<PAGE> 1
NATIONS [GRAPHIC]
FUNDS
Investments For A Lifetime[SM]
GOVERNMENT Nations
Short-Term
Income Fund
& CORPORATE Nations
Short-Intermediate
Government Fund
BOND FUNDS Nations
Government
Securities Fund
Nations
Strategic
Fixed Income Fund
Nations
U.S. Government
Bond Fund
Nations
Diversified
Income Fund
Nations
Global Government
Income Fund
Semi-Annual Report For The Period
Ended September 30, 1997
<PAGE> 2
This Report is submitted for
the general information of
shareholders of Nations Funds.
This material must be preceded or
accompanied by a current Nations
Funds prospectus.
Nations Funds Distributor:
Stephens Inc. Stephens Inc., which
is not affiliated with NationsBank,
N.A., is not a bank, and securities
offered by it are not guaranteed by [GRAPHIC DEPICTING BASKETS]
any bank or insured by the FDIC.
Stephens Inc., member NYSE, SIPC.
Nations Funds Investment Adviser:
NationsBanc Advisors, Inc.
Nations Funds Investment Sub-
Advisers: TradeStreet Investment
Associates, Inc., Gartmore Global
Partners and Boatmen's Capital
Management, Inc.
- ----------------------------------
NOT FDIC
INSURED
- ----------------------------------
MAY LOSE VALUE
- ----------------------------------
NO BANK GUARANTEE
- ----------------------------------
<PAGE> 3
NATIONS FUNDS
DEAR SHAREHOLDER:
The capital markets, particularly the U.S. stock markets, have continued to
surprise participants with solid investment returns through the first nine
months of 1997. But as we had anticipated in January, the markets have become
more volatile than in the previous two years. Stock investors have experienced
more daily swings exceeding one percent of value than at any time in the 1990s.
Bond investors have seen yields move up and down in a broad range for most of
the year. Meanwhile, municipal securities have enjoyed better total returns than
their taxable counterparts.
Investors have continued to benefit from the outstanding economic conditions in
the U.S. Employment is high and jobs are being produced at a 200,000-plus rate
monthly. The growth rate for the U.S. economy has exceeded three percent in real
terms (after inflation) for the past four quarters. Corporate profits are
exceeding Wall Street estimates and should finish the year up about twelve
percent, which would make 1997 a record sixth consecutive year of double-digit
profit growth. Inflation is perhaps the biggest surprise of all: retail
inflation has registered a benign 2.2 percent for the past year, and wholesale
inflation has actually dropped over the same period.
As we have noted, investors have been the beneficiaries of strong economic and
market conditions over the past three years. However, we do not subscribe to the
notion that the historical business cycle has been "repealed." Indeed, we
encourage investors to maintain reasonable expectations about the future. A
recent national survey of 750 mutual fund investors conducted by Montgomery
Asset Management found that those shareholders surveyed anticipated average
annual returns of 34 percent on their investments over the next decade. Such
results, roughly triple the average annual return from stocks over the past 60
years, demonstrate the strong exuberance in the marketplace and give us some
cause for concern. We believe investors should temper their expectations of the
future and enjoy the rewards of the recent past.
That being said, there is little on the horizon that would suggest trouble for
investors as 1997 draws to a close. We believe that the pattern of the past
several years will continue to hold true and should produce a reasonable
investment environment as we move into the new year. The economy continues its
vigorous pace, monetary policy is neutral, inflation is virtually absent, and
the profit picture remains intact. However, any changes on any of these fronts
could translate into market volatility. On behalf of our shareholders, we will
stay vigilant in our work as we pursue the Funds' investment objectives.
Sincerely,
/s/ A. Max Walker /s/ Mark Williamson
A. Max Walker Mark Williamson
President and Chairman of the Board President, NationsBanc Advisors, Inc.
September 30, 1997
ADDENDUM
Since the date of this report, equity markets worldwide have experienced
enormous volatility sparked by events in the Pacific Rim. However, the U.S.
economic picture remains positive -- fundamentals have not changed. Although we
expect continued volatility, our long-term view of the domestic market remains
intact.
November 26, 1997
1
<PAGE> 4
NATIONS FUNDS
Nations Short-Term Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 25.4%
$10,300,000 Banc One Credit Card Master
Trust, Series 1994-C, Class A,
7.800% 11/15/98............... $ 10,470,568
7,900,000 BankBoston Revenue,
6.480% 07/15/08............... 7,951,848
11,000,000 Chase Manhattan Auto Owner
Trust, Series 1996-C, Class
A4,
6.150% 03/15/02............... 10,996,480
7,000,000 Discover Card Master Trust,
Series 1995-2, Class A,
6.550% 02/15/03............... 7,061,250
9,345,000 EQCC Home Equity Loan Trust,
Series 1996-2, Class A2,
6.700% 09/15/08............... 9,409,247
9,000,000 Fingerhut Metris Master Trust,
Series 1996-1, Class A,
6.450% 02/20/02............... 9,056,250
6,000,000 Green Tree Financial
Corporation, Series 1996-9,
Class A2,
6.250% 01/15/28............... 6,009,360
6,350,000 Household Affinity Credit Card
Master Trust I, Series 1993-1,
Class B,
5.300% 09/15/00............... 6,264,656
10,500,000 IMC Home Equity Loan Trust,
Series 1997-1, Class A3,
6.820% 10/25/11............... 10,575,474
5,119,111 Keystone Auto Grantor Trust,
Series 1996-B, Class A,
6.150% 04/15/03**............. 5,128,709
10,400,000 Premier Auto,
6.320% 03/06/02............... 10,448,755
5,500,000 Prime Credit Card Master Trust,
Series 1992-2, Class B2,
7.950% 11/15/02............... 5,663,240
5,350,000 Sears Credit Account Master
Trust, Series 1995-4, Class A,
6.250% 01/15/03............... 5,360,004
10,300,000 Spiegel Master Trust, Series
1995-A, Class A,
7.500% 09/15/04............... 10,618,661
5,150,000 Standard Credit Card Market,
Series 1993-3, Class A,
5.500% 02/07/00............... 5,114,568
------------
TOTAL ASSET-BACKED SECURITIES
(Cost $119,964,811)........... 120,129,070
============
CORPORATE BONDS AND NOTES -- 51.9%
BANKING -- 6.0%
9,142,000 Chemical Bank (N.Y.)
Corporation, 9.750%
06/15/99...................... 9,671,687
9,600,000 First Chicago NBD Corporation,
Sr. Notes,
6.250% 07/21/00............... 9,591,360
9,000,000 Union Planters National Bank,
Notes,
6.470% 10/29/99............... 9,048,080
------------
28,311,127
------------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
BROKERAGE -- 9.2%
$ 3,400,000 Goldman Sachs Group, L.P.,
Notes, 6.875% 09/15/99**...... $ 3,446,104
8,475,000 Lehman Brothers Holdings Inc.,
MTN,
6.850% 10/08/99............... 8,577,463
5,000,000 Merrill Lynch & Company, MTN,
6.475% 03/01/00............... 5,027,750
Paine Webber Group, Inc., Sr.
Notes:
2,500,000 6.250% 06/15/98................. 2,504,700
8,800,000 7.700% 02/11/00................. 9,066,200
4,500,000 Salomon Inc., MTN,
9.000% 02/15/99............... 4,669,650
10,000,000 Smith Barney Holdings, Inc.,
Notes, 5.625% 11/15/98........ 9,954,500
------------
43,246,367
------------
CAPTIVE FINANCE -- 2.1%
9,850,000 AT&T Capital Corporation, MTN,
5.650% 01/15/99............... 9,786,566
------------
FINANCIAL -- 22.1%
7,100,000 Aristar, Inc., Notes,
6.125% 12/01/00............... 7,052,004
8,500,000 Associates Corporation N.A.,
6.375% 06/15/00............... 8,532,045
9,300,000 Banponce Financial Corporation,
MTN,
6.560% 04/22/99............... 9,375,516
6,700,000 Bear Stearns Companies, Inc.,
MTN,
6.560% 06/20/00............... 6,754,002
11,000,000 Chrysler Financial Corporation,
Notes,
6.375% 01/28/00............... 11,047,960
7,000,000 Dean Witter Discover and
Company, MTN,
7.580% 06/11/01............... 7,245,000
Finova Capital Corporation,
Notes:
3,000,000 6.380% 04/15/99................. 3,016,890
6,500,000 6.250% 08/15/00................. 6,495,060
1,950,000 Fletcher Challenge Finance USA,
9.800% 06/15/98............... 2,000,076
9,150,000 General Motors Association
Corporation, MTN,
7.375% 07/20/98............... 9,248,912
8,850,000 Heller Financial, Inc., MTN,
6.510% 09/20/99............... 8,918,411
4,500,000 Norwest Financial Inc., Sr.
Notes,
8.375% 01/15/00............... 4,599,810
10,000,000 NYNEX, MTN,
6.720% 06/15/98**............. 10,065,000
1,850,000 PACCAR Financial Corporation,
5.910% 10/15/99............... 1,839,769
8,000,000 Salomon Inc.,
7.000% 05/15/99............... 8,095,680
------------
104,286,135
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
2
<PAGE> 5
NATIONS FUNDS
Nations Short-Term Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
INDEPENDENT FINANCE -- 1.7%
North American Mortgage Company,
MTN:
$ 2,500,000 5.800% 11/02/98................. $ 2,492,500
5,500,000 5.840% 11/04/98................. 5,485,975
------------
7,978,475
------------
INDUSTRIAL -- 8.8%
10,000,000 Comdisco, Inc., MTN,
6.470% 09/30/98............... 10,036,400
3,000,000 Crane Company, Notes,
7.250% 06/15/99............... 3,052,380
8,140,000 News America Holdings Inc., Sr.
Notes,
7.500% 03/01/00............... 8,345,128
6,250,000 PDV America, Inc., Sr. Notes,
7.750% 08/01/00............... 6,439,125
10,000,000 Time Warner-Pats,
4.900% 07/29/99**............. 9,746,100
4,000,000 Unocal Corporation, MTN,
8.810% 05/18/98............... 4,066,680
------------
41,685,813
------------
RETAIL -- 0.2%
1,130,000 Sears, Roebuck & Company, MTN,
9.230% 08/06/98............... 1,159,617
------------
UTILITY -- ELECTRIC -- 1.8%
8,299,000 Columbia Gas System, Series A,
6.390% 11/28/00............... 8,324,312
------------
TOTAL CORPORATE BONDS AND NOTES
(Cost $244,188,308)........... 244,778,412
============
FOREIGN BONDS AND NOTES -- 5.2%
8,000,000 Bladex, Notes,
7.000% 09/24/99**............. 8,096,320
7,000,000 Corporacion Andina De Fomento,
Eurobonds,
6.625% 10/14/98**............. 7,035,882
9,500,000 Skandia Capital AB, Guaranteed
Eurobonds,
6.000% 11/02/98............... 9,494,300
------------
TOTAL FOREIGN BONDS AND NOTES
(Cost $24,272,731)............ 24,626,502
============
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
MORTGAGE-BACKED SECURITY -- 3.2%
(Cost $15,527,077)
$15,365,153 Federal National Mortgage
Association (FNMA)
Certificate, 6.000%
11/01/03...................... $ 15,245,121
============
U.S. TREASURY OBLIGATIONS -- 13.5%
U.S. Treasury Notes:
62,300,000 5.875% 01/31/99................. 62,397,188
1,100,000 6.875% 07/31/99................. 1,119,591
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $63,093,234)............ 63,516,779
============
TOTAL SECURITIES (Cost
$467,046,161)................. 468,295,884
============
REPURCHASE AGREEMENT -- 0.6%
(Cost $2,818,000)
2,818,000 Agreement with Smith Barney,
5.480% dated 09/30/97 to be
repurchased at $2,818,429 on
10/01/97, collateralized by:
$1,199,971 U.S. Treasury Note,
7.375% due 11/15/97; $327,365
U.S. Treasury Bond, 11.250% due
02/15/15; $843,549 Resolution
Funding Corporation, Strips,
Principal Only, due 04/15/05;
$604,967 GNMA, 6.000% due
05/20/27....................... 2,818,000
============
TOTAL INVESTMENTS
(Cost $469,864,161*).................. 99.8% 471,113,884
OTHER ASSETS AND LIABILITIES (NET)...... 0.2 814,317
----- ------------
NET ASSETS.............................. 100.0% $471,928,201
===== ============
</TABLE>
- ---------------
* Aggregate cost for Federal tax purposes.
** Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
ABBREVIATION:
MTN Medium Term Note
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE> 6
NATIONS FUNDS
Nations Short-Intermediate Government Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
COLLATERALIZED MORTGAGE OBLIGATION -- 0.1%
(Cost $442,032)
$ 417,996 Drexel Burnham Lambert, Series
S, Class 2,
9.000% 08/01/18............. $ 418,125
============
GOVERNMENT GUARANTEED BOND -- 0.2%
(Cost $1,291,378)
1,280,000 Second Attransco Tanker
Corporation, Series A,
8.500% 06/15/02............. 1,306,381
============
MORTGAGE-BACKED SECURITIES -- 42.7%
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FHLMC)
CERTIFICATES -- 5.6%
17,162 6.500% 09/01/03............... 17,126
14,847,000 6.500% 02/01/27............... 14,485,030
1,770,154 REMIC, Series 1361, Class C,
6.000% 07/15/04............. 1,766,826
30 Year Gold Pass Thru:
12,649,480 7.000% 12/01/25............... 12,633,668
7,070,000 7.000% 09/01/27............... 7,052,325
------------
35,954,975
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FNMA)
CERTIFICATES -- 31.5%
1,700,000 8.150% 05/11/98............... 1,721,522
19,500,000 7.780% 09/29/06............... 19,952,595
27,000,000 7.550% 03/27/07............... 27,545,535
16,400,000 6.500% 09/17/11............... 16,282,084
4,469,944 9.000% 04/01/16............... 4,746,052
3,796,922 6.500% 04/01/26............... 3,699,607
8,871,134 7.500% 02/01/27............... 9,018,040
8,300,000 7.000% 06/30/12, TBA+......... 8,377,854
14,900,000 7.500% 10/01/27, TBA+......... 15,146,744
Discount notes:
50,000,000 5.510% 11/21/97++............. 49,610,500
46,000,000 5.517% 11/24/97++............. 45,620,500
------------
201,721,033
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA)
CERTIFICATES -- 5.6%
3,798,782 8.500% 02/15/05 - 08/15/08 (26
Pools)...................... 4,012,543
4,629,903 7.500% 02/15/24............... 4,722,501
8,855,845 7.500% 04/15/24............... 9,032,962
3,838,768 7.500% 04/15/26............... 3,904,718
5,800,000 8.500% 01/31/27, TBA+......... 6,068,250
7,500,000 8.000% 05/27/27, TBA+......... 7,753,125
96,159 GNMA II/GNMA I,
8.500% 07/15/08............... 101,395
------------
35,595,494
------------
TOTAL MORTGAGE-BACKED
SECURITIES
(Cost $271,499,235)......... 273,271,502
============
U.S. GOVERNMENT AGENCY SECURITIES -- 0.2%
Student Loan Marketing
Association (SLMA):
500,000 4.635% 06/01/98+++............ 499,435
1,000,000 5.280% 08/02/99+++............ 996,600
------------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES
(Cost $1,499,426)........... 1,496,035
============
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS -- 65.9%
U.S. TREASURY BOND -- 23.9%
$ 151,400,000 6.250% 02/28/02............... $152,795,908
------------
U.S. TREASURY NOTES -- 42.0%
136,000,000 6.375% 04/30/99............... 137,211,760
28,000,000 7.125% 02/29/00............... 28,778,680
8,800,000 6.375% 05/15/00............... 8,904,456
42,000,000 5.625% 02/28/01............... 41,586,720
11,000,000 6.625% 05/15/07............... 11,360,910
41,000,000 6.125% 08/15/07............... 41,019,270
------------
268,861,796
------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $419,600,837)......... 421,657,704
============
TOTAL SECURITIES
(Cost $694,332,908)......... 698,149,747
============
REPURCHASE AGREEMENT -- 0.2%
(Cost $960,000)
960,000 Agreement with Smith Barney,
5.480% dated 09/30/97, to be
repurchased at $960,146 on
10/01/97, collateralized by:
$408,791 U.S. Treasury Note,
7.375% due 11/15/97;
$111,522 U.S. Treasury Bond,
11.250% due 02/15/15;
$287,369 Resolution Funding
Corporation, Strips,
Principal Only, due
04/15/05; $206,092 GNMA,
6.000% due 05/20/27......... 960,000
============
TOTAL INVESTMENTS
(Cost $695,292,908*).................. 109.3% 699,109,747
OTHER ASSETS AND LIABILITIES (NET)...... (9.3) (59,393,660)
----- ------------
NET ASSETS.............................. 100.0% $639,716,087
===== ============
</TABLE>
- ---------------
* Aggregate cost for Federal tax purposes.
+ Security purchased on a when-issued or delayed delivery basis (Note 1).
++ Rate represents annualized yield at date of purchase.
+++ Variable rate security. The interest rate shown reflects the rate in effect
at September 30, 1997.
ABBREVIATIONS:
<TABLE>
<S> <C>
Gold Payments are on accelerated 45 day payment cycle
instead of regular 75 day cycle
REMIC Real Estate Mortgage Investment Conduit
TBA To Be Announced
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE> 7
NATIONS FUNDS
Nations Government Securities Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
MORTGAGE-BACKED SECURITIES -- 37.0%
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FHLMC)
CERTIFICATES -- 3.5%
$ 269,665 7.500% 08/01/08 - 06/01/09 (2
Pools)........................ $ 276,952
2,707,324 8.000% 08/01/07 - 05/01/17 (5
Pools)........................ 2,799,792
595,174 8.500% 02/01/08 - 06/01/17 (5
Pools)........................ 622,725
536,195 9.000% 05/01/09 - 12/01/16 (2
Pools)........................ 570,844
653,471 9.500% 04/01/18 - 06/01/21 (4
Pools)........................ 709,196
72,738 10.000% 07/01/01................ 76,965
------------
5,056,474
------------
FEDERAL HOUSING AUTHORITY (FHA)
CERTIFICATE -- 2.1%
2,975,310 Carrollon Manner,
7.375% 04/01/21............... 2,985,072
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FNMA)
CERTIFICATES -- 22.8%
5,000,000 5.800% 08/25/06................. 4,954,650
15,616,196 7.500% 06/01/12 - 03/01/27 (3
Pools)........................ 15,917,648
4,498,080 8.000% 04/01/06 - 09/01/11 (2
Pools)........................ 4,657,243
175,495 8.250% 04/01/09 (2 Pools)....... 182,613
4,357,202 8.500% 12/01/11 - 12/01/26 (4
Pools)........................ 4,552,409
2,230,105 10.000% 04/01/14................ 2,464,221
------------
32,728,784
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA)
CERTIFICATES -- 8.5%
1,424,093 7.000% 06/15/23 (3 Pools)....... 1,428,978
9,196,602 7.500% 02/15/04 - 03/15/24 (2
Pools)........................ 9,380,534
316,550 9.500% 04/15/16 - 08/15/21 (5
Pools)........................ 344,721
643,598 10.000% 11/15/09 - 08/15/20 (13
Pools)........................ 716,055
131,439 10.500% 12/15/20................ 147,986
127,387 11.750% 09/15/00 - 12/15/00 (2
Pools)........................ 134,193
2,813 12.750% 12/15/97................ 2,961
------------
12,155,428
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION II (GNMA II)
CERTIFICATE -- 0.1%
114,428 11.000% 10/20/20................ 130,405
------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $52,375,604)............ 53,056,163
============
MUNICIPAL BOND -- 5.2%
(Cost $7,500,000)
$ 7,500,000 Texas State Department of
Housing and Community Affairs,
Single Family Revenue,
(Teams-Taxable-Mortgage),
Series C,
(MBIA Insured),
6.800% 09/01/29............... 7,518,825
============
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT AGENCY SECURITIES -- 10.4%
Federal National Mortgage
Association, Discount notes:
5,000,000 6.750% 10/15/97+................ $ 4,989,200
5,000,000 5.950% 01/06/98+................ 4,927,400
5,000,000 6.530% 06/29/12+................ 4,985,000
------------
TOTAL U.S. GOVERNMENT AGENCY
SECURITIES
(Cost $14,916,365)............ 14,901,600
============
U.S. TREASURY OBLIGATIONS -- 52.8%
U.S. TREASURY BONDS -- 28.6%
11,000,000 7.250% 08/15/22................. 12,020,910
7,800,000 6.250% 08/15/23................. 7,572,084
10,000,000 6.000% 02/15/26................. 9,393,700
4,000,000 6.625% 02/15/27................. 4,095,640
8,000,000 6.375% 08/15/27................. 7,964,960
------------
41,047,294
------------
U.S. TREASURY NOTES -- 24.2%
4,750,000 5.875% 07/31/99................. 4,753,705
10,000,000 5.875% 08/31/99................. 10,007,800
9,000,000 6.250% 08/31/02................. 9,081,540
11,000,000 6.125% 08/15/07................. 11,005,170
------------
34,848,215
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $75,186,737)............ 75,895,509
============
TOTAL SECURITIES
(Cost $149,978,706)........... 151,372,097
============
REPURCHASE AGREEMENT -- 1.0%
(Cost $1,417,000)
1,417,000 Agreement with Smith Barney,
5.480% dated 09/30/97, to be
repurchased at $1,417,216 on
10/01/97, collateralized by:
$603,392 U.S. Treasury Note,
7.375% due 11/15/97; $164,612
U.S. Treasury Bond, 11.250%
due 02/15/15; $424,169
Resolution Funding
Corporation, Strips, Principal
Only, due 04/15/05; $304,201
GNMA, 6.000% due 05/20/27..... 1,417,000
============
TOTAL INVESTMENTS
(Cost $151,395,706*).................. 106.4% 152,789,097
OTHER ASSETS AND LIABILITIES (NET)...... (6.4) (9,126,373)
----- ------------
NET ASSETS.............................. 100.0% $143,662,724
===== ============
</TABLE>
- ---------------
* Aggregate cost for Federal tax purposes.
+ Zero coupon security. The rate shown is the effective yield at date of
purchase.
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE> 8
NATIONS FUNDS
Nations Strategic Fixed Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 16.1%
$29,050,000 American Express Company,
Master Trust, Series 1994-3,
Class A,
7.850% 08/15/05.............. $ 31,165,131
15,000,000 BankBoston RV Asset Backed
Trust, Series1997-1, Class
A5,
6.350% 10/15/05.............. 15,051,563
21,000,000 Delta Funding Home Equity Loan
Trust, Series 1995-2, Class
A2, 6.570% 12/25/10.......... 21,019,530
8,579,000 Discover Card Master Trust,
Series 1996-3, Class B,
6.250% 08/18/08.............. 8,241,159
EQCC Home Equity Loan Trust:
20,391,000 Series 1996-2, Class A2,
6.700% 09/15/08.............. 20,531,188
20,000,000 Series 1997-2, Class A5,
6.540% 04/15/11.............. 20,112,500
21,834,134 First Alliance Mortgage Loan
Trust, Series 1994-2, Class
A1,
7.625% 07/25/25.............. 22,707,500
22,000,000 IMC Home Equity Loan Trust,
Series 1997-1, Class A3,
6.820% 10/25/11.............. 22,158,136
Metris Master Trust:
20,275,000 Series 1996-1, Class A,
6.450% 02/20/02.............. 20,401,719
15,000,000 Series 1996-1, Class B,
6.800% 02/20/02.............. 15,126,450
15,000,000 Series 1997-1, Class B,
7.110% 10/20/05.............. 15,281,250
30,000,000 Olympic Automobile Receivables
Trust, Series 1996-C, Class
A4, 6.800% 03/15/02.......... 30,375,000
14,600,000 Prime Credit Card Master Trust,
Series 1992-2, Class B2,
7.950% 11/15/02.............. 15,033,328
13,250,000 Spiegel Master Trust, Series
1994-B, Class A,
8.150% 06/15/04.............. 13,804,844
20,800,000 Standard Credit Card Master
Trust, Series 1995-9, Series
B,
6.650% 10/07/07.............. 20,546,448
WFS Financial Owner Trust:
15,000,000 Series 1997-B, Class CTFS,
6.550% 10/20/04.............. 15,081,900
25,000,000 Series 1997-C, Class A3,
6.100% 03/20/02.............. 24,976,500
------------
TOTAL ASSET-BACKED SECURITIES
(Cost $330,526,637).......... 331,614,146
============
CORPORATE BONDS AND NOTES -- 33.1%
BANKING AND FINANCE -- 15.8%
10,000,000 Banco Latino America, Notes,
7.230% 04/17/00**............ 10,216,600
20,985,000 Banponce Financial Corporation,
MTN,
6.550% 10/10/00.............. 21,113,428
10,000,000 Bayerische LBK NY Branch,
6.625% 06/25/07.............. 10,186,500
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
BANKING AND FINANCE -- (CONTINUED)
Bear Stearns Companies, Inc.:
$15,000,000 Notes,
6.075% 09/24/99.............. $ 14,987,400
15,475,000 Sr. Notes,
6.750% 05/01/01.............. 15,641,047
20,000,000 Donaldson, Lufkin and Jenrette,
MTN,
6.310% 05/26/00.............. 19,986,000
10,000,000 First Union Institutional
Capital Trust I,
8.040% 12/01/26.............. 10,265,200
15,000,000 First USA Bank, Notes,
6.580% 03/17/05.............. 15,079,695
15,150,000 Ford Motor Credit Corporation,
MTN,
6.060% 12/27/00.............. 15,059,554
15,000,000 General Electric Capital
Corporation, MTN,
8.650% 05/15/09.............. 17,728,200
16,060,000 Goldman Sachs Group L.P.,
Notes, 6.600% 07/15/02**..... 16,122,473
Lehman Brothers Holdings, MTN:
7,000,000 6.890% 10/10/00.............. 7,107,450
26,700,000 6.650% 11/08/00.............. 26,936,216
20,000,000 Lehman Brothers Inc., Sr. Sub.
Notes,
7.250% 04/15/03.............. 20,450,800
10,750,000 Liberty Mutual, Notes,
7.875% 10/15/26**............ 11,281,372
10,000,000 New England Mutual, Notes,
7.875% 02/15/24**............ 10,489,300
14,150,000 Paine Webber Group Inc., MTN,
7.300% 10/15/03.............. 14,586,103
Salomon Inc.:
MTN:
10,300,000 7.590% 01/28/00................ 10,563,268
17,500,000 6.625% 11/30/00.............. 17,563,875
9,325,000 Sr. Notes,
7.000% 06/15/03.............. 9,462,917
20,750,000 Travelers,
6.450% 10/18/99**............ 20,828,643
10,000,000 Wells Fargo Capital,
7.960% 12/15/26.............. 10,163,400
------------
325,819,441
------------
ENTERTAINMENT -- 2.1%
Time Warner Inc., Notes:
20,000,000 4.900% 07/29/99**............ 19,492,200
25,000,000 6.100% 12/30/01**............ 24,392,250
------------
43,884,450
------------
INDUSTRIAL -- 10.4%
15,000,000 Anheuser Busch Companies Inc.,
Debs.,
7.000% 12/01/25.............. 14,485,200
19,785,000 Auburn Hills Trust
Certificates, Deb.,
12.000% 05/01/20+++.......... 30,315,368
15,000,000 British Telecommunications,
7.000% 05/23/07.............. 15,448,350
10,000,000 Chrysler Corporation, Deb.,
7.450% 02/01/2097............ 10,139,100
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE> 9
NATIONS FUNDS
Nations Strategic Fixed Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
INDUSTRIAL -- (CONTINUED)
$21,805,000 News America Holdings, Inc.,
Sr. Notes,
9.125% 10/15/99.............. $ 22,968,733
PDV America, Inc.:
Gtd. Sr. Notes:
15,000,000 7.750% 08/01/00.............. 15,453,900
20,000,000 7.875% 08/01/03.............. 20,505,600
10,000,000 Sr. Notes,
7.250% 08/01/98.............. 10,060,300
33,190,000 Tennessee Valley Authority,
Deb., 5.980% 04/01/36........ 33,511,943
15,000,000 Toyota Motor Credit,
7.000% 06/11/07.............. 15,472,800
15,000,000 Xerox Capital Trust I,
8.000% 02/01/27.............. 15,364,800
10,000,000 Zurich Capital Trust I,
8.376% 06/01/37**............ 10,701,800
------------
214,427,894
------------
RETAIL -- 2.6%
Federated Department Stores,
Inc.:
Sr. Notes:
15,850,000 10.000% 02/15/01............... 17,542,146
7,650,000 8.125% 10/15/02................ 8,143,960
Sears Roebuck Acceptance
Corporation:
10,000,000 7.500% 10/15/27.............. 9,975,000
16,850,000 MTN,
6.690% 04/30/01.............. 17,038,215
------------
52,699,321
------------
RETAIL -- FOOD -- 0.5%
10,000,000 Safeway Inc., Sr. Notes,
7.000% 09/15/07.............. 10,176,850
------------
TRANSPORTATION -- 0.7%
14,000,000 Erac USA Finance Company,
6.950% 03/01/04**............ 14,170,940
------------
UTILITY -- 0.5%
10,000,000 Carolina Power and Light,
6.800% 08/15/07.............. 10,105,500
------------
OIL -- 0.5%
10,000,000 Enterprise,
6.700% 09/15/07.............. 9,963,800
------------
TOTAL CORPORATE BONDS AND NOTES
(Cost $672,216,531).......... 681,248,196
============
FOREIGN BONDS -- 3.2%
20,000,000 Associates Corporation,
6.75% 10/31/01............... 20,180,000
20,925,000 Bladex,
7.000% 09/24/99**............ 21,176,937
22,500,000 Hydro-Quebec,
9.000% 03/07/01.............. 24,265,350
------------
TOTAL FOREIGN BONDS
(Cost $65,305,918)......... 65,622,287
============
MORTGAGE-BACKED SECURITIES -- 28.0%
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FHLMC)
CERTIFICATES -- 8.1%
25,000,000 6.320% 07/14/00................ 24,976,500
5,017,802 9.000% 04/01/25................ 5,348,123
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
MORTGAGE-BACKED SECURITIES -- (CONTINUED)
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC)
CERTIFICATES -- (CONTINUED)
$25,612,009 7.000% 02/01/26................ $ 25,579,994
8,193,408 6.500% 04/01/26................ 7,993,653
19,986,980 7.500% 11/01/26................ 20,342,949
5,499,212 8.500% 11/01/26................ 5,746,677
10,067,938 6.500% 01/01/27................ 9,822,481
Gold:
11,262,478 6.500% 08/01/10................ 11,235,786
12,805,057 7.000% 08/01/11................ 12,951,675
8,727,999 7.500% 09/12/26................ 8,891,649
9,191,000 6.500% 02/01/27................ 8,966,924
24,442,000 7.000% 09/01/27................ 24,380,895
------------
166,237,306
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FNMA)
CERTIFICATES -- 8.8%
44,300,000 7.180% 10/01/03................ 44,832,929
18,489,558 7.000% 12/01/07................ 18,741,201
4,952,605 7.000% 09/01/11................ 5,005,697
9,300,000 6.500% 09/17/11................ 9,233,133
4,866,291 9.000% 08/01/24................ 5,196,761
14,730,199 7.500% 09/01/25................ 15,001,824
15,059,915 8.000% 09/15/25................ 15,638,818
4,088,071 6.500% 03/01/26................ 3,983,294
13,323,729 6.500% 04/01/26................ 12,982,241
21,999,386 7.000% 04/01/26................ 21,930,528
5,692,284 8.500% 07/01/26................ 5,946,615
19,634,447 6.500% 09/01/26................ 19,131,216
1,260,181 8.000% 09/01/26................ 1,301,124
2,300,000 7.000% 06/30/12, TBA+.......... 2,321,574
------------
181,246,955
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA)
CERTIFICATES -- 11.1%
7,950,349 7.000% 07/15/10................ 8,099,418
13,041,142 6.500% 08/15/11................ 13,024,840
10,296,934 7.000% 10/15/11................ 10,438,517
6,017,686 8.000% 01/15/22................ 6,250,871
9,711,625 8.000% 02/15/22................ 10,087,951
13,728,948 8.000% 06/15/22................ 14,260,945
10,422,767 8.000% 07/15/22................ 10,826,649
5,603,480 8.000% 10/15/22................ 5,820,615
21,330,543 8.000% 11/15/22................ 22,157,101
7,114,601 8.000% 12/15/22................ 7,390,292
4,733,570 8.000% 03/15/23................ 4,912,546
18,627,226 7.500% 10/15/23................ 19,011,319
29,358,260 7.500% 01/15/24................ 29,945,425
4,354,413 8.500% 08/15/24................ 4,563,948
4,447,327 8.000% 10/15/24................ 4,602,939
4,583,907 8.500% 02/15/25................ 4,817,365
4,327,389 8.000% 08/15/25................ 4,476,121
4,657,291 8.500% 09/15/26................ 4,872,691
21,550,998 7.500% 11/15/26................ 21,921,244
5,041,476 8.500% 12/15/26................ 5,274,644
5,468,112 8.500% 01/15/27................ 5,721,012
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 10
NATIONS FUNDS
Nations Strategic Fixed Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
MORTGAGE-BACKED SECURITIES -- (CONTINUED)
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA)
CERTIFICATES -- (CONTINUED)
$3,053,870 8.500% 02/15/27................ $ 3,195,111
7,600,000 8.500% 01/31/27, TBA+.......... 7,951,500
--------------
229,623,064
--------------
TOTAL MORTGAGE-BACKED
SECURITIES
(Cost $567,862,620).......... 577,107,325
==============
U.S. TREASURY OBLIGATIONS -- 20.8%
U.S. TREASURY BILL -- 5.0%
104,000,000 5.010% 12/11/1997++............ 102,995,360
--------------
U.S. TREASURY BONDS -- 10.6%
37,100,000 6.250% 02/28/02................ 37,442,062
14,000,000 7.500% 11/15/16................ 15,577,240
60,869,000 8.125% 08/15/19................ 72,405,502
21,125,000 8.750% 08/15/20................ 26,782,486
38,325,000 7.125% 02/15/23................ 41,318,949
25,000,000 6.375% 08/15/27................ 24,890,500
--------------
218,416,739
--------------
U.S. TREASURY NOTES -- 5.2%
24,935,000 6.375% 05/15/99................ 25,157,171
20,000,000 5.875% 07/31/99................ 20,015,600
20,205,000 6.250% 02/15/03................ 20,397,554
42,000,000 6.125% 08/15/07................ 42,019,740
--------------
107,590,065
--------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $424,170,827)........ 429,002,164
==============
TOTAL SECURITIES
(Cost $2,060,082,533)...... 2,084,594,118
==============
REPURCHASE AGREEMENT -- 0.7%
(Cost $15,431,000)
15,431,000 Agreement with Smith Barney,
5.480% dated 09/30/97, to be
repurchased at $15,433,349 on
10/01/97, collateralized by:
$6,570,883 U.S. Treasury
Note, 7.375% due 11/15/97;
$1,792,608 U.S. Treasury
Bond, 11.250% due 02/15/15;
$4,619,165 Resolution Funding
Corporation, Strips,
Principal Only, due 04/15/05;
$3,312,720 GNMA, 6.000% due
05/20/27..................... 15,431,000
==============
</TABLE>
<TABLE>
<CAPTION>
VALUE
(NOTE 1)
- ------------------------------------------------------------
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $2,075,513,533*).............. 101.9% $2,100,025,118
OTHER ASSETS AND LIABILITIES (NET).... (1.9) (39,661,005)
--------------
NET ASSETS............................ 100.0% $2,060,364,113
==============
</TABLE>
- ---------------
* Aggregate cost for Federal tax purposes.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
+ Security purchased on a when-issued or delayed delivery basis (Note 1).
++ Rate represents annualized yield at date of purchase.
+++ Step coupon bond. Current rate remains in effect through maturity date.
Effective yield was 12.39% at acquisition date.
ABBREVIATIONS:
Gold Payments are on accelerated 45 day payment cycle instead of regular 75
day cycle
MTN Medium Term Note
TBA To Be Announced
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 11
NATIONS FUNDS
Nations U.S. Government Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS -- 98.1%
U.S. TREASURY BOND -- 17.4%
$23,300,000 7.500% 11/15/16................. $ 25,924,978
------------
U.S. TREASURY NOTES -- 80.7%
22,800,000 5.500% 11/15/98................. 22,746,648
14,000,000 5.875% 01/31/99................. 14,021,840
67,000,000 6.375% 04/30/99................. 67,596,970
10,500,000 5.625% 11/30/00................. 10,408,125
5,060,000 6.500% 08/31/01................. 5,149,360
------------
119,922,943
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $143,759,878)........... 145,847,921
============
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT -- 0.3%
(Cost $436,000)
$436,000 Agreement with Smith Barney,
5.480% dated 09/30/97, to be
repurchased at $436,066 on
10/01/97, collateralized by:
$185,659 U.S. Treasury Note,
7.375% due 11/15/97; $50,650
U.S. Treasury Bond, 11.250%
due 02/15/15; $130,514
Resolution Funding
Corporation, Strips, Principal
Only, due 04/15/05; $93,600
GNMA 6.000% due 05/20/27...... $ 436,000
============
TOTAL INVESTMENTS
(Cost $144,195,878*).................. 98.4% 146,283,921
OTHER ASSETS AND LIABILITIES
(NET)................................. 1.6 2,413,938
----- ------------
NET ASSETS.............................. 100.0% $148,697,859
===== ============
</TABLE>
- ---------------
* Aggregate cost for Federal tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 12
NATIONS FUNDS
Nations Diversified Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- 32.3%
BANKING AND FINANCE -- 9.5%
$ 3,000,000 Conseco, Inc., Sr. Notes,
10.500% 12/15/04.............. $ 3,580,650
2,000,000 First Nationwide Escrow, Sr.
Sub. Notes,
10.625% 10/01/03.............. 2,200,000
2,650,000 Lehman Brothers Holdings, Inc.,
Notes,
6.890% 10/10/00............... 2,690,677
2,700,000 Leucadia National Corporation,
Sr. Sub. Notes,
8.250% 06/15/05............... 2,854,224
3,900,000 Morgan Stanley Finance PLC, Gtd.
Sub. Deb.,
8.030% 02/28/17............... 4,036,500
3,200,000 Paine Webber Group, Inc., Sr.
Notes,
7.625% 10/15/08............... 3,338,560
2,200,000 Salomon, Inc., Sr. Notes,
6.700% 07/05/00............... 2,217,358
2,200,000 Security Pacific Corporation,
Sub. Notes,
11.000% 03/01/01.............. 2,508,506
2,075,000 TIG Holdings, Inc., Notes,
8.125% 04/15/05............... 2,201,679
2,150,000 Western Financial Savings Bank,
Sub. Deb.,
8.500% 07/01/03............... 2,136,068
------------
27,764,222
------------
BROADCASTING -- 0.7%
2,000,000 Turner Broadcasting System,
Inc., Sr. Notes,
7.400% 02/01/04............... 2,048,140
------------
COMPUTER -- 0.5%
1,500,000 Unisys Corporation, Sr. Notes,
10.625% 10/01/99.............. 1,522,500
------------
CONTAINERS -- 0.7%
1,900,000 BWAY Corporation, Sr. Sub.
Notes, 10.250% 04/15/07**..... 2,061,500
------------
ENERGY -- 0.9%
2,000,000 Occidental Petroleum
Corporation, Sr. Deb.,
10.125% 09/15/09.............. 2,520,340
------------
GAS -- 0.8%
2,200,000 Louis Dreyfus Natural Gas
Corporation, Sr. Sub. Notes,
9.250% 06/15/04............... 2,403,500
------------
HEALTH CARE -- 4.1%
2,100,000 Genesis Health Ventures Inc.,
Sr. Sub. Notes,
9.250% 10/01/06............... 2,147,250
2,775,000 Healthsouth Corporation, Sr.
Sub. Notes,
9.50% 04/01/01................ 2,927,625
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
HEALTH CARE -- (CONTINUED)
Tenet Healthcare Corporation:
$ 1,570,000 Sr. Notes,
8.000% 01/15/05............... $ 1,601,400
2,525,000 Sr. Sub. Notes,
10.125% 03/01/05.............. 2,764,875
2,400,000 Quorum Health Group, Inc., Sr.
Sub. Notes,
8.750% 11/01/05............... 2,502,000
------------
11,943,150
------------
INDUSTRIAL -- 11.5%
2,000,000 Auburn Hills Trust Certificates,
Deb.,
12.000% 05/01/20+............. 3,064,480
2,850,000 Barrett Resources Corporation,
Sr. Notes,
7.550% 02/01/07............... 2,903,972
2,600,000 Fisher Scientific International,
Sr. Notes,
7.125% 12/15/05............... 2,515,214
1,655,000 Georgia-Pacific Corporation,
Deb.,
9.950% 06/15/02............... 1,872,351
2,000,000 Harris Corporation, Notes,
10.375% 12/01/18.............. 2,176,840
2,450,000 Maxus Energy Corporation, Notes,
9.375% 11/01/03............... 2,642,937
3,885,000 PDV America Inc., Gtd. Sr.
Notes,
7.875% 08/01/03............... 3,983,213
6,205,000 Tennessee Valley Authority,
5.880% 04/01/36............... 6,265,188
2,775,000 Valassis Inserts Inc., Sr.
Notes,
9.375% 03/15/99............... 2,858,305
2,585,000 Viacom Inc., Sr. Notes,
7.750% 06/01/05............... 2,598,597
2,860,000 Westpoint Stevens Inc., Sr.
Notes,
8.750% 12/15/01............... 2,974,400
------------
33,855,497
------------
PUBLISHING -- 1.0%
2,575,000 News America Holdings Inc., Gtd.
Deb.,
10.125% 10/15/12.............. 2,957,568
------------
TELECOMMUNICATIONS -- 1.7%
2,000,000 Jones Intercable, Inc., Sr.
Notes,
9.625% 03/15/02............... 2,130,000
2,700,000 Rogers Cablesystems Limited,
Deb.,
10.000% 12/01/07.............. 2,949,750
------------
5,079,750
------------
TRANSPORTATION -- 0.9%
2,200,000 Federal Express Corporation,
Notes,
9.650% 06/15/12............... 2,713,876
------------
TOTAL CORPORATE BONDS AND NOTES
(Cost $92,822,606)............ 94,870,043
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 13
NATIONS FUNDS
Nations Diversified Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
MORTGAGE-BACKED SECURITIES -- 30.4%
FEDERAL HOME LOAN MORTGAGE
CORPORATION (FHLMC)
CERTIFICATES -- 10.5%
$ 7,576,566 7.000% 07/01/11................. $ 7,663,318
8,080,000 6.500% 04/01/12................. 8,024,409
14,831,533 Gold,
7.500% 06/01/26................. 15,109,624
------------
30,797,351
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FNMA)
CERTIFICATES -- 10.5%
1,771,820 7.000% 05/11/11................. 1,790,814
5,492,971 6.500% 07/01/11................. 5,462,046
5,497,424 7.000% 09/01/11................. 5,556,357
4,009,460 7.000% 08/01/25................. 4,006,934
1,570,510 8.500% 12/01/25................. 1,640,680
1,852,216 6.500% 05/01/26................. 1,804,744
4,967,133 6.500% 02/01/27................. 4,836,747
2,564,080 7.000% 04/01/27................. 2,553,644
1,971,797 6.500% 05/01/27................. 1,920,037
1,163,030 9.000% 05/01/27................. 1,235,719
------------
30,807,722
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA)
CERTIFICATES -- 9.4%
3,800,464 8.000% 07/15/24................. 3,933,442
1,522,424 8.500% 08/15/24................. 1,595,683
4,702,486 8.000% 09/15/24................. 4,867,026
3,167,227 8.500% 05/15/25................. 3,315,675
3,960,100 7.500% 08/15/26................. 4,028,135
4,595,346 9.000% 08/15/26................. 4,895,468
4,885,397 8.500% 09/18/26................. 5,111,347
------------
27,746,776
------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $87,653,893)............ 89,351,849
============
U.S. TREASURY OBLIGATIONS -- 35.2%
U.S. TREASURY BONDS -- 18.4%
25,800,000 9.125% 05/15/09................. 29,782,746
25,115,000 6.250% 08/15/23................. 24,381,140
------------
54,163,886
------------
U.S. TREASURY NOTES -- 16.8%
20,420,000 5.500% 11/15/98................. 20,372,217
14,410,000 5.875% 01/31/99................. 14,432,480
10,000,000 10.625% 08/15/15................ 14,415,600
------------
49,220,297
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $103,169,188)........... 103,384,183
============
TOTAL SECURITIES
(Cost $283,645,687)........... 287,606,075
============
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT -- 0.7%
(Cost $1,964,000)
$ 1,964,000 Agreement with Smith Barney,
5.480% dated 09/30/97, to be
repurchased at $1,964,299 on
10/01/97, collateralized by:
$836,317 U.S. Treasury Note,
7.375% due 11/15/97; $228,156
U.S. Treasury Bond, 11.250%
due 02/15/15; $587,910
Resolution Funding
Corporation, Strips, Principal
Only, due 04/15/05; $421,631
GNMA, 6.000% due 05/20/27..... $ 1,964,000
============
TOTAL INVESTMENTS
(Cost $285,609,687*).................. 98.6% 289,570,075
OTHER ASSETS AND LIABILITIES
(NET)................................. 1.4 4,192,194
----- ------------
NET ASSETS.............................. 100.0% $293,762,269
===== ============
</TABLE>
- ---------------
* Aggregate cost for Federal tax purposes.
**Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
+ Step coupon bond. Current rate remains in effect through maturity
date. Effective yield was 12.39% at acquisition date.
ABBREVIATION:
Gold Payments are on accelerated 45 day payment cycle instead of regular 75 day
cycle.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 14
NATIONS FUNDS
Nations Global Government Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------------------------------------------------------
<C> <S> <C>
FOREIGN BONDS AND NOTES -- 91.7%
AUSTRALIA -- 3.9%
AUD 2,200,000 New South Wales Treasury
Corporation,
7.000% 04/01/04........ $ 1,674,609
------------
AUSTRIA -- 5.9%
DEM 1,500,000 Government of Austria,
8.000% 06/17/02........ 954,827
USD 1,500,000 KFW International
Finance Inc.,
7.500% 04/21/05........ 1,589,063
------------
2,543,890
------------
BELGIUM -- 2.8%
USD 1,250,000 Kingdom of Belgium,
5.500% 11/05/03........ 1,203,906
------------
CANADA -- 12.1%
CAD 2,280,000 Government of Canada,
8.500% 03/01/00........ 1,785,979
USD 1,800,000 Province of Alberta,
6.250% 10/19/00........ 1,812,375
DEM 2,800,000 Province of Ontario,
5.000% 02/15/01........ 1,598,166
------------
5,196,520
------------
CHINA -- 2.6%
DEM 2,000,000 People's Republic of
China,
5.000% 06/26/02........ 1,115,224
------------
DENMARK -- 9.0%
Kingdom of Denmark:
DKK 12,500,000 6.000% 12/10/99.......... 1,910,602
DKK 12,000,000 7.000% 12/15/04.......... 1,927,269
------------
3,837,871
------------
FINLAND -- 3.0%
Republic of Finland,
8.000% 04/07/03........
GBP 750,000 1,275,496
------------
FRANCE -- 6.4%
ECU 1,500,000 Government of France,
6.750% 04/25/02........ 1,776,193
ECU 850,000 French Treasury Bill,
(BTAN 5 Year Issue),
5.000% 03/16/99........ 949,896
------------
2,726,089
------------
GERMANY -- 13.3%
DEM 2,250,000 DSL Finance NV,
5.000% 01/23/01........ 1,288,316
Federal Republic of
Germany:
DEM 1,600,000 6.375% 05/20/98.......... 921,933
DEM 2,000,000 5.750% 08/20/98.......... 1,152,982
DEM 4,050,000 5.125% 11/21/00.......... 2,337,539
------------
5,700,770
------------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
----------------------------------------------------------
<C> <S> <C>
FOREIGN BONDS AND NOTES -- (CONTINUED)
GREAT BRITAIN -- 7.7%
USD 1,950,000 Glaxo Wellcome plc,
6.750% 05/31/00........ $ 1,981,666
GBP 800,000 United Kingdom Treasury,
8.000% 12/07/00........ 1,336,752
------------
3,318,418
------------
ITALY -- 3.1%
ITL 2,200,000,000 Italian Government,
7.500% 10/01/99........ 1,323,581
------------
JAPAN -- 3.7%
USD 1,500,000 Kansai Electric Power
Company Inc.,
7.250% 09/25/06........ 1,566,562
------------
MEXICO -- 2.5%
USD 1,000,000 Mexican Global Bond,
9.750% 02/06/01........ 1,068,125
------------
NETHERLANDS -- 3.6%
NLG 3,000,000 Government of
Netherlands,
6.500% 01/15/99........ 1,553,596
------------
POLAND -- 3.6%
USD 1,500,000 Government of Poland,
7.125% 07/01/04........ 1,522,500
------------
SPAIN -- 4.6%
Government of Spain:
ESP 55,000,000 12.250% 03/25/00......... 429,956
ESP 200,000,000 8.000% 05/30/04.......... 1,522,208
------------
1,952,164
------------
SUPRANATIONAL -- 3.9%
World Bank,
JPY 200,000,000 4.500% 12/22/97........ 1,672,951
------------
TOTAL FOREIGN BONDS AND
NOTES
(Cost $40,306,133)..... 39,252,272
============
U.S. TREASURY OBLIGATIONS -- 4.1%
U.S. Treasury Bonds:
USD 1,000,000 6.000% 08/15/00.......... 1,003,594
USD 750,000 6.625% 02/15/27.......... 768,135
------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $1,751,513)...... 1,771,729
============
TOTAL INVESTMENTS
(Cost $42,057,646*)................... 95.8% 41,024,001
OTHER ASSETS AND LIABILITIES (NET)...... 4.2 1,777,884
----- ------------
NET ASSETS.............................. 100.0% $ 42,801,885
===== ============
</TABLE>
- ---------------
*Aggregate cost for Federal tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 15
NATIONS FUNDS
Nations Global Government Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
CONTRACTS TO BUY
---------------------------------------------------------- NET UNREALIZED
LOCAL VALUE IN IN EXCHANGE APPRECIATION
MATURITY DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACT
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10/01/97 2,050,497 DEM........................... $1,160,735 $1,158,408 $ 2,327
10/09/97 85,000,000 ESP........................... 569,465 535,838 33,627
--------
$ 35,954
--------
<CAPTION>
CONTRACTS 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>
10/01/97 85,000,000 ESP........................... $ 569,464 $ 575,101 $ 5,637
10/01/97 208,975,000 JPY........................... 1,731,789 1,742,911 11,122
--------
$ 16,759
--------
Net Unrealized Appreciation of Forward Foreign Exchange Contracts................................... $ 52,713
========
</TABLE>
ABBREVIATIONS OF CURRENCY
THAT ISSUE IS HELD IN:
<TABLE>
<S> <C>
AUD Australian Dollar
CAD Canadian Dollar
DEM German Deutschmark
DKK Danish Krona
ECU European Currency Unit
ESP Spanish Peseta
GBP Great Britain Pound
ITL Italian Lira
JPY Japanese Yen
NLG Netherland Guilder
USD United States Dollar
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE> 16
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NATIONS NATIONS NATIONS NATIONS
NATIONS SHORT- NATIONS STRATEGIC U.S. NATIONS GLOBAL
SHORT-TERM INTERMEDIATE GOVERNMENT FIXED GOVERNMENT DIVERSIFIED GOVERNMENT
INCOME GOVERNMENT SECURITIES INCOME BOND INCOME INCOME
FUND FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (Note 1),
See accompanying schedules... $471,113,884 $699,109,747 $152,789,097 $2,100,025,118 $146,283,921 $289,570,075 $41,024,001
Cash........................... 995 367 181 -- 186 430 93,899
Short-term investments held as
collateral for loaned
securities (Note 9).......... -- 63,113,570 34,091,313 93,859,234 436,000 -- 4,891,581
Interest receivable............ 5,776,421 6,137,672 984,395 24,924,538 3,285,789 4,543,594 1,213,353
Net unrealized appreciation of
forward foreign exchange
contracts.................... -- -- -- -- -- -- 52,713
Receivable for Fund shares
sold......................... 2,142,790 1,353,086 222,301 6,275,044 25,566 1,583,228 145,097
Receivable for investment
securities sold.............. 3,193,076 31,268,026 -- 218,310,837 -- 2,680,785 1,731,789
Unamortized organization costs
(Note 6)..................... -- -- -- 338 7,367 338 95,138
Prepaid expenses and other
assets....................... 22,936 17,638 75,262 193,406 42,896 46,661 34,448
------------ ------------ ------------ -------------- ------------ ------------ -----------
Total Assets............... 482,250,102 801,000,106 188,162,549 2,443,588,515 150,081,725 298,425,111 49,282,019
------------ ------------ ------------ -------------- ------------ ------------ -----------
LIABILITIES:
Due to custodian............... -- -- -- 128,607 -- -- --
Payable for Fund shares
redeemed..................... 1,322,599 1,482,696 51,924 3,315,045 163,600 260,821 200,000
Payable for investment
securities purchased (Notes 1
and 4)....................... 6,495,060 93,347,842 9,575,418 274,343,943 -- 2,708,946 1,160,735
Collateral on securities loaned
(Note 9)..................... -- 63,113,570 34,091,313 93,859,234 436,000 -- 4,891,581
Investment advisory fee payable
(Note 2)..................... 116,930 214,773 59,688 862,968 38,328 119,745 24,597
Administration fee payable
(Note 2)..................... 38,977 53,693 11,938 172,593 12,315 23,949 3,514
Shareholder servicing and
distribution fees payable
(Note 3)..................... 6,106 26,410 27,941 14,297 1,755 55,287 4,795
Transfer agent fees payable
(Note 2)..................... 15,161 12,171 7,437 103,855 8,821 29,172 19,956
Custodian fees payable (Note
2)........................... 11,716 28,797 -- 26,345 7,130 344 2,770
Dividends payable.............. 2,238,659 2,894,720 645,085 10,113,988 646,986 1,380,998 137,863
Accrued Trustees'/Directors'
fees and expenses (Note 2)... 12,688 30,743 5,813 62,077 994 13,524 8,694
Accrued expenses and other
payables..................... 64,005 78,604 23,268 221,450 67,937 70,056 25,629
------------ ------------ ------------ -------------- ------------ ------------ -----------
Total Liabilities.......... 10,321,901 161,284,019 44,499,825 383,224,402 1,383,866 4,662,842 6,480,134
------------ ------------ ------------ -------------- ------------ ------------ -----------
NET ASSETS..................... $471,928,201 $639,716,087 $143,662,724 $2,060,364,113 $148,697,859 $293,762,269 $42,801,885
vz ============ ============ ============ ============== ============ ============ ===========
Investments, at cost........... $469,864,161 $695,292,908 $151,395,706 $2,075,513,533 $144,195,878 $285,609,687 $42,057,646
============ ============ ============ ============== ============ ============ ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 17
NATIONS FUNDS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED) SEPTEMBER 30, 1997 (UNAUDITED)
NATIONS NATIONS NATIONS NATIONS
NATIONS SHORT- NATIONS STRATEGIC U.S. NATIONS GLOBAL
SHORT-TERM INTERMEDIATE GOVERNMENT FIXED GOVERNMENT DIVERSIFIED GOVERNMENT
INCOME GOVERNMENT SECURITIES INCOME BOND INCOME INCOME
FUND FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSETS CONSIST OF:
Undistributed net
investment income/
(distributions in
excess of net
investment income).... $ 6,369 $ 33,130 $ (340,498) $ 1,890 $ (1,069) $ 38,183 $ (38,969)
Accumulated net realized
gain/(loss) on
investments sold...... (7,171,238) (19,600,535) (9,567,064) (5,483,996) 1,608,867 (2,522,167) 45,483
Net unrealized
appreciation/
(depreciation) of
investments........... 1,249,723 3,816,839 1,393,391 24,511,585 2,088,043 3,960,388 (1,144,391)
Paid-in capital......... 477,843,347 655,466,653 152,176,895 2,041,334,634 145,002,018 292,285,865 43,939,762
------------ ------------ ------------ -------------- ------------ ------------ -----------
$471,928,201 $639,716,087 $143,662,724 $2,060,364,113 $148,697,859 $293,762,269 $42,801,885
============ ============ ============ ============== ============ ============ ===========
NET ASSETS:
Primary A Shares........ $452,081,056 $563,498,464 $ 95,767,931 $2,022,295,719 $146,077,705 $212,876,250 $27,526,033
============ ============ ============ ============== ============ ============ ===========
Primary B Shares........ $ 512,532 $ 16,089,499 $ 589,303 $ 21,583,113 $ -- $ 243,199 $ 9.85
============ ============ ============ ============== ============ ============ ===========
Investor A Shares....... $ 10,420,665 $ 43,114,766 $ 10,922,796 $ 13,189,918 $ 1,118,315 $ 11,477,200 $15,103,751
============ ============ ============ ============== ============ ============ ===========
Investor B Shares
(formerly Investor N
Shares)............... $ 4,814,482 $ 10,270,129 $ 34,811,376 $ 2,041,896 $ 5,260 $ 66,512,404 $ 162,627
============ ============ ============ ============== ============ ============ ===========
Investor C Shares....... $ 4,099,466 $ 6,743,229 $ 1,571,318 $ 1,253,467 $ 1,496,579 $ 2,653,216 $ 9,464
============ ============ ============ ============== ============ ============ ===========
SHARES OUTSTANDING:
Primary A Shares........ 46,279,243 137,833,114 9,891,623 202,843,962 14,046,091 20,420,754 2,793,666
============ ============ ============ ============== ============ ============ ===========
Primary B Shares........ 52,468 3,935,832 60,859 2,165,058 -- 23,330 1
============ ============ ============ ============== ============ ============ ===========
Investor A Shares....... 1,066,852 10,546,749 1,128,241 1,323,007 107,532 1,101,005 1,532,921
============ ============ ============ ============== ============ ============ ===========
Investor B Shares....... 492,855 2,512,279 3,595,696 204,830 506 6,380,391 16,506
============ ============ ============ ============== ============ ============ ===========
Investor C Shares....... 419,660 1,649,493 162,303 125,737 143,905 254,522 961
============ ============ ============ ============== ============ ============ ===========
PRIMARY A SHARES:
Net asset value,
offering and
redemption price per
share................. $9.77 $4.09 $9.68 $9.97 $10.40 $10.42 $9.85
===== ===== ===== ===== ====== ====== =====
PRIMARY B SHARES:
Net asset value,
offering and
redemption price per
share................. $9.77 $4.09 $9.68 $9.97 $ -- $10.42 $9.85
===== ===== ===== ===== ====== ====== =====
INVESTOR A SHARES:
Net asset value,
offering and
redemption price per
share................. $9.77 $4.09 $9.68 $9.97 $10.40 $10.42 $9.85
===== ===== ===== ===== ====== ====== =====
INVESTOR B SHARES:
Net asset value,
offering and
redemption price per
share................. $9.77 $4.09 $9.68 $9.97 $10.40 $10.42 $9.85
===== ===== ===== ===== ====== ====== =====
INVESTOR C SHARES:
Net asset value and
offering price
per share*............ $9.77 $4.09 $9.68 $9.97 $10.40 $10.42 $9.85
===== ===== ===== ===== ====== ====== =====
</TABLE>
- ---------------
* Redemption price per share is equal to Net Asset Value less any applicable
contingent deferred sales charge.
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE> 18
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NATIONS NATIONS NATIONS NATIONS
NATIONS SHORT- NATIONS STRATEGIC U.S. NATIONS GLOBAL
SHORT-TERM INTERMEDIATE GOVERNMENT FIXED GOVERNMENT DIVERSIFIED GOVERNMENT
INCOME GOVERNMENT SECURITIES INCOME BOND INCOME INCOME
FUND FUND FUND FUND FUND(A) FUND FUND
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest........................ $8,061,748 $ 18,669,309 $3,709,503 $42,325,580 $3,301,797 $ 9,418,292 $1,145,338
Security lending (Note 9)....... 148 19,815 4,875 11,802 417 235 363
---------- ------------ ---------- ----------- ---------- ----------- ----------
8,061,896 18,689,124 3,714,378 42,337,382 3,302,214 9,418,527 1,145,701
---------- ------------ ---------- ----------- ---------- ----------- ----------
EXPENSES:
Investment advisory fee (Note
2)............................ 766,786 1,838,459 355,501 3,816,296 317,533 804,271 151,599
Administration fee (Note 2)..... 127,797 306,410 55,521 636,050 59,049 134,045 21,657
Transfer agent fees (Note 2).... 78,882 182,832 41,056 385,596 38,642 79,831 17,412
Custodian fees (Note 2)......... 13,714 26,306 11,375 46,189 6,388 14,646 5,747
Legal and audit fees............ 22,378 33,883 18,661 53,756 14,148 23,343 18,739
Registration and filing fees.... 34,297 56,575 34,784 75,889 25,498 36,366 28,231
Trustees'/Directors' fees and
expenses (Note 2)............. 3,557 8,568 1,182 17,783 669 3,857 4,986
Amortization of organization
costs (Note 6)................ 2,016 -- -- 2,016 270 2,016 17,298
Other........................... 59,943 20,907 30,015 269,243 5,503 83,973 26,389
---------- ------------ ---------- ----------- ---------- ----------- ----------
Subtotal...................... 1,109,370 2,473,940 548,095 5,302,818 467,700 1,182,348 292,058
Shareholder servicing and
distribution fees (Note 3):
Primary B Shares.............. 1,494 31,710 2,002 70,398 -- 539 --
Investor A Shares............. 5,902 41,259 12,489 7,657 798 14,705 18,992
Investor B Shares............. 9,109 34,936 5,194 8,209 4,159 270,617 29
Investor C Shares............. 6,731 22,038 128,443 2,841 240 8,971 764
Fees waived by investment
adviser (Note 2).............. (383,393) (612,820) (77,897) (636,049) (135,377) (134,045) --
---------- ------------ ---------- ----------- ---------- ----------- ----------
Total expenses.............. 749,213 1,991,063 618,326 4,755,874 337,520 1,343,135 311,843
Fees reduced by credits allowed
by the custodian (Note 2)..... (4,873) (2,142) -- -- -- (3,048) --
---------- ------------ ---------- ----------- ---------- ----------- ----------
Net expenses................ 744,340 1,988,921 618,326 4,755,874 337,520 1,340,087 311,843
---------- ------------ ---------- ----------- ---------- ----------- ----------
NET INVESTMENT INCOME........... 7,317,556 16,700,203 3,096,052 37,581,508 2,964,694 8,078,440 833,858
---------- ------------ ---------- ----------- ---------- ----------- ----------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS
(NOTES 1 AND 4):
Net realized gain/(loss) on
investments sold during
the period.................... (233,226) 3,951,559 906,818 13,443,385 981,880 1,240,474 52,786
Net unrealized appreciation of
investments during the
period........................ 2,788,688 7,205,487 2,420,871 37,327,445 2,056,316 6,497,845 340,429
---------- ------------ ---------- ----------- ---------- ----------- ----------
Net realized and unrealized gain
on investments................ 2,555,462 11,157,046 3,327,689 50,770,830 3,038,196 7,738,319 393,215
---------- ------------ ---------- ----------- ---------- ----------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS..... $9,873,018 $ 27,857,249 $6,423,741 $88,352,338 $6,002,890 $15,816,759 $1,227,073
========== ============ ========== =========== ========== =========== ==========
</TABLE>
- ---------------
(a) The period for the Nations U.S. Government Bond Fund reflects operations
from May 17, 1997 through September 30, 1997 (Note 11).
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE> 19
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NATIONS NATIONS NATIONS NATIONS
NATIONS SHORT- NATIONS STRATEGIC U.S. NATIONS GLOBAL
SHORT-TERM INTERMEDIATE GOVERNMENT FIXED GOVERNMENT DIVERSIFIED GOVERNMENT
INCOME GOVERNMENT SECURITIES INCOME BOND INCOME INCOME
FUND FUND FUND FUND FUND(a) FUND FUND
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment
income....... $ 7,317,556 $ 16,700,203 $ 3,096,052 $ 37,581,508 $ 2,964,694 $ 8,078,440 $ 833,858
Net realized
gain/(loss)
on
investments... (233,226) 3,951,559 906,818 13,443,385 981,880 1,240,474 52,786
Change in
unrealized
appreciation
of
investments... 2,788,688 7,205,487 2,420,871 37,327,445 2,056,316 6,497,845 340,429
------------ ------------ ------------ -------------- ------------- ------------ -----------
Net increase in
net
assets
resulting
from
operations... 9,873,018 27,857,249 6,423,741 88,352,338 6,002,890 15,816,759 1,227,073
Distributions
to
shareholders
from net
investment
income:
Primary A
Shares..... (6,891,581) (14,682,198) (1,807,923) (36,498,887) (2,944,082) (5,748,089) (553,207)
Primary B
Shares..... (23,011) (467,044) (21,433) (773,475) -- (6,190) (5)
Investor A
Shares..... (159,889) (1,110,931) (281,268) (220,596) (15,545) (353,504) (278,072)
Investor B
Shares..... (139,412) (186,224) (940,542) (61,391) (24,609) (1,886,262) (2,409)
Investor C
Shares..... (103,690) (253,806) (44,886) (25,269) (3,599) (84,285) (155)
Distributions
to
shareholders
from net
realized gain
on
investments:
Primary A
Shares..... -- -- -- -- -- -- (80,404)
Primary B
Shares..... -- -- -- -- -- -- --
Investor A
Shares..... -- -- -- -- -- -- (43,214)
Investor B
Shares..... -- -- -- -- -- -- (454)
Investor C
Shares..... -- -- -- -- -- -- (26)
Net
increase/(decrease)
in net assets
from Fund
share
transactions:
Primary A
Shares..... 268,210,566 183,006,325 41,363,328 1,025,616,347 (5,007,556) 55,528,987 (775,341)
Primary B
Shares..... (447,398) (1,320,988) (190,643) (8,649,257) 10 195,179 (5,076)
Investor A
Shares..... 4,204,224 (288,012) 763,412 6,584,089 367,563 (544,026) (97,768)
Investor B
Shares..... (770,692) (758,861) (5,140,067) (146,687) (1,520,527) (6,127,386) (31,247)
Investor C
Shares..... 475 (1,766,898) (316,191) 152,032 1,498,054 (775,318) 188
------------ ------------ ------------ -------------- ------------- ------------ -----------
Net
increase/(decrease)
in net
assets....... 273,752,610 190,028,612 39,807,528 1,074,329,244 (1,647,401) 56,015,865 (640,117)
NET ASSETS:
Beginning of
period....... 198,175,591 449,687,475 103,855,196 986,034,869 150,345,260 237,746,404 43,442,002
------------ ------------ ------------ -------------- ------------- ------------ -----------
End of
period....... $471,928,201 $639,716,087 $143,662,724 $2,060,364,113 $ 148,697,859 $293,762,269 $42,801,885
============ ============ ============ ============== ============= ============ ===========
Undistributed
net
investment
income/
(distributions
in excess of
net
investment
income) at
end of
period....... $ 6,369 $ 33,130 $ (340,498) $ 1,890 $ (1,069) $ 38,183 $ (38,969)
============ ============ ============ ============== ============= ============ ===========
</TABLE>
- ---------------
(a) The period for the Nations U.S. Government Bond Fund reflects operations
from May 17, 1997 through September 30, 1997 (Note 11).
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE> 20
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED MARCH 31, 1997 AND THE PERIOD ENDED MAY 16, 1997
<TABLE>
<CAPTION>
NATIONS NATIONS
NATIONS SHORT- NATIONS STRATEGIC NATIONS U.S.
SHORT-TERM INTERMEDIATE GOVERNMENT FIXED GOVERNMENT
INCOME GOVERNMENT SECURITIES INCOME BOND
FUND FUND FUND FUND FUND(a)
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net investment income................................ $ 11,901,922 $ 26,750,446 $ 6,795,585 $ 56,841,576 $ 5,972,110
Net realized gain/(loss) on investments.............. 14,435 (9,570,325) (3,826,282) (17,609,800) 923,301
Change in unrealized appreciation/ (depreciation) of
investments......................................... (1,766,538) 826,615 478,228 479,199 1,508,806
------------ ------------ ------------ ------------- ------------
Net increase in net assets resulting from
operations.......................................... 10,149,819 18,006,736 3,447,531 39,710,975 8,404,217
Distributions to shareholders from net investment
income:
Primary A Shares.................................... (10,929,771) (22,214,271) (3,299,326) (54,960,385) (5,885,069)
Primary B Shares.................................... (24,362) (363,390) (23,959) (701,691) --
Investor A Shares................................... (296,338) (2,674,564) (629,297) (388,702) (36,240)
Investor B Shares................................... (357,900) (623,578) (2,442,823) (124,213) (50,801)
Investor C Shares................................... (265,655) (513,751) (122,250) (35,613) --
Distributions to shareholders in excess of net
investment income:
Primary A Shares.................................... -- -- -- -- --
Primary B Shares.................................... -- -- -- -- --
Investor A Shares................................... -- -- -- -- --
Investor B Shares................................... -- -- -- -- --
Investor C Shares................................... -- -- -- -- --
Distributions to shareholders from net realized gain
on investments:
Primary A Shares.................................... -- -- -- (10,984,337) (7,085,032)
Primary B Shares.................................... -- -- -- (168,447) --
Investor A Shares................................... -- -- -- (77,228) (55,087)
Investor B Shares................................... -- -- -- (26,485) (76,740)
Investor C Shares................................... -- -- -- (8,604) --
Distributions to shareholders from capital:
Primary A Shares.................................... -- -- (26,548) (61,284) --
Primary B Shares.................................... -- -- (214) (836) --
Investor A Shares................................... -- -- (5,279) (449) --
Investor B Shares................................... -- -- (22,014) (156) --
Investor C Shares................................... -- -- (1,067) (43) --
Net increase/(decrease) in net assets from Fund share
transactions:
Primary A Shares.................................... 3,091,273 (22,025,851) (1,923,011) 150,300,620 7,694,223
Primary B Shares.................................... 957,004 17,251,586 768,845 29,855,538 --
Investor A Shares................................... 3,387,681 (13,976,457) (1,489,221) 104,418 156,503
Investor B Shares................................... (1,747,931) (2,780,531) (10,856,535) (313,787) 343,817
Investor C Shares................................... (2,014,986) (3,303,160) (659,366) 790,529 --
------------ ------------ ------------ ------------- ------------
Net increase/(decrease) in net assets................ 1,948,834 (33,217,231) (17,284,534) 152,909,820 3,409,791
NET ASSETS:
Beginning of year.................................... 196,226,757 482,904,706 121,139,730 833,125,049 146,935,469
------------ ------------ ------------ ------------- ------------
End of year.......................................... $198,175,591 $449,687,475 $103,855,196 $ 986,034,869 $150,345,260
============ ============ ============ ============= ============
Undistributed net investment income/ (distributions
in excess of net investment income) at end of
year................................................ $ 6,396 $ 33,130 $ (340,498) $ -- $ 22,072
============ ============ ============ ============= ============
<CAPTION>
NATIONS
NATIONS GLOBAL
DIVERSIFIED GOVERNMENT
INCOME INCOME
FUND FUND
--------------------------------------
<S> <C> <C>
Net investment income................................ $ 12,837,273 $ 1,926,329
Net realized gain/(loss) on investments.............. (3,799,025) 953,513
Change in unrealized appreciation/ (depreciation) of
investments......................................... 106,386 (1,284,681)
------------ -----------
Net increase in net assets resulting from
operations.......................................... 9,144,634 1,595,161
Distributions to shareholders from net investment
income:
Primary A Shares.................................... (7,049,444) (1,249,093)
Primary B Shares.................................... (1,757) (2,462)
Investor A Shares................................... (820,865) (667,922)
Investor B Shares................................... (4,654,890) (6,474)
Investor C Shares................................... (222,986) (378)
Distributions to shareholders in excess of net
investment income:
Primary A Shares.................................... -- (250,244)
Primary B Shares.................................... -- (547)
Investor A Shares................................... -- (142,043)
Investor B Shares................................... -- (1,679)
Investor C Shares................................... -- (85)
Distributions to shareholders from net realized gain
on investments:
Primary A Shares.................................... (1,246,521) (428,196)
Primary B Shares.................................... (481) (876)
Investor A Shares................................... (146,959) (242,140)
Investor B Shares................................... (932,648) (2,622)
Investor C Shares................................... (42,737) (143)
Distributions to shareholders from capital:
Primary A Shares.................................... -- --
Primary B Shares.................................... -- --
Investor A Shares................................... -- --
Investor B Shares................................... -- --
Investor C Shares................................... -- --
Net increase/(decrease) in net assets from Fund share
transactions:
Primary A Shares.................................... 90,247,006 4,327,824
Primary B Shares.................................... 41,228 5,828
Investor A Shares................................... (1,295,769) 650,979
Investor B Shares................................... (11,813,564) 606
Investor C Shares................................... (16,833) 4,661
------------ -----------
Net increase/(decrease) in net assets................ 71,187,414 3,590,155
NET ASSETS:
Beginning of year.................................... 166,558,990 39,851,847
------------ -----------
End of year.......................................... $237,746,404 $43,442,002
============ ===========
Undistributed net investment income/ (distributions
in excess of net investment income) at end of
year................................................ $ 38,073 $ (38,979)
============ ===========
</TABLE>
- ---------------
(a) Formerly the Pilot U.S. Government Securities Fund. The period reflects
operations from September 1, 1996 through May 16, 1997 (Note 11).
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE> 21
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY
<TABLE>
<CAPTION>
NATIONS SHORT-TERM INCOME FUND
SIX MONTHS ENDED
SEPTEMBER 30, 1997 YEAR ENDED
(UNAUDITED) MARCH 31, 1997(a)
--------------------------- ---------------------------
SHARES DOLLARS SHARES DOLLARS
-----------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold.............................................................. 3,246,683 $ 31,445,235 6,396,691 $ 62,280,237
Issued in exchange for Common Trust Shares of Nations Common Trust
Short Term Income Fund (Note 11)................................ 28,299,082 275,916,054 -- --
Issued as reinvestment of dividends............................... 271,959 2,649,819 611,423 5,939,306
Redeemed.......................................................... (4,290,005) (41,800,542) (6,692,510) (65,128,270)
---------- ------------ ---------- ------------
Net increase...................................................... 27,527,719 $268,210,566 315,604 $ 3,091,273
========== ============ ========== ============
PRIMARY B SHARES:
Sold.............................................................. 8,600 $ 83,673 100,331 $ 975,313
Issued as reinvestment of dividends............................... 1,318 12,834 1,896 18,454
Redeemed.......................................................... (55,894) (543,905) (3,783) (36,763)
---------- ------------ ---------- ------------
Net increase/(decrease)........................................... (45,976) $ (447,398) 98,444 $ 957,004
========== ============ ========== ============
INVESTOR A SHARES:
Sold.............................................................. 879,302 $ 8,566,665 536,576 $ 5,205,410
Issued as reinvestment of dividends............................... 14,701 143,289 27,926 271,789
Redeemed.......................................................... (464,638) (4,505,730) (214,856) (2,089,518)
---------- ------------ ---------- ------------
Net increase...................................................... 429,365 $ 4,204,224 349,646 $ 3,387,681
========== ============ ========== ============
INVESTOR B SHARES:
Sold.............................................................. 28,303 $ 275,973 62,794 $ 611,334
Issued as reinvestment of dividends............................... 12,405 120,849 31,742 308,758
Redeemed.......................................................... (119,956) (1,167,514) (274,315) (2,668,023)
---------- ------------ ---------- ------------
Net decrease...................................................... (79,248) $ (770,692) (179,779) $ (1,747,931)
========== ============ ========== ============
INVESTOR C SHARES:
Sold.............................................................. 28,356 $ 277,657 63,175 $ 614,207
Issued as reinvestment of dividends............................... 6,971 67,945 19,749 192,097
Redeemed.......................................................... (35,529) (345,127) (290,139) (2,821,290)
---------- ------------ ---------- ------------
Net increase/(decrease)........................................... (202) $ 475 (207,215) $ (2,014,986)
========== ============ ========== ============
</TABLE>
- ---------------
(a) Nations Short-Term Income Fund's Primary B Shares commenced operations on
June 28, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE> 22
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
NATIONS GOVERNMENT
NATIONS SHORT-INTERMEDIATE GOVERNMENT FUND SECURITIES FUND
SIX MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, 1997 YEAR ENDED SEPTEMBER 30, 1997
(UNAUDITED) MARCH 31, 1997(a) (UNAUDITED)
---------------------------- ---------------------------- --------------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold......................... 12,175,652 $ 52,111,834 25,588,345 $ 103,176,037 719,736 $ 7,161,089
Issued in exchange for Pilot
Shares of Pilot
Intermediate U.S.
Government Securities Fund
(Note 11).................. 57,272,980 230,814,630 -- -- -- --
Issued in exchange for Common
Trust Shares of Nations
Common Trust Mortgage
Backed Securities Fund
(Note 11).................. -- -- -- -- 4,714,190 45,209,085
Issued as reinvestment of
dividends.................. 622,309 3,080,125 1,947,196 7,858,690 15,346 147,212
Redeemed..................... (25,141,112) (103,000,264) (32,906,576) (133,060,578) (1,162,136) (11,154,058)
----------- ------------- ----------- ------------- ---------- ------------
Net increase/(decrease)...... 44,929,829 $ 183,006,325 (5,371,035) $ (22,025,851) 4,287,136 $ 41,363,328
=========== ============= =========== ============= ========== ============
PRIMARY B SHARES:
Sold......................... 844,285 $ 3,350,140 4,641,662 $ 18,801,947 10,667 $ 101,431
Issued as reinvestment of
dividends.................. 78,710 386,382 73,779 298,014 555 5,326
Redeemed..................... (1,242,780) (5,057,510) (459,824) (1,848,375) (30,841) (297,400)
----------- ------------- ----------- ------------- ---------- ------------
Net increase/(decrease)...... (319,785) $ (1,320,988) 4,255,617 $ 17,251,586 (19,619) $ (190,643)
=========== ============= =========== ============= ========== ============
INVESTOR A SHARES:
Sold......................... 882,730 $ 3,511,310 485,750 $ 1,962,420 115,882 $ 1,119,433
Issued in exchange for Class
A Shares of Pilot
Intermediate U.S.
Government Securities Fund
(Note 11).................. 342,822 1,381,763 -- -- -- --
Issued as reinvestment of
dividends.................. 152,638 748,717 457,633 1,847,025 17,519 168,143
Redeemed..................... (1,464,347) (5,929,802) (4,410,571) (17,785,902) (54,791) (524,164)
----------- ------------- ----------- ------------- ---------- ------------
Net increase/(decrease)...... (86,157) $ (288,012) (3,467,188) $ (13,976,457) 78,610 $ 763,412
=========== ============= =========== ============= ========== ============
INVESTOR B SHARES:
Sold......................... 41,623 $ 145,852 181,291 $ 727,752 13,901 $ 133,744
Issued as reinvestment of
dividends.................. 29,632 146,642 90,867 366,792 56,993 546,776
Redeemed..................... (259,882) (1,051,355) (959,850) (3,875,075) (609,547) (5,820,587)
----------- ------------- ----------- ------------- ---------- ------------
Net decrease................. (188,627) $ (758,861) (687,692) $ (2,780,531) (538,653) $ (5,140,067)
=========== ============= =========== ============= ========== ============
INVESTOR C SHARES:
Sold......................... 12,813 $ 29,148 157,558 $ 632,641 284 $ 2,731
Issued as reinvestment of
dividends.................. 24,644 122,935 86,331 348,458 2,562 24,573
Redeemed..................... (474,481) (1,918,981) (1,061,848) (4,284,259) (36,016) (343,495)
----------- ------------- ----------- ------------- ---------- ------------
Net decrease................. (437,024) $ (1,766,898) (817,959) $ (3,303,160) (33,170) $ (316,191)
=========== ============= =========== ============= ========== ============
<CAPTION>
YEAR ENDED
MARCH 31, 1997(a)
--------------------------
SHARES DOLLARS
--------------------------
<S> <C> <C>
PRIMARY A SHARES:
Sold......................... 1,744,975 $ 16,536,475
Issued in exchange for Pilot
Shares of Pilot
Intermediate U.S.
Government Securities Fund
(Note 11).................. -- --
Issued in exchange for Common
Trust Shares of Nations
Common Trust Mortgage
Backed Securities Fund
(Note 11).................. -- --
Issued as reinvestment of
dividends.................. 36,054 344,081
Redeemed..................... (1,963,478) (18,803,567)
---------- ------------
Net increase/(decrease)...... (182,449) $ (1,923,011)
========== ============
PRIMARY B SHARES:
Sold......................... 84,339 $ 805,378
Issued as reinvestment of
dividends.................. 577 5,502
Redeemed..................... (4,438) (42,035)
---------- ------------
Net increase/(decrease)...... 80,478 $ 768,845
========== ============
INVESTOR A SHARES:
Sold......................... 35,068 $ 337,119
Issued in exchange for Class
A Shares of Pilot
Intermediate U.S.
Government Securities Fund
(Note 11).................. -- --
Issued as reinvestment of
dividends.................. 40,328 385,010
Redeemed..................... (231,727) (2,211,350)
---------- ------------
Net increase/(decrease)...... (156,331) $ (1,489,221)
========== ============
INVESTOR B SHARES:
Sold......................... 85,775 $ 815,971
Issued as reinvestment of
dividends.................. 152,150 1,452,183
Redeemed..................... (1,373,092) (13,124,689)
---------- ------------
Net decrease................. (1,135,167) $(10,856,535)
========== ============
INVESTOR C SHARES:
Sold......................... 3,497 $ 33,160
Issued as reinvestment of
dividends.................. 7,277 69,445
Redeemed..................... (79,815) (761,971)
---------- ------------
Net decrease................. (69,041) $ (659,366)
========== ============
</TABLE>
- ---------------
(a) Nations Short-Intermediate Government Fund and Nations Government Securities
Fund's Primary B Shares commenced operations on June 28, 1996.
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE> 23
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
NATIONS U.S. GOVERNMENT
NATIONS STRATEGIC FIXED INCOME FUND BOND FUND
PERIOD ENDED
SIX MONTHS ENDED SEPTEMBER 30, 1997(b)(c)
SEPTEMBER 30, 1997 YEAR ENDED
(UNAUDITED) MARCH 31, 1997(a) (UNAUDITED)
----------------------------- ---------------------------- --------------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold......................... 16,361,733 $ 157,162,054 43,888,161 $ 428,802,189 610,069 $ 6,284,679
Issued in exchange for
Primary A Shares of
Peachtree Bond Fund........ -- -- 6,826,942 67,043,140 -- --
Issued in exchange for Pilot
Shares of Pilot Diversified
Bond Fund (Note 11)........ 9,934,893 96,657,323 -- -- -- --
Issued in exchange for Common
Trust Shares of Nations
Common Trust: Strategic
Fixed Income Fund (Note
11)........................ 99,909,128 987,102,187 -- -- -- --
Bank South Fixed Income (Note
11)........................ 2,475,616 24,459,089 -- -- -- --
Issued as reinvestment of
dividends.................. 1,523,853 15,014,099 3,413,891 33,535,767 8,017 82,982
Redeemed..................... (25,823,432) (254,778,405) (38,662,065) (379,080,476) (1,101,993) (11,375,217)
----------- --------------- ----------- ------------- ---------- ------------
Net increase/(decrease)...... 104,381,791 $1,025,616,347 15,466,929 $ 150,300,620 (483,907) $ (5,007,556)
=========== =============== =========== ============= ========== ============
PRIMARY B SHARES:
Sold......................... 303,199 $ 2,977,329 3,696,662 $ 36,307,617 1 $ 10
Issued as reinvestment of
dividends.................. 57,800 568,727 62,778 616,546 -- --
Redeemed..................... (1,233,677) (12,195,313) (721,704) (7,068,625) -- --
----------- --------------- ----------- ------------- ---------- ------------
Net increase/(decrease)...... (872,678) $ (8,649,257) 3,037,736 $ 29,855,538 1 $ 10
=========== =============== =========== ============= ========== ============
INVESTOR A SHARES:
Sold......................... 700,187 $ 6,947,677 271,643 $ 2,666,104 41,541 $ 428,992
Issued in exchange for Class
A Shares of Pilot
Diversified Bond Fund (Note
11)........................ 18,369 178,746 -- -- -- --
Issued as reinvestment of
dividends.................. 18,137 178,928 38,529 378,759 1,496 15,486
Redeemed..................... (73,281) (721,262) (299,293) (2,940,445) (7,464) (76,915)
----------- --------------- ----------- ------------- ---------- ------------
Net increase................. 663,412 $ 6,584,089 10,879 $ 104,418 35,573 $ 367,563
=========== =============== =========== ============= ========== ============
INVESTOR B SHARES:
Sold......................... 10,751 $ 111,433 17,220 $ 170,471 371 $ 39,853
Issued in exchange for Class
B Shares of Pilot
Diversified Bond Fund (Note
11)........................ 35,367 344,002 -- -- -- --
Issued as reinvestment of
dividends.................. 5,188 51,109 12,584 123,689 1,380 14,255
Redeemed..................... (65,758) (653,231) (61,936) (607,947) (151,309) (1,574,635)
----------- --------------- ----------- ------------- ---------- ------------
Net increase/(decrease)...... (14,452) $ (146,687) (32,132) $ (313,787) (149,558) $ (1,520,527)
=========== =============== =========== ============= ========== ============
INVESTOR C SHARES:
Sold......................... 78,662 $ 777,010 114,761 $ 1,123,112 144,190 $ 1,501,012
Issued as reinvestment of
dividends.................. 2,496 24,615 4,392 43,199 119 1,242
Redeemed..................... (66,417) (649,593) (38,322) (375,782) (404) (4,200)
----------- --------------- ----------- ------------- ---------- ------------
Net increase................. 14,741 $ 152,032 80,831 $ 790,529 143,905 $ 1,498,054
=========== =============== =========== ============= ========== ============
<CAPTION>
PERIOD ENDED
MAY 16, 1997(D)
--------------------------
SHARES DOLLARS
---------------------------
<S> <C> <C>
PRIMARY A SHARES:
Sold......................... 2,306,446 $ 23,888,310
Issued in exchange for
Primary A Shares of
Peachtree Bond Fund........ -- --
Issued in exchange for Pilot
Shares of Pilot Diversified
Bond Fund (Note 11)........ -- --
Issued in exchange for Common
Trust Shares of Nations
Common Trust: Strategic
Fixed Income Fund (Note
11)........................ -- --
Bank South Fixed Income (Note
11)........................ -- --
Issued as reinvestment of
dividends.................. 42,084 436,204
Redeemed..................... (1,599,474) (16,630,291)
---------- ------------
Net increase/(decrease)...... 749,056 $ 7,694,223
========== ============
PRIMARY B SHARES:
Sold......................... -- --
Issued as reinvestment of
dividends.................. -- --
Redeemed..................... -- --
---------- ------------
Net increase/(decrease)...... -- --
========== ============
INVESTOR A SHARES:
Sold......................... 52,309 $ 567,880
Issued in exchange for Class
A Shares of Pilot
Diversified Bond Fund (Note
11)........................ -- --
Issued as reinvestment of
dividends.................. 8,606 89,844
Redeemed..................... (49,048) (501,221)
---------- ------------
Net increase................. 11,867 $ 156,503
========== ============
INVESTOR B SHARES:
Sold......................... 37,748 $ 401,061
Issued in exchange for Class
B Shares of Pilot
Diversified Bond Fund (Note
11)........................ -- --
Issued as reinvestment of
dividends.................. 10,431 108,295
Redeemed..................... (15,714) (165,539)
---------- ------------
Net increase/(decrease)...... 32,465 $ 343,817
========== ============
INVESTOR C SHARES:
Sold......................... -- --
Issued as reinvestment of
dividends.................. -- --
Redeemed..................... -- --
---------- ------------
Net increase................. -- --
========== ============
</TABLE>
- ---------------
(a) Nations Strategic Fixed Income Fund's Primary B Shares commenced operations
on June 28, 1996.
(b) This period reflects operations from May 17, 1997 through September 30, 1997
(Note 11).
(c) Nations U.S. Government Bond Fund's Investor C Shares commenced operations
on September 19, 1997.
(d) The Nations U.S. Government Bond Fund Primary A Shares (formerly the Pilot
U.S. Government Securities Fund's Pilot Shares prior to May 17, 1997),
Investor A Shares (formerly the Pilot U.S. Government Securities Fund's
Class A Shares prior to May 17, 1997) and Investor B Shares (formerly the
Pilot U.S. Government Securities Fund Class B Shares prior to May 17, 1997)
commenced operations on November 7, 1994, February 7, 1995 and November 10,
1994; respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE> 24
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
NATIONS GLOBAL
NATIONS DIVERSIFIED INCOME FUND GOVERNMENT INCOME FUND
SIX MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, 1997 YEAR ENDED SEPTEMBER 30, 1997
(UNAUDITED) MARCH 31, 1997(a) (UNAUDITED)
-------------------------- -------------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold................................... 6,113,040 $ 63,082,469 9,326,149 $ 95,819,147 35,469 $ 347,343
Issued as reinvestment of dividends.... 344,342 3,562,595 682,648 7,030,327 54,047 528,627
Redeemed............................... (1,072,777) (11,116,077) (1,220,878) (12,602,468) (169,139) (1,651,311)
---------- ------------ ---------- ------------ -------- -----------
Net increase/(decrease)................ 5,384,605 $ 55,528,987 8,787,919 $ 90,247,006 (79,623) $ (775,341)
========== ============ ========== ============ ======== ===========
PRIMARY B SHARES:
Sold................................... 22,735 $ 229,536 3,788 $ 38,990 -- $ --
Issued as reinvestment of dividends.... 593 6,137 217 2,238 -- 1
Redeemed............................... (4,003) (40,494) -- -- (526) (5,077)
---------- ------------ ---------- ------------ -------- -----------
Net increase/(decrease)................ 19,325 $ 195,179 4,005 $ 41,228 (526) $ (5,076)
========== ============ ========== ============ ======== ===========
INVESTOR A SHARES:
Sold................................... 141,117 $ 1,447,137 340,595 $ 3,519,242 12,115 $ 118,491
Issued as reinvestment of dividends.... 22,768 235,250 50,590 521,584 1,330 13,010
Redeemed............................... (215,954) (2,226,413) (518,078) (5,336,595) (23,296) (229,269)
---------- ------------ ---------- ------------ -------- -----------
Net increase/(decrease)................ (52,069) $ (544,026) (126,893) $ (1,295,769) (9,851) $ (97,768)
========== ============ ========== ============ ======== ===========
INVESTOR B SHARES:
Sold................................... 152,938 $ 1,573,057 419,468 $ 4,343,211 34 $ 333
Issued as reinvestment of dividends.... 108,498 1,121,080 334,274 3,456,153 291 2,848
Redeemed............................... (864,736) (8,821,523) (1,901,187) (19,612,928) (3,538) (34,428)
---------- ------------ ---------- ------------ -------- -----------
Net increase/(decrease)................ (603,300) $ (6,127,386) (1,147,445) $(11,813,564) (3,213) $ (31,247)
========== ============ ========== ============ ======== ===========
INVESTOR C SHARES:
Sold................................... 15,862 $ 156,002 103,490 $ 1,066,332 1 $ 7
Issued as reinvestment of dividends.... 5,526 57,081 18,494 190,859 19 181
Redeemed............................... (97,367) (988,401) (123,059) (1,274,024) -- --
---------- ------------ ---------- ------------ -------- -----------
Net increase/(decrease)................ (75,979) $ (775,318) (1,075) $ (16,833) 20 $ 188
========== ============ ========== ============ ======== ===========
<CAPTION>
YEAR ENDED
MARCH 31, 1997(a)
-----------------------
SHARES DOLLARS
------------------------
<S> <C> <C>
PRIMARY A SHARES:
Sold................................... 649,206 $ 6,647,355
Issued as reinvestment of dividends.... 154,032 1,570,912
Redeemed............................... (387,483) (3,890,443)
-------- -----------
Net increase/(decrease)................ 415,755 $ 4,327,824
======== ===========
PRIMARY B SHARES:
Sold................................... 13,113 $ 132,884
Issued as reinvestment of dividends.... 298 3,090
Redeemed............................... (12,884) (130,146)
-------- -----------
Net increase/(decrease)................ 527 $ 5,828
======== ===========
INVESTOR A SHARES:
Sold................................... 69,887 $ 714,152
Issued as reinvestment of dividends.... 2,747 28,266
Redeemed............................... (8,928) (91,439)
-------- -----------
Net increase/(decrease)................ 63,706 $ 650,979
======== ===========
INVESTOR B SHARES:
Sold................................... 3,210 $ 31,111
Issued as reinvestment of dividends.... 995 10,579
Redeemed............................... (3,615) (37,029)
-------- -----------
Net increase/(decrease)................ 590 $ 4,661
======== ===========
INVESTOR C SHARES:
Sold................................... -- $ --
Issued as reinvestment of dividends.... 59 606
Redeemed............................... -- --
-------- -----------
Net increase/(decrease)................ 59 $ 606
======== ===========
</TABLE>
- ---------------
(a) Nations Diversified Income Fund and Nations Global Government Income Fund's
Primary B Shares commenced operations on June 28, 1996.
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE> 25
[THIS PAGE INTENTIONALLY LEFT BLANK]
23
<PAGE> 26
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
DISTRIBUTIONS
NET ASSET NET REALIZED NET INCREASE/ DIVIDENDS IN EXCESS
VALUE NET AND UNREALIZED (DECREASE) IN FROM NET OF NET
BEGINNING INVESTMENT GAIN/(LOSS) NET ASSET VALUE INVESTMENT INVESTMENT
OF PERIOD INCOME ON INVESTMENTS FROM OPERATIONS INCOME INCOME
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NATIONS SHORT-TERM INCOME FUND
PRIMARY A
Six months ended 09/30/97
(unaudited)................. $ 9.68 $ 0.28 $ 0.09 $ 0.37 $(0.28) --
Year ended 03/31/1997#........ 9.76 0.58 (0.08) 0.50 (0.58) --
Period ended 03/31/1996(a)# 9.84 0.20 (0.08) 0.12 (0.20) --
Year ended 11/30/1995#........ 9.48 0.61 0.36 0.97 (0.61) --
Year ended 11/30/1994#........ 10.01 0.50 (0.51) (0.01) (0.48) $ (0.02)
Year ended 11/30/1993......... 9.75 0.53 0.26 0.79 (0.53) --
Period ended 11/30/1992*...... 10.00 0.09 (0.25) (0.16) (0.09) --
PRIMARY B
Six months ended 09/30/97
(unaudited)................. $ 9.68 $ 0.28 $ 0.07 $ 0.35 $(0.26) --
Period ended 03/31/1997*#..... 9.71 0.41 (0.03) 0.38 (0.41) --
INVESTOR A
Six months ended 09/30/97
(unaudited)................. $ 9.68 $ 0.27 $ 0.09 $ 0.36 $(0.27) --
Year ended 03/31/1997#........ 9.76 0.56 (0.08) 0.48 (0.56) --
Period ended 03/31/1996(a)#... 9.84 0.19 (0.08) 0.11 (0.19) --
Year ended 11/30/1995#........ 9.48 0.59 0.36 0.95 (0.59) --
Year ended 11/30/1994#........ 10.01 0.48 (0.51) (0.03) (0.46) $ (0.02)
Year ended 11/30/1993......... 9.75 0.51 0.26 0.77 (0.51) --
Period ended 11/30/1992*...... 10.00 0.08 (0.26) (0.18) (0.07) --
INVESTOR B
Six months ended 09/30/97
(unaudited)................. $ 9.68 $ 0.25 $ 0.10 $ 0.35 $(0.26) --
Year ended 03/31/1997#........ 9.76 0.55 (0.08) 0.47 (0.55) --
Period ended 03/31/1996(a)#... 9.84 0.19 (0.08) 0.11 (0.19) --
Year ended 11/30/1995#........ 9.48 0.57 0.36 0.93 (0.57) --
Year ended 11/30/1994#........ 10.01 0.47 (0.51) (0.04) (0.45) $ (0.02)
Period ended 11/30/1993*...... 9.94 0.22 0.07 0.29 (0.22) --
INVESTOR C
Six months ended 09/30/97
(unaudited)................. $ 9.68 $ 0.26 $ 0.09 $ 0.35 $(0.26) --
Year ended 03/31/1997#........ 9.76 0.55 (0.08) 0.47 (0.55) --
Period ended 03/31/1996(a)#... 9.84 0.19 (0.08) 0.11 (0.19) --
Year ended 11/30/1995#........ 9.48 0.57 0.36 0.93 (0.57) --
Year ended 11/30/1994#........ 10.01 0.46 (0.51) (0.05) (0.44) $ (0.02)
Year ended 11/30/1993......... 9.75 0.48 0.26 0.74 (0.48) --
Period ended 11/30/1992*...... 10.00 0.08 (0.26) (0.18) (0.07) --
<CAPTION>
TOTAL
DISTRIBUTIONS DIVIDENDS
FROM AND
CAPITAL DISTRIBUTIONS
------------------------------
<S> <C> <C>
NATIONS SHORT-TERM INCOME FUND
PRIMARY A
Six months ended 09/30/97
(unaudited)................. -- $ (0.28)
Year ended 03/31/1997#........ -- (0.58)
Period ended 03/31/1996(a)# -- (0.20)
Year ended 11/30/1995#........ -- (0.61)
Year ended 11/30/1994#........ $ (0.02) (0.52)
Year ended 11/30/1993......... -- (0.53)
Period ended 11/30/1992*...... -- (0.09)
PRIMARY B
Six months ended 09/30/97
(unaudited)................. -- $ (0.26)
Period ended 03/31/1997*#..... -- (0.41)
INVESTOR A
Six months ended 09/30/97
(unaudited)................. -- $ (0.27)
Year ended 03/31/1997#........ -- (0.56)
Period ended 03/31/1996(a)#... -- (0.19)
Year ended 11/30/1995#........ -- (0.59)
Year ended 11/30/1994#........ $ (0.02) (0.50)
Year ended 11/30/1993......... -- (0.51)
Period ended 11/30/1992*...... -- (0.07)
INVESTOR B
Six months ended 09/30/97
(unaudited)................. -- $ (0.26)
Year ended 03/31/1997#........ -- (0.55)
Period ended 03/31/1996(a)#... -- (0.19)
Year ended 11/30/1995#........ -- (0.57)
Year ended 11/30/1994#........ $ (0.02) (0.49)
Period ended 11/30/1993*...... -- (0.22)
INVESTOR C
Six months ended 09/30/97
(unaudited)................. -- $ (0.26)
Year ended 03/31/1997#........ -- (0.55)
Period ended 03/31/1996(a)#... -- (0.19)
Year ended 11/30/1995#........ -- (0.57)
Year ended 11/30/1994#........ $ (0.02) (0.48)
Year ended 11/30/1993......... -- (0.48)
Period ended 11/30/1992*...... -- (0.07)
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Nations Short-Term Income Fund's Primary A, Primary B, Investor A, Investor B and Investor C Shares commenced operations
on September 30, 1992, June 28, 1996, October 2, 1992, June 7, 1993 and October 2, 1992, respectively.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and does not reflect the deduction of any
applicable sales charges.
+++ Unaudited.
# Per share numbers have been calculated using the monthly average share method, which more appropriately represents the per
share data for the period since 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 November 30.
(b) The effect of interest expense on the operating expense ratio was less than 0.01%.
(c) The effect of the fees reduced by credits allowed by the custodian on the operating expense ratio, with and without
waivers and/or expense reimbursements, and net investment income per share was less than 0.01% and $0.01, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE> 27
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS AND/OR
EXPENSE REIMBURSEMENTS
--------------------------
RATIO OF RATIO OF RATIO OF
NET ASSET NET ASSETS OPERATING NET INVESTMENT OPERATING NET
VALUE END OF EXPENSES TO INCOME TO PORTFOLIO EXPENSES TO INVESTMENT
END OF TOTAL PERIOD AVERAGE AVERAGE TURNOVER AVERAGE INCOME
PERIOD RETURN++ (IN 000'S) NET ASSETS NET ASSETS RATE NET ASSETS PER SHARE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 9.77 3.87% $452,081 0.56%+ 5.74%+ 34% 0.87%+ $ 0.26
9.68 5.25 181,455 0.55(b)(c) 5.97 172 0.85(c) 0.55(c)
9.76 1.19 179,957 0.55+ 6.07+ 73 0.88+ 0.19
9.84 10.48 169,291 0.56 6.32 224 0.86 0.58
9.48 (0.11) 176,712 0.50 5.23 293 0.82 0.47
10.01 8.26 201,738 0.37 5.27 121 0.79 0.48
9.75 (1.58)+++ 190,680 0.30+ 5.54+ 45 0.90+ 0.08
$ 9.77 3.68% $ 513 0.91%+ 5.39%+ 34% 1.22%+ $ 0.26
9.68 3.95 953 0.90+(b)(c) 5.62+ 172 1.20+(c) 0.39(c)
$ 9.77 3.77% $ 10,421 0.76%+ 5.54%+ 34% 1.07%+ $ 0.25
9.68 5.04 6,169 0.75(b)(c) 5.77 172 1.05(c) 0.53(c)
9.76 1.13 2,810 0.75+ 5.87+ 73 1.08+ 0.18
9.84 10.29 2,969 0.76 6.12 224 1.06 0.56
9.48 (0.33) 2,490 0.71 5.02 293 1.03 0.45
10.01 8.03 11,205 0.57 5.07 121 0.99 0.48
9.75 (1.81)+++ 254 0.45+ 5.39+ 45 1.05+ 0.07
$ 9.77 3.68% $ 4,814 0.91%+ 5.39%+ 34% 1.22%+ $ 0.23
9.68 4.89 5,536 0.90(b)(c) 5.62 172 1.20(c) 0.52(c)
9.76 1.08 7,339 0.90+ 5.72+ 73 1.23+ 0.18
9.84 10.10 8,873 0.91 5.97 224 1.21 0.54
9.48 (0.46) 16,550 0.85 4.88 293 1.17 0.44
10.01 2.96 39,861 0.72+ 4.92+ 121 1.14+ 0.21
$ 9.77 3.68% $ 4,099 0.91%+ 5.39%+ 34% 1.22%+ $ 0.24
9.68 4.89 4,063 0.90(b)(c) 5.62 172 1.20(c) 0.52(c)
9.76 1.07 6,121 0.90+ 5.72+ 73 1.23+ 0.18
9.84 10.08 6,056 0.91 5.97 224 1.21 0.54
9.48 (0.51) 8,102 0.89 4.84 293 1.21 0.43
10.01 7.73 19,851 0.87 4.77 121 1.29 0.45
9.75 (1.82)+++ 6,747 0.80+ 5.04+ 45 1.40+ 0.07
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE> 28
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
DISTRIBUTIONS
NET ASSET NET REALIZED NET INCREASE/ DIVIDENDS IN EXCESS
VALUE NET AND UNREALIZED (DECREASE) IN FROM NET OF NET
BEGINNING INVESTMENT GAIN/(LOSS) NET ASSET VALUE INVESTMENT INVESTMENT
OF PERIOD INCOME ON INVESTMENTS FROM OPERATIONS INCOME INCOME
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NATIONS SHORT-INTERMEDIATE GOVERNMENT FUND
PRIMARY A
Six months ended 09/30/97
(unaudited)................. $3.99 $ 0.11 $ 0.10 $ 0.21 $(0.11) --
Year ended 03/31/1997#........ 4.07 0.23 (0.08) 0.15 (0.23) --
Period ended 03/31/1996(b)#... 4.14 0.07 (0.07) 0.00 (0.07) $ (0.00)(a)
Year ended 11/30/1995#........ 3.93 0.24 0.21 0.45 (0.24) (0.00)(a)
Year ended 11/30/1994......... 4.28 0.23 (0.33) (0.10) (0.23) (0.00)(a)
Year ended 11/30/1993......... 4.16 0.23 0.14 0.37 (0.23) --
Year ended 11/30/1992......... 4.17 0.28 (0.01) 0.27 (0.28) --
Period ended 11/30/1991*...... 4.00## 0.10 0.17 0.27 (0.10) --
PRIMARY B
Six months ended 09/30/97
(unaudited)................. $3.99 $ 0.10 $ 0.10 $ 0.20 $(0.10) --
Period ended 03/31/1997*#..... 4.02 0.16 (0.03) 0.13 (0.16) --
INVESTOR A
Six months ended 09/30/97
(unaudited)................. $3.99 $ 0.11 $ 0.10 $ 0.21 $(0.11) --
Year ended 03/31/1997#........ 4.07 0.22 (0.08) 0.14 (0.22) --
Period ended 03/31/1996(b)#... 4.14 0.07 (0.07) 0.00 (0.07) $ (0.00)(a)
Year ended 11/30/1995#........ 3.93 0.23 0.21 0.44 (0.23) (0.00)(a)
Year ended 11/30/1994......... 4.28 0.22 (0.33) (0.11) (0.22) (0.00)(a)
Year ended 11/30/1993......... 4.16 0.22 0.14 0.36 (0.22) --
Year ended 11/30/1992......... 4.17 0.27 (0.01) 0.26 (0.27) --
Period ended 11/30/1991*...... 4.00## 0.10 0.17 0.27 (0.10) --
INVESTOR B
Six months ended 09/30/97
(unaudited)................. $3.99 $ 0.10 $ 0.10 $ 0.20 $(0.10) --
Year ended 03/31/1997#........ 4.07 0.20 (0.08) 0.12 (0.20) --
Period ended 03/31/1996(b)#... 4.14 0.07 (0.07) 0.00 (0.07) $ (0.00)(a)
Year ended 11/30/1995#........ 3.93 0.21 0.21 0.42 (0.21) (0.00)(a)
Year ended 11/30/1994......... 4.28 0.20 (0.33) (0.13) (0.20) (0.00)(a)
Period ended 11/30/1993*...... 4.26 0.09 0.02 0.11 (0.09) --
INVESTOR C
Six months ended 09/30/97
(unaudited)................. $3.99 $ 0.10 $ 0.10 $ 0.20 $(0.10) --
Year ended 03/31/1997#........ 4.07 0.21 (0.08) 0.13 (0.21) --
Period ended 03/31/1996(b)#... 4.14 0.07 (0.07) 0.00 (0.07) $ (0.00)(a)
Year ended 11/30/1995#........ 3.93 0.22 0.21 0.43 (0.22) (0.00)(a)
Year ended 11/30/1994......... 4.28 0.20 (0.33) (0.13) (0.20) (0.00)(a)
Year ended 11/30/1993......... 4.16 0.20 0.14 0.34 (0.20) --
Period ended 11/30/1992*...... 4.19 0.10 (0.03) 0.07 (0.10) --
<CAPTION>
DISTRIBUTIONS TOTAL
FROM NET DIVIDENDS
REALIZED AND
CAPITAL GAINS DISTRIBUTIONS
--------------------------------------------
<S> <<C> <C>
NATIONS SHORT-INTERMEDIATE GOVOVERNMENT FUND
PRIMARY A
Six months ended 09/30/97
(unaudited)................. -- $ (0.11)
Year ended 03/31/1997#........ -- (0.23)
Period ended 03/31/1996(b)#... -- (0.07)
Year ended 11/30/1995#........ -- (0.24)
Year ended 11/30/1994......... $ (0.02) (0.25)
Year ended 11/30/1993......... (0.02) (0.25)
Year ended 11/30/1992......... -- (0.28)
Period ended 11/30/1991*...... -- (0.10)
PRIMARY B
Six months ended 09/30/97
(unaudited)................. -- $ (0.10)
Period ended 03/31/1997*#..... -- (0.16)
INVESTOR A
Six months ended 09/30/97
(unaudited)................. -- $ (0.11)
Year ended 03/31/1997#........ -- (0.22)
Period ended 03/31/1996(b)#... -- (0.07)
Year ended 11/30/1995#........ -- (0.23)
Year ended 11/30/1994......... $ (0.02) (0.24)
Year ended 11/30/1993......... (0.02) (0.24)
Year ended 11/30/1992......... -- (0.27)
Period ended 11/30/1991*...... -- (0.10)
INVESTOR B
Six months ended 09/30/97
(unaudited)................. -- $ (0.10)
Year ended 03/31/1997#........ -- (0.20)
Period ended 03/31/1996(b)#... -- (0.07)
Year ended 11/30/1995#........ -- (0.21)
Year ended 11/30/1994......... $ (0.02) (0.22)
Period ended 11/30/1993*...... -- (0.09)
INVESTOR C
Six months ended 09/30/97
(unaudited)................. -- $ (0.10)
Year ended 03/31/1997#........ -- (0.21)
Period ended 03/31/1996(b)#... -- (0.07)
Year ended 11/30/1995#........ -- (0.22)
Year ended 11/30/1994......... $ (0.02) (0.22)
Year ended 11/30/1993......... (0.02) (0.22)
Period ended 11/30/1992*...... -- (0.10)
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Nations Short-Intermediate Government Fund's Primary A, Primary B, Investor A, Investor B and Investor C Shares commenced
operations on August 1, 1991, June 28, 1996, August 5, 1991, June 7, 1993 and June 17, 1992, respectively.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and does not reflect the deduction of any
applicable sales charges.
+++ Unaudited.
# Per share numbers have been calculated using the monthly average share method, which more appropriately represents the
per share data for the period since use of the undistributed income method did not accord with the results of operations.
## Nations Short-Intermediate Government Fund's net asset value upon commencement of operations was $2.00 per share.
Effective September 25, 1991, the net asset value doubled as a result of the reclassification of each outstanding share
into half as many shares (reverse split).
### Amount represents less than 0.01%.
(a) Amount represents less than $0.01.
(b) Fiscal year end changed to March 31. Prior to this, the fiscal year end was November 30.
(c) The effect of interest expense on the operating expense ratio was less than 0.01%.
(d) The effect of the fees reduced by credits allowed by the custodian on the operating expense ratio, with and without
waivers and/or expense reimbursements and net investment income per share was less than 0.01% and $0.01, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE> 29
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS AND/OR
EXPENSE REIMBURSEMENTS
--------------------------
RATIO OF RATIO OF RATIO OF
NET ASSET NET ASSETS OPERATING NET INVESTMENT OPERATING NET
VALUE END OF EXPENSES TO INCOME PORTFOLIO EXPENSES TO INVESTMENT
END OF TOTAL PERIOD AVERAGE NET TO AVERAGE TURNOVER AVERAGE NET INCOME
PERIOD RETURN++ (IN 000'S) ASSETS NET ASSETS RATE ASSETS PER SHARE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$4.09 5.36% $563,498 0.61%+(d) 5.49%+ 409% 0.81%+(d) $ 0.11(d)
3.99 3.72 371,118 0.63(c)(d) 5.73 529 0.83(d) 0.22(d)
4.07 0.07 399,915 0.63+ 5.32+ 189 0.86+ 0.06
4.14 11.70 425,200 0.60 5.88 328 0.80 0.23
3.93 (2.23) 433,278 0.59 5.76 133 0.80 0.22
4.28 9.03 443,426 0.55 5.40 92 0.79 0.22
4.16 6.70+++ 360,497 0.37 6.48 25 0.77 0.26
4.17 6.81+++ 158,435 0.08+ 7.21+ 11 0.82+ 0.00(a)
$4.09 5.18% $ 16,089 0.96%+(d) 5.14%+ 409% 1.16%+(d) $ 0.10(d)
3.99 3.31 16,980 0.98+(c)(d) 5.38+ 529 1.18+(d) 0.15(d)
$4.09 5.26% $ 43,115 0.81%+(d) 5.29%+ 409% 1.01%+(d) $ 0.11(d)
3.99 3.51 42,468 0.83(c)(d) 5.53 529 1.03(d) 0.21(d)
4.07 0.00### 57,381 0.83+ 5.12+ 189 1.06+ 0.06
4.14 11.48 64,848 0.80 5.68 328 1.00 0.22
3.93 (2.41) 77,128 0.77 5.58 133 0.98 0.21
4.28 8.85 173,449 0.70 5.25 92 0.94 0.21
4.16 6.61 188,624 0.48 6.34 25 0.88 0.25
4.17 6.81+++ 53,874 0.08+ 7.21+ 11 0.82+ 0.00(a)
$4.09 5.04% $ 10,270 1.28%+(d) 4.82%+ 409% 1.48%+(d) $ 0.10(d)
3.99 3.10 10,788 1.23(c)(d) 5.13 529 1.43(d) 0.19(d)
4.07 (0.13) 13,789 1.23+ 4.72+ 189 1.46+ 0.06
4.14 11.02 14,893 1.20 5.28 328 1.40 0.20
3.93 (2.81) 10,974 1.19 5.16 133 1.40 0.19
4.28 2.65 8,847 1.15+ 4.80+ 92 1.39+ 0.09
$4.09 5.06% $ 6,743 1.20%+(d) 4.90%+ 409% 1.40%+(d) $ 0.10(d)
3.99 3.21 8,334 1.13(c)(d) 5.23 529 1.33(d) 0.20(d)
4.07 (0.10) 11,820 1.13+ 4.82+ 189 1.36+ 0.06
4.14 11.15 13,206 1.10 5.38 328 1.30 0.21
3.93 (2.80) 16,725 1.17 5.18 133 1.38 0.19
4.28 8.20 31,440 1.30 4.65 92 1.54 0.19
4.16 1.64+++ 24,352 1.18+ 4.80+ 25 1.44+ 0.09
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
27
<PAGE> 30
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET DISTRIBUTIONS DISTRIBUTIONS
ASSETS NET REALIZED NET INCREASE/ DIVIDENDS IN EXCESS IN EXCESS OF
VALUE NET AND UNREALIZED (DECREASE) IN FROM NET OF NET NET REALIZED
BEGINNING INVESTMENT GAIN/(LOSS) ON NET ASSET VALUE INVESTMENT INVESTMENT CAPITAL
OF PERIOD INCOME INVESTMENTS FROM OPERATIONS INCOME INCOME GAINS
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NATIONS GOVERNMENT SECURITIES FUND
PRIMARY A
Six months ended 09/30/97
(unaudited)................. $ 9.39 $ 0.30 $ 0.27 $ 0.57 $(0.28) -- --
Year ended 03/31/1997#........ 9.67 0.60 (0.30) 0.30 (0.58) -- --
Period ended 03/31/1996(a)#... 9.86 0.52 (0.19) 0.33 (0.50) $(0.02) --
Year ended 05/31/1995#........ 9.80 0.64 0.06 0.70 (0.60) -- --
Year ended 05/31/1994......... 10.46 0.64 (0.61) 0.03 (0.58) (0.02) $(0.05)
Year ended 05/31/1993#........ 10.36 0.71 0.13 0.84 (0.70) -- (0.04)
Year ended 05/31/1992......... 10.05 0.74 0.37 1.11 (0.77) -- (0.03)
Period ended 05/31/1991*...... 10.00 0.10 0.02 0.12 (0.07) -- --
PRIMARY B
Six months ended 09/30/97
(unaudited)................. $ 9.39 $ 0.26 $ 0.29 $ 0.55 $(0.26) -- --
Period ended 03/31/1997*#..... 9.51 0.40 (0.12) 0.28 (0.40) -- --
INVESTOR A
Six months ended 09/30/97
(unaudited)................. $ 9.39 $ 0.27 $ 0.29 $ 0.56 $(0.27) -- --
Year ended 03/31/1997#........ 9.67 0.58 (0.30) 0.28 (0.56) -- --
Period ended 03/31/1996(a)#... 9.86 0.50 (0.19) 0.31 (0.48) $(0.02) --
Year ended 05/31/1995#........ 9.80 0.61 0.06 0.67 (0.57) -- --
Year ended 05/31/1994......... 10.46 0.62 (0.61) 0.01 (0.56) (0.02) $(0.05)
Year ended 05/31/1993#........ 10.36 0.66 0.16 0.82 (0.68) -- (0.04)
Year ended 05/31/1992......... 10.05 0.71 0.38 1.09 (0.75) -- (0.03)
Period ended 05/31/1991*...... 10.01 0.09 0.02 0.11 (0.07) -- --
INVESTOR B
Six months ended 09/30/97
(unaudited)................. $ 9.39 $ 0.25 $ 0.29 $ 0.54 $(0.25) -- --
Year ended 03/31/1997#........ 9.67 0.54 (0.30) 0.24 (0.52) -- --
Period ended 03/31/1996(a)#... 9.86 0.47 (0.19) 0.28 (0.45) $(0.02) --
Year ended 05/31/1995#........ 9.80 0.58 0.06 0.64 (0.54) -- --
Period ended 05/31/1994*...... 10.49 0.54 (0.64) (0.10) (0.49) (0.01) $(0.05)
INVESTOR C
Six months ended 09/30/97
(unaudited)................. $ 9.39 $ 0.23 $ 0.31 $ 0.54 $(0.25) -- --
Year ended 03/31/1997#........ 9.67 0.55 (0.30) 0.25 (0.53) -- --
Period ended 03/31/1996(a)#... 9.86 0.47 (0.19) 0.28 (0.45) $(0.02) --
Year ended 05/31/1995#........ 9.80 0.57 0.06 0.63 (0.53) -- --
Year ended 05/31/1994......... 10.46 0.55 (0.61) (0.06) (0.50) (0.01) $(0.05)
Period ended 05/31/1993*#..... 10.52 0.59 0.02 0.61 (0.63) -- (0.04)
<CAPTION>
DISTRIBUTIONS
FROM
CAPITAL
--------------
<S> <C>
NATIONS GOVERNMENT SECURITIES FUND
PRIMARY A
Six months ended 09/30/97
(unaudited)................. --
Year ended 03/31/1997#........ $ (0.00)(b)
Period ended 03/31/1996(a)#... --
Year ended 05/31/1995#........ (0.04)
Year ended 05/31/1994......... (0.04)
Year ended 05/31/1993#........ --
Year ended 05/31/1992......... --
Period ended 05/31/1991*...... --
PRIMARY B
Six months ended 09/30/97
(unaudited)................. --
Period ended 03/31/1997*#..... $ (0.00)(b)
INVESTOR A
Six months ended 09/30/97
(unaudited)................. --
Year ended 03/31/1997#........ $ (0.00)(b)
Period ended 03/31/1996(a)#... --
Year ended 05/31/1995#........ (0.04)
Year ended 05/31/1994......... (0.04)
Year ended 05/31/1993#........ --
Year ended 05/31/1992......... --
Period ended 05/31/1991*...... --
INVESTOR B
Six months ended 09/30/97
(unaudited)................. --
Year ended 03/31/1997#........ $ (0.00)(b)
Period ended 03/31/1996(a)#... --
Year ended 05/31/1995#........ (0.04)
Period ended 05/31/1994*...... (0.04)
INVESTOR C
Six months ended 09/30/97
(unaudited)................. --
Year ended 03/31/1997#........ $ (0.00)(b)
Period ended 03/31/1996(a)#... --
Year ended 05/31/1995#........ (0.04)
Year ended 05/31/1994......... (0.04)
Period ended 05/31/1993*#..... --
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Nations Government Securities Fund's Primary A, Primary B, Investor A, Investor B and Investor C Shares commenced
operations on April 11, 1991, June 28, 1996, April 17, 1991, June 7, 1993 and July 6, 1992, respectively.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and does not reflect the deduction of any
applicable sales charges.
+++ Unaudited.
# Per share numbers have been calculated using the monthly average share method, which more appropriately represents the per
share data for the period since 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) Amount represents less than $0.01.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
28
<PAGE> 31
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT
WAIVERS
AND/OR
EXPENSE
REIMBURSEMENTS
-----------------------
RATIO OF RATIO OF RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING NET INVESTMENT OPERATING NET
DIVIDENDS VALUE END OF EXPENSES TO INCOME PORTFOLIO EXPENSES TO INVESTMENT
AND END OF TOTAL PERIOD AVERAGE NET TO AVERAGE TURNOVER AVERAGE NET INCOME
DISTRIBUTIONS PERIOD RETURN++ (IN 000'S) ASSETS NET ASSETS RATE ASSETS PER SHARE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (0.28) $ 9.68 6.14% $ 95,768 0.85%+ 5.84%+ 324% 0.99%+ $ 0.29
(0.58) 9.39 3.18 52,606 0.80 6.28 468 0.94 0.59
(0.52) 9.67 3.41 55,962 0.80+ 6.36+ 199 0.95+ 0.51
(0.64) 9.86 7.55 39,909 0.76 6.69 413 0.94 0.62
(0.69) 9.80 0.06 44,536 0.73 6.08 56 0.94 0.61
(0.74) 10.46 8.37 40,472 0.85 6.67 103 1.00 0.60
(0.80) 10.36 11.43+++ 42,256 1.06 7.15 130 1.72 0.07
(0.07) 10.05 1.19+++ 10,047 1.10+ 7.18+ 5 1.69++ 0.09++++
$ (0.26) $ 9.68 5.88% $ 589 1.35%+ 5.34%+ 324% 1.49%+ $ 0.25
(0.40) 9.39 2.90 755 1.30+ 5.78+ 468 1.44+ 0.39
$ (0.27) $ 9.68 6.01% $ 10,923 1.10%+ 5.59%+ 324% 1.24%+ $ 0.26
(0.56) 9.39 2.92 9,852 1.05 6.03 468 1.19 0.57
(0.50) 9.67 3.20 11,662 1.05+ 6.11+ 199 1.20+ 0.49
(0.61) 9.86 7.29 10,928 1.01 6.44 413 1.19 0.59
(0.67) 9.80 (0.11) 14,044 0.90 5.91 56 1.11 0.59
(0.72) 10.46 8.18 15,354 1.00 6.52 103 1.15 0.55
(0.78) 10.36 11.18+++ 3,326 1.31 6.90 130 1.97 0.07
(0.07) 10.05 1.07+++ 661 1.35+ 7.22+ 5 1.94++ 0.08++++
$ (0.25) $ 9.68 5.77% $ 34,811 1.55%+ 5.14%+ 324% 1.69%+ $ 0.24
(0.52) 9.39 2.51 38,807 1.45 5.63 468 1.59 0.53
(0.47) 9.67 2.85 50,958 1.45+ 5.71+ 199 1.60+ 0.46
(0.58) 9.86 6.86 56,155 1.41 6.04 413 1.59 0.56
(0.59) 9.80 (1.09) 56,313 1.38+ 5.43+ 56 1.59+ 0.52
$ (0.25) $ 9.68 5.82% $ 1,571 1.46%+ 5.23%+ 324% 1.60%+ $ 0.22
(0.53) 9.39 2.67 1,835 1.30 5.78 468 1.44 0.54
(0.47) 9.67 2.83 2,558 1.48+ 5.68+ 199 1.63+ 0.46
(0.57) 9.86 6.76 2,945 1.51 5.94 413 1.69 0.55
(0.60) 9.80 (0.69) 5,265 1.48 5.33 56 1.69 0.53
(0.67) 10.46 5.37 5,998 1.60+ 5.92+ 103 1.75+ 0.42
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
29
<PAGE> 32
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
DISTRIBUTIONS
NET ASSET NET REALIZED NET INCREASE/ DIVIDENDS IN EXCESS
VALUE NET AND UNREALIZED (DECREASE) IN FROM NET OF NET
BEGINNING INVESTMENT GAIN(LOSS) NET ASSET VALUE INVESTMENT INVESTMENT
OF PERIOD INCOME ON INVESTMENTS FROM OPERATIONS INCOME INCOME
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NATIONS STRATEGIC FIXED INCOME FUND
PRIMARY A
Six months ended 09/30/97
(unaudited)................. $ 9.62 $ 0.29 $ 0.35 $ 0.64 $(0.29) --
Year ended 03/31/1997#........ 9.93 0.58 (0.20) 0.38 (0.58) --
Period ended 03/31/1996(a).... 10.22 0.19 (0.29) (0.10) (0.19) --
Year ended 11/30/1995......... 9.32 0.59 0.90 1.49 (0.59) --
Year ended 11/30/1994......... 10.55 0.53 (0.89) (0.36) (0.51) $ (0.02)
Year ended 11/30/1993......... 9.94 0.56 0.62 1.18 (0.56) --
Period ended 11/30/1992*...... 10.00 0.05 (0.06) (0.01) (0.05) --
PRIMARY B
Six months ended 09/30/97
(unaudited)................. $ 9.62 $ 0.27 $ 0.35 $ 0.62 $(0.27) --
Period ended 03/31/1997*#..... 9.81 0.41 (0.08) 0.33 (0.41) --
INVESTOR A
Six months ended 09/30/97
(unaudited)................. $ 9.62 $ 0.28 $ 0.35 $ 0.63 $(0.28) --
Year ended 03/31/1997#........ 9.93 0.56 (0.20) 0.36 (0.56) --
Period ended 03/31/1996(a).... 10.22 0.18 (0.29) (0.11) (0.18) --
Year ended 11/30/1995......... 9.32 0.57 0.90 1.47 (0.57) --
Year ended 11/30/1994......... 10.55 0.51 (0.89) (0.38) (0.49) $ (0.02)
Year ended 11/30/1993......... 9.94 0.54 0.62 1.16 (0.54) --
Period ended 11/30/1992*...... 9.99 0.01 (0.06) (0.05) -- --
INVESTOR B
Six months ended 09/30/97
(unaudited)................. $ 9.62 $ 0.26 $ 0.35 $ 0.61 $(0.26) --
Year ended 03/31/1997#........ 9.93 0.52 (0.20) 0.32 (0.52) --
Period ended 03/31/1996(a).... 10.22 0.16 (0.29) (0.13) (0.16) --
Year ended 11/30/1995......... 9.32 0.53 0.90 1.43 (0.53) --
Year ended 11/30/1994......... 10.55 0.47 (0.89) (0.42) (0.45) $ (0.02)
Period ended 11/30/1993*...... 10.39 0.21 0.17 0.38 (0.21) --
INVESTOR C
Six months ended 09/30/97
(unaudited)................. $ 9.62 $ 0.26 $ 0.35 $ 0.61 $(0.26) --
Year ended 03/31/1997#........ 9.93 0.53 (0.20) 0.33 (0.53) --
Period ended 03/31/1996(a).... 10.22 0.17 (0.29) (0.12) (0.17) --
Year ended 11/30/1995......... 9.32 0.54 0.90 1.44 (0.54) --
Year ended 11/30/1994......... 10.55 0.47 (0.89) (0.42) (0.45) $ (0.02)
Year ended 11/30/1993......... 9.94 0.48 0.62 1.10 (0.48) --
Period ended 11/30/1992*...... 9.97 0.02 (0.04) (0.02) (0.01) --
<CAPTION>
DISTRIBUTIONS
FROM NET
REALIZED DISTRIBUTIONS
CAPITAL GAINS FROM CAPITAL
----------------------------------------------------------------------
<S> <C> <C>
NATIONS STRATEGIC FIXED INCOME
PRIMARY A
Six months ended 09/30/97
(unaudited)................. -- --
Year ended 03/31/1997#........ $ (0.11) $ (0.00)(b)
Period ended 03/31/1996(a).... -- --
Year ended 11/30/1995......... -- --
Year ended 11/30/1994......... (0.34) --
Year ended 11/30/1993......... (0.01) --
Period ended 11/30/1992*...... -- --
PRIMARY B
Six months ended 09/30/97
(unaudited)................. -- --
Period ended 03/31/1997*#..... $ (0.11) $ (0.00)(b)
INVESTOR A
Six months ended 09/30/97
(unaudited)................. -- --
Year ended 03/31/1997#........ $ (0.11) $ (0.00)(b)
Period ended 03/31/1996(a).... -- --
Year ended 11/30/1995......... -- --
Year ended 11/30/1994......... (0.34) --
Year ended 11/30/1993......... (0.01) --
Period ended 11/30/1992*...... -- --
INVESTOR B
Six months ended 09/30/97
(unaudited)................. -- --
Year ended 03/31/1997#........ $ (0.11) $ (0.00)(b)
Period ended 03/31/1996(a).... -- --
Year ended 11/30/1995......... -- --
Year ended 11/30/1994......... (0.34) --
Period ended 11/30/1993*...... (0.01) --
INVESTOR C
Six months ended 09/30/97
(unaudited)................. -- --
Year ended 03/31/1997#........ $ (0.11) $ (0.00)(b)
Period ended 03/31/1996(a).... -- --
Year ended 11/30/1995......... -- --
Year ended 11/30/1994......... (0.34) --
Year ended 11/30/1993......... (0.01) --
Period ended 11/30/1992*...... -- --
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Nations Strategic Fixed Income Fund's Primary A, Primary B, Investor A, Investor B and Investor C Shares commenced
operations on October 30, 1992, June 28, 1996, November 19, 1992, June 7, 1993 and November 16, 1992, respectively.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and does not reflect the deduction of any
applicable sales charges.
+++ Unaudited.
# Per share numbers have been calculated using the monthly average share method, which more appropriately represents the per
share data for the period since 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 November 30.
(b) Amount represents less than $0.01.
(c) The effect of the fees reduced by credits allowed by the custodian on the operating expense ratio, with and without waivers
and/or expense reimbursements and net investment income per share was less than 0.01% and $0.01, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
30
<PAGE> 33
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT
WAIVERS
AND/OR
EXPENSE
REIMBURSEMENTS
-------------------------
RATIO OF RATIO OF RATIO OF
TOTAL NET ASSET NET ASSETS OPERATING NET INVESTMENT OPERATING NET
DIVIDENDS VALUE END OF EXPENSES INCOME PORTFOLIO EXPENSES TO INVESTMENT
AND END OF TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER AVERAGE INCOME
DISTRIBUTIONS PERIOD RETURN++ (IN 000'S) NET ASSETS NET ASSETS RATE NET ASSETS PER SHARE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (0.29) $9.97 6.75% $2,022,296 0.73%+ 5.92%+ 273% 0.83%+ $ 0.28
(0.69) 9.62 3.90 947,277 0.71(c) 5.98 368 0.81(c) 0.57(c)
(0.19) 9.93 (1.04) 823,890 0.72+ 5.49+ 133 0.83+ 0.19
(0.59) 10.22 16.45 823,098 0.71 6.05 228 0.81 0.58
(0.87) 9.32 (3.58) 550,697 0.68 5.43 307 0.76 0.52
(0.57) 10.55 12.05 545,538 0.61 5.40 161 0.77 0.55
(0.05) 9.94 (0.11)+++ 581,329 0.26+ 6.15+ 12 0.86+ 0.04
$ (0.27) $9.97 6.48% $ 21,583 1.23%+ 5.42%+ 273% 1.33%+ $ 0.26
(0.52) 9.62 3.35 29,235 1.21(c)+ 5.48+ 368 1.31(c)+ 0.43(c)
$ (0.28) $9.97 6.64% $ 13,190 0.93%+ 5.72%+ 273% 1.03%+ $ 0.27
(0.67) 9.62 3.70 6,345 0.91(c) 5.78 368 1.01(c) 0.55(c)
(0.18) 9.93 (1.11) 6,440 0.92+ 5.29+ 133 1.03+ 0.18
(0.57) 10.22 16.22 6,662 0.91 5.85 228 1.01 0.56
(0.85) 9.32 (3.76) 967 0.86 5.25 307 0.94 0.50
(0.55) 10.55 11.88 1,138 0.76 5.25 161 0.92 0.53
-- 9.94 (0.49)+++ 113 0.40+ 6.00+ 12 1.00+ 0.01
$ (0.26) $9.97 6.40% $ 2,042 1.43%+ 5.22%+ 273% 1.53%+ $ 0.25
(0.63) 9.62 3.23 2,109 1.36(c) 5.33 368 1.46(c) 0.51(c)
(0.16) 9.93 (1.26) 2,496 1.37+ 4.84+ 133 1.48+ 0.16
(0.53) 10.22 15.70 2,578 1.36 5.40 228 1.46 0.52
(0.81) 9.32 (4.21) 2,145 1.33 4.78 307 1.41 0.46
(0.22) 10.55 3.64 1,620 1.26+ 4.75+ 161 1.42+ 0.21
$ (0.26) $9.97 6.44% $ 1,253 1.33%+ 5.32%+ 273% 1.43%+ $ 0.25
(0.64) 9.62 3.38 1,068 1.21(c) 5.48 368 1.31(c) 0.52(c)
(0.17) 9.93 (1.22) 299 1.22+ 4.99+ 133 1.33+ 0.17
(0.54) 10.22 15.87 227 1.21 5.55 228 1.31 0.53
(0.81) 9.32 (4.14) 41 1.43 4.68 307 1.51 0.46
(0.49) 10.55 11.20 65 1.36 4.65 161 1.52 0.47
(0.01) 9.94 (0.22)+++ 84 1.03+ 5.40+ 12 1.63+ 0.02
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
31
<PAGE> 34
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET NET REALIZED NET INCREASE DIVIDENDS DISTRIBUTIONS TOTAL NET ASSET
VALUE NET AND UNREALIZED IN NET FROM NET FROM NET DIVIDENDS VALUE
BEGINNING INVESTMENT GAIN/(LOSS) ASSET VALUE INVESTMENT REALIZED AND END OF
OF PERIOD INCOME ON INVESTMENTS FROM OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS PERIOD
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NATIONS U.S. GOVERNMENT BOND FUND
PRIMARY A
Period ended 09/30/1997*
(unaudited)............ $ 10.19 $ 0.19 $ 0.21 $0.40 $(0.19) -- $ (0.19) $ 10.40
Period ended 05/16/97*... 10.53 0.41 0.17 0.58 (0.41) $ (0.51) (0.92) 10.19
Year ended 08/31/96*..... 11.20 0.61 (0.22) 0.39 (0.61) (0.45) (1.06) 10.53
Period ended
08/31/1995*............ 10.00 0.56 1.20 1.76 (0.56) -- (0.56) 11.20
INVESTOR A
Period ended 09/30/1997*
(unaudited)............ $ 10.20 $ 0.19 $ 0.19 $0.38 $(0.18) -- $ (0.18) $ 10.40
Period ended 05/16/97*... 10.54 0.39 0.17 0.56 (0.39) $ (0.51) (0.90) 10.20
Year ended 08/31/96*..... 11.19 0.59 (0.20) 0.39 (0.59) (0.45) (1.04) 10.54
Period ended
08/31/1995*............ 10.48 0.37 0.71 1.08 (0.37) -- (0.37) 11.19
INVESTOR B
Period ended 09/30/1997*
(unaudited)............ $ 10.19 $ 0.17 $ 0.21 $0.38 $(0.17) -- $ (0.17) $ 10.40
Period ended 05/16/97*... 10.52 0.34 0.18 0.52 (0.34) $ (0.51) (0.85) 10.19
Year ended 08/31/96*..... 11.19 0.51 (0.22) 0.29 (0.51) (0.45) (0.96) 10.52
Period ended
08/31/1995*............ 10.05 0.46 1.14 1.60 (0.46) -- (0.46) 11.19
INVESTOR C
Period ended 09/30/1997**
(unaudited)............ $ 10.41 $ 0.08 $ 0.00 $0.08 $(0.09) -- $ (0.09) $ 10.40
</TABLE>
- ---------------
<TABLE>
<S> <C>
* Nations U.S. Government Bond Fund's Primary A, Investor A and Investor B Shares commenced operations on May 16, 1997. The
financial information for the fiscal periods through May 16, 1997 are based on the financial information for the Pilot
U.S. Government Securities Fund's Pilot Shares, Class A Shares and Class B Shares, which were reorganized into the Primary
A Shares, Investor A Shares and Investor B Shares, respectively, as of the close of business on May 16, 1997.
** Nations U.S. Government Bond Fund's Investor C Shares commenced operations on September 19, 1997.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and does not reflect the deduction of any
applicable sales charges.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
32
<PAGE> 35
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS AND/OR
EXPENSE REIMBURSEMENTS
--------------------------
RATIO OF RATIO OF RATIO OF
NET ASSETS OPERATING NET INVESTMENT OPERATING NET
END OF EXPENSES TO INCOME PORTFOLIO EXPENSES TO INVESTMENT
TOTAL PERIOD AVERAGE TO AVERAGE TURNOVER AVERAGE INCOME
RETURN++ (IN 000'S) NET ASSETS NET ASSETS RATE NET ASSETS PER SHARE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6.02% $146,078 0.60%+ 5.36%+ 81% 0.84%+ $ 0.18
5.62 148,082 0.62+ 5.60+ 58 0.77+ --
3.46 145,066 0.65 5.61 87 0.82 --
18.03 137,261 0.62+ 6.45+ 132 0.87+ --
5.79% $ 1,118 0.85%+ 5.11%+ 81% 1.09%+ $ 0.18
5.44 734 0.87+ 5.35+ 58 1.07+ --
3.44 632 0.85 5.44 87 1.07 --
10.41 87 0.82+ 5.76+ 132 1.12+ --
5.62% $ 5 1.40%+ 4.56%+ 81% 1.64%+ $ 0.16
4.99 1,529 1.62+ 4.60+ 58 1.77+ --
2.43 1,237 1.65 4.60 87 1.82 --
16.19 146 1.62+ 5.19+ 132 1.87+ --
0.17% $ 1,497 1.25%+ 4.71%+ 81% 1.49%+ $ 0.07
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
33
<PAGE> 36
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
DISTRIBUTIONS
NET ASSET NET REALIZED NET INCREASE/ DIVIDENDS IN EXCESS DISTRIBUTIONS TOTAL
VALUE NET AND UNREALIZED (DECREASE) IN FROM NET OF NET FROM NET DIVIDENDS
BEGINNING INVESTMENT GAIN/(LOSS) NET ASSET VALUE INVESTMENT INVESTMENT REALIZED AND
OF PERIOD INCOME ON INVESTMENTS FROM OPERATIONS INCOME INCOME CAPITAL GAINS DISTRIBUTIONS
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NATIONS DIVERSIFIED INCOME FUND
PRIMARY A
Six months ended
09/30/97
(unaudited)... $ 10.11 $ 0.32 $ 0.31 $ 0.63 $(0.32) -- -- $ (0.32)
Year ended
03/31/1997#... 10.42 0.69 (0.18) 0.51 (0.69) -- $ (0.13) (0.82)
Period ended
03/31/1996(b)... 10.82 0.23 (0.40) (0.17) (0.23) -- -- (0.23)
Year ended
11/30/1995.... 9.67 0.73 1.15 1.88 (0.73) -- -- (0.73)
Year ended
11/30/1994#... 10.88 0.74 (1.06) (0.32) (0.74) $ (0.00)(a) (0.15) (0.89)
Year ended
11/30/1993#... 9.97 0.78 0.91 1.69 (0.78) -- -- (0.78)
Period ended
11/30/1992*... 10.00 0.06 (0.03) 0.03 (0.06) -- -- (0.06)
PRIMARY B
Six months ended
09/30/97
(unaudited)... $ 10.11 $ 0.29 $ 0.32 $ 0.61 $(0.30) -- -- $ (0.30)
Period ended
03/31/1997*#... 10.28 0.47 (0.04) 0.43 (0.47) -- $ (0.13) (0.60)
INVESTOR A
Six months ended
09/30/97
(unaudited)... $ 10.11 $ 0.31 $ 0.31 $ 0.62 $(0.31) -- -- $ (0.31)
Year ended
03/31/1997#... 10.42 0.66 (0.18) 0.48 (0.66) -- $ (0.13) (0.79)
Period ended
03/31/1996(b)... 10.82 0.22 (0.40) (0.18) (0.22) -- -- (0.22)
Year ended
11/30/1995.... 9.67 0.71 1.15 1.86 (0.71) -- -- (0.71)
Year ended
11/30/1994#... 10.88 0.72 (1.06) (0.34) (0.72) $ (0.00)(a) (0.15) (0.87)
Year ended
11/30/1993#... 9.96 0.76 0.92 1.68 (0.76) -- -- (0.76)
Period ended
11/30/1992*.... 10.02 0.01 (0.06) (0.05) (0.01) -- -- (0.01)
INVESTOR B
Six months ended
09/30/97
(unaudited)... $ 10.11 $ 0.28 $ 0.31 $ 0.59 $(0.28) -- -- $ (0.28)
Year ended
03/31/1997#... 10.42 0.61 (0.18) 0.43 (0.61) -- $ (0.13) (0.74)
Period ended
03/31/1996(b)... 10.82 0.21 (0.40) (0.19) (0.21) -- -- (0.21)
Year ended
11/30/1995.... 9.67 0.66 1.15 1.81 (0.66) -- -- (0.66)
Year ended
11/30/1994#... 10.88 0.67 (1.06) (0.39) (0.67) $ (0.00)(a) (0.15) (0.82)
Period ended
11/30/1993*#... 10.59 0.30 0.29 0.59 (0.30) -- -- (0.30)
INVESTOR C
Six months ended
09/30/97
(unaudited)... $ 10.11 $ 0.29 $ 0.31 $ 0.60 $(0.29) -- -- $ (0.29)
Year ended
03/31/1997#... 10.42 0.63 (0.18) 0.45 (0.63) -- $ (0.13) (0.76)
Period ended
03/31/1996(b)... 10.82 0.21 (0.40) (0.19) (0.21) -- -- (0.21)
Year ended
11/30/1995.... 9.67 0.66 1.15 1.81 (0.66) -- -- (0.66)
Year ended
11/30/1994#... 10.88 0.67 (1.06) (0.39) (0.67) $ (0.00)(a) (0.15) (0.82)
Year ended
11/30/1993#... 9.96 0.70 0.92 1.62 (0.70) -- -- (0.70)
Period ended
11/30/1992*.... 9.93 0.03 0.02 0.05 (0.02) -- -- (0.02)
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Nations Diversified Income Fund's Primary A, Primary B, Investor A, Investor B and Investor C Shares commenced operations
on October 30, 1992, June 28, 1996, November 25, 1992, June 7, 1993 and November 9, 1992, respectively.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and does not reflect the deduction of any
applicable sales charges.
+++ Unaudited.
# Per share numbers have been calculated using the monthly average share method, which more appropriately represents the per
share data for the period since use of the undistributed income method did not accord with the results of operations.
(a) Amount represents less than $0.01.
(b) Fiscal year end changed to March 31. Prior to this, the fiscal year end was November 30.
(c) The effect of the fees reduced by credits allowed by the custodian on the operating expense ratio, with and without waivers
and/or expense reimbursements and net investment income per share was less than 0.01% and $0.01, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
34
<PAGE> 37
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
WITHOUT WAIVERS AND/OR
EXPENSE REIMBURSEMENTS
--------------------------
RATIO OF RATIO OF RATIO OF
NET ASSET NET ASSETS OPERATING NET INVESTMENT OPERATING NET
VALUE END OF EXPENSES TO INCOME PORTFOLIO EXPENSES TO INVESTMENT
END OF TOTAL PERIOD AVERAGE TO AVERAGE TURNOVER AVERAGE NET INCOME
PERIOD RETURN++ (IN 000'S) NET ASSETS NET ASSETS RATE ASSETS PER SHARE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 10.42 6.33% $212,876 0.78%+(c) 6.25%+ 114% 0.88%+(c) $ 0.32(c)
10.11 4.97 152,070 0.75 6.73 278 0.85 0.67
10.42 (1.59) 65,081 0.77+ 6.49+ 69 0.87+ 0.23
10.82 20.11 64,800 0.80 7.03 96 0.93 0.72
9.67 (3.05) 22,298 0.74 7.31 144 0.95 0.72
10.88 17.40 28,553 0.55 7.02 86 0.95 0.70
9.97 0.32+++ 23,962 0.25+ 7.76+ 46 0.85+ 0.05
$ 10.42 6.10% $ 243 1.28%+(c) 5.75%+ 114% 1.38%+(c) $ 0.29(c)
10.11 4.22 41 1.25+ 6.23+ 278 1.35+ 0.47
$ 10.42 6.20% $ 11,477 1.03%+(c) 6.00%+ 114% 1.13%+(c) $ 0.31(c)
10.11 4.71 11,662 1.00 6.48 278 1.10 0.66
10.42 (1.67) 13,332 1.02+ 6.24+ 69 1.12+ 0.22
10.82 19.82 13,150 1.05 6.78 96 1.18 0.70
9.67 (3.26) 10,819 0.96 7.09 144 1.17 0.70
10.88 17.32 13,291 0.70 6.87 86 1.10 0.70
9.96 (0.49)+++ 18 0.40+ 7.61+ 46 1.00+ 0.01
$ 10.42 5.92% $ 66,512 1.57%+(c) 5.46%+ 114% 1.67%+(c) $ 0.28(c)
10.11 4.18 70,631 1.50 5.98 278 1.60 0.61
10.42 (1.83) 84,692 1.52+ 5.74+ 69 1.62+ 0.21
10.82 19.22 90,887 1.55 6.28 96 1.68 0.65
9.67 (3.77) 55,058 1.49 6.56 144 1.70 0.65
10.88 5.58 24,630 1.30+ 6.27+ 86 1.70+* 0.27
$ 10.42 6.01% $ 2,653 1.39%+(c) 5.64%+ 114% 1.49%+(c) $ 0.29(c)
10.11 4.44 3,343 1.25 6.23 278 1.35 0.63
10.42 (1.77) 3,454 1.33+ 5.93+ 69 1.43+ 0.21
10.82 19.22 3,582 1.55 6.28 96 1.68 0.65
9.67 (3.77) 2,636 1.49 6.56 144 1.70 0.65
10.88 16.65 3,633 1.30 6.27 86 1.70 0.64
9.96 0.54+++ 149 1.00+ 7.01+ 46 1.60+ 0.03
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
35
<PAGE> 38
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET NET REALIZED NET INCREASE DIVIDENDS DISTRIBUTIONS DISTRIBUTIONS
VALUE NET AND UNREALIZED IN NET FROM NET IN EXCESS OF FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ASSET VALUE INVESTMENT NET REALIZED REALIZED
OF PERIOD INCOME ON INVESTMENTS FROM OPERATIONS INCOME CAPITAL GAINS CAPITAL GAINS
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NATIONS GLOBAL GOVERNMENT INCOME FUND
PRIMARY A SHARES
Six months ended
09/30/1997
(unaudited)............. $ 9.79 $ 0.19 $ 0.09 $0.28 $(0.19) -- $ (0.03)
Year ended 03/31/1997#.... 10.07 0.47 (0.03) 0.44 (0.46) $ (0.10) (0.16)
Period ended
03/31/1996**............ 10.00 0.39 0.11 0.50 (0.37) (0.02) (0.04)
PRIMARY B SHARES
Six months ended
09/30/1997
(unaudited)............. $ 9.79 $ 0.20 $ 0.09 $0.29 $(0.20) -- $ (0.03)
Period ended 03/31/1997**
#....................... 10.13 0.43 (0.22) 0.21 (0.32) $ (0.07) (0.16)
INVESTOR A SHARES
Six months ended
09/30/1997
(unaudited)............. $ 9.79 $ 0.18 $ 0.09 $0.27 $(0.18) -- $ (0.03)
Year ended 03/31/1997#.... 10.07 0.44 (0.02) 0.42 (0.45) $ (0.09) (0.16)
Period ended
03/31/1996**............ 10.00 0.37 0.11 0.48 (0.35) (0.02) (0.04)
INVESTOR B SHARES
Six months ended
09/30/1997
(unaudited)............. $ 9.79 $ 0.15 $ 0.09 $0.23 $(0.15) -- $ (0.02)
Year ended 03/31/1997#.... 10.07 0.36 (0.02) 0.34 (0.38) $ (0.08) (0.16)
Period ended
03/31/1996**............ 10.00 0.32 0.11 0.43 (0.30) (0.02) (0.04)
INVESTOR C SHARES
Six months ended
09/30/1997
(unaudited)............. $ 9.79 $ 0.16 $ 0.09 $0.25 $(0.16) -- $ (0.03)
Year ended 03/31/1997#.... 10.07 0.42 (0.03) 0.39 (0.42) $ (0.09) (0.16)
Period ended
03/31/1996**............ 10.00 0.33 0.11 0.44 (0.31) (0.02) (0.04)
</TABLE>
- ---------------
<TABLE>
<C> <S>
** Nations Global Government Income Fund's Primary A, Investor A, Investor B and Investor C Shares commenced operations on
June 30, 1995. Nations Global Government Income Fund's Primary B Shares commenced operations on June 28, 1996.
+ 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 results of operations.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
36
<PAGE> 39
NATIONS FUNDS
- --------------------------------------------------------------------------------
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
AND END OF TOTAL PERIOD AVERAGE AVERAGE TURNOVER
DISTRIBUTIONS PERIOD RETURN++ (IN 000'S) NET ASSETS NET ASSETS RATE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ (0.22) $ 9.85 2.91% $ 27,526 1.35%+ 3.94%+ 57%
(0.72) 9.79 4.25 28,130 1.26 4.60 100
(0.43) 10.07 5.03 24,753 1.32+ 5.17+ 213
$ (0.23) $ 9.85 2.99% $ -- 1.85%+ 3.44%+ 57%
(0.55) 9.79 1.93 5 1.76+ 4.10+ 100
$ (0.21) $ 9.85 2.78% $ 15,104 1.60%+ 3.69%+ 57%
(0.70) 9.79 3.99 15,104 1.51 4.35 100
(0.41) 10.07 4.84 14,898 1.57+ 4.92+ 213
$ (0.17) $ 9.85 2.42% $ 163 2.30%+ 2.99%+ 57%
(0.62) 9.79 3.22 193 2.26 3.60 100
(0.36) 10.07 4.27 193 2.32+ 4.17+ 213
$ (0.19) $ 9.85 2.59% $ 9 1.97%+ 3.32%+ 57%
(0.67) 9.79 3.73 9 1.76 4.10 100
(0.37) 10.07 4.40 9 2.16+ 4.33+ 213
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
37
<PAGE> 40
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Nations Fund Trust (the "Trust"), 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 Trust offers thirty-three separate
portfolios, the Company offers eight separate portfolios and Nations Portfolios
offers three separate portfolios. Information presented in these financial
statements pertains only to: Nations Short-Term Income Fund, Nations
Short-Intermediate Government Fund, Nations Government Securities Fund, Nations
Strategic Fixed Income Fund, Nations U.S. Government Bond Fund, Nations
Diversified Income Fund and Nations Global Government Income Fund (each, a
"Fund" and collectively, the "Funds"). The financial statements for the
remaining funds of the Trust, the Company and Nations Portfolios are presented
under separate cover. The Funds currently offer five classes of shares: Primary
A Shares, Primary B Shares, Investor A Shares, Investor B Shares (formerly
Investor N Shares) and Investor C Shares. Shareholders of a Fund have equal
voting rights on matters affecting all shareholders of the Fund. 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.
1. SIGNIFICANT ACCOUNTING POLICIES.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Funds in the preparation of
their financial statements.
Securities Valuation: The Funds' portfolio securities are valued using broker
quotations or prices provided by a pricing service. Certain securities are
valued using broker quotations that are based on a matrix pricing system which
considers such factors as security prices, yields and maturities. The value of
mortgage-backed securities can be significantly affected by changes in interest
rates. Certain securities may be valued by one or more principal market makers.
The valuation of international securities which are traded on foreign exchanges
are provided by an independent pricing service approved by the Board of Trustees
or the Board of Directors of each Fund. Securities for which market quotations
are not readily available are valued by the investment adviser under the
supervision of the Board of Trustees or 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, including joint repurchase agreement transactions in which the
Funds, along with other registered investment companies advised by NationsBanc
Advisers, Inc. ("NBAI"), a wholly-owned subsidiary of NationsBank, N.A.
("NationsBank") invest their aggregate cash balances. 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 securities must be 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 would be a potential loss to the
Fund in the event the Fund is delayed or prevented from exercising its right to
dispose of the collateral 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 expressly permitted by the Securities and Exchange
Commission, the Fund will not enter into repurchase agreements with its
investment adviser, distributor or any of their affiliates. The Funds'
investment adviser, acting under the supervision of the Board of Trustees and
the Board of Directors, monitors the value of the collateral received as well as
the creditworthiness of those banks and dealers with which the Funds enter into
repurchase agreements to evaluate potential risks.
Dollar Roll Transactions: Certain Funds may enter into dollar roll transactions
with financial institutions to take advantage of opportunities in the mortgage
market. Dollar roll transactions consist of the sale by the Fund of mortgage-
backed or other asset-backed securities, with a commitment to purchase similar,
but not identical, securities at a future date, at the same price. The Funds are
paid a fee as consideration for entering into a commitment to purchase the
securities. This fee accrues as income over the duration of the dollar roll
contract. If the broker/dealer to whom a Fund sells the security becomes
insolvent, the Fund's right to purchase or repurchase the security may be
restricted; the value of the security may change adversely over the term of the
dollar roll; the security that the Fund is required to repurchase
38
<PAGE> 41
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
may be worth less than the security that the Fund originally held, and the
return earned by the Fund in addition to the proceeds of a dollar roll sale may
not exceed transaction costs.
Foreign Currency: The books and records of Nations Global Government Income
Fund 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
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.
Forward Foreign Currency Transactions: Generally, Nations Global Government
Income Fund may enter into forward currency exchange contracts 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 the
investment adviser or investment sub-adviser believes that the currency of a
particular foreign country may experience a substantial movement against the
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, however, 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 would also limit any potential gain that might result should the
value of the currency increase instead of decrease. These contracts may involve
market risk in excess of the unrealized gain or loss reflected in the Statements
of Assets and Liabilities. 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
based on the specific identification of the securities sold. Interest income,
adjusted for accretion of discounts and amortization of premiums calculated
ratably, is earned from settlement date and is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income is not accrued
until settlement date. Each Fund instructs the custodian to segregate assets
with a current value at least equal to the amount of its when-issued purchase
commitments.
Stripped mortgage-backed securities are derivative multi-class mortgage
securities structured so that one class receives most, if not all, of the
principal from the mortgage assets, while the other class receives most, if not
all, of the interest and the remainder of the principal. If the underlying
mortgage assets experience greater than anticipated repayments of principal, a
Fund may fail to fully recoup its initial investment in an interest-only
security. The fair market value of these securities is unusually volatile in
response to changes in interest rates.
Dividends and Distributions to Shareholders: It is the policy of each Fund to
declare dividends daily from net investment income and to pay such dividends
monthly. Each Fund will distribute net realized capital gains (including net
short-term capital gains), annually after the fiscal year in which earned,
unless offset by any available capital loss carryforward. Additional
distributions of net investment income and capital gains may be made at the
discretion of the Board of Trustees or the Board of Directors in order to avoid
application of the 4% non-deductible Federal excise tax. Income distributions
and capital gain distributions on a Fund level are determined in accordance with
Federal income tax
39
<PAGE> 42
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to timing differences and differing
characterization of distributions made by the Fund as a whole.
Federal Income Tax: It is the policy of each Fund to qualify as a regulated
investment company by complying with the requirements of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies and by
distributing substantially all of its earnings to its shareholders. Therefore,
no Federal income or excise tax provision is applicable. Nations Global
Government Income Fund may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be recoverable.
Nations Global Government Income Fund will accrue such taxes and recoveries as
applicable, based upon its current interpretation of tax rules and regulations
that exist in the markets in which it invests.
Expenses: General expenses of the Trust, the Company or Nations Portfolios are
allocated to the relevant Funds based upon their relative net assets. Operating
expenses directly attributable to a Fund or class of shares are charged to such
Fund's or class's operations. Expenses of each Fund not directly attributable to
the operations of any class of shares are prorated among the classes based on
the relative net assets of each class of shares.
2. INVESTMENT ADVISORY FEE, SUB-ADVISORY FEE, ADMINISTRATION FEE AND RELATED
PARTY TRANSACTIONS.
Each of the Trust, the Company and Nations Portfolios has, on behalf of the
Funds, entered into an investment advisory agreement (the "Investment Advisory
Agreements") with NBAI, pursuant to which NBAI provides investment advisory
services to the Funds. Under the terms of these Investment Advisory Agreements,
NBAI is entitled to receive an advisory fee, calculated daily and payable
monthly based on the following annual rates multiplied by the average daily net
assets of each Fund:
<TABLE>
<CAPTION>
ANNUAL RATE
----------
<S> <C>
Nations Short-Term Income Fund, Nations Short-Intermediate Government Fund, Nations
Strategic Fixed Income Fund, Nations U.S. Government Bond Fund and Nations
Diversified Income Fund.......................................................... 0.60%
Nations Global Government Income Fund.............................................. 0.70%
<CAPTION>
FEES ON ASSETS FEES ON ASSETS FEES ON ASSETS
UP TO BETWEEN $100 EXCEEDING
$100 MILLION AND $250 MILLION $250 MILLION
------------------------------------------------------
<S> <C> <C> <C>
Nations Government Securities Fund.................. 0.65% 0.55% 0.50%
</TABLE>
Each of the Trust, the Company and Nations Portfolios has, on behalf of its
Funds, except for Nations U.S. Government Bond Fund, entered into a sub-advisory
agreement (the "Sub-Advisory Agreements") with NBAI and TradeStreet Investment
Associates, Inc. ("TradeStreet"), a wholly-owned subsidiary of NationsBank.
Under the terms of these Sub-Advisory Agreements, TradeStreet is entitled to
receive a sub-advisory fee from NBAI for each Fund at the annual rate of 0.15%
of each Fund's average daily net assets.
Boatmen's Capital Management, Inc. ("Boatmen's"), an indirect subsidiary of
NationsBank Corporation, serves as investment sub-adviser to Nations U.S.
Government Bond Fund. For services provided pursuant to the sub-advisory
agreement, NBAI will pay Boatmen's a sub-advisory fee at the annual rate of
0.15% of the average daily net assets of Nations U.S. Government Bond Fund.
Nations Portfolios has, on behalf of its Funds, entered into a sub-advisory
agreement (the "Sub-Advisory Agreement") with NBAI and Gartmore Global Partners
("Gartmore"). Gartmore is a joint venture structured as a general partnership
between NB Partner Corp., a wholly-owned subsidiary of NationsBank, and Gartmore
U.S. Limited, an indirect wholly-owned subsidiary of Gartmore Investment
Management plc ("Gartmore plc"), which is a United Kingdom ("U.K.") holding
company for a leading U.K. based international fund management group of
companies. National Westminster Bank plc and its affiliated entities own 100% of
the equity of Gartmore plc. For services provided pursuant to the sub-advisory
agreement, NBAI will pay Gartmore a sub-advisory fee at the annual rate of 0.54%
of the average daily net assets of Nations Global Government Income Fund.
Stephens Inc. ("Stephens") serves as the administrator of the Trust, the
Company, and Nations Portfolios pursuant to separate administration agreements
(the "Administration Agreements"). First Data Investor Services Group, Inc.
("First
40
<PAGE> 43
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
Data"), a wholly-owned subsidiary of First Data Corporation, serves as the
co-administrator of the Trust, the Company and Nations Portfolios pursuant to
co-administration agreements (the "Co-Administration Agreements"). Pursuant to
the Administration and Co-Administration Agreements, Stephens and First Data are
entitled to receive a combined fee, computed daily and paid monthly, at the
annual rate of 0.10% of the average daily net assets of the Trust's, the
Company's and Nations Portfolios' Funds. NationsBank serves as the
sub-administrator of the Trust and the Company pursuant to a sub-administration
agreement (the "Sub-Administration Agreement") with Stephens. For the six months
ended September 30, 1997, Stephens earned $781,678 from the Funds for its
administration services, of which $134,431 was paid to NationsBank for its
services as sub-administrator.
The investment adviser, sub-adviser and administrator may, from time to time,
voluntarily reduce their fees payable by each Fund. For the six months ended
September 30, 1997, the investment adviser voluntarily waived fees as follows:
<TABLE>
<CAPTION>
FEES WAIVED
BY ADVISER
----------
<S> <C>
Nations Short-Term Income Fund..................................................... $ 383,393
Nations Short-Intermediate Government Fund......................................... 612,820
Nations Government Securities Fund................................................. 77,897
Nations Strategic Fixed Income Fund................................................ 636,049
Nations U.S. Government Bond Fund.................................................. 135,377
Nations Diversified Income Fund.................................................... 134,045
</TABLE>
NationsBank of Texas, N.A.("NationsBank of Texas" and, collectively with The
Bank of New York ("BONY"), called "Custodians") acts as Custodian of the
Trust's, the Company's and Nations Portfolio's assets and, for the six months
ended September 30, 1997, earned $128,040 for providing such services. BONY has
entered into an agreement with each of the Funds and NationsBank of Texas,
whereby BONY will serve as sub-custodian for the Funds. The Trust and the
Company accrue a credit on daily cash balances held at BONY. The earnings credit
is applied to the monthly custody fee. For the six months ended September 30,
1997, the earnings credit was $10,063.
First Data also serves as the transfer agent for the Funds' shares. NationsBank
of Texas acts as the sub-transfer agent for the Primary Shares of the Funds and,
for the six months ended September 30, 1997, earned approximately $18,040 for
providing such services.
Stephens also serves as distributor of the Funds' shares. For the six months
ended September 30, 1997, the Funds were informed that the distributor received
$206,769 in contingent deferred sales charges from shares which were subject to
such charges. A substantial portion of these fees are paid to affiliates of
NationsBank and NBAI.
No officer, director or employee of NationsBank, NBAI, TradeStreet, Gartmore,
Stephens, First Data, or any affiliate thereof, receives any compensation from
the Trust, the Company or Nations Portfolios for serving as a trustee, director
or officer of the Trust, the Company or Nations Portfolios. The Trust, the
Company and Nations Portfolios pay each unaffiliated Trustee or Director an
annual fee of $1,000 ($3,000 for the Chairman of the Board), plus $500 per Fund
and an additional $1,000 for each in-person board meeting, and $500 for each
telephonic board meeting attended. The Trust, the Company and Nations Portfolios
also reimburse expenses incurred by each unaffiliated Trustee or Director in
attending such meetings.
The Trust's, the Company's and Nations Portfolio's eligible Trustees or
Directors, respectively, may participate in a non-qualified deferred
compensation 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 is tied to the rate of return of the
eligible mutual funds selected by the participants or, if no funds are selected,
to the rate of return of Nations Treasury Fund, a fund of the Company. The
expense for the deferred compensation and retirement plan is included in
"Trustees/Directors fees and expenses" in the Statements of Operations.
41
<PAGE> 44
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
3. SHAREHOLDER SERVICING AND DISTRIBUTION PLANS.
The Trust, the Company and Nations Portfolios each have adopted shareholder
administration plans (each an "Administration Plan") for Primary B Shares of
each Fund; 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 B Shares and Investor
C Shares of each Fund; and a distribution plan ("Distribution Plan") pursuant to
Rule 12b-1 for Investor B Shares and Investor C Shares of each Fund
(collectively, the "Plans"). The Administration Plan permits the Funds to
compensate institutions for shareholder administration services provided to
their customers that own Primary B Shares. 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 A Shares of Nations Short-Term Income Fund. 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 B
Shares or Investor C Shares, respectively. Payments under the Plans are accrued
daily and paid monthly at a rate set, from time to time, by the distributor.
Fees incurred pursuant to the Plans are charged as expenses of each Fund
directly to the Primary B Shares, Investor A Shares, Investor B Shares and
Investor C Shares, respectively.
For the six months ended September 30, 1997, the effective rates incurred by the
Funds, as a percentage of average daily net assets, pursuant to the plans were
as follows:
<TABLE>
<CAPTION>
PRIMARY B INVESTOR B INVESTOR B INVESTOR C INVESTOR C
ADMINISTRATION INVESTOR A DISTRIBUTION SERVICING DISTRIBUTION SERVICING
FUND PLAN PLAN PLAN* PLAN PLAN* PLAN
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Nations Short-Term Income Fund........... 0.35% 0.20% 0.10% 0.25% 0.10% 0.25%
Nations Short-Intermediate Government
Fund................................... 0.35% 0.20% 0.42% 0.25% 0.34% 0.25%
Nations Government Securities Fund....... 0.50% 0.25% 0.45% 0.25% 0.36% 0.25%
Nations Strategic Fixed Income Fund...... 0.50% 0.20% 0.45% 0.25% 0.35% 0.25%
Nations U.S. Government Bond Fund........ 0.50% 0.25% 0.55% 0.25% 0.40% 0.25%
Nations Diversified Income Fund.......... 0.50% 0.25% 0.54% 0.25% 0.36% 0.25%
Nations Global Government Income Fund.... 0.50% 0.25% 0.70% 0.25% 0.37% 0.25%
</TABLE>
- ---------------
* The Investor B Distribution Plan and Investor C Distribution Plan rates
changed effective August 1, 1997.
In addition, a shareholder servicing plan has been adopted for the Investor A
Shares of the Nations Short-Term Income Fund. For the six months ended September
30, 1997, no fees were incurred by the Fund pursuant to the plan.
A substantial portion of the fees paid pursuant to the plans described above are
paid to affiliates of NationsBank and NBAI.
4. PURCHASES AND SALES OF SECURITIES.
The aggregate cost of purchases and proceeds from sales of securities, excluding
U.S. government securities and short-term investments, for the six months ended
September 30, 1997 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-----------------------------
<S> <C> <C>
Nations Short-Term Income Fund.................................... $ 67,520,960 $ 60,767,714
Nations Short-Intermediate Government Fund........................ -- 530,236
Nations Strategic Fixed Income Fund............................... 836,657,301 553,393,994
Nations Diversified Income Fund................................... 38,591,557 14,749,420
Nations Global Government Income Fund............................. 16,521,842 15,852,618
</TABLE>
42
<PAGE> 45
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
The aggregate cost of purchases and proceeds from sales of long-term U.S.
government securities for the six months ended September 30, 1997 were as
follows:
<TABLE>
<CAPTION>
PURCHASES SALES
---------------------------------
<S> <C> <C>
Nations Short-Term Income Fund................................. $ 25,360,742 $ 34,073,150
Nations Short-Intermediate Government Fund..................... 2,508,133,775 2,355,914,656
Nations Government Securities Fund............................. 349,835,741 355,527,448
Nations Strategic Fixed Income Fund............................ 2,273,574,891 2,991,276,359
Nations U.S. Government Bond Fund.............................. 98,961,586 103,246,430
Nations Diversified Income Fund................................ 302,684,353 281,023,622
Nations Global Government Income Fund.......................... 7,264,774 8,727,254
</TABLE>
At September 30, 1997, aggregate gross unrealized appreciation and unrealized
depreciation for tax purposes were as follows:
<TABLE>
<CAPTION>
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION
----------------------------
<S> <C> <C>
Nations Short-Term Income Fund....................................... $ 2,092,873 $ 843,150
Nations Short-Intermediate Government Fund........................... 4,244,662 427,823
Nations Government Securities Fund................................... 1,492,674 99,283
Nations Strategic Fixed Income Fund.................................. 26,415,615 1,904,030
Nations U.S. Government Bond Fund.................................... 2,195,021 106,978
Nations Diversified Income Fund...................................... 4,460,453 500,065
Nations Global Government Income Fund................................ 558,487 1,592,132
</TABLE>
5. SHARES OF BENEFICIAL INTEREST/CAPITAL STOCK.
As of September 30, 1997, an unlimited number of shares without par value were
authorized for the Trust, 420,000,000,000 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. The Trust's
Declaration of Trust authorizes the Board of Trustees to classify or reclassify
any authorized, but unissued shares into one or more additional classes or
series of shares. See Schedule of Capital Stock Activity.
6. 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 a straight-line basis over a period of five years from commencement
of operations. In the event that any of the shares issued by the Funds to their
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 redemption. All such costs for
Nations Short-Term Income Fund, Nations Short-Intermediate Government Fund,
Nations Government Securities Fund and Nations U.S. Government Bond Fund have
been fully amortized.
7. FOREIGN SECURITIES.
Nations Global Government Income 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.
43
<PAGE> 46
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
8. LINE OF CREDIT.
The Trust, the Company and Nations Portfolios participate in an uncommitted line
of credit provided by BONY under a line of credit agreement dated February 28,
1997 (the "Agreement"). Advances under the Agreement are taken primarily for
temporary or emergency purposes, including the meeting of redemption requests
that otherwise might require the untimely disposition of securities. Under the
Agreement, each Fund may borrow up to the lesser of $25 million or 25% of its
net assets. Interest on borrowings is payable at the Federal Funds Rate plus
0.50% on an annualized basis. The Agreement requires, among other things, that
each participating Fund maintain a ratio of no less than 4 to 1 net assets (not
including funds borrowed pursuant to the agreement) to aggregate amount of
indebtedness pursuant to the agreement.
At September 30, 1997, there were no loans outstanding under this Agreement.
Borrowings for the six months ended September 30, 1997 by the Funds under each
agreement are disclosed below:
<TABLE>
<CAPTION>
INTEREST
MAXIMUM AVERAGE AVERAGE RATE
AMOUNT AMOUNT AVERAGE DEBT ------------ INTEREST
FUND OUTSTANDING OUTSTANDING SHARES PER SHARE HIGH LOW EXPENSE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Nations Short-Term Income Fund.......... $ 100,000 $ 546 28,421,067 $0.00(a) 6.02% 6.02% $ 17
</TABLE>
- ---------------
(a) Amount represents less than $0.01 per share.
The average amount outstanding was calculated by adding the borrowings at the
end of each day and dividing the sum by the number of days in the six months
ended September 30, 1997.
9. LENDING OF PORTFOLIO SECURITIES.
Under an agreement with BONY, dated July 23, 1997, the Funds have the ability to
lend their securities to approved brokers, dealers and other financial
institutions. Loans of portfolio securities are collateralized by cash, in an
amount at least equal to 102% of the market value of the securities on loan.
Generally, in the event of counterparty default, the Fund has the right to use
the collateral to offset losses incurred. There would be a potential loss to the
Fund in the event the Fund is delayed or prevented from exercising its right to
dispose of the collateral. Generally, in the event of counterparty default, the
Fund has the right to use the collateral to offset losses incurred. There would
be a potential loss to the Fund in the event the Fund is delayed or prevented
from exercising its rights to dispose of the collateral.
At September 30, 1997, the following Funds had securities on loan:
<TABLE>
<CAPTION>
FUND MARKET VALUE % OF NET ASSETS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nations Short-Intermediate Government Fund................................ $ 63,113,570 9.87%
Nations Government Securities Fund........................................ 34,091,313 23.73
Nations Strategic Fixed Income Fund....................................... 93,859,234 4.56
Nations Global Government Income Fund..................................... 4,891,581 11.43
</TABLE>
10. CAPITAL LOSS CARRYFORWARD.
At March 31, 1997, the following Funds had available for Federal income tax
purposes the following unused capital losses expiring March 31:
<TABLE>
<CAPTION>
FUND 2001 2002 2003 2004 2005
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nations Short-Term Income Fund...... -- $ 6,266,621 $ 650,652 -- $ 12,596
Nations Short-Intermediate
Government Fund................... $ 742,400 14,325,900 -- -- 6,939,350
Nations Government Securities
Fund.............................. -- 2,565,227 6,633,456 -- 2,302,378
Nations Strategic Fixed Income
Fund.............................. 1,218,818 -- 1,054,686 $ 1,368,677 18,774,009
Nations Diversified Income Fund..... -- -- -- -- 3,351,263
</TABLE>
44
<PAGE> 47
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
Under the current tax law, capital losses realized after October 31, may be
deferred and treated as occurring on the first day of the following fiscal year.
For the year ended March 31, 1997, the following Funds have elected to defer
losses occurring between November 1, 1996 and March 31, 1997 under these rules:
<TABLE>
<CAPTION>
POST-OCTOBER CAPITAL
-----------------------------
LONG TERM
SHORT TERM (GAIN)/LOSS
FUND LOSS DEFERRAL DEFERRAL
- ----------------------------------------------------------------------------------
<S> <C> <C>
Nations Short-Intermediate Government Fund......... $ 3,013,169 $(177,210)
Nations Government Securities Fund................. 1,327,435 203,060
Nations Diversified Income Fund.................... 361,140 (23,167)
</TABLE>
<TABLE>
<CAPTION>
POST-OCTOBER
CURRENCY
LOSS
FUND DEFERRAL
- ------------------------------------------------------------------------------
<S> <C>
Nations Global Government Income Fund........................... $ 50,744
</TABLE>
11. REORGANIZATIONS.
On August 22, 1997, certain Nations Funds, as listed below (each an "Acquiring
Fund"), acquired the assets and certain liabilities of the Nations Common Trust
Funds, also listed below (each an "Acquired Fund"), in a tax-free exchange for
shares of the Acquiring Fund, pursuant to a plan of reorganization approved by
the Acquired Fund's shareholders. Total shares issued by the Acquiring Fund, the
value of the shares issued by the Acquiring Fund, the total net assets of the
Acquired Fund and the Acquiring Fund, the total net assets of each Acquiring
Fund after the acquisition and any unrealized appreciation included in the
Acquired Fund's total net assets at the acquisition date are as follows:
<TABLE>
<CAPTION>
VALUE OF TOTAL NET
SHARES SHARES TOTAL NET TOTAL NET ASSETS OF
ISSUED BY ISSUED BY ASSETS OF ASSETS OF ACQUIRING
ACQUIRING ACQUIRED ACQUISITION ACQUIRING ACQUIRING ACQUIRED ACQUIRING FUND AFTER
FUND FUND DATE FUND FUND FUND FUND ACQUISITION
- ----- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Nations Short-Term Nations Common Trust
Income Fund Short-Term Income 08/22/97 28,299,082 $275,916,054 $275,916,054 $ 201,134,137 $ 477,050,191
Fund
Nations Government Nations Common Trust
Securities Fund Mortgage Backed 08/22/97 4,714,190 45,209,085 45,209,085 100,213,066 145,422,151
Securities Fund
Nations Strategic Nations Common Trust
Fixed Income Fund Strategic Fixed 08/22/97 99,909,128 987,102,187 987,102,187 1,095,669,960 2,107,231,236
Income Fund
Nations Strategic Nations Common Trust
Fixed Income Fund Bank South Fixed 08/22/97 2,475,616 24,459,089 24,459,089 1,095,669,960 2,107,231,236
Income Fund
<CAPTION>
ACQUIRED
FUND
ACQUIRING UNREALIZED
FUND APPRECIATION
-------------------------------------
<S> <C>
Nations Short-Term
Income Fund $ 168,997
Nations Government
Securities Fund (31,371)
Nations Strategic
Fixed Income Fund 4,084,790
Nations Strategic
Fixed Income Fund 145,289
</TABLE>
45
<PAGE> 48
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
On May 16, 1997 and on May 23, 1997, certain Nations Funds, as listed below
(each an "Acquiring Fund"), acquired the assets and certain liabilities of The
Pilot Funds, also listed below (each an "Acquired Fund"), in a tax-free exchange
for shares of the Acquiring Fund, pursuant to a plan of reorganization approved
by the Acquired Fund's shareholders. Total shares issued by the Acquiring Fund,
the value of the shares issued by the Acquiring Fund, the total net assets of
the Acquired Fund and the Acquiring Fund, the total net assets of each Acquiring
Fund after the acquisition and any unrealized appreciation included in the
Acquired Fund's total net assets at the acquisition date are as follows:
<TABLE>
<CAPTION>
VALUE OF TOTAL NET
SHARES SHARES TOTAL NET TOTAL NET ASSETS OF
ISSUED BY ISSUED BY ASSETS OF ASSETS OF ACQUIRING
ACQUIRING ACQUIRED ACQUISITION ACQUIRING ACQUIRING ACQUIRED ACQUIRING FUND AFTER
FUND FUND DATE FUND FUND FUND FUND ACQUISITION
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Nations Short- Pilot Intermediate
Intermediate U.S. Government
Government Fund Securities Fund 05/16/97 57,615,801 $232,196,393 $232,196,393 $448,240,118 $ 680,436,512
Nations Strategic Pilot Diversified
Fixed Income Fund Bond Fund 05/16/97 9,988,629 97,180,071 97,180,071 976,332,670 1,073,512,741
Nations U.S. Pilot U.S. Government
Government Bond Securities Fund
Fund 05/23/97 14,750,066 150,058,265 150,058,265 -- 150,058,265
<CAPTION>
ACQUIRED
FUND
ACQUIRING UNREALIZED
FUND APPRECIATION
--------- ------------
<S> <C>
Nations Short-
Intermediate
Government Fund $ (2,072,892)
Nations Strategic
Fixed Income Fund 378,365
Nations U.S.
Government Bond
Fund (234,247)
</TABLE>
12. SUBSEQUENT EVENT.
Effective October 1, 1997, Patrick Frith replaces Brad Pope as Portfolio Manager
of Nations Short-Term Income Fund.
46
<PAGE> 49
[GRAPHIC DEPICTING BASKETS]
<PAGE> 50
--------------------
NATIONS BULK RATE
FUNDS U.S. POSTAGE
PAID
P.O. Box 32602 N READING, MA
Charlotte, NC 28234-4602 PERMIT NO.
Toll Free 1-800-982-2271 105
--------------------
SAR3 97495 9/97
