<PAGE> 1
[GRAPHIC: FAMILY AT SHORE] LifeGoal Growth
Portfolio
LifeGoal Balanced
Growth Portfolio
LifeGoal Income
and Growth Portfolio
LIFEGOAL PORTFOLIOS
SEMIANNUAL REPORT FOR THE PERIOD
ENDED SEPTEMBER 30, 2000
[NATIONS FUNDS LOGO]
<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., which is not affiliated with Bank of
America N.A., is not a bank, and securities offered by it are not guaranteed by
any bank or insured by the FDIC. Stephens Inc., member NYSE, SIPC.
Nations Funds Investment adviser: Banc of America Advisors, Inc.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE> 3
PRESIDENTS' MESSAGE
Dear Shareholder:
The six-month period ended September 30, 2000 proved
to be quite unsettling for mutual fund investors.
Several factors led to turbulence in U.S. and
overseas markets. The Federal Reserve Board's
practice of increasing interest rates in an attempt
to slow down the economy and keep inflation at bay
took a toll on the stock market. Oil prices soared
over the summer causing concern across the country as
several cities saw gas prices above $2.00 per gallon.
The slowing economy affected earnings at a number of
leading U.S. companies, causing additional volatility
in the stock market. Overseas, the European Central
Bank raised interest rates in August -- the fifth
rate hike this year -- and the euro fell to a record
low. In Japan, the Bank of Japan increased interest
rates for the first time in a decade, adding
additional strain to an economy that has struggled
over the last several years.
The only seemingly bright spot for investors during
the past six months has been in the bond market.
Because of the federal government's budget surplus,
the U.S. Treasury has had to buy back many of its
long-term securities. The shortage in long-term
securities has generally increased returns on these
securities, resulting in an inversion of the yield
curve -- whereby short-term securities are yielding
more than many longer-term securities. This is the
first time in a long time that most bond sectors have
outperformed both the Standard & Poor's 500 Composite
Stock Price Index and the Nasdaq Composite Index*.
Now, you're probably asking yourself "Is this a good
time to invest in stocks or bonds?" We think the
answer is "Yes." While stocks of all sizes have
historically outperformed bonds over the long-term,
and bonds have performed well this year, a broadly
diversified portfolio -- one consisting of both
stocks and bonds -- can help you weather market
volatility. Remember that the financial markets tend
to be cyclical and while one asset class or
investment style may be the flavor of the month, it
could be out of favor the next.
It's also important to note that volatility tends to
keep some investors on the sidelines. But waiting for
the right time to invest may result in missed
opportunities. Disciplined investing requires staying
invested through market highs and lows. Investors can
also take advantage of dollar cost averaging** during
volatile times -- the practice of systematic
investing where you seek to buy more shares when
prices are low and fewer shares when prices are high,
resulting in a lower average share price over time.
Remaining invested and regularly investing is key.
Whether it's growth vs. value, large cap vs. small
cap, stocks vs. bonds, or U.S. vs. international, no
single investment style alone will assure that you
achieve your long-term financial goals. We believe
diversification is the key to long-term success and
an investment professional can help you create a
portfolio best suited to your risk tolerance and
investment time horizon.
*The Standard & Poor's 500 Composite Stock Price
Index is an unmanaged index of 500 widely held
common stocks. It is unavailable for investment. The
Nasdaq Composite Index tracks the performance of
domestic common stocks traded on the regular Nasdaq
market as National Market System traded foreign
stocks and ADRs. It is unmanaged and unavailable for
investment.
**Dollar cost averaging does not ensure a profit or
protect against a loss in a declining market. You
should carefully consider your ability to make
regular investments through periods of fluctuating
market conditions.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
<PAGE> 4
PRESIDENTS' MESSAGE CONTINUED...
At Nations Funds, we strongly believe in the value of
advice. An investment professional can provide you
with market research and analysis, years of
investment experience, and work with you to determine
the best strategy for surviving short-term volatility
and successfully reaching your long-term goals.
We remain committed to providing you with world-class
investment management and competitive products to
help you reach your long-term goals. Should you have
any questions or comments on your semiannual report,
please contact your investment professional or call
us at 1.800.321.7854. You can also visit us online at
www.nations-funds.com.
Thank you for being a part of the Nations Funds
family.
Sincerely,
/s/ A. Max Walker
A. MAX WALKER
PRESIDENT AND CHAIRMAN OF THE BOARD
NATIONS FUNDS
/s/ Robert H. Gordon
ROBERT H. GORDON
PRESIDENT
BANC OF AMERICA ADVISORS, INC.
September 30, 2000
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C>
NATIONS FUNDS SPECTRUM 2
FINANCIAL STATEMENTS
Statements of net assets
Nations LifeGoal Growth Portfolio 3
Nations LifeGoal Balanced Growth Portfolio 4
Nations LifeGoal Income and Growth Portfolio 5
Statements of operations 6
Statements of changes in net assets 7
Schedules of capital stock activity 8
Financial highlights 12
Notes to financial statements 18
</TABLE>
<TABLE>
<S> <C>
------------------------------------------------------------------------------
NATIONS FUNDS [DALBAR MUTUAL FUND SERVICE
AWARD GRAPHIC]
RECOGNIZED FOR
OUTSTANDING DALBAR, Inc., is a well-respected
CUSTOMER SERVICE research firm that measures
customer service levels and
IN RECOGNITION OF ITS COMMITMENT TO establishes benchmarks in the
PROVIDE SHAREHOLDERS WITH THE financial services industry.
HIGHEST LEVEL OF CUSTOMER SERVICE
IN THE MUTUAL FUND INDUSTRY,
NATIONS FUNDS RECEIVED THE DALBAR
MUTUAL FUND SERVICE AWARD IN 1999.
------------------------------------------------------------------------------
</TABLE>
<PAGE> 6
THE NATIONS FUNDS FAMILY OF FUNDS
LOWER RISK/REWARD POTENTIAL
MONEY MARKET FUNDS
Nations Prime Fund
Nations Cash Reserves
Nations Money Market Reserves
Nations Government Money Market Fund
Nations Government Reserves
Nations Treasury Fund
Nations Treasury Reserves
Nations Tax Exempt Fund
Nations Municipal Reserves
Nations California Tax-Exempt Reserves
FIXED INCOME FUNDS
INCOME FUNDS
Nations High Yield Bond Fund
Nations Strategic Income Fund
Nations U.S. Government Bond Fund
Nations Government Securities Fund
Nations Bond Fund
Nations Intermediate Bond Fund
Nations Short-Intermediate Government Fund
Nations Short-Term Income Fund
TAX-EXEMPT INCOME FUNDS
Nations Municipal Income Fund
Nations State-Specific Long-Term Municipal
Bond Funds (CA, FL, GA, KS,
MD, NC, SC, TN, TX, VA)
Nations Intermediate Municipal Bond Fund
Nations State-Specific Intermediate Municipal
Bond Funds (FL, GA, MD,
NC, SC, TN, TX, VA)
Nations Short-Term Municipal Income Fund
DOMESTIC EQUITY FUNDS
GROWTH FUNDS
Nations Small Company Fund
Nations Marsico 21st Century Fund
Nations MidCap Growth Fund
Nations Marsico Focused Equities Fund
Nations Aggressive Growth Fund
Nations Capital Growth Fund
Nations Strategic Growth Fund
Nations Blue Chip Fund
GROWTH AND INCOME FUNDS
Nations Marsico Growth & Income Fund
Nations Value Fund
Nations Equity Income Fund
Nations Asset Allocation Fund
Nations Balanced Assets Fund
Nations Convertible Securities Fund
INTERNATIONAL FUNDS
Nations Emerging Markets Fund
Nations Marsico International Opportunities Fund
Nations International Equity Fund
Nations International Value Fund
HIGHER RISK/REWARD POTENTIAL
INDEX FUNDS
Nations Managed Index Fund
Nations LargeCap Index Fund
Nations MidCap Index Fund
Nations SmallCap Index Fund
ASSET ALLOCATION PORTFOLIOS
Nations LifeGoal Balanced Growth Portfolio
Nations LifeGoal Growth Portfolio
Nations LifeGoal Income and Growth Portfolio
2
<PAGE> 7
NATIONS FUNDS
Nations LifeGoal Growth Portfolio
STATEMENT OF NET ASSETS SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (000)
----------------------------------------------------------
<C> <S> <C> <C>
INVESTMENT COMPANY SECURITIES -- 99.9%
637,502 Nations International Value
Fund............................ $11,679
743,051 Nations Marsico Focused Equities
Fund............................ 15,924
793,116 Nations Small Company Fund........ 16,814
237,305 Nations Strategic Growth Fund..... 3,809
2,211,384 Nations Value Fund................ 31,711
-------
TOTAL INVESTMENT COMPANY
SECURITIES
(Cost $79,291)............. 79,937
-------
TOTAL INVESTMENTS
(Cost $79,291*)............ 99.9% 79,937
-------
OTHER ASSETS AND
LIABILITIES (NET)........ 0.1%
Receivable for Fund shares sold... $ 169
Payable for Fund shares
redeemed........................ (52)
Investment advisory fee payable... (39)
Shareholder servicing and
distribution fees payable....... (34)
-------
TOTAL OTHER ASSETS AND
LIABILITIES (NET)............... 44
-------
NET ASSETS................. 100.0% $79,981
=======
NET ASSETS CONSIST OF:
Undistributed net investment
income.......................... $ 159
Accumulated net realized gain on
investments sold................ 1,671
Net unrealized appreciation of
investments..................... 646
Paid-in capital................... 77,505
-------
NET ASSETS........................ $79,981
=======
</TABLE>
<TABLE>
<CAPTION>
VALUE
----------------------------------------------------------
<C> <S> <C> <C>
PRIMARY A SHARES:
Net asset value, offering and
redemption price per share
($59,941,934 / 4,428,256 shares
outstanding).................... $13.54
======
PRIMARY B SHARES:
Net asset value, offering and
redemption price per share
($8,804 / 652 shares
outstanding).................... $13.49
======
INVESTOR A SHARES:
Net asset value and redemption
price per share
($6,817,100 / 503,449 shares
outstanding).................... $13.54
======
Maximum sales charge.............. 5.75%
Maximum offering price per
share........................... $14.37
INVESTOR B SHARES:
Net asset value and offering price
per share+ ($10,988,915 / 821,096
shares outstanding)............. $13.38
======
INVESTOR C SHARES:
Net asset value and offering price
per share+ ($2,224,386 / 166,957
shares outstanding)............. $13.32
======
</TABLE>
---------------
* Federal Income Tax Information: Net unrealized appreciation of $646 on
investment securities was comprised of gross appreciation of $1,073 and gross
depreciation of $427 for federal income tax purposes. At September 30, 2000,
the aggregate cost of securities for federal income tax purposes was $79,291.
+ The redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE> 8
NATIONS FUNDS
Nations LifeGoal Balanced Growth Portfolio
STATEMENT OF NET ASSETS SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (000)
----------------------------------------------------------
<C> <S> <C> <C>
INVESTMENT COMPANY SECURITIES -- 99.8%
6,740,951 Nations Bond Fund................ $ 63,971
1,091,865 Nations International Value
Fund........................... 20,003
801,884 Nations Marsico Focused Equities
Fund........................... 17,184
1,198,719 Nations Small Company Fund....... 25,413
4,496,847 Nations Strategic Income Fund.... 42,855
3,049,483 Nations Value Fund............... 43,730
--------
TOTAL INVESTMENT COMPANY
SECURITIES
(Cost $209,381).................. 213,156
--------
TOTAL INVESTMENTS
(Cost $209,381*).......... 99.8% 213,156
--------
OTHER ASSETS AND
LIABILITIES (NET)....... 0.2%
Receivable for Fund shares
sold........................... $ 68
Dividends receivable............. 589
Payable for Fund shares
redeemed....................... (4)
Investment advisory fee
payable........................ (156)
Shareholder servicing and
distribution fees payable...... (33)
Distributions payable............ (7)
--------
TOTAL OTHER ASSETS AND
LIABILITIES (NET).............. 457
--------
NET ASSETS................ 100.0% $213,613
========
NET ASSETS CONSIST OF:
Undistributed net investment
income......................... $ 294
Accumulated net realized gain on
investments sold............... 1,951
Net unrealized appreciation of
investments.................... 3,775
Paid-in capital.................. 207,593
--------
NET ASSETS....................... $213,613
========
</TABLE>
<TABLE>
<CAPTION>
VALUE
----------------------------------------------------------
<C> <S> <C> <C>
PRIMARY A SHARES:
Net asset value, offering and
redemption price per share
($197,828,195 / 17,283,113
shares outstanding)............ $11.45
======
PRIMARY B SHARES:
Net asset value, offering and
redemption price per share
($344,924 / 30,093 shares
outstanding)................... $11.46
======
INVESTOR A SHARES:
Net asset value and redemption
price per share
($2,822,140 / 246,010 shares
outstanding)................... $11.47
======
Maximum sales charge............. 5.75%
Maximum offering price per
share.......................... $12.17
INVESTOR B SHARES:
Net asset value and offering
price per share+
($10,986,032 / 957,806 shares
outstanding)................... $11.47
======
INVESTOR C SHARES:
Net asset value and offering
price per share+
($1,632,200 / 141,155 shares
outstanding)................... $11.56
======
</TABLE>
---------------
* Federal Income Tax Information: Net unrealized appreciation of $3,775 on
investment securities was comprised of gross appreciation of $4,750 and gross
depreciation of $975 for federal income tax purposes. At September 30, 2000,
the aggregate cost of securities for federal income tax purposes was $209,381.
+ The redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE> 9
NATIONS FUNDS
Nations LifeGoal Income and Growth Portfolio
STATEMENT OF NET ASSETS SEPTEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (000)
----------------------------------------------------------
<C> <S> <C> <C>
INVESTMENT COMPANY SECURITIES -- 99.8%
25,948 Nations Blue Chip Fund.............. $ 898
547,926 Nations Bond Fund................... 5,199
35,849 Nations International Value Fund.... 657
473,433 Nations Short-Term Income Fund...... 4,531
18,571 Nations Small Company Fund.......... 394
92,138 Nations Value Fund.................. 1,321
-------
TOTAL INVESTMENT COMPANY SECURITIES
(Cost $12,982)...................... 13,000
-------
TOTAL INVESTMENTS
(Cost $12,982*).............. 99.8% 13,000
-------
OTHER ASSETS AND
LIABILITIES (NET).......... 0.2%
Receivable for Fund shares sold..... $ 8
Dividends receivable................ 52
Payable for Fund shares redeemed.... (2)
Investment advisory fee payable..... (7)
Shareholder servicing and
distribution fees payable......... (14)
Distributions payable............... (10)
-------
TOTAL OTHER ASSETS AND
LIABILITIES (NET)................. 27
-------
NET ASSETS................... 100.0% $13,027
=======
NET ASSETS CONSIST OF:
Distributions in excess of net
investment income................. $ (5)
Accumulated net realized gain on
investments sold.................. 100
Net unrealized appreciation of
investments....................... 18
Paid-in capital..................... 12,914
-------
NET ASSETS.......................... $13,027
=======
</TABLE>
<TABLE>
<CAPTION>
VALUE
----------------------------------------------------------
<S> <C> <C>
PRIMARY A SHARES:
Net asset value, offering and
redemption price per share
($6,887,853 / 642,850 shares
outstanding)...................... $10.72
======
INVESTOR A SHARES:
Net asset value and redemption price
per share ($843,778 / 78,275
shares outstanding)............... $10.78
======
Maximum sales charge................ 5.75%
Maximum offering price per share.... $11.44
INVESTOR B SHARES:
Net asset value and offering price
per share+ ($4,268,443 / 395,693
shares outstanding)............... $10.79
======
INVESTOR C SHARES:
Net asset value and offering price
per share+ ($1,027,108 / 95,575
shares outstanding)............... $10.75
======
</TABLE>
---------------
* Federal Income Tax Information: Net unrealized appreciation of $18 on
investment securities was comprised of gross appreciation of $112 and gross
depreciation of $94 for federal income tax purposes. At September 30, 2000,
the aggregate cost of securities for federal income tax purposes was $12,982.
+ The redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE> 10
NATIONS FUNDS
STATEMENTS OF OPERATIONS (UNAUDITED)
For the six months ended September 30, 2000
<TABLE>
LIFEGOAL LIFEGOAL
LIFEGOAL BALANCED INCOME AND
GROWTH GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------------------------------
<S> <C> <C> <C>
(IN THOUSANDS)
INVESTMENT INCOME:
Dividends................................................... $ 376 $ 2,731 $ 328
-------------- -------------- --------------
EXPENSES:
Investment advisory fee..................................... 58 173 15
Shareholder servicing and distribution fees:
Primary B Shares.......................................... --* 2 --
Investor A Shares......................................... 7 3 1
Investor B Shares......................................... 47 51 22
Investor C Shares......................................... 9 10 5
-------------- -------------- --------------
Total expenses.......................................... 121 239 43
Fees waived by distributor.................................. --* (1) --
-------------- -------------- --------------
Net expenses............................................ 121 238 43
-------------- -------------- --------------
NET INVESTMENT INCOME/(LOSS)................................ 255 2,493 285
-------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) on investments..................... (239) 1,383 (36)
Capital gains distributions received........................ 1,949 941 183
Net change in unrealized appreciation/(depreciation) of
investments............................................... (1,434) 1,885 (55)
-------------- -------------- --------------
Net realized and unrealized gain/(loss) on investments...... 276 4,209 92
-------------- -------------- --------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $ 531 $ 6,702 $ 377
============== ============== ==============
</TABLE>
---------------
* Amount represents less than $500.
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE> 11
NATIONS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
LIFEGOAL GROWTH LIFEGOAL BALANCED LIFEGOAL INCOME
PORTFOLIO GROWTH PORTFOLIO AND GROWTH PORTFOLIO
------------------------- ------------------------- ------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
9/30/00 YEAR ENDED 9/30/00 YEAR ENDED 9/30/00 YEAR ENDED
(UNAUDITED) 3/31/00 (UNAUDITED) 3/31/00 (UNAUDITED) 3/31/00
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
Net investment income/(loss)........... $ 255 $ (32) $ 2,493 $ 741 $ 285 $ 470
Net realized gain/(loss) on
investments.......................... (239) 4,046 1,383 1,259 (36) (44)
Capital gain distributions received.... 1,949 865 941 447 183 93
Net change in unrealized appreciation/
(depreciation) of investments........ (1,434) 1,434 1,885 1,849 (55) 1
----------- ----------- ----------- ----------- ----------- -----------
Net increase/(decrease) in net assets
resulting from operations............ 531 6,313 6,702 4,296 377 520
Distributions to shareholders from net
investment income:
Primary A Shares..................... (83) -- (1,961) (441) (150) (257)
Primary B Shares..................... --* -- (6) (9) -- --
Investor A Shares.................... (10) -- (48) (66) (22) (40)
Investor B Shares.................... (3) -- (156) (229) (92) (178)
Investor C Shares.................... (1) -- (28) (51) (20) (25)
Distributions to shareholders in excess
of net investment income:
Primary A Shares..................... -- (108) -- (48) -- --
Primary B Shares..................... -- --* -- (1) -- --
Investor A Shares.................... -- (49) -- (8) -- --
Investor B Shares.................... -- (84) -- (37) -- --
Investor C Shares.................... -- (12) -- (6) -- --
Distributions to shareholders from net
realized gain on investments:
Primary A Shares..................... (2,101) (172) (688) (327) -- (110)
Primary B Shares..................... (1) --* (17) (8) -- --
Investor A Shares.................... (624) (109) (121) (47) -- (22)
Investor B Shares.................... (1,169) (252) (492) (248) -- (106)
Investor C Shares.................... (222) (22) (106) (32) -- (8)
Net increase/(decrease) in net assets
from Portfolio share transactions.... 53,406 8,047 182,707 (530) 1,916 (3,498)
----------- ----------- ----------- ----------- ----------- -----------
Net increase/(decrease) in net
assets............................... 49,723 13,552 185,786 2,208 2,009 (3,724)
NET ASSETS:
Beginning of period.................... 30,258 16,706 27,827 25,619 11,018 14,742
----------- ----------- ----------- ----------- ----------- -----------
End of period.......................... $ 79,981 $ 30,258 $ 213,613 $ 27,827 $ 13,027 $ 11,018
=========== =========== =========== =========== =========== ===========
Undistributed net investment
income/(loss)/ (distributions in
excess of net investment income) at
end of period........................ $ 159 $ -- $ 294 $ -- $ (5) $ (6)
=========== =========== =========== =========== =========== ===========
</TABLE>
---------------
* Amount represents less than $500.
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 12
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY
<TABLE>
<CAPTION>
LIFEGOAL GROWTH PORTFOLIO
SIX MONTHS ENDED
SEPTEMBER 30, 2000 YEAR ENDED
(UNAUDITED) MARCH 31, 2000
------------------ -----------------
SHARES DOLLARS SHARES DOLLARS
-----------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 4,513 $ 60,817 768 $10,460
Issued as reinvestment of dividends....................... 166 2,147 20 271
Redeemed.................................................. (1,236) (16,424) (157) (2,069)
------ -------- ---- -------
Net increase/(decrease)................................... 3,443 $ 46,540 631 $ 8,662
====== ======== ==== =======
PRIMARY B SHARES:
Sold...................................................... -- $ -- --* $ --*
Issued as reinvestment of dividends....................... --* 1 -- --
Redeemed.................................................. -- -- -- --
------ -------- ---- -------
Net increase/(decrease)................................... --* $ 1 -- $ --
====== ======== ==== =======
INVESTOR A SHARES:
Sold...................................................... 201 $ 2,728 78 $ 1,051
Issued as reinvestment of dividends....................... 49 631 12 157
Redeemed.................................................. (39) (535) (77) (1,048)
------ -------- ---- -------
Net increase/(decrease)................................... 211 $ 2,824 13 $ 160
====== ======== ==== =======
INVESTOR B SHARES:
Sold...................................................... 208 $ 2,785 99 $ 1,336
Issued as reinvestment of dividends....................... 87 1,110 24 314
Redeemed.................................................. (58) (795) (242) (3,173)
------ -------- ---- -------
Net increase/(decrease)................................... 237 $ 3,100 (119) $(1,523)
====== ======== ==== =======
INVESTOR C SHARES:
Sold...................................................... 60 $ 820 71 $ 913
Issued as reinvestment of dividends....................... 17 222 3 35
Redeemed.................................................. (8) (101) (16) (200)
------ -------- ---- -------
Net increase/(decrease)................................... 69 $ 941 58 $ 748
====== ======== ==== =======
Total net increase/(decrease)............................. 3,960 $ 53,406 583 $ 8,047
====== ======== ==== =======
</TABLE>
---------------
* Amount represents less than 500 shares and/or $500, as applicable.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 13
NATIONS FUNDS
--------------------------------------------------------------------------------
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
LIFEGOAL BALANCED GROWTH PORTFOLIO
SIX MONTHS ENDED
SEPTEMBER 30, 2000 YEAR ENDED
(UNAUDITED) MARCH 31, 2000
---------------------- -------------------
SHARES DOLLARS SHARES DOLLARS
-----------------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 26,090 $ 293,388 474 $ 5,241
Issued as reinvestment of dividends....................... 235 2,648 73 805
Redeemed.................................................. (10,156) (115,211) (808) (8,887)
------- --------- ---- -------
Net increase/(decrease)................................... 16,169 $ 180,825 (261) $(2,841)
======= ========= ==== =======
PRIMARY B SHARES:
Sold...................................................... 1 $ 13 --* $ 1
Issued as reinvestment of dividends....................... 2 23 2 17
Redeemed.................................................. -- -- --* (3)
------- --------- ---- -------
Net increase/(decrease)................................... 3 $ 36 2 $ 15
======= ========= ==== =======
INVESTOR A SHARES:
Sold...................................................... 59 $ 678 131 $ 1,458
Issued as reinvestment of dividends....................... 15 169 11 121
Redeemed.................................................. (20) (230) (71) (819)
------- --------- ---- -------
Net increase/(decrease)................................... 54 $ 617 71 $ 760
======= ========= ==== =======
INVESTOR B SHARES:
Sold...................................................... 180 $ 2,037 197 $ 2,189
Issued as reinvestment of dividends....................... 53 584 43 477
Redeemed.................................................. (90) (1,035) (249) (2,765)
------- --------- ---- -------
Net increase/(decrease)................................... 143 $ 1,586 (9) $ (99)
======= ========= ==== =======
INVESTOR C SHARES:
Sold...................................................... 22 $ 258 174 $ 1,923
Issued as reinvestment of dividends....................... 12 133 8 90
Redeemed.................................................. (66) (748) (33) (378)
------- --------- ---- -------
Net increase/(decrease)................................... (32) $ (357) 149 $ 1,635
======= ========= ==== =======
Total net increase/(decrease)............................. 16,337 $ 182,707 (48) $ (530)
======= ========= ==== =======
</TABLE>
---------------
* Amount represents less than 500 shares and/or $500, as applicable.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 14
NATIONS FUNDS
--------------------------------------------------------------------------------
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
LIFEGOAL INCOME AND GROWTH PORTFOLIO
SIX MONTHS ENDED
SEPTEMBER 30, 2000 YEAR ENDED
(UNAUDITED) MARCH 31, 2000
------------------- -------------------
SHARES DOLLARS SHARES DOLLARS
--------------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 368 $ 3,937 264 $ 2,829
Issued as reinvestment of dividends....................... 14 149 33 353
Redeemed.................................................. (185) (1,975) (633) (6,820)
---- ------- ---- -------
Net increase/(decrease)................................... 197 $ 2,111 (336) $(3,638)
==== ======= ==== =======
INVESTOR A SHARES:
Sold...................................................... 25 $ 267 39 $ 412
Issued as reinvestment of dividends....................... 2 20 6 61
Redeemed.................................................. (23) (239) (95) (1,019)
---- ------- ---- -------
Net increase/(decrease)................................... 4 $ 48 (50) $ (546)
==== ======= ==== =======
INVESTOR B SHARES:
Sold...................................................... 20 $ 215 154 $ 1,653
Issued as reinvestment of dividends....................... 7 72 21 231
Redeemed.................................................. (65) (702) (182) (1,949)
---- ------- ---- -------
Net increase/(decrease)................................... (38) $ (415) (7) $ (65)
==== ======= ==== =======
INVESTOR C SHARES:
Sold...................................................... 21 $ 227 73 $ 787
Issued as reinvestment of dividends....................... 2 20 3 32
Redeemed.................................................. (7) (75) (6) (68)
---- ------- ---- -------
Net increase/(decrease)................................... 16 $ 172 70 $ 751
==== ======= ==== =======
Total net increase/(decrease)............................. 179 $ 1,916 (323) $(3,498)
==== ======= ==== =======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 15
[This page intentionally left blank.]
11
<PAGE> 16
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period.
<TABLE>
<CAPTION>
NET INCREASE/
(DECREASE) IN
NET ASSET NET REALIZED NET ASSETS DISTRIBUTIONS DISTRIBUTIONS
VALUE NET AND UNREALIZED RESULTING FROM FROM NET IN EXCESS OF
BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT NET INVESTMENT
OF PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME INCOME
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LIFEGOAL GROWTH PORTFOLIO
PRIMARY A SHARES
Six months ended 9/30/2000#
(unaudited)............... $15.50 $ 0.07 $(0.01) $0.06 $(0.04) $ --
Year ended 3/31/2000#....... 12.15 0.04 3.88 3.92 -- (0.18)
Year ended 3/31/1999........ 12.49 0.04 0.31 0.35 -- (0.09)
Year ended 3/31/1998#....... 10.15 0.08 2.87 2.95 (0.01) (0.39)
Period ended 3/31/1997*..... 10.06 0.12 0.09 0.21 (0.12) --
PRIMARY B SHARES
Six months ended 9/30/2000#
(unaudited)............... $15.43 $ 0.11 $(0.05) $0.06 $(0.02) $ --
Year ended 3/31/2000#....... 12.14 (0.02) 3.86 3.84 -- (0.16)
Year ended 3/31/1999........ 12.49 0.00 0.30 0.30 -- (0.05)
Period ended 3/31/1998#**... 12.25 0.01 0.70 0.71 (0.01) (0.25)
INVESTOR A SHARES
Six months ended 9/30/2000#
(unaudited)............... $15.48 $ 0.08 $(0.01) $0.07 $(0.03) $ --
Year ended 3/31/2000#....... 12.16 0.01 3.87 3.88 -- (0.17)
Year ended 3/31/1999........ 12.50 0.04 0.30 0.34 -- (0.08)
Year ended 3/31/1998#....... 10.15 0.05 2.89 2.94 (0.01) (0.37)
Period ended 3/31/1997*..... 10.06 0.12 0.09 0.21 (0.12) --
INVESTOR B SHARES
Six months ended 9/30/2000#
(unaudited)............... $15.35 $ 0.07 $(0.06) $0.01 $(0.00)## $ --
Year ended 3/31/2000#....... 12.13 (0.08) 3.84 3.76 -- (0.15)
Year ended 3/31/1999........ 12.49 (0.06) 0.31 0.25 -- (0.01)
Period ended 3/31/1998#**... 11.98 (0.02) 0.99 0.97 (0.01) (0.24)
INVESTOR C SHARES
Six months ended 9/30/2000#
(unaudited)............... $15.30 $ 0.07 $(0.06) $0.01 $(0.01) $ --
Year ended 3/31/2000#....... 12.09 (0.08) 3.83 3.75 -- (0.15)
Year ended 3/31/1999........ 12.46 (0.05) 0.30 0.25 -- (0.02)
Year ended 3/31/1998#....... 10.15 0.02 2.89 2.87 (0.01) (0.34)
Period ended 3/31/1997*..... 10.06 0.11 0.09 0.20 (0.11) --
</TABLE>
---------------
+ 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.
* LifeGoal Growth Portfolio Primary A, Investor A and Investor C Shares
commenced operations on October 2, 1996. Shares were offered to the public
on October 15, 1996.
** LifeGoal Growth Portfolio Primary B and Investor B Shares commenced
operations on September 19, 1997 and August 12, 1997, respectively.
# Per share net investment income has been calculated using the monthly
average shares method.
## Amount represents less than $0.01.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 17
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF RATIO OF
DISTRIBUTIONS NET ASSETS OPERATING NET INVESTMENT OPERATING
FROM NET NET ASSET END OF EXPENSES TO INCOME/(LOSS) PORTFOLIO EXPENSES TO
REALIZED TOTAL VALUE TOTAL PERIOD AVERAGE NET TO AVERAGE TURNOVER AVERAGE NET
GAINS DISTRIBUTIONS END OF PERIOD RETURN++ (000) ASSETS+++ NET ASSETS RATE ASSETS+++
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(1.98) $(2.02) $13.54 1.27% $59,942 0.25%+ 1.09%+ 40% 0.25%+
(0.39) (0.57) 15.50 32.94 15,265 0.25 0.34 161 --
(0.60) (0.69) 12.15 3.04 4,291 0.25 0.46 159 --
(0.21) (0.61) 12.49 29.80 289 0.25 0.65 69 --
-- (0.12) 10.15 2.10 929 0.25+ 1.11+ 25 --
$(1.98) $(2.00) $13.49 1.20% $ 9 0.75%+ 0.59%+ 40% 0.85%+
(0.39) (0.55) 15.43 32.40 9 0.75 (0.16) 161 --
(0.60) (0.65) 12.14 2.58 7 0.75 (0.04) 159 --
(0.21) (0.47) 12.49 6.24 6 0.75+ 0.15+ 69 --
$(1.98) $(2.01) $13.54 1.25% $ 6,817 0.50%+ 0.84%+ 40% 0.50%+
(0.39) (0.56) 15.48 32.67 4,528 0.50 0.09 161 --
(0.60) (0.68) 12.16 2.87 3,404 0.50 0.21 159 --
(0.21) (0.59) 12.50 29.68 1,526 0.50 0.40 69 --
-- (0.12) 10.15 2.05 681 0.50+ 0.86+ 25 --
$(1.98) $(1.98) $13.38 0.89% $10,989 1.25%+ 0.09%+ 40% 1.25%+
(0.39) (0.54) 15.35 31.68 8,972 1.25 (0.66) 161 --
(0.60) (0.61) 12.13 2.14 8,531 1.25 (0.54) 159 --
(0.21) (0.46) 12.49 8.55 5,829 1.25+ (0.35)+ 69 --
$(1.98) $(1.99) $13.32 0.89% $ 2,224 1.25%+ 0.09%+ 40% 1.25%+
(0.39) (0.54) 15.30 31.65 1,485 1.25 (0.66) 161 --
(0.60) (0.62) 12.09 2.07 473 1.25 (0.54) 159 --
(0.21) (0.56) 12.46 28.89 342 1.09 (0.19) 69 --
-- (0.11) 10.15 2.01 82 0.75+ 0.61+ 25 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE> 18
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
For a share outstanding throughout each period.
<TABLE>
<CAPTION>
NET INCREASE/
(DECREASE) IN
NET ASSET NET REALIZED NET ASSETS DISTRIBUTIONS DISTRIBUTIONS
VALUE NET AND UNREALIZED RESULTING FROM FROM NET IN EXCESS OF
BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT NET INVESTMENT
OF PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME INCOME
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LIFEGOAL BALANCED GROWTH
PORTFOLIO
PRIMARY A SHARES
Six months ended 9/30/2000#
(unaudited)............... $11.97 $0.24 $ 0.06 $0.30 $(0.22) $ --
Year ended 3/31/2000#....... 10.80 0.36 1.54 1.90 (0.40) (0.04)
Year ended 3/31/1999........ 10.92 0.26 0.23 0.49 (0.28) --
Year ended 3/31/1998#....... 9.95 0.33 1.74 2.07 (0.28) (0.32)
Period ended 3/31/1997*..... 10.05 0.19 (0.10) 0.09 (0.19) --
PRIMARY B SHARES
Six months ended 9/30/2000#
(unaudited)............... $11.99 $0.20 $ 0.07 $0.27 $(0.20) $ --
Year ended 3/31/2000#....... 10.82 0.32 1.52 1.84 (0.34) (0.04)
Year ended 3/31/1999........ 10.94 0.23 0.20 0.43 (0.22) --
Period ended 3/31/1998#**... 10.95 0.16 0.77 0.93 (0.20) (0.24)
INVESTOR A SHARES
Six months ended 9/30/2000#
(unaudited)............... $11.99 $0.23 $ 0.06 $0.29 $(0.21) $ --
Year ended 3/31/2000#....... 10.82 0.34 1.53 1.87 (0.37) (0.04)
Year ended 3/31/1999........ 10.94 0.25 0.21 0.46 (0.25) --
Year ended 3/31/1998#....... 9.95 0.28 1.79 2.07 (0.27) (0.31)
Period ended 3/31/1997*..... 10.05 0.19 (0.10) 0.09 (0.19) --
INVESTOR B SHARES
Six months ended 9/30/2000#
(unaudited)............... $12.00 $0.18 $ 0.06 $0.24 $(0.17) $ --
Year ended 3/31/2000#....... 10.82 0.26 1.54 1.80 (0.29) (0.04)
Year ended 3/31/1999........ 10.92 0.17 0.22 0.39 (0.16) --
Period ended 3/31/1998#**... 10.88 0.11 0.87 0.98 (0.20) (0.24)
INVESTOR C SHARES
Six months ended 9/30/2000#
(unaudited)............... $12.09 $0.19 $ 0.05 $0.24 $(0.17) $ --
Year ended 3/31/2000#....... 10.92 0.26 1.55 1.81 (0.31) (0.04)
Year ended 3/31/1999........ 10.92 0.20 0.26 0.46 (0.13) --
Year ended 3/31/1998#....... 9.95 0.23 1.78 2.01 (0.25) (0.29)
Period ended 3/31/1997*..... 10.05 0.19 (0.10) 0.09 (0.19) --
</TABLE>
---------------
+ 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.
* LifeGoal Balanced Growth Portfolio Primary A, Investor A and Investor C
Shares commenced operations on October 2, 1996. Shares were offered to the
public on October 15, 1996.
** LifeGoal Balanced Growth Portfolio Primary B and Investor B Shares commenced
operations on August 4, and August 13, 1997, respectively.
# Per share net investment income has been calculated using the monthly
average shares method.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 19
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF RATIO OF
DISTRIBUTIONS NET ASSETS OPERATING NET INVESTMENT OPERATING
FROM NET NET ASSET END OF EXPENSES TO INCOME/(LOSS) PORTFOLIO EXPENSES TO
REALIZED TOTAL VALUE TOTAL PERIOD AVERAGE NET TO AVERAGE TURNOVER AVERAGE NET
GAINS DISTRIBUTIONS END OF PERIOD RETURN++ (000) ASSETS+++ NET ASSETS RATE ASSETS+++
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(0.60) $(0.82) $11.45 2.90% $197,828 0.25%+ 3.62%+ 96% 0.25%+
(0.29) (0.73) 11.97 18.34 13,325 0.25 3.37 124 --
(0.33) (0.61) 10.80 4.77 14,844 0.25 2.77 121 --
(0.50) (1.10) 10.92 21.74 103 0.25 2.87 94 --
-- (0.19) 9.95 0.90 2,114 0.25+ 3.94+ 1 --
$(0.60) $(0.80) $11.46 2.58% $ 345 0.75%+ 3.12%+ 96% 0.85%+
(0.29) (0.67) 11.99 17.73 322 0.75 2.87 124 --
(0.33) (0.55) 10.82 4.15 276 0.75 2.27 121 --
(0.50) (0.94) 10.94 9.24 26 0.75+ 2.37+ 94 --
$(0.60) $(0.81) $11.47 2.78% $ 2,822 0.50%+ 3.37%+ 96% 0.50%+
(0.29) (0.70) 11.99 18.03 2,298 0.50 3.12 124 --
(0.33) (0.58) 10.82 4.44 1,308 0.50 2.52 121 --
(0.50) (1.08) 10.94 21.76 489 0.50 2.62 94 --
-- (0.19) 9.95 0.86 94 0.50+ 3.69+ 1 --
$(0.60) $(0.77) $11.47 2.34% $ 10,986 1.25%+ 2.62%+ 96% 1.25%+
(0.29) (0.62) 12.00 17.26 9,789 1.25 2.37 124 --
(0.33) (0.49) 10.82 3.78 8,925 1.25 1.77 121 --
(0.50) (0.94) 10.92 9.70 4,917 1.25+ 1.87+ 94 --
$(0.60) $(0.77) $11.56 2.28% $ 1,632 1.25%+ 2.62%+ 96% 1.25%+
(0.29) (0.64) 12.09 17.22 2,092 1.25 2.37 124 --
(0.33) (0.46) 10.92 4.43 266 1.25 1.77 121 --
(0.50) (1.04) 10.92 21.10 737 1.09 2.03 94 --
-- (0.19) 9.95 0.85 18 0.75+ 3.44+ 1 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE> 20
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
For a share outstanding throughout each period.
<TABLE>
<CAPTION>
NET INCREASE/
(DECREASE) IN
NET ASSET NET REALIZED NET ASSETS DISTRIBUTIONS DISTRIBUTIONS
VALUE NET AND UNREALIZED RESULTING FROM FROM NET IN EXCESS OF
BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT NET INVESTMENT
OF PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME INCOME
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LIFEGOAL INCOME AND GROWTH PORTFOLIO
PRIMARY A SHARES
Six months ended 9/30/2000#
(unaudited)............... $10.63 $0.28 $ 0.09 $0.37 $(0.28) $ --
Year ended 3/31/2000#....... 10.86 0.49 0.02 0.51 (0.51) --
Year ended 3/31/1999........ 10.70 0.35 0.37 0.72 (0.36) --
Year ended 3/31/1998#....... 9.97 0.43 0.89 1.32 (0.40) (0.12)
Period ended 3/31/1997*..... 10.03 0.32 (0.06) 0.26 (0.32) --
INVESTOR A SHARES
Six months ended 9/30/2000#
(unaudited)............... $10.69 $0.28 $ 0.08 $0.36 $(0.27) $ --
Year ended 3/31/2000#....... 10.89 0.48 0.03 0.51 (0.48) --
Year ended 3/31/1999........ 10.71 0.36 0.35 0.71 (0.33) --
Year ended 3/31/1998#....... 9.97 0.41 0.89 1.30 (0.38) (0.11)
Period ended 3/31/1997*..... 10.03 0.31 (0.06) 0.25 (0.31) --
INVESTOR B SHARES
Six months ended 9/30/2000#
(unaudited)............... $10.70 $0.23 $ 0.09 $0.32 $(0.23) $ --
Year ended 3/31/2000#....... 10.89 0.41 0.03 0.44 (0.40) --
Year ended 3/31/1999........ 10.70 0.28 0.35 0.63 (0.24) --
Period ended 3/31/1998#**... 10.51 0.19 0.36 0.55 (0.22) (0.07)
INVESTOR C SHARES
Six months ended 9/30/2000#
(unaudited)............... $10.67 $0.23 $ 0.08 $0.31 $(0.23) $ --
Year ended 3/31/2000#....... 10.90 0.40 0.03 0.43 (0.43) --
Year ended 3/31/1999........ 10.70 0.31 0.31 0.62 (0.22) --
Year ended 3/31/1998#....... 9.97 0.36 0.89 1.25 (0.35) (0.10)
Period ended 3/31/1997*..... 10.03 0.31 (0.06) 0.25 (0.31) --
</TABLE>
---------------
+ 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.
* LifeGoal Income and Growth Portfolio Primary A, Investor A and Investor C
Shares commenced operations on October 2, 1996. Shares were offered to the
public on October 15, 1996.
** LifeGoal Income and Growth Portfolio Investor B Shares commenced operations
on August 7, 1997.
# Per share net investment income has been calculated using the monthly
average shares method.
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE> 21
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
RATIO OF RATIO OF
DISTRIBUTIONS NET ASSETS OPERATING NET INVESTMENT
FROM NET NET ASSET END OF EXPENSES TO INCOME/(LOSS) PORTFOLIO
REALIZED TOTAL VALUE TOTAL PERIOD AVERAGE NET TO AVERAGE TURNOVER
GAINS DISTRIBUTIONS END OF PERIOD RETURN++ (000) ASSETS+++ NET ASSETS RATE
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ -- $(0.28) $10.72 3.42% $6,888 0.25%+ 5.39%+ 29%
(0.23) (0.74) 10.63 4.91 4,736 0.25 4.78 96
(0.20) (0.56) 10.86 6.98 8,489 0.25 3.99 107
(0.07) (0.59) 10.70 13.56 476 0.25 4.17 64
-- (0.32) 9.97 2.59 223 0.25+ 6.34+ 2
$ -- $(0.27) $10.78 3.38% $ 844 0.50%+ 5.14%+ 29%
(0.23) (0.71) 10.69 4.93 789 0.50 4.53 96
(0.20) (0.53) 10.89 6.92 1,347 0.50 3.74 107
(0.07) (0.56) 10.71 13.38 126 0.50 3.92 64
-- (0.31) 9.97 2.54 131 0.50+ 6.09+ 2
$ -- $(0.23) $10.79 2.98% $4,268 1.25%+ 4.39%+ 29%
(0.23) (0.63) 10.70 4.25 4,645 1.25 3.78 96
(0.20) (0.44) 10.89 6.16 4,806 1.25 2.99 107
(0.07) (0.36) 10.70 5.33 1,212 1.25+ 3.17+ 64
$ -- $(0.23) $10.75 2.93% $1,027 1.25%+ 4.39%+ 29%
(0.23) (0.66) 10.67 4.11 848 1.25 3.78 96
(0.20) (0.42) 10.90 6.02 100 1.25 2.99 107
(0.07) (0.52) 10.70 12.83 87 1.09 3.33 64
-- (0.31) 9.97 2.54 1 0.75+ 5.84+ 2
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE> 22
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Nations LifeGoal Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end investment
company. At September 30, 2000, the Company offered three Portfolios: LifeGoal
Growth Portfolio, LifeGoal Balanced Growth Portfolio and LifeGoal Income and
Growth Portfolio (each a "Portfolio" and collectively, the "Portfolios"). The
Portfolios invest in other Nations Funds (the "Underlying Funds") distributed by
Stephens Inc. ("Stephens") and advised by Banc of America Advisors, Inc.
("BAAI"). The Portfolios currently offer five classes of shares: Primary A
Shares, Primary B Shares, Investor A Shares, Investor B Shares and Investor C
Shares. 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 that
class and separate voting rights on matters in which the interests of one class
differ from the interests of any other class.
On October 15, 1996, the Company began offering its shares to the public. On
October 2, 1996, Stephens, the Company's distributor, made an initial capital
investment into each Portfolio, which was in turn invested into the Underlying
Funds. The operating results from October 2, 1996 through October 14, 1996 are
reflected in the beginning net asset value reported in the Financial highlights.
1. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
certain 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 net
asset value 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 trade date. Realized gains and losses are computed based on the
specific identification of 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 share
classes based upon the relative net assets of each class of shares.
Dividends and distributions to shareholders: Distributions from net investment
income are declared and paid 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 capital gains were earned,
unless offset by any available capital loss carryforward. Income distributions
and capital gain distributions on a Portfolio level are determined in accordance
with federal income tax regulations which may differ from accounting principles
generally accepted in the United States of America.
Federal income tax: Each Portfolio 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 substantially
all of its earnings to its shareholders. Therefore, no provision is made for
federal income or excise taxes.
Expenses: General expenses of the Company are allocated to the Portfolios based
upon their relative net assets or other expense allocation methodologies
determined by the nature of the expense. Expenses directly attributable to a
Portfolio or class of shares are charged to such Portfolio or class. In
addition, the Portfolios indirectly bear their pro rata share of expenses of the
Underlying Funds.
2. INVESTMENT ADVISORY FEE, SUB-ADVISORY FEE, CO-ADMINISTRATION FEE AND RELATED
PARTY TRANSACTIONS
The Company has entered into an investment advisory agreement (the "Investment
Advisory Agreement") with BAAI, 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 BAAI provides investment advisory services to the
Portfolios. Under the terms of the Investment Advisory Agreement, BAAI is
entitled to receive an advisory fee, calculated daily and payable monthly, at
the maximum annual rate of 0.25% of each Portfolio's average daily net assets
and has agreed to bear all fees and expenses of the Portfolios (other than the
investment advisory fee payable under the Investment Advisory Agreement, taxes,
brokerage fees and commissions, extraordinary expenses, and any
18
<PAGE> 23
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
applicable Rule 12b-1 fees, shareholder servicing fees and/or shareholder
administration fees).
The Company, on behalf of the Portfolios, has entered into a sub-advisory
agreement with BAAI and Banc of America Capital Management, Inc. ("BACAP"), a
wholly-owned subsidiary of Bank of America, pursuant to which BACAP is entitled
to receive a sub-advisory fee from BAAI at the maximum annual rate of 0.05% of
each Portfolio's average daily net assets.
Stephens and BAAI serve as co-administrators of the Company. The Bank of New
York ("BNY") serves as sub-administrator of the Company pursuant to an agreement
with BAAI. Stephens and BAAI receive no compensation for their services as
co-administrators from the portfolios.
Bank of America serves as custodian of the Company's assets.
BAAI may, from time to time, voluntarily reduce its fee payable by each
Portfolio. For the six months ended September 30, 2000, BAAI did not waive any
fees.
PFPC Inc. ("PFPC") serves as the transfer agent for the Portfolios' shares. Bank
of America serves as sub-transfer agent for the Portfolios' Primary A and
Primary B Shares.
Stephens also serves as distributor of the Portfolios' shares. For the six
months ended September 30, 2000, the Portfolios were informed that the
distributor received $19,129 in front-end sales charges for sales of Investor A
Shares and $29,762 in contingent deferred sales charges from redemption of
shares which were subject to such charges. A substantial portion of these fees
is paid to affiliates of Bank of America.
No officer, director or employee of Bank of America, BAAI or BACAP, or any
affiliate thereof, receives any compensation from the Company for serving as a
Director or Officer of the Company.
A significant portion of each Portfolio's Primary A Shares represents
investments by fiduciary accounts over which Bank of America has either sole or
joint investment discretion.
3. SHAREHOLDER SERVICING AND DISTRIBUTION PLANS
The Company has adopted a shareholder administration plan for Primary B Shares
of each Portfolio and shareholder servicing plans and distribution plans for the
Investor B and Investor C Shares of each Portfolio, and a combined distribution
and shareholder servicing plan for the Investor A shares of each Portfolio. The
administration plan permits the Portfolios to compensate institutions for
shareholder administration services provided to their customers that own Primary
B Shares. The shareholder servicing plans permit the Portfolios to compensate or
reimburse servicing agents for shareholder services provided by the servicing
agents. The distribution plans, adopted pursuant to Rule 12b-1 under the 1940
Act, permit the Portfolios to compensate or reimburse the distributor (and for
Investor A Shares, the distributor and/or selling agents) for activities or
expenses primarily intended to result in the sale of the classes' shares.
Payments are made at an annual rate, as a percentage of average daily net
assets, set from time to time by the Board of Directors, and are charged as
expenses of each Portfolio directly to the applicable class. A substantial
portion of the expenses incurred pursuant to these plans is paid to affiliates
of Bank of America and BAAI.
At September 30, 2000, the rates in effect and plan limits, as a percentage of
average daily net assets, were as follows:
<TABLE>
<CAPTION>
CURRENT PLAN
RATE LIMIT
----------------
<S> <C> <C>
Primary B Shareholder Administration
Plan............................... 0.50% 0.60%
Investor A Combined Shareholder
Servicing and Distribution Plan.... 0.25% 0.25%
Investor B and Investor C Shareholder
Servicing Plans.................... 0.25% 0.25%
Investor B and Investor C
Distribution Plans................. 0.75% 0.75%
</TABLE>
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, 2000 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
(000) (000)
---------------------
<S> <C> <C>
Growth.......................... $ 70,570 $ 19,280
Balanced Growth................. 298,366 116,452
Income and Growth............... 5,405 3,453
</TABLE>
5. CAPITAL STOCK
At September 30, 2000, 1,200,000,000 shares of $.001 par value capital stock
were authorized for the Company. The Company's Articles of Incorporation
authorize the Board of Directors to classify or reclassify any authorized, but
unissued shares into one or more additional classes or series of shares. See
Schedules of capital stock activity.
19
<PAGE> 24
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
6. RISK FACTORS OF THE PORTFOLIOS AND THE UNDERLYING FUNDS
Investing in the Underlying Funds through the Portfolios involves certain
additional expenses and possible risks that would not be present in a direct
investment in the Underlying Funds. Under certain circumstances, an Underlying
Fund may pay 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 and
incur custody and other costs until BAAI determines that it is appropriate to
dispose of such securities.
The Officers and Directors of the Company also serve as Officers and
Trustees/Directors of the Underlying Funds. In addition, BAAI and BACAP are
wholly-owned subsidiaries of Bank of America. Conflicts may arise as these
companies seek to fulfill their fiduciary responsibilities to both the
Portfolios and the Underlying Funds.
From time to time, one or more of the Underlying Funds a Portfolio invests in
may experience relatively large investments or redemptions due to reallocations
or rebalancings by the Portfolios as recommended by BAAI. In such event, the
Underlying Funds that experience redemptions as a result of the reallocations or
rebalancings may have to sell portfolio securities, and the 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 have to do so.
These transactions could also have tax consequences if sales of securities
result in gains and could also increase transaction costs. BAAI, 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. BAAI may,
nevertheless, face conflicts of interest in fulfilling its responsibilities to
both the Portfolios and the Underlying Funds.
Investing in the Underlying Funds also presents certain risks. Each of the
Underlying Funds may invest in certain specified derivative securities,
including but not limited to: 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
and various other investment vehicles, each with inherent risks.
7. CAPITAL LOSS CARRYFORWARD
Under the current tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the following fiscal year.
For the year ended March 31, 2000, the Income and Growth Portfolio elected to
defer losses of $4,291 occurring between November 1, 1999 and March 31, 2000
under these rules.
8. SPRING REORGANIZATION
On August 23, 2000, the Board of Directors of the Company approved the
reorganization of the Growth, Balanced Growth and Growth and Income Portfolios
into new shell funds of Nations Funds Trust. The principal effect of these
reorganizations would be to redomicile the Portfolios in Delaware, under a
Delaware business trust structure that management believes provides greater
flexibility and efficiency in certain corporate and organizational matters. The
Growth, Balanced Growth and Growth and Income Portfolios will retain their name,
investment objectives and principal investment strategies without change. If
approved by shareholders, it is anticipated that the reorganization would take
place in the second quarter of 2001.
20
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P.O. Box 34602
Charlotte, NC 28254-4602
Toll free 1.800.321.7854
NATIONS FUNDS
LIFEGLSAR (9/00)
