<PAGE> 1
[NATIONS FUNDS LOGO]
Domestic
Stock
Funds
Annual Report For The
Year Ended March 31, 1998
[PICTURE OF TREE]
Investments For A Lifetime(SM)
Nations
Balanced Assets
Fund
Nations
Equity Income
Fund
Nations Value Fund
Nations Marsico
Growth & Income
Fund
Nations
Equity Index
Fund
Nations
Capital Growth
Fund
Nations
Disciplined Equity
Fund
Nations Marsico
Focused Equities
Fund
Nations
Emerging Growth
Fund
Nations
Small Company
Growth Fund
<PAGE> 2
[BACKGROUND DEPICTING BASKETS]
This Report is submitted for
the general information of
shareholders of Nations Funds.
This material must be preceded or
accompanied by a current Nations
Funds prospectus.
Nations Funds Distributor:
Stephens Inc. Stephens Inc., which
is not affiliated with NationsBank,
N.A., is not a bank, and securities
offered by it are not guaranteed by
any bank or insured by the FDIC.
Stephens Inc., member NYSE, SIPC.
Nations Funds Investment Adviser:
NationsBanc Advisors, Inc.
Nations Funds Investment Sub-
Advisers: TradeStreet Investment
Associates, Inc., Gartmore Global
Partners, Boatmen's Capital
Management, Inc. and Marsico
Capital Management, LLC.
- -----------------
[DOWNWARD ARROW]
NOT FDIC-
INSURED
- -----------------
May Lose Value
- -----------------
No Bank Guarantee
- -----------------
<PAGE> 3
Presidents'
Message
Dear Shareholder:
The past 12 months have been very rewarding for many
investors. Even with domestic markets feeling the
effects of the Asian financial crisis, the Standard &
Poor's 500 Composite Stock Price Index (S&P 500
Index) -- a widely known indicator of stock market
activity -- returned 47.98%.*
Even though the markets have experienced recent
success, the prudent investor realizes these conditions
cannot continue indefinitely. While the markets have
continued to perform well during the first three months
of 1998, we encourage you to consider:
-- BUILDING A DIVERSIFIED PORTFOLIO. A portfolio
comprised of different types of
investments -- stocks, bonds, money market
instruments -- has the potential to serve you best
in volatile markets.
-- CHOOSING AN INVESTMENT STRATEGY THAT COMPLEMENTS
YOUR LIFESTYLE AND FINANCIAL OBJECTIVES, and
maintaining that strategy as you pursue your
investment goals.
-- INVESTING FOR THE LONG TERM. If you can afford to
invest throughout inevitable market fluctuations,
you should benefit since historically, market prices
have generally gone up over the long term. This is
often a better strategy than attempting to "time"
the market.
-- INVESTING ON A REGULAR BASIS. This technique, known
as dollar-cost averaging, may enable you to buy more
shares when prices are lower and fewer when prices
are higher. Systematic investing generally provides
an easy, disciplined way to increase your assets.
Such a strategy does not assure a profit and does
not protect against loss in declining markets. Since
this strategy involves continuous investment in
securities regardless of fluctuating price levels,
you should carefully consider your financial ability
to continue your purchases through periods of
declining price levels.
Following these guidelines may help you create an
investment portfolio with the potential to make the
most of current market conditions, as well as those to
come.
With Nations Funds as a component of that portfolio,
your investment is part of over $33 billion in assets
under management. We are very pleased with the overall
performance of the Funds over the past 12 months.
Please refer to the individual fund commentary for
performance results.
NEW OPPORTUNITIES FOR YOUR DIVERSIFIED PORTFOLIO
We have continued to expand the Nations Funds family of
funds, including the addition of two new growth funds
managed by Tom Marsico, one of
* The S&P 500 Index is an unmanaged index of 500 widely
held common stocks. It is unavailable for investment.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
<PAGE> 4
Presidents'
Message continued...
the most respected portfolio managers in the industry.
Mr. Marsico is widely known in the investment community
for having managed the Janus Twenty Fund and Janus
Growth and Income Fund; during his tenure of nearly 10
years at Janus, these Funds grew from $7 million in
assets to more than $7 billion.
In addition, we created Nations Annuity Trust, which
consists of eight investment portfolios that serve as
underlying investment vehicles for annuity products.
One of those products, Nations Variable Annuity issued
by Hartford Life Insurance Company, is now available
for your long-term tax-deferred investing needs.
RECOGNITION FOR SUPERIOR SHAREHOLDER SERVICES
The Nations Funds product line and its performance,
however, lacks importance if it isn't backed by
helpful, professional services to its shareholders.
That's why, among all the Funds' accomplishments this
year, we are particularly proud of the recognition the
industry bestowed on Nations Funds.
In its first year as a participant in the annual survey
conducted by DALBAR, Inc. -- an independent research
firm that measures customer service and establishes
benchmarks in the financial services industry --
Nations Funds was honored with the Key Honors Award for
superior customer service. This award "designates those
firms that demonstrate their commitment to the
shareholder by providing consistently solid service."
NATIONS FUNDS PROVIDES INVESTMENTS FOR A LIFETIME
We want to thank you for your confidence in Nations
Funds, and for making them part of your investment
strategy. As we strive to provide an ever-diverse range
of investment products, we recognize that the
strongest, most important asset is you, the
shareholder.
Sincerely,
<TABLE>
<S> <C>
/s/ A. Max Walker /s/ Robert H. Gordon
A. MAX WALKER ROBERT H. GORDON
PRESIDENT AND CHAIRMAN PRESIDENT
OF THE BOARD NATIONSBANC ADVISORS, INC.
</TABLE>
March 31, 1998
P.S.: If you have any questions or comments on your
annual report
or the information in it, please contact us at
1-800-321-7854 or
send us a message from the Nations Funds Web Site at
www.nationsbank.com/nationsfunds.
<PAGE> 5
Table
Of
Contents
<TABLE>
<S> <C>
NATIONS FUNDS SPECTRUM 2
ECONOMIC OVERVIEWS 4
PORTFOLIO MANAGER COMMENTARY
Nations Balanced Assets Fund 7
Nations Equity Income Fund 12
Nations Value Fund 17
Nations Marsico Growth & Income Fund 21
Nations Equity Index Fund 26
Nations Capital Growth Fund 29
Nations Disciplined Equity Fund 34
Nations Marsico Focused Equities Fund 38
Nations Emerging Growth Fund 43
Nations Small Company Growth Fund 47
FINANCIAL STATEMENTS
Schedules of Investments 51
Statements of Assets and Liabilities 78
Statements of Operations 82
Statements of Changes in Net Assets 84
Schedules of Capital Stock Activity 88
Financial Highlights 96
Notes to Financial Statements 116
---------------------------------------------------------------------------------
NATIONS FUNDS [DALBAR KEY HONOR LOGO]
RECOGNIZED FOR DALBAR, Inc., is a well-respected research firm
OUTSTANDING that measures customer service levels and
CUSTOMER SERVICE establishes benchmarks in the financial services
industry.
In recognition of our
commitment to retail
shareholders through
consistently providing
superior customer service,
Nations Funds was awarded
DALBAR Key Honors in 1997.
---------------------------------------------------------------------------------
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
The
Nations Funds
Family At A Glance
STABILITY
- ---------------- CURRENT INCOME
- ----------------------------------------------------------------------------------
GROWTH & INCOME
-----------------------
MONEY SHORTER INTERMEDIATE LONGER TERM LARGE CAPITALIZATION
MARKET MATURITY MATURITY DOMESTIC VALUE FUNDS
FUNDS BOND FUNDS BOND FUNDS AND GLOBAL
BOND FUNDS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- - Nations - Nations Short- - Nations - Nations Global - Nations
Prime Fund Intermediate Strategic Fixed Government Value Fund
Government Income Fund Income Fund
- - Nations Government Fund - Nations
Money Market - Nations - Nations Managed
Fund - Nations Government Diversified Value Index
Short-Term Securities Fund Income Fund Fund
- - Nations Income Fund
Treasury Fund - Nations - Nations - Nations
- - Nations Tax - Nations Short- Intermediate U.S. Government Equity Income
Exempt Fund Term Municipal Municipal Bond Fund Fund
Income Fund Bond Fund
- Nations - Nations
- Nations Municipal Balanced Assets
State-Specific Income Fund Fund
Intermediate
Municipal Bond - Nations
Funds State-Specific
Long-Term
Municipal Bond
Funds
</TABLE>
POTENTIAL RETURN
RISK (VARIABILITY)
2
<PAGE> 7
[NATIONS FUNDS LOGO]
Investments For A Lifetime(SM)
<TABLE>
<CAPTION>
GROWTH & INCOME
- -------------------------
GROWTH
- ----------------------------------------------------------
AGGRESSIVE GROWTH
-------------------------------------------------------------------------------
LARGE LARGE MID SMALL
CAPITALIZATION CAPITALIZATION INTERNATIONAL CAPITALIZATION CAPITALIZATION REGION-SPECIFIC
FUNDS GROWTH FUNDS EQUITY FUNDS FUNDS FUNDS INTERNATIONAL FUNDS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- - Nations - Nations - Nations - Nations - Nations - Nations
Marsico Marsico Focused International Emerging Small Company Emerging
Growth Equities Fund Growth Fund Growth Fund Growth Fund Markets Fund
& Income
Fund - Nations - Nations - Nations - Nations
Disciplined International Managed Pacific Growth
- - Nations Equity Fund Equity Fund SmallCap Fund
Managed Index Fund
Index Fund - Nations
Capital Growth - Nations
Fund Managed
SmallCap
Value Index
Fund
</TABLE>
The Nations Funds family also includes Nations Equity Index Fund, which seeks
investment results that correspond, before fees and expenses, to the total
return of the Standard and Poor's 500 Composite Stock Price Index.
LIFEGOAL PORTFOLIOS
- - LifeGoal Income and Growth Portfolio
- - LifeGoal Balanced Growth Portfolio
- - LifeGoal Growth Portfolio
3
<PAGE> 8
Economic
Overview
For the 12-month period ended March 31, 1998, economic
conditions in the United States were stellar, fueling a
steady rise in the financial markets and giving
investors plenty to cheer about.
Economic activity was robust, and the pace of growth
for the year was the fastest of the current expansion,
which is now entering its eighth year. With business
booming, corporate profits rose by more than 10%.
Nearly three million new jobs were created, sending the
national unemployment rate down to a 30-year low of
4.6%. What's more, in this high employment environment,
U.S. workers have enjoyed rising wages.
Fortunately, the inflationary impact of rising labor
costs has been more than offset by other strong forces.
In fact, overall inflation was almost nonexistent for
the reporting period, with the Consumer Price Index,
the most commonly used measure of inflation at the
retail level, up less than 2%. Meanwhile, wholesale
inflation actually dropped over the past 12 months.
What explains the economic balancing act that allows
for continual growth without the threat of inflation?
The answer is that the United States is benefiting from
a moderate economic expansion, driven by capital
spending that is expanding capacity rather than
pressuring it. Productivity gains have been impressive,
and inflation is being subdued by increasingly global
markets for labor and products, along with a freer
world trade environment. As long as these trends remain
in place, our economy should continue to grow while
experiencing stable prices for goods and services. We
remain bullish about long-term economic prospects in
the United States.
These ideal economic conditions have helped propel the
financial markets to new significant highs. During the
past 12 months, the Dow Jones Industrial Average* broke
through the 7,000 and 8,000 barriers, closing the
period at 8,799.81 -- up over 35%. Even more amazing is
that the Dow soared by over 20% for the third year in a
row, an unprecedented feat for the blue-chip average.
All other domestic stock indexes rose as well, some
higher than others. By all measures, the past year was
a rewarding one for stock investors.
*The Dow Jones Industrial Average is a price-weighted
index of 30 of the largest, most widely held stocks
traded on the New York Stock Exchange. It is unmanaged
and unavailable for investment.
Source for all statistical data -- TradeStreet
Investment Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
4
<PAGE> 9
Economic
Overview continued...
With news on the inflation front remaining positive,
the bond market also performed well during the period.
Interest rates drifted to lower levels and bond values
rose accordingly. This translated into attractive
results for bond funds, with total returns generally
ranging from 9% to 12% for the period.
Looking ahead, the next several months will likely be
dominated by news about the financial crisis in Asia
and its impact on U.S. companies. However, we do not
expect the so-called "Asian contagion" to cause U.S.
economic conditions to deteriorate. We believe the
positive cyclical themes of 1997 -- moderate growth,
low inflation and continued profit growth -- will
remain intact in the year ahead, and we remain
optimistic that the expansion will continue
uninterrupted.
The U.S. economy has climbed to a level envied by most
other countries in the world. For stock investors in
particular, the view from this lofty perch is
spectacular. Could our markets soar to even higher
levels? Yes, as long as favorable conditions remain in
place.
But investors must remember that stock markets do not
go up indefinitely. Today, our challenge is to fight
off the euphoria that can often accompany a bull market
and remind ourselves that investing is a long-term
endeavor. Historically, stocks have risen over time,
but there have been plenty of ups and downs along the
way. The next stock market correction may be out there,
even if we can't see any dark clouds yet.
On behalf of Nations Funds shareholders, we will keep
our eye on the horizon.
E. KEITH WIRTZ, CFA
CHIEF INVESTMENT OFFICER
TRADESTREET INVESTMENT ASSOCIATES, INC.
March 31, 1998
5
<PAGE> 10
Economic
Commentary
During the 3-month period ended March 31, 1998, the
U.S. economy was exceptionally strong, benefiting from
a combination of steady growth, low inflation, falling
interest rates, low unemployment, rising wages and high
levels of consumer confidence.
The market was driven by the realization that the U.S.
was strong enough to overcome weakness caused by the
Asian financial crisis. Managers who kept their
portfolios invested in growth-oriented stocks during
the Asian financial crisis were able to take advantage
of the market when it rebounded.
Two factors lead us to believe that inflation will
continue to be restrained during the foreseeable
future: productivity gains and Asian exports. U.S.
companies have demonstrated an ability to improve
quality through productivity gains while keeping costs
low. Because domestic product demand in Asia is stifled
by currency devaluation, that region's economic
recovery will be driven by exports. The lower prices of
Asian products, coupled with the stronger U.S. dollar,
reduce the ability of their U.S. competitors to raise
prices. For example, Ford Motor Company cannot raise
its prices for the Lincoln Towncar if Toyota's Lexus
line can offer customers comparable quality at lower
prices.
In light of the healthy economy, consumer confidence
was high. At the same time, consumers were very bargain
conscious, making it difficult for companies to pass on
price increases -- causing a weak pricing environment
for corporations. For example, consumers appreciated
the lower-cost, high-quality products offered by Dell
Computer through its direct distribution delivery
model, while sales of higher-priced, retail-distributed
Compaq computers decreased.
Looking ahead, we expect low interest rates to
continue. With high investor confidence in Federal
Reserve Board Chairman Alan Greenspan and the U.S.
remaining as a "safe haven" for investors in this
uncertain world (creating a shortage of risk-free U.S.
government issues), we find it unlikely that interest
rates will increase.
In our view, the investing environment is close to
ideal -- a strong U.S. economy combined with
shareholder-oriented management
creates a template for strong earnings growth, while
low interest rates and low inflation create the
backdrop for a strong stock market.
THOMAS F. MARSICO
CHIEF EXECUTIVE OFFICER
MARSICO CAPITAL MANAGEMENT, LLC
March 31, 1998
6
<PAGE> 11
Nations
Balanced Assets
Fund Portfolio Manager Commentary*
IN THE FOLLOWING INTERVIEW, MS. HALE SHARES HER VIEWS ON
NATIONS BALANCED ASSETS FUND'S PERFORMANCE FOR THE
12-MONTH PERIOD ENDED MARCH 31, 1998, AND HER CURRENT
OUTLOOK.
<TABLE>
<S> <C>
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S INVESTMENT STYLE AND PHILOSOPHY.
Julie L. Hale, CFA, is Senior The Fund aims to provide shareholders with the potential for
Portfolio Manager of Nations solid returns with reduced overall portfolio risk. It
Balanced Assets Fund and Senior allocates its assets among a diversified portfolio of
Portfolio Manager, Equity stocks, fixed income securities and money market
Management for TradeStreet instruments -- all of which have different return/risk
Investment Associates, Inc., characteristics. The Fund invests primarily in stocks of
investment sub-adviser to the high quality companies with favorable long-term fundamentals
Fund. and attractive valuations. Its fixed-income holdings consist
INVESTMENT OBJECTIVE of investment-grade securities.
The Fund seeks total return by WHAT WERE ECONOMIC AND MARKET CONDITIONS LIKE DURING THE
investing in equity and fixed REPORTING PERIOD?
income securities. During the 12-month period ended March 31, 1998, the economy
PERFORMANCE REVIEW was exceptionally strong reflecting moderate growth, low
For the 12-month period ended inflation and declining interest rates. Against this
March 31, 1998, Nations encouraging backdrop, the financial markets performed well,
Balanced Assets Fund Primary A with the Standard & Poor's 500 Composite Price Index (S&P
Shares provided a total return 500 Index) returning about 48% and long-term bonds returning
of 30.35%. in excess of 20%.** Nations Balanced Assets Fund (Primary A
Shares) returned 30.35%, outperforming its peer group, the
Lipper Balanced Funds Universe, which returned 28.13%.***
The stock market's rise was not without its volatile
moments, the most notable being the 554-point drop in the
Dow Jones Industrial Average on October 27, 1997 triggered
by financial crises in Hong Kong and other Asian markets. By
the final quarter of the reporting period, however, the
stock market had not only stabilized but resumed its rise to
reach new record levels.+
Market events like the October correction and the so-called
"Asian flu" demonstrate precisely why stock investors need
to take a long-term perspective. Over the past three
calendar years, the U.S. stock market has climbed over 100%.
Longer term, investors have enjoyed positive stock market
returns in 16 out of the past 18 calendar years.
*The outlook for this Fund may differ from that presented
for other Nations Funds mutual funds.
**The Standard & Poor's 500 Composite Stock Price Index is
an unmanaged index of 500 widely held common stocks. It is
unavailable for investment.
***Lipper Analytical Services, Inc. is an independent mutual
fund performance monitor. Funds included in the Lipper
Balanced Funds Universe have a primary objective of
conserving principal by maintaining at all times a balanced
portfolio of both stocks and bonds typically, the stock/bond
ratio ranges around 60%/40%.
+The Dow Jones Industrial Average is a price-weighted index
of 30 of the largest, most widely held stocks traded on the
New York Stock Exchange. It is unmanaged and unavailable for
investment.
Source for all statistical data -- TradeStreet Investment
Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
</TABLE>
7
<PAGE> 12
Nations
Balanced Assets
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
HOW WERE THE FUND'S ASSETS ALLOCATED DURING THE PERIOD,
AND WAS THIS EFFECTIVE?
It's important to understand that this is an equity-oriented
balanced fund. While the typical balanced fund has an asset
allocation mix of 60% stocks and 40% bonds, this Fund had an
average stock allocation of 65% during the reporting period.
With the overwhelming performance of the stock market, this
allocation proved to be very beneficial.
HOW DID YOU MANAGE THE STOCK PORTION OF THE FUND?++
During the first quarter of the reporting period, we raised
the Fund's exposure to stocks and reduced its bond holdings.
As we attempt to find value within the stock market, we
gravitate toward firms that are temporarily out of favor
with investors. Often times, this approach leads us to
companies that are or become takeover candidates. This was
the case over the reporting period. Successful stock
selection was focused on companies involved or potentially
involved in takeovers and corporate restructurings.
Specifically, the Fund invested in Keystone International, a
valve manufacturer that was bought out by Tyco International
early in the reporting period. The stock of Navistar
International, a heavy equipment manufacturer, rose sharply
as internal restructuring steps boosted earnings. Later in
the year, an investment in Echlin, an automotive parts
manufacturer and distributor, enhanced Fund performance as
SPX Corporation bid to take over the firm.
Communication services, which comprised roughly 8.5% of the
portfolio during August and September 1997, were also very
important to the Fund's returns during the reporting period.
The Fund benefited from its investment in MCI
Communications, which is being purchased by WorldCom
Incorporated. Ameritech Corporation, SBC Communications and
GTE Corporation were other communication services companies
in the portfolio -- all of which experienced and benefited
from merger speculation. As a result of its value
discipline, the Fund was able to buy these issues at
reasonable prices and sell them as their valuations
increased. By January 1998, the Fund's holdings in this
sector were reduced to 1%.
WHAT INVESTMENT DECISIONS CONTRIBUTED TO THE FUND'S BOND
PERFORMANCE?
The strong performance of corporate bonds in the media/cable
industry, such as Time Warner Incorporated and Viacom
Incorporated, contributed to Fund performance. In addition,
the Fund's performance benefited from its investment in the
financial services industry. As the market's low interest
rates prompted more people to invest, brokerage firms such
as Paine Webber Group, Bear Stearns Companies, Donaldson,
Lufkin & Jenrette and Lehman Brothers experienced a boost in
transaction revenues. This, in turn, benefited the
performance of corporate bonds in this industry.
++Portfolio holdings were current as of March 31, 1998, are
subject to change and may not be representative of current
holdings.
</TABLE>
8
<PAGE> 13
Nations
Balanced Assets
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
WHAT INVESTMENT DECISIONS HINDERED OVERALL PORTFOLIO
PERFORMANCE DURING THE PERIOD?
Toward the beginning of the reporting period, our outlook
was that the economy was growing too fast. We believed that
this growth rate could lead to inflationary pressures that
could prompt the Federal Reserve Board (the Fed) to raise
interest rates. Consequently, the Fund was positioned too
conservatively in terms of the allocation to stocks.
Continued low levels of inflation led us to change this view
early in the period and we increased the Fund's allocation
to stocks.
In the third calendar quarter of 1997, when the Asian
financial crisis struck the economy, the Fund's stock
holdings in cyclicals and technology suffered declines.
Specifically, the value of the Fund's investments in
engineering and construction companies such as Fluor
Corporation and Foster Wheeler -- which build infrastructure
projects in Asia -- went down. The Asian situation also
impacted profits in the technology sector, with particular
damage to the Fund's holdings in semiconductor stocks.
WHAT ECONOMIC DEVELOPMENTS DO YOU ANTICIPATE DURING THE REST
OF 1998?
Looking ahead, we expect the stock market to perform well
but not experience the spectacular gains of the last 12
months. We anticipate that the financial crisis in Asia will
have an impact on the U.S. economy, affecting our markets in
the third or fourth quarter of 1998. When this occurs, we
expect the economy to slow, prompting the labor market to
ease and the Fed to reduce interest rates. However, we do
not expect the slowdown to be so severe as to cause a
recession.
HOW DO YOU EXPECT TO MANAGE THE FUND IN THE COMING MONTHS?
We plan to posture the Fund slightly more conservatively by
reducing its exposure to stocks and increasing its bond
investments. To capture incremental yield and income for the
bond portion of the portfolio, the Fund will continue to
reduce its exposure to mortgage-backed securities and
increase its holdings in corporate bonds.
We find three stock sectors to be particularly promising:
energy, technology and cyclicals. Due to the "Asian flu,"
the price of oil is low because demand is weak, creating an
excellent buying opportunity. Although that industry has not
performed well lately, we expect it to recover over time as
demand rises in Asia, inventories are reduced and prices
increase.
The Asian crisis also prompted a slowdown in the growth of
the telecommunications industry, dampening near-term
earnings for such companies as Ericsson and Scientific
Atlantic. However, we expect these communications equipment
companies -- as well as mainstream computer companies such
as Hewlett-Packard, International Business Machines and
Compaq Computer -- to experience improving earnings growth
and, in turn, favorable stock price performance.
</TABLE>
9
<PAGE> 14
Nations
Balanced Assets
Fund Portfolio Manager Commentary continued...
Lastly, cyclicals have attractive valuations within the
market because investors are reluctant to invest in them
after several years of positive economic growth. We have
increased the Fund's holdings in specialty chemical and
machinery stocks and believe that over the next 18
months earnings will recover as we experience continued
domestic growth and a recovery in Asia.
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/98)
[PIE CHART]
3.3% Oil - Domestic
3.3% Machinery and Equipment
3.6% (FHLMC) Certificates
3.9% Banks
5.4% Banking and Finance
6.8% U.S. Treasury Notes
7.8% Oil - Refining & Marketing
65.9% Other
<TABLE>
<C> <S> <C>
TOP TEN HOLDINGS
(AS A % OF NET ASSETS AS OF 3/31/98)
-----------------------------------------
1 U.S. Treasury Notes due 6.8%
through 2007 ranging from
5.625% to 7.875%
-----------------------------------------
2 FHLMC Gold Pool due through 3.6%
2025 ranging from 6.500% to
8.000%
-----------------------------------------
3 U.S. Treasury Bonds due 3.4%
through 2023 ranging from
6.250% to 7.500%
-----------------------------------------
4 GNMA 7.500% 10/15/27 2.0%
-----------------------------------------
5 CS First Boston Mortgage 1.3%
Securities Corporation
Series 1996-2, Class A4 --
6.620% 9/25/09
-----------------------------------------
6 Dillards Inc., Class A 1.2%
-----------------------------------------
7 Chase Manhattan Corporation 1.2%
-----------------------------------------
8 Bankers Trust New York 1.2%
Corporation
-----------------------------------------
9 Occidental Petroleum 1.1%
Corporation
-----------------------------------------
10 ALLTEL Corporation 1.1%
-----------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1998, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
10
<PAGE> 15
Nations
Balanced Assets
Fund Performance
GROWTH OF $10,000 INVESTMENT
Primary A Shares (as of 3/31/98)
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
S&P
500 Composite Stock
Measurement Period Price Index Lehman Aggregate Bond
(Fiscal Year Covered) $30,086 Index $14,606 Lipper Balanced Funds Universe $20,929
<S> <C> <C> <C>
Sept. 30 1992 10000 10000 10000
1992 10502 10027 10405
10961 10441 10852
11013 10718 11029
11297 10998 11433
1993 11559 11004 11600
11121 10689 11228
11167 10578 11109
11712 10643 11433
1994 11710 10683 11306
12849 11222 12019
14074 11906 12903
15192 12140 13622
1995 16106 12657 14188
16970 12432 14556
17731 12503 14888
18279 12734 15271
1996 19801 13116 16143
20333 13043 16168
23880 13522 17906
25668 13971 19184
1997 26405 14383 19388
Mar. 31 1998 30086 14606 20929
<CAPTION>
Measurement Period
(Fiscal Year Covered) Balanced Assets $21,180
<S> <C>
Sept. 30 1992 10000
1992 10384
10818
11089
11338
1993 11416
11052
10706
11128
1994 11059
11701
12665
13345
1995 13971
14443
14849
15193
1996 16021
16248
17896
19336
1997 19496
Mar. 31 1998 21180
</TABLE>
Investor B Shares (as of 3/31/98)*
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
S&P
500 Composite Stock
Measurement Period Price Index Lehman Aggregate Bond Lipper Balanced Funds
(Fiscal Year Covered) Balanced Assets $18,755 $27,398 Index $13,875 Universe $19,132
<S> <C> <C> <C> <C>
June 7 1993 10000 10000 10000 10000
10287 10029 10181 10115
10498 10287 10447 10475
1993 10546 10526 10453 10615
10198 10127 10154 10271
9860 10170 10049 10147
10231 10666 10110 10448
1994 10147 10664 10148 10338
10709 11701 10660 10995
11573 12817 11310 11803
12174 13834 11532 12457
1995 12723 14667 12023 12971
13129 15454 11810 13328
13463 16146 11877 13659
13751 16646 12097 14017
1996 14476 18032 12460 14777
14654 18516 12390 14780
16119 21746 12845 16371
17366 23375 13272 17537
1997 17468 24046 13662 17723
Mar. 31 1998 18755 27398 13875 19132
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN
Primary A Shares
Since Inception
(9/30/92 through 3/31/98) 14.62%
The charts to the left show the growth
in value of a hypothetical $10,000
investment in Primary A and Investor B
Shares of Nations Balanced Assets Fund
from the date each class of shares was
first offered. 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.
Funds included in the Lipper Balanced
Funds Universe have a primary objective
of conserving principal by maintaining
at all times a balanced portfolio of
both stocks and bonds typically, the
stock/bond ratio ranges around 60%/40%.
It is not possible to invest in the
indexes or Lipper Universe. The
performance shown reflects the
performance of Primary A and Investor B
Shares. The performance of Primary B,
Investor A and Investor C Shares may
vary based on the differences in sales
loads and fees paid by the shareholders
investing in each class.
AVERAGE ANNUAL TOTAL RETURN
Investor B Shares
Since Inception NAV CDSC*
(6/7/93 through
3/31/98) 14.21% 13.96%
</TABLE>
TOTAL RETURN (AS OF 3/31/98)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
PRIMARY A PRIMARY B INVESTOR A INVESTOR B INVESTOR C
Inception Date 9/30/92 6/28/96 10/2/92 6/7/93 10/2/92
NAV CDSC*
- --------------------------------------------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE 30.35% 29.90% 30.13% 29.35% 24.35% 29.43%
- --------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
3 Years 21.87% NA 21.64% 20.97% 20.28% 21.05%
5 Years 14.38% NA 14.13% NA NA 13.45%
Since Inception 14.62% 21.95% 14.37% 14.21% 13.96% 13.67%
</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 THEIR ORIGINAL COST. Average annual total returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
Figures at net asset value (NAV) do not reflect any sales charges.
11
<PAGE> 16
Nations
Equity Income
Fund Portfolio Manager Commentary*
IN THE FOLLOWING INTERVIEW, MR. WILLIAMS SHARES HIS
VIEWS ON NATIONS EQUITY INCOME FUND'S PERFORMANCE FOR
THE 12-MONTH PERIOD ENDED MARCH 31, 1998 AND HIS CURRENT
OUTLOOK.
<TABLE>
<S> <C>
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S INVESTMENT STYLE AND PHILOSOPHY.
Eric S. Williams, CFA, is The Fund provides investors with a diversified portfolio
Senior Portfolio Manager of comprised primarily of stocks that in our view are
Nations Equity Income Fund and undervalued relative to the Standard & Poor's 500 Composite
a Director of Equity Management Stock Price Index (S&P 500 Index).** The portfolio aims to
for TradeStreet Investment provide returns comparable to the S&P 500 Index over time
Associates, Inc., investment with less risk. One way we strive to accomplish this goal is
sub-adviser to the Fund. by buying high-quality companies with above-average
INVESTMENT OBJECTIVE dividends. Additionally, the Fund invests in convertible
The Fund seeks current income securities for extra income potential and diversification.
and growth of capital by With this strategy, the Fund hopes to capture a large
investing primarily in portion of the returns in rising markets, while avoiding the
companies with above-average full impact of a falling market.
dividend yields. WHAT WERE ECONOMIC AND MARKET CONDITIONS LIKE DURING THE
PERFORMANCE REVIEW REPORTING PERIOD?
For the 12-month period ended During the 12-month period ended March 31, 1998, the economy
March 31, 1998, Nations Equity was exceptionally strong as it benefited from a combination
Income Fund Primary A Shares of steady growth, low inflation, falling interest rates, low
provided a total return of unemployment, rising wages and stellar corporate profits.
37.21%. Against this encouraging backdrop, U.S. stock market indexes
posted increases ranging from approximately 35% to 50% for
the period.
The stock market's rise was not without its volatile
moments, the most notable being the 554-point drop in the
Dow Jones Industrial Average*** on October 27, 1997
triggered by financial crises in Hong Kong and other Asian
markets. By the final quarter of the reporting period,
however, the stock market had not only stabilized but
resumed its rise to new record levels. With a total return
of 37.21%, Nations Equity Income Fund (Primary A Shares)
marginally underperformed the Lipper Equity Income Funds
Universe which returned 37.99%.+
*The outlook for this Fund may differ from that presented
for other Nations Funds mutual funds.
**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 Dow Jones Industrial Average is a price-weighted
index of 30 of the largest, most widely held stocks traded
on the New York Stock Exchange. It is unmanaged and
unavailable for investment.
+Lipper Analytical Services, Inc. is an independent mutual
fund performance monitor. Funds included in the Lipper
Equity Income Funds Universe seek relatively high current
income and growth of income through investing 60% or more of
their portfolio in equities.
Source for all statistical data -- TradeStreet Investment
Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
</TABLE>
12
<PAGE> 17
Nations
Equity Income
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
Market events like the October correction and the so-called
"Asian flu" demonstrate precisely why stock investors need
to take a long-term perspective. Over the past three
calendar years, the U.S. stock market has climbed over 100%.
Over the long term, investors have enjoyed positive stock
market returns in 16 out of the past 18 calendar years.
HOW DID THESE ECONOMIC CONDITIONS AFFECT FUND PERFORMANCE?
All in all, it was an excellent environment for stocks,
which perform particularly well in a falling interest rate
environment. In fact, this below market risk Fund produced
an annual return in excess of 35%. Although the market
favored the large-capitalization "mega blue-chip" stocks
with market capitalizations over $25 billion, many of these
stocks had valuations we deemed too high for the Fund to own
given its price-sensitive approach. The Fund focused on
large-capitalization stocks with market capitalizations of
approximately $10 billion.
THE GREATEST CONTRIBUTOR TO WHAT INVESTMENT DECISIONS CONTRIBUTED TO THE FUND'S
FUND PERFORMANCE WAS ITS PERFORMANCE?
INVESTMENT IN THE ENERGY The greatest contributor to Fund performance was its
SECTOR. SPECIFICALLY, THE investment in the energy sector. Specifically, the
VOLATILITY IN CRUDE OIL PRICES volatility in crude oil prices created several opportunities
CREATED SEVERAL OPPORTUNITIES for this valuation-focused Fund. The Fund was able to buy
FOR THIS VALUATION-FOCUSED energy stocks when prices were low, hold them as their
FUND. prices rose and sell them before their prices went back
down.
DID ANY SPECIFIC INDUSTRIES OR SECTORS OFFER EXCEPTIONAL
OPPORTUNITIES FOR THE FUND?++
Rather than concentrating on sectors, the Fund focuses on
individual stocks that are identified as promising and
poised to deliver solid return potential. As a result, the
top five Fund holdings during the reporting period are in
separate sectors: Frontier Corporation, a long-distance
telecommunications company, increased over 80%; Imperial
Chemical Industries, a paint and coating company in the
chemical sector, was up 65%; Computer Associates
International, a software technology company, experienced
gains of 120%; Supervalu Inc., a food distribution company,
increased 60% and Dresser Industries, an oil products and
services company, returned 60%. (It is also worth noting
that although some of the Fund's holdings increased more in
value, on a percentage basis, than its top five holdings,
the Fund invested less money in them because of their higher
risk, so their overall contribution to performance was
less.)
++Portfolio holdings were current as of March 31, 1998, are
subject to change and may not be representative of current
holdings.
</TABLE>
13
<PAGE> 18
Nations
Equity Income
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
DID THE FUND INVEST IN BONDS? IF SO, HOW DID THEY IMPACT
PERFORMANCE?
Rather than investing a portion of the Fund in cash
reserves, we invested approximately 5% of the Fund in U.S.
Treasury securities, which performed remarkably well as
investors fled to these higher-quality investments in
reaction to the Asian financial crisis. We also note that
during our interest rate forecasting process, we had
projected that U.S. Treasury securities would provide good
values to investors. When interest rates hit our long-term
interest-rate target of 6%, we sold these positions, also
contributing to Fund performance.
WHAT INVESTMENT DECISIONS HINDERED OVERALL PORTFOLIO
PERFORMANCE DURING THE PERIOD?
The Asian crisis hindered performance during the fourth
calendar quarter of 1997, particularly with respect to the
performance of basic material and capital goods companies.
Although the valuations of these stocks were strong for the
better part of the calendar year, the crisis in the Asian
economy worked against them. Specifically, the Fund
experienced a decline in the value of its holdings in
companies with ties to the Asian economy: Fluor Corporation,
an engineering firm and Cyprus Amax Minerals, a copper
company. Although we trimmed the Fund's position in both
stocks as a result, we believe that they will reap benefits
as Asia recovers.
In addition, performance would have been even stronger had
the Fund invested in bank stocks, which were strong due to
merger and acquisition activity. The Fund is likely to
remain underweighted in bank stocks due to their current
heightened valuations. Pharmaceutical and technology stocks
were other top performers that the Fund underweighted
because of their high valuations.
WHAT ECONOMIC DEVELOPMENTS DO YOU ANTICIPATE DURING THE REST
OF 1998?
Looking ahead, we expect the stock market to perform well
but not to repeat the spectacular gains of the past 12
months. We anticipate that investors will begin to focus on
valuations as Asia starts to impact earnings.
We anticipate the crisis in Asia to have an impact on the
U.S. economy, affecting our markets in the third or fourth
quarter of 1998. When this occurs, we expect the economy to
slow, prompting the labor market to ease and the Federal
Reserve Board to reduce interest rates. However, we do not
expect the slowdown to be so severe as to cause a recession.
</TABLE>
14
<PAGE> 19
Nations
Equity Income
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/98)
[PIE CHART]
3.8% Banks
4.0% Diversified
4.1% Paper and Forest Products
4.2% Medical Products
4.6% Chemicals - Specialty
5.0% Aerospace & Defense
5.1% Machinery and
Equipment
69.2% Other
<TABLE>
<C> <S> <C>
TOP TEN HOLDINGS
(AS A % OF NET ASSETS AS OF 3/31/98)
-----------------------------------------
1 RPM, Inc. 1.9%
-----------------------------------------
2 Frontier Corporation 1.8%
-----------------------------------------
3 National Australia Bank,
Conv., 7.8750% 1.7%
-----------------------------------------
4 Genuine Parts Company 1.7%
-----------------------------------------
5 Raytheon Company 1.6%
-----------------------------------------
6 Equitable Resources Inc. 1.6%
-----------------------------------------
7 Barrick Gold Conv. Note
(Trizac Hahn Corp.) 3.25%
12/10/18 1.6%
-----------------------------------------
8 General Re Corporation 1.5%
-----------------------------------------
9 AMP Inc. 1.4%
-----------------------------------------
10 Mallinckrodt Inc. 1.4%
-----------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1998, ARE
SUBJECT TO CHANGE AND MAY NOT
BE REPRESENTATIVE OF CURRENT HOLDINGS.
15
<PAGE> 20
Nations
Equity Income
Fund Performance
GROWTH OF $10,000 INVESTMENT
Primary A Shares (as of 3/31/98)
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
S&P
Measurement Period 500 Composite Stock Lipper
(Fiscal Year Covered) Equity Income $30,184 Price Index $35,106 Equity Income Funds Universe $30,657
<S> <C> <C> <C>
April 11, 1991 10000 10000 10000
9933 9976 10090
10668 10508 10727
1991 11465 11388 11311
11376 11101 11355
11687 11312 11628
12140 11669 11925
1992 12634 12255 12479
13292 12790 13303
13394 12851 13491
13894 13182 14102
1993 14233 13487 14305
13682 12977 13784
13939 13031 13855
14475 13667 14415
1994 14093 13665 14042
15308 14994 15111
16224 16423 16165
17227 17727 17346
1995 17982 18793 18309
19027 19802 19163
19723 20689 19696
20270 21329 20230
1996 21565 23106 21748
21998 23726 22090
24648 27865 24976
27096 29952 27098
1997 27201 30811 27682
Mar. 31, 1998 30184 35106 30657
</TABLE>
Investor B Shares (as of 3/31/98)*
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
S&P
Measurement Period 500 Composite Stock Lipper
(Fiscal Year Covered) Equity Income $21,674 Price Index $27,308 Equity Income Funds Universe $22,909
<S> <C> <C> <C>
June 7, 1993 10000 10000 10000
10073 10029 10080
10429 10287 10525
1993 10670 10526 10679
10236 10127 10285
10411 10170 10355
10784 10666 10774
1994 10480 10664 10507
11356 11701 11328
12016 12817 12094
12740 13834 12961
1995 13276 14667 13699
14013 15454 14357
14500 16146 14766
14876 16646 15175
1996 15805 18032 16288
16081 18516 16559
17982 21746 18734
19724 23375 20280
1997 19749 24046 20682
Mar. 31, 1998 21674 27308 22909
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN
Primary A Shares
Since Inception
(4/11/91 through 3/31/98) 17.18%
The charts to the left show the growth
in value of a hypothetical $10,000
investment in Primary A and Investor B
Shares of Nations Equity Income Fund
from the date each class of shares was
first offered. Figures for the Standard
& Poor's 500 Composite Stock Price
Index, an unmanaged index of 500 widely
held common stocks, include
reinvestment of dividends. Funds
included in the Lipper Equity Income
Funds Universe seek relatively high
current income and growth with income
through investing 60% or more of their
portfolios in equities. It is not
possible to invest in an index or
Lipper Universe. The performance shown
reflects the performance of Primary A
and Investor B Shares. The performance
of Primary B, Investor A and Investor C
Shares may vary based on the
differences in sales loads and fees
paid by the shareholders investing in
each class.
AVERAGE ANNUAL TOTAL RETURN
Investor B Shares
Since
Inception NAV CDSC*
(6/7/93 through
3/31/98) 17.66% 17.43%
[CHART LEGEND]
</TABLE>
TOTAL RETURN (AS OF 3/31/98)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PRIMARY A PRIMARY B INVESTOR A INVESTOR B INVESTOR C
Inception Date 4/11/91 6/28/96 4/16/91 6/7/93 6/17/92
NAV CDSC*
- --------------------------------------------------------------------------------------------------------------------------------
1 YEAR PERFORMANCE 37.21% 36.36% 36.92% 36.02% 31.02% 36.28%
- --------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
3 Years 25.40% NA 25.12% 24.42% 23.77% 24.55%
5 Years 17.82% NA 17.53% NA NA 16.85%
Since Inception 17.18% 26.74% 16.83% 17.66% 17.43% 17.15%
</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 total returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
Figures at net asset value (NAV) do not reflect any sales charges.
16
<PAGE> 21
Nations
Value
Fund Portfolio Manager Commentary*
IN THE FOLLOWING INTERVIEW, MS. HERRMANN SHARES HER
VIEWS ON NATIONS VALUE FUND'S PERFORMANCE FOR THE
12-MONTH PERIOD ENDED MARCH 31, 1998, AND HER CURRENT
OUTLOOK.
<TABLE>
<S> <C>
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
Sharon Herrmann, CFA, is Senior Nations Value Fund is managed on the premise that a
Portfolio Manager of Nations well-diversified portfolio of undervalued companies with low
Value Fund and a Director of prices relative to the earnings they are expected to
Equity Management for generate should, over time, outperform the overall market
TradeStreet Investment while incurring lower-than-average market risk. We also
Associates, Inc., investment believe the Fund's focus on owning stocks with low
sub-adviser to the Fund. price-to-earnings ratios should provide a cushion during
INVESTMENT OBJECTIVE periods of market declines.***
The Fund seeks growth of PLEASE COMMENT ON THE FUND'S PERFORMANCE.
capital by investing in With a return of 38.53%, we are pleased to report that this
companies that are believed to has been one of the strongest years ever for Nations Value
be undervalued. Fund (Primary A Shares). Though the Fund marginally
PERFORMANCE REVIEW underperformed the Lipper Growth and Income Funds Universe,
For the 12-month period ended which returned 40.15%, for the reporting period, it
March 31, 1998, Nations Value outperformed this peer group over the three- and five-year
Fund Primary A Shares provided periods.+ We are also delighted to note that over the prior
a total return of 38.53%.** three- and five- year periods, Nations Value Fund
shareholders have earned annualized returns of 28.85% and
20.29%, respectively.
WHAT ECONOMIC FACTORS OR MARKET OCCURRENCES INFLUENCED THE
FUND'S PERFORMANCE?
This has been a terrific economic environment for equity
investors, regardless of investment style during the past
year due to modest-but-steady economic growth, low inflation
and strong cash flows into the market.
The Fund's performance from March through September 1997 was
very solid, keeping pace with the Standard & Poor's
Composite Stock Price Index (S&P 500 Index)++. The Asian
financial crisis had a significant impact on the portfolio
during its third quarter, giving back some of the
*The outlook for this Fund may differ from that presented
for other Nations Funds mutual funds.
**The performance shown includes the effect of fee waivers
by the investment adviser, which has the effect of
increasing total return.
***The 12-month forward price-to-earnings multiple is
calculated by taking a company's forecasted 12-month
earnings per share and dividing it by the current stock
share price.
+Lipper Analytical Services, Inc. is an independent mutual
fund performance monitor. Funds included in the Lipper
Growth and Income Funds Universe combine a growth of
earnings orientation and an income requirement for level
and/or rising dividends.
++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 -- TradeStreet Investment
Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
</TABLE>
17
<PAGE> 22
Nations
Value
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
gains it had achieved earlier in the year. We resisted the
temptation to move totally out of affected sectors -- such
as capital goods and technology -- though we did lighten or
eliminate the Fund's holdings in certain stocks. This
strategy paid off as those sectors hit the hardest during
the third quarter experienced a pleasant rebound.
THIS HAS BEEN ONE OF THE The Asian financial crisis continued in the fourth quarter
STRONGEST YEARS EVER FOR and served to dampen investors' enthusiasm for cyclical
NATIONS VALUE FUND. companies, though much of the immediate impact seems to be
an overreaction.
WHAT PARTICULAR SECTORS OR STOCKS WERE FAVORABLE FOR THE
THIS HAS BEEN A TERRIFIC FUND?+++
ECONOMIC ENVIRONMENT FOR EQUITY Technology and health care were two strong sectors for
INVESTORS, REGARDLESS OF Nations Value Fund as it owned companies that appreciated
INVESTMENT STYLE. more than the sector did on average. Financials such as
Chase Manhattan and Mellon Bank Corporation performed well
due to industry consolidation and low interest rates. Other
outstanding performers for the year included:
-- Bristol-Myers Squibb, a core holding in the portfolio,
initially due to its low price and presently due to its
earnings momentum. Favorable dynamics for the health care
sector, including an accommodating Food and Drug
Administration for new product approval, also contributed
to performance.
-- Tenet Healthcare, a hospital management company that is
making acquisitions and growing rapidly, also did well in
the health care sector, as did Wellpoint, a managed
health care provider with a strong management team
capable of executing their business plan.
-- Xerox Corporation experienced exceptional growth within
the technology sector due to the success of its new digital
printer products and restructuring efforts.
-- Delta Air Lines, due to lower fuel prices and a change in
management, including a new chairman who is making positive
changes and cutting costs.
WHAT PARTICULAR SECTORS OR STOCKS WERE UNFAVORABLE FOR THE
FUND?
Although the Fund's investment in utilities generally
underperformed, we continue to overweight this sector
because we believe there are still attractive opportunities
with favorable yields in the sector as a result of
consolidation and deregulation. Another area the Fund has
been underweighted in during the reporting period has been
consumer staples, which performed very well; while there are
many great companies in this sector, we find them to be less
attractive investments from a value perspective,
particularly those that have price-to-earnings multiples --
calculated by taking a company's forecasted 12-month
earnings per share
+++Portfolio holdings were current as of March 31, 1998, are
subject to change and may not be representative of current
holdings.
</TABLE>
18
<PAGE> 23
Nations
Value
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
and dividing it by the current stock share price -- of 30 to
40 times earnings, increasing those earnings by about 12% a
year.
WHAT INVESTMENT OPPORTUNITIES DO YOU ANTICIPATE IN THE
COMING YEAR AND HOW ARE YOU POSITIONING THE FUND
ACCORDINGLY?
We believe the Fund's exposure to utilities, insurance
companies, energy and lower price-to-earnings companies
should position it to hold up relatively well even if we
experience a major market decline. As one would expect from
its value discipline, the Fund tends not to capture the full
gains of a bull market, but in turn, it generally should
benefit by not experiencing the entire decline of a bear
market.
Looking forward, we have reduced the Fund's weighting in
technology stocks in the last quarter and placed the
proceeds in consumer cyclicals, overweighting that sector.
This has proved to be very profitable in the past, and we
anticipate growth in that sector as well as in the financial
services sector. We look to take advantage of the baby boom
generation's retirement planning activity and their need for
quality savings and insurance providers.
In our view, we also find value in energy stocks, especially
from oil and oil services companies, since oil prices should
eventually stabilize and rise again.
</TABLE>
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/98)
[PIE CHART]
4.7% Aerospace and Defense
4.8% Drugs
5.5% Medical Services
6.2% Oil - International
6.3% Insurance
6.7% Utilities - Telephone
7.9% Banks
57.9% Other
<TABLE>
<C> <S> <C>
TOP TEN HOLDINGS
(AS A % OF NET ASSETS AS OF 3/31/98)
-----------------------------------------
1 Xerox Corporation 2.9%
-----------------------------------------
2 Tenet Healthcare Corporation 2.3%
-----------------------------------------
3 Lincoln National Corporation
Ltd. 2.3%
-----------------------------------------
4 Bristol-Myers Squibb Company 2.1%
-----------------------------------------
5 Ahmanson H F & Company 2.1%
-----------------------------------------
6 Schering-Plough Corporation 2.1%
-----------------------------------------
7 GTE Corporation 2.1%
-----------------------------------------
8 Coastal Corporation 2.1%
-----------------------------------------
9 New York State Electric & Gas
Company 2.0%
-----------------------------------------
10 Delta Air Lines, Inc. 1.9%
-----------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT AS
OF MARCH 31, 1998, ARE SUBJECT TO
CHANGE AND MAY NOT BE REPRESENTATIVE
OF CURRENT HOLDINGS.
19
<PAGE> 24
Nations
Value
Fund Performance
GROWTH OF $10,000 INVESTMENT
Primary A Shares (as of 3/31/98)
Assumes the reinvestment of all distributions
<TABLE>
<CAPTION>
S&P
Measurement Period 500 Composite Stock Lipper Growth &
(Fiscal Year Covered) Value $37,165 Price Index $39,748 Income Funds Universe $33,638
<S> <C> <C> <C>
Sep. 19 1989 10000 10000 10000
1989 10073 10205 9992
10148 9898 9742
10676 10520 10246
9384 9076 8898
1990 10428 9888 9554
11827 11322 10908
11826 11295 10887
12345 11898 11516
1991 13125 12894 12362
13201 12569 12370
13273 12808 12387
13417 13212 12705
1992 14083 13875 13495
14758 14481 14143
15107 14550 14310
15781 14925 14855
1993 16388 15271 15192
15959 14693 14754
15828 14754 14681
16096 15474 15344
1994 15898 15471 15058
17372 16976 16233
19134 18594 17521
20661 20071 18828
1995 21636 21278 19668
22724 22420 20731
23624 23425 21412
24201 24149 22056
1996 26206 26161 23673
26829 26863 23963
30233 31549 27425
33713 33912 29970
1997 33191 34885 30165
Mar. 31 1998 37165 39748 33638
</TABLE>
Investor B Shares (as of 3/31/98)*
Assumes the reinvestment of all distributions
<TABLE>
<CAPTION>
S&P
Measurement Period 500 Composite Stock Lipper Growth
(Fiscal Year Covered) Value $23,905 Price Index $27,398 & Income Funds Universe $23,887
<S> <C> <C> <C>
June 7 1993 10000 10000 10000
10155 10029 10040
10588 10287 10390
1993 10967 10526 10640
10665 10127 10320
10577 10170 10279
10735 10666 10734
1994 10585 10664 10557
11539 11701 11411
12682 12817 12323
13673 13834 13228
1995 14286 14667 13854
14979 15454 14610
15546 16146 15107
15898 16646 15554
1996 17180 18032 16738
17557 18516 16968
19739 21746 19446
21973 23375 21217
1997 21574 24046 21390
Mar. 31 1998 23905 27398 23887
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN
Primary A Shares
Since Inception
(9/19/89 through 3/31/98) 16.64%
The charts to the left show the growth
in value of a hypothetical $10,000
investment in Primary A and Investor B
Shares of Nations Value Fund from the
date each class of shares was first
offered. Figures for the Standard &
Poor's 500 Composite Stock Price Index,
an unmanaged index of 500 widely held
common stocks, include reinvestment of
dividends. Funds included in the Lipper
Growth and Income Funds Universe
combine a growth of earnings
orientation and an income requirement
for level and/or rising dividends. It
is not possible to invest in an index
or Lipper Universe. The performance
shown reflects the performance of
Primary A and Investor B Shares. The
performance of Primary B, Investor A
and Investor C Shares may vary based on
the differences in sales loads and fees
paid by the shareholders investing in
each class.
AVERAGE ANNUAL TOTAL RETURN
Investor B Shares
Since
Inception NAV CDSC*
(6/7/93 through
3/31/98) 20.05% 19.85%
[CHART LEGEND]
</TABLE>
TOTAL RETURN (AS OF 3/31/98)
<TABLE>
<CAPTION>
PRIMARY A PRIMARY B INVESTOR A INVESTOR B INVESTOR C
Inception Date 9/19/89 6/28/96 12/6/89 6/7/93 6/17/92
NAV CDSC*
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR PERFORMANCE 38.53% 38.09% 38.22% 37.29% 32.29% 37.55%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
3 Years 28.85% NA 28.53% 27.83% 27.22% 27.97%
5 Years 20.29% NA 20.03% NA NA 19.35%
Since Inception 16.64% 28.98% 16.86% 20.05% 19.85% 19.02%
</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 total returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
Figures at net asset value (NAV) do not reflect any sales charges.
The performance shown includes the effect of fee waivers by the investment
adviser, which has the effect of increasing total return.
20
<PAGE> 25
Nations
Marsico Growth & Income
Fund Portfolio Manager Commentary*
IN THE FOLLOWING INTERVIEW, MR. MARSICO SHARES HIS VIEWS
ON NATIONS MARSICO GROWTH & INCOME FUND'S PERFORMANCE
FOR THE 3-MONTH PERIOD ENDED MARCH 31, 1998 AND HIS
CURRENT OUTLOOK.
<TABLE>
<S> <C>
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
Thomas F. Marsico is Portfolio The Fund focuses on large-capitalization companies that have
Manager of Nations Marsico strong brand franchises, improving returns and present
Growth & Income Fund and Chief growth opportunities either through global expansion, new
Executive Officer of Marsico products or the use of capital to expand their business
Capital Management, LLC, through acquisition.
investment sub-adviser to the WHAT WERE ECONOMIC AND MARKET CONDITIONS LIKE DURING THE
Fund. REPORTING PERIOD?
INVESTMENT OBJECTIVE During the 3-month period ended March 31, 1998, there was
The Fund seeks long-term growth concern in the markets over the impact of the Asian
of capital with a limited financial crisis that prompted a 554-point drop in the Dow
emphasis on income. Jones Industrial Average** on October 27, 1997. Despite this
PERFORMANCE REVIEW concern, the economy was exceptionally strong over the
Nations Marsico Growth & Income reporting period, as it benefited from a combination of
Fund commenced operations on steady growth, low inflation, falling interest rates, low
December 31, 1997. For the unemployment, rising wages and strong corporate profits.
3-month period ended March 31, In the first quarter of 1998, the economy continued to
1998, Nations Marsico Growth & perform well as indicated by high sales of existing homes, a
Income Fund Primary A Shares boost in consumer spending and strong personal income
provided a total return of figures. Although Gross Domestic Product growth was less
20.30%.*** than its 10-year high in the prior quarter, it reflected
solid economic growth.
HOW DID YOU MANAGE THE FUND DURING THE REPORTING PERIOD?
As part of its ongoing investment strategy, the Fund focuses
on companies with superior top-line growth rates and a
global presence. Our strategy is to look at macroeconomic
trends such as interest rates, the competitive landscape and
the regulatory environment and then determine the industries
best capable of taking advantage of those broad trends. Then
we analyze companies within those industries and choose
those with the best fundamentals, which we believe are
poised to benefit in light of the factors identified. We
believe these types of companies will be successful in the
long term.
*The outlook for this Fund may differ from that presented
for other Nations Funds mutual funds.
**The Dow Jones Industrial Average is a price-weighted index
of 30 of the largest, most widely held stocks traded on the
New York Stock Exchange. It is unmanaged and unavailable for
investment.
***The performance shown includes the effect of fee waivers
by the investment adviser, which has the effect of
increasing total return.
Source for all statistical data -- Marsico Capital
Management, LLC
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
</TABLE>
21
<PAGE> 26
Nations
Marsico Growth & Income
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
The Fund did not invest in any bonds during the period
because market conditions were favorable for equity
investments. If the tables should turn, however, we will
certainly look to take advantage of opportunities in the
bond market for the Fund.
WHILE THE FUND'S ENTIRE WHAT INVESTMENTS CONTRIBUTED TO THE FUND'S STRONG
PORTFOLIO DID WELL, TWO PERFORMANCE?+ While the Fund's entire portfolio did well,
STANDOUT PERFORMERS WERE two standout performers were Citicorp and Dell Computer
CITICORP AND DELL COMPUTER Corporation. Due to its exposure to Asia, Citicorp declined
CORPORATION. in value in late 1997. We saw this price drop as an
opportunity to establish a position in the stock -- a
strategy that benefited the Fund. Citicorp is involved in
several emerging markets, many of which are in Asia. When
these markets collapsed, investors fled from domestic banks
and turned to a "safe haven," which in this case was
Citicorp. As indicated by the lines outside of its branches
in Tokyo, Citicorp enjoyed immense consumer confidence.
Citicorp also benefited from the overall strength of the
financial services sector.
Dell Computer Corporation was also among the best performing
stocks in the Fund's portfolio. Dell's biggest strength,
aside from its strong management team, is its direct
distribution delivery model. That efficient model allows
Dell to avoid inventory buildups and accelerate its growth
into other computer-related areas, such as servers and
workstations.
In managing the Fund, we look for companies with the
potential for consistent long-term growth. Through our
in-depth research, we found such companies in the
pharmaceutical, agriculture business and financial services
areas. With commodity prices lower due to the Asian crisis,
we anticipate that these stocks will continue to benefit
from lower interest rates and lower inflation.
The Fund is also invested in "lifecycle companies," which
are companies involved in a broad number of industries where
we believe the focus of business is changing for the better
and profit margins are improving. Specifically, the Fund
focused on Lockheed Martin, AlliedSignal Incorporated,
United Technologies and Textron, Incorporated -- all of
which contributed to performance.
IS SECTOR SELECTION IMPORTANT TO THE FUND'S STRATEGY?
No, it isn't. The Fund owns a diverse group of stocks from
various industries. We try to take advantage of the best
opportunities available, rather than buying stocks that are
part of a particular industry or sector. The Fund invests in
companies that we anticipate are going to benefit from lower
inflation, lower interest rates, higher productivity, stable
economic
+Portfolio holdings were current as of March 31, 1998, are
subject to change and may not be representative of current
holdings.
</TABLE>
22
<PAGE> 27
Nations
Marsico Growth & Income
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
environment, expanding global markets and better management
techniques. In addition, we invest in companies that make
their employees stakeholders by linking a portion of their
compensation directly to the company's overall performance.
While the Fund does not concentrate on any one industry, it
generally avoids the oil industry. We believe there is too
much oil for the demand, causing price weakness.
WHAT INVESTMENT DECISIONS HINDERED OVERALL PORTFOLIO
PERFORMANCE DURING THE PERIOD?
With a portfolio generally consisting of just 35 to 45
stocks, it's difficult to have many poor-performing stocks
and still provide strong returns.
During the quarter, we sold Phillips Electronics because we
anticipated some weakness in that company. Specifically, we
were uncertain about Phillips' components business, which
comprises roughly 12 to 15% of the company's overall
business. Although a small portion of the overall business,
it was difficult to obtain information about it, and we
chose to move the money to another stock about which we had
greater insight and information.
WHAT ECONOMIC DEVELOPMENTS DO YOU ANTICIPATE DURING THE REST
OF 1998, AND HOW ARE YOU POSITIONING THE FUND TO TAKE
ADVANTAGE OF THEM?
Looking ahead, we expect lower interest rates to result in
higher price-to-earnings ratios and higher stock prices.++
We believe that the worst of the Asian crisis is behind us,
the situation in Korea has stabilized and Japan is beginning
to address its structural problems. In our view, the
investing environment, in the short-term, is close to
ideal -- a strong U.S. economy combined with
shareholder-oriented management creates a template for
strong earnings growth, while low interest rates and low
inflation also create the backdrop for a strong stock
market.
TELL US ABOUT A STOCK YOU FIND TO BE PARTICULARLY PROMISING.
We believe that Ford Motor Company, a current portfolio
holding, will spin off a number of its businesses, such as
Associates First Capital and Ford Motor Credit. With its
core automotive business generating over $3 billion in cash
per year and the company initiating a major share repurchase
program and exhibiting improving fundamentals, we believe
that the stock is worth more than its share price reflects.
In fact, the Fund's investment in Ford has already begun to
pay off, and we expect the stock's strong performance to
continue.
++The 12-month forward price-to-earnings multiple is
calculated by taking a company's forecasted 12-month
earnings per share and dividing it by the current stock
share price.
</TABLE>
23
<PAGE> 28
Nations
Marsico Growth & Income
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/98)
[NATIONS PORTFOLIO BREAKDOWN PIE CHART]
4.5% Computers - Micro
4.5% Beverages - Non-Alcoholic
4.7% Diversified Manufacturing Operations
4.8% Money Center Banks
6.8% Telecommunications
7.2% Medical - Drugs
7.6% Automotive - Cars & Light Trucks
59.9% Other
<TABLE>
<C> <S> <C>
TOP TEN HOLDINGS
(AS A % OF NET ASSETS AS OF 3/31/98)
-----------------------------------------
1 FHLB Discount Note 5.650%
04/01/98 8.3%
-----------------------------------------
2 Ford Motor Company 5.4%
-----------------------------------------
3 Citicorp 4.8%
-----------------------------------------
4 General Electric Company 4.7%
-----------------------------------------
5 Coca-Cola Enterprises, Inc. 4.5%
-----------------------------------------
6 Dell Computer Corporation 4.5%
-----------------------------------------
7 Merrill Lynch & Company 4.3%
-----------------------------------------
8 Pfizer Inc. 4.3%
-----------------------------------------
9 Lucent Technologies Inc. 4.0%
-----------------------------------------
10 Delta & Pine Land Company 3.6%
-----------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1998, ARE SUBJECT
TO CHANGE AND MAY NOT BE REPRESENTATIVE
OF CURRENT HOLDINGS.
24
<PAGE> 29
Nations
Marsico Growth & Income
Fund Performance
GROWTH OF $10,000 INVESTMENT
Primary A Shares (as of 3/31/98)
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
S&P Lipper Growth
Measurement Period Nations Marsico Growth 500 Composite Stock & Income
(Fiscal Year Covered) & Income $12,030 Price Index $11,394 Funds Universe $11,170
<S> <C> <C> <C>
Dec. 31 1997 10000 10000 10000
Mar. 31 1998 12030 11394 11170
</TABLE>
Investor B Shares (as of 3/31/98)*
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
S&P 500 Composite Lipper Growth
Measurement Period Nations Marsico Growth Stock Price & Income
(Fiscal Year Covered) & Income $11,520 Index $11,394 Funds Universe $11,170
<S> <C> <C> <C>
Dec. 31 1997 10000 10000 10000
Mar. 31 1998 11520 11394 11170
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN
Primary A Shares
Since Inception
(12/31/97 through 3/31/98) 20.30%
The charts to the left show the growth
in value of a hypothetical $10,000
investment in Primary A and Investor B
Shares of Nations Marsico Growth &
Income Fund from the date each class of
shares was first offered. Figures for
the Standard & Poor's 500 Composite
Stock Price Index, an unmanaged index
of 500 widely held common stocks,
include reinvestment of dividends.
Funds included in the Lipper Growth and
Income Funds Universe combine a growth
of earnings orientation and an income
requirement for level and/or rising
dividends. It is not possible to invest
in an index or Lipper universe. The
performance shown reflects the
performance of Primary A and Investor B
Shares. The performance of Primary B,
Investor A and Investor C Shares may
vary based on the differences in sales
loads and fees paid by the shareholders
investing in each class.
AVERAGE ANNUAL TOTAL RETURN
Investor B Shares
Since
Inception NAV CDSC*
(12/31/97 through
3/31/98) 20.20% 15.20%
</TABLE>
TOTAL RETURN (AS OF 3/31/98)
<TABLE>
<CAPTION>
PRIMARY A INVESTOR A INVESTOR B INVESTOR C
Inception Date 12/31/97 12/31/97 12/31/97 12/31/97
NAV CDSC*
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 YEAR PERFORMANCE NA NA NA NA NA
- --------------------------------------------------------------------------------------------------------------
Since Inception 20.30% 20.20% 20.20% 15.20% 20.20%
</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 total returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
Figures at net asset value (NAV) do not reflect any sales charges.
The performance shown includes the effect of fee waivers by the investment
adviser, which has the effect of increasing total return.
25
<PAGE> 30
Nations
Equity Index
Fund Portfolio Manager Commentary*
IN THE FOLLOWING INTERVIEW, MR. GOLDEN SHARES HIS VIEWS
ON NATIONS EQUITY INDEX FUND'S PERFORMANCE FOR THE
12-MONTH PERIOD ENDED MARCH 31, 1998, AND HIS CURRENT
OUTLOOK.
<TABLE>
<S> <C>
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
Greg W. Golden is Portfolio The Fund invests in the stocks that comprise the S&P 500
Manager of Nations Equity Index Index, an unmanaged market-capitalization-weighted index
Fund and Structured Products consisting of 500 common stocks chosen for market size,
Manager, Equity Management for liquidity and industry group representation.
TradeStreet Investment
Associates, Inc., investment HOW DID THE FUND PERFORM UNDER THE MARKET CONDITIONS THAT
sub-adviser to the Fund. PREVAILED OVER THE PAST 12 MONTHS?
INVESTMENT OBJECTIVE Nations Equity Index Fund (Primary A Shares) tracked the S&P
The Fund seeks investment 500 Index for the 12 months ending March 31, 1998, returning
results that correspond, before 47.38%, while the Index returned 47.98%.
fees and expenses, to the total WHICH SECTORS PROVED FAVORABLE FOR THE FUND AND WHICH PROVED
return of the Standard & Poor's UNFAVORABLE?+
500 Composite Stock Price Index Strength during the year was found in the capital goods,
(S&P 500 Index).** consumer durables and finance sectors.
PERFORMANCE REVIEW In addition, the aging of the baby boom generation is
For the 12-month period ended providing more demand than ever for quality health care
March 31, 1998, Nations Equity products and services, which the Fund also invested in. This
Index Fund Primary A Shares section of the population has placed added pressure on the
provided a total return of U.S. Food and Drug Administration to consider new therapies
47.38%.*** and medications through expedited, technology-aided product
approval cycles. Additionally, there has been a great shift
toward managed care; therefore, with co-payment programs,
many more people are taking prescribed medicine due to its
affordability.
The financial sector also performed well due to industry
consolidation and low interest rates.
*The outlook for this Fund may differ from that presented
for other Nations Funds mutual funds.
**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 performance shown includes the effect of fee waivers
by the investment adviser, which has the effect of
increasing total return.
+Portfolio characteristics were current as of March 31,
1998, are subject to change and may not be representative of
current characteristics.
Source for all statistical data -- TradeStreet Investment
Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
</TABLE>
26
<PAGE> 31
Nations
Equity Index
Fund Portfolio Manager Commentary continued ...
<TABLE>
<S> <C>
WE ARE IN A HIGHLY FAVORABLE An area of weakness was the energy sector, which
MARKET ENVIRONMENT DUE TO THE underperformed due to falling fuel costs, even after its
COMBINATION OF LOW INFLATION, strong start.
HIGH COMPANY PRODUCTIVITY AND
AN OVERALL EFFICIENT ECONOMY. WHAT DO YOU ANTICIPATE FOR THE COMING YEAR?
We are in a highly favorable market environment due to the
combination of low inflation, high company productivity and
an overall efficient economy. Though we may not see as good
a year in the coming year as we did this past year, we still
anticipate positive returns relative to other types of
investments.
</TABLE>
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/98)
<TABLE>
<S> <C> <C> <C> <C>
58.6% OTHER 9.0% BANKS 7.5% DRUGS 7.1% UTILITIES - TELEPHONE 5.2% OIL - INTERNATIONAL
4.7% COMPUTER RELATED 4.1% FINANCIAL SERVICES 3.8% INSURANCE
TOP TEN HOLDINGS
(AS A % OF NET ASSETS AS OF 3/31/98)
-----------------------------------------
1 General Electric Company 3.3%
-----------------------------------------
2 Microsoft Corporation 2.5%
-----------------------------------------
3 Coca-Cola Company 2.2%
-----------------------------------------
4 Exxon Corporation 1.9%
-----------------------------------------
5 Merck & Company Inc. 1.8%
-----------------------------------------
6 Pfizer, Inc. 1.5%
-----------------------------------------
7 Intel Corporation 1.5%
-----------------------------------------
8 Royal Dutch Petroleum
Company, ADR 1.4%
-----------------------------------------
9 Wal-Mart Stores Inc. 1.3%
-----------------------------------------
10 Procter & Gamble Company 1.3%
-----------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT AS OF
MARCH 31, 1998, ARE SUBJECT TO CHANGE
AND MAY NOT BE REPRESENTATIVE OF CURRENT HOLDINGS.
27
<PAGE> 32
Nations
Equity Index
Fund Performance
GROWTH OF $10,000 INVESTMENT
Primary A Shares (as of 3/31/98)
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
S&P Lipper S&P
Measurement Period Equity Index 500 Composite Stock 500 Index Objective Funds
(Fiscal Year Covered) Fund $25,829 Price Index $26,344 Universe $25,864
<S> <C> <C> <C>
Dec. 15 1993 10000 10000 10000
1993 10072 10121 10117
9681 9738 9721
9710 9778 9754
10182 10256 10216
1994 10172 10254 10209
11515 11251 11190
12208 12324 12240
13166 13302 13196
1995 13938 14102 13977
14677 14859 14713
15329 15525 15358
15787 16005 15817
1996 17093 17338 17117
17526 17804 17553
20577 20910 20595
22113 22476 22112
1997 22683 23121 22724
Mar. 31 1998 25829 26344 25864
</TABLE>
Investor A Shares (as of 3/31/98)
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
S&P Lipper S&P
Measurement Period Equity Index 500 Composite Stock 500 Index Objective Funds
(Fiscal Year Covered) Fund $19,662 Price Index $19,804 Universe $19,572
<S> <C> <C> <C>
Oct. 10 1995 10000 10000 10000
1995 10710 10602 10590
11267 11170 11147
11755 11671 11634
12092 12032 11979
1996 13090 13034 12962
13414 13384 13291
15735 15719 15594
16894 16896 16739
1997 17285 17381 17198
Mar. 31 1998 19662 19804 19572
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN
Primary A Shares
Since Inception
(12/15/93 through 3/31/98) 24.74%
The charts to the left show the growth
in value of a hypothetical $10,000
investment in Primary A and Investor A
Shares of Nations Equity Index Fund
from the date each class of shares was
first offered. Figures for the Standard
& Poor's 500 Composite Stock Price
Index, an unmanaged index of 500 widely
held common stocks, include
reinvestment of dividends. Funds
included in the Lipper S&P 500 Index
Objective Funds Universe are passively
managed, limited-expense (advisor fee
no higher than 0.50%) funds designed to
replicate the performance of the
Standard & Poor's 500 Index on a
reinvested basis. It is not possible to
invest in an index or Lipper universe.
The performance shown reflects the
performance of Primary A and Investor A
Shares. The performance of Primary B
Shares may vary based on the
differences in sales loads and fees
paid by the shareholders investing in
each class.
AVERAGE ANNUAL TOTAL RETURN
Investor A Shares
Since Inception
(10/10/95 through 3/31/98) 31.44%
[CHART LEGEND]
</TABLE>
TOTAL RETURN (AS OF 3/31/98)
<TABLE>
<CAPTION>
PRIMARY A PRIMARY B INVESTOR A
Inception Date 12/15/93 6/28/96 10/10/95
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 YEAR PERFORMANCE 47.38% 46.75% 46.58%
- ---------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
3 Years 32.31% NA NA
5 Years NA NA NA
Since Inception 24.74% 34.01% 31.44%
</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 total returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
The performance shown includes the effect of fee waivers by the investment
adviser, which has the effect of increasing total return.
28
<PAGE> 33
Nations
Capital Growth
Fund Portfolio Manager Commentary*
IN THE FOLLOWING INTERVIEW, MR. SANDERS SHARES HIS VIEWS
ON NATIONS CAPITAL GROWTH FUND'S PERFORMANCE FOR THE
12-MONTH PERIOD ENDED MARCH 31, 1998, AND HIS CURRENT
OUTLOOK.
<TABLE>
<S> <C>
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
Philip J. Sanders, CFA, is We believe that a stock portfolio of large-capitalization
Senior Portfolio Manager of companies with superior long-term growth prospects,
Nations Capital Growth Fund and purchased at reasonable prices, will provide the potential
Senior Product Manager, Equity for superior returns over a market cycle. We look for
Management for TradeStreet companies that are well positioned to generate sustainable
Investment Associates, Inc., earnings growth at a rate well above the overall market. The
investment sub-adviser to the companies the Fund invests in are generally regarded as
Fund. industry leaders, have strong track records and possess key
INVESTMENT OBJECTIVE competitive advantages that can be used to sustain their
The Fund seeks growth of above- average growth rates and potentially report earnings
capital by investing in above consensus expectations. To augment our search for
companies that are believed to superior growth companies, we particularly focus on those
have superior earnings growth firms whose prospects are leveraged to positive secular
potential. themes embedded in the marketplace. These themes include
PERFORMANCE REVIEW demographics, emerging technologies, deregulation and
For the 12-month period ended changes in consumer spending patterns, among others.
March 31, 1998, Nations Capital While the majority of the Fund's holdings are in
Growth Fund Primary A Shares large-capitalization issues, we have the flexibility to
provided shareholders with a selectively invest in some smaller company issues that, in
total return of 53.89%. our view, possess superior growth prospects.
PLEASE COMMENT ON THE FUND'S PERFORMANCE.
It was a very strong year for the Fund. It outperformed both
its benchmark, the Standard & Poor's 500 Composite Stock
Price Index (S&P 500 Index)** and its peer group, the Lipper
Growth Funds Universe, by good margins.***
For the one-year period ended March 31, 1998, the Fund
(Primary A Shares) was 5.91% ahead of the S&P 500 Index. The
Fund's strong performance is even more dramatically shown
when we compare the Fund to the Lipper Growth Funds
Universe, which it outperformed by 10.99%. Nations Capital
Growth Fund outperformed over 90% of its competitors in the
Lipper Growth Funds Universe (858 funds) for the reporting
period.
*The outlook for this Fund may differ from that presented
for other Nations Funds mutual funds.
**The Standard & Poor's 500 Composite Stock Price Index is
an unmanaged index of 500 widely held common stocks. It is
unavailable for investment.
***Lipper Analytical Services, Inc. is an independent mutual
fund performance monitor. Funds included in the Lipper
Growth Funds Universe normally invest in companies whose
long-term earnings are expected to grow significantly faster
than the earnings of the stocks represented in the major
unmanaged stock indices.
Source for all statistical data -- TradeStreet Investment
Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
</TABLE>
29
<PAGE> 34
Nations
Capital Growth
Fund Portfolio Manager Commentary continued ...
<TABLE>
<S> <C>
WHAT PARTICULAR SECTORS OR STOCKS PROVED FAVORABLE FOR THE
FUND?+
There were four areas that performed particularly well for
the Fund over the past 12 months: health care, computer
software and services, telecommunications and specialty
retailers.
The Fund generally maintained an overweighting in health
care, and that sector performed very well due to certain
industry trends. First, the aging of the baby boom
generation provided more demand than ever for quality health
care products and services. This section of the population
has placed added pressure on the U.S. Food and Drug
Administration (FDA) to consider new therapies and
medications through expedited, technology-aided product
approval cycles.
Additionally, there has been a great shift toward managed
care; therefore, with co-payment programs, many more people
are taking prescribed medicine due to its affordability.
Benefiting from these trends were several large drug
manufacturers like Schering-Plough, Warner-Lambert Company
and Bristol-Myers Squibb Company, all of which the Fund
holds. Guidant Corporation, a medical products producer,
also had very good returns.
Even with the volatility of the technology sector over the
year, the Fund benefited from the stocks of companies that
produce computer software and networking and
telecommunications equipment.
Software companies tend to be an area of focus for Nations
Capital Growth Fund because they generally have more
sustainable growth prospects due to their market leadership
positions. For these companies, the quality and productivity
benefits of their products are more likely than pricing to
be the determining factor in customer purchase decisions.
With that in mind, the Fund had strong contributions from
companies such as Compuware Corporation, Microsoft
Corporation, BMC Software, Inc. and Computer Associates
International, Inc.
In the telecommunications and networking arenas, the leaders
were Lucent Technologies, Cisco Systems, Northern Telecom,
Ltd. and Nokia Corporation. As industry strives to become
more productive, the efficient movement of data and
information that these telecommunication and networking
companies provide becomes critical. Also, these types of
companies continued to benefit from the deregulation of the
telecommunication services industry and the rapid growth of
the Internet.
+Portfolio holdings were current as of March 31, 1998, are
subject to change and may not be representative of current
holdings.
</TABLE>
30
<PAGE> 35
Nations
Capital Growth
Fund Portfolio Manager Commentary continued ...
<TABLE>
<S> <C>
NATIONS CAPITAL GROWTH FUND HAS The fourth sector that showed particular strength was
MAINTAINED RELATIVELY LITTLE specialty retailers. In particular, TJX Companies, Inc.
EXPOSURE TO THE STOCKS OF benefited from consumer confidence in the economy, as
SECTORS THAT PERFORMED POORLY. reflected in strong consumer spending at their T J Maxx and
Marshalls stores. Lowe's Companies and Home Depot home
supply stores also benefited greatly from strong consumer
spending, as well as increased home sales and low interest
rates. In addition, the Asian market crisis has not
significantly affected these companies because of their
predominant domestic focus.
WHAT PARTICULAR SECTORS OR STOCKS WERE UNFAVORABLE FOR THE
FUND?
Holdings that generally underperformed due to earnings
disappointments and deteriorating near-term growth prospects
were: Reuters Holdings Group, PLC; Aetna, Inc.; Fluor
Corporation; Green Tree Financial.
Within the technology sector, semiconductor and hardware
companies have generally underperformed. The Fund had some
exposure to this sector through Hewlett-Packard Company,
International Business Machines and Intel Corporation.
Also underperforming have been holdings in energy, primarily
due to the steady decline in oil prices. The Fund has only
modest exposure to this sector, owning Halliburton Company,
Diamond Offshore Drilling, Inc. and Mobil Oil Corporation,
all of which we believe possess above-average long-term
growth prospects relative to their peers.
WHAT ECONOMIC FACTORS MOST INFLUENCED THE FUND'S
PERFORMANCE?
THE FUND BENEFITED FROM AN Specifically, low interest rates, low inflation and solid
ECONOMY THAT PRODUCED A VERY corporate profits enabled the Fund to experience its strong
FAVORABLE BACKDROP FOR GROWTH return over the reporting period.
FUNDS. WHAT INVESTMENT OPPORTUNITIES DO YOU ANTICIPATE IN THE
COMING YEAR AND HOW ARE YOU POSITIONING THE FUND
ACCORDINGLY?
In the year ahead, we expect continued volatility in the
technology sector. Inherently volatile to begin with, we
expect that volatility will be magnified by the concern and
uncertainty in the Asian markets. The technology industry is
a global industry and Asia is an important source of its
growth. We anticipate these stocks will fluctuate as
investors waver between fear that a slowdown in the Asian
market will hurt the demand for technology products and
services, and a belief that this market may begin to
stabilize. We are always exploring the broad list of
technology stocks, taking advantage of volatility to
pinpoint growth opportunities.
We also see continued favorable dynamics for the health care
sector due to the demographics of the baby boom generation,
a very accommodating FDA and the consistency in the earnings
growth these stocks may provide.
</TABLE>
31
<PAGE> 36
Nations
Capital Growth
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/98)
[PIE CHART]
5.1% Medical Products & Supplies
5.2% Insurance
5.8% Banks
6.5% Drugs
7.3% Electrical Equipment
8.1% Retail
9.0% Computer Related
53.0% Other
<TABLE>
<C> <S> <C>
TOP TEN HOLDINGS
(AS A % OF NET ASSETS AS OF 3/31/98)
-----------------------------------------
1 General Electric Company 2.5%
-----------------------------------------
2 Cisco Systems, Inc. 2.0%
-----------------------------------------
3 Merck & Company Inc. 1.9%
-----------------------------------------
4 AlliedSignal Inc. 1.9%
-----------------------------------------
5 Service Corporation
International 1.9%
-----------------------------------------
6 Computer Associates
International Inc. 1.8%
-----------------------------------------
7 Bristol-Myers Squibb Company 1.8%
-----------------------------------------
8 CBS Corporation 1.8%
-----------------------------------------
9 Tyco International Ltd. 1.7%
-----------------------------------------
10 Honeywell, Inc. 1.7%
-----------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE
CURRENT AS OF MARCH 31, 1998,
ARE SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
32
<PAGE> 37
Nations
Capital Growth
Fund Performance
GROWTH OF $10,000 INVESTMENT
Primary A Shares (as of 3/31/98)
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
S&P
Measurement Period 500 Composite Stock
(Fiscal Year Covered) Capital Growth $26,598 Price Index $30,086 Lipper Growth Funds Universe $26,634
<S> <C> <C> <C>
Sept. 30 1992 10000 10000 10000
1992 10780 10502 10892
10982 10961 11186
10877 11013 11279
11248 11297 11823
1993 11626 11559 12100
11279 11121 11720
10944 11167 11444
11631 11712 12050
1994 11481 11710 11896
12212 12849 12805
13520 14074 14053
14726 15192 15262
1995 14778 16106 15659
15449 16970 16493
16080 17731 17172
16682 18279 17664
1996 17528 19801 18733
17284 20333 18667
20283 23880 21587
22141 25668 23853
1997 22878 26405 23667
Mar. 31 1998 26598 30086 26634
</TABLE>
Investor B Shares (as of 3/31/98)*
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
S&P 500
Composite Stock Lipper Growth
Measurement Period Capital Growth Price Index Funds Universe
(Fiscal Year Covered) $23,698 $26,281 $23,702
<S> <C> <C> <C>
June 7 1993 10000 10000 10000
10239 10029 10022
10562 10287 10511
1993 10889 10526 10755
10537 10127 10407
10205 10170 10149
10813 10666 10694
1994 10641 10664 10558
11293 11701 11369
12481 12817 12495
13552 13834 13589
1995 13582 14667 13926
14157 15454 14678
14699 16146 15308
15210 16646 15746
1996 15943 18032 16645
15669 18516 16553
18363 21746 19162
19992 23375 21188
1997 20601 24046 21004
Mar. 31 1998 23698 26281 23702
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN
Primary A Shares
Since Inception
(9/30/92 through 3/31/98) 19.47%
The charts to the left show the growth
in value of a hypothetical $10,000
investment in Primary A and Investor B
Shares of Nations Capital Growth Fund
from the date each class of shares was
first offered. Figures for the Standard
& Poor's 500 Composite Stock Price
Index, an unmanaged index of 500 widely
held common stocks, include
reinvestment of dividends. Funds
included in the Lipper Growth Funds
Universe normally invest in companies
whose long-term earnings are expected
to grow significantly faster than the
earnings of the stocks represented in
the major unmanaged stock indices. It
is not possible to invest in an index
or Lipper universe. The performance
shown reflects the performance of
Primary A and Investor B Shares. The
performance of Primary B, Investor A
and Investor C Shares may vary based on
the differences in sales loads and fees
paid by the shareholders investing in
each class.
AVERAGE ANNUAL TOTAL RETURN
Investor B Shares
Since
Inception NAV CDSC*
(6/7/93 through
3/31/98) 19.84% 19.63%
[CHART LEGEND]
</TABLE>
TOTAL RETURN (AS OF 3/31/98)
<TABLE>
<CAPTION>
PRIMARY A PRIMARY B INVESTOR A INVESTOR B INVESTOR C
Inception Date 9/30/92 6/28/96 10/2/92 6/7/93 10/2/92
NAV CDSC*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR PERFORMANCE 53.89% 52.99% 53.83% 52.52% 47.52% 53.02%
- -------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
3 Years 29.63% NA 29.41% 28.39% 27.78% 28.80%
5 Years 19.35% NA 19.11% NA NA 18.41%
Since Inception 19.47% 32.46% 19.23% 19.84% 19.63% 18.51%
</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 total returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
Figures at net asset value (NAV) do not reflect any sales charges.
33
<PAGE> 38
Nations
Disciplined Equity
Fund Portfolio Manager Commentary*
IN THE FOLLOWING INTERVIEW, MR. MOSER SHARES HIS VIEWS
ON NATIONS DISCIPLINED EQUITY FUND'S PERFORMANCE FOR THE
12-MONTH PERIOD ENDED MARCH 31, 1998, AND HIS CURRENT
OUTLOOK.
<TABLE>
<S> <C>
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
Jeffrey C. Moser, CFA, The core premise underlying Nations Disciplined Equity
is Senior Portfolio Manager of Fund's investment philosophy and style is that earnings
Nations Disciplined Equity Fund drive stock prices. We use quantitative techniques to
and Senior Product Manager, construct an equally weighted portfolio of undervalued
Equity Management for companies that we believe are most likely to report earnings
TradeStreet Investment that exceed expectations.
Associates, Inc., investment To capture earnings expectations or discern earnings
sub-adviser to the Fund. surprises, the Fund uses a proprietary tracking system that
INVESTMENT OBJECTIVE follows a set of established rules for the stock buying,
The Fund seeks growth of selling and valuation processes.
capital by investing in PLEASE EXPLAIN THE PROCESS YOU USE TO CHOOSE THE STOCKS
companies that are expected to COMPRISING NATIONS DISCIPLINED EQUITY FUND.
produce significant increases The investment process for the Fund is quantitative and
in earnings per share. focuses primarily on the information we believe most
PERFORMANCE REVIEW important: earnings expectations and valuation. We use
For the 12-month period ended computer tools and computer models to rank various
March 31, 1998, Nations securities based on these criteria. Based on this
Disciplined Equity Fund Primary quantitative process, we then actively narrow possible
A Shares provided a total investments to a select group of securities that meet the
return of 48.65%. earnings expectations and valuation criteria we establish
for the Fund. Companies identified by the process are also
reviewed to ensure financial stability and quality of
earnings.
Nations Disciplined Equity Fund is also equally disciplined
on the selling side. In the same manner as stocks are
identified for purchase, we evaluate those stocks already in
the portfolio to determine when to sell them.
PLEASE COMMENT ON THE FUND'S PERFORMANCE.
Nations Disciplined Equity Fund (Primary A Shares)
substantially outperformed both its benchmark, the Standard
& Poor's 500 Composite Stock Price Index (S&P 500 Index)**
and its peer group, the Lipper Growth Funds Universe.*** For
the one-year period ended March 31, 1998, the Fund was 67
basis points above the S&P 500 Index, and 5.75% above the
Lipper Growth Funds Universe average of 42.90%.
*The outlook for this Fund may differ from that presented
for other Nations Funds mutual funds.
**The Standard & Poor's 500 Composite Stock Price Index is
an unmanaged index of 500 widely held common stocks. It is
unavailable for investment.
***Lipper Analytical Services, Inc. is an independent mutual
fund performance monitor. Funds included in the Lipper
Growth Funds Universe normally invest in companies whose
long-term earnings are expected to grow substantially faster
than the earnings of the stocks represented in the major
unmanaged stock indices.
Source for all statistical data -- TradeStreet Investment
Associates, Inc.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
</TABLE>
34
<PAGE> 39
Nations
Disciplined Equity
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
We attribute this excellent performance to our quantitative
process that enables us to select quality stocks for the
portfolio.
WHAT PARTICULAR SECTORS OR STOCKS PROVED FAVORABLE FOR THE
FUND?+
The best performing sectors were technology and financial
services stocks. The Fund was at least equally weighted or
overweighted in these sectors for the balance of the year,
and those were two of the market's best-performing sectors
overall. Furthermore, within those sectors, stock selections
were excellent, again due to the quantitative modeling
system.
The Fund's holdings in technology stocks appreciated at more
than two times the rate of that sector on average. One of
the best performers was Dell Computer Corporation, which
returned over 300% for the 12-month period ending March 31,
1998. Compuware Corporation also did well, appreciating over
200% for the year.
The financial services holdings of Nations Disciplined
Equity Fund also appreciated at a rate higher than that of
the sector on average. Paine Webber Group, with earnings
that significantly exceeded expectations, performed very
well in this sector. H.F. Ahmanson and Company and Travelers
Group also reported solid earnings and were good performers
for the Fund.
WHAT PARTICULAR SECTORS OR STOCKS WERE UNFAVORABLE FOR THE
FUND?
The Fund was underweighted for the entire period in health
care, one of the better performing sectors in the S&P 500
Index. Even though our quantitative model ranked these
stocks as favorable, we maintained the Fund's underweight
position because they ranked less favorably than others.
And even though the Fund had excellent returns overall,
there were some stocks that did not meet expectations due to
disappointing earnings. Specifically, Fruit of the Loom and
Phelps Dodge Corporation performed below expectations. We
eventually sold these stocks, replacing them with securities
that the expectations model identified as more appropriate.
WHAT ECONOMIC FACTORS MOST INFLUENCED THE FUND'S
PERFORMANCE?
Through 1997, the market, in general, continued to
experience earnings above expectations. Coupled with low
inflation, an environment for very positive stock market
returns was created.
+Portfolio holdings were current as of March 31, 1998, are
subject to change and may not be representative of current
holdings.
</TABLE>
35
<PAGE> 40
Nations
Disciplined Equity
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
DO YOU EXPECT THAT MARKET ENVIRONMENT TO CHANGE?
Toward the end of the 1997 calendar year and the beginning
of 1998, we've seen some of the effects of a slow down in
exports to Asian countries. As is well known, most Asian
economies are experiencing financial uncertainties, which,
in turn, affects exports of U.S.-based companies. If these
companies continue to export less, it will dampen their
revenues and earnings. Overall, we believe the equity market
should still be strong, only not as robust as it has been
recently.
HOW ARE YOU POSITIONING THE FUND TO TAKE ADVANTAGE OF THE
MARKET YOU JUST DESCRIBED?
Over the past few months, our quantitative model has
indicated a sell signal for energy stocks. Therefore, we
will underweight in that sector going forward. The stocks
that meet the buy criteria -- some of the more attractively
ranked securities based on earnings expectations and
valuation -- continue to be in the financial, technology and
consumer cyclical sectors. We'll follow where the
quantitative model and analytical process leads us, and
invest in these areas.
</TABLE>
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/98)
[PIE CHART]
4.4% Medical Products & Supplies
4.7% Computer Related
5.7% Oil Refining and Marketing
6.1% Computer Software
6.5% Retail -- General
7.8% Insurance
9.6% Financial Services
55.2% Other
<TABLE>
<C> <S> <C>
TOP TEN HOLDINGS
(AS A % OF NET ASSETS AS OF 3/31/98)
-----------------------------------------
1 Compuware Corporation 2.7%
-----------------------------------------
2 Dell Computer Corporation 2.6%
-----------------------------------------
3 TJX Companies Inc. 2.4%
-----------------------------------------
4 Lucent Technologies 2.3%
-----------------------------------------
5 Dayton Hudson Corporation 2.3%
-----------------------------------------
6 Guidant Corporation 2.3%
-----------------------------------------
7 Equitable Companies, Inc. 2.2%
-----------------------------------------
8 Ford Motor Company 2.2%
-----------------------------------------
9 Paine Webber Group, Inc. 2.2%
-----------------------------------------
10 Maytag Corporation 2.2%
-----------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1998, ARE
SUBJECT TO CHANGE AND MAY NOT BE
REPRESENTATIVE OF CURRENT HOLDINGS.
36
<PAGE> 41
Nations
Disciplined Equity
Fund Performance
GROWTH OF $10,000 INVESTMENT
Primary A Shares (as of 3/31/98) [Line Graph]
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
S&P Lipper Growth
Measurement Period 500 Composite Stock Funds
(Fiscal Year Covered) Disciplined Equity $37,443 Price Index $30,086 Universe $26,634
<S> <C> <C> <C>
Oct. 1 1992 10000 10000 10000
1992 13311 10502 10892
14105 10961 11186
15100 11013 11279
17923 11297 11823
1993 17279 11559 12100
16409 11121 11720
15304 11167 11444
16542 11712 12050
1994 16181 11710 11896
16441 12849 12805
18521 14074 14053
20413 15192 15262
1995 20636 16106 15659
21529 16970 16493
22388 17731 17172
23139 18279 17664
1996 25193 19801 18733
25188 20333 18667
29407 23880 21587
33532 25668 23853
1997 32731 26405 23667
Mar. 31 1998 37443 30086 26634
</TABLE>
Investor B Shares (as of 3/31/98)* [Line Graph]
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
S&P Lipper Growth
Measurement Period 500 Composite Stock Funds
(Fiscal Year Covered) Disciplined Equity $22,869 Price Index $26,281 Universe $22,420
<S> <C> <C> <C>
May 20 1994 10000 10000 10000
9779 9755 9662
10555 10231 10186
1994 10304 10230 10053
10437 11224 10806
11730 12294 11866
12896 13271 12904
1995 12999 14069 13201
13533 14824 13921
14034 15489 14538
14472 15967 14967
1996 15721 17297 15781
15678 17762 15662
18255 20860 18141
20762 22422 20065
1997 20214 23066 19851
Mar. 31 1998 22869 26281 22420
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN
Primary A Shares
SINCE INCEPTION
(10/1/92 through 3/31/98) 27.15%
The charts to the left show the growth
in value of a hypothetical $10,000
investment in Primary A and Investor B
Shares of Nations Disciplined Equity
Fund from the date each class of shares
was first offered. Figures for the
Standard & Poor's 500 Composite Stock
Price Index, an unmanaged index of 500
widely held common stocks, include
reinvestment of dividends. Funds
included in the Lipper Growth Funds
Universe normally invest in companies
whose long-term earnings are expected
to grow significantly faster than the
earnings of the stocks represented in
the major unmanaged stock indices. It
is not possible to invest in an index
or Lipper universe. The performance
shown reflects the performance of
Primary A and Investor B Shares. The
performance of Primary B, Investor A
and Investor C Shares may vary based on
the differences in sales loads and fees
paid by the shareholders investing in
each class.
AVERAGE ANNUAL TOTAL RETURN
Investor B Shares
SINCE
INCEPTION NAV CDSC*
(5/20/94 through
3/31/98) 24.16% 23.88%
[CHART LEGEND]
</TABLE>
TOTAL RETURN (AS OF 3/31/98)
<TABLE>
<CAPTION>
PRIMARY A PRIMARY B INVESTOR A INVESTOR B INVESTOR C
Inception Date 10/1/92 6/28/96 7/26/93 5/20/94 5/10/95
NAV CDSC*
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR PERFORMANCE 48.65% 48.44% 48.28% 47.14% 42.14% 47.38%
- ------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
3 Years 31.57% NA 31.30% 30.26% 29.67% NA
5 Years 21.56% NA NA NA NA NA
Since Inception 27.15% 33.67% 21.37% 24.16% 23.88% 29.66%
</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 total returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
Figures at net asset value (NAV) do not reflect any sales charges.
37
<PAGE> 42
Nations
Marsico Focused Equities
Fund Portfolio Manager Commentary*
IN THE FOLLOWING INTERVIEW, MR. MARSICO SHARES HIS VIEWS
ON NATIONS MARSICO FOCUSED EQUITIES FUND'S PERFORMANCE
FOR THE 3-MONTH PERIOD ENDED MARCH 31, 1998 AND HIS
CURRENT OUTLOOK.
<TABLE>
<S> <C>
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
Thomas F. Marsico is Portfolio The Fund invests in 20 to 30 large-capitalization companies
Manager of Nations Marsico that have strong brand franchises, improving returns and
Focused Equities Fund and Chief present growth opportunities either through global
Executive Officer of Marsico expansion, new products or the use of capital to expand
Capital Management, LLC, their business through acquisition.
investment sub-adviser to the
Fund. WHAT WERE ECONOMIC AND MARKET CONDITIONS LIKE DURING THE
INVESTMENT OBJECTIVE REPORTING PERIOD?
The Fund seeks long-term growth During the 3-month period ended March 31, 1998, there was
of capital. concern in the markets over the impact of the Asian
PERFORMANCE REVIEW financial crisis that prompted a 554-point drop in the Dow
Nations Marsico Focused Jones Industrial Average** on October 27, 1997. Despite this
Equities Fund commenced concern, the economy was exceptionally strong over the
operations on December 31, reporting period, as it benefited from a combination of
1997. For the 3-month period steady growth, low inflation, falling interest rates, low
ended March 31, 1998, Nations unemployment, rising wages and strong corporate profits.
Marsico Focused Equities Fund
Primary A Shares provided a In the first quarter of 1998, the economy continued to
total return of 21.30%. perform well as indicated by high sales of existing homes, a
As part of its ongoing boost in consumer spending and strong personal income
investment strategy, the Fund figures. Although Gross Domestic Product growth was less
focuses on companies with than its 10-year high in the prior quarter, it reflected
superior top-line growth rates solid economic growth.
and a global presence.
HOW DID YOU MANAGE THE FUND DURING THE REPORTING PERIOD?
As part of its ongoing investment strategy, the Fund focuses
on companies with superior top-line growth rates and a
global presence. Our strategy is to look at macroeconomic
trends such as interest rates, the competitive landscape and
the regulatory environment and then determine the
industries best capable of taking advantage of those broad
trends. Then we analyze companies within those industries
and choose those with the best fundamentals, which we
believe are poised to benefit in light of the factors
identified. We believe these types of companies will be
successful in the long term.
The Fund did not invest in any bonds during the period
because market conditions were favorable for equity
investments. If the tables should turn, however, we will
certainly look to take advantage of opportunities in the
bond market for the Fund.
*The outlook for this Fund may differ from that presented
for other Nations Funds mutual funds.
**The Dow Jones Industrial Average is a price-weighted index
of 30 of the largest, most widely held stocks traded on the
New York Stock Exchange. It is unmanaged and unavailable for
investment.
Source for all statistical data -- Marsico Capital
Management, LLC
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
</TABLE>
38
<PAGE> 43
Nations
Marsico Focused Equities
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
WHAT INVESTMENTS CONTRIBUTED TO THE FUND'S STRONG
PERFORMANCE?***
While the Fund's entire portfolio did well, two standout
performers were Citicorp and Dell Computer Corporation.
Due to its exposure to Asia, Citicorp declined in value in
late 1997. We saw this price drop as an opportunity to
establish a position in the stock -- a strategy that
benefited the Fund. Citicorp is involved in several emerging
markets, many of which are in Asia. When these markets
collapsed, investors fled from domestic banks and turned to
a "safe haven," which in this case was Citicorp. As
indicated by the lines outside of its branches in Tokyo,
Citicorp enjoyed immense consumer confidence. Citicorp also
benefited from the overall strength of the financial
services sector.
Dell Computer was also among the best performing stocks in
the Fund's portfolio. Dell's biggest strength, aside from
its strong management team, is its direct distribution
delivery model. That efficient model allows Dell to avoid
inventory buildups and accelerate its growth into other
computer-related areas, such as servers and workstations.
In managing the Fund, we look for companies with the
potential for consistent long-term growth. Through our
in-depth research, we found such companies in the
pharmaceutical, agriculture business and financial services
areas. With commodity prices lower due to the Asian crisis,
we anticipate that these stocks will continue to benefit
from lower interest rates and lower inflation.
IS SECTOR SELECTION IMPORTANT TO THE FUND'S STRATEGY?
No, it isn't. The Fund owns a diverse group of stocks from
various industries. We try to take advantage of the best
opportunities available, rather than buying stocks that are
part of a particular industry or sector. The Fund invests in
companies that we anticipate are going to benefit from lower
inflation, lower interest rates, higher productivity, stable
economic environment, expanding global markets and better
management techniques. In addition, we invest in companies
that make their employees stakeholders by linking a portion
of their compensation directly to the company's overall
performance.
While the Fund does not concentrate on any one industry, it
generally avoids the oil industry. We believe there is too
much oil for the demand, causing price weakness.
WHAT INVESTMENT DECISIONS HINDERED OVERALL PORTFOLIO
PERFORMANCE DURING THE PERIOD?
With a portfolio of just 20 to 30 stocks, it's difficult to
have many poor-performing stocks and still provide strong
returns.
***Portfolio holdings were current as of March 31, 1998, are
subject to change and may not be representative of current
holdings.
</TABLE>
39
<PAGE> 44
Nations
Marsico Focused Equities
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
During the quarter, we sold Phillips Electronics because we
anticipated some weakness in that company. Specifically, we
were uncertain about Phillips' components business, which
comprises roughly 12 to 15% of the company's overall
business. Although a small portion of the overall business,
it was difficult to obtain information about it, and we
chose to move the money to another stock about which we had
greater insight and information.
WHAT ECONOMIC DEVELOPMENTS DO YOU ANTICIPATE DURING THE REST
OF 1998, AND HOW ARE YOU POSITIONING THE FUND TO TAKE
ADVANTAGE OF THEM?
Looking ahead, we expect lower interest rates to result in
higher price-to-earnings ratios and higher stock prices.+ We
believe that the worst of the Asian crisis is behind us, the
situation in Korea has stabilized and Japan is beginning to
address its structural problems. In our view, the investing
environment, in the short-term, is close to ideal -- a
strong U.S. economy combined with shareholder-oriented
management creates a template for strong earnings growth,
while low interest rates and low inflation also create the
backdrop for a strong stock market.
TELL US ABOUT A STOCK YOU FIND TO BE PARTICULARLY PROMISING.
We believe that Ford Motor Company, a current portfolio
holding, will spin off a number of its businesses, such as
Associates First Capital and Ford Motor Credit. With its
core automotive business generating over $3 billion in cash
per year and the company initiating a major share repurchase
program and exhibiting improving fundamentals, we feel that
the stock is worth more than its share price reflects. In
fact, the Fund's investment in Ford has already begun to pay
off, and we expect the stock's strong performance to
continue.
+The 12-month forward price-to-earnings multiple is
calculated by taking a company's forecasted 12-month
earnings per share and dividing it by the current stock
share price.
</TABLE>
40
<PAGE> 45
Nations
Marsico Focused Equities
Fund
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/98)
[PIE CHART]
4.4% Agricultural Operations
4.5% Telecommunication Equipment
5.2% Resorts & Theme Parks
5.4% Money Center Banks
9.2% Computer -- Micro
11.3% Medical -- Drugs
11.5% Automobile -- Cars &
Light Trucks
48.5% Other
<TABLE>
<C> <S> <C>
TOP TEN HOLDINGS
(AS A % OF NET ASSETS AS OF 3/31/98)
-----------------------------------------
1 FHLB Discount Note, 5.650%
04/01/98 9.8%
-----------------------------------------
2 Ford Motor Company 9.2%
-----------------------------------------
3 Dell Computer Corporation 9.2%
-----------------------------------------
4 Pfizer, Inc. 6.2%
-----------------------------------------
5 Citicorp 5.4%
-----------------------------------------
6 Premier Parks Inc. 5.2%
-----------------------------------------
7 Delta and Pine Land Company 4.4%
-----------------------------------------
8 Merrill Lynch & Company Inc. 4.3%
-----------------------------------------
9 Coca-Cola Company 4.2%
-----------------------------------------
10 Time Warner Inc. 3.6%
-----------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1998,
ARE SUBJECT TO CHANGE AND MAY NOT
BE REPRESENTATIVE OF CURRENT HOLDINGS.
41
<PAGE> 46
Nations
Marsico Focused Equities
Fund Performance
GROWTH OF $10,000 INVESTMENT
Primary A Shares (as of 3/31/98)
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
S&P
Measurement Period 500 Composite Stock
(Fiscal Year Covered) Nations Marsico Focused Price Index $11,394
Equities $12,130
<S> <C> <C>
Dec. 31 1997 10000 10000
Mar. 31 1998 12130 11394
<CAPTION>
Measurement Period
(Fiscal Year Covered) Lipper Growth Funds
Universe $11,288
<S> <C>
Dec. 31 1997 10000
Mar. 31 1998 11288
</TABLE>
Investor B Shares (as of 3/31/98)*
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
S&P
Measurement Period 500 Composite Stock Lipper Growth
(Fiscal Year Covered) Nations Marsico Focused Price Index $11,394 Funds Universe $11,288
Equities $11,630
<S> <C> <C> <C>
Dec. 31 1997 10000 10000 10000
Mar. 31 1998 11630 11394 11288
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN
Primary A Shares
Since Inception
(12/31/97 through 3/31/98) 21.30%
The charts to the left show the growth
in value of a hypothetical $10,000
investment in Primary A and Investor B
Shares of Nations Marsico Focused
Equities Fund from the date each class
of shares was first offered. Figures
for the Standard & Poor's 500 Composite
Stock Price Index, an unmanaged index
of 500 widely held common stocks,
include reinvestment of dividends.
Funds included in the Lipper Growth
Funds Universe normally invest in
companies whose long-term earnings are
expected to grow significantly faster
than the earnings of the stocks
represented in the major unmanaged
stock indices. It is not possible to
invest in an index or Lipper universe.
The performance shown reflects the
performance of Primary A and Investor B
Shares. The performance of Primary B,
Investor A and Investor C Shares may
vary based on the differences in sales
loads and fees paid by the shareholders
investing in each class.
AVERAGE ANNUAL TOTAL RETURN
Investor B Shares
Since
Inception NAV CDSC*
(12/31/97 through
3/31/98) 21.30% 16.30%
</TABLE>
TOTAL RETURN (AS OF 3/31/98)
<TABLE>
<CAPTION>
PRIMARY A INVESTOR A INVESTOR B INVESTOR C
Inception Date 12/31/97 12/31/97 12/31/97 12/31/97
NAV CDSC*
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 YEAR PERFORMANCE NA NA NA NA NA
- --------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
Since Inception 21.30% 21.40% 21.30% 16.30% 21.30%
</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 THEIR ORIGINAL COST. Average annual total returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
Figures at net asset value (NAV) do not reflect any sales charges.
42
<PAGE> 47
Nations
Emerging Growth
Fund Portfolio Manager Commentary*
IN THE FOLLOWING INTERVIEW, MR. BILLEADEAU SHARES HIS
VIEWS ON NATIONS EMERGING GROWTH FUND'S PERFORMANCE FOR
THE 12 MONTH PERIOD ENDED MARCH 31, 1998 AND HIS CURRENT
OUTLOOK.
<TABLE>
<S> <C>
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
Scott Billeadeau, CFA, is Nations Emerging Growth Fund typically invests in
Senior Portfolio Manager of high-quality growth companies with average market
Nations Emerging Growth Fund capitalizations of $2 billion. The earnings growth rates of
and a Director of Equity these companies have averaged over 30% per year for the
Management for TradeStreet previous three years. Operating margins and return on equity
Investment Associates, Inc., are much higher than the average mid-capitalization-size
investment sub-adviser to the company, often reflecting value-added product lines that
Fund. serve niche markets with significant barriers to entry. As a
INVESTMENT OBJECTIVE result of this discipline, most companies selected for the
The Fund seeks capital portfolio have revenues between $50 million and $1.5
appreciation by investing in billion.
emerging growth companies that
are believed to have superior HOW DID THE FUND PERFORM UNDER THE MARKET CONDITIONS THAT
long-term earnings growth PREVAILED OVER THE LAST 12 MONTHS?
prospects. Considering the volatility that characterized
PERFORMANCE REVIEW mid-capitalization funds generally during the last 12
For the 12-month period ended months, Nations Emerging Growth Fund performed relatively
March 31, 1998, Nations well. The Fund experienced positive results from May to
Emerging Growth Fund Primary A mid-September 1997, but its performance was impacted by a
Shares provided a total return very weak fourth calendar quarter. With a total return of
of 45.09%. 45.09%, the Fund (Primary A Shares) outperformed its peer
group, the Lipper MidCap Funds Universe, which returned
43.06%.**
At the end of March 1997, mid-capitalization stock prices
came close to their all-time low relative valuations, mostly
due to concerns about the U.S. economy. Eventually, Nations
Emerging Growth Fund benefited from these valuations as
concerns subsided. Thanks to moderate interest rates, the
economy became fairly robust. Emerging growth stocks
experienced positive earnings through the remaining part of
the first quarter and through the second quarter.
Due to the Asian financial crisis, the fourth quarter of
1997 was rather lackluster for the Fund and for stocks in
general. Investors became cautious, shying away from growth
stocks. Investors' attitudes had an even more dramatic
effect in the mid-capitalization market.
*The outlook for this Fund may differ from that presented
for other Nations Funds mutual funds.
**Lipper Analytical Services, Inc. is an independent mutual
fund performance monitor. Funds included in the Lipper
MidCap Funds Universe invest primarily in companies with
market capitalizations less than $5 billion at time of
purchase.
Source for all statistical data -- TradeStreet Investment
Associates, 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.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
</TABLE>
43
<PAGE> 48
Nations
Emerging Growth
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
WHAT PARTICULAR SECTORS OR STOCKS WERE FAVORABLE FOR THE
FUND?***
Sectors that were quite favorable for Nations Emerging
Growth Fund were financial services, consumer cyclicals and
technology.
Financial services performed well due to low interest rates,
merger activity and a very favorable credit environment.
Certain money managers, like Franklin Resources and State
Street Boston Corporation, benefited from the influx of
money into the bull market.
SECTORS THAT WERE QUITE Economic confidence helped the consumer cyclicals sector.
FAVORABLE FOR NATIONS EMERGING Like many other mid-capitalization stocks, those from this
GROWTH FUND WERE FINANCIAL sector did well during the first two quarters. They also
SERVICES, CONSUMER CYCLICALS received a lift during the Asian financial crisis, since
AND TECHNOLOGY. investors were searching for stocks with little or no Asian
exposure.
Because the Fund buys stocks of companies that serve niche
markets with barriers to entry into their businesses,
technology holdings did well, even in a volatile year for
that sector. We focused on software companies and were
rewarded for this strategy. The performance of Compuware
Corporation and America Online, Inc. contributed greatly to
the Fund's growth.
Another sector that did well was transportation,
particularly small airlines. This sector benefited not only
from the strong economy, but also from fuel costs being cut
by approximately 40%.
WHAT PARTICULAR SECTORS OR STOCKS WERE UNFAVORABLE FOR THE
FUND?
The energy sector suffered due to falling fuel costs. In
particular, oil services companies like Neighbor Industries
suffered.
Two other stocks that were disappointments came from the
technology sector. Atmel Corporation and Remedy Corporation
did not execute according to their business plans, which
resulted in unfavorable market reaction to their stocks.
However, we still like these companies and actually
increased the Fund's positions in them because we believe
they are fundamentally sound.
WHAT INVESTMENT OPPORTUNITIES DO YOU ANTICIPATE IN THE
COMING YEAR AND HOW ARE YOU POSITIONING THE FUND
ACCORDINGLY?
We believe the market is beginning to favor growth stocks,
particularly those of medium- and small-sized companies. In
fact, during the first calendar quarter of 1998, mid- and
small-capitalization stocks have comprised the largest
percentage of companies reporting earnings that were better
than expected.
***Portfolio holdings were current as of March 31, 1998, are
subject to change and may not be representative of current
holdings.
</TABLE>
44
<PAGE> 49
Nations
Emerging Growth
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
Also, although the economy is strong, we believe it will
begin to slow. That should favor growth companies, and we
expect to see growth stocks outperform value stocks.
WE'LL IDENTIFY AND PURCHASE To capitalize, we'll identify and purchase stocks of
STOCKS OF COMPANIES THAT WE companies that we believe have visible and sustainable
FEEL HAVE VISIBLE AND earnings growth. We're seeing that already in some
SUSTAINABLE EARNINGS GROWTH. technology stocks and health care stocks, which are
beginning to benefit the portfolio. We believe the market is
confident these companies are going to experience earnings
growth.
In total, we believe that the market shift toward growth
stocks and our anticipated return on investment should
reward shareholders in the long run.
</TABLE>
PORTFOLIO BREAKDOWN (AS OF 3/31/98)
[PIE CHART]
4.3% Oil Services
4.5% Electric Components
5.4% Apparel and Textiles
5.9% Financial Services
6.1% Computer Software
6.4% Medical Products and Supplies
7.8% Medical Services
59.6% Other
<TABLE>
<C> <S> <C>
TOP TEN HOLDINGS (AS OF 3/31/98)
-----------------------------------------
1 Tommy Hilfiger Corporation 1.8%
-----------------------------------------
2 Southdown Inc. 1.7%
-----------------------------------------
3 Compuware Corporation 1.7%
-----------------------------------------
4 Biogen Inc. 1.6%
-----------------------------------------
5 Coca Cola Enterprises Inc. 1.6%
-----------------------------------------
6 BJ Services Inc. 1.6%
-----------------------------------------
7 Superior Industries
International Inc. 1.6%
-----------------------------------------
8 Comair Holdings Inc. 1.6%
-----------------------------------------
9 Linear Technology Corporation 1.5%
-----------------------------------------
10 Belo (A.H.) Corporation,
Class A 1.5%
-----------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS AND OUTLOOK
WERE CURRENT AS OF MARCH 31, 1998,
ARE SUBJECT TO CHANGE AND MAY NOT
BE REPRESENTATIVE OF CURRENT HOLDINGS.
45
<PAGE> 50
Nations
Emerging Growth
Fund Performance
GROWTH OF $10,000 INVESTMENT
Primary A Shares (as of 3/31/98)
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
Measurement Period S&P MidCap 400
(Fiscal Year Covered) Index $26,024 Lipper MidCap Funds Universe $23,925 Emerging Growth $24,047
<S> <C> <C> <C>
Dec. 4 1992 10000 10000 10000
1992 10335 10318 10342
10675 10536 9950
10923 10766 10240
11472 11539 11141
1993 11778 11849 11583
11330 11495 10975
10917 10940 10256
11656 11822 11644
1994 11356 11703 11658
12274 12541 12258
13357 13623 13342
14661 15145 14731
1995 14870 15323 15156
15785 16248 16508
16240 17015 17731
16713 17567 18027
1996 17725 17905 17980
17462 16775 16574
20036 19407 19437
23248 22115 22842
1997 23442 21359 21695
Mar. 31 1998 26024 23925 24047
</TABLE>
Investor B Shares (as of 3/31/98)*
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
Lipper MidCap
Measurement Period S&P MidCap 400 Funds
(Fiscal Year Covered) Emerging Growth $22,995 Index $26,024 Universe $22,303
<S> <C> <C> <C>
June 7 1993 10000 10000 10000
10354 10923 10081
11235 11472 10837
1993 11641 11778 11117
11005 11330 10769
10257 10917 10239
11631 11656 11071
1994 11604 11356 10960
12179 12274 11738
13211 13357 12785
14553 14661 14205
1995 14953 14870 14337
16241 15785 15204
17387 16240 15932
17640 16713 16430
1996 17554 17725 16708
16148 17462 15633
18880 20036 18041
22135 23248 20604
1997 20962 23442 19904
Mar. 31 1998 22995 26024 22303
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN
Primary A Shares
Since Inception
(12/4/92 through 3/31/98) 17.92%
The charts to the left show the growth
in value of a hypothetical $10,000
investment in Primary A and Investor B
Shares of Nations Emerging Growth Fund
from the date each class of shares was
first offered. Figures for the Standard
& Poor's MidCap 400 Index, an unmanaged
capitalization-weighted index of 400
mid-range sector common stocks, include
reinvestment of dividends. Funds
included in the Lipper MidCap Funds
Universe invest primarily in companies
with market capitalizations less than
$5 billion at time of purchase. It is
not possible to invest in an index or
Lipper universe. The performance shown
reflects the performance of Primary A
and Investor B Shares. The performance
of Primary B, Investor A and Investor C
Shares may vary based on the
differences in sales loads and fees
paid by the shareholders investing in
each class.
AVERAGE ANNUAL TOTAL RETURN
Investor B Shares
Since
Inception NAV CDSC*
(6/7/93 through 3/31/98)19.10% 18.88%
[CHART LEGEND]
</TABLE>
TOTAL RETURN (AS OF 3/31/98)
<TABLE>
<CAPTION>
PRIMARY A PRIMARY B INVESTOR A INVESTOR B INVESTOR C
Inception Date 12/4/92 6/28/96 12/10/92 6/7/93 12/18/92
NAV CDSC*
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR PERFORMANCE 45.09% 44.33% 44.86% 43.64% 38.64% 43.80%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
3 Years 25.18% NA 24.93% 23.96% 23.30% 24.27%
5 Years 19.30% NA 19.04% NA NA 18.31%
Since Inception 17.92% 18.40% 18.00% 19.10% 18.88% 17.31%
</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 total returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
*Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
Figures at net asset value (NAV) do not reflect any sales charges.
46
<PAGE> 51
Nations
Small Company Growth
Fund Portfolio Manager Commentary*
IN THE FOLLOWING INTERVIEW, MR. BILLEADEAU SHARES HIS
VIEWS ON NATIONS SMALL COMPANY GROWTH FUND'S PERFORMANCE
FOR THE 12-MONTH PERIOD ENDED MARCH 31, 1998, AND HIS
CURRENT OUTLOOK.
<TABLE>
<S> <C>
PORTFOLIO MANAGER PLEASE DESCRIBE THE FUND'S INVESTMENT PHILOSOPHY AND STYLE.
Scott Billeadeau, CFA, is Our approach to small-capitalization investing emphasizes a
Senior Portfolio Manager of rigorous, disciplined and fundamental-based process that
Nations Small Company Growth identifies successful companies at the early stages of their
Fund and a Director of Equity economic life cycle, long before they are recognized by the
Management for TradeStreet greater investing public.
Investment Associates, Inc.,
investment sub-adviser to the HOW DID THE FUND PERFORM UNDER THE MARKET CONDITIONS THAT
Fund. PREVAILED OVER THE LAST 12 MONTHS?
INVESTMENT OBJECTIVE It was a volatile period for small-company stocks. Due to
The Fund seeks long-term underperformance in April 1997, small-capitalization stocks
capital growth by investing appeared "cheap" relative to larger-company stocks. Relative
primarily in equity securities. valuations were close to an all-time low June through
PERFORMANCE REVIEW September 1997, making small-capitalization stocks
For the 12-month period ended attractive. So overall, May through September proved to be
March 31, 1998, Nations Small strong months. Then the Asian financial crisis sent
Company Growth Fund Primary A investors toward the purchase of large-capitalization
Shares provided a total return blue-chip stocks rather than small-capitalization stocks
of 49.41%.** during the third fiscal quarter. With a total return of
49.41%, the Fund (Primary A Shares) outperformed its peer
group, the Lipper SmallCap Funds Universe which returned
43.53%.***
WHAT PARTICULAR SECTORS OR STOCKS WERE FAVORABLE FOR THE
FUND?+
Sectors that were favorable for Nations Small Company Growth
Fund were financial services, technology and consumer
cyclicals.
Small capitalization stocks from the financial sector did
well due to low interest rates, a strong economy and
consolidation in that industry. During the fiscal year,
several banks in the portfolio were taken over by or merged
into larger banks. That type of activity significantly added
to the Fund's performance. The stocks of City National,
SouthWest Securities, OnBanc and US Bancorp performed
particularly well.
*The outlook for this Fund may differ from that presented
for other Nations Funds mutual funds.
**The performance shown includes the effect of fee waivers
by the investment adviser, which has the effect of
increasing total return.
***Lipper Analytical Services, Inc. is an independent mutual
fund monitor. Funds included in the Lipper SmallCap Funds
Universe invest primarily in companies with market
capitalizations less than $1 billion at time of purchase.
+Portfolio holdings were current as of March 31, 1998, are
subject to change and may not be representative of current
holdings.
Source for all statistical data -- TradeStreet Investment
Associates, 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.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
</TABLE>
47
<PAGE> 52
Nations
Small Company Growth
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
The consumer cyclicals sector benefited in the third fiscal
quarter because those small company stocks are domestic in
nature and, thus, were not impacted by the Asian financial
crisis. Add to that a good domestic economy, and it's
obvious why those securities benefited. In particular, the
stocks of retailers Ethan Allen Retailers and Pacific
Sunwear performed well.
Adding to the positive annual return was the Fund's
underweighting in several underperforming sectors. For
example, the health care sector has underperformed in the
small-capitalization universe, especially when compared to
large-capitalization health care stocks which profited from
mergers and consolidation. In addition, smaller health care
companies tend to be one-product companies which carry much
more risk than well-diversified larger companies. (The same
is true for technology.) Due to these factors, we have
significantly underweighted the Fund in health care against
the benchmark.
Normally, small-capitalization growth funds own more health
care stocks than the Fund does, but because of the inherent
risk, we were particularly selective. That philosophy
benefitted the Fund because it was underweighted in a sector
that underperformed.
SMALL CAPITALIZATION STOCKS WHAT PARTICULAR SECTORS OR STOCKS WERE UNFAVORABLE FOR THE
FROM THE FINANCIAL SECTOR DID FUND?
WELL DUE TO LOW INTEREST RATES, Small-capitalization technology stocks, in general, showed
A STRONG ECONOMY AND poor returns, especially those with Asian exposure. These
CONSOLIDATION IN THAT INDUSTRY. companies may not have direct exposure to the Asian markets,
but because they supply companies that do, they were
affected by the Asian financial crisis.
We've had to identify the technology companies that do have
this indirect exposure and evaluate the Fund's positions in
them. Many have stayed the course and are now beginning to
rebound. However, we are selling those that have significant
Asian exposure. Basically, it comes down to whether we
consider the underperformance as a short-term disruption to
the company or as having a lasting fundamental effect on the
stock.
Other stocks that didn't meet expectations included Delta
Woodside Industries and Proxim, Inc.
THE MARKET IS BEGINNING TO WHAT ECONOMIC FACTORS INFLUENCED THE FUND'S PERFORMANCE AND
FAVOR GROWTH STOCKS, WHAT DO YOU ANTICIPATE IN THE COMING YEAR?
PARTICULARLY THOSE OF MEDIUM- The first and second fiscal quarters of 1997 were favorable
AND SMALL-SIZED COMPANIES. to small-capitalization investors. The third fiscal quarter
was lackluster as a result of the Asian financial crisis,
which caused liquidity to dry up in the small-
capitalization universe as investors moved toward
larger-capitalization stocks. Consequently,
large-capitalization stocks have grown to an all-time high
in terms of the number of investors choosing them over
small-capitalization stocks.
</TABLE>
48
<PAGE> 53
Nations
Small Company Growth
Fund Portfolio Manager Commentary continued...
<TABLE>
<S> <C>
However, the market is beginning to favor growth stocks,
particularly those of medium- and small-sized companies. In
fact, during the first calendar quarter of 1998, mid- and
small-capitalization stocks have comprised the largest
percentage of companies reporting better-than-expected
earnings. Also, although the economy is strong, we believe
it will begin to slow. That should favor the growth
universe, and we believe growth stocks will outperform value
stocks.
To capitalize, we'll identify and purchase stocks of
companies that we believe have visible and sustainable
earnings growth. In total, we believe that the market shift
toward growth stocks and the Fund's anticipated return on
investment should reward shareholders in the long run.
</TABLE>
PORTFOLIO BREAKDOWN (AS A % OF NET ASSETS AS OF 3/31/98)
[PIE CHART]
4.0% Apparel and Textiles
4.3% Medical Products and Supplies
4.4% Retail -- Specialty
4.5% Computer Software
5.2% Electronics
5.8% Professional Services
7.6% Telecommunications
64.2% Other
<TABLE>
<C> <S> <C>
TOP TEN HOLDINGS (AS A % OF NET ASSETS AS
OF 3/31/98)
-----------------------------------------
1 REMEC, Inc. 2.0%
-----------------------------------------
2 Core Laboratories N.V. 1.9%
-----------------------------------------
3 Cybex Computer Products
Corporation 1.8%
-----------------------------------------
4 SCB Computer Technology, Inc. 1.7%
-----------------------------------------
5 Stanford Telecommunications,
Inc. 1.6%
-----------------------------------------
6 Henry Schein, Inc. 1.6%
-----------------------------------------
7 Quicksilver 1.6%
-----------------------------------------
8 Orthodontic Centers of
America 1.5%
-----------------------------------------
9 Lason Holdings Inc. 1.4%
-----------------------------------------
10 Rogue Wave Software 1.4%
-----------------------------------------
THE TOP TEN HOLDINGS ARE PRESENTED TO
ILLUSTRATE EXAMPLES OF THE INDUSTRIES AND
SECURITIES IN WHICH THE FUND MAY INVEST.
</TABLE>
PORTFOLIO HOLDINGS WERE CURRENT
AS OF MARCH 31, 1998, ARE SUBJECT
TO CHANGE AND MAY NOT BE REPRESENTATIVE
OF CURRENT HOLDINGS.
49
<PAGE> 54
Nations
Small Company Growth
Fund Performance
GROWTH OF $10,000 INVESTMENT
Primary A Shares (as of 3/31/98)
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
Measurement Period Russell
(Fiscal Year Covered) Small Company Growth $16,832 2000 Index $16,103 Lipper SmallCap Funds Universe $16,214
<S> <C> <C> <C>
Dec. 12 1995 10000 10000 10000
1995 9875 10264 10169
10470 10788 10802
11159 11327 11611
11283 11366 11836
1996 11909 11957 12148
11266 11339 11352
13512 13177 13257
15584 15138 15419
1997 14272 14631 14633
Mar. 31 1998 16832 16103 16214
</TABLE>
Investor B Shares (as of 3/31/98)*
Assumes the reinvestment of all distributions.
<TABLE>
<CAPTION>
Measurement Period Small Company Growth Russell
(Fiscal Year Covered) $16,459 2000 Index $16,103 Lipper SmallCap Funds Universe $16,214
<S> <C> <C> <C>
Dec. 12 1995 10000 10000 10000
1995 9881 10264 10169
10439 10788 10802
11096 11327 11611
11199 11366 11836
1996 11795 11957 12148
11122 11339 11352
13304 13177 13257
15315 15138 15419
1997 13978 14631 14633
Mar. 31 1998 16459 16103 16214
</TABLE>
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN
Primary A Shares
Since Inception
(12/12/95 through 3/31/98) 25.39%
The charts to the left show the growth
in value of a hypothetical $10,000
investment in Primary A and Investor B
Shares of Nations Small Company Growth
Fund from the date each class of shares
was first offered. Figures for the
Russell 2000 Index, an unmanaged
capitalization-weighted index that
includes 2,000 of the smallest stocks,
representing approximately 11% of the
U.S. equity market, include
reinvestment of dividends. Funds
included in the Lipper SmallCap Funds
Universe invest primarily in companies
with market capitalization less than $1
billion at the time of purchase. It is
not possible to invest in an index or
Lipper universe. The performance shown
reflects the performance of Primary A
and Investor B Shares. The performance
of Investor A and Investor C Shares may
vary based on the differences in sales
loads and fees paid by the shareholders
investing in each class.
AVERAGE ANNUAL TOTAL RETURN
Investor B Shares
Since
Inception NAV CDSC*
(12/12/95 through
3/31/98) 24.18% 23.19%
[CHART LEGEND]
</TABLE>
TOTAL RETURN (AS OF 3/31/98)
<TABLE>
<CAPTION>
PRIMARY A INVESTOR A INVESTOR B INVESTOR C
Inception Date 12/12/95 12/12/95 12/12/95 9/22/97
NAV CDSC*
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 YEAR PERFORMANCE 49.41% 49.15% 47.99% 42.99% NA
- ------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
Since Inception 25.39% 24.94% 24.18% 23.19% 8.75%
</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 total returns are
historical in nature and measure net investment income and capital gain or loss
from portfolio investments assuming reinvestment of dividends.
The performance shown reflects the performance of the Pilot Small Capitalization
Equity Fund, which was reorganized into Nations Small Company Growth Fund on May
23, 1997.
The performance shown includes the effect of fee waivers by the investment
adviser, which has the effect of increasing total return.
*Figures at CDSC reflect the maximum applicable contingent deferred sales
charge.
Figures at net asset value (NAV) do not reflect any sales charges.
50
<PAGE> 55
NATIONS FUNDS
Nations Balanced Assets Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 65.9%
AEROSPACE AND DEFENSE -- 1.8%
13,650.... Litton Industries, Inc.+............. $ 787,434
4,925 Lockheed Martin Corporation.......... 554,062
13,725 Raytheon Company Class B............. 801,197
------------
2,142,693
------------
APPAREL AND TEXTILES -- 1.5%
14,600 Liz Clairborne Inc. ................. 728,175
32,850 Reebok International Ltd.+........... 1,001,925
------------
1,730,100
------------
AUTOMOBILE PARTS MANUFACTURERS -- 1.0%
51,050 Cooper Tire & Rubber Company......... 1,212,438
------------
BANKS -- 3.9%
9,500 BankAmerica Corporation.............. 784,937
11,450 Bankers Trust New York Corporation... 1,377,577
10,400 Chase Manhattan Corporation.......... 1,402,700
27,600 One Valley Bancorp................... 1,043,625
------------
4,608,839
------------
BEVERAGES -- 0.9%
16,000 Anheuser-Bush Companies, Inc. ....... 741,000
8,550 PepsiCo Inc. ........................ 364,977
------------
1,105,977
------------
BUILDING PRODUCTS -- AIR & HEATING -- 1.6%
12,825 Armstrong World International........ 1,110,164
23,650 Owens Corning........................ 849,922
------------
1,960,086
------------
CHEMICALS & ALLIED PRODUCTS -- 0.8%
26,185 Lubrizol Corporation................. 1,008,122
------------
CHEMICALS -- BASIC -- 1.6%
10,425 Dow Chemical Company................. 1,013,831
12,500 PPG Industries, Inc. ................ 849,219
------------
1,863,050
------------
CHEMICALS -- SPECIALTY -- 1.6%
14,000 BetzDearborn, Inc. .................. 790,125
24,375 Ferro Corporation.................... 716,016
7,575 Union Carbide Corporation............ 379,697
------------
1,885,838
------------
COMPUTER INDUSTRY -- 0.9%
33,295 Flowserve Corporation................ 1,086,249
------------
COMPUTER SERVICES -- 2.8%
48,550 Compaq Computer Corporation.......... 1,256,231
17,900 Hewlett-Packard Company.............. 1,134,412
9,200 International Business Machines
Corporation......................... 955,650
------------
3,346,293
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
COSMETICS AND TOILETRY -- 1.5%
38,025 Alberto-Culver Company............... $ 1,157,386
12,200 Kimberly-Clark Corporation........... 611,525
------------
1,768,911
------------
DIVERSIFIED -- 1.3%
11,050 Raychem Corporation.................. 459,266
20,500 Varian Associates Inc. .............. 1,135,187
------------
1,594,453
------------
DURABLE GOODS -- WHOLESALE -- 0.9%
19,045 Avnet, Inc. ......................... 1,096,278
------------
ELECTRIC POWER -- 1.4%
27,800 Dominion Resources Inc. ............. 1,167,600
16,900 Entergy Corporation.................. 502,775
------------
1,670,375
------------
ELECTRIC SERVICES -- 0.8%
38,075 PP & L Resources, Inc. .............. 899,522
------------
ELECTRONICS -- 2.5%
26,850 AMP Inc. ............................ 1,176,366
22,400 Arrow Electronics, Inc.+............. 606,200
18,800 Motorola, Inc. ...................... 1,139,750
------------
2,922,316
------------
FINANCIAL SERVICES -- 1.5%
10,775 Allstate Corporation................. 990,627
20,250 Southtrust Corporation............... 847,969
------------
1,838,596
------------
FOOD PRODUCERS -- 1.1%
18,750 Nabisco Holdings Corporation, Class
A................................... 881,250
8,250 Quaker Oats Company.................. 472,313
------------
1,353,563
------------
FURNITURE AND APPLIANCES -- 0.6%
26,675 Rubbermaid, Inc. .................... 760,238
------------
GAS -- DISTRIBUTION -- 0.8%
26,800 Peoples Energy Corporation........... 974,850
------------
INSURANCE -- 1.9%
16,675 SAFECO Corporation................... 911,393
11,925 Hartford Financial Services Group
Inc. ............................... 1,293,863
------------
2,205,256
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
51
<PAGE> 56
NATIONS FUNDS
Nations Balanced Assets Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
MACHINERY AND EQUIPMENT -- 3.3%
34,500 AGCO Corporation..................... $ 1,024,219
16,900 General Signal Corporation........... 790,075
35,150 Harnischfeger Industries Inc. ....... 1,201,691
18,200 Nordson Corporation.................. 907,725
------------
3,923,710
------------
MEDICAL PRODUCTS AND SUPPLIES -- 2.5%
7,625 Abbott Laboratories.................. 574,258
20,375 Bard (C.R.) Inc. .................... 748,781
15,125 Johnson & Johnson.................... 1,108,852
15,050 United States Surgical Corporation... 496,650
------------
2,928,541
------------
MEDICAL SERVICES -- 0.3%
16,850 Humana Inc.+......................... 418,091
------------
MISCELLANEOUS MANUFACTURER -- 2.7%
26,100 Briggs & Stratton Corporation........ 1,195,706
23,800 Dexter Corporation................... 984,725
21,125 Olin Corporation..................... 991,555
------------
3,171,986
------------
OIL -- DOMESTIC -- 3.3%
5,700 Amoco Corporation.................... 492,338
13,675 Equitable Resources.................. 454,694
15,100 Repsol S.A., ADR..................... 768,213
27,975 Ultramar Diamond Shamrock
Corporation......................... 986,119
31,000 Unocal Corporation................... 1,199,313
------------
3,900,677
------------
OIL -- INTERNATIONAL -- 2.9%
14,950 Mobil Corporation.................... 1,145,544
44,425 Occidental Petroleum Corporation..... 1,302,208
30,100 YFP S.A. Sponsored ADR............... 1,023,400
------------
3,471,152
------------
OIL -- REFINING & MARKETING -- 7.8%
21,300 Apache Corporation................... 782,775
14,600 Atlantic Richfield Company........... 1,147,925
29,475 Baker Hughes Inc. ................... 1,186,369
8,100 Coastal Corporation.................. 527,512
22,750 Murphy Oil Corporation............... 1,140,344
21,250 Phillips Petroleum Company........... 1,061,172
57,650 Union Texas Petroleum Holdings Inc... 1,275,506
32,600 Valero Energy Corporation............ 1,088,025
45,100 Union Pacific Resources Group........ 1,076,763
------------
9,286,391
------------
PAPER & RELATED PRODUCTS -- 1.1%
16,775 Louisiana-Pacific Corporation........ 390,019
29,350 Westvaco Corporation................. 902,512
------------
1,292,531
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
RESTAURANTS -- 0.9%
50,210 Wendy's International................ $ 1,120,311
------------
RETAIL -- GENERAL -- 1.2%
39,475 Dillards Inc., Class A............... 1,458,108
------------
RETAIL -- SPECIALTY -- 1.0%
18,300 Nordstrom Inc. ...................... 1,167,769
------------
STEEL -- 0.7%
14,725 Nucor Corporation.................... 801,592
------------
TELECOMMUNICATIONS -- 3.0%
29,700 ALLTEL Corporation................... 1,297,519
61,700 DSC Communications Corporation....... 1,122,169
56,250 Scientific-Atlanta Inc. ............. 1,100,391
------------
3,520,079
------------
TRANSPORTATION -- RAILROADS -- 1.0%
10,900 Burlington Northern Santa Fe Inc. ... 1,133,600
------------
UTILITIES -- TELEPHONE -- 1.5%
15,150 GTE Corporation...................... 907,106
38,400 Telefonica de Peru S.A., ADR......... 828,000
------------
1,735,106
------------
TOTAL COMMON STOCKS
(Cost $72,438,775)................... 78,363,687
============
<CAPTION>
PRINCIPAL
AMOUNT
- ---------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 5.3%
$ 990,000 Chase Manhattan Credit Card Master
Trust, Series 1996-4, Class A,
6.730% 02/15/03..................... 1,000,207
1,550,000 CS First Boston Mortgage Securities
Corporation, Series 1996-2, Class
A4, 6.620% 09/25/09................. 1,548,789
928,585 EQCC Home Equity Loan Trust: Series
1996-2, Class A2, 6.700% 09/15/08... 933,662
500,000 IMC Home Equity Loan Trust, 6.540%
11/20/12............................ 500,935
1,250,000 Premier Auto Trust, 6.530% 12/06/03.. 1,265,430
250,000 Premier Auto Trust, 5.920% 10/16/04.. 248,592
440,000 Spiegel Master Trust, 8.150%
06/15/04............................ 455,813
325,000 Standard Credit Card Master,
6.650% 10/07/07..................... 328,351
------------
TOTAL ASSET-BACKED
SECURITIES
(Cost $6,241,049).................... 6,281,779
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
52
<PAGE> 57
NATIONS FUNDS
Nations Balanced Assets Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- 10.2%
AEROSPACE -- 0.2%
$ 250,000 Raytheon Company, 6.750% 08/15/07.... $ 254,378
------------
AUTOMOTIVE -- 0.9%
500,000 Ford Motor Credit Company, MTN,
7.400% 08/01/26..................... 529,570
500,000 Toyota 1997-A2, 6.350% 04/26/04...... 503,125
------------
1,032,695
------------
BANKING AND FINANCE -- 4.7%
250,000 AVCO Financial Services, 5.750%
01/23/01............................ 239,052
ERAC USA Finance Company,
250,000 6.950% 03/01/04**.................... 254,102
500,000 6.625% 02/15/05**.................... 497,405
250,000 First Union Corporation, 8.040%
12/01/26............................ 264,632
500,000 GMAC, 8.750% 07/15/05................ 568,465
500,000 Goldman Sachs Group, 6.625%
12/01/04**.......................... 500,235
250,000 INTL Re Recon & Development, 5.620%
03/17/03............................ 248,150
500,000 Lehman Brothers Holdings, MTN, 7.250%
04/15/03............................ 516,455
750,000 Popular North America Inc., 6.625%
10/27/02............................ 760,763
750,000 Salomon, Inc., 6.625% 11/30/00....... 757,830
500,000 Spintab AB, 7.500% 08/14/49**........ 514,290
250,000 Union Planters Corporation,
Sub. Notes, 8.200% 12/15/26......... 261,655
250,000 Zurich Capital Trust, 8.376%
06/01/37**.......................... 271,112
------------
5,654,146
------------
INDUSTRIAL -- 1.5%
500,000 Auburn Hills Trust Certificates,
Deb., 12.000% 05/01/20.............. 796,505
250,000 IBM Corporation, 6.500% 01/15/28..... 244,790
250,000 Wells Fargo, 7.960% 12/15/26......... 264,610
500,000 Xerox Capital Trust I, 8.000%
02/01/27............................ 523,800
------------
1,829,705
------------
INSURANCE -- 0.5%
250,000 American Re Corporation, 7.450%
12/15/26............................ 269,370
325,000 Conseco Finance Trust II, 8.700%
11/15/26............................ 361,416
------------
630,786
------------
REGIONAL AGENCIES -- 0.5%
$ 500,000 Province of Quebec, 7.000% 01/30/07.. 520,475
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
TELECOMMUNICATIONS -- 0.6%
250,000 GTE Corporation, 6.600% 09/22/05..... $ 250,245
500,000 Tele-Communications, 7.375%
01/15/00............................ 509,250
------------
759,495
------------
TRANSPORTATION -- 0.2%
250,000 Norfolk Southern Corporation, 7.350%
05/15/07............................ 266,080
------------
WASTE DISPOSAL -- 0.2%
250,000 U.S.A. Waste Services Inc., 7.125%
10/01/07............................ 257,975
------------
OTHER -- 0.9%
500,000 Dominion Capital Trust I, 7.830%
12/01/27**.......................... 510,980
500,000 FCB/NB Capital Trust I, 8.050%
03/01/28**.......................... 504,490
------------
1,015,470
------------
TOTAL CORPORATE BONDS
AND NOTES
(Cost $12,683,389).................. 12,221,205
============
MORTGAGE-BACKED SECURITIES -- 5.6%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC)
CERTIFICATES -- 3.6%
GOLD,
1,997,573 6.500% 08/01/10..................... 2,010,717
2,188,719 8.000% 09/01/25..................... 2,266,331
------------
4,277,048
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA)
CERTIFICATES -- 2.0%
2,329,501 7.500% 10/15/27...................... 2,388,461
------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $6,568,273).................... 6,665,509
============
U.S. TREASURY SECURITIES -- 10.2%
U.S. TREASURY BOND -- 3.4%
1,300,000 6.250% 08/15/23...................... 1,340,014
2,500,000 7.500% 05/15/02...................... 2,666,400
------------
4,006,414
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
53
<PAGE> 58
NATIONS FUNDS
Nations Balanced Assets Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
U.S. TREASURY SECURITIES -- (CONTINUED)
U.S. TREASURY NOTES -- 6.8%
$2,050,000 6.000% 08/15/99...................... $ 2,060,577
1,500,000 7.500% 10/31/99...................... 1,542,180
3,150,000 7.875% 08/15/01...................... 3,361,145
900,000 5.625% 12/31/02...................... 898,452
200,000 6.125% 08/15/07...................... 205,687
------------
8,068,041
------------
TOTAL U.S. TREASURY SECURITIES
(Cost $12,090,996)................... 12,074,455
============
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
INVESTMENT COMPANY -- 2.4% (Cost $2,878,000)
2,878,000 Nations Cash Reserves(a)............. $ 2,878,000
============
TOTAL INVESTMENTS
(Cost $112,900,482*)..................... 99.6% 118,484,635
OTHER ASSETS AND
LIABILITIES (NET)........................ 0.4 451,972
----- ------------
NET ASSETS................................ 100.0% $118,936,607
===== ============
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $5,736,379 and gross
depreciation of $608,508 for federal income tax purposes. At March 31, 1998,
the aggregate cost of securities for federal income tax purposes was
$113,356,764.
** Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended ("the 1933 Act"). These securities may be resold in
transactions exempt from registration, normally to qualified institutional
buyers.
+ Non-income producing security.
(a) Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates, Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
54
<PAGE> 59
NATIONS FUNDS
Nations Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 90.2%
AEROSPACE AND DEFENSE -- 5.0%
150,200 Allied Signal Inc. ................ $ 6,308,400
101,100 Lockhead Martin Corporation........ 11,373,750
315,000 Raytheon Company................... 18,388,125
211,700 TRW Inc. .......................... 11,669,963
99,300 United Technologies Corporation.... 9,166,631
--------------
56,906,869
--------------
AUTOMOBILE PARTS MANUFACTURERS -- 3.2%
652,400 Cooper Tire & Rubber Company....... 15,494,500
15,600 Eaton Corporation.................. 1,484,925
510,150 Genuine Parts Company.............. 19,449,469
--------------
36,428,894
--------------
BANKS -- 3.8%
88,000 Banc One Corporation............... 5,566,000
76,500 Chase Manhattan Corporation........ 10,317,937
175,400 Crestar Financial Corporation...... 10,370,525
164,100 Fleet Financial Group Inc. ........ 13,958,756
23,500 Morgan (J.P.) & Company Inc. ...... 3,156,344
--------------
43,369,562
--------------
BEVERAGES -- 1.4%
362,500 PepsiCo Inc. ...................... 15,474,219
--------------
BUILDING PRODUCTS -- 1.6%
88,000 Armstrong World Industries Inc. ... 7,617,500
238,100 York International Corporation..... 10,714,500
--------------
18,332,000
--------------
CHEMICALS -- BASIC -- 2.2%
176,400 Imperial Chemical Industries Plc
ADR............................... 12,678,750
559,400 Wellman, Inc. ..................... 12,097,025
--------------
24,775,775
--------------
CHEMICALS -- SPECIALTY -- 4.6%
147,740 Betzdearborn Inc. ................. 8,338,076
823,200 Engelhard Corporation.............. 15,640,800
124,900 Morton International Inc.,
Industries........................ 4,098,281
1,204,375 RPM, Inc. ......................... 21,452,930
76,900 Sigma-Aldrich Corporation.......... 2,864,525
--------------
52,394,612
--------------
COMPUTER RELATED -- 0.8%
138,700 Hewlett-Packard Company............ 8,790,113
--------------
COMPUTER SERVICES -- 1.2%
228,500 Computer Associates International,
Inc. ............................. 13,195,875
--------------
CONTAINERS -- 1.4%
290,800 Crown Cork & Seal Inc. ............ 15,557,800
--------------
COSMETICS AND TOILETRY -- 1.0%
237,800 Kimberly-Clark Corporation......... 11,919,725
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
DATA PROCESSING/MANAGEMENT -- 0.8%
296,400 First Data Corporation............. $ 9,633,000
--------------
DIVERSIFIED -- 4.0%
226,829 Cooper Industries Inc. ............ 13,482,148
251,300 Fluor Corporation.................. 12,502,175
214,100 National Service Industries........ 12,591,756
100,800 PPG Industries Inc. ............... 6,848,100
--------------
45,424,179
--------------
ELECTRIC POWER -- 3.6%
46,600 Baltimore Gas & Electric Company... 1,523,238
257,600 CINergy Corporation................ 9,531,200
186,595 Duke Energy Corporation............ 11,114,065
350,260 PacifiCorp......................... 8,625,152
331,300 SCANA Corporation.................. 10,249,594
--------------
41,043,249
--------------
ELECTRONICS -- 1.7%
375,500 AMP Inc. .......................... 16,451,594
38,700 Thomas & Betts Corporation......... 2,476,800
--------------
18,928,394
--------------
FOOD PRODUCERS -- 2.6%
89,300 Best Foods......................... 10,436,937
54,700 Chiquita Brands International
Inc. ............................. 748,706
74,600 General Mills Inc. ................ 5,669,600
380,600 McCormack & Company................ 12,274,350
--------------
29,129,593
--------------
FOOD RETAILERS -- 1.8%
803,800 Food Lion, Inc., Class A........... 8,590,613
342,400 Food Lion, Inc., Class B........... 3,755,700
185,200 Supervalu Inc. .................... 8,634,950
--------------
20,981,263
--------------
FUNERAL SERVICES -- 0.9%
411,000 Loewen Group Inc. ................. 10,377,750
--------------
FURNITURE AND APPLIANCES -- 0.4%
168,917 Rubbermaid, Inc. .................. 4,814,135
--------------
GAS DISTRIBUTION -- 2.2%
27,800 AGL Resources Inc. ................ 597,700
217,700 KeySpan Energy Corporation......... 7,905,231
119,000 NICOR Inc. ........................ 5,027,750
144,700 PECO Energy Company................ 3,201,487
191,900 Questar Corporation................ 7,975,844
--------------
24,708,012
--------------
INSURANCE -- 3.6%
149,000 Aetna Inc. ........................ 12,432,187
74,900 General Re Corporation............. 16,524,813
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
55
<PAGE> 60
NATIONS FUNDS
Nations Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
INSURANCE -- (CONTINUED)
40,400 Lincoln National Corporation
Ltd. ............................. $ 3,428,950
101,600 St. Paul Companies Inc. ........... 9,055,100
--------------
41,441,050
--------------
MACHINERY AND EQUIPMENT -- 5.1%
112,800 Case Corporation................... 7,684,500
134,600 Dover Corporation.................. 5,114,800
505,900 Foster Wheeler Corporation......... 15,461,569
275,444 General Signal Corporation......... 12,877,007
172,000 Harnischfeger Industries........... 5,880,250
507,900 Pall Corporation................... 10,919,850
--------------
57,937,976
--------------
MEDICAL PRODUCTS AND SUPPLIES -- 4.2%
144,000 Becton, Dickinson & Company........ 9,801,000
158,200 Johnson & Johnson Company.......... 11,598,038
409,700 Mallinckrodt Inc. ................. 16,183,150
314,200 United States Surgical
Corporation....................... 10,368,600
--------------
47,950,788
--------------
METALS AND MINING -- 0.5%
327,400 Cyprus Amax Minerals Company....... 5,443,025
--------------
METALS PROCESSORS -- 1.2%
777,900 Worthington Industries, Inc. ...... 14,099,438
--------------
OIL -- DOMESTIC -- 3.5%
78,424 Amoco Corporation.................. 6,773,873
160,618 Atlantic Richfield Company......... 12,628,590
370,000 Occidental Petroleum Corporation... 10,845,625
234,494 Sun Company, Inc. ................. 9,584,942
--------------
39,833,030
--------------
OIL -- INTERNATIONAL -- 1.6%
43,000 Chevron Corporation................ 3,453,438
197,200 Mobil Corporation.................. 15,110,450
--------------
18,563,888
--------------
OIL SERVICES -- 2.8%
152,000 Apache Corporation................. 5,586,000
150,700 Baker Hughes Inc. ................. 6,065,675
310,200 Dresser Industries, Inc. .......... 14,908,988
57,800 Murphy Oil Corporation............. 2,897,225
106,200 Union Texas Petroleum Holdings
Inc. ............................. 2,349,675
--------------
31,807,563
--------------
PAPER AND FOREST PRODUCTS -- 4.1%
113,600 Potlatch Corporation............... 4,891,900
360,420 Sonoco Products Company............ 14,439,326
211,300 Union Camp Corporation............. 12,625,175
432,600 Unisource Worldwide Inc. .......... 5,353,425
176,300 Westvaco Corporation............... 5,421,225
72,000 Weyerhaeuser Company............... 4,068,000
--------------
46,799,051
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
PIPELINES -- 1.3%
351,400 Sonat, Inc. ....................... $ 15,285,900
--------------
PRINTING AND PUBLISHING -- 0.7%
204,100 Donnelley (R.R.) & Sons Company.... 8,380,856
--------------
RESTAURANTS AND LODGING -- 2.0%
188,300 McDonald's Corporation............. 11,298,000
527,300 Wendy's International Inc. ........ 11,765,381
--------------
23,063,381
--------------
RETAIL -- GENERAL -- 2.8%
273,900 Dillards Department Stores, Inc.,
Class A........................... 10,117,181
231,500 May Department Stores Company...... 14,700,250
87,200 Penney (J.C.) Company, Inc. ....... 6,599,950
--------------
31,417,381
--------------
RETAIL -- SPECIALTY -- 1.3%
632,200 Heilig-Meyers Company.............. 8,890,313
235,000 Pep Boys-Manny Moe & Jack.......... 5,449,063
--------------
14,339,376
--------------
SERVICES -- 0.9%
353,700 Ogden Corporation.................. 10,168,875
--------------
STEEL -- 1.3%
276,700 Nucor Corporation.................. 15,062,856
--------------
TOYS -- 0.4%
139,000 Hasbro Inc. ....................... 4,908,436
--------------
TRANSPORTATION -- AIRLINES -- 0.8%
256,500 ASA Holdings, Inc. ................ 9,442,406
--------------
TRANSPORTATION -- RAILROADS -- 2.1%
99,200 Burlington Northern Santa Fe....... 10,316,800
228,100 CSX Corporation.................... 13,571,950
--------------
23,888,750
--------------
UTILITIES -- NATURAL GAS -- 3.0%
277,400 Consolidated Natural Gas Company... 16,002,513
534,800 Equitable Resources Inc. .......... 17,782,100
--------------
33,784,613
--------------
UTILITIES -- TELEPHONE -- 2.8%
635,700 Frontier Corporation............... 20,699,981
194,869 GTE Corporation.................... 11,667,781
--------------
32,367,762
--------------
TOTAL COMMON STOCKS
(Cost $815,187,682)............... 1,028,171,420
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
56
<PAGE> 61
NATIONS FUNDS
Nations Equity Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS -- 3.8%
BANKS -- 1.7%
679,900 National Australia Bank, Conv.,
7.875%............................ $ 19,717,100
--------------
FOOD PRODUCERS -- 1.2%
241,000 Chiquita Brands International Inc.,
Series B, Conv., $3.750........... 13,496,000
--------------
HEALTH CARE -- 0.4%
50,590 AETNA Inc., Conv. Class C, 6.250%.. 4,050,362
--------------
METALS AND MINING -- 0.5%
125,000 Cyprus AMAX Minerals Company,
Series A, Conv. $4.000 ........... 6,062,500
--------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $31,221,441)................. 43,325,962
==============
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <S> <C>
CONVERTIBLE BONDS AND NOTES -- 4.6%
HEALTH CARE -- 0.6%
$8,000,000 Ivax Corporation, Conv. Note,
6.500% 11/15/11................... 7,020,000
--------------
INSURANCE -- 0.4%
4,200,000 NAC Re Corporation, Conv. Sub.
Note, 5.250% 12/15/02............. 4,599,000
--------------
METALS AND MINING -- 1.5%
22,500,000 Barrick Gold Conv. Note (Trizac
Hahn Corporation) 3.250%
12/10/18.......................... 17,718,750
--------------
OIL -- 0.3%
2,000,000 Pennzoil Company, Conv. Note 4.750%
10/01/03.......................... 2,850,000
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
CONVERTIBLE BONDS AND NOTES -- (CONTINUED)
PHARMACEUTICALS -- 0.2%
$3,000,000 Dura Pharmaceuticals Inc., Conv.
Notes 3.500% 07/15/02............. $ 2,591,250
--------------
RESTAURANTS -- 0.5%
10,000,000 Boston Chicken Inc., Conv., Sub.
Deb. 7.750% 05/01/04.............. 5,462,500
--------------
RETAIL -- SPECIALTY -- 1.1%
14,000,000 Saks Holdings, Conv. Note 5.500%
09/15/06.......................... 12,565,000
--------------
TOTAL CONVERTIBLE BONDS AND NOTES
(Cost $54,217,862)................ 52,806,500
==============
<CAPTION>
SHARES
---------
<C> <S> <C>
INVESTMENT COMPANY -- 2.0% (Cost $22,336,156)
22,336,156 Nations Cash Reserves(a)........... 22,336,156
==============
TOTAL INVESTMENTS
(Cost $922,963,141*)................... 100.6% 1,146,640,038
OTHER ASSETS AND
LIABILITIES (NET)...................... (0.6) (7,727,506)
----- --------------
NET ASSETS.............................. 100.0% $1,138,912,532
===== ==============
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $238,281,158 and gross
depreciation of $14,959,049 for federal income tax purposes. At March 31,
1998, the aggregate cost of securities for federal income tax purposes was
$923,317,929.
(a) Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates, Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
57
<PAGE> 62
NATIONS FUNDS
Nations Value Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 98.6%
AEROSPACE AND DEFENSE -- 4.7%
277,775 Lockheed Martin Corporation........ $ 31,249,688
736,734 Raytheon Company................... 43,006,847
501,950 United Technologies Corporation.... 46,336,259
--------------
120,592,794
--------------
APPAREL AND TEXTILES -- 0.6%
310,350 Liz Claiborne Inc. ................ 15,478,706
--------------
AUTOMOBILE AND TRUCK MANUFACTURERS -- 3.1%
1,130,950 Chrysler Corporation............... 47,005,109
818,050 ITT Industries Inc. ............... 31,137,028
--------------
78,142,137
--------------
AUTOMOBILE PARTS MANUFACTURERS -- 2.9%
382,150 B.F. Goodrich Company.............. 19,513,534
1,270,900 Cooper Tire & Rubber Company....... 30,183,875
321,050 Echlin Inc. ....................... 16,835,059
119,050 Lear Corporation+.................. 6,711,444
--------------
73,243,912
--------------
BANKS -- 7.9%
763,455 Banc One Corporation............... 48,288,529
182,550 BankBoston Corporation............. 20,126,138
325,800 Bank of New York Inc. ............. 20,464,313
354,002 Chase Manhattan Corporation........ 47,746,020
129,750 Citicorp........................... 18,424,500
740,600 Mellon Bank Corporation............ 47,028,100
--------------
202,077,600
--------------
BEVERAGES -- 1.9%
1,132,450 PepsiCo Inc. ...................... 48,341,459
--------------
CHEMICALS -- SPECIALTY -- 0.6%
259,050 Cytec Industries Inc.+............. 14,263,941
--------------
COAL, GAS AND PIPELINE -- 3.3%
806,250 Coastal Corporation................ 52,507,031
415,900 Columbia Energy Group.............. 32,336,225
--------------
84,843,256
--------------
COMPUTER RELATED -- 4.4%
519,150 Ceridian Corporation+.............. 28,001,653
797,900 Compaq Computer Corporation+....... 20,645,663
319,750 International Business Machines
Corporation....................... 33,214,031
759,750 Sun Microsystems Inc.+............. 31,695,820
--------------
113,557,167
--------------
CONSUMER PRODUCTS -- 0.6%
24,300 Avon Products, Inc. ............... 1,895,400
199,500 Unilever NV ADR.................... 13,690,688
--------------
15,586,088
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
DIVERSIFIED -- 2.4%
1,018,200 AlliedSignal Inc. ................. $ 42,764,400
446,500 Tenneco Inc. ...................... 19,059,969
--------------
61,824,369
--------------
DRUGS -- 4.8%
525,450 Bristol-Myers Squibb Company....... 54,811,002
1,057,098 Pharmerica Inc.+................... 15,724,333
652,300 Schering-Plough Corporation........ 53,284,756
--------------
123,820,091
--------------
ELECTRIC POWER -- 4.1%
606,100 Baltimore Gas & Electric Company... 19,811,894
133,376 CINergy Corporation................ 4,934,912
206,350 Consolidated Edison................ 9,646,863
256,100 DPL Inc. .......................... 4,993,950
217,950 Florida Progress Corporation....... 9,085,791
126,000 GPU, Inc. ......................... 5,575,500
1,309,250 New York State Electric & Gas
Company........................... 52,206,344
--------------
106,255,254
--------------
ELECTRONICS -- 2.2%
533,200 Harris Corporation................. 27,793,050
481,800 Rockwell International
Corporation....................... 27,643,275
--------------
55,436,325
--------------
FINANCIAL SERVICES -- 3.7%
695,500 Ahmanson H F & Company............. 53,901,250
1,006,700 Paine Webber Group, Inc. .......... 40,393,838
--------------
94,295,088
--------------
FOOD PRODUCERS -- 4.2%
161,575 Dole Foods Inc. ................... 7,816,191
317,825 Interstate Bakeries Corporation.... 10,269,720
595,900 Kroger Company+.................... 27,523,131
847,300 Nabisco Holdings Corporation, Class
A................................. 39,823,100
394,800 Quaker Oats Company................ 22,602,300
--------------
108,034,442
--------------
INDUSTRIAL CONGLOMERATES -- 0.3%
218,050 Premark International Inc. ........ 7,222,906
--------------
INSURANCE -- 6.3%
163,500 CIGNA Corporation.................. 33,517,500
117,833 General Re Corporation............. 25,996,906
415,025 Hartford Financial Services Group
Inc. ............................. 45,030,213
682,400 Lincoln National Corporation
Ltd. ............................. 57,918,700
--------------
162,463,319
--------------
MACHINERY AND EQUIPMENT -- 1.8%
542,713 Cooper Industries Inc. ............ 32,257,504
443,200 Foster Wheeler Corporation......... 13,545,300
--------------
45,802,804
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
58
<PAGE> 63
NATIONS FUNDS
Nations Value Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
MEDICAL SERVICES -- 5.5%
2,806,475 Beverly Enterprises+............... $ 37,361,198
1,628,900 Tenet Healthcare Corporation+...... 59,149,431
661,625 Wellpoint Health Networks+......... 44,659,688
--------------
141,170,317
--------------
METALS AND MINING -- 0.8%
422,750 ASARCO Inc. ....................... 11,282,141
507,600 Cyprus Amax Minerals Company....... 8,438,850
--------------
19,720,991
--------------
OFFICE EQUIPMENT -- 2.9%
695,500 Xerox Corporation.................. 74,027,280
--------------
OIL -- INTERNATIONAL -- 6.2%
537,300 British Petroleum Company Plc,
ADR............................... 46,241,381
120,833 Chevron Corporation................ 9,704,400
328,700 Exxon Corporation.................. 22,228,338
572,400 Mobil Corporation.................. 43,860,150
857,050 Noble Affiliates, Inc. ............ 35,674,706
--------------
157,708,975
--------------
OIL SERVICES -- 2.5%
311,850 Diamond Offshore Drilling.......... 14,150,194
250,350 Smith International, Inc.+......... 13,784,897
1,079,600 Valero Energy Corporation.......... 36,031,650
--------------
63,966,741
--------------
PRINTING AND PUBLISHING -- 1.9%
1,437,700 Dun & Bradstreet Corporation....... 49,151,369
--------------
RECREATIONAL -- 0.4%
316,400 Brunswick Corporation.............. 11,034,450
--------------
RETAIL -- GENERAL -- 4.1%
634,250 Dillard Department Stores Inc.,
Class A........................... 23,427,609
880,350 Federated Department Stores
Inc.+............................. 45,613,134
560,340 May Department Stores Company...... 35,581,590
--------------
104,622,333
--------------
SEMICONDUCTORS -- 1.2%
385,590 Intel Corporation.................. 30,100,119
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
TOBACCO -- 2.2%
1,004,287 Philip Morris Companies Inc. ...... $ 41,866,214
436,500 UST, Inc. ......................... 14,077,125
--------------
55,943,339
--------------
TOYS -- 1.2%
870,650 Hasbro Inc. ....................... 30,744,828
--------------
TRANSPORTATION -- AIRLINES -- 1.9%
421,075 Delta Air Lines, Inc. ............. 49,792,119
--------------
UTILITIES -- NATURAL GAS -- 1.3%
1,055,250 Williams Companies Inc. ........... 33,768,000
--------------
UTILITIES -- TELEPHONE -- 6.7%
199,650 AT&T Corporation................... 13,102,031
720,050 Bell South Corporation............. 48,648,378
882,545 GTE Corporation.................... 52,842,382
193,925 MCI Communications Corporation..... 9,599,288
1,072,750 SBC Communications Inc. ........... 46,798,719
--------------
170,990,798
--------------
TOTAL COMMON STOCKS
(Cost $1,745,574,734).............. 2,524,023,317
==============
INVESTMENT COMPANY -- 1.4% (Cost $36,554,598)
36,554,598 Nations Cash Reserves(a)........... 36,554,598
==============
TOTAL INVESTMENTS
(Cost $1,782,129,332*).................. 100.0% 2,560,577,915
OTHER ASSETS AND
LIABILITIES (NET)....................... 0.0 653,039
----- --------------
NET ASSETS............................... 100.0% $2,561,230,954
===== ==============
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $795,424,855 and gross
depreciation of $17,220,809 for federal income tax purposes. At March 31,
1998, the aggregate cost of securities for federal income tax purposes was
$1,782,373,869.
+ Non-income producing security.
(a) Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates, Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
59
<PAGE> 64
NATIONS FUNDS
Nations Marsico Growth & Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 92.8%
AEROSPACE AND DEFENSE EQUIPMENT -- 3.5%
4,066 Allied Signal Inc..................... $ 170,772
975 Lockheed Martin Corporation........... 109,688
1,500 United Technologies Corporation....... 138,469
-----------
418,929
-----------
AGRICULTURAL OPERATIONS -- 3.6%
8,317 Delta & Pine Land Company............. 432,484
-----------
AIRLINES -- 3.2%
12,969 Southwest Airlines Company............ 383,396
-----------
APPLICATIONS SOFTWARE -- 1.4%
3,100 Peoplesoft Inc.+...................... 163,331
-----------
APPAREL MANUFACTURERS -- 1.1%
4,500 Polo Ralph Lauren Corporation+........ 135,281
-----------
AUTOMOTIVE -- CARS & LIGHT TRUCKS -- 7.6%
10,101 Ford Motor Company.................... 654,671
344 Volkswagen AG......................... 269,141
-----------
923,812
-----------
BEVERAGES -- NON-ALCOHOLIC -- 4.5%
14,780 Coca-Cola Enterprises Inc. ........... 542,241
-----------
BUILDING RESIDENTIAL/COMMERCIAL -- 0.9%
6,191 M.D.C. Holdings, Inc. ................ 109,890
-----------
CHEMICALS -- DIVERSIFIED -- 3.3%
7,763 Monsanto Company...................... 403,676
-----------
CHEMICALS -- SPECIALTY -- 2.0%
4,483 Cytec Industries Inc.+................ 246,845
-----------
COMMERCIAL BANKS -- WESTERN U.S. -- 0.7%
1,500 Zions Bancorporation.................. 78,938
-----------
COMPUTERS -- MICRO -- 4.5%
7,980 Dell Computer Corporation+............ 540,644
-----------
COMPUTER SOFTWARE -- 2.9%
3,890 Microsoft Corporation+................ 348,155
-----------
DIRECT MARKETING -- 0.1%
622 PC Connection, Inc.+.................. 13,218
-----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 4.7%
6,613 General Electric Company.............. 569,958
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
DIVERSIFIED OPERATIONS -- 0.6%
1,009 Textron Inc. ......................... $ 77,693
-----------
FINANCE -- CONSUMER LOANS -- 3.1%
8,583 SLM Holding Corporation............... 374,433
-----------
FINANCE -- INVESTMENT BANKERS/BROKERS -- 4.3%
6,273 Merrill Lynch & Company............... 520,659
-----------
FINANCE -- OTHER SERVICES -- 3.0%
7,286 Newcourt Credit Group Inc............. 364,300
-----------
HOTELS & MOTELS -- 1.3%
4,530 Four Seasons Hotels, Inc. ............ 154,586
-----------
MACHINERY CONSTRUCTION & MINING -- 3.1%
6,838 Caterpillar Inc. ..................... 376,517
-----------
MEDICAL -- DRUGS -- 7.2%
5,183 Pfizer Inc. .......................... 516,680
2,060 Warner-Lambert Company................ 350,844
-----------
867,524
-----------
MONEY CENTER BANKS -- 4.8%
4,123 Citicorp.............................. 585,466
-----------
MULTIMEDIA -- 2.5%
4,135 Time Warner Inc. ..................... 297,720
-----------
NETWORK PRODUCTS -- 1.9%
3,300 Cisco Systems, Inc.+.................. 225,638
-----------
OFFICE FURNISHINGS -- ORIGINAL -- 2.2%
7,175 Steelcase Inc., Class A............... 261,888
-----------
RENTAL AUTO & EQUIPMENT -- 2.0%
5,353 Hertz Corporation -- Class A.......... 246,238
-----------
RETAIL -- BUILDING PRODUCTS -- 0.4%
688 Home Depot, Inc. ..................... 46,397
-----------
RETAIL -- DRUG STORES -- 2.0%
8,500 Duane Reade Inc.+..................... 217,281
1,132 Rite Aid Corporation.................. 38,771
-----------
256,052
-----------
SAVINGS/LOANS/THRIFTS -- EASTERN U.S. -- 0.5%
2,900 Staten Island Bancorp Inc............. 59,450
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
60
<PAGE> 65
NATIONS FUNDS
Nations Marsico Growth & Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
SUPER REGIONAL BANKS -- U.S. -- 3.1%
1,121 Wells Fargo & Company................. $ 371,331
-----------
TELECOMMUNICATION EQUIPMENT -- 6.8%
3,754 Lucent Technologies Inc............... 480,043
5,286 Northern Telecom Ltd.................. 341,608
-----------
821,651
-----------
TOTAL COMMON STOCKS
(Cost $10,098,976)................... 11,218,341
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- ---------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- 0.9%
$ 100,000 Premier Parks Inc., 0.000%
04/01/08++........................... 63,625
50,000 MDC Holdings Inc., 8.375% 02/01/08.... 50,125
-----------
TOTAL CORPORATE BONDS AND NOTES (Cost
$111,191)............................ 113,750
===========
<CAPTION>
SHARES
- ---------
<C> <S> <C>
RIGHTS -- 0.1% (Cost $0)
344 Volkswagen AG, Expires 04/03/98....... 6,245
===========
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT AGENCY -- 8.3% (Cost $1,000,000)
$1,000,000 Federal Home Loan Bank,
5.650% 04/01/98**.................... $ 1,000,000
-----------
<CAPTION>
SHARES
- ---------
<C> <S> <C>
INVESTMENT COMPANY -- 1.0% (Cost $120,000)
120,000 Nations Cash Reserves(a).............. 120,000
===========
TOTAL INVESTMENTS (Cost $11,330,167*)...... 103.1% 12,458,336
OTHER ASSETS AND LIABILITIES (NET)......... (3.1) (375,274)
----- -----------
NET ASSETS................................. 100.0% $12,083,062
===== ===========
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $1,161,347 and gross
depreciation of $38,820 for federal income tax purposes. At March 31, 1998,
the aggregate cost of securities for federal income tax purposes was
$11,335,809.
** Rate represents annualized yield at date of purchase.
+ Non-income producing security.
++ Step coupon bond. Interest rate steps up to 10.00% on April 1, 2003.
(a) Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates, Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
61
<PAGE> 66
NATIONS FUNDS
Nations Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 99.4%
AEROSPACE AND DEFENSE -- 1.6%
76,500 Boeing Company $ 3,987,562
3,300 EG&G Inc. ............................ 95,906
4,800 General Dynamics Corporation.......... 413,400
14,800 Lockheed Martin Corporation........... 1,665,000
5,100 Northrop Grumman Corporation.......... 547,931
24,300 Raytheon Company, Class B............. 1,418,512
9,300 TRW Inc. ............................. 512,663
17,800 United Technologies Corporation....... 1,643,162
------------
10,284,136
------------
APPAREL AND TEXTILES -- 0.4%
5,600 Fruit of the Loom Inc., Class A+...... 171,500
5,100 Liz Claiborne Inc. ................... 254,362
3,200 National Service Industries Inc. ..... 188,200
22,200 Nike Inc., Class B.................... 982,350
4,200 Reebok International, Ltd.+........... 128,100
2,700 Russell Corporation................... 72,394
1,500 Springs Industries Inc. .............. 82,406
9,300 V.F. Corporation...................... 488,831
------------
2,368,143
------------
AUTOMOBILE AND TRUCK MANUFACTURERS -- 1.9%
50,800 Chrysler Corporation.................. 2,111,375
91,400 Ford Motor Company.................... 5,923,862
54,200 General Motors Corporation............ 3,655,112
9,000 ITT Industries Inc. .................. 342,562
5,600 Navistar International Corporation+... 196,000
6,000 PACCAR, Inc. ......................... 357,375
------------
12,586,286
------------
AUTOMOBILE PARTS MANUFACTURERS -- 0.6%
11,500 AutoZone, Inc.+....................... 389,563
5,400 BF Goodrich Company................... 275,737
6,100 Cooper Tire & Rubber Company.......... 144,875
8,000 Dana Corporation...................... 465,500
6,000 Eaton Corporation..................... 571,125
4,900 Echlin Inc. .......................... 256,944
13,600 Genuine Parts Company................. 518,500
11,800 Goodyear Tire & Rubber Company........ 893,850
4,600 Snap-On Inc. ......................... 209,875
------------
3,725,969
------------
BANKS -- 9.0%
10,500 BB&T Corporation...................... 710,719
49,500 Banc One Corporation.................. 3,130,875
53,100 BankAmerica Corporation............... 4,387,388
11,100 BankBoston Corporation................ 1,223,775
28,800 Bank of New York Inc. ................ 1,809,000
7,400 Bankers Trust N.Y. Corporation........ 890,312
32,300 Chase Manhattan Corporation........... 4,356,463
34,900 Citicorp.............................. 4,955,800
8,000 Comerica Inc. ........................ 846,500
15,100 CoreStates Financial Corporation...... 1,355,225
11,700 Fifth Third Bancorp................... 1,000,350
22,300 First Chicago Corporation NBD......... 1,965,187
47,700 First Union Corporation............... 2,706,975
19,100 Fleet Financial Group Inc. ........... 1,624,694
14,600 Huntington Bancshares................. 531,987
33,600 KeyCorp (New)......................... 1,270,500
19,600 Mellon Bank Corporation............... 1,244,600
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
BANKS -- (CONTINUED)
9,500 Mercantile Bancorporation............. $ 520,719
13,600 Morgan (J.P.) & Company Inc. ......... 1,826,650
45,400 Morgan Stanley, Dean Witter, Discover
and Company.......................... 3,308,525
8,600 Northern Trust Corporation............ 642,850
16,400 National City Corporation............. 1,202,325
72,043 NationsBank Corporation............... 5,254,636
57,900 Norwest Corporation................... 2,406,469
23,400 PNC Bank Corporation.................. 1,402,537
4,000 Republic New York Corporation......... 533,500
12,200 State Street Corporation.............. 830,362
13,600 Summit Bancorp+....................... 680,850
16,100 SunTrust Banks Inc. .................. 1,213,537
18,700 U.S. Bancorp.......................... 2,332,825
15,200 Wachovia Corporation.................. 1,289,150
6,500 Wells Fargo & Company................. 2,153,125
------------
59,608,410
------------
BEVERAGES -- 3.4%
37,500 Anheuser-Busch Companies, Inc. ....... 1,736,719
5,100 Brown-Forman Corporation, Class B..... 280,500
189,400 Coca-Cola Company++................... 14,666,662
2,700 Coors (Adolph) Company, Class B....... 94,500
116,200 PepsiCo Inc. ......................... 4,960,287
27,300 Seagram Company, Ltd. ................ 1,042,519
------------
22,781,187
------------
BIO SPECIALTY PHARMACEUTICALS -- 0.2%
20,100 Amgen Inc.+........................... 1,223,587
------------
CHEMICALS -- BASIC -- 2.3%
8,500 Air Products & Chemicals Inc. ........ 704,437
17,400 Dow Chemical Company.................. 1,692,150
86,700 du Pont (E.I.) de Nemours &
Company.............................. 5,895,600
6,100 Eastman Chemical Company.............. 411,369
9,900 Ecolab Inc. .......................... 287,100
2,700 FMC Corporation (New)+................ 211,950
14,200 Freeport McMoran Copper and Gold,
Class B.............................. 283,112
7,300 Hercules, Inc. ....................... 360,437
5,600 Mallinckrodt Group Inc. .............. 221,200
45,400 Monsanto Company...................... 2,360,800
5,100 Nalco Chemical Company................ 206,869
13,500 PPG Industries, Inc. ................. 917,156
11,900 Praxair Inc. ......................... 612,106
4,600 Rohm & Haas Company................... 475,237
9,500 Union Carbide Corporation............. 476,187
------------
15,115,710
------------
CHEMICALS -- SPECIALTY -- 0.3%
8,000 Avery Dennison Corporation............ 427,000
11,100 Engelhard Corporation................. 210,900
5,700 Grace (W.R.) & Company................ 477,019
4,500 Great Lakes Chemical Corporation...... 243,000
10,100 Morton International Inc.,
Industries........................... 331,406
7,700 Sigma-Aldrich Corporation............. 286,825
------------
1,976,150
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
62
<PAGE> 67
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Nations Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
COAL, GAS AND PIPELINE -- 0.2%
8,100 Coastal Corporation................... $ 527,512
24,200 Enron Corporation..................... 1,122,275
------------
1,649,787
------------
COMMUNICATION EQUIPMENT -- 0.0%#
6,900 Andrew Corporation+................... 136,706
------------
COMPUTER RELATED -- 4.7%
9,800 Apple Computer Inc.+.................. 269,500
5,900 Ceridian Corporation+................. 318,231
77,100 Cisco Systems, Inc.+.................. 5,271,713
115,800 Compaq Computer Corporation+.......... 2,996,325
3,500 Data General Corporation+............. 61,906
50,000 Dell Computer Corporation+............ 3,387,500
11,200 Digital Equipment Corporation+........ 585,900
38,000 EMC Corporation+...................... 1,436,875
79,700 Hewlett-Packard Company............... 5,050,987
9,700 Honeywell, Inc. ...................... 802,069
74,500 International Business Machines
Corporation.......................... 7,738,687
18,600 Seagate Technology+................... 469,650
14,300 Silicon Graphics Inc.+................ 199,306
28,600 Sun Microsystems Inc.+................ 1,193,156
26,400 3Com Corporation+..................... 948,750
13,700 Unisys Corporation+................... 260,300
------------
30,990,855
------------
COMPUTER SERVICES -- 0.7%
22,400 Automatic Data Processing Inc. ....... 1,524,600
41,700 Computer Associates International
Inc. ................................ 2,408,175
11,900 Computer Sciences Corporation+........ 654,500
------------
4,587,275
------------
COMPUTER SOFTWARE -- 3.3%
5,600 Adobe Systems, Inc. .................. 253,050
3,500 Autodesk, Inc. ....................... 150,937
16,200 Bay Networks Inc.+.................... 439,425
12,000 Cabletron Systems Inc.+............... 174,750
32,800 First Data Corporation................ 1,066,000
185,100 Microsoft Corporation+................ 16,566,450
26,800 Novell Inc.+.......................... 287,262
75,100 Oracle Systems Corporation+........... 2,370,344
19,500 Parametric Technology Company+........ 649,594
1,900 Shared Medical Systems Corporation.... 148,912
------------
22,106,724
------------
CONSTRUCTION -- 0.4%
3,100 Armstrong World Industries, Inc. ..... 268,344
5,800 Case Corporation...................... 395,125
4,500 Centex Corporation.................... 171,562
3,400 Crane Company......................... 180,200
6,400 Fluor Corporation..................... 318,400
3,000 Kaufman & Broad Home Corporation...... 97,688
12,600 Masco Corporation..................... 749,700
3,900 Owens-Corning Fiberglass
Corporation.......................... 140,156
1,600 Pulte Corporation..................... 74,400
13,200 Sherwin-Williams Company.............. 468,600
------------
2,864,175
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
CONTAINERS -- 0.2%
2,200 Ball Corporation...................... $ 72,050
3,900 Bemis Inc. ........................... 175,987
9,800 Crown Cork & Seal Inc. ............... 524,300
10,900 Owens-Illinois, Inc.+................. 471,425
4,600 Tupperware Corporation................ 122,475
------------
1,366,237
------------
COSMETICS AND TOILETRY -- 2.7%
4,000 Alberto-Culver Company, Class B....... 121,750
10,000 Avon Products Inc. ................... 780,000
7,900 Clorox Company........................ 676,931
22,600 Colgate-Palmolive Company............. 1,957,725
42,800 Gillette Company...................... 5,079,825
8,400 International Flavors & Fragrances
Inc. ................................ 395,850
102,900 Procter & Gamble Company.............. 8,682,188
------------
17,694,269
------------
DIVERSIFIED -- 1.5%
2,200 Aeroquip-Vickers Inc. ................ 127,187
43,200 AlliedSignal Inc. .................... 1,814,400
12,300 Cognizant Corporation................. 705,712
17,700 Corning Inc. ......................... 783,225
1,500 Eastern Enterprises................... 64,500
13,200 Fortune Brands, Inc. ................. 526,350
12,500 Frontier Corporation.................. 407,031
8,800 Loews Corporation..................... 917,400
31,200 Minnesota Mining & Manufacturing
Company.............................. 2,845,050
13,000 Tenneco Inc. ........................ 554,938
12,500 Textron, Inc. ........................ 962,500
------------
9,708,293
------------
DRUGS -- 7.5%
6,500 ALZA Corporation+..................... 291,281
49,800 American Home Products Corporation.... 4,749,675
76,100 Bristol-Myers Squibb Company.......... 7,938,181
85,000 Lilly (Eli) & Company................. 5,068,125
91,900 Merck & Company Inc.++................ 11,797,662
99,000 Pfizer, Inc. ......................... 9,869,062
38,700 Pharmacia & Upjohn Inc. .............. 1,693,125
55,900 Schering-Plough Corporation........... 4,566,331
20,800 Warner-Lambert Company................ 3,542,500
------------
49,515,942
------------
ELECTRIC POWER -- 2.5%
11,300 Ameren Corporation.................... 476,012
14,500 American Electric Power Inc. ......... 728,625
11,200 Baltimore Gas & Electric Company...... 366,100
11,400 Carolina Power & Light Company........ 515,850
16,300 Central & South West Corporation...... 436,025
11,900 CINergy Corporation................... 440,300
17,900 Consolidated Edison Company
New York Inc. ....................... 836,825
14,300 Dominion Resources Inc. .............. 600,600
11,100 DTE Energy Company.................... 436,369
27,600 Duke Power Company.................... 1,643,925
29,100 Edison International.................. 854,813
18,600 Entergy Corporation, (New)............ 553,350
17,500 FirstEnergy........................... 539,219
13,800 FPL Group Inc. ....................... 886,650
9,100 GPU, Inc. ............................ 402,675
21,700 Houston Industries Inc. .............. 623,875
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
63
<PAGE> 68
NATIONS FUNDS
Nations Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
ELECTRIC POWER -- (CONTINUED)
11,100 Niagara Mohawk Power Corporation+..... $ 144,300
5,700 Northern States Power Corporation..... 336,300
22,700 PacifiCorp............................ 558,988
17,000 PECO Energy Company................... 376,125
33,300 PG&E Corporation...................... 1,098,900
12,600 PP&L Resources Inc. .................. 297,675
17,700 Public Service Enterprise Group....... 670,387
52,900 Southern Company...................... 1,464,669
18,800 Texas Utilities Company............... 739,075
16,600 Unicom Corporation.................... 581,000
------------
16,608,632
------------
ELECTRICAL EQUIPMENT -- 3.7%
33,900 Emerson Electric Company.............. 2,209,856
249,500 General Electric Company++............ 21,503,781
3,600 Grainger (W.W.) Inc. ................ 370,125
6,500 Raychem Corporation................... 270,156
6,100 Scientific-Atlanta Inc. .............. 119,331
4,100 Thomas & Betts Corporation............ 262,400
------------
24,735,649
------------
ELECTRONICS -- 1.0%
16,800 AMP Inc. ............................ 736,050
28,100 Applied Materials Inc.+............... 992,281
6,200 Harris Corporation.................... 323,175
6,400 KLA-Tencor Corporation+............... 244,800
10,900 LSI Logic Corporation+................ 275,225
45,800 Motorola, Inc. ....................... 2,776,625
12,200 National Semiconductor Corporation+... 255,437
3,200 Perkin-Elmer Corporation.............. 231,400
15,900 Rockwell International Corporation.... 912,262
3,700 Tektronix Inc. ....................... 165,112
------------
6,912,367
------------
ENVIRONMENTAL -- 0.6%
15,100 Browning-Ferris Industries Inc. ..... 492,637
6,400 Johnson Controls Inc. ................ 388,400
24,600 Laidlaw Inc., Class B................. 390,525
3,200 Millipore Corporation................. 111,200
4,400 Safety-Kleen Corporation.............. 124,850
40,500 Tyco International Ltd. .............. 2,212,312
------------
3,719,924
------------
EXPLORATION AND DRILLING -- 0.1%
13,600 Burlington Resources Inc. ........... 651,950
3,600 Helmerich & Payne Inc. ............... 112,500
4,100 McDermott International Inc. ......... 169,381
------------
933,831
------------
FINANCIAL SERVICES -- 4.1%
35,600 American Express Company.............. 3,268,525
18,700 American General Corporation.......... 1,209,656
3,900 Beneficial Corporation................ 484,819
20,300 Charles Schwab Corporation............ 771,400
8,300 Countrywide Credit Industries,
Inc. ................................ 441,456
11,400 Equifax Inc. ......................... 416,100
53,200 Federal Home Loan Mortgage
Corporation.......................... 2,523,675
81,100 Federal National Mortgage
Association.......................... 5,129,575
10,400 Green Tree Financial Corporation...... 295,750
8,200 Household International Inc. ......... 1,129,550
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
FINANCIAL SERVICES -- (CONTINUED)
7,600 Lehman Brothers Holdings.............. $ 569,050
12,900 Marsh & McLennan Companies Inc. ...... 1,126,331
38,400 MBNA Corporation...................... 1,375,200
25,500 Merrill Lynch & Company Inc. ......... 2,116,500
13,500 Synovus Financial Corporation......... 501,187
4,800 Transamerica Corporation.............. 559,200
86,301 Travelers Group Inc. ................. 5,178,060
------------
27,096,034
------------
FOOD PRODUCERS -- 2.8%
42,700 Archer-Daniels-Midland Company........ 936,731
11,100 Best Foods............................ 1,297,312
34,900 Campbell Soup Company................. 1,980,575
36,100 ConAgra Inc. ......................... 1,159,712
12,000 General Mills Inc. ................... 912,000
28,300 Heinz (H.J.) Company.................. 1,652,012
11,000 Hershey Foods Corporation............. 787,875
31,400 Kellogg Company....................... 1,354,125
5,000 Pioneer Hi-Bred International......... 487,812
10,700 Quaker Oats Company................... 612,575
8,200 Ralston Purina Group.................. 869,200
36,700 Sara Lee Corporation.................. 2,261,637
3,490 Vlasic Foods International+........... 89,212
49,100 Unilever N.V., ADR.................... 3,369,487
8,700 Wrigley (Wm.) Jr. Company............. 711,225
------------
18,481,490
------------
FOOD RETAILERS -- 0.6%
18,700 Albertson's, Inc. .................... 984,087
20,800 American Stores Company............... 540,800
4,500 Giant Food Inc., Class A.............. 173,812
2,900 Great Atlantic & Pacific Tea Inc. .... 87,725
19,600 Kroger Company+....................... 905,275
4,500 SuperValu Inc. ....................... 209,813
26,000 Sysco Corporation..................... 666,250
11,300 Winn-Dixie Stores Inc. ............... 524,037
------------
4,091,799
------------
FURNITURE AND APPLIANCES -- 0.4%
7,300 Black & Decker Corporation............ 387,356
7,300 Maytag Corporation.................... 349,031
12,000 Newell Company........................ 581,250
11,400 Rubbermaid, Inc. .................... 324,900
6,800 Stanley Works......................... 379,100
5,800 Whirlpool Corporation................. 397,662
------------
2,419,299
------------
INSURANCE -- 3.8%
11,301 Aetna Life & Casualty Company......... 942,927
32,800 Allstate Corporation.................. 3,015,550
53,600 American International Group, Inc. ... 6,750,250
12,800 Aon Corporation....................... 828,800
12,900 Chubb Corporation..................... 1,011,037
5,700 CIGNA Corporation..................... 1,168,500
4,000 Cincinnati Financial Corporation...... 501,000
14,400 Conseco Inc. ......................... 815,400
6,100 General Re Corporation................ 1,345,812
9,000 Hartford Financial Services
Group Inc. .......................... 976,500
5,400 Jefferson-Pilot Corporation........... 480,262
7,800 Lincoln National Corporation Ltd. .... 662,025
6,800 MBIA, Inc. ........................... 527,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
64
<PAGE> 69
NATIONS FUNDS
Nations Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
INSURANCE -- (CONTINUED)
8,700 MGIC Investment Corporation........... $ 571,481
5,500 Progressive Corporation............... 740,781
7,300 Providian Corporation................. 419,294
10,900 SAFECO Corporation.................... 595,752
6,400 St. Paul Companies Inc. .............. 570,400
14,800 SunAmerica, Inc. ..................... 708,550
10,800 Torchmark Corporation................. 494,775
10,600 UNUM Corporation...................... 584,987
8,700 USF&G Corporation..................... 216,956
19,800 Washington Mutual, Inc. .............. 1,420,031
------------
25,348,070
------------
MACHINERY AND EQUIPMENT -- 1.2%
1,900 Briggs & Stratton Corporation......... 87,044
28,500 Caterpillar Inc. ..................... 1,569,281
3,000 Cincinnati Milacron Inc. ............. 95,625
9,200 Cooper Industries Inc. ............... 546,825
2,900 Cummings Engine Inc. ................. 159,862
19,400 Deere & Company....................... 1,201,587
16,100 Dover Corporation..................... 611,800
3,000 Foster Wheeler Corporation............ 91,687
3,600 General Signal Corporation............ 168,300
3,500 Harnischfeger Industries Inc. ........ 119,656
19,200 Illinois Tool Works Inc. ............. 1,243,200
12,600 Ingersoll-Rand Company................ 604,013
600 NACCO Industries Inc., Class A........ 80,400
9,700 Pall Corporation...................... 208,550
8,500 Parker-Hannifin Corporation........... 435,625
11,500 Thermo Electron Corporation+.......... 464,312
4,800 Timken Company........................ 162,300
------------
7,850,067
------------
MEDIA -- 1.5%
53,900 CBS Corporation....................... 1,829,231
7,400 Clear Channel Communications, Inc.+... 725,200
26,300 Comcast Corporation, Class A.......... 928,719
11,700 Omnicom Group......................... 550,631
39,900 Tele-Communications Inc., Class A..... 1,240,641
42,500 Time Warner Inc. ..................... 3,060,000
46,400 U.S. West Media Group, Inc.+.......... 1,612,400
------------
9,946,822
------------
MEDICAL PRODUCTS AND SUPPLIES -- 2.9%
58,600 Abbott Laboratories................... 4,413,312
5,000 Allergan, Inc. ....................... 190,000
245 Allergan Specialty Therapeutics,
Class A.............................. 2,971
4,300 Bard (C.R.) Inc. ..................... 158,025
4,100 Bausch & Lomb Inc. .................. 187,319
21,400 Baxter International Inc. ........... 1,179,675
9,300 Becton, Dickinson & Company........... 632,981
8,500 Biomet, Inc. ......................... 255,000
14,900 Boston Scientific Corporation+........ 1,005,750
8,400 Cardinal Health, Inc. ................ 740,775
11,200 Guidant Corporation................... 821,800
103,000 Johnson & Johnson..................... 7,551,187
35,900 Medtronic, Inc. ...................... 1,862,313
7,100 St. Jude Medical Inc.+................ 237,406
5,900 United States Surgical Corporation.... 194,700
------------
19,433,214
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
MEDICAL SERVICES -- 0.9%
49,600 Columbia/HCA Healthcare Corporation... $ 1,599,600
15,200 HBO & Company......................... 917,700
30,100 HEALTHSOUTH Corporation+.............. 844,681
12,500 Humana Inc.+.......................... 310,156
4,900 Manor Care Inc. ...................... 181,300
23,400 Tenet Healthcare Corporation+......... 849,712
14,400 United Healthcare Corporation......... 932,400
------------
5,635,549
------------
METALS AND MINING -- 0.6%
17,500 Alcan Aluminum Ltd. ................. 546,875
13,200 Aluminum Company of America........... 908,325
3,100 ASARCO Inc. ......................... 82,731
28,400 Barrick Gold Corporation, ADR......... 614,150
17,600 Battle Mountain Gold Company.......... 112,200
7,100 Cyprus Amax Minerals Company.......... 118,038
11,100 Homestake Mining Company.............. 120,712
12,700 Inco Ltd. ............................ 237,331
11,800 Newmont Mining Corporation............ 360,674
4,400 Phelps Dodge Corporation.............. 284,075
18,600 Placer Dome Inc., ADR................. 245,287
5,700 Reynolds Metals Company............... 350,194
------------
3,980,592
------------
OFFICE EQUIPMENT -- 0.6%
10,200 Ikon Office Solutions................. 352,538
6,700 Moore Corporation Ltd. ............... 111,387
22,100 Pitney Bowes Inc. .................... 1,109,144
24,900 Xerox Corporation..................... 2,650,294
------------
4,223,363
------------
OIL -- DOMESTIC -- 1.5%
7,000 Amerada Hess Corporation.............. 408,187
37,400 Amoco Corporation..................... 3,230,425
5,800 Ashland Oil, Inc. .................... 328,425
24,400 Atlantic Richfield Company............ 1,918,450
3,500 Kerr-McGee Corporation................ 243,469
26,000 Occidental Petroleum Corporation...... 762,125
8,100 Oryx Energy Company+.................. 210,600
3,500 Pennzoil Company...................... 226,187
20,100 Phillips Petroleum Company............ 1,003,744
5,500 Sun Company, Inc. .................... 224,812
18,900 Unocal Corporation.................... 731,194
22,100 USX-Marathon Group (New).............. 831,512
------------
10,119,130
------------
OIL -- INTERNATIONAL -- 5.2%
4,500 Anadarko Petroleum Corporation........ 310,500
6,900 Apache Corporation.................... 253,575
50,300 Chevron Corporation................... 4,039,719
189,000 Exxon Corporation++................... 12,781,125
60,000 Mobil Corporation..................... 4,597,500
164,400 Royal Dutch Petroleum Company,
ADR++................................ 9,339,975
41,700 Texaco Inc. .......................... 2,512,425
19,500 Union Pacific Resources Group Inc. ... 465,562
------------
34,300,381
------------
OIL SERVICES -- 0.9%
12,800 Baker Hughes Inc. .................... 515,200
4,100 Columbia Energy Group................. 318,775
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
65
<PAGE> 70
NATIONS FUNDS
Nations Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
OIL SERVICES -- (CONTINUED)
13,500 Dresser Industries, Inc. ............. $ 648,844
20,000 Halliburton Company................... 1,003,750
6,500 Rowan Companies Inc.+................. 188,500
38,000 Schlumberger Ltd. .................... 2,878,500
4,000 Western Atlas, Inc.+.................. 309,500
------------
5,863,069
------------
PAPER AND FOREST PRODUCTS -- 1.2%
4,100 Boise Cascade Corporation............. 147,856
7,300 Champion International Corporation.... 396,481
16,000 Fort James Corporation................ 733,000
7,000 Georgia-Pacific Corporation........... 453,250
23,200 International Paper Company........... 1,086,050
42,500 Kimberly-Clark Corporation............ 2,130,312
8,400 Louisiana Pacific Corporation......... 195,300
8,000 Mead Corporation...................... 286,500
2,200 Potlatch Corporation.................. 94,738
7,500 Stone Container Corporation+.......... 93,750
4,200 Temple-Inland Inc. ................... 260,925
5,300 Union Camp Corporation................ 316,675
7,800 Westvaco Corporation.................. 239,850
15,300 Weyerhaeuser Company.................. 864,450
8,500 Willamette Industries Inc. .......... 319,281
------------
7,618,418
------------
PHOTO AND OPTICAL -- 0.3%
24,900 Eastman Kodak Company................. 1,615,388
3,300 Polaroid Corporation.................. 145,200
------------
1,760,588
------------
PRINTING AND PUBLISHING -- 1.0%
5,600 American Greetings Corporation, Class
A.................................... 257,600
6,200 Deluxe Corporation.................... 204,212
11,100 Donnelley (R.R.) & Sons Company....... 455,794
7,100 Dow Jones & Company Inc. ............. 375,856
13,000 Dun & Bradstreet Corporation.......... 444,438
21,600 Gannett Company, Inc. ................ 1,552,500
5,300 Harcourt General Inc. ................ 293,488
2,300 Harland (John H.) Company............. 35,794
3,000 Jostens Inc. ........................ 72,000
6,400 Knight-Ridder Inc. ................... 357,600
7,500 McGraw-Hill Companies, Inc. .......... 570,469
3,800 Meredith Corporation.................. 160,075
7,300 New York Times Company, Class A....... 511,000
7,300 Times Mirror Company, Class A......... 462,637
9,300 Tribune Company....................... 655,650
------------
6,409,113
------------
PROFESSIONAL SERVICES -- 0.3%
8,000 Block (H&R) Inc. .................... 380,500
9,600 Interpublic Group Companies Inc. ..... 596,400
19,400 Service Corporation International..... 823,287
------------
1,800,187
------------
RECREATION -- 1.4%
7,700 Brunswick Corporation................. 268,537
51,700 Disney (Walt) Company................. 5,518,975
2,700 Fleetwood Enterprises Inc. ........... 125,719
7,700 Harrah's Entertainment Inc.+.......... 189,131
9,600 Hasbro Inc. ......................... 339,000
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
RECREATION -- (CONTINUED)
5,500 King World Productions Inc.+.......... $ 160,875
22,200 Mattel, Inc. ........................ 879,675
13,600 Mirage Resorts, Inc.+................. 330,650
26,400 Viacom Inc., Class B+................. 1,419,000
------------
9,231,562
------------
RESTAURANTS AND LODGING -- 1.2%
61,100 Cendant Corporation+.................. 2,421,087
11,500 Darden Restaurants Inc. .............. 178,969
19,300 Hilton Hotels Corporation............. 615,188
9,700 Marriott International Inc. .......... 360,719
9,700 Marriott International Inc. Class A... 347,381
52,700 McDonald's Corporation................ 3,162,000
2,425 Sodexho Marriott Services............. 64,414
11,500 Tricon Global Restaurants............. 345,719
10,000 Wendy's International Inc. ........... 223,125
------------
7,718,602
------------
RETAIL -- DISCOUNT -- 1.8%
8,300 Consolidated Stores Corporation+...... 356,381
37,500 Kmart Stores Corporation+............. 625,781
19,200 Rite Aid Corporation.................. 657,600
12,300 TJX Companies Inc. .................. 556,575
21,900 Toys R Us Inc.+....................... 658,369
172,500 Wal-Mart Stores Inc. ................. 8,765,156
10,400 Woolworth Corporation+................ 260,000
------------
11,879,862
------------
RETAIL -- GENERAL -- 1.2%
16,300 Costco Companies, Inc+................ 870,012
16,700 Dayton Hudson Corporation............. 1,469,600
8,500 Dillard Department Stores Inc.,
Class A.............................. 313,969
16,100 Federated Department Stores Inc.+..... 834,181
17,800 May Department Stores Company......... 1,130,300
2,700 Mercantile Stores Inc. ............... 181,406
19,200 Penney (J.C.) Company Inc. ........... 1,453,200
30,000 Sears, Roebuck & Company.............. 1,723,125
------------
7,975,793
------------
RETAIL -- SPECIALTY -- 1.6%
8,100 Charming Shoppes Inc.+................ 38,475
7,500 Circuit City Stores Inc. ............. 320,625
13,200 CVS Corporation....................... 996,600
30,700 Gap Inc. ............................ 1,381,500
55,800 Home Depot Inc. ..................... 3,763,012
20,800 Limited Inc. ......................... 596,700
3,000 Longs Drug Stores Corporation......... 91,313
13,500 Lowe's Companies Inc. ................ 947,531
6,000 Nordstrom, Inc. ...................... 382,875
4,900 Pep Boys-Manny, Moe & Jack............ 113,619
7,900 Tandy Corporation..................... 371,300
37,700 Walgreen Company...................... 1,326,569
------------
10,330,119
------------
SAVINGS AND LOANS -- 0.1%
7,200 Ahmanson (H.F.) & Company............. 558,000
4,300 Golden West Financial Corporation..... 411,994
------------
969,994
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
66
<PAGE> 71
NATIONS FUNDS
Nations Equity Index Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
SEMICONDUCTORS -- 1.8%
11,000 Advanced Micro Devices Inc.+.......... $ 319,687
125,300 Intel Corporation++................... 9,781,231
16,100 Micron Technology, Inc.+.............. 467,906
29,900 Texas Instruments Inc. ............... 1,618,338
------------
12,187,162
------------
STEEL -- 0.2%
13,400 Allegheny Teledyne Inc. ............. 372,687
8,300 Armco Inc.+........................... 48,762
8,700 Bethlehem Steel Corporation+.......... 117,994
3,500 Inland Steel Industries Inc. ........ 96,687
6,700 Nucor Corporation..................... 364,731
6,500 USX-U.S. Steel Group.................. 245,375
7,300 Worthington Industries Inc. .......... 132,312
------------
1,378,548
------------
TELECOMMUNICATIONS -- 1.5%
9,000 DSC Communications Corporation+....... 163,688
11,200 General Instruments Corporation+...... 234,500
49,100 Lucent Technologies................... 6,278,662
40,000 Northern Telecommunications, Ltd. .... 2,585,000
13,800 Tellabs, Inc.+........................ 926,325
------------
10,188,175
------------
TOBACCO -- 1.2%
185,800 Philip Morris Companies Inc. ......... 7,745,537
14,000 UST Inc. ............................. 451,500
------------
8,197,037
------------
TRANSPORTATION -- AIRLINES -- 0.5%
6,900 AMR Corporation+...................... 987,994
5,700 Delta Air Lines, Inc. ............... 674,025
11,160 FDX Corporation+...................... 793,755
16,800 Southwest Airlines Company............ 496,650
6,900 USAir Group Inc.+..................... 511,463
------------
3,463,887
------------
TRANSPORTATION -- RAILROADS -- 0.7%
11,800 Burlington Northern Santa Fe Inc. ... 1,227,200
16,700 CSX Corporation....................... 993,650
28,800 Norfolk Southern Corporation.......... 1,076,400
18,900 Union Pacific Corporation............. 1,061,944
------------
4,359,194
------------
TRUCKING AND SHIPPING -- 0.0%#
5,900 Ryder Systems Inc. .................. 224,200
------------
UTILITIES -- NATURAL GAS -- 0.3%
7,200 Consolidated Natural Gas Company...... 415,350
3,500 NICOR Inc. ........................... 147,875
2,300 ONEOK Inc. .......................... 93,725
6,400 Pacific Enterprises................... 261,200
2,600 Peoples Energy Corporation............ 94,575
6,400 Sonat, Inc. ......................... 278,400
23,000 Williams Companies Inc. ............. 736,000
------------
2,027,125
------------
UTILITIES -- TELEPHONE -- 7.1%
38,500 AirTouch Communications, Inc.+........ 1,884,094
14,100 ALLTEL Corporation.................... 615,994
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
UTILITIES -- TELEPHONE -- (CONTINUED)
83,800 Ameritech Corporation................. $ 4,142,862
124,500 AT&T Corporation...................... 8,170,312
59,500 Bell Atlantic Corporation............. 6,098,750
75,900 BellSouth Corporation................. 5,127,994
73,200 GTE Corporation....................... 4,382,850
52,200 MCI Communications Corporation........ 2,583,900
140,400 SBC Communications Inc. .............. 6,124,950
32,200 Sprint Corporation.................... 2,179,538
37,000 U.S. West Inc. ....................... 2,025,750
76,400 WorldCom Inc.+........................ 3,289,975
------------
46,626,969
------------
WASTE DISPOSAL -- 0.2%
34,800 Waste Management Inc. ................ 1,072,275
------------
TOTAL COMMON STOCKS
(Cost $356,992,973)................... 657,407,933
============
<CAPTION>
PRINCIPAL
AMOUNT
- --------
<C> <S> <C>
U.S. TREASURY SECURITIES -- 0.2% (Cost $1,093,686)
U.S. Treasury Bills:
$ 700,000 5.120% 05/28/98**++................... 694,325
200,000 4.970% 04/09/98**++................... 199,779
200,000 5.070% 04/16/98**++................... 199,582
------------
TOTAL U.S. TREASURY OBLIGATIONS....... 1,093,686
============
SHARES
--------
INVESTMENT COMPANY -- 0.2% (Cost $1,350,000)
1,350,000 Nations Cash Reserves(a).............. 1,350,000
============
TOTAL INVESTMENTS
(Cost $359,436,659*)..................... 99.8% 659,851,619
OTHER ASSETS AND
LIABILITIES (NET)........................ 0.2 1,389,450
----- ------------
NET ASSETS................................ 100.0% $661,241,069
===== ============
</TABLE>
<TABLE>
<CAPTION>
NUMBER NET
OF UNREALIZED
CONTRACTS DEPRECIATION
- --------------------------------------------------------------
<C> <S> <C>
FUTURES CONTRACTS -- LONG POSITION
18 S&P 500 Index Futures, June
1998............................. $ (12,730)
============
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $297,827,740 and gross
depreciation of $1,872,003 for federal income tax purposes. At March 31,
1998, the aggregate cost of securities for federal income tax purposes was
$363,895,882.
** Rate represents annualized yield at date of purchase.
+ Non-income producing security.
++ Security segregated as collateral for futures contracts.
# Amount represents less than 0.01%.
(a) Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates, Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
67
<PAGE> 72
NATIONS FUNDS
Nations Capital Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 99.2%
APPAREL AND TEXTILES -- 0.6%
97,750 Tommy Hilfiger Corporation........... $ 5,871,109
------------
BANKS -- 5.8%
217,060 Banc One Corporation................. 13,729,045
166,000 BankAmerica Corporation.............. 13,715,750
124,750 Chase Manhattan Corporation.......... 16,825,656
309,800 Norwest Corporation.................. 12,876,063
------------
57,146,514
------------
BEVERAGES -- 1.5%
352,800 PepsiCo Inc. ........................ 15,060,150
------------
CHEMICALS -- SPECIALTY -- 2.4%
164,900 Morton International Inc.,
Industries.......................... 5,410,781
315,600 Raychem Corporation.................. 13,117,125
103,200 Praxair, Inc. ....................... 5,308,350
------------
23,836,256
------------
COMPUTER RELATED -- 9.0%
290,600 Cisco Systems, Inc.+................. 19,869,774
190,700 EMC Corporation+..................... 7,210,844
171,175 Hewlett-Packard Company.............. 10,848,216
208,250 Intel Corporation.................... 16,256,516
138,850 International Business Machines
Corporation......................... 14,423,044
68,950 Network Associates, Inc.+............ 4,567,937
203,500 SCI Systems Inc.+.................... 7,249,687
188,050 Sun Microsystems, Inc.+.............. 7,845,211
------------
88,271,229
------------
COMPUTER SERVICES -- 2.4%
305,775 Computer Associates International
Inc. ............................... 17,658,504
122,500 Sterling Commerce, Inc.+............. 5,680,937
------------
23,339,441
------------
COMPUTER SOFTWARE -- 4.7%
98,550 BMC Software, Inc.+.................. 8,259,721
137,100 Cadence Design Systems, Inc.+........ 4,747,087
208,250 Compuware Corporation+............... 10,282,345
177,250 Microsoft Corporation+............... 15,863,875
214,800 Parametric Technology Corporation+... 7,155,525
------------
46,308,553
------------
COSMETICS AND TOILETRY -- 0.7%
83,300 Clorox Company....................... 7,137,769
------------
DIVERSIFIED -- 5.2%
449,500 AlliedSignal Inc. ................... 18,879,000
313,450 Tyco International Ltd. ............. 17,122,206
161,250 United Technologies Corporation...... 14,885,391
------------
50,886,597
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
DRUGS -- 6.5%
166,600 Bristol-Myers Squibb Company......... $ 17,378,463
148,700 Merck & Company Inc. ................ 19,089,362
109,000 Pfizer Inc. ......................... 10,865,938
201,200 Schering-Plough Corporation.......... 16,435,525
------------
63,769,288
------------
ELECTRICAL EQUIPMENT -- 7.3%
204,800 Emerson Electric Company............. 13,350,400
287,900 General Electric Company............. 24,813,381
205,400 Honeywell, Inc. ..................... 16,984,012
274,900 Sundstrand Corporation............... 16,631,450
------------
71,779,243
------------
FINANCIAL SERVICES -- 5.1%
218,750 Equifax Inc. ........................ 7,984,375
180,200 Federal National Mortgage
Association......................... 11,397,650
64,800 Household International, Inc. ....... 8,926,200
213,200 Morgan Stanley, Dean Witter, Discover
& Company........................... 15,536,950
80,500 Washington Mutual, Inc. ............. 5,773,359
------------
49,618,534
------------
FOOD PRODUCERS -- 2.7%
258,325 Cambell Soup Company................. 14,659,944
151,700 Hershey Foods Corporation............ 10,865,513
25,833 Vlasic Foods International Inc.+..... 660,343
------------
26,185,800
------------
FOOD RETAILERS -- 2.1%
428,600 Safeway, Inc.+....................... 15,831,413
170,000 SYSCO Corporation.................... 4,356,250
------------
20,187,663
------------
HOME APPLIANCES -- 0.7%
157,500 Sunbeam Corporation.................. 6,939,844
------------
INSURANCE -- 5.2%
105,525 American International Group,
Inc. ............................... 13,289,555
57,050 General Re Corporation............... 12,586,656
132,000 MGIC Investment Corporation.......... 8,670,750
291,400 UNUM Corporation..................... 16,081,638
------------
50,628,599
------------
MACHINERY AND EQUIPMENT -- 2.0%
270,300 Dover Corporation.................... 10,271,400
140,000 Illinois Tool Works, Inc. ........... 9,065,000
------------
19,336,400
------------
MEDIA -- 2.6%
508,600 CBS Corporation...................... 17,260,613
112,400 Time Warner Inc. .................... 8,092,800
------------
25,353,413
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
68
<PAGE> 73
NATIONS FUNDS
Nations Capital Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
MEDICAL PRODUCTS AND SUPPLIES -- 5.1%
216,100 Abbott Laboratories.................. $ 16,275,031
163,500 Guidant Corporation.................. 11,996,813
185,500 Medtronic, Inc. ..................... 9,622,813
73,400 Warner Lambert Company............... 12,500,938
------------
50,395,595
------------
MEDICAL SERVICES -- 2.6%
393,300 HEALTHSOUTH Corporation+............. 11,036,981
405,350 Tenet Healthcare+.................... 14,719,272
------------
25,756,253
------------
OFFICE SUPPLIES -- 1.0%
279,200 IKON Office Solutions, Inc. ......... 9,649,850
------------
OIL -- INTERNATIONAL -- 1.6%
210,200... Mobil Corporation.................... 16,106,575
------------
OIL SERVICES -- 3.5%
163,700... Diamond Offshore Drilling............ 7,427,888
328,600... Halliburton Company.................. 16,491,613
137,000... Schlumberger Ltd. ................... 10,377,750
------------
34,297,251
------------
PRINTING AND PUBLISHING -- 1.1%
151,600 Gannett Company, Inc. ............... 10,896,250
------------
PROFESSIONAL SERVICES -- 1.9%
441,525... Service Corporation International.... 18,737,217
------------
RECREATION -- 2.0%
156,000 Carnival Corporation................. 10,881,000
84,700 Disney (Walt) Company................ 9,041,725
------------
19,922,725
------------
RESTAURANTS AND LODGING -- 1.7%
423,754... Cendant Corporation+................. 16,791,252
------------
RETAIL -- 8.1%
462,300 CompUSA, Inc.+....................... 12,019,800
140,100 CVS Corporation...................... 10,577,550
88,600 Dayton Hudson Corporation............ 7,796,800
205,400 Federated Department Stores+......... 10,642,288
93,000 Home Depot Inc. ..................... 6,271,688
163,450 Lowe's Companies Inc. ............... 11,472,147
618,250 OfficeMax, Inc.+..................... 11,051,219
215,650 TJX Companies, Inc. ................. 9,758,162
------------
79,589,654
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
TELECOMMUNICATIONS -- 3.0%
44,600 Lucent Technologies.................. $ 5,703,225
49,000 Nokia Corporation, Class A, ADR...... 5,288,937
154,000 Northern Telecom Ltd. ............... 9,952,250
132,400 Tellabs, Inc.+....................... 8,887,350
------------
29,831,762
------------
UTILITIES -- TELEPHONE -- 1.1%
104,550 AirTouch Communications, Inc.+....... 5,116,416
126,900 WorldCom Inc.+....................... 5,464,631
------------
10,581,047
------------
TOTAL COMMON STOCKS
(Cost $649,043,944).................. 974,211,833
============
INVESTMENT COMPANY -- 1.6% (Cost $15,352,789)
15,352,789 Nations Cash Reserves(a)............. 15,352,789
============
TOTAL INVESTMENTS
(Cost $664,396,733*)..................... 100.8% 989,564,622
OTHER ASSETS AND
LIABILITIES (NET)........................ (0.8) (8,091,303)
----- ------------
NET ASSETS................................ 100.0% $981,473,319
===== ============
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $334,457,884 and gross
depreciation of $9,493,066 for federal income tax purposes. At March 31,
1998, the aggregate cost of securities for federal income tax purposes was
$664,599,804.
+ Non-income producing security.
(a) Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates, Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
69
<PAGE> 74
NATIONS FUNDS
Nations Disciplined Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 97.4%
AEROSPACE AND DEFENSE -- 1.8%
37,500 United Technologies Corporation....... $ 3,461,719
------------
APPAREL AND TEXTILES -- 3.6%
67,400 Liz Claiborne Inc. ................... 3,361,575
67,700 VF Corporation........................ 3,558,481
------------
6,920,056
------------
APPLIANCES -- 2.2%
88,300 Maytag Corporation.................... 4,221,844
------------
AUTOMOTIVE AND TRUCK MANUFACTURERS -- 2.2%
66,100 Ford Motor Company.................... 4,284,106
------------
AUTOMOBILE PARTS MANUFACTURERS -- 1.8%
37,300 Eaton Corporation..................... 3,550,494
------------
BANKS -- 4.0%
52,700 Ahmanson (H.F.) & Company............. 4,084,250
45,400 BankAmerica Corporation............... 3,751,175
------------
7,835,425
------------
BUILDING & CONSTRUCTION -- 1.8%
64,600 USG Corporation+...................... 3,500,512
------------
CHEMICALS -- BASIC -- 1.5%
28,600 Rohm & Haas Company................... 2,954,737
------------
COMPUTER RELATED -- 4.7%
74,000 Dell Computer Corporation+............ 5,013,500
54,800 Storage Technology Corporation+....... 4,168,225
------------
9,181,725
------------
COMPUTER SOFTWARE -- 6.1%
105,700 Compuware Corporation+................ 5,218,937
38,600 Microsoft Corporation+................ 3,454,700
117,500 Symantec Corporation+................. 3,165,156
------------
11,838,793
------------
DRUGS -- 0.4%
9,000 Schering-Plough Corporation........... 735,188
------------
ELECTRIC POWER -- 2.0%
96,800 DTE Energy Company.................... 3,805,450
------------
ELECTRONICS -- 3.3%
87,500 SCI Systems Inc.+..................... 3,117,187
54,700 Sundstrand Corporation................ 3,309,350
------------
6,426,537
------------
FINANCIAL SERVICES -- 9.6%
94,600 GreenPoint Financial Corporation...... 3,399,688
50,100 Morgan Street Dean Witter Discover+... 3,651,038
106,675 Paine Webber Group, Inc. ............. 4,280,334
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
FINANCIAL SERVICES -- (CONTINUED)
74,050 SLM Holding Corporation............... $ 3,230,431
68,150 Travelers Group Inc. ................. 4,089,000
------------
18,650,491
------------
FOOD -- 3.6%
57,900 Dean Foods Company.................... 2,913,094
108,988 Safeway Inc.+......................... 4,025,744
------------
6,938,838
------------
HOUSEWARES -- 1.9%
111,100 Premark International, Inc. .......... 3,680,188
------------
INSTRUMENTS -- CONTROLS -- 1.8%
67,300 Parker Hannifin Corporation........... 3,449,125
------------
INSURANCE -- 7.8%
38,100 Allstate Corporation.................. 3,502,819
76,300 Equitable Companies, Inc. ............ 4,306,181
53,000 MGIC Investment Corporation........... 3,481,438
78,300 Sunamerica Inc. ...................... 3,748,613
------------
15,039,051
------------
MACHINERY AND EQUIPMENT -- 3.6%
63,500 Caterpillar Inc. ..................... 3,496,469
73,300 Ingersoll-Rand Company................ 3,513,819
------------
7,010,288
------------
MEDICAL PRODUCTS AND SUPPLIES -- 4.4%
59,400 Guidant Corporation................... 4,358,475
41,200 Pfizer Inc.+.......................... 4,107,125
------------
8,465,600
------------
OIL REFINING AND MARKETING -- 5.7%
65,300 Ashland Inc. ......................... 3,697,612
98,600 BJ Services Company+.................. 3,592,737
89,700 Sun Company........................... 3,666,487
------------
10,956,836
------------
PAPER & RELATED PRODUCTS -- 1.7%
72,000 Fort James Corporation................ 3,298,500
------------
RETAIL -- DISCOUNT -- 2.3%
100,500 TJX Companies Inc. ................... 4,547,625
------------
RETAIL -- GENERAL -- 6.5%
50,000 Dayton Hudson Corporation............. 4,400,000
78,900 Costco Companies, Inc.+............... 4,211,288
54,600 Lowe's Companies...................... 3,832,238
------------
12,443,526
------------
STEEL -- 1.7%
86,600 USX-U.S. Steel Group.................. 3,269,150
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
70
<PAGE> 75
NATIONS FUNDS
Nations Disciplined Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
TELECOMMUNICATIONS -- 4.3%
60,000 AT&T Corporation...................... $ 3,937,500
34,800 Lucent Technologies................... 4,450,050
------------
8,387,550
------------
TRANSPORTATION -- AIRLINES -- 3.6%
46,900 FDX Corporation+...................... 3,335,762
38,200 UAL Corporation+...................... 3,550,212
------------
6,885,974
------------
UTILITIES -- NATURAL GAS -- 3.5%
41,100 Columbia Gas Systems Inc. ............ 3,195,525
85,900 NICOR Inc. ........................... 3,629,275
------------
6,824,800
------------
TOTAL COMMON STOCKS (Cost
$138,422,214)........................ 188,564,128
============
INVESTMENT COMPANY -- 2.5% (Cost $4,774,000)
4,774,000 Nations Cash Reserves(a).............. 4,774,000
============
TOTAL INVESTMENTS (Cost $143,196,214*)..... 99.9% 193,338,128
OTHER ASSETS AND LIABILITIES (NET)......... 0.1 170,315
----- ------------
NET ASSETS................................. 100.0% $193,508,443
===== ============
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $51,164,558 and gross
depreciation of $1,085,355 for federal income tax purposes. At March 31,
1998, the aggregate cost of securities for federal income tax purposes was
$143,258,925.
+ Non-income producing security.
(a) Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates, Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
71
<PAGE> 76
NATIONS FUNDS
Nations Marsico Focused Equities Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 93.5%
AGRICULTURAL OPERATIONS -- 4.4%
30,493 Delta and Pine Land Company........... $ 1,585,636
-----------
APPLICATIONS SOFTWARE -- 2.3%
15,850 PeopleSoft, Inc.+..................... 835,097
-----------
AUTOMOTIVE -- CARS & LIGHT TRUCKS -- 11.5%
50,949 Ford Motor Company.................... 3,302,132
1,017 Volkswagen AG. ....................... 795,686
-----------
4,097,818
-----------
BEVERAGES -- NON-ALCOHOLIC -- 4.2%
40,929 Coca-Cola Enterprises Inc. ........... 1,501,583
-----------
BUILDING -- RESIDENTIAL/COMMERCIAL -- 0.9%
18,274 MDC Holdings Inc. .................... 324,363
-----------
CHEMICALS -- DIVERSIFIED -- 3.1%
21,000 Monsanto Company...................... 1,092,000
-----------
COMPUTER -- MICRO -- 9.2%
48,453 Dell Computer Corporation+............ 3,282,691
-----------
COMPUTER SOFTWARE -- 2.9%
11,470 Microsoft Corporation+................ 1,026,565
-----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 3.0%
12,633 General Electric Company.............. 1,088,807
-----------
FINANCE -- CONSUMER LOANS -- 2.5%
20,739 SLM Holding Corporation............... 904,738
-----------
FINANCE -- INVESTMENT BANKERS/BROKERS -- 4.3%
18,556 Merrill Lynch & Company Inc. ......... 1,540,148
-----------
FINANCE -- MORTGAGE LOAN/BROKER -- 2.0%
11,428 Federal National Mortgage
Association.......................... 722,821
-----------
HOTELS & MOTELS -- 1.9%
19,509 Four Seasons Hotels, Inc. ............ 665,745
-----------
MACHINERY CONSTRUCTION & MINING -- 3.5%
22,756 Caterpillar Inc. ..................... 1,253,002
-----------
MEDICAL -- DRUGS -- 11.3%
22,264 Pfizer, Inc. ......................... 2,219,443
7,388 Schering-Plough Corporation........... 603,507
7,187 Warner-Lambert Company................ 1,224,036
-----------
4,046,986
-----------
MONEY CENTER BANKS -- 5.4%
13,689 Citicorp.............................. 1,943,838
-----------
MULTIMEDIA -- 3.6%
18,120 Time Warner Inc. ..................... 1,304,640
-----------
NETWORKING PRODUCTS -- 2.5%
13,065 Cisco Systems, Inc.+.................. 893,319
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
RENTAL AUTO & EQUIPMENT -- 0.4%
2,896 Hertz Corporation, Class A............ $ 133,216
-----------
RESORTS & THEME PARKS -- 5.2%
32,250 Premier Parks Inc.+................... 1,870,500
-----------
RETAIL -- BUILDING PRODUCTS -- 0.3%
1,389 Home Depot, Inc. ..................... 93,671
-----------
RETAIL -- DISCOUNT -- 1.2%
8,758 Wal Mart Stores Inc. ................. 445,016
-----------
RETAIL -- DRUG STORE -- 1.1%
16,000 Duane Reade Inc.+..................... 409,000
-----------
SUPER REGIONAL BANKS -- U.S. -- 2.3%
2,481 Wells Fargo & Company................. 821,831
-----------
TELECOMMUNICATION EQUIPMENT -- 4.5%
3,267 Lucent Technologies................... 417,768
18,345 Northern Telecommunications, Ltd. .... 1,185,546
-----------
1,603,314
-----------
TOTAL COMMON STOCKS
(Cost $30,206,909).................... 33,486,345
===========
RIGHTS -- 0.1% (Cost $0)
1,017 Volkswagen AG, Expires 04/03/98....... 18,463
===========
<CAPTION>
PRINCIPAL
AMOUNT
- ---------
<C> <S> <C>
U.S. GOVERNMENT AGENCY -- 9.8% (Cost $3,500,000)
$3,500,000 Federal Home Loan Bank,
5.650% 04/01/98**.................... 3,500,000
===========
SHARES
- ---------
INVESTMENT COMPANY -- 0.2% (Cost $83,000)
83,000 Nations Cash Reserves(a).............. 83,000
===========
TOTAL INVESTMENTS
(Cost $33,789,909*)......................... 103.6% 37,087,808
OTHER ASSETS AND
LIABILITIES (NET)........................... (3.6) (1,309,529)
----- -----------
NET ASSETS................................... 100.0% $35,778,279
===== ===========
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $3,390,963 and gross
depreciation of $107,851 for federal income tax purposes. At March 31, 1998,
the aggregate cost of securities for federal income tax purposes was
$33,804,696.
** Rate represents annualized yield at date of purchase.
+ Non-income producing security.
(a) Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates, Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
72
<PAGE> 77
NATIONS FUNDS
Nations Emerging Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 96.6%
APPAREL AND TEXTILES -- 5.4%
105,000 Columbia Sportswear Company........... $ 2,218,125
19,900 Jones Apparel Group, Inc.+............ 1,095,744
51,400 Land's End Inc.+...................... 1,895,375
100,000 Stage Stores, Inc.+................... 5,162,500
100,000 The Men's Wearhouse, Inc.+............ 3,700,000
115,000 Tommy Hilfiger Corporation............ 6,907,187
------------
20,978,931
------------
AUTOMOBILE PARTS MANUFACTURERS -- 1.6%
184,600 Superior Industries International
Inc.................................. 6,126,412
------------
BANKS -- 1.1%
55,000 Northern Trust Company................ 4,111,250
------------
BEVERAGES -- 1.6%
169,000 Coca Cola Enterprises Inc. ........... 6,200,187
------------
BIO SPECIALTY PHARMACEUTICALS -- 1.6%
129,000 Biogen, Inc.+......................... 6,216,187
------------
BUILDING SUPPLIES -- 1.7%
95,000 Southdown Inc. ....................... 6,620,312
------------
CHEMICALS -- SPECIALTY -- 1.3%
93,900 Cytec Industries Inc.+................ 5,170,368
------------
CIRCUITS -- 1.5%
84,700 Linear Technology Corporation......... 5,844,300
------------
COMPUTER RELATED -- 2.2%
70,000 Comverse Technology Inc.+............. 3,421,250
57,200 Diebold, Inc. ........................ 2,516,800
103,000 Symantec Corporation.................. 2,774,563
------------
8,712,613
------------
COMPUTER SERVICES -- 1.6%
39,000 Networks Associates Inc. ............. 2,583,750
81,000 Sterling Commerce..................... 3,756,375
------------
6,340,125
------------
COMPUTER SOFTWARE -- 6.1%
55,200 BMC Software, Inc.+................... 4,626,450
97,600 Check Point Software Technology....... 4,459,100
130,100 Compuware Corporation+................ 6,423,687
115,100 Remedy Corporation.................... 2,258,838
90,000 Structural Dynamics Research
Corporation.......................... 2,238,750
104,000 SunGard Data Systems, Inc.+........... 3,828,500
------------
23,835,325
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
ELECTRIC COMPONENTS -- 4.5%
212,000 Atmel Corporation..................... $ 3,193,250
114,000 Maxim Integrated Products Inc. ....... 4,153,875
126,000 Solectron............................. 5,323,500
127,200 Xilinx Inc. .......................... 4,762,050
------------
17,432,675
------------
ELECTRIC POWER -- 2.5%
108,000 AES Corporation+...................... 5,663,250
90,000 CMS Energy Corporation................ 4,224,375
------------
9,887,625
------------
ELECTRONICS -- 4.3%
147,000 ADC Telecommunications Inc.+.......... 4,051,688
119,000 Analog Devices, Inc.+................. 3,956,750
138,000 Parametric Technology................. 4,597,125
65,000 Sundstrand Corporation................ 3,932,500
------------
16,538,063
------------
ENVIRONMENTAL -- 1.1%
100,000 USA Waste Service Inc.+............... 4,456,250
------------
EXPLORATION AND DRILLING -- 2.3%
170,000 BJ Services Inc.+..................... 6,194,374
50,000 Smith International Inc.+............. 2,753,125
------------
8,947,499
------------
FINANCIAL SERVICES -- 5.9%
130,000 FIRSTPLUS Financial Group, Inc.+...... 5,460,000
33,000 Fiserv Inc. .......................... 2,091,375
100,000 Franklin Resources Inc. .............. 5,300,000
102,500 Green Tree Financial Corporation...... 2,914,844
59,999 Legg Mason Inc. ...................... 3,558,691
134,000 Waddell & Reed Financial, Inc. ....... 3,484,000
------------
22,808,910
------------
FOOD PRODUCTION -- 0.9%
100,000 International Home Foods Inc. ........ 3,325,000
------------
INSURANCE -- 1.6%
48,000 Aflac Inc. ........................... 3,036,000
56,000 Vesta Insurance Group. ............... 3,003,000
------------
6,039,000
------------
MEDIA -- 1.2%
202,000 Metro-Goldwyn-Mayer Inc. ............. 4,519,750
------------
MEDICAL PRODUCTS AND SUPPLIES -- 6.4%
151,000 Acuson Corporation+................... 2,736,875
63,000 Centocor Inc. ........................ 2,811,375
173,000 DePuy, Inc.+.......................... 5,244,063
110,000 ESC Medical Systems................... 3,863,750
121,600 Stryker Corporation................... 5,700,000
122,000 Watson Pharmaceuticals................ 4,392,000
------------
24,748,063
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
73
<PAGE> 78
NATIONS FUNDS
Nations Emerging Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
MEDICAL SERVICES -- 7.8%
120,200 Centennial Health Corporation......... $ 3,020,025
128,592 Concentra Managed Care Inc. .......... 3,954,204
116,800 Genesis Health Ventures+.............. 3,285,000
65,000 Health Care and Retirement
Corporation.......................... 2,790,938
200,000 Health Management Associates Inc.,
Class A+............................. 5,725,000
133,050 National Surgery Centers, Inc.+....... 3,401,091
68,300 Pediatrix Medical Group Inc.+......... 3,175,950
145,500 Quorum Health Group, Inc.+............ 4,892,438
------------
30,244,646
------------
OIL AND GAS DRILLING -- 3.4%
186,000 Nabors Industries Inc. ............... 4,405,875
138,000 Noble Drilling Corporation............ 4,217,625
92,000 Transocean Offshore Inc. ............. 4,732,250
------------
13,355,750
------------
OIL -- DOMESTIC -- 1.4%
215,800 Global Marine, Inc.+.................. 5,341,050
------------
OIL SERVICES -- 4.3%
85,000 Camco International Companies Inc. ... 5,142,500
97,000 Pioneer Natural Resources............. 2,412,875
16,800 Tidewater, Inc. ...................... 736,050
148,000 Tosco Corporation..................... 5,217,000
126,000 Varco International Inc. ............. 3,244,500
------------
16,752,925
------------
PAPER AND FOREST PRODUCTS -- 1.1%
130,000 Caraustar Industries, Inc. ........... 4,290,000
------------
PRINTING AND PUBLISHING -- 1.5%
105,200 Belo (A.H.) Corporation, Class A...... 5,786,000
------------
PROFESSIONAL SERVICES -- 2.2%
230,000 Personnel Group of America, Inc.+..... 5,232,500
305,000 Philip Services Corporation........... 3,183,438
426 Siebel Systems Inc. .................. 12,248
------------
8,428,186
------------
REAL ESTATE -- 1.2%
200,000 Cabot Industrial Trust................ 4,762,500
------------
RECREATION -- 0.6%
75,000 International Speedway Corporation+... 2,296,875
------------
RESTAURANTS AND LODGING -- 3.2%
245,600 La Quinta Inns Inc. .................. 5,157,600
50,000 Papa John's International Inc.+....... 1,918,750
108,355 Promus Hotel Corporation+............. 5,173,950
------------
12,250,300
------------
RETAIL -- DISCOUNT -- 0.5%
50,000 Dollar General Corporation............ 1,934,375
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
RETAIL -- SPECIALTY -- 2.1%
95,000 Bed Bath & Beyond Inc.+............... $ 4,387,813
154,500 Staples Inc. ......................... 3,582,469
------------
7,970,282
------------
SEMICONDUCTORS -- 2.4%
121,000 Altera Corporation+................... 4,567,750
100,000 Vitesse Semiconductor Corporation+.... 4,715,625
------------
9,283,375
------------
TELECOMMUNICATION EQUIPMENT -- 1.9%
104,000 Advanced Fibre Communication+......... 3,783,000
114,000 ECI Telecom Ltd. ADR.................. 3,505,500
------------
7,288,500
------------
TELECOMMUNICATIONS -- 0.8%
90,000 Reltec Corporation+................... 3,189,375
------------
TELEVISION -- 1.3%
250,000 TV Azteca S.A. de C.V., ADR........... 4,906,250
------------
TECHNOLOGY -- 0.8%
75,000 Uniphase Corporation.................. 3,154,688
------------
TRANSPORTATION -- AIRLINES -- 1.6%
228,725 Comair Holdings Inc. ................. 6,061,212
------------
WATER TREATMENT SYSTEMS -- 0.7%
81,000 US Filter Corporation................. 2,845,125
------------
OTHER -- 1.4%
110,000 Atl Ultrasound Inc. .................. 5,596,250
------------
TOTAL COMMON STOCKS
(Cost $272,410,744).................. 374,596,509
============
INVESTMENT COMPANY -- 1.8% (Cost $7,116,000)
7,116,000 Nations Cash Reserves(a).............. 7,116,000
============
TOTAL INVESTMENTS
(Cost $279,526,744*)..................... 98.4% 381,712,509
OTHER ASSETS AND
LIABILITIES (NET)........................ 1.6 6,203,134
----- ------------
NET ASSETS................................ 100.0% $387,915,643
===== ============
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $112,732,807 and gross
depreciation of $10,910,759 for federal income tax purposes. March 31, 1998,
the aggregate cost of securities for federal income tax purposes was
$279,890,461.
+ Non-income producing security.
(a) Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates, Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
74
<PAGE> 79
NATIONS FUNDS
Nations Small Company Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 94.5%
ADVERTISING SALES -- 1.0%
72,112 HA-LO Industries, Inc.+.............. $ 2,519,413
------------
AEROSPACE AND DEFENSE -- 2.0%
174,750 REMEC, Inc. ......................... 5,013,141
------------
APPAREL AND TEXTILES -- 4.0%
78,178 Culp, Inc. .......................... 1,602,649
57,400 Delta Woodside Industries, Inc. ..... 322,875
106,000 Galey & Lord, Inc.+.................. 2,438,000
66,000 Tefron Ltd.+......................... 1,608,750
113,700 Quicksilver, Inc.+................... 4,064,775
------------
10,037,049
------------
BANKS -- 1.1%
73,000 City National Corporation............ 2,774,000
------------
BUILDING MATERIALS -- 4.0%
121,400 Advanced Lighting Technologies+...... 3,141,225
123,700 Group Maintenance America
Corporation+........................ 2,095,169
83,700 Service Experts, Inc.+............... 2,631,319
28,600 Southdown, Inc. ..................... 1,993,063
------------
9,860,776
------------
COAL, GAS AND PIPELINE -- 1.1%
77,500 Kinder Morgan Energy
Partners, L.P. .................... 2,688,281
------------
COMMERCIAL SERVICES -- 2.6%
94,200 Lason Holdings, Inc.+................ 3,556,050
154,900 PMT Services+........................ 2,778,519
------------
6,334,569
------------
COMMUNICATIONS SOFTWARE -- 0.8%
50,600 Avid Technology, Inc.+............... 2,080,925
------------
COMPUTER SERVICES -- 2.0%
115,800 Aehr Test Systems+................... 694,800
130,400 Cybex Computer Products
Corporation+........................ 4,246,150
------------
4,940,950
------------
COMPUTER SOFTWARE -- 4.5%
116,700 3Dlabs Inc., Ltd.+................... 2,844,563
74,400 BARRA, Inc.+......................... 2,120,400
23,700 Dataworks+........................... 625,087
72,500 Progress Software Corporation+....... 2,175,000
231,900 Rogue Wave Software+................. 3,492,994
------------
11,258,044
------------
CONSTRUCTION -- 3.6%
43,900 Champion Enterprises, Inc.+.......... 1,171,581
102,300 Kaufman & Broad Home Corporation..... 3,331,144
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
CONSTRUCTION -- (CONTINUED)
53,100 Oakwood Homes Corporation............ $ 1,944,788
52,800 Pulte Corporation.................... 2,455,200
------------
8,902,713
------------
CONSUMER PRODUCTS -- 0.4%
29,500 Russ Berrie & Company, Inc. ......... 894,219
------------
COSMETICS AND TOILETRY -- 1.4%
113,525 Alberto-Culver Company............... 3,455,417
------------
ELECTRONICS -- 5.2%
124,900 Aeroflex Inc.+....................... 1,654,925
131,000 Aneren Microwave, Inc.+.............. 2,882,000
67,300 Electro Scientific Industries,
Inc.+............................... 2,599,462
67,750 Esterline Technologies
Corporation+........................ 2,858,203
109,900 Sawtek Inc.+......................... 2,788,713
------------
12,783,303
------------
ELECTRONICS -- SEMICONDUCTOR -- 2.9%
149,400 AstroPower, Inc. .................... 1,297,912
59,400 Plexus Corporation+.................. 1,180,575
142,100 SDL, Inc. .......................... 3,374,875
53,400 Watkins-Johnson Company.............. 1,445,138
------------
7,298,500
------------
EXPLORATION AND DRILLING -- 2.3%
59,300 Cliffs Drilling Company.............. 2,449,831
130,900 Parker Drilling Company+............. 1,374,450
63,100 Varco International, Inc.+........... 1,624,825
26,700 Wiser Oil Company.................... 340,425
------------
5,789,531
------------
FINANCIAL SERVICES -- 1.0%
190,100 IMC Mortgage Company+................ 2,542,587
------------
FOOD -- 0.6%
42,400 American Italian Pasta Company+...... 1,531,700
------------
FURNITURE AND APPLIANCES -- 1.3%
51,900 Ethan Allen Interiors Inc. .......... 3,101,025
------------
INSTRUMENTS -- SCIENTIFIC -- 1.0%
46,500 Dionex Corporation+.................. 2,592,375
------------
INSURANCE -- 3.2%
62,903 Delphi Financial Group, Inc.,
Class A............................. 3,349,585
101,380 Frontier Insurance Group, Inc. ...... 2,800,622
41,000 Triad Guaranty, Inc.+................ 1,681,000
------------
7,831,207
------------
MACHINERY AND EQUIPMENT -- 3.5%
49,000 Applied Power, Inc., Class A......... 1,886,500
39,287 DT Industries, Inc. ................. 1,507,639
102,975 Gardner Denver Machinery Inc.+....... 3,050,634
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
75
<PAGE> 80
NATIONS FUNDS
Nations Small Company Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
MACHINERY AND EQUIPMENT -- (CONTINUED)
103,500 MagneTek, Inc.+...................... $ 1,947,094
16,700 Ritchie Brothes Auctioneers+......... 401,844
------------
8,793,711
------------
MANUFACTURING INDUSTRIES -- 1.1%
64,400 Kaydon Corporation................... 2,632,350
------------
MEDICAL BIOTECHNOLOGY -- 2.3%
42,800 Human Genome Sciences, Inc.+......... 1,703,975
11,747 Martek Biosciences Corporation+...... 178,408
163,100 Molecular Dynamics, Inc.+............ 2,354,756
90,700 Vical, Inc.+......................... 1,428,525
------------
5,665,664
------------
MEDICAL PRODUCTS AND SUPPLIES -- 4.3%
119,200 Coherent, Inc.+...................... 2,883,150
97,991 Henry Schein, Inc.+.................. 4,066,626
92,750 Invacare Corporation................. 2,411,500
116,700 Somnus Medical Technologies+......... 1,385,813
------------
10,747,089
------------
MEDICAL SERVICES -- 3.0%
84,500 Acuson Corporation+.................. 1,531,562
169,800 Orthodontic Centers of America+...... 3,682,538
49,900 Province Healthcare Company+......... 1,309,875
47,600 Shire Pharmaceuticals
Group Plc, ADR+..................... 1,020,425
------------
7,544,400
------------
METALS AND MINING -- 0.8%
138,600 AMCOL International Corporation...... 2,096,325
------------
MULTIMEDIA -- 1.4%
42,900 Pulitizer Publishing Company......... 3,426,638
------------
OIL SERVICES -- 2.3%
192,200 Core Laboratories N.V.+.............. 4,684,875
19,700 SECOR SMIT Inc.+..................... 1,146,294
------------
5,831,169
------------
PHOTO AND OPTICAL -- 0.5%
51,600 Innovex, Inc. ....................... 1,257,750
------------
PRINTING AND PUBLISHING -- 0.5%
37,925 McClatchy Newspapers, Inc.,
Class A............................. 1,130,639
------------
PROFESSIONAL SERVICES -- 5.8%
68,800 AHL Services+........................ 2,244,600
44,300 Best Software, Inc.+................. 670,037
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
PROFESSIONAL SERVICES -- (CONTINUED)
95,100 Career Education Corporation+........ $ 2,092,200
114,500 Inacom Corporation+.................. 3,163,062
182,800 SCB Computer Technology, Inc.+....... 4,204,400
72,300 Trammell Crow Company+............... 2,060,550
------------
14,434,849
------------
RESTAURANTS AND LODGING -- 0.6%
106,300 NPC International Inc.+.............. 1,408,475
------------
RETAIL -- DISCOUNT -- 1.9%
52,900 BJ'S Wholesale Club, Inc.+........... 2,063,100
80,800 ShopKo Stores, Inc.+................. 2,560,350
------------
4,623,450
------------
RETAIL -- GENERAL -- 1.5%
41,900 Pentacon Inc.+....................... 586,600
78,200 Neiman Marcus Group, Inc.+........... 3,211,087
------------
3,797,687
------------
RETAIL -- SPECIALTY -- 4.4%
47,900 Eagle Hardware & Garden, Inc.+....... 844,237
80,675 Fabri-Centers of America,
Class A+............................ 2,511,009
104,600 Fossil, Inc.+........................ 3,386,425
47,625 Pacific Sunwear of California+....... 1,976,437
36,900 Williams-Sonoma, Inc.+............... 2,135,588
------------
10,853,696
------------
SAVINGS AND LOANS -- 1.3%
88,600 First Republic Bank+................. 3,189,600
------------
STEEL -- 0.4%
84,950 Steel Technologies Inc. ............. 1,016,745
------------
TELECOMMUNICATIONS -- 7.6%
218,925 Allen Telecom Inc.+.................. 3,448,069
83,400 CellStar Corporation+................ 2,668,800
144,000 Gilat Communications Ltd.+........... 1,566,000
187,800 Harmonic Lightwaves, Inc.+........... 3,028,275
120,800 LCC International, Inc.+............. 2,400,900
99,600 Spectrian Corporation+............... 1,655,850
242,900 Stanford Telecommunications, Inc.+... 4,098,937
------------
18,866,831
------------
TELECOMMUNICATIONS EQUIPMENT -- 2.6%
210,100 ANTEC Corporation+................... 3,151,500
220,300 Proxim, Inc.+........................ 3,359,575
------------
6,511,075
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
76
<PAGE> 81
NATIONS FUNDS
Nations Small Company Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
TRANSPORTATION -- AIRLINES -- 2.7%
74,650 Air Express International
Corporation......................... $ 1,982,891
71,800 Airborne Freight Corporation......... 2,701,475
112,800 Midway Airlines Corporation+......... 2,129,100
------------
6,813,466
------------
TOTAL COMMON STOCKS
(Cost $186,161,821).................. 234,871,334
============
INVESTMENT COMPANY -- 7.2% (Cost $17,961,000)
17,961,000 Nations Cash Reserves(a)............. 17,961,000
============
TOTAL INVESTMENTS
(Cost $204,122,821*)..................... 101.7% 252,832,334
OTHER ASSETS AND
LIABILITIES (NET)........................ (1.7) (4,127,183)
----- ------------
NET ASSETS................................ 100.0% $248,705,151
===== ============
</TABLE>
- ---------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $52,405,859 and gross
depreciation of $3,696,346 for federal income tax purposes. At March 31,
1998, the aggregate cost of securities for federal income tax purposes was
$204,122,821.
+ Non-income producing security.
(a) Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates, Inc.
<TABLE>
<S> <C>
Comprehensive Abbreviation Listing for all 3/31/98 Nations
Domestic Stock Funds:
ABBREVIATIONS:
ADR American Depositary Receipt
GOLD Payments are on an accelerated 45-day payment cycle
instead of a 75-day cycle
MTN Medium Term Note
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
77
<PAGE> 82
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES MARCH 31, 1998
<TABLE>
<CAPTION>
BALANCED EQUITY GROWTH &
ASSETS INCOME VALUE INCOME
----------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value, See accompanying schedules........... $118,484,635 $1,146,640,038 $2,560,577,915 $12,458,336
Short-term investments held as collateral for loaned
securities................................................ 1,131,571 6,779,281 42,397,955 --
Cash........................................................ 670 161 149 61,450
Dividends receivable........................................ 149,090 1,706,117 3,628,217 3,680
Interest receivable......................................... 493,864 930,277 -- --
Receivable for Fund shares sold............................. 197,971 1,666,003 2,823,341 797,100
Receivable for investment securities sold................... 2,360,189 -- 15,320,170 204,497
Receivable from investment advisor.......................... -- -- -- 11,151
Receivable for variation margin............................. -- -- -- --
Unamortized organization costs.............................. -- -- -- --
Prepaid expenses and other assets........................... -- 8,737 13,258 57,875
------------ -------------- -------------- -----------
Total Assets............................................ 122,817,990 1,157,730,614 2,624,761,005 13,594,089
------------ -------------- -------------- -----------
LIABILITIES:
Collateral on securities loaned............................. 1,131,571 6,779,281 42,397,955 --
Payable for Fund shares redeemed............................ 275,740 9,588,242 11,514,144 9,577
Payable for investment securities purchased................. 2,107,033 959,420 6,771,260 1,476,914
Investment advisory fee payable............................. 74,807 604,286 1,640,004 6,505
Administration fee payable.................................. 9,974 96,480 218,694 765
Shareholder servicing and distribution fees payable......... 213,618 404,339 463,497 6,792
Transfer agent fees payable................................. 14,424 63,318 63,181 1,482
Custodian fees payable...................................... 5,935 24,085 21,120 500
Accrued Trustees'/Directors' fees and expenses.............. 11,934 29,160 96,444 51
Accrued expenses and other payables......................... 36,347 269,471 343,752 8,441
------------ -------------- -------------- -----------
Total Liabilities....................................... 3,881,383 18,818,082 63,530,051 1,511,027
------------ -------------- -------------- -----------
NET ASSETS.................................................. $118,936,607 $1,138,912,532 $2,561,230,954 $12,083,062
============ ============== ============== ===========
Investments, at cost........................................ $112,900,482 $ 922,963,141 $1,782,129,332 $11,330,167
============ ============== ============== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
78
<PAGE> 83
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SMALL
EQUITY CAPITAL DISCIPLINED FOCUSED EMERGING COMPANY
INDEX GROWTH EQUITY EQUITIES GROWTH GROWTH
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$659,851,619 $989,564,622 $193,338,128 $37,087,808 $381,712,509 $252,832,334
792,679 11,452,643 5,107,552 -- 13,817,177 8,681,166
15,678 856 961 631 7 110,740
709,680 436,148 161,753 6,815 60,973 125,783
-- -- -- -- -- --
6,306 966,082 465,459 1,932,442 9,290,216 88,134
1,645,657 -- -- 748,752 350,085 584,061
-- -- -- -- -- --
21,600 -- -- -- -- --
1,000 -- -- -- -- --
3,378 -- 1,257 55,810 -- 7,091
------------ ------------ ------------ ----------- ------------ ------------
663,047,597 1,002,420,351 199,075,110 39,832,258 405,230,967 262,429,309
------------ ------------ ------------ ----------- ------------ ------------
792,679 11,452,643 5,107,552 -- 13,817,177 8,681,166
774,115 4,108,208 202,643 13,355 765,409 94,340
21,405 4,486,900 -- 3,987,993 2,217,545 4,745,200
112,001 623,383 120,213 18,874 246,626 150,655
55,862 83,118 16,031 2,221 32,883 20,091
600 115,460 71,487 18,102 75,719 12,710
17,347 -- 4,077 1,542 27,971 --
3,376 -- 8,991 500 22,660 5,857
29,143 50,490 7,878 63 20,029 1,994
-- 26,830 27,795 11,329 89,305 12,145
------------ ------------ ------------ ----------- ------------ ------------
1,806,528 20,947,032 5,566,667 4,053,979 17,315,324 13,724,158
------------ ------------ ------------ ----------- ------------ ------------
$661,241,069 $981,473,319 $193,508,443 $35,778,279 $387,915,643 $248,705,151
============ ============ ============ =========== ============ ============
$359,436,659 $664,396,733 $143,196,214 $33,789,909 $279,526,744 $204,122,821
============ ============ ============ =========== ============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
79
<PAGE> 84
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- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
BALANCED EQUITY GROWTH &
ASSETS INCOME VALUE INCOME
-------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSETS CONSIST OF:
Paid in capital............................................. $106,187,149 $ 846,750,555 $1,580,421,091 $10,937,579
Undistributed net investment income/(distributions in excess
of net investment income)................................. 40,895 334,658 214,914 8,864
Accumulated net realized gain on investments, futures
contracts and foreign currency............................ 7,124,410 68,150,422 202,146,366 8,450
Net unrealized appreciation of investments and futures
contracts................................................. 5,584,153 223,676,897 778,448,583 1,128,169
------------ -------------- -------------- -----------
$118,936,607 $1,138,912,532 $2,561,230,954 $12,083,062
============ ============== ============== ===========
NET ASSETS:
Primary A Shares............................................ $ 20,299,057 $ 915,629,746 $2,248,459,760 $ 2,516,552
Primary B Shares............................................ 1,868,237 15 16 --
Investor A Shares........................................... 16,009,098 68,005,666 149,167,350 1,141,185
Investor B Shares........................................... 78,812,762 144,928,916 149,634,527 7,906,976
Investor C Shares........................................... 1,947,453 10,348,189 13,969,301 518,349
SHARES OUTSTANDING:
Primary A Shares............................................ 1,766,055 65,661,525 112,856,183 209,276
Primary B Shares............................................ 162,469 1 1 --
Investor A Shares........................................... 1,395,183 4,895,379 7,489,407 94,910
Investor B Shares........................................... 6,882,051 10,446,734 7,552,142 657,732
Investor C Shares........................................... 170,680 738,388 707,297 43,119
PRIMARY A SHARES:
Net asset value, offering and redemption price per share.... $11.49 $13.94 $19.92 $12.03
PRIMARY B SHARES:
Net asset value, offering and redemption price per share.... $11.50 $13.94 $19.98 N/A
INVESTOR A SHARES:
Net asset value offering and redemption price per share..... $11.47 $13.89 $19.92 $12.02
INVESTOR B SHARES:
Net asset value and offering price per share*............... $11.45 $13.87 $19.81 $12.02
INVESTOR C SHARES:
Net asset value, offering and redemption price per share.... $11.41 $14.01 $19.75 $12.02
</TABLE>
- ---------------
* Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
SEE NOTES TO FINANCIAL STATEMENTS.
80
<PAGE> 85
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED) MARCH 31, 1998
<TABLE>
<CAPTION>
SMALL
EQUITY CAPITAL DISCIPLINED FOCUSED EMERGING COMPANY
INDEX GROWTH EQUITY EQUITIES GROWTH GROWTH
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$336,340,892 $511,353,899 $128,835,891 $32,440,792 $232,695,153 $187,951,398
15,901 -- 47,050 -- -- (37,057)
24,482,046 144,951,531 14,483,588 39,588 53,034,725 12,081,297
300,402,230 325,167,889 50,141,914 3,297,899 102,185,765 48,709,513
------------ ------------ ------------ ----------- ------------ ------------
$661,241,069 $981,473,319 $193,508,443 $35,778,279 $387,915,643 $248,705,151
============ ============ ============ =========== ============ ============
$656,523,252 $872,149,995 $132,504,292 $ 8,808,064 $318,584,342 $235,426,998
122,517 271,484 17 -- 23,115 --
4,595,300 43,380,333 21,725,260 6,055,805 21,590,816 6,771,642
-- 59,495,522 38,079,438 20,445,793 45,451,175 3,384,242
-- 6,175,985 1,199,436 468,617 2,266,195 3,122,269
29,298,504 65,561,216 5,976,263 726,394 19,238,504 14,911,034
5,454 20,560 1 -- 1,409 --
205,947 3,271,915 983,570 499,006 1,324,995 430,327
-- 4,635,709 1,765,030 1,686,148 2,918,120 217,062
-- 478,129 54,719 38,635 145,022 198,381
$22.41 $13.30 $22.17 $12.13 $16.56 $15.79
$22.46 $13.20 $22.17 N/A $16.41 --
$22.31 $13.26 $22.09 $12.14 $16.30 $15.74
N/A $12.83 $21.57 $12.13 $15.58 $15.59
N/A $12.92 $21.92 $12.13 $15.63 $15.74
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
81
<PAGE> 86
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
BALANCED EQUITY GROWTH &
ASSETS INCOME VALUE INCOME(a)
------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (Net of foreign withholding taxes of $7,876, $0,
$0, $0, $41,161, $781, $0, $0, $1,140, and $0,
respectively)............................................. $ 2,673,199 $ 17,929,014 $ 39,537,433 $ 8,727
Interest.................................................... 4,825,927 4,851,981 1,756,097 10,166
Securities lending.......................................... 31,090 34,637 195,550 0
----------- ------------ ------------ ----------
Total investment income................................. 7,530,216 22,815,632 41,489,080 18,893
----------- ------------ ------------ ----------
EXPENSES:
Investment advisory fee..................................... 1,493,286 4,731,858 15,667,970 10,919
Administration fee.......................................... 199,105 739,293 2,089,063 1,285
Transfer agent fees......................................... 318,554 482,916 1,226,204 1,482
Custodian fees.............................................. 38,816 69,723 148,867 1,556
Legal and audit fees........................................ 32,773 75,885 178,680 5,122
Registration and filing fees................................ 48,251 227,848 300,383 4,736
Trustees'/Directors' fees and expenses...................... 2,790 16,704 53,538 51
Amortization of organization costs.......................... 2,016 -- -- --
Interest expense............................................ 88 -- -- --
Other....................................................... 22,876 44,893 152,220 166
----------- ------------ ------------ ----------
Subtotal................................................ 2,158,555 6,389,120 19,816,925 25,317
Shareholder servicing and distribution fees:
Primary B Shares.......................................... 30,926 24,723 94,267 --
Investor A Shares......................................... 30,709 148,897 273,466 205
Investor B Shares......................................... 648,797 1,161,194 1,129,299 6,525
Investor C Shares......................................... 18,377 68,146 91,117 190
Fees waived and expenses reimbursed by investment adviser
and administrator......................................... -- -- (49,168) (11,246)
----------- ------------ ------------ ----------
Total expenses.......................................... 2,887,364 7,792,080 21,355,906 20,991
Fees reduced by credits allowed by the custodian............ (999) (12,267) (4,693) (36)
----------- ------------ ------------ ----------
Net expenses............................................ 2,886,365 7,779,813 21,351,213 20,955
----------- ------------ ------------ ----------
NET INVESTMENT INCOME/(LOSS)................................ 4,643,851 15,035,819 20,137,867 (2,062)
----------- ------------ ------------ ----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain/(loss) from:
Security transactions..................................... 36,270,800 122,323,155 514,207,825 8,450
Forward foreign currency contracts and foreign currency
transactions............................................ -- -- -- (716)
Futures contracts......................................... -- -- -- --
----------- ------------ ------------ ----------
Net realized gain on investments............................ 36,270,800 122,323,155 514,207,825 7,734
----------- ------------ ------------ ----------
Change in unrealized appreciation/depreciation of:
Securities (Note 8)....................................... 9,456,583 109,180,802 170,187,167 1,128,169
Futures contracts......................................... -- -- -- --
Net change in unrealized appreciation of investments........ 9,456,583 109,180,802 170,187,167 1,128,169
----------- ------------ ------------ ----------
Net realized and unrealized gain on investments............. 45,727,383 231,503,957 684,394,992 1,135,903
----------- ------------ ------------ ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $50,371,234 $246,539,776 $704,532,859 $1,133,841
=========== ============ ============ ==========
</TABLE>
- ---------------
(a) Focused Equities and Growth & Income commenced operations on December 31,
1997.
(b) Represents financial information for the Pilot Small Capitalization Equity
Fund, which was reorganized into Small Company Growth on May 23, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
82
<PAGE> 87
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH
--------------------------------------
FOR THE PERIOD FOR THE PERIOD
EQUITY CAPITAL DISCIPLINED FOCUSED EMERGING MAY 17, 1997 SEPTEMBER 1, 1996
INDEX GROWTH EQUITY EQUITIES(A) GROWTH TO MARCH 31, 1998 TO MAY 16, 1997(b)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 11,482,695 $ 7,378,295 $ 111,696 $ 18,680 $ 1,177,006 $ 970,310 $ 933,976
309,703 886,517 2,121,623 20,191 881,330 377,271 150,185
12,063 20,033 1,920 0 100,331 36,285 --
------------ ------------- ----------- ---------- ------------ ----------- -----------
11,804,461 8,284,845 2,235,239 38,871 2,158,667 1,383,866 1,084,161
------------ ------------- ----------- ---------- ------------ ----------- -----------
3,390,949 5,717,424 1,236,280 27,032 2,836,719 1,378,986 731,622
673,465 762,323 164,612 3,180 378,229 140,738 86,915
113,132 564,064 108,608 1,542 282,339 75,083 54,616
150,225 72,261 28,182 1,595 47,414 23,971 9,936
32,783 69,947 29,097 5,149 44,574 18,933 31,668
39,195 15,861 20,734 9,685 69,951 81,879 58,791
14,262 20,670 3,006 63 8,779 3,118 2,696
1,500 2,018 -- -- 3,039 -- 2,660
36,707 1,643 14,788 -- 61,411 3,060 --
44,708 49,217 17,791 277 26,597 13,402 30,051
------------ ------------- ----------- ---------- ------------ ----------- -----------
4,496,926 7,275,428 1,623,098 48,523 3,759,052 1,739,170 1,008,955
20,313 38,659 3,779 -- 14,710 -- --
7,389 74,936 32,655 1,045 39,225 11,220 5,816
-- 500,773 269,859 16,942 399,673 18,467 17,260
-- 52,381 7,854 356 17,465 16,309 --
(2,088,839) -- -- -- -- (419,890) (312,289)
------------ ------------- ----------- ---------- ------------ ----------- -----------
2,435,789 7,942,177 1,937,245 66,866 4,230,125 1,365,276 719,742
(291) (5,587) (1,537) (75) (4,543) (4,889) --
------------ ------------- ----------- ---------- ------------ ----------- -----------
2,435,498 7,936,590 1,935,708 66,791 4,225,582 1,360,387 719,742
------------ ------------- ----------- ---------- ------------ ----------- -----------
9,368,963 348,255 299,531 (27,920) (2,066,915) 23,479 364,419
------------ ------------- ----------- ---------- ------------ ----------- -----------
43,872,785 273,745,451 35,307,105 41,500 89,899,532 20,503,246 (1,681,500)
5 -- -- (2,119) -- -- --
4,180,237 -- -- -- -- 372,523 --
------------ ------------- ----------- ---------- ------------ ----------- -----------
48,053,027 273,745,451 35,307,105 39,381 89,899,532 20,875,769 (1,681,500)
------------ ------------- ----------- ---------- ------------ ----------- -----------
194,591,795 78,877,994 29,981,822 3,297,899 47,047,263 34,466,663 13,621,363
247,870 -- -- -- -- -- --
194,839,665 78,877,994 29,981,822 3,297,899 47,047,263 34,466,663 13,621,363
------------ ------------- ----------- ---------- ------------ ----------- -----------
242,892,692 352,623,445 65,288,927 3,337,280 136,946,795 55,342,432 11,939,863
------------ ------------- ----------- ---------- ------------ ----------- -----------
$252,261,655 $ 352,971,700 $65,588,458 $3,309,360 $134,879,880 $55,365,911 $12,304,282
============ ============= =========== ========== ============ =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
83
<PAGE> 88
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- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BALANCED ASSETS EQUITY INCOME
----------------------------- -------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/98 3/31/97 3/31/98 3/31/97
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income/(loss)..................... $ 4,643,851 $ 7,417,326 $ 15,035,819 $ 11,061,733
Net realized gain on investments................. 36,270,800 35,946,666 122,323,155 74,322,757
Net change in unrealized
appreciation/(depreciation) of investments..... 9,456,583 (15,894,144) 109,180,802 (29,303,706)
------------ ------------- -------------- -------------
Net increase in net assets resulting from
operations..................................... 50,371,234 27,469,848 246,539,776 56,080,784
Distributions to shareholders from net investment
income:
Primary A Shares............................... (2,911,469) (5,399,863) (11,908,693) (6,913,427)
Primary B Shares............................... (138,508) (79,708) (83,901) (64,743)
Investor A Shares.............................. (304,424) (248,137) (1,137,570) (1,325,087)
Investor B Shares.............................. (1,224,494) (1,668,470) (1,602,722) (2,623,184)
Investor C Shares.............................. (40,650) (36,108) (114,348) (129,443)
Distributions to shareholders from net realized
gain on investments:
Primary A Shares............................... (26,569,087) (20,247,211) (45,271,340) (37,718,705)
Primary B Shares............................... (1,422,981) (349,059) (846,761) (364,882)
Investor A Shares.............................. (2,364,076) (913,264) (9,122,280) (7,574,248)
Investor B Shares.............................. (13,747,221) (8,113,431) (19,537,593) (18,346,111)
Investor C Shares.............................. (445,402) (164,110) (1,368,307) (811,608)
Net increase/(decrease) in net assets from Fund
share transactions:
Primary A Shares............................... (113,077,843) (21,867,306) 586,432,383 (71,958,670)
Primary B Shares............................... (3,572,170) 5,736,112 (6,984,721) 6,594,237
Investor A Shares.............................. 6,432,722 3,120,407 11,875,372 7,946,497
Investor B Shares.............................. 11,691,283 867,166 19,167,995 10,359,559
Investor C Shares.............................. 462,835 262,475 4,665,726 673,023
------------ ------------- -------------- -------------
Net increase/(decrease) in net assets............ (96,860,251) (21,630,659) 770,703,016 (66,176,008)
NET ASSETS:
Beginning of year................................ 215,796,858 237,427,517 368,209,516 434,385,524
------------ ------------- -------------- -------------
End of year...................................... $118,936,607 $ 215,796,858 $1,138,912,532 $ 368,209,516
============ ============= ============== =============
Undistributed net investment income/
(distributions in excess of net investment
income) at end of year......................... $ 40,895 $ 63,372 $ 334,658 $ 146,073
============ ============= ============== =============
</TABLE>
- ---------------
(a) Growth & Income commenced operations on December 31, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
84
<PAGE> 89
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
GROWTH &
INCOME(a)
VALUE ----------- EQUITY INDEX CAPITAL GROWTH
--------------------------------- PERIOD ------------------------------ ------------------------------
YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
3/31/98 3/31/97 3/31/98 3/31/98 3/31/97 3/31/98 3/31/97
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 20,137,867 $ 18,813,204 $ (2,062) $ 9,368,963 $ 8,208,889 $ 348,255 $ 2,448,490
514,207,825 146,169,597 7,734 48,053,027 2,109,098 273,745,451 186,162,170
170,187,167 51,368,916 1,128,169 194,839,665 65,065,504 78,877,994 (73,539,048)
-------------- -------------- ----------- ------------- ------------ ------------ -------------
704,532,859 216,351,717 1,133,841 252,261,655 75,383,491 352,971,700 115,071,612
(18,994,123) (17,054,950) -- (9,283,339) (8,239,169) (639,552) (2,456,103)
(96,854) (141,517) -- (31,988) (25,680) -- --
(849,205) (810,737) -- (35,275) (12,723) -- (32,258)
(231,336) (736,681) -- -- -- -- --
(22,806) (58,256) -- -- -- -- --
(287,309,482) (90,693,794) -- (19,200,647) (1,840,430) (143,057,627) (157,141,909)
(3,677,998) (1,455,500) -- (117,572) (5,984) (2,385,965) (1,860,901)
(19,884,870) (5,016,860) -- (88,934) (859) (7,644,543) (5,044,758)
(22,961,884) (7,458,038) -- -- -- (13,929,479) (10,035,157)
(2,516,245) (428,414) -- -- -- (1,825,299) (1,078,436)
722,990,804 121,967,391 2,106,048 (131,758,932) 309,726,636 169,979,949 (253,994,363)
(29,608,308) 26,709,258 -- (6,654,554) 5,186,022 (12,913,703) 13,807,295
68,357,987 11,536,708 1,062,365 1,032,862 2,463,849 17,061,927 4,824,423
38,808,437 4,280,295 7,278,677 -- -- 10,472,816 6,554,887
7,431,523 1,479,950 502,131 -- -- (302,516) 2,759,406
-------------- -------------- ----------- ------------- ------------ ------------ -------------
1,155,968,499 258,470,572 12,083,062 86,123,276 382,635,153 367,787,708 (288,626,262)
1,405,262,455 1,146,791,883 -- 575,117,793 192,482,640 613,685,611 902,311,873
-------------- -------------- ----------- ------------- ------------ ------------ -------------
$2,561,230,954 $1,405,262,455 $12,083,062 $ 661,241,069 $575,117,793 $981,473,319 $ 613,685,611
============== ============== =========== ============= ============ ============ =============
214,914
$ $ 271,371 $ 8,864 $ 15,989 -- $ -- $ 99,716
============== ============== =========== ============= ============ ============ =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
85
<PAGE> 90
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
DISCIPLINED FOCUSED
EQUITY EQUITIES (a)
------------------------------ ------------
YEAR ENDED YEAR ENDED PERIOD ENDED
3/31/98 3/31/97 3/31/98
----------------------------------------------
<S> <C> <C> <C>
Net investment income/(loss)................................ $ 299,531 $ 756,136 $ (27,920)
Net realized gain on investments............................ 35,307,105 25,522,798 39,381
Net change in unrealized appreciation/(depreciation) of 29,981,822 (3,229,620) 3,297,899
investments...............................................
------------ ------------ -----------
Net increase/(decrease) in net assets resulting from 65,588,458 23,049,314 3,309,360
operations................................................
Distributions to shareholders from net investment income:
Primary A Shares.......................................... (246,150) (812,678) --
Primary B Shares.......................................... -- (1,649) --
Investor A Shares......................................... (6,331) (32,042) --
Investor B Shares......................................... -- -- --
Investor C Shares......................................... -- (61) --
Distributions to shareholders from net realized gain on
investments:
Primary A Shares.......................................... (22,846,877) (9,585,919) --
Primary B Shares.......................................... (158,642) (91,846) --
Investor A Shares......................................... (1,985,072) (528,226) --
Investor B Shares......................................... (5,097,878) (1,571,314) --
Investor C Shares......................................... (160,354) (30,729) --
Net increase/(decrease) in net assets from Fund share
transactions:
Primary A Shares.......................................... 5,494,089 (24,812,393) 7,828,693
Primary B Shares.......................................... (1,253,651) 1,089,022 --
Investor A Shares......................................... 11,990,970 1,668,358 5,590,497
Investor B Shares......................................... 12,688,841 552,434 18,618,887
Investor C Shares......................................... 579,913 142,101 430,842
------------ ------------ -----------
Net increase/(decrease) in net assets....................... 64,587,316 (10,965,628) 35,778,279
NET ASSETS:
Beginning of year........................................... 128,921,127 139,886,755 --
------------ ------------ -----------
End of year................................................. $193,508,443 $128,921,127 $35,778,279
============ ============ ===========
Undistributed net investment income/(distributions in excess
of net
investment income) at end of year......................... $ 47,050 $ -- $ --
============ ============ ===========
</TABLE>
- ---------------
(a) Focused Equities commenced operations on December 31, 1997.
(b) Represents the period from December 12, 1995 (commencement of operations) to
August 31, 1996.
(c) Represents financial information for the Pilot Small Capitalization Equity
Fund, which was reorganized into Small Company Growth on May 23, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
86
<PAGE> 91
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
EMERGING
GROWTH SMALL COMPANY GROWTH
----------------------------- ---------------------------------------------
YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
3/31/98 3/31/97 3/31/98 5/16/97(c) 8/31/96(b)(c)
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ (2,066,915) $ (1,329,587) $ 23,479 $ 364,419 $ 321,840
89,899,532 34,454,446 20,875,769 (1,681,500) 581,207
47,047,263 (30,383,696) 34,466,663 13,621,363 621,487
------------ ------------ ------------ ------------ -----------
134,879,880 2,741,163 55,365,911 12,304,282 1,524,534
-- -- (57,798) (361,933) (310,641)
-- -- -- -- --
-- -- -- (8,336) (5,306)
-- -- -- (591) (1,071)
-- -- -- -- --
(34,129,105) (27,305,634) (6,838,543) (357,391) --
(445,198) (59,072) -- -- --
(1,862,868) (1,061,416) (270,789) (12,306) --
(4,817,062) (3,332,013) (51,935) (9,752) --
(260,355) (97,646) (153,463) -- --
(28,187,935) (4,477,335) 80,279,978 28,069,972 69,301,552
(3,393,696) 3,259,671 -- -- --
5,667,751 5,544,043 1,852,186 703,694 2,605,000
2,960,620 1,782,278 (218,899) 482,145 1,859,000
383,717 635,028 3,015,651 --
------------ ------------ ------------ ------------ -----------
70,795,749 (22,370,933) 132,922,299 40,809,784 74,973,068
317,119,894 339,490,827 115,782,852 74,973,068 --
------------ ------------ ------------ ------------ -----------
$387,915,643 $317,119,894 $248,705,151 $115,782,852 $74,973,068
============ ============ ============ ============ ===========
$ -- $ -- $ (37,057) $ -- $ --
============ ============ ============ ============ ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
87
<PAGE> 92
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY
<TABLE>
<CAPTION>
BALANCED ASSETS
YEAR ENDED YEAR ENDED
MARCH 31, 1998 MARCH 31, 1997(a)
---------------------------- --------------------------
SHARES DOLLARS SHARES DOLLARS
----------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold...................................................... 2,573,940 $ 29,244,592 3,829,498 $ 44,702,059
Issued as reinvestment of dividends....................... 2,583,373 27,578,001 2,138,736 24,087,846
Redeemed.................................................. (15,564,414) (169,900,436) (7,888,635) (90,657,211)
----------- ------------- ---------- ------------
Net decrease.............................................. (10,407,101) $(113,077,843) (1,920,401) $(21,867,306)
=========== ============= ========== ============
PRIMARY B SHARES:
Sold...................................................... 268,516 $ 3,019,250 547,555 $ 6,317,399
Issued as reinvestment of dividends....................... 132,818 1,403,970 4,338 48,794
Redeemed.................................................. (736,095) (7,995,390) (54,663) (630,081)
----------- ------------- ---------- ------------
Net increase/(decrease)................................... (334,761) $ (3,572,170) 497,230 $ 5,736,112
=========== ============= ========== ============
INVESTOR A SHARES:
Sold...................................................... 680,877 $ 7,698,697 319,807 $ 3,637,712
Issued as reinvestment of dividends....................... 246,678 2,624,092 101,995 1,144,997
Redeemed.................................................. (347,739) (3,890,067) (144,535) (1,662,302)
----------- ------------- ---------- ------------
Net increase.............................................. 579,816 $ 6,432,722 277,267 $ 3,120,407
=========== ============= ========== ============
INVESTOR B SHARES:
Sold...................................................... 692,251 $ 7,671,421 132,981 $ 1,549,286
Issued as reinvestment of dividends....................... 1,379,474 14,629,121 852,851 9,553,149
Redeemed.................................................. (954,651) (10,609,259) (881,717) (10,235,269)
----------- ------------- ---------- ------------
Net increase.............................................. 1,117,074 $ 11,691,283 104,115 $ 867,166
=========== ============= ========== ============
INVESTOR C SHARES:
Sold...................................................... 123,656 $ 1,367,395 32,683 $ 379,832
Issued as reinvestment of dividends....................... 45,905 485,648 17,917 200,277
Redeemed.................................................. (124,878) (1,390,208) (26,954) (317,634)
----------- ------------- ---------- ------------
Net increase.............................................. 44,683 $ 462,835 23,646 $ 262,475
=========== ============= ========== ============
Total net decrease.......................................... (9,000,289) $ (98,063,173) (1,018,143) $(11,881,146)
=========== ============= ========== ============
</TABLE>
- ---------------
(a) Balanced Assets Primary B Shares commenced operations on June 28, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
88
<PAGE> 93
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
EQUITY INCOME
YEAR ENDED YEAR ENDED
MARCH 31, 1998 MARCH 31, 1997(a)
----------------------------- ----------------------------
SHARES DOLLARS SHARES DOLLARS
-------------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold...................................................... 6,312,441 $ 81,040,281 5,493,997 $ 70,367,708
Issued in exchange for:
Pilot Shares of Pilot Equity Income Fund (Note 8)....... 10,971,724 132,320,870 -- --
Assets of NationsBank Common Trust Equity Income Fund
(Note 8).............................................. 46,644,708 563,468,074
Issued as reinvestment of dividends....................... 1,566,180 19,190,851 1,788,758 22,091,931
Redeemed.................................................. (16,153,352) (209,587,693) (12,511,675) (164,418,309)
----------- -------------- ----------- -------------
Net increase/(decrease)................................... 49,341,701 $ 586,432,383 (5,228,920) $ (71,958,670)
=========== ============== =========== =============
PRIMARY B SHARES:
Sold...................................................... 69,544 $ 892,708 581,119 $ 7,285,073
Issued as reinvestment of dividends....................... 62,888 762,302 10,429 127,760
Redeemed.................................................. (659,819) (8,639,731) (64,160) (818,596)
----------- -------------- ----------- -------------
Net increase/(decrease)................................... (527,387) $ (6,984,721) 527,388 $ 6,594,237
=========== ============== =========== =============
INVESTOR A SHARES:
Sold...................................................... 1,076,783 $ 13,598,871 681,422 $ 8,856,816
Issued in exchange for Class A Shares of Pilot Equity
Income Fund (Note 8).................................... 355,685 4,272,939 -- --
Issued as reinvestment of dividends....................... 787,808 9,543,607 682,371 8,392,448
Redeemed.................................................. (1,231,066) (15,540,045) (707,574) (9,302,767)
----------- -------------- ----------- -------------
Net increase.............................................. 989,210 $ 11,875,372 656,219 $ 7,946,497
=========== ============== =========== =============
INVESTOR B SHARES:
Sold...................................................... 1,292,855 $ 16,797,254 347,847 $ 4,549,473
Issued in exchange for Class B Shares of Pilot Equity
Income Fund (Note 8).................................... 408,886 4,902,332 -- --
Issued as reinvestment of dividends....................... 1,674,562 20,415,522 1,645,356 20,181,935
Redeemed.................................................. (1,751,345) (22,947,113) (1,111,287) (14,371,849)
----------- -------------- ----------- -------------
Net increase.............................................. 1,624,958 $ 19,167,995 881,916 $ 10,359,559
=========== ============== =========== =============
INVESTOR C SHARES:
Sold...................................................... 491,783 $ 6,684,481 81,457 $ 1,089,046
Issued as reinvestment of dividends....................... 117,678 1,450,894 75,113 929,638
Redeemed.................................................. (276,478) (3,469,649) (100,800) (1,345,661)
----------- -------------- ----------- -------------
Net increase.............................................. 332,983 $ 4,665,726 55,770 $ 673,023
=========== ============== =========== =============
Total net increase/(decrease)............................... 51,761,465 $ 615,156,755 (3,107,627) $ (46,385,354)
=========== ============== =========== =============
</TABLE>
- ---------------
(a) Equity Income's Primary B Shares commenced operations on June 28, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
89
<PAGE> 94
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
VALUE GROWTH & INCOME
YEAR ENDED YEAR ENDED PERIOD ENDED
MARCH 31, 1998 MARCH 31, 1997(a) MARCH 31, 1998(b)
---------------------------- --------------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold.................................. 16,610,108 $ 311,812,030 29,322,532 $ 511,605,757 210,202 $ 2,117,149
Issued in exchange for: Pilot Shares
of Pilot Growth and Income Fund
(Note 8)............................ 17,843,256 327,256,599 -- -- -- --
Assets of NationsBank Common Trust
Value Equity Fund (Note 8)........ 54,449,440 916,928,568 -- -- -- --
Issued as reinvestment of dividends... 9,341,728 165,845,548 3,289,592 58,525,164 -- --
Redeemed.............................. (52,590,220) (998,851,941) (25,604,738) (448,163,530) (926) (11,101)
----------- -------------- ----------- ------------- --------- -----------
Net increase.......................... 45,654,312 $ 722,990,804 7,007,386 $ 121,967,391 209,276 $ 2,106,048
=========== ============== =========== ============= ========= ===========
PRIMARY B SHARES:
Sold.................................. 207,749 $ 3,908,695 1,816,714 $ 31,661,762 -- $ --
Issued as reinvestment of dividends... 156,875 2,797,725 43,152 768,906 -- --
Redeemed.............................. (1,908,368) (36,314,728) (316,121) (5,721,410) -- --
----------- -------------- ----------- ------------- --------- -----------
Net increase/(decrease)............... (1,543,744) $ (29,608,308) 1,543,745 $ 26,709,258 -- $ --
=========== ============== =========== ============= ========= ===========
INVESTOR A SHARES:
Sold.................................. 3,310,313 $ 65,461,777 1,008,873 $ 17,617,492 99,818 $ 1,117,528
Issued in exchange for Class A
Shares of Pilot Growth and Income Fund
(Note 8)............................ 436,043 7,994,948 -- -- -- --
Issued as reinvestment of dividends... 1,125,757 19,824,278 313,372 5,573,438 -- --
Redeemed.............................. (1,317,470) (24,923,016) (661,226) (11,654,222) (4,908) (55,163)
----------- -------------- ----------- ------------- --------- -----------
Net increase.......................... 3,554,643 $ 68,357,987 661,019 $ 11,536,708 94,910 $ 1,062,365
=========== ============== =========== ============= ========= ===========
INVESTOR B SHARES:
Sold.................................. 1,418,572 $ 32,294,571 487,075 $ 8,412,470 663,907 $ 7,349,854
Issued in exchange for Class B Shares
of Pilot Growth and Income Fund
(Note 8)............................ 310,528 5,667,939 -- -- -- --
Issued as reinvestment of dividends... 1,288,100 22,710,825 455,824 8,073,126 -- --
Redeemed.............................. (1,080,225) (21,864,898) (697,591) (12,205,301) (6,175) (71,177)
----------- -------------- ----------- ------------- --------- -----------
Net increase.......................... 1,936,975 $ 38,808,437 245,308 $ 4,280,295 657,732 $ 7,278,677
=========== ============== =========== ============= ========= ===========
INVESTOR C SHARES:
Sold.................................. 502,824 $ 10,534,393 175,986 $ 3,020,176 43,119 $ 502,131
Issued as reinvestment of dividends... 144,602 2,530,205 27,497 485,883 -- --
Redeemed.............................. (307,422) (5,633,075) (116,991) (2,026,109) -- --
----------- -------------- ----------- ------------- --------- -----------
Net increase.......................... 340,004 $ 7,431,523 86,492 $ 1,479,950 43,119 $ 502,131
=========== ============== =========== ============= ========= ===========
Total net increase...................... 49,942,190 $ 807,980,443 9,543,950 $ 165,973,602 1,005,037 $10,949,221
=========== ============== =========== ============= ========= ===========
</TABLE>
- ---------------
(a) Value's Primary B Shares commenced operations on June 28, 1996.
(b) Growth & Income commenced operations on December 31, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
90
<PAGE> 95
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
EQUITY INDEX
YEAR ENDED YEAR ENDED
MARCH 31, 1998 MARCH 31, 1997(a)
---------------------------- ----------------------------
SHARES DOLLARS SHARES DOLLARS
------------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold...................................................... 14,924,586 $ 286,046,706 40,225,078 $ 580,368,542
Issued as reinvestment of dividends....................... 1,113,973 21,515,441 517,996 7,964,898
Redeemed.................................................. (22,418,467) (439,321,079) (19,227,462) (278,606,804)
----------- ------------- ----------- -------------
Net increase/(decrease)................................... (6,379,908) $(131,758,932) 21,515,612 $ 309,726,636
=========== ============= =========== =============
PRIMARY B SHARES:
Sold...................................................... 119,316 $ 2,218,708 663,406 $ 10,427,520
Issued as reinvestment of dividends....................... 7,455 142,095 1,599 25,530
Redeemed.................................................. (467,866) (9,015,357) (318,456) (5,267,028)
----------- ------------- ----------- -------------
Net increase/(decrease)................................... (341,095) $ (6,654,554) 346,549 $ 5,186,022
=========== ============= =========== =============
INVESTOR A SHARES:
Sold...................................................... 200,915 $ 3,880,766 333,277 $ 5,286,564
Issued as reinvestment of dividends....................... 6,242 113,637 866 13,492
Redeemed.................................................. (163,462) (2,961,541) (178,866) (2,836,207)
----------- ------------- ----------- -------------
Net increase.............................................. 43,695 $ 1,032,862 155,277 $ 2,463,849
=========== ============= =========== =============
Total net increase/(decrease)............................... (6,677,308) $(137,380,624) 22,017,438 $ 317,376,507
=========== ============= =========== =============
</TABLE>
- ---------------
(a) Equity Index's Primary B Shares commenced operations on June 28, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
91
<PAGE> 96
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
CAPITAL GROWTH
YEAR ENDED YEAR ENDED
MARCH 31, 1998 MARCH 31, 1997(a)
---------------------------- ----------------------------
SHARES DOLLARS SHARES DOLLARS
------------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold...................................................... 6,333,922 $ 78,066,149 15,753,137 $ 192,039,483
Issued in exchange for:
Assets of NationsBank Common Trust Capital Growth Fund
(Note 8).............................................. 44,250,802 469,943,520 -- --
Assets of NationsBank Common Trust Equity Funds for
Personal Trusts (Note 8).............................. 5,061,582 53,754,003 -- --
Shares of the Peachtree Equity Fund (Note 8)............ -- -- 6,613,086 95,758,235
Issued as reinvestment of dividends....................... 9,411,246 105,982,565 2,411,051 13,926,195
Redeemed.................................................. (45,060,960) (537,766,288) (41,713,535) (555,718,276)
----------- ------------- ----------- -------------
Net increase/(decrease)................................... 19,996,592 $ 169,979,949 (16,936,261) $(253,994,363)
=========== ============= =========== =============
PRIMARY B SHARES:
Sold...................................................... 96,416 $ 1,135,842 1,263,951 $ 16,621,006
Issued as reinvestment of dividends....................... 177,189 1,992,695 107,692 1,306,298
Redeemed.................................................. (1,311,448) (16,042,240) (313,240) (4,120,009)
----------- ------------- ----------- -------------
Net increase/(decrease)................................... (1,037,843) $ (12,913,703) 1,058,403 $ 13,807,295
=========== ============= =========== =============
INVESTOR A SHARES:
Sold...................................................... 2,778,208 $ 33,435,602 530,791 $ 7,132,768
Issued as reinvestment of dividends....................... 619,288 6,940,925 374,048 4,532,192
Redeemed.................................................. (1,878,889) (23,314,600) (517,176) (6,840,537)
----------- ------------- ----------- -------------
Net increase.............................................. 1,518,607 $ 17,061,927 387,663 $ 4,824,423
=========== ============= =========== =============
INVESTOR B SHARES:
Sold...................................................... 351,745 $ 4,213,004 170,735 $ 2,258,704
Issued as reinvestment of dividends....................... 1,252,253 13,690,243 829,556 9,896,604
Redeemed.................................................. (622,555) (7,430,431) (430,513) (5,600,421)
----------- ------------- ----------- -------------
Net increase.............................................. 981,443 $ 10,472,816 569,778 $ 6,554,887
=========== ============= =========== =============
INVESTOR C SHARES:
Sold...................................................... 148,605 $ 1,807,905 267,345 $ 3,391,862
Issued as reinvestment of dividends....................... 164,838 1,809,159 90,327 1,077,600
Redeemed.................................................. (335,477) (3,919,580) (133,084) (1,710,056)
----------- ------------- ----------- -------------
Net increase/(decrease)................................... (22,034) $ (302,516) 224,588 $ 2,759,406
=========== ============= =========== =============
Total net increase/(decrease)............................... 21,436,765 $ 184,298,473 (14,695,829) $(226,048,352)
=========== ============= =========== =============
</TABLE>
- ---------------
(a) Capital Growth's Primary B Shares commenced operations on June 28, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
92
<PAGE> 97
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
DISCIPLINED EQUITY FOCUSED EQUITIES
YEAR ENDED YEAR ENDED PERIOD ENDED
MARCH 31, 1998 MARCH 31, 1997(a) MARCH 31, 1998(b)
-------------------------- ------------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold...................................... 3,959,735 $ 81,039,110 1,043,144 $ 19,363,107 726,654 $ 7,831,780
Issued in exchange for:
Pilot Shares of Pilot Growth Fund (Note
8).................................... 2,069,494 37,388,841 -- -- -- --
Issued as reinvestment of dividends....... 736,037 13,934,505 269,533 5,025,966 -- --
Redeemed.................................. (6,216,266) (126,868,367) (2,662,039) (49,201,466) (260) (3,087)
---------- ------------- ---------- ------------ --------- -----------
Net increase/(decrease)................... 549,000 $ 5,494,089 (1,349,362) $(24,812,393) 726,394 $ 7,828,693
========== ============= ========== ============ ========= ===========
PRIMARY B SHARES:
Sold...................................... 7,856 $ 157,587 72,997 $ 1,321,229 -- $ --
Issued as reinvestment of dividends....... 1,546 28,006 1,078 20,122 -- --
Redeemed.................................. (70,100) (1,439,244) (13,376) (252,329) -- --
---------- ------------- ---------- ------------ --------- -----------
Net increase/(decrease)................... (60,698) $ (1,253,651) 60,699 $ 1,089,022 -- $ --
========== ============= ========== ============ ========= ===========
INVESTOR A SHARES:
Sold...................................... 733,195 $ 14,589,121 193,255 $ 3,454,199 513,954 $ 5,757,813
Issued in exchange for Class A
Shares of Pilot Growth Fund (Note 8).... 12,356 222,685 -- -- -- --
Issued as reinvestment of dividends....... 102,525 1,934,451 29,576 548,264 -- --
Redeemed.................................. (235,238) (4,755,287) (127,280) (2,334,105) (14,948) (167,316)
---------- ------------- ---------- ------------ --------- -----------
Net increase.............................. 612,838 $ 11,990,970 95,551 $ 1,668,358 499,006 $ 5,590,497
========== ============= ========== ============ ========= ===========
INVESTOR B SHARES:
Sold...................................... 592,039 $ 11,776,878 152,010 $ 2,744,026 1,700,674 $18,782,688
Issued in exchange for Class B
Shares of Pilot Growth Fund (Note 8).... 7,838 139,127 -- -- -- --
Issued as reinvestment of dividends....... 270,591 5,024,580 83,821 1,541,463 -- --
Redeemed.................................. (218,327) (4,251,744) (206,188) (3,733,055) (14,526) (163,801)
---------- ------------- ---------- ------------ --------- -----------
Net increase.............................. 652,141 $ 12,688,841 29,643 $ 552,434 1,686,148 $18,618,887
========== ============= ========== ============ ========= ===========
INVESTOR C SHARES:
Sold...................................... 52,977 $ 1,059,147 8,434 $ 156,195 38,635 $ 430,842
Issued as reinvestment of dividends....... 8,134 153,723 1,658 30,790 -- --
Redeemed.................................. (30,611) (632,957) (2,437) (44,884) -- --
---------- ------------- ---------- ------------ --------- -----------
Net increase.............................. 30,500 $ 579,913 7,655 $ 142,101 38,635 $ 430,842
---------- ------------- ---------- ------------ --------- -----------
Total net increase/(decrease)............... 1,783,781 $ 29,500,162 (1,155,814) $(21,360,478) 2,950,183 $32,468,919
========== ============= ========== ============ ========= ===========
</TABLE>
- ---------------
(a) Disciplined Equity's Primary B Shares commenced operations on June 28, 1996.
(b) Focused Equities commenced operations on December 31, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
93
<PAGE> 98
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
EMERGING GROWTH
YEAR ENDED YEAR ENDED
MARCH 31, 1998 MARCH 31, 1997(a)
---------------------------- ---------------------------
SHARES DOLLARS SHARES DOLLARS
-----------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold...................................................... 3,096,268 $ 44,790,437 6,690,635 $ 96,565,776
Issued in exchange for:
Assets of NationsBank Common Trust Emerging Growth Fund
(Note 8).............................................. 7,085,789 103,027,379 -- --
Issued as reinvestment of dividends....................... 1,623,996 23,698,262 1,250,998 17,241,100
Redeemed.................................................. (13,361,578) (199,704,013) (8,214,473) (118,284,211)
----------- ------------- ---------- -------------
Net decrease.............................................. (1,555,525) $ (28,187,935) (272,840) $ (4,477,335)
=========== ============= ========== =============
PRIMARY B SHARES:
Sold...................................................... 98,258 $ 1,358,162 245,436 $ 3,520,560
Issued as reinvestment of dividends....................... 29,054 425,391 3,291 45,259
Redeemed.................................................. (352,006) (5,177,249) (22,624) (306,148)
----------- ------------- ---------- -------------
Net increase/(decrease)................................... (224,694) $ (3,393,696) 226,103 $ 3,259,671
=========== ============= ========== =============
INVESTOR A SHARES:
Sold...................................................... 1,654,886 $ 24,207,480 546,489 $ 7,824,718
Issued as reinvestment of dividends....................... 115,612 1,645,312 77,403 1,054,366
Redeemed.................................................. (1,400,738) (20,185,041) (229,441) (3,335,041)
----------- ------------- ---------- -------------
Net increase.............................................. 369,760 $ 5,667,751 394,451 $ 5,544,043
=========== ============= ========== =============
INVESTOR B SHARES:
Sold...................................................... 367,721 $ 5,385,937 269,650 $ 3,748,488
Issued as reinvestment of dividends....................... 340,124 4,707,156 247,739 3,275,603
Redeemed.................................................. (501,689) (7,132,473) (376,980) (5,241,813)
----------- ------------- ---------- -------------
Net increase.............................................. 206,156 $ 2,960,620 140,409 $ 1,782,278
=========== ============= ========== =============
INVESTOR C SHARES:
Sold...................................................... 96,758 $ 1,349,270 68,305 $ 936,567
Issued as reinvestment of dividends....................... 18,567 259,870 7,368 97,347
Redeemed.................................................. (86,979) (1,225,423) (27,993) (398,886)
----------- ------------- ---------- -------------
Net increase.............................................. 28,346 $ 383,717 47,680 $ 635,028
=========== ============= ========== =============
Total net increase/(decrease)............................... (1,175,957) $ (22,569,543) 535,803 $ 6,743,685
=========== ============= ========== =============
</TABLE>
- ---------------
(a) Emerging Growth's Primary B Shares commenced operations on June 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS.
94
<PAGE> 99
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH
PERIOD ENDED PERIOD ENDED PERIOD ENDED
MARCH 31, 1998(a) MAY 16, 1997(b) AUGUST 31, 1996(b)(c)
------------------------- ------------------------- --------------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold.................................... 9,152,651 $125,787,286 3,463,179 $ 39,823,163 6,777,289 $70,988,552
Issued as reinvestment of dividends..... 110,558 1,585,978 8,255 96,586 6,000 56,000
Redeemed................................ (3,417,491) (47,093,286) (1,023,407) (11,849,777) (166,000) (1,743,000)
---------- ------------ ---------- ------------ --------- -----------
Net increase............................ 5,845,718 $ 80,279,978 2,448,027 $ 28,069,972 6,617,289 $69,301,552
========== ============ ========== ============ ========= ===========
INVESTOR A SHARES:
Sold.................................... 233,530 $ 3,338,782 88,361 $ 1,015,071 249,416 $ 2,643,000
Issued as reinvestment of dividends..... 18,200 260,445 1,757 20,377 -- 4,000
Redeemed................................ (128,161) (1,747,041) (28,776) (331,754) (4,000) (42,000)
---------- ------------ ---------- ------------ --------- -----------
Net increase............................ 123,569 $ 1,852,186 61,342 $ 703,694 245,416 $ 2,605,000
========== ============ ========== ============ ========= ===========
INVESTOR B SHARES:
Sold.................................... 223,789 $ 3,173,578 58,307 $ 660,045 177,357 $ 1,869,000
Issued as reinvestment of dividends..... 3,578 50,921 676 10,243 -- 1,000
Redeemed................................ (229,421) (3,443,398) (16,425) (188,143) (1,000) (11,000)
---------- ------------ ---------- ------------ --------- -----------
Net increase/(decrease)................. (2,054) $ (218,899) 42,558 $ 482,145 176,357 $ 1,859,000
========== ============ ========== ============ ========= ===========
INVESTOR C SHARES:
Sold.................................... 224,505 $ 3,398,928 -- $ -- -- $ --
Issued as reinvestment of dividends..... 10,369 148,697 -- -- -- --
Redeemed................................ (36,493) (531,974) -- -- -- --
---------- ------------ ---------- ------------ --------- -----------
Net increase............................ 198,381 $ 3,015,651 -- -- -- --
========== ============ ========== ============ ========= ===========
Total net increase........................ 6,165,614 $ 84,928,916 2,551,927 $ 29,255,811 7,039,062 $73,765,552
========== ============ ========== ============ ========= ===========
</TABLE>
- ---------------
(a) Small Company Growth's Investor C Shares commenced operations on September
22, 1997.
(b) Represents financial information for the Pilot Small Capitalization Equity
Fund which was reorganized into Nations Small Company Growth Fund on May 23,
1997.
(c) Represents the period from December 12, 1995 (commencement of operations) to
August 31, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
95
<PAGE> 100
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET NET INCREASE/
NET ASSET REALIZED AND (DECREASE) IN DIVIDENDS DISTRIBUTIONS
VALUE NET UNREALIZED NET ASSET FROM NET FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ON VALUE FROM INVESTMENT REALIZED
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCED ASSETS
PRIMARY A SHARES
Year ended 03/31/1998.................... $11.15 $0.29 $ 2.68 $ 2.97 $(0.29) $(2.34)
Year ended 03/31/1997.................... 11.65 0.39 1.03 1.42 (0.38) (1.54)
Period ended 03/31/1996(a)............... 12.68 0.11 0.45 0.56 (0.18) (1.41)
Year ended 11/30/1995.................... 10.44 0.38 2.21 2.59 (0.33) (0.02)
Year ended 11/30/1994.................... 10.87 0.25 (0.43) (0.18) (0.25) --
Year ended 11/30/1993.................... 10.24 0.29 0.64 0.93 (0.30) --
Period ended 11/30/1992*................. 10.00 0.06 0.18# 0.24 -- --
PRIMARY B SHARES
Year ended 03/31/1998.................... $11.14 $0.23 $ 2.70 $ 2.93 $(0.23) $(2.34)
Period ended 03/31/1997*................. 11.87 0.21 0.85 1.06 (0.25) (1.54)
INVESTOR A SHARES
Year ended 03/31/1998.................... $11.13 $0.27 $ 2.68 $ 2.95 $(0.27) $(2.34)
Year ended 03/31/1997.................... 11.64 0.34 1.05 1.39 (0.36) (1.54)
Period ended 03/31/1996(a)............... 12.66 0.11 0.45 0.56 (0.17) (1.41)
Year ended 11/30/1995.................... 10.42 0.34 2.23 2.57 (0.31) (0.02)
Year ended 11/30/1994.................... 10.86 0.22 (0.44) (0.22) (0.22) --
Year ended 11/30/1993.................... 10.24 0.29 0.62 0.91 (0.29) --
Period ended 11/30/1992*................. 10.00 0.01 0.23# 0.24 -- --
INVESTOR B SHARES
Year ended 03/31/1998.................... $11.11 $0.19 $ 2.68 $ 2.87 $(0.19) $(2.34)
Year ended 03/31/1997.................... 11.62 0.29 1.04 1.33 (0.30) (1.54)
Period ended 03/31/1996(a)............... 12.63 0.09 0.45 0.54 (0.14) (1.41)
Year ended 11/30/1995.................... 10.40 0.28 2.22 2.50 (0.25) (0.02)
Year ended 11/30/1994.................... 10.85 0.17 (0.44) (0.27) (0.18) --
Period ended 11/30/1993*................. 10.61 0.14 0.23 0.37 (0.13) --
INVESTOR C SHARES
Year ended 03/31/1998.................... $11.08 $0.20 $ 2.67 $ 2.87 $(0.20) $(2.34)
Year ended 03/31/1997.................... 11.60 0.33 1.02 1.35 (0.33) (1.54)
Period ended 03/31/1996(a)............... 12.61 0.09 0.45 0.54 (0.14) (1.41)
Year ended 11/30/1995.................... 10.38 0.26 2.21 2.47 (0.22) (0.02)
Year ended 11/30/1994.................... 10.82 0.14 (0.43) (0.29) (0.15) --
Year ended 11/30/1993.................... 10.23 0.23 0.59 0.82 (0.23) --
Period ended 11/30/1992*................. 10.00 0.01 0.22# 0.23 -- --
</TABLE>
- ---------------
* Balanced Assets' Primary A, Primary B, Investor A, Investor B and Investor C
Shares commenced operations on September 30, 1992, June 28, 1996, October 2,
1992, June 7, 1993 and October 2, 1992, respectively.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ Unaudited.
# The amount shown at this caption for each share outstanding throughout the
period may not accord with the change in the aggregate gains and losses in
the portfolio securities for the period because of the timing of purchases
and withdrawals of shares in relation to the fluctuating market value of the
portfolio.
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
November 30.
(b) Average commission rate paid per share of securities purchased and sold by
the Fund.
(c) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was less than 0.01%.
(d) The effect of interest expense on the operating expense ratio was less than
0.01%.
SEE NOTES TO FINANCIAL STATEMENTS.
96
<PAGE> 101
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES TO INCOME TO PORTFOLIO EXPENSES TO AVERAGE
AND END OF TOTAL PERIOD AVERAGE AVERAGE TURNOVER AVERAGE COMMISSION
DISTRIBUTIONS PERIOD RETURN++ (000'S) NET ASSETS NET ASSETS RATE NET ASSETS RATE PAID(b)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$(2.63) $11.49 30.35% $ 20,299 1.08%(c)(d) 2.70% 276% 1.08%(c) $0.0581
(1.92) 11.15 12.50 135,731 1.00(c) 3.31 264 1.00 (c) 0.0563
(1.59) 11.65 4.90 164,215 1.00+ 2.91+ 83 1.00+ 0.0598
(0.35) 12.68 25.27 163,198 0.99 3.25 174 0.99 N/A
(0.25) 10.44 (1.73) 162,215 0.98 2.31 156 0.99 N/A
(0.30) 10.87 9.22 178,270 0.90 2.82 50 0.97 N/A
-- 10.24 2.40+++ 111,953 0.30+ 3.85+ 79 1.05+ N/A
$(2.57) $11.50 29.90% $ 1,868 1.58%(c)(d) 2.20% 276% 1.58%(c) $0.0581
(1.79) 11.14 9.06 5,537 1.50+(c) 2.81+ 264 1.50+(c) 0.0563
$(2.61) $11.47 30.13% $ 16,009 1.33%(c)(d) 2.45% 276% 1.33%(c) $0.0581
(1.90) 11.13 12.18 9,075 1.25(c) 3.06 264 1.25 (c) 0.0563
(1.58) 11.64 4.86 6,261 1.25+ 2.66+ 83 1.25+ 0.0598
(0.33) 12.66 25.01 5,276 1.24 3.00 174 1.24 N/A
(0.22) 10.42 (2.02) 4,881 1.23 2.06 156 1.24 N/A
(0.29) 10.86 8.93 5,191 1.15 2.57 50 1.22 N/A
-- 10.24 2.40+++ 547 0.55+ 3.60+ 79 1.30+ N/A
$(2.53) $11.45 29.35% $ 78,813 2.00%(c)(d) 1.78% 276% 2.00%(c) $0.0581
(1.84) 11.11 11.62 64,058 1.75(c) 2.56 264 1.75 (c) 0.0563
(1.55) 11.62 4.69 65,764 1.75+ 2.16+ 83 1.75+ 0.0598
(0.27) 12.63 24.35 65,275 1.74 2.50 174 1.74 N/A
(0.18) 10.40 (2.51) 52,905 1.73 1.56 156 1.74 N/A
(0.13) 10.85 3.45 27,982 1.65+ 2.07+ 50 1.72+ N/A
$(2.54) $11.41 29.43% $ 1,947 1.91%(c)(d) 1.87% 276% 1.91%(c) $0.0581
(1.87) 11.08 11.85 1,396 1.50(c) 2.81 264 1.50 (c) 0.0563
(1.55) 11.60 4.71 1,187 1.62+ 2.29+ 83 1.62+ 0.0598
(0.24) 12.61 24.03 992 1.99 2.25 174 1.99 N/A
(0.15) 10.38 (2.72) 951 1.98 1.31 156 1.99 N/A
(0.23) 10.82 8.06 1,196 1.90 1.82 50 1.97 N/A
-- 10.23 2.30+++ 156 1.30+ 2.85+ 79 2.05+ N/A
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
97
<PAGE> 102
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET
NET ASSET NET REALIZED INCREASE DIVIDENDS DISTRIBUTIONS
VALUE NET AND UNREALIZED IN NET ASSET FROM NET FROM NET
BEGINNING INVESTMENT GAIN ON VALUE FROM INVESTMENT REALIZED
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EQUITY INCOME
PRIMARY A SHARES
Year ended 03/31/1998#...................... $12.30 $0.29 $3.79 $4.08 $(0.28) $(2.16)
Year ended 03/31/1997....................... 13.14 0.43 1.55 1.98 (0.41) (2.41)
Period ended 03/31/1996(a).................. 11.81 0.30 1.77 2.07 (0.37) (0.37)
Year ended 05/31/1995....................... 11.43 0.42 1.11 1.53 (0.42) (0.73)
Year ended 05/31/1994....................... 12.06 0.38 0.22 0.60 (0.42) (0.81)
Year ended 05/31/1993....................... 11.41 0.37 1.08 1.45 (0.35) (0.45)
Year ended 05/31/1992....................... 10.19 0.34 1.25 1.59 (0.30) (0.07)
Period ended 05/31/1991*.................... 10.00 0.05 0.14 0.19 -- --
PRIMARY B SHARES
Year ended 03/31/1998#...................... $12.30 $0.24 $3.75 $3.99 $(0.19) $(2.16)
Period ended 03/31/1997*.................... 13.50 0.25 1.21 1.46 (0.25) (2.41)
INVESTOR A SHARES
Year ended 03/31/1998#...................... $12.26 $0.26 $3.77 $4.03 $(0.24) $(2.16)
Year ended 03/31/1997....................... 13.11 0.36 1.58 1.94 (0.38) (2.41)
Period ended 03/31/1996(a).................. 11.78 0.27 1.77 2.04 (0.34) (0.37)
Year ended 05/31/1995....................... 11.41 0.40 1.10 1.50 (0.40) (0.73)
Year ended 05/31/1994....................... 12.02 0.37 0.21 0.58 (0.38) (0.81)
Year ended 05/31/1993....................... 11.40 0.34 1.05 1.39 (0.32) (0.45)
Year ended 05/31/1992....................... 10.19 0.29 1.27 1.56 (0.28) (0.07)
Period ended 05/31/1991*.................... 10.04 0.05 0.10 0.15 -- --
INVESTOR B SHARES
Year ended 03/31/1998#...................... $12.25 $0.17 $3.77 $3.94 $(0.16) $(2.16)
Year ended 03/31/1997....................... 13.10 0.31 1.57 1.88 (0.32) (2.41)
Period ended 03/31/1996(a).................. 11.77 0.22 1.76 1.98 (0.28) (0.37)
Year ended 05/31/1995....................... 11.40 0.34 1.11 1.45 (0.35) (0.73)
Period ended 05/31/1994*.................... 11.98 0.37 0.22 0.59 (0.36) (0.81)
INVESTOR C SHARES
Year ended 03/31/1998#...................... $12.35 $0.18 $3.83 $4.01 $(0.19) $(2.16)
Year ended 03/31/1997....................... 13.19 0.33 1.59 1.92 (0.35) (2.41)
Period ended 03/31/1996(a).................. 11.83 0.21 1.78 1.99 (0.26) (0.37)
Year ended 05/31/1995....................... 11.47 0.32 1.08 1.40 (0.31) (0.73)
Year ended 05/31/1994....................... 12.04 0.28 0.21 0.49 (0.25) (0.81)
Period ended 05/31/1993*.................... 11.13 0.32 1.32 1.64 (0.28) (0.45)
</TABLE>
- ---------------
* Equity Income's Primary A, Primary B, Investor A, Investor B and Investor C
Shares commenced operations on April 11, 1991, June 28, 1996, April 16, 1991,
June 7, 1993 and June 17, 1992, respectively.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ Unaudited.
# Per share net investment income has been calculated using the monthly average
share method.
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
May 31.
(b) Average commission rate paid per share of securities purchased and sold by
the Fund.
(c) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was less than 0.01%.
(d) Amount represents less than $1,000.
SEE NOTES TO FINANCIAL STATEMENTS.
98
<PAGE> 103
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS AND/OR
EXPENSE REIMBURSEMENTS
RATIO OF ----------------------
OPERATING RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS EXPENSES TO INVESTMENT OPERATING
DIVIDENDS VALUE END OF AVERAGE INCOME TO PORTFOLIO EXPENSES TO
AND END OF TOTAL PERIOD NET AVERAGE TURNOVER AVERAGE
DISTRIBUTIONS PERIOD RETURN++ (000'S) ASSETS NET ASSETS RATE NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(2.44) $13.94 37.21% $915,630 0.86%(c) 2.22% 74% 0.86%(c)
(2.82) 12.30 15.62 200,772 0.91(c) 3.09 102 0.91(c)
(0.74) 13.14 17.98 283,142 0.90+ 2.84+ 59 0.90+
(1.15) 11.81 14.79 283,082 0.92 3.75 158 0.93
(1.23) 11.43 5.00 225,740 0.94 3.41 116 0.95
(0.80) 12.06 13.30 175,949 0.92 3.37 55 1.04
(0.37) 11.41 15.91+++ 18,104 1.10 3.15 84 2.21
-- 10.19 1.90+++ 10,194 1.12+ 3.66+ 9 1.80+
$(2.35) $13.94 36.36% $ 0(d) 1.36%(c) 1.72% 74% 1.36%(c)
(2.66) 12.30 11.17 6,484 1.41+(c) 2.59+ 102 1.41+(c)
$(2.40) $13.89 36.92% $ 68,006 1.11%(c) 1.97% 74% 1.11%(c)
(2.79) 12.26 15.30 47,891 1.16(c) 2.84 102 1.16(c)
(0.71) 13.11 17.75 42,606 1.15+ 2.59+ 59 1.15+
(1.13) 11.78 14.53 35,538 1.17 3.50 158 1.18
(1.19) 11.41 4.74 33,691 1.19 3.16 116 1.20
(0.77) 12.02 12.78 32,760 1.17 3.12 55 1.29
(0.35) 11.40 15.59+++ 3,418 1.35 2.90 84 2.46
-- 10.19 1.49+++ 497 1.37+ 3.40+ 9 15.09+
$(2.32) $13.87 36.02% $144,929 1.78%(c) 1.30% 74% 1.78%(c)
(2.73) 12.25 14.76 108,055 1.66(c) 2.34 102 1.66(c)
(0.65) 13.10 17.21 104,026 1.65+ 2.09+ 59 1.65+
(1.08) 11.77 14.03 75,371 1.67 3.00 158 1.68
(1.17) 11.40 4.84 46,043 1.69+ 2.66+ 116 1.70+
$(2.35) $14.01 36.28% $ 10,348 1.69%(c) 1.39% 74% 1.69%(c)
(2.76) 12.35 15.01 5,007 1.41(c) 2.59 102 1.41(c)
(0.63) 13.19 17.20 4,612 1.75+ 1.99+ 59 1.75+
(1.04) 11.83 13.49 4,278 1.92 2.75 158 1.93
(1.06) 11.47 3.96 4,221 1.94 2.41 116 1.95
(0.73) 12.04 15.31 4,377 1.92+ 2.37+ 55 2.04+
<CAPTION>
AVERAGE
COMMISSION RATE
PAID(b)
- --- ---------------
<S> <C>
$0.0607
0.0609
0.0287
N/A
N/A
N/A
N/A
N/A
$0.0607
0.0609
$0.0607
0.0609
0.0287
N/A
N/A
N/A
N/A
N/A
$0.0607
0.0609
0.0287
N/A
N/A
$0.0607
0.0609
0.0287
N/A
N/A
N/A
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
99
<PAGE> 104
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET INCREASE/
NET ASSET NET REALIZED (DECREASE) IN DIVIDENDS DISTRIBUTIONS
VALUE NET AND UNREALIZED NET ASSET VALUE FROM NET FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ON FROM INVESTMENT REALIZED
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
VALUE
PRIMARY A SHARES
Year ended 03/31/1998#............. $17.87 $0.20 $ 5.98 $ 6.18 $(0.19) $(3.94)
Year ended 03/31/1997.............. 16.60 0.26 2.69 2.95 (0.26) (1.42)
Period ended 03/31/1996(a)......... 16.21 0.07 1.06 1.13 (0.12) (0.62)
Year ended 11/30/1995.............. 12.98 0.27 3.91 4.18 (0.28) (0.67)
Year ended 11/30/1994.............. 13.74 0.24 (0.23) 0.01 (0.23) (0.54)
Year ended 11/30/1993.............. 12.45 0.24 1.38 1.62 (0.24) (0.09)
Year ended 11/30/1992.............. 11.16 0.28 1.57 1.85 (0.27) (0.29)
Year ended 11/30/1991.............. 9.71 0.34 1.47 1.81 (0.36) --
Year ended 11/30/1990.............. 10.04 0.35 (0.36) (0.01) (0.32) --
Period ended 11/30/1989*#.......... 10.00 0.08 (0.04) 0.04 -- --
PRIMARY B SHARES
Year ended 03/31/1998#............. $17.87 $0.11 $ 6.01 $ 6.12 $(0.07) $(3.94)
Period ended 03/31/1997*........... 17.19 0.14 2.10 2.24 (0.14) (1.42)
INVESTOR A SHARES
Year ended 03/31/1998#............. $17.87 $0.15 $ 5.98 $ 6.13 $(0.14) $(3.94)
Year ended 03/31/1997.............. 16.60 0.21 2.70 2.91 (0.22) (1.42)
Period ended 03/31/1996(a)......... 16.21 0.05 1.06 1.11 (0.10) (0.62)
Year ended 11/30/1995.............. 12.98 0.23 3.92 4.15 (0.25) (0.67)
Year ended 11/30/1994.............. 13.72 0.20 (0.20) 0.00 (0.20) (0.54)
Year ended 11/30/1993.............. 12.45 0.22 1.35 1.57 (0.21) (0.09)
Year ended 11/30/1992.............. 11.16 0.26 1.59 1.85 (0.27) (0.29)
Year ended 11/30/1991.............. 9.71 0.34 1.47 1.81 (0.36) --
Period ended 11/30/1990*........... 10.04 0.35 (0.36) (0.01) (0.32) --
INVESTOR B SHARES
Year ended 03/31/1998#............. $17.81 $0.02 $ 5.96 $ 5.98 $(0.04) $(3.94)
Year ended 03/31/1997.............. 16.55 0.14 2.68 2.82 (0.14) (1.42)
Period ended 03/31/1996(a)......... 16.15 0.03 1.05 1.08 (0.06) (0.62)
Year ended 11/30/1995.............. 12.94 0.17 3.89 4.06 (0.18) (0.67)
Year ended 11/30/1994.............. 13.71 0.15 (0.22) (0.07) (0.16) (0.54)
Period ended 11/30/1993*........... 13.08 0.11 0.63 0.74 (0.11) --
INVESTOR C SHARES
Year ended 03/31/1998#............. $17.75 $0.04 $ 5.95 $ 5.99 $(0.05) $(3.94)
Year ended 03/31/1997.............. 16.50 0.17 2.68 2.85 (0.18) (1.42)
Period ended 03/31/1996(a)......... 16.09 0.04 1.05 1.09 (0.06) (0.62)
Year ended 11/30/1995.............. 12.90 0.13 3.88 4.01 (0.15) (0.67)
Year ended 11/30/1994.............. 13.64 0.12 (0.22) (0.10) (0.10) (0.54)
Year ended 11/30/1993.............. 12.41 0.13 1.32 1.45 (0.13) (0.09)
Period ended 11/30/1992*........... 11.63 0.07 0.78 0.85 (0.07) --
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Value's Primary A, Primary B, Investor A, Investor B and
Investor C Shares commenced operations on September 19,
1989, June 28, 1996, December 6, 1989, June 7, 1993 and June
17, 1992, respectively.
+ Annualized.
++ Total return represents aggregate total return for the
period indicated and does not reflect the deduction of any
applicable sales charges.
+++ Unaudited.
# Per share net investment income has been calculated using
the monthly average share method.
(a) Fiscal year end changed to March 31. Prior to this, the
fiscal year end was November 30.
(b) Average commission rate paid per share of securities
purchased and sold by the Fund.
(c) The effect of the fees reduced by credits allowed by the
custodian on the operating expense ratio, with and without
waivers and/or expense reimbursements, was less than 0.01%.
(d) Amount represents less than $1,000.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
100
<PAGE> 105
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING NET INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES TO INCOME TO PORTFOLIO EXPENSES TO AVERAGE
AND END OF TOTAL PERIOD AVERAGE AVERAGE TURNOVER AVERAGE COMMISSION
DISTRIBUTIONS PERIOD RETURN++ (000'S) NET ASSETS NET ASSETS RATE NET ASSETS RATE PAID(b)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$(4.13) $19.92 38.53% $2,248,460 0.95%(c) 1.04% 79% 0.95%(c) $0.0590
(1.68) 17.87 18.07 1,200,853 0.97(c) 1.51 47 0.97 (c) 0.0649
(0.74) 16.60 7.20 998,957 0.96+ 1.30+ 12 0.96+ 0.0648
(0.95) 16.21 34.53 956,669 0.94 1.90 63 0.94 N/A
(0.77) 12.98 (0.08) 799,743 0.93 1.85 75 0.93 N/A
(0.33) 13.74 13.19 707,185 0.96 1.98 64 0.97 N/A
(0.56) 12.45 17.00+++ 282,138 0.90 2.31 60 0.97 N/A
(0.36) 11.16 18.79+++ 82,360 0.53 3.33 51 0.99 N/A
(0.32) 9.71 (0.16)+++ 19,769 0.21 4.19 24 1.11 N/A
-- 10.04 0.40+++ 5,161 0.49+ 4.41+ -- 1.41+ N/A
$(4.01) $19.98 38.09% $ 0(d) 1.45%(c) 0.54% 79% 1.45%(c) $0.0590
(1.56) 17.87 13.20 27,586 1.47+(c) 1.01+ 47 1.47+(c) 0.0649
$(4.08) $19.92 38.22% $ 149,167 1.20%(c) 0.79% 79% 1.20%(c) $0.0590
(1.64) 17.87 17.80 70,305 1.22(c) 1.26 47 1.22(c) 0.0649
(0.72) 16.60 7.07 54,341 1.21+ 1.05+ 12 1.21+ 0.0648
(0.92) 16.21 34.22 48,440 1.19 1.65 63 1.19 N/A
(0.74) 12.98 (0.17) 35,445 1.18 1.60 75 1.18 N/A
(0.30) 13.72 12.80 32,607 1.21 1.73 64 1.22 N/A
(0.56) 12.45 16.96+++ 24,536 1.06 2.15 60 1.15 N/A
(0.36) 11.16 18.79+++ 13,514 0.53 3.33 51 0.99 N/A
(0.32) 9.71 (0.16)+++ 7,020 0.21+ 4.19+ 24 1.11+ N/A
$(3.98) $19.81 37.29% $ 149,635 1.87%(c) 0.12% 79% 1.87%(c) $0.0590
(1.56) 17.81 17.21 99,999 1.72(c) 0.76 47 1.72 (c) 0.0649
(0.68) 16.55 6.90 88,861 1.71+ 0.55+ 12 1.71+ 0.0648
(0.85) 16.15 33.55 83,699 1.69 1.15 63 1.69 N/A
(0.70) 12.94 (0.69) 42,530 1.68 1.10 75 1.68 N/A
(0.11) 13.71 5.65 10,449 1.71+ 1.23+ 64 1.72+ N/A
$(3.99) $19.75 37.55% $ 13,969 1.78%(c) 0.21% 79% 1.78%(c) $0.0590
(1.60) 17.75 17.51 6,519 1.47(c) 1.01 47 1.47 (c) 0.0649
(0.68) 16.50 6.99 4,633 1.58+ 0.68+ 12 1.58+ 0.0648
(0.82) 16.09 33.15 4,185 1.94 0.90 63 1.94 N/A
(0.64) 12.90 (0.92) 2,983 1.93 0.85 75 1.93 N/A
(0.22) 13.64 11.85 2,997 1.96 0.98 64 1.97 N/A
(0.07) 12.41 7.33+++ 1,286 1.98+ 1.22+ 60 1.98+ N/A
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
101
<PAGE> 106
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET
NET ASSET NET REALIZED INCREASE IN DIVIDENDS DISTRIBUTIONS
VALUE NET AND UNREALIZED NET ASSET VALUE FROM NET FROM NET
BEGINNING INVESTMENT GAIN ON FROM INVESTMENT REALIZED CAPITAL
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GROWTH & INCOME
PRIMARY A SHARES
Period ended 03/31/1998*#........ $10.00 $ 0.01 $2.02 $2.03 $0.00 $0.00
INVESTOR A SHARES
Period ended 03/31/1998*#........ $10.00 $ 0.00(c) $2.02 $2.02 $0.00 $0.00
INVESTOR B SHARES
Period ended 03/31/1998*#........ $10.00 $(0.02) $2.04 $2.02 $0.00 $0.00
INVESTOR C SHARES
Period ended 03/31/1998*#........ $10.00 $(0.02) $2.04 $2.02 $0.00 $0.00
<CAPTION>
TOTAL
DIVIDENDS
AND
DISTRIBUTIONS
-------------
<S> <C>
GROWTH & INCOME
PRIMARY A SHARES
Period ended 03/31/1998*#........ $0.00
INVESTOR A SHARES
Period ended 03/31/1998*#........ $0.00
INVESTOR B SHARES
Period ended 03/31/1998*#........ $0.00
INVESTOR C SHARES
Period ended 03/31/1998*#........ $0.00
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Growth & Income Fund's Primary A, Investor A, Investor B and
Investor C Shares commenced operations on December 31, 1997.
+ Annualized.
++ Total return represents aggregate total return for the
period indicated and does not reflect the deduction of any
applicable sales charges.
# Per share net investment income has been calculated using
the monthly average share method.
(a) Average commission rate paid per share of securities
purchased and sold by the Fund.
(b) The effect of the fees reduced by credits allowed by the
custodian on the operating expense ratio, with and without
waivers and/or expense reimbursements, was 0.01%.
(c) Amount represents less than $0.01 per share.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
102
<PAGE> 107
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
VALUE END OF EXPENSES TO INCOME/LOSS PORTFOLIO EXPENSES TO AVERAGE
END OF TOTAL PERIOD AVERAGE NET TO AVERAGE TURNOVER AVERAGE NET COMMISSION
PERIOD RETURN++ (000'S) ASSETS NET ASSETS RATE ASSETS Rate Paid(a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$12.03 20.30% $2,517 1.09%+(b) 0.38%+ 22% 1.97%+(b) $0.0528
$12.02 20.20% $1,141 1.34%+(b) 0.13%+ 22% 2.22%+(b) $0.0528
$12.02 20.20% $7,907 2.09%+(b) (0.62)%+ 22% 2.97%+(b) $0.0528
$12.02 20.20% $ 518 2.09%+(b) (0.62)%+ 22% 2.97%+(b) $0.0528
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
103
<PAGE> 108
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET NET REALIZED NET INCREASE DIVIDENDS DISTRIBUTIONS TOTAL
VALUE NET AND UNREALIZED IN NET ASSET FROM NET FROM NET DIVIDENDS
BEGINNING INVESTMENT GAIN/(LOSS) ON VALUE FROM INVESTMENT REALIZED AND
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY INDEX
PRIMARY A SHARES
Year ended 03/31/1998#..... $15.89 $0.27 $ 7.11 $7.38 $(0.27) $(0.59) $(0.86)
Year ended 03/31/1997...... 13.58 0.26 2.36 2.62 (0.26) (0.05) (0.31)
Period ended
03/31/1996(a)............ 12.91 0.08 0.86 0.94 (0.13) (0.14) (0.27)
Year ended 11/30/1995...... 9.84 0.28 3.20 3.48 (0.28) (0.13) (0.41)
Period ended 11/30/1994*... 10.00 0.24 (0.21) 0.03 (0.19) -- (0.19)
PRIMARY B SHARES
Year ended 03/31/1998#..... $15.89 $0.18 $ 7.12 $7.30 $(0.14) $(0.59) $(0.73)
Period ended 03/31/1997*... 14.13 0.16 1.80 1.96 (0.15) (0.05) (0.20)
INVESTOR A SHARES
Year ended 03/31/1998#..... $15.87 $0.21 $ 7.05 $7.26 $(0.23) $(0.59) $(0.82)
Year ended 03/31/1997...... 13.58 0.25 2.32 2.57 (0.23) (0.05) (0.28)
Period ended
03/31/1996(a)............ 12.91 0.06 0.87 0.93 (0.12) (0.14) (0.26)
Period ended 11/30/1995*... 12.29 0.03 0.59 0.62 -- -- --
</TABLE>
- ---------------
* Equity Index's Primary A, Primary B and Investor A Shares commenced
operations on December 15, 1993, June 28, 1996 and October 10, 1995,
respectively.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
# Per share net investment income has been calculated using the monthly average
share method.
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
November 30.
(b) Average commission rate paid per share of securities purchased and sold by
the Fund.
(c) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was less than 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS.
104
<PAGE> 109
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
RATIO OF REIMBURSEMENTS
OPERATING ---------------
RATIO OF EXPENSES TO RATIO OF NET RATIO OF
NET ASSET NET ASSETS OPERATING AVERAGE INVESTMENT OPERATING
VALUE END OF EXPENSES TO NET ASSETS INCOME TO PORTFOLIO EXPENSES TO AVERAGE
END OF TOTAL PERIOD AVERAGE INCLUDING AVERAGE TURNOVER AVERAGE COMMISSION
PERIOD RETURN++ (000'S) NET ASSETS INTEREST EXPENSE NET ASSETS RATE NET ASSETS Rate Paid(b)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$22.41 47.38% $656,523 0.35%(c) 0.36% 1.39% 26% 0.66%(c) $0.0255
15.89 19.41 567,039 0.35(c) N/A 1.91 5 0.70(c) 0.0173
13.58 7.33 192,388 0.35%+ 0.35+ 1.99+ 2 0.73+ 0.0291
12.91 36.35 145,021 0.37 0.38 2.44 18 0.78 N/A
9.84 0.29 123,147 0.35+ -- 2.64+ 14 0.79+ N/A
$22.46 46.75% $ 123 0.85%(c) 0.86% 0.89% 26% 1.16%(c) $0.0255
15.89 13.93 5,505 0.85+(c) N/A 1.41+ 5 1.20+(c) 0.0173
$22.31 46.58% $ 4,595 0.60%(c) 0.61% 1.14% 26% 0.91%(c) $0.0255
15.87 19.06 2,574 0.60(c) N/A 1.66 5 0.95(c) 0.0173
13.58 7.26 95 0.35+ 0.35%+ 1.99+ 2 0.73+ 0.0291
12.91 5.04 11 0.62+ 0.63+ 2.19+ 18 1.03+ N/A
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
105
<PAGE> 110
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DIVIDENDS DISTRIBUTIONS
VALUE NET AND UNREALIZED NET INCREASE IN FROM NET FROM NET
BEGINNING INVESTMENT GAIN ON NET ASSET VALUE INVESTMENT REALIZED
OF PERIOD INCOME/(LOSS) INVESTMENTS FROM OPERATIONS INCOME CAPITAL GAINS
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL GROWTH
PRIMARY A SHARES
Year ended 03/31/1998##............. $11.70 $ 0.02 $5.27 $5.29 $(0.01) $(3.68)
Year ended 03/31/1997##............. 13.43 0.05 1.66 1.71 (0.05) (3.39)
Period ended 03/31/1996(a).......... 14.24 0.02 0.38 0.40 (0.02) (1.19)
Year ended 11/30/1995............... 11.23 0.09 3.28 3.37 (0.10) (0.26)
Year ended 11/30/1994............... 11.08 0.09 0.14 0.23 (0.08) (0.00)(b)
Year ended 11/30/1993............... 10.68 0.09 0.42 0.51 (0.10) (0.01)
Period ended 11/30/1992*............ 10.00 0.02 0.66# 0.68 -- --
PRIMARY B SHARES
Year ended 03/31/1998##............. $11.68 $(0.05) $5.25 $5.20 $ -- $(3.68)
Period ended 03/31/1997##*.......... 13.96 (0.01) 1.12 1.11 -- (3.39)
INVESTOR A SHARES
Year ended 03/31/1998##............. $11.67 $(0.01) $5.28 $5.27 $ -- $(3.68)
Year ended 03/31/1997##............. 13.41 0.02 1.65 1.67 (0.02) (3.39)
Period ended 03/31/1996(a).......... 14.22 0.01 0.38 0.39 (0.01) (1.19)
Year ended 11/30/1995............... 11.21 0.06 3.28 3.34 (0.07) (0.26)
Year ended 11/30/1994............... 11.06 0.07 0.14 0.21 (0.06) (0.00)(b)
Year ended 11/30/1993............... 10.67 0.07 0.41 0.48 (0.08) (0.01)
Period ended 11/30/1992*............ 10.00 0.01 0.66# 0.67 -- --
INVESTOR B SHARES
Year ended 03/31/1998##............. $11.47 $(0.10) $5.14 $5.04 $ -- $(3.68)
Year ended 03/31/1997##............. 13.31 (0.08) 1.63 1.55 -- (3.39)
Period ended 03/31/1996(a).......... 14.15 (0.02) 0.37 0.35 -- (1.19)
Year ended 11/30/1995............... 11.17 (0.03) 3.27 3.24 -- (0.26)
Year ended 11/30/1994............... 11.05 (0.01) 0.13 0.12 -- (0.00)(b)
Period ended 11/30/1993*............ 10.55 (0.01) 0.53 0.52 (0.02) --
INVESTOR C SHARES
Year ended 03/31/1998##............. $11.50 $(0.08) $5.18 $5.10 $ -- $(3.68)
Year ended 03/31/1997##............. 13.26 (0.01) 1.64 1.63 -- (3.39)
Period ended 03/31/1996(a).......... 14.09 0.00(b) 0.36 0.36 -- (1.19)
Year ended 11/30/1995............... 11.14 (0.03) 3.24 3.21 -- (0.26)
Year ended 11/30/1994............... 11.01 (0.02) 0.15 0.13 -- (0.00)(b)
Year ended 11/30/1993............... 10.67 (0.00)(b) 0.38 0.38 (0.03) (0.01)
Period ended 11/30/1992*............ 10.00 (0.00)(b) 0.67# 0.67 -- --
</TABLE>
- ---------------
* Capital Growth's Primary A, Primary B, Investor A, Investor B and Investor C
Shares commenced operations on September 30, 1992, June 28, 1996, October 2,
1992, June 7, 1993 and October 2, 1992, respectively.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
+++ Unaudited.
# The amount shown at this caption for each share outstanding throughout the
period may not accord with the change in the aggregate gains and losses in
the portfolio securities for the period because of the timing of purchases
and withdrawals of shares in relation to the fluctuating market value of the
portfolio.
## Per share net investment income has been calculated using the monthly average
share method.
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
November 30.
(b) Amount represents less than $0.01 per share.
(c) Average commission rate paid per share of securities purchased and sold by
the Fund.
(d) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was less than 0.01%.
(e) The effect of interest expense on the operating expense ratio was less than
0.01%.
SEE NOTES TO FINANCIAL STATEMENTS.
106
<PAGE> 111
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES TO INCOME/(LOSS) PORTFOLIO EXPENSES TO AVERAGE
AND END OF TOTAL PERIOD AVERAGE TO AVERAGE TURNOVER AVERAGE COMMISSION
DISTRIBUTIONS PERIOD RETURN++ (000'S) NET ASSETS NET ASSETS RATE NET ASSETS Rate Paid(c)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$(3.69) $13.30 53.89% $872,150 0.95%(d)(e) 0.13% 113% 0.95%(d) $0.0586
(3.44) 11.70 11.88 533,168 0.96(e) 0.39 75 0.96 0.0604
(1.21) 13.43 3.14 839,300 0.96+ 0.38+ 25 0.96+ 0.0632
(0.36) 14.24 30.96 867,361 0.98 0.71 80 0.98 N/A
(0.08) 11.23 2.14 717,914 0.90 0.85 56 0.91 N/A
(0.11) 11.08 4.84 646,661 0.80 0.84 81 0.89 N/A
-- 10.68 6.80+++ 728,629 0.30+ 1.33+ 7 1.05+ N/A
$(3.68) $13.20 52.99% $ 271 1.45%(d)(e) (0.37)% 113% 1.45%(d) $0.0586
(3.39) 11.68 7.07 12,367 1.46+(e) (0.11)+ 75 1.46+ 0.0604
$(3.68) $13.26 53.83% $ 43,380 1.20%(d)(e) (0.12)% 113% 1.20%(d) $0.0586
(3.41) 11.67 11.58 20,465 1.21(e) 0.14 75 1.21 0.0604
(1.20) 13.41 3.02 18,311 1.21+ 0.13+ 25 1.21+ 0.0632
(0.33) 14.22 30.70 16,770 1.23 0.46 80 1.23 N/A
(0.06) 11.21 1.93 11,038 1.15 0.60 56 1.16 N/A
(0.09) 11.06 4.56 11,182 1.05 0.59 81 1.14 N/A
-- 10.67 6.70+++ 1,225 0.55+ 1.08+ 7 1.30+ N/A
$(3.68) $12.83 52.52% $ 59,496 1.95%(d)(e) (0.87)% 113% 1.95%(d) $0.0586
(3.39) 11.47 10.68 41,933 1.96(e) (0.61) 75 1.96 0.0604
(1.19) 13.31 2.77 41,045 1.96+ (0.62)+ 25 1.96+ 0.0632
(0.26) 14.15 29.80 40,868 1.98 (0.29) 80 1.98 N/A
(0.00)(b) 11.17 1.12 23,591 1.90 (0.15) 56 1.91 N/A
(0.02) 11.05 4.95 9,511 1.80+ (0.16)+ 81 1.89+ N/A
$(3.68) $12.92 53.02% $ 6,176 1.78%(d)(e) (0.70)% 113% 1.78%(d) $0.0586
(3.39) 11.50 11.39 5,752 1.46(e) (0.11) 75 1.46 0.0604
(1.19) 13.26 2.86 3,655 1.58+ (0.24)+ 25 1.58+ 0.0632
(0.26) 14.09 29.61 3,322 1.98 (0.29) 80 1.98 N/A
(0.00)(b) 11.14 1.22 2,394 1.90 (0.15) 56 1.91 N/A
(0.04) 11.01 3.61 2,919 1.80 (0.16) 81 1.89 N/A
(0.00)(b) 10.67 6.70+++ 406 1.30+ 0.33+ 7 2.05+ N/A
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
107
<PAGE> 112
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET NET REALIZED NET INCREASE/ DIVIDENDS DISTRIBUTIONS
VALUE NET AND UNREALIZED (DECREASE) IN FROM NET FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ON NET ASSET VALUE INVESTMENT REALIZED CAPITAL
OF PERIOD INCOME/(LOSS) INVESTMENTS FROM OPERATIONS INCOME GAINS
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DISCIPLINED EQUITY
PRIMARY A SHARES
Year ended 03/31/1998##........... $18.47 $ 0.08 $ 7.88 $ 7.96 $(0.03) $(4.23)
Year ended 03/31/1997............. 17.19 0.14 2.79 2.93 (0.14) (1.51)
Period ended 03/31/1996(a)........ 17.06 0.05 0.35 0.40 (0.04) (0.23)
Year ended 11/30/1995............. 13.08 0.10 3.96 4.06 (0.08) --
Period ended 11/30/1994*.......... 13.31 0.01 (0.23)# (0.22) (0.01) --
Period ended 04/29/1994*.......... 13.65 (0.05) 2.66 2.61 -- (2.95)
Period ended 04/30/1993*.......... 10.00 (0.03) 3.74 3.71 -- (0.06)
PRIMARY B SHARES
Year ended 03/31/1998##........... $18.47 $(0.03) $ 7.96 $ 7.93 -- $(4.23)
Period ended 03/31/1997***........ 17.84 0.03 2.15 2.18 $(0.04) (1.51)
INVESTOR A SHARES
Year ended 03/31/1998##........... $18.44 $ 0.02 $ 7.87 $ 7.89 $(0.01) $(4.23)
Year ended 03/31/1997............. 17.16 0.08 2.80 2.88 (0.09) (1.51)
Period ended 03/31/1996(a)........ 17.04 0.04 0.35 0.39 (0.04) (0.23)
Year ended 11/30/1995............. 13.06 0.09 3.96 4.05 (0.07) --
Period ended 11/30/1994**......... 13.30 0.00(b) (0.23)# (0.23) (0.01) --
Period ended 04/30/1994**......... 14.94 (0.04) 1.35 1.31 -- (2.95)
INVESTOR B SHARES
Year ended 03/31/1998##........... $18.20 $(0.12) $ 7.72 $ 7.60 -- $(4.23)
Year ended 03/31/1997............. 17.00 (0.05) 2.76 2.71 -- (1.51)
Period ended 03/31/1996(a)........ 16.89 (0.01) 0.35 0.34 -- (0.23)
Year ended 11/30/1995............. 13.02 0.03 3.87 3.90 $(0.03) --
Period ended 11/30/1994***........ 12.77 (0.02) 0.28 0.26 (0.01) --
INVESTOR C SHARES
Year ended 03/31/1998##........... $18.41 $(0.09) $ 7.83 $ 7.74 -- $(4.23)
Year ended 03/31/1997............. 17.10 0.04 2.79 2.83 $(0.01) (1.51)
Period ended 03/31/1996(a)........ 16.97 0.01 0.35 0.36 -- (0.23)
Period ended 11/30/1995***........ 14.08 (0.00)(b) 2.92 2.92 (0.03) --
</TABLE>
- ---------------
* The period for the Disciplined Equity's Primary A Shares reflects operations
from April 30, 1994 through November 30, 1994. The financial information for
the fiscal periods through April 29, 1994 is based on the financial
information for The Capitol Mutual Funds Special Equity Portfolio Class A
Shares, which were reorganized into Primary A Shares of Disciplined Equity
Fund (then named Nations Special Equity Fund) as of the close of business on
April 29, 1994. The Capitol Mutual Funds' Special Equity Portfolio Class A
Shares commenced operations on October 1, 1992.
** The period for the Disciplined Equity's Investor A Shares reflects
operations from April 30, 1994 through November 30, 1994. The financial
information for the fiscal periods through April 29, 1994 is based on the
financial information for The Capitol Mutual Funds Special Equity Portfolio
Class B Shares, which were reorganized into Investor A Shares of Disciplined
Equity Fund (then named Nations Special Equity Fund) as of the close of
business on April 29, 1994. The Capitol Mutual Funds Special Equity
Portfolio Class B Shares commenced operations on July 26, 1993.
*** The Disciplined Equity's Primary B, Investor B and Investor C Shares
commenced operations on June 28, 1996, May 20, 1994 and May 10, 1995,
respectively.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
# The amount shown at this caption for each share outstanding throughout the
period may not accord with the change in the aggregate gains and losses in
the portfolio securities for the period because of the timing of purchases
and withdrawals of shares in relation to the fluctuating market value of the
portfolio.
## Per share net investment income has been calculated using the monthly average
share method.
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
November 30.
(b) Amount represents less than $0.01 per share.
(c) Average commission rate paid per share of securities purchased and sold by
the Fund.
(d) The effect of interest expense on the operating expense ratio was less than
0.01%.
(e) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was less than 0.01%.
(f) Amount represents less than $1,000.
SEE NOTES TO FINANCIAL STATEMENTS.
108
<PAGE> 113
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
RATIO OF REIMBURSEMENTS
OPERATING ---------------
EXPENSES RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS TO INVESTMENT OPERATING
DIVIDENDS VALUE END OF AVERAGE INCOME/(LOSS) PORTFOLIO EXPENSES TO
RETURN OF AND END OF TOTAL PERIOD NET TO AVERAGE TURNOVER AVERAGE
CAPITAL DISTRIBUTIONS PERIOD RETURN++ (000'S) ASSETS NET ASSETS RATE NET ASSETS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-- $(4.26) $22.17 48.65% $132,504 0.98%(d)(e) 0.37% 79% 0.98%(d)(e)
-- (1.65) 18.47 17.00 100,260 1.04(d) 0.70 120 1.04
-- (0.27) 17.19 2.44 116,469 1.02+ 0.82+ 47 1.02+
-- (0.08) 17.06 31.13 109,939 1.30 0.85 124 1.3
$(0.00)(b) (0.01) 13.08 (1.62) 9,947 1.13+ 0.12+ 177 1.56+
-- (2.95) 13.31 18.79 8,079 1.20+ (0.60)+ 475 1.53+
-- (0.06) 13.65 37.13 4,638 1.20+ (0.58)+ 203 1.31+
-- $(4.23) $22.17 48.44% $ 0(f) 1.48%(d)(e) (0.13)% 79% 1.48%(d)(e)
-- (1.55) 18.47 12.13 1,121 1.54+(d) 0.20+ 120 1.54+
-- $(4.24) $22.09 48.28% $ 21,725 1.23%(d)(e) 0.12% 79% 1.23%(d)(e)
-- (1.60) 18.44 16.76 6,837 1.29(d) 0.45 120 1.29
-- (0.27) 17.16 2.35 4,722 1.12+ 0.72+ 47 1.12+
-- (0.07) 17.04 31.05 3,234 1.40 0.75 124 1.4
$(0.00)(b) (0.01) 13.06 (1.71) 252 1.23+ 0.02+ 177 1.66+
-- (2.95) 13.30 8.31 165 1.30+ (0.62)+ 475 1.74+
-- $(4.23) $21.57 47.14% $ 38,079 1.98%(d)(e) (0.63)% 79% 1.98%(d)(e)
-- (1.51) 18.20 15.86 20,257 2.04(d) (0.30) 120 2.04
-- (0.23) 17.00 2.08 18,412 2.02+ (0.18)+ 47 2.02+
-- (0.03) 16.89 29.94 16,874 2.30 (0.15) 124 2.3
$(0.00)(b) (0.01) 13.02 2.02 177 2.09+ (0.84)+ 177 2.52+
-- $(4.23) $21.92 47.38% $ 1,199 1.81%(d)(e) (0.46)% 79% 1.81%(d)(e)
-- (1.52) 18.41 16.45 446 1.54(d) 0.20 120 1.54
-- (0.23) 17.10 2.19 283 1.65+ 0.19+ 47 1.65+
-- (0.03) 16.97 20.78 322 2.30+ (0.15)+ 124 2.30+
<CAPTION>
AVERAGE
COMMISSION
RATE PAID(c)
- --- ------------
<S> <C>
$0.0263
0.0377
0.0627
N/A
N/A
N/A
N/A
$0.0263
0.0377
$0.0263
0.0377
0.0627
N/A
N/A
N/A
$0.0263
0.0377
0.0627
N/A
N/A
$0.0263
0.0377
0.0627
N/A
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
109
<PAGE> 114
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET NET
NET ASSET REALIZED AND INCREASE IN DIVIDENDS DISTRIBUTIONS
VALUE NET UNREALIZED NET ASSET FROM NET FROM NET
BEGINNING INVESTMENT GAIN ON VALUE FROM INVESTMENT REALIZED
OF PERIOD INCOME/(LOSS) INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOCUSED EQUITIES
PRIMARY A SHARES
Period ended 03/31/1998*#.......... $10.00 $(0.01) $2.14 $2.13 $0.00 $0.00
INVESTOR A SHARES
Period ended 03/31/1998*#.......... $10.00 $(0.01) $2.15 $2.14 $0.00 $0.00
INVESTOR B SHARES
Period ended 03/31/1998*#.......... $10.00 $(0.04) $2.17 $2.13 $0.00 $0.00
INVESTOR C SHARES
Period ended 03/31/1998*#.......... $10.00 $(0.04) $2.17 $2.13 $0.00 $0.00
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Focused Equities' Primary A, Investor A, Investor B and
Investor C Shares commenced operations on December 31, 1997.
+ Annualized.
++ Total return represents aggregate total return for the
period indicated and does not reflect the deduction of any
applicable sales charges.
# Per share net investment income has been calculated using
the monthly average share method.
(a) Average commission rate paid per share of securities
purchased and sold by the Fund.
(b) The effect of the fees reduced by credits allowed by the
custodian on the operating expense ratio, with and without
waivers and/or expense reimbursements, was 0.01%.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
110
<PAGE> 115
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES TO LOSS TO PORTFOLIO EXPENSES TO
AND END OF TOTAL PERIOD AVERAGE AVERAGE TURNOVER AVERAGE
DISTRIBUTIONS PERIOD RETURN++ (000'S) NET ASSETS NET ASSETS RATE NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$0.00 $12.13 21.30% $ 8,808 1.52%+(b) (0.30)%+ 25% 1.52%+(b)
$0.00 $12.14 21.40% $ 6,056 1.77%+(b) (0.55)%+ 25% 1.77%+(b)
$0.00 $12.13 21.30% $20,446 2.52%+(b) (1.30)%+ 25% 2.52%+(b)
$0.00 $12.13 21.30% $ 469 2.52%+(b) (1.30)%+ 25% 2.52%+(b)
<CAPTION>
AVERAGE
COMMISSION
RATE PAID(a)
- --- ------------
<S> <C>
$0.0544
$0.0544
$0.0544
$0.0544
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
111
<PAGE> 116
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET NET REALIZED NET INCREASE/ DISTRIBUTIONS TOTAL
VALUE NET AND UNREALIZED (DECREASE) IN FROM NET DIVIDENDS
BEGINNING INVESTMENT GAIN/(LOSS) ON NET ASSET VALUE REALIZED AND
OF PERIOD INCOME/(LOSS) INVESTMENTS FROM OPERATIONS CAPITAL GAINS DISTRIBUTIONS
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EMERGING GROWTH
PRIMARY A SHARES
Year ended 03/31/1998#............ $12.86 $(0.06) $ 5.55 $ 5.49 $(1.79) $(1.79)
Year ended 03/31/1997#............ 14.04 (0.04) 0.20 0.16 (1.34) (1.34)
Period ended 03/31/1996#(a)....... 14.28 (0.00)(b) 1.26 1.26 (1.50) (1.50)
Year ended 11/30/1995............. 11.41 0.01 3.26 3.27 (0.40) (0.40)
Year ended 11/30/1994#............ 10.87 (0.03) 0.71 0.68 (0.14) (0.14)
Period ended 11/30/1993*.......... 10.00 (0.01) 0.89 0.88 (0.01) (0.01)
PRIMARY B SHARES
Year ended 03/31/1998#............ $12.81 $(0.15) $ 5.54 $ 5.39 $(1.79) $(1.79)
Year ended 03/31/1997#*........... 15.08 (0.08) (0.85) (0.93) (1.34) (1.34)
INVESTOR A SHARES
Year ended 03/31/1998#............ $12.69 $(0.10) $ 5.50 $ 5.40 $(1.79) $(1.79)
Year ended 03/31/1997#............ 13.91 (0.07) 0.19 0.12 (1.34) (1.34)
Period ended 03/31/1996#(a)....... 14.17 (0.01) 1.25 1.24 (1.50) (1.50)
Year ended 11/30/1995............. 11.35 (0.01) 3.23 3.22 (0.40) (0.40)
Year ended 11/30/1994#............ 10.85 (0.06) 0.70 0.64 (0.14) (0.14)
Period ended 11/30/1993*.......... 9.87 (0.03) 1.02 0.99 (0.01) (0.01)
INVESTOR B SHARES
Year ended 03/31/1998#............ $12.29 $(0.20) $ 5.28 $ 5.08 $(1.79) $(1.79)
Year ended 03/31/1997#............ 13.61 (0.18) 0.20 0.02 (1.34) (1.34)
Period ended 03/31/1996#(a)....... 13.93 (0.05) 1.23 1.18 (1.50) (1.50)
Year ended 11/30/1995............. 11.24 (0.07) 3.16 3.09 (0.40) (0.40)
Year ended 11/30/1994#............ 10.82 (0.14) 0.70 0.56 (0.14) (0.14)
Period ended 11/30/1993*.......... 9.88 (0.02) 0.96 0.94 -- --
INVESTOR C SHARES
Year ended 03/31/1998#............ $12.31 $(0.18) $ 5.29 $ 5.11 $(1.79) $(1.79)
Year ended 03/31/1997#............ 13.56 (0.10) 0.19 0.09 (1.34) (1.34)
Period ended 03/31/1996#(a)....... 13.87 (0.03) 1.22 1.19 (1.50) (1.50)
Year ended 11/30/1995............. 11.20 (0.08) 3.15 3.07 (0.40) (0.40)
Year ended 11/30/1994#............ 10.78 (0.14) 0.70 0.56 (0.14) (0.14)
Period ended 11/30/1993*.......... 9.89 (0.09) 0.98 0.89 -- --
</TABLE>
- ---------------
* Emerging Growth's Primary A, Primary B, Investor A, Investor B and Investor C
Shares commenced operations on December 4, 1992, June 28, 1996, December 10,
1992, June 7, 1993 and December 18, 1992, respectively.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and
does not reflect the deduction of any applicable sales charges.
# Per share net investment income has been calculated using the monthly average
share method.
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
November 30.
(b) Amount represents less than $0.01 per share.
(c) Average commission rate paid per share of securities purchased and sold by
the Fund.
(d) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was less than 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS.
112
<PAGE> 117
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
RATIO OF RATIO OF ---------------
OPERATING OPERATING RATIO OF RATIO OF
NET ASSET NET ASSETS EXPENSES TO EXPENSES TO NET INVESTMENT OPERATING
VALUE END OF AVERAGE AVERAGE NET INCOME/(LOSS) PORTFOLIO EXPENSES TO AVERAGE
END OF TOTAL PERIOD NET ASSETS INCLUDING TO AVERAGE TURNOVER AVERAGE COMMISSION
PERIOD RETURN++ (000'S) ASSETS INTEREST EXPENSE NET ASSETS RATE NET ASSETS Rate Paid(c)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$16.56 45.09% $318,584 0.98%(d) 0.99% (0.42)% 76% 0.98%(d) $0.0526
12.86 0.48 267,319 0.98(d) N/A (0.26) 93 0.98(d) 0.0562
14.04 9.87 295,764 0.99+ N/A (0.06)+ 39 0.99%+ 0.0599
14.28 29.95 269,484 0.98 N/A 0.08 139 0.98 N/A
11.41 6.26 182,459 1.01 N/A (0.29) 129 1.01 N/A
10.87 8.81 121,281 0.80+ N/A (0.15)+ 159 1.01+ N/A
$16.41 44.33% $ 23 1.48%(d) 1.49% (0.92)% 76% 1.48%(d) $0.0526
12.81 (6.80) 2,897 1.48+(d) N/A (0.76)+ 93 1.48+(d) 0.0562
$16.30 44.86% $ 21,591 1.23%(d) 1.24% (0.67)% 76% 1.23%(d) $0.0526
12.69 0.18 12,126 1.23(d) N/A (0.51) 93 1.23(d) 0.0562
13.91 9.80 7,802 1.24+ N/A (0.31)+ 39 1.24+ 0.0599
14.17 29.65 5,765 1.23 N/A (0.17) 139 1.23 N/A
11.35 5.90 3,234 1.26 N/A (0.54) 129 1.26 N/A
10.85 9.99 2,095 1.05+ N/A (0.40)+ 159 1.26+ N/A
$15.58 43.64% $ 45,451 1.98%(d) 1.99% (1.42)% 76% 1.98%(d) $0.0526
12.29 (0.57) 33,342 1.98(d) N/A (1.26) 93 1.98(d) 0.0562
13.61 9.52 34,989 1.99+ N/A (1.06)+ 39 1.99+ 0.0599
13.93 28.75 32,349 1.98 N/A (0.92) 139 1.98 N/A
11.24 5.17 15,909 2.01 N/A (1.29) 129 2.01 N/A
10.82 9.51 3,594 1.80+ N/A (1.15)+ 159 2.01+ N/A
$15.63 43.80% $ 2,266 1.81%(d) 1.82% (1.25)% 76% 1.81%(d) $0.0526
12.31 (0.04) 1,437 1.48(d) N/A (0.76) 93 1.48(d) 0.0562
13.56 9.64 936 1.61+ N/A (0.68)+ 39 1.61+ 0.0599
13.87 28.67 805 1.98 N/A (0.92) 139 1.98 N/A
11.20 5.19 542 2.01 N/A (1.29) 129 2.01 N/A
10.78 9.00 469 1.80+ N/A (1.15)+ 159 2.01+ N/A
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
113
<PAGE> 118
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET NET REALIZED NET INCREASE DIVIDENDS DISTRIBUTIONS
VALUE NET AND UNREALIZED IN NET ASSET FROM NET FROM NET
BEGINNING INVESTMENT GAIN ON VALUE FROM INVESTMENT REALIZED
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME CAPITAL GAINS
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SMALL COMPANY GROWTH
PRIMARY A SHARES
Period ended 03/31/1998*.............. $12.07 $ 0.01 $4.43 $4.44 $(0.01) $(0.71)
Period ended 05/16/97*................ 10.65 0.04 1.47 1.51 (0.04) (0.05)
Period ended 08/31/96*(c)............. 10.00 0.09 0.64 0.73 (0.08) --
INVESTOR A SHARES
Period ended 03/31/1998*.............. $12.05 $(0.02) $4.42 $4.40 $ -- $(0.71)
Period ended 05/16/97*................ 10.64 0.03 1.46 1.49 (0.03) (0.05)
Period ended 08/31/96*(c)............. 10.00 0.05 0.64 0.69 (0.05) --
INVESTOR B SHARES
Period ended 03/31/1998*.............. $12.03 $(0.08) $4.35 $4.27 $ -- $(0.71)
Period ended 05/16/97*................ 10.65 (0.03) 1.46 1.43 -- (0.05)
Period ended 08/31/96*(c)............. 10.00 0.01 0.65 0.66 (0.01) --
INVESTOR C SHARES
Period ended 03/31/1998**............. $15.18 $(0.08) $1.35 $1.27 $ -- $(0.71)
</TABLE>
- ---------------
<TABLE>
<C> <S>
* The financial information for the fiscal periods prior to
May 23, 1997 reflects the financial information for the
Pilot Small Capitalization Equity Fund's Pilot Shares, Class
A Shares and Class B Shares, which were reorganized into the
Primary A Shares, Investor A Shares and Investor B Shares,
respectively, as of the close of business on May 23, 1997.
Prior to May 23, 1997, the investment manager to Small
Company Growth was Boatmen's Trust Company. Effective May
23, 1997, the investment manager to Small Company Growth was
TradeStreet Investment Associates, Inc.
** Investor C Shares commenced operations on September 22,
1997.
+ Annualized.
++ Total return represents aggregate total return for the
period indicated and does not reflect the deduction of any
applicable sales charges.
(a) Average commission rate paid per share of securities
purchased and sold by the Fund.
(b) The effect of the fees reduced by credits allowed by the
custodian on the operating expense ratio, with and without
waivers and/or expense reimbursements, was less than 0.01%
for Primary A, Investor A and Investor C Shares and 0.01%
for Investor B Shares.
(c) Represents the period from December 12, 1995 (commencement
of operations) to August 31, 1996.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
114
<PAGE> 119
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
RATIO OF ---------------
RATIO OF OPERATING RATIO OF NET RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING EXPENSES TO INVESTMENT OPERATING
DIVIDENDS VALUE END OF EXPENSES TO AVERAGE NET INCOME/LOSS PORTFOLIO EXPENSES TO
AND END OF TOTAL PERIOD AVERAGE ASSETS INCLUDING TO AVERAGE TURNOVER AVERAGE
DISTRIBUTIONS PERIOD RETURN++ (000'S) NET ASSETS INTEREST EXPENSE NET ASSETS RATE NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$(0.72) $15.79 37.27% $235,427 0.95%+(b) 0.95%+ 0.05%+ 59% 1.26%+(b)
(0.09) 12.07 14.21 109,450 0.98+ -- 0.54+ 48 1.41+
(0.08) 10.65 7.37 70,483 1.00+ -- 1.06+ 31 1.54+
$(0.71) $15.74 37.02% $ 6,772 1.20%+(b) 1.20%+ (0.20)%+ 59% 1.51%+(b)
(0.08) 12.05 13.98 3,697 1.23+ -- 0.30+ 48 1.66+
(0.05) 10.64 6.88 2,611 1.25+ -- 0.66+ 31 1.65+
$(0.71) $15.59 36.06% $ 3,384 1.87%+(b) 1.88%+ (0.87)%+ 59% 2.18%+(b)
(0.05) 12.03 13.43 2,635 1.97+ -- (0.45)+ 48 2.41+
(0.01) 10.65 6.65 1,878 2.01+ -- (0.07)+ 31 2.44+
$(0.71) $15.74 8.75% $ 3,122 1.95%+(b) 1.95%+ (0.95)%+ 59% 2.26%+(b)
<CAPTION>
AVERAGE
COMMISSION
RATE PAID(a)
------------
<S> <C>
$0.0356
0.0323
0.0340
$0.0356
0.0323
0.0340
$0.0356
0.0323
0.0340
$0.0356
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
115
<PAGE> 120
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Nations Fund Trust (the "Trust") and Nations Fund, Inc. (the "Company") are each
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end investment company. At March 31, 1998, the Trust offered
thirty-seven separate portfolios and the Company offered eight separate
portfolios. Information presented in these financial statements pertains only to
the domestic stock portfolios of the Trust and the Company (each a "Fund" and
collectively, the "Funds"). The financial statements for the other portfolios of
the Trust and the Company are presented under separate cover. The Funds (except
Equity Index Fund, Focused Equities Fund and Growth & Income Fund) currently
offer five classes of shares: Primary A Shares, Primary B Shares, Investor A
Shares, Investor B Shares (formerly Investor N Shares) and Investor C Shares.
Index Fund currently offers Primary A Shares, Primary B Shares and Investor A
Shares and Focused Equities Fund and Growth & Income Fund currently offer
Primary A Shares, Investor A Shares, Investor B Shares and Investor C Shares.
Each class of shares of a Fund has identical voting rights (except shareholders
of a class have exclusive voting rights on matters that relate solely to that
class), dividend, liquidation and other rights, except each class bears
different shareholder servicing and distribution plan fees.
1. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Funds in the preparation of
their financial statements.
Securities Valuation: The Funds' portfolio securities which are traded on a
recognized stock exchange or on the NASDAQ system are valued at the last sales
price on the securities exchange or market on which such securities are
primarily traded. Securities traded only on over-the-counter markets (other than
on the NASDAQ system) are valued at the closing over-the-counter bid prices or,
if no sale occurred on such day, at the mean of the current bid and asked
prices. Certain securities may be valued by one or more principal market makers.
Restricted securities, securities for which market quotations are not readily
available, and certain other assets are valued by the investment adviser under
the supervision of the Board of Trustees/Directors. Short-term investments that
mature in 60 days or less are valued at amortized cost.
Futures Contracts: The Equity Index Fund may invest in futures contracts for
the purpose of hedging against changes in values of the Fund's securities or
changes in the prevailing levels of interest rates or currency exchange rates or
for gaining exposure to the equity market. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin." Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuation of the
value of the contract.
During the period the futures contract is open, changes in the value of the
contract are recognized as unrealized gains or losses by "marking-to-market" on
a daily basis to reflect the market value of the contract at the end of each
day. The Fund recognizes a realized gain or loss when the contract is closed,
equal to the difference between the proceeds from (or cost of) the closing
transaction and the Fund's basis in the contract.
Risks arise in the possible movement of the securities or indices underlying
those investments. Risks also include the possibility that there may not be a
liquid secondary market for these contracts, that a change in the value of the
contract may not correlate with changes in the value of the underlying
securities or that the counterparty to a contract may default on its obligation
to perform.
Securities Transactions and Investment Income: Securities transactions are
accounted for on a trade date basis. Realized gains and losses are computed
based on the specific identification of the securities sold. Interest income,
adjusted for accretion of discounts and amortization of premiums, is earned from
settlement date and is recorded on an accrual basis. Dividend income is recorded
on the ex-dividend date. Each Fund'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.
116
<PAGE> 121
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Dividends and Distributions to Shareholders: Distributions from net investment
income are declared and paid each calendar quarter by the Balanced Assets,
Emerging Growth, Equity Index, Focused Equities and Growth & Income Funds; all
other Funds declare and pay distributions monthly.
Each Fund will distribute net realized capital gains (including net short-term
capital gains), annually after the fiscal year in which the capital gains were
earned, unless offset by any available capital loss carryforward. Income
distributions and capital gain distributions on a Fund level are determined in
accordance with Federal income tax regulations which may differ from generally
accepted accounting principles.
Certain reclassifications are made to each Fund'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 organization costs, paydowns, net
operating losses, currency gains and losses and the Fund's use of the tax
accounting practice known as equalization.
Reclassifications for the year ended March 31, 1998 were as follows:
<TABLE>
<CAPTION>
INCREASE/
(DECREASE) INCREASE/
INCREASE/ UNDISTRIBUTED (DECREASE)
(DECREASE) NET ACCUMULATED
PAID-IN INVESTMENT NET REALIZED
CAPITAL INCOME GAIN/(LOSS)
-----------------------------------------
<S> <C> <C> <C>
Balanced Assets................ 4,634,817 (46,783) (4,588,034)
Equity Income.................. 7,979,630 -- (7,979,630)
Value.......................... 46,360,281 -- (46,360,281)
Growth & Income................ (11,642) 10,926 716
Equity Index................... 4,388,447 (2,460) (4,385,987)
Capital Growth................. 33,962,903 191,581 (34,154,484)
Disciplined Equity............. 4,259,550 -- (4,259,550)
Focused Equities............... (28,127) 27,920 207
Emerging Growth................ 8,746,211 2,066,915 (10,813,126)
Small Company Growth........... 3,628 (3,628) --
</TABLE>
Federal Income Tax: Each Fund intends to continue to qualify as a regulated
investment company by complying with the requirements of the Internal Revenue
Code of 1986, as amended, and by distributing substantially all of its earnings
to its shareholders. Therefore, no Federal income or excise tax provision is
applicable.
Expenses: General expenses of the Trust or the Company are allocated to the
relevant Funds based upon relative net assets. Operating expenses directly
attributable to a Fund or class of shares are charged to such Fund's or class's
operations. Expenses of each Fund not directly attributable to the operations of
any class of shares are prorated among the classes based on the relative net
assets of each class of shares. The Funds bear all costs in connection with
their organization, including the fees and expenses of registering and
qualifying their shares for distribution under Federal and state securities
regulations. All such costs are being amortized on a straight line basis over a
period of five years from commencement of operations.
2. INVESTMENT ADVISORY FEE, SUB-ADVISORY FEE, ADMINISTRATION FEE AND RELATED
PARTY TRANSACTIONS
Each of the Trust and the Company has, on behalf of the Funds, entered into an
investment advisory agreement (the "Investment Advisory Agreements") with
NationsBanc Advisors, Inc. ("NBAI"), a wholly-owned subsidiary of NationsBank,
N.A. ("NationsBank"), pursuant to which NBAI provides investment advisory
services to the Funds. Under the terms of these Investment Advisory Agreements,
NBAI is entitled to receive an advisory fee calculated daily and payable monthly
based on the following annual rates multiplied by the average daily net assets
of each Fund:
<TABLE>
<CAPTION>
ANNUAL
RATE
------
<S> <C>
Small Company Growth.................................... 1.00%
Focused Equities, Growth & Income....................... 0.85%
Balanced Assets, Value, Capital Growth, Disciplined
Equity, Emerging Growth................................ 0.75%
Equity Index............................................ 0.50%
</TABLE>
<TABLE>
<CAPTION>
FEES ON FEES ON FEES ON
NET ASSETS NET ASSETS NET ASSETS
UP TO BETWEEN $100 EXCEEDING
$100 MILLION AND $250 MILLION $250 MILLION
----------------------------------------------
<S> <C> <C> <C>
Equity Income............ 0.75% 0.70% 0.60%
</TABLE>
Each of the Trust and the Company has, on behalf of the Funds, entered into a
sub-advisory agreement with NBAI and TradeStreet Investment Associates, Inc.
("TradeStreet"), a wholly-owned subsidiary of NationsBank, pursuant to which
TradeStreet is entitled to receive a sub-advisory fee from NBAI at the
117
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NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
following annual rates of each Fund's average daily net assets:
<TABLE>
<CAPTION>
ANNUAL
RATE
------
<S> <C>
Growth & Income, Focused Equities....................... 0.45%
Balanced Assets, Value, Capital Growth, Disciplined
Equity, Emerging Growth, Small Company Growth.......... 0.25%
Equity Income........................................... 0.20%
Equity Index............................................ 0.10%
</TABLE>
The Trust has, on behalf of the Focused Equities and Growth & Income Funds,
entered into a sub-advisory agreement with NBAI and Marsico Capital Management,
LLC ("Marsico"), pursuant to which Marsico is entitled to receive a sub-advisory
fee from NBAI at the annual rate of 0.45% of each Fund's average daily net
assets.
Stephens Inc. ("Stephens") serves as the administrator of the Trust and the
Company. First Data Investor Services Group, Inc. ("First Data"), a wholly-
owned subsidiary of First Data Corporation, serves as the co-administrator of
the Trust and the Company. Stephens and First Data are entitled to receive a
combined fee, computed daily and paid monthly, at the annual rate of 0.10% of
each Fund's average net assets. Effective November 18, 1997 NBAI became the
sub-administrator of the Trust and the Company pursuant to a sub-administration
agreement with Stephens. Prior to that date, NationsBank served as
sub-administrator. For the year ended March 31, 1998, Stephens earned $3,276,473
from the Funds for its administration services, of which $312,936 and $202,992
was paid to NBAI and NationsBank, respectively, for their services as
sub-administrator.
The investment adviser, sub-adviser and administrator may, from time to time,
voluntarily reduce their fees payable by each Fund. For the year ended March 31,
1998, the fee waivers were as follows:
<TABLE>
<CAPTION>
FEES WAIVED
BY ADVISER
-----------
<S> <C>
Value.............................................. $ 49,168
Equity Index....................................... 2,088,839
Small Company Growth............................... 419,890
Growth & Income.................................... 11,246
</TABLE>
NationsBank of Texas, N.A. ("NationsBank of Texas") served as custodian of the
Trust's and the Company's assets and, for the year ended March 31, 1998, earned
$52,077 for providing such services. The Bank of New York ("BONY") has entered
into an agreement with each of the Funds and NationsBank of Texas, whereby BONY
serves as sub-custodian for the Funds. For the year ended March 31, 1998,
expenses of the Funds were reduced by $34,917 under expense offset arrangements
with BONY. Custodian fees reported in the Statements of Operations exclude these
credits. The Funds could have invested a portion of the assets utilized in
connection with the expense offset arrangements in an income producing asset if
they had not entered into such arrangements.
First Data serves as the transfer agent for the Funds' shares. NationsBank of
Texas served as the sub-transfer agent for the Primary Shares of the Funds for
the year ended March 31, 1998, and earned approximately $41,600 for providing
such services.
Stephens serves as distributor of the Funds' shares. For the year ended March
31, 1998, the Funds were informed that the distributor received $564,079 in
contingent deferred sales charges from shares which were subject to such
charges. A substantial portion of these fees are paid to affiliates of
NationsBank and NBAI.
The Trust and the Company pay each unaffiliated Trustee or Director an annual
fee of $1,000 ($3,000 for the Chairman of the Board), plus $500 per Fund and an
additional $1,000 for each in-person board meeting, and $500 for each telephonic
board meeting attended. The Trust and the Company also reimburse expenses
incurred by each unaffiliated Trustee or Director in attending such meetings.
The Trust's and the Company's eligible Trustees or Directors, respectively, 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 Funds'
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 the Company. The expense for the deferred compensation and
retirement plans is included in "Trustees'/Directors' fees and expenses" in the
Statements of Operations.
The Company has made daily investments of cash balances in Nations Cash
Reserves, a portfolio of Nations Institutional Reserves, pursuant to an
exemptive order received from the Securities and Ex-
118
<PAGE> 123
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
change Commission. For the period ended March 31, 1998, the Funds earned
$2,063,627 in the aggregate from such investments.
A significant portion of each Fund's Primary A Shares represent investments by
fiduciary accounts over which Nations Bank N.A. has either sole or joint
investment discretion.
3. SHAREHOLDER SERVICING AND
DISTRIBUTION PLANS
The Trust and the Company each have adopted a shareholder administration plan
for Primary B shares of each Fund (except Growth & Income and Focused Equities)
and shareholder servicing plans and distribution plans for the Investor A,
Investor B and Investor C Shares of each Fund (except Equity Index). The
administration plan permits the Funds to compensate institutions for shareholder
administration services provided to their customers that own Primary B Shares.
The shareholder servicing plans permit the Funds 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 Investment Company
Act of 1940, permit the Funds 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 forth from time to time by the Board of Trustees/ Directors, and are charged
as expenses of each Fund directly to the applicable class. A substantial portion
of the expenses incurred pursuant to these plans are paid to affiliates of
NationsBank and NBAI.
At March 31, 1998, the actual rates in effect and the plan limits, as a
percentage of average daily assets, were as follows:
<TABLE>
<CAPTION>
PLAN
CURRENT RATE LIMIT
---------------------
<S> <C> <C>
Primary B Administration Plan............ 0.50% 0.60%
Investor A Shareholder Servicing and
Distribution Plan....................... 0.25% 0.25%
Investor B Distribution Plan:
Balanced Assets, Equity Income, Value,
Small Company Growth.................. 0.75%* 0.75%
Focused Equities, Growth & Income,
Capital Growth, Disciplined Equity,
Emerging Growth....................... 0.75% 0.75%
Investor B and C Shareholder Servicing
Plans................................... 0.25% 0.25%
Investor C Distribution Plan:
Balanced Assets, Equity Income, Value,
Capital Growth, Disciplined Equity,
Emerging Growth, Small Company
Growth................................ 0.75%** 0.75%
Focused Equities, Growth & Income....... 0.75% 0.75%
</TABLE>
- ---------------
* Reflects a rate change effective August 1, 1997 from 0.50%.
** Reflects a rate change effective August 1, 1997 from 0.25%.
4. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, excluding
U.S. government securities and short-term investments, for the year ended March
31, 1998 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
--------------------------------
<S> <C> <C>
Balanced Assets................. $ 371,727,361 $ 474,933,741
Equity Income................... 835,752,289 485,182,747
Value........................... 1,562,625,593 1,657,270,096
Growth & Income................. 11,274,909 1,073,193
Equity Index.................... 170,471,874 331,035,182
Capital Growth.................. 833,869,288 978,957,525
Disciplined Equity.............. 126,754,889 166,064,456
Focused Equities................ 33,505,583 3,340,174
Emerging Growth................. 272,816,826 352,191,148
Small Company Growth............ 148,238,055 81,329,765
</TABLE>
The aggregate cost of purchases and proceeds from sales of long-term U.S.
government securities for the year ended March 31, 1998 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------------------------
<S> <C> <C>
Balanced Assets.................... $128,493,732 $160,136,960
Equity Income...................... -- 30,449,743
</TABLE>
119
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NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. SHARES OF BENEFICIAL
INTEREST/CAPITAL STOCK
As of March 31, 1998, an unlimited number of shares of beneficial interest
without par value were authorized for the Trust and 420,000,000,000 shares of
$.001 par value capital stock were authorized for the Company. The Trust's
Declaration of Trust and the Company's Articles of Incorporation authorize the
Board of Trustees/Directors to classify or reclassify any authorized, but
unissued shares into one or more additional classes or series of shares. See
Schedule of Capital Stock Activity.
6. LINE OF CREDIT
The Trust and the Company participate in a uncommitted line of credit provided
by BONY under a line of credit agreement (the "Agreement"). Advances under the
Agreement are taken primarily for temporary or emergency purposes, including the
meeting of redemption requests that otherwise might require the untimely
disposition of securities. Interest on borrowings is payable at the federal
funds rate plus 0.50% on an annualized basis. The Agreement requires, among
other things, that each participating Fund maintain a ratio of no less than 4 to
1 net assets (not including funds borrowed pursuant to the Agreement) to
aggregate amount of indebtedness pursuant to the Agreement.
For the year ended March 31, 1998, borrowings by the Funds under the Agreement
were as follows:
<TABLE>
<CAPTION>
AVERAGE AVERAGE
AMOUNT AVERAGE DEBT
FUND OUTSTANDING SHARES PER SHARE
- -------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Assets.............. $ 1,397 16,956,566 $0.00(a)
Equity Index................. 696,740 34,729,749 0.02
Capital Growth............... 26,849 61,689,987 0.00(a)
Disciplined Equity........... 224,682 8,053,520 0.03
Emerging Growth.............. 981,123 25,078,950 0.04
Small Company Growth......... 49,945 20,902,377 0.00(a)
</TABLE>
- ---------------
(a) Amount represents less than $0.01 per share.
The average amount outstanding was calculated based on daily balances in the
period.
7. LENDING OF PORTFOLIO SECURITIES
Under an agreement with BONY, the Funds have the ability to lend their
securities to approved brokers, dealers and other financial institutions. Loans
of portfolio securities are collateralized by cash, in an amount at least equal
to the market value of the securities on loan. The cash collateral received is
invested in Nations Cash Reserves, a portfolio of Nations Institutional
Reserves. A portion of the income generated by the investment of the collateral,
net of any rebates paid by BONY to borrowers, is remitted to BONY as lending
agent, and the remainder is paid to the Fund. Generally, in the event of
counterparty default, the Fund has the right to use the collateral to offset
losses incurred. There would be a potential loss to the Fund in the event the
Fund is delayed or prevented from exercising its right to dispose of the
collateral. The Fund bears risk in the event that invested collateral is not
sufficient to meet obligations due on the loans.
At March 31, 1998 the following Funds had securities on loan:
<TABLE>
<CAPTION>
MARKET VALUE OF MARKET VALUE
FUND LOANED SECURITIES OF COLLATERAL
- ------------------------------------------------------------------
<S> <C> <C>
Balanced Assets................ $ 1,086,146 $ 1,131,571
Equity Income.................. 5,592,532 6,779,281
Value.......................... 39,717,192 42,397,955
Equity Index................... 771,624 792,679
Capital Growth................. 11,232,629 11,452,643
Disciplined Equity............. 5,013,500 5,107,552
Emerging Growth................ 13,233,983 13,817,177
Small Company Growth........... 8,522,301 8,681,166
</TABLE>
8. REORGANIZATIONS
ACQUISITION OF THE PILOT FUNDS
On May 23, 1997, the Small Company Growth Fund, a newly established portfolio,
acquired the assets and certain liabilities of the Pilot Small Capitalization
Equity Fund pursuant to a plan of reorganization approved by its shareholders.
The acquisition was accomplished by a tax-free exchange of shares of the Small
Company Growth Fund in an amount equal to the outstanding shares of the Pilot
Small Capitalization Equity Fund. The financial statements of the Small Company
Growth Fund reflect the historical financial results of the Pilot Small
Capitalization Equity Fund prior to the reorganization. Additionally, the fiscal
year end of the Pilot Small Capitalization Equity Fund for financial reporting
purposes was changed to coincide with that of the Company.
On May 16, 1997, certain Funds, as listed below (each an "Acquiring Fund"),
acquired the assets and certain liabilities of The Pilot Funds, also listed
below (each an "Acquired Fund"), in a tax-free reorganization in exchange for
shares of the Acquiring Fund,
120
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NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
pursuant to a plan of reorganization approved by the Acquired Fund's
shareholders. The number and value of shares issued by the Acquiring Fund are
presented in the Schedule of Capital Stock Activity. Net assets and unrealized
appreciation as of the reorganization date were as follows:
<TABLE>
<CAPTION>
ACQUIRED
TOTAL NET ASSETS OF FUND
ACQUIRED TOTAL NET ASSETS OF TOTAL NET ASSETS OF ACQUIRING FUND UNREALIZED
ACQUIRING FUND FUND ACQUIRED FUND ACQUIRING FUND AFTER ACQUISITION APPRECIATION
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equity Income Pilot Equity Income Fund $141,496,141 $ 380,383,623 $ 521,879,764 $21,628,696
Value Pilot Growth and Income 340,919,486 1,483,907,876 1,824,827,362 70,611,659
Fund
Disciplined Equity Pilot Growth Fund 37,750,653 134,469,491 172,220,144 6,637,133
</TABLE>
CONVERSION OF COMMON TRUST FUNDS
On November 12, 1997, certain Funds, as listed below (each an "Acquiring Fund"),
acquired the assets of certain common trust funds, managed by Nations Bank, as
listed below (each an "Acquired Fund"), in a tax-free reorganization in exchange
for shares of the Acquiring Fund. The number and value of shares issued by the
Acquiring Fund are presented in the Schedule of Capital Stock Activity. Net
assets and unrealized appreciation as of the conversion date were as follows:
<TABLE>
<CAPTION>
ACQUIRED
TOTAL NET ASSETS OF FUND
ACQUIRING ACQUIRED TOTAL NET ASSETS OF TOTAL NET ASSETS OF ACQUIRING FUND UNREALIZED
FUND FUND ACQUIRED FUND ACQUIRING FUND AFTER ACQUISITION APPRECIATION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Growth Common Trust
Equity Funds
for Personal Trusts $ 53,754,003 $ 994,840,057 $1,048,594,060 $ 23,336,044
Capital Growth Common Trust
Capital Growth 469,943,520 524,896,537 994,840,057 131,129,004
Value Common Trust
Value Equity 916,928,568 1,630,080,894 2,547,009,462 256,045,444
Equity Income Common Trust
Equity Income 563,468,074 508,666,543 1,072,134,617 75,094,683
Emerging Growth Common Trust
Emerging Growth 103,027,379 347,819,198 450,846,577 26,813,115
</TABLE>
ACQUISITION OF PEACHTREE FUND
On September 27, 1996 the Capital Growth Fund ("Acquiring Fund") acquired the
assets and certain liabilities of the Peachtree Equity Fund ("Acquired Fund") in
a tax-free reorganization in exchange for shares of the Acquiring Fund, pursuant
to a plan of reorganization approved by the Acquired Fund's shareholders. The
number and value of shares issued by the Acquiring Fund are presented in the
Schedule of Capital Stock Activity. Net assets and unrealized appreciation as of
the reorganization date were as follows:
<TABLE>
<CAPTION>
ACQUIRED
TOTAL NET ASSETS OF FUND
ACQUIRING ACQUIRED TOTAL NET ASSETS OF TOTAL NET ASSETS OF ACQUIRING FUND UNREALIZED
FUND FUND ACQUIRED FUND ACQUIRING FUND AFTER ACQUISITION APPRECIATION
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Growth Peachtree Equity Fund $95,758,235 $697,812,337 $793,570,572 $24,195,257
Fund
</TABLE>
9. SUBSEQUENT EVENT
The Trust and the Company are each parties to Agreements and Plans of
Reorganization with The Emerald Funds (which are advised by Barnett Capital
Advisors, Inc., an indirect wholly-owned subsidiary of NationsBank Corporation)
pursuant to which the assets and liabilities (net) of the Emerald Balanced
Assets Fund of $76,886,508, Emerald Equity Value Fund of $26,394,353, Emerald
Equity Fund of $296,852,074 and Emerald Small Capitalization Fund of
$153,087,518, were acquired in a tax free exchange of shares by the Balanced
Assets Fund, Value Fund,
121
<PAGE> 126
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Disciplined Equity Fund and Small Company Growth Fund, respectively, on May 15,
1998.
In addition, NationsBank of Texas merged into NationsBank on May 6, 1998.
NationsBank began serving as custodian of the Company's and the Trust's assets
and sub-transfer agent for the Primary Shares of the Funds on that date and is
providing the same services as were previously provided by NationsBank of Texas.
122
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NATIONS FUNDS
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS, DIRECTORS AND TRUSTEES OF NATIONS FUNDS
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, 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 Balanced Assets Fund,
Nations Equity Income Fund, Nations Value Fund, Nations Marsico Growth & Income
Fund, Nations Equity Index Fund, Nations Capital Growth Fund, Nations
Disciplined Equity Fund, Nations Marsico Focused Equities Fund, Nations Emerging
Growth Fund, and Nations Small Company Growth Fund (portfolios of Nations Fund
Trust or Nations Fund, Inc., hereafter referred to as the "Funds") at March 31,
1998, and the results of each of their operations, the changes in each of their
net assets and the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' 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 generally accepted
auditing standards 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, 1998 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where securities purchased had not been received by the
custodian, provide a reasonable basis for the opinion expressed above. The
financial statements of Nations Small Company Growth Fund, formerly Pilot Small
Capitalization Equity Fund, for the periods ended May 16, 1997 were audited by
other independent accountants whose report dated June 20, 1997 expressed an
unqualified opinion on those statements.
Price Waterhouse LLP
Boston, Massachusetts
May 28, 1998
123
<PAGE> 128
NATIONS FUNDS
- --------------------------------------------------------------------------------
TAX INFORMATION (UNAUDITED)
For the fiscal year ended March 31, 1998, the amount of long-term capital
gains designated by the Trust and/or the Company were as follows:
<TABLE>
<CAPTION>
28% 20%
FUND RATE GAIN RATE GAIN TOTAL
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Assets................................ 4,516,412 1,007,627 5,524,039
Equity Income.................................. 21,489,578 28,485,671 49,975,249
Value.......................................... 105,123,406 213,062,690 318,186,096
Equity Index................................... 7,314,496 3,764,940 11,079,436
Capital Growth................................. 111,761,157 65,295,843 177,057,000
Disciplined Equity............................. 13,122,368 9,876,366 22,998,734
Emerging Growth................................ 21,895,734 21,323,586 43,219,320
Small Company Growth........................... 3,068,952 1,105,413 4,174,365
</TABLE>
Of the ordinary income (including short-term capital gain) distributions
made by the Trust and the Company during the fiscal year ended March 31, 1998,
the following percentages qualify for the dividend received deduction available
to corporate shareholders:
<TABLE>
<S> <C>
Balanced Assets............................................. 6.48%
Equity Income............................................... 30.13%
Value....................................................... 44.32%
Equity Index................................................ 50.88%
Capital Growth.............................................. 32.82%
Disciplined Equity.......................................... 18.88%
Emerging Growth............................................. 19.87%
Small Company Growth........................................ 23.52%
</TABLE>
124
<PAGE> 129
[BACKGROUND DEPICTING BASKETS]
<PAGE> 130
[NATIONS FUNDS LOGO] BULK RATE
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105
AR1 IN96116 3/98
