ENDED PERIOD
09/30/97 ENDED 09/30/97 ENDED 09/30/97** 09/30/97 ENDED
(UNAUDITED) 03/31/97* (UNAUDITED) 03/31/97* (UNAUDITED) (UNAUDITED) 03/31/97*
====================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
NATIONS LIFEGOAL INCOME AND
GROWTH PORTFOLIO
OPERATING PERFORMANCE:
Net asset value, beginning
of period................. $ 9.97 $10.03 $ 9.97 $10.03 $10.51 $ 9.97 $10.03
------ ------ ------ ------ ------ ------ ------
Net investment income....... 0.32 0.32 0.26 0.31 0.06 0.20 0.31
Net realized and unrealized
gain/(loss) on
investments............... 0.50 (0.06) 0.55 (0.06) 0.01 0.60 (0.06)
------ ------ ------ ------ ------ ------ ------
Net increase in net assets
resulting from investment
operations................ 0.82 0.26 0.81 0.25 0.07 0.80 0.25
DISTRIBUTIONS:
Dividends from net
investment income......... (0.30) (0.32) (0.29) (0.31) (0.09) (0.28) (0.31)
------ ------ ------ ------ ------ ------ ------
Total distributions......... (0.30) (0.32) (0.29) (0.31) (0.09) (0.28) (0.31)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period.................... $10.49 $ 9.97 $10.49 $ 9.97 $10.49 $10.49 $ 9.97
====== ====== ====== ====== ====== ====== ======
Total return ++............. 8.30% 2.59% 8.16% 2.54% 0.71% 8.07% 2.54%
====== ====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period
(in 000's)................ $ 615 $ 223 $ 13 $ 131 $ 131 $ 27 $ 1
Ratio of operating expenses
to average net
assets+++................. 0.25%+ 0.25%+ 0.50%+ 0.50%+ 1.25%+ 0.91%+ 0.75%+
Ratio of net investment
income to average net
assets.................... 5.28%+ 6.34%+ 5.03%+ 6.09%+ 4.28%+ 4.62%+ 5.84%+
Portfolio turnover rate..... 27% 2% 27% 2% 27% 27% 2%
</TABLE>
- ---------------
* Nations LifeGoal Income and Growth Portfolio's Primary A Shares, Investor A
Shares and Investor C Shares commenced investment operations on October 2,
1996. Shares were offered to the public on October 15, 1996.
** Nations LifeGoal Income and Growth Portfolio's Investor B Shares commenced
investment operations on August 7, 1997.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
funds.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 15
NATIONS FUNDS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- -------------------------------------------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PRIMARY A PRIMARY A PRIMARY B INVESTOR A INVESTOR A
SHARES SHARES SHARES SHARES SHARES
---------- --------- ---------- ---------- ----------
SIX MONTHS PERIOD SIX MONTHS
ENDED PERIOD ENDED ENDED PERIOD
09/30/97 ENDED 09/30/97** 09/30/97 ENDED
(UNAUDITED) 03/31/97* (UNAUDITED) (UNAUDITED) 03/31/97*
====================================================================
<S> <C> <C> <C> <C> <C>
NATIONS LIFEGOAL BALANCED GROWTH PORTFOLIO
OPERATING PERFORMANCE:
Net asset value, beginning of period......... $ 9.95 $10.05 $10.95 $ 9.95 $10.05
------ ------ ------ ------ ------
Net investment income........................ 0.23 0.19 0.17 0.18 0.19
Net realized and unrealized gain/(loss) on
investments................................ 1.12 (0.10) 0.17 1.16 (0.10)
------ ------ ------ ------ ------
Net increase in net assets resulting from
investment operations...................... 1.35 0.09 .34 1.34 0.09
DISTRIBUTIONS:
Dividends from net investment income......... (0.22) (0.19) (.21) (0.21) (0.19)
------ ------ ------ ------ ------
Total distributions.......................... (0.22) (0.19) (0.21) (0.21) (0.19)
------ ------ ------ ------ ------
Net asset value, end of period............... $11.08 $ 9.95 $11.08 $11.08 $ 9.95
====== ====== ====== ====== ======
Total return++............................... 13.62% 0.90% 13.58% 13.51% 0.86%
====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA:
Net assets, end of period (in 000's)......... $2,517 $2,114 $ 24 $ 405 $ 94
Ratio of operating expenses to average net
assets+++.................................. 0.25%+ 0.25%+ 0.75%+ 0.50%+ 0.50%+
Ratio of net investment income to average net
assets..................................... 4.34%+ 3.94%+ 3.84%+ 4.09%+ 3.69%+
Portfolio turnover rate...................... 6% 1% 6% 6% 1%
<CAPTION>
INVESTOR B INVESTOR C INVESTOR C
SHARES SHARES SHARES
---------- ---------- ----------
PERIOD SIX MONTHS
ENDED ENDED PERIOD
09/30/97*** 09/30/97 ENDED
(UNAUDITED) (UNAUDITED) 03/31/97*
====================================
<S> <C> <C> <C>
NATIONS LIFEGOAL BALANCED GROWTH PORTFOLIO
OPERATING PERFORMANCE:
Net asset value, beginning of period......... $10.88 $ 9.95 $10.05
------ ------ ------
Net investment income........................ 0.04 0.16 0.19
Net realized and unrealized gain/(loss) on
investments................................ 0.23 1.17 (0.10)
------ ------ ------
Net increase in net assets resulting from
investment operations...................... 0.27 1.33 0.09
DISTRIBUTIONS:
Dividends from net investment income......... (0.07) (0.19) (0.19)
------ ------ ------
Total distributions.......................... (0.07) (0.19) (0.19)
------ ------ ------
Net asset value, end of period............... $11.08 $11.09 $ 9.95
====== ====== ======
Total return++............................... 2.49% 13.39% 0.85%
====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA:
Net assets, end of period (in 000's)......... $ 182 $ 575 $ 18
Ratio of operating expenses to average net
assets+++.................................. 1.25% + 0.91%+ 0.75%+
Ratio of net investment income to average net
assets..................................... 3.34% + 3.68%+ 3.44%+
Portfolio turnover rate...................... 6 % 6% 1%
</TABLE>
- ---------------
* Nations LifeGoal Balanced Growth Portfolio's Primary A Shares, Investor A
Shares and Investor C Shares commenced investment operations on October 2,
1996. Shares were offered to the public on October 15, 1996.
** Please note that the performance shown for Primary B Shares includes the
performance for Primary A Shares from their date of inception (10/2/96)
through 8/4/97, plus the performance for Primary B Shares from 8/4/97
through 9/30/97. The expense structures for Primary A and Primary B Shares
are similar, except that Primary B Shares are subject to a shareholder
servicing fee of up to 60 basis points. This will result in a slight
variance in the performance of Primary A and Primary B Shares.
*** Nations LifeGoal Balanced Growth Portfolio's Investor B Shares commenced
investment operations on August 13, 1997.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
funds.
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE> 16
NATIONS FUNDS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD.
PRIMARY A PRIMARY A PRIMARY B INVESTOR A INVESTOR A
SHARES SHARES SHARES SHARES SHARES
---------- --------- ---------- ---------- ----------
SIX MONTHS PERIOD SIX MONTHS
ENDED PERIOD ENDED ENDED PERIOD
09/30/97 ENDED 09/30/97** 09/30/97 ENDED
(UNAUDITED) 03/31/97* (UNAUDITED) (UNAUDITED) 03/31/97*
=====================================================================
<S> <C> <C> <C> <C> <C>
NATIONS LIFEGOAL GROWTH PORTFOLIO
OPERATING PERFORMANCE:
Net asset value, beginning of period......... $10.15 $10.06 $12.25 $10.15 $10.06
------ ------ ------ ------ ------
Net investment income........................ 0.13 0.12 0.13 0.10 0.12
Net realized and unrealized gain on
investments................................ 2.13 0.09 0.03 2.15 0.09
------ ------ ------ ------ ------
Net increase in net assets resulting from
investment operations...................... 2.26 0.21 0.16 2.25 0.21
DISTRIBUTIONS:
Dividends from net investment income......... (0.12) (0.12) (0.12) (0.12) (0.12)
------ ------ ------ ------ ------
Total distributions.......................... (0.12) (0.12) (0.12) (0.12) (0.12)
------ ------ ------ ------ ------
Net asset value, end of period............... $12.29 $10.15 $12.29 $12.28 $10.15
====== ====== ====== ====== ======
Total return++............................... 22.40% 2.10% 22.40% 22.24% 2.05%
====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA:
Net assets, end of period (in 000's)......... $1,559 $ 929 $ 6 $1,400 $ 681
Ratio of operating expenses to average net
assets+++.................................. 0.25%+ 0.25%+ 0.75%+ 0.50%+ 0.50%+
Ratio of net investment income to average net
assets..................................... 2.10%+ 1.11%+ 1.60%+ 1.85%+ 0.86%+
Portfolio turnover rate...................... 10% 25% 10% 10% 25%
<CAPTION>
INVESTOR B INVESTOR C INVESTOR C
SHARES SHARES SHARES
--------- ---------- ----------
PERIOD SIX MONTHS
ENDED ENDED PERIOD
09/30/97*** 09/30/97 ENDED
(UNAUDITED) (UNAUDITED) 03/31/97*
=====================================
<S> <C> <C> <C>
NATIONS LIFEGOAL GROWTH PORTFOLIO
OPERATING PERFORMANCE:
Net asset value, beginning of period......... $11.98 $10.15 $10.06
------ ------ ------
Net investment income........................ 0.01 0.08 0.11
Net realized and unrealized gain on
investments................................ 0.30 2.14 0.09
------ ------ ------
Net increase in net assets resulting from
investment operations...................... 0.31 2.22 0.20
DISTRIBUTIONS:
Dividends from net investment income......... (0.00) (0.11) (0.11)
------ ------ ------
Total distributions.......................... (0.00) (0.11) (0.11)
------ ------ ------
Net asset value, end of period............... $12.29 $12.26 $10.15
====== ====== ======
Total return++............................... 2.59% 21.97% 2.01%
====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA:
Net assets, end of period (in 000's)......... $1,377 $ 177 $ 82
Ratio of operating expenses to average net
assets+++.................................. 1.25%+ 0.91%+ 0.75%+
Ratio of net investment income to average net
assets..................................... 1.10%+ 1.44%+ 0.61%+
Portfolio turnover rate...................... 10% 10% 25%
</TABLE>
- ---------------
* Nations LifeGoal Growth Portfolio's Primary A Shares, Investor A Shares and
Investor C Shares commenced investment operations on October 2, 1996. Shares
were offered to the public on October 15, 1996.
** Please note that the performance shown for Primary B Shares includes the
performance for Primary A Shares from their date of inception (10/2/96)
through 9/19/97, plus the performance for Primary B Shares from 9/19/97
through 9/30/97. The expense structures for Primary A and Primary B Shares
are similar, except that Primary B Shares are subject to a shareholder
servicing fee of up to 60 basis points. This will result in a slight
variance in the performance of Primary A and Primary B Shares.
*** Nations LifeGoal Growth Portfolio's Investor B Shares commenced investment
operations on August 12, 1997.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ The Portfolio's expenses do not include the expenses of the underlying
funds.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 17
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
Nations LifeGoal Funds, Inc. (the "Company") was organized as a Maryland
Corporation on July 3, 1996 and is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end management investment
company. The Company was established in order to offer a range of asset
allocation and diversification strategies to accommodate different investment
philosophies and goals. The Company offers three Portfolios: Nations LifeGoal
Income and Growth Portfolio, Nations LifeGoal Balanced Growth Portfolio, and
Nations LifeGoal Growth Portfolio (each, a "Portfolio" and collectively, the
"Portfolios"). The Portfolios invest in other mutual funds (the "Underlying
Funds") sponsored by Stephens Inc. ("Stephens") and managed by NationsBanc
Advisors, Inc. ("NBAI"). The Portfolios offer five classes of shares: Primary A
Shares, Primary B Shares, Investor A Shares, Investor B Shares and Investor C
Shares. As of September 30, 1997, Nations LifeGoal Income and Growth Portfolio's
Primary B Shares have not been issued to the public. Shareholders of a Portfolio
have equal voting rights on matters affecting all shareholders of the Portfolio.
In addition, each class of shares of a Portfolio has exclusive voting rights on
matters that relate solely to its class and separate voting rights on matters in
which the interests of one class of shares differ from the interests of any
other class.
1. SIGNIFICANT ACCOUNTING POLICIES.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Portfolios in the preparation of
their financial statements.
Securities Valuation: Investments in the Underlying Funds are valued at the
price of each Primary A Share of the respective Underlying Fund determined as of
the close of the New York Stock Exchange on the valuation date.
Securities Transactions and Investment Income: Securities transactions are
accounted for on a trade date basis. Realized gains and losses are computed
based on the specific identification of the securities sold. Distributions from
the Underlying Funds are recorded on the ex-dividend date. Each Portfolio's
investment income and realized and unrealized gains and losses are allocated
among its classes based upon the relative net assets of each class of shares.
Dividends and Distributions to Shareholders: It is the policy of each Portfolio
to declare and pay dividends from net investment income each calendar quarter.
Each Portfolio will distribute net realized capital gains (including net short-
term capital gains), at least annually after the fiscal year in which the income
is earned, unless offset by any available capital loss carryforward. Additional
distributions of net investment income and capital gains may be made at the
discretion of the Board of Directors in order to avoid application of the 4%
non-deductible Federal excise tax. Income distributions and capital gain
distributions on a Portfolio level are determined in accordance with Federal
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing characterization of
distributions made by a Portfolio as a whole.
Federal Income Tax: Each Portfolio intends to qualify as a regulated investment
company by complying with the requirements of the Internal Revenue Code of 1986,
as amended, applicable to regulated investment companies and by distributing
substantially all of its earnings to its shareholders. Therefore, no Federal
income or excise tax provision is applicable.
Expenses: General expenses of the Company are allocated to the relevant
Portfolios based upon relative net assets. In addition, the Portfolios
indirectly bear their pro rata share of expenses of the Underlying Funds.
Operating expenses directly attributable to a Portfolio or class of shares are
charged to that Portfolio's or class' operations. Expenses of each Portfolio not
directly attributable to the operations of any class of shares are prorated
among the classes based on the relative net assets of each class of shares.
2. INVESTMENT ADVISORY FEE, SUB-ADVISORY FEE, ADMINISTRATION FEE AND RELATED
PARTY TRANSACTIONS.
The Company has, on behalf of its Portfolios, entered into an investment
advisory agreement (the "Investment Advisory Agreement") with NBAI, a
wholly-owned subsidiary of NationsBank, N.A. ("NationsBank"), pursuant to which
NBAI provides investment advisory services to the Portfolios. Under the terms of
this Investment Advisory Agreement, NBAI is entitled to receive advisory fees at
the annual rate of 0.25% of the average daily net assets of each Portfolio and
has agreed to bear all fees and expenses of the Portfolios (other than the
management fee payable under the agreement, taxes,
15
<PAGE> 18
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
brokerage fees and commissions, extraordinary expenses, and any applicable Rule
12b-1 fees, shareholder servicing fees and/or shareholder administration fees).
The Company has, on behalf of its Portfolios, entered into a sub-advisory
agreement (the "Sub-Advisory Agreement") with NBAI and TradeStreet Investment
Associates, Inc. ("TradeStreet"), a wholly-owned subsidiary of NationsBank.
Under the terms of the Sub-Advisory Agreement, TradeStreet is entitled to
receive a sub-advisory fee from NBAI at the annual rate of 0.05% of the average
daily net assets of each Portfolio.
Stephens serves as the administrator of the Company pursuant to an
administration agreement (the "Administration Agreement"). Stephens receives no
compensation from the Portfolios for its services as administrator.
NationsBank of Texas, N.A. ("NationsBank of Texas") acts as the custodian for
the Portfolios. First Data Investor Services Group, Inc.("First Data"), a
wholly-owned subsidiary of First Data Corporation, serves as the transfer agent
for the Portfolios' shares. NationsBank of Texas acts as the sub-transfer agent
for the Primary Shares of the Portfolios.
NBAI may, from time to time, voluntarily reduce their fees payable by each
Portfolio. For the six months ended September 30, 1997, NBAI did not waive any
fees.
Stephens also serves as distributor of the Portfolios' shares. For the six
months ended September 30, 1997, the Portfolios were informed that the
distributor received no contingent deferred sales charges from shares which were
subject to such charges.
No officer, director or employee of NationsBank, NBAI, TradeStreet, Stephens,
First Data or any affiliate thereof, receives any compensation from the Company
for serving as a director or officer of the Company. NBAI pays each unaffiliated
Director an annual fee of $1,000 ($3,000 for the Chairman of the Board), plus
$500 per Portfolio and an additional $1,000 for each in-person board meeting,
and $500 for each telephonic board meeting attended. NBAI also reimburses
expenses incurred by each unaffiliated Director in attending such meetings.
3. SHAREHOLDER SERVICING AND DISTRIBUTION PLANS.
The Company has adopted a shareholder administration plan (the "Administration
Plan") for Primary B Shares of each Portfolio; shareholder servicing and
distribution plan pursuant to Rule 12b-1 under the 1940 Act for Investor A
Shares of each Portfolio ("Investor A Plan"); a shareholder servicing plan
("Servicing Plan") for Investor B Shares and Investor C Shares of each
Portfolio; and a distribution plan ("Distribution Plan") pursuant to Rule 12b-1
for Investor B Shares and Investor C Shares of each Portfolio (collectively, the
"Plans"). The Administration Plan permits the Portfolios to compensate
institutions for shareholder administration services provided to their customers
that own Primary B Shares. The Investor A Plan permits the Portfolios to
compensate (i) servicing agents and selling agents that have entered into a
servicing agreement with the Portfolios for services provided to their customers
that own Investor A Shares and (ii) Stephens for distribution-related expenses
incurred in connection with Investor A Shares. The Servicing Plan permits the
Portfolios to compensate servicing agents for services provided to their
customers that own Investor B Shares and Investor C Shares. The Distribution
Plan permits the Portfolios to compensate or reimburse Stephens for any
activities or expenses primarily intended to result in the sale of the
Portfolios' Investor B Shares and Investor C Shares. Payments under the Plans
are accrued daily and paid monthly at a rate set, from time to time, by the
Portfolios. Fees incurred pursuant to the Plans are charged as expenses of each
Portfolio directly to the Primary B Shares, Investor A Shares, Investor B Shares
and Investor C Shares, respectively.
For the six months ended September 30, 1997, the effective rates incurred by the
Portfolios, as a percentage of average daily net assets, pursuant to the Plans
were as follows:
<TABLE>
<CAPTION>
PRIMARY B INVESTOR B INVESTOR B INVESTOR C INVESTOR C
ADMINISTRATION INVESTOR A DISTRIBUTION SERVICING DISTRIBUTION SERVICING
FUND PLAN PLAN PLAN PLAN PLAN PLAN
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Nations LifeGoal Income and Growth
Portfolio.............................. 0.50% 0.25% 0.25% 0.75% 0.58% 0.08%
Nations LifeGoal Balanced Growth
Portfolio.............................. 0.50% 0.25% 0.25% 0.75% 0.58% 0.08%
Nations LifeGoal Growth Portfolio........ 0.50% 0.25% 0.25% 0.75% 0.58% 0.08%
</TABLE>
A substantial portion of the fees paid pursuant to the Plans described above are
paid to affiliates of NationsBank and NBAI.
16
<PAGE> 19
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
4. PURCHASES AND SALES OF SECURITIES.
The aggregate cost of purchases and proceeds from sales of the Underlying Funds
for the six months ended September 30, 1997 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
=======================
<S> <C> <C>
Nations LifeGoal Income and Growth Portfolio........... $ 624,191 $164,481
Nations LifeGoal Balanced Growth Portfolio............. 1,375,306 193,691
Nations LifeGoal Growth Portfolio...................... 2,717,113 270,340
</TABLE>
At September 30, 1997, aggregate gross unrealized appreciation/(depreciation) of
the Underlying Funds for tax purposes were as follows:
<TABLE>
<CAPTION>
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION
=============================
<S> <C> <C>
LifeGoal Income and Growth Portfolio.............. $ 18,779 $ --
LifeGoal Balanced Growth Portfolio................ 218,776 391
LifeGoal Growth Portfolio......................... 347,136 29,111
</TABLE>
5. CAPITAL STOCK.
As of September 30, 1997, 1,200,000,000 shares of $.001 par value capital stock
were authorized for the Company. The Company's Articles of Incorporation
authorizes the Board of Directors to classify or reclassify any authorized, but
unissued shares into one or more additional classes or series of shares. See
Schedule of Capital Stock Activity.
6. PRINCIPAL SHAREHOLDERS.
At September 30, 1997, shareholders holding more than 10% of shares outstanding
are as follows:
<TABLE>
<CAPTION>
% OF TOTAL
FUND NUMBER OF SHAREHOLDERS SHARES OUTSTANDING
---- ---------------------- ------------------
<S> <C> <C>
Nations LifeGoal Income and Growth Portfolio........ 2 75%
Nations LifeGoal Balance Growth Portfolio........... 2 77%
Nations LifeGoal Growth Portfolio................... 1 13%
</TABLE>
7. RISK FACTORS OF THE PORTFOLIOS.
Investing in the Underlying Funds through the Portfolios involves certain
additional expenses and tax results that would not be present in a direct
investment in the Underlying Funds. Under certain circumstances, an Underlying
Fund may determine to make payment of a redemption request by a Portfolio wholly
or partly by a distribution in kind of securities from its portfolio, instead of
cash, in accordance with the rules of the Securities and Exchange Commission. In
such cases, the Portfolios may hold securities distributed by an Underlying Fund
until NBAI determines that it is appropriate to dispose of such securities.
Each of the Underlying Funds may invest in certain specified derivative
securities, including: interest rate swaps, caps and floors for hedging
purposes; exchange-traded options; over-the-counter options executed with
primary dealers, including long calls and puts and covered calls and financial
futures and options. Certain of the Underlying Funds may invest in restricted
securities; instruments issued by trusts, partnerships or other issuers,
including pass-through certificates representing participations in, or debt
instruments backed by, the securities owned by such issuers. These Underlying
Funds also may engage in securities lending, reverse repurchase agreements and
dollar roll transactions. In addition, certain of the Underlying Funds may
invest in below-investment grade debt, debt obligations of foreign issuers and
stocks of foreign corporations, securities in foreign investment funds or
trusts, derivative securities including futures contracts, options, interest
rate and currency swap transactions, and various other investment vehicles each
with inherent risks.
The officers and directors of the Company also serve as officers and directors
of the Underlying Funds. In addition, NBAI, TradeStreet and NationsBank of Texas
are all wholly-owned subsidiaries of NationsBank. Conflicts may arise as these
companies seek to fulfill their fiduciary responsibilities to both the
Portfolios and Underlying Funds.
17
<PAGE> 20
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
From time to time, one or more of the Underlying Funds used for investment by a
Portfolio may experience relatively large investments or redemptions due to
reallocations or rebalancings by the Portfolios as recommended by NBAI. These
transactions will affect the Underlying Funds, since the Underlying Funds that
experience redemptions as a result of the reallocations or rebalancings may have
to sell portfolio securities and Underlying Funds that receive additional cash
will have to invest such cash. While it is impossible to predict the overall
impact of these transactions over time, there could be adverse effects on
portfolio management to the extent that the Underlying Funds may be required to
sell securities or invest cash at times when they would not otherwise do so.
These transactions could also have tax consequences if sales of securities
resulted in gains and could also increase transactions costs. NBAI, representing
the interests of the Underlying Funds, is committed to minimizing the impact of
Portfolio transactions on the Underlying Funds to the extent it is consistent
with pursuing the investment objectives of the Portfolios. NBAI may,
nevertheless, face conflicts in fulfilling its responsibilities to both the
Portfolios and Underlying Funds.
18
<PAGE> 21
[GRAPHIC DEPICTING BASKETS]
<PAGE> 22
[NATIONS FUNDS LOGO]
--------------------
BULK RATE
P.O. Box 32602 U.S. POSTAGE
Charlotte, NC 28234-4602 PAID
Toll Free 1-800-982-2271 N READING, MA
PERMIT NO.
105
--------------------
