<PAGE> 1
[GRAPHIC: FAMILY AT SHORE] LifeGoal Income
and Growth Portfolio
LifeGoal Balanced
Growth Portfolio
LifeGoal Growth
Portfolio
LIFEGOAL PORTFOLIOS
ANNUAL REPORT FOR THE YEAR
ENDED MARCH 31, 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:
As we report on the past 12 months ending March 31,
2000, we need to remind ourselves of two major
investment tenets -- diversification and investing
for the long term. Keep these points in mind as we
take a look back at the past year and where we are
today.
THE YEAR IN REVIEW
For most of 1999, the threat of Y2K was on everyone's
minds. Many companies in the U.S. and around the
world went to great lengths to make sure that
computer systems were compliant and ready to "squash"
the Y2K bug. Fortunately, we entered the 21st century
relatively unscathed. But in the months that led up
to the year 2000 and in the first quarter of the new
year, the markets have put on quite a show. We've
seen an unusual level of volatility and it doesn't
look like things are going to calm down any time
soon.
While large-company stocks continued to perform well
in 1999 and into 2000, markets began to broaden with
small and mid-size company stocks staging turnarounds
and actually outperforming large-company stocks. The
Standard & Poor's 500 Composite Stock Price Index was
up 17.94% for the 12 months ending March 31, 2000,
while the S&P MidCap 400 Index and Russell 2000 Index
were up 38.20% and 37.29%, respectively.* Value
stocks also regained some ground during the period
after several quarters of underperformance versus
growth stocks.
International markets also showed new life in 1999
and into 2000, especially in Asia where it's been a
long recovery since the Asian "malaise" began in
1997. The Morgan Stanley Capital International (MSCI)
Europe, Australasia and Far East (EAFE) Index gained
25.09% for the 12 months ending March 31, 2000,
thanks in large part to the economic recovery in
Japan.**
MARKET MAYHEM
As of late, we have witnessed wild swings in the U.S.
stock markets, setting new milestones for one-day
gains and losses. It's a tumultuous time in the
markets and now, more than ever, it's important to
remember that one key to a successful investment
strategy is diversification. Investing in a number of
sectors allows you to take advantage of those sectors
that are in favor today, and those that may be in
favor tomorrow. And, as shown by how quickly the
markets have rebounded from these dramatic highs and
lows, you need to remember to stay focused on
long-term goals. Investing takes discipline and a
conviction to hold true to your long-term objectives.
As we've said before, investors that took themselves
out of the market based on short-term volatility and
Y2K fears lost out on potential gains in their
investments during that time and face possible tax
implications and fees as a result of their
withdrawal. It's true that over the long term, the
market has trended upward. While there is no
assurance that this trend will continue, the
advantages of long-term investing are clear.
*The Standard & Poor's 500 Composite Stock Price
Index is an unmanaged index of 500 widely held common
stocks. The Standard & Poor's MidCap 400 Index is a
market-value weighted index that measures the market
value of 400 domestic stocks chosen for market size,
liquidity, and industry representation. It is
unmanaged and unavailable for investment. The Russell
2000 Index is an unmanaged capitalization-weighted
index that tracks the performance of 2000 small
company stocks. It is unavailable for investment.
**The Morgan Stanley Capital International Europe,
Australasia and Far East Index is an unmanaged,
capitalization-weighted index that tracks stocks
traded in twenty countries in Europe, Australia, and
the Far East. It is unavailable for investment.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
<PAGE> 4
PRESIDENTS' MESSAGE CONTINUED...
At Nations Funds, we firmly believe in the value of
advice, especially in times of uncertainty. An
investment professional can keep you abreast of
current market conditions and work with you to
determine the best strategy for surviving short-term
volatility and successfully reaching your long-term
goals.
WHAT'S NEW AT NATIONS FUNDS
In its continuing effort to provide world-class
investment management, Bank of America reorganized a
number of internal investment management units into
Banc of America Capital Management, Inc. (BACAP).
Focusing on both equity and fixed income funds, this
Nations Funds Manager of Distinction(SM) is
responsible for the portfolio management of more than
40 Nations Funds. This entity was developed to
synergize research and investment capabilities into a
premier investment management organization. And the
media has taken notice. You may have seen BACAP
investment professionals regularly featured on
programs on CNBC and CNNfn. When the media looks to
the industry for expert analysis, they are now
turning regularly to the investment professionals of
BACAP.
In addition to the changes at BACAP, we enhanced our
investment management expertise with the addition of
MacKay Shields LLC as our newest Manager of
Distinction to manage Nations High Yield Bond Fund,
which debuted in February. The Fund rounds out our
line of fixed income fund offerings. On the equity
side, we launched a new Fund for a new era -- Nations
Marsico 21st Century Fund. This latest offering
managed by Marsico Capital Management, LLC is
positioned to invest in companies of any size that
are changing the way the world does business.
Not only are new products important to us. Quality
shareholder service continues to be of utmost
importance. We were recognized by DALBAR, Inc. -- an
independent evaluator of customer service in the
mutual fund industry -- with the 1999 Mutual Fund
Service Award. This award was given to us in
recognition of our commitment to provide shareholders
with the highest level of client service in the
mutual fund industry. We will strive to maintain this
level of excellence throughout 2000 and beyond.
We are excited about our growth over the past year
and the opportunities ahead of us. Should you have
any questions or comments on your annual 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.
March 31, 2000
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C>
NATIONS FUNDS SPECTRUM 2
ECONOMIC OVERVIEW 3
PORTFOLIO COMMENTARY
Nations LifeGoal Income and Growth Portfolio 5
Nations LifeGoal Balanced Growth Portfolio 10
Nations LifeGoal Growth Portfolio 15
FINANCIAL STATEMENTS
Statements of net assets 19
Statements of operations 22
Statements of changes in net assets 24
Schedules of capital stock activity 26
Financial highlights 30
Notes to financial statements 36
</TABLE>
<TABLE>
<S> <C>
------------------------------------------------------------------------------
NATIONS FUNDS [DALBAR LOGO]
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
As of March 31, 2000
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 Investment Grade 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,
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 MidCap Growth Fund
Nations Marsico Focused Equities Fund
Nations Disciplined Equity 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 International Growth Fund
Nations International Equity Fund
Nations International Value Fund
HIGHER RISK/REWARD POTENTIAL
INDEX FUNDS
Nations LargeCap Index Fund
Nations Managed Index Fund
Nations SmallCap Index Fund
Nations Managed SmallCap Value Index Fund
Nations Managed Value Index Fund
ASSET ALLOCATION PORTFOLIOS
Nations LifeGoal Balanced Growth Portfolio
Nations LifeGoal Growth Portfolio
Nations LifeGoal Income and Growth Portfolio
2
<PAGE> 7
ECONOMIC OVERVIEW
BANC OF AMERICA CAPITAL MANAGEMENT*
THE YEAR IN REVIEW
Both the U.S. economy and stock market scored
impressive performances in the year ended March 31,
2000. Our economy launched an unprecedented tenth
year of expansion, marking the longest upswing in
American history. And the stock market's continued
climb reflected favorable short-term fundamentals and
a long-term revolution in technology and
communications.
In the year ended March 31, the Standard & Poor's 500
Composite Stock Price Index advanced by 17.94%. While
investors turned in March to some of those economic
sectors largely overlooked in the rush to technology,
the Nasdaq Composite Index still sparkled with an 86%
advance for the past 12 months. A renewed interest in
smaller-capitalization stocks also drove the Russell
2000 Index 37% higher as of March 31.**
During the past year, U.S. real GDP (gross domestic
product) expanded an estimated 5%, while inflation
remained subdued. Despite a near tripling in oil
costs, consumer prices increased by only 2.4%. Two
primary forces deserve credit for this nearly
flawless performance. First, U.S. economic policies
have spawned an environment conducive to
non-inflationary growth. These policies include
deficit reduction, monetary discipline, deregulation
and free foreign trade. Second, a once-in-a-century
wave of innovation has sparked large gains in
productivity through advances in the internet,
computers and information sharing. These advances in
output per hour have restrained inflation and helped
companies achieve double-digit profit gains.
Economic and stock market advances have continued
despite five interest rate hikes enacted by the
Federal Reserve Board (the Fed) over the past year.
Three of those increases simply reversed the easings
triggered by Russia's crisis in 1998. The last two
advances in the Federal Funds rate have restored the
monetary target to the 6.0% level of 1995. The Fed is
attempting to achieve a tempered and sustainable
economic growth rate consistent with an ongoing low
rate of inflation.
The long-term bond market appears confident that the
Fed will succeed. The yield on 30-year U.S. Treasury
bonds slid below 6.0% by the end of March 2000,
reflecting in part the conviction that economic
growth will ultimately moderate and that inflation
will stay in check. In addition, the Treasury's
decision to buy back
*Banc of America Capital Management is the investment
management group of Bank of America, N.A. and
includes Banc of America Capital Management, Inc.,
investment sub-adviser to many Nations Funds, and
other non-bank affiliates of Bank of America.
**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.
The Russell 2000 Index is an unmanaged,
capitalization-weighted index that tracks the
performance of 2000 small company stocks. It is
unavailable for investment.
Source for all statistical data -- Banc of America
Capital Management.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
3
<PAGE> 8
ECONOMIC OVERVIEW CONTINUED...
$30 billion in government debt because of the
emergence of sizable federal budget surpluses has
been a major force pushing long-term Treasury bond
yields lower.
The past 12 months have also witnessed the emergence
of a global recovery. Much of Asia has rebounded
smartly from the scourge of devaluations that began
in 1997. Japan's economy has continued to struggle
but appears to be on a modest upward track. The new
"Eurozone" has moved forward, although growth has
been moderate. Even Russia has begun to emerge from
the turmoil of 1998. Finally, while parts of Latin
America -- such as Venezuela and Argentina --
continue to struggle, Brazil appears to have turned
the corner and Mexico has prospered.
The major non-event of the year turned out to be the
"Y2K" date change. Although computer failures could
have wreaked havoc on financial markets and the
global economy, extensive investment and preparation
by the technology-dependent countries allowed markets
to celebrate the new year with barely a hiccup.
THE YEAR AHEAD
Look for the U.S. economy to continue its expansion
during the coming year, with no recession looming on
the horizon. We forecast growth to moderate, however,
to 3.5% or less over the course of the next 12
months. This pace will be more consistent with a
long-term sustainable trend.
Inflation should remain constrained. Although low
unemployment may cause additional upward pressure on
wages and benefits, productivity gains should offset
much of that increase. Meanwhile, a step-up in
production by oil producing countries should cause
energy prices to subside from the peaks reached in
early 2000.
We also anticipate one or two more interest rate
hikes from the Fed as monetary authorities attempt to
rein in growth and ensure that the economy does not
overheat. Long-term interest rates have already
largely incorporated expectations of such additional
tightening.
The stock market has displayed extreme volatility
recently, and large swings are likely to continue.
Strong profit growth and moderate interest rates
should support a further rise in overall stock prices
during the coming year. However, general gains of
more than 10% should be more difficult to achieve,
especially as the surge in the technology sector has
tended to overstate some of the general strength in
the market.
While the long-term fundamentals underpinning the
technology sector remain compelling, a reallocation
in portfolios generally has begun. Investors have
started to switch from internet, communications, and
biotechnology stocks with very high valuations to
other market segments with much lower price-to-
earnings ratios***. We think this rebalancing of the
market is healthy, especially as it involves some
broadening in its strength to encompass the
financial, consumer noncyclical and industrial
sectors of the market. Also, look for investors to
continue to discern between internet and other new
firms that are likely to be long-term survivors and
those that have set up shop with only a concept and a
promise.
LYNN REASER, PH.D.
CHIEF ECONOMIST
BANC OF AMERICA CAPITAL MANAGEMENT
March 31, 2000
***The price-to-earnings ratio gives investors an
idea of how much they are paying for a company's
earning power.
4
<PAGE> 9
NATIONS LIFEGOAL INCOME
AND GROWTH PORTFOLIO
INVESTMENT STRATEGIES TEAM COMMENTARY*
<TABLE>
<S> <C>
IN THE FOLLOWING INTERVIEW, THE TEAM SHARES ITS VIEWS ON
NATIONS LIFEGOAL INCOME AND GROWTH PORTFOLIO'S PERFORMANCE
FOR THE 12-MONTH PERIOD ENDED MARCH 31, 2000 AND ITS CURRENT
OUTLOOK.
PORTFOLIO MANAGEMENT PLEASE DESCRIBE THE PORTFOLIO'S INVESTMENT STYLE AND
The Portfolio is managed by the PHILOSOPHY.
Investment Strategies Team of Banc Nations LifeGoal Income And Growth Portfolio is the most
of America of Capital Management, conservative of the three Nations LifeGoal Portfolios. The
Inc., the investment sub-adviser Portfolio invests primarily in bond funds in order to
to the Portfolio. provide current income and to help reduce the risks
INVESTMENT OBJECTIVE associated with a pure stock investment. We allocate a
The Portfolio seeks current income relatively small percentage of assets to stock funds to seek
and modest growth to protect some growth in capital as well as protect against inflation.
against inflation and to preserve By diversifying investments across various Nations Funds
purchasing power. mutual funds, Nations LifeGoal Income And Growth Portfolio
PERFORMANCE REVIEW allows investors to participate in a variety of timely
For the 12-month period ended opportunities within our fund complex, such as short- and
March 31, 2000, Nations LifeGoal intermediate-term bond funds, large- and
Income And Growth Portfolio small-capitalization domestic stock funds and stock funds
Investor A Shares provided a total that invest internationally.
return of 4.93%.** WHAT WERE THE ECONOMIC AND MARKET CONDITIONS LIKE DURING THE
REPORTING PERIOD?
The domestic and international economies grew briskly over
the last 12 months, leading to strong earnings growth and
higher interest rates in the U.S. and throughout most major
nations. According to government statistics, inflation
remained low with the CPI (consumer price index) remaining
well below 3%. Despite the low inflation, interest rates
soared as the economy grew stronger and labor markets grew
tighter. Unemployment fell to 4%, the lowest in three
decades, oil prices surged over 100%, and most other
commodity prices firmed, all leading investors to fears of
higher inflation sometime in the future. With this as a
backdrop, the 30-year U.S. Treasury bond had one of its
worst years on record in 1999 as its yield rose 25% from
5.1% to 6.4%, although it fell back under 6% by March 31,
2000. Short-term interest rates rose as well on the heels of
the conservative stance taken by the Federal Reserve Board
to control the strong economic growth and inflation. The
rise in interest rates across all maturities, coupled with
continued low inflation, led to materially higher real
yields (bond yields after inflation) during the last 12
months.
Strong corporate profits and low inflation led to another
stellar year for the stock market. In calendar year 1999,
the Standard & Poor's 500 Composite Stock Price Index (S&P
500 Index)*** finished its fifth consecutive year of 20%
plus returns. The cumulative return of the S&P 500 over the
past five years is the best five-year
</TABLE>
*The outlook for this Portfolio may differ from that
presented for other Nations Funds mutual funds.
**The performance shown does not reflect the maximum
front-end sales charge of 5.75% that may apply
to purchases of Investor A Shares. For standardized
performance, please refer to the Performance table.
***The Standard & Poor's 500 Composite Stock Price
Index is an unmanaged index of 500 widely held
common stocks. It is unavailable for investment.
Source for all statistical data -- Banc of America
Capital Management, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
5
<PAGE> 10
NATIONS LIFEGOAL INCOME
AND GROWTH PORTFOLIO
INVESTMENT STRATEGIES TEAM COMMENTARY continued
<TABLE>
<S> <C>
return in market history. It continued to be a big-cap
market led by the technology sector. Growth stocks continued
their spectacular dominance over value, via high exposure to
the technology sector and the huge returns in that sector.
The technology sector now accounts for 35% of the value of
the S&P 500. Technology investors saw returns hardly
imaginable years ago, and the market went into Internet IPO
(initial public offering) overdrive through the course of
1999 and into 2000. Value investors muddled through while
growth investors rode the back of technology. By year-end,
stock indices and valuations were close to new record highs
as the economy stayed its steady course. The first three
months of 2000 have been more volatile as rising interest
rates have caused investors to reexamine company valuations.
IN BROAD TERMS, HOW DID THE VARIOUS ASSET CLASSES PERFORM
DURING THE PERIOD?
In general, these were the performance trends among the
major asset classes (types of investments):
-- Stocks outperformed bonds significantly
-- Small-capitalization stocks performed better than
large-capitalization stocks
-- Growth stocks delivered better results than value
stocks by a wide margin
-- Cash equivalents had better returns than most fixed
income securities
-- Government guaranteed U.S. Treasury bonds performed
better than higher risk non-investment grade high yield
bonds
CAN YOU DESCRIBE THE ASSET ALLOCATION PROCESS AND HOW THE
PORTFOLIO WAS POSITIONED AT THE BEGINNING OF THE REPORTING
PERIOD?+
We use a structured, disciplined process to determine the
appropriate asset allocation for Nations LifeGoal Income And
Growth Portfolio. By "asset allocation" we mean the
percentages of the Portfolio that are invested in various
investment categories, or asset classes. In deciding how to
allocate the Portfolio's assets, we employ quantitative
models that allow us to develop expected returns and
profiles for each asset class. We also analyze the
historical relationships among asset classes -- whether, and
how much, movements in one have correlated with movements in
the others -- in varying market environments. Based on this
information, we try to allocate the Portfolio's assets as
efficiently as possible -- which means seeking the highest
return potential for a given level of risk, while staying
true to the Portfolio's investment objective.
The Portfolio began the period with an 80% allocation to
short-term bonds and 20% to equities. Of the Portfolio's
total holdings, 15% was invested in large-capitalization
domestic equities and 5% was invested in
large-capitalization international equities.
</TABLE>
+Portfolio characteristics are subject to change and
may not be representative of current characteristics.
6
<PAGE> 11
NATIONS LIFEGOAL INCOME
AND GROWTH PORTFOLIO
INVESTMENT STRATEGIES TEAM COMMENTARY continued
<TABLE>
<S> <C>
WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO'S ASSET
ALLOCATION DURING THE REPORTING PERIOD?
We made only one significant adjustment to the asset mix in
the twelve-month period ended March 31, 2000. In early
December, we took advantage of modest weakness in the
corporate bond market as well as longer-dated bonds by
adding a new position in Nations Investment Grade Bond Fund.
We funded this purchase by reducing the Portfolio's exposure
to Nations Short-Term Income Fund and selling Nations
Short-Intermediate Government Fund. At the same time, we
tilted the equity allocation towards more of a value bias
based on the wide valuation discrepancy that had taken place
between growth and value stocks. We accomplished this by
buying Nations Value Fund and Nations Blue Chip Fund. These
positions were funded by selling Nations Managed Index Fund
and Nations Disciplined Equity Fund. Interestingly, none of
these moves changed our overall 80%/20% allocation to bonds
and stocks, respectively. After these moves in December, we
did not make any changes for the remainder of the fiscal
year.
WHICH ASSET ALLOCATION DECISIONS HELPED PORTFOLIO
PERFORMANCE?
The Portfolio's exposure to the international equity markets
was a significant positive contributor to performance over
the past twelve months. While the weighting in international
stocks averaged only 5% over the past year, the returns were
very large. Coming off the heels of a weak 1998 as a result
of the "Asian crisis," international stock markets came
roaring back in 1999 as interest rates declined and
economies strengthened. We gained our exposure to these
markets through ownership of Nations International Value
Fund (Primary A Shares), which was up 36.03% over the 12
months ending March 31, 2000. In addition, our move to
increase exposure to longer-dated bonds by adding Nations
Investment Grade Bond Fund to the Portfolio has benefited
performance already.
WHICH ASSET ALLOCATION DECISIONS HAD A NEGATIVE IMPACT ON
PORTFOLIO PERFORMANCE?
With the continued strength of the equity market relative to
bonds, we could have been more aggressive adding to equity
exposure at the beginning of the year and holding it to
year-end. Of course, that is with the benefit of hindsight.
We still believe, however, that current valuation levels are
high, and that, in time, this decision to only have 20%
allocation to equities should benefit the Portfolio. Also,
the lack of exposure to small-capitalization stocks hurt
performance on a relative basis, as small-cap stocks had an
exceptional year and outperformed large-capitalization
stocks.
LOOKING AHEAD, WHAT INVESTMENT OPPORTUNITIES DO YOU
ANTICIPATE AND HOW ARE YOU POSITIONING THE PORTFOLIO TO TAKE
ADVANTAGE OF THEM?
With the moves we made in December, the Portfolio is well
positioned to take advantage of the strength we anticipate
within the value style this year, as well as corporate bonds
which, in our view, currently offer relatively attractive
yields.
</TABLE>
7
<PAGE> 12
NATIONS LIFEGOAL INCOME
AND GROWTH PORTFOLIO
INVESTMENT STRATEGIES TEAM COMMENTARY continued
<TABLE>
<S> <C>
We continue to approach the equity market warily, as
concerns about high valuations dominate our outlook;
nevertheless, our long-term view is positive. Should the
equity markets decline, we will try to take advantage of
lower prices by positioning the Portfolio more heavily in
stocks. However, Nations LifeGoal Income And Growth
Portfolio is the most conservative of the LifeGoal
Portfolios -- its exposure to the equity market will always
be relatively low.
</TABLE>
8
<PAGE> 13
NATIONS LIFEGOAL INCOME
AND GROWTH PORTFOLIO
PERFORMANCE
GROWTH OF A $10,000 INVESTMENT
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
<TABLE>
<CAPTION>
SINCE INCEPTION NAV** MOP*
<S> <C> <C>
(10/15/96
through
3/31/00) 7.97% 6.14%
</TABLE>
The charts to the left show the growth in value of a hypothetical $10,000
investment in Investor A Shares of Nations LifeGoal Income And Growth Portfolio
from the inception of the share class. Figures for the Lehman Aggregate Bond
Index, which is an unmanaged index comprised of the Government/Corporate Bond
Index, the Asset-Backed Securities Index and the Mortgage-Backed Securities
Index and includes U.S. Treasury issues, agency issues, corporate bond issues
and mortgage-backed issues, include reinvestment of dividends. Figures for the
Standard & Poor's 500 Composite Stock Price Index, an unmanaged index of 500
widely held common stocks, include reinvestment of dividends. The Indexes are
unavailable for investment. The performance of Primary A, Investor B and
Investor C Shares may vary based on the differences in sales loads and fees paid
by the shareholders investing in each class.
Nations LifeGoal Income And Growth Portfolio's Primary A, Investor A and
Investor C Shares commenced investment operations on October 2, 1996. Shares
were offered to the public on October 15, 1996.
[CHART LEGEND]
[INVESTOR A SHARES AT MOP* RETURN CHART]
<TABLE>
<CAPTION>
NATIONS LIFEGOAL INCOME LEHMAN AGGREGATE BOND S&P 500 COMPOSITE STOCK
AND GROWTH FUND $12,292 INDEX $12,444 PRICE INDEX $22,382
----------------------- --------------------- -----------------------
<S> <C> <C> <C>
Oct. 15 1996 9425.00 10000.00 10000.00
1996 9618.00 10300.00 10542.00
9664.00 10242.00 10825.00
10137.00 10618.00 12716.00
10453.00 10971.00 13667.00
1997 10435.00 11293.00 14059.00
10956.00 11469.00 16020.00
11079.00 11738.00 16549.00
10815.00 12234.00 14902.00
1998 11491.00 12276.00 18076.00
11714.00 12215.00 18978.00
11906.00 12107.00 20316.00
11853.00 12189.00 19047.00
1999 12205.00 12175.00 21881.00
Mar. 31 2000 12292.00 12444.00 22382.00
</TABLE>
[INVESTOR A SHARES AT NAV** RETURN CHART]
<TABLE>
<CAPTION>
NATIONS LIFEGOAL INCOME LEHMAN AGGREGATE BOND S&P 500 COMPOSITE STOCK
AND GROWTH FUND $13,043 INDEX $12,444 PRICE INDEX $22,382
----------------------- --------------------- -----------------------
<S> <C> <C> <C>
Oct. 15 1996 10000.00 10000.00 10000.00
1996 10205.00 10300.00 10542.00
10254.00 10242.00 10825.00
10755.00 10618.00 12716.00
11091.00 10971.00 13667.00
1997 11072.00 11293.00 14059.00
11625.00 11469.00 16020.00
11755.00 11738.00 16549.00
11475.00 12234.00 14902.00
1998 12192.00 12276.00 18076.00
12429.00 12215.00 18978.00
12633.00 12107.00 20316.00
12576.00 12189.00 19047.00
1999 12949.00 12175.00 21881.00
Mar. 31 2000 13043.00 12444.00 22382.00
</TABLE>
TOTAL RETURN (AS OF 3/31/00)
<TABLE>
<CAPTION>
INVESTOR A INVESTOR B INVESTOR C
PRIMARY A NAV** MOP* NAV** CDSC*** NAV** CDSC***
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date 10/15/96 10/15/96 8/7/97 10/15/96
---------------------------------------------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE 4.91% 4.93% -1.07% 4.25% -0.66% 4.11% 3.13%
---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 8.42% 8.33% 6.21% 7.59% 7.59%
SINCE INCEPTION 8.06% 7.97% 6.14% 5.95% 4.91% 7.33% 7.33%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of distributions.
*Figures at maximum offering price (MOP) reflect the maximum front-end sales
charge of 5.75%.
**Figures at net asset value (NAV) do not reflect any sales charges. Investor A
Shares are available with a reduced or waived sales charge only under certain
circumstances as described in the prospectus.
***Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
9
<PAGE> 14
NATIONS LIFEGOAL
BALANCED GROWTH PORTFOLIO
INVESTMENT STRATEGIES TEAM COMMENTARY*
<TABLE>
<S> <C>
IN THE FOLLOWING INTERVIEW, THE TEAM SHARES ITS VIEWS ON
NATIONS LIFEGOAL BALANCED GROWTH PORTFOLIO'S PERFORMANCE FOR
THE 12-MONTH PERIOD ENDED MARCH 31, 2000 AND ITS CURRENT
OUTLOOK.
PORTFOLIO MANAGEMENT PLEASE DESCRIBE THE PORTFOLIO'S INVESTMENT STYLE AND
The Portfolio is managed by the PHILOSOPHY.
Investment Strategies Team of Banc Nations LifeGoal Balanced Growth Portfolio aims to provide a
of America Capital Management, moderate approach to growth. The Portfolio holds stock funds
Inc., the investment sub-adviser for their growth potential and bond funds for current income
to the Portfolio. potential. Bond fund holdings are also intended to help
INVESTMENT OBJECTIVE reduce the risk of a portfolio comprised entirely of stocks.
The Portfolio seeks total return By diversifying investments across various Nations Funds
through a balanced portfolio of mutual funds, Nations LifeGoal Balanced Growth Portfolio
equity and fixed income gives investors the opportunity to participate in large- and
securities. small-capitalization domestic stocks, diversified bond funds
PERFORMANCE REVIEW and international stock funds.
For the 12-month period ended WHAT WERE THE ECONOMIC AND MARKET CONDITIONS LIKE DURING THE
March 31, 2000, Nations LifeGoal REPORTING PERIOD?
Balanced Growth Portfolio Investor The domestic and international economies grew briskly over
A Shares provided a total return the last 12 months, leading to strong earnings growth and
of 18.03%.** higher interest rates in the U.S. and throughout most major
nations. According to government statistics, inflation
remained low with the CPI (consumer price index) remaining
well below 3%. Despite the low inflation, interest rates
soared as the economy grew stronger and labor markets grew
tighter. Unemployment fell to 4%, the lowest in three
decades, oil prices surged over 100%, and most other
commodity prices firmed, all leading investors to fears of
higher inflation sometime in the future. With this as a
backdrop, the 30-year U.S. Treasury bond had one of its
worst years on record in 1999 as its yield rose 25% from
5.1% to 6.4%, although it fell back under 6% by March 31,
2000. Short-term interest rates rose as well on the heels of
the conservative stance taken by the Federal Reserve Board
to control the strong economic growth and inflation. The
rise in interest rates across all maturities, coupled with
continued low inflation, led to materially higher real
yields (bond yields after inflation) during the last 12
months.
</TABLE>
*The outlook for this Portfolio may differ from that
presented for other Nations Funds mutual funds.
**The performance shown does not reflect the maximum
front-end sales charge of 5.75% that may apply
to purchases of Investor A Shares. For standardized
performance, please refer to the Performance table.
Source for all statistical data -- Banc of America
Capital Management, Inc.
BECAUSE SMALL COMPANIES OFTEN HAVE NARROWER MARKETS
AND LIMITED FINANCIAL RESOURCES, AND THEIR STOCKS ARE
NOT AS ACTIVELY TRADED AS LARGE COMPANY STOCKS, THEIR
SHARE PRICES WILL BE MORE VOLATILE.
INVESTING IN INTERNATIONAL INVESTMENTS MAY INVOLVE
SPECIAL RISKS, INCLUDING FOREIGN TAXATION, CURRENCY
RISKS, RISKS ASSOCIATED WITH POSSIBLE DIFFERENCES IN
FINANCIAL STANDARDS, AND OTHER MONETARY AND POLITICAL
RISKS ASSOCIATED WITH FUTURE POLITICAL AND ECONOMIC
DEVELOPMENTS.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
10
<PAGE> 15
NATIONS LIFEGOAL
BALANCED GROWTH PORTFOLIO
INVESTMENT STRATEGIES TEAM COMMENTARY continued
<TABLE>
<S> <C>
Strong corporate profits and low inflation led to another
stellar year for the stock market. In calendar year 1999,
the Standard & Poor's 500 Composite Stock Price Index (S&P
500)*** finished its fifth consecutive year of 20% plus
returns. The cumulative return of the S&P 500 over the past
five years is the best five-year return in market history.
It continued to be a big-cap market led by the technology
sector. Growth stocks continued their spectacular dominance
over value, via high exposure to the technology sector and
the huge returns in that sector. The technology sector now
accounts for 35% of the value of S&P 500. Technology
investors saw returns hardly imaginable years ago, and the
market went into Internet IPO (initial public offering)
overdrive through the course of 1999 and into 2000. Value
investors muddled through while growth investors rode the
back of technology. By year-end, stock indices and
valuations were close to new record highs as the economy
stayed its steady course. The first three months of 2000
have been more volatile as rising interest rates have caused
investors to reexamine company valuations.
IN BROAD TERMS, HOW DID THE VARIOUS ASSET CLASSES PERFORM
DURING THE PERIOD?
In general, these were the performance trends among the
major asset classes (types of investments):
-- Stocks outperformed bonds significantly
-- Small-capitalization stocks performed better than
large-capitalization stocks
-- Growth stocks delivered better results than value
stocks by a wide margin
-- Cash equivalents had better returns than most fixed
income securities
-- Government guaranteed U.S. Treasury bonds performed
better than higher risk non-investment grade high yield
bonds
CAN YOU DESCRIBE THE ASSET ALLOCATION PROCESS AND HOW THE
PORTFOLIO WAS POSITIONED AT THE BEGINNING OF THE REPORTING
PERIOD?+
We use a structured, disciplined process to determine the
appropriate asset allocation for LifeGoal Balanced Growth
Portfolio. By "asset allocation" we mean the percentages of
the portfolio that are invested in various investment
categories, or asset classes. In deciding how to allocate
Portfolio assets, we employ quantitative models that allow
us to develop expected returns and profiles for each asset
class. We also analyze the historical relationships among
asset classes -- whether, and how much, movements in one
have correlated in the past with movements in the
others -- in varying market environments. Based on this
information, we try to allocate the Portfolio's assets as
efficiently as possible -- which means seeking the highest
return potential for a given level of risk, while staying
true to the Portfolio's investment objective.
</TABLE>
***The Standard & Poor's 500 Composite Stock Price
Index is an unmanaged index of 500 widely held common
stocks. It is unavailable for investment.
+Portfolio characteristics are subject to change and
may not be representative of current characteristics.
11
<PAGE> 16
NATIONS LIFEGOAL
BALANCED GROWTH PORTFOLIO
INVESTMENT STRATEGIES TEAM COMMENTARY continued
<TABLE>
<S> <C>
The Portfolio began the period with a 45% allocation to
stocks and 55% to bonds. Of its total holdings, including
bonds, the Portfolio had 10% exposure to large-
capitalization stocks, 25% in small-capitalization stocks,
and 10% in international stocks.
WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO'S ASSET
ALLOCATION DURING THE REPORTING PERIOD?
We made two significant changes in the portfolio over the
past twelve months. In early December, we added a position
in Nations Marsico Focused Equities Fund, seeking to take
advantage of its strong track record and focused style of
investing. We also added Nations Value Fund to gain exposure
to the attractive valuations present within the equity
market. On the fixed income side, we increased exposure to
the corporate bond market by adding to the Portfolio's
position in Nations Investment Grade Bond Fund. While we
made several changes to the Portfolio, we did not change the
allocation between stocks and bonds.
In March of this year, we changed our equity holdings again
in order to tilt the Portfolio towards more of a value style
and reduce its exposure to growth stocks. We took some gains
off the table in Nations Marsico Focused Equities Fund and
Nations Small Company Fund, which performed exceptionally
well, and added to the position in Nations Value Fund. The
Portfolio's bond holdings remained unchanged.
WHICH ASSET ALLOCATION DECISIONS HELPED PORTFOLIO
PERFORMANCE?
While it has only been in the Portfolio for four months, the
addition of a 15% position in Nations Marsico Focused
Equities Fund in December was a significant contributor to
performance. In addition, exposure to the small-cap growth
segment of the market as well as to international markets,
contributed to the Portfolio's performance. Coming off the
heels of a weak 1998 as a result of the "Asian crisis,"
international stock markets came roaring back in 1999 as
interest rates declined and economies strengthened. The
Portfolio gained exposure to these markets through ownership
of Nations International Value Fund (Primary A Shares),
which was up 36.03% over the 12 months ending March 31,
2000. Nations Small Company Fund (Primary A Shares) was up a
whopping 97.46% over the past 12 months.
Lastly, our move away from growth into value appears well
timed. We made that move toward the end of the fiscal year.
As mentioned earlier, none of the moves changed the mix in
the Portfolio between stocks and bonds.
WHICH ASSET ALLOCATION DECISIONS HAD A NEGATIVE IMPACT ON
PORTFOLIO PERFORMANCE?
We reduced the Portfolio's equity exposure late in the
second half of 1999, reflecting our concerns over high
valuation levels. At the same time, we increased the
allocation to fixed income funds by adding to the position
in Nations Investment Grade Bond Fund -- a move that was
consistent with our cautious view toward equities. With the
continued strength of the equity market relative to bonds,
we could have been more aggressive adding to the Portfolio's
equity exposure at
</TABLE>
12
<PAGE> 17
NATIONS LIFEGOAL
BALANCED GROWTH PORTFOLIO
INVESTMENT STRATEGIES TEAM COMMENTARY continued
<TABLE>
<S> <C>
the beginning of the year and holding it to year-end. Of
course, that is with the benefit of hindsight. We still
believe, however, that current valuation levels are high,
and that, in time, this decision to only have a 45%
allocation to stocks should benefit the Portfolio.
At present, these moves appear premature as equity markets
have continued to soar to record highs, however, our
valuation models have historically been very accurate and
thus we remain firm in our conviction. While the fundamental
outlook for the U.S. economy remains very positive,
valuations by almost any measure are at unprecedented
levels.
LOOKING AHEAD, WHAT INVESTMENT OPPORTUNITIES DO YOU
ANTICIPATE AND HOW ARE YOU POSITIONING THE PORTFOLIO TO TAKE
ADVANTAGE OF THEM?
We continue to approach the equity market warily, as
concerns about high valuations dominate our outlook.
Nevertheless, our long-term view is positive. Within the
equity market, value stocks appear particularly attractive
relative to growth stocks, which have soared to record
valuations, mainly due to the strong performance of
technology stocks. The Portfolio is well positioned for a
"value market" which we fully expect this year. Should the
equity markets decline, we will try to take advantage of
lower prices by positioning the Portfolio more heavily in
stocks. However, the Portfolio will continue to pursue its
objective through a broadly diversified mix of investment
assets.
</TABLE>
13
<PAGE> 18
NATIONS LIFEGOAL
BALANCED GROWTH PORTFOLIO
PERFORMANCE
GROWTH OF A $10,000 INVESTMENT
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
<TABLE>
<CAPTION>
SINCE INCEPTION NAV** MOP*
<S> <C> <C>
(10/15/96
through
3/31/00) 12.74% 10.84%
</TABLE>
The charts to the left show the growth in value of a hypothetical $10,000
investment in Investor A Shares of Nations LifeGoal Balanced Growth Portfolio
from the inception of the share class. Figures for the Standard & Poor's 500
Composite Stock Price Index, an unmanaged index of 500 widely held common
stocks, include reinvestment of dividends. Figures for the Lehman Aggregate Bond
Index, which is an unmanaged index comprised of the Government/Corporate Bond
Index, the Asset-Backed Securities Index and the Mortgage-Backed Securities
Index and includes U.S. Treasury issues, agency issues, corporate bond issues
and mortgage-backed issues, include reinvestment of dividends. The Indexes are
unavailable for investment. The performance of Primary A, Primary B, Investor B
and Investor C Shares may vary based on the differences in sales loads and fees
paid by the shareholders investing in each class.
Nations LifeGoal Balanced Growth Portfolio's Primary A, Investor A and Investor
C Shares commenced investment operations on October 2, 1996. Shares were offered
to the public on October 15, 1996.
[CHART LEGEND]
[INVESTOR A SHARES AT MOP* RETURN CHART]
<TABLE>
<CAPTION>
NATIONS LIFEGOAL BALANCED LEHMAN AGGREGATE BOND S&P 500 COMPOSITE STOCK
GROWTH FUND $14,270 INDEX $12,444 PRICE INDEX $22,382
------------------------- --------------------- -----------------------
<S> <C> <C> <C>
Oct. 15/1996 9425.00 10000.00 10000.00
9657.00 10300.00 10542.00
9506.00 10242.00 10825.00
10263.00 10618.00 12716.00
10790.00 10971.00 13667.00
1997 10740.00 11293.00 14059.00
11575.00 11469.00 16020.00
11719.00 11738.00 16549.00
10669.00 12234.00 14902.00
1998 11991.00 12276.00 18076.00
12089.00 12215.00 18978.00
12535.00 12107.00 20316.00
12343.00 12189.00 19047.00
1999 13716.00 12175.00 21881.00
Mar. 31 2000 14270.00 12444.00 22382.00
</TABLE>
[INVESTOR A SHARES AT NAV** RETURN CHART]
<TABLE>
<CAPTION>
NATIONS LIFE GOAL BALANCED LEHMAN AGGREGATE BOND S&P 500 COMPOSITE STOCK
GROWTH FUND INDEX PRICE INDEX
-------------------------- --------------------- -----------------------
<S> <C> <C> <C>
Oct. 15 1996 10000.00 10000.00 10000.00
10246.00 10300.00 10542.00
10086.00 10242.00 10825.00
10889.00 10618.00 12716.00
11449.00 10971.00 13667.00
1997 11395.00 11293.00 14059.00
12281.00 11469.00 16020.00
12434.00 11738.00 16549.00
11320.00 12234.00 14902.00
1998 12722.00 12276.00 18076.00
12826.00 12215.00 18978.00
13299.00 12107.00 20316.00
13096.00 12189.00 19047.00
1999 14552.00 12175.00 21881.00
Mar. 31|2000 15140.00 12444.00 22382.00
</TABLE>
TOTAL RETURN (AS OF 3/31/00)
<TABLE>
<CAPTION>
INVESTOR A INVESTOR B INVESTOR C
PRIMARY A PRIMARY B NAV** MOP* NAV** CDSC*** NAV** CDSC***
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date 10/15/96 8/4/97 10/15/96 8/13/97 10/15/96
-----------------------------------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE 18.34% 17.73% 18.03% 11.25% 17.26% 12.26% 17.22% 16.22%
-----------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 14.71% 14.50% 12.25% 14.02% 14.02%
SINCE INCEPTION 12.94% 12.58% 12.74% 10.84% 11.59% 10.63% 12.33% 12.33%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of distributions.
*Figures at maximum offering price (MOP) reflect the maximum front-end sales
charge of 5.75%.
**Figures at net asset value (NAV) do not reflect any sales charges. Investor A
Shares are available with a reduced or waived sales charge only under certain
circumstances as described in the prospectus.
***Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
14
<PAGE> 19
NATIONS LIFEGOAL
GROWTH PORTFOLIO
INVESTMENT STRATEGIES TEAM COMMENTARY*
<TABLE>
<S> <C>
IN THE FOLLOWING INTERVIEW, THE TEAM SHARES ITS VIEWS ON
NATIONS LIFEGOAL GROWTH PORTFOLIO'S PERFORMANCE FOR THE
12-MONTH PERIOD ENDED MARCH 31, 2000 AND ITS CURRENT
OUTLOOK.
PORTFOLIO MANAGEMENT PLEASE DESCRIBE THE PORTFOLIO'S INVESTMENT STYLE AND
The Portfolio is managed by the PHILOSOPHY.
Investment Strategies Team of Banc Nations LifeGoal Growth Portfolio is the most aggressive of
of America Capital Management, the three Nations LifeGoal Portfolios. This Portfolio aims
Inc., the investment sub-adviser to provide long-term capital appreciation for
to the Portfolio. growth-oriented investors with an investment time frame of
INVESTMENT OBJECTIVE at least five years who are comfortable with
The Portfolio seeks capital moderate-to-high risk. By diversifying investments across
appreciation through exposure to a various Nations Funds mutual funds, Nations LifeGoal Growth
variety of equity market segments. Portfolio gives investors the opportunity to participate in
PERFORMANCE REVIEW a variety of large- and small-capitalization domestic stock
For the 12-month period ended funds, as well as stock funds that invest internationally.
March 31, 2000, Nations LifeGoal WHAT WERE THE ECONOMIC AND MARKET CONDITIONS LIKE DURING THE
Growth Portfolio Investor A Shares REPORTING PERIOD?
provided a total return of The domestic and international economies grew briskly over
32.85%.** the last 12 months, leading to strong earnings growth and
higher interest rates in the U.S. and throughout most major
nations. According to government statistics, inflation
remained low with the CPI (consumer price index) remaining
well below 3%. Despite the low inflation, interest rates
soared as the economy grew stronger and labor markets grew
tighter. Unemployment fell to 4%, the lowest in three
decades, oil prices surged over 100%, and most other
commodity prices firmed, all leading investors to fears of
higher inflation sometime in the future. With this as a
backdrop, the 30-year U.S. Treasury bond had one of its
worst years on record in 1999 as its yield rose 25% from
5.1% to 6.4%, although it fell back under 6% by March 31,
2000. Short-term interest rates rose as well on the heels of
the conservative stance taken by the Federal Reserve Board
to control the strong economic growth and inflation. The
rise in interest rates across all maturities, coupled with
continued low inflation, led to materially higher real
yields (bond yields after inflation) during the last 12
months.
</TABLE>
*The outlook for this Portfolio may differ from that
presented for other Nations Funds mutual funds.
**The performance shown does not reflect the maximum
front-end sales charge of 5.75% that may apply
to purchases of Investor A Shares. For standardized
performance, please refer to the Performance table.
Source for all statistical data -- Banc of America
Capital Management, Inc.
BECAUSE SMALL COMPANIES OFTEN HAVE NARROWER MARKETS
AND LIMITED FINANCIAL RESOURCES, AND THEIR STOCKS ARE
NOT AS ACTIVELY TRADED AS LARGE COMPANY STOCKS, THEIR
SHARE PRICES WILL BE MORE VOLATILE.
INVESTING IN INTERNATIONAL INVESTMENTS MAY INVOLVE
SPECIAL RISKS, INCLUDING FOREIGN TAXATION, CURRENCY
RISKS, RISKS ASSOCIATED WITH POSSIBLE DIFFERENCES IN
FINANCIAL STANDARDS, AND OTHER MONETARY AND POLITICAL
RISKS ASSOCIATED WITH FUTURE POLITICAL AND ECONOMIC
DEVELOPMENTS.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
15
<PAGE> 20
NATIONS LIFEGOAL
GROWTH PORTFOLIO
INVESTMENT STRATEGIES TEAM COMMENTARY continued
<TABLE>
<S> <C>
Strong corporate profits and low inflation led to another
stellar year for the stock market. In calendar year 1999,
the Standard & Poor's 500 Composite Stock Price Index (S&P
500)*** finished its fifth consecutive year of 20% plus
returns. The cumulative return of the S&P 500 over the past
five years is the best five-year return in market history.
It continued to be a big-cap market led by the technology
sector. Growth stocks continued their spectacular dominance
over value, via high exposure to the technology sector and
the huge returns in that sector. The technology sector now
accounts for 35% of the value of the S&P 500. Technology
investors saw returns hardly imaginable years ago, and the
market went into Internet IPO (initial public offering)
overdrive through the course of 1999 and into 2000. Value
investors muddled through while growth investors rode the
back of technology. By calendar year-end, stock indices and
valuations were close to new record highs as the economy
stayed its steady course. The first three months of 2000
have been more volatile as rising interest rates have caused
investors to reexamine company valuations.
IN BROAD TERMS, HOW DID THE VARIOUS ASSET CLASSES PERFORM
DURING THE PERIOD?
In general, these were the performance trends among the
major asset classes (types of investments):
-- Stocks outperformed bonds significantly
-- Small-capitalization stocks performed better than
large-capitalization stocks
-- Growth stocks delivered better results than value
stocks by a wide margin
-- International stocks outperformed domestic stocks due
to a strong economic recovery.
CAN YOU DESCRIBE THE ASSET ALLOCATION PROCESS AND HOW THE
PORTFOLIO WAS POSITIONED AT THE BEGINNING OF THE REPORTING
PERIOD?+
We use a structured, disciplined process to determine the
appropriate asset allocation for Nations LifeGoal Growth
Portfolio. By "asset allocation" we mean the percentages of
the Portfolio that are invested in various investment
categories, or asset classes. In deciding how to allocate
Portfolio assets, we employ quantitative models that allow
us to develop expected returns and profiles for each asset
class. We also analyze the historical relationships among
asset classes -- whether, and how much, movements in one
have correlated with movements in the others -- in varying
market environments. Based on this information, we try to
allocate the Portfolio's assets as efficiently as
possible -- which means seeking to provide the highest
return potential for a given level of risk, while staying
true to the Portfolio's investment objective.
The Portfolio is designed so that a minimum of 40% and a
maximum of 75% of its assets are invested in
large-capitalization domestic stock funds. The Portfolio's
allocation to small- and mid-capitalization domestic stock
funds ranges from 15%
</TABLE>
***The Standard & Poor's 500 Composite Stock Price
Index is an unmanaged index of 500 widely held common
stocks. It is unavailable for investment.
+Portfolio characteristics are subject to change and
may not be representative of current characteristics.
16
<PAGE> 21
NATIONS LIFEGOAL
GROWTH PORTFOLIO
INVESTMENT STRATEGIES TEAM COMMENTARY continued
<TABLE>
<S> <C>
to 35%. For added growth potential, the Portfolio may invest
between 10% and 30% of its assets in core international
stock funds.
At the beginning of the reporting period, the Portfolio's
assets were allocated 65% to large-cap domestic equity
funds, 25% to small- and mid-cap domestic stock funds, and
10% to international funds.
WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO'S ASSET
ALLOCATION DURING THE REPORTING PERIOD?
We emphasized two themes in the changes that we made to the
Portfolio's asset allocation: repositioning the Portfolio to
have more of a value bias, with a less aggressive growth
tilt, and adding exposure to what we think will be the best
long-term performers. In December, we shifted assets from
Nations Managed Index Fund and Nations Disciplined Equity
Fund to Nations Marsico Focused Equities Fund and Nations
Strategic Growth Fund to seek to take advantage of the
strong track records these two funds have generated
historically. Then in March 2000, we tilted the Portfolio
towards a value style by increasing exposure to Nations
Value Fund to 40% of the Portfolio's assets. At the same
time, we reduced exposure to growth by trimming the position
in Nations Small Company Fund. We also increased our
weighting in international equities on the heels of strong
international economies and better valuations versus
domestic equities.
WHICH ASSET ALLOCATION DECISIONS HELPED THE PORTFOLIO'S
PERFORMANCE?
The addition of Nations Marsico Focused Equities Fund helped
the Portfolio's returns during the period, even though it
has only been in the Portfolio for four months. The
Portfolio's 25% weighting in small- and mid-cap growth
stocks also added significantly to performance. The
Portfolio's reduction in exposure to the growth segment of
the market late in the year and an increase in exposure to
value appear to have been well timed. Value stocks seem to
have begun to turn the corner going into the next fiscal
year.
WHICH ASSET ALLOCATION DECISIONS HAD A NEGATIVE IMPACT ON
PORTFOLIO PERFORMANCE?
In hindsight, the Portfolio's international allocation
should have been higher. International markets were in
turmoil just 18 months ago, after the "Asian crisis". They
quickly recovered though, and most international markets
were up significantly in 1999. We increased our weighting in
international stocks from 10% to 20% later in the year, and
are optimistic that this will have a positive impact next
year.
LOOKING AHEAD, WHAT INVESTMENT OPPORTUNITIES DO YOU
ANTICIPATE AND HOW ARE YOU POSITIONING THE PORTFOLIO TO TAKE
ADVANTAGE OF THEM?
Overall, we remain optimistic about the U.S. economy -- we
see nothing on the horizon that's likely to impede the
current business expansion, although the pace of growth may
slow somewhat. Corporate profit growth should continue to
moderate, in our opinion. Value stocks appear particularly
attractive relative to growth stocks, which have soared to
record valuations, mainly due to the strong performance of
technology stocks. The portfolio is well positioned for a
"value market" which we fully anticipate for this year. We
maintain the view that the equity market should offer
investors the potential for attractive long-term returns in
spite of inevitable periods of volatility.
</TABLE>
17
<PAGE> 22
NATIONS LIFEGOAL
GROWTH PORTFOLIO
PERFORMANCE
GROWTH OF A $10,000 INVESTMENT
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
<TABLE>
<CAPTION>
SINCE INCEPTION NAV** MOP*
<S> <C> <C>
(10/15/96
through
3/31/00) 18.65% 16.65%
</TABLE>
The charts to the left show the growth in value of a hypothetical $10,000
investment in Investor A Shares of Nations LifeGoal Growth Portfolio from the
inception of the share class. Figures for the Standard & Poor's 500 Composite
Stock Price Index, an unmanaged index of 500 widely held common stocks, include
reinvestment of dividends. It is not available for investment. The performance
of Primary A, Primary B, Investor B and Investor C Shares may vary based on the
differences in sales loads and fees paid by the shareholders investing in each
class.
Nations LifeGoal Growth Portfolio's Primary A, Investor A and Investor C Shares
commenced investment operations on October 2, 1996. Shares were offered to the
public on October 15, 1996.
[CHART LEGEND]
[INVESTOR A SHARES AT MOP* RETURN CHART]
<TABLE>
<CAPTION>
NATIONS LIFEGOAL GROWTH LEHMAN AGGREGATE BOND S&P 500 COMPOSITE STOCK
FUND $17,025 INDEX $12,444 PRICE INDEX $22,382
----------------------- --------------------- -----------------------
<S> <C> <C> <C>
Oct. 15 1996 9425.00 10000.00 10000.00
9755.00 10300.00 10542.00
9609.00 10242.00 10825.00
10934.00 10618.00 12716.00
11757.00 10971.00 13667.00
1997 11176.00 11293.00 14059.00
12474.00 11469.00 16020.00
12229.00 11738.00 16549.00
10189.00 12234.00 14902.00
1998 12589.00 12276.00 18076.00
12832.00 12215.00 18978.00
14007.00 12107.00 20316.00
13234.00 12189.00 19047.00
1999 15814.00 12175.00 21881.00
Mar. 31 2000 17025.00 12444.00 22382.00
</TABLE>
[INVESTOR A SHARES AT NAV** RETURN CHART]
<TABLE>
<CAPTION>
NATIONS LIFEGOAL GROWTH LEHMAN AGGREGATE BOND S&P 500 COMPOSITE STOCK
FUND $18,064 INDEX $12,444 PRICE INDEX $22,382
----------------------- --------------------- -----------------------
<S> <C> <C> <C>
Oct. 15 1996 10000.00 10000.00 10000.00
10350.00 10300.00 10542.00
10195.00 10242.00 10825.00
11601.00 10618.00 12716.00
12474.00 10971.00 13667.00
1997 11858.00 11293.00 14059.00
13235.00 11469.00 16020.00
12975.00 11738.00 16549.00
10811.00 12234.00 14902.00
1998 13357.00 12276.00 18076.00
13615.00 12215.00 18978.00
14862.00 12107.00 20316.00
14042.00 12189.00 19047.00
1999 16778.00 12175.00 21881.00
Mar. 31 2000 18064.00 12444.00 22382.00
</TABLE>
TOTAL RETURN (AS OF 3/31/00)
<TABLE>
<CAPTION>
INVESTOR A INVESTOR B INVESTOR C
PRIMARY A PRIMARY B NAV** MOP* NAV** CDSC*** NAV** CDSC***
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date 10/15/96 9/19/97 10/15/96 8/12/97 10/15/96
---------------------------------------------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE 32.94% 32.40% 32.67% 25.06% 31.68% 26.68% 31.65% 30.65%
---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 21.19% 21.00% 18.63% 20.13% 20.13%
SINCE INCEPTION 18.82% 18.48% 18.65% 16.65% 15.45% 14.55% 17.89% 17.89%
</TABLE>
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. Average annual returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of distributions.
*Figures at maximum offering price (MOP) reflect the maximum front-end sales
charge of 5.75%.
**Figures at net asset value (NAV) do not reflect any sales charges. Investor A
Shares are available with a reduced or waived sales charge only under certain
circumstances as described in the prospectus.
***Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
18
<PAGE> 23
NATIONS FUNDS
Nations LifeGoal Income And Growth Portfolio
STATEMENT OF NET ASSETS MARCH 31, 2000
<TABLE>
<CAPTION>
VALUE
SHARES (000)
-----------------------------------------------------------
<C> <S> <C> <C>
INVESTMENT COMPANY SECURITIES -- 101.1%
15,664 Nations Blue Chip Fund................. $ 585
31,074 Nations International Value Fund....... 584
470,389 Nations Investment Grade Bond Fund..... 4,407
460,463 Nations Short-Term Income Fund......... 4,379
72,903 Nations Value Fund..................... 1,184
-------
TOTAL INVESTMENT COMPANY SECURITIES
(Cost $11,066)....................... 11,139
-------
TOTAL INVESTMENTS
(Cost $11,066*)............... 101.1% 11,139
-------
OTHER ASSETS AND
LIABILITIES (NET)............. (1.1)%
Receivable for Fund shares sold........ 21
Dividends receivable................... 49
Payable for Fund shares redeemed....... (164)
Investment advisory fee payable........ (7)
Shareholder servicing and distribution
fees payable......................... (14)
Distributions payable.................. (6)
-------
TOTAL OTHER ASSETS AND
LIABILITIES (NET).................... (121)
-------
NET ASSETS...................... 100.0% $11,018
=======
NET ASSETS CONSIST OF:
Distributions in excess of net
investment income.................... $ (6)
Accumulated net realized loss on
investments sold..................... (47)
Net unrealized appreciation of
investments.......................... 73
Paid-in capital........................ 10,998
-------
NET ASSETS............................. $11,018
=======
</TABLE>
<TABLE>
<CAPTION>
VALUE
-----------------------------------------------------------
-----------------------------------------------------------
<C> <S> <C> <C>
PRIMARY A SHARES:
Net asset value, offering and
redemption price per share
($4,736,323 / 445,531 shares
outstanding)......................... $10.63
=======
INVESTOR A SHARES:
Net asset value and redemption price
per share ($788,833 / 73,800 shares
outstanding)......................... $10.69
=======
Maximum sales charge................... 5.75%
Maximum offering price per share....... $11.34
INVESTOR B SHARES:
Net asset value and offering price per
share+ ($4,644,696 / 434,172 shares
outstanding)......................... $10.70
=======
INVESTOR C SHARES:
Net asset value and offering price per
share+ ($847,913 / 79,474 shares
outstanding)......................... $10.67
=======
</TABLE>
---------------
* Federal Income Tax Information: Net unrealized appreciation of $30 on
investment securities was comprised of gross appreciation of $178 and gross
depreciation of $148 for Federal income tax purposes. At March 31, 2000, the
aggregate cost of securities for federal income tax purposes was $11,109.
+ The redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE> 24
NATIONS FUNDS
Nations LifeGoal Balanced Growth Portfolio
STATEMENT OF NET ASSETS MARCH 31, 2000
<TABLE>
<CAPTION>
VALUE
SHARES (000)
-----------------------------------------------------------
<C> <S> <C> <C>
INVESTMENT COMPANY SECURITIES -- 100.5%
156,136 Nations International Value Fund....... $ 2,932
887,416 Nations Investment Grade Bond Fund..... 8,315
121,335 Nations Marsico Focused Equities
Fund................................. 2,741
110,907 Nations Small Company Fund............. 2,514
579,774 Nations Strategic Income Fund.......... 5,525
366,236 Nations Value Fund..................... 5,948
-------
TOTAL INVESTMENT COMPANY SECURITIES
(Cost $26,085)....................... 27,975
-------
TOTAL INVESTMENTS
(Cost $26,085*)............... 100.5% 27,975
-------
OTHER ASSETS AND
LIABILITIES (NET)............. (0.5)%
Receivable for Fund shares sold........ 110
Dividends receivable................... 78
Payable for Fund shares redeemed....... (288)
Investment advisory fee payable........ (16)
Shareholder servicing and distribution
fees payable......................... (30)
Distributions payable.................. (2)
-------
TOTAL OTHER ASSETS AND
LIABILITIES (NET).................... (148)
-------
NET ASSETS...................... 100.0% $27,827
=======
NET ASSETS CONSIST OF:
Accumulated net realized gain on
investments sold..................... $ 1,050
Net unrealized appreciation of
investments.......................... 1,890
Paid-in capital........................ 24,887
-------
NET ASSETS............................. $27,827
=======
</TABLE>
<TABLE>
<CAPTION>
VALUE
-----------------------------------------------------------
-----------------------------------------------------------
<C> <S> <C> <C>
PRIMARY A SHARES:
Net asset value, offering and
redemption price per share
($13,325,339 / 1,113,463 shares
outstanding)......................... $11.97
------
------
PRIMARY B SHARES:
Net asset value, offering and
redemption price per share
($322,248 / 26,882 shares
outstanding)......................... $11.99
------
------
INVESTOR A SHARES:
Net asset value and redemption price
per share ($2,298,240 / 191,641
shares outstanding).................. $11.99
------
------
Maximum sales charge................... 5.75%
Maximum offering price per share....... $12.72
INVESTOR B SHARES:
Net asset value and offering price per
share+ ($9,789,326 / 815,880 shares
outstanding)......................... $12.00
------
------
INVESTOR C SHARES:
Net asset value and offering price per
share+ ($2,091,564 / 173,071 shares
outstanding)......................... $12.09
------
------
</TABLE>
---------------
* Federal Income Tax Information: Net unrealized appreciation of $1,379 on
investment securities was comprised of gross appreciation of $2,205 and gross
depreciation of $826 for Federal income tax purposes. At March 31, 2000, the
aggregate cost of securities for federal income tax purposes was $26,596.
+ The redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE> 25
NATIONS FUNDS
Nations LifeGoal Growth Portfolio
STATEMENT OF NET ASSETS MARCH 31, 2000
<TABLE>
<CAPTION>
VALUE
SHARES (000)
-----------------------------------------------------------
<C> <S> <C> <C>
INVESTMENT COMPANY SECURITIES -- 100.2%
332,528 Nations International Value Fund....... $ 6,245
258,611 Nations Marsico Focused Equities
Fund................................. 5,842
177,678 Nations Small Company Fund............. 4,028
90,690 Nations Strategic Growth Fund.......... 1,544
779,608 Nations Value Fund..................... 12,661
-------
TOTAL INVESTMENT COMPANY SECURITIES
(Cost $28,239)....................... 30,320
-------
TOTAL INVESTMENTS
(Cost $28,239*)............... 100.2% 30,320
-------
OTHER ASSETS AND
LIABILITIES (NET)............. (0.2)%
Receivable for Fund shares sold........ 100
Payable for Fund shares redeemed....... (120)
Investment advisory fee payable........ (16)
Shareholder servicing and distribution
fees payable......................... (26)
-------
TOTAL OTHER ASSETS AND
LIABILITIES (NET).................... (62)
-------
NET ASSETS...................... 100.0% $30,258
=======
NET ASSETS CONSIST OF:
Accumulated net realized gain on
investments sold..................... $ 4,077
Net unrealized appreciation of
investments.......................... 2,081
Paid-in capital........................ 24,100
-------
NET ASSETS............................. $30,258
=======
</TABLE>
<TABLE>
<CAPTION>
VALUE
-----------------------------------------------------------
-----------------------------------------------------------
<C> <S> <C> <C>
PRIMARY A SHARES:
Net asset value, offering and
redemption price per share
($15,264,621 / 985,122 shares
outstanding)......................... $15.50
------
------
PRIMARY B SHARES:
Net asset value, offering and
redemption price per share
($8,708 / 564 shares outstanding).... $15.43
------
------
INVESTOR A SHARES:
Net asset value and redemption price
per share ($4,527,580 / 292,445
shares outstanding).................. $15.48
------
------
Maximum sales charge................... 5.75%
Maximum offering price per share....... $16.42
INVESTOR B SHARES:
Net asset value and offering price per
share+ ($8,971,922 / 584,513 shares
outstanding)......................... $15.35
------
------
INVESTOR C SHARES:
Net asset value and offering price per
share+ ($1,484,812 / 97,064 shares
outstanding)......................... $15.30
------
------
</TABLE>
---------------
* Federal Income Tax Information: Net unrealized appreciation of $1,982 on
investment securities was comprised of gross appreciation of $2,081 and gross
depreciation of $99 for Federal income tax purposes. At March 31, 2000, the
aggregate cost of securities for federal income tax purposes was $28,338.
+ The redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE> 26
NATIONS FUNDS
STATEMENTS OF OPERATIONS
For the year ended March 31, 2000
<TABLE>
LIFEGOAL LIFEGOAL
INCOME AND BALANCED LIFEGOAL
GROWTH GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------
<S> <C> <C> <C>
(IN THOUSANDS)
INVESTMENT INCOME:
Dividends................................................... $ 556 $ 921 $ 120
-------------- -------------- --------------
EXPENSES:
Investment advisory fee..................................... 29 64 51
Shareholder servicing and distribution fees:
Primary B Shares.......................................... -- 1 --*
Investor A Shares......................................... 2 5 10
Investor B Shares......................................... 50 94 82
Investor C Shares......................................... 5 16 9
-------------- -------------- --------------
Total expenses.......................................... 86 180 152
Fees waived by distributor.................................. -- -- --
-------------- -------------- --------------
Net expenses............................................ 86 180 152
-------------- -------------- --------------
NET INVESTMENT INCOME/(LOSS)................................ 470 741 (32)
-------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) on investments..................... (44) 1,259 4,046
Capital gains distributions received........................ 93 447 865
Net unrealized appreciation/(depreciation) of investments
during the year........................................... 1 1,849 1,434
-------------- -------------- --------------
Net realized and unrealized gain/(loss) on investments...... 50 3,555 6,345
-------------- -------------- --------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $ 520 $ 4,296 $ 6,313
============== ============== ==============
</TABLE>
---------------
* Amount represents less than $500.
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE> 27
[This page is intentionally left blank.]
23
<PAGE> 28
NATIONS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
LIFEGOAL INCOME AND
GROWTH PORTFOLIO
-----------------------------------------
YEAR ENDED YEAR ENDED
3/31/00 3/31/99
-----------------------------------------
<S> <C> <C>
(IN THOUSANDS)
Net investment income....................................... $ 470 $ 242
Net realized gain/(loss) on investments during the year..... (44) 211
Capital gain distributions received......................... 93 56
Net change in unrealized appreciation/(depreciation) of
investments during the year............................... 1 33
-------------- --------------
Net increase/(decrease) in net assets resulting from
operations................................................ 520 542
Distributions to shareholders from net investment income:
Primary A Shares.......................................... (257) (104)
Primary B Shares.......................................... -- --
Investor A Shares......................................... (40) (33)
Investor B Shares......................................... (178) (78)
Investor C Shares......................................... (25) (2)
Distributions to shareholders in excess of net investment
income:
Primary A Shares.......................................... -- --
Primary B Shares.......................................... -- --
Investor A Shares......................................... -- --
Investor B Shares......................................... -- --
Investor C Shares......................................... -- --
Distributions to shareholders from net realized gain on
investments:
Primary A Shares.......................................... (110) (17)
Primary B Shares.......................................... -- --
Investor A Shares......................................... (22) (12)
Investor B Shares......................................... (106) (45)
Investor C Shares......................................... (8) (2)
Net increase/(decrease) in net assets from Portfolio share
transactions.............................................. (3,498) 12,592
-------------- --------------
Net increase/(decrease) in net assets....................... (3,724) 12,841
NET ASSETS:
Beginning of year........................................... 14,742 1,901
-------------- --------------
End of year................................................. $ 11,018 $ 14,742
============== ==============
Undistributed net investment income/(distributions in excess
of net investment income) at end of year.................. $ (6) $ 32
============== ==============
</TABLE>
---------------
* Amount represents less than $500.
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE> 29
NATIONS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
LIFEGOAL BALANCED LIFEGOAL GROWTH
GROWTH PORTFOLIO PORTFOLIO
----------------------------------- -------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/00 3/31/99 3/31/00 3/31/99
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 741 $ 469 $ (32) $ (27)
1,259 143 4,046 60
447 504 865 575
1,849 (240) 1,434 227
-------------- -------------- -------------- --------------
4,296 876 6,313 835
(441) (319) -- --
(9) (5) -- --
(66) (27) -- --
(229) (116) -- --
(51) (3) -- --
(48) (12) (108) (29)
(1) --* --* --
(8) (1) (49) (18)
(37) (4) (84) (10)
(6) --* (12) --
(327) (206) (172) (78)
(8) (5) --* --
(47) (28) (109) (98)
(248) (214) (252) (335)
(32) (14) (22) (18)
(530) 19,424 8,047 8,463
-------------- -------------- -------------- --------------
2,208 19,346 13,552 8,712
25,619 6,273 16,706 7,994
-------------- -------------- -------------- --------------
$ 27,827 $ 25,619 $ 30,258 $ 16,706
============== ============== ============== ==============
$ -- $ 56 $ -- $ --
============== ============== ============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE> 30
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY
<TABLE>
<CAPTION>
LIFEGOAL INCOME AND GROWTH PORTFOLIO
YEAR ENDED YEAR ENDED
MARCH 31, 2000 MARCH 31, 1999
----------------- -----------------
SHARES DOLLARS SHARES DOLLARS
----------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 264 $ 2,829 1,215 $12,984
Issued as reinvestment of dividends....................... 33 353 11 114
Redeemed.................................................. (633) (6,820) (489) (5,201)
---- ------- ----- -------
Net increase/(decrease)................................... (336) $(3,638) 737 $ 7,897
==== ======= ===== =======
INVESTOR A SHARES:
Sold...................................................... 39 $ 412 128 $ 1,364
Issued as reinvestment of dividends....................... 6 61 4 42
Redeemed.................................................. (95) (1,019) (20) (213)
---- ------- ----- -------
Net increase/(decrease)................................... (50) $ (546) 112 $ 1,193
==== ======= ===== =======
INVESTOR B SHARES:
Sold...................................................... 154 $ 1,653 416 $ 4,427
Issued as reinvestment of dividends....................... 21 231 10 106
Redeemed.................................................. (182) (1,949) (98) (1,042)
---- ------- ----- -------
Net increase/(decrease)................................... (7) $ (65) 328 $ 3,491
==== ======= ===== =======
INVESTOR C SHARES:
Sold...................................................... 73 $ 787 4 $ 45
Issued as reinvestment of dividends....................... 3 32 --* 3
Redeemed.................................................. (6) (68) (3) (37)
---- ------- ----- -------
Net increase/(decrease)................................... 70 $ 751 1 $ 11
==== ======= ===== =======
Total net increase........................................ (323) $(3,498) 1,178 $12,592
==== ======= ===== =======
</TABLE>
---------------
* Amount represents less than $500 or 500 shares.
SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE> 31
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
LIFEGOAL BALANCED GROWTH PORTFOLIO
YEAR ENDED YEAR ENDED
MARCH 31, 2000 MARCH 31, 1999
----------------- ------------------
SHARES DOLLARS SHARES DOLLARS
-----------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 474 $ 5,241 2,353 $ 25,445
Issued as reinvestment of dividends....................... 73 805 51 535
Redeemed.................................................. (808) (8,887) (1,039) (11,171)
---- ------- ------ --------
Net increase/(decrease)................................... (261) $(2,841) 1,365 $ 14,809
==== ======= ====== ========
PRIMARY B SHARES:
Sold --* $ 1 22 $ 243
Issued as reinvestment of dividends....................... 2 17 1 10
Redeemed.................................................. --* (3) -- --
---- ------- ------ --------
Net increase/(decrease)................................... 2 $ 15 23 $ 253
==== ======= ====== ========
INVESTOR A SHARES:
Sold...................................................... 131 $ 1,458 114 $ 1,232
Issued as reinvestment of dividends....................... 11 121 5 56
Redeemed.................................................. (71) (819) (43) (444)
---- ------- ------ --------
Net increase/(decrease)................................... 71 $ 760 76 $ 844
==== ======= ====== ========
INVESTOR B SHARES:
Sold...................................................... 197 $ 2,189 592 $ 6,244
Issued as reinvestment of dividends....................... 43 477 30 321
Redeemed.................................................. (249) (2,765) (248) (2,584)
---- ------- ------ --------
Net increase/(decrease)................................... (9) $ (99) 374 $ 3,981
==== ======= ====== ========
INVESTOR C SHARES:
Sold...................................................... 174 $ 1,923 25 $ 273
Issued as reinvestment of dividends....................... 8 90 1 16
Redeemed.................................................. (33) (378) (69) (752)
---- ------- ------ --------
Net increase/(decrease)................................... 149 $ 1,635 (43) $ (463)
==== ======= ====== ========
Total net increase........................................ (48) $ (530) 1,795 $ 19,424
==== ======= ====== ========
</TABLE>
---------------
* Amount represents less than $500 or 500 shares.
SEE NOTES TO FINANCIAL STATEMENTS.
27
<PAGE> 32
NATIONS FUNDS
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
LIFEGOAL GROWTH PORTFOLIO
YEAR ENDED YEAR ENDED
MARCH 31, 2000 MARCH 31, 1999
------------------ -----------------
SHARES DOLLARS SHARES DOLLARS
-----------------------------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
PRIMARY A SHARES:
Sold...................................................... 768 $ 10,460 929 $10,881
Issued as reinvestment of dividends....................... 20 271 10 110
Redeemed.................................................. (157) (2,069) (609) (7,166)
---- -------- ---- -------
Net increase/(decrease)................................... 631 $ 8,662 330 $ 3,825
==== ======== ==== =======
PRIMARY B SHARES:
Sold...................................................... --* $ --* -- $ --
Issued as reinvestment of dividends....................... -- -- --* --*
Redeemed.................................................. -- -- -- --
---- -------- ---- -------
Net increase/(decrease)................................... -- $ -- -- $ --
==== ======== ==== =======
INVESTOR A SHARES:
Sold...................................................... 78 $ 1,051 213 $ 2,362
Issued as reinvestment of dividends....................... 12 157 10 113
Redeemed.................................................. (77) (1,048) (65) (746)
---- -------- ---- -------
Net increase/(decrease)................................... 13 $ 160 158 $ 1,729
==== ======== ==== =======
INVESTOR B SHARES:
Sold...................................................... 99 $ 1,336 354 $ 4,096
Issued as reinvestment of dividends....................... 24 314 28 333
Redeemed.................................................. (242) (3,173) (146) (1,652)
---- -------- ---- -------
Net increase/(decrease)................................... (119) $ (1,523) 236 $ 2,777
==== ======== ==== =======
INVESTOR C SHARES:
Sold...................................................... 71 $ 913 20 $ 226
Issued as reinvestment of dividends....................... 3 35 2 19
Redeemed.................................................. (16) (200) (10) (113)
---- -------- ---- -------
Net increase/(decrease)................................... 58 $ 748 12 $ 132
==== ======== ==== =======
Total net increase........................................ 583 $ 8,047 736 $ 8,463
==== ======== ==== =======
</TABLE>
---------------
* Amount represents less than $500 or 500 shares.
SEE NOTES TO FINANCIAL STATEMENTS.
28
<PAGE> 33
[This page is intentionally left blank.]
29
<PAGE> 34
NATIONS FUNDS
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period.
<TABLE>
<CAPTION>
NET INCREASE/
(DECREASE)
NET ASSET NET REALIZED IN NET ASSETS DISTRIBUTIONS
VALUE NET AND UNREALIZED RESULTING FROM FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT
OF PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIFEGOAL INCOME AND GROWTH PORTFOLIO
PRIMARY A SHARES
Year ended 3/31/2000(a)................... $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(a)................... 9.97 0.43 0.89 1.32 (0.40)
Period ended 3/31/1997*................... 10.03 0.32 (0.06) 0.26 (0.32)
INVESTOR A SHARES
Year ended 3/31/2000(a)................... $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(a)................... 9.97 0.41 0.89 1.30 (0.38)
Period ended 3/31/1997*................... 10.03 0.31 (0.06) 0.25 (0.31)
INVESTOR B SHARES
Year ended 3/31/2000(a)................... $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(a)**............... 10.51 0.19 0.36 0.55 (0.22)
INVESTOR C SHARES
Year ended 3/31/2000(a)................... $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(a)................... 9.97 0.36 0.89 1.25 (0.35)
Period ended 3/31/1997*................... 10.03 0.31 (0.06) 0.25 (0.31)
<CAPTION>
DISTRIBUTIONS
IN EXCESS OF
NET INVESTMENT
INCOME
--------------
<S> <C>
LIFEGOAL INCOME AND GROWTH PORTFOLIO
PRIMARY A SHARES
Year ended 3/31/2000(a)................... --
Year ended 3/31/1999...................... --
Year ended 3/31/1998(a)................... $(0.12)
Period ended 3/31/1997*................... --
INVESTOR A SHARES
Year ended 3/31/2000(a)................... --
Year ended 3/31/1999...................... --
Year ended 3/31/1998(a)................... $(0.11)
Period ended 3/31/1997*................... --
INVESTOR B SHARES
Year ended 3/31/2000(a)................... --
Year ended 3/31/1999...................... --
Period ended 3/31/1998(a)**............... $(0.07)
INVESTOR C SHARES
Year ended 3/31/2000(a)................... --
Year ended 3/31/1999...................... --
Year ended 3/31/1998(a)................... $(0.10)
Period ended 3/31/1997*................... --
</TABLE>
---------------
* LifeGoal Income and Growth Portfolio Primary A, Investor A and Investor C
Shares commenced investment operations on October 2, 1996. Shares were
offered to the public on October 15, 1996.
** LifeGoal Income and Growth Portfolio 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.
(a) Per share net investment income has been calculated using the monthly
average shares method.
SEE NOTES TO FINANCIAL STATEMENTS.
30
<PAGE> 35
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 TO PORTFOLIO
REALIZED TOTAL VALUE TOTAL PERIOD AVERAGE NET AVERAGE NET TURNOVER
CAPITAL GAINS DISTRIBUTIONS END OF PERIOD RETURN++ (000) ASSETS+++ ASSETS RATE
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$(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
$(0.23) $(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) $(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) $(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.
31
<PAGE> 36
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
For a share outstanding throughout each period.
<TABLE>
<CAPTION>
NET INCREASE/
(DECREASE)
NET ASSET NET REALIZED IN 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
Year ended 3/31/2000(a) $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(a) 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
Year ended 3/31/2000(a) $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(a)** 10.95 0.16 0.77 0.93 (0.20) (0.24)
INVESTOR A SHARES
Year ended 3/31/2000(a) $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(a) 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
Year ended 3/31/2000(a) $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(a)** 10.88 0.11 0.87 0.98 (0.20) (0.24)
INVESTOR C SHARES
Year ended 3/31/2000(a) $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(a) 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>
---------------
* LifeGoal Balanced Growth Portfolio Primary A, Investor A and Investor C
Shares commenced investment 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
investment operations on August 4, and August 13, 1997, respectively.
+ 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.
(a) Per share net investment income has been calculated using the monthly
average shares method.
SEE NOTES TO FINANCIAL STATEMENTS.
32
<PAGE> 37
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
RATIO OF RATIO OF
DISTRIBUTIONS NET ASSET NET ASSETS OPERATING NET INVESTMENT
FROM NET VALUE END OF EXPENSES TO INCOME TO PORTFOLIO
REALIZED TOTAL END OF TOTAL PERIOD AVERAGE NET AVERAGE TURNOVER
CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN++ (000) ASSETS+++ NET ASSETS RATE
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$(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
$(0.29) $(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
$(0.29) $(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
$(0.29) $(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
$(0.29) $(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.
33
<PAGE> 38
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
For a share outstanding throughout each period.
<TABLE>
<CAPTION>
NET INCREASE/
(DECREASE)
NET ASSET NET REALIZED IN 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
Year ended 3/31/2000(a)..... $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(a)..... 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
Year ended 3/31/2000(a)..... $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(a)**............ 12.25 0.01 0.70 0.71 $(0.01) (0.25)
INVESTOR A SHARES
Year ended 3/31/2000(a)..... $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(a)..... 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
Year ended 3/31/2000(a)..... $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(a)**............ 11.98 (0.02) 0.99 0.97 $(0.01) (0.24)
INVESTOR C SHARES
Year ended 3/31/2000(a)..... $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(a)..... 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>
---------------
* LifeGoal Growth Portfolio Primary A, Investor A and Investor C Shares
commenced investment 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
investment operations on September 19, 1997 and August 12, 1997,
respectively.
+ 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.
(a) Per share net investment income has been calculated using the monthly
average shares method.
SEE NOTES TO FINANCIAL STATEMENTS.
34
<PAGE> 39
NATIONS FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
RATIO OF RATIO OF
DISTRIBUTIONS NET ASSET NET ASSETS OPERATING NET INVESTMENT
FROM NET VALUE END OF EXPENSES TO INCOME/(LOSS) PORTFOLIO
REALIZED TOTAL END OF TOTAL PERIOD AVERAGE NET TO AVERAGE TURNOVER
CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN++ (000) ASSETS+++ NET ASSETS RATE
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$(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
$(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
$(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
$(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
$(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.
35
<PAGE> 40
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS
Nations LifeGoal Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. The Company offers three Portfolios: LifeGoal Income and
Growth Portfolio, LifeGoal Balanced Growth Portfolio and LifeGoal 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 offer four classes of shares: Primary A Shares,
Investor A Shares, Investor B Shares and Investor C Shares. LifeGoal Balanced
Growth Portfolio and LifeGoal Growth Portfolio also offer Primary B 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 commenced the sale of 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 generally accepted
accounting principles requires management to make certain estimates and
assumptions at the date of the financial statements that affect the amounts and
disclosures reported. 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 the 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 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
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 generally accepted accounting principles.
Certain reclassifications are made to each Portfolio's capital accounts to
reflect income and gains available for distribution (or available capital loss
carryforwards) under Federal income tax regulations. These reclassifications are
due to different book and tax accounting for short-term capital gain
distributions received different characterizations of distributions made by the
Portfolios, and each Portfolio's use of the tax accounting practice of
equalization.
Reclassifications for the year ended March 31, 2000 were as follows:
<TABLE>
<CAPTION>
INCREASE/
(DECREASE) INCREASE/
INCREASE/ UNDISTRIBUTED (DECREASE)
(DECREASE) NET ACCUMULATED
PAID-IN INVESTMENT NET REALIZED
CAPITAL INCOME GAIN/(LOSS)
(000) (000) (000)
-----------------------------------------
<S> <C> <C> <C>
Income and Growth......... $ 64 $ (8) $ (56)
Balanced Growth........... 96 100 (196)
Growth.................... 251 285 (536)
</TABLE>
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 in accordance with generally accepted
accounting principles. 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.
36
<PAGE> 41
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. INVESTMENT ADVISORY FEE, SUB-ADVISORY FEE, CO-ADMINISTRATION FEE AND RELATED
PARTY TRANSACTIONS
The Company, on behalf of the Portfolios, 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 any and 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 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")
(formerly known as TradeStreet Investment Associates, Inc.), 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.
Effective December 1, 1999, First Data Investor Services Group, Inc. ("First
Data"), the transfer agent for the Portfolios' shares, was acquired by PFPC Inc.
("PFPC"). PFPC provides the same services as the transfer agent for the
Portfolios' shares as were previously provided by First Data. Bank of America
serves as sub-transfer agent for the Portfolios' Primary A and Primary B Shares.
BAAI may, from time to time, voluntarily reduce its fee payable by each
Portfolio. For the year ended March 31, 2000, BAAI did not waive any fees.
Stephens also serves as distributor of the Portfolios' shares. For the year
ended March 31, 2000, the Portfolios were informed that the distributor received
$600 in front-end sales charges for sales of Investor A Shares and $96 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 the Bank of America, BAAI and BACAP, or any
affiliate thereof, receives any compensation from the Company for serving as a
director or officer of the Company.
The Company's eligible Directors may participate in non-qualified deferred
compensation and retirement plans which may be terminated at any time. All
benefits provided under these plans are unfunded and any payments to plan
participants are paid solely out of the Portfolios' assets. Income earned on
each plan participant's deferral account is tied to the rate of return of the
eligible mutual funds selected by the participants or, if no funds are selected,
to the rate of return of Nations Treasury Fund, a portfolio of Nations Fund,
Inc. The expense for the deferred compensation and retirement plans is included
in "Directors' fees and expenses" in the Statements of operations.
A significant portion of each Portfolio's Primary A Shares represents
investments by fiduciary accounts of 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
37
<PAGE> 42
NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 March 31, 2000, the rates in effect and plan limits, as a percentage of
average daily net assets, were as follows:
<TABLE>
<CAPTION>
CURRENT PLAN
RATE LIMITS
-------------------
<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 year ended March 31, 2000 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
(000) (000)
----------------------
<S> <C> <C>
Income and Growth.............. $11,386 $14,989
Balanced Growth................ 31,963 32,686
Growth......................... 41,073 33,094
</TABLE>
5. CAPITAL STOCK
At March 31, 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.
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
resulted 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.
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NATIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. CAPITAL LOSS INFORMATION
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 tax year ended March 31, 2000, the Income and Growth Portfolio elected
to defer losses occurring between November 1, 1999 and March 31, 2000 in the
amount of $4,291.
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NATIONS FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND DIRECTORS OF NATIONS LIFEGOAL FUNDS, INC.
In our opinion, the accompanying statements of net assets, and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Nations LifeGoal Income and Growth Portfolio, Nations LifeGoal Balanced Growth
Portfolio and Nations LifeGoal Growth Portfolio (constituting Nations LifeGoal
Funds, Inc., hereafter referred to as the "Portfolios") at March 31, 2000, the
results of each of their operations for the year then ended, the changes in each
of their net assets for each of the two years in the period then ended and the
financial highlights for the periods indicated, in conformity with accounting
principles generally accepted in the United States. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Portfolios' management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at March
31, 2000 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
May 19, 2000
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NATIONS FUNDS
TAX INFORMATION (UNAUDITED)
Of the distributions (including short term capital gains) paid by the following
Portfolios, the corresponding percentage represents the amount of each
distribution which will qualify for the dividends received deduction available
to corporate shareholders:
<TABLE>
<S> <C>
LifeGoal Growth And Income Portfolio........................ 8.71%
LifeGoal Balanced Growth Portfolio.......................... 5.41%
LifeGoal Growth Portfolio................................... 0%
</TABLE>
For the year ended March 31, 2000, the amount of long-term capital gain
distributed by the Portfolios was as follows:
<TABLE>
<CAPTION>
LONG TERM
CAPITAL GAIN
DISTRIBUTION
FUND DESIGNATION
--------------------------------------------------------------------------
<S> <C>
LifeGoal Growth And Income Portfolio........................ $ 15,724
LifeGoal Balanced Growth Portfolio.......................... 436,645
LifeGoal Growth Portfolio................................... 372,083
</TABLE>
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P.O. Box 34602
Charlotte, NC 28254-4602
Toll free 1.800.321.7854
NATIONS FUNDS
LIFEGLAR (3/00)
