<PAGE> 1
NATIONS
FUNDS
Investments for A Lifetime(SM)
International
Funds
Annual Report For The Year Ended March 31, 1997
<PAGE> 2
<TABLE>
<S> <C>
NOT FDIC- MAY LOSE VALUE
INSURED NO BANK GUARANTEE
</TABLE>
NATIONS FUNDS DISTRIBUTOR: STEPHENS INC. STEPHENS INC., WHICH IS NOT AFFILIATED
WITH NATIONSBANK, N.A., IS NOT A BANK AND SECURITIES OFFERED BY IT ARE NOT
GUARANTEED BY ANY BANK OR INSURED BY THE FDIC. STEPHENS INC., MEMBER NYSE-SIPC.
NATIONS FUNDS INVESTMENT ADVISER: NATIONSBANC ADVISORS, INC.
NATIONS FUNDS INVESTMENT SUB-ADVISERS: TRADESTREET INVESTMENT ASSOCIATES, INC.
AND GARTMORE GLOBAL PARTNERS.
<PAGE> 3
NATIONS FUND
DEAR SHAREHOLDER:
We are pleased to report to you on the activities and investment results of the
Nations Funds international mutual funds for the fiscal year ended March 31,
1997.
Over the past twelve months, the world's major economies have moved out of step
with one another. The U.S. economy was strong during the period, while the U.K.
economy, although initially subdued, enjoyed a strong recovery. Continental
Europe experienced patchy, though modest growth, which was insufficient to stop
a rise in unemployment. The Japanese economy was volatile, with a bullish phase
at the outset of the period fading as the year wore on, but eventually succeeded
by a re-acceleration towards the end of the reporting period. Growth in the
Pacific Rim slowed, though remained strong in absolute terms, while growth in
non-Asian emerging markets, particularly in Latin America, accelerated sharply
during the year.
The combination of modest economic growth and continued low inflation resulted
in positive returns, in local currency returns, from international equities in
Europe and the U.K. and several emerging markets, notably in Latin America.
However, Japan, still struggling to climb out of its long recession, and Asia
Pacific, hampered by rising interest rates and an export slowdown, suffered
negative returns. A generally appreciating U.S. dollar adversely impacted
returns from most markets with the notable exception being the U.K., where
sterling's strength, particularly late in the period, resulted in returns, in
U.S. dollar terms, being boosted by more than 10%, to just under 29%. Core
Continental European currencies and the yen were both significantly weaker
against the dollar, reducing Continental Europe's 35% return, in local currency
terms, to just 19% in U.S. dollars. For Japan, a decline of 14% translated into
an even steeper fall of over 25%, in U.S. dollar terms. This sharp decline and
the adverse currency move limited overall returns in international markets, as
measured by the Morgan Stanley Capital International Europe, Australia and Far
East Index, to an increase of just 1.5% compared with a 20% return for the
Standard & Poor's 500 Composite Stock Price Index. Global bond markets rose 8.3%
in local currency terms, but U.S. dollar strength reduced the increase to just
under 4%, in U.S. dollar terms.
Looking ahead, 1997 should evidence a year of expansion for most economies, with
Asia enjoying a more favorable export performance, Continental Europe responding
to the huge monetary stimulus of 1996 and Japan progressing with its recovery,
albeit at a slow pace. Earnings growth should not only be positive in all major
international markets but faster than that of the U.S. in aggregate. Given the
relative significant underperformance of international equities to U.S. equities
over the last two years, we are comfortable that, subject to short-term
setbacks, international markets are poised to offer the same opportunities that
U.S. markets have offered.
Thank you for your continued confidence in the Nations Funds family of funds.
Sincerely,
/s/ A. Max Walker /s/ Mark H. Williamson
A. Max Walker Mark H. Williamson
President and Chairman of the Board President, NationsBanc Advisors, Inc.
March 31, 1997
1
<PAGE> 4
THE NATIONS FUNDS ADVANTAGE
A family of mutual funds provides investors with a number of advantages,
including the ability to shift investment assets among funds as their financial
objectives or market conditions change. The Nations Funds family of mutual
funds includes a broad array of professionally managed domestic and
international stock, bond and money market funds advised by NationsBanc
Advisors, Inc. The family was designed to accommodate a wide variety of
investment objectives across the risk/reward spectrum.
<TABLE>
<CAPTION>
POTENTIAL RETURN
MONEY SHORTER INTERMEDIATE LONGER TERM BALANCED EQUITY
MARKET MATURITY MATURITY DOMESTIC FUNDS INCOME
FUNDS BOND FUNDS BOND FUNDS AND GLOBAL FUNDS
BOND FUNDS
<S> <C> <C> <C> <C> <C>
- ------ ---------- ---------- ----------- --------- -------
*Nations *Nations Short- *Nations *Nations Global *Nations *Nations
Prime Fund Intermediate Strategic Fixed Government Balanced Equity Income
*Nations Government Income Fund Income Fund Assets Fund Fund
Government Fund *Nations *Nations
Money Market *Nations Intermediate Diversified
Fund Short-Term Municipal Income Fund
*Nations Income Fund Bond Fund *Nations
Treasury Fund *Nations Short- *Nations Government
*Nations Tax Term Municipal State-Specific Securities Fund
Exempt Fund Income Fund Intermediate *Nations
Municipal Municipal
Bonds Funds Income Fund
*Nations State- --------------
Specific Long-
Term Municipal
Bond Funds ----GROWTH & INCOME--->
- --------------------------------CURRENT INCOME -------------------------------->
<------STABILITY--------- RISK (VARIABILITY)-->
</TABLE>
For specific information on developing an investment portfolio that will more
closely target your investment objectives, contact your investment
representative or Nations Fund for fund brochures and prospectuses at
(800) 982-2271.
The Nations Funds family also includes Nations Equity Index Fund, which seeks
to match the performance of the S&P 500 before fees and expenses.
2
<PAGE> 5
<TABLE>
<CAPTION>
GROWTH LARGE SMALLER INTERNATIONAL REGION-SPECIFIC
AND INCOME CAPITALIZATION CAPITALIZATION EQUITY FUNDS INTERNATIONAL
FUNDS GROWTH FUNDS GROWTH FUNDS FUNDS
- ---------- -------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C>
*Nations *Nations *Nations *Nations *Nations
Value Fund Disciplined Emerging International Emerging
Equity Fund Growth Fund Equity Fund Markets Fund
*Nations Capital *Nations
Growth Fund Pacific Growth
Fund
------------- AGGRESSIVE GROWTH ----------------->
- -------- GROWTH ------------->
</TABLE>
SPECIALTY FUNDS
MANAGED INDEX FUNDS
-------------------
Nations Managed SmallCap Index Fund
Nations Managed Index Fund
3
<PAGE> 6
TIME AND DIVERSIFICATION
CAN SMOOTH OUT
MARKET VOLATILITY
During the past two years, many investors have enjoyed some of the most
rewarding stock market gains in history. So if you're relatively new to the
financial markets, the market fluctuations over recent months may be an
unsettling experience.
We can't say with certainty when this period of market volatility may end. But
we can say that it's an entirely normal occurrence. In fact, the history of the
market shows both periods of growth and periods of downturns. The good news is
that downturns are often short-lived, and have historically been followed by
renewed growth.
So instead of focusing on the market's daily ups and downs, keep focused on your
long-term goals. By staying invested, you won't miss out on the potential for
later gains from a market rebound. You may also want to take advantage of these
helpful strategies:
- - PUT DIVERSIFICATION ON YOUR SIDE. You may lessen the effect of market
fluctuations when you maintain a diversified portfolio of stocks, bonds, and
cash investments such as money market funds. In addition, mutual funds make it
easy to diversify within each asset class. For example, you can add an
international fund if your portfolio is largely domestic equities. Or you can
spread your fixed-income component across multiple bond funds that emphasize
different maturities and credit qualities.
- - REBALANCE YOUR ASSETS. Your original investment allocation among stocks, bonds
and money market funds may have shifted over time -- for example, with recent
gains, you may have a larger percentage of your investments in stocks than you
expect. If needed, you should rebalance your allocations in line with your
long-term strategy.
- - CONSIDER DOWNTURNS A BUYING OPPORTUNITY. By investing regular amounts in a
Nations Funds account on a set interval, regardless of the market's direction,
you wind up purchasing more shares when the price is low and fewer when the
price is high. This strategy, called dollar-cost averaging, may help lessen
the impact of market swings by averaging the cost of your shares over time.
And, with a systematic investment plan (SIP), you can have a set amount
automatically withdrawn from your bank checking or savings account and
invested directly into your Nations Funds account on a monthly or quarterly
basis.
Please note that dollar-cost averaging does not assure a profit or protect
against loss in declining markets. Since such a plan involves continuous
investment in securities, regardless of fluctuating price levels, you should
carefully consider your financial ability to continue your purchases through
periods of fluctuating price levels.
So remember, if you have a sound long-term investment program, and your
short-term needs are being met, your original decisions should still serve you
well. Simply by staying patient, you may increase your likelihood of reaching
your investment goals. For more information, please call Nations Funds at
1-800-321-7854.
4
<PAGE> 7
NATIONS INTERNATIONAL EQUITY FUND
PERFORMANCE AND COMMENTARY
PORTFOLIO MANAGER
Stephen Watson is Principal Portfolio Manager of Nations International
Equity Fund and is the Head of the International and Global Portfolio Team for
Gartmore Global Partners, investment sub-adviser to the Fund.
INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth by investing primarily in equity
securities of non-United States companies in Europe, Australia, the Far East and
other regions, including developing countries.
PERFORMANCE REVIEW
For the one-year period ended March 31, 1997, Nations International Equity
Fund Investor A Shares provided a total return of 1.08%.
PORTFOLIO MANAGER COMMENTARY
In the following interview, Mr. Watson shares his views on financial market
conditions and Fund performance for the one-year period ended March 31, 1997.
BRIEFLY DESCRIBE YOUR OVERALL INVESTMENT PHILOSOPHY AND STYLE.
Our overall investment philosophy emphasizes growth at a reasonable price
for the selection of regions, countries and stocks. This philosophy implies a
combination of good growth company stock selection with active regional and
country allocation aimed at strategically overweighting growing markets, while
tactically avoiding those with less favorable prospects. We believe this
provides the greatest potential for attractive risk-adjusted returns.
PLEASE DESCRIBE THE MARKET CONDITIONS THAT PREVAILED DURING THE REPORTING
PERIOD.
World markets, with exceptions that included some of the Pacific Rim
economies, were characterized by low interest rates, low inflation and a
depreciating currency against the U.S. dollar during the year under review. Weak
growth, combined with anti-inflationary monetary policies, held back markets in
the tiger economies of Asia, although Hong Kong and Malaysia rose strongly over
the period, contributing to a strong return for the region as a whole.
Continental European markets were also marked by low growth, but an increasingly
positive monetary environment as the year progressed helped equity markets
deliver above-average returns. The U.K., although at a later stage in the
economic cycle, also produced respectable returns. These were enhanced in U.S.
dollar terms by strong sterling appreciation during the final quarter. Japan
appeared to be at the start of another bull phase at the outset of the period,
but concerns about the level of economic growth and tighter fiscal policies
dragged the market into extreme negative territory for the period as a whole.
Emerging markets, particularly in Latin America, strengthened as economies
showed signs of sustained economic growth.
HOW WAS THE FUND POSITIONED OVER THE PERIOD?
The Fund seeks to provide U.S. investors with well-diversified exposure to
international markets, with an orientation toward faster growing economies that,
we feel, have the potential for enhanced returns. During the period under
review, the Fund held an underweight position in Continental Europe, the U.K.,
and Japan, and an overweight position in the Pacific Rim and non-Asian emerging
markets. The Fund's marginal underperformance, relative to its benchmark, the
Morgan Stanley Capital International Europe, Australia and Far East Index, was
mainly attributable to being underweight Continental Europe and the U.K. and,
within Asia, being overweight in the poorly performing countries of Korea and
Thailand.
In Continental Europe, the Fund moved from a neutral position at the
beginning of the year to being underweight more recently because, by most of our
valuation measures, equity markets in the region started to look extremely
stretched. The Fund remained underweight in the U.K. because of the prospect of
tighter monetary policy (an interest rate cut was made in October) and the
proximity of an election. The Fund's position in Japan, although underweight,
was most likely higher than many other international equity funds, as we were
more positive about Japan's longer-term growth prospects than the consensus
view. The Fund's exposure to non-Asian emerging markets more than doubled,
particularly
5
<PAGE> 8
in the recovering markets of Brazil, Chile and Argentina. Relative to Asia,
however, exposure to Latin America remained small.
Toward the end of 1996, we removed our defensive currency management
strategy in favor of the U.S. dollar against the yen, on the view that further
substantial yen weakness was unlikely. This was followed by the removal of the
Fund's positions against the French and Swiss francs because the dollar had
risen beyond our target levels against these currencies.
WHAT COUNTRIES OR REGIONS REPRESENTED WITHIN THE FUND EXHIBITED THE BEST
PERFORMANCE AND WHY?
Continental Europe, the U.K. and the Pacific Rim (ex-Japan) regions
delivered the highest returns, in U.S. dollar terms, during the period under
review. However, within Asia, performances were varied, with Hong Kong, Malaysia
and Taiwan very strong. Hong Kong was boosted by a buoyant property sector and a
favorable U.S. interest rate environment, while Malaysia enjoyed good growth, a
recovery in the trade account, and strong corporate earnings. In Taiwan, export-
oriented stocks were buoyant on the back of an improved outlook for global sales
in the coming year. Within Continental Europe, Sweden, Spain and the Netherlands
were top performers. Spain's equity market benefited from a strong bond market
while both Sweden and the Netherlands benefited from good corporate results. The
U.K. market did well in local currency terms, on the back of improving
fundamentals and this was augmented, in U.S. dollar terms, as a result of
sterling appreciation.
WHAT ARE SOME EXAMPLES OF COMPANIES THAT PERFORMED PARTICULARLY WELL?*
During the year under review, several of the Fund's holdings produced
outstanding returns. In Continental Europe, these included BIC, the French
plastic pens, razors and lighter manufacturer; Pinault Printemps, the French
retail chain; SGL Carbon, the German maker of specialty graphite products; and
ABN Amro, the Dutch bank. Another notable stock was the Swiss pharmaceutical
company, Novartis, which resulted from the merger of Ciba-Geigy and Sandoz and
has benefited from cost cutting plans following the merger. Strong performers in
the U.K. included Barclays Bank, one of the country's leading clearing banks;
Enterprise Oil, an exploration and production company, and Zeneca, the
pharmaceutical company. In Japan, the leaders included NCR Japan, an electronics
and computer manufacturer; Sony, consumer electronics, and TDK, a magnetic tape
manufacturer. In Taiwan, the Fund's holding in the Taiwan American Fund has done
very well. In Chile, holdings in Enersis and Telecom de Chile have increased in
value.
WHAT IS YOUR OUTLOOK FOR ECONOMIC GROWTH GOING FORWARD AND HOW WILL YOU POSITION
THE FUND ACCORDINGLY?
During the coming year, we believe that international markets, in general,
are poised for an upturn in economic growth, although the direction of U.S.
interest rates could affect the level and sustainability of such a trend,
particularly in export-oriented Asian markets. Although growth in Japan is
likely to be modest, a positive environment for interest rate-sensitive sectors
and exports leads us to be more positive than the consensus view. Accordingly,
we may further increase exposure to the market. While growth prospects in the
U.K. are strong, official interest rates are likely to be raised shortly after
the election in May and the rise in sterling has slowed the growth in export
volumes. We will be monitoring the situation in the U.K. closely, although we
believe the market has already discounted a further interest rate rise.
Continental European equities look expensive on nearly all of our valuation
measures, so the Fund is likely to maintain an underweight position.
The calm reaction to the death of Deng Xiaoping in China added to our
confidence regarding the outlook for most Pacific Rim markets, with the notable
exception of Thailand, so the Fund is likely to remain overweight the region. We
expect non-Asian emerging markets, particularly in Latin America, to continue to
grow in response to improved macroeconomic conditions. We begin the year having
reached our 5% target exposure to the region and will watch for further
developments.
- ---------------
* Portfolio characteristics and outlook were current as of March 31, 1997, are
subject to change and may not be representative of current characteristics and
outlook. Also, the outlook of this Fund's portfolio manager may differ from
that of other Nations Funds' portfolio managers.
6
<PAGE> 9
NATIONS FUNDS
Nations International Equity Fund
[PIE CHART]
<TABLE>
<CAPTION>
- ------------------------------------ --------------------------------------
COUNTRY BREAKDOWN AS A % OF TOP TEN PORTFOLIO HOLDINGS AS A
NET ASSETS AS OF 3/31/97 % OF NET ASSETS AS OF 3/31/97
<S> <C> <C> <C> <C>
Japan 23.4% 1. Novartis AG 1.9%
Other 16.6% 2. Roche Holdings AG 1.8
Great Britain 13.4% 3. Zurich Versicherungs 1.4
France 7.6% 4. Telecom Italia Mobile 1.3
Germany 7.3% 5. BIC 1.2
Switzerland 6.9% 6. TOTAL, "B" Shares ord 1.2
Hong Kong 6.4% 7. Fortis Amev N.V. 1.1
Netherlands 5.9% 8. AXA-UAP 1.1
Malaysia 4.0% 9. Banco Santander SA ord 1.1
Australia 3.3% 10. Elsevier N.V. 1.1
Sweden 2.7%
Singapore 2.5%
</TABLE>
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR A SHARES AS OF 3/31/97
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
INVESTOR A SHARES
- ---------------------------------
<S> <C>
Year Ended 03/31/97 1.08%
Since Inception (06/03/92)
through 03/31/97 6.63%
</TABLE>
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations
International Equity Fund on
June 3, 1992 (inception date).
Figures for the Morgan Stanley
Capital International EAFE
Index ("MSCI EAFE Index"), an
unmanaged index used to
portray the pattern of common
stock price movement in
Europe, Australia and the Far
East, include reinvestment of
dividends.
<TABLE>
<CAPTION>
Measurement Period Growth of Investment with
(Quarterly) MSCI EAFE Index Distributions Reinvested
<S> <C> <C>
June 3, 1992 10000 10000
9526 9748
9670 9508
9296 9114
10411 9620
May 31, 1993 11458 9932
12218 10822
12323 11566
12754 11458
May 31, 1994 13406 11726
13419 12158
13282 11821
13529 11291
May 31, 1995 13628 11541
14196 12370
14771 12791
Mar. 31, 1996 15197 13487
15438 13707
15418 13656
15664 13833
Mar. 31, 1997 15418 13633
</TABLE>
- --------------------------------------------------------------------------------
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
Average annual total returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming reinvestment
of dividends.
Portfolio characteristics and outlook were current as of March 31, 1997, are
subject to change and may not be representative of current characteristics and
outlook.
7
<PAGE> 10
NATIONS FUNDS
Nations International Equity Fund
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR C, INVESTOR N, PRIMARY A AND PRIMARY B
SHARES AS OF MARCH 31, 1997
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
INVESTOR C SHARES
- ----------------------------------------------
<S> <C>
Year Ended 03/31/97 0.27%*
Year Ended 03/31/97 0.77%
Since Inception (06/17/92) through
03/31/97 6.58%
</TABLE>
*adjusted for maximum contingent deferred
sales charge of 0.50% when Investor C Shares
are redeemed within one year of purchase
<TABLE>
<CAPTION>
INVESTOR N SHARES
- ----------------------------------------------
<S> <C>
Year Ended 03/31/97 0.28%
Since Inception (06/07/93) through
03/31/97 7.21%
</TABLE>
<TABLE>
<CAPTION>
PRIMARY A SHARES
- ----------------------------------------------
<S> <C>
Year Ended 03/31/97 1.32%
Five Years Ended 03/31/97 8.24%
Since Inception (12/02/91) through
03/31/97 7.10%
</TABLE>
AGGREGATE TOTAL RETURN
<TABLE>
<CAPTION>
PRIMARY B SHARES**
- ----------------------------------------------
<S> <C>
Since Inception (06/28/96) through
03/31/97 (0.66)%
</TABLE>
The charts to the right show the growth in value of a hypothetical $10,000
investment in Investor C, Investor N, Primary A and Primary B Shares of
Nations International Equity Fund from the date each class of shares was
first offered. Figures for the Morgan Stanley Capital International EAFE
Index ("MSCI EAFE Index"), an unmanaged index used to portray the pattern
of common stock price movement in Europe, Australia and the Far East,
include reinvestment of dividends.
Each chart assumes the reinvestment of all distributions.
**Please note that the performance shown for Primary B Shares includes the
performance for Primary A Shares from their date of inception (12/2/91)
through 6/28/96, plus the performance for Primary B Shares from their date
of inception (6/28/96) through 3/31/97. The expense structures for Primary
A and Primary B Shares are similar, except that Primary B Shares are
subject to a shareholder servicing fee of up to 60 basis points. This
difference in expenses will result in a slight difference in the
performance of Primary A and Primary B Shares.
PERFORMANCE COMPARISONS
INVESTOR C SHARES AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
GROWTH OF
INVESTMENT
WITH
MEASUREMENT PERIOD MSCI EAFE DISTRIBUTIONS
(QUARTERLY) INDEX REINVESTED
<S> <C> <C>
JUNE 17, 1992 10000 10000
10151 9752
9759 9328
10929 9828
MAY 31, 1993 12028 10120
12826 11012
12937 11734
13389 11613
MAY 31, 1994 14073 11837
14087 12258
13943 11893
14203 11341
MAY 31, 1995 14306 11566
14902 12384
15506 12775
MAR. 31, 1996 15954 13464
16206 13660
16186 13598
16443 13770
MAR. 31, 1997 16186 13557
</TABLE>
INVESTOR N SHARES AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
GROWTH OF
INVESTMENT
WITH
MEASUREMENT PERIOD MSCI EAFE DISTRIBUTIONS
(QUARTERLY) INDEX REINVESTED
<S> <C> <C>
JUNE 7, 1993 10000 10000
10497 11012
10588 11734
10958 11613
MAY 31, 1994 11518 11837
11529 12258
11411 11893
11624 11341
MAY 31, 1995 11708 11566
12196 12384
12690 12775
MAR. 31, 1996 13057 13464
13263 13660
13247 13598
13457 13770
MAR. 31, 1997 13247 13567
</TABLE>
PRIMARY A AND PRIMARY B SHARES AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
GROWTH OF
INVESTMENT
WITH
MEASUREMENT PERIOD MSCI EAFE DISTRIBUTIONS
(QUARTERLY) INDEX REINVESTED
<S> <C> <C>
DEC. 2, 1991 10000 10000
10517 10416
9269 9700
MAY 31, 1992 9465 10171
9607 9934
9236 9523
10344 10071
MAY 31, 1993 11384 10393
12139 11338
12244 12114
12672 12023
MAY 31, 1994 13319 12310
13332 12771
13196 12429
13442 11876
MAY 31, 1995 13540 12147
14104 13034
14675 13479
MAR. 31, 1996 15099 14225
JUN. 28, 1996 15338 14463
15319 14421
15563 14621
MAR. 31, 1997 15319 14413
</TABLE>
- --------------------------------------------------------------------------------
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
Average annual and aggregate total returns are historical in nature and measure
net investment income and capital gain or loss from portfolio investments
assuming reinvestment of dividends.
8
<PAGE> 11
NATIONS PACIFIC GROWTH FUND
PERFORMANCE AND COMMENTARY
PORTFOLIO MANAGER
Seok Teoh is Principal Portfolio Manager of Nations Pacific Growth Fund.
She has been associated with Gartmore Global Partners, the Fund's investment
sub-adviser, since 1990 as the London based manager on its Far East Team.
INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth by investing primarily in equity
securities of companies in the Pacific Basin and the Far East (excluding Japan).
PERFORMANCE REVIEW
For the one-year period ended March 31, 1997, Nations Pacific Growth Fund
Investor A Shares provided a total return of 1.86%.
PORTFOLIO MANAGER COMMENTARY
In the following interview, Ms. Teoh shares her views on financial market
conditions and Fund performance for the one-year period ended March 31, 1997.
PLEASE DESCRIBE YOUR OVERALL INVESTMENT PHILOSOPHY AND STYLE.
Our overall investment philosophy is best characterized as growth at a
reasonable price. This philosophy is applied as appropriate for each specific
region or market in which we invest, with input from the overall firm asset
allocation process. For the Pacific Basin, this implies a combination of
bottom-up stock selection with risk controlled country allocation. Local
contacts, fundamental research and seasoned judgment are vital components in
capturing attractive issues and regional growth in the Pacific Basin and the Far
East.
PLEASE DESCRIBE THE MARKET CONDITIONS THAT PREVAILED DURING THE REPORTING
PERIOD.
The performance of Asian markets was divided between those that benefited
from a benign interest rate environment and resilient economy and those affected
by a downturn in global demand, particularly in semiconductors. During the past
twelve months, Hong Kong, Indonesia, Taiwan, Malaysia and the Philippines
rallied strongly. By contrast, Korea, Thailand and Singapore were weak,
depressed by concerns about slowing economic growth, reduced export demand and
poor corporate profits. The Thai stock market was also weighed down by worries
about the weakness of the finance and securities sector due to the high debt
levels in the corporate sector. Mid-capitalization stocks performed well in
Malaysia and interest rate sensitive stocks, primarily within the property and
banking sectors, outperformed in Hong Kong and Indonesia. In Taiwan,
export-oriented stocks were buoyant on the back of an improved outlook for
global sales in the coming year.
DID POLITICAL EVENTS IMPACT FUND PERFORMANCE?
Political events had a minor impact on the performance of stocks in Asia
during the period under review, although both the easing of tensions between
China and Taiwan at the outset of the period and the calm reaction to Deng
Xiaoping's recent death had a positive effect on markets as a whole. In
Thailand, a general election in November 1996, precipitated by the collapse of a
weak ruling coalition, failed to win an overwhelming mandate from a divided
electorate. However, investors were more preoccupied with the potential fallout
from bad loans in the finance and securities sector. In Singapore, a general
election early in January 1997 resulted in a strong win for the ruling party,
the PAP, which won back two out of four opposition seats. The market largely
shrugged off the election results as a foregone conclusion.
WHAT THEMES DID THE FUND EMPHASIZE AND WHERE WERE HOLDINGS CONCENTRATED?
We favored Taiwan during the year ended March 1997. This was largely due to
our expectations of a recovery in the earnings of export and trade-oriented
companies, such as electronics and shipping stocks. The Fund was well weighted
in both sectors. The portfolio was overweight in Hong Kong for most of the
period, largely because of the positive outlook for property prices, and this
was beneficial to Fund performance. However, by the end of 1996, the valuations
of the property sector were looking less attractive. We added to China-related
stocks during the course of the past twelve months. This
9
<PAGE> 12
was largely due to our forecasts for a rebound in the Chinese economy spurred by
an easing of monetary policy starting mid-1996. The Fund was well weighted in
infrastructure-related stocks in Malaysia, Indonesia and the Philippines. These
included toll-road operators and construction stocks. The outlook for
infrastructure spending over the longer term in these areas remains positive.
The Fund was also well weighted in bank stocks in Hong Kong, Malaysia and
Indonesia. These stocks are well exposed to capture the high economic growth
potential in these economies.
WHAT HOLDINGS WERE MOST BENEFICIAL TO PERFORMANCE AND WHY?*
A high weighting in property stocks in Hong Kong added to performance. The
Fund's core holdings in this sector included Sun Hung Kai Properties and Cheung
Kong Holdings. Heavy exposure to bank stocks in Hong Kong, Malaysia and
Indonesia also added to performance as this sector outperformed the other
sectors in these markets because of good earnings growth. Key investments in the
banking sector included HSBC Holdings and Malayan Bank. In Taiwan, the Fund's
holding in Siliconware Precision did particularly well.
WHAT IS YOUR OUTLOOK GOING FORWARD AND HOW WILL YOU POSITION THE FUND
ACCORDINGLY?
In the short-term, Asian markets are likely to be cautious given
nervousness after the recent sharp swings in the world's financial markets. The
Hong Kong market remains vulnerable to rising U.S. interest rates as the
country's currency (Hong Kong dollar) and interest rates are linked to those in
the U.S. The Hong Kong property sector is looking less attractive in terms of
current valuations. We have reduced exposure to the property sector in favor of
utility stocks with steady earnings growth and China-related stocks. The latter
should benefit from a continuing rebound in the Chinese economy this year. The
Fund continues to be well positioned in infrastructure-related stocks in
Malaysia as the earnings growth outlook in this sector remains positive. Taiwan
and Korea also look attractive given the potential for a recovery in both
economies this year. We would like to add to the Fund's position in these
countries on any price weakness, particularly to the Korean market where the
Portfolio is currently underweight. We are cautious towards Indonesia ahead of
the May elections and towards the Philippines which is beginning to overheat.
Thailand is also expected to remain problematic in the face of severe problems
in the financial sector and slower growth. Generally, however, we expect export
and Gross Domestic Product growth to accelerate across the region in 1997 and
valuations to remain relatively cheap.
- ---------------
* Portfolio characteristics and outlook were current as of March 31, 1997, are
subject to change and may not be representative of current characteristics and
outlook. Also, the outlook of this Fund's portfolio may differ from that of
other Nations Funds' portfolio managers.
10
<PAGE> 13
NATIONS FUNDS
Nations Pacific Growth Fund
- ---------------------------------------------
COUNTRY BREAKDOWN AS A % OF
NET ASSETS AS OF 3/31/97
[PIE CHART]
<TABLE>
<S> <C>
Hong Kong 34.8%
Malaysia 19.4%
Taiwan 9.5%
Singapore 9.4%
Indonesia 6.5%
Other 5.8%
Philippines 4.6%
Thailand 4.2%
South Korea 3.1%
Australia 2.7%
</TABLE>
-------------------------------------
TOP TEN PORTFOLIO HOLDINGS AS A
% OF NET ASSETS AS OF 3/31/97
<TABLE>
<C> <S> <C>
1. HSBC Holdings plc. 5.3%
2. Hutchison Whampoa Ltd. 4.3
3. Cheung Kong Holdings Ltd. 3.8
4. Taiwan American Fund Ltd. 3.5
5. Sun Hung Kai Properties 3.0
6. Malayan Banking Berhad 2.4
7. Hong Kong Electric Holdings Ltd. 2.2
8. Rashid Hussain Berhad 2.1
9. Development & Commercial Bank Holdings
Corporation 2.1
10. Konsortium Perkapalan 2.0
</TABLE>
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR A SHARES AS OF 3/31/97
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
INVESTOR A SHARES
- ---------------------------------
<S> <C>
Year Ended 03/31/97 1.86%
Since Inception (06/30/95)
through 03/31/97 2.50%
</TABLE>
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Pacific
Growth Fund on June 30, 1995
(inception date). The Morgan
Stanley Capital International
Combined Far East (ex-Japan)
Free Index ("MSCI Far East
Index") is an unmanaged,
capitalization-weighted index
that tracks 7 countries and
represents only those
securities that are available
for investment by
international investors; many
issues are still restricted to
domestic investors in certain
Pacific Basin countries.
<TABLE>
<CAPTION>
Measurement Period Growth of Investment with
(Quarterly) MSCI Far East Index Distributions Reinvested
<S> <C> <C>
June 30, 1995 10000 10000
9842 9700
10068 9731
Mar. 31, 1996 11042 10252
11014 10353
10857 10243
11190 10735
Mar. 31, 1997 10772 10443
</TABLE>
- --------------------------------------------------------------------------------
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
Average annual total returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming reinvestment
of dividends.
Portfolio characteristics and outlook were current as of March 31, 1997, are
subject to change and may not be representative of current characteristics and
outlook.
11
<PAGE> 14
NATIONS FUNDS
Nations Pacific Growth Fund
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR C, INVESTOR N, PRIMARY A AND PRIMARY B
SHARES AS OF MARCH 31, 1997
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
INVESTOR C SHARES
- ----------------------------------------------
<S> <C>
Year Ended 03/31/97 1.07%*
Year Ended 03/31/97 1.57%
Since Inception (06/30/95) through
03/31/97 2.04%
</TABLE>
*adjusted for maximum contingent deferred
sales charge of 0.50% when Investor C Shares
are redeemed within one year of purchase
<TABLE>
<CAPTION>
INVESTOR N SHARES
- ----------------------------------------------
<S> <C>
Year Ended 03/31/97 1.18%
Since Inception (06/30/95) through
03/31/97 1.75%
</TABLE>
<TABLE>
<CAPTION>
PRIMARY A SHARES
- ----------------------------------------------
<S> <C>
Year Ended 03/31/97 2.18%
Since Inception (06/30/95) through
03/31/97 2.78%
</TABLE>
AGGREGATE TOTAL RETURN
<TABLE>
<CAPTION>
PRIMARY B SHARES**
- ----------------------------------------------
<S> <C>
Since Inception (06/28/96) through
03/31/97 0.75%
</TABLE>
The charts to the right show the growth in value of a hypothetical $10,000
investment in Investor C, Investor N, Primary A and Primary B Shares of
Nations Pacific Growth Fund from the date each class of shares was first
offered. The Morgan Stanley Capital International Combined Far East
(ex-Japan) Free Index ("MSCI Far East Index") is an unmanaged,
capitalization-weighted index that tracks 7 countries and represents only
those securities that are available for investment by international
investors; many issues are still restricted to domestic investors in
certain Pacific Basin countries.
Each chart assumes the reinvestment of all distributions.
**Please note that the performance shown for Primary B Shares includes the
performance for Primary A Shares from their date of inception (6/30/95)
through 6/28/96, plus the performance for Primary B Shares from their date
of inception (6/28/96) through 3/31/97. The expense structures for Primary
A and Primary B Shares are similar, except that Primary B Shares are
subject to a shareholder servicing fee of up to 60 basis points. This
difference in expenses will result in a slight difference in the
performance of Primary A and Primary B Shares.
PERFORMANCE COMPARISONS
INVESTOR C SHARES AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
GROWTH OF
INVESTMENT
WITH
MEASUREMENT PERIOD MSCI FAR EAST DISTRIBUTIONS
(QUARTERLY) INDEX REINVESTED
<S> <C> <C>
JUNE 30, 1995 10000 10000
9842 9680
10068 9690
MAR. 31, 1996 11042 10200
11014 10290
10857 10170
11190 10650
MAR. 31, 1997 10772 10360
</TABLE>
INVESTOR N SHARES AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
GROWTH OF
INVESTMENT
WITH
MEASUREMENT PERIOD MSCI FAR EAST DISTRIBUTIONS
(QUARTERLY) INDEX REINVESTED
<S> <C> <C>
JUNE 30, 1995 10000 10000
9842 9690
10068 9698
MAR. 31, 1996 11042 10188
11014 10279
10857 10148
11190 10609
MAR. 31, 1997 10772 10309
</TABLE>
PRIMARY A AND PRIMARY B SHARES AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
GROWTH OF
INVESTMENT
WITH
MEASUREMENT PERIOD MSCI FAR EAST DISTRIBUTIONS
(QUARTERLY) INDEX REINVESTED
<S> <C> <C>
JUNE 30, 1995 10000 10000
9842 9710
10068 9745
MAR. 31, 1996 11042 10266
11014 10383
JUNE 28, 1996 10857 10282
11190 10773
MAR. 31, 1997 10772 10491
</TABLE>
- --------------------------------------------------------------------------------
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
Average annual and aggregate total returns are historical in nature and measure
net investment income and capital gain or loss from portfolio investments
assuming reinvestment of dividends.
12
<PAGE> 15
NATIONS EMERGING MARKETS FUND
PERFORMANCE AND COMMENTARY
PORTFOLIO MANAGER
Philip Ehrmann is Principal Portfolio Manager of Nations Emerging Markets
Fund and is the Head of the Gartmore Emerging Markets Team. Gartmore Global
Partners is the investment sub-adviser to the Fund.
INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth by investing primarily in equity
securities of companies in emerging market countries, such as those in Latin
America, Eastern Europe, the Pacific Basin, the Far East, Africa and India.
PERFORMANCE REVIEW
For the one-year period ended March 31, 1997, Nations Emerging Markets Fund
Investor A Shares provided a total return of 11.74%.
PORTFOLIO MANAGER COMMENTARY
In the following interview, Mr. Ehrmann shares his views on financial
market conditions and Fund performance for the one-year period ended March 31,
1997.
PLEASE DESCRIBE YOUR OVERALL INVESTMENT PHILOSOPHY AND STYLE.
Our overall investment philosophy is best characterized as growth at a
reasonable price. This philosophy is applied as appropriate for each specific
region or market in which we invest, with input from the overall firm asset
allocation process. With respect to emerging markets, this implies a combination
of bottom-up stock selection with risk controlled country allocation. The
integration of active stock selection with country allocation is necessary to
optimize the Fund's risk/return characteristics, as emerging markets are fast
changing.
The ability to move freely between markets to take advantage of improving
and avoid deteriorating economic fundamentals is important in the pursuit of an
active management style. Therefore, emphasis is placed on the larger, more
liquid securities available in the markets in which we invest.
PLEASE DESCRIBE THE MARKET CONDITIONS THAT PREVAILED DURING THE REPORTING
PERIOD.
Emerging markets regained their poise during the year under review after a
turbulent period over the previous two years, with the International Finance
Corporation Investables Index (IFC Index) rising by 11.4% in U.S. dollar terms.
Significantly, Latin America replaced Asia as the best performing region, with
notable gains in Brazil and Argentina, as those countries showed signs of
substantial, sustained growth while Asia's emerging markets - particularly Korea
and Thailand - suffered from a combination of restrictive monetary policies and
a decline in export demand. Also worth noting was Mexico, which rose more than
the IFC Index, helped by a buoyant export sector and improving fundamentals.
Malaysia also made impressive strides, although not rising above the IFC Index,
as corporate earnings improved and the economic outlook brightened. Also, the
nascent markets of Eastern Europe - Poland and Hungary, in particular - and
Russia appreciated sharply in response to international investor interest. In
contrast, the South African market fell from grace after two years of
outperformance, as interest rates rose in response to excessive consumer
borrowing and an embattled currency. India also fell back on profit taking in
response to the government's loose monetary policy and failure to deal with
subsidies, particularly in the oil industry.
WHAT WERE THE MAJOR EVENTS OF THE LAST TWELVE MONTHS?
The easing of political tensions between Taiwan and China following the
conclusion of Taiwan's first presidential elections coincided with the start of
the reporting period, producing a more favorable market environment in Asia,
particularly in those countries most dependent on trade with China. This was
enhanced by the news that Morgan Stanley Capital International (MSCI) would be
re-weighting its Asia regional index to include Taiwan and increase Korea's
weighting. China eased its monetary policy, creating a more favorable economic
climate for its major Asian trading partners, particularly Hong Kong and Taiwan.
However, a fall-off in global demand adversely affected other, more export-
sensitive markets such as Korea, Thailand and Singapore.
13
<PAGE> 16
In Latin America, Argentina's Finance Minister, Domingo Cavallo, the chief
architect of the country's currency stabilization plan, was fired. While this
initially unsettled markets in the region, the effects were not long-lasting as
his successor continued his policies. Indian shares rallied during the early
part of the period following the installation of the United Front coalition
government, but the government's subsequent economic policies proved
disappointing to the market.
In South Africa, the rand devaluation that occurred early in the year did
not produce the hoped-for stability needed for the Reserve Bank to reverse its
tighter monetary policy.
HOW WAS THE PORTFOLIO POSITIONED IN LIGHT OF THESE EVENTS?
We added to the Fund's position in Taiwan, assuming that a combination of
factors -- namely the reduction in tensions with China, the increased MSCI
weighting and a historically low valuation -- would increase investor interest.
The Fund maintained an overweight position in Korea on the basis that the market
would respond to its increased weighting in the benchmark index and the opening
of the market to foreigners. However, as the year progressed, exposure was
reduced. In Thailand, the Fund moved from an overweight to an underweight
position.
In Latin America, the Fund maintained overweight positions in Brazil and
Argentina. The Fund also moved into an overweight position in Chile on the basis
that the government's restrictive monetary policies, responsible fiscal policies
and a stable currency would lead to increased investor interest. In South
Africa, the Fund maintained an underweight position, while in India, the
portfolio was overweight, although profits were taken as opportunities presented
themselves.
WHERE DID THE FUND INVEST MOST HEAVILY?*
The Fund was most heavily invested in Brazil (14.8%). Other large positions
included Malaysia (13%) and Hong Kong/Taiwan/China (10.4%). On a regional basis,
the Fund was about equally positioned between Latin America and Asia, with
lesser amounts in South Africa, India, Eastern European markets and the Middle
East (Egypt and Israel).
WHAT COUNTRIES AND SECURITIES HOLDINGS WERE MOST BENEFICIAL TO FUND PERFORMANCE
OVER THE LAST TWELVE MONTHS?**
Four markets in which the Fund held positions stood out in terms of
performance over the last twelve months. Significantly, three of them are in
Latin America -- Brazil and Argentina, with Mexico also performing well although
the Fund was slightly underweight. The fourth, Taiwan, surged over the last
twelve months as improved monetary and political conditions, in relation to the
Republic's dealings with China, have been reflected in asset prices. Greece and
Portugal, in which the Fund has relatively smaller holdings, also rose strongly.
In terms of individual holdings, it should be noted that, until recently,
the Fund's exposure to Taiwan was entirely through the medium of closed-end
country funds. In contrast, the performance garnered from Latin America was
driven by the Fund's core equity holdings. In Brazil, the likely beneficiaries
of the ongoing privatization process have stood out, with Petrobras, Electrobras
and Telebras -- all market heavyweights in terms of capitalization -- performing
particularly well. In Mexico, the drivers of performance were less concentrated
with Alfa, an industrial conglomerate, being matched by Modelo, a brewer, both
of which the Fund held. Elsewhere across emerging markets, value was added in
Malaysia via the holding in Konsortium Perkapal, in Portugal, Portugal Telecom,
following its sharp appreciation, and in China, Guangdong Investments, which
rose, reflecting an improved tone in China.
WHAT IS YOUR OUTLOOK GOING FORWARD AND HOW WILL YOU POSITION THE FUND
ACCORDINGLY?
Emerging markets should perform relatively well in an environment where
U.S. interest rates remain modest. Within Asia, China's stimulative monetary
policies should exert a positive influence over the region, although recoveries
in the Korean and Thai markets will probably be delayed until their trade
accounts improve. In Latin America, growth in industrial production and
corporate earnings should remain strong in Argentina, Brazil and Mexico. Chile
should also feature prominently during the coming year as the Chilean Central
Bank begins to reverse its tight monetary policy. South Africa could see some
improvement as there are signs of lower inflation which could lead to a decline
in interest rates. India also shows some hopeful signs given the government's
recent business friendly budget, although its loose monetary policy and failure
to deal with subsidies continue to be a concern.
Looking ahead, we believe that Latin American markets are approaching a
point at which they will need to consolidate before making further progress.
Accordingly, we will be looking to take profits selectively while maintaining
the Fund's current overweight position in the region.
- ---------------
* Percentages as of March 31, 1997.
** Portfolio characteristics and outlook were current as of March 31, 1997, are
subject to change and may not be representative of current characteristics
and outlook. Also, the outlook of this Fund's portfolio manager may differ
from that of other Nations Funds' portfolio managers.
14
<PAGE> 17
NATIONS FUNDS
Nations Emerging Markets Fund
<TABLE>
<CAPTION>
[PIE CHART]
---------------------------------------- -------------------------------------
COUNTRY BREAKDOWN AS A % OF TOP TEN PORTFOLIO HOLDINGS AS A
NET ASSETS AS OF 3/31/97 % OF NET ASSETS AS OF 3/31/97
<S> <C> <C> <C> <C>
Other 30.6% 1. East European Development Fund 3.2%
Brazil 14.8% 2. Telebras, ADR 2.6
Malaysia 13.0% 3. Petroleo Brasileiros NPV, preferred stock 2.0
Mexico 9.3% 4. Tenaga Nasional Berhad 1.8
South Africa 8.0% 5. United Engineers (Malaysia) Berhad 1.8
India 6.1% 6. Taiwan Index Fund 1.8
Chile 5.2% 7. Formosa Fund, IDR 1.7
Hong Kong 4.9% 8. Malayan Banking Berhad 1.7
Argentina 4.4% 9. CEMIG Companhia, New, ADR 1.6
Portugal 3.7% 10. Portugal Telecommunications, ADR 1.6
</TABLE>
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR A SHARES AS OF 3/31/97
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
INVESTOR A SHARES
- ---------------------------------
<S> <C>
Year Ended 03/31/97 11.74%
Since Inception (06/30/95)
through 03/31/97 8.49%
</TABLE>
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Emerging
Markets Fund on June 30, 1995
(inception date). The IFC
Investables Index ("IFC
Index") is an unmanaged index
which includes over 1,100
stocks representing 27 stock
markets in developing
countries and reflects the
accessibility of markets and
individual stocks for foreign
ownership.
<TABLE>
<CAPTION>
Measurement Period Growth of Investment with
(Quarterly) IFC Index Distributions Reinvested
<S> <C> <C>
June 30, 1995 10000 10000
9966 9870
9874 9770
Mar. 31, 1996 10619 10320
11071 10737
10828 10376
10799 10600
Mar. 31, 1997 11829 11532
</TABLE>
- --------------------------------------------------------------------------------
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
Average annual total returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming reinvestment
of dividends.
Portfolio characteristics and outlook were current as of March 31, 1997, are
subject to change and may not be representative of current characteristics and
outlook.
15
<PAGE> 18
NATIONS FUNDS
Nations Emerging Markets Fund
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR C, INVESTOR N, PRIMARY A AND PRIMARY B
SHARES AS OF MARCH 31, 1997
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
INVESTOR C SHARES
- ------------------------------------------------
<S> <C>
Year Ended 03/31/97 10.84%*
Year Ended 03/31/97 11.34%
Since Inception (06/30/95) through
03/31/97 7.96%
</TABLE>
*adjusted for maximum contingent
deferred sales charge of 0.50% when
Investor C Shares are redeemed within
one year of purchase
<TABLE>
<CAPTION>
INVESTOR N SHARES
- ------------------------------------------------
<S> <C>
Year Ended 03/31/97 10.88%
Since Inception (06/30/95) through
03/31/97 7.65%
</TABLE>
<TABLE>
<CAPTION>
PRIMARY A SHARES
- ------------------------------------------------
<S> <C>
Year Ended 03/31/97 11.97%
Since Inception (06/30/95) through
03/31/97 8.74%
</TABLE>
AGGREGATE TOTAL RETURN
<TABLE>
<CAPTION>
PRIMARY B SHARES**
- ------------------------------------------------
<S> <C>
Since Inception (06/28/96) through
03/31/97 7.34%
</TABLE>
The charts to the right show the growth in value of a hypothetical $10,000
investment in Investor C, Investor N, Primary A and Primary B Shares of Nations
Emerging Markets Fund from the date each class of shares was first offered. The
IFC Investables Index ("IFC Index") is an unmanaged index which includes over
1,100 stocks representing 27 stock markets in developing countries and reflects
the accessibility of markets and individual stocks for foreign ownership.
Each chart assumes the reinvestment of all distributions.
**Please note that the performance shown for Primary B Shares includes the
performance for Primary A Shares from their date of inception (6/30/95) through
6/28/96, plus the performance for Primary B Shares from their date of inception
(6/28/96) through 3/31/97. The expense structures for Primary A and Primary B
Shares are similar, except that Primary B Shares are subject to a shareholder
servicing fee of up to 60 basis points. This difference in expenses will result
in a slight difference in the performance of Primary A and Primary B Shares.
PERFORMANCE COMPARISONS
INVESTOR C SHARES AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
GROWTH OF
INVESTMENT
WITH
MEASUREMENT PERIOD DISTRIBUTIONS
(QUARTERLY) IFC INDEX REINVESTED
<S> <C> <C>
JUNE 30, 1995 10000 10000
9966 9850
9874 9730
MAR. 31, 1996 10619 10270
11071 10670
10828 10310
10799 10517
MAR. 31, 1997 11829 11434
</TABLE>
INVESTOR N SHARES AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
GROWTH OF
INVESTMENT
WITH
MEASUREMENT PERIOD DISTRIBUTIONS
(QUARTERLY) IFC INDEX REINVESTED
<S> <C> <C>
JUNE 30, 1995 10000 10000
9966 9850
9874 9730
MAR. 31, 1996 10619 10260
11071 10650
10828 10280
10799 10471
MAR. 31, 1997 11829 11377
</TABLE>
PRIMARY A AND PRIMARY B SHARES AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
GROWTH OF
INVESTMENT
WITH
MEASUREMENT PERIOD DISTRIBUTIONS
(QUARTERLY) IFC INDEX REINVESTED
<S> <C> <C>
JUNE 30, 1995 10000 10000
9966 9880
9874 9782
MAR. 31, 1996 10619 10342
11071 10761
10828 10410
10799 10636
MAR. 31, 1997 11829 11580
</TABLE>
- --------------------------------------------------------------------------------
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
Average annual and aggregate total returns are historical in nature and measure
net investment income and capital gain or loss from portfolio investments
assuming reinvestment of dividends.
16
<PAGE> 19
NATIONS GLOBAL GOVERNMENT INCOME FUND
PERFORMANCE AND COMMENTARY
PORTFOLIO MANAGER
Mark Rimmer is Principal Portfolio Manager of Nations Global Government
Income Fund. He has been associated with Gartmore Global Partners, the Fund's
investment sub-adviser, since 1990, as an International Fixed Income Fund
Manager.
INVESTMENT OBJECTIVE
The Fund seeks total return by investing primarily in high quality debt
securities issued by governments, banks and supranational entities located
throughout the world.
PERFORMANCE REVIEW
For the one-year period ended March 31, 1997, Nations Global Government
Income Fund Investor A Shares provided a total return of 3.99%.
PORTFOLIO MANAGER COMMENTARY
In the following interview, Mr. Rimmer shares his views on financial market
conditions and Fund performance for the one-year period ended March 31, 1997.
BRIEFLY DESCRIBE YOUR FIXED INCOME INVESTMENT PHILOSOPHY AND STYLE.
Our investment philosophy for active fixed income management is founded
upon the belief that the analysis of longer term economic trends is the key to
successful fixed income investment management rather than relying on short-term
tactical models or specific issue selection through credit analysis. Therefore,
our investment process is top-down, macroeconomic driven and strategic in
nature, relying primarily on investment in very high credit quality fixed income
securities with the objective of adding value through correct identification of
interest rate and currency trends across global markets.
PLEASE DESCRIBE MARKET CONDITIONS THAT PREVAILED DURING THE REPORTING PERIOD.
Over the last twelve months, global bond yields moved lower in the majority
of countries, with the notable exception of the U.S. where yields were
marginally higher. In local currency terms, global bond markets provided
attractive returns, but when expressed in U.S. dollar terms, returns were
reduced because of the effect of dollar appreciation against the majority of
overseas currencies. The U.S. bond market was volatile over the period, with the
yield on the long bond initially rising to 7.2%, as economic growth remained
firm, then declining in the latter part of last year to 6.3%, as there were few
signs of inflationary pressures. In the last month of the reporting period, the
yield rose again to 7.0% after the federal funds rate was raised by 0.25% to
5.5%, with accompanying hints of further rises to come. The best-performing bond
market, in U.S. dollar terms, was the U.K., primarily due to the strength of
sterling against the dollar. European bond yields trended lower as their
economies remained weak. With the exception of the high-yielding markets, which
performed well on expectations that European Monetary Union (EMU) would occur as
planned in 1999, returns from European bond markets to U.S. investors were
negative as the dollar appreciated sharply against most European currencies.
Japanese bonds also had a negative return over the period due to the sharp rise
in the U.S. dollar versus the yen.
WHERE WERE FUND HOLDINGS CONCENTRATED AND WHY?*
The Fund initially had an overweight position in the high-yielding European
bond markets on the basis of expectations that EMU would occur in January 1999,
and that countries such as Spain, and to a lesser extent Italy, would
- ---------------
* Portfolio characteristics and outlook were current as of March 31, 1997, are
subject to change and may not be representative of current characteristics and
outlook. Also, the outlook of this Fund's portfolio manager may differ from
that of other Nations Funds' portfolio managers.
17
<PAGE> 20
be able to join in 1999 or at least soon afterward. Italy and Spain made
substantial progress toward meeting the Maastricht criteria by reducing their
budget deficits toward the target level of 3% of Gross Domestic Product (GDP).
Toward the middle of the period, however, we took the view that these markets
had, if anything, become too optimistic on EMU hopes as yields had converged
sharply to those of Germany. Accordingly, we took advantage of rising prices to
sharply reduce non-core holdings. Proceeds were switched into the 'core' bond
markets, particularly Germany, primarily in longer-maturity bonds because of the
prospect of weak growth in Europe.
The Fund maintained an overweight position in the Canadian and Australian
bond markets, as yields in both of these markets were well above those of the
U.S., and looked set to converge toward U.S. levels. Although the Fund had an
overweight position in the U.S. dollar, as it appeared positioned to appreciate
against most overseas currencies, the Fund was underweight the U.S. bond market
on the basis that the outlook for firm growth would put upward pressure on
interest rates. The Fund was very underweight Japanese bonds for the majority of
the period, although more recently, exposure has been increased in Japan.
WHICH POSITIONS HAD THE MOST IMPACT ON PERFORMANCE?
The overweighting in Australia and Canada was a strong positive, as was the
underweighting in Japan, as the yen weakened substantially against the U.S.
dollar over the period. The Fund was well positioned in shorter-maturity dollar
bonds as U.S. yields rose in the early part of last year, although the average
maturity of the dollar bonds was not increased sufficiently to benefit fully
from the fall in U.S. yields toward the end of last year. The initial overweight
position in the high-yielding European markets benefited the Fund. The strategy
of overweighting the U.S. dollar bloc was successful in limiting some of the
negative impact of the rise in the U.S. dollar against overseas currencies.
WHAT IS YOUR OUTLOOK AND HOW WILL YOU POSITION THE FUND ACCORDINGLY?
With the increase in U.S. short-term interest rates in March, we believe
that U.S. bonds may now represent fair value and, given the increase in U.S.
long-maturity bond yields toward the 7.00% level, the threat of a further
interest rate increase could already be discounted. It is, therefore, likely
that exposure to U.S. bonds will be increased at these higher yield levels,
although we do not foresee increasing exposure to the dollar on a currency basis
because we believe that the bulk of the dollar's appreciation against overseas
currencies has already occurred. In Europe, the low level of short-term interest
rates and the fall in the European currencies should prove to be stimulative,
which could put their bond markets under pressure. The Fund is now defensively
positioned in core European bond markets, and the underweight stance in the
high-yielding markets will be maintained, at least for the short-term. The Fund
remains overweight in Australia and Canada, and this position will be maintained
for now as these currencies have the potential to appreciate against the U.S.
dollar. The Fund has shifted to a slightly overweight position in short-maturity
Japanese bonds based on our view that the yen will appreciate against the dollar
in the months ahead as the Japanese economy finally recovers and the Japanese
trade surplus increases.
18
<PAGE> 21
NATIONS FUNDS
Nations Global Government Income Fund
- ---------------------------------------------
PORTFOLIO BREAKDOWN AS A % OF
NET ASSETS AS OF 3/31/97
[PIE CHART]
<TABLE>
<S> <C>
Other Foreign Bonds and Notes,
U.S. Treasury Obligations and
Net Other Assets and Liabilities 26.1%
Germany 16.1%
Canada 10.9%
Denmark 9.2%
Japan 8.8%
Great Britain 7.6%
Supranational 7.6%
Belgium 5.0%
Australia 4.9%
Netherlands 3.8%
</TABLE>
-------------------------------------
TOP TEN PORTFOLIO HOLDINGS AS A
% OF NET ASSETS AS OF 3/31/97
<TABLE>
<C> <S> <C>
1. Federal Republic of Germany, 5.125% 11/21/00 5.7%
2. Federal Republic of Germany, 6.500% 10/14/05 4.9
3. Government of Australia, 7.500% 07/15/05 4.9
4. Kingdom of Denmark, 6.000% 12/10/99 4.7
5. Kansai Electric Power Company Inc.,
7.250% 09/25/06 4.6
6. Glaxo Wellcome plc, 6.750% 05/31/00 4.5
7. Kingdom of Denmark, 7.000% 12/15/04 4.5
8. U.S. Treasury Note, 6.500% 10/15/06 4.5
9. Export-Import Bank of Japan, 4.375% 10/01/03 4.2
10. Government of Canada, 8.500% 03/01/00 4.1
</TABLE>
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR A SHARES AS OF 3/31/97
<TABLE>
AVERAGE ANNUAL TOTAL RETURN
INVESTOR A SHARES
- ---------------------------------
<S> <C>
Year Ended 03/31/97 3.99%
Since Inception (06/30/95)
through 03/31/97 5.06%
</TABLE>
The chart to the right shows
the growth in value of a
hypothetical $10,000
investment in Investor A
Shares of Nations Global
Government Income Fund on June
30, 1995 (inception date). The
JP Morgan Global Government
Bond Index ("JP Morgan Index")
is an unmanaged,
capitalization-weighted index
that tracks government bonds
issued in 13 countries located
in the United States, Europe
and the Far East.
<TABLE>
<CAPTION>
Measurement Period Growth of Investment with
(Quarterly) JP Morgan Index Distributions Reinvested
<S> <C> <C>
June 30, 1995 10000 10000
9988 10163
10325 10623
Mar. 31, 1996 10143 10484
10205 10681
10493 11033
10779 11337
Mar. 31, 1997 10357 10902
</TABLE>
- --------------------------------------------------------------------------------
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
Average annual total returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming reinvestment
of dividends.
Portfolio characteristics and outlook were current as of March 31, 1997, are
subject to change and may not be representative of current characteristics and
outlook.
19
<PAGE> 22
NATIONS FUNDS
Nations Global Government Income Fund
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON - INVESTOR C, INVESTOR N, PRIMARY A AND PRIMARY B
SHARES AS OF MARCH 31, 1997
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
INVESTOR C SHARES
- ----------------------------------------------
<S> <C>
Year Ended 03/31/97 3.24%*
Year Ended 03/31/97 3.73%
Since Inception (06/30/95) through
03/31/97 4.66%
</TABLE>
*adjusted for maximum contingent
deferred sales charge of 0.50% when
Investor C Shares are redeemed
within one year of purchase
<TABLE>
<CAPTION>
INVESTOR N SHARES
- ----------------------------------------------
<S> <C>
Year Ended 03/31/97 3.22%
Since Inception (06/30/95) through
03/31/97 4.29%
</TABLE>
<TABLE>
<CAPTION>
PRIMARY A SHARES
- ----------------------------------------------
<S> <C>
Year Ended 03/31/97 4.25%
Since Inception (06/30/95) through
03/31/97 5.32%
</TABLE>
AGGREGATE TOTAL RETURN
<TABLE>
<CAPTION>
PRIMARY B SHARES**
- ----------------------------------------------
<S> <C>
Since Inception (06/28/96) through
03/31/97 1.93%
</TABLE>
The charts to the right show the growth in value of a hypothetical $10,000
investment in Investor C, Investor N, Primary A and Primary B Shares of
Nations Global Government Income Fund from the date each class of shares
was first offered. The JP Morgan Global Government Bond Index ("JP Morgan
Index") is an unmanaged, capitalization-weighted index that tracks
government bonds issued in 13 countries located in the United States,
Europe and the Far East.
Each chart assumes the reinvestment of all distributions.
**Please note that the performance shown for Primary B Shares includes the
performance for Primary A Shares from their date of inception (6/30/95)
through 6/28/96, plus the performance for Primary B Shares from their date
of inception (6/28/96) through 3/31/97. The expense structures for Primary
A and Primary B Shares are similar, except that Primary B Shares are
subject to a shareholder servicing fee of up to 60 basis points. This
difference in expenses will result in a slight difference in the
performance of Primary A and Primary B Shares.
PERFORMANCE COMPARISONS
INVESTOR C SHARES AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
GROWTH OF
INVESTMENT
WITH
MEASUREMENT PERIOD JP MORGAN DISTRIBUTIONS
(QUARTERLY) INDEX REINVESTED
<S> <C> <C>
JUNE 30, 1995 10000 10000
9988 10146
10325 10586
MAR. 31, 1996 10143 10440
10205 10630
10493 10974
10779 11269
MAR. 31, 1997 10357 10830
</TABLE>
INVESTOR N SHARES AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
GROWTH OF
INVESTMENT
WITH
MEASUREMENT PERIOD JP MORGAN DISTRIBUTIONS
(QUARTERLY) INDEX REINVESTED
<S> <C> <C>
JUNE 30, 1995 10000 10000
9988 10146
10325 10586
MAR. 31, 1996 10143 10427
10205 10603
10493 10933
10779 11213
MAR. 31, 1997 10357 10763
</TABLE>
PRIMARY A AND PRIMARY B SHARES AS OF MARCH 31, 1997
<TABLE>
<CAPTION>
GROWTH OF
INVESTMENT
WITH
MEASUREMENT PERIOD JP MORGAN DISTRIBUTIONS
(QUARTERLY) INDEX REINVESTED
<S> <C> <C>
JUNE 30, 1995 10000 10000
9988 10169
10325 10636
MAR. 31, 1996 10143 10503
10205 10707
10493 11067
10779 11379
MAR. 31, 1997 10357 10949
</TABLE>
- --------------------------------------------------------------------------------
THE PERFORMANCE SHOWN REPRESENTS PAST PERFORMANCE AND IS NOT PREDICTIVE OF
FUTURE RESULTS. A MUTUAL FUND'S SHARE PRICE AND INVESTMENT RETURN WILL VARY WITH
MARKET CONDITIONS, AND THE PRINCIPAL VALUE OF SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST.
Average annual and aggregate total returns are historical in nature and measure
net investment income and capital gain or loss from portfolio investments
assuming reinvestment of dividends.
20
<PAGE> 23
NATIONS FUNDS
Nations International Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------
COMMON STOCKS -- 96.0%
<C> <S> <C>
ARGENTINA -- 0.5%
220,000 Perez Compac, ADR.................. $ 3,401,710
55,000 Y.P.F Sociedad Anonima, ADR........ 1,457,500
------------
4,859,210
------------
AUSTRALIA -- 3.3%
750,000 Australia & New Zealand Bank Group
Ltd. ............................ 4,750,735
350,000 Broken Hill Property............... 4,664,501
365,500 CRA Ltd. .......................... 5,404,025
3,000,000 Fosters Brewing Group.............. 6,208,882
300,000 National Australia Bank Ltd. ord... 3,798,236
1,100,000 News Corporation Ltd. ............. 5,130,951
600,000 WMC Ltd. .......................... 3,791,182
------------
33,748,512
------------
BELGIUM -- 0.8%
22,000 Generale de Banque NPV............. 8,633,721
------------
BRAZIL -- 1.9%
190,000 Aracruz Celulose SA, ADR........... 3,467,500
60,000 CEMIG Companhia, New, ADR.......... 2,541,000
135,000 Companhia Brasileira de
Distribuicao Grupo Pao de Acucar,
GDS.............................. 2,936,250
250,000 Companhia Cervejaria Brahma, ADR... 3,375,000
37,000 Telebras, ADR...................... 3,787,875
300,000 Usiminas Siderurgicas de Minas
Gerais SA, ADR................... 3,442,500
------------
19,550,125
------------
CHILE -- 0.7%
106,250 Cia de Telecomunicaciones de Chile
SA, ADR.......................... 3,054,688
150,000 Enersis SA, ADR.................... 4,762,500
------------
7,817,188
------------
FRANCE -- 7.6%
175,000 AXA-UAP............................ 11,604,328
80,000 BIC................................ 12,182,741
17,000 Carrefour.......................... 10,570,310
66,202 Compagnie de Saint-Gobain.......... 10,046,150
32,000 LVMH Moet Hennessy................. 7,785,555
17,700 Pinault-Printemps-Redoute SA....... 7,629,175
110,000 Schneider SA....................... 6,308,665
140,000 TOTAL, "B" Shares ord.............. 12,141,063
------------
78,267,987
------------
GERMANY -- 6.6%
250,000 Bayer AG........................... 10,406,358
110,000 Daimler-Benz AG.................... 8,801,320
70,000 Fresenius Medical Care AG.......... 6,713,450
200,000 Hoechst AG......................... 8,103,164
350,000 Lufthansa AG....................... 5,069,726
13,000 Mannesmann AG...................... 4,974,659
195,000 RWE AG............................. 8,707,602
30,000 SGL Carbon AG...................... 4,120,558
200,000 Veba AG............................ 11,330,034
------------
68,226,871
------------
GREAT BRITAIN -- 13.4%
466,667 Argos ord.......................... 5,193,895
340,000 Barclays plc ord................... 5,711,146
475,000 Bass ord........................... 6,365,071
425,000 BOC Group plc...................... 6,684,446
600,000 BPB Industries ord................. 3,301,916
480,000 British Airport Authority ord...... 4,059,036
325,000 British Land Company plc ord....... 2,898,020
657,566 British Petroleum Company ord...... 7,643,110
800,000 British Telecommunications ord..... 5,863,491
375,000 Cable & Wireless ord............... 3,044,647
800,000 Electra Investment Trust plc ord... 6,133,304
500,000 E.M.A.P. ord....................... 6,379,261
350,000 Enterprise Oil ord................. 3,737,071
1,000,000 Fleming Mercantile Investment Trust
plc ord.......................... 6,185,950
490,000 General Accident plc ord........... 6,594,289
160,000 Glaxo Wellcome plc ord............. 2,938,985
400,000 Granada Group plc ord.............. 6,037,882
150,000 Kingfisher ord..................... 1,728,693
110,000 Land Securities plc ord............ 1,399,818
550,000 Marks & Spencer ord................ 4,411,191
500,000 Provident Financial plc ord........ 4,614,785
550,000 Reuters Holdings ord............... 5,601,082
1,500,000 Rolls Royce plc ord................ 5,626,582
175,000 Scottish & Newcastle Breweries
ord.............................. 1,947,711
275,000 Siebe plc.......................... 4,644,193
407,600 Smithkline Beecham "A" ord......... 6,055,368
437,252 United Utilities ord............... 4,517,623
700,000 Vodafone Group plc ord............. 3,207,317
300,000 Wolseley ord....................... 2,425,847
100,000 Zeneca Group plc ord............... 2,899,665
------------
137,851,395
------------
HONG KONG -- 6.4%
800,000 Cheung Kong Holdings Ltd. ......... 7,046,343
1,800,000 China Light & Power................ 7,921,329
1,300,000 Citic Pacific Ltd. ................ 6,442,371
1,500,000 Dao Heng Bank Group................ 6,852,762
1,650,000 Hong Kong Land Holdings............ 3,828,000
2,550,000 Hong Kong Telecommunications....... 4,360,409
200,000 HSBC Holdings plc.................. 4,645,941
800,000 Hutchison Whampoa Ltd. ............ 6,013,912
375,000 Jardine Matheson Holdings.......... 2,175,000
610,000 Jardine Strategic Holdings......... 2,110,600
550,000 Sun Hung Kai Properties............ 5,820,331
625,000 Swire Pacific, "A" Shares.......... 4,920,180
900,000 Wharf (Holdings) Ltd............... 3,443,804
------------
65,580,982
------------
INDIA -- 0.3%
95,000 Reliance Industries Ltd., GDS+++... 1,710,000
42,500 State Bank of India, GDR+++........ 958,375
------------
2,668,375
------------
INDONESIA -- 0.7%
1,600,000 Bank Negara Indonesia, Alien
Shares+.......................... 916,285
150,000 Hanjaya Mandala Sampoerna, Alien
Shares........................... 702,832
190,000 PT Indonesian Satellite, ADR, "B"
Class............................ 5,082,500
------------
6,701,617
------------
IRELAND -- 0.7%
770,000 Bank of Ireland.................... 7,695,832
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE> 24
NATIONS FUNDS
Nations International Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- ---------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
<C> <S> <C>
ITALY -- 2.5%
750,000 Ente Nazionale Idrocarburi Spa..... $ 3,812,416
70,700 Gucci Group........................ 5,099,238
1,700,000 Telecom Italia..................... 4,251,912
4,500,000 Telecom Italia Mobile.............. 12,955,466
------------
26,119,032
------------
JAPAN -- 22.3%
120,000 Asatsu Inc......................... 3,114,741
40,000 Autobacs Seven Company............. 2,393,466
300,300 Canon Sales Company................ 5,949,179
350,000 Dai-ichi Kangyo Bank............... 3,707,447
750 DDI Corporation.................... 4,736,395
125,000 Dia Kensetsu Company Ltd. ......... 1,091,615
430,000 Fuji Bank Ltd. .................... 4,972,103
750,000 Fujitsu Ltd. ...................... 7,641,303
500,000 Hitachi Ltd. ...................... 4,447,319
1,000,000 Itochu Corporation................. 4,900,137
110,000 Ito-Yokado Company................. 4,892,051
110,000 Mandom Corporation................. 1,040,673
550,000 Matsushita Electric Industrial
Company Ltd...................... 8,583,327
575,000 Matsushita Electric Works.......... 5,253,902
125,000 Mitsuba Corporation................ 1,162,368
700,000 Mitsubishi Electric Corporation.... 3,933,856
575,000 Mitsubishi Estate Company.......... 6,137,301
840,000 Mitsubishi Heavy Industries........ 5,467,777
865,000 Mitsui Fudosan Company............. 8,952,858
90,000 Miura Company...................... 1,077,060
680,000 NCR Japan Ltd. .................... 5,196,086
70,000 Nichiei Company Ltd. .............. 5,433,816
800,000 Nippon Express Company Ltd......... 5,330,315
200,000 Nippon Hi-Pack Company............. 798,900
1,450,000 Nippon Sanso....................... 4,748,524
2,500,000 Nippon Steel....................... 6,873,130
1,000 Nippon Telephone & Telegraph
Corporation...................... 7,042,937
355,000 Nomura Securities Company.......... 3,932,643
1,150,000 NTN Corporation.................... 5,356,190
150 NTT Data Communications Systems
Company.......................... 3,990,458
665,000 OJI Paper Company (New)............ 3,350,004
700,000 Ricoh Company...................... 7,980,917
180,000 Sankyo Company Ltd. ............... 4,963,209
400,000 Sekisui House...................... 3,913,641
425,000 Shimizu Construction Company....... 2,354,047
410,000 Shiseido Company Ltd. ............. 5,304,439
510,000 Shizuoka Bank...................... 4,453,788
150,000 Shochiku Company................... 1,237,163
150,000 Sony Corporation................... 10,491,631
550,000 Sumitomo Electric Industries....... 7,471,497
130,000 TDK Corporation.................... 8,935,069
900,000 Teijin Ltd. ....................... 3,442,225
200,000 Tokio Marine & Fire Insurance
Company.......................... 2,037,681
475,000 Tokyo Broadcasting Systems Inc. ... 6,759,926
225,000 Tokyo Electric Power Company....... 4,093,555
350,000 Tostem Corporation................. 8,037,519
180,000 Toyota Motor Corporation........... 4,555,672
250,000 Yamaha Motor Company............... 2,203,445
------------
229,743,305
------------
MALAYSIA -- 4.0%
499,900 Genting Berhad..................... 3,388,811
1,297,000 Land & General Berhad.............. 2,407,425
600,000 Malayan Banking Berhad............. 6,839,504
2,350,000 Malaysian Resources................ 8,439,423
700,000 Perusahaan Otomobil Berhad......... 4,434,581
450,000 Resorts World Berhad............... 1,924,745
350,000 Telekom Malaysia Berhad............ 2,725,714
750,000 Tenaga Nasional Berhad............. 3,661,858
800,000 United Engineers (Malaysia)
Berhad........................... 6,972,661
------------
40,794,722
------------
MEXICO -- 1.3%
400,000 Carso Global Telecom, ADR+......... 2,452,000
3,000,000 Cifra SA de CV, Class E, ADR....... 4,155,000
150,000 Empresas ICA SA de CV, ADR+........ 2,381,250
380,000 Grupo Carso SA de CV, ADR++........ 4,512,500
------------
13,500,750
------------
NETHERLANDS -- 5.9%
165,000 ABN Amro Holding N.V. ............. 11,349,276
50,000 Akzo Nobel N.V. ................... 7,182,276
700,000 Elsevier N.V. ..................... 11,383,935
300,000 Fortis Amev N.V. .................. 11,693,194
50,000 Royal Dutch Petroleum.............. 9,080,487
80,000 Wolters Kluwer..................... 9,636,087
------------
60,325,255
------------
PERU -- 0.2%
100,000 Telefonica del Peru SA, Class B,
ADR.............................. 2,225,000
------------
PHILIPPINES -- 0.6%
100,000 Philippine Long Distance Telephone
Company, ADR..................... 5,987,500
------------
PORTUGAL -- 0.4%
55,000 Cimpor-Cimentos de Portugal, SGPS,
SA............................... 1,148,088
70,000 Portugal Telecom SA................ 2,607,205
------------
3,755,293
------------
SINGAPORE -- 2.5%
500,000 Development Bank of Singapore,
Alien Shares..................... 5,815,161
700,000 Keppel Corporation................. 4,409,830
900,000 Keppel Land Ltd.+.................. 2,778,816
363,000 Overseas Chinese Banking
Corporation, Alien Shares........ 4,322,326
300,000 Singapore Airlines International,
Alien Shares..................... 2,409,138
252,000 Singapore Press Holdings, Alien
Shares........................... 4,588,162
1,160,000 United Overseas Land............... 1,806,854
------------
26,130,287
------------
SOUTH KOREA -- 0.9%
72,246 Hyundai Engineering and
Construction Company............. 1,492,521
70,000 Korea Electric Power Corporation... 2,032,384
400,000 Korea First Bank................... 1,630,374
95,000 LG Electronics Inc. ............... 1,103,294
45,548 Samsung Corporation, 1/2
Non-Voting Shares, GDS+.......... 931,457
828 Samsung Electronics Ltd.+.......... 55,385
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE> 25
NATIONS FUNDS
Nations International Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- ---------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
<C> <S> <C>
SOUTH KOREA -- (CONTINUED)
2,740 Shinhan Bank....................... $ 32,739
137,853 Yukong Ltd. ....................... 2,463,035
------------
9,741,189
------------
SPAIN -- 1.9%
165,000 Banco Santander SA ord............. 11,387,365
450,000 Centros Comerciales Pryca.......... 8,440,984
------------
19,828,349
------------
SWEDEN -- 2.7%
400,000 Atlas Copco AB "B"................. 10,031,514
285,000 Ericsson (L.M.) Telephone Company,
Class B.......................... 10,059,380
275,000 Sandvik AB "B"..................... 7,298,059
------------
27,388,953
------------
SWITZERLAND -- 6.9%
6,500 ABB AG............................. 7,814,455
8,750 Nestle SA.......................... 10,245,830
15,573 Novartis AG........................ 19,328,268
2,200 Roche Holdings AG.................. 19,026,407
45,000 Zurich Versicherungs ord........... 14,166,088
------------
70,581,048
------------
TAIWAN -- 0.2%
109,000 Evergreen Marine Corporation,
GDR+............................. 2,024,675
------------
THAILAND -- 0.8%
350,000 Advanced Information Services
Public Company Ltd., Alien
Shares........................... 2,993,643
225,000 Bangkok Bank Public Company Ltd.,
Alien Shares..................... 2,184,550
485,000 Thai Farmers Bank Public Company
Ltd., Alien Shares............... 3,157,966
337,500 Thai Telephone &
Telecommunications, Alien
Shares+.......................... 282,821
------------
8,618,980
------------
TOTAL COMMON STOCKS
(Cost $893,168,513).............. 988,366,153
============
<CAPTION>
PRINCIPAL
AMOUNT
- -------------
CONVERTIBLE BONDS -- 1.3%
<C> <S> <C>
JAPAN -- 1.1%
USD 6,000,000 MBL International Finance
Bermuda,
3.000% 11/30/02............... 6,157,500
JPY600,000,000 Sumitomo Bank International
Finance,
0.750% 05/31/01............... 5,094,211
------------
11,251,711
------------
TAIWAN -- 0.2%
USD 875,000 United Microelectronics,
1.250% 06/08/04............... 1,485,313
------------
TOTAL CONVERTIBLE BONDS (Cost
$13,170,161).................. 12,737,024
============
<CAPTION>
VALUE
SHARES (NOTE 1)
- ---------------------------------------------------------------
INVESTMENT FUND -- 0.5% (Cost $3,677,030)
<C> <S> <C>
TAIWAN -- 0.5%
297,893 Taiwan American Fund Ltd........ 5,397,821
============
<CAPTION>
PREFERRED STOCKS -- 0.8%
<C> <S> <C>
GERMANY -- 0.7%
40,000 SAP AG.......................... 6,861,598
------------
SOUTH KOREA -- 0.1%
75,000 LG Electronics Inc. ............ 406,198
19,520 Samsung Electronics Ltd. ....... 673,553
------------
1,079,751
------------
TOTAL PREFERRED STOCKS
(Cost $8,515,728)............. 7,941,349
============
<CAPTION>
WARRANTS -- 0.0%#
<C> <S> <C>
SINGAPORE -- 0.0%#
225,000 Keppel Land Ltd., Expire
12/12/00+..................... 235,202
116,000 United Overseas Land, Expire
05/28/01+..................... 72,274
------------
307,476
------------
THAILAND -- 0.0%#
60,625 Thai Farmers Bank Public Company
Ltd., Expire 09/15/02+........ 43,796
------------
TOTAL WARRANTS (Cost
$464,101)..................... 351,272
============
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $918,995,533*)................ 98.6% 1,014,793,619
OTHER ASSETS AND LIABILITIES
(NET)............................... 1.4 14,716,410
----- --------------
NET ASSETS............................ 100.0% $1,029,510,029
===== ==============
</TABLE>
- ---------------
* Aggregate cost for Federal tax purposes was $924,001,433.
+ Non-income producing security.
++ Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to
qualified institutional buyers.
# Amount represents less than 0.1%.
ABBREVIATIONS:
ADR American Depositary Receipt
GDR Global Depositary Receipt
GDS Global Depositary Share
ord Ordinary Shares
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE> 26
NATIONS FUNDS
Nations International Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1997
AT MARCH 31, 1997 SECTOR DIVERSIFICATION WAS AS FOLLOWS (UNAUDITED):
<TABLE>
<CAPTION>
% OF NET VALUE
SECTOR DIVERSIFICATION ASSETS (NOTE 1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
Services................................................................... 17.0% $ 174,394,554
Consumer Goods............................................................. 13.8 141,413,037
Finance -- Other........................................................... 12.7 131,062,722
Energy..................................................................... 9.2 94,967,837
Finance -- Banking......................................................... 9.1 93,458,545
Materials.................................................................. 8.5 87,790,497
Services -- Telecommunications............................................. 8.4 86,720,900
Capital Equipment.......................................................... 6.1 62,562,260
Finance -- Real Estate..................................................... 5.2 53,643,183
Construction............................................................... 4.2 43,459,728
Transportation............................................................. 1.8 18,892,890
------ --------------
TOTAL COMMON STOCKS........................................................ 96.0 988,366,153
CONVERTIBLE BONDS.......................................................... 1.3 12,737,024
INVESTMENT FUND............................................................ 0.5 5,397,821
PREFERRED STOCKS........................................................... 0.8 7,941,349
WARRANTS................................................................... 0.0# 351,272
------ --------------
TOTAL INVESTMENTS.......................................................... 98.6 1,014,793,619
OTHER ASSETS AND LIABILITIES (NET)......................................... 1.4 14,716,410
------ --------------
NET ASSETS................................................................. 100.0% $1,029,510,029
====== ==============
</TABLE>
- ---------------
# Amount represents less than 0.1%.
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE> 27
NATIONS FUNDS
Nations International Equity Fund
- --------------------------------------------------------------------------------
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS MARCH 31, 1997
<TABLE>
<CAPTION>
CONTRACT 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>
05/30/97 225,000,000 FRF................... $40,242,169 $40,100,519 $ 141,650
-----------
<CAPTION>
CONTRACT TO SELL
-------------------------------------------------- NET UNREALIZED
LOCAL VALUE IN IN EXCHANGE DEPRECIATION
MATURITY DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACT
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
05/30/97 225,000,000 FRF................... $40,242,169 $40,128,410 $ (113,759)
-----------
<S> <C>
Net Unrealized Appreciation of Forward Foreign Exchange Contracts................. $ 27,891
===========
</TABLE>
- ---------------------------------------------------
ABBREVIATIONS OF CURRENCY
THAT ISSUE IS HELD IN:
FRF French Franc
JPY Japanese Yen
USD United States Dollar
- ---------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE> 28
NATIONS FUNDS
Nations Pacific Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------
COMMON STOCKS -- 87.2%
<C> <S> <C>
AUSTRALIA -- 2.7%
377,000 Australia and New Zealand Banking
Group Ltd. .................... $ 2,388,036
400,000 Southern Pacific Petroleum NL+... 1,009,727
------------
3,397,763
------------
HONG KONG -- 34.8%
549,000 Cheung Kong Holdings Ltd. ....... 4,835,553
1,470,000 China Everbright -- IHD Holdings
Ltd. .......................... 1,109,800
3,000,000 Continental Mariner
Investment+.................... 1,529,289
700,000 Cosco Pacific Ltd. .............. 921,445
428,000 Dao Heng Bank Group.............. 1,955,322
113,000 Hang Seng Bank Ltd. ............. 1,166,647
233,000 Henderson Land Development
Company........................ 1,931,969
800,000 Hong Kong Electric Holdings
Ltd. .......................... 2,823,699
730,000 Hong Kong Land Holdings ord...... 1,693,600
1,190,000 Hong Kong Telecommunications..... 2,034,857
290,800 HSBC Holdings plc. .............. 6,755,198
730,000 Hutchison Whampoa Ltd. .......... 5,487,695
320,000 New World Development Company.... 1,726,225
1,180,000 Shangri-La Asia.................. 1,370,552
370,000 Sun Hung Kai Properties.......... 3,915,496
259,000 Swire Pacific, Class A........... 2,038,923
348,000 Television Broadcasts Ltd. ...... 1,414,689
528,000 Wharf (Holdings) Ltd............. 2,020,365
------------
44,731,324
------------
INDONESIA -- 6.4%
805,000 Bank Dagang Nasional Indonesia,
Alien Shares................... 804,665
2,720,000 Bank Negara Indonesia, Alien
Shares+........................ 1,557,684
1,540,000 Citra Marga Nusadhala Persada,
Alien Shares................... 1,379,009
194,000 Hanjaya Mandala Sampoerna, Alien
Shares......................... 908,996
2,269,664 PT Bank Internasional
Indonesia...................... 1,725,172
21,000 PT Telekomunikasi Indonesia,
ADR............................ 632,625
501,400 Semen Gresik, Alien Shares....... 1,247,757
------------
8,255,908
------------
MALAYSIA -- 19.4%
233,000 Amway (Malaysia) Holdings
Berhad+........................ 1,523,091
948,000 Bandar Raya Development Berhad... 1,866,737
700,000 Development & Commercial Bank
Holdings Corporation Berhad.... 2,640,977
119,000 Diperdana Corporation Berhad..... 941,148
376,000 Konsortium Perkapalan Berhad..... 2,571,653
270,000 Malayan Banking Berhad........... 3,077,777
578,000 Malaysian Resources Berhad....... 2,075,739
199,000 MNI Holdings Berhad.............. 1,035,852
260,000 New Straits Times Berhad......... 1,594,674
228,000 Perusahaan Otomobil Berhad....... 1,444,406
338,000 Rashid Hussain Berhad............ 2,659,538
300,000 Tenaga Nasional Berhad........... 1,464,742
237,000 United Engineers (Malaysia)
Berhad......................... 2,065,651
------------
24,961,985
------------
PHILIPPINES -- 4.6%
1,000,000 Ayala Corporation, Class B....... 1,024,085
1,108,000 Ayala Land Inc., Class B......... 1,260,762
1,730,000 DMCI Holdings Inc.+.............. 1,230,324
375,000 First Philippine Holdings, Class
B.............................. 689,835
3,100,000 Hi Cement Corporation............ 1,175,801
8,640 Philippine Long Distance
Telephone Company.............. 519,416
12,434 Security Bank Corporation........ 24,524
------------
5,924,747
------------
SINGAPORE -- 9.4%
219,000 Development Bank of Singapore,
Alien Shares................... 2,547,041
362,000 First Capital Corporation
Ltd. .......................... 1,002,423
610,000 Keppel Land Ltd.+................ 1,883,420
278,000 Sembawang Corporation Ltd. ...... 1,337,556
440,000 Sunright Ltd. ................... 456,906
1,700,000 Thakral Corporation, Ltd. ....... 1,589,500
179,000 United Overseas Bank, Alien
Shares......................... 1,833,990
1,070,000 Wong's Circuits Holdings Ltd.+... 1,401,700
------------
12,052,536
------------
SOUTH KOREA -- 3.1%
43,222 Dong Ah Construction Industries,
EDR............................ 406,287
494 Hyundai Engineering &
Construction Company........... 10,619
47,000 Koram Bank....................... 556,337
56,000 Korea Electric Power
Corporation.................... 1,625,907
18,450 Korea Electric Power Corporation,
ADR............................ 322,875
15,010 Samsung Electronics Ltd. ........ 1,004,019
2,740 Shinhan Bank..................... 32,739
------------
3,958,783
------------
TAIWAN -- 3.4%
47,300 Evergreen Marine Corporation,
GDR............................ 878,598
93,000 Siliconware Precision Industries
Company, GDR................... 1,408,950
29,000 Teco Electric and Machinery,
GDR+........................... 559,990
98,000 Yageo Corporation, GDR........... 1,505,280
------------
4,352,818
------------
THAILAND -- 3.4%
30,000 Ban Pu Public Company Ltd., Alien
Shares......................... 449,624
71,000 Bangkok Bank Public Company Ltd.,
Alien Shares................... 689,347
35,000 Grammy Entertainment, Alien
Shares......................... 482,759
73,000 PTT Exploration and Production
Public Company Ltd., Alien
Shares+........................ 1,085,648
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE> 29
NATIONS FUNDS
Nations Pacific Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- --------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
<C> <S> <C>
THAILAND -- (CONTINUED)
380,000 TelecomAsia Corporation Public
Company Ltd., Alien Shares+.... $ 647,852
160,000 Thai Farmers Bank Public Company
Ltd., Alien Shares............. 1,041,803
------------
4,397,033
------------
TOTAL COMMON STOCKS
(Cost $103,534,046)............ 112,032,897
============
<CAPTION>
INVESTMENT FUNDS -- 3.5% (Cost $3,301,218)
<C> <S> <C>
TAIWAN -- 3.5%
254,053 Taiwan American Fund Ltd. ....... 4,539,927
============
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
CONVERTIBLE BONDS -- 1.5%
<C> <S> <C>
TAIWAN -- 0.7%
USD1,000,000 U-Ming Marine Transport
Corporation, 1.500% due
02/07/01....................... 852,500
------------
THAILAND -- 0.8%
USD1,100,000 Bangkok Bank Public Company Ltd.,
3.250% due 03/03/04............ 1,028,500
------------
TOTAL CONVERTIBLE BONDS
(Cost $2,111,397).............. 1,881,000
============
<CAPTION>
U.S. TREASURY BILL -- 1.2% (Cost $1,541,239)
<C> <S> <C>
USD1,580,000 U.S. Treasury Bill, 5.370%
09/18/97##..................... 1,541,239
===========
<CAPTION>
SHARES
- -----------
WARRANTS -- 0.1%
<C> <S> <C>
INDONESIA -- 0.1%
166,592 PT Bank Internasional Indonesia,
Expire 01/17/00+............... 58,977
------------
SINGAPORE -- 0.0%#
51,250 Keppel Land Ltd., Expire
12/12/00+...................... 53,574
------------
TOTAL WARRANTS
(Cost $62,188)................. 112,551
===========
<CAPTION>
NUMBER OF
CONTRACTS
- -----------
CALL OPTIONS PURCHASED -- 1.9% (Cost $2,395,825)
<C> <S> <C>
TAIWAN -- 1.9%
13,415 Taiwan Weighted Index Call
Options, Strike price $117.807,
Expire 09/18/97+............... 2,395,825
===========
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $112,945,913*).................. 95.4% 122,503,439
OTHER ASSETS AND
LIABILITIES (NET)..................... 4.6 5,950,834
----- ------------
NET ASSETS.............................. 100.0% $128,454,273
===== ============
</TABLE>
- ---------------
* Aggregate cost for Federal tax purposes was
$114,291,309.
+ Non-income producing security.
# Amount represents less than 0.1%.
## Security segregated as collateral for call options
purchased.
ABBREVIATIONS:
ADR American Depositary Receipt
EDR European Depositary Receipt
GDR Global Depositary Receipt
GDS Global Depositary Share
ord Ordinary Shares
SEE NOTES TO FINANCIAL STATEMENTS.
27
<PAGE> 30
NATIONS FUNDS
Nations Pacific Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1997
AT MARCH 31, 1997 SECTOR DIVERSIFICATION WAS AS FOLLOWS (UNAUDITED):
<TABLE>
<CAPTION>
% OF NET VALUE
SECTOR DIVERSIFICATION ASSETS (NOTE 1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
Finance -- Banking........................................................... 22.4% $ 28,797,259
Finance -- Real Estate....................................................... 18.9 24,212,289
Finance -- Other............................................................. 10.1 13,009,876
Consumer Goods............................................................... 8.1 10,358,432
Services -- Transportation................................................... 7.4 9,558,698
Energy....................................................................... 6.8 8,782,222
Services..................................................................... 3.8 4,862,674
Services -- Telecommunications............................................... 3.0 3,834,750
Construction................................................................. 2.9 3,712,881
Materials.................................................................... 2.7 3,459,410
Capital Equipment............................................................ 1.1 1,444,406
----- -----------
TOTAL COMMON STOCKS.......................................................... 87.2 112,032,897
INVESTMENT FUNDS............................................................. 3.5 4,539,927
CONVERTIBLE BONDS............................................................ 1.5 1,881,000
U.S. TREASURY BILL........................................................... 1.2 1,541,239
WARRANTS..................................................................... 0.1 112,551
CALL OPTIONS PURCHASED....................................................... 1.9 2,395,825
----- -----------
TOTAL INVESTMENTS............................................................ 95.4 122,503,439
OTHER ASSETS AND LIABILITIES (NET)........................................... 4.6 5,950,834
----- -----------
NET ASSETS................................................................... 100.0% $128,454,273
===== ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
28
<PAGE> 31
NATIONS FUNDS
Nations Pacific Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS MARCH 31, 1997
<TABLE>
<CAPTION>
CONTRACT TO SELL
---------------------------------------------------
VALUE NET UNREALIZED
LOCAL IN IN EXCHANGE DEPRECIATION
MATURITY DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACT
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
04/07/97 170,059,812 IDR........................ $70,800 $70,711 $(89)
-----------
Net Unrealized Depreciation of Forward Foreign Exchange Contracts.................. $(89)
===========
</TABLE>
- ---------------------------------------------------
ABBREVIATIONS OF CURRENCY
THAT ISSUE IS HELD IN:
IDR Indonesian Ruppee
USD United States Dollars
- ---------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
29
<PAGE> 32
NATIONS FUNDS
Nations Emerging Markets Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- ---------------------------------------------------------------
COMMON STOCKS -- 81.8%
<C> <S> <C>
ARGENTINA -- 4.4%
349,990 Astra Cia Argentina de Petroleo
SA............................... $ 546,066
8,000 Irsa Inversiones Y
Representaciones, GDR............ 298,000
60,000 Perez Compac, ADR.................. 927,739
330,000 Siderca SA ........................ 696,404
16,000 Telefonica de Argentina, ADR....... 470,000
20,000 Y.P.F Sociedad Anonima, ADR........ 530,000
------------
3,468,209
------------
BRAZIL -- 8.4%
30,600 CEMIG Companhia, New, ADR.......... 1,295,910
100,000 Cia Acos Especiais Itab, ADR....... 493,750
10,000 Companhia Brasileira de
Distribuicao Grupo Pao de Acucar,
GDS.............................. 217,500
35,000 Companhia Vale do Rio Doce, ADR.... 848,750
42,500 Electrobras, ADR................... 945,625
20,000 Telebras, ADR...................... 2,047,500
203,138 Telecomunicacoes de Sao Paulo SA
NPV+............................. 50,820
70,000 Usinas Siderurgicas de Minas Gerais
SA, ADR.......................... 803,250
------------
6,703,105
------------
CHILE -- 5.2%
75,000 Antofagasta Holdings ord........... 450,373
28,000 Banco de Edwards, ADR.............. 588,000
29,750 Cia de Telecomunicaciones de Chile
SA, ADR.......................... 855,313
25,100 Enersis SA, ADR.................... 796,925
9,000 Madeco SA, ADR..................... 240,750
26,600 Santa Isabel SA, ADR............... 688,275
8,900 Sociedad Quimica Minera de Chile,
ADR.............................. 512,863
------------
4,132,499
------------
EGYPT -- 2.5%
23,000 Al Ahram Beverages Company,
GDR+............................. 447,350
35,000 Commercial International Bank,
GDR+............................. 793,625
35,000 Suez Cement Company, GDR+.......... 708,750
------------
1,949,725
------------
GREECE -- 2.4%
15,217 Ergo Bank+++....................... 967,843
30,000 Hellenic Bottling Company SA....... 975,011
------------
1,942,854
------------
HONG KONG -- 4.5%
72,000 China Light & Power................ 316,853
700,000 Guangdong Investment Ltd. ......... 600,745
80,000 Guoco Group........................ 395,421
41,000 Henderson Land Development Company
Ltd. ............................ 339,960
112,000 New World Development Company...... 604,179
600,000 Qingling Motor Company Ltd., Class
H................................ 319,408
2,200,000 Shanghai Petrochemical Company
Ltd., Class H.................... 567,837
2,000,000 Yizheng Chemical Fibre, Class H.... 428,459
------------
3,572,862
------------
INDIA -- 6.1%
30,000 Hindalco, GDR...................... 976,950
30,100 Indian Hotels Company Ltd., GDR.... 646,398
35,200 Larsen & Toubro Ltd., GDS++........ 497,200
20,000 Ranbaxy Laboratories Ltd., GDS..... 467,500
35,000 Reliance Industries Ltd., GDS++.... 630,000
45,000 State Bank of India, GDR++ +....... 1,014,750
33,000 Videsh Sanchar Nigam Ltd., GDR+.... 582,450
------------
4,815,248
------------
INDONESIA -- 3.4%
1,200,000 Bank Negara Indonesia, Alien
Shares+.......................... 687,214
46,000 Hanjaya Mandala Sampoerna, Alien
Shares........................... 215,535
387,306 PT Bank Internasional Indonesia.... 294,391
580,980 PT Bank Internasional Indonesia,
Alien Shares..................... 441,603
20,000 PT Indonesian Satellite, ADR, "B"
Class............................ 535,000
39,000 Semen Gresik....................... 97,053
181,000 Semen Gresik, Alien Shares......... 450,427
------------
2,721,223
------------
ISRAEL -- 0.9%
40,000 ECI Telecommunications Ltd., ADR... 740,000
------------
MALAYSIA -- 13.0%
600,000 Bandar Raya Developments Berhad.... 1,181,479
270,000 Development & Commercial Bank
Holdings Corporation............. 1,018,662
183,000 Konsortium Perkapalan Berhad+...... 1,251,629
120,000 Malayan Banking Berhad............. 1,367,901
300,000 Resorts World Berhad............... 1,283,164
161,000 Telekom Malaysia................... 1,253,828
300,000 Tenaga Nasional Berhad............. 1,464,743
168,000 United Engineers (Malaysia)
Berhad........................... 1,464,259
------------
10,285,665
------------
MEXICO -- 9.3%
150,000 Alfa SA de CV...................... 842,739
50,000 Carso Global Telecom, ADR+......... 306,500
150,000 Cemex SA NPV....................... 548,584
20,000 Consorcio Ara SA , ADR++ +......... 685,000
40,000 Empresas ICA Sociedad Controladora
SA de CV, ADR.................... 635,000
90,000 Grupo Carso SA de CV, ADR.......... 1,068,750
600,000 Grupo Corvi SA+.................... 316,288
35,500 Grupo Imsa SA de CV, ADR+.......... 825,375
102,000 Grupo Modelo SA de CV, Class C..... 614,869
130,000 Seguros Commercial America,
Class B+......................... 388,549
30,000 Telefonos de Mexico SA, ADR........ 1,155,000
------------
7,386,654
------------
PERU -- 1.0%
34,000 Banco Wiese, ADR................... 212,500
10,000 CPT Telefonica del Peru, ADR....... 222,500
172,000 CPT Telefonica del Peru, Class B... 381,573
------------
816,573
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
30
<PAGE> 33
NATIONS FUNDS
Nations Emerging Markets Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- ---------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
<C> <S> <C>
PHILIPPINES -- 2.9%
1,500,000 Hi Cement Corporation.............. $ 568,936
65,000 Manila Electric Company, Class B... 517,732
45,000 Philippines National Bank+......... 537,645
200,000 San Miguel Corporation, Class B.... 694,102
------------
2,318,415
------------
PORTUGAL -- 3.7%
40,000 Cimpor-Cimentos de Portugal, SGPS,
SA............................... 834,973
35,000 Portugal Telecommunications, ADR... 1,286,250
10,000 Telecel-Comunicacaoes Pessoais,
SA+.............................. 820,063
------------
2,941,286
------------
RUSSIA -- 0.4%
5,000 Tatneft, ADR....................... 345,000
------------
SOUTH AFRICA -- 8.0%
8,960 Anglo-American Industrial
Corporation SA................... 364,928
13,000 Barlow Ltd......................... 144,281
40,000 Barlow Ltd., ADR................... 442,500
30,000 De Beers Consolidated Mines
Ltd.+............................ 1,092,884
160,000 Gencor Ltd......................... 742,165
50,000 Nedcor Ltd., GDR................... 937,750
70,000 Rembrandt Group.................... 748,388
60,000 Sasol NPV.......................... 641,475
350,000 South Africa Iron & Steel
Industrial Corporation........... 285,100
30,000 South African Breweries............ 950,335
------------
6,349,806
------------
SOUTH KOREA -- 3.3%
43,548 Dong Ah Construction Industries,
EDR+............................. 409,351
11,000 Korea Electric Power Corporation... 319,375
33,000 Korea Electric Power Corporation,
ADR.............................. 577,500
20,000 Samsung Corporation, 1/2
Non-Voting Shares, GDS+.......... 409,000
1,496 Samsung Electronics Ltd. .......... 100,068
40,000 The Daegu Bank..................... 315,355
26,000 Yukong Ltd. ....................... 464,545
------------
2,595,194
------------
TAIWAN -- 1.2%
50,000 Evergreen Marine Corporation,
GDR.............................. 928,750
------------
THAILAND -- 1.2%
48,000 Thai Farmers Bank Public Company
Ltd., Alien Shares............... 312,541
100,000 Total Access Communications
(CLOB)........................... 625,000
------------
937,541
------------
TOTAL COMMON STOCKS
(Cost $59,928,523)............... 64,950,609
============
<CAPTION>
PREFERRED STOCKS -- 6.7%
<C> <S> <C>
BRAZIL -- 6.4%
125,000,000 Banco Bradesco NPV................. 1,032,570
1,500,000 Cia Cervejaria Brahma NPV.......... 977,815
20,000,000 Companhia Brasileira de
Distribuicao Grupo Pao de Acucar,
ADR.............................. 431,438
8,000,000 Petroleo Brasileiros NPV........... 1,589,805
4,000,000 Telecomunicacoes de Sao Paulo SA
NPV+............................. 1,015,813
------------
5,047,441
============
SOUTH KOREA -- 0.3%
50,000 Daewoo Securities Company.......... 246,231
============
TOTAL PREFERRED STOCKS
(Cost $3,709,383)................ 5,293,672
============
<CAPTION>
INVESTMENT FUNDS -- 6.7%
<C> <S> <C>
SUPRANATIONAL -- 3.2%
70,000 East European Development Fund..... 2,555,000
------------
TAIWAN -- 3.5%
130 Formosa Fund, IDR.................. 1,384,500
100,000 Taiwan Index Fund.................. 1,400,000
------------
2,784,500
------------
TOTAL INVESTMENT FUNDS (Cost
$4,124,933)...................... 5,339,500
============
<CAPTION>
PRINCIPAL
AMOUNT
----------
CONVERTIBLE BONDS -- 1.6%
<C> <S> <C>
HONG KONG -- 0.4%
USD315,000 Qingling Motors Company,
3.500% 01/22/02.................. 310,275
------------
TAIWAN -- 1.2%
USD460,000 Far East Department Stores,
3.000% 07/06/01.................. 480,700
USD300,000 President Enterprise Corporation,
Zero coupon 07/22/01............. 495,000
------------
975,700
------------
TOTAL CONVERTIBLE BONDS
(Cost $1,239,426)................ 1,285,975
============
<CAPTION>
SHARES
----------
WARRANTS -- 0.0%#
<C> <S> <C>
BRAZIL -- 0.0%#
4,990 Cia Cervejaria Brahma, Expire
04/30/03+........................ 471
59,969 Cia Cervejaria Brahma, Preferred
Shares, Expire 04/30/03+......... 4,257
------------
4,728
------------
INDONESIA -- 0.0%#
86,068 PT Bank Internasional Indonesia,
Expire 01/17/00+................. 30,470
------------
THAILAND -- 0.0%#
6,000 Thai Farmers Bank Public Company
Ltd., Expire 09/15/02+........... 4,334
------------
TOTAL WARRANTS
(Cost $21,112)................... 39,532
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
31
<PAGE> 34
NATIONS FUNDS
Nations Emerging Markets Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1997
<TABLE>
<CAPTION>
VALUE
(NOTE 1)
- ------------------------------------------------------------
<S> <C> <C>
TOTAL INVESTMENTS
(Cost $69,023,377*)................... 96.8% 76,909,288
OTHER ASSETS AND
LIABILITIES (NET)..................... 3.2 2,493,475
----- -----------
NET ASSETS.............................. 100.0% $79,402,763
===== ===========
</TABLE>
- ---------------
* Aggregate cost for Federal tax purposes was $69,881,116.
+ Non-income producing security.
++ Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold
in transactions exempt from registration to qualified
institutional buyers.
+++ Includes 3,850 shares that may not be resold until
06/30/97.
# Amount represents less than 0.1%.
ABBREVIATIONS:
ADR American Depositary Receipt
CLOB Custody License Outside Border
EDR European Depositary Receipt
GDR Global Depositary Receipt
GDS Global Depositary Share
IDR International Depositary Receipt
ord Ordinary Shares
USD United States Dollar
SEE NOTES TO FINANCIAL STATEMENTS.
32
<PAGE> 35
NATIONS FUNDS
Nations Emerging Markets Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) MARCH 31, 1997
AT MARCH 31, 1997 SECTOR DIVERSIFICATION WAS AS FOLLOWS (UNAUDITED):
<TABLE>
<CAPTION>
% OF NET VALUE
SECTOR DIVERSIFICATION ASSETS (NOTE 1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
Services -- Telecommunications................................................ 15.2% $12,067,791
Materials..................................................................... 14.6 11,604,708
Energy........................................................................ 12.2 9,689,488
Finance -- Banking............................................................ 10.8 8,541,286
Finance -- Other.............................................................. 7.7 6,079,551
Consumer Goods................................................................ 5.4 4,406,270
Construction.................................................................. 5.1 4,018,985
Services...................................................................... 4.6 3,619,125
Finance -- Real Estate........................................................ 3.1 2,423,618
Services -- Transportation.................................................... 2.7 2,180,379
Capital Equipment............................................................. 0.4 319,408
-------- -----------
TOTAL COMMON STOCKS........................................................... 81.8 64,950,609
PREFERRED STOCKS.............................................................. 6.7 5,293,672
INVESTMENT FUNDS.............................................................. 6.7 5,339,500
CONVERTIBLE BONDS............................................................. 1.6 1,285,975
WARRANTS...................................................................... 0.0# 39,532
-------- -----------
TOTAL INVESTMENTS............................................................. 96.8 76,909,288
OTHER ASSETS AND LIABILITIES (NET)............................................ 3.2 2,493,475
-------- -----------
NET ASSETS.................................................................... 100.0% $79,402,763
======= ===========
</TABLE>
- ---------------
# Amount represents less than 0.1%.
SEE NOTES TO FINANCIAL STATEMENTS.
33
<PAGE> 36
NATIONS FUNDS
Nations Global Government Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS MARCH 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- ------------------------------------------------------------
FOREIGN BONDS AND NOTES -- 89.0%
<S> <C> <C> <C>
AUSTRALIA -- 4.9%
AUD 2,800,000 Government of Australia,
7.500% 07/15/05.......... $ 2,141,939
-----------
AUSTRIA -- 1.6%
DEM 1,000,000 Government of Austria,
8.000% 06/17/02.......... 677,462
-----------
BELGIUM -- 5.0%
USD 1,450,000 Kingdom of Belgium, 7.000%
07/07/99................. 1,461,781
USD 750,000 Kingdom of Belgium, 5.500%
11/05/03................. 693,281
-----------
2,155,062
-----------
CANADA -- 10.9%
CAD 2,280,000 Government of Canada,
8.500% 03/01/00.......... 1,780,269
USD 1,800,000 Province of Alberta, 6.250%
10/19/00................. 1,776,375
CAD 1,550,000 Province of Ontario, 7.750%
12/08/03................. 1,190,564
-----------
4,747,208
-----------
DENMARK -- 9.2%
DKK 12,500,000 Kingdom of Denmark, 6.000%
12/10/99................. 2,029,414
DKK 12,000,000 Kingdom of Denmark, 7.000%
12/15/04................. 1,948,426
-----------
3,977,840
-----------
FINLAND -- 2.9%
GBP 750,000 Republic of Finland 8.000%
04/07/03................. 1,243,154
-----------
FRANCE -- 2.8%
ECU 1,000,000 Obligations Assimilables du
Tresor (France), 6.750%
04/25/02................. 1,232,902
-----------
GERMANY -- 16.1%
DEM 2,250,000 DSL Finance NV, 5.000%
01/23/01................. 1,372,470
DEM 1,600,000 Federal Republic of
Germany, 6.375%
05/20/98................. 990,661
DEM 4,050,000 Federal Republic of
Germany, 5.125%
11/21/00................. 2,488,907
DEM 3,430,000 Federal Republic of
Germany, 6.500%
10/14/05................. 2,149,343
-----------
7,001,381
-----------
GREAT BRITAIN -- 7.6%
USD 1,950,000 Glaxo Wellcome plc, 6.750%
05/31/00................. 1,953,656
GBP 800,000 United Kingdom Treasury,
8.000% 12/07/00.......... 1,345,362
-----------
3,299,018
-----------
IRELAND -- 1.5%
IRP 400,000 Government of Ireland,
6.500% 10/18/01.......... 641,580
-----------
ITALY -- 2.0%
JPY 100,000,000 Republic of Italy, Global
Bond, 3.500% 06/20/01.... 871,776
-----------
JAPAN -- 8.8%
JPY 200,000,000 Export-Import Bank of
Japan, 4.375% 10/01/03... 1,845,638
USD 2,000,000 Kansai Electric Power
Company Inc. 7.250%
09/25/06................. 1,995,000
-----------
3,840,638
-----------
NETHERLANDS -- 3.8%
NLG 3,000,000 Government of the
Netherlands, 6.500%
01/15/99................. 1,673,998
-----------
SPAIN -- 2.2%
ESP 55,000,000 Government of Spain,
12.250% 03/25/00......... 451,524
ESP 65,000,000 Government of Spain, 8.000%
05/30/04................. 486,827
-----------
938,351
-----------
SUPRANATIONAL -- 7.6%
JPY 200,000,000 European Investment Bank,
4.500% 10/08/97.......... 1,651,573
JPY 200,000,000 World Bank, 4.500%
12/22/97................. 1,664,713
-----------
3,316,286
-----------
SWEDEN -- 2.1%
JPY 110,000,000 Government of Sweden,
4.625% 02/04/98.......... 920,039
-----------
TOTAL FOREIGN BONDS AND
NOTES (Cost
$40,221,261)............. 38,678,634
==========
<CAPTION>
U.S. TREASURY OBLIGATIONS -- 6.9%
<S> <C> <C> <C>
USD 2,000,000 U.S. Treasury Note, 6.500%
10/15/06................. 1,938,047
USD 1,000,000 U.S. Treasury Note, 7.625%
02/15/25................. 1,050,000
-----------
TOTAL U.S. TREASURY
OBLIGATIONS (Cost
$3,050,841).............. 2,988,047
==========
<S> <C> <C>
TOTAL INVESTMENTS (Cost $43,272,102*).... 95.9% 41,666,681
OTHER ASSETS AND LIABILITIES (NET)....... 4.1 1,775,321
----- -----------
NET ASSETS............................... 100.0% $43,442,002
===== ===========
</TABLE>
- ---------------
* Aggregate cost for Federal tax purposes was $43,277,219.
SEE NOTES TO FINANCIAL STATEMENTS.
34
<PAGE> 37
NATIONS FUNDS
Nations Global Government Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS MARCH 31, 1997
<TABLE>
<CAPTION>
CONTRACT TO BUY
--------------------------------------------------- IN NET UNREALIZED
LOCAL VALUE IN EXCHANGE DEPRECIATION
MATURITY DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACT
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
04/09/97 750,000,000 ITL..................... $ 449,737 $ 464,296 $(14,559)
------------
</TABLE>
<TABLE>
<CAPTION>
CONTRACT TO SELL NET UNREALIZED
--------------------------------------------------- IN APPRECIATION/
LOCAL VALUE IN EXCHANGE (DEPRECIATION)
MATURITY DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACT
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
04/02/97 108,388 AUD..................... $ 84,971 $ 84,597 $ (374)
04/09/97 7,500,000 DKK..................... 1,180,353 1,260,081 79,728
04/09/97 85,000,000 ESP..................... 601,646 643,744 42,098
04/09/97 750,000,000 ITL..................... 449,737 484,643 34,906
------------
$156,358
------------
<S> <C>
Net Unrealized Appreciation of Forward Foreign Exchange Contracts................. $141,799
============
</TABLE>
- ---------------------------------------------------
ABBREVIATIONS OF CURRENCY
THAT ISSUE IS HELD IN:
AUD Australian Dollar
CAD Canadian Dollar
DEM German Deutschmark
DKK Danish Krona
ECU European Currency Unit
ESP Spanish Peseta
GBP Great Britain Pound
IRP Irish Pound
ITL Italian Lira
JPY Japanese Yen
NLG Netherland Guilder
USD United States Dollar
- ---------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
35
<PAGE> 38
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES MARCH 31, 1997
<TABLE>
<CAPTION>
NATIONS
NATIONS NATIONS NATIONS GLOBAL
INTERNATIONAL PACIFIC EMERGING GOVERNMENT
EQUITY GROWTH MARKETS INCOME
FUND FUND FUND FUND
------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (Note 1) See accompanying schedules......... $1,014,793,619 $122,503,439 $76,909,288 $41,666,681
Cash.............................................................. 11,427,524 4,997,623 2,851,190 387,732
Foreign currency, at value (cost $140,212, $5,419, $11,250 and $0,
respectively)................................................... 140,744 7,386 10,788 --
Net unrealized appreciation of forward foreign exchange
contracts....................................................... 27,891 -- -- 141,799
Dividends receivable.............................................. 3,299,268 188,193 123,714 --
Interest receivable............................................... 158,723 5,029 23,362 1,162,206
Receivable for Fund shares sold................................... 3,528,805 351,346 108,707 94,504
Receivable for investment securities sold......................... -- 651,128 -- 2,257,465
Unamortized organization costs (Note 6)........................... -- 101,748 94,838 112,436
Prepaid expenses and other assets................................. 4,809 21,771 56 14,375
-------------- ------------ ----------- -----------
Total Assets.................................................... 1,033,381,383 128,827,663 80,121,943 45,837,198
-------------- ------------ ----------- -----------
LIABILITIES:
Net unrealized depreciation of forward foreign exchange
contracts....................................................... -- 89 -- --
Payable for Fund shares redeemed.................................. 2,577,531 84,810 44,743 33
Payable for investment securities purchased....................... -- -- 475,000 2,172,494
Dividends payable................................................. -- -- -- 133,872
Investment advisory fee payable (Note 2).......................... 785,024 100,200 74,185 26,046
Administration fee payable (Note 2)............................... 87,224 11,133 6,745 3,721
Shareholder servicing and distribution fees payable (Note 3)...... 37,875 4,457 2,036 3,475
Transfer agent fees payable (Note 2).............................. 32,960 16,741 17,686 3,046
Custodian fees payable (Note 2)................................... 162,194 47,015 25,751 3,918
Accrued Directors' fees and expenses (Note 2)..................... 41,582 23,524 14,375 6,891
Accrued expenses and other payables............................... 146,964 85,421 58,659 41,700
-------------- ------------ ----------- -----------
Total Liabilities............................................... 3,871,354 373,390 719,180 2,395,196
-------------- ------------ ----------- -----------
NET ASSETS........................................................ $1,029,510,029 $128,454,273 $79,402,763 $43,442,002
============== ============ =========== ===========
Investments, at cost.............................................. $ 918,995,533 $112,945,913 $69,023,377 $43,272,102
============== ============ =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
36
<PAGE> 39
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED) MARCH 31, 1997
<TABLE>
<CAPTION>
NATIONS
NATIONS NATIONS NATIONS GLOBAL
INTERNATIONAL PACIFIC EMERGING GOVERNMENT
EQUITY GROWTH MARKETS INCOME
FUND FUND FUND FUND
------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSETS CONSIST OF:
Distributions in excess of net investment income.................. $ (1,238,945) $ (75,460) $ (426,539) $ (38,979)
Accumulated net realized gain/(loss) on investments sold, forward
foreign exchange contracts, foreign currencies and net other
assets.......................................................... (4,702,715) (5,534,245) (203,980) 116,795
Net unrealized appreciation/(depreciation) of investments, forward
foreign exchange contracts, foreign currencies and net other
assets.......................................................... 95,759,023 9,559,194 7,885,548 (1,484,820)
Paid-in capital................................................... 939,692,666 124,504,784 72,147,734 44,849,006
-------------- ------------ ------------ -----------
$1,029,510,029 $128,454,273 $79,402,763 $43,442,002
============== ============ =========== ===========
NET ASSETS:
Primary A Shares.................................................. $ 976,854,687 $122,887,290 $76,483,145 $28,130,458
============== ============ =========== ===========
Primary B Shares.................................................. $ 5,526,252 $ 617,760 $ 300,821 $ 5,158
============== ============ =========== ===========
Investor A Shares................................................. $ 9,443,485 $ 2,479,923 $ 893,916 $15,104,118
============== ============ =========== ===========
Investor C Shares................................................. $ 987,626 $ 102,456 $ 225,970 $ 9,216
============== ============ =========== ===========
Investor N Shares................................................. $ 36,697,979 $ 2,366,844 $ 1,498,911 $ 193,052
============== ============ =========== ===========
SHARES OUTSTANDING:
Primary A Shares.................................................. 74,409,502 11,808,618 6,702,785 2,873,289
============== ============ =========== ===========
Primary B Shares.................................................. 421,690 59,440 26,396 527
============== ============ =========== ===========
Investor A Shares................................................. 726,102 239,029 78,468 1,542,772
============== ============ =========== ===========
Investor C Shares................................................. 77,552 9,905 19,926 941
============== ============ =========== ===========
Investor N Shares................................................. 2,860,141 229,680 132,498 19,719
============== ============ =========== ===========
PRIMARY A SHARES:
Net asset value, offering and redemption price per share.......... $13.13 $10.41 $11.41 $9.79
====== ====== ====== =====
PRIMARY B SHARES:
Net asset value, offering and redemption price per share.......... $13.11 $10.39 $11.40 $9.79
====== ====== ====== =====
INVESTOR A SHARES:
Net asset value, offering and redemption price per share.......... $13.01 $10.37 $11.39 $9.79
====== ====== ====== =====
INVESTOR C SHARES:
Net asset value and offering price per share*..................... $12.74 $10.34 $11.34 $9.79
====== ====== ====== =====
INVESTOR N SHARES:
Net asset value, offering and redemption price per share.......... $12.83 $10.30 $11.31 $9.79
====== ====== ====== =====
</TABLE>
- ---------------
* Redemption price per share is equal to Net Asset Value less any applicable
contingent deferred sales charge.
SEE NOTES TO FINANCIAL STATEMENTS.
37
<PAGE> 40
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
NATIONS
NATIONS NATIONS NATIONS GLOBAL
INTERNATIONAL PACIFIC EMERGING GOVERNMENT
EQUITY GROWTH MARKETS INCOME
FUND FUND FUND FUND
---------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (Net of foreign withholding taxes of $2,132,828, $161,024,
$62,632 and $0, respectively)...................................... $ 16,505,136 $ 1,820,353 $1,019,828 $ --
Interest (Net of foreign withholding taxes of $3,151, $0, $0 and
$20,651, respectively)............................................. 1,104,637 262,368 104,829 2,505,790
------------ ----------- ---------- ----------
Total investment income.......................................... 17,609,773 2,082,721 1,124,657 2,505,790
------------ ----------- ---------- ----------
EXPENSES:
Investment advisory fee (Note 2)..................................... 8,870,691 1,035,724 661,747 298,997
Administration fee (Note 2).......................................... 985,632 115,080 60,159 42,714
Transfer agent fees (Note 2)......................................... 697,430 94,073 59,350 35,513
Custodian fees (Note 2).............................................. 441,768 135,865 73,233 10,473
Shareholder reports expense.......................................... 101,510 40,466 17,219 12,126
Legal and audit fees................................................. 139,440 45,647 37,914 39,011
Registration and filing fees......................................... 128,599 92,492 72,847 50,763
Directors' fees and expenses (Note 2)................................ 31,927 30,962 18,756 10,348
Amortization of organization costs (Note 6).......................... 18,237 31,307 29,180 34,595
Other................................................................ 60,476 14,639 14,295 4,937
------------ ----------- ---------- ----------
Subtotal......................................................... 11,475,710 1,636,255 1,044,700 539,477
Shareholder servicing and distribution fees (Note 3):
Primary B Shares................................................... 13,436 1,464 414 296
Investor A Shares.................................................. 24,965 5,372 1,623 37,823
Investor C Shares.................................................. 3,756 389 646 46
Investor N Shares.................................................. 393,431 24,514 13,604 1,819
------------ ----------- ---------- ----------
Total expenses................................................... 11,911,298 1,667,994 1,060,987 579,461
------------ ----------- ---------- ----------
NET INVESTMENT INCOME................................................ 5,698,475 414,727 63,670 1,926,329
------------ ----------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (NOTES 1 AND
4):
Net realized gain/(loss) from:
Security transactions.............................................. 9,375,287 (4,836,069) 395,463 651,482
Forward foreign exchange contracts................................. 12,740,743 (115,937) (34,960) 372,536
Foreign currencies................................................. 298,768 (11,665) (6,609) (70,505)
------------ ----------- ---------- ----------
Net realized gain/(loss) on investments during the year.............. 22,414,798 (4,963,671) 353,894 953,513
------------ ----------- ---------- ----------
Change in unrealized appreciation/(depreciation) of:
Securities......................................................... (13,814,028) 6,507,049 6,577,447 (1,345,773)
Forward foreign exchange contracts................................. (1,906,092) (1,789) 70 82,438
Foreign currencies and other net assets............................ (41,625) 4,008 (29) (21,346)
------------ ----------- ---------- ----------
Net unrealized appreciation/(depreciation) of investments during the
year............................................................... (15,761,745) 6,509,268 6,577,488 (1,284,681)
------------ ----------- ---------- ----------
Net realized and unrealized gain/(loss) on investments............... 6,653,053 1,545,597 6,931,382 (331,168)
------------ ----------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................. $ 12,351,528 $ 1,960,324 $6,995,052 $1,595,161
------------ ----------- ---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
38
<PAGE> 41
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
NATIONS
NATIONS NATIONS NATIONS GLOBAL
INTERNATIONAL PACIFIC EMERGING GOVERNMENT
EQUITY GROWTH MARKETS INCOME
FUND FUND FUND FUND
----------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income..................................... $ 5,698,475 $ 414,727 $ 63,670 $ 1,926,329
Net realized gain/(loss) on investments................... 22,414,798 (4,963,671) 353,894 953,513
Change in unrealized appreciation/(depreciation) of
investments............................................. (15,761,745) 6,509,268 6,577,488 (1,284,681)
-------------- ------------ ----------- -----------
Net increase in net assets resulting from operations...... 12,351,528 1,960,324 6,995,052 1,595,161
Distributions to shareholders from net investment income:
Primary A Shares........................................ (7,716,230) (404,835) (106,255) (1,249,093)
Primary B Shares........................................ (4,088) (201) (33) (2,462)
Investor A Shares....................................... (63,728) (9,546) (825) (667,922)
Investor C Shares....................................... (2,790) -- (108) (378)
Investor N Shares....................................... (126,291) (145) -- (6,474)
Distributions to shareholders in excess of net investment
income:
Primary A Shares........................................ (404,655) (266,788) (372,176) (250,244)
Primary B Shares........................................ (1,165) (711) (115) (547)
Investor A Shares....................................... (4,380) (5,269) (2,891) (142,043)
Investor C Shares....................................... (325) -- (377) (85)
Investor N Shares....................................... (16,858) -- -- (1,679)
Distributions to shareholders from net realized gain on
investments:
Primary A Shares........................................ (29,318,724) -- (328,396) (428,196)
Primary B Shares........................................ (109,072) -- (327) (876)
Investor A Shares....................................... (346,966) -- (3,682) (242,140)
Investor C Shares....................................... (22,984) -- (1,071) (143)
Investor N Shares....................................... (1,189,816) -- (7,629) (2,622)
Distributions to shareholders in excess of net realized
gain on investments:
Primary A Shares........................................ (2,311,831) -- -- --
Primary B Shares........................................ (6,656) -- -- --
Investor A Shares....................................... (25,025) -- -- --
Investor C Shares....................................... (1,858) -- -- --
Investor N Shares....................................... (96,313) -- -- --
Net increase/(decrease) in net assets from Fund share
transactions:
Primary A Shares........................................ 154,790,642 26,496,408 22,988,246 4,327,824
Primary B Shares........................................ 5,673,834 620,742 285,704 5,828
Investor A Shares....................................... 2,071,832 1,042,976 341,961 650,979
Investor C Shares....................................... 354,805 42,848 181,271 606
Investor N Shares....................................... (2,414,814) 8,985 164,903 4,661
-------------- ------------ ----------- -----------
Net increase in net assets................................ 131,058,072 29,484,788 30,133,252 3,590,155
NET ASSETS:
Beginning of year......................................... 898,451,957 98,969,485 49,269,511 39,851,847
-------------- ------------ ----------- -----------
End of year............................................... $1,029,510,029 $128,454,273 $79,402,763 $43,442,002
============== ============ =========== ===========
Distributions in excess of net investment income.......... $ (1,238,945) $ (75,460) $ (426,539) $ (38,979)
============== ============ =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
39
<PAGE> 42
NATIONS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
NATIONS
NATIONS NATIONS NATIONS GLOBAL
INTERNATIONAL PACIFIC EMERGING GOVERNMENT
EQUITY GROWTH MARKETS INCOME
FUND(a) FUND(b) FUND(b) FUND(b)
--------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income/(loss)................................. $ 3,626,554 $ (100,618) $ (71,055) $ 969,470
Net realized gain/(loss) on investments...................... 32,418,643 (445,524) (197,613) 221,004
Change in unrealized appreciation/(depreciation) of
investments................................................ 72,008,937 3,049,926 1,308,060 (200,139)
------------ ----------- ----------- -----------
Net increase in net assets resulting from operations......... 108,054,134 2,503,784 1,039,392 990,335
Distributions to shareholders from net investment income:
Primary A Shares........................................... (3,605,055) -- -- (797,500)
Investor A Shares.......................................... (21,498) -- -- (119,144)
Investor C Shares.......................................... -- -- -- (267)
Investor N Shares.......................................... -- -- -- (3,189)
Distributions to shareholders in excess of net investment
income:
Primary A Shares........................................... (2,391,207) (108,132) (3,687) (42,578)
Investor A Shares.......................................... (20,996) (1,632) -- (6,554)
Investor C Shares.......................................... (1,140) -- -- (17)
Investor N Shares.......................................... (85,934) (1,443) -- (221)
Distributions to shareholders from net realized gain on
investments:
Primary A Shares........................................... (1,248,540) -- -- (81,861)
Investor A Shares.......................................... (11,031) -- -- (89)
Investor C Shares.......................................... (1,122) -- -- (33)
Investor N Shares.......................................... (71,408) -- -- (586)
Net increase in net assets from Fund share transactions:
Primary A Shares........................................... 182,162,851 92,975,768 46,582,308 24,647,663
Investor A Shares.......................................... 1,946,226 1,318,061 454,932 15,047,874
Investor C Shares.......................................... 78,368 50,206 14,264 327
Investor N Shares.......................................... 3,984,676 2,198,873 1,148,302 183,687
------------ ----------- ----------- -----------
Net increase in net assets................................... 288,768,324 98,935,485 49,235,511 39,817,847
NET ASSETS:
Beginning of period.......................................... 609,683,633 34,000 34,000 34,000
------------ ----------- ----------- -----------
End of period................................................ $ 898,451,957 $98,969,485 $49,269,511 $39,851,847
============ =========== =========== ===========
Undistributed net investment income/(distributions in excess
of net investment income).................................. $ 1,078,353 $ -- $ (93,457) $ (108,343)
============ =========== =========== ===========
</TABLE>
- ---------------
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end
was May 31. The numbers reflected are for the period June 1, 1995 through
March 31, 1996.
(b) Nations Emerging Markets Fund, Nations Pacific Growth Fund and Nations
Global Government Income Fund commenced operations on June 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS.
40
<PAGE> 43
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY
<TABLE>
<CAPTION>
NATIONS INTERNATIONAL EQUITY FUND NATIONS PACIFIC GROWTH FUND
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
MARCH 31, 1997(a) MARCH 31, 1996(b) MARCH 31, 1997(a) MARCH 31, 1996(c)
-------------------------- ------------------------- ------------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold.............. 26,915,662 $ 361,667,261 21,779,745 $277,149,224 5,886,080 $ 61,730,754 9,508,684 $95,045,750
Issued as
reinvestment
of dividends.... 986,163 13,366,394 117,187 1,548,026 19,030 199,151 630 6,096
Redeemed.......... (16,427,294) (220,243,013) (7,709,286) (96,534,399) (3,392,989) (35,433,497) (213,667) (2,076,078)
----------- ------------- ---------- ------------ ---------- ------------ --------- -----------
Net increase...... 11,474,531 $ 154,790,642 14,187,646 $182,162,851 2,512,121 $ 26,496,408 9,295,647 $92,975,768
=========== ============= ========== ============ ========== ============ ========= ===========
PRIMARY B SHARES:
Sold.............. 514,246 $ 6,923,373 67,793 $ 707,717
Issued as
reinvestment
of dividends.... 5,046 68,239 56 591
Redeemed.......... (97,602) (1,317,778) (8,409) (87,566)
----------- ------------- ---------- ------------
Net increase...... 421,690 $ 5,673,834 59,440 $ 620,742
=========== ============= ========== ============
INVESTOR A SHARES:
Sold.............. 650,277 $ 8,611,306 1,204,885 $ 14,928,700 869,893 $ 9,124,829 145,535 $ 1,437,200
Issued as
reinvestment
of dividends.... 29,635 394,417 3,747 48,496 1,339 14,016 168 1,629
Redeemed.......... (524,532) (6,933,891) (1,055,939) (13,030,970) (766,685) (8,095,869) (12,071) (120,768)
----------- ------------- ---------- ------------ ---------- ------------ --------- -----------
Net increase...... 155,380 $ 2,071,832 152,693 $ 1,946,226 104,547 $ 1,042,976 133,632 $ 1,318,061
=========== ============= ========== ============ ========== ============ ========= ===========
INVESTOR C SHARES:
Sold.............. 48,335 $ 623,770 9,348 $ 114,146 4,398 $ 46,738 5,052 $ 50,206
Issued as
reinvestment
of dividends.... 2,084 26,628 167 2,118 14 145 -- --
Redeemed.......... (22,531) (295,593) (3,089) (37,896) (409) (4,035) -- --
----------- ------------- ---------- ------------ ---------- ------------ --------- -----------
Net increase...... 27,888 $ 354,805 6,426 $ 78,368 4,003 $ 42,848 5,052 $ 50,206
=========== ============= ========== ============ ========== ============ ========= ===========
INVESTOR N SHARES:
Sold.............. 140,712 $ 1,846,991 719,771 $ 8,739,740 47,220 $ 485,528 232,191 $ 2,245,592
Issued as
reinvestment
of dividends.... 106,501 1,416,247 11,981 152,998 -- -- 139 1,346
Redeemed.......... (433,659) (5,678,052) (397,985) (4,908,062) (45,803) (476,543) (4,917) (48,065)
----------- ------------- ---------- ------------ ---------- ------------ --------- -----------
Net increase/
(decrease)...... (186,446) $ (2,414,814) 333,767 $ 3,984,676 1,417 $ 8,985 227,413 $ 2,198,873
=========== ============= ========== ============ ========== ============ ========= ===========
</TABLE>
- ---------------
(a) Nations International Equity Fund's and Nations Pacific Growth Fund's
Primary B Shares commenced operations on June 28, 1996.
(b) Fiscal year end changed to March 31. Prior to this, the fiscal year end was
May 31.
(c) Nations Pacific Growth Fund's Primary A Shares, Investor A Shares, Investor
C Shares and Investor N Shares commenced operations on June 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS.
41
<PAGE> 44
NATIONS FUNDS
- --------------------------------------------------------------------------------
SCHEDULE OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
NATIONS EMERGING MARKETS FUND NATIONS GLOBAL GOVERNMENT INCOME FUND
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
MARCH 31, 1997(a) MARCH 31, 1996(b) MARCH 31, 1997(a) MARCH 31, 1996(b)
---------------------- -------------------- ------------------- --------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRIMARY A SHARES:
Sold............. 3,555,779 $ 38,563,526 4,725,947 $47,770,341 649,206 $ 6,647,355 2,470,544 $24,792,601
Issued as
reinvestment of
dividends...... 34,126 355,453 16 155 154,032 1,570,912 17,845 180,058
Redeemed......... (1,487,854) (15,930,733) (126,079) (1,188,188) (387,483) (3,890,443) (31,705) (324,996)
---------- ------------ --------- ----------- -------- ----------- --------- -----------
Net increase..... 2,102,051 $ 22,988,246 4,599,884 $46,582,308 415,755 $ 4,327,824 2,456,684 $24,647,663
========== ============ ========= =========== ======== =========== ========= ===========
PRIMARY B SHARES:
Sold............. 29,362 $ 317,536 13,113 $ 132,884
Issued as
reinvestment of
dividends...... 29 305 298 3,090
Redeemed......... (2,995) (32,137) (12,884) (130,146)
---------- ------------ -------- -----------
Net increase..... 26,396 $ 285,704 527 $ 5,828
========== ============ ======== ===========
INVESTOR A SHARES:
Sold............. 118,447 $ 1,294,139 46,699 $ 468,391 69,887 $ 714,152 1,478,192 $15,047,626
Issued as
reinvestment of
dividends...... 658 6,821 -- -- 2,747 28,266 94 953
Redeemed......... (86,867) (958,999) (1,319) (13,459) (8,928) (91,439) (70) (705)
---------- ------------ --------- ----------- -------- ----------- --------- -----------
Net increase..... 32,238 $ 341,961 45,380 $ 454,932 63,706 $ 650,979 1,478,216 $15,047,874
========== ============ ========= =========== ======== =========== ========= ===========
INVESTOR C SHARES:
Sold............. 17,883 $ 183,109 1,425 $ 14,264 -- $ -- 1 $ 10
Issued as
reinvestment of
dividends...... 105 1,555 -- -- 59 606 31 317
Redeemed......... (337) (3,393) -- -- -- -- -- --
---------- ------------ --------- ----------- -------- ----------- --------- -----------
Net increase..... 17,651 $ 181,271 1,425 $ 14,264 59 $ 606 32 $ 327
========== ============ ========= =========== ======== =========== ========= ===========
INVESTOR N SHARES:
Sold............. 37,467 $ 402,741 121,704 $ 1,194,610 3,210 $ 31,111 18,001 $ 180,857
Issued as
reinvestment of
dividends...... 726 7,402 -- -- 995 10,579 392 3,996
Redeemed......... (23,492) (245,240) (4,757) (46,308) (3,615) (37,029) (114) (1,166)
---------- ------------ --------- ----------- -------- ----------- --------- -----------
Net increase..... 14,701 $ 164,903 116,947 $ 1,148,302 590 $ 4,661 18,279 $ 183,687
========== ============ ========= =========== ======== =========== ========= ===========
</TABLE>
- ---------------
(a) Nations Emerging Markets Fund's and Nations Global Government Income Fund's
Primary B Shares commenced operations on June 28, 1996.
(b) Nations Emerging Markets Fund's and Nations Global Government Income Fund's
Primary A Shares, Investor A Shares, Investor C Shares and Investor N Shares
commenced operations on June 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS.
42
<PAGE> 45
[THIS PAGE INTENTIONALLY LEFT BLANK]
43
<PAGE> 46
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED NET INCREASE/ DIVIDENDS DISTRIBUTIONS DISTRIBUTIONS
VALUE INVESTMENT AND UNREALIZED (DECREASE) IN FROM NET IN EXCESS OF FROM NET
BEGINNING OF INCOME/ GAIN/(LOSS) ON NET ASSET VALUE INVESTMENT NET INVESTMENT REALIZED
YEAR (LOSS) INVESTMENTS FROM OPERATIONS INCOME INCOME CAPITAL GAINS
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NATIONS INTERNATIONAL
EQUITY FUND
PRIMARY A SHARES
Year ended
03/31/1997#......... $13.50 $ 0.08 $ 0.11 $ 0.19 $(0.11) $(0.00)*** $ (0.42)
Period ended
03/31/1996(a)#...... 11.75 0.07 1.80 1.87 (0.06) (0.04) (0.02)
Year ended
05/31/1995#......... 12.06 0.14 (0.20) (0.06) (0.03) -- (0.12)
Year ended
05/31/1994#......... 10.60 0.09 1.44 1.53 (0.05) -- (0.02)
Year ended
05/31/1993#......... 10.40 0.09 0.21 0.30 (0.08) -- (0.02)
Period ended
05/31/1992*......... 10.00 0.08 0.36 0.44 (0.04) -- --
PRIMARY B SHARES
Period ended
03/31/1997*#........ $13.65 $ 0.01 $(0.09)(c) $ (0.08) $(0.01) $(0.00)*** $ (0.42)
INVESTOR A SHARES
Year ended
03/31/1997#......... $13.39 $ 0.05 $ 0.11 $ 0.16 $(0.09) $(0.00)*** $ (0.42)
Period ended
03/31/1996(a)#...... 11.67 0.04 1.78 1.82 (0.04) (0.04) (0.02)
Year ended
05/31/1995#......... 12.00 0.11 (0.20) (0.09) (0.02) -- (0.12)
Year ended
05/31/1994#......... 10.56 0.06 1.44 1.50 (0.04) -- (0.02)
Period ended
05/31/1993*#........ 10.38 0.07 0.21 0.28 (0.08) -- (0.02)
INVESTOR C SHARES
Year ended
03/31/1997#......... $13.13 $ 0.02 $ 0.10 $ 0.12 $(0.06) $(0.00)*** $ (0.42)
Period ended
03/31/1996(a)#...... 11.45 (0.03) 1.75 1.72 -- (0.02) (0.02)
Year ended
05/31/1995#......... 11.86 0.02 (0.21) (0.19) -- -- (0.12)
Year ended
05/31/1994#......... 10.49 (0.03) 1.43 1.40 (0.01) -- (0.02)
Period ended
05/31/1993*#........ 10.10 0.00*** 0.48 0.48 (0.07) -- (0.02)
INVESTOR N SHARES
Year ended
03/31/1997#......... $13.27 $(0.05) $ 0.10 $ 0.05 $(0.04) $(0.00)*** $ (0.42)
Period ended
03/31/1996(a)#...... 11.56 (0.02) 1.78 1.76 -- (0.03) (0.02)
Year ended
05/31/1995#......... 11.96 0.05 (0.22) (0.17) (0.01) -- (0.12)
Period ended
05/31/1994*#........ 10.51 (0.00)*** 1.51 1.51 (0.04) -- (0.02)
NATIONS PACIFIC
GROWTH FUND
PRIMARY A SHARES
Year ended
03/31/1997.......... $10.24 $ 0.04 $ 0.19 $ 0.23 $(0.03) $(0.03) --
Period ended
03/31/1996**#....... 10.00 (0.02) 0.29 0.27 -- (0.03) --
PRIMARY B SHARES
Year ended
03/31/1997**........ $10.34 $ 0.01 $ 0.07 $ 0.08 $(0.02) $(0.01) --
INVESTOR A SHARES
Year ended
03/31/1997.......... $10.23 $ 0.00*** $ 0.19 $ 0.19 $(0.03) $(0.02) --
Period ended
03/31/1996**#....... 10.00 (0.04) 0.29 0.25 -- (0.02) --
INVESTOR C SHARES
Year ended
03/31/1997.......... $10.20 $ 0.00*** $ 0.14 $ 0.14 -- -- --
Period ended
03/31/1996**#....... 10.00 (0.09) 0.29 0.20 -- -- --
INVESTOR N SHARES
Year ended
03/31/1997.......... $10.18 $(0.05) $ 0.19 $ 0.14 $(0.01) $(0.01) --
Period ended
03/31/1996**#....... 10.00 (0.10) 0.29 0.19 -- (0.01) --
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Nations International Equity Fund's Primary A, Primary B, Investor A, Investor C and Investor N Shares commenced operations
on December 2, 1991, June 28, 1996, June 3, 1992, June 17, 1992 and June 7, 1993, respectively.
** Nations Pacific Growth Fund's Primary A, Investor A, Investor C and Investor N Shares commenced operations on June 30, 1995.
Nations Pacific Growth Fund's Primary B Shares commenced operations on June 28, 1996.
*** Amount represents less than $0.01 per share.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and does not reflect the deduction of any applicable
sales charges.
# Per share numbers have been calculated using the monthly average shares method, which more appropriately represents the per
share data for the period, since the use of the undistributed income method did not accord with results of operations.
## Amount represents less than 0.01%.
(a) Fiscal year end changed to March 31. Prior to this, the fiscal year end was May 31.
(b) Average commission rate paid per share of securities purchased and sold by the Fund.
(c) The amount shown at this caption for each share outstanding throughout the period may not accord with the net realized and
unrealized gain/(loss) for the period because of the timing of purchases and withdrawals of shares in relation to the
fluctuating market values of the portfolio.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
44
<PAGE> 47
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
RATIO OF
DISTRIBUTIONS TOTAL NET ASSET NET ASSETS OPERATING
IN EXCESS OF DIVIDENDS VALUE END OF EXPENSES TO
NET REALIZED AND END OF TOTAL YEAR AVERAGE NET
CAPITAL GAINS DISTRIBUTIONS YEAR RETURN++ (IN 000'S) ASSETS
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NATIONS INTERNATIONAL
EQUITY FUND
PRIMARY A SHARES
Year ended
03/31/1997#......... $ (0.03) $ (0.56) $ 13.13 1.32% $976,855 1.16%
Period ended
03/31/1996(a)#...... -- (0.12) 13.50 16.01 849,731 1.17+
Year ended
05/31/1995#......... (0.10) (0.25) 11.75 (0.46) 572,940 1.03
Year ended
05/31/1994#......... -- (0.07) 12.06 14.37 401,559 1.17
Year ended
05/31/1993#......... -- (0.10) 10.60 3.14 118,873 1.30
Period ended
05/31/1992*......... -- (0.04) 10.40 4.43+++ 83,970 1.33+
PRIMARY B SHARES
Period ended
03/31/1997*#........ $ (0.03) $ (0.46) $ 13.11 (0.66)% $ 5,526 1.66%+
INVESTOR A SHARES
Year ended
03/31/1997#......... $ (0.03) $ (0.54) $ 13.01 1.08% $ 9,443 1.41%
Period ended
03/31/1996(a)#...... -- (0.10) 13.39 15.66 7,643 1.42+
Year ended
05/31/1995#......... (0.10) (0.24) 11.67 (0.69) 4,877 1.28
Year ended
05/31/1994#......... -- (0.06) 12.00 14.00 3,219 1.42
Period ended
05/31/1993*#........ -- (0.10) 10.56 2.91 839 1.55+
INVESTOR C SHARES
Year ended
03/31/1997#......... $ (0.03) $ (0.51) $ 12.74 0.77% $ 988 1.66%
Period ended
03/31/1996(a)#...... -- (0.04) 13.13 15.09 652 2.09+
Year ended
05/31/1995#......... (0.10) (0.22) 11.45 (1.56) 495 2.03
Year ended
05/31/1994#......... -- (0.03) 11.86 13.21 339 2.17
Period ended
05/31/1993*#........ -- (0.09) 10.49 4.97 200 2.30+
INVESTOR N SHARES
Year ended
03/31/1997#......... $ (0.03) $ (0.49) $ 12.83 0.28% $ 36,698 2.16%
Period ended
03/31/1996(a)#...... -- (0.05) 13.27 15.25 40,426 1.99+
Year ended
05/31/1995#......... (0.10) (0.23) 11.56 (1.30) 31,372 1.78
Period ended
05/31/1994*#........ -- (0.06) 11.96 14.32 17,349 1.92+
NATIONS PACIFIC
GROWTH FUND
PRIMARY A SHARES
Year ended
03/31/1997.......... -- $ (0.06) $ 10.41 2.18% $122,887 1.42%
Period ended
03/31/1996**#....... -- (0.03) 10.24 2.66 95,210 1.76+
PRIMARY B SHARES
Year ended
03/31/1997**........ -- $ (0.03) $ 10.39 0.75% $ 618 1.92%+
INVESTOR A SHARES
Year ended
03/31/1997.......... -- $ (0.05) $ 10.37 1.86% $ 2,480 1.67%
Period ended
03/31/1996**#....... -- (0.02) 10.23 2.52 1,375 2.01+
INVESTOR C SHARES
Year ended
03/31/1997.......... -- -- $ 10.34 1.57% $ 102 1.92%
Period ended
03/31/1996**#....... -- -- 10.20 2.00 60 2.65+
INVESTOR N SHARES
Year ended
03/31/1997.......... -- $ (0.02) $ 10.30 1.18% $ 2,367 2.42%
Period ended
03/31/1996**#....... -- (0.01) 10.18 1.88 2,324 2.76+
<CAPTION>
WITHOUT WAIVERS AND/OR
EXPENSE REIMBURSEMENTS
------------------------------
RATIO OF RATIO OF
NET INVESTMENT OPERATING NET INVESTMENT
INCOME/(LOSS) PORTFOLIO EXPENSES TO INCOME/ AVERAGE
TO AVERAGE TURNOVER AVERAGE NET (LOSS) PER COMMISSION
NET ASSETS RATE ASSETS SHARE RATE PAID(b)
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NATIONS INTERNATIONAL
EQUITY FUND
PRIMARY A SHARES
Year ended
03/31/1997#......... 0.62% 36% -- -- $0.0279
Period ended
03/31/1996(a)#...... 0.65+ 26 1.18%+ $ 0.07 0.0272
Year ended
05/31/1995#......... 1.17 92 1.04 0.14 --
Year ended
05/31/1994#......... 0.75 39 1.18 0.08 --
Year ended
05/31/1993#......... 1.03 41 1.32 0.10 --
Period ended
05/31/1992*......... 1.81+ 11 1.43+ 0.03 --
PRIMARY B SHARES
Period ended
03/31/1997*#........ 0.12%+ 36% -- -- $0.0279
INVESTOR A SHARES
Year ended
03/31/1997#......... 0.37% 36% -- -- $0.0279
Period ended
03/31/1996(a)#...... 0.40+ 26 1.43%+ $ 0.04 0.0272
Year ended
05/31/1995#......... 0.92 92 1.29 0.11 --
Year ended
05/31/1994#......... 0.50 39 1.43 0.05 --
Period ended
05/31/1993*#........ 0.78+ 41 1.62+ 0.07 --
INVESTOR C SHARES
Year ended
03/31/1997#......... 0.12% 36% -- -- $0.0279
Period ended
03/31/1996(a)#...... (0.27)+ 26 2.10%+ $(0.03) 0.0272
Year ended
05/31/1995#......... 0.17 92 2.04 0.02 --
Year ended
05/31/1994#......... (0.25) 39 2.18 (0.03) --
Period ended
05/31/1993*#........ 0.03+ 41 2.32+ 0.00*** --
INVESTOR N SHARES
Year ended
03/31/1997#......... (0.38)% 36% -- -- $0.0279
Period ended
03/31/1996(a)#...... (0.17)+ 26 2.00%+ $(0.02) 0.0272
Year ended
05/31/1995#......... 0.42 92 1.79 0.05 --
Period ended
05/31/1994*#........ (0.00)+## 39 1.93+ (0.00)*** --
NATIONS PACIFIC
GROWTH FUND
PRIMARY A SHARES
Year ended
03/31/1997.......... 0.39% 78% -- -- $0.0126
Period ended
03/31/1996**#....... (0.27)+ 23 -- -- 0.0178
PRIMARY B SHARES
Year ended
03/31/1997**........ (0.11)%+ 78% -- -- $0.0126
INVESTOR A SHARES
Year ended
03/31/1997.......... 0.14% 78% -- -- $0.0126
Period ended
03/31/1996**#....... (0.52)+ 23 -- -- 0.0178
INVESTOR C SHARES
Year ended
03/31/1997.......... (0.11)% 78% -- -- $0.0126
Period ended
03/31/1996**#....... (1.16)+ 23 -- -- 0.0178
INVESTOR N SHARES
Year ended
03/31/1997.......... (0.61)% 78% -- -- $0.0126
Period ended
03/31/1996**#....... (1.27)+ 23 -- -- 0.0178
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
45
<PAGE> 48
NATIONS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED NET INCREASE/ DIVIDENDS DISTRIBUTIONS DISTRIBUTIONS
VALUE INVESTMENT AND UNREALIZED (DECREASE) IN FROM NET IN EXCESS OF FROM NET
BEGINNING OF INCOME/ GAIN/(LOSS) NET ASSET VALUE INVESTMENT NET INVESTMENT REALIZED
YEAR (LOSS) ON INVESTMENTS FROM OPERATIONS INCOME INCOME CAPITAL GAINS
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NATIONS EMERGING
MARKETS FUND
PRIMARY A SHARES
Year ended
03/31/1997#......... $10.34 $ 0.01 $ 1.21 $ 1.22 $(0.02) $(0.07) $ (0.06)
Period ended
03/31/1996*#........ 10.00 (0.03) 0.37 0.34 -- 0.00*** --
PRIMARY B SHARES
Period ended
03/31/1997*#........ $10.71 (0.04) $ 0.82 $ 0.78 $(0.01) $(0.02) $ (0.06)
INVESTOR A SHARES
Year ended
03/31/1997#......... $10.32 $(0.01) $ 1.21 $ 1.20 $(0.02) $(0.05) $ (0.06)
Period ended
03/31/1996*#........ 10.00 (0.05) 0.37 0.32 -- -- --
INVESTOR C SHARES
Year ended
03/31/1997#......... $10.27 (0.04) $ 1.20 $ 1.16 $(0.01) $(0.02) $ (0.06)
Period ended
03/31/1996*#........ 10.00 (0.10) 0.37 0.27 -- -- --
INVESTOR N SHARES
Year ended
03/31/1997#......... $10.26 (0.09) $ 1.20 $ 1.11 -- -- $ (0.06)
Period ended
03/31/1996*#........ 10.00 (0.11) 0.37 0.26 -- -- --
NATIONS GLOBAL
GOVERNMENT INCOME FUND
PRIMARY A SHARES
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
Period ended
03/31/1997**#....... $10.13 $ 0.43 (0.22) $ 0.21 $(0.32) $(0.07) $ (0.16)
INVESTOR A SHARES
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 C SHARES
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)
INVESTOR N SHARES
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)
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Nations Emerging Markets Fund's Primary A, Investor A, Investor C and Investor N Shares commenced operations on June 30,
1995. Nations Emerging Markets Fund's Primary B Shares commenced operations on June 28, 1996.
** Nations Global Government Income Fund's Primary A, Investor A, Investor C and Investor N Shares commenced operations on
June 30, 1995. Nations Global Government Income Fund's Primary B Shares commenced operations on June 28, 1996.
*** Amount represents less than $0.01 per share.
+ Annualized.
++ Total return represents aggregate total return for the period indicated and does not reflect the deduction of any
applicable sales charges.
# Per share numbers have been calculated using the monthly average shares method, which more appropriately represents the
per share data for the period, since the use of the undistributed income method did not accord with results of operations.
(a) Average commission rate paid per share of securities purchased and sold by the Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
46
<PAGE> 49
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/(LOSS) PORTFOLIO AVERAGE
AND END OF TOTAL YEAR AVERAGE NET TO AVERAGE NET TURNOVER COMMISSION
DISTRIBUTIONS YEAR RETURN++ (IN 000'S) ASSETS ASSETS RATE RATE PAID(a)
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NATIONS EMERGING
MARKETS FUND
PRIMARY A SHARES
Year ended
03/31/1997#......... $ (0.15) $ 11.41 11.97% $ 76,483 1.74% 0.13% 31% $0.0003
Period ended
03/31/1996*#........ 0.00*** 10.34 3.42 47,560 2.13+ (0.38)+ 17 0.0004
PRIMARY B SHARES
Period ended
03/31/1997*#........ $ (0.09) $ 11.40 7.34% $ 301 2.24%+ (0.37)%+ 31% $0.0003
INVESTOR A SHARES
Year ended
03/31/1997#......... $ (0.13) $ 11.39 11.74% $ 894 1.99% (0.12)% 31% $0.0003
Period ended
03/31/1996*#........ -- 10.32 3.20 477 2.38+ (0.63)+ 17 0.0004
INVESTOR C SHARES
Year ended
03/31/1997#......... $ (0.09) $ 11.34 11.34% $ 226 2.24% (0.37)% 31% $0.0003
Period ended
03/31/1996*#........ -- 10.27 2.70 23 3.02+ (1.27)+ 17 0.0004
INVESTOR N SHARES
Year ended
03/31/1997#......... $ (0.06) $ 11.31 10.88% $ 1,499 2.74% (0.87)% 31% $0.0003
Period ended
03/31/1996*#........ -- 10.26 2.60 1,209 3.13+ (1.38)+ 17 0.0004
NATIONS GLOBAL
GOVERNMENT INCOME FUND
PRIMARY A SHARES
Year ended
03/31/1997#......... $ (0.72) $ 9.79 4.25% $ 28,130 1.26% 4.60% 100% --
Period ended
03/31/1996**........ (0.43) 10.07 5.03 24,753 1.32+ 5.17+ 213 --
PRIMARY B SHARES
Period ended
03/31/1997**#....... $ (0.55) $ 9.79 1.93% $ 5 1.76%+ 4.10%+ 100% --
INVESTOR A SHARES
Year ended
03/31/1997#......... $ (0.70) $ 9.79 3.99% $ 15,104 1.51% 4.35% 100% --
Period ended
03/31/1996**........ (0.41) 10.07 4.84 14,898 1.57+ 4.92+ 213 --
INVESTOR C SHARES
Year ended
03/31/1997#......... $ (0.67) $ 9.79 3.73% $ 9 1.76% 4.10% 100% --
Period ended
03/31/1996**........ (0.37) 10.07 4.40 9 2.16+ 4.33+ 213 --
INVESTOR N SHARES
Year ended
03/31/1997#......... $ (0.62) $ 9.79 3.22% $ 193 2.26% 3.60% 100% --
Period ended
03/31/1996**........ (0.36) 10.07 4.27 193 2.32+ 4.17+ 213 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
47
<PAGE> 50
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Nations Fund, Inc. (the "Company") and Nations Fund Portfolios, Inc. ("Nations
Portfolios") are registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as open-end investment companies. As of the date of this
report, the Company offers five separate portfolios and Nations Portfolios
offers three separate portfolios. Information presented in these financial
statements pertains only to: Nations International Equity Fund, Nations Pacific
Growth Fund, Nations Emerging Markets Fund and Nations Global Government Income
Fund (each a "Fund" and collectively, the "Funds"). The financial statements for
the remaining funds of the Company are presented under separate cover. The Funds
currently offer five classes of shares: Primary A Shares, Primary B Shares,
Investor A Shares, Investor C Shares and Investor N 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 the
significant accounting policies followed by the Funds in the preparation of
their financial statements.
Securities Valuation: A security listed or traded on an exchange is valued at
its last sales price on the exchange where the security is principally traded
or, if no sale occurred on such day, the security is valued at the mean between
the closing bid and asked prices on that day. If there are no such bid and asked
quotations, the most recent bid quote is used. Each security traded in the
over-the-counter market (but not including securities reported on the NASDAQ
National Market System) is valued at the mean between the last available bid and
asked prices based upon quotes furnished by principal market makers for such
securities. The valuation of international securities which trade on foreign
exchanges are provided by an independent pricing service approved by the Board
of Directors of each Fund. Each security reported on the NASDAQ National Market
System is valued at the last sales price on the valuation date. Debt obligations
are valued on the basis of prices provided by an independent pricing service.
Prices provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as yield,
type of issue, coupon rate, maturity and general market conditions. Securities
for which market quotations are not readily available are valued by the
investment adviser under the supervision of the Boards of Directors. Short-term
investments that mature in 60 days or less are valued at amortized cost.
Repurchase Agreements: Each Fund may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
This arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the collateral must
be 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
Directors, monitors the value of collateral received as well as the
creditworthiness of those banks and dealers with which the Funds enter into
repurchase agreements to evaluate potential risks.
Foreign Currency: The books and records of the Funds are maintained in U.S.
dollars. Foreign currencies, investments and other assets and liabilities are
translated into U.S. dollars at the exchange rates prevailing at the end of the
period. Purchases and sales of investment securities, income and expenses are
translated on the respective dates of such 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
48
<PAGE> 51
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, a 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 Fund's 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 also would 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 trade date. Realized gains and losses are computed based on the
basis of specific identification of the securities sold. Interest income,
adjusted for accretion of discounts and amortization of premiums, is earned from
settlement date and is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date, except that certain dividends from foreign
securities are recorded as soon as the Funds are informed of the ex-dividend
date. Each Fund's investment income and realized and unrealized gains and losses
are allocated among its classes based upon the relative net assets of each class
of shares. Uninvested cash balances earn interest at a rate agreed upon by the
Funds and The Bank of New York ("BONY").
Dividends and Distributions to Shareholders: Distributions from net investment
income, if any, for Nations International Equity Fund, Nations Pacific Growth
Fund and Nations Emerging Markets Fund are declared and paid each calendar
quarter. These distributions are recorded on ex-date. Dividends from net
investment income for the Nations Global Government Income Fund are declared on
each day the Fund is open for business and paid monthly. Each Fund will
distribute net realized capital gains (including net short-term capital gains)
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 Boards of Directors in order
to avoid the application of a 4% non-deductible Federal excise tax. Income
distributions and capital gain distributions on a Fund level are determined in
accordance with Federal income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to timing
differences and differing characterization of distributions made by a Fund as a
whole.
Reclassifications are made to each Fund's capital accounts to reflect income and
gains available for distribution (or available capital loss carryforwards) under
Federal income tax regulations. Certain reclassification adjustments are made
among undistributed net investment income, realized gain and loss and paid-in
capital due to different book and tax accounting for foreign currency,
amortization of organization costs and investments in Passive Foreign Investment
Companies.
49
<PAGE> 52
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Reclassifications for the year ended March 31, 1997 were as follows:
<TABLE>
<CAPTION>
INCREASE/(DECREASE) INCREASE/(DECREASE)
DECREASE UNDISTRIBUTED NET ACCUMULATED NET
PAID-IN CAPITAL INVESTMENT INCOME REALIZED GAIN/(LOSS)
------------------------------------------------------------
<S> <C> <C> <C>
Nations International Equity Fund.......... $ -- $ 324,736 $ (324,736)
Nations Pacific Growth Fund................ (15,750) 197,308 (181,558)
Nations Emerging Markets Fund.............. (28,647) 86,028 (57,381)
Nations Global Government Income Fund...... (34,062) 463,962 (429,900)
</TABLE>
The calculation of net investment income per share in the Nations Pacific Growth
Fund's financial highlights excludes this adjustment.
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 tax provision is applicable. The Funds may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable. The Funds will accrue such taxes and
recoveries as applicable, based upon their current interpretation of tax rules
and regulations that exist in the markets in which they invest.
Expenses: General expenses of the Company or Nations Portfolios are allocated
to the relevant Funds based upon relative net assets. Operating expenses
directly attributable to a Fund or a class of shares are charged to such Fund's
or class' 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 Company and Nations Portfolios has, on behalf of its Funds, entered
into an investment advisory agreement (the "Investment Advisory Agreements")
with NationsBanc Advisors, Inc. ("NBAI"), a wholly-owned subsidiary of
NationsBank, N.A. ("NationsBank"), pursuant to which NBAI provides investment
advisory services to the Funds. Under the terms of this Investment Advisory
Agreement, 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 International Equity Fund.............................................. 0.90%
Nations Pacific Growth Fund.................................................... 0.90
Nations Emerging Markets Fund.................................................. 1.10
Nations Global Government Income Fund.......................................... 0.70
</TABLE>
Each of the Company and Nations Portfolios has, on behalf of its Funds, entered
into a sub-advisory agreement (the "Sub-Advisory Agreements") 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.
Under the terms of the Sub-Advisory Agreements, Gartmore is entitled to receive
a sub-advisory fee from NBAI for each Fund at the following annual rates of each
Fund's averages daily net assets:
<TABLE>
<CAPTION>
ANNUAL RATE
----------
<S> <C>
Nations International Equity Fund.............................................. 0.70%
Nations Pacific Growth Fund.................................................... 0.70
Nations Emerging Markets Fund.................................................. 0.85
Nations Global Government Income Fund.......................................... 0.54
</TABLE>
Stephens Inc. ("Stephens") serves as the administrator of the Company and
Nations Portfolios pursuant to administration agreements (the "Administration
Agreements"). First Data Investor Services Group, Inc. ("First Data"), a
wholly-owned subsidiary of First Data Corporation, serves as co-administrator of
the Company and Nations Portfolios
50
<PAGE> 53
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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
investment portfolios of the Company and Nations Portfolios and the investment
portfolios of Nations Fund Trust (another registered open-end investment company
which is a part of the Nations Funds Family) on a combined basis. NationsBank
serves as the sub-administrator of the Company and Nations Portfolios pursuant
to a sub-administration agreement (the "Sub-Administration Agreement") with
Stephens. For the year ended March 31, 1997, Stephens earned $520,144 from the
Funds for its administration services, of which $120,359 was paid to NationsBank
for its services as sub-administrator.
The investment adviser, sub-adviser, administrator and co-administrator may,
from time to time, voluntarily reduce their fees payable by each Fund.
Stephens serves as the distributor of the Funds' shares. For the year ended
March 31, 1997, the Funds were informed that the distributor received $110,840
in contingent deferred sales charges from shares which were subject to such
charges. A substantial portion of these fees were paid to affiliates of
NationsBank and NBAI.
No officer, director or employee of NationsBank, NBAI, Gartmore, Stephens, First
Data, or any affiliate thereof, receives any compensation from the Company or
Nations Portfolios for serving as director or officer of the Company or Nations
Portfolios. The Company and Nations Portfolios pay each unaffiliated Director an
annual fee of $1,000 ($3,000 for the Chairman of the Board), plus $500 per Fund
and an additional $1,000 for each in-person board meeting, and $500 for each
telephonic board meeting attended. The Company and Nations Portfolios also
reimburse expenses incurred by each unaffiliated Director in attending such
meetings.
The Company's and Nations Portfolio's eligible Directors 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 will be tied to the rate of
return of the eligible mutual funds selected by the participants or, if no funds
are selected, to the rate of return of Nations Treasury Fund, another fund of
the Company. The expense for the deferred compensation plan is included in
"Directors' fees and expenses" in the Statements of Operations.
The Bank of New York acts as the custodian for the Funds. First Data serves as
the transfer agent for the Funds' shares. NationsBank of Texas, N.A.
("NationsBank of Texas") acts as the sub-transfer agent for the Primary A Shares
of the Funds and, for the year ended March 31, 1997, earned approximately
$22,741 for providing such services. The Funds placed a portion of their
portfolio transactions with firms that could be deemed to be affiliated of
Gartmore plc.
3. SHAREHOLDER SERVICING AND DISTRIBUTION PLANS.
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 C Shares and Investor N Shares of
each Fund; and a distribution plan ("Distribution Plan") pursuant to Rule 12b-1
for Investor C Shares and Investor N 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 C Shares and Investor N Shares, respectively. The Distribution Plan
permits the Funds to compensate or reimburse Stephens for any activities or
expenses primarily intended to result in the sale of the Funds' Investor C
Shares or Investor N Shares, respectively. Payments under the Plans are accrued
daily and paid monthly at a rate set, from time to time, by the Funds. Fees
incurred pursuant to the Plans are charged as expenses of each Fund directly to
the Primary B Shares, Investor A Shares, Investor C Shares and Investor N
Shares, respectively.
51
<PAGE> 54
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the year ended March 31, 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 C INVESTOR C INVESTOR N INVESTOR N
ADMINISTRATION INVESTOR A DISTRIBUTION SERVICING DISTRIBUTION SERVICING
FUND PLAN PLAN PLAN PLAN PLAN PLAN
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Nations International Equity Fund......... 0.50% 0.25% 0.25% 0.25% 0.75% 0.25%
Nations Pacific Growth Fund............... 0.50 0.25 0.25 0.25 0.75 0.25
Nations Emerging Markets Fund............. 0.50 0.25 0.25 0.25 0.75 0.25
Nations Global Government Income Fund..... 0.50 0.25 0.25 0.25 0.75 0.25
</TABLE>
A substantial portion of the fees paid pursuant to the Plans described above are
paid to affiliates of NationsBank 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 securities, for the year ended March
31, 1997 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-----------------------------
<S> <C> <C>
Nations International Equity Fund.................................. $486,601,963 $343,518,252
Nations Pacific Growth Fund........................................ 110,458,492 89,158,007
Nations Emerging Markets Fund...................................... 42,418,480 17,748,687
Nations Global Government Income Fund.............................. 37,359,359 33,981,770
</TABLE>
The aggregate cost of purchases and proceeds from sales of U.S. government
securities, for the year ended March 31, 1997, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-----------------------------
<S> <C> <C>
Nations Global Government Income Fund......................... $ 7,612,711 $ 6,546,844
</TABLE>
At March 31, 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 International Equity Fund................................... $166,877,573 $ 76,085,387
Nations Pacific Growth Fund......................................... 12,911,866 4,699,736
Nations Emerging Markets Fund....................................... 11,211,060 4,182,888
Nations Global Government Income Fund............................... 216,599 1,827,137
</TABLE>
5. CAPITAL STOCK.
As of March 31, 1997, 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. See Schedule of Capital
Stock Activity.
6. ORGANIZATION COSTS.
The Funds bear all costs in connection with its organization, including the fees
and expenses of registering and qualifying its 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 the 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 the redemption.
52
<PAGE> 55
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
As of March 31, 1997, all organizational costs were fully amortized for Nations
International Equity Fund.
7. FOREIGN SECURITIES.
Each Fund may invest in foreign securities. Investing in securities of foreign
companies and foreign governments involves special risks and considerations not
typically associated with investing in U.S. companies and the U.S. government.
These risks include re-valuation of currencies, less reliable information about
issuers, different securities transaction clearance and settlement practices,
and future adverse political and economic developments. These risks are
heightened for investments in emerging markets countries. Moreover, securities
of many foreign companies and foreign governments and their markets may be less
liquid and their prices more volatile than those of securities of comparable
U.S. companies and the U.S. government.
8. SIGNIFICANT CONCENTRATIONS.
On February 26, 1997, NationsBank Corporation's (the "Corporation") Asset
Management Group announced plans to sell its Institutional Trust, Retirement
Services and Corporate Trust businesses (collectively, the "Businesses"). The
Businesses make significant use of the Nations Family of Funds (the "Funds") to
satisfy their clients' investment needs. It is uncertain at this point what
impact, if any, the sale of these Businesses will have on the Funds and its
shareholders. Currently, however, the Advisor does not believe that a
significant impact to the overall financial condition and operating performance
of the Funds will occur.
9. LINE OF CREDIT.
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 borrowing 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. Prior to executing the Agreement with
BONY, the Company participated in a line of credit agreement with Mellon Bank
N.A. During the year ended March 31, 1997, the Funds did not borrow under either
Agreement.
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 2004 2005
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nations Pacific Growth Fund.................................................... $102,682 $3,784,722
</TABLE>
Under the current tax law, capital and currency losses realized after October
31, may be deferred and treated as occurring on the first day of the following
fiscal year. For the year ended March 31, 1997, the following Funds elected to
defer losses occurring between November 1, 1996 and March 31, 1997 under these
rules, as follows:
<TABLE>
<CAPTION>
POST-OCTOBER CAPITAL
FUND LOSS DEFERRAL
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Nations International Equity Fund................................................... $3,453,751
Nations Pacific Growth Fund......................................................... 1,540,154
Nations Emerging Markets Fund....................................................... 175,861
</TABLE>
<TABLE>
<CAPTION>
POST-OCTOBER CURRENCY
FUND LOSS DEFERRAL
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Nations Global Government Income Fund.............................................. $ 50,744
</TABLE>
53
<PAGE> 56
NATIONS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
11. SUBSEQUENT EVENT.
The Company is a party to an Agreement and Plan of Reorganization with The Pilot
Funds (which are advised by Boatmen's Trust Company, an affiliate of NationsBank
Corporation since January 7, 1997) pursuant to which certain Nations Funds
portfolios will acquire the assets of The Pilot Funds portfolios. The
shareholders of The Pilot Funds voted to approve the proposed reorganization on
or before May 14, 1997. As of March 31, 1997, net assets of the fourteen funds
comprising The Pilot Funds were approximately $6.5 billion.
54
<PAGE> 57
NATIONS FUNDS
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REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND DIRECTORS OF NATIONS FUNDS
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Nations International Equity
Fund, Nations Pacific Growth Fund, Nations Emerging Market Fund and Nations
Global Government Income Fund (collectively referred to as the "Funds") at March
31, 1997 and the results of each of their operations, the changes in each of
their net assets and their financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at March 31, 1997 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
May 15, 1997
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NATIONS FUNDS
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TAX INFORMATION (UNAUDITED)
YEAR ENDED MARCH 31, 1997
The amount of long-term capital gain paid for the year ended March 31, 1997
was as follows:
<TABLE>
<S> <C>
Nations International Equity Fund........................................ $27,471,429
Nations Emerging Markets Fund............................................ 21,991
Nations Global Government Income Fund.................................... 8,560
</TABLE>
For the year ended March 31, 1997, the total amount of income received by
Nations International Equity Fund, Nations Pacific Growth Fund, Nations Emerging
Markets Fund and Nations Global Government Income Fund from sources within
foreign countries and possessions of the United States was $0.2516, $0.1786,
$0.1706 and $0.5282 per share, respectively (representing a total of
$19,745,752, $2,204,926, $1,187,289 and $2,343,664, respectively). The total
amount of taxes paid by the Nations International Equity Fund, Nations Pacific
Growth Fund, Nations Emerging Markets Fund and Nations Global Government Income
Fund to such countries was $0.0285, $0.0136, $0.0086, and $0.0049 per share,
respectively (representing a total of $2,240,866, $167,483, $60,156, and
$21,762, respectively).
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THE NATIONS FUNDS FAMILY
EQUITY FUNDS
GROWTH
Nations Emerging Markets Fund
Nations Pacific Growth Fund
Nations International Equity Fund
Nations Managed Smallcap Index Fund
Nations Emerging Growth Fund
Nations Disciplined Equity Fund
Nations Capital Growth Fund
GROWTH AND INCOME
Nations Value Fund
Nations Managed Index Fund
Nations Equity Index Fund
Nations Equity Income Fund
Nations Balanced Assets Fund
LIFEGOAL PORTFOLIOS
LifeGoal Growth Portfolio
LifeGoal Balanced Growth Portfolio
LifeGoal Income and Growth Portfolio
BOND FUNDS
INCOME
Nations Global Government Income Fund
Nations Diversified Income Fund
Nations Strategic Fixed Income Fund
Nations Government Securities Fund
Nations Short-Intermediate Government Fund
Nations Short-Term Income Fund
TAX-EXEMPT INCOME
Nations Municipal Income Fund
Nations Intermediate Municipal Bond Fund
Nations Short-Term Municipal Income Fund
Nations Florida Municipal Bond Fund
Nations Florida Intermediate Municipal Bond Fund
Nations Georgia Municipal Bond Fund
Nations Georgia Intermediate Municipal Bond Fund
Nations Maryland Municipal Bond Fund
Nations Maryland Intermediate Municipal Bond Fund
Nations North Carolina Municipal Bond Fund
Nations North Carolina Intermediate Municipal Bond Fund
Nations South Carolina Municipal Bond Fund
Nations South Carolina Intermediate Municipal Bond Fund
Nations Tennessee Municipal Bond Fund
Nations Tennessee Intermediate Municipal Bond Fund
Nations Texas Municipal Bond Fund
Nations Texas Intermediate Municipal Bond Fund
Nations Virginia Municipal Bond Fund
Nations Virginia Intermediate Municipal Bond Fund
MONEY MARKET FUNDS
Nations Prime Fund
Nations Government Money Market Fund
Nations Treasury Fund
Nations Tax Exempt Fund
For more complete information on Nations Funds mutual funds, including
charges and expenses, please contact Nations Funds or your Investment
Representative for a current prospectus. Please read the prospectus carefully
before you invest or send money.
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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.
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