<PAGE> 1
Nations
Fund
International
Funds
ANNUAL REPORT FOR THE YEAR ENDED MARCH 31, 1996
[NATIONS FUND LOGO]
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<TABLE>
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<S> <C>
NOT MAY LOSE VALUE
FDIC-
INSURED NO BANK GUARANTEE
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</TABLE>
NATIONS FUND 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 FUND INVESTMENT ADVISER: NATIONSBANC ADVISORS, INC.
NATIONS FUND SUB-ADVISER: NATIONS GARTMORE INVESTMENT MANAGEMENT.
<PAGE> 3
NATIONS FUND
DEAR SHAREHOLDER:
We are pleased to report to you on the activities and investment results of the
Nations Fund international mutual funds for the fiscal period ended March 31,
1996.* Overall, markets have rewarded investors, and during this period, assets
of the Nations Fund family of mutual funds surpassed the $18 billion level.
Over the last twelve months, the world's major economies have moved increasingly
out of step with one another. In the U.S., the economy appears to be achieving
the desired soft landing of moderate economic growth, combined with continued
productivity gains and low levels of inflation. Japan, however, is still in the
early stages of emerging from what, in many ways, has been its worst slowdown
during the post World War II period. Growth in the major Continental European
economies, by contrast, continued to slow during 1995 to the extent that Germany
and France were effectively in a recession by year end. This lack of
synchronization in economic growth rates resulted in significant differences in
returns and considerable volatility in global financial and currency markets.
Investment professionals managing international portfolios normally concentrate
most of their energies on analyzing companies and discerning economic trends.
However, 1995 was a year when international portfolio managers had to be
particularly sensitive to managing currency exposure. The yen, for example,
appreciated by 25% against the U.S. dollar during the first half of 1995, only
to reverse course and fall swiftly by 30% by year-end. The impact of currency
fluctuations such as these overshadowed the importance of security selection
itself. It is for this reason that we stress the importance of defensive
currency management to help protect the U.S. dollar value of Nations Global
Government Income Fund and Nations International Equity Fund.
Going forward, we believe divergent stock and bond market performance should
create international investment opportunities. Investment themes worthy of close
attention are the continued recovery in the Japanese economy, the extremely
attractive long-term economic development of the fast growing Pacific Rim
countries and, selectively, an exposure to attractively valued, high quality
growth companies in Europe.
Sincerely,
/s/ A. Max Walker /s/ Mark H. Williamson
A. Max Walker Mark H. Williamson
President and Chairman, Nations Fund President, NationsBanc Advisors, Inc.
March 31, 1996
* THE NATIONS INTERNATIONAL EQUITY FUND CHANGED ITS FISCAL YEAR END TO MARCH 31.
<PAGE> 4
THE NATIONS FUND ADVANTAGE
A family of mutual funds provides investors with a number of advantages,
including the ability to shift investment assets among funds as their financial
objectives or market conditions change. The Nations Fund family of mutual funds
includes a broad array of professionally managed domestic and international
stock, bond and money market funds advised by NationsBanc Advisors, Inc. The
family was designed to accommodate a wide variety of investment objectives
across the risk/reward spectrum.
THE NATIONS FUND FAMILY* GRAPH
POTENTIAL RETURN
<TABLE>
<CAPTION>
POTENTIAL RISK (VARIABILITY)
---------------------------------------------------------------------------
CURRENT INCOME GROWTH AND INCOME GROWTH AGGRESSIVE GROWTH
--------------------------------- -------------------------- -------------------------- ----------------------------
STABILITY
- ----------------
Shorter Intermediate Longer Growth Large Small Region
Money Maturity Maturity Maturity Equity And Capitalization International Capitalization Specific
Market Bond Bond Bond Balanced Income Income Growth Equity Growth International
Funds Funds Funds Funds Funds Funds Funds Funds* Funds Funds Funds
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -Nations -Nations -Nations -Nations -Nations -Nations -Nations -Nations -Nations -Nations -Nations
Prime Short- Stragegic Government Balanced Equity Value Capital International Emerging Emerging
Fund Term Fixed Securities Assets Income Fund Growth Equity Fund Growth Market
- -Nations Income Income Fund Fund Fund Fund Fund Fund
Govern- Fund Fund -Nations -Nations -Nations
ment -Nations -Nations Diversified Disciplined Pacific
Money Short- Inter- Income Equity Growth
Market Term mediate- Fund Fund Fund
Fund Municipal Term -Nations
- -Nations Income Municipal Long-Term
Treasury Fund Bond Municipal
Fund -Nations Funds Bond
- -Nations Short- Funds
Tax- Intermediate -Nations
Exempt Government Global
Fund Fund Government
Income Fund
</TABLE>
For specific information on developing an investment portfolio that will more
closely target your investment objectives, contact your investment
representative or Nations Fund for fund brochures and prospectuses at (800)
982-2271.
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* The Nations Fund family also includes Nations Equity Index Fund, which seeks
to match the performance of the S&P 500 before fees and expenses.
2
<PAGE> 5
NATIONS INTERNATIONAL EQUITY FUND
PERFORMANCE AND COMMENTARY
PORTFOLIO MANAGER
Stephen Watson is the portfolio manager for Nations International Equity
Fund. Mr. Watson joined Gartmore plc, in London, as a Global Fund Manager in
1993, and currently holds the position of Head of the International and Global
Team. Prior to joining Gartmore plc, Mr. Watson was employed by James Capel Fund
Managers where he acted as a Director, Global Fund Manager and Client Services
Manager. From 1980 to 1987, he was associated with Capel-Cure Myers in the
portfolio management division and, prior to that, was with the investment
division at Samuel Montagu. Mr. Watson is a member of the Securities Institute.
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital primarily by investing in
marketable equity securities of established, non-United States issuers.
PERFORMANCE REVIEW*
For the one-year period ended March 31, 1996, Nations International Equity
Fund Investor A Shares provided a total return of 19.45%.
PORTFOLIO MANAGER COMMENTARY
In the following interview, Mr. Watson shares his views on financial market
conditions and Fund performance for the one-year period ended March 31, 1996.
BRIEFLY DESCRIBE YOUR OVERALL INVESTMENT PHILOSOPHY.
Our overall investment philosophy is that, in the long run, superior
earnings growth fuels above-average investment returns. We are also cognizant of
paying an appropriate price for this growth potential. Therefore, our investment
philosophy is best characterized as "growth at a reasonable price." The
application of this philosophy, which combines good growth company stock
selection with active regional and market allocation, provides the potential for
very attractive returns and risk diversification.
PLEASE DESCRIBE MARKET CONDITIONS THAT PREVAILED DURING THE REPORTING PERIOD.
World markets, with the exception of Japan, entered 1995 experiencing
above-trend levels of growth that led investors to believe there would be a
tightening of monetary policy. Fixed income markets had already reacted sharply
to the prospect of robust economic growth. These fears of inflationary excesses
proved to be ill founded as world economic activity slowed, bond yields declined
and non-U.S. regions posted acceptable returns over the year. In Japan, bond
yields were near record lows, the yen was at a record high of just below
Japanese yen 80 to the U.S. dollar, the equity market was weak and investors
were fearful of a collapse in the banking system. Japanese equities rose sharply
in local terms during the latter half of 1995, primarily in response to the
weakening yen, but made little or no progress in U.S. dollar terms during the
one-year period ended on March 31, 1996.
HOW WAS THE FUND POSITIONED OVER THE REPORTING PERIOD?
The Fund has always sought to provide U.S. investors with well-diversified
exposure to international markets, with an orientation toward faster-growing
economies. Over time, we would expect this to result in enhanced return
potential, as higher economic growth generally turns into higher capital market
returns. Many of the fastest-growing economies are located within Asia and other
emerging areas. The Fund has been overweight in these markets, primarily at the
expense of being underweight in Japanese equities. Emerging markets, despite
high individual volatility, also offer the advantage to U.S. investors of a low
correlation with U.S. equities. We favored Asia relative to Latin America, as
growth in Asia is higher and more robust. Savings rates and the level of
long-term direct capital are higher, and leave the region less vulnerable to the
adverse effects suffered by Mexico during the 1994-1995 currency crisis.
- ---------------
* The performance shown includes the effect of fee waivers by the investment
adviser. Such fee waivers have the effect of increasing total return.
3
<PAGE> 6
We increased the Fund's exposure to Continental European markets, as it
became clear that governments would reduce short-term interest rates in order to
rekindle growth in economies beset by fiscal problems, high unemployment and
overvalued currencies.
WHAT COUNTRIES EXHIBITED THE BEST PERFORMANCE AND WHY?
The best returns were in Continental Europe and Asia. However, within
Europe, there was a huge divergence in returns. Switzerland was the
best-performing individual market. Returns were boosted by a strong currency,
partially because of the turmoil caused by European Monetary Union (EMU), with
the Netherlands and Germany also performing well. Our currency management
strategy of underweighting some European currencies and the yen added
significant value to the Fund over the twelve months ended March 31, 1996. Our
asset allocation strategy of being underweight Japanese equities, relative to
the Morgan Stanley Capital International Europe, Australia, and Far East Index
(the "Index"), also added value to the Fund over the year.
WHAT ARE SOME EXAMPLES OF COMPANIES THAT PERFORMED PARTICULARLY WELL?*
During the year, several of the Fund's holdings produced outstanding
returns. Specifically, in Europe, these included Wolters Kluwer, a Dutch
publishing company and Bayer AG, a German chemical company; in the United
Kingdom, Argos ord, a discount retailer, British Petroleum Company ord, an oil
company and Reuters Holdings ord, an electronic information provider; in Japan,
Mitsubishi Heavy Industries, Japan's largest heavy machinery-maker. These
companies were just a few of the best performing.
WHAT IS YOUR OUTLOOK FOR ECONOMIC GROWTH GOING FORWARD AND HOW WILL YOU POSITION
THE FUND ACCORDINGLY?
Despite evidence of a general rise in long-term interest rates, we remain
sanguine over the outlook for inflation during 1996. Our expectation is that
growth will remain subdued and most economies will expand at, or below, their
long-term non-inflationary trend levels. Japan is now clearly responding to
loose monetary and fiscal policy, and combined with a weak yen, should show
modest growth from current levels. Consequently, we expect sharply higher
corporate profits. We expect lower short-term interest rates in Europe, with
some weakening of core European currencies against the U.S. dollar. Asia should
continue to be the fastest-growing region. Since valuation levels of most Asian
markets are at, or below, their long-term averages, they fulfill our "growth at
a reasonable price" criterion. As a result, the Fund is underweight in Japanese
equities versus the Index, broadly neutral in Europe (marginally favoring
Continental markets over the United Kingdom), and overweight in Asia and
emerging markets.
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* Portfolio holdings are subject to change and may not be representative of
current holdings.
4
<PAGE> 7
NATIONS FUND
Nations International Equity Fund
<TABLE>
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PORTFOLIO BREAKDOWN AS OF 3/31/96
- --------------------------------------------------------------------------------
<S> <C>
Finance 22.8%
Services 22.0%
Capital Equipment 14.2%
Consumer Goods 12.6%
Energy 12.3%
Materials 11.9%
Preferred Stocks, Investment Funds, Convertible
Bond, Warrants and Net Other Assets and Liabilities 4.2%
</TABLE>
<TABLE>
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TOP TEN HOLDINGS AS A % OF NET ASSETS AS OF 3/31/96
- --------------------------------------------------------------------------------
<C> <S> <C>
1. Roche Holdings AG (Consumer Goods) 1.6%
2. Bayer AG (Materials) 1.4%
3. Mannesmann AG (Capital Equipment) 1.4%
4. Elsevier N.V. (Services) 1.4%
5. Wolters Kluwer (Services) 1.3%
6. Veba AG (Energy) 1.3%
7. Telecom Italia Mobile (Services) 1.2%
8. LVMH Moet Hennessey (Consumer Goods) 1.2%
9. Fortis Amev N.V. (Finance) 1.2%
10. TOTAL, "B" Shares ord (Energy) 1.2%
</TABLE>
<TABLE>
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COUNTRY BREAKDOWN AS A % OF COMMON STOCK AS OF 3/31/96
- --------------------------------------------------------------------------------
<S> <C>
Japan 29.7%
Great Britain 14.3%
Germany 7.2%
France 6.8%
Netherlands 6.5%
Switzerland 6.1%
Hong Kong 5.9%
Malaysia 3.6%
Spain 2.8%
Singapore 2.8%
Other Countries 14.3%
</TABLE>
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Portfolio holdings are subject to change and may not be representative of the
Fund's current holdings.
5
<PAGE> 8
NATIONS FUND
Nations International Equity Fund
<TABLE>
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PERFORMANCE COMPARISON - INVESTOR A SHARES AS OF 3/31/96
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AVERAGE ANNUAL TOTAL RETURN
- ------------------------------------
<S> <C>
YEAR ENDED 19.45%
03/31/96
---------------------
INCEPTION
(06/03/92) 8.13%
THROUGH
03/31/96
- ----
</TABLE>
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations
International Equity Fund on
June 3, 1992 (inception).
Figures for the Morgan
Stanley Capital
International EAFE Index
("MSCI EAFE Index"), an
unmanaged index used to
portray the pattern of
common stock price movement
in Europe, Australia and the
Far East, include
reinvestment of dividends.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GROWTH OF INVESTMENT MSCI EAFE
WITH DISTRIBUTIONS REINVESTED INDEX
- --------------------------------------------------------------------------------
<S> <C> <C>
June 3, 1992 $10,000 $10,000
9,748 9,526
9,508 9,670
9,114 9,296
9,620 10,411
May 31, 1993 9,932 11,458
10,822 12,218
11,566 12,323
11,458 12,754
May 31, 1994 11,726 13,406
12,158 13,419
11,821 13,282
11,291 13,529
May 31, 1995 11,541 13,628
12,370 14,196
12,791 14,771
March 31, 1996 13,487 15,197
</TABLE>
Assumes the reinvestment of all distributions.
<TABLE>
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PERFORMANCE COMPARISON - INVESTOR C SHARES AS OF 3/31/96
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
- ------------------------------------
<S> <C> <C>
YEAR ENDED 18.22%* 18.72%
03/31/96
---------------------
INCEPTION
(06/17/92) 8.17% 8.17%
THROUGH
03/31/96
---------------------
*Adjusted Not
for maximum adjusted
contingent for
deferred contingent
sales charge deferred
of 0.50% sales
charge
- ----
</TABLE>
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor C
Shares of Nations
International Equity Fund on
June 17, 1992 (inception).
Investor C Shares that are
redeemed within one year of
purchase are subject to a
0.50% contingent deferred
sales charge. Figures for
the Morgan Stanley Capital
International EAFE Index
("MSCI EAFE Index"), an
unmanaged index used to
portray the pattern of
common stock price movement
in Europe, Australia and the
Far East, include
reinvestment of dividends.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GROWTH OF INVESTMENT MSCI EAFE
WITH DISTRIBUTIONS REINVESTED INDEX
- --------------------------------------------------------------------------------
<S> <C> <C>
June 17, 1992 $10,000 $10,000
9,752 10,151
9,328 9,759
9,828 10,929
May 31, 1993 10,120 12,028
11,012 12,826
11,734 12,937
11,613 13,389
May 31, 1994 11,837 14,073
12,258 14,087
11,893 13,943
11,341 14,203
May 31, 1995 11,566 14,306
12,384 14,902
12,775 15,506
March 31, 1996 13,464 15,954
</TABLE>
Assumes the reinvestment of all distributions.
- --------------------------------------------------------------------------------
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 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.
Effective January 1, 1996, Nations Fund changed the pricing structure for its
Investor A, Investor C and Investor N Shares. Under the new pricing structure,
the front-end sales charge for Investor A Shares was eliminated, the 1 year
contingent deferred sales charge on Investor C Shares was reduced from 1.00% to
0.50% (for new accounts) and the contingent deferred sales charge on Investor N
Shares was eliminated (for new accounts). Please note that the one-year and
since inception performance figures provided above reflect how the Fund would
have performed during those periods under the new pricing structure.
6
<PAGE> 9
NATIONS FUND
Nations International Equity Fund
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR N SHARES AS OF 3/31/96
<TABLE>
<CAPTION>
- -------------------------------------
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------
<S> <C>
YEAR ENDED 18.85%
03/31/96
---------------------
INCEPTION
(06/07/93) 9.79%
THROUGH
03/31/96
</TABLE>
- ----------------------------
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor N
Shares of Nations
International Equity Fund on
June 7, 1993 (inception).
Figures for the Morgan
Stanley Capital
International EAFE Index
("MSCI EAFE Index"), an
unmanaged index used to
portray the pattern of
common stock price movement
in Europe, Australia and the
Far East, include
reinvestment of dividends.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GROWTH OF INVESTMENT MSCI EAFE
WITH DISTRIBUTIONS REINVESTED INDEX
- --------------------------------------------------------------------------------
<S> <C> <C>
June 7, 1993 $10,000 $10,000
9,747 9,844
10,581 10,497
11,279 10,588
11,174 10,958
May 31, 1994 11,406 11,518
11,808 11,529
11,479 11,411
10,942 11,624
May 31, 1995 11,167 11,708
11,967 12,196
12,351 12,690
March 31, 1996 13,005 13,057
</TABLE>
Assumes the reinvestment of all distributions.
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - PRIMARY A SHARES AS OF 3/31/96
<TABLE>
<CAPTION>
- -------------------------------------
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------
<S> <C>
YEAR ENDED 19.78%
03/31/96
---------------------
INCEPTION
(12/02/91) 8.48%
THROUGH
03/31/96
</TABLE>
- ----------------------------
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Primary A
Shares of Nations
International Equity Fund on
December 2, 1991
(inception). Figures for the
Morgan Stanley Capital
International EAFE Index
("MSCI EAFE Index"), an
unmanaged index used to
portray the pattern of
common stock price movement
in Europe, Australia and the
Far East, include
reinvestment of dividends.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GROWTH OF INVESTMENT MSCI EAFE
WITH DISTRIBUTIONS REINVESTED INDEX
- --------------------------------------------------------------------------------
<S> <C> <C>
Dec. 2, 1991 $10,000 $10,000
10,416 10,517
9,700 9,269
May 31, 1992 10,171 9,465
9,934 9,607
9,523 9,236
10,071 10,344
May 31, 1993 10,393 11,384
11,338 12,139
12,114 12,244
12,023 12,672
May 31, 1994 12,310 13,319
12,771 13,332
12,429 13,196
11,876 13,442
May 31, 1995 12,147 13,540
13,034 14,104
13,479 14,675
March 31, 1996 14,225 15,099
</TABLE>
Assumes the reinvestment of all distributions.
- --------------------------------------------------------------------------------
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 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.
Effective January 1, 1996, Nations Fund changed the pricing structure for its
Investor A, Investor C and Investor N Shares. Under the new pricing structure,
the front-end sales charge for Investor A Shares was eliminated, the 1 year
contingent deferred sales charge on Investor C Shares was reduced from 1.00% to
0.50% (for new accounts) and the contingent deferred sales charge on Investor N
Shares was eliminated (for new accounts). Please note that the one-year and
since inception performance figures provided above reflect how the Fund would
have performed during those periods under the new pricing structure.
7
<PAGE> 10
NATIONS PACIFIC GROWTH FUND
PERFORMANCE AND COMMENTARY
PORTFOLIO MANAGER
Seok Teoh is the portfolio manager for Nations Pacific Growth Fund. Ms.
Teoh has been associated with Gartmore plc since 1990 as the London-based
manager on its Far East desk. Prior to that, Ms. Teoh managed Far East equities
for Rothschild Asset Management in Tokyo and in Singapore. She was also
responsible for Singaporean and Malaysian equity sales at Overseas Union Bank
Securities in Singapore. Ms. Teoh, who is a native of Singapore, received an
Economics degree from the University of Durham.
INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth, with income a secondary
consideration. To pursue this objective, the Fund invests primarily in
securities of issuers that conduct their principal business activities in the
Pacific Basin and the Far East (excluding Japan).
PERFORMANCE REVIEW
The Fund commenced operations on June 30, 1995. For the nine-month period
ended March 31, 1996, Nations Pacific Growth Fund Investor A Shares provided a
total return of 2.52%.
PORTFOLIO MANAGER COMMENTARY
In the following interview, Ms. Teoh shares her views on financial market
conditions and Fund performance for the nine-month period ended March 31, 1996.
PLEASE DESCRIBE YOUR OVERALL INVESTMENT PHILOSOPHY.
Our overall investment philosophy is that, in the long run, superior
earnings growth fuels above-average investment returns. We are also cognizant of
paying an appropriate price for this growth potential. Therefore, our investment
philosophy is best characterized as "growth at a reasonable price."
WHAT IS THE FUND'S INVESTMENT APPROACH?
In Nations Pacific Growth Fund, we employ a combination of bottom-up stock
selection and risk controlled country allocation. In addition, we take advantage
of our experience with local contacts to seek to optimize return potential from
the region's rapidly growing markets.
PLEASE DESCRIBE THE MARKET CONDITIONS THAT PREVAILED DURING THE REPORTING
PERIOD.
Asian interest rates were out of step with the U.S., as a result of higher
economic growth and inflation. This had an adverse impact on many of the
region's stock markets. For most of 1995, Asian growth markets and stocks were
heavily down-graded as investors overweighted lower-growth and lower-beta stocks
in the belief that they would be less volatile. However, early in 1996, we
identified a slight reversal of that trend, and the Fund took profits before the
ensuing drop in the bond market. The gains made during this period were mainly
in markets where interest rates tracked those of the U.S. and inflation was
declining, in particular Hong Kong, Singapore and Australia.
DID POLITICAL EVENTS IMPACT FUND PERFORMANCE?
The Fund was overweight in South Korea and Taiwan, both of which were
depressed by political factors during the period ended March 31, 1996. In South
Korea, the revelation of an estimated U.S. $600 million political slush fund
linked to ex-President Roh led to investigations that extended to leading
figures in the business community and caused concern about the possible impact
these criminal investigations would have on economic growth and investment. At
the same time, interest rates rose as corporations began a large bond-issuance
program to fund expansion. This combination of factors depressed the market as
well as the Fund's performance.
8
<PAGE> 11
In Taiwan, the dispute with China over the issue of Taiwan's independence
escalated during the past three months and concerns about the threat of a
military conflict in the region heightened. This concern was exacerbated by the
media who displayed alarming images of troop movements and ships releasing live
missiles. Tension in the region undermined Asian equity markets, precipitating a
sell-off in Taiwanese equities and the local dollar. The government reacted by
using its vast foreign exchange reserves of U.S. $100 billion to defend the
currency. The central bank also intervened, cutting bank reserve requirements to
ensure the banking system's ability to maintain lending despite the flight of
capital.
With the conclusion of Taiwan's first democratic presidential election by
popular vote on March 23rd, the political temperature cooled. President Lee
Teng-hui, the incumbent, retained office and both sides now appear to be moving
toward rapprochement. Although this political turmoil has detracted from the
Fund's performance, it has also created buying opportunities for investors in
the Taiwan stock market.
WHAT THEMES DID THE PORTFOLIO EMPHASIZE AND WHERE WERE HOLDINGS CONCENTRATED?
Growth stocks and markets looked increasingly cheap, and during the year we
increased the Fund's exposure to Malaysia and the Philippines. Favored sectors
in these countries included banks and trade-related shipping services companies.
The Fund also invested in South Korea and Taiwan during the year, carefully
choosing stocks with good longer term growth potential, particularly
telecommunications stocks.
We are maintaining the Fund's overweight position in South Korea, as this
market is now at the low end of its seven-year valuation range. On the basis of
its price-to-earnings ratio, Korea is now cheaper than Hong Kong. We
overweighted the Fund's holdings in banks and construction companies with the
expectation that domestic demand will rebound, prompted by falling interest
rates this year.
WHAT HOLDINGS WERE MOST BENEFICIAL TO PERFORMANCE AND WHY?*
The Fund's heavy weighting in the banking sector added to performance,
especially in January and February of this year. In particular, the Fund's
portfolio holdings of small banks in Hong Kong have done well, as have
telecommunications stocks in Thailand. In February and March, the Fund benefited
from increased exposure to Malaysia.
WHAT IS YOUR OUTLOOK GOING FORWARD AND HOW WILL YOU POSITION THE FUND
ACCORDINGLY?
Early 1996 has been volatile as interest rates neared a peak in countries
with rising inflation and trade deficits. Overall, we expect interest rates to
decline in much of Asia, with the exception of Singapore, where rates are at
historically low levels and Hong Kong, where interest rates are closely linked
to U.S. rates. Earnings growth is still relatively good for the region's markets
as a whole, with particularly good prospects in the Philippines, Malaysia and
Indonesia. Valuations in most of the Asian markets are at the low end of their
seven-year ranges, with the exception of Hong Kong, where valuations are close
to the high end of their ranges.
- ---------------
* Portfolio holdings are subject to change and may not be representative of
current holdings.
9
<PAGE> 12
NATIONS FUND
Nations Pacific Growth Fund
- ---------------------------------------------
PORTFOLIO BREAKDOWN AS OF 3/31/96
<TABLE>
<S> <C>
Finance--Banking 21.6%
Finance--Real Estate 14.1%
Finance--Other 11.5%
Services 10.9%
Services--Telecommunications 10.3%
Capital Equipment 8.3%
Consumer Goods 5.8%
Energy 4.3%
Materials 3.8%
Services--Transportation 3.0%
Investment Funds, Convertible Bonds, Warrants
and Net Other Assets and Liabilities 6.4%
</TABLE>
- ---------------------------------------------------
TOP TEN HOLDINGS AS A % OF NET ASSETS AS OF 3/31/96
<TABLE>
<C> <S> <C>
1. HSBC Holdings plc (Finance -- Banking) 3.5%
2. Sun Hung Kai Properties (Finance -- Real Estate) 2.9%
3. Hutchinson Whampoa Ltd. (Finance -- Other) 2.9%
4. Henderson Land Development Company (Finance --
Real Estate) 2.6%
5. Swire Pacific (Services) 2.5%
6. Malaysian Banking Berhad (Finance -- Banking) 1.8%
7. Hong Kong Telecommunications (Services --
Telecommunications) 1.8%
8. Telekom Malaysia (Services -- Telecommunications) 1.8%
9. Jardine Matheson Holdings (Finance -- Other) 1.7%
10. Straits Steamship Land Ltd. (Finance -- Real
Estate) 1.7%
</TABLE>
- --------------------------------------------------------------------------------
COUNTRY BREAKDOWN AS A % OF COMMON STOCK AS OF 3/31/96
<TABLE>
<S> <C>
Hong Kong 33.9%
Malaysia 19.5%
Singapore 13.3%
Thailand 11.0%
South Korea 7.5%
Indonesia 7.2%
Philippines 6.4%
Australia 1.2%
</TABLE>
- --------------------------------------------------------------------------------
Portfolio holdings are subject to change and may not be representative of the
Fund's current holdings.
10
<PAGE> 13
NATIONS FUND
Nations Pacific Growth Fund
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR A SHARES AS OF 3/31/96
<TABLE>
<CAPTION>
AGGREGATE TOTAL RETURN
------------------------------------
<S> <C>
INCEPTION
(06/30/95) 2.52%
THROUGH
03/31/96
</TABLE>
- ----------------------------
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Pacific
Growth Fund on June 30, 1995
(inception). The Morgan
Stanley Capital
International Combined Far
East (ex-Japan) Free Index
("MSCI Far East Index") is a
capitalization-weighted
index that tracks 7
countries and represents
only those securities that
are available for investment
by international investors;
many issues are still
restricted to domestic
investors in certain Pacific
Basin countries.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GROWTH OF INVESTMENT MSCI
WITH DISTRIBUTIONS REINVESTED FAR EAST INDEX
- --------------------------------------------------------------------------------
<S> <C> <C>
June 30, 1995 $10,000 $10,000
Sep. 30, 1995 9,700 9,842
Dec. 31, 1995 9,731 10,068
March 31, 1996 10,252 11,042
</TABLE>
Assumes the reinvestment of all distributions.
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR C SHARES AS OF 3/31/96
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ----------------------------------------
AGGREGATE TOTAL RETURN
------------------------------------
INCEPTION
(06/30/95) 1.50%* 2.00%
THROUGH
03/31/96
---------------------
Not
*Adjusted adjusted
for maximum for
contingent contingent
deferred deferred
sales charge sales
of 0.50% charge
</TABLE>
- ----------------------------
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor C
Shares of Nations Pacific
Growth Fund on June 30, 1995
(inception). Investor C
Shares that are redeemed
within one year of purchase
are subject to a 0.50%
contingent deferred sales
charge. The Morgan Stanley
Capital International
Combined Far East (ex-Japan)
Free Index ("MSCI Far East
Index") is a
capitalization-weighted
index that tracks 7
countries and represents
only those securities that
are available for investment
by international investors;
many issues are still
restricted to domestic
investors in certain Pacific
Basin countries.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GROWTH OF INVESTMENT MSCI
WITH DISTRIBUTIONS REINVESTED FAR EAST INDEX
- --------------------------------------------------------------------------------
<S> <C> <C>
June 30, 1995 $10,000 $10,000
Sep. 30, 1995 9,680 9,842
Dec. 31, 1995 9,690 10,068
March 31, 1996 10,150 11,042
</TABLE>
Assumes the deduction of the maximum contingent deferred sales charge of 0.50%
and the reinvestment of all distributions.
- --------------------------------------------------------------------------------
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 ORIGINAL COST.
Aggregate total returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming reinvestment
of dividends.
Effective January 1, 1996, Nations Fund changed the pricing structure for its
Investor A, Investor C and Investor N Shares. Under the new pricing structure,
the front-end sales charge for Investor A Shares was eliminated, the 1 year
contingent deferred sales charge on Investor C Shares was reduced from 1.00% to
0.50% (for new accounts) and the contingent deferred sales charge on Investor N
Shares was eliminated (for new accounts). Please note that the since inception
performance figures provided above reflect how the Fund would have performed
during those periods under the new pricing structure.
11
<PAGE> 14
NATIONS FUND
Nations Pacific Growth Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERFORMANCE COMPARISON - INVESTOR N SHARES AS OF 3/31/96
<S> <C> <C>
- ----------------------------------------
AGGREGATE TOTAL RETURN
------------------------------------
INCEPTION
(06/30/95) 1.88%
THROUGH
03/31/96
</TABLE>
- ----------------------------
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor N
Shares of Nations Pacific
Growth Fund on June 30, 1995
(inception). The Morgan
Stanley Capital
International Combined Far
East (ex-Japan) Free Index
("MSCI Far East Index") is a
capitalization-weighted
index that tracks 7
countries and represents
only those securities that
are available for investment
by international investors;
many issues are still
restricted to domestic
investors in certain Pacific
Basin countries.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
GROWTH OF INVESTMENT MSCI
WITH DISTRIBUTIONS REINVESTED FAR EAST INDEX
- ------------------------------------------------------------------------------
<S> <C> <C>
June 30, 1995 $10,000 $10,000
Sep. 30, 1995 9,690 9,842
Dec. 31, 1995 9,698 10,068
March 31, 1996 10,188 11,042
</TABLE>
Assumes the reinvestment of all distributions.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERFORMANCE COMPARISON - PRIMARY A SHARES AS OF 3/31/96
<S> <C>
------------------------------------
AGGREGATE TOTAL RETURN
------------------------------------
INCEPTION
(06/30/95) 2.66%
THROUGH
03/31/96
</TABLE>
- ----------------------------
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Primary A
Shares of Nations Pacific
Growth Fund on June 30, 1995
(inception). The Morgan
Stanley Capital
International Combined Far
East (ex-Japan) Free Index
("MSCI Far East Index") is a
capitalization-weighted
index that tracks 7
countries and represents
only those securities that
are available for investment
by international investors;
many issues are still
restricted to domestic
investors in certain Pacific
Basin countries.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
GROWTH OF INVESTMENT MSCI
WITH DISTRIBUTIONS REINVESTED FAR EAST INDEX
- -------------------------------------------------------------------------------
<S> <C> <C>
June 30, 1995 $10,000 $10,000
Sep. 30, 1995 9,710 9,842
Dec. 31, 1995 9,745 10,068
March 31, 1996 10,266 11,042
</TABLE>
Assumes the reinvestment of all distributions.
- --------------------------------------------------------------------------------
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 ORIGINAL COST.
Aggregate total returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming reinvestment
of dividends.
Effective January 1, 1996, Nations Fund changed the pricing structure for its
Investor A, Investor C and Investor N Shares. Under the new pricing structure,
the front-end sales charge for Investor A Shares was eliminated, the 1 year
contingent deferred sales charge on Investor C Shares was reduced from 1.00% to
0.50% (for new accounts) and the contingent deferred sales charge on Investor N
Shares was eliminated (for new accounts). Please note that the since inception
performance figures provided above reflect how the Fund would have performed
during those periods under the new pricing structure.
12
<PAGE> 15
NATIONS EMERGING MARKETS FUND
PERFORMANCE AND COMMENTARY
PORTFOLIO MANAGER
Philip Ehrmann is the portfolio manager for Nations Emerging Markets Fund.
Mr. Ehrmann joined Gartmore plc, in 1995, as Head of the Emerging Markets Team.
Prior to joining Gartmore plc, he was the Director of Emerging Markets for
Invesco in London. He began his career in 1981, as an institutional stockbroker
with Rowe & Pitman Inc., and also spent a brief period with Prudential Bache
Securities as an institutional salesman. Mr. Ehrmann graduated from the London
School of Economics with a degree in Economics, Industry and Trade.
INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth. To pursue this objective, the Fund
invests primarily in securities of companies that conduct their principal
business activities in emerging markets. The Fund invests primarily in companies
located in countries considered to have potential for rapid economic growth and
that have a relatively low gross national product per capita compared to the
world's major economies.
PERFORMANCE REVIEW
The Fund commenced operations on June 30, 1995. For the nine-month period
ended March 31, 1995, Nations Emerging Markets Fund Investor A Shares provided a
total return of 3.20%.
PORTFOLIO MANAGER COMMENTARY
In the following interview, Mr. Ehrmann shares his views on financial
market conditions and Fund performance for the nine-month period ended March 31,
1996.
PLEASE DESCRIBE YOUR OVERALL INVESTMENT PHILOSOPHY AND THE FUND'S INVESTMENT
APPROACH.
We seek to maximize the returns available from investing in emerging
markets while controlling the higher volatility associated with them.
Considerable emphasis is placed on the systematic analysis of economic data and
valuation criteria to evaluate the merits of individual emerging markets. This
is augmented by extensive primary research to assess growth prospects of the
leading companies within each country. The blending of macro-economic indicators
with an understanding of the factors directly influencing company performance
allows us to emphasize those countries where prospects are brightest. Portfolios
are constructed utilizing securities that encapsulate the most dynamic
characteristics of the local economy.
PLEASE DESCRIBE MARKET CONDITIONS THAT PREVAILED DURING THE REPORTING PERIOD.
Over the first half of the reporting period, the primary influence on
emerging markets was U.S. domestic monetary policy, and the degree to which
interest-rate volatility affected the flow of investor funds into these markets.
In addition, currency volatility, high foreign debt levels and current account
instability were a constant source of investor concern. Following clear signs of
an easing monetary stance in the United States during the fourth quarter of
1995, markets around the world recovered their poise. Share trading in the Latin
American markets, previously subdued in the aftermath of the Mexican "Tequila
crisis," recovered notably. The new year and evidence of renewed investor
interest triggered a similar surge of investment across many of the Asian
emerging markets.
WHAT WERE THE MAJOR EVENTS OF THE LAST NINE MONTHS?
Latin America continued to adjust to the collapse in the value of the
Mexican peso. The devaluation of the peso had the effect of making Mexico's
exports more competitive, turning a growing trade deficit into a record trade
surplus in 1995. Elsewhere in the region, attention focused on Brazil, where
genuine economic and political reforms have taken place. The Argentine economy
contracted throughout the year as the Central Bank fought to protect the
hard-earned gains of the Dollar Convertibility program. As it became clear that
domestic investors were not fleeing the country's banking system, confidence was
restored, which produced a sharp recovery in the Argentine stock market.
13
<PAGE> 16
Asian markets were negatively affected by investors who fled economies
afflicted by perceived structural weakness. After over 18 months of
consolidation, valuation levels across the region returned to attractive levels.
Strong economic and corporate earnings growth continued to erode the
historically high price-to-earnings multiples of late 1993.
The inclusion of South Africa in the International Finance Corporation
Investables Index -- IFC ("the Index") (March 1995) also proved to be a
significant event. The substantial weighting of the market required investors to
actively build positions. However, the South African market is tightly held,
dominated by local institutions, so there is not a large supply of shares
available to individual investors. Therefore, an uptick in foreign buying acted
to drive up stock prices.
HOW WAS THE PORTFOLIO POSITIONED IN REACTION TO THESE EVENTS?
We took advantage of attractive stock prices to increase the Fund's
exposure to the depressed markets of Asia. Of particular note was the
opportunity to build up the Fund's holdings in South Korea by taking advantage
of a decline in local sentiment in the wake of a political scandal involving
several leading industrialists. The South Korean economy continues to exhibit
strong growth and the forthcoming deregulation of the investment market should
further stimulate foreign interest.
Elsewhere in Asia, the Fund benefited from the year-end rally in securities
exposed to China. There is evidence that a "soft landing" has been engineered in
the Chinese economy and further strength in these securities is to be expected.
WHERE DID THE FUND INVEST MOST HEAVILY?
The Fund was heavily invested in Brazil (14.8%), which was materially
overweight the benchmark Index at 10.5%. Other large positions included Malaysia
(12.5%), and South Africa (10.2%). On a regional basis, the Fund closed the
period neutrally weighted to Latin America, marginally overweight the Pacific
Rim, underweight Europe and Africa, and heavily overweight the Indian
Sub-Continent. The Indian market stands at its lowest level of relative
valuation since 1992, and corporate earnings are likely to exceed those
elsewhere in the emerging markets field.
WHAT COUNTRIES AND SECURITIES HOLDINGS WERE MOST BENEFICIAL TO FUND PERFORMANCE
SINCE INCEPTION?*
The holdings in the Latin American markets of Argentina and Brazil
contributed strongly, as the returns from these holdings were up 20% and 14%,
respectively. In Asia, Indonesian stocks (although a small part of the Fund's
portfolio) shone brightly, rising by almost 11%.
The performance contributions of individual securities were masked by the
Fund's strong cash flow since inception. However, an increase of over 20% in the
value of holdings in Telebras, ADR (a Brazilian telephone utility), Netas ord (a
Turkish telecom equipment manufacturer), and Dong-Ah Construction Industries,
EDR (a South Korean construction company) stand out.
WHAT IS YOUR OUTLOOK GOING FORWARD AND HOW WILL YOU POSITION THE FUND
ACCORDINGLY?
In a benign interest-rate environment, prospects across the emerging
markets through the remainder of 1996 appear bright. In many regions, political
issues are expected to be resolved in the near-term, removing a significant
degree of uncertainty. Growth across Latin America is likely to rebound after
the very difficult corporate environment in 1995. The only cloud on the horizon
is the continued strong pace of growth in Asia. It remains to be seen whether
action by monetary authorities to curb inflationary excesses will bear fruit.
Consequently, the Fund's exposure to Latin America is neutral with the
Index, having been overweight during the final quarter of 1995. Within the
region, the Fund remains overweighted in Brazil at the expense of Mexico.
Profits from Latin America have been channeled into Asia, with Thailand and the
Philippines being the primary beneficiaries. Exposure to Malaysia, while well
below the Index weighting, is substantial when compared to those of its peers,
and will continue to be monitored closely. Exposure to the depressed markets of
South Korea and Taiwan is maintained. In both instances, political issues have
clouded solid fundamental values. Elsewhere, the Fund's holdings in South Africa
are expected to benefit from further inward flows of international capital and
continued economic progress.
- ---------------
* Portfolio holdings are subject to change and may not be representative of
current holdings.
14
<PAGE> 17
NATIONS FUND
Nations Emerging Markets Fund
- ---------------------------------------------
PORTFOLIO BREAKDOWN AS OF 3/31/96
<TABLE>
<S> <C>
Finance 22.1%
Preferred Stocks, Investment Funds,
Convertible Bonds, Warrants, Rights and
Net Other Assets and Liabilities 19.0%
Services 18.5%
Materials 14.4%
Energy 12.9%
Consumer Goods 9.1%
Capital Equipment 4.0%
</TABLE>
- ---------------------------------------------------
TOP TEN HOLDINGS AS A % OF NET ASSETS AS OF 3/31/96
<TABLE>
<C> <S> <C>
1. Taiwan Index Fund (Finance) 2.7%
2. Telebras, ADR (Services) 2.5%
3. Indian Hotels, GDR (Services) 2.3%
4. Telekom Malaysia (Services) 2.1%
5. CEMIG Companhia, New, ADR (Energy) 2.0%
6. Larsen & Toubro Ltd., GDS (Consumer Goods) 1.9%
7. Development & Commercial Bank Holdings
Corporation (Finance) 1.9%
8. Bandar Raya Developments Berhad (Finance) 1.7%
9. Telefonos de Mexico SA, ADR (Services) 1.7%
10. Technology Resources Industries (Services) 1.6%
</TABLE>
- --------------------------------------------------------------------------------
COUNTRY BREAKDOWN AS A % OF COMMON STOCK AS OF 3/31/96
<TABLE>
<S> <C>
Malaysia 15.4%
Other Countries 15.1%
South Africa 12.6%
Brazil 11.4%
India 9.0%
Mexico 8.2%
Thailand 7.2%
South Korea 5.6%
Philippines 5.3%
Argentina 5.3%
Hong Kong 4.9%
</TABLE>
- --------------------------------------------------------------------------------
Portfolio holdings are subject to change and may not be representative of the
Fund's current holdings.
15
<PAGE> 18
NATIONS FUND
Nations Emerging Markets Fund
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR A SHARES AS OF 3/31/96
<TABLE>
<S> <C> <C>
- -------------------------------------
AGGREGATE TOTAL RETURN
---------------------------------
INCEPTION
(06/30/95) 3.20%
THROUGH
03/31/96
</TABLE>
- ----------------------------
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Emerging
Markets Fund on June 30,
1995 (inception). The IFC
Investables Index ("IFC
Index"), includes over 1,100
stocks representing 27 stock
markets in developing
countries, and reflects the
accessibility of markets and
individual stocks for
foreign ownership.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GROWTH OF INVESTMENT
WITH DISTRIBUTIONS REINVESTED IFC INDEX
- --------------------------------------------------------------------------------
<S> <C> <C>
June 30, 1995 $10,000 $10,000
Sep. 30, 1995 9,870 9,966
Dec. 31, 1995 9,770 9,874
March 31, 1996 10,320 10,619
</TABLE>
Assumes the reinvestment of all distributions.
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR C SHARES AS OF 3/31/96
<TABLE>
<S> <C> <C> <C>
- -------------------------------------
AGGREGATE TOTAL RETURN
---------------------------------
INCEPTION
(06/30/95) 2.20%* 2.70%
THROUGH
03/31/96
---------------------
*Adjusted Not
for maximum adjusted
contingent for
deferred contingent
sales charge deferred
of 0.50% sales
charge
</TABLE>
- ----------------------------
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor C
Shares of Nations Emerging
Markets Fund on June 30,
1995 (inception). Investor C
Shares that are redeemed
within one year of purchase
are subject to a 0.50%
contingent deferred sales
charge. The IFC Investables
Index ("IFC Index"),
includes over 1,100 stocks
representing 27 stock
markets in developing
countries, and reflects the
accessibility of markets and
individual stocks for
foreign ownership.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GROWTH OF INVESTMENT
WITH DISTRIBUTIONS REINVESTED IFC INDEX
- --------------------------------------------------------------------------------
<S> <C> <C>
June 30, 1995 $10,000 $10,000
Sep. 30, 1995 9,850 9,966
Dec. 31, 1995 9,730 9,874
March 31, 1996 10,220 10,619
</TABLE>
Assumes the deduction of the maximum contingent deferred sales charge of 0.50%
and the reinvestment of all distributions.
- --------------------------------------------------------------------------------
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 ORIGINAL COST.
Aggregate total returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming reinvestment
of dividends.
Effective January 1, 1996, Nations Fund changed the pricing structure for its
Investor A, Investor C and Investor N Shares. Under the new pricing structure,
the front-end sales charge for Investor A Shares was eliminated, the 1 year
contingent deferred sales charge on Investor C Shares was reduced from 1.00% to
0.50% (for new accounts) and the contingent deferred sales charge on Investor N
Shares was eliminated (for new accounts). Please note that the since inception
performance figures provided above reflect how the Fund would have performed
during those periods under the new pricing structure.
16
<PAGE> 19
NATIONS FUND
Nations Emerging Markets Fund
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR N SHARES AS OF 3/31/96
<TABLE>
<S> <C> <C>
- -------------------------------------
AGGREGATE TOTAL RETURN
---------------------------------
INCEPTION
(06/30/95) 2.60%
THROUGH
03/31/96
</TABLE>
- ----------------------------
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor N
Shares of Nations Emerging
Markets Fund on June 30,
1995 (inception). The IFC
Investables Index ("IFC
Index"), includes over 1,100
stocks representing 27 stock
markets in developing
countries, and reflects the
accessibility of markets and
individual stocks for
foreign ownership.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GROWTH OF INVESTMENT
WITH DISTRIBUTIONS REINVESTED IFC INDEX
- --------------------------------------------------------------------------------
<S> <C> <C>
June 30, 1995 $10,000 $10,000
Sep. 30, 1995 9,850 9,966
Dec. 31, 1995 9,730 9,874
March 31, 1996 10,260 10,619
</TABLE>
Assumes the reinvestment of all distributions.
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - PRIMARY A SHARES AS OF 3/31/96
<TABLE>
<S> <C> <C> <C>
- -------------------------------------
AGGREGATE TOTAL RETURN
---------------------------------
INCEPTION
(6/30/95) 3.42%
THROUGH
03/31/96
</TABLE>
- ----------------------------
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Primary A
Shares of Nations Emerging
Markets Fund on June 30,
1995 (inception). The IFC
Investables Index ("IFC
Index"), includes over 1,100
stocks representing 27 stock
markets in developing
countries, and reflects the
accessibility of markets and
individual stocks for
foreign ownership.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GROWTH OF INVESTMENT
WITH DISTRIBUTIONS REINVESTED IFC INDEX
- --------------------------------------------------------------------------------
<S> <C> <C>
June 30, 1995 $10,000 $10,000
Sep. 30, 1995 9,880 9,966
Dec. 31, 1995 9,782 9,874
March 31, 1996 10,342 10,619
</TABLE>
Assumes the reinvestment of all distributions.
- --------------------------------------------------------------------------------
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 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.
Effective January 1, 1996, Nations Fund changed the pricing structure for its
Investor A, Investor C and Investor N Shares. Under the new pricing structure,
the front-end sales charge for Investor A Shares was eliminated, the 1 year
contingent deferred sales charge on Investor C Shares was reduced from 1.00% to
0.50% (for new accounts) and the contingent deferred sales charge on Investor N
Shares was eliminated (for new accounts). Please note that the since inception
performance figures provided above reflect how the Fund would have performed
during those periods under the new pricing structure.
17
<PAGE> 20
NATIONS GLOBAL GOVERNMENT INCOME FUND
PERFORMANCE AND COMMENTARY
PORTFOLIO MANAGER
Mark Rimmer is the portfolio manager for Nations Global Government Income
Fund. Mr. Rimmer joined Gartmore plc, in 1990 as an International Fixed Income
Fund Manager. Previously, Mr. Rimmer managed multi-currency funds for
institutional clients at Gulf International Bank in Bahrain, and prior to that
was a senior trader for Sumitomo Finance International in London. Mr. Rimmer
graduated from Cambridge University with an honors degree in Economics.
INVESTMENT OBJECTIVE
The Fund seeks current income. Although the Fund emphasizes income when
selecting investments, the potential for growth of capital also is considered.
To pursue this objective, the Fund invests primarily in debt securities issued
by governments, banks and supranational entities located throughout the world.
PERFORMANCE REVIEW
The Fund commenced operations on June 30, 1995. For the nine-month period
ended March 31, 1996, Nations Global Government Income Fund Investor A Shares
provided a total return of 4.84%.
PORTFOLIO MANAGER COMMENTARY
In the following interview, Mr. Rimmer shares his views on financial market
conditions and Fund performance for the nine-month period ended March 31, 1996.
BRIEFLY DESCRIBE YOUR FIXED INCOME INVESTMENT PHILOSOPHY AND STYLE.
Our investment philosophy is founded upon the belief that the analysis of
longer term economic trends is the key to successful fixed income investment
management. Therefore, our investment process is top-down, macroeconomic-driven
and strategic in nature. We focus on high-quality, fixed income securities and
strive to add value through correct identification of interest-rate and currency
trends across global markets.
PLEASE DESCRIBE MARKET CONDITIONS THAT PREVAILED DURING THE REPORTING PERIOD.
During 1995, global bonds performed well, with the rally led by the sharp
fall in U.S. bond yields. In the very early part of the reporting period, global
bond yields rose as investors perceived the U.S. economy was recovering.
However, this recovery proved to be short-lived as economic data releases showed
that growth was still subdued. As a result, the U.S. bond market and overseas
bond markets performed well, with yields falling and prices rising. The yield on
the U.S. long bond fell from a high of 7% in August to a low of just below 6% at
the end of 1995. However, during the first calendar quarter of 1996, the U.S.
bond market weakened substantially on fears of sustainable economic strength,
with the yield on the long bond moving back above 6.5%. Overseas bond markets
reacted to the U.S. movements and also weakened, but in most markets, the rise
in yields was not as pronounced as in the U.S.
WHERE WERE FUND HOLDINGS CONCENTRATED AND WHY?*
The Fund had an overweight position in the Canadian and Australian bond
markets over most of the period. These markets provided incremental income, and
handsomely outperformed the U.S. bond market. The Australian market was
particularly attractive as the Australian dollar appreciated sharply versus the
U.S. dollar.
The Fund also concentrated investments in the European bond markets because
these economies were weak and the prospects were good for further interest-rate
cuts to stimulate growth. Initially, investments were directed toward core
markets such as Germany and Holland. At the start of 1996, some of these
holdings were switched into the higher-
- ---------------
* Portfolio holdings are subject to change and may not be representative of
current holdings.
18
<PAGE> 21
yielding peripheral markets of Italy, Spain and Sweden. Despite political
uncertainties in some of these countries, these bond markets appeared attractive
when compared to Germany, due to the fundamentals of falling inflation and
improved prospects for monetary union.
WHICH POSITIONS HAD THE MOST IMPACT ON PERFORMANCE?
The Fund benefited from a healthy exposure to U.S. bonds during the rally
toward the end of 1995 and from the defensive position adopted in U.S. bonds
early this year. The Fund also benefited from its European bond positions,
particularly as some of the currency exposure was hedged back to the U.S.
dollar, which rose moderately over the period. The Australian and Canadian bond
markets also provided very attractive returns over the period.
In both local and U.S. dollar terms, Japanese bonds performed very poorly
over the period. However, the Fund had only a very small exposure to this
market, and the negative impact was further limited as much of the Japanese yen
position was hedged back into the dollar.
WHAT IS YOUR OUTLOOK AND HOW WILL YOU POSITION THE FUND ACCORDINGLY?
In the U.S., inflation remains low. However, the economic recovery has
somewhat worsened the outlook for bonds, as clearly there is now less scope for
short-term interest rates to fall. Although the Fund is likely to maintain an
underweight position in U.S. bonds, the rise in U.S. bond yields already
reflects stronger economic growth, and, if the yield on the long bond reaches
7%, these bonds would start to represent good value. The Fund will maintain an
overweight position in European bonds as we believe these economies will remain
weak. European official interest rates may be cut further and, with high
unemployment, inflationary pressures are absent. As the European higher-yielding
markets have performed well recently, it may be appropriate to reduce exposure
to these markets, as they could be vulnerable to any increase in uncertainty
over monetary union. The Fund will remain underweight in Japanese bonds. Overall
duration is currently close to the JP Morgan Global Government Bond Index (the
"Index"). However, if global bond yields rise from current levels, particularly
in the U.S., we might be inclined to raise duration above that of the benchmark.
The Fund will retain a positive stance on the U.S. dollar, and, after currency
hedges are taken into account, will have an exposure to the dollar-bloc
currencies above that of the Index.
19
<PAGE> 22
NATIONS FUND
Nations Global Government Income Fund
- ---------------------------------------------
PORTFOLIO BREAKDOWN AS OF 3/31/96
<TABLE>
<S> <C>
Other Foreign Bonds and Notes, U.S. Treasury
Obligations and Net Other Assets and Liabilities 27.7%
Canada 11.8%
Italy 11.4%
Great Britain 10.7%
Denmark 9.3%
Germany 8.0%
Australia 6.6%
Spain 5.2%
Portugal 5.0%
Supranational 4.3%
</TABLE>
---------------------------------------
TOP TEN HOLDINGS AS A % OF NET
ASSETS AS OF 3/31/96
<TABLE>
<C> <S> <C>
1. Kingdom of Denmark, 7.000% due 11/10/24 5.0%
2. Government of Portugal, 6.000% due 02/16/04 5.0
3. Republic of Italy, 9.500% due 12/01/99 4.6
4. Federal Republic of Germany, 6.500% due 10/14/05 4.6
5. Province of Alberta, 6.250% due 10/19/00 4.5
6. Government of Canada, 8.500% due 03/01/00 4.4
7. Kingdom of Denmark, 8.000% due 03/15/06 4.3
8. United Kingdom Treasury, 8.000% due 12/07/00 4.3
9. Republic of Italy, Global Bond, 3.500% due
06/20/01 4.3
10. Government of Sweden, 6.000% due 02/09/05 3.8
</TABLE>
- --------------------------
Portfolio holdings are subject to change and may not be representative of the
Fund's current holdings.
20
<PAGE> 23
NATIONS FUND
Nations Global Government Income Fund
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR A SHARES AS OF 3/31/96
<TABLE>
<CAPTION>
- -------------------------------------
AGGREGATE TOTAL RETURN
- ------------------------------------
<S> <C>
INCEPTION
(06/30/95) 4.84%
THROUGH
03/31/96
</TABLE>
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Global
Government Income Fund on
June 30, 1995 (inception).
The JP Morgan Global
Government Bond Index ("JP
Morgan Index") is a
capitalization-weighted
index that tracks government
bonds issued in 13 countries
located in the United
States, Europe and the Far
East.
<TABLE>
<CAPTION>
Growth of Investment
with
Distributions Reinvested JP Morgan Index
------------------------ ---------------
<S> <C> <C>
June 30, 1995 $10,000 $10,000
Sep. 30, 1995 10,163 9,988
Dec. 31, 1995 10,623 10,325
March 31, 1996 10,484 10,143
</TABLE>
Assumes the reinvestment of all distributions.
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR C SHARES AS OF 3/31/96
<TABLE>
<CAPTION>
- ------------------------------------------
AGGREGATE TOTAL RETURN
- ------------------------------------------
<S> <C> <C>
INCEPTION
(06/30/95) 3.90%* 4.40%
THROUGH
03/31/96
- ------------------------------------------
*Adjusted Not
for maximum adjusted
contingent for
deferred contingent
sales charge deferred
of 0.50% sales
charge
</TABLE>
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor C
Shares of Nations Global
Government Income Fund on
June 30, 1995 (inception).
Investor C Shares that are
redeemed within one year of
purchase are subject to a
0.50% contingent deferred
sales charge. The JP Morgan
Global Government Bond Index
("JP Morgan Index") is a
capitalization-weighted
index that tracks government
bonds issued in 13 countries
located in the United
States, Europe and the Far
East.
<TABLE>
<CAPTION>
Growth of Investment
with
Distributions Reinvested JP Morgan Index
------------------------ ---------------
<S> <C> <C>
June 30, 1995 $10,000 $10,000
Sep. 30, 1995 10,146 9,988
Dec. 31, 1995 10,586 10,325
March 31, 1996 10,390 10,143
</TABLE>
Assumes the deduction of the maximum contingent deferred sales charge of 0.50%
and the reinvestment of all distributions.
- --------------------------------------------------------------------------------
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 ORIGINAL COST.
Aggregate total returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming reinvestment
of dividends.
Effective January 1, 1996, Nations Fund changed the pricing structure for its
Investor A, Investor C and Investor N Shares. Under the new pricing structure,
the front-end sales charge for Investor A Shares was eliminated, the 1 year
contingent deferred sales charge on Investor C Shares was reduced from 1.00% to
0.50% (for new accounts) and the contingent deferred sales charge on Investor N
Shares was eliminated (for new accounts). Please note that the since inception
performance figures provided above reflect how the Fund would have performed
during those periods under the new pricing structure.
21
<PAGE> 24
NATIONS FUND
Nations Global Government Income Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERFORMANCE COMPARISON - INVESTOR N SHARES AS OF 3/31/96
<S> <C>
------------------------------------
AGGREGATE TOTAL RETURN
------------------------------------
INCEPTION
(06/30/95) 4.27%
THROUGH
03/31/96
</TABLE>
- ----------------------------
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor N
Shares of Nations Global
Government Income Fund on
June 30, 1995 (inception).
The JP Morgan Global
Government Bond Index ("JP
Morgan Index") is a
capitalization-weighted
index that tracks government
bonds issued in 13 countries
located in the United
States, Europe and the Far
East.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
GROWTH OF INVESTMENT
WITH DISTRIBUTIONS REINVESTED JP MORGAN INDEX
- ------------------------------------------------------------------------------
<S> <C> <C>
June 30, 1995 $10,000 $10,000
Sep. 30, 1995 10,146 9,988
Dec. 31, 1995 10,586 10,325
March 31, 1996 10,427 10,143
</TABLE>
Assumes the reinvestment of all distributions.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERFORMANCE COMPARISON - PRIMARY A SHARES AS OF 3/31/96
<S> <C>
------------------------------------
AGGREGATE TOTAL RETURN
------------------------------------
INCEPTION
(06/30/95) 5.03%
THROUGH
03/31/96
</TABLE>
- ----------------------------
- ----------------------------
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Primary A
Shares of Nations Global
Government Income Fund on
June 30, 1995 (inception).
The JP Morgan Global
Government Bond Index ("JP
Morgan Index") is a
capitalization-weighted
index that tracks government
bonds issued in 13 countries
located in the United
States, Europe and the Far
East.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
GROWTH OF INVESTMENT
WITH DISTRIBUTIONS REINVESTED JP MORGAN INDEX
- -------------------------------------------------------------------------------
<S> <C> <C>
June 30, 1995 $10,000 $10,000
Sep. 30, 1995 10,169 9,988
Dec. 31, 1995 10,636 10,325
March 31, 1996 10,503 10,143
</TABLE>
Assumes the reinvestment of all distributions.
- --------------------------------------------------------------------------------
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 ORIGINAL COST.
Aggregate total returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming reinvestment
of dividends.
Effective January 1, 1996, Nations Fund changed the pricing structure for its
Investor A, Investor C and Investor N Shares. Under the new pricing structure,
the front-end sales charge for Investor A Shares was eliminated, the 1 year
contingent deferred sales charge on Investor C Shares was reduced from 1.00% to
0.50% (for new accounts) and the contingent deferred sales charge on Investor N
Shares was eliminated (for new accounts). Please note that the since inception
performance figures provided above reflect how the Fund would have performed
during those periods under the new pricing structure.
22
<PAGE> 25
NATIONS FUND
Nations International Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
------------------------------------------------------------
COMMON STOCKS -- 95.8%
ARGENTINA -- 0.5%
280,014 Perez Compac, ADR.................. $ 3,150,158
55,000 Y.P.F. Sociedad Anonima, ADR....... 1,106,875
------------
4,257,033
------------
AUSTRALIA -- 2.1%
1,250,000 Australia & New Zealand Bank
Group............................ 5,978,095
250,000 Broken Hill Property............... 3,559,506
365,500 CRA Ltd. .......................... 5,469,624
2,000,000 Fosters Brewing Group.............. 3,454,010
------------
18,461,235
------------
AUSTRIA -- 0.1%
16,650 Bohler-Uddeholm.................... 1,293,438
------------
BELGIUM -- 0.5%
12,500 Generale de Banque................. 4,439,637
------------
BRAZIL -- 0.7%
200,000 Aracruz Celulose SA, ADR........... 1,600,000
80,000 CEMIG Compania, New, ADR........... 2,240,000
50,000 Telebras, ADR...................... 2,487,500
------------
6,327,500
------------
FRANCE -- 6.5%
32,000 Alcatel Alsthom Cie Generale
d'Electric....................... 2,965,916
14,000 Carrefour.......................... 10,249,529
42,321 Compagnie de Saint-Gobain.......... 5,494,379
105,000 Credit Commercial de France........ 4,898,263
91,000 Credit Local de France............. 7,124,645
20,000 L'Oreal............................ 6,265,012
42,000 LVMH Moet Hennessey................ 10,655,285
155,000 TOTAL, "B" Shares ord.............. 10,461,539
------------
58,114,568
------------
GERMANY -- 6.9%
37,000 Bayer AG........................... 12,605,718
10,000 Daimler-Benz AG.................... 5,440,011
18,000 Hoechst AG......................... 6,377,617
35,000 Lufthansa.......................... 5,548,405
34,000 Mannesmann AG...................... 12,392,114
195,000 RWE AG............................. 7,829,856
235,000 Veba AG............................ 11,422,837
------------
61,616,558
------------
GREAT BRITAIN -- 13.7%
1,900,000 Allied Colloids ord................ 3,755,462
1,075,000 Allied Irish Banks................. 5,496,589
500,000 Argos ord.......................... 5,212,316
800,000 B.A.T. Industries ord.............. 5,903,730
375,000 Barclays plc, ord.................. 4,161,077
375,000 Bass ord........................... 4,278,411
1,100,000 BPB Industries ord................. 5,196,290
765,000 British Airport Authority ord...... 6,246,766
200,000 British Land Company plc, ord...... 1,169,146
850,000 British Petroleum Company ord...... 7,440,333
800,000 British Telecommunications ord..... 4,511,744
1,125,000 BTR ord............................ 5,417,413
175,000 Cable & Wireless ord............... 1,419,650
400,000 Cadbury Schweppes ord.............. 3,058,706
600,000 E.M.A.P. ord....................... 5,888,467
250,000 Enterprise Oil ord................. 1,669,391
90,000 Glaxo Wellcome ord................. 1,127,783
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
GREAT BRITAIN -- (CONTINUED)
720,000 Guinness ord....................... $ 5,230,937
1,150,000 INCHCAPE ord....................... 5,011,226
150,000 Kingfisher ord..................... 1,302,697
675,000 Marks & Spencer ord................ 4,327,062
182,560 National Grid Group plc, ord....... 542,654
450,000 Powergen plc, ord+................. 3,448,295
550,000 Reuters Holdings ord............... 5,968,598
1,805,074 Rolls Royce plc, ord............... 5,937,209
1,000,000 Royal Insurance Holdings ord....... 5,395,472
125,000 Scottish & Newcastle Breweries
ord.............................. 1,221,040
300,000 Smith (D.S.) Holdings ord.......... 1,410,302
400,000 Smithkline Beecham "A" ord......... 4,011,118
125,000 Unilever ord....................... 2,327,608
350,000 United Utilities ord............... 3,298,717
200,000 Wolseley ord....................... 1,340,092
------------
122,726,301
------------
HONG KONG -- 5.6%
910,000 Cheung Kong Holdings............... 6,412,594
1,600,000 Dao Heng Bank Group................ 6,620,119
2,500,000 Hong Kong and China Gas............ 4,929,532
1,650,000 Hong Kong Land Holdings............ 3,960,000
2,550,000 Hong Kong Telecommunications....... 5,094,065
308,323 HSBC Holdings plc.................. 4,624,446
375,000 Jardine Matheson Holdings.......... 2,925,000
610,000 Jardine Strategic Holdings......... 1,927,600
590,000 Sun Hung Kai Properties............ 5,282,842
625,000 Swire Pacific...................... 5,495,216
900,000 Wharf Holdings..................... 3,397,983
------------
50,669,397
------------
INDIA -- 0.1%
95,000 Reliance Industries Ltd., GDS...... 1,365,625
------------
INDONESIA -- 1.2%
835,500 PT Indofood Sukses Makmur, Alien
Shares+.......................... 3,904,122
73,000 PT Indonesian Satellite, ADR, "B"
Class............................ 2,491,125
1,100,000 PT Inti Indorayon Utama, Alien
Shares........................... 1,140,932
1,000,000 Semen Cibinong, Alien Shares....... 2,822,926
------------
10,359,105
------------
ITALY -- 2.5%
102,600 Gucci Group........................ 4,924,800
440,000 Rinascente......................... 2,841,389
2,421,000 Telecom Italia..................... 3,837,110
6,000,000 Telecom Italia Mobile.............. 10,906,343
------------
22,509,642
------------
JAPAN -- 28.4%
500,000 Asahi Bank Ltd. ................... 5,984,105
273,000 Canon Sales Company................ 7,249,369
350,000 Dai-ichi Kangyo Bank............... 6,839,645
1,000 East Japan Railway Company......... 5,142,590
350,000 Hitachi Ltd. ...................... 3,403,460
225,000 Kajima Corporation................. 2,419,355
560,000 Kirin Brewery Company.............. 6,754,558
358,000 Marui Company...................... 7,799,345
450,000 Matsushita Electric Industrial..... 7,321,178
700,000 Mitsubishi Electric Corporation.... 5,209,911
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE> 26
NATIONS FUND
Nations International Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
JAPAN -- (CONTINUED)
200,000 Mitsubishi Estate Company.......... $ 2,748,948
990,000 Mitsubishi Heavy Industries........ 8,553,156
625,000 Mitsui Fudosan Company............. 8,122,955
830,000 New OJI Paper Company.............. 7,566,620
915,000 Nippon Express Company Ltd. ....... 8,983,170
1,500,000 Nippon Oil Company................. 9,579,243
1,300,000 Nippon Sanso....................... 6,746,143
2,000,000 Nippon Steel....................... 6,881,720
1,065 Nippon Telephone & Telegraph
Corporation...................... 7,787,097
9,000 Nippon Television Network
Corporation...................... 2,650,771
1,500,000 Nippon Yusen....................... 8,541,374
355,000 Nomura Securities Company.......... 7,800,374
1,150,000 NTN Corporation.................... 8,548,387
900,000 Ricoh Company...................... 9,677,419
110,000 Rohm Company....................... 6,273,960
400,000 Sekisui House...................... 5,011,688
850,000 Shimizu Construction Company....... 9,298,738
510,000 Shizuoka Bank...................... 6,437,588
550,000 Sumitomo Trust & Bank.............. 7,559,607
165,000 TDK Corporation.................... 8,500,701
1,500,000 Teijin............................. 8,274,895
475,000 Tokyo Broadcasting Systems Inc. ... 7,372,604
325,000 Tokyo Electric Power Company....... 8,326,321
215,000 Tostem Corporation................. 6,714,353
2,150,000 UBE Industries Ltd. ............... 8,322,581
250,000 Yamaha Motors Company.............. 2,454,418
1,170,000 Yasuda Fire & Marine Industries.... 8,718,934
------------
255,577,281
------------
MALAYSIA -- 3.4%
412,500 Genting Berhad..................... 3,733,696
1,850,000 Land & General Berhad.............. 4,899,209
166,666 Leader Universal Holdings.......... 474,306
450,000 Malayan Banking Berhad............. 4,197,628
2,350,000 Malaysian Resources................ 5,573,123
960,000 Perusahaan Otomobil Nasional....... 4,287,747
500,000 Tenaga Nasional Berhad............. 2,114,625
800,000 United Engineers (Malaysia)
Berhad........................... 5,533,597
------------
30,813,931
------------
MEXICO -- 0.1%
44,000 Grupo Carso S.A. de CV, ADR++...... 679,800
------------
NETHERLANDS -- 6.2%
800,000 Elsevier N.V. ..................... 12,251,074
150,000 Fortis Amev N.V. .................. 10,577,447
100,000 K.L.M. ............................ 3,480,419
170,000 Polygram........................... 10,289,934
50,000 Royal Dutch Petroleum.............. 7,081,896
110,000 Wolters Kluwer..................... 12,104,594
------------
55,785,364
------------
NORWAY -- 0.5%
100,000 Norsk Hydro AS .................... 4,366,778
------------
SINGAPORE -- 2.7%
300,000 Development Bank of Singapore,
Alien Shares..................... 3,686,865
250,000 Keppel Corporation................. 2,273,212
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
SINGAPORE -- (CONTINUED)
330,000 Overseas Chinese Banking
Corporation, Alien Shares........ $ 4,430,632
300,000 Singapore Airlines, Alien Shares... 3,111,458
252,000 Singapore Press Holdings,
Alien Shares..................... 5,030,333
900,000 Straits Steamship Land Ltd. ....... 3,030,475
1,160,000 United Overseas Land............... 2,447,396
------------
24,010,371
------------
SOUTH KOREA -- 1.5%
33,405 Hyundai Engine and Construction.... 1,592,849
70,000 Korea Electric Power
Corporation, ADR................. 2,729,306
192,000 Korea First Bank................... 1,696,031
50,000 LG Electronics Inc.+............... 1,361,457
46,915 Samsung Electronics Ltd., GDR++.... 1,688,947
120,000 Yukong Ltd., GDS................... 4,019,175
------------
13,087,765
------------
SPAIN -- 2.7%
35,000 Banco Popular de Espanol........... 6,047,467
150,000 Continente Cent. .................. 3,427,086
125,000 Empresa Nacional de Electridad SA
(Endesa)......................... 7,162,429
200,000 Repsol SA.......................... 7,543,216
------------
24,180,198
------------
SWEDEN -- 2.0%
20,000 Astra AB "B"....................... 919,702
400,000 Atlas Copco AB "B"................. 7,178,161
450,000 Ericsson (L.M.) Telephone Company,
Class B.......................... 9,892,402
------------
17,990,265
------------
SWITZERLAND -- 5.8%
7,280 Brown Boveri & Cie AG.............. 8,857,073
8,000 Ciba Geigy AG...................... 10,015,555
8,750 Nestle SA.......................... 9,873,040
1,700 Roche Holdings AG.................. 14,121,999
33,000 Zurich Versicherungs............... 9,489,217
------------
52,356,884
------------
THAILAND -- 2.1%
250,000 Advanced Information Services
Public Company Ltd., Alien
Shares........................... 4,792,459
225,000 Bangkok Bank Public Company Ltd.,
Alien Shares..................... 3,029,943
80,000 Siam Cement Public Company Ltd.,
Alien Shares..................... 4,119,138
485,000 Thai Farmers Bank Public Company
Ltd., Alien Shares............... 5,685,995
450,000 Thai Telephone &
Telecommunications, Alien
Shares........................... 1,604,087
------------
19,231,622
------------
TOTAL COMMON STOCKS
(Cost $747,363,674).............. 860,220,298
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE> 27
NATIONS FUND
Nations International Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
------------------------------------------------------------
CONVERTIBLE BONDS -- 1.0%
JAPAN -- 0.9%
USD 7,700,000 MBL International Finance
Bermuda, Conv.,
3.000% 11/30/02............... $ 8,484,630
------------
TAIWAN -- 0.1%
USD 875,000 United Microelectronics, Conv.,
1.250% 06/08/04............... 907,812
------------
TOTAL CONVERTIBLE BONDS
(Cost $9,313,200)............. 9,392,442
===========
<CAPTION>
- ------------
<C> <S> <C>
INVESTMENT FUNDS -- 0.4%
CHILE -- 0.4%
600,000 Five Arrows Chile Investment
Trust Ltd. ................... 1,740,000
50,000 GT Chile Growth Fund............ 1,925,000
------------
TOTAL INVESTMENT FUNDS
(Cost $6,354,519)............. 3,665,000
===========
PREFERRED STOCKS -- 0.3%
KOREA -- 0.3%
75,000 LG Electronics Inc. ............ 1,265,580
20,355 Samsung Electronics Ltd. ....... 1,481,518
------------
TOTAL PREFERRED STOCKS
(Cost $3,381,922)............. 2,747,098
===========
<CAPTION>
VALUE
(NOTE 1)
<C> <S> <C>
------------------------------------------------------------
WARRANTS -- 0.0%# (Cost $277,522)
SINGAPORE -- 0.0%#
225,000 Straits Steamship Land Ltd.,
Expire 12/12/00+.............. $ 278,113
-----------
TOTAL INVESTMENTS
(Cost $766,690,837*).................. 97.5% 876,302,951
OTHER ASSETS AND
LIABILITIES (NET)..................... 2.5 22,149,006
----- ------------
NET ASSETS.............................. 100.0% $898,451,957
===== ============
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Aggregate cost for Federal tax purposes was $767,425,318.
+ Non-income producing security.
++ Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration to qualified
institutional buyers.
# Amount represents less than 0.1%.
ABBREVIATIONS:
ADR American Depositary Receipt
Conv. Convertible
GDS Global Depositary Share
ord Ordinary Shares
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE> 28
NATIONS FUND
Nations International Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1996
AT MARCH 31, 1996 SECTOR DIVERSIFICATION WAS AS FOLLOWS (UNAUDITED):
<TABLE>
<CAPTION>
% OF NET VALUE
SECTOR DIVERSIFICATION ASSETS (NOTE 1)
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
COMMON STOCKS:
Finance...................................................................... 22.8% $204,818,035
Services..................................................................... 22.0 197,199,451
Capital Equipment............................................................ 14.2 127,044,018
Consumer Goods............................................................... 12.6 113,287,044
Energy....................................................................... 12.3 110,723,965
Materials.................................................................... 11.9 107,147,785
-------- ------------
TOTAL COMMON STOCKS.......................................................... 95.8 860,220,298
CONVERTIBLE BONDS............................................................ 1.0 9,392,442
INVESTMENT FUNDS............................................................. 0.4 3,665,000
PREFERRED STOCKS............................................................. 0.3 2,747,098
WARRANTS..................................................................... 0.0# 278,113
-------- ------------
TOTAL INVESTMENTS............................................................ 97.5 876,302,951
OTHER ASSETS AND LIABILITIES (NET)........................................... 2.5 22,149,006
-------- ------------
NET ASSETS................................................................... 100.0% $898,451,957
======== ============
</TABLE>
- ---------------
# Amount represents less than 0.1%.
SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE> 29
NATIONS FUND
Nations International Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS MARCH 31, 1996
<TABLE>
<CAPTION>
CONTRACT TO BUY
-------------------------------------------------- NET UNREALIZED
LOCAL VALUE IN IN EXCHANGE DEPRECIATION
MATURITY DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACT
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
04/03/96 13,070,250 ATS................... $ 1,261,406 $ 1,261,607 $ (201)
04/16/96 27,061,000 BEF................... 892,956 894,283 (1,327)
-------------
$ (1,528)
-------------
</TABLE>
<TABLE>
<CAPTION>
CONTRACT TO SELL NET UNREALIZED
-------------------------------------------------- APPRECIATION/
LOCAL VALUE IN IN EXCHANGE (DEPRECIATION)
MATURITY DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACT
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
04/02/96 6,251,190 SEK................... $ 934,834 $ 933,710 $ (1,124)
04/04/96 1,732,057 DM.................... 1,173,538 1,173,878 340
05/28/96 6,600,000 CHF................... 5,584,229 5,621,806 37,577
05/28/96 108,000,000 FRF................... 21,487,406 21,600,000 112,594
05/28/96 9,500,000 JPY................... 89,575,319 91,361,443 1,786,124
-------------
$1,935,511
-------------
Net Unrealized Appreciation of Forward Foreign Exchange Contracts................. $1,933,983
=============
- ---------------------------------------------------
ABBREVIATIONS OF CURRENCY
THAT ISSUE IS HELD IN:
ATS Austrian Schilling
BEF Belgian Franc
CHF Swiss Franc
DM German Deutschmark
FRF French Franc
JPY Japanese Yen
SEK Swedish Krona
USD United States Dollar
- ---------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
27
<PAGE> 30
NATIONS FUND
Nations Pacific Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
------------------------------------------------------------
COMMON STOCKS -- 93.6%
AUSTRALIA -- 1.1%
200,000 Minproc Engineers Ltd. ........... $ 93,774
125,000 Skilled Engineering Ltd. ......... 336,024
100,000 Western Mining Corporation
Holdings, Ltd. ................. 661,107
------------
1,090,905
------------
HONG KONG -- 31.7%
1,310,000 Amoy Properties................... 1,532,907
300,000 Cathay Pacific Airways............ 527,541
3,100,000 Chaifa Holdings Ltd. ............. 831,717
330,000 China Light & Power............... 1,489,139
380,000 Dao Heng Bank Group............... 1,572,278
388,000 Great Eagle Holdings Ltd. ........ 1,146,341
130,000 Hang Seng Bank Ltd. .............. 1,327,903
360,000 Henderson Land Development
Company......................... 2,525,213
900,000 Hong Kong Telecommunications...... 1,797,905
231,800 HSBC Holdings plc................. 3,476,700
448,000 Hutchinson Whampoa Ltd. .......... 2,826,791
218,800 Jardine Matheson Holdings......... 1,706,640
388,000 Jardine Strategic Holdings........ 1,226,080
321,000 New World Development Company..... 1,494,182
880,000 Shangri-La Asia................... 1,183,346
319,000 Sun Hung Kai Properties........... 2,856,316
280,000 Swire Pacific..................... 2,461,857
360,000 Wing Hang Bank.................... 1,424,360
------------
31,407,216
------------
INDONESIA -- 6.7%
760,000 Bank Dagang Nasional Indonsia,
Alien Shares.................... 658,255
93,000 Citra Marga Nusadhala Persada..... 120,327
787,000 Citra Marga Nusadhala Persada,
Alien Shares.................... 1,018,253
143,000 Hanjaya Mandala Sampoerna, Alien
Shares.......................... 1,493,916
200,000 Indofood Sukses Makmur,
Alien Shares.................... 934,559
36,000 PT Indonesian Satellite, ADR,
"B" Class....................... 1,228,500
338,000 Semen Gresik, Alien Shares........ 1,196,300
------------
6,650,110
------------
MALAYSIA -- 18.3%
770,000 Bandar Raya Developments
Berhad+......................... 1,314,783
368,000 Development & Commercial Bank
Holdings Corporation............ 1,265,455
118,000 Genting Berhad.................... 1,068,063
490,000 Highlands & Lowlands.............. 836,680
400,000 Hong Leong Bank Berhad............ 1,114,625
460,000 Konsortium Perkapalan............. 1,600,000
194,000 Malayan Banking Berhad............ 1,809,644
337,000 Malaysia Airlines Systems......... 1,092,253
490,000 Malaysian Resources............... 1,162,055
218,000 New Straits Time.................. 1,120,158
390,000 RJ Reynolds Berhad................ 1,079,051
430,000 Technology Resources
Industries+..................... 1,546,640
190,000 Telekom Malaysia.................. 1,749,802
188,000 United Engineers (Malaysia)
Berhad.......................... 1,300,395
------------
18,059,604
------------
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
PHILIPPINES -- 6.0%
890,000 Ayala Corporation, Class B........ $ 1,291,826
460,000 Ayala Land Inc., Class B.......... 746,753
1,320,000 DMCI Holdings Inc. ............... 857,143
470,000 First Philippines Holdings, Class
B............................... 870,703
83,000 Philippines National Bank......... 1,085,848
800,000 Philippino Telephone
Corporation+.................... 1,084,798
------------
5,937,071
------------
SINGAPORE -- 12.4%
83,000 Cycle & Carriage.................. 955,175
117,000 Development Bank of Singapore,
Alien Shares.................... 1,437,877
248,000 Far East Levingston
Shipbuilding.................... 1,382,965
88,800 Fraser & Neave.................... 1,002,998
660,000 Hotel Properties.................. 1,190,879
690,000 Liang Court Holdings+............. 651,914
105,000 Singapore Airlines, Alien
Shares.......................... 1,089,010
530,000 Singapore Telecommunications...... 1,302,692
488,000 Straits Steamship Land Ltd. ...... 1,643,191
472,000 Sunright Ltd. .................... 499,595
113,000 United Overseas Bank, Alien
Shares.......................... 1,139,874
------------
12,296,170
------------
SOUTH KOREA -- 7.1%
70,000 Daewoo Heavy Industries........... 689,038
25,233 Dong Ah Construction Industries,
EDR+............................ 485,735
51,500 Hanshin Securities................ 1,027,037
26,450 Korea Electric Power Corporation,
ADR............................. 608,350
58,000 Korea Exchange Bank............... 785,938
77,000 Kyung Nam Bank.................... 984,340
7,000 LG Electronics Inc.+.............. 190,604
77,000 LG Electronics Inc., GDR+......... 637,175
29 Samsung Electronics Ltd., GDR++... 1,675
18,563 Samsung Electronics Ltd., GDS++... 668,264
28,000 Yukong Ltd., GDS.................. 937,808
------------
7,015,964
------------
THAILAND -- 10.3%
49,000 Advanced Information Services
Public Company Ltd., Alien
Shares.......................... 919,914
35,000 Grammy Entertainment, Alien
Shares . . 318,837
270,000 Krung Thai Bank, Alien Shares..... 1,272,576
133,000 Phatra Thanakit Company,
Alien Shares.................... 1,222,117
98,000 PTT Exploration and Production
Public Company Ltd., Alien
Shares.......................... 1,242,079
81,100 Quality Houses Company,
Alien Shares+................... 313,183
20,000 Siam Cement Public Company Ltd.,
Alien Shares.................... 1,029,785
846,000 Siam City Bank Public Company,
Ltd., Alien Shares.............. 1,055,490
133,000 Thai Airways International........ 297,627
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
28
<PAGE> 31
NATIONS FUND
Nations Pacific Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
THAILAND -- (CONTINUED)
82,200 Thai Farmers Bank Public Company
Ltd., Alien Shares.............. $ 963,688
173,000 Total Access Communications
(CLOB).......................... 1,522,400
------------
10,157,696
------------
TOTAL COMMON STOCKS
(Cost $89,268,395).............. 92,614,736
============
INVESTMENT FUNDS -- 2.2%
SOUTH KOREA -- 0.6%
146 Korea Europe Fund, IDR............ 593,125
------------
TAIWAN -- 1.6%
90,000 New Taipai Fund Ltd. ............. 1,001,250
8,000 Taipei Fund, Class B.............. 584,000
------------
1,585,250
------------
TOTAL INVESTMENT FUNDS
(Cost $2,299,500)............... 2,178,375
============
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
- -----------
CONVERTIBLE BONDS -- 1.5%
TAIWAN -- 0.5%
USD 80,000 Acer Inc.,
4.000% due 06/10/01............. 198,000
USD 255,000 United Microelectronics, Conv.,
1.250% due 06/08/04............. 264,563
------------
462,563
------------
THAILAND -- 1.0%
USD 900,000 Bangkok Bank,
3.250% due 03/03/04............. 1,044,000
------------
TOTAL CONVERTIBLE BONDS
(Cost $1,715,094)............... 1,506,563
============
<CAPTION>
SHARES
<C> <S> <C>
- -----------
WARRANTS -- 0.1%
MALAYSIA -- 0.0%#
22,500 Hong Leong Bank, Expire
02/27/99+ . . 24,012
------------
SINGAPORE -- 0.1%
58,750 Liang Court Holdings,
Expire 08/31/00+................ 24,624
51,250 Straits Steamship Land Ltd.,
Expire 12/12/00+................ 63,348
------------
87,972
------------
TOTAL WARRANTS
(Cost $78,192).................. 111,984
============
</TABLE>
<TABLE>
<CAPTION>
VALUE
(NOTE 1)
<S> <C> <C>
- ------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $93,361,181*).................... 97.4% $96,411,658
OTHER ASSETS AND
LIABILITIES (NET)...................... 2.6 2,557,827
----- -----------
NET ASSETS............................... 100.0% $98,969,485
===== ===========
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Aggregate cost for Federal tax purposes was $93,406,508.
+ Non-income producing security.
++ Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration to qualified
institutional buyers.
# Amount represents less than 0.1%.
ABBREVIATIONS:
ADR American Depositary Receipt
CLOB Custody License Outside Border
Conv. Convertible
EDR European Depositary Receipt
GDR Global Depositary Receipt
GDS Global Depositary Share
IDR International Depositary Receipt
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
29
<PAGE> 32
NATIONS FUND
Nations Pacific Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1996
AT MARCH 31, 1996 SECTOR DIVERSIFICATION WAS AS FOLLOWS (UNAUDITED):
<TABLE>
<CAPTION>
% OF NET VALUE
SECTOR DIVERSIFICATION ASSETS (NOTE 1)
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
COMMON STOCKS:
Finance -- Banking............................................................ 21.6% $21,374,851
Finance -- Real Estate........................................................ 14.1 13,911,600
Finance -- Other.............................................................. 11.5 11,333,249
Services...................................................................... 10.9 10,805,732
Services -- Telecommunications................................................ 10.3 10,232,737
Capital Equipment............................................................. 8.3 8,164,352
Consumer Goods................................................................ 5.8 5,784,536
Energy........................................................................ 4.3 4,277,376
Materials..................................................................... 3.8 3,723,872
Services -- Transportation.................................................... 3.0 3,006,431
-------- -----------
TOTAL COMMON STOCKS........................................................... 93.6 92,614,736
INVESTMENT FUNDS.............................................................. 2.2 2,178,375
CONVERTIBLE BONDS............................................................. 1.5 1,506,563
WARRANTS...................................................................... 0.1 111,984
-------- -----------
TOTAL INVESTMENTS............................................................. 97.4 96,411,658
OTHER ASSETS AND LIABILITIES (NET)............................................ 2.6 2,557,827
-------- -----------
NET ASSETS.................................................................... 100.0% $98,969,485
======== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
30
<PAGE> 33
NATIONS FUND
Nations Pacific Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS MARCH 31, 1996
<TABLE>
<CAPTION>
CONTRACT TO BUY NET UNREALIZED
--------------------------------------------------- APPRECIATION/
LOCAL VALUE IN IN EXCHANGE (DEPRECIATION)
MATURITY DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACT
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
04/01/96 274,608 SGD......................... $195,083 $ 195,242 $ (159)
04/02/96 1,403,510 HKD......................... 181,473 181,496 (23)
04/02/96 906,444 MYR......................... 358,264 356,517 1,747
04/03/96 292,770 MYR......................... 115,712 115,092 620
----------
$2,185
----------
</TABLE>
<TABLE>
<CAPTION>
CONTRACT TO SELL
--------------------------------------------------- NET UNREALIZED
LOCAL VALUE IN IN EXCHANGE DEPRECIATION
MATURITY DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACT
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
04/01/96 1,005,873 PHP......................... $ 38,420 $ 38,378 $ (42)
04/01/96 183,861 THB......................... 7,282 7,282 0
04/02/96 1,920,490 PHP......................... 73,351 73,162 (189)
04/03/96 1,690,761 THB......................... 66,963 66,934 (29)
04/08/96 214,008 SGD......................... 152,111 151,886 (225)
----------
$ (485)
----------
Net Unrealized Appreciation of Forward Foreign Exchange Contracts.................. $1,700
----------
- ---------------------------------------------------
ABBREVIATIONS OF CURRENCY
THAT ISSUE IS HELD IN:
HKD Hong Kong Dollar
MYR Malaysian Ringgit
PHP Philippine Peso
SGD Singapore Dollar
THB Thai Baht
USD United States Dollars
- ---------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
31
<PAGE> 34
NATIONS FUND
Nations Emerging Markets Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
------------------------------------------------------------
COMMON STOCKS -- 81.0%
ARGENTINA -- 4.3%
11,700 Buenos Aires Embotelladora SA,
ADR.............................. $ 194,513
6,300 Central Costanera, ADR............. 190,575
8,000 Irsa Inversioners Y
Representaciones, GDR............ 225,000
44,296 Perez Compac, ADR.................. 498,330
14,000 Telefonica de Argentina, ADR....... 358,750
1,942 Quilmes Industrial SA ord.......... 23,304
29,950 Y.P.F. Sociedad Anonima, ADR....... 602,744
------------
2,093,216
------------
BRAZIL -- 9.3%
34,600 Aracruz Celulose SA, ADR........... 276,800
35,600 CEMIG Companhia, New, ADR.......... 996,800
65,200 Cia Acos Especiais Itab, ADR....... 733,500
60,000 Electrobras, ADR+.................. 780,000
25,000 Telebras, ADR...................... 1,243,750
500,000,000 White Martins ord.................. 531,457
------------
4,562,307
------------
CHILE -- 4.3%
60,000 Antofagasta Holdings ord........... 328,765
19,300 Banco de Edwards, ADR+............. 405,300
3,800 Chilectra SA, ADR.................. 191,201
25,100 Enersis SA, ADR.................... 709,075
8,900 Sociedad Quimica Minera de Chile,
ADR.............................. 465,025
------------
2,099,366
------------
COLUMBIA -- 0.8%
22,100 Banco Industrial Colombiano, ADR... 408,850
------------
GREECE -- 1.8%
9,000 Ergo Bank.......................... 441,305
12,500 Hellenic Bottling Company SA....... 466,965
------------
908,270
------------
HONG KONG -- 4.0%
72,000 China Light & Power................ 324,903
254,000 Guangdong Investment Ltd. ......... 160,926
80,000 Guoco Group........................ 440,652
112,000 New World Development Company...... 521,334
2,000,000 Yizheng Chemical Fibre............. 517,197
------------
1,965,012
------------
INDIA -- 7.3%
21,500 Hindalco, GDR...................... 790,125
43,000 Indian Hotels, GDR................. 1,139,500
60,000 Larsen & Toubro Ltd., GDS.......... 942,000
10,000 Ranbaxy Laboratories Ltd., GDS..... 224,000
35,000 Reliance Industries Ltd., GDS...... 503,125
------------
3,598,750
------------
INDONESIA -- 3.6%
35,000 Hanjaya Mandala Sampoerna, Alien
Shares........................... 365,644
40,000 Indofood Sukses Makmur,
Alien Shares..................... 186,912
95,000 PT Bank International Indonesia,
Alien Shares..................... 400,235
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
INDONESIA -- (CONTINUED)
14,000 PT Indonesian Satellite, ADR.
"B" Class........................ $ 477,750
100,000 Semen Gresik, Alien Shares......... 353,935
------------
1,784,476
------------
MALAYSIA -- 12.5%
500,000 Bandar Raya Developments Berhad+... 853,755
270,000 Development & Commercial Bank
Holdings Corporation............. 928,459
450,000 Magnum Corporation Berhad.......... 722,134
74,800 Malayan Banking Berhad............. 697,739
250,000 Malaysia International Shipping
Company.......................... 706,522
225,000 Technology Resources Industries+... 809,289
110,000 Telekom Malaysia................... 1,013,043
62,000 United Engineers (Malaysia)
Berhad........................... 428,854
------------
6,159,795
------------
MEXICO -- 6.6%
138,500 Cemex SA........................... 492,608
460,000 Cifra SA de CV, Class B+........... 595,700
4,900 Desc de CV, Class C, ADR+.......... 83,300
46,200 Grupo Carso SA de CV, ADR++........ 713,790
81,000 Grupo Modelo SA de CV, Class C..... 374,632
530,000 Seguros Commercial American, Class
B+............................... 185,694
25,000 Telefonos de Mexico SA, ADR........ 821,875
------------
3,267,599
------------
PERU -- 1.4%
34,000 Banco Wiese, ADR................... 229,500
10,000 Cementos Lima, ADR................. 125,877
172,000 CPT Telefonica del Peru, Class
B+............................... 354,677
------------
710,054
------------
PHILIPPINES -- 4.3%
550,000 Ayala Corporation, Class B......... 798,319
67,000 Manila Electric Company, Class B... 591,176
56,000 Philippines National Bank.......... 732,620
------------
2,122,115
------------
PORTUGAL -- 0.1%
3,500 Soares da Costa.................... 27,996
------------
RUSSIA -- 0.1%
10,000 Petersburg Long Distance, ADR+..... 49,375
------------
SOUTH AFRICA -- 10.2%
8,000 Anglo-American Industrial
Corporation SA................... 384,282
13,000 Barlow Ltd. ....................... 166,740
4,000 Barlow Ltd., ADR................... 50,300
24,000 De Beers Consolidated Mines
Ltd.+............................ 772,587
160,000 Gencor Ltd. ....................... 631,751
50,000 Malbak Ltd. NPV.................... 295,505
70,000 Remrandt Group..................... 638,164
60,000 Sasol NPV.......................... 585,476
50,000 Sentrachem Ltd. ................... 211,055
15,000 Sentrachem Ltd., GDR+.............. 251,250
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
32
<PAGE> 35
NATIONS FUND
Nations Emerging Markets Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
SOUTH AFRICA -- (CONTINUED)
350,000 South Africa Iron & Steel
Industrial Corporation........... $ 330,965
22,000 South African Breweries............ 697,139
------------
5,015,214
------------
SOUTH KOREA -- 4.5%
60,000 Daewoo Heavy Industries............ 590,604
12,024 Dong Ah Construction Industries,
EDR+............................. 231,462
7,500 Korea Electric Power Corporation,
ADR.............................. 172,500
28,190 Korea Exchange Bank................ 381,993
1,497 Samsung Electronics Ltd.++......... 176,012
13,951 Samsung Electronics Ltd., GDS++.... 502,222
10,000 The Daegu Bank..................... 157,239
------------
2,212,032
------------
THAILAND -- 5.8%
57,000 PTT Exploration and Production
Public Company Ltd., Alien
Shares........................... 722,433
15,000 Siam Cement Public Company Ltd.,
Alien Shares..................... 772,338
224,000 Siam City Bank Public Company Ltd.,
Alien Shares..................... 279,468
26,000 Thai Farmers Bank Public Company
Ltd., Alien Shares............... 304,816
90,000 Total Access Communications
(CLOB)........................... 792,000
------------
2,871,055
------------
TURKEY -- 0.1%
102,000 Netas ord.......................... 31,497
------------
TOTAL COMMON STOCKS
(Cost $38,807,074)............... 39,886,979
==========
PREFERRED STOCKS -- 5.5%
BRAZIL -- 5.5%
69,624,842 Banco Bradesco..................... 729,480
1,500,000 Cia Cervejaria Brahma.............. 724,300
12,050 Compania Vale do Rio Doce, ADR..... 472,776
4,740,000 Telesp Tel Sao Paulo............... 806,114
------------
TOTAL PREFERRRED STOCKS
(Cost $2,604,934)................ 2,732,670
==========
INVESTMENT FUNDS -- 5.1%
CHILE -- 0.5%
6,000 Chile Fund Inc. ................... 139,500
43,300 Five Arrows Chile Investment
Trust Ltd. ...................... 125,570
------------
265,070
------------
SOUTH KOREA -- 0.4%
50 Korea Europe Fund, IDR............. 203,125
------------
<CAPTION>
VALUE
SHARES (NOTE 1)
<C> <S> <C>
------------------------------------------------------------
INVESTMENT FUNDS -- (CONTINUED)
TAIWAN -- 4.2%
100 Formosa Fund, IDR.................. $ 730,000
125,000 Taiwan Index Fund.................. 1,312,500
------------
2,042,500
------------
TOTAL INVESTMENT FUNDS
(Cost $2,417,032)................ 2,510,695
==========
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
----------
CONVERTIBLE BOND -- 0.3% (Cost $135,752)
SOUTH KOREA
CHF150,000 Yukong Conv.,
1.000% due 12/31/98.............. 134,002
==========
<CAPTION>
SHARES
<C> <S> <C>
----------
WARRANTS -- 0.0%# (Cost $2,238)
BRAZIL
44,117 Cia Cervejaria Brahma,
Expire 04/30/03+................. 12,058
==========
RIGHTS -- 0.0%# (Cost $11,591)
ARGENTINA
1,942 Quilmes Industrial SA, Expire
04/10/96+........................ 10,681
==========
TOTAL INVESTMENTS (Cost $43,978,621*)... 91.9% 45,287,085
OTHER ASSETS AND
LIABILITIES (NET)..................... 8.1 3,982,426
------------
NET ASSETS.............................. 100.0% $49,269,511
===== ===========
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Aggregate cost for Federal tax purposes was $44,106,371.
+ Non-income producing security.
++ Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration to qualified
institutional buyers.
# Amount represents less than 0.1%.
ABBREVIATIONS:
ADR American Depositary Receipt
CLOB Custody License Outside Border
Conv. Convertible
EDR European Depositary Receipt
GDR Global Depositary Receipt
GDS Global Depositary Share
IDR International Depositary Receipt
ord Ordinary Shares
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
33
<PAGE> 36
NATIONS FUND
Nations Emerging Markets Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1996
AT MARCH 31, 1996 SECTOR DIVERSIFICATION WAS AS FOLLOWS (UNAUDITED):
<TABLE>
<CAPTION>
% OF NET VALUE
SECTOR DIVERSIFICATION ASSETS (NOTE 1)
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
COMMON STOCKS:
Finance....................................................................... 22.1% $10,885,285
Services...................................................................... 18.5 9,084,365
Materials..................................................................... 14.4 7,068,038
Energy........................................................................ 12.9 6,365,213
Consumer Goods................................................................ 9.1 4,495,431
Capital Equipment............................................................. 4.0 1,988,647
-------- -----------
TOTAL COMMON STOCKS........................................................... 81.0 39,886,979
PREFERRED STOCKS.............................................................. 5.5 2,732,670
INVESTMENT FUNDS.............................................................. 5.1 2,510,695
CONVERTIBLE BOND.............................................................. 0.3 134,002
WARRANTS...................................................................... 0.0# 12,058
RIGHTS........................................................................ 0.0# 10,681
-------- -----------
TOTAL INVESTMENTS............................................................. 91.9 45,287,085
OTHER ASSETS AND LIABILITIES (NET)............................................ 8.1 3,982,426
-------- -----------
NET ASSETS.................................................................... 100.0% $49,269,511
======== ===========
</TABLE>
- ---------------
# Amount represents less than 0.1%.
SEE NOTES TO FINANCIAL STATEMENTS.
34
<PAGE> 37
NATIONS FUND
Nations Emerging Markets Fund
- --------------------------------------------------------------------------------
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS MARCH 31, 1996
<TABLE>
<CAPTION>
CONTRACT TO BUY
-------------------------------------------------- NET UNREALIZED
LOCAL VALUE IN IN EXCHANGE DEPRECIATION
MATURITY DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACT
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
04/01/96 6,502,268 PHP................... $ 248,357 $ 248,463 $ (106)
----------
</TABLE>
<TABLE>
<CAPTION>
CONTRACT TO SELL
-------------------------------------------------- NET UNREALIZED
LOCAL VALUE IN IN EXCHANGE APPRECIATION
MATURITY DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACT
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
04/01/96 811,920,000 TRL................... $ 11,396 $ 11,432 $ 36
---------
Net Unrealized Depreciation of Forward Foreign Exchange Contracts................. $ (70)
=========
- -------------------------------------------------------
ABBREVIATIONS OF CURRENCY
THAT ISSUE IS HELD IN:
CHF Swiss Franc
PHP Philippine Peso
TRL Turkish Lira
- -------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
35
<PAGE> 38
NATIONS FUND
Nations Global Government Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<S> <C> <C> <C>
- ------------------------------------------------------------
FOREIGN BONDS AND NOTES -- 90.7%
AUSTRALIA -- 6.6%
AUD 1,500,000 Government of Australia,
9.000% due 09/15/04...... $ 1,181,025
AUD 2,000,000 Government of Australia,
7.500% due 07/15/05...... 1,429,429
------------
2,610,454
------------
AUSTRIA -- 1.9%
DM 1,000,000 Government of Austria,
8.000% due 06/17/02...... 745,546
------------
BELGIUM -- 4.1%
USD 950,000 Kingdom of Belgium,
7.000% due 07/07/99...... 950,000
USD 750,000 Kingdom of Belgium,
5.500% due 11/05/03...... 697,032
------------
1,647,032
------------
CANADA -- 11.8%
CAD 2,280,000 Government of Canada,
8.500% due 03/01/00...... 1,768,733
USD 1,800,000 Province of Alberta,
6.250% due 10/19/00...... 1,784,700
CAD 1,550,000 Province of Ontario,
7.750% due 12/08/03...... 1,145,855
------------
4,699,288
------------
DENMARK -- 9.3%
DKK 9,500,000 Kingdom of Denmark,
8.000% due 03/15/06...... 1,721,837
DKK 13,300,000 Kingdom of Denmark,
7.000% due 11/10/24...... 1,997,159
------------
3,718,996
------------
FRANCE -- 3.2%
ECU 1,000,000 Obligations Assimilables du
Tresor (France),
6.750% due 04/25/02...... 1,267,118
------------
GERMANY -- 8.0%
DM 1,000,000 DSL Finance NV,
5.000% due 01/23/01...... 665,267
DM 1,000,000 Federal Republic of
Germany,
5.125% due 11/21/00...... 675,157
DM 2,700,000 Federal Republic of
Germany,
6.500% due 10/14/05...... 1,834,632
------------
3,175,056
------------
GREAT BRITAIN -- 10.7%
GBP 600,000 British Aerospace plc,
11.875% due 12/29/08..... 1,092,560
USD 1,450,000 Glaxo Wellcome plc,
6.750% due 05/31/00...... 1,462,832
GBP 1,100,000 United Kingdom Treasury,
8.000% due 12/07/00...... 1,708,832
------------
4,264,224
------------
ITALY -- 11.4%
ITL 2,950,000,000 Republic of Italy,
9.500% due 12/01/99...... 1,850,459
JPY 175,000,000 Republic of Italy, Global
Bond,
3.500% due 06/20/01...... 1,695,185
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
<S> <C> <C> <C>
- ------------------------------------------------------------
FOREIGN BONDS AND NOTES -- (CONTINUED)
ITALY -- (CONTINUED)
ITL 1,500,000,000 S.N.C.F.,
11.500% due 10/18/99..... $ 992,922
------------
4,538,566
------------
NETHERLANDS -- 2.9%
NLG 1,800,000 Government of Netherlands,
6.500% due 01/15/99...... 1,145,633
------------
NEW ZEALAND -- 2.5%
NZD 1,500,000 Government of New Zealand,
6.500% due 02/15/00...... 1,013,771
------------
PORTUGAL -- 5.0%
ECU 1,700,000 Government of Portugal,
6.000% due 02/16/04...... 1,993,011
------------
SPAIN -- 5.2%
ESP 70,000,000 Government of Spain,
12.250% due 03/25/00..... 621,219
ESP 200,000,000 Government of Spain,
8.000% due 05/30/04...... 1,466,334
------------
2,087,553
------------
SUPRANATIONAL -- 4.3%
ESP 55,000,000 European Investment Bank,
7.500% due 03/09/01...... 421,747
GBP 380,000 European Investment Bank,
8.000% due 06/10/03...... 571,874
DM 1,000,000 International Bank for
Reconstruction &
Development,
7.250% due 10/13/99...... 726,238
------------
1,719,859
------------
SWEDEN -- 3.8%
SEK 12,000,000 Government of Sweden,
6.000% due 02/09/05...... 1,512,499
------------
TOTAL FOREIGN BONDS AND
NOTES
(Cost $36,371,121)....... 36,138,606
==========
U.S. TREASURY OBLIGATIONS -- 4.9%
USD 1,000,000 U.S. Treasury Note,
6.500% due 11/30/96...... 1,006,797
USD 1,000,000 U.S. Treasury Note,
5.250% due 01/31/01...... 966,016
------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $1,999,946)........ 1,972,813
----------
TOTAL INVESTMENTS
(Cost $38,371,067*).................... 95.6% 38,111,419
OTHER ASSETS AND
LIABILITIES (NET)...................... 4.4 1,740,428
----- -----------
NET ASSETS............................... 100.0% $39,851,847
===== ===========
</TABLE>
- ---------------
* Aggregate cost for Federal tax purposes was $38,376,184
SEE NOTES TO FINANCIAL STATEMENTS.
36
<PAGE> 39
NATIONS FUND
Nations Global Government Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS MARCH 31, 1996
<TABLE>
<CAPTION>
CONTRACT TO BUY
--------------------------------------------------- IN NET UNREALIZED
LOCAL VALUE IN EXCHANGE DEPRECIATION
MATURITY DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACT
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
04/02/96 112,472 DM....................... $ 76,199 $ 76,252 $ (53)
04/09/96 850,000 CAD...................... 623,671 624,908 (1,237)
-----------
$ (1,290)
-----------
</TABLE>
<TABLE>
<CAPTION>
CONTRACT TO SELL NET UNREALIZED
--------------------------------------------------- IN APPRECIATION/
LOCAL VALUE IN EXCHANGE (DEPRECIATION)
MATURITY DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACT
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
04/02/96 29,212 AUD...................... $ 22,827 $ 22,552 $ (275)
04/02/96 14,971 NLG...................... 9,062 9,059 (3)
04/09/96 850,000 CAD...................... 623,671 626,677 3,006
04/09/96 2,500,000 DKK...................... 438,828 437,545 (1,283)
04/09/96 2,300,000 DM....................... 1,558,831 1,597,222 38,391
04/09/96 1,600,000 DM....................... 1,084,405 1,076,571 (7,834)
04/09/96 1,100,000 DM....................... 745,528 748,809 3,281
04/09/96 85,000,000 JPY...................... 795,614 816,523 20,909
04/09/96 50,000,000 JPY...................... 468,008 470,792 2,784
04/09/96 1,300,000 NLG...................... 787,280 788,955 1,675
-----------
$ 60,651
-----------
Net Unrealized Appreciation of Forward Foreign Exchange Contracts................. $ 59,361
===========
- ---------------------------------------------------
ABBREVIATIONS OF CURRENCY
THAT ISSUE IS HELD IN:
AUD Australian Dollar
CAD Canadian Dollar
DM German Deutschmark
DKK Danish Krona
ECU European Currency Units
ESP Spanish Peseta
GBP Great Britain Pound
JPY Japanese Yen
ITL Italian Lira
NLG Netherlands Guilder
NZD New Zealand Dollar
SEK Swedish Krona
USD United States Dollar
- ---------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
37
<PAGE> 40
NATIONS FUND
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES MARCH 31, 1996
<TABLE>
<CAPTION>
NATIONS
NATIONS NATIONS NATIONS GLOBAL
INTERNATIONAL PACIFIC EMERGING GOVERNMENT
EQUITY GROWTH MARKETS INCOME
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
---------------------------------------------------
ASSETS:
Investments, at value. (Note 1) See accompanying schedules......... $876,302,951 $ 96,411,658 $45,287,085 $38,111,419
Cash............................................................... 21,255,344 2,479,072 4,705,859 667,183
Net unrealized appreciation of forward foreign exchange
contracts........................................................ 1,933,983 1,700 -- 59,361
Dividends receivable............................................... 2,992,217 105,189 58,680 --
Interest receivable................................................ 195,054 6,440 140 985,101
Receivable for Fund shares sold.................................... 3,997,295 726,176 101,135 90,372
Receivable for investment securities sold.......................... 2,108,235 685,339 19,309 2,996,973
Unamortized organization costs (Note 6)............................ 18,237 133,055 124,018 147,031
Prepaid expenses and other assets.................................. 7,611 14,479 13,557 14,366
------------ ----------- ----------- -----------
Total Assets..................................................... 908,810,927 100,563,108 50,309,783 43,071,806
------------ ----------- ----------- -----------
LIABILITIES:
Net unrealized depreciation of forward foreign exchange
contracts........................................................ -- -- 70 --
Payable for Fund shares redeemed................................... 2,227,447 14,698 4,544 331
Payable for investment securities purchased........................ 7,078,101 1,381,102 910,148 3,041,278
Dividends payable.................................................. -- -- -- 85,301
Investment advisory fee payable (Note 2)........................... 664,431 72,099 43,529 23,445
Administration fee payable (Note 2)................................ 73,826 8,011 3,957 3,349
Shareholder servicing and distribution fees payable (Note 3)....... 36,245 2,708 1,179 3,382
Transfer agent fees payable (Note 2)............................... 90,566 10,540 5,768 5,101
Custodian fees payable (Note 2).................................... 31,988 15,777 9,999 1,367
Accrued Directors' fees and expenses (Note 2)...................... 21,837 13,393 6,610 5,643
Accrued expenses and other payables................................ 134,529 75,295 54,468 50,762
------------ ----------- ----------- -----------
Total Liabilities................................................ 10,358,970 1,593,623 1,040,272 3,219,959
------------ ----------- ----------- -----------
NET ASSETS......................................................... $898,451,957 $ 98,969,485 $49,269,511 $39,851,847
============ =========== =========== ===========
Investments, at cost............................................... $766,690,837 $ 93,361,181 $43,978,621 $38,371,067
------------ ----------- ----------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
38
<PAGE> 41
NATIONS FUND
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED) MARCH 31, 1996
<TABLE>
<CAPTION>
NATIONS
NATIONS NATIONS NATIONS GLOBAL
INTERNATIONAL PACIFIC EMERGING GOVERNMENT
EQUITY GROWTH MARKETS INCOME
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
---------------------------------------------------
NET ASSETS CONSIST OF:
Undistributed net investment income/(distributions in excess of
net investment income)........................................... $ 1,078,353 $ -- $ (93,457) $ (108,343)
Accumulated net realized gain/(loss) on investments sold, forward
foreign exchange contracts, foreign currencies and other net
assets........................................................... 6,636,469 (389,016) (159,388) 267,159
Net unrealized appreciation/(depreciation) of investments, forward
foreign exchange contracts, foreign currencies and other net
assets........................................................... 111,520,768 3,049,926 1,308,060 (200,139)
Paid-in capital.................................................... 779,216,367 96,308,575 48,214,296 39,893,170
------------ ----------- ----------- -----------
$898,451,957 $ 98,969,485 $49,269,511 $39,851,847
============ ============ =========== ===========
NET ASSETS:
Primary A Shares (formerly Trust A Shares)......................... $849,730,936 $ 95,209,780 $47,560,154 $24,752,718
============ ============ =========== ===========
Investor A Shares.................................................. $ 7,643,233 $ 1,375,138 $ 477,037 $14,897,567
============ ============ =========== ===========
Investor C Shares.................................................. $ 652,058 $ 60,171 $ 23,361 $ 8,886
============ ============ =========== ===========
Investor N Shares.................................................. $ 40,425,730 $ 2,324,396 $ 1,208,959 $ 192,676
============ ============ =========== ===========
SHARES OUTSTANDING:
Primary A Shares (formerly Trust A Shares)......................... 62,934,971 9,296,497 4,600,734 2,457,534
============ ============ =========== ===========
Investor A Shares.................................................. 570,722 134,482 46,230 1,479,066
============ ============ =========== ===========
Investor C Shares.................................................. 49,664 5,902 2,275 882
============ ============ =========== ===========
Investor N Shares.................................................. 3,046,587 228,263 117,797 19,129
============ ============ =========== ===========
PRIMARY A SHARES (formerly Trust A Shares):
Net asset value, offering and redemption price per share........... $13.50 $10.24 $10.34 $10.07
====== ====== ====== ======
INVESTOR A SHARES:
Net asset value, offering and redemption price per share........... $13.39 $10.23 $10.32 $10.07
====== ====== ====== ======
INVESTOR C SHARES:
Net asset value and offering price per share*...................... $13.13 $10.20 $10.27 $10.07
====== ====== ====== ======
INVESTOR N SHARES:
Net asset value, offering and redemption price per share........... $13.27 $10.18 $10.26 $10.07
====== ====== ====== ======
</TABLE>
- ---------------
* Redemption price per share is equal to Net Asset Value less any applicable
contingent deferred sales charge.
SEE NOTES TO FINANCIAL STATEMENTS.
39
<PAGE> 42
NATIONS FUND
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
NATIONS
NATIONS NATIONS NATIONS GLOBAL
INTERNATIONAL PACIFIC EMERGING GOVERNMENT
EQUITY GROWTH MARKETS INCOME
FUND(a) FUND(b) FUND(b) FUND(b)
<S> <C> <C> <C> <C>
------------------------------------------------
INVESTMENT INCOME:
Dividends (Net of foreign withholding taxes of $1,343,573, $36,089,
$13,959
and $0, respectively)................................................ $ 9,594,831 $ 385,965 $ 188,821 $ --
Interest (Net of foreign withholding taxes of $0, $79, $0 and $12,466,
respectively)........................................................ 1,264,066 126,699 110,639 1,225,862
------------ ----------- ----------- -----------
Total investment income............................................ 10,858,897 512,664 299,460 1,225,862
------------ ----------- ----------- -----------
EXPENSES:
Investment advisory fee (Note 2)....................................... 5,375,815 307,806 188,334 132,152
Administration fee (Note 2)............................................ 597,450 34,201 17,121 18,879
Registration and filing fees........................................... 110,915 33,503 16,752 13,915
Transfer agent fees (Note 2)........................................... 396,098 24,809 14,513 8,100
Custodian fees (Note 2)................................................ 443,050 104,817 51,558 7,628
Legal and audit fees................................................... 81,646 38,409 37,239 36,562
Directors' fees and expenses (Note 2).................................. 25,229 23,799 11,764 7,053
Amortization of organization costs (Note 6)............................ 17,194 20,268 19,488 20,685
Other.................................................................. -- 15,949 8,595 4,248
------------ ----------- ----------- -----------
Subtotal........................................................... 7,047,397 603,561 365,364 249,222
Shareholder servicing and distribution fees (Note 3):
Investor A Shares.................................................... 12,545 1,034 276 6,269
Investor C Shares.................................................... 4,415 274 88 55
Investor N Shares.................................................... 252,458 8,413 4,787 846
Fees waived by investment adviser (Note 2)............................. (84,472) -- -- --
------------ ----------- ----------- -----------
Total expenses..................................................... 7,232,343 613,282 370,515 256,392
------------ ----------- ----------- -----------
NET INVESTMENT INCOME/(LOSS)........................................... 3,626,554 (100,618) (71,055) 969,470
------------ ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (NOTES 1 AND 4):
Net realized gain/(loss) from:
Security transactions................................................ 11,155,678 (385,879) (159,388) (48,120)
Forward foreign exchange contracts................................... 22,377,015 (89,658) (32,985) 292,316
Foreign currencies................................................... (1,114,050) 30,013 (5,240) (23,192)
------------ ----------- ----------- -----------
Net realized gain/(loss) on investments during the period.............. 32,418,643 (445,524) (197,613) 221,004
------------ ----------- ----------- -----------
Change in unrealized appreciation/(depreciation) of:
Securities........................................................... 65,110,840 3,050,477 1,308,464 (259,648)
Forward foreign exchange contracts................................... 7,025,862 1,700 (70) 59,361
Currencies and other net assets...................................... (127,765) (2,251) (334) 148
------------ ----------- ----------- -----------
Net unrealized appreciation/(depreciation) of investments during the
period............................................................... 72,008,937 3,049,926 1,308,060 (200,139)
------------ ----------- ----------- -----------
Net realized and unrealized gain on investments........................ 104,427,580 2,604,402 1,110,447 20,865
------------ ----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $108,054,134 $2,503,784 $1,039,392 $ 990,335
------------ ----------- ----------- -----------
</TABLE>
- ---------------
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
May 31. The numbers reflected are for the period June 1, 1995 through March
31, 1996.
(b) Nations Emerging Markets Fund, Nations Pacific Growth Fund and Nations
Global Government Income Fund commenced operations on June 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS.
40
<PAGE> 43
NATIONS FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
NATIONS
NATIONS NATIONS NATIONS GLOBAL
INTERNATIONAL PACIFIC EMERGING GOVERNMENT
EQUITY GROWTH MARKETS INCOME
FUND(a) FUND(b) FUND(b) FUND(b)
<S> <C> <C> <C> <C>
-------------------------------------------------------
Net investment income/(loss)................................. $ 3,626,554 $ (100,618) $ (71,055) $ 969,470
Net realized gain/(loss) on investments...................... 32,418,643 (445,524) (197,613) 221,004
Change in unrealized appreciation/(depreciation) of
investments................................................ 72,008,937 3,049,926 1,308,060 (200,139)
------------ ----------- ----------- -----------
Net increase in net assets resulting from operations......... 108,054,134 2,503,784 1,039,392 990,335
Distributions to shareholders from net investment income:
Primary A Shares........................................... (3,605,055) -- -- (797,500)
Investor A Shares.......................................... (21,498) -- -- (119,144)
Investor C Shares.......................................... -- -- -- (267)
Investor N Shares.......................................... -- -- -- (3,189)
Distributions to shareholders in excess of net investment
income:
Primary A Shares........................................... (2,391,207) (108,132) (3,687) (42,578)
Investor A Shares.......................................... (20,996) (1,632) -- (6,554)
Investor C Shares.......................................... (1,140) -- -- (17)
Investor N Shares.......................................... (85,934) (1,443) -- (221)
Distributions to shareholders from net realized gain on
investments:
Primary A Shares........................................... (1,248,540) -- -- (81,861)
Investor A Shares.......................................... (11,031) -- -- (89)
Investor C Shares.......................................... (1,122) -- -- (33)
Investor N Shares.......................................... (71,408) -- -- (586)
Net increase in net assets from Fund share transactions:
Primary A Shares........................................... 182,162,851 92,975,768 46,582,308 24,647,663
Investor A Shares.......................................... 1,946,226 1,318,061 454,932 15,047,874
Investor C Shares.......................................... 78,368 50,206 14,264 327
Investor N Shares.......................................... 3,984,676 2,198,873 1,148,302 183,687
------------ ----------- ----------- -----------
Net increase in net assets................................... 288,768,324 98,935,485 49,235,511 39,817,847
NET ASSETS:
Beginning of period.......................................... 609,683,633 34,000 34,000 34,000
------------ ----------- ----------- -----------
End of period................................................ $898,451,957 $98,969,485 $49,269,511 $39,851,847
============ =========== =========== ===========
Undistributed net investment income/(distributions in excess
of net investment income).................................. $ 1,078,353 $ -- $ (93,457) $ (108,343)
============ =========== =========== ==========
</TABLE>
- ---------------
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
May 31. The numbers reflected are for the period June 1, 1995 through March
31, 1996.
(b) Nations Emerging Markets Fund, Nations Pacific Growth Fund and Nations
Global Government Income Fund commenced operations on June 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS.
41
<PAGE> 44
NATIONS FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED MAY 31, 1995
<TABLE>
<CAPTION>
NATIONS
INTERNATIONAL
EQUITY
FUND
<S> <C>
------------
Net investment income.............................................................................. $ 6,125,402
Net realized loss on investments................................................................... (18,973,898)
Change in unrealized appreciation of investments................................................... 6,301,646
------------
Net decrease in net assets resulting from operations............................................... (6,546,850)
Distributions to shareholders from net investment income:
Primary A Shares................................................................................. (931,481)
Investor A Shares................................................................................ (5,028)
Investor C Shares................................................................................ --
Investor N Shares................................................................................ (12,349)
Distributions to shareholders from net realized gain on investments:
Primary A Shares................................................................................. (5,495,934)
Investor A Shares................................................................................ (49,133)
Investor C Shares................................................................................ (4,022)
Investor N Shares................................................................................ (291,841)
Distributions to shareholders in excess of net realized gain on investments:
Primary A Shares................................................................................. (4,311,458)
Investor A Shares................................................................................ (38,735)
Investor C Shares................................................................................ (3,171)
Investor N Shares................................................................................ (229,798)
Net increase in net assets from Fund share transactions:
Primary A Shares................................................................................. 187,819,405
Investor A Shares................................................................................ 1,874,077
Investor C Shares................................................................................ 169,852
Investor N Shares................................................................................ 15,273,894
------------
Net increase in net assets......................................................................... 187,217,428
NET ASSETS:
Beginning of year.................................................................................. 422,466,205
------------
End of year........................................................................................ $ 609,683,633
=============
Distributions in excess of net investment income................................................... $ (17,575,809)
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
42
<PAGE> 45
NATIONS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY
<TABLE>
<CAPTION>
NATIONS PACIFIC GROWTH
NATIONS INTERNATIONAL EQUITY FUND FUND
PERIOD ENDED YEAR ENDED PERIOD ENDED
MARCH 31, 1996(a) MAY 31, 1995 MARCH 31, 1996(b)
---------------------- ---------------------- --------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold...................................... 21,779,745 $277,149,224 22,828,690 $275,581,668 9,508,684 $95,045,750
Issued as reinvestment of dividends....... 117,187 1,548,026 23,815 275,921 630 6,096
Redeemed.................................. (7,709,286) (96,534,399) (7,414,635) (88,038,184) (213,667) (2,076,078)
---------- ----------- ----------- ------------ --------- -----------
Net increase.............................. 14,187,646 $182,162,851 15,437,870 $187,819,405 9,295,647 $92,975,768
========== =========== =========== ============ ========= ===========
INVESTOR A SHARES:
Sold...................................... 1,204,885 $ 14,928,700 338,220 $ 4,096,060 145,535 $ 1,437,200
Issued as reinvestment of dividends....... 3,747 48,496 7,391 84,829 168 1,629
Redeemed.................................. (1,055,939) (13,030,970) (195,903) (2,306,812) (12,071) (120,768)
---------- ----------- ----------- ------------ --------- -----------
Net increase.............................. 152,693 $ 1,946,226 149,708 $ 1,874,077 133,632 $ 1,318,061
========== =========== =========== ============ ========= ===========
INVESTOR C SHARES:
Sold...................................... 9,348 $ 114,146 16,915 $ 196,692 5,052 $ 50,206
Issued as reinvestment of dividends....... 167 2,118 621 7,000 -- --
Redeemed.................................. (3,089) (37,896) (2,910) (33,840) -- --
---------- ----------- ----------- ------------ --------- -----------
Net increase.............................. 6,426 $ 78,368 14,626 $ 169,852 5,052 $ 50,206
========== =========== =========== ============ ========= ===========
INVESTOR N SHARES:
Sold...................................... 719,771 $ 8,739,740 1,600,158 $ 19,214,591 232,191 $ 2,245,592
Issued as reinvestment of dividends....... 11,981 152,998 45,762 521,446 139 1,346
Redeemed.................................. (397,985) (4,908,062) (384,329) (4,462,143) (4,917) (48,065)
---------- ----------- ----------- ------------ --------- -----------
Net increase.............................. 333,767 $ 3,984,676 1,261,591 $ 15,273,894 227,413 $ 2,198,873
========== =========== =========== ============ ========= ===========
</TABLE>
- ---------------
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
May 31.
(b) Nations Pacific Growth Fund's Primary A Shares, Investor A Shares, Investor
C Shares and Investor N Shares commenced operations on June 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS.
43
<PAGE> 46
NATIONS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
NATIONS EMERGING NATIONS GLOBAL
MARKETS FUND GOVERNMENT INCOME FUND
PERIOD ENDED PERIOD ENDED
MARCH 31, 1996(b) MARCH 31, 1996(b)
-------------------- --------------------
SHARES DOLLARS SHARES DOLLARS
--------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold...................................................................... 4,725,947 $47,770,341 2,470,544 $24,792,601
Issued as reinvestment of dividends....................................... 16 155 17,845 180,058
Redeemed.................................................................. (126,079) (1,188,188) (31,705) (324,996)
--------- ----------- --------- -----------
Net increase.............................................................. 4,599,884 $46,582,308 2,456,684 $24,647,663
========= =========== ========= ===========
INVESTOR A SHARES:
Sold...................................................................... 46,699 $ 468,391 1,478,192 $15,047,626
Issued as reinvestment of dividends....................................... -- -- 94 953
Redeemed.................................................................. (1,319) (13,459) (70) (705)
--------- ----------- --------- -----------
Net increase.............................................................. 45,380 $ 454,932 1,478,216 $15,047,874
========= =========== ========= ===========
INVESTOR C SHARES:
Sold...................................................................... 1,425 $ 14,264 1 $ 10
Issued as reinvestment of dividends....................................... -- -- 31 317
--------- ----------- --------- -----------
Net increase.............................................................. 1,425 $ 14,264 32 $ 327
========= =========== ========= ===========
INVESTOR N SHARES:
Sold...................................................................... 121,704 $ 1,194,610 18,001 $ 180,857
Issued as reinvestment of dividends....................................... -- -- 392 3,996
Redeemed.................................................................. (4,757) (46,308) (114) (1,166)
--------- ----------- --------- -----------
Net increase.............................................................. 116,947 $ 1,148,302 18,279 $ 183,687
========= =========== ========= ===========
</TABLE>
- ---------------
(b) Nations Emerging Markets Fund and Nations Global Government Income Funds'
Primary A Shares, Investor A Shares, Investor C Shares and Investor N Shares
commenced operations on June 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS.
44
<PAGE> 47
[THIS PAGE INTENTIONALLY LEFT BLANK]
45
<PAGE> 48
NATIONS FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED NET INCREASE/ DIVIDENDS DISTRIBUTIONS DISTRIBUTIONS
VALUE INVESTMENT AND UNREALIZED (DECREASE) IN FROM NET IN EXCESS OF FROM NET
BEGINNING OF INCOME/ GAIN/(LOSS) ON NET ASSET VALUE INVESTMENT NET INVESTMENT REALIZED
PERIOD (LOSS) INVESTMENTS FROM OPERATION INCOME INCOME CAPITAL GAINS
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NATIONS INTERNATIONAL
EQUITY FUND
PRIMARY A SHARES
Period ended
03/31/1996(a)#...... $11.75 $ 0.07 $ 1.80 $ 1.87 $(0.06) $(0.04) $ (0.02)
Year ended
05/31/1995#......... 12.06 0.14 (0.20) (0.06) (0.03) -- (0.12)
Year ended
05/31/1994#......... 10.60 0.09 1.44 1.53 (0.05) -- (0.02)
Year ended
05/31/1993#......... 10.40 0.09 0.21 0.30 (0.08) -- (0.02)
Period ended
05/31/1992*......... 10.00 0.08 0.36 0.44 (0.04) -- --
INVESTOR A SHARES
Period ended
03/31/1996(a)#...... $11.67 $ 0.04 $ 1.78 $ 1.82 $(0.04) $(0.04) $ (0.02)
Year ended
05/31/1995#......... 12.00 0.11 (0.20) (0.09) (0.02) -- (0.12)
Year ended
05/31/1994#......... 10.56 0.06 1.44 1.50 (0.04) -- (0.02)
Period ended
05/31/1993*#........ 10.38 0.07 0.21 0.28 (0.08) -- (0.02)
INVESTOR C SHARES
Period ended
03/31/1996(a)#...... $11.45 $(0.03) $ 1.75 $ 1.72 -- $(0.02) $ (0.02)
Year ended
05/31/1995#......... 11.86 0.02 (0.21) (0.19) -- -- (0.12)
Year ended
05/31/1994#......... 10.49 (0.03) 1.43 1.40 (0.01) -- (0.02)
Period ended
05/31/1993*#........ 10.10 0.00*** 0.48 0.48 (0.07) -- (0.02)
INVESTOR N SHARES
Period ended
03/31/1996(a)#...... $11.56 $(0.02) $ 1.78 $ 1.76 -- $(0.03) $ (0.02)
Year ended
05/31/1995#......... 11.96 0.05 (0.22) (0.17) (0.01) -- (0.12)
Period ended
05/31/1994*#........ 10.51 (0.00)*** 1.51 1.51 (0.04) -- (0.02)
NATIONS PACIFIC GROWTH FUND
PRIMARY A SHARES
Period ended
03/31/1996**#....... $10.00 $(0.02) $ 0.29 $ 0.27 -- $(0.03) --
INVESTOR A SHARES
Period ended
03/31/1996**#....... $10.00 $(0.04) $ 0.29 $ 0.25 -- $(0.02) --
INVESTOR C SHARES
Period ended
03/31/1996**#....... $10.00 $(0.09) $ 0.29 $ 0.20 -- -- --
INVESTOR N SHARES
Period ended
03/31/1996**#....... $10.00 $(0.10) $ 0.29 $ 0.19 -- $(0.01) --
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Nations International Equity Fund's Primary A, Investor A, Investor C and Investor N Shares commenced operations on
December 2, 1991, June 3, 1992, June 17, 1992 and June 7, 1993, respectively.
** Nations Pacific Growth Fund's Primary A, Investor A, Investor C and Investor N Shares commenced operations on June 30,
1995.
*** Amount represents less than $0.01 per share.
+ 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 numbers have been calculated using the monthly average shares method, which more appropriately represents the
per share data for the period, since the use of the undistributed income method did not accord with the results of
operations.
(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.
</TABLE>
46
<PAGE> 49
NATIONS FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
RATIO OF RATIO OF
DISTRIBUTIONS TOTAL NET ASSET NET ASSETS OPERATING NET INVESTMENT
IN EXCESS OF DIVIDENDS VALUE END OF EXPENSES TO INCOME/(LOSS) PORTFOLIO
NET REALIZED AND END OF TOTAL PERIOD AVERAGE NET TO AVERAGE TURNOVER
CAPITAL GAIN DISTRIBUTIONS PERIOD RETURN++ (IN 000'S) ASSETS NET ASSETS RATE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-- $ (0.12) $ 13.50 16.01% $849,731 1.17%+ 0.65%+ 26%
(0.10) (0.25) 11.75 (0.46) 572,940 1.03 1.17 92
-- (0.07) 12.06 14.37 401,559 1.17 0.75 39
-- (0.10) 10.60 3.14 118,873 1.30 1.03 41
-- (0.04) 10.40 4.43+++ 83,970 1.33+ 1.81+ 11
-- $ (0.10) $ 13.39 15.66% $ 7,643 1.42%+ 0.40%+ 26%
(0.10) (0.24) 11.67 (0.69) 4,877 1.28 0.92 92
-- (0.06) 12.00 14.00 3,219 1.42 0.50 39
-- (0.10) 10.56 2.91 839 1.55+ 0.78+ 41
-- $ (0.04) $ 13.13 15.09% $ 652 2.09%+ (0.27)%+ 26%
(0.10) (0.22) 11.45 (1.56) 495 2.03 0.17 92
-- (0.03) 11.86 13.21 339 2.17 (0.25) 39
-- (0.09) 10.49 4.97 200 2.30+ 0.03+ 41
-- $ (0.05) $ 13.27 15.25% $ 40,426 1.99%+ (0.17)%+ 26%
(0.10) (0.23) 11.56 (1.30) 31,372 1.78 0.42 92
-- (0.06) 11.96 14.32 17,349 1.92+ (0.00)+*** 39
-- $ (0.03) $ 10.24 2.66% $ 95,210 1.76%+ (0.27)%+ 23%
-- $ (0.02) $ 10.23 2.52% $ 1,375 2.01%+ (0.52)%+ 23%
-- -- $ 10.20 2.00% $ 60 2.65%+ (1.16)%+ 23%
-- $ (0.01) $ 10.18 1.88% $ 2,324 2.76%+ (1.27)%+ 23%
<CAPTION>
WITHOUT WAIVERS AND/OR
EXPENSE REIMBURSEMENTS
------------------------------
RATIO OF
OPERATING NET INVESTMENT
EXPENSES TO INCOME/ AVERAGE
AVERAGE NET (LOSS) PER COMMISSION
ASSETS SHARE RATE PAID(b)
- ------------------------------------------------------
<S> <C> <C> <C> <C>
1.18%+ $ 0.07 $0.0272
1.04 0.14 --
1.18 0.08 --
1.32 0.10 --
1.43+ 0.03 --
1.43%+ $ 0.04 $0.0272
1.29 0.11 --
1.43 0.05 --
1.62+ 0.07 --
2.10%+ $(0.03) $0.0272
2.04 0.02 --
2.18 (0.03) --
2.32+ 0.00*** --
2.00%+ $(0.02) $0.0272
1.79 0.05 --
1.93+ (0.00)*** --
-- -- $0.0178
-- -- $0.0178
-- -- $0.0178
-- -- $0.0178
</TABLE>
47
<PAGE> 50
NATIONS FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED DIVIDENDS DISTRIBUTIONS DISTRIBUTIONS
VALUE INVESTMENT AND UNREALIZED NET INCREASE IN FROM NET IN EXCESS OF FROM NET
BEGINNING OF INCOME/ GAIN ON NET ASSET VALUE INVESTMENT NET INVESTMENT REALIZED
PERIOD (LOSS) INVESTMENTS FROM OPERATIONS INCOME INCOME CAPITAL GAINS
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NATIONS EMERGING
MARKETS FUND
PRIMARY A SHARES
Period ended
03/31/1996*#........ $10.00 $(0.03) $ 0.37 $ 0.34 -- $ 0.00*** --
INVESTOR A SHARES
Period ended
03/31/1996*#........ $10.00 $(0.05) $ 0.37 $ 0.32 -- -- --
INVESTOR C SHARES
Period ended
03/31/1996*#........ $10.00 $(0.10) $ 0.37 $ 0.27 -- -- --
INVESTOR N SHARES
Period ended
03/31/1996*#........ $10.00 $(0.11) $ 0.37 $ 0.26 -- -- --
NATIONS GLOBAL
GOVERNMENT INCOME FUND
PRIMARY A SHARES
Period ended
03/31/1996**#....... $10.00 $ 0.39 $ 0.11 $ 0.50 $(0.37) $(0.02) $ (0.04)
INVESTOR A SHARES
Period ended
03/31/1996**#....... $10.00 $ 0.37 $ 0.11 $ 0.48 $(0.35) $(0.02) $ (0.04)
INVESTOR C SHARES
Period ended
03/31/1996**#....... $10.00 $ 0.33 $ 0.11 $ 0.44 $(0.31) $(0.02) $ (0.04)
INVESTOR N SHARES
Period ended
03/31/1996**#....... $10.00 $ 0.32 $ 0.11 $ 0.43 $(0.30) $(0.02) $ (0.04)
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Nations Emerging Markets Fund's Primary A, Investor A, Investor C and Investor N Shares commenced operations on June 30,
1995.
** Nations Global Government Income Fund's Primary A, Investor A, Investor C and Investor N Shares commenced operations on
June 30, 1995.
*** Amount represents less than $0.01 per share.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and does not reflect the deduction of any
applicable sales charges.
# Per share numbers have been calculated using the monthly average shares method, which more appropriately represents the
per share data for the period, since the use of the undistributed income method did not accord with the results of
operations.
(a) Average commission rate paid per share of securities purchased and sold by the Fund.
</TABLE>
48
<PAGE> 51
NATIONS FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
RATIO OF RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING NET INVESTMENT
DIVIDENDS VALUE END OF EXPENSES TO INCOME TO PORTFOLIO AVERAGE
AND END OF TOTAL PERIOD AVERAGE NET AVERAGE NET TURNOVER COMMISSION
DISTRIBUTIONS PERIOD RETURN++ (IN 000'S) ASSETS ASSETS RATE RATE PAID(a)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0.00*** $ 10.34 3.42% $ 47,560 2.13%+ (0.38)%+ 17% $0.0004
-- $ 10.32 3.20% $ 477 2.38%+ (0.63)%+ 17% $0.0004
-- $ 10.27 2.70% $ 23 3.02%+ (1.27)%+ 17% $0.0004
-- $ 10.26 2.60% $ 1,209 3.13%+ (1.38)%+ 17% $0.0004
$ (0.43) $ 10.07 5.03% $ 24,753 1.32%+ 5.17% 213% --
$ (0.41) $ 10.07 4.84% $ 14,898 1.57%+ 4.92%+ 213% --
$ (0.37) $ 10.07 4.40% $ 9 2.16%+ 4.33%+ 213% --
$ (0.36) $ 10.07 4.27% $ 193 2.32%+ 4.17%+ 213% --
</TABLE>
49
<PAGE> 52
NATIONS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES.
Nations Fund, Inc. (the "Company") and Nations Fund Portfolios, Inc. ("Nations
Portfolios") are registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as open-end investment companies. As of the date of this
report, the Company offers five separate portfolios and Nations Portfolios
offers three separate portfolios. The Company changed its fiscal year end from
May 31 to March 31. The information presented for the Company is for the period
from June 1, 1995 to March 31, 1996. The information presented for Nations
Portfolios is for the period from June 30, 1995 to March 31, 1996. Information
presented in these financial statements pertains only to Nations International
Equity Fund, Nations Pacific Growth Fund, Nations Emerging Markets Fund and
Nations Global Government Income Fund (individually the "Fund", collectively the
"Funds"). The financial statements for the remaining funds of the Company are
presented under separate cover. On February 28, 1996, a special meeting of the
Board of Directors was held to approve the name change from Trust A and Trust B
Shares to Primary A and Primary B Shares, respectively. The Funds currently
offer four classes of shares: Primary A Shares (formerly known as Trust A
Shares), Investor A Shares, Investor C Shares and Investor N Shares. The Board
of Directors of the Company and Nations Portfolios have authorized the issuance
of Primary B Shares (formerly known as Trust B Shares) for all Funds. As of
March 31, 1996, no Primary B Shares have been issued. Shareholders of a Fund
have equal voting rights on matters affecting all shareholders of the Fund
equally. In addition, each class of shares of a Fund has exclusive voting rights
on matters that relate solely to its class and separate voting rights on matters
in which the interests of one class of shares differ from the interests of any
other class. 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 the significant accounting policies followed by the
Funds in the preparation of their financial statements.
Securities Valuation: A security listed or traded on an exchange is valued at
its last sales price on the exchange where the security is principally traded
or, lacking any sales on a particular day, the security is valued at the mean
between the closing bid and asked prices on that day. If there are no such bid
and asked quotations, the most recent bid quote is used. Each security traded in
the over-the-counter market (but not including securities reported on the NASDAQ
National Market System) is valued at the mean between the last available bid and
asked prices based upon quotes furnished by market makers for such securities.
The valuation of International Securities which trade on foreign exchanges are
provided by an independent pricing service approved by the Board of Directors.
Each security reported on the NASDAQ National Market System is valued at the
last sales price on the valuation date. Debt obligations are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted prices,
and may reflect appropriate factors such as yield, type of issue, coupon rate,
maturity and general market conditions. Securities for which market quotations
are not readily available are valued at fair value under the supervision of the
Board of Directors. Short-term investments that mature in 60 days or less are
valued at amortized cost.
Repurchase Agreements: Each Fund may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
This arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the collateral is at
least equal at all times to the total amount of the repurchase obligations,
including interest. Generally, in the event of counterparty default, the Fund
has the right to use the collateral to offset losses incurred. There is
potential loss to the Fund in the event the Fund is delayed or prevented from
exercising its right to dispose of the collateral securities, including the risk
of a possible decline in the value of the underlying securities during the
period while the Fund seeks to assert its right. Unless permitted by the
Securities and Exchange Commission, the Fund will not enter into repurchase
agreements with the investment adviser, the distributor or any of their
affiliates. The Funds' investment adviser, acting under the supervision of the
Board of Directors, monitors the value of collateral received as well as the
creditworthiness of those banks and dealers with which the Funds enter into
repurchase agreements to evaluate potential risks.
Foreign Currency: The books and records of the Funds are maintained in U.S.
dollars. Foreign currencies, investments and other assets and liabilities are
translated into U.S. dollars at the exchange rates prevailing at the end of the
period. Purchases and sales of investment securities, income and expenses are
translated on the respective dates of such
50
<PAGE> 53
NATIONS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
transactions. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date of investment securities transactions, foreign
currency transactions and the difference between the amounts of interest and
dividends recorded on the books of a Fund and the amounts actually received. The
effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statements of Operations from the effects
of changes in market prices of those securities, but are included with the net
realized and unrealized gain or loss on investment securities.
Foreign Currency Transactions: The Funds may enter into forward currency
exchange contracts generally only under two circumstances: (i) when the Fund
enters into a contract for the purchase or sale of a security denominated in a
foreign currency, to "lock" in the U.S. exchange rate of the transaction, with
such period being a short-dated contract covering the period between transaction
date and settlement date; and (ii) when NationsBanc Advisors Inc. ("NBAI")
and/or Nations Gartmore Investment Management ("Nations Gartmore") believes that
the currency of a particular foreign country may experience a substantial
movement against the United States ("U.S.") dollar. Forward foreign currency
contracts are valued at the forward rate and are marked-to-market daily. The
change in market value is recorded by the Fund as an unrealized gain or loss.
When the contract is closed, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed.
Forward foreign currency contracts will be used primarily to protect the Funds
from adverse currency movements and will generally not be entered into for terms
greater than one year. The use of forward foreign currency contracts does not
eliminate fluctuations in the underlying prices of the Funds' investment
securities, but it does establish a rate of exchange that can be achieved in the
future. The use of forward contracts involves the risk that anticipated currency
movements will not be accurately predicted. A forward contract would limit the
risk of loss due to a decline in the value of a particular currency, however, it
also would limit any potential gain that might result should the value of the
currency increase instead of decrease. In addition, the Funds could be exposed
to risks if counterparties to the contracts are unable to meet the terms of
their contracts. The counterparty risk exposure is, therefore, closely monitored
and contracts are only executed with high credit quality financial institutions.
Securities Transactions and Investment Income: Securities transactions are
accounted for on a trade date basis. Realized gains and losses are computed on
the basis of specific identification of the securities sold. Interest income,
adjusted for amortization of market discounts and premiums on investments, is
earned from settlement date and is recorded on the accrual basis. Dividend
income is recorded on the ex-dividend date, except that certain dividends from
foreign securities are recorded as soon as the Funds are informed of 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. Uninvested cash balances earn interest at a rate
agreed upon by the Funds and the Bank of New York.
Dividends and Distributions to Shareholders: Distributions from net investment
income, if any, for Nations International Equity Fund, Nations Pacific Growth
Fund and Nations Emerging Markets Fund are declared and paid each calendar
quarter. Dividends from net investment income for the Nations Global Government
Income Fund are declared on each day the Fund is open for business and paid
monthly. Each Fund will distribute net realized capital gains (including net
short-term capital gains), unless offset by any available capital loss
carryforward, annually after the fiscal year in which earned. Additional
distributions of net investment income and capital gains may be made at the
discretion of the Board of Directors in order to avoid the application of a 4%
non-deductible Federal excise tax. Income distributions and capital gain
distributions on a Fund level are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to timing differences and differing
characterization of distributions made by a Fund as a whole.
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. Certain reclassification adjustments are made
between undistributed net investment income, realized gain and loss and paid-in
capital due to different book and tax accounting for foreign currency, foreign
securities mark to market and organization costs.
51
<PAGE> 54
NATIONS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Reclassifications for the period ended March 31, 1996, were as follows:
<TABLE>
<CAPTION>
INCREASE/(DECREASE) INCREASE/(DECREASE)
DECREASE UNDISTRIBUTED NET ACCUMULATED NET
PAID-IN CAPITAL INVESTMENT INCOME REALIZED GAIN/(LOSS)
------------------------------------------------------------
<S> <C> <C> <C>
Nations International Equity Fund........... -- $21,153,438 $(21,153,438)
Nations Pacific Growth Fund................. $(268,333) 211,825 56,508
Nations Emerging Markets Fund............... (19,510) (18,715) 38,225
Nations Global Government Income Fund....... (20,381) (108,343) 128,724
</TABLE>
Income Tax: Each Fund intends to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies and by distributing
substantially all of its earnings to its shareholders. Therefore, no Federal
income tax provision is required. The Funds may be subject to foreign taxes on
income, gains on investments or currency repatriation, a portion of which may be
recoverable. The Funds will accrue such taxes and recoveries as applicable,
based upon their current interpretation of tax rules and regulations that exist
in the markets in which they invest.
Expenses: General expenses of the Company or Nations Portfolios are allocated
to the relevant Fund based upon relative net assets. Operating expenses directly
attributable to a Fund or a class of shares are charged to that Fund's or class'
operations. Expenses of each Fund not directly attributable to the operations of
any class of shares or portfolio are prorated among the classes based on the
relative average net assets of each class of shares.
2. INVESTMENT ADVISORY FEE, SUB-ADVISORY FEE, SUB-INVESTMENT
ADVISORY FEE, ADMINISTRATION FEE AND RELATED PARTY TRANSACTIONS.
Each of the Company and Nations Portfolios has, on behalf of its Funds, entered
into Investment Advisory Agreements with NBAI, a wholly-owned subsidiary of
NationsBank, N.A., pursuant to which NBAI provides investment advisory services
to the Funds. Prior to January 1, 1996, NationsBank, N.A. acted as investment
adviser. The investment advisory fees under the new Investment Advisory
Agreements are the same as those under the prior agreements.
Under the terms of these Investment Advisory Agreements, NBAI is entitled to
receive an advisory fee at the following annual rates of average daily net
assets of each Fund:
<TABLE>
<CAPTION>
ANNUAL RATE
----------
<S> <C>
Nations International Equity Fund................................................ 0.90%
Nations Pacific Growth Fund...................................................... 0.90
Nations Emerging Markets Fund.................................................... 1.10
Nations Global Government Income Fund............................................ 0.70
</TABLE>
The Company and Nations Portfolios and NBAI, have entered into Sub-Investment
Advisory Agreements with Nations Gartmore. Nations Gartmore is a joint venture
structured as a general partnership between NB Partners Corp., a wholly-owned
subsidiary of NationsBank, N.A., and Gartmore U.S. Limited, a wholly-owned
subsidiary of Gartmore plc.
On February 19, 1996, it was announced that National Westminster Bank plc
("NatWest"), one of the world's largest commercial and investment banking firms,
had agreed to acquire, subject to the satisfaction or waiver of certain
conditions, control of Gartmore plc from Compagnie de Suez through a two-part
transaction involving (1) the direct purchase from Compagnie de Suez of its
subsidiary that holds 75% of the outstanding voting shares of Gartmore plc; and
(2) a tender offer for the remaining portion of Gartmore plc shares held by
public shareholders (collectively, the "Acquisition"). The Acquisition, if
completed, will result in a change in ownership of Nations Gartmore and will
probably result in a change in the name of Nations Gartmore.
52
<PAGE> 55
NATIONS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Under the terms of the Sub-Investment Advisory Agreement, Nations Gartmore is
entitled to receive from NBAI a sub-advisory fee for each Fund at the following
annual rates of average daily net assets of each Fund.
<TABLE>
<CAPTION>
ANNUAL RATE
----------
<S> <C>
Nations International Equity Fund................................................ 0.70%
Nations Pacific Growth Fund...................................................... 0.70
Nations Emerging Markets Fund.................................................... 0.85
Nations Global Government Income Fund............................................ 0.54
</TABLE>
Stephens Inc. ("Stephens") serves as the administrator of the Company and
Nations Portfolios pursuant to Administration Agreements. First Data Investor
Services Group, Inc. (formerly known as The Shareholder Services Group, Inc.), a
wholly-owned subsidiary of First Data Corporation, serves as co-administrator of
the Company and Nations Portfolios pursuant to Co-Administration Agreements.
Pursuant to the Administration and Co-Administration Agreements, the
administrator and co-administrator are entitled to receive a combined fee,
computed daily and paid monthly, at the annual rate of 0.10% of average daily
net assets of the Company and Nations Portfolios and the investment portfolios
of Nations Fund Trust (another registered open-end investment company which is
part of the Nations Fund Family) on a combined basis. NationsBank, N.A. serves
as the sub-administrator of the Company and Nations Portfolios pursuant to Sub-
Administration Agreements with Stephens. For the period ended March 31, 1996,
Stephens earned $418,266 from the Funds for its administration services of which
$16,948 was paid to NationsBank, N.A.
The investment adviser, sub-adviser, administrator and co-administrator may,
from time to time, reduce their fees payable by each Fund (either voluntarily or
pursuant to applicable state limitations). For the period ended March 31, 1996,
the investment adviser for Nations International Equity Fund voluntarily waived
fees in the amount of $84,472.
No officer, director or employee of NBAI, Nations Gartmore, Stephens or First
Data Investor Services Group, Inc., or any affiliate thereof, receives any
compensation from the Company or Nations Portfolios for serving as director or
officer of the Company or Nations Portfolios. The Company and Nations Portfolios
pay each 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 Company and
Nations Portfolios also reimburse expenses incurred by each Director in
attending such meetings.
The Funds' eligible Directors may participate in a nonqualified deferred
compensation plan and retirement plan 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 will be 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 fund of the Company. The
expense for the deferred compensation plan is included in the "Directors' fees
and expenses" line of the Statements of Operations.
Bank of New York acts as the custodian for the Funds. First Data Investor
Services Group, Inc. serves as the transfer agent for the Funds' shares.
NationsBank of Texas, N.A. acts as the sub-transfer agent for Primary A Shares
of the Funds and for the period ended March 31, 1996, earned approximately
$17,570 for providing such services. The Funds placed a portion of its portfolio
transactions with firms that are affiliates of NationsBank, N.A. and NBAI.
Stephens acts as the distributor of the Funds' shares. For the period ended
March 31, 1996, the Funds were informed that the distributor received $8,440,
representing commission (sales charges) on sales of Investor A Shares of the
Funds. For the period ended March 31, 1996, the Funds were informed that the
distributor received $112,755 in contingent deferred sales charges from Investor
C and Investor N Shares of the Funds. A substantial portion of these fees were
paid to affiliates of NationsBank, N.A. and NBAI.
53
<PAGE> 56
NATIONS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
A summary of the above expenses is as follows:
<TABLE>
<CAPTION>
SUB TRANSFER
SUB AGENT
ADVISORY ADMINISTRATION ADMINISTRATION FEES(c)
FEES* FEES(a) FEES(b) (NATIONSBANK
FUND (NBAI) (STEPHENS) (NATIONSBANK N.A.) OF TEXAS)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NATIONS FUND PORTFOLIOS, INC.
Nations Pacific Growth Fund.................... $ 307,806 $ 20,550 $ 1,487 $ 4,271
Nations Emerging Markets Fund.................. 188,334 10,287 745 4,271
Nations Global Government Income Fund.......... 132,152 11,338 641 4,271
---------- -------- ------- -------
628,292 42,175 2,873 12,813
---------- -------- ------- -------
NATIONS FUND, INC.
Nations International Equity Fund.............. 5,291,343 359,143 14,075 4,757
---------- -------- ------- -------
Total.......................................... $5,919,635 $401,318 $16,948 $17,570
========== ======== ======= =======
</TABLE>
- ---------------
* Advisory fees are shown net of waivers for the period ended March 31, 1996.
This amount includes fees paid to NationsBank, N.A. under the prior advisory
agreement.
(a) Represents the portion of the administration fees paid to Stephen's Inc. for
the period ended March 31, 1996.
(b) Represents the sub-administration fees paid to NationsBank, N.A. for the
period ended March 31, 1996.
(c) Represents the sub-transfer agent fees paid to NationsBank of Texas, N.A.
for the period ended March 31, 1996.
3. SHAREHOLDER SERVICING AND DISTRIBUTION PLAN.
The Company and Nations Portfolios each have adopted shareholder servicing and
distribution plans pursuant to Rule 12b-1 under the 1940 Act for Investor A
Shares of each Fund ("Investor A Plan"), a shareholder servicing plan
("Servicing Plan") for Investor C Shares and Investor N Shares of each Fund and
a distribution plan ("Distribution Plan") pursuant to Rule 12b-1 under the 1940
Act for Investor C Shares and Investor N Shares of each Fund. The Investor A
Plan permits the Funds to compensate (i) Servicing Agents and Selling Agents
that have entered into a servicing agreement with the Funds for services
provided to their customers that own Investor A Shares and (ii) Stephens for
distribution-related expenses incurred in connection with Investor A Shares. The
Servicing Plan permits the Funds to compensate Servicing Agents for services
provided to their customers that own Investor C Shares and Investor N Shares,
respectively. The Distribution Plan permits the Funds to compensate or reimburse
Stephens for any activities or expenses primarily intended to result in the sale
of the Funds' Investor C Shares or Investor N Shares, respectively. Payments
under the plans are accrued daily and paid monthly at a rate set from time to
time by the Funds. Fees paid pursuant to the plans are charged as expenses of
Investor A Shares, Investor C Shares and Investor N Shares, respectively, of
each Fund as accrued.
For the period ended March 31, 1996, the effective rates paid by the Funds, as a
percentage of average daily net assets, pursuant to the plans are as follows:
<TABLE>
<CAPTION>
INVESTOR C INVESTOR C INVESTOR N INVESTOR N
INVESTOR A DISTRIBUTION SERVICING DISTRIBUTION SERVICING
FUND PLAN PLAN PLAN PLAN PLAN
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nations International Equity Fund................ 0.25% 0.67% 0.25% 0.75% 0.07%
Nations Pacific Growth Fund...................... 0.25 0.64 0.25 0.75 0.25
Nations Emerging Markets Fund.................... 0.25 0.64 0.25 0.75 0.25
Nations Global Government Income Fund............ 0.25 0.59 0.25 0.75 0.25
</TABLE>
A substantial portion of the fees paid pursuant to the plans described above are
paid to affiliates of NationsBank, N.A. and NBAI.
54
<PAGE> 57
NATIONS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 securities, for the period ended March
31, 1996, was as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-----------------------------
<S> <C> <C>
Nations International Equity Fund.................................. $398,504,325 $178,833,191
Nations Pacific Growth Fund........................................ 103,238,543 9,449,307
Nations Emerging Markets Fund...................................... 47,573,654 3,433,317
Nations Global Government Income Fund.............................. 71,429,439 34,845,493
</TABLE>
The aggregate cost of purchases and proceeds from sales of U.S. government
securities, for the period ended March 31, 1996, was as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-----------------------------
<S> <C> <C>
Nations Global Government Income Fund.......................... $ 13,487,477 $ 11,571,297
</TABLE>
At March 31, 1996, aggregate gross unrealized appreciation and unrealized
depreciation for tax purposes was as follows:
<TABLE>
<CAPTION>
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION
-----------------------------
<S> <C> <C>
Nations International Equity Fund......................................... $122,364,037 $ 13,486,404
Nations Pacific Growth Fund............................................... 5,777,488 2,772,338
Nations Emerging Markets Fund............................................. 2,683,068 1,502,354
Nations Global Government Income Fund..................................... 261,697 526,462
</TABLE>
5. CAPITAL STOCK.
As of March 31, 1996, 270,000,000,000 shares of $.001 par value capital stock
were authorized for the Company and 150,000,000,000 shares of $.001 par value
capital stock were authorized for Nations Portfolios.
6. ORGANIZATION COSTS.
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 the straight-line method over a period of five years from the
commencement of operations. In the event that any of the shares issued by a Fund
to its sponsor prior to the commencement of the Funds' public offering ("initial
shares") are redeemed during such amortization period by any holder thereof, the
Funds will be reimbursed by the holder for any unamortized organization costs in
the same proportion as the number of initial shares redeemed bears to the number
of initial shares outstanding at the time of the redemption.
7. FOREIGN SECURITIES.
Each Fund may invest in foreign securities. Investing in securities of foreign
companies and foreign governments involves special risks and considerations not
typically associated with investing in U.S. companies and the U.S. government.
These risks include re-valuation of currencies, less reliable information about
issuers, different securities transaction clearance and settlement practices,
and future adverse political and economic developments. These risks are
heightened for investments in emerging markets countries. Moreover, securities
of many foreign companies and foreign governments and their markets may be less
liquid and their prices more volatile than those of securities of comparable
U.S. companies and the U.S. government.
8. LINE OF CREDIT.
The Company participates in a $25 million line of credit provided by Mellon
Bank, N.A. under a Line of Credit Agreement (the "Agreement") dated March 17,
1996. Advances under the Agreement are taken primarily for temporary or
emergency purposes, including the meeting of redemption requests that otherwise
might require the untimely
55
<PAGE> 58
NATIONS FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
disposition of securities. Under this Agreement, Nations International Equity
Fund may borrow up to the lesser of $10 million or 5.00% of its net assets.
Interest is payable either at the bank's Money Market Rate or the London
Interbank Offered Rate (LIBOR) plus 0.25% on an annualized basis. The Fund and
the other affiliated entities which are parties to the Agreement are charged an
aggregate commitment fee of 0.25% per annum on the amount of the credit. The
Fund shall be liable only for that portion of the commitment with respect to it
and shall not be liable for the portion of the commitment fee of any other fund.
The Agreement requires, among other things, that each participating Fund
maintain a ratio of net assets (not including funds borrowed pursuant to the
Agreement) to aggregate amount of indebtedness pursuant to the Agreement of not
less than 4 to 1. During the period ended March 31, 1996, Nations International
Equity Fund did not borrow under this Agreement.
9. CAPITAL LOSS CARRYFORWARD.
At March 31, 1996, the following Funds had available for Federal income tax
purposes the following unused capital losses:
<TABLE>
<CAPTION>
LOSSES DEFERRED
FUND EXPIRING IN 2004
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Nations Pacific Growth Fund............................................................. $102,682
Nations Emerging Markets Fund........................................................... 99,373
</TABLE>
Under the current tax law, capital and currency losses realized after October
31, may be deferred and treated as occurring on the first day of the following
fiscal year. For the period ended March 31, 1996, the following Funds have
elected to defer losses occurring between November 1, 1995 and March 31, 1996
under these rules, as follows:
<TABLE>
<CAPTION>
POST-OCTOBER CAPITAL
SHORT-TERM
FUND LOSS DEFERRAL
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Nations Pacific Growth Fund.......................................................... $241,007
Nations Emerging Markets Fund........................................................ 60,015
</TABLE>
10. SUBSEQUENT EVENT
National Westminster Bank plc announced on April 10, 1996 that the acquisition
of Indosuez UK Asset Management Limited by NatWest Group had been completed.
Accordingly, Gartmore plc became a subsidiary of National Westminster Bank plc
on April 10, 1996.
Effective May 13, 1996, Nations Gartmore Investment Management has changed its
name to Gartmore Global Partners. Gartmore Global Partners remains jointly owned
(50/50) by subsidiaries of NationsBank and Gartmore in London and continues to
be the exclusive provider of Gartmore's investment services in the U.S.
56
<PAGE> 59
NATIONS FUND
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND DIRECTORS OF NATIONS FUND
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 the Nations International Equity
Fund, Nations Pacific Growth Fund, Nations Emerging Market Fund and Nations
Global Government Income Fund (collectively referred to as the "Funds") at
March, 31, 1996 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, 1996 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
May 17, 1996
<PAGE> 60
NATIONS FUND
- --------------------------------------------------------------------------------
TAX INFORMATION (UNAUDITED)
PERIOD ENDED MARCH 31, 1996
The amount of long-term capital gain paid for the period ended March 31, 1996
was as follows:
<TABLE>
<S> <C>
Nations International Equity Fund........................................... $1,332,101
</TABLE>
For the period ended March 31, 1996, the total amount of income received by
Nations International Equity Fund, Nations Pacific Growth Fund, Nations Emerging
Markets Fund and Nations Global Government Income Fund from sources within
foreign countries and possessions of the United States was $0.2535, $0.0509,
$0.0834 and $0.3532 per share, respectively (representing a total of
$16,880,531, $492,324, $397,724 and $1,397,322, respectively). The total amount
of taxes paid by the Nations International Equity Fund, Nations Pacific Growth
Fund, Nations Emerging Markets Fund and Nations Global Government Income Fund to
such countries was $0.0196, $0.0022, $0.0010 and $0.0012 per share, respectively
(representing a total of $1,307,708, $21,065, $4,701 and $4,733, respectively).
Of the ordinary income (including short-term capital gain) distributions made by
Nations Emerging Markets Fund during the period ended March 31, 1996, 4.49%
qualified for the dividends received deduction available to corporate
shareholders.
<PAGE> 61
THE NATIONS FUND FAMILY
EQUITY FUNDS
GROWTH
Nations Capital Growth Fund
Nations Disciplined Equity Fund
Nations Emerging Growth Fund
Nations Emerging Markets Fund
Nations Equity Index Fund
Nations International Equity Fund
Nations Pacific Growth Fund
GROWTH AND INCOME
Nations Balanced Assets Fund
Nations Equity Income Fund
Nations Value Fund
BOND FUNDS
INCOME
Nations Diversified Income Fund
Nations Global Government Income Fund
Nations Government Securities Fund
Nations Short-Intermediate Government Fund
Nations Short-Term Income Fund
Nations Strategic Fixed Income Fund
TAX-EXEMPT INCOME
Nations Florida Municipal Bond Fund
Nations Florida Intermediate Municipal Bond Fund
Nations Georgia Municipal Bond Fund
Nations Georgia Intermediate Municipal Bond Fund
Nations Maryland Municipal Bond Fund
Nations Maryland Intermediate Municipal Bond Fund
Nations North Carolina Municipal Bond Fund
Nations North Carolina Intermediate Municipal Bond Fund
Nations South Carolina Municipal Bond Fund
Nations South Carolina Intermediate Municipal Bond Fund
Nations Tennessee Municipal Bond Fund
Nations Tennessee Intermediate Municipal Bond Fund
Nations Texas Municipal Bond Fund
Nations Texas Intermediate Municipal Bond Fund
Nations Virginia Municipal Bond Fund
Nations Virginia Intermediate Municipal Bond Fund
Nations Municipal Income Fund
Nations Intermediate Municipal Bond Fund
Nations Short-Term Municipal Income Fund
MONEY MARKET FUNDS
Nations Government Money Market Fund
Nations Prime Fund
Nations Tax Exempt Fund
Nations Treasury Fund
<PAGE> 62
This report is submitted for the general information of shareholders of Nations
Fund. This material must be accompanied or preceded by a Nations Fund
prospectus.
<PAGE> 63
[NATIONS FUND LOGO] ------------
BULK RATE
U.S. POSTAGE
P.O. Box 34602 PAID
Charlotte, NC 28234-4602 BOSTON, MA
Toll Free 1-800-982-2271 PERMIT NO.
54201
------------
AR3 IN-96118-596
